Table 2. DISCRETIONARY SPENDING LIMITS

(In millions of dollars)

Adjustments to discretionary limits.—Table 2 shows how adjustments pursuant to section 251(b) of the BEA of 1997 affect the discretionary limits in 2000 through 2002.

Section 251(b)(2) of the BEA authorizes certain adjustments after the enactment of appropriations. Table 2 includes those adjustments that can be made now due to legislation enacted to date. Table 2 also includes anticipated adjustments that would be made assuming enactment of 2002 appropriations bills, although the Administration cannot determine the actual adjustments that would be included in the final sequestration report at the end of this year's session of Congress until all appropriations are enacted. The section 251(b)(2) adjustments include:

Emergency Appropriations.—These adjustments include funding for amounts that the President designates as "emergency requirements" and that Congress so designates in law. Since the President submitted the 2002 budget in April, Congress has not enacted any additional emergency spending for fiscal year 2001.

The President has authorized the release of some previously enacted emergency appropriations since the April Budget submission. These funds will allow the Federal Emergency Management Agency to carry out its mission in response to natural disasters like Tropical Storm Allison. While adjustments to the caps were made for these funds in the Preview Report, the effects of new estimates of the rate at which these funds will be spent are included here.

Additional Adjustments that Would Be Made Contingent Upon Final Congressional Action.—Table 2 also shows how adjustments permitted under section 251(b) of the BEA would affect the discretionary limits if the following were included in 2002 appropriations bills.

Earned Income Tax Credit (EITC) Compliance Initiative.—The Balanced Budget Act of 1997 authorized appropriations for the Treasury Department to enforce EITC compliance and made specific allowance for adjustment of the caps by the appropriated amounts. This funding is provided in order to reduce the number of erroneous EITC claims, including the detection of erroneous claims and enforcement of EITC eligibility rules. The House-passed version of the 2002 Treasury and General Government appropriations bill provides $146 million for this initiative.

    Continuing Disability Reviews (CDRs).—The BEA authorizes adjustment of the caps by the amounts appropriated for CDRs, which are periodic examinations conducted to verify that recipients of Social Security disability insurance benefits and Supplemental Security Income benefits for persons with disabilities are still disabled. Cap adjustments are limited to the exact levels of budget authority and outlays specified in the BEA, but the Administration has requested appropriations below the level set for 2002. While the Congress has yet to take up the 2002 Labor, Health and Human Services, and Education appropriations bill, OMB has included an adjustment of $433 million, the funding level in the 2002 budget requested for CDRs.

Adoption Incentive Payments.—The Adoption and Safe Families Act of 1997 authorizes bonus payments to States that increase the number of adoptions from the foster care system. It provides for a discretionary cap adjustment for appropriations up to $20 million annually in each of the years 1999 through 2003, because the cost of adoption bonuses are assumed to be offset by reductions in mandatory foster care costs. Again, OMB has included an adjustment equal to the level requested in the budget ($20 million in budget authority) since the Congress has not yet acted on the 2002 Labor, Health and Human Services, and Education appropriations bill.

Summary of 2001 discretionary appropriations. —Table 3 summarizes the status of enacted 2001 discretionary appropriations, relative to the discretionary caps. Enacted budget authority and outlays for all categories for 2001 are within the specified cap levels. The outlays cap for the other discretionary category includes a special outlay adjustment made pursuant to section 251(b)(2)(B) of the BEA. This section gives OMB the authority to adjust upward the outlay cap by up to 0.5 percent of the total pre-adjustment level.

Table 3. SUMMARY OF 2001 DISCRETIONARY APPROPRIATIONS

(In millions of dollars)

Status of 2002 discretionary appropriations.—Table 4 shows preliminary OMB scoring of the latest House and Senate action for the 13 annual appropriations bills. If offsets to discretionary spending are not enacted or the caps are not raised, OMB estimates of House and Senate action to date would exceed the outlay limits in the conservation category and would exceed both the budget authority and outlay limits in the other discretionary category. Current OMB estimates of House action to date indicate that a sequester of approximately $192.8 billion in budget authority and $115.7 billion in outlays would be triggered. Current estimates of Senate action, unless offset, would trigger a budget authority sequester of approximately $192.4 billion, and an outlay sequester of $115.5 billion.

OMB estimates of a sequester under House and Senate action to date are based on the following assumptions:

• Bills that have not been acted on are assumed to be funded at the 302(b) allocation.

• The spending limits shown for the House and Senate have been adjusted upward for the earned income tax compliance initiative included in the Treasury and General Government appropriations bill and for CDR and Adoption Incentive Payment levels requested in the budget.

Table 4. STATUS OF 2002 APPROPRIATIONS ACTION

(In millions of dollars)

Comparison of OMB and CBO discretionary limits.—Section 254(d)(5) of the BEA requires that this report explain the differences between OMB and CBO estimates for discretionary spending limits. Table 5 compares OMB and CBO limits for 2001 and 2002. CBO uses the discretionary limits from OMB's preview report as a starting point for adjustments in its sequestration update report.

There is no difference between OMB and CBO for estimates of budget authority limits in 2001 and 2002. This is the first time in several years that OMB has matched CBO's estimates of budget authority limits and results primarily from OMB adopting a scoring treatment of contingent emergencies that matches with CBO's policy.

Differences in 2001 outlay limits total $2,885 million, $2,434 million of which is due to OMB's adjustment of 2001 outlays by the special outlay allowance. CBO did not make a similar adjustment in its update report. The remaining $451 million outlay limit difference in 2001, and all of the $21 million outlay limit difference in 2002, results from different technical assumptions about the spendout of recently released contingent emergency appropriations for the Federal Emergency Management Agency that occurred since the transmission of the 2002 budget to Congress.

Table 5. COMPARISON OF OMB AND CBO DISCRETIONARY SPENDING LIMITS

(In millions of dollars)

III. PAY–AS–YOU–GO SEQUESTRATION REPORT

The BEA requires that OMB issue reports after enactment of individual bills and three times a year on the overall status of Pay-as-you-go (PAYGO) legislation. This report provides OMB's updated estimates, reflecting legislation enacted as of August 15, 2001. As the BEA requires, the estimates rely on the same economic and technical assumptions as in the President's 2002 budget, which the Administration transmitted to Congress on April 9, 2001.

PAYGO enforcement covers all direct spending and receipts legislation. The BEA defines direct spending as entitlement authority, the food stamp program, and budget authority provided by law other than in appropriations acts.

The BEA requires that, in total, receipts and direct spending legislation not result in a net cost in any year. If such legislation yields a net cost, and if the President and Congress do not fully offset it by other legislative savings, the law requires a sequester of non-exempt direct spending programs.

The BEA requires that OMB submit a report to Congress that estimates the change in outlays or receipts for the current year, the budget year, and the following four fiscal years resulting from enactment of PAYGO legislation. The estimates, which must rely on the economic and technical assumptions underlying the most recent President's budget, determine whether the PAYGO requirement is met. The PAYGO process requires that OMB maintain a "scorecard" that shows the cumulative net cost of such legislation.

Table 6 presents OMB estimates of PAYGO legislation enacted as of August 15, 2001. In total, these bills have resulted in a net cost of $75.0 billion for 2001 and a net cost of $51.7 billion for 2002. As required by the BEA, the 2001 total reflects only Acts added to the scorecard after the OMB Final Sequestration Report for Fiscal Year 2001 was issued. At the end of this session of Congress, OMB will determine the need for sequestration by combining the 2001 and 2002 totals. For legislation enacted as of August 15, 2001, this calculation yields a cost of $126.7 billion, indicating that a sequester would be required for 2002 if there are no changes to current law. For 2002, the maximum savings achievable from a sequester is $33.3 billion. The Administration will work with Congress to ensure that no unintended sequesters of spending occur under current law or through enactment of any other proposals that meet the President's objectives to reduce the debt, fund priority initiatives, and grant tax relief to all income tax paying Americans.

Table 7. PAY–AS–YOU–GO LEGISLATION WITH IMPACT OF $500,000 OR LESS ENACTED AS OF AUGUST 15, 2001 ¹

Pending legislation.—The Congress completed action on three additional PAYGO bills, but they have not yet been signed into law. These bills are the Federal Firefighters Retirement Age Fairness Act (H.R. 93), the Bull Run Watershed Management Unit Act (H.R. 427), and the Carson City, Nevada, Land Conveyance Act (H.R. 271). OMB estimates that these bills would have a negligible PAYGO impact. Because these bills have not yet been signed into law, OMB did not take them into account for this report.

Comparison with CBO estimates.—The BEA requires that OMB explain differences with CBO estimates of enacted PAYGO legislation. Table 6 shows the CBO estimate for each Act as it was reported in CBO's PAYGO bill reports. For the sum of 2001 and 2002, OMB estimates a net cost of $126.7 billion, while CBO estimates a net cost of $129.8 billion. OMB's estimate is $3.0 billion lower due to its lower cost estimate of the Economic Growth and Tax Relief Reconciliation Act, partially offset by its higher 2002 PAYGO balance in the Preview Report. The scoring difference for the tax bill is the result of different baseline assumptions and estimating models. Over 2001 through 2006, OMB estimates a net cost of $614.2 billion, $1.3 billion higher than CBO. This difference results from OMB's lower scoring of the tax bill, more than offset by its higher PAYGO balances in the Preview Report.

Federal Register  | Jobs at OMB  | FOIA  | OMB Locator  | Text only Accessibility  | Privacy Statement  | Site Search  | Help