House Report 115-240 - CONCURRENT RESOLUTION ON THE BUDGET-- FISCAL YEAR 2018

[House Report 115-240]
[From the U.S. Government Publishing Office]

115th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 115-240
_______________________________________________________________________

CONCURRENT RESOLUTION
ON THE BUDGET--
FISCAL YEAR 2018

----------

R E P O R T

of the

COMMITTEE ON THE BUDGET
HOUSE OF REPRESENTATIVES

to accompany

H. Con. Res. 71

ESTABLISHING THE BUDGET FOR THE UNITED STATES GOVERNMENT FOR FISCAL
YEAR 2018 AND SETTING FORTH APPROPRIATE BUDGETARY LEVELS FOR FISCAL
YEARS 2019 THROUGH 2027

together with

MINORITY AND ADDITIONAL VIEWS

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

July 21, 2017.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed

115th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 115-240
_______________________________________________________________________

CONCURRENT RESOLUTION

ON THE BUDGET--

FISCAL YEAR 2018

__________

R E P O R T

of the

COMMITTEE ON THE BUDGET

HOUSE OF REPRESENTATIVES

to accompany

H. Con. Res. 71

ESTABLISHING THE BUDGET FOR THE UNITED STATES GOVERNMENT FOR FISCAL
YEAR 2018 AND SETTING FORTH APPROPRIATE BUDGETARY LEVELS FOR FISCAL
YEARS 2019 THROUGH 2027

together with

MINORITY AND ADDITIONAL VIEWS

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

July 21, 2017.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
______

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COMMITTEE ON THE BUDGET

DIANE BLACK, Tennessee, Chairman
TODD ROKITA, Indiana, Vice Chairman JOHN A. YARMUTH, Kentucky,
MARIO DIAZ-BALART, Florida Ranking Minority Member
TOM COLE, Oklahoma BARBARA LEE, California
TOM McCLINTOCK, California MICHELLE LUJAN GRISHAM, New Mexico
ROB WOODALL, Georgia SETH MOULTON, Massachusetts
MARK SANFORD, South Carolina HAKEEM S. JEFFRIES, New York
STEVE WOMACK, Arkansas BRIAN HIGGINS, New York
DAVE BRAT, Virginia SUZAN K. DelBENE, Washington
GLENN GROTHMAN, Wisconsin DEBBIE WASSERMAN SCHULTZ, Florida
GARY J. PALMER, Alabama BRENDAN F. BOYLE, Pennsylvania
BRUCE WESTERMAN, Arkansas RO KHANNA, California
JAMES B. RENACCI, Ohio PRAMILA JAYAPAL, Washington,
BILL JOHNSON, Ohio Vice Ranking Minority Member
JASON SMITH, Missouri SALUD CARBAJAL, California
JASON LEWIS, Minnesota SHEILA JACKSON LEE, Texas
JACK BERGMAN, Michigan JANICE D. SCHAKOWSKY, Illinois
JOHN J. FASO, New York
LLOYD SMUCKER, Pennsylvania
MATT GAETZ, Florida
JODEY C. ARRINGTON, Texas
A. DREW FERGUSON IV, Georgia

Professional Staff

Richard E. May, Staff Director
Ellen Balis, Minority Staff Director

C O N T E N T S

Page
Introduction..................................................... 3
Summary Tables--Spending and Revenue:
Table 1. Fiscal Year 2018 Budget Resolution Total Spending
and Revenue................................................ 17
Table 2. Fiscal Year 2018 Budget Resolution Discretionary
Spending................................................... 20
Table 3. Fiscal Year 2018 Budget Resolution Mandatory
Spending................................................... 23
The Long-Term Budget Outlook..................................... 27
Direct Spending Trends and Reforms............................... 31
Table 4. Historical Means-Tested and Non Means-Tested Direct
Spending................................................... 34
Table 5. Projected Means-Tested and Non Means-Tested Direct
Spending................................................... 35
The Economy and Economic Assumptions............................. 39
Table 6. Economic Projections: Administration, CBO, and
Private Forecasters........................................ 45
Table 7. Economic Assumptions of the Fiscal Year 2018 Budget
Resolution................................................. 46
Macroeconomic Feedback Effects of Pro-Growth Policies............ 47
Functional Presentation.......................................... 51
Principal Federal Responsibilities........................... 55
National Defense......................................... 55
International Affairs.................................... 59
Overseas Contingency Operations/Global War on Terrorism.. 63
Veterans Benefits and Services........................... 64
Administration of Justice................................ 76
General Government....................................... 81
Government-Wide Policy................................... 84
Domestic Priorities.......................................... 89
General Science, Space, and Technology................... 90
Energy................................................... 92
Natural Resources and Environment........................ 98
Agriculture.............................................. 102
Commerce and Housing Credit.............................. 103
Transportation........................................... 107
Community and Regional Development....................... 117
Education, Training, Employment, and Social Services..... 119
Health................................................... 126
Income Security.......................................... 131
Other Discretionary Spending............................. 133
Direct Spending.............................................. 135
Social Security.......................................... 135
Medicare................................................. 141
Medicaid, the American Health Care Act, and Related
Programs............................................... 153
Income Support, Nutrition, and Related Programs.......... 168
Farm Support and Related Programs........................ 180
Banking, Commerce, Postal Service, and Related Programs.. 181
Student Loans, Social Services, and Related Programs..... 187
Federal Lands and Other Resources........................ 194
Other Direct Spending.................................... 196
Financial Management......................................... 199
Net Interest............................................. 199
Allowances............................................... 200
Undistributed Offsetting Receipts........................ 200
Revenue and Tax Reform........................................... 203
Table 8. Tax Expenditure Estimates by Budget Function, Fiscal
Years 2016-2020............................................ 207
Addressing Improper Payments..................................... 217
Unauthorized Spending Programs................................... 221
Table 9. Summary of Authorizations of Appropriations Expiring
on or Before 30 September 2017, by Appropriations
Subcommittee............................................... 222
Table 10. Summary of Authorizations of Appropriations
Expiring on or Before 30 September 2017, by House
Authorizing Committee...................................... 222
`High-Risk' Federal Programs and Activities...................... 225
Government Waste, Fraud, and Abuse............................... 231
Budget Process Reform............................................ 239
Reclaiming Constitutional Authority Through the `Power of the
Purse'..................................................... 241
The Importance of Fiscal Goals............................... 253
The Need to Control Direct Spending.......................... 265
Making Budget Enforcement More Effective..................... 277
Alternative Approaches to the Federal Budget................. 287
Proposals for a Rewrite of the Congressional Budget Process.. 303
Regulatory Budgeting............................................. 309
The President's Budget: A Brief Summary.......................... 313
Table 11. Summary of Fiscal Year 2018 Budget Resolution...... 316
Table 12. Fiscal Year 2018 House Budget Resolution vs. the
President's Budget......................................... 316
Section-by-Section Description................................... 319
The Congressional Budget Process................................. 337
Table 13. Allocation of Spending Authority to House Committee
on Appropriations.......................................... 339
Table 14. Resolution by Authorizing Committee (On-budget
Amounts)................................................... 339
Reconciliation................................................... 343
Enforcing Budgetary Levels....................................... 347
Statutory Controls Over the Budget............................... 351
Accounts Identified for Advance Appropriations................... 357
Votes of the Committee........................................... 359
Other Matters Under the Rules of the House....................... 393
Minority Views................................................... 395
Additional Views................................................. 399
Supplemental Material............................................ 401
Concurrent Resolution on the Budget--Fiscal Year 2018
(legislative text)............................................. 409
T A B L E S

Page
Summary Tables--Spending and Revenue:
Table 1. Fiscal Year 2018 Budget Resolution Total Spending
and Revenue................................................ 17
Table 2. Fiscal Year 2018 Budget Resolution Discretionary
Spending................................................... 20
Table 3. Fiscal Year 2018 Budget Resolution Mandatory
Spending................................................... 23
Direct Spending Trends and Reforms:
Table 4. Historical Means-Tested and Non Means-Tested Direct
Spending................................................... 34
Table 5. Projected Means-Tested and Non Means-Tested Direct
Spending................................................... 35
The Economy and Economic Assumptions:
Table 6. Economic Projections: Administration, CBO, and
Private Forecasters........................................ 45
Table 7. Economic Assumptions of the Fiscal Year 2018 Budget
Resolution................................................. 46
Revenue and Tax Reform:
Table 8. Tax Expenditure Estimates by Budget Function, Fiscal
Years 2016-2020............................................ 207
Unauthorized Spending Programs:
Table 9. Summary of Authorizations of Appropriations Expiring
on or Before 30 September 2017, by Appropriations
Submmittee................................................. 222
Table 10. Summary of Authorizations of Appropriations
Expiring on or Before 30 September 2017, by House
Authorizing Committee...................................... 222
The President's Budget: A Brief Summary:
Table 11. Summary of Fiscal Year 2018 Budget Resolution...... 316
Table 12. Fiscal Year 2018 House Budget Resolution vs. the
President's Budget......................................... 316
The Congressional Budget Process:
Table 13. Allocation of Spending Authority to House Committee
on Appropriations.......................................... 339
Table 14. Resolution by Authorizing Committee (On-budget
Amounts)................................................... 339

115th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 115-240

======================================================================

CONCURRENT RESOLUTION ON THE BUDGET--
FISCAL YEAR 2018

_______

ESTABLISHING THE BUDGET FOR THE UNITED STATES GOVERNMENT FOR FISCAL
YEAR 2018 AND SETTING FORTH APPROPRIATE BUDGETARY LEVELS FOR FISCAL
YEARS 2019 THROUGH 2027

_______

July 21, 2017.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed

_______

Mrs. Black, from the Committee on the Budget, submitted the following

R E P O R T

together with

MINORITY AND ADDITIONAL VIEWS

[To accompany H. Con. Res. 71]

INTRODUCTION

----------

Anyone paying attention these days, anyone willing to face
reality, knows the Federal Government's fiscal health is
reaching critical condition. Spending is rising at plainly
unsustainable rates. Deficits are about to begin swelling
again, exceeding $1 trillion annually within the next 10 years.
The government's publicly held debt, already at historically
high levels, is on course to exceed the size of the entire
economy in slightly more than a decade. The trust funds of the
two major social insurance programs--Social Security and
Medicare--are approaching depletion, which will force deep and
automatic cuts in benefits, as required by law. Meanwhile, last
year Washington paid out nearly $150 billion in benefits to the
wrong people, in the wrong amounts, or for the wrong reasons--
and that is very likely an underestimate.
The term ``unsustainable'' is used so often to describe the
government's fiscal path that it has almost lost its impact.
What it means is this: The increases in spending, deficits, and
debt cannot continue--and will not. Perhaps major programs will
collapse under their own weight. Perhaps investors in Treasury
bonds will begin demanding higher returns, further increasing
the cost of debt service. Alternatively, investors may begin
losing confidence in Washington's ability to correct its fiscal
course and take their money elsewhere, leaving the Federal
Government unable to finance its programs--an effect that could
cascade unexpectedly. Or perhaps the debt will so burden the
economy that growth stagnates altogether. In short, if
policymakers do not start making changes, and soon, the changes
will be imposed on the entire country--and they will be
unforgiving.
Some will doggedly oppose reform, branding it ``mindless
austerity.'' The government's deficit troubles can be fixed,
they will say, simply by raising taxes on the wealthy or
controlling health care costs with more government-imposed
regulation and price-fixing. They will claim to be protecting
government programs intended to serve the elderly or
vulnerable. Instead, they will only ensure the demise of those
very programs as they become unaffordable not only for the
government, but for the economy itself.
All that said, it is neither naive nor fanciful to see in
these challenges a once-in-a-generation opportunity--an
opportunity not only to correct the disastrous course of fiscal
policy, but to transform government itself. Anti-poverty
programs can cease trapping beneficiaries in dependency and
instead boost them toward self-sufficiency. Health care can be
freed from Washington's dictates to provide more choices and
better care at lowers costs. The Byzantine Federal tax code can
be revised and simplified to encourage work, saving, and
investment. Burdensome regulations can be discarded and bloated
bureaucracies trimmed. These changes should happen anyway, but
if the pressure of budgetary constraints drives them, so be it.
Indeed, budget and policy reforms go hand in hand. The right
kinds of reforms can significantly reduce costs, easing
government's constant pressure on taxpayers and helping
Congress toward the most sound and reliable of fiscal goals: a
balanced budget.
Meeting the government's fiscal challenges will be a
daunting task, requiring conviction and resolve. Governing is
hard. Then again, Members of Congress are elected not to do
what is easy, but to do what is right. This budget resolution
starts the process. It retains longstanding beliefs about
budgeting and governing. It reverses the drift toward excessive
spending and larger government; it reinforces the innovation
and creativity stirring in the myriad institutions and
communities across the country; and it revitalizes the
prosperity that creates ever-expanding opportunities for all
Americans to pursue their destinies. Like any good budget
resolution, this one expresses a vision of governing, and of
America itself. As described further in this report, this
fiscal blueprint follows these guidelines:

LBalancing the Budget. The resolution draws a path
toward a balanced budget within 10 years, without raising
taxes, and places the government on a fiscal course sustainable
for the long term. The national debt is already an impediment
to greater prosperity and a threat to the security of future
generations. This committee's budget significantly reduces
spending and reforms programs to put the government on a
sustainable spending path.

LPromoting Economic Growth. For the past eight
years, government has been a hindrance to economic growth. This
budget urges reversing this trend with a combination of pro-
growth policies, including deficit reduction, spending
restraint, comprehensive tax reform, welfare reform, Obamacare
repeal-and-replace legislation, and regulatory reform. All can
promote more robust growth over the longer term.

LEnsuring a Strong National Defense. Defending
America's security is the highest priority of the Federal
Government. To that end, this budget supports robust funding of
troop training, equipment, compensation, and improved
readiness.

LImproving the Sustainability of Medicare.
Notwithstanding Medicare's popularity, there are far better
ways to achieve the program's worthy goals. Retirees should be
able to choose the coverage plan best suited to their
particular needs, rather than accept a set of benefits dictated
by Washington. The program should ensure doctors and patients
make health care decisions for themselves, and promote
competition among insurers to expand choices of coverage and
restrain costs. Reforms such as these will have the added
benefit of improving Medicare's long-term financial condition,
ensuring it will be there for future generations.

LRestoring the Proper Role of State and Local
Governments. The resolution encourages the innovation and
creativity outside Washington. Under this budget, States and
localities would reclaim their rightful authority to tailor
programs in areas such as education, transportation, welfare,
and environmental stewardship. They possess not only the
ability but also the will to reform and modernize programs that
serve their citizens. The laboratories of democracy, not the
Federal Government, are where these reforms should happen.

LReforming Government Programs While Improving
Accountability. Every tax dollar collected by the Federal
Government was generated by private-sector economic activity.
Responsible stewardship of taxpayer dollars is a fundamental
component of the budget resolution. At every opportunity
possible, the budget reforms government programs and improves
accountability to while generating better outcomes for
Americans.

This resolution is more, however, than a symbolic,
philosophical statement. It is an instrument for governing. The
majorities in Congress are in a position to make their policy
goals a reality. The budget assumes Congress will support its
limits on spending growth by enforcing its allocations to
authorizing and appropriations committees. The resolution also
employs budget reconciliation to drive policy reforms and
achieve specified fiscal outcomes. By adhering to the
guidelines of the resolution, Congress can enact, not just
envision, a range of major policy reforms. Lawmakers could, for
example, begin the establishment of truly patient-centered
health care to replace Obamacare; reform the tax code; lighten
the yoke of the regulatory state; transform public assistance
programs so they promote self-sufficiency rather than expanding
dependency. The budget calls for action to reduce the
government's billions of dollars in improper payments, and to
slice away vast sums of unnecessary, obsolete, duplicative, and
nonsensical grants and spending programs. The budget aims to
make these policies real, and provides the means of doing so.
The policy changes to meet the budget's parameters will be
determined by the respective committees of jurisdiction. They
retain maximum flexibility in determining those specific
policies. The discussions in this report, while developed in
consultation with the authorizing and appropriations
committees, reflect purely illustrative options committees may
want to consider. Nothing in the report, or in the budget
resolution's reconciliation instructions, predetermines,
promotes, or assumes any specific policy change to be made.
Nevertheless, they may wish to consider these discussions I
constructing their proposals.
The guiding principles of the resolution follow in this
introduction.

Balancing the Budget

Since Republicans reclaimed the House Majority in 2011,
every House budget resolution has drawn a path to balance. As
Congress now turns to the fiscal year 2018 budget, the fiscal
outlook suffers from a weak economy, mounting pressure on
spending, and deeper projected deficits. Hence the task of
balancing the budget has become more difficult.

A Lackluster Economic Outlook. An expanding economy, which
boosts Federal revenue without tax increases, is essential for
deficit reduction. Just five years ago, the Congressional
Budget Office [CBO] projected real (inflation-adjusted)
economic growth would average 3 percent per year--roughly equal
to the historical trend rate. Every year since then, however,
CBO has ratcheted down its forecast, and now projects a
sluggish 1.9-percent average annual growth rate for the next 10
years--partly due to the Obama Administration's health care
plan, high spending, and heavy regulation. (See further
discussion in the section of this report titled ``The Economy
and Economic Assumptions.'')

Larger Projected Deficits. As recently as February 2013,
CBO projected deficits would total roughly $7.0 trillion for
the 10-year period of 2014 through 2023. In CBO's January 2017
budget outlook, the 10-year deficit projections had surged by
nearly $2.5 trillion, totaling $9.4 trillion for 2018 through
2027.\1\ (See Figure 1.)
---------------------------------------------------------------------------
\1\In CBO's updated budget outlook, published in June, the deficit
figure had worsened further, to $10.1 trillion over the next 10 years.
This budget, however, was constructed from CBO's January baseline, so
the discussion here employs those figures.

Relentless Mandatory Spending Pressure. In addition to the
sluggish economy, the principal drivers of these growing
deficits are the government's health, retirement, and income
security programs. By 2029, these programs, plus net interest,
are expected to consume all Federal tax revenue, meaning the
rest of the government's activities--defense, infrastructure,
research, and myriad others--will have to be financed on
---------------------------------------------------------------------------
borrowed money.

Greater Savings Needed. The fiscal year 2016 budget
resolution conference report (S. Con. Res. 11) reached balance
by proposing $5 trillion in savings, coupled with improved
economic growth due to deficit reduction and tax reform. Now,
just two years later, this fiscal year 2018 budget requires
$6.5 trillion in net deficit reduction over 10 years to reach
balance.
In short, balancing the budget will require improved
economic growth, bold program reforms, and a sustained
commitment to fiscal discipline. That is a major task facing
the 115th Congress.
This formula proved effective in the 1990s. Over the course
of that decade, Congress actually reduced annually appropriated
``discretionary'' spending after adjusting for inflation. In
1997, following two years of confrontation, President Clinton
finally joined the Republican Congress in striving to surpass
the timid and unsuccessful pursuit of mere deficit reduction
and commit to eliminating deficits--and to do so entirely
through spending restraint. The Balanced Budget Act of 1997 was
paired with tax cuts then estimated at $95.3 billion over five
years and $275.4 billion over 10 years.\2\ Perhaps not
surprisingly, economic growth surged: Growth in real gross
domestic product [GDP] exceeded 4 percent annually in the
latter part of the decade. With this combination, the plan to
reach balance in five years actually produced surpluses in one
year--surpluses that remained until the terrorist attacks of 11
September 2001.
---------------------------------------------------------------------------
\2\See the Conference Report on the ``Taxpayer Relief Act of 1997''
(H.R. 2014), p. 807.
---------------------------------------------------------------------------
Balancing the budget is not, however, merely a matter of
making numbers add up. It is an ethical commitment. As Nobel
Laureate James M. Buchanan wrote:

Politicians prior to World War II would have
considered it to be immoral (to be a sin) to spend more
than they were willing to generate in tax revenues,
except during periods of extreme and temporary
emergency. To spend borrowed sums on ordinary items for
public consumption was, quite simply, beyond the pale
of acceptable political behavior. There were basic
moral constraints in place; there was no need for an
explicit fiscal rule in the written constitution.\3\
---------------------------------------------------------------------------
\3\James M. Buchanan, ``Clarifying Confusion About the Balanced
Budget Amendment,'' National Tax Journal, Vol. 48, No. 3, September
1995, page 347.

When the typical family borrows, for a home or a new car or
college, they themselves assume the responsibility for their
own debt. When the government borrows chronically--as it has
been doing--it imposes the costs on future generations who have
no say in the matter and will receive no benefits from it. In
fact, they will be worse off due to the higher taxes and weaker
economic growth that result. What does that say about the
character of a government that encourages and perpetuates such
a practice?
While some ``experts'' dismiss the balanced budget standard
as a kind of quaint anachronism, nothing has come to replace it
as a consensus norm for budgeting. As a result, fiscal policy
has been adrift, and increasingly unsustainable. Some have
tried to substitute intellectually sophisticated concepts, such
trying limiting deficits or debt as a share of the economy--yet
there is no agreement on what the acceptable maximum levels
might be. Others have suggested allowing ``counter-cyclical''
policies in the near term while striving for ``long-term fiscal
sustainability''--with no sound definition of what the latter
means. This formula, of course, merely rationalizes spending
now while putting off restraint until later--so the restraint
never happens.
Today, in the absence of the balanced budget principle, the
only fiscal guideline is the modern, relativistic pay-as-you-go
concept, which merely ratifies existing deficits as the measure
of budgetary rectitude--no matter how large those deficits
might be. Thus, proponents of the Affordable Care Act could
boast the health care program was fiscally ``responsible''
because it did not increase deficits--which in 2010, the year
of its enactment, already exceeded a trillion dollars a year--
while it recklessly added trillions more to government
spending.
The durability of the balanced budget principle is
demonstrated even by the non-partisan Congressional Budget
Office itself. Every time the CBO publishes its regular updates
of budget and economic conditions, the first item it reports is
the magnitude of the deficit or surplus--that is, the
relationship between total outlays and total tax revenue. It is
the very same measure that underlies the balanced budget
standard: a simple comparison of current income and outgo.\4\
CBO's clear implication is that the more spending exceeds
revenue, and the more rapidly the two diverge, the more
unstable is the government's fiscal condition. There is simply
no more straightforward measure of the government's fiscal
health and stability.
---------------------------------------------------------------------------
\4\For example, the first three sentences of the summary in the
recent The Budget and Economic Outlook: 2017 to 2027 (p. 1) read as
follows: ``In fiscal year 2016, for the first time since 2009, the
federal budget deficit increased in relation to the nation's economic
output. The Congressional Budget Office projects that over the next
decade, if current laws remained generally unchanged, budget deficits
would eventually follow an upward trajectory--the result of strong
growth in spending for retirement and health care programs targeted to
older people and rising interest payments on the government's debt,
accompanied by only modest growth in revenue collections.''

FIGURE 1

FIGURE 2

If current policies remain unchanged, deficits are about to
begin surging, nearly tripling over the next decade. CBO's
January estimates project deficits swelling from $487 billion
in fiscal year 2018 to $1.4 trillion in 2027. As a share of
economic output, deficits will grow steadily as well, reaching
5 percent of gross domestic product [GDP] in fiscal year
2027.\5\ Debt held by the public will climb to $24.9 trillion
at the end of 10 years, or 88.9 percent of GDP--its highest
level since 1947 (see Figure 2). Gross Federal debt, which
includes funds owed to the Social Security Trust Fund and other
Federal accounts, is projected to rise from $20.4 trillion at
the end of 2017 to $30.0 trillion in 2027.\6\
---------------------------------------------------------------------------
\5\Congressional Budget Office, The Budget and Economic Outlook:
2017 to 2027, January 2017, Table 1-1, p. 10.
\6\Ibid., Table 1-4. p. 29.
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Make no mistake; this pattern is due to excessive spending,
not insufficient tax revenue. CBO's January figures show
revenue rising to 18.1 percent of GDP in 2018--well above the
17.4-percent average of the past 50 years. Revenue will remain
at that level through 2023, and then rise, reaching 18.4
percent of GDP in 2027. Nevertheless, spending will
consistently outpace these healthy tax collections. Even
excluding interest payments, programmatic government spending
will hit 19.1 percent of GDP in 2018, then rise throughout the
decade, to 20.8 percent of GDP in 2027. Because of the chronic
borrowing to finance government operations, debt service will
add to the problem: With interest payments included, spending
rises from 20.5 percent of GDP in 2018 to 23.4 percent in
2027.\7\
---------------------------------------------------------------------------
\7\Congressional Budget Office, The Budget and Economic Outlook:
2017 to 2027, Table 1-1, p. 10.
---------------------------------------------------------------------------
The trend persists for the longer term. While CBO projects
tax revenue rising to historically high levels--averaging 19.3
percent of GDP in the decade of 2038 through 2047--programmatic
spending will still outgrow revenue. Adding debt service drives
total spending to 28 percent of GDP, generating relentlessly
deepening deficits and growing debt.\8\
---------------------------------------------------------------------------
\8\Congressional Budget Office, The 2017 Long-Term Budget Outlook,
June 2017, Table 1.
---------------------------------------------------------------------------
Only by controlling spending can Congress alter this
catastrophic course.
In the face of this fiscal onslaught, doing nothing invites
financial disaster. A rising debt level is unsustainable
because its growth eventually begins to exceed that of the
overall economy. As a result, debt service costs absorb an
increasing share of national income and the government must
borrow an increasing amount each year--likely in the face of
rising interest rates--to both fund its ongoing services and
make good on its previous debt commitments. Ultimately, this
dynamic leads to a decline in national saving and a ``crowding
out'' of private investment, sapping economic output and
diminishing the country's standard of living. In a worst-case
scenario, this dynamic could also lead to a full-blown debt
crisis, devastating at the macroeconomic level and acutely
painful for families and businesses.
Investors and businesses look forward in making their
decisions. They recognize today's large debt levels are simply
tomorrow's tax hikes, interest rate increases, or inflation--
and they act accordingly. This debt overhang, and the
uncertainty it generates, weighs on growth, investment, and job
creation.
Interest payments on the debt (the ``legacy cost'' of
deficit spending) will total a staggering $5.2 trillion over
the next decade, according to CBO.\9\ These payments threaten
to overwhelm other spending priorities in the budget. In 2012,
Deloitte LLP--a tax, audit and consulting firm--discussed the
ways in which debt will hamper U.S. competitiveness in the
years ahead.
---------------------------------------------------------------------------
\9\Ibid., Table 1-1, p. 10.

[A] great variety of meaningful investments will
almost certainly be left undone simply because interest
payments will push them out of the budget. This is the
silent cost of prior debts that, unless explicitly
recognized, crucially leads policymakers to
underestimate the effect that prior deficits have
already had on this decades planned expenditures.\10\
---------------------------------------------------------------------------
\10\Deloitte LLP, The Untold Story of America's Debt, June 2012.

Debt service is already projected to dominate the budget.
Within a decade, the Federal Government will reach a point at
which it spends more on interest payments than it does on
national defense, Medicaid, education, or infrastructure, among
others (see Figure 3). Interest on the debt will become the
government's third largest program, following only Social
Security and Medicare.
All these factors point to the need for returning to the
balanced budget standard. It is the only clear fiscal guideline
that commands a consensus of public understanding and support.
All other formulations are merely ways of rationalizing
continued deficit spending. A balanced budget is also the
sturdiest means of limiting government. A balanced budget
commitment establishes real-time restraint on the expansion of
the public sector: The size and scope of government, as
measured by its spending, may not exceed the amount taxpayers
endorse and the economy sustains. This empowers the people, on
an ongoing basis, to hold their government in check.

FIGURE 3

The pursuit of balance has distinct economic and fiscal
benefits as well. Nearly all economists, including those at the
CBO, explain that reducing budget deficits (bending the curve
on debt levels) increases the pool of national savings and
boosts investment, thereby raising economic growth and job
creation. The greater economic output that stems from a large
deficit reduction package would have a sizeable impact on the
Federal budget. For instance, higher output would lead to
greater revenues through the increase in taxable incomes. Lower
interest rates, and a reduction in the stock of debt, would
lead to lower government spending on net interest expenses.
(See the section in this report titled ``Macroeconomic Feedback
Effects of Pro-Growth Policies.'')
For all these reasons, this budget resolution reasserts the
balanced budget standard, and then maintains it--putting the
government on a path to paying off the debt.

Mandatory Spending Programs

Just as important as pursuing balance is the way in which
lawmakers achieve it. Some experts and policymakers advocate a
mix of spending restraint and tax increases--the so-called
``balanced'' approach--as if the two were merely opposite sides
of the same coin. That sterile, policy-neutral concept,
however, masks the fundamental cause and effect of government
budgeting: Spending comes first. Spending--one of the best
measures of the size and scope of government--is how government
does what it does. Government's programs and activities exist
only if government spends money to implement them. ``In a
fundamental sense,'' writes longtime budget expert Allen
Schick, ``the federal government is what it spends.''\11\ It is
because of spending that the government taxes and borrows.
Hence, spending is the root cause of all other fiscal
consequences.
---------------------------------------------------------------------------
\11\Allen Schick, The Federal Budget: Politics, Policy, Process
(Washington DC: The Brookings Institution Press, 2007), page 2.
---------------------------------------------------------------------------
Today, gaining control of spending unquestionably requires
controlling mandatory, or direct, spending. Unlike the
government's ``discretionary'' accounts, for which Congress
sets fixed limits on total budget authority, direct spending is
open-ended and flows from effectively permanent authorizations.
Programs funded this way pay benefits directly to groups or
individuals without an intervening appropriation. They spend
without limit. Their totals are determined by numerous factors
outside the control of Congress: caseloads, the growth or
contraction of GDP, inflation, and many others. To put it
simply, the design of direct spending makes it especially
difficult to control.
The list of these programs is long and broad. It includes
the social insurance programs, Social Security and Medicare;
other health spending, such as Medicaid and the Affordable Care
Act; income support, nutrition assistance, unemployment
compensation, disability insurance, student loans, and a range
of others.
In 1965, as President Johnson's Great Society programs were
being enacted, net direct spending (including interest)
represented about 34 percent of the budget. By last year, this
form of spending had doubled as a share of the budget, reaching
69 percent. By 2040, direct spending, coupled with interest
payments, will constitute more than four-fifths of total
Federal spending (see Figure 4).

Clearly this problem with direct spending has been building
for decades, yet lawmakers have found it difficult to build an
enduring consensus for addressing it. With each year that
passes, spending control becomes more difficult, because the
necessary changes in programs become larger and more wrenching.
At some point the programs will simply collapse under their own
weight. Those who claim to ``protect'' them by resisting reform
only ensure their demise.
Controlling mandatory spending need not be seen, however,
as some daunting exercise in ``mindless austerity,'' as former
President Obama so ominously put it. As long as reform is
necessary, it can be approached as an opportunity to save and
strengthen these programs--to make them better for the people
they are intended to serve.

FIGURE 4

Consider a few examples.
This resolution assumes enactment of the American Health
Care Act [AHCA], recently passed by the House. The AHCA serves
as a fundamental transformation of health care policy--away
from the domineering, nationalized approach of Obamacare toward
a strategy that places patients at the center of health care.
To put this another way: ``In a nation of over 323 million
people, each with different needs and circumstances, it makes
no sense for one federal agency to dictate the contents of
every American's health insurance plan.''\12\ The American
Health Care Act removes a bureaucratically designed one-size-
fits-all scheme and promotes a greater range of choices, at
lower costs, for all Americans.
---------------------------------------------------------------------------
\12\The Speaker's Health Care Reform Task Force, A Better Way: Our
Vision for a Confident America--Health Care, 22 June 2016, p. 12.
---------------------------------------------------------------------------
In a similar way, the budget envisions a new Medicare
option that would transform this retirees' health coverage
program from a government-run, price-controlled bureaucracy to
a personalized system in which seniors have the option of
choosing the health coverage best suited to their needs from a
range of commercial plans. Traditional fee-for-service Medicare
would always be an option available to current seniors, those
near retirement, and future generations of beneficiaries. Fee-
for-service Medicare, along with private plans providing the
same level of health coverage, would compete for seniors'
business, just as Medicare Advantage does today. The new
program, however, would also adopt the competitive structure of
Medicare Part D, the prescription drug benefit program, to
deliver savings for seniors in the form of lower monthly
premium costs.
In short, this Medicare reform would give retired
Americans, not the government, the ultimate leverage over what
kind of coverage they will have--and the government would
provide them financial assistance in making the choices.
Another area of automatic spending, assistance for low-
income Americans, should be revised to encourage self-
sufficiency, not to trap people in dependency. Clearly, persons
with chronic disadvantages need and deserve a sturdy safety
net. Others require assistance at particular times of economic
downturns or personal misfortune. Still, the most compassionate
way to provide government assistance is to help free
individuals from the need for it. Welfare programs should
encourage recipients toward supporting themselves to the
greatest degree possible. As was proved with the successful
welfare reform of the 1990s, when struggling people are
challenged to work and earn on their own way, they rise to the
occasion--and they are better off for it.
It should be noted, too, that government is not the sole
source of the many domestic benefits Americans receive; it is
not even the primary one. Every benefit the government
ostensibly ``provides'' actually draws from the abundant
resources of the Nation's economy. The government could not
maintain Medicare, or Social Security, or its numerous safety
net programs without the funding generated by free markets.
Communities could not build schools and hospitals without local
economies sufficiently prosperous to support them. This is why
the fiscal policy of this budget--restraining spending and
reducing deficits--is crucial to the well-being of all
Americans. Those who strive to pull themselves out of
difficulties benefit most from the expanding opportunities and
rising incomes that only a prosperous economy can provide.
Finally, policymakers must embrace the recognition that
government can never substitute for nature's safety net: the
family. For generation upon generation, the family has been the
main source of comfort, security, and economic stability for
the individual. It is where moral values and a sense of
responsibility grow. The family reinforces the individual's
place in the larger community. As government seeks to support
those who lose any connection to a family, it should take care
not to contribute to the dissolution of families. Government
programs should aim to strengthen the family, the most
important and enduring institution in society.

Restoring the Role of State and Local Governments

The republic of the United States reached a turning point
in 1936: That was the first peacetime year in which the Federal
Government's total spending exceeded the combined outlays of
the State and local governments. ``It can even be argued that
one year--1936--created the modern entitlement challenge that
so bedevils both parties.''\13\
---------------------------------------------------------------------------
\13\Amity Shlaes, The Forgotten Man: A New History of the Great
Depression (New York: Harper Perennial, 2008), page 11.
---------------------------------------------------------------------------
As the 20th century unfolded, the national government's
dominance--both fiscally and as the central governing
authority--expanded. This was understandable during times of
war, especially World War II, when the entire Nation was under
threat. The notion continued to expand, however, into an ever-
growing range of domestic policies. President Roosevelt's New
Deal was a major step. Later came President Truman's pursuit of
nationalized health care, and President Johnson's Great
Society. By the late 1980s, health care once again came to the
fore, with some proposing a single-payer Canadian-style system
for the United States. The trend culminated with Obamacare.
Over time, States in some respects have been reduced to
carrying out the wishes of Washington, rather than serving as
the ``laboratories of democracy.'' This is precisely contrary
to the Founders' vision:

The powers delegated by the proposed Constitution to
the Federal Government, are few and defined. Those
which are to remain in the State governments are
numerous and indefinite. The former will be exercised
principally on external objects, as war, peace,
negotiation, and foreign commerce; with which last the
power of taxation will, for the most part, be
connected. The powers reserved to the several States
will extend to all the objects which, in the ordinary
course of affairs, concern the lives, liberties, and
properties of the people, and the internal order,
improvement, and prosperity of the State.\14\
---------------------------------------------------------------------------
\14\Federalist No. 45.

As succinctly put in the Tenth Amendment: ``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.''
Indeed, Madison argued the Federal Government would depend
on the States--not the other way around: ``The State
governments may be regarded as constituent and essential parts
of the Federal Government; whilst the latter is nowise
essential to the operation or organization of the former.''\15\
This point is proved in reality by the countless activities,
essential to the lives of individuals and communities, that
predated the national government and would continue without it.
Even if the 50 States stood as separate entities, they would
still operate schools and hospitals; they would find ways to
build roads and bridges; scientific research would continue;
energy and communications companies would emerge.
---------------------------------------------------------------------------
\15\Ibid.
---------------------------------------------------------------------------
This is not to say Americans would be better off without
the Federal Government. Their security and prosperity are
vastly enhanced by the voluntary unity reflected in the bonds
of the national Constitution. The point is simply that the
Federal Government's principal role is to protect the security
of the Nation, and to maintain an environment that supports the
initiative and creativity possible only through the diversity
of the several States and the bonds of civil society.
The reversal of this concept that developed over the past
100 years or so also has fiscal consequences. Federal
Government resources cannot maintain the overreach of its
governing ambitions. That is the message of Washington's
current, catastrophic spending path. To restore fiscal
sustainability, Congress sooner or later will have to consider
realigning the roles of different levels of government. It will
have to reinstitute the practice of federalism.
This will remain a necessity even if Congress gains control
of direct spending. Yet the fiscal concerns are only part of
the reason. The increasing centralization of government
smothers the energy of State and local policymakers. Restoring
State autonomy will deliver benefits for the entire Nation in
critical areas such as education, health care, infrastructure,
energy, the environment, and employment.
The budget resolution supports these aims. It promotes
State flexibility in areas such as Medicaid and the
Supplemental Nutrition Assistance Program. It encourages State
and local initiative in education. It sheds the conceit that
Washington knows what is right for the people. The very
structure of this report reflects a distinction between those
activities required of the Federal Government from those best
suited to States and localities and the private sector (see the
explanation in the section titled ``Functional Presentation'').

Restoring Congressional Budgeting

The congressional budget process, enacted in 1974, has
rarely worked as designed. Deadlines in the Congressional
Budget Act are missed far more often than made, rules are often
skirted, loopholes in spending disciplines exploited. Since
1998, the House and Senate have failed 10 times to agree on a
budget resolution, the cornerstone of the process.
Congressional budgeting by the early 1970s was already
complicated, and the 1974 Act added new procedures onto
existing spending and tax practices. Since then, Congress has
enacted additional layers, such as the Balanced Budget and
Emergency Deficit Control Act of 1985, the Budget Enforcement
Act of 1990, and the Statutory Pay-As-You-Go Act of 2010, among
others. Given all this, it may be time to dismantle the entire
process and build a new one. The lessons of the past four
decades of congressional budgeting will certainly inform that
development. Still, in thinking about a new process, lawmakers
should step back and ask a threshold question: What is the
congressional budget process for?
The obvious first answer is fiscal control. That, however,
is part of a more fundamental act: the act of governing.
Because budgeting truly is governing, the budget process should
be seen as a principal means of exercising constitutional
government. The Constitution does not prescribe how big
government should be, but it does establish a framework for
limiting government. One of the best ways to determine that
limit is to limit spending--one of the clearest measures of the
size and scope of government.
The budget also is Congress's main instrument for
policymaking, the legislature's essential authority. ``This
power of the purse may, in fact, be regarded as the most
complete and effectual weapon with which any constitution can
arm the immediate representatives of the people, for obtaining
a redress of every grievance, and for carrying into effect
every just and salutary measure.''\16\ Any new budget process
should enhance Congress's policymaking role.
---------------------------------------------------------------------------
\16\Federalist, No. 58.
---------------------------------------------------------------------------
The process also must reinforce the balance of powers, one
of the most critical protections of liberty. For nearly a half
century after enactment of the 1921 Budget and Accounting Act--
which attempted to straddle the separation of powers by
establishing an executive-centered budget process modeled after
Great Britain's--the presidency grew increasingly powerful.
Starting in the 1950s, presidents began deliberately tying
their budgets together with their legislative programs,
increasing their ability to set the legislative agenda, and
helping sustain what Schlesinger called ``the imperial
presidency.''\17\ The 1974 Congressional Budget Act was, in
part, an attempt to restore the legislature's agenda-setting
role. Any new budget process should advance that effort.
---------------------------------------------------------------------------
\17\Arthur M. Schlesinger Jr., The Imperial Presidency, (New York:
Houghton Mifflin Company, 2004).
---------------------------------------------------------------------------
Budgeting also should be an instrument for enhancing
congressional oversight. There is no better way to get the
attention of executive agencies than by controlling their
funding. The budget process should encourage appropriations
subcommittees and authorizing committees to use the tool of the
budget aggressively, and to control the ever-expanding
administrative state.
Finally, just as the restoration of sound budgeting for how
the Federal Government spends is critical to the promotion of
economic growth, debt-reduction, federalism, and ordered
liberty, so too is the introduction of budgeting for how the
Federal Government directs others to spend: regulatory
budgeting.
When regulation is needed, it can be done in more cost-
effective ways. Before it is imposed, Congress can budget for
how much new regulation, if any, can sustainably be imposed on
America's economy year by year. It makes eminent sense to do
that using the kinds of budgeting tools Congress applies to put
the brakes on runaway Federal spending. To date, Congress has
not adopted regulatory budgeting tools to manage the Federal
regulatory footprint. Neither has it imposed robust statutory
controls against Federal regulators' abilities to burden
America's workers and economy with excessively expensive and
insufficiently effective Federal regulations. The time has come
to do both.

Conclusion

As described at the outset, this budget resolution
expresses a vision; its contours are detailed throughout the
text of this report. It is also an instrument for realizing
that vision. Its allocations of spending authority implement
the budget's priorities; its fiscal path--achieving balance
within 10 years--restores the sound fiscal norm that long kept
spending, and the size of government itself, in check. It is an
instrument for true fiscal sustainability, and for maintaining
America's unique and exceptional brand of constitutional
government.

TABLE 1.--FISCAL YEAR 2018 BUDGET RESOLUTION TOTAL SPENDING AND REVENUE
[In millions of dollars]
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal year 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2018-2022 2018-2027
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
SUMMARY
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total spending:
BA...................................................... 4,096,933 4,210,736 4,286,076 4,344,146 4,567,485 4,685,904 4,810,056 5,019,533 5,198,404 5,370,264 21,505,376 46,589,537
OT...................................................... 4,024,170 4,184,625 4,263,701 4,371,392 4,560,681 4,662,535 4,771,559 4,976,995 5,172,531 5,344,567 21,404,569 46,332,757
On-budget:
BA...................................................... 3,232,597 3,286,018 3,299,573 3,290,186 3,441,975 3,483,686 3,528,872 3,655,413 3,746,208 3,824,652 16,550,350 34,789,180
OT...................................................... 3,164,885 3,265,306 3,283,026 3,323,464 3,441,603 3,467,047 3,497,308 3,620,210 3,727,971 3,806,792 16,478,284 34,597,612
Off-budget:
BA...................................................... 864,336 924,717 986,503 1,053,959 1,125,510 1,202,219 1,281,184 1,364,120 1,452,197 1,545,612 4,955,026 11,800,357
OT...................................................... 859,285 919,319 980,675 1,047,928 1,119,078 1,195,488 1,274,251 1,356,785 1,444,561 1,537,776 4,926,286 11,735,146
Revenues:
Total................................................... 3,542,479 3,668,467 3,796,957 3,920,337 4,066,811 4,219,233 4,386,477 4,574,285 4,784,571 4,993,388 18,995,051 41,953,005
On-budget............................................... 2,670,356 2,767,357 2,870,414 2,963,953 3,077,586 3,195,139 3,325,690 3,475,784 3,642,629 3,811,687 14,349,666 31,800,595
Off-budget.............................................. 872,123 901,110 926,543 956,384 989,225 1,024,094 1,060,787 1,098,501 1,141,942 1,181,701 4,645,385 10,152,410
Recommended Change in Revenues (vs. CBO Baseline):
Total................................................... -61,209 -64,517 -81,260 -98,684 -109,109 -126,636 -140,283 -150,125 -146,865 -146,800 -414,779 -1,125,488
On-budget............................................... -63,213 -66,151 -80,162 -95,958 -105,330 -122,777 -136,738 -146,394 -146,749 -146,700 -410,814 -1,110,172
Off-budget.............................................. +2,004 +1,634 -1,098 -2,726 -3,779 -3,859 -3,545 -3,731 -116 -100 -3,965 -15,316
Surplus/Deficit(-):
Total................................................... -471,691 -496,158 -436,744 -381,055 -393,870 -293,302 -175,082 -152,710 -87,960 8,821 -2,179,518 -2,879,752
Macroeconomic Impact on the Deficit..................... 10,000 20,000 30,000 70,000 100,000 150,000 210,000 250,000 300,000 360,000 230,000 1,500,000
On-budget............................................... -494,529 -497,949 -412,612 -359,511 -364,017 -271,908 -171,618 -144,426 -85,342 4,895 -2,128,618 -2,797,017
Off-budget.............................................. 12,838 -18,209 -54,132 -91,544 -129,853 -171,394 -213,464 -258,284 -302,619 -356,075 -280,901 -1,582,736
Debt Held by the Public (end of year)..................... 15,399,966 15,971,804 16,477,150 16,920,847 17,371,706 17,720,326 17,949,306 18,156,356 18,299,466 18,345,826
Debt Subject to Limit (end of year)....................... 21,059,756 21,720,619 22,263,387 22,717,657 23,120,068 23,414,924 23,577,205 23,665,687 23,701,446 23,484,672
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
BY FUNCTION
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
National Defense (050):
BA...................................................... 629,595 660,832 693,646 728,125 731,818 735,468 739,157 742,886 747,414 751,098 3,444,016 7,160,038
OT...................................................... 607,810 636,795 666,519 698,761 717,568 720,401 720,755 729,581 734,037 737,798 3,327,453 6,970,025
International Affairs (150):
BA...................................................... 41,521 40,210 39,428 38,654 37,623 38,445 39,285 40,174 41,121 42,025 197,436 398,486
OT...................................................... 43,643 41,207 39,965 38,585 38,021 37,795 38,102 38,643 39,365 40,175 201,421 395,501
General Science, Space and Technology (250):
BA...................................................... 28,524 29,107 29,702 30,346 31,018 31,694 32,378 33,112 33,854 34,602 148,697 314,337
OT...................................................... 30,072 29,365 29,360 29,718 30,259 30,797 31,325 31,928 32,550 33,162 148,774 308,536
Energy (270):
BA...................................................... -3,088 1,704 -11,179 1,871 1,705 754 437 -4 2,233 2,324 -8,987 -3,243
OT...................................................... 2,559 1,714 -11,813 786 445 -491 -727 -1,052 1,207 1,370 -6,309 -6,002
Natural Resources & Environment (300):
BA...................................................... 31,720 31,856 33,255 32,704 34,295 34,684 34,598 35,520 36,186 36,742 163,830 341,560
OT...................................................... 35,641 33,751 33,581 32,652 33,909 34,186 34,081 34,921 35,526 36,078 169,534 344,326
Agriculture (350):
BA...................................................... 24,223 21,091 19,786 18,217 17,835 18,153 18,880 19,863 20,214 20,422 101,152 198,684
OT...................................................... 22,913 20,200 19,293 17,660 17,339 17,713 18,331 19,225 19,593 19,817 97,405 192,084
Commerce & Housing Credit (370):
On-budget:
BA.................................................... -7,287 -7,517 -10,358 -13,446 -12,880 -12,330 -10,989 -10,255 -11,141 -11,933 -51,488 -108,136
OT.................................................... -19,601 -15,753 -18,126 -22,106 -22,470 -22,598 -22,362 -22,849 -23,569 -24,521 -98,056 -213,955
Off-budget:
BA.................................................... -2,816 -2,850 -5,083 -5,375 -5,646 -5,813 -5,979 -6,153 -6,358 -6,669 -21,770 -52,742
OT.................................................... -2,815 -2,848 -5,081 -5,374 -5,645 -5,811 -5,977 -6,152 -6,357 -6,667 -21,763 -52,727
Transportation (400):
BA...................................................... 88,095 88,892 82,748 37,190 66,950 66,895 67,483 68,481 69,714 70,948 363,875 707,396
OT...................................................... 91,796 90,602 90,508 77,995 65,076 68,694 69,617 69,074 69,044 69,741 415,977 762,147
Community & Regional Development (450):
BA...................................................... 4,365 4,170 4,240 4,353 4,487 4,556 4,673 4,857 5,077 4,953 21,615 45,731
OT...................................................... 18,626 16,983 11,842 9,558 6,386 5,090 4,745 4,767 4,805 4,809 63,395 87,611
Education,Training,Employment,and Social Services (500):
BA...................................................... 69,920 79,090 80,305 81,922 82,350 86,279 86,641 86,977 87,459 88,216 393,587 829,159
OT...................................................... 89,295 81,404 81,129 82,479 83,539 85,843 87,897 88,522 89,186 90,080 417,846 859,374
Health (550):
BA...................................................... 579,328 564,387 552,405 512,289 528,560 547,998 571,335 594,923 618,119 623,810 2,736,969 5,693,154
OT...................................................... 551,277 570,419 541,949 518,445 533,688 549,687 569,207 591,171 613,682 626,774 2,715,778 5,666,299
Medicare (570):
BA...................................................... 593,830 652,984 692,126 739,367 826,276 845,800 850,393 916,244 988,183 1,053,671 3,504,583 8,158,874
OT...................................................... 593,567 652,740 691,917 739,161 826,057 845,593 850,177 916,009 987,942 1,053,435 3,503,442 8,156,598
Income Security (600):
BA...................................................... 491,789 464,425 475,015 484,414 492,453 475,767 484,425 493,048 502,057 511,675 2,408,096 4,875,068
OT...................................................... 477,428 454,786 464,925 475,140 489,299 468,217 471,370 480,920 496,505 505,382 2,361,578 4,783,972
Social Security (650):
On-budget:
BA.................................................... 39,475 43,016 46,287 49,748 53,392 57,378 61,764 66,388 70,871 75,473 231,918 563,792
OT.................................................... 39,475 43,016 46,287 49,748 53,392 57,378 61,764 66,388 70,871 75,473 231,918 563,792
Off-budget:
BA.................................................... 966,037 1,024,166 1,086,433 1,152,744 1,222,514 1,295,244 1,371,263 1,450,496 1,533,384 1,619,909 5,451,894 12,722,190
OT.................................................... 960,983 1,018,765 1,080,602 1,146,712 1,216,081 1,288,510 1,364,328 1,443,160 1,525,746 1,612,071 5,423,143 12,656,958
Veterans Benefits and Services (700):
BA...................................................... 176,704 191,507 194,930 199,751 215,442 212,567 209,943 227,991 234,947 243,718 978,334 2,107,500
OT...................................................... 178,038 190,235 193,931 197,856 213,337 210,444 207,908 225,820 232,660 241,501 973,397 2,091,730
Administration of Justice (750):
BA...................................................... 51,367 58,245 59,720 61,054 62,092 63,671 65,285 66,947 69,907 70,270 292,478 628,558
OT...................................................... 61,079 58,867 60,036 60,946 61,925 63,462 65,043 66,498 70,200 69,722 302,853 637,778
General Government (800):
BA...................................................... 23,564 23,948 23,557 23,386 23,127 26,420 26,351 26,246 26,083 25,855 117,582 248,537
OT...................................................... 23,091 23,314 23,303 23,190 23,013 26,057 26,168 26,060 25,917 25,722 115,911 245,835
Net Interest (900):
On-budget:
BA.................................................... 376,842 409,185 450,859 493,778 531,929 565,282 589,292 607,012 620,536 623,786 2,262,594 5,268,502
OT.................................................... 376,842 409,185 450,859 493,778 531,929 565,282 589,292 607,012 620,536 623,911 2,262,594 5,268,627
Off-budget:
BA.................................................... -81,548 -78,697 -76,363 -74,350 -71,711 -66,958 -63,222 -58,701 -52,643 -44,758 -382,668 -668,951
OT.................................................... -81,548 -78,697 -76,363 -74,350 -71,711 -66,958 -63,222 -58,701 -52,643 -44,758 -382,668 -668,951
Allowances (920):
BA...................................................... -44,505 -42,219 -45,246 -48,056 -50,544 -52,326 -53,659 -55,439 -51,908 -55,254 -230,570 -499,156
OT...................................................... -23,272 -34,499 -40,640 -44,164 -47,877 -49,819 -51,411 -53,060 -52,127 -53,919 -190,452 -450,788
Government-Wide Savings (930):
BA...................................................... 34,145 -1,555 -67,381 -120,155 -153,376 -174,438 -194,373 -193,336 -246,573 -258,801 -308,322 -1,375,843
OT...................................................... 2,778 -2,528 -47,665 -97,069 -137,459 -159,489 -179,541 -187,355 -223,016 -240,977 -281,943 -1,272,321
Undistributed Offsetting Receipts (950):
On-budget:
BA.................................................... -83,212 -86,409 -86,316 -90,347 -93,573 -100,001 -105,371 -115,139 -117,033 -127,808 -439,857 -1,005,209
OT.................................................... -83,212 -86,409 -86,316 -90,347 -93,573 -100,001 -105,371 -115,139 -117,033 -127,808 -439,857 -1,005,209
Off-budget:
BA.................................................... -17,326 -17,890 -18,472 -19,048 -19,635 -20,241 -20,865 -21,509 -22,172 -22,856 -92,371 -200,014
OT.................................................... -17,326 -17,890 -18,472 -19,048 -19,635 -20,241 -20,865 -21,509 -22,172 -22,856 -92,371 -200,014
Overseas Contingency Operations/Global War on Terrorism (970):
BA...................................................... 86,591 60,000 43,000 26,000 12,000 12,000 12,000 0 0 0 227,591 251,591
OT...................................................... 45,781 50,748 43,076 31,635 18,768 13,799 11,957 4,171 1,160 165 190,008 221,260
Across the Board Adjustment (990):
On-budget:
BA.................................................... -909 -931 -956 -979 -1,004 -1,030 -1,056 -1,083 -1,112 -1,140 -4,779 -10,200
OT.................................................... -740 -837 -895 -944 -968 -993 -1,018 -1,045 -1,070 -1,099 -4,384 -9,609
Off-budget:
BA.................................................... -11 -12 -12 -12 -12 -13 -13 -13 -14 -14 -59 -126
OT.................................................... -9 -11 -11 -12 -12 -12 -13 -13 -13 -14 -55 -120
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Notes:

1. Only on-budget amounts for fiscal years 2018-2027 are entered into the budget resolution legislative text. Off-budget amounts are shown for display purposes only.
2. The Office of Management and Budget and the Congressional Budget Office do not separately track outlays for Overseas Contingency Operations/Global War on Terrorism (GWOT) once funds have been appropriated. The budget, therefore,
shows in function 970 OCO/GWOT outlays that result from new budget authority occurring in fiscal years 2018-2027 only. Outlays resulting from OCO/GWOT activity prior to fiscal year 2017 are included in budget functions 050 and
150.

TABLE 2.--FISCAL YEAR 2018 BUDGET RESOLUTION DISCRETIONARY SPENDING
[In millions of dollars]
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal year 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2018-2022 2018-2027
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
SUMMARY
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total spending:
BA...................................................... 1,219,896 1,222,022 1,193,737 1,183,604 1,168,176 1,166,265 1,163,587 1,159,312 1,159,356 1,164,130 5,987,435 11,800,084
OT...................................................... 1,249,478 1,277,039 1,262,142 1,239,131 1,212,860 1,204,530 1,196,357 1,195,544 1,193,811 1,197,352 6,240,650 12,228,245
Base Defense (050):
BA...................................................... 621,500 652,575 685,204 719,464 722,964 726,464 729,964 733,464 736,964 740,464 3,401,707 7,069,026
OT...................................................... 599,410 628,198 657,708 689,706 708,294 711,055 711,338 720,002 723,493 727,057 3,283,316 6,876,261
Base Non Defense:
BA...................................................... 510,749 508,666 464,966 437,666 432,666 426,666 421,166 425,666 422,166 423,666 2,354,713 4,474,043
OT...................................................... 603,733 597,360 560,722 517,258 485,258 478,821 472,387 470,994 468,883 469,993 2,764,332 5,125,410
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
BY FUNCTION
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
National Defense (050):
BA...................................................... 621,500 652,575 685,204 719,464 722,964 726,464 729,964 733,464 736,964 740,464 3,401,707 7,069,026
OT...................................................... 599,410 628,198 657,708 689,706 708,294 711,055 711,338 720,002 723,493 727,057 3,283,316 6,876,261
International Affairs (150):
BA...................................................... 36,320 36,486 36,630 36,794 37,612 38,416 39,229 40,103 40,997 41,891 183,842 384,478
OT...................................................... 47,318 44,203 42,138 39,863 39,225 38,994 39,305 39,863 40,565 41,395 212,747 412,869
General Science, Space and Technology (250):
BA...................................................... 28,417 29,007 29,602 30,246 30,918 31,594 32,278 33,012 33,754 34,502 148,190 313,330
OT...................................................... 29,967 29,263 29,260 29,618 30,159 30,697 31,225 31,828 32,450 33,062 148,267 307,529
Energy (270):
BA...................................................... 3,438 3,204 3,165 3,175 3,203 3,322 3,617 3,385 3,468 3,547 16,185 33,524
OT...................................................... 5,701 4,803 4,010 3,492 3,199 3,169 3,482 3,264 3,364 3,470 21,205 37,954
Natural Resources & Environment (300):
BA...................................................... 31,335 32,088 32,963 33,879 34,791 35,739 36,733 37,737 38,792 39,884 165,056 353,941
OT...................................................... 34,609 33,511 33,230 33,736 34,423 35,262 36,172 37,141 38,144 39,212 169,509 355,440
Agriculture (350):
BA...................................................... 6,360 6,526 6,692 6,868 7,048 7,234 7,423 7,624 7,830 8,035 33,494 71,640
OT...................................................... 6,199 6,440 6,613 6,786 6,960 7,145 7,329 7,517 7,721 7,925 32,998 70,635
Commerce & Housing Credit (370):
On-budget:
BA.................................................... -16,407 -15,730 -14,773 -14,111 -13,473 -13,032 -12,062 -11,410 -11,414 -11,523 -74,494 -133,935
OT.................................................... -15,825 -15,568 -14,873 -14,217 -13,578 -13,144 -12,177 -11,529 -11,540 -11,656 -74,061 -134,107
Off-budget:
BA.................................................... 275 284 294 304 315 325 336 348 360 372 1,472 3,213
OT.................................................... 274 284 294 304 315 325 336 347 359 371 1,471 3,209
Transportation (400):
BA...................................................... 28,517 28,660 29,111 28,911 28,599 28,482 28,525 28,999 28,073 28,767 143,798 286,644
OT...................................................... 90,618 90,082 90,423 78,412 65,970 70,055 71,454 71,408 70,257 71,430 415,505 770,109
Community & Regional Development (450):
BA...................................................... 5,132 5,128 5,279 5,415 5,546 5,689 5,830 5,979 6,139 6,295 26,500 56,432
OT...................................................... 19,601 17,625 12,711 10,558 7,192 6,030 5,823 5,963 6,140 6,337 67,687 97,980
Education, Training, Employment, and Social Services
(500):
BA...................................................... 80,373 91,865 93,529 95,235 96,936 98,719 100,514 102,409 104,327 106,210 457,938 970,117
OT...................................................... 91,328 91,159 92,126 93,680 95,371 97,079 98,861 100,697 102,575 104,480 463,664 967,356
Health (550):
BA...................................................... 61,560 61,785 62,417 63,026 63,637 64,185 64,664 65,186 65,649 66,033 312,425 638,142
OT...................................................... 61,269 61,300 61,572 61,853 62,195 62,583 62,947 63,281 63,678 64,018 308,189 624,696
Medicare (570):
BA...................................................... 6,550 6,892 7,240 7,605 8,001 8,404 8,823 9,262 9,704 10,161 36,288 82,642
OT...................................................... 6,613 6,887 7,194 7,539 7,929 8,331 8,747 9,183 9,623 10,079 36,162 82,125
Income Security (600):
BA...................................................... 68,090 68,719 69,607 70,345 71,006 71,651 72,297 72,998 73,701 74,390 347,767 712,804
OT...................................................... 67,548 68,516 69,665 70,660 71,148 71,468 71,845 72,473 73,171 73,850 347,537 710,344
Social Security (650):
On-budget:
BA.................................................... 0 0 0 0 0 0 0 0 0 0 0 0
OT.................................................... 0 0 0 0 0 0 0 0 0 0 0 0
Off-budget:
BA.................................................... 5,374 5,532 5,697 5,866 6,039 6,218 6,402 6,595 6,796 6,999 28,508 61,518
OT.................................................... 5,420 5,531 5,666 5,834 6,006 6,184 6,367 6,559 6,758 6,961 28,457 61,286
Veterans Benefits and Services (700):
BA...................................................... 79,067 83,387 83,386 85,140 87,603 90,132 92,738 95,459 98,293 101,165 418,583 896,370
OT...................................................... 77,871 81,776 82,342 83,284 85,755 88,234 90,782 93,438 96,208 98,987 411,028 878,677
Administration of Justice (750):
BA...................................................... 53,984 55,335 57,067 58,816 60,625 62,485 64,413 66,417 68,514 70,655 285,827 618,311
OT...................................................... 55,217 56,326 57,464 58,734 60,206 62,060 63,974 65,958 68,029 70,156 287,947 618,124
General Government (800):
BA...................................................... 15,868 16,423 16,023 15,797 15,481 18,747 18,590 18,389 18,143 17,857 79,592 171,318
OT...................................................... 15,488 15,860 15,800 15,646 15,390 18,384 18,424 18,235 18,013 17,761 78,184 169,001
Allowances (920):
BA...................................................... -39,567 -40,476 -43,053 -46,676 -48,870 -50,554 -51,788 -53,575 -53,744 -55,254 -218,642 -483,557
OT...................................................... -20,852 -33,359 -38,713 -42,718 -46,314 -48,313 -49,864 -51,505 -52,365 -53,463 -181,956 -437,466
Government-Wide Savings (930):
BA...................................................... 58,039 35,275 -14,375 -47,504 -60,789 -78,912 -95,870 -101,973 -115,864 -125,166 -29,354 -547,139
OT...................................................... 26,672 34,302 5,341 -24,318 -44,772 -63,863 -80,938 -91,692 -102,909 -113,132 -2,775 -455,309
Overseas Contingency Operations/Global War on Terrorism (970):
BA...................................................... 86,591 60,000 43,000 26,000 12,000 12,000 12,000 0 0 0 227,591 251,591
OT...................................................... 45,781 50,748 43,076 31,635 18,768 13,799 11,957 4,171 1,160 165 190,008 221,260
Across the Board Adjustment (990):
On-budget:
BA.................................................... -909 -931 -956 -979 -1,004 -1,030 -1,056 -1,083 -1,112 -1,140 -4,779 -10,200
OT.................................................... -740 -837 -895 -944 -968 -993 -1,018 -1,045 -1,070 -1,099 -4,384 -9,609
Off-budget:
BA.................................................... -11 -12 -12 -12 -12 -13 -13 -13 -14 -14 -59 -126
OT.................................................... -9 -11 -11 -12 -12 -12 -13 -13 -13 -14 -55 -120
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

TABLE 3.--FISCAL YEAR 2018 BUDGET RESOLUTION MANDATORY SPENDING
[In millions of dollars]
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal year 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2018-2022 2018-2027
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
SUMMARY
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total spending:
BA........................................................ 2,877,037 2,988,714 3,092,339 3,160,542 3,399,309 3,519,639 3,646,469 3,860,221 4,039,048 4,206,134 15,517,941 34,789,453
OT........................................................ 2,774,693 2,907,586 3,001,559 3,132,261 3,347,820 3,458,005 3,575,202 3,781,451 3,978,720 4,147,215 15,163,919 34,104,513
On-budget:
BA...................................................... 2,018,339 2,069,800 2,111,815 2,112,740 2,280,141 2,323,951 2,372,010 2,503,031 2,593,994 2,667,879 10,592,836 23,053,701
OT...................................................... 1,921,093 1,994,070 2,026,833 2,090,458 2,235,051 2,269,015 2,307,641 2,431,559 2,541,264 2,616,757 10,267,506 22,433,742
Off-budget:
BA...................................................... 858,698 918,913 980,524 1,047,801 1,119,168 1,195,689 1,274,459 1,357,190 1,445,055 1,538,255 4,925,105 11,735,752
OT...................................................... 853,600 913,515 974,726 1,041,802 1,112,769 1,188,991 1,267,561 1,349,892 1,437,457 1,530,458 4,896,413 11,670,771
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
BY FUNCTION
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
National Defense (050):
BA........................................................ 8,095 8,257 8,442 8,661 8,854 9,004 9,193 9,422 10,450 10,634 42,309 91,012
OT........................................................ 8,400 8,597 8,811 9,055 9,274 9,346 9,417 9,579 10,544 10,741 44,137 93,764
International Affairs (150):
BA........................................................ 5,201 3,724 2,798 1,860 11 29 56 71 124 134 13,594 14,008
OT........................................................ -3,675 -2,996 -2,173 -1,278 -1,204 -1,199 -1,203 -1,220 -1,200 -1,220 -11,326 -17,368
General Science, Space and Technology (250):
BA........................................................ 107 100 100 100 100 100 100 100 100 100 507 1,007
OT........................................................ 105 102 100 100 100 100 100 100 100 100 507 1,007
Energy (270):
BA........................................................ -6,526 -1,500 -14,344 -1,304 -1,498 -2,568 -3,180 -3,389 -1,235 -1,223 -25,172 -36,767
OT........................................................ -3,142 -3,089 -15,823 -2,706 -2,754 -3,660 -4,209 -4,316 -2,157 -2,100 -27,514 -43,956
Natural Resources & Environment (300):
BA........................................................ 385 -232 292 -1,175 -496 -1,055 -2,135 -2,217 -2,606 -3,142 -1,226 -12,381
OT........................................................ 1,032 240 351 -1,084 -514 -1,076 -2,091 -2,220 -2,618 -3,134 25 -11,114
Agriculture (350):
BA........................................................ 17,863 14,565 13,094 11,349 10,787 10,919 11,457 12,239 12,384 12,387 67,658 127,044
OT........................................................ 16,714 13,760 12,680 10,874 10,379 10,568 11,002 11,708 11,872 11,892 64,407 121,449
Commerce & Housing Credit (370):
On-budget:
BA...................................................... 9,120 8,213 4,415 665 593 702 1,073 1,155 273 -410 23,006 25,799
OT...................................................... -3,776 -185 -3,253 -7,889 -8,892 -9,454 -10,185 -11,320 -12,029 -12,865 -23,995 -79,848
Off-budget:
BA...................................................... -3,091 -3,134 -5,377 -5,679 -5,961 -6,138 -6,315 -6,501 -6,718 -7,041 -23,242 -55,955
OT...................................................... -3,089 -3,132 -5,375 -5,678 -5,960 -6,136 -6,313 -6,499 -6,716 -7,038 -23,234 -55,936
Transportation (400):
BA........................................................ 59,578 60,232 53,637 8,279 38,351 38,413 38,958 39,482 41,641 42,181 220,077 420,752
OT........................................................ 1,178 520 85 -417 -894 -1,361 -1,837 -2,334 -1,213 -1,689 472 -7,962
Community & Regional Development (450):
BA........................................................ -767 -958 -1,039 -1,062 -1,059 -1,133 -1,157 -1,122 -1,062 -1,342 -4,885 -10,701
OT........................................................ -975 -642 -869 -1,000 -806 -940 -1,078 -1,196 -1,335 -1,528 -4,292 -10,369
Education, Training, Employment, and Social Services (500):
BA........................................................ -10,453 -12,775 -13,224 -13,313 -14,586 -12,440 -13,873 -15,432 -16,868 -17,994 -64,351 -140,958
OT........................................................ -2,033 -9,755 -10,997 -11,201 -11,832 -11,236 -10,964 -12,175 -13,389 -14,400 -45,818 -107,982
Health (550):
BA........................................................ 517,768 502,602 489,988 449,263 464,923 483,813 506,671 529,737 552,470 557,777 2,424,544 5,055,012
OT........................................................ 490,008 509,119 480,377 456,592 471,493 487,104 506,260 527,890 550,004 562,756 2,407,589 5,041,603
Medicare (570):
BA........................................................ 587,280 646,092 684,886 731,762 818,275 837,396 841,570 906,982 978,479 1,043,510 3,468,295 8,076,232
OT........................................................ 586,954 645,853 684,723 731,622 818,128 837,262 841,430 906,826 978,319 1,043,356 3,467,280 8,074,473
Income Security (600):
BA........................................................ 423,699 395,706 405,408 414,069 421,447 404,116 412,128 420,050 428,356 437,285 2,060,329 4,162,264
OT........................................................ 409,880 386,270 395,260 404,480 418,151 396,749 399,525 408,447 423,334 431,532 2,014,041 4,073,628
Social Security (650):
On-budget:
BA...................................................... 39,475 43,016 46,287 49,748 53,392 57,378 61,764 66,388 70,871 75,473 231,918 563,792
OT...................................................... 39,475 43,016 46,287 49,748 53,392 57,378 61,764 66,388 70,871 75,473 231,918 563,792
Off-budget:
BA...................................................... 960,663 1,018,634 1,080,736 1,146,878 1,216,475 1,289,026 1,364,861 1,443,901 1,526,588 1,612,910 5,423,386 12,660,672
OT...................................................... 955,563 1,013,234 1,074,936 1,140,878 1,210,075 1,282,326 1,357,961 1,436,601 1,518,988 1,605,110 5,394,686 12,595,672
Veterans Benefits and Services (700):
BA........................................................ 97,637 108,120 111,544 114,611 127,839 122,435 117,205 132,532 136,654 142,553 559,751 1,211,130
OT........................................................ 100,167 108,459 111,589 114,572 127,582 122,210 117,126 132,382 136,452 142,514 562,369 1,213,053
Administration of Justice (750):
BA........................................................ -2,617 2,910 2,653 2,238 1,467 1,186 872 530 1,393 -385 6,651 10,247
OT........................................................ 5,862 2,541 2,572 2,212 1,719 1,402 1,069 540 2,171 -434 14,906 19,654
General Government (800):
BA........................................................ 7,696 7,525 7,534 7,589 7,646 7,673 7,761 7,857 7,940 7,998 37,990 77,219
OT........................................................ 7,603 7,454 7,503 7,544 7,623 7,673 7,744 7,825 7,904 7,961 37,727 76,834
Net Interest (900):
On-budget:
BA...................................................... 376,842 409,185 450,859 493,778 531,929 565,282 589,292 607,012 620,536 623,786 2,262,594 5,268,502
OT...................................................... 376,842 409,185 450,859 493,778 531,929 565,282 589,292 607,012 620,536 623,911 2,262,594 5,268,627
Off-budget:
BA...................................................... -81,548 -78,697 -76,363 -74,350 -71,711 -66,958 -63,222 -58,701 -52,643 -44,758 -382,668 -668,951
OT...................................................... -81,548 -78,697 -76,363 -74,350 -71,711 -66,958 -63,222 -58,701 -52,643 -44,758 -382,668 -668,951
Allowances (920):
BA........................................................ -4,938 -1,743 -2,193 -1,380 -1,674 -1,772 -1,871 -1,864 1,836 0 -11,928 -15,599
OT........................................................ -2,420 -1,140 -1,927 -1,446 -1,563 -1,506 -1,547 -1,555 238 -456 -8,496 -13,322
Government-Wide Savings (930):
BA........................................................ -23,894 -36,830 -53,006 -72,651 -92,587 -95,526 -98,503 -91,363 -130,709 -133,635 -278,968 -828,704
OT........................................................ -23,894 -36,830 -53,006 -72,751 -92,687 -95,626 -98,603 -95,663 -120,107 -127,845 -279,168 -817,012
Undistributed Offsetting Receipts (950):
On-budget:
BA...................................................... -83,212 -86,409 -86,316 -90,347 -93,573 -100,001 -105,371 -115,139 -117,033 -127,808 -439,857 -1,005,209
OT...................................................... -83,212 -86,409 -86,316 -90,347 -93,573 -100,001 -105,371 -115,139 -117,033 -127,808 -439,857 -1,005,209
Off-budget:
BA...................................................... -17,326 -17,890 -18,472 -19,048 -19,635 -20,241 -20,865 -21,509 -22,172 -22,856 -92,371 -200,014
OT...................................................... -17,326 -17,890 -18,472 -19,048 -19,635 -20,241 -20,865 -21,509 -22,172 -22,856 -92,371 -200,014
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

THE LONG-TERM BUDGET OUTLOOK

----------

The growing probability of a sovereign debt crisis is an
urgent challenge facing the United States today. The source of
the crisis is the drift toward ever-expanding government. The
Congressional Budget Office [CBO] has repeatedly warned current
laws and policies are fiscally unsustainable. That means they
will not, in fact, be sustained. CBO cautions that high and
rising Federal debt would have serious negative consequences
for the budget and the Nation. Under current law policies
Federal spending on interest payments will increase rapidly and
mounting Federal debt will negatively affect the economy in the
years ahead. ``Because Federal borrowing reduces total saving
in the economy over time, the nation's capital stock would
ultimately be smaller, and productivity and total wages would
be lower.''\18\ CBO also cautions: ``The likelihood of a fiscal
crisis in the United States would increase. There would be a
greater risk that investors would become unwilling to finance
the government's borrowing unless they were compensated with
very high interest rates; if that happened, interest rates on
Federal debt would rise suddenly and sharply.''\19\ To avert
such consequences, Congress must stop government's relentless
encroachment on Americans' lives and prosperity, and let
American civil society flourish.
---------------------------------------------------------------------------
\18\Congressional Budget Office, The Budget and Economic Outlook:
2017 to 2027 January, 2017, pp 3-4.
\19\Ibid.
---------------------------------------------------------------------------
This is more than a financial problem. As noted previously,
the government's mounting debt reflects a moral failing. In the
past, policymakers would have considered it nothing less than
``a sin'' to routinely spend borrowed money on ordinary
present-day uses--forcing future generations to finance today's
consumption. A government that promotes such practices through
its profligacy corrodes the Nation's underlying values--an even
more pervasive threat to America's future.\20\
---------------------------------------------------------------------------
\20\James M. Buchanan, ``Clarifying Confusion About the Balanced
Budget Amendment,'' National Tax Journal, Vol. 48, No. 3, September
1995, page 347.
---------------------------------------------------------------------------
In its latest long-term analysis, CBO projects Federal debt
held by the public--which stands at roughly 77.5 percent of
gross domestic product [GDP] today--will surge to 113 percent
of GDP in the next 20 years, and 150 percent by 2047.\21\ Even
today's debt levels are well beyond the debt target of no more
than 60-percent of GDP adopted in the European Union's
Maastricht Treaty; in the future they will be far worse.
---------------------------------------------------------------------------
\21\Congressional Budget Office, The 2017 Long-Term Budget Outlook,
March 2017, Data and Supplemental Information.
---------------------------------------------------------------------------
The projected increase in debt is driven by spending
growing well above historic levels of revenues. Revenues today
stand at 17.8 percent of GDP--greater than the 50-year
historical annual average of 17.4 percent. Revenues are
projected to average 18.2 percent of GDP over the next 10
years, then reach 19.0 percent in 2037 and 19.6 percent in
2047. Spending, however, will persistently outpace revenue
growth, averaging 22.1 percent of GDP over the next 10 years,
then surging to 26.3 percent in 2037 and 29.4 percent in
2047.\22\
---------------------------------------------------------------------------
\22\Ibid..
---------------------------------------------------------------------------
The automatic spending for Federal entitlement programs,
plus interest payments, will continue to dominate the budget.
By 2029, entitlement spending plus net interest is expected to
consume all Federal revenue, meaning all other government
activities--such as national defense, education,
infrastructure, research, and myriad others--will have to be
financed on borrowed money. By 2039, the situation will worsen,
as a mere handful of programs--Social Security and health care
entitlement spending--plus net interest are expected to consume
all Federal revenue; at that point, all other direct spending
and all discretionary spending will have to be debt-financed.
It is important to note these trends result not from temporary
surges in spending or economic downturns, but from permanent
government spending programs. This is an entrenched, structural
excess of spending over revenues.
CBO notes it is impossible to predict how long the Nation
could sustain such growth in Federal debt, but at some point
investors would be begin to doubt the government's willingness
or ability to pay its obligations. This would require the
government to pay much higher interest costs to borrow money,
resulting in significant negative consequences for the economy
and the Federal budget. This large and growing amount of debt
would restrict policymakers' ability to use tax and spending
policies for responding to unexpected challenges, such as
recessions, financial crises, or national security emergencies,
and would pose substantial risks to the Nation.\23\
---------------------------------------------------------------------------
\23\Ibid., pp. 3-7.
---------------------------------------------------------------------------
This budget would turn the tide. If the policies
incorporated in the budget were enacted, they would yield $6.5
trillion in deficit reduction (compared with current
projections) over the next 10 years. The budget calls for
responsible reforms of government spending programs. It
protects key priorities while eliminating waste. It avoids
sudden and arbitrary cuts to current services, such as those
the country would experience in a debt crisis.
The reductions from projected spending are hardly
draconian. Over the years, Congress has put two-thirds of the
budget on auto-pilot, and spending in those areas grows each
year. Yet any effort to restrain this growth in spending is
cast, in Orwellian fashion, as a ``cut.'' This is because the
Federal Government describes its fiscal plans relative to
estimates of future spending, not to the reality of actual
current spending. This is a fundamental contributor to the
government's bias toward higher spending.
This budget does not make sudden ``cuts.'' Instead, it
holds spending growth to a manageable rate. Under the CBO
current law baseline, the Federal Government will spend $52.5
trillion over the next 10 years.\24\ Under this budget
proposal, it will spend roughly $46.3 trillion. Put another
way, on its current path, Federal spending will rise by an
unmanageable annual average of 5.1 percent, significantly
greater than the projected growth in nominal GDP. This budget
slows that rate of spending growth to 3.0 percent, less than
the economy's nominal rate of expansion.
---------------------------------------------------------------------------
\24\Congressional Budget Office, The Budget and Economic Outlook:
2017 to 2027, January 2017.
---------------------------------------------------------------------------
Nor is this an ``austerity'' plan. When policymakers
restrain the growth of government, they allow more room for
private enterprise of all kinds. With its measured spending
restraints, this budget ensures the American economy will
outgrow the government. Thus, the budget achieves balance in
2027 by gradually reducing the size of government relative to
the economy from 20.7 percent this year\25\ to 17.8 percent in
2027. To achieve this outcome, the budget encourages a range of
fundamental program reforms, described elsewhere in this
report, that will improve and strengthen Federal programs and
put the government on a sound financial footing.
---------------------------------------------------------------------------
\25\Ibid.
---------------------------------------------------------------------------
The spending path assumed in this budget will result in a
balanced budget within 10 years and a growing surplus that will
lead to a sharp reduction in the national debt. The Budget
Committee estimates a small budget surplus in 2027 will
steadily grow larger in years beyond the window. At the same
time, debt held by the public will decline from 77 percent of
GDP today\26\ to 61 percent of GDP in 2027, and will fall
steadily as a percent of GDP in the subsequent 20 years--a
glide path to fully paying off the national debt.
---------------------------------------------------------------------------
\26\Ibid.
---------------------------------------------------------------------------
Over the long term, the budget assumes revenue generally
follows CBO's extended baseline adjusted for tax relief
provided by the American Health Care Act. The Budget Committee
estimates revenues under this budget will rise in nominal terms
over the next 10 years, but will hold steady as a share of the
economy, at about 17.8 percent of GDP. The Committee further
assumes revenues will gradually rise over the subsequent 20
years until eventually reaching and stabilizing at 19.0 percent
of GDP, including the macroeconomic effects of the budget's
pro-growth policies and the Trump Administration's regulatory
relief.
The United States has dealt with financial problems in the
past. In 1997, a Democratic president and a Republican Congress
passed the Balanced Budget Act of 1997, which resulted in four
years of budget surpluses. It was the last period of sustained
balanced budgets the Nation has seen. This budget follows that
model. It incorporates ideas from both parties to address one
of the most pressing issues of the day: America's ever-rising
national debt.

DIRECT SPENDING TRENDS AND REFORMS

----------

Background

Direct spending remains the fastest growing part of the
spending-driven sovereign debt crisis the Nation faces.
The Congressional Budget Office [CBO] reports that total
non-interest direct (or ``mandatory'') spending in fiscal year
2016 was $2.429 trillion, and will surge to $4.305 trillion by
2027. This reflects an average annual growth rate of 5.3
percent--faster than both CBO's projection of 2016 nominal
economic growth of 2.9 percent and CBO's longer-term projection
of 3.9-percent economic growth. Within overall non-interest
mandatory spending, the two major social insurance programs are
projected to continue growing faster than the economy as a
whole, with Social Security (both Old-Age and Survivors
Insurance and Disability Insurance) expected to increase from
$910 billion in 2016 to $1.7 trillion in 2027 and Medicare from
$692 billion in 2016 to $1.4 trillion in 2027.\27\
---------------------------------------------------------------------------
\27\Congressional Budget Office, The Budget and Economic Outlook,
2017 to 2027, January 2017.
---------------------------------------------------------------------------
Over the past 10 years, major means-tested automatic
spending programs have grown from $385 billion in 2007 to $720
billion in 2016. In the next decade, these programs are
expected to grow by 4.3 percent per year--from $745 billion in
2017 to $1.1 trillion in 2027.\28\
---------------------------------------------------------------------------
\28\Ibid.
---------------------------------------------------------------------------
A number of factors contribute to these increases. The 2008
recession caused significant increases in spending on low-
income programs. Spending is projected to remain at elevated
levels for several programs--most notably, the Supplemental
Nutrition Assistance Program, or SNAP (formerly known as food
stamps). Over the past 10 years, SNAP grew at 7.3 percent
annually, ballooning from $35 billion in 2007 to $73 billion in
2016. While this amount is projected to decline slightly over
the next 10 years, it remains elevated compared to prerecession
levels.\29\
---------------------------------------------------------------------------
\29\Ibid.
---------------------------------------------------------------------------
Other programs have also seen large increases. Supplemental
Security Income [SSI] was created as a needs-based program that
provides cash benefits to aged, blind, or disabled persons with
limited income and assets. When the program began, the majority
of payments went toward the aged. As it matured, however, a
much greater percentage of beneficiaries were under age 18 or
between the ages of 18 to 64. Over the past decade, spending on
SSI has grown by 4.4 percent per year.\30\
---------------------------------------------------------------------------
\30\Ibid.
---------------------------------------------------------------------------
The largest means-tested program in the Federal budget is
Medicaid, the Federal-State low-income health program. Medicaid
spending, and its related State Children's Health Insurance
Program [SCHIP], doubled from $197 billion in 2007 to $382
billion in 2016. Going forward, CBO projects Federal Medicaid
and SCHIP spending, on its current path, will reach $656
billion in fiscal year 2027. Absent structural reform, Medicaid
will not be able to deliver on its promise to provide a sturdy
health care safety net for society's most vulnerable. Because
of the flawed incentives in this program, Medicaid grew at 7.4
percent a year over the past 10 years, and it is projected to
grow 5.3 percent a year over the next 10 years. This level of
growth is clearly unsustainable.\31\
---------------------------------------------------------------------------
\31\Ibid.
---------------------------------------------------------------------------

The Fiscal Year 2018 Budget

The fiscal year 2018 budget addresses both non-means-tested
and means-tested direct spending. Most important, it tackles
the primary drivers of debt and deficits: the government's
health programs. For Medicare, this budget advances policies to
put seniors, not the Federal Government, in control of their
health care decisions. This resolution provides future retirees
with the freedom to choose a health plan best suited for them,
and guarantees health security throughout their retirement
years. Under this program, traditional Medicare and private
plans--providing the same level of health coverage--compete for
seniors' choices, just as Medicare Advantage does today. This
improved Medicare program would also adopt the competitive
structure of Part D, the prescription drug benefit program,
providing beneficiaries with a defined contribution to purchase
coverage and, through competition, deliver savings for seniors
in the form of lower monthly premium costs. Allowing seniors to
choose the best plan for themselves promotes competition among
health insurers on price and quality. This means the program
works better for patients and can be sustained for future
generations of seniors. The improved program also includes
additional protections for the most vulnerable. The Federal
contribution would be adjusted based on the health of the
beneficiary so those with illnesses would receive higher
payments if their condition worsened; lower-income seniors
would receive additional assistance to help cover out-of-pocket
costs; and wealthier seniors would assume responsibility for a
greater share of their premiums.
For Medicaid, this budget converts the Federal share of
Medicaid spending into per capita allotments, as advanced in
the House-passed ``American Health Care Act''. This structure
gives States the flexibility to tailor their programs in ways
that meet their fiscal needs as well as serving the most
vulnerable in their populations. The strategy would end the
misguided one-size-fits-all approach that ties the hands of
State governments trying to make their Medicaid programs as
effective as possible. In addition, the budget proposes to
advance a work requirement for all able-bodied adults without
dependents who are enrolled in Medicaid. Work not only provides
a source of income and self-sufficiency, but also has been
demonstrated as a valuable source of self-worth and dignity for
individuals.
Additionally, in keeping with a recommendation from the
National Commission on Fiscal Responsibility and Reform, the
budget recommends Federal employees--including Members of
Congress and their staffs--make greater contributions toward
their own retirement.
This budget is premised on the belief that the prospect of
upward mobility should be in the reach of every American, and
that priority must be given to maximizing the effectiveness of
anti-poverty programs across Federal, State, and local
governments. Congress should remove the barriers and obstacles
preventing the most vulnerable Americans from taking advantage
of economic and educational opportunities. Wherever possible,
government programs should help these individuals climb the
ladder of self-sufficiency and join the middle class. By
balancing the budget, implementing comprehensive tax reform,
and reforming means-tested entitlement programs, this
resolution is designed to accomplish exactly these goals.

TABLE 4.--HISTORICAL MEANS-TESTED AND NON MEANS-TESTED DIRECT SPENDING
[Outlays by fiscal year, billions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated Average
----------- annual
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 growth
2017 ----------
2008-2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
Means-Tested Programs:
Health Care Programs:
Medicaid............................ 191 201 251 273 275 251 265 301 350 368 389 7.4
Health insurance subsidies\a,b\..... 0 0 0 0 0 0 0 13 27 31 42 n.a.
Medicare Part D low-income subsidies 17 17 19 21 24 20 22 22 24 29 29 5.9
Children's Health Insurance Program. 6 7 8 8 9 9 9 9 9 14 15 9.2
-----------------------------------------------------------------------------------------------------
Subtotal.......................... 213 225 277 302 308 279 297 346 411 443 474 8.3
Income security programs:
Earned income and child tax 54 75 67 77 78 77 79 82 81 81 80 3.9
credits\b,c\.......................
SNAP................................ 35 39 56 70 77 80 83 76 76 73 71 7.3
Supplemental Security Income........ 36 41 45 47 53 47 53 54 55 59 55 4.4
Family support and foster care\d\... 31 32 33 35 33 30 32 31 31 31 31 0.2
Child nutrition\e\.................. 13 14 15 16 17 18 19 19 21 22 23 5.8
-----------------------------------------------------------------------------------------------------
Subtotal.......................... 169 201 216 246 259 253 265 262 263 266 260 4.4
Veterans' pensions...................... 3 4 4 4 5 5 5 6 5 6 6 5.1
Pell grants\f\.......................... 0 1 2 4 14 12 16 8 10 6 6 n.a.
-----------------------------------------------------------------------------------------------------
Subtotal, Means-Tested Programs... 385 430 500 556 586 549 583 622 689 720 745 6.8
Non-Means-Tested Programs\g,h\.......... 1,243 1,350 1,788 1,554 1,649 1,710 1,753 1,754 1,865 1,946 1,989 4.8
-----------------------------------------------------------------------------------------------------
Total Mandatory Outlays\h\........ 1,628 1,780 2,288 2,110 2,235 2,259 2,336 2,376 2,554 2,666 2,734 5.3
=====================================================================================================
Memorandum:
Pell Grants (Discretionary)............. 13 15 13 20 21 21 17 23 20 22 22 5.3
Means-Tested Programs:
Adjusted for Timing Shifts............ 389 430 500 556 580 555 583 622 689 713 745 6.7
Non-Means-Tested Programs:
Adjusted for Timing Shifts............ 1,242 1,350 1,788 1,554 1,627 1,731 1,753 1,754 1,865 1,916 1,985 4.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sources: Congressional Budget Office; staff of the Joint Committee on Taxation.

The average annual growth rate over the 2008-2017 period encompasses growth in outlays from the amount recorded in 2007 through the amount projected for
2017.

Data on spending for benefit programs in this table exclude administrative costs that are classified as discretionary but generally include
administrative costs that are classified as mandatory.

SNAP = Supplemental Nutrition Assistance Program; n.a. = not applicable.

Because October 1 fell on a weekend in 2007, 2012, and 2016, certain federal payments that were due on those dates were instead made at the end of the
preceding September and thus recorded in the previous fiscal year. October 1, 2017, also will fall on a weekend, causing payments due to be made in
fiscal year 2018 to be recorded in fiscal year 2017. Those shifts primarily affect outlays for Supplemental Security Income, veterans' compensation
benefits and pensions, and Medicare.

a. Differs from the amounts reported for 2016 through 2027 in the line ``Health insurance subsidies and related spending'' in Table 1-2 in The Budget
and Economic Outlook: Fiscal Years 2017 to 2027 in that it does not include payments to health insurance plans for risk adjustment (amounts paid to
plans that attract less healthy enrollees) and reinsurance (amounts paid to plans that enroll people with high health care costs). Spending for grants
to states to establish health insurance marketplaces also is excluded.

b. Does not include amounts that reduce tax receipts.

c. Differs from the amounts reported for 2016 through 2027 in the line ``Earned income, child, and other tax credits'' in Table 1-2 in The Budget and
Economic Outlook: Fiscal Years 2017 to 2027 in that it does not include other tax credits that were included in that table.

d. Includes the Temporary Assistance for Needy Families program, the Child Support Enforcement program, the Child Care Entitlement program, and other
programs that benefit children.

e. Differs from the amounts reported for 2016 through 2027 in the line ``Child nutrition'' in Table 1-2 in The Budget and Economic Outlook: Fiscal Years
2017 to 2027 in that it does not include outlays related to the Funds for Strengthening Markets program (also known as Section 32) or the Commodity
Assistance Program.

f. Includes mandatory spending designed to reduce the discretionary budget authority needed to support the maximum award amount set in the appropriation
act plus mandatory spending that, by formula, increases the total maximum award above the amount set in the appropriation act.

g. Does not include offsetting receipts.

h. Does not include outlays associated with federal interest payments.

TABLE 5.--PROJECTED MEANS-TESTED AND NON MEANS-TESTED DIRECT SPENDING
[Outlays by fiscal year, billions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average
annual
growth
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 (percent)
----------
2018-2027
--------------------------------------------------------------------------------------------------------------------------------------------------------
Means-Tested Programs:
Health Care Programs:
Medicaid.............................. 389 408 428 450 474 499 525 554 584 616 650 5.3
Health insurance subsidies\a,b\....... 42 55 64 73 78 82 85 89 92 94 97 8.8
Medicare Part D low-income subsidies.. 29 29 33 35 38 44 45 45 53 58 62 7.9
Children's Health Insurance Program... 15 11 6 6 6 6 6 6 6 6 6 -8.9
---------------------------------------------------------------------------------------------------
Subtotal............................ 474 503 530 564 596 631 661 694 735 774 815 5.6
Income security programs:
Earned income and child tax 80 79 81 83 84 86 88 89 91 93 94 1.7
credits\b,c\.........................
SNAP.................................. 71 69 67 67 67 66 66 66 67 68 69 -0.2
Supplemental Security Income.......... 55 52 58 60 62 68 66 62 70 72 74 3.1
Family support and foster care\d\..... 31 32 33 33 33 33 34 34 34 35 35 1.1
Child nutrition\e\.................... 23 24 25 26 27 28 30 31 32 34 35 4.4
---------------------------------------------------------------------------------------------------
Subtotal............................ 260 255 263 268 273 283 283 283 295 301 308 1.7
Veterans' pensions...................... 6 5 6 6 6 7 6 6 7 8 8 3.5
Pell grants\f\.......................... 6 7 7 7 7 7 8 8 8 8 8 3.0
---------------------------------------------------------------------------------------------------
Subtotal, Means-Tested Programs..... 745 771 807 845 882 928 958 991 1,045 1,090 1,139 4.3
Non-Means-Tested Programs\g,h\............ 1,989 2,064 2,221 2,356 2,503 2,703 2,811 2,921 3,137 3,347 3,546 6.0
---------------------------------------------------------------------------------------------------
Total Mandatory Outlays\h\.......... 2,734 2,834 3,028 3,201 3,384 3,631 3,769 3,912 4,182 4,437 4,685 5.5
===================================================================================================
Memorandum:
Pell Grants (Discretionary)\i\............ 22 24 31 24 24 24 25 25 26 26 27 2.3
Means-Tested Programs:
Adjusted for Timing Shifts.............. 745 778 807 845 882 919 958 1,000 1,045 1,090 1,139 4.3
Non-Means-Tested Programs:
Adjusted for Timing Shifts.............. 1,985 2,097 2,221 2,356 2,503 2,654 2,807 2,974 3,137 3,347 3,546 6.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sources: Congressional Budget Office; staff of the Joint Committee on Taxation.

The projections shown here, which exclude the effects of offsetting receipts, are the same as those reported in Congressional Budget Office, The Budget
and Economic Outlook: Fiscal Years 2017 to 2027 (January 2017), www.cbo.gov/publication/52370

The average annual growth rate over the 2018-2027 period encompasses growth in outlays from the amount projected for 2017 through the amount projected
for 2027.

Projections of spending for benefit programs in this table exclude administrative costs that are classified as discretionary but generally include
administrative costs that are classified as mandatory.

SNAP = Supplemental Nutrition Assistance Program.

Because October 1 fell on a weekend in 2016, certain federal payments that were due on that date were instead made at the end of the preceding September
and thus recorded in the previous fiscal year. October 1 will fall on a weekend again in 2017, 2022, and 2023, and the same shift in certain federal
payments will occur. The payment shifts primarily affect outlays for Supplemental Security Income, veterans' compensation benefits and pensions, and
Medicare.

b. Does not include amounts that reduce tax receipts.

d. Includes the Temporary Assistance for Needy Families program, the Child Support Enforcement program, the Child Care Entitlement program, and other
programs that benefit children.

g. Does not include offsetting receipts.

h. Does not include outlays associated with federal interest payments.

i. The discretionary baseline does not represent a projection of expected costs for the discretionary portion of the Federal Pell Grant Program. As with
all other discretionary programs, the budget authority is calculated by inflating the budget authority appropriated for fiscal year 2017. Outlays for
future years are based on those amounts of budget authority and also reflect a temporary surplus of budget authority provided in 2017.

THE ECONOMY AND ECONOMIC ASSUMPTIONS

----------

A Subpar Recovery

U.S. economic performance has generally been mixed in the
first half of 2017, and much needs to be done to return the
economy to its previous growth potential. Since 2010, real
growth in gross domestic product [GDP] has averaged only
slightly better than 2.0 percent annually, well below the 3.0
percent historical trend rate of growth in the U.S.
This trend of prolonged subpar economic performance has
surprised most economic forecasters. Back in 2012, the
Congressional Budget Office [CBO] expected real GDP to grow by
a relatively brisk 3.0-percent annual average over the 10-year
budget window. By 2014, that projected average slipped to 2.5
percent. In CBO's latest economic forecast, expected average
real GDP growth fell to just 1.9 percent (see Figure 5).

FIGURE 5

CBO has significantly lowered its expectation of long-term
growth in potential GDP as well, due mainly to negative
developments in the labor market and expected sluggish
productivity growth. CBO expects slower growth in the potential
labor force later this decade, which is linked to the aging of
the population and the retirement of the baby-boom generation.
With a smaller labor force, there will also be less business
investment and slower growth in the country's capital stock.
This ``new normal''--if that is what it is--is especially
troubling because without more robust growth the economy will
struggle to support the 80 million retirees expected over the
next couple decades, as well as the working age population.
Standards of living will suffer, especially for middle-income
earners.
Government policies also play a role in this trend. The
heavy spending of recent years drains economic resources that
otherwise would be available for growth-producing activities.
In addition, the sharp increase in government debt--which now
stands at near-record post-World War II levels--will crowd out
additional capital investment in the long term. Meanwhile, CBO
projects the Affordable Care Act will create incentives for
people to work fewer hours over the medium and longer term. The
overall picture that CBO's latest economic forecast paints is
that sluggish economic growth has evolved from mainly a
cyclical issue to a longer-term structural problem. The clear
downward trend in the economic forecast in recent years has
raised the hurdle significantly for those trying to correct the
fiscal imbalance over the next decade. As discussed below,
however, a meaningful change in fiscal policy can repay in
stronger economic growth and budgetary dividends.

The Benefits of a Stronger Economy

A stronger economy would provide a number of tangible
benefits for the average American. Back in the latter part of
the 1990s, real GDP was growing at a rate of about 4.5
percent--roughly twice the rate of growth today. From 1995 to
1999, real median household income grew by $5,000, nearly 10
percent. Not coincidentally, this was a time when the Federal
budget achieved a string of surpluses. In contrast, fiscal
policy today features large deficits combined with a
historically large stock of government debt.
A robust labor market also fosters more opportunity and
upward mobility. Currently about 5.3 million Americans are
working part-time due to poor business conditions or because
that was the only employment option available. In the latter
part of the 1990s, 30 percent fewer Americans faced this
problem. A stronger economy also naturally alleviates poverty.
By the year 2000, after multiple years of robust economic
growth, the rate of poverty in the U.S. had declined to a 25-
year low. A more robust economy also provides more resources to
the government to maintain a strong safety net.
Achieving a stronger rate of growth requires the right
economic policies. Key policies needed to bolster growth
include fundamental tax reform to lower tax rates on
individuals and businesses and thus reduce disincentives to
work and invest; regulatory reforms to scale back and prevent
regulations, such as Dodd-Frank, that fail cost-benefit tests
and hamper economic growth; and direct spending reforms to
prevent a debt explosion and improve incentives.

The Current Economic Situation

Economic output remained sluggish in the first quarter of
2017, growing by just 1.4 percent on a seasonally adjusted,
annualized basis. This was better than an earlier estimate of
0.7 percent, but still weaker than all but two quarters of the
past two years.\32\ The tepid performance was highlighted by a
slowdown in consumer spending, which typically accounts for
two-thirds of overall GDP growth. Business investment, however,
advanced in the first quarter at its strongest clip since late
2013 and most economists expect overall GDP growth to rebound
in subsequent quarters. Looking back, real GDP increased by
just 1.6 percent (measured on a year-over-year basis) in 2016,
the lowest annual growth rate in five years. Since 2010, real
GDP growth has averaged just over 2.0 percent annually, well
below the roughly 3.0-percent historical trend rate of growth
in the U.S. Sluggish economic growth has contributed to the
government's fiscal problems. It leads to lower revenue levels
than would otherwise occur while government spending (on
welfare programs, for example) is higher. According to CBO, if
productivity growth, which is closely correlated with overall
GDP growth, is just 0.1 percentage point lower per year, the
budget deficit will be higher by $273 billion over 10 years.
Conversely, stronger productivity and GDP growth would greatly
improve the fiscal outlook.
---------------------------------------------------------------------------
\32\Bureau of Economic Analysis release, 29 June 2017: https://
www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm.
---------------------------------------------------------------------------
Monthly job growth has been choppy in 2017, but the pace of
employment gains steadied heading into mid-year. So far this
year, monthly job increases are averaging 180,000, down
slightly from 187,000 per month last year. In the latest month
of June, job growth was 222,000, above market expectations. The
unemployment rate rose slightly to 4.4 percent in June, but
remains near the lowest rate in 16 years. When discouraged
workers and marginally employed persons are counted, the
broader under-employment rate is 8.6 percent, nearly double the
headline rate.\33\ Still, this under-employment rate has now
fallen to its lowest level since late 2007.
---------------------------------------------------------------------------
\33\Bureau of Labor Statistics, U-6 Index, Table A-15, July 2017.
---------------------------------------------------------------------------
Although the overall trend of job gains has still been
solid this year, and the headline unemployment rate has dropped
to a low level, other aspects of the labor market are not as
robust. The labor force participation rate stands at 62.8
percent, down a full 3 percentage points since early 2009, and
remains near its lowest level since the late 1970s (see Figure
6). Long-term unemployment also remains a problem. Of the 7.0
million people who are currently unemployed, 1.7 million (24
percent) have been unemployed for more than six months. Long-
term unemployment has genuinely corrosive consequences. For
individuals, it erodes their job skills, further detaching them
from employment opportunities. At the same time, it undermines
the long-term productive capacity of the economy.
In previous episodes when the unemployment rate was at or
below 5.0 percent, the overall labor market was healthier than
it is today. For instance, about a decade ago, in 2005, the
unemployment rate was trending lower and even dipped below 5.0
percent. Yet the labor force participation rate was 66 percent,
more than 3 percentage points above the rate today. The number
of people not in the labor force (or ``on the sidelines'') is
currently about 95 million, or 24 percent higher than the
figure back in 2005. Also, more people today are working part-
time because of poor business conditions or they can only find
part-time work. Currently, 5.3 million Americans face this
problem, whereas that figure was slightly more than 4 million
in 2005.

Wage gains have been moderate over the past year. Average
hourly earnings of private-sector workers increased by 2.5
percent in June from the year-earlier level. Still, prior to
the recession, average hourly earnings were tracking closer to
3.5 percent. Real median household income is finally on the
upswing, but at $56,500 it is still $900, or 1.6 percent, below
its pre-recession peak in 2007.

FIGURE 6

Crude oil prices had plunged from mid-2014 to early 2016,
dropping from over $100 per barrel to just $30 per barrel.
Since that time, however, prices have been trending higher. So
far in 2017, crude oil prices are averaging just over $50 per
barrel, about 50 percent higher than the level in early 2016.
The gradual increase in the price of oil has led to a
relative firming in headline inflation rates. For instance, the
price index for personal consumption expenditures [PCE] has
increased by 1.4 percent over the latest 12 months, up from
annual growth below 1.0 percent in 2015. The so-called ``core''
PCE index (which excludes energy and food prices), the Federal
Reserve's preferred inflation gauge, has also increased 1.4
percent over the past year. These levels of inflation are still
somewhat below the Federal Open Market Committee's 2-percent
objective for inflation over the longer run.
The Federal Reserve increased interest rates for the second
time this year in June. That marked the fourth rate hike since
late 2015. Prior to that time, the Fed had been holding
interest rates near zero since the depths of the financial
crisis in 2008. Looking ahead, the Fed has signaled that it
will continue to increase interest rates at a measured pace,
thereby normalizing monetary policy.
The yield on the 10-year Treasury note has increased since
last fall. The 10-year Treasury has been hovering around 2.2
percent as of June 2017, up about 40 basis points from last
October.
Many global central banks have signaled their intention to
keep interest rates low and their overall monetary policy
loose--in contrast to the Federal Reserve's current policy
stance. This divergence in central bank policy stances on
interest rates, as well as the differing economic outlook
between the U.S. and the rest of the world, has caused the U.S.
dollar to appreciate vis-a-vis other foreign currencies.
The value of the U.S. dollar has been increasing gradually
over the past 3 years. Since mid-2014, the U.S. dollar has
appreciated by 20 percent on a trade-weighted basis.
U.S. stock markets have increased sharply in the wake of
the November 2016 election and the promise of pro-growth
economic policies from Washington. Since early November, the
S&P 500 has increased by roughly 15 percent.

The Economic Outlook

The Trump Administration's economic forecast is more
hopeful than the Obama Administration's forecast last year, and
it is more upbeat than either CBO or the Blue Chip consensus of
private-sector forecasters--who also are less optimistic than
last year. Assuming full implementation of its proposed
policies--which include reforming the tax code and health care,
cutting regulation, slowing the growth of spending, and
reducing deficits--the administration projects real GDP,
measured on a year to year basis, will grow 2.3 percent in
calendar year 2017, 2.4 percent in 2018. It will then rise to
3.0 percent in 2021 and remain at that level in later years of
the budget window. Assuming a continuation of current law, CBO
projects real GDP will grow 2.3 percent in calendar year 2017,
decline to 2.0 percent in 2018, 1.7 percent in 2019 and will
then stabilize at 1.9 percent in 2022 and later years. CBO
writes that its projections are generally similar to other
forecasters: ``The economic projections in this report do not
differ significantly from those of most other forecasters. They
are generally similar to the Blue Chip consensus forecast that
was published this month (January 2017) and to the latest
forecasts by Federal Reserve officials (December 2016).''\34\
---------------------------------------------------------------------------
\34\Congressional Budget Office, The Budget and Economic Outlook:
2017 to 2027, January 2017, p.41.
---------------------------------------------------------------------------
The Blue Chip consensus projects real GDP growth of 2.1
percent in 2017, 2.4 percent in 2018, and about 2.0 percent in
later years. Over the 10-year window of the budget resolution,
the administration's Office of Management and Budget [OMB]
expects real GDP growth to average 2.9 percent, significantly
higher than the Blue Chip's 2.1 percent and a full percentage
point higher than CBO, which projects a 1.9 percent growth rate
average over this period.
Like other forecasters, the administration expects the
unemployment rate to decline gradually in the coming years.
According to OMB, the unemployment rate will average 4.6
percent in 2017, decline to 4.4 percent in 2018, and rise to
4.6 percent in 2019. The administration sees the unemployment
rate stabilizing at 4.8 percent in 2021. That path is similar
in the near term but is more optimistic in the latter part of
the window than the CBO forecast. CBO expects the unemployment
rate to average 4.6 percent in 2017, 4.4 percent in 2018, 4.5
percent in 2019, rising to 5.0 percent in 2021 through 2023 and
stabilizing at 4.9 thereafter. The Blue Chip consensus sees a
near-term decline in the unemployment rate similar to both CBO
and the administration, but is closer to the administration's
forecast in the latter part of the window. According to Blue
Chip, the unemployment rate will average 4.5 percent in 2017,
4.3 percent in 2018, and 4.5 percent in 2019 and will rise
gradually in later years before leveling off at 4.7 percent in
2022.
The administration expects consumer price inflation,
measured by the year-to-year percent change in the consumer
price index, to rise to 2.6 percent in 2017 from 1.3 percent in
2016. The administration expects price inflation of 2.3 percent
in 2018 and later years. CBO expects price inflation of 2.4
percent in 2017, 2.3 percent in 2018 and 2019 and 2.4 percent
in 2020 and later years. The Blue Chip consensus expects
inflation over the next two years that is similar to the
administration's and CBO's forecasts. According to Blue Chip,
price inflation will rise to 2.4 percent in 2017, range between
2.2 percent and 2.4 percent in subsequent years and stabilize
at 2.4 percent in 2024.
As economic growth strengthens, OMB expects interest rates
will rise to more normal levels in the coming years. The 10-
year Treasury note, which was 1.8 percent in 2016, is projected
to rise to 2.7 percent in 2017, 3.3 percent in 2018, and 3.4
percent in 2019. OMB expects the 10-year Treasury to hit 3.8
percent in 2020 and remain there in later years. CBO expects
interest rates to rise to more normal levels as well but more
gradual increases and lower rates than the administration for
most years. CBO sees the 10-year Treasury averaging 2.3 percent
in 2017, 2.5 percent in 2018, and 2.8 percent in 2019, and
continuing to rise gradually in subsequent years until
stabilizing at 3.6 percent in 2023. The Blue Chip consensus
also expects a gradual increase in interest rates over the
budget window, but like the administration sees higher interest
rates than does CBO over the next several years. The Blue Chip
consensus forecasts the 10-year Treasury note to average 2.6
percent in 2017, 3.1 percent in 2018, 3.6 percent in 2019 and
gradually rising further until stabilizing at 3.9 percent in
2024 and later years.

Economic Assumptions of the Budget Resolution

Customarily, the House budget resolution employs CBO's
economic assumptions as its foundation, but this is not a
requirement. The Budget Committee may use a different set of
projections if it chooses. The Committee has made that choice
in this case. The budget resolution calls for significant
policy changes, including substantial reductions in deficits
and debt that are expected to lead to improved economic
outcomes. The resolution assumes the enactment of such policies
and the economic benefits they would generate. In turn, the
effects of improved economic performance are expected to ``feed
back'' into components of the budget, producing improved fiscal
outcomes. Put another way, the resolution rests on a ``post-
policy'' economic forecast that incorporates the effects of the
budget's pro-growth strategy. It is the same approach that
presidents' budgets have used for decades, and is more fully
explained in the next section, ``Macroeconomic Feedback Effects
of Pro-Growth Policies.''
As noted previously, CBO projects real (inflation-adjusted)
GDP to grow at an annual average of just 1.9 percent--more than
a full percentage point below the 3.0-percent average of the
past 50 years. One component of this projection is CBO's
``current-law'' expectation for Federal policy. CBO assumes
laws in place today will remain in place throughout the 10-year
budget window--that major program spending and tax laws, as
well as government regulation, will unfold as called for in
existing law. CBO's projection also assumes the continuation of
current regulatory regimes. This current-law framework
contributes to CBO's dismal economic forecast.
In contrast, the Budget Committee assumes the enactment of
its pro-growth policies--including comprehensive tax reform and
welfare reform, the budget's spending restraint, the
administration's regulatory reforms, and Obamacare repeal and
replace legislation--and the economic benefits they would
generate. Under the ``post-policy'' perspective of this
resolution, real GDP growth will average 2.6 percent over the
budget window. This projected level of real economic growth is
lower than the administration's but higher than CBO's or the
Blue Chip's. The Committee projects that real economic growth
rates under this year's House budget will remain near CBO's
baseline forecast in the initial years of the window with
larger differences in later years of the window.
Regarding other major macroeconomic variables, the
resolution foresees inflation, as measured by the consumer
price index, averaging 2.4 percent for the 2018-2027 period.
The unemployment rate is expected to remain at or below 5.0
percent, at an average of 4.8 percent per year. The resolution
foresees somewhat higher interest rates along with increased
economic growth, particularly in the latter part of this ten-
year period. The rates on three-month Treasury bills under the
resolution's assumptions rise gradually through the this
period, reaching 3.1 percent in 2024 and average 2.7 percent
over 2018-2027, similar to the Administration and Blue Chip but
higher than CBO's 2.5 percent. The rates on 10-year Treasury
note under the House budget rise gradually from 2.6 percent in
2018 to 4.0 percent in 2027 and average 3.6 percent over the
10-year period, similar to the administration and Blue Chip but
higher than CBO's 3.3 percent.
It is important to note that this improved growth rate
stems from the combination of policies assumed in the budget
resolution. It cannot be separated into separate legislative
initiatives considered in isolation. Further, maintaining pro-
growth fiscal policies is critical for keeping their benefits
alive.

TABLE 6.--ECONOMIC PROJECTIONS: ADMINISTRATION, CBO, AND PRIVATE FORECASTERS
[Calendar years]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
--------------------------------------------------------------------------------------------------------------------------------------------------------
Year to Year, Percent Change
--------------------------------------------------------------------------------------------------------------------------------------------------------
Real GDP:
Administration Budget.............................. 1.6 2.3 2.4 2.7 2.9 3.0 3.0 3.0 3.0 3.0 3.0 3.0
CBO (Jan. 2017).................................... 1.6 2.3 2.0 1.7 1.5 1.8 1.9 1.9 1.9 1.9 1.9 1.9
Blue Chip (March and May 2017)..................... 1.6 2.1 2.4 2.1 2.0 2.0 2.0 2.1 2.0 2.0 2.0 2.0
Consumer Price Index:
Administration Budget.............................. 1.3 2.6 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3
CBO (Jan. 2017).................................... 1.3 2.4 2.3 2.3 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.4
Blue Chip (March and May 2017)..................... 1.3 2.4 2.2 2.3 2.4 2.3 2.3 2.3 2.4 2.4 2.4 2.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual Average, Percent
--------------------------------------------------------------------------------------------------------------------------------------------------------
Unemployment Rate:
Administration Budget.............................. 4.9 4.6 4.4 4.6 4.7 4.8 4.8 4.8 4.8 4.8 4.8 4.8
CBO (Jan. 2017).................................... 4.9 4.6 4.4 4.5 4.9 5.0 5.0 5.0 4.9 4.9 4.9 4.9
Blue Chip (March and May 2017)..................... 4.9 4.5 4.3 4.5 4.6 4.6 4.7 4.7 4.7 4.7 4.7 4.7
3-Month Treasury Bill:
Administration Budget.............................. 0.3 0,8 1.5 2.1 2.6 2.9 3.0 3.0 3.1 3.1 3.1 3.1
CBO (Jan. 2017).................................... 0.3 0.7 1.1 1.7 2.3 2.7 2.8 2.8 2.8 2.8 2.8 2.8
Blue Chip (March and May 2017)..................... 0.3 1.0 1.8 2.4 2.7 2.8 2.8 2.8 2.9 2.9 2.9 2.9
10-Year Treasury Note:
Administration Budget.............................. 1.8 2.7 3.3 3.4 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8
CBO (Jan. 2017).................................... 1.8 2.3 2.5 2.8 3.1 3.4 3.5 3.6 3.6 3.6 3.6 3.6
Blue Chip (March and May 2017)..................... 1.8 2.6 3.1 3.6 3.7 3.8 3.8 3.8 3.9 3.9 3.9 3.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sources: Congressional Budget Office, Office of Management and Budget, and Blue Chip Economic Indicators.

TABLE 7.--ECONOMIC ASSUMPTIONS OF THE FISCAL YEAR 2018 BUDGET RESOLUTION
[Calendar years]
--------------------------------------------------------------------------------------------------------------------------------------------------------
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2027
---------------------------------------------------------------------------------------------------------------------------------------------------- ------
Year to Year, Percent Change
--------------------------------------------------------------------------------------------------------------------------------------------------------
Real GDP:
HBC (June 2017)........................................... 2.3 2.3 2.4 2.5 2.7 2.9 2.9 2.8 2.6 2.6 2.6
Consumer Price Index:
HBC (June 2017)........................................... 2.4 2.3 2.3 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual Average, Percent
--------------------------------------------------------------------------------------------------------------------------------------------------------
Unemployment Rate:
HBC (June 2017)........................................... 4.6 4.4 4.5 4.9 5.0 5.0 5.0 4.9 4.9 4.9 4.9
3-Month Treasury Bill:
HBC (June 2017)........................................... 0.7 1.2 1.9 2.6 2.9 3.0 3.0 3.1 3.1 3.1 3.2
10-Year Treasury Note:
HBC (June 2017)........................................... 2.3 2.6 3.0 3.4 3.7 3.8 3.8 3.9 3.9 3.9 4.0
--------------------------------------------------------------------------------------------------------------------------------------------------------

MACROECONOMIC FEEDBACK EFFECTS
OF PRO-GROWTH POLICIES

----------

Economic growth is one of the major determinants of revenue
and spending levels--and therefore the size of budget
deficits--over a given period. For instance, a higher rate of
gross domestic product [GDP] growth can lead to lower projected
spending if it translates into reduced burdens on government
safety net programs. It can also generate higher revenue due to
increases in taxable incomes. Naturally, such a pattern would
cause a reduction in Federal deficits and debt relative to
current estimates. Conversely, lower rates of growth can cause
the opposite outcomes: higher rates of spending increases and
lower revenue growth.
On the other hand, Federal policies themselves--including
tax policy, regulations, and rising deficits and debt--can
affect the economy's potential to grow. They can generate
changes in economic performance that ``feed back'' into
budgetary outcomes. Consequently, fiscally responsible policies
that improve the economy's long-term growth prospects can help
reduce the size of budget deficits over a given period.
As noted in the previous section, this resolution is based
on a post-policy perspective, incorporating the macroeconomic
feedback effects of its spending and deficit reduction, as well
as its assumed tax reform and other policies. Although a
departure from normal practice, it is justified based on
analyses by a range of economists.
The Congressional Budget Office [CBO] has written
extensively on the risks to the economy of deficits and debt,
and how reducing them has economic benefits. Other policies
likely to boost economic growth include fundamental tax reform,
increasing domestic energy production, regulatory reform, and
the restoration of incentives for people to work, save, and
invest. At present, however, CBO projects real (inflation-
adjusted) [GDP] to grow at an annual average of just 1.9
percent--more than a full percentage point below the 3.0-
percent average of the past 50 years.
These outcomes are at least partly due to the policies of
the previous administration, starting with the overall fiscal
legacy after former President Obama's tenure. It is ``genuinely
unsustainable,'' according to Douglas J. Holtz-Eakin, President
of the American Action Forum and former CBO Director. Absent
reform, he says, the government's direct spending programs will
inevitably lead to a crisis or a sharp increase in taxes--both
of which would hamper growth. Holtz-Eakin also contends the
government's high-spending policies under the Obama
Administration--which he describes as a ``misguided reliance on
temporary, targeted piecemeal policymaking''--failed to
stimulate the economy as their advocates promised. ``Even if
one believed that countercyclical fiscal policy (``stimulus'')
could be executed precisely and had multiplier effects, it is
time to learn by experience that this strategy is not
working.''\35\
---------------------------------------------------------------------------
\35\Douglas J. Holtz-Eakin, testimony to the Committee on the
Budget, U.S. House of Representatives, 7 June 2017.
---------------------------------------------------------------------------
A second drag on the economy is the corporate income tax.
``It doesn't raise that much revenue, drives production in
headquarters overseas, and is incredibly costly to comply with
and administer,'' Holtz-Eakin says.
A third problem is an increasing Federal Government
regulatory burden on the private sector under Obama. Over the
past eight years, Holtz-Eakin says, ``the agencies have put in
place new major regulations with a cumulative increase in
compliance costs totaling $800 billion.'' He suggests this has
an economic impact comparable to a $100-billion tax increase
every year for eight years.\36\
---------------------------------------------------------------------------
\36\Ibid.
---------------------------------------------------------------------------
The current historically low labor force participation rate
also plays a role in the economic outlook. About half the
reduction in the labor force participation rate since 2009 is
due to people leaving the labor force voluntarily, according to
economist John W. Diamond of Rice University--and ``this is
largely because of policies such as the Affordable Care Act
that is basically a large implicit tax on work and so people
are choosing not to work as much.''\37\
---------------------------------------------------------------------------
\37\John W. Diamond, testimony to the Committee on the Budget, U.S.
House of Representatives, 7 June 2017.
---------------------------------------------------------------------------
In any event, continuing the economic pattern is
unacceptable. ``[T]he recent economic performance is
insufficient to improve standards of living at a rate to which
most Americans are accustomed. And it is at odds with a society
that promises opportunity and upward mobility for the next
generation * * *. The conduct of economic policies during the
past several years * * * has failed to address structural
impediments to more rapid growth in productivity and
wages.''\38\
---------------------------------------------------------------------------
\38\John F. Cogan, R. Glenn Hubbard, John B. Taylor, Kevin M.
Warsh, On the Prospects for Higher Economic Growth, Hoover Institution,
Stanford University, and the American Enterprise Institute, 18 July
2017.
---------------------------------------------------------------------------
All these economists agree the right set of Federal
policies could lead to stronger economic growth than CBO
projects. Among these policies are spending restraint, deficit
reduction, tax reform, and regulatory reform--the strategy of
this budget resolution. ``The policy changes of the kind
proposed by the Congress and the [Trump] Administration, if
enacted, would significantly improve the economy's growth
prospects.''\39\
---------------------------------------------------------------------------
\39\Ibid.
---------------------------------------------------------------------------
In some respects, the reasons are not difficult to
understand. For instance, every dollar the government spends is
a dollar drawn from the economy and therefore not available for
growth-producing private-sector activities. This might be an
entirely rational choice. Americans surely support devoting
economic resources, through the government, to protecting the
Nation's security and enforcing its laws. The construction and
maintenance of infrastructure may also be judged a worthwhile
government activity--one that can itself help maintain
conditions for growth. On the other hand, if government spends
on activities that readily could be managed in the private
sector, or merely transfers resources from one sector to
another, there is little benefit to the economy. Such spending
tends to create costs that actually impede growth.
Consequently, limiting government spending to the extent
possible, and focusing resources on truly essential government
activities, leaves room for the economy to expand. Spending
restraint is itself a pro-growth policy.
Similarly, deficit reduction can be an aid to growth. When
the government borrows, it draws resources from the pool of
savings--resources that otherwise would go toward investments
leading to enhanced productivity. Chronic government borrowing
dampens this potential.
Another example is tax reform. When there are many tax
brackets, and increasingly high marginal rates, workers
experience less and less benefit from working additional hours.
This is because the next dollar earned may be taxed at a higher
rate and therefore yield less growth in household incomes.
Higher marginal tax rates also encourage people to leave the
workforce earlier than would otherwise be the case.
Consequently, such a rate structure reduces incentives to work.
The complexity of the tax code aggravates its anti-growth
effects. The tax code is honeycombed with special-interest
exclusions, exemptions, deductions, credits, and so on. Nearly
all of them are aimed at encouraging some government-approved
activity. That is, however well-intentioned such provisions
might be, they are motivated by political interests, not
necessarily their potential for promoting economic growth. They
can even distort economic decisions by causing taxpayers to
divert resources to tax-advantaged options rather than
activities that could contribute to growth.
These are among the reasons for the policies of this budget
resolution--spending restraint, deficit reduction, and tax
reform, along with others.
The economists identified in this discussion believe
returning to the Nation's historical growth rate of 3.0-percent
per year, while ambitious, is conceivable under these policies.
``Could implementation of such a comprehensive economic plan
raise the economic growth rate to 3 percent? We believe it
can.''\40\ Nevertheless, the assumptions of this budget
resolution are more conservative than that, though more
positive than those of CBO.
---------------------------------------------------------------------------
\40\Ibid.
---------------------------------------------------------------------------
The Budget Committee estimates that under the pro-growth
policies in this year's House budget resolution--including
Obamacare repeal and replace legislation, comprehensive tax
reform, welfare reform, net deficit reduction of $5.0 trillion
from spending restraint, and the Trump Administration's
regulatory reforms--real economic growth can average 2.6
percent over the budget window, 0.7 percentage point higher
than the CBO baseline's 1.9 percent average. This higher growth
rate is consistent with what Holtz-Eakin, Diamond, Cogan,
Hubbard, Taylor, and Warsh all say is achievable if these pro-
growth policies are enacted and implemented.
According to the CBO, productivity growth is an important
determinant of real economic growth over time. Productivity
growth that is just 0.1 percentage point higher than expected
over the 10-year window would translate into annual rates of
real economic growth that are about 0.1 percentage point higher
than those underlying the baseline. CBO estimates that such
productivity growth increase would reduce the cumulative
deficit by $273 billion over 10 years, mostly because of higher
revenues--without tax increases.\41\ An increase in the labor
force participation rate is another important determinant of
real economic growth over time. According to CBO, if labor
force growth is just 0.1 percentage point higher than expected
cumulative deficits would fall by $185 billion over 10 years,
mostly because of higher revenues resulting from an increase in
labor compensation due to greater hours worked.\42\
---------------------------------------------------------------------------
\41\Congressional Budget Office, The Budget and Economic Outlook:
2017 to 2027, ``Appendix B, How Changes in Economic Projections Might
Affect Budget Projections,'' January 2017.
\42\Congressional Budget Office, How Economic Changes Affect CBO's
Budget Projections, 24 April 2017 post on the CBO blog.
---------------------------------------------------------------------------
Applying the CBO economic rules of thumb to 2.6 percent
average economic growth yields a macroeconomic effect on the
budget of $1.8 trillion over 10 years assuming that most of the
0.7 percentage point increase in average annual growth is due
to higher productivity and the remaining portion of higher
growth is due to higher labor force growth compared to the
January 2017 CBO baseline. The budget assumes that $1.5
trillion of this total reduces the deficit.\43\ Not taking this
$300 billion into account in the deficit calculation is based
on HBC staff's review of several estimates by non-governmental
and governmental entities of the growth potential for various
tax reform proposals.
---------------------------------------------------------------------------
\43\This estimate includes debt service effects due to higher
interest rates and also debt service effects due to non-interest
deficit reduction.
---------------------------------------------------------------------------
The Committee also projects the increased economic growth
expected under this budget will result in interest rates that
are somewhat higher than those underlying the CBO baseline. The
net effect of these macroeconomic changes on the Federal budget
will be significantly positive, primarily due to higher
revenues that result from greater growth--without tax
increases.
Maintaining pro-growth fiscal policy, however, entails a
broad and long-term commitment, not simply individual
initiatives. ``Economic growth policy is more a philosophy than
a piece of legislation. It is a commitment at every juncture in
the policy process to evaluate tradeoffs between social goals,
environmental goals, special interest goals and economic
growth--and err on the side of growth.''\44\
---------------------------------------------------------------------------
\44\Op cit., Holtz-Eakin.

FUNCTIONAL PRESENTATION

----------

The construction of reports such as this has typically
followed the sequence of functional categories in the budget
resolution itself. These categories aim to reflect major
activities of the government, and they have changed little
since enactment of the Congressional Budget Act of 1974.
This budget resolution retains these conventional
categories, as do the summary tables in the report. The
narrative discussion below, however, takes a different
approach. As with the House budget resolutions of the 114th
Congress, it arranges the functions differently to reflect two
important governing considerations. First is the distinction
between the proper roles of State and local governments and
those of the Federal Government--commonly known as
``federalism.'' The second is the growing burden of mandatory,
or direct, spending programs, which are increasingly dominating
the budget.
The standard budget resolution format presents the range of
government activities largely without distinguishing those of
principal importance to the national government from those that
may draw greater initiative from States and localities or the
private sector. While National Defense and International
Affairs appear first--as is appropriate for two of the national
government's main responsibilities--the sequencing of the
remaining functions appears to reflect no order of priorities
for the Federal Government. There is no reason, for example,
why Energy (Function 270) should appear before Health (Function
550), or Veterans Benefits and Services (Function 700) before
Administration of Justice (Function 750).
The narratives below are arranged to make such a
distinction. The presentation retains the content of each
functional category, just as in the conventional format, but
organizes the functional discussions in four broader categories
as described below. The intent is to provoke a re-evaluation of
the roles of different layers of government through the
structure of the report itself. Put another way, the format
encourages lawmakers and the public to think differently about
spending priorities by looking at the budget differently.
The groupings are as follows:

Principal Federal Responsibilities. The first group
consists of those activities clearly associated with the
national level of government. Defending the country and
conducting international diplomacy are obvious components here,
as directed by the Constitution itself. Those categories do
not, however, acknowledge several other areas for which the
Federal Government also has the central responsibility. These
include veterans' benefits (an aspect of the compensation for
military service), Federal courts and law enforcement, and
general government, the last of which mainly finances the
Legislative and Executive Branches of the Federal Government.
Also included here are Overseas Contingency Operations/Global
War on Terrorism, which provides funds for non-recurring
military and diplomatic activities in the Middle East.\45\
Finally, the section reflects government-wide policies--
policies that cut across functional categories and Executive
Branch agencies.
---------------------------------------------------------------------------
\45\The Budget Control Act of 2011 employs the term Overseas
Contingency Operations/Global War on Terrorism. This resolution uses
the original Bush Administration term, Global War on Terrorism.
---------------------------------------------------------------------------
The overall grouping, using the formal functional titles,
is as follows:

LNational Defense

LInternational Affairs

LOverseas Contingency Operations/Global War on
Terrorism

LVeterans Benefits and Services

LAdministration of Justice

LGeneral Government

LGovernment-Wide Policy

Domestic Priorities. The second set of categories consists
mainly of the discretionary spending in Functions 250 through
650 of the conventional format. These are activities that may
be best administered or initiated by State and local
governments or the private sector. In addition, most of these
activities would exist even if there were no Federal Government
(schools, hospitals, roads, and so on). This does not suggest
they are of lesser priority. The arrangement simply aims to
encourage greater recognition of States and localities in
America's governing system--that is, the principle of
federalism. Although the discussion here focuses on annually
appropriated discretionary spending, two categories--Energy and
Transportation--retain both the discretionary and direct
spending components. This is because in these areas, the two
forms of spending are intertwined in ways unlike those of other
functional categories. In Energy, for example, what appears as
``negative'' direct spending mainly reflects the incoming
repayment of loans and receipts from the sale of electricity
produced by Federal entities, as well as rescissions of
unobligated balances in green energy loan programs. These are
fundamentally different from most direct spending, which
applies to government benefit programs. Transportation has a
split treatment of its funding. Its budget authority is a kind
of mandatory spending called contract authority, while its
outlays--controlled by annual limitations on obligations set in
appropriations acts--are treated as discretionary spending; the
two cannot really be separated.
Overall, this grouping of domestic priorities consist of
the following (discretionary spending only, unless indicated
otherwise).

LGeneral Science, Space, and Technology

LEnergy (both discretionary and direct spending)

LNatural Resources and Environment

LAgriculture

LCommerce and Housing Credit

LTransportation (both discretionary and direct
spending)

LCommunity and Regional Development

LEducation, Training, Employment, and Social
Services

LHealth

LIncome Security

LOther Domestic Discretionary (mainly the
administration of the Social Security and Medicare Programs)

Direct Spending Programs. This group generally presents the
direct spending in the same functional categories as in the
Domestic Priorities group. The aim is to reflect the growing
magnitude of these programs--mostly social insurance and safety
net programs--in the overall budget. This form of spending is
largely open-ended and flows from effectively permanent
authorizations. Most of the programs funded this way pay
benefits directly to groups or individuals without an
intervening appropriation. They spend without limit, and their
totals are determined by numerous factors outside the control
of Congress: caseloads, the growth or contraction of gross
domestic product, inflation, and many others. These are the
areas driving the government's uncontrolled spending, deficits,
and debt. Addressing them is indispensable to managing fiscal
policy and balancing the budget.

LSocial Security

LMedicare

LMedicaid, the American Health Care Act, and
Related Programs

LIncome Support, Nutrition, and Related Programs

LFarm Support

LBanking, Housing, and the Postal Service

LStudent Loans, Social Services, and Related
Programs

LFederal Lands and Other Resources

LOther Direct Spending (science, natural
resources, and community and regional development)

Financial Management. This final grouping consists of those
functions that round out the budget's overall financing.

LNet Interest

LAllowances

LUndistributed Offsetting Receipts

Principal Federal Responsibilities

----------

The two most obvious responsibilities of the Federal
Government are providing for the common defense of all the
constituent States, and conducting diplomacy on behalf of the
Nation as a whole. Related to these two is the supplemental
spending for Overseas Contingency Operations/Global War on
Terrorism. Nevertheless, there are other activities intrinsic
to the national government's responsibilities. For example, as
part of the compensation for military service, the government
also offers a range of benefits specifically for veterans. The
category called Administration of Justice mainly reflects
funding for Federal law enforcement agencies--such as the
Federal Bureau of Investigation and the Drug Enforcement
Administration, among others--as well as the Federal judiciary.
The vast majority of funding for the General Government
function supports the Executive and Legislative Branches of the
Federal Government. Finally, there are activities and policies
that cut across agencies and functional categories.

NATIONAL DEFENSE

Function Summary

Eight years of the Obama Administration's feckless foreign
policy have left the global security environment more dangerous
and less stable, as the United States faces increasingly
complex and evolving threats around the world. U.S. military
forces continue to battle terrorist groups, including a
reinvigorated Al Qaeda and the Islamic State in Afghanistan,
Iraq, Syria, the Horn of Africa, and Libya. Potential
adversaries continue to exhibit aggressive behavior that needs
to be countered. These include China's efforts to expand its
military footprint in the South China Sea and Russia's unlawful
intrusion of sovereign countries in Europe. Meanwhile, Iran
aspires to be a ``regional hegemon'' and ``poses the most
significant threat'' to the United States and its allies in the
Middle East.\46\ North Korea is actively developing an
intercontinental ballistic system to carry nuclear warheads
that can strike the United States and its allies in the Korean
Peninsula.
---------------------------------------------------------------------------
\46\Statement of General Joseph L. Votel, Commander, U.S. Central
Command, Appropriations Subcommittee on Defense, House of
Representatives, hearing on ``The Posture of U.S. Central Command,'' 28
March 2017: http://docs.house.gov/meetings/AP/AP02/20170328/105771/
HHRG-115-AP02-Wstate-VotelJ-20170328.pdf.
---------------------------------------------------------------------------
On 1 February 2017, former Central Intelligence Agency
Director General David H. Petraeus testified before the House
Armed Services Committee that the United States is ``under
unprecedented threats from multiple directions'' and that
``perhaps even more pernicious * * * [the world order has been
undermined by] a loss of self-confidence, resolve, and
strategic clarity on America's part about our vital interest in
preserving and protecting the system we sacrificed so much to
bring into being and have sacrificed so much to preserve.''\47\
Even more recently, on 12 June 2017, Secretary of Defense
Mattis stated: ``[A] * * * concurrent force acting on the
Department is the worsening global security situation. Our
challenge is characterized by a decline in the long-standing
rules-based international order, bringing with it a more
volatile security environment than any I have experienced
during my four decades of military service.''\48\
---------------------------------------------------------------------------
\47\Committee on Armed Services, U.S. House of Representatives,
hearing on ``The State of World: National Security Threats and
Challenges,'' 1 February 2017.
\48\Statement of Secretary of Defense James N. Mattis, Committee on
Armed Services, House of Representatives, hearing on ``The Fiscal Year
2018 National Defense Authorization Budget Request from the Department
of Defense,'' 12 June 2017: https://armedservices.house.gov/
legislation/hearings/fiscal-year-2018-national-defense-authorization-
budget-request-department.
---------------------------------------------------------------------------
While the national security environment, both at home and
abroad, continues to grow more dangerous and unpredictable, the
U.S. military has grown smaller and less capable of deterring
and meeting these threats. ``We have the smallest Air Force
since 1947 * * * the Navy will be retiring ships faster than
they can be replaced * * *. Alarmingly, for today's defense
budget we are fielding 35% fewer combat brigades, 53% fewer
combat ships, 63% fewer combat aircraft squadrons.''\49\ The
reduction in the size and capability of U.S. armed forces has
resulted mainly from the automatic enforcement procedure of the
Budget Control Act [BCA] of 2011--a procedure known as
``sequestration.'' The national defense budget has carried the
bulk of sequestration's effects. Relative to the fiscal year
2012 defense budget request by then-Defense Secretary Gates,
defense spending has been reduced by $460 billion. By 2021,
sequestration will arbitrarily cut almost $1 trillion from
defense spending, eroding critical warfighting capabilities,
modernization, and readiness across all the services. Every
year since the BCA was enacted, budgetary prescriptions have
been shaping national defense strategy, not the other way
around. This has resulted in higher risks for service members
and the Nation.
---------------------------------------------------------------------------
\49\Statement of General John M. Keane, USA (Ret), Committee on
Armed Services, US Senate, hearing on ``Emerging US Defense Challenges
and Worldwide Threats,'' 6 December 2016: https://www.armed-
services.senate.gov/imo/media/doc/Keane_12-06-16.pdf.
---------------------------------------------------------------------------
According to the House Armed Services Committee, increased
threats to national security at home and abroad, coupled with
the concurrent military drawdown, have resulted in ``a
significant gap between what the American people expect of the
military and what it actually could do effectively if called
upon today.''\50\ The Heritage Foundation rated the U.S.
military posture, in aggregate, as ``Marginal'' and trending
toward ``Weak,'' the same rating as in 2016.\51\ This budget
calls for reversing the defense sequester and beginning the
process of rebuilding our military.
---------------------------------------------------------------------------
\50\Committee on Armed Services, U.S. House of Representatives,
Views and Estimates, 3 March 2017.
\51\Heritage Foundation, 2017 Index of U.S. Military Strength:
Assessing America's Ability to Provide for the Common Defense, 2017:
http://index.heritage.org/military/2017/assessments/.
---------------------------------------------------------------------------
For National Defense (Function 050 in the summary tables),
the budget resolution calls for $621.5 billion in discretionary
budget authority and $599.4 billion in discretionary outlays in
fiscal year 2018. When combined with military resources for the
Overseas Contingency Operations/Global War on Terrorism
(Function 970), total discretionary defense spending is
consistent with that of H.R. 2810, the ``National Defense
Authorization Act for Fiscal Year 2018''\52\ which passed the
House on 14 July 2017 by a vote of 344 to 81, and the
associated fiscal year 2018 defense-related appropriations
bills. These amounts include funding to compensate, train,
maintain, and equip the military forces of the United States.
More than 95 percent of the funding in this function goes to
Department of Defense [DOD] activities. The remainder finances
the atomic energy defense programs of the Department of Energy,
and other defense-related activities (primarily in connection
with homeland security).
---------------------------------------------------------------------------
\52\See Committee on Armed Services, U.S. House of Representatives,
Chairman's Mark Summary for H.R. 2810.
---------------------------------------------------------------------------
Direct spending in fiscal year 2018 for this category--
which includes allowances, offsetting receipts, and retirement
payments--is $8.1 billion in budget authority and $8.4 billion
in outlays in fiscal year 2018. The 10-year totals for the
entire defense category are $7.2 trillion in budget authority
and $7.0 trillion in outlays.

Illustrative Policy Options

Policy development in this area rests primarily with the
Committee on Armed Services and the Appropriations Subcommittee
on Defense. They have maximum flexibility in determining
priorities for maintaining robust national defense capabilities
while responsibly managing taxpayer resources. Some
illustrative options the committees might consider include the
following.

Budget Transparency. Like all government agencies, DOD has
a responsibility to account for and effectively manage its
taxpayer-provided resources. The 2010 National Defense
Authorization Act (Public Law 111-84) required the Department
to implement the Financial Improvement and Audit readiness
plan, and the Department expects to be fully auditable by the
end of fiscal year 2017.\53\ DOD's size and complexity make the
endeavor difficult, but ``that is not a reason to delay the
audit--it is the reason to begin.''\54\ In addition, President
Trump has called for ``conducting a full audit of the
Pentagon.''\55\ This budget expects DOD to be audit-ready by
the end of fiscal year 2017 and for it to execute a Department-
wide audit on all financial statements of fiscal year 2018. An
inability to produce an auditable financial statement by the
statutory deadline would undermine defense reform efforts.\56\
Any continued failure of the DOD to perform a complete audit
not only limits transparency and congressional oversight of
defense programs, but also erodes public confidence in the
Department's ability to effectively manage taxpayer resources.
---------------------------------------------------------------------------
\53\Public Law 111-84
\54\Statement of David L. Norquist, Committee on Armed Services,
U.S. Senate, hearing on ``Nominations--Norquist, Daigle, McCusker,'' 9
May 2017: https://www.armed-services.senate.gov/imo/media/doc/
Norquist_05-09-17.pdf.
\55\Donald J. Trump's Vision National Defense, 14 October 2016:
http://www.warrencountyvagop.com/2016/10/14/donald-j-trumps-vision-
national-defense/.
\56\Committee on Armed Services, U.S. House of Representatives,
Views and Estimates, 3 March 2017.

Defense Industrial Base and Sustainment. A robust
industrial base is vital to military readiness and, therefore,
the national security of the United States. As defense budgets
have declined, the acquisition of new weapons systems has
received much-needed focus. Little attention, however, has been
given to the fact that sustainment is 60 percent to 80 percent
of the total lifecycle cost of a weapon system, according to
the Department of Defense.\57\ Therefore, the ongoing health of
the defense industrial base, in its entirety, also must be
carefully considered.
---------------------------------------------------------------------------
\57\Government Accountability Office, Weapon Systems Management:
DOD Has Taken Steps to Implement Product Support Managers but Needs to
Evaluate Their Effects, April 2014; and, Capt. Gary Jones, USAF, Edward
White, Lt. Col Erin T. Ryan, USAF, and Lt. Col Jonathan D. Ritschel,
USAF, Investigation into the Ratio of Operation and Support Costs to
Life-Cycle Costs for DoD Weapons Systems, Defense Acquisition
University, January 2014.
---------------------------------------------------------------------------
The sustainment industrial base comprises both private
sector and military facilities, each serving a unique and vital
role in the maintenance, repair, and overhaul of weapons,
weapons systems, components, subcomponents, parts, and
equipment. As budget resources become more scarce, the military
facilities and private sectors should focus on the areas in
which each excels, entering into public-private partnerships,
as appropriate, to save taxpayer dollars and increase military
readiness. Furthermore, the Department should learn from recent
mistakes and failed policies, which include the unnecessary
furlough of working capital fund employees or managing by end
strength. Workload should be one of the key drivers when
managing depots, arsenals, and ammunition plants to ensure the
lowest cost to the taxpayer.
Military depots are the backbone of the organic industrial
base and are the Nation's insurance policy against economic
uncertainty, changes in the defense industry, and wartime
demands. Additionally, military depots serve as the appropriate
location for maintaining command and control of the majority of
warfighting systems. The B-52 bomber program, as one example,
is a reminder that sustainment of weapons systems for decades
beyond their initially projected lifecycle is feasible and
likely will be essential to meeting military readiness needs.
Military depots have proven their value to the taxpayer for
efficiently sustaining systems that are no longer profitable or
no longer cost-effective to maintain in the private sector.
During peacetime or war, military depots meet military
readiness requirements and provide critical and necessary skill
sets on time and on budget.
Acquisition reform should reaffirm the value of military
core statutes and the longstanding balance of workload between
military depots and the private sector. These key provisions in
existing law, when vigorously enforced, will ensure that the
vital security interests of the United States military are met
through the maintenance of a healthy defense industrial base,
even during a time of declining budgets. These laws were
written for just such a time.

Major Range and Test Facility Base. Major Range and Test
Facility Bases [MRTFBs] are a designated set of DOD
installations, ranges, and facilities used for Test and
Evaluation missions. In 1983, under the authority of DOD
Directive 3200.11, the Under Secretary of Defense for Research
and Engineering directed the Office of the Secretary of
Defense, the Military Service Branches, the Joint Chiefs of
Staff, and Defense Agencies, that major ranges and test
facilities constitute a ``national asset'' due to their unique
capabilities in support of DOD, other U.S. government agencies,
allied foreign governments, and private organizations.\58\
MRTFBs are DOD's core testing and evaluation facilities to
assess weapon system capabilities before being provided to the
military and the warfighter. The budget recommends MRTFBs
continue to be the tip of the spear on weapons testing and
capabilities evaluation to ensure the services are provided the
most effective weapon systems the United States can produce.
---------------------------------------------------------------------------
\58\Isham Linder, Major Range and Test Facility Base Summary of
Capabilities (DoD 3200.11-D), Department of Defense, June 1983.

Defense Acquisition Reform. Since 1990, DOD weapon systems
acquisition has been on the Government Accountability Office
[GAO] ``high-risk'' list for its continued failure to meet
cost, schedule, and performance expectations. As a result,
``DOD pays more than anticipated, can buy less than expected,
and, in some cases, delivers less capability to the
warfighter.''\59\ In May 2017, House Armed Services Chairman
Thornberry introduced H.R. 2511, the ``Defense Acquisition
Streamlining and Transparency Act,'' to address the
Department's acquisition problems. The bill, the provisions of
which are also included in the House-passed ``Fiscal Year 2018
National Defense Authorization Act'', continues the committee's
efforts to ``streamline bureaucracy, drive efficiency through
competition, and give the Pentagon the tools it needs to make
better business decisions.''\60\ Preceded by acquisition
reforms enacted in the fiscal year 2016 and 2017 National
Defense Authorization Acts, the legislation represents the
third installment of Chairman Thornberry's defense acquisition
reform effort.\61\ Over time, defense acquisition reforms will
provide a better return-on-investment for the taxpayer, while
also allowing DOD to be more agile in a changing technology
environment. The Budget Committee applauds the House Armed
Services Committee's efforts to address much-needed acquisition
reform, which will ultimately help the warfighter and result in
the most effective and efficient use taxpayer dollars.
---------------------------------------------------------------------------
\59\Government Accountability Office, DOD Weapon Systems
Acquisition, May 2017: http://www.gao.gov/highrisk/dod_weapon_systems/
why_did_study#t=0.
\60\Committee on Armed Services, House of Representatives,
``Thornberry Introduces Acquisition Reform Bill,'' 18 May 2017.
\61\Ibid.
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INTERNATIONAL AFFAIRS

Function Summary

The United States remains the world's indispensable
Nation--vital to global peace, security, stability, and the
spread of freedom.\62\ With this comes great challenges and
responsibilities. In the absence of American leadership, others
will not uphold their responsibility to advance these shared
interests and values.\63\ Therefore, to remain an effective
leader, the United States should ensure that its military
strength, diplomatic corps, and civilian agencies are aligned
in the task of protecting American interests around the globe.
---------------------------------------------------------------------------
\62\The Foreign Policy Initiative, Foreign Policy 2016, 2 May 2016,
http://www.foreignpolicyi.org/files/uploads/images/2016-05-02-
Foreign%20Policy%202016.pdf
\63\Ibid.
---------------------------------------------------------------------------
According to the Committee on Foreign Affairs, advancing a
comprehensive State Department Authorization bill in 2017 will
be important in countering America's threats, while holding
accountable the perpetrators of war crimes and human rights
atrocities. At the same time, the Department should build on
common-sense efforts to eliminate duplication and waste.\64\
Reducing poverty through economic growth remains a key
objective, but Federal agencies must remain vigilant to ensure
taxpayer funds are spent efficiently and achieve measurable
results.
---------------------------------------------------------------------------
\64\Committee on Foreign Affairs, U.S. House of Representatives,
Views and Estimates, 3 March 2017.
---------------------------------------------------------------------------
The international affairs budget is critical in advancing
U.S. strategic priorities and interests, especially those
relating to economic opportunities, national security, and
American values. Nevertheless, inefficiencies, duplicative
programs, and those unrelated to vital U.S. national interests
remain prevalent and are ripe for reform. The fiscal year 2018
budget resolution represents a thorough re-evaluation of
accounts in this category and gives priority to programs that
are both integral to the core mission and that effectively and
efficiently achieve desired outcomes.
For this budget category (Function 150 in the summary
tables), the budget resolution proposes a total of $41.5
billion in budget authority and $43.6 billion in outlays for
fiscal year 2018. This funding covers the following:
international development, food security, and humanitarian
assistance; international security assistance; the conduct of
foreign affairs; foreign-information and exchange activities;
and international financial programs. The primary agencies
responsible for executing these programs are the Departments of
State, Agriculture, and the Treasury; the U.S. Agency for
International Development [USAID]; and the Millennium Challenge
Corporation. Over 10 years the budget totals are $398.5 billion
in budget authority and $395.5 billion in outlays.
The majority of the funding is discretionary spending,
which is $36.3 billion in budget authority and $47.3 billion in
outlays for fiscal year 2018. Direct spending in this
function--totaling $5.2 billion in budget authority and -$3.7
billion in outlays for fiscal year 2018--includes loan
guarantee programs, payments to the Foreign Service Retirement
and Disability Fund, and foreign-military sales programs. The
negative figures reflect receipts from foreign-military sales
and financing programs.
As with National Defense, funding for the State Department
and USAID's incremental, non-enduring civilian activities in
the frontline states of the global war on terrorism is
reflected in the Global War on Terrorism account.

Refocusing the Strategy

The Trump Administration presents an opportunity to
fundamentally rethink the way the Federal Government's civilian
agencies approach defense, diplomacy, and development
overseas.\65\ From workforce modernization to cyber security
and embassy security--the United States ``bears special
responsibility for protecting the men and women of the United
States'' in the 285 U.S. embassies and consulates around the
world.\66\
---------------------------------------------------------------------------
\65\Ibid.
\66\Ibid.
---------------------------------------------------------------------------
Fine-tuning U.S. foreign assistance while imposing
strategic cuts to ineffective, duplicative, or wasteful
programs is no simple task. It requires planning, and is in the
interest of the United States to clearly define and articulate
its mission.\67\ For instance, systemic shortcomings in the
implementation of U.S. security assistance will remain a
problem until overall planning, coordination, and evaluation of
U.S. security assistance are more closely examined.\68\
Strengthening alliances through security assistance is a tool
the U.S. uses to mitigate threats to peace and stability around
the globe.
---------------------------------------------------------------------------
\67\Ibid.
\68\Ibid.
---------------------------------------------------------------------------

Illustrative Discretionary Spending Policy Options

The committees of jurisdiction--the Committees on Foreign
Affairs and Agriculture, as well as the Appropriations
Subcommittee on State, Foreign Operations, and Related
Programs--should continue effective oversight of international
affairs programs to ensure resources are used efficiently to
achieve desired results that ultimately support U.S. national
interests. Those committees have complete authority in
determining policies in this area. Nothing in the discussion
below binds them to any particular course. That said, some
illustrative options they might wish to consider include the
following.

Eliminate Funding for Peripheral Foreign-Affairs
Institutions. The United States funds multiple independent
agencies and quasi-private institutions through the foreign-
affairs budget. Included in this list are the Inter-American
Foundation, the African Development Foundation, and the East-
West Center. These institutions all engage in activities that
overlap the State Department and USAID activities. For
instance, the East-West Center was established in 1960 to
promote a better understanding between the U.S. and nations of
the Asia-Pacific region. Over the past 57 years, a number of
factors, including the development of the Internet, increased
trade, and cultural diversity here at home, have led to the
creation of private institutions that serve similar purposes as
the East-West Center.\69\
---------------------------------------------------------------------------
\69\Ibid.
---------------------------------------------------------------------------
Consolidating and eliminating funding for multiple
institutions that perform similar tasks will make U.S.
engagement with the world more efficient and cost-effective.
Further, some of these organizations already receive private
funding and could continue with non-government funds.

Reduce Contributions to International Organizations and
Programs. The United States makes voluntary contributions to
more than 40 multilateral organizations and programs. These
often duplicate funding provided in the Contributions to
International Organizations account, which makes payments to
organizations pursuant to treaties and conventions the United
States has signed. Programs such as the United Nations
Population Fund and United Nations Development Program [UNDP]
flow through the voluntary contributions account. The Special
Inspector General for Afghanistan Reconstruction has found
weaknesses in the UNDP's oversight and management of the Law
and Order Trust Fund for Afghanistan--to which the United
States and other donors have contributed more than $3 billion
since 2002. This makes taxpayer dollars susceptible to fraud,
waste, and abuse.\70\ This budget funds the organizations the
United States is required to by treaty, while reducing
voluntary funding made in the International Organizations and
Programs account.
---------------------------------------------------------------------------
\70\John F. Sopko, Special Inspector General for Afghanistan
Reconstruction, letter to Helen Clark, UNDP Administrator, 12 September
2014: http://www.sigar.mil/pdf/special%20projects/SIGAR-14-98-SP.pdf.

Reform Food Aid. One of the areas where the international
affairs budget fails to use taxpayer dollars efficiently and
effectively is the U.S. international food aid program,
including Food for Peace (Public Law 480, Title II). Food for
Peace provides emergency food assistance abroad and supports
development programs in developing nations. Its failings result
primarily from enduring program constraints, including the
cargo preference (which dictates at least 50 percent of food
aid must be shipped on U.S. flagged vessels). To keep pace with
rising demands and finite resources, U.S. food aid programs
must be efficient and adaptable.\71\ Several bipartisan efforts
have called for reforming food programs. According to a 2011
report by the Government Accountability Office [GAO], the
practice of monetization loses an average of 25 cents of every
dollar spent on food aid.\72\ This budget calls for food aid
reforms to get the maximum benefit out of every dollar spent on
this program.
---------------------------------------------------------------------------
\71\Committee on Foreign Affairs, U.S. House of Representatives,
Views and Estimates, 3 March 2017.
\72\Government Accountability Office, International Food
Assistance: Funding Development Projects through the Purchase,
Shipment, and Sale of U.S. Commodities Is Inefficient and Can Cause
Adverse Market Impacts, 23 June 2011.

Overhaul the Broadcasting Board of Governors. For years,
the Office of the Inspector General and GAO have noted
inefficiencies and redundant bureaucratic structures within the
Broadcasting Board of Governors [BBG]. The fiscal year 2017
National Defense Authorization Act's codification of the Global
Engagement Center created overlap with the BBG, specifically
The Voice of America. This is an area in which Congress can and
should clarify lines of responsibility and eliminate
duplications.\73\ BBG is mostly known for programs that educate
the world on American culture, society, and governance, in
addition to promoting democratic principles such as human
rights and religious freedom. In the 114th Congress, the House
Foreign Affairs Committee passed H.R. 2323, the ``United States
International Communications Reform Act of 2015'', a bipartisan
bill that addresses these problems by improving the management
and effectiveness of BBG programs. Subsequently, the ``Fiscal
Year 2017 National Defense Authorization Act'' included BBG
consolidation reforms. This budget supports a reduction in
funding for BBG until significant reforms are made to safeguard
taxpayer dollars from continued waste at the hands of
governmental mismanagement.
---------------------------------------------------------------------------
\73\Committee on Foreign Affairs, U.S. House of Representatives,
Views and Estimates, 3 March 2017.

Eliminate Contributions to the Clean Technology Fund and
the Strategic Climate Fund. The Obama Administration created
the Clean Technology and Strategic Climate Funds in 2010. They
provide foreign assistance to support energy-efficient
technologies intended to reduce energy use and mitigate climate
change. Borrowing funds abroad to provide financial assistance
in this area is not a core U.S. foreign policy function--
especially in this period of large and mounting debt. In
addition, the U.S. government should not attempt to pick
winners and losers in terms of which technologies and companies
to favor and advance abroad. This budget recommends eliminating
---------------------------------------------------------------------------
funding for both programs.

Reinstate the Mexico City Policy. The Mexico City Policy,
originally adopted by President Reagan in 1984, prohibits non-
governmental organizations receiving U.S funding from
performing or promoting abortion. In addition, on 9 May 2017,
Secretary of State Tillerson approved a plan to implement the
manner in which U.S. Government departments and agencies will
apply these provisions to grants, cooperative agreements and
contracts with foreign non-governmental organizations that
receive U.S. funding for global health assistance.\74\
---------------------------------------------------------------------------
\74\Presidential Review Memorandum, 15 May 2017.
---------------------------------------------------------------------------

OVERSEAS CONTINGENCY OPERATIONS/GLOBAL WAR ON TERRORISM

Function Summary

This category reflects non-enduring funding for the
execution of Overseas Contingency Operations/Global War on
Terrorism [OCO/GWOT] and other closely related activities. It
provides funding for Department of Defense military operations,
primarily in Iraq and Afghanistan, and civilian activities led
by the Department of State and the U.S. Agency for
International Development [USAID]. The funding is entirely
discretionary, with no direct spending components. OCO/GWOT
funding is not subject to statutory discretionary spending
limits established by the ``Budget Control Act of 2011''.
The resolution calls for $86.6 billion in total budget
authority and $45.8 billion in new outlays in fiscal year 2018
for the OCO/GWOT (shown in Function 970 in the summary tables).
This total OCO/GWOT funding level is a 16.5 percent reduction
from the enacted fiscal year 2017 level of $103.7 billion.
About $75 billion of the total OCO/GWOT budget authority is
dedicated to military activities by the Department of Defense.
When combined with defense discretionary spending in Function
050, total defense resources in the resolution are consistent
with those provided for in the House Armed Services House-
passed fiscal year 2018 ``National Defense Authorization Act''
and the associated fiscal year 2018 defense-related
appropriations bills.

Policy Considerations

The criteria DOD has been using to determine whether war-
related funding belongs in the base budget or the OCO/GWOT
funding request has not been updated since 2010. Consequently,
DOD's fiscal year 2018 OCO/GWOT request is based on dated
standards ``when military operations in Iraq and Afghanistan
were the principal contingency operations supported by
DOD.''\75\ The current criteria do not address the expanded
scope of OCO/GWOT operations including: ``new geographic areas
such as Syria and Libya, the department's deterrence and
counterterrorism initiatives, or requests for OCO amounts to
fund base budget requirements, such as readiness.''\76\
According to the GAO: ``DOD officials agree that updated
guidance is needed but note that the Office of Management and
Budget has deferred the decision to update the criteria until a
new administration is in place in 2017.''\77\ This budget calls
for the Office of Management and Budget, in conjunction with
DOD, to re-evaluate and update the OCO/GWOT criteria as soon as
possible to ensure budget transparency and accountability
regarding this cap adjustment.
---------------------------------------------------------------------------
\75\Government Accountability Office, Overseas Contingency
Operations: OMB and DOD should revise the criteria for determining
eligible costs and identify the costs likely to endure long term,
January 2017.
\76\Ibid.
\77\Ibid.
---------------------------------------------------------------------------
For the longer term, this budget supports gradually phasing
out the separate Overseas Contingency Operations/Global War on
Terrorism designation for both military and civilian
activities, and assumes a transition to base budget funds in
the future. While this budget fully supports OCO/GWOT efforts
and sufficient funding to execute contingency missions, funding
provided in the OCO/GWOT budget will take place 18 years after
the 9/11 terrorist attacks on the United States, which
triggered wars in Afghanistan and Iraq. If these are to be
ongoing activities--which may well be the case in the 21st
Century security environment--Congress should assume them as
part of the Nation's overall defense strategy, and budget
accordingly. This would be consistent with past Republican
budgets.1

VETERANS BENEFITS AND SERVICES

Function Summary

Americans' respect for those who serve the Nation in its
armed forces is reflected partly through bipartisan support for
service veterans. This support follows a long tradition that
can be traced as far back as 1636, when the Pilgrims of
Plymouth Colony were fighting the Pequot Indians. ``The
Pilgrims passed a law that stated that disabled soldiers would
be supported by the colony. Later, the Continental Congress of
1776 encouraged enlistments during the Revolutionary War,
providing pensions to disabled soldiers. In the early days of
the Republic, individual states and communities provided direct
medical and hospital care to veterans. In 1811, the federal
government authorized the first domiciliary and medical
facility for veterans. Also in the 19th century, the Nation's
veterans assistance program was expanded to include benefits
and pensions not only for veterans, but for their widows and
dependents.'' Many States created veterans' homes after the
Civil War. When the U.S. entered World War I, Congress
broadened the system of veterans' benefits to include
disability compensation and educational rehabilitation.\78\
---------------------------------------------------------------------------
\78\Department of Veterans Affairs, ``History--Department of
Veterans Affairs'': https://www.va.gov/about_va/vahistory.asp.
---------------------------------------------------------------------------
On 9 August 1921, veterans' benefits were consolidated into
a Veterans Bureau, which launched a wave of hospital
construction. In July 1930, President Hoover elevated the
bureau to a full administrative agency called the Veterans
Administration.\79\
---------------------------------------------------------------------------
\79\Ibid.
---------------------------------------------------------------------------
After World War II, with an immense wave of veterans
returning home, Congress vastly expanded benefits, most
significantly with the World War II GI Bill. ``It is said the
GI Bill had more impact on the American way of life than any
law since the Homestead Act of 1862.''\80\ Veterans benefits
continued expanding in the subsequent decades until, in 1989,
President Reagan raised the Veterans Administration to Cabinet
status as the Department of Veterans Affairs [VA].
---------------------------------------------------------------------------
\80\Ibid.
---------------------------------------------------------------------------
Today the Department offers an array of assistance to
veterans and their families, and provides its range of benefits
through three agencies: the Veterans Health Administration
[VHA], the Veterans Benefits Administration [VBA], and the
National Cemetery Administration [NCA]. Congress remains
committed to ensuring the VA's roles are carried out
effectively, and this budget maintains that commitment, giving
priority to veterans' benefits and services. Part of that
commitment entails effective and efficient management of VA
services. In this regard, the Department is long overdue for
many program and management reforms to health care,
readjustment benefits, disability compensation rating schedule
and disability compensation benefit program.
The VA budget includes both discretionary and direct
spending. Discretionary accounts fund medical care, medical
research, construction programs, information technology, and
general operating expenses, among other activities. Direct
spending accounts fund disability compensation, pensions,
vocational rehabilitation and employment, education, life
insurance, housing, and burial benefits, among other benefits
and services. In 2014, Congress enacted the Veterans Access,
Choice and Accountability Act of 2014\81\ and established a new
fund, classified as direct spending, to provide care under the
Veterans Choice Program [VCP]. Recently, the VA notified
Congress that additional funding would be needed to continue
VCP past August 2017.
---------------------------------------------------------------------------
\81\Public Law 113-146.
---------------------------------------------------------------------------
For fiscal year 2018, the budget resolution calls for
discretionary spending of $79.1 billion in budget authority--
about 6 percent higher than the fiscal year 2017 enacted
level--and $77.9 billion in outlays. These figures match
President Trump's budget request. Direct spending in fiscal
year 2018 is $97.6 billion in budget authority and $100.2
billion in outlays. The 10-year direct spending totals for
budget authority and outlays are $1.2 trillion and $1.2
trillion, respectively. This resolution accommodates up to
$70.7 billion for fiscal year 2019 in discretionary advance
appropriations for medical care.\82\
---------------------------------------------------------------------------
\82\Public Law 111-81.
---------------------------------------------------------------------------

The Challenge of Veterans' Health Care
and Benefits Programs

The Federal Government's obligation to veterans is to
assist in their readjustment into society and to help them
overcome any significant barriers that may have arisen as a
consequence of their military service.\83\ After many decades
of trial and error, the government has developed a reasonably
successful VA health care system and set of benefit programs to
meet the needs of veterans with service-connected conditions or
disabilities. Nevertheless, both need improvement.\84\ The
leading problems are decades of traditional philosophy and a
failure to adjust to current service-connected veterans'
needs.\85\ According to the Government Accountability Office
[GAO]: ``VA faces challenges regarding the reliability,
transparency, and consistency of its budget estimates for
medical services, as well as weakness in tracking obligations
for medical services and estimating budgetary needs for future
years.''\86\
---------------------------------------------------------------------------
\83\Clarence Adamy, William Donovan, Paul Hawley, Martin Jenkins,
Theodore Petersen, John Thompson, Veterans' Benefits in the United
States, April 1956.
\84\Ibid.
\85\Ibid.
\86\Government Accountability Office, VA's Health Care Budget, June
2016.
---------------------------------------------------------------------------
The Veterans Access, Choice and Accountability Act set in
motion an examination of the underlying causes of failures of
the VA health care system. Both the Independent Assessment and
the Commission on Care established as a result of the statute
made a series of recommendations to reform the VA health care
delivery system. The Independent Assessment found that ``the
organization is plagued by many problems: growing bureaucracy,
leadership and staffing challenges, and an unsustainable
trajectory of capital costs.''\87\ The Independent Assessment
also made numerous recommendations including a systematic
approach to aligning demand, resources, and eligibility for
care; developing a patient-centered operation that balances
local autonomy with appropriate standardization across the VA
health care system; developing data and tools; and improving
leadership.\88\
---------------------------------------------------------------------------
\87\The CMS Alliance to Modernize Healthcare, Centers for Medicare
and Medicaid Services, Veterans Choice Act Independent Assessment
(Section 201)-
Integrated Report, prepared for the U.S. Department of Veterans
Affairs, 1 September 2015, p. xii.
\88\Committee on Veterans Affairs, U.S. House of Representatives,
hearing on ``Independent Assessment of the Health Care Delivery Systems
and Management Processes of the Department of Veterans Affairs,'' 7
October 2015.
---------------------------------------------------------------------------
Health care delivery and financing have evolved
significantly since the Federal Government began providing care
to veterans after World War I and it continues to evolve. As
stated by the Commission on Care eligibility for VA health care
has not been examined since 1996. ``[A]dditionally, the
enrollment system the department established is not being used
today to calibrate supply and demand as envisioned.''\89\ As
recommended by the Commission, Congress should emphasize
reforming an inadequate health care priority system and
``identify who VHA will serve, and what services it will
provide.''\90\ The growth of VA's health care and benefit
programs are straining budgetary resources in a tight fiscal
climate due to an unprecedented expansion in their scope,
liberalization of eligibility conditions, and broad
interpretation of laws.\91\
---------------------------------------------------------------------------
\89\Commission on Care, Commission on Care Final Report, 30 June
2016: https://s3.amazonaws.com/sitesusa/wp-content/uploads/sites/912/
2016/07/Commission-on-Care_Final-Report_063016_FOR-WEB.pdf.
\90\Ibid.
\91\Op. cit., Adamy; Nina Owcharenko, Proceed with Caution: The
Unintended Consequences of Expanding VA Access, 17 March 2006.
---------------------------------------------------------------------------
VA's program structure is largely based on precedents built
up over decades of piecemeal laws.\92\ The health care and
benefits provided to recent veterans ``were built upon those
provided for their predecessors.''\93\ While, the majority of
these services are well-intentioned, they are long overdue for
revision and modernization to ensure they address today's
overall needs.\94\ The VA needs a clear philosophy or guiding
principle governing its health care and benefits programs.
---------------------------------------------------------------------------
\92\Op. cit., Adamy.
\93\Ibid.
\94\United States Code: Title 38--Veterans' Benefits.
---------------------------------------------------------------------------
If traditional patterns continue, the magnitude and scope
of VA programs will continue to grow so large in future years
that the ``moral and economic stability of our whole society
can be adversely affected.''\95\ Yet any discussion on the
future of the VA health care system and benefit programs should
be based solely on facts that can lead to a more equitable and
rational system.\96\ If the ``goal is not to get veterans off
disability and to become active, contributing members of
society then what is the goal?''\97\
---------------------------------------------------------------------------
\95\Op. cit., Adamy.
\96\James D. Ridgway, The Splendid Isolation Revisited: Lessons
from the History of Veterans' Benefits Before Judicial Review, Veterans
Law Review [Vol 3. 2011], 10 February 2011.
\97\Committee on Veterans' Affairs, U.S. House of Representatives,
hearing on ``Overcoming PTSD: Assessing VA's Efforts to Promote
Wellness and Healing,'' 7 June 2017: http://docs.house.gov/meetings/VR/
VR00/20170607/106073/HHRG-115-VR00-Wstate-OByrneB-20170607.pdf.
---------------------------------------------------------------------------
Congress needs to thoroughly reassess the structure, scope,
philosophy, and administration of the VA health care system and
benefit programs that veterans and their families use.\98\
---------------------------------------------------------------------------
\98\Op. cit., Adamy; John S. O'Shea, Reforming Veterans Health
Care: Now and for the Future, Heritage Foundation, 24 June 2016; and,
James D. Ridgway, The Splendid Isolation Revisited: Lessons from the
History of Veterans' Benefits Before Judicial Review, Veterans Law
Review [Vol 3. 2011], 10 February 2011.
---------------------------------------------------------------------------

The Way Forward

VA needs to adopt a new way of thinking to address its most
challenging problems, such as access to health care, the
quality and delivery of programs, and cost management. All
programs should maximize net benefits for the veterans, and be
cost and target efficient.
Reducing moral hazard on the part of government agencies
and program beneficiaries is one of many ways to improve VA
programs.\99\ All VA programs vulnerable to significant moral
hazard should require adequate cost-sharing to assure that
beneficiaries commit enough of their own resources to act
responsibly, with amounts scaled to what they can afford.
---------------------------------------------------------------------------
\99\Ibid.
---------------------------------------------------------------------------
Additionally, as large number of veterans age, they become
entitled to Medicare. Some veterans also qualify for Medicaid
based on income. Based on the 2014 survey results, VHA reported
that 78 percent of veterans enrolled in the VA health care
system had another form of health care coverage as well. If
veterans are provided greater access to care in the community,
imposing health insurance elements such as premiums,
deductibles, or coinsurance to control costs and to restrain
spending may be considered.\100\
---------------------------------------------------------------------------
\100\Congressional Research Service, Do Veterans Have Choices in
How They Access Health Care? 13 June 2016: http://www.crs.gov/reports/
pdf/IF10418.
---------------------------------------------------------------------------
Since 2015, GAO has included the VA's Information
Technology [IT] systems and VA and DOD interoperability on its
``high-risk'' list.\101\ In 2017, Acting Assistant Secretary
for Information Technology and CIO for the Office of
Information and Technology at the VA, acknowledged VA's
previous failures to modernize their IT system and build them
from the ground up.\102\ In 2013, VA and DOD decided to abandon
an initiative to create a joint medical health sharing record
system, citing ``different system needs and a projected total
price tag of $28 billion.''\103\ On 5 June 2017, VA Secretary
Shulkin announced VA would adopt DOD's MHS Genesis Electronic
Health Record IT platform at an estimated cost of at least $4
billion and abandon VA's VistA platform after spending billions
of taxpayer dollars on upgrading a failed VistA EHR
interoperable IT system.\104\ After IT, construction, and
health care modernization attempts, failures, and billions of
taxpayer dollars wasted, Congress should require any VA rule or
regulation with an annual economic impact of $100 million or
more to come before Congress for an up-or-down vote before
implementation.\105\
---------------------------------------------------------------------------
\101\Government Accountability Office, Improving the Management of
IT Acquisitions and Operations, January 2017: http://www.gao.gov/
highrisk/improving_management_it_acquisitions_operations/
why_did_study#t=0
\102\Committee on Veterans' Affairs, U.S. House of Representatives,
hearing on ``Assessing the VA IT Landscape: Progress and Challenges,''
7 February 2017.
\103\Patricia Kime, ``Pentagon, VA health records systems still far
from interoperable,'' Military Times, 28 October 2015.
\104\Leo Shane, ``VA to use DOD's electronic medical records
system,'' Military Times, 5 June 2017.
\105\There is a precedent with VA major construction projects over
$100 million. VA needs Congressional certification to move forward with
construction projects over $100 million threshold. Neil Siefring, ``The
REINS Act will keep regulations and their costs in check,'' The Hill.
16 February 2016: http://thehill.com/blogs/pundits-blog/economy-budget/
250178-the-reins-act-will-keep-regulations-and-their-costs-in; and
Passage of H.R. 427 (H. Rept. 114-214), the Regulations from the
Executive in Need of Scrutiny Act of 2015 (REINS Act), (H.R. 427, H.
Rept. 114-214): https://www.congress.gov/bill/114th-congress/house-
bill/427.
---------------------------------------------------------------------------
Congress and the Executive Branch should conduct a thorough
analysis of VA and reassess its missions based on their
importance, difficulty, and past success. One area of likely
consensus lies in personnel reforms. VA's workforce is in
serious crisis, experiencing a long-term decline in quality,
accountability, vision, energy, and professional commitment. No
organization or Federal agency can function properly without
maintaining an effective workforce--and that includes
disciplining employees when necessary.
Since its creation in 1946, the VA's personnel system has
been based on the urgent need to recruit physicians, dentists,
and nurses. That has come to be a problem in itself. A
personnel system built to expedite VA hiring has led to a
``lengthy disciplinary board process that prevents timely--and
thus, effective--imposition of discipline, particularly of the
more minor corrective actions.''\106\ The personnel system
desperately needs an overhaul to address its failures and
deficiencies. Additionally, Congress and the Executive Branch
can achieve greater reform if the VA begins to thin out its
bureaucracy, consolidating the number of VA layers between top
and bottom employees, reducing the number of managers,
accelerating the hiring and appointment processes (working
alongside the Congress where appropriate), streamlining the
disciplinary process, refining performance measure metrics, and
strengthening oversight and contract administration of private
employee contracts.\107\
---------------------------------------------------------------------------
\106\Keith Bell, A Special Study: The Title 38 Personnel System in
the Department of Veterans Affairs: An Alternate Approach, April 1991:
www.dtic.mil/get-tr-doc/pdf?AD=ADA234756.
\107\Ibid.
---------------------------------------------------------------------------
Without these steps, the consequences will be an
increasingly demoralized, poorly equipped, and undisciplined VA
workforce. These employees are, after all, the implementers and
ultimate instruments of the VA's policies, and if they are not
up to the job, then neither is the VA.

Illustrative Policy Options

The committees of jurisdiction--the Committee on Veterans'
Affairs and the Appropriations Subcommittee on Military
Construction, Veterans Affairs, and Related Agencies--should
continue effective oversight of the Department of Veterans
Affairs and Department of Labor Veterans' Employment and
Training Service programs to ensure resources are used
efficiently to achieve desired results. The Budget Committee's
authority applies solely to the budgetary parameters for each
committee of jurisdiction. The final policy choices will lie
with the committees, some options worthy of consideration to
achieve the budgetary goals of the resolution are described
below.

DISCRETIONARY SPENDING

Address the `High-Risk' Status of VA Health Care. Every two
years, at the start of a new Congress, the Government
Accountability Office [GAO] releases a ``high-risk'' list that
calls attention to Federal programs vulnerable to fraud, waste,
abuse, mismanagement, or needing transformation. In 2015, VA
health care was placed on the list for its inability to ensure
allocated resources are being used ``cost-effectively and
efficiently to improve veterans''' health care access, safety,
and quality.\108\ VA health care remains on the list today.
``[W]e continue to be concerned about VA's ability to ensure
its resources are being used cost-effectively and efficiently
to improve veterans' timely access to health care, and to
ensure the quality and safety of that care.''\109\ GAO notes
that although VA medical caseloads increased significantly over
the past decade, VA facilities often failed to keep up. ``In
some cases, the delays in care or VA's failure to provide care
at all reportedly have resulted in harm to veterans.''\110\ The
``Veterans Access, Choice, and Accountability Act of 2014''
(Public Law 113-146) provided $10 billion in additional
spending authority--to last through August 2017--to help
alleviate the problem, and led to the creation of the Veterans
Choice Program in November 2014. This has been only partly
successful. According to GAO: ``With the increased utilization
of community providers that has occurred as a result of the
``Veterans Access, Choice, and Accountability Act'', veterans
are required to navigate multiple complex health care systems--
the VA health care system and those of community providers--to
obtain needed health care services.''\111\ VA also suffers
problems ``regarding the reliability, transparency, and
consistency of its budget estimates for medical services, as
well as weaknesses in tracking obligations for medical services
and estimating budgetary needs for future years.''\112\
---------------------------------------------------------------------------
\108\Government Accountability Office, Managing Risks and Improving
VA Health Care, March 2017: http://www.gao.gov/highrisk/
managing_risks_improving_va_health_care/why_did_study
\109\Government Accountability Office, High Risk List, 1 March
2017: http://www.gao.gov/highrisk/overview.
\110\Ibid.
\111\Ibid.
\112\Ibid.
---------------------------------------------------------------------------
Additionally, as the Commission on Care highlighted in its
report:
``Choice involves tradeoffs. Reducing drive times to see a
doctor may lead to longer wait times, for example, if it
induces substantially more veterans to seek more care. VHA
reliance on contracting could also have unintended consequences
for already underserved communities. Providers in such
communities who join the local VHA network may decide to limit
the number of Medicare and Medicaid patients they accept into
their practices. In other, highly concentrated health care
markets, which are increasingly common throughout the United
States, VHA may not be able to contract for care in the
community except at higher prices. Such circumstances
underscore the importance of VHA retaining the option of
building its own capacity.''\113\
---------------------------------------------------------------------------
\113\Commission on Care, Commission on Care Final Report, 30 June
2016.
---------------------------------------------------------------------------
This budget option calls for the VA to review and implement
GAO's recommendations to update and improve VA's disability
compensation benefit program and health care system to remove
these items from GAO's ``high-risk'' list.

Reduce Improper Payments. Improper payments--payments made
in the wrong amounts, to the wrong people, or for the wrong
reasons--have consistently been a government-wide problem (see
discussion in separate section of this report). For fiscal year
2016, the VA reported $5.5 billion in improper payments,
principally in its Community Care and Purchased Long-Term
Services and Support programs.\114\
---------------------------------------------------------------------------
\114\Government Accountability Office, ``Veterans Affairs: Improper
Payment Estimates on Ongoing Efforts for Reduction,'' testimony to the
House Veterans Affairs Subcommittee on Oversight and Investigation, 24
May 2017.
---------------------------------------------------------------------------
Agencies with program(s) reported as noncompliant with the
``Improper Payments Elimination and Recovery Act of 2010''
[IPERA] for three consecutive years are required to propose to
their committees of jurisdiction statutory changes to bring the
program into compliance.\115\ IPERA compliance review serves as
a critical tool to ensure taxpayer dollars are not misspent and
to guarantee Federal agencies are proactive in addressing
program(s) with high improper payment error rates.\116\ This
budget option recommends the VA adhere to the requirement,
striving to mitigate, reduce, or eliminate future improper
payments.\117\
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\115\Public Law 111-204
\116\Nicholas Pacifico, Federal Improper Payments Are Significant,
Costing Taxpayers Billions, Project on Government Oversight, 12 July
2016.
\117\Public Law 111-204.

Sunset Advisory Committees. Federal advisory committees are
defined as ``any committee, board, commission, council,
conference, panel, task force, or other similar group'' that
dispenses ``advice or recommendations'' to the President and/or
Cabinet Secretaries.\118\ VA currently has 15 advisory
committees established by statute, and 10 non-statutory
panels.\119\ In 2015, for example, VA created a new initiative
called ``MyVA'' that focused on ``customer service from a
veteran's perspective.''\120\ The Appropriations Subcommittee
on Military Construction, Veterans Affairs, and Related
Agencies raised concerns with the funding and full-time
equivalent employees [FTEs] allocation to the new
initiative.\121\ The new initiative required a budget of $76.3
million and 204 FTEs for activities to support ``planned
customer data integration and Department-wide
reorganization.''\122\ The VA has yet to submit information
about the MyVA office, its mission, action plan, and cost of
such an undertaking.
---------------------------------------------------------------------------
\118\Public Law 92-463.
\119\U.S. Department of Veterans' Affairs, Advisory Committee Names
and Objectives, 3 January 2017.
\120\Public Law 114-92.
\121\Ibid.
\122\Ibid.
---------------------------------------------------------------------------
To ensure advisory committees are not inefficient or
duplicative of VA efforts, this illustrative option calls for
VA to ``review and eliminate advisory committees that are
obsolete, duplicative, low priority or serve a special, rather
than national interest,'' and sunset all committees after two
years of enactment, unless the Legislative Branch has specified
otherwise.\123\
---------------------------------------------------------------------------
\123\U.S. Office of Management and Budget, OMB Circular No. A-135
as Applied to Federal Advisory Committee Act, 28 June 1994: https://
www.whitehouse.gov/omb/circulars_a135 and Public Law 92-463.

Consolidate Transition Assistance Program Goals, Plans,
Success Program. Redundant Federal programs are leading to
millions, if not billions, in wasteful spending. At a time of
increased budget pressure, American taxpayers cannot afford to
keep buying the same service twice. The Transition Assistance
Program Goals, Plans, Success Program [TAP GPS] is designed to
facilitate service members' transition to civilian life and is
governed by a working group representing five agencies: the
Department of Defense, the Department of Education, the
Department of Labor [DOL], the Small Business Administration,
and the Office of Personnel Management. The working group
designs the curriculum composed of a five-day core class
focused on job-hunting skills and VA benefits. In addition, an
optional two-day course focuses on education, small business,
and trades training. TAP GPS is taught largely by contractors
hired by DOL and VA. Instead of combining the training
curricula requirements into one overarching contract, however,
VA and DOL have awarded separate contracts, thus doubling the
overhead costs. Veterans Benefits Administration leaders have
shifted TAP GPS funding to cover the costs of other VA non-
statutory job placement programs unrelated to the TAP GPS
program. This budget option recommends consolidating TAP
programs to achieve greater service-member and veterans'
transition results.

DIRECT SPENDING

Reform VA's Rating Schedule for Disability Compensation.
The Department of Veterans Affairs administers one of the
largest Federal disability compensation benefit programs, based
on the loss of earning potential as a result of service-
connected disability.\124\ Under sections 1110 and 1155 of
Title 38, VA is required to ``adopt and apply a schedule of
ratings of reductions in earning capacity from specific
injuries or combination of injuries'' to determine the
veteran's disability compensation amount.\125\ In fiscal year
2016 (the most recent figures available), VA provided $64.7
billion in disability compensation payments to 4.3 million
veterans with service-connected disabilities.\126\ Currently,
the VA uses the ``1945 Rating Schedule and its medical criteria
with some revisions to evaluate veterans for disability
compensation.''\127\ Over the years, VA's rating schedule
criteria to assign degree of work disability have not been
consistent with ``changes in medicine and the labor market''--
leading some experts to believe some veterans with service-
connected injuries are being overcompensated or
undercompensated.\128\ In 2003, GAO designated VA's disability
compensation rating program as ``high-risk'' due in part to
VA's relying on outdated criteria to determine whether
recipients should qualify for disability compensation benefits
in relation to advances in ``medicine, technology, or changes
in the modern work environment.''\129\ The program remains on
the high-risk list today.
---------------------------------------------------------------------------
\124\Government Accountability Office, VA Disability Compensation:
Actions Needed to Address Hurdles Facing Program Modernization,
September 2012: http://www.gao.gov/assets/650/647877.pdf.
\125\38 U.S. Code Sec. 1110 and 38 U.S. Code Sec. 1115
\126\Department of Veterans Affairs, VBA Annual Benefits Report,
2016: http://www.benefits.va.gov/REPORTS/abr/ABR-Compensation-FY16-
0613017.pdf.
\127\H.R. 5149, to govern the effective dates of ratings and awards
under the Veterans' Administration revised Schedule for Rating
Disabilities, 1945, and for other purposes, 79th Congress: 2nd Session,
4 June 1946: https://www.finance.senate.gov/imo/media/doc/Rpt79-
1417.pdf and Institute of Medicine; Board on Military and Veterans
Health; Committee on Medical Evaluation of Veterans for Disability
Compensation; Michael McGeary, Morgan A. Ford, Susan R. McCutchen, and
David K. Barnes, A 21st Century System for Evaluating Veterans for
Disability Benefits, 2007.
\128\Op. cit. Government Accountability Office, VA Disability
Compensation: Actions Needed to Address Hurdles Facing Program
Modernization, September 2012: http://www.gao.gov/assets/650/
647877.pdf.
\129\Op. cit. Government Accountability Office, Improving and
Modernizing Federal Disability Programs (also appears in the 2015 High
Risk Report), February 2015: http://www.gao.gov/highrisk/
improving_federal_disability/why_did_study#t=0.
---------------------------------------------------------------------------
The rating schedule needs a systematic overhaul to align
with present-day accepted medical principles and medical
standards, and to address whether disabilities lower than 30
percent constitute material impairment of earning
capacity.\130\ This budget option calls for reforming the
rating schedule.
---------------------------------------------------------------------------
\130\Op. cit. VA Disability Compensation: Actions Needed to Address
Hurdles Facing Program Modernization, Institute of Medicine; Board on
Military and Veterans Health; Committee on Medical Evaluation of
Veterans for Disability Compensation; Michael McGeary, Morgan A. Ford,
Susan R. McCutchen, and David K. Barnes, A 21st Century System for
Evaluating Veterans for Disability Benefits, 2007.

Reform VA's Disability Compensation Program. In 1924,
through Public Law 68-242, the ``World War Veterans Act of
1924'', Congress established veterans' benefits program and
today's VA disability compensation program.\131\ Disability
compensation provides a monthly cash benefit to veterans who
have incurred an injury or disease contracted in, or aggravated
by, active military service.\132\ The disability compensation
program does not always reflect ``recent medical and
technological advances, and their impact on medical conditions
that affect potential earnings.''\133\ VA's disability
compensation program has not kept pace with changes in the
labor workforce from a ``manufacturing-based jobs to service--
and knowledge-based'' market, and changes in skillsets has also
evolved.\134\ These labor market changes are not reflected in
VA's rating for disability compensation.\135\ This budget
option recommends Congress direct VA to evaluate ``whether the
ratings for conditions in the schedule correspond to veterans'
average loss in earnings due to these conditions and adjust
disability ratings accordingly,'' and that VA conduct a study
and report to Congress on the effects and impact medical
advancements and technology would have on VA's disability
compensation program and benefit package.\136\ VA should also
refine the current Disability Presumption Process to avoid
listing ``conditions that are associated with age and
lifestyle--as opposed to chemical exposure'' on the presumptive
list.\137\
---------------------------------------------------------------------------
\131\Department of Veterans Affairs, VA Disability Compensation
Program: Legislation History, December 2004: https://www.va.gov/op3/
docs/ProgramEvaluations/DisCompProgram/
Disability_Comp_Legislative_Histor_lit_Review.pdf.
\132\38 U.S.C. Sec. 1131.
\133\Committee on Veterans' Affairs, U.S. Senate, hearing on
``Proposals to Limit Eligibility for VA Compensation to Veterans with
Disabilities Directly Related to the Performance of Duty,'' 23
September 2003.
\134\Ibid.
\135\Ibid.
\136\Ibid.
\137\Congressional Research Service, Veterans Affairs: Presumptive
Service Connection and Disability Compensation, 18 November 2014:
www.crs.gov/Reports/R41405.

Update VA's Individual Unemployability Benefits. The VA's
Individual Unemployability [IU] program pays certain veterans
disability compensation at the 100-percent rate, even though VA
has not rated the veteran at that level.\138\ In 2003, GAO
designated VA's IU program as high-risk, and it remains on the
list today.\139\ In September 2015 (the most recent figures
available), more than 60 percent of veterans receiving VA's IU
supplemental benefit were 65 or older.\140\ From fiscal year
2009 through 2013, the VA's IU benefit program increased by 22
percent with a ``73 percent increase in the subgroup of
beneficiaries aged 65 and older.''\141\ Moreover, about 2,800
of new first time beneficiaries were 75 years of age and
older--with 400 of them 90 and older.\142\ These trends have
raised the question of what constitutes ``unemployability'' in
today's economy.\143\ This budget option recommends the
following: 1) institute an application restriction to veterans
age 70 and older from applying for the first time to the VA's
IU benefit program; 2) revise VA regulations to require all
veterans applying for IU be referred to the vocational
rehabilitation unit for work potential evaluation before being
considered for IU benefits; 3) codify the IU program into law
(it is currently regulatory, not statutory) to ensure it
functions appropriately through congressional oversight; 4)
update the IU program to reflect today's economy; and 5) means
test the program.\144\ This budget recommendation also assumes
beneficiaries who were enrolled before enactment would not be
affected by any policy change.
---------------------------------------------------------------------------
\138\Department of Veterans Affairs, Individual Unemloyability,
2017: http://www.benefits.va.gov/compensation/claims-special-
individual_unemployability.asp.
\139\Government Accountability Office, High Risk List, January
2017: http://www.gao.gov/highrisk/overview.
\140\Congressional Budget Office, Options for Reducing the Deficit:
2017 to 2026, 8 December 2016.
\141\Government Accountability Office, Veterans' Disability
Benefits: VA Can Better Ensure Unemployability Decisions Are Well
Supported, 2 June 2015: http://www.gao.gov/products/GAO-15-464.
\142\Ibid.
\143\Ibid.
\144\General Accounting Office, Veterans Benefits: Improving the
Integrity of VA's Unemployability Compensation Program, September 1987:
http://www.gao.gov/assets/150/145765.pdf; and, 38 CFR Sec. 4.16a.

Slow the Growth of Education Tuition Increases. The Post-9/
11 GI Bill covers veterans' tuition, fees, and textbook costs,
in addition to providing a monthly living stipend. Veterans'
education benefits became significantly more generous following
the 2008 passage of the Post-9/11 GI Bill. Over the past
decade, education tuition annually on average have been higher
than the average rate of inflation--increasing VA's education
payments on an annual basis.\145\ The rapidly increasing
tuition cost nationwide is causing substantial, unexpected
increases in education benefit spending, putting future
benefits at risk. In 2011, the House and Senate Veterans'
Affairs Committees' letter to the Joint Select Committee on
Deficit Reduction [JSCDR] recommended this policy proposal to
slow the rate of education growth.\146\ This budget option
would cap the increase in tuition assistance at 3 percent,
providing sustainability of the program in the out years. This
budget recommendation also assumes beneficiaries who were
enrolled before enactment would not be impacted by any policy
change.
---------------------------------------------------------------------------
\145\Saving for College, The Real Cost of Higher Education, 2016:
http://www.savingforcollege.com/tutorial101/
the_real_cost_of_higher_education.php.
\146\Chairs and Ranking Members of the Veterans' Affairs Committees
letter to the Joint Select Committee on Deficit Reduction, 14 October
2011: https://veterans.house.gov/sites/republicans.veterans.house.gov/
files/HVAC-SVAC%20Letter%20to%20JSC.pdf.

Reform VA Home Loan Guaranty Funding Fee Rates. The VA's
home loan guaranty funding fee was first established through
the ``Omnibus Budget Reconciliation Act of 1982'' (Public Law
97-253).\147\ Under current law, VA may guarantee a home loan
to eligible service members, veterans (with both service-
connected and non-service-connected injuries), reservists, and
certain unmarried surviving spouses to purchase houses,
condominiums, and manufactured homes.\148\ In addition, the VA
may not collect a funding fee from a service-connected-injured
veteran.\149\ The VA funding fee percentage varies from 0.5
percent to 3.3 percent depending on several factors. Among
these factors are whether the veteran is a first-time homebuyer
or if the veteran is making a down payment.\150\
---------------------------------------------------------------------------
\147\Public Law 97-253: https://transition.fcc.gov/Bureaus/OSEC/
library/legislative_histories/1657.pdf.
\148\Subchapter III of title 38, United States Code.
\149\Subsection (C)(1), section 3729 of title 38, United States
Code.
\150\Public Law 113-146
---------------------------------------------------------------------------
Since 1982, the VA Home Loan Guaranty funding fee rates
have been adjusted to pay for other VA programs.\151\ Current
VA funding fees are lower than other Federal housing programs,
such as the Federal Housing Administration. This budget option
calls for the VA Home Loan Guaranty funding fee rates for non-
service-connected veterans be reformed at a reasonable rate,
while ensuring the integrity and sustainability of the program
stays intact. This budget recommendation also assumes
beneficiaries who were enrolled before enactment would not be
affected by any policy change.
---------------------------------------------------------------------------
\151\The VA Home Loan Guaranty funding fee was used as an offset in
Public Law 97-253, The Omnibus Budget Reconciliation Act of 1982, and
Public Law 113-146, Veterans Access, Choice and Accountability Act of
2014.

Reform Dependent Housing Stipend. The GI Bill's primary use
is assisting a veteran's reintegration into civilian life by
providing the education and skills necessary to gain meaningful
employment after military service. To provide both a recruiting
and retention incentive, the Post-9/11 GI Bill allows each
military service to determine which service members who meet
the statutory eligibility requirements to transfer all or some
of their education benefits to their dependents. Instead of
targeting the benefit to retain service members with critical
needed skills, the services have made eligible all service
members who qualify under the time-in-service requirements.
This budget option calls for the Post-9/11 GI Bill to restore
its original intent by focusing resources on veterans
readjusting into society after their military career, and for
VA and DOD to assess the transferability's impact on
recruitment and retention. This budget recommendation also
assumes beneficiaries who were enrolled before enactment would
---------------------------------------------------------------------------
not be affected by any policy change.

Prevent VA from Providing Unlimited Amounts for Flight
Training at Public Schools. Brought to Congress' attention by
the VA, Veterans Service Organizations, and the National
Association of State Approving Agencies [NASAA], some flight
schools are exploiting an aviation training tuition loophole in
the Post-9/11 GI Bill.\152\ Some institutions of higher
learning have applied extreme costs for flight fees as there
are no caps in place for such institutions with third-party
flight contractors. According to representatives from NASAA,
some student veterans are taking flight classes as electives
with no cost cap for flight fees.\153\ In response to concerns
from stakeholders regarding this loophole, in 2016 the House
Veterans Affairs Subcommittee on Economic Opportunity
introduced H.R. 3016, the ``Veterans Employment, Education, and
Healthcare Improvement Act'', which grandfathered current
flight school students' tuition for two years and made
improvements to veterans' educational assistance. In 2016, the
measure passed the House on a bipartisan basis. This budget
option reflects a provision in H.R. 3016 that applies a tuition
cap for flight programs at public institutions of higher
learning that is consistent with other veterans' educational
programs.\154\ This budget recommendation also assumes
beneficiaries who were enrolled before enactment would not be
affected by any policy change. This policy recommendation is
also included in President Trump's fiscal year 2018 budget
request.
---------------------------------------------------------------------------
\152\Curtis L. Coy, Deputy Under Secretary for Economic
Opportunity, Veterans Benefit Administration, testimony before the
House Veterans' Affairs Subcommittee on Economic Opportunity, 19
November 2014: https://veterans.house.gov/witness-testimony/mr-curtis-
l-coy-7. The Iraq and Afghanistan Veterans of America, the American
Legion, and the Veterans of Foreign Wars all support closing this
loophole.
\153\Ibid.
\154\``Veterans Employment, Education, and Healthcare Improvement
Act'' (H.R. 3016): https://www.congress.gov/bill/114th-congress/house-
bill/3016/text.

Round Down Annual Cost-of-Living Allowance to the Next
Lower Whole Dollar. This option would require VA to round down
increases in the monthly compensation rate resulting from an
annual cost-of-living adjustment [COLA] to the next lower whole
dollar. The VA would apply this round down to both disability
compensation and dependency and indemnity compensation
payments. A similar requirement expired at the end of 2013 and
this budget option recommends a reinstatement of this policy.
This policy recommendation is also included in President
---------------------------------------------------------------------------
Trump's fiscal year 2018 budget request.

Reform Chapter 33, Post-9/11 GI Bill, Monthly Housing
Allowance Rate. Under current law, the Post-9/11 GI Bill
housing allowance is based on the Department of Defense monthly
housing allowance [MHA] for a service member in pay grade E-5
with dependents.\155\ The housing allowance is equal to the MHA
payment for the military housing area in which the institution
of higher learning is located, and reduced according to the
beneficiary's enrollment rate.\156\
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\155\Section 403 of title 37 (The E-5 with dependents BAH is the
monthly basic allowance for housing for a member of the Armed Forces
with dependents in pay grade E-5) and subsection (B)(i)(I), Section
3313 of title 38.
\156\Cassandria Dortch, The Post-9/11 Veterans Educational
Assistance Act of 2008 (Post-9/11 GI Bill): Primer and Issues,
Congressional Research Service, 28 July 2014.
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The current Post-9/11 GI Bill policy for MHA payment does
not take into account that not every Post-9/11 GI Bill
beneficiary has a dependent. The Post-9/11 GI Bill is the only
Federal program to pay individuals with a dependent who do not
warrant such a payment (e.g., Active Duty MHA and IRS filings).
The Post-9/11 GI Bill MHA should be aligned with other federal
programs. This budget option recommends a change to the current
policy to require that beneficiaries verify their dependent to
collect Post-9/11 GI Bill BAH at the E-5 with dependent pay
rate. Should the beneficiary be unable to verify their
dependent, they will be paid at E-5 without dependent pay rate,
and dependents will be paid at the E-5 without dependent pay
rate. This budget recommendation also assumes beneficiaries who
were enrolled before enactment would not be affected by any
policy change.

ADMINISTRATION OF JUSTICE

Function Summary

While freedom is Americans' most cherished possession,
their personal safety and equal protection under the law are
instrumental in securing it. Therefore, over the Nation's
history, States, localities, and the Federal Government have
written laws and established institutions to ensure their
enforcement. As in so much of the American system, States and
localities are better suited to enforcing laws of more local or
regional character. The Federal Government's main role is to
address security issues that affect the entire Nation, such as
terrorism and border security. Yet vast amounts of Federal
resources are shipped back to the States and localities they
came from, typically with strings attached by domineering
Washington bureaucracies.
The ongoing risk of domestic terrorism, and the tidal wave
of government debt, call for better targeting of Federal law
enforcement funds. Federal tax dollars for the Department of
Justice [DOJ] and the Department of Homeland Security [DHS]
should be focused on administering justice, arresting and
prosecuting terrorists, protecting and securing the Nation's
borders, investigating Federal crimes, and seeking punishment
for those guilty of unlawful behavior. Local law enforcement,
in contrast, is the responsibility of the States and local
communities, and they should determine the best course of
action in deterring local crime.
In 2016, the Federal Government provided States and
localities with more than $666 billion in grants.\157\ Of that
amount, $2.4 billion went to three agencies in the Department
of Justice: the Office of Justice Programs, the Office on
Violence Against Women, and the Community Oriented Policing
Services Office. The Government Accountability Office reported
in 2012 that many of DOJ's roughly 11,000 annual grants are
awarded without consideration of overlap or duplication with
other grant programs, and that DOJ should better target its
grants. GAO's 2015 update of that report states that DOJ had
only partially addressed this area of potential
duplication.\158\ In former President Obama's last budget
proposal, Washington was to award $7.2 billion in total justice
and homeland security grants to State and local governments. It
is not the function of the Federal Government to finance State
and local governments. Federal law enforcement needs to focus
on its core responsibilities. The Executive Branch needs clear
guidance from Congress in facing the Nation's continuing
security threats.
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\157\Government Accountability Office, DOJ Grants Management:
Justice Has Made Progress Addressing GAO Recommendations, testimony
before the House Oversight and Government Reform Subcommittee on
Government Operations, 14 July 2016.
\158\Government Accountability Office, 2015 Annual Report:
Additional Opportunities to Reduce Fragmentation, Overlap, and
Duplication and Achieve Other Financial Benefits, April 2015, p. 209:
http://www.gao.gov/assets/670/669613.pdf.
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The principal activities in this category (Function 750 in
the summary tables) include Federal law enforcement programs,
litigation and judicial activities, correctional operations,
and border security. The function includes most of the
Department of Justice and several components of the DHS. Other
agencies funded here include the Federal Bureau of
Investigation [FBI]; the Drug Enforcement Administration; the
Bureau of Alcohol, Tobacco, Firearms and Explosives; the United
States Attorneys; legal divisions within the Department of
Justice; the Legal Services Corporation; the Federal Judiciary;
and the Federal Bureau of Prisons.
The vast majority of this category's funding is
discretionary, provided by the Appropriations Subcommittees on
Commerce, Justice, Science and Related Activities, and Homeland
Security. The Committee on the Judiciary and the Committee on
Homeland Security have the main authorizing duties. The
resolution calls for $54.0 billion in discretionary budget
authority and $55.2 billion in outlays for fiscal year 2018.
The small amount of direct spending in the category--which
funds certain immigration activities, the Crime Victims Fund,
the Assets Forfeiture Fund, and the Treasury Forfeiture Fund,
among others--totals -$2.6 billion in budget authority and $5.9
billion in outlays for fiscal year 2018. The 10-year totals for
the function are $628.6 billion in budget authority and $637.8
billion in outlays.

TERRORISM

In the 16 years since 9/11, Americans have grown accustomed
to living in an environment of enhanced security. Airports,
government buildings, major sporting venues, and myriad other
public facilities now feature the instruments of vigilance that
have become necessarily common. Yet despite these measures,
terrorism continues to lurk in the shadows, striking out all
too unexpectedly--from San Bernardino to Orlando, Chattanooga
to the campus of Ohio State University. Terrorists need to
succeed only once to inflict their damage; the vigilance needed
to stop them must be tireless and ongoing. Yet this must not
entail any sacrifice of personal freedoms so easily at risk in
today's high-technology environment. The words of the Fourth
Amendment are unconditional: ``The right of the people to be
secure in their persons, houses, papers, and effects, against
unreasonable searches and seizures shall not be violated * *
*'' [emphasis added].

IMMIGRATION AND BORDER SECURITY

The ongoing debate over America's troubled immigration
processes demonstrates the numerous vexing challenges in
addressing the issue. All too often, the current system rewards
those who enter the United States illegally, while doing little
to recognize those who spend years waiting in line to immigrate
properly. While specific immigration policies debated in
previous years provided for semi-legal protections for
undocumented residents already present within the United
States, comprehensive reforms must make security a paramount
concern. Whether it is enhanced protection, increased
enforcement, or more robust cooperation between Federal and
local jurisdictions, immigration reform policies cannot proceed
until all Americans have confidence in the security of the
Nation's borders.

SANCTUARY CITIES

A ``sanctuary city'' is one that has adopted a policy of
protecting undocumented immigrants, which runs contrary to
Federal immigration law. These cities not only fail to
prosecute violations, in specific situations they have enabled
criminal activity. As stated by Immigration and Customs
Enforcement [ICE]: ``A significant factor impacting removal
operations has been the number of state and local law
enforcement jurisdictions that have limited or declined
cooperation with ICE, due to the enactment of numerous state
statutes and local ordinances reducing and/or preventing
cooperation with ICE, in addition to federal court decisions
that created the perception of liability concerns for
cooperating law enforcement agencies. Declined detainers result
in convicted criminals being released back into U.S.
communities with the potential to re-offend. Moreover, they
draw resources away from other ICE efforts to protect public
safety, by requiring ICE to expend additional resources to
locate and arrest convicted criminals at-large rather than
safely taking custody of such individuals in jails.''\159\
President Trump has criticized such ``sanctuary cities'' and
has pledged to defund them. Withholding Federal funds from
these cities may be initiated by placing an amendment in the
Commerce, Justice, and Science Appropriations bill that blocks
grants from the Department of Justice to local law enforcement
agencies that engage in sanctuary practices. Congress could
take action on one or both of the following pieces of
legislation introduced in the 115th Congress. H.R. 83, the
``Mobilizing Against Sanctuary Cities Act'', would prohibit a
State or local government from receiving Federal funds for a
minimum of one year if it interfered with immigration laws.
Similarly, H.R. 3003, the ``No Sanctuary for Criminals Act''--
cosponsored by Representatives Goodlatte (R-VA), King (R-IA),
and Biggs (R-AZ)--restricts sanctuary jurisdictions from
receiving Federal law enforcement grants while protecting
jurisdictions who comply with immigration law from being sued.
The bill also has the potential to decrease government spending
and lower the deficit by as-yet-undetermined amounts, according
to the Congressional Budget Office.
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\159\Department of Homeland Security, DHS Releases End of Fiscal
Year 2016 Statistics, 30 December 2016: https://www.dhs.gov/news/2016/
12/30/dhs-releases-end-year-fiscal-year-2016-statistics.
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THE JUDGMENT FUND

The Judgment Fund was created in 1956 to pay judgments and
settlements of lawsuits against the Federal Government. The
fund is a permanent appropriation, and payments do not require
congressional notification or approval. Simply put, it is a
limitless bank account shielded from congressional oversight.
Due to the fund's design, the Obama Administration was able
to pay billions of dollars in interest payments to Iran,
sidestepping Congress. On 17 January 2016, the State Department
announced the U.S. Government agreed to pay the Iranian
government $1.7 billion to settle a case related to the sale of
military equipment prior to the Iranian revolution, and $1.3
billion was sourced through the Judgment Fund.
The Obama Administration's ability to unilaterally draw
from the fund for its agenda without congressional oversight or
approval illustrates the fund's inherent structural flaws.
Several long-term solutions are available for consideration
that would reassert Congress's Article I power of the purse,
reining in automatic spending that currently occurs through
this program, and closing the administrative loophole. Congress
could require a Joint Resolution of Approval for any sum of
payments over a certain amount, increased transparency, and
agency reimbursements to the fund over a fixed time period.
Short-term solutions include H.R. 1096 and S. 565, the
``Judgement Fund Transparency Act of 2017'', which requires to
the Department of the Treasury to publically disclose details
after payments are made.

Illustrative Policy Options

In developing policies to meet their budget targets, the
committees of jurisdiction cited above should give priority to
those activities that are essential for the Federal Government.
This does not necessarily require more funding in each area; it
means addressing those Federal responsibilities first. The
committees have sole authority in determining the policy
choices and priorities in these areas. The discussions below
are illustrative, intended to indicate policy options or
directions the committees might consider.

DISCRETIONARY SPENDING

Consolidate Justice Grants. In fiscal year 2016, DOJ
awarded $2.4 billion in grants to conduct research, provide
training assistance, and support the State and local criminal
justice system. The Congressional Research Service and GAO have
identified overlap and duplication within many of these grant
programs, and it is clear they fund law enforcement activities
that are primarily State and local responsibilities. In
addition, Federal grants should not be awarded to State and
local law enforcement agencies unless they comply with the
Federal law. This includes jurisdictions that refuse to honor
Federal detainers, harbor illegal aliens, or fail to share
information on criminal illegal aliens. This option streamlines
grants into three categories--first responders, law
enforcement, and victims--while eliminating waste,
inefficiency, and bureaucracy.

Eliminate Unnecessary Headquarters and Construction Funding
for DHS, DOJ, and the Judiciary. Construction funding for
various agencies within this budget function have increased
without due oversight and cost-benefit analysis, though the
committees of jurisdiction have focused on addressing cost
overruns and increasing accountability. This budget recommends
reducing DHS and DOJ construction budgets by 15 percent to rein
in unnecessary construction projects, exempting those agencies
involved with border security and immigration enforcement. The
budget recommends additional scrutiny of cost overruns of DHS's
St. Elizabeth's project, the largest Federal building project
in the District of Columbia since the Pentagon. Another major
concern is the mishandling of taxpayer funds by the General
Services Administration for giving priority to green energy
projects over security and life safety issues at Federal
courthouses. The renovation of the Poff Federal Building is a
prime example of this wasteful spending. A sum of $51 million
was used to make this building more energy-efficient, money
that was critically needed to address security and public
safety at other sites.

Eliminate the Legal Services Corporation. It is the duty of
State and local governments to provide legal services to those
individuals unable to provide it for themselves. Local
jurisdictions are more aware of their citizens' needs and can
provide more responsive service than the Federal Government.
Critics have argued that despite restrictions already in place,
the Legal Services Corporation too often focuses on social
activist causes rather than advocating for those persons
needing legal help the most.

DIRECT SPENDING

Permanently Extend Customs User Fees. Continuing the policy
of the ``Emergency Unemployment Compensation Extension Act of
2014'', the budget assumes the Bureau of Customs and Border
Protection continues to collect customs user fees through
fiscal year 2027, the last year of the budget window. With the
passage of the ``Emergency Unemployment Compensation Extension
Act of 2014'', authority to collect these fees expires in 2024.
The Bipartisan Budget Agreement of 2015 extended customs user
fee collections through 2025. This budget assumes making these
customs user fees permanent.

GENERAL GOVERNMENT

Function Summary

As government strives to make its programs more effective
and efficient, it must also do so with its own internal
operations. One cannot be achieved without the other. Yet this
has not been the case with many of the Federal Government's
agencies. Funding in the category of General Government
(Function 800 in the summary tables) has increased by roughly
30 percent in the past 10 years, but no one would contend the
additional resources have yielded commensurate gains in
productivity or effectiveness. Across the Nation, startups and
existing companies continue to innovate, replacing outdated
business practices and sectors of industry, but the Federal
Government remains entrenched in bloated bureaucracies, legacy
technology, and obsolete procedures. To respond to the Nation's
needs in the 21st Century, the Federal Government must
constantly improve operations, remove practices that stand in
the way of innovation, and maximize the return on taxpayers'
dollars. To this end, the budget resolution aims to eliminate
waste across all Federal Government branches and agencies, and
provide resources for necessary reforms to all facets of
government operations. If a program or activity is poorly
targeted, ineffective, duplicative of other efforts, requires
updated technology, or could be better performed by the private
sector, it is a candidate for elimination or restructuring.
This budget category mainly provides funding for the
Legislative and Executive Branches of the Federal Government.
On the legislative side, these funds support the operations of
Congress, including the Congressional Budget Office, the
Library of Congress, and the Government Accountability Office.
In the Executive Branch, the category finances the Executive
Office of the President, including the Office of Management and
Budget, the Council on Environmental Quality, White House
salaries, and White House building repair; general tax
administration and fiscal operations of the Department of the
Treasury (including the Internal Revenue Service); the Office
of Personnel Management; the real-property and personnel costs
of the General Services Administration; general-purpose fiscal
assistance to States, localities, the District of Columbia, and
U.S. territories; and other general government activities.
Most of this funding comes through annual appropriations
(discretionary spending), which in fiscal year 2018 totals
$15.9 billion in budget authority and $15.5 billion in outlays.
Budget authority for direct spending in this area will total
$7.7 billion, with $7.6 billion in accompanying outlays. Over
10 years, the budget anticipates $248.5 billion in total budget
authority and $245.8 billion in outlays.

Illustrative Discretionary Spending Policy Options

While specific policy decisions are entirely under the
authority of the committees of jurisdiction--which include the
Committees on Transportation and Infrastructure, House
Administration, Ways and Means, Natural Resources, and
Oversight and Government Reform--the discussion below offers
illustrative options they might consider. Funding for Federal
operations and property management are just a few areas where
savings should be achieved. This resolution also urges the
Office of Management and Budget and relevant agencies to make a
top priority of implementing the data aggregation and
transparency initiatives in the ``Digital Accountability and
Transparency Act'', as well as information technology upgrades
and the retirement of legacy systems via the Technology
Modernization Fund provided by the ``Modernizing Government
Technology Act of 2017''. The budget resolution also supports
the House Majority Leader's ``Innovation Initiative'', focusing
on modernizing the information and technology systems within
the Federal government to bring about greater efficiency and
efficacy.
Some specific options worthy of consideration are described
below.

Terminate the Election Assistance Commission. This
independent agency was created in 2002 as part of the ``Help
America Vote Act'' to provide grants to States to modernize
voting equipment. Its mission has been fulfilled. The National
Association of Secretaries of State, the association of State
officials responsible for administering elections, has passed
resolutions stating the Election Assistance Commission [EAC]
has served its purpose, and funding is no longer necessary. The
EAC should be eliminated and any valuable residual functions
should be transferred to the Federal Election Commission.

Accompany Pro-Growth Tax Reform with Responsible Reductions
to the Internal Revenue Service. The Internal Revenue Service
[IRS] has nearly 90,000 employees and spends in excess of $12
billion annually. Additionally, the Internal Revenue Code now
contains approximately four million words, and each year
taxpayers and businesses spend more than six billion hours
complying with filing requirements.\160\ The investigation
related to the IRS targeting American citizens demonstrates
that the massive budget has not resulted in better service to
taxpayers; rather, it has created a bloated bureaucracy filled
with inefficiency and abuse. A simplified tax code would have
the dual benefits of reducing both the time taxpayers devote to
complying with an overly complex code, and the taxpayer dollars
needed to administer and enforce it.
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\160\National Taxpayer Advocate, 2016 Annual Report to Congress,
December 2016.

Make More Efficient Use of Legislative and Executive Branch
Resources. The budget for the House of Representatives today is
$188 billion less than it was when Republicans assumed the
majority in 2011. This budget resolution aims to scale back
government wherever it has expanded needlessly or beyond its
proper role. That includes within government operations and
offices themselves. It also could include reforms such as
scaling back pensions of former U.S. presidents--recognizing
their ability to support themselves primarily through other
means of employment--while providing for their security and
pensions for any surviving spouses. The resolution recommends
treating the Legislative and Executive Branch appropriations
the same as other Federal agencies and programs, and paring
costs where possible. As taxpayers are required, at times, to
do more with less, so too must Congress and the Executive
Branch. The budget supports cost-cutting efforts and reforms
that require better priority-setting for Legislative and
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Executive Branch funds.

Further Consolidate Federal Data Centers. This budget
supports the bipartisan Federal Data Center Consolidation
Initiative, which was created in 2010 to reverse the widespread
escalation of Federal data center construction, acquisition,
management, and maintenance. By increasing efficiencies and
continued efforts to incorporate cloud computing technologies,
the Federal government can significantly decrease taxpayer
spending on underused infrastructure.\161\
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\161\Chief Information Officer [CIO], Federal CIO Council, ``Data
Center Consolidation and Optimization'': https://cio.gov/drivingvalue/
data-center-consolidation/.

Modernize Federal Information Technology. OMB and multiple
agencies could help the Federal Government realize savings by
strengthening oversight and taking steps to implement H.R.
2227, the ``Modernizing Government Technology Act of 2017''.
This bipartisan-supported process provides agencies with the
ability to upgrade their information technology investments
through a Technology Modernization Fund.\162\ This budget
supports the work of the White House Office of American
Innovation, a group of private sector and administration
officials responsible for updating the technology and data
infrastructure of the Federal Government. The President's
executive order establishing the American Technology Council is
also a welcome move to create a resource of data and IT
infrastructure innovation for the Federal Government. Regarding
previous measures, OMB launched the PortfolioStat initiative in
2012, to maximize the return on IT investments across the
Federal Government's portfolio. Nevertheless, the Government
Accountability Office has listed a variety of IT reforms from
various agencies that need of attention. The following examples
were identified in the testimony of Gene L. Dodaro, Comptroller
General, before the Committee on the Budget on 3 May 2017.\163\
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\162\The ``Modernizing Government Technology Act of 2017'' (H.R.
2227) 28 April 2017.
\163\Gene L Dodaro, Comptroller General of the United States,
testimony before the Committee on the Budget, U.S. House of
Representatives, 3 May 2017.

Department of Defense contract management for
information technology. GAO has found that DOD department
components have employed strategic sourcing for only 10 percent
and 27 percent of their $8.1 billion IT service contracts.
Strategic sourcing is an approach to supply chain management
that allows organizations to use information to leverage their
consolidated purchasing power, thereby realizing the best
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values in the marketplace.

The Department of Veterans Affairs outdated
financial IT systems. While the VA has examined options to
upgrade its financial systems and IT infrastructure, GAO has
raised concerns regarding the fiscal year 2020 completion date
and the amount of resources required to implement the
transition.

OMB's PortfolioStat initiative. GAO has provided
OMB with several recommendations regarding the transparency and
accountability of the initiative. While OMB has taken steps to
publicly disclose planned and actual data consolidation
efforts, OMB needs to improve its ability to track planned cost
savings and cost avoidance figures.

The Federal Government's geospatial investments.
While the government collects, manages, and uses a variety of
geospatial information to assist and aid in decision-making
across the Federal Government, GAO has recommended to OMB that
better coordination and data sharing among agencies could
eliminate duplicative spending on similar geospatial
information systems and IT investments, and achieve annual
savings of billions of dollars.

GOVERNMENT-WIDE POLICY

Function Summary

A number of policies assumed in the budget resolution cut
across agencies or functional categories, and have government-
wide effects. These include changes in the Federal civilian
workforce or reductions in the government's improper payments.
For ease of understanding, the budget resolution employs this
category, Government-Wide Policy, to describe these
assumptions. For fiscal year 2018, the resolution calls for
$34.1 billion in budget authority and $2.8 billion in outlays.
The 10-year totals for budget authority and outlay savings are
-$1.4 trillion and -$1.3 trillion, respectively. (The figures
appear in Function 930 in the summary tables.) As is true
elsewhere, specific policies will be determined by the
appropriate committees of jurisdiction.

Illustrative Policy Options

The options discussed below are for illustrative purposes
only. The committees of jurisdiction will determine actual
policy changes, and they have maximum flexibility in deciding
what those policies are.

DISCRETIONARY SPENDING

The total base discretionary budget authority for fiscal
year 2018 assumed in the resolution is $1.132 trillion. The
resolution calls for approximately $60.0 billion in fiscal year
2018 non-defense discretionary savings in several budget
functions should Congress choose to enact additional deficit
reduction for that year. Because these additional savings would
cause the resolution to display a lower total base
discretionary level than contemplated in the resolution, $60.0
billion in non-defense discretionary spending is added back to
Function 930 to make the total budget resolution base
discretionary level match the amount specified.
Additional illustrative savings options, of a government-
wide nature, are presented below.

Reduce the Federal Civilian Workforce Through Attrition.
The budget assumes discretionary savings through a 10-percent
reduction in certain agencies of the Federal civilian workforce
through attrition. Under the assumed strategy, the
administration would be permitted to hire one employee for
every three who leave government service. National security
positions would be exempt.

Reform Civil Service Pensions. The policy described in the
Income Support, Nutrition, and Related Programs section of this
report would increase the share of Federal retirement benefits
funded by the employee. This policy has the effect of reducing
the personnel costs for the employing agency. The budget
assumes savings from a reduction in agency appropriations
associated with the reduction in payments that agencies make
into the Civil Service Retirement and Disability Fund for
Federal employee retirement.

Implement Federal Transition to Shared Services. ``Shared
Services'' is a proven, ``best practice'' business model, in
both the public and private sectors, for delivering common
administrative services (e.g., human resources, financial
management, acquisition, supply chain, IT services, and so on).
The shared services approach allows a government enterprise to
offer customer agency services from third-party service
providers with high-capacity platforms. These providers can
serve multiple agencies more cost-effectively than if the
individual agencies operated the same services themselves in-
house. After decades of evolution, shared services has become
the delivery model of choice for common business transactions
in leading public- and private-sector organizations throughout
the world. Global experience demonstrates typical cost savings
of 25 percent to 45 percent, and significant service
improvements through leveraging economies of scale and skill
over decentralized or self-service models. The advent of
``cloud'' technologies is creating ever-increasing
opportunities to drive ``commodity'' transactions to shared
service business platforms.
Shared services, also known as ``line of business''
modernization, has been under way in the Federal Government for
several decades, with support from administrations of both
parties. Nevertheless, progress has been extremely slow and
disjointed across administrations and the 24 Chief Financial
Officers Act (1990) departments and agencies. The leading
success story to date has been payroll shared services, but it
took more than 25 years to consolidate from dozens of agency-
specific arrangements to today's four government-wide
platforms.\164\ The Office of Personnel Management has
estimated cumulative savings of $1.6 billion to date from
payroll consolidation\165\--but the government has only
scratched the surface of the full potential across the entire
Federal back office.
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\164\The four Federal payroll providers are: USDA's National
Finance Center; the Interior Business Center; the Defense Finance and
Accounting Service; and the General Services Administration.
\165\Office of Personnel Management, HR Line of Business: FY 2011
Cost Benefit Analysis Report, May 2012.
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A report published by the non-partisan Partnership for
Public Service in 2015 estimated Federal agencies spend about
$125 billion per year on their individual back offices, and
that full implementation of shared services across these common
functions could produce savings of nearly $50 billion by
eliminating wasteful duplication and improving efficiency.\166\
The Shared Services Roundtable's cost savings estimate was
endorsed in a report issued by the Technology CEO Council in
January 2017.\167\ Shared services can not only improve
efficiency and effectiveness, but can also enable improved
transparency, accountability and a more secure cyber
environment in government business operations.
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\166\Partnership for Public Service, Shared Services Roundtable,
``Building a Shared Services Marketplace,'' March 2015.
\167\Technology CEO Council, ``The Government We Need,'' January
2017.
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DIRECT SPENDING

Reduce Improper Payments/Program Integrity. This budget
calls for program integrity savings by assuming that Continuing
Disability Reviews and Supplemental Security Income
Redeterminations are fully funded and that additional steps are
taken to reduce improper payments in Medicare, Medicaid,
Unemployment Insurance [UI], the Earned Income Tax Credit
[EITC], and other programs (see the separate discussion of
improper payments elsewhere in this report). By ensuring all
benefits are targeted toward the appropriate households, this
budget will reduce fraud and improper payments in these
programs.
``Improper payments'' are defined as any government payment
made in an incorrect amount (mostly overpayments), to the wrong
individual or entity, or for the wrong reason. According to the
Government Accountability Office, these payments totaled a
stunning $144.3 billion in 2016, up from $107.1 billion in
2012. Worse, this figure likely understates the full extent of
the problem; 18 government programs deemed susceptible to
improper payments did not even submit error estimates last
year, according to GAO. Thus, the estimated total may very well
represent a floor rather than a ceiling.\168\
---------------------------------------------------------------------------
\168\Government Accountability Office, briefing to the House Budget
Committee, 29 March 2017.
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These payment errors occur widely throughout government,
including 112 government programs across 22 agencies, GAO
reports. More than 75 percent of the problem, however, lies
with three large programs: Medicare, Medicaid and the Earned
Income Tax Credit [EITC]. In fact, the EITC program has an
estimated payment error rate of 24.0 percent, meaning that
nearly one in four dollars that leaves the Treasury for this
program is deemed to be incorrect. Other notable government
programs with improper payment problems include UI, Direct
Student Loans, and the National School Lunch Program. One
example of an improper payment would be a UI check going to
someone who has already returned to work. Another example would
be an EITC payment going to an individual who has earned income
above the program's qualifying amount.\169\
---------------------------------------------------------------------------
\169\Ibid.
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Since 2002, Congress has passed several legislative
measures to address the problem, with little tangible success.
This is an issue the Budget Committee intends to pursue
aggressively in the future under the leadership of
Representative Palmer (R-AL) and other Committee members. The
Committee believes those departments and agencies that cannot
decrease the amount of improper payments should be held
accountable for their inability to stop these inappropriate
expenditures. The Budget Committee will work with the
appropriations and authorizing committees exploring numerous
ideas to effectively address this problem.
GAO reported that agencies continue to face difficulties in
reducing improper payments. In addition, GAO found that sharing
death data can help prevent improper payments to deceased
individuals or those who use deceased individuals' identities,
but the Social Security Administration has trouble maintaining
these data, and other Federal agencies face difficulty
obtaining them.\170\
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\170\Government Accountability Office, ``Improper Payments,
Government-Wide Estimates and Use of Death Data to Help Prevent
Payments to Deceased Individuals,'' testimony before the U.S. Senate
Committee on Homeland Security and Governmental Affairs, 16 March 2015:
http://www.gao.gov/assets/670/669026.pdf.

Align the G-Fund Investment Return with an Appropriate Risk
Profile. The resolution assumes savings by correctly aligning
the rate of return on U.S. Treasury securities within the
Federal Employee Retirement System's Thrift Savings Plan with
its investment risk profile. Securities within the G-Fund are
not subject to risk of default. Payment of principal and
interest is guaranteed by the U.S. Government. Yet the interest
rate paid is equivalent to a long-term security. As a result,
those who participate in the G Fund are rewarded with a long-
---------------------------------------------------------------------------
term rate on what is essentially a short-term security.

Assume Savings in Budget Control Act Continue. The BCA
established an automatic enforcement mechanism--commonly known
as a sequester--to ensure a promised level of savings from that
law was actually realized. These savings were first implemented
in 2013 and are scheduled to last through 2025. The resolution
proposes to extend the savings created by the BCA through 2027,
although the budget calls on Congress to replace the automatic
sequester with specific, targeted reforms.

Domestic Priorities

----------

The budget resolution provides funding for a range of
priority activities and services that are domestic in nature.
Although all of them have national importance--that is why they
appear in the Federal budget in the first place--they bear a
special connection to the States and localities that constitute
the Nation, as well as the vast array of non-government
institutions throughout the country. K-12 education, for
instance, is a quintessentially local priority. Because most
Americans do most of their traveling in or near their own
communities, their own roads and bridges are a fundamental
local concern. Health care is provided mainly through local
hospitals and private physicians. All these activities, and
many others, would exist even if there were no Federal
Government. Washington did not create them; States and
localities and the private sector did. The concept on which
America was founded--commonly known as federalism--recognizes
that fact, and encourages the diversity of approaches best
furnished by layers of government or non-government
institutions closer to the people served. In grouping these
activities together, the discussion below seeks to recognize
the initiative of States and localities in finding new, better,
and more efficient ways to provide these services. The Federal
Government can assist these efforts through judicious
allocation of supporting resources.
The activities presented here are mainly the discretionary
spending components in Function 250 through 650 in the
conventional budget format. In two areas, however--Energy
(Function 270) and Transportation (Function 400)--both the
discretionary and direct spending components are presented.
This is because in these areas, the two forms of spending are
intertwined in ways unlike those of other functional
categories. In Energy, for example, what appears as
``negative'' direct spending mainly reflects the incoming
repayment of loans and receipts from the sale of electricity
produced by Federal entities, as well as rescissions of
unobligated balances in green energy loan programs. These are
fundamentally different from most direct spending, which
applies to government benefit programs. Transportation has a
split treatment of its funding. Its budget authority is a kind
of mandatory spending called contract authority, while its
outlays--controlled by annual limitations on obligations set in
appropriations acts--are treated as discretionary spending; the
two cannot really be separated.

GENERAL SCIENCE, SPACE, AND TECHNOLOGY

Function Summary: Discretionary Spending

The largest component of this category--about half its
total spending--is for the space-flight, research, and
supporting activities of the National Aeronautics and Space
Administration [NASA]. The function also contains general
science funding, including the budgets for the National Science
Foundation [NSF] and the Department of Energy's Office of
Science.
The budget reduces questionable and unjustified spending,
while supporting core government responsibilities. The
resolution provides stable funding for NSF to refocus on
priority basic research in the Mathematical and Physical
Sciences, Engineering, Computer and Information Science, and
the Biological Sciences. As part of the criteria in the just-
enacted ``American Innovation and Competitiveness Act,'' the
NSF needs to restore its grant making process to better align
with one national interest, and remain accountable to the
American public.\171\ The budget provides continued support for
NASA and recognizes the vital strategic importance of the
United States remaining the preeminent space-faring nation.
This budget aligns funding in accordance with NASA's core
principles: to support robust space capability, to allow for
exploration beyond low Earth orbit, and to support the Nation's
scientific and educational base.
---------------------------------------------------------------------------
\171\The ``American Innovation and Competitiveness Act'' (Public
Law 114-329): https://www.congress.gov/bill/114th-congress/senate-bill/
3084.
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The budget resolution also calls for consistent funding for
the basic research programs in the Department of Energy Office
of Science. The Office of Science is the lead Federal agency
for basic research in the physical sciences, and hosts more
than 30,000 researchers per year at national laboratories and
user facilities across the country. The fundamental research
conducted by the Office of Science has provided the foundation
for groundbreaking discoveries about the universe, innovative
new technologies, and private sector achievements. In
particular, this budget resolution will give priority to the
Department of Energy's science infrastructure to ensure
American leadership in scientific discovery.
The vast majority of this category's funding is
discretionary, provided by the House Committee on Science,
Space, and Technology and the Appropriations Subcommittee on
Commerce, Justice, Science, and Related Activities. The
resolution calls for $28.4 billion in discretionary budget
authority and $30.0 billion in outlays in fiscal year 2018. The
10-year totals for discretionary budget authority and outlays
are $313.3 billion and $307.5 billion, respectively.

Illustrative Discretionary Spending Policy Options

The committees of jurisdiction will determine policies to
align with the spending levels in the resolution. They have
complete authority to make those determinations, and maximum
flexibility in doing so. The options below are offered as
illustrations of the kinds of proposals that can help meet the
budget's fiscal guidelines.

Restore Core Government Responsibilities. Spending in
research and development between NASA and the NSF is projected
to reach $16.3 billion in 2017.\172\ The resolution's levels
support preserving the Federal scientific community's original
role as a venue for groundbreaking discoveries and a driver of
innovation and economic growth. It responsibly pares back
applied and commercial research and development and areas of
wasteful spending that do not provide a high return on taxpayer
resources. The proper role of the Federal Government is to
support basic research, and funding should be distributed
accordingly. For example, the NSF needs to be more transparent
and accountable to the taxpayer. Every grant issued should be
accompanied by an explanation of the project's scientific
merits and how it serves the national interest as prescribed in
the recently enacted American Innovation and Competitiveness
Act. NSF-funded studies--such as a $300,000 grant to study
whether girls are more likely to play with Barbie dolls than
boys,\173\ $40 million investigating social media's obsession
with Ebola, coined ``Fearbola,''\174\ $565,000 to study how
long Mudskipper Fish could run outside the water,\175\ and a
$450,000 project to study whether dinosaurs had the ability to
sing\176\--do not serve a vital national interest. Funding for
these programs and similarly wasteful or low-return social and
behavioral studies should be redirected to scientific research
that better serves the national interest.
---------------------------------------------------------------------------
\172\Office of Management and Budget, Budget of the U.S.
Government--Fiscal Year 2017: Historical Tables, Table 9.8: Outlays for
Research and Development: https://obamawhitehouse.archives.gov/omb/
budget/Historicals.
\173\Senator Jeff Flake, Wastebook: The Farce Awakens, December
2015, p. 62.
\174\Ibid., p. 106.
\175\Ibid., p. 17.
\176\Ibid., p. 72.
---------------------------------------------------------------------------
Similarly, spending for Biological and Environmental
Research within the DOE Office of Science has eclipsed $600
million per year. While much of the research conducted within
the Office of Science is critical basic research in the
physical sciences, using taxpayer dollars allocated for basic
science research on duplicative climate change research is not.
The previous administration also neglected programs within the
core mission of the Department at BER, like the Low Dose
Radiation Research Program, in order to fund climate change
programs.
Finally, NASA's spending on earth science has increased
significantly in recent years, almost doubling, while funding
for other activities have remained flat or decreased. This
spending should return to previous funding levels so NASA can
maintain a balanced portfolio of activities by reconstituting
NASA's unique capabilities in Exploration, Planetary Science,
Astrophysics, Heliophysics, and Aeronautics.

Reduce Expenses for the Department of Homeland Security's
Directorate of Science and Technology. The budget recommends
reductions in management and administrative expenses for the
Department of Homeland Security's Directorate of Science and
Technology, while shifting funding to frontline missions and
capabilities.

ENERGY

Function Summary

Regulations placed on the private sector paired with ill-
advised investments have hampered the Nation's ability to
effectively address its energy security needs. The government
continues to pick winners and losers in energy markets, hoping
that flooding money into politically connected private
companies to deploy energy technology will produce greater
results than getting the government out of the way for
innovators. The Department of Energy [DOE] has an exemplary
track record in the basic research that facilitates technology
development led by the private sector. When limited Federal
research dollars are used to fund loans, loan guarantees,
commercial-scale demonstration projects, or the deployment of
energy technology, there are fewer funds for this basic
research. The fact is, the private sector is better suited to
commercialize and deploy energy technology than the federal
government. The DOE needs to focus on three primary missions;
maintaining and modernizing the national nuclear supply,
environmental cleanup, and the basic research programs that
ensure American leadership in discovery science and energy
security.
The Office of Energy Efficiency and Renewable Energy has
grown by almost 50 percent in the past decade, and is currently
funded at more than the budgets for applied research in nuclear
energy, fossil energy, and electricity combined. In March 2017,
CBO testified before the Energy and Commerce Committee,
concluding that ``energy related R&D funding by the DOE has had
mixed results.''\177\ CBO found that federal funds are most
cost effective when it supports research that profitable firms
would not take on their own, such as the basic research
conducted by the DOE Office of Science. While there are
certainly benefits to using Federal funds for conducting basic
research, spending on technology deployment, loans and loan
guarantees, and commercial scale-demonstration projects for
technologies that are backed by mature industries in the
private sector is highly questionable.
---------------------------------------------------------------------------
\177\Congressional Budget Office Testimony before Subcommittee on
Energy, Federal Support for Developing, Producing, and Using Fuels and
Energy Technologies, 29 March 2017.
---------------------------------------------------------------------------
In addition to significant Federal investment through R&D
spending, renewable energy receives an overwhelming benefit
through the U.S. tax code. In 2016, energy-related tax
preferences totaled $18.4 billion.\178\ $10.9 billion of this
total was directed towards renewable energy.
---------------------------------------------------------------------------
\178\Ibid.
---------------------------------------------------------------------------
The DOE loan and loan guarantee programs are another
example of DOE's intervention in the energy market. The
Department's current loan programs portfolio consists of 34
loans and loan guarantees that total approximately $28 billion
in support of 30 projects.\179\ To date, borrowers have
defaulted on loans for five projects, at a cost of $807 million
to the taxpayer, including two solar manufacturing projects,
two advanced automotive manufacturing projects, and one energy
storage project.\180\
---------------------------------------------------------------------------
\179\Government Accountability Office, DOE Loan Programs: Current
Estimated Net Costs Include $2.2 Billion in Credit Subsidy, Plus
Administrative Expenses, GAO-15-438, 7 April 2015: http://www.gao.gov/
products/GAO-15-438.
\180\Ibid., (emphasis added).
---------------------------------------------------------------------------
According to the Government Accountability Office, between
2008 and 2014, administrative costs totaled approximately $312
million, or $251.6 million for loan guarantees and $60.6
million for the Advanced Technology Vehicles Manufacturing loan
program, a cost that has been partially offset by the
approximately $196 million in fees collected under the loan
guarantee program in the same period.\181\ GAO estimates that
the total credit subsidy cost (the expected net cost of
subsidizing loans over their duration) for the current
portfolio to be $2.21 billion.\182\
---------------------------------------------------------------------------
\181\Ibid.
\182\Ibid.
---------------------------------------------------------------------------
Projects that received loan guarantees have also been given
preferential treatment by the previous administration. Abound
Solar, which received $400 million in loan guarantees, was
cited by the Colorado Department of Public Health and
Environment for hazardous waste left from its failed solar
panels.\183\
---------------------------------------------------------------------------
\183\Michael Sandoval, ``Bankrupt Abound Solar to Bury Unused Solar
Panels in Cement,'' The Daily Signal, The Heritage Foundation, 26
February 2013.
---------------------------------------------------------------------------
Another grant recipient, A123, was given permission to hand
out as much as $3.7 million in bonuses to top executives as a
part of its bankruptcy proceedings.\184\ And in the
Department's most high profile failure, Solyndra, the DOE
Inspector General found that DOE officials had many
opportunities to validate claims of success, but repeatedly
failed to conduct due diligence and ``critically analyze
problematic information that Solyndra had provided to the
Department.''\185\
---------------------------------------------------------------------------
\184\Paul Chesser, ``A123's Executives Get Their Richly Undeserved
Bonuses,'' National Legal and Policy Center, 13 November 2012: http://
nlpc.org/stories/2012/11/13/a123s-executives-get-their-richly-
undeserved-bonuses.
\185\Department of Energy Office of the Inspector General, Special
Report: The Department of Energy's Loan Guarantee to Solyndra, Inc. 24
August 2015: http://energy.gov/sites/prod/files/2015/08/f26/11-0078-
I.pdf.
---------------------------------------------------------------------------
This is particularly problematic, because unlike the
private sector, in which this company would eventually be held
accountable to its investors for these failures, taxpayers have
no way of holding the Federal Government accountable for each
``investment.''
The Advanced Research Projects Agency-Energy [ARPA-E] is
also a misuse of federal research dollars. ARPA-E was intended
to provide investment in high risk, high reward energy
technologies that are too innovative to gather private
financing. While some of ARPA-E's funding has gone to
innovative technology projects, GAO has found that a
significant portion of ARPA-E awards went to companies that had
already received private sector financing for similar
technologies.
A number of ARPA-E funded projects have also exemplified
the Obama Administration's tendency toward crony capitalism and
the picking of winners and losers in support of its ``green
energy'' agenda, with the winners often conveniently being
supporters of the previous administration's political agenda.
Simply put, the late stage, venture-capital-style funding
allocated through ARPA-E distorts the energy market and extends
far beyond the appropriate role of the Federal Government in
energy R&D. The new administration should strive to reverse the
Obama agenda.
After eight years, the verdict is in: increased oil and
natural gas production by private sector companies on private
land has made the U.S. the world's number one energy producer.
The world has experienced an energy boom that continues to
drive gas and other energy prices lower. Yet billions of
dollars of government spending has brought the Nation no closer
to cost-effective zero-carbon energy. Instead of prioritizing
the basic research that can lead to technology breakthroughs,
DOE has spent limited research dollars on picking winners and
losers in the energy market. Technological breakthroughs will
continue to occur--such as the combination of horizontal
drilling and hydraulic fracturing that built off early stage
research in the DOE national labs to revolutionize oil and gas
production in the mid-2000s--but the Federal Government must
resist the temptation to intervene at taxpayers' expense.
These collective failures are only made worse by the
failure to dispose of the spent nuclear fuel that is stuck at
the country's nuclear power plant sites. GAO has recently
reported that the Federal Government's environmental liability
is up to $447 billion, compared to $212 billion in 1997.\186\
The Nuclear Waste Policy Act of 1982 obligated the government
to dispose of the spent fuel by 1998, yet nearly 20 years later
the material sits scattered around the country. Taxpayers
remain on the hook for the Federal government's broken
promises. The Obama Administration's negligence concerning the
Yucca Mountain program, the designated disposal site, leaves
our country with a challenging pathway to dispose of the
growing amount of spent nuclear fuel. In the meantime,
taxpayers have already paid more than $4.4 billion to cover the
cost of the government's failed promises,\187\ with a $25-
billion bill coming due in the future.\188\ This will continue
to rise until the government begins meeting these obligations.
---------------------------------------------------------------------------
\186\GAO High-Risk Series: Progress on Many High-Risk Areas, While
Substantial Efforts Needed on Others. February 15, 2017.
\187\CBO testimony before the Subcommittee on Environment and the
Economy, 3 December 2015.
\188\DOE FY16 Agency Financial Report: https://energy.gov/sites/
prod/files/2016/11/f34/DOE_FY2016_AFR.pdf.
---------------------------------------------------------------------------
Last year, the Department of Energy was provided with $29.7
billion, a 6.4-percent increase over the previous year. In
particular, the Office of Energy Efficiency and Renewable
Energy was given a budget of $2.07 billion, an 18-percent
increase since 2013. Many of DOE's national security, defense
and civilian programs, environmental cleanup activities, and
the basic research programs that ensure American leadership in
discovery science and energy security remain worthy of support;
significantly increasing funding for the expedited
commercialization of costly technologies that put taxpayer
dollars at risk is of dubious value.
The Trump Administration is committed to changing how we
handle energy policy. Lowering costs at the pump, maximizing
domestic resources, lessening U.S. dependence on foreign oil,
and eliminating unnecessary regulations on American industry
have been a staple of the President's vision for the country.
He plans to eliminate harmful and unnecessary policies such as
the Climate Action Plan and the Waters of the U.S. rule.
``Sound energy policy begins with the recognition that we have
vast untapped domestic energy sources and reserves right here
in America.''\189\
---------------------------------------------------------------------------
\189\The White House: http://www.whitehouse.gov/america-first-
energy.
---------------------------------------------------------------------------
Discretionary spending in this category includes some of
the civilian energy and environmental programs of the
Department of Energy. It also includes funding for the
operations of the Nuclear Regulatory Commission [NRC]. A large
majority of the DOE discretionary budget is allocated to
applied research and development [R&D], commercialization, and
deployment of energy technologies in renewable energy, energy
efficiency, fossil energy, nuclear energy, and electricity
delivery and energy reliability. Beyond the early stage applied
research that cannot be accomplished by the private sector--
like research in cybersecurity for electrical systems and
nuclear energy research requiring access to controlled nuclear
research reactors--these activities are better left to the
private sector. Spending also includes operations and
maintenance accounts for some of DOE's direct spending
programs, like the Power Marketing Administrations.
According to the National Science Foundation, private
sector companies in the U.S. spent more than $341 billion on
research and development in 2014 (the most recent figures
available).\190\ While these efforts focus on more than energy,
detailed NSF surveys indicate that funding for more efficient
fuel consumption, electric vehicles, energy efficiency, and
fossil fuel R&D total billions of dollars' worth of private
sector capital per year. As a result, DOE's civilian research
should focus solely on basic research and early stage applied
research of breakthrough, innovative technologies.
---------------------------------------------------------------------------
\190\https://www.nsf.gov/statistics/2016/nsf16315/.
---------------------------------------------------------------------------
Direct spending in this category includes the remaining
civilian energy and environmental programs at the DOE. It also
includes the Rural Utilities Service of the U.S. Department of
Agriculture [USDA], the Tennessee Valley Authority, and the
Federal Energy Regulatory Commission. (It does not include
DOE's national security activities, conducted by the National
Nuclear Security Administration, which are in Function 050, or
its basic research and science activities, which are in
Function 250.)
For fiscal year 2018, the budget resolution provides $3.4
billion in discretionary budget authority, with $5.7 billion in
related outlays (shown in Table 2, Function 270). Direct
spending figures (shown in Table 3, Function 270) are -$6.5
billion in budget authority and -$3.1 billion in outlays. The
negative balances reflect the incoming repayment of loans and
receipts from the sale of electricity produced by Federal
entities, which are accounted for as ``negative spending,'' as
well as rescissions of unobligated balances in green energy
loan programs. Over 10 years, the resolution provides
discretionary budget authority of $33.5 billion and $38.0
billion in outlays. Ten-year totals for direct spending are
-$36.8 billion in budget authority and -$44.0 billion in
outlays.

Illustrative Discretionary Spending Policy Options

In the House, discretionary spending energy programs
(Function 270 in Table 2) fall under the jurisdiction of the
Committee on Energy and Commerce and the Committee on Science,
Space, and Technology. Funding for these programs comes from
the Appropriations Subcommittees on Energy and Water
Development, and Related Agencies, and Interior, Environment,
and Related Agencies.
These committees will determine specific policy options to
meet the budget's fiscal guidelines. Nothing in this report
binds the committees to any specific policy direction; they
have complete flexibility in making those determinations.
Nevertheless, a central aim for them to consider is ensuring
private sector capital is not crowded out by government
intervention in the energy market and bureaucratic waste. They
should also seeks to protect taxpayers from poor government
decision-making that wastes Federal dollars, increases energy
prices, and picks winners and losers in the energy market.
Finally, streamlining R&D activities across the Department of
Energy to prioritize basic and early stage applied research
will increase efficiency, consolidate operations, and reduce
costs, while ensuring American leadership in energy technology
and discovery science. The following illustration reflects this
approach.

Reduce Funding for Commercial Research and Development. The
resolution supports maintaining current funding levels for
basic R&D activities within the DOE, while significantly
reducing funding for applied R&D. Focusing on basic R&D will
allow DOE to zero in on cutting-edge discoveries in the
physical sciences that may lead to major improvements in
society, such as the Internet, while leaving the application,
commercialization, and deployment of new technologies to the
private sector.

Illustrative Direct Spending Policy Options

In the process of transforming policy in this area, the
Committee on Energy and Commerce and the Committee on Science,
Space, and Technology can be guided in part by seeking to
reverse the damage caused by the previous administration's
spending priorities. They can also evaluate each program's
merit by asking two simple questions: If this program did not
exist, would there be a private sector industry or entity that
would fund similar activities? Does this program align with
DOE's mission? Unless the answers are ``no and yes,'' the
program should be viewed as ripe for reform or elimination. The
options below indicate some possible directions the Energy and
Commerce Committee and the Science, Space, and Technology
Committee could take.

Rescind Unobligated Balances from the Stimulus Bill's Green
Energy Programs. The budget recommends rescinding unobligated
balances in DOE's loan portfolio. Since implementation of the
``American Recovery and Reinvestment Act of 2009'', or the
stimulus bill, these programs have spawned numerous failures,
such as Solyndra and Abound Solar. The government cannot undo
the harm that has been done or recover taxpayer dollars from
failed entities. It can, however, reclaim all of the spending
authority the DOE has not yet obligated to ensure that
taxpayers are not exposed to further risk for renewable energy
projects that would not otherwise be market-viable.

Rescind Unobligated Balances from the Title XVII Loan
Guarantee Program. The budget recommends rescinding unobligated
balances in DOE's Title XVII Section 1703 loan guarantee
program. The Department has over $25 billion in remaining loan
guarantee authority, which includes over $12.5 billion in
authority for advanced nuclear energy, $8.5 billion for
advanced fossil energy, and $4.5 billion for renewable energy
and energy efficiency projects.\191\ Despite high-profile
project failures, the office also lacks transparency and has
been slow to implement management recommendations made by the
GAO.\192\ The government must continue to manage the existing
portfolio of loan guarantees, but it should not put additional
tax dollars at risk by issuing new loan guarantees. The Federal
Government should reclaim the remaining spending authority the
DOE has not yet obligated to ensure that taxpayers are not
exposed to further financial risk.
---------------------------------------------------------------------------
\191\U.S. Department of Energy Loan Programs Office, ``Investing in
American Energy.'' March 2016: https://energy.gov/sites/prod/files/
2016/07/f33/DOE-LPO_Email-Update_014_Final_2-Mar-2016.pdf.
\192\Frank Rusco, ``Testimony before the Subcommittees on Energy
and Oversight, Committee on Science, Space, and Technology, House of
Representatives,'' Government Accountability Office, 3 March 2016:
https://science.house.gov/sites/republicans.science.house.gov/files/
documents/HHRG-114-SY20-WState-FRusco-20160302.pdf.

Rescind Unobligated Balances from the ATVM direct loan
program. The budget recommends rescinding unobligated balances
in DOE's Section 136 Advanced Technology Vehicles Manufacturing
[ATVM] direct loan program. Since 2007, DOE has awarded $8.4
billion in loans to five companies (Fisker, Ford, Nissan,
Tesla, and the Vehicle Production Group). Two companies were
unable to continue payments on their loans, resulting in $181
million in losses to the American taxpayers.\193\ DOE has over
$16 billion in remaining loan authority under the ATVM program.
While DOE should continue to provide responsible management and
oversight for the existing loan portfolio, the Federal
Government should rescind the remaining loan authority and
protect the taxpayer from future loss.
---------------------------------------------------------------------------
\193\Department of Energy Loan Program Office, ``ATVM Program
Overview'': https://www.energy.gov/lpo/atvm.

Rescind Funding for Biomass Research and Development. The
Biomass Research and Development program is a joint initiative
of the USDA and DOE intended to ``carry out research on and
development and demonstration of (1) biofuels and biobased
products, and (2) the methods, practices, and technologies, for
the production of biofuels and biobased products.''\194\ In
fiscal year 2016, DOE received $225 million for the Bioenergy
technologies program within the Office of Energy Efficiency and
Renewable Energy in order to accelerate ``the development and
commercialization of cost-competitive technologies'' for
biofuels.\195\
---------------------------------------------------------------------------
\194\Department of Agriculture, ``Biomass Research and Development
Initiative Competitive Grants Program,'' Catalog of Federal Domestic
Assistance: https://www.cfda.gov/index?s=program&mode=form&tab=core&id=
416c795f6d234174f72d346d328d0464.
\195\Department of Energy, ``FY 2017 Congressional Budget Request:
Volume 3,'' February 2016: http://energy.gov/sites/prod/files/2016/02/
f29/FY2017BudgetVolume3_2.pdf.
---------------------------------------------------------------------------
Unreasonable mandates in the Renewable Fuel Standard have
already forced private sector gasoline refiners and importers
to spend billions of dollars of their own money to assist
bringing uneconomic biofuels to market. Piling on millions of
Federal dollars only perpetuates the problem and exposes
taxpayers to financial risk. This program is a prime example of
late stage commercialization activities at the Department that
take away funding for basic research at DOE.

Repeal Stimulus-Driven Borrowing Authority Specifically for
Green Transmission. The $3.25 billion in borrowing authority in
the Western Area Power Administration's Transmission
Infrastructure Program provides loans to develop new
transmission systems aimed solely at integrating renewable
energy. This authority was inserted into the 2009 stimulus bill
without the opportunity for debate. Of most concern, the
authority includes a bailout provision that would require
American taxpayers to pay outstanding balances on projects that
private developers fail to repay. The budget recommends the
rescission of the program's unobligated funds, which could save
taxpayers almost a billion dollars.

NATURAL RESOURCES AND ENVIRONMENT

Function Summary: Discretionary Spending

America's heritage thrives on the Nation's stunning
landscapes and resources. Among these are its inspiring parks
and forests, countless species of wildlife, bountiful rivers
and lakes, and land, water, and mineral resources. All call for
responsible stewardship as a moral obligation to today's
generation, and those of the future. It does not require a
domineering Federal Government twisting the aims of
preservation into an excuse for ever more centralized
regulation.
Yet too often this is precisely what happens. As one
example, the primary role of the Environmental Protection
Agency [EPA] is to ensure the air Americans breathe and the
water they drink is clean and unpolluted. Instead, however, the
EPA for too long has viewed itself as an energy policy
authority, regulating low-cost, reliable energy sources out of
the market and mandating increased use of uncompetitive and
less reliable ones. Any EPA funding should require the EPA
Administrator to certify the availability to the public of all
scientific and technical information and data relied on to
support a risk, exposure, limitation, regulation, regulatory
impact analysis, or guidance.
The budget focuses on paring back unnecessary spending used
to carry out overreaching regulatory expansion. It supports the
recent actions taken by Congress and the Executive Branch to
pass ``Congressional Review Act'' [CRA] resolutions of
disapproval, repealing onerous and unnecessary regulatory
barriers that have handcuffed the Nation's economy and its
ability to achieve domestic energy independence. The following
resolutions of disapproval illustrate just a small amount of
the burdensome regulatory overreach that the Obama
Administration attempted to leave in its wake. Nevertheless, a
proactive Congress and Trump Administration have worked
diligently to rein in the regulatory state that has negatively
impacted the lives of everyday Americans.

H.J. Res. 38, the Stream Protection Rule. This
joint resolution nullifies the Stream Protection Rule finalized
by the Department of the Interior's Office of Surface Mining
Reclamation and Enforcement on 20 December 2016. The rule, a
highlight of the Obama Administration's regulatory state,
required more than seven years to finalize and precluded input
from major stakeholders and even State parties that would be
affected. The rule would have prohibited surface mining across
large sectors of the Nation, including Appalachia, and would
have resulted in thousands of lost jobs and economic malaise.

H.J. Res. 44, the Bureau of Land Management's
[BLM] Land Use Planning Rule. This joint resolution nullifies
the rule finalized by the Department of the Interior on 12
December 2016, relating to regulations that establish the
procedures used to prepare, revise, or amend land use plans
pursuant to the ``Federal Land Policy and Management Act of
1976''. The rule, also referred to as the ``BLM Planning 2.0
rule'', was intended to improve BLM's ability to administer
public lands. The reality, however, is that the rule would have
reduced local and State authority to determine the best uses
for public lands in their States. By consolidating authority
over resource management plans with BLM, the rule would have
given Washington bureaucrats sole authority over 175 million
acres of lands in 11 western States.

H.J. Res. 69, the Alaska National Wildlife
Refuges Rule. This joint resolution nullifies the rule
finalized by the Department of the Interior on 5 August 2016,
relating to non-subsistence takings of wildlife and public
participation and closure procedures on National Wildlife
Refuges in Alaska. The rule significantly reinterpreted Federal
law to effectively sharply limit recreational and subsistence
hunting of fish and wildlife in the State. The State of Alaska
had previously filed a lawsuit against the rule, arguing that
it would upend the traditional State-Federal jurisdictional
relationship.

This budget also emphasizes core government
responsibilities, while reducing spending in areas of
duplication or non-core functions. Pursuant to these
guidelines, the resolution provides $31.3 billion in
discretionary budget authority for fiscal year 2018, with $34.6
billion in related outlays (see Function 300 in Table 2). These
funds will finance programs within the Departments of Interior,
Agriculture, Commerce, and Transportation, as well as the Army
Corps of Engineers, and the EPA.
Some of the larger spending programs subject to
appropriations are the EPA's clean water and drinking water
programs, as well as the agency's environmental programs and
management account.
The Army Corps of Engineers' construction and operations
and maintenance accounts also fall under this function.
Congress most recently authorized the Corps' Civil Works
Program to perform a range of water resources development
activities within its mission, which includes navigation, flood
and storm damage reduction, and aquatic ecosystem restoration--
in 2016 legislation. The Committee on Transportation and
Infrastructure intends to take up another Water Resource
Development Act authorization bill this Congress.\196\
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\196\Committee on Transportation and Infrastructure, Views and
Estimates for Fiscal Year 2018, 28 February 2017: https://
transportation.house.gov/uploadedfiles/2017-02-28_views_and_esti-
mates_fy2018.pdf.
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Given the Panama Canal expansion and rapidly increasing use
of larger, cost-efficient post-Panamax vessels that require
deeper draft harbors and channels, the Corps' port maintenance
and dredging activities have received renewed attention from
policymakers and stakeholders. Congress passed legislation in
2014 and 2016 aimed at maintaining and improving the Nation's
port infrastructure so they can accommodate post-Panamax
vessels. A number of U.S. ports have achieved depths and widths
necessary to receive these larger vessels; some other domestic
ports, however, are seeking to increase their depths and widths
so they can accommodate such vessels in the future. A number of
factors affect port maintenance and capital improvement
projects. Stakeholder views on future needs vary, but encompass
the following: increased coordination of Federal or local
spending; ways of lowering project costs; determining project
priorities and moving them through the Corps' project
authorization queue more efficiently; and reviewing statutes
governing port maintenance and dredging. It is important for
U.S. ports to be capable of meeting the needs of 21st-Century
maritime trade and remain competitive in the global economy.
The budget envisions that the committees of jurisdiction will
consider cost-effective, market-based solutions to meet the
Nation's port maintenance and capital improvement project
needs. In doing so, the authorizing committees can promote
innovation and spur domestic job creation and economic growth.
Another large discretionary part of this function consists
of accounts responsible for operation of the National Park
Service and Wildland Fire Management in the U.S. Forest Service
and the Department of the Interior. The Forest Service and the
Interior Department have used a large amount of their overall
budget allocations toward wildfire suppression in the Western
region of the U.S. Under the ``Budget Control Act of 2011''
(Public Law 112-25) the Disaster Relief Fund [DRF] has received
appropriations first through the Disaster Relief Allowable
Adjustment (``Disaster Cap''), then through the Emergency
Requirements Adjustment. Supplemental wildfire funding has been
made available in previous years due to the difference between
the annual appropriation amount to the DRF and the total
Disaster Cap funding limit. This allows for additional funding
without using the Emergency Requirements Adjustment. As the
Disaster Cap decreases, however, allowable funding under the
BCA will be insufficient to meet both the Federal Emergency
Management Agency's disaster needs and supplemental wildfire
funding.\197\ The frequency and severity of these wildfires
pose a risk to the citizens, water, and wildlife in the region.
Borrowing for wildfires is detrimental to the long-term
planning of these agencies. This budget acknowledges the need
to minimize the adverse effects of fire transfers on the
budgets of other fire and non-fire programs, and the need to
responsibly budget for wildfires. The budget recommends
responsible forest management and supplemental wildfire funding
solutions. Congress and the Trump Administration must work to
find a viable solution to the forthcoming Disaster Cap
reduction that will allow supplemental wildfire suppression to
continue to be funded without having to compete with other
Disaster Relief Fund activities and regular operations.
---------------------------------------------------------------------------
\197\The Disaster Cap is limited by a formula calculated with the
rolling average of the past ten years' appropriations to the Disaster
Relief Fund, with the maximum and minimum years subtracted, and
includes last year's average minus the actual DRF appropriation.
---------------------------------------------------------------------------

Illustrative Discretionary Spending Policy Options

The Committee on Natural Resources is the primary
authorizer in this area. The Appropriations Subcommittees on
Energy and Water Development, and Related Agencies, and
Interior, Environment and Related Agencies are responsible for
annual funding. These committees have complete authority and
maximum flexibility in determining the policies in their
jurisdictions. The Budget Committee's role is solely to
recommend spending parameters. The discussion below suggests
illustrative options the committees may wish to consider. In
doing so, the committees may be guided by the budget's effort
to focus on core government activities and reduce duplication
and waste.

Reduce and Refocus Environmental Protection Agency Funding.
The EPA continues to use its budget to implement its
unprecedented activist regulatory policy to the detriment of
States, localities, small businesses, and energy consumers.
This is evidenced in the many ongoing legal challenges facing
EPA's proposed regulations. The budget calls for reducing
annual funding levels for the EPA to allow the agency to focus
on its core mission of simply enforcing laws passed by Congress
rather than continually attempting to re-write them through
regulations. The budget recommends no funding reductions to the
EPA's Regional Geographic Initiative Program, which encompasses
a dual mandate of improving the environment while
simultaneously spurring economic development. Specific
programs, such as the Great Lakes Restoration Initiative and
the Chesapeake Bay Program, not only support efforts to restore
the health of many of the Nation's most treasured water
ecosystems, but also provides domestic jobs in communities that
depend on these natural landmarks.

Eliminate the EPA Office of Regulatory Policy and
Management. This office manages the regulatory development
process for the EPA by providing support and guidance for the
agency's national and regional offices in developing
regulations. According to the EPA website, a primary function
of this office is to ``manage the Agency's policy priority
agenda.''\198\ As an executive agency created to enforce
congressional statutes, the EPA should have no policy priority
agenda at all.
---------------------------------------------------------------------------
\198\Environmental Protection Agency, ``About the Office of
Policy,'' February 2016: www.epa.gov.

Streamline Climate-Change Activities Across Government.
This budget resolution reduces spending for numerous climate-
change-related activities and research within this function,
primarily by reducing overlapping or unproductive policies. It
also recommends better coordination of programs and funds to
eliminate duplicative and unnecessary spending. Many of these
programs are funded within the National Oceanic and Atmospheric
---------------------------------------------------------------------------
Administration [NOAA], as well as the EPA.

Eliminate the National Sea Grant College and Fellowship
Programs. Since 1966, NOAA has provided Federal funds to
various universities and academic research organizations across
33 States to sponsor a variety of marine research, outreach,
and education projects. The program also funds a National Sea
Grant Office, which offers fellowship opportunities for
graduate students. While the premise of these programs is
reasonable, they illustrate a growing trend within individual
agencies to offer and fund education-based grants and
fellowships that are better suited for either the Department of
Education or provided by State and local government.

Eliminate Funding for EPA Armed Enforcement Division. The
EPA is one of nearly 70 Federal agencies that employs armed
agents. This troubling trend of militarization extends to many
Federal agencies that most Americans would never associate with
law enforcement. Federal agencies should be required to clearly
demonstrate their need for armed personnel. Absent such a
demonstration, agencies should rely on local law enforcement
when there is a need for armed protection.

Reduce Funding for the Office of Surface Mining Reclamation
and Enforcement [OSMRE]. OSMRE's budget and resources are well
above current and foreseeable needs, as the number of mines and
coal miners has declined by 35 percent since 2011. Under the
``Surface Mining Control and Reclamation Act'', States perform
the daily permitting and regulation for 97 percent of all coal
mines within the country, while OSMRE is tasked with a
secondary role of performing oversight of State implementation
of their programs. This budget helps ensure OSMRE's resources
are spent on core, non-duplicative functions--not direct
enforcement or permitting actions that the States perform.

Give Priority to Army Corps of Engineers Civil Works. This
budget encourages prioritization of the Army Corps of Engineers
Civil Works program, which supports water resources,
development, management, and restoration through investigations
and surveys, engineering and design, construction, and
operation and maintenance as authorized by Congress. To rebuild
the Nation's infrastructure, it is imperative to furnish the
Army Corps with the resources to continue to complete this
necessary work. Additionally, giving priority to projects of
regional or national significance that feature robust State and
local investment will boost domestic manufacturing and expand
American exports.

AGRICULTURE

Function Summary: Discretionary Spending

Discretionary funding in the agricultural category supports
agricultural research, education, and economics; direct and
guaranteed farm operating and ownership loans; operating
budgets of the Farm Service Agency, Foreign Agricultural
Service, and Risk Management Agency; marketing and information
services; animal and plant health inspection services;
Department of Agriculture administration; and a variety of
related programs and activities.
The budget provides for fiscal year 2018 discretionary
spending in these areas totaling $6.4 billion in budget
authority and $6.2 billion in outlays. Over the 10-year period
of 2018 through 2027, the budget assumes discretionary spending
of $71.6 billion in budget authority and $70.6 billion in
outlays. (See Function 350, Table 2).

Illustrative Discretionary Spending Policy Options

Funding for discretionary agriculture programs and
activities will be determined by the Appropriations
Subcommittee on Agriculture, Rural Development, Food and Drug
Administration, and Related Agencies. Like last year's budget,
this resolution recommends giving a higher priority to
competitive grant-based agricultural research. This type of
research funding, in contrast to formula-based and other forms,
is most likely to spur agricultural productivity growth, which
is important to enhancing the international competiveness of
U.S. agriculture over the longer term. Also, continued
attention should be given to streamlining and, where possible,
consolidating operations and activities across U.S. Department
of Agriculture agencies, including in its large network of
county field offices.

COMMERCE AND HOUSING CREDIT

Function Summary: Discretionary Spending

Supporting commerce--maintaining an environment that allows
ingenuity and free enterprise to flourish--is a worthy and
important role of government. This includes providing necessary
oversight and regulation of business and commerce. As in many
other areas, however, the Federal Government has too often
taken the approach that more money, more red tape, and more
bureaucracy can answer every problem. A fundamental government
role is to maintain competitive markets that encourage
innovation and creativity, and promote efficiency, thereby
stimulating an expanding range of products and services at
lower costs for consumers.
When the Federal Government creates artificial barriers to
entry for entrepreneurs and startups, it is consumers who pay
the price. The government should not be in the business of
picking winners and losers. The Federal regulatory regime of
the previous administration allowed the rulemaking process to
protect established corporate actors to the detriment of
innovative small businesses. When the costs of regulatory
compliance become onerous, sectors of the economy are ruled by
federally mandated oligopolies. To stem the tide of the ever-
growing regulatory state, this budget supports the recent
Presidential directives established by the Trump administration
to combat the regulatory burden placed on manufacturers and
streamline the permitting review and approval processes. The
Memorandum on Streamlining Permitting and Reducing Regulatory
Burdens for Domestic Manufacturing (``Memorandum on
Manufacturing'') provides for stakeholder engagement and
feedback from the Nation's domestic manufacturers in an effort
to highlight unnecessary regulatory burdens and other
administrative policies, practices, and procedures that inhibit
economic growth and job creation.
Another example of smart regulatory reform is H.R. 5, the
``Regulatory Accountability Act of 2017'' (115th Congress). It
is a comprehensive package of rulemaking and administrative
changes focused on government transparency, public input, and
regulatory overreach. This budget supports enacting the bill
into law and implementing the following provisions as soon as
possible:

``Require agencies to choose the lowest-cost
rulemaking alternative that meets statutory objectives,
permitting costlier rules only when cost-justified and needed
to protect public health, safety, or welfare;

``Require greater opportunity for public input
and vetting of critical information--especially for major and
billion-dollar rules;

``Repeal the Chevron and Auer doctrines to end
judicial deference to overreaching agency statutory and
regulatory interpretations;

``Require agencies to account for the direct,
indirect, and cumulative impacts of new regulations on small
businesses--and find flexible ways to reduce them;

``Prohibit new billion-dollar rules from taking
effect until courts can resolve timely-filed litigation
challenging their promulgation;

``Force agencies to publish online, timely
information about regulations in development and their expected
nature, cost and timing;

``Publish plain-language, online summaries of new
proposed rules, so the public can understand what agencies
actually propose to do.''\199\
---------------------------------------------------------------------------
\199\Representative Bob Goodlatte, ``Goodlatte Praises Passage of
Major Regulatory Reform Legislation,'' 11 January 2017.

These kinds of activities on the Federal level are
supported through discretionary spending in the Commerce and
Housing Credit category (Function 370 in Table 2), where the
government funds programs through the Departments of Commerce
and Housing and Urban Development. Entities funded with
discretionary dollars in this function include the Federal
Trade Commission, the majority of the Small Business
Administration, and regulatory agencies such as the Securities
and Exchange Commission.
On a unified basis, for fiscal year 2018, the budget
resolution provides -$16.1 billion in discretionary budget
authority and -$15.6 billion in outlays (Table 2). The negative
discretionary budget authority and outlay figures mainly
reflect the subsidy rates applied to certain loan and loan
guarantee programs scored under the guidelines of the ``Federal
Credit Reform Act'', such as Federal Housing Administration and
Government National Mortgage Association [Ginnie Mae] programs.
This accounting method is further discussed in the section of
this report titled ``Banking, Commerce, Postal Service, and
Related Programs.''

Illustrative Discretionary Spending Policy Options

The main committees responsible for funding programs in
this area are the Committee on Financial Services and the
Committee on Energy and Commerce. As they make final policy
determinations, the committees of jurisdiction should aim to
reduce unwarranted subsidies to big businesses, reform
inefficient government bureaucracies, and create a climate that
supports rather than stifles commerce and free enterprise.
Options worthy of consideration include those cited below. The
policy discussions in this report reflect purely illustrative
options the committees of jurisdiction may want to consider.
Nothing in these descriptions is intended to predetermine,
promote, or assume any specific policy change to be made. The
committees of jurisdiction retain complete flexibility in
deciding what policies they develop pursuant to the
resolution's budgetary goals.

Eliminate Corporate Welfare Programs in the Department of
Commerce. Subsidies to businesses distort the economy, impose
unfair burdens on taxpayers, and are especially problematic
given the fiscal problems facing the Federal Government.
Programs that should be considered for elimination include the
following:

The Hollings Manufacturing Extension Program,
which subsidizes a network of nonprofit extension centers that
provide technical, financial, and marketing services for small
and medium-size businesses. These services are largely
available in the private market. The program already obtains
two-thirds of its funding from non-Federal sources, and was
originally intended to be self-supporting.

The International Trade Administration [ITA].
This agency, within the Department of Commerce, provides trade-
promotion services for U.S. companies. The fees it charges for
these services do not cover the cost of these activities.
Businesses can obtain similar services from State and local
governments and the private market. The ITA should be
eliminated or should charge for the full cost of these ``Trade
Promotion Authority'' services.

The National Network for Manufacturing
Innovation. This program, previously known as the Advanced
Manufacturing Technology Consortia, provides Federal grants to
support research for commercial technology and manufacturing.
As stated in the Heritage Foundation's The Budget Book:
``Businesses should not receive taxpayer subsidies; these long-
lived and unnecessary subsidies increase federal spending and
distort the marketplace. Corporate welfare to politically
connected corporations should end.''\200\
---------------------------------------------------------------------------
\200\The Heritage Foundation, The Budget Book: 106 Ways to Reduce
the Size & Scope of Government, 2015, p. 94

Tighten the Belts of Government Agencies. Duplication,
hidden subsidies, and large bureaucracies are symptomatic of
many agencies within Function 370. For example, the Securities
and Exchange Commission [SEC] now has more than 4,000
employees. According to the Committee on Financial Services:
``The SEC's current budget authority represents an increase of
almost 57 percent since the passage of the Dodd-Frank Act in
2010, and it is 90 percent higher than a decade ago. Since
2000, the SEC's budget authority has increased by more than 345
percent.''\201\ Despite these large increases, the SEC has
consistently requested additional funding. The premise that
more funding for the SEC means better, smarter regulation is
highly questionable. The agency should be reformed so it can
perform its duties more efficiently. Another example is the
Federal Trade Commission's budget, which has increased 30
percent since 2008.
---------------------------------------------------------------------------
\201\Committee on Financial Services, U.S. House of
Representatives, Views and Estimates, 3 March 2017.
---------------------------------------------------------------------------
Congress should assess the ever-growing spending of Federal
agencies, determining what levels are necessary to effectively
and efficiently execute their missions, and adjusting funding
accordingly.

Streamline Federal Housing Programs. There are currently
three major federal home buying programs: the Federal Housing
Administration [FHA], the Rural Housing Service [RHS], and the
Veterans Affairs Home Loan Program [VA]. The fiscal year 2018
budget recommends Committees of jurisdiction streamline these
programs to gain efficiencies while continuing to serve each
program's core mission.

Eliminate Overlap and Consolidate Necessary Department of
Commerce Functions Into Other Departments. Since its
establishment in 1903, the Commerce Department has expanded in
size and scope to include many elements whose priorities would
be better suited in other agencies. The Department of Commerce
and its various agencies and programs are rife with waste,
abuse, and duplication. This budget recommends the following
dissolution, delegation of authority, and consolidation
measures:

Consolidate National Oceanic and Atmospheric
Administration functions into the Department of the Interior.

Establish the U.S. Patent and Trademark Office as
an independent agency.

Eliminate the International Trade Administration.

Delegate trade enforcement activities to the
International Trade Commission.

Consolidate the Bureau of Industry and Security
into the Department of State.

Eliminate the Economic Development
Administration.

Consolidate trade adjustment activities into the
Department of Labor, which already has a duplicate program.

Consolidate the Minority Business Development
Agency into the Small Business Administration.

Consolidate the National Institute of Standards
and Technology and the National Technical Information Services
into the National Science Foundation.

Consolidate the National Telecommunication and
Information Administration with the Federal Communications
Commission as an independent agency.

Consolidate the United States Census Bureau and
the Bureau of Economic Analysis into the Department of Labor's
Bureau of Labor Statistics.

TRANSPORTATION

Function Summary

Innovation is propelling the Nation's transportation sector
forward. The coming years will likely see technological leaps
of American ingenuity. Technologies at various stages of
development and deployment hold potential to increase mobility
and safety, solve persistent problems, and expand commerce
opportunities. Technology is available that collects real-time
traffic, road condition, and parking information; cities and
states that leverage this technology can employ the data and
analytics to do tasks ranging from identifying potholes to
assessing travel patterns. Ride-sharing technology and services
provide new ways to move around cities and towns. Technologies
on the horizon includ unmanned aircraft systems (drones), and
semi- and fully autonomous vehicles. These and other
advancements will be under consideration by Federal
policymakers, as they develop future transportation policies
and manage current surface, air, water, and other
transportation programs.
A transportation system that enables people and goods to
move freely, efficiently, and affordably is a national
priority. Such a system should be resilient and responsive to
the needs of the traveling public and businesses. Its funding
should be sustainable and finances sound. As the following
discussion and explanation of illustrative fiscal year 2018
budget options suggest, Federal policymakers have opportunities
to try new approaches to ensure America's transportation system
accommodates innovation and is financially healthy and focused
on performance.
Congress has a history of bipartisanship in setting
transportation policy. The Trump Administration has proposed--
most recently in the President's fiscal year 2018 budget
request\202\--increasing transportation infrastructure
investment and making it more productive, as well as reducing
red tape that delays projects and increases costs. Part of the
administration's proposal calls for improvements to existing
transportation systems, whether by improving airports and
seaports or maintaining roads and bridges, to help America
remain competitive and to increase productivity. In addition to
ongoing public funding for transportation, the President's
budget envisions a private sector role, both in partnership
with and separate from the public sector.\203\
---------------------------------------------------------------------------
\202\The President's FY 2018 Budget Request, Fact Sheet:
Infrastructure Initiative: May 2017, https://www.whitehouse.gov/sites/
whitehouse.gov/files/omb/budget/fy2018/fact_sheets/
2018%20Budget%20Fact%20Sheet_Infrastructure%20Initiative.pdf.
\203\Ibid. p. 2.
---------------------------------------------------------------------------
Indeed, all levels of government and the private sector
fund and manage transportation activities, from construction to
operations to safety oversight. Though public-private
partnerships are not suitable for all types of projects,
government and private businesses do collaborate and share the
costs of constructing and maintaining transportation assets.
Mandates, rules, and regulations accompany Federal
transportation funding.\204\ They have received renewed
attention from lawmakers, scholars, and the Trump
Administration, because they can undermine the goal of
efficient, productive investment. Some Federal mandates pertain
to workers. Others place sourcing requirements on certain
construction materials; they can increase project costs or lead
to delays. Other laws, rules, and regulations, such as those
governing permitting and environmental reviews, also delay
transportation projects, at the expense of time and funding.
The current fiscal environment should prompt lawmakers, as
stewards of public dollars, to review such rules and
regulations and assess viable alternatives. The budget
recognizes that pursuing free-market reforms in these areas,
through statutory, regulatory, and organizational improvements,
could reduce costs, speed up project timelines, and get more
value overall from Federal transportation spending.
---------------------------------------------------------------------------
\204\For discussion of specific mandates and restrictions on
transportation funding and proposed solutions, see Philip K. Howard,
``Two Years Not Ten Years: Redesigning Infrastructure Approvals,''
Common Good, September 2015: http://commongood.3cdn.net/
c613b4cfda258a5fcb_ e8m6b5t3x.pdf and Michael Sargent and Nicolas
Loris, ``Driving Investment, Fueling Growth: How Strategic Reforms Can
Generate $1.1 Trillion in Infrastructure Investment,'' The Heritage
Foundation, 3 May 2017: http://www.heritage.org/government-regulation/
report/driving-investment-fueling-growth-how-strategic-reforms-can-
generate.
---------------------------------------------------------------------------
In addition to alleviating the regulatory burden, the House
budget envisions focusing the Federal Government's role on
needs that are national in scope and Federal in responsibility.
State and local governments are versed in their particular
transportation challenges, such as planning what to build and
maintain or how to pay for transportation improvements. Federal
policies should aid, not hinder, States' efforts to solve those
problems. Federal reforms that cut red tape, for example, would
free up resources and allow all levels of government and
private businesses to invest efficiently and experience fewer
project delays.
Major components of the Nation's transportation system
include the vast network of interstate highway roads and
bridges and major arterials, and the civil aviation system,
including air traffic control and airport improvement
activities. Federal transportation programs in these areas face
challenges, and the illustrative budget options that follow
contain further discussion of the problems along with
consideration of other categories of transportation.
The transportation category of the budget (Function 400 in
the summary tables) reflects ground, air, water, and other
transportation funding. The major agencies and programs within
this function are the Department of Transportation (which
includes the Federal Aviation Administration; the Federal
Highway Administration; the Federal Transit Administration;
highway, motor-carrier, rail, and pipeline-safety programs; and
the Maritime Administration); the Department of Homeland
Security (including the Federal Air Marshals, the
Transportation Security Administration [TSA], and the U.S.
Coast Guard); the aeronautical activities of the National
Aeronautics and Space Administration; and the National Railroad
Passenger Corporation, or Amtrak.
For these programs and agencies, the budget resolution
calls for $88.1 billion in budget authority and $91.8 billion
in outlays in fiscal year 2018. Discretionary budget authority
in 2018 is $28.5 billion, with outlays of $90.6 billion (see
Table 2); direct spending is $59.6 billion in budget authority
and $1.2 billion in outlays (Table 3). Over 10 years, budget
authority totals $707.4 billion, with outlays of $762.1
billion.
The large discrepancy between discretionary budget
authority and outlays here results from the split treatment of
the Highway Trust Fund programs and certain aviation
activities, for which funding is provided as a type of
mandatory budget authority called contract authority, while
outlays--controlled by annual limitations on obligations set in
appropriations acts--are treated as discretionary spending.
Because of this unique budgeting regime, the discussion below
examines both categories of transportation spending.
Basic transportation policies in this area fall under the
jurisdiction of the Committee on Transportation and
Infrastructure and the Appropriations Subcommittee on
Transportation, Housing and Urban Development, and Related
Agencies. The Committee on Homeland Security and the
Appropriations Subcommittee on Homeland Security will determine
policies for the Transportation Security Administration and
Federal Air Marshals. These committees retain full authority
and flexibility in determining policy choices over programs in
their jurisdictions. The options that follow demonstrate the
credibility of the budgetary assumptions of the resolution. In
the spirit of ensuring the safe, reliable transportation system
described above, the budget envisions maintaining essential
funding for surface transportation, aviation, and safety--
offset by reductions in other transportation activities of
lower priority to the Federal Government.

Illustrative Direct Spending Policy Options

Put the Highway Trust Fund on a Path Toward Solvency and
End Taxpayer Bailouts. The Highway Trust Fund [HTF] has
required large general fund contributions totaling $141 billion
since 2008 to cover cash shortfalls. These transfers from the
general fund enable the U.S. Department of Transportation to
reimburse States for Federal highway and transit commitments in
a timely manner. While a cash shortfall is not imminent for
several years, the budget resolution continues a reform that
would require offsets for any future general fund transfer to
the HTF. CBO estimates that, absent changes, the Highway Trust
Fund again will face insolvency during fiscal year 2021, the
year after the current authorization law, the ``Fixing
America's Surface Transportation Act'', expires.
Congress created the Highway Trust Fund (under the Highway
Revenue Act of 1956) as a mechanism to connect revenue
generated from gasoline taxes to the purpose of building the
Interstate Highway System. The Federal-Aid Highway Act of 1956
established the program enabling its construction.\205\
Receipts from Federal excise taxes on fuels, levied on
motorists, truckers, and bus operators, along with related
truck and tire fees, fill the Highway Trust Fund; these tax
rates stand at 18.4 cents per gallon for gasoline and 24.4
cents per gallon for diesel. Congress and the President enacted
the most recent fuel tax increase in 1993--originally as part
of deficit-reduction legislation.
---------------------------------------------------------------------------
\205\The Interstate Highway System, in fact, dates to 1944
legislation.
---------------------------------------------------------------------------
For decades, the trust fund was self-financing; cash
shortfalls date only to 2008. In addition to inflation's
effects on Highway Trust Fund revenue's purchasing power,
Federal fuel-economy standards and increased use of hybrid and
electric vehicles are eroding the trust fund's balances. In
recent years, Congress also has authorized annual spending out
of the trust fund above the amount of tax receipts collected or
projected for collection. From 1999 through 2008, outlays
outpaced receipts in the trust fund by almost $1 billion a
year, on average. The spending-revenue gap widened further
under the Obama Administration, expanding to more than $11
billion a year. The ``Fixing America's Surface Transportation
Act'' reauthorized Federal highway and transit programs for 5
years and provided for a $70-billion general revenue transfer
to the trust fund. The transfer covers trust fund deficits,
which range from $11 billion in fiscal year 2016 to a projected
$16 billion in fiscal year 2020. The CBO projects the trust
fund's accounts will face a combined $5-billion shortfall
sometime in fiscal year 2021, and the trust fund's cumulative
deficit will grow from $24 billion in fiscal year 2022 to $138
billion by fiscal year 2027.\206\
---------------------------------------------------------------------------
\206\Congressional Budget Office, ``Projections of Highway Trust
Fund Accounts''--CBO's June 2017 Baseline: https://www.cbo.gov/sites/
default/files/recurringdata/51300-2017-06-highwaytrustfund.pdf.
---------------------------------------------------------------------------
Congress has time and options to address the systemic
factors driving the repeated cash shortfalls in the trust fund
and implement sustainable solutions. Congress could continue
using general tax dollars to pay for an increasing share of
Federal transportation programs, although doing so would
further unravel the user-pays/user-benefits model that proved
successful over the Federal-Aid Highway Program's history.
Congress also could reconsider the mission and scope of surface
transportation program, including which activities belong in a
Federal program and those that do not. It may conclude, for
example, that the Federal Government bears some role in the
considerable task of rebuilding the decades-old Interstate
Highway System in the future, while providing aid to States and
cities for activities of local benefit, such as bicycle and
recreational trails, sidewalks, and streetcars, lies outside
its purview or are of lower priority given scarce funding.
Toward this end, Federal policymakers could reconsider spending
mandates on non-highway projects through program set-asides or
the eligibility of non-highway activities for funding. Another
solution could involve a pilot program for States to fund their
transportation priorities with State revenues, opt out of the
Federal fuel taxes, and forgo Federal allocations. Indeed,
numerous States have proposed and enacted legislation to
generate more money for their transportation programs in recent
years.
Pursuing other reforms to Federal surface transportation
policy, in tandem with reforms to the Highway Trust Fund and
its programs, would help advance the broad public policy goal
of efficiently directing resources toward high-value, cost-
effective projects that address congestion problems and improve
mobility and safety. For example, policymakers could assess the
progress of recent legislative efforts to simplify
transportation project review processes and reduce red tape.
They could then use that assessment to inform future
legislation.\207\ To ensure productive use of resources,
lawmakers could consider reforms to other regulations and
mandates that unintentionally increase project costs or siphon
money to government bureaucracy. To ameliorate funding
concerns, they could continue to refine financing mechanisms
for public-private sector partnerships (as demonstrated in the
Transportation Infrastructure Finance and Innovation Act
program). Lawmakers also could consider policies that remove
barriers States face in generating transportation revenue to
fund and finance projects.
---------------------------------------------------------------------------
\207\The FAST Act, enacted in December 2015, contained provisions
to improve and consolidate the environmental and permitting process for
surface transportation projects, for example.
---------------------------------------------------------------------------
The budget encourages reform that puts the trust fund back
on sound financial footing, and it dispenses with the habit of
raiding general funds and increasing the deficit. It recommends
sensible reforms to avert the projected bankruptcy of the
Highway Trust Fund within the budget window, by aligning
spending with incoming revenues, and it includes a provision to
ensure offsets to any future general-fund transfers. President
Trump included this policy in his fiscal year 2018 budget
request.\208\
---------------------------------------------------------------------------
\208\Office of Management and Budget, The Fiscal Year 2018 Budget
of the U.S. Government, A New Foundation for American Greatness, p. 42,
https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/budget/
fy2018/budget.pdf.

Restructure the Air Traffic Control System. Upgrading the
United States' air traffic control [ATC] system, by reforming
its governance and funding structures, is in the interests of
air travelers, businesses that operate within the National
Airspace System, and Federal taxpayers. Without reform,
improvements such as reduced airport congestion, timely
technological upgrades, improved service, and stable funding
for investments will continue to be delayed--and at a steep
cost. Restructuring the system, on the other hand, would have
numerous benefits, including attracting a talented workforce,
meeting demand in the skies, and cost-effectively maintaining
the safest ATC system in the world. A model successfully
adopted by some other countries is that of a federally
chartered, not-for-profit corporation. The government
establishes the corporation, which then operates the ATC system
day to day and makes business decisions, to include investments
in technology. The corporation is self-funded through service
charges paid by users. A government entity--the Federal
Aviation Administration [FAA] in the U.S.--retains its strong
safety oversight and regulatory role.
The budget does not assume budgetary figures associated
with a new approach for providing ATC services. It does include
a reserve fund to accommodate the budgetary effects of such a
proposal, and the reserve fund requires the downward revision
of the Budget Control Act's discretionary spending limits to
reflect the reduction in appropriated spending on ATC-related
activities that should occur as part of ATC reform.
This is not a new concept. Considerable study and debate of
this approach to providing ATC services has gone on over
several decades. The fiscal year 1997 House budget resolution,
for example, proposed to study separating ATC operations from
the Federal Aviation Administration. The budget report
discussed projected congestion at airports and the inability of
the system to meet travel demands cost-effectively and
efficiently. It cited the current system's outdated technology
and that ``Washington has bungled its modernization for more
than a decade.''\209\ Twenty years later, similar problems
hamper the system. Recognizing the need for modern equipment
and ATC facilities, President Trump also proposed to
restructure the ATC system in his fiscal year 2018 budget
request.\210\ The President's proposal envisions a new ATC
provider that quickly and efficiently invests in technology
upgrades and improves services, while the Federal Government
dedicates its resources to maintaining unparalleled safety in
the air navigation system. More recently, the Committee on
Transportation and Infrastructure reported a Federal aviation
program authorization bill to the House; this bill would
transfer operations of the Nation's air traffic control system
to a federally chartered, not-for-profit corporation, and it
would maintain the Federal Aviation Administration's role in
overseeing safety in the system.\211\
---------------------------------------------------------------------------
\209\H. Con. Res. 178, Concurrent Resolution on the Budget for
Fiscal Year 1997, https://www.congress.gov/104/crpt/hrpt575/CRPT-
104hrpt575.pdf pg. 92-94.
\210\The President's FY 2018 budget, https://www.whitehouse.gov/
sites/whitehouse.gov/files/omb/budget/fy2018/fact_sheets/.
2018%20Budget%20Fact%20Sheet_Air%20Traffic%20Control%20Reform.pdf.
\211\On 27 June 2017, the committee favorably reported H.R. 2997,
the 21st Century Aviation, Innovation, Reform, and Reauthorization Act.
---------------------------------------------------------------------------

AN UPGRADE IS NEEDED

The FAA operates a safe ATC system, but not because the
Federal Government owns and operates it. It is safe due to the
daily efforts of the FAA's approximately 14,000 air traffic
controllers and to safety being at the fore of aircraft design
and maintenance. Technology used by the FAA is obsolete. Its
computer system relies on ground-based radar, not Global
Positioning System [GPS]. As a point of contrast, the thousands
of travelers who fly daily within the system carry GPS-enabled
phones. For at least two decades Congress, with little success,
has legislated reforms requiring the FAA to operate its Air
Traffic Organization [ATO] like a business and expedite
modernization.
The ATO remains a massive bureaucracy with high operating
costs, losses in productivity, and a culture that resists
change. The FAA also has received criticism over its
implementation of the multibillion-dollar Next Generation Air
Transportation System [NextGen] program, which is to upgrade
the ATC system. In a letter to the FAA's Administrator, the
Department of Transportation's Inspector General wrote: ``While
FAA reports improvements in its management of acquisitions,
major projects continue to experience problems that delay the
introduction of new technologies, such as performance-based
navigation; postpone benefits to users; and defer the
retirement of costly legacy systems * * * Notwithstanding
reforms, several underlying and systemic issues--including
overambitious plans, shifting requirements, software
development problems, ineffective contract and program
management, and unreliable cost and schedule estimates--affect
the FAA's ability to introduce new technologies and
capabilities that are critical to transitioning to
NextGen.''\212\
---------------------------------------------------------------------------
\212\See Office of the Inspector General, Department of
Transportation, FAA Reforms Have Not Achieved Expected Cost,
Efficiency, and Modernization Outcomes, Audit Report AV-2016-05, 15
January 2016: https://www.oig.dot.gov/sites/default/files/
FAA%20Organizational%20Structure_ Final%20Report%5E1-15-16.pdf.
---------------------------------------------------------------------------
A high-tech ATC service provider, by contrast, would be
able to respond quickly to market forces and implement new
technology efficiently. Recognizing this need in their
respective situations, more than 50 countries--from Canada, the
United Kingdom, and Spain, to Germany, Australia, and New
Zealand--have remodeled their ATC systems over the past few
decades. While the countries have adopted different corporation
models, they have enjoyed similar results: consistent or
greater safety, modernized systems, improved service, and lower
costs.
All those who use the national airspace value access to it.
They all have a stake in the future of the ATC system,
including any proposal to change its governance structure and
means of funding. Likewise, uninterrupted and matchless safety
on the ground and in the skies is paramount to all users. As
the Congress and administration consider future measures, they
will take into account the interests of rural communities,
airports, business jet owners, and private pilots, as well as
labor groups, commercial airlines, the traveling public, and
national security.
Modernization of the United States' ATC system has the
potential to improve the airspace navigation experience for all
users. It would allow for better cost management, safe and
efficient delivery of services, and a more direct connection
between system users and funding.

BUDGETARY EFFECTS

The budget contains a reserve fund to accommodate any
budgetary effects resulting from ATC system reform. The budget
would view a new provider of ATC services as independent, and
therefore it would not view such an entity's spending and
revenue as part of the Federal Government's budget. Under such
reform, Federal spending on ATC and related activities should
necessarily decrease as soon as the new provider assumes
operational responsibility and begins assessing service
charges. Therefore, the budget's reserve fund requires that the
Budget Control Act's discretionary spending caps be lowered to
reflect this decrease in appropriated funding.
Congress may choose to transition the U.S. ATC system to a
federally chartered, non-profit corporation model as part of
reform efforts. As international experience has shown, the
following factors are typical under this type of model: the new
ATC services provider would be independent and self-supporting,
charging its users fees for services it provides. The fees
would fund daily operations and finance borrowing in private
capital markets to pay for capital-intensive investments.
Receipts from the fees would not be deposited into the U.S.
Treasury but would be managed directly by the ATC provider.
This entity would operate the ATC system directly and set its
own budget. It would become the employer of current government
employees connected to providing ATC services, and it would
provide for the health and retirement benefits of new
employees. A chief executive officer and governing board would
be composed of aviation stakeholders with a fiduciary duty to
the Corporation, and the board would make all business
decisions. The ATC provider, not Congress, would initiate
organizational changes and investments. The budget resolution
would view such an entity as independent, not as an agent of
the Federal Government.

Encourage Efficiencies and Controlled Costs in Essential
Air Service. The Essential Air Service [EAS] program began as a
temporary program following airline deregulation in the late
1970s, to provide transitional assistance and ensure airlines
would provide at least some service in small communities.
Through the program, the Department of Transportation enters
into contracts with air carriers (airlines) and subsidizes a
certain number of flights between small community airports and
larger, hub airports. EAS program costs increased by an
inflation-adjusted 123 percent between 2008 and 2015; these
cost escalations have come even though the government has
implemented reforms aimed at containing costs, such as
restricting subsidies to airports beyond a certain driving
distance from a hub airport and allowing airlines to use
smaller planes. According to Congressional Research Service
findings, current law does not require the Department to weigh
cost in the bidding process for EAS service. Congress and the
Department have the opportunity to devise solutions that
control the costs of providing this service.

Illustrative Discretionary Spending Policy Options

Reduce Federal Subsidies for Amtrak. Consistent with
President Trump's budget request, the budget also assumes
reduced Federal subsidies for Amtrak's operations. Federal
subsidies have insulated the National Railroad Passenger
Corporation [Amtrak] from becoming self-sufficient, and they
unfairly commit taxpayers nationwide to underwriting the
commutes, recreation, and other trips for a fraction of the
traveling public. Generally, routes in the Northeast Corridor
operate at a profit but have high capital costs, while long-
distance routes in the National Network tend to operate at a
loss but have low capital costs. The 1997 Amtrak authorization
law required Amtrak to operate free of subsidies by 2002. Yet
taxpayers continue subsidizing approximately $44 of the cost of
the average Amtrak ticket sold.\213\
---------------------------------------------------------------------------
\213\Based on fiscal year 2016 ridership of approximately 31.3
million customers and a $1.4 billion total appropriation.
---------------------------------------------------------------------------
The budget envisions policies that would allow Amtrak's
management to make judicious business decisions in an operating
environment with reduced Federal subsidies. For example,
Amtrak's management, in coordination with stakeholders, could
be empowered to eliminate food and beverage service losses;
lower its per-employee labor costs and administrative expenses;
and discontinue or restructure unprofitable lines. Short of
phasing out subsidies, Congress could make future
appropriations contingent on Amtrak competitively contracting
out the operation of its lines, as other commuter rail lines in
the U.S. have done successfully.\214\ Amtrak could participate
in such competitive bids. The anticipated benefits of these
changes would be lower operating costs for Amtrak and high-
quality service for passengers.
---------------------------------------------------------------------------
\214\The VRE and MARC train are two such lines that have contracted
out certain aspects of their operations.

Prohibit Funding for High-Speed Rail. Only two high-speed
rail lines in the world are profitable: one in France and
another in Japan.\215\ They serve densely populated areas where
gasoline is expensive. Similar success is far from certain in
the U.S., which has low population densities relative to high-
speed rail markets in Europe and Asia. American travelers also
have widespread access to personal vehicles and competitively
priced air and bus transportation, plus commuter rail and
intercity passenger rail service. Both factors mean high-speed
rail cannot currently attract enough riders, which in turn
makes it challenging to meet revenue targets. Several governors
across the country rejected Federal high-speed rail funding in
recent years, because they recognized the risk to their
taxpayers, who would have had to subsidize the proposed lines
in perpetuity. Backing such risky, local projects, likewise, is
not within the purview of the Federal Government but rather, it
is more suited to the discretion of localities and the private
sector.
---------------------------------------------------------------------------
\215\See the Reason Foundation, High-Speed Rail in Europe and Asia:
Lessons for the United States, May 2013: http://reason.org/files/
high_speed_rail_lessons.pdf.

Phase Out Future Capital Investment Program Grants. Often
called New Starts, this program awards grants for new fixed-
guideway mass transit projects and the expansion of existing
ones. Streetcars, ferries, bus rapid transit, and other types
of rail transit are examples of eligible projects. Such
transportation systems produce local, not national, benefits.
The budget supports fulfilling current commitments and then
phasing out new grants, giving States and cities time to plan
their future transportation priorities and budgets accordingly.
This Federal grant program can have the perverse consequence of
distorting local decisions about which types of transit
projects to build, in favor of more costly projects. For
example, a city may opt for a new rail transit project in one
area at the expense of expanding comparatively cost-effective,
flexible bus service in an area where that service is already
in demand. Moreover, if a taxpayer-backed New Starts project
fails to attract enough riders and generate expected revenue
levels, local citizens must make up the revenue to cover future
---------------------------------------------------------------------------
operating and capital costs.

Eliminate TIGER Grants. The Transportation Investment
Generating Economic Recovery [TIGER] Program was a 2009
stimulus bill measure established as a competitive grant
program. Congress and the President created this program to
drive funding to critical national transportation needs for the
country, yet more than 60 percent of the grants support local
transit or so-called ``enhancement'' projects. With grantee
selection based on vague metrics, including ``livability,'' the
Department of Transportation has failed to provide more
information regarding documentation of its review process as
requested by the Government Accountability Office.\216\ The
Trump Administration's preliminary budget proposal recommends
ending this unauthorized program, in favor of supporting
Nationally Significant Freight and Highway Projects grants,
which more reasonably will produce national, not local,
benefits.
---------------------------------------------------------------------------
\216\See the Reason Foundation, ``Eliminate TIGER Program,'' 17
February 2015: http://reason.org/news/show/eliminate-tiger-program.

Encourage Improved Performance and Safety at Washington
Metropolitan Area Transit Authority [WMATA]. WMATA, commonly
called ``Metro,'' is a local transit authority that operates
rail, bus, and paratransit services in the Nation's capital and
nearby communities. In addition to fare box and advertising
revenue, it receives Federal aid through annual appropriations
acts. Specifically, it receives Federal Transit Administration
formula grants and a line-item appropriation. The District of
Columbia, Maryland, and Virginia also raise matching funds
through dedicated sources to pay for Metro's services.
Congress, in a line-item appropriation, directed $150 million
to Metro in fiscal year 2016. Approximately 40 percent of
Metro's rush hour passengers are Federal Government employees.
The transit agency has been characterized by poor performance
in several areas: low on-time performance, weekly service
disruptions, maintenance backlogs, smoky rail tunnels, high
operating costs, and a tragically fatal rail accident in early
2015. In October 2015, U.S. Federal Transit Administration
officials assumed direct safety supervision of Metro's rail
system. Customer satisfaction has dropped.\217\ Decreased
reliability along with reduced service and hours of operation
to accommodate SafeTrack repairs have led to lower ridership.
---------------------------------------------------------------------------
\217\Washington Metropolitan Area Transit Authority [WMATA],
``Vital Signs,'' November 2015: p. 5, http://www.wmata.com/about_metro/
scorecard/documents/Vital_Signs_Q3_2015.pdf.
---------------------------------------------------------------------------
In recent months, however, the new Metro General Manager,
Paul Wiedefeld, has taken steps to control costs, conduct
emergency repairs, and restore safety to the system--all
without increased Federal subsidies. In his fiscal year 2018
``Reality Check'' budget, he proposed broad-ranging reforms,
including eliminating 1,000 nonessential or duplicative
positions; increased funding from Maryland, Virginia, and the
District of Columbia; and fare increases for bus and rail
passengers.\218\ In total, the budget would close a $290
million gap between revenue and expenses. His proposed budget
does not rely on increased Federal subsidies. This budget
resolution supports legislative reforms that encourage Metro to
contain costs and operate more like a business, rather than
reward the system with greater taxpayer-funded subsidies. Metro
customers would benefit from more reliable, safer service.
---------------------------------------------------------------------------
\218\FY 2018 Proposed Budget, https://www.wmata.com/about/records/
public_docs/upload/Metro_FY2018_Proposed_Budget_15Dec16_v4.pdf.

Continue Reforms at the Transportation Security
Administration [TSA]. In the wake of the September 11, 2001
terrorist attacks on the country, which exposed major security
gaps in airport screening and security, Congress and the
Executive Branch took decisive action to assume control over
aviation security. The Transportation Security Administration
[TSA] was created to protect the nation's transportation
systems by providing screening and setting security standards
for major transportation sectors.
TSA continues to face many challenges. Given low employee
morale and high leadership turnover to prolonged airport wait
times and failed internal investigations, reform and
improvement at the agency must remain a top priority.
Fortunately, Congress has made major efforts to reform and
improve TSA through legislative action and oversight. In the
114th Congress, six pieces of legislation were signed into law
that sought reforms of airport checkpoint wait times, last
point of departure airport security, TSA PreCheck, and domestic
airport security. Additional bills passed the House in the
114th Congress seeking to improve vetting of TSA and airport
employees and establish comprehensive reforms for both aviation
and surface transportation security.
While the problems at TSA are great, it is important that
Congress and the Executive Branch continue to build upon
previous reforms. The committees of jurisdiction over aviation
security, as well as TSA itself, must continue to emphasize
risk-based security procedures, innovative screening
capabilities and equipment, improvements in the workforce, and
removal of all insider threats and corruption. Close
relationships with other security agencies, law enforcement,
airports, and airlines will enable TSA to maintain these
priorities and conduct ongoing analysis of innovative
approaches to carrying out its mission. Continued efforts in
these areas, along with rigorous oversight of TSA, will ensure
that the proper improvements are made. This budget recommends
that TSA funding focus on the aforementioned priorities, with
the expectation that the authorizing and appropriating
committees of jurisdiction will continue their responsibility
of directing substantive reforms, to ensure that funding is
meeting taxpayers' expectations.

COMMUNITY AND REGIONAL DEVELOPMENT

Function Summary: Discretionary Spending

The Federal Government continues to support many local,
regional, and community-based activities. While both State and
local governments maintain the bulk of programs in this
purview, a variety of federally structured actions are required
to be addressed at a community level. Federal funding for
economic and community development in both urban and rural
areas appears in this category. It includes Community
Development Block Grants; the non-power activities of the
Tennessee Valley Authority; the regional commissions, including
the Appalachian Regional Commission; the Economic Development
Administration; and partial funding for the Bureau of Indian
Affairs. Homeland Security spending in this function includes
the State- and local-government grant programs of the
Department of Homeland Security, as well as a majority of the
funding for the Federal Emergency Management Agency.
While supporting these programs related to emergency
preparedness and critical needs, this resolution urges
streamlining non-essential community and regional initiatives
that are not core functions of the Federal Government.
The majority of this category's funding is discretionary
and provided by the Appropriations Subcommittees on Financial
Services; Energy and Water; Agriculture; Interior, Environment,
and Related Agencies; and Homeland Security. Relevant
authorizing committees for this category include the Committee
on Financial Services, the Committee on Transportation and
Infrastructure, and the Committee on Homeland Security.
The resolution calls for $5.1 billion in discretionary
budget authority and $19.6 billion in outlays in fiscal year
2018. The 10-year totals for discretionary budget authority and
outlays are $56.4 billion and $98.0 billion, respectively. The
figures appear in Function 450 of Table 2.

Illustrative Discretionary Spending Policy Options

As elsewhere, the committees of jurisdiction will make
final policy determinations. None of the policy discussions in
this report is intended to bind the committees of jurisdiction
to any particular policy direction. The committees retain full
authority and flexibility in determining the policies to be
adopted. The proposals below indicate policy options that might
be considered.

Eliminate Non-Core Programs. At a time when reducing
spending is imperative for the government's fiscal well-being,
this resolution recommends a hard look at community and
regional programs, especially scrutinizing those that deliver
funds for non-core Federal Government functions, and
consolidating and streamlining programs wherever possible. A
particular example is the Community Development Fund [CDF].
Historically, about 80 percent to 90 percent of funding for the
CDF is spent on the Community Development Block Grant program
[CDBG], a program that dates to the 1974 Housing and Community
Development Act of 1974. CDBG is an annual formula grant
directed to State and local governments. In 2016, Congress
appropriated $3.0 billion for CDBG. A vast range of activities
are eligible for funds, such as home water and energy
efficiency activities, historic preservation, demolishing
blighted properties, street and sidewalk repairs, job training,
grants to local businesses, and community planning. Local
organizations, private business, and sometimes local
communities at-large are the ultimate recipients of CDBG funds.
Likewise, the benefits are enjoyed locally, not nationally. The
program's effectiveness has been compromised over the decades
by debates over formulas, which have allowed wealthier
communities to receive funding at the expense of lower-income
communities; currently there is no maximum community poverty
rate to determine eligibility for funds, nor are communities
with high average income limited or excluded. Further, wasteful
and inefficient projects have received grants, and the program
has been criticized for incurring unnecessarily high
administrative costs, which drain funding for actual projects.
Recognizing the waste and abuse in the CDBG program, President
Trump's fiscal year 2018 budget recommends eliminating it.

Focus Department of Homeland Security Urban Area Security
Initiative Grants. Urban Area Security Initiative grants to
more than 30 cities have not produced measurable results for
the most critical municipalities. This option would limit the
grants on a risk-based formula basis.

Reform the Federal Emergency Management Agency. The budget
supports implementation of reforms at the Federal Emergency
Management Agency [FEMA] passed by Congress to improve service
delivery and efficacy in disaster assistance, while at the same
time proposing further steps to eliminate overlap and
inefficiencies. The budget also acknowledges the need to
consider reforms in disaster-relief assistance to ensure those
State and local governments most in need are receiving the
assistance required. The disaster declaration is intended as a
process to help State and local governments receive Federal
assistance when the severity and magnitude of the disaster
exceeds State and local resources, and when Federal assistance
is absolutely necessary. Nevertheless, the recent precedent set
by Congress regarding Federal emergency and disaster assistance
has focused on providing designated emergency CDBG funding
instead of using the FEMA Disaster Relief Fund. As a result,
FEMA has pivoted to a variety of grant programs that exceed the
purview of Federal funding and should be provided by individual
states and localities themselves. This budget calls for a
thorough review of the scope and funding levels of the
following FEMA grant programs to determine whether overlap and
duplication exists.

Preparedness (Non-Disaster) Grants. This category
of grants comprises a variety of security-related programs
attempting to ``enhance the capacity of state and local
emergency responders.''\219\ This includes the Homeland
Security Grant Program; the Intercity Bus Security Grant
Program; the Intercity Passenger Rail Security Grant Program;
the Nonprofit Security Grant Program; the Port Security Grant
Program; the Tribal Homeland Security Grant Program; and the
Transit Security Grant Program.
---------------------------------------------------------------------------
\219\Federal Emergency Management Agency [FEMA], ``Preparedness
(Non-Disaster) Grants'': https://www.fema.gov/preparedness-non-
disaster-grants.

Hazard Mitigation Assistance Grant Programs. This
category of grants includes the Flood Mitigation Assistance
Program, the Hazard Mitigation Grant Program, and the Pre-
Disaster Mitigation Grants. These non-emergency disaster
assistance programs hope to ``reduce overall risk to the
population and structures from hazard events, while also
reducing reliance on Federal funding for future
disasters.''\220\
---------------------------------------------------------------------------
\220\FEMA, ``Pre-Disaster Mitigation Grant Program: General Program
Information'': https://www.fema.gov/pre-disaster-mitigation-grant-
program.

Assistance to Firefighters Grant Programs. This
collection of grants includes the Assistance to Firefighters
Grants [AFG], Fire Prevention and Safety [FP&S], and Staffing
for Adequate Fire and Emergency Response [SAFER]. These grants
subsidize local and volunteer fire departments, and provide
Federal funds to increase the staffing levels of specific
community fire departments.

EDUCATION, TRAINING, EMPLOYMENT,
AND SOCIAL SERVICES

Function Summary: Discretionary Spending

Creating and supporting an environment of opportunity for
all Americans is a national goal and a focus of Federal
policymakers. Access to high-quality education is key to
achieving this goal. Education can end the cycle of poverty in
families and offer a path to the middle class. It equips
students to pursue their academic and professional goals, makes
American workers more competitive, and increases the Nation's
economic strength.
The question, however, is how best to advance the cause of
high-quality education. One approach has crept toward ever-
greater centralization, creating Federal programs, spending
more money, and piling on regulation. This approach has
stripped local entities of opportunities to decide how to
measure their educational systems and programs, and it ``has
limited the ability of teachers, parents, faculty, and
education leaders to do what's best for students and local
communities.''\221\ The approach favors programs that spend
more but gives insufficient attention to outcomes for students.
Higher spending has not led to higher achievement. ``Since
World War II, inflation-adjusted spending per student in
American public schools has increased by 663 percent,'' yet
student achievement has not followed suit.\222\ For example,
``public school national math scores have been flat (and
national reading scores declined slightly) for 17-year-olds
since 1992,'' as analysis of Federal data show.\223\ Graduation
rates at public high schools have not improved considerably
since 1970.\224\
---------------------------------------------------------------------------
\221\Committee on Education and the Workforce, FY 2018 Views and
Estimates.
\222\Gerard Robinson and Benjamin Scafidi, ``More Money, Same
Problems,'' U.S. News and World Report, 20 September 2016: https://
www.usnews.com/opinion/articles/2016-09-20/more-money-wont-fix-failing-
public-schools.
\223\Ibid.
\224\Ibid.
---------------------------------------------------------------------------

K-12 EDUCATION

Principally, Federal funds for K-12 education (Function 500
in Table 2 of this report) should aim to support State and
local entities and empower them to produce good outcomes for
students. It should not seize control from States and
localities. Real gains in education result from the diversity
and creativity of State and local educators. Centralizing rules
and standards in Washington risks dampening their effectiveness
and innovation. The Federal Government has an interest in
education, but that interest is chiefly in promoting the
initiatives of local educators, not dictating them. To this
end, Congress continues to oversee the implementation of the
``Every Student Succeeds Act'', a law governing major K-12
education programs, aimed at reducing Federal overreach.
Promoting choice is another way to expand access to
quality, affordable education. When parents have choices, they
are empowered to help their children attend excellent schools
and receive a first-rate education. States and local districts
across the country are experimenting with the many forms of
school choice, which include vouchers, charter schools, magnet
schools, Education Savings Accounts, education-related tax
credits, homeschooling, online learning programs, and
others.\225\ For example, 43 States and the District of
Columbia have laws governing charter schools, which now serve
approximately 3 million students across the country.\226\ As
the Education and the Workforce Committee notes in its Views
and Estimates: ``[T]he D.C. Opportunity Scholarship program * *
* has allowed thousands of students to attend private schools
of their choice''\227\ as an alternative to staying at a poorly
performing school. Four States--Arizona, Florida, Tennessee,
and Mississippi--have active Education Savings Accounts
programs serving an estimated 11,300 students combined.\228\
The 115th Congress may consider appropriate Federal solutions
that advance the mission of school choice, alongside efforts to
improve children's experiences and educational outcomes in the
Nation's public schools.
---------------------------------------------------------------------------
\225\See ``Types of School Choice,'' database at edchoice.org,
https://www.edchoice.org/school-choice/types-of-school-choice/.
\226\Education and Workforce Committee, ``Helping Students Succeed
Through the Power of School Choice,'' Rep. Rokita opening statement, 2
February 2017: http://edworkforce.house.gov/news/
documentsingle.aspx?DocumentID=401246.
\227\Committee on Education and the Workforce, FY 2018 Views and
Estimates
\228\``Fast Facts on School Choice,'' EdChoice.org, https://
www.edchoice.org/resource-hub/fast-facts/.
---------------------------------------------------------------------------

CAREER AND TECHNICAL EDUCATION

While in middle and high school and in college, some
students also pursue their academic and professional goals
through a set of educational institutions referred to as career
and technical education. Career and technical education [CTE]
refers to programs that prepare students with academic and
technical knowledge and skills to succeed in a specific field,
whether health care, hospitality, manufacturing, information
technology, and more. These capabilities are indispensable for
maintaining the foundation of the Nation's economy, and
equipping students with such in-demand skills is a national
priority. This is especially so given gaps between jobs
available in certain industries and the number of workers
qualified for those jobs (often called the skills gap).\229\
Likewise, both traditional high-school graduates and older,
contemporary students can enjoy the job-readiness benefits of
CTE without taking on the costs--and debt often required--for
four-year degree programs.\230\ As with K-12 education
programs, there are opportunities for Congress to ensure
Federal laws governing CTE programs are not overly prescriptive
but instead empower State and local leaders to design
innovative ways to educate students for high-demand, high-skill
jobs.
---------------------------------------------------------------------------
\229\See Testimony of Mike Rowe, House Committee on Education and
the Workforce, 28 February 2017: https://edworkforce.house.gov/
uploadedfiles/rowe_-_written_testimony.pdf
\230\A Better Way, ``Poverty, Opportunity, and Upward Mobility,''
p. 28, https://abetterway.speaker.gov/_assets/pdf/ABetterWay-Poverty-
PolicyPaper.pdf.
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JOB TRAINING

In addition to high-quality educational opportunities,
Americans of all ages should have access to skills and job
training that will equip them to compete in the rapidly
changing global economy. Federal training programs--also a
major component of discretionary funding in this function--are
notorious for their failure and duplication. As described
further below, 42 training programs--administered by nine
Federal agencies--have created a labyrinth of bureaucracy that
consistently fail to produce a substantial number of job
placements. In addition to reforming training programs so they
serve Americans more effectively, Congress must make every
dollar count by eliminating wasteful, duplicative, and
ineffective programs.
For fiscal 2018 the budget resolution in this category
provides $80.4 billion in discretionary budget authority and
$91.3 billion in outlays, which primarily goes to the
Departments of Education, Labor, and Health and Human Services.

Illustrative Discretionary Spending Policy Options

The main committees responsible for funding programs in
this area are the Committee on Education and the Workforce and
the Appropriations Subcommittee on Labor, Health and Human
Services, Education, and Related Agencies. They will make final
decisions about what policies to develop to achieve their
budgetary targets. Policy options for consideration include the
following:

Reform Job-Training Programs. The Bureau of Labor
Statistics' February 2017 report found that 7.5 million
Americans are unemployed. Yet the bureau also reports 5.6
million job openings. This gap is due in part to the failure of
the Nation's workforce-development programs to successfully
match workers' skills with employers' needs.
This budget builds on the reforms made possible by the
``Workforce Innovation and Opportunity Act'' [WIOA], signed
into law in 2014. This budget calls for further consolidation
of duplicative Federal job training programs and improved
coordination with the reformed workforce development system. A
streamlined approach with increased oversight and
accountability will not only provide administrative savings,
but will improve access, choice, and flexibility, enabling
workers and job seekers to respond quickly and effectively to
whatever specific career challenges they face.
The GAO last reviewed Federal job training programs in
2011, three years before WIOA was enacted. This budget
recommends that GAO conduct a study to examine the
effectiveness of current Federal job training programs, and
identify ways to better measure program success.

Make the Pell Grant Program Sustainable. The Pell Grant
program is the foundation of Federal student aid, a portable
grant to help low-income students afford a college education.
After years of decisions to raise the Pell Grant award levels,
however, the program is on unstable financial ground, with real
consequences for future students. Pell Grant discretionary
costs ballooned from $12.8 billion to $22.2 billion between
fiscal years 2006 and 2016 (most recent data available). During
this period, the funding required to support the discretionary
portion of the grant award fluctuated considerably. In fiscal
years 2011 and 2012, for example, Congress provided $36.5
billion each year to sustain the program. CBO estimates Pell
Grant program costs will increase over the coming decade.
Instead of confronting some of the factors driving the
program's costs, previous Congresses increasingly relied on
mandatory spending to make up for discretionary funding
deficiencies. Instead of implementing necessary, structural
reforms to set up the program for long-term success, lawmakers
repeatedly resorted to short-term funding patches--a temporary
answer that will not prevent a severe funding cliff for the
program in the future. Any reforms to Pell Grants should aim to
help students with lower incomes access higher education and
complete in a timely manner. The budget envisions responsible
adjustments so that Pell Grants will continue to remain
available for future students. These include the following:

Provide flexibility and ensure on-time
completion. The fiscal year 2017 omnibus appropriations act
provides for year-round Pell Grants, which allow eligible
students to draw down their overall maximum grant eligibility
and continue their studies in the summer. Such a statutory
change could be a way to give students more flexibility in
earning their degree. It will likely lead to higher program
costs. It is therefore important that students accelerate
through their studies and complete their degrees on time. The
committee of jurisdiction could consider, in future
legislation, ways to encourage on-time completion. Policies
could include changing the Federal definition of ``full-time''
attendance for financial aid to one that would align with on-
time completion, or explicitly requiring students participating
in year-round Pell to accelerate their progress to completion.

Roll back certain recent expansions to the needs
analysis to ensure aid is available to students with the most
need. The Department of Education attributed 14 percent of
program growth between 2008 and 2011 to recent legislative
expansions to the needs-analysis formula. The biggest cost
drivers come from changes made in the ``College Cost Reduction
and Access Act'' [CCRAA] of 2007, such as the expansions of the
level at which a student qualifies for an automatic zero
Expected Family Contribution and the income-protection
allowance. One option is to return to these pre-CCRAA levels.

Eliminate administrative fees paid to
participating institutions. The government pays participating
schools $5 per grant to administer and distribute Pell awards.
Schools already benefit from the Pell program, because the aid
makes attendance at those schools more affordable.

Consider setting a maximum-income cap. Currently
there is no fixed upper-income limit for a student to qualify
for Pell. Figures go into a formula, which is used to calculate
the grant amount for which the student qualifies. The higher
the income level of the student and the student's family (and
therefore expected family contribution to the student's
education), the smaller the grant he or she receives.

Eliminate eligibility for less-than-half-time
students. Some students eligible for Pell grants may be
balancing a job and college courses, and even family
responsibilities. Timely completion of required course credits
is important, so that students do not borrow more in loans than
necessary to cover tuition and living costs; so that they can
graduate, secure a job, and be financially able to start
repaying any student loans; and so that grant aid can be made
available to more students. One option for encouraging timely
completion would be reserving funding for students enrolled on
no less than a half-time basis. This policy would retain
flexibility for contemporary students balancing school, work,
and family commitments.

Adopt a sustainable maximum-award level. The
Department of Education attributed 25 percent of recent program
growth to the stimulus bill's $619 increase in the maximum
award, which took effect in the 2009-2010 academic year. To
make Pell Grant program funding more stable and sustainable,
the budget recommends maintaining the maximum award for the
2017-2018 award year, of $5,920, in each year of the budget
window. Discretionary appropriations would fund this award.

Consider reforms to Return of Title IV Funds
regulations. Simple changes to this policy, such as increasing
the amount of time a student must attend class to withdraw
without debt owed for back assistance, will increase the
likelihood of students completing their courses and reduce
incentives for fraud.

Encourage Innovation in Higher Education. Federal higher-
education policy should focus not solely on financial aid but
on policies that maximize innovation and ensure a robust menu
of institutional options for students and their families. Such
policies should include reexamining the data made available to
students, to make certain they have information to assist them
in making decisions about where to go to college and how to pay
for it. Additionally, the Federal Government should remove
regulatory barriers in higher education that act to restrict
flexibility and innovative teaching, particularly as it relates
to contemporary models, such as online coursework.

Eliminate Administrative Fees Paid to Schools in the
Campus-Based Student-Aid Programs. Under current law,
participating higher-education institutions can use a
percentage of Federal program funds for administrative
purposes. One option would be to prohibit this practice.
Schools benefit significantly from participating in Federal
student-aid programs.

Ensure Federal Early Childhood Programs Work for Children
and Families. Recently enacted legislation, the Every Student
Succeeds Act, intends to scale back Federal overreach into
local education decisions and empower States to streamline many
early childhood programs. In short, it aims to better target
resources and shrink bureaucracy, and it gives States and
localities the opportunity to innovate and pursue programs with
demonstrated success. The budget supports future reforms, by
committees of jurisdiction, to programs and activities that are
not improving outcomes for participating children and parents.
For example, a study released in 2010 by the Department of
Health and Human Services found the Head Start program that
serves children across the country was not producing lasting
improvements in participating children's math, language, and
literacy skills. Nor was it improving parenting practices.\231\
Yet taxpayers fund this program at $9 billion annually. The
Obama Administration took regulatory action aimed at correcting
the program's course, but without engaging Congress in
discussions about how best to do so. Parents and their children
deserve better. The budget supports efforts by the committees
of jurisdiction to ensure that programs such as Head Start
support working parents, expand parental choice, are not mired
in regulation, and result in lasting gains for low-income
children and their parents. Congress and the new administration
have the responsibility to ensure existing early childhood
programs are producing desired outcomes before establishing and
funding new initiatives.
---------------------------------------------------------------------------
\231\See U.S. Department of Health and Human Services, Head Start
Impact Study, 15 January 2010: http://www.acf.hhs.gov/sites/default/
files/opre/executive_summary_final.pdf.

Empower Parents and Ensure High Quality in Federal Primary
and Secondary Education Programs. Certain provisions in the
``Every Student Succeeds Act'' prevent the Federal Government
from coercing States into adopting specific sets of academic
standards, such as Common Core. Setting standards, devising
curricula, and conducting related activities are not Federal
duties; they are of State and local concern. The budget
supports work to implement these provisions as well as future
efforts that stop Federal edicts and instead empower States,
local communities, and parents.
The structure for K-12 programs at the Department of
Education is fragmented and ineffective. Many programs are
duplicative, not working as intended, or are highly restricted,
serving only a small number of students. Given budget
constraints, Congress must focus resources on programs that
truly help students. The ``Every Student Succeeds Act''
provided for the elimination or consolidation of 49 of these
programs and replaced them with a single Student Support and
Academic Enrichment Grant.\232\ The budget encourages the
timely transition from an array of K-12 programs to the new
streamlined system, which will increase efficiency, limit the
Federal role, and make way for innovative practices in States
and localities. Downsizing the number and scope of programs,
and making more Federal aid dollars portable will make that
possible. Federal dollars should go to efforts that improve
academic outcomes, not add to the bureaucracy.
---------------------------------------------------------------------------
\232\Became Public Law 114-95.
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The budget recommends that, as efforts to consolidate and
streamline are undertaken, the committees of jurisdiction
continue giving priority to discretionary funding for students
with disabilities provided under the ``Individuals with
Disabilities Education Act'' [IDEA]. IDEA funding has
consistently fallen short of the 40-percent Federal
contribution threshold established in statute. Congress should
refocus efforts to support this existing commitment before it
entertains new education programs or initiatives.

Encourage Private Funding for Cultural Agencies. The
activities and content funded by cultural agencies, such as the
Corporation for Public Broadcasting, National Endowment for the
Arts, and National Endowment for the Humanities, go beyond the
core mission of the Federal Government. The country has robust
offerings in the arts and media, which cater to the spectrum of
preferences and perspectives held by people across the country,
from small towns to dense urban cores. Federal cultural
agencies can generate additional financial support from
private-sector patrons, which will also alleviate risks of
political interference and perennial funding uncertainty that
come with Federal subsidies.

Make Way for Increased State, Local, and Private Financial
Support for Museums and Libraries. State and local governments
are in a position to manage and invest in museums and
libraries. Charitable contributions from private-sector
businesses, organizations, and individuals in civil society can
augment this funding.

Promote More Private Support for the Smithsonian
Institution. The Smithsonian Institution consists of 19 museums
and galleries, a zoological park, and research and supporting
facilities. Approximately 29 million visitors enjoyed the
Smithsonian complex in person in fiscal year 2016 (the last
full fiscal year), and the Institution can connect with
millions through its website, podcast, and social media.\233\
In fiscal year 2016, for example, the Smithsonian raised $326
million in private funds.\234\ Through Federal grants and
appropriated funds, general taxpayers contribute about 60
percent of its annual budget. The remaining 40 percent comes
from trust fund sources and non-federal funds, including
private gifts, endowment disbursements, membership
contributions, external grants, and business income.\235\ The
budget supports continued efforts by the Smithsonian to
generate non-federal revenue. Given the current Federal fiscal
environment, increased private funding can better enable
Smithsonian to expand its collections, improve existing
facilities, and make business decisions.
---------------------------------------------------------------------------
\233\Smithsonian Institution Fiscal Year 2018 Budget Justification
to Congress, May 2017: p. 1, https://www.si.edu/sites/default/files/
about/fy_2018_cjb_linked_table_of_contents.pdf.
\234\Ibid., p. 251.
\235\See Smithsonian Dashboard, Finances: http://dashboard.si.edu/
finances.

Eliminate the Corporation for National and Community
Service. Programs administered out of this agency provide
funding to students and others who work in certain areas of
public service. Participation in these programs is not need-
based. The United States has a long history of robust volunteer
work and other efforts that provide services to communities and
individuals. Americans' generosity in contributing their time
and money to these efforts is extraordinary and should be
encouraged. The Federal Government already has aid programs
focused on low-income students, and the oxymoronic act of
paying ``volunteers'' is not a core Federal responsibility,
especially in times of high deficits and debt. Further, it is
much more efficient to have such efforts operate at the State
and local level by the community that receives the benefit of
the service.

HEALTH

Function Summary: Discretionary Spending

For decades, the United States has been the biomedical
innovation capital of the world. This comes from the Nation's
commitment to the discovery, development, and delivery of new
treatments and cures. America should maintain its world
leadership in medical science by encouraging competitive forces
to work through the marketplace in delivering cures and
therapies to patients. Federal policies should foster
innovation in health care and promote medical ingenuity, not
stifle it. Bureaucracy and red tape in Washington have held
back medical innovation and prevented new lifesaving treatments
from reaching patients. Removing these burdens will allow the
Nation to maintain its lead in the production of medical
devices, the creation of new vaccines, and the pharmaceutical
research that saves and enhances millions of lives. This
resolution recognizes the valuable role of government support
for research agencies, such as the National Institutes of
Health [NIH], but also encourages the indispensable
contributions to medical research coming from outside
Washington.
In addition to the NIH and the Centers for Disease Control
and Prevention [CDC], programs and agencies that receive
discretionary funding in this category (Function 550 in Table
2) include Project Bioshield, the Food Safety and Inspection
Service, and the Food and Drug Administration [FDA]. The
resolution's discretionary totals for fiscal year 2018 are
$61.6 billion in budget authority and $61.3 billion in outlays.
The 10-year discretionary totals are $638.1 billion in budget
authority and $624.7 billion in outlays.

Illustrative Discretionary Spending Policy Options

The principal authorizing committees in this category are
the Committee on Energy and Commerce and the Committee on
Oversight and Government Reform. Funding is provided by the
Appropriations Subcommittees on Labor, Health and Human
Services, Education, and Related Agencies; Agriculture, Rural
Development, Food and Drug Administration, and Related
Agencies; and the Legislative Branch. These panels have sole
authority and maximum flexibility in determining the policy
choices to meet the fiscal parameters of this resolution.
Nevertheless, they might wish to consider the principles and
illustrative policy options described below.

Support Global Health Responses. The Nation must remain
prepared to address threats to public health in a timely
fashion. The budget protects funding for the NIH and the CDC,
the first line of defense for the American people. The
resolution recognizes the importance of resources to combat
infectious diseases and respond to global health crises,
ensuring the Nation's capability to prepare and act upon
emerging health threats, such as the recent Ebola and Zika
outbreaks. At the time of this resolution's consideration, the
NIH is advancing clinical trials in the human testing phase for
a new vaccine to combat the Zika virus.

Defend Against Bioterrorism. The Constitution requires the
Federal Government to provide for the common defense--a
function that has implications for health care in a global
environment fraught with chemical, biological, radiological,
and nuclear [CBRN] weapons. In following this commitment, the
budget supports funding to guard against bioterrorism, such as
the countermeasure procurement and development activities of
the Secretary of Health and Human Services.
The Federal Government operates a pathway for medical
countermeasures [MCM] to bioterrorism events. When the
Department of Homeland Security, in collaboration with the U.S.
intelligence community, identifies a CBRN threat, it begins the
MCM development and stockpiling process. The linchpin of the
process is Project BioShield. Project BioShield uses the
Special Reserve Fund to procure and stockpile MCMs that are
approved only for emergency use, following their research and
development by NIH and the Biomedical Advanced Research and
Development Authority [BARDA]. Upon approval by the Food and
Drug Administration [FDA], MCMs are shifted to the CDC-managed
Strategic National Stockpile. This budget recognizes the
collaborative effort in developing MCMs is vital to
safeguarding Americans against a bioterrorism attack. As such,
it supports adequate, consistent, and advance funding for these
activities.

Foster Medical Research, Innovation, and Development.
Medical breakthroughs and discoveries are made every day, and
the pace of medical innovation will continue to quicken due to
advancements in groundbreaking fields such as genomic medicine,
molecular medicine, and biomedical research. The NIH and the
CDC foster fundamental creative discoveries, cures, and
therapies. The Health and Human Service Laboratories housed in
these agencies rank first in the 2017 list of the world's most
innovative research institutions.\236\ The budget resolution
supports a level of funding for these agencies that enables
them to continue their critical work. The budget also
encourages the continuation of work started under the ``21st
Century Cures Act'', which provided funds through the NIH and
the Cures Innovation Fund for biomedical research, particularly
early-stage, ``high-risk, high-reward'' research.\237\
---------------------------------------------------------------------------
\236\David Ewalt, ``The World's Most Innovative Research
Institutions,'' Reuters, 1 March 2017: http://www.reuters.com/article/
innovative-institutions-ranking-idUSL2N1GC1NG.
\237\H.R. 6, the ``21st Century Cures Act,'' 114th Congress: 1st
Session, 19 May 2015.
---------------------------------------------------------------------------
Regrettably, much of this innovation has faced significant
hurdles due to the Federal overregulation pushed by the Obama
Administration. For example, a recent report from the Mercatus
Center at George Mason University highlights the proper role
the FDA should have in the 21st Century.\238\ It should not be
an organization that holds up products for nine years before
approving them.\239\ It should not cost innovators close to $20
million to deal with the FDA's myriad requirements.\240\ Most
important, patients should not be left to suffer the true costs
of delaying life-saving devices. This resolution calls for a
complete examination of the FDA approval process to promote a
more effective, efficient system that truly safeguards
Americans' access to innovative cures and therapies. The Trump
Administration has signaled its intention to expedite review of
potentially life-saving medicines and devices, and this budget
supports those efforts.
---------------------------------------------------------------------------
\238\Jason Briggeman, Joseph V. Gulfo, and Ethan C. Roberts, The
Proper Role of the FDA for the 21st Century, the Mercatus Center at
George Mason University, February 2016: http://mercatus.org/sites/
default/files/Gulfo-Proper-Role-FDA-v1.pdf.
\239\Emergo, ``How long it has historically taken the FDA to clear
510(k) submissions,'' retrieved 1 February 2016: http://
www.emergogroup.com/resources/research/fda-510k-review-times-research.
\240\AdvaMed, FDA Impact on U.S. Medical Technology Innovation,
November 2010: http://www.advamed.org/sites/default/files/resource/
30_10_11_10_2010_Study_CAgenda_makowerreportfinal.pdf.

Strengthen Oversight and Program Integrity Measures.
Federal grant programs fund a variety of health care services
provided by State and local governments. Every dollar made
available through these programs should be used transparently,
and in the most effective manner possible, for its intended
purpose. This budget resolution supports increased program
integrity measures to prevent fraud and abuse in health care
programs, particularly in the realms of improper payments and
inappropriate expenditures.
The resolution promotes scientific integrity, particularly
when taxpayer dollars are funding research. International
research entities should be subject to the same strict
transparency and reproducibility requirements that U.S.
institutions must follow to receive the same grant money. If
these standards are violated--or worse, never put into place--
the findings of the research are questionable at best.
Regrettably, the government does not maintain these same
protections when transferring taxpayer money overseas through
international grant projects. This lack of transparency allows
for results-shopping to fit a particular ideology, the
intentional misdirection of taxpayer dollars away from
institutions that value the scientific method, and the
deliberate misinformation of the public. At the time of this
report's writing, the House Committee on Science, Space, and
Technology is conducting an investigation into just such an
egregious use of taxpayer dollars.\241\
---------------------------------------------------------------------------
\241\Letter from Chairman Lamar Smith, Chairman, House Committee on
Science, Space, and Technology, and Chairman Darin LaHood, Science,
Space, and Technology Subcommittee on Oversight, to Thomas E. Price,
Secretary, U.S. Department of Health and Human Services, 24 March 2017:
https://science.house.gov/sites/republicans.science.house.gov/files/
documents/03_24_2017%20SST%20to%20Price%20HHS%20Re%20NIEHS.pdf.
---------------------------------------------------------------------------
This budget supports the ongoing investigative efforts of
the House Committee on Science, Space, and Technology.
Furthermore, it asserts that future grants to study health
safety should be awarded only to those intuitions subject to
the same scientific standards as U.S. researchers.

Limit Federal Health Coverage Funding for Members of
Congress and Their Staffs. Currently, Federal contributions to
the Federal Employee Health Benefits Program grow by the
average weighted rate of change in these programs. This budget
supports restricting the growth in these plans to inflation. It
also proposes restricting Federal employees' retirement
benefits based on length of service, which would bring Federal
benefits in line with the private sector model.

Reduce Wasteful Spending. This budget repeals funding for
certain offices that waste taxpayer resources on nonessential
projects, particularly projects that are only tangential to
improving Americans' health. The NIH operates the National
Center for Complementary and Integrative Health, which receives
funding for research on alternative health care. Some of its
recent grant awardees include studies on the effectiveness of
cranberry juice in treating urinary tract infections; the
potential use of yoga to improve low metabolism; and the
benefits of chamomile tea in treating anxiety. The CDC operates
the Division of Community Health, which provides grants to
programs that fund sidewalks and smoke-free housing options.
The CDC and NIH do excellent work on early detection,
prevention, and treatment for breast and cervical cancer, as
well as on immunizations, flu vaccines, and many other worthy
efforts. The agency should receive sufficient funding for these
activities, but they should not be spending American taxpayer
dollars on unsubstantiated research and community enhancement
that would be best conducted by local governments.

Target Resources, Improve Outcomes. The budget supports
better targeting of Federal spending to achieve the country's
health care goals. For example, the budget calls for
eliminating duplicative programs at the Department of Health
and Human Services [HHS]. The budget supports the consolidation
of the Agency for Healthcare Research and Quality [AHRQ] into
existing HHS agencies. The AHRQ's mission and areas of research
exist within other HHS agencies and are therefore duplicative
and unnecessary.
The budget also supports prudent investments to improve
mental health care and awareness. In 2015, according to NIH,
nearly 10 million adults in the U.S. lived with severe mental
illness,\242\ and it is important that the Federal Government
give priority to treatment of the sickest and most vulnerable
patients. The Government Accountability Office recently
conducted a study that identified more than 100 distinct
programs supporting individuals with serious mental illness,
and found interagency coordination for programs severely
lacking.\243\ Federal dollars should not be squandered on
antiquated programs that fail to meet patients' needs. The
budget calls for Federal programs to be reoriented to advance
treatment for those facing serious mental illness. Any research
conducted and grants awarded by the Federal Government should
be firmly rooted in evidence-based practice. Programs and
resources in this area should focus on psychiatric care for
patients and families most in need of services.
---------------------------------------------------------------------------
\242\National Institute of Mental Health, ``Director's Blog: Mental
Health Awareness Month: By the Numbers,'' 15 May 2015: http://
www.nimh.nih.gov/about/director/2015/mental-health-awareness-month-by-
the-numbers.shtml.
\243\Government Accountability Office, HHS Leadership Needed to
Coordinate Federal Efforts Related to Serious Mental Illness, report to
the Energy and Commerce Subcommittee on Oversight and Investigations,
December 2014: http://energycommerce.house.gov/sites/
republicans.energycommerce.house.gov/files/114/Analysis/
20150205GAOReport.pdf.
---------------------------------------------------------------------------
This budget supports initiatives aimed at modernizing the
health care system, such as advancing telemedicine. This
practice utilizes technology allowing providers to interact
with patients from a distance. It can offer access to care for
patients who may otherwise not receive regular care,
particularly those in rural areas. It also gives patients
greater control over their own health care while reducing
costs.\244\ At the same time, this budget recognizes the
government must not leave behind patients who rely on more
traditional medical practices. Patient-centered care requires
the budget to look forward as it fosters private-sector
innovation, without abandoning currently available care models
that patients require.
---------------------------------------------------------------------------
\244\Bill Frist, ``Telemedicine: A Solution to Address the Problems
of Cost, Access, and Quality,'' Health Affairs, 23 July 2015: http://
healthaffairs.org/blog/2015/07/23/telemedicine-a-solution-to-address-
the-problems-of-cost-access-and-quality/.
---------------------------------------------------------------------------
One such model is the Federal Black Lung Program, which
provides compensation to coal miners disabled by pneumoconiosis
that resulted from their work in coal mining. The Black Lung
Benefits Act provides eligible miners with medical coverage to
treat related lung disease through benefits and clinic funding.
This budget allows for continued support of those who risked
their health to power the Nation.

Combat the Opioid Epidemic. Finally, the budget recognizes
that the United States is in the midst of a deadly battle with
opioid and heroin abuse. According to the CDC, an average of 91
Americans die each day from an opioid overdose.\245\ In the
State of Tennessee, there are more opioid prescriptions than
people. In 2015, Tennessee health care professionals wrote
nearly 8 million prescriptions for opioids, producing enough
for 1.18 prescription per Tennessean.\246\ Nearly 5 percent of
Tennesseans suffer from opioid abuse.\247\ This reflects a
larger challenge faced by Americans nationwide.
---------------------------------------------------------------------------
\245\Centers for Disease Control and Prevention, ``Opioid Basics:
Understanding the Epidemic,'' 16 December 2016: https://www.cdc.gov/
drugoverdose/epidemic/index.html.
\246\Holly Fletcher, ``There Are More Opioid Prescriptions than
People in Tennessee,'' The Tennessean, 19 September 2016: http://
www.tennessean.com/story/news/health/2016/09/19/there-more-opioid-
prescriptions-than-people-tennessee/90358404/.
\247\Jake Lowary, ``Tennessee Lawmakers Still Wrangling with Opioid
Epidemic,'' The Tennessean, 26 March 2017: http://www.tennessean.com/
story/news/politics/2017/03/26/tennessee-lawmakers-still-wrangling-
opioid-epidemic/98487640/.
---------------------------------------------------------------------------
The Committee on Energy and Commerce has led an ongoing
effort to ascertain which Federal programs have been effective
in combatting opioid abuse, and which have not--and why the
latter failed.\248\ The budget resolution supports a
continuation of these efforts. It calls for a complete
examination of the Federal response to the crisis. The
government should implement prevention activities, and evaluate
them to identify effective strategies for preventing substance
abuse. The budget resolution includes a policy statement that
describes in greater detail the contours of how the Federal
Government should respond to the ongoing substance abuse
crisis.
---------------------------------------------------------------------------
\248\Press Release, Committee on Energy and Commerce, U.S. House of
Representatives, 29 March 2017: https://energycommerce.house.gov/news-
center/press-releases/ec-leaders-comment-president-trump-s-executive-
action-address-opioid.
---------------------------------------------------------------------------

INCOME SECURITY

Function Summary: Discretionary Spending

The aim of potential reforms described here is to make more
judicious use of limited resources. In addition, these reforms
seek to target funds on the most needy while encouraging self-
sufficiency for those who can achieve it. Programs that
subsidize food and housing for low-income Americans remain
largely unreformed, nearly two decades after the success of the
``Personal Responsibility and Work Opportunity Act''--the major
welfare reform bill enacted in 1996. This budget proposes to
improve work incentives for these programs and increase State
flexibility.
Discretionary spending components of this category
(Function 600 in Table 2) include the Special Supplemental
Nutrition Program for Women, Infants, and Children; the Low
Income Housing Energy Assistance Program; housing assistance
programs; and the Child Care and Development Block Grant. For
these programs the budget resolution provides $68.1 billion in
budget authority in fiscal year 2018, and $67.6 billion in
outlays. The budget assumes discretionary spending of $712.8
billion in budget authority and $710.3 billion in outlays in
this area over the 2018-2027 period.

Illustrative Discretionary Spending Policy Options

The main committees responsible for funding these programs
are the Committee on Agriculture; the Committee on Financial
Services; and the Appropriations Subcommittees on Labor, Health
and Human Services, Education, and Related Agencies, and on
Agriculture, Rural Development, Food and Drug Administration,
and Related Agencies. They will make final policy
determinations for discretionary funding and should aim to
provide State flexibility and to expand work incentives. The
options below are potential policy proposals that follow such
guidelines.
The committees of jurisdiction are not bound by any of the
illustrative policy discussions in this report. The options are
presented to demonstrate the credibility of the budgetary
assumptions of the resolution, but the authorizing and
appropriating committees retain full authority and maximum
flexibility in determining the policies to be adopted.

Make Responsible Reforms to Housing-Assistance Programs.
This resolution supports taking actions that would make
housing-assistance programs more sustainable and direct Federal
dollars to serve those most in need. In past budgets,
illustrative policy options have attempted to impose a Federal
solution to housing policy to aid those most in need. The
Committee on Financial Services says: ``Current federal housing
policy is fractured, costly, and inefficient * * *. In
particular, the Department of Housing and Urban Development has
received more than $1.655 trillion in real (2014) dollars in
appropriations over its 50 year existence and today spends $45
billion annually on at least 85 active programs.''\249\ The
Committee on Financial Services also reports current federal
programs for providing housing assistance are fragmented and
outdated. As a result, ``[t]his fragmented national system * *
*. may further constrain individual choice and economic
mobility.\250\
---------------------------------------------------------------------------
\249\Committee on Financial Services, U.S. House of
Representatives, Views and Estimates, 3 March 2017.
\250\Ibid.
---------------------------------------------------------------------------
There is nothing more local than housing assistance. For
fiscal year 2018, the resolution calls for block granting all
discretionary housing assistance programs at the Department of
Housing and Urban Development. Local communities are better
prepared to address the housing needs of their citizens. Some
communities have a large homeless population, while others may
struggle to assist working age adults in unstable housing
situations. Communities must be able to set their own
priorities to address these local needs. Building off of the
successful reforms to the Temporary Assistance for Needy
Families [TANF] program, the fiscal year 2018 policy option
would provide a base level of funding to each state and allow
States to determine the best programs to provide housing for
their citizens.

Reform Supplemental Nutrition Assistance Program Outreach
Funding. This budget assumes that outreach funding for
Supplemental Nutrition Assistance Program (formerly food
stamps) is reduced, and funds are shifted toward programs that
facilitate upward mobility, such as properly reformed job-
training programs.

Enforce Eligibility Requirements For WIC Program. The
Women, Infants, and Children [WIC] Program is intended to serve
individuals with incomes below 185 percent of the Federal
Poverty Level. Adjunctive eligibility allows individuals to
demonstrate eligibility for the program if they are enrolled in
Medicaid. Since Medicaid serves families with incomes above 185
percent of the Federal Poverty Level, adjunctive eligibility
not only simplifies program administration, but also expands
eligibility. The budget would limit WIC eligibility to 185
percent of the Federal Poverty Level.

OTHER DISCRETIONARY SPENDING

Discretionary spending under the Medicare Program consists
primarily of administration and management costs. The budget
resolution totals for fiscal year 2018 are $6.6 billion in
discretionary budget authority, with $6.6 billion in outlays.
The 10-year totals in the budget resolution are $82.6 billion
in discretionary budget authority and $82.1 billion in outlays
(Function 570 in Table 2). This also includes the budget for
the Medicare Payment Advisory Commission, a non-partisan,
independent agency established by the Balanced Budget Act of
1997 to advise Congress on Medicare payment policies and
analyze issues affecting beneficiaries, such as access to care,
quality of care, health care outcomes, and so on.
For administering Social Security, the budget assumes $5.4
billion in discretionary budget authority and $5.4 billion in
outlays for fiscal year 2018. The 10-year totals for
discretionary budget authority and outlays are $61.5 billion
and $61.3 billion, respectively (Function 650 in Table 2). All
the budget authority and all but a sliver of residual outlays
are off budget. The Social Security Administration oversees the
program.

Direct Spending

----------

Uncontrolled automatic spending, formally called ``direct''
or ``mandatory'' spending,\251\ has come to dominate the
Federal budget, and its share of total outlays continues to
increase. As noted previously, this form of spending is largely
open-ended and flows from effectively permanent authorizations.
Most of the programs funded this way pay benefits directly to
groups or individuals without an intervening appropriation.
They spend without limit, and their totals are determined by
numerous factors outside the control of Congress: caseloads,
the growth or contraction of gross domestic product, inflation,
and many others.
---------------------------------------------------------------------------
\251\The Balanced Budget and Emergency Deficit Control Act (Public
Law 99-177) defines ``direct spending'' as budget authority provided in
law other than appropriations acts; entitlement authority; and the
Supplemental Nutrition Assistance Program (formerly food stamps).
---------------------------------------------------------------------------
The majority of this spending goes toward the government's
health programs--mainly Medicare, Medicaid, and the Affordable
Care Act. Social Security represents another major component.
Apart from these, however, there are numerous other benefit
programs financed with direct spending. These include farm
assistance, food stamps, a range of income support programs,
tuition assistance for college students, and many others. This
section discusses solely the direct spending in these areas to
reinforce the urgency of getting this spending under control.

SOCIAL SECURITY

Function Summary: Direct Spending

Following the outbreak of the Great Depression, rates of
unemployment and poverty increased dramatically, and nearly
half of elderly Americans lacked the means to be self-
supporting. Many lived in poverty and also had no access to
viable retirement security options. Americans at the time were
reluctant to expand welfare programs. They believed in the
virtue of self-sufficiency, and the strength of character that
emerges in striving for it. What President Roosevelt proposed
in the midst of America's economic crisis, however, was not
welfare; it was retirement security through social insurance.
``[S]ecurity was attained in the earlier days through the
interdependence of members of families upon each other and of
the families within a small community upon each other,'' the
President told Congress. ``The complexities of great
communities and of organized industry make less real these
simple means of security. Therefore, we are compelled to employ
the active interest of the Nation as a whole through government
in order to encourage a greater security for each individual
who composes it * * * a right which belongs to every individual
and every family willing to work.''\252\
---------------------------------------------------------------------------
\252\President Franklin D. Roosevelt, Message to Congress Reviewing
the Broad Objectives and Accomplishments of the Administration, 8 June
1934: https://www.ssa.gov/history/fdrcon34.html.
---------------------------------------------------------------------------
The result was the creation of the Old-Age and Survivors
Insurance [OASI] program, commonly known today as Social
Security, which established a work-based contribution system to
insure against old-age and provide lifetime benefits to retired
workers. The 1939 Amendments added Social Security benefits for
the spouse and minor children of retired workers. Twenty years
later, Social Security was expanded to provide disability
benefits to workers and their dependents.
Before the passage of the Social Security Act in 1935, the
Federal Government played a limited role in poverty relief. In
the 1920s, there were between five million and six million
seniors, or 5 percent of the population. For male seniors, work
provided the primary source of support. If a senior was unable
to work and care for himself, the ``safety net'' was his
family.\253\ Following the Great Depression, Social Security
and other Federal poverty programs provided a floor of support
for senior citizens during old age.
---------------------------------------------------------------------------
\253\Carolyn L. Weaver, ``Support of the Elderly Before the
Depression: Individual and Collective Arrangements,'' Cato Journal, Vol
1, No. 2, Fall 1986: http://object.cato.org/sites/cato.org/files/
serials/files/cato-journal/1987/11/cj7n2-15.pdf.
---------------------------------------------------------------------------

Success, Popularity, and Expansion

Social Security is the largest program in the Federal
Government's budget. Program benefits are reflected in the
direct spending of budget Function 650 (Table 3 in the summary
tables). Under this budget, these benefits total $995 billion
in outlays in fiscal year 2018. Over 10 years, total outlays
will be $13.2 trillion. With respect to the budget resolution,
these benefits are treated as off budget and do not appear in
the legislative text. The retirement program, Old-Age and
Survivors Insurance, is projected to spend $847 billion in
benefits in 2018, and $11.4 trillion for the period of 2018
through 2027. The Disability Insurance [DI] program has
projected outlays of $148 billion for 2018 and $1.8 trillion
for 2018-2027.\254\
---------------------------------------------------------------------------
\254\Congressional Budget Office, The Budget and Economic Outlook:
2017 to 2027, January 2017, Table 1-2: https://www.cbo.gov/sites/
default/files/115th-congress-2017-2018/reports/52370-
budeconoutlook.pdf.
---------------------------------------------------------------------------
OASI was created in 1935\255\ as a self-financed program--
funded through a payroll tax on employers and employees--that
provides a monthly cash benefit to retired workers, based on
the worker's lifetime average earnings in covered employment.
The program furnishes benefits to workers who spend at least 10
years (40 quarters) in jobs in which they pay Social Security
taxes. OASI has a progressive benefit structure so lower-income
beneficiaries generally receive a monthly benefit that replaces
a higher percentage of their pre-retirement income than do
higher-income beneficiaries.
---------------------------------------------------------------------------
\255\Public Law 74-271, 74th Congress.
---------------------------------------------------------------------------
From the outset, however, Social Security benefits were
never intended to be the sole source of income for seniors in
retirement, but rather a floor so a senior citizen would not
become destitute. Personal savings, pensions, family support,
and continuing to work into old age were to provide additional
support to seniors above a person's Social Security benefit.
From 1935 through 1975, Congress expanded the number of
people covered by the program, increased benefits and the taxes
that support it, created the DI Program (in 1956),\256\ and
established a cost-of-living adjustment [COLA] (in 1975).\257\
Since then, Congress has focused on ensuring the long-term
solvency of the program. In 1983, Congress passed substantial
reforms to Social Security, including increasing the full
retirement age from 65 to 67.
---------------------------------------------------------------------------
\256\Public Law 84-880, 84th Congress.
\257\Public Law 92-603, 92nd Congress.
---------------------------------------------------------------------------
By almost every measure, U.S. senior citizens today are
healthier and wealthier than at any point in U.S. history.
Social Security, along with Medicare, has played a significant
role in improving quality of life for America's seniors.
Americans also are living longer, largely due to medical
innovation and healthier lifestyles. In 1935, when Social
Security was created, the average life expectancy from birth
was 60 years. Today, it is 78.8 years.
A 2011 study using both income and consumption data found
seniors over 65 have much lower poverty rates than almost any
other demographic group.\258\ According to one of its authors:
``Even over the past 10 years, those 65 and older with the
lowest income are now living in bigger houses that are much
more likely to be air conditioned and have appliances like a
dishwasher and clothes dryer. Few other groups have enjoyed as
much improvement in living standards over the past three
decades.''\259\
---------------------------------------------------------------------------
\258\Bruce D. Meyer, University of Chicago, and James X. Sullivan,
University of Notre Dame, The Material Well-Being of the Poor and
Middle Class Since 1980, American Enterprise Institute, 22 September
2011: http://www3.nd.edu/jsulliv4/well_being_middle_class_poor4.3.pdf.
\259\Bruce D. Meyer, ``Using Consumption to Study Older Americans'
Poverty,'' The New York Times, 9 November 2011: http://www.nytimes.com/
roomfordebate/2011/11/09/are-older-americans-better-off/using-
consumption-to-study-older-americans-poverty.
---------------------------------------------------------------------------
Social Security enjoys widespread support. It continues to
represent a bond, a compact, among generations of Americans.
The program currently serves some 60 million beneficiaries, but
with 10,000 baby boomers now retiring daily, by 2040 Social
Security will cover 100 million beneficiaries. Today and in the
future, Social Security beneficiaries deserve a program that is
sound and reliable--one responsive to the 21st century economy.
Social Security is threatened, however, by demographic,
financial, and structural challenges. It is on an unsustainable
financial trajectory and will not be able to pay promised
benefits within the next two decades.

Fragile Financial Prospects

Social Security payroll taxes are credited to two trust
funds: one for OASI and one for DI. The Social Security Trust
Funds also hold additional assets, including interest on
Treasury securities from previous cash surpluses. From 1983
through 2010, more tax revenues were collected by the Trust
Funds than what was paid out in Social Security benefits, so
Social Security ran annual cash-flow surpluses. Because the
government subsequently borrowed these surplus funds for other
activities, critics declared a ``raid'' on Social Security that
threatened retirees' future benefits. It was not. All the
borrowed funds were replaced with interest-bearing Treasury
securities--the only kind of resources the Trust Funds hold--
that can be redeemed as needed.
In 2010, Social Security began running a cash-flow deficit,
meaning non-interest income (mainly payroll tax revenue) could
no longer pay all the benefits to current retirees. If not for
balances of Treasury securities in the Trust Funds, built up
from previous surpluses, the program would already be unable to
pay promised benefits. The ability to redeem these securities,
however, depends entirely on the Treasury's ability to raise
money through taxes or borrowing.
To make matters worse, both Trust Funds face insolvency
within the next 20 years--2028 for DI and 2035 for OASI--
depleting their capacity to pay full benefits. With each year
Congress delays, the policy changes needed to correct the
program's fiscal trajectory will become too large and wrenching
to adopt. That will lead to sudden, steep reductions in
benefits.
Those who doggedly oppose reform, however, only ensure
these automatic benefit cuts will occur. ``The Social Security
program is kept solvent on the government's books by
`planning'--it's the law of the land--to cut benefits 25
percent across the board in under two decades. It's a horrible
way to run a pension program and no one should be proud of that
and so we need a better Social Security program. It's not a
matter of just cutting because [we] want to have the numbers
line up. It's about having programs that are serving the
beneficiaries well.''\260\
---------------------------------------------------------------------------
\260\Douglas J. Holtz-Eakin, The Need for Fiscal Goals, testimony
to the Committee on the Budget, U.S. House of Representatives, 15 June
2016: https://www.youtube.com/watch?v=CW5sA9-ikg0.
---------------------------------------------------------------------------
For these reasons, the House adopted a rule for the 114th
Congress prohibiting legislation that improves the financial
condition of DI at the expense of the OASI Trust Fund. The rule
provides an exemption, however, for legislation that improves
the financial condition of both Social Security Trust Funds.
The rule has been continued in the 115th Congress.\261\
---------------------------------------------------------------------------
\261\Section 3(o) of H. Res. 5, Rules of the House of
Representatives: One Hundred Fifteenth Congress.
---------------------------------------------------------------------------
The lack of bipartisan congressional action on a long-term
solution to the problem facing Social Security has resulted in
many Members of Congress offering their own. One such proposal
would be a bipartisan commission that would study the
structural deficiencies within the current Social Security
system and report back with specific legislative proposals for
Congress and the President to consider.
Social Security's fiscal condition warrants a long-term
solution that keeps the promise made to the Nation's current
and future retirees.
This budget calls for a bipartisan path forward in
addressing the long-term structural problems within Social
Security. The path will require all parties to first
acknowledge the fiscal realities of this critical program.
Short-term policy proposals that merely delay addressing Social
Security's long-term fiscal challenges are no longer
acceptable. Neither borrowing between the OASI and DI Trust
Funds, nor reallocating the apportionment of payroll tax
revenues to each Fund, is a long-term solution to Social
Security's fiscal challenges. ``If you want to help both
programs you're not going to accomplish that by moving money
around just between them.''\262\
---------------------------------------------------------------------------
\262\Holtz-Eakin, op. cit.
---------------------------------------------------------------------------
Former President Obama's Fiscal Commission made an
important contribution to the debate about addressing Social
Security's financial shortfall. The Commission acknowledged the
reality of increasing longevity and proposed reforms to
alleviate the demographic problems that are undermining Social
Security's finances.
This budget seeks to build on the Fiscal Commission by
requiring the President to put forward specific solutions to
fix Social Security's long-term fiscal problem. The budget also
puts the onus on Congress to offer legislation ensuring the
long-term solvency of this program. Any policy proposal offered
regarding the Disability Insurance program should first and
foremost strengthen the long-term integrity of the program for
Americans with disabilities (see further discussion below).
The Committee on Ways and Means will determine actual
policies in Social Security. The committee's members have
maximum flexibility in determining the appropriate legislative
course for meeting the budget resolution's parameters. The
discussion below offers some guiding principles to include in
the debate.

Starting the Process

This budget requires the President and Congress to begin
the process of reforming Social Security by altering a current-
law trigger that, in the event the Social Security program is
not sustainable, requires the President, in conjunction with
the Social Security Board of Trustees, to submit a plan for
restoring the balance to the Trust Funds. This provision would
then require congressional leaders to put forward their
positive solutions to ensure the long-term solvency of Social
Security. While the Committee on Ways and Means would make the
final policy decisions, this provision would require the
following:

If in any year the Board of Trustees of the
Federal Old-Age and Survivors Insurance Trust Fund and the
Disability Insurance Trust Fund, in its annual Trustees'
Report, determine that the 75-year actuarial balance of the
Social Security Trust Funds in the 75th year is in deficit, the
Board of Trustees should, no later than the 30th of September
of the same calendar year, submit to the President
recommendations for statutory reforms necessary to achieve a
positive 75-year actuarial balance and a positive annual
balance in the 75th year.

No later than the 1st of December of the same
calendar year in which the Board of Trustees submits its
recommendations, the President shall promptly submit
implementing legislation to both Houses of Congress, including
recommendations necessary to achieve a positive 75-year
actuarial balance and a positive annual balance in the 75th
year.

Within 60 days of the President's submission, the
committees of jurisdiction to which the legislation has been
referred shall report the bill, which shall be considered by
the full House and Senate under expedited procedures.

Disability Insurance

The Disability Insurance program provides essential income
support for persons with disabilities and their families. Due
in large part to the predictable consequence of demographic
factors and policy decisions, however, DI program revenues will
be unable to cover the full costs of benefits in 2028,
according to the Social Security Trustees, unless Congress
acts.
In 2015 Congress took the first step toward comprehensive
Disability Insurance reform that would solve the Trust Fund's
long-term financing troubles. The Bipartisan Budget Act of 2015
included a number of provisions to reduce fraud, increase
program integrity, and encourage DI beneficiaries to return to
work. These provisions strengthened the DI program and extended
its solvency date to 2022.\263\
---------------------------------------------------------------------------
\263\Public Law 114-74.
---------------------------------------------------------------------------
Despite this recent legislation, the structural problems
facing the DI program remain the same. Under current law, its
Trust Fund is expected to be exhausted in 2028. If lawmakers do
not enact reforms to ensure the long-term solvency of the
Disability Insurance program, an immediate 7-percent reduction
in benefits will be required when the Trust Fund becomes
exhausted.\264\
---------------------------------------------------------------------------
\264\Congressional Budget Office, Estimate of the Effects on the
OASI and DI Trust Fund of enacting H.R. 1314, the Bipartisan Budget Act
of 2015, introduced 27 September 2015.
---------------------------------------------------------------------------
The huge growth in the number of individuals receiving DI,
and the benefits paid to each, have contributed heavily to the
worsening financial condition of the DI Trust Fund. In 2016,
the Congressional Budget Office reported that the share of
working-age adults receiving DI benefits rose from 1.3 percent
in 1970 to 4.5 percent in 2014.\265\ Between 1990 and 2015, the
total number of individuals receiving DI benefits increased
from 4.3 million to 10.9 million.\266\ Average DI benefits per
person have also increased significantly from $5,100 in 1970 to
$12,200 in 2015 (as measured in 2015 dollars). Legislated
changes to the formula used to compute benefits contributed to
the increase in spending.\267\ Meanwhile, tax revenues paid
into the DI Trust Fund have remained relatively flat as a share
of taxable payroll.
---------------------------------------------------------------------------
\265\Congressional Budget Office, Social Security Disability
Insurance: Participation and Spending, June 2016, p. 1.
\266\Ibid., p. 6.
\267\Ibid., p. 9-10.
---------------------------------------------------------------------------
The demographic factors contributing to the problem include
the aging of the baby boomers into their most disability-prone
years and the increased number of women in the workforce now
eligible for benefits should they become severely disabled. In
addition, policymakers have expanded the ways in which
applicants may qualify for benefits. At the same time, those
receiving DI are in many ways prevented from improving their
situations. If they work too much, they see their benefits
reduced or eliminated. While about 40 percent of disability
beneficiaries indicate an interest in working, less than one-
half of one percent leave the rolls each year due to earnings
from work.\268\
---------------------------------------------------------------------------
\268\Debra Wright, Gina Livermore, Denise Hoffman, Eric Grau, and
Maura Bardos, 2010 National Beneficiary Survey: Methodology and
Descriptive Statistics, Mathematica, 2 April 2012.
---------------------------------------------------------------------------

Principles for Disability Insurance Reform

Congress and the President should develop bipartisan
legislation to secure the future of the DI program. This
legislation should be rooted in principles that do the
following:

Promote opportunity for those trying to return to
work;

Ensure benefits continue to be paid to
individuals with disabilities and their family members who rely
on them;

Prevent an 7-percent across the board benefit
cut; and

Make the Disability Insurance program work
better.

Consistent with the House rule, reforms should begin to
improve the financial situation of Social Security.

Illustrative Policy Option

Eliminate the Ability to Receive Both Unemployment
Insurance and Disability Insurance. This option would eliminate
concurrent receipt of unemployment and disability insurance, a
clear example of duplication in the Federal budget. The
proposal would give the Social Security Administration the
authority to identify fraud and prevent individuals from
obtaining benefits from both programs. It is consistent with a
similar policy proposal President Trump and former President
Obama made in their budget requests. This budget takes the
first step in preventing across the board benefit reductions to
the Social Security program. This policy option could save up
to $4.4 billion.

MEDICARE

Function Summary: Direct Spending

The Medicare and Medicaid Programs reached their 50th
anniversary in July 2015. By many measures, Medicare has seen
remarkable successes, such as providing access to health care
for millions of seniors, and contributing to increased life
expectancies and reduced rates of poverty among seniors. At the
same time, however, it has become an immensely expensive
program that actually limits retirees' choices, imposes heavy
burdens on medical providers, and--through its myriad billing
rules--effectively makes Washington bureaucrats the decision-
makers for retirees' health care services.
The aims of Medicare are not in question. Retirees need
health care and it has to be paid for somehow--without
burdening seniors themselves with crippling costs. That was the
goal of the program's creation in 1965. The problem has been
the attempt to deliver Medicare's vast promises through a
centrally managed government financing arrangement. In the 21st
century American health care market, there is a far better way
to achieve Medicare's worthy goals. It should be built on the
same principles that apply to health care reform generally.
Retirees should be able to choose the coverage plan best suited
to their particular needs, rather than accept a set of benefits
dictated by Washington. The program should ensure doctors and
patients make health care decisions for themselves. It also
should encourage competition among insurers to expand choices
of coverage and restrain costs.
The benefits of this approach have already been
demonstrated in certain existing components of Medicare.
Medicare Advantage and Medicare Part D, an optional
prescription drug benefit, provide seniors with the opportunity
to choose, from an array of private plan options, the coverage
that best suits their needs. These programs, described further
below, offer lessons that can be applied more broadly through
Medicare, creating a more responsive and resilient program.
They are a model for the proposals envisioned in this budget
resolution.
Looking to these examples, as well as the private sector,
positive solutions can be discovered that maintain access to
high-quality care through patient-centered reforms fostering
competition, restoring market forces, expanding choices and
empowering individuals, promoting innovation, and providing
flexibility for patients and providers.
Such reforms, worthwhile in themselves, have another
significant benefit: They can help Congress balance the budget,
and bolster Medicare's collapsing financial structure. On its
present course, the so-called Medicare ``guarantee'' is in fact
a promise of shrinking benefits. Yet those who doggedly oppose
reform only ensure this unacceptable outcome.

INCREASING COMPLEXITY: MEDICARE'S EVOLUTION

When the Medicare Program was created in 1965, it consisted
of just two essential parts: Part A, coverage for hospital
services, or hospital insurance [HI]; and Part B, or
supplementary medical insurance [SMI]. The HI Trust Fund is
funded primarily through a designated payroll tax of 2.9
percent that is shared equally by employer and employee. The
SMI Trust Fund is supported much differently; revenues consist
of beneficiary premiums, which must account for 25 percent of
all Part B costs on an annual basis, and transfers from the
U.S. Treasury's general revenues.
During the late 1990s, Congress created Medicare Part C, or
Medicare Advantage [MA]. The MA program offers beneficiaries
private plan options that cover services provided under Part A,
Part B, and often Part D benefits. The Federal Government
determines the level of spending per enrollee that will be
provided to MA plans (with funds from the appropriate trust
funds used to offset the Part A, Part B, and Part D costs), and
beneficiaries pay a monthly premium as they do under Parts B
and D. Not surprisingly, with the adjustment of payment rates
to make MA plans comparable to traditional Medicare, use of
this program dramatically expanded. In 2016, 31 percent of all
Medicare beneficiaries chose a MA plan, as opposed to just 13
percent in 2003.\269\
---------------------------------------------------------------------------
\269\Gretchen Jacobson, Giselle Casillas, Anthony Damico, Tricia
Neuman, and Marsha Gold, Medicare Advantage 2016 Spotlight: Enrollment
Market Update, The Kaiser Family Foundation, 11 May 2016: http://
kff.org/medicare/issue-brief/medicare-advantage-2016-spotlight-
enrollment-market-update/.
---------------------------------------------------------------------------
Finally, Medicare Part D, Prescription Drug Coverage, was
established in 2003. Part D is structured similarly to Part B
and is a separate account within the SMI Trust Fund.
Beneficiary premiums account for approximately 25.5 percent of
costs, with the remaining 74.5 percent funded through general
revenues.\270\ Unlike any other program in Medicare, however,
Part D relies on market forces and competition among private
plans to drive down costs. As a result, year after year Part D
reports costs millions of dollars lower than projected, while
still maintaining high quality and beneficiary satisfaction.
These lessons ought to be applied throughout the Medicare
Program.
---------------------------------------------------------------------------
\270\Part D also receives payments from States for dually enrolled
beneficiaries in the program.
---------------------------------------------------------------------------
Medicare's evolution brought growing complexity, making
benefits difficult for retirees to navigate. This conflicts
with the experience the majority of beneficiaries enjoyed for a
lifetime in the private health insurance market prior to
entering the program. Notwithstanding the program's successes,
Medicare's complicated benefit structure, along with a
multitude of rules and regulations, make the program a
bureaucratic quagmire for both beneficiaries and providers.
Medicare's current benefit design is overly complex, with
various cost-sharing structures for each part. Currently,
beneficiaries must enroll in three separate programs to get the
same comprehensive coverage. Seniors are required to enroll in
Part A for hospitalization; coverage is provided separately for
outpatient physician services and prescription medications,
through the optional Parts B and D, respectively. Medicare also
fails to offer financial protections for seniors, such as
annual or lifetime limits. Many must sign up for an additional
supplemental insurance policy called MediGap to obtain a fully
comprehensive coverage package.
Several fundamental program design problems add costs to
the system and inhibit innovation. First, Medicare allows
government bureaucrats to determine what benefits enrollees are
entitled to, and the program's administrative pricing system
distorts costs and services throughout the entire health care
sector. Medicare keeps restricting the medical sector because
its savings mechanisms are largely price controls, not cost
controls. The Centers for Medicare and Medicaid Services [CMS]
often fails to reimburse for new therapies and medical
technology, limiting patient access to more advanced cures.
This effectively stymies innovation throughout the health care
delivery model.
Additionally, CMS acts as the clinical arbiter of access to
medical goods and services with full authority to deny coverage
of items. Unfortunately for patients, CMS is often abysmally
wrong when it comes to coverage determinations, and in some
cases appears to be working toward a certain bottom line rather
than ensuring patients have access to the safest and most up-
to-date medical technologies and therapies. For example,
transcatheter aortic valve replacement [TAVR] is a minimally
invasive surgical procedure used to repair heart valves--which
previously required open heart surgery. Today, a small implant
can be inserted through a catheter to the affected valve and
requires only very small openings that leave all the chest
bones in place. While no procedure is completely without risk,
TAVR provided options to previously non-viable surgical
candidates and offers a faster recovery period. Despite these
advances, CMS created coverage and procedural requirements to
limit the procedure's use.
Finally, Medicare's billing and reporting regulatory regime
force providers to spend more time filling out paperwork than
actually seeing patients.\271\ A recent Health Affairs article
reported that today physician practices spend more than 785
hours per physician and $15 billion annually to report quality
measures.\272\ While everyone benefits from quality health
care, the current reporting requirements are highly burdensome
and add unnecessary costs to the health care system.
---------------------------------------------------------------------------
\271\Christine Sinsky, Lacey Colligan, Ling Li, Mirela Prgomet, Sam
Reynolds, Lindsey Goeders, Johanna Westbrook, Michael Tutty, and George
Blike, ``Allocation of Physician Time in Ambulatory Practice: A Time
and Motion Study in 4 Specialties,'' Annals of Internal Medicine, 6
December 2016: http://annals.org/aim/article/2546704/allocation-
physician-time-ambulatory-practice-time-motion-study-4-specialties.
\272\Lawrence P. Casalino, David Gans, Rachel Weber, Meagan
Cea,Amber Tuchovsky, Tara F. Bishop, Yesenia Miranda, Brittany A.
Frankel, Kristina B. Ziehler, Meghan M. Wong and Todd B. Evenson, ``US
Physician Practices Spend More Than $15.4 Billion Annually To Report
Quality Measures,'' Health Affairs, March 2016: http://
content.healthaffairs.org/content/35/3/401.abstract.
---------------------------------------------------------------------------
Many of these difficulties could be addressed by expanding
retirees' choices of insurance plans and promoting competition
among insurers. As noted, such approaches are already working
in Medicare Parts C and D. They should apply to the program
more broadly.

FORTHCOMING FINANCIAL COLLAPSE

In addition to its structural problems, Medicare suffers
from a failing financial arrangement and ever-rising costs.
Correcting these problems is indispensable for making the
program sustainable for the long term. They also contribute
immensely to the important task of balancing the Federal
budget.
Medicare and the other major health care programs are
projected to consume an ever-increasing portion of the Federal
budget over time.\273\ In the next decade, annual spending on
these programs will double, from $1.1 trillion to $2.2
trillion, according to estimates by the Congressional Budget
Office [CBO].\274\ Medicare currently serves more than 57
million beneficiaries, and is the second largest direct, or
automatic, spending program after Social Security.\275\ In
2016, Medicare Program costs totaled $692 billion, and CBO
projects spending to more than double by 2027, reaching $1.4
trillion that year. Congress cannot balance the budget without
addressing these rapid cost increases.
---------------------------------------------------------------------------
\273\Using CBO's descriptions, the major health care programs are
Medicare, Medicaid, the State Children's Health Insurance Program, and
the Affordable Care Act's exchanges and associated credits and
subsidies.
\274\Congressional Budget Office, The Budget and Economic Outlook:
2017 to 2027, January 2017.
\275\CMS.gov: https://www.cms.gov/fastfacts/.
---------------------------------------------------------------------------
Several factors contribute to the growth in program
spending over the next decade. Foremost is the aging of the
population. In 2011, the first baby boomer enrolled in
Medicare. This generation will continue to age into the program
over the next two decades at a rate of approximately 10,000
beneficiaries per day. By the time the baby-boom generation has
fully aged into Medicare in 2030, the program will cover more
than 75 million beneficiaries. Such an increase in the
Medicare-covered population naturally corresponds with an
increase in program costs, but this effect is exacerbated by a
number of additional factors. Since the beginning of the
program, the average life expectancy has increased dramatically
while the Medicare eligibility age has remained unchanged. In
1965, the average life expectancy was 70 years, meaning
Medicare provided 5 years of health care coverage on average.
Today, life expectancy is almost 80 years, and the average
Medicare beneficiary remains in the program roughly three times
longer than those enrolled at its inception.
Additionally, revenues for Part A--supporting the HI Trust
Fund--cannot meet the costs of the program due to a shrinking
working-age population. When Medicare was created, there were
4.5 workers for every beneficiary enrolled in the program,
which easily sustained the pay-as-you-go funding structure.
Today, the ratio has declined with approximately three workers
per beneficiary. By 2030, when the baby-boom generation has
fully aged into Medicare, the ratio will be closer to two
workers per beneficiary, meaning fewer revenues will be
available to offset ever-increasing program costs. Finally,
although most beneficiaries pay into the Medicare Program
throughout their working years, the Medicare benefit the
average person receives far exceeds his or her contribution to
the program through payroll taxes. For example, the present
value of lifetime Medicare taxes for a married couple earning
the average wage and retiring at age 65 in 2015 equaled
approximately $140,000 contributed through payroll taxes, but
the anticipated lifetime Medicare benefit is estimated to be
$422,000--roughly three times the lifetime contribution.\276\
By 2050, the anticipated lifetime Medicare benefit balloons to
more than four times the lifetime contribution.
---------------------------------------------------------------------------
\276\C. Eugene Stuerle and Caleb Quakenbush, Social Security and
Medicare Lifetime Benefits and Taxes, Urban Institute, September 2015:
http://www.urban.org/sites/default/files/alfresco/publication-pdfs/
2000378-Social-Security-and-Medicare-Lifetime-Benefits-and-Taxes.pdf.
---------------------------------------------------------------------------
These trends play a significant role in Medicare's long-
term outlook. The CBO recently updated enrollment projections
for Medicare by age group. Currently, the majority of
beneficiaries are under age 75, but by 2035 there will be more
Medicare beneficiaries over age 75 than under.\277\ This is
especially troubling when the difference in Medicare per capita
spending between older and younger beneficiaries has widened.
The average spending for a Medicare beneficiary of 85 years is
now more than twice that of a 66-year-old, and spending is
three times greater for a 95-year-old.\278\ Not surprisingly,
Medicare costs are expected to rise not only as a greater
number of beneficiaries enter the program, but also as per-
capita costs increase with the continued aging of the Medicare
population. The CBO estimates Medicare per-capita cost growth
to average 4.3 percent per year between 2017 and 2027, 3
percent higher than the previous five years and net program
spending to grow from 3 percent of gross domestic product [GDP]
to 5.7 percent by 2046. Compared to the other major health care
programs--Medicaid, the State Children's Health Insurance
Program, and the Affordable Care Act [ACA]--that are expected
to grow from 2.2 percent to 2.9 percent of GDP by 2040, this is
a startling growth rate for a single program.\279\ Furthermore,
the Medicare Trustees estimate the total amount of unfunded
obligations for the Medicare Program over the 75-year period to
equal $3.2 trillion for the HI Trust Fund and $24.8 trillion
for the SMI Trust Fund.\280\
---------------------------------------------------------------------------
\277\The Congressional Budget Office, The 2015 Long-Term Budget
Outlook, June 2015: https://www.cbo.gov/sites/default/files/114th-
congress-2015-2016/reports/50250/50250-breakout-Chapter2-2.pdf.
\278\Tricia Neuman, Juliette Cubanski, Jennifer Huang, and Anthony
Damico, The Rising Cost of Living Longer: Analysis of Medicare Spending
by Age for Beneficiaries in Traditional Medicare, The Kaiser Family
Foundation, 14 January 2015: http://kff.org/medicare/report/the-rising-
cost-of-living-longer-analysis-of-medicare-spending-by-age-for-
beneficiaries-in-traditional-medicare/.
\279\The Congressional Budget Office, The 2015 Long-Term Budget
Outlook, June 2015: https://www.cbo.gov/sites/default/files/114th-
congress-2015-2016/reports/50250/50250-breakout-Chapter2-2.pdf.
\280\United States Department of the Treasury. Fiscal Year 2015
Financial Report of the United States Government: https://
www.fiscal.treasury.gov/fsreports/rpt/finrep/fr/15frusg/02242016_
FR(Final).pdf.
---------------------------------------------------------------------------
In the short term, Medicare costs are projected to outpace
income, creating a shortfall in the HI Trust Fund. In January
2017, the CBO reported the HI Trust Fund would be exhausted by
2025--four years earlier than the date estimated by the
Medicare Trustees and one year earlier than CBO projected last
year.\281\ Expenditures from the trust fund, which is financed
mainly through the 2.9-percent payroll tax, have exceeded
revenues annually since 2008. Although the Medicare trustees
expect a slight surplus from 2016 through 2020, the ratio of
revenues to costs declines quickly in the following years. The
most recent projection, reported by the trustees in July 2017,
estimated depletion of the HI Trust Fund in 2029. Upon
depletion, Medicare may only pay for Part A services equal to
the amount of revenues available in the HI Trust Fund, which
are expected to cover only 88 percent of promised benefits. The
Social Security Act is silent on what steps may be taken upon
depletion of the HI Trust Fund, but without action,
beneficiaries' access to health care services would certainly
be severely reduced. They will be subject to automatic benefit
reductions.
---------------------------------------------------------------------------
\281\Congressional Budget Office, The Budget and Economic Outlook:
2017 to 2027, January 2017.
---------------------------------------------------------------------------
Structural reforms to the Medicare Program are necessary to
ensure the long-term viability of the program without
compromising beneficiary access to quality care. While many of
the most insidious effects of the ACA appear mainly in
Medicaid, the Medicare Program was also fundamentally undercut
and altered as a result. The ACA imposed across-the-board cuts
on Medicare providers and services, and put those savings
toward new government spending programs rather than to extend
the solvency of the Medicare Program. Furthermore, the Medicare
trustees have warned for several years that the low Medicare
payment updates authorized by the ACA will lead to serious
limitations of access over the long term, and create perverse
incentives in the short term that further distort the health
care sector. By 2040, approximately half of hospitals, 70
percent of skilled nursing facilities, and over 80 percent of
home health agencies will have negative margins, the Medicare
trustees estimate--an unsustainable situation that will cause
many providers to withdraw from the program, and will
unquestionably limit access to quality care for Medicare
beneficiaries.\282\ Furthermore, the Independent Payment
Advisory Board [IPAB] established by the ACA must submit
proposals for further spending reductions if the estimated rate
of growth in Medicare exceeds GDP plus 1 percent. Without
congressional action to achieve the same level of savings, the
IPAB's proposals will automatically take effect. Given these
pressures, medical providers have acted accordingly, with
record rates of consolidation among hospitals and physician
practices. Medicare currently pays approximately 67 percent of
what private insurance would otherwise pay for hospital
services. Over time, however, reimbursements for services are
expected to fall well below providers' overhead costs, such as
rent, energy, equipment, and the cost of employing medical
staff. A recent study by the Government Accountability Office
[GAO] reported that from 2007 through 2013, the number of
vertically consolidated physician practices nearly doubled,
from 96,000 to 182,000; this occurred more rapidly in recent
years across all regions and hospital sizes.\283\
---------------------------------------------------------------------------
\282\2017 Annual Report of the Boards of Trustees of the Federal
Hospital Insurance and Federal Supplementary Medical Insurance Trust
Funds, July 2017. https://www.cms.gov/research-statistics-data-and-
systems/statistics-trends-and-reports/reportstrustfunds/downloads/
tr2017.pdf.
\283\Government Accountability Office, Increasing Hospital
Physician Consolidation Highlights Need for Payment Reform, December
2015: http://www.gao.gov/assets/680/674347.pdf.
---------------------------------------------------------------------------
As currently structured, Medicare cannot fulfill the
promise of health care security for America's seniors. Medicare
must be saved, strengthened, and secured to restore the trust
that both current and future retirees will continue to have
guaranteed access to health care providers, services, and
treatments. Looking to examples both within the Medicare
Program and the private sector, positive solutions can be
discovered that reduce costs while maintaining access to high
quality care through patient-centered reforms that foster
competition, restore market forces, expand choices and empower
individuals, promote innovation, and provide flexibility for
patients and providers.
This budget resolution reflects the Medicare Program in the
direct spending portion of Function 570 (see Table 3). The
function includes all four program components: Medicare Part A
Hospital Insurance Program, Part B Supplementary Medical
Insurance Program, Part C Medicare Advantage Program, and Part
D prescription drug coverage. For fiscal year 2018, the net
direct spending totals in the resolution are $587.3 billion in
budget authority and $587.0 billion in outlays. Over 10 years,
Medicare direct spending is projected at $8.1 trillion in
budget authority and $8.1 trillion in outlays.
The primary authorizing committees--Ways and Means and
Energy and Commerce--have made a laudable commitment to
structural Medicare reforms, along with efforts to improve
transparency and eliminate waste, fraud, and abuse in the
program.\284\ They have complete authority and discretion to
write program reforms that meet the fiscal parameters of this
budget resolution. Nevertheless, they may choose to follow the
framework outlined below to ensure Medicare's long-term
sustainability for America's current and future retirees.
---------------------------------------------------------------------------
\284\Committee on Ways and Means Committee, Views and Estimates, 14
February 2017; Committee on Energy and Commerce, Views and Estimates on
the President's Fiscal Year 2018 Budget, 3 March 2017.
---------------------------------------------------------------------------

Illustrative Direct Spending Policy Options

This budget provides for policy proposals that protect
seniors' and near-seniors' health care security with a focus on
the doctor patient relationship as opposed to the
indiscriminate, mindless cuts brought about as a result of the
ACA.
Every year that difficult choices are deferred, the cost of
inaction continues to rise and inflicts tremendous fear on
current recipients who do not view Medicare as a real choice.
To them, it is truly a matter of life and death. Without
changes, the accelerated insolvency of the HI Trust Fund will
only lead to an abdication of the Federal Government's
responsibility to this population. The budget offers Americans
true structural reforms that generate savings by allowing
competition to derive greater efficiencies without the loss of
access to high-quality care for beneficiaries.

Enhance Quality and Choice in Medicare. Throughout
Medicare's history, Washington has been slow to innovate and
respond to transformations in health care delivery. Meanwhile,
controlling costs in Medicare's open-ended fee-for-service
system has proved impossible without limiting access or
sacrificing quality. This is because policies in the main have
artificially controlled prices or payments, not costs; in the
absence of real structural reform, the factors that drive costs
higher remain. Today, costs continue to grow, seniors continue
to lose access to quality care, and the program remains on a
path to bankruptcy. Inaction will not protect Medicare; it will
only hasten the program's demise.
Reform aimed at empowering patients--combined with a
strengthened safety net for the poor and the sick--will not
only ensure the fiscal sustainability of this program, the
Federal budget, and the U.S. economy, but will also guarantee
that Medicare can fulfill the promise of health security for
America's seniors. Hence, this budget resolution fully supports
a patient-centered program that enhances quality and choice in
Medicare.
Under this program, traditional Medicare--which would
always be an option available to beneficiaries--and private
plans providing the same level of health coverage would compete
for seniors' business, just as Medicare Advantage does today.
By adopting the competitive structure of Part D, the
prescription drug benefit, the program would also deliver
savings for seniors in the form of lower monthly premium costs.
This improved program assumes a simplified benefit that
provides comprehensive coverage for all beneficiaries, rather
than the complex and fragmented structure in place today.
Currently, beneficiaries must enroll in three separate programs
to get the same comprehensive coverage. Seniors are required to
enroll in Part A for hospitalization; coverage is provided
separately for physician services and prescription medications,
through the optional Parts B and D, respectively. None of these
coverage options, however, offers financial protections for
seniors, such as annual or lifetime limits, and many must sign
up for an additional supplemental insurance policy called
MediGap to obtain a fully comprehensive coverage package.
Today, only Medicare Advantage (Part C) offers seniors the
opportunity to choose from a selection of comprehensive
coverage plans. Not surprisingly, Medicare Advantage enrollment
has tripled in the past decade and currently serves almost 18
million seniors.\285\ Medicare Advantage also shows higher
satisfaction rates than traditional Medicare. Beneficiaries
were especially satisfied with the overall cost of Medicare
Advantage plans and with the simplified health process compared
to traditional Medicare.\286\
---------------------------------------------------------------------------
\285\Medicare Advantage, The Kaiser Family Foundation, 11 May 2016:
http://http://kff.org/medicare/fact-sheet/medicare-advantage/.
\286\Morning Consult, Seniors Love Their Medicare (Advantage), 30
March 2015: http://morningconsult.com/2015/03/seniors-love-their-
medicare-advantage/.
---------------------------------------------------------------------------
The Medicare improvements envisioned in this budget
resolution would adopt the popular simplified coverage
structure of Medicare Advantage, and allow seniors greater plan
choices while reducing costs. It would resemble the private
insurance market, in which the majority of Americans select a
single health care plan to cover all their medical needs.
The enhanced program would also continue to offer a robust
financial benefit to all beneficiaries. In many ways, the
benefit provided would mirror the Federal Employees Health
Benefits [FEHB] Program for Federal employees, retirees, and
their families. FEHB boasts the widest selection of health
plans in the country, from which its eight million members may
choose. Plans offered under the FEHB Program may charge
different premium amounts, competing for individuals' choices,
and the government pays a certain percentage--or a defined
contribution--to help offset the cost of coverage. Similarly, a
Medicare recipient would choose from an array of guaranteed-
coverage options, including traditional Medicare, for a health
plan that best suits his or her needs.
The Federal Government contribution would go directly to
the plan provider, following the current model under both the
FEHB Program and Medicare Advantage. Furthermore, the
government payment would be adjusted so the sick would receive
more financial assistance if their conditions worsened, and
lower-income seniors would receive additional support to help
cover premiums and out-of-pocket costs. Wealthier seniors would
assume responsibility for a greater share of their premiums.
Additionally, this enhanced Medicare program would ensure
affordability by fixing the currently broken system and letting
market competition work as a real check on widespread waste and
skyrocketing health care costs--as successfully demonstrated
through the competitive structure adopted by Medicare Part D.
More than 70 percent of beneficiaries are currently enrolled in
the prescription drug benefit, which enjoys extremely high
satisfaction rates among seniors.\287\ In 2016, nearly 90
percent reported satisfaction with their coverage, and 80
percent consider the coverage to be a good value.\288\
Similarly, this personalized arrangement puts patients in
charge of how their health care dollars are spent, requiring
providers to compete against one another on price and quality.
---------------------------------------------------------------------------
\287\The Kaiser Family Foundation, The Medicare Part D Prescription
Drug Benefit, 13 October 2015:
http://kff.org/medicare/fact-sheet/the-medicare-prescription-drug-
benefit-fact-sheet/#endnote_link_165022-4.
\288\Morning Consult, National Tracking Poll, conducted 1-11 July
2016: http://http://medicaretoday.org/wp-content/uploads/2016/07/2016-
Senior-Satisfaction-Survey-Fact-Sheet.pdf.
---------------------------------------------------------------------------
The improvements to Medicare derive from a long history of
bipartisan reform plans based on the defined contribution
model, or premium support, with a competitive bidding structure
to lower costs. The 1999 Breaux-Thomas Commission, the
Domenici-Rivlin 2010 Report, and the 2011 Wyden-Ryan plan all
put forward this model of reform as it is designed to ensure
security and affordability for seniors now and into the
future.\289\ All three recognize two fundamental truths: the
current path of Medicare is unsustainable, and it is
unacceptable for Washington to allow the program to fail
current or future beneficiaries. Each proposal further
developed the policy with the intent of preserving Medicare
over the long term without reducing health care access or
quality.
---------------------------------------------------------------------------
\289\National Bipartisan Commission on the Future of Medicare,
Building a Better Medicare for Today and Tomorrow, 16 March 1999:
http://thomas.loc.gov/medicare/bbmtt31599.html; Bipartisan Policy
Center, Restoring America's Future, November 2010: http://
bipartisanpolicy.org/wp-content/uploads/sites/default/files/
BPC%20FINAL%20REPORT%20FOR%20PRINTER%2002%2028%2011.pdf.; and Senator
Ronald L. Wyden and Representative Paul D. Ryan, Guaranteed Choices to
Strengthen Medicare and Health Security for All: Bipartisan Options for
the Future, 15 December 2011: http://budget.house.gov/uploadedfiles/
wydenryan.pdf.
---------------------------------------------------------------------------
The policy continues to garner bipartisan support today.
Even former-President Obama's fiscal year 2017 budget proposal
included a similar reform to introduce a competitive bidding
structure into the Medicare Advantage program. His proposal
failed, however, to offer the benefits of more choice and lower
costs achieved through the competitive bidding structure to all
beneficiaries.
Following these examples, CBO performed an analysis of two
variations of premium support that established a defined
government contribution using different formulas. CBO
determined that a Medicare Program following the premium
support model that based the contribution level on an average
of bids submitted by competing plans would result in savings
for both beneficiaries and the program. Moreover, it would set
up a carefully monitored exchange for Medicare plans. Health
plans that chose to participate in the Medicare exchange would
agree to offer insurance to all Medicare beneficiaries, to
avoid cherry-picking, and to ensure that Medicare's sickest and
highest-cost beneficiaries received coverage.\290\ A patient-
centered Medicare program would also adopt these protections to
guarantee better health, better value, and better choice for
America's seniors, and allow all those in traditional, fee-for-
service Medicare the same opportunity as new retirees to remain
there or transition into the improved program beginning in
2024.
---------------------------------------------------------------------------
\290\Congressional Budget Office, A Premium Support System for
Medicare: Analysis of Illustrative Options, 18 September 2013: http://
www.cbo.gov/sites/default/files/09-18-PremiumSupport.pdf.
---------------------------------------------------------------------------
This resolution envisions giving seniors the freedom to
choose plans best suited for them, guaranteeing health security
throughout their retirement years. Further, it resolves the
concerns regarding Medicare's long-term sustainability, while
also lowering costs for beneficiaries. With the adoption of
patient-centered improvements, this program would preserve the
positive aspects of traditional Medicare, while modernizing the
program to reflect the changes to health care delivery in the
21st century.

Promoting Personal Digital Advance Care Plans. In keeping
with expanding patient-centered care, this resolution supports
the use of readily available advance care plans. Administering
medical treatment often requires patient consent. When informed
consent cannot be obtained due to life-threatening emergencies
or impaired decision-making, precious time is lost in
determining who has the legal authority to act on behalf of a
critical patient. Consequently, the patient's wishes may not
ultimately be fulfilled. Digital advance care plans allow
individuals to thoughtfully consider their treatment options,
on their schedules, and with their loved ones--rather than
making urgent decisions under emergency room pressure, where
time is of the essence. This resolution respects the patient's
voice, whatever it says, and supports its primacy in the health
care delivery process.

Implement a Unified Deductible and Reform Supplemental
Insurance. This resolution strengthens the Medicare Program
through another bipartisan proposal. The outdated and
fragmented fee-for-service arrangement would be streamlined
into one benefit, unifying the separate parts of the program,
that would provide coverage for both hospital and physician
services. Additionally, the reform would provide common sense
financial protections for America's seniors and reform
supplemental insurance policies. This proposal, which was also
supported by a number of bipartisan commissions including
Breaux-Thomas, Domenici-Rivlin, and Simpson-Bowles, would allow
the Medicare benefit to operate more like private health
insurance coverage.\291\\,\\292\\,\\293\
---------------------------------------------------------------------------
\291\National Bipartisan Commission on the Future of Medicare, op.
cit., 16 March 1999; Bipartisan Policy Center, op. cit., November 2010.
\292\Bipartisan Policy Center, op. cit. November 2010.
\293\The National Commission on Fiscal Responsibility and Reform,
The Moment of Truth, December 2010: http://www.fiscalcommission.gov/
sites/fiscalcommission.gov/files/documents/
TheMomentofTruth12<1<2010.pdf.
---------------------------------------------------------------------------
With this reform, Medicare will have a single, annual
deductible for medical costs and include a catastrophic cap on
annual out-of-pocket expenses--an important aspect of the
private health insurance market to safeguard the sickest and
poorest beneficiaries that is currently absent from Medicare.
These reforms build in further protections for beneficiaries
and for the preservation of the Medicare Program for future
generations.

Means Test Premiums for High-Income Seniors. Under current
law, high-income beneficiaries are responsible for a greater
share of the premium costs for Medicare's Part B and Part D
programs, or the optional coverage for physician services and
prescription drug coverage respectively. Medicare Advantage
enrollees receiving coverage for these benefits similarly
assume a share of the costs. Parts B and D must account for all
additional program costs net of beneficiary premiums from
general revenues because these components of the Medicare
Program do not have a dedicated income source like the 2.9-
percent payroll tax that funds most of the Part A benefits.
Consistent with several bipartisan proposals, including former-
President Obama's fiscal year 2017 budget, this resolution
assumes additional means testing of premiums in Medicare Parts
B and D for high-income seniors, including full responsibility
of premium costs for individuals with annual income exceeding
$1 million.

Equalize the Eligibility Age with Social Security. One of
the Nation's greatest achievements of the 20th century was the
dramatic increase in the average life expectancy. As Americans'
health improves, extending their lives, many enjoy the benefits
of employment later in life. To further ensure Medicare's long-
term sustainability, this resolution recommends a gradual
increase of the Medicare eligibility age to correspond with
that of Social Security.

Streamline Support for Graduate Medical Education. All
Americans benefit from a strong physician workforce. Since the
creation of the Federal health care programs, Federal funds
have supported physician training. The congressional report
from the Social Security Amendments of 1965 comments on the
need for Federal funds to support hospitals in the education
and training of physicians, nurses and other medical personnel,
``until the community undertakes to bear such education costs
in some other way * * * ''\294\ Instead, the level of Federal
support has grown over time, and the complexity of the payment
formulas linked to a hospital's Medicare inpatient volume has
made accountability and oversight next to impossible. The
financing structure also props up an antiquated system that
fails to recognize the rapidly changing care delivery model and
the demographic shifts within the population--meaning the
number of physicians is insufficient and cannot meet the
Nation's needs either in terms of specialty or geography.
Distributing funds directly to hospitals favors traditional
acute care institutions and discourages physician training in
various clinical or lower cost settings of care, including
children's hospitals, safety net hospitals, ambulatory surgical
centers, and so on.\295\ The call for reform to enhance
accountability, transparency, and flexibility in graduate
medical education has been advanced by the Institute of
Medicine, the Medicare Patient Advisory Commission, the
American Enterprise Institute and the Heritage Foundation.\296\
This resolution recommends that support for medical education
should accurately reflect the costs of training future
physicians and be streamlined into a single payment, providing
greater freedom and flexibility to encourage teaching
institutions and States to develop innovative approaches to
medical education.
---------------------------------------------------------------------------
\294\Committee on Finance, U.S. Senate, Social Security Amendments
of 1965 (H.R. 6675), Report to the Committee on Finance, U.S. Senate
(Rept. 404), 30 June 1965: https://ssa.gov/history/pdf/Downey%20PDFs/
Social%20Security%20Amendments%20of%201965%20Vol%202.pdf.
\295\Institute of Medicine of the National Academies, Graduate
Medical Education that Meets the Nation's Health Needs, 29 July 2014:
http://www.nap.edu/read/18754/chapter/1#xi
\296\Ibid.; Medicare Payment Advisory Commission, Does it Cost More
to Train Residents or to Replace Them?, September 2013: http://
www.medpac.gov/documents/contractor-reports/
sept13_residents_gme_contractor.pdf?sfvrsn=0; American Enterprise
Institute, Improving Health and Health Care: An Agenda for Reform,
December 2015: https://www.aei.org/wp-content/uploads/2015/12/
Improving-Health-and-Health-Care-online.pdf; John O'Shea, Reforming
Graduate Medical Education in the U.S., The Heritage Foundation, 29
December 2014: http://www.heritage.org/research/reports/2014/12/
reforming-graduate-medical-education-in-the-us.

Establish an Uncompensated Care Fund. Since 1986, Medicare
has provided additional financial support to hospitals that
serve a significant population of low-income patients in the
form of a disproportionate share hospital [DSH] payment. This
funding was intended to ensure access for low-income patients
and those unable to afford the costs of care. Hospitals, in
addition to receiving a Medicare DSH payment, may also receive
a Medicaid DSH payment so long as they meet certain
requirements. This has led to some States engaging in improper
fund transfers in order to gain additional Federal support of
State Medicaid budgets through the Federal Medical Assistance
Percentage.
Additionally, limiting DSH payments to only hospitals fails
to recognize the abundance of uncompensated care that occurs
outside of the hospital setting. Therefore, this resolution
recommends converting the separate DSH payments into a single
flexibility fund to support uncompensated care, to more
appropriately and equitably distribute funds in a targeted
manner that recognizes all providers serving low-income
populations.

Reform Medical Liability Insurance. This resolution also
advances the common sense curbs on abusive and frivolous
lawsuits contained in H.R. 1215, the ``Protecting Access to
Care Act of 2017'', as passed by the House on 28 June 2017.
Medical lawsuits and excessive verdicts increase health care
costs, result in reduced access to care, and contribute to the
practice of defensive medicine. When mistakes happen, patients
have a right to fair representation and fair compensation. The
current tort litigation system, however, too often serves the
interests of lawyers while driving up costs due to expenses
associated with the practice of defensive medicine. The costs
of defensive medicine are often overlooked, but add a
considerable burden to overall health care spending. According
to a study published in 2010--apparently the most comprehensive
available--more than 30 percent of health care costs, or
approximately $650 billion annually, were attributable to
defensive medicine.\297\ Even if the costs are only a fraction
of this projection, such expenses are unnecessary and
unsustainable for the Medicare Program and America's seniors.
Therefore, this resolution supports several changes to laws
governing medical liability.
---------------------------------------------------------------------------
\297\Jackson Healthcare, Physician Study: Quantifying the Cost of
Defensive Medicine, 2010: http://www.jacksonhealthcare.com/media-room/
surveys/defensive-medicine-study-2010.aspx.
---------------------------------------------------------------------------

MEDICAID, THE AMERICAN HEALTH CARE ACT,
AND RELATED PROGRAMS

Function Summary: Direct Spending

The center of all health care policy assumed in this budget
resolution is the patient. This requires placing the emphasis
on real Americans' health needs--not on Washington's ideas
about what those needs may be. Health care in America is a
complex and dynamic set of interactions that employs more than
$3 trillion of the Nation's resources and represents about one-
fifth of the economy; it is a sector in which the participants
themselves--patients, care-providers, and insurers--are clearly
best suited to establish effective and efficient means of
delivering such a uniquely valued service.\298\
---------------------------------------------------------------------------
\298\Centers for Medicare and Medicaid Services, National Health
Expenditures 2015 Highlights: https://www.cms.gov/research-statistics-
data-and-systems/statistics-trends-and-reports/
nationalhealthexpenddata/downloads/highlights.pdf.
---------------------------------------------------------------------------
Yet for decades, Federal policymakers have relentlessly
sought to systematize health care to meet their ideological and
bureaucratic aims. When the Federal Government sets the
standards of health care, or determines the required contents
of health coverage--and it cannot do one without the other--
this necessarily limits the options available to consumers,
suffocates innovation, and spikes costs. Such an approach must
assume that a population of 323 million--living in a wide range
of geographical and climatic settings, and possessing diverse
cultural backgrounds and values--all require roughly the same
set of health care services. The government's increasing
imposition distorts the medical market, drives up prices,
requires tedious regulations, and undermines Americans' liberty
in this most important and intimate realm: their health. The
House of Representatives recently passed the ``American Health
Care Act'' [AHCA] in a critical first step toward restoring
health decisions to patients.\299\
---------------------------------------------------------------------------
\299\H.R. 1628, the ``American Health Care Act of 2017'', 115th
Congress: 1st Session, 20 March 2017.
---------------------------------------------------------------------------
Washington's progressively expanding involvement in the
health care sector stems from the belief that government can
centrally manage the entirety of the Nation's diverse, personal
health needs. This notion has led to the creation of Medicare
(discussed previously), Medicaid, and the Affordable Care
Act.\300\ Of these, Medicaid constitutes the majority of direct
spending in this category (Function 550 in Table 3). The totals
for fiscal year 2018 are $517.8 billion in budget authority and
$490.0 billion in outlays. Over 10 years, the budget projects
direct spending of $5.1 trillion in budget authority and $5.0
trillion in outlays for all components of this function
combined.
---------------------------------------------------------------------------
\300\The Affordable Care Act consists of the two related measures
enacted in March 2010 that constituted the health care legislation: the
Patient Protection and Affordable Care Act (Public Law 111-148), and
the Health Care and Education Reconciliation Act of 2010 (Public Law
111-152).
---------------------------------------------------------------------------
The Affordable Care Act has led to higher insurance
premiums and deductibles; has limited consumers' choices of
doctors and health plans; has deprived millions of the coverage
they had; and has imposed taxes aimed at compelling people to
purchase health coverage they do not want. Insurance markets
are collapsing, and total national health care spending is
projected to more than double during the next three decades.
The ACA established a system of four tiers of insurance
plans--described as bronze, silver, gold, and platinum--that
forces insurers to construct their coverage plans according to
the demands of Washington, not the marketplace. These tiers
mandate the actuarial value of benefits insurers must cover in
their plans rather than letting insurers design plans for a
broader variety of patient needs--thus sharply restricting the
available choices. The AHCA unravels this tier system by
repealing the Obamacare actuarial value requirements. This
budget supports the sort of bold reform that infuses the
insurance market with the flexibility that will lead to greater
patient choice and higher quality care.
Obamacare's resulting limited options are so unsatisfying
that enrollments under the law are about half of what was
projected when it was enacted, and 19.2 million Americans have
chosen to face its individual mandate tax penalty rather than
buying coverage they did not want.\301\ To the extent Obamacare
may have expanded health coverage, it has not enhanced access
to affordable health care. Due to higher premiums and
deductibles, many who have obtained ACA coverage cannot use it
because their out-of-pocket medical expenses are too high.
Recent reports showed that 50 percent of Obamacare customers
were cutting back on care to help manage their health costs.
This compares to 33 percent among the general insured
population.\302\ In other words, enrollees cannot afford to use
their Affordable Care Act coverage.
---------------------------------------------------------------------------
\301\Internal Revenue Service Commissioner John A. Koskinen updated
members of Congress regarding 2016 tax filings related to Affordable
Care Act provisions, 9 January 2017: https://www.irs.gov/pub/newsroom/
commissionerletteracafilingseason.pdf.
\302\GfK, ``To Reduce Health Costs, 50% of ACA Exchange Customers
Are Cutting Back on Care--GfK Study,'' 27 October 2016: http://
www.gfk.com/en-us/insights/press-release/to-reduce-health-costs-50-of-
aca-exchange-customers-are-cutting-back-on-care-gfk-study/.
---------------------------------------------------------------------------
The AHCA serves as a fundamental transformation of health
care policy toward a better strategy for true reform. To put
this another way: ``It makes no sense for one Federal agency to
dictate the contents of every American's health insurance
plan.''\303\ The ``American Health Care Act'' unravels
Obamacare's tier system by repealing its actuarial value
requirements. Thus the AHCA removes a bureaucratically imposed
design from the health care market.
---------------------------------------------------------------------------
\303\The Speaker's Health Care Reform Task Force, A Better Way: Our
Vision for a Confident America--Health Care, 22 June 2016, p. 12.
---------------------------------------------------------------------------
A key component of this strategy involves the restoration
of federalism in health care--giving States more flexibility to
handle health care arrangements for their distinctive
populations. ``States have been in the business of regulating
health insurance for decades. They should be empowered to make
the right tradeoffs between consumer protections and individual
choice, not regulators in Washington.''\304\ Under the AHCA,
States will have the opportunity to assist high-risk
individuals or fund innovation programs to care for their
unique patient populations.
---------------------------------------------------------------------------
\304\A Better Way op. cit., p. 12.
---------------------------------------------------------------------------
The ``American Health Care Act'' provides a portable,
advanceable tax credit that evolves with an individual's health
care needs. The legislation's reforms will make more options
available for individuals and families, who will be free to
choose the health plan that best meets their needs. Protections
and access to care for individuals with pre-existing conditions
will continue. Further, by increasing the amount of money that
can be placed in Health Savings Accounts, coupled with other
reforms, the policies will allow individuals and families to
save and spend their health care dollars the way they want.
The analysis by the Congressional Budget Office and the
Joint Committee on Taxation [JCT] projects stability in the
non-group health insurance market. These agencies estimate
grants from the AHCA's Patient and State Stability Fund would
exert substantial downward pressure on premiums in the nongroup
market and would help encourage insurers' participation in the
market.''\305\ Although the new tax credits would be structured
differently from current subsidies, the analysis notes, the
other changes would ``lower average premiums enough to attract
a sufficient number of relatively healthy people to stabilize
the market.''\306\ Further, CBO and JCT agree the Federal
Invisible Risk Sharing Program ``would result in lower premiums
for health insurance coverage in the nongroup market and would
encourage insurers to continue to sell insurance in that
market.''\307\ In addition to these efforts to restore
patients' rights and inject stability into the now-precarious
health insurance market, the ``American Health Care Act'' will
reduce the Federal deficit by $118.7 billion, if enacted.\308\
---------------------------------------------------------------------------
\305\Congressional Budget Office, ``Cost Estimate for the `American
Health Care Act', as passed by the House of Representatives on May 4,
2017,'' 24 May 2017: https://www.cbo.gov/system/files/115th-congress-
2017-2018/costestimate/hr1628aspassed.pdf, p. 14.
\306\Ibid., p. 5.
\307\Ibid., p. 14.
\308\Ibid.
---------------------------------------------------------------------------
This budget supports the sort of bold reform that infuses
the insurance market with the flexibility that will lead to
greater patient choice and higher quality care. The
resolution's approach to health care builds on the ``American
Health Care Act'', and revolves around the following goals:

Lowering costs;

Providing more choices;

Restoring patient control; and

Ensuring universal access to quality care.

The illustrative options for health care outlined in this
report follow this guidance, while allowing for a stable
transition that does not disrupt people's current coverage, or
the insurance market.
Because the AHCA removes the individual mandate penalty and
enables people to choose coverage that best suits their
individual needs--or, as the case may be, to choose not to have
coverage at all--a greater number of Americans will elect to
have coverage outside Obamacare's restrictive definitions. Many
Americans will choose catastrophic plans, mini-medical plans,
expanded Health Savings Accounts, or as-yet-undefined plans
purchased with the new AHCA tax credits. CBO does not count
these in its model for ``comprehensive'' health plans, and
therefore treats individuals who might purchase them as
uninsured. This is a key reason for the decline in coverage,
relative to current law, CBO projects for the ``American Health
Care Act''. The analysts simply do not account for alternative
forms of legitimate insurance that may arise in a less
restricted market
CBO's capacity for estimating coverage, however, is an
emerging field. The agency is limited in its ability to predict
behavior and therefore the number of people truly covered by a
range of insurance options. CBO's coverage estimates are narrow
in scope, and cannot account for the variety of plan options
detailed in this section. CBO itself considers this a
``challenge,'' and explains the problem in two separate blog
posts that the analysts cite in their multiple iterations of
the score for the ``American Health Care Act''.\309\ Even so,
CBO predicts that ``more people who would otherwise be
uninsured would enroll in nongroup coverage in states making
changes to regulations, because of the resulting lower
premiums.''\310\
---------------------------------------------------------------------------
\309\See: Congressional Budget Office, ``Challenges in Estimating
the Number of People With Nongroup Health Insurance Coverage Under
Proposals for Refundable Tax Credits'', Blog Post, 20 December 2016:
https://www.cbo.gov/publication/52351, and, Congressional Budget
Office, ``How Does CBO Define and Estimate Health Insurance Coverage
for People Under Age 65?'', Blog Post, 20 December 2016: https://
www.cbo.gov/publication/52352.
\310\CBO Cost Estimate for AHCA, 24 May 2017, p. 31.
---------------------------------------------------------------------------
Another major policy area reflected here--the largest
component of Function 550--is Medicaid. Medicaid is a crucial
component of the American safety net. It provides a fundamental
level of security for low-income Americans who struggle with
long-term illnesses and disabilities. These individuals are
unable to perform substantial gainful activities; they require
society's help. Medicaid is often the only option for people in
these difficult circumstances.
Medicaid is also a vital program for low-income children,
parents, pregnant women, and seniors. The social safety net
should catch these individuals when they fall. On the other
hand, for those who are able-bodied, it should serve as a
springboard to help them get back up. For many, though,
Medicaid's promises are empty, its goals are unmet, and its
dollars are wasted. Sick individuals cannot get appointments,
and new beneficiaries cannot find doctors, making Medicaid
synonymous with poor access and little care. Medicaid patients
often have a hard time accessing care at all. A survey in The
Washington Post found that fewer than one out of every two
physicians now accept Medicaid as a form of coverage.\311\
---------------------------------------------------------------------------
\311\Jenny Gold, Wonkblog, ``In cities, the average doctor wait-
time is 18.5 days,'' The Washington Post, 29 January 2014: https://
www.washingtonpost.com/news/wonk/wp/2014/01/29/in-cities-the-average-
doctor-wait-time-is-18-5-days/?utm_term=.9938b8a1686f.
---------------------------------------------------------------------------
In fact, according to a study conducted by a team of
renowned economists from the Massachusetts Institute of
Technology, Harvard, and Dartmouth, Medicaid's value to its
recipients is significantly lower than the government's
spending on the program.\312\ In addition, doctors who provide
services to Medicaid patients are severely under-
reimbursed,\313\ a problem made worse by adding more
individuals to the system.\314\ GAO found that provider
payments for Medicaid are about 30 percent to 65 percent lower
than what private insurers pay providers.\315\ This contributes
to the difficulty Medicaid patients have in finding a doctor.
Without reform, Medicaid will fail to deliver on its promise of
providing a sturdy health care safety net for the Nation's most
vulnerable.
---------------------------------------------------------------------------
\312\Amy Finkelstein, Nathaniel Hendren, and Erzo F.P. Luttmer, The
Value of Medicaid: Interpreting Results from the Oregon Health
Insurance Experiment, June 2015, pp. 2, 40, 41: http://
economics.mit.edu/files/10580. Furthermore, the study found that
Medicaid does not have a ``statistically significant impact on
mortality or physical health measures'' for recipients.
\313\The Henry J. Kaiser Family Foundation, ``Medicaid-to-Medicare
Fee Index,'' Accessed 8 January 2016: http://kff.org/medicaid/state-
indicator/medicaid-to-medicare-fee-index/.
\314\Congressional Budget Office, The Budget and Economic Outlook:
2017 to 2027, Underling Baseline Projections for Medicaid. In 2016, the
average number of people enrolled in Medicaid, on a monthly basis, was
76 million, making Medicaid the largest health care provider in the
country.
\315\Government Accountability Office, GAO-14-533, ``Medicaid
Payment: Comparisons of Selected Services under Fee-for-Service,
Managed Care, and Private Insurance,'' July 2014.
---------------------------------------------------------------------------
Furthermore, Medicaid spending is not sustainable. Spending
in the program's first 50 years far exceeded expectations, and
the trend is projected to continue in the future. According to
the CBO, since 1980, Medicaid spending has increased by more
than 2,600 percent, and by 300 percent of gross domestic
product. In just the past 15 years, Medicaid spending has
increased by 200 percent, or 66 percent as a share of GDP. Last
year alone, Medicaid spending grew by $19 billion; this single
year's increase was more than the entire Federal share of
Medicaid spending for the program in 1980, at which time the
cost was $14 billion. The CBO projects Federal spending on this
program to be $389 billion in fiscal year 2017. This amount is
expected to grow by 67 percent over the next 10 years, reaching
$650 billion by fiscal year 2027.\316\
---------------------------------------------------------------------------
\316\Congressional Budget Office, op. cit., p. 13, and p. 96.
---------------------------------------------------------------------------
This number, however, masks the full cost of Medicaid,
because it represents only the Federal share of spending.
States also pay a significant portion of Medicaid costs, and
their spending on the program is expected to follow these
upward trends as well. According to the most recent data
available from the Centers for Medicare and Medicaid Services,
total State Medicaid spending is expected to rise from about
$212.5 billion in fiscal year 2016 to $369.8 billion in fiscal
year 2025.\317\ This means that at the end of the 10-year
window, taxpayers will spend about $1 trillion annually on
Medicaid through Federal and State expenditures. According to
the CMS Actuary's most recent annual report, by fiscal year
2025, Medicaid is projected to have 81.6 million
enrollees.\318\
---------------------------------------------------------------------------
\317\Office of the Actuary, Centers for Medicare and Medicaid
Services, 2016 Actuarial Report on the Financial Outlook for Medicaid.
This reflects the most recent data available. The 2017 Actuarial report
will be released this summer.
\318\Ibid., p.21.
---------------------------------------------------------------------------
Medicaid's current funding structure (the Federal Medical
Assistance Percentage [FMAP]) creates perversely encourages
States to expand the program while providing little incentive
to save. For every dollar a State government spends on
Medicaid, the Federal Government traditionally has paid an
average of 57 cents. Expanding Medicaid coverage during boom
years is tempting for States because they pay less than half
the cost. Conversely, there is little incentive to restrain
Medicaid's growth because State governments only save an
average of 43 cents for every dollar worth of coverage they
rescind. The program's expansion under Obamacare exacerbates
this challenge, with the Federal Government covering 95 percent
of every dollar spent on a State's additional Medicaid
population in 2017.\319\ CBO estimates former President Obama's
health care law will increase Federal spending for Medicaid and
State Children's Health Insurance Program [SCHIP] by more than
$1 trillion over the 2018-2027 period. This sharp increase is
due to the millions of new beneficiaries the Affordable Care
Act drives into these programs.
---------------------------------------------------------------------------
\319\This percentage began at 100 percent and will decrease over
time, falling to 90 percent of the costs for a State's additional
Medicaid population in 2020 and thereafter.
---------------------------------------------------------------------------
In contrast, the ``American Health Care Act'' seeks to
minimize the strain on the Medicaid Program to preserve
resources for those most in need. Currently, Medicaid subjects
enrollees to second-rate care--if they can get care at all. The
expansion under the ACA only served to exacerbate this problem,
as well as to discourage work and self-sufficiency.
The AHCA's Medicaid reforms provide greater State
flexibility while modernizing the program for the 21st Century.
Significant reforms will ensure resources are available for the
vulnerable populations Medicaid is intended to serve: children,
pregnant women, the aged, and the disabled. A reformed payment
structure will give States the latitude and control to meet
their varied needs. Indeed, even after AHCA's allegedly deep
``cuts'' in Medicaid, the program's spending would continue to
grow, rising from $389 billion in 2017 to $466 billion in 2026
(the final year of CBO's most recent cost estimate). Federal
Medicaid spending will still total $4.09 trillion over the 10-
year period, even after reform. What AHCA will do is slow the
growth of Medicaid spending, making the program sustainable for
the long term so it can protect the most vulnerable in American
society.
While the AHCA presents a promising change of course for
America's health care sector, this budget envisions additional
steps toward a fully patient-centered system. Congress must
pass further legislation, and the administration must implement
significant regulatory reform, to achieve this goal.

Illustrative Direct Spending Policy Options

For all the reasons given above, the budget resolution
calls for major reforms of the Medicaid Program and further
steps in the repeal and replacement of the Affordable Care Act.
To clear the way for patient-centered health care in America,
the budget supports the AHCA and efforts to continue down the
path it started.
Americans should have more choices in coverage options are
available so they can pick a plan that best fits their unique
health care needs. A critical initial action is eliminating
Obamacare's burdensome one-size-fits-all mandates and
regulations that are driving up the price of insurance and
limiting options. Encouraging a robust, competitive insurance
market would reduce costs, restore flexibility, and provide
Americans more options to choose the coverage they want for
themselves and their families.
Those who have a severe injury or illness should also have
access to quality and responsive care. To guarantee affordable
coverage, patient-centered health care would provide
protections for patients with pre-existing conditions, reward
those who maintain health coverage, and give States--who are
better equipped to respond to the needs of their communities--
more control over regulating insurance. Finally, patient-
centered health care must break down costly and burdensome
barriers to innovation so that life-saving technologies and
treatments are reaching patients in need. By moving health care
into the 21st Century, America can build on the remarkable
advancements that have already been made, which make delivery
of care more effective, efficient, and affordable.
These principles--affordability, accessibility, quality,
choices, innovation, and responsiveness--provide the roadmap to
health care that actually works for patients and providers.
They promote a responsive network that puts health care
decisions in the hands of individuals, families, and their
doctors, not Washington. The budget resolution includes a
policy statement that describes in greater detail the contours
of such a patient-centered approach.
The House committees responsible for the program changes in
these areas are Energy and Commerce, Ways and Means, Education
and the Workforce, Judiciary, Natural Resources, House
Administration, and three Appropriations Subcommittees:
Agriculture, Rural Development, Food and Drug Administration
and Related Agencies; Labor, Health and Human Services,
Education, and Related Agencies; and Legislative Branch. These
panels have full authority over the programs in their
jurisdictions; they will determine the exact parameters of
structural Medicaid reform, as well as those for other policies
flowing from the fiscal assumptions in this budget resolution.
Nevertheless, meaningful Medicaid reform and other measures to
slow the growth of Federal spending, while also providing
recipients with a benefit that helps improve health outcomes,
are critical. One set of potential approaches is outlined
below.

TOWARD PATIENT-CENTERED HEALTH CARE

Repeal the Remainder of the ACA and Repair Its Damage. This
budget encourages additional action--through both
administrative and legislative channels--to repair the market
damage and patient suffering caused by the ACA. The Obamacare
legislation contains more than 1,400 instances in which it
grants the Department of Health and Human Services broad
discretion in determining Federal health care policy. Apart
from subjecting individuals' medical care to the dictates of
government bureaucrats, this constitutes a dangerous expansion
of the administrative state. The budget supports a rollback of
the vast regulatory authority granted to the Executive Branch.
Such a rollback would likely promote economic growth as well as
patient choice.
The ACA expanded Washington bureaucracy through a number of
new programs. Many of these programs either duplicated existing
efforts or expend taxpayer dollars with no accountability.
Still others created new programs exemplifying the ideology of
``Washington knows best.'' The Prevention and Public Health
Fund, though intended to support prevention and public health
activities, provided the administration with access to $15
billion that could be accessed without restraint, and was
raided to supplement the costly ACA exchanges.
The AHCA eliminates the Prevention and Public Health Fund,
but there are additional similarly problematic programs. For
example, Obamacare established the Patient-Centered Outcomes
Research Institute to study the effectiveness of various
medical treatments. It imposes a $2 fee for every covered life
the epitome of bureaucracy in health care determining the cost-
benefit of treatments for patients. The Centers for Medicare
and Medicaid Innovation [CMMI] presents another example: CMMI
was designed to test new payment models in Medicare and
Medicaid, but the Obama Administration interpreted its
authority beyond the ability to ``test'' payment models and
announced it will ``mandate'' untested payment models that may
adversely affect quality of care for Medicare and Medicaid
patients. In the new administration, HHS Secretary Price has
signaled his intent to restore the CMMI program to its original
intent.
The most egregious program created under the Affordable
Care Act, however, is the Independent Payment Advisory Board, a
panel of 15 unelected, unaccountable bureaucrats charged with
making coverage decisions on Medicare to decrease program
spending levels without the authority of Congress.
Obamacare's failures are not mere glitches in an otherwise
smooth-running operation. They are the predictable and
inevitable result of a program that remains profoundly and
fundamentally flawed. For all these reasons, this budget calls
for full repeal of the Affordable Care Act, building on the
efforts of the ``American Health Care Act''.
As mentioned earlier, however, repealing Obamacare is only
the first step. The more important effort is to rethink health
care fundamentally--to shed the arrogant illusion that
Washington bureaucrats and technicians can somehow control and
manage the many moving parts that interact to create what is
known as health care in America. Instead of trying to box this
immensely valuable service into an homogenous, government-run
system, policymakers should enlist the creativity of all the
participants--and also open the door to innovators from outside
the field, who may be able to deliver unexpected insights--and
reform health care from the ground up. This should start from
the most fundamental relationship in medicine: the one between
the patient and the doctor.

MEDICAID AND SCHIP

Repeal the Medicaid Expansion under the Affordable Care
Act. The ACA's Medicaid expansion also binds the hands of local
governments in developing solutions that meet the unique needs
of their citizens. Obamacare exacerbates the already crippling
one-size-fits-all enrollment mandates that have resulted in
below-market reimbursements, poor health care outcomes, and
restrictive service availability.
The ACA created major expansions in the Medicaid Program
beginning in 2014. As noted previously, the Federal Government
now pays a significantly larger share of the Medicaid expenses
for individuals who are newly eligible for Medicaid due to the
ACA, dramatically increasing Federal spending. Newly eligible
beneficiaries also add pressure to already-strained State
budgets, drawing limited resources away from the most
vulnerable populations. According to CBO, approximately 12
million new individuals are enrolled in Medicaid under the ACA
in 2017; this number is expected to grow to 17 million
individuals by 2027 if the law is not reformed.\320\
---------------------------------------------------------------------------
\320\Congressional Budget Office, Federal Subsidies Under the
Affordable Care Act for Health Insurance Related to the Expansion of
Medicaid and Nongroup Health Insurance: Tables from CBO's January 2017
Baseline, January 2017: https://www.cbo.gov/sites/default/files/
recurringdata/51298-2017-01-healthinsurance.pdf.
---------------------------------------------------------------------------
While the AHCA begins reforming the Medicaid expansion, it
allows States the option of continuing the expanded program for
individuals up to 138 percent of the Federal Poverty Level
[FPL]. The budget calls for repealing the ACA's Medicaid
expansions. While it supports the AHCA's policy not to remove
from the rolls anyone currently on the program, it does not
support adding any new enrollees above the poverty line.

Refocus Medicaid Resources on the Truly Needy. The Federal
Government and States share the cost of Medicaid, with the
share of each derived from the FMAP formula.\321\ This formula
provides for a higher reimbursement rate to States with a lower
per capita income, and a lower reimbursement rate for States
with a higher per capita income.\322\ To achieve this, a
State's per capita income is compared to the National per
capita income. As such, the Federal share of spending varies
from State to State.\323\
---------------------------------------------------------------------------
\321\Section 1905(b) of the Social Security Act.
\322\The statutory formula is as follows:
FMAPState = 1--((Per Capita IncomeState)\2\/
(Per Capita IncomeU.S.)\2\ * 0.45)
\323\The FMAP discussed in this section refers to the traditional,
or base, FMAP. For many populations, the FMAP rate is higher (for
example, due to the ACA expansion or enhanced FMAP additions for select
groups such as SCHIP enrollees or prisoners).
---------------------------------------------------------------------------
Medicaid continues to grow at an unsustainable rate and
contributes to the ballooning budget deficit. As such, Congress
must make adjustments to ensure that taxpayer dollars are spent
with prudence--that is, that dollars are spent in a way that
they do the most good for the most people. Additionally, for
States to gain greater flexibility in designing their Medicaid
programs, they should be required to raise their stake in the
programs' successes.
Under Obamacare's Medicaid scheme, the Federal Government
reimburses States at a higher FMAP rate for enrollees above the
poverty line than for those below it. This means that an able-
bodied, working-age adult without dependents receives more
taxpayer dollars for Medicaid than a sick, disabled child well
below the poverty line.
For example, an adult with no physical or mental obstacles
who has an income above the poverty line will bring the State a
95-percent FMAP in 2017, but a needy child below the poverty
line could earn only a 50-percent FMAP.\324\ The scheme was
created as a perverse incentive under the ACA to entice States
into adding more people to their Medicaid rolls, rather than
finding ways to lift them out of poverty or near-poverty. With
limited Federal resources and a growing strain on taxpayers,
such a system is unsustainable--in addition to being unfair to
those Medicaid was intended to serve. This disproportionate
reimbursement incentive flagrantly abandons the most vulnerable
in favor of advancing an ideology of government dependency.
---------------------------------------------------------------------------
\324\This traditional match rate is dependent on the State, as it
is calculated based on each State's per-capita income. The statutory
range is currently between 50% and 85%.
---------------------------------------------------------------------------
This budget encourages reinserting parity into the Medicaid
FMAP structure. The budget encourages returning for higher-
earning Medicaid enrollees to the traditional FMAP. By
restoring enrollees above the poverty line to the same match
rate as those below the poverty line, the Federal Government
removes the incentive for States to push resources away from
the most impoverished. This would also preserve access to
Medicaid for those most in need of society's help.

Put Medicaid on a Budget. The budget resolution supports
the AHCA's model for transforming Medicaid from an open-ended
benefit back to a quality safety net for the Nation's most
vulnerable. States would have the option of choosing one of two
possible designs: the per capita cap allotment or the optional
block grant.
The AHCA strengthens and secures Medicaid by instituting a
per capita cap, which converts the Federal share of Medicaid
spending into finite funding amounts. The allotment is paired
with reforms that allow States to design programs for their
Medicaid enrollees, such as the ability to define the essential
health benefits Medicaid must cover. Governors and State
legislatures are closer to patients in their States and know
better than Washington bureaucrats where there are unmet needs,
as well as opportunities to cut down on waste, fraud, and
abuse.
Even with the limited flexibility of Medicaid's current
waiver program, States have developed innovative reforms that
produce cost savings and quality improvements. For example, the
Healthy Indiana Plan (implemented prior to the ACA) provided
that State's residents who did not qualify for Medicaid with
access to health benefits such as physician services,
prescription drugs, inpatient and outpatient hospital care, and
disease management--all without additional funding. Other
States could alter eligibility requirements, for example, or
move able-bodied adults off the Medicaid rolls. The savings
generated could then be redirected toward additional
protections for the most vulnerable populations, or to other
State health care priorities.
All States should have the flexibility to adapt their
Medicaid programs--to design their benefit packages in a way
that best meets the needs of their State populations; to
promote personal responsibility and healthy behaviors; and to
encourage a more holistic approach to care that considers not
only Medicaid beneficiaries' health conditions, but also their
economic, social, and family concerns.
The per capita cap program design ensures protections for
the most vulnerable by providing States with designated funding
for those persons who are truly in need of care and support.
Based on the four main eligibility categories as currently
defined by the Federal Government in the Medicaid Program--the
elderly, the blind and disabled, nondisabled adults, and
children--a per-person payment amount would account for the
average cost of care, per enrollee, in each of these four
principal categories, and would be indexed to a predetermined
growth rate. The Federal Government would then provide Medicaid
funds to the States based on the total number of enrollees in
category. This accounts for the variation in spending among the
four different categories, helping target funds to the most
vulnerable. Further, Federal law would provide the basic
template for the program to provide accountability for the
funds and help root out waste, fraud, and abuse.\325\
---------------------------------------------------------------------------
\325\Committee on Oversight and Government Reform, Uncovering
Waste, Fraud, and Abuse in the Medicaid Program, staff report 25 April
2012: https://oversight.house.gov/wp-content/uploads/2012/04/
Uncovering-Waste-Fraud-and-Abuse-in-the-Medicaid-Program-Final-3.pdf.

Promote State Flexibility. The optional block grant would
encourage State innovation. Through this arrangement, both the
Federal Government and the States would have budgetary
certainty, which would create strong incentives for the States
to manage the Federal funding wisely, while reducing
costs.\326\ Any spending that exceeded the amount provided to
the State would have to be financed by the State. Conversely,
the funding provided to States would not be reduced if they
found innovative ways to reduce Medicaid costs. Under a
traditional State Flexibility Fund, States could, for example,
use money saved to support other welfare programs, including
Temporary Assistance for Needy Families, Supplemental Security
Income, and the Supplemental Nutrition Assistance Program (food
stamps) if the need was greater in those areas. This option
provided by the AHCA restores State prerogatives and increases
the ability of States to tailor programs for their vulnerable
populations.
---------------------------------------------------------------------------
\326\Letter from Keith Hall, Congressional Budget Office Director,
to the Honorable Diane Black, Chairman of the U.S. House Committee on
the Budget, 17 March 2017: https://www.cbo.gov/system/files/115th-
congress-2017-2018/reports/52510-medicaidblockgrant.pdf.
---------------------------------------------------------------------------
If enacted, these ``American Health Care Act'' Medicaid
reforms would improve the health care safety net for low-income
Americans by giving States the ability to offer their Medicaid
populations more options and better access to care. This kind
of reform would ease the fiscal burdens on States. It also
would provide States budget certainty, contribute to the long-
term stabilization of the Federal Government's fiscal path, and
preserve the Medicaid safety net.
The budget also supports legislative efforts to promote
State flexibility in Medicaid beyond structural reform. For
example, States could be enabled to set reasonable cost-sharing
standards for able-bodied adults. The Federal Government could
improve program management and empower States simultaneously
through a variety of other tools, including: allowing States to
use contractors in eligibility processing, giving States
flexibility regarding non-emergency transportation use, and
promoting better oversight and transparency of the State-
managed portions of Medicaid.

Apply a Work Requirement to Medicaid. The budget seeks to
promote self-sufficiency through a work requirement for able-
bodied adults enrolled in Medicaid. Such a proposal would aim
to reinforce and strengthen the policy of the ``American Health
Care Act''.
Under the policy, where applicable, able-bodied, working-
age adults would remain enrolled in Medicaid only if they were
actively seeking employment, participating in an education or
training program, or doing community service. The policy would
support Americans who are trying to get back on their feet
while preserving resources for those who need help most.
Work provides a source of income and self-sufficiency. It
also has been demonstrated as a valuable source of self-worth
and dignity for individuals. In fact, employment and self-
esteem are so closely tied together that a Gallup-Healthways
Well-Being Index found ``Unemployed adults and those not
working as much as they would like are about twice as likely as
Americans who are employed full time to be depressed.''\327\
Applying a work requirement to Medicaid would assist more
people in transitioning out of poverty while also enhancing
their self-respect, their self-reliance, and their courage and
determination--much like what occurred with the highly
successful Temporary Assistance for Needy Families Program as
established in 1996.
---------------------------------------------------------------------------
\327\Alyssa Brown and Kyley McGeeney, In U.S., Employment Most
Linked to Being Depression-Free, Gallup, 23 August 2013: http://
www.gallup.com/poll/164090/employment-linked-depression-free.aspx.
---------------------------------------------------------------------------
Under this option, the policy would apply to Medicaid
beneficiaries who are able-bodied, non-elderly adults without
dependents. For children in foster care or living with
relatives, the policy would treat non-parent custodians as
parents in determining dependent status. The policy also would
exclude pregnant women from the requirement--and provide a
postpartum exemption period of at least 62 days (nine weeks) to
cover mothers who suffer a miscarriage, whose infant dies
during or shortly after birth, or who place their child with an
adoptive or foster family.
Under such a policy, enrollees could be expected to work 30
hours per week, with 20 of the 30 hours attributable to ``core
work activities.'' Core activities would be defined as: private
or public sector employment; work experience; on-the-job
training; job-search or job-readiness assistance program
participation; community service; or vocational training and
education. Noncore activities that might be counted as the
remaining 10 hours would be defined as: job-skills training,
job-related education, or satisfactory attendance at high
school or in an equivalent course.
This policy would promote State flexibility by allowing
States to define the criteria for qualifying community service,
job-search and training programs, and unpaid work experience.
It also would encourage States to perform case checks as they
saw fit. States would have the authority to make determinations
on hardship exemptions.
At the same time, because Medicaid is partly a federally
funded program, the Federal Government has a responsibility to
ensure taxpayer dollars are appropriately spent. Hence, under
such a policy, States would certify that beneficiaries meet the
minimum work requirement standards for an individual to enroll
in the Medicaid Program. Enrollees not meeting work
requirements for more than 63 days would be ineligible for
benefits, barring an exemption. The budget recommends a two-
year roll-out period for States to acclimate to the new
standards. To prevent fraud and abuse, States would conduct
checks every six months, and the GAO or the HHS Inspector
General would conduct annual audits of State programs to ensure
proper reporting.
These requirements would help target resources toward the
most vulnerable populations, while at the same time making
Medicaid available for those on the precipice of poverty who
are transitioning into economic stability.

Eliminate Waste, Fraud, and Abuse. The budget also advances
several reforms to help root out waste, fraud, and abuse in the
Medicaid Program. For example, Medicaid eligibility is
determined by an individual's calculated Modified Adjusted
Gross Income [MAGI].\328\ Under current law, the MAGI does not
include all forms of income. This budget proposes to expand the
MAGI to count extra income, presenting a more accurate picture
of eligibility. This will help target the limited Medicaid
resources to those who are actually in need of them.
---------------------------------------------------------------------------
\328\Centers for Medicare and Medicaid Services, MAGI: Medicaid and
CHIP's New Eligibility Standards, 30 September 2013: https://
www.medicaid.gov/medicaid/program-information/downloads/modified-
adjusted-gross-income-and-medicaid-chip.pdf.
---------------------------------------------------------------------------
In addition, the budget recognizes several options that can
be implemented in the short term to strengthen and preserve the
Medicaid Program. The first is to reform the 1115 waiver
process. One potential improvement would be requiring that
waivers be budget-neutral in actual costs and to ensure that
any new spending does not duplicate other Federal programs.
Another would be allowing States to adopt previously approved
waivers without having to go through the approval process
again. Additionally, the budget encourages efforts recently
initiated by CMS to streamline the waiver application process
and assist States in creating programs that will be successful.
Furthermore, the budget supports implementation of
recommendations from the Government Accountability Office to
improve how the program functions and reduce fraud.

Reduce Risk Based on GAO Recommendations. The Government
Accountability Office has designated Medicaid as high-risk
since 2003, largely due to ``concerns about the adequacy of
fiscal oversight.''\329\ According to GAO, State management of
programs complicates oversight of payments and patient access
to care, as the Federal Government must rely on State-provided
data. Further, Medicaid experiences dramatic swings in
enrollment and funding requirements based on economic upturns
and downturns. These periods of higher enrollment lead to
higher costs and less State revenue stability, which in turn
contribute to greater risk for improper payments and poor
access to services. Adding to this, CMS receives insufficient
data on Medicaid programs from States. GAO describes the lack
of accurate, timely data as an ``overarching challenge'' for
oversight of the Medicaid program.\330\ Often, available data
is three years behind.
---------------------------------------------------------------------------
\329\Government Accountability Office, High-Risk Series: Progress
on Many High-Risk Areas, While Substantial Efforts Needed on Others, 15
February 2017, p. 560: http://www.gao.gov/assets/690/682765.pdf.
\330\GAO, op. cit., p. 563.
---------------------------------------------------------------------------
In its report on high risk programs, GAO provides five
areas of Medicaid in need of improved oversight: financing and
provider payment transparency and oversight, managed care
payments and utilization oversight, growing expenditures for
and oversight of large Medicaid demonstrations, monitoring and
measurement of access to quality care, and growing expenditures
for long-term care services.
This budget supports GAO's recommendations for reducing
risk in the Medicaid sphere. Among them, GAO and this budget
encourage a systematic review of Federal determinations of
Medicaid eligibility. GAO and this budget also support
improving the process for reviewing and approving Medicaid
demonstrations, and making transparent the basis for spending
limits approved by HHS for the demonstrations. Finally, based
on testimony by Comptroller General Gene L. Dodaro, this budget
proposes requiring greater reporting by States on Medicaid
payments for uncompensated care, along with greater
coordination between CMS and State auditors.\331\
---------------------------------------------------------------------------
\331\Committee on the Budget, U.S. House of Representatives,
hearing on ``Failures of Fiscal Management: A View from the Comptroller
General,'' 3 May 2017.

Institute Parity for SCHIP. The State Children's Health
Insurance Program provides coverage for otherwise-uninsured
low-income children and pregnant women who do not qualify for
Medicaid. These enrollees are above the poverty rate required
for Medicaid coverage. For fiscal year 2017, 6.3 million
children are projected to be enrolled in SCHIP on a monthly
average.\332\ CBO anticipates Federal outlays for the same year
to total $14.5 billion.\333\
---------------------------------------------------------------------------
\332\Congressional Budget Office, Detail of Spending and Enrollment
for the Children's Health Insurance Program--CBO's January 2017
Baseline, January 2017: https://www.cbo.gov/sites/default/files/
recurringdata/51296-2017-01-chip.pdf.
\333\CBO, op. cit.
---------------------------------------------------------------------------
SCHIP is essential for children in the gap between Medicaid
and private health insurance (those children whose parents
cannot provide health care coverage but who are not
impoverished). This budget supports the continuation of the
program and urges Congress to extend its funding when it
expires shortly. At the same time, the budget proposes using
the forthcoming extension as an opportunity to prevent unfair
practices that divert resources away from the most susceptible
children.
As with the ACA's unfair practice of favoring higher-income
Medicaid enrollees over the poorest Americans, the Obama
Administration unjustly favored higher-income SCHIP recipients
over their poorer Medicaid counterparts. At present, States
receive an enhanced FMAP for SCHIP enrollees, with an average
increase of 15 percent over the State's Medicaid reimbursement
rate per enrollee. Additionally, the ACA added an additional 23
percent FMAP increase for SCHIP. This places the combined
enhanced Federal Medical Assistance Percentage rate for SCHIP
such that the Federal Government covers 88 percent to 100
percent of the cost for each SCHIP beneficiary.\334\ As such,
the Federal Government provides a higher nominal amount for
States to cover children above the poverty line than to cover
those below it.
---------------------------------------------------------------------------
\334\Baumrucker and Mitchell, op. cit., p. 17.
---------------------------------------------------------------------------
Under Obamacare, subsidies are available for individuals up
to 400 percent of FPL.\335\ As such, most of these children
could be covered through the health care insurance market,
rather than under SCHIP. If the AHCA is enacted, parents will
have access to a portable, advanceable tax credit to purchase
health care coverage for their children, as well, regardless of
income. Thus, children and pregnant women would have access to
plans that better fit their needs and provide broader access to
care through expanded provider networks and tailored services.
With these considerations, the requirement for enhanced funding
for SCHIP no longer stands.
---------------------------------------------------------------------------
\335\HealthCare.gov, Glossary: Federal Poverty Level, last accessed
16 May 2017: https://www.healthcare.gov/glossary/federal-poverty-level-
FPL/.
---------------------------------------------------------------------------
Taking these concerns together, children and pregnant women
well above the poverty line, with no limit on income, and
alternative access to care receive the greatest taxpayer
assistance. Congress must take measures to correct this
disparity, while preserving health care access for children and
pregnant women who cannot access it without help. This budget
proposes that Congress eliminate the enhanced 23-percent FMAP
for SCHIP recipients in parity with the previously discussed
option of returning Medicaid expansion enrollees to the
traditional FMAP.

PRO-LIFE POLICIES

Defend Life and Promote Access to Health Care. This
resolution supports the long-standing policy to ban Federal
taxpayer dollars from funding elective abortions and calls for
a 10-year cessation of Federal funding for Planned Parenthood.
This year, President Trump signed into law H. J. Res. 43 under
the authority of the Congressional Review Act.\336\ This
legislation overturns a December 2016 Obama Administration rule
that forced States to provide Title X family planning grants to
abortion providers. The Federal Government should not force
States to provide funding to clinics such as Planned Parenthood
that perform elective abortions. Similarly, the government
should not force taxpayers to fund those clinics. The budget
continues this protection by proposing to eliminate all Federal
funding from Planned Parenthood and similar organizations.
---------------------------------------------------------------------------
\336\Public Law 115-23, Providing for congressional disapproval
under chapter 8 of title 5, United States Code, of the final rule
submitted by Secretary of Health and Human Services relating to
compliance with title X requirements by project recipients in selecting
subrecipients, 115th Congress: 1st Session, 13 April 2017.
---------------------------------------------------------------------------
The resolution promotes reinvesting the Planned Parenthood
funding in community health centers [CHCs] to promote greater
access to care for women, men, children, and the unborn. CHCs
are nonprofit, community-based clinics that provide
comprehensive care. There are 9,000 community health centers,
which--unlike Planned Parenthood clinics--are required to be
situated in underserved areas with high levels of poverty and
infant mortality.\337\
---------------------------------------------------------------------------
\337\Elayne J. Heisler and Victoria L. Elliot, Factors Relating to
the Use of Planned Parenthood Affiliated Health Centers (PPAHCs) and
Federally Qualified Health Centers (FHQCs), Congressional Research
Service, 18 May 2017.
---------------------------------------------------------------------------
This budget supports enhanced access to women's health
care, while protecting taxpayers from funding abortion. For
example, although Planned Parenthood advocates regularly claim
that women receive mammograms at its facilities, none of the
organization's 650 facilities actually offers mammograms. In
contrast, CHCs are major providers of mammograms and other
preventive services, particularly to women of color, Medicaid
recipients, and the uninsured.
In 2015, CHCs provided health services to more than 20
million Americans, nearly 60 percent of whom were female. In
contrast, Planned Parenthood served fewer than 3 million
Americans the same year.\338\ This budget makes efforts to
ensure that taxpayer dollars do not go to the Nation's largest
provider of abortions, but rather support the health centers
that truly provide care to millions of women.
---------------------------------------------------------------------------
\338\Heisler and Elliot, op. cit.
---------------------------------------------------------------------------

FEDERAL EMPLOYEE HEALTH BENEFITS

Reform the Federal Employee Health Benefit Program.
Currently, Federal contributions to the Federal Employees
Health Benefits Program grow by the average weighted rate of
change in these programs. This budget supports restricting the
growth in these plans to inflation for retirees.\339\ The
budget also proposes basing Federal employee retirees' health
benefits on length of service. This option would reduce premium
subsidies for retirees who had relatively short Federal
careers. Together, these two reforms would bring health
benefits for Federal retirees more in line with those offered
in the private sector.
---------------------------------------------------------------------------
\339\The budget also restricts growth of the Federal Employees
Health Benefits Program for current Members of Congress and their
staffs. The cost savings from this proposal are reflected in the
discretionary spending section of Function 550.
---------------------------------------------------------------------------

INCOME SUPPORT, NUTRITION,
AND RELATED PROGRAMS

Function Summary

With the passage of his Great Society programs, President
Johnson launched America's War on Poverty and greatly expanded
the Nation's safety net. ``Our aim,'' he promised, ``is not
only to relieve the symptom of poverty, but to cure it and,
above all, to prevent it.'' The President's intentions were
widely accepted, and still are. A prosperous country, filled
with a generous people, should be willing and able to help
those of its citizens who are less well off. Indeed, voluntary
charity is one striking demonstration of the American spirit.
In 2015, charitable giving in America totaled $373.25 billion;
that was more than the Federal Government spent on its major
income security programs that year ($302 billion).\340\
---------------------------------------------------------------------------
\340\The National Philanthropic Trust [NPT], ``Charitable Giving
Statistics'': https://www.nptrust.org/philanthropic-resources/
charitable-giving-statistics (figures are the latest available;
Congressional Budget Office, The Budget and Economic Outlook: 2016 to
2026, January 2016, Table 3-2, p. 68. The comparison is not dollar for
dollar. According to the NPT, the majority of philanthropic spending
went to religion (32 percent), education (15 percent), human services
(12 percent)grantmaking foundations (11 percent), and health (8
percent). The intent is simply to provide a measure of the magnitude of
voluntary charity in America.
---------------------------------------------------------------------------
Yet after a half century and trillions of Federal dollars
spent, Washington's vast anti-poverty efforts have produced
disappointing results. Two years after the war began, the
poverty rate stood at 14.7 percent; in 2015, it was only
modestly lower, at 13.5 percent.\341\ Reflecting on the
divergence between higher spending and disappointing results,
in 1988 President Reagan noted: ``The Federal Government
declared war on poverty, and poverty won.''
---------------------------------------------------------------------------
\341\Bernadette D. Proctor, Jessica L. Semega, and Melissa A.
Kollar, Income and Poverty in the United States: 2015, United States
Census Bureau, September 2016: https://www.census.gov/library/
publications/2016/demo/p60-256.html.
---------------------------------------------------------------------------
Today, the Federal Government continues to operate a
patchwork of more than 90 welfare programs that lack any
coordination in their efforts to help lift people out of
poverty, for which spending by all levels of government exceeds
$1 trillion. Multiple programs, overlapping services, and
differing benefit structures often create significant
disincentives to work, keeping many trapped in a cycle of
poverty for years. While reforms during the 1990s reduced
caseloads in Temporary Assistance for Needy Families [TANF] by
more than two-thirds, and helped many cash welfare recipients
find work and escape poverty, those reforms were limited in
scope and affected only a small part of the safety net.
However well-intended, the current web of public assistance
is more likely to entangle individuals in poverty rather than
empowering them and their families to build lives of self-
sufficiency. ``[O]ur current system is broken,'' contends Larry
C. Woods, Chief Executive Officer for the Winston-Salem Housing
Authority, who has spent a career trying to assist America's
most vulnerable. ``Our approach is flawed. Our safety net is no
longer a net, but a steel trap fostering dependency and
cultivating generational poverty. It must change; and we must
change it--and sooner rather than later.''\342\
---------------------------------------------------------------------------
\342\Testimony of Larry C. Woods, Chief Executive Office of the
Winston-Salem Housing Authority, to the Committee on the Budget, U.S.
House of Representatives, 28 October 2015.
---------------------------------------------------------------------------
If America is going to cure poverty and prevent it, the
effectiveness of anti-poverty programs must be measured by the
number of individuals lifted out of poverty rather than the
number of dollars being spent. What's more, if the government
continues running unsustainable deficits and experiences a debt
crisis, the poor and vulnerable will undoubtedly be the hardest
hit, as the Federal Government's only recourse will be severe,
across-the-board cuts.
Anti-poverty programs should promote self-sufficiency, not
extended dependency. To that end, this budget proposes to
continue the successful welfare reforms of the 1990s by
improving work requirements for means-tested programs to help
more people escape poverty and move up the economic ladder. It
focuses resources in programs that deliver real results,
restraining spending to reasonable levels, reducing improper
payments, and allowing States more ability to improve programs
through policy innovation. It is focused on the following
principles:

Expect able-bodied adults receiving welfare to
work or prepare for work in exchange for receiving benefits.
Work--especially full-time work--is the surest way out of
poverty. Many welfare programs provide benefits to alleviate
immediate need, yet few expect able-bodied adults to work or
assist them in finding and keeping jobs so they can move up the
economic ladder. This budget proposes that able-bodied
individuals receiving welfare benefits from a variety of
programs be required to work or prepare for work in exchange
for benefits, and that States be held accountable for engaging
recipients in activities to help them find jobs and stay
employed.

Get incentives right when people move from
welfare to work. The Nation's safety net should be designed to
help those in need so they can get back on their feet and care
for themselves and their families. Yet States and other service
providers may lose money when someone leaves welfare for work,
meaning they are better off failing than succeeding. Given the
way the welfare system works now, it may not make sense for
someone on welfare to work more because they can end up worse
off financially. Under this budget resolution, committees
across Congress would work together to get these incentives
right, to make sure everyone is better off when someone leaves
welfare for work.

Focus welfare programs on outcomes, not inputs.
The Federal Government often evaluates programs based on
inputs, such as benefits paid, classes held, or people served.
Yet very few, if any, programs are measured based on their
results to assess whether they are really helping people out of
poverty and dependency. To make sure taxpayer dollars are spent
wisely, this budget would require committees overseeing welfare
programs to work together to develop similar outcome measures
for their programs and use funding structures that are focused
on outcomes. Common outcome measures will allow Congress and
the American people to better judge whether these programs are
working and whether they should continue, need to be reformed,
or should end. Focusing spending on outcomes allows greater
flexibility in the operations of programs while ensuring
families receive real help to climb the economic ladder.

Preserve welfare benefits for those most in need.
The American public is faced with a steady stream of reports
revealing how welfare benefits are being paid to those who
should never receive them. This frustrates taxpayers paying for
these programs and reduces resources for those who truly need
access to these benefits. Advances in technology have made it
possible to more easily protect against fraud and abuse, and
States are beginning to use these tools more frequently. The
budget would implement these technological and administrative
processes across means-tested programs to better protect
taxpayer dollars allocated for these programs. By reducing
abuse, these welfare programs will be better focused on those
who truly need help to move their families forward.

Finally, no set of government safety net programs can
replace, or improve upon, nature's safety net: the family. For
generation upon generation, the family has been the main source
of comfort, security, and economic stability for the
individual. It is where moral values and a sense of
responsibility grow. The family reinforces the individual's
place in the larger community. Government programs should
recognize and support those who lose any connection to a
family. At the same time, however, government should take care
not to contribute to the dissolution of families. Government
programs should aim to strengthen the family, the most
important and enduring institution in society.
Social scientists across the political spectrum agree that
children are better off with married parents.\343\ Yet today,
more than 40 percent of children are born to unwed
mothers,\344\ and the structure of anti-poverty programs places
harsh anti-marriage penalties on those who currently depend on
these programs when it is clear that ``the married, two-parent
family is one of the best weapons we have in the fight against
poverty.''\345\ In 2014, the poverty rate for single mother-led
families was almost five times the poverty rate for married-
couple families, 30.6 percent and 6.2 percent,
respectively.\346\ This budget proposes to reduce, and wherever
possible eliminate, the marriage penalties that have been
unwittingly built into the current welfare system.
---------------------------------------------------------------------------
\343\``They Do: The scholarly about-face on marriage,'' The Boston
Globe, 26 April 2015: http://www.bostonglobe.com/ideas/2015/04/25/
scholarly-kiss-for-wedded-bliss/INyenlyr0FIuWzaJDuFWGK/story.html.
\344\Centers for Disease Control and Prevention, Births: Final Data
for 2013, National Vital Statistic Report Volume 64, Number 1, 15
January 2015: http://www.cdc.gov/nchs/data/nvsr/nvsr64/nvsr64_01.pdf.
\345\Robert L. Doar, Morgridge Fellow in Poverty Studies at the
American Enterprise Institute, testimony to the Committee on the
Budget, U.S. House of Representatives, 28 October 2015.
\346\Carmen DeNavas-Walt and Bernadette D. Proctor, United States
Census Bureau, Income and Poverty in the United States: 2014, United
States Census Bureau, September 2015: https://www.census.gov/content/
dam/Census/library/publications/2015/demo/p60-252.pdf.
---------------------------------------------------------------------------
Most of the Federal Government's income-support programs
are reflected in the direct spending components of Function
600, Income Security (see Table 3). These include Federal
employee retirement and disability benefits (including military
retirees); general retirement and disability insurance
(excluding Social Security)--mainly through the Pension Benefit
Guaranty Corporation--and benefits to railroad retirees;
unemployment compensation; food and nutrition assistance,
including food stamps and school lunch subsidies; and other
income-security programs.
This last category includes: TANF, the government's
principal cash welfare program; Supplemental Security Income
[SSI]; and spending for the refundable portion of the Earned
Income Tax Credit [EITC]. Agencies administering these and
other programs in Function 600 include the Departments of
Agriculture, Health and Human Services, Housing and Urban
Development, the Social Security Administration (for SSI), and
the Office of Personnel Management (for Federal retirement
benefits).
For these programs, the resolution provides $423.7 billion
in direct spending budget authority for fiscal year 2018, and
$409.9 billion in outlays. The 10-year figures are $4.2
trillion in budget authority and $4.1 trillion in outlays. The
figures appear in Function 600 of Table 3.

The History and Development of
Federal Anti-Poverty Programs

Before the New Deal, poverty relief was seen primarily as a
responsibility of States, localities, and civil society. The
Great Depression hit State budgets hard, while also increasing
the demand for aid. The country experienced joblessness,
homelessness, and deflation to previously unknown degrees. This
combination resulted in direct intervention by Washington that
forever redefined the relationship between the American people
and their Federal Government.
In his 1935 State of the Union Address, President Roosevelt
laid the foundation of the modern welfare state, declaring the
Federal Government had a moral obligation to ensure a basic
level of security for individuals. He warned, however, that
Federal assistance ought to be focused and provide a pathway to
self-sufficiency and independence. ``The lessons of history,''
he noted, ``confirmed by the evidence immediately before me,
show conclusively that continued dependence upon relief induces
a spiritual 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. It is
inimical to the dictates of a sound policy. It is in violation
of the traditions of America. Work must be found for able-
bodied but destitute workers. The Federal Government must and
shall quit this business of relief * * *. We must preserve not
only the bodies of the unemployed from destitution but also
their self-respect, their self-reliance, and courage and
determination.''\347\
---------------------------------------------------------------------------
\347\The American Presidency Project, President Franklin D.
Roosevelt, Annual Message to Congress, 4 January 1935: http://
www.presidency.ucsb.edu/ws/index.php?pid=14890.
---------------------------------------------------------------------------
That year saw the enactment of Social Security, which
created, among other things, Aid to Dependent Children, (later
renamed Aid to Families with Dependent Children [AFDC]). In
1946, President Truman signed into law the National School
Lunch Program. He also proposed a plan for national health care
In 1953, Washington's role in public assistance expanded
and became bipartisan with the establishment of the Department
of Health, Education, and Welfare under President Eisenhower.
President Johnson launched his Great Society programs starting
in 1964. Among other things, the Food Stamp Act made permanent
a pilot program and, a year later, Congress and the President
enacted Medicaid as part of the 1965 Social Security Amendment.
The Supplemental Security Income Program began operations in
1974, and in 1975 Congress created the Earned Income Tax
Credit. By many important measures, however, the results of
these efforts and others has been disappointing. In particular,
the rising Federal spending commitment has not been matched
with a falling poverty rate, increased self-reliance, or an
improvement in other notable social indicators such as the
health of the family.
In his 1988 State of the Union Address, President Reagan
lamented: ``With the best of intentions, government created a
poverty trap that wreaks havoc on the very support system the
poor need most to lift themselves out of poverty: the family.
Dependency has become the one enduring heirloom, passed from
one generation to the next, of too many fragmented
families.''\348\ This remains true today for many of the
safety-net programs.
---------------------------------------------------------------------------
\348\The American Presidency Project, President Ronald Reagan,
Address Before a Joint Session of Congress on the State of the Union,
25 January 1988: http://www.presidency.ucsb.edu/ws/?pid=36035.
---------------------------------------------------------------------------

Welfare Reform

During the 1980s and 1990s, leaders began to recognize the
shortcomings of many safety net programs, especially AFDC, and
began to build reforms that focused on improving the lives of
recipients. During the 1992 presidential race, Bill Clinton
promised to ``end welfare as we know it.'' Two years later,
congressional Republicans' Contract with America included
welfare reform as one of its 10 policy initiatives.\349\
---------------------------------------------------------------------------
\349\Representative Newt Gingrich, ``The Capitol Steps Contract and
Cynicism in Washington, DC,'' the Congressional Record, 22 September
1994, vol. 140 (Washington: Government Printing Office, 1994), pp.
H9526-H9527.
---------------------------------------------------------------------------
These proposals were much needed. The number of families on
AFDC peaked at 5.1 million in March 1994.\350\ The subsequent
1996 welfare reform law replaced AFDC with TANF. Its key
revisions to welfare policy included a capped allotment to
States, work requirements, time limits on benefits, and State
flexibility in the use of funds. Along with moving many from
welfare to work, these reforms led to the single largest
sustained reduction in child poverty since the onset of the
Great Society.
---------------------------------------------------------------------------
\350\Gene Falk, Congressional Research Service, Temporary
Assistance for Needy Families [TANF]: Size and Characteristics of the
Cash Assistance Caseload, 5 August 2014.
---------------------------------------------------------------------------

Failures of the Current Government Safety Net

Notwithstanding the success of welfare reform, the current
government safety net fails to achieve the most important sort
of compassion: lifting those less well off into self-
sufficiency. Federal assistance programs too often discourage
work, and the intended beneficiaries become trapped in a system
with little opportunity to build a prosperous life of their
own.

BENEFIT CLIFFS AND DISINCENTIVES TO WORK

As recipients of public benefits find work or begin to earn
more, their benefits phase out and their tax burdens rise. The
combination of higher taxes and lost benefits can exceed the
value of a dollar earned. Gary D. Alexander, former Secretary
of Public Welfare for Pennsylvania, notes how various cliffs in
anti-poverty programs can cause total household income to
decline as wages increase.\351\ A department examination of
poverty programs concluded that the cliff effect can cause
individuals earning $29,000 and $69,000 to have almost
identical household incomes once taxes and benefit phase-outs
are taken into account.
---------------------------------------------------------------------------
\351\Gary D. Alexander, the American Enterprise Institute,
Welfare's Failure and the Solution, July 2012: http://www.aei.org/wp-
content/uploads/2012/07/-alexander-presentation_10063532278.pdf.
---------------------------------------------------------------------------
``Penalties to increased work effort, such as `benefit
cliffs' and high implicit marginal tax rates, are not just
hypothetical,'' says Robert L. Doar, former commissioner of New
York City's Human Resources Administration and current fellow
at the American Enterprise Institute [AEI]. ``* * * In my
experience, child care subsidies are especially disjointed and
prone to large benefit cliffs that need to be mitigated.
Policymakers must find ways to better coordinate programs so
that these drop-offs in benefits are more rational and don't
interfere with low-income Americans accepting a raise or
working more hours.''\352\
---------------------------------------------------------------------------
\352\Op. cit., Doar.
---------------------------------------------------------------------------
For many beneficiaries, the cliff effect compounds with the
lack of work expectations in many programs, further reducing
incentives to seek employment. The Obama Administration even
claimed authority to waive the work requirements in TANF.
Where Federal policy has failed, non-government policy
innovators are attempting to fill the void. For example, Woods
is pursuing strategies to increase self-reliance in Winston-
Salem housing programs: ``In the City of Winston Salem, there
are a growing number of agencies (public and private) that are
discussing coordination of services, resource leveraging,
collaborative partnerships, and data sharing all related to
performance-based outcomes * * *. Our approach is designed to
provide a positive and hopefully permanent exit strategy so
families remain self-reliant.
``We call this approach `Growing Families out of Poverty.'
Unfortunately, under the current regulatory and statutory
structure, we cannot fully implement our program. We have faced
roadblock after roadblock restricting our ability to require or
incentivize participation.''\353\
---------------------------------------------------------------------------
\353\Op. cit., Woods.
---------------------------------------------------------------------------
Under Doar's management, New York City's anti-poverty
programs made work expectations a major focus. ``In New York,
we were most successful at fighting poverty when we maintained
the proper balance of strong work requirements and government
assistance that supported--but did not replace--work.''\354\
---------------------------------------------------------------------------
\354\Op. cit., Doar.
---------------------------------------------------------------------------
Civic organizations are also solving problems where Federal
programs have disappointed. William C. McGahan, Founder of
Georgia Works!, has developed a program in the heart of
downtown Atlanta to help chronically homeless men overcome
obstacles--criminal records, substance abuse, overdue child
support, lack of proper identification, and so on--and assist
them toward a path to becoming self-sufficient individuals
reintegrated with their families, into the work place, and into
society. ``Unlike other programs that focus on singular issues
faced by homeless individuals, the Georgia Works! methodology
is comprehensive. The idea is to not only help eliminate the
barriers to `escaping' homelessness, but also to change the
person so that homelessness does not re-occur.'' Each month,
six to eight more men graduate to self-sufficiency.
Work not only provides a source of income and self-
sufficiency, but also has been a demonstrated source of self-
worth, pride, and dignity for individuals. In fact, employment
and self-esteem are tied so tightly together that a Gallup-
Healthways Well-Being Index found: ``Unemployed adults and
those not working as much as they would like are about twice as
likely as Americans who are employed full time to be
depressed.''\355\ Protecting programs with existing work
requirements from efforts to weaken them, and expanding them to
other programs, will allow more people to escape poverty and to
preserve their self-respect and self-reliance.
---------------------------------------------------------------------------
\355\Alyssa Brown and Kyley McGeeney, Gallup, In U.S., Employment
Most Linked to Being Depression-Free, 23 August 2013: http://
www.gallup.com/poll/164090/employment-linked-depression-free.aspx.
---------------------------------------------------------------------------

MARRIAGE PENALTIES

The structure of income support programs creates marriage
penalties that cause individuals to have to choose between
getting married or keeping benefits. ``For several decades now,
policymakers have created public tax and transfer programs with
little if any attention to the sometimes-severe marriage
penalties that they inadvertently impose. The expanded public
subsidies thus put in place by lawmakers came at the expense of
higher effective marginal tax rates, as program benefits often
had to be phased out beginning at fairly low incomes to keep
overall program costs in check. The combined effective marginal
tax rates from these phase-outs and from regular taxes are very
high--sometimes causing households to lose a dollar or more for
every dollar earned and severely penalizing marriage. In
aggregate, couples today face hundreds of billions of dollars
in increased taxes or reduced benefits if they marry.
Cohabitating or not getting married has become the tax shelter
of the poor.''\356\
---------------------------------------------------------------------------
\356\C. Eugene Steuerle, The Widespread Prevalence of Marriage
Penalties, testimony before the District of Columbia Subcommittee on
Appropriations, U.S. Senate, 3 May 2006: http://
www.taxpolicycenter.org/UploadedPDF_Steuerle_050306.pdf.
---------------------------------------------------------------------------
In 2014, the poverty rate for single mother-led families
was almost five times the poverty rate for married-couple
families, 30.6 percent and 6.2 percent, respectively.\357\ Yet
today, more than 40 percent of children are born to unwed
mothers,\358\ and the structure of anti-poverty programs places
harsh marriage penalties on those who currently depend on these
programs even though it is clear that ``the married, two-parent
family is one of the best weapons we have in the fight against
poverty.''\359\
---------------------------------------------------------------------------
\357\Op. cit., DeNavas-Walt and Proctor.
\358\Centers for Disease Control and Prevention, Births: Final Data
for 2013, National Vital Statistic Report Volume 64, Number 1, 15
January 2015: http://www.cdc.gov/nchs/data/nvsr/nvsr64/nvsr64_01.pdf.
\359\Doar, op. cit.
---------------------------------------------------------------------------
Furthermore, a recent AEI study found that marriage
includes the far-reaching benefits of: greater economic growth,
economic mobility, less crime, and less child poverty. The very
first recommendation to ``strengthen the economic and cultural
foundations of marriage and family life'' is an end to the
marriage penalties in means-tested programs.\360\ Reducing
these penalties should be a major focus of improving poverty
policy.
---------------------------------------------------------------------------
\360\W. Bradford Wilcox, Joseph Price, Robert I. Lerman, American
Enterprise Institute and Institute for Family Studies, Strong Families,
Prosperous States: Do Healthy Families Affect the Wealth of States?,
2015: https://www.aei.org/wp-content/uploads/2015/10/IFS-
HomeEconReport-2015-FinalWeb.pdf.
---------------------------------------------------------------------------

RIGID CENTRALIZATION

Washington's one-size fits all administration of means-
tested programs limits State innovation and experimentation
that might improve the programs to truly meet the needs of
their residents. States lack the flexibility to improve the
efficiency of their programs, though many governors have asked
for a new approach. Federal mandates prevent States from
finding new ways to make the programs more effective for
beneficiaries while also deriving efficiencies and reducing
costs.
Woods notes that ``there is insufficient flexibility to
allow agencies to tailor localized, common-sense approaches to
problem solving. For example, laws prohibit residents' required
participation in self-sufficiency programs.''\361\ If the State
had the flexibility to require participation on a trial basis,
such a program could test the improvements of the safety net in
Winston-Salem. Greater flexibility for States would enable
State and local governments to find innovative solutions for
work disincentives, marriage penalties, and other flaws in
current federal policy.
---------------------------------------------------------------------------
\361\Woods, op. cit.
---------------------------------------------------------------------------

POOR TARGETING OF RESOURCES

The government's multiple programs across various
departments, overlapping services, and differing benefit
structures create significant penalties on work and marriage,
keeping many trapped in a cycle of poverty for years.
Duplication and fragmentation of programs make them difficult
and time-consuming to navigate. Additionally, the incentives
and disincentives are mismatched, often preventing resources
from going to those most in need.
In housing programs, for example, resources are not
targeted where they can do the most good. ``In subsidized
housing programs today, there is a stagnation of movement
through the system,'' says Woods. ``Non-elderly, able-bodied
families are living in subsidized housing for unnecessarily
lengthy periods, resulting in generational poverty and
cumbersome waiting lists. These waiting lists prevent our
agency from responding to individuals who face unexpected,
temporary, situational poverty.''\362\
---------------------------------------------------------------------------
\362\Woods, op. cit.
---------------------------------------------------------------------------

WASTE AND FRAUD

Safety net programs are not immune to waste and fraudulent
activity by bad actors. The aforementioned challenges
contribute to this, but the Federal Government and States have
also loosened eligibility and oversight. As a result, a portion
of what resources are available is siphoned from those
individuals who truly need them. This is not fair to
individuals truly in need or to hardworking taxpayers
supporting the programs.
Research by the Foundation for Government Accountability
estimates that between 5 percent and 25 percent of spending on
welfare programs has been wasted or spent on fraudulent
activities.\363\ In the Supplemental Nutrition Assistance
Program, benefits reportedly have been exchanged for cash and
other non-food goods and services, including illegal
drugs.\364\
---------------------------------------------------------------------------
\363\Josh Archambault, Stop the Scam: Voters Know Welfare Fraud is
a BIG Problem, The Foundation for Government Accountability: http://
solutions.thefga.org/solutions/stop-the-scam/.
\364\Government Accountability Office, Supplemental Nutrition
Assistance Program: Enhanced Detection Tools and Reporting Could
Improve Efforts to Combat Recipient Fraud, August 2014. http://
www.gao.gov/assets/670/665383.pdf.
---------------------------------------------------------------------------
States and the Federal Government are both responsible for
the current rates of waste and fraud. More than half of States
have made use of waivers to roll back work requirements for
able-bodied adults without dependents on SNAP. More than half
of States have increased income limits and weakened, or
altogether eliminated, asset tests, absurdly enabling
millionaires to qualify for SNAP benefits.\365\
---------------------------------------------------------------------------
\365\The Foundation for Government Accountability, The Food Stamp
Crisis: http://thefga.org/download/solutions/food-stamps/
Food%20Stamp%20Emergency.pdf.
---------------------------------------------------------------------------
The integrity of the safety net rests with the Federal
Government and the States. It is a disservice to America's most
vulnerable individuals to allow waste and fraud to continue
unchecked. While wasteful spending and fraudulent activity are
not limited to safety net programs in the overall Federal
budget, the harm and damage are felt more acutely by those
Americans who would otherwise rely on these programs when they
fall on hard times.

Illustrative Direct Spending Policy Options

The main committees responsible for funding programs under
Function 600 are Ways and Means, Agriculture, Oversight and
Government Reform, and Education and the Workforce. They will
make final policy determinations on how to increase State
flexibility, reduce improper payments, and reform programs to
eliminate marriage penalties and work disincentives. Some
potential policy options following these guidelines might
include the following.

TEMPORARY ASSISTANCE FOR NEEDY FAMILIES

Strengthen Welfare Work Requirements. Welfare reforms in
the 1990s led to substantial declines in poverty, increases in
work, and decreases in government dependency. The TANF program
was a central feature of these reforms. This budget calls for
reforms to strengthen TANF work requirements so States will
engage more recipients in activities leading to self-
sufficiency. This should include ending States' ability to
reduce work targets by spending more than required, as well as
enforcing penalties against States that fail to meet work
targets. This budget also calls for TANF reforms to provide
states with more options to help people prepare to leave
welfare for work, and to hold states accountable for their
success in getting people off welfare and into jobs.

SUPPLEMENTAL SECURITY INCOME

Reform Supplemental Security Income. Welfare programs
typically pay benefits on a sliding scale. Supplemental
Security Income [SSI] is different, paying an average of $640
for each and every child in a household who receives benefits.
This reform would create a sliding scale for children on SSI.
Advocates for individuals with disabilities have expressed
support in the past for such a step. In 1995, Jonathan M.
Stein--the lead advocate attorney in the landmark 1990 Supreme
Court Case expanding SSI eligibility for children and witness
at a 27 October 2011 Ways and Means Subcommittee hearing on
SSI--said the following about this proposal: ``[W]e have a long
list of reforms that we do not have time to get into, but we
would say for very large families there should be some sort of
family cap or graduated sliding scale of benefits.''\366\
Additionally, Congress should review mental health categories
in the children's SSI program, which have been the fastest
growing categories of eligibility. This budget proposes a GAO
recommendation that Continuing Disability Reviews be conducted
every three years for children on the program who are deemed
likely to improve upon initially receiving benefits.
Additionally, benefits should be linked to school attendance
except where the Social Security Administration finds medical
cause.
---------------------------------------------------------------------------
\366\Committee on Ways and Means, Contract with America: Welfare
Reform, Part 2, hearing 2 February 1995 (Serial No. 104-44),
Washington: Government Printing Office, 1995.
---------------------------------------------------------------------------

NUTRITION PROGRAMS

Reform the Supplemental Nutrition Assistance Program.
During the 114th Congress, the Agriculture Committee held 16
hearings examining the past, present, and future of SNAP and
reported 15 key findings in December 2016. In addressing these
findings, the Agriculture Committee has done an excellent job
of exploring options for improving eligibility standards that
ensure SNAP is meeting its intent of providing services to the
most vulnerable. The committee of jurisdiction has considered
reforming Broad-Based Categorical Eligibility to end the
practice of making individuals eligible for SNAP simply by
receiving a TANF brochure or being referred to a social service
telephone number. The committee could also continue improving
program integrity, including limiting SNAP account balances to
reasonable levels and eliminating abuse of the Low Income
Housing Energy Assistance Program. As was demonstrated by the
welfare reforms of the 1990s, work requirements are central to
ensuring that public assistance helps individuals transition to
independence. Pairing reformed work requirements with
consistent enforcement would lead to more sustainable, self-
sufficient outcomes for SNAP recipients. Finally, the budget
resolution encourages the committee to focus on reforms that
will restore overall SNAP funding to sustainable levels while
still providing States the flexibility to tailor the program to
best meet the needs of their SNAP-eligible populations.

Better Target Child Nutrition Resources. The 2010 child
nutrition reauthorization law allows schools with 40 percent
qualifying students to provide meals free of charge to all
students regardless of income. The Community Eligibility
Provision simplifies program administration, but a higher
threshold would better target program resources to lower-income
households.

REFUNDABLE TAX CREDITS

Child Tax Credit Program Integrity. The budget would
require individuals seeking the refundable child tax credit to
submit a Social Security number to claim the credit. Under
current law, a Social Security number is now required in order
to claim children under the EITC.

Reform the Earned Income Tax Credit and Eliminate Marriage
Penalties. The EITC is susceptible to fraud and abuse.
According to the Internal Revenue Service, 24 percent of EITC
payments were issued improperly in fiscal year 2016 (about
$16.8 billion). To reduce these errors in the EITC program,
this budget proposes requiring verification of income before
these benefits are paid and using the resulting savings to
eliminate marriage penalties.

CHILD SUPPORT PROGRAMS

Allow State Flexibility for the Foster Care Program.
Significant progress has been made among States, advocates, and
Federal policymakers in developing proposals that would expand
State flexibility in designing programs and pilot projects
meant to better prevent child abuse and neglect. Such proposals
would result in fewer children being removed from their homes,
allowing more funds to be directed toward prevention efforts,
as well as reducing the cost of the Nation's foster care
system.

Implement Pay for Outcomes. H.R. 576, the ``Social Impact
Partnerships to Pay for Results Act'', creates a model for
Federal financing of social programs where payment is
contingent on whether an independent analysis shows that the
program achieved the desired goal. Expanding this concept to
programs intended to reduce poverty would improve program
outcomes while providing savings to taxpayers as funds would
only be spent on programs that work.

Modernize Child Support Enforcement. Enacted in 1975, the
Child Support Enforcement [CSE] program was created to secure
child support payments from non-custodial parents for families
who relied on both the Federal and State governments for
welfare benefits. The CSE program was designed to reimburse the
government for those welfare benefits, as well as assist
families in attaining self-sufficiency. Today, however, two-
thirds of CSE collections are for helping families who have
never received cash welfare payments from the TANF program--
those it was intended to help. To ensure the CSE program is
targeted for those who are most in need, this budget proposes
to return the annual user fee for non-TANF families to its
original value and index it for inflation. In addition, the
budget would better align the financial incentives for states
by modifying the Federal matching rate and the criteria for
states receiving incentive payments to ensure they are truly
rewarding innovation and effectiveness. Finally, this budget
would require all income support programs to coordinate efforts
with the child support enforcement program.

CIVIL SERVICE

Reform Civil Service Pensions. This budget adopts a policy
proposed by former President Obama's National Commission on
Fiscal Responsibility. The policy calls for Federal employees,
including members of Congress and staff, to make greater
contributions toward their own defined benefit retirement
plans. It would also end the ``special retirement supplement,''
which pays Federal employees the equivalent of their Social
Security benefit at an earlier age. This would achieve
significant savings while recognizing the need for new Federal
employees to transition to a defined contribution retirement
system. The vast majority of private sector employees
participate in defined contribution retirement plans. These
plans put the ownership, flexibility, and portfolio risk on the
employee as opposed to the employer. Similarly, Federal
employees would have more control over their own retirement
security under this option. President Trump's fiscal year 2018
budget calls for a phased-in increase to contributions federal
employees pay into the Federal Employee Retirement System so
that both employees and the government are contributing an
equal amount.

FARM SUPPORT AND RELATED PROGRAMS

Function Summary: Direct Spending

Agriculture experienced a period of high market prices and
incomes during the initial years of this decade, but national
farm income has fallen sharply from 2013's record-high level.
The U.S. Department of Agriculture [USDA] forecasts that farm
income will be roughly flat in 2017 compared to last year.
The ``Agricultural Act of 2014''--otherwise known as the
Farm Bill--made a number of reforms to agricultural policies,
most notably by eliminating Direct Payments which had cost
taxpayers almost $91 billion over the past 18 years and were
paid regardless of market conditions. While it is important to
continue reforming agricultural programs, weather and market
challenges continue to highlight the importance of maintaining
a safety net for farmers. This is especially true when
considering that other countries--primarily advanced,
developing countries such as China--have dramatically increased
trade-distorting support to their producers at the expense of
America's farmers and ranchers. Further, it is worth noting
that current law establishing the annual mandatory sequester
pursuant to the Budget Control Act of 2011 affects agricultural
programs significantly and indicates the need for Congress to
review the sequester process to ensure all Federal programs are
treated equitably.
Direct (or ``mandatory'') spending programs in this
category (Function 350 in Table 3) include direct assistance
and loans to food and fiber producers, export assistance,
agricultural research, and other programs. The Committee on
Agriculture has made commendable efforts to reduce overall
direct spending here. The budget resolution calls for direct
spending of $17.9 billion in budget authority and $16.7 billion
in outlays in fiscal year 2018. The 10-year direct spending
totals for budget authority and outlays are $127.0 billion and
$121.4 billion, respectively.

Illustrative Direct Spending Policy Option

The Committee on Agriculture has complete authority to
determine direct spending policies under its jurisdiction and
nothing in this report is intended to predetermine or influence
the committee's specific choices. The Committee on the Budget
will work with the Agriculture Committee to ensure it has
adequate flexibility to craft a farm bill that responds to the
significant challenges facing America's farmers and ranchers.
Among the options the Agriculture Committee may wish to
consider is the following:

Reform Agricultural Programs. The Agriculture Committee is
encouraged to continue reforming agricultural programs. Any
additional savings would be coupled with significant benefits
that will be realized from other provisions in this budget,
including regulatory relief, fundamental tax reform, and
stronger economic growth as the burden of Federal deficits is
lifted from the economy.

BANKING, COMMERCE, POSTAL SERVICE
AND RELATED PROGRAMS

Function Summary: Direct Spending

As with its annually appropriated programs, the Federal
Government has used direct spending in commerce and housing in
a way that moves from healthy and productive support for
industry to over-subsidizing corporations and unfairly exposing
taxpayers to risk. One example is Fannie Mae and Freddie Mac,
which were placed into Federal conservatorship in 2008 and
remain a part of the Federal Government. As a result, taxpayers
remain exposed to Fannie's and Freddie's more than $5 trillion
of outstanding commitments.
On a unified basis, the resolution provides $6.0 billion in
direct spending budget authority and -$6.9 billion in outlays
in this area in fiscal year 2018 (shown in Function 370 of
Table 3, Commerce and Housing Credit). Reforms will be
determined by the Committee on Financial Services, the
Committee on Energy and Commerce, and the Committee on
Oversight and Government Reform. Criteria the committees may
wish to apply include promoting free enterprise and economic
growth in a responsible way, scaling back corporate welfare,
and protecting taxpayers from the risk of future bailouts.

Illustrative Direct Spending Policy Options

Specific policies affecting direct spending in this
function will be determined by the Committee on Financial
Services, the Committee on Energy and Commerce, and the
Committee on Oversight and Government Reform. The resolution
encourages continued reform in the areas discussed below, but
the committees of jurisdiction retain complete flexibility in
determining the policies to be adopted.

ON-BUDGET DIRECT SPENDING

Assume Provisions of the House-Passed Financial CHOICE Act.
On 8 June 2017, the House of Representatives passed H.R. 10,
the ``Financial CHOICE Act'', by a vote of 233-186. The
legislation is the first comprehensive reform bill to replace
the disastrous Dodd-Frank Act. CHOICE stands for ``Creating
Hope and Opportunity for Investors, Consumers, and
Entrepreneurs,'' because the most basic element of resilient,
reliable economic growth is allowing financial institutions and
markets to invest in America without government regulators
second-guessing every decision and driving up the cost of
capital.
Congress passed Dodd-Frank in a zealous regulatory attempt
to ``fix'' the causes of the 2008 financial crisis. Although
dubbed ``Wall Street Reform,'' the Dodd-Frank Act actually
intensifies the problem of too-big-to-fail by giving large,
interconnected financial institutions advantages that small
firms will not enjoy. Dodd-Frank expands and centralizes power
in Washington, exacerbating--not fixing--the root causes of the
2008 financial crisis. It contains layer upon layer of new
bureaucracy sewn together by complex regulations, yet it fails
to address key problems, such as Fannie Mae and Freddie Mac,
that contributed to the worst financial unraveling in recent
history.
The Financial CHOICE Act is built on seven key
principles\367\:
---------------------------------------------------------------------------
\367\The Financial CHOICE Act, Creating Hope and Opportunities for
Investors, Consumers, and Entrepreneurs--Executive Summary.

1. Taxpayer bailouts of financial institutions must end
---------------------------------------------------------------------------
and no company can remain too big to fail;

2. Both Wall Street and Washington must be held
accountable;

3. Simplicity must replace complexity, because complexity
can be gamed by the well-connected and abused by the Washington
powerful;

4. Economic growth must be revitalized through
competitive, transparent, and innovative capital markets;

5. Every American, regardless of circumstances, must have
the opportunity to achieve financial independence;

6. Consumers must be vigorously protected from fraud and
deception as well as the loss of economic liberty; and

7. Systemic risk must be managed in a market with profit
and loss.

The Financial CHOICE Act is the legislative manifestation
of many of the policies the Committee on the Budget has
recommended for many years, and continues in this resolution.
H.R. 10 would change the name of the Consumer Financial
Protection Bureau [CFPB] to the Consumer Law Enforcement Agency
[CLEA], and--in a highly significant step--subject the agency
to congressional oversight through the appropriations process.
Under the Dodd-Frank legislation, the CFPB is allowed to fund
its operations from a portion of the yearly off-budget
remittances made to the Treasury by the Federal Reserve. The
CFPB is housed in the Federal Reserve but is completely
autonomous. Its financing scheme made it totally unaccountable
as well. CLEA would be subject to annual appropriations and
required to adhere to government-wide standards of cost-benefit
analysis. CLEA would no longer serve as a supervisory agency,
but would remain responsible for enforcing specifically
enumerated consumer protection laws.
The Financial CHOICE Act also repeals the Federal Deposit
Insurance Corporation [FDIC] bailout fund, called Orderly
Liquidation Fund. The Dodd-Frank Act created this fund to
resolve ``systemically important financial institutions,'' but
the Committee on the Budget has long held this is simply a
taxpayer bailout fund for large, interconnected financial
institutions. The fiscal year 2018 budget resolution continues
to recommend repealing this regime that only paves the way for
future bailouts. Taking the lead on regulatory reform,
President Trump's fiscal year 2018 budget also recommends an
end to the Dodd-Frank Act bailout system.

Subject All Federal Financial Regulators to Congressional
Oversight. H.R. 10 would also subject certain other financial
regulators to congressional appropriations. Current law allows
most Federal financial regulators to levy fees on the
businesses they regulate to pay for operations, shielding them
from congressional oversight through annual appropriations.
These agencies include: Federal Deposit Insurance Corporation,
National Credit Union Administration, Federal Reserve Board of
Governors [the Fed], and the Federal Housing Finance Agency.
Not all financial regulators set their own budgets. The
Securities and Exchange Commission is subject to Congressional
oversight through appropriations. The Financial CHOICE Act
would mirror the current Securities and Exchange Commission
appropriations structure for all Federal financial regulators.
The budget resolution supports this policy.

Terminate Separate Benefit and Payscales for Financial
Regulators. Under current law, employees at the Fed and the
CFPB have a separate retirement benefit arrangement. The fiscal
year 2018 budget calls for a uniform system across the Federal
Government and recommends these two agencies begin
participating in the Federal Employees Retirement System and
the Thrift Savings Plan.
Likewise, many Federal financial regulators are not subject
to the Office of Personnel Management [OPM] General Schedule
[GS] payscale. As a result, financial regulators pay employees
far more than other federal employees employed at different
departments and agencies. The fiscal year 2018 budget
recommends Committees look at these sweetheart pay arrangements
and move federal financial regulators to the more transparent
GS payscale.

Reform the Universal Service Fund. The Universal Service
Fund [USF] provides subsidized telecommunications services
through four main programs: High-Cost Support, Schools and
Libraries (E-rate), the Lifeline Program, and Rural Health
Care. The USF is funded through mandatory contributions by
carriers, who pass these costs to consumers as fees on
subscribers' telephone bills. The Federal Communications
Commission [FCC] maintains the USF's roughly $9 billion in net
assets\368\ not in the U.S. Treasury but in a private bank
account, where they are not subject to the management and
safeguards as other Federal programs. This budget resolution
aims to reform burdensome programs and has identified Lifeline
as a key example.
---------------------------------------------------------------------------
\368\Government Accountability Office, Additional Action Needed to
Address Significant Risks in FCC's Lifeline Program, May 2017. The $9
billion figure is as of September 2016.
---------------------------------------------------------------------------
Lifeline--sometimes called ``Obamaphones\369\--provides
subsidies to about 12.3 million low-income Americans for
telephone, wireless, and broadband service, at a cost of about
$1.5 billion per year.\370\ To be eligible, a household must
have an income at or below the Federal Poverty Line or must
participate in one of several safety net programs, such as
Medicaid or the Supplemental Nutrition Assistance Program (food
stamps). Yet due to a loosely monitored oversight arrangement,
Lifeline is highly susceptible to fraud, waste, and abuse.
According to a recently released report by the Government
Accountability Office report, Lifeline has ``limited abilities
to detect and prevent ineligible subscribers from
enrolling.''\371\ This is because its structure relies on more
than 2,000 Eligible Telecommunication Carriers with the dual
duties of receiving subsidies from the Federal Government and
verifying subscriber eligibility for each subsidy. Thus, with
little oversight and audit ability available, these carriers
have a financial incentive to sign up as many subscribers as
possible--regardless of program eligibility. Moreover, about 96
percent of low-income households already have phone
service.\372\
---------------------------------------------------------------------------
\369\When launched in the mid-1980s, Lifeline covered only
telephones. More recently, it has expanded to include broadband and
wireless, and during former President Obama's tenure, many carriers
also began offering free or low-cost cell phones, which came to be
called ``Obamaphones.''
\370\Ibid. The program was created in the mid-1980s to promote
telephone service for low-income households. Wireless service came to
be included in the mid-2000s, and broadband in 2016.
\371\Government Accountability Office, Additional Action Needed to
Address Significant Risks in FCC's Lifeline Program, May 2017.
\372\Ibid.
---------------------------------------------------------------------------
In attempts to match subscriber to benefit data, GAO could
not confirm whether roughly 1.2 million individuals--some 36
percent of the 3.5 million subscribers the agency reviewed--
were actually eligible. Continued auditing by GAO of the
National Lifeline Accountability Database, which consists of
subscriber information from 46 States, has also found that
subsidies totaling about $612,000 annually were duplicate
payments. Even worse, GAO found that 6,378 individuals who were
currently receiving benefits were deceased according to the
Social Security Administration's Death Master File. In an
undercover test using fictitious names and documentation, GAO
gained approval for Lifeline service from 12 of 19 providers
contacted.
While the FCC has taken steps to rectify some of Lifeline's
internal controls, the agency's most significant reform plans--
creation of a third-party national eligibility verifier, and an
independent third party tasked with evaluating the Lifeline
program's design, function, and administration--will not
materialize until 2019 and 2020 respectively. Reforming this
program would significantly reduce the burden on taxpayers.

Privatize the Business of Government-Controlled Mortgage
Giants Fannie Mae and Freddie Mac. In 2008, the Federal
Government placed Fannie Mae and Freddie Mac\373\ into
conservatorship to prevent them from going bankrupt. The
Treasury has already provided $187 billion in bailouts to the
Government-Sponsored Enterprises [GSEs], and taxpayers remain
exposed to more than $5 trillion in Fannie Mae's and Freddie
Mac's outstanding commitments as long as the entities remain in
conservatorship. The Congressional Budget Office has recorded
Fannie Mae and Freddie Mac as explicit financial components of
the Federal budget, accounting for their liabilities as
liabilities of the government. In contrast, the administration
does not fully account for taxpayer exposure to Fannie Mae and
Freddie Mac, leaving them off budget. Despite recent dividend
payments by the two mortgage agencies, both enterprises
continue to assume outsized risks that place taxpayers in
jeopardy in the event of future downturns in the housing
market. Regrettably, reductions in dividend payments from
Fannie Mae and Freddie Mac will increase the deficit as the
Treasury has now come to rely heavily on these transfers.
---------------------------------------------------------------------------
\373\Formally the Federal National Mortgage Association [FNMA] and
the Federal Home Loan Mortgage Corporation [FHLMC].
---------------------------------------------------------------------------
This budget suggests ending the corporate subsidies and
taxpayer bailouts in housing finance. It envisions the eventual
elimination of Fannie Mae and Freddie Mac, winding down their
government guarantee, and ending taxpayer subsidies. In the
interim, this resolution seeks to remove distortions, thereby
allowing an influx of private capital back into the housing
credit marketplace and advancing various measures that would
bring transparency and accountability to these two GSEs, which
could include measures described in H.R. 2767, the ``Protecting
American Taxpayers and Homeowners Act of 2013'' (113th
Congress). Recognizing the need for housing finance reform, the
Trump budget includes policies to improve the housing finance
system while ensuring access to housing credit.

Incorporate Fair-Value Accounting Principles in the Credit
Reform Act. Taxpayers are also vulnerable to bailing out
another housing giant, the Federal Housing Administration
[FHA]. The capital ratio of the FHA's Mutual Mortgage Insurance
fund remained below the congressionally mandated 2-percent
level for seven years. In fiscal year 2015, FHA finally reached
its mandated 2-percent capital ratio. The fiscal year 2016 FHA
Actuarial Report released on 15 November 2016 again shows FHA
has achieved its statutory requirement of 2-percent.
Nevertheless, FHA still provides guarantees on more than $1
trillion in outstanding loans.\374\ Given the precarious
financial position of FHA in recent years, it is incumbent upon
Congress to ensure the forward progress continues. Furthermore,
the government should adopt measures to control the assumption
of risk by the FHA as other government-backed entities (such as
Fannie and Freddie) are wound down. Right now, the government
accounts for the risks carried by the FHA differently from the
way it accounts for those of Fannie Mae and Freddie Mac. These
differences simply encourage just such a shift in risk.
---------------------------------------------------------------------------
\374\Actuarial Review of the Federal Housing Administration Mutual
Mortgage Insurance Fund Forward Loans for Fiscal Year 2016, 15 November
2016.
---------------------------------------------------------------------------
The cost of FHA-insured loans are scored by calculating the
net present value of the cash flows associated with loans and
discounting those flows using a risk-free marketable Treasury
security rate. In contrast, the CBO uses fair-value accounting
for Fannie Mae- and Freddie Mac-guaranteed loans. Fair-value
accounting recognizes that adverse economic events such as
market downturns can cause loan defaults to rise; hence it
reflects the full financial risk incurred by taxpayers for
backing these loans. In other words, the current budgetary
treatment of FHA loans understates the full costs associated
with them, thereby encouraging policymakers to shift risk from
Fannie and Freddie to the FHA.
This resolution requires the CBO to provide supplemental
estimates using fair-value scoring for federally-backed
mortgages and mortgage-backed securities, regardless of which
Federal agency is acting as the insurer or guarantor.
As the government reforms its role in the U.S. housing
market, which this resolution supports, Fannie Mae, Freddie
Mac, and FHA loans should be treated with parity and full
transparency. The current structure of the Federal housing
finance system socializes potential losses in the housing
market among all Americans. The housing-finance system of the
future, however, should allow private-market secondary lenders
to fairly, freely, and transparently compete, with the
knowledge that they will ultimately appropriate risk for the
loans they guarantee. Their viability will be determined by the
soundness of their practices and the value of their services.

OFF-BUDGET DIRECT SPENDING

Reform the U.S. Postal Service. The U.S. Postal Service
[USPS] is expected to be self-sustaining and was statutorily
placed off budget in the Omnibus Budget Reconciliation Act of
1989, where it remains today. The mission of the USPS is to ``*
* * provide postal services to bind the Nation together through
* * * correspondence of the people'' and ``provide prompt,
reliable, and efficient services to patrons in all
areas.''\375\ It boasts an iconic brand name, universal
service, and certain competitive advantages with regard to
market-dominant products. In recent decades, however, the USPS
has faced financial instability stemming largely from reduced
demand for its services and ever-growing unfunded pension and
health care liabilities. Electronic mail is ubiquitous, while
demand for paper mail has waned. From 2000 to 2016, for
example, first-class mail volume dropped by 59 percent.\376\
Further, USPS has suffered from inefficiencies in its business
model. The organization faces financial problems that threaten
its long-term viability and will ultimately lead to a taxpayer
bailout.
---------------------------------------------------------------------------
\375\Public Law 91-375.
\376\United States Postal Service, ``First-Class Mail Volume Since
1926'': https://about.usps.com/who-we-are/postal-history/first-class-
mail-since-1926.htm.
---------------------------------------------------------------------------
The USPS is unable to meet its financial obligations
through its own business-like operation and desperately needs
structural reforms. Since fiscal year 2007, the USPS has run
annual operating losses; in fiscal year 2016 it defaulted on
another $5.8 billion payment to prefund the retirement health
care of its employees.\377\ In the Government Accountability
Office's annual High-Risk Series report to Congress for 2017,
it found that USPS ``continues to face unfunded liabilities
that have grown from 99 percent of USPS revenues in fiscal year
2007 to 169 percent of revenues in fiscal year 2016. These
unfunded liabilities--totaling about $121 billion at the end of
fiscal year 2016--consist mostly of retiree health and pension
benefit obligations for which USPS has not set aside sufficient
funds to cover.''\378\ According to GAO, ``Congress and USPS
need to agree on a comprehensive package of actions to improve
USPS's financial viability.''\379\
---------------------------------------------------------------------------
\377\Government Accountability Office, U.S. Postal Service:
Financial Challenges Continue, testimony before the Senate Committee on
Homeland Security and Governmental Affairs, 21 January 2016: http://
www.gao.gov/assets/680/674728.pdf.
\378\Government Accountability Office, High-Risk Series: An Update,
February 2013: http://www.gao.gov/assets/660/652133.pdf.
\379\Ibid.
---------------------------------------------------------------------------
With declining mail volumes and increasing personnel costs,
USPS has continued to give priority to parcel delivery as a
value stream that may be able to make up for the loss in
revenue from First Class Mail. According to the Postal
Service's own research, while mail delivery volume to
households has declined by 7 percent since 2012, package
delivery has increased by 91 percent over the same window.
While the Postal Service's parcel delivery market share has
continued to grow, several questions remain regarding USPS's
ability to accurately capture total costs associated with its
parcel services. For the Postal Service to continue to
associate a majority of its operational costs as
``institutional'' is an affront to Congress and an
administration that holds transparency and accountability
paramount.
The budget recommends broad-based restructuring of the
Postal Service. It should provide USPS with the flexibility
that any business needs to create a viable and sustainable
business model. That model should allow the Postal Service to
compete in a 21st-Century economy, and to respond to changing
market conditions, including declining mail volume. Examples of
the flexibility that should be considered have been included in
several reform proposals approved by the House Committee on
Oversight and Government Reform, including calls to modify both
the frequency and type of mail delivery. Allowing the Postal
Service the authority to expand the products and services it
provides would aid in creating additional revenue. This budget
also recognizes the need to reform compensation of postal
employees who currently pay a smaller share of the costs of
their health and life insurance premiums than do all other
Federal employees, and to address the prefunding schedule for
postal retiree health benefits established in the ``Postal
Accountability and Enhancement Act of 2006''.

STUDENT LOANS, SOCIAL SERVICES,
AND RELATED PROGRAMS

Function Summary: Direct Spending

Earning a college degree can bring marked, long-lasting
benefits to individuals and society. Prospective and enrolled
college students alike cite better employment prospects and
financial security among their reasons for going to
college.\380\ In addition to gaining sought-after knowledge and
skills, graduates tend to enjoy higher earnings over a
lifetime, steady employment, and access to jobs that require
advanced training.\381\ They are also less likely to live in
poverty or participate in public assistance programs.\382\ In
turn, such financial security can help individuals pursue
professional and personal goals, such as launching a business,
climbing the career ladder, starting a family, and saving for
retirement or their children's education. Society benefits in
numerous ways from an educated citizenry, not least of which is
having a competitive workforce to contribute to economic
growth.
---------------------------------------------------------------------------
\380\New America, College Decisions Survey: Deciding to Go to
College, https://www.newamerica.org/education-policy/edcentral/
collegedecisions/, 28 May 2015, and Kaitlin Mulhere, ``141,000 Freshman
Say Their Major Reason for Attending College Is * * *,'' Time.com,
http://time.com/money/4216707/college-freshman-survey-jobs-cost-
student-protests/?iid=sr-link1.
\381\College Board, Education Pays, 2016, https://
trends.collegeboard.org/sites/default/files/education-pays-2016-full-
report.pdf.
\382\Ibid.
---------------------------------------------------------------------------
America's higher education system gives students choices
and an abundance of opportunity. Students can choose among two-
year or four-year programs at public, private, career and
technical schools, and proprietary schools. They also can
enroll in programs of study ranging from liberal arts, to math
and the sciences, to business, or to career and technical
training. Additionally, schools offer study abroad programs,
externships with industry-specific employers, and other on-the-
job training opportunities that teach valuable skills.
Innovation is increasing choice and access in the higher
education system, entrepreneurs and existing institutions are
building programs on new business models, increasing the supply
of postsecondary education. Some providers have designed online
courses and degrees, as a complement or alternative to
traditional in-class instruction.\383\ Others offer competency-
based programs, in which students move through coursework at
their own pace and earn credit based on what they learn, not
the number of hours they spend in a classroom.\384\ In some
instances, such innovation has lowered costs in higher
education. For example, Georgia Institute of Technology offers
an online master's in computer science program for $7,000.\385\
A traditional high school graduate can earn a bachelor's degree
through the competency-based Texas Affordable Baccalaureate
Program for a cost of $13,000 to $15,000.\386\ These are just
two examples of the innovation happening around the country.
---------------------------------------------------------------------------
\383\Michael B. Horn, Testimony before Senate HELP Committee,
http://www.help.senate.gov/imo/media/doc/Horn5.pdf.
\384\Lindsey M. Burke and Stuart M. Butler, Ph.D., Accreditation:
Removing the Barrier to Higher Education Reform, Heritage Foundation
Backgrounder No. 2728, 21 September 2012: http://www.heritage.org/
education/report/accreditation-removing-the-barrier-higher-education-
reform.
\385\Kevin Carey, ``An Online Education Breakthrough? A Master's
Degree for a Mere $7,000,'' The New York Times, 28 September 2016:
https://www.nytimes.com/2016/09/29/upshot/an-online-education-
breakthrough-a-masters-degree-for-a-mere-7000.html?_r=0.
\386\The Texas Higher Education Coordinating Board, South Texas
College, Texas A&M University-Commerce, and the College for All Texans
Foundation jointly developed the Texas Affordable Baccalaureate
Program. See Thomas Lindsay, Ph.D., Testimony before the House Budget
Committee, 21 September 2016, p. 6:, http://budget.house.gov/
uploadedfiles/
written_testimony._thomas_k._lindsay._house_budget_cmte..docx.pdf.
---------------------------------------------------------------------------
These new business models and the choices they bring
benefit students and, in particular, contemporary students, who
now constitute the majority of those attending college.\387\
These students are beyond the 18-to-21-year-old high school
graduate age, and they may have full-time jobs and families. A
technology-rich, flexible education experience can help them
earn a degree in concert with their work schedules, family
commitments, and geographic locations--removing those barriers.
An affordable experience lowers a common barrier: high cost.
Traditional high school graduates and contemporary college
students both benefit from comparably lower-priced degree
programs, because they do not have to borrow substantially and
assume the associated risks.
---------------------------------------------------------------------------
\387\Committee on Education and the Workforce, Views and Estimates
for Fiscal Year 2018, p.3.
---------------------------------------------------------------------------
Yet college affordability has been, and remains, a
challenge for many students and their families. The Federal
Government has provided substantial student aid, particularly
through loans, since the 1960s, with the purpose of increasing
college access and affordability--especially for low-income,
disadvantaged students. Today it administers grant and loan
programs, and authorizes the accrediting entities charged with
monitoring institutions' quality. Yet Federal involvement in
higher education has come with several disconcerting trends.
Among them are:

Rising college costs. College tuition is
increasing well beyond inflation. For example, after accounting
for inflation, published tuition and fees at public four-year
schools are 3.1 times higher in the 2016-17 academic year than
in 1986-87; 2.29 times higher at private four-year schools; and
2.43 times higher at public two-year schools.\388\ There is
debate over what is causing steady and robust tuition
increases. Regulatory compliance costs may contribute, as may
State budget constraints--though not at all types of
institutions.\389\ Another explanation holds that students'
easy and expanded access to Federal aid has enabled schools to
increase tuition rates. The New York Federal Reserve examined
the relationship between expanded lending and tuition and found
that on average, for every dollar increase in subsidized loans,
tuition increased by up to 60 cents.\390\ The researchers found
a smaller but still positive pass-through effect on
unsubsidized loans.
---------------------------------------------------------------------------
\388\College Board, Trends in Higher Education, Published Tuition
and Fees Relative to 1986-87, by Sector, https://
trends.collegeboard.org/college-pricing/figures-tables/published-
tuition-and-fees-relative-1986-87-sector.
\389\Preston Cooper, ``State Budget Cuts Don't Explain Tuition
Increases,'' Forbes.com, 14 September 2016: https://www.forbes.com/
sites/prestoncooper2/2016/09/14/state-budget-cuts-dont-explain-tuition-
increases/#2d88c37c47ca.
\390\The pass-through effect of subsidized loans was larger for
private schools than public ones. See Federal Reserve Bank of New York,
``Credit Supply and the Rise in College Tuition: Evidence from the
Expansion in Federal Student Aid Programs,'' Staff Report, Revised
2017: https://www.newyorkfed.org/medialibrary/media/research/
staff_reports/sr733.pdf?la=en.

Student debt. There is widespread concern that
students are borrowing money they do not need and may have
trouble repaying. Research shows defaults come most frequently
from those who borrow less than $5,000.\391\ The Federal
Government holds most student loan debt; as of the second
quarter 2017, its portfolio was $1.3 trillion, up from roughly
$516 billion in fiscal year 2007.\392\ One explanation for the
increase is a greater number of students seeking a
postsecondary credential. In addition, some Federal programs
allow graduate students to borrow essentially unlimited
amounts, and some lend essentially unlimited amounts to parents
without expecting they will be able to repay. Students are
permitted to borrow up to statutory annual and aggregate loan
limits, and institutions of higher education are unable to
limit them to borrowing less than these limits. Institutions
and their financial aid administrators, for example, might
otherwise believe it is in the students' best interest to limit
the amounts they can borrow based on the level of credential or
program of study they are pursuing, to prevent them from over-
borrowing. As Federal lending consumes an ever-larger share of
the student loan market, it crowds out private and other
lenders that may have better products to meet individual
borrowers' needs. There is also concern that as students
struggle to pay back their student loan debt, they may delay
important goals, such as buying a home or saving for
retirement.\393\
---------------------------------------------------------------------------
\391\``Share of Defaulters and Three-Year Default Rate by Loan
Balance,'' Trends in Student Aid, The College Board, 2016: https://
trends.collegeboard.org/student-aid/figures-tables/share-defaulters-
and-three-year-default-rates-loan-balance.
\392\Office of Federal Student Aid U.S. Department of Education,
Federal Student Aid Portfolio Summary: https://studentaid.ed.gov/sa/
sites/default/files/fsawg/datacenter/library/PortfolioSummary.xls.
\393\Federal Reserve, How Much Student Debt is Out There?, 7 August
2015: https://www.federalreserve.gov/econresdata/notes/feds-notes/2015/
how-much-student-debt-is-out-there-20150807.html.

Complex, overlapping Federal aid programs.
Students and parents navigate a confusing array of grants,
loans, and loan repayment options when trying to figure out how
to pay for college.\394\ Each program has distinct eligibility
criteria and terms. For example, nine loan repayment plans now
exist, after the Obama Administration created new ones through
the regulatory process. A borrower has some choice, but may be
limited based on when he or she took out their loan. Comparing
monthly payments and other features of the various repayment
plans can be confusing and time-consuming. It is in the
interests of students and taxpayers to have a simplified aid
system.
---------------------------------------------------------------------------
\394\A Better Way: https://abetterway.speaker.gov/_assets/pdf/
ABetterWay-Poverty-PolicyPaper.pdf.

College has become more expensive, and therefore less
accessible for many Americans. Students face a dilemma: do not
go to college and forego the lasting benefits, or take on
sizeable debt and associated risks, such as having trouble
repaying loans in a weak job market. Loans are even riskier for
students who begin but do not complete a degree or certificate;
these borrowers are much more likely to default on their loans
than peers who finish their programs.\395\
---------------------------------------------------------------------------
\395\College Board, Trends in Student Aid, ``Two-Year Default Rates
by Sector and Completion Status,'' https://trends.collegeboard.org/
student-aid/figures-tables/two-year-default-rates-sector-and-
completion-status.
---------------------------------------------------------------------------
Another pernicious problem lies with how the Federal
Government accounts for--or measures the costs of--student loan
programs and most other Federal loan and loan guarantee
programs. It uses accounting procedures established by the
Federal Credit Reform Act of 1990 [FCRA]. CBO explains the
problem with this as follows: ``FCRA accounting does not
consider some costs borne by the government. In particular, it
omits the risk taxpayers face because federal receipts from
interest and principal payments on student loans tend to be low
when economic and financial conditions are poor and resources
therefore are more valuable.''\396\ Borrowers may have trouble
repaying loans if they cannot find a job, or if wages are
stagnant. Under FCRA, the government makes money on student
loans and has a perverse incentive to issue more loans,
regardless of the consequences for students, families, and
taxpayers. The CBO projects that in 2018, the government will
save 9 cents for every dollar in student loans under FCRA.\397\
Alternate procedures, called fair-value accounting, account for
such risks.\398\ As a contrast to FCRA estimates, CBO projects
the government will spend 12 cents for evfery loan dollar
issued in 2018 under fair-value measures.\399\
---------------------------------------------------------------------------
\396\Congressional Budget Office, Options to Change Interest Rates
and Other Terms on Student Loans, June 2013, p. 2: https://www.cbo.gov/
sites/default/files/113th-congress-2013-2014/reports/44318-
StudentLoans-1Column.pdf.
\397\Congressional Budget Office 29 June 2017 Baseline Projections
for the Student Loan Program, 25 January 2017, https://www.cbo.gov/
sites/default/files/recurringdata/51310-2017-06-studentloan.pdf.
\398\The Federal Government used fair-value accounting in
estimating the Troubled Asset Relief Program.
\399\Congressional Budget Office June 2017 Baseline Projections for
the Student Loan Program.
---------------------------------------------------------------------------
The FCRA accounting regime discourages lawmakers from
implementing certain reasonable policy changes. For example,
subsidized and unsubsidized Direct Loans for undergraduates and
graduates have borrowing limits. PLUS loan programs for
graduate students and parents, by comparison, are limited only
by the cost of attendance, as determined by the institution.
Under FCRA, extending limits to PLUS loan programs would cost
the government money.
Unrealistic assumptions in the accounting methodology cause
the spending for this section of the resolution--which is bound
by the same estimating conventions--to be negative: in fiscal
year 2018, budget authority totals -$10.5 billion, and outlays
are -$2.0 billion. As previously explained, these figures are
misleading.
This resolution envisions a framework that uses Federal
dollars more efficiently, accounts for student loans in a way
that reflects their true cost, and invests in a sustainable
higher education system that is good for students, institutions
of higher education, and taxpayers. Student loans are a major
component of direct spending in this category, shown as
Function 500 in Table 3. Additionally, the function reflects
numerous other programs supporting higher education, and some
others that fund social services.

Illustrative Direct Spending Policy Options

The transformation of programs in this area will be
determined primarily by the Committee on Education and the
Workforce, which has complete flexibility in determining
policies. Committee members may be guided by some of the
principles described above. Potential policy options include
those below.

EDUCATION

Repeal New Funding from the Student Aid and Fiscal
Responsibility Act of 2010. During the debate on the ``Student
Aid and Fiscal Responsibility Act'' [SAFRA], the CBO provided
estimates showing that projected future savings from a
government takeover of all Federal student loans decreased
dramatically when market risk was taken into account. Since
then, the National Commission on Fiscal Responsibility and the
Pew-Peterson Commission on Budget Reform have recommended
incorporating fair-value accounting for all Federal loan and
loan-guarantee programs to enable a true assessment of their
cost to taxpayers.
However, SAFRA exploited the higher non-adjusted savings
projection to help subsidize the Affordable Care Act and to
increase spending on several education programs. Although much
of the funding allocations have already been spent, Congress
could cancel some of the future spending by repealing
expansions to some Federal income-based repayment programs. The
Income-Based Repayment Program, created by the ``College Cost
Reduction and Access Act of 2007'', and accelerated by the
Obama Administration, is one example. In addition to rolling
back the expansions and streamlining the number of repayment
plans tied to a borrower's income, the Education and the
Workforce Committee could consider limiting how much taxpayer-
funded loan forgiveness the government offers under income-
based repayment. The expansions could disproportionately
benefit graduate and professional students who over-borrow and
struggle to repay their loans; graduate and professional
students would have considerable amounts of debt forgiven, at a
steep cost to taxpayers. Moreover, the expansions could
encourage students to borrow too much, which is the opposite
signal policymakers should send.\400\ One version of a reform
to income-driven repayment plans appeared in President Trump's
fiscal year 2018 budget, with the goal of streamlining the
financing options students face. Congress should reform these
programs to ensure they are meeting their intended goals, are
designed to give students proper incentives, and are protecting
taxpayer dollars.
---------------------------------------------------------------------------
\400\See American Enterprise Institute, Balancing Risk and
Responsibility: Reforming Student Loan Repayment, 19 November 2015, p.
6-7.

Accept the Fiscal Commission's Proposal to Eliminate In-
School Interest Subsidies for Undergraduate Students. The
Federal Government focuses aid decisions on family income prior
to a student's enrollment and then provides a number of
repayment protections and, in some cases, loan forgiveness
after a period of repayment. There is no evidence that in-
school interest subsidies are critical to individual
matriculation. Ending these subsidies for future graduates
would create parity with graduate loans; with enactment of the
``Budget Control Act of 2011'', the Federal Government ceased
to pay interest on graduate loans while borrowers are in
---------------------------------------------------------------------------
school.

Simplify the Existing Higher Education Programs to Protect
Students and Taxpayers. The current Federal aid system is
unduly complicated. Students and their parents must wade
through an array of six loans, nine loan repayment plans, as
well as eight loan forgiveness programs and 32 options for loan
deferment and forbearance.\401\ As the House Education and the
Workforce Committee describes it: ``Many students, particularly
first-generation and low-income students, are bogged down with
the complexity of the current system, which ultimately deters
them from accessing aid that will make college an affordable
reality.''\402\
---------------------------------------------------------------------------
\401\Committee on Education and the Workforce, Rep. Guthrie Opening
Statement, Hearing on ``Improving Federal Student Aid to Better Meet
the Needs of Students,'' 21 March 2017: http://edworkforce.house.gov/
news/documentsingle.aspx?DocumentID=401468.
\402\Committee on Education and the Workforce, Budget Views and
Estimates for Fiscal Year 2018, 3 March 2017.
---------------------------------------------------------------------------
Simplifying both the aid and repayment options available to
students and parents is important. Actions taken by the
committee of jurisdiction to reduce duplication and make the
financing system less complicated could include ending the
Public Service Loan Forgiveness [PSLF] Program and the Teacher
Loan Forgiveness program, or limiting forgiveness under either
program. The Government Accountability Office estimates the
Teacher Loan Forgiveness Program is benefiting only 0.8 percent
of people eligible; students may be unaware of the program or
have difficulty understanding how it interacts with other loan
repayment and forgiveness arrangements.\403\ Borrowers who work
full time in a public service job can have their loan balance
forgiven after making 120 cumulative monthly loan payments (10
years) under a qualifying income-based plan, as part of the
PSLF program. The first borrowers will be eligible for
forgiveness in October 2017. The exact number who will seek
debt relief in the coming years is unknown, as is the dollar
amount of loan forgiveness, because borrowers can verify their
employment and other requirements with the Department of
Education at the end--after 10 years of payments. Public
service in this program has a broad definition--so broad that
the GAO estimates one-quarter of all workers are in public
service.\404\ As borrowers increasingly enroll in income-based
repayment plans, not only will more borrowers potentially be
eligible for loan forgiveness under those plans, but one can
expect the taxpayer-funded debt relief through PSLF to
increase. President Trump's fiscal year 2018 budget also
proposed ending PSLF as part of a package of reforms to
simplify student loan financing and repayment.
---------------------------------------------------------------------------
\403\Government Accountability Office, ``Better Management of
Federal Grant and Loan Forgiveness Programs for Teachers Needed to
Improve Participant Outcomes,'' February 2015: http://gao.gov/assets/
670/668634.pdf.
\404\Government Accountability Office, Federal Student Loans:
Education Could Do More to Help Ensure Borrowers Are Aware of Repayment
and Forgiveness Options, August 2015, p. 27: http://www.gao.gov/assets/
680/672136.pdf.

Phase out Underused TEACH Grants. The budget also assumes a
consolidation of Federal grant aid for students to simplify the
system and better target resources. One option would be to
phase out the Teacher Education Assistance for College and
Higher Education [TEACH] Grant Program. TEACH Grants are aimed
at encouraging promising undergraduate and graduate students to
teach in high-needs fields in low-income schools. Undergraduate
students can receive up to $16,000, and graduate students can
receive up to $8,000. They must teach subjects such as math,
science, and foreign language for four years within eight years
of graduating. If they do not complete the service requirement,
their grants become loans with interest. The GAO has reported
several troubling findings about TEACH grants: one-third of the
grants have been converted to loans--some erroneously, the
program has only a 19-percent utilization rate among eligible
students, and the Department of Education does not yet
adequately evaluate the program's effectiveness.\405\
---------------------------------------------------------------------------
\405\Government Accountability Office, ``Better Management of
Federal Grant and Loan Forgiveness Programs for Teachers Needed to
Improve Participant Outcomes.'' Factors ranging from securing and then
maintaining a teaching position at a qualifying school for four years
to completing necessary paperwork can make fulfilling the program
requirements a challenge.
---------------------------------------------------------------------------

SOCIAL SERVICES

Terminate the Duplicative Social Services Block Grant. The
Social Services Block Grant is an annual payment sent to
States--without any matching, accountability, or evaluation
requirements--intended to help achieve a range of social goals,
including by providing child care, health, and employment
services. Most of these activities are also funded by other
Federal programs designed to support these same services.
States are given wide discretion in determining how to spend
this money and are not required to demonstrate the outcomes of
this spending, so there is no evidence of its effectiveness.
The budget assumes the elimination of this duplicative
spending.

FEDERAL LANDS AND OTHER RESOURCES

Function Summary: Direct Spending

The fiscal year 2018 budget resolution continues to support
policies that will make America's natural resources available
to producers who can provide a fair return to taxpayers. In
addition to receipts the Federal Government collects from
royalties, rents, and bonus bids, increased economic activity
on Federal land will create jobs and boost economic output.
Farm security, rural investment programs, and the Fish and
Wildlife Service's Federal aid in wildlife restoration programs
are among the largest direct spending programs in this
category. The remaining funds are distributed among numerous
smaller programs. The direct spending budget totals for these
programs are $385 million in budget authority and $1.0 billion
in outlays for fiscal year 2018; over 10 years, the figures are
-$12.4 billion in budget authority and -$11.1 billion in
outlays. (See Function 300 in Table 3.)
Oil and gas production on Federal land fell significantly
under the Obama Administration, but the decline was more than
offset by increased production on private lands. In fiscal year
2009, the U.S. produced 5.6 million barrels of oil per day,
with production on Federal property accounting for 31 percent
of the total.\406\ By fiscal year 2015 (the most recent figures
available), the U.S. produced 9.4 million barrels per day, but
production on Federal lands represented only 21 percent of the
total.\407\
---------------------------------------------------------------------------
\406\Marc Humphries, U.S. Crude Oil and Natural Gas Production in
Federal and Non-Federal Areas, Congressional Research Service, 22 April
2016.
\407\Ibid.
---------------------------------------------------------------------------
Similarly, timber harvests on Federal land have declined
for decades since peaking in the late 1980s and early 1990s. In
fiscal year 1988, 14.6 million board feet of timber were
harvested on Federal land, with a total value of roughly $2.5
billion (in 2013 dollars).\408\ In fiscal year 2014 (again, the
most recent available figures), only 2.4 million board feet
were harvested, generating less than $150 million.\409\ This
dramatic reduction in economic activity in States and counties
that have Federal lands within their borders has wreaked havoc
on their ability to fund local services, such as schools.
---------------------------------------------------------------------------
\408\Katie Hoover, National Forest System Management: Overview,
Appropriations, and Issues for Congress, Congressional Research
Service, 29 January 2015.
\409\Ibid.
---------------------------------------------------------------------------
One large culprit: The previous administration kept Federal
lands under lock and key, while pressing its politically
motivated climate change agenda. On 15 January 2016, the Obama
Administration unilaterally imposed a moratorium on new leases
for coal mined from Federal land.\410\ This halt dealt another
crushing blow to the coal industry. Mining on Federal lands
accounts for 42 percent of the coal production in America, and
approximately 34 percent of U.S. coal reserves is located on
Federal lands.\411\ The Bureau of Land Management estimated
that nearly 1.9 billion tons of coal reserves in nine States
would be placed off limits due to the Secretarial Order.
---------------------------------------------------------------------------
\410\Joby Warrick and Juliet Eilperin, ``Obama Announces Moratorium
on New Federal Coal Leases,'' The Washington Post, 15 January 2016:
https://www.washingtonpost.com/news/energy-environment/wp/2016/01/14/
obama-administration-set-to-announce-moratorium-on-some-new-federal-
coal-leases/.
\411\Marc Humphries, The Federal Coal Leasing Moratorium,
Congressional Research Service, 30 March 2017.
---------------------------------------------------------------------------
Moreover, Federal coal leases provide thousands of jobs as
well as revenue for State and local communities. The moratorium
was rescinded by Secretary Zinke on 29 March 2017.\412\ This
budget supports the Trump Administration's efforts to reverse
the past eight years of Federal subjugation over domestic
energy production and the communities who were devastated by
former President Obama's Federal fiat. Domestic energy
independence is a priority for the United States, and will have
a far-reaching effect on not just the economy and American
jobs, but foreign policy and international affairs as well.
---------------------------------------------------------------------------
\412\U.S. Department of the Interior, ``Secretary Zinke Takes
Immediate Action to Advance American Energy Independence, 29 March
2017: https://www.doi.gov/pressreleases/secretary-zinke-takes-
immediate-action-advance-american-energy-independence.
---------------------------------------------------------------------------
The Federal Government owns ``somewhere between 635 million
and 640 million acres of land--almost a third of the United
States.''\413\ The government cannot properly manage all this
land and, as a result, Federal agencies struggle with a
maintenance backlog estimated at $17 billion to $22
billion.\414\ The budget resolution supports giving States and
localities more control over the resources within their
borders. This will lead to increased resource production and
regulatory efficiency, while allowing States and localities to
take advantage of the benefits of increased economic activity.
---------------------------------------------------------------------------
\413\House Committee on Natural Resources, Views and Estimates for
Fiscal Year 2018.
\414\Ibid.
---------------------------------------------------------------------------

Illustrative Direct Spending Options

As it develops policies in these areas, the Committee on
Natural Resources may wish to consider the factors above. Below
are options that could emerge from such consideration.

Maintaining Existing Land Resources. As noted, the Federal
Government already struggles with its $17-billion-to-$22-
billion maintenance backlog, but the Obama Administration
sought to acquire even more land. This budget keeps funding for
land acquisition under congressional oversight, giving States
and localities more control over the land and resources within
their borders.

Expand Access to Federal Land for Timber Harvest. Timber
harvest rates on Federal land have declined for nearly 30
years. As a result, the States and localities that depend on
their share of the receipts have been shortchanged the funding
they expected to receive to pay for schools and other local
priorities. Increased timber harvests will generate economic
growth in localities throughout the country, increase receipts
to the Federal Government, States, and localities, and reduce
the need for funding replacement programs, such as Secure Rural
Schools.

Expand Onshore and Offshore Natural Resource Production.
Despite the existence of abundant domestic resources, the
Federal Government has adopted policies that hinder American
production of oil and natural gas on Federal lands and in
Federal waters. Breaking free of future dependence on energy
supplies from countries whose interests differ from those of
the United States requires producing more energy at home.
Unlocking domestic energy supplies in a safe,
environmentally responsible manner will increase receipts from
bonus bids, rental payments, royalties, and fees. The budget
allows for greater access in areas such as Alaska, the Outer
Continental Shelf, the Gulf of Mexico, and the Intermountain
West.
Expanding the authority of the Department of the Interior
to allow for leasing of helium and other critical gases will
provide a new revenue stream for the United States and ensure a
consistent supply for the Nation's medical, military, and
technology industries.

OTHER DIRECT SPENDING

General Science, Space, and Technology

Almost all the government's science and technology funding
is discretionary. Nevertheless, there is a small amount of
direct spending within the National Science Foundation that
funds the Directorate for Education and Human Resources [EHR].
The EHR focuses on science, technology, engineering, and math
programs at all educational levels.
The resolution calls for $107 million in direct spending
budget authority and $105 million in outlays in fiscal year
2018.The 10-year totals are $1.0 billion for both budget
authority and outlays. The figures appear in Table 3, Function
250.

Community and Regional Development

The main direct spending component of this function
(Function 450 in Table 3) is the National Flood Insurance
Program [NFIP]. The NFIP reauthorization will expire 30
September 2017. The Committee on Financial Services says:
``[T]here is little to no private sector alternative to the
NFIP, exposing taxpayers to virtually all of the nation's
insured flood risk. Forty-nine years after the NFIP's creation,
given the dynamics of the market and the information now
available, the Committee believes the biggest impediment to the
development of a private flood insurance market is the
subsidized monopoly of the NFIP. The Committee will explore
legislative initiatives to facilitate the establishment of a
private flood insurance market that serves the needs of all
Americans and reduces the significant financial risk faced by
taxpayers.''\415\ In January 2017, the NFIP announced another
$1.6 billion is needed from taxpayers to cover flood insurance
losses in 2016. This brings the total cumulative debt of the
NFIP to $24.6 billion.
---------------------------------------------------------------------------
\415\Committee on Financial Services, U.S. House of
Representatives, Views and Estimates, 3 March 2017.
---------------------------------------------------------------------------
Other direct spending programs within the function include
activities such as Community Development Financial
Institutions, Rural Energy for America, the Bureau of Indian
Affairs and Indian Education, and activities of the Gulf Coast
Restoration Trust Fund. The resolution calls for -$767 million
in direct spending budget authority and -$975 million in
outlays in fiscal year 2018. The 10-year totals for direct
spending budget authority and outlays are -$10.7 billion and
-$10.3 billion, respectively.
A potential savings option here is to reduce energy
subsidies for commercial interests. The budget recommends
spending reductions for rural green-energy loan guarantees.
These loan guarantees come with Federal mandates that channel
private investments into financing the administration's
preferred interests at taxpayers' expense.

Financial Management

----------

The remaining categories chiefly concern major non-
programmatic financing mechanisms for the Federal Government.
Net Interest, for example, represents payments resulting from
the government's prior borrowing. Allowances is a placeholder
function for budgetary effects that the Congressional Budget
Office [CBO] has not yet assigned to other specific categories.
Undistributed Offsetting Receipts represents payments to the
government that are recorded as negative budget authority and
outlays. These three functions round out the spending
components of the budget overall.

NET INTEREST

Function Summary

As the government runs chronic deficits, it continues
running up interest costs. These payments provide no benefits,
and finance no government service or operations. They are
simply excess costs resulting from a history of spending beyond
the government's means. According to the Congressional Budget
Office, if government programs are not reformed, net interest
payments are projected to nearly triple over the next decade,
rising from $270 billion this year to $768 billion in 2027.
During this time, the Federal Government will reach a point at
which it spends more on interest payments than it does on
national defense, Medicaid, education, and infrastructure,
among others. Interest on the debt will become the government's
third largest program, following only Social Security and
Medicare.
These costs are reflected in this category (Function 900 in
Tables 1 and 3), which presents the interest paid for the
Federal Government's borrowing minus the interest received by
the Federal Government from trust fund investments and loans to
the public. It is a mandatory payment, in the true sense of the
word, with no policy options and no discretionary components.
Reducing interest costs will require sustained spending
restraint. This budget resolution provides such restraint, and
it reduces net interest by $628 billion over 10 years compared
with the CBO baseline.

Summary of Net Interest Payments

The resolution calls for $295.3 billion of direct spending
for net interest payments in fiscal year 2018. Over 10 years,
interest payments are expected to total $4.6 trillion.
On-budget direct spending--or net interest payments
unrelated to Social Security--sum to $376.8 billion in fiscal
year 2018 and $5.3 trillion over 10 years. The on-budget figure
is larger than the budget Function 900 total, because the
former is offset by off-budget interest payments to the Social
Security Trust Fund. These off-budget payments are presented as
negative numbers, because they reflect money coming into,
rather than flowing out of, the Treasury. Off-budget direct
spending is -$81.5 billion in fiscal year 2018 and -$669
billion over 10 years.

ALLOWANCES

Function Summary

The Allowances categories represent place-holders for
certain budgetary effects to which CBO has yet to assign to a
specific budget function. In the case of this resolution, there
are two presented as Function 920 and 990 in the summary
tables. The particulars of the categories are described below.

Function 920

In August 2011, the former President Obama and Congress
enacted the Budget Control Act [BCA] of 2011 (Public Law 112-
25), which provided for significant spending reductions,
enforced by statutory spending caps and an automatic
enforcement procedure. The BCA did not specify a distribution
of spending reductions in specific budget functions other than
for National Defense (Function 050) and Medicare (Function
570), even though the law does require reductions in non-
defense and non-Medicare areas of the budget. At the time of
its January 2017 baseline release, the Congressional Budget
Office did not provide forward-looking, function-level
information on what non-defense and non-Medicare reductions are
under the terms of the BCA. The CBO has, instead, assigned the
non-defense and non-Medicare reductions required by the BCA to
Function 920.
In Function 920, the budget resolution includes reductions
of $499.2 billion in budget authority and $450.8 billion in
outlays over 10-years to reflect the impact of the BCA on non-
defense and non-Medicare spending.

Function 990

The CBO baseline for Function 990 includes reductions of
$10.3 billion in budget authority and $9.7 billion in outlays
over 10 years, to reflect the impact of an across-the-board cut
contained in the fiscal year 2017 continuing resolution. The
budget resolution recommends no changes in this function,
leaving it instead at the CBO baseline levels.

UNDISTRIBUTED OFFSETTING RECEIPTS

Function Summary

Offsetting receipts to the Treasury are recorded in this
category as negative budget authority and outlays. Receipts
appearing here are either intra-budgetary (a payment from one
Federal agency to another, such as agency payments to the
retirement trust funds) or proprietary (a payment from the
public for some kind of business transaction with the
government). The main types of receipts presented are the
payments Federal agencies make to employee retirement and
health care funds; payments made by companies for the right to
explore and produce oil and gas on the Outer Continental Shelf;
and payments by those who bid for the right to buy or use
public property or resources, such as the electromagnetic
spectrum. The category also contains an off-budget component
that reflects the Federal Government's share of Social Security
contributions for Federal employees.
All transactions in this area are recorded as direct
spending and appear in Function 950 of Table 3. On a unified
basis, the resolution calls for -$100.5 billion in budget
authority and outlays in fiscal year 2018 (the minus sign
indicates receipts flowing into the Treasury). Over 10 years,
budget authority and outlays total -$1.2 trillion.
On-budget amounts are -$83.2 billion in budget authority
and outlays for fiscal year 2018, and -$1.0 trillion in budget
authority and outlays over 10 years.
Off-budget amounts are -$17.3 billion in budget authority
and outlays for fiscal year 2018, and -$200.0 billion in budget
authority and outlays over 10 years. The major program in the
off-budget category is Federal agency matching payments for
retirement contributions on behalf of Federal employees to the
Federal Old Age and Survivors and Disability Insurance Trust
Fund--or Social Security. The budget resolution recommends no
policy changes to the off-budget portion of Function 950.

Illustrative Policy Options

Federal Real-Property Sales and Management. The Federal
Government's management, maintenance, and ownership of real
property continues to plague the Nation's fiscal health. While
the General Services Administration [GSA] is the primary
authority tasked with managing this portfolio, the sheer size
of the government's real estate and property management
footprint is impossible to ascertain in real time. Adding to
the burden, the GSA is not equipped to manage this portfolio of
buildings, structures, and leases. As an agency, GSA lacks
significant authorities to rein in the desires of other
agencies and departments to continue leasing buildings and
other real estate when adequate federally owned property is
already available. The Federal real-property inventory is so
massive that the report accounting for it lags two years behind
the current budget year. Complex procedural requirements, lack
of organization, and delayed data reporting provide agencies
with few incentives to dispose of unneeded properties and even
fewer repercussions for holding onto these properties
indefinitely. Real-property management has been on the
Government Accountability Office's list of ``high risk''
government activities since 2003. According to the most recent
Federal Real Property Profile, from fiscal year 2015, the
Federal Government owns more than 273,000 buildings and 496,000
structures, with a total of over 2.8 billion square
footage.\416\
---------------------------------------------------------------------------
\416\General Services Administration, Summary of Fiscal Year 2015
Federal Real Property Profile Open Data Set: https://www.gsa.gov/
portal/getMediaData?mediaId=129426.
---------------------------------------------------------------------------
The government has a poor track record for real-estate
asset sales. The fiscal year 2015 report shows that of the
14,400 assets the Federal Government disposed of in that year,
2,369, or almost 20 percent, were disposed of by way of
demolition. Just more than 1 percent were disposed of through a
sale. Many assets were conveyed, or given away, at below-market
value or for free.\417\
---------------------------------------------------------------------------
\417\General Services Administration, FY2015 Federal Real Property
Profile (FRPP) Open Data Set: https://www.gsa.gov/portal/
getMediaData?mediaId=132270.
---------------------------------------------------------------------------
The House Committee on Oversight and Government Reform has
worked tirelessly to bring accountability, transparency, and
actionable solutions to fix the Federal real-property
portfolio. The ``Federal Property Management Reform Act of
2016'', which became law in December 2016, established a
Federal Real Property Council tasked with reforming the current
Federal property management system, and updating the current
practices that have been unable to provide accurate and up-to-
date metrics on the Federal Government's real estate
investments.\418\ Using these reforms as a foundation, the
resolution urges the Office of Management and Budget to
streamline the asset-sale process; loosen regulations for the
disposal and sale of Federal property to eliminate red tape and
waste; set enforceable targets for asset sales; and hold
government agencies accountable for the buildings they oversee
and leasing practices of non-governmental real estate. If these
actions are done correctly, the Federal Government could save
billions of dollars from selling unused government property and
realize savings from forcing agencies to utilize government
real property before entering into outside leases.
---------------------------------------------------------------------------
\418\Public Law 114-318.

Federal Land. Currently, the Federal Government owns nearly
650 million acres of land--almost 30 percent of the land area
of the United States. In addition to Federal real-property
sales, this resolution supports examining Federal lands, in
consultation with State and local communities, to identify
where certain lands may be more efficiently managed, thus
reducing the burden on the Federal government. Excluded from
this policy are National Parks, wilderness areas, wildlife
---------------------------------------------------------------------------
refuges, and wild and scenic rivers.

Reduce Strategic Petroleum Reserve Through Asset Sales. The
The Strategic Patroleum Reserve was created following the
energy crisis of 1973 when the Organization of Petroleum
Exporting Countries members proclaimed an oil embargo. Since
then the U.S. has significantly reduced its dependence on
overseas oil. Furthermore, the recent expansion of U.S. oil
supplies allows the Federal Government to safely draw down the
number of barrels it holds in reserve.

REVENUE AND TAX REFORM

----------

The U.S. tax code is notoriously complex, patently unfair,
and highly inefficient. Its complexity distorts decisions to
work, save, and invest, which leads to slower economic growth,
lower wages, and less job creation. This budget proposes to
address these problems with a reformed pro-growth tax code that
is simpler and fairer--one that cuts out confusion and lowers
rates for families and workers. A revamped tax code could raise
just as much revenue as does the system in place today, without
the harmful tax policies embedded in current law. A
restructured and more efficient tax code would also spark
greater economic growth and job creation. Congress and the
President have an opportunity to open the door for a tax code
that is among the most competitive in the world. That means
more businesses being able to choose to stay here in America,
rather than being driven by the tax code to move offshore.
The budget resolution's revenue projections--$3.542
trillion in fiscal year 2018 and $41.953 trillion through
2027--are built on a tax reform model derived from the
principles below.

The Challenge

The current tax code is needlessly complex. It is estimated
that individuals, families, and employers spend more than 8.9
billion hours and $409 billion a year trying to negotiate a
labyrinth of special rules, deductions, and tax schedules.\419\
Since 2001, there have been more than 5,800 changes made to the
tax code. Many of the major changes made over the years have
carved out special preferences, exclusions, or deductions for
various activities or groups. These tax breaks sum to roughly
$1.4 trillion per year (see the tax expenditures table that
follows this discussion).\420\ To put that figure in
perspective, the government collected about $1.5 trillion in
individual income taxes last year.
---------------------------------------------------------------------------
\419\The Speaker's Tax Reform Task Force, A Better Way: Our Vision
for a Confident America--Tax, 24 June 2016.
\420\National Taxpayer Advocate, Annual Report To Congress 2016.
---------------------------------------------------------------------------
As the tax code has grown in complexity, the Internal
Revenue Service [IRS] has increased its funding requests to
support an army of tax examiners and agents. To cite just one
example, the Treasury Department requested more than $402
million in fiscal year 2017 simply to administer the tax
elements of the Affordable Care Act. Ways and Means Committee
Chairman Kevin Brady (R-TX) envisions that, under the House's A
Better Way tax reform proposal, most Americans will be able to
do their own taxes on a simple form, roughly the size of a
postcard. The plan also redesigns the IRS to have a single
focus--customer service.
The large amount of tax preferences that pervade the code
end up narrowing the tax base. A narrow tax base requires much
higher tax rates to raise a given amount of revenue. Standard
economic theory shows that high marginal tax rates dampen
incentives to work, save, and invest, which reduces economic
output and job creation. Lower economic output, in turn, drains
off the intended revenue gain from higher marginal tax rates.
The top tax rate has risen and fallen dramatically
throughout U.S. history, with little effect on tax revenue as a
share of the economy. For instance, the top U.S. tax rate for
individuals has been as high as 90 percent and as low as 28
percent. Income tax revenue has remained fairly steady, despite
these sharp rate swings. It turns out that the biggest driver
of Federal revenue is not higher tax rates, but economic
growth. A sizable majority of economists point out that a broad
base and low rates are key in a tax system that fosters
economic growth and competitiveness. Legislators on both sides
of the aisle agree on this basic principle.
One hallmark of the U.S. economy is the role of smaller,
unincorporated businesses. Roughly half of U.S. active business
income and half of private sector employment are derived from
business entities (such as partnerships, S corporations, and
sole proprietorships) that are taxed on a ``pass-through''
basis. This means income derived from a business is passed
through to the business owner, who pays taxes on it at the
individual income tax rate. Small businesses, in particular,
tend to choose this form for Federal tax purposes, and the top
effective Federal tax rate on such small business income can
reach nearly 45 percent. For these reasons, sound economic
policy requires lowering marginal rates on these pass-through
entities.
The U.S. has the highest corporate income tax rate in the
industrialized world, at 35 percent, not including State and
local taxes. The tax itself raises relatively little revenue:
only about 10 percent of total Federal tax revenue comes from
taxing corporate income. Furthermore, corporate income is taxed
twice: first at the corporate entity level, as it is earned,
and also at the shareholder level, when corporations distribute
earnings. The current tax structure discourages investment and
job creation, distorts business activity, and puts American
businesses at a competitive disadvantage against foreign
competitors. Policymakers should consider options to limit
double taxation when comprehensive tax reform is considered.
Any tax that raises little revenue, yet creates many economic
distortions is particularly ripe for reform.
A high corporate tax rate hinders American competitiveness
by making the U.S. a less desirable destination for investment
and jobs. Decisions about where to locate a business and make
investments are becoming more sensitive to country tax rates,
as global integration increases. Foreign investment is
important to an economy, because it is a key source of funding
to finance innovation and jobs. Many countries have been
lowering their business tax rates to increase their
competitiveness. The U.S. continues to risk falling behind as
it maintains a high tax rate while other countries lower
theirs. The U.S. corporate tax constrains economic growth and
job creation, because it deters potential investment. Also, the
U.S. tax rate differential with other countries fosters a
variety of complicated multinational corporate behaviors
intended to avoid the tax--profit shifting, corporate
inversions, and transfer pricing--which have the effect of
moving the tax base offshore, destroying American jobs, and
decreasing corporate revenue.
The structure of U.S. international taxation is also out of
sync with the international standard used by the majority of
other countries, putting U.S. businesses operating abroad at a
competitive disadvantage. Most countries operate under a so-
called ``territorial'' system of international taxation,
whereby their businesses operating abroad are only subject to
the tax of the country where they do business. The U.S. has an
antiquated ``worldwide'' system of international taxation, in
which U.S. multinational businesses operating abroad pay both
the foreign-country tax and U.S. corporate taxes when profits
are repatriated. They are essentially taxed twice. This puts
them at an obvious competitive disadvantage.
Reforming the U.S. tax code to an international system
would boost the competitiveness of U.S. companies operating
abroad and would also reduce incentives for tax avoidance.

Solution: Pro-Growth Tax Reform

Given the many problems with the current system, Congress
should enact legislation that provides for a comprehensive
reform of the U.S. tax code to promote economic growth, create
American jobs, and increase wages. While the Committee on Ways
and Means continues to develop specific policies, these aims
can be achieved through revenue-neutral, fundamental tax reform
that does the following:

LSimplifies the tax code to make it fairer to
American families and businesses and reduces the amount of time
and resources necessary to comply with tax laws;

LLowers tax rates for individuals, and
consolidates the current seven individual income tax brackets;

LRepeals the Alternative Minimum Tax;

LReduces the corporate tax rate; and

LTransitions the tax code from a ``worldwide''
system to a ``territorial'' system.

Economists have shown that lowering overall rates and
broadening the tax base would create greater economic growth
and support more job creation by the private sector. A faster-
growing economy would help reduce the budget deficit. According
to the Congressional Budget Office [CBO], raising productivity
growth by just 0.1 percentage point per year would reduce the
deficit by $273 billion over the next decade.
This resolution calls for comprehensive tax reform and lays
out several principles. As indicated, there are many good ideas
on this front--growth-oriented tax plans that could strengthen
the economy and support the Nation's spending priorities.
For instance, Representative Rob Woodall (R-GA) has a plan
that would eliminate taxes on wages, corporations, self-
employment, and capital gains in favor of a personal
consumption tax providing the economic certainty that American
businesses, entrepreneurs, and taxpayers desire. The plan also
eliminates the gift and death taxes.
Representative Bob Goodlatte (R-VA) has also submitted
legislation establishing a structure for a tax system that
encourages job creation and a healthy economy. Without
prescribing any specific tax system, it calls for a low tax
rate for all Americans, tax relief for working individuals,
protection for the rights of taxpayers, and a reduction in tax
collection abuses. Additionally, under this legislation, the
tax system would support savings and investment, and would not
penalize marriage or families.
It is no secret that Washington has a spending problem, not
a revenue problem. The tax expenditure table below shows just
how complex the current tax code is--offering preferential tax
treatment in the form of credits, deductions and exclusions to
various categories of industries and individuals. The Joint
Committee on Taxation estimates this spending through the tax
code to cost the Federal Government $1.6 trillion in 2017.
CBO projects Federal revenue will exceed 18.0 percent of
gross domestic product throughout the next decade, well above
the 17.4-percent average annual level of the past half century.
Nevertheless, spending will persistently outpace revenue,
producing chronic and growing deficits. This is primarily due
to the growing costs of health and retirement benefits.
Therefore, Congress should reject proposals that seek to raise
revenue with the introduction of a new and additional tax to
finance out of control spending. Such proposals would
discourage savings and investment and increase the costs of
individual, family, and employee retirement accounts. The focus
should be on restraining spending.
One way to relieve the ever-increasing burden of automatic
spending is to encourage individuals and families to save.
Maintaining and strengthening the critical role of the private
sector in helping all Americans achieve retirement security is
important. Tax reform that encourages taxpayers to save is pro-
growth economic policy that would consequently enable
individuals and families to rely less on the Federal
Government.
Congress should consider these and the full range of pro-
growth plans as it moves toward implementing the tax reform
called for under this budget.

TABLE 8.--TAX EXPENDITURE ESTIMATES BY BUDGET FUNCTION, FISCAL YEARS 2016-2020\1\
[Billions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Corporations Individuals
Function ------------------------------------------------------------------------------------------ Total
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 2016-20
--------------------------------------------------------------------------------------------------------------------------------------------------------
National Defense:
Exclusion of benefits and allowances to armed ....... ....... ....... ....... ....... 5.5 5.6 6.1 6.4 6.5 30.1
forces personnel.................................
Exclusion of military disability benefits......... ....... ....... ....... ....... ....... 0.3 0.3 0.3 0.3 0.3 1.3
Deduction for overnight-travel expenses of ....... ....... ....... ....... ....... 0.1 0.1 0.1 0.1 0.1 0.5
national guard and reserve members...............
Exclusion of combat pay........................... ....... ....... ....... ....... ....... 1.2 1.3 1.4 1.4 1.4 6.7
International Affairs:
Exclusion of certain allowances for Federal ....... ....... ....... ....... ....... 1.3 1.3 1.4 1.4 1.5 6.8
employees abroad.................................
Exclusion of foreign earned income:
Housing......................................... ....... ....... ....... ....... ....... 1.1 1.2 1.2 1.2 1.2 5.9
Salary.......................................... ....... ....... ....... ....... ....... 6.6 7.0 7.5 8.0 8.5 37.6
Inventory property sales source rule exception.... 1.7 1.8 1.8 1.8 1.8 ....... ....... ....... ....... ....... 8.9
Deduction for foreign taxes instead of a credit... 0.3 0.3 0.3 0.3 0.3 ....... ....... ....... ....... ....... 1.5
Interest expense allocation:
Unavailability of symmetric worldwide method*... -1.2 -1.2 -1.2 -1.1 -1.1 ....... ....... ....... ....... ....... -5.8
Separate grouping of affiliated financial 0.4 0.4 0.4 0.4 0.5 ....... ....... ....... ....... ....... 2.1
companies......................................
Apportionment of research and development expenses 0.1 0.2 0.2 0.2 0.3 ....... ....... ....... ....... ....... 1.0
for determination of foreign tax credits.........
Special rules for interest-charge domestic 0.9 0.9 1.0 1.0 1.0 ....... ....... ....... ....... ....... 4.8
international sales corporations.................
Tonnage tax....................................... 0.1 0.1 0.1 0.1 0.1 ....... ....... ....... ....... ....... 0.5
Deferral of active income of controlled foreign 102.7 119.0 121.8 120.5 123.1 ....... ....... ....... ....... ....... 587.2
corporations.....................................
Deferral of active financing income............... 9.1 9.4 9.7 9.9 10.3 ....... ....... ....... ....... ....... 48.5
General Science, Space, and Technology:
Credit for increasing research activities (Code 9.4 9.8 10.3 10.9 11.4 1.0 1.0 1.1 1.2 1.3 57.5
section 41)......................................
Expensing of research and experimental 2.0 2.0 2.0 2.0 2.0 0.1 0.1 0.1 0.1 0.1 11.0
expenditures.....................................
Therapeutic research credit....................... 0.1 0.1 ....... ....... ....... 0.1 0.1 ....... ....... ....... 0.5
Energy:
Credit for energy-efficient improvements to ....... ....... ....... ....... ....... 0.5 0.4 ....... ....... ....... 0.9
existing homes...................................
Credit for holders of clean renewable energy bonds (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) 0.1 0.1 0.1 0.6
(Code sections 54 and 54C)\2,3\..................
Exclusion of energy conservation subsidies ....... ....... ....... ....... ....... (\4\) (\4\) (\4\) (\4\) (\4\) 0.1
provided by public utilities.....................
Credit for holders of qualified energy ....... ....... ....... ....... ....... (\4\) (\4\) (\4\) (\4\) (\4\) 0.3
conservation bonds\2,3\..........................
Energy credit (section 48)........................ 2.3 2.5 2.5 2.5 2.7 0.3 0.2 0.1 0.1 0.1 13.6
Solar........................................... 2.2 2.4 2.4 2.4 2.6 0.2 0.2 0.1 0.1 0.1 12.3
Geothermal...................................... (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\)
Fuel Cells...................................... (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\)
Microturbines................................... (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\)
Combined heat and power......................... (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\)
Small wind...................................... (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\)
Geothermal heat pump systems.................... (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\)
Credits for electricity production from renewable
resources (section 45):..........................
Wind............................................ 3.1 4.0 4.8 5.2 5.4 0.2 0.2 0.3 0.3 0.3 23.7
Closed-loop biomass............................. (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) 0.1
Geothermal...................................... (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) 0.1
Qualified hydropower............................ (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) 0.1
Small irrigation power.......................... (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) 0.1
Municipal solid waste........................... (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) 0.4
Open-loop biomass............................... 0.1 0.2 0.2 0.3 0.3 (\4\) (\4\) (\4\) (\4\) (\4\) 1.2
Special rule to implement electric transmission -0.2 -0.2 -0.2 -0.2 -0.2 ....... ....... ....... ....... ....... -1.0
restructuring....................................
Credits for investments in clean coal facilities.. 0.2 0.2 0.2 0.2 0.2 ....... ....... ....... ....... ....... 1.0
Coal production credits:
Refined coal.................................... (\4\) (\4\) (\4\) (\4\) (\4\) ....... ....... ....... ....... ....... 0.1
Indian coal..................................... (\4\) (\4\) (\4\) (\4\) (\4\) ....... ....... ....... ....... ....... 0.1
Credits for alternative technology vehicles:
Other alternative fuel vehicles................. (\4\) (\4\) (\4\) (\4\) (\4\) ....... ....... ....... ....... ....... 0.1
Residential energy-efficient property credit...... ....... ....... ....... ....... ....... 1.1 1.0 0.4 0.4 0.4 3.2
Credit for plug-in electric vehicles.............. 0.2 0.3 0.3 0.4 0.4 0.1 0.4 0.5 0.5 0.6 4.4
Credit for investment in advanced energy property. 0.2 0.2 0.1 0.1 (\4\) 0.1 0.1 0.1 0.1 0.1 0.8
Exclusion of interest on State and local (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) 0.7
government qualified private activity bonds for
energy production facilities.....................
Expensing of exploration and development costs,
fuels:
Oil and gas..................................... 1.4 1.2 1.1 1.0 0.9 0.4 0.4 0.4 0.3 0.3 7.4
Other fuels..................................... (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) 0.6
Excess of percentage over cost depletion, fuels:
Oil and gas..................................... 0.7 0.8 0.9 0.9 1.0 (\4\) (\4\) (\4\) (\4\) (\4\) 4.3
Other fuels..................................... 0.2 0.2 0.2 0.1 0.1 (\4\) (\4\) (\4\) (\4\) (\4\) 0.9
Amortization of geological and geophysical 0.1 0.1 0.1 0.1 0.1 (\4\) (\4\) (\4\) (\4\) (\4\) 0.6
expenditures associated with oil and gas
exploration......................................
Amortization of air pollution control facilities.. 0.5 0.8 0.9 1.0 1.0 ....... ....... ....... ....... ....... 4.2
Depreciation recovery periods for energy-specific
items:
Five-year MACRS for certain energy property 0.2 0.2 0.2 0.2 0.6 0.1 0.1 0.1 0.1 0.2 2.0
(solar, wind, etc.)............................
10-year MACRS for smart electric distribution 0.1 0.1 0.1 0.1 0.1 ....... ....... ....... ....... ....... 0.5
property.......................................
15-year MACRS for certain electric transmission 0.1 0.1 0.1 0.1 0.1 ....... ....... ....... ....... ....... 0.5
property.......................................
15-year MACRS for natural gas distribution line. 0.2 0.2 0.2 0.1 0.1 ....... ....... ....... ....... ....... 0.8
Exceptions for publicly traded partnership with ....... ....... ....... ....... ....... 0.9 1.0 1.0 1.0 1.0 4.9
qualified income derived from certain energy-
related activities...............................
Natural Resources and Environment:
Special depreciation allowance for certain reuse (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) 0.1
and recycling property...........................
Expensing of exploration and development costs, 0.1 0.1 0.1 0.1 0.1 (\4\) (\4\) (\4\) (\4\) (\4\) 0.5
nonfuel minerals.................................
Excess of percentage over cost depletion, nonfuel 0.1 0.1 0.1 0.1 0.1 (\4\) (\4\) (\4\) (\4\) (\4\) 0.5
minerals.........................................
Expensing of timber-growing costs................. 0.3 0.3 0.3 0.3 0.3 (\4\) (\4\) (\4\) (\4\) (\4\) 1.6
Special rules for mining reclamation reserves..... (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) 0.2
Special tax rate for nuclear decommissioning 0.2 0.3 0.3 0.3 0.3 ....... ....... ....... ....... ....... 1.4
reserve funds....................................
Exclusion of contributions in aid of construction (\4\) (\4\) (\4\) (\4\) (\4\) ....... ....... ....... ....... ....... 0.2
for water and sewer utilities....................
Exclusion of earnings of certain environmental (\4\) (\4\) (\4\) (\4\) (\4\) ....... ....... ....... ....... ....... 0.1
settlement funds.................................
Amortization and expensing of reforestation 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.2 0.2 1.3
expenditures.....................................
Capital gains treatment for qualified timber ....... ....... ....... ....... ....... 0.3 0.4 0.4 0.4 0.4 1.9
income (including coal and iron ore).............
Treatment of income from exploration and mining of ....... ....... ....... ....... ....... 0.1 0.1 0.1 0.1 0.1 0.5
natural resources as qualifying income under the
publicly-traded partnership rules................
Agriculture:
Expensing of soil and water conservation (\4\) (\4\) (\4\) (\4\) (\4\) 0.1 0.1 0.1 0.1 0.1 0.6
expenditures.....................................
Expensing of the costs of raising dairy and (\4\) (\4\) (\4\) (\4\) (\4\) 0.2 0.1 (\4\) (\4\) (\4\) 0.4
breeding cattle..................................
Exclusion of cost-sharing payments................ (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) 0.1
Exclusion of cancellation of indebtedness income ....... ....... ....... ....... ....... 0.1 0.1 0.1 0.1 0.1 0.5
of farmers.......................................
Income averaging for farmers and fishermen........ ....... ....... ....... ....... ....... 0.2 0.2 0.2 0.2 0.2 1.0
Five-year carryback period for net operating (\4\) (\4\) (\4\) (\4\) (\4\) 0.1 0.1 0.1 0.1 0.1 0.4
losses attributable to farming...................
Expensing by farmers for fertilizer and soil (\4\) (\4\) (\4\) (\4\) 0.1 0.1 0.1 0.1 0.1 0.2 0.9
conditioner costs................................
Cash accounting for agriculture................... (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) 0.1
Commerce and Housing:
Housing:
Deduction for mortgage interest on owner- ....... ....... ....... ....... ....... 59.0 63.6 72.4 78.7 83.4 357.0
occupied residences............................
Exclusion of income attributable to the ....... ....... ....... ....... ....... 2.3 1.2 ....... ....... ....... 3.5
discharge of principal residence acquisition
indebtedness...................................
Deduction for premiums for qualified mortgage ....... ....... ....... ....... ....... 1.0 0.8 ....... ....... ....... 1.7
insurance......................................
Deduction for property taxes on real property... ....... ....... ....... ....... ....... 31.2 33.3 36.4 38.5 40.5 180.0
Exclusion of capital gains on sales of principal ....... ....... ....... ....... ....... 29.2 32.1 33.4 34.9 36.8 166.3
residences.....................................
Exclusion of interest on State and local 0.4 0.4 0.4 0.4 0.4 0.9 1.0 1.0 1.1 1.1 7.1
government qualified private activity bonds for
owner-occupied housing\5\......................
Credit for low-income housing................... 7.9 8.2 8.6 9.0 9.6 0.3 0.3 0.4 0.4 0.4 45.1
Credit for rehabilitation of historic structures 0.7 0.7 0.8 0.8 0.9 0.2 0.2 0.2 0.2 0.2 4.8
Credit for rehabilitation of structures, other (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) 0.1 0.1 0.1 0.3
than historic structures.......................
Exclusion of interest on State and local 0.3 0.3 0.3 0.3 0.3 0.7 0.8 0.8 0.9 0.9 5.6
government qualified private activity bonds for
rental housing.................................
Depreciation of rental housing in excess of 0.4 0.4 0.4 0.4 0.4 4.0 3.8 3.7 3.6 3.5 20.7
alternative depreciation system................
Other business and commerce:
Exclusion of interest on State and local 0.1 0.1 0.1 0.1 0.1 0.3 0.3 0.3 0.3 0.4 2.2
government small-issue qualified private
activity bonds.................................
Carryover basis of capital gains on gifts....... ....... ....... ....... ....... ....... 2.5 2.0 3.2 4.5 4.9 17.0
Deferral of gain on non-dealer installment sales 6.8 6.7 6.7 6.7 6.7 1.7 1.4 1.2 1.2 1.2 40.3
Deferral of gain on like-kind exchanges......... 11.1 11.4 11.7 12.2 12.7 5.9 6.0 6.2 6.4 6.6 90.2
Expensing under section 179 of depreciable 34.2 24.1 17.9 12.9 8.2 53.0 37.4 27.8 20.0 12.7 248.2
business property..............................
Amortization of business startup costs.......... (\4\) (\4\) (\4\) (\4\) 0.1 (\4\) (\4\) (\4\) 0.1 0.1 0.4
Reduced rates on first $10,000,000 of corporate 3.0 3.1 3.1 3.3 3.4 ....... ....... ....... ....... ....... 15.9
taxable income.................................
Exemptions from imputed interest rules.......... (\4\) (\4\) (\4\) (\4\) (\4\) 0.6 0.7 0.7 0.7 0.8 3.5
Expensing of magazine circulation expenditures.. 0.2 (\4\) (\4\) (\4\) (\4\) 0.1 (\4\) (\4\) (\4\) (\4\) 0.3
Special rules for magazine, paperback book, and (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) 0.2
record returns.................................
Completed contract rules........................ 0.9 0.9 1.0 1.0 1.1 0.1 0.1 0.1 0.1 0.1 5.5
Cash accounting, other than agriculture......... 0.3 0.3 0.3 0.3 0.3 1.9 1.9 2.0 2.0 2.1 11.5
Credit for employer-paid FICA taxes on tips..... 0.5 0.5 0.5 0.5 0.6 1.0 1.0 1.0 1.1 1.1 7.8
Deduction for income attributable to domestic 14.5 14.6 14.7 14.9 15.3 5.5 5.5 5.6 5.7 5.8 102.1
production activities..........................
Credit for the cost of carrying tax-paid (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) 0.1
distilled spirits in wholesale inventories.....
Reduced rates of tax on dividends and long-term ....... ....... ....... ....... ....... 130.9 133.6 135.9 137.3 139.9 677.7
capital gains..................................
Surtax on net investment income*................ ....... ....... ....... ....... ....... -28.4 -29.3 -30.3 -31.1 -32.5 -151.6
Exclusion of capital gains at death............. ....... ....... ....... ....... ....... 32.9 33.8 35.6 37.7 39.6 179.4
Expensing of costs to remove architectural and (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) 0.1
transportation barriers to the handicapped and
elderly........................................
Exclusion for gain from certain small business ....... ....... ....... ....... ....... 1.1 1.2 1.3 1.3 1.3 6.2
stock..........................................
Distributions in redemption of stock to pay ....... ....... ....... ....... ....... (\4\) (\4\) (\4\) 0.1 0.1 0.2
various taxes imposed at death.................
Exclusion from UBTI of certain payments to (\4\) (\4\) (\4\) (\4\) (\4\) ....... ....... ....... ....... ....... 0.1
controlling exempt organizations...............
Inventory methods and valuation:
Last in first out............................. 1.3 1.4 0.1 1.4 1.4 0.2 0.2 0.2 0.2 0.3 8.1
Lower of cost or market....................... 0.1 0.1 0.1 0.1 0.1 (\4\) (\4\) (\4\) (\4\) (\4\) 0.4
Specific identification for homogeneous (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) 0.1
products.....................................
Exclusion of gain or loss on sale or exchange of (\4\) (\4\) (\4\) (\4\) (\4\) ....... ....... ....... ....... ....... 0.1
brownfield property............................
Income recognition rule for gain or loss from (\4\) (\4\) (\4\) (\4\) (\4\) 1.0 1.0 1.0 1.1 1.1 5.4
section 1256 contracts.........................
Net alternative minimum tax attributable to net -0.5 -0.5 -0.5 -0.5 -0.5 -0.1 -0.1 -0.1 -0.1 -0.1 -3.0
operating loss limitation*.....................
Exclusion of interest on State and local (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) 0.1
qualified private activity bonds for green
buildings and sustainable design projects......
Depreciation of buildings other than rental 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 2.1
housing in excess of alternative depreciation
system.........................................
Depreciation of equipment in excess of the 17.3 25.1 17.6 7.6 -21.1 7.1 10.3 7.2 3.1 -8.6 65.7
alternative depreciation system\6\.............
Financial institutions:
Exemption of credit union income.................. 2.6 2.7 2.9 3.0 3.2 ....... ....... ....... ....... ....... 14.4
Insurance companies:
Small life insurance company taxable income (\4\) (\4\) (\4\) (\4\) (\4\) ....... ....... ....... ....... ....... 0.0
adjustment.....................................
Special treatment of life insurance company 3.2 3.3 3.3 3.3 3.4 ....... ....... ....... ....... ....... 16.5
reserves.......................................
Special deduction for Blue Cross and Blue Shield 0.4 0.4 0.4 0.5 0.5 ....... ....... ....... ....... ....... 2.2
companies......................................
Tax-exempt status and election to be taxed only 0.1 0.1 0.1 0.1 0.1 ....... ....... ....... ....... ....... 0.5
on investment income for certain small property
and casualty insurance companies...............
Interest rate and discounting period assumptions 2.4 2.6 2.6 2.6 2.6 ....... ....... ....... ....... ....... 12.8
for reserves of property and casualty insurance
companies......................................
Proration for property and casualty insurance 0.4 0.4 0.4 0.4 0.5 ....... ....... ....... ....... ....... 2.1
companies......................................
Transportation:
Exclusion of employer-paid transportation benefits ....... ....... ....... ....... ....... 5.1 5.3 5.4 5.6 5.7 27.2
(parking, van pools, and transit passes).........
Deferral of tax on capital construction funds of 0.1 0.1 0.1 0.1 0.1 ....... ....... ....... ....... ....... 0.5
shipping companies...............................
Exclusion of interest on State and local (\4\) (\4\) 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.7
government qualified private activity bonds for
highway projects and rail-truck transfer
facilities.......................................
Exclusion of interest on State and local (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) 0.1
government qualified private activity bonds for
high-speed intercity rail facilities.............
Exclusion of interest on State and local 0.3 0.3 0.3 0.3 0.3 0.7 0.7 0.7 0.8 0.8 5.1
government qualified private activity bonds for
private airports, docks, and mass-commuting
facilities.......................................
Provide a 50 percent tax credit for certain 0.2 0.1 ....... ....... ....... ....... ....... ....... ....... ....... 0.2
expenditures for maintaining railroad tracks.....
Community and Regional Development:
Empowerment zone tax incentives................... 0.2 0.1 (\4\) (\4\) (\4\) 0.1 0.1 (\4\) (\4\) (\4\) 0.4
New markets tax credit............................ 1.2 1.2 1.2 1.2 1.1 (\4\) (\4\) (\4\) (\4\) (\4\) 5.9
District of Columbia tax incentives............... (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\)
Credit for Indian reservation employment.......... (\4\) (\4\) ....... ....... ....... (\4\) (\4\) ....... ....... ....... 0.1
Exclusion of interest on State and local 0.1 0.1 0.1 0.1 0.1 0.3 0.4 0.4 0.4 0.4 2.5
government qualified private activity bonds for
sewage, water, and hazardous waste facilities....
Recovery zone economic development bonds\2,3\..... (\4\) (\4\) (\4\) (\4\) (\4\) 0.2 0.2 0.2 0.2 0.2 0.9
Eliminate requirement that financial institutions 0.5 0.5 0.5 0.5 0.5 ....... ....... ....... ....... ....... 2.6
allocate interest expense attributable to tax-
exempt interest..................................
Disaster Relief:
National disaster relief........................
[Estimate contained in other provisions]
Education, Training, Employment, and Social
Services:
Education and training:
Deduction for interest on student loans......... ....... ....... ....... ....... ....... 2.2 2.3 2.4 2.5 2.6 11.9
Exclusion of earnings of Coverdell education ....... ....... ....... ....... ....... 0.1 0.1 0.1 0.1 0.1 0.5
savings accounts...............................
Exclusion of scholarship and fellowship income.. ....... ....... ....... ....... ....... 3.5 3.7 3.9 4.1 4.4 19.5
Exclusion of income attributable to the ....... ....... ....... ....... ....... 0.2 0.2 0.2 0.2 0.2 0.9
discharge of certain student loan debt and NHSC
and certain State educational loan repayments..
Exclusion of employer-provided education ....... ....... ....... ....... ....... 1.2 1.2 1.3 1.3 1.3 6.3
assistance benefits............................
Exclusion of employer-provided tuition reduction ....... ....... ....... ....... ....... 0.3 0.3 0.3 0.3 0.3 1.6
benefits.......................................
Parental personal exemption for students aged 19 ....... ....... ....... ....... ....... 4.3 4.5 4.5 4.7 4.9 23.0
to 23..........................................
Exclusion of interest on State and local 0.2 0.2 0.2 0.2 0.2 0.4 0.4 0.5 0.5 0.5 3.1
government qualified private activity bonds for
student loans..................................
Exclusion of interest on State and local 1.0 1.0 1.0 1.1 1.1 2.6 2.8 2.9 3.1 3.2 19.8
government qualified private activity bonds for
private nonprofit and qualified public
educational facilities.........................
Credit for holders of qualified zone academy 0.2 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.1 1.5
bonds\2,3\.....................................
Deduction for higher education expenses......... ....... ....... ....... ....... ....... 0.4 0.1 ....... ....... ....... 0.5
Deduction for teacher classroom expenses........ ....... ....... ....... ....... ....... 0.2 0.2 0.2 0.2 0.3 1.2
Deduction for charitable contributions to 0.9 0.9 0.9 1.0 1.0 9.3 9.6 9.9 10.2 10.5 54.2
educational institutions.......................
Credits for tuition for post-secondary ....... ....... ....... ....... ....... 18.4 19.6 20.0 20.0 20.1 98.2
education\3\...................................
Exclusion of tax on earnings of qualified
tuition programs:..............................
Prepaid tuition programs........................ ....... ....... ....... ....... ....... ....... ....... 0.1 0.1 0.1 0.2
Savings account programs........................ ....... ....... ....... ....... ....... 0.7 1.0 1.1 1.3 1.4 5.5
Qualified school construction bonds\2,3\........ (\4\) (\4\) (\4\) (\4\) (\4\) 1.1 1.2 1.3 1.4 1.5 6.5
Employment:
Exclusion of employee meals and lodging (other ....... ....... ....... ....... ....... 3.0 3.1 3.2 3.3 3.5 16.1
than military).................................
Exclusion of benefits provided under cafeteria ....... ....... ....... ....... ....... 31.3 32.8 33.9 34.7 36.0 168.8
plans\7\.......................................
Exclusion of housing allowances for ministers... ....... ....... ....... ....... ....... 0.8 0.8 0.8 0.8 0.8 4.1
Exclusion of miscellaneous fringe benefits...... ....... ....... ....... ....... ....... 7.7 7.8 8.0 8.2 8.4 40.2
Exclusion of employee awards.................... ....... ....... ....... ....... ....... 0.3 0.4 0.4 0.4 0.4 1.9
Exclusion of income earned by voluntary ....... ....... ....... ....... ....... 2.5 2.5 2.6 2.7 2.8 13.1
employees' beneficiary associations............
Special tax provisions for employee stock 1.4 1.4 1.5 1.5 1.5 1.6 1.6 1.6 1.7 1.7 15.5
ownership plans (ESOPs)........................
Deferral of taxation on spread on acquisition of -1.1 -1.2 -1.2 -1.2 -1.3 0.4 0.3 0.3 0.3 0.3 -4.5
stock under incentive stock option plans*......
Deferral of taxation on spread on employee stock -0.2 -0.2 -0.2 -0.2 -0.2 (\4\) (\4\) 0.1 0.1 0.1 -0.7
purchase plans*................................
Disallowance of deduction for excess parachute -0.3 -0.3 -0.3 -0.3 -0.3 ....... ....... ....... ....... ....... -1.4
payments (applicable if payments to a
disqualified individual are contingent on a
change of control of a corporation and are
equal to or greater than three times the
individual's annualized includible
compensation)\8\*..............................
Limits on deductible compensation\8\*........... -0.7 -0.8 -0.9 -1.0 -1.0 ....... ....... ....... ....... ....... -4.3
Work opportunity tax credit..................... 1.4 1.6 1.7 1.8 1.1 0.1 0.1 0.1 0.1 0.1 8.2
Social services:
Credit for children under age 17\3\............. ....... ....... ....... ....... ....... 55.0 54.6 54.2 53.6 53.1 270.5
Credit for child and dependent care and ....... ....... ....... ....... ....... 4.2 4.3 4.4 4.4 4.5 21.7
exclusion of employer-provided child care\3,9\.
Credit for employer-provided dependent care..... (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) 0.1
Exclusion of certain foster care payments....... ....... ....... ....... ....... ....... 0.4 0.4 0.4 0.5 0.5 2.2
Adoption credit and employee adoption benefits ....... ....... ....... ....... ....... 0.3 0.3 0.4 0.4 0.4 1.8
exclusion......................................
Deduction for charitable contributions, other 1.9 2.0 2.0 2.1 2.1 41.5 42.8 44.1 45.2 46.6 230.5
than for education and health\10\..............
Credit for disabled access expenditures......... (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) 0.3
Health:
Exclusion of employer contributions for health ....... ....... ....... ....... ....... 155.3 164.7 173.0 180.6 189.5 863.1
care, health insurance premiums, and long-term
care insurance premiums\11\......................
Exclusion of medical care and TRICARE medical ....... ....... ....... ....... ....... 2.7 2.9 3.0 3.1 3.3 15.0
insurance for military dependents, retirees, and
retiree dependents not enrolled in Medicare......
Exclusion of health insurance benefits for ....... ....... ....... ....... ....... 0.9 1.0 1.0 1.1 1.2 5.2
military retirees and retiree dependents enrolled
in Medicare......................................
Deduction for health insurance premiums and long- ....... ....... ....... ....... ....... 5.7 5.9 6.4 6.8 6.4 31.2
term care insurance premiums by the self-employed
Deduction for medical expenses and long-term care ....... ....... ....... ....... ....... 10.0 10.1 10.9 12.1 13.4 56.6
expenses.........................................
Exclusion of workers' compensation benefits ....... ....... ....... ....... ....... 5.0 5.1 5.2 5.3 5.4 26.1
(medical benefits)...............................
Health savings accounts........................... ....... ....... ....... ....... ....... 2.2 2.5 2.9 3.4 4.0 15.0
Exclusion of interest on State and local 0.7 0.7 0.7 0.7 0.7 1.8 1.9 2.0 2.1 2.2 13.5
government qualified private activity bonds for
private nonprofit hospital facilities............
Deduction for charitable contributions to health 1.1 1.1 1.1 1.1 1.2 4.4 4.5 4.6 4.7 4.9 28.7
organizations....................................
Credit for purchase of health insurance by certain ....... ....... ....... ....... ....... (\4\) (\4\) (\4\) (\4\) (\4\) 0.2
displaced persons\3\.............................
Credit for orphan drug research................... 1.3 1.7 2.1 2.6 3.2 (\4\) 0.1 0.1 0.1 0.1 11.2
Tax credit for small businesses purchasing 0.2 0.1 0.1 0.1 0.1 1.2 0.8 0.6 0.7 0.7 4.7
employer insurance\3\............................
Subsidies for insurance purchased through health ....... ....... ....... ....... ....... 41.3 55.8 68.9 77.9 82.7 326.6
benefit exchanges\3\.............................
Income Security:
Exclusion of amounts received under life insurance 2.2 2.3 2.3 2.4 2.4 22.2 22.8 23.3 23.9 24.5 128.3
contracts........................................
Exclusion of workers' compensation benefits ....... ....... ....... ....... ....... 2.9 3.1 3.2 3.3 3.3 15.8
(disability and survivors payments)..............
Exclusion of damages on account of personal ....... ....... ....... ....... ....... 1.7 1.7 1.7 1.8 1.8 8.6
physical injuries or physical sickness...........
Exclusion of special benefits for disabled coal ....... ....... ....... ....... ....... (\4\) (\4\) (\4\) (\4\) (\4\) 0.1
miners...........................................
Net exclusion of pension contributions and
earnings:
Plans covering partners and sole proprietors ....... ....... ....... ....... ....... 7.1 8.6 13.9 16.3 17.1 63.0
(sometimes referred to as ``Keogh plans'').....
Defined benefit plans........................... ....... ....... ....... ....... ....... 58.6 70.4 83.4 97.9 114.0 424.3
Defined contribution plans...................... ....... ....... ....... ....... ....... 90.4 102.0 115.3 129.8 146.1 583.6
Individual retirement arrangements:
Traditional IRAs................................ ....... ....... ....... ....... ....... 15.2 16.1 17.1 18.2 19.3 85.8
Roth IRAs....................................... ....... ....... ....... ....... ....... 7.3 8.1 8.9 9.7 10.6 44.6
Credit for certain individuals for elective ....... ....... ....... ....... ....... 1.4 1.4 1.4 1.4 1.4 7.0
deferrals and IRA contributions..................
Exclusion of other employee benefits:
Premiums on group term life insurance........... ....... ....... ....... ....... ....... 4.1 4.2 4.3 4.4 4.5 21.5
Premiums on accident and disability insurance... ....... ....... ....... ....... ....... 4.2 4.4 4.6 4.8 5.0 23.1
Additional standard deduction for the blind and ....... ....... ....... ....... ....... 3.4 3.6 3.7 3.9 4.2 18.7
the elderly......................................
Deduction for casualty and theft losses........... ....... ....... ....... ....... ....... 0.4 0.4 0.4 0.4 0.5 2.1
Earned income credit\3\........................... ....... ....... ....... ....... ....... 73.0 73.4 74.4 75.6 77.0 373.4
Phase out of the personal exemption for the ....... ....... ....... ....... ....... -16.1 -17.1 -18.0 -18.8 -19.9 -89.8
regular income tax, and disallowance of the
personal exemption and the standard deduction
against the alternative minimum tax*.............
Exclusion of survivor annuities paid to families ....... ....... ....... ....... ....... (\4\) (\4\) (\4\) (\4\) (\4\) 0.1
of public safety officers killed in the line of
duty.............................................
Exclusion of disaster mitigation payments......... (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) 0.2
ABLE accounts\12\................................. ....... ....... ....... ....... ....... (\4\) (\4\) (\4\) (\4\) (\4\) 0.1
Social Security and Railroad Retirement:
Exclusion of untaxed Social Security and railroad ....... ....... ....... ....... ....... 38.4 40.2 42.5 45.0 47.8 213.8
retirement benefits..............................
Veterans' Benefits and Services:
Exclusion of veterans' disability compensation.... ....... ....... ....... ....... ....... 8.3 8.4 8.2 9.4 9.8 44.1
Exclusion of veterans' pensions................... ....... ....... ....... ....... ....... 0.2 0.2 0.2 0.2 0.2 0.9
Exclusion of veterans' readjustment benefits...... ....... ....... ....... ....... ....... 1.7 1.7 1.7 1.9 2.0 9.0
Exclusion of interest on State and local (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) (\4\) 0.3
government qualified private activity bonds for
veterans' housing................................
General Purpose Fiscal Assistance:
Exclusion of interest on public purpose State and 9.8 10.1 10.3 10.6 10.9 25.9 26.6 29.1 29.8 31.6 194.7
local government bonds...........................
Deduction of nonbusiness State and local ....... ....... ....... ....... ....... 65.4 69.3 74.1 78.0 82.0 368.8
government income taxes, sales taxes, and
personal property taxes..........................
Build America bonds\2,3\.......................... ....... ....... ....... ....... ....... 3.2 3.2 3.2 3.2 3.2 16.0
Interest:
Deferral of interest on savings bonds............. ....... ....... ....... ....... ....... 1.3 1.3 1.3 1.3 1.3 6.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Details may not add to totals due to rounding. An ``*'' indicates a negative tax expenditure for the 2016-2020 period.

\1\Reflects legislation enacted by December 15, 2016.
\2\Estimate includes an outlay to State and local governments. For the purposes of this table outlays are attributed to individuals.
\3\Estimate includes refundability associated with the following outlay effects:

Corporations Individuals
Total
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 2016-20

-------------------------------------------------------------------------------------------

Credit for holders of clean renewable energy ....... ....... ....... ....... ....... (\4\) (\4\) (\4\) (\4\) (\4\) 0.2
bonds..........................................
Credit for holders of qualified energy ....... ....... ....... ....... ....... (\4\) (\4\) (\4\) (\4\) (\4\) 0.3
conservation bonds.............................
Recovery zone economic development bonds........ ....... ....... ....... ....... ....... 0.2 0.2 0.2 0.2 0.2 0.8
Credit for holders of qualified zone academy ....... ....... ....... ....... ....... 0.1 0.1 0.1 0.1 0.1 0.3
bonds..........................................
Credits for tuition for post-secondary education ....... ....... ....... ....... ....... 6.4 6.4 6.8 6.8 6.9 33.3
Qualified school construction bonds............. ....... ....... ....... ....... ....... 1.1 1.2 1.3 1.4 1.5 6.4
Credit for children under age 17................ ....... ....... ....... ....... ....... 32.8 32.7 32.7 32.5 32.4 163.1
Credit for child and dependent care and ....... ....... ....... ....... ....... 0.9 0.9 0.9 0.9 0.9 4.5
exclusion of employer-provided child care......
Credit for purchase of health insurance by ....... ....... ....... ....... ....... (\4\) (\4\) (\4\) (\4\) (\4\) 0.1
certain displaced persons......................
Tax credit for small businesses purchasing (\4\) (\4\) (\4\) (\4\) (\4\) 0.1 0.1 (\4\) (\4\) (\4\) 0.4
employer insurance.............................
Subsidies for insurance purchased through health ....... ....... ....... ....... ....... 0.1 0.1 (\4\) (\4\) (\4\) 0.4
benefit exchanges..............................
Earned income credit............................ ....... ....... ....... ....... ....... 63.9 64.2 64.8 65.8 66.8 325.5
Build America bonds............................. ....... ....... ....... ....... ....... 3.2 3.2 3.2 3.2 3.2 16.0

\4\Positive tax expenditure of less than $50 million.
\5\Estimate includes effect of credit for interest on certain home mortgages (Section 25).
\6\Includes bonus depreciation and general acceleration under MACRS.
\7\Estimate includes amounts of employer-provided health insurance purchased through cafeteria plans and employer-provided child care purchased through
dependent care flexible spending accounts. These amounts are also included in other line items in this table.
\8\Estimate does not include effects of changes made by the Emergency Economic Stabilization Act of 2008.
\9\Estimate includes employer-provided child care purchased through dependent care flexible spending accounts.
\10\In addition to the general charitable deduction, the tax expenditure accounts for the higher percentage limitation for public charities, the fair
market value deduction for related-use tangible personal property, the enhanced deduction for inventory, the fair market value deduction for publicly
traded stock and exceptions to the partial interest rules.
\11\Estimate includes employer-provided health insurance purchased through cafeteria plans and TRICARE medical insurance, which are also includedin
other line items on this table.
\12\Estimate does not include outlays due to Medicaid.

ADDRESSING IMPROPER PAYMENTS

----------

It is no secret that waste and mismanagement are all too
common throughout the government, at both the State and Federal
level. The extent of government-wide payment errors is higher
than most think. These ``improper payments'' are defined as any
government payment made in an incorrect amount (mostly
overpayments), to the wrong individual or entity, or for the
wrong reason. According to the Government Accountability Office
[GAO], these payments totaled a stunning $144.3 billion in
2016, up from $107.1 billion in 2012. Worse, this figure likely
understates the full extent of the problem; 18 government
programs deemed susceptible to improper payments did not even
submit error estimates last year, according to GAO. Thus, the
estimated total may very well represent a floor rather than a
ceiling.\421\
---------------------------------------------------------------------------
\421\Government Accountability Office, briefing to the House Budget
Committee, 29 March 2017.

FIGURE 7

These payment errors occur widely throughout government,
including 112 government programs across 22 agencies, GAO
reports. More than 75 percent of the problem, however, lies
with three large programs: Medicare, Medicaid and the Earned
Income Tax Credit [EITC]. In fact, the EITC program has an
estimated payment error rate of 24.0 percent, meaning that
nearly one in four dollars that leaves the Treasury for this
program is deemed to be incorrect. Other notable government
programs with improper payment problems include Unemployment
Insurance [UI], Direct Student Loans, and the National School
Lunch Program. One example of an improper payment would be a UI
check going to someone who has already returned to work.
Another example would be an EITC payment going to an individual
who has earned income above the program's qualifying
amount.\422\
---------------------------------------------------------------------------
\422\Ibid.

FIGURE 8

Congress has passed legislation over the years to try to
address the problem of improper payments. The Improper Payment
Information Act [IPIA] was enacted 2002, requiring agencies to
report a formal estimate of improper payments throughout their
programs and how they might be prevented. Subsequently,
however, the data showed annual payment error numbers continued
to rise. In 2010, Congress expanded upon IPIA by passing the
Improper Payments Elimination and Recovery Act [IPERA], which
tried to make agency reviews of this problem more thorough and
comprehensive. For instance, IPERA sought to improve agency
methodologies for estimating improper payments. It also
required agencies to identify the specific causes of improper
payments, as well as the actions they were taking to reduce and
recover improper payments. The Inspector General of each agency
is charged with annually reviewing the agency's actions to
determine compliance with IPERA requirements.\423\
---------------------------------------------------------------------------
\423\Committee on Oversight and Government Reform, U.S. House of
Representatives, The Improper Payments Elimination and Recovery Act: An
Analysis of Five Years of Data, October 2016: https://
oversight.house.gov/report/improper-payments-elimination-recovery-act-
analysis-five-years-data/.
---------------------------------------------------------------------------
The results have not been encouraging. GAO has found that
15 of the 24 Chief Financial Officers Act agencies failed to
comply with the criteria in IPERA in 2015. According to the
House Oversight and Government Reform Committee, nine Federal
agencies have never complied with the requirements in
IPERA.\424\
---------------------------------------------------------------------------
\424\Ibid.
---------------------------------------------------------------------------
In December 2012, Congress passed the Improper Payments
Elimination and Recovery Audit Improvement Act [IPERIA],\425\
which further built upon the structure established by previous
legislation. IPERIA requires the Office of Management and
Budget to identify for greater oversight ``high priority''
government programs that are particularly susceptible to
improper payments. Agencies with such programs must submit
annual reports on the steps they are taking to prevent or
recover improper payments.\426\ This legislation also created
the so-called ``Do Not Pay'' initiative, a centralized, data-
matching service for agencies to use to help to verify an
individual's program eligibility before a payment is made.\427\
This web-based system comprises six databases, included the
Social Security Death Master File and the Treasury's Debt Check
Database.\428\ Although this was an important first step,
experts agree that Do Not Pay should be expanded to include
other data sources beyond those listed in the statute, such as
the National Directory of New Hires.\429\
---------------------------------------------------------------------------
\425\Enacted 10 January 2013, Public Law 112-248.
\426\Congressional Research Service, Improper Payments Legislation:
Key Provisions, Implementation, and Selected Proposals in the 114th
Congress, 7 December 2016.
\427\Government Accountability Office, Addressing Improper Payments
and the Tax Gap Would Improve the Government's Fiscal Position, 1
October 2015.
\428\Op. cit., Congressional Research Service.
\429\Op. cit., Committee on Oversight and Government Reform.
---------------------------------------------------------------------------
Despite these legislative efforts, tangible progress on
reducing improper payments remains elusive. Late last year, the
Congressional Research Service summarized its view of the
impact of the various legislative initiatives, stating that
``the data show that over time, while individual programs have
reduced their improper payment rates and amounts, there has
been no sustained progress on a government-wide basis, and
several programs with billions of dollars in annual improper
payments have seen no substantial improvement.''\430\
---------------------------------------------------------------------------
\430\Op. cit., p. 12 (italics added), Congressional Research
Service.
---------------------------------------------------------------------------
Many agencies seem to still follow a ``pay and chase''
model for addressing improper payments. The agencies focus on
``getting the checks out the door,'' only to determine after
the fact that many were improper. This determination sparks a
laborious and sometimes costly process to recoup such payments.
GAO believes one key to curbing improper payments is to prevent
them from being made in the first place. In GAO's words:
``[S]trong preventive controls can serve as the frontline
defense against improper payments.''\431\ One such control is
``up-front eligibility validation through data sharing.''\432\
Agencies need access to the broadest and most accurate
databases available, and they need to systematically leverage
this information to ensure their payments are accurate and
going to the correct persons or entities. GAO has also provided
agencies with numerous program-specific recommendations over
the years for bolstering internal controls to reduce improper
payments. Nevertheless, agencies are not obligated to act on
these recommendations. GAO has made nearly 130 recommendations
over the past five years that the various agencies have not
fully acted upon.
---------------------------------------------------------------------------
\431\Op. cit., p. 28, Government Accountability Office.
\432\Ibid., p. 28.
---------------------------------------------------------------------------

Reducing Improper Payments: `50 Percent Within 5'

As discussed above, the legislative initiatives in recent
years have produced little progress in reducing improper
payments; the majority of government agencies are not even
complying with the requirements of those laws. Similarly, GAO
has produced a plethora of good, program-specific
recommendations to promote more efficient financial management,
but many agencies have failed to institute them in their
operations. Clearly, something is not working and there is not
a proper incentive structure for agencies to become better
stewards of taxpayer dollars.
This budget resolution proposes the establishment of an
independent commission to find tangible solutions to reduce
government-wide improper payments by the end of the year. Such
a commission would be akin to the Bowles-Simpson Commission of
2010 that was charged with putting the government back on a
sustainable fiscal path by reducing deficits and debt over
time.
This new commission would be charged with finding ways to
tangibly reduce government-wide improper payments by 50 percent
within the next five years. This timeframe recognizes that this
problem is complex and there is not one silver-bullet solution
that could be implemented overnight. Rather, the commission
should methodically solicit input from experts within
government, such as GAO, and the private sector to determine
the best ways to tackle this problem. In recent testimony
before the House Budget Committee, Office of Management and
Budget Director Mulvaney affirmed this level of improper
payment reduction was attainable. Speaking about reducing
government-wide improper payments, Director Mulvaney said it
was ``reasonable * * * to go as high as 40 or 50 percent in
that. I think that's a goal that you should shoot for.''\433\
---------------------------------------------------------------------------
\433\Mick Mulvaney, Director of the Office of Management and
Budget, testimony before the Committee on the Budget, U.S. House of
Representatives, 24 May 2017.
---------------------------------------------------------------------------
No matter how useful the solutions, it will be incumbent
upon the agencies to implement them--and the Committee supports
the Trump Administration's efforts in this area. In addition,
the commission should be required to develop a tighter system
of agency oversight to ensure agencies comply with commission
recommendations and are achieving the reduction goal over time.
This could include penalties and funding reductions for
agencies that fail to meet the established target. Where States
play a large role in administrating a government program, such
as Medicaid, incentives should also be established to reduce
their improper payments. For instance, States with Medicaid
improper payment rates that exceed the national average of the
previous five years could face penalties for doing so.
Reducing government-wide improper payments is no easy task.
It will take innovative and comprehensive solutions and an
incentive structure to make sure agencies act upon them.
Nevertheless, even reducing these improper payments by half
would save the government, and taxpayers, hundreds of billions
of dollars over the budget window.

UNAUTHORIZED SPENDING PROGRAMS

----------

Another form of effectively automatic Federal spending goes
toward programs that are no longer, or never were, authorized
by Congress. In January 2016, the Congressional Budget Office
[CBO] reported: ``Lawmakers appropriated about $310 billion for
fiscal year 2016 for programs and activities whose
authorizations of appropriations have expired and whose
appropriations could be identified.'' For perspective, $310
billion in unauthorized appropriations constituted more than 26
percent of all discretionary spending for fiscal year 2016.
That is, more than a quarter of the taxpayer dollars Congress
appropriated were neither reviewed nor authorized to be spent.
This reflected 256 laws that Congress has not reauthorized,
says CBO.\434\
---------------------------------------------------------------------------
\434\Congressional Budget Office, Unauthorized Appropriations and
Expiring Authorizations, 15 January 2016.
---------------------------------------------------------------------------
When CBO produced its report in January, it could not cite
a comparable figure for the current year, fiscal year 2017,
because most of the government's activities at that time were
funded under a temporary continuing resolution that expired on
28 April 2017.\435\ (Congress has since enacted appropriations
for the balance of the year, but CBO does not expect to update
its report on unauthorized spending for this year.)
Nevertheless, CBO identified $648.7 billion in appropriations
whose authorizations would expire by the end of the fiscal
year, 30 September 2017 (see Table 9 and Table 10). In failing
to authorize these programs, Congress misses a key opportunity
to conduct oversight of existing programs and Executive Branch
agencies.
---------------------------------------------------------------------------
\435\Only one regular appropriations bill for the year--the
Military Construction, Veterans Affairs, and Related Agencies
Appropriations Act (Public Law 114-223)--has been enacted.
Consequently, CBO cannot assess most of the government's full-year
funding.
---------------------------------------------------------------------------
By regularly failing to reauthorize these programs--or by
failing to prevent the reappropriation of expired
authorizations--Congress shirks its legislative responsibility
to exercise spending discretion. The Constitution endows the
Legislative Branch with the power of the purse.\436\ Congress
abdicates this power when it permits programs to continue
operating without the check of regular order budgeting.
---------------------------------------------------------------------------
\436\Constitution of the United States, Article I, Section 9,
Clause 7.
---------------------------------------------------------------------------
This budget resolution strongly supports efforts to reverse
this bias toward higher spending and reassert Congress's
constitutional authority over fiscal policy.

TABLE 9.--SUMMARY OF AUTHORIZATIONS OF APPROPRIATIONS EXPIRING ON OR
BEFOREP30 SEPTEMBER 2017, BY APPROPRIATIONS SUBCOMMITTEE
------------------------------------------------------------------------
Appropriations
Authorizations of Authorized (in
Appropriations subcommittee appropriations\a\ millions of
dollars)\b\
------------------------------------------------------------------------
Agriculture/Rural Development... 7 171
Commerce/Justice/ Science....... 10 68
Defense......................... 1 583,626
Energy/Water Development........ 3 19,425
Homeland Security............... 9 9,515
Interior/Environment............ 3 4
Labor/HHS....................... 10 8,915
Mil. Con./VA.................... 12 9,907
State/Foreign Operations........ 10 270
Transportation/HUD.............. 8 16,764
---------------------------------------
Total..................... 73 648,669
------------------------------------------------------------------------
Source: Congressional Budget Office, Expired and Expiring
Authorizations, 13 January 2017.

\a\Number of explicit authorizations of appropriations within the
jurisdiction of each appropriations subcommittee that expire on or
before 30 September 2017.
\b\Amounts specified in statute, a conference report, or other
legislative history.

TABLE 10.--SUMMARY OF AUTHORIZATIONS OF APPROPRIATIONS EXPIRING ON OR
BEFORE 30 SEPTEMBER 2017, BY HOUSE AUTHORIZING COMMITTEE
------------------------------------------------------------------------
Appropriations
Authorizations of authorized (in
House committee appropriations\a\ millions of
dollars)\b\
------------------------------------------------------------------------
Armed Services.................. 6 611,532
Education and the Workforce..... 5 4,928
Energy and Commerce............. 14 4,216
Foreign Affairs................. 10 270
Homeland Security............... 2 11
Judiciary....................... 6 44
Natural Resources............... 2 4
Science, Space, and Technology.. 4 21
Transportation and 14 25,990
Infrastructure.................
Veterans Affairs................ 10 1,653
---------------------------------------
Total..................... 73 648,669
------------------------------------------------------------------------
Source: Congressional Budget Office, Expired and Expiring
Authorizations, 13 January 2017.

\a\Number of explicit authorizations of appropriations within the
jurisdiction of each House committee that expire on or before 30
September 2017.
\b\Amounts specified in statute, a conference report, or other
legislative history.

Background

Congress from early on distinguished between funding
bills--appropriations--and other kinds of legislation. Although
not required by the Constitution, the distinction ``was
reflected in the designation of measures containing budget
authority for more than one purpose as `supply bills,'
highlighting their purpose as supplying funds to carry out
government operations already established in law.''\437\ The
distinction can be generally explained as follows. An
authorization may be described as ``a statutory provision that
defines the authority of the government to act,'' whereas an
appropriation can be described as ``a statutory provision that
permits a federal agency to incur obligations and make payments
from the Treasury for specified purposes, usually during a
specified period of time.''\438\
---------------------------------------------------------------------------
\437\Jessica S. Tollestrup, Congressional Research Service,
Spending on Unauthorized Programs, testimony to the Committee on the
Budget, U.S. Senate, 3 February 2016.
\438\Ibid.
---------------------------------------------------------------------------
This separation serves as the foundation for the two-step
process under which congressional committees operate. Just
after the Civil War, and running through the end of the 19th
century, the structure of House and Senate Committees embraced
the distinction. Up to that point, budgetary matters fell to
the Committee on Ways and Means in the House and the Committee
on Finance in the Senate. After the war, the two Chambers
separated spending and revenue authority, giving the former to
the newly created Appropriations Committees. Then, starting in
the 1870s, the authorizing committees seized control of roughly
half of government spending, further reinforcing the two-step
process of authorizing and appropriating.
During the 1920s, Congress began including explicit
provisions in bills that authorized specific amounts for future
appropriations of programs authorized.\439\ This practice
enabled authorizing committees to exert more control over
funding decisions carried out by appropriators.
---------------------------------------------------------------------------
\439\Ibid.
---------------------------------------------------------------------------

Significance of the Breakdown

Even if this two-step process of authorizations and
appropriations may lengthen the time needed to fund agencies
and programs, there are sound reasons for separating the two,
and Congress should follow its own regular order of budgeting.
Congress designed a two-step paradigm wherein program funding
must undergo scrutiny on two distinct levels before taxpayer
dollars can be committed. Without this full consideration, the
practice of funding unauthorized programs also has the effect
of converting a range of discretionary programs into another
form of automatic spending.
The two-step authorization-appropriation process loses
legitimacy each time an unauthorized program persists without
express congressional consent. When Congress releases
appropriations without clear reauthorization, it effectively
gives priority to those select programs. As such, outdated
grant programs receive spending priority over vital functions
such as defense spending and military readiness, which do
undergo the regular appropriations process. By bypassing
regular order, unauthorized appropriations function as a
secondary stream of direct spending. This unauthorized stream
has no legal justification.

The Failure of Current Rules

The House and Senate have had rules restricting the
consideration of appropriations for programs that have never
been authorized or whose authorizations have expired. In 1837,
Congressional Research Service notes, the House first
promulgated formal rules prohibiting any appropriations for
``any expenditure not previously authorized by law.'' ``These
rules were motivated, at least in part, by concern over the
increasing delays in enacting appropriations due to the
inclusion of `debatable matters of another character.'''\440\
That arrangement, however, has broken down. While the Congress
continues to maintain similar prohibitions,\441\ these rules
are regularly waived.
---------------------------------------------------------------------------
\440\Ibid., citing Asher C. Hinds, Hinds' Precedents of the House
of Representatives of the United States (Washington: Government
Printing Office, 1907-1908), vol 4, Sec. 3578.
\441\These prohibitions are currently located in House Rule
XXI(2)(a) and Senate Rule XVI(1).
---------------------------------------------------------------------------
In the 114th Congress, the House waived its own Rule
XXI(2)(a), which prohibits unauthorized appropriations, 14
separate times.\442\ Each instance that Congress waives this
rule, it relinquishes its hold on the Federal purse strings,
and at the same time, furthers the bias toward unchecked
spending. Furthermore, waiving these rules calls into question
the credibility of the budget, as the action bypasses
Congressional scrutiny of spending.
---------------------------------------------------------------------------
\442\Committee on Rules, U.S. House of Representatives, ``Survey of
Activities of the House Committee on Rules for the 114th Congress,'' 2
January 2017: https://www.gpo.gov/fdsys/pkg/CRPT-114hrpt905/pdf/CRPT-
114hrpt905.pdf.
---------------------------------------------------------------------------

Potential Reforms

During the 114th Congress, the House Budget Committee
developed a method to address unauthorized spending in its
``Proposed Rewrite of the Congressional Budget Process.''\443\
The draft proposal would reduce the statutory discretionary
spending limits, or caps, by the amount appropriated for
unauthorized programs exceeding a certain level. The level
would be determined with consideration given to the amount of
lapsed time since the latest authorization expired.
---------------------------------------------------------------------------
\443\Committee on the Budget, U.S. House of Representatives,
``Proposed Rewrite of the Congressional Budget Process: Discussion
Draft: Description and Rationale,'' 30 November 2016: http://
budget.house.gov/uploadedfiles/bpr-longsummary-30nov2016.pdf.
---------------------------------------------------------------------------
This budget includes a policy statement that each
authorizing committee should review all programs with
unauthorized appropriations and reauthorize those deserving
continued funding.
Another proposal for addressing the problem is H.R. 2174,
the ``Unauthorized Spending Accountability Act of 2017'',
introduced by Representative Cathy McMorris Rogers (R-WA),
Chair of the House Republican Conference.\444\ The legislation
would put all unauthorized programs on a path to sunset in
three years, and require any new authorizations to include a
sunset clause.
---------------------------------------------------------------------------
\444\H.R. 2174, the ``Unauthorized Spending Accountability Act of
2017'', 115th Congress: 1st Session, 26 April 2017.
---------------------------------------------------------------------------

Conclusion

To unwind this pattern of reckless spending, Congress must
proactively reclaim its authority over the Federal purse
strings. Unauthorized appropriations move the country toward
the trend of higher spending. This budget makes the case for
moving away from higher spending and returning to fiscal
responsibility.
The budget supports efforts to eliminate the practice of
unauthorized spending. Requiring new authorizations to have
sunset provisions and scheduling reauthorizations for expired
and expiring programs are prudent steps. Nevertheless, like the
budget resolution itself, no proposal can succeed without
proper enforcement. That is a fundamental requirement of fiscal
responsibility.

`HIGH-RISK' FEDERAL
PROGRAMS AND ACTIVITIES

----------

Every two years, at the beginning of each Congress, the
Government Accountability Office [GAO] publishes an updated
list of government programs and activities considered at high
risk for waste, fraud, abuse, and mismanagement. The 2017
report, on which the discussion below is based, identifies 34
high-risk programs across a wide range of agencies.\445\ Among
the more prominent are the following: Medicare; Medicaid;
Federal disability programs; Pension Benefit Guaranty
Corporation insurance programs; the National Flood Insurance
Program; and veterans' health care.
---------------------------------------------------------------------------
\445\Government Accountability Office, High-Risk Series: Progress
on Many High-Risk Areas, While Substantial Efforts Needed on Others, 15
February 2017: http://www.gao.gov/products/GAO-17-317.
---------------------------------------------------------------------------

The Medicare Program

Medicare was designated as a high-risk program by GAO in
1990 due to its size, complexity, and susceptibility to
mismanagement and improper payments. In 2016, Medicare was
projected to spend $696 billion and provide health care
coverage to more than 57 million beneficiaries. More than 1
million health care providers, contractors, and suppliers--
including private health plans, physicians, hospitals, skilled
nursing facilities, durable medical equipment suppliers,
ambulance providers, and many others--receive payments from
Medicare.
Every year, Medicare pays more than a billion claims
submitted by these health care providers. According to the
Congressional Budget Office [CBO], in fiscal year 2016,
Medicare outlays totaled more than was spent on defense ($579
billion) and almost double the Federal spending on Medicaid
($365 billion in net outlays). Medicare spending in 2016
accounts for approximately 17.8 percent of the approximately
$3.9 trillion in Federal outlays. The majority of fee-for-
service claims are handled by private insurers called Medicare
Administrative Contractors [MACs]. They process Medicare claims
for nearly 70 percent of the program's total beneficiaries,
about 37.5 million people in the fee-for-service program. Taken
together, they process more than 1.2 billion Medicare fee-for-
service claims annually at a value of more than $360 billion in
benefits.
CBO projects that, in just 10 years (in 2026) under current
law, Medicare spending will reach $1.3 trillion. The Medicare
Trustees 2016 report stated that, under current law, Medicare's
cost as a percentage of gross domestic product would rise to
5.6 percent by 2040. For these reasons, even small changes can
have large effects of the overall spending of the Medicare
Program. It is critical that Medicare be closely monitored to
ensure that accurate payments are made for services.

The Medicaid Program

GAO has designated Medicaid as high-risk since 2003,
largely due to ``concerns about the adequacy of fiscal
oversight.'' State flexibility complicates oversight of
payments and patient access to care. Medicaid experiences
dramatic swings in enrollment and funding requirements. Periods
of higher enrollment, higher costs, and less State revenue
stability contribute to risk for improper payments and poor
access to services.
The Centers for Medicare and Medicaid Services [CMS] has
insufficient data on Medicaid from States. GAO describes the
lack of accurate, timely data as an ``overarching challenge''
for oversight of the Medicaid Program. Often, available data
are three years behind. GAO lists five key areas in Medicaid
needing improved oversight:

LFinancing and provider payment transparency and
oversight. CMS needs better information to determine whether
expenditures are appropriate and to ensure States continue to
contribute their shares.

LManaged care payments and utilization oversight.
GAO could not fully assess utilization patterns for managed
care patients in 19 States, as the data was either unavailable
or unreliable.

LGrowing expenditures for and oversight of large
Medicaid demonstrations. Medicaid demonstrations have grown to
a third of Medicaid spending and result in billions of dollars
expended for costs not otherwise approved.

LMonitoring and measurement of access to quality
care. Data suggests that Medicaid enrollees have a hard time
accessing preventative, oral, and mental health services. More
conclusive reporting is needed.

LGrowing expenditures for long-term care services.
Personal care services are among the highest at risk for
improper payments (including for services billed but never
provided).

Federal Disability Programs

Like Medicaid, Federal disability programs were designated
high risk in 2003. GAO reports three of the Federal
Government's largest disability programs--two run by the Social
Security Administration [SSA] and one by the Department of
Veterans Affairs [VA]--allocated about $256 billion in cash
benefits to more than 20 million people in fiscal year 2015,
but are struggling to make timely decisions about who is
eligible for benefits.
The workload problems are most evident in appeals, GAO
reports. Between 2012 and 2015, the number of appeals increased
by 30 percent at the SSA and 34 percent at the VA. Workloads
for these agencies are likely to remain a challenge as the
population ages and large numbers of service-members are
expected to transition out of the military in the next several
years.
In addition, the SSA and the VA rely on outdated criteria
to determine whether individuals qualify for benefits,
according to GAO. While these agencies reported efforts to
update their rules, they continue to emphasize individuals'
medical conditions without sufficiently considering whether
improvements in workplace accommodations or ``assistive
technologies'' would make it possible for them to work.
GAO found another 45 disability programs across nine
different Federal agencies ``that provide a patchwork of
employment supports to people with disabilities.'' These
programs, GAO reported, ``lack a unified vision, strategy, or
set of goals to guide their outcomes.''

Pension Benefit Guaranty Corporation Insurance Programs

The Pension Benefit Guaranty Corporation [PBGC] runs two
pension insurance programs: one for single-employer pensions
and one for multi-employer pensions. Single-employer pension
plans are sponsored by one employer and cover eligible workers
employed by the plan sponsor. Multi-employer plans are
collectively bargained plans to which more than one company
makes contributions.
PBGC covers roughly 40 million current workers and retirees
in 24,000 private-sector pension programs. In fiscal year 2016,
PBGC had a net accumulated financial deficit of $79.4 billion,
an increase of $44 billion since 2013. GAO has identified the
single-employer program as ``high risk'' since 2003 and the
multi-employer program since 2009. PBGC projects the multi-
employer program will be insolvent by 2025. Since 2013, the
deficit in the multi-employer program, comprising about 1,400
plans, has increased by more than 400 percent.
In December 2014, Congress increased premiums for PBGC-
covered multi-employer plans to try to address the looming
insolvency, but the increase has had little impact.

Flood Insurance

The National Flood Insurance Program [NFIP] has appeared on
the GAO high-risk list since 2006. According to the GAO, the
NFIP program does not collect enough premiums both to cover its
insured losses and to repay taxpayers. Furthermore, the NFIP
has never collected enough premiums to cover ``catastrophic
loss years'' and will likely need more taxpayer bailouts in the
future.
Indeed, the ``NFIP's overall rate-setting structure was not
designed to be actuarially sound in the aggregate,'' GAO says,
``nor was it intended to generate sufficient funds to fully
cover all losses. Instead, Congress authorized the Federal
Emergency Management Agency [FEMA], which manages the NFIP, to
borrow from Treasury, within certain limits, when needed.
``Until the 2005 hurricanes,'' GAO says, ``FEMA had used its
authority to borrow intermittently and was able to repay the
loans. As of March 2016, FEMA owed Treasury $23 billion, up
from $20 billion in November 2012. FEMA made a $1 billion
principal repayment at the end of December 2014--its first such
payment since 2010.''
In 2016, the NFIP had 5 million policies collecting $3.3
billion in premiums on $1.2 trillion of insurance in force. As
of mid-April 2017, the NFIP owed $25 billion to taxpayers.
Since 2010, NFIP has repaid only $1 billion to taxpayers. In
January 2017, the NFIP announced it would need $1.6 billion
more from taxpayers to cover losses incurred in 2016.
The NFIP runs on outdated information technology, policy
and risk management systems. As a result, the NFIP cannot
accurately price its policies to reflect the risk of flooding
for each property and policy.
In 2012, Congress passed a long-term reauthorization of the
NFIP: the ``Biggert-Waters Flood Insurance Reform Act of 2012''
(Public Law 112-141). The NFIP authorization expires on 30
September 2017.

Veterans Administration Health Care

The VA health care system was placed on GAO's high-risk
list in 2015, for its inability to ensure allocated resources
are being used in a ``cost-effectively and efficiently to
improve veterans''' health care access, safety, and quality. VA
has problems with the reliability, transparency, and
consistency of its budget estimates for medical services, as
well as weaknesses in tracking obligations for medical services
and estimating budgetary needs for future years. The budget
troubles were evident in June 2015, when the VA requested
additional funds from Congress due to VA officials' failure to
project a fiscal year 2015 funding gap of about $3 billion in
its medical services.
Although VA's budget and the total number of medical
appointments provided have substantially increased for at least
a decade, there have been numerous reports in this same
period--by GAO, VA's Office of the Inspector General, and
others--of VA facilities failing to provide timely health care.
VA's lack of medication continuation policy is an example of
the administration's risk. The failure of the VA, the
Department of Defense, and community providers to promptly
communicate important clinical information, such as medication,
can increase the risk of adverse health effects and/or result
in harm to veterans.
Other programs and activities on GAO's 2017 ``high-risk''
list:

Strengthening the Foundation for
Efficiency and Effectiveness

LStrategic human capital management.

LManaging Federal real property.

LFunding the Nation's surface transportation
system.

LModernizing the U.S. financial regulatory system
and the Federal role in housing finance.

LRestructuring the U.S. Postal Service to achieve
sustainable financial viability.

LManagement of Federal oil and gas resources.

LLimiting the Federal Government's fiscal exposure
by better managing climate change risks.

LImproving the management of IT acquisitions and
operations.

LImproving Federal programs that serve tribes and
their members.

LU.S. Government environmental liabilities.

Transforming Department of Defense [DOD]
Program Management

LSupply chain management.

LWeapon systems acquisition.

LFinancial management.

LBusiness systems modernization.

LSupport infrastructure management.

LApproach to business transformation.

Ensuring Public Safety and Security

LEnsuring the security of Federal information
systems and cyber-critical infrastructure, and protecting the
privacy of personally identifiable information.

LStrengthening Department of Homeland Security
management functions.

LEnsuring the effective protection of technologies
critical to U.S. national security interests.

LImproving Federal oversight of food safety.

LProtecting public health through enhanced
oversight of medical products.

LTransforming the Environmental Protection
Agency's processes for assessing and controlling toxic
chemicals.

LMitigating gaps in weather satellite data.

Managing Federal Contracting More Effectively

LThe Department of Energy's contract management
for the National Nuclear Security Administration and Office of
Environmental Management.

LNational Aeronautics and Space Administration
acquisition management.

LDOD contract management.

Assessing the Efficiency and Effectiveness of
Tax Law Administration

LEnforcement of tax laws.

GOVERNMENT WASTE, FRAUD, AND ABUSE

----------

Compounding the problem of mounting Federal deficits and
debt is the wasteful spending that constantly seeps out of
Federal bureaucracies. Despite numerous reforms and fiscal
commissions tasked with reducing government bloat, taxpayers
are forced to continue funding Federal programs and activities
that are unnecessary, obsolete, or just plain ridiculous. The
following examples highlight just some of the more egregious
and wasteful ways the government spends taxpayers' dollars.
Many such items were initially cited in work published by
Senators Jeff Flake (R-AZ) and Lankford (R-OK), whose offices
annually compile summaries of the most questionable spending
activities of the Federal Government. Their ``waste books'' are
titled The Farce Awakens (Senator Jeff Flake, 2015); PORKemon
Go (Senator Jeff Flake, 2016); Federal Fumbles (Senator James
Lankford, 2015); Federal Fumbles Vol. 2 (Senator Lankford,
2016). Below is a sampling from these works, which contain a
variety of additional examples that illustrate the extent to
which the Federal Government throws away taxpayers' money at
unnecessary, wasteful, and even fraudulent spending. (All the
items are annually appropriated, discretionary spending, unless
otherwise indicated.)
The items are organized below by budget function
categories.

Function 050: National Defense

Spaceport to Nowhere. The Alaska Aerospace Development
Corporation [AADC] was established as an independent State
agency in 1991 to build ``space-related economic development''
in Alaska. The Department of Defense [DOD] and Air Force
opposed the AADC funding request to build a rocket launching
site in Alaska, because the military already had rocket launch
sites throughout the country. Nevertheless, DOD employees and
defense contractors arranged an illegal scheme to fund the
launch site in Alaska, and received kickbacks worth $1.6
million for steering $350 million to contractors. (PORKemon Go,
2016, p. 5-9)

It's a PR Problem. Federal contracts for advertising and
public relations average $1 billion per year, with DOD paying
60 percent of overall public relations contracts, amounting to
$626.2 million last year. DOD also employs the largest number
of public relations staff. According to a Pew Research Center
poll, 32 percent of Americans have ``a favorable impression of
the federal government,'' with 68 percent having an unfavorable
impression. (PORKemon Go, 2016, p. 46-47)

High-Priced Gasoline. According to the Special Inspector
General for Afghanistan Reconstruction, the Department of
Defense spent $43 million to build ``the world's most expensive
gas station'' in Afghanistan to distribute natural gas, which
few Afghan cars run on. The contract to build the gas station
was estimated to cost the Federal Government less than $3
million. In the end, DOD spent $43 million for the construction
and supervising of the operation for the station. (The Farce
Awakens, 2015, p. 32-34)

Function 150: International Affairs

Lights, Camera, Action. The State Department announced a
partnership with a non-profit arts organization to create
``Global Media Makers''--an international film exchange program
in which the U.S. will bring 12 to 18 international film and
video professionals to the U.S. to educate them; at a cost to
taxpayers of $1 million. (Federal Fumbles Vol 2, 2016, p. 77)

Shocked. The State Department signed two contracts to build
office and living buildings near the U.S. Embassy of Kabul at a
cost of $793 million. Once completed it was discovered that due
to contractor negligence, potentially lethal levels of
electrical current were flowing through the buildings without
proper insulation and protection. (Federal Fumbles Vol 2, 2016,
p. 36)

Function 250: General Science, Space, and Technology

Save the Mudskipper. The National Science Foundation [NSF]
spent $1.5 million on grants to the University of California-
San Diego Institution of Oceanography to study the fitness
levels of mudskippers on a treadmill; bluegills in treadmill-
like swim tunnels; and the effect of oxygen and PH levels on
the performance of rockfish. (PORKemon Go, 2016, p. 17)

Icelandic Culture. The NSF spent $500,000 in multiple
grants to determine the connection among religion, politics,
and cemeteries in 12th-century Iceland. Additional NSF grants
this year for Iceland studies included volcanoes, ``calcium and
strontium isotope geochemistry of weathering,'' the flow of
water from Denmark to Iceland, and the spread of flies at a
lake in Iceland. (Federal Fumbles Vol. 2, 2016, p. 9)

Function 270: Energy

Carbon Capture Comes up Empty. The Department of Energy
[DOE] has spent hundreds of millions of dollars to capture man-
made carbon dioxide [CO2]. The Summit Power Group
LLC's Texas Clean Energy Project was expected to capture
CO2 emitted during the production of energy from
coal. The compressed gas would then be used for ``enhanced oil
recovery,'' which pushes more crude oil out of the ground. The
project is six years behind schedule and has cost the DOE $450
million. (PORKemon Go, 2016, p. 37)

Function 300: Natural Resources and Environment

Dirtbag Beach. The Downtown Montauk Emergency Stabilization
Project required the Army Corps of Engineers to spend $8.4
million to plow away the beach's natural dunes and construct a
wall made up of 14,000 1.7-ton geotextile bags holding orange,
non-beach sand to protect against erosion. Waves of protestors
assembled to halt the project and many have questioned whether
the town has ``destroyed the beach in order to save it.''
(PORKemon Go, 2016, p. 52-55)

What's Upstream? A lobbying campaign in Washington State
titled ``What's Upstream'' was paid for with a portion of a
$12-million Environmental Protection Agency [EPA] grant to the
Northwest Indian Fisheries Commission. ``The effort, which
disparaged farmers as `polluters of our waterways,' included a
website and advertisements on billboards, buses, and the
radio.'' EPA records show the campaign was used to lobby the
State to implement tougher regulations than even allowed under
the Federal Clean Water Act. (PORKemon Go, 2016, p. 64-67)

Duck, Duck, Goose? For almost 20 years, the U.S. Fish and
Wildlife Service [FWS] has used a method to count sea ducks
that it either knew or suspected was ineffective. FWS has
offered a $180,000 grant for an outside group to develop an
effective way to count and tag sea ducks. (Federal Fumbles Vol.
2, 2016, p. 11)

Minecraft: The Federal Video Game Edition. The EPA's
Environmental Education grant provided $36,700 in Federal funds
to a group in Massachusetts to develop a Minecraft video game
customized specifically for the Berkshires to engage children
in ``environmental conservation.'' (PORKemon Go, 2016, p. 100-
101)

Function 350: Agriculture

Fast and Furious. At the U.S. Department of Agriculture
[USDA] Wildlife Services' National Wildlife Research Center in
Ohio, nearly $118,000 has been spent on studies trying to
determine the speed an automobile must be traveling to hit a
bird before it can fly to safety. (PORKemon Go, 2016, p. 102-
103)

Cornhusker, Kick Back. Using Agriculture and Food Research
Initiative Grant funding from the USDA's National Institute of
Food and Agriculture, University of Nebraska football fans were
provided with ``Ultimate Tailgating Packages'' that included a
koozie, aprons, and other tailgating ``essentials.'' The
project was part of a larger grant linking scientific research
to outreach and education. (The Farce Awakens, 2015, p. 97-98)

Function 370: Commerce and Housing Credit

World Tour. ``The U.S. Small Business Administration's
State Trade and Export Promotion program pays for international
trips, design of international marketing products and
campaigns, and export trade show exhibits for small businesses.
These include excursions to international fashion shows, air
shows, and wine fairs'' at a cost to taxpayers of $18.9
million. (PORKemon Go, 2016, p. 125-126)

Function 400: Transportation

The Fast Track to Nowhere. More than $3.1 billion in
grants, including stimulus funds, have been dedicated to
constructing a high-speed rail line between San Francisco and
Los Angeles. The project, however, has experienced tens of
billions of dollars in cost overruns and a series of delays.
(PORKemon Go, 2016, p. 24-26)

Reefer Madness. Colorado's Department of Transportation
[CDOT] used a National Highway Traffic Safety Administration
grant to install a 28-foot tall, 3-D billboard of a wrecked car
shaped like a marijuana joint. The billboard is an effort to
educate people about the danger of driving under the influence
of marijuana. The total cost, $35,000, included $16,600 that
CDOT paid to the advertising agency that designed the
billboard. (PORKemon Go, 2016, p. 48-49)

Tax Dollars at `Work.' An audit of the Lake Sumter, FL
Metropolitan Planning Organization found $892,000 in misspent
funds over four years, with the money going to fund ``golf
tournaments, a music and wine festival, holiday wine glasses,
and a private boat cruise.'' More than $100 million goes to
this local planning entity every year, in the form of Federal
and State grants. (PORKemon Go, 2016, p. 96-99)

App-Solute Failure. The Transportation Security
Administration contracted with IBM to enhance their software
systems, which included $47,400 for an iPad app that randomly
directs airline passengers to enter the left or right line at
an airport security screening station. (Federal Fumbles Vol. 2,
2016, p. 98)

Function 450: Community and Regional Development

Tastes Good, Good for Whom? The USDA provided $250,000 in
Value-Added Producer grants to Ocean Spray to produce and ship
three new juice drinks. Ocean Spray's current annual sales are
around $2 billion. (Federal Fumbles Vol 2, 2016, p. 21)

K-9 Clothier. A total of $210,000 in Federal funding via
Community Development Block Grants [CDBGs] went to Maine
Stitching Specialties. ``The company designs dog vests and
accessories for L.L. Bean and Orvis, including leashes and
collars as well as the collar kerchief.'' (The Farce Awakens,
2015, p. 38-39)

Got Yogurt? The Michigan Economic Development Corporation
allocated $76,886 in CDBG funds for the Yogurtopia Building
Facade project this year. Yogurtopia offers a variety of more
than 50 flavors of yogurt. (The Farce Awakens, 2015, p. 175)

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

How the Cookie Crumbles. Using a $150,000 Institute of
Museum and Library Services grant, the Oregon Museum of Science
and Industry organized a series of ``Gingerbread Adventures''
workshops. Participants still had to purchase tickets for the
various workshops. (PORKemon Go, 2016, p. 50-51)

Here's Johnny! The National Endowment for the Arts [NEA]
provided a $70,000 grant to the Minnesota Opera to perform an
adaption of Stephen King's novel The Shining. ``Despite the
show's financial success, taxpayers were still haunted with the
production's costs.'' (PORKemon Go, 2016, p. 114-115)

The Most Interesting Man in the World. The Smithsonian
Institution, which receives about 60 percent of its annual
budget from the Federal Government, announced an American
Brewing History Initiative that will research home brewing and
its history. Included in the initiative is a ``beer
historian,'' which the Smithsonian announced is a three-year
position that pays $64,540 annually. (Federal Fumbles Vol. 2,
2016, p. 58)

A Government Solution. The Department of Labor provided
almost $30 million in National Emergency Grants to help 6,835
laid-off workers retain jobs. Out of the near 7,000 displaced
workers, only 1,231 participated. Of those, just 357 found jobs
with assistance from the program. (PORKemon Go, 2016, p. 112)

Function 550: Health

Tooth Terror. The National Institute of Health [NIH]
provided $3.5 million in grants to West Virginia University to
determine why people are scared of the dentist. (PORKemon Go,
2016, p. 116-117)

Kappa Tappa Kegga. The NIH's National Institute on Alcohol
Abuse and Alcoholism provided $5 million in grants to Brown
University to study drinking at fraternities. The studies'
findings were on the drinking culture of campus Greek life.
(PORKemon Go, 2016, p. 20-23)

Pay First, Ask Questions Later. The Centers for Medicare
and Medicaid Services have paid more than $3 million in
improper payments to barred providers who are kicked out of
Medicaid or Medicare for cause (fraud, poor quality, or
conviction for a crime). These providers are prohibited under
Federal law from participating in the programs in other States,
but the Congressional Budget Office estimates barred providers
still collect $3 million in mandatory spending, annually, under
Medicaid and Children's Health Insurance Program. (PORKemon Go,
2016, p. 109-110)

Up in Smoke. More than $5 million dollars, provided by the
NIH, was used for parties thrown for hipsters where the
organizers hoped to convince millennials not to smoke, and to
take a stand against tobacco corporations. If the party failed,
the participants were paid $100 to quit smoking. Researchers
found these ``events'' did not change smoking rates. (The Farce
Awakens, 2015, p. 11-13)

Function 600: Income Security

Lifestyles of the Rich and Federally Subsidized. In 2015,
the Department of Housing and Urban Development [HUD] paid $104
million to subsidize housing for 25,000 families that exceed
the HUD maximum income threshold. ``For example one New York
City family living in a public housing apartment had a November
2013 annual household income of $497,911, more than seven times
the low-income family threshold of $67,100 in New York City.''
(Federal Fumbles, 2015, p. 71)

Slumlord Millionaires. HUD officials blocked Tennessee
housing officials from conducting safety inspections at a
subsidized housing development operated by Global Ministries
Foundation [GMF], which has received more than $60 million
annually to provide low income housing in Memphis. ``Residents
at GMF reported living in deplorable conditions with broken
pipes, exposed electrical sockets, and infestation with
roaches, bedbugs, and rodents.'' (The Farce Awakens, 2015, p.
67-70)

Taxpayer U-Haul. HUD spends $2 million annually to pay
relocation and travel expenses for HUD employees. ``In all,
nearly $2.9 million has been spent since 2013 to move about 125
HUD employees. The average cost paid per employee relocated is
nearly $23,000.'' (The Farce Awakens, 2015, p. 74)

Function 650: Social Security

Lost in Translation. The Social Security Administration
[SSA] is spending millions of mandatory dollars paying Social
Security Disability Insurance benefits to hundreds of Puerto
Ricans because they do not speak English. The official language
of Puerto Rico is Spanish, as enacted by the territorial
government of Puerto Rico. ``The SSA policy contradicts a 1987
court ruling. A U.S. District Court upheld a U.S. Court of
Appeals decision `that, for the most part, it is the ability to
communicate in Spanish, not English, that is vocationally
important in Puerto Rico.''' (The Farce Awakens, 2015, p. 130-
131)

Function 700: Veterans Benefits and Services

Costly Outreach. Federal contracts for advertising and
public relations average $1 billion per year, with the
Department of Veterans Affairs [VA] having the largest
percentage increase in public relations staff over the past
decade. VA public relations staff grew from ``144 employees in
2006 to 286 in 2014,'' and the department currently spends
nearly $24 million per year in advertising and public
relations. (PORKemon Go, 2016, p. 46-47)

Total Recall. The Madison VA Medical Center in Wisconsin
purchased two robots at a cost of $313,000 each, only to sell
them back to the manufacturer for less than $2,000 each after
leaving them unused for two years. The robots were acquired to
assist with the distribution of supplies throughout the VA
facility. (PORKemon Go, 2016, p. 120-121)

Function 750: Administration of Justice

Show Me the Money. The Department of Justice [DOJ] has used
settlements with defendants, particularly defendant
corporations, to compel payments of mandatory funds to third-
party groups without permission from Congress. ``Here is how
this works: DOJ prosecutes a person or company, generally
larger companies. Then when that company reaches a settlement
with the government that includes fines or payments, DOJ
induces the company to pay at least part of the fine to an
outside group instead of to the government.'' (Federal Fumbles
Vol. 2, 2016, p. 42)

Knock on Wood. Nearly $1.2 million dollars were spent to
purchase, install, and then remove a giant wooden sculpture
from the Federal Bureau of Investigation's Miami field office.
The sculpture caused severe allergic reactions that
hospitalized at least a dozen staffers, including the
facility's nurse. (PORKemon Go, 2016, p. 94-95)

Function 800: General Government

You've Got Mail. The Internal Revenue Service [IRS] has
spent more than $12 million for ``an e-mail archiving system
that the IRS has never used. While the IRS has been paying
subscription and renewal fees over the past two years beginning
in June 2014 for the service, the software to activate the
program was never even deployed, according to a review by the
Treasury Inspector General for Tax Administration.'' (PORKemon
Go, 2016, p. 88-89)

Campaign Cash. The Presidential Election Campaign Fund is
an antiquated leftover from the scandal-plagued Watergate era.
It was created to limit the influence of big money in
presidential campaigns by enticing candidates to accept free
money in exchange for limiting private donations and campaign
spending. In 2016, Martin O'Malley was the only major party
candidate to accept public, mandatory funding. (PORKemon Go,
2016, p. 27-29)

The Big Picture. During renovation of the Federal
courthouse in Los Angeles, CA, the General Services
Administration paid almost $1 million for a single picture of
Yosemite Falls in Yosemite National Park. The picture was to be
cut into six pieces and hung in the atrium of the courthouse.
(Federal Fumbles Vol. 2, 2016, p. 35)

BUDGET PROCESS REFORM

----------

Since the adoption of the Congressional Budget Act in 1974,
the budget process has been amended several times, adding
complexity and confusion to an already complicated exercise.
The process has become so cumbersome, frustrating, and
ineffective that Congress now frequently abandons it in favor
of manufactured, ad hoc procedures. This deterioration only
weakens Congress's power of the purse, and thus its capacity to
govern. In addition, fiscal conditions have changed
dramatically over the past 43 years, including the inexorable
growth of automatic spending as a share of the total budget and
the recent explosion of government debt that threatens to
overwhelm the budget and the economy.
Incremental, piecemeal fixes will not correct these deep
and fundamental failings in the budget process. What is needed
is a thorough rewrite of congressional budget practices.
Following an extensive series of hearings and working papers,
the House Budget Committee has developed the attached
discussion draft describing a proposed overhaul of the process.
During the 114th Congress, the Committee on the Budget
conducted extensive research in the practices of congressional
budgeting. The examination included several hearings and a
series of working papers. The aim was to develop a deeper
understanding of the nature of congressional budgeting and its
role in governing. The following discussions--updated from
their original publication in 2016--reflect some of the major
considerations in that exploration.

Reclaiming Constitutional Authority
Through the `Power of the Purse'

----------

Choosing priorities and allocating financial resources is
the most fundamental way for a legislature to shape governing
policies. Moreover, a government's budgeting process is central
to determining the kind of governing system a country has.
Hence, a vigorous practice of budgeting is fundamental to
Congress's policymaking authority under Article I of the
Constitution.
The United States Federal Government is not a parliamentary
system. To the extent Congress cedes control of the budget, the
Executive Branch--which is independent of Congress--gains
power, undermining the Constitution's carefully drawn balance
of powers. The Founders established this constitutional system
precisely to prevent such concentrations of power, which could
ultimately threaten individual freedoms. Therefore, the budget
process must strive to reinforce Congress's constitutional
authority and the U.S. Government's arrangement of three
separate but coequal branches.

BUDGETING AND GOVERNING

Most discussions of budget process reform focus on the
practical mechanisms of budgeting, and evaluate the budget's
constitutional role only secondarily, if at all. In truth,
however, the budget is a principal means of policymaking and of
exercising constitutional government. ``[T]he budget is much
more than a matter of dollars. It finances federal programs and
agencies and is a vital means of establishing and pursuing
national priorities. In a fundamental sense, the federal
government is what it spends.''\446\
---------------------------------------------------------------------------
\446\Allen Schick, The Federal Budget: Politics, Policy, Process--
Third Edition (Washington, DC: Brookings Institution Press, 2007), p.
14.
---------------------------------------------------------------------------
As one scholar put it a century ago: ``The budget in
practically all current discussions is treated as an incidental
or a minor thing. It is regarded primarily as a matter of
finance or of accounting procedure. It is viewed too often
merely as a question of the manipulation of figures. While as a
matter of fact instead of being a secondary thing it is of the
first importance; instead of being a subordinate thing it is a
fundamental thing; instead of being merely the manipulation of
figures it is decisive in its relation to the health, education
and welfare of all the citizens and residents of the state or
nation concerned.''\447\
---------------------------------------------------------------------------
\447\Edward Augustus Fitzpatrick, Budget Making in a Democracy (New
York: The MacMillan Company, 1918), p. vii.
---------------------------------------------------------------------------

CONSTITUTIONAL AUTHORITY FOR THE
`POWER OF THE PURSE'

Although America's Founders had little sense of formalized
budget practices, they knew control over spending and taxation
was one of the most powerful instruments of government--one
that had to rest with the legislature. ``Centuries of struggle
in England between Parliament and the Crown over the power of
the purse culminated in the principle that the government's
authority to tax and spend must be conferred by legislation. It
took centuries to implant this principle in England, but by the
time the American colonies were waging war for their
independence, its acceptance on this side of the Atlantic was a
basic tenet of limited, democratic government.''\448\
---------------------------------------------------------------------------
\448\Op. cit., p. 10, Schick.
---------------------------------------------------------------------------
Indeed, budgeting plays a critical role in maintaining the
constitutional order itself: ``When you have decided on your
budget procedure you have decided on the form of government you
will have as a matter of fact. Make the executive the
dominating and controlling factor in budget-making and you
have, irrespective of what label you put on it, an autocratic
actual government. If, recognizing the large part the executive
or the administration may play in budget-making, you give the
dominating and controlling influence to the representatives of
the people elected to the legislature, you have, irrespective
of what label you put on it, a democratic or a representative
actual government.''\449\
---------------------------------------------------------------------------
\449\Op. cit., p. viii, Fitzpatrick.
---------------------------------------------------------------------------
The most often-cited source of Congress's power of the
purse is the constitutional requirement that Federal spending
can occur only pursuant to an appropriations act (Article I,
Section 9). In fact, however, the congressional budgeting
authority lies in several provisions of the Constitution:

Article I, Section 7, First Clause: ``All Bills
for raising revenue shall originate in the House of
Representatives; but the Senate may propose or concur with
Amendments as on other Bills.''

Article I, Section 8, First Clause: ``The
Congress shall have the Power To lay and collect Taxes, Duties,
Imposts and Excises, to pay the Debts and provide for the
common Defence and general Welfare of the United States; but
all Duties, Imposts and Excises shall be uniform throughout the
United States;''

Article I, Section 8, Second Clause: [The
Congress shall have the Power] ``To borrow money on the credit
of the United States;''

Article I, Section 9, Seventh Clause: ``No Money
shall be drawn from the Treasury, but in Consequence of
Appropriations made by Law; and a regular Statement and Account
of the Receipts and Expenditures of all public Money shall be
published from time to time.''

Amendment XVI: ``The Congress shall have the
power to lay and collect taxes on incomes, from whatever source
derived without apportionment among the several States, and
without regard to any census or enumeration.''\450\
---------------------------------------------------------------------------
\450\See Committee on the Budget, U.S. House of Representatives, A
Compendium of Laws and Rules of the Congressional Budget Process,
Committee Print Serial No. CP-1, August 2015, p. 580-582.

Notwithstanding this authority, the Constitution prescribes
no particular budgeting procedures. Those came about from
practices that started from the beginning of the republic and
evolved over time, eventually leading to formal budget laws and
rules in the House and Senate.\451\ This tangle of laws and
procedures has contributed to the complexity of today's budget
process, making budgeting itself more difficult.
---------------------------------------------------------------------------
\451\Ibid.
---------------------------------------------------------------------------

HOW CURRENT BUDGET PRACTICES
UNDERMINE CONGRESS'S AUTHORITY

When adopted in 1974, the Congressional Budget Act sought
to reassert legislative control over budgeting after several
years of discord between Congress and both Presidents Johnson
and Nixon. Nevertheless, as the process has unfolded, various
procedures, or failures in budget practices, have come to
actually erode Congress's policymaking authority. In some
cases, Congress has ceded power, in concrete ways, to the
Executive Branch. The following discussion presents some
examples.

The President's Budget

Until the early 20th century, the Federal Government had no
formal or comprehensive budgeting procedure. Generally, agency
heads would visit their respective committees of jurisdiction
on Capitol Hill and submit their budget requests, with no
overall coordination by the White House, and the committees
would determine how much to provide.
This was a period of legislative dominance over budgeting.
``The various requests were compiled by the Treasury in an
annual Book of Estimates, but little effort was made to
coordinate spending by individual agencies or to ensure that
they totaled to an acceptable amount and were in accord with
national policy.''\452\ Congress controlled not only the
totals, but also individual spending items by making detailed
appropriations. Perhaps surprisingly, throughout this period--
during which balanced budgets were the fiscal norm in
peacetime--Congress maintained fiscal stability without a
formal budget plan to coordinate expenditures and revenues.
``As long as the government was small and its financial needs
modest, a national budget was not necessary for producing
acceptable outcomes.''\453\
---------------------------------------------------------------------------
\452\Op. cit., p. 14, Schick.
\453\Ibid., p. 13.
---------------------------------------------------------------------------
By the early 20th century, the stability had begun to break
down. Between 1894 and 1915, Federal spending doubled in
nominal terms, producing chronic deficits. ``Spending exceeded
revenues in 11 of the 17 years from 1894 to 1910.''\454\ World
War I (then known as The Great War) caused spending to soar,
from $726 million in 1914 to $19 billion five years later.
``The public debt followed a similar trend in those five years,
escalating from $1 billion to $26 billion.''\455\ That was
about 33 percent of gross domestic product [GDP] at the time.
(Today, the Federal Government's publicly held debt is 77.5
percent of GDP, and gross debt--including amounts owed to
government accounts--is about 106 percent of GDP.\456\)
---------------------------------------------------------------------------
\454\Ibid., p. 14.
\455\Ibid., p. 14.
\456\Congressional Budget Office, Updated Budget Projections: 2016-
2026, March 2016.
---------------------------------------------------------------------------
Progressive reformers at the time--favoring ``experts''
over politicians--encouraged a more centralized, administrative
form of government. They expressed this impulse, in part, by
proposing an organized practice of Federal budgeting, situated
in the Executive Branch. This led to the Budget and Accounting
Act of 1921.\457\ The measure contained the following main
elements:
---------------------------------------------------------------------------
\457\Public Law 67-13, 42 Stat. 20, enacted 10 June 1921.

It required the President to submit to Congress
every year a comprehensive budget reflecting all the agencies'
---------------------------------------------------------------------------
requests.

It created the Bureau of the Budget (renamed the
Office of Management and Budget in 1971), originally situated
in the Treasury Department.

It also created the General Accounting Office
(now the Government Accountability Office) to provide
congressional oversight of Executive Branch fiscal activities.

The arrangement was consciously modeled on that of the
United Kingdom. ``A simile--be like Britain--justified
recommendations for budget hierarchy in the United
States.''\458\ Thus, the Budget and Accounting Act imposed on
the U.S. Constitution's arrangement of three separate but
coequal branches a budget procedure designed for a
parliamentary system of government. In effect, it attempted to
straddle the constitutional separation of powers.
---------------------------------------------------------------------------
\458\Aaron B. Wildavsky, The New Politics of the Budgetary Process
- Third Edition (New York: Addison-Wesley Educational Publishers Inc.,
1997), p. 35.
---------------------------------------------------------------------------
The President's budget never had any legislative
authority--it still does not--but it provided the President a
platform to spell out a national agenda. Although actual
spending and taxation still could result only from acts of
Congress, congressional action on fiscal matters was piecemeal.
Only the President's budget reflected an overall view of the
government. President Franklin D. Roosevelt understood the
value of this instrument for shifting control of government and
policy to the Executive Branch. ``[T]he seeds of a new form of
governing had been sown. The initial change can be seen in the
New Deal, which brought significant new interventions in the
national economy and the creation of the entitlement programs
that threaten our fiscal stability today. FDR recognized the
constitutional significance of this shift when he moved the
Bureau of the Budget (established under the 1921 Budget and
Accounting Act) from the Treasury to the new Executive Office
of the President, establishing that henceforth control of the
budget would be key to controlling and directing the new form
of American government.''\459\
---------------------------------------------------------------------------
\459\Matthew C. Spalding, Congress, Budget Control, and
Constitutional Self-Government, testimony to the Committee on the
Budget, U.S. House of Representatives, 25 May 2016. President Roosevelt
moved the Bureau of the Budget in his 1939 government reorganization
plan.
---------------------------------------------------------------------------
After World War II, presidents consciously expanded the use
of the budget to express their policy agendas. ``During the
1950s and 1960s, it became customary for the president to
prepare a legislative program in tandem with the annual budget.
The president used the budget to propose spending initiatives,
which shaped Congress's agenda and media coverage. * * * This
was the age of the `imperial presidency,' a term coined by
scholars to characterize the extent to which the president
dominated national policy. The budget was one of his chief
tools, enabling him to formulate programs, promote spending
initiatives, and preside over a new burst of governmental
expansion that culminated in the Great Society legislation
enacted in 1964 and 1965.''\460\
---------------------------------------------------------------------------
\460\Op. cit., p. 17, Schick.
---------------------------------------------------------------------------
By the second half of the 1960s, budgetary conflict became
more common. ``[T]he simultaneous pressures on expenditures of
social programs and the Vietnam War strained the budget.
Faltering economic growth ended the fiscal dividend, and with
it the politics of accommodation among advocates of social
spending, defense spending, more or less balanced budgets, and
tax reductions. The legacy of earlier policies--entitlements,
indexing, tax cuts, Keynesian economics, federal credit--was
now visible in the changed composition and dynamics of the
federal budget. This budget was much less flexible, far more
difficult to control, and extraordinarily vulnerable to
breakdown as underlying the old order collapsed.''\461\
President Nixon provoked Congress even further by impounding
funds not merely for fiscal management, but to thwart
congressional policy aims. In 1974, lawmakers therefore adopted
the ``Congressional Budget and Impoundment Control Act''. It
was intended to restore congressional power over budgeting, and
at least theoretically, it did: Individual spending and tax
bills would now be written pursuant to the congressional budget
resolution--a new instrument created under the Budget Act--
rather than the President's budget. ``The budget resolution
augmented the wholly decentralized approach that had existed to
that point, in which individual committees considered pieces of
the budget, but the Congress never considered the budget as a
unified whole.''\462\ Because the congressional budget
resolution was the formal vehicle of fiscal policy, the
President's actions--limited to signing or vetoing spending and
tax bills--became piecemeal. Nevertheless, the President's
budget still came first in the process, and was considered the
start of budget development (both are still the case today).
Most experts refer to the congressional budget as a
``response'' to the President's, not as the main blueprint for
fiscal policy.
---------------------------------------------------------------------------
\461\Op. cit., p. 68, Wildavsky.
\462\Philip G. Joyce, testimony to the Committee on the Budget,
U.S. House of Representatives, on ``Reclaiming Congressional Authority
through the Power of the Purse,'' 25 May 2016.
---------------------------------------------------------------------------

The Dominance of Automatic Federal Spending

The problem of automatic government spending traces as far
back as the post-Civil War period. For the first 75 years of
the republic, both spending and revenue were handled by the
House Committee on Ways and Means and the Senate Committee on
Finance. After the Civil War, the House and Senate carved out
separate Appropriations Committees to handle spending matters.
``The arrangement allowed for unified control of spending in
one committee. Yet, it did not have authority to control all
spending--the size of pensions and other permanent
appropriations (together constituting over half the budget)
were determined by other committees.''\463\
---------------------------------------------------------------------------
\463\Op. cit., p. 30, Wildavsky.
---------------------------------------------------------------------------
That problem returned and worsened with the dawn of
President Johnson's Great Society. Most of the Federal
Government's automatic spending--formally known as ``direct''
or ``mandatory'' spending\464\--flows from effectively
permanent authorizations. Programs funded this way--mainly
entitlements--pay benefits directly to groups and individuals
without an intervening appropriation. They spend without limit.
Their totals are determined by numerous factors outside the
control of Congress: caseloads, the growth or contraction of
GDP, inflation, and many others. To put it simply, spending in
these programs is uncontrolled and uncontrollable--because it
is designed to be.
---------------------------------------------------------------------------
\464\Section 250 of the ``Balanced Budget and Emergency Deficit
Control Act of 1985'' defines ``direct spending'' as ``(A) budget
authority provided by law other than appropriations Acts; (B)
entitlement authority; and (C) the Supplemental Nutrition Assistance
Program.''
---------------------------------------------------------------------------
In 1965, Washington's automatic spending, including
interest payments (a mandatory payment in the true sense of the
word), represented about 34 percent of the budget. By 1974,
when the Congressional Budget Act was adopted, it had swollen
to nearly 49 percent of total spending. By 2016, direct
spending programs and interest payments had surged to more than
two-thirds of the budget,\465\ and will reach 81 percent by
2040.\466\ Automatic spending is the sole source of Federal
spending growth as a share of the economy and the main driver
of government debt. (See further discussion of automatic
spending below.)
---------------------------------------------------------------------------
\465\Op. cit., Table 1, Congressional Budget Office.
\466\Ibid., Table 1.
---------------------------------------------------------------------------
Even these figures, however, fail to fully capture the
pervasiveness of the problem. Control of spending, properly
understood, means the power to spend or not to spend taxpayer
money. Automatic/mandatory spending destroys Congress's ability
not to spend. By design, automatic spending requires a
Presidential signature to turn off--the very opposite of the
constitutional provision that spending can occur only pursuant
to positive legislation appropriating funds. It should be
Congress, not the President, deciding whether or not money is
spent. Yet even if Congress passes legislation to alter the
course of any automatic spending program, the President can
veto the change. Unless both Chambers of Congress can muster a
two-thirds supermajority to overrule the President, automatic
spending will continue on its current path. With two-thirds of
the budget no longer in the control of Congress, the so-called
``power of the purse'' has been effectively ceded to the
Executive Branch.

Abandoning the `Regular Order'

On numerous occasions, Congress has failed to follow
normal, basic budget procedures. In the five years ending in
fiscal year 2016, the House and Senate had produced only one
budget resolution conference report, and had finished none of
its regular appropriations bills on time. In the past 10 years,
Congress wrapped up just five of 120 regular appropriations on
schedule. These lapses resulted in continuing resolutions of
varying magnitudes and amounts, lasting well after the start of
the fiscal year, and sometimes late in the calendar year, just
as Members are leaving Washington for the Christmas and New
Year's holidays. Sometimes these lapses of appropriations--
coupled with impasses between Congress and the White House--
have resulted in temporarily shutting down agencies and
activities considered non-essential for health, safety, or
national security.
Although lawmakers themselves are ultimately responsible,
the current process allows them to postpone politically
sensitive bills until a late-year or post-election rush, with
no immediately apparent consequences. Furthermore, the process
lacks incentives to ensure timely consideration of regular
appropriations, leading to increasingly frequent use of omnibus
spending bills.
This breakdown of the ``regular order'' diminishes
Congress's policymaking authority in several ways.

First, the simple inability of Congress to follow
its own budget procedures is a de facto failure to exercise its
governing authority.

Second, in recent years, the total discretionary
spending amounts have been decided not through the budget or
appropriations, but in ad hoc, short-term budget agreements
negotiated among a few Members of Congress and the
administration, often behind closed doors. This cedes to the
Executive Branch partial authority to determine aggregate
spending levels--a decision that, under the Congressional
Budget Act, belongs solely to Congress.

Third, adopting huge omnibus spending bills means
Members are forced to take a single vote up or down on a
trillion-dollar package. They cannot differentiate their votes
on individual preferences; it is a take-it-or-leave-it
proposition for the entire discretionary budget.

Fourth, such legislation may contain important
policy choices heavily influenced by the administration. This
was the case with the ``Bipartisan Budget Act of 2013''--which
followed a two-week partial shutdown of government activities
in October--and the ``Bipartisan Budget Act of 2015''. In these
measures, the administration demanded that every increase in
defense discretionary spending had to be matched dollar-for-
dollar by increases in non-defense discretionary spending, and
Congress accepted.

These budgeting failures also corrode Congress's authority
in the eyes of the public. ``I have no specific evidence
concerning precisely how all of the recent talk about
government shutdowns, `fiscal cliffs,' and late budgets has
translated into a specific loss of public faith in the
Congress. But it can't have helped. If the Congress is viewed
only as a source of gridlock, it not only invites unilateral
executive action, but reinforces the notion that the President
can get things done and the Congress cannot. I would therefore
conclude that timely adherence to the budget timetable not only
makes the government work better and cost less, it also
strengthens the Congress as an institution.''\467\
---------------------------------------------------------------------------
\467\Op. cit., Joyce.
---------------------------------------------------------------------------

User Fees and Collections

According to the Office of Management and Budget, the
Federal Government will collect an estimated $356.2 billion in
user fees in 2017.\468\ A user fee typically reflects optional
business-like transactions between private parties and the
government rather than compulsory taxes. These fees, which are
booked as offsets to spending rather than as revenue, arguably
mask the true size and scope of government activity.
---------------------------------------------------------------------------
\468\Office of Management and Budget, Analytical Perspectives:
Budget of the U.S. Government--Fiscal Year 2017, p. 213.
---------------------------------------------------------------------------
Equally important, an estimated $231.8 billion of these
collections will be credited directly to expenditure accounts
and can be spent when they are collected, without further
congressional action.\469\ This weakens congressional oversight
and accountability. In some cases, the practice prevents
Congress from influencing agency behavior because the agencies
can essentially operate through fee collections, without
appropriations. In other cases, such as in the Asset Forfeiture
Fund, user fees are seen as fostering incentives for potential
abuse, because the more assets an agency seizes, the larger its
budget becomes.
---------------------------------------------------------------------------
\469\Ibid., p. 215.
---------------------------------------------------------------------------

RESTORING CONSTITUTIONAL GOVERNMENT

Piecemeal, incremental fixes to the current budget process
will no longer suffice to restore the practice of congressional
budgeting. A complete rewrite of the Congressional Budget Act
is needed, built on the following principles: exercising
constitutional government by reinforcing Congress's power of
the purse; promoting and sustaining fiscal responsibility;
restoring congressional control of spending and taxing;
improving oversight and facilitating orderly decision-making;
and reflecting the true costs of government programs.
For Congress to reclaim its full authority under Article I
of the Constitution, this rewrite of the Budget Act must reach
deeper than practical or mechanical elements. It should aim not
just at fixing current problems in the budget process--of which
there are many--but at actually enhancing constitutional
government. Among the considerations that can help guide the
process are the following:

Limiting Government

The principle of limited government runs throughout the
Constitution, but is clearly stated in the Tenth Amendment:
``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.'' In other words,
the Federal Government may not expand beyond the powers
expressly defined in the Constitution.
The most readily available means of implementing this
principle is the control of spending. If the Constitution was
intended to provide a framework for a limited government,
limiting spending is one of the best ways to achieve it.
Spending is how government does what it does, the reason
government taxes and borrows. Hence, spending is the root cause
of every other fiscal consequence. Total spending also is one
of the best measures of the size and scope of government and
its burden on the economy.\470\
---------------------------------------------------------------------------
\470\See Douglas J. Holtz-Eakin, testimony in hearing, Economic
Effects of Long-Term Federal Obligations, Committee on the Budget, U.S.
House of Representatives, 24 July 2003.
---------------------------------------------------------------------------
Controlling spending is therefore a principal means of
limiting government and should be a focus of the budget
process. To limit spending is to limit government itself and to
validate the principle that ``budgeting is governing.''

Enhancing Congress's Policymaking Role

Budgeting should be viewed as more than a mechanical or
accounting process. It should strengthen Congress's
constitutional role as the policymaking institution of the
Federal Government. Therefore, the budget resolution--the only
legislative vehicle that views the government comprehensively--
should define the priorities guiding its allocation of
resources. It should reflect the delegation of powers between
the Federal and State governments as envisioned in the
Constitution. Embracing these principles gives meaning to the
budget resolution as an instrument for governing, and provides
coherence to the spending and tax bills that follow.
Congress also must return to a regular and systematic
practice of budgeting. This should include passing separate
appropriations bills, as the budget process intends, and
developing methods of regaining control over automatic spending
programs. The best incentive for budgeting, of course, is
simply a firm commitment by lawmakers to fulfill their
legislative obligations. Nevertheless, the budget process can
provide incentives to support that commitment, and a rewrite of
the Budget Act should strive to create them.

Reinforcing the Balance of Powers

The Congressional Budget Act of 1974 made the budget a
concurrent resolution--not requiring the President's
signature--for a reason. The President still prepares his
budget--an expression of his own agenda, his own priorities and
policy proposals--independently of Congress. The President also
has the important budgeting role of either signing or vetoing
the spending and tax bills that implement the congressional
budget. Through veto messages, he can encourage, but not
compel, changes in those measures.
The United States Government is not a parliamentary system,
and its budgeting procedures--so central to governing--should
not be designed that way. The budget process should reinforce
the Constitution's arrangement of three separate, coequal
branches of government by separating powers, not combining
them. Preventing a concentration of power in any one branch is
essential to preventing the emergence of an autocratic
government. The congressional budget should assertively define
the allocation of resources in a way that aligns with
Congress's vision of national priorities. Congress also should
periodically review all spending, including direct spending
programs.

Controlling the Administrative State

The vast expansion of the Executive Branch has led to an
ever-growing role of government in American society--through
regulation rather than legislation. The Progressive impulses
that promoted this trend relied largely on policy ``experts,''
shielded from political influence.
In their regulatory capacities, these bureaucrats have come
to assume authorities of all three branches of government:
legislative, executive, and judicial. Thus, America's
constitutional government has increasingly become an
administrative state largely run by unelected career government
employees. ``In fact, the vast majority of `laws' governing the
United States are not passed by Congress but are issued as
regulations, crafted largely by thousands of unnamed,
unreachable bureaucrats.''\471\
---------------------------------------------------------------------------
\471\Jonathan Turley, ``The Rise of the Fourth Branch,'' The
Washington Post, 26 May 2013, http://articles.washingtonpost.com/2013-
05-24/opinions/39495251_1_federal-agencies-federal-government-fourth-
branch.
---------------------------------------------------------------------------
``Whether the regulatory agencies are `executive agencies,'
`executive departments,' `federal departments,' or `independent
regulatory commissions' is irrelevant. In whatever form they
may take, the myriad agencies and departments that make up this
administrative state operate as a `fourth branch' of government
that typically combines the powers of the other three and makes
policy with little regard for the rights and opinions of
citizens.''\472\ (See further discussion of regulatory
budgeting elsewhere in this report.)
---------------------------------------------------------------------------
\472\Joseph Postell, From Administrative State to Constitutional
Government, Heritage Foundation Special Report No. 116, 7 December
2012, p. 5: http://www.heritage.org/research/reports/2012/12/from-
administrative-state-to-constitutional-government.
---------------------------------------------------------------------------
In addition to taking firmer control of the regulatory
process itself, Congress could address this problem through
budgeting. ``Reversing the trend of a diminishing legislature
and the continued expansion of the executive falls largely to
Congress, which must rebuild itself to control the operations
of government, break the administrative state, and provide a
robust check on the modern executive * * * This will be a
battle that must be fought on many fronts, but a crucial piece
of that effort will be reviving the power of the purse as a
tool to help return lawmaking powers to Congress and restore
fiscal responsibility.''\473\
---------------------------------------------------------------------------
\473\Op. cit., Spalding.
---------------------------------------------------------------------------

CONCLUSION

No single activity consumes as much of Congress's time as
budgeting--choosing priorities and allocating financial
resources accordingly. These are among the most fundamental
ways for a legislature to shape governing policies. Moreover,
the budget process amounts to a direct exercise of the form of
government a country has. In the United States, the budget
system is essential to maintaining the Federal Government's
arrangement of three separate but coequal branches. The budget
process must reinforce basic constitutional principles.
The Founders granted Congress the principal role in
formulating national policy, and created a separate,
independent Executive Branch to execute it. It is not a
parliamentary structure; it consists of three coequal branches,
each with distinct powers. The budget process should not merely
accommodate the constitutional system, but should actively
strive to enhance it. Strengthening Congress's Article I
authority should be a central consideration of budget process
reform.

The Importance of Fiscal Goals

----------

When policymakers and the public have a consensus about the
broad guidelines of government's fiscal policy, that
understanding naturally leads to incremental budgetary targets
that discipline spending and taxation. For much of America's
early history, the standard was the balanced budget. Since that
principle was abandoned, no other norm has emerged to take its
place, and fiscal policy has been adrift.
An alternative to the balanced budget standard is ``fiscal
sustainability''--but its definition is elusive. It may refer
to a stable or declining ratio of debt to gross domestic
product; limiting deficits as a percentage of the economy;
establishing spending or revenue targets; or several other
options. Whatever standard is defined, it is not enough that it
be economically and fiscally defensible; it must be politically
compelling to ensure the public's acceptance. The congressional
budget process should then be constructed to achieve that goal.

THE BALANCED BUDGET PRINCIPLE

Through most of America's early history, policymakers
broadly accepted the aim of balancing the Federal budget in
peacetime--and they often succeeded. During the Nation's first
century-and-a-half, the budget was balanced roughly two-thirds
of the time (see Figure 9).\474\ ``Most of the exceptions were
during wartime, when a surge in federal spending led to
deficits. But the deficits were small and short-lived; when the
war ended, budgetary balance was restored. Deficits were also
occasioned by adverse economic conditions; these, too, tended
to disappear when the economy recovered.''\475\ Even with two
major wars in the 20th Century, along with the Cold War and
other conflicts, Congress achieved balanced budgets in 31
fiscal years. Since World War II, the budget has been balanced
in 12 fiscal years: 1947-1949; 1951; 1957-1958; 1960; 1969; and
1998-2001. The Federal Government has run deficits every year
since 2001.\476\
---------------------------------------------------------------------------
\474\Historical Statistics of the United States: Colonial Times to
1970, 93rd Congress, First Session, H. Doc. 78, part 2, Y 335-38.
\475\Allen Schick, The Federal Budget: Politics, Policy, Process--
Third Edition (Washington, DC: The Brookings Institution, 2007), p. 10.
Data drawn from the Historical Statistics of the United States:
Colonial Times to 1970, 93rd Congress, First Session, H. Doc. 78, part
2, Y 335-38.
\476\Office of Management and Budget, Budget of the U.S Government:
Fiscal Year 2017--Historical Tables.

For many, the belief in balancing budgets was merely common
sense: Government simply should not outspend its resources. As
President Truman put it: ``There is nothing sacred about the
pay-as-you-go idea except that it represents the soundest
principle of financing that I know.''\477\ For others, however,
balancing budgets reflected a moral commitment, as described by
Nobel Laureate James M. Buchanan: ``Politicians prior to World
War II would have considered it to be immoral (to be a sin) to
spend more than they were willing to generate in tax revenues,
except during periods of extreme and temporary emergency. To
spend borrowed sums on ordinary items for public consumption
was, quite simply, beyond the pale of acceptable political
behavior. There were basic moral constraints in place; there
was no need for an explicit fiscal rule in the written
constitution.''\478\
---------------------------------------------------------------------------
\477\Harry S. Truman, Memoirs of Harry S. Truman, two volumes
(Garden City, NY: Doubleday & Company, 1956), 2:41 quoted in Herbert
Stein, The Fiscal Revolution in America (Chicago: University of Chicago
Press, 1969), p. 207, and Aaron B. Wildavsky, The New Politics of the
Budgetary Process--Second Edition (New York: HarperCollins Publishers
Inc., 1992), p. 71. Before it was diluted into a rationalization for
merely managing budget deficits, ``pay-as-you-go'' referred to
balancing budgets.
\478\James M. Buchanan, ``Clarifying Confusion About the Balanced
Budget Amendment,'' National Tax Journal, Vol. 48, No. 3, September
1995, p. 347.

FIGURE 9

In any case, the balanced budget norm provided an
overarching guideline for the Federal Government's fiscal
policy. Although John Maynard Keynes published his economic
theory in the 1930s--saying deficit spending could be justified
at times for promoting economic growth and employment--it was
not until the 1960s that deficits became politically
acceptable. Even then, President Johnson insisted on balancing
his final budget (for fiscal year 1969), notwithstanding the
costs of the Vietnam War and his ambitious Great Society
programs.
After that, however, policymakers grew increasingly
tolerant of deficits. ``We have gone from trying to achieve
balanced budgets at least over a business cycle to trying to
keep peacetime deficits no larger than the rate of growth in
the economy.''\479\ Due to this tolerance, the Federal
Government has run deficits--often of substantial magnitude--
for all but four of the past 45 years, and the one brief
stretch of surpluses resulted mainly from an unexpected surge
in economic output (and consequently tax revenue) in the late
1990s. In recent years, annual deficits have soared to greater
than $1 trillion, so that nearly 40 percent of the government's
spending was financed with borrowed money. Although deficits
have declined in recent years, they still range near a half
trillion dollars annually and are projected to rise again later
in the decade, driven mainly by a surge of direct spending
largely due to the retirement of the baby-boom generation.\480\
The government's publicly held debt has swollen as well. It now
matches roughly three-fourths of the entire economy--higher
than at any time in the past 65 years--and it continues to rise
(see further discussion below).
---------------------------------------------------------------------------
\479\David M. Walker, former Comptroller of the United States,
Budget Reforms and Mandatory Spending, testimony to the Committee on
the Budget, U.S. House of Representatives, 9 June 2016.
\480\Congressional Budget Office, The Budget and Economic Outlook:
2017 to 2027, January 2017.
---------------------------------------------------------------------------
The erosion of the balanced budget standard has also
deprived policymakers of the only consensus norm for fiscal
policy they ever had, and nothing has replaced it. Today, the
only guideline is the modern, relativistic pay-as-you-go
concept, which merely ratifies existing deficits as the measure
of budgetary rectitude--no matter how large those deficits
might be. Thus, the proponents of the Affordable Care Act could
boast the health care program was fiscally ``responsible''
because it did not increase deficits--which already exceeded a
trillion dollars a year--while it recklessly added trillions of
dollars to government spending.
Although some budget experts consider the balanced budget
concept a kind of quaint anachronism, no other standard has
come to replace it, and the lack of any budgetary norm has left
fiscal policy adrift. ``Without an effective and enforced
fiscal goal, policymakers can always choose to borrow for any
tax cut or spending initiative. Policymakers are not forced to
prioritize or determine if something is worth the cost * * *
Having a goal--whether it is balancing the budget by a certain
date, or getting the debt to a specific level or share of the
economy in a certain amount of time--forces policymakers to
show their preferred paths for achieving the goal, which in
turn would lead to the discussion of the various trade-offs or
different approaches. That is supposed to be a core principle
of budgeting.''\481\
---------------------------------------------------------------------------
\481\Maya C. MacGuineas, Setting a Fiscal Goal, testimony before
the Committee on the Budget, U.S. House of Representatives, 15 June
2016.
---------------------------------------------------------------------------
Several alternatives for a fiscal goal have been offered,
backed by economically sound reasoning. A key question,
however, is whether alternative standards can gain a compelling
political consensus as well as an economic one.

OTHER FISCAL NORMS AND TARGETS

What is the Right Target?

Before choosing fiscal goals, one must first answer: ``What
is the ultimate purpose of Federal budgeting?'' It is possible
to conceive of numerous activities worthy of government
expenditure--military readiness, income and health security, a
competitive workforce, and many others. Yet most would argue
the main point of budgeting is to ensure the government's
financial sustainability over time, even if national priorities
change; other targets are secondary.

What is `Sustainability'?

Naturally, that assumption begs the question of what
``fiscal sustainability'' means. Since early on, the question
mostly has been connected with debt. Many of America's early
political leaders associated government debt with corruption
and thought it undermined checks and balances, threatening
liberty.\482\
---------------------------------------------------------------------------
\482\Chris Edwards, book review in the Cato Journal, Vol. 35, No. 2
(Spring/Summer 2015).
---------------------------------------------------------------------------
Today, government debt remains a key measure of fiscal
sustainability. While some debt is acceptable, when its growth
exceeds that of the overall economy, it puts the country on a
dangerous fiscal path. Debt service costs begin to absorb an
increasing share of national income, and the government must
borrow an increasing amount each year both to fund its ongoing
services and to make good on previous debt commitments.
Ultimately, this dynamic drains national savings and crowds out
private investment, leading to a decline in economic output and
a decline in a country's standard of living.
For this reason, economists caution that government debt in
excess of about 60 percent of the economy is not sustainable
for an extended period. When debt is growing faster than a
country's economy indefinitely, that country over time faces an
increased risk of economic stagnation, a sovereign debt crisis,
or both. ``Higher debt levels serve to increase interest rate
risk, can create a drag on economic growth, and can result in a
loss of confidence in the dollar and a loss of global currency
market share. The uncertainty over how the future fiscal gap
will be addressed results in fewer investments, less economic
growth, and fewer employment opportunities. The related
uncertainty also undercuts the ability of states,
municipalities, companies, non-profits, [and] individuals to
plan for the future.''\483\
---------------------------------------------------------------------------
\483\Op. cit., Walker.
---------------------------------------------------------------------------
The Federal Government currently stands at risk of such a
debt crisis. Gross Federal debt--which includes funds owed to
the Social Security Trust Fund and other Federal accounts--has
roughly doubled in the past eight years, to $19.9 trillion in
January this year, and CBO projects it will exceed $30 trillion
in just 10 years.\484\ Additionally, the share of debt known as
``debt held by the public''--the amount owed to outside
investors--is projected to reach $14.8 trillion, or 77.5
percent of GDP, at the end of fiscal year 2017. Over the next
10 years, it will surge to $25.0 trillion, or 88.9 percent of
GDP, by far the highest level of debt since just after World
War II.\485\ ``For comparison, such debt has averaged 40
percent of GDP over the past 50 years. During only one other
period in U.S. history--from 1944 through 1950, because of the
surge in federal spending during World War II--has that debt
exceeded 70 percent of GDP.''\486\ After that, the debt outlook
worsens further. ``If current laws generally remain unchanged,
federal debt [held by the public] as a percentage of GDP would
reach unprecedented levels because the gap between spending and
revenues would continue to widen. CBO projects that debt would
rise to 89 percent of GDP by 2027, and eight years later, in
2035, it would surpass the peak of 106 percent recorded in
1946. By 2047, federal debt would reach 150 percent of GDP--
significantly larger than the average of the past five
decades--and it would be on track to grow even larger.''\487\
---------------------------------------------------------------------------
\484\Congressional Budget Office, The Budget and Economic Outlook:
2017 to 2027, Table 1-4, p. 29.
\485\Ibid.
\486\Congressional Budget Office, The 2017 Long-Term Budget
Outlook, March 2017, p. 3.
\487\Ibid.
---------------------------------------------------------------------------
Moreover, unlike the government's post-war debt, which
resulted from temporary surges of war spending, today's debt
results from runaway spending in permanent government
programs--specifically the Federal Government's direct spending
programs. The growing debt already threatens to crowd out other
government programs. Under current trends, by 2027--just 10
years from now--the government's interest payments will exceed
funding for national defense, Medicaid, education,
transportation, and many other activities. Interest will become
the government's largest spending program, with only Social
Security and Medicare being greater.
The growing debt presents broader hazards as well. ``The
widely acknowledged drivers of the long-term debt--health and
retirement programs for aging populations, and borrowing
costs--will begin to overtake higher than average tax revenue
and steady economic growth by the middle of the decade, and
grow ever inexorably upwards until creditors effectively refuse
to continue to finance our deficits by charging ever higher
interest payments on an increasingly large debt portfolio. This
crisis state is more pernicious than mere stabilization of the
debt at a high level, which would suppress economic growth as
financing the debt crowds out other productive investment.
Rather, unchecked accumulation of debt would precipitate a
fiscal crisis that would upend world financial markets and do
lasting harm to the nation's standard of living.''\488\
---------------------------------------------------------------------------
\488\Douglas J. Holtz-Eakin, The Need for Budget Process Reforms,
testimony before the Committee on the Budget, U.S. House of
Representatives, 15 June 2016.
---------------------------------------------------------------------------

OPTIONS FOR PRIMARY FISCAL GOALS

The Balanced Budget

Forty-nine of the 50 American States have balanced budget
requirements, although some exclude capital spending. Citizens,
businesses, interest groups, and others readily understand this
concept because they must follow it in their own financial
activities. Yet despite the wide acceptance of a balanced
budget as a fundamental principle, there are important
differences in how one defines ``balance.''

Cash Balance. At the Federal level, a balanced budget
primarily means cash expenditures do not exceed cash
receipts.\480\ In this framework, capital expenditures for
roads, bridges, planes, and buildings are treated as full
budgetary expenditures in the year they are financed.
---------------------------------------------------------------------------
\489\Some components of the Federal budget, such as credit
programs, are treated on an accrual basis. By and large, however, the
budget is cash-based.
---------------------------------------------------------------------------
A principal virtue of maintaining cash balance is that it
precludes the accumulation of debt. Presumably it can also head
off long-term fiscal problems, such as those the Federal
Government now faces, because it addresses spending pressures
year by year rather than allowing them to accumulate. On the
other hand, maintaining simple annual cash balances does not
account for mounting pressures from factors such as
demographics and longer-term government obligations.
Consequently, it may give an illusion of fiscal stability while
simply failing to face potential longer-term crises.
Some also argue that a cash balance is difficult to achieve
during times of slow or negative economic growth, when demands
on government assistance programs, called ``automatic
stabilizers,'' are greater.

Accrual-Based Balance. An alternative to the cash-based
model is full accrual accounting, in which capital expenses are
recognized over the lifetime of the asset. For example, instead
of booking the full expense of a new building in the year it
was financed, an accrual-based system would recognize 1/30th of
the building's cost each year for the next 30 years. This is
the accounting system used by most businesses, States, and in
the everyday lives of citizens.
Under an accrual-based system, the budget is not ``cash-
balanced'' in years in which borrowing is used to finance long-
term capital needs. Instead, ``balance'' is defined as ensuring
operating expenditures do not exceed revenue. A fundamental
accounting requirement of this system is that operating
expenditures are defined to include the principal and interest
that is necessary to pay down capital needs over the lifetime
of capital assets. Under this system, a balanced operating
budget usually leads to fiscal sustainability even if borrowing
still occurs for capital needs. An operating budget that is not
balanced signals trouble and a likely deviation from a fiscally
sustainable path.
Clearly, a sound definition of ``capital'' is crucial to
ensuring a workable accrual-based budget. Generally Accepted
Accounting Principles typically define capital as long-lived
assets whose lifetime exceeds one year or more. Some argue that
softer assets such as ``human capital,'' job training,
development grants, and other less tangible public goods should
also be treated as capital assets. The risk of widening the
definition of capital, however, is that as more items become
eligible for borrowing and fewer things are considered as
operating expenses, a balanced operating budget becomes less
likely to ensure a sustainable debt load. Put another way, the
temptation in an accrual arrangement is to define an ever-
growing list of popular items as ``investments,'' and thereby
justify chronic deficit spending.
Under either of the balanced-budget scenarios described
above, budget reformers will need to define what a Federal
balanced budget truly means if that concept is ever to be
adopted as the primary fiscal target.

Sustainable Debt Level

The other widely discussed primary fiscal target, implied
by the discussion above, is a sustainable debt level, usually
defined as the ratio of debt to gross domestic product. This
metric is popular among economists and budgeteers because it
indicates a nation's financial flexibility and a government's
ability to finance basic operations. The higher the debt level
as a share of the economy, the less flexibility a government
has to respond to emergencies such as wars, natural disasters,
or severe economic downturns. Similarly, the higher the debt
level, the more government revenue must be diverted to pay
principal and interest, making less resources available for
basic services.
A debt level at 60 percent of GDP has international
recognition as a sustainable norm; it is the standard employed
under the Maastricht Treaty that formed the European Union.
Nevertheless, there is scant evidence that this specific number
leads to predictable economic results, either good or bad, as
even proponents of the debt-to-GDP measure acknowledge: ``There
is no magic number, but we need to set a realistic, yet
ambitious goal that will convince credit markets we are serious
about addressing the debt.''\490\
---------------------------------------------------------------------------
\490\Committee for a Responsible Federal Budget, Stabilize the
Debt: An Online Exercise in Hard Choices, FAQ page.
---------------------------------------------------------------------------

Spending Growth Limitation

An alternative to fixed targets of some sort would be a
more dynamic concept, such as limiting the rate of increase in
overall Federal spending to less than the economy's growth.
This might be described as ensuring the economy outgrows the
government. The aim might face problems similar to that of a
cash-balanced budget in difficult economic times, when demands
on government assistance programs are greater. On the other
hand, if the approach could be maintained for the most part, it
would almost surely lead to balanced budgets, or something
close, and the resulting benefits of declining debt and
shrinking debt service. This is because Federal tax revenue
generally grows faster than GDP. Therefore, if Congress held
spending at less than GDP growth--or even equivalent to it--
revenue would overtake spending, creating balanced budgets.

Time Period for Achieving Primary Fiscal Goals

Any primary fiscal goal, whether it be a balanced budget, a
debt-to-GDP ratio, or something else, needs a time period over
which the goal will be measured and enforced. For example,
should the target be enforced each fiscal year or should it be
evaluated over a period of years? Should it align with economic
cycles of growth, unemployment, or other conditions? The
answers to these questions will affect the practicality,
effectiveness, and ultimately the durability of fiscal targets.

SECONDARY FISCAL TARGET OPTIONS

Spending and Revenue Caps

Secondary fiscal targets do not speak directly to fiscal
sustainability, but they can have a profound impact on the type
of government under which citizens live. Chief among these are
spending and revenue targets. For example, some proposals would
cap spending and revenue at a certain level of GDP. Fiscal
targets such as these will influence whether Americans live
under an ever-expanding government or a more limited one, but
fiscal sustainability is at least theoretically possible either
way.
``Spending targets could be divided further among major
types of spending, perhaps with separate limits on
discretionary and mandatory spending or possibly dividing
further with separate targets for health entitlements and other
major categories of mandatory spending. Establishing separate
spending and revenue goals would allow fiscal rules to target
the cause of any violation of debt or deficit targets--if the
debt or deficit target was missed because spending exceeded the
target, fiscal rules would focus on corrective action on the
spending side and if the goal was not met because revenues fall
short of the target fiscal rules would focus corrective action
on the revenue side.''\491\ These kinds of fiscal targets more
properly belong in a budget resolution or in statute with
periodic sunset dates so that Americans can regularly express
their preference for the type of government they want.
Whichever they ultimately choose, however, the primary fiscal
target of the budget should be long-term sustainability.
---------------------------------------------------------------------------
\491\Op. cit., MacGuineas.
---------------------------------------------------------------------------

Deficit Ratios

A popular fiscal target is a deficit-to-GDP ratio of no
larger than 3 percent, as employed in the European Union (see
further discussion below). The level of 3 percent is chosen
because deficits at that level or below usually result in a
stable debt-to-GDP ratio as long as the economy is growing at
near 3 percent. (Since 2010, the U.S. economy has been growing
at only slightly better than 2 percent annually, adjusted for
inflation, and is projected to continue at about that rate
assuming current policies remain unchanged.) This specific
fiscal target may be considered a secondary measure because its
main purpose is to maintain a certain debt-to-GDP level, which
is the primary concern.

Spending Caps for Discretionary Spending,
Direct Spending Programs, and Other Categories

At various times, the budget has included spending caps for
discrete categories such as total discretionary spending,
national defense, and non-defense domestic programs. These caps
have been relatively successful at containing spending growth
in limited areas, but they have not resulted in overall fiscal
sustainability. Recent discussions have turned to whether to
impose caps on major direct spending categories, because there
is nearly universal recognition that these programs are growing
shares of the budget and are the main drivers of rising debt
levels.

Committee Spending Allocations

A little-known feature of the Federal budget is the
spending allocations provided to each authorizing committee as
part of the congressional budget resolution. These allocations
reflect spending assumptions within the budget. Although the
Congressional Budget Act provides points of order to enforce
these allocations, such provisions are typically waived. Thus,
there are no real consequences for breaching them. A reformed
budget process should rethink how to make these spending
allocations more effective.

HOW ARE TARGETS CODIFIED?

Ensuring a fiscal target will be met raises questions of
where it should be codified. A primary fiscal target that
speaks to sustainability should be a constitutional
requirement, or at the very least codified in statute. An
amendment to the Constitution stands the best chance of
enduring and actually achieving the intended outcome. If
ratified, a constitutional amendment would enjoy broad-based
public support, a basic understanding and awareness among
citizens, and an expectation that government has a fundamental
responsibility to live within its means. It would provide
citizens not only with electoral control over the budget, but
also legal recourse if government failed to abide by its
constitutional duty--though admittedly there are many
unanswered questions about how courts could enforce fiscal
targets.
Secondary fiscal targets that do not deal directly with
fiscal sustainability are best codified in statute, a budget
resolution, or House/Senate rules.

EXCEPTIONS TO FISCAL TARGETS

Inevitably, national emergencies or other unexpected events
will cause the budget to veer from the agreed-to fiscal
targets. There should be flexibility built into the targets and
their associated enforcement mechanisms to accommodate certain
such episodes. These exceptions, however, should not be
routine. Instead, they should be rare and reflect national
consensus on true emergency needs that justify a temporary
suspension of fiscal norms. Such exceptions should possibly
require super-majority votes and a plan to restore fiscal
norms, including paying down any debt accumulated during such
an emergency.

ENFORCEABILITY

Ultimately, fiscal targets are only as good as the will to
enforce them. Primary fiscal targets need an enforceable
guarantee; otherwise they will not be taken seriously and
ultimately will be ignored. Regrettably, most means of
enforcing fiscal targets are blunt and do not easily help
rationalize national priorities. That is because the main way
to enforce fiscal targets is by automatic spending or revenue
triggers. For example, under the existing discretionary
spending caps, an across-the-board spending cut (a sequester)
must be ordered if Congress appropriates more funding than is
statutorily allowed.
Another possible statutory control is to automatically end
authority for certain programs to operate under specific
circumstances. Tying these to budget criteria, however, could
prove challenging.
A non-statutory control to enforce fiscal targets is to
withhold scheduling of legislation unless certain conditions
are met. For example, the Congressional Budget Act does not
allow appropriations bills to be considered before the 15th of
May unless a budget resolution has been adopted. Similarly, the
House Leadership has created Cut-As-You-Go protocols under
which it will not schedule bills that authorize higher direct
or discretionary spending unless offset by other reductions.
The Leadership and Rules Committee also will often withhold
scheduling bills or amendments that have budget violations.
These non-statutory tools, however, can easily be waived and
have proved ineffective in ensuring fiscal sustainability over
the long term.

WHAT ARE OTHER COUNTRIES DOING?

European Union

The European Union [EU] implemented five ``convergence
criteria'' in 1992 through the Maastricht Treaty for new member
states to meet before joining (see Figure 2). These criteria
were established to maintain price stability in the Eurozone
and to ensure no shock to a new member's economy, allowing for
easy adoption of the euro as a single currency.

FIGURE 10

The five convergence criteria are still applied today and
are measured by the consumer price inflation rate; a
government's deficit as a percent of GDP, which may not exceed
3 percent; government debt as a percent of GDP, which may not
exceed 60 percent; a long-term interest rate; and the deviation
from a central exchange rate. The five convergence criteria
function as a fiscal safety net for the Eurozone by maintaining
fiscal stability.

Ireland

In 2011, Ireland established a Fiscal Advisory Council that
independently assesses, and publicly comments on, whether the
government is meeting budget targets and goals. This watchdog
council is successful in bringing transparency to government
decision-making regarding spending. As stated on its website,
the Irish Fiscal Advisory Council's mandate consists of the
following:\492\
---------------------------------------------------------------------------
\492\Irish Fiscal Advisory Council: http://www.fiscalcouncil.ie/
about-the-council/.

To endorse, as it considers appropriate, the
macroeconomic forecasts prepared by the Department of Finance
---------------------------------------------------------------------------
on which the Budget and Stability Programme Update are based.

To assess the official forecasts produced by the
Department of Finance. These are the macroeconomic and
budgetary forecasts published by the Department twice a year--
in the Stability Programme Update in the spring and in the
Budget in the autumn.

To assess whether the fiscal stance of the
Government is conducive to prudent economic and budgetary
management, with reference to the EU Stability and Growth Pact
[SGP]. The SGP is a rule-based framework that aims to
coordinate national fiscal policies in the economic and
monetary union.

To monitor and assess compliance with the
budgetary rule as set out in the Fiscal Responsibility Act. The
budgetary rule requires that the Government's budget is in
surplus or in balance, or is moving at a satisfactory pace
towards that position.

To assess, in relation to the budgetary rule,
whether any non-compliance is a result of ``exceptional
circumstances.'' This could mean a severe economic downturn
and/or an unusual event outside the control of Government which
may have a major impact on the budgetary position.

New Zealand

In 1994, New Zealand passed the Fiscal Responsibility Act,
which used transparency as the main tool to maintain sound
fiscal policy and prevent future debt. For example, the Act
requires the government to obtain permission from the
Parliament before incurring a deficit. Such a request must
include the following: the cause for the projected deficit; how
long the government is expected to be in debt as a result; the
projected amount of accumulated debt that will be incurred; and
a plan on how and when the government will repay the debt.
The Act has reportedly succeeded in enforcing fiscal
responsibility: ``The net result of these requirements is that
no government has sought permission to go into debt, and the
country has a history of balanced budgets where surpluses are a
regular feature of government fiscal management.''\493\
---------------------------------------------------------------------------
\493\The Honorable Maurice P. McTigue, testimony before the
Homeland Security and Governmental Affairs Subcommittee on Federal
Financial Management, Government Information, Federal Services, and
International Security, U.S. Senate, 26 June 2008.
---------------------------------------------------------------------------

CONCLUSION

For most of America's history, running through the 1950s,
Federal budget policy was guided by the principle of balancing
the budget. Congress did not always succeed in doing so, but
the standard helped maintain a fiscal discipline. When deficits
did emerge--usually during wars or other economic emergencies--
they were usually eliminated after the crisis passed.
Consequently, when the government did accumulate large debts,
they were typically paid down fairly swiftly.
The loss of the balanced budget norm has left fiscal policy
adrift. In recent years, the absence of sound budget control
has contributed to historically high levels of government debt
that show no sign of abating. The situation is even more
alarming with the retirement of the baby-boom generation now
under way, and the inexorable growth of Federal retirement
programs that will result.
An essential step for regaining control of the budget is to
establish a consensus about the goal of fiscal policy. If not a
balanced budget, then some other standard must be developed
that provides fiscal and economic sustainability and commands
broad political acceptance. The Federal budget process should
then drive fiscal policy toward that goal.

The Need to Control Direct Spending

----------

The prevalence of direct spending in the Federal budget
(also known as mandatory spending) threatens to overwhelm
fiscal policy and the economy. More than two-thirds of Federal
spending (including interest payments) runs on effectively
permanent authorizations, and Congress sets no limits on the
totals. This form of spending--mostly for the government's
major benefits programs, such as Social Security, Medicare,
Medicaid, welfare programs, and the like--is the sole cause of
spending growth as a share of the economy, and the main
contributor to the government's mounting debt--which has
reached its highest levels since just after World War II, and
continues to grow.
When the Congressional Budget Act was written in 1974, its
authors did not anticipate automatic spending and chronic
deficits would become so dominant. Over the years, additional
measures were developed to gain control of this spending--such
as ``pay-as-you-go'' and sequestration--but have proved
inadequate.
Washington's direct spending programs have grown cumbersome
and costly. Worse, they are failing the very people they were
intended to serve. Budget procedures can drive the needed
reforms by creating or enhancing incentives and disciplines
that drive reform. A central aim of a new budget process must
be to gain control of the government's automatic spending.

THE DOMINANCE OF AUTOMATIC SPENDING

Over the past 50 years, the Federal budget has increasingly
become dominated by automatic spending. This form of spending--
formally called ``direct'' or ``mandatory''\494\--flows from
effectively permanent authorizations, and Congress does not
limit the totals. In 1965, at the dawn of President Johnson's
Great Society, Washington's automatic spending, including
interest payments (a mandatory payment in the true sense of the
word), represented about 34 percent of the budget. By 1974,
when the Congressional Budget Act was adopted, it had swollen
to nearly 49 percent of total spending. By 2016, direct
spending programs and interest had surged to more than two-
thirds of the budget,\495\ and will reach 81 percent by
2040.\496\ (See Figure 11.) Automatic spending is the sole
source of Federal spending growth as a share of the economy and
the main driver of government debt. (See further discussion of
direct spending below.)
---------------------------------------------------------------------------
\494\Section 250(C)(8) of the ``Balanced Budget and Emergency
Deficit Control Act of 1985'' (as amended) defines ``direct spending''
as: ``(A) budget authority provided by law other than appropriations
acts; (B) entitlement authority; and (C) the Supplemental Nutrition
Assistance Program.''
\495\Op. cit., Table 1, Congressional Budget Office.
\496\Ibid., Table 1.

Programs funded this way pay benefits directly to groups or
individuals without an intervening appropriation. They spend
without limit. Their totals are determined by numerous factors
outside the control of Congress: caseloads, the growth or
contraction of gross domestic product [GDP], inflation, and
---------------------------------------------------------------------------
others.

FIGURE 11

To put it simply, spending on these programs is
unrestrained because it is designed to be. Any reform of the
congressional budget process must include procedures for
reining in this automatic spending. Otherwise fiscal policy
will continue to run out of control, overwhelming the budget
and the Nation's economy.

SPENDING AND DEBT

Figures by the Congressional Budget Office [CBO] confirm
that excessive spending, not a shortage of tax revenues, is the
cause of the government's growing debt problem. CBO's latest
estimates show Federal tax revenue in 2018 will reach about
18.1 percent of GDP, well above the 17.4-percent average of the
past 50 years. Total spending, however, will be about 20.5
percent of GDP,\497\ and will continue to outpace revenue over
the next 30 years.\498\
---------------------------------------------------------------------------
\497\Congressional Budget Office, The Budget and Economic Outlook:
2017 to 2027, January 2017, Table 1-1, p. 10.
\498\Congressional Budget Office, The 2017 Long-Term Budget
Outlook, March 2017, Table 1, p. 2.
---------------------------------------------------------------------------
CBO projects that while tax revenue will average a
historically high level of 19.3 percent of GDP annually for the
decade of 2038 through 2047, the government's programmatic
spending--that is, excluding interest--will average 22.8
percent a year. Adding interest costs boosts the annual
spending average to 28.0 percent of GDP.\499\
---------------------------------------------------------------------------
\499\Ibid.
---------------------------------------------------------------------------
Rising interest costs will also crowd out other activities,
as increasing shares of government spending go not to support
government programs, but simply to pay debt service. Under
current trends, by 2027--just 10 years from now--the
government's interest payments will exceed funding for national
defense, Medicaid, education, transportation, and many other
activities (see Figure 12). Interest will be the government's
third-largest program, with only Social Security and Medicare
greater.
A significant difference from the past, however, is that
the previous record debt resulted from large but temporary
surges of war spending; future debt is projected to result from
permanent government spending programs. ``It is clear that our
Federal fiscal challenge is so great that unlike after World
War II, we will not be able to grow our way out of the problem.
It is also clear that we will not be able to reduce our Federal
public debt to GDP to a reasonable and sustainable level
without addressing mandatory spending programs and engaging in
comprehensive tax reform.''\500\
---------------------------------------------------------------------------
\500\The Honorable David M. Walker, Budget Reforms and Mandatory
Spending, testimony before the Committee on the Budget, U.S. House of
Representatives, 9 June 2016.

FIGURE 12

As noted previously, the government's chronic and growing
deficits will push debt above its already historically high
levels. Gross Federal debt--which includes funds owed to the
Social Security Trust Fund and other Federal accounts--has
roughly doubled in the past eight years, to $19.9 trillion in
January this year, and CBO projects it will exceed $30 trillion
in just 10 years.\501\ Additionally, the share of debt known as
``debt held by the public''--the amount owed to outside
investors--is projected to reach $14.8 trillion, or 77.5
percent of GDP, at the end of fiscal year 2017. Over the next
10 years, it will surge to $25.0 trillion, or 88.9 percent of
GDP, by far the highest level of debt since just after World
War II.\502\ ``For comparison, such debt has averaged 40
percent of GDP over the past 50 years. During only one other
period in U.S. history--from 1944 through 1950, because of the
surge in federal spending during World War II--has that debt
exceeded 70 percent of GDP.''\503\
---------------------------------------------------------------------------
\501\Congressional Budget Office, The Budget and Economic Outlook:
2017 to 2027, Table 1-4, p. 29.
\502\Ibid.
\503\Congressional Budget Office, The 2017 Long-Term Budget
Outlook, March 2017, p. 3.
---------------------------------------------------------------------------
After that, the debt outlook worsens further. ``If current
laws generally remain unchanged, federal debt [held by the
public] as a percentage of GDP would reach unprecedented levels
because the gap between spending and revenues would continue to
widen. CBO projects that debt would rise to 89 percent of GDP
by 2027, and eight years later, in 2035, it would surpass the
peak of 106 percent recorded in 1946. By 2047, federal debt
would reach 150 percent of GDP--significantly larger than the
average of the past five decades--and it would be on track to
grow even larger.''\504\
---------------------------------------------------------------------------
\504\Ibid.
---------------------------------------------------------------------------
To call these fiscal patterns ``unsustainable'' is to say
they will not, in fact, be sustained. Unless Congress acts,
automatic Federal spending will overwhelm the budget and bury
the country in debt. That will force wrenching program changes
and spending cuts, or ever-growing levels of taxation,
suffocating taxpayers and the economy.

TRENDS IN AUTOMATIC SPENDING PROGRAMS

CBO reports that total non-interest mandatory spending in
fiscal year 2016 was $2.429 trillion, and will grow to $4.305
trillion by 2027, reflecting an average annual growth rate of
5.3 percent--faster than both CBO's projection of 2016 nominal
economic growth of 2.9 percent and CBO's longer-term projection
of economic growth of 3.9 percent. Within overall non-interest
mandatory spending, Medicare and Social Security are projected
to continue growing faster than the economy as a whole, with
Social Security expected to grow from $910 billion in 2016 to
$1.7 trillion in 2027 and Medicare expected to grow from $692
billion in 2016 to $1.4 trillion in 2027.\505\
---------------------------------------------------------------------------
\505\Congressional Budget Office, The Budget and Economic Outlook:
2017 to 2027, January 2017.
---------------------------------------------------------------------------
Over the next decade, the major means-tested direct
spending programs are expected to grow by 4.3 percent per
year--from $745 billion in 2017 to $1.1 trillion in 2027. Over
just the past 10 years, these programs have grown from $385
billion in 2007 to $720 billion in 2016.\506\
---------------------------------------------------------------------------
\506\Ibid.
---------------------------------------------------------------------------
Several factors contribute to these increases. Most
recently, the 2008 recession caused significant increases in
spending on low-income programs. Spending is projected to
remain at elevated levels for several programs--most notably,
the Supplemental Nutrition Assistance Program, [SNAP] (formerly
known as food stamps). Over the past 10 years, SNAP increased
by an average of 7.3 percent annually, ballooning from $35
billion in 2007 to $73 billion in 2016. While this amount is
projected to decline slightly over the next 10 years, it
remains elevated compared to prerecession levels.\507\
---------------------------------------------------------------------------
\507\Ibid.
---------------------------------------------------------------------------
Other programs have also seen large increases. Supplemental
Security Income [SSI] was created as a needs-based program that
provides cash benefits to aged, blind, or disabled persons with
limited income and assets. When the program began, the majority
of payments went toward the aged. As it matured, however, a
much greater percentage of beneficiaries were under age 18 or
between the ages of 18 and 64. Over the past decade, spending
on SSI has grown by 4.4 percent per year.\508\
---------------------------------------------------------------------------
\508\Ibid.
---------------------------------------------------------------------------
The largest means-tested program in the Federal budget is
Medicaid, the Federal-State low-income health program. Medicaid
spending- and its related State Children's Health Insurance
Program [SCHIP]--doubled from $197 billion in 2007 to $382
billion in 2016. Going forward, the Congressional Budget Office
projects Federal Medicaid and SCHIP spending to reach $656
billion in fiscal year 2027. Absent reform, Medicaid will not
be able to deliver on its promise to provide a sturdy health
care safety net for society's most vulnerable. Because of the
flawed incentives in this program, Medicaid grew at 7.4 percent
a year over the past 10 years, and it is projected to grow 5.3
percent a year over the next 10 years. This level of growth is
clearly unsustainable.

EXISTING CONTROLS ON AUTOMATIC SPENDING

Reconciliation

The most readily available mechanism for driving reform of
automatic spending programs is budget reconciliation. It is an
optional process, used far too seldom, in which the budget
resolution can call for reforms of direct spending programs
(and tax laws) by requiring one or more authorizing committees
to achieve savings in programs within their respective
jurisdictions. A principal advantage of budget reconciliation
is that it is not subject to a filibuster in the Senate; a
reconciliation bill can pass with a simple majority of 51
Senators. In addition, Senate debate on a reconciliation bill
is limited to 20 hours (10 hours on conference reports), and
amendments must be germane.
A complication of the process, however, is that in the
Senate the provisions in a reconciliation bill are restricted
to budgetary matters. This requirement, known as the ``Byrd
Rule'' (Section 313 of the Congressional Budget Act of 1974),
prohibits ``extraneous'' provisions from reconciliation bills.
Extraneous provisions include any that would cause an estimated
deficit increase beyond the 10-year budget window compared to
what deficits would have been otherwise. Among other things,
the Byrd Rule gives the Senate leverage to strike House
provisions the Senate does not favor. In addition, the
definition of ``extraneous'' provisions is highly subject to
interpretation by the presiding officer, who relies on the
Senate's Parliamentarian.\509\
---------------------------------------------------------------------------
\509\The rule, authored by Senator Robert C. Byrd (D-W.Va.)--a
strong advocate for Senate prerogatives--was adopted in 1985 and
amended in 1990.
---------------------------------------------------------------------------
The use of reconciliation has changed over the years.
Originally, under the 1974 Budget Act, Congress was to adopt
two budget resolutions a year. The first, in the spring, would
set advisory levels to guide the work of authorizing and
appropriating committees; the second, in September, would
establish binding levels. If economic or fiscal conditions had
changed by then--or if fiscal outcomes differed from earlier
projections (possibly because of new legislation)--the second
resolution would contain instructions calling for changes that
would reconcile actual spending and revenue with the binding
levels of the second budget resolution. In the early 1980s,
Congress ceased adopting two resolutions, so reconciliation was
used in the ``earlier'' (and sole) budget resolution in the
spring, if at all. The time frame for reconciliation was also
extended to cover multiple years.
From 1980 through 1997, reconciliation was used mostly to
reduce deficits by restraining direct spending programs--
ranging from farm subsidies to student loans to welfare--and
increasing revenue. The major policy reforms in President
Reagan's first budget were enacted through the ``Omnibus Budget
Reconciliation Act of 1981''. (His first round of tax cuts, the
Economic Recovery Tax Act of 1981, did not employ
reconciliation.) The extension of health coverage benefits
occurred through the ``Consolidated Omnibus Budget
Reconciliation Act of 1985''. Other reconciliation measures
included the ``Budget Enforcement Act of 1990''; the
implementation of President Clinton's first budget in 1993; a
welfare reform bill in 1996 titled the Personal Responsibility
and Work Opportunity Reconciliation Act; and the ``Balanced
Budget Act of 1997''.
In 2001 and 2003, Congress and President Bush used
reconciliation to enact his tax cuts, overcoming a threatened
Senate filibuster. Because of this, however, the Byrd Rule
limited the tax reductions to 10 years, leading to
automatically scheduled tax increases that were averted in
January 2011 and again in January 2013. In the latter case,
Congress and the President agreed to extend most of the Bush-
era tax policies, but did allow tax increases on certain upper-
income taxpayers.
In the fiscal year 2010 budget resolution (S. Con. Res.
13), Democratic majorities in the House and Senate made a
significant change in the use of reconciliation. Instead of
employing the procedure for deficit reduction, the resolution
called for token savings of $1 billion from each of several
committees, allowing them to use reconciliation to adopt their
major health coverage overhaul. This step became necessary in
the end, because the two Chambers could not agree on a single
health insurance measure. Consequently they adopted two laws,
one modifying the other, to constitute the Affordable Care Act
[ACA], or Obamacare.\510\ Republican Majorities used a similar
technique in the fiscal year 2016 budget resolution conference
report (S. Con. Res. 11) to employ reconciliation for repealing
the Affordable Care Act (H.R. 3762, the Restoring Americans'
Healthcare Freedom Reconciliation Act of 2015). They did so as
well with the fiscal year 2017 budget resolution (S. Con. Res.
3).
---------------------------------------------------------------------------
\510\The Affordable Care Act consists of two measures: the Patient
Protection and Affordable Care Act (Public Law 111-148), and the Health
Care and Education Reconciliation Act of 2010 (Public Law 111-152).
---------------------------------------------------------------------------

Pay-As-You-Go

For most of the Nation's history, the concept of pay-as-
you-go meant balancing the budget--that is, limiting spending
to what the government collected in revenue. In 1990, however,
policymakers converted pay-as-you-go into a rationalization for
maintaining or managing deficit spending, rather than reducing
or preventing it. This new interpretation of ``pay-as-you-go''
was adopted in the ``Budget Enforcement Act of 1990'' [BEA]
(Title XIII of Public Law 101-508), which sought to rescue
Congress and the President from a pending fiscal crisis due to
the ``Balanced Budget and Emergency Deficit Control Act of
1985'' (Title II of Public Law 99-177). The law required
Congress to meet specific, declining deficit targets each year,
with the aim of achieving a balanced budget by 1991. Congress
and the President could not meet the target for fiscal year
1991, and consequently faced automatic, across-the-board
spending cuts under a process called ``sequestration.'' To
avoid that outcome, they agreed to a compromise package of
spending restraints and tax increases, backed by a new set of
budget disciplines, including pay-as-you-go.\511\
---------------------------------------------------------------------------
\511\Robert Keith, The Statutory Pay-As-You-Go Act of 2010,
Congressional Research Service, 2 April 2010, p. 1.
---------------------------------------------------------------------------
The new version of pay-as-you-go (typically called pay-go
or PAYGO) is not to reduce or eliminate deficits, but simply to
prevent them from getting larger. ``PAYGO is budget-speak for
`do no harm' or `don't make deficits worse.'''\512\ The
practice requires that the estimated costs of any new direct
(or mandatory) spending initiatives be offset by direct
spending reductions elsewhere, or tax increases, or a
combination of the two. These costs are measured against
whatever the estimated baseline deficit is at the time, no
matter how large. Any costs or savings from new direct spending
or tax legislation are tallied on a ``scorecard'' that
estimates their effects over five years and 10 years. If all
the legislation in a given session of Congress causes a net
deficit increase, the Office of Management and Budget imposes
sequestration to make up the difference.
---------------------------------------------------------------------------
\512\Alice M. Rivlin, Statutory PAYGO: An Important First Step
Toward Fiscal Responsibility, testimony to the Committee on the Budget,
U.S. House of Representatives, 25 June 2009.
---------------------------------------------------------------------------
The statutory pay-as-you-go provision under the BEA ran
through 1997, and then was extended through the end of fiscal
year 2002. It officially terminated on 2 December 2002 with the
enactment of Public Law 107-312, which fixed the remaining
balances on the pay-as-you-go scorecard at zero. From time to
time after that, attempts were made to restore pay-as-you-go in
law, but they proved unsuccessful--although the principle
remained in House and Senate rules. Pay-as-you-go was restored
by the Statutory Pay-As-You-Go Act of 2010, enacted on 12
February 2010 (Public Law 111-139).\513\
---------------------------------------------------------------------------
\513\Op. cit., p. 1-3, Keith.
---------------------------------------------------------------------------
Proponents contend pay-as-you-go has provided an important
restraint on deficit spending, and in many cases prevented new
legislation from being considered because its authors could not
identify sufficient offsets for new spending: ``[S]tatutory
PAYGO proved a highly effective deterrent to deficit-increasing
legislation in the 1990s--at least until the surplus was
achieved in 1998. The effects of PAYGO were not visible to the
public or the press because they involved spending and tax
proposals that never saw the light of day.''\514\ ``Clearly,
PAYGO will not by itself balance the budget or address our
long-term fiscal challenges, but it will help to bring
discipline back to the budgeting process. PAYGO puts the brakes
on policies that increase the deficit and it provides hurdles
Congress has to clear before enacting new mandatory spending or
tax cut policies.''\515\
---------------------------------------------------------------------------
\514\Op. cit., Rivlin.
\515\Maya C. MacGuineas, President, Committee for a Responsible
Federal Budget, testimony before the Committee on the Budget, U.S.
House of Representatives, 25 July 2007.
---------------------------------------------------------------------------
On the other hand, critics contend pay-as-you-go has little
benefit because it does not cut into the government's already
unsustainable path of spending. ``Paygo does not place any
constraint on the natural (and inexorable) growth of
entitlement spending that occurs under current law. Rather, it
puts a big hurdle in the way of across-the-board tax cutting
that might be promoted in a pro-growth economic agenda. * * *
Paygo is the embodiment of the view that fiscal responsibility
entails `paying for' newly enacted spending commitments. That's
very different from the view that sound fiscal policy focuses
on spending control to allow private actors to keep and use as
many of their own resources as possible.''\516\
---------------------------------------------------------------------------
\516\James C. Capretta, The Budget Act at Forty: Time for Budget
Process Reform, the Mercatus Center at George Mason University, March
2015.
---------------------------------------------------------------------------
Put another way, instead of reinforcing the clear fiscal
goal of balanced budgets, pay-as-you-go actually ratifies
existing deficits, however large, as the measure of budget
``discipline.'' Under this notion, Congress and President Obama
in 2010 could justify trillions of dollars in new spending for
the Affordable Care Act because it was offset on paper by
estimated savings in other programs (including Medicare) and
tax hikes (many of which were of questionable credibility).
This was termed ``fiscally responsible'' because it did not
increase deficits that already exceeded $1 trillion a year.
Interestingly, once the ACA was enacted, the Congressional
Budget Office noted it could no longer track the deficit-
reduction components of the legislation because they occurred
in existing programs. ``In cases where the new [ACA] laws
affected an existing flow of spending or revenues--such as
Medicare outlays or income tax receipts--their effects will not
be separately identifiable. Therefore, comparing all elements
of the laws' ultimate impact with the amounts estimated at the
time of their enactment will not be possible.''\517\ CBO later
explained this is a problem with all alleged deficit-reducing
measures: ``[T]he problem is common to all legislation that
changes existing federal programs or tax provisions with
results that cannot be clearly distinguished from what would
have occurred under previous law.''\518\
---------------------------------------------------------------------------
\517\Congressional Budget Office, The Budget and Economic Outlook:
An Update, August 2010, Box 1-1.
\518\Congressional Budget Office, ``Answers to Questions for the
Record Following a Hearing on the Budget and Economic Outlook for 2014
to 2024 Conducted by the Senate Committee on the Budget,'' 10 June
2014.
---------------------------------------------------------------------------

Other Procedural Restraints on Automatic Spending

Many other procedural restraints on automatic spending
exist. Section 302(f) of the Congressional Budget Act limits
new direct spending to the amounts allocated by the budget
resolution to a given authorizing committee. It is enforced by
a point of order, though the enforcement is usually waived by
the rule for consideration of the legislation. The Cut-As-You-
Go rule (Clause 10 of House Rule XXI) is a more focused version
of pay-as-you-go. It requires that any legislation increasing
direct spending be offset by commensurate reductions in direct
spending only (not revenue); it is enforced by a point of
order. Finally, the Long-Term Direct Spending rule (Section 3
of House Resolution 5, The Rules of the House of
Representatives for the 115th Congress) prohibits the
consideration of legislation that would increase direct
spending by $5 billion or more in any of four consecutive 10-
year periods following the initial 10-year budget window. It is
also enforced by a point of order.

POTENTIAL ADDITIONAL CONTROLS
ON AUTOMATIC SPENDING

The budget process cannot by itself bring about the
fundamental reform of direct spending programs needed to put
them on a sustainable fiscal course. Nevertheless, budget
procedures can provide tools and incentives that can drive
program reform. Among proposals discussed are the following.

Caps on Direct Spending

One possible means of controlling automatic spending is to
place ceilings on total direct spending amounts, similar to
caps on annually appropriated (discretionary) spending.
Theoretically, the caps might allow direct spending programs to
continue paying out benefits, as they do now, but then impose
sequestration if the ceiling were breached. Because of the
potentially wrenching impact of such abrupt funding reductions,
the cap would presumably create an incentive for Congress to
develop more gradual program adjustments and spending
restraints.
The ceilings could be designed in several different ways.
For instance, there could be one cap on all direct spending.
Alternatively, different caps could be applied to groups of
direct spending programs: the major health programs, income
security, and so on. Ceilings could be imposed on certain large
entitlement programs, such as Medicare or Medicaid. Another
option would be to design limits such that Federal spending
would increase at a rate slower than the growth of gross
domestic product. Because tax revenue tends to grow slightly
faster than the economy, this would mean revenue would outpace
spending, reducing deficits and eventually leading to balanced
budgets.
Caps are a blunt instrument when applied to direct spending
programs, because they may force indiscriminate cuts in
benefits to eligible individuals or groups. As noted
previously, the spending totals for direct spending programs
are simply whatever results from all these payments; Congress
does not set lump sum amounts or limits on the totals, as it
does with discretionary spending. On the other hand, that is
precisely the problem with these benefit programs: they spend
without limit, which is why their spending is spinning out of
control. Caps on these programs could reverse that problem. The
biggest challenge would lie in determining what happens if a
ceiling is reached, and how to execute the enforcement of the
cap or caps.

Sunset Provisions

Another way of addressing direct spending is to eliminate
the effectively permanent nature of their authorizations,
ensuring they expire periodically. Presumably, the
reauthorization procedure would force Congress to reconsider
these programs from time to time, to conduct oversight, and
perhaps promote reforms and limit their funding.
It is uncertain how much actual reform and savings would
result from such a practice, but at least it would cause
Congress to re-evaluate these programs on a regular basis.

Long-Term Budgets for Major Direct Spending Programs

The Brookings-Heritage Fiscal Seminar in 2008 advocated
long-term budgets for the three major direct spending programs,
Social Security, Medicare, and Medicaid. The argument for this
approach was that because many people rely heavily on
entitlements and plan their lives around them, the programs
should not undergo frequent changes. ``The three major
entitlement programs should be budgeted for longer periods (for
example, 30 years) but be subjected to review every five years.
These five-year reviews would allow reconsideration of the
trade-offs between entitlement spending and other purposes and
might cause adjustments in benefits, premiums, taxes, or all
three.''\519\
---------------------------------------------------------------------------
\519\The Brookings-Heritage Fiscal Seminar, Taking Back Our Fiscal
Future, April 2008. In addition to the Brookings Institution and the
Heritage Foundation, participation in the Seminar included
representatives from various other research and policy organizations,
including the American Enterprise Institute, the Concord Coalition, the
Urban Institute, and the Progressive Policy Institute.
---------------------------------------------------------------------------
The long-term budget could be made the default spending
plan, allowing Congress and the President to make modifications
if they agreed to do so. In any case, the approach would
encourage policymakers to make decisions, ``rather than
allowing some programs to have automatic status'' with which
they ``steadily crowd out other priorities.''\520\
---------------------------------------------------------------------------
\520\Stuart M. Butler, testimony before the Committee on the
Budget, U.S. House of Representatives, 9 June 2016.
---------------------------------------------------------------------------
Although many support applying a long-term perspective to
direct spending programs, budgeting for the long term may be
difficult because of the inherent difficulties with estimating
economic and fiscal conditions over several decades.

Triggers

The Fiscal Seminar also proposed triggers for the major
direct spending programs that would force action--automatic
benefit cuts or revenue increases--when projected spending
exceeded budgeted amounts. The trigger ``could only be over-
ridden by an explicit vote or enactment of alternative policies
that would achieve budget outcomes similar to the automatic
adjustments.''\521\
---------------------------------------------------------------------------
\521\Op. cit., the Brookings-Heritage Fiscal Seminar.
---------------------------------------------------------------------------
An alternative would be a trigger leading to the formation
of a commission that would make recommendations for adjusting
the direct spending path, and holding an up-or-down vote on the
recommendations. ``The trigger process that forces an explicit
vote when the long-run budget for any of these programs is
exceeded will dramatize the importance of modernizing these
entitlement programs to reflect increasing longevity, higher
incomes, and the rising cost of medical care.''\522\
---------------------------------------------------------------------------
\522\Ibid.
---------------------------------------------------------------------------
Recent experience with such mechanisms, however, has not
been encouraging. The ``Medicare Prescription Drug,
Improvement, and Modernization Act of 2003'' required the
Medicare trustees to report annually whether general revenue
funding for Medicare would exceed 45 percent of program outlays
in the current fiscal year or any of the subsequent six fiscal
years. If such a determination occurred in two consecutive
years, the President was required to submit a legislative
proposal to lower the ratio to 45 percent.
The trustees issued such funding warnings in every one of
their annual reports from 2006 through 2013, yet only once did
a President submit corrective legislation. That was from
President Bush in 2008, and the Democratic Majority in Congress
did not act on it. President Obama never submitted such a
proposal.\523\
---------------------------------------------------------------------------
\523\Patricia A. Davis, Todd Garvey, Christopher M. Davis, Medicare
Trigger, Congressional Research Service, 10 March 2014.
---------------------------------------------------------------------------

CONCLUSION

The Federal debt has risen to historically high levels. It
is driven to such perilous heights largely by automatic
spending, mainly for government direct spending programs. The
1974 Congressional Budget Act did not anticipate the immense
problem entitlement spending would become. Therefore, an
imperative for budget process reform is to develop means of
controlling automatic spending. To that end, Congress should
explore various options, including the possibility of imposing
caps, instituting sunset provisions, creating long-term budgets
for the programs, and imposing trigger consequences.
Controlling automatic spending must be a central feature of a
new congressional budget process.

Making Budget Enforcement More Effective

----------

The need for sound enforcement of spending and revenue is
inherent in the practice of budgeting. A budget lacking
enforcement is not a budget at all, and this dilutes Congress's
constitutional ``power of the purse.'' The Congressional Budget
Act of 1974 has several enforcement provisions, and Congress
has adopted additional rules and statutes over the years to
enforce budgetary goals. Most of these have failed, however,
due to poor design or because they can easily be waived or
circumvented. The result has been a cluster of ineffective
budgetary rules that only make the budget process more
complicated. The necessity of developing better budget rules is
clearly evident. Enforcement regimes can be strengthened by
streamlining rules, plugging loopholes, and changing defaults
and incentives. A key element in rewriting the Congressional
Budget Act, therefore, is to develop successful and effective
means of enforcing congressional budgets.

THE IMPORTANCE OF BUDGET ENFORCEMENT

In addition to laying out a formalized budget procedure for
the House and Senate, the Congressional Budget Act of 1974
[Budget Act] provided a series of enforcement measures aimed at
ensuring the spending and revenue levels in the budget
resolution--the key legislative instrument created by the
Budget Act--would be adhered to. In the 43 years since then,
those provisions have been revised or expanded numerous times.
Congress also has passed additional laws and rules intended to
further enhance enforcement of the budget. The result has been
a complex web of budget enforcement procedures that have
complicated the process and yielded, at best, mixed results.
While some provisions may have achieved their purposes, it
cannot be said that Congress has the budget and fiscal policy
fully under control.
The failure of budget enforcement mechanisms has at least
two major consequences. First, it significantly reduces the
effectiveness of the budget resolution and of congressional
budgetary procedures generally; Congress thus loses control of
fiscal policy. Second, in the process, Congress sacrifices some
of its constitutional ``power of the purse,'' ceding greater
authority to the Executive Branch. A budget left unenforced is
not an effective budget.
A key element in rewriting the Budget Act, therefore, is to
develop successful and effective means of enforcing
congressional budgets.

A SHORT HISTORY OF PRE-1974 FEDERAL BUDGETING

Prior to the Budget Act, Congress had a somewhat fragmented
approach to budget enforcement through various legislation and
reforms related to the budget process. Some of the key laws and
efforts that laid the foundation for the 1974 Budget Act and
today's budget process include the ``Antideficiency Act of
1870'' (amended in 1905 and 1906), the ``Budget and Accounting
Act of 1921'', the ``Legislative Reorganization Act of 1946'',
the 1967 President's Commission on Budget Concepts, and
legislation regarding statutory spending limits and reductions
proposed between 1967 and 1973.
The Antideficiency Act is one of the fundamental laws
governing Federal expenditures. It prohibits the Federal
Government from obligating funds in the absence of available
appropriations.\524\ There are limited exceptions, mainly ``for
emergencies involving the safety of human life or the
protection of property.''\525\
---------------------------------------------------------------------------
\524\31 USC Sec. 1341-1342, 1511-1519; Clinton T. Brass,
Coordinator, General Management Laws: A Compendium, Congressional
Research Service, Washington: updated 19 May 2004, p. 93, 95-96.
\525\31 USC Sec. 1342.
---------------------------------------------------------------------------
The ``Budget and Accounting Act of 1921'' established the
executive budget process aimed at producing a better-
coordinated system for making fiscal decisions within the
government.\526\ The act required an annual budget submission
by the President to Congress, but did not alter congressional
procedures for consideration of a Federal budget.\527\ It
created the Bureau of the Budget (now the Office of Management
and Budget), originally situated in the Treasury Department.
(In 1939, President Roosevelt moved the Budget Bureau to the
White House as part of his government reorganization plan.) The
law also created the General Accounting Office (now the
Government Accountability Office) as an auditing arm of
Congress.
---------------------------------------------------------------------------
\526\James V. Saturno, Coordinator, Introduction to the Federal
Budget Process, Congressional Research Service, 3 December 2012, p. 1.
\527\Ibid.
---------------------------------------------------------------------------
The ``Legislative Reorganization Act of 1946'' included the
first attempt at creating a formal congressional budget
process, though the procedure was a small component of the
measure. The legislation made fundamental reforms to
congressional committees in addition to requiring Congress,
early in a session, to agree to an overall budget plan that
would guide consideration of budgetary legislation later in the
session.\528\ The legislation also established a Joint
Committee on the Legislative Budget, tasked with reviewing the
President's budget submission at the start of each session and
reporting an annual legislative budget no later than 15
February that included total spending and revenue levels.\529\
Congress attempted to report a legislative budget three times
pursuant to this provision. On two occasions, Congress failed
to agree to a budget; in a third, lawmakers exceeded the budget
they had agreed to.\530\ After that, Congress abandoned the
practice.
---------------------------------------------------------------------------
\528\Ibid.
\529\Ibid at p. 24-25.
\530\Ibid at p. 25.
---------------------------------------------------------------------------
On 3 March 1967, President Johnson appointed a commission
of 15 individuals to review the Federal budget and its
submission to Congress and the public.\531\ In its report, the
Commission presented 13 major recommendations to make the
Federal budget a more understandable and useful fiscal policy
document.\532\ The Commission's report included recommendations
on the use of ``a unified summary budget statement,'' inclusion
of all Federal Government and agency programs in the budget,
use of accrual accounting methods instead of cash accounting
for reporting expenditures and receipts, and inclusion of a
``means of financing section based on the budget deficit or
surplus.''\533\
---------------------------------------------------------------------------
\531\Statement by the President Announcing the Appointment of a
Commission to Study the Federal Budget: http://www.presidency.ucsb.edu/
ws/index.php?pid=28677.
\532\Report of the President's Commission on Budget Concepts,
October 1967.
\533\Ibid., p. 6-9.
---------------------------------------------------------------------------
Between 1967 and 1973, Congress acted five times on
legislation limiting Federal spending.\534\ These legislative
proposals were reductions in obligations and expenditures in
the fiscal year 1968 continuing appropriations resolution
(Public Law 90-218); the ``Revenue and Expenditure Control Act
of 1968'' (Public Law 90-364), which raised taxes and made
spending cuts; the Supplemental Appropriations Act for the
fiscal year ending on 30 June 1969, which included spending
limits (Public Law 91-47); the ``Second Supplemental
Appropriations Act, 1970'', which included a spending limit on
fiscal year 1970 budget outlays (Public Law 91-305); and a
measure providing a temporary increase in the public debt along
with spending limits (Public Law 92-599).\535\ Additionally,
Public Law 92-599 included a provision establishing a Joint
Study Committee on Budget Control. The committee consisted of
bicameral and bipartisan membership and was tasked with
reviewing the Federal budget and improving Congress's control
over fiscal policy.\536\
---------------------------------------------------------------------------
\534\Committee on the Budget, United States Senate, S. Doc. 109-24,
p. 28: http://www.budget.senate.gov/imo/media/doc/
BudgetCommitteeHistory2.pdf; Allen Schick, Congress and Money, The
Urban Institute (Washington: 1980), p. 32.
\535\Op. cit., p. 28, Senate Budget Committee, and op. cit., p. 42,
Schick.
\536\Op. cit., p. 28, Senate Budget Committee, Public Law 92-599.
---------------------------------------------------------------------------

BASIC FLAWS IN CURRENT PRACTICES, AND POTENTIAL REMEDIES

Too Many Different Rules

A key problem with the current budget process is its
complex array of dozens of budget rules (see separate
discussions in this report on ``Enforcing Budgetary Levels''
and ``Statutory Controls Over the Budget''). Part of the
complexity results from rules being codified in multiple
locations in various statutes and protocols. There are six
major budget laws dealing with the congressional budget
process, and an entire separate title of the U.S. Code dealing
with the executive budget process. Second, the House and Senate
have adopted their own budget rules that apply to each body
separately. Finally, there are the budget resolutions
themselves, and often the House and Senate cannot agree on a
conference report.

Effective Rules versus Those Seldom Used

A perception exists that many of the points of order
codified in the Budget Act are either dormant or infrequently
used; these provisions are frequently waived. The conclusion is
difficult to prove, however, because most budget enforcement
occurs informally, well in advance of bills reaching the floor.
Nevertheless, certain points of order are more effective
than others, if enforced. The most effective are those in the
Congressional Budget Act limiting the amount of new spending in
appropriations and authorizing bills (Section 302(a) and
Section 302(f)); establishing a revenue floor and overall total
spending limits (Section 311); and preventing legislation with
budgetary effects from being considered until a budget
resolution has been adopted (Section 303). Preventing increases
in direct spending in the current year, the budget year, and
the four and nine subsequent years (House Rule XXI, Clause 10,
known as Cut-As-You-Go) has proved effective. Nevertheless,
some of these provisions are weakened by exceptions or
loopholes. For instance, appropriations acts may be considered
in the House after the 15th of May even if a budget resolution
has not been adopted. Although the Cut-As-You-Go rule has
instilled some limited spending discipline in the House, it
still allows for near-term spending increases in exchange for
promised future cuts, many of which never materialize.

House Rule Waivers

During the 114th Congress, budget rules were waived an
estimated 42 times--a rate of more than 23 percent--for bills
that were considered under a rule.\537\ ``One of the more
troubling aspects of the current budget enforcement environment
is how easy it is to waive budget protocols, often with little
or no recognition by Members of Congress themselves, that we
are agreeing to violate our own rules.''\538\
---------------------------------------------------------------------------
\537\Figures are estimates by the House Budget Committee majority
staff.
\538\Chairman Tom Price, M.D., Committee on the Budget, U.S. House
of Representatives, opening statement at the hearing, Making Budget
Enforcement More Effective, 22 June 2016.
---------------------------------------------------------------------------
Various ideas have been proposed for making rule waivers
more difficult. One possibility is to prohibit Budget Act
waivers to be included in blanket waivers in special rules
considered by the House; separate votes and debate should be
required. Another proposal would require supermajority votes to
waive points of order against Budget Act violations. Applying
budget rules more surgically rather than against consideration
of entire bills would allow budget points of order to strike
specific offending provisions rather than defeat entire bills;
this could make more Members willing to use them during floor
consideration.
Yet another option would be requiring a Congressional
Budget Office [CBO] cost estimate of legislation to be
considered at the beginning of a committee markup. (At present,
estimates are produced only after a bill is reported from
committee.) This would increase committee members' awareness of
the budgetary effects they vote on--which they often do not
know during markup--and would likely reduce the amount of
legislation favorably reported with budget violations. Another
possibility is having the Budget Committee publish a weekly
bulletin of the budgetary effects of all legislation scheduled
for consideration by the House, including an indication of
budget rule violations.\539\
---------------------------------------------------------------------------
\539\During the tenure of Chairman Jim Nussle (R-Iowa) (2001-2006),
the House Budget Committee did produce such a bulletin, called Budget
Week.
---------------------------------------------------------------------------

The Byrd Rule

The Byrd Rule (section 313 of the Congressional Budget Act)
deals with a narrow set of budget enforcement provisions for
reconciliation bills. Generally, it allows the Senate to strike
from reconciliation measures provisions that do not have
budgetary effects. The rule was intended to limit the scope of
reconciliation bills because they are not subject to a
filibuster in the Senate.\540\ It has the additional effect,
however, of preventing Congress from considering certain
provisions needed to achieve savings, such as limits on
appropriations and other budget controls.
---------------------------------------------------------------------------
\540\The rule, authored by Senator Robert C. Byrd (D-W.Va.)--a
strong advocate for Senate prerogatives--was adopted in 1985 and
amended in 1990.
---------------------------------------------------------------------------
Another concern with the rule is that it applies in the
Senate only, giving that Chamber important leverage when
negotiating with the House on final reconciliation legislation.
These determinations are made by the Senate's presiding
officer, who relies on the interpretation of the Senate
Parliamentarian, a non-elected official. A reformed budget
process could permit the inclusion of provisions that
indirectly reduce spending, make the application of the rule
more objective, and create a more even playing field for
negotiating reconciliation bills.

The Failings of Section 401

The rules in Section 401 of the Congressional Budget Act
were intended to aid Congress in controlling spending through
the annual appropriations process. They imposed controls on
four types of mandatory, or direct, spending: new entitlement
authority, contract authority, credit authority, and borrowing
authority. These rules, however, have not succeeded.
Section 401(a) of the Budget Act prohibits the
consideration of any bill, joint resolution, amendment, or
conference report that provides (1) new authority to enter into
contracts under which the Federal Government is obligated to
make outlays; (2) new authority to incur indebtedness; or (3)
new credit authority, unless such measure is subject to the
availability of appropriations. It is a strict rule because,
similar to the House Cut-As-You-Go rule (see below) and
statutory Pay-As-You-Go (see next section), a bill would
violate Section 401(a) even if the budget resolution
specifically assumed the increase in mandatory spending.
Section 401(b)(1) of the Budget Act prohibits the
consideration of any bill, joint resolution, amendment, or
conference report that provides new entitlement authority first
effective in the current fiscal year. This point of order
prevents Congress from prematurely increasing new entitlement
authority before Congress agrees to a budget resolution for the
forthcoming fiscal year.
Section 401(b)(2) requires the referral to the Committee on
Appropriations of any reported authorization bill increasing
entitlement spending in the forthcoming fiscal year if it
exceeds the reporting committee's 302(a) allocation. The
Committee on Appropriations is then empowered to limit the
total amount of new entitlement authority provided by that
bill.
The well-intentioned rules under Section 401 of the Budget
Act have proven ineffective. Congress has passed numerous bills
that have increased one or more of the categories of direct or
mandatory spending specified in Section 401. These increases in
direct spending have included entirely new programs, expansions
of existing programs, and increases in existing programs that
occur under current law.

Statutory Budget Enforcement Rules

Arguably the most successful budget enforcement rules are
those with binding statutory requirements that cannot be waived
except through a new statute and are enforced by automatic
spending cuts through a process known as sequestration (see
``Statutory Controls Over the Budget'' elsewhere in this
report). A current and well-known example of this type of rule
is the limitation on discretionary spending codified in the
``Budget Control Act of 2011''. These limits are enforced
through a statutory requirement to sequester spending that
exceeds the limits rather than by points of order against
consideration in the House and Senate.
Sequestration is a blunt tool for enforcing budget rules,
and a wide swath of programs--mainly direct spending programs,
the main source of today's spending problems--are exempt. As a
result, the process deepens the cuts in non-exempt programs,
while failing to address the most significant budgetary
challenges. In addition, most fee-funded programs are
sequestered even though no taxpayer dollars are used to finance
them. Users of these programs often mention the fundamental
unfairness of cutting programs that are completely user-funded
and that do not contribute to the deficit.
Efforts to reform the budget process should examine how to
improve sequestration by exempting fewer programs, targeting
programs that actually cause deficit spending, and providing
better handling of user-financed programs.

OTHER ENFORCEMENT MODELS

The Base Realignment and Closure Commission

Many have recommended translating this model, widely
considered successful, into a means of adopting policy reforms
and budget disciplines. The independent Defense Base
Realignment and Closure Commission [BRAC] was authorized to
make recommendations as to which defense bases to close. The
recommendations take effect, absent any further legislation,
unless Congress passes, and the President signs, a joint
resolution disapproving them. The joint resolution is
considered under expedited procedures in both the House and
Senate. The procedures prohibit amendments to the disapproval
resolution.
Enacting a budget resolution in accordance with the BRAC
system could eliminate the partisan politics that persist
today. ``In order to make the budget resolution meaningful and
implementable, we must move from the party platform mentality
to a governing platform.''\541\ By not voting on a bill except
in the case of disapproval, Congress would, in effect, make the
shift from partisan politics to a more effective governing
style. There have been 10 rounds of base closures under BRAC.
Congress considered seven disproval recommendations between
1989 and 2005, and none was enacted. Hence, the closure
recommendations held.
---------------------------------------------------------------------------
\541\G. William Hoagland, Fulfilling the Budget Resolution and
Enhancing Budget Enforcement, statement before the Committee on the
Budget, U.S. House of Representatives, 22 June 2016.
---------------------------------------------------------------------------
The most important elements of this process are the
creation of a commission to make the recommendations;
congressional consideration of a disapproval joint resolution
under expedited procedures; a prohibition on Congress amending
the resolution; and automatic application of the
recommendations unless Congress passes and the President signs
a disapproval bill.

Super Committee and Sequestration

The ``Budget Control Act of 2011'' established statutory
deficit reduction targets. It created a Joint Select Committee
on Deficit Reduction (colloquially called the ``super
committee'') to make recommendations as to how these targets
were to be achieved. The Leadership agreed to consider any
package of policies to achieve the required level of deficit
reduction. A sequester was triggered in the event the super
committee did not agree to a package of recommendations and
absent any other legislative action. The sequester would
achieve half the savings in defense programs and half in non-
defense programs. The Joint Select Committee failed to agree on
policy recommendations to meet the targets. Consequently, a
sequester was triggered in 2013, and the discretionary limits
for fiscal years 2014 through 2021 were lowered. Thus, the
process did achieve a degree of spending restraint.
The key features of this model are that budget targets are
enacted into law; a special bicameral committee considers a
one-time package of proposals to meet those targets; the
Leadership commits to bringing this legislation to the floor
for consideration; and a sequester is triggered if the
committee fails to agree on recommendations or if Congress and
the President fail to agree on legislation to meet the targets.

Expedited Rescission

The House has previously considered legislation to provide
a fast-track process for considering a President's proposed
rescissions of previously appropriated budget authority. It was
developed as an alternative to the ``Line-Item Veto Act of
1996'', which the Supreme Court found to be unconstitutional.
Under an expedited rescission process, the President would
submit to Congress a package of proposed rescissions each time
an appropriations bill was enacted. The Congress then would be
required to consider the proposed rescissions en bloc, or an
alternative package of rescissions in the same amount and from
the same law as proposed by the President. Interest in
expedited rescissions waned as Congress adopted its own rules
to control congressional earmarks.
An expedited rescission model could be extended beyond a
process for reconsidering pork barrel discretionary spending to
considering entirely new deficit reduction proposals that meet
previously enacted targets. The model also could be extended to
direct spending and conceivably certain targeted tax
preferences. A major objection to this approach is that it
relies on the President to initiate the rescission process and
is therefore considered a serious abrogation of congressional
power. Also, even if the Congress could substitute its own
legislative proposals for those of the President, the House
Leadership could simply override the expedited procedures for
considering the bill with a simple rule passed by the majority
of the House.

Automatic Continuing Resolution

The notion of an automatic continuing resolution [CR] is
predicated on continuing resolutions that are annually enacted
when Congress and the President fail to enact, by the beginning
of a new fiscal year, the 12 regular appropriations bills
necessary to fund the Federal Government. The flat level of
funding that typically would occur under an automatic CR is
supposed to provide an incentive to pass regular appropriations
bills at levels Congress prefers. CRs are usually set at either
the prior year's level or the lower of the House and Senate
levels for the budget year. CRs can also be set at alternative
levels. Under an automatic CR, if appropriations were not
enacted at the beginning of a fiscal year, appropriations would
automatically occur at a default level. Unlike a regular CR,
legislation would not have to be enacted each time
appropriations bills are not passed by the beginning of the
fiscal year. As with a regular CR, the levels could be provided
at the prior year's level, the lower of the House or Senate
level, or at a level automatically reduced over time or until
regular appropriations are enacted.
One reason for an automatic CR would be to prevent the
shutdown of government agencies whose appropriations are not
enacted by the start of the fiscal year (excluding agencies and
activities considered ``essential''). Such shutdowns are
typically unproductive and destabilizing. On the other hand, a
risk of such a measure is that it eases the pressure on
lawmakers to finish their budget work on time. This might be
addressed by building into the CR automatic, phased-in spending
reductions that would squeeze programs and agencies and thereby
encourage legislators to complete unfinished spending bills
swiftly.
An automatic CR could not easily be adapted to mandatory
programs because, unlike programs funded through discretionary
appropriations, the appropriation is already in law and hence a
lower funding level could not be triggered in the absence of
legislative action. One approach might be to provide for a
reduction in mandatory spending if programs are not
reauthorized according to a predetermined schedule.

The Medicare Payment Advisory Commission

The Medicare Payment Advisory Commission [MedPAC] was
established by the ``Balanced Budget Act of 1997'' to advise
Members on both payments to private health care plans under
Medicare and providers in the fee-for-services program. The
Commission consists of 17 members appointed by the Comptroller
General of the United States. The Commission issues two reports
a year and advises on proposed regulations issued by the
Secretary of the Department of Health and Human Services. Any
reports and recommendations issued by MedPAC are strictly
advisory; there is no requirement for Congress to consider
them. Hence the Commission does not undermine congressional
prerogatives. Congress has not adopted expedited procedures to
consider MedPAC's recommendations. The Commission is subject to
annual appropriations and therefore to oversight through the
annual appropriations process.
Congress could establish a MedPAC-style commission to
report to the Congress on potential policies to reduce the
deficit, similar to what the Simpson-Bowles Commission did
without a legal mandate. The commission could make
recommendations to the Congress, upon which the Congress would
have to act if they were to become law. Congress could
determine whether the authorizing legislation would include
expedited procedures for considering any of the commission's
recommendations.

The Sustainable Growth Rate

The ``Balanced Budget Act of 1997'' established the
sustainable growth rate [SGR] targets for physician services
under Medicare as a means of controlling growth in these
expenditures. If actual expenditures exceeded the targets, the
fee schedule for reimbursing physician services was adjusted by
a sufficient amount to bring expenditures in line with the
targets. Adjustments in the fees were authorized to occur
automatically, without further legislative action. There were
no expedited procedures for Congress to consider changing the
updates or imposing additional policies to meet the targets.
The SGR is generally viewed as having failed to constrain
Medicare costs. Congress routinely passed, and the President
signed, legislation pre-empting the negative updates (a
practice known as the ``Doc Fix''). The legislation generally
offset the foregone savings with specific changes in physician
payments and in other health-related programs. The SGR and the
automatic adjustments in physician payments were repealed in
April 2015, under the ``Medicare Access and CHIP
Reauthorization Act of 2015''.

Executive Order on Entitlement Targets

In August 1993, President Clinton signed Executive Order
12857, which established entitlement targets and a process for
monitoring them. The order established direct spending targets
for fiscal years 1994 through 1997. The targets covered all
direct spending other than interest and deposit insurance. If
projected or actual direct spending exceeded or was projected
to exceed the direct spending targets, the President was
required to submit a special message to the Congress. The
message would identify the overage and recommend increasing the
targets, increasing taxes, reducing outlays to offset the
overage, or taking no action to address it.
Limits on mandatory spending have often been considered,
because uncapped entitlement programs are the principal
contributor to the government's growing spending and debt.
``Medicare, Medicaid, and Social Security * * * are the three
that are forcing growth. Capping those, in some sense, would
force the kind of political decisions that need to be
made.''\542\
---------------------------------------------------------------------------
\542\Barry B. Anderson, testimony before the Committee on the
Budget, U.S. House of Representatives, 22 June 2016.
---------------------------------------------------------------------------
President Clinton's aforementioned 1993 Executive Order was
widely perceived as part of an effort by the administration to
provide cover for Members who voted for the Omnibus Budget
Reconciliation Act of 1993. The legislation was criticized at
the time for disproportionately increasing taxes to achieve
deficit reduction goals. The order was generally viewed as
toothless because it was not enforced by sequestration and it
explicitly stated the administration could increase the targets
or recommend Congress take no action to reduce the overage.

The Unfunded Mandate Reform Act

The ``Unfunded Mandate Reform Act of 1995'' [UMRA]
established a series of reporting requirements for legislation
that would establish either an intergovernmental or private-
sector mandate. The CBO was required to include in its regular
cost estimates an estimate of unfunded mandates and a statement
as to whether the mandate exceeded a specified threshold. In
the House, it also established a point of order against bills
that exceeded this threshold.
This model could be adapted to a regulatory budget. An
additional unit could be established at the CBO to include in
its cost estimates for all reported bills an estimate of the
amount the bill would affect regulatory costs. These estimates
could be purely advisory or could be part of a budgetary rule
requiring that any legislation that increases regulatory costs
be coupled with the elimination of an existing regulatory
requirement.
Alternatively, this model could be used to enforce a
regulatory budget, which would impose limits on regulatory
costs. Any legislation that exceeded limits set forth in the
budget resolution or some other legislative vehicle could be
subject to a point of order, as are certain unfunded mandates
under the UMRA. (See further discussion under ``Regulatory
Budgeting'' elsewhere in this report.)

CONCLUSION

The Federal budget's high spending levels are not
sustainable, and no matter how vigorously any budget plan
strives to gain control of spending, it is inconsequential
without functional enforcement regimens. Several measures have
been adopted in the past, some more successful than others, but
the need for more effective budget enforcement procedures
remains. Various models, including the Base Realignment and
Closure system, independent commissions, and sequestration or
expedited rescissions, could prove to be useful alternatives.
In any event, without sound enforcement, Congress loses control
of spending and relinquishes its constitutional power of the
purse.

Alternative Approaches to the Federal Budget

----------

In developing a new congressional budget process, it is
worth considering alternative perspectives that can help inform
legislators' decisions about fiscal priorities and policies.
One example is examining how to link performance measures to
the allocation of resources. Another is capital investments,
which are currently accounted for in the same way as immediate
consumption spending. There are other examples as well.
The discussion below considers some of these options.
Whether or not they should become part of the congressional
budget process is for elected lawmakers to determine. Examining
them, however, can shed light on fiscal policymaking for the
Federal Government.

PERFORMANCE-BASED BUDGETING

As Used by State Governments

Performance-based budgeting started in the States in the
1970s as an innovative way to examine how agencies were using
public funds. It is an attempt to quantify and measure the
success of agencies and programs. ``This means moving away from
funding an activity or program and instead focusing on funding
the outcome desired by the government.''\543\
---------------------------------------------------------------------------
\543\Maurice P. McTigue, QSO, Budget Process Reform: Utilizing
Performance Information to Produce Better Outcomes, statement to the
Committee on the Budget, U.S. House of Representatives, 6 July 2006.
---------------------------------------------------------------------------
Nearly all the States have experimented with some form of
performance budgeting, with varying success, but all were
seeking to improve performance, control costs, and focus finite
resources on the most effective programs. Legislators or
governors (the latter by executive order) required agencies to
establish measurable outcomes in terms of their missions and
objectives. The policymakers could then judge the agencies'
success against these measurable outputs.
In 2013, the National Association of State Budget Officers
[NASBO] conducted a survey in which 44 percent of respondents
said their States used some form of performance budgeting,
sometimes in concert with another method such as traditional
line-item budgeting.\544\ One study using data from 1970
through 1997 indicates performance-based budgeting reduced
State spending by 1.3 percent as a share of State income and
per capita spending by approximately 2 percentage points.
Magnitudes vary among States depending on the specific
procedures used and the duration of performance budgeting.\545\
---------------------------------------------------------------------------
\544\Elaine S. Povich, ```Performance-Based Budgeting' Takes Off in
States,'' Governing.com, 28 August 2014: http://www.governing.com/news/
headlines/performance-based-budgeting-fad-Takes-off-in-states.html.
\545\W. Mark Crain and J. O'Roark, ``The impact of performance-
based budgeting on state fiscal performance,'' Economics of Governance,
2004: https://ideas.repec.org/a/spr/ecogov/v5y2004i2p167-
186.html#author.
---------------------------------------------------------------------------
Nevertheless, a serious criticism of performance-based
budgeting says agencies may set outcome criteria too low,
thereby underperforming their potential but still meeting
policymakers' expectations.\546\ A second caveat is that some
spending may actually increase with the use of performance
budgeting, as high-performing programs receive greater funding
even as poor performers are cut.
---------------------------------------------------------------------------
\546\Ibid, p. 168.
---------------------------------------------------------------------------
There is also the possibility of new programs being created
because of the reduced cost of old programs.\547\ In a study
NASBO conducted in 2014, the organization cautioned that
performance budgeting is a tool, not a silver bullet, and
requires a high level leadership and agency buy-in to succeed.
NASBO further concluded a statutory framework provides greater
continuity in performance budgeting than executive
actions.\548\
---------------------------------------------------------------------------
\547\Ibid, p. 180.
\548\National Association of State Budget Officers, Investing in
Results, Summer 2014: http://www.nasbo.org/sites/default/files/pdf/
NASBO%20Investing%20in%20Results.pdf.
---------------------------------------------------------------------------
Texas and Minnesota are often cited as models for best
practices in performance budgeting, but it is ``not a panacea
for making tough choices,'' cautions former Texas Budget
Director Wayne R. Roberts. ``Every line item has a powerful
constituency. There are no accidents in budgets.''\549\ Put
another way, performance budgeting may provide useful
information about whether government programs are efficient or
effective. It cannot, however, judge whether agencies or
programs should exist, or what priority they should hold among
a government's activities.
---------------------------------------------------------------------------
\549\Ibid.
---------------------------------------------------------------------------

The Federal Experience

As part of its ``Reinventing Government'' initiative, the
Clinton Administration introduced a form of performance
budgeting for Federal agencies with the ``Government
Performance and Results Act of 1993'' [GPRA]. The law requires
agencies to develop mission statements and strategic plans with
annual performance goals; to provide brief descriptions of how
the goals are to be met and verified; and to prepare annual
performance reports.\550\
---------------------------------------------------------------------------
\550\Ibid.
---------------------------------------------------------------------------
In 2000, the Mercatus Center at George Mason University
studied Federal vocational training programs using GPRA
information and developed an analytic framework for identifying
which programs accomplish their intended goals. The study
concluded the performance budgeting framework was flexible
enough to accommodate diverse values and judgments about policy
priorities. It further stated calculations used in performance
budgeting do not make decisions automatic, but they do give
policymakers a clearer understanding of the effects of their
decisions.\551\ ``[C]hanged procedures will not, on their own,
improve budget decision-making if the legislature does not
change its practices as well. But better budget processes that
more starkly demonstrate the options available to
appropriators--and the consequences of each of the options--may
well change the incentives for appropriators.''\552\
---------------------------------------------------------------------------
\551\Jerry Ellig and Maurice P. McTigue, Putting a Price on
Performance: A Demonstration Study of Outcome-Based Scrutiny, the
Mercatus Center at George Mason University, 2000, p. 12.
\552\Op. cit., McTigue.
---------------------------------------------------------------------------
The law was updated with the ``GPRA Modernization Act of
2010'' [GPRAMA], signed by President Obama in 2011.\553\ The
update more closely aligns reporting with presidential terms
and presidential budget proposals, and gives the
administration's Office of Management and Budget [OMB] a
stronger role in the process. It explicitly calls for
consultations with Congress and requires the reporting to be
available on the Internet. The law also provides Congress and
outside stakeholders an opportunity to influence the manner and
content of agency and OMB goal-setting and then assess their
performance.\554\
---------------------------------------------------------------------------
\553\Public Law 111-352, 111th Congress.
\554\Congressional Research Service, Changes to the Government
Performance and Results Act: Overview of the New Framework of Products
and Processes, 29 February 2012, p. 1.
---------------------------------------------------------------------------
The Government Accountability Office [GAO] finds
implementation of GPRAMA has been uneven across the Federal
Government, with some agencies improving their performance but
with much work still to be done. The challenges, according to
GAO, are:

LPerformance information must be useful and used
by agency managers;

LThe Executive Branch needs to address cross-
cutting (cross-agency) issues;

LAgencies struggle to link individual and agency
performance to results;

LOMB and agencies have not clearly communicated
reliable and complete financial and performance results.\555\
---------------------------------------------------------------------------
\555\Government Accountability Office, Implementation of GPRA
Modernization Act Has Yielded Mixed Progress in Addressing Pressing
Governance Challenges, 30 September 2015: http://www.gao.gov/products/
GAO-15-819.
---------------------------------------------------------------------------

Lessons from the States and Other Countries

Different States and countries have had varying experiences
with performance-based budgeting. States examined were
Washington, Iowa, Virginia, Nevada, Oregon, Texas, Minnesota,
Alabama, Connecticut, Colorado, North Carolina, Illinois, and
Utah.\556\ Countries studied were Canada, the United Kingdom,
Australia, and Denmark.\557\ Below is a short list of common
results or lessons learned.
---------------------------------------------------------------------------
\556\Op. cit., p. 6-16, National Association of State Budget
Officers.
\557\Organisation for Economic Co-Operation and Development,
Performance Budgeting in OECD Countries, 2007: https://www.bmf.gv.at/
budget/haushaltsrechtsreform/
OECD_Studie_Performance_Budgeting.pdf?5b0ube.

LAgency buy-in from senior managers is key to the
successful implementation of performance budgeting, because
---------------------------------------------------------------------------
elected officials and political appointees are transient.

LLeadership matters. Top leaders must actively
participate in implementing performance budgeting to ensure
agencies will actually use the information developed to inform
funding and management decisions.

LSpending should be aligned with core government
functions. That requires a detailed understanding of the
relationship between resources expended and results achieved at
the program level.

LA common framework is crucial for application of
government-wide, results-based management.

LPerformance budgeting requires clear
expectations, regular evaluation and reassessment in light of
experience, and public accountability.

LA systematic approach to program reviews,
regularly scheduled, is essential for integrating performance
information in the budget process.

LThere must be a clear link between program
outcomes and results for performance information to be useful
in budgeting.

LAgencies or departments should not be penalized
automatically for failing to meet outcome goals because
external factors may have a significant impact on the outcome.

LIncentives matter. If agencies are allowed to
keep savings they identify and redirect the funds, they have a
greater incentive to collect and use data about the efficiency
and effectiveness of their programs.

PORTFOLIO BUDGETING

The Portfolio Concept

Under the current budget process, spending decisions are
organized by individual agencies, programs, or congressional
committees, not in terms of comprehensive national goals and
priorities whose underlying programs cut across these groups.
Further, it focuses on spending, and does not always take into
account the tax or regulatory policies in a program area.
Critics argue the current arrangement is piecemeal and
fragmented, and inherently favors the short-term and
incremental. The effect is ``little change and inadequate focus
on national priorities or how to achieve them more
efficiently.''\558\ For instance, there are roughly four dozen
different Federal job training programs across several
agencies, creating ``a labyrinth of bureaucracy that
consistently fails to produce substantial numbers of job
placements.''\559\ While some populations, such as veterans,
may benefit from programs targeted to their specific needs,
most job-training programs are overlapping and duplicative.
---------------------------------------------------------------------------
\558\F. Stevens Redburn and Paul L. Posner, Portfolio Budgeting:
How a New Approach to the Budget Could Yield Better Decisions, The
Brookings Institution, September 2015.
\559\Committee on the Budget, U.S. House of Representatives, Report
on the Concurrent Resolution on the Budget--Fiscal Year 2017 (H. Con.
Res. 125, Report 114-470).
---------------------------------------------------------------------------
Portfolio budgeting would look at the entire range of
programs and seek better fiscal strategies for achieving their
aims. In one respect, a portfolio might resemble the current
arrangement of budget ``functions.'' These categories do not
align with government agencies or congressional committees.
Instead, they transcend those organizations to view spending on
major activities of the Federal Government, such as national
defense, international affairs, transportation, and so on.
Portfolios would take this arrangement another step, focusing
on strategic priorities that ``look broadly across a range of
closely related programs, tax provisions, and regulatory
policies affecting common policy goals.''\560\
---------------------------------------------------------------------------
\560\Op. cit., Redburn and Posner.
---------------------------------------------------------------------------
``[T]he current process for developing the budget--because
it is biased toward marginal, short-term changes and familiar
policies and is piecemeal, fragmented, and stove-piped--is
often blind to major shifts in the Nation's economy and social
structure. The result: it misses bigger, strategic options that
could produce breakthrough gains in how resources could be used
to achieve national goals. This is why it would be helpful to
add a `portfolio budgeting' approach to the current process.
This would make room in the process for selective, deeper
consideration each year of a few important policy objectives
that cut across agency, program, and committee
jurisdictions.''\561\
---------------------------------------------------------------------------
\561\F. Stevens Redburn, statement to the Committee on the Budget,
U.S. House of Representatives, 6 July 2006.
---------------------------------------------------------------------------
By taking into account all aspects of policy, the portfolio
budgeting method would allow policymakers to evaluate programs
and fiscal strategies more comprehensively. ``Each year, for
each selected policy objective, the full portfolio of spending,
tax provisions, and other policies addressed to each selected
goal would be compared with alternative strategies that use
resources very differently with the aim of finding a new
strategy to achieve a better result at lower cost. * * * This
approach is designed to identify breakthrough gains in the
productive use of resources.''\562\
---------------------------------------------------------------------------
\562\Ibid.
---------------------------------------------------------------------------
Portfolio budgeting calls for a two-track system. The
administration and Congress would continue to formulate budgets
in some areas using the current budget process. They would
apply the portfolio budgeting method for a select few major
policy objectives each year, allowing an in-depth focus and
analysis on the selected portfolios.
The portfolio process would follow this sequence:

LSelecting national priorities and goals, or
portfolios;

L``Identifying the set of federal policies,
spending programs, regulations, tax preferences, and other
activities that constitutes the relevant policy portfolio for
analysis and budgeting'';\563\
---------------------------------------------------------------------------
\563\Op. cit., Redburn and Posner.

LAssessing the collective effects of programs and
considering alternative policies and whether they could yield
better results at a lower cost.

An Illustration

Consider Federal fiscal policy toward higher education. The
Federal Government subsidizes the costs of tuition, books,
fees, and other college expenses through loans, grants, and tax
provisions. The goals of these policies and programs, which
have a budget of more than $100 billion a year,\564\ are to
expand access to higher education, make college more
affordable, and achieve and maintain the country's economic
competitiveness by maintaining an educated workforce.
---------------------------------------------------------------------------
\564\Ibid, p. 2.
---------------------------------------------------------------------------
The portfolio budgeting approach would involve Congress in
examining the entire education portfolio--cross-cutting
committee jurisdictions and particular pieces of legislation--
and asking questions about the effectiveness of the programs in
relation to stated goals and the Federal Government's return on
the investment. Then alternative approaches to achieving these
goals in higher education could be analyzed to see if they
produce a better return on Federal spending and actually meet
the needs of the students served.

Pros and Cons

One fundamental benefit of the portfolio approach is that
it would lead to re-evaluating the major categories of
government fiscal policies, and perhaps reassessing whether
government should be involved in so many things with so many
programs.
An important consideration, however, is who would choose
and create the portfolios, which would have a significant
impact on setting the long-term policy agenda. The
administration, by its nature and institutional structure,
would appear to be well-suited for this task. On the other
hand, establishing the portfolios would be an influential
instrument for setting the national policy agenda. This is
Congress's constitutional role, on which presidents over the
past century have increasingly encroached. It may be more
appropriate, therefore, for Congress to develop the portfolios,
even if it requires expanding its own institutions such as the
Congressional Budget Office.
Another risk lies in the portfolios' inclusion of both
spending and tax provisions (known as ``tax expenditures'').
This would increase the temptation to treat tax provisions as
identical to spending, so that eliminating a tax
``expenditure''--a revenue increase--would be viewed as a
spending reduction to offset higher spending elsewhere in the
portfolio. This would be an out-and-out ``tax and spend''
result.

CAPITAL BUDGETING

What Is Capital Budgeting?

Capital budgeting is a system in which the expense
associated with acquiring an asset is apportioned over the
entire useful lifetime of the asset, rather than all at once
when the initial acquisition occurs. For example, the expense
of acquiring a new building would be reflected in the budget as
something equivalent to an annual mortgage payment or a
depreciation charge, and it would recur until the useful life
of the asset was fully depleted. In a non-capital budgeting
system, such as what is now used in the Federal budget, the
entire cost of the building is recognized in the year it is
acquired, and no subsequent expense would be recognized over
the remaining years of the building's useful life.

How Capital Assets are Defined

Capital assets are defined broadly as those with a useful
lifetime of more than one year, and usually at least two
years.\565\ Typical capital assets include things such as land,
structures, and equipment; these are classified as physical
capital. Capital assets may also include intellectual property
such as patents, or long-term agreements such as exclusive
rights to broadcast programming or distribution of a product.
Some analysts suggest capital assets should also include less
tangible items that are believed to produce long-term benefits,
such as spending on research and development, education, job
training, wellness, and intervention programs. Capital assets
do not include items acquired for resale or in the ordinary use
in operations such as materials and supplies.
---------------------------------------------------------------------------
\565\The Office of Management and Budget has set two years as the
minimum useful lifetime for capital assets for agency budget planning
purposes. See Capital Planning Guide V 3.0, Supplement to Office of
Management and Budget Circular A-11, p. 2.
---------------------------------------------------------------------------

How Congress Budgets for Capital

Congress does not have a capital budget--at least not one
that resembles practices in the States and several other
countries. While Congress does appropriate funds for capital
assets, there is no unifying congressional budget strategy on
the amount of resources that should be dedicated for long-term
purposes, and no authoritative definition of what a capital
asset is.
Because the congressional budget recognizes all capital
costs ``up front,'' it does not include future repayment of
debt principal as a budgetary cost. This is done to avoid
double-counting the cost of acquiring a capital asset; it must
be recognized either all ``up front'' or all over time.
Despite a lack of information on overall capital spending
at the congressional stage of the budget process, OMB provides
some useful information about government-wide ``investments,''
which it defines to include the following:

LSpending on physical capital;

LGrants to States for capital-related spending
(mostly transportation); research and development;

LEducation and training.

According to OMB, the Federal Government spent $489 billion
on such investments in fiscal year 2015--about 13 percent of
the overall Federal budget that year.

Is Congressional Budgeting Biased
Against Capital Spending?

Some believe the entirely ``up-front'' recognition of
capital expenses in the congressional budget creates a bias
against capital spending--one that would be ameliorated by
distributing costs over the useful life of the asset. This bias
is most acute for capital items funded with discretionary
appropriations,- which funds the majority of capital spending,
because they are constrained by fixed statutory spending
limits. Within the context of constrained discretionary
appropriations, anything that causes a spending spike--such as
capital-intensive acquisitions--are at a disadvantage vis-a-vis
routine spending for operations expenses, which are recurring
and typically smooth from year to year.
Current budget rules also may be causing greater-than-
necessary spending for acquiring capital assets. This results
from agencies' and authorizing committees' heavy preference for
operating leases instead of capital leases or outright
purchases for physical assets. Under current budget rules,
operating leases are scored only for the cost of annual lease
payments, whereas capital leases and outright purchases are
scored for the full lifetime cost of the lease or purchase.
Operating leases are a much more expensive option if the true
intention of the agency is to remain in one location for a long
period of time.

The Benefits of Capital Budgeting

An explicit capital budget would have the virtue of
aligning the recognition of expenses in the Federal budget to
the point in time when the benefits of the asset are actually
consumed. It would also address an issue of fairness--the
notion that future generations should help pay the costs of
assets from which they benefit. Critics argue that future
generations already do pay for the costs of acquiring capital
assets, assuming they are financed with new borrowing, because
repayment of principal and interest occurs in the future.
Nevertheless, as mentioned above, principal repayments are not
recognized as a budget expense under current budget rules; only
interest is. Another potential benefit of a capital budget
would be that it would better engage the Congress in thinking
about an overall, government-wide capital planning strategy,
rather than continuing with no overall plan and making capital
decisions in isolation.
Depending on its implementation, capital budgeting can also
lead to better management of capital assets among agencies. One
real-world example was New Zealand's decision to include a
``cost of capital'' charge in the budgets for its agencies.
This reform created incentives for New Zealand's agencies to
dispose of unused and underused capital so that budgetary
resources could be put to better use.
A capital budget might also bring Congress closer to
achieving a balanced budget--though the definition of balance
would differ from the current cash-based standard. Most States
in the U.S. and other countries that have capital budgets
define a balanced budget to mean a balanced ``operating
budget''; their capital budgets are separate and might or might
not be balanced. If the Federal Government had implemented a
capital budget and used OMB's definition of investments--which
is admittedly broad--the results in fiscal year 2015 would have
been an operating surplus of $57 billion rather than a deficit
of $432 billion. Note the actual fiscal year 2015 cash deficit
of $432 billion is the same, regardless of whether one employed
a cash-based or capital budgeting-based system.

The Risks of Capital Budgeting

One of the main risks associated with capital budgeting
would be an expansion or ``loosening'' of the definition of
capital assets. Proponents of higher spending would be tempted
to get more programs classified as ``investments'' to receive
favorable budgetary treatment. The concept of long-term
benefits--a central requirement of capital assets--is somewhat
subjective; one could argue nearly all Federal spending somehow
generates a long-term benefit. Social programs that deal with
intervention and welfare assistance are prime examples of
spending that could bestow long-term, albeit highly uncertain,
benefits. Most entities that use capital budgeting exclude
social programs.
Another risk is that capital budgeting can lead to
increased borrowing, especially if there is an expectation that
all capital assets should be financed with debt. Although
capital spending can be financed from general or dedicated
revenue sources rather than debt--the Federal Highway Trust
Fund is one example--the question of future generations paying
their fair share for benefits tends to sway the argument of how
to finance capital assets toward using new borrowing. Changing
the treatment of capital assets in the Federal budget would
likely further complicate an already overly complex system.

What Other Countries Are Doing

Countries that have adopted capital budgets generally have
done so as part of a larger shift from budgeting on a cash
basis to an accrual basis.\566\ The following describes two
prominent examples--New Zealand and Australia--along with
several examples of countries that abstained from accounting
for capital spending on an accrual basis.
---------------------------------------------------------------------------
\566\Congressional Budget Office, Capital Budgeting, May 2008, p.
11: https://www.cbo.gov/sites/default/files/110th-congress-2007-2008/
reports/05-08-capital.pdf.

New Zealand. New Zealand is roughly the same area (land
size) as Colorado, and is home to 4.5 million people\567\--
several hundred thousand more than Los Angeles.\568\ In 1984,
New Zealanders elected a reform-oriented government that set
about correcting various problems plaguing the country. This
included seeking ways of improving how capital resources were
used. Additionally, the government sought to improve the
performance of the public sector and make more informed
spending decisions. One problem was that spending decisions
were not connected explicitly to stated, or expected, outcomes.
The government established Purchase Agreements to try to
connect the two. In the Purchase Agreements, what was expected
from the spending- the defined outcome--was expressly laid out,
making it easier to hold agencies accountable and force various
programs to compete with one another.
---------------------------------------------------------------------------
\567\The World Bank, database on New Zealand, http://
data.worldbank.org/country/new-zealand, accessed 29 June 2016.
\568\U.S. Census Bureau, 21 May 2015: http://www.census.gov/
newsroom/press-releases/2015/cb15-89.html.
---------------------------------------------------------------------------
In addition, Parliament committees began overseeing all
programs in their respective jurisdictions. For example, the
Education and Science Committee began directly overseeing all
education programs, and it could determine which were working
and which were not. Then the Parliament's appropriators had the
necessary information to shift how they allocated
resources.\569\ Key here is that the legislature, which has the
authority to make spending decisions, was empowered and also
required to take program performance into account.
---------------------------------------------------------------------------
\569\Maurice P. McTigue, ``Can Budget Process Reforms Produce
Better Budget Outcomes?'' the Mercatus Center at George Mason
University, testimony before the Committee on the Budget, U.S. Senate,
12 April 2016: http://mercatus.org/sites/default/files/McTigue-Senate-
Budget-Committee-Testimony-v1.pdf.

FIGURE 13

In this shift to output-based budgeting, New Zealand also
shifted to accrual budgeting. The key legislation related to
this shift is the Public Finance Act, passed in 1989 and
amended in 2004.\570\ Subsequent acts built upon the Public
Finance Act, as the country began implementing accrual
budgeting (see Figure 13).
---------------------------------------------------------------------------
\570\Treasury of New Zealand, A Guide to the Public Finance Act,
August 2005: http://www.treasury.govt.nz/publications/guidance/
publicfinance/pfaguide/02.htm.
---------------------------------------------------------------------------
Output-based budgeting in New Zealand has similarities with
performance- or evidence-based budgeting. It involves the
purchasing of outputs, or specified goals (see discussion
above), from government departments or outside sources, such as
the private sector, if an activity has been contracted out to a
non-government entity. The departments are then responsible for
both operations and capital spending, which are considered
inputs.
Accrual budgeting benefits both the New Zealand Parliament
and the government departments. Departments can make informed
decisions about how to deploy capital spending. For example,
for one department it might make more sense to rent an office
building than purchase the building to house its employees, or
vice versa. The practice also gives the Parliament information
about how departments are using capital resources, so lawmakers
can decide how much to give to them in the future. The
Parliament is able to keep tabs on whether or not a department
is overcommitting itself and unable to keep its capital assets
functioning properly.

Australia. Effective in the 1999-2000 budget year, this
country, with a population of more than 23.4 million
people,\571\ shifted from cash to accrual budgeting. It also
began to display its agencies' financial statements using
accrual accounting rather than the previously used cash
accounting.\572\ The government also required its agencies to
produce Portfolio Budget Statements specifying both the
outcomes they expected and the outputs they would produce. Put
another way, the agencies must say what benefit they expect to
provide to the public and what specific items will result from
their spending. Interestingly, the Australian Parliament cites
in its primer on the budget that the new way of presenting
agency budgets was not transparent--at least not initially--
even though that was a goal. The first budget in 1999-2000
provided little information, and only in subsequent years did
the quality and quantity of the information improve.\573\
---------------------------------------------------------------------------
\571\The World Bank, database on Australia: http://
data.worldbank.org/country/australia, accessed 29 June 2016.
\572\Parliament of Australia, Budget Guide: http://www.aph.gov.au/
About_Parliament/Parliamentary_Departments/Parliamentary_Library/
Publications_Archive/archive/BudgetGuide#Where%20to%20Start.
\573\Ibid.
---------------------------------------------------------------------------
The new method does have other flaws. For example, if
agencies' outcomes are vague or are not connected to more
general, national goals, they are less effective and less
meaningful. Outcome statements are sometimes subjective, as in
``producing a better national transportation network.'' A more
meaningful statement would be ``increased mobility and reduced
traffic congestion, measured in part by shorter commuting times
and fewer accidents.'' As part of its budget process, Australia
also requires each agency to produce statements showing
operations, assets and liabilities, cash flow, and capital
information. In particular, the assets and liabilities
statement is used to get a picture of those things Australia
owns that will provide future benefits and those liabilities,
or obligations, that Australia must pay or, in the case of
services, provide. The capital statement tells the government
what kinds of assets the agencies are purchasing and how
capital funds will be used.

Other Countries. Not all other countries who have weighed
the benefits and costs of adopting accrual-based budgeting
chose to follow through with the switch. Norway and Sweden, for
example, chose not to change and instead continued with their
practice of cash-based budgeting. Their rationale was that they
could maintain more control over spending on capital activities
through cash-based rather than accrual budgeting.\574\ This
decision is not unfounded. In addition to the risks of capital
budgeting described previously, a country considering the
switch would be wise to estimate whether capital budgeting
would yield the spending outcomes they desired. One question
would be whether the country wanted to incur additional debt to
finance capital activities, and what limits on borrowing it
might impose. Other countries that ultimately retired their
separate capital budgets are Denmark, Finland, and the
Netherlands.
---------------------------------------------------------------------------
\574\Congressional Budget Office, Capital Budgeting, May 2008, p.
12: https://www.cbo.gov/sites/default/files/110th-congress-2007-2008/
reports/05-08-capital.pdf.
---------------------------------------------------------------------------

Lessons from the States

As in New Zealand and Australia, capital budgeting in the
States offers a useful guide for connecting broader goals of
government with specific capital spending. How States define
capital budgeting is important to consider. According to NASBO:
``[T]here is no uniform definition of capital expenditures
across states or a single guideline regarding the optimum
financing strategy for capital projects.''\575\
---------------------------------------------------------------------------
\575\National Association of State Budget Officers, Capital
Budgeting in the States, Spring 2014, http://www.nasbo.org/sites/
default/files/pdf/Capital%20Budgeting%20in%20the%20 States.pdf.
---------------------------------------------------------------------------
Nevertheless, some common characteristics in what are
considered capital projects do arise. ``[T]hey are a
nonrecurring expense for a physical asset that has a long-term
life. Most states include construction, land acquisition, major
renovations and repairs, major items of equipment, information
technology systems, and funds or grants to local agencies of a
capital nature.''\576\ Specific examples from various States
include the following:
---------------------------------------------------------------------------
\576\John T. Hicks, Capital Budgeting in the States, statement
before the Committee on the Budget, U.S. House of Representatives, 6
July 2016.

Georgia defines capital spending as ``the
budgeting of the State's General Obligation Bonds and the
expenditure of the bond proceeds for capital projects.''\577\
---------------------------------------------------------------------------
\577\Op. cit., Table 2, p. 8, National Association of State Budget
Officers.

Kansas considers activities including new
construction, remodeling, razing, acquisition, and the
principal and debt service for a capital spending to be
eligible capital expenses.\578\
---------------------------------------------------------------------------
\578\Ibid.

Other States list land acquisition, equipment,
information technology, easements, vehicles and machinery,
---------------------------------------------------------------------------
infrastructure, major renovations, and furnishings.

Some States, such as Oregon and New Hampshire,
require the item to have a useful life of a certain length,
whether one year, five years, or even 20 years. Additionally,
States may set cost thresholds for certain capital items--$500
in Ohio, at least $50,000 for furnishing and equipment in New
Jersey, and major maintenance and repairs costing more than
$250,000 in Vermont.

All 50 States include capital construction in
their definition, and all but three count land or site
acquisitions. About half the States require the expenditure to
be non-recurring, and half also require the asset to be
physical in nature.

Looking at capital expenditures by program area is also
useful. ``Most capital spending by states is concentrated in
two areas: transportation and higher education. Transportation
accounted for over 63 percent, and higher education accounted
for 12 percent of state capital spending in fiscal year
2015.''\579\ No States consider corrections activities to be
capital, while 19 consider transportation as such.\580\
---------------------------------------------------------------------------
\579\Op. cit., Hicks.
\580\Op. cit., Table 5, p. 14, National Association of State Budget
Officers.
---------------------------------------------------------------------------
The source of the definition of capital expenditures also
varies among States. In Arkansas, the definition can be found
in the State constitution, regulations, code, and statute. In
Kentucky, the definition is solely in statute.\581\ It is worth
noting that intangibles, such as education and other human
capital spending, are not considered as capital expenditures.
By limiting the definition, States guard against understating
the cost of spending on intangible activities for which it is
difficult to measure any depreciation costs or life-cycle
benefits.
---------------------------------------------------------------------------
\581\Ibid, Table 1, p. 7.
---------------------------------------------------------------------------
A key to States' use of capital budgets is connecting them
to a regular planning process related to long-term capital
goals. Many States have found success in having a central
planning agency manage capital projects. For some States, the
job falls to their budget offices; in others it is in the
Department of Finance or Administration. For other States,
though, this activity is done at individual agencies. To be
successful, States also have to connect their capital and
operating budgets. They need to be able to know the budgetary
effects of different capital projects to record them on their
operating budgets, both in the current year and several years
out.
Another important consideration is who is able to request
capital spending in the States. In all 50 States, the agencies
can make such a request, and in all but three, institutions of
higher education can. In only eight States are private
organizations eligible.\582\
---------------------------------------------------------------------------
\582\Ibid, Table 17, p. 47.
---------------------------------------------------------------------------
When recording the budget transaction for capital
expenditures, States focus on the costs and do not record any
net benefits, which are difficult to define. Benefits,
especially if they can be measured, certainly could be
considered as part of States' capital planning. It is also
important to note that States budget for the debt service
arising from capital spending. Interestingly, States often book
debt service as an operating expense and fund it out of general
revenues. Sometimes a dedicated tax or fee is used to pay the
debt service. To illustrate the point: 47 States use general
revenues to pay debt service on capital costs, and 40 use
specific taxes and fees. Similarly, 29 States use capital
project-generated revenue, if it is available.\583\ Further, to
ensure they can cover the debt service, many States have
established limitations on how much debt they can issue.
Thirty-eight States have constitutional, statutory, or policy
limits on total general obligation debt. These legal
limitations augment natural constraints on States' borrowing
from the municipal bond market and how much general revenue is
available, as two examples.\584\
---------------------------------------------------------------------------
\583\Ibid, Table 36, p. 99.
\584\Ibid, p. 83.
---------------------------------------------------------------------------

Incorporating Elements of Capital Budgeting
Into the U.S. Federal Budget

Adopting a separate capital budget presents significant
challenges. President Johnson's budget concepts commission
recommended against capital budgeting, saying in part: ``In
periods of inflationary pressure the appearance of a balanced
budget, with capital expenditures excluded, might pose a
psychological barrier to adequate taxation. In any event,
proponents of new spending programs would be tempted to stretch
the capital budget rules on inclusion, so that the immediate
impact of the program in increasing the current deficit, or
reducing the current surplus, would be less, and the program
itself therefore less visible.''\585\
---------------------------------------------------------------------------
\585\Report of the President's Commission on Budget Concepts,
October 1967, p. 33-34.
---------------------------------------------------------------------------
Nevertheless, other capital-budget-related mechanisms or
features could be incorporated into a reformed budget process.
One approach could be to ``charge'' agencies for the cost of
their capital assets each year, to encourage them to dispose of
unused capital. U.S. Federal agencies have little incentive to
liquidate capital assets, such as unused or underused land,
equipment, or buildings. Scorekeeping rules contribute to the
dilemma (in certain cases land disposition may be scored as
costing, rather than saving, money), but in any case agencies
are not motivated through budget means to relinquish assets
they are not using.
In New Zealand, the government made it a priority to
dispose of such assets. Any funds spent on maintaining a vacant
building or on equipment that will not be used for the
foreseeable future cannot be spent on acquiring or maintaining
useful capital assets. These foregone benefits are one reason
to give agencies incentives to clean house. The inherent misuse
of taxpayer resources is another. New Zealand set up capital
charges that function like a dividend. The agencies are fully
funded for the assets they are using, but not for those they
are not using. For example, a hypothetical agency may have
assets it is using that require $100 million to be kept
current. Yet it has other assets it is not using that cost $10
million to maintain annually. The agency would be funded for
the gross quantity of assets being used--$100 million--but
would have to pay for the assets it was not using. Thus it
would have the incentive to liquidate those unused assets in a
timely way to avoid paying for them.
Another option would be for Congress to devise criteria to
evaluate one instance of capital spending relative to another,
even if the capital activities are dissimilar. One way would be
to determine an activity's rate of return, which could inform
appropriations. Defining the rate of return could be difficult
and politicized, but if done correctly it could make it more
difficult and less attractive for Congress to fund capital
activities of low value. Key to this approach would be making
the rate of return criteria transparent. For example, one
measure of defense or homeland security capital spending's rate
of return would be how well it reduces risk and harm to the
public. For transportation capital spending, it could be the
decrease in traffic congestion or the increase in mobility in
metropolitan areas and downtown urban cores. Various factors in
each area's rate of return would be weighted differently. Then
different defense, homeland security, or transportation
programs/activities could be compared; Congress would have the
information and could abandon unproductive activities while
funding successful ones.
It would be important to clearly connect the information
about capital spending's rate of return to the appropriations
process. One option would be to require appropriators to
explain in their supporting documents what they expect to get
for the spending. The next year, they could examine whether
that goal was met or not. Connecting the two would also enable
better congressional oversight. Under today's practice of
Federal appropriations, the decision to spend is public, but
the answer to the question of ``why'' spend on certain capital
activities often is not visible.
Still another approach to getting better value for capital
spending is to devise ways to hold the government accountable
for its capability, or competence, in a given spending area. If
it is not maintaining its capability or performing a service
cost-effectively, then it could look to contracting out or
otherwise getting out of a certain area altogether. Further,
the appropriations process could be altered to require the
committee to demonstrate it has used such performance
information when appropriating funds. New Zealand made a
widespread effort to seek competitive bids for government
activities. The results were especially dramatic in the size of
the civil service. For example, the Department of
Transportation went from having 5,600 employees to having 53;
the Forest Service went from 17,000 employees to 17; and the
Ministry of Works went from 28,000 employees to one. While
those individuals no longer had civil service jobs, the need
for their skills still existed in the private sector.\586\
---------------------------------------------------------------------------
\586\From a lecture by the Honorable Maurice P. McTigue, adapted
for ``Rolling Back Government: Lessons from New Zealand,'' Imprimis,
Volume 33, Number 4, April 2004: https://imprimis.hillsdale.edu/
rolling-back-government-lessons-from-new-zealand/.
---------------------------------------------------------------------------

ZERO-BASED BUDGETING

Zero-based budgeting is a method of decision-making that
requires each line item in a budget to be justified,
considered, and approved during each budget cycle. Put simply,
it requires each budget to be built from a ``base of zero.''
This system is the opposite of incremental budgeting, in which
only new budgetary items are considered and everything already
approved in prior budgets becomes part of a permanent spending
``baseline'' that is automatically approved without new
justification. Critics of incremental, ``baseline'' budgeting
point out that automatically approving a certain baseline of
spending does not adequately control costs or provide
incentives for oversight.
While it is true that baseline concepts play a large role
in the congressional budget process, it is also true that all
discretionary appropriations are built, strictly speaking, from
a zero-base starting point. Furthermore, the Congressional
Budget Office scores all appropriations acts assuming a base of
zero. On the other hand, CBO's baseline spending projections
assume the current discretionary spending level, and then
project it forward with built-in increases for inflation. For
``direct'' or ``mandatory'' spending, however, the budget does
not start with a zero base. Indeed, all spending for such
programs is permanent or subject only to occasional sunset
dates, allowing them to operate as if a permanent baseline
governed their behavior. Spending for these programs is subject
to justification only when it is originally authorized or
reauthorized. This contributes to the automatic and
uncontrolled nature of this spending.
President Carter attempted to introduce zero-based
budgeting in the late 1970s. By 1978 the Office of Management
and Budget had developed procedures for using it,\587\ but it
was never implemented. Seventeen States have experimented with
the concept. Florida and Oklahoma abandoned it. In the States,
zero-based reviews are primarily an Executive Branch
responsibility.\588\
---------------------------------------------------------------------------
\587\National Conference of State Legislatures, Fiscal Brief: Zero-
Base Budgeting in the States, January 2012.
\588\Ibid.
---------------------------------------------------------------------------

CONCLUSION

In constructing a new congressional budget process, it is
clearly worth considering options outside current structures.
These might include incorporating performance measures of
programs and agencies; evaluating the full range of policies
employed to achieve national goals; distinguishing between
operating and capital expenditures; and assuming a zero base as
a starting point for spending decisions, to force a more
rigorous demand for justifying programs. Policymakers may or
may not choose to adopt such practices. Nevertheless,
evaluating the practice of budgeting can illuminate limitations
of today's procedures and inform decisions about what a
restructured budget process should include.

Proposals for a Rewrite of the
Congressional Budget Process

----------

During the 114th Congress, the Committee on the Budget
developed a series of proposals, based on the foregoing
discussions, for developing a fundamental overhaul of the
congressional budget process. The key recommendations are
described below.

ENHANCE CONSTITUTIONAL AUTHORITY

Asserting Article I Congressional Powers

Move to a Calendar-Year Cycle. Change the fiscal year to
start on January 1 (rather than the current October 1); adjust
the budget timetable to the calendar year so the budget process
corresponds with Congress's legislative schedule; and allow
more time to complete appropriations bills and other
legislative business. (See further discussion below.)

Changes in Budget Timetable. Change the budget timetable to
correspond with the change in the fiscal year. Unlike current
procedures, in which the President's budget submission drives
the process, this timetable should require the administration's
submission to occur after the House and Senate Budget
Committees report their concurrent resolutions on the budget.

Unauthorized Programs. Establish a procedure to reduce
discretionary spending by the amount of excess appropriations
for unauthorized programs. This would set the expectation that
unauthorized programs, or those with expired authorizations,
will not continue to receive funding.

Views and Estimates. Make mandatory the requirement that
authorizing committees submit Views and Estimates to their
respective Budget Committees and require authorizing committees
to include a list of programs needing reauthorization, and a
zero-based justification for each program they propose to
reauthorize.

Uniform Budget Rules and Procedures. Create a point of
order against the consideration of a budget resolution that
establishes different budgetary rules for the House and Senate.

House Budget Committee Tenure. Eliminate term limits for
Budget Committee members, allowing them to build and maintain
expertise on setting and enforcing national budget priorities.

Biennial Budgeting

Budget Resolution and Appropriations. Require annual budget
resolutions that provide two-year spending allocations for six
appropriations acts considered in the first year of the
biennium; two-year spending allocations for the other six
appropriations acts considered in the second year of the
biennium; and all other appropriate levels for at least the
next two biennia. The Government Accountability Office would
submit a report four years after enactment evaluating the
effectiveness of a biennial budget process and recommend to
Congress whether to make the shift to biennial budgeting
permanent.

Prohibition of Long-Term Continuing Resolutions. Create a
point of order against the consideration of any legislation
that continues appropriations for a period longer than 12
months.

STRENGTHEN BUDGET ENFORCEMENT

Adhering to Budget Rules

Restriction on Moving Spending and Tax Measures Before a
Budget Resolution. Eliminate loopholes that allow the
consideration of spending or tax legislation in the absence of
a budget resolution.

Identifying Budget Waivers. Require that, in the House, any
rule providing for the consideration of a bill or joint
resolution must separately identify any waiver of a budget
rule.

Striking Budget Waivers. Provide Members the ability to
strike budget waivers in the rule providing for consideration
of legislation.

Prohibition on the Use of Budget Gimmicks. Prevent
congressional committees from using gimmicks, such as one-time
savings from asset sales or timing shifts, to offset increases
in spending.

Emergency Spending

Striking Emergency Designations. Permit any House or Senate
Member to offer an amendment that strikes an emergency
designation in any measure.

Emergency Spending and the Baseline. Prohibit inflation
adjustments for emergency spending in calculating the baselines
produced by the Congressional Budget Office and the Office of
Management and Budget.

Two-Year Limit on Emergency Funding. Prohibit the
consideration of any general appropriations bill or continuing
resolution providing emergency spending for longer than two
fiscal years.

Justification of Emergency Designations. Require the House
and Senate Appropriations Committees and the President to
provide justifications for any emergency designation.

Standardized Treatment of Emergency Spending. Establish a
scoring rule for the treatment of the budgetary effects of
emergency-designated provisions in legislation.

Government Accountability Office Report. Require the
Comptroller General to submit a report reviewing recent use of
the emergency designation.

REVERSE THE BIAS TOWARD HIGHER SPENDING

Reversing the Baseline Bias. Recast the CBO and OMB
baselines to:

LEliminate built-in discretionary inflation;

LRemove automatic extensions of expiring programs;
and

LRemove the assumption that entitlement payments
continue at current levels even if trust funds are insolvent.

Treatment of Trust Funds. Establish a scoring rule that
prohibits any reduction in trust fund spending, or an increase
in revenues or fees, from being counted toward offsetting
unrelated, non-trust fund programs.

Cost Estimates Prior to Markup. Require CBO, when formally
requested by the Chair of the authorizing committee or the
Chair of the Budget Committee, to prepare a preliminary cost
estimate for any bill scheduled for consideration by the
applicable authorizing committee.

Debt Service Costs. Require the CBO Director to include, in
the cost estimate for any legislation, an estimate of any
change in debt service costs resulting from the measure.

Repeal of Statutory Pay-As-You-Go. Repeal the Statutory
Pay-As-You-Go Act of 2010 and replace it with enforceable
limits on direct spending.

CONTROL AUTOMATIC SPENDING

Binding Spending and Debt Limits. Establish a process for
budget limits that have the force of law and are enforceable
through automatic spending reductions.

Transitioning Direct Spending Programs to Discretionary
Appropriations. Establish a commission to recommend converting
direct spending programs to discretionary appropriations and
create an expedited procedure for considering such
recommendations.

Rule Against New Direct Spending Programs. Create a point
of order against the consideration of any new direct spending
program not included in the budget resolution.

Referral of Direct Spending Measures to House Budget
Committee. Provide a limited referral to the House Budget
Committee for bills that increase direct spending.

INCREASE TRANSPARENCY

Regulatory Budget

President's Budget Submission. Require the President's
budget submission to include an analysis of the costs of
complying with all current and proposed Federal regulations.

Regulatory Pay-As-You-Go. Prohibit any agency from adding
new regulatory costs without eliminating existing regulatory
costs by the same amount.

Regulatory Baseline. Require CBO and OMB to create a
regulatory baseline that estimates total Federal regulatory
costs.

Accountability and Public Accessibility

Annual Joint Session of Congress on the Fiscal State of the
Union. Require the Comptroller General to present annually, to
a Joint Session of Congress, the audited financial statements
of the United States Government.

Citizens' Guide to the Budget. Require both the
congressional budget resolution and the President's budget
submission to include a citizens' guide, not more than five
pages, summarizing the sources of Federal funds, how spending
is distributed, a comparison of proposed spending levels with
those of the current fiscal year, and other major budgetary
matters.

ENSURE FISCAL SUSTAINABILITY

Long-Term Debt Limits

Setting Long-Term Debt Limits, and Enhanced Reconciliation.
Establish long-term targets for debt as a percentage of gross
domestic product [GDP] that are enforced through enhanced
reconciliation or automatic enforcement procedures.

LThe targets would be set to assume a decline from
today's historically high levels to ensure the Federal
Government will remain on a fiscally sustainable path.

LThe proposal also calls for creating an enhanced
reconciliation procedure that is automatically triggered if any
debt target is exceeded. If a reconciliation bill curing the
breach of the debt limit were not enacted, an automatic
enforcement procedure would be triggered to ensure adherence to
the target.

Reforms to the Debt Limit. Change the enforcement of the
debt limit to track debt as a percentage of GDP--that is, the
long-term debt targets mentioned above--rather than a fixed
dollar level or suspension period of the debt limit as is done
under current practice. A vote to increase the debt limit would
not be required as long as the debt-to-GDP ratio remained below
the targets established in law. If debt exceeded those targets,
then the Secretary of the Treasury would be prohibited from new
borrowing until a new debt limit was enacted.

Accrual Budgeting

Federal Insurance and Retirement Programs. Subject Federal
insurance and retirement programs, excluding Social Security,
to accrual budgeting, requiring Congress to budget up front for
the full costs of such programs.

Fair-Value Accounting. Implement fair-value accounting
principles to more accurately measure the costs of Federal
credit programs by incorporating the cost of systemic market
risk.

Other Reforms

Publication of Budget Justifications. Require any agency
preparing and submitting written budget justification materials
to any committee to also post the justification, as well as
information regarding the process and methodology it used to
compose it, on that agency's public website. Similarly, this
proposal would require OMB to post budget justifications in a
centralized location on its website.

Rule Against Long-Term Spending. Require the CBO Director
to prepare an estimate of whether a proposed measure would
cause a net increase in direct spending greater than $2.5
billion in any year in the next four decades beyond the budget
window.

ADDITIONAL REFORMS

Macroeconomic Effects of Legislation. Require that any
estimate for major legislation provided by CBO or the Joint
Committee on Taxation also incorporate any budgetary effects it
may have on changes in economic output, employment, and other
macroeconomic variables.

National Commission on Budget Concepts. Establish a
National Commission on Budget Concepts to review the concepts
and definitions underlying the Federal budget and make
recommendations to Congress and the President on potential
revisions. Among its duties, the Commission would be charged
with reporting on how Federal portfolio and capital budgets
could be implemented and their implications with respect to
balancing the budget.

REGULATORY BUDGETING

----------

The restoration of sound budgeting for how the Federal
Government spends taxpayer dollars is critical to the promotion
of economic growth debt-reduction, federalism, and ordered
liberty. So too is the introduction of budgeting for how the
Federal Government directs others to spend: regulatory
budgeting.
Excessive and unnecessary regulation is a hidden tax on
Americans. It regressively taxes the poor, leaves displaced
workers unemployed or in lower-paying jobs, and often inflicts
concrete pain in search of illusory benefits. It is one of the
biggest reasons America's growth rate failed to yield a
sufficient recovery during the Obama years.
Growing research shows the cumulative burden of Federal
regulation--and high regulatory uncertainty about what
regulation may come next--drains America's economy of the
growth it needs to reduce and eliminate Federal debt. Precious
manpower and financial resources that productive sectors could
otherwise spend on innovating, hiring new workers, and rolling
out new products and services is wasted every day on compliance
with extensive amounts of new regulation--and the enormous
numbers of regulations already on the books.
All too often, this serves only the administrative state,
not families in search of a living, the poor in search of
opportunity, and workers in need of a job. Washington's
regulatory bureaucracy rarely knows either the monetized costs
or the monetized benefits of even new major regulations that it
issues. Frequently, the benefits claimed for new regulation are
not the direct benefits Congress directly sought when it passed
the relevant regulatory statutes. Instead, they are purported
``co-benefits''--side effects--that the bureaucracy argues
serve some other end.
None of this can be afforded by an America that must rely
on productive-sector growth to help pay down almost $20
trillion in Federal Government debt. None of it should be
countenanced by a Nation founded on the principles of limited
government and personal liberty.
Recognizing the need to rein in government red tape, on 30
January 2017, President Trump signed Executive Order 13771 on
``Reducing Regulation and Controlling Regulatory Costs''.\589\
This Executive Order, for the first time, requires agencies to
repeal two regulations for every new regulatory action
proposed. The process, commonly referred to as ``one in, two
out,'' requires concrete regulatory reductions if an agency
wants to issue new regulatory requirements. The President is
also required to submit to Congress a regulatory budget
alongside the normal fiscal budget submission.
---------------------------------------------------------------------------
\589\Federal Register, Vol 82, No. 22, 3 February 2017, p. 9339-
9341.
---------------------------------------------------------------------------
Executive Order 13771 is consistent with the reform
principles laid out in A Better Way: Our Vision for a Confident
America\590\ and the Committee on the Budget's discussion draft
titled Proposed Rewrite of the Congressional Budget
Process.\591\ The discussion draft proposed establishing a
simple ``one in, one out'' regulatory freeze, called
``Regulatory Pay-Go,'' as a precursor to a full regulatory
budget implemented by Congress. The Trump Administration's
executive action is the first step toward facilitating long-
term regulatory budgeting.
---------------------------------------------------------------------------
\590\Speaker Paul D. Ryan, A Better Way Our Vision for a Confident
America: The Constitution, 16 June 2016.
\591\Committee on the Budget, U.S. House of Representatives,
Proposed Rewrite of the Congressional Budget Process Discussion Draft:
Description and Rationale, 30 November 2016.
---------------------------------------------------------------------------
The initial challenges facing any regulatory budget or
regulatory Pay-Go fall in two main areas: measurement and
consistent implementation. Implementing guidance from the
Office of Management and Budget [OMB] directs agencies to
measure ``opportunity costs to society'' as defined in OMB
Circular A-4. No other country has attempted to quantify and
reduce ``opportunity costs to society'' through a regulatory
budget. If successful, it would enable the Federal Government
to create a lean, effective regulatory system that balances the
need for smart regulation while allowing the economy to
prosper. Any measuring formula must be accurate and
consistently applied, and must bear out intended results of
reducing regulatory costs.
An obstacle to Congress codifying a regulatory budget is
the lack of account level data and retrospective reviews to
create a reliable starting point. President Trump's Executive
Order 13771 allows Congress to move ahead with codifying a
regulatory budget because, in complying with the order,
agencies will have the level of granular detail to create a
reliable regulatory baseline.
Congress and the administration can work together to ensure
regulatory transparency and compliance with statutory
objectives.
On 24 February 2017, President Trump signed a second order
relating to regulatory reform. Executive Order 13777,
``Enforcing the Regulatory Reform Agenda'',\592\ would require
each agency to designate an official at each agency to
implement and oversee all executive orders relating to
regulatory relief. This designated Regulatory Reform Officer is
required to enforce agency compliance with Executive Order
13771 as well as previous executive orders carried forward by
the Trump Administration. Executive Order 13777 further
requires each agency to establish a Regulatory Reform Task
Force. Each task force is responsible for finding those agency
rules and regulations that inhibit job creation, are outdated,
unnecessary or ineffective, or are inconsistent with other
agency policy or regulations.
---------------------------------------------------------------------------
\592\Federal Register, Vol. 82, No. 39, 1 March 2017, p. 12285-
12287.
---------------------------------------------------------------------------
Taken together, these steps by the Trump Administration
demonstrate a serious commitment to reforming the way the
Executive Branch implements legislative requirement by
Congress. Using his executive authority, President Trump is
signaling a change in philosophy for agencies from regulation
makers to regulation managers.
In Congress, the House of Representatives has passed
several bills to streamline the regulatory process and insure
regulatory accountability is ultimately vested with Congress.
On 5 January 2017, the House passed H.R. 26, the ``Regulations
from the Executive in Need of Scrutiny [REINS] Act'' by a vote
of 237-187. The legislation requires Federal agencies to submit
for congressional approval major rules with costs to the
economy exceeding $100 million. The REINS Act provides an
expedited approval process. Similar REINS provisions have been
included in other reform bills including H.R. 10, the
``Financial CHOICE Act''.\593\
---------------------------------------------------------------------------
\593\More discussion on H.R. 10, the ``Financial CHOICE Act'' can
be found in the section of this report titled, ``Banking, Commerce,
Postal Service, and Related Programs.''
---------------------------------------------------------------------------
The ``Regulatory Accountability Act'' passed the House of
Representatives on 11 January 2017 by a vote of 238-183. The
measure requires agencies to use the lowest cost rulemaking
alternative that meets statutory objectives. The bill repeals
both the Chevron and Auer doctrines which provide judicial
deference to bureaucrats' statutory and regulatory
interpretations.
While an important first step, executive actions must be
reinforced by congressional action. As the first and ultimate
source of legislative requirements, Congress must act to codify
regulatory reforms pursued by the Administration. When
regulation is needed, it can be done in more cost-effective
ways. Before any regulation is implemented, Congress can budget
for how much new regulation can sustainably be imposed on
America's economy year by year. The undue brake on economic
growth that Federal regulation sets must be controlled. It
makes sense to do that using the kinds of budgeting tools
available for reining in runaway Federal spending. To date,
Congress has not adopted regulatory budgeting tools to manage
the Federal regulatory footprint. Neither has it imposed robust
statutory controls against Federal regulators' abilities to
burden America's workers and economy with excessively expensive
and insufficiently effective Federal regulations. The time has
come to do both.

THE PRESIDENT'S BUDGET:
A BRIEF SUMMARY

----------

MAJOR COMPONENTS

Balances the Budget. The President's budget for fiscal year
2018 reduces deficits by $5.6 trillion over the course of the
2018-2027 period, achieving a surplus of $16 billion at the end
of the decade, by slowing the rate of growth in Federal
Government spending. It also reduces debt held by the public
from 77.4 percent of gross domestic product [GDP] this year to
59.8 percent of GDP by the end of the decade.\594\ Former
President Obama never tried to balance the budget.
---------------------------------------------------------------------------
\594\These and all other figures for the President's budget are
from the Office of Management and Budget and may not match those of the
Congressional Budget Office.

FIGURE 14

Defense and Non-Defense Discretionary. The President calls
for increasing base defense discretionary spending by $54
billion in 2018 and reducing nondefense by the same. His budget
proposes $603 billion in base defense discretionary spending in
fiscal year 2018, and $462 billion for non-defense
discretionary. Defense grows to $727 billion in 2027, while
non-defense discretionary declines to $367 billion that year.
(See Figure 2, next page).
For the Global War on Terrorism (``overseas contingency
operations'' in the administration's terms), the President's
budget calls for a total of $77 billion--$65 billion for
defense and $12 billion for non-defense.

Mandatory Savings. The budget achieves a net of $2.5
trillion in 10-year savings from direct spending proposals,
including major program reforms summarized below.

Major Program Reforms. Key programs reforms assumed in the
President's budget, and their 10-year budget effects, include
the following:

Repeal and replace Obamacare (net savings of $250
billion).

Reform Medicaid and the State Children's Health
Insurance Program (savings of $616 billion).

Make no major changes in Medicare, but repeal
Obamacare's Independent Payment Advisory Board and calls for
medical liability reform.

Make no reductions in core Social Security
benefits.

Reform the welfare system (saving $272 billion).

Reform financial regulation and prevent taxpayer-
funded bailouts (saving $35 billion).

Reform Federal student loans (saving $143
billion).

Reform disability programs (saving $72 billion).

Reform entitlement benefits for Federal employees
(saving $63 billion).

Limit Farm Bill subsidies and make other
agricultural reforms (saving $38 billon).

Extend the current Veterans Choice program
(increasing spending by $29 billion), offset by $43 billion in
other veterans' program savings, for net deficit reduction of
$15 billion over 10 years.

FIGURE 15

Reduce improper payments government-wide (saving
$142 billion).

Support $1 trillion in private/public
infrastructure program (net Federal spending increase of $200
billion).

Establish a paid parental leave program (net
spending increase of $19 billion).

Make other spending reductions and program
reforms (savings of $339 billion).

Interest Savings. The President's budget assumes $311 in
savings on net interest over 10 years.

Tax Reform. President Trump's budget calls for revenue-
neutral tax reform. Major components are the following:

Reduce the current seven tax brackets to three:
10 percent, 25 percent, and 35 percent. The proposal also
doubles the standard deduction (currently $12,700 for married
couples filing jointly).

Reduce the current business tax rate (corporate
and pass-through) to 15 percent from the current 35 percent;
establish a territorial tax system (taxes levied where business
is conducted); and apply a one-time repatriation of money held
offshore.

Simplify the tax code by eliminating targeted tax
breaks that mainly benefit the wealthiest taxpayers; protect
the home ownership and charitable gift tax deductions; repeal
the estate tax and the Alternative Minimum Tax

Economic Assumptions. Over the 2018-2027 period, the
administration projects 2.9-percent average annual growth in
real (inflation-adjusted) GDP based on the President's proposed
policies, including spending and deficit reduction, tax reform,
and regulatory reform. That rate is consistent with historical
trends, slightly above 3.0 percent per year. By comparison, the
Congressional Budget Office [CBO] projects average annual GDP
growth of 1.9 percent, and the Blue Chip consensus of private
forecasters 2.1 percent. The administration projects real GDP
to rise, on a year-over-year basis, from 2.3 percent in 2017
(the same as CBO and the Blue Chip] to 3.0 percent in 2021, and
remaining at that level through the rest of the decade. CBO's
projection falls to 1.8 percent in 2021, then ticks up to 1.9
percent in 2022 and holds there through 2027. The Blue Chip
dips to 2.0 percent in 2020 and remains in that range for the
rest of the decade. Other economic assumptions in the
administration's budget include:

The unemployment rate rising slightly to 4.8
percent in 2021 and remaining at that level through 2027.

Inflation, as measured by the consumer price
index, reaching 2.6 percent this year and then falling to 2.3
percent per year for the rest of the decade.

Interest rates on 10-year Treasury notes rising
from 2.7 percent this year to 3.8 percent in 2020, then
remaining at that level through 2027. These projected rates are
higher than CBO's but are similar to Blue Chip over the budget
window.

Macroeconomic Feedback. The budget also assumes $2.06
trillion in deficit reduction over 10 years due to the
administration's pro-growth policies, including spending and
deficit reduction, tax reform, and regulatory reform.

TABLE 11.--SUMMARY OF FISCAL YEAR 2018 BUDGET RESOLUTION
[As a percentage of GDP]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2018-2027
--------------------------------------------------------------------------------------------------------------------------------------------------------
Deficit(+)/Surplus(-):
Committee Recommendation............... +2.4% +2.4% +2.0% +1.7% +1.6% +1.2% +0.7% +0.6% +0.3% -0.0% +1.3%
CBO.................................... +2.4% +2.9% +3.2% +3.6% +4.2% +4.2% +4.1% +4.5% +4.8% +5.0% +3.9%
President's Budget..................... +2.2% +2.5% +2.2% +2.0% +1.8% +1.3% +0.8% +0.6% +0.4% -0.1% +1.4%
Debt Held by the Public:
Committee Recommendation............... 77.0% 76.8% 75.9% 74.5% 72.7% 70.9% 68.5% 66.3% 63.8% 60.9% n.a.
CBO.................................... 77.4% 77.9% 78.8% 79.9% 81.3% 82.6% 83.8% 85.3% 87.0% 89.0% n.a.
President's Budget..................... 76.7% 76.2% 75.1% 73.7% 72.2% 70.2% 67.8% 65.3% 62.7% 59.8% n.a.
Outlays:
Committee Recommendation............... 20.1% 20.1% 19.6% 19.3% 19.1% 18.7% 18.2% 18.2% 18.0% 17.8% 18.9%
CBO.................................... 20.5% 21.0% 21.3% 21.7% 22.3% 22.3% 22.3% 22.8% 23.1% 23.4% 22.1%
President's Budget..................... 20.5% 20.7% 20.3% 20.0% 19.9% 19.4% 18.9% 18.9% 18.7% 18.4% 21.6%
Revenues:
Committee Recommendation............... 17.7% 17.6% 17.5% 17.3% 17.0% 16.9% 16.7% 16.7% 16.7% 16.6% 17.1%
CBO.................................... 18.1% 18.1% 18.1% 18.1% 18.1% 18.1% 18.2% 18.2% 18.3% 18.4% 18.2%
President's Budget..................... 18.3% 18.2% 18.1% 18.0% 18.1% 18.1% 18.2% 18.2% 18.3% 18.4% 18.2%
--------------------------------------------------------------------------------------------------------------------------------------------------------

TABLE 12.--FISCAL YEAR 2018 HOUSE BUDGET RESOLUTION VS. THE PRESIDENT'S BUDGET
[In millions of dollars]
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal year 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2018-2022 2018-2027
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
FISCAL YEAR 2018 BUDGET RESOLUTION
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total spending:
BA............................................ 4,096,933 4,210,736 4,286,076 4,344,146 4,567,485 4,685,904 4,810,056 5,019,533 5,198,404 5,370,264 21,505,376 46,589,537
OT............................................ 4,024,170 4,184,625 4,263,701 4,371,392 4,560,681 4,662,535 4,771,559 4,976,995 5,172,531 5,344,567 21,404,569 46,332,757
On-budget:
BA............................................ 3,232,597 3,286,018 3,299,573 3,290,186 3,441,975 3,483,686 3,528,872 3,655,413 3,746,208 3,824,652 16,550,350 34,789,180
OT............................................ 3,164,885 3,265,306 3,283,026 3,323,464 3,441,603 3,467,047 3,497,308 3,620,210 3,727,971 3,806,792 16,478,284 34,597,612
Off-budget:
BA............................................ 864,336 924,717 986,503 1,053,959 1,125,510 1,202,219 1,281,184 1,364,120 1,452,197 1,545,612 4,955,026 11,800,357
OT............................................ 859,285 919,319 980,675 1,047,928 1,119,078 1,195,488 1,274,251 1,356,785 1,444,561 1,537,776 4,926,286 11,735,146
Revenues:
Total......................................... 3,542,479 3,668,467 3,796,957 3,920,337 4,066,811 4,219,233 4,386,477 4,574,285 4,784,571 4,993,388 18,995,051 41,953,005
On-budget..................................... 2,670,356 2,767,357 2,870,414 2,963,953 3,077,586 3,195,139 3,325,690 3,475,784 3,642,629 3,811,687 14,349,666 31,800,595
Off-budget.................................... 872,123 901,110 926,543 956,384 989,225 1,024,094 1,060,787 1,098,501 1,141,942 1,181,701 4,645,385 10,152,410
Surplus/Deficit(-):
Total......................................... -471,691 -496,158 -436,744 -381,055 -393,870 -293,302 -175,082 -152,710 -87,960 8,821 -2,179,518 -2,879,752
Macroeconomic fiscal impact................. 10,000 20,000 30,000 70,000 100,000 150,000 210,000 250,000 300,000 360,000 230,000 1,500,000
On-budget................................... -494,529 -497,949 -412,612 -359,511 -364,017 -271,908 -171,618 -144,426 -85,342 4,895 -2,128,618 -2,797,017
Off-budget.................................. 12,838 -18,209 -54,132 -91,544 -129,853 -171,394 -213,464 -258,284 -302,619 -356,075 -280,901 -1,582,736
Debt held by the public (end of year)........... 15,399,966 15,971,804 16,477,150 16,920,847 17,371,706 17,720,326 17,949,306 18,156,356 18,299,466 18,345,826 n.a. n.a.
Debt subject to limit (end of year)............. 21,059,756 21,720,619 22,263,387 22,717,657 23,120,068 23,414,924 23,577,205 23,665,687 23,701,446 23,484,672 n.a. n.a.
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
PRESIDENT'S FY2018 BUDGET AS SUBMITTED\a\
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total spending:
BA............................................ 4,279,489 4,284,736 4,431,601 4,582,090 4,811,798 4,976,250 5,142,694 5,366,177 5,589,332 5,784,121 22,389,714 49,248,288
OT............................................ 4,094,450 4,339,564 4,470,079 4,616,682 4,831,744 4,933,301 5,073,222 5,305,694 5,527,346 5,708,455 22,352,519 48,900,537
On-budget:
BA............................................ 3,407,261 3,352,526 3,435,375 3,522,074 3,679,846 3,766,583 3,850,359 3,989,535 4,123,820 4,227,206 17,397,082 37,354,585
OT............................................ 3,227,792 3,415,966 3,482,316 3,564,720 3,708,130 3,732,853 3,789,948 3,938,203 4,071,120 4,161,179 17,398,924 37,092,227
Off-budget:
BA............................................ 872,228 932,210 996,226 1,060,016 1,131,952 1,209,667 1,292,335 1,376,642 1,465,512 1,556,915 4,992,632 11,893,703
OT............................................ 866,658 923,598 987,763 1,051,962 1,123,614 1,200,448 1,283,274 1,367,491 1,456,226 1,547,276 4,953,595 11,808,310
Revenues:
Total......................................... 3,654,292 3,813,661 3,982,126 4,160,885 4,390,081 4,614,609 4,864,116 5,130,102 5,416,878 5,724,237 20,001,045 45,750,987
On-budget..................................... 2,762,138 2,882,385 3,010,308 3,134,084 3,308,822 3,481,718 3,672,677 3,879,500 4,101,053 4,345,727 15,097,737 34,578,412
Off-budget.................................... 892,154 931,276 971,818 1,026,801 1,081,259 1,132,891 1,191,439 1,250,602 1,315,825 1,378,510 4,903,308 11,172,575
Surplus/Deficit(-):
Total......................................... -440,158 -525,903 -487,953 -455,797 -441,663 -318,692 -209,106 -175,592 -110,468 15,782 -2,351,474 -3,149,550
On-budget..................................... -465,654 -533,581 -472,008 -430,636 -399,308 -251,135 -117,271 -58,703 29,933 184,548 -2,301,187 -2,513,815
Off-budget.................................... 25,496 7,678 -15,945 -25,161 -42,355 -67,557 -91,835 -116,889 -140,401 -168,766 -50,287 -635,735
Debt held by the public (end of year)........... 15,353,047 15,957,363 16,509,025 17,023,615 17,517,470 17,886,953 18,149,815 18,378,925 18,541,270 18,575,195 n.a. n.a.
Debt subject to limit (end of year)............. 21,095,075 21,844,415 22,510,291 23,123,214 23,658,420 24,084,273 24,425,178 24,655,504 24,798,681 24,694,793 n.a. n.a.
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DIFFERENCE
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total spending:
BA............................................ -182,556 -74,000 -145,525 -237,944 -244,313 -290,346 -332,638 -346,644 -390,928 -413,857 -884,338 -2,658,751
OT............................................ -70,280 -154,939 -206,378 -245,290 -271,063 -270,766 -301,663 -328,699 -354,815 -363,888 -947,950 -2,567,780
On-budget:
BA............................................ -174,664 -66,508 -135,802 -231,888 -237,871 -282,897 -321,487 -334,122 -377,612 -402,554 -846,732 -2,565,405
OT............................................ -62,907 -150,660 -199,290 -241,256 -266,527 -265,806 -292,640 -317,993 -343,149 -354,387 -920,640 -2,494,615
Off-budget:
BA............................................ -7,892 -7,493 -9,723 -6,057 -6,442 -7,448 -11,151 -12,522 -13,315 -11,303 -37,606 -93,346
OT............................................ -7,373 -4,279 -7,088 -4,034 -4,536 -4,960 -9,023 -10,706 -11,665 -9,500 -27,309 -73,164
Revenues:
Total......................................... -111,813 -145,194 -185,169 -240,548 -323,270 -395,376 -477,639 -555,817 -632,307 -730,849 -1,005,994 -3,797,982
On-budget..................................... -91,782 -115,028 -139,894 -170,131 -231,236 -286,579 -346,987 -403,716 -458,424 -534,040 -748,071 -2,777,817
Off-budget.................................... -20,031 -30,166 -45,275 -70,417 -92,034 -108,797 -130,652 -152,101 -173,883 -196,809 -257,923 -1,020,165
Surplus/Deficit(-):
Total......................................... 31,533 -29,745 -51,209 -74,742 -47,793 -25,390 -34,024 -22,882 -22,508 6,961 -171,956 -269,798
Macroeconomic fiscal impact................. -10,000 -20,000 -30,000 -70,000 -100,000 -150,000 -210,000 -250,000 -300,000 -360,000 -230,000 -1,500,000
On-budget................................... 28,875 -35,632 -59,396 -71,125 -35,291 20,773 54,347 85,723 115,275 179,653 -172,569 283,202
Off-budget.................................. 12,658 25,887 38,187 66,383 87,498 103,837 121,629 141,395 162,218 187,309 230,614 947,001
Debt held by the public (end of year)........... 46,919 14,441 -31,876 -102,769 -145,764 -166,628 -200,509 -222,569 -241,804 -229,369 n.a. n.a.
Debt subject to limit (end of year)............. -35,319 -123,795 -246,905 -405,557 -538,352 -669,349 -847,973 -989,818 -1,097,235 -1,210,122 n.a. n.a.
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\a\Figures for the President's budget are from the Office of Management and Budget and may not match those at the Congressional Budget Office.

SECTION-BY-SECTION DESCRIPTION

----------

The concurrent resolution on the budget for fiscal year
2018 establishes an overall budgetary framework. As required
under the Congressional Budget Act of 1974 [the Budget Act],
this framework includes aggregate levels of new budget
authority, outlays, revenues, the amount by which revenues
should be changed, the surplus or deficit, new budget authority
and outlays for each major functional category, debt held by
the public, and debt subject to the statutory limit. This
resolution also sets appropriate budgetary levels for fiscal
years 2019 through 2027.
This resolution provides reconciliation instructions to
authorizing committees to achieve specified amounts of deficit
reduction. It is envisioned that the reconciliation process
will be used both to reduce the deficit by $203 billion over 10
years and provide for comprehensive tax reform that will be
deficit neutral. It includes rulemaking provisions necessary to
enforce the budget resolution, procedures for adjusting the
budget resolution, provisions to accommodate legislation not
assumed in the budget resolution, and certain policy
assumptions underlying the budget resolution.
Section 1. Concurrent Resolution on the Budget for Fiscal Year 2018.
Subsection (a) establishes the budgetary levels for fiscal
year 2018 and each of the nine ensuing fiscal years, 2019
through 2027. Section 301(a) of the Budget Act stipulates that
the budget resolution establish budgetary levels for the fiscal
year for which such resolution is adopted and for at least each
of the four ensuing fiscal years.
In addition to the levels set forth in the fiscal year 2018
budget resolution, this report provides an allocation of
discretionary budget authority and outlays, as required under
section 302(a) of the Budget Act, to the Committee on
Appropriations. The Committee on Appropriations, in turn,
suballocates this allocation among its 12 subcommittees. These
302(b) suballocations serve as limits on the amount that can be
appropriated for various programs, projects, and activities
within the jurisdiction of its subcommittees.
This report also provides allocations of direct spending to
each of the authorizing committees with jurisdiction over
entitlements and other forms of mandatory spending. In addition
to an allocation for fiscal year 2018, the authorizing
committees receive an allocation of spending authority over the
10-fiscal-year period provided for by this budget resolution
and may not, under section 302(f) of the Budget Act, spend more
than the allocation for the budget year or over the 10-fiscal-
year period.
Subsection (b) sets out the table of contents of the
resolution.

TITLE I--RECOMMENDED LEVELS AND AMOUNTS

Section 101. Recommended Levels and Amounts.
Section 101, as required by section 301 of the Budget Act,
establishes the recommended levels for revenue, the amount by
which revenue should be changed, total new budget authority,
total budget outlays, surpluses or deficits, debt subject to
the statutory limit (the budget resolution does not change the
actual debt limit), and debt held by the public.
The revenue level operates as a floor against which all
revenue legislation is measured, pursuant to section 311 of the
Budget Act. Similarly, the recommended levels of new budget
authority and budget outlays serve as a ceiling for spending
legislation. The surplus or deficit levels include only on-
budget outlays and revenue and do not include most outlays and
receipts related to the Social Security program and United
States Postal Service operations.
Debt subject to the statutory limit generally refers to the
portion of gross Federal debt issued by the Treasury Department
to the public or another government fund or account. Debt held
by the public is the amount of debt issued and held by entities
or individuals other than the U.S. Government.
Section 102. Major Functional Categories.
Section 102, as required by section 301(a) of the Budget
Act, establishes the budgetary levels for each major functional
category for fiscal year 2018 and establishes these levels for
each of fiscal years 2019 through 2027.
These major functional categories are the following:

050 National Defense
150 International Affairs
250 General Science, Space, and Technology
270 Energy
300 Natural Resources and Environment
350 Agriculture
370 Commerce and Housing Credit
400 Transportation
450 Community and Regional Development
500 Education, Training, Employment, and Social Services
550 Health
570 Medicare
600 Income Security
650 Social Security
700 Veterans Benefits and Services
750 Administration of Justice
800 General Government
900 Net Interest
920 Allowances
930 Government-Wide Savings
950 Undistributed Offsetting Receipts
970 Overseas Contingency Operations/Global War on Terrorism
990 Across-the-Board Adjustment

TITLE II--RECONCILIATION AND RELATED MATTERS

Section 201. Reconciliation in the House of Representatives.
Section 201 sets forth reconciliation instructions to 11
authorizing committees in the House of Representatives. These
instructions are optional under section 301(b) of the Budget
Act.
Subsection (a) specifies a deadline of 6 October 2017 for
the instructed authorizing committees to submit reconciliation
legislation to the Committee on the Budget.
Subsection (b) sets forth reconciliation instructions to 11
authorizing committees, pursuant to section 310 of the Budget
Act, to achieve specified amounts of deficit reduction. The
instructed committees have jurisdiction over direct spending
for which savings are assumed in the budget resolution. The
instructed committees and the amounts of reconciled savings are
as follows:

Committee on Agriculture.............................. $10,000,000,000
Committee on Armed Services........................... $1,000,000,000
Committee on Education and the Workforce.............. $20,000,000,000
Committee on Energy and Commerce...................... $20,000,000,000
Committee on Financial Services....................... $14,000,000,000
Committee on Homeland Security........................ $3,000,000,000
Committee on the Judiciary............................ $45,000,000,000
Committee on Natural Resources........................ $5,000,000,000
Committee on Oversight and Government Reform.......... $32,000,000,000
Committee on Veterans' Affairs........................ $1,000,000,000
Committee on Ways and Means........................... $52,000,000,000

This budget resolution follows the convention of not
reconciling Senate committees and assumes that instructions to
Senate authorizing committees will be incorporated in any final
budget agreement.
The committees are instructed to achieve these specified
amounts through deficit reduction rather than through changes
in budget authority, outlays, or revenue.
The reconciled amounts act as a floor, not a ceiling, on
the required savings for each committee. The targets are for
the total of the 10-fiscal-year period of fiscal years 2018
through 2027. These targets will provide the committees maximum
flexibility in the construction of savings.
A central tenet of the reconciliation process is that the
authorizing committees determine their own policies as long as
they meet their reconciliation targets. As such, the reconciled
amounts may be based on policy assumptions in the budget
resolution, but the authorizing committees can meet them with
any combination of policies within their jurisdiction that
achieves the required level of savings.
The Committee on Ways and Means is reconciled an amount of
deficit reduction in lieu of specific changes in both direct
spending and revenue because it has jurisdiction over both
direct spending programs and most sources of revenue. It is the
clear intent that the committee will include deficit neutral,
comprehensive tax reform in its submission in addition to
achieving $52 billion in deficit reduction over the period of
fiscal years 2018 through 2027.
All reconciled committees are required to mark up
legislation that meets their reconciliation targets and submit
the legislation to the Committee on the Budget rather than
reporting the legislation to the House.
Other than submitting their legislation to the Committee on
the Budget, the authorizing committees are expected to follow
regular order in complying with House and Committee rules
related to markup procedures and reporting requirements.
The Committee on the Budget will then combine all of the
submissions and report the bill to the House. Under section
310(b) of the Budget Act, the Committee on the Budget must
report the submissions without substantive revision.

TITLE III--BUDGET ENFORCEMENT IN THE
HOUSE OF REPRESENTATIVES

Subtitle A--Budget Enforcement

Section 301. Point of Order Against Increasing Long-Term Direct
Spending.
Subsection (a) establishes a point of order against the
consideration of any measure other than an appropriation
measure, or amendment thereto or conference report thereon,
that increases net direct spending by $2.5 billion over the
long-term. The $2.5 billion threshold is a reduction from the
$5 billion threshold applicable under section 3(h) of H. Res. 5
(115th Congress).
Subsection (b) requires the Congressional Budget Office
[CBO], to the extent practicable, to prepare an estimate of
whether a measure would cause a net increase in direct spending
in excess of $2.5 billion over the long-term. The applicable
periods for this section are any of the four consecutive 10-
fiscal year periods beginning in fiscal year 2028.
Subsection (c) states that application of this section in
the House shall not apply to any measure for which the Chair of
the Committee on the Budget adjusts the allocations,
aggregates, or other budgetary levels in this concurrent
resolution.
Subsection (d) affirms the authority of the Chair of the
Committee on the Budget to determine the estimates that are
used to enforce this section. As a practical matter, the
Committee on the Budget uses the estimates provided by CBO.
Subsection (e) provides that this section shall have no
force or effect after September 30, 2018.
Section 302. Allocation for Overseas Contingency Operations/Global War
on Terrorism.
Subsection (a) provides the Committee on Appropriations
with a separate allocation for the purposes of Overseas
Contingency Operations/Global War on Terrorism [OCO/GWOT] under
section 302(a) of the Budget Act. This separate allocation is
included in the 302(a) allocation tables in this report. It
exempts the OCO/GWOT allocation from certain display
requirements that apply to the overall 302(a) allocation.
Subsection (b) stipulates that this separate 302(a)
allocation is the exclusive allocation for OCO/GWOT under
section 302(b) of the Budget Act, and it permits the Committee
on Appropriations to provide suballocations to its
subcommittees as it does for its overall 302(a) allocation
under section 302(b) of the Budget Act.
Subsection (c) stipulates that, for purposes of enforcing
this separate allocation under section 302(f) of the Budget
Act, the ``first fiscal year'' and the ``total of fiscal
years'' refer to fiscal year 2018 only. This provision is
necessary because the Committee on Appropriations' 302(a)
allocation is only enforced one year at a time. It also
effectively exempts the OCO/GWOT allocation from the
requirement that the Committee on Appropriations must
suballocate this separate allocation among its relevant
subcommittees.
Subsection (d) provides that only appropriations designated
for OCO/GWOT under the statutory spending limits will be
counted against the separate OCO/GWOT allocation.
Subsection (e) ensures that the budget resolution levels
are not inadvertently adjusted for any OCO/GWOT appropriations,
because these appropriations are already accommodated in the
separate OCO/GWOT allocation. It specifically provides that no
adjustment will be made under section 314(a) of the Budget Act
if an adjustment would be made under section 251(b)(2)(A)(ii)
of the Balanced Budget and Emergency Deficit Control Act of
1985 [Deficit Control Act of 1985].
Section 303. Limitation on Changes in Certain Mandatory Programs.
Section 303 reinforces the enforcement of the Committee on
Appropriations' 302(a) and (b) allocations by limiting the
extent to which Congress can use illusory savings to meet the
overall limit on discretionary spending.
Subsection (a) defines the term ``change in mandatory
programs'' as a provision that: (1) would have been estimated
as affecting direct spending or receipts under section 252 of
the Deficit Control Act of 1985 (as in effect prior to 30
September 2002) if such provision were included in legislation
other than appropriations acts; and (2) results in a net
decrease in budget authority in the budget year, but does not
result in a net decrease in outlays over the total period of
the current year, budget year, and all fiscal years covered
under the most recently agreed to budget resolution.
Subsection (b) establishes a point of order against any
provision in a bill or joint resolution, or amendment thereto
or conference report thereon, making appropriations for a full
fiscal year that proposes a change in mandatory programs that,
if enacted, would cause the absolute value of all such changes
in mandatory programs enacted in relation to a full fiscal year
to be more than the amount specified under this section. The
amounts under this subsection are as follows:

Fiscal Year 2018: $19,100,000,000
Fiscal Year 2019: $17,000,000,000
Fiscal Year 2020: $15,000,000,000

Subsection (c) stipulates that, for purposes of this
section, budgetary levels shall be determined on the basis of
estimates provided by the Chair of the Committee on the Budget.
Section 304. Limitation on Advance Appropriations.
Similar to the limit on changes in mandatory programs, the
limit on advance appropriations is intended to ensure the
integrity of the 302(a) and (b) allocations by limiting the
amount of appropriations that can be appropriated in the years
following the budget year, commonly referred to as ``advance
appropriations.''
Section 304 establishes a limit on advance appropriations,
defined as budget authority that first becomes effective in
fiscal year 2019.
Subsection (a) establishes a general rule that prohibits
the consideration of any general appropriation bill or bill or
joint resolution continuing appropriations, or amendment
thereto or conference report thereon, from making advance
appropriations unless included on a list of exceptions in the
report or joint statement of managers, as applicable,
accompanying the budget resolution.
Subsection (b) provides exceptions to the general rule for
two separate lists of accounts included in this report, one for
miscellaneous accounts identified under the heading ``Accounts
Identified for Advance Appropriations'' and one for veterans
accounts under the heading ``Veterans Accounts Identified for
Advance Appropriations.''
Subsection (c) sets an overall limit on miscellaneous
accounts of $28,852,000,000 and a limit on veterans accounts of
$70,699,313,000 on allowable advance appropriations.
Subsection (d) defines an ``advance appropriation'' as any
new discretionary budget authority provided in a general
appropriation bill or bill or joint resolution continuing
appropriations for fiscal year 2018, or any amendment thereto
or conference report thereon, that first becomes available for
the first fiscal year following fiscal year 2018.
Section 305. Estimates of Debt Service Costs.
Section 305 authorizes the Chair of the Committee on the
Budget to direct CBO to include an estimate of any change in
debt service costs (whether an increase or decrease) in its
cost estimates for pending legislation. These estimates are
advisory; they will not be used to determine whether a measure
complies with the limits established in the budget resolution
and other budget rules. This requirement is not intended to
apply to authorizations of discretionary programs or to
appropriation bills, but is intended to apply to changes in the
authorization level of appropriated entitlements.
The Chair intends to request such estimates for measures
with a significant budgetary impact that would have a
noticeable effect on debt service costs.
Section 306. Fair-Value Credit Estimates.
Subsection (a) directs CBO to include a supplemental fair-
value estimate, if requested by the Chair, of any legislation
modifying or establishing a loan or loan guarantee program.
This applies to all loans and loan guarantees, regardless of
program or policy area.
Subsection (b) directs CBO to include in all estimates of
legislation establishing or modifying a loan or loan guarantee
program for student financial assistance and housing (including
residential mortgage). No request from the Chair of the
Committee on the Budget is necessary.
Under both subsection (a) and (b), CBO is directed to
provide such an estimate only if practicable.
Subsection (c) requires CBO to include, in its The Budget
and Economic Outlook: 2018 to 2027, a comparison baseline
projection for student financial assistance, housing (including
residential mortgage) and other major credit programs on a
fair-value and credit reform basis.
Subsection (d) permits the Chair of the Committee on the
Budget to use the fair-value estimate provided pursuant to
subsection (a) or (b) in determining whether legislation
complies with the Budget Act and other budget rules.
Section 307. Estimates of Macroeconomic Effects of Major Legislation.
This rule is essentially identical to section 3112 of the
conference report accompanying S. Con. Res. 11 (the Fiscal Year
2016 Concurrent Resolution on the Budget), which effectively
superseded an earlier version of the rule set forth in clause 8
of House rule XIII. The only difference from its predecessor is
that it fully applies to both the House and Senate.
Subsection (a) directs CBO and the Joint Committee on
Taxation [JCT], as applicable and to the extent practicable, to
incorporate in the cost estimates of major legislation the
macroeconomic effects of such legislation during the 115th
Congress.
Subsection (b) stipulates that these macroeconomic
estimates are to include, also to the extent practicable, a
qualitative assessment of the budgetary effects of major
legislation in the 20-fiscal year period beginning after the
last fiscal year of the most recently agreed to budget
resolution and an identification of the assumptions and source
data underlying the estimate.
Subsection (c) defines major legislation as: (1)
legislation that causes a gross budgetary effect (before
incorporating macroeconomic effects and not including timing
shifts in any fiscal year covered by the budget resolution)
equal to or greater than 0.25 percent of the current projected
GDP of the United States for that fiscal year; or (2) is
designated by the appropriate Chair of the Committee on Budget
for all direct spending legislation or the Chair or Vice Chair
of JCT for revenue legislation. Additionally, in the Senate, a
treaty having a budgetary impact equal to or greater than $15
billion would also constitute major legislation.
The term ``budgetary effects'' is defined as changes in
revenues, direct spending outlays, and deficits. The term
``timing shifts'' is defined as provisions that either: (1)
cause a delay of the date in which outlays flowing from direct
spending would otherwise occur from one fiscal year to the next
fiscal year; or (2) cause an acceleration of the date on which
revenues would otherwise occur from one fiscal year to the
prior fiscal year.
Section 308. Adjustments for Improved Control of Budgetary Resources.
Section 308, long a feature of budget resolutions, is
intended to remove a disincentive to subjecting existing
mandatory programs to annual appropriations. It would
effectively hold the Committee on Appropriations harmless for
any such conversion and prevent the applicable authorizing
committee from using savings that could otherwise be used to
offset other increases in mandatory spending.
Subsection (a) permits the Chair of the Committee on the
Budget to adjust the budget resolution to accommodate
legislation that subjects an existing mandatory program to
annual appropriations. The Chair would increase the 302(a)
allocation to the Committee on Appropriations by the amount of
the new discretionary program and reduce the 302(a) allocation
of the authorizing committee that reported the legislation.
These adjustments would be made upon enactment of the
legislation.
Subsection (b) authorizes the Chair of the Committee on the
Budget to make the adjustments under subsection (a) and affirms
the Chair's authority to determine the estimates used to
execute this section.
Section 309. Scoring Rule for Energy Savings Performance Contracts.
Section 309 estimates in today's dollars the net cash
flows, both savings and costs, associated with any Energy
Performance Contract [ESPC] or Utility Service Contract over
the period of the contract, but not to exceed 25 years. This
scoring rule would have the effect of capturing any long-term
budgetary savings (and costs) resulting from these contracts.
Under existing cash-based estimates, much of the savings from
these contracts occur outside the budget window.
This section adheres to the principle that costs resulting
from such contracts are direct spending if imposed by
authorization legislation. It would not change the fact that
Federal agencies would continue to cover contractual payments
through annual, discretionary appropriations.
Subsection (a) requires the Director of CBO to estimate on
a net present value basis any legislation that expands the
Federal government's authority to enter into or modify an
existing ESPC or Utility Service Contract.
Subsection (b) stipulates that the net present value is
calculated as follows: (1) the discount rate must reflect
market risk; (2) cash flows must include, whether mandatory or
discretionary spending, payments to contractors under the terms
of their contracts, payments to contractors for other services,
and direct savings in energy and energy-related costs; and (3)
the stream of payments must cover the period of the contracts
but not to exceed 25 years.
Subsection (c) defines ``covered energy savings contract''
as either: (1) an energy savings performance contract
authorized under section 801 of the National Energy
Conservation Policy Act; or (2) a utility energy service
contract as described in the Office of Management and Budget
[OMB] Memoranda on Federal Use of Energy Savings Performance
Contracting (M-98-13) or Federal Use of Energy Saving
Performance Contracts and Utility Energy Service Contracts (M-
12-21) or any successor to either memorandum.
Subsection (d) prohibits the House from counting, for
purposes of budget enforcement, any savings resulting from the
net present value calculation under this section.
Subsection (e) requires the estimated net present value of
the budget authority provided by the legislation and outlays
flowing therefrom to be classified as direct spending for
budget enforcement purposes.
Subsection (f) expresses the sense of the House that the
Director of OMB, in consultation with the Director of CBO,
should separately identify the cash flows under subsection
(b)(2) and include such information in the President's annual
budget submission to Congress. It further clarifies that the
Committee on the Budget should not apply this scoring
methodology to other types of contracts.
Section 310. Limitation on Transfers from the General Fund of the
Treasury to the Highway Trust Fund.
Section 310 stipulates that legislation that transfers
funds from the general fund of the Treasury to the Highway
Trust Fund will count as new budget authority and outlays equal
to the amount of the transfer in the fiscal year the transfer
occurs for purposes of budget enforcement.
Section 311. Prohibition on Use of Federal Reserve Surpluses as an
Offset.
Section 311 provides that the proceeds from transfers of
surpluses held by the Federal Reserve to the Department of the
Treasury shall not be counted for purposes of budget
enforcement. The Committee on the Budget views the transfer of
the Federal Reserve's surpluses as essentially a timing shift
and not a substantive change in the Federal government's fiscal
posture and therefore should not be used to offset new
financial obligations.
Section 312. Prohibition on Use of Guarantee Fees as an Offset.
Section 312 changes the scoring of certain fees imposed by
government-sponsored enterprises from counting as budgetary
savings for purposes of budget enforcement. The rule applies to
both the Federal National Mortgage and the Federal Home Loan
Mortgage Corporation. Under the rule, a committee may not
offset spending or revenue legislation in the same or separate
legislation with fee increases or extensions of such increases.

Subtitle B--Other Provisions

Section 321. Budgetary Treatment of Administrative Expenses.
Subsection (a) provides that the administrative expenses of
the Social Security Administration and the United States Postal
Service are reflected in the allocation to the Committee on
Appropriations even though both are technically off-budget.
This language is necessary to ensure the Committee on
Appropriations retains control over administrative expenses for
these agencies through the annual appropriations process. This
budgetary treatment of administrative expenses for these
entities is based on the long-term practice of the House and
Senate Committees on the Budget.
Subsection (b) requires administrative expenses to be
included in the cost estimate for any relevant appropriations
measure, which is used to determine if a measure exceeds the
spending limits in the budget resolution.
Section 322. Application and Effect of Changes in Allocations and
Aggregates.
Section 322 explains the mechanics of adjustments made to
the budget resolution pursuant to the reserve funds in Title IV
and other sections in this concurrent resolution.
Subsection (a) specifies the procedure for making
adjustments to the levels established by the budget resolution
for five reserve funds and other special procedures in this
resolution. It provides that the adjustments apply while the
legislation is under consideration and take effect upon
enactment of the legislation. The Chair of the Committee on the
Budget must submit any adjustments to the budget resolution for
printing in the Congressional Record.
Subsection (b) clarifies that the adjusted levels in the
budget are fully enforceable under the Budget Act and other
budget rules.
Subsection (c) clarifies that the Chair of the Committee on
the Budget is the ultimate arbiter of the cost estimates for
legislation used to enforce the budget resolution and budget
rules.
Subsection (d) clarifies that legislation for which an
adjustment to the budget resolution is made, such as those in
the reserve funds in Title IV, are not subject to clause 10 of
rule XXI of the Rules of the House Representatives, commonly
referred to as the House Cut-As-You-Go rule and the point of
order on increasing long-term direct spending in section 301 of
this concurrent resolution.
Subsection (e) permits the Chair of the Committee on the
Budget to adjust the appropriate levels in this concurrent
resolution to accommodate the disposition of pending
reconciliation legislation.
Section 323. Adjustments to Reflect Changes in Concepts and
Definitions.
Section 323 authorizes the Chair of the Committee on the
Budget to adjust the appropriate aggregates, allocations, and
other budgetary levels of this concurrent resolution for any
change in budgetary concepts and definitions in accordance with
section 251(b)(1) of the Deficit Control Act of 1985.
Section 324. Adjustment for Changes in the Baseline.
Section 324 authorizes the Chair of the Committee on the
Budget to adjust the budgetary levels in this concurrent
resolution to reflect changes from CBO's update to its baseline
for fiscal years 2018 to 2027.
Section 325. Application of Rule Regarding Limits on Discretionary
Spending.
Section 325 waives the point of order that would otherwise
apply to an appropriation measure that exceeds the statutory
limits on discretionary spending, as long as the measure is
within the limits established pursuant to this budget
resolution. This waiver is necessary because the budget
resolution reflects security spending that is higher than the
current statutory limits, and reflects non-security spending
that is lower than the current statutory limits.
More specifically, this section provides that Section
314(f) of the Budget Act shall not apply in the House to any
bill, joint resolution, or amendment or conference report,
providing new budget authority for a fiscal year if it would
not cause the Committee on Appropriations' 302(a) allocation to
be exceeded.
Section 326. Exercise of Rulemaking Powers.
Section 326 affirms the adoption of this budget resolution
is an exercise of the rulemaking power of the House and that
the House has the constitutional right to change these rules.

TITLE IV--RESERVE FUNDS IN THE
HOUSE OF REPRESENTATIVES

Title IV establishes five reserve funds for air traffic
control, infrastructure, tax reform, and health legislation.
Reserve funds are special procedures that provide the committee
reporting specific legislation flexibility as to the timing and
composition of offsets in the legislation. The mechanism for
achieving the flexibility is through adjustments the Chair of
the Committee on the Budget is authorized to make to the budget
resolution to accommodate the legislation. In the absence of
such adjustments, the relevant legislation might breach the
budget resolution and be subject to points of order that
preclude its consideration by the House.
Reserve funds generally impose conditions that must be met
to qualify for the adjustment--the most frequent being that the
legislation must be for a specified purpose and must be offset
over a period of 10 years (fiscal years 2018 through 2027). The
adjustments are generally made to the 302(a) allocation of the
committee that reported the legislation and to the budget
resolution's ceiling on spending (both new budget authority and
outlays), as well as the floor on revenue.
Section 401. Reserve Fund for Commercialization of Air Traffic Control.
Subsection (a) permits the Chair of the Committee on the
Budget to adjust, at a time the Chair deems appropriate, the
302(a) allocation to the Committee on Transportation and
Infrastructure of the House of Representatives and other
applicable committees, aggregates, and other appropriate levels
in the budget resolution for legislation that commercializes
the operations of the air traffic control system. To qualify
for the adjustment, the legislation must reduce the
discretionary spending limits under section 251(c) of the
Deficit Control Act of 1985 by the amount appropriated to the
Federal Aviation Administration for air traffic control. The
adjustment under this section shall only be made upon enactment
of such an aviation bill.
Subsection (b) provides that, to qualify for the
adjustment, the legislation must establish a federally-
chartered, not-for-profit corporation that: (1) is authorized
to provide air traffic control services within U.S. airspace;
(2) sets user fees to finance its operations; (3) may borrow
from private capital markets to finance improvements; (4) is
governed by a board of directors composed of a CEO and
directors whose fiduciary duty is to the entity; and (5)
becomes the employer of those employees directly connected to
providing air traffic control services and who the Secretary
transfers from the Federal Government.
Section 402. Reserve Fund for Investments in National Infrastructure.
Section 402 permits the Chair of the Committee on the
Budget to adjust the allocations, aggregates, and other
appropriate levels in the budget resolution for legislation
that invests in national infrastructure to the extent that such
legislation is deficit neutral over the period of fiscal years
2018 through 2027. The amount of the adjustment would be equal
to the amount the legislation increases budget authority and
outlays or reduces revenue.
Section 403. Reserve Fund for Comprehensive Tax Reform.
Section 403 permits the Chair of the Committee on the
Budget to adjust the allocations, aggregates, and other
appropriate levels in the budget resolution for comprehensive
tax reform. Adjustments may be made for bills, joint
resolutions, amendments and conference reports. The amount of
the adjustment would be equal to the amount the legislation
increases budget authority and outlays or reduces revenue. To
qualify for the adjustment, the legislation may not increase
the deficit over the period of fiscal years 2018 through 2027.
Section 404. Reserve Fund for the State Children's Health Insurance
Program.
Section 404 permits the Chair of the Committee on the
Budget to adjust the appropriate allocations, aggregates, and
other appropriate levels in the budget resolution for
legislation that extends the State Children's Health Insurance
Program [SCHIP]. Adjustments may be made for bills, joint
resolutions, amendments and conference reports. The SCHIP
allotment is scheduled to expire at the end of fiscal year
2017.
Section 405. Reserve Fund for the Repeal or Replacement of President
Obama's Health Care Laws.
Section 405 permits the Chair of the Committee on the
Budget to adjust the allocations, aggregates, and other
appropriate levels in the budget resolution for legislation
that repeals or replaces any provision of the Patient
Protection and Affordable Care Act (Public Law 111-148) or the
health care related provisions of the Health Care and Education
Reconciliation Act of 2010 (Public Law 111-152). Adjustments
may be made for bills, joint resolutions, conference reports
and amendments. The amount of the adjustment is equal to the
amount the legislation increases budget authority and outlays
or reduces revenue. The legislation need not be deficit neutral
to qualify for an adjustment under this section.

TITLE V--POLICY STATEMENTS IN THE
HOUSE OF REPRESENTATIVES

Section 501. Policy Statement on a Balanced Budget Amendment.
Subsection (a) sets out findings.
Subsection (b) states it is the policy of this concurrent
resolution that the House should propose a balanced budget
amendment for ratification by the States.
Section 502. Policy Statement on Budget Process Reform.
Section 502 states it is the policy of this concurrent
resolution that Congress should reform the congressional budget
process. Congress should restructure its procedures for making
budgetary decisions, and reassert its role as the Federal
Government's spending authority by promoting prudent spending
control, efficient action, and greater transparency. The
specific reforms were developed during the course of hearings
held by the Committee on the Budget during the 114th Congress.
Section 503. Policy Statement on Federal Regulatory Budgeting and
Reform.
Subsection (a) sets out findings.
Subsection (b) states it is the policy of this concurrent
resolution that the House should consider legislation that
implements regulatory budgeting and reform. Such legislation
should require the President's budget submission to include an
analysis of the costs of complying with current and proposed
regulations; develop the institutional capacity of CBO to
establish a regulatory baseline and estimate regulatory costs;
codify the Trump Administration's regulatory pay-as-you-go
requirements; and require Federal agencies to give notice and
allow for comments on proposed guidance documents.
Section 504. Policy Statement on Unauthorized Appropriations.
Subsection (a) sets out findings.
Subsection (b) states it is the policy of this concurrent
resolution that the House should enact legislation that
establishes a schedule for reauthorizing all Federal programs
on a staggered, five-year basis, which would also prohibit
Congress from funding programs above specified levels. These
limits would be gradually reduced the longer a program remained
unauthorized. The policy further states that this new rule
would be strictly enforced.
Section 505. Policy Statement on Federal Accounting.
Subsection (a) sets out findings.
Subsection (b) states it is the policy of this concurrent
resolution to apply fair-value accounting for Federal credit
programs to provide greater transparency.
Section 506. Policy Statement on Commission on Budget Concepts.
Subsection (a) sets out findings.
Subsection (b) states it is the policy of this concurrent
resolution that Congress should enact legislation that
establishes a Commission on Budget Concepts to review and
revise budget definitions and concepts and create a more
transparent Federal budget process.
Section 507. Policy Statement on Budget Enforcement.
Section 507 states it is the policy of this concurrent
resolution that the House should enforce budget discipline.
Such discipline includes: adopting the budget resolution before
considering any spending or revenue legislation; enforcing
rules preventing the authorization of new direct spending
programs; complying with the discretionary spending limits of
the Deficit Control Act of 1985; modifying scoring to encourage
the commercialization of government activities; and
discouraging the use of savings identified in the budget
resolution as offsets for legislation.
Section 508. Policy Statement on Improper Payments.
Subsection (a) sets out findings.
Subsection (b) states it is the policy of this concurrent
resolution that an independent commission should be established
to find tangible solutions to reduce total improper payments by
50 percent within the next 5 years as well as develop a more-
stringent system of agency oversight to achieve this goal.
Section 509. Policy Statement on Expenditures from Agency Fees and
Spending.
Subsection (a) sets out findings.
Subsection (b) states it is the policy of this concurrent
resolution that the House should subject all fees paid by the
public to Federal agencies to annual appropriations or
authorizing legislation, with a share of these proceeds
reserved for deficit reduction.
Section 510. Policy Statement on Promoting Real Health Care Reform.
Subsection (a) sets out findings.
Subsection (b) states it is the policy of this concurrent
resolution that Congress should pursue health care reforms that
put patients, families, and doctors in charge of medical care,
and encourage increased competition and transparency in health
care.
Section 511. Policy Statement on Medicare.
Subsection (a) sets out findings.
Subsection (b) states it is the policy of this concurrent
resolution to preserve Medicare for those in or near retirement
and strengthen the program for future beneficiaries.
Subsection (c) sets forth the assumptions of this
concurrent resolution for an improved Medicare program.
Section 512. Policy Statement on Combating the Opioid Epidemic.
Subsection (a) sets out findings.
Subsection (b) states it is the policy of this concurrent
resolution that the House should support, using available
budgetary resources, essential activities, including
rehabilitation, to reduce and prevent opioid abuse.
Section 513. Policy Statement on the State Children's Health Insurance
Program.
Subsection (a) sets out findings.
Subsection (b) states it is the policy of this concurrent
resolution that the House should work in a bipartisan manner to
reauthorize the SCHIP; consider establishing a Federal upper
limit for SCHIP eligibility; target resources designated for
SCHIP toward those most in need of Federal assistance; and
require greater reporting by States of SCHIP data.
Section 514. Policy Statement on Medical Discovery, Development,
Delivery and Innovation.
Subsection (a) sets out findings.
Subsection (b) states it is the policy of this concurrent
resolution that the the House should support the work of
medical innovators through continued funding for the agencies
that engage in life-saving research and development, and
unleash the power of innovation by removing obstacles that
impede the adoption of medical technologies.
Section 515. Policy Statement on Public Health Preparedness.
Subsection (a) sets out findings.
Subsection (b) states it is the policy of this concurrent
resolution that the House should, within available budgetary
resources, provide continued support for research, prevention,
and public health preparedness programs to ensure the Nation
efficiently and effectively responds to potential public health
threats.
Section 516. Policy Statement on Social Security.
Subsection (a) sets out findings.
Subsection (b) states it is the policy of this concurrent
resolution to ensure sustainable solvency of Social Security.
Subsection (c) states it is the policy of this concurrent
resolution to reform the Disability Insurance program and work
to address its looming insolvency before in occurs in 2028.
Subsection (d) states that any legislation improving the
solvency of the Disability Insurance Trust Fund must also
improve the long-term solvency of the combined Old Age and
Survivors Disability Trust Fund.
Section 517. Policy Statement on Medicaid Work Requirements.
Subsection (a) sets out findings.
Subsection (b) states it is the policy of this concurrent
resolution that the House should pass legislation that
encourages a work or service requirement for able-bodied, non-
elderly, non-pregnant adults without dependents to receive
Medicaid and gives States flexibility to determinate the
parameters of such a requirement and perform regular case
checks. The Government Accountability Office or Department of
Health and Human Services Inspector General should also conduct
annual audits of State Medicaid programs to ensure proper
reporting and to prevent waste, fraud, and abuse.
Section 518. Policy Statement on Welfare Reform and Supplemental
Nutrition Assistance Program Work Requirements.
Subsection (a) sets out findings.
Subsection (b) states it is the policy of this concurrent
resolution that the welfare system should reward work, provide
tools to escape poverty, and expect working-capable adults to
work or prepare for work in exchange for welfare benefits. The
Supplemental Nutrition Assistance Program [SNAP] should also be
reformed to improve work requirements to help more people
escape poverty and move up the economic ladder.
Section 519. Policy Statement on State Flexibility in Supplemental
Nutrition Assistance Program.
Subsection (a) sets out findings.
Subsection (b) states it is the policy of this concurrent
resolution that SNAP should be reformed, based on the
successful welfare reforms of the 1990s, to help those in need
find gainful employment, escape poverty, and move up the
economic ladder through improved work requirements and flexible
funding for States.
Section 520. Policy Statement on Higher Education and Workforce
Development Opportunity.
Subsection (a) sets out findings on higher education.
Subsection (b) states it is the policy of this concurrent
resolution to promote affordability of higher education by
targeting Federal financial aid, streamlining aid programs, and
removing regulatory barriers.
Subsection (c) sets out findings on workforce development.
Subsection (d) states it is the policy of this concurrent
resolution to improve workforce development by building upon
the Workforce Innovation and Opportunity Act, enacted by
Congress in 2014, by streamlining job training programs and
allowing States to tailor programs to their constituencies.
Section 521. Policy Statement on Supplemental Wildfire Suppression
Funding.
Subsection (a) sets out findings.
Subsection (b) states it is the policy of this concurrent
resolution that Congress, in coordination with the
administration, should develop a long-term funding mechanism
allowing for supplemental wildfire suppression funding, and
reforms that reduce hazardous fuel loads on Federal forests and
lands that could decrease wildfires.
Section 522. Policy Statement on the Department of Veterans Affairs.
Subsection (a) sets out findings.
Subsection (b) states it is the policy of this concurrent
resolution that the House should require the Department of
Veterans Affairs to conduct an audit of its programs named on
the Government Accountability Office's ``high-risk'' list and
report its findings to the Committee on Appropriations, the
Committee on the Budget, and the Committee on Veterans' Affairs
of the House of Representatives.
Section 523. Policy Statement on Moving the United States Postal
Service on Budget.
Subsection (a) sets out findings.
Subsection (b) states it is policy of this concurrent
resolution that all receipts and disbursements of the United
States Postal Service should be included in the congressional
budget and the budget of the Federal Government.
Section 524. Policy Statement on the Judgment Fund.
Subsection (a) sets out findings.
Subsection (b) states it is the policy of this concurrent
resolution that the House should enact legislation reclaiming
its power of the purse over the Judgment Fund.
Section 525. Policy Statement on Responsible Stewardship of Taxpayer
Dollars.
Subsection (a) sets out findings.
Subsection (b) states it is the policy of this concurrent
resolution that the House should be a model for the responsible
stewardship of taxpayer dollars and identify any savings that
can be achieved through greater productivity and efficiency in
the operation and maintenance of House services and resources.
Section 526. Policy Statement on Tax Reform.
Subsection (a) sets out findings.
Subsection (b) states it is the policy of this concurrent
resolution that the House should consider comprehensive tax
reform legislation that promotes economic growth, creates
American jobs, increases wages, and benefits American
consumers, investors, and workers.

THE CONGRESSIONAL BUDGET PROCESS

----------

The spending and revenue levels established in the budget
resolution are implemented through two parallel but separate
mechanisms: (1) allocations to the authorizing and
appropriations committees that serve as limits on spending and
tax legislation; and (2) when necessary, reconciliation
directives to the authorizing committees to achieve a specified
change in direct spending or revenue.
As required under Section 302(a) of the Congressional
Budget and Impoundment Control Act of 1974 [Budget Act] (Public
Law 93-344), the direct spending levels in the budget
resolution are allocated to each House and Senate authorizing
committee with direct spending authority. The resolution's
discretionary spending levels are allocated to the Committee on
Appropriations of each Chamber of Congress. These allocations
are included in the report (or joint statement of managers for
a conference report) accompanying the concurrent resolution on
the budget. They are enforced through points of order (see the
section of this report titled: ``Enforcing Budgetary Levels'').
For the authorizing committees, Section 302 of the Budget
Act, as modified by the Balanced Budget Act of 1997 (Public Law
105-33), requires allocations of budget authority be provided
in the report accompanying a budget resolution for the fiscal
year for which it is adopted and at least the four ensuing
fiscal years. The Committee on Appropriations receives an
allocation for the budget year only. This budget resolution
provides allocations of budget authority and outlays for fiscal
year 2018 and each of the nine ensuing fiscal years, 2019
through 2027.

Committee on Appropriations--302(a) and 302(b) Allocations

302(a) Allocation. The Committee on Appropriations receives
a lump sum of discretionary budget authority and corresponding
outlays. It is usually included in the report accompanying a
concurrent resolution on the budget, or joint statement of
managers for a conference report, for the fiscal year for which
the budget resolution is adopted. This allocation operates as a
ceiling on the amount of discretionary budget authority that
can be appropriated for that fiscal year. This budget
resolution provides a 302(a) allocation to the Committee on
Appropriations for fiscal year 2018, which commences on 1
October 2017.

302(b) Allocations. Once a 302(a) allocation is provided,
the Committee on Appropriations is then required, in full
committee, to divide the allocation among its 12 subcommittees.
The amount each subcommittee receives constitutes its
suballocation under Section 302(b) of the Budget Act. Each
subcommittee's regular appropriations bill is capped at the
level of its 302(b) suballocation and the bill is subject to a
point of order if it exceeds this amount. Under Section 302(c)
of the Budget Act, appropriations acts may not be considered on
the floor of the House of Representatives before the 302(b)
suballocations are made.
Although it would seem the sum of the 12 subcommittees'
302(b) suballocations must equal the Committee on
Appropriations' 302(a) allocation, this has not always been the
case. Under section 314 of the Budget Act, the Chairman of the
Committee on the Budget may adjust the budget resolution levels
for appropriations bills for continuing disability reviews,
combatting health care fraud, and recovering from natural
disasters. The Committee on Appropriations, however, does not
always make corresponding adjustments to the appropriate 302(b)
suballocations. The House is then left with unenforceable
302(b) suballocations because these suballcoations do not equal
the total 302(a) allocation of the Committee on Appropriations
and do not reflect the House's actions on the applicable
appropriations bills. Without these adjustments to the 302(b)
suballocations, the House can enforce only the overall 302(a)
allocation, rendering the entire enforcement scheme useless.
For example, even if 11 of the appropriations bills are over
budget, the 302(a) allocation would be breached only by the
last bill enacted.
The Committee on Appropriations should be granted greater
flexibility in how to adjust its 302(b) suballocations.
Recognizing it may sometimes be impracticable for the full
Committee on Appropriations to convene and report out revisions
to the 302(b) suballocations, the applicable rules should be
modified to give the Committee on Appropriations maximum
flexibility in making these adjustments. One approach would be
to grant the Committee on Appropriations the authority to
choose among the following options: acting as a full committee
on each adjustment; empowering the Chairman of the Committee on
Appropriations to unilaterally make the adjustment (as the
Committee on the Budget does); or making the adjustment
automatic based on the actual amount of appropriations provided
in each bill.

Authorizing Committees--302(a) Allocations

The report accompanying the concurrent resolution on the
budget, or the joint statement of managers for a conference
report, allocates to each authorizing committee an amount of
new budget authority along with the attendant outlays required
to accommodate the direct spending within each authorizing
committee's jurisdiction. If the budget resolution assumes
increases in direct spending for new or expanded programs with
no offsetting reductions in direct spending, authorizing
committees may be allocated additional budget authority.
Conversely, the allocation may reflect negative budget
authority (relative to the projected current-law baseline) if
the budget resolution assumes the enactment of legislation
reducing direct spending.
Because the spending authority for these direct spending
programs is multi-year or permanent, the allocations to the
authorizing committees cover both the budget year and the
entire period of the budget resolution. As noted, this budget
resolution provides allocations for authorizing committees for
fiscal year 2018, commencing on 1 October 2017, and fiscal
years 2019 through 2027.
Unlike the Committee on Appropriations, each authorizing
committee is provided a single allocation of new budget
authority (divided between current law and expected policy
action) not provided through annual appropriations. These
committees are not required to file 302(b) suballocations.
Bills first effective in fiscal year 2018 are measured against
the level for that year included in the fiscal year 2018 budget
resolution and also the 10-year period of fiscal years 2018
through 2027.

TABLE 13.--ALLOCATION OF SPENDING AUTHORITY TO HOUSE COMMITTEE ON
APPROPRIATIONS
[In millions of dollars]
------------------------------------------------------------------------
2018
------------------------------------------------------------------------
Base Discretionary Action:
BA....................................................... 1,132,249
OT....................................................... 1,203,144
Global War on Terrorism:
BA....................................................... 86,591
OT....................................................... 45,781
Current Law Mandatory:
BA....................................................... 1,017,791
OT....................................................... 1,005,440
------------------------------------------------------------------------

TABLE 14.--RESOLUTION BY AUTHORIZING COMMITTEE
[On-budget amounts in millions of dollars]
------------------------------------------------------------------------
2018 2018-2027
------------------------------------------------------------------------
Agriculture:
Current Law:
BA.................................. 16,631 741,377
OT.................................. 15,639 731,563
Resolution Change:
BA.................................. -2,243 -209,852
OT.................................. -1,991 -206,919
-------------------------------
Total:
BA................................ 14,388 531,525
OT................................ 13,648 524,644
Armed Services:
Current Law:
BA.................................. 164,662 1,790,474
OT.................................. 160,056 1,786,703
Resolution Change:
BA.................................. -1,651 -32,949
OT.................................. -1,485 -32,601
-------------------------------
Total:
BA................................ 163,011 1,757,525
OT................................ 158,571 1,754,102
Financial Services:
Current Law:
BA.................................. 12,379 97,975
OT.................................. -2,182 -17,010
Resolution Change:
BA.................................. -10,980 -124,012
OT.................................. -10,695 -123,666
-------------------------------
Total:
BA................................ 1,399 -26,037
OT................................ -12,877 -140,676
Education & Workforce:
Current Law:
BA.................................. -3,389 22,153
OT.................................. -7,955 -19,873
Resolution Change:
BA.................................. -16,809 -353,852
OT.................................. -9,799 -326,214
-------------------------------
Total:
BA................................ -20,198 -331,699
OT................................ -17,754 -346,087
Energy & Commerce:
Current Law:
BA.................................. 436,628 6,418,926
OT.................................. 447,564 6,428,636
Resolution Change:
BA.................................. 7,805 -1,652,820
OT.................................. -24,661 -1,656,131
-------------------------------
Total:
BA................................ 444,433 4,766,106
OT................................ 422,903 4,772,505
Foreign Affairs:
Current Law:
BA.................................. 39,300 335,073
OT.................................. 30,641 312,277
Resolution Change:
BA.................................. 0 0
OT.................................. 0 0
-------------------------------
Total:
BA................................ 39,300 335,073
OT................................ 30,641 312,277
Oversight & Government Reform:
Current Law:
BA.................................. 121,714 1,406,102
OT.................................. 119,858 1,370,668
Resolution Change:
BA.................................. -12,746 -281,830
OT.................................. -12,746 -281,706
-------------------------------
Total:
BA................................ 108,968 1,124,272
OT................................ 107,112 1,088,962
Homeland Security:
Current Law:
BA.................................. 2,454 25,861
OT.................................. 2,521 26,766
Resolution Change:
BA.................................. -430 -25,270
OT.................................. -193 -24,689
-------------------------------
Total:
BA................................ 2,024 591
OT................................ 2,328 2,077
House Administration:
Current Law:
BA.................................. 41 331
OT.................................. 13 107
Resolution Change:
BA.................................. 0 0
OT.................................. 0 0
-------------------------------
Total:
BA................................ 41 331
OT................................ 13 107
Natural Resources:
Current Law:
BA.................................. 5,544 58,768
OT.................................. 5,864 59,904
Resolution Change:
BA.................................. -3,816 -60,417
OT.................................. -3,171 -59,302
-------------------------------
Total:
BA................................ 1,728 -1,649
OT................................ 2,693 602
Judiciary:
Current Law:
BA.................................. 21,586 135,089
OT.................................. 16,401 147,778
Resolution Change:
BA.................................. -16,098 -67,078
OT.................................. -1,528 -67,178
-------------------------------
Total:
BA................................ 5,488 68,011
OT................................ 14,873 80,600
Transportation & Infrastructure:
Current Law:
BA.................................. 76,388 734,774
OT.................................. 16,763 179,222
Resolution Change:
BA.................................. -241 -122,290
OT.................................. -193 -3,066
-------------------------------
Total:
BA................................ 76,147 612,484
OT................................ 16,570 176,156
Science, Space & Technology:
Current Law:
BA.................................. 108 1,017
OT.................................. 106 1,017
Resolution Change:
BA.................................. 0 0
OT.................................. 0 0
-------------------------------
Total:
BA................................ 108 1,017
OT................................ 106 1,017
Small Business:
Current Law:
BA.................................. 0 0
OT.................................. 0 0
Resolution Change:
BA.................................. 0 0
OT.................................. 0 0
-------------------------------
Total:
BA................................ 0 0
OT................................ 0 0
Veterans Affairs:
Current Law:
BA.................................. 2,533 128,755
OT.................................. 5,336 133,378
Resolution Change:
BA.................................. -748 -49,022
OT.................................. -748 -49,022
-------------------------------
Total:
BA................................ 1,785 79,733
OT................................ 4,588 84,356
Ways & Means:
Current Law:
BA.................................. 1,065,242 14,926,712
OT.................................. 1,063,476 14,920,121
Resolution Change:
BA.................................. -19,499 -800,344
OT.................................. -19,108 -799,687
-------------------------------
Total:
BA................................ 1,045,743 14,126,368
OT................................ 1,044,368 14,120,434
------------------------------------------------------------------------

RECONCILIATION

----------

Section 310 of the Congressional Budget Act of 1974 [Budget
Act] sets out a special procedure for making changes in direct
spending, revenue, or the debt limit. Under the procedure,
called reconciliation, a concurrent resolution on the budget
may direct one or more authorizing committees to produce
legislation making changes in any of these three categories, to
bring their levels into compliance with the resolution's
assumed changes in direct spending or revenue. To be valid,
reconciliation directives must be included in a concurrent
resolution on the budget adopted by both the House and Senate.
In general, reconciliation directives include the amount of
budgetary change to be achieved; the time period over which
such budgetary change should be measured; and a deadline by
which the authorizing committees must report legislation. When
more than one authorizing committee receives reconciliation
directives, each committee considers legislation to comply with
these directives as it would any other bill, but the
legislative text and other materials are submitted to the
Committee on the Budget instead of being reported to the House.
The Committee on the Budget then combines the submissions,
without substantive revision, into a single measure and reports
it to the House. If only one authorizing committee received
reconciliation directives, that committee reports its
legislation directly to the House.
The Budget Committee's authority in this procedure is
solely over the budgetary change each committee is to achieve.
Nothing in the instructions predetermines, promotes, or assumes
any specific policy change to be made under such instructions.
The committees of jurisdiction have maximum flexibility in
determining what policies they develop to achieve their
budgetary targets.
In the House, the Committee on Rules reports a special rule
governing the consideration of a reconciliation bill.
Typically, the rule allows for two or three hours of general
debate equally divided between majority and minority. The
Committee on the Budget determines whether an authorizing
committee has complied with its reconciliation directives and
relies solely on the Congressional Budget Office's estimates
when determining compliance. Under Section 310 of the Budget
Act, authorizing committees must comply with reconciliation
directives. If an authorizing committee fails to comply with
its directives, the Committee on Rules may make in order
amendments that achieve the required budgetary changes pursuant
to Section 311(d)(5) of the Budget Act.
A reconciliation bill is a privileged measure in the
Senate. Distinct from most Senate bills, debate is limited to
20 hours and requires only a simple majority to pass (51 votes)
rather than the 60 votes otherwise required for cloture.
In the Senate, the ``Byrd Rule'' (Section 313 of the Budget
Act) limits the content of a reconciliation bill. Under the
Byrd Rule, provisions that are considered ``extraneous'' can be
stricken from the bill if a point of order is raised. The
provision may remain, however, if 60 Senators vote to waive the
Byrd Rule. If a point of order is raised and the rule is not
waived, a provision found to violate the Byrd Rule is removed
from the bill or conference report and the measure is sent back
to the House. The House may then pass the amended bill or
conference report, amend it and send it back to the Senate, or
decline to consider it.
This Concurrent Resolution on the Budget for Fiscal Year
2018, as reported by the Committee on the Budget, provides for
such reconciliation legislation. It instructs 11 authorizing
committees to submit changes in law necessary to achieve a
minimum of $203 billion in net deficit reduction over the
period of fiscal years 2018 through 2027.\595\ Each authorizing
committee must submit legislative text and associated material
to the Committee on the Budget no later than 6 October 2017.
The instruction to the Committee on Ways and Means has dual
policy goals: to develop comprehensive, deficit-neutral reform
of Federal taxation, and to achieve the designated amount of
deficit reduction. Under the Congressional Budget Act, the
budget resolution cannot dictate specific policy reforms.
Consequently, this resolution does not expressly define the
types of legislative provisions to be developed by the
Committee on Ways and Means. Nevertheless, it is the intent of
the resolution's reconciliation instructions that the Committee
on Ways and Means will develop comprehensive deficit neutral
tax reform legislation and report such legislative language to
the Committee on the Budget.
---------------------------------------------------------------------------
\595\Although a portion of these savings are viewed as offsetting
the budget's increase in defense spending in fiscal year 2018, the
defense spending is a one-year increase in discretionary spending. The
reconciled savings here are entirely from permanent changes in law in
direct spending programs.
---------------------------------------------------------------------------
Several features of these directives are important to note.
First, the principal goal of these instructions is to drive
much-needed reform of the government's major benefit programs.
As detailed throughout this report, many of these programs--
along with being unnecessarily costly--are failing the very
people they were intended to serve. Income support programs
often lure their beneficiaries into a cycle of dependency,
depriving them of opportunities to achieve self-sufficiency.
The Medicaid Program delivers substandard care to the Nation's
most vulnerable--if they can get health care at all. Medicare
needlessly limits retirees' choices of health plans--and
besides is on a course to bankruptcy. Maintaining this failed
apparatus is unacceptable. These reconciliation directives
start turning Federal benefit programs onto a different course.
Reforming these programs will also make them more efficient.
They will spend less than they would otherwise, and thereby
help Congress toward the important goal of balancing the
budget.
As noted above, however, nothing in the instructions
predetermines in any way the policies to be adopted. Those
decisions lie entirely in the hands of the committees of
jurisdiction.
Second, the instructions in this resolution represent the
beginning of a process, not the totality of the overall fiscal
plan. The total deficit reduction amount required is a first
installment on the path toward balancing the budget by 2027.
The government's chronic deficits and mounting debt developed
over a number of years of profligate spending and aimless
fiscal policy. It will be corrected only through a sustained
commitment to spending restraint. The Committee assumes future
budget resolutions will include further reconciliation
instructions calling for additional savings until, step by
step, the goal of balance is achieved. Moreover, the net
deficit reduction directed here--along with the specific
savings amount for each committee--are considered minimums.
Committees are expected to achieve at least those savings
amounts, and substantially more wherever possible.
Third, this down payment on balancing the budget is no
trivial amount in itself. It would be, in fact, the largest
enacted deficit reduction in 20 years--since the historic
Balanced Budget Act of 1997. Of note: Unlike previous
reconciliation measures that decade, the Balanced Budget Act
contained no tax increases; all its savings resulted from
slowing the growth of direct spending by what was then
estimated at $424 billion over 10 years.\596\ This was coupled
with a tax reduction of an estimated $275 billion over 10
years.\597\ The result of this combination? A plan intended to
balance the budget by 2002 yielded surpluses within a year
after enactment.
---------------------------------------------------------------------------
\596\Congressional Budget Office, CBO Memorandum: Budgetary
Implications of the Balanced Budget Act of 1997, December 1997.
\597\See the Conference Report on the ``Taxpayer Relief Act of
1997'' (H.R. 2014), p. 807.
---------------------------------------------------------------------------
Fourth, whatever reforms the authorizing committees
develop, they will entail permanent changes in policy, not
merely one-time savings. Further, their fiscal benefits
accumulate over time, so that the savings grow each year.
The specific committees receiving instructions in this
resolution, and their minimum required savings amounts, are the
following:

------------------------------------------------------------------------
Minimum
deficit
Authorizing committee reduction 2018-
2027
------------------------------------------------------------------------
Committee on Agriculture................................ $10 billion
Committee on Armed Services............................. $1 billion
Committee on Education and the Workforce................ $20 billion
Committee on Energy and Commerce........................ $20 billion
Committee on Financial Services......................... $14 billion
Committee on Homeland Security.......................... $3 billion
Committee on the Judiciary.............................. $45 billion
Committee on Natural Resources.......................... $5 billion
Committee on Oversight and Government Reform............ $32 billion
Committee on Veterans' Affairs.......................... $1 billion
Committee on Ways and Means............................. $52 billion
------------------------------------------------------------------------

As noted previously, the instruction to the Committee on
Ways and Means is intended for the development of
comprehensive, deficit-neutral tax reform as well deficit
reduction.
FIGURE 16

ENFORCING BUDGETARY LEVELS

----------

The congressional budget process contains various
mechanisms for enforcing the concurrent resolution on the
budget. These include provisions of the budget resolution, the
Congressional Budget and Impoundment Control Act of 1974
[Budget Act] (Public Law 93-344), and the Rules and Separate
Orders of the House of Representatives.

The Concurrent Resolution on the Budget

The concurrent resolution on the budget establishes overall
limits on spending and revenue. The report accompanying the
budget resolution (or the joint statement of managers for a
conference report) contains allocations to congressional
committees that are binding on Congress when it considers
subsequent spending and tax legislation. Any legislation that
breaches the levels set forth in the budget resolution is
subject to points of order on the floor of the House of
Representatives. The concurrent resolution on the budget is
established pursuant to the Budget Act, which includes various
requirements concerning its content and enforcement. In
addition to setting targets for spending, revenue, deficits and
debt, the budget resolution may include special procedures to
execute and enforce congressional budgetary decisions.
The levels established in the budget resolution are not
self-enforcing. Members of the House must raise points of order
against legislation that breaches the allocations and aggregate
spending levels established in the budget resolution. If a
point of order is sustained, the House is precluded from
further consideration of the measure. It has been the practice
of the House to waive all points of order in the resolution, or
``rule,'' that provides for House consideration of a bill.

Provisions of the Congressional Budget Act

Section 302(f). Section 302(f) of the Budget Act prohibits
the consideration of legislation that exceeds a committee's
allocation of budget authority. For authorizing committees,
this section applies to the first fiscal year and the period of
fiscal years covered by the most recently agreed to budget
resolution. For appropriations bills, however, the test
measures only the budget effects in the first fiscal year.

Section 303. Section 303 prohibits the consideration of
spending and revenue legislation before the House has passed a
concurrent resolution on the budget for a given fiscal year. If
such a budget resolution has not been agreed to, legislation
that changes revenue or increases budget authority in the
applicable fiscal year violates Section 303(a). Section 303(a)
does not apply to budget authority and revenue provisions first
effective in a year following the first fiscal year to which a
budget resolution would apply or to appropriations bills after
15 May.

Section 311. Section 311 of the Budget Act prohibits the
consideration of legislation that would exceed the overall
limits on budget authority and outlays established by the
concurrent resolution on the budget, or cause revenue levels to
fall below the revenue floor in that resolution. If a measure
would cause the aggregate spending levels of budget authority
or outlays to exceed the ceiling established for the first
fiscal year of a budget resolution, the measure violates
Section 311. A measure also violates Section 311 if it would
cause revenue to be lower than the revenue floor in the first
fiscal year or the period of fiscal years covered by the most
recently agreed to budget resolution. Section 311 does not
apply to measures that provide budget authority but do not
exceed a committee's 302(a) allocations.

Section 314(f). Section 314(f) prohibits the consideration
of any bill, joint resolution, amendment, or conference report
that would cause the statutory spending category limits
established in Section 251(c) of the Balanced Budget and
Emergency Deficit Control Act of 1985 (Public Law 99-177) (as
adjusted by procedures set out in Section 251A of that Act) to
be exceeded.

Section 401(a). Section 401(a) of the Budget Act prohibits
the consideration of any bill, joint resolution, amendment, or
conference report that provides, unless subject to the
availability of appropriations: (1) new authority to enter into
contracts under which the Federal Government is obligated to
make outlays; (2) new authority to incur indebtedness; or (3)
new credit authority. It is a strict rule because, similar to
the House Cut-As-You-Go rule (see below) and statutory Pay-As-
You-Go (see next section), a bill would violate Section 401(a)
even if the budget resolution specifically assumed the increase
in direct spending.

Section 401(b). Section 401(b)(1) of the Budget Act
prohibits the consideration of any bill, joint resolution,
amendment, or conference report that provides new entitlement
authority first effective in the current fiscal year. This
point of order prevents Congress from prematurely increasing
new entitlement authority before Congress agrees to a budget
resolution for the forthcoming fiscal year.
Section 401(b)(2) requires the referral to the Committee on
Appropriations of any reported authorization bill increasing
entitlement spending in the forthcoming fiscal year if it
exceeds the reporting committee's 302(a) allocation. The
Committee on Appropriations is then empowered to limit the
total amount of new entitlement authority provided by that
bill.
The well-intentioned rules under Section 401 of the Budget
Act have proven ineffective. Congress has passed numerous bills
that have increased one or more of the categories of direct
spending specified in Section 401. These increases in direct
spending have included entirely new programs, expansions of
existing programs, and increases in existing programs that
occur under current law.

Budget-Related Provisions Under House Rules

Rule XIII, Clause 8. Rule XIII, Clause 8 requires the
Congressional Budget Office and Joint Committee on Taxation to
incorporate the macroeconomic effects of major legislation into
official cost estimates used for budget enforcement and other
rules of the House. The operation of this rule has been
superseded by Section 307 of this resolution.

Rule XXI, Clause 7. Rule XXI, Clause 7 prohibits the
consideration of a concurrent resolution on the budget
containing reconciliation directives (pursuant to Section 310
of the Budget Act) that would cause a net increase in direct
spending.

Rule XXI, Clause 10. Rule XXI, Clause 10 prohibits the
consideration of legislation that increases direct spending
over the applicable six-year period or 11-year period. If such
spending is increased in either of these periods, then it must
be offset by corresponding reductions in direct spending. If an
amendment offered to a measure increases direct spending in
either of these periods, then the amendment must also reduce
net direct spending by at least the same amount. This rule is
commonly referred to as Cut-As-You-Go.

Rule XXIX, Clause 4. Rule XXIX, Clause 4 specifies that the
Chairman of the Committee on the Budget is responsible for
providing authoritative guidance concerning the impact of a
legislative proposition related to the levels of new budget
authority, outlays, direct spending, and new entitlement
authority.

Section 3 of the Separate Orders of House Resolution 5 of
the 115th Congress. House Resolution 5 adopted the rules from
the 114th Congress as the Rules of the House of Representatives
for the 115th Congress and incorporated additional provisions
related to the budget process.
Section 3(e) maintains the requirement, from the 112th,
113th, and 114th Congresses, that each general appropriations
bill include a ``spending reduction account.'' This account
provides a recitation of the amount by which, through the
amendment process, the House has reduced spending in other
portions of the bill and indicates that those savings be
counted toward spending reduction. It also provides that any
amendment increasing spending relative to the underlying bill
must include an offset of an equal or greater amount.
Section 3(h) requires that the Congressional Budget Office,
to the extent practicable, prepare an estimate of whether a
measure would cause a net increase in direct spending in excess
of $5 billion\598\ in any of the four consecutive 10-fiscal-
year periods beginning with the first fiscal year occurring 10
fiscal years after the current fiscal year. It also establishes
a point of order against consideration of any bill or joint
resolution reported by a committee, or any amendment or
conference report, that causes a net increase in direct
spending in excess of $5 billion in any of the four consecutive
10-fiscal-year periods described above.\599\ For purposes of
Section 3(h), the levels of any net increase in direct spending
shall be determined on the basis of estimates provided by the
Chairman of the Committee on the Budget. This point of order
does not apply to any bill or joint resolution, or any
amendment or conference report, that repeals the Patient
Protection and Affordable Care Act and Title I and Subtitle B
of Title II of the Health Care and Education Affordability
Reconciliation Act of 2010; reforms the Patient Protection and
Affordable Care Act and the Health Care and Education
Affordability Reconciliation Act of 2010;\600\ or for which the
Chairman of the Committee on the Budget adjusts the
allocations, levels, or limits contained in the most recently
adopted concurrent resolution on the budget.
---------------------------------------------------------------------------
\598\This budget resolution lowers the $5-billion threshold to $2.5
billion, Section 301(b).
\599\This budget resolution lowers the $5-billion threshold to $2.5
billion, Section 301(a).
\600\The exceptions for health care legislation are not included in
the budget resolution.
---------------------------------------------------------------------------
Section 3(o) prohibits the consideration of any legislation
that reduces the actuarial balance of the Federal Old-Age and
Survivors Insurance Trust Fund unless such legislation improves
the overall financial health of the combined Social Security
Trust Funds.

STATUTORY CONTROLS OVER THE BUDGET

----------

Since 1985, numerous statutory budget controls have been
superimposed over the congressional budget process through the
enactment of, and subsequent amendments to, the ``Balanced
Budget and Emergency Deficit Control Act of 1985'' [Deficit
Control Act] (Public Law 99-177). This law has been amended
several times and generally serves as the primary vehicle for
statutory controls over the budget.

The Balanced Budget and Emergency
Deficit Control Act of 1985

The Deficit Control Act initially was intended to reduce
deficits by establishing annual maximum deficit limits. These
limits were enforced through ``sequestration,'' which entailed
automatic spending reductions in non-exempt discretionary
programs and a relatively small number of direct spending
programs. If the deficit targets were exceeded, a presidential
sequestration order would be triggered within 15 days after the
end of a session of Congress. The sequestration process
remained in force for laws enacted through the end of fiscal
year 2002.

The Budget Enforcement Act of 1990

The ``Budget Enforcement Act of 1990'' [BEA 1990] (Public
Law 101-508) effectively replaced the maximum deficit limits
originally established by the Deficit Control Act with annual
limits on discretionary spending and controls over increases in
the deficit. The deficit increases were calculated by adding
together, for each fiscal year, increases in direct spending
and reductions in revenues, and the controlling mechanism was
termed ``pay-as-you-go.''
For discretionary appropriations, BEA 1990 established
limits for three separate categories of spending: defense,
international affairs, and domestic. These spending limits
applied through fiscal year 1993, and then were combined into a
single limit on all appropriations for fiscal years 1994 and
1995.
Under pay-as-you-go requirements, a sequester would be
triggered if the cumulative effect of all newly enacted direct
spending or revenue laws increased the deficit. As with the
maximum deficit amounts before it, most spending defined as
``direct'' was exempt from any reductions. Other spending
programs had limitations on the reductions. For example,
spending reductions in the Medicare Program, under pay-as-you-
go, were limited to 4 percent of the program costs. (The Budget
Control Act of 2011, discussed below, changed this limit to 2
percent for most Medicare costs.)

The Omnibus Budget Reconciliation Act of 1993

The ``Omnibus Budget Reconciliation Act of 1993'' [OBRA
1993] (Public Law 103-66) extended a single limit on
discretionary spending through fiscal year 1998. Any breach of
the limit would cause a sequestration (again, an across-the-
board cut in all nonexempt discretionary programs). Programs
under these spending limits were held harmless for changes in
inflation, emergencies, estimating differences between the
Office of Management and Budget [OMB] and the Congressional
Budget Office [CBO], and changes in concepts and definitions.
OBRA 1993 also extended the pay-as-you-go enforcement
procedures for legislation enacted through fiscal year 1998.

The Balanced Budget Act of 1997

As amended by OBRA 1993, the statutory limits on
discretionary spending would have expired at the end of fiscal
year 1998. The ``Balanced Budget Act of 1997'' [BBA 1997]
(Public Law 105-33) modified these limits for fiscal year 1998
and extended them through fiscal year 2002. Similarly, the pay-
as-you-go requirements were extended for legislation enacted
through the end of fiscal year 2002. Although sequestration
remained in effect through fiscal year 2002, it was turned off
by Public 107-312, a bill ``to reduce preexisting PAYGO
balances'', enacted 2 December 2002.
BBA 1997 also made numerous technical changes in both the
congressional budget process and sequestration procedures that
enforce the discretionary spending limits and pay-as-you-go
requirements.
BBA 1997 established separate limits on defense and non-
defense discretionary spending for fiscal years 1998 and 1999.
These limits were combined into a single limit on discretionary
spending in fiscal years 2000, 2001, and 2002. The separate
discretionary spending limits were designed to prevent Congress
and the President from shifting resources from one category to
another.
BBA 1997 repealed automatic adjustments in the spending
limits for changes in inflation and estimating differences
between OMB and CBO on budget outlays. It retained adjustments
for emergencies, estimating differences in budget authority,
and continuing disability reviews; it added adjustments for the
International Monetary Fund, international arrearages, and an
Earned Income Tax Credit compliance initiative. The adjustments
are made in the President's final sequestration report issued
15 days after the end of a session of Congress. Separate limits
were subsequently enacted for certain transportation and
conservation spending programs. While the transportation
spending limit was ostensibly a limit on funding, it was
primarily used to calculate the levels of spending that flowed
from the Highway Trust Fund.

The Statutory Pay-As-You-Go Act of 2010

No further legislation was enacted to reestablish statutory
controls on spending and revenue until 2010, when on 10
February of that year, the ``Statutory Pay-As-You-Go Act of
2010'' was signed as part of Public Law 111-139. This law
permanently reinstated pay-as-you-go requirements. It also
increased the statutory limit on the public debt and amended
the base of programs subject to sequestration. It did not,
however, re-impose the limits on discretionary spending.

The Budget Control Act of 2011

The main impetus for the ``Budget Control Act of 2011''
[BCA 2011] (Public Law 112-25), enacted on 2 August 2011, was
to authorize an increase in the public debt limit before it was
breached. It also set statutory controls on spending, and
created a Joint Select Committee on Deficit Reduction to
recommend policies achieving $1.5 trillion in deficit reduction
through fiscal year 2021. As a fallback, the measure provided
for an offsetting sequester to be achieved through the
reestablishment of discretionary spending limits and a parallel
mechanism for triggering a sequestration of direct spending
programs.
The discretionary spending limits were reestablished for
fiscal years 2012 through 2021. For the first two years of the
legislation (fiscal years 2012 and 2013), these limits were
divided into ``security'' and ``non-security'' categories.\601\
For the remaining years, the limits were set as a single
general discretionary category.
---------------------------------------------------------------------------
\601\Section 102 of the Act defines the ``security'' category as
comprising discretionary appropriations for the Department of Defense,
the Department of Homeland Security, the Department of Veterans
Affairs, the National Nuclear Security Administration, the intelligence
community management account, and all budget accounts in Function 150,
International Affairs. All other discretionary appropriations were
grouped together in the non-security category. These were replaced with
``revised'' security and non-security limits on spending for programs,
which fall inside Function 050, Defense, and outside that function.
---------------------------------------------------------------------------
BCA 2011 included additional procedures that had the effect
of altering the discretionary spending limits under Section
251(c) of the Deficit Control Act, mainly by extending the
security and non-security categories through the end of the
period. CBO estimated that the discretionary spending limits
under BCA 2011 would reduce the deficit, including savings from
debt service, by $917 billion over the 10-fiscal-year period of
2012 through 2021.
The legislation reported by the Joint Select Committee was
to be considered under procedures limiting amendment and
debate. Under BCA 2011, a sequester was established to offset
any portion of $1.2 trillion in deficit reduction that was not
achieved through the enactment of legislation reported by the
Joint Committee. The Joint Committee failed to report proposals
reducing the deficit by any amount, and no legislation to that
purpose was enacted by the required deadline of 15 January
2012. As a result, the Joint Committee ceased to exist and the
automatic spending reduction process was triggered.
The automatic spending reduction process prompted new
discretionary spending based on the aforementioned ``security''
and ``non-security'' categories. A formula was used to
calculate the sequestration order and was based on a number of
factors, including reduced cost of debt service, the number of
remaining fiscal years, and direct and discretionary spending;
in fiscal year 2013, both direct and discretionary spending
were affected.

The American Taxpayer Relief Act of 2012

As part of an agreement to make permanent most tax policies
first enacted in 2001 and 2003 but scheduled to expire at the
end of 2012,\602\ the ``American Taxpayer Relief Act of 2012''
[ATRA] (Public Law 112-240) was enacted. It included certain
budget process provisions. ATRA reduced the BCA 2011 fiscal
year 2013 sequester by $24 billion--from $109.33 billion to
$85.33 billion for that fiscal year. It postponed the BCA 2011
sequester (under section 251(a) of the Deficit Control Act) by
two months, from 2 January 2013 to 1 March 2013. It also
postponed, until 17 March 2017, the Deficit Control Act
sequester (a separate sequestration under Section 251(a) that
normally occurs 15 days after the end of a session of
Congress). Rather than require a sequester of a nominal amount
for fiscal year 2013, as dictated by BCA 2011, the sequester
triggered by the Deficit Control Act enforced spending limit
categories and applied regardless of spending level relative to
spending limits. It also reduced the defense and non-defense
limits for fiscal years 2013 and 2014 by $4 billion and $8
billion, respectively. As required by ATRA, President Obama
ordered the fiscal year 2013 BCA sequester on 1 March 2013.
---------------------------------------------------------------------------
\602\These tax policies were temporary because they were enacted
under the budget reconciliation process. Section 313 of the Budget
Act--known as the ``Byrd Rule''--prohibits spending and tax legislation
enacted in reconciliation from increasing the projected deficit outside
the 10-year budget window compared to what it would have been without
those tax policies. Consequently, those tax relief policies were
required to expire.
---------------------------------------------------------------------------

The Bipartisan Budget Act of 2013

As a result of the budget negotiations between House Budget
Committee Chairman Ryan and Senate Budget Committee Chairman
Murray, the ``Bipartisan Budget Act of 2013'' [BBA 2013]
(Public Law 113-67) increased the discretionary spending limits
for fiscal years 2014 and 2015. The agreement provided $63
billion in sequester relief over two years, split evenly
between defense and non-defense programs. BBA 2013 reset the
fiscal year 2014 defense discretionary limit at $520.5 billion
and non-defense discretionary spending at $491.8 billion. For
fiscal year 2015, defense and non-defense limits were reset at
$521.3 billion and $492.4 billion, respectively.
The sequester relief was fully offset by numerous direct
spending reductions and non-tax revenues totaling $85 billion.
These savings included the following: counting $28 billion in
reductions stemming from a provision requiring the President to
sequester the same percentage of mandatory budgetary resources
in 2022 and 2023 as will be sequestered in 2021 under current
law; amending the Mineral Leasing Act to deposit two-percent of
certain payments made to States under the Act to the Treasury;
restructuring aviation security service fees; increasing
Pension Benefit Guaranty Corporation premium rates; and
rescinding and permanently cancelling $693 million from the
Department of Justice's Asset Forfeiture Fund, among other
provisions.

The Bipartisan Budget Act of 2015

The ``Bipartisan Budget Act of 2015'' [BBA 2015] (Public
Law 114-67) again increased the near-term discretionary
spending limits and offset the increase through reductions in
direct spending. BBA 2015 specifically increased the combined
discretionary limits by $50 billion in fiscal year 2016 and $30
billion in fiscal year 2017, equally divided between defense
and non-defense spending each year. These increases in the
discretionary spending limits were offset through reductions in
direct spending spread over a 10-year period. The savings
included the following: establishing an overall rate of return
for insurance providers under the Standard Reinsurance
Agreement; authorizing the sale of 58 million barrels of oil
from the Strategic Petroleum Reserve; raising premium rates for
single employer pension plans; accelerating the due date for
pension premiums; maintaining the 2016 Medicare Part B premium;
and rescinding and permanently cancelling $746 million from the
Department of Justice's Asset Forfeiture Fund, among other
provisions. The measure also reduced spending by $14 billion in
fiscal year 2025 by requiring the President to sequester the
same percentage of direct spending in 2025 as will be
sequestered in 2021.
Additionally, BBA 2015 increased the adjustments in the
non-defense limits for appropriations for Social Security
continuing disability reviews by $484 million through fiscal
year 2021. The Act temporarily suspended the debt limit through
15 March 2017 and, for the Senate only, established the budget
aggregates, 302 allocations, and other budgetary limits that
normally would have been set as part of the fiscal year 2017
concurrent resolution on the budget.

ACCOUNTS IDENTIFIED FOR
ADVANCE APPROPRIATIONS

----------

Accounts Identified for Advance Appropriations
for Fiscal Year 2019

(SUBJECT TO A GENERAL LIMIT OF $28,852,000,000)

Labor, Health and Human Services, and Education
Employment and Training Administration
Education for the Disadvantaged
School Improvement
Career, Technical, and Adult Education
Special Education
Transportation, Housing and Urban Development
Tenant-based Rental Assistance
Project-based Rental Assistance

Veterans Discretionary Accounts Identified for Advance Appropriations
for Fiscal Year 2019

(SUBJECT TO A SEPARATE LIMIT OF $70,699,313,000)

Military Construction, Veterans Affairs
Veterans Medical Services
Veterans Medical Support and Compliance
Veterans Medical Facilities
Veterans Medical Community Care

VOTES OF THE COMMITTEE

----------

Clause 3(b) of House Rule XIII requires each committee
report to accompany any bill or resolution of a public
character, ordered to include the total number of votes cast
for and against on each roll call vote, on a motion to report
and any amendments offered to the measure or matter, together
with the names of those voting for and against. Listed below
are the roll call votes taken in the Committee on the Budget on
the Concurrent Resolution on the Budget for Fiscal Year 2018.
On July 19, 2017, the Committee met in open session, a
quorum being present.
The Committee adopted and ordered reported the Concurrent
Resolution on the Budget for Fiscal Year 2018. The Committee on
the Budget took the following votes:
1. An amendment offered by Representatives Wasserman
Schultz, Yarmuth, Lee, Lujan Grisham, Moulton, Jeffries,
Higgins, DelBene, Khanna, Jayapal, Jackson Lee, and Schakowsky
to reject the ``American Health Care Act.''
The amendment would increase mandatory budget authority and
outlays for Function 550 by the following amounts: $26.3
billion for fiscal year 2018, $21.7 billion for fiscal year
2019, $78.9 billion for fiscal year 2020, $126.1 billion for
fiscal year 2021, $145.1 billion for fiscal year 2022, $164.5
billion for fiscal year 2023, $180.9 billion for fiscal year
2024, $195.2 billion for fiscal year 2025, $209.0 billion for
fiscal year 2026, and $223.8 billion for fiscal year 2027.
The amendment would adjust the aggregate levels of revenue
by amounts equal to the aforementioned changes in outlays,
reflecting the rejection of certain tax cuts and the reduction
of tax expenditures in the ``American Health Care Act.''
The amendment was not agreed to by a roll call vote of 12
ayes and 21 noes.

ROLL CALL VOTE NO. 1
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA)
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------

2. An amendment offered by Representatives Jackson Lee,
Yarmuth, Lee, Lujan Grisham, Jeffries, Higgins, Wasserman
Schultz, Khanna, Jayapal, and Schakowsky to increase Medicaid
spending and increase revenue by an equal amount.
The amendment would increase both mandatory budget
authority and outlays for Function 550 (Health) each by the
following amounts: $13.7 billion for fiscal year 2018, $34.3
billion for fiscal year 2019, $76.1 billion for fiscal year
2020, $107.9 billion for fiscal year 2021, $120.9 billion for
fiscal year 2022, $130.5 billion for fiscal year 2023, $141.1
billion for fiscal year 2024, $151.8 billion for fiscal year
2025, $164.0 billion for fiscal year 2026, and $188.2 billion
for fiscal year 2027.
The amendment would adjust the aggregate levels of revenue
by amounts equal to the aforementioned changes in outlays,
reflecting the reduction of tax expenditures for high-income
earners or certain corporate tax breaks.
The amendment was not agreed to by a roll call vote of 13
ayes and 21 noes.

ROLL CALL VOTE NO. 2
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA)
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES X
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------

3. An amendment offered by Representatives Boyle, Yarmuth,
Lee, Lujan Grisham, Higgins, Khanna, Jayapal, Jackson Lee, and
Schakowsky to insert a policy statement on preventing tax
increases for low-income and middle-income families.
The amendment was not agreed to by a roll call vote of 13
ayes and 21 noes.

ROLL CALL VOTE NO. 3
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA)
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES X
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------

4. An amendment offered by Representatives Yarmuth, Lee,
Lujan Grisham, Moulton, Higgins, Wasserman Schultz, Khanna,
Jayapal, Jackson Lee, and Schakowsky to insert a policy
statement on supporting equal increases in defense and non-
defense funding.
The amendment was not agreed to by a roll call vote of 13
ayes and 21 noes.

ROLL CALL VOTE NO. 4
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA)
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES X
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------

5. An amendment offered by Representatives Jeffries,
Yarmuth, Lee, Lujan Grisham, Higgins, DelBene, Wasserman
Schultz, Khanna, Jayapal, Carbajal, Jackson Lee, and Schakowsky
relating to Medicare.
The amendment would strike Section 511 of the Chairman's
mark and insert a policy statement on opposing eliminating
guaranteed health benefits under Medicare and establishing a
Medicare voucher or premium support plan.
The amendment was not agreed to by a roll call vote of 14
ayes and 21 noes.

ROLL CALL VOTE NO. 5
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES X
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------

6. An amendment offered by Representatives Schakowsky,
Yarmuth, Lee, Lujan Grisham, Moulton, Higgins, DelBene,
Wasserman Schultz, Khanna, Jayapal, Carbajal, and Jackson Lee
to insert a policy statement on women's health care.
The amendment was not agreed to by a roll call vote of 13
ayes and 21 noes.

ROLL CALL VOTE NO. 6
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES X
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------

Representative Jackson Lee asked unanimous consent, after
the closing of the vote, that the record reflect she would have
voted aye on roll call vote no. 6. There was no objection to
this unanimous consent request.
7. An amendment offered by Representatives Higgins,
Yarmuth, Lee, Lujan Grisham, Moulton, DelBene, Boyle, Khanna,
Jayapal, Carbajal, Jackson Lee, and Schakowsky to increase
budget authority and outlays for Function 400 (Transportation)
and increase revenue by an equal amount.
Budget authority would increase by the following amounts:
$6.651 billion for fiscal year 2018, $7.954 billion for fiscal
year 2019, $8.751 billion for fiscal year 2020, $55.232 billion
for fiscal year 2021, $26.429 billion for fiscal year 2022,
$27.453 billion for fiscal year 2023, $27.847 billion for
fiscal year 2024, $27.9 billion for fiscal year 2025, $27.727
billion for fiscal year 2026, and $27.566 billion for fiscal
year 2027.
Outlays would increase by the following amounts: $2.209
billion for fiscal year 2018, $4.983 billion for fiscal year
2019, $6.821 billion for fiscal year 2020, $20.842 billion for
fiscal year 2021, $35.357 billion for fiscal year 2022, $33.504
billion for fiscal year 2023, $34.293 billion for fiscal year
2024, $36.958 billion for fiscal year 2025, $38.896 billion for
fiscal year 2026, and $40.167 billion for fiscal year 2027.
The amendment would adjust the aggregate levels of revenue
by amounts equal to the aforementioned outlay changes,
reflecting the reduction of tax expenditures for high-income
earners or certain corporate tax breaks.
The amendment was not agreed to by a roll call vote of 14
ayes and 21 noes.

ROLL CALL VOTE NO. 7
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES X
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------

8. An amendment offered by Representatives Lee, Yarmuth,
Lujan Grisham, Jeffries, Higgins, Khanna, Jayapal, Jackson Lee,
and Schakowsky to increase budget authority and outlays for
Function 500 (Education, Training, Employment, and Social
Services) and Function 600 (Income Security) and increase
revenue by an equal amount.
The amendment would increase mandatory budget authority for
Function 500 by the following amounts: $15.967 billion for
fiscal year 2018, $19.832 billion for fiscal year 2019, $21.395
billion for fiscal year 2020, $22.959 billion for fiscal year
2021, $24.844 billion for fiscal year 2022, $23.032 billion for
fiscal year 2023, $24.768 billion for fiscal year 2024, $26.389
billion for fiscal year 2025, $27.794 billion for fiscal year
2026, and $28.850 billion for fiscal year 2027.
Outlays for Function 500 would increase by the following
amounts: $8.691 billion for fiscal year 2018, $17.531 billion
for fiscal year 2019, $19.916 billion for fiscal year 2020,
$21.427 billion for fiscal year 2021, $22.8 billion for fiscal
year 2022, $22.629 billion for fiscal year 2023, $22.558
billion for fiscal year 2024, $23.920 billion for fiscal year
2025, $25.202 billion for fiscal year 2026, $26.283 billion for
fiscal year 2027.
The amendment would increase mandatory budget authority for
Function 600 by the following amounts: $22.733 billion for
fiscal year 2018, $64.607 billion for fiscal year 2019, $68.830
billion for fiscal year 2020, $73.336 billion for fiscal year
2021, $82.793 billion for fiscal year 2022, $107.357 billion
for fiscal year 2023, $106.630 billion for fiscal year 2024,
$117.567 billion for fiscal year 2025, $123.020 for fiscal year
2026, and $128.711 billion for fiscal year 2027.
Outlays for Function 600 would increase by the following
amounts: $22.502 billion for fiscal year 2018, $63.505 billion
for fiscal year 2019, $68.543 billion for fiscal year 2020,
$73.101 billion for fiscal year 2021, $82.624 billion for
fiscal year 2022, $107.126 billion for fiscal year 2023,
$106.146 billion for fiscal year 2024, $117.242 billion for
fiscal year 2025, $122.784 billion for fiscal year 2026, and
$128.472 billion for fiscal year 2027.
The amendment would also adjust the aggregate levels of
revenue by the amounts equal to the aforementioned changes in
outlays, reflecting the reduction of tax expenditures for high-
income earners or certain corporate tax breaks.
The amendment was not agreed to by a roll call vote of 13
ayes and 21 noes.

ROLL CALL VOTE NO. 8
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------

9. An amendment offered by Representatives Jayapal,
Yarmuth, Lee, Lujan Grisham, Moulton, Higgins, DelBene,
Wasserman Schultz, Khanna, Carbajal, Jackson Lee, and
Schakowsky relating to immigration reform.
The amendment would increase the aggregate levels of
revenue by the following amounts to account for increased
economic growth resulting from adoption of the ``Border
Security, Economic Opportunity, and Immigration Modernization
Act'', as introduced in the House in the 113th Congress: $2.1
billion for fiscal year 2017, $11.5 billion for fiscal year
2018, $28.0 billion for fiscal year 2019, $39.1 billion for
fiscal year 2020, $45.0 billion for fiscal year 2021, $47.7
billion for fiscal year 2022, $55.3 billion for fiscal year
2023, $65.0 billion for fiscal year 2024, $77.7 billion for
fiscal year 2025, and $87.6 billion for fiscal year 2026.
The amendment would also increase both mandatory budget
authority and outlays for Function 920 each by the following
amounts to reflect adoption of the ``Border Security, Economic
Opportunity, and Immigration Modernization Act'', as introduced
in the House in the 113th Congress: $4.6 billion for fiscal
year 2017, $6.8 billion for fiscal year 2018, $14.0 billion for
fiscal year 2019, $19.8 billion for fiscal year 2020, $24.6
billion for fiscal year 2021, $26.6 billion for fiscal year
2022, $32.2 billion for fiscal year 2023, $37.4 billion for
fiscal year 2024, $44.4 billion for fiscal year 2025, and $51.4
billion for fiscal year 2026.
The amendment also adds a policy statement calling for a
vote on comprehensive immigration reform.
The amendment was not agreed to by a roll call vote of 13
ayes and 21 noes.

ROLL CALL VOTE NO. 9
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------

10. An amendment offered by Representatives Carbajal,
Yarmuth, Lee, Lujan Grisham, Higgins, Khanna, Jayapal, Jackson
Lee, and Schakowsky to insert a policy statement on rejecting
construction of a border wall.
The amendment was not agreed to by a roll call vote of 13
ayes and 21 noes.

ROLL CALL VOTE NO. 10
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------

11. An amendment offered by Representatives Lujan Grisham,
Yarmuth, Lee, Jeffries, Higgins, DelBene, Wasserman Schultz,
Khanna, Jayapal, Carbajal, Jackson Lee, and Schakowsky relating
to the Supplemental Nutrition Assistance Program (SNAP) and
increase revenue by an equal amount.
The amendment would increase both mandatory budget
authority and outlays for Function 600 (Income Security) each
by the following amounts: $1.5 billion for fiscal year 2018,
$2.0 billion for fiscal year 2019, $2.5 billion for fiscal year
2020, $3.0 billion for fiscal year 2021, $3.5 billion for
fiscal year 2022, $27.5 billion for fiscal year 2023, $27.5
billion for fiscal year 2024, $27.5 billion for fiscal year
2025, $27.5 billion for fiscal year 2026, and $27.5 billion for
fiscal year 2027.
The amendment would adjust the aggregate levels of revenue
by amounts equal to the aforementioned changes in outlays,
reflecting the reduction of tax expenditures for high-income
earners or certain corporate tax breaks.
The amendment was not agreed to by a roll call vote of 14
ayes and 21 noes.

ROLL CALL VOTE NO. 11
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES X
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------

12. An amendment offered by Representatives DelBene,
Yarmuth, Lee, Lujan Grisham, Moulton, Higgins, Khanna, Jayapal,
Jackson Lee, and Schakowsky to insert a deficit-neutral reserve
fund to improve the economy and create jobs in under-served
areas.
The amendment was not agreed to by a roll call vote of 14
ayes and 21 noes.

ROLL CALL VOTE NO. 12
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES X
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------

13. An amendment offered by Representatives Moulton,
Yarmuth, Lee, Lujan Grisham, Jeffries, Higgins, Wasserman
Schultz, Boyle, Khanna, Jayapal, Jackson Lee, and Schakowsky to
insert a policy statement ensuring adequate funding for special
counsel to investigate Russian interference in the 2016 U.S.
presidential election.
The amendment was not agreed to by a roll call vote of 14
ayes and 21 noes.

ROLL CALL VOTE NO. 13
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES X
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------

14. An amendment offered by Representatives Khanna,
Yarmuth, Lee, Lujan Grisham, Higgins, Boyle, Jayapal, Jackson
Lee, and Schakowsky to insert a deficit-neutral reserve fund
for the Earned Income Tax Credit.
The amendment was not agreed to by a roll call vote of 14
ayes to 21 noes.

ROLL CALL VOTE NO. 14
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES X
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------

15. An amendment offered by Representatives Yarmuth, Lee,
Moulton, Jeffries, Higgins, Khanna, Jayapal, Jackson Lee, and
Schakowsky to strike the reconciliation instructions in title
II of the Chairman's Mark.
The amendment was not agreed to by a roll call vote of 11
ayes and 20 noes.

ROLL CALL VOTE NO. 15
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA)
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES X
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------

Representatives Carbajal, Lee, and Wasserman Schultz asked
unanimous consent, after the closing of the vote, that the
record reflect they would have voted aye on roll call vote no.
15. There was no objection to these unanimous consent requests.
16. An amendment offered by Representatives Lujan Grisham,
Yarmuth, Lee, Higgins, Wasserman Schultz, Khanna, Jayapal,
Jackson Lee, and Schakowsky to insert a deficit-neutral reserve
fund for long-term care services and supports.
The amendment was not agreed to by a roll call vote of 12
ayes and 20 noes.

ROLL CALL VOTE NO. 16
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA)
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES X
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------

Representatives Lee and Wasserman Schultz asked unanimous
consent, after the closing of the vote, that the record reflect
they would have voted aye on roll call vote no. 16. There was
no objection to these unanimous consent requests.
17. An amendment offered by Representatives Moulton,
Yarmuth, Lee, Jeffries, Higgins, Boyle, Khanna, Jayapal,
Jackson Lee, and Schakowsky to increase budget authority and
outlays for Function 150 (International Affairs) and increase
revenue by an equal amount.
The amendment would increase budget authority in Function
150 by $11.171 billion in fiscal year 2018.
The amendment would increase outlays in Function 150 by the
following amounts: $5.851 billion in fiscal year 2018, $3.348
billion in fiscal year 2019, $1.159 billion in fiscal year
2020, $0.302 billion in fiscal year 2021, and $0.316 billion in
fiscal year 2022.
The amendment would adjust the aggregate levels of revenue
by amounts equal to the aforementioned changes in outlays by
raising taxes on high-income individuals, eliminating tax
deductions for oil production and U.S. businesses with
international operations, changing the depreciation schedules
for certain equipment, closing loopholes in the international
corporate tax system, and reforming the tax code by repealing
certain business expense deductions.
The amendment was not agreed to by a roll call vote of 12
ayes and 20 noes.

ROLL CALL VOTE NO. 17
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA)
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES X
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------

Representatives Lee and Wasserman Schultz asked unanimous
consent, after the closing of the vote, that the record reflect
they would have voted aye on roll call vote no. 17. There was
no objection to these unanimous consent requests.
18. An amendment offered by Representatives Jeffries,
Yarmuth, Lee, Lujan Grisham, Moulton, Higgins, Khanna, Jayapal,
Jackson Lee, and Schakowsky to insert a policy statement
supporting implementation of the ``Mnuchin Rule''.
The amendment was not agreed to by a roll call vote of 13
ayes and 20 noes.

ROLL CALL VOTE NO. 18
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES X
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------

Representative Wasserman Schultz asked unanimous consent,
after the closing of the vote, that the record reflect she
would have voted aye on roll call vote no. 18. There was no
objection to this unanimous consent request.
19. An amendment offered by Representatives Lee, Yarmuth,
Higgins, Khanna, Jayapal, Jackson Lee, and Schakowsky to
decrease budget authority and outlays for Function 970
(Overseas Contingency Operations/Global War on Terrorism).
The amendment would decrease budget authority in Function
970 by $10 billion in fiscal year 2018.
The amendment would decrease outlays in Function 970 by the
following amounts: $4.963 billion in fiscal year 2018, $2.693
billion in fiscal year 2019, $1.262 billion in fiscal year
2020, $0.537 billion in fiscal year 2021, $0.228 billion in
fiscal year 2022, $0.081 billion in fiscal year 2023, $0.023
billion in fiscal year 2024, and $0.006 billion in fiscal year
2025.
The amendment was not agreed to by a roll call vote of 16
ayes and 19 noes.

ROLL CALL VOTE NO. 19
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) X MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES X
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------

20. An amendment offered by Representatives Higgins,
Yarmuth, Lee, Lujan Grisham, Moulton, Wasserman Schultz,
Khanna, Jayapal, Carbajal, Jackson Lee, and Schakowsky to
increase budget authority and outlays in Function 300 (Natural
Resources and Environment) and increase revenue by an equal
amount.
The amendment would increase budget authority in Function
300 by $5.200 billion in fiscal year 2018.
The amendment would increase outlays in Function 300 by the
following amounts: $2.725 billion in fiscal year 2018, $1.560
billion in fiscal year 2019, $0.541 billion in fiscal year
2020, $0.140 billion in fiscal year 2021, and $0.146 billion in
fiscal year 2022.
The amendment would adjust the aggregate levels of revenue
by amounts equal to the aforementioned changes in outlays by
raising taxes on high-income individuals, eliminating tax
deductions for oil production and U.S. businesses with
international operations, changing the depreciation schedules
for certain equipment, closing loopholes in the international
corporate tax system, and reforming the tax code by repealing
certain business expense deductions.
The amendment was not agreed to by a roll call vote of 14
ayes and 21 noes.

ROLL CALL VOTE NO. 20
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) X MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES X
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------

21. An amendment offered by Representatives DelBene,
Yarmuth, Lee, Lujan Grisham, Moulton, Jeffries, Higgins,
Wasserman Schultz, Khanna, Jayapal, Carbajal, Jackson Lee, and
Schakowsky to increase budget authority and outlays in
Functions 250 (General Science, Space, and Technology) and
Function 550 (Health) to invest in scientific research and
increase revenue by an equal amount.
The amendment would increase budget authority in Function
250 by the following amounts: $0.520 billion in fiscal year
2018, $0.530 billion in fiscal year 2019, $0.540 billion in
fiscal year 2020, $0.551 billion in fiscal year 2021, $0.562
billion in fiscal year 2022, $0.573 billion in fiscal year
2023, $0.584 billion in fiscal year 2024, $0.596 billion in
fiscal year 2025, $0.608 billion in fiscal year 2026, and
$0.621 billion in fiscal year 2027.
The amendment would increase outlays in Function 250 by the
following amounts: $0.293 billion in fiscal year 2018, $0.438
billion in fiscal year 2019, $0.495 billion in fiscal year
2020, $0.522 billion in fiscal year 2021, $0.544 billion in
fiscal year 2022, $0.555 billion in fiscal year 2023, $0.566
billion in fiscal year 2024, $0.577 billion in fiscal year
2025, $0.589 billion in fiscal year 2026, and $0.601 billion in
fiscal year 2027.
The amendment would increase budget authority in Function
550 by the following amounts: $2.0 billion in fiscal year 2018,
$2.038 billion in fiscal year 2019, $2.077 billion in fiscal
year 2020, $2.118 billion in fiscal year 2021, $2.161 billion
in fiscal year 2022, $2.204 billion in fiscal year 2023, $2.248
billion in fiscal year 2024, $2.293 billion in fiscal year
2025, $2.339 billion in fiscal year 2026, and $2.388 billion in
fiscal year 2027.
The amendment would increase outlays in Function 550 by the
following amounts: $1.126 billion in fiscal year 2018, $1.684
billion in fiscal year 2019, $1.905 billion in fiscal year
2020, $2.008 billion in fiscal year 2021, $2.093 billion in
fiscal year 2022, $2.134 billion in fiscal year 2023, $2.177
billion in fiscal year 2024, $2.221 billion in fiscal year
2025, $2.265 billion in fiscal year 2026, and $2.312 billion in
fiscal year 2027.
The amendment would adjust the aggregate levels of revenue
by amounts equal to the aforementioned changes in outlays by
raising taxes on high-income individuals, eliminating tax
deductions for oil production and U.S. businesses with
international operations, changing the depreciation schedules
for certain equipment, closing loopholes in the international
corporate tax system, and reforming the tax code by repealing
certain business expense deductions.
The amendment was not agreed to by a roll call vote of 14
ayes and 21 noes.

ROLL CALL VOTE NO. 21
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) X MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES X
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------

22. An amendment offered by Representatives Wasserman
Schultz, Yarmuth, Lee, Lujan Grisham, Moulton, Higgins, Boyle,
Khanna, Jayapal, Jackson Lee, and Schakowsky to increase budget
authority and outlays for Function 500 (Education, Training,
Employment, and Social Services) and Function 600 (Income
Security) for early childhood programs and increase revenue by
an equal amount.
The amendment would increase budget authority in Function
500 by the following amounts: $0.382 billion in fiscal year
2018, $0.389 billion in fiscal year 2019, $0.397 billion in
fiscal year 2020, $0.405 billion in fiscal year 2021, $0.413
billion in fiscal year 2022, $0.421 billion in fiscal year
2023, $0.429 billion in fiscal year 2024, $0.438 billion in
fiscal year 2025, $0.447 billion in fiscal year 2026, and
$0.456 billion in fiscal year 2027.
The amendment would increase outlays in Function 500 by the
following amounts: $0.215 billion in fiscal year 2018, $0.322
billion in fiscal year 2019, $0.364 billion in fiscal year
2020, $0.384 billion in fiscal year 2021, $0.400 billion in
fiscal year 2022, $0.408 billion in fiscal year 2023, $0.416
billion in fiscal year 2024, $0.424 billion in fiscal year
2025, $0.433 billion in fiscal year 2026, and $0.442 billion in
fiscal year 2027.
The amendment would increase budget authority in Function
600 by the following amounts: $0.239 billion in fiscal year
2018, $0.244 billion in fiscal year 2019, $0.248 billion in
fiscal year 2020, $0.253 billion in fiscal year 2021, $0.258
billion in fiscal year 2022, $0.263 billion in fiscal year
2023, $0.269 billion in fiscal year 2024, $0.274 billion in
fiscal year 2025, $0.279 billion in fiscal year 2026, and
$0.285 billion in fiscal year 2027.
The amendment would increase outlays in Function 600 by the
following amounts: $0.135 billion in fiscal year 2018, $0.201
billion in fiscal year 2019, $0.288 billion in fiscal year
2020, $0.240 billion in fiscal year 2021, $0.250 billion in
fiscal year 2022, $0.255 billion in fiscal year 2023, $0.260
billion in fiscal year 2024, $0.265 billion in fiscal year
2025, $0.271 billion in fiscal year 2026, and $0.276 billion in
fiscal year 2027.
The amendment would adjust the aggregate levels of revenue
by amounts equal to the aforementioned changes in outlays by
raising taxes on high-income individuals, eliminating tax
deductions for oil production and U.S. businesses with
international operations, changing the depreciation schedules
for certain equipment, closing loopholes in the international
corporate tax system, and reforming the tax code by repealing
certain business expense deductions.
The amendment was not agreed to by a roll call vote of 14
ayes and 22 noes.

ROLL CALL VOTE NO. 22
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) X MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES X
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------

23. An amendment offered by Representatives Boyle, Yarmuth,
Lee, Lujan Grisham, Jeffries, Higgins, Wasserman Schultz,
Khanna, Jayapal, Carbajal, Jackson Lee, and Schakowsky to
insert a policy statement opposing any reduction in Social
Security benefits.
The amendment was not agreed to by a roll call vote of 14
ayes and 22 noes.

ROLL CALL VOTE NO. 23
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) X MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES X
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------

24. An amendment offered by Representatives Khanna,
Yarmuth, Lee, Lujan Grisham, Moulton, Higgins, Wasserman
Schultz, Jayapal, Jackson Lee, and Schakowsky to insert a
policy statement supporting the Consumer Financial Protection
Bureau.
The amendment was not agreed to by a roll call vote of 14
ayes and 22 noes.

ROLL CALL VOTE NO. 24
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) X MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES X
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------

25. An amendment offered by Representatives Jayapal,
Yarmuth, Lee, Lujan Grisham, Moulton, Higgins, Wasserman
Schultz, Boyle, Khanna, Carbajal, Jackson Lee, and Schakowsky
to increase budget authority and outlays for Function 300
(Natural Resources and Environment) to create an initiative to
support States' and Cities' efforts to abide by the United
Nations Paris Climate Agreement and increase revenue by an
equal amount.
The amendment would increase budget authority in Function
300 by $0.50 billion in each fiscal year over the period of
fiscal years 2018 through 2027.
The amendment would increase outlays in Function 300 by the
following amounts: $0.265 billion in fiscal year 2018, $0.415
billion in fiscal year 2019, $0.465 billion in fiscal year
2020, $0.49 billion in fiscal year 2021, $0.50 billion in
fiscal year 2022, $0.50 billion in fiscal year 2023, $0.50
billion in fiscal year 2024, $0.50 billion in fiscal year 2025,
$0.50 billion in fiscal year 2026, and $0.50 billion in fiscal
year 2027.
The amendment would adjust the aggregate levels of revenue
by amounts equal to the aforementioned changes in outlays by
raising taxes on high-income individuals, eliminating tax
deductions for oil production and U.S. businesses with
international operations, changing the depreciation schedules
for certain equipment, closing loopholes in the international
corporate tax system, and reforming the tax code by repealing
certain business expense deductions.
The amendment was not agreed to by a roll call vote of 14
ayes and 22 noes.

ROLL CALL VOTE NO. 25
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) X MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES X
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------

26. An amendment offered by Representatives Carbajal,
Yarmuth, Lee, Lujan Grisham, Moulton, Higgins, Wasserman
Schultz, Khanna, Jayapal, Jackson Lee, and Schakowsky to
increase budget authority and outlays for Function 700
(Veterans Benefits and Services) and increase revenue by an
equal amount.
The amendment would increase both budget authority and
outlays each by the following amounts: $0.748 billion in fiscal
year 2018, $2.828 billion in fiscal year 2019, $3.889 billion
in fiscal year 2020, $4.953 billion in fiscal year 2021, $5.593
billion in fiscal year 2022, $6.282 billion in fiscal year
2023, $5.865 billion in fiscal year 2024, $5.908 billion in
fiscal year 2025, $6.644 billion in fiscal year 2026, and
$6.312 billion in fiscal year 2027.
The amendment would adjust the aggregate levels of revenue
by amounts equal to the aforementioned changes in outlays by
raising taxes on high-income individuals, eliminating tax
deductions for oil production and U.S. businesses with
international operations, changing the depreciation schedules
for certain equipment, closing loopholes in the international
corporate tax system, and reforming the tax code by repealing
certain business expense deductions.
The amendment was not agreed to by a roll call vote of 14
ayes and 22 noes.

ROLL CALL VOTE NO. 26
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) X MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES X
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------

27. An amendment offered by Representatives Jackson Lee,
Yarmuth, Lee, Lujan Grisham, Moulton, Jeffries, Higgins,
Wasserman Schultz, Boyle, Khanna, Jayapal, Carbajal, and
Schakowsky to increase budget authority and outlays for
Function 500 (Education, Training, Employment, and Social
Services) for Pell Grants and increase revenue by an equal
amount.
The amendment would increase budget authority in Function
500 by $2.80 billion in fiscal year 2018.
The amendment would increase outlays in Function 500 by the
following amounts: $0.756 billion in fiscal year 2018, $2.016
billion in fiscal year 2019, and $0.028 billion in fiscal year
2020.
The amendment would adjust the aggregate levels of revenue
by amounts equal to the aforementioned changes in outlays by
raising taxes on high-income individuals, eliminating tax
deductions for oil production and U.S. businesses with
international operations, changing the depreciation schedules
for certain equipment, closing loopholes in the international
corporate tax system, and reforming the tax code by repealing
certain business expense deductions.
The amendment was not agreed to by a roll call vote of 14
ayes and 22 noes.

ROLL CALL VOTE NO. 27
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) X MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES X
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------

28. An amendment offered by Representatives Schakowsky,
Yarmuth, Lee, Lujan Grisham, Jeffries, Higgins, Wasserman
Schultz, Khanna, Jayapal, and Jackson Lee to insert a policy
statement on reducing prescription drug costs for Americans.
The amendment was not agreed to by a roll call vote of 14
ayes and 22 noes.

ROLL CALL VOTE NO. 28
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) X MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES X
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------

29. Representative Rokita made a motion that the Committee
adopt the aggregates, functional categories, and other
appropriate matter.
The motion offered by Representative Rokita was agreed to
by voice vote.
Chairman Black called up the Concurrent Resolution on the
Budget for Fiscal Year 2018 incorporating the aggregates,
function totals, and other appropriate matters as previously
agreed.
30. Representative Rokita made a motion that the Committee
order the Concurrent Resolution reported with a favorable
recommendation and that the Concurrent Resolution do pass.
The motion offered by Representative Rokita was agreed to
by a roll call vote of 22 ayes to 14 noes.

ROLL CALL VOTE NO. 29
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) X MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES X
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------

Representative Rokita asked for unanimous consent that the
Chairman be authorized to offer such motions in the House as
may be necessary to go to conference pursuant to clause 1 of
House Rule XXII, the staff be authorized to make any necessary
technical and conforming corrections in the resolution, and
calculate any remaining elements required in the resolution,
prior to filing the resolution.
There was no objection to the unanimous consent requests.

OTHER MATTERS UNDER THE RULES
OF THE HOUSE

----------

Committee on the Budget Oversight Findings
and Recommendations

Clause 3(c)(1) of Rule XIII of the Rules of the House of
Representatives requires each committee report to contain
oversight findings and recommendations pursuant to Clause
2(b)(1) of Rule X. The Committee on the Budget has no findings
to report at the present time.

New Budget Authority, Entitlement Authority,
and Tax Expenditures

Clause 3(c)(2) of Rule XIII of the Rules of the House of
Representatives provides that committee reports must contain
the statement required by Section 308(a) of the Congressional
Budget Act of 1974. This report does not contain such a
statement because, as a concurrent resolution setting forth a
blueprint for the congressional budget, the budget resolution
does not provide new budget authority or new entitlement
authority, and does not change revenues.

General Performance Goals and Objectives

Clause 3(c)(4) of Rule XIII of the Rules of the House of
Representatives requires each committee report on a legislative
measure to contain a statement of general performance goals and
objectives, including outcome-related goals and objectives, for
which the measure authorizes funding. The Committee on the
Budget has no such goals and objectives to report at this time.

Views of Committee Members

Clause 2(1) of Rule XI of the Rules of the House of
Representatives requires each committee to afford members of
the committee two days to file minority, additional,
dissenting, or supplemental views on reported legislative
measures, and to include the views in the report accompanying
such legislation. The following views were submitted:

MINORITY VIEWS

----------

John Yarmuth,
Ranking Member.
Michelle Lujan Grisham.
Hakeem Jeffries.
Suzan DelBene.
Brendan Boyle.
Pramila Jayapal.
Sheila Jackson Lee.
Barbara Lee.
Seth Moulton.
Brian Higgins.
Debbie Wasserman Schultz.
Ro Khanna.
Salud Carbajal.
Janice Schakowsky.

ADDITIONAL VIEWS

----------

The budget resolution should continue to support farm
programs. Given the international trade inequities, low
commodity prices, and the historically steep decline in farm
income, the Committee should fund programs that provide
resources to ensure a responsible and reliable safety net for
cotton and other commodities. A safe and affordable food supply
is critical to our economy and national security.
Jodey Arrington,
Member of Congress.

SUPPLEMENTAL MATERIAL

----------

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

115th CONGRESS
1st Session

H. CON. RES. 71

Establishing the congressional budget for the United States Government
for fiscal year 2018 and setting forth the appropriate budgetary levels
for fiscal years 2019 through 2027.

CONCURRENT RESOLUTION

Resolved by the House of Representatives (the Senate concurring),

SECTION 1. CONCURRENT RESOLUTION ON THE BUDGET FOR FISCAL YEAR 2018.

(a) Declaration.--The Congress determines and declares that prior
concurrent resolutions on the budget are replaced as of fiscal year
2018 and that this concurrent resolution establishes the budget for
fiscal year 2018 and sets forth the appropriate budgetary levels for
fiscal years 2019 through 2027.
(b) Table of Contents.--The table of contents for this concurrent
resolution is as follows:

Sec. 1. Concurrent resolution on the budget for fiscal year 2018.

TITLE I--RECOMMENDED LEVELS AND AMOUNTS

Sec. 101. Recommended levels and amounts.
Sec. 102. Major functional categories.

TITLE II--RECONCILIATION AND RELATED MATTERS

Sec. 201. Reconciliation in the House of Representatives.

TITLE III--BUDGET ENFORCEMENT IN THE HOUSE OF REPRESENTATIVES

Subtitle A--Budget Enforcement

Sec. 301. Point of order against increasing long-term direct spending.
Sec. 302. Allocation for Overseas Contingency Operations/Global War on
Terrorism.
Sec. 303. Limitation on changes in certain mandatory programs.
Sec. 304. Limitation on advance appropriations.
Sec. 305. Estimates of debt service costs.
Sec. 306. Fair-value credit estimates.
Sec. 307. Estimates of macroeconomic effects of major legislation.
Sec. 308. Adjustments for improved control of budgetary resources.
Sec. 309. Scoring rule for Energy Savings Performance Contracts.
Sec. 310. Limitation on transfers from the general fund of the Treasury
to the Highway Trust Fund.
Sec. 311. Prohibition on use of Federal Reserve surpluses as an offset.
Sec. 312. Prohibition on use of guarantee fees as an offset.

Subtitle B--Other Provisions

Sec. 321. Budgetary treatment of administrative expenses.
Sec. 322. Application and effect of changes in allocations and
aggregates.
Sec. 323. Adjustments to reflect changes in concepts and definitions.
Sec. 324. Adjustment for changes in the baseline.
Sec. 325. Application of rule regarding limits on discretionary
spending.
Sec. 326. Exercise of rulemaking powers.

TITLE IV--RESERVE FUNDS IN THE HOUSE OF REPRESENTATIVES

Sec. 401. Reserve fund for commercialization of air traffic control.
Sec. 402. Reserve fund for investments in national infrastructure.
Sec. 403. Reserve fund for comprehensive tax reform.
Sec. 404. Reserve fund for the State Children's Health Insurance
Program.
Sec. 405. Reserve fund for the repeal or replacement of President
Obama's health care laws.

TITLE V--POLICY STATEMENTS IN THE HOUSE OF REPRESENTATIVES

Sec. 501. Policy statement on a balanced budget amendment.
Sec. 502. Policy statement on budget process reform.
Sec. 503. Policy statement on Federal regulatory budgeting and reform.
Sec. 504. Policy statement on unauthorized appropriations.
Sec. 505. Policy statement on Federal accounting.
Sec. 506. Policy statement on Commission on Budget Concepts.
Sec. 507. Policy statement on budget enforcement.
Sec. 508. Policy statement on improper payments.
Sec. 509. Policy statement on expenditures from agency fees and
spending.
Sec. 510. Policy statement on promoting real health care reform.
Sec. 511. Policy statement on Medicare.
Sec. 512. Policy statement on combating the opioid epidemic.
Sec. 513. Policy statement on the State Children's Health Insurance
Program.
Sec. 514. Policy statement on medical discovery, development, delivery,
and innovation.
Sec. 515. Policy statement on public health preparedness.
Sec. 516. Policy statement on Social Security.
Sec. 517. Policy statement on Medicaid work requirements.
Sec. 518. Policy statement on welfare reform and Supplemental Nutrition
Assistance Program work requirements.
Sec. 519. Policy Statement on State flexibility in Supplemental
Nutrition Assistance Program.
Sec. 520. Policy statement on higher education and workforce development
opportunity.
Sec. 521. Policy statement on supplemental wildfire suppression funding.
Sec. 522. Policy statement on the Department of Veterans Affairs.
Sec. 523. Policy statement on moving the United States Postal Service on
budget.
Sec. 524. Policy statement on the Judgment Fund.
Sec. 525. Policy statement on responsible stewardship of taxpayer
dollars.
Sec. 526. Policy statement on tax reform.

TITLE I--RECOMMENDED LEVELS AND AMOUNTS

SEC. 101. RECOMMENDED LEVELS AND AMOUNTS.

The following budgetary levels are appropriate for each of
fiscal years 2018 through 2027:
(1) Federal revenues.--For purposes of the
enforcement of this concurrent resolution:
(A) The recommended levels of Federal
revenues are as follows:
Fiscal year 2018: $2,670,356,000,000.
Fiscal year 2019: $2,767,357,000,000.
Fiscal year 2020: $2,870,414,000,000.
Fiscal year 2021: $2,963,953,000,000.
Fiscal year 2022: $3,077,586,000,000.
Fiscal year 2023: $3,195,139,000,000.
Fiscal year 2024: $3,325,690,000,000.
Fiscal year 2025: $3,475,784,000,000.
Fiscal year 2026: $3,642,629,000,000.
Fiscal year 2027: $3,811,687,000,000.
(B) The amounts by which the aggregate levels
of Federal revenues should be changed are as
follows:
Fiscal year 2018: -$63,213,000,000.
Fiscal year 2019: -$66,151,000,000.
Fiscal year 2020: -$80,162,000,000.
Fiscal year 2021: -$95,958,000,000.
Fiscal year 2022: -$105,330,000,000.
Fiscal year 2023: -$122,777,000,000.
Fiscal year 2024: -$136,738,000,000.
Fiscal year 2025: -$146,394,000,000.
Fiscal year 2026: -$146,749,000,000.
Fiscal year 2027: -$146,700,000,000.
(2) New budget authority.--For purposes of the
enforcement of this concurrent resolution, the
appropriate levels of total new budget authority are as
follows:
Fiscal year 2018: $3,232,597,000,000.
Fiscal year 2019: $3,286,018,000,000.
Fiscal year 2020: $3,299,573,000,000.
Fiscal year 2021: $3,290,186,000,000.
Fiscal year 2022: $3,441,975,000,000.
Fiscal year 2023: $3,483,686,000,000.
Fiscal year 2024: $3,528,872,000,000.
Fiscal year 2025: $3,655,413,000,000.
Fiscal year 2026: $3,746,208,000,000.
Fiscal year 2027: $3,824,652,000,000.
(3) Budget outlays.--For purposes of the enforcement
of this concurrent resolution, the appropriate levels
of total budget outlays are as follows:
Fiscal year 2018: $3,164,885,000,000.
Fiscal year 2019: $3,265,306,000,000.
Fiscal year 2020: $3,283,026,000,000.
Fiscal year 2021: $3,323,464,000,000.
Fiscal year 2022: $3,441,603,000,000.
Fiscal year 2023: $3,467,047,000,000.
Fiscal year 2024: $3,497,308,000,000.
Fiscal year 2025: $3,620,210,000,000.
Fiscal year 2026: $3,727,971,000,000.
Fiscal year 2027: $3,806,792,000,000.
(4) Deficits (on-budget).--For purposes of the
enforcement of this concurrent resolution, the amounts
of the deficits (on-budget) are as follows:
Fiscal year 2018: $494,529,000,000.
Fiscal year 2019: $497,949,000,000.
Fiscal year 2020: $412,612,000,000.
Fiscal year 2021: $359,511,000,000.
Fiscal year 2022: $364,017,000,000.
Fiscal year 2023: $271,908,000,000.
Fiscal year 2024: $171,618,000,000.
Fiscal year 2025: $144,426,000,000.
Fiscal year 2026: $85,342,000,000.
Fiscal year 2027: -$4,895,000,000.
(5) Debt subject to limit.--The appropriate levels of
debt subject to limit are as follows:
Fiscal year 2018: $21,059,756,000,000.
Fiscal year 2019: $21,720,619,000,000.
Fiscal year 2020: $22,263,387,000,000.
Fiscal year 2021: $22,717,657,000,000.
Fiscal year 2022: $23,120,068,000,000.
Fiscal year 2023: $23,414,924,000,000.
Fiscal year 2024: $23,577,205,000,000.
Fiscal year 2025: $23,665,687,000,000.
Fiscal year 2026: $23,701,446,000,000.
Fiscal year 2027: $23,484,672,000,000.
(6) Debt held by the public.--The appropriate levels
of debt held by the public are as follows:
Fiscal year 2018: $15,399,966,000,000.
Fiscal year 2019: $15,971,804,000,000.
Fiscal year 2020: $16,477,150,000,000.
Fiscal year 2021: $16,920,847,000,000.
Fiscal year 2022: $17,371,706,000,000.
Fiscal year 2023: $17,720,326,000,000.
Fiscal year 2024: $17,949,306,000,000.
Fiscal year 2025: $18,156,356,000,000.
Fiscal year 2026: $18,299,466,000,000.
Fiscal year 2027: $18,345,826,000,000.

SEC. 102. MAJOR FUNCTIONAL CATEGORIES.

The Congress determines and declares that the appropriate
levels of new budget authority and outlays for fiscal years
2018 through 2027 for each major functional category are:
(1) National Defense (050):
Fiscal year 2018:
(A) New budget authority,
$629,595,000,000.
(B) Outlays, $607,810,000,000.
Fiscal year 2019:
(A) New budget authority,
$660,832,000,000.
(B) Outlays, $636,795,000,000.
Fiscal year 2020:
(A) New budget authority,
$693,646,000,000.
(B) Outlays, $666,519,000,000.
Fiscal year 2021:
(A) New budget authority,
$728,125,000,000.
(B) Outlays, $698,761,000,000.
Fiscal year 2022:
(A) New budget authority,
$731,818,000,000.
(B) Outlays, $717,568,000,000.
Fiscal year 2023:
(A) New budget authority,
$735,468,000,000.
(B) Outlays, $720,401,000,000.
Fiscal year 2024:
(A) New budget authority,
$739,157,000,000.
(B) Outlays, $720,755,000,000.
Fiscal year 2025:
(A) New budget authority,
$742,886,000,000.
(B) Outlays, $729,581,000,000.
Fiscal year 2026:
(A) New budget authority,
$747,414,000,000.
(B) Outlays, $734,037,000,000.
Fiscal year 2027:
(A) New budget authority,
$751,098,000,000.
(B) Outlays, $737,798,000,000.
(2) International Affairs (150):
Fiscal year 2018:
(A) New budget authority,
$41,521,000,000.
(B) Outlays, $43,643,000,000.
Fiscal year 2019:
(A) New budget authority,
$40,210,000,000.
(B) Outlays, $41,207,000,000.
Fiscal year 2020:
(A) New budget authority,
$39,428,000,000.
(B) Outlays, $39,965,000,000.
Fiscal year 2021:
(A) New budget authority,
$38,654,000,000.
(B) Outlays, $38,585,000,000.
Fiscal year 2022:
(A) New budget authority,
$37,623,000,000.
(B) Outlays, $38,021,000,000.
Fiscal year 2023:
(A) New budget authority,
$38,445,000,000.
(B) Outlays, $37,795,000,000.
Fiscal year 2024:
(A) New budget authority,
$39,285,000,000.
(B) Outlays, $38,102,000,000.
Fiscal year 2025:
(A) New budget authority,
$40,174,000,000.
(B) Outlays, $38,643,000,000.
Fiscal year 2026:
(A) New budget authority,
$41,121,000,000.
(B) Outlays, $39,365,000,000.
Fiscal year 2027:
(A) New budget authority,
$42,025,000,000.
(B) Outlays, $40,175,000,000.
(3) General Science, Space, and Technology (250):
Fiscal year 2018:
(A) New budget authority,
$28,524,000,000.
(B) Outlays, $30,072,000,000.
Fiscal year 2019:
(A) New budget authority,
$29,107,000,000.
(B) Outlays, $29,365,000,000.
Fiscal year 2020:
(A) New budget authority,
$29,702,000,000.
(B) Outlays, $29,360,000,000.
Fiscal year 2021:
(A) New budget authority,
$30,346,000,000.
(B) Outlays, $29,718,000,000.
Fiscal year 2022:
(A) New budget authority,
$31,018,000,000.
(B) Outlays, $30,259,000,000.
Fiscal year 2023:
(A) New budget authority,
$31,694,000,000.
(B) Outlays, $30,797,000,000.
Fiscal year 2024:
(A) New budget authority,
$32,378,000,000.
(B) Outlays, $31,325,000,000.
Fiscal year 2025:
(A) New budget authority,
$33,112,000,000.
(B) Outlays, $31,928,000,000.
Fiscal year 2026:
(A) New budget authority,
$33,854,000,000.
(B) Outlays, $32,550,000,000.
Fiscal year 2027:
(A) New budget authority,
$34,602,000,000.
(B) Outlays, $33,162,000,000.
(4) Energy (270):
Fiscal year 2018:
(A) New budget authority, -
$3,088,000,000.
(B) Outlays, $2,559,000,000.
Fiscal year 2019:
(A) New budget authority,
$1,704,000,000.
(B) Outlays, $1,714,000,000.
Fiscal year 2020:
(A) New budget authority, -
$11,179,000,000.
(B) Outlays, -$11,813,000,000.
Fiscal year 2021:
(A) New budget authority,
$1,871,000,000.
(B) Outlays, $786,000,000.
Fiscal year 2022:
(A) New budget authority,
$1,705,000,000.
(B) Outlays, $445,000,000.
Fiscal year 2023:
(A) New budget authority,
$754,000,000.
(B) Outlays, -$491,000,000.
Fiscal year 2024:
(A) New budget authority,
$437,000,000.
(B) Outlays, -$727,000,000.
Fiscal year 2025:
(A) New budget authority, -
$4,000,000.
(B) Outlays, -$1,052,000,000.
Fiscal year 2026:
(A) New budget authority,
$2,233,000,000.
(B) Outlays, $1,207,000,000.
Fiscal year 2027:
(A) New budget authority,
$2,324,000,000.
(B) Outlays, $1,370,000,000.
(5) Natural Resources and Environment (300):
Fiscal year 2018:
(A) New budget authority,
$31,720,000,000.
(B) Outlays, $35,641,000,000.
Fiscal year 2019:
(A) New budget authority,
$31,856,000,000.
(B) Outlays, $33,751,000,000.
Fiscal year 2020:
(A) New budget authority,
$33,255,000,000.
(B) Outlays, $33,581,000,000.
Fiscal year 2021:
(A) New budget authority,
$32,704,000,000.
(B) Outlays, $32,652,000,000.
Fiscal year 2022:
(A) New budget authority,
$34,295,000,000.
(B) Outlays, $33,909,000,000.
Fiscal year 2023:
(A) New budget authority,
$34,684,000,000.
(B) Outlays, $34,186,000,000.
Fiscal year 2024:
(A) New budget authority,
$34,598,000,000.
(B) Outlays, $34,081,000,000.
Fiscal year 2025:
(A) New budget authority,
$35,520,000,000.
(B) Outlays, $34,921,000,000.
Fiscal year 2026:
(A) New budget authority,
$36,186,000,000.
(B) Outlays, $35,526,000,000.
Fiscal year 2027:
(A) New budget authority,
$36,742,000,000.
(B) Outlays, $36,078,000,000.
(6) Agriculture (350):
Fiscal year 2018:
(A) New budget authority,
$24,223,000,000.
(B) Outlays, $22,913,000,000.
Fiscal year 2019:
(A) New budget authority,
$21,091,000,000.
(B) Outlays, $20,200,000,000.
Fiscal year 2020:
(A) New budget authority,
$19,786,000,000.
(B) Outlays, $19,293,000,000.
Fiscal year 2021:
(A) New budget authority,
$18,217,000,000.
(B) Outlays, $17,660,000,000.
Fiscal year 2022:
(A) New budget authority,
$17,835,000,000.
(B) Outlays, $17,339,000,000.
Fiscal year 2023:
(A) New budget authority,
$18,153,000,000.
(B) Outlays, $17,713,000,000.
Fiscal year 2024:
(A) New budget authority,
$18,880,000,000.
(B) Outlays, $18,331,000,000.
Fiscal year 2025:
(A) New budget authority,
$19,863,000,000.
(B) Outlays, $19,225,000,000.
Fiscal year 2026:
(A) New budget authority,
$20,214,000,000.
(B) Outlays, $19,593,000,000.
Fiscal year 2027:
(A) New budget authority,
$20,422,000,000.
(B) Outlays, $19,817,000,000.
(7) Commerce and Housing Credit (370):
Fiscal year 2018:
(A) New budget authority, -
$7,287,000,000.
(B) Outlays, -$19,601,000,000.
Fiscal year 2019:
(A) New budget authority, -
$7,517,000,000.
(B) Outlays, -$15,753,000,000.
Fiscal year 2020:
(A) New budget authority, -
$10,358,000,000.
(B) Outlays, -$18,126,000,000.
Fiscal year 2021:
(A) New budget authority, -
$13,446,000,000.
(B) Outlays, -$22,106,000,000.
Fiscal year 2022:
(A) New budget authority, -
$12,880,000,000.
(B) Outlays, -$22,470,000,000.
Fiscal year 2023:
(A) New budget authority, -
$12,330,000,000.
(B) Outlays, -$22,598,000,000.
Fiscal year 2024:
(A) New budget authority, -
$10,989,000,000.
(B) Outlays, -$22,362,000,000.
Fiscal year 2025:
(A) New budget authority, -
$10,255,000,000.
(B) Outlays, -$22,849,000,000.
Fiscal year 2026:
(A) New budget authority, -
$11,141,000,000.
(B) Outlays, -$23,569,000,000.
Fiscal year 2027:
(A) New budget authority, -
$11,933,000,000.
(B) Outlays, -$24,521,000,000.
(8) Transportation (400):
Fiscal year 2018:
(A) New budget authority,
$88,095,000,000.
(B) Outlays, $91,796,000,000.
Fiscal year 2019:
(A) New budget authority,
$88,892,000,000.
(B) Outlays, $90,602,000,000.
Fiscal year 2020:
(A) New budget authority,
$82,748,000,000.
(B) Outlays, $90,508,000,000.
Fiscal year 2021:
(A) New budget authority,
$37,190,000,000.
(B) Outlays, $77,995,000,000.
Fiscal year 2022:
(A) New budget authority,
$66,950,000,000.
(B) Outlays, $65,076,000,000.
Fiscal year 2023:
(A) New budget authority,
$66,895,000,000.
(B) Outlays, $68,694,000,000.
Fiscal year 2024:
(A) New budget authority,
$67,483,000,000.
(B) Outlays, $69,617,000,000.
Fiscal year 2025:
(A) New budget authority,
$68,481,000,000.
(B) Outlays, $69,074,000,000.
Fiscal year 2026:
(A) New budget authority,
$69,714,000,000.
(B) Outlays, $69,044,000,000.
Fiscal year 2027:
(A) New budget authority,
$70,948,000,000.
(B) Outlays, $69,741,000,000.
(9) Community and Regional Development (450):
Fiscal year 2018:
(A) New budget authority,
$4,365,000,000.
(B) Outlays, $18,626,000,000.
Fiscal year 2019:
(A) New budget authority,
$4,170,000,000.
(B) Outlays, $16,983,000,000.
Fiscal year 2020:
(A) New budget authority,
$4,240,000,000.
(B) Outlays, $11,842,000,000.
Fiscal year 2021:
(A) New budget authority,
$4,353,000,000.
(B) Outlays, $9,558,000,000.
Fiscal year 2022:
(A) New budget authority,
$4,487,000,000.
(B) Outlays, $6,386,000,000.
Fiscal year 2023:
(A) New budget authority,
$4,556,000,000.
(B) Outlays, $5,090,000,000.
Fiscal year 2024:
(A) New budget authority,
$4,673,000,000.
(B) Outlays, $4,745,000,000.
Fiscal year 2025:
(A) New budget authority,
$4,857,000,000.
(B) Outlays, $4,767,000,000.
Fiscal year 2026:
(A) New budget authority,
$5,077,000,000.
(B) Outlays, $4,805,000,000.
Fiscal year 2027:
(A) New budget authority,
$4,953,000,000.
(B) Outlays, $4,809,000,000.
(10) Education, Training, Employment, and Social
Services (500):
Fiscal year 2018:
(A) New budget authority,
$69,920,000,000.
(B) Outlays, $89,295,000,000.
Fiscal year 2019:
(A) New budget authority,
$79,090,000,000.
(B) Outlays, $81,404,000,000.
Fiscal year 2020:
(A) New budget authority,
$80,305,000,000.
(B) Outlays, $81,129,000,000.
Fiscal year 2021:
(A) New budget authority,
$81,922,000,000.
(B) Outlays, $82,479,000,000.
Fiscal year 2022:
(A) New budget authority,
$82,350,000,000.
(B) Outlays, $83,539,000,000.
Fiscal year 2023:
(A) New budget authority,
$86,279,000,000.
(B) Outlays, $85,843,000,000.
Fiscal year 2024:
(A) New budget authority,
$86,641,000,000.
(B) Outlays, $87,897,000,000.
Fiscal year 2025:
(A) New budget authority,
$86,977,000,000.
(B) Outlays, $88,522,000,000.
Fiscal year 2026:
(A) New budget authority,
$87,459,000,000.
(B) Outlays, $89,186,000,000.
Fiscal year 2027:
(A) New budget authority,
$88,216,000,000.
(B) Outlays, $90,080,000,000.
(11) Health (550):
Fiscal year 2018:
(A) New budget authority,
$579,328,000,000.
(B) Outlays, $551,277,000,000.
Fiscal year 2019:
(A) New budget authority,
$564,387,000,000.
(B) Outlays, $570,419,000,000.
Fiscal year 2020:
(A) New budget authority,
$552,405,000,000.
(B) Outlays, $541,949,000,000.
Fiscal year 2021:
(A) New budget authority,
$512,289,000,000.
(B) Outlays, $518,445,000,000.
Fiscal year 2022:
(A) New budget authority,
$528,560,000,000.
(B) Outlays, $533,688,000,000.
Fiscal year 2023:
(A) New budget authority,
$547,998,000,000.
(B) Outlays, $549,687,000,000.
Fiscal year 2024:
(A) New budget authority,
$571,335,000,000.
(B) Outlays, $569,207,000,000.
Fiscal year 2025:
(A) New budget authority,
$594,923,000,000.
(B) Outlays, $591,171,000,000.
Fiscal year 2026:
(A) New budget authority,
$618,119,000,000.
(B) Outlays, $613,682,000,000.
Fiscal year 2027:
(A) New budget authority,
$623,810,000,000.
(B) Outlays, $626,774,000,000.
(12) Medicare (570):
Fiscal year 2018:
(A) New budget authority,
$593,830,000,000.
(B) Outlays, $593,567,000,000.
Fiscal year 2019:
(A) New budget authority,
$652,984,000,000.
(B) Outlays, $652,740,000,000.
Fiscal year 2020:
(A) New budget authority,
$692,126,000,000.
(B) Outlays, $691,917,000,000.
Fiscal year 2021:
(A) New budget authority,
$739,367,000,000.
(B) Outlays, $739,161,000,000.
Fiscal year 2022:
(A) New budget authority,
$826,276,000,000.
(B) Outlays, $826,057,000,000.
Fiscal year 2023:
(A) New budget authority,
$845,800,000,000.
(B) Outlays, $845,593,000,000.
Fiscal year 2024:
(A) New budget authority,
$850,393,000,000.
(B) Outlays, $850,177,000,000.
Fiscal year 2025:
(A) New budget authority,
$916,244,000,000.
(B) Outlays, $916,009,000,000.
Fiscal year 2026:
(A) New budget authority,
$988,183,000,000.
(B) Outlays, $987,942,000,000.
Fiscal year 2027:
(A) New budget authority,
$1,053,671,000,000.
(B) Outlays, $1,053,435,000,000.
(13) Income Security (600):
Fiscal year 2018:
(A) New budget authority,
$491,789,000,000.
(B) Outlays, $477,428,000,000.
Fiscal year 2019:
(A) New budget authority,
$464,425,000,000.
(B) Outlays, $454,786,000,000.
Fiscal year 2020:
(A) New budget authority,
$475,015,000,000.
(B) Outlays, $464,925,000,000.
Fiscal year 2021:
(A) New budget authority,
$484,414,000,000.
(B) Outlays, $475,140,000,000.
Fiscal year 2022:
(A) New budget authority,
$492,453,000,000.
(B) Outlays, $489,299,000,000.
Fiscal year 2023:
(A) New budget authority,
$475,767,000,000.
(B) Outlays, $468,217,000,000.
Fiscal year 2024:
(A) New budget authority,
$484,425,000,000.
(B) Outlays, $471,370,000,000.
Fiscal year 2025:
(A) New budget authority,
$493,048,000,000.
(B) Outlays, $480,920,000,000.
Fiscal year 2026:
(A) New budget authority,
$502,057,000,000.
(B) Outlays, $496,505,000,000.
Fiscal year 2027:
(A) New budget authority,
$511,675,000,000.
(B) Outlays, $505,382,000,000.
(14) Social Security (650):
Fiscal year 2018:
(A) New budget authority,
$39,475,000,000.
(B) Outlays, $39,475,000,000.
Fiscal year 2019:
(A) New budget authority,
$43,016,000,000.
(B) Outlays, $43,016,000,000.
Fiscal year 2020:
(A) New budget authority,
$46,287,000,000.
(B) Outlays, $46,287,000,000.
Fiscal year 2021:
(A) New budget authority,
$49,748,000,000.
(B) Outlays, $49,748,000,000.
Fiscal year 2022:
(A) New budget authority,
$53,392,000,000.
(B) Outlays, $53,392,000,000.
Fiscal year 2023:
(A) New budget authority,
$57,378,000,000.
(B) Outlays, $57,378,000,000.
Fiscal year 2024:
(A) New budget authority,
$61,764,000,000.
(B) Outlays, $61,764,000,000.
Fiscal year 2025:
(A) New budget authority,
$66,388,000,000.
(B) Outlays, $66,388,000,000.
Fiscal year 2026:
(A) New budget authority,
$70,871,000,000.
(B) Outlays, $70,871,000,000.
Fiscal year 2027:
(A) New budget authority,
$75,473,000,000.
(B) Outlays, $75,473,000,000.
(15) Veterans Benefits and Services (700):
Fiscal year 2018:
(A) New budget authority,
$176,704,000,000.
(B) Outlays, $178,038,000,000.
Fiscal year 2019:
(A) New budget authority,
$191,507,000,000.
(B) Outlays, $190,235,000,000.
Fiscal year 2020:
(A) New budget authority,
$194,930,000,000.
(B) Outlays, $193,931,000,000.
Fiscal year 2021:
(A) New budget authority,
$199,751,000,000.
(B) Outlays, $197,856,000,000.
Fiscal year 2022:
(A) New budget authority,
$215,442,000,000.
(B) Outlays, $213,337,000,000.
Fiscal year 2023:
(A) New budget authority,
$212,567,000,000.
(B) Outlays, $210,444,000,000.
Fiscal year 2024:
(A) New budget authority,
$209,943,000,000.
(B) Outlays, $207,908,000,000.
Fiscal year 2025:
(A) New budget authority,
$227,991,000,000.
(B) Outlays, $225,820,000,000.
Fiscal year 2026:
(A) New budget authority,
$234,947,000,000.
(B) Outlays, $232,660,000,000.
Fiscal year 2027:
(A) New budget authority,
$243,718,000,000.
(B) Outlays, $241,501,000,000.
(16) Administration of Justice (750):
Fiscal year 2018:
(A) New budget authority,
$51,367,000,000.
(B) Outlays, $61,079,000,000.
Fiscal year 2019:
(A) New budget authority,
$58,245,000,000.
(B) Outlays, $58,867,000,000.
Fiscal year 2020:
(A) New budget authority,
$59,720,000,000.
(B) Outlays, $60,036,000,000.
Fiscal year 2021:
(A) New budget authority,
$61,054,000,000.
(B) Outlays, $60,946,000,000.
Fiscal year 2022:
(A) New budget authority,
$62,092,000,000.
(B) Outlays, $61,925,000,000.
Fiscal year 2023:
(A) New budget authority,
$63,671,000,000.
(B) Outlays, $63,462,000,000.
Fiscal year 2024:
(A) New budget authority,
$65,285,000,000.
(B) Outlays, $65,043,000,000.
Fiscal year 2025:
(A) New budget authority,
$66,947,000,000.
(B) Outlays, $66,498,000,000.
Fiscal year 2026:
(A) New budget authority,
$69,907,000,000.
(B) Outlays, $70,200,000,000.
Fiscal year 2027:
(A) New budget authority,
$70,270,000,000.
(B) Outlays, $69,722,000,000.
(17) General Government (800):
Fiscal year 2018:
(A) New budget authority,
$23,564,000,000.
(B) Outlays, $23,091,000,000.
Fiscal year 2019:
(A) New budget authority,
$23,948,000,000.
(B) Outlays, $23,314,000,000.
Fiscal year 2020:
(A) New budget authority,
$23,557,000,000.
(B) Outlays, $23,303,000,000.
Fiscal year 2021:
(A) New budget authority,
$23,386,000,000.
(B) Outlays, $23,190,000,000.
Fiscal year 2022:
(A) New budget authority,
$23,127,000,000.
(B) Outlays, $23,013,000,000.
Fiscal year 2023:
(A) New budget authority,
$26,420,000,000.
(B) Outlays, $26,057,000,000.
Fiscal year 2024:
(A) New budget authority,
$26,351,000,000.
(B) Outlays, $26,168,000,000.
Fiscal year 2025:
(A) New budget authority,
$26,246,000,000.
(B) Outlays, $26,060,000,000.
Fiscal year 2026:
(A) New budget authority,
$26,083,000,000.
(B) Outlays, $25,917,000,000.
Fiscal year 2027:
(A) New budget authority,
$25,855,000,000.
(B) Outlays, $25,722,000,000.
(18) Net Interest (900):
Fiscal year 2018:
(A) New budget authority,
$376,842,000,000.
(B) Outlays, $376,842,000,000.
Fiscal year 2019:
(A) New budget authority,
$409,185,000,000.
(B) Outlays, $409,185,000,000.
Fiscal year 2020:
(A) New budget authority,
$450,859,000,000.
(B) Outlays, $450,859,000,000.
Fiscal year 2021:
(A) New budget authority,
$493,778,000,000.
(B) Outlays, $493,778,000,000.
Fiscal year 2022:
(A) New budget authority,
$531,929,000,000.
(B) Outlays, $531,929,000,000.
Fiscal year 2023:
(A) New budget authority,
$565,282,000,000.
(B) Outlays, $565,282,000,000.
Fiscal year 2024:
(A) New budget authority,
$589,292,000,000.
(B) Outlays, $589,292,000,000.
Fiscal year 2025:
(A) New budget authority,
$607,012,000,000.
(B) Outlays, $607,012,000,000.
Fiscal year 2026:
(A) New budget authority,
$620,536,000,000.
(B) Outlays, $620,536,000,000.
Fiscal year 2027:
(A) New budget authority,
$623,786,000,000.
(B) Outlays, $623,911,000,000.
(19) Allowances (920):
Fiscal year 2018:
(A) New budget authority, -
$44,505,000,000.
(B) Outlays, -$23,272,000,000.
Fiscal year 2019:
(A) New budget authority, -
$42,219,000,000.
(B) Outlays, -$34,499,000,000.
Fiscal year 2020:
(A) New budget authority, -
$45,246,000,000.
(B) Outlays, -$40,640,000,000.
Fiscal year 2021:
(A) New budget authority, -
$48,056,000,000.
(B) Outlays, -$44,164,000,000.
Fiscal year 2022:
(A) New budget authority, -
$50,544,000,000.
(B) Outlays, -$47,877,000,000.
Fiscal year 2023:
(A) New budget authority, -
$52,326,000,000.
(B) Outlays, -$49,819,000,000.
Fiscal year 2024:
(A) New budget authority, -
$53,659,000,000.
(B) Outlays, -$51,411,000,000.
Fiscal year 2025:
(A) New budget authority, -
$55,439,000,000.
(B) Outlays, -$53,060,000,000.
Fiscal year 2026:
(A) New budget authority, -
$51,908,000,000.
(B) Outlays, -$52,127,000,000.
Fiscal year 2027:
(A) New budget authority, -
$55,254,000,000.
(B) Outlays, -$53,919,000,000.
(20) Government-wide savings and adjustments (930):
Fiscal year 2018:
(A) New budget authority,
$34,145,000,000.
(B) Outlays, $2,778,000,000.
Fiscal year 2019:
(A) New budget authority, -
$1,555,000,000.
(B) Outlays, -$2,528,000,000.
Fiscal year 2020:
(A) New budget authority, -
$67,381,000,000.
(B) Outlays, -$47,665,000,000.
Fiscal year 2021:
(A) New budget authority, -
$120,155,000,000.
(B) Outlays, -$97,069,000,000.
Fiscal year 2022:
(A) New budget authority, -
$153,376,000,000.
(B) Outlays, -$137,459,000,000.
Fiscal year 2023:
(A) New budget authority, -
$174,438,000,000.
(B) Outlays, -$159,489,000,000.
Fiscal year 2024:
(A) New budget authority, -
$194,373,000,000.
(B) Outlays, -$179,541,000,000.
Fiscal year 2025:
(A) New budget authority, -
$193,336,000,000.
(B) Outlays, -$187,355,000,000.
Fiscal year 2026:
(A) New budget authority, -
$246,573,000,000.
(B) Outlays, -$223,016,000,000.
Fiscal year 2027:
(A) New budget authority, -
$258,801,000,000.
(B) Outlays, -$240,977,000,000.
(21) Undistributed Offsetting Receipts (950):
Fiscal year 2018:
(A) New budget authority, -
$83,212,000,000.
(B) Outlays, -$83,212,000,000.
Fiscal year 2019:
(A) New budget authority, -
$86,409,000,000.
(B) Outlays, -$86,409,000,000.
Fiscal year 2020:
(A) New budget authority, -
$86,316,000,000.
(B) Outlays, -$86,316,000,000.
Fiscal year 2021:
(A) New budget authority, -
$90,347,000,000.
(B) Outlays, -$90,347,000,000.
Fiscal year 2022:
(A) New budget authority, -
$93,573,000,000.
(B) Outlays, -$93,573,000,000.
Fiscal year 2023:
(A) New budget authority, -
$100,001,000,000.
(B) Outlays, -$100,001,000,000.
Fiscal year 2024:
(A) New budget authority, -
$105,371,000,000.
(B) Outlays, -$105,371,000,000.
Fiscal year 2025:
(A) New budget authority, -
$115,139,000,000.
(B) Outlays, -$115,139,000,000.
Fiscal year 2026:
(A) New budget authority, -
$117,033,000,000.
(B) Outlays, -$117,033,000,000.
Fiscal year 2027:
(A) New budget authority, -
$127,808,000,000.
(B) Outlays, -$127,808,000,000.
(22) Overseas Contingency Operations/Global War on
Terrorism (970):
Fiscal year 2018:
(A) New budget authority,
$86,591,000,000.
(B) Outlays, $45,781,000,000.
Fiscal year 2019:
(A) New budget authority,
$60,000,000,000.
(B) Outlays, $50,748,000,000.
Fiscal year 2020:
(A) New budget authority,
$43,000,000,000.
(B) Outlays, $43,076,000,000.
Fiscal year 2021:
(A) New budget authority,
$26,000,000,000.
(B) Outlays, $31,635,000,000.
Fiscal year 2022:
(A) New budget authority,
$12,000,000,000.
(B) Outlays, $18,768,000,000.
Fiscal year 2023:
(A) New budget authority,
$12,000,000,000.
(B) Outlays, $13,799,000,000.
Fiscal year 2024:
(A) New budget authority,
$12,000,000,000.
(B) Outlays, $11,957,000,000.
Fiscal year 2025:
(A) New budget authority, $0.
(B) Outlays, $4,171,000,000.
Fiscal year 2026:
(A) New budget authority, $0.
(B) Outlays, $1,160,000,000.
Fiscal year 2027:
(A) New budget authority, $0.
(B) Outlays, $165,000,000.
(23) Across-the-Board Adjustment (990):
Fiscal year 2018:
(A) New budget authority, -
$909,000,000.
(B) Outlays, -$740,000,000.
Fiscal year 2019:
(A) New budget authority, -
$931,000,000.
(B) Outlays, -$837,000,000.
Fiscal year 2020:
(A) New budget authority, -
$956,000,000.
(B) Outlays, -$895,000,000.
Fiscal year 2021:
(A) New budget authority, -
$979,000,000.
(B) Outlays, -$944,000,000.
Fiscal year 2022:
(A) New budget authority, -
$1,004,000,000.
(B) Outlays, -$968,000,000.
Fiscal year 2023:
(A) New budget authority, -
$1,030,000,000.
(B) Outlays, -$993,000,000.
Fiscal year 2024:
(A) New budget authority, -
$1,056,000,000.
(B) Outlays, -$1,018,000,000.
Fiscal year 2025:
(A) New budget authority, -
$1,083,000,000.
(B) Outlays, -$1,045,000,000.
Fiscal year 2026:
(A) New budget authority, -
$1,112,000,000.
(B) Outlays, -$1,070,000,000.
Fiscal year 2027:
(A) New budget authority, -
$1,140,000,000.
(B) Outlays, -$1,099,000,000.

TITLE II--RECONCILIATION AND RELATED MATTERS

SEC. 201. RECONCILIATION IN THE HOUSE OF REPRESENTATIVES.

(a) Submissions Providing for Reconciliation.--Not later than
October 6, 2017, the committees named in subsection (b) shall
submit their recommendations on changes in laws within their
jurisdictions to the Committee on the Budget that would achieve
the specified reduction in the deficit for the period of fiscal
years 2018 through 2027.
(b) Instructions.--
(1) Committee on agriculture.--The Committee on
Agriculture shall submit changes in laws within its
jurisdiction sufficient to reduce the deficit by
$10,000,000,000 for the period of fiscal years 2018
through 2027.
(2) Committee on armed services.--The Committee on
Armed Services shall submit changes in laws within its
jurisdiction sufficient to reduce the deficit by
$1,000,000,000 for the period of fiscal years 2018
through 2027.
(3) Committee on education and the workforce.--The
Committee on Education and the Workforce shall submit
changes in laws within its jurisdiction sufficient to
reduce the deficit by $20,000,000,000 for the period of
fiscal years 2018 through 2027.
(4) Committee on energy and commerce.--The Committee
on Energy and Commerce shall submit changes in laws
within its jurisdiction sufficient to reduce the
deficit by $20,000,000,000 for the period of fiscal
years 2018 through 2027.
(5) Committee on financial services.--The Committee
on Financial Services shall submit changes in laws
within its jurisdiction sufficient to reduce the
deficit by $14,000,000,000 for the period of fiscal
years 2018 through 2027.
(6) Committee on homeland security.--The Committee on
Homeland Security shall submit changes in laws within
its jurisdiction sufficient to reduce the deficit by
$3,000,000,000 for the period of fiscal years 2018
through 2027.
(7) Committee on the judiciary.--The Committee on the
Judiciary shall submit changes in laws within its
jurisdiction sufficient to reduce the deficit by
$45,000,000,000 for the period of fiscal years 2018
through 2027.
(8) Committee on natural resources.--The Committee on
Natural Resources shall submit changes in laws within
its jurisdiction sufficient to reduce the deficit by
$5,000,000,000 for the period of fiscal years 2018
through 2027.
(9) Committee on oversight and government reform.--
The Committee on Oversight and Government Reform shall
submit changes in laws within its jurisdiction
sufficient to reduce the deficit by $32,000,000,000 for
the period of fiscal years 2018 through 2027.
(10) Committee on veterans' affairs.--The Committee
on Veterans' Affairs shall submit changes in laws
within its jurisdiction sufficient to reduce the
deficit by $1,000,000,000 for the period of fiscal
years 2018 through 2027.
(11) Committee on ways and means.--The Committee on
Ways and Means shall submit changes in laws within its
jurisdiction sufficient to reduce the deficit by
$52,000,000,000 for the period of fiscal years 2018
through 2027.

TITLE III--BUDGET ENFORCEMENT IN THE HOUSE OF REPRESENTATIVES

Subtitle A--Budget Enforcement

SEC. 301. POINT OF ORDER AGAINST INCREASING LONG-TERM DIRECT SPENDING.

(a) Point of Order.--It shall not be in order in the House of
Representatives to consider any bill or joint resolution, or
amendment thereto or conference report thereon, that would
cause a net increase in direct spending in excess of
$2,500,000,000 in any of the 4 consecutive 10-fiscal year
periods described in subsection (b).
(b) Congressional Budget Office Analysis of Proposals.--The
Director of the Congressional Budget Office shall, to the
extent practicable, prepare an estimate of whether a bill or
joint resolution reported by a committee (other than the
Committee on Appropriations), or amendment thereto or
conference report thereon, would cause, relative to current
law, a net increase in direct spending in the House of
Representatives, in excess of $2,500,000,000 in any of the 4
consecutive 10-fiscal year periods beginning after the last
fiscal year of this concurrent resolution.
(c) Limitation.--In the House of Representatives, the
provisions of this section shall not apply to any bills or
joint resolutions, or amendments thereto or conference reports
thereon, for which the chair of the Committee on the Budget has
made adjustments to the allocations, aggregates, or other
budgetary levels in this concurrent resolution.
(d) Determinations of Budget Levels.--For purposes of this
section, the levels of net increases in direct spending shall
be determined on the basis of estimates provided by the chair
of the Committee on the Budget of the House of Representatives.
(e) Sunset.--This section shall have no force or effect after
September 30, 2018.

SEC. 302. ALLOCATION FOR OVERSEAS CONTINGENCY OPERATIONS/GLOBAL WAR ON
TERRORISM.

(a) Separate Allocation for Overseas Contingency Operations/
Global War on Terrorism.--In the House of Representatives,
there shall be a separate allocation of new budget authority
and outlays provided to the Committee on Appropriations for the
purposes of Overseas Contingency Operations/Global War on
Terrorism, which shall be deemed to be an allocation under
section 302(a) of the Congressional Budget Act of 1974. Section
302(a)(3) of such Act shall not apply to such separate
allocation.
(b) Section 302 Allocations.--The separate allocation
referred to in subsection (a) shall be the exclusive allocation
for Overseas Contingency Operations/Global War on Terrorism
under section 302(b) of the Congressional Budget Act of 1974.
The Committee on Appropriations of the House of Representatives
may provide suballocations of such separate allocation under
such section 302(b).
(c) Application.--For purposes of enforcing the separate
allocation referred to in subsection (a) under section 302(f)
of the Congressional Budget Act of 1974, the ``first fiscal
year'' and the ``total of fiscal years'' shall be deemed to
refer to fiscal year 2018. Section 302(c) of such Act shall not
apply to such separate allocation.
(d) Designations.--New budget authority or outlays shall only
be counted toward the allocation referred to in subsection (a)
if designated pursuant to section 251(b)(2)(A)(ii) of the
Balanced Budget and Emergency Deficit Control Act of 1985.
(e) Adjustments.--For purposes of subsection (a) for fiscal
year 2018, no adjustment shall be made under section 314(a) of
the Congressional Budget Act of 1974 if any adjustment would be
made under section 251(b)(2)(A)(ii) of the Balanced Budget and
Emergency Deficit Control Act of 1985.

SEC. 303. LIMITATION ON CHANGES IN CERTAIN MANDATORY PROGRAMS.

(a) Definition.--In this section, the term ``change in
mandatory programs'' means a provision that--
(1) would have been estimated as affecting direct
spending or receipts under section 252 of the Balanced
Budget and Emergency Deficit Control Act of 1985 (as in
effect prior to September 30, 2002) if the provision
were included in legislation other than appropriation
Acts; and
(2) results in a net decrease in budget authority in
the budget year, but does not result in a net decrease
in outlays over the total of the current year, the
budget year, and all fiscal years covered under the
most recently agreed to concurrent resolution on the
budget.
(b) Point of Order in the House of Representatives.--
(1) In general.--A provision in a bill or joint
resolution making appropriations for a full fiscal year
that proposes a change in mandatory programs that, if
enacted, would cause the absolute value of the total
budget authority of all such changes in mandatory
programs enacted in relation to a full fiscal year to
be more than the amount specified in paragraph (3),
shall not be in order in the House of Representatives.
(2) Amendments and conference reports.--It shall not
be in order in the House of Representatives to consider
an amendment to, or a conference report on, a bill or
joint resolution making appropriations for a full
fiscal year if such amendment thereto or conference
report thereon proposes a change in mandatory programs
that, if enacted, would cause the absolute value of the
total budget authority of all such changes in mandatory
programs enacted in relation to a full fiscal year to
be more than the amount specified in paragraph (3).
(3) Amount.--The amount specified in this paragraph
is--
(A) for fiscal year 2018, $19,100,000,000;
(B) for fiscal year 2019, $17,000,000,000;
and
(C) for fiscal year 2020, $15,000,000,000.
(c) Determination.--For purposes of this section, budgetary
levels shall be determined on the basis of estimates provided
by the chair of the Committee on the Budget of the House of
Representatives.

SEC. 304. LIMITATION ON ADVANCE APPROPRIATIONS.

(a) In General.--In the House of Representatives, except as
provided for in subsection (b), any general appropriation bill
or bill or joint resolution continuing appropriations, or
amendment thereto or conference report thereon, may not provide
advance appropriations.
(b) Exceptions.--An advance appropriation may be provided for
programs, projects, activities, or accounts identified in the
report or the joint explanatory statement of managers, as
applicable, accompanying this concurrent resolution under the
heading--
(1) General.--``Accounts Identified for Advance
Appropriations''.
(2) Veterans.--``Veterans Accounts Identified for
Advance Appropriations''.
(c) Limitations.--The aggregate level of advance
appropriations shall not exceed--
(1) General.--$28,852,000,000 in new budget authority
for all programs identified pursuant to subsection
(b)(1).
(2) Veterans.--$70,699,313,000 in new budget
authority for programs in the Department of Veterans
Affairs identified pursuant to subsection (b)(2).
(d) Definition.--The term ``advance appropriation'' means any
new discretionary budget authority provided in a general
appropriation bill or joint resolution continuing
appropriations for fiscal year 2018, or any amendment thereto
or conference report thereon, that first becomes available for
the first fiscal year following fiscal year 2018.

SEC. 305. ESTIMATES OF DEBT SERVICE COSTS.

In the House of Representatives, the chair of the Committee
on the Budget may direct the Congressional Budget Office to
include, in any estimate prepared under section 402 of the
Congressional Budget Act of 1974 with respect to any bill or
joint resolution, an estimate of any change in debt service
costs resulting from carrying out such bill or resolution. Any
estimate of debt service costs provided under this section
shall be advisory and shall not be used for purposes of
enforcement of such Act, the Rules of the House of
Representatives, or this concurrent resolution. This section
shall not apply to authorizations of programs funded by
discretionary spending or to appropriation bills or joint
resolutions, but shall apply to changes in the authorization
level of appropriated entitlements.

SEC. 306. FAIR-VALUE CREDIT ESTIMATES.

(a) All Credit Programs.--Whenever the Director of the
Congressional Budget Office provides an estimate of any measure
that establishes or modifies any program providing loans or
loan guarantees, the Director shall also, to the extent
practicable, provide a fair-value estimate of such loan or loan
guarantee program if requested by the chair of the Committee on
the Budget of the House of Representatives.
(b) Student Financial Assistance and Housing Programs.--The
Director of the Congressional Budget Office shall provide, to
the extent practicable, a fair-value estimate as part of any
estimate for any measure that establishes or modifies a loan or
loan guarantee program for student financial assistance or
housing (including residential mortgage).
(c) Baseline Estimates.--The Congressional Budget Office
shall include estimates, on a fair-value and credit reform
basis, of loan and loan guarantee programs for student
financial assistance, housing (including residential mortgage),
and such other major loan and loan guarantee programs, as
practicable, in its The Budget and Economic Outlook: 2018 to
2027.
(d) Enforcement in the House of Representatives.--If the
Director of the Congressional Budget Office provides an
estimate pursuant to subsection (a) or (b), the chair of the
Committee on the Budget of the House of Representatives may use
such estimate to determine compliance with the Congressional
Budget Act of 1974 and other budget enforcement requirements.

SEC. 307. ESTIMATES OF MACROECONOMIC EFFECTS OF MAJOR LEGISLATION.

(a) CBO and JCT Estimates.--During the 115th Congress, any
estimate of major legislation considered in the House of
Representatives or the Senate provided by the Congressional
Budget Office under section 402 of the Congressional Budget Act
of 1974 or by the Joint Committee on Taxation to the
Congressional Budget Office under section 201(f) of such Act
shall, to the extent practicable, incorporate the budgetary
effects of changes in economic output, employment, capital
stock, and other macroeconomic variables resulting from such
major legislation.
(b) Contents.--Any estimate referred to in subsection (a)
shall, to the extent practicable, include--
(1) a qualitative assessment of the budgetary effects
(including macroeconomic variables described in
subsection (a)) of major legislation in the 20-fiscal
year period beginning after the last fiscal year of the
most recently agreed to concurrent resolution on the
budget that sets forth budgetary levels required under
section 301 of the Congressional Budget Act of 1974;
and
(2) an identification of the critical assumptions and
the source of data underlying that estimate.
(c) Definitions.--In this section:
(1) Major legislation.--The term ``major
legislation'' means--
(A) in the Senate, a bill, joint resolution,
conference report, amendment, amendment between
the Houses, or treaty--
(i) for which an estimate is required
to be prepared pursuant to section 402
of the Congressional Budget Act of 1974
(2 U.S.C. 653) and that causes a gross
budgetary effect (before incorporating
macroeconomic effects and not including
timing shifts) in a fiscal year in the
period of years of the most recently
agreed to concurrent resolution on the
budget equal to or greater than--
(I) 0.25 percent of the
current projected gross
domestic product of the United
States for that fiscal year; or
(II) for a treaty, equal to
or greater than $15,000,000,000
for that fiscal year; or
(ii) designated as such by--
(I) the chair of the
Committee on the Budget of the
Senate for all direct spending
legislation; or
(II) the Senator who is
Chairman or Vice Chairman of
the Joint Committee on Taxation
for revenue legislation; and
(B) in the House of Representatives, a bill
or joint resolution, or amendment thereto or
conference report thereon--
(i) for which an estimate is required
to be prepared pursuant to section 402
of the Congressional Budget Act of 1974
(2 U.S.C. 653) and that causes a gross
budgetary effect (before incorporating
macroeconomic effects and not including
timing shifts) in a fiscal year in the
period of years of the most recently
agreed to concurrent resolution on the
budget equal to or greater than 0.25
percent of the current projected gross
domestic product of the United States
for that fiscal year; or
(ii) designated as such by--
(I) the chair of the
Committee on the Budget of the
House of Representatives for
all direct spending
legislation; or
(II) the Member who is
Chairman or Vice Chairman of
the Joint Committee on Taxation
for revenue legislation.
(2) Budgetary effects.--The term ``budgetary
effects'' means changes in revenues, direct spending
outlays, and deficits.
(3) Timing shifts.--The term ``timing shifts''
means--
(A) provisions that cause a delay of the date
on which outlays flowing from direct spending
would otherwise occur from one fiscal year to
the next fiscal year; or
(B) provisions that cause an acceleration of
the date on which revenues would otherwise
occur from one fiscal year to the prior fiscal
year.

SEC. 308. ADJUSTMENTS FOR IMPROVED CONTROL OF BUDGETARY RESOURCES.

(a) Adjustments of Discretionary and Direct Spending
Levels.--In the House of Representatives, if a committee (other
than the Committee on Appropriations) reports a bill or joint
resolution, or an amendment thereto is offered or conference
report thereon is submitted, providing for a decrease in direct
spending (budget authority and outlays flowing therefrom) for
any fiscal year and also provides for an authorization of
appropriations for the same purpose, upon the enactment of such
measure, the chair of the Committee on the Budget may decrease
the allocation to the applicable authorizing committee that
reports such measure and increase the allocation of
discretionary spending (budget authority and outlays flowing
therefrom) to the Committee on Appropriations for fiscal year
2018 by an amount equal to the new budget authority (and
outlays flowing therefrom) provided for in a bill or joint
resolution making appropriations for the same purpose.
(b) Determinations.--In the House of Representatives, for
purposes of enforcing this concurrent resolution, the
allocations and aggregate levels of new budget authority,
outlays, direct spending, revenues, deficits, and surpluses for
fiscal year 2018 and the total of fiscal years 2018 through
2027 shall be determined on the basis of estimates made by the
chair of the Committee on the Budget and such chair may adjust
the applicable levels in this concurrent resolution.

SEC. 309. SCORING RULE FOR ENERGY SAVINGS PERFORMANCE CONTRACTS.

(a) In General.--The Director of the Congressional Budget
Office shall estimate provisions of any bill or joint
resolution, or amendment thereto or conference report thereon,
that provides the authority to enter into or modify any covered
energy savings contract on a net present value basis (NPV).
(b) NPV Calculations.--The net present value of any covered
energy savings contract shall be calculated as follows:
(1) The discount rate shall reflect market risk.
(2) The cash flows shall include, whether classified
as mandatory or discretionary, payments to contractors
under the terms of their contracts, payments to
contractors for other services, and direct savings in
energy and energy-related costs.
(3) The stream of payments shall cover the period
covered by the contracts but not to exceed 25 years.
(c) Definition.--As used in this section, the term ``covered
energy savings contract'' means--
(1) an energy savings performance contract authorized
under section 801 of the National Energy Conservation
Policy Act; or
(2) a utility energy service contract, as described
in the Office of Management and Budget Memorandum on
Federal Use of Energy Savings Performance Contracting,
dated July 25, 1998 (M-98-13), and the Office of
Management and Budget Memorandum on the Federal Use of
Energy Saving Performance Contracts and Utility Energy
Service Contracts, dated September 28, 2015 (M-12-21),
or any successor to either memorandum.
(d) Enforcement in the House of Representatives.--In the
House of Representatives, if any net present value of any
covered energy savings contract calculated under subsection (b)
results in a net savings, then the budgetary effects of such
contract shall not be counted for purposes of titles III and IV
of the Congressional Budget Act of 1974, this concurrent
resolution, or clause 10 of rule XXI of the Rules of the House
of Representatives.
(e) Classification of Spending.--For purposes of budget
enforcement, the estimated net present value of the budget
authority provided by the measure, and outlays flowing
therefrom, shall be classified as direct spending.
(f) Sense of the House of Representatives.--It is the sense
of the House of Representatives that--
(1) the Director of the Office of Management and
Budget, in consultation with the Director of the
Congressional Budget Office, should separately identify
the cash flows under subsection (b)(2) and include such
information in the President's annual budget submission
under section 1105(a) of title 31, United States Code;
and
(2) the scoring method used in this section should
not be used to score any contracts other than covered
energy savings contracts.

SEC. 310. LIMITATION ON TRANSFERS FROM THE GENERAL FUND OF THE TREASURY
TO THE HIGHWAY TRUST FUND.

In the House of Representatives, for purposes of the
Congressional Budget Act of 1974, the Balanced Budget and
Emergency Deficit Control Act of 1985, and the rules or orders
of the House of Representatives, a bill or joint resolution, or
an amendment thereto or conference report thereon, that
transfers funds from the general fund of the Treasury to the
Highway Trust Fund shall be counted as new budget authority and
outlays equal to the amount of the transfer in the fiscal year
the transfer occurs.

SEC. 311. PROHIBITION ON USE OF FEDERAL RESERVE SURPLUSES AS AN OFFSET.

In the House of Representatives, any provision of a bill or
joint resolution, or amendment thereto or conference report
thereon, that transfers any portion of the net surplus of the
Federal Reserve System to the general fund of the Treasury
shall not be counted for purposes of enforcing the
Congressional Budget Act of 1974, this concurrent resolution,
or clause 10 of rule XXI of the Rules of the House of
Representatives.

SEC. 312. PROHIBITION ON USE OF GUARANTEE FEES AS AN OFFSET.

In the House of Representatives, any provision of a bill or
joint resolution, or amendment thereto or conference report
thereon, that increases, or extends the increase of, any
guarantee fees of the Federal National Mortgage Association
(Fannie Mae) or the Federal Home Loan Mortgage Corporation
(Freddie Mac) shall not be counted for purposes of enforcing
the Congressional Budget Act of 1974, this concurrent
resolution, or clause 10 of rule XXI of the Rules of the House
of Representatives.

Subtitle B--Other Provisions

SEC. 321. BUDGETARY TREATMENT OF ADMINISTRATIVE EXPENSES.

(a) In General.--In the House of Representatives,
notwithstanding section 302(a)(1) of the Congressional Budget
Act of 1974, section 13301 of the Budget Enforcement Act of
1990, and section 2009a of title 39, United States Code, the
report or the joint explanatory statement, as applicable,
accompanying this concurrent resolution shall include in its
allocation to the Committee on Appropriations under section
302(a) of the Congressional Budget Act of 1974 amounts for the
discretionary administrative expenses of the Social Security
Administration and the United States Postal Service.
(b) Special Rule.--In the House of Representatives, for
purposes of enforcing section 302(f) of the Congressional
Budget Act of 1974, estimates of the levels of total new budget
authority and total outlays provided by a measure shall include
any discretionary amounts described in subsection (a).

SEC. 322. APPLICATION AND EFFECT OF CHANGES IN ALLOCATIONS AND
AGGREGATES.

(a) Application.--In the House of Representatives, any
adjustments of the allocations, aggregates, and other budgetary
levels made pursuant to this concurrent resolution shall--
(1) apply while that measure is under consideration;
(2) take effect upon the enactment of that measure;
and
(3) be published in the Congressional Record as soon
as practicable.
(b) Effect of Changed Allocations and Aggregates.--Revised
allocations and aggregates resulting from these adjustments
shall be considered for the purposes of the Congressional
Budget Act of 1974 as the allocations and aggregates contained
in this concurrent resolution.
(c) Budget Committee Determinations.--For purposes of this
concurrent resolution, the budgetary levels for a fiscal year
or period of fiscal years shall be determined on the basis of
estimates made by the chair of the Committee on the Budget of
the House of Representatives.
(d) Aggregates, Allocations and Application.--In the House of
Representatives, for purposes of this concurrent resolution and
budget enforcement, the consideration of any bill or joint
resolution, or amendment thereto or conference report thereon,
for which the chair of the Committee on the Budget makes
adjustments or revisions in the allocations, aggregates, and
other budgetary levels of this concurrent resolution shall not
be subject to the points of order set forth in clause 10 of
rule XXI of the Rules of the House of Representatives or
section 301 of this concurrent resolution.
(e) Other Adjustments.--The chair of the Committee on the
Budget of the House of Representatives may adjust other
appropriate levels in this concurrent resolution depending on
congressional action on pending reconciliation legislation.

SEC. 323. ADJUSTMENTS TO REFLECT CHANGES IN CONCEPTS AND DEFINITIONS.

In the House of Representatives, the chair of the Committee
on the Budget may adjust the appropriate aggregates,
allocations, and other budgetary levels in this concurrent
resolution for any change in budgetary concepts and definitions
consistent with section 251(b)(1) of the Balanced Budget and
Emergency Deficit Control Act of 1985.

SEC. 324. ADJUSTMENT FOR CHANGES IN THE BASELINE.

In the House of Representatives, the chair of the Committee
on the Budget may adjust the allocations, aggregates,
reconciliation targets, and other appropriate budgetary levels
in this concurrent resolution to reflect changes resulting from
the Congressional Budget Office's update to its baseline for
fiscal years 2018 through 2027.

SEC. 325. APPLICATION OF RULE REGARDING LIMITS ON DISCRETIONARY
SPENDING.

Section 314(f) of the Congressional Budget Act of 1974 shall
not apply in the House of Representatives to any bill, joint
resolution, or amendment that provides new budget authority for
a fiscal year or to any conference report on any such bill or
resolution if--
(1) the enactment of that bill or resolution;
(2) the adoption and enactment of that amendment; or
(3) the enactment of that bill or resolution in the
form recommended in that conference report,
would not cause the 302(a) allocation to the Committee on
Appropriations for fiscal year 2018 to be exceeded.

SEC. 326. EXERCISE OF RULEMAKING POWERS.

The House of Representatives adopts the provisions of this
title and title II--
(1) as an exercise of the rulemaking power of the
House of Representatives, and as such they shall be
considered as part of the rules of the House of
Representatives, and such rules shall supersede other
rules only to the extent that they are inconsistent
with such other rules; and
(2) with full recognition of the constitutional right
of the House of Representatives to change those rules
at any time, in the same manner, and to the same extent
as is the case of any other rule of the House of
Representatives.

TITLE IV--RESERVE FUNDS IN THE HOUSE OF REPRESENTATIVES

SEC. 401. RESERVE FUND FOR COMMERCIALIZATION OF AIR TRAFFIC CONTROL.

(a) In General.--In the House of Representatives, the chair
of the Committee on the Budget may adjust, at a time the chair
deems appropriate, the section 302(a) allocation to the
Committee on Transportation and Infrastructure and other
applicable committees of the House of Representatives,
aggregates, and other appropriate levels established in this
concurrent resolution for a bill or joint resolution, or
amendment thereto or conference report thereon, that
commercializes the operations of the air traffic control system
if such measure reduces the discretionary spending limits in
section 251(c) of the Balanced Budget and Emergency Deficit
Control Act of 1985 by the amount that would otherwise be
appropriated to the Federal Aviation Administration for air
traffic control. Adjustments to the section 302(a) allocation
to the Committee on Appropriations, consistent with the
adjustments to the discretionary spending limits under such
section 251(c), shall only be made upon enactment of such
measure.
(b) Definition.--For purposes of this section, a measure that
commercializes the operations of the air traffic control system
shall be a measure that establishes a Federally-chartered, not-
for-profit corporation that--
(1) is authorized to provide air traffic control
services within the United States airspace;
(2) sets user fees to finance its operations;
(3) may borrow from private capital markets to
finance improvements;
(4) is governed by a board of directors composed of a
CEO and directors whose fiduciary duty is to the
entity; and
(5) becomes the employer of those employees directly
connected to providing air traffic control services and
who the Secretary transfers from the Federal
Government.

SEC. 402. RESERVE FUND FOR INVESTMENTS IN NATIONAL INFRASTRUCTURE.

In the House of Representatives, the chair of the Committee
on the Budget may adjust the allocations, aggregates, and other
appropriate levels in this concurrent resolution for any bill
or joint resolution, or amendment thereto or conference report
thereon, that invests in national infrastructure to the extent
that such measure is deficit neutral for the total of fiscal
years 2018 through 2027.

SEC. 403. RESERVE FUND FOR COMPREHENSIVE TAX REFORM.

In the House of Representatives, if the Committee on Ways and
Means reports a bill or joint resolution that provides for
comprehensive tax reform, the chair of the Committee on the
Budget may adjust the allocations, aggregates, and other
appropriate budgetary levels in this concurrent resolution for
the budgetary effects of any such bill or joint resolution, or
amendment thereto or conference report thereon, if such measure
would not increase the deficit for the total of fiscal years
2018 through 2027.

SEC. 404. RESERVE FUND FOR THE STATE CHILDREN'S HEALTH INSURANCE
PROGRAM.

In the House of Representatives, the chair of the Committee
on the Budget may adjust the allocations, budget aggregates and
other appropriate levels in this concurrent resolution for the
budgetary effects of any bill or joint resolution, or amendment
thereto or conference report thereon, that extends the State
Children's Health Insurance Program allotments, if such measure
would not increase the deficit for the total of fiscal years
2018 through 2027.

SEC. 405. RESERVE FUND FOR THE REPEAL OR REPLACEMENT OF PRESIDENT
OBAMA'S HEALTH CARE LAWS.

In the House of Representatives, the chair of the Committee
on the Budget may revise the allocations, aggregates, and other
appropriate budgetary levels in this concurrent resolution for
the budgetary effects of any bill or joint resolution, or
amendment thereto or conference report thereon, that repeals or
replaces any provision of the Patient Protection and Affordable
Care Act or title I or subtitle B of title II of the Health
Care and Education Reconciliation Act of 2010 by the amount of
budget authority and outlays flowing therefrom provided by such
measure for such purpose.

TITLE V--POLICY STATEMENTS IN THE HOUSE OF REPRESENTATIVES

SEC. 501. POLICY STATEMENT ON A BALANCED BUDGET AMENDMENT.

(a) Findings.--The House finds the following:
(1) In fiscal year 2017, the Federal Government will
collect approximately $3.3 trillion in taxes, but spend
more than $4.0 trillion to maintain its operations,
borrowing 15 cents of every Federal dollar spent.
(2) At the end of fiscal year 2016, the national debt
of the United States was more than $19.5 trillion.
(3) A majority of States have petitioned the Federal
Government to hold a constitutional convention to adopt
a balanced budget amendment to the Constitution.
(4) As of the spring of 2016, 46 States have
requirements to annually balance their respective
budgets.
(5) Numerous balanced budget amendment proposals have
been introduced on a bipartisan basis in the House.
Currently in the 115th Congress, 8 joint resolutions
proposing a balanced budget amendment have been
introduced.
(6) In the 111th Congress, the House considered H. J.
Res. 2, sponsored by Representative Robert W. Goodlatte
of Virginia. Although it received 262 aye votes, it did
not receive the two-thirds required for passage.
(7) In 1995, a balanced budget amendment to the
Constitution passed the House with bipartisan support,
but failed to pass by one vote in the United States
Senate.
(8) Five States, Georgia, Alaska, Mississippi, North
Dakota, and Arizona, have agreed to the Compact for a
Balanced Budget, which seeks to amend the Constitution
to require a balanced budget through an Article V
convention by April 12, 2021.
(b) Policy on a Balanced Budget Constitutional Amendment.--It
is the policy of this concurrent resolution that the House
should propose a balanced budget constitutional amendment for
ratification by the States.

SEC. 502. POLICY STATEMENT ON BUDGET PROCESS REFORM.

It is the policy of this concurrent resolution that the House
should enact legislation that reforms the congressional budget
process to--
(1) reassert congressional control over the budget
process by reorienting the Views and Estimates that
committees submit to the Committee on the Budget, as
required under 301(d) of the Congressional Budget Act
of 1974, to emphasize congressional rather than
executive branch priorities;
(2) strengthen enforcement of budgetary rules and
requirements by--
(A) enabling Members of the House of
Representatives to enforce budget requirements
in a manner that does not jeopardize the
ability of the majority to work its will on
legislation; and
(B) permitting members of Congress to
determine whether emergency-designated
appropriations are for unanticipated situations
that pose a threat to life, property, or
national security;
(3) increase control over the costs of Federal
activities by--
(A) incorporating debt service costs into
cost estimates prepared by the Congressional
Budget Office;
(B) establishing a process for setting limits
on the amount of debt incurred by the Federal
Government from the private sector as a share
of the economy that requires congressional
action if such limits deviate from those
previously determined by Congress and the
President;
(C) transitioning to fair-value accounting;
(D) budgeting for Federal insurance programs
on an accrual basis; and
(E) developing and implementing a regulatory
budget as provided in section 503;
(4) achieve greater control over mandatory spending
by reforming reconciliation procedures and requirements
to ensure they are transparent, objectively applied,
and maximize opportunities for deficit reduction;
(5) increase the efficiency of the congressional
budget process by--
(A) realigning the budget cycle with the
calendar year and the congressional calendar;
(B) simplifying the procedures by which the
Committee on Appropriations adjusts its section
302(b) suballocations to ensure they are
consistent with the Committee's overall section
302(a) allocation; and
(C) increasing congressional accountability
for budget decisions;
(6) improve the transparency of the Federal
Government's obligations by--
(A) modifying the content of the budget
resolution to reflect the budgetary decisions
that Congress actually makes and enforces;
(B) requiring the Comptroller General to
periodically report to Congress on the
consolidated financial report of the Federal
Government; and
(C) restructuring the baseline, as set forth
in section 257 of the Balanced Budget and
Emergency Deficit Control Act of 1985, to treat
mandatory spending and revenue on a comparable
basis; and
(7) achieve control over long-term budget obligations
by--
(A) establishing declining limits on the
amount of debt incurred by the Federal
Government from the private sector as a share
of the economy that requires congressional
action if such limits deviate from those
previously determined by Congress and the
President; and
(B) codifying limits on the amount
legislation can increase the deficit beyond the
ten fiscal-year period of the concurrent
resolution on the budget.

SEC. 503. POLICY STATEMENT ON FEDERAL REGULATORY BUDGETING AND REFORM.

(a) Findings.--The House finds the following:
(1) Federal regulations are estimated to cost $1.9
trillion per year or approximately $15,000 per
household. Such costs exceed 10 percent of the Gross
Domestic Product of the United States.
(2) Excessive Federal regulation--
(A) retards job creation, investment, wages,
competition, and economic growth, slowing the
Nation's recovery from economic recession and
harming American households;
(B) operates as a regressive tax on poor and
lower-income households;
(C) displaces workers into long-term
unemployment or lower-paying jobs;
(D) adversely affects small businesses, the
primary source of new jobs; and
(E) impedes the economic growth necessary to
provide sufficient funds to meet vital
commitments and reduce the Federal debt.
(3) Federal agencies do not systematically analyze
both the costs and benefits of new regulations or
identify and eliminate, minimize, or mitigate excess
regulatory costs through post-implementation
assessments of their regulations.
(4) Agencies too often impose costly regulations
without relying on sound science, through the use of
agency guidance, judicial consent decrees, and
settlement agreements, and through the abuse of high
interim compliance costs imposed on regulated entities
that bring legal challenges against newly promulgated
regulations.
(5) Congress lacks an effective mechanism to manage
the level of new Federal regulatory costs imposed each
year. Other nations, meanwhile, have successfully
implemented the use of regulatory budgeting to control
excess regulation and regulatory costs.
(6) Significant steps have been taken already by
President Trump and the 115th Congress, including the
imposition of a regulatory pay-as-you-go regimen for
new and revised regulations by the Trump Administration
and the enactment of 14 measures under the
Congressional Review Act that repealed regulations
promulgated in the final 60 legislative days of the
114th Congress.
(b) Policy on Federal Regulatory Budgeting and Reform.--It is
the policy of this concurrent resolution that the House should,
in consultation with the public, consider legislation that--
(1) requires the President's budget submission to
include an analysis of the costs of complying with
current and proposed regulations;
(2) builds the institutional capacity of the
Congressional Budget Office to develop a regulatory
baseline and estimate regulatory costs;
(3) codifies the Trump Administration's regulatory
pay-as-you-go requirements, which require agencies to
offset the costs of new or revised regulations with the
repeal or modification of existing regulations; and
(4) requires Federal agencies to give notice and
allow for comments on proposed guidance documents.

SEC. 504. POLICY STATEMENT ON UNAUTHORIZED APPROPRIATIONS.

(a) Findings.--The House finds the following:
(1) Article I of the Constitution vests all
legislative power in Congress.
(2) Central to the legislative powers of Congress is
the authorization of appropriations necessary to
execute the laws that establish agencies and programs
and impose obligations.
(3) Clause 2 of rule XXI of the Rules of the House of
Representatives prohibits the consideration of
appropriations measures that provide appropriations for
unauthorized programs.
(4) In fiscal year 2016, more than $310 billion was
appropriated for unauthorized programs, spanning 256
separate laws.
(5) Agencies such as the Department of State have not
been authorized for 15 years.
(6) The House adopted a requirement for the 115th
Congress, as part of H. Res. 5, that requires each
standing committee of the House to adopt an
authorization and oversight plan that enumerates all
unauthorized programs and agencies within its
jurisdiction that received funding in the prior year,
among other oversight requirements.
(b) Policy on Unauthorized Appropriations.--In the House, it
is the policy of this concurrent resolution that legislation
should be enacted that--
(1) establishes a schedule for reauthorizing all
Federal programs on a staggered five-year basis
together with declining spending targets for each year
a program is not reauthorized according to such
schedule;
(2) prohibits the consideration of appropriations
measures in the House that provide appropriations in
excess of spending targets specified for such measures
and ensures that such rule should be strictly enforced;
and
(3) limits funding for non-defense or non-security-
related Federal programs that are not reauthorized
according the schedule described in paragraph (1).

SEC. 505. POLICY STATEMENT ON FEDERAL ACCOUNTING.

(a) Findings.--The House finds the following:
(1) Current accounting methods fail to capture and
present in a compelling manner the full scope of the
Federal Government and its fiscal condition.
(2) Most fiscal analyses produced by the
Congressional Budget Office (CBO) are conducted over a
10-fiscal year period. The use of generational
accounting or a longer time horizon would provide a
more complete picture of the Federal Government's
fiscal condition.
(3) The Federal budget currently accounts for most
programs on a cash accounting basis, which records
revenue and expenses when cash is actually paid or
received. However, it accounts for loan and loan
guarantee programs on an accrual basis, which records
revenue when earned and expenses when incurred.
(4) The Government Accountability Office has advised
that accrual accounting may be more accurate than cash
accounting in estimating the Federal Government's
liabilities for insurance and other programs.
(5) Accrual accounting under the Federal Credit
Reform Act of 1990 (FCRA) understates the risk and thus
the true cost of some Federal programs, including loans
and loan guarantees.
(6) Fair-value accounting better reflects the risk
associated with Federal loan and loan guarantee
programs by using a market based discount rate. CBO,
for example, uses fair-value accounting to measure the
cost of the Federal National Mortgage Association
(Fannie Mae) and the Federal Home Loan Mortgage
Corporation (Freddie Mac).
(7) In comparing fair-value accounting to FCRA, CBO
has concluded that ``adopting a fair-value approach
would provide a more comprehensive way to measure the
costs of Federal credit programs and would permit more
level comparisons between those costs and the costs of
other forms of Federal assistance''.
(8) The Department of the Treasury, when reporting
the principal financial statements of the United States
entitled Balance Sheet and Statement of Operations and
Changes in Net Position, may omit some of the largest
projected Federal Government expenses, including social
insurance programs. The projected expenses of these
programs are reported by the Department in its
Statements of Social Insurance and Changes in Social
Insurance Amounts.
(9) This concurrent resolution directs CBO to
estimate the costs of Federal credit programs on a
fair-value basis to fully capture the risk associated
with these programs.
(b) Policy on Federal Accounting Methodologies.--It is the
policy of this concurrent resolution that the House should, in
consultation with CBO and other appropriate stakeholders,
reform government-wide budget and accounting practices so
Members and the public can better understand the fiscal
condition of the United States and the best options to improve
it. Such reforms may include the following:
(1) Providing additional metrics to enhance analysis
by considering the Nation's fiscal condition
comprehensively, over an extended time period, and how
it affects Americans of various age cohorts.
(2) Expanding the use of accrual accounting where
appropriate.
(3) Accounting for certain Federal credit programs
using fair-value accounting to better capture market
risk.

SEC. 506. POLICY STATEMENT ON COMMISSION ON BUDGET CONCEPTS.

(a) Findings.--The Congress finds the following:
(1) In 1965, the President's Commission on Budget
Concepts made a series of recommendations that were
adopted and continue to provide the foundation for the
Federal budget process.
(2) Over the ensuing 52 years, the Federal budget
process has undergone major transformations, including
the following:
(A) Congress asserted its Article I ``power
of the purse'' through the Congressional Budget
Act of 1974 in the form of a congressional
budget process predicated on the adoption of an
annual budget resolution setting forth its
priorities independent of the executive branch.
(B) Congress and the President have
periodically augmented the President's budget
submission and the budget resolution by
establishing statutory budget rules and limits
enforced through sequestration.
(C) The share of Federal spending that is not
controlled through the annual appropriations
process has ballooned from 32 percent of total
Federal spending in 1967 to 69 percent in 2016.
(D) Activities previously considered the
exclusive domain of the Federal Government have
been fully commercialized, contracted out to
the private sector, financed through third
party arrangements, or devolved to State and
local governments.
(E) Key functions of the Federal Government
are now funded through user fees rather than
general revenue, often shielding them from
congressional control and oversight.
(F) The Credit Reform Act of 1990 placed
Federal loans and loan guarantees on an accrual
basis.
(G) Increasing shares of the economy are
directed towards compliance with Federal
regulations, which are not subject to the
limitations applicable to Federal spending.
(b) Policy on Commission on Budget Concepts.--It is the
policy of this concurrent resolution on the budget that
legislation should be enacted that establishes a Commission on
Budget Concepts to review and revise budget concepts and make
recommendations to create a more transparent Federal budget
process.

SEC. 507. POLICY STATEMENT ON BUDGET ENFORCEMENT.

It is the policy of this concurrent resolution that the House
should--
(1) adopt an annual budget resolution before spending
and tax legislation is considered in either House of
Congress;
(2) assess measures for timely compliance with budget
rules in the House;
(3) pass legislation to strengthen enforcement of the
budget resolution;
(4) comply with the discretionary spending limits set
forth in the Balanced Budget and Emergency Deficit
Control Act of 1985;
(5) prevent the use of accounting gimmicks to offset
higher spending;
(6) modify scoring conventions to encourage the
commercialization of Federal Government activities that
can best be provided by the private sector; and
(7) discourage the use of savings identified in the
budget resolution as offsets for spending or tax
legislation.

SEC. 508. POLICY STATEMENT ON IMPROPER PAYMENTS.

(a) Findings.--The House finds the following:
(1) The Government Accountability Office defines
improper payments as any reported payment that should
not have been made or was made in an incorrect amount.
(2) Improper payments totaled $1.2 trillion between
fiscal years 2003 and 2016 with a reported Federal
Government-wide error rate of 5.1 percent in fiscal
year 2016.
(3) Improper payments increased from $107 billion in
2012 to $144 billion in 2016.
(4) The Earned Income Tax Credit, Medicare, and
Medicaid account for 78 percent of total improper
payments, with error rates of 24 percent, 11 percent,
and 10.5 percent, respectively.
(5) Eight agencies did not report payment estimates
for 18 programs that the Comptroller General deems
susceptible to significant improper payments.
(b) Policy on Improper Payments.--It is the policy of this
concurrent resolution that an independent commission should be
established with the goal of finding tangible solutions to
reduce total improper payments by 50 percent within the next 5
years. The commission should also develop a more-stringent
system of agency oversight to achieve this goal.

SEC. 509. POLICY STATEMENT ON EXPENDITURES FROM AGENCY FEES AND
SPENDING.

(a) Findings.--The House finds the following:
(1) Many Federal agencies and organizations have
permanent authority to collect and spend fees and other
offsetting collections.
(2) The Office of Management and Budget estimates the
total amount of offsetting fees and collections to be
$513 billion in fiscal year 2017.
(3) Agency budget justifications are, in some cases,
not fully transparent about the amount of program
activity funded through offsetting collections or fees.
This lack of transparency prevents effective and
accountable Government.
(b) Policy on Expenditures From Agency Fees and Spending.--It
is the policy of this concurrent resolution that the House
should reassert its constitutional prerogative to control
Federal spending and exercise rigorous oversight over Federal
agencies. Congress should subject all fees paid by the public
to Federal agencies to annual appropriations or authorizing
legislation and a share of these proceeds should be reserved
for taxpayers in the form of deficit reduction.

SEC. 510. POLICY STATEMENT ON PROMOTING REAL HEALTH CARE REFORM.

(a) Findings.--The House finds the following:
(1) Patient-centered health care increases access to
quality care for all Americans, regardless of age,
income, or health status.
(2) States are best equipped to respond to the needs
of their unique communities.
(3) The current legal framework encourages frivolous
medical malpractice lawsuits that increase health care
costs.
(b) Policy on Health Care Regulation.--It is the policy of
this concurrent resolution that--
(1) the American health care system should encourage
research, development, and innovation in the medical
sector, rather than stymie growth through over-
regulation;
(2) States should determine the parameters of
acceptable private insurance plans based on the needs
of their populations and retain control over other
health care coverage standards;
(3) reforms should protect patients with pre-existing
conditions, reward those who maintain continuous health
coverage, and create greater parity between benefits
offered through employers and those offered
independently;
(4) States should have greater flexibility in
designing their Medicaid program and State Children's
Health Insurance Program;
(5) medical malpractice reform should emphasize
compliance with best practice guidelines, while
continuing to protect patients' interests; and
(6) States should have the flexibility to implement
medical liability policies to best suit their needs.

SEC. 511. POLICY STATEMENT ON MEDICARE.

(a) Findings.--The House finds the following:
(1) More than 57 million Americans depend on Medicare
for their health security.
(2) The Medicare Trustees Report has repeatedly
recommended that Congress address Medicare's long-term
financial challenges. Each year without reform, the
financial condition of Medicare becomes more precarious
and the threat to those in or near retirement more
pronounced. The current challenges that Congress will
need to address include--
(A) the Hospital Insurance Trust Fund will be
exhausted in 2029 and unable to pay the
scheduled benefits;
(B) Medicare enrollment is expected to
increase more than 50 percent in the next two
decades, as 10,000 baby boomers reach
retirement age each day;
(C) due to extended life spans, enrollees
remain in Medicare three times longer than at
the outset of the program five decades ago;
(D) notwithstanding the program's trust fund
arrangement, current workers' payroll tax
contributions pay for current Medicare
beneficiaries instead of being set aside for
their own future use;
(E) the number of workers supporting each
beneficiary continues to fall; in 1965, the
ratio was 4.5 workers per beneficiary, and by
2030, the ratio will be only 2.4 workers per
beneficiary;
(F) the average Medicare beneficiary receives
about three dollars in Medicare benefits for
every dollar paid into the program;
(G) Medicare is growing faster than the
economy, with a projected growth rate of 7.2
percent per year on average through 2026,
peaking in 2026 at 9.2 percent; and
(H) by 2027, Medicare spending will reach
more than $1.4 trillion, more than double the
2016 spending level of $692 billion.
(3) Failing to address the impending insolvency of
Medicare will leave millions of American seniors
without adequate health security and younger
generations burdened with having to pay for these
unsustainable spending levels.
(b) Policy on Medicare Reform.--It is the policy of this
concurrent resolution to save Medicare for those in or near
retirement and to strengthen the program's solvency for future
beneficiaries.
(c) Assumptions.--This concurrent resolution assumes
transition to an improved Medicare program that ensures--
(1) Medicare is preserved for current and future
beneficiaries;
(2) future Medicare beneficiaries may select from
competing guaranteed health coverage options a plan
that best suits their needs;
(3) traditional fee-for-service Medicare remains a
plan option;
(4) Medicare provides additional assistance for
lower-income beneficiaries and those with greater
health risks; and
(5) Medicare spending is put on a sustainable path
and becomes solvent over the long term.

SEC. 512. POLICY STATEMENT ON COMBATING THE OPIOID EPIDEMIC.

(a) Findings.--The House finds the following:
(1) According to the Centers for Disease Control and
Prevention (CDC), 91 Americans die each day from an
opioid overdose.
(2) Nearly half of all opioid overdose deaths involve
a prescription opioid.
(3) Since 1999, the number of prescription opioids
sold in the U.S. has nearly quadrupled.
(4) Since 1999, the number of deaths from
prescription opioids has more than quadrupled.
(5) The CDC asserts that improving opioid prescribing
practices will reduce exposure to opioids, prevent
abuse, and stop addiction.
(6) The CDC has found that individuals in rural
counties are almost twice as likely to overdose on
prescription painkillers as those in urban areas.
(7) According to the CDC, nearly 7,000 people are
treated in emergency rooms every day for using opioids
in a non-approved manner.
(8) The 21st Century Cures Act and the Comprehensive
Addiction and Recovery Act were signed into law in the
114th Congress in an overwhelming display of
congressional and executive branch support in the fight
against the opioid epidemic.
(9) Bipartisan efforts to eliminate opioid abuse and
provide relief from addiction for all Americans should
continue.
(b) Policy on Opioid Abuse.--It is the policy of this
concurrent resolution that--
(1) combating opioid abuse using available budgetary
resources remains a high priority;
(2) the House, in a bipartisan manner, should
continue to examine the Federal response to the opioid
abuse epidemic and support essential activities to
reduce and prevent substance abuse;
(3) the House should continue to support initiatives
included in the 21st Century Cures Act and the
Comprehensive Addiction and Recovery Act;
(4) the House should continue its oversight efforts,
particularly ongoing investigations conducted by the
House Committee on Energy and Commerce, to ensure that
taxpayer dollars intended to combat opioid abuse are
spent appropriately and efficiently; and
(5) the House should collaborate with State, local,
and tribal entities to develop a comprehensive strategy
for addressing the opioid addiction crisis.

SEC. 513. POLICY STATEMENT ON THE STATE CHILDREN'S HEALTH INSURANCE
PROGRAM.

(a) Findings.--The House finds the following:
(1) The State Children's Health Insurance Program
(SCHIP) is a means-tested program that provides health
insurance coverage to low-income children and pregnant
women who do not qualify for Medicaid based on income.
(2) SCHIP eligibility varies by State, as States
decide the income upper limit for beneficiaries; the
current upper limit varies from 175 percent of the
Federal poverty level to 405 percent of the Federal
poverty level.
(3) SCHIP covered on average 6.3 million people
monthly in fiscal year 2017.
(4) The average cost of a child enrolled in SCHIP to
the Federal Government was approximately $2,300 in
fiscal year 2017, compared to approximately $1,910 for
a child enrolled in Medicaid.
(5) The Federal spending allotment for SCHIP will
expire at the end of fiscal year 2017.
(6) The Medicaid and CHIP Payment and Access
Commission recommends an extension of Federal SCHIP
funding, and warns that all States are projected to
exhaust their Federal SCHIP funds during fiscal year
2018.
(7) SCHIP should be preserved to assist the Nation's
vulnerable children.
(b) Policy on the State Children's Health Insurance
Program.--It is the policy of this concurrent resolution that--
(1) the House should work in a bipartisan manner to
reauthorize SCHIP funding;
(2) the authorizing committees should consider
establishing a Federal upper limit for SCHIP
eligibility, rather than providing open-ended access to
the program for those at higher income levels;
(3) the House should target resources designated for
SCHIP toward those most in need of Federal assistance;
and
(4) the House should require greater reporting by
States of SCHIP data in order to better structure the
program to meet beneficiaries' needs.

SEC. 514. POLICY STATEMENT ON MEDICAL DISCOVERY, DEVELOPMENT, DELIVERY,
AND INNOVATION.

(a) Findings.--The House finds the following:
(1) The Nation's commitment to the discovery,
development, and delivery of new treatments and cures
has made the United States the biomedical innovation
capital of the world for decades.
(2) The history of scientific discovery and medical
breakthroughs in the United States is extensive,
including the creation of the polio vaccine, the first
genetic mapping, and the invention of the implantable
cardiac pacemaker.
(3) Reuters ranks the United States Health and Human
Services Laboratories as first in the world for
innovation on its 2017 list of the Top 25 Global
Innovators.
(4) The United States leads the world in the
production of medical devices, and the United States
medical device market accounts for approximately 45
percent of the global market.
(5) The United States remains a global leader in
pharmaceutical research and development investment, has
produced more than half of the world's new molecules in
the past decade, and represents the world's largest
pharmaceutical market, which is triple the size of the
nearest rival, China.
(b) Policy on Medical Innovation.--It is the policy of this
concurrent resolution that--
(1) the Federal Government should foster investment
in health care innovation and maintain the Nation's
world leadership status in medical science by
encouraging competition;
(2) the House should continue to support the critical
work of medical innovators throughout the country
through continued funding for agencies, including the
National Institutes of Health and the Centers for
Disease Control and Prevention, to conduct life-saving
research and development; and
(3) the Federal Government should unleash the power
of private-sector medical innovation by removing
regulatory obstacles that impede the adoption of new
medical technology and pharmaceuticals.

SEC. 515. POLICY STATEMENT ON PUBLIC HEALTH PREPAREDNESS.

(a) Findings.--The House finds the following:
(1) The Constitution requires the Federal Government
to provide for the common defense. As such, the Nation
must prioritize its ability to respond rapidly and
effectively to a public health crisis or bioterrorism
threat.
(2) There is a persistent threat of bioterrorism
against American lives.
(3) Naturally-occurring public health threats can
spread through the transmission of communicable
diseases during international trade and travel.
(4) As of April 3, 2016, the World Health
Organization reported nearly 29,000 cases of the Ebola
virus worldwide, including 4 instances in the U.S.
(5) As of July 12, 2017, the Centers for Disease
Control and Prevention (CDC) reports that the current
Zika epidemic resulted in over 5,000 cases of the Zika
virus within the United States, with nearly 37,000 more
cases reported in U.S. territories.
(6) Preventing the spread of disease to Americans
requires halting threats before they breach the U.S.
border.
(7) The United States is a leader in global public
health assistance and orchestrates international
responses to health crises.
(b) Policy on Public Health Preparedness.--It is the policy
of this concurrent resolution that--
(1) the House should continue to fund activities of
the CDC, the National Institutes of Health, and the
Biomedical Advanced Research and Development Authority
to develop and stockpile medical countermeasures to
infectious diseases and chemical, biological,
radiological, and nuclear agents;
(2) the House should, within available budgetary
resources, provide continued support for research,
prevention, and public health preparedness programs;
(3) the Federal Government should encourage private-
sector development of critical vaccines and other
medical countermeasures to emerging public health
threats; and
(4) the Secretary of Health and Human Services, the
Secretary of Defense, and the Secretary of State should
collaborate on global health preparedness initiatives
to prevent overlap and promote responsible stewardship
of taxpayer resources.

SEC. 516. POLICY STATEMENT ON SOCIAL SECURITY.

(a) Findings.--The House finds the following:
(1) More than 60 million retirees, individuals with
disabilities, and survivors depend on Social Security.
Since enactment, Social Security has served as a vital
leg of the ``three-legged stool'' of retirement
security, which includes employer provided pensions as
well as personal savings.
(2) Lower-income Americans rely on Social Security
for a larger proportion of their retirement income.
Therefore, reforms should take into consideration the
need to protect lower income Americans' retirement
security.
(3) The Social Security Trustees Report has
repeatedly recommended that Social Security's long-term
financial challenges be addressed soon. The financial
condition of Social Security and the threat to seniors
and those receiving Social Security disability benefits
becomes more pronounced each year without reform. For
example--
(A) in 2028, the Disability Insurance Trust
Fund will be exhausted and program revenues
will be unable to pay scheduled benefits; and
(B) with the exhaustion of both the
Disability Insurance Trust Fund and the Old-Age
and Survivors and Disability Trust Fund in
2035, benefits will be cut by as much as 25
percent across the board, devastating those
currently in or near retirement and those who
rely on Social Security the most.
(4) The recession and continued low economic growth
have exacerbated the looming fiscal crisis facing
Social Security. The most recent Congressional Budget
Office (CBO) projections find that Social Security will
run cash deficits of more than $1.3 trillion over the
next 10 years.
(5) The Disability Insurance program provides an
essential income safety net for those with disabilities
and their families. According to CBO, between 1970 and
2015 the number of disabled workers and their dependent
family members receiving disability benefits has
increased by more than 300 percent from 2.7 million to
over 10.9 million. This increase is not due strictly to
population growth or decreases in health. CBO also
attributes program growth to changes in demographics
and the composition of the labor force as well as
Federal policies.
(6) In the past, Social Security has been reformed on
a bipartisan basis, most notably by the ``Greenspan
Commission'', which helped address Social Security
shortfalls for more than a generation.
(7) Americans deserve action by the President and
Congress to preserve and strengthen Social Security to
ensure that Social Security remains a critical part of
the safety net.
(b) Policy on Social Security.--It is the policy of this
concurrent resolution that the House should work in a
bipartisan manner to make Social Security solvent on a
sustainable basis. This concurrent resolution assumes, under a
reform trigger, that--
(1) if in any year the Board of Trustees of the
Federal Old-Age and Survivors Insurance Trust Fund and
the Federal Disability Insurance Trust Fund annual
Trustees Report determines that the 75-year actuarial
balance of the Social Security Trust Funds is in
deficit, and the annual balance of the Social Security
Trust Funds in the 75th year is in deficit, the Board
of Trustees should, no later than September 30 of the
same calendar year, submit to the President
recommendations for statutory reforms necessary to
achieve a positive 75-year actuarial balance and a
positive annual balance in the 75th year, and any
recommendations provided to the President must be
agreed upon by both Public Trustees of the Board of
Trustees;
(2) not later than December 1 of the same calendar
year in which the Board of Trustees submit its
recommendations, the President should promptly submit
implementing legislation to both Houses of Congress
including recommendations necessary to achieve a
positive 75-year actuarial balance and a positive
annual balance in the 75th year, and the majority
leader of the Senate and the majority leader of the
House should introduce the President's legislation upon
receipt;
(3) within 60 days of the President submitting
legislation, the committees of jurisdiction should
report a bill, which the House or Senate should
consider under expedited procedures; and
(4) legislation submitted by the President should--
(A) protect those in or near retirement;
(B) preserve the safety net for those who
count on Social Security the most, including
those with disabilities and survivors;
(C) improve fairness for participants;
(D) reduce the burden on and provide
certainty for future generations; and
(E) secure the future of the Disability
Insurance program while addressing the needs of
those with disabilities today and improving the
determination process.
(c) Policy on Disability Insurance.--It is the policy of this
concurrent resolution that the House should consider
legislation on a bipartisan basis to reform the Disability
Insurance program prior to its insolvency in 2028 and should
not raid the Social Security retirement system without reforms
to the Disability Insurance system. This concurrent resolution
assumes reform that--
(1) promotes opportunity for those trying to return
to work;
(2) ensures benefits continue to be paid to
individuals with disabilities and their family members
who rely on them;
(3) prevents a 7 percent across-the-board benefit
cut; and
(4) improves the Disability Insurance program.
(d) Policy on Social Security Solvency.--It is the policy of
this concurrent resolution that any legislation the House
considers to improve the solvency of the Disability Insurance
Trust Fund must also improve the long-term solvency of the
combined Old Age and Survivors Disability Insurance Trust Fund.

SEC. 517. POLICY STATEMENT ON MEDICAID WORK REQUIREMENTS.

(a) Findings.--The House finds the following:
(1) Medicaid is a Federal-State program that provides
health care coverage for impoverished Americans.
(2) Medicaid serves four major population categories:
the elderly, the blind and disabled, children, and
adults.
(3) The Congressional Budget Office projects the
average monthly enrollment in Medicaid for fiscal year
2018 to be 78 million people.
(4) Of this 78 million people, 27 million - more than
one third of the enrollees - are non-elderly, non-
disabled adults.
(5) Medicaid continues to grow at an unsustainable
rate, and will cost approximately one trillion dollars
per year within the decade, between Federal and State
spending.
(6) Congress has a responsibility to preserve limited
Medicaid resources for America's most vulnerable -
those who cannot provide for themselves.
(7) Forbes reported last year on a first-of-its-kind
study conducted by the Foundation for Government
Accountability. It analyzed data from the State of
Kansas, which demonstrates that work requirements have
led to greater employment, higher incomes, and less
poverty.
(8) The State of Maine implemented work requirements
in 2014, and saw incomes rise for able-bodied welfare
recipients by an average of 114 percent within a year.
(9) Work is a valuable source of human dignity, and
work requirements help lift Americans out of poverty by
incentivizing self-reliance.
(b) Policy on Medicaid Work Requirements.--It is the policy
of this concurrent resolution that--
(1) Congress should enact legislation that encourages
able-bodied, non-elderly, non-pregnant adults without
dependents to work, actively seek work, participate in
a job-training program, or do community service, in
order to receive Medicaid;
(2) Medicaid work requirements legislation could
include 30 hours per week of work, of which 20 of those
hours should be spent in the core activities of: public
or private sector employment, work experience, on-the-
job training, job-search or job-readiness assistance
program participation, community service, or vocational
training and education;
(3) States should be given flexibility to determine
the parameters of qualifying program participation and
work-equivalent experience;
(4) States should perform regular case checks to
ensure taxpayer dollars are appropriately spent; and
(5) the Government Accountability Office or the
Department of Health and Human Services Inspector
General should conduct annual audits of State Medicaid
programs to ensure proper reporting and prevent waste,
fraud, and abuse.

SEC. 518. POLICY STATEMENT ON WELFARE REFORM AND SUPPLEMENTAL NUTRITION
ASSISTANCE PROGRAM WORK REQUIREMENTS.

(a) Findings.--The House finds the following:
(1) Participation in the Supplemental Nutrition
Assistance Program (SNAP) has grown from 17 million
Americans in 2001 to 44 million in 2016.
(2) The work support role of SNAP has declined, and
the program increasingly serves as a replacement to
work.
(3) Work requirements were key to the success of the
Personal Responsibility and Work Opportunity Act
(Public Law 104-193), which led to a two-thirds
reduction in welfare caseloads, a reduction in child
poverty, and an increase in work participation. The
successful 1996 welfare reform law provides a model for
improving work requirements in other anti-poverty
programs.
(b) Policy on Welfare Reform and SNAP Work Requirements.--It
is the policy of this concurrent resolution that--
(1) the welfare system should reward work, provide
tools to escape poverty, and expect work-capable adults
to work or prepare for work in exchange for welfare
benefits; and
(2) SNAP should be reformed to improve work
requirements to help more people escape poverty and
move up the economic ladder.

SEC. 519. POLICY STATEMENT ON STATE FLEXIBILITY IN SUPPLEMENTAL
NUTRITION ASSISTANCE PROGRAM.

(a) Findings.--The House finds the following:
(1) Spending on Supplemental Nutrition Assistance
Program (SNAP) has almost quadrupled since 2001.
(2) Various factors are driving this growth, but one
major reason is that while States have the
responsibility of administering the program, they have
little incentive to ensure it is well run.
(3) In 1996, a Republican Congress and a Democratic
President reformed welfare by limiting the duration of
benefits, giving States more control over the program,
and helping recipients find work. In the 5 years
following passage, child-poverty rates fell, welfare
caseloads fell, and workers' wages increased. This
bipartisan success offers a model for improving other
anti-poverty programs.
(b) Policy on State Flexibility in SNAP.--It is the policy of
this concurrent resolution that SNAP should be reformed to
reduce poverty and increase opportunity and upward mobility for
struggling Americans on the road to personal and financial
independence. Based on the successful welfare reforms of the
1990s, these proposals would improve work requirements and
provide flexible funding for States to help those most in need
find gainful employment, escape poverty, and move up the
economic ladder.

SEC. 520. POLICY STATEMENT ON HIGHER EDUCATION AND WORKFORCE
DEVELOPMENT OPPORTUNITY.

(a) Findings on Higher Education.--The House finds the
following:
(1) A well-educated, high-skilled workforce is
critical to economic, job, and wage growth.
(2) Average published tuition and fees have increased
consistently above the rate of inflation across all
types of colleges and universities.
(3) With an outstanding student loan portfolio of
$1.3 trillion, the Federal Government is the largest
education lender to undergraduate and graduate
students, parents, and other guarantors.
(4) Students who do not complete their college degree
are at a greater risk of defaulting on their loans than
those who complete their degree.
(5) Participation in Federal income-driven repayment
plans is rising, in terms of the percent of both
borrowers and loan dollars, according to the Government
Accountability Office. Because these plans offer loan
balance forgiveness after a repayment period, this
increased use portends higher projected costs to
taxpayers.
(b) Policy on Higher Education.--It is the policy of this
concurrent resolution to promote college affordability, access,
and success by--
(1) reserving Federal financial aid for those most in
need and streamlining grant and loan aid programs to
help students and families more easily assess their
options for financing postsecondary education; and
(2) removing regulatory barriers to reduce costs,
increase access, and allow for innovative teaching
models.
(c) Findings on Workforce Development.--The House finds the
following:
(1) 7.5 million Americans are currently unemployed.
(2) Despite billions of dollars in spending, those
looking for work are stymied by a broken workforce
development system that fails to connect workers with
assistance and employers with skilled personnel.
(3) The House Committee on Education and the
Workforce successfully consolidated 15 workforce
development programs when Congress enacted the
Workforce Innovation and Opportunity Act in 2014.
(d) Policy on Workforce Development.--It is the policy of
this concurrent resolution to build on the success of the
Workforce Innovation and Opportunity Act by--
(1) further streamlining and consolidating Federal
workforce development programs; and
(2) empowering States with the flexibility to tailor
funding and programs to the specific needs of their
workforce.

SEC. 521. POLICY STATEMENT ON SUPPLEMENTAL WILDFIRE SUPPRESSION
FUNDING.

(a) Findings.--The House finds the following:
(1) In 1995, fire activities made up 16 percent of
the United States Forest Service's (USFS) annual
appropriated budget. Since 2015, more than 50 percent
has now been dedicated to wildfire.
(2) Wildland fire suppression activities are
currently funded entirely within the USFS budget, based
on a 10-year rolling average. Using this model, the
agency must average firefighting costs from the past 10
years to predict and request costs for the next year.
When the average was stable, the agency was able to use
this model to budget consistently for the annual costs
associated with wildland fire suppression.
(3) Over the last few decades, wildland fire
suppression costs have increased as fire seasons have
grown longer and the frequency, size, and severity of
wildland fires has increased.
(4) The six worst fire seasons since 1960 have all
occurred since 2000. Since 2000, many western states
have experienced the largest wildfires in their State's
history. In 2016 alone, there were a recorded 67,595
fires and a total of over 5.5 million acres burned. The
suppression costs to USFS and other Federal agencies
for 2016 totaled over $1.9 billion dollars.
(5) As wildfire costs continue to increase, funding
levels for USFS wildfire suppression activities will
also continue to constrict funding levels for other
necessary USFS forest management activities focused on
land management and wildfire prevention.
(b) Policy on Supplemental Wildfire Suppression Funding.--It
is the policy of this concurrent resolution that Congress, in
coordination with the Administration, should develop both a
long-term funding mechanism that would allow supplemental
wildfire suppression funding and reforms on reducing hazardous
fuel loads on Federal forests and lands that could decrease
wildfires.

SEC. 522. POLICY STATEMENT ON THE DEPARTMENT OF VETERANS AFFAIRS.

(a) Findings.--The House finds the following:
(1) For years there have been serious concerns
regarding the Department of Veterans Affairs' (VA)
bureaucratic mismanagement and continuous failure to
provide veterans timely access to health care.
(2) Since 2003, VA disability compensation and health
care have been added to the Government Accountability
Office's (GAO) ``high-risk'' list, due to mismanagement
and oversight failures, lack of a ``unified vision,
strategy, or set of goals to guide their outcomes,''
and the inability to ensure allocated resources are
used in a cost-effective and efficient way to improve
veterans' health care access.
(3) The VA's failure to provide timely and accessible
health care to America's veterans is unacceptable.
While Congress has done its part for more than a decade
by providing sufficient funding for the VA, the agency
has mismanaged these resources, resulting in proven
adverse effects on veterans and their families.
(b) Policy on the Department of Veterans Affairs.--It is the
policy of this concurrent resolution that the House should
require the VA to conduct an audit of its programs named on
GAO's ``high-risk'' list and report its findings to the
Committee on Appropriations, the Committee on the Budget, and
the Committee on Veterans Affairs of the House of
Representatives.

SEC. 523. POLICY STATEMENT ON MOVING THE UNITED STATES POSTAL SERVICE
ON BUDGET.

(a) Findings.--The House finds the following:
(1) The President's Commission on Budget Concepts
recommends that the budget should, as a general rule,
be comprehensive of the full range of Federal activity.
(2) The Omnibus Reconciliation Act of 1989 (Public
Law 101-239) moved the United States Postal Service
(USPS) off budget and exempted it from sequestration.
(3) The USPS has a direct effect on the fiscal
posture of the Federal Government, through--
(A) the receipt of direct appropriations of
$35 million in fiscal year 2017;
(B) congressional mandates such as
requirements for mail delivery service
schedules;
(C) incurring $15 billion in debt from the
Treasury, the maximum permitted by law;
(D) continued operating deficits since 2007;
(E) defaulting on its statutory obligation to
prefund health care benefits for future
retirees; and
(F) carrying $119 billion in total unfunded
liabilities with no foreseeable pathway of
funding these liabilities under current law.
(b) Policy on Moving the USPS on Budget.--It is the policy of
this concurrent resolution that all receipts and disbursements
of the USPS should be included in the congressional budget and
the budget of the Federal Government.

SEC. 524. POLICY STATEMENT ON THE JUDGMENT FUND.

(a) Findings.--The House finds the following:
(1) The Judgment Fund (Fund), established in 1956,
was created to pay judgments and settlements of
lawsuits against the Federal Government.
(2) As a result of the Fund's design, it is ripe for
executive branch exploitation. The Obama Administration
used the Fund to make billions of dollars in payments
to Federal agencies and foreign entities. For example--
(A) on January 17, 2016, the State Department
announced the Federal Government agreed to pay
the Iranian government $1.7 billion to settle a
case related to the sale of military equipment
prior to the Iranian revolution, of which $1.3
billion was sourced through the Fund, without
prior congressional notification; the Obama
Administration's use of the Fund to make this
and other payments raises serious concerns by
sidestepping Congress; and
(B) in 2016, the Department of Health and
Human Services announced its intentions to use
the Fund for settlements with health insurers
who sued the Federal Government over the loss
of funds for risk corridors under the Patient
Protection and Affordable Care Act.
(3) Failing to address the lack of oversight over the
Fund annually costs taxpayers billions of dollars, as
payments exceeded $4.6 billion in 2016 and more than
$26 billion in the preceding 10 year period.
(b) Policy on Judgment Fund.--It is the policy of this
concurrent resolution that the House should consider
legislation that reclaims Congress's power of the purse over
the Fund. Such legislation should--
(1) prohibit interest payments paid from the Fund for
accounts or assets frozen by the Federal Government and
listed on--
(A) the Sanctions Programs list of the Office
of Foreign Asset Control of the Department of
Treasury; or
(B) Sponsors of Terrorism list of the
Department of State;
(2) amend sections 2414 and 1304 of titles 28 and 31,
United States Code, respectively, to--
(A) provide a clear definition and
explanation of a ``foreign court or tribunal'';
and
(B) require congressional notification
whenever the Fund makes a settlement or court
ordered lump sum or aggregated payment
exceeding $500 million; and
(3) require legislative action to approve payments
from the Fund in excess of a specified threshold,
increase transparency, and require Federal agencies to
reimburse the Fund over a fixed time period.

SEC. 525. POLICY STATEMENT ON RESPONSIBLE STEWARDSHIP OF TAXPAYER
DOLLARS.

(a) Findings.--The House finds that significant savings were
achieved by the House by consolidating operations and
renegotiating contracts.
(b) Policy on Responsible Stewardship of Taxpayer Dollars.--
It is the policy of this concurrent resolution that--
(1) the House should be a model for the responsible
stewardship of taxpayer resources, and identify any
savings that can be achieved through greater
productivity and efficiency gains in the operation and
maintenance of House services and resources, including
printing, conferences, utilities, telecommunications,
furniture, grounds maintenance, postage, and rent;
(2) the House should review policies and procedures
for the acquisition of goods and services to eliminate
unnecessary spending;
(3) the Committee on House Administration should
review the policies pertaining to services provided to
Members and committees of the House, and identify ways
to reduce any subsidies paid for the operation of the
House gym, barber shop, salon, and the House dining
room;
(4) no taxpayer funds should be used to purchase
first class airfare or to lease corporate jets for
Members of Congress; and
(5) retirement benefits for Members of Congress
should not include free, taxpayer-funded health care
for life.

SEC. 526. POLICY STATEMENT ON TAX REFORM.

(a) Findings.--The House finds the following:
(1) A world-class tax system should be simple, fair,
and promote (rather than impede) economic growth. The
United States tax code fails on all 3 counts: it is
complex, unfair, and inefficient. The tax code's
complexity distorts decisions to work, save, and
invest, which leads to slower economic growth, lower
wages, and less job creation.
(2) Standard economic theory holds that high marginal
tax rates lessen the incentives to work, save, and
invest, which reduces economic output and job creation.
Lower economic output, in turn, mutes the intended
revenue gain from higher marginal tax rates.
(3) Roughly half of United States active business
income and half of private sector employment are
derived from business entities (such as partnerships, S
corporations, and sole proprietorships) that are taxed
on a ``pass-through'' basis, meaning the income is
taxed at individual rates rather than corporate rates.
Small businesses, in particular, tend to choose this
form for Federal tax purposes, and the highest Federal
rate on such small business income can reach nearly 45
percent. For these reasons, sound economic policy
requires lowering marginal rates on these pass-through
entities.
(4) The top United States corporate income tax rate
(including Federal, State, and local taxes) is slightly
more than 39 percent, the highest rate in the
industrialized world. Tax rates this high suppress
wages, discourage investment and job creation, distort
business activity, and put American businesses at a
competitive disadvantage with foreign competitors.
(5) By deterring potential investment, the United
States corporate tax restrains economic growth and job
creation. The United States tax rate differential
fosters a variety of complicated multinational
corporate practices intended to avoid the tax, which
have the effect of moving the tax base offshore,
destroying American jobs, and decreasing corporate
revenue.
(6) The ``world-wide'' structure of United States
international taxation essentially taxes earnings of
United States firms twice, putting them at a
significant competitive disadvantage with competitors
that have more competitive international tax systems.
(7) Reforming the tax code would boost the
competitiveness of United States companies operating
abroad and significantly reduce tax avoidance.
(8) The tax code imposes costs on American workers
through lower wages, consumers in higher prices, and
investors in diminished returns.
(9) Increasing taxes to raise revenue and meet out-
of-control spending would sink the economy and
Americans' ability to save for their children's
education and retirement.
(10) Closing special preference carve outs in our tax
code to finance higher spending does not constitute
fundamental tax reform.
(11) Tax reform should curb or eliminate tax breaks
and use those savings to lower tax rates across the
board, not to fund more wasteful Federal Government
spending. Washington has a spending problem, not a
revenue problem.
(12) Many economists believe that fundamental tax
reform, including a broader tax base and lower tax
rates, would lead to greater labor supply and increased
investment, which would have a positive impact on total
national output.
(b) Policy on Tax Reform.--It is the policy of this
concurrent resolution that the House should consider
comprehensive tax reform legislation that promotes economic
growth, creates American jobs, increases wages, and benefits
American consumers, investors, and workers by--
(1) simplifying the tax code to make it fairer to
American families and businesses and reducing the
amount of time and resources necessary to comply with
tax laws;
(2) substantially lowering tax rates for individuals
and consolidating the current seven individual income
tax brackets into fewer brackets;
(3) repealing the Alternative Minimum Tax;
(4) reducing the corporate tax rate; and
(5) transitioning the tax code to a more competitive
system of international taxation.

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