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   104th Congress 1st            SENATE                 Report
         Session
                                                        104-82
_______________________________________________________________________



                                     

                                                       Calendar No. 109

                                   FY
 
                  CONCURRENT RESOLUTION ON THE BUDGET

                                  1996

                               __________

                              R E P O R T

                                 of the

                        COMMITTEE ON THE BUDGET
                          UNITED STATES SENATE

                              to accompany

                            S. Con. Res. 13

                             together with



                     ADDITIONAL AND MINORITY VIEWS

                                     



Setting forth the congressional budget for the United States Government 
     for fiscal years 1996, 1997, 1998, 1999, 2000, 2001, and 2002

                  May 15, 1995.--Ordered to be printed

                        COMMITTEE ON THE BUDGET

  PETE V. DOMENICI, New Mexico, 
             Chairman

                                     CHARLES E. GRASSLEY, Iowa
                                     DON NICKLES, Oklahoma
                                     PHIL GRAMM, Texas
                                     CHRISTOPHER S. BOND, Missouri
                                     TRENT LOTT, Mississippi
                                     HANK BROWN, Colorado
                                     SLADE GORTON, Washington
                                     JUDD GREGG, New Hampshire
                                     OLYMPIA J. SNOWE, Maine
                                     SPENCER ABRAHAM, Michigan
J. JAMES EXON, Nebraska              BILL FRIST, Tennessee
ERNEST F. HOLLINGS, South Carolina
J. BENNETT JOHNSTON, Louisiana
FRANK R. LAUTENBERG, New Jersey
PAUL SIMON, Illinois
KENT CONRAD, North Dakota
CHRISTOPHER J. DODD, Connecticut
PAUL S. SARBANES, Maryland
BARBARA BOXER, California
PATTY MURRAY, Washington

    G. William Hoagland, Staff 
             Director
 William G. Dauster,  Democratic 
 Chief of Staff and Chief Counsel

                                  (ii)

  



                            C O N T E N T S

                              ----------                              
                                                                   Page
  I. Introduction and Overview.......................................01
 II. Economics.......................................................07
III. Spending and Revenues...........................................21
        Baseline
            A. Spending by Function..............................    25
            B. Revenues..........................................    98
 IV. Summary Tables.................................................109
  V. Budget Resolutions: Enforcement, Reconciliation and Other Issues
        Contents of Budget Resolution............................   121
        Enforcement..............................................   123
        Reconciliation...........................................   125
        Other Issues.............................................   127
 VI. Procedural and Miscellaneous Provisions
        Procedural Provisions....................................   128
        Miscellaneous Provisions.................................   128
VII. Committees Views and Estimates.................................133
VIII.
     Roll Call Votes in Committee...................................288
 IX. Additional, Minority, and Supplemental Views...................300
                                                       Calendar No. 109
104th Congress                                                   Report
                                 SENATE

 1st Session                                                     104-82
_______________________________________________________________________



        CONCURRENT RESOLUTION ON THE BUDGET FOR FISCAL YEAR 1996

                                _______


                  May 15, 1995.--Ordered to be printed

_______________________________________________________________________


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

                              R E P O R T

                             together with

                     ADDITIONAL AND MINORITY VIEWS

                     [To accompany S. Con. Res. 13]

    The Committee on the Budget submits the following report, 
accompanying the Concurrent Resolution on the Budget and 
setting forth the congressional budget for the United States 
Government for fiscal years 1996, 1997, 1998, 1999, 2000, 2001, 
and 2002 pursuant to the Congressional Budget and Impoundment 
Control Act of 1974 (Public Law 93-344).

                      I. Introduction and Overview

    The Committee's reported Concurrent Resolution on the 
Budget for Fiscal Year 1996 provides a fiscal blueprint that 
would for the first time in three decades result in a balanced 
federal budget, measured by a comprehensive accounting of all 
federal activities.\1\ The Committee's recommendations are 
based on the unequivocal goal expressed by the American public 
and by a majority of the members of the 104th Congress--balance 
the federal budget early in the next century, specifically by 
the year 2002.\2\ The Committee's recommendations are based on 
one simple proposition: by meeting our requirement to fiscal 
responsibility we will insure a better future for our children 
and a better future for our country.
    \1\ During the Committee's deliberations on the FY 1996 Concurrent 
Resolution a discussion of budget concepts transpired. The Committee's 
reported resolution complies with the Budget Enforcement Act, Subtitle 
C, Social Security, Section 13301, which requires the exclusion of 
receipts and disbursements of the Federal Old-Age and Survivors 
Insurance Trust Fund and the Federal Disability Insurance Trust Fund 
from the reported budget resolution. As is the custom in the budgets 
submitted by the President and analyzed by the Congressional Budget 
Office and others, summary tables are included in this report that 
present a complete accounting of all federal activities as well as the 
exclusion of off-budget programs (currently Social Security and U.S. 
Postal Service).
    \2\ The reported resolution also complies with S.Amdt.No. 238 
adopted by the full Senate on February 10, 1995, (87-10). The amendment 
directed the Senate Budget Committee ``to report . . . at the earliest 
possible date to the Senate how to achieve a balanced budget. . . .''
---------------------------------------------------------------------------
    The Committee's reported budget resolution stands in stark 
contrast to President Clinton's 1996 budget which surrenders to 
the deficit and, based on the Congressional Budget Office's 
recent estimates, sentences the country to increasing deficits 
each and every year into the next century.\3\ President 
Clinton's federal deficit would increase from $177 billion this 
year to nearly $280 billion in the year 2000. Under President 
Clinton's do nothing deficit policy, total debt held by the 
public would increase both in absolute terms and as a 
proportion of the total economy (from $3.5 trillion this year 
to $5.0 trillion in the year 2000; from 52 percent of GDP this 
year to over 55 percent of GDP in 2000.)
    \3\ An Analysis of the President's Budgetary Proposals for Fiscal 
Year 1996, Prepared at the Request of the Senate Committee on 
Appropriations, April 1995.
---------------------------------------------------------------------------
    Committee's recommendations provide a real alternative for 
a brighter fiscal future. Following the assumptions of the 
Committee's recommendations, total federal spending will still 
increase from $1.5 trillion this year to nearly $1.9 trillion 
in 2002. But for the first time in nearly three decades, wages 
and salaries will be growing faster than the rate of growth in 
federal spending--5 percent versus 3 percent annually. The 
federal deficit, left unchanged would grow from $175 billion 
this year to nearly $230 billion in 2002, and the debt burden 
on the public would increase from $3.8 trillion to over $5.4 
trillion in 2002, or 54 percent of GDP. Under the Committee's 
recommendations--a real, no-smoke and mirrors budget--fully 
implemented and enforceable, the deficit declines to zero in 
the year 2002. Debt held by the public would reach $4.3 
trillion in 2002 before declining thereafter. More importantly 
debt held by the public would decline as a proportion of the 
GDP to 43 percent in 2002--a 20 percent decline.
    Under the assumptions of the Committee's recommendations 
annual expenditures for appropriated accounts will decline from 
$278 billion this year to $245 billion in 2002. Annual 
expenditures for appropriated defense programs, as requested by 
President Clinton, would decline slightly from the current 
spending level ($270 billion) throughout the remainder of the 
century before returning to an annual level of $270 billion in 
2002.
    Under the assumptions of the Committee's recommendations, 
social security expenditures will continue to grow from $334 
billion this year to over $480 billion in 2002. The Committee's 
recommendations does not change any social security benefit or 
any social security COLA.
    Under the assumptions of the Committee's recommendations, 
the Medicare program will remain the fastest growing program in 
the federal budget, increasing at an annual rate of 7.1 
percent, growing from $178 billion this year to $288 billion in 
2002. The Committee adopted (13-9) an amendment offered by 
Senator Frist that would encourage the Congress to quickly 
establish a bipartisan commission similar to that recommended 
by the Social Security and Medicare Trustees in April. The 
commission would make recommendations to the Congress in two 
steps. In the first step, the commission would address the 
current short-term insolvency of the Medicare program early 
this summer. In the second step, the commission would address 
the long-term insolvency of the account early next year. The 
establishment of such a commission it was felt would provide 
expert advice that could be used by the authorizing committees 
of the Congress as they worked to provide solvency to the 
Medicare program and meet their required reconciliation 
instructions later this summer.
    Under the Committee's recommendations, the federal Medicaid 
program could be converted into a block grant program to the 
states, and its annual growth rate would be reduced from nearly 
10 percent annually to an average of 5 percent over the next 
seven years. In total, federal and state Medicaid spending 
would increase from about $160 billion this year to over $220 
billion in 2002. Federal spending for Medicaid would increase 
from nearly $89 billion this year to over $125 billion in 2002.
    The Committee's recommendations were designed to achieve 
the goal of fiscal solvency while building on the following 
themes:
          Protect and preserve programs that provide income 
        security for our senior citizens.--Again, no changes 
        are recommended to the social security program. No 
        changes to any COLA are assumed for any federal pension 
        program.
          Begin deficit reduction in our own backyard.--The 
        Committee's recommendations assumes a seven year freeze 
        on all members pay, federal judges, and SES employees. 
        The reported resolution assumes a 15 percent reduction 
        in Senate Committee staff, a 12.5 percent reduction in 
        Senate support staff, a 25 percent reduction in GAO, 
        and the termination of OTA. The resolution assumes rank 
        and file federal workers would receive current law pay 
        adjustments.
          Devolve federal programs to states.--Move power and 
        money out of Washington and back to citizens in their 
        states and communities. The Committee's recommendations 
        assumes consolidation of federal health, 
        transportation, education and other social service 
        programs. The Committee's recommendations assumes 
        federal assistance would be returned to states in the 
        form of various block grants. The Committee recognizes 
        that changes to major federal-state programs will 
        require careful coordination to ensure state and local 
        administrative changes take place in an orderly manner.
          Reduce the size of the federal government.--
        Terminate, eliminate, reduce duplication and modernize 
        programs that were created for the 1960's--not the 21st 
        century. The Committee's recommendations assumes the 
        termination of more than 100 federal programs, 
        agencies, and commissions. The Committee's 
        recommendations assumes the orderly termination of the 
        Department of Commerce and the Office of Personnel 
        Management.
          Public programs that could better be run as 
        commercial endeavors should be privatized.--The 
        Committee's recommendations assumes the creation of a 
        private air traffic control system, privatization of 
        Sallie Mae, privatize the naval petroleum reserve and 
        the uranium enrichment corporation, close GSA supply 
        depots, repeal of the Davis-Bacon Act and other 
        proposals discussed later.
          Protect national security and people's security.--The 
        Committee's recommendations assumes President Clinton's 
        defense request in his 1996 budget submission. The 
        Committee's recommendations assumes that the Crime 
        Trust Fund would be funded and that the FBI, DEA, and 
        INS funding would increase.
          Reform federal assistance programs.--The Committee's 
        recommendations assumes welfare reform savings over the 
        next seven years that will total $80 billion, and yet 
        the budget blueprint continues significant funding for 
        vulnerable low-income families and their children. Over 
        the same seven year period federal food stamp spending 
        will exceed $192 billion, AFDC and Child Care Programs 
        will exceed $131 billion, the federal SSI program will 
        expend $231 billion, the EITC program will continue to 
        grow and expend $155 billion, the federal child 
        nutrition programs will expend $66 billion and the WIC 
        program will cost $26 billion. In total these programs 
        alone would provide over $800 billion in assistance to 
        low-income families and their children.
          The food stamp program would be reformed and benefits 
        would be tied to the rate of growth in food inflation. 
        The school lunch and school breakfast program would not 
        be changed but the Committee's recommendations assumes 
        targeting the Child Adult Care Feeding Program on low-
        income families. The Committee's recommendations 
        assumes funding for the WIC program will increase. The 
        Committee's recommendations assumes an important 
        expansion of the Child Support Enforcement Program 
        requiring absent fathers and mothers to provide support 
        to their abandoned children.
          Control the growth of public health care 
        expenditures.--The Committee's recommendations assumes 
        that unsustainable growth in federal health care costs 
        must be curbed to insure the solvency of the Medicare 
        trust fund and to guarantee its survival for future 
        recipients.
          Reduce spending on corporate subsidies.--The 
        Committee's recommendations reduces federal corporate 
        subsidies for agriculture, trade, energy, and 
        transportation industries. According to the 
        Congressional Budget Office, federal spending to 
        support business and industry totals about $27 billion 
        annually. The Committee's recommendations would reduce 
        these corporate subsidies by nearly one-third.
    The Committee's recommendations do not assume any net 
change in revenues from that which would result from a 
continuation of current tax policies. However, a special 
reserve fund would provide, after spending restraint is enacted 
as assumed in the reported resolution, and that restraint is 
estimated and certified to achieve balance in 2002 by the 
Congressional Budget Office, that then and only then would any 
resulting ``fiscal dividend'' be made available to the tax 
writing committees of Congress for consideration of tax 
reduction not to exceed the estimated fiscal dividend. The 
Committee further adopted a Sense of the Congress resolution, 
that should any tax reduction legislation be considered, then 
that tax reduction should go to working families with annual 
incomes below $100,000. To achieve any fiscal dividend and 
therefore any tax reduction, however, the Committee reported 
resolution restraining the rate of growth in federal spending 
must first be implemented--legislation enacted, Congressional 
Budget Office certification of balance and estimate of 
dividend, and Presidential signature of the deficit reduction 
legislation that achieves balance in 2002.
    Finally, the Committee's recommendations would enforce the 
assumptions of the budget resolution through tough and 
disciplined provisions governing the consideration of enacting 
legislation. First, discretionary spending caps would be 
consistent with the assumptions of the Committee's 
recommendations and extended through 2002. Defense and 
nondefense discretionary firewalls would be reestablished to 
protect President Clinton's requested defense mark. The 
Committee's recommendations would enforce the mandatory 
spending assumptions through the process of reconciling 
spending savings. Reconciled committees would be required to 
meet the Chairman's assumptions of direct spending savings in 
the first year, the cumulative five year sum, and the 
cumulative seven year sum. The Committee's recommendations 
would require emergency spending outside the spending caps to 
secure 60 votes--true emergency spending would have no 
difficulty meeting this test. And finally, the Committee's 
recommendations would extend the Budget Act's 60 vote 
enforcement and pay-as-you-go provisions through the year 2002. 
A 10 year point-of-order, adopted in the last two budget 
resolutions would be continued in the Committee's 
recommendations.
    The Committee's recommendations are real, enforceable, and 
achieve the fiscal policy goal of a comprehensive, unified 
balanced budget in 2002. It is a budget blueprint that will 
guide the country into a successful and prosperous 21st 
Century. The Committee's recommendations if implemented would 
restore our nation's fiscal equilibrium. It would protect our 
children and grandchildren by putting the breaks on government 
borrowing and underscores the simple notion that our government 
cannot continue to spend our children's legacy.


                                        TABLE 1.--AGGREGATE BUDGET TOTALS                                       
                                              [Dollars in billions]                                             
----------------------------------------------------------------------------------------------------------------
                                    1995      1996      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
On-budget:                                                                                                      
    Budget authority............  $1,260.9  $1,268.5  $1,295.3  $1,343.3  $1,385.9  $1,444.8  $1,472.0  $1,518.1
    Outlays.....................   1,243.7   1,274.8   1,292.7   1,319.9   1,367.1   1,422.3   1,451.0   1,498.5
    Revenues....................     997.8   1,042.4   1,082.8   1,134.2   1,188.4   1,247.4   1,314.2   1,385.0
    Deficit.....................    -245.9    -232.4    -209.9    -185.7    -178.7    -174.9    -136.8    -113.5
Off-budget:                                                                                                     
    Budget authority............     292.6     306.2     321.1     329.4     345.1     356.4     371.8     387.7
    Outlays.....................     286.1     299.4     310.1     323.2     338.4     351.7     368.1     383.8
    Revenues....................     357.4     374.7     392.0     411.4     430.9     452.0     475.2     498.6
    Surplus.....................      71.3      75.3      81.9      88.1      92.5     100.3     107.1     114.8
Unified budget:                                                                                                 
    Budget authority............   1,553.6   1,574.7   1,616.5   1,672.8   1,731.0   1,801.2   1,843.8   1.905.8
    Outlays.....................   1,529.9   1,574.2   1,602.8   1,643.2   1,705.5   1,774.0   1,819.1   1,882.3
    Revenues....................   1,355.2   1,417.1   1,474.8   1,545.6   1,619.3   1,699.4   1,789.4   1,883.6
    Deficit/surplus.............    -174.7    -157.1    -128.0     -97.6     -86.2     -74.6     -29.7       1.3
Debt subject to limit...........   4,903.0   5,201.7   5,481.0   5,734.9   5,980.0   6,219.0   6,421.8   6,599.5
----------------------------------------------------------------------------------------------------------------



                                       TABLE 2.--COMMITTEE RECOMMENDATION                                       
                                              [Dollars in billions]                                             
----------------------------------------------------------------------------------------------------------------
                             1995       1996       1997       1998       1999       2000       2001       2002  
----------------------------------------------------------------------------------------------------------------
Discretionary:                                                                                                  
    Defense.............       $270       $262       $257       $255       $261       $268       $268       $260
    Nondefense..........        278        268        255        250        248        250        248        248
      Subtotal                                                                                                  
       discretionary....        548        530        512        506        509        518        517        518
Mandatory:                                                                                                      
    Social Security.....        334        352        371        391        411        433        456        480
    Medicare............        178        187        198        213        228        244        262        283
    Medicaid............         89         96        102        107        112        116        121        125
    Other mandatory.....        146        152        156        159        172        181        185        197
Net interest............        235        258        264        267        272        278        278        279
      Total outlays.....      1,530      1,574      1,602      1,643      1,705      1,771      1,818      1,882
Revenues................      1,355      1,418      1,476      1,546      1,618      1,698      1,789      1,884
Resulting deficit/                                                                                              
 surplus................       -175       -157       -128        -98        -86        -75        -30          1
----------------------------------------------------------------------------------------------------------------
Note: Detail may not add to totals due to rounding. All totals shown on a unified budget basis.                 



                            TABLE 3.--COMMITTEE RECOMMENDATION COMPARISON TO BASELINE                           
                                              [Dollars in billions]                                             
----------------------------------------------------------------------------------------------------------------
                                                                            5-yr                          Grand 
                          1996      1997      1998      1999      2000      total     2001      2002      total 
----------------------------------------------------------------------------------------------------------------
Current Law Deficit...      $197      $214      $209      $223      $236        $0      $224      $227        $0
Discretionary:                                                                                                  
    Defense...........         4         0        -2         2         6        10         6         8        25
    Nondefense........       -12       -26       -29       -30       -29      -127       -31       -31      -189
Mandatory:                                                                                                      
    Social Security...  ........  ........  ........  ........  ........  ........  ........  ........  ........
    Medicare..........       -12       -22       -27       -36       -44      -141       -53       -62      -256
    Medicaid..........        -4        -8       -15       -23       -32       -81       -42       -53      -175
    Other mandatory...       -14       -25       -29       -30       -33      -132       -37       -39      -208
Revenues..............  ........  ........  ........  ........  ........  ........  ........  ........  ........
      Total policy                                                                                              
       changes........       -39       -81      -101      -117      -132      -470      -156      -177      -804
Debt service..........        -1        -5       -11       -19       -28       -65       -39       -51      -155
      Total deficit                                                                                             
       reduction......       -40       -86      -113      -136      -160      -535      -195      -229      -958
Resulting deficit/                                                                                              
 surplus..............       157       128        98        86        75         0        30        -1         0
----------------------------------------------------------------------------------------------------------------
Note: Details may not add to totals due to rounding. All totals shown on a unified budget basis.                

                              II. Economics

    The Committee baseline is predicated on assumptions about 
the future yearly path of the U.S. economy, detailed in Table 
1. These economic assumptions were developed by the 
Congressional Budget Office (CBO) and are the same as the 
assumptions underlying CBO's budget projections in its January 
1995 report, updated for CBO revisions to its 1998 through 2002 
CPI inflation assumptions. The figures reflect a short-term 
forecast for 1995 and 1996 and projections in later years based 
on longer-term trends in the economy. The near-term forecast is 
the result of likely outcomes based on analysis of the current 
state of the economy and in particular its position in the 
business cycle.

                                       TABLE 1.--CBO ECONOMIC PROJECTIONS                                       
                                                [Calendar Years]                                                
----------------------------------------------------------------------------------------------------------------
                                   1994     1995     1996     1997     1998     1999     2000     2001     2002 
----------------------------------------------------------------------------------------------------------------
Percent change, year over year:                                                                                 
    Real GDP...................      4.1      3.1      1.8      2.4      2.3      2.3      2.3      2.3      2.3
    Implicit GDP deflator......      2.1      2.6      2.8      2.8      2.8      2.8      2.8      2.8      2.8
    CPI-U......................      2.6      3.1      3.4      3.4      3.2      3.2      3.2      3.2      3.2
Percent, Annual:                                                                                                
    Unemployment rate..........      6.1      5.5      5.7      5.8      5.9      6.0      6.0      6.0      6.0
    Three-month treasury bill..      4.2      6.2      5.7      5.3      5.1      5.1      5.1      5.1      5.1
    Ten-year treasury note rate      7.1      7.7      7.0      6.7      6.7      6.7      6.7      6.7      6.7
----------------------------------------------------------------------------------------------------------------

                      the business cycle expansion

    The Clinton Administration came to office during the fast-
growing, recovery stage of the tenth business-cycle expansion 
since WW II. The current expansion which began in April 1991 
during the Bush Administration is now just over four years old. 
The strongest components of growth during the expansion have 
been centered in interest-sensitive sectors of the economy such 
as construction and durable goods manufacturing, and in export 
sectors.

                 COMPONENTS OF CURRENT EXPANSION GROWTH                 
         [Annual percent change 1991 to 1994, constant dollars]         
------------------------------------------------------------------------
                  Consumer         Home         Equipment               
     GDP       durable goods   construction    investment      Exports  
------------------------------------------------------------------------
      3.1....           7.7            10.8           13.7           6.5
------------------------------------------------------------------------
Source: Bureau of Economic Analysis, Department of Commerce.            

    Beginning in 1990, in response to a faltering economy, the 
Federal Reserve (Fed) began a concerted policy effort to reduce 
interest rates. The Federal Funds rate, the primary rate the 
Fed controls, was reduced from 8.3 percent in 1990 to a 1992 
level of 2.9 percent, the lowest point reached during the 
current expansion. Fed interest rate reductions were completed 
by the end of 1992 as clear signs of strong economic growth 
became evident. By the fourth quarter of 1992, GDP growth had 
reached 5.7 percent, the fastest rate since 1987. Chart 1 shows 
the path of Three-month Treasury Bill rates which track 
movements in the Federal Funds rate.


    Long-term interest rates also began declining in 1990. The 
Ten-year Treasury Note rate declined from 8.9 percent in 1990 
to an expansion low of 5.3 percent by 1993. Consistent with the 
typical 9-month to one-and-a-half year delay experienced 
between monetary policy easing and its economic effects, 
economic growth in interest sensitive sectors began rising in 
1992 and gained momentum in 1993 and 1994.
    Now exceeding four years in length, the current business 
cycle expansion equals the average length of the nine 
expansions since WW II. Moreover, current conditions indicate 
that, after retreating in 1990 and 1991, the economy has once 
again reached a level of output that is close to fully 
utilizing the economy's current resources. Factors are 
developing that signal slower growth ahead than the 4.1 percent 
pace of 1994 or even the three percent pace since the expansion 
began. At this point, should economic growth continue to 
surpass the economy's capacity to expand--a rate of between 2.0 
percent to 2.5 percent growth a year according to calculations 
from CBO, the Federal Reserve, and most private sector 
forecasters--the economy could overheat and increase 
inflationary pressures, hastening the expansion's end.
    A number of factors suggest the economy is close to this 
point:
          As measured by the Federal Reserve Board, utilization 
        of factory capacity in January reached the highest 
        level since October of 1979.
          Down from a recession-induced high of 7.7 percent, 
        the 5.5 percent unemployment rate in the first quarter 
        is below most estimates of the level at which rising 
        inflation usually begins to develop--approximately a 
        6.0 percent rate of unemployment. While actual 
        inflation increases often lag behind tightening labor 
        markets, inflation pressures from these markets, once 
        started, are difficult to quell.
          Prices for crude and intermediate materials that are 
        used at early stages of processing have been 
        accelerating in the past year suggesting tightening 
        supplies. These rises eventually feed into more 
        pervasive inflation measures that affect consumers. 
        Prices for crude materials, less the more volatile food 
        and energy prices, have risen 15 percent over the past 
        12 months and intermediate prices, similarly adjusted, 
        have risen 7 percent, the fastest rate since the late 
        1980s.
          Core consumer inflation (less food and energy) has 
        accelerated in the past four months to 4.2 percent--
        faster than the 2.9 percent pace of the past two years.
          Declines to historic lows of the exchange rate value 
        of the U.S. dollar against the yen and mark in recent 
        months puts added pressure on rising prices of imports.
    With the economy at currently high capacity levels and the 
pace of growth in 1994 above the rate that is sustainable over 
the long-run, economic growth will have to slow in the near-
term. This can occur in three ways: as the result of the 
delayed effects of monetary policy tightening engineered by the 
Fed through its seven monetary policy actions since the 
beginning of 1994, as the result of fiscal restraint that is 
viewed as temporary and doesn't promise budget balance in 
future years or, should fast growth continue in the immediate 
future, through a more jarring and steep slow down possibly 
ending in recession.

                          economic projections

    CBO's growth projections reflect its judgment that the 
Federal Reserve will be successful in slowing real GDP growth 
without precipitating a recession. The economy is expected to 
reach a ``soft landing'' growth rate that matches the economy's 
long-run potential to expand of 2.0 to 2.5 percent. Over 1995 
and 1996 on a fourth-quarter to fourth-quarter basis, CBO's GDP 
growth forecast averages 2.2 percent, a rate that is expected 
to keep inflation from heating up excessively, helping to 
continue the expansion. Recent statistics suggest that this 
scenario is in fact unfolding. In the first quarter, consumer 
purchases, adjusted for inflation, increased 1.4 percent after 
rising 5.1 percent in the fourth quarter of 1994. New housing 
starts have slowed to a 1.27 million annual rate in the first 
three months of this year, down 8 percent from the average in 
the second-half of 1994.
    CBO traditionally focuses on underlying trends in the 
economy as the basis for its longer term projections rather 
than yearly forecasts of economic measures and these 
projections have been assumed by the Committee for 1997 through 
2002. The trends represent estimations of the economy's ability 
to expand capacity based on projections about labor force 
growth, capital formation, and long-term productivity gains.
    Table 1 shows the components of the Committee economic 
assumptions. Real GDP growth slows from 4.1 percent in 1994 to 
3.1 percent in 1995 and to 1.8 percent in 1996. In later years, 
real GDP is projected to average 2.3 percent a year, roughly 
the rate of growth of the economy's potential. At this rate, 
unemployment will remain below or at 6.0 percent through 2002. 
Inflation as measured by the CPI is projected to be 3.1 percent 
in 1995, rise to 3.4 percent, and then remain at 3.2 percent in 
1998 and later years.
    In January, CBO projected CPI inflation would remain at 3.4 
percent for 1998 and thereafter. The downward revision reported 
here relative to the January figures reflects CBO's new 
appraisal that the 1998 benchmark revision to the CPI planned 
by the Bureau of Labor Statistics will likely reduce the rise 
in the computed measure of the CPI by 0.2 percentage points a 
year. Federal Reserve Chairman Greenspan and CPI experts have 
recently testified before the Senate that incomplete evidence 
suggests CPI inflation may be overstated by as much as 1.0 to 
1.5 percentage points a year. However, in advance of further, 
more conclusive analysis, CPI biases remain speculative and 
have not been incorporated into the Committee assumptions.
    The Committee's short-term economic assumptions in general 
are similar to those of private sector forecasts, as Table 2 
indicates. The CBO real GDP average of 2.2 percent for 1995-
1996 is the same as the Data Resources Incorporated average and 
only one-tenth percentage point lower than the average of 50 
forecasters making up the Blue Chip Consensus. CBO's figures 
for inflation, unemployment, and interest rates similarly fall 
within the range of other estimates.

                      TABLE 2.--FORECAST COMPARISON                     
 [4th-Quarter 1994 to 4th-Quarter 1996 Change, or 1995-1996 Avg. Levels]
------------------------------------------------------------------------
                          Percent change                                
                    -------------------------- Unemployment   3-month T-
                       Real GDP       CPI          rate          bill   
------------------------------------------------------------------------
CBO................          2.2          3.3           5.6          6.0
Blue Chip                                                               
 Consensus--April..          2.3          3.5           5.6          6.1
Data Resources                                                          
 Inc.--April.......          2.2          3.2           5.7          5.3
L. Meyer Assoc.--                                                       
 April.............          2.3          3.3           5.6          6.0
Administration--Jan                                                     
 uary..............          2.5          3.2           5.9          5.7
------------------------------------------------------------------------

      No Further Deficit Reduction Coming From the Business Cycle

    The strength of the business cycle expansion has been the 
primary contributor to the decline in the Federal deficit. In 
total, the deficit will have declined from $290 billion in 
fiscal year 1992 to a CBO estimated $176 in the current year--a 
decline of $114 billion. However, of that decline, CBO 
calculates that $101 billion, or 89 percent, was accounted for 
by the strong business cycle rebound. An alternative measure of 
the deficit, the ``standardized-employment'' deficit, strips 
out the portion of deficit reduction that is explained by the 
business cycle. CBO calculates that when the effects of the 
business cycle are removed, the Federal deficit declined only 
$13 billion between 1992 and 1995. The standardized-employment 
deficit in Chart 2 shows this $13 billion decline, from $290 
billion in 1992 to $277 billion in 1995.


    Because GDP growth will have to slow soon to the growth 
rate potential of the economy, further declines in the actual 
deficit due to the business cycle are now at an end. Further 
declines can only come from concerted policy action. Moreover, 
this future path is based on the optimistic premise that no 
recessions occur this year or over the next seven years, making 
this an eleven-year expansion--the longest expansion this 
century, as Chart 3 shows.


    With economic growth expected to slow as the business cycle 
matures, the challenge ahead is to expand the capacity of the 
American economy, including new factories, new technologies, 
and new job opportunities. However, a number of factors, are 
working against the ability of the American economy to expand 
its economic capacity.
          The household saving rate, after rising in 1992 to 
        5.5 percent, has averaged 4.1 percent in 1993 and 1994, 
        the lowest two-year average since World War II. 
        Moreover, even as private savings decline, the 
        government drain on those resources is projected to 
        rise. The Bipartisan Commission on Entitlement and Tax 
        Reform concluded that, if current policy is not 
        changed, the deficit will rise to 18 percent of GDP by 
        2030 from approximately three percent today.
          Owing to low private saving, continued sizable 
        Federal borrowing, and growing domestic investment 
        needs, borrowing from abroad has increased on net from 
        $57 billion in 1992 to $143 billion in 1994. January 
        Office of Management and Budget projections show 
        borrowing requirements reaching as high as $190 billion 
        by 1996, surpassing the previous highs reached in 1987.
          Rising requirements for foreign borrowing has helped 
        push long-term interest rates higher. The Ten-year 
        Treasury Note rate is now nearly two percentage points 
        higher than its level a year and a half ago, more than 
        can be explained by increases in short-term interest 
        rates.
          Despite these higher interest rates, the dollar has 
        weakened (Chart 4), indicating continued expectations 
        of unfavorable rates of return on American investments 
        relative to other countries. Within the past few weeks 
        the dollar has hit historical lows against the Japanese 
        Yen and the German Mark.
        
        
          Low national savings--the result of low private 
        savings and continued large federal deficits--coupled 
        with high interest rates harm national investment. As a 
        share of GDP, U.S. investment has been lagging behind 
        the other major industrial nations and behind its own 
        performance in the first two decades following WW II. 
        Tables 3 and 4 document these trends.

                                 TABLE 3.--LAGGING INVESTMENT AND INCOME GROWTH                                 
----------------------------------------------------------------------------------------------------------------
                                                        Japan    Germany   France     U.K.     Canada     U.S.  
----------------------------------------------------------------------------------------------------------------
Investment as % of GDP \1\..........................      24.1      14.7      15.0      14.3      15.3      13.9
Annual % Increase: Capital per Worker \2\...........       6.7       2.8       3.1       2.4       2.3       1.0
Income per Worker \3\...............................       2.8       1.9       2.2       1.7       1.2       0.8
----------------------------------------------------------------------------------------------------------------
\1\ Average 1973-1991.                                                                                          
\2\ 1970-1988.                                                                                                  
\3\ Measured using GDP per worker, 1975-1992.                                                                   
Source: OECD, Dr. Edward Wolff, and American Council for Capital Formation.                                     


           TABLE 4.--GROWTH IN U.S. NET CAPITAL STOCK BY TYPE           
              [Average annual growth rates in 1987 dollars]             
------------------------------------------------------------------------
                              1950-69         1970-89         1990-93   
------------------------------------------------------------------------
Total...................             4.1             3.3             1.4
Equipment...............             4.6             3.8             2.3
Less Info. Processing...             4.3             2.7             0.3
Industrial..............             4.7             2.4             0.1
Structures..............             3.8             2.8             0.6
------------------------------------------------------------------------
Source: American Council for Capital Formation.                         

          Inadequate investment has adversely affected 
        increases in the living standards of many Americans 
        because incomes are directly linked to the level of 
        capital they work with and to technological advances. A 
        report by Harvard professor Dale Jorgenson shows that 
        investments in new capital make the largest 
        contribution to economic growth. New York University 
        Professor Edward Wolff, using OECD data, has found a 
        high correlation between increased capital per worker 
        and technological advances, increasing further the 
        importance of investment. Given America's poor 
        prospects for national saving and investment, living 
        standards are at risk.
          Hiring uncertainties and regulatory hurdles are 
        helping to limit the supply of new jobs. Overhead costs 
        imposed on firms rise faster when new workers are added 
        than when existing workers are employed more 
        intensively. Partly in response, workplace overtime has 
        been trending up for over a decade and stands at a 
        record-high of 4.9 hours per week in manufacturing.
          The Office of Management and Budget in its last three 
        budgets has costed out the size of the tax burden 
        created by all current and proposed government programs 
        on future generations of taxpayers. Although these 
        calculations were dropped from this year's budget 
        document, last year's figures show that future 
        generations can expect to face a net tax rate of 
        approximately 82 percent of their income. This net rate 
        shows taxes they will pay over and above the government 
        benefits they can expect to receive during their 
        lifetime.
          The full extent of the implications of projected 
        future budgets was contained in the final report of the 
        Bipartisan Entitlement Commission. Interest payments on 
        the Federal debt will make up such a large portion of 
        the budget that future generations will be unable to 
        direct government to address coming national 
        priorities. In 2002, the Medicare Hospital Insurance 
        Trust Fund goes bankrupt. By 2012, entitlements and 
        interest payments alone consume all taxes. The Treasury 
        would become nothing more than a check writing agency, 
        mailing all of America's tax collections to entitlement 
        recipients and government bond holders. All remaining 
        programs, everything from police protection, defense, 
        education, environment, housing, commerce, and 
        science--about 7 percent of Gross Domestic Product--
        would have to be paid for with borrowed money. These 
        debts would add yearly to the accumulated level of 
        national debt, further increasing interest payments. In 
        2029, the Social Security Trust Fund goes bankrupt. By 
        2030, with 50 percent of revenues dedicated to interest 
        payments, future generations would have no leeway in 
        redirecting government toward future national 
        priorities.

                   Risks to the Economic Assumptions

    The risks to the economic projections appear on both the 
positive side and on the negative side. Should the current 
expansion continue as CBO and the Administration assume, this 
expansion would be older than any expansion this century. On 
the negative side, without attention to the factors listed 
above that are inhibiting the supply of savings, investment, 
and jobs, continued economic growth becomes more precarious. If 
the chance of recession rises as expansions mature, then any 
budgetary proposals that delay the path to budget balance 
likely increase the chances that budget balance will not be 
reached. A recession would raise Federal deficits significantly 
above CBO's and the Administration's estimates. Over the past 
quarter century, the increase in federal deficits that has 
resulted from cyclical downturns has averaged 1.6 percent of 
GDP or $107 billion dollars in today's economy. Chart 5 shows 
the size of the cyclical portion of the Federal deficit since 
1974. As a percent of GDP, the cyclical portion of the deficit 
rises during and just following each recession. On average, 
during each recession and the year following it the cyclical 
portion of the deficit is 1.6 percentage points higher than in 
the two years leading up to the recession.


    On the positive side, should Congress pass and carry out in 
coming years a budget resolution that balances the budget by 
2002, the economy would likely be significantly strengthened, 
according to both the current and the previous CBO directors 
and private forecasters. CBO concludes that, without taking 
into account the effects of individual policy changes that 
might affect saving, investment and work effort, national 
saving would be significantly increased by balancing the 
budget. Capital formation and productivity would increase and 
borrowing from abroad would lessen, improving U.S. net exports. 
Because of higher productivity, CBO predicts economic growth 
would average 0.1 percent a year faster through 2002 and would 
continue higher in subsequent years. Long-term interest rates 
could be as much as 1.7 percentage points lower by 2001.
    The Committee has not incorporated these effects into the 
economic assumptions for purposes of consideration of the 
Budget Resolution. If the Resolution passes, these economic 
benefits would become significantly more likely.
    Both a weaker cyclical economic path if the economic 
expansion runs its course and a stronger trend path from 
fulfilling the goal of a balanced budget are possible. For 
purposes of consideration of the Budget Resolution, the 
Committee assumptions incorporate CBO's economic projections 
which steer between these two events. If a recession does 
materialize, the economic benefits of a balanced budget--a 
fiscal dividend--could help to offset the severity of the 
downturn. Indeed, a balanced budget path that expands capital 
formation and the capacity of the economy to produce would help 
to stave off capacity constraint problems that might 
precipitate a recession. If as a result of passing the Budget 
Resolution, the economy does better than the Committee economic 
assumptions--as CBO anticipates, the fiscal dividend could help 
balance the budget earlier, start to build a budget surplus as 
a down-payment on future entitlement debts, or be returned to 
taxpayers.

                       III. Spending and Revenues

          Baseline Assumptions in the Committee Recommendation

    The baseline (referred to as the ``current law baseline'') 
as shown in this report was developed by the committee staff, 
in consultation with the Congressional Budget Office, and is 
based on CBO economic and technical assumptions. The basic 
premise is that the baseline reflects the last action of 
Congress on spending and revenues, which is current law, and 
assumes no changes for the next seven years. Specifically the 
baseline assumes:
          Defense discretionary spending is at the 1995 Clinton 
        request level, adjusted for final Congressional action 
        on appropriations in the 103rd Congress.
          Nondefense discretionary spending is at the 1995 
        enacted level. Emergency supplementals are not assumed 
        to be projected in the outyears.
          All other spending is at levels currently estimated 
        under the law, which is the same as the CBO March 
        baseline. Entitlements and other mandatory spending 
        consist mainly of benefit programs, such as social 
        security, medicare, and medicaid. Spending for those 
        programs is controlled by setting eligibility rules, 
        benefit levels, and other cost factors, rather than 
        voting annually on funding levels. Offsetting receipts 
        and deposit insurance spending is estimated in a 
        similar manner. Net interest spending is driven by the 
        size of the deficit and by interest rates and is not 
        directly affected by Congressional action.
          Revenue estimates similarly assume no change in 
        current tax law.
    Table 1 shows the current law baseline levels by major 
spending category.

                                         TABLE 1.--CURRENT LAW BASELINE                                         
                                              [Dollars in billions]                                             
----------------------------------------------------------------------------------------------------------------
                                            1995     1996     1997     1998     1999     2000     2001     2002 
----------------------------------------------------------------------------------------------------------------
Outlays: discretionary: \1\                                                                                     
    Defense.............................     $270     $258     $257     $257     $259     $262     $262     $262
    Nondefense..........................      278      281      282      280      279      280      280      280
      Subtotal discretionary............      548      539      539      537      538      542      542      542
Mandatory:                                                                                                      
    Social Security.....................      334      352      371      391      411      433      456      480
    Medicare............................      178      199      219      240      263      288      315      345
    Medicaid............................       89       99      110      122      135      148      163      178
    Other mandatory.....................      242      247      261      272      287      303      313      332
      Subtotal mandatory................      843      897      961     1025     1097     1172     1247     1335
Deposit insurance.......................      -16       -8       -4       -5       -3       -2       -2       -2
Offsetting receipts.....................      -80      -73      -75      -79      -82      -86      -90      -94
Net interest............................      235      260      270      278      291      305      317      331
                                         -----------------------------------------------------------------------
      Total outlays.....................     1530     1614     1689     1756     1841     1931     2014     2111
Revenues................................     1355     1418     1476     1546     1618     1698     1789     1884
Deficits................................     -175     -197     -214     -209     -223     -235     -224     -227
----------------------------------------------------------------------------------------------------------------
Note: Details may not add to totals due to rounding.                                                            
\1\ Assumes Clinton's 1995 defense request and a freeze on nondefense spending at the 1995 level.               

    The current law baseline is different from the CBO baseline 
in two aspects. First, the current law baseline assumes updated 
CBO economic estimates for the scheduled Consumer Price Index 
(CPI) rebenchmarking in 1998, as discussed in the Economics 
section of the markup book. Compared to CBO's March baseline, 
these changes reduce spending by $12.0 billion and increase 
revenues by $7.5 billion in 1999-2002, lowering deficits by 
$19.5 billion over this period.
    Second, the CBO baseline assumes that discretionary 
spending complies with the caps on discretionary spending set 
in the Omnibus Budget Reconciliation Act of 1993 (OBRA 1993), 
while the current law baseline assumes the defense and 
nondefense paths described above. When CBO estimates 
discretionary spending, they make no assumptions about how 
Congress will choose to meet the discretionary caps. Every 
discretionary account is increased by formula for inflation and 
pay raises and a negative adjustment is made to the overall 
discretionary total that brings it down to the statutory cap 
total. Because the law does not specify how to treat 
discretionary spending after the authority for the 
discretionary caps expire in 1998, CBO has presented two 
alternatives: (1) increase the cap total by the rate of 
inflation, or (2) freeze the cap total at the 1998 level 
through the projection period.
    It is important to note that CBO included the 
Administration's estimate of the discretionary cap, which is 
the statutory level, in their baseline. CBO's Analysis of the 
President's Budgetary Proposals for FY 1996 points out that the 
Office of Management and Budget (OMB) interpreted a provision 
of OBRA 1993 to allow a new method of calculating the required 
adjustment to the discretionary caps for inflation. This change 
in methodology increased the discretionary limits by almost $37 
billion in 1996-2000 over CBO's estimate. Although CBO does not 
believe that OMB's adjustments are correct, they feel compelled 
to use the statutory level.

                     Growth of Baseline Components

    Tables 2 and 3 show annual increases in the current law 
baseline, by major component, in dollar and percentage 
increases, respectively. Defense outlays would decline from 
$270 billion in 1995 to a low of $257 billion in 1997, rising 
slightly thereafter to $262 billion in 2002. The annual change 
in the defense baseline would average -0.4 percent over the 
period. Nondefense discretionary outlays would remain almost 
flat, going from $278 billion in 1995 to $280 billion in 2002. 
(Note: The current law baseline does not include supplementals 
or rescissions enacted this session. P.L. 104-6, the Defense 
Emergency Supplemental and Rescission bill, would increase 
defense outlays by less than $0.5 billion over 1995-1999 and 
would reduce nondefense outlays by less than $0.5 billion over 
1995-1999.)
    Among the major entitlement programs, outlays for medicare 
and medicaid are still growing at least three times faster than 
the rate of growth in the economy. Table 5 displays the sources 
of growth in mandatory spending between 1995 and 2000. It is 
interesting to note that for medicare and medicaid, over 40 
percent of the annual growth is unrelated to either caseload 
increases or automatic increases in reimbursement rates. 
Medicare outlays would grow from $178 billion in 1995 to $345 
billion in 2002, an average annual growth rate of 10 percent. 
Likewise Medicaid continues to outpace the economy, also 
growing at an average 10 percent per year, doubling in size 
from $89 billion in 1995 to $178 billion in 2002. Social 
Security spending grows by about 5 percent annually and by 2002 
would be 44 percent greater than spending in the current year. 
Other entitlements, such as welfare benefits, civil service and 
military retirement, agriculture subsidies, and unemployment 
insurance, among others, would grow at about twice the rate of 
inflation, increasing from $242 billion in 1995 to $332 billion 
in 2002.
    Deposit insurance spending reflects the net outlays caused 
by the government's pledges to protect depositors in insolvent 
institutions. Although deposit insurance outlays shot up to a 
record $66 billion in 1991, CBO expects that this category of 
spending will be less volatile in the future, now that the bulk 
of asset disposition by the RTC has taken place. This category 
shows negative outlays, indicating that income from liquidation 
and fees exceeds disbursements. Such net income will fall from 
$16 billion in 1995 to $2 billion by 2002.
    Offsetting receipts are income that the government records 
as negative outlays. All are either intragovernmental--
reflecting payments from one part of the Federal government to 
another--or proprietary--reflecting voluntary payments from the 
public in exchange for goods and services. Receipts that the 
government collects due to its sovereign powers are shown as 
governmental revenues. Offsetting receipts will increase 
slightly from $80 billion in 1995 to $94 billion in 2002, an 
increase of 17 percent. Most of this growth is attributed to 
increased collections for Medicare premiums. Net interest 
outlays will increase substantially between 1995 and 1996, due 
to recent increases in interest rates. Over the 1995-2002 
period, net interest will increase by 40 percent, from $235 
billion in 1995 to $331 billion in 2002.
    Revenues in the baseline increase from $1,355 billion in 
1995 to $1,884 billion in 2002, an increase of $529 billion. 
Overall revenues increase at an average annual rate of 4.8 
percent between 1995 and 2002. Table 6 shows the CBO revenue 
baseline, as well as average annual growth, for the various 
revenue components.
    The baseline takes into account that some provisions are 
scheduled to change or expire during the 1995-2000 period. In 
general, the baseline assumes that those changes and 
expirations occur on schedule. One category of taxes, excise 
taxes dedicated to trust funds, constitutes the sole exception 
to this rule. The baseline assumes that those taxes will be 
extended even if they are scheduled to expire, in order to be 
consistent with the spending assumptions. (Spending funded by 
trust fund collections is assumed to continue in the baseline; 
it would be inconsistent to assume that the collections cease 
and the spending continues.) The excise taxes that the current 
baseline assumes will be extended are those devoted to the 
Highway Trust Fund, the Airport and Airway Trust Fund, the 
Hazardous Substance Superfund, and the Leaking Underground 
Storage Tank Trust Fund. By the year 2000, those taxes 
contribute $25 billion of baseline excise tax revenues, about 
two-fifths of total excise taxes.
    Deficits continue to rise under the current law baseline, 
growing from $175 billion in 1995 to $227 billion in 2002, a 30 
percent increase. Deficits will grow faster as we pass the turn 
of the century, increasing to approximately $310 billion by 
2005, another 36 percent increase in only three years.

                                    TABLE 2.--GROWTH IN CURRENT LAW BASELINE                                    
                                      [Annual change, dollars in billions]                                      
----------------------------------------------------------------------------------------------------------------
                                            1996     1997     1998     1999     2000     2001     2002    Total 
----------------------------------------------------------------------------------------------------------------
Outlays--discretionary:\1\                                                                                      
    Defense.............................      -12       -1        0        2        3        0        0       -8
    Nondefense..........................        3        1       -2       -1        1        0        0        2
      Subtotal discretionary............       -9       -0       -2        1        4        0        0       -6
Mandatory:                                                                                                      
    Social Security.....................       18       19       20       21       22       23       24      146
    Medicare............................       21       20       21       23       25       27       30      167
    Medicaid............................       10       11       12       13       13       14       15       89
    Other mandatory.....................        5       14       11       16       16       10       18       90
      Subtotal mandatory................       54       64       64       72       75       75       88      492
Deposit insurance.......................        8        3       -0        2        1        0        0       14
Offsetting receipts.....................        7       -2       -4       -2       -4       -4       -4      -13
Net interest............................       25       10        9       13       14       11       14       95
                                         -----------------------------------------------------------------------
      Total outlays.....................       85       75       67       86       90       82       97      581
Revenues................................       63       58       71       72       80       91       94      529
Deficits................................      -22      -17        4      -14      -13       11       -3      -52
----------------------------------------------------------------------------------------------------------------
Note: Details may not add to totals due to rounding.                                                            
\1\ Assumes Clinton's 1995 defense request and a freeze on nondefense spending at the 1995 level.               


                                    TABLE 3.--GROWTH IN CURRENT LAW BASELINE                                    
                                             [Percent annual change]                                            
----------------------------------------------------------------------------------------------------------------
                                            1996     1997     1998     1999     2000     2001     2002    Total 
----------------------------------------------------------------------------------------------------------------
Outlays--discretionary:\1\                                                                                      
    Defense.............................       -4       -0        0        1        1        0        0       -3
    Nondefense..........................        1        0       -1       -0        0        0        0        1
      Subtotal discretionary............       -2       -0       -0        0        1        0        0       -1
Mandatory:                                                                                                      
    Social Security.....................        5        5        5        5        5        5        5       44
    Medicare............................       12       10       10       10        9        9       10       94
    Medicaid............................       11       11       11       10       10       10        9       99
    Other mandatory.....................        2        6        4        6        5        3        6       37
      Subtotal mandatory................        6        7        7        7        7        6        7       58
Deposit insurance.......................      -51      -43        7      -33      -22      -10       -7      -87
Offsetting receipts.....................       -9        3        5        3        5        5        5       17
Net interest............................       10        4        3        5        5        4        4       40
                                         -----------------------------------------------------------------------
      Total outlays.....................        6        5        4        5        5        4        5       38
Revenues................................        5        4        5        5        5        5        5       39
Deficits................................       12        9       -2        6        6       -5        1       30
----------------------------------------------------------------------------------------------------------------
Note: Details may not add to totals due to rounding.                                                            
\1\ Assumes Clinton's 1995 defense request and a freeze on nondefense spending at the 1995 level.               


            TABLE 4.--SOURCES OF GROWTH IN MANDATORY SPENDING           
                          [Dollars in billions]                         
------------------------------------------------------------------------
                      1996       1997       1998       1999       2000  
------------------------------------------------------------------------
Projected 1995                                                          
 spending........       $843       $843       $843       $843       $843
Sources of                                                              
 Growth:                                                                
    Growth in                                                           
     caseloads...         15         28         41         55         68
    Cost-of-                                                            
     living                                                             
     adjustments.         10         26         43         61         78
    Other                                                               
     automatic                                                          
     increases in                                                       
     benefits \1\          6         15         24         32         41
    Other                                                               
     increases in                                                       
     Medicare and                                                       
     Medicaid \2\         20         38         60         85        112
    Other growth                                                        
     in average                                                         
     Social                                                             
     Security                                                           
     benefits \3\          5          8         11         15         20
    Irregular                                                           
     number of                                                          
     benefit                                                            
     payments \4\         -3          0          0          0          5
    Change in                                                           
     outlays of                                                         
     credit                                                             
     liquidating                                                        
     accounts....         -1         -3         -4         -6         -7
    Other........          2          6          7         12         15
      Total......         54        118        182        254        332
Projected                                                               
 spending........        897        961      1,025      1,097      1,175
------------------------------------------------------------------------
Source: Congressional Budget Office.                                    
Automatic increases in Food Stamp benefits, Medicare reimbursement      
  rates, and the earned income tax credit under formulas specified by   
  law.                                                                  
All growth not attributed to caseloads and automatic increases in       
  reimbursement rates.                                                  
Supplemental Security Income and veterans' compensation and pensions    
  will pay 11 months of benefits in 1996, 13 in 2000, and 12 in other   
  years.                                                                

                        A. Spending by Function

    This section of the report provides details on the 
Committee's spending recommendations for each of the 20 
functional areas of the budget. Each functional section 
contains the following material.
          A table showing for fiscal years 1995-2002 the 
        Committee recommendation, the current law baseline, and 
        the President's budget for 1996 as reestimated by the 
        Congressional Budget Office.
          An overview of the major programs and activities 
        funded in the function and a discussion of baseline 
        trends.
          A summary of the Committee recommendation.
          A discussion of major assumptions for discretionary 
        and mandatory programs in the Committee recommendation.
    In all numerical tables and in text, ``President's budget'' 
refers to the President's 1996 budget request as reestimated by 
the Congressional Budget Office. In the case of all tables in 
this section: (1) ``BA'' means budget authority, (2) ``OT'' 
means outlays, (3) ``NA'' means not available, and (4) all 
years are fiscal years unless otherwise noted.
    The Balanced Budget and Emergency Deficit Control Act 
requires that the receipts and disbursements of the social 
security (OASDI) trust funds not be included in the President's 
budget or in the congressional budget resolution. The summary 
tables in this report display both on-budget and off-budget 
spending totals for the affected functions. However, the 
function tables in this section show total spending.

                     Function 050: NATIONAL DEFENSE

    Function 050 consists of the activities of the Department 
of Defense, defense programs in the Department of Energy, and 
some other, minor, defense-related activities in other 
agencies. More than 95 percent of the funds in function 050 are 
for the Department of Defense (DoD). About 4 percent of the 
funds in function 050 are for defense programs in the 
Department of Energy (DoE).
    The President has proposed $257.7 billion in budget 
authority and $261.1 billion in outlays for national defense in 
1996. The figures do not include the Administration's requested 
supplemental or the enacted supplemental (P.L. 104-6). The 
budget request for the DoD is $245.8 billion in budget 
authority. There are six major components of the budget for the 
DoD. Proposed funding for the largest four components (military 
personnel, operations and maintenance (O&M;), procurement, and 
research and development), is down $8.1 billion from last 
year's level. The budget request for defense programs in the 
DoE is $11.1 billion in budget authority, compared to $10.3 
billion last year.

                                                             FUNCTION 050: NATIONAL DEFENSE                                                             
                                                                  [Dollars in billions]                                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                   5-year                        7-year 
                                                        1995      1996      1997      1998      1999      2000      total     2001      2002      total 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Committee recommendation:                                                                                                                               
    BA..............................................    $261.4    $257.7    $253.4    $259.6    $266.2    $276.0  $1,312.8    $275.9    $275.9  $1,864.6
    OT..............................................     269.6     261.1     257.0     254.5     259.6     267.8   1,300.0     267.7     269.2   1,836.9
Current law:                                                                                                                                            
    BA..............................................     261.4     255.0     251.7     258.3     264.9     271.6   1,301.5     271.5     271.5   1,844.5
    OT..............................................     269.6     257.4     256.8     256.1     257.9     261.5   1,289.7     261.4     261.4   1,812.5
President's budget:                                                                                                                                     
    BA..............................................     261.4     257.7     253.4     259.6     266.2     276.0   1,312.8        NA        NA        NA
    OT..............................................     269.6     261.1     257.0     254.5     259.6     267.8   1,300.0        NA        NA        NA
Committee recommendation compared to:                                                                                                                   
    Current law:                                                                                                                                        
        BA..........................................  ........       2.7       1.7       1.3       1.3       4.4      11.3       4.4       4.4      20.1
        OT..........................................  ........       3.7       0.2      -1.6       1.7       6.3      10.3       6.3       7.9      24.5
    President's budget                                                                                                                                  
        BA..........................................  ........  ........  ........  ........  ........  ........  ........        NA        NA        NA
        OT..........................................  ........  ........  ........  ........  ........  ........  ........        NA        NA        NA
--------------------------------------------------------------------------------------------------------------------------------------------------------

                  Summary of Committee Recommendation

    The Committee recommendation assumes the President's 1996 
budget request without the proposed or enacted supplemental. 
Spending would decline over the next two years, and then begin 
to increase in 1998. Over the seven-year period 1996-2002--
$1,865 billion in budget authority and $1,837 billion in 
outlays would be spent on national defense, compared to $1,845 
billion in budget authority and $1,813 billion in outlays 
assumed under the current law baseline. Over the five year 
period 1996-2000-- $1,313 billion in budget authority and 
$1,300 billion in outlays would be spent on national defense.
    The Committee recommendation supports the DoD's two most 
important initiatives: readiness and quality of life. With 
respect to readiness, the O&M; budget is nearly the same as last 
year. The O&M; budget provides for readiness essentials like 
training and maintenance. With a nearly level O&M; budget the 
Administration claims that readiness is protected because of 
force reductions and streamlining of DoD infrastructure and 
overhead. According to the DoD, ``the FY 1996-97 budget 
maintains traditionally high rates for the operating tempo 
(OPTEMPO) of active U.S. forces. Army training rates will hold 
at 14.5 flying hours per month per tactical aircrew and 800 
miles per year for tanks. Navy steaming days per quarter will 
remain at 50.5 and 29 days for deployed and non-deployed 
fleets, respectively. Navy flying hours per crew per month will 
hold at 24 hours. Flying hours per month for active duty Air 
Force tactical aircrews will stay at about 20 hours.''
    Quality of life for service men, women, and their families 
impacts on readiness. To this end the Administration's budget 
provides for full military pay raises allowed under current 
law. The pay raise in 1996 is 2.4 percent and in 1997 it is 3.1 
percent. The Administration also ``added 2.7 billion over the 
next six year's for family and bachelor housing; cost of living 
and housing allowances; child care; family assistance; and 
morale, welfare, and recreation programs.''
    The drawdown to the Administration's Bottom-Up-Review (BUR) 
force structure is nearly complete. The BUR force structure is 
designed to provide a capability to fight and win two nearly 
simultaneous major conflicts. DoD force structure and personnel 
totals will be nearly 30 percent smaller, by the end of 1996, 
as compared with 1990. As the force has drawdown, the 
Administration has dramatically scaled back procurement 
funding. The Administration intends to reverse this trend 
beginning in 1997. The Administration's plans are to ``focus on 
upgrading the capabilities of some existing weapons, weapons 
platforms, and supporting systems. The 1996-97 procurement 
budget provides funds for AV-8B, C-17, F/A-18C/D and E/F, and 
E-8 aircraft. The budget also funds UH-60 helicopters, Javelin, 
Hellfire, Patriot, Tomahawk, and Trident II missiles. The 
budget also provides for M1 tanks, Aegis destroyers, and a 
third Seawolf submarine.''
    While the committee recommendation endorses the President's 
budget submission for defense, the committee believes that 
improved management of defense dollars would help ensure that 
we got more ``bang for the buck.'' This is also true of 
management practices in all other federal agencies. The 
committee therefore urges the Committee on Governmental Affairs 
and the Committee on Armed Services to jointly pursue a major 
restructuring of the federal buying system in order to 
significantly reduce the cost of the federal purchases of goods 
and services. The federal government's purchases of goods and 
services are expected to be approximately $450 billion in FY 
1996. Two-thirds of these purchases are made by the DoD. Last 
December, a DoD Process Action Team report found that Defense 
acquisition programs continue to be, on average, 33 percent 
over budget and behind schedule. According to that report, 
weapons are several generations out of date when fielded. The 
fifteen to twenty layer management structure is top-heavy and 
expensive.
    Last year's procurement reform bill, the Federal 
Acquisition Streamlining Act, was a step in the right 
direction. But the Congressional Budget Office (CBO) could not 
estimate savings resulting from the changes made by that Act. 
CBO and other studies have indicated that, in order to achieve 
billions in savings, there must be both organizational 
streamlining and significant reduction in cost and schedule 
overruns on large federal procurements. The General Accounting 
Office has reported that significant changes cannot occur 
without a change in the incentives facing the acquisition 
workforce. By undertaking comprehensive reforms that address 
these issues, the Committee believes that several billion 
dollars could be saved across the government.

                  Function 150: INTERNATIONAL AFFAIRS

                       Major Programs in Function

    Function 150 funds the Department of State, Agency for 
International Development, United States Information Agency and 
the Arms Control and Disarmament Agency. It includes resources 
for trade promotion activities, U.S. participation in 
multilateral development banks, international organizations 
including the United Nations, and various miscellaneous foreign 
affairs activities.
    In 1995, $18.9 billion in both budget authority and outlays 
would be spent under current law on international affairs 
activities. About a third of the discretionary portion of these 
funds is administered by the Agency for International 
Development and a quarter by the Department of State. 
Approximately ten percent goes to international financial 
institutions through the Department of Treasury and five 
percent goes to the United States Information Agency. 
Approximately 90 percent of the function is appropriated by the 
Foreign Operations and Commerce, Justice, State and Judiciary 
Subcommittees. The remainder is appropriated by the Agriculture 
and the Labor, Health and Human Services, and Education 
Subcommittees.
    Under current law, Function 150 spending would fall by 
approximately $2.4 billion in both budget authority and outlays 
between 1995 and 1999. In 2000, however, budget authority would 
spike up by $1.9 billion as a result of mandatory account 
fluctuations. The 1995 budget authority and outlay levels of 
$18.9 billion would fall, under current law, to $18.4 billion 
in budget authority and $16.6 billion in outlays by 2000.

                                       FUNCTION 150: INTERNATIONAL AFFAIRS                                      
                                              [Dollars in billions]                                             
----------------------------------------------------------------------------------------------------------------
                                                                               5-year                     7-year
                          1995     1996     1997     1998     1999     2000    total     2001     2002    total 
----------------------------------------------------------------------------------------------------------------
Committee                                                                                                       
 recommendation:                                                                                                
    BA................    $18.9    $15.4    $14.3    $13.5    $12.6    $14.1    $69.9    $14.3    $14.2    $98.4
    OT................     18.9     16.9     15.1     14.3     13.5     13.1     72.8     13.4     13.3     99.5
Current law:                                                                                                    
    BA................     18.9     17.9     17.3     17.0     16.5     18.4     87.2     18.5     18.5    124.2
    OT................     18.9     17.5     16.7     16.7     16.5     16.6     84.0     16.8     16.8    117.6
President's budget:                                                                                             
    BA................     19.8     18.8     17.6     16.8     15.8     17.3     86.3       NA       NA       NA
    OT................     19.8     17.5     16.7     16.5     16.0     15.8     82.5       NA       NA       NA
Committee                                                                                                       
 recommendation                                                                                                 
 compared to:                                                                                                   
    Current law:                                                                                                
        BA............       --     -2.5     -3.0     -3.5     -4.0     -4.3    -17.3     -4.3     -4.3    -25.8
        OT............       --     -0.6     -1.7     -2.4     -3.0     -3.5    -11.2     -3.5     -3.5    -18.1
    President's                                                                                                 
     budget:                                                                                                    
        BA............     -0.9     -3.4     -3.2     -3.3     -3.3     -3.2    -16.3       NA       NA       NA
        OT............     -0.9     -0.6     -1.6     -2.2     -2.5     -2.6     -9.6       NA       NA       NA
----------------------------------------------------------------------------------------------------------------

                Summary of the Committee Recommendation

    The Committee recommendation assumes $15.4 billion in 
budget authority and $16.9 billion in outlays in 1996 for 
programs and activities in Function 150. Budget authority would 
decline over the 1996-1999 period to $12.6 billion, but spike 
back up to $14.1 billion in 2000 due to the previously noted 
mandatory account fluctuations. Outlays would decline to $13.1 
billion by 2000. Over the seven-year period 1996-2002, $98.4 
billion in budget authority and $99.5 billion in outlays would 
be spent on international affairs functions, compared to $124.2 
billion in budget authority and $117.6 billion in outlays under 
the current law baseline. Over the five-year period 1996-2000, 
$69.9 billion in budget authority and $72.8 billion in outlays 
would be spent compared to the $86.3 billion in budget 
authority and $82.5 billion in outlays that the President's 
budget recommends.

    Major Discretionary Assumptions in the Committee Recommendation

    The Committee recommendation assumes discretionary spending 
levels of $17.9 billion in budget authority and $20.5 billion 
in outlays in 1996, a reduction of $2.5 billion in budget 
authority and $0.6 billion in outlays from the 1995 level. 
Spending would decline to $16.2 billion in budget authority and 
$16.9 billion in outlays by 2002. The Committee recommendation 
assumes, among other changes, the following major policy 
options to achieve the recommended funding levels:
    Increase efficiency and eliminate duplication by:
          Reducing funding of the Department of State by $433 
        million in budget authority and $381 in outlays over 
        five years.
          Consolidating and reducing programs of the U.S. 
        Agency for International Development by $3.9 billion in 
        budget authority and $2.7 billion in outlays over five 
        years.
          Consolidating and reducing broadcast and exchange 
        programs of the U.S. Information Agency by $1.0 billion 
        in budget authority and $0.9 billion in outlays over 
        five years.
          Terminating the Arms Control and Disarmament Agency 
        and consolidating functions into the Department of 
        State, saving $60 million in budget authority and $53 
        million in outlays over five years.
    Focus foreign aid by:
          Phasing down aid to European countries by $3.6 
        billion in budget authority and $1.7 billion in outlays 
        over five years.
          Reducing replenishments to soft loan arms of the 
        multilateral development banks by $3.8 billion in 
        budget authority and $1.6 billion in outlays over five 
        years.
    Reduce corporate subsidies by:
          Reducing export financing and trade promotion 
        programs by $755 million in budget authority and $404 
        million in outlays over five years.
          Reducing PL 480 food aid by $430 million in budget 
        authority and $386 million in outlays over five years.
    Readjust American participation in international 
organizations by:
          Limiting voluntary peacekeeping funding to the Camp 
        David Accord Multilateral Force and Observers mission 
        saving $286 million in budget authority and $268 
        million in outlays over five years.
          Maintaining funding for the United Nations Children's 
        Fund and International Atomic Energy Agency while 
        limiting overall participation in voluntary 
        international organizations and programs to $200 
        million annually. Saves $870 million in budget 
        authority and $788 million in outlays over five years.
          Progressively phasing back assessed contributions for 
        United Nations peacekeeping to the 1991 level with a 
        discretionary supplement, saving $ 1.3 billion in 
        budget authority and $1.2 billion in outlays over five 
        years.

      Major Mandatory Assumptions in the Committee Recommendation

    None.

          Function 250: GENERAL SCIENCE, SPACE, AND TECHNOLOGY

                       Major Programs in Function

    Function 250 includes the National Aeronautics and Space 
Administration (NASA) civilian space program, basic research 
programs of the Department of Energy (DOE), and the National 
Science Foundation (NSF).
    In 1995, $17.2 billion in budget authority and $17.5 
billion in outlays will be spent on science, space and 
technology programs. Just over 90 percent of the function is 
comprised of spending for NASA. Nearly 100 percent of the 
function is discretionary outlays under the jurisdiction of the 
Appropriations subcommittees on VA, HUD and Independent 
Agencies and Energy and Water.
    Under current baseline estimates, spending in Function 250 
holds steady over the 1995-2000 period, with budget authority 
remaining at $17.2 billion each year and outlays rising to 
$17.2 billion and holding by 1997.

                                                    FUNCTION 250: GENERAL SCIENCE, SPACE & TECHNOLOGY                                                   
                                                                  [Dollars in billions]                                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                   5-year                        7-year 
                                                        1995      1996      1997      1998      1999      2000      total     2001      2002      total 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Chairman's mark:                                                                                                                                        
    BA..............................................     $17.2     $16.7     $16.3     $16.1     $16.0     $15.8     $80.9     $15.8     $15.8    $112.5
    OT..............................................      17.5      16.7      16.6      16.3      16.0      15.9      81.5      15.9      15.9     113.3
Current law:                                                                                                                                            
    BA..............................................      17.2      17.2      17.2      17.2      17.2      17.2      86.0      17.2      17.2     120.4
    OT..............................................      17.5      16.9      17.2      17.2      17.1      17.2      85.6      17.2      17.2     120.0
President's budget:                                                                                                                                     
    BA..............................................      17.0      17.3      16.7      16.4      16.1      15.7      82.2        NA        NA        NA
    OT..............................................      17.5      17.1      16.9      16.5      16.2      15.9      82.6        NA        NA        NA
Chairman's mark compared to:                                                                                                                            
    Current law:                                                                                                                                        
        BA..........................................        --      -0.5      -0.9      -1.1      -1.2      -1.4      -5.1      -1.4      -1.4      -7.9
        OT..........................................        --      -0.2      -0.6      -0.9      -1.1      -1.3      -4.1      -1.3      -1.3      -6.7
    President's budget:                                                                                                                                 
        BA..........................................       0.2      -0.6      -0.4      -0.3      -0.1      -0.1      -1.3       -NA       -NA       -NA
        OT..........................................        --      -0.4      -0.3      -0.2       0.2        --      -1.1       -NA       -NA       -NA
--------------------------------------------------------------------------------------------------------------------------------------------------------

                 Summary of Committee's Recommendation

    The Committee's recommendation assumes $16.7 billion in 
budget authority and outlays in 1996 for programs and 
activities in Function 250. Spending would decline over the 
1996-2002 period, falling to $15.8 billion in budget authority 
and $15.9 billion in outlays by 2002. Over the seven-year 
period 1996-2002, $113 billion in budget authority and outlays 
would be spent on general science, space and technology 
functions, compared to $120 billion in budget authority and 
outlays assumed under the current law baseline. Over the five-
year period 1996-2000, $81 billion in budget authority and 
outlays would be spent compared to the $83 billion in budget 
authority and outlays that the President recommends.

   Major Discretionary Assumptions in the Committee's Recommendation

    The Committee's recommendation assumes discretionary 
spending levels of $16.7 billion in budget authority and 
outlays in 1996, a reduction of $0.5 billion in budget 
authority and $0.2 billion in outlays from the 1995 level. This 
spending would decline to $15.8 billion in budget authority and 
$15.9 billion in outlays in 2002. The Committee's 
recommendation assumes the following major policy options to 
achieve the recommended funding levels:
    The Committee's recommendation assumes the President's 
proposal to streamline and consolidate activities within NASA. 
The Committee recommends that NASA continue its efforts to 
increase its reliance on the private sector for operations and 
changes in NASA's procurement policy. The Committee believes 
that NASA's internal reviews, to be competed this spring, will 
provide changes within NASA to reduce outlays and return NASA 
to its primary mission of a research and development agency.
    For the National Science Foundation, the Committee's 
recommendation assumes the President's proposed cuts in 
academic infrastructure and major research equipment. The 
Committee assumes a $100 million reduction in NSF research and 
a refocus on its original mission of basic scientific research.
    For Department of Energy research, the Committee's 
recommendation assumes the President's freeze and reduction in 
outyears.

     Major Mandatory Assumptions in the Committee's Recommendation

    There are no mandatory proposals in this function.

                          Function 270: ENERGY

                       Major Programs in Function

    Function 270 includes the civilian activities of the 
Department of Energy (DOE), including solar, renewable, fossil, 
and conservation research and development, civilian nuclear 
waste disposal, State energy conservation grants, the strategic 
petroleum reserves, the naval petroleum reserves and the power 
marketing administrations. In addition, this function includes 
the Rural Utilities Service (formerly called the Rural 
Electrification Administration (REA)), the Nuclear Regulatory 
Commission (NRC), the Uranium Enrichment Corporation, and the 
Tennessee Valley Authority's (TVA) power program.
    Discretionary outlays amount to $6.6 billion in this 
function for 1995. Mandatory spending in this function is more 
than offset by receipts and net mandatory spending reduces 
total outlays in this function by $1.6 billion in 1995. Over 
the five-year time frame, total outlays for this function fall 
from $4.9 billion in 1995 to $3.9 billion in 2000. This decline 
is due to lower mandatory spending by the TVA power program and 
the growth in net receipts from rural electric and telephone 
loans.

                                                                  FUNCTION 270: ENERGY                                                                  
                                                                  [Dollars in billions]                                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                   5-year                        7-year 
                                                        1995      1996      1997      1998      1999      2000      total     2001      2002      total 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Committee recommendation:                                                                                                                               
    BA..............................................      $6.3      $2.9      $1.7      $3.3      $4.2      $4.1     $16.2      $4.0      $4.0     $24.2
    OT..............................................       4.9       2.7       1.0       2.6       3.1       2.8      12.4       2.9       2.9      18.2
Current law:                                                                                                                                            
    BA..............................................       6.3       5.6       5.3       5.3       5.6       5.5      27.3       5.5       5.5      38.3
    OT..............................................       4.9       4.7       4.0       4.1       4.3       4.2      21.3       4.2       4.2      29.7
President's budget:                                                                                                                                     
    BA..............................................       6.3       5.3       4.9       5.0       4.5       4.4      24.2        NA        NA        NA
    OT..............................................       4.9       4.5       4.3       4.3       3.9       3.3      20.3        NA        NA        NA
    Committee recommendation compared to:                                                                                                               
    Current law:                                                                                                                                        
        BA..........................................  ........      -2.7      -3.6      -2.0      -1.4      -1.5     -11.1      -1.5      -1.5     -14.1
        OT..........................................  ........      -2.0      -3.0      -1.4      -1.1      -1.4      -8.9      -1.3      -1.3     -11.5
    President's budget:                                                                                                                                 
        BA..........................................  ........      -2.4      -3.2      -1.7      -0.3      -0.3      -8.0        NA        NA        NA
        OT..........................................  ........      -1.8      -3.3      -1.7      -0.7      -0.5      -7.9        NA        NA        NA
--------------------------------------------------------------------------------------------------------------------------------------------------------

               Summary of the Committee's Recommendation

    The Committee recommendation assumes $2.9 billion in budget 
authority and $2.7 billion in outlays in 1996 for programs and 
activities in Function 270. As a result of the proceeds from 
asset sales, which reduces spending in this function, spending 
falls abruptly in 1996 and 1997 and rebounds by 1998. Over the 
seven-year period 1996-2002, $24.2 billion in budget authority 
and $18.2 billion in outlays would be spent on energy programs, 
compared to $38.3 billion in budget authority and $29.7 billion 
in outlays assumed under the current law baseline. Over the 
five year period 1996-2000, $16.2 billion in budget authority 
and $12.4 billion in outlays would be spent compared to the 
$24.2 billion in budget authority and $20.3 billion in outlays 
that the President recommends. While the Committee 
recommendation includes $8 billion more in savings than the 
President's budget, by the year 2000, spending in this function 
would only be $0.3 billion lower than the President's budget 
for that year.

    Major Discretionary Assumptions in the Committee Recommendation

    The Committee Recommendation assumes discretionary spending 
levels of $5.9 billion in budget authority and $6.6 billion in 
outlays in 1996, a reduction of $1.0 billion in budget 
authority and $0.2 billion in outlays from the 1995 level. This 
spending would decline to $4.0 billion in budget authority and 
$2.9 billion in outlays in 2002. The Committee Recommendation 
assumes the following major policy options to achieve the 
recommended funding levels:
    Privatization of non-governmental functions such as the 
sale of the naval petroleum reserves (NPR), which reduces the 
need for appropriations generating $0.7 billion in budget 
authority and $0.6 billion in outlay savings over five years; 
and,
    Reduction in corporate technology subsidies by:
          Phasing-in a 50 percent reduction in near-term 
        commercialization efforts, reducing outlays by $3.0 
        billion over five years. Due to the major increases 
        that solar, renewables and conservation research and 
        development programs have received since 1990, the 
        Committee Recommendation retains funding for these 
        programs at 50 percent above 1990 levels. The Committee 
        Recommendation would continue to provide a total of $21 
        billion over the next five years for Federal energy 
        research and development efforts.
          Providing no new funding for the clean coal 
        technology program as proposed by the Clinton 
        Administration.
    Consolidating and streamlining Department of Energy (DOE) 
programs, which reduces outlays by $1.4 billion over five 
years. Because other proposals for this function reduce DOE's 
functions, a corresponding reduction can be made in overhead 
and administrative expenses. The Department of Energy recently 
announced total five year savings of $1.8 billion from its 
``Strategic Alignment and Downsizing Initiative''.
    The Committee Recommendation assumes no reductions in the 
Rural Utilities Service (RUS).

      Major Mandatory Assumptions in the Committee Recommendation

    The Committee Recommendation assumes mandatory spending 
levels that amount to -$2.9 billion in budget authority and 
-$3.8 billion in outlays in 1996. Net mandatory spending 
declines rapidly in 1996-1997 as a result of the proceeds from 
assets sales. Net mandatory spending levels off after 1997 and 
amounts to -$2.5 billion in 2000. The Committee Recommendation 
assumes the following major policy options to achieve the 
recommended funding levels:
    Privatization and the sale of non-governmental assets. 
These recommendations include:
          Privatization of the naval petroleum reserves (NPR). 
        The sale of the naval petroleum reserves generates $1.5 
        billion in 1996 receipts. Because the Federal 
        government would no longer collect revenues after 1996 
        from the sale of oil produced from the NPR, there is an 
        offsetting cost associated with this proposal. While 
        this proposal causes a net $316 million cost for 
        mandatory spending over five years, this cost is more 
        than offset by discretionary spending savings (see 
        discussion above).
          Privatization of the uranium enrichment corporation. 
        Adopts the President's proposal to sell the uranium 
        enrichment corporation. The 1992 Energy Policy Act 
        established the uranium enrichment corporation as a 
        Federal corporation and provided for its eventual 
        privatization. The corporation is required to submit a 
        privatization plan to the President and the Congress by 
        July 1, 1995. The sale of the uranium enrichment 
        corporation reduces BA by $1.5 billion and outlays by 
        $1.6 billion over the five year period.
          A modification of the President's proposals to sell 
        four power marketing administrations (PMAs). The 
        President's budget proposed to sell the Alaska, 
        Southeastern, Southwestern, and Western PMAs, which 
        generated $4.5 billion in receipts. Due to the 
        complexities associated with the sale of these PMAs, 
        the Committee Recommendation only assumes $1.6 billion 
        from the sale of the PMAs. The Committee Recommendation 
        assumes the committees of jurisdiction will make the 
        determination of which of the PMA assets will be sold. 
        The Committee Recommendation also assumes the existing 
        customers are given the first opportunity to purchase 
        these assets.
          A modification of the President's proposal to sell a 
        portion of the oil held by the strategic petroleum 
        reserves (SPRO), generating $900 million over five 
        years. The President's budget proposes to decommission 
        the Weeks Island facility, one of SPRO's storage 
        facilities that is experiencing technical difficulties, 
        and sell 7 million barrels of the 72 million barrels of 
        oil stored in this facility to cover the cost of 
        decommissioning the facility (estimated at $65 million) 
        and transporting the remaining 65 million barrels to 
        other SPRO facilities (estimated at $35 million). This 
        option would sell all of the Weeks Island oil except 10 
        million barrels, which can be transported to a nearby 
        facility inexpensively. SPRO would continue to hold 530 
        million barrels under this policy option.
    Extension of Nuclear Regulatory Commission (NRC) fees. 
Under current law, NRC's is required to collect 100 percent of 
its budget from NRC licensees. This authority sunsets in 1998, 
when NRC will be only required to collect one-third of its 
budget from NRC licensees. This option would extend NRC's 
authority to collect 100 percent of its budget through 2002.

            Function 300: NATURAL RESOURCES AND ENVIRONMENT

                       Major Programs in Function

    This function includes funding for water resources, 
conservation and land management, recreational resources and 
pollution control and abatement. Agencies with major programs 
in this function include: the Army Corp of Engineers, Bureau of 
Reclamation, Forest Service, Bureau of Land Management, Fish 
and Wildlife Service, the National park Service, Environmental 
Protection Agency, National Oceanic and Atmospheric 
Administration, and the U.S. Geological Survey.
    In 1995, $22.3 billion in BA and $21.7 billion in outlays 
will be spent on natural resources and environment. 
Approximately 99 percent of the funding in 1995 is for 
discretionary programs. Budget authority decreases from $22.3 
billion in 1995 to $21.2 billion in 2000 and outlays decrease 
from $21.7 billion in 1995 to $21.6 billion in 2000.
    On December 14, 1994 the Secretary of Agriculture announced 
his intention to offer participants the opportunity to modify 
and extend their conservation reserve program (CRP) contracts 
up to an additional 10 years when the current contracts expire. 
The baseline assumes that 10 year extensions will be offered to 
program participants when their existing contracts expire and 
that approximately 15 million enrolled acres will be extended. 
With the extension, outlays for the CRP will fall from $1.9 
billion in 1995, covering 36.4 million acres, to $1.2 billion 
in 2000 on 21.4 million acres. Without the extension the 
outlays for the CRP would fall to $0.5 million covering 8.2 
million acres by 2000.

                                                     FUNCTION 300: NATURAL RESOURCES AND ENVIRONMENT                                                    
                                                                  [Dollars in billions]                                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                   5-year                        7-year 
                                                        1995      1996      1997      1998      1999      2000      total     2001      2002      total 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Chairman's mark:                                                                                                                                        
    BA..............................................     $22.3     $19.5     $18.3     $15.6     $16.8     $16.4     $86.7     $15.0     $15.8    $117.5
    OT..............................................      21.7      20.4      20.1      17.9      18.4      17.4      94.3      15.9      16.6     126.8
Current law:                                                                                                                                            
    BA..............................................      22.3      22.0      22.0      21.6      21.4      21.2     108.3      20.9      20.8     149.9
    OT..............................................      21.7      21.4      21.9      21.9      21.8      21.6     108.5      21.1      21.0     150.6
President's budget:                                                                                                                                     
    BA..............................................      22.3      22.9      22.3      21.7      21.2      20.6     108.9        NA        NA        NA
    OT..............................................      21.7      21.9      22.2      21.9      21.5      20.8     108.3        NA        NA        NA
Chairman's mark compared to:                                                                                                                            
    BA..............................................  ........      -2.5      -3.7      -6.0      -4.6      -4.8     -21.6      -5.8      -5.0     -32.4
    OT..............................................  ........      -1.0      -1.8      -4.0      -3.3      -4.2     -14.3      -5.2      -4.3     -23.7
President's budget:                                                                                                                                     
    BA..............................................  ........      -3.4      -4.0      -6.1      -4.4      -4.2     -22.2        NA        NA        NA
    OT..............................................  ........      -1.5      -2.1      -4.0      -3.0      -3.4     -14.0        NA        NA        NA
--------------------------------------------------------------------------------------------------------------------------------------------------------

                  Summary of Committee Recommendation

    The Committee recommendation assumes $19.5 billion in 
budget authority and $20.4 billion in outlays in 1996 for 
programs and activities in Function 300. Spending would decline 
over the 1996-2002 period, falling to $15.8 billion in budget 
authority and $16.6 billion in outlays by 2002. Over the seven-
year period 1996-2002, $117.5 billion in budget authority and 
$126.8 billion in outlays would be spent on natural resources 
and environment, compared to $149.9 billion in budget authority 
and $150.6 billion in outlays assumed under the current law 
baseline. Over the five year period 1996-2000, $86.7 billion in 
budget authority and $94.3 billion in outlays would be spent 
compared to $108.9 billion in budget authority and $108.3 
billion in outlays that the President recommends.

     Major Discretionary Assumption in the Committee Recommendation

    The Committee recommendation assumes discretionary spending 
levels of $19.1 billion in budget authority and $20.3 billion 
in outlays in 1996, a reduction of $2.5 billion in budget 
authority and $1.0 billion in outlays from the 1995 level. This 
spending would decline to $16.9 billion in budget authority and 
$18.0 billion in outlays in 2002. The Committee recommendation 
assumes the following major policy options to achieve the 
recommended funding level.
          Federal contributions to the state revolving funds 
        (SRF) were intended to help in the transition to full 
        state and local financing of the SRFs by 1995. Since 
        1972, the Congress has appropriated about $65 billion 
        to assist localities in complying with the Clean Water 
        Act. The Senate-passed rescission bill rescinded $1.2 
        billion which was appropriated in 1995 and prior years 
        for water infrastructure SRFs. This option assumes that 
        grants for water infrastructure would be phased-out 
        over 3 years, reducing outlays by $5.3 billion over 
        1996-2000.
          Eliminate lower priority and duplicate programs in 
        the Department of Agriculture and Department of 
        Interior such as the forestry incentives program, urban 
        park and recreation fund, international forestry, 
        advisory council on historic preservation. Accepts the 
        President's proposal to reduce the agriculture 
        conservation program by 50 percent.
          Accepts most of the Administration's reductions for 
        the Army Corp of Engineers and the Bureau of 
        Reclamation which reduces outlays by $1.3 billion over 
        1996-2000.
          Reduce the National Oceanic Atmospheric 
        Administration by 5 percent and accepts the President's 
        request for construction, reducing outlays by $0.6 
        billion over 1996-2000. As part of the reduction the 
        option assumes the President's proposal to terminate 41 
        projects and privatizing portions of the National 
        Weather Service such as specialized weather services 
        provided to aviation, marine and agricultural 
        communities. (See Department of Commerce description in 
        Function 370.)
          Reform the various land management agencies of the 
        Department of Interior and the Forest Service. The 
        Committee recommendation assumes a 10 percent reduction 
        in the operating budgets of the Forest Service, 
        National Park Service, Fish and Wildlife Service, the 
        Bureau of Land Management and dissolves the National 
        Biological Service (maintains most of the research and 
        cooperative unit activities). The Committee 
        recommendation would continue to provide over $15.5 
        billion in outlays to support operations within the 
        various land management agencies over 1996-2000.
    The Committee assumes the Superfund program will be 
reformed and reauthorized this year. The resolution assumes 
that Superfund reauthorization will be on-budget and will not 
increase mandatory spending. The Committee recommendation has 
made no specific assumptions about funding levels or funding 
sources of the reformed Superfund program. It is assumed that 
those issues will be dealt with in the context of Superfund 
reform legislation.

      Major Mandatory Assumptions in the Committee Recommendation

    The Committee recommendation assumes mandatory spending 
levels of $0.4 billion in budget authority and $0.1 billion in 
outlays in 1996, basically the same as current law level. Over 
the five-year period mandatory spending is reduced by $1.8 
billion in budget authority and outlays.
          Privatization of non-governmental functions and 
        leases. These recommendations include:
                  Lease approximately 8 percent of the 19 
                million acre Arctic National Wildlife Refuge 
                (ANWR). The development of ANWR will only 
                affect approximately 13,000 acres. The lease of 
                ANWR would reduce budget authority and outlays 
                $1.4 billion over 1996-2000.
                  Privatize the helium reserve as proposed by 
                President Clinton. This assumption would reduce 
                outlays by $27 million over 1996-2000.
    Presidio of San Francisco--The resolution assumes savings 
from the sale of the Presidio over a three year period 
beginning in 2000. However, there could be significant costs 
required for the cleanup under federal law. Also, transfer of 
the property from the National Park Service to private entities 
would trigger application of local zoning and building code 
ordinances, under which the Presidio could be designated for 
public use only. Since the City of San Francisco is committed 
to maintaining the Presidio as public space, any potential 
buyers of Presidio property would be aware that a change in 
this use status could take many years. It is possible that no 
sale would occur during the time period covered by the budget 
resolution and/or that the amount realized from such sale would 
be less than the savings assumed.
    In the event that CBO cannot verify savings from sale of 
the Presidio, the Committee assumes that the Committee of 
Jurisdiction will meet its reconciliation instructions, through 
other reforms, such as S. 594. That bill would establish a 
public trust structure for the property in order to maximize 
the collection of rents and other revenues to minimize federal 
costs and not increase the level of the federal deficit or debt 
of the Federal Government.

                       Function 350: AGRICULTURE

                       Major Programs in Function

    This function includes programs that provide farm income 
stabilization and agriculture research and services. Programs 
in this function include direct assistance and loans to food 
and fiber producers, market information and agriculture 
research. Producers are assisted with deficiency payments, crop 
insurance, non-recourse crop loans, operating loans and export 
promotion.
    The spending in function 350 decreases from $14.0 billion 
in budget authority and $12.7 billion in outlays in 1995 to 
$13.7 billion in BA and $12.5 billion in outlays in 2000. The 
decrease is due to a decline in mandatory spending.
    The price support programs operated by the Commodity Credit 
Corporation (CCC) make up most of the spending in this 
function. CCC spending has varied widely from $0.6 billion in 
1975 to a record high of $26 billion in 1986. In the 1970s, CCC 
outlays totaled $30.3 billion. CCC spending has ranged from $6 
billion to $16 billion in the 1990s. The CBO projects that CCC 
spending will decrease from $8.7 billion in 1995 to $7.9 
billion in 2000. However, the increase in crop insurance 
outlays from $0.6 billion in 1995 to $1.4 billion in 2000 
largely offsets the decline in CCC spending. Over the five year 
period, 1996-2000, the CBO projects that $41.6 billion would be 
spent on farm commodity programs.

                                                                FUNCTION 350: AGRICULTURE                                                               
                                                                  [Dollars in billions]                                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                   5-year                        7-year 
                                                        1995      1996      1997      1998      1999      2000      total     2001      2002      total 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Chairman's mark:                                                                                                                                        
    BA..............................................     $14.0     $13.1     $12.2     $11.8     $11.7     $11.7     $60.5     $10.5     $10.1     $81.1
    OT..............................................      12.7      11.9      10.9      10.6      10.4      10.6      54.3       9.4       9.1      72.9
Current law:                                                                                                                                            
    BA..............................................      14.0      14.5      14.2      14.0      13.9      13.7      70.3      12.6      12.6      95.4
    OT..............................................      12.7      13.1      12.8      12.8      12.6      12.5      63.8      11.5      11.5      86.8
President's budget:                                                                                                                                     
    BA..............................................      14.0      14.5      14.2      13.8      13.5      13.3      69.3        NA        NA        NA
    OT..............................................      12.7      13.1      12.8      12.7      12.3      12.1      62.9        NA        NA        NA
Chairman's mark compared to:                                                                                                                            
    Current law:                                                                                                                                        
        BA..........................................  ........      -1.3      -2.0      -2.3      -2.2      -1.9      -9.7      -2.1      -2.4     -14.3
        OT..........................................  ........      -1.2      -2.0      -2.2      -2.2      -1.9      -9.5      -2.1      -2.4     -14.0
    President's budget:                                                                                                                                 
        BA..........................................  ........      -1.4      -1.9      -2.0      -1.9      -1.5      -8.7        NA        NA        NA
        OT..........................................  ........      -1.2      -1.9      -2.1      -1.9      -1.5      -8.6        NA        NA        NA
--------------------------------------------------------------------------------------------------------------------------------------------------------

                  Summary of Committee Recommendation

    The Committee recommendation assumes $13.1 billion in 
budget authority and $11.9 billion in outlays in 1996 for 
programs and activities in Function 350. Spending would decline 
over the 1996-2002 period, falling to $10.1 billion in budget 
authority and $9.1 billion in outlays by 2002. Over the seven-
year period 1996-2002, $81.1 billion in budget authority and 
$72.9 billion in outlays would be spent on agriculture, 
compared to $95.4 billion in budget authority and $86.8 billion 
in outlays assumed under the current law baseline. Over the 
five year period 1996-2000, $60.5 billion in budget authority 
and $54.3 billion in outlays would be spent compared to the 
$69.3 billion in budget authority and $62.9 billion in outlays 
that the President recommends.

    Major Discretionary Assumptions in the Committee Recommendation

    The Committee recommendation assumes discretionary spending 
levels of $3.6 billion in budget authority and $3.8 billion in 
outlays in 1996, a reduction of $0.4 billion in budget 
authority and $0.2 billion in outlays from the 1995 level. 
Budget authority would remain essentially at the 1996 level and 
outlays decrease to $3.7 billion. The Committee recommendation 
assumes the following major policy options to achieve the 
recommended funding levels:
          Reduce Agriculture Research Service (ARS) and 
        Cooperative State Research, Education, and Extension 
        Service (CSREES) by 10 percent, reducing outlays by 
        $1.0 billion. The option assumes the President's 
        request for buildings and facilities for the ARS and 
        the CSREES and elimination of the CSREES special 
        earmarked grants. The option does not assume reductions 
        for the 4-H program.
          Eliminate subsidies for the Foreign Agriculture 
        Service cooperator and Cochran fellowship programs, 
        reducing outlays by $0.1 billion over 1996-2000. The 
        Foreign Agriculture Service (FAS) provides subsidies 
        for U.S. Trade and commodity organizations (called 
        cooperators). This provides overseas advertising 
        campaigns, trade show exhibits and promotional 
        materials. Under the Cochran fellowship program, the 
        FAS provides, agricultural and agribusiness training to 
        foreign nationals. Funding for these programs would be 
        reverted to the private sector.
          Fund the emergency food assistance program at the 
        President's request, reducing outlays by $0.1 billion 
        over 1996-2000.

      Major Mandatory Assumptions in the Committee Recommendation

    The Committee recommendation assumes mandatory spending 
levels of $9.5 billion in budget authority and $8.0 billion in 
outlays in 1996. Over the five year period, 1996-2000, the 
Committee recommendation assumes that $42.3 billion in budget 
authority and $35.7 billion in outlays will be spent on the 
Commodity Credit Corporation price support programs, crop 
insurance, and other related mandatory programs in this 
function. This represents a 16-percent reduction in budget 
authority from the current law baseline.
    The spending reductions could be accommodated under the 
1995 farm bill when reauthorized. The reductions can be made 
while increasing opportunities for farmers to base their 
planting decisions on market signals and not government 
regulation; reduce regulatory burden; enhance international 
competitiveness; maintain consistency between farm programs and 
environmental goals; and provide producers with a basic 
financial safety net against catastrophic crop disasters.
    The Committee recognizes the importance of agriculture to 
the nation's economy. A Sense of the Senate amendment was 
adopted by the Committee on a vote of 11-7. The Sense of the 
Senate states that in meeting its reconciliation instructions, 
the Senate Committee on Agriculture, Nutrition and Forestry 
should provide that no more than 20 percent of its savings be 
achieved in commodity programs.

               Function 370: COMMERCE AND HOUSING CREDIT

                       Major Programs in Function

    Function 370 includes discretionary housing programs, such 
as subsidies for single and multifamily housing in rural areas 
and mortgage insurance provided by the Federal Housing 
Administration; net spending by the Postal Service; 
discretionary funding for commerce programs, such as 
international trade and exports, science and technology, the 
periodic census, small business, and regulators of securities 
and commodity futures markets; and mandatory spending for 
deposit insurance for banks, savings and loans, and credit 
unions.

                                                        FUNCTION 370: COMMERCE AND HOUSING CREDIT                                                       
                                                                  [Dollars in billions]                                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                   5-year                        7-year 
                                                        1995      1996      1997      1998      1999      2000      total     2001      2002      total 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Chairman's mark:                                                                                                                                        
    BA..............................................      $8.9      $6.6      $8.3      $1.8      $3.0      $1.5     $21.2      $0.5      $0.2     $21.9
    OT..............................................     -13.5      -7.0      -6.2      -8.4      -5.2      -3.9     -30.7      -3.3      -3.4     -37.4
Current law:                                                                                                                                            
    BA..............................................       8.9       8.0      10.2       4.0       5.5       2.2      29.9       2.5       2.6      34.9
    OT..............................................     -13.5      -6.1      -4.6      -6.3      -2.7      -3.1     -22.7      -1.2      -1.0     -24.9
President's budget:                                                                                                                                     
    BA..............................................       8.9       8.4      10.4       4.2       5.5       5.0      33.5        NA        NA        NA
    OT..............................................     -13.5      -5.9      -4.4      -6.1      -2.6      -0.5     -19.3        NA        NA        NA
Chairman's mark compared to:                                                                                                                            
    Current law:....................................                                                                                                    
        BA..........................................  ........      -1.4      -1.8      -2.2      -2.5      -0.7      -8.6      -2.1      -2.4     -13.0
        OT..........................................  ........      -0.9      -1.6      -2.1      -2.5      -0.8      -8.0      -2.1      -2.4     -12.4
    President's budget:.............................                                                                                                    
        BA..........................................       0.0      -1.8      -2.1      -2.4      -2.5      -3.5     -12.3        NA        NA        NA
        OT..........................................       0.0      -1.2      -1.9      -2.3      -2.6      -3.4     -11.4        NA        NA        NA
--------------------------------------------------------------------------------------------------------------------------------------------------------

                  Summary of Committee Recommendation

     The totals for budget authority and outlays are unusual 
because the patterns of the mandatory activities in the 
function mask the levels of spending in the discretionary 
programs. For 1996, the Committee recommendation assumes $6.6 
billion in budget authority and -$7.0 billion in outlays for 
all programs in Function 370. Net spending would actually 
increase over the 1996-2002 period, reaching -$3.4 billion in 
outlays by 2002, although this is more a result of the current 
law baseline, which reflects dramatically reduced deposit 
insurance premiums paid by banks, than a result of any 
Committee recommendation. Over the seven-year period, the 
Committee recommendation for this function would reduce the 
deficit by $12.5 billion relative to the current law baseline. 
Over the 1996-2000 period, outlays would be -$30.5 billion 
under the Committee recommendation, compared to the -$19.3 
billion that the President recommends.

    Major Discretionary Assumptions in the Committee Recommendation

     The Committee recommendation assumes discretionary 
spending levels of $2.1 billion in budget authority and $2.4 
billion in outlays. This spending would decline to $1.2 billion 
in budget authority and outlays in 2002.
     The Committee recommendation assumes certain major policy 
options to achieve the recommended funding levels, including 
the gradual elimination of the Department of Commerce (as 
recommended by Senator Dole and Senator Abraham's task force on 
eliminating federal agencies). Although parts of the Department 
of Commerce would need to be remain as independent offices or 
parts of other agencies (Patent and Trademark Office, Bureau of 
the Census, Bureau of Economic Analysis, National Oceanic and 
Atmospheric Administration, the standards bureau in the 
National Institute of Standards and Technology, and most of the 
Export Administration), the rest of the department's activities 
in this function are not crucial responsibilities of the 
federal government or else duplicate responsibilities that are 
handled by other federal agencies. Eventually, appropriations 
could be reduced by more than $1 billion annually under this 
option.
     The Committee assumes continuation of funding for 
conducting the next census in 2000, as required, although with 
sampling improvements and other efficiencies recommended by the 
General Accounting Office (GAO) to reduce costs.
     The Committee also recommends centralizing the servicing 
of the rural, single-family loan portfolio held by the 
Department of Agriculture (USDA), either by contracting out to 
the private sector or dramatically improving USDA's performance 
and lowering its costs (as described by both Senator Gorton and 
Senator Brown's working groups). The GAO has reported that USDA 
cannot keep the portfolio current using existing, inefficient, 
decentralized servicing methods, and that USDA has made little 
progress in improving and centralizing its systems.
     Finally, the Committee recommends the reduction or 
elimination of certain subsidies provided by the federal 
government for a range of credit programs in the Small Business 
Administration, the Federal Housing Administration, and the 
Rural Housing and Community Development Service.

      Major Mandatory Assumptions in the Committee Recommendation

     The Committee recommendation assumes mandatory spending 
levels of $4.5 billion in budget authority and -$9.4 billion in 
outlays in 1996, about $0.1 billion less than levels under 
current law. The savings relative to current law would level 
off at $0.2 billion per year in the latter half of the 1996-
2002 period. The committee recommendation assumes the creation 
or extension of fees to cover the costs of operating regulatory 
agencies.
     The Committee, however, recognizes the importance of 
American industries that compete on a global basis. The 
committee therefore discourages the adoption of new revenue-
raising measures that would hurt U.S. industries' 
competitiveness both at home and abroad. In addition, if new 
revenue-raising measures are considered, the committee 
discourages the singling-out of one segment of a particular 
industry to bear the burden of regulatory fees.
     In addition, the Committee recommendation includes options 
related to allowing the Federal Communications Commission (FCC) 
to recover value from the spectrum. Although such receipts are 
displayed in Function 950 by convention, they are discussed 
here because this function includes the FCC. Until this year, 
commercial enterprises have used their allocation of the 
spectrum for free. Under a 1993 law, however, the FCC is just 
concluding an auction of parts of the spectrum that has raised 
over $7 billion for the Treasury. The Committee recommendation 
assumes options that would extend the FCC's authority to 
auction spectrum past 1998, broaden the types of spectrum the 
FCC is allowed to auction, and provide the FCC authority to 
reallocate parts of the spectrum and impose fees to encourage a 
more efficient distribution and use of the spectrum.

                      Function 400: TRANSPORTATION

                       major programs in function

    Function 400 includes ground transportation programs, such 
as the federal-aid highway program, mass transit operating and 
capital assistance, rail transportation through AMTRAK and 
other rail programs, and the Interstate Commerce Commission 
(ICC); air transportation through the Federal Aviation 
Administration (FAA) Airport Improvement Program (AIP), 
aviation facilities and equipment programs, and operation of 
the air traffic control system; water transportation through 
the Coast Guard and the Maritime Administration; and related 
transportation support activities.
    In 1995, $42.5 billion in budget authority and $39.3 
billion in outlays will be spent on transportation activities. 
Nearly 70 percent of the function is comprised of contract 
authority for highways, aviation and mass transit. Nearly 100 
percent of the function is discretionary outlays under the 
jurisdiction of the Appropriations subcommittee on 
transportation.
    Under current baseline estimates, spending in Function 400 
increases over the 1995-2000 period, with budget authority 
growing from the 1995 level of $42.5 billion to $47.6 billion 
in 2000. The baseline appears to dip in 1996 because of an 
automatic reduction in highway spending of over $4 billion due 
to Section 1003 of the Intermodal Surface Transportation 
Efficiency Act of 1991 (ISTEA).

                                                              FUNCTION 400: TRANSPORTATION                                                              
                                                                  [Dollars in billions]                                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                   5-year                        7-year 
                                                        1995      1996      1997      1998      1999      2000      total     2001      2002      total 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Chairman's mark:                                                                                                                                        
    BA..............................................      42.5      36.5      38.8      39.4      40.2      41.2     196.1      41.0      40.8     277.9
    OT..............................................      39.3      38.3      32.8      31.8      31.3      31.1     165.3      31.1      31.1     227.5
Current law:                                                                                                                                            
    BA..............................................      42.5      38.2      44.6      45.6      46.6      47.6     222.6      47.4      47.1     317.1
    OT..............................................      39.3      39.6      39.7      39.7      39.8      40.0     198.8      40.0      40.0     278.8
President's budget:                                                                                                                                     
    BA..............................................      42.1      38.6      40.3      38.7      35.6      35.0     188.2        NA        NA        NA
    OT..............................................      39.3      39.3      37.9      38.4      37.9      36.5     190.0        NA        NA        NA
Chairman's mark compared to:                                                                                                                            
    Current law:                                                                                                                                        
        BA..........................................  ........      -1.7      -5.8      -6.2      -6.4      -6.4     -26.5      -6.4      -6.3     -39.2
        OT..........................................  ........      -1.3      -6.9      -7.9      -8.5      -8.9     -33.5      -8.9      -8.9     -51.3
    President's budget:                                                                                                                                 
        BA..........................................       0.4      -2.1      -1.5       0.7       4.6       6.2       7.9        NA        NA        NA
        OT..........................................  ........      -1.0      -5.1      -6.6      -6.6      -5.4     -24.7        NA        NA        NA
--------------------------------------------------------------------------------------------------------------------------------------------------------

                  Summary of Committee Recommendation

    The Committee's recommendation assumes $36.5 billion in 
budget authority and $38.3 billion in outlays in 1996 for 
programs and activities in Function 400. Spending would decline 
over the 1996-2002 period, falling to $31.1 billion in outlays 
by 2002. Over the seven-year period 1996-2002, $278 billion in 
budget authority and $228 billion in outlays would be spent on 
transportation functions, compared to $317 billion in budget 
authority and $279 billion in outlays assumed under the current 
law baseline. Over the five year period 1996-2000, $196 billion 
in budget authority and $165 billion in outlays would be spent 
compared to the $188 billion in budget authority and $190 
billion in outlays that the President recommends.

    Major Discretionary Assumptions in the Committee Recommendation

    The Committee's recommendation assumes discretionary 
spending levels of $14.3 billion in budget authority and $38.3 
billion in outlays in 1996, a reduction of $1.2 billion in 
budget authority and $0.5 billion in outlays from the 1995 
level. This spending would decline to $31.1 billion in outlays 
in 2002. The Committee's recommendation assumes the following 
majorpolicy options to achieve the recommended funding 
levels:The Committee's goals for transportation spending is to 
direct limited federal transportation resources to capital, 
formula driven programs in which states, localities and 
transportation authorities can determine their own 
transportation priorities.
    While infrastructure improvements have enabled the United 
States to become the world's leading economic power, it has 
become apparent that changes will have to be made to federal 
transportation programs to prepare our infrastructure for the 
21st century.
    Current transportation programs have, through Congressional 
action, become a series of compromises, mandated set-asides, 
and an increasing amount of demonstration programs. With 
reductions in federal transportation spending, coupled with the 
growing need to rehabilitate our highways, mass transit 
facilities, airports and waterways, current authorization 
programs will have to be amended, or in some cases, entirely 
replaced. Primarily, the Committee believes that Congress must 
address transportation financing mechanisms in order maintain 
our nation's vital infrastructure.
    Without changes in transportation programs and their 
revenue sources, the current system will not serve our economy 
into the 21st century. New innovative ideas will have to be 
developed in order to fund our infrastructure needs. Short term 
changes in transportation programs include:
          Termination of outdated transportation programs and 
        agencies, such as the Interstate Commerce Commission.
          Consolidation of federal transportation programs by 
        eliminating current division of authority among the 
        different modes of transportation within the U.S. 
        Department of Transportation. Tremendous redundancy 
        exists in the administration, procurement and 
        accounting of federal transportation programs.
          Phase-out federal funding for transportation 
        operating assistance to AMTRAK and mass transit.
          Prioritize federal highway, transit and aviation 
        transportation dollars on projects of national 
        significance, through elimination of highway 
        demonstration program funding.
          Privatize FAA air traffic control (ATC) operations. 
        This will allow for the elimination of current federal 
        procurement regulations on the FAA, provide private 
        sector management techniques for both procurement and 
        personnel decisions, and provide ATC needed access to 
        capital markets for modernization activities. Most 
        importantly, this action will lead to increased safety. 
        Today's antiquated technology is one of the largest 
        concerns to air service in the U.S. Only the efforts of 
        ATC employees and technicians allows the current system 
        to function. But without modernization, coupled with 
        predictions that air travel will double over the next 
        two decades, the current system will begin to fail 
        without restructuring the FAA and ATC.
    Long-term goals for transportation infrastructure and 
financing changes include:
          Changes in current law allowing the private sector to 
        invest in public infrastructure projects. Testimony 
        before the Committee by Ralph Stanley, Senior Vice 
        President of United Infrastructure Company, detailed 
        the use of private sector funding in 72 countries 
        worldwide, totaling almost $680 billion. Many American 
        institutions, such as banks, insurance companies and 
        pension funds invest in these projects but are 
        prohibited from investing in infrastructure projects in 
        the United States.

     Major Mandatory Assumptions in the Committee's Recommendation

    The Committee's recommendation assumes mandatory spending 
levels of $22.2 billion in budget authority and a reduction of 
$45 million in outlays in 1996. The Committee's recommendation 
assumes the extension of transportation safety user fees set to 
expire between 1996-2000.

            Function 450: COMMUNITY AND REGIONAL DEVELOPMENT

                       Major Programs in Function

    This function includes funding for community and regional 
development and disaster relief. The major programs are 
administered through a variety of agencies including the 
Department of Housing and Urban Development, Appalachian 
Regional Commission (ARC), Tennessee Valley Authority, Economic 
Development Administration (EDA), Bureau of Indian Affairs, 
Federal Emergency Management Agency, and the Department of 
Agriculture.
    In 1995, $9.2 billion in budget authority and $11.6 billion 
in outlays will be spent on community and regional development. 
Approximately 97 percent of this function is discretionary. In 
1995, six programs--Community Development Block Grants, 
Disaster Loans and relief, BIA operations, rural water and 
waste water grants , and economic development grants, accounted 
for approximately 86 percent of the spending in this function.
    Spending in Function 450 holds relatively steady over the 
1995-2000 period, budget authority remains at $9.1 billion in 
1996-99 and decreases to $9.0 billion in 2000. Outlays decrease 
from $11.6 billion in 1995 to $8.9 billion in 2000.

                                                     FUNCTION 450: COMMUNITY AND REGIONAL DEVELOPMENT                                                   
                                                                  [Dollars in billions]                                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                   5-year                        7-year 
                                                        1995      1996      1997      1998      1999      2000      total     2001      2002      total 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Chairman's mark:                                                                                                                                        
    BA..............................................       9.2       5.8       5.4       5.1       5.1       5.0      26.5       4.5       4.4      35.4
    OT..............................................      11.6       9.8       7.3       5.6       5.1       5.1      32.9       5.0       5.0      42.8
Current law:                                                                                                                                            
    BA..............................................       9.2       9.1       9.1       9.1       9.1       9.0      45.3       8.6       8.5      62.4
    OT..............................................      11.6      10.3       8.9       8.5       8.6       8.9      45.3       8.8       8.8      62.9
President's budget:                                                                                                                                     
    BA..............................................      15.9       9.9       9.4       9.3       9.0       8.6      46.3        NA        NA        NA
    OT..............................................      11.9      10.9      10.7      10.4      10.7       9.4      52.2        NA        NA        NA
Chairman's mark compared to:                                                                                                                            
Current law:                                                                                                                                            
    BA..............................................  ........      -3.3      -3.6      -4.0      -4.0      -4.0     -18.9      -4.0      -4.1     -27.0
    OT..............................................  ........      -0.5      -1.7      -2.9      -3.5      -3.8     -12.4      -3.8      -3.8     -20.1
President's budget:                                                                                                                                     
    BA..............................................      -6.7      -4.2      -4.0      -4.2      -3.9      -3.6     -19.9        NA        NA        NA
    OT..............................................      -0.3      -1.1      -3.5      -4.8      -5.6      -4.3     -19.4        NA        NA        NA
--------------------------------------------------------------------------------------------------------------------------------------------------------

                  Summary of Committee Recommendation

    The Committee recommendation assumes $5.8 billion budget 
authority and $9.8 billion in outlays in 1996 for programs and 
activities in Function 450. Spending would decline over the 
1996-2002 period, falling to $4.4 billion in budget authority 
and $5.0 billion in outlays by 2002. Over the seven-year period 
1996-2002, $35.4 billion in budget authority and $42.8 billion 
in outlays would be spent on community and regional 
development, compared to $62.4 billion in budget authority and 
62.9 billion in outlays assumed under the current law baseline. 
Over the five year period 1996-2000, $26.5 billion in budget 
authority and $32.9 billion in outlays would be spent compared 
to the $46.3 billion in budget authority and $52.2 billion in 
outlays that the President recommends.

    Major Discretionary Assumptions in the Committee Recommendation

     The Committee recommendation assumes discretionary 
spending levels of $5.9 billion in budget authority and $10.2 
billion in outlays in 1996, a reduction of $2.9 billion in 
budget authority and $0.1 billion in outlays from the 1995 
level. This spending would decline to $5.2 billion in budget 
authority and $5.5 billion in outlays in 2002. The Committee 
recommendation assumes the following major policy options to 
achieve the recommended funding levels:
           Terminate lower priority commissions and 
        corporations--the Pennsylvania Development Corporation, 
        the National Capitol Planning Commission, and the 
        Commission on Fine Arts.
           Reduce community development block grants by 50 
        percent and target funds to the most needy areas. This 
        option reduces outlays by $7.6 billion over 1996-2000. 
        The Committee recognizes the unique trust relationship 
        between the U.S. Government and the nation's Indian 
        tribes and pueblos. That trust relationship is based 
        upon a government-to-government principle embodied in 
        treaties and subsequent actions by both the Executive 
        and Legislative Branches of Government, and the courts. 
        The Committee acknowledges this trust relationship, and 
        assumes that programs serving Native Americans through 
        the Bureau of Indian Affairs will be given priority 
        consideration for ongoing federal support.
           Consolidate and streamline several rural development 
        programs into a single rural development block grant, 
        reducing outlays by $0.7 billion over 1996-2000. A GAO 
        report, ``Patchwork of Federal Programs Needs to be 
        Reappraised,'' July 1994, identified over 600 programs 
        which address rural development and/or influence 
        economic well being. The report also states that the 
        web of Federal policies, programs, and regulations make 
        the delivery of assistance inefficient and costly to 
        use.
           Phase-out the Appalachian Regional Commission, 
        reducing outlays by $0.5 billion over 1996-2000.

       Major Mandatory Assumption in the Committee Recommendation

     The Committee recommendation assumes mandatory spending 
levels of $-0.1 billion in budget authority and $-0.4 billion 
in outlays in 1996. This spending would decline to $-0.8 
billion in budget authority and $-0.5 billion in outlays in 
2002. The Committee recommendation assumes the following major 
policy options to achieve the recommended funding levels:
           Eliminate the flood insurance subsidy for buildings 
        constructed before January 1, 1975, reducing outlays by 
        $2.0 billion over 1996-2000.

   Function 500: EDUCATION, TRAINING, EMPLOYMENT AND SOCIAL SERVICES

                       Major Programs in Function

     Function 500 includes a total of 321 programs. These 
programs include all those in the Department of Education, the 
Administration for Children and Families (ACF), and the 
Administration on Aging (AOA) in the Department of Heath and 
Human Services, certain job training programs in the Department 
of Labor, and certain independent agencies such as the 
Institute for Museum Services, the National Endowment for the 
Arts and Humanities (NEA and NEH), and the Corporation for 
Public Broadcasting (CPB).
     In 1995, $58.1 billion in budget authority and $54.7 
billion in outlays will be spent on Education, Job Training, 
and Social Services. Total baseline spending for this function 
in 1996 is $56.4 billion in budget authority and $55.7 billion 
in outlays. The bulk of this spending, 74 percent, is in the 
discretionary area with $42 billion in budget authority and 
$41.2 billion in outlays for discretionary programs. The 
category of funding which receives the most funding in this 
function is elementary and secondary education, projected at 37 
percent, or $15.6 billion in budget authority and $15.5 billion 
in outlays.
     From current law, total spending in this function is 
expected to grow by $2.9 billion in budget authority and $4.5 
billion in outlays over the next five years, according to the 
President's plan. All growth will occur within the 
discretionary spending category. This increase is targeted 
primarily toward Education Reform, and Social Services programs 
such as National and Community Service and Head Start. While 
discretionary spending will rise by $6.7 billion in BA and $8.6 
billion in outlays, the President's budget proposes net savings 
of $241 million in BA and $33 million in outlays for 1996.

                                            FUNCTION 500: EDUCATION, TRAINING, EMPLOYMENT AND SOCIAL SERVICES                                           
                                                                  [Dollars in billions]                                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                   5-year                        7-year 
                                                        1995      1996      1997      1998      1999      2000      total     2001      2002      total 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Chairman's mark:                                                                                                                                        
    BA..............................................      58.3      48.1      47.3      47.2      47.4      47.8     237.8      47.3      47.4     390.8
    OT..............................................      54.7      51.7      47.9      47.0      46.8      47.3     240.7      46.8      46.9     389.1
Current law:                                                                                                                                            
    BA..............................................      58.3      56.4      56.0      56.5      57.2      58.0     284.1      57.5      57.8     457.7
    OT..............................................      54.7      55.7      55.7      55.8      56.4      57.1     280.7      56.7      56.9     449.0
President's budget:                                                                                                                                     
    BA..............................................      58.1      58.3      57.0      56.8      57.3      57.6     287.0  ........  ........  ........
    OT..............................................      54.7      56.4      57.3      56.9      57.2      57.4     285.2  ........  ........  ........
Chairman's mark compared to:                                                                                                                            
    Current law:                                                                                                                                        
        BA..........................................  ........      -8.3      -8.7      -9.3      -9.8     -10.2     -46.3     -10.2     -10.4     -66.9
        OT..........................................      -0.0      -4.0      -7.8      -8.8      -9.6      -9.8     -40.0      -9.9     -10.0     -59.9
    President's budget:                                                                                                                                 
        BA..........................................       0.2     -10.2      -9.7      -9.6      -9.9      -9.8     -49.2  ........  ........  ........
        OT..........................................       0.0      -4.7      -9.4      -9.9     -10.4     -10.1     -44.5  ........  ........  ........
--------------------------------------------------------------------------------------------------------------------------------------------------------

                  summary of committee recommendation

     The Committee's recommendation assumes $48.1 billion in 
budget authority and $51.7 billion in outlays in 1996 for 
programs and activities in Function 500. Spending would decline 
over the 1996-2002 period, falling to $47.4 billion in budget 
authority and $46.9 billion in outlays by 2002. Over the seven-
year period 1996-2002, $333 billion in budget authority and 
$334 billion in outlays would be spent on education, training, 
and social services, compared to $399 billion in budget 
authority and $394 billion in outlays assumed under the current 
law baseline.
    Over the five year period 1996-2000, $238 billion in budget 
authority and $241 billion in outlays would be spent compared 
to the $287 billion in budget authority and $285 billion in 
outlays recommended by the President.

      major discretionary assumptions in committee recommendation

     The Committee's recommendation assumes discretionary 
spending levels of $36.6 billion in budget authority and $39.4 
billion in outlays in 1996, a reduction of $5.2 billion in 
budget authority and $108 million in outlays from the 1995 
level. This spending would decline to $35.6 billion in budget 
authority and outlays in 2002. The Reported resolution assumes 
the following major policy options to achieve the recommended 
funding levels:
     In order to achieve a balanced budget by the year 2002, 
the reported resolution assumes that many discretionary 
programs are reduced below the 1995 funding level. However, the 
Committee intends to hold the line on major programs targeted 
at the disadvantaged. For instance the recommendation assumes 
that current law funding of major programs such as Chapter 1, 
Head Start, Special Education, Pell Grants, and Community 
Services Block Grant is maintained.
     The Committee's recommendation starts from the premise 
that the Federal government is too big and its reach is too 
wide. It assumes the consolidation of many Federal programs 
resulting in savings to the Federal government and increased 
flexibility for States in the development and implementation of 
programs. For example, the recommendation assumes the 
consolidation of 60 job training programs with a reduction in 
overall funding of 25 percent.
    The size of the Federal Government is reflected in the 
Department of Education. Currently, the Department of Education 
funds 240 categorical programs. The Department's first budget 
year as a cabinet agency was FY 1980. At that time, the budget 
was just over $14 billion, funding about 150 programs. That 
budget has more than doubled since that time. The Committee's 
recommendation accepts the bulk of the President's 
recommendations for eliminating over thirty small education 
programs. For the Parents as Teachers program, which provides 
parent education and early intervention for children in a 
family focused manner, the Committee recommendation assumes 
that funding would continue under the Fund for the Improvement 
of Education.
     For Impact Aid, the Committee's recommendation assumes a 
slight reduction. The President's budget, on the other hand, 
proposes sharp reductions in Impact Aid totalling $779 million 
in budget authority and $740 million in outlays. In addition, 
the President's budget proposes to limit payments to those 
children living on Indian lands and those of parents in the 
uniformed service living on Federal lands.
     The Committee's recommendation proposes a much smaller 
reduction in Impact Aid of 10 percent over the next seven years 
and does not assume the strict programmatic changes proposed by 
the President. There are certainly economic benefits from the 
presence of federal activities in local jurisdictions. The 
reduction in the recommendation should result in targeting of 
the program to those areas most in need of assistance.
     The Committee's recommendation acknowledges the growth in 
the arts and humanities and the existing and potential private 
sector support for these programs by reducing the Federal role 
in these activities. Private giving to the arts and humanities 
is estimated to be $9.6 billion in 1993. More than 80 percent 
of support for public broadcasting comes from sources other 
than the Federal government. The Committee recommendation 
assumes that funding for the National Endowment for the Arts 
and Humanities will be reduced by 50 percent. In addition, the 
Committee recommends that expanded advertising be allowed by 
the Corporation for Public Broadcasting in order to further 
encourage private support and help offset the Federal 
investment. The Committee cautions that such advertising should 
be in keeping with the essential non-commercial character of 
public broadcasting and in a way that respects its public 
service mission.
     The Federal government has provided volunteer 
opportunities through a number of longstanding programs 
including the Peace Corps, VISTA, and the Foster Grandparents 
program. The Committee notes the growth in duplicative Federal 
programs and proposes terminations and consolidations in many 
instances. One such program assumed to be terminated under the 
Committee recommendation is the AmeriCorps program. This 
program provides participants with educational awards and other 
benefits in exchange for public service. The program which is 
not means tested provides participants with educational awards, 
a living allowance, and health and child care benefits if 
needed. The average annual cost for a full time participant in 
this program is $19,725. This level of funding could provide 8 
students with a maximum Pell Grant award.
     The Committee recognizes the unique trust relationship 
between the U.S. Government and the nation's Indian tribes and 
pueblos. That trust relationship is based upon a government-to-
government principle embodied in treaties and subsequent 
actions by both the Executive and Legislative Branches of 
Government, and the courts. The Committee acknowledges this 
trust relationship, and assumes that education programs serving 
Native Americans, including those administered through the 
Office of Indian Education, will be given priority 
consideration for ongoing federal support.

      major mandatory assumptions in the committee recommendation

     The Committee recommendation assumes mandatory spending 
levels of $11.5 billion in budget authority and $12.3 billion 
in outlays in 1996, $2.9 billion in budget authority and $2.2 
billion in outlays below current law. Spending would decrease 
slightly from 1996-2002, to $11.8 billion in budget authority 
and $11.2 billion in outlays in 2002. The Committee 
recommendation assumes the following major policy options to 
achieve the recommended funding levels:
     The Committee recommendation assumes the privatization of 
the Student Loan Marketing Association (Sallie Mae). Sallie Mae 
was created by Congress in 1972 to help ensure access to 
guaranteed student loans by providing liquidity to private 
lenders making such loans. The Committee concurs with the view 
expressed by Senator Gorgon's working group on privatization 
that there is no longer a need for a government sponsored 
enterprise to act as a secondary market for student loans. Now 
is the time to relieve taxpayers of this implicit liability of 
more than $50 billion, which is associated with the activities 
of this GSE. In addition, it is appropriate that the federal 
government benefit from the success of Sallie Mae, due in part 
to its status as a GSE.
     Therefore, the Committee recommendation assumes that 
Sallie Mae will released from its harter and its corresponding 
obligations of payment in the form of ``offset fees.'' In 
exchange, the Committee assumes that Sallie Mae will pay and 
exit fee to the federal government. The form should be 
determined by the appropriate authorizing committees, and be 
structured in such a way as to enhance the long term stability 
and success of Sallie Mae as a fully private company.
     For student loans, the Committee recommendation assumes 
the currently projected student loan volume growth of $26.6 
billion in loans for 1996 and totalling $151.4 billion over the 
next five years. The current interest rate calculation and caps 
would remain under the Committee recommendation.
     The Committee recommendation would introduce greater 
parity in the direct and guaranteed loan programs. For example, 
State risk sharing for student loan defaults by requiring 
current default fee to be based upon both guaranteed loans and 
direct loans.
     Current law only requires the fee to be based on 
guaranteed loan volume. In addition, the Committee is aware 
that the Labor Committee is considering legislation to limit 
the growth of direct student loans. The Committee understands 
that benefits will not change for students but that any costs 
associated with implementing such a proposal would be borne by 
the private sector participants whose industries would benefit 
from greater involvement in the student loan program.
     The Committee recommendation would increase graduate and 
professional students' responsibility for education expenses by 
removing government interest rate subsidies. The Committee 
notes that for these students, interest would not accrue on 
their undergraduate loans until they complete their graduate 
education. It is only on the additional loans for those final 
years of advanced education, that interest would accrue. 
Graduate and professional students would continue to receive 
the benefits of capped interest rates on their loans, Federal 
guarantees, opportunities to defer payments in case of economic 
hardship, the ability to consolidate their loans at capped 
interest rates, and the opportunity to participate in a number 
of Federal fellowship programs targeted specifically toward 
graduate students. Unlike the President, the reported 
resolution assumes no reductions in these fellowship programs.
     The Committee recommendation assumes a 20 percent 
reduction in the Social Services Block Grant Program. This 
reduction relates to the growth in other social services 
programs such as the Child Care and Development Block Grant. 
Data from States relating to the use of Social Services Block 
Grant funds points to the fact that they were spending an 
average of 15 percent of funds on child care.
     The Committee recommendation retains individual 
entitlement for at-risk youth in Foster Care and Adoption 
Assistance programs and standardizes Federal match rates for 
those programs at 50 percent. The Committee notes that the 
Finance Committee will likely address any adjustments to these 
programs in comprehensive welfare reform.

                       Major Programs in Function

    Function 550 includes mandatory spending for Medicaid and 
the retiree portion of the Federal Employees Health Benefits 
(FEHB) program. On the discretionary side, this function 
includes health services, health education and training, the 
National Institutes of Health, the Center for Disease Control 
and Prevention, the Indian Health Service, and consumer and 
occuptional health and safety programs administrated by several 
agencies. Function 550 comprises all Federal health spending, 
with two major exceptions: Medicare and health benefits for 
Federal civilian and military employees. Note that the 
Committee's tables include savings from changes to health 
benefits for Federal civilian employees in function 550.

                                                                  FUNCTION 550: HEALTH                                                                  
                                                                  [Dollars in Billions]                                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                   5-year                        7-year 
                                                        1995      1996      1997      1998      1999      2000      total     2001      2002      total 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Chairman's mark:                                                                                                                                        
    BA..............................................     116.6     120.1     126.6     132.1     137.0     141.1     657.0     145.2     149.6     951.9
    OT..............................................     115.8     120.6     126.5     132.2     137.0     140.9     657.0     144.9     149.5     951.4
Current law:                                                                                                                                            
    BA..............................................     116.6     126.6     137.8     150.2     163.4     177.1     755.2     192.1     207.7    1155.0
    OT..............................................     115.8     126.1     137.7     150.3     163.4     177.0     754.4     191.7     207.6    1153.7
President's budget:                                                                                                                                     
    BA..............................................     116.6     127.5     137.9     149.9     163.0     176.5     754.8        NA        NA        NA
    OT..............................................     115.7     126.3     138.1     150.4     163.3     176.6     754.7        NA        NA        NA
Committee recommendation compared to:                                                                                                                   
     Current law:                                                                                                                                       
    BA..............................................  ........      -6.5     -11.2     -18.1     -26.4     -36.0     -98.2     -46.8     -58.1    -203.1
    OT..............................................  ........      -5.5     -11.2     -18.1     -26.4     -36.1     -97.4     -46.8     -58.1    -202.3
     President's budget:                                                                                                                                
    BA..............................................       0.0      -7.3     -11.3     -17.7     -26.0     -35.4     -97.8        NA        NA        NA
    OT..............................................       0.0      -5.7     -11.6     -18.2     -26.3     -35.8     -97.6        NA        NA        NA
--------------------------------------------------------------------------------------------------------------------------------------------------------

                  summary of committee recommendation

    The Committee recommendation assumes $120.1 billion in 
budget authority and $120.6 billion in outlays in 1996 for 
programs and activities in Function 550. Spending would 
increase by 29 percent over the 1996-2002 period, rising to 
$149.6 billion in budget authority and $149.5 billion in 
outlays by 2002. Over the seven-year period 1996-2002, $951.9 
billion in budget authority and $951.4 billion in outlays would 
be spent in function 550, compared to $1.155 trillion in budget 
authority and $1.154 trillion in outlays in the current law 
baseline. Over the five year period 1996-2000, $657.0 billion 
in budget authority and outlays would be spent compared to the 
$754.8 billion in budget authority and $754.7 billion that the 
President recommends.

    major discretionary assumptions in the committee recommendation

    The Committee recommendation assumes discretionary spending 
levels of $20.0 billion in budget authority and $20.5 billion 
in outlays in 1996, a decrease of $2.8 billion in budget 
authority and $1.8 billion in outlays from the 1995 level. This 
spending would decline to $18.8 billion in budget authority and 
outlays in 2002.
    The Committee recommendation assumes full funding for the 
Center for Disease Control and Prevention and the Food and Drug 
Administration (except for new construction). The Committee 
recommendation assumes full funding for the Indian Health 
Service, for the Substance Abuse and Mental Health Services 
Administration, and for all AIDS and HIV-related programs.
    Indian Health Service.--The Committee recognizes the unique 
trust relationship between the U.S. Government and the nation's 
Indian tribes and pueblos. That trust relationship is based 
upon a government-to-government principle embodied in treaties 
and subsequent actions by both the Executive and Legislative 
Branches of Government, and the courts. The Committee 
acknowledges this trust relationship, and assumes that health 
programs serving Native Americans, especially through the 
Indian Health Service, will be given priority consideration for 
ongoing federal support.
    The Committee recommendation assumes the following major 
policy options to achieve the recommended funding levels:
    Consolidate 19 Public Health Service programs into a State 
Health Block grant. An asterisk (*) in the list below means 
that the President proposed consolidating this program into one 
of five ``health centers''. The nineteen programs are:
          1. National Health Service Corps & NHSC recruitment*
          2. Hansen's disease center
          3. Pacific basin initiative*
          4. Payment to Hawaii for the treatment of Hansen's 
        disease*
          5. Public housing health services*
          6. Alzheimer's demonstration grants*
          7. Native Hawaiian health care*
          8. Nursing loan repayment*
          9. Maternal and child health block grant
          10. Healthy start
          11. Pediatric emergency medical services*
          12. Health teaching facilities
          13. Health care facilities
          14. Organ transplantation
          15. Trauma care demonstration*
          16. Family planning
          17. Health services outreach demonstration*
          18. Rural health research
          19. State offices of rural health*
    The Committee recognizes that block grants represent a 
significant change in the fiscal relationship between the 
States and the Federal government. Such a change can take time 
to implement. The Committee urges the authorizing and 
appropriations committees to consider, where appropriate, other 
means of achieving the first year savings targets to provide 
States with the time necessary to adapt to a block grant.
    Terminate the Office of the Assistant Secretary for Health 
(OASH) in the Department of Health and Human Services. The Mark 
assumes that the $1.7 million for HIV program coordination 
would not be terminated, and that this function would be 
transferred elsewhere within the Department. OASH has fourteen 
Deputy Assistant Secretaries, and it is unclear what are the 
direct line responsibilities of this office.
    Reduce funding for the Agency for Health Care Policy and 
Research by 75 percent. The support materials for the 
Chairman's Mark incorrectly stated that AHCPR was intended to 
be the primary administrator of comprehensive health reform. 
The Committee staff apologize for this error.
    Reduce funding for the Occupational Safety & Health 
Administration (OSHA) and the Mine Safety & Health 
Administration (MSHA) by 50 percent, and terminate the outdated 
OSHA/MSHA Review Commission.
    Terminate construction of the new Food and Drug 
Administration (FDA) campus. The Committee notes that this 
termination is included in the current rescission bill. The 
Committee recommendation therefore assumes no further changes 
to FDA funding over the next seven years.
    Reduce funding for the National Institutes of Health by 10 
percent. The Committee recommendation assumes that none of this 
reduction would occur in AIDS or HIV-related areas. According 
to the Congressional Budget Office, ``a reduction in funding 
for NIH research could be justified by its rapid growth in 
recent years. Between 1984 and 1994, NIH expenditures more than 
doubled. . . . Because funding for [competitively awarded] 
research projects is based on a rating system, the least 
promising projects would be dropped.'' In addition, CBO notes 
that ``between 1982 and 1992, private-sector spending for 
health research and development more than doubled, even 
exceeding the increase in NIH spending.'' The Committee 
recommendation assumes that 1996 funding would be 10 percent 
lower than its 1995 level ($10.2 billion vs. $11.3 billion). 
This new level of funding would be maintained through 2002. The 
Committee notes that NIH spending would still comprise more 
than half of non-Medicaid spending in function 550.
    Federal agencies would follow the lead of the private 
sector by contributing a fixed dollar amount to Federal 
employees' health plans, thus encouraging Federal employees to 
make more cost-effective decisions in the allocation of their 
compensation. This fixed dollar amount would be indexed to 
inflation. Federal agencies would no loner provide extra 
subsidies to those Federal employees who choose more expensive 
health plans. Federal employees would be able to avoid most of 
the burden of this policy change by choosing more cost-
effective health plans. Those Federal employees who continued 
to choose more expensive health plans would bear the full 
economic burden of that decision. It is unclear why, in an era 
in which health spending is rapidly spiraling upward, the 
Federal government should continue to encourage employees to 
purchase more expensive health plans. These savings are 
included in function 550, and not in the functions in which the 
Federal employees are distributed.

      Major Mandatory Assumptions in the Committee Recommendation

    The Committee recommendation assumes mandatory spending 
levels of $100.1 billion in budget authority and $100.0 billion 
in outlays in 1996, an increase of $5.6 billion in budget 
authority and $6.0 billion in outlays from the 1995 level. This 
spending would increase by 39 percent to $130.9 billion in 
budget authority and $130.7 billion in outlays in 2002. The 
Committee recommendation assumes the following major policy 
options to achieve the recommended funding levels:
    As for current Federal employees (see above), the Federal 
government would follow the lead of the private sector by 
contributing a fixed dollar amount to federal retirees's health 
plans, thus encouraging Federal retirees to make more cost-
effective decisions in the allocation of their compensation. 
This fixed dollar amount would be indexed to inflation. The 
Federal government would no longer provide extra subsidies to 
Federal retirees who choose more expensive health plans.

          Medicaid Assumption in the Committee Recommendation

    Over the seven-year period 1996-2002, the Committee 
recommendation assumes total Federal Medicaid spending of 
$780.0 billion, compared to $954.8 billion in outlays in the 
current law baseline. Over the seven years, total Federal 
Medicaid outlays would grow at an average of 5.0 percent per 
year. The Committee recommendation assumes that Federal 
Medicaid spending would grow faster than 5 percent in the first 
few years, and would grow 4 percent per year in the last few 
years. The Committee recommendation assumes that the Federal 
Medicaid baseline after 2002 would grow 4 percent per year.
    These Medicaid outlay levels could be achieved in several 
ways, including:
          A Medicaid block grant, in which Federal payments to 
        states grew at the following rates form the 1995 
        Federal base level:

------------------------------------------------------------------------
                                                                   after
                   1996   1997   1998   1999   2000   2001   2002   2002
------------------------------------------------------------------------
Benefits and                                                            
 administration                                                         
 (percent)......     8%     7%     6%     5%     4%     4%     4%     4%
DSH (percent)...      0      0      0      0      0      0      0      0
------------------------------------------------------------------------

          An across-the-board reduction of each state's 
        matching rate could achieve the necessary savings over 
        seven years. Further programmatic reforms would be 
        needed to slow the growth rate in the later years.
    The Committee recommendation is designed to be compatible 
with a wide range of Medicaid restructuring proposals. The 
Committee recommendation makes no assumption about individual 
entitlement, eligibility groups, benefits, payment rates, 
financing structures, or the distribution of Federal funds 
among the states within the total Federal funding levels 
specified.
    The Committee recommendation assumes the present ratio of 
Federal to State funding (57% Federal, 43% State) would 
continue.
    The Committee recognizes that block grants represent a 
significant change in the fiscal relationship between the 
States and the Federal government. Such a change can take time 
to implement. The Committee urges the authorizing and 
appropriations committees to consider, where appropriate, other 
means of achieving the first year savings targets to provide 
States with the time necessary to adapt to a block grant.

                         Function 570: MEDICARE

                       MAJOR PROGRAMS IN FUNCTION

    Function 570 includes only the Medicare program. This 
entitlement program pays to health care providers for health 
services provided to senior citizens and disabled 
beneficiaries. Medicare is divided into two parts: Hospital 
Insurance (Part A) and Supplementary Medical Insurance (Part 
B). Medicare Part A is financed by a 2.9 percent payroll tax on 
current workers, by the 1993 increases in income tax on Social 
Security benefits, and by general revenue payments denoted as 
interest on trust fund assets. Medicare Part B is financed 31 
percent by premium payments from current beneficiaries, and 69 
percenby by payments from general revenues.

                                                                 FUNCTION 570: MEDICARE                                                                 
                                                                  [Dollars in billions]                                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                   5-year                        7-year 
                                                        1995      1996      1997      1998      1999      2000      total     2001      2002      total 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Chairman's mark:                                                                                                                                        
    BA..............................................    $162.6    $171.9    $180.5    $193.1    $207.4    $221.4    $974.1    $238.9    $258.9  $1,471.9
    OT..............................................     161.1     169.5     178.9     191.4     204.8     219.5     964.2     236.9     256.7   1,457.7
Current law:                                                                                                                                            
    BA..............................................     162.6     184.1     202.0     220.6     242.9     265.7   1,115.2     291.7     320.6   1,727.6
    OT..............................................     161.1     181.7     200.4     218.9     240.4     263.8   1,105.3     289.7     318.4   1,713.3
President's budget                                                                                                                                      
    BA..............................................     162.6     184.2     201.6     219.9     239.6     259.4   1,104.7        NA        NA        NA
    OT..............................................     161.0     181.8     200.1     218.3     237.0     257.6   1,094.7        NA        NA        NA
Committee recommendation compared to:                                                                                                                   
    Current law:                                                                                                                                        
        BA..........................................  ........     -12.2     -21.5     -27.5     -35.6     -44.3    -141.1     -52.8     -61.7    -255.6
        OT..........................................  ........     -12.2     -21.5     -27.5     -35.6     -44.3    -141.1     -52.8     -61.7    -255.6
    President's Budget:                                                                                                                                 
        BA..........................................       0.0     -12.3     -21.1     -26.9     -32.2     -38.0     130.5        NA        NA        NA
        OT..........................................       0.0     -12.3     -21.1     -26.9     -32.2     -38.1    -130.5        NA        NA        NA
--------------------------------------------------------------------------------------------------------------------------------------------------------

                     projected medicare insolvency

    In their 1995 Annual Report to the Congress, the Medicare 
Trustees recently announced that the Medicare Hospital 
Insurance Trust Fund will be insolvent seven years from now, in 
the year 2002. The Trustees conclude that ``the HI program is 
severely out of financial balance and the Trustees believe that 
the Congress must take timely action to establish long-term 
financial stability for the program.''
    The Committee recommendation has been strongly influenced 
by current and past Trustees' reports, by recent testimony of 
the Public Trustees, and by the statement of the two Public 
Trustees.
    The Public Trustees have issued their own bipartisan 
statement each year. This statement is attached to the full 
Board of Trustees' annual report. The Public Trustees have a 
different recommendation than the full Board of Trustees. The 
full text of the Medicare portion of their statement is 
included here.

          Both the Hospital Insurance Trust Fund and the 
        Supplementary Medical Insurance Trust Fund show 
        alarming financial results. The HI Trust Fund continues 
        to be severely out of financial balance and is 
        projected to be exhausted in about 7 years. The SMI 
        Trust Fund, while in balance on an annual basis, shows 
        a rate of growth of costs which is clearly 
        unsustainable. Moreover, this fund is projected to be 
        75 percent or more financed by general revenues, so 
        that given the general budget deficit problem, it is a 
        major contributor to the larger fiscal problems of the 
        nation.
          The Medicare program is clearly unsustainable in its 
        present form. We had hoped for several years that 
        comprehensive health care reform would include 
        meaningful Medicare reforms. However, with the results 
        of the last Congress, it is now clear that Medicare 
        reform needs to be addressed urgently as a distinct 
        legislative initiative. We also strongly believe that 
        Medicare reform should be included as an integral part 
        of any broader health care reform initiative which may 
        be considered in the future.''
          There are basic questions with the scale, structure, 
        and administration of the Medicare program that need to 
        be addressed. For example, is it appropriate to have a 
        Part A and Part B today, or should this legacy of the 
        political process that enacted Medicare in the mid-
        1960s be revised to create a unified program? Is it 
        appropriate to combine participants' social insurance 
        tax contributions for Part A and premium payments for 
        approximately one-quarter of Part B with general 
        revenues? If so, what should be the proper combination 
        of beneficiary premiums, taxpayer social insurance 
        contributions, and general revenues? How are each of 
        these kinds of revenue sources to be justified and what 
        rights to benefits and responsibilities to pay benefits 
        are thereby established? How can the program become 
        more cost-effective? How can fraud, abuse and waste be 
        better controlled?
          We feel strongly that comprehensive Medicare reforms 
        should be undertaken to make this program financially 
        sound now and over the long term. The idea that 
        reductions in Medicare expenditures should be available 
        for other purposes, including even other health care 
        purposes, is mistaken. The focus should be on making 
        Medicare itself sustainable, making it compatible with 
        OASDI, and making both Social Security and Medicare 
        financially sound in the long term.
          We strongly recommend that the crisis presented by 
        the financial condition of the Medicare Trust Funds be 
        urgently addressed on a comprehensive basis, including 
        a review of the program's financing methods, benefit 
        provisions, and delivery mechanisms. Various groups 
        should be consulted and reform plans developed that 
        will not be disruptive to beneficiaries, will be fair 
        to current taxpayers who will in the future become 
        beneficiaries, and will be compatible with government 
        finances overall. (emphasis in the original)

    The Committee recommendation is based on the 
recommendations of the Public Trustees. Specifically, the 
Committee recommendation addresses both the short and long-term 
insolvency of the entire Medicare program. Based on the 
recommendations of the Public Trustees and experts, the 
Committee urges the Congress to think about Medicare in its 
entirety, and not to be bound by historical distinctions 
between parts A and B.
    The Committee recommendation assumes that:
          Medicare reform will be addressed urgently as a 
        distinct legislative initiative;
          comprehensive Medicare reforms will be undertaken 
        this year to make the program financially sound now;
          reductions in the rate of growth of Medicare 
        expenditures will be focused on making Medicare itself 
        sustainable;
          a special bipartisan commission will be created to 
        address the long-term solvency of Medicare;
          this commission will address the questions raised by 
        the Public Trustees; and
          this commission will review the program's financing 
        methods, benefit provisions, and delivery mechanisms.

                  summary of committee recommendation

    The Committee recommendation assumes $171.9 billion in 
budget authority and $169.5 billion in outlays in 1996 for 
Medicare. Spending would increase by 59 percent over the 1996-
2002 period, rising to $258.9 billion in budget authority and 
$256.7 billion in outlays by 2002. Over the seven year period 
1996-2002, Medicare would grow at an average annual rate of 6.9 
percent. Over the seven-year period, $1.472 trillion in budget 
authority and $1.458 trillion in outlays would be spent on 
Medicare, compared to $1.728 trillion in budget authority and 
$1.713 trillion in outlays in the current law baseline. Over 
the five year period 1996-2000, $974.1 billion in budget 
authority and $964.2 billion in outlays would be spent, 
compared to the $1.105 trillion in BA and $1.095 trillion in 
outlays that the President recommends.

    major discretionary assumptions in the committee recommendation

    The Committee recommendation assumes discretionary spending 
levels of $3.0 billion in budget authority and outlays in 1996, 
the same as the 1995 level. This spending would remain constant 
for the next seven years.
    Discretionary spending in function 570 is entirely for the 
administration of Medicare. The Committee recommendation 
assumes no changes to discretionary spending in Medicare.

      major mandatory assumptions in the committee recommendation

    The Committee recommendation assumes mandatory spending 
levels of $168.9 billion in budget authority and $166.5 billion 
in outlays in 1996, an increase of $10.7 billion in budget 
authority and $10.2 billion in outlays from the 1995 level. 
Spending would increase by 62 percent over the 1996-2002 
period, rising to $255.9 billion in budget authority and $253.7 
billion in outlays by 2002. The 2002 outlay level is 62 percent 
higher than the 1995 outlay level. This represents an average 
annual growth rate of 7.2 percent.
    Even in real (inflation-adjusted) per capita terms, Federal 
spending for Medicare still grows in the Chairman's mark. In 
1995, Federal per capita Medicare spending is about $4950 per 
beneficiary. In 2002, under the Committee recommendation, 
Federal per capita Medicare spending is about $6400 per 
beneficiary, a 29 percent increase over seven years. After 
adjusting for inflation, Federal per capita spending in 2002 
would still rise by about $100, to about $5050 per beneficiary.

                     Function 600: INCOME SECURITY

    Function 600, Income Security includes a broad range of 
programs including the federal retirement programs, the major 
cash and in-kind welfare programs, housing programs, and 
nutrition programs. These programs are administered by many 
departments in the federal government including the Department 
of Health and Human Services, the Office of Personnel 
Management, the U.S. Department of Agriculture, the Railroad 
Retirement Board, the Social Security Administration, and the 
Department of Housing and Urban Development.
    Of the $222 billion in total 1995 outlays in this function, 
$185 billion (83 percent) is spent on entitlement programs. Six 
mandatory programs account for $171 billion of outlays. The six 
programs are the major cash and in-kind entitlement welfare 
programs: Supplemental Security Income (SSI), Aid to Families 
with Dependent Children (AFDC), Unemployment Insurance, and 
Food Stamps, as well as outlays for the Earned Income Tax 
Credit (EITC) and federal civilian and military retirement and 
disability programs. The federal retirement programs alone 
account for $65 billion or 30 percent of the 1995 outlays. 
(Social Security benefits are found in function 650.)
    Total spending in function 600 is expected to grow by 39 
percent, from $222.2 billion in outlays in 1995 to $308.9 
billion in 2002. By 2002, SSI is expected to grow 93 percent 
from $24.3 billion to $46.8 billion. The growth is attributable 
to new classes of eligible beneficiaries and, regulatory and 
court ordered expansion. Also growing faster than function 600 
average of 39 percent are Food Stamps which is projected to 
grow by 46 percent from $25.1 billion to $36.6 billion and EITC 
which is projected to grow 62 percent from $17.3 billion to 
$28.0 billion in 2002.
    Of the $38.7 billion in discretionary spending in this 
function in 1995, about two-thirds is devoted to housing 
programs, with the rest spent on social service and nutrition 
programs like the Low Income Home Energy Assistance (LIHEAP) 
and the Special Supplemental Food Program for Women, Infants 
and Children (WIC).

                                                              FUNCTION 600: INCOME SECURITY                                                             
                                                                  [Dollars in billions]                                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                   5-year                        7-year 
                                                        1995      1996      1997      1998      1999      2000      total     2001      2002      total 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Committee recommendation:                                                                                                                               
    BA..............................................     219.5     226.3     233.7     253.0     256.0     272.6   1,241.6     277.5     291.9   1,811.0
    OT..............................................     222.2     225.9     235.6     246.1     257.9     272.6   1,238.0     277.4     291.7   1,807.1
Current law:                                                                                                                                            
    BA..............................................     219.5     228.2     242.9     254.2     266.6     281.8   1,273.8     288.8     305.5   1,868.1
    OT..............................................     222.2     231.4     247.5     257.1     268.9     284.9   1,289.8     291.9     308.4   1,890.0
President's budget:                                                                                                                                     
    BA..............................................     219.5     228.5     241.5     263.2     271.0     285.4   1,289.6        NA        NA        NA
    OT..............................................     222.2     232.8     249.1     263.3     280.8     297.3   1,323.3        NA        NA        NA
Committee recommendation compared to:                                                                                                                   
    Current law:                                                                                                                                        
        BA..........................................  ........      -1.9      -9.2      -1.2     -10.7      -9.2     -32.2     -11.3     -13.6     -57.1
        OT..........................................  ........      -5.4     -11.9     -11.1     -11.0     -12.3     -51.8     -14.5     -16.7     -82.9
    President's budget:                                                                                                                                 
        BA..........................................  ........      -2.2      -7.8     -10.2     -15.0     -12.8     -48.0        NA        NA        NA
        OT..........................................  ........      -6.9     -13.5     -17.2     -22.9     -24.7     -85.3        NA        NA        NA
--------------------------------------------------------------------------------------------------------------------------------------------------------

                  Summary of Committee Recommendation

    The Committee recommendation assumes $226.3 billion in 
budget authority and $225.9 billion in outlays in 1996 for 
programs and activities in Function 600. Spending would 
increase by 29 percent (over 4% annually) over the 1996-2002 
period, rising to $292.4 billion in budget authority and $292.2 
billion in outlays by 2002. Over the seven-year period 1996-
2002, $1.808 trillion in outlays would be spent on income 
security functions, compared to $1.891 trillion assumed under 
the current law baseline. Over the five year period 1996-2000, 
$1.242 trillion in budget authority and $1.238 trillion in 
outlays would be spent compared to the $1.290 trillion in 
budget authority and $1.323 trillion in outlays that the 
President recommends.

    major discretionary assumptions in the committee recommendation

     The Committee recommendation assumes discretionary 
spending levels of $37.7 billion in budget authority and $39.7 
billion in outlays in 1996, an increase of $4.0 billion in 
budget authority and $0.5 billion in outlays from the 1995 
level. This spending would increase to $43.0 billion in budget 
authority and $45.2 billion in outlays in 2002. The Committee 
recommendation assumes the following major policy options to 
achieve the funding levels in the resolution:
     Addition of all funds necessary to renew contracts for 
housing assistance (section 8) that will expire over the next 
seven years, amounting to $75.8 billion in budget authority and 
$39.9 billion in outlays. Because the number of such renewals 
in 1995 is less than the number of renewals that will be 
necessary in later years, providing only the 1995 level of 
funding in those years would not be sufficient to renew all 
expiring contracts. Providing the additional funds will ensure 
that those currently receiving housing assistance will not lose 
their assistance.
     Preserve as currently structured and maintain funding at 
the 1995 level the elderly housing program (section 202), the 
disabled housing program (section 811), and the Housing 
Opportunities for Persons with AIDS program. In addition, all 
current funding for Native American housing programs would be 
grouped into a separate program and maintained.
     A block grant incorporating most existing public housing 
programs and another block grant making eligible most existing 
housing assistance programs. By removing overly strict federal 
rules for a confusing array of housing programs and turning the 
funds over to states and public housing authorities, more 
efficient use can be made of the housing funds that are 
provided. Block grants would allow the termination of a few 
remaining programs that are no longer needed, such as special 
purpose grants and pension fund partnerships, as well as reduce 
administrative costs, thereby reducing spending by $5.7 billion 
over the next five years.
     An additional $1.9 billion in funds for the Special 
Supplemental Food Program for Women, Infants and Children 
(WIC). No cuts in funding for the Child Care Development Block 
Grant (CCDBG).
     Additional funds for the Social Security Administration to 
fund Continuing Disability Reviews (CDR) in Supplemental 
Security Income to ensure that those who no longer need 
services do not continue to receive benefits, and to fight 
fraud and abuse.

      major mandatory assumptions in the committee recommendation

     The Committee recommendation assumes mandatory spending 
levels of $188.6 billion in budget authority and $186.2 billion 
in outlays in 1996, a decrease of $5.9 billion in outlays from 
the 1996 projected level. Spending would rise to $246.9 billion 
in outlays or 33 percent over the 1996-2002 period. The 
Committee recommendation assumes the following major policy 
options to achieve the funding levels resolution:
     $47 billion over 5 years, and $80 billion over 7 years in 
savings from Welfare Reform (of which $45 billion over 5 years 
is in function 600.) Over the period of 1996-2002, the 
Committee recommends funding of over $800 billion for Food 
Stamps, SSI, EITC, AFDC, Child Care and Child Nutrition.
     Return responsibility for welfare to the States. The 
Committee recommendation assumes a restructuring of the 
existing welfare system by returning power and responsibility 
to the States. One way to turn power back to the States would 
be through block grants with strings attached only to ensure 
that funds are used efficiently and effectively. The block 
grants would be available with no coverage mandates so States 
could craft programs appropriate to the problems of the State, 
and even regions in the State. Finally, States would receive a 
guaranteed amount for five years so States can plan 
effectively. States would be allowed to maintain a rainy day 
fund from their welfare reform savings as a contingency for 
future needs.
     Child Support Enforcement reform. The Committee 
recommendation assumes a reinvigorated child support 
enforcement system that will reward States for good performance 
and provide strong incentives for poorly performing States to 
improve their system. In exchange for a performance based 
financing system, States will be given vast flexibility to 
improve child support collections free from the current 
process-driven federal mandates. States would be encouraged to 
privatize child support functions, move away from the court-
based paper bound system and recover costs from absent parents 
who try to bog down the process.
     An effective and efficient child support system will 
reduce public assistance costs, give single parents leaving 
welfare a basic amount of income, and avoid welfare costs in 
the future. Advocates point out that an effective child support 
system over the long term could have profound societal effects 
which could alleviate structural welfare problems.
     In a Sense of the Senate provision, the Committee passed 
language encouraging social service funding to be provided in 
block grants where feasible. The Committee recognizes that 
block grants represent a significant change in the fiscal 
relationship between the States and the Federal government. 
Such a change can take time to implement. The Committee urges 
the authorizing and appropriations committees to consider, 
where appropriate, other means of achieving the first year 
savings targets to provide States with the time necessary to 
adapt to a block grant.
     Targets funds to the neediest. No assumed reductions in 
the School Lunch or School Breakfast programs. Currently 45 
percent of the Child and Adult Care Feeding Program (CACFP) 
benefits families of four with incomes over $32,000. In lieu of 
a burdensome means test, this proposal would decrease meal 
reimbursement rates to upper income neighborhoods, while 
maintaining reimbursements for children in family day care 
homes in low to moderate income neighborhoods, and for low 
income providers. Maintains the safety net of Food Stamps but 
reforms the program to target funds to lower income 
beneficiaries. Under the Committee recommendation, Food Stamp 
expenditures will increase from $26 billion in 1995 to $30 
billion in 2002, with total expenditures of nearly $200 billion 
over that period. The recommendation would also limit receipt 
of welfare benefits by aliens.
     Conforms Congressional retirement to federal civilian 
retirement. The Committee recommendation eliminates more 
generous pensions currently available to Members of Congress 
and their staff. The proposal conforms accrual rates and 
pension contributions to the rates paid by federal civilian 
employees.
     Restores the cost of living adjustment (COLA) for military 
retirees to the date of COLAs for civilian retirees for all 
three years. Assumes no reductions or delays in COLAs for 
federal retirees but sets the basis of pension from the average 
of the top three highest salaries to the private sector 
standard of the average of the five highest annual salaries.
     Accepts the President's proposal for denying the Earned 
Income Tax Credit (EITC) to undocumented workers, targets the 
credit to working families and maintains indexing of the 
credit, but limits prospective increases. Beneficiaries would 
not receive less in EITC payments in 1996 than they receive in 
1995 and the maximum benefit would continue to rise each year. 
Under the Committee recommendation spending on EITC will 
increase 47 percent from $17 billion in 1995 to $25 billion in 
2002 with total expenditures of $154 billion over the period.


                     Function 650: SOCIAL SECURITY

                       major programs in function

    Function 650 includes the Old Age and Survivors Insurance 
(OASIS) program and the Disability Insurance (DI) program. Both 
of these programs provide entitlement payments from the Social 
Security trust funds. Both programs are financed by a 12.4 
percent payroll tax on wages of current worker up to a 
specified level ($61,200 in 1995), by income tax revenues on 
Social Security benefits, and by general revenue payments 
denoted as interest on trust fund assets. The Social Security 
trust funds are off-budget and are displayed separately in the 
budget resolution.

                                                              FUNCTION 650: SOCIAL SECURITY                                                             
                                                                  [Dollars in billions]                                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                   5-year                        7-year 
                                                        1995      1996      1997      1998      1999      2000      total     2001      2002      total 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Chairman's mark:                                                                                                                                        
    BA..............................................    $336.9    $354.3    $374.0    $394.3    $415.0    $436.7   $1974.4     459.6    $483.7   $2917.7
    OT..............................................     336.2     354.2     373.1     393.1     413.7     435.6    1969.7     458.3     482.2    2910.2
Current law:                                                                                                                                            
    BA..............................................     336.9     354.3     374.0     394.3     415.0     436.7    1974.4     459.6     483.7    2917.7
    OT..............................................     336.2     354.2     373.1     393.1     413.7     435.6    1969.7     458.3     482.2    2910.2
President's budget:                                                                                                                                     
    BA..............................................     336.9     354.3     374.0     394.3     415.6     438.2    1976.4        NA        NA        NA
    OT..............................................     336.2     354.8     373.7     393.9     415.0     437.6    1975.0        NA        NA        NA
Committee recommendation compared to:                                                                                                                   
    Current law:                                                                                                                                        
        BA..........................................  ........  ........  ........  ........  ........  ........  ........  ........  ........  ........
        OT..........................................  ........  ........  ........  ........  ........  ........  ........  ........  ........  ........
    President's budget:                                                                                                                                 
        BA..........................................  ........  ........  ........  ........      -0.6      -1.4      -2.0        NA        NA        NA
        OT..........................................       0.0      -0.6      -0.7      -0.7      -1.3      -2.0      -5.3        NA        NA        NA
--------------------------------------------------------------------------------------------------------------------------------------------------------

                  summary of committee recommendation

    The Committee recommendation assumes no changes to Social 
Security.
    The Committee recommendation assumes $354.3 billion in 
budget authority and $354.2 billion in outlays in 1996 for 
programs and activities in Function 650. Spending would 
increase by 43% over the 1996-2002 period, rising to $483.7 
billion in budget authority and $482.2 billion in outlays by 
2002. Over the seven-year period 1996-2002, $2.918 trillion in 
budget authority and $2.91 trillion in outlays would be spent 
in Social Security, the same as the current law baseline. Over 
the five year period 1996-2000, $1.974 trillion in budget 
authority and $1.970 trillion in outlays would be spent 
compared to the $1.976 trillion in BA and $1.975 trillion that 
the President recommends.

    major discretionary assumptions in the committee recommendation

    The Committee recommendation assumes no changes to Social 
Security.

      major mandatory assumptions in the committee recommendation

    The Committee recommendation assumes no changes to Social 
Security.

              Function 700: VETERANS BENEFITS AND SERVICES

                       Major Programs in Function

    Function 700 includes all programs directed toward veterans 
of the armed services. Income security needs of disabled 
veterans and survivors of deceased veterans are addressed 
through compensation benefits, pensions and life insurance 
programs. Major education, training and rehabilitation and 
readjustment programs include the Montgomery GI Bill, the 
Veterans Educational Assistance Program, and the Vocational 
Rehabilitation and Counseling program. The VA also provides 
veterans with guarantees on home loans and farm loans. In 1995 
slightly less than half of all spending, $17.7 billion, is for 
the Veterans Health Administration, which comprises over 700 
hospitals, nursing homes, domiciliaries, and outpatient 
clinics.
    Total VA 1995 spending is projected to be $38.2 billion in 
BA and $37.2 billion in outlays. $19.5 billion or 53 percent of 
outlays is entitlement spending. Spending on veterans programs 
is projected to rise by 18 percent to $43.7 billion in outlays 
by 2002. The main growth in the veterans spending is due to 
veterans compensation, a mandatory program, which is projected 
to increase 38 percent, from $14.4 billion in 1995 to $19.8 
billion in 2002, due in part to judicial interpretation. 
Finally, the veteran population is declining, and by 1999 the 
veteran population over 65 years old is expected to peak and 
gradually decline.

                                                              FUNCTION 700: VETERAN AFFAIRS                                                             
                                                                  [Dollars in billions]                                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                   5-year                        7-year 
                                                        1995      1996      1997      1998      1999      2000      total     2001      2002      total 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Commitee recommendation:                                                                                                                                
    BA..............................................     $37.7     $37.4     $37.5     $37.6     $37.9     $37.9    $188.3     $38.3     $38.7    $265.3
    OT..............................................      37.4      36.9      37.7      38.0      38.2      39.4     190.2      40.1      40.4     270.6
Current law:                                                                                                                                            
    BA..............................................      37.7      38.2      38.6      39.1      40.4      40.8     197.1      41.5      42.1     280.7
    OT..............................................      37.4      37.2      38.5      39.1      40.4      42.3     197.6      43.0      43.7     284.3
President's budget:                                                                                                                                     
    BA..............................................      37.7      39.1      38.9      39.0      39.1      39.1     195.3        NA        NA        NA
    OT..............................................      37.4      37.3      38.8      39.0      39.1      40.6     194.7        Na        NA        NA
Committee recommendation compared to:                                                                                                                   
Current law:                                                                                                                                            
        BA..........................................  ........      -0.8      -1.1      -1.5      -2.5     - 2.9      -8.8      -3.2      -3.5     -15.5
        OT..........................................  ........      -0.3      -0.8      -1.2      -2.2      -2.9      -7.4      -2.9      -3.3     -13.7
    President's budget:                                                                                                                                 
        BA..........................................  ........      -1.7      -1.4      -1.4      -1.2      -1.2      -7.0        NA        NA        NA
        OT..........................................  ........      -0.4      -1.1      -1.1      -0.9      -1.2      -4.6        NA       NAS        NA
--------------------------------------------------------------------------------------------------------------------------------------------------------

                  Summary of Committee Recommendation

    The Committee recommendation assumes $37.2 billion in 
budget authority and $37.1 billion in outlays in 1996 for 
programs and activities in Function 700. Spending would 
increase slightly over the 1996-2002 period, rising to $38.7 
billion in budget authority and $40.4 billion in outlays by 
2002. Over the seven-year period 1996-2002, $264 billion in 
budget authority and $269 billion outlays would be spent on 
veteran's programs, compared to $281 billion in budget 
authority and $284 billion in outlays assumed under the current 
law baseline. Under the Committee's recommendation per capita 
veterans spending will rise from $1,416 to $1,611 per veteran. 
Over the five year period 1996-2000, $187 billion in budget 
authority and $189 billion outlays would be spent compared to 
the $195.3 billion in budget authority and $194.7 billion in 
outlays that the President recommends.

    Major Discretionary Assumptions in the Committee Recommendation

    The Committee recommendation assumes discretionary spending 
levels of $17.9 billion in budget authority and $18.9 billion 
in outlays in 1996, a reduction of $.5 billion in budget 
authority and $0.1 billion in outlays from the 1995 level. This 
spending would decline to $17.2 billion in budget authority and 
$17.3 billion in outlays in 2002. The Committee recommendation 
assumes the following major policy options to achieve the 
funding levels:
          No changes in VA medical funding. While the 
        President's Budget proposes an increase in 1996 for the 
        VA medical system, over time the recommended funding 
        drops below the 1995 level. Under the Committee's 
        recommendation, spending on VA health programs would be 
        $780 million over the President's recommended level in 
        2000.
          Phase out construction of VA facilities. By 1999, the 
        veterans population over 65 begins declining. Any major 
        construction will not be available for use by that 
        date. The Committee is concerned that, from a long term 
        budget standpoint, to maintain quality the VA system 
        would be burdened by facilities that can not be filled 
        or adequately staffed. Thus, the system will be better 
        served by using existing capacity.
          The mark incorporates the needs for improvement, 
        repairs, new cemeteries, long term care facilities and 
        conversion that must be performed over the short term, 
        but expects that past 1999 the VA system will use 
        existing capacity.
          In 1996, the committee assumes the 1995 level of 
        funding for general operating expenses less the funds 
        for the one time modernization effort in the 1995 base.

      Major Mandatory Assumptions in the Committee Recommendation

    The Committee recommendation assumes mandatory spending 
levels of $19.5 billion in budget authority and $17.9 billion 
in outlays in 1996, $.4 billion in budget authority and outlays 
less than under current law. Spending would increase to $21.5 
billion and $22.9 billion in outlays in 2002. The Committee 
recommendation assumes the following major policy options to 
achieve the funding levels:
          Makes no changes in compensation or in cost of living 
        adjustments for all veterans currently receiving 
        compensation from service connected disabilities.
          Repeals the ``Gardner'' decision that extended 
        compensation to VA medical patients suffering an 
        adverse outcome in cases where no fault was found with 
        VA.
          Targets compensation in the future to veterans 
        disabled in combat and veterans disabled during 
        performance of duty.
          Phases in a higher prescription co-payment for upper 
        income veterans.
          Extends expiring current law provisions from the 
        Omnibus Reconciliation Act of 1993.
          Restores the funding ratio for GI Bill benefits to 
        the pre-Gulf War level.
        
        
                Function 750: ADMINISTRATION OF JUSTICE

                       Major Programs in Function

    Function 750 includes the Department of Justice, the 
Judiciary, Customs and other law enforcement functions in the 
Department of Treasury, as well as independent agencies such as 
the Legal Services Corporation. Programs in this function 
provide law enforcement protection, including civil rights 
enforcement, crime prevention, funding for the care of 
prisoners and prison construction, costs of the Judiciary, and 
appointed counsel or other legal services for those in need.
    Total spending in this function for 1995 is $18.5 billion 
in budget authority and $18.2 billion in outlays. For 1996, the 
President is requesting $21.9 billion in budget authority and 
$20 billion in outlays. Total spending in the function is 
expected to rise by $23.8 billion in budget authority and $19.8 
billion in outlays through 2000. The increase is due, 
primarily, to the enactment of the Violent Crime Reduction 
Trust Fund which will provide funding to programs, primarily in 
this function, totaling $23.5 billion in budget authority and 
$20.7 billion in outlays through 2000. A significant amount of 
funding in this function is targeted toward discretionary 
programs, with Federal law enforcement receiving $7.8 billion, 
or 33 percent in 1996.

                                                         FUNCTION 750: ADMINISTRATION OF JUSTICE                                                        
                                                                  [Dollars in billions]                                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                   5-year                        7-year 
                                                        1995      1996      1997      1998      1999      2000      total      2001     2002      total 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Chairman's mark:                                                                                                                                        
    BA..............................................     $18.5     $20.0     $20.7     $21.4     $22.3     $22.3    $106.7     $21.9     $21.8    $168.9
    OT..............................................      17.1      19.6      21.2      22.4      23.1      23.7     110.0      23.3      23.2     173.6
Current law:                                                                                                                                            
    BA..............................................      18.5      18.5      18.5      18.6      18.6      18.6      92.8      18.2      18.1     147.6
    OT..............................................      17.1      18.2      18.3      18.6      18.6      18.5      92.1      18.2      18.1     145.5
President's budget:                                                                                                                                     
    BA..............................................      18.5      21.9      22.3      23.3      24.5      24.7     116.6  ........  ........  ........
    OT..............................................  ........      -0.4      -0.2      -0.3      -0.4      -0.6      -2.0  ........  ........  ........
Chairman's Mark compared to:                                                                                                                            
    Current law:                                                                                                                                        
        BA..........................................  ........       1.5       2.2       2.8       3.7       3.7      13.9       3.7       3.7      21.3
        OT..........................................  ........       1.4       2.9       3.8       4.5       5.2      17.9       5.1       5.1      28.1
    President's budget:                                                                                                                                 
        BA..........................................  ........      -1.9      -1.6      -1.9      -2.2      -2.4      -9.9  ........  ........  ........
        OT..........................................  ........      -0.4      -0.2      -0.3      -0.4      -0.6      -2.0  ........  ........  ........
--------------------------------------------------------------------------------------------------------------------------------------------------------

                  summary of committee recommendation

    The Committee recommendation assumes $20 billion in budget 
authority and $19.5 billion in outlays in 1996 for programs and 
activities in Function 750. Spending would increase slightly 
over the 1996-2002 period, rising to $21.7 billion in budget 
authority and $23.1 billion in outlays by 2002. Over the seven-
year period 1996-2002, $149 billion in budget authority and 
$156 billion in outlays would be spent on the administration of 
justice functions, compared to $129 billion in budget authority 
and $128 billion in outlays assumed under the current law 
baseline. Over the five year period 1996-2000, $106.2 billion 
in budget authority and $109.5 billion in outlays would be 
spent compared to the $116.6 billion in budget authority and 
$112 billion in outlays that the President recommends.

    major discretionary assumptions in the committee recommendation

    The Committee recommendation assumes discretionary spending 
levels of $19.9 billion in budget authority and $19.5 billion 
in outlays in 1996, an additional $1.5 billion in budget 
authority and $2.5 billion in outlays from the 1995 level. This 
spending would rise to $21.7 billion in budget authority and 
$23.1 billion in outlays in 2002. The Committee Recommendation 
assumes the following major policy options to achieve the 
recommended funding levels:
    In order to continue to fulfill the commitment the Congress 
made last year to step up the Federal fight against violent 
crime, the Committee recommendation assumes full funding of the 
law enforcement programs under the Violent Crime Reduction 
Trust Fund. The reported resolution assumes over $4 billion in 
1996 for the Crime Trust Fund and over $25 billion through 
2002.
    While funding priorities under the discretionary spending 
caps will be the determined by the Appropriations Committee, 
the Committee recommendation intends that spending under the 
Crime Trust Fund be lowered by $2.7 billion and that an 
additional $2.7 billion be made available under the 
discretionary spending caps be made available to provide 
additional funding for the INS, DEA, FBI. It is the Committee's 
intent that these programs maintain at least current agent 
levels.
    The Committee recommendation assumes that Legal Services 
Corporation be funded at 65 percent of its current level of 
$415 million.

      major mandatory assumptions in the committee recommendation

    The Committee recommendation assumes mandatory spending 
levels of $241 million in budget authority and $192 million in 
outlays in 1996, $119 million lower in budget authority and 
outlays from the current law level. Spending would decrease 
over the 1996-2002 period and the Committee recommendation 
assumes savings of $173 million in budget authority and $172 
million in outlays for 2002. The Committee recommendation 
assumes the following major policy options to achieve the 
recommended funding levels:
    The Committee intends that automation expenses of the 
Federal Judiciary should be funded through the regular 
appropriations process and thus assumes the termination of the 
Judiciary Automation Fund.
    The Committee recommendation assumes that Judges' pay, 
along with Members of Congress and other high ranking Federal 
officials will have their pay frozen until the Budget is 
balanced in 2002.

                    Function 800: GENERAL GOVERNMENT

                       major programs in function

    Function 800 consists of the activities of the Legislative 
Branch, the Executive Office of the President, U.S. Treasury 
fiscal operations (including tax collection), personnel and 
property management, and general purpose fiscal assistance to 
states, localities, and U.S. territories.
    In 1995, $13.3 billion in budget authority and $13.4 
billion in outlays will be spent on general government 
activities. About half of the spending, $7.6 billion, is for 
the Internal Revenue Service. Over 90 percent of this function 
is discretionary spending under the jurisdiction of these 
Appropriations subcommittees: Legislative Branch, Treasury-
Postal Service and General Government, and Interior.
    After dropping from $13.3 billion in BA in 1995 to $13.2 
billion in BA in 1996, baseline spending in Function 800 holds 
steady over the 1996-2000 period, returning to $13.3 billion in 
BA in 1998. Spending drops to $12.9 billion in 2001 and 2002 
due to projected decreases in mandatory programs.

                                                            FUNCTION 800: GENERAL GOVERNMENT                                                            
                                                                  [Dollars in billions]                                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                   5-year                        7-year 
                                                        1995      1996      1997      1998      1999      2000      total     2001      2002      total 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Committee recommendation:                                                                                                                               
    BA..............................................     $13.3     $12.5     $12.4     $12.2     $12.1     $12.0     $61.3     $11.6     $11.6     $84.5
    OT..............................................      13.4      13.0      12.4      12.3      12.0      11.9      61.6      11.7      11.6      84.9
Current law:                                                                                                                                            
    BA..............................................      13.3      13.2      13.2      13.3      13.3      13.3      66.3      12.9      12.9      92.0
    OT..............................................      13.4      13.5      13.1      13.2      13.1      13.3      66.0      12.9      12.8      91.7
President's budget:                                                                                                                                     
    BA..............................................      13.3      14.7      14.3      14.1      14.0      13.6      70.6        NA        NA        NA
    OT..............................................      13.4      14.2      13.8      13.8      13.8      13.8      69.3        NA        NA        NA
Committee recommendation compared to:                                                                                                                   
    Current law:                                                                                                                                        
        BA..........................................  ........      -0.7      -0.8      -1.0      -1.2      -1.3      -5.0      -1.3      -1.3      -7.5
        OT..........................................  ........      -0.5      -0.7      -0.8      -1.0      -1.4      -4.4      -1.2      -1.2      -6.8
    President's budget:                                                                                                                                 
        BA..........................................       0.0      -2.1      -1.9      -1.9      -1.8      -1.6      -9.3        NA        NA        NA
        OT..........................................       0.0      -1.2      -1.4      -1.5      -1.7      -1.9      -7.7        NA        NA        NA
--------------------------------------------------------------------------------------------------------------------------------------------------------

                  SUMMARY OF COMMITTEE RECOMMENDATION

    The Committee recommendation assumes $12.5 billion in 
budget authority and $13.0 billion in outlays in 1996 for 
programs and activities in Function 800. Spending would decline 
slowly over the 1996-2002 period, falling to $11.6 billion in 
budget authority and outlays by 2002. Over the seven-year 
period 1996-2002, $85 billion in budget authority in outlays 
would be spent on general government functions, compared to $92 
billion assumed under the current law baseline. Over the five 
year period 1996-2002, $61 billion in budget authority and 
outlays would be spent compared to the $71 billion that the 
President recommends.

    major discretionary assumptions in the committee recommendation

    The Committee recommendation assumes discretionary spending 
levels of $11.7 billion in budget authority and $12.1 billion 
in outlays in 1996, a reduction of $0.6 billion in budget 
authority and $0.3 billion in outlays from the 1995 level. This 
spending would decline to $11.2 billion in budget authority and 
$11.0 billion in outlays by 2002. The committee recommendation 
assumes the following major policy options to achieve the 
recommended funding levels.
    The Committee assumes savings from the Senate Republican 
Conference plan to cut Legislative Branch spending by $200 
million from the 1995 enacted level. If projected through the 
1996-2002 period, this proposal would save $1.4 billion. Their 
recommendations included:
          Reducing committee staffs by 15 percent;
          Reducing Senate support offices by 12.5 percent;
          Reducing funding for the General Accounting Office by 
        25 percent;
          Eliminating the Office of Technology Assessment; and
          Other cuts following a thorough review of entire 
        Legislative Branch operations.
    The Committee recommendation assumes a significant amount 
of savings from streamlining operations and consolidating 
functions in the Executive Branch. The resolution assumes a 25 
percent reduction in spending for the Executive Office of the 
President; closing GSA supply depots, as recommended by the 
General Accounting Office; a 25 percent reduction in 
construction and acquisition of Federal buildings, the 
elimination of the Office of Territorial and International 
Affairs and reorganization of these activities as proposed by 
the President, and other streamlining savings proposed by the 
President for Treasury agencies, the National Archives, and 
other agencies.
    The Committee recommendation assumes that the Office of 
Personnel Management would be phased down to a Civil Service 
Commission. Employee benefit and retirement functions would 
remain centralized while most other functions would be 
delegated to the agencies.
    The Committee recommendation assumes full funding of the 
President's request for the Internal Revenue Service (IRS) tax 
law enforcement functions, including the compliance initiative 
begun in 1995. According to the Treasury Department, this 
compliance initiative was expected to collect $9.2 billion in 
revenues over the 1995-1999 period in addition to the revenue 
levels assumed in the 1995 Budget Resolution. The Committee is 
encouraged that a new system for tracking enforcement 
initiatives has been developed and that early results show that 
IRS will meet or exceed the revenue goals of this initiative. 
The Committee strongly endorses continued funding of this 
initiative at $405 million within the amounts available to the 
Committee on Appropriations under the nondefense discretionary 
cap.

           major mandatory assumptions in the chairman's mark

    The Chairman's Mark assumes mandatory spending levels of 
$0.8 billion in budget authority and $0.9 billion in outlays in 
1996, slightly lower than the current law level. Spending would 
decline to $0.4 billion in budget authority and $0.6 billion in 
outlays by 2002. The Chairman's Mark assumes the following 
major policy options to achieve the recommended funding levels: 
freezing pay for Members of Congress until the budget is 
balanced in 2002, the elimination of taxpayer subsidies for 
Presidential campaigns after the 1996 election cycle, and 
charging fees for parking at Federal buildings.

                       Function 900: NET INTEREST

                       Major Programs in Function

    Function 900 displays net interest, which is a mandatory 
payment. There are no discretionary programs in function 900. 
Net interest includes interest on the public debt after 
deducting the amount of interest income received by the federal 
government.
    Interest on the public debt, or gross interest, is the 
Treasury's cost of financing the entire public debt of the U.S. 
government. Gross interest costs are not, however, a 
comprehensive measure of government borrowing costs because 
some of the debt is held by the government and generates 
interest income for the government. In 1994, more than $1.2 
trillion (a little more than 25 percent) of the total public 
debt was held by the federal government itself, mostly by trust 
funds such as social security and federal civilian and military 
retirement. The government both pays and collects interest on 
these securities. In addition, the federal government lends 
money through other credit programs. These activities also 
result in interest income to the government. Since net interest 
reflects both the interest paid and interest earned by the 
government, it provides the best measure of the costs of 
federal borrowing.

                                                               FUNCTION 900: NET INTEREST                                                               
                                                                  [Dollars in billions]                                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                   5-year                        7-year 
                                                        1995      1996      1997      1998      1999      2000      total     2001      2002      total 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Committee recommendation:                                                                                                                               
    Interest on the public debt.....................    $339.6    $369.6    $380.2    $388.1    $400.2    $411.4  $1,949.5    $421.7    $430.8  $2,802.0
    Interest rec'd by trust funds...................     -96.1    -103.0    -108.3    -113.8    -119.7    -125.6    -570.3    -135.1    -142.4    -847.7
    Other interest received.........................      -8.2      -8.2      -7.5      -7.4      -7.8      -8.2     -39.1      -8.4      -9.1     -56.5
                                                     ---------------------------------------------------------------------------------------------------
      Total net interest............................     235.3     258.5     264.4     266.9     272.7     277.7   1,340.1     278.3     279.3   1,897.7
Current law:                                                                                                                                            
    Interest on the public debt.....................     339.6     370.4     384.5     398.0     417.1     437.0   2,007.1     457.7     479.3   2,944.1
    Interest rec'd by trust funds...................     -96.1    -102.4    -107.2    -112.3    -117.8    -123.4    -563.0    -132.5    -139.5    -835.1
    Other interest received.........................      -8.2      -8.2      -7.5      -7.4      -7.8      -8.2     -39.1      -8.4      -9.1     -56.5
                                                     ---------------------------------------------------------------------------------------------------
      Total net interest............................     235.3     259.9     269.8     278.3     291.5     305.5   1,404.9     316.8     330.7   2,052.5
President's budget:                                                                                                                                     
    Interest on the public debt.....................     339.8     371.3     386.8     402.2     423.8     446.7   2,030.8        NA        NA        NA
    Interest rec'd by trust funds...................     -96.1    -102.4    -107.2    -112.3    -117.8    -123.4    -563.0  ........  ........  ........
    Other interest received.........................      -8.2      -8.4      -8.2      -9.0     -10.3     -11.6     -47.5        NA        NA        NA
                                                     ---------------------------------------------------------------------------------------------------
      Total net interest............................     235.5     260.6     271.4     280.9     295.7     311.6   1,420.2        NA        NA        NA
Committee recommendation compared to current law:                                                                                                       
    Interest on the public debt.....................  ........       0.8       4.3       9.9      16.9      25.6      57.6      36.0      48.5     142.1
    Interest rec'd by trust funds...................  ........       0.6       1.1       1.5       1.9       2.2       7.3       2.5       2.9      12.7
    Other interest received.........................  ........  ........  ........  ........  ........  ........  ........  ........  ........  ........
      Total net interest............................  ........       1.4       5.4      11.3      18.8      27.8      64.8      38.6      51.4     154.8
Committee recommendation compared to President's                                                                                                        
 budget:                                                                                                                                                
    Interest on the public debt.....................       0.2       1.7       6.6      14.1      23.6      35.2      81.3        NA        NA        NA
    Interest rec'd by trust funds...................  ........       0.6       1.1       1.5       1.9       2.2       7.3        NA        NA        NA
    Other interest received.........................      -0.1      -0.2      -0.7      -1.5      -2.5      -3.5      -8.4        NA        NA        NA
      Total net interest............................       0.1       2.1       7.0      14.0      23.0      34.0      80.1        NA        NA        NA
--------------------------------------------------------------------------------------------------------------------------------------------------------

                  Summary of Committee Recommendation

    Net interest payments in the Committee Recommendation rise 
from $258.5 billion in 1996 to $279.3 billion in 2002, an 8.0 
percent increase. Under the current law baseline, net interest 
payments rise 27.2 percent over the period 1996-2002. The net 
interest levels in the Committee Recommendation are $154.8 
billion lower than the baseline over the next seven years and 
$80.1 billion lower than the levels recommended in the 
President's budget over the next five years.
    Interest on the public debt is a major beneficiary of 
deficit reduction and is lower in the Committee Recommendation 
because of the substantial deficit reduction embodied in the 
plan. The Committee Recommendation for net interest, at $279.3 
billion in 2002, represents 14.8 percent of total outlays. 
Under the current law baseline net interest represents 15.7 
percent of total outlays in 2002.

                        Function 920: ALLOWANCES

                       Major Programs in Function

    This function displays the budgetary effects of proposals 
that cannot be easily classified by function. In past years, 
Function 920 has included total savings or costs from proposals 
to change the pay of federal employees, change procurement 
procedures, or change the amount of rent that federal agencies 
pay.

                                                                FUNCTION 920: ALLOWANCES                                                                
                                                                  [Dollars in billions]                                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                   5-year                        7-year 
                                                        1995      1996      1997      1998      1999      2000      total     2001      2002      total 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Chairman's mark:                                                                                                                                        
    BA..............................................  ........     $-8.6     $-8.5     $-7.3     $-6.8     $-5.7    $-37.0     S-5.7     $-5.7    $-48.4
    OT..............................................  ........      -6.5      -8.5      -7.6      -7.1      -6.1     -35.8      -6.1      -6.1     -48.0
Current law:                                                                                                                                            
    BA..............................................  ........  ........  ........  ........  ........  ........  ........  ........  ........  ........
    OT..............................................  ........  ........  ........  ........  ........  ........  ........  ........  ........  ........
President's budget:                                                                                                                                     
    BA..............................................  ........  ........  ........  ........  ........  ........  ........        NA        NA        NA
    OT..............................................  ........  ........  ........  ........  ........  ........  ........        NA        NA        NA
Chairman's mark compared to:                                                                                                                            
Current law:                                          ........      -8.6      -8.5      -7.3      -6.8      -5.7     -37.0      -5.7      -5.7     -48.4
    BA..............................................  ........  ........  ........  ........  ........  ........  ........  ........  ........  ........
    OT..............................................  ........      -6.5      -8.5      -7.6      -7.1      -6.1     -35.8      -6.1      -6.1     -48.0
President's budget:                                   ........      -8.6      -8.5      -7.3      -6.8      -5.7     -37.0        NA        NA        NA
    BA..............................................  ........  ........  ........  ........  ........  ........  ........  ........  ........  ........
    OT..............................................  ........      -6.5      -8.5      -7.6      -7.1      -6.1     -35.8        NA        NA        NA
--------------------------------------------------------------------------------------------------------------------------------------------------------

                  Summary of Committee Recommendation

    The Committee recommendation assumes -$8.6 billion in 
budget authority and -$6.5 billion in outlays for 1996 for 
programs in Function 920. This reduction in spending would 
average about -$6.9 billion a year over the 1996-2002 period, 
leveling off at -$6.2 billion in outlays by 2002. Over the 
seven-year period, this Committee recommendation for this 
function would reduce the deficit by $48 billion. Over the 
1996-2000 period, outlays would be -$35.9 billion less under 
the Committee recommendation than under current law or the 
President's's budget.

    Major Discretionary Assumptions in the Committee Recommendation

    The Committee recommendation assumes reductions in 
discretionary spending levels of -$8.6 billion in budget 
authority and -$6.5 billion in outlays in 1996. The Committee 
recommendation includes assumptions for both increases and 
decreases in governmentwide spending that result in the net 
budget authority and outlay totals. On the increase side, the 
Committee assumes levels sufficient to provide non-defense 
agencies with 50 percent of the funds needed to pay for the 
annual cost-of-living increases scheduled for salaries of 
federal employees (except Senior Executive Service and 
Executive Schedule) so the agencies do not have to absorb the 
whole cost of such raises.
    As for spending reductions, the Committee assumes a 15 
percent reduction in overhead (which covers items such as 
printing, utilities, rent, communication, travel, shipping, and 
certain contracts included in object classes 20 and 30, except 
for object classes 25.4 and 25.5) for programs of non-defense 
agencies that remain funded in the budget and whose funding is 
not interconnected with receipts dedicated to a program (as 
identified by Senator Brown's working group on discretionary 
spending). This assumption would not reduce funding for the 
programmatic activities of agencies.
    The Committee recommendation assumes repeal of the Davis-
Bacon Act to reduce federal construction costs by $2.6 billion 
over five years, as well as modification of the Service 
Contract Act to reduce the cost of federal contracts for items 
such as laundry, custodial, or guard services by more than $1 
billion over the 1996-2000 period.
    The Committee also assumes a reduction in the number of 
political appointees from 2,800 to 2,000, which would decrease 
spending by $0.4 billion over five years.

      Major Mandatory Assumptions in the Committee Recommendation

    There is no mandatory spending in this function.

            Function 950: UNDISTRIBUTED OFFSETTING RECEIPTS

                       Major Programs in Function

    This function records offsetting receipts (receipts that 
the budget shows as offsets to spending programs) that are too 
large to record in other budget functions. Such receipts are 
either ``intrabudgetary'' (a payment from one federal agency to 
another, such as agency payments to the retirement trust funds) 
or ``proprietary'' (a payment from the public under some type 
of business arrangement with the government). The main types of 
receipts recorded as ``undistributed'' in this function are: 
the payments agencies make to retirement trust funds for their 
employees, 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 federal 
property, such as the spectrum or major assets.

                                                     FUNCTION 950: UNDISTRIBUTED OFFSETTING RECEIPTS                                                    
                                                                  [Dollars in billions]                                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                5-year                           7-year 
                                                    1995      1996      1997      1998      1999      2000      total       2001       2000      total  
--------------------------------------------------------------------------------------------------------------------------------------------------------
Chairman's mark:                                                                                                                                        
    BA..........................................    $-46.2    $-39.9    $-40.9    $-43.9    $-45.8    $-48.5    $-219.0     $-50.5     $-52.6    $-322.1
    OT..........................................     -46.2     -39.9     -40.9     -43.9     -45.8     -48.5     -219.0      -50.5      -52.6     -322.1
Current law:                                                                                                                                            
    BA..........................................     -46.2     -38.1     -38.3     -39.5     -40.9     -43.5     -200.4      -45.6      -47.7     -293.6
    OT..........................................     -46.2     -38.1     -38.3     -39.5     -40.9     -43.5     -200.4      -45.6      -47.7     -293.6
President's budget:                                                                                                                                     
    BA..........................................     -46.2     -38.1     -38.5     -39.8     -41.4     -43.6     -201.4         NA         NA         NA
    OT..........................................     -46.2     -38.1     -38.5     -39.8     -41.4     -43.6     -201.4         NA         NA         NA
Chairman's mark compared to:                                                                                                                            
    Current law:                                                                                                                                        
        BA......................................  ........      -1.9      -2.6      -4.3      -4.8      -5.0      -18.6       -5.0       -4.9      -28.5
        OT......................................  ........      -1.9      -2.6      -4.3      -4.8      -5.0      -18.6       -5.0       -4.9      -28.5
    President's budget:                                                                                                                                 
        BA......................................  ........      -1.8      -2.5      -4.1      -4.4      -4.8      -17.6         NA         NA         NA
        OT......................................  ........      -1.8      -2.5      -4.1      -4.4      -4.8      -17.6         NA         NA         NA
--------------------------------------------------------------------------------------------------------------------------------------------------------

                  Summary of Committee Recommendation

    The Committee recommendation assumes -$39.9 billion in 
budget authority and in outlays for 1996, a reduction in total 
spending (because of an increase in receipts) of $1.9 billion 
from the current law level. These receipts would increase to 
-$51 billion in 2002. Over the seven-year period, the Committee 
recommendation for this function would offset total spending by 
$319 billion, compared to $294 billion under the current law 
baseline. Over the 1996-2000 period, these receipts would be 
$17.6 billion more under the Committee recommendation compared 
to the President's budget.

    Major Discretionary Assumptions in the Committee Recommendation

    There are no discretionary effects in this function.

      Major Mandatory Assumptions in the Committee Recommendation

    The Committee recommendation includes options related to 
allowing the Federal Communications Commission (FCC) to recover 
value from the spectrum. Although such receipts are displayed 
in Function 950 by convention, they are discussed here because 
this function includes the FCC. Until this year, commercial 
enterprises have used their allocation of the spectrum for 
free. Under a 1993 law, however, the FCC is just concluding an 
auction of parts of the spectrum that has raised over $7 
billion for the Treasury. The committee recommendation assumes 
options that would extend the FCC's authority to auction 
spectrum past 1998, broaden the types of spectrum the FCC is 
allowed to auction, and provide the FCC authority to reallocate 
parts of the spectrum and impose fees to encourage a more 
efficient distribution and use of the spectrum.

                              B. Revenues

                    Description of Federal Revenues

    Federal revenues are taxes and other collections from the 
public that result from the government's sovereign or 
governmental powers. Federal revenues include individual income 
taxes, corporate income taxes, social insurance taxes, estate 
and gift taxes, customs duties and miscellaneous receipts 
(which include deposits of earnings by the Federal Reserve 
System, fines, penalties, fees for regulatory services, and 
others).
    The baseline projections for revenues assume that current 
tax law remains unchanged. The baseline takes into account that 
some provisions are scheduled to change or expire during the 
1995-2000 period. In general, the baseline assumes that those 
changes and expirations occur on schedule. One category of 
taxes, excise taxes dedicated to trust funds, constitutes the 
sole exception to this rule.
    In 1995, total revenue collections are expected to be 
$1.355 trillion. Forty-four percent of total revenues is from 
individual income taxes; another 36 percent is from social 
insurance taxes which are also paid by individuals. By the year 
2002, federal revenues are projected to be $1.884 trillion, 
representing 39 percent growth from the 1995 level. Revenues 
will grow at about 5 percent per year between 1995 and 2000, 
absent any changes in law.

                                                                        REVENUES                                                                        
                                                                [In billions of dollars]                                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                   5-year                        7-year 
                                                        1995      1996      1997      1998      1999      2000      Total     2001      2002      Total 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Committee Recommendation............................   1,355.2   1,417.1   1,474.8   1,545.6   1,619.3   1,699.4   7,775.2   1,789.4   1,883.6  11,429.2
Current Law.........................................   1,355.2   1,417.7   1,475.5   1,546.4   1,618.4   1,698.2   7,756.2   1,789.4   1,883.6  11,429.2
President's Budget..................................   1,355.4   1,415.6   1,464.2   1,533.8   1,603.8   1,678.0   7,695.3        NA        NA        NA
                                                     ===================================================================================================
Committee Recommendation compared to:                                                                                                                   
    Current Law.....................................  ........      -0.6      -0.7      -0.8       0.9       1.2       0.0       0.0      -0.0       0.0
    President's Budget..............................      -0.1       1.6      10.6      11.8      15.5      21.4      60.9        NA        NA        NA
--------------------------------------------------------------------------------------------------------------------------------------------------------

                  Summary of Committee Recommendation

    The Committee Recommendation assumes no net revenue change 
over the period 1996-2000 or 1996-2002, and the Finance 
Committee is not given revenue reconciliation instructions.
    The Committee Recommendation incorporates the revenue 
losses associated with the enactment of H.R. 831, the Self-
Employed Health Insurance bill. The mark also incorporates 
small revenue increases associated with proposals to reform the 
Earned Income Tax Credit (roughly 80 percent of the budget 
effect of the EITC reform proposals is shown in function 600). 
The Committee Recommendation also assumes that the Finance 
Committee acts to extend expiring provisions. The Finance 
Committee may decide to raise some revenues by extending 
expiring taxes, and reduce some revenues by extending other 
expiring provisions. The Finance Committee may choose to do any 
combination of revenue raisers and revenue losers so long as 
the first and five-year net revenue loss does not result in a 
level of revenues which is lower than the level set in the 
resolution. Possible extensions of current taxes that raise 
revenue include: corporate tax dedicated to Superfund, FUTA 0.2 
percentage point surtax, luxury tax on passenger vehicles, 1.25 
cents/gallon railroad diesel fuel tax, 2.5 cents/gallon 
motorboat gasoline tax, and the 20.1 cents/gallon motorboat 
diesel fuel tax. Possible extensions of expiring provisions 
that lose revenue include: the commercial aviation exemption 
from the fuel tax, deduction for contributions to private 
foundations, targeted jobs tax credit, exclusion for employer-
provided education assistance, orphan drug tax credit, research 
and experimentation tax credit and allocation rules, 
generalized system of preferences, deny deduction for some 
noncomplying health plans (ERISA waiver), and the 
nonconventional fuels tax credit.

                      Providing for Tax Reductions

    In the section on miscellaneous provisions, the Committee 
Recommendation includes two ``reserve funds'' that would 
provide for further tax reductions. The first reserve fund 
would provide, after passage of a conference report on 
reconciliation, a reserve fund to accommodate deficit-neutral 
tax reduction legislation. The second reserve fund would 
provide, after enactment of reconciliation, a reserve fund to 
allow CBO's ``fiscal dividend'' to be made available for tax 
reduction legislation. The language in the resolution makes it 
very clear that the fiscal dividend savings must be ``locked-
in'' before they can be dedicated to tax cuts. The reserve fund 
provides that in the event reconciliation is enacted, the 
Congressional Budget Office (CBO) would certify, broken down on 
a year-by-year basis, the amount of the fiscal dividend 
achieved as a result of enacting this balanced budget plan. 
That ``fiscal dividend'' could be used for a tax cut. Numerous 
amendments designed to use the fiscal dividend to increase the 
size of government by increasing spending on various programs 
were defeated in the Committee. It is the Committee's view that 
the fiscal dividend should not be used to restart the tax and 
spend cycle that this fair, but tough balanced budget plan, was 
designed to stop. It is the committee's view that middle class 
taxpayers should share in the benefits of balancing the budget 
to the extent there is a fiscal dividend.
    The Committee adopted a Boxer-Brown Sense of the Senate 
resolution providing that approximately ninety percent of the 
benefits of any tax cuts should be targeted to middle class 
working families with incomes below approximately $100,000. The 
Committee's interpretation of the appropriate definition of 
``income'' is adjusted gross income. It is the Committee's view 
that adjusted gross income is the most commonly understood 
definition of income. Taxpayers and the Internal Revenue 
Service use ``adjusted gross income'' to calculate federal 
income tax liability. The Committee expressly rejected the use 
of ``family economic income'' to calculate income for the 
purpose of defining the middle class tax cut. It expressly 
rejected the view that income should be calculated to include 
the value of the ``imputed rent'' on owner-occupied housing, 
the value of employer-provided benefits such as health 
insurance and pension contributions, the value of the inside 
build-up of life insurance, pension plans, capital gains that 
have not yet been realized because the taxpayer has not sold 
the capital asset, an estimate of income that an average family 
should have reported for tax purposes but did not, or Social 
Security and AFDC payments. Each of these items are included in 
the definition of family economic income. Any calculation based 
on family economic income results in families appearing to be 
in higher income brackets and income tax brackets than they 
actually are.
    The specific requirements for both reserve funds are 
discussed in more detail in the description of miscellaneous 
provisions.

                                COMMITTEE RECOMMENDATION REVENUES BY MAJOR SOURCE                               
                                       [Fiscal years, dollars in billions]                                      
----------------------------------------------------------------------------------------------------------------
                                            1995     1996     1997     1998     1999     2000     2001     2002 
----------------------------------------------------------------------------------------------------------------
Individual Income Taxes.................   $593.7   $627.4   $656.3   $692.7   $730.4   $772.4   $818.2   $865.0
Corporate Income Taxes..................    149.0    151.4    155.3    161.3    167.4    172.9    183.1    193.1
Social Insurance Taxes..................    493.8    516.8    539.0    564.7    590.0    618.5    650.2    682.5
    Off Budget..........................    357.4    374.7    392.0    411.4    430.9    452.0    475.2    498.6
    On Budget...........................    136.4    142.1    147.0    153.3    159.1    166.5    175.0    183.9
Excise Taxes............................     55.9     55.3     56.3     57.3     58.4     58.9     59.7     60.7
Estate and Gift Taxes...................     16.0     16.8     17.6     18.5     19.4     20.4     21.4     22.5
Customs Duties..........................     21.3     21.4     21.2     21.5     21.8     22.9     24.2     25.9
Miscellaneous Receipts..................     25.5     27.9     29.0     29.6     31.9     33.4     32.5     33.9
                                         -----------------------------------------------------------------------
      Total Revenues....................  1,355.2  1,417.1  1,474.8  1,545.6  1,619.3  1,699.4  1,789.4  1,883.6
----------------------------------------------------------------------------------------------------------------

                            Tax Expenditures

    The Congressional Budget Act of 1974 requires a listing of 
tax expenditures in the President's budget submission and in 
reports accompanying congressional budget resolutions. Tax 
expenditures are defined by the Act as ``revenue losses 
attributable to provisions of the Federal tax law which allow a 
special exclusion, exemption, or deduction from gross income or 
which provide a special credit, a preferential rate of tax, or 
a deferral of tax liability.'' Under this definition, the 
concept of tax expenditures refers to revenue losses 
attributable exclusively to corporate and individual income 
taxes.
    The estimates presented here are those of the Joint 
Committee on Taxation and in this case are based on the 
committee's most recent report of November 9, 1994 (Estimates 
of Federal Tax Expenditures for Fiscal Years 1995-1999) (JCS-6-
94). The lists shows the estimated revenue lost from tax 
expenditure items for fiscal years 1995 through 1999. Because 
of the interaction among provisions, the Joint Committee on 
Taxation warns that it is incorrect to assume that estimates of 
separate tax expenditures can be summed to calculate a total 
revenue effect of repeal of a group of tax expenditures. The 
tax expenditures in the following list are estimated 
separately, under the assumption that all other tax 
expenditures remain in the code. If two or more tax 
expenditures were estimated simultaneously, the total change in 
tax liability could be smaller or larger than the sum of the 
amounts shown for each item separately.

                 TABLE 1.--TAX EXPENDITURE ESTIMATES BY BUDGET FUNCTION, FISCAL YEARS 1995-1999                 
                                              [Billions of dollars]                                             
----------------------------------------------------------------------------------------------------------------
                                    Corporations                             Intividuals                        
       Function       --------------------------------------------------------------------------------   Total  
                        1995    1996    1997    1998    1999    1995    1996    1997    1998    1999   1995-1999
----------------------------------------------------------------------------------------------------------------
National defense:                                                                                               
    Exclusion of                                                                                                
     benefits and                                                                                               
     allowances to                                                                                              
     Armed Forces                                                                                               
     personnel.......  ......  ......  ......  ......  ......     2.1     2.1     2.1     2.2     2.3       10.8
    Exclusions of                                                                                               
     military                                                                                                   
     disability                                                                                                 
     benefits........  ......  ......  ......  ......  ......     0.1     0.1     0.1     0.1     0.1        0.5
International                                                                                                   
 affairs:                                                                                                       
    Exclusion of                                                                                                
     income earned                                                                                              
     abroad by U.S.                                                                                             
     citizens........  ......  ......  ......  ......  ......     1.6     1.6     1.7     1.8     1.9        8.6
    Exclusion of                                                                                                
     certain                                                                                                    
     allowances for                                                                                             
     Federal                                                                                                    
     employees abroad  ......  ......  ......  ......  ......     0.2     0.2     0.2     0.2     0.2        1.0
    Exclusions of                                                                                               
     income of                                                                                                  
     foreign sales                                                                                              
     corporations                                                                                               
     (FSCs)..........     1.4     1.5     1.5     1.5     1.6  ......  ......  ......  ......  ......        7.5
    Deferral of                                                                                                 
     income of                                                                                                  
     controlled                                                                                                 
     foreign                                                                                                    
     corporations....     1.1     1.1     1.1     1.2     1.2  ......  ......  ......  ......  ......        5.7
    Inventory                                                                                                   
     property sales                                                                                             
     source rule                                                                                                
     exception.......     3.5     3.6     3.7     3.7     3.8  ......  ......  ......  ......  ......       18.3
    Interest                                                                                                    
     allocation rules                                                                                           
     exception for                                                                                              
     certain                                                                                                    
     nonfinancial                                                                                               
     institutions....     0.2     0.2     0.2     0.2     0.2  ......  ......  ......  ......  ......        1.0
General science,                                                                                                
 space, and                                                                                                     
 technology:                                                                                                    
    Expensing of                                                                                                
     research and                                                                                               
     development                                                                                                
     expenditures....     1.0     0.5     0.2     0.1     0.1   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        2.1
Energy:                                                                                                         
    Expensing of                                                                                                
     exploration and                                                                                            
     development                                                                                                
     costs:                                                                                                     
        Oil and gas       0.5     0.5     0.5     0.5     0.5   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        2.5
        Other fuels     (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.3
    Excess of                                                                                                   
     percentage over                                                                                            
     cost depletion:                                                                                            
        Oil and gas..     0.3     0.3     0.3     0.3     0.3     0.3     0.3     0.3     0.3     0.3        2.0
        Other fuels..     0.2     0.2     0.2     0.2     0.2   (\1\)   (\1\)     0.1     0.1     0.1        1.4
    Credit for                                                                                                  
     enhanced oil                                                                                               
     recovery costs..   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.4
    Nonconventional                                                                                             
     fuels production                                                                                           
     credit..........     0.8     0.9     0.9     0.9     0.3     0.3     0.3     0.3     0.3     0.3        5.8
    Alcohol fuel                                                                                                
     credits(\2\)....   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)  ......  ......  ......  ......  ......        0.2
    Exclusion of                                                                                                
     interest on                                                                                                
     State and local                                                                                            
     government                                                                                                 
     industrial                                                                                                 
     development                                                                                                
     bonds for energy                                                                                           
     production                                                                                                 
     facilities......   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)     0.1     0.1     0.1     0.1     0.1        0.9
    Expensing of                                                                                                
     tertiary                                                                                                   
     injectants......   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.1
    Exclusion of                                                                                                
     energy                                                                                                     
     conservation                                                                                               
     subsidies                                                                                                  
     provided by                                                                                                
     public utilities  ......     0.1     0.2     0.3     0.3   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        1.0
    Credit for                                                                                                  
     investments in                                                                                             
     solar and                                                                                                  
     geothermal                                                                                                 
     energy                                                                                                     
     facilities......     0.0     0.1     0.1     0.1     0.1   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.4
    Credits for                                                                                                 
     electricity                                                                                                
     production from                                                                                            
     wind and biomass   (\1\)   (\1\)   (\1\)     0.1     0.1   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.3
    Deductions and                                                                                              
     credits for                                                                                                
     clean-fuel                                                                                                 
     vehicles and                                                                                               
     refueling                                                                                                  
     property........   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.3
Natural resources and                                                                                           
 environment:                                                                                                   
    Expensing of                                                                                                
     exploration and                                                                                            
     development                                                                                                
     costs, nonfuel                                                                                             
     minerals........   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.3
    Excess of                                                                                                   
     percentage over                                                                                            
     cost depletion,                                                                                            
     nonfuel minerals     0.2     0.2     0.2     0.2     0.2   (\1\)   (\1\)     0.1     0.1     0.1        1.4
    Investment credit                                                                                           
     and 7-year                                                                                                 
     amortization for                                                                                           
     reforestation                                                                                              
     expenditures....   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.1
    Expensing of                                                                                                
     multiperiod                                                                                                
     timber-growing                                                                                             
     costs...........     0.4     0.4     0.5     0.5     0.5   (\1\)   (\1\)   (\1\)     0.1     0.1        2.6
    Exclusion of                                                                                                
     interest on                                                                                                
     State and local                                                                                            
     government                                                                                                 
     sewage, water,                                                                                             
     and hazardous                                                                                              
     waste facilities                                                                                           
     bonds...........     0.2     0.2     0.2     0.2     0.2     0.5     0.5     0.5     0.5     0.5        3.2
    Investment tax                                                                                              
     credit for                                                                                                 
     rehabilitation                                                                                             
     of historic                                                                                                
     structures......     0.1     0.1     0.1     0.1     0.1   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.5
    Special rules for                                                                                           
     mining                                                                                                     
     reclamation                                                                                                
     reserves........   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.2
Agriculture:                                                                                                    
    Expensing of soil                                                                                           
     and water                                                                                                  
     conservation                                                                                               
     expenditures....   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.2
    Expensing of                                                                                                
     fertilizer and                                                                                             
     soil conditioner                                                                                           
     costs...........   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)     0.1        0.3
    Expensing of the                                                                                            
     costs of raising                                                                                           
     dairy and                                                                                                  
     breeding cattle.   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)     0.1     0.1     0.1     0.1     0.1        0.7
    Exclusion of cost-                                                                                          
     sharing payments   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.1
    Exclusion of                                                                                                
     cancellation of                                                                                            
     indebtedness                                                                                               
     income of                                                                                                  
     farmers.........  ......  ......  ......  ......  ......     0.1     0.1     0.1     0.1     0.1        0.3
    Cash accounting                                                                                             
     for agriculture.     0.1     0.1     0.1     0.1     0.1     0.2     0.2     0.2     0.2     0.2        1.3
Commerce and housing:                                                                                           
    Financial                                                                                                   
     institutions:                                                                                              
        Bad-debt                                                                                                
         reserves of                                                                                            
         financial                                                                                              
         institutions     0.1     0.1     0.1     0.1     0.1  ......  ......  ......  ......  ......        0.5
        Exemption of                                                                                            
         credit union                                                                                           
         income......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......        3.7
    Insurance                                                                                                   
     companies:                                                                                                 
        Exclusion of                                                                                            
         investment                                                                                             
         income on                                                                                              
         life                                                                                                   
         insurance                                                                                              
         and annuity                                                                                            
         contracts...     0.8     0.9     1.0     1.1     1.2    10.3    11.5    12.4    13.3    14.3       66.8
        Exclusion of                                                                                            
         investment                                                                                             
         income from                                                                                            
         structured                                                                                             
         settlement                                                                                             
         amounts.....   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)  ......  ......  ......  ......  ......      (\1\)
        Small life                                                                                              
         insurance                                                                                              
         company                                                                                                
         taxable                                                                                                
         income                                                                                                 
         adjustment..     0.1     0.1    0.10     0.1     0.1  ......  ......  ......  ......  ......        0.5
        Special                                                                                                 
         treatment of                                                                                           
         life                                                                                                   
         insurance                                                                                              
         company                                                                                                
         reserves....     2.1     2.3     2.5     2.7     2.9  ......  ......  ......  ......  ......       12.5
        Deduction of                                                                                            
         unpaid                                                                                                 
         property                                                                                               
         loss                                                                                                   
         reserves for                                                                                           
         property and                                                                                           
         casualty                                                                                               
         insurance                                                                                              
         companies...     1.6     1.8     1.9     2.1     2.3  ......  ......  ......  ......  ......        9.7
        Special                                                                                                 
         alternative                                                                                            
         tax on small                                                                                           
         property and                                                                                           
         casualty                                                                                               
         insurance                                                                                              
         companies...   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)  ......  ......  ......  ......  ......      (\1\)
        Tax exemption                                                                                           
         for certain                                                                                            
         insurance                                                                                              
         companies...   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)  ......  ......  ......  ......  ......      (\1\)
        Special                                                                                                 
         deduction                                                                                              
         for Blue                                                                                               
         Cross and                                                                                              
         Blue Shield                                                                                            
         companies...     0.3     0.3     0.1     0.1     0.1  ......  ......  ......  ......  ......        0.9
    Housing:                                                                                                    
        Deductibility                                                                                           
         of mortgage                                                                                            
         interest on                                                                                            
         owner-                                                                                                 
         occupied                                                                                               
         residences..  ......  ......  ......  ......  ......    53.5    56.8    60.2    63.9    67.8      302.1
        Deductibility                                                                                           
         of property                                                                                            
         tax on owner-                                                                                          
         occupied                                                                                               
         homes.......  ......  ......  ......  ......  ......    13.7    14.5    15.3    16.2    17.1       76.8
        Deferral of                                                                                             
         capital                                                                                                
         gains on                                                                                               
         sales of                                                                                               
         principal                                                                                              
         residence...  ......  ......  ......  ......  ......    14.8    15.3    15.9    16.4    17.0       79.4
        Exclusion of                                                                                            
         capital                                                                                                
         gains on                                                                                               
         sales of                                                                                               
         principal                                                                                              
         residences                                                                                             
         for persons                                                                                            
         age 55 and                                                                                             
         over                                                                                                   
         ($125,000                                                                                              
         exclusion)..  ......  ......  ......  ......  ......     4.9     5.1     5.3     5.5     5.7       26.5
        Exclusion of                                                                                            
         interest on                                                                                            
         State and                                                                                              
         local                                                                                                  
         government                                                                                             
         bonds for                                                                                              
         owner-                                                                                                 
         occupied                                                                                               
         housing.....     0.5     0.5     0.5     0.4     0.4     1.4     1.4     1.4     1.3     1.3        9.0
        Exclusion of                                                                                            
         interest on                                                                                            
         State and                                                                                              
         local                                                                                                  
         government                                                                                             
         bonds for                                                                                              
         rental                                                                                                 
         housing.....     0.2     0.2     0.2     0.2     0.2     0.7     0.7     0.7     0.6     0.6        4.3
        Depreciation                                                                                            
         of rental                                                                                              
         housing in                                                                                             
         excess of                                                                                              
         alternative                                                                                            
         depreciation                                                                                           
         system......     1.0     1.0     0.9     0.8     0.7     0.7     0.6     0.6     0.5     0.5        7.3
        Low-income                                                                                              
         housing tax                                                                                            
         credit......     0.8     0.9     1.0     1.2     1.3     1.4     1.7     1.9     2.2     2.4       14.8
    Other business                                                                                              
     and commerce:                                                                                              
        Maximum 28%                                                                                             
         tax rate on                                                                                            
         long-term                                                                                              
         capital                                                                                                
         gains.......  ......  ......  ......  ......  ......     9.1    10.5    11.3    12.6    13.9       57.4
        Depreciation                                                                                            
         of buildings                                                                                           
         other than                                                                                             
         rental                                                                                                 
         housing in                                                                                             
         excess of                                                                                              
         alternative                                                                                            
         depreciation                                                                                           
         system......     3.5     3.2     2.7     2.1     1.5     1.4     1.3     1.1     0.9     0.6       18.5
        Depreciation                                                                                            
         of equipment                                                                                           
         in excess of                                                                                           
         alternative                                                                                            
         depreciation                                                                                           
         system......    19.9    19.9    19.6    19.1    19.2     5.7     5.7     5.6     5.4     5.5      125.4
        Expending of                                                                                            
         up to                                                                                                  
         $17,500 of                                                                                             
         depreciable                                                                                            
         business                                                                                               
         property....     0.9     0.7     0.5     0.3     0.1     0.6     0.4     0.3     0.1   (\1\)        4.0
        Exclusion of                                                                                            
         capital                                                                                                
         gains at                                                                                               
         death.......  ......  ......  ......  ......  ......    12.7    14.0    15.4    17.1    18.3       77.5
        Carryover                                                                                               
         basis of                                                                                               
         capital                                                                                                
         gains on                                                                                               
         gifts.......  ......  ......  ......  ......  ......     1.4     1.5     1.5     1.6     1.7        7.7
        Amortization                                                                                            
         of business                                                                                            
         startup                                                                                                
         costs.......   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)     0.2     0.2     0.2     0.2     0.2        1.1
        Reduced rates                                                                                           
         for first                                                                                              
         $10,000,000                                                                                            
         of corporate                                                                                           
         taxable                                                                                                
         income......     3.9     4.1     4.3     4.5     4.7  ......  ......  ......  ......  ......       21.7
        Expensing of                                                                                            
         magazine                                                                                               
         circulation                                                                                            
         expenditures   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)     0.2     0.2     0.2     0.2     0.2        1.1
        Special rules                                                                                           
         for                                                                                                    
         magazine,                                                                                              
         paperback                                                                                              
         book, and                                                                                              
         record                                                                                                 
         returns.....   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.1
        Deferral of                                                                                             
         gain on non-                                                                                           
         dealer                                                                                                 
         installment                                                                                            
         sales.......     0.4     0.4     0.4     0.5     0.5     0.3     0.3     0.3     0.4     0.4        3.9
        Completed                                                                                               
         contract                                                                                               
         rules.......     0.2     0.2     0.2     0.2     0.2   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        1.0
        Cash                                                                                                    
         accounting,                                                                                            
         other than                                                                                             
         agriculture.   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)     0.1     0.1        0.5
        Exclusion of                                                                                            
         interest on                                                                                            
         State and                                                                                              
         local                                                                                                  
         government                                                                                             
         small-issue                                                                                            
         industrial                                                                                             
         development                                                                                            
         bonds.......     01.     0.1     0.1     0.1     0.1     0.4     0.3     0.3     0.3     0.2        1.9
        Deferral of                                                                                             
         gain on like-                                                                                          
         kind                                                                                                   
         exchanges...     0.4     0.5     0.5     0.5     0.7     0.2     0.3     0.3     0.3     0.4        4.1
        Exception                                                                                               
         from net                                                                                               
         operating                                                                                              
         loss                                                                                                   
         limitations                                                                                            
         for                                                                                                    
         corporations                                                                                           
         in                                                                                                     
         bankruptcy                                                                                             
         proceedings.     0.4     0.4     0.5     0.5     0.5  ......  ......  ......  ......  ......        2.2
    Deferral of gains                                                                                           
     from sale of                                                                                               
     broadcasting                                                                                               
     facilities to                                                                                              
     minority-owned                                                                                             
     businesses......     0.1     0.1     0.1     0.1     0.1  ......  ......  ......  ......  ......        0.5
Transportation:                                                                                                 
    Deferral of tax                                                                                             
     on capital                                                                                                 
     construction                                                                                               
     funds of                                                                                                   
     shipping                                                                                                   
     companies.......     0.1     0.1     0.1     0.1     0.1  ......  ......  ......  ......  ......        0.4
    Employer-paid                                                                                               
     transportation                                                                                             
     benefits........  ......  ......  ......  ......  ......     1.9     2.1     2.2     2.3     2.4       10.9
    Exclusion of                                                                                                
     interest on                                                                                                
     State and local                                                                                            
     government bonds                                                                                           
     for high-speed                                                                                             
     rail............   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.1
Community and                                                                                                   
 regional                                                                                                       
 developments:                                                                                                  
    Investment credit                                                                                           
     for                                                                                                        
     rehabilitation                                                                                             
     of structures,                                                                                             
     other than                                                                                                 
     historic                                                                                                   
     structures......   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.3
    Exclusion of                                                                                                
     interest on                                                                                                
     State and local                                                                                            
     government bonds                                                                                           
     for private                                                                                                
     airports, docks,                                                                                           
     and mass-                                                                                                  
     commuting                                                                                                  
     facilities......     0.2     0.2     0.2     0.3     0.3     0.6     0.7     0.7     0.8     0.8        4.9
    Regional economic                                                                                           
     development tax                                                                                            
     incentives:                                                                                                
     empowerment                                                                                                
     zones,                                                                                                     
     enterprise                                                                                                 
     communities, and                                                                                           
     Indian                                                                                                     
     investment                                                                                                 
     incentives......     0.2     0.2     0.2     0.3     0.3     0.1     0.2     0.3     0.3     0.3        2.5
Education, training,                                                                                            
 employment, and                                                                                                
 social services:                                                                                               
    Education and                                                                                               
     training:                                                                                                  
        Exclusion of                                                                                            
         scholarship                                                                                            
         and                                                                                                    
         fellowship                                                                                             
         income......  ......  ......  ......  ......  ......     0.7     0.7     0.8     0.8     0.8        3.8
        Parental                                                                                                
         personal                                                                                               
         exemption                                                                                              
         for students                                                                                           
         age 19 to 23  ......  ......  ......  ......  ......     0.9     0.9     0.9     0.9     0.9        4.6
    Exclusion of                                                                                                
     interest on                                                                                                
     State and local                                                                                            
     government                                                                                                 
     student loan                                                                                               
     bonds...........     0.1     0.1   (\1\)   (\1\)   (\1\)     0.2     0.2     0.1     0.1     0.1        1.0
        Exclusion of                                                                                            
         interest on                                                                                            
         State and                                                                                              
         local                                                                                                  
         government                                                                                             
         bonds for                                                                                              
         private                                                                                                
         nonprofit                                                                                              
         educational                                                                                            
         facilities..     0.2     0.2     0.2     0.2     0.2     0.6     0.6     0.6     0.7     0.7        4.2
        Deductibility                                                                                           
         of                                                                                                     
         charitable                                                                                             
         contribution                                                                                           
         s for                                                                                                  
         educational                                                                                            
         institutions     0.5     0.5     0.5     0.5     0.5     2.0     2.1     2.2     2.3     2.4       13.2
        Exclusion of                                                                                            
         interest on                                                                                            
         educational                                                                                            
         savings                                                                                                
         bonds.......  ......  ......  ......  ......  ......     0.1     0.1     0.2     0.2     0.3        0.9
        Exclusion for                                                                                           
         employer-                                                                                              
         provided                                                                                               
         education                                                                                              
         assistance                                                                                             
         benefits....     0.3  ......  ......  ......  ......  ......  ......  ......  ......  ......        0.3
    Employment:                                                                                                 
        Exclusion of                                                                                            
         employee                                                                                               
         meals and                                                                                              
         lodging                                                                                                
         (other than                                                                                            
         military)...  ......  ......  ......  ......  ......     0.6     0.7     0.7     0.7     0.8        3.5
        Special tax                                                                                             
         provisions                                                                                             
         for employee                                                                                           
         stock                                                                                                  
         ownership                                                                                              
         plans                                                                                                  
         (ESOPs).....     0.9     1.0     1.1     1.2     1.2   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        5.4
        Exclusion of                                                                                            
         benefits                                                                                               
         provided                                                                                               
         under                                                                                                  
         cafeteria                                                                                              
         plans (\3\).  ......  ......  ......  ......  ......     3.8     4.4     5.0     5.7     6.5       25.4
        Exclusion of                                                                                            
         rental                                                                                                 
         allowances                                                                                             
         for                                                                                                    
         minister's                                                                                             
         homes.......  ......  ......  ......  ......  ......     0.3     0.3     0.3     0.3     0.3        1.5
        Exclusion of                                                                                            
         miscellaneou                                                                                           
         s fringe                                                                                               
         benefits....  ......  ......  ......  ......  ......     4.9     5.2     5.5     5.8     6.2       27.5
        Exclusion of                                                                                            
         employee                                                                                               
         awards......  ......  ......  ......  ......  ......     0.1     0.1     0.1     0.1     0.1        0.6
        Exclusion of                                                                                            
         income                                                                                                 
         earned by                                                                                              
         voluntary                                                                                              
         employees'                                                                                             
         beneficiary                                                                                            
         associations  ......  ......  ......  ......  ......     0.5     0.5     0.5     0.6     0.6        2.7
        Targeted jobs                                                                                           
         tax credit..     0.2     0.1   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.4
    Social services:                                                                                            
        Deductibility                                                                                           
         of                                                                                                     
         charitable                                                                                             
         contribution                                                                                           
         s, other                                                                                               
         than for                                                                                               
         education                                                                                              
         and health..     0.4     0.4     0.4     0.4     0.4    13.9    14.7    15.4    16.1    16.9       79.0
        Credit for                                                                                              
         child and                                                                                              
         dependent                                                                                              
         care                                                                                                   
         expenses....  ......  ......  ......  ......  ......     2.7     2.8     2.8     2.9     3.0       14.2
        Exclusion for                                                                                           
         employer-                                                                                              
         provided                                                                                               
         child care                                                                                             
         (\4\).......  ......  ......  ......  ......  ......     0.6     0.7     0.8     0.9     1.0        4.0
        Exclusion for                                                                                           
         certain                                                                                                
         foster care                                                                                            
         payments....  ......  ......  ......  ......  ......   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.1
        Expensing of                                                                                            
         costs for                                                                                              
         removing                                                                                               
         architectura                                                                                           
         l barriers..   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.1
        Credit for                                                                                              
         disabled                                                                                               
         access                                                                                                 
         expenditures   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.1
Health:                                                                                                         
    Exclusion of                                                                                                
     employer                                                                                                   
     contributions                                                                                              
     for medical                                                                                                
     insurance                                                                                                  
     premiums and                                                                                               
     medical care                                                                                               
     (\5\)...........  ......  ......  ......  ......  ......    45.8    49.9    53.8    57.9    62.3      269.7
    Exclusion of                                                                                                
     medical care and                                                                                           
     CHAMPUS health                                                                                             
     insurance for                                                                                              
     military                                                                                                   
     dependents......  ......  ......  ......  ......  ......     0.4     0.5     0.5     0.5     0.5        2.4
    Deductibility of                                                                                            
     medical expenses  ......  ......  ......  ......  ......     4.1     4.5     5.0     5.5     6.0       25.0
    Exclusion of                                                                                                
     interest on                                                                                                
     State and local                                                                                            
     government bonds                                                                                           
     for private                                                                                                
     nonprofit                                                                                                  
     hospital                                                                                                   
     facilities......     0.4     0.4     0.5     0.5     0.5     1.2     1.3     1.4     1.4     1.5        9.2
    Deductibility of                                                                                            
     charitable                                                                                                 
     contributions to                                                                                           
     health                                                                                                     
     organizations...     0.3     0.3     0.3     0.4     0.4     1.4     1.5     1.6     1.6     1.7        9.6
Medicare:                                                                                                       
    Exclusion of                                                                                                
     untaxed medical                                                                                            
     benefits:                                                                                                  
        Hospital                                                                                                
         insurance...  ......  ......  ......  ......  ......     8.0     9.2    10.8    12.6    14.8       55.3
        Supplementary                                                                                           
         medical                                                                                                
         insurance...  ......  ......  ......  ......  ......     5.1     6.1     7.3     8.7    10.4       37.6
Income security:                                                                                                
    Exclusion of                                                                                                
     workers'                                                                                                   
     compensation                                                                                               
     benefits........  ......  ......  ......  ......  ......     3.9     4.0     4.2     4.4     4.6       21.0
    Exclusion of                                                                                                
     special benefits                                                                                           
     for disabled                                                                                               
     coal miners.....  ......  ......  ......  ......  ......     0.1     0.1     0.1     0.1     0.1        0.4
    Exclusion of cash                                                                                           
     public                                                                                                     
     assistance                                                                                                 
     benefits........  ......  ......  ......  ......  ......     0.5     0.5     0.6     0.6     0.7        2.8
    Net exclusion of                                                                                            
     pension                                                                                                    
     contributions                                                                                              
     and earnings:                                                                                              
        Employer                                                                                                
         plans.......  ......  ......  ......  ......  ......    69.4    73.5    78.0    82.8    87.9      391.6
        Individual                                                                                              
         retirement                                                                                             
         plans.......  ......  ......  ......  ......  ......     8.4     8.7     9.2     9.7    10.2       46.2
        Keogh plans..  ......  ......  ......  ......  ......     3.1     3.3     3.5     3.7     3.9       17.8
    Exclusion of                                                                                                
     other employee                                                                                             
     benefits:                                                                                                  
        Premiums on                                                                                             
         group term                                                                                             
         life                                                                                                   
         insurance...  ......  ......  ......  ......  ......     2.0     2.0     2.1     2.2     2.2       10.5
        Premiums on                                                                                             
         accident and                                                                                           
         disability                                                                                             
         insurance...  ......  ......  ......  ......  ......     0.2     0.2     0.2     0.2     0.2        1.0
    Exclusion of                                                                                                
     employer-                                                                                                  
     provided death                                                                                             
     benefits........  ......  ......  ......  ......  ......   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.2
    Additional                                                                                                  
     standard                                                                                                   
     deduction for                                                                                              
     the blind and                                                                                              
     the elderly.....  ......  ......  ......  ......  ......     1.9     2.0     2.1     2.2     2.4       10.6
    Tax credit for                                                                                              
     the elderly and                                                                                            
     disabled........  ......  ......  ......  ......  ......   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.1
    Deductibility of                                                                                            
     casualty and                                                                                               
     theft losses....  ......  ......  ......  ......  ......     0.1     0.1     0.1     0.1     0.1        0.5
    Earned income tax                                                                                           
     credit (EITC)                                                                                              
     (\6\)...........  ......  ......  ......  ......  ......     3.5     3.9     4.2     4.4     4.6       20.5
Social security and                                                                                             
 railroad retirement:                                                                                           
    Exclusion of                                                                                                
     untaxed social                                                                                             
     security and                                                                                               
     railroad                                                                                                   
     retirement                                                                                                 
     benefits........  ......  ......  ......  ......  ......    23.1    24.1    25.1    26.1    27.1      125.5
Veterans' benefits                                                                                              
 and services:                                                                                                  
    Exclusion of                                                                                                
     veterans'                                                                                                  
     disability                                                                                                 
     compensation....  ......  ......  ......  ......  ......     1.6     1.6     1.7     1.7     1.8        8.4
    Exclusion of                                                                                                
     veterans'                                                                                                  
     pensions........  ......  ......  ......  ......  ......     0.1     0.1     0.1     0.1     0.1        0.5
    Exclusion of GI                                                                                             
     bill benefits...  ......  ......  ......  ......  ......     0.1     0.1     0.1     0.1     0.1        0.5
    Exclusion of                                                                                                
     interest on                                                                                                
     State and local                                                                                            
     government bonds                                                                                           
     for veterans'                                                                                              
     housing.........   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)     0.1     0.1     0.1     0.1     0.1        0.4
General purpose                                                                                                 
 fiscal assistance:                                                                                             
    Exclusion of                                                                                                
     interest on                                                                                                
     public purpose                                                                                             
     State and local                                                                                            
     government debt.     3.2     3.3     3.5     3.7     3.8     9.5    10.0    10.5    11.0    11.5       70.1
    Deduction of                                                                                                
     nonbusiness                                                                                                
     State and local                                                                                            
     government                                                                                                 
     income and                                                                                                 
     personal                                                                                                   
     property taxes..  ......  ......  ......  ......  ......    24.7    26.2    27.7    29.3    31.0      139.0
    Tax credit for                                                                                              
     section 936                                                                                                
     income..........     3.7     3.8     4.0     4.1     4.2  ......  ......  ......  ......  ......       19.7
Interest:                                                                                                       
    Deferral of                                                                                                 
     interest on                                                                                                
     savings bonds...  ......  ......  ......  ......  ......     1.3     1.4     1.5     1.6     1.7        7.3
----------------------------------------------------------------------------------------------------------------
\1\ Positive tax expenditure of less than $50 million.                                                          
\2\ In addition, the 5.4-cents-per-gallon exemption from excise tax for alcohol fuels results in a reduction in 
  excise tax receipts, net of income tax effect, of $0.6 billion per year in fiscal year 1995, and $0.7 billion 
  per year in fiscal years 1996 through 1999.                                                                   
\3\ Estimate includes amounts of employer-provided health insurance purchased through cafeteria plans and       
  employer-provided child care purchased dependent care flexible spending accounts. These amounts are also      
  included in other line items in this table.                                                                   
\4\ Estimate includes employer-provided child care purchased through dependent care flexible spending accounts. 
\5\ Estimate includes employer-provided health insurance purchased through cafeteria plans.                     
\6\ The figures in the table show the effect of the EITC on receipts. The increase in outlays is: $18.6 billion 
  in 1995, $20.6 billion in 1996, $21.6 billion in 1997, $22.2 billion in 1998, and $22.9 billion in 1999.      
                                                                                                                
Note.--Details may not add to totals due to rounding.                                                           
                                                                                                                
Source: Joint Committee on Taxation.                                                                            

                           IV. Summary Tables

                                            COMMITTEE RECOMMENDATION                                            
                                              [Dollars in billions]                                             
----------------------------------------------------------------------------------------------------------------
                                    1995      1996      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
050: National Defense:                                                                                          
    BA..........................     261.4     257.7     253.4     259.6     266.2     276.0     275.9     275.9
    OT..........................     269.6     261.1     257.0     254.5     259.6     267.8     267.7     269.2
150: International Affairs:                                                                                     
    BA..........................      18.9      15.4      14.3      13.5      12.6      14.1      14.3      14.2
    OT..........................      18.9      16.9      15.1      14.3      13.5      13.1      13.4      13.3
250: Science, Space and                                                                                         
 Technology:                                                                                                    
    BA..........................      17.2      16.7      16.3      16.1      16.0      15.8      15.8      15.8
    OT..........................      17.5      16.7      16.6      16.3      16.0      15.9      15.9      15.9
270: Energy:                                                                                                    
    BA..........................       6.3       2.9       1.7       3.3       4.2       4.1       4.0       4.0
    OT..........................       4.9       2.7       1.0       2.6       3.1       2.8       2.9       2.9
300: Natural Resources and                                                                                      
 Environment:                                                                                                   
    BA..........................      22.3      19.5      18.3      15.6      16.8      16.4      15.0      15.8
    OT..........................      21.7      20.4      20.1      17.9      18.4      17.4      15.9      16.6
350: Agriculture:                                                                                               
    BA..........................      14.0      13.1      12.2      11.8      11.7      11.7      10.5      10.1
    OT..........................      12.7      11.9      10.9      10.6      10.4      10.6       9.4       9.1
370: Commerce and Housing                                                                                       
 Credit:                                                                                                        
    On-budget:                                                                                                  
        BA......................       5.4       2.5       1.5       0.6       0.1       1.7       0.5       0.2
        OT......................     -13.7      -7.0      -5.4      -7.0      -5.1      -2.5      -3.2      -3.4
    Off-budget:                                                                                                 
        BA......................       3.5       4.1       6.8       1.2       2.9      -0.2  ........  ........
        OT......................       0.2      -0.0      -0.8      -1.4      -0.1      -1.4  ........  ........
    Total:                                                                                                      
        BA......................       8.9       6.6       8.3       1.8       3.0       1.5       0.5       0.2
        OT......................     -13.5      -7.0      -6.2      -8.4      -5.2      -3.9      -3.2      -3.4
400: Transporation:                                                                                             
    BA..........................      42.5      36.5      38.8      39.4      40.2      41.2      41.0      40.8
    OT..........................      39.3      38.3      32.8      31.8      31.3      31.1      31.1      31.1
450: Community and Regional                                                                                     
 Development:                                                                                                   
    BA..........................       9.2       5.8       5.4       5.1       5.1       5.0       4.5       4.4
    OT..........................      11.6       9.8       7.3       5.6       5.1       5.1       5.0       5.0
500: Education, Training,                                                                                       
 Employment and Social Services:                                                                                
    BA..........................      58.3      48.1      47.3      47.2      47.4      47.8      47.3      47.4
    OT..........................      54.7      51.7      47.9      47.0      46.8      47.3      46.8      46.9
550: Health:                                                                                                    
    BA..........................     116.6     120.1     126.6     132.1     137.0     141.1     145.2     149.6
    OT..........................     115.8     120.6     126.5     132.2     136.9     140.9     145.0     149.3
570: Medicare:                                                                                                  
    BA..........................     162.6     171.9     180.5     193.1     207.4     221.4     238.9     258.9
    OT..........................     161.1     169.5     178.9     191.4     204.8     219.5     236.9     256.7
600: Income Security:                                                                                           
    BA..........................     219.9     226.3     233.7     253.0     256.0     272.6     277.5     291.9
    OT..........................     222.2     225.9     235.6     246.1     257.9     272.6     277.4     291.7
650: Social Security:                                                                                           
    On-budget:                                                                                                  
        BA......................       6.8       5.9       8.1       8.8       9.6      10.5      11.1      11.7
        OT......................       9.3       8.5      10.5      11.3      12.1      12.9      13.5      14.1
    Off-budget:                                                                                                 
        BA......................     330.1     348.4     366.0     385.5     405.4     426.2     448.5     472.0
        OT......................     326.9     345.7     362.5     381.9     401.7     422.7     444.8     468.1
    Total:                                                                                                      
        BA......................     336.9     354.3     374.1     394.3     415.0     436.7     459.6     483.7
        OT......................     336.2     354.2     373.0     393.2     413.8     435.6     458.3     482.2
700: Veterans Benefits                                                                                          
    BA..........................      37.7      37.4      37.5      37.6      37.9      37.9      38.3      38.7
    OT..........................      37.4      36.9      37.7      38.0      38.2      39.4      40.1      40.4
750: Administration of Justice                                                                                  
    BA..........................      18.5      20.0      20.7      21.4      22.3      22.3      21.9      21.8
    OT..........................      17.1      19.6      21.2      22.4      23.1      23.7      23.3      23.2
800: General Government:                                                                                        
    BA..........................      13.3      12.5      12.4      12.2      12.1      12.0      11.6      11.6
    OT..........................      13.4      13.0      12.4      12.3      12.0      11.9      11.7      11.6
900: Net Interest:                                                                                              
    On-budget:                                                                                                  
        BA......................     269.9     297.9     308.8     316.5     327.7     338.6     345.5     353.3
        OT......................     269.9     297.9     308.8     316.5     327.7     338.6     345.5     353.3
    Off-budget:                                                                                                 
        BA......................     -34.5     -39.5     -44.5     -49.7     -55.1     -60.9     -67.2     -74.0
        OT......................     -34.5     -39.5     -44.5     -49.7     -55.1     -60.9     -67.2     -74.0
    Total:                                                                                                      
        BA......................     235.4     258.5     264.3     266.8     272.6     277.6     278.3     279.3
        OT......................     235.3     258.5     264.3     266.8     272.6     277.6     278.3     279.3
920: Allowances:                                                                                                
        BA......................  ........      -8.6      -8.5      -7.3      -6,8      -5.7      -5.7      -5.7
        OT......................  ........      -6.5      -8.5      -7.6      -7.1      -6.1      -6.1      -6.1
950: Undistributed Offsetting                                                                                   
 Receipts:                                                                                                      
    On-budget:                                                                                                  
        BA......................     -39.8     -33.1     -33.8     -36.3     -37.7     -39.7     -41.1     -42.3
        OT......................     -39.8     -33.1     -33.8     -36.3     -37.7     -39.7     -41.1     -42.3
    Off-budget:                                                                                                 
        BA......................      -6.4      -6.8      -7.1      -7.6      -8.1      -8.7      -9.5     -10.3
        OT......................      -6.4      -6.8      -7.1      -7.6      -8.1      -8.7      -9.5     -10.3
    Total:                                                                                                      
        BA......................     -46.2     -39.9     -40.9     -43.9     -45.8     -48.4     -50.6     -52.6
        OT......................     -46.2     -39.9     -40.9     -43.9     -45.8     -48.4     -50.6     -52.6
                                 -------------------------------------------------------------------------------
Total Spending:                                                                                                 
    On-budget:                                                                                                  
        BA......................   1,260.9   1,268.5   1,295.3   1,343.3   1,385.9   1,444.8   1,472.0   1,518.1
        OT......................   1,243.7   1,274.8   1,292.7   1,319.9   1,367.1   1,422.3   1,451.0   1,498.5
    Off-budget:                                                                                                 
        BA......................     292.6     306.2     321.1     329.4     345.1     356.4     371.8     387.7
        OT......................     286.1     299.4     310.1     323.2     338.4     351.7     368.1     383.8
    Total:                                                                                                      
        BA......................   1,553.6   1,574.7   1,616.5   1,672.8   1,731.0   1,801.2   1,843.8   1,905.8
        OT......................   1,529.9   1,574.2   1,602.8   1,643.2   1,705.5   1,774.0   1,819.1   1,882.3
Revenues:                                                                                                       
    On-budget...................     997.8   1,042.4   1,082.8   1,134.2   1,188.4   1,247.4   1,314.2   1,385.0
    Off-budget..................     357.4     374.7     392.0     411.4     430.9     452.0     475.2     498.6
    Total.......................   1,355.2   1,417.1   1,474.8   1,545.6   1,619.3   1,699.4   1,789.4   1,883.6
Deficit:                                                                                                        
    On-budget...................    -245.9    -232.4    -209.9    -185.7    -178.7    -174.9    -136.8    -113.5
    Off-budget..................      71.3      75.3      81.9      88.1      92.5     100.3     107.1     114.8
    Total.......................    -174.7    -157.1    -128.0     -97.6     -86.2     -74.6     -29.7       1.3
----------------------------------------------------------------------------------------------------------------


                                              CURRENT LAW BASELINE                                              
                                              [Dollars in billions]                                             
----------------------------------------------------------------------------------------------------------------
                                    1995      1996      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
050: National Defense:                                                                                          
    BA..........................     261.4     255.0     251.7     258.3     264.9     271.6     271.5     271.5
    OT..........................     269.6     257.4     256.8     256.1     257.9     261.5     261.4     261.4
150: International Affairs:                                                                                     
    BA..........................      18.9      17.9      17.3      17.0      16.5      18.4      18.5      18.5
    OT..........................      18.9      17.5      16.7      16.7      16.5      16.6      16.8      16.8
250: Science, Space and                                                                                         
 Technology:                                                                                                    
    BA..........................      17.2      17.2      17.2      17.2      17.2      17.2      17.2      17.2
    OT..........................      17.5      16.9      17.2      17.2      17.1      17.2      17.2      17.2
270: Energy:                                                                                                    
    BA..........................       6.3       5.6       5.3       5.3       5.6       5.5       5.5       5.5
    OT..........................       4.9       4.7       4.0       4.1       4.3       4.2       4.2       4.2
300: Natural Resources and                                                                                      
 Environment:                                                                                                   
    BA..........................      22.3      22.0      22.0      21.6      21.4      21.2      20.9      20.8
    OT..........................      21.7      21.4      21.9      21.9      21.8      21.6      21.1      21.0
350: Agriculture:                                                                                               
    BA..........................      14.0      14.5      14.2      14.0      13.9      13.7      12.6      12.6
    OT..........................      12.7      13.1      12.8      12.8      12.6      12.5      11.5      11.5
370: Commerce and Housing                                                                                       
 Credit:                                                                                                        
    On-budget:                                                                                                  
        BA......................       5.4       3.9       3.4       2.8       2.6       2.4       2.5       2.6
        OT......................     -13.7      -6.1      -3.7      -4.9      -2.6       -17      -1.2      -1.0
    Off-budget:                                                                                                 
        BA......................       3.5       4.1       6.8       1.2       2.9      -0.2  ........  ........
        OT......................       0.2      -0.0      -0.8      -1.4      -0.1      -1.4  ........  ........
    Total:                                                                                                      
        BA......................       8.9       8.0      10.2       4.0       5.5       2.2       2.5       2.6
        OT......................     -13.5      -6.1      -4.6      -6.3      -2.7      -3.1      -1.2      -1.0
400: Transportation:                                                                                            
    BA..........................      42.5      38.2      44.6      45.6      46.6      47.6      47.4      47.1
    OT..........................      39.3      39.6      39.7      39.7      39.8      40.0      40.0      40.0
450: Community and Regional                                                                                     
 Development:                                                                                                   
    BA..........................       9.2       9.1       9.1       9.1       9.1       9.0       8.6       8.5
    OT..........................      11.6      10.3       8.9       8.5       8.6       8.9       8.8       8.8
500: Education, Training,                                                                                       
 Employment and Social Services:                                                                                
    BA..........................      58.3      56.4      56.0      56.5      57.2      58.0      57.5      57.8
    OT..........................      54.7      55.7      53.9      55.8      56.4      57.1      56.7      56.9
550: Health:                                                                                                    
    BA..........................     116.6     126.6     137.8     150.2     163.4     177.1     192.1     207.7
    OT..........................     115.8     126.1     137.7     150.3     163.4     177.0     191.9     207.6
570: Medicare:                                                                                                  
    BA..........................     162.6     184.1     202.0     220.6     242.9     265.7     291.7     320.6
    OT..........................     161.1     181.7     200.4     218.9     240.4     263.8     289.7     318.4
600: Income Security:                                                                                           
    BA..........................     219.9     228.2     242.9     254.2     266.6     281.8     288.8     305.5
    OT..........................     222.2     231.4     247.5     257.1     268.9     284.9     291.9     308.4
650: Social Security:                                                                                           
    On-budget:                                                                                                  
        BA......................       6.8       5.9       8.1       8.8       9.6      10.5      11.1      11.7
        OT......................       9.3       8.5      10.5      11.3      12.1      12.9      13.5      14.1
    Off-budget:                                                                                                 
        BA......................     330.1     348.4     366.0     385.5     405.4     426.2     448.5     472.0
        OT......................     326.9     345.7     362.5     381.9     401.7     422.7     444.8     468.1
    Total:                                                                                                      
        BA......................     336.9     354.3     374.0     394.3     415.0     436.7     459.6     483.7
        OT......................     336.2     354.2     373.1     392.1     413.7     435.6     458.3     482.2
700: Veterans Benefits:                                                                                         
    BA..........................      37.7      38.2      38.6      39.1      40.4      40.8      41.5      42.1
    OT..........................      37.4      37.2      38.5      39.1      40.4      42.3      43.0      43.7
750: Administration of Justice:                                                                                 
    BA..........................      18.5      18.5      18.5      18.6      18.6      18.6      18.2      18.1
    OT..........................      17.1      18.2      18.3      18.6      18.6      18.5      18.2      18.1
800: General Government:                                                                                        
    BA..........................      13.3      13.2      13.2      13.3      13.3      13.3      12.9      12.9
    OT..........................      13.4      13.5      13.1      13.2      13.1      13.3      12.9      12.8
900: Net Interest:                                                                                              
    On-budget:                                                                                                  
        BA......................     269.9     299.4     314.3     327.9     346.6     366.4     384.0     404.7
        OT......................     269.9     299.4     314.3     327.9     346.6     366.4     384.0     404.7
    Off-budget:                                                                                                 
        BA......................     -34.5     -39.5     -44.5     -49.7     -55.1     -60.9     -67.2     -74.0
        OT......................     -34.5     -39.5     -44.5     -49.7     -55.1     -60.9     -67.2     -74.0
    Total:                                                                                                      
        BA......................     235.4     259.9     269.8     278.3     291.5     305.5     316.8     330.7
        OT......................     235.3     259.9     269.8     278.3     291.5     305.5     316.8     330.7
920: Allowances:                                                                                                
    BA..........................  ........  ........  ........  ........  ........  ........  ........  ........
    OT..........................  ........  ........  ........  ........  ........  ........  ........  ........
950: Undistributed Offsetting                                                                                   
 Receipts:                                                                                                      
    On-budget:                                                                                                  
        BA......................     -39.8     -31.3     -31.2     -32.0     -32.9     -34.8     -36.1     -37.4
        OT......................     -39.8     -31.3     -31.2     -32.0     -32.9     -34.8     -36.1     -37.4
    Off-budget:                                                                                                 
        BA......................      -6.4      -6.8      -7.1      -7.6      -8.1      -8.7      -9.5     -10.3
        OT......................      -6.4      -6.8      -7.1      -7.6      -8.1      -8.7      -9.5     -10.3
    Total:                                                                                                      
        BA......................     -46.2     -38.1     -38.3     -39.5     -40.9     -43.5     -45.6     -47.7
        OT......................     -46.2     -38.1     -38.3     -39.5     -40.9     -43.5     -45.6     -47.7
                                 -------------------------------------------------------------------------------
Total Spending:                                                                                                 
    On-budget:                                                                                                  
        BA......................   1,260.9   1,322.5   1,385.1   1,448.0   1,523.7   1,604.1   1,666.4   1,747.7
        OT......................   1,243.7   1,315.1   1,379.1   1,432.4   1,503.0   1,582.1   1,645.4   1,726.8
    Off-budget:                                                                                                 
        BA......................     292.6     306.2     321.1     329.5     345.1     356.4     371.9     387.8
        OT......................     286.1     299.4     310.0     323.3     338.4     351.6     368.1     383.9
    Total:                                                                                                      
        BA......................   1,553.6   1,628.7   1,706.2   1,777.5   1,868.8   1,960.5   2,038.3   2,135.5
        OT......................   1,529.9   1,614.5   1,689.2   1,755.7   1,841.3   1,933.7   2,013.5   2,110.7
Revenues:                                                                                                       
    On-budget...................     997.8   1,043.0   1,083.5   1,135.0   1,187.5   1,246.2   1,314.2   1,385.0
    Off-budget..................     357.4     374.7     392.0     411.4     430.9     452.0     475.2     498.6
    Total.......................   1,355.2   1,417.7   1,475.5   1,546.4   1,618.4   1,698.2   1,789.4   1,883.6
Deficit/Surplus:                                                                                                
    On-budget...................    -245.9    -272.1    -295.6    -297.4    -315.4    -335.9    -331.2    -341.8
    Off-budget..................      71.3      75.3      81.9      88.1      92.5     100.4     107.1     114.7
    Total.......................    -174.7    -196.8    -213.7    -209.3    -229.9    -235.5    -242.2    -227.0
----------------------------------------------------------------------------------------------------------------


                            COMMITTEE RECOMMENDATION COMPARED TO CURRENT LAW BASELINE                           
                                              [Dollars in billions]                                             
----------------------------------------------------------------------------------------------------------------
                                    1996      1997      1998      1999      2000      2001      2002      Total 
----------------------------------------------------------------------------------------------------------------
050: National Defense:                                                                                          
    BA..........................       2.7       1.6       1.3       1.4       4.4       4.4       4.4      20.2
    OT..........................       3.7       0.2      -1.6       1.7       6.3       6.3       7.9      24.5
150: International Affairs:                                                                                     
    BA..........................      -2.5      -3.0      -3.5      -4.0      -4.3      -4.3      -4.3     -25.8
    OT..........................      -0.6      -1.7      -2.4      -3.0      -3.5      -3.5      -3.5     -18.1
250: Science, Space and                                                                                         
 Technology:                                                                                                    
    BA..........................      -0.5      -0.9      -1.0      -1.2      -1.4      -1.4      -1.4      -7.6
    OT..........................      -0.2      -0.6      -0.9      -1.1      -1.3      -1.3      -1.3      -6.6
270: Energy:                                                                                                    
    BA..........................      -2.7      -3.6      -2.0      -1.4      -1.5      -1.5      -1.5     -14.1
    OT..........................      -2.0      -3.0      -1.4      -1.1      -1.4      -1.3      -1.2     -11.5
300: Natural Resources and                                                                                      
 Environment:                                                                                                   
    BA..........................      -2.5      -3.7      -6.0      -4.6      -4.8      -5.8      -5.0     -32.4
    OT..........................      -1.0      -1.8      -4.0      -3.3      -4.2      -5.2      -4.3     -23.7
350: Agriculture:                                                                                               
    BA..........................      -1.3      -2.0      -2.3      -2.2      -1.9      -2.1      -2.4     -14.3
    OT..........................      -1.2      -2.0      -2.2      -2.2      -1.9      -2.1      -2.4     -14.0
370: Commerce and Housing                                                                                       
 Credit:                                                                                                        
    On-budget:                                                                                                  
        BA......................      -1.4      -1.8      -2.2      -2.5      -0.7      -2.0      -2.3     -13.0
        OT......................      -0.9      -1.6      -2.1      -2.5      -0.8      -2.0      -2.3     -12.4
    Off-budget:                                                                                                 
        BA......................  ........  ........  ........  ........  ........  ........  ........  ........
        OT......................  ........  ........  ........  ........  ........  ........  ........  ........
    Total:                                                                                                      
        BA......................      -1.4      -1.8      -2.2      -2.5      -0.7      -2.0      -2.3     -13.0
        OT......................      -0.9      -1.6      -2.1      -2.5      -0.8      -2.0      -2.3     -12.4
400: Transportation:                                                                                            
    BA..........................      -1.7      -5.9      -6.1      -6.3      -6.4      -6.4      -6.4     -39.2
    OT..........................      -1.3      -6.9      -7.9      -8.6      -8.9      -8.9      -8.9     -51.5
450: Community and Regional                                                                                     
 Development:                                                                                                   
    BA..........................      -3.3      -3.6      -4.0      -4.0      -4.0      -4.0      -4.1     -27.0
    OT..........................      -0.5      -1.7      -2.9      -3.5      -3.8      -3.8      -3.8     -20.1
500: Education, Training,                                                                                       
 Employment and Social Services                                                                                 
    BA..........................      -8.3      -8.8      -9.3      -9.8     -10.2     -10.2     -10.4     -66.9
    OT..........................      -4.0      -7.8      -8.9      -9.6      -9.9      -9.9     -10.0     -60.0
550: Health:                                                                                                    
    BA..........................      -6.5     -11.2     -18.1     -26.4     -36.0     -46.8     -58.1    -203.1
    OT..........................      -5.5     -11.2     -18.1     -26.4     -36.1     -46.9     -58.2    -202.5
570: Medicare:                                                                                                  
    BA..........................     -12.2     -21.5     -27.5     -35.6     -44.3     -52.8     -61.7    -255.6
    OT..........................     -12.2     -21.5     -27.5     -35.6     -44.3     -52.8     -61.7    -255.6
600: Income Security:                                                                                           
    BA..........................      -1.9      -9.2      -1.2     -10.7      -9.2     -11.3     -13.6     -57.1
    OT..........................      -5.4     -11.9     -11.1     -11.0     -12.3     -14.4     -16.7     -82.9
650: Social Security:                                                                                           
    On-budget:                                                                                                  
        BA......................  ........  ........  ........  ........  ........  ........  ........  ........
        OT......................  ........  ........  ........  ........  ........  ........  ........  ........
    Off-budget:                                                                                                 
        BA......................  ........  ........  ........  ........  ........  ........  ........  ........
        OT......................  ........  ........  ........  ........  ........  ........  ........  ........
    Total:                                                                                                      
        BA......................  ........  ........  ........  ........  ........  ........  ........  ........
        OT......................  ........  ........  ........  ........  ........  ........  ........  ........
700: Veterans Benefits:                                                                                         
        BA......................      -0.8      -1.1      -1.5      -2.5      -3.0      -3.2      -3.5     -15.5
        OT......................      -0.3      -0.8      -1.2      -2.2      -2.9      -2.9      -3.3     -13.6
750: Administration of Justice:                                                                                 
    BA..........................       1.6       2.3       2.7       3.7       3.7       3.7       3.7      21.3
    OT..........................       1.4       2.9       3.9       4.6       5.1       5.1       5.1      28.2
800: General Government:                                                                                        
    BA..........................      -0.7      -0.8      -1.0      -1.2      -1.3      -1.3      -1.3      -7.5
    OT..........................      -0.5      -0.7      -0.8      -1.0      -1.4      -1.2      -1.2      -6.8
900: Net Interest:                                                                                              
    On-budget:                                                                                                  
        BA......................      -1.5      -5.5     -11.5     -18.9     -27.9     -38.6     -51.4    -155.2
        OT......................      -1.5      -5.5     -11.5     -18.9     -27.9     -38.6     -51.4    -155.2
    Off-budget:                                                                                                 
        BA......................  ........  ........  ........  ........  ........  ........  ........  ........
        OT......................  ........  ........  ........  ........  ........  ........  ........  ........
    Total:                                                                                                      
        BA......................      -1.5      -5.5     -11.5     -18.9     -27.9     -38.6     -51.4    -155.2
        OT......................      -1.5      -5.5     -11.5     -18.9     -27.9     -38.6     -51.4    -155.2
920: Allowances:                                                                                                
    BA..........................      -8.6      -8.5      -7.3      -6.8      -5.7      -5.7      -5.7     -48.4
    OT..........................      -6.5      -8.5      -7.6      -7.1      -6.1      -6.1      -6.1     -48.0
950: Undistributed Offsetting                                                                                   
 Receipts:                                                                                                      
    On-budget:                                                                                                  
        BA......................      -1.8      -2.6      -4.3      -4.8      -5.0      -5.0      -4.9     -28.5
        OT......................      -1.8      -2.6      -4.3      -4.8      -5.0      -5.0      -4.9     -28.5
    Off-budget:                                                                                                 
        BA......................  ........  ........  ........  ........  ........  ........  ........  ........
        OT......................  ........  ........  ........  ........  ........  ........  ........  ........
    Total:                                                                                                      
        BA......................      -1.8      -2.6      -4.3      -4.8      -5.0      -5.0      -4.9     -28.5
        OT......................      -1.8      -2.6      -4.3      -4.8      -5.0      -5.0      -4.9     -28.5
                                 -------------------------------------------------------------------------------
Total Spending:                                                                                                 
    On-budget:                                                                                                  
        BA......................     -54.0     -89.8    -104.7    -137.8    -159.3    -194.4    -229.7    -969.5
        OT......................     -40.3     -86.4    -112.4    -135.8    -159.8    -194.4    -228.3    -957.5
    Off-budget:                                                                                                 
        BA......................  ........  ........  ........  ........  ........  ........  ........  ........
        OT......................  ........  ........  ........  ........  ........  ........  ........  ........
    Total:                                                                                                      
        BA......................     -54.0     -89.7    -104.7    -137.8    -159.3    -194.4    -229.7    -969.6
        OT......................     -40.3     -86.4    -112.5    -135.8    -159.8    -194.4    -228.3    -957.5
Revenues:                                                                                                       
    On-budget...................      -0.6      -0.7      -0.8       0.9       1.2       0.0      -0.0       0.0
    Off-budget..................        --        --        --        --        --        --        --        --
    Total.......................      -.06      -0.7      -0.8       0.9       1.2       0.0      -0.0       0.0
Deficit:                                                                                                        
    On-budget...................     -39.7     -85.7    -111.6    -136.7    -161.0    -194.5    -228.3    -957.5
    Off-budget..................        --        --        --        --        --        --        --        --
    Total.......................     -39.7     -85.7    -111.7    -136.7    -161.0    -194.5    -228.3    -957.5
----------------------------------------------------------------------------------------------------------------


                                    COMMITTEE RECOMMENDATION COMPARED TO 1995                                   
                                              [Dollars in billions]                                             
----------------------------------------------------------------------------------------------------------------
                                    1996      1997      1998      1999      2000      2001      2002      Total 
----------------------------------------------------------------------------------------------------------------
050: National Defense:                                                                                          
    BA..........................      -3.7      -8.1      -1.8       4.8      14.6      14.5      14.5      34.7
    OT..........................      -8.5     -12.7     -15.1     -10.0      -1.8      -1.9      -0.4     -50.4
150: International Affairs:                                                                                     
    BA..........................      -3.4      -4.5      -5.3      -6.3      -4.7      -4.6      -4.6     -33.6
    OT..........................      -2.0      -3.8      -4.6      -5.4      -5.8      -5.5      -5.5     -32.6
250: Science, Space and                                                                                         
 Technology:                                                                                                    
    BA..........................      -0.5      -0.8      -1.0      -1.2      -1.3      -1.4      -1.4      -7.5
    OT..........................      -0.8      -0.9      -1.3      -1.5      -1.6      -1.6      -1.6      -9.4
270: Energy:                                                                                                    
    BA..........................      -3.4      -4.6      -3.1      -2.1      -2.3      -2.3      -2.4     -20.1
    OT..........................      -2.2      -3.9      -2.3      -1.8      -2.1      -2.1      -2.0     -16.5
300: Natural Resources and                                                                                      
 Environment:                                                                                                   
    BA..........................      -2.8      -3.9      -6.7      -5.5      -5.9      -7.2      -6.5     -38.6
    OT..........................      -1.3      -1.6      -3.8      -3.3      -4.4      -5.8      -5.1     -25.4
350: Agriculture:                                                                                               
    BA..........................      -0.8      -1.7      -2.2      -2.3      -2.2      -3.5      -3.8     -16.6
    OT..........................      -0.8      -1.8      -2.1      -2.3      -2.2      -3.3      -3.6     -16.1
370: Commerce and Housing                                                                                       
 Credit:                                                                                                        
    On-budget:                                                                                                  
        BA......................      -2.9      -3.9      -4.8      -5.3      -3.7      -4.9      -5.2     -30.6
        OT......................       6.7       8.3       6.7       8.6      11.2      10.5      10.3      62.5
    Off-budget:                                                                                                 
        BA......................       0.6       3.3      -2.3      -0.7      -3.7      -3.5      -3.5      -9.9
        OT......................      -0.2      -1.0      -1.6      -0.3      -1.6      -0.2      -0.2      -5.1
    Total:                                                                                                      
        BA......................      -2.3      -0.6      -7.1      -6.0      -7.4      -8.4      -8.7     -40.5
        OT......................       6.5       7.3       5.1       8.3       9.6      10.3      10.1      57.4
400: Transportation:                                                                                            
    BA..........................      -6.0      -3.8      -3.1      -2.3      -1.3      -1.5      -1.8     -19.7
    OT..........................      -1.0      -6.5      -7.6      -8.1      -8.3      -8.3      -8.3     -48.1
450: Community and Regional                                                                                     
 Development:                                                                                                   
    BA..........................      -3.4      -3.7      -4.1      -4.1      -4.1      -4.6      -4.8     -28.8
    OT..........................      -1.8      -4.3      -6.0      -6.5      -6.5      -6.6      -6.6     -38.3
500: Education, Training,                                                                                       
 Employment and Social Services:                                                                                
    BA..........................     -10.2     -11.0     -11.1     -10.9     -10.5     -11.0     -10.9     -75.6
    OT..........................      -3.0      -6.8      -7.8      -7.9      -7.5      -7.9      -7.9     -48.7
550: Health:                                                                                                    
    BA..........................       3.5      10.0      15.5      20.4      24.5      28.6      33.0     135.6
    OT..........................       4.8      10.7      16.4      21.2      25.1      29.2      33.6     141.1
570: Medicare:                                                                                                  
    BA..........................       9.2      17.8      30.4      44.7      58.7      76.3      96.3     333.5
    OT..........................       8.5      17.9      30.4      43.7      58.5      75.8      95.6     330.3
600: Income Security:                                                                                           
    BA..........................       6.3      13.8      33.1      36.0      52.7      57.6      72.0     271.4
    OT..........................       3.7      13.4      23.8      35.7      50.4      55.2      69.4     251.6
650: Social Security:                                                                                           
    On-budget:                                                                                                  
        BA......................      -0.9       1.3       2.0       2.8       3.7       4.3       4.9      18.1
        OT......................      -0.8       1.2       2.0       2.8       3.6       4.2       4.8      17.7
    Off-budget:                                                                                                 
        BA......................      18.3      35.9      55.4      75.4      96.1     118.4     142.0     541.5
        OT......................      18.8      35.6      55.0      74.8      95.7     117.9     141.2     538.9
    Total:                                                                                                      
        BA......................      17.4      37.2      57.4      78.2      99.8     122.7     146.8     559.6
        OT......................      17.9      36.8      56.9      77.5      99.4     122.1     146.0     556.6
700: Veterans Benefits:                                                                                         
    BA..........................      -0.3      -0.1      -0.0       0.3       0.2       0.6       1.0       1.7
    OT..........................      -0.5       0.3       0.6       0.8       2.0       2.7       3.0       8.9
                                                                                                                
750: Administration of Justice:                                                                                 
    BA..........................       1.5       2.2       2.8       3.8       3.8       3.4       3.3      20.7
    OT..........................       2.4       4.1       5.3       6.0       6.6       6.2       6.1      36.7
800: General Government:                                                                                        
    BA..........................      -0.7      -0.9      -1.0      -1.1      -1.3      -1.6      -1.7      -8.3
    OT..........................      -0.4      -1.0      -1.1      -1.3      -1.5      -1.7      -1.8      -8.9
900: Net Interest:                                                                                              
    On-budget:                                                                                                  
        BA......................      28.0      38.9      46.6      57.8      68.7      75.6      83.4     398.9
        OT......................      28.0      38.9      46.6      57.8      68.7      75.6      83.4     399.0
    Off-budget:                                                                                                 
        BA......................      -4.9     -10.0     -15.1     -20.6     -26.4     -32.7     -39.4    -149.1
        OT......................      -4.9     -10.0     -15.1     -20.6     -26.4     -32.7     -39.4    -149.0
    Total:                                                                                                      
        BA......................      23.1      28.9      31.5      37.2      42.3      42.9      43.9     249.9
        OT......................      23.1      29.0      31.5      37.2      42.3      42.9      44.0     249.9
920: Allowances:                                                                                                
    BA..........................      -8.6      -8.5      -7.3      -6.8      -5.7      -5.7      -5.7     -48.4
    OT..........................      -6.5      -8.5      -7.6      -7.1      -6.1      -6.1      -6.1     -48.0
950: Undistributed Offsetting                                                                                   
 Receipts:                                                                                                      
    On-budget:                                                                                                  
        BA......................       6.6       6.0       3.5       2.1       0.1      -1.3      -2.6      14.4
        OT......................       6.6       6.0       3.5       2.1       0.1      -1.3      -2.6      14.4
    Off-budget:                                                                                                 
        BA......................      -0.4      -0.7      -1.1      -1.6      -2.3      -3.0      -3.8     -13.0
        OT......................      -0.4      -0.7      -1.1      -1.6      -2.3      -3.0      -3.8     -13.0
    Total:                                                                                                      
        BA......................       6.3       5.3       2.3       0.4      -2.2      -4.3      -6.4       1.4
        OT......................       6.3       5.3       2.3       0.4      -2.2      -4.3      -6.4       1.4
                                 -------------------------------------------------------------------------------
Total Spending:                                                                                                 
    On-budget:                                                                                                  
        BA......................       7.6      34.4      82.4     124.9     183.8     211.1     257.1     901.2
        OT......................      31.0      49.0      76.2     123.4     178.6     207.3     254.8     920.3
    Off-budget:                                                                                                 
        BA......................      13.6      28.5      36.8      52.5      63.7      79.2      95.1     369.4
        OT......................      13.3      23.9      37.1      52.2      65.5      82.0      97.7     371.7
    Total:                                                                                                      
        BA......................      21.2      62.9     119.2     177.4     247.6     290.3     352.2   1,270.6
        OT......................      44.3      72.9     113.3     175.7     244.1     289.2     352.5   1,292.0
Revenues:                                                                                                       
    On-budget...................      44.7      85.0     136.4     190.7     249.6     316.4     387.3   1,410.1
    Off-budget..................      17.2      34.5      54.0      73.4      94.6     117.7     141.2     532.6
    Total.......................      61.9     119.6     190.4     264.1     344.2     434.2     528.4   1,942.7
----------------------------------------------------------------------------------------------------------------


                                    PRESIDENT'S BUDGET AS REESTIMATED BY CBO                                    
                                              [Dollars in billions]                                             
----------------------------------------------------------------------------------------------------------------
                                                        1995      1996      1997      1998      1999      2000  
----------------------------------------------------------------------------------------------------------------
050: National Defense:                                                                                          
    BA..............................................     261.4     257.7     253.4     259.6     266.2     276.0
    OT..............................................     269.6     261.1     257.0     254.5     259.6     267.8
150: International Affairs:                                                                                     
    BA..............................................      19.8      18.8      17.6      16.8      15.8      17.3
    OT..............................................      19.8      17.5      16.7      16.5      16.0      15.8
250: Science, Space and Technology:                                                                             
    BA..............................................      17.0      17.3      16.7      16.4      16.1      15.7
    OT..............................................      17.5      17.1      16.9      16.5      16.2      15.9
270: Energy:                                                                                                    
    BA..............................................       6.3       5.3       4.9       5.0       4.5       4.4
    OT..............................................       4.9       4.5       4.3       4.3       3.9       3.3
300: Natural Resources and Environment:                                                                         
    BA..............................................      22.3      22.9      22.3      21.7      21.2      20.6
    OT..............................................      21.7      21.9      22.2      21.9      21.5      20.8
350: Agriculture:                                                                                               
    BA..............................................      14.0      14.5      14.2      13.8      13.5      13.3
    OT..............................................      12.7      13.1      12.8      12.7      12.3      12.1
370: Commerce and Housing Credit:                                                                               
    On-Budget:                                                                                                  
        BA..........................................       5.4       4.3       3.6       3.0       2.7       5.2
        OT..........................................     -13.7      -5.8      -3.5      -4.7      -2.5       0.9
    Off-Budget:                                                                                                 
        BA..........................................       3.5       4.1       6.8       1.2       2.9      -0.2
        OT..........................................       0.2      -0.0      -0.8      -1.4      -0.1      -1.4
    Total:                                                                                                      
        BA..........................................       8.9       8.4      10.4       4.2       5.5       5.0
        OT..........................................     -13.5      -5.9      -4.4      -6.1      -2.6      -0.5
400: Transportation:                                                                                            
    BA..............................................      41.7      38.6      40.3      38.7      35.6      35.0
    OT..............................................      39.3      39.3      37.9      38.4      37.9      36.5
450: Community and Regional Development:                                                                        
    BA..............................................      15.9       9.9       9.4       9.3       9.0       8.6
    OT..............................................      11.9      10.9      10.7      10.4      10.7       9.4
500: Education, Training, Employment and Social                                                                 
 Services:                                                                                                      
    BA..............................................      58.1      58.3      57.0      56.8      57.3      57.6
    OT..............................................      54.7      56.4      57.3      56.9      57.2      57.4
550: Health:                                                                                                    
    BA..............................................     116.6     127.5     137.9     149.9     163.0     176.5
    OT..............................................     115.7     126.3     138.1     150.4     163.3     176.6
570: Medicare:                                                                                                  
    BA..............................................     162.6     184.2     201.6     219.9     239.6     259.4
    OT..............................................     161.0     181.8     200.1     218.3     237.0     257.6
600: Income Security:                                                                                           
    BA..............................................     219.5     228.5     241.5     263.2     271.0     285.4
    OT..............................................     222.2     232.8     249.1     263.3     280.8     297.3
650: Social Security:                                                                                           
    On-budget:                                                                                                  
        BA..........................................       6.8       5.9       8.1       8.8       9.6      10.5
        OT..........................................       9.3       9.0      11.2      12.0      12.7      13.5
    Off-budget:                                                                                                 
        BA..........................................     330.1     348.4     366.0     385.5     406.0     427.7
        OT..........................................     326.9     345.7     362.5     381.9     402.3     424.1
    Total:                                                                                                      
        BA..........................................     336.9     354.3     374.0     394.3     415.6     438.2
        OT..........................................     336.2     345.8     373.7     393.9     415.0     437.6
700: Veterans Benefits:                                                                                         
    BA..............................................      37.7      39.1      38.9      39.0      39.1      39.1
    OT..............................................      37.4      37.3      38.8      39.0      39.1      40.6
750: Administration of Justice:                                                                                 
    BA..............................................      18.5      21.9      22.3      23.3      24.5      24.7
    OT..............................................      17.1      20.0      21.4      22.7      23.5      24.3
800: General Government:                                                                                        
    BA..............................................      13.3      14.7      14.3      14.1      14.0      13.6
    OT..............................................      13.4      14.2      13.8      13.8      13.8      13.8
900: Net Interest:                                                                                              
    On-budget:                                                                                                  
        BA..........................................     270.0     300.0     315.9     330.6     350.8     372.6
        OT..........................................     270.0     300.0     315.9     330.6     350.8     372.6
    :Off-budget:                                                                                                
        BA..........................................     -34.5     -39.5     -44.5     -49.7     -55.1     -60.9
        OT..........................................     -34.5     -39.5     -44.5     -49.7     -55.1     -60.9
    Total:                                                                                                      
        BA..........................................     235.5     260.6     271.4     280.9     295.7     311.6
        OT..........................................     235.5     260.6     271.4     280.9     295.7     311.6
920: Allowances:                                                                                                
    BA..............................................  ........  ........  ........  ........  ........  ........
    OT..............................................  ........  ........  ........  ........  ........  ........
950: Undistributed Offsetting Receipts:                                                                         
    On-budget:                                                                                                  
        BA..........................................     -39.8     -31.9     -34.8     -35.7     -33.3     -34.9
        OT..........................................     -39.8     -31.9     -34.8     -35.7     -33.3     -34.9
    Off-budget:                                                                                                 
        BA..........................................      -6.4      -6.8      -7.1      -7.6      -8.1      -8.7
        OT..........................................      -6.4      -6.8      -7.1      -7.6      -8.1      -8.7
    Total:                                                                                                      
        BA..........................................     -46.2     -38.7     -42.0     -43.3     -41.4     -43.6
        OT..........................................     -46.2     -38.7     -42.0     -43.3     -41.4     -43.6
                                                     -----------------------------------------------------------
Total Spending:                                                                                                 
    On-budget:                                                                                                  
        BA..........................................   1,267.0   1,337.4   1,385.0   1,454.2   1,520.2   1,600.5
        OT..........................................   1.245.0   1,325.4   1,385.7   1,441.8   1,520.6   1,601.2
    Off-budget:                                                                                                 
        BA..........................................     292.6     306.2     321.1     329.5     345.7     357.8
        OT..........................................     286.1     299.4     310.0     323.3     339.0     353.1
    Total:                                                                                                      
        BA..........................................   1,559.6   1,643.6   1,706.1   1,783.7   1,865.9   1,958.3
        OT..........................................   1,531.1   1,624.8   1,695.8   1,765.1   1,859.5   1,954.3
Revenues:                                                                                                       
    On-budget.......................................     997.9   1,040.9   1,072.2   1,122.4   1,172.9   1,226.0
    Off-budget......................................     357.4     374.7     392.0     411.4     430.9     452.0
    Total...........................................   1,355.4   1,415.6   1,464.2   1,533.8   1,603.8   1,678.0
Deficit:                                                                                                        
    On-budget.......................................    -247.1    -284.5    -313.5    -319.4    -347.6    -375.3
    Off-budget......................................      71.3      75.3      81.9      88.1      91.9      98.9
    Total...........................................    -175.8    -209.3    -231.6    -231.3    -255.7    -276.3
----------------------------------------------------------------------------------------------------------------


                                 PRESIDENT COMPARED TO COMMITTEE RECOMMENDATION                                 
                                              [Dollars in billions]                                             
----------------------------------------------------------------------------------------------------------------
                                                        1996      1997      1998      1999      2000      Total 
----------------------------------------------------------------------------------------------------------------
050: National Defense:                                                                                          
    BA..............................................  ........  ........  ........  ........  ........  ........
    OT..............................................  ........  ........  ........  ........  ........  ........
150: International Affairs:                                                                                     
    BA..............................................       3.4       3.2       3.3       3.3       3.2      16.3
    OT..............................................       0.6       1.6       2.2       2.5       2.6       9.6
250: Science, Space and Technology:                                                                             
    BA..............................................       0.6       0.4       0.3       0.1      -0.1       1.3
    OT..............................................       0.3       0.3       0.2       0.2       0.0       1.0
270: Energy:                                                                                                    
    BA..............................................       2.4       3.2       1.7       0.3       0.3       8.0
    OT..............................................       1.8       3.3       1.7       0.7       0.5       7.9
300: Natural Resources and Environmental:                                                                       
    BA..............................................       3.4       4.0       6.1       4.4       4.2      22.2
    OT..............................................       1.5       2.1       4.0       3.0       3.4      14.0
350: Agriculture:                                                                                               
    BA..............................................       1.4       1.9       2.0       1.9       1.5       8.7
    OT..............................................       1.2       1.9       2.1       1.9       1.5       8.6
370: Commerce and Housing Credit:                                                                               
    On-budget:                                                                                                  
        BA..........................................       1.8       2.1       2.4       2.5       3.5      12.3
        OT..........................................       1.2       1.9       2.3       2.6       3.4      11.4
    Off-budget:                                                                                                 
        BA..........................................  ........  ........  ........  ........  ........  ........
        OT..........................................  ........  ........  ........  ........  ........  ........
    Total:                                                                                                      
        BA..........................................       1.8       2.1       2.4       2.5       3.5      12.3
        OT..........................................       1.2       1.9       2.3       2.6       3.4      11.4
400: Transportation:                                                                                            
        BA..........................................       2.1       1.5      -0.7      -4.7      -6.3      -8.1
        OT..........................................       1.0       5.1       6.7       6.6       5.4      24.8
450: Community and Regional Development:                                                                        
    BA..............................................       4.2       4.0       4.2       3.9       3.6      19.9
    OT..............................................       1.1       3.5       4.8       5.6       4.3      19.4
500: Education, Training, Employment and Social                                                                 
 Services:                                                                                                      
    BA..............................................      10.2       9.7       9.6       9.9       9.7      49.2
    OT..............................................       4.7       9.4       9.9      10.4      10.1      44.5
550: Health:                                                                                                    
    BA..............................................       7.3      11.3      17.7      26.0      35.4      97.8
    OT..............................................       5.7      11.6      18.2      26.3      35.8      97.6
570: Medicare:                                                                                                  
    BA..............................................      12.3      21.1      26.9      32.2      38.0     130.5
    OT..............................................      12.3      21.1      26.9      32.2      38.1     130.5
600: Income Security:                                                                                           
    BA..............................................       2.2       7.8      10.1      15.0      12.8      48.0
    OT..............................................       6.9      13.5      17.3      22.9      24.7      85.3
650: Social Security:                                                                                           
    On-budget:......................................                                                            
        BA..........................................  ........  ........  ........  ........  ........  ........
        OT..........................................       0.6       0.7       0.7       0.7       0.6       3.3
    Off-budget:.....................................                                                            
        BA..........................................  ........  ........  ........  ........  ........  ........
        OT..........................................  ........  ........  ........  ........  ........  ........
    Total:                                                                                                      
        BA..........................................  ........  ........  ........  ........  ........  ........
        OT..........................................       0.6       0.7       0.7       0.7       0.6       3.3
700: Veterans Benefits:                                                                                         
    BA..............................................       1.7       1.4       1.4       1.2       1.2       7.0
    OT..............................................       0.4       1.0       1.1       0.9       1.2       4.6
750: Administration of Justice:                                                                                 
    BA..............................................       1.8       1.6       1.9       2.1       2.4       9.8
    OT..............................................       0.4       0.3       0.3       0.4       0.6       1.9
800: General Government:                                                                                        
    BA..............................................       2.1       1.9       1.9       1.8       1.6       9.3
    OT..............................................       1.2       1.4       1.5       1.7       1.9       7.7
900: Net Interest:                                                                                              
    On-budget:                                                                                                  
        BA..........................................       2.1       7.1      14.1      23.1      34.0      80.4
        OT..........................................       2.1       7.1      14.1      23.1      34.0      80.4
    Off-budget:                                                                                                 
        BA..........................................  ........  ........  ........  ........  ........  ........
        OT..........................................  ........  ........  ........  ........  ........  ........
    Total:                                                                                                      
        BA..........................................       2.1       7.1      14.1      23.1      34.0      80.4
        OT..........................................       2.1       7.1      14.1      23.1      34.0      80.4
920: Allowances:                                                                                                
    BA..............................................       8.6       8.5       7.3       6.8       5.7      37.0
    OT..............................................       6.5       8.5       7.6       7.1       6.1      35.8
950: Undistributed Offsetting Receipts:                                                                         
    On-budget:                                                                                                  
        BA..........................................       1.2      -1.1       0.6       4.4       4.8      10.0
        OT..........................................       1.2      -1.1       0.6       4.4       4.8      10.0
    Off-budget:                                                                                                 
        BA..........................................  ........  ........  ........  ........  ........  ........
        OT..........................................  ........  ........  ........  ........  ........  ........
    Total:                                                                                                      
        BA..........................................       1.2      -1.1       0.6       4.4       4.8      10.0
        OT..........................................       1.2      -1.1       0.6       4.4       4.8      10.0
                                                     -----------------------------------------------------------
Total Spending:                                                                                                 
    On-budget:                                                                                                  
        BA..........................................      68.9      89.7     110.9     134.4     155.7     559.6
        OT..........................................      50.7      93.1     122.1     153.3     179.2     598.4
    Off-budget:                                                                                                 
        BA..........................................  ........  ........  ........  ........  ........  ........
        OT..........................................  ........  ........  ........  ........  ........  ........
    Total:                                                                                                      
        BA..........................................      68.9      89.7     110.9     134.4     155.7     559.6
        OT..........................................      50.7      93.1     122.1     153.3     179.2     598.4
Revenues:                                                                                                       
    On-budget.......................................      -1.6     -10.6     -11.8     -15.5     -21.4     -60.9
    Off-budget......................................  ........  ........  ........  ........  ........  ........
      Total.........................................      -1.6     -10.6     -11.8     -15.5     -21.4     -60.9
Deficit:                                                                                                        
    On-budget.......................................      52.2     103.7     133.9     168.8     200.6     659.3
    Off-budget......................................  ........  ........  ........  ........  ........  ........
      Total.........................................      52.2     103.7     133.9     168.8     200.6     659.3
----------------------------------------------------------------------------------------------------------------


          CREDIT TOTALS IN COMMITTEE RECOMMENDATION BY FUNCTION         
                        [In billions of dollars]                        
------------------------------------------------------------------------
                   1996    1997    1998    1999    2000    2001    2002 
------------------------------------------------------------------------
Function 050:                                                           
    Direct Loans     0.0     0.0     0.0     0.0     0.0     0.0     0.0
    Guaranteed                                                          
     Loans......     1.7     1.7     1.7     1.7     1.7     1.7     1.7
Function 150:                                                           
    Direct Loans     5.7     5.7     5.7     5.7     5.7     5.7     5.7
    Guaranteed                                                          
     Loans......    18.3    18.3    18.3    18.3    18.3    18.3    18.3
Function 270:                                                           
    Direct Loans     1.2     1.2     1.2     1.2     1.2     1.2     1.2
    Guaranteed                                                          
     Loans......     0.0     0.0     0.0     0.0     0.0     0.0     0.0
Function 300:                                                           
    Direct Loans     0.1     0.1     0.1     0.1     0.1     0.1     0.1
    Guaranteed                                                          
     Loans......     0.0     0.0     0.0     0.0     0.0     0.0     0.0
Function 350:                                                           
    Direct Loans    11.5    11.5    10.9    11.6    11.4    11.1    10.9
    Guaranteed                                                          
     Loans......     5.7     5.7     5.7     5.7     5.7     5.7     5.7
Function 370:                                                           
    Direct Loans     1.4     1.4     1.4     1.4     1.4     1.4     1.4
    Guaranteed                                                          
     Loans......   123.1   123.1   123.1   123.1   123.1   123.1   123.1
Function 400:                                                           
    Direct Loans     0.2     0.2     0.2     0.2     0.2     0.2     0.2
    Guaranteed                                                          
     Loans......     0.0     0.0     0.0     0.0     0.0     0.0     0.0
Function 450:                                                           
    Direct Loans     2.7     2.7     2.7     2.7     2.7     2.7     2.7
    Guaranteed                                                          
     Loans......     1.2     1.2     1.2     1.2     1.2     1.2     1.2
Function 500:                                                           
    Direct Loans    13.6    16.3    19.1    21.8    21.9    22.0    22.2
    Guaranteed                                                          
     Loans......    16.3    15.9    15.2    14.3    15.0    15.8    16.6
Function 550:                                                           
    Direct Loans     0.0     0.0     0.0     0.0     0.0     0.0     0.0
    Guaranteed                                                          
     Loans......     0.3     0.3     0.3     0.3     0.3     0.3     0.3
Function 600:                                                           
    Direct Loans     0.0     0.0     0.0     0.0     0.0     0.0     0.0
    Guaranteed                                                          
     Loans......     0.1     0.1     0.1     0.1     0.1     0.1     0.1
Function 700:                                                           
    Direct Loans     1.2     1.1     1.0     1.0     1.2     1.4     1.7
    Guaranteed                                                          
     Loans......    26.7    21.6    19.7    18.6    19.3    19.9    20.6
                 -------------------------------------------------------
    Grand total:                                                        
    Direct Loans    37.6    40.2    42.3    45.7    45.8    45.8    46.1
    Guaranteed                                                          
     Loans......   193.4   187.9   185.3   183.3   184.7   186.1   187.6
------------------------------------------------------------------------

  V. Budget Resolution: Enforcement, Reconciliation, and Other Issues

    Prior to 1974, the President was the dominant player in 
setting national budget priorities. Congress reasserted its 
role over the budget through the enactment of the Congressional 
Budget Act of 1974 (the Budget Act). The Budget Act established 
budget procedures and internal enforcement mechanisms to ensure 
effective Congressional control over fiscal policy and the 
budgetary process.

                  A. CONTENTS OF THE BUDGET RESOLUTION

    The focus of the Congressional budget process is the 
concurrent resolution on the budget (the budget resolution), 
which plays the central role in setting and enforcing 
Congressional budget priorities. Under the Congressional Budget 
Act of 1974, as amended, the budget resolution is privileged 
and is considered under expedited procedures. Because such 
procedures are unusual in the Senate, section 301 places 
constraints on the budget resolution by setting forth the 
elements that must be contained in the budget resolution and 
those elements that may be included at the discretion of the 
Budget Committees.

Aggregates and functional levels

    Section 301(a) of the Budget Act requires the budget 
resolution to set forth the aggregate levels of new budget 
authority, outlays, revenues, the deficit (or surplus), and the 
public debt, among others. The aggregate amounts of new budget 
authority and outlays are then required to be divided and set 
forth for each major functional category. (Functional 
categories classify the budgetary resources of programs into 
categories according to the national need addressed, e.g. 
Defense, International Affairs, Health, General Government, 
etc). The budget resolution is also required to set forth the 
outlays and revenues of the Old-Age and Survivors Insurance and 
the Disability Insurance (OASDI) Trust Funds. These aggregates, 
functional levels, and other amounts required under section 301 
can be found in sections 2 through 5 of the fiscal year 1996 
budget resolution.

OASDI trust funds

    The Budget Enforcement Act of 1990 (the BEA) affirmed the 
off-budget status of the OASDI trust funds. Section 301(a) of 
the Budget Act, as amended by the 1990 Act, specifically 
prohibits the inclusion of the receipts or disbursements of the 
OASDI trust funds in the deficit totals in the budget 
resolution. Section 301(i) prohibits the budget resolution from 
reducing the surplus in the OASDI trust funds in any fiscal 
year covered by that resolution. The fiscal year 1993 and 1994 
budget resolutions made this prohibition applicable against 
floor amendments to the budget resolution, that restriction 
continues to apply as a rule of the Senate. The fiscal year 
1996 budget resolution complies with the BEA and with all of 
the restrictions on Social Security trust funds under section 
301 of the Budget Act.

Additional matters that may be in budget resolutions

    Section 301(b) sets forth those elements that may be 
included in the budget resolution at the discretion of the 
Budget Committees. One of these elements is reconciliation 
instructions described in section 310 of the Budget Act. 
Periodically, Congress may adopt a budget resolution that will 
require changes in the projected levels of direct spending or 
revenues under current law. In order to implement that budget 
resolution, the differences between current law and the budget 
resolution must be reconciled and the budget resolution will, 
therefore, contain ``reconciliation instructions''. (See 
Reconciliation below).
    In addition to the aggregates, functional levels, and the 
reconciliation instructions, section 301(b) of the Budget Act 
permits the budget resolution to include ``other matters, and 
[to] require other procedures relating to the budget as are 
appropriate to carry out [the Budget] Act.'' This section has 
been the authority to include language amending the budget 
process, creating new enforcement mechanisms, and clarifying 
the application of existing provisions of the Budget. Such 
language may be temporary or permanent, and may affect only the 
Senate or may affect both Houses of Congress. The fiscal year 
1996 budget resolution establishes discretionary caps for 
defense and non-defense spending, modifies and extends the 10-
year pay-go point of order, establishes two ``reserve funds'' 
for legislation that reduces revenues, and clarifies the budget 
scoring treatment of certain transactions. (See Part VI, 
Miscellaneous Provisions, of this report).

Other constraints on the budget resolution

    Subsection (g) of section 301 and other sections of the 
Budget Act place restrictions on the budget resolution that are 
enforceable through points of order. Section 301(g) prohibits 
the consideration of a budget resolution (or an amendment 
thereto) that is based on more than one set of economic 
assumptions. The fiscal year 1996 budget resolution complies 
with this requirement (See Part II, Economics, of this report). 
Section 601(b) prohibits the consideration of a budget 
resolution (or an amendment thereto) that would exceed the 
discretionary spending limits set forth in section 601(a). This 
prohibition is continued and the discretionary caps reduced in 
a separate provision in the fiscal year 1996 budget resolution 
(See Part VI, Miscellaneous Provisions, of this report). 
Lastly, section 305(d) prohibits the Senate from voting on a 
budget resolution that is not mathematically consistent
    In addition to points of order against the budget 
resolution that were established in the Budget Act, previously 
passed budget resolutions contain enforcement provisions 
against budget resolutions. Section 24 of the fiscal year 1995 
budget resolution (H.Con.Res. 218) prohibits the consideration 
of a budget resolution for fiscal years 1996, 1997, or 1998 
that recommends discretionary spending levels in the first year 
of that resolution that exceed the Exon-Grassley levels. The 
fiscal year 1996 budget resolution complies with this 
requirement and contains discretionary caps for fiscal years 
1997 through 2002 that reduce the discretionary caps to levels 
below the Exon-Grassley reductions and, thereby, supercedes 
Exon-Grassley. (See Part VI, Miscellaneous Provisions, of this 
report).

Crime trust fund

    The Violent Crime Control and Law Enforcement Act of 1994 
(the Crime Act) established the Violent Crime Reduction Trust 
Fund (the Fund). Specified levels of funds are provided to the 
Trust Fund each year through fiscal year 2000 and those funds 
are available to be appropriated for crime programs authorized 
in that Act. The Fund was not established as an off-budget 
entity, but is a separate account whose activities are excluded 
from the discretionary spending caps under existing law. The 
fiscal year 1996 budget resolution includes the new budget 
authority and outlays associated with the Fund in the 
aggregates and function levels in the budget resolution, but 
exclude them from the discretionary caps set forth in section 
201 of the resolution..

                             B. ENFORCEMENT

    As explained above, the budget resolution sets for the 
aggregate levels of new budget authority, outlays and revenues. 
Section 302(a) and 602(a) of the Budget Act require the joint 
statement of managers accompanying the conference report on the 
budget resolution to allocate the aggregate levels of new 
budget authority, outlays, and Social Security outlays among 
the Senate committees, based on each committee's jurisdiction 
over legislation providing such budgetary resources. The budget 
authority and outlays associated with direct spending programs 
are allocated to the appropriate authorizing committees for 
each of five fiscal years in the budget resolution. The budget 
authority and outlays associated with discretionary programs 
are allocated to the Appropriations Committee for the first 
fiscal year in that resolution. Section 602(b) of the Budget 
Act requires the Appropriations Committee to suballocate that 
amount.
    The aggregate spending levels, the revenue floors, and the 
committee allocations contained in the budget resolution form 
the parameters within which Congress considers spending and 
revenue legislation that affect the fiscal years covered by 
that resolution. The Budget Act, generally, prohibits the 
consideration of legislation that would cause the appropriate 
levels or allocations to be breached.

Section 311

    In order to determine whether a particular piece of 
legislation would breach any of the appropriate levels or 
allocations, the Senate Budget Committee tracks and reports to 
the Senate on the cumulative effect of spending and revenue 
legislation that has been enacted. These ``Current Level 
Reports'' are printed in the Congressional Record, at least, 
monthly and form the basis against which the budgetary effects 
of legislation under consideration in the Senate are measured. 
If the new budget authority provided in, or the outlays 
resulting from, the legislation (together with the cumulative 
spending effects of previously enacted legislation) would 
exceed the aggregate level of new budget authority or outlays 
in the budget resolution for the first year, that legislation 
would be subject to a point of order under section 311 of the 
Budget Act. If the revenue loss resulting from legislation 
(together with the cumulative revenue effects of previously 
enacted legislation) would cause revenues to be less that the 
the aggregate level of revenues in the budget resolution that 
legislation would be subject to a point of order under section 
311. The revenue aggregate is enforced in the first year and 
for total of the first year and the four succeeding fiscal 
years. Section 311 may be waived only on an affirmative vote of 
sixty (60) Senators.

Section 302

    Similarly, the budgetary effects of each bill, amendment, 
and conference report is assigned to the committee of 
jurisdiction. The cumulative effects of a committee's 
legislation that is enacted is tracked by the Senate Budget 
Committee and compared to that committee's allocation contained 
in the joint statement of managers on the budget resolution. 
Any legislation that would cause the committee to exceed its 
allocation for the first fiscal year or the total of five 
fiscal years would be subject to a point of order under section 
302(f) of the Budget Act. That provision may be waived only on 
an affirmative vote of sixty (60) Senators.
    The surplus in the OASDI trust funds are protected 
separately through the aggregate and allocation procedures 
under the Budget Act. The budget resolution sets aggregate 
levels of Social Security outlays and revenues that are 
enforced through the the existing provisions of the Budget Act 
that prohibit consideration of legislation that breaches the 
outlay ceiling or revenue floors, or that breaches the 
committee allocation of outlay levels.

Other Sections

    In addition to points of order that were established in the 
Budget Act, section 23 of the budget resolution for fiscal year 
1995 (H. Con. Res. 218) established the ``pay-as-you-go'' point 
of order. This provision prohibits consideration of legislation 
that would increase the deficit in year one, over five years, 
or over 10 years. This provision is modified slightly and 
extended in the fiscal year 1996 budget resolution (See Part 
VI, Miscellaneous Provisions, of this report). The 10-year 
``pay-as-you-go'' provision may be waived only on an 
affirmative vote of sixty (60) Senators.

Committee Allocations

    Section 301(e)(9) of the Budget Act requires the written 
report accompanying the budget resolution to include 
allocations of the aggregate levels to the appropriate Senate 
committees in accordance with section 302(a). Accordingly, the 
committee allocations are shown below:

  SENATE COMMITTEE BUDGET AUTHORITY AND OUTLAY ALLOCATIONS PURSUANT TO  
   SECTION 302 OF THE CONGRESSIONAL BUDGET ACT BUDGET YEAR TOTAL: 1996  
                        [In millions of dollars]                        
------------------------------------------------------------------------
                           Direct spending       Entitlements funded in 
                            jurisdiction          annual appropriations 
      Committee      ---------------------------------------------------
                         Budget                    Budget               
                       authority     Outlays     authority     Outlays  
------------------------------------------------------------------------
Appropriations......      759,739      797,323  ...........  ...........
Appropriations                                                          
 (Violent Crime                                                         
 Trust Fund)........        4,101        3,037  ...........  ...........
Agriculture,                                                            
 Nutrition, and                                                         
 Forestry...........        8,382        6,319       18,466        8,011
Armed Services......       41,709       41,356  ...........  ...........
Banking, Housing,                                                       
 and Urban Affairs..        4,251      (8,419)  ...........  ...........
Commerce, Science,                                                      
 and Transportation.          269      (2,383)          584          581
Energy and Natural                                                      
 Resources..........        (276)        (466)           38           28
Environment and                                                         
 Public Works.......       19,823        1,762  ...........  ...........
Finance.............      627,939      624,410      118,498      119,082
Foreign Relations...       13,926       14,093  ...........  ...........
Governmental Affairs       52,194       51,081  ...........  ...........
Judiciary...........        2,145        2,088          230          229
Labor and Human                                                         
 Resources..........        5,891        6,130        1,425        1,425
Rules and                                                               
 Administration.....           94          204  ...........  ...........
Veterans Affairs....        1,481        1,464       19,195       17,643
Select Indian                                                           
 Affairs............          409          378  ...........  ...........
Small Business......            3        (450)  ...........  ...........
Not allocated to                                                        
 committees.........    (273,581)    (263,128)  ...........  ...........
                     ---------------------------------------------------
    Total...........    1,268,500    1,274,800      158,436      146,999
------------------------------------------------------------------------


SENATE COMMITTEE BUDGET AUTHORITY AND OUTLAY ALLOCATIONS PURSUANT TO SECTION 302 OF THE CONGRESSIONAL BUDGET ACT
                                           FIVE-YEAR TOTAL: 1996-2000                                           
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                Direct spending         Entitlements funded in  
                                                                 jurisdiction            annual appropriations  
                        Committee                        -------------------------------------------------------
                                                             Budget                      Budget                 
                                                            authority      Outlays      authority      Outlays  
----------------------------------------------------------------------------------------------------------------
Agriculture, Nutrition, and Forestry....................        37,325        25,946        84,289        44,437
Armed Services..........................................       228,648       227,727  ............  ............
Banking, Housing, and Urban Affairs.....................        21,547      (34,191)  ............  ............
Commerce, Science, and Transportation...................       (7,460)      (21,643)         3,254         3,236
Energy and Natural Resources............................         4,053         3,696           177           181
Environment and Public Works............................       121,771         5,742  ............  ............
Finance.................................................     3,401,481     3,385,333       650,179       651,069
Foreign Relations.......................................        57,253        61,166  ............  ............
Governmental Affairs....................................       281,885       276,649  ............  ............
Judiciary...............................................        11,183        10,893         1,153         1,149
Labor and Human Resources...............................        25,055        24,004         7,642         7,633
Rules and Administration................................           260           313  ............  ............
Veterans Affairs........................................        18,054         7,573        98,527        97,423
Select Indian Affairs...................................         2,149         1,987  ............  ............
Small Business..........................................            12       (1,745)  ............  ............
----------------------------------------------------------------------------------------------------------------

                           C. Reconciliation

    As stated earlier, Congress may adopt a budget resolution 
that will require changes in the projected levels of direct 
spending or revenues under current law. Under these 
circumstances, the Budget Committee may include 
``reconciliation instructions'' in the budget resolution in 
order to implement the budget resolution. Section 310 of the 
Budget Act specifies the form of the instructions and sets 
forth the reconciliation process and procedures.

                       instructions and procedure

    When the budget resolution contains reconciliation 
instructions, the Budget Committee specifies, to each committee 
to be reconciled, the total amount by which direct spending or 
revenues under existing laws is to be changed. The Committee 
may also specify the total amount by which the statutory limit 
on the public debt is to be changed. Each committee is then 
instructed to recommend the appropriate legislative changes to 
meet the instructions and to report those recommendations to 
the Senate Budget Committee by a specified date. Once the 
budget resolution is adopted in identical form in both Houses, 
the reconciliation instructions become binding.
    Upon receipt of each committee's recommendations (report 
language and CBO cost estimates) the Senate Budget Committee 
consolidates the legislative language into a single piece of 
legislation and reports it to the Senate, without substantive 
change. Section 310 of the Budget Act establishes expedited 
procedures for the consideration of this omnibus budget 
reconciliation legislation. In the Senate, debate on the 
reconciliation measures is limited to 20 hours, any amendment 
must be germane and may not increase outlays or reduce revenues 
such that the deficit in the budget resolution would increase. 
A motion to strike a provision, regardless of its effect on the 
deficit, is always in order. These provisions require the vote 
of sixty (60) Senators to waive. The same requirements 
concerning mathematical consistency that apply to budget 
resolutions apply to reconciliation measures; however, this 
requirement may be waived on a majority vote.

                           the ``byrd'' rule

    The ``Byrd Rule'' is codified in section 313 of the Budget 
Act and prohibits the inclusion of matter in a reconciliation 
measure, or an amendment thereto, that is extraneous to the 
deficit reduction goals of the reconciliation process. If the 
Presiding Officer sustains a point of order under the Byrd 
Rule, that provision is stricken from the measure and may not 
be offered as an amendment from the floor. The Byrd Rule may be 
waived only on an affirmative vote of sixty (60) Senators.
    A provision is extraneous if it 1) produces no change in 
outlays or revenues, 2) increases the deficit, if the reporting 
committee its instruction, 3) is not in the jurisdiction of the 
committee reporting it, 4) produces changes in outlays or 
revenues that are ``merely incidental'' to the non-budgetary 
components of the provision, 5) increases the deficit in any 
year beyond the years reconciled and such increase is not 
offset by other provisions in the same title, or 6) changes the 
OASDI program under title II of the Social Security Act.

          reconciliation instructions to the senate committees

    Pursuant to section 310(b)(2), the fiscal year 1996 budget 
resolution includes instructions to the various Senate 
authorizing committees to report their recommended changes in 
law to the Senate Budget Committee by July 14, 1995. The 
instructions set targets for fiscal year 1996, fiscal years 
1996 through 2000, and fiscal years 1996 through 2002. Such 
outyear instructions have been included in prior year's budget 
resolutions and are in order in the Senate.

              SENATE COMMITTEE RECONCILIATION INSTRUCTIONS              
                          [Dollars in millions]                         
------------------------------------------------------------------------
                                             Five-year      Seven-year  
        Committee              1996            total           total    
------------------------------------------------------------------------
Agriculture, Nutrition                                                  
 and Forestry OT........         $-2,490        $-27,973        $-45,804
Armed Services OT.......             -21            -338            -649
Banking, Housing and                                                    
 Urban Affairs DR.......            -373          -5,742          -6,690
Commerce, Science and                                                   
 Transportation OT......          -2,464         -21,937         -33,685
Energy and Natural                                                      
 Resources OT...........          -1,771          -4,775          -5,001
Environment and Public                                                  
 Works OT...............            -106          -1,290          -2,236
Finance OT..............         -21,657        -278,760        -519,002
Governmental Affairs OT.            -118          -3,023          -6,871
Judiciary OT............            -119            -923          -1,483
Labor and Human                                                         
 Resources OT...........          -1,141          -9,165         -13,795
Rules and Administration                                                
 OT.....................              -2            -280            -319
Veterans' Affairs OT....            -301          -5,760         -10,002
                         -----------------------------------------------
      Total                                                             
       reconciliation                                                   
       instructions OT..         -30,563        -359,966        -645,537
------------------------------------------------------------------------

                            D. Other Issues

               Federal Aid to State and Local Governments

    The Committee recommendation includes as one of its 
objectives the return of programs to the States. Section 302 of 
the resolution sets forth the committee's views on the 
relationship between the Federal government and state and local 
governments.
    The Committee recommendation does assume the growth in 
funding to States and local governments is slowed, but the 
recommendation assumes that the States and local governments 
are given greater flexibility to determine the allocation of 
resources. In addition, a balanced budget will benefit States 
and local governments by lowering interest rates, increasing 
economic growth, and increasing the standard of living of the 
American people.
    The major assumptions in the Committee recommendations for 
Federal assistance to States and local governments are as 
follows:
          $780 billion is spent on the Federal Medicaid program 
        over the next seven years, with an average growth rate 
        of 5 percent (see the function 550, Health, discussion 
        for more details).
          Welfare programs and certain housing programs are 
        returned to the States in the form of block grants (see 
        the function 600, Income Security, discussion for more 
        details).
          Funding is maintained for major education and social 
        services programs serving disadvantaged populations 
        including: Chapter 1, Head Start, Special Education, 
        Pell Grants, and the Community Services Block Grant 
        program. Other job training and education programs are 
        consolidated or eliminated (see the function 500, 
        Education, discussion for more details).
    In addition to these major proposals, the Committee 
recommendation includes other assumptions that affect funding 
for State and local governments. The details of these proposals 
can be found in the following functions: 300 (Natural Resources 
and Environment), 400 (Transportation), 450 (Community and 
Regional Development), and 750 (Administration of Justice).

              Senate Directives and Committee Rules Change

    During the Committee's markup of the budget resolution the 
Committee adopted an amendment to its rules, which was 
published in the May 9, 1995 Congressional Record (p. S6367). 
The amendment established a ``pay-as-you-go'' rule for all 
amendments offered during the Committee's deliberations on the 
1996 budget resolution. The amendment to the Committee's rules 
required all perfecting amendments to the Chairman's mark to be 
deficit neutral and all substitute amendments to achieve a 
balanced budget by 2002. An exception was made for a substitute 
amendment comprising the President's budget request.
    The Committee took this extraordinary action because of a 
motion adopting during the Senate's consideration of the 
proposed amendment to the Constitution requiring that the 
Federal budget be balanced by 2002. On February 10, 1995, 
during the debate on H.J. Res. 1, the Senate directed the 
Budget Committee to report to the Senate a plan to achieve a 
balanced budget by a vote of 87-10.
    The Committee recommendation complies with the Senate's 
directive to report a plan to achieve a balanced budget by 
2002.

              VI. Procedural and Miscellaneous Provisions

    The Senate-reported resolution includes a number of 
miscellaneous provisions to ensure a balanced budget is 
achieved by 2002 and the budget resolution's policies are 
executed. Title II of the resolution establishes procedures and 
rules to implement a balanced budget and title III includes 
provisions stating the sense of the Senate or Congress.

             Title II--Budgetary Restraints and Rulemaking

Sec. 201. Discretionary spending limits

    The 1990 Budget Enforcement Act (BEA) established caps on 
defense, international, and domestic discretionary spending. 
These caps were enforced by sequesters and a points of order in 
the Senate. The separate caps covered 1990 through 1993. The 
BEA provided a cap on total discretionary spending for 1994 
through 1995. The Omnibus Budget Reconciliation Act of 1993 
extended caps on total discretionary spending through 1998. The 
1995 budget resolution (H. Con. Res. 218) reduced these 
discretionary caps.
    The Committee recommendation establishes the following caps 
on defense and nondefense discretionary spending for 1996 
through 2002:

                                            DISCRETIONARY CAP TOTALS                                            
                                              [Dollars in millions]                                             
----------------------------------------------------------------------------------------------------------------
                           1996         1997         1998         1999         2000         2001         2002   
----------------------------------------------------------------------------------------------------------------
Defense:                                                                                                        
    Budget authority.     $258,379     $254,028     $260,321     $266,906     $276,644     $276,644     $276,644
    Outlays..........      262,035      257,695      255,226      260,331      268,468      268,468      270,000
Nondefense:                                                                                                     
    Budget authority.      219,441      212,164      219,247      210,579      215,533      219,454      218,854
    Outlays..........      264,908      249,248      244,735      242,240      243,293      248,790      248,160
Total discretionary:                                                                                            
    Budget authority.      477,820      466,192      479,568      477,485      492,177      496,098      495,498
    Outlays..........      526,943      506,943      499,961      502,571      511,761      517,258      218,160
----------------------------------------------------------------------------------------------------------------

    This section provides for the enforcement of these 
discretionary spending caps by creating a point of order in the 
Senate against consideration of a budget resolution that would 
exceed the aggregate cap on discretionary spending. This 
section also provides a point of order in the Senate against an 
appropriations bill that would exceed the defense or non-
defense levels for a fiscal year or that would exceed the 
section 602(b) suballocation of those levels. This point of 
order can be waived by an affirmative vote of three-fifths of 
the Senate.

Sec. 202: Extension of the pay-as-you-go point of order

    Subsection 12(c) of the 1994 budget resolution (H. Con. 
Res. 64) established a pay-as-you-go point of order in the 
Senate that prohibited consideration of legislation that would 
cause an increase in the deficit over a ten year period. The 
1995 budget resolution (H. Con. Res. 218) modified and extended 
this point of order to provide that legislation was out of 
order if it caused a deficit increase in the first year covered 
by the budget resolution, the sum of the first five years 
covered by the budget resolution, and the sum of the five years 
following the first five year period. The current pay-as-you-go 
point of order expires in 1998.
    The Committee recommendation extends the point of order 
through 2002 and makes one additional change. The current pay-
as-you-go point of order permits the use of budgetary savings 
generated by legislation enacted since 1993 as an offset for 
legislation that would increase the deficit. The Committee 
recommendation modifies the pay-as-you-go point of order to 
eliminate the ability to use prior surpluses.

Sec. 203. Tax reserve fund in the Senate

    A budget resolution establishes binding ceilings on 
spending and binding floors on revenues. These ceilings and 
floors are enforced by points of order in the Senate that, if 
raised, can only be waived by an affirmative vote of three-
fifths of the Senate. A reserve fund provides the Chairman of 
the Budget Committee with the authority to modify the outlay 
ceiling and the revenue floor to accommodate deficit-neutral 
legislation. The Budget Act specifically authorizes the 
inclusion of reserve funds in a budget resolution and past 
budget resolutions have included reserve funds for a variety of 
purposes. For example, the 1994 budget resolution contained 11 
such reserve funds.
    The Committee recommendation provides a reserve fund for 
deficit-neutral legislation that reduces revenues following 
passage of the conference report on reconciliation. This 
reserve fund provides the Chairman authority to modify the 
aggregates for legislation that reduces revenues.
    The Committee adopted a Conrad-Domenici amendment to this 
reserve fund. Past budget resolutions have only required that 
legislation to be deficit neutral for the five year period 
covered by the budget resolution. As amended, this reserve fund 
would give the Chairman of the Budget Committee the authority 
to trigger the reserve fund as long as the revenue legislation 
did not increase the deficit for 1996, the period covered by 
1996-2000, and the period covered by 2001-2005.

Sec. 204. Budget surplus allowance

    Past budget resolutions have contained reserve funds, 
contingencies or allowances that provide the Chairman with the 
authority to modify the aggregate levels in the budget 
resolution for future legislation. For example, the 1995 
concurrent resolution on the budget gave the Chairman the 
authority to add $405 million in budget authority and outlays 
to the levels in the budget resolution to accommodate higher 
spending by the Internal Revenue Service (IRS).
    The Committee Recommendation provides a budget surplus 
allowance that gives the Chairman of the Budget Committee the 
authority to reduce the revenue floor by an amount equal to the 
additional budgetary savings as estimated by CBO that will be 
achieved as a result of the enactment of legislation that 
produces a balanced budget. CBO has calculated that adoption of 
a balanced budget could generate additional budgetary savings 
of $170 billion over seven years. \4\ This additional budgetary 
savings has been referred to as the ``fiscal dividend'' or 
``economic dividend''.
    \4\ Congressional Budget Office, Appendix B, An Analysis of the 
President's Budgetary Proposals for Fiscal Year 1996, April 1995.
---------------------------------------------------------------------------
    This section requires CBO to reestimate the deficit after 
the enactment of the reconciliation bill and to provide the 
Chairman of the Budget Committee with the revised estimate of 
the deficit. If CBO estimates a lower deficit as a result of 
the enactment of the reconciliation bill and the economic 
benefits of achieving these lower deficit levels, the Chairman 
of the Budget Committee is given the authority to reduce the 
budget resolution's revenue aggregates and revise other levels 
to accommodate legislation that reduces revenues. The Chairman 
is only allowed to reduce the revenue aggregates by the amount 
of the fiscal dividend, which is calculated by taking the 
amount by which CBO's revised deficit estimate is below the 
budget resolution's deficit levels.
    While this section only refers to legislation that reduces 
revenues, the Committee expressed its intent on revenue 
legislation by the adoption of an amendment by Senators Boxer 
and Brown. This amendment is reflected in section 306 of the 
resolution that states the sense of the Congress that tax 
reduction legislation should provide approximately 90 percent 
of the benefits to working families with incomes less than 
$100,000 annually. It is the Committee's view that the 
appropriate definition to be used in measuring the $100,000 in 
annual income is adjusted gross income (see the revenue section 
of this report for a full discussion).
    The Committee is concerned that revenue reducing 
legislation not erode the deficit levels in this budget 
resolution. Therefore, the Committee recommendation requires a 
CBO certification of the fiscal dividend and spells out two 
other contingencies that must be met before this allowance is 
triggered. More specifically, subsection (e) provides that the 
following contingencies must be met prior to the triggering of 
this budget surplus allowance:
          (1) enactment of a reconciliation bill complying with 
        the budget resolution's reconciliation instructions;
          (2) a CBO certification of the fiscal dividend; and
          (3) a requirement that the adjustments made by the 
        Chairman do not cause a budget deficit for the years 
        2002, 2003, 2004, or 2005.

Sec. 205. Scoring of emergency legislation

    The 1990 Budget Enforcement Act amended the Budget Act to 
provide a procedure that provided that the cost of emergency 
legislation would not be taken into account for the purposes of 
Budget Act points of order. More specifically, section 
606(d)(2) of the Budget Act provides that the budgetary impact 
of legislation is not taken into account for Budget Act points 
of order if legislation is designated as an emergency by the 
President and the Congress.
    The Committee is concerned about the abuse of these 
emergency procedures and is concerned that this provision of 
the law could be used to circumvent the balanced budget plan 
required by this budget resolution. However, the Committee also 
recognizes the need to fund emergency legislation.
    The Committee recommendation provides that beginning with 
1996 all legislation will be scored for the purposes of the 
budget resolution and the Budget Act even if it is designated 
as an emergency. If legislation is a true emergency, there 
should be sufficient support to waive a Budget Act point of 
order against such legislation. In addition, the Committee 
recommendation does not affect current law provisions that 
provide adjustments to the caps so that emergency legislation 
does not cause a sequester under the Balanced Budget and 
Emergency Deficit Control Act. Moreover, the Committee 
recommendation provides that the discretionary caps established 
by section 201 of this resolution will be adjusted after the 
enactment of any emergency legislation to hold the caps 
harmless for the cost of the emergency legislation.

Sec. 206. Sale of government assets

    In 1987, the Congress adopted a change in the scoring of 
legislation to provide that the proceeds from assets sales 
should not be taken into account for budget enforcement 
purposes. Each budget resolution since 1986 has contained 
language prohibiting the scoring of savings associated with 
asset sales. In addition, section 257(e) of the Balanced Budget 
and Emergency Deficit Control Act prohibits the scoring of the 
proceeds from asset sales.
    This rule has blocked privatization efforts and other 
reforms that would shift activities to the private sector or 
other non-federal entities that can more appropriately or more 
efficiently manage these assets. The President's 1996 budget 
proposed $8 billion in proceeds from assets sales and proposed 
a change in the asset sale scoring rule to allow the proceeds 
from these asset sales to be scored.
    The Committee recommendation provides that for the purposes 
of the Budget Act and budget resolutions the proceeds from 
asset sales will be scored. The Committee notes that the budget 
resolution cannot change law and for the purposes of Office of 
Management and Budget (OMB) scoring, proceeds from asset sales 
will not be scored until section 257(e) of the Balanced Budget 
and Emergency Deficit Control Act is either amended or 
repealed.
    The Committee is concerned about the long-term budgetary 
impact of asset sales and does not support asset sales that 
would cost the Federal government money in the long run. The 
Committee plans to consider a new scoring rule that would take 
into account the long-term budgetary impact of asset sales.

Sec. 207. Credit reform and student loans

    The 1990 Federal Credit Reform Act modified the budgetary 
treatment of Federal credit programs to take into account the 
long-term cost of Federal credit activities. More specifically, 
this law required the cost of direct loans and guaranteed loans 
to be measured by taking the net present value of the cash 
flows over the life of the direct loan or loan guarantee.
    Under credit reform, several disparities have arisen in the 
scoring of student loans. The Committee recommendation corrects 
a portion of the problem associated with the budgetary 
treatment of administrative expenses. For direct student loans, 
the administrative cost are measured on a cash basis, with the 
budget reflecting only that year's cost of administering the 
loan. For guaranteed student loans, the administrative costs 
are measured on a net present value basis for the entire length 
of the loan. The result is that direct lending appears to be 
much less expensive than guaranteed student lending. Both the 
Congressional Research Service and the Congressional Budget 
Office have acknowledged the bias that this treatment of 
administrative expenses has created.
    The Committee recommendation would put the measurement of 
administrative expenses on equal footing for legislation 
expanding direct student loans. More specifically, the 
Committee recommendation provides that for the purposes of 
Congressional scoring, the administrative cost for new direct 
student loans to be measured on a net present value basis.

Sec. 208. Extension of Budget Act 60-vote enforcement

    Under current law, the three-fifths requirement in the 
Senate to waive many of the Budget Act's points of order is 
permanent. The 1995 concurrent resolution on the budget 
provided a 1998 sunset date for the three-fifths waiver 
requirement for many of these points of order.
    The Committee recommendation extends the sunset date for 
this three-fifths waiver requirement through 2002. The 
Committee recommendation does not affect section 313 of the 
Budget Act (the Byrd rule). The Committee intends that the 
three-fifths waiver requirement for this point of order remain 
permanent.

Sec. 209. Repeal of the IRS allowance

    Section 25 of the 1995 budget resolution (H. Con. Res. 218) 
created a $405 million BA and outlay allowance to fund an 
Internal Revenue Service (IRS) compliance initiative outside 
the discretionary caps.
    The Committee recommendation repeals this allowance. The 
Committee recommendation includes full funding for the IRS 
compliance initiative in function 800, General Government. The 
Committee is concerned about efforts to circumvent the caps and 
does not believe that the IRS should be funded outside the 
discretionary caps.

Sec. 210. Exercise of rulemaking powers

    The Committee recommendation includes a number of changes 
that have the effect of changing the rules of the Senate. The 
Committee recommendation includes a provision recognizing the 
Senate's constitutional right to change Senate rules at any 
time.

            Title III--Sense of the Congress and the Senate

    The Committee recommendation includes the following sense 
of the Congress and Senate provisions.
          Restructuring government and program terminations 
        (sec. 301);
          Returning programs to the States (sec. 302);
          Commercialization of Federal activities (sec. 303);
          Nonpartisan advisory commission on the CPI (sec. 
        304);
          Uniform accounting system for the Federal government 
        (sec. 305);
          Tax cuts and the middle class (sec. 306);
          Bipartisan commission on the solvency of Medicare 
        (sec. 307);
          Distribution of agriculture savings (sec. 308);
          Protection of children's health (sec. 309);
          Tax deductibility of lobbying expenses (sec. 310); 
        and,
          Expatriate taxes and deficit reduction (sec. 311).

                   VII. Committee Views and Estimates

    Section 301(c) of the Congressional Budget Act requires the 
committees of the Senate to report to the Budget Committees 
their views and estimates of budget requirements for matters 
within their jurisdictions to assist the Budget committees in 
preparing the budget resolution.
    Following are the views and estimates received from the 
various Senate committees:

                              INTRODUCTION

    The portion of our national wealth dedicated to 
discretionary Federal programs continues to decline. 
Discretionary spending claimed 13.4 percent of gross domestic 
product [GDP] in fiscal year 1963. It has declined to 8.2 
percent of GDP in fiscal year 1994. Discretionary spending 
peaked at 14.4 percent of GDP in fiscal year 1968, and has been 
less than 10 percent each year since fiscal year 1988. The 
portion of our gross domestic product devoted to discretionary 
spending in fiscal year 1994 was 8.2 percent--the lowest level 
over the 1963-94 time period. This trend is illustrated by the 
table below:




    The Congressional Budget Office [CBO] estimate for fiscal 
year 1995 enacted discretionary spending is even lower--7.7 
percent of GDP, falling to 7.4 percent of GDP, assuming 
compliance with the discretionary caps in fiscal year 1996. 
Moreover, under CBO's most unrestrictive projection with full 
inflation adjustments after fiscal year 1998, discretionary 
spending will decline to 6.5 percent of GDP by the fiscal year 
2000.
    The CBO in its January 1995 report entitled ``The Economic 
and Budget Outlook: Fiscal Years 1996-2000'' estimates that, in 
order to stay within the current statutory discretionary caps 
in fiscal year 1998, all discretionary spending--for defense, 
international, and domestic activities--would have to be frozen 
for 3 years at the fiscal year 1995 levels. Under the existing 
statutory regime, therefore, no room exists to increase any 
program above the fiscal year 1995 level for the next 3 years 
without concomitant reductions in other discretionary programs.
    This document sets forth the views of the Committee on 
Appropriations on the fiscal year 1996 budget, and is submitted 
to the Senate Committee on the Budget pursuant to section 
301(d) of the Congressional Budget Act of 1974, as amended (the 
Budget Act).
    Fiscal year 1996 spending estimates contained in this 
report are at best preliminary, and reflect the concerns of the 
13 subcommittees. The President's budget request was submitted 
to the Congress on February 6, 1995, and detailed justification 
materials are still arriving. In addition, the Committee has 
had under consideration the Department of Defense supplemental 
request for replenishing certain accounts for the course of the 
current year, a major disaster relief supplemental, and a 
rescission bill making substantial reductions in prior-year 
appropriations. Consequently, the subcommittees have just begun 
the hearings designed to scrutinize the administration 
proposals and current spending within their respective 
jurisdictions. The Committee notes that the President's budget 
request, in many instances, is predicated on actions outside 
the control of the appropriations process, including changes in 
substantive law, administrative action, and budget amendments 
to be submitted later.
    The following table shows the portion of the President's 
request within the purview of the Committee. The estimates used 
in this table reflect the President's estimates, prepared by 
OMB. OMB estimates are used in measuring compliance with the 
strictures of the sequester regime which is used to enforce the 
statutory caps of the Balanced Budget and Emergency Deficit 
Control Act of 1985, as amended. CBO estimates are used for 
measuring compliance with Budget Act points of order.



    The following table shows what spending would be in fiscal 
year 1996 if budget authority were maintained at fiscal year 
1995 levels:

                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                        Budget authority                   CBO outlays          
                                               -----------------------------------------------------------------
                                                  Fiscal     Fiscal     Freeze     Fiscal     Fiscal     Freeze 
                                                year 1995  year 1996    versus   year 1995  year 1996    versus 
                                                   base      freeze      base       base      freeze      base  
----------------------------------------------------------------------------------------------------------------
Discretionary:                                                                                                  
    Defense...................................    262,390    263,031       +641    269,950    263,811     -6,139
    International.............................     20,442     20,499        +57     21,213     21,110       -103
    Domestic..................................    223,487    229,970     +6,483    252,029    255,666     +3,637
                                               -----------------------------------------------------------------
      Subtotal, discretionary.................    506,319    513,500     +7,181    543,192    540,587     -2,605
Violent crime reduction trust fund............      2,422      2,422  .........        724      1,614       +890
Gramm-Rudman-Hollings mandatory...............    273,348    296,454    +23,106    256,659    284,161    +27,502
                                               =================================================================
      Total appropriations....................    782,089    812,376    +30,287    800,575    826,362    +25,787
----------------------------------------------------------------------------------------------------------------
NOTE: In all tables, detail may not add to totals due to rounding.                                              

    The above table reflects CBO's estimate of discretionary 
spending if appropriations were continued in fiscal year 1996 
at enacted 1995 levels. There are two principal exceptions to 
this rule. First, CBO assumes, as specified by section 
257(c)(2) of the Balanced Budget and Emergency Deficit Control 
Act of 1985, that funds will be appropriated in fiscal year 
1996 to renew expiring contracts for subsidized housing. 
Second, in the case of advance appropriations, CBO uses the 
amount of the advance rather than the 1995 level. In addition, 
CBO does not make projections of negative budget authority. A 
comparable table appears for each subcommittee.

          Agriculture, Rural Development, and Related Agencies

                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                            Budget authority                 CBO outlays        
                                                     -----------------------------------------------------------
                                                       Fiscal    Fiscal              Fiscal    Fiscal           
                                                        year      year     Freeze     year      year     Freeze 
                                                        1995      1996     versus     1995      1996     versus 
                                                        base     freeze     base      base     freeze     base  
----------------------------------------------------------------------------------------------------------------
Discretionary:                                                                                                  
    Defense.........................................  ........  ........  ........  ........  ........  ........
    International...................................     1,246     1,246  ........     1,348     1,254       -94
    Domestic........................................    12,495    12,495  ........    12,884    12,507      -377
                                                     -----------------------------------------------------------
      Subtotal, discretionary.......................    13,741    13,741  ........    14,232    13,761      -471
Violent crime reduction trust fund..................  ........  ........  ........  ........  ........  ........
Gramm-Rudman-Hollings mandatory.....................    53,446    49,867    -3,579    36,916    39,184    +2,268
                                                     ===========================================================
      Total appropriations..........................    67,187    63,608    -3,579    51,148    52,945    +1,797
----------------------------------------------------------------------------------------------------------------
NOTE: In all tables, detail may not add to totals due to rounding.                                              

                                Overview

    The Subcommittee on Agriculture, Rural Development, and 
Related Agencies provides funding for all programs and 
activities of the U.S. Department of Agriculture [USDA], with 
the exception of those of the U.S. Forest Service. These 
include agricultural research and extension activities, a 
variety of conservation programs, farm income and commodity 
price support programs, marketing and inspection activities, 
domestic food programs, rural economic and community 
development and electrification assistance, and various export 
and international activities of the USDA.
    In addition, the subcommittee provides funding for the Food 
and Drug Administration [FDA] and the Commodity Futures Trading 
Commission [CFTC], and establishes a limitation on the 
administrative expenses of the Farm Credit Administration 
[FCA]. It also provides money to the Department of the Treasury 
for payments to the Farm Credit System Financial Assistance 
Corporation.

           fiscal year 1995 Base and fiscal year 1996 Freeze

    Total new budget authority for programs and activities 
under the subcommittee's jurisdiction is estimated by CBO to 
decline by $3,579,000,000 in fiscal year 1996, from a fiscal 
year 1995 baseline level of $67,187,000,000 to a 
$63,608,000,000 fiscal year 1996 freeze level. Total new budget 
authority for discretionary programs under a freeze will remain 
at the fiscal year 1995 base level of $13,741,000,000. In 
addition, CBO estimates that total direct loan authority under 
a freeze will decline by $1,078,588,000, from $4,085,929,000 to 
$3,007,341,000; and that total guaranteed loan authority will 
increase slightly to $3,142,579,000.
    The $3,579,000,000 reduction in the total new budget 
authority available to fund all programs and activities under a 
fiscal year 1996 freeze level is equal to the reduction in 
CBO's estimate of total fiscal year 1996 appropriations 
required to meet mandatory program costs. CBO estimates that a 
$10,500,000,000 appropriation will be required in fiscal year 
1996 to reimburse the Commodity Credit Corporation [CCC] for 
net realized losses, $5,000,000,000 below the fiscal year 1995 
base level. Offsetting the reduction in CCC spending, is a 
$1,421,000,000 increase in total appropriations projected to be 
required to meet other mandatory program costs. These include 
increases above the 1995 base level for the Food Stamp Program 
(+$820,000,000), the Conservation Reserve Program 
(+$17,501,000), the Federal Crop Insurance Corporation fund 
(+$44,000,000), the Wetlands Reserve Program (+$47,625,000), 
and the National School Lunch and other child nutrition 
programs (+$459,000,000).
    The Appropriations Committee has no effective control over 
the appropriations required to cover these mandatory program 
costs. Only changes in substantive law to limit or reduce the 
costs of these programs will affect fiscal year 1996 and future 
year appropriations for these programs.
    Outlays for mandatory programs represent just over 72 
percent of total fiscal year 1995 base outlays for all programs 
and activities under the subcommittee's jurisdiction, and will 
rise to 74 percent of the subcommittee's total outlays under a 
fiscal year 1996 freeze. Correspondingly, total outlays for the 
wide range of other discretionary programs and activities 
funded by the subcommittee will begin to decline, from nearly 
28 percent in 1995 to 26 percent of total outlays under a 
fiscal year 1996 freeze.
    A freeze in dollar terms on fiscal year 1996 new budget 
authority for discretionary programs at the fiscal year 1995 
base level will mean that all programs will decline in real 
terms. Absorption of pay and other mandatory cost increases 
will be required. No increased funding will be available for 
program enhancements or new initiatives. Where activities are 
personnel intensive, such as is the case with most salaries and 
expenses accounts, funding pay raise and other mandatory cost 
increases will be most difficult. Personnel streamlining 
reductions and administrative cost savings can offset these 
additional costs, but many of the agencies have been held to 
freeze levels in the past few years and will face further 
staffing reductions to meet these costs. Increases to enhance 
base program levels or to fund new requirements will only be 
possible through offsetting program cuts or eliminations. 
Increased targeting or the establishment of program or funding 
priorities may partially ameliorate the impacts of a freeze on 
individual programs and activities. To the extent that 
increased funding is available, the subcommittee will be faced 
with decisions as to how to allocate the resources available 
among a number of competing priorities.
    The USDA Office of General Counsel's budget provides an 
example of the effects of absorbing mandatory and inflationary 
cost increases at straight-lined appropriations levels. The 
Office's budget has been frozen for the past 2 years. Personnel 
cost increases over that time have forced the Office to reduce 
staff through attrition and to pare back nonpayroll 
expenditures. The Office is facing the possibility of furloughs 
in fiscal year 1995. If fiscal year 1996 funding is limited to 
the fiscal year 1995 level, the Office anticipates that it will 
have to reduce its work force by up to 25 lawyers. Critical 
activities such as litigation support and debt collection would 
be substantially impaired.
    The Food Safety and Inspection Service is also a personnel-
intensive agency. The agency is now seeking a supplemental of 
$9,082,000 for fiscal year 1995 to cover a shortfall in funding 
for mandatory pay raise and other uncontrollable cost 
increases. Carrying this shortfall into fiscal year 1996 will 
further exacerbate the agency's ability to meet its staffing 
requirements. Erosion of the program to cover increased 
personnel and other uncontrollable cost increases will occur in 
a freeze scenario. Should this occur, it will prevent proposed 
improvements in the current inspection program and could cause 
a shutdown of all agency operations for up to 31 days. As the 
GATT and NAFTA agreements are implemented, other inspection and 
quarantine activities of the Department could face similar 
tradeoff decisions.
    Limiting funding for the National Agricultural Statistics 
Service to the fiscal year 1995 level would prevent the agency 
from carrying out two pesticide-related initiatives planned for 
fiscal year 1996. Both initiatives are critical to achieving 
integrated pest management on 75 percent of the Nation's crop 
acreage and developing alternatives for important pesticide 
uses vulnerable to loss through regulations.
    USDA's discretionary conservation program activities have 
already suffered significant reductions in the past couple of 
years. A freeze at the fiscal year 1995 level would restrict 
the Natural Resources Conservation Service from completing its 
responsibilities under the Food Security Act, most of which are 
oriented to activities on highly erodible land. If additional 
funds are necessary to implement USDA's reorganization, a 
freeze may curtail agency efforts to shift resources from the 
headquarters to the field. Other programs of the agency, such 
as technical assistance for various mandatory programs, and 
many private landowner programs will also be reduced. 
Appropriations for watershed and flood prevention operations 
sustained a significant cut in fiscal year 1995. However, 
despite the program's slow obligation rate, outlays will remain 
high in fiscal year 1996 from previous year emergency 
supplemental appropriations and higher regular program 
appropriations levels.
    Increases in interest rates have already eroded funded 
program levels of all credit programs within the jurisdiction 
of the subcommittee. These include farm ownership and 
operating, rural housing, rural electrification and 
telecommunication, and water and waste disposal loans. To the 
extent that the current trends in interest rates continue, a 
freeze on subsidy appropriations for these programs required 
under credit reform will result in further declines in loan 
levels below 1995. Conversely, if interest rates decline, it 
can be expected that program levels will exceed the 1995 levels 
if appropriated subsidy levels remain at 1995 appropriated 
levels. Many of the credit programs also have grant programs 
which work in conjunction with, or augment, the respective loan 
program. These grant programs are targeted to stimulate 
economic growth and industrial development in communities which 
cannot qualify for other private or public financing. 
Uncontrollable increases in personnel and other expenses will 
erode program levels. A freeze will also prevent the respective 
agencies from significantly reducing current backlogs in these 
programs. Shifting emphasis from direct to guaranteed loans may 
reduce budgetary requirements but would deny assistance to the 
most disadvantaged borrowers who do not have access to a 
private lender. No credit sales of inventory properties would 
occur in fiscal year 1996 under a budget freeze. This would 
likely cause the agency to incur maintenance, insurance, and 
tax costs at a level in excess of 130 percent of the cost of 
the program until funding is available to remove these 
properties from Government inventory. Should necessary 
maintenance not take place, the value of the Government's 
inventory would decline. A freeze at the fiscal year 1995 
appropriated level for the Rental Assistance Program would 
allow for continued renewal of expiring contracts, but would 
decrease the level of the program for new construction by more 
than 50 percent below the current level.
    Many of the programs administered by the Consolidated Farm 
Service Agency are mandatory. However, salaries and expenses 
for this agency are discretionary, including the increases that 
will be necessary to implement USDA reorganization. In order 
for the Government to realize long-term savings from 
reorganization, increases to fund office consolidation and 
relocation, and a new supporting automated data processing 
network will be required. Any increases in the mandatory 
spending level of the Federal Crop Insurance Program would 
likely carry increases in the discretionary ``Salaries and 
expenses'' account. Under a freeze, these increases could not 
be met, thereby potentially preventing producers from 
purchasing crop insurance and precluding them from 
participation in other USDA commodity programs.
    With the implementation of the North American Free Trade 
Agreement and the GATT Uruguay Round Agreement, new 
opportunities are emerging to expand United States agricultural 
exports. Further investments are required to take advantage of 
export promotion and market expansion opportunities at a time 
when international markets are growing but also becoming 
increasingly competitive. Without increased funding in this 
area, USDA indicates that the United States risks losing 
existing market share. Eleven of our major agricultural trade 
competitors are already spending a total of about $500,000,000 
annually to carry out a wide variety of market development 
programs, almost four times the amount that USDA will spend on 
market development programs this fiscal year. During 
congressional consideration of the Uruguay Round implementing 
legislation, the administration made a commitment to increase 
the program levels of the ``greenbox'' or GATT-consistent 
export promotion programs by $600,000,000 over the next 5 years 
to take full advantage of the market-opening benefits of that 
agreement. Increases in funding for discretionary ``greenbox'' 
programs cannot be accommodated at the fiscal year 1995 level. 
Without additional resources, continued absorption of domestic 
and overseas wage and price increases will further erode USDA's 
current export promotion capabilities as overseas offices and 
agency staffing levels sustain further cuts. USDA's Foreign 
Agricultural Service has already reduced domestic permanent 
employment by 10 percent since fiscal year 1993 and most 
recently, closed the London Agricultural Trade Office to offset 
higher fiscal year 1995 overseas operating costs elsewhere.
    USDA domestic food assistance programs serve as a 
fundamental safety net for families in need and provide food 
and nutrition information to improve the health and well-being 
of eligible American citizens. The Special Supplemental Food 
Program for Women, Infants, and Children [WIC] has received 
substantial additional annual investments each year. In fiscal 
year 1995, a $3,470,000,000 appropriation was provided for WIC, 
$260,000,000 above the fiscal year 1994 level. This was the 
single largest funding increase and one of the few increases 
provided above the previous year's level for any discretionary 
program funded by the Agriculture, Rural Development, Food and 
Drug Administration, and Related Agencies Appropriations Act, 
1995. An average monthly participation of 7 million women, 
infants, and children is currently estimated for fiscal year 
1995. The average monthly cost per person is projected to rise 
from $41.68 in fiscal year 1995 to $43 in fiscal year 1996. 
Freezing funding for the WIC Program at the fiscal year 1995 
level will cause a reduction in current participation levels to 
offset these food cost increases and prohibit additional 
funding to support new participation in the program. Holding 
funding for the Commodity Supplemental Food Program at the 
fiscal year 1995 level will result in possible reductions in 
elderly participation. An increase of $1,500,000 is needed in 
fiscal year 1996 to hold the Commodity Supplemental Food 
Program's expected fiscal year 1995 caseload of 210,454 women, 
infants, and children, and 202,429 elderly. A freeze on funding 
for the nutrition program for the elderly will result in even 
lower reimbursement rates per meal, which are already well 
below authorized levels. Funding for soup kitchens and the 
Emergency Food Assistance Program would be maintained at the 
fiscal year 1995 levels. A freeze on funding for the Food 
Distribution Program on Indian reservations at the fiscal year 
1995 level, as CBO's fiscal year 1996 freeze baseline reflects, 
would be devastating. This is because the fiscal year 1995 
appropriation required for this program was lower than usual 
due to a one-time buildup of program inventory. The excess 
program inventory is expected to be depleted in fiscal year 
1995 and an increase of roughly $45,000,000 is needed to 
maintain the fiscal year 1995 program participation level and 
cover expected inflation costs. Freezing the fiscal year 1996 
appropriation for the program at the fiscal year 1995 level 
will result in a reduction of around 87,136 participants per 
month, or 75 percent of the expected participation. In 
addition, funding for new USDA nutrition initiatives, including 
a comprehensive program of research and evaluation of nutrition 
assistance programs, would be curtailed. A freeze on funding 
for food program administration would prevent investments in 
the agency's automation infrastructure necessary to implement 
personnel streamlining efforts, and jeopardize effective 
administration and oversight of the billions of dollars spent 
to deliver food assistance to eligible Americans.
    The Food and Drug Administration [FDA] is a personnel-
intensive agency. Roughly 65 percent of its budget goes to pay 
and benefits costs, while the balance goes to operating support 
for these employees (supplies, equipment, travel, 
telecommunications, facilities, et cetera) to conduct 
inspections and evaluations of food, drug, and device products. 
FDA could reduce nonpay costs to cover unfunded mandatory pay 
raise and inflationary cost increases or cover these costs 
through attrition and staff absorptions. Reductions in FDA's 
resources to carry out public health and safety programs would 
restrict FDA's ability to keep up with a growing workload. This 
would result in less frequent blood bank, import, and plant 
inspections and increased drug, biological product, and device 
review times. FDA is presently utilizing collections from user 
fees authorized by the Prescription Drug User Fee Act to 
expedite its workload and reduce backlogs of drug applications 
and could continue to use increased collections from fees for 
these purposes. However, under the act, FDA cannot charge and 
collect user fees from industry if its salaries and expenses 
level goes below the fiscal year 1992 level, adjusted by the 
CPI index. If the reauthorization of this act continues this 
requirement, a freeze on FDA's salaries and expenses 
appropriation beyond fiscal year 1997, could fall below this 
trigger, prohibiting FDA from collecting fees with severe 
implications for the drug review process.
    Freezing funding for the Commodity Futures Trading 
Commission [CFTC] at the fiscal year 1995 level would deny the 
Commission increased staffing to meet market demands and its 
own oversight responsibilities. The Commission indicates that 
over the last 10 years, exchange futures and options trading 
volume has tripled (170 to 510 million contracts) while its 
staff has risen by just 6 percent (512 to 543 FTE's). In the 
past 3 years alone, exchange trading volume grew by over 42 
percent, while CFTC's staff actually decreased by 8 percent. 
CFTC has reduced its operating costs over this period and now 
identifies a need for additional staff resources to keep up 
with the growth in the industry it regulates and the changes in 
the financial markets. At a freeze level, CFTC would be 
required to achieve further reductions in its operating and 
administrative costs or reduce staff to cover pay raise and 
other mandatory cost increases forcing it to meet its increased 
surveillance, exchange oversight, and other responsibilities 
within existing resources.

     Commerce, Justice, State, the Judiciary, and Related Agencies

                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                            Budget authority                 CBO outlays        
                                                     -----------------------------------------------------------
                                                       Fiscal    Fiscal              Fiscal    Fiscal           
                                                        year      year     Freeze     year      year     Freeze 
                                                        1995      1996     versus     1995      1996     versus 
                                                        base     freeze     base      base     freeze     base  
----------------------------------------------------------------------------------------------------------------
Discretionary:                                                                                                  
    Defense.........................................        75        83        +8       348       158      -190
    International...................................     5,537     5,537  ........     5,871     5,644      -227
    Domestic........................................    18,425    18,425  ........    18,321    18,450      +129
                                                     -----------------------------------------------------------
      Subtotal, discretionary.......................    24,037    24,045        +8    24,540    24,252      -288
Violent crime reduction trust fund..................     2,345     2,345  ........       695     1,551      +856
Gramm-Rudman-Hollings mandatory.....................       535       541        +6       523       532        +9
                                                     ===========================================================
      Total appropriations..........................    26,917    26,931       +14    25,758    26,335      +577
----------------------------------------------------------------------------------------------------------------
NOTE: In all tables, detail may not add to totals due to rounding.                                              

                                OVERVIEW

    The Commerce, Justice, and State, the Judiciary, and 
Related Agencies Subcommittee [CJS] supports three Cabinet 
departments, the U.S. court system, including the Supreme 
Court, and over 20 independent agencies. The Office of the U.S. 
Trade Representative (which has Cabinet rank), the Small 
Business Administration, the Federal Communications Commission, 
the Securities and Exchange Commission, the U.S. Information 
Agency, and the Federal Trade Commission are among the 
independent agencies funded in this appropriations bill. The 
CJS Subcommittee is the only subcommittee that supports 
appropriations under all three categories of discretionary 
spending that were stipulated in the 1990 Budget Enforcement 
Act: domestic, international affairs, and national defense.
    The CJS bill is the principal funding source for both 
Federal crime-fighting efforts and Federal assistance to State 
and local law enforcement--including antidrug programs, 
counterterrorism programs to combat violent crime, and the 
Federal judiciary. All of the Department of Justice programs, 
the Federal Bureau of Investigation, the Drug Enforcement 
Agency, the Bureau of Prisons, and the Immigration and 
Naturalization Service are funded in this bill. In fact, over 
86 percent of the funds appropriated for law enforcement in 
fiscal year 1995 falls under the CJS Subcommittee's 
jurisdiction. The Violent Crime Control and Law Enforcement Act 
of 1994 (1994 crime bill) established the violent crime 
reduction trust fund (crime trust fund) to utilize projected 
savings from the Federal Workforce Reduction Act of 1994 (a 
total of $30,200,000,000 through fiscal year 2000) to 
supplement Federal crime-fighting efforts. The amounts in the 
crime trust fund, would then be available, subject to 
appropriation, to support any program for which an 
authorization of appropriation appears in the act. Over 96 
percent of the $2,423,000,000 appropriated from the crime trust 
fund in fiscal year 1995 went to crime bill authorized programs 
under the subcommittee's jurisdiction.

           FISCAL YEAR 1995 BASE AND FISCAL YEAR 1996 FREEZE

    The discretionary funding level for the programs under the 
subcommittee's jurisdiction total $24,037,000,000 in fiscal 
year 1995. The funding from the crime trust fund for programs 
under the subcommittee's jurisdiction total $2,345,000,000 in 
fiscal year 1995.
    Congressional Budget Office [CBO] scorekeeping methodology 
understates the cost of a discretionary freeze on the programs 
under the subcommittee's jurisdiction by $149,653,000 in fiscal 
year 1996. Earlier in fiscal year 1995, Congress approved a 
rescission of $158,000,000 in unobligated balances in the 
Maritime Administration's Ready Reserve Force for the 
acquisition of ships. Since the rescission amount was greater 
than the annual peacetime cost of ongoing Ready Reserve Force 
operations, CBO conventions require that zero funding for 
fiscal year 1996 is needed to finance ongoing operations of the 
Ready Reserve Force. In reality, a freeze requires $149,653,000 
to continue operations of the Ready Reserve Force at 1995 
levels.
    Most accounts under the subcommittee's jurisdiction fund 
salaries and expenses. As a result, the subcommittee has an 
aggregate outlay rate of approximately 70 percent. Since the 
CJS bill is personnel intensive, a hard freeze would likely 
trigger reductions in force or furloughs in several agencies.
    In order to put the Federal budget on a path toward 
balance, Congress must begin this year to make decisions about 
spending priorities. In that context, it is important to note 
that Congress has made it clear, on a bipartisan, bicameral 
basis, that efforts to fight crime and make our streets and 
schools safer for our children should remain a top priority. 
The crime trust fund created last year was intended as a 
supplement to, not a substitute for, existing Federal crime-
fighting efforts. Of the $2,423,000,000 appropriated from the 
crime trust fund last year, 86 percent ($2,103,000,000) went to 
supplement State and local law enforcement. This funding 
supplemented the $10,432,145,000 appropriated in fiscal year 
1995 for Federal law enforcement and crime-fighting activities.
    Freezing the crime trust fund at fiscal year 1995 levels 
would undercut Federal efforts to support the men and women on 
the front lines in the war against crime. An amount of 
$4,287,000,000 in savings from the Federal Workforce Reduction 
Act of 1994 will be available, subject to appropriation, from 
the crime trust fund in fiscal year 1996. A total of 
$4,646,540,000 in fiscal year 1996 and carryover balances from 
fiscal year 1995 have been authorized from the crime trust fund 
for crime-fighting efforts under the subcommittee's 
jurisdiction. The Committee strongly supports on a bipartisan 
basis making available the full $4,287,000,000 in the trust 
fund in fiscal year 1996 available for appropriations.
    A freeze on discretionary appropriations for law 
enforcement could seriously impact Federal crime-fighting 
efforts under the subcommittee's jurisdiction. For example, the 
Justice Department estimates that an increase of $291,400,000 
above a freeze is needed to maintain current services and 
support existing personnel. Several other examples are 
discussed below.
    Last year, Congress approved funding for an additional 436 
Federal Bureau of Investigation [FBI] agents--returning FBI 
agent staffing to peak (1992) levels--and for the necessary 
staff to support those agents. The FBI plans to hire a total of 
680 agents this year to fill both these new positions and 
replace those individuals who are now retiring. A hard freeze 
in 1996 would require the FBI to reduce 490 agents and 311 
support personnel from the FBI's current work force.
    Similarly, a freeze on law enforcement programs would 
necessitate a reduction of 255 special agent positions at the 
Drug Enforcement Administration [DEA]. DEA would be forced to 
cancel planned increases in its State and Local Task Force 
Program which now includes 85 program funded task forces and 
another 34 fledgling task forces that are currently carried on 
a provisional basis.
    With respect to Federal efforts to control our borders 
against a rising tide of illegal immigration, a hard freeze at 
fiscal year 1995 levels would not fund the full-year costs of 
the increases approved last year for the Immigration and 
Naturalization Service [INS] for 700 new border patrol agents, 
110 new land border inspectors, and several infrastructure and 
technological improvements to improve border security. INS will 
generate an estimated 23,250 criminal alien removals and 25,600 
noncriminal alien removals in 1995. INS projects that the 
number of removals will more than double in fiscal year 1996. A 
freeze would prevent INS from hiring the new staff approved by 
Congress to cope with this problem and limit the Federal 
Government's ability to reimburse States for the costs 
associated with housing criminal illegal aliens.
    In fiscal year 1995, $2,356,404,000 in discretionary 
appropriations was provided to fund the operations of the 
Federal Prison System. Over the past 5 years, funding for the 
prison system has increased by more than 50 percent. The 
Federal prison population has increased from 47,550 average 
daily prisoners in 1987 to more than 102,000 this year. 
According to the Bureau of Prisons, the Federal prison 
population is expected to top 130,000 by 1999 and continue to 
grow thereafter. Prison population currently exceeds capacity 
by 26 percent; 30,000 additional prison beds are currently 
under construction. Under a freeze, there would be no resources 
to activate any new prisons in fiscal year 1996. Moreover, 
three new prisons scheduled to activate in 1995 likely would 
have to be closed next year, since the full-year cost to 
operate these new facilities would not be available under a 
freeze. As a result of all of these changes, prison 
overcrowding would increase to 38 percent over capacity in 
fiscal year 1996.
    A freeze on the judiciary at fiscal year 1995 levels would 
lead to an increased backlog of pending Federal criminal and 
civil cases and potentially result in more criminal defendants' 
charges being dismissed. A freeze would impact the operations 
of the judiciary as follows: (1) the scheduled increase in 
staffing of 3,200 positions--including 1,400 probation officers 
and 434 court security officers--would be canceled, and (2) 
staffing at the district clerks' offices would be reduced by 
1,079.
    Under a hard freeze at fiscal year 1995 levels, the Census 
Bureau will be unable to properly prepare for conducting the 
next decennial census in the year 2000. The fiscal year 1995 
appropriation for the Bureau of the Census is $278,000,000 and 
3,700 full-time equivalent employees [FTE]. Failure to provide 
increases to the Census Bureau in fiscal year 1996 could 
ultimately increase the cost of performing the 2000 census, 
currently projected at $2,900,000,000.
    In order to maintain funding for these priority activities, 
however, other programs under the subcommittee's jurisdiction 
would have to be considered for reductions.

                         THE PRESIDENT'S BUDGET

    The President's budget proposal for discretionary 
appropriations is $26,054,391,000 in budget authority and 
$25,896,532,000 in outlays. The President's budget requests 
$3,995,269,000 in budget authority and $2,065,468,000 in 
outlays from the violent crime reduction trust fund (crime 
trust fund) for accounts under the subcommittee's jurisdiction. 
Preliminary scoring by the Congressional Budget Office 
estimates total discretionary outlays resulting from this 
request at $26,326,607,000, or $430,075,000 above the 
President's estimate. Assuming CBO reestimates, the President's 
discretionary request is $1,232,242,000 in budget authority and 
$260,332,000 in outlays above fiscal year 1995. Preliminary 
scoring by the CBO estimates total outlays resulting from the 
President's crime trust fund request at $1,989,750,000, or 
$75,718,000 below the President's estimate. Assuming CBO 
reestimates, the President's crime trust fund request is 
$1,854,264,000 in budget authority and $1,447,264,000 in 
outlays above fiscal year 1995. The President's budget proposes 
a 21-percent increase in funding for law enforcement and crime-
fighting activities for fiscal year 1996.

       LEGISLATIVE PROPOSALS/USER FEES IN THE PRESIDENT'S BUDGET

    The President's budget proposal contains a number of 
legislative initiatives proposed for later transmittal to 
Congress which would establish offsetting collections or 
establish user fees for certain activities. With respect to 
user fees, the President's budget proposes a border services 
user fee ($3 per vehicle entry and $1.50 per pedestrian entry) 
to be collected by both the Immigration and Naturalization 
Service and the U.S. Customs Service to fully fund the 
administration's initiatives to improve border security. 
Receipts from the fee are estimated at $200,000,000 in fiscal 
year 1996 at a cost of $100,000,000 to collect the fees. The 
Committee notes that (1) this proposal has been withdrawn in 
favor of a new local option approach, and (2) despite 
widespread opposition to the revised proposal, current 
administration estimates appear to assume 100 percent 
participation by the border States. The Committee notes 
legislation to establish such fees are normally within the 
jurisdiction of the authorizing committees, not the 
Appropriations Committee.
    The President's budget also proposes a 30-percent surcharge 
imposed on civil monetary penalties and criminal fines. 
Receipts from the proposed surcharge would be used to help 
reimburse telecommunications carriers for costs directly 
associated with the so-called Advanced Digital Telephony 
Program projected at $500,000,000 over 4 years. Receipts from 
this surcharge are estimated at $100,000,000 in fiscal year 
1996. Again, the Committee notes legislation to establish such 
fees are normally the jurisdiction of the authorizing 
committees, not the Appropriations Committee.

                 FISCAL YEAR 1995 SUPPLEMENTAL REQUESTS

    The President's budget requests a $672,000,000 emergency 
supplemental for United Nations [U.N.] peacekeeping. The State 
Department's peacekeeping expenditures were $1,071,000,000 in 
fiscal year 1994 and will be roughly $1,200,000,000 in fiscal 
year 1995 (including the President's supplemental request). The 
President's budget requests only $455,000,000 for U.N. 
peacekeeping for fiscal year 1996. The Committee notes that the 
administration has consistently understated the costs of 
ongoing peacekeeping operations. The Committee is concerned 
that the administration is attempting to sidestep the 
discretionary spending caps and pave the way for another 
emergency supplemental request for fiscal year 1996. The 
Committee has not funded the President's request for an 
emergency fiscal year 1995 supplemental for U.N. activities. 
The Committee urges the administration to carefully consider 
the potential budgetary effects of supporting new, expanded, or 
enhanced U.N. peacekeeping missions around the globe.

                                Defense

                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                            Budget authority                 CBO outlays        
                                                     -----------------------------------------------------------
                                                       Fiscal    Fiscal              Fiscal    Fiscal           
                                                        year      year     Freeze     year      year     Freeze 
                                                        1995      1996     versus     1995      1996     versus 
                                                        base     freeze     base      base     freeze     base  
----------------------------------------------------------------------------------------------------------------
Discretionary:                                                                                                  
    Defense.........................................   242,846   243,346      +500   249,787   243,953    -5,834
    International...................................  ........  ........  ........  ........  ........  ........
    Domestic........................................       126       126  ........       192       125       -67
                                                     -----------------------------------------------------------
      Subtotal, discretionary.......................   242,972   243,472      +500   249,979   244,078    -5,901
Violent crime reduction trust fund..................  ........  ........  ........  ........  ........  ........
Gramm-Rudman-Hollings mandatory.....................       198       214       +16       198       214       +16
                                                     ===========================================================
      Total appropriations..........................   243,170   243,686      +516   250,177   244,292    -5,885
----------------------------------------------------------------------------------------------------------------
NOTE: In all tables, detail may not add to totals due to rounding.                                              


    The Congressional Budget Office estimates that 
discretionary budget authority of $243,472,333,000 would be 
required in fiscal year 1996 to maintain the funding approved 
for fiscal year 1995 for Department of Defense activities under 
the Subcommittee on Defense's jurisdiction. This amount is 
$500,000,000 more than the CBO 1995 baseline, reflecting a 
technical adjustment regarding previously approved budget 
authority transfers from the Department's national defense 
sealift fund to other agencies. The CBO estimate of outlays 
associated with this budget authority level is 
$244,078,216,000, a decrease of $5,901,109,000 from the 1995 
outlay amount. The outlay difference results mostly from the 
cumulative effect of continual decreases to the Defense 
Department's budget authority levels in the late 1980's and 
early 1990's.
    The President's budget requests total discretionary funding 
of $236,180,117,000 for activities of the Department of Defense 
under the jurisdiction of the Subcommittee on Defense. This 
level is $7,292,216,000, or 3 percent, below the fiscal year 
1996 freeze discretionary budget authority amount. According to 
the Congressional Budget Office, the request is estimated to 
result in discretionary outlays of $241,307,388,000 during 
fiscal year 1996.
    The budget proposed for fiscal year 1996 reflects the 11th 
consecutive year that the amount requested for the military 
functions of the Department of Defense has declined. While the 
Department has made considerable strides compared to previous 
budget proposals to address vital readiness, pay, and quality 
of life priorities, the proposal before the Committee fails to 
provide adequate funding to meet the full spectrum of national 
security requirements.
    For fiscal 1996, the most serious and disturbing cuts 
hamper the ability of U.S. military forces to maintain 
technological superiority over potential adversaries. According 
to the Department, funding for weapons system procurement has 
been slashed by 71 percent since 1985. In testimony before the 
Defense Subcommittee this year, Defense Secretary William Perry 
observed that the amounts proposed in the fiscal year 1996 
budget, and forecast in the Department's future year defense 
plan [FYDP], for modernization were inadequate, and do not 
support the force structure envisioned by the administration's 
``Bottom-Up Review.'' Absent immediate action by the Congress, 
the costs of meeting DOD modernization needs in future years 
will be dramatically higher, and pose new threats to funding 
for key combat training and personnel support programs.
    The Committee will closely scrutinize spending proposed by 
the President in areas not traditionally associated with 
military readiness. In the Committee-reported version of H.R. 
889, the supplemental appropriations and rescissions bill for 
fiscal year 1995, significant cuts in dual-use technology 
programs, defense conversion, and environmental restoration 
activities were proposed. Some defense modernization and 
support needs can be fulfilled through further reductions in 
these programs for 1996. The Committee has also not supported 
previous requests for peacekeeping activities, which are more 
appropriately funded in other appropriations acts.
    Recognizing tight constraints on discretionary 
appropriations, additional funds are necessary for fiscal year 
1996 to meet anticipated defense requirements. The President's 
budget fails to propose any funds for continuing overseas 
deployments. These operations in the Persian Gulf, the former 
Yugoslavia, Cuba, and Haiti pose significant risks to military 
readiness during fiscal year 1995. If such activities will 
continue during 1996, the Congress must work with the 
administration to determine likely costs, and assess what level 
of funding will be required for 1996. If the Congress does not 
choose to appropriate funds for these missions, they should not 
be continued with funds appropriated to the Department of 
Defense for other purposes.
    Despite consistent efforts by the Committee to address 
previous proposals, the Department again fails to adequately 
meet the needs of the Reserve components. Funding for real 
property maintenance, training, operations, and logistics 
support for the Army National Guard lags severely behind rates 
provided for the active component. The President's budget 
proposes a devastating reduction in tactical forces assigned to 
the Air National Guard, at the same time that the Air Guard 
assumes a higher profile in supporting national commitments. 
The National Guard cannot take on its share of our national 
defense mission absent necessary funds and forces. The 
Committee faces the need to make increases to the levels 
proposed for all the Reserve components.
    The budget proposed for the Department of Defense 
represents an improvement over previous recent requests, but 
leaves the Congress the responsibility to meet numerous 
unfunded requirements. The amounts proposed in the President's 
budget are not sufficient to fully respond to these needs.

                          District of Columbia

                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                            Budget authority                 CBO outlays        
                                                     -----------------------------------------------------------
                                                       Fiscal    Fiscal              Fiscal    Fiscal           
                                                        year      year     Freeze     year      year     Freeze 
                                                        1995      1996     versus     1995      1996     versus 
                                                        base     freeze     base      base     freeze     base  
----------------------------------------------------------------------------------------------------------------
Discretionary:                                                                                                  
    Defense.........................................  ........  ........  ........  ........  ........  ........
    International...................................  ........  ........  ........  ........  ........  ........
    Domestic........................................       712       712  ........       714       712        -2
                                                     -----------------------------------------------------------
      Subtotal, discretionary.......................       712       712  ........       714       712        -2
Violent crime reduction trust fund..................  ........  ........  ........  ........  ........  ........
Gramm-Rudman-Hollings mandatory.....................  ........  ........  ........  ........  ........  ........
                                                     ===========================================================
      Total appropriations..........................       712       712  ........       714       712        -2
----------------------------------------------------------------------------------------------------------------
NOTE: In all tables, detail may not add to totals due to rounding.                                              

                                Overview

    The subcommittee is responsible for all aspects of the 
budget providing for the operations of the Nation's Capital. 
The budget includes amounts for the public school system, the 
courts of the District of Columbia, the District Council, and 
the various executive agencies of the District government.
    The budget also includes various enterprise funds which 
support such processes as the water and sewers, Convention 
Center operations, Lottery and Charitable Games Control Board, 
Office of Cable Television, and D.C. General Hospital. In 
addition, the District supports its capital borrowing needs 
through the issuance of debt securities in the private 
municipal bond market.
    The District's budget is made up of two components. The 
first, Federal funds appropriated to the District include a 
Federal payment in lieu of taxes, an annual contribution to 
certain retirement funds and from time to time various 
specialized amounts for particular purposes or services. The 
second, and largest, source of revenue to the District are 
local tax revenues.

           fiscal year 1995 Base and fiscal year 1996 Freeze

    In fiscal year 1995 the Congress appropriated a total of 
$712,070,000 for the District of Columbia. This amount 
consisted of $660,000,000 for the Federal payment to the 
District and $52,070,000 as a Federal contribution to the 
retirement programs of the police and firefighters, teachers, 
and judges. These amounts are also the amounts authorized for 
fiscal year 1996 for each of these accounts, and represent the 
amounts requested in the President's budget, submitted February 
6, 1996.
    The authorizing committees have under consideration 
legislation to establish an independent board to manage the 
District's current financial emergency. The Committee does not, 
however, at this writing, expect an increase in either of these 
accounts in fiscal year 1996.

                      Energy and Water Development

                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                            Budget authority                 CBO outlays        
                                                     -----------------------------------------------------------
                                                       Fiscal    Fiscal              Fiscal    Fiscal           
                                                        year      year     Freeze     year      year     Freeze 
                                                        1995      1996     versus     1995      1996     versus 
                                                        base     freeze     base      base     freeze     base  
----------------------------------------------------------------------------------------------------------------
Discretionary:                                                                                                  
    Defense.........................................    10,334    10,334  ........    10,455    10,344      -111
    International...................................  ........  ........  ........  ........  ........  ........
    Domestic........................................    10,174    10,177        +3    10,597    10,155      -442
                                                     -----------------------------------------------------------
      Subtotal, discretionary.......................    20,508    20,511        +3    21,052    20,499      -553
Violent crime reduction trust fund..................  ........  ........  ........  ........  ........  ........
Gramm-Rudman-Hollings mandatory.....................  ........  ........  ........  ........  ........  ........
                                                     ===========================================================
      Total appropriations..........................    20,508    20,511        +3    21,052    20,499      -553
----------------------------------------------------------------------------------------------------------------
NOTE: In all tables, detail may not add to totals due to rounding.                                              

                                Overview

    The Subcommittee on Energy and Water has jurisdiction for 
appropriation of funds for fiscal year 1996 for the U.S. Army 
Corps of Engineers Civil Works Program; the Department of the 
Interior, Bureau of Reclamation water resource development 
activities; the Department of Energy (except for fossil energy, 
energy conservation, and certain regulatory activities), its 
energy supply research and development activities including 
solar and renewables, nuclear fission, magnetic fusion, and the 
basic and general sciences and technology programs, including 
the national scientific laboratories; the atomic energy defense 
activities, including nuclear weapons core stockpile 
stewardship, testing capability, and readiness; the disposal of 
defense nuclear wastes; and the environmental restoration and 
cleanup of the entire nuclear defense and nondefense complex; 
the Civilian Nuclear Waste Disposal Program; and related 
independent agencies and commissions including the Appalachian 
Regional Commission [ARC], the Nuclear Regulatory Commission 
[NRC], the Defense Nuclear Facilities Safety Board, the 
Tennessee Valley Authority [TVA], and several small river basin 
commissions.

                      water resources development

    The fiscal year 1996 budget for water resource activities 
of the U.S. Army Corps of Engineers and the Bureau of 
Reclamation is the minimum level of funding needed to address 
important infrastructure requirements of the country.
    Lack of sufficient discretionary resources will severely 
hamper the subcommittee's efforts to address the deteriorating 
infrastructure and other water resource needs of the country, 
and result in greater cost to the Federal Government if 
projects are not completed without significant delay. In 
addition, several ongoing projects are either not funded or 
significantly under funded in the fiscal year 1996 budget 
request.
    Fundamental policy changes are being proposed in the budget 
in regards to the role of the Corps of Engineers in flood 
control and related water resource development projects. 
Briefly, the proposed changes would limit the Corps' role, 
shifting the responsibility for many flood control projects to 
State and local governments to undertake. Implementation of 
this policy is projected to save $29,000,000 in discretionary 
spending in fiscal year 1996 and nearly $1,000,000,000 over 5 
years. Given the history and interest in the flood control 
program, and the unaddressed flood control needs nationally, it 
is unlikely that the significant change in policy, as proposed, 
will be enacted.

                     department of energy programs

    The budget request for the Department of Energy continues 
the trend of the past several years committing increasing 
discretionary resources to the environmental restoration and 
waste management programs. Even though the fiscal year 1996 
funding request is increasing over the 1995 level, it is still 
well below the 5-year program plan unless there are sizable 
increases in productivity and efficiency, development of new 
cleanup technologies, and changes in program execution. In 
addition, a large portion of the increase reflects the transfer 
of several production facilities to the environmental 
management program. A freeze of the defense environmental 
restoration and waste management discretionary programs at the 
current year level or large reductions below the fiscal year 
1996 budget request, could trigger legal action by affected 
States or local communities unless negotiated compliance or 
cleanup agreements are adjusted. It is likely that Congress 
will have to make changes to the laws governing the DOE 
Environmental Restoration and Waste Management Program.
    The budget proposes a program of approximately $631,000,000 
for the civilian radioactive waste activities in fiscal year 
1996. However, $431,000,000 of the program is proposed as a 
mandatory appropriation which requires enactment of authorizing 
legislation and is subject to PAYGO requirements. It is clear 
that the Congress must resolve this problem by enacting 
legislative reforms to ensure that the program can proceed. It 
would be nearly impossible for the Committee to divert funds 
from other important programs and functions to continue this 
program as required in the absence of a legislative solution. 
Additional budgetary resources will be needed in fiscal year 
1996 if the program is to continue under current schedules and 
meet established milestones.
    A major mission of the Department of Energy is to provide 
for the national security by ensuring a credible nuclear 
deterrent by maintaining safe, secure, and reliable nuclear 
weapons. These national defense requirements are included in 
the defense (050) function and are coordinated with and 
included in the annual authorization of national defense 
programs. While drastic changes have occurred in the past 
several years responding to the post-cold war environment, it 
is clear that a strong core stockpile stewardship program will 
remain an essential element of the national defense strategy 
for the foreseeable future. Even under the increased levels 
reflected in the fiscal year 1996 budget, the national weapons 
laboratories' budgets may not be adequate to prevent further 
erosion in the laboratories' core research and basic science 
capabilities. Continued funding at the current level would have 
serious impacts on the confidence in the nuclear deterrent in 
the future because of the loss of engineering skills and 
scientific judgment. It appears, therefore, that the budget 
request is the minimum level to sustain adequate confidence in 
the nuclear deterrent.

       Foreign Operations, Export Financing, and Related Programs

                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                            Budget authority                 CBO outlays        
                                                     -----------------------------------------------------------
                                                       Fiscal    Fiscal              Fiscal    Fiscal           
                                                        year      year     Freeze     year      year     Freeze 
                                                        1995      1996     versus     1995      1996     versus 
                                                        base     freeze     base      base     freeze     base  
----------------------------------------------------------------------------------------------------------------
Discretionary:                                                                                                  
    Defense.........................................  ........  ........  ........  ........  ........  ........
    International...................................    13,647    13,704       +57    13,983    14,200      +217
    Domestic........................................         6         6  ........         3         6        +3
                                                     -----------------------------------------------------------
      Subtotal, discretionary.......................    13,653    13,710       +57    13,986    14,206      +220
Violent crime reduction trust fund..................  ........  ........  ........  ........  ........  ........
Gramm-Rudman-Hollings mandatory.....................        45        46        +1        45        46        +1
                                                     ===========================================================
      Total appropriations..........................    13,698    13,756       +58    14,031    14,252      +221
----------------------------------------------------------------------------------------------------------------
NOTE: In all tables, detail may not add to totals due to rounding.                                              

                                OVERVIEW

    The Subcommittee on Foreign Operations, Export Financing, 
and Related Programs has jurisdiction over the bulk of the 
international affairs function (150) of the U.S. budget. The 
subcommittee funds multilateral economic assistance programs, 
including the multilateral development banks, and voluntary 
contributions to the United Nations; bilateral assistance 
programs, primarily those activities implemented by the Agency 
for International Development; military assistance programs, 
which in the post cold war period, are provided mainly to the 
Camp David agreement countries; and export financing, chiefly, 
through the Export-Import Bank and the Overseas Private 
Investment Corporation.
    The subcommittee has completed fewer than one-half of its 
hearings on the fiscal year 1996 budget request, and has yet to 
receive all of the administration's written justification 
material. Therefore, the recommendations in this report must be 
considered preliminary. Additionally, foreign assistance 
programs tend to be sensitive to specific events throughout the 
year, causing unexpected strain on foreign assistance 
resources.

                   fiscal year 1996 BUDGET ESTIMATES

    The administration proposes $14,788,932,000 in new budget 
authority for activities and programs under the jurisdiction of 
the subcommittee. This request is $1,090,932,000 over the 
amount appropriated thus far for fiscal year 1995.
    The administration recommends increases in appropriations 
under title I, multilateral assistance, for the multilateral 
development banks totaling $400,000,000 in new budget 
authority, and just over $50,000,000 in voluntary contributions 
to international organizations and programs. Under title II, 
bilateral assistance, the administration recommends an increase 
of $70,000,000 in assistance to Russia/NIS, $121,000,000 in 
assistance for Eastern Europe and the Baltic States, and 
$108,000,000 for international narcotics control. Most other 
requested increases are minor, though a $15,000,000 increase in 
the nonproliferation and disarmament fund is significant 
considering the current appropriated level for that program is 
$10,000,000.
    For military assistance programs under title III, the 
administration recommends an increase in grant military 
assistance totaling $153,000,000; a $14,000,000 increase in the 
Military Education and Training Program for a total of 
$40,000,000; and a one-third increase in voluntary peacekeeping 
operations from an appropriated fiscal year 1995 level of 
$75,000,000 to a request of $100,000,000 for fiscal year 1996.

                 FISCAL YEAR 1995 SUPPLEMENTAL REQUESTS

    Included in the President's fiscal year 1996 budget are 
requests for four separate supplementals under the jurisdiction 
of the Foreign Operations Subcommittee. Three of these 
requests, $18,000,000 for the Development Assistance Fund, 
$82,300,000 for the Economic Support Fund, and $27,200,000 for 
peacekeeping operations are related to United States operations 
in Haiti. These amounts were borrowed from these three 
accounts, and the administration's supplemental request would 
reimburse those accounts. The fourth supplemental is a request 
for $275,000,000 in debt relief for Jordan. This program was 
authorized as part of a fiscal year 1994 supplemental contained 
in the fiscal year 1995 Foreign Operations appropriations bill. 
At that time, Congress approved the appropriation of 
$99,000,000 for this purpose. Originally, the administration 
indicated it would request funds in two additional tranches, 
but instead has requested the remainder for this program in one 
tranche as a fiscal year 1995 supplemental.

                  COMMITTEE'S PRIORITIES AND CONCERNS

    In supporting current efforts to reduce the deficit, the 
Committee will not seek funds above the President's request for 
foreign operations and export financing programs. However, 
unlike other Federal programs which may be dismantled and 
better managed or funded by State and local authorities, 
foreign assistance can only be administered by the U.S. 
Government. Given constraints on discretionary spending, the 
Committee believes the foreign aid program should be more 
sharply focused in order to effectively serve American 
interests.
    In an era of diminishing resources, foreign assistance 
should clearly further U.S. security, economic, political, and 
humanitarian interests. To this end, the Committee considers 
programs which contribute to stabilization in the new republics 
of the former Soviet Union high priorities which should be 
sustained. The legacy of communism, including the emergence of 
ethnic tensions, regional rivalries, economic dislocation, 
sizable conventional and nuclear arsenals warrant U.S. 
attention. Bilateral and multilateral assistance which 
contribute to stable democracies and open free markets affect 
U.S. trade opportunities and security.
    The Committee also believes U.S. leadership in advancing 
the Middle East peace process directly affects national 
interests. Assistance reduces the threat of a regional 
conflict, sustains vital alliances, and secures America's 
principal energy supply.
    Given a more constrained budget environment, the Committee 
intends to sustain support for activities which leverage 
limited resources. In this context, the Committee considers 
U.S. export promotion and financing activities essential to 
economic growth abroad and jobs, exports, and income here at 
home. In addition, the Committee supports contributions to 
those multilateral banks which have implemented financial 
management reforms and are assuring that recipients actively 
promote free market policies.
    Finally, the Committee considers prudent security 
assistance a high priority. In the post cold war world, 
transnational threats including narcotics trafficking and 
terrorism, have developed as serious threats to U.S. interests. 
The Committee believes the timely and effective provision of 
training, equipment, and grant assistance is key to reducing 
the emerging threats.

                     Interior and Related Agencies

                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                            Budget authority                 CBO outlays        
                                                     -----------------------------------------------------------
                                                       Fiscal    Fiscal              Fiscal    Fiscal           
                                                        year      year     Freeze     year      year     Freeze 
                                                        1995      1996     versus     1995      1996     versus 
                                                        base     freeze     base      base     freeze     base  
----------------------------------------------------------------------------------------------------------------
Discretionary:                                                                                                  
    Defense.........................................  ........  ........  ........  ........  ........  ........
    International...................................  ........  ........  ........  ........  ........  ........
    Domestic........................................    13,502    13,800      +298    13,875    13,913       +38
                                                     -----------------------------------------------------------
      Subtotal, discretionary.......................    13,502    13,800      +298    13,875    13,913       +38
Violent crime reduction trust fund..................  ........  ........  ........  ........  ........  ........
Gramm-Rudman-Hollings mandatory.....................        37        62       +25        20        50       +30
                                                     ===========================================================
      Total appropriations..........................    13,539    13,862      +323    13,895    13,963       +68
----------------------------------------------------------------------------------------------------------------
NOTE: In all tables, detail may not add to totals due to rounding.                                              

                                OVERVIEW

    The jurisdiction of the Interior and Related Agencies 
Subcommittee includes the administration of approximately 900 
million acres of Federal land and trust responsibilities for 56 
million acres of Indian lands, particularly in the West. These 
lands include 368 units of the National Park System; 504 
refuges of the Fish and Wildlife Service; 156 national forests 
and 20 national grasslands of the Forest Service; the Bureau of 
Land Management's grasslands, forests, and 300-million-acre 
mineral estate; and the Indian trust lands. All basic human 
services, including education and health care, are provided to 
550 tribes with diverse needs. The jurisdiction of the 
subcommittee also extends to the nondefense, nonnuclear 
programs of the Department of Energy, as well as to other 
related Indian programs and many of the Federal arts and 
humanities programs, including the Smithsonian Institution.
    If the agencies under the jurisdiction of the Interior bill 
are held to the fiscal year 1995 level, the base funding for 
many of the programs will decrease. The absorption of employee 
compensation and benefits has a serious impact on programs. The 
fixed costs for employees require approximately 50 percent of 
the bill's resources.

           fiscal year 1995 BASE AND fiscal year 1996 FREEZE

Bureau of Land Management

    Public demand for timber, livestock forage, mineral and 
energy resources, and recreational opportunities continues to 
increase on BLM lands. Maintaining funding at 1995 levels would 
limit BLM's capability to meet the public's demand for these 
resources. Timber harvest in the Pacific Northwest, which was 
recently reinstated following a 4-year ban stemming from 
northern spotted owl issues, would be compromised. In addition, 
efforts to address forest health problems caused by drought, 
insects, disease, and wildfires would be adversely impacted. 
Efforts to accelerate improvement of BLM rangelands, which 
provide livestock forage and contribute to the economic 
stability of many western communities, would be curtailed. 
Healthy upland and riparian areas are critical for providing 
suitable habitat for fish and wildlife resources, recreational 
opportunities, and forage for livestock.
    Freezing funding at the fiscal year 1995 level would not 
permit funding the increased payments to States as authorized 
by passage of the Payments in Lieu of Taxes Act, Public Law 
103-97. The BLM would also be unable to fund the provisions of 
the California Desert Protection Act. Maintaining funding at 
1995 levels will constrain BLM's ability to protect and manage 
effectively the 69 new wilderness areas established by the 
California Desert Protection Act in 1994. BLM is joining with 
other Federal agencies, State parks, and private interests to 
collaboratively manage wildland resources in the California 
desert.
    Funding for emergency fire presuppression activities is 
based on a 10-year average of expenditures. If the 
``Firefighting'' account is held at the fiscal year 1995 level 
of funding, fire suppression activities could be compromised, 
including preparation for extraordinary fires, improvement of 
health and safety measures for firefighters necessary to 
prevent tragedies such as those that occurred last summer, and 
prevention of significant loss of natural resources.
    Current practice in the Interior bill, as agreed to by the 
Budget Committee, is to fund the annual emergency firefighting 
amount at the 10-year average. Because of the significant fire 
expenditures last year, increased funds are necessary this year 
(for both the BLM and the Forest Service) to maintain the 10-
year average in appropriations.

Fish and Wildlife Service

    Despite a Federal capital investment of more than 
$4,000,000,000 and an operations and maintenance backlog of at 
least $391,000,000, funding for O&M; activities in the Service's 
refuge system continue to be inadequate. If funding is frozen 
at the fiscal year 1995 level or further reduced, the O&M; 
backlog will grow. In addition, proposed program increases in 
the cooperative endangered species fund ($29,000,000) and the 
Resource Management Program ($13,000,000) would not be granted.

National Biological Service

    The National Biological Service [NBS] was formed in fiscal 
year 1994 by consolidating the biological research, inventory 
and monitoring, and information transfer activities of the Fish 
and Wildlife Service, the National Park Service, the Bureau of 
Land Management, the Geological Survey, the Minerals Management 
Service, the Office of Surface Mining, and the Bureau of 
Reclamation. The NBS's fiscal year 1995 appropriation of 
$167,000,000 (the same level as fiscal year 1994) provides 
funding for 15 science centers, 60 cooperative research units 
in 39 States, and approximately 90 field stations. It is a 
nonregulatory agency. If NBS funding were to remain frozen at 
the fiscal year 1994 level, research and other program funds 
would be reduced at all NBS organizational units to absorb the 
uncontrollable costs of pay, benefits, and space. A decreased 
funding level would result in closure of established science 
centers, cooperative research units, and field station offices.

National Park Service

    The National Park Service [NPS] funding continues to be 
inadequate to meet public use needs while minimizing visitor 
impact on the resources. Absorption of uncontrollable costs, 
such as pay, space rental, park police pensions, and addition 
of new park units continue to erode park operations funds. The 
NPS appropriations total $1,412,000,000 in fiscal year 1995. 
Failure to provide additional resources for these expenses most 
frequently results in decreased attention to maintenance and 
visitor services. Thus, portions of parks become unavailable to 
the public as areas are closed due to budget shortfalls and 
staffing reductions. If the ``Operations of the national park 
systems'' account was frozen at the fiscal year 1995 level of 
$1,078,000,000, high-priority maintenance deficiencies would be 
deferred, adding to the NPS maintenance backlog of over 
$2,000,000,000. The rehabilitation of park structures, roads, 
trails, and utility systems is critical to the health and 
safety of visitors and employees. Increased visitation at park 
units without increased funding would limit the Park Service's 
ability to respond to the public.

U.S. Geological Survey

    In cooperation with State, local, and tribal governments, 
the U.S. Geological Survey [USGS] collects vital information on 
earthquakes, floods, mudslides, and other natural disasters, as 
well as assessments of the quantity and quality of the Nation's 
water and mineral resources. Freezing funding for the Survey at 
the fiscal year 1995 level would reduce data collection and 
analysis necessary for cooperative water studies, and reduce 
the Survey's ability to analyze and respond to significant 
earthquake hazards in major metropolitan areas.
    Because of the highly skilled and scientific nature of the 
Geological Survey's work force, increases in Federal pay and 
benefits that are not funded fully can erode the USGS's 
scientific research, especially with non-Federal partners. In 
fiscal year 1996, pay costs are estimated to cost USGS an 
additional $6,800,000.

Minerals Management Service

    If funding for MMS is held to the fiscal year 1995 level, 
$6,000,000 in proposed increases for oilspill research, coastal 
marine institutes, and various royalty management initiatives 
would not be funded. Actual reductions in funding should be 
examined in light of the fact that MMS is expected to manage 
$5,200,000,000 in Federal receipts in fiscal year 1996.
    Beyond fiscal year 1996, there remains a risk that the 
United States will be required to buy back certain oil and gas 
leases off Florida, Alaska, and North Carolina. These tracts 
were leased to private companies in the early 1980's, but their 
development has been prevented in part by congressional and 
administration moratoria. The matter is currently being 
litigated and the Committee notes that this potential exposure 
could amount to $500,000,000.

Bureau of Mines

    If funding is frozen at the fiscal year 1995 level, the 
Bureau will be able to continue the phased and orderly 
consolidation of Bureau offices as directed in the fiscal year 
1995 Interior appropriations conference report. If funding is 
reduced by $20,000,000 as proposed in the President's fiscal 
year 1996 request, consolidation will be accelerated and 
expanded. Five research centers and several field units will be 
closed immediately. Program reductions would occur in pollution 
prevention and control ($9,200,000), health and safety research 
($5,600,000), environmental remediation ($2,300,000), mineral 
information ($1,700,000), and general administration 
($1,300,000).
    The President also proposes to privatize the Federal helium 
program by ceasing refining activities and selling the reserve 
of crude helium over a number of years. While the budget 
request does not assume any changes in fiscal year 1996, it 
does assume a decrease in net outlays of $5,000,000 in each of 
the following fiscal years.

Office of Surface Mining

    An additional $7,900,000 over the fiscal year 1995 funding 
level will be required to maintain the Rural Abandoned Mine 
Program [RAMP]. Level or decreased funding will likely 
necessitate termination of RAMP, as well as reductions in the 
Federal Regulatory Program, the proposed Appalachian clean 
stream initiative ($11,000,000), and the emergency reclamation 
program ($2,000,000).

Bureau of Indian Affairs

    Freezing the Bureau of Indian Affairs would seriously 
undermine and delay progress in promoting self-determination 
for Indian tribes. At the fiscal year 1995 level of funding, 
BIA-funded schools could be forced to shorten the school year 
and abandon school lunch programs as a result of costs 
associated with population increases and mandated teacher pay 
raises. Two new school construction projects would be delayed, 
causing Indian children to continue to attend schools in 
crowded and unsafe facilities. At the fiscal year 1995 level of 
funding, projects would be deferred for tribal housing, road, 
and natural resource, all areas where significant backlogs of 
projects exist. Progress will be delayed in making structural 
repairs to high-hazard BIA dams as identified by the Bureau of 
Reclamation. BIA has a greater proportion of unsafe dams than 
any bureau within the Department of the Interior.
    At the fiscal year 1995 level of funding, the BIA would be 
unable to make payments to tribes as mandated by enacted land 
and water settlements. Failure to make such payments will 
increase the funding requirements for settlements in future 
years because of the penalties associated with not funding 
settlement provisions. While these settlements have been 
considered discretionary in the past, the Committee deems 
payment mandatory because of the associated penalties for 
nonpayment.

Office of Territorial and International Affairs [OTIA]

    The President has proposed to reduce the ``Assistance to 
territories'' account by $9,957,000. The infrastructure needs 
of American Samoa, Guam, and the Virgin Islands would instead 
be met by a mandatory grant program to be financed by a 
$21,580,000 reduction in funding for the Commonwealth of the 
Northern Mariana Islands. This proposal will require 
legislative approval. If the proposed legislation is not 
enacted, payments to the CNMI would continue at the current 
level, and an additional $15,000,000 would be required to 
maintain other OTIA programs at the current level.
    The President has also proposed to abolish OTIA and 
distribute its functions to other agencies. The proposal 
estimates a savings of $1,200,000.

Forest Service

    If the funding level for the Forest Service were frozen at 
the fiscal year 1995 level of $2,358,000,000, funding shifts 
would be necessary within the Forest Service accounts. The 
Forest Service lands have critical forest health problems. 
Aggressive action is proposed to address the condition of the 
Nation's forests which are deteriorating due to drought, 
insects, disease, wildfire, blowdown, and overstocking. Funding 
above the fiscal year 1995 level is needed to address these 
forest health concerns. During the last 15 years, the timber 
program has gone from a 12-billion-board-foot program to a 4-
billion-board-foot program in fiscal year 1995. If timber sale 
process requirements are simplified to move more timber sale 
volume into the marketplace, additional funding resources would 
be required to support that effort.
    The backlog of maintenance needs for the agency are 
approximately $1,600,000,000, including facilities, roads, and 
trails. There is a growing backlog of rehabilitation problems 
resulting from sustained high use by the public, age of 
facilities, and service demands.
    Last year, Congress approved an additional $450,000,000 in 
emergency firefighting appropriations above the base 
appropriation of $385,000,000. Nonetheless, the Forest Service 
still had to make emergency transfers from other accounts to 
fund fully the 1994 fire season expenditures. Thus, the 
subcommittee faces a bill of an estimated $295,000,000 to repay 
accounts for these emergency expenditures. If emergency 
designations are not available to meet these requirements, the 
subcommittee would be faced with significant reductions in all 
Forest Service programs, including research, State and private 
forestry, recreation, watershed, timber, wildlife, road 
construction, and land acquisition. In addition, this amount 
owed could increase if fiscal year 1995 ends up being another 
high-cost fire year.

Clean coal technology

    It is likely that $200,000,000 in unobligated clean coal 
balances will be rescinded this year. Making any further 
rescissions in the fiscal year 1996 bill would be extremely 
risky, as the Department could be left without adequate funds 
to complete projects that meet the requirements of previously 
signed cooperative agreements. This would invite legal 
challenges from the non-Federal signatories to those 
agreements. But regardless of appropriations or rescissions 
included in the bill, outlays for fiscal year 1996 are 
estimated to rise to $300,000,000 as work continues on projects 
funded from prior appropriations.

Fossil energy research and development

    Funding fossil energy research and development below the 
fiscal year 1995 level will impact the $29,600,000 increase in 
gas research and development proposed by the President. 
Proposed increases to accelerate demonstrations of fuel cells 
($8,000,000) and to expand the advanced computational 
technology initiative ($10,600,000) would be particularly 
vulnerable. Reducing or holding the petroleum program to fiscal 
year 1995 funding levels would generally inhibit efforts to 
develop, demonstrate, and transfer improved technologies that 
will prevent abandonment of marginal and declining wells. The 
President has also proposed a $35,500,000 cut in the coal 
program. Restoring funding to fiscal year 1995 levels would 
allow additional work on advanced power systems and advanced 
clean fuels.

Naval petroleum and oil shale reserves

    An amount of $176,000,000 will be needed to operate the 
naval petroleum and oil shale reserves at their maximum 
efficient rate, an amount $11,000,000 less than the fiscal year 
1995 funding level, but $75,000,000 above the President's 
fiscal year 1996 request. The President's request proposes a 
caretaker budget pending passage of legislation to turn the 
reserves into a Government corporation. This caretaker budget 
is inadequate to produce the reserves at their optimal rate, 
and will cause a decrease in the value of the reserves to the 
Treasury. The President also proposes to sell the naval 
petroleum reserve at Elk Hills subsequent to corporatization. 
This proposal has repeatedly been rejected by Congress. While 
the request assumes no savings from the sale in fiscal year 
1996, it does assume $1,600,000,000 in net proceeds in fiscal 
years 1997-2000.

Energy conservation

    The Energy Conservation Program provides support for the 
development and deployment of advanced energy efficient 
technologies for the buildings, industrial, transportation, and 
utility sectors, as well as grants for State energy programs, 
and energy efficiency retrofits for low-income residences and 
schools and hospitals. At the fiscal year 1995 level of 
funding, development of advanced automotive technologies needed 
to improve fuel efficiency and reduce emissions will be delayed 
or terminated. Efforts to improve the competitiveness of U.S. 
industries through improvements in energy efficiency processes 
and pollution prevention will be delayed or terminated. At the 
fiscal year 1995 funding level, voluntary programs with 
industry to deploy technologies to reduce emissions will be 
unfunded, which may lead to greater regulation of industries in 
order to meet Clean Air Act deadlines.

Strategic petroleum reserve

    Approximately $313,000,000 is required to fund strategic 
petroleum reserve operations in fiscal year 1996--an amount far 
above the President's request of $25,689,000. The request 
assumes that $100,000,000 in oil sale proceeds will be 
available to offset the costs of decommissioning the Weeks 
Island storage facility. While the risks posed by potential 
failure of the Weeks Island facility must be addressed, it is 
doubtful whether the Department of Energy will be granted 
authority to fund decommissioning activities with oil sale 
proceeds. If such authority is not granted and the fiscal year 
1996 budget request is enacted, drawdown capacity would drop, 
security would be reduced, facility life extension would be 
delayed, readiness would decline, and mitigation associated 
with Weeks Island decommissioning would be delayed.
    The President has also proposed to offset the cost of SPR 
operations with $187,000,000 from the ``SPR petroleum'' 
account. While use of these funds reduces the need for new 
budget authority in fiscal year 1996, it depletes all but 
$35,000,000 remaining in the petroleum account. As such, it is 
expected that well over $200,000,000 in new budget authority 
will be needed annually for SPR operations in fiscal year 1997 
and beyond. In both the ``Strategic petroleum reserve'' and the 
``Naval petroleum reserve'' accounts, the Committee objects 
strongly to any savings presumed in discretionary 
appropriations that are contingent upon the enactment of 
authorizing legislation. Until such proposals are enacted into 
law, it is inappropriate to assume that these facilities can be 
operated at the levels presumed in the budget.

Indian Health Service [IHS]

    Approximately $2,065,000,000 will be required in fiscal 
year 1996 to continue Indian Health Service programs at the 
current level. If funding for the Service's account is held to 
the fiscal year 1995 level, IHS would be forced to absorb some 
$86,000,000 in medical inflation, increased pay, and other 
uncontrollable costs. Necessary hospital admissions would be 
reduced by 3,950, outpatient visits would be reduced by 
156,700, and dental services would be reduced by 63,000. 
Movement toward greater tribal compacting would be slowed, and 
modest programmatic increases proposed for urban health, child 
abuse, information systems, and other initiatives would not be 
funded.
    If funding for the ``Facilities'' account is reduced from 
the level proposed in the President's request, construction of 
two facilities scheduled to be completed in fiscal year 1996 
would be jeopardized. If facilities funding is maintained at 
the fiscal year 1995 level, design and construction work on two 
or three additional priority list projects could be funded. To 
fund all projects currently on the construction priority list, 
the ``Facilities'' account would require a $108,000,000 
increase over the President's request. Additional funds would 
be required to reduce the $600,000,000 backlog in feasible 
sanitation facilities projects.

Arts, humanities, and museums

    The National Endowment for the Arts [NEA] and the National 
Endowment for the Humanities [NEH] receive a small portion of 
the Interior appropriations. Each agency is fulfilling its 
mission as defined by congressional legislation. Various 
parties are making suggestions to reduce funding or to 
eliminate funding for both of these agencies. If these agencies 
receive decreased funding levels in fiscal year 1996, it would 
seem reasonable to work closely with the agencies to identify 
the highest priorities or to direct funds to those programs 
that reach the widest audience. It should be noted that, if 
significant funding reductions to the NEA, NEH, and the 
Institute of Museum Services occur, these agencies would need 
to retain some form of administrative structure and the 
necessary funds to honor those grants to which the Federal 
Government has already committed itself.
    The Kennedy Center is a Presidential memorial, which is 25 
years old and in urgent need of repairs. Funding through the 
Interior bill is provided for the operation, maintenance, and 
capital repair of the Kennedy Center building. Funding 
decreases would affect the Kennedy Center's ability to continue 
to operate the Center.
    The Smithsonian Institution received an appropriation of 
$371,093,000 in fiscal year 1995. In its fiscal year 1996 
budget request, the Institution estimates $12,811,000 in 
uncontrollable costs. By holding their budget at the current 
fiscal year 1995 level and requiring the Smithsonian to absorb 
fully these mandatory costs, most of which are in personnel 
compensation and benefits, the immediate result would be felt 
in erosion of the program base. Two points, in particular, 
should be made in this regard. The Institution has a backlog of 
repair and renovation work that is estimated at $250,000,000. 
Any future effort to reduce significantly this backlog will 
require an increased appropriation. Further, Congress has 
authorized and appropriated initial funding for construction of 
the multifacility National Museum of the American Indian. While 
it might be possible within the fiscal year 1995 level, to move 
forward on construction of the Cultural Resources Center at 
Suitland, an increased appropriation would be necessary to 
begin construction of The Mall facility as well as to address 
other capital infrastructure requirements identified by the 
Smithsonian Institution as necessary to protect its collections 
adequately.

Land acquisition and construction

    Appropriations for the land acquisition accounts for the 
Bureau of Land Management, the Fish and Wildlife Service, the 
National Park Service, and the Forest Service total 
$235,000,000 in fiscal year 1995 and are requested at that 
amount in fiscal year 1996. The total amount appropriated for 
land acquisition has decreased $106,000,000, or 31 percent, 
over the past 5 years. Increased emphasis has been placed on 
land exchanges during the past few years.
    The fiscal year 1995 funding for construction accounts for 
the Bureau of Land Management, the Fish and Wildlife Service, 
the National Park Service, the Bureau of Indian Affairs, the 
Forest Service, the Indian Health Service, and the Smithsonian 
is $865,000,000. Over the past several years the overall 
construction accounts have declined over 20 percent. Many of 
the construction dollars are used for the rehabilitation of 
facilities, which have been identified in the agencies' 
mounting maintenance backlog. Limitations have been placed on 
beginning new projects such as visitor centers, which do not 
have significant non-Federal funding support. Both the land 
acquisition accounts and the construction accounts receive 
substantial congressional support during the Interior bill 
formulation process.

                Labor-HHS-Education and Related Agencies

                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                           Budget authority                 CBO outlays         
                                                   -------------------------------------------------------------
                                                     Fiscal    Fiscal               Fiscal    Fiscal            
                                                      year      year      Freeze     year      year      Freeze 
                                                      1995      1996      versus     1995      1996      versus 
                                                      base     freeze      base      base     freeze      base  
----------------------------------------------------------------------------------------------------------------
Discretionary:                                                                                                  
    Defense.......................................  ........  ........  .........  ........  ........  .........
    International.................................        12        12  .........        11        12         +1
    Domestic......................................    70,050    69,996        -54    69,685    71,726     +2,041
                                                   -------------------------------------------------------------
      Subtotal, discretionary.....................    70,062    70,008        -54    69,696    71,738     +2,042
Violent crime reduction trust fund................        38        38  .........         7        28        +21
Gramm-Rudman-Hollings mandatory...................   187,392   213,892    +26,500   186,227   213,868    +27,641
                                                   =============================================================
      Total appropriations........................   257,492   283,938    +26,446   255,930   285,634    +29,704
----------------------------------------------------------------------------------------------------------------
NOTE: In all tables, detail may not add to totals due to rounding.                                              

                                Overview

    The Subcommittee on Labor, Health and Human Services, and 
Education, and Related Agencies provides funding for all 
agencies of the three departments, with the exception of the 
Indian Health Service and the Food and Drug Administration of 
the Department of Health and Human Services, and the Office of 
Indian Education of the Department of Education. The programs 
within the subcommittee's jurisdiction include work- and 
school-based education and training, occupational safety, 
primary and preventive health services, needs-based income 
support, and basic/clinical research on the broad array of 
diseases that afflict humanity.
    In addition, the subcommittee provides funding for 15 
related agencies. The related agency programs include the 
former programs of the ACTION agency at the Corporation for 
National and Community Service, the Corporation for Public 
Broadcasting, the National Labor Relations Board, the Railroad 
Retirement Board, and the U.S. Institute of Peace.

           fiscal year 1995 Base and fiscal year 1996 Freeze

    The 1996 Congressional Budget Office [CBO] freeze baseline 
for the discretionary programs and activities funded under the 
Departments of Labor, Health and Human Services, and Education 
Appropriations Act totals $70,008,000,000 in budget authority 
and $71,738,000,000 in outlays for fiscal year 1996. The outlay 
baseline is an increase of $2,042,000,000 above the outlay 
total for fiscal year 1995. Increases of $1,619,000,000 in 
prior-year outlays and $423,000,000 in adjustments to the 
outlay base, primarily for child care and public broadcasting, 
account for the difference from fiscal year 1995.
    The CBO estimates that in order to keep pace with 
inflation, increases of $2,356,000,000 in budget authority and 
$3,189,000,000 in outlays over the freeze baseline would be 
required.
    Mandatory appropriations are estimated to increase by 
$27,641,000,000 in fiscal year 1996, primarily related to 
growth in Medicaid and Medicare entitlement costs. Although the 
rate of increase in these programs is expected to be slower 
than in recent years, annual growth is still expected to exceed 
9 percent for the next 5 years.
    Federal fund appropriations cover 75 percent of the cost of 
Medicare part B, which includes payments to physicians and 
other outpatient services; the remaining 25 percent is covered 
by beneficiary premiums. For the State-administered Medicaid 
program, general revenues enhance Federal matching funds, which 
may range from 50 to 83 percent, based upon per capita income 
relative to the national average. Based on CBO freeze 
calculations, an estimated $154,638,147,000 will be needed for 
Medicare and Medicaid appropriated entitlement costs in fiscal 
year 1996.

              Effect of a Freeze on Subcommittee Programs

    For Department of Labor programs, 85 percent of current 
discretionary appropriations are for employment and training, 
with the remainder for worker protection activities, such as 
workplace safety and health. Major programs include dislocated 
worker assistance, youth and adult training block grants, 
community service employment for older Americans, the Job 
Corps, and summer youth jobs. Recent initiatives have been the 
creation of one-stop career centers to better coordinate an 
array of job training programs, and school-to-work opportunity 
grants to improve the transition of noncollege bound youth into 
the work force. Full implementation of these initiatives will 
require further increases in fiscal year 1996.
    Fiscal year 1995 Labor Department appropriations provided 
employment and training services to approximately 2.2 million 
individuals. While most programs were maintained at the 
previous year's enrollment levels, services for dislocated 
workers were expanded by 16 percent, serving 679,000 
participants. With an expected increase in worker dislocations, 
there will be pressure for further expansion. For example, the 
Base Realignment and Closure Commission is expected to announce 
base closures affecting more than 30,000 workers. Previous 
transfers from the Department of Defense of $225,000,000 have 
been exhausted, and the only remaining source of funds for 
Defense-related adjustment is from the Labor Department's 
dislocated worker appropriation. Also, during 1995, many of the 
requirements of the Clean Air Act will go into effect, 
resulting in increased demand for services in program year 1995 
by workers who are laid off as a result of the changes required 
under the act; this will most severely impact coal producing 
States. These pressures will be on top of the need to help 
workers impacted by restrictions on timber harvests in the 
Northwest, the secondary impact of international trade 
agreements which are not covered by the Trade Adjustment 
Assistance Program, those affected by natural disasters, as 
well as requests on behalf of workers affected by plant 
closures and corporate downsizing. A $200,000,000 increase in 
fiscal year 1996 would partially offset the loss of prior-year 
transfers, and allow the Department to serve more than 100,000 
dislocated workers.
    In fiscal year 1995, startup funding was also provided to 
establish four new Job Corps centers, in addition to eight new 
centers the previous year. To complete construction of these 
centers, appropriations of about $100,000,000 will be needed. 
When fully operational these new centers will require annual 
funding of about $120,000,000 over current levels. To keep on 
schedule with the long-range plan to open 50 new Job Corps 
centers by 2008, the fiscal year 1996 budget proposes 4 more 
new starts; each new center costs about $16,000,000 to build 
and $10,000,000 per year to operate. The total cost of this 
expansion plan over the next 5 years is about $1,086,000,000.
    The CBO freeze estimate reflects a decline of $89,000,000 
in fiscal year 1996 operating costs for the Unemployment 
Insurance Service, which is $253,000,000 less than the 
administration's estimate. If the OMB forecast is accurate, the 
CBO freeze level for both budget authority and outlays would 
need to be adjusted upward by $250,000,000.
    For the Department of Health and Human Services, 58 percent 
of current discretionary spending is for the programs of the 
Public Health Service. Major programs include community and 
migrant health centers, Ryan White AIDS care, maternal and 
child health block grant, breast and cervical cancer screening, 
vaccines for children, substance abuse and mental health 
services, and biomedical research. The balance of the 
Department's discretionary funding is spread throughout the 
Administration for Children and Families, the Social Security 
Administration, and the Administration on Aging.
    For fiscal year 1995, Public Health Service appropriations 
within the subcommittee's jurisdiction totaled $19,214,208,000. 
With the demise of health care reform in the last Congress, 
pressure will be on the subcommittee to increase funding for 
programs to improve and expand primary and preventive health 
programs, particularly in underserved rural and urban 
communities and hard to serve populations. For example, only 35 
States currently receive Federal funding to develop a statewide 
system to screen women for breast and cervical cancer. The cost 
of extending grants for comprehensive breast and cervical 
screening programs to the remaining 15 States is $20,000,000 in 
fiscal year 1996.
    In fiscal year 1995, $632,965,000 was appropriated to carry 
out the activities authorized by the Ryan White CARE Act. In 
fiscal year 1996, the Department of Health and Human Services 
estimates that 10 to 14 more metropolitan areas will become 
eligible for funding under title I of the act. The President's 
budget for fiscal year 1996 includes an increase of $50,000,000 
for title I in order to address the needs of newly eligible 
areas. Additionally, recent research has found that the 
provision of AZT to HIV positive pregnant women can reduce the 
incidence of transmission of the virus to the fetus by two-
thirds. This also will put pressure on the subcommittee to 
increase funding for the Ryan White program. Title IV targets 
funding to pediatric patients and families with AIDS/HIV. At a 
freeze level, no new resources would be available in fiscal 
year 1996 to expand the implementation of AZT therapy to reduce 
perinatal transmission.
    Level funding in fiscal year 1996 would require the NIH to 
absorb within its base funding the $248,917,000 increase in the 
continuation costs associated with grants funded in fiscal year 
1995. The number of new/competing grants funded in fiscal year 
1996 would have to be cut to make up for the shortfall. 
Already, the NIH reports that fewer than 1 in 4 grants which 
have been reviewed and recommended for funding actually receive 
funding. It is estimated that a freeze would reduce the funding 
to fewer than 1 in 5 approved grants.
    Fiscal year 1996 marks the peak year of funding required 
for the 5-year, $92,900,000, national medical expenditure 
survey, which received an appropriation of $15,000,000 in 
fiscal year 1995. Survey costs are estimated to rise to 
$36,000,000 in fiscal year 1996. The purpose of this survey, 
which is undertaken roughly every 10 years, is to provide the 
basic information for estimating the effects of various changes 
and trends in the American health care system.
    The subcommittee's jurisdiction includes claims processing 
activities for a number of entitlement programs, including 
unemployment compensation, Medicare, and Social Security old 
age, survivors, and disability benefits. Although the control 
on the volume of claims for these entitlement programs is 
outside the control of the Appropriations Committees, the 
administrative costs to process growing claims volume must be 
accommodated within the discretionary allocation ceiling. Based 
upon administration estimates, claims processing costs will 
increase by $565,000,000 in fiscal year 1996. A freeze on these 
administrative costs would have a profound effect upon the 
timely processing and payment of claims and benefits.
    The increased volume of claims in these programs also 
necessitates increased monitoring activities to prevent waste, 
fraud, and abuse. These auditing functions, although a 
discretionary expense, result in savings in entitlement costs 
many times greater than their cost. For example, every 
discretionary dollar spent by the Social Security 
Administration to audit disability benefits, results in $4 of 
savings to the disability trust fund. Every discretionary 
dollar spent by the Health Care Financing Administration to 
review Medicare claims, saves $15 in entitlement costs. 
Although only a small fraction of claims are currently audited, 
Medicare savings alone are estimated to exceed $6,000,000,000 
in fiscal year 1995 from payment safeguard activities. A freeze 
in funding of these administrative accounts would yield 
reductions in monitoring activities as scarce resources are 
shifted to make up for the additional $565,000,000 needed to 
cover the increase in claims volume.
    The Department of Education's discretionary programs under 
the subcommittee's jurisdiction include elementary and 
secondary education, programs for education reform, bilingual 
education, special education and rehabilitation services, 
vocational and adult programs, aid for college students, and 
research and statistics.
    Over 39 percent of discretionary education dollars fall in 
the area of elementary and secondary education. Major programs 
include education for disadvantaged children in grades K-12, 
Even Start, migrant programs, bilingual education and 
professional development for teachers, impact aid, and safe and 
drug free schools. Title I grants to local education agencies 
make up the largest portion of this program. The grants provide 
supplemental education funding to schools to help low-income, 
low-achieving students. Title I funds are currently serving 
approximately 6.4 million pupils. It is projected that 200,000 
fewer educationally disadvantaged children would be served if 
title I funding was frozen.
    Discretionary spending for postsecondary education programs 
in fiscal year 1995 totaled $13,400,000,000. These programs 
improve postsecondary educational access and opportunity for 
low- and middle-income students by providing grants, loans, and 
work-study opportunities for eligible students. Amendments to 
the Higher Education Act of 1992 increased the maximum Pell 
grant for academic year 1994-95 to $3,900. However, the fiscal 
year 1995 appropriations act capped the maximum grant at 
$2,340. Because of the rising costs of college tuition, the 
subcommittee will be under pressure to raise the cap on the 
maximum Pell grant. Current projections are that over 
$330,000,000 is needed to raise the grant level $100. Due to 
budget constraints and the unpredictability of demands for 
grants, raising the maximum grant will be difficult. To the 
extent that grant and loan programs don't increase to meet 
higher college tuition costs, students would be forced to rely 
more heavily on higher interest loans.
    In fiscal year 1995, funds were also expanded to provide 
for school-to-work opportunity grants. The Departments of 
Education and Labor formed a partnership to implement a 
transition program from school-to-work for noncollege bound 
youth. A freeze in this area would result in fewer States 
receiving grants for full implementation of their school-to-
work opportunity system.
    The Individuals with Disabilities Education Act requires 
that all children with disabilities aged 3 through 21 years be 
served. It is projected that the number of children eligible to 
be served under this program will grow at a rate of 3 percent 
annually over the next few years due to prenatal exposure to 
drugs or alcohol. Because of the mandate that all children be 
provided with a free appropriate public education, States are 
required to serve all children who are eligible. In fiscal year 
1995, 150,960 additional children were served, for an estimated 
total of 5,182,959. A freeze would result in fewer dollars 
available to States to meet the costs of educating children 
with disabilities. When combining the projected 3 percent 
growth rate with the rate of inflation, States would have to 
find an additional 6 percent from other sources in order to 
meet the Federal requirement to serve all eligible children.

                    fiscal year 1996 Budget Request

    The President's budget proposes discretionary increases 
totaling $5,200,000,000, including $3,700,000,000 for high-
priority activities identified as investment programs. These 
programs include, school to work, dislocated worker assistance, 
compensatory education for the disadvantaged, the National 
Institutes of Health, Head Start, Ryan White CARE Act, 
substance abuse treatment, and disability review and automation 
activities of the Social Security Administration. Offsetting 
reductions of $1,100,000,000 are proposed, for a net 
discretionary increase of $4,100,000,000, or 5.9 percent. Of 
the net discretionary increase, $2,400,000,000 is requested for 
current law programs. The CBO estimates that under the 
President's budget recommendations, funding for the 
subcommittee programs would total $73,343,551,000 in budget 
authority and $70,510,400,000 in outlays in fiscal year 1996.

                           Legislative Branch

                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                            Budget authority                 CBO outlays        
                                                     -----------------------------------------------------------
                                                       Fiscal    Fiscal              Fiscal    Fiscal           
                                                        year      year     Freeze     year      year     Freeze 
                                                        1995      1996     versus     1995      1996     versus 
                                                        base     freeze     base      base     freeze     base  
----------------------------------------------------------------------------------------------------------------
Discretionary:                                                                                                  
    Defense.........................................  ........  ........  ........  ........  ........  ........
    International...................................  ........  ........  ........  ........  ........  ........
    Domestic........................................     2,390     2,390  ........     2,289     2,299       +10
                                                     -----------------------------------------------------------
      Subtotal, discretionary.......................     2,390     2,390  ........     2,289     2,299       +10
Violent crime reduction trust fund..................  ........  ........  ........  ........  ........  ........
Gramm-Rudman-Hollings mandatory.....................        90        92        +2        90        92        +2
                                                     ===========================================================
      Total appropriations..........................     2,480     2,482        +2     2,379     2,391       +12
----------------------------------------------------------------------------------------------------------------
NOTE: In all tables, detail may not add to totals due to rounding.                                              


    The President's budget requests a total of $2,610,616,000 
for the agencies and activities within the jurisdiction of the 
Subcommittee on the Legislative Branch. This represents an 
increase of $220,194,900, or 9.2 percent, from the total of 
$2,390,421,100 enacted for fiscal year 1995.
    It is the Committee's strong belief that Congress must lead 
by example in making the spending reductions that are critical 
to achieving a balanced budget. Therefore, the Committee is 
committed to serious and significant reductions in 
appropriations provided to cover the cost of the legislative 
branch. The Committee hopes to reduce overall legislative 
branch appropriations by as much as $200,000,000 below the 
fiscal year 1995 enacted level, or $420,194,900 below the 
President's fiscal year 1996 request.
    The Committee will recommend achieving these reductions 
through a thorough review of all accounts within its 
jurisdiction, both those relative to the operations of Congress 
itself and those funding the Governmentwide activities of 
support agencies such as the Government Printing Office and the 
General Accounting Office. The Committee notes that the Senate 
has already undertaken this difficult task in its action to 
reduce funding for standing, special, and select committees of 
the Senate, and is aware that the Secretary and the Sergeant at 
Arms and Doorkeeper of the Senate are preparing recommendations 
to reduce funding within their respective offices.
    Achieving reductions of this magnitude the Committee 
recommendation will require bipartisan and bicameral 
cooperation. Changes in statutes and internal rules will be 
necessary and will require legislative action by the 
appropriate committees of jurisdiction. Further, reductions of 
this magnitude will have consequences. In all probability 
services will be reduced, and in some cases, eliminated. 
Employment levels throughout the legislative branch will fall. 
The Committee hopes to achieve these reductions in a sensible 
manner that will preclude the more Draconian effects of formal 
reduction-in-force procedures, but that eventuality cannot be 
ruled out.

                         Military Construction

                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                            Budget authority                 CBO outlays        
                                                     -----------------------------------------------------------
                                                       Fiscal    Fiscal              Fiscal    Fiscal           
                                                        year      year     Freeze     year      year     Freeze 
                                                        1995      1996     versus     1995      1996     versus 
                                                        base     freeze     base      base     freeze     base  
----------------------------------------------------------------------------------------------------------------
Discretionary:                                                                                                  
    Defense.........................................     8,850     8,983      +133     9,061     9,073       +12
    International...................................  ........  ........  ........  ........  ........  ........
    Domestic........................................  ........  ........  ........  ........  ........  ........
                                                     -----------------------------------------------------------
      Subtotal, discretionary.......................     8,850     8,983      +133     9,061     9,073       +12
Violent crime reduction trust fund..................  ........  ........  ........  ........  ........  ........
Gramm-Rudman-Hollings mandatory.....................  ........  ........  ........  ........  ........  ........
                                                     ===========================================================
      Total appropriations..........................     8,850     8,983      +133     9,061     9,073       +12
----------------------------------------------------------------------------------------------------------------
NOTE: In all tables, detail may not add to totals due to rounding.                                              

                                OVERVIEW

    The military construction appropriations bill provides 
funding for construction at military installations worldwide 
including construction and operations of military family 
housing. The bill also provides funding for Department of 
Defense base closure activities.

           fiscal year 1995 Base and fiscal year 1996 Freeze

    A budget authority freeze at the fiscal year 1995 level 
would be $133,000,000 over the enacted fiscal year 1995 
discretionary appropriations. The military construction 
appropriation would increase from $8,850,000,000 to 
$8,983,000,000.
    This difference in amount reflects a one-time transfer to 
the ``Base closure II'' account. Transfers of unobligated 
balances are scored as reductions in current budget authority. 
This amount is projected at zero in the enacted fiscal year 
1995 discretionary appropriations.
    A budget authority freeze would be detrimental to the 
readiness or our Armed Forces. The Department of Defense has 
purposely scaled back its funding of military construction in 
recent years due to the base closure and realignment process. 
This process will officially conclude at the end of calendar 
year 1995.

                          MAJOR CUTS/INCREASES

    Significant increases over the enacted fiscal year 1995 
discretionary appropriation of $8,850,000,000 are included in 
what is planned for fiscal year 1996. The planned budget 
authority is a 42-percent increase for the base closure 
accounts. If this account were to remain at the budget 
authority freeze level, the base closure process for each of 
the four rounds would be significantly delayed. If this 
reduction were applied to the upcoming base closure round, no 
funding would be available for it.
    The planned budget authority for family housing is 
increased 15 percent from fiscal year 1995 to fiscal year 1996. 
If this increase does not occur, the backlog of maintenance of 
real property will continue to go unchecked.
    The following are two options which would have to be 
addressed. First, unfunded requirements could be shared by all 
the military construction accounts. This would preserve troop 
housing, community facilities, base closure accounts, and 
family housing. The other option reduces budget authority 
increases in the base closure accounts, family housing, and all 
facility categories in military construction and family 
housing.

Option one

    In the first option, budget authority planned for 
operations would be deleted. This includes funding for piers, 
runway repair, aircraft parking aprons, and hydrant fuel 
systems. Projects used in training would also be reduced. This 
would include training ranges, a combat trainer building, a 
platoon battle course, a B-2 simulator facility, and a C-17 
simulator facility. It would also include reductions for 
consolidated maintenance facilities and chemical 
demilitarization facilities. These maintenance facilities have 
been budgeted for by the Army, Navy, Air Force, and Army 
National Guard.
    The reduction would reduce budget authority planned for 
research and development facilities. These facilities include 
an Anechoic test chamber, a Ballistic Missile Defense Office 
[BMDO] theater high-altitude area defense [THAAD] facility, and 
a Walter Reed Army Institute of Research [WRAIR] facility.
    Planned budget authority would also be reduced for supply 
efforts. This includes fuel replacement tanks, ammo storage, 
and supply storage. Planned medical facility construction would 
be reduced. This would delay the final phase of two hospitals 
as well as life safety projects and clinics.
    Planned administrative facility construction would be 
reduced. This would delay a fleet support headquarters, an 
operations center, and a Defense Mapping Agency facility which 
had been damaged by flooding.
    Planned budget authority for utility projects would be 
reduced. This includes sewer systems, fire protection, and 
heating and air-conditioning systems. Finally, planned budget 
authority for planning and design, unspecified minor 
construction, and NATO infrastructure would be reduced.

Option two

    The second option reduces planned budget authority for the 
following programs: barracks, dormitories, community 
facilities, base closure and realignment implementation, 
construction and renovation of 3,782 units of family housing, 
and operations and maintenance for family housing. There are 
over 350,000 family housing units in the inventory which would 
deteriorate due to lack of operations and maintenance funding.
    Funding levels for military construction kept at a budget 
authority freeze at the fiscal year 1995 level regardless of 
how it is applied would constitute another moratorium on the 
appropriation. Such a reduction would be difficult to recover 
from, in view of declining resources. It would degrade 
readiness, eliminate quality of life initiatives and/or would 
potentially delay base closures by as much as 2 years.

                  Transportation and Related Agencies

                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                            Budget authority                 CBO outlays        
                                                     -----------------------------------------------------------
                                                       Fiscal    Fiscal              Fiscal    Fiscal           
                                                        year      year     Freeze     year      year     Freeze 
                                                        1995      1996     versus     1995      1996     versus 
                                                        base     freeze     base      base     freeze     base  
----------------------------------------------------------------------------------------------------------------
Discretionary:                                                                                                  
    Defense.........................................  ........  ........  ........  ........  ........  ........
    International...................................  ........  ........  ........  ........  ........  ........
    Domestic........................................    13,747    13,747  ........    36,982    37,561      +579
                                                     -----------------------------------------------------------
      Subtotal, discretionary.......................    13,747    13,747  ........    36,982    37,561      +579
Violent crime reduction trust fund..................  ........  ........  ........  ........  ........  ........
Gramm-Rudman-Hollings mandatory.....................       555       575       +20       561       572       +11
                                                     ===========================================================
      Total appropriations..........................    14,302    14,322       +20    37,543    38,133      +590
----------------------------------------------------------------------------------------------------------------
NOTE: In all tables, detail may not add to totals due to rounding.                                              

                                OVERVIEW

    The Subcommittee on Transportation provides funding for all 
the organizations included in the Department of Transportation, 
except for the Maritime Administration. In addition, the 
subcommittee has jurisdiction over a number of related agencies 
including the Interstate Commerce Commission, the National 
Transportation Safety Board, the Panama Canal Commission, and 
the Washington Metropolitan Area Transit Authority.
    In fiscal year 1995, major funding was provided to the 
Federal Aviation Administration, the U.S. Coast Guard, the 
Federal Transit Administration, the Federal Highway 
Administration, the National Highway Traffic Safety 
Administration, the Federal Railroad Administration, and the 
National Railroad Passenger Corporation [Amtrak].

                         fiscal year 1996 Base

    New spending provided in fiscal year 1995 was approximately 
$1,300,000,000 higher than that provided in fiscal year 1994. 
The Committee continued to provide significant increases for 
transportation infrastructure spending. This follows from the 
increased demands of members and transportation-related 
constituents following enactment of major legislation in the 
surface transportation area (the Intermodal Surface 
Transportation Efficiency Act of 1991, or ISTEA), and in the 
aviation area.

            Discretionary Spending (Freezing at 1995 Level)

    The Committee is concerned about several aspects of a 
freeze on Transportation spending for fiscal year 1996. Because 
of authorizing legislation that places increased 
responsibilities on operating entities within the Department, 
and because of congressional expectations regarding investments 
in infrastructure, there are several major program areas under 
the Committee's jurisdiction that would be adversely impacted 
by a freeze.
    Federal Aviation Administration.--Due to the introduction 
of foreign-manufactured aircraft and a recent spate of 
accidents in the commercial aviation area, increased concerns 
regarding aviation safety, poor weather conditions, and the 
need to provide more modern, high-speed radar and 
communications systems, increased funding is warranted for 
Federal Aviation Administration operating and capital accounts. 
A freeze in FAA spending causes the curtailment or delay in 
providing sufficient resources in these areas.
    Coast Guard.--In recent years, the Coast Guard has been 
involved in increasing numbers of search and rescue missions 
and oilspill responses. In addition, over two-thirds of the 
Coast Guard's personnel expenses fall under the military pay 
rules and regulations. Coast Guard resources are being called 
upon more and more for treaty enforcement in the fisheries area 
and to play a significant role in the Caribbean for immigration 
and drug interdiction activities.
    Federal Highway Administration.--With the passage of the 
Intermodal Surface Transportation Efficiency Act of 1991 
[ISTEA], Congress expressed its desire to increase investment 
in our Nation's highways. Reports from the Federal Highway 
Administration point out that U.S. highways are facing 
increased congestion problems, which result in lost 
productivity; and that there is not sufficient progress on 
replacing structurally and functionally obsolete bridges. 
Freezing highway spending at the fiscal year 1995 level will 
retard the progress on promises made under ISTEA.
    In fiscal year 1995, funding for highway construction 
through the ``Federal-aid highways'' account was 
$19,400,000,000. Of this amount, $2,270,000,000 was for 
programs that were exempt by authorizing statute from the 
Committee-imposed obligation ceiling. Because certain highway 
programs are exempt from the obligation ceiling, the Committee 
is charged with approximately $370,000,000 in new outlays every 
year to accommodate these exemptions that were written in 
authorizing legislation.
    By law, even under a freeze assumption, exempt programs can 
grow. However, it is expected for fiscal year 1996 that they 
will remain at the $2,270,000,000 level. Under section 1003 of 
ISTEA, an overall cap on budget authority for the 6-year life 
of the bill is imposed.
    Federal Transit Administration.--One of the major 
activities that has experienced large cost increases due to 
federally imposed mandates is the Nation's transit industry. 
The requirements of the Clean Air Act and the Americans with 
Disabilities Act have imposed significant costs on U.S. transit 
providers. The industry is faced with the pressing problems of 
equipping its fleets and facilities to be handicapped 
accessible, to retrofit its bus fleets with clean-burning, new 
technology engines, and also to help contribute to solving 
congestion and clear air problems in America's cities. The 
Committee reduced transit operating assistance by 12 percent in 
the fiscal year 1995 Transportation appropriations bill.
    Federal Railroad Administration.--A significant issue 
before Congress this year is the appropriate funding level for 
Amtrak. The administration has asked for $750,000,000 for 
Amtrak's basic program, a 3-percent cut from the current 
enacted level. Amtrak's precarious financial condition has 
forced it to cut 21 percent of its service, lay off nearly 
5,500 employees, and cut $435,000,000 in costs. If Amtrak 
funding shortfalls should trigger route closures, then Federal 
law would mandate labor protection payments to the affected 
employees. A complete shutdown of Amtrak could trigger payments 
of about $5,200,000,000. The High Speed Rail Program is 
proposed for funding at $68,000,000 (double the authorized 
amount and double the current program level). The additional 
funds are for research and development of high speed rail 
technologies.

                         Discretionary Outlays

    If the agencies within the Department of Transportation 
receive the same budget authority for fiscal year 1996, it is 
worth noting that prior years' outlays are estimated to 
increase by approximately $600,000,000. This is because bills 
will be coming due from long-term commitments in the areas of 
highway construction, transit new starts construction, and 
airport runway construction. Because of the long-term nature of 
the construction associated with infrastructure investment, 
some projects take as long as 6 to 7 years to spend out the 
money provided. For most major construction projects in the 
transportation area, no more than 20 percent will spend out the 
first year it is made available, whereas 30 to 50 percent of 
the new money provided will spend out in the second year after 
it is first made available. Any freeze in new budgetary 
resources should allow for the increased outlays associated 
with prior-year commitments, that are legal contractual 
obligations of the Federal Government.
    In order to meet reduced outlay allocations, the 
Transportation Subcommittee, unlike other subcommittees, must 
balance outlays associated with prior commitments--which are 
effectively out of the subcommittee's control--against fast-
spending accounts which are personnel intensive. The 
subcommittee is unique in that the Coast Guard and Federal 
Aviation Administration operate 24 hours a day, 7 days a week, 
providing direct, real services to the American public, 
providing for safe and efficient transportation, including 
life-saving missions.
    Any cut in outlays would necessitate a reduction in Coast 
Guard and FAA operations, such as air traffic controllers and 
Coast Guard search and rescue missions. A drastic reduction in 
outlays for this subcommittee might necessitate curtailing 
aviation operations due to controller layoffs and marine 
operations due to a reduction in Coast Guard personnel.

                      The Administration's Request

    Discretionary resources requested by the administration 
include $35,512,190,000 in combined budget authority and 
obligation limitation; and $36,555,207,000 in outlays. This 
takes into account a number of rescissions and program 
eliminations proposed by the administration. It is worth 
noting, however, that the Congressional Budget Office estimates 
that, if the administration's request were enacted, total 
Transportation Subcommittee outlays would actually be 
$37,075,128,000, or $519,921,000 higher than that estimated by 
the Office of Management and Budget. A fiscal year 1996 freeze 
at the fiscal year 1995 level would require an allocation of at 
least $37,600,000,000 in outlays.
    The administration has proposed the elimination of several 
programs, including local rail freight assistance and the 
essential air service programs; appropriated highway 
demonstration projects; and the Interstate Commerce Commission. 
Programs significantly cut under the administration's request 
include transit operating assistance (-$210,000,000), and the 
Federal Aviation Administration's ``Facilities and equipment'' 
account (-$180,000,000).
    The administration has submitted a budget which relies on a 
complete restructuring of the Department into three modal 
administrations, and of the way resources are provided to State 
and local governments. Details on how funds would be 
distributed, and to whom, have not yet been provided to the 
Committee. However, it is worth noting that the 
administration's overall budget request would require a 
$2,300,000,000 reduction in infrastructure investment. These 
cuts, if done on a relative basis, would require a 
$1,900,000,000 cut in the highway account, a $100,000,000 
reduction in the airport grant account, and $300,000,000 
reduction in the transit capital account (on top of the 
proposed $210,000,000 cut in transit operating assistance).
    The necessary legislation to restructure the Department of 
Transportation and to transfer air traffic control to a 
Government corporation is to be submitted by the administration 
later this year. However, the effects of these proposals would 
have the greatest impact beginning in fiscal year 1997.
    Under the administration's request, safety inspector 
staffing is protected from cuts. Hazardous materials, motor 
carriers, and pipeline inspectors are maintained at the 1995 
levels. An additional 253 flight standards and certification 
inspectors are requested for the Federal Aviation 
Administration.

            Treasury, Postal Service, and General Government

                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                            Budget authority                 CBO outlays        
                                                     -----------------------------------------------------------
                                                       Fiscal    Fiscal              Fiscal    Fiscal           
                                                        year      year     Freeze     year      year     Freeze 
                                                        1995      1996     versus     1995      1996     versus 
                                                        base     freeze     base      base     freeze     base  
----------------------------------------------------------------------------------------------------------------
Discretionary:                                                                                                  
    Defense.........................................  ........  ........  ........  ........  ........  ........
    International...................................  ........  ........  ........  ........  ........  ........
    Domestic........................................    11,551    11,391      -160    11,761    11,700       -61
                                                     -----------------------------------------------------------
      Subtotal, discretionary.......................    11,551    11,391      -160    11,761    11,700       -61
Violent crime reduction trust fund..................        39        39  ........        22        35       +13
Gramm-Rudman-Hollings mandatory.....................    11,516    11,897      +381    11,513    11,896      +383
                                                     ===========================================================
      Total appropriations..........................    23,106    23,327      +221    23,296    23,631      +335
----------------------------------------------------------------------------------------------------------------
NOTE: In all tables, detail may not add to totals due to rounding.                                              

                                Overview

    The Treasury, Postal Service, and General Government 
Subcommittee is responsible for funding programs and activities 
of the U.S. Department of the Treasury; the U.S. Postal 
Service; certain Executive Office of the President agencies; 
the General Services Administration; and certain other 
independent agencies. At the time of the preparation of this 
report, the subcommittee has not yet received all of the 
detailed appropriations justification materials in support of 
the President's fiscal year 1996 budget. Nonetheless, the 
subcommittee has made some tentative views and estimates with 
regard to the total amount of new budget authority and outlays 
required to sufficiently fund programs under its jurisdiction 
for fiscal year 1996.

           fiscal year 1995 Base and fiscal year 1996 Freeze

    The discretionary and violent crime trust fund funding 
level for the fiscal year 1995 Treasury bill totals 
$11,590,000,000. This funding provides the basis for a 
significant portion of basic Government operations. It covers 
the costs to collect the taxes, make payments to Government 
beneficiaries, provide and care for Government office space and 
courthouses, and to enforce Federal criminal laws. 
Approximately 70 percent of the discretionary spending goes to 
cover personnel-related costs. These accounts outlay on average 
at over 85 percent. Nearly 12 percent of discretionary spending 
is dedicated to information systems and other automation 
activities of the agencies funded in the bill. The Internal 
Revenue Service's Tax Systems Modernization [TSM] Program is a 
prime example of the information systems funded. TSM 
expenditures total $650,000,000 in fiscal year 1995.
    Despite Government downsizing, personnel-related costs 
continue to rise as length of service accrues, grade creep is 
taken into consideration, and other incremental increases 
required under existing law are implemented. Fixed costs such 
as communications (including automation), utilities, and rent 
remain a constant percentage of expenditures. As a result, when 
reductions are required, the subcommittee has no choice but to 
target programs which provide public services.
    When these trends are taken into account, maintaining 
current levels of service require significant annual increases. 
Assuming fixed costs remain constant, failure to provide those 
increases will lead to a reduction in programmatic operations. 
Using the Customs Service, as an example, the fiscal year 1995 
appropriation for salaries and expenses totals $1,394,793,000 
for 17,524 FTE's. Just to maintain its law enforcement, drug 
interdiction, trade and passenger facilitation activities, and 
operate the current number of ports of entry, with no new 
initiatives, Customs requires an increase of slightly more than 
$40,000,000 in fiscal year 1996. Without that increased 
funding, personnel would have to be reduced by some 400 FTE's. 
This is only one example, but is representative of the impact 
other agencies in the Treasury bill face if level funding is 
considered for fiscal year 1996.

                        The President's Request

    For fiscal year 1996, the President proposes a total of 
$24,937,823,000 in new budget authority for programs and 
activities under the jurisdiction of the subcommittee. This 
total request is $1,483,017,000 above the fiscal year 1995 
enacted appropriations level and $1,203,906,000 above the 
fiscal year 1995 Congressional Budget Office [CBO] baseline 
level. Discretionary spending for fiscal year 1996 totals 
$11,889,400,000 in budget authority and $12,376,483,000 in 
outlays. CBO's reestimate of the President's budget totals 
$24,937,823,000 for budget authority and $21,724,374,000 for 
outlays, or $8,842,000 in outlays below the OMB estimate.
    Increases proposed in the President's budget.--The 
President proposes a net increase of $1,483,017,000 in budget 
authority above the fiscal year 1995 level. This increase 
includes an additional $162,021,000 for mandatory program 
requirements over which the subcommittee has no effective 
control.
    Major increases proposed for domestic discretionary 
programs include an increase of $420,498,000 for construction 
and acquisition activities of the General Services 
Administration [GSA]. This increase is requested to facilitate 
construction of Federal office and court space to meet the 
needs of Federal agencies and the judiciary. The President 
proposes to utilize receipts in the Federal buildings fund 
totaling $554,813,000 to fund these activities coupled with 
$467,400,000 in direct appropriations to the fund. Other 
increases included in the President's budget are $14,490,000 
for a new account under Treasury Departmental Offices, 
``Treasury foreign law enforcement'', to consolidate designated 
Treasury law enforcement personnel deployed at foreign 
locations beneath the Under Secretary for Enforcement. The 
Clinton administration proposes to fund this account through 
commensurate reductions in the salaries and expenses accounts 
of the affected law enforcement bureaus, such as the Secret 
Service, the Customs Service, the IRS, and the Bureau of 
Alcohol, Tobacco and Firearms. The Committee notes that the 
Office of the Under Secretary for Law Enforcement is policy in 
nature--not operational. As a result, the Committee questions 
the merit of transferring these personnel and requisite funding 
to the Department under this new account.
    For the Internal Revenue Service, an increase of 
$727,742,000 is proposed to maintain current levels, enhance 
tax systems modernization efforts, and continue tax compliance 
initiatives begun in fiscal year 1995. Other increases include 
$69,964,000 for the protective activities of U.S. Secret 
Service for workload increases associated with the Presidential 
election and the 1996 Summer Olympics and other initiatives; an 
increase of $15,523,000 for the Bureau of Alcohol, Tobacco and 
Firearms for equipment, financial management, and security 
initiatives; and an increase of $3,000,000 for the Office of 
National Drug Control Policy to provide assistance to State and 
local drug control agencies in high-intensity drug trafficking 
areas [HIDTA's]. These and other smaller proposed increases in 
discretionary funding are almost fully offset by proposed 
reductions in other discretionary programs under the 
subcommittee's jurisdiction.
    Violent crime reduction trust fund.--The President proposes 
that $78,200,000 be appropriated through the violent crime 
reduction trust fund for various Treasury enforcement 
initiatives in fiscal year 1996. The Committee strongly 
supports the role of Treasury enforcement bureaus in the war 
against violent crime. The subcommittee notes, however, that 
these initiatives can only be funded if the 602(b) allocations 
from the trust fund are sufficient to cover these amounts.
    IRS-proposed increases.--The President's budget request 
proposes a net increase of $727,742,000 in funding for the 
Internal Revenue Service [IRS] in fiscal year 1996. Of this 
amount, $477,213,000 is for information systems development, 
including tax systems redesign; $23,207,000 for enhanced tax 
law enforcement initiatives; and approximately $206,397,000 is 
to fund mandatory and inflationary increases to maintain base 
personnel and program levels, to accommodate tax processing 
workload growth, and to continue prior-year revenue compliance 
initiatives. These increases are offset by approximately 
$19,222,000 in productivity savings from improved and 
modernized systems as well as nonrecurring costs associated 
with equipment purchases in fiscal year 1995.
    Internal Revenue Service [IRS] 1995 compliance 
initiative.--The total budget authority requested by the 
President also includes $405,000,000 to maintain funding for 
the second-year implementation of the fiscal year 1995 IRS 
resource compliance initiatives which are expected to realize, 
over a 5-year period, between $9,000,000,000 and 
$10,000,000,000 in additional revenues assumed in the Omnibus 
Budget Reconciliation Act of 1994. In accordance with section 
25(a) of the conference report accompanying the 1995 budget 
resolution, if funding to continue these initiatives is 
provided, the Appropriations Committee's fiscal year 1995 
domestic discretionary spending limits are to be adjusted by 
$405,000,000 in budget authority and $405,000,000 in new 
outlays including the prior-year outlays resulting from 
appropriations of budget authority provided for these 
initiatives.
    Legislative proposals/user fees.--Included in the 
President's budget are numerous legislative initiatives 
proposed for later transmittal which would transfer 
discretionary expenses to permanent indefinite status, 
establish offsetting collections, or establish user fees and 
revolving funds for certain activities. With respect to user 
fees, the President's budget proposes a border crossing fee of 
$1.50 per pedestrian entry and $3 per vehicle entry to be 
collected by both the Immigration and Naturalization Service 
and the U.S. Customs Service to enhance border law enforcement, 
stem illegal immigration, and facilitate cross border commerce 
and traffic. Receipts from the fee are estimated at 
$200,000,000 in fiscal year 1996 at a cost of $100,000,000 to 
collect the fees. The remaining $100,000,000 would be shared 
jointly by Customs and INS to enhance border inspection and 
enforcement activities. The subcommittee notes that the border 
crossing fees proposed are controversial and will have the 
greatest impact on border communities. In addition, legislation 
to establish such fees are normally the jurisdiction of the 
authorizing committees of the Congress, not the Appropriations 
Committee. The President recently announced that he has 
reconsidered and will not send legislation pertaining to this 
fee to Congress. The President further proposes offsetting 
collections totaling $3,100,000 from user fees for marketable 
security activities carried out by the Bureau of the Public 
Debt be used to offset the ``Salaries and expenses'' account. 
In addition, the President proposes appropriations language 
which would authorize an offsetting user fee to cover the 
Customs costs of collecting the harbor maintenance fee [HMF] 
from receipts in the HMF trust fund estimated at $3,000,000.
    The President proposes the establishment of revolving funds 
and permanent indefinite appropriations for a Treasury 
enterprise fund, a U.S. Mint revolving fund, a check forgery 
insurance fund, and a Federal Reserve Bank reimbursement fund 
to cover the costs of certain Treasury financial services, coin 
production, and check forgery reclamation activities. Savings 
cannot be realized from these proposals unless affirmative 
action is taken by the authorizing committees and enacted into 
law by the Congress.
    Reductions proposed in the President's budget.--
Discretionary programs proposed for significant reductions for 
fiscal year 1995 include a decrease of $42,291,000 in the U.S. 
Customs Service. In light of increased border traffic due to 
the North American Free Trade Agreement, and the President's 
decision not to submit legislative language to impose a fee it 
is unlikely that the Committee will support additional 
reductions in the very programs charged with interdicting 
illegal drugs and other contraband while ensuring the 
expeditious flow of people and commercial merchandise.
    Program terminations.--No programs under the subcommittee's 
jurisdiction are proposed for termination in the 
administration's fiscal year 1996 budget.

             fiscal year 1995 Supplemental Budget Requests

    The administration has submitted a supplemental request for 
an additional $9,000,000 for the Office of Personnel 
Management's Government payment for annuitants, employees life 
insurance. This is a mandatory account which finance 
postretirement life insurance benefits. Due to the Government 
downsizing and larger than anticipated number of Federal 
employees taking buy-outs, this has increased OPM's 
contribution requirements for life insurance benefits. Other 
supplementals submitted do not request additional spending 
authority.

                   VA, HUD, and Independent Agencies

                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                            Budget authority                 CBO outlays        
                                                     -----------------------------------------------------------
                                                       Fiscal    Fiscal              Fiscal    Fiscal           
                                                        year      year     Freeze     year      year     Freeze 
                                                        1995      1996     versus     1995      1996     versus 
                                                        base     freeze     base      base     freeze     base  
----------------------------------------------------------------------------------------------------------------
Discretionary:                                                                                                  
    Defense.........................................       285       285  ........       299       283       -16
    International...................................  ........  ........  ........  ........  ........  ........
    Domestic........................................    70,307    76,703    +6,396    74,726    76,512    +1,786
                                                     -----------------------------------------------------------
      Subtotal, discretionary.......................    70,592    76,988    +6,396    75,025    76,795    +1,770
Violent crime reduction trust fund..................  ........  ........  ........  ........  ........  ........
Gramm-Rudman-Hollings mandatory.....................    19,534    19,268      -266    20,566    17,707    -2,859
                                                     ===========================================================
      Total appropriations..........................    90,126    96,256    +6,130    95,591    94,502    -1,089
----------------------------------------------------------------------------------------------------------------
NOTE: In all tables, detail may not add to totals due to rounding.                                              

Department of Housing and Urban Development

    The Department of Housing and Urban Development is one of 
the largest Federal departments in terms of domestic 
discretionary spending, with an annual outlay total approaching 
$30,000,000,000. It expends more discretionary funds than any 
other entity in the VA-HUD, Independent Agencies appropriations 
bill. What is particularly striking, and surprisingly so, is 
the fact that HUD is also one of the Federal Government's 
fastest growing departments in terms of discretionary spending 
(about 9 percent per year). Only the Commerce Department is 
growing faster (12 percent per year), and it is one-tenth the 
size of HUD.
    In addition, current HUD expenditure levels cannot readily 
be reduced because of the magnitude of previously made long-
term contractual commitments and obligations. At the end of 
fiscal year 1994, HUD amassed a total of $222,000,000,000 in 
unexpended budget authority from appropriations made in prior 
years--an amount exceeding the accumulated balance of the 
Department of Defense ($195,000,000,000), and one which dwarfs 
all other Federal agencies.
    Subsidized low-income housing is the largest component of 
HUD spending activities, along with community development 
activities such as the community development block grant 
[CDBG]. Both activities are noteworthy for remarkable growth 
over the past decade, but also for the unique characteristic of 
being funded with new budget authority which have negligible 
outlay impact in the year in which the appropriation was made. 
Through this budgetary quirk, substantial increases have been 
made in program levels, evading normal budgetary controls which 
have had the tendency to focus on limiting outlays on a year-
by-year basis.
    Discretionary Federal assisted housing outlays grew 
steadily from a modest $165,000,000 in 1962 to $5,500,000,000 
in 1980, and soared to an estimated $23,700,000,000 in 1994. 
This is a rate of growth more than triple that of overall 
domestic discretionary spending since 1980. Fully 10 percent of 
all domestic discretionary outlays are now devoted to housing 
assistance, compared to the 4 percent it consumed in 1980 or 
the less than 1 percent share it occupied in the 1962 budget.
    It is surprising that such substantial budgetary growth 
could have occurred, especially in recent years, given the 
increasing constraints on discretionary spending. Perhaps more 
surprising is that this dramatic growth has received little 
attention during the annual debates over the size of the 
discretionary budget. As discussed below, there are a number of 
factors which have obscured the budgetary impact and 
implications of current housing policies. The magnitude and 
growth rate of subsidized housing outlays, however, can no 
longer be ignored, especially in light of previously enacted 
budget caps which freeze aggregate discretionary outlays and 
the prospects for still further reductions.
    In contrast to the multiyear hard freeze on discretionary 
outlays, HUD estimates substantial increases in discretionary 
outlays through fiscal year 2000 under its current services 
analysis of programs using fiscal year 1995 statutory policies 
as a basis. The Congressional Budget Office recently 
reestimated the cost of the administration's budgetary 
proposals, and determined that rather than curbing future cost 
growth for public and assisted housing subsidies, that an 
additional $26,000,000,000 in new outlays would be necessary to 
sustain the President's request. This means, that for the 
portion of the HUD program which has been sufficiently defined 
to make an estimate, it will grow in annual outlays by 50 
percent over the current fiscal year 1996 estimate over the 
next 5 years, to nearly $40,000,000,000.
    Significant concerns remain unresolved over the balance of 
the President's budget request in housing. For example, the 
administration has proposed the initiation of a cost-savings 
approach to heavily subsidized multifamily housing 
developments. CBO, unfortunately, does not currently have 
sufficient information on how such a program would be 
implemented to determine if claimed cost savings can be 
achieved.
    Housing simply is expensive, for Americans rich and poor. 
Moreover, over the past several decades, housing has become 
much more expensive relative to incomes of poor families. Any 
governmental program designed to provide such families safe, 
decent, and adequate shelter must necessarily confront the 
growing cost of such assistance.
    Shorter contract terms mean that additional budget 
authority must be provided sooner to maintain a subsidized 
housing unit for a low-income family. Failure to renew the 
subsidy contract would mean eviction. To avoid such hardships, 
Congress has been called upon since 1990 to provide new 
appropriations for renewal of such expiring contracts. The 
funding needs for section 8 contract renewals are anticipated 
to soar above $20,000,000,000 annually in the next few years.
    In addition, since many of the FHA multifamily 
developmental assistance contracts entered into in the late 
1960's and early 1970's are also becoming eligible for 
termination, a new program entitled ``low-income housing 
preservation'' was enacted and is rapidly growing in cost. This 
program is designed to provide subsidies as an incentive to 
owners to maintain these developments for rental to low- and 
moderate-income families, again to avoid hardship for tenants 
who would otherwise be displaced. Congress also enacted a one-
for-one replacement statute in the early 1980's which requires 
funding a new replacement unit before any public housing unit 
or one subsidized under section 8 could be demolished, sold, or 
otherwise be removed from the inventory.
    This commitment to continue assistance for rental units and 
families occupying these units have resulted in a housing 
subsidy program which is all but permanent in duration. Each 
annual increment of additional housing units brought under 
subsidy increases the overall size of the inventory since 
almost no units are ever eliminated. This means that the annual 
outlay subsidy cost increases at a cumulative rate as the 
inventory expands. HUD now estimates that it has about 4.8 
million units under subsidy, an increase over the 1980 total of 
about 55 percent.
    In addition to inventory driven cost growth, annual subsidy 
outlay increases exceeded changes in the unit count because of 
inflationary pressures on maintenance costs, utilities, 
insurance, depreciation and replacement calculations, and real 
estate appreciation. Moreover, as new tenant selection criteria 
favored lower-income families, the portion of actual rental 
costs contributed by the tenant has declined, forcing up 
subsidy costs. For example, in public housing, tenant incomes 
now average only about 16 percent of the median family income 
of the communities they serve, down from 33 percent in 1980. 
Finally, many public housing developments are incurring 
substantial additional costs of providing security improvements 
and services to prevent further crime and deterioration in 
their developments. These cost factors have forced the average 
annual per-unit HUD subsidy (for all different forms of housing 
assistance) from $1,716 in 1980 to nearly $4,600 in 1994. The 
average per-unit cost in subsidizing a new section 8 
certificate or voucher contract for fiscal year 1995 is $6,857 
per year. Absent major changes in Federal housing policies, 
there is no reason to expect this annual escalation in subsidy 
rates to abate.
    The per-unit cost growth in housing subsidies, when 
combined with the growth in the number of units in the 
inventory have yielded an average compounded annual growth rate 
of 8.6 percent over the past 5 years for HUD-assisted housing 
outlays.
    Housing assistance on a per-participant basis is 
substantially larger than other forms of means-tested benefits 
provided low-income families. For example, in their September 
1994 study of entitlement spending, the Congressional Budget 
Office estimated that the average per-family benefit (in 1990 
dollars) from supplemental security income [SSI] was $3,820; 
for aid to families with dependent children [AFDC], $3,340; 
food stamps, $1,490; and for the earned income tax credit 
[EITC], $600. The Medicaid benefit was estimated at $3,950 per 
family in 1990. By contrast, the annual cost of a new section 8 
rental assistance certificate for that year was estimated at 
$5,992. In addition, section 8 is exclusively funded by the 
Federal Government while AFDC and Medicaid benefit levels 
reflect substantial State matching payments.
    Federal low-income assisted housing programs are not 
entitlements, unlike most income transfer programs of the 
Government, like Social Security or Federal retirement, as well 
as means-tested (based on low income), like AFDC, Medicaid, 
food stamps, or SSI. As a consequence, it is estimated that 
only about 30 percent of eligible families are served by these 
programs, and long, slow moving waiting lists are the general 
rule in most housing agencies.
    Long-term contracts and delays in expending funds for 
housing construction and other community development activities 
cause an outlay pattern for HUD which is unique. Less than 10 
percent of the estimated $30,000,000,000 of HUD outlays, 
departmentwide, in fiscal year 1996 will result from budget 
authority appropriated in that year. The other 90 percent will 
flow from contracts and budget authority in previous years. 
Moreover, these outlays from prior-year authority are estimated 
to rise by $3,000,000,000 over that in fiscal year 1995. In 
other words, the increase in prior-year outlays will match the 
entire outlays effect of all new budget authority provided for 
fiscal year 1996, so even if the entire Department was provided 
only closeout funding, outlays would still increase over the 
current year level.
    Sustaining the existing rate of outlay growth for housing 
and community development will be impossible under the current 
hard freeze imposed on aggregate discretionary outlays. Making 
the necessary programmatic changes to even moderate the rate of 
increase in outlays for HUD will necessarily be dramatic given 
the limited impact of new budgetary authority cuts on current 
outlays. In addition, the thicket of long-term contractual 
obligations, as well as FHA development guarantees, complicate 
any attempt to significantly shift existing housing policies.
    In the 1960's and 1970's a principal mechanism for 
encouraging the development of lower income multifamily rental 
housing was FHA guaranteed loans, often coupled with interest 
rate subsidies. Many such developments later required greater 
subsidy arrangements to prevent foreclosure. New programs such 
as the flexible subsidy or loan management were put into place 
to prevent financial failures, not only to preserve this 
housing stock but also to limit the exposure of FHA to losses 
under the underlying loan guarantee. This dual level of Federal 
subsidy, one to guarantee the underlying mortgage, and a second 
rental subsidy to maintain the viability of the development to 
prevent foreclosure, makes it very difficult to identify a 
policy which will yield net savings to the Government. If the 
Government removes the section 8 subsidy, the Government will 
end up paying for the development under its FHA guarantee, and 
must then continue to directly subsidize low-income tenants, or 
put them out on the street.
    In other cases, where tight housing markets made 
condominium conversions or market rate rentals viable, 
additional subsidies were necessary to preserve their 
availability to lower-income families. These additional 
subsidies continue to add to the cost of maintaining the 
inventory of low- and moderate-income housing.
    Funding constraints will make it impossible to maintain the 
existing inventory in fiscal year 1996, or soon thereafter. If 
Congress fails to confront this budgetary crisis with a 
coherent strategy to make reasoned programmatic reductions, 
arbitrary funding declines will result. This will likely 
include inadequate subsidy levels which, in the case of public 
housing and project-based rental assistance, will yield to more 
marginal operations, ultimately leading to further 
deterioration in housing conditions and project abandonments. 
With respect to tenant-based housing assistance, inadequate 
funding could result in simply a failure to renew expiring 
rental contracts, or could be more broadly distributed to 
pressure either rental reductions, greater tenant 
contributions, or evictions.

Department of Veterans Affairs

    The Department of Veterans Affairs fiscal year 1995 
appropriation was $37,700,000,000. In mandatory spending, the 
fiscal year 1995 budget included approximately $19,500,000,000 
in budget authority and $18,000,000,000 in new outlays. VA 
discretionary spending comprised $18,200,000,000 in budget 
authority and $14,700,000,000 in new outlays.
    VA's mandatory benefits programs will require an increase 
of approximately $461,500,000 over the 1995 level to provide 
full benefits to all eligible beneficiaries in fiscal year 
1996. This increase is needed primarily to provide cost-of-
living adjustments to eligible beneficiaries, including to 2.2 
million service-connected disabled veterans, 428,000 low-income 
veterans, and 670,000 veterans' survivors. If cost-of-living 
adjustments are provided in this program for each of the fiscal 
years 1996-2000, the total cost would be approximately 
$8,000,000,000, including $440,000,000 in fiscal year 1996.
    VA discretionary programs totaled $18,245,000,000 in budget 
authority in fiscal year 1995. The largest discretionary 
appropriation is medical care, which totaled $16,200,000,000 in 
budget authority and approximately $14,000,000,000 in new 
outlays in fiscal year 1995, and funds the operation of 173 VA 
hospitals, 133 nursing homes, 39 domiciliaries, and 376 
outpatient clinics. It is estimated that an increase of 
approximately $700,000,000 in budget authority is required to 
provide care to the current patient population of 2.8 million 
individuals in fiscal year 1996.
    The Committee notes that in the 5-year period from fiscal 
year 1991-95, VA's appropriation rose by a total of 
$3,900,000,000 (32 percent), yet VA's patient population has 
seen very little real growth. It is anticipated that similar 
increases will be required over the next 5 years to provide 
current levels of patient care.
    If no increases are provided to VA over the next several 
years, the Department would be forced to close at least 30, 
300-bed medical centers by the year 2000, and deny care to as 
many as 780,000 indigent veterans who do not have private 
health insurance. To reduce costs in the first year, VA would 
likely eliminate certain types of high-cost medical services 
such as dialysis treatment for end-stage renal disease which is 
currently provided to 4,000 patients. These patients would be 
forced to seek treatment through Medicare-funded programs.
    Should the VA hospital system receive no increase in fiscal 
year 1996, VA would not be able to equip and staff numerous 
outpatient clinics, nursing homes, and hospitals which are 
scheduled to be activated in fiscal year 1996 at a cost of 
$80,000,000 above the 1995 level for activations of new 
facilities. These resources enable VA to operate under the 
guidelines set forth by the Joint Commission on Accreditation 
of Healthcare Organizations and to meet life safety codes.
    In addition, if no increase were provided, the Veterans 
Health Administration would not be able to meet its payroll 
requirements for existing employment. VA is required by law to 
maintain the fiscal year 1995 employment level, and an increase 
of approximately $400,000,000 in additional payroll costs is 
needed to meet that statutory requirement.
    For all nonmedical general operating expenses of the 
Department, VA received $890,000,000 in fiscal year 1995 budget 
authority and $765,000,000 in new outlays. Included in this 
appropriation is $676,000,000 for the Veterans Benefits 
Administration which manages all nonmedical benefits programs, 
including compensation, pensions, education, and home loan 
guarantees.
    Primarily as a result of years of underfunding, the 
Veterans Benefits Administration has a backlog of approximately 
500,000 pending claims. In 1994, it took the Department 7 
months on average to adjudicate a claim, while VA's own 
standard of timeliness is 106 days. If VBA funding were frozen 
at the 1995 level for the next 5 years, it is anticipated that 
the backlog of pending claims would reach at least 1 million 
cases by the year 2000. It is noted that VBA has made progress 
over the past year in reducing the backlog, in large part due 
to the use of overtime. The use of overtime would be impossible 
under a freeze.
    Furthermore, if the Department were provided no increase in 
1996, and assuming there would be no relief from the statutory 
requirement that current VA staffing levels be maintained, VA 
would be unable to award contracts to continue its automated 
data processing modernization program. This initiative is a key 
element in reducing the claims backlog.
    The Department received $354,000,000 in budget authority 
and $16,600,000 in new outlays for major construction funding 
in fiscal year 1995. This program accounted for $458,000,000 in 
prior-year outlays in fiscal year 1995. Without any increase in 
budget authority, the Department would be unable to fund 
construction of new hospitals in California and Florida, as 
planned. Even if no new budget authority were provided in 1996, 
$450,000,000 will be required for prior-year outlays, and a 
total of $1,467,000,000 will be needed for outlays from prior-
year budget authority in the fiscal years 1997-2000.
    It is noted that the President's fiscal year 1996 budget 
includes $188,500,000 for a new hospital at Travis Air Force 
Base and $154,700,000 for a new hospital in Brevard County, FL. 
The Department projects it will cost $140,000,000 and 
$134,000,000, respectively, to staff and equip these facilities 
when they open in fiscal year 2000.

Environmental Protection Agency

    The Environmental Protection Agency received an 
appropriation of $7,240,000,000 in fiscal year 1995 budget 
authority and $2,100,000,000 in new outlays. EPA programs 
accounted for approximately $4,180,000,000 in prior-year 
outlays, primarily from the Superfund and wastewater treatment 
construction programs.
    EPA's core operating programs totaled $3,000,000,000 in 
fiscal year 1995. These programs include salaries, expenses, 
contracts, grants, and facilities-related costs. Included in 
the fiscal year 1995 operating program budget is approximately 
$665,000,000 in State grant funding. These funds help States 
comply with Federal environmental mandates, yet funding 
shortfalls for environmental programs have left States with 
significant unfunded mandates. To meet Federal drinking water 
laws, for example, it is estimated that States have an annual 
funding shortfall of approximately $165,000,000. To prevent the 
furtherance of unfunded mandates, no reductions should be made 
to State grants.
    To fully fund EPA's work force without any reductions in 
force or furloughs would require an increase of approximately 
$60,000,000 over the fiscal year 1995 level. In addition, it is 
anticipated that EPA will have uncontrollable cost increases in 
the operating programs of $30,000,000 for such activities as 
rent and service contracts. If State grants were protected from 
reductions and if current staffing levels were maintained, it 
would be necessary to terminate one or more major initiatives, 
such as the Climate Change Action Program ($125,000,000), the 
Environmental Monitoring and Assessment Program ($36,000,000), 
or the environmental technology initiative ($120,000,000), in 
fiscal year 1996 if the operating programs were frozen at the 
1995 level.
    For the Superfund Program, $1,420,000,000 was appropriated 
in fiscal year 1995. Superfund accounted for a total of 
$1,474,000,000 in fiscal year 1995 outlays, including 
$1,100,000,000 in prior-year outlays. The Committee notes that 
even if no budget authority were provided in fiscal year 1996 
for Superfund, $1,140,000,000 in outlays would be required from 
prior-year appropriations, and a total of $6,257,000,000 would 
be required for the period fiscal year 1996-2000.
    It should be noted that the taxing authority for this 
program expires at the end of calendar year 1995. There is 
significant interest in making major legislative changes to 
this program, including the repeal of retroactive liability for 
toxic waste sites created prior to the enactment of the 1987 
Superfund law. Such a change would have a dramatic impact on 
the Superfund budget. It is estimated that repealing 
retroactive liability without changing cleanup standards would 
increase the Federal cost of cleanups by at least 
$1,500,000,000 annually.
    For water infrastructure funding, $2,800,000,000 in budget 
authority was provided in fiscal year 1995. Outlays totaled 
$2,100,000,000, including $1,959,000,000 from prior-year 
appropriations. This spending enables States to capitalize 
their revolving loan funds for the construction of wastewater 
and drinking water plants. EPA estimates $100,000,000,000 in 
wastewater construction funding is needed nationwide to meet 
Federal water pollution control standards.
    If no new funds were appropriated for the fiscal years 
1996-2000, prior-year outlays associated with the ``Water 
infrastructure'' account would total $12,959,000,000. If 
funding were provided at the fiscal year 1995 level for each of 
the years fiscal year 1996-2000, outlays would total 
$13,849,000,000.

FEMA disaster relief

    Funding for disaster relief expenses represents a 
significant challenge for the Appropriations Committee. It is 
noted that while the fiscal year 1995 discretionary 
appropriation for the Federal Emergency Management Agency's 
disaster relief fund was $320,000,000, the administration has 
requested a $6,700,000,000 emergency supplemental appropriation 
to provide for costs associated with last year's Northridge 
earthquake, as well as prior-year disasters in 40 States and 
disasters expected to occur over the course of the year. This 
amount represents close to 10 percent of the VA, HUD, and 
Independent Agencies' fiscal year 1995 discretionary budget 
allocation.
    Under current law, $320,000,000 in FEMA disaster relief 
spending is subject to the discretionary spending caps. Amounts 
appropriated in excess of $320,000,000 have been considered 
emergency spending.
    The Committee notes that the current 10-year historical 
average annual cost of disaster relief is approximately 
$1,130,000,000 (excluding costs associated with the Northridge 
earthquake). It should be noted that the CBO baseline does not 
reflect this current estimate. Freezing disaster spending at 
the 1995 level will likely result in a shortfall of at least 
$800,000,000.
    Finally, since hazard mitigation is a key component to 
reducing future disaster costs, FEMA's recent focus on 
mitigation efforts should be supported. FEMA's fiscal year 1995 
mitigation activities, outside of those funded through the 
disaster relief fund, totaled approximately $100,000,000.

National Aeronautics and Space Administration

    The National Aeronautics and Space Administration received 
an appropriation of $14,400,000,000 in fiscal year 1995 budget 
authority and $14,500,000,000 in total outlays. Approximately 
$5,200,000,000 is estimated as prior outlays for fiscal year 
1996.
    In science, NASA would like to initiate development of a 
series of low-cost, advanced technology spacecraft and continue 
the Mission to Planet Earth Program. In aeronautics, NASA plans 
to continue development of high-risk technology for advanced 
supersonic commercial jets and safer, more efficient air 
transportation. In space technology, NASA plans to build an 
experimental rocket that could someday replace the space 
shuttle. In space communications, NASA plans a $140,000,000 
increase for fiscal year 1996 to buy more tracking and data 
relay satellites for space communications between Earth-
orbiting spacecraft like space shuttle and ground operators. A 
budget freeze would disrupt and defer most of these 
aforementioned activities.
    The space station is the culmination of a major redesign 
begun in 1993 in response to lower budget projections for the 
agency. Through fiscal year 1995, NASA will have spent about 
$14,000,000,000 and will require about $13,000,000,000 more 
through fiscal year 2002 to complete development and assembly. 
The space station program was appropriated $2,100,000,000 in 
fiscal year 1995 to continue development toward a first flight 
in November 1997. NASA was also appropriated $100,000,000 for 
continued cooperation with the Russians on their space station 
Mir. NASA requires an equal amount of funding in fiscal year 
1996 to keep the space station on schedule and pay Russia for 
use of Mir.
    Since the space station is the largest development program 
in NASA's budget, opponents of the program are likely to try 
again to cancel it. If the program were terminated just prior 
to fiscal year 1996, NASA would save approximately 
$1,500,000,000 in budget authority and $1,000,000,000 in 
outlays. About $600,000,000 in budget authority would be 
required to pay termination fees for the program contractors. 
Cancellation would represent a tremendous setback for the human 
space flight program and cooperative international R&D; efforts.

National Science Foundation

    The National Science Foundation received an appropriation 
of $3,360,000,000 in fiscal year 1995 budget authority and 
$2,860,000,000 in total outlays. Approximately $1,830,000,000 
is estimated as prior outlays for fiscal year 1996.
    The Foundation is a major supporter of fundamental research 
conducted at colleges and universities. The President requested 
$3,360,000,000 for fiscal year 1996, an amount equal to the 
1995 appropriated amount. The consequences of a budget freeze 
in fiscal year 1996 would depend on whether $130,000,000 in 
funding for academic research infrastructure were rescinded. If 
rescinded, the President's request for fiscal year 1996 would 
need to be reduced by an equal amount. The rescission was 
proposed by the President and is under consideration by the 
Congress.
    The ``Research and related'' account, which represents 
about 70 percent of NSF's budget, was the only account proposed 
for a significant increase in fiscal year 1996, about 
$170,000,000, or 8 percent. About two-thirds of this account 
funds research projects submitted by individual and small group 
investigators. The remaining funds primarily support major 
research centers and facilities such as the advanced scientific 
computing centers, national astronomy centers, and the U.S. 
polar research programs.
    The other NSF accounts, such as education and human 
resources, academic research infrastructure, major research 
equipment, and salaries and expenses, are slated for little or 
no increase for fiscal year 1996. The Foundation has recently 
revalidated the cost estimates for its single largest 
development program, the laser interferometer gravitational 
wave observatory [LIGO]. The program is projected to cost about 
$365,000,000 through fiscal year 2001 for construction and 
initial operation.
    The Committee notes that the Foundation is studying the 
need for other relatively high-cost items. These include the 
polar cap observatory estimated at about $25,000,000 to 
$30,000,000, a new arctic research vessel for about 
$150,000,000, a new radio telescope in the $200,000,000 range, 
and reconstruction of the South Pole station estimated at about 
$200,000,000. No budget growth for the Foundation would 
certainly defer initiation of these programs.
                                       U.S. Senate,
         Committee on Agriculture, Nutrition, and Forestry,
                                     Washington, DC, April 7, 1995.
Hon. Pete V. Domenici
Chairman, Committee on the Budget, U.S. Senate, Washington, DC.
    Dear Mr. Chairman: This letter provides the views of the 
Senate Committee on Agriculture, Nutrition, and Forestry 
regarding the FY 1996 Budget Resolution. These views are 
provided in re- 
sponse to your February 13 letter and are in accordance with 
the requirements of the Congressional Budget Act, as amended.
    In past years, this Committee has been willing to reduce 
spending and to meet its reconciliation instructions. We except 
the Committee to do the same this year as we move toward a 
balanced budget.

         mandatory spending under the committee's jurisdiction

    CBO's March 1995 baseline projects that mandatory spending 
under the Agriculture Committee's jurisdiction will total $250 
billion over the next five years, FY 1996-2000. Food and 
nutrition programs account for $200 billion, or 80 percent of 
this total. The Food Stamp Program alone is expected to cost 
$145 billion--72 percent of total food and nutrition program 
spending.
    The other $50 billion is in three areas. Farm programs, 
which include commodity price-support, trade, crop insurance, 
and long-term land retirement programs, are expected to total 
$57 billion. Various activities of the Forest Service and the 
Rural Utilities Service account for another $4 billion. 
Finally, CBO projects repayments of $11 billion on certain 
Farmers Home Administration, P.L. 480, and Rural Telephone Bank 
loans.

             Farm Program Spending Continues At High Levels

    While farm program spending is certainly down from the peak 
of the mid 1980s, it continues at levels well above the longer-
term historical average, even after adjustment for inflation. 
Real farm program spending (including discretionary 
administrative expenses) averaged $14.9 billion per year during 
FY 1991-95, up from $11 billion during FY 1961-70, a period 
characterized by weak commodity prices and large price-support 
expenditures. Perhaps equally important, past farm program 
savings have often failed to materialize. In 1990, Congress 
believed that cuts enacted would reduce spending in the next 
five years by nearly $10 billion. These cuts reduced spending 
compared to what otherwise would have occurred. Nevertheless, 
total spending went up not down. Overall, the government spent 
$14 billion more than anticipated.
    CBO projects that mandatory farm program spending will be 
between $11 and $12 billion per year during the FY 1996-2000 
period, down somewhat from the last five years. However, these 
projections are highly tentative because they depend on a 
number of critical assumptions; crop yields based on ``normal'' 
weather, the continuation of current trends in commodity 
markets, a relatively strong performance of both the U.S. and 
world economy, and continuation of current farm policies both 
here and abroad.
    More often than not, spending projections turn out to be 
too low. Reductions in target prices in the 1985 Food Security 
Act and reductions in payment acres in the 1990 Budget 
Reconciliation Act have reduced the budget exposure inherent in 
farm programs, but it remains high. The most recent example is 
FY 1993, when large crops in the U.S. combined with weak export 
demand caused farm program expenditures to soar to $18 billion.

                        reforming farm programs

    We can strengthen American agriculture even as we reduce 
subsidies if we follow these principles in 1995 farm 
legislation: Increase opportunities for farmers to make 
planting choices and other production decisions on the basis of 
market signals, not government programs; enhance our continued 
international competitiveness; continue to maintain consistency 
between farm programs and environmental goals; offer program 
certainly for five years; and continue a basic safety net for 
farm income, given the vagaries of weather.

                    the conservation reserve program

    The Committee recommends that the budget resolution 
baseline adopt CBO's baseline for the Conservation Reserve 
Program, which incorporates the Department of Agriculture's 
December 1994 decision to extend and modify certain CRP 
contracts.

                      food and nutrition programs

    The Committee will very likely not be able to meet its 
reconciliation instruction through farm programs alone. We 
recognize the important role of nutrition programs, but we 
anticipate that reforms will also be required in mandatory food 
and nutrition programs. The CBO baseline projects mandatory 
food and nutrition programs outlays of $44.4 billion in FY 
2000, up 29 percent from the $34.4 billion estimated for FY 
1995.
    The Committee looks forward to working with you as we move 
ahead with our budget responsibilities this year.
                        Sincerely,
                                   Richard G. Lugar,
                                   Chairman.
                                   Patrick Leahy,
                                   Ranking Minority Member.
                                ------                                

                                       U.S. Senate,
                               Committee on appropriations,
                                     Washington, DC, April 6, 1995.
Hon. Pete V. Domenici, 
Chairman.
Hon. J. James Exon,
Ranking Minority Member, Committee on the Budget, U.S. Senate, 
        Washington, DC.
    Dear Chairman Domenici and Senator Exon: On behalf of the 
Committee on Appropriations, we submit herewith the views of 
the Committee on the first concurrent resolution on the budget, 
in compliance with section 301(d) of the Congressional Budget 
Act of 1974, as amended.
                        Sincerely,
                                   Mark O. Hatfield,
                                           Chairman.
                                   Robert C. Byrd,
                                           Ranking Minority Member.
                                ------                                

                                       U.S. Senate,
                               Committee on Armed Services,
                                     Washington, DC, April 4, 1995.
Senator Pete V. Domenici,
Chairman.
Senator J. James Exon,
Ranking Minority Member, Committee on the Budget, U.S. Senate, 
        Washington, DC.
    Dear Pete and Jim: In accordance with your request, we are 
forwarding our recommendations for the Fiscal Year 1996 Budget 
Resolution.
    We recommend that the Fiscal Year 1996 defense budget be 
maintained at the Fiscal Year 1995 levels in real terms. We 
propose setting the budget authority for Fiscal Year 1996 at 
$270 billion and outlays at $273 billion. The defense budget 
must provide sufficient resources to meet the national security 
requirements and ensure the United States' position as a world 
leader.
    Providing these resource levels will improve the balance 
between present and future readiness, quality of life of our 
military personnel and their families, modernization of the 
force to meet requirements, and the necessary emphasis on 
missile defense systems. The current defense budget forces 
serious trade offs in future readiness to meet minimum current 
readiness requirements and is inadequate to meet our national 
security goals.
    We continue to support efforts to address the disparity 
between military retirement Cost-of-Living Adjustments and 
federal civilian retirement Cost-of-Living Adjustments. Efforts 
were successful in rectifying the inequity for Fiscal Year 
1995. The President's budget will eliminate the inequity for 
Fiscal Year 1996. However, the inequity would still exist for 
Fiscal Years 1997, and 1998. The Budget Resolution and the 
subsequent Budget Reconciliation Act are the appropriate 
vehicles to correct this situation.
    Over the next several months, the committee will continue 
to review the defense budget in an effort to assess future 
requirements and ensure outyear budgets are based on national 
security requirements. We will re-prioritize the President's 
Budget to achieve the appropriate balance of near-term 
readiness, modernization and quality of life programs. The 
committee will eliminate defense spending that does not 
contribute directly to the national security of the United 
States and reevaluate the budget impacts of peacekeeping roles, 
policies, and operations. Even after applying these stringent 
measures, the Administration's request will not be sufficient 
to address the short falls we have noted in this letter. The 
defense top line must be set at the Fiscal Year 1995 level 
adjusted to maintain pace with inflation.
    We continue to support your efforts to re-establish the 
firewalls between defense and non-defense discretionary 
spending. We do believe the firewalls should be established 
after defense funding has been increased to adequate levels 
necessary to support our security needs.
    We look forward to working with you on a Budget Resolution 
which will result in a budget that supports a strong National 
defense.
                        Sincerely,
                                   Sam Nunn,
                                           Ranking Minority Member.
                                   Strom Thurmond,
                                           Chairman.
                                ------                                

                                       U.S. Senate,
          Committee on Banking, Housing, and Urban Affairs,
                                     Washington, DC, April 6, 1995.
Senator Pete V. Domenici,
Chairman.
Senator J. James Exon,
Ranking Member, Committee on the Budget, Washington, DC.
    Dear Senators Domenici and Exon: This letter transmits the 
views and estimates of the Committee on Banking, Housing and 
Urban Affairs regarding the funding of programs in our 
jurisdiction, as required by Section 301 of the Congressional 
Budget Act of 1974.
    Members of the Committee continue to be concerned by the 
size of the Federal deficit and intend to apply vigorous tests 
of effectiveness and efficiency during the authorization 
process.

     DEPOSIT INSURANCE PREMIUM DISPARITY BETWEEN BANKS AND THRIFTS

    The Committee is concerned about the significant disparity 
between bank and thrift insurance premiums that will develop 
when the Federal Deposit Insurance Corporation (FDIC) lowers 
bank premiums once the Bank Insurance Fund (BIF) is fully 
recapitalized. Thrift premiums could be as much as five times 
greater than bank premiums, since thrift premiums would need to 
remain at higher levels to capitalize the Saving Association 
Insurance Fund (SAIF) fully. The higher thrift premiums would 
also be needed to pay interest on Financing Corporation (FICO) 
bonds issued specifically to help resolve the thrift crisis 
that developed in the 1980's. SAIF assessment revenue currently 
is about $1.7 billion a year. FICO interest payments run $779 
million a year, about 45 percent of all SAIF assessments.
    As of December 31, 1994, BIF had unaudited reserves of 
$21.8 billion, or about 1.16 percent of insured deposits, and 
SAIF had unaudited reserves of $1.9 billion, about .27 percent 
of insured deposits. The current average premium rates are 23 
cents for every $100 in insured deposits for banks and 24 cents 
for thrifts. The FDIC has proposed adjusting bank premium rates 
as early as the September 1995 payment to reflect the Fund's 
recapitalization. However, the FDIC has projected that SAIF 
will not be fully capitalized for at least another 7 years. The 
FDIC has projected that BIF's reduced premiums will average 4 
to 5 basis points, while SAIF's will average 24 basis points 
until SAIF is fully capitalized. Since 1989, SAIF's total 
deposit base has declined by 25 percent, and the portion of the 
base available to pay FICO has declined by 48 percent. Although 
these declines reflect the RTC's resolution of problem thrifts, 
the deposit base continues to decline, though at a decreasing 
rate, and the portion of the base available to pay FICO 
interest also continues to decline. If this experience 
continues, the premium differential is likely to increase, and 
the sufficiency of SAIF premiums to pay the FICO bond interest 
may be jeopardized. Additional pressure on the SAIF stems from 
the fact that the RTC's authority to place failed thrifts into 
conservatorship expires on June 30, 1995. Starting July 1, 1995 
the cost of all new thrift failures must be paid out of the 
SAIF.
    The premium disparity has raised the concern that thrifts 
will be at a significant competitive disadvantage to banks. 
This outcome could adversely affect the viability of the thrift 
industry and the SAIF, and could result in the need for 
appropriated funds. Most of the options that have been 
suggested to lessen the potential impact of the premium 
differential involve shifting some of the costs of 
capitalization or future FICO interest payments to either BIF 
members or to the taxpayer. The FDIC has estimated that about 
$15.1 billion would be required to establish parity between the 
BIF and SAIF. Of this amount, $6.7 billion would be needed to 
increase the SAIF from its 1994 year end balance of $1.9 
billion to $8.7 billion, the amount currently required to 
achieve the designated reserve ratio of 1.25. The remaining 
$8.4 billion of the $15.1 billion total is the amount that 
would be needed at current interest rates to address the FICO 
obligation. (The $8.4 billion is the amount that would have to 
be invested today to service the FICO bonds until maturity 
between the years 2017 and 2019, since the bonds are not 
callable.)
    The deposit insurance premium disparity issue is a priority 
for the Committee. We will fully consider all potential options 
for addressing this matter. We urge the Budget Committee to 
work with the Banking Committee in preparing this year's budget 
resolution to ensure that the resolution does not preclude 
legislative options to solve this problem.

               EXAMINATION FEES FOR STATE-CHARTERED BANKS

    The Committee in the past has opposed a new Federal 
examination fee for state chartered banks. The proposal was 
first submitted by the Administration in 1933 and rejected by 
this Committee. The Administration has renewed its proposal to 
raise $1 billion by the year 2000 by the imposition of this fee 
on state-chartered banks.
    Committee members in the past have expressed the following 
concerns with this proposal: First, it would undermine the 
``dual banking'' system. Second, it would create an inequity 
for state-chartered banks which already pay fees to their state 
regulators. Third, the banking industry as a whole, including 
state-chartered banks, pays all the expenses of the FDIC 
through insurance premium assessments and, with respect to the 
Federal Reserve Board, through forgone interest on mandated 
sterile reserves.

                       EXPORT ADMINISTRATION ACT

    This year, the committee will reauthorize the export 
Administration Act of 1979, as amended. The Act provides a 
legal basis for the export control regime in place since the 
beginning of the Cold War in the late 1940's. The Act expired 
on August 20, 1994, and the Bureau of Export Administration is 
operating under the emergency authority of the International 
Economic Emergency Powers Act.
    The Administration has not yet presented its proposed 
reauthorization legislation to the Committee. The 
Administration has requested an authorization of $48.441 
million for the Bureau of Export Administration of the 
Department of Commerce for FY 1996 to carry out the purposes of 
the Export Administration Act. The Committee intends to provide 
an authorization in an amount similar to the Administration's 
request.

                           EXPORT-IMPORT BANK

    This year, the Committee will reauthorize the Tied Aid 
Capital Projects Fund of the Export-Import Bank of the United 
States. Authorization for the fund expires on September 30, 
1995. The fund was established to provide U.S. exporters with 
matching financing when they face tied aid concessionary 
financing offers on the part of their foreign competitors. The 
Administration has requested $100 million for the fund for FY 
1996. The Committee intends to provide an authorization in an 
amount similar to the Administration's request.

               SECURITIES AND EXCHANGE COMMISSION FUNDING

    The Committee believes that SEC ``user fees'' assessed on 
the industry should bear a rational relationship to the cost of 
regulation. The Committee opposes a further increase in SEC 
user fees for deficit reduction.
    The proposed budget would raise approximately $844 million 
through SEC ``user fees.'' The SEC user fees contemplated by 
the proposed budget include registration fees (paid by issuers 
of securities), transaction fees (paid by brokers and dealers 
for trades executed on registered exchanges), tender offer and 
merger fees (paid by registered corporations) and certain 
miscellaneous fees.
    The total SEC budget proposed for fiscal year 1996 is 
$342.9 million. The budget provides for user fees to raise a 
half a billion dollars over the SEC budget figure. The $500 
million would go into the general Treasury, to be used for 
deficit reduction.
    User fees that vastly exceed the cost of regulation amount 
to a tax on the securities industry, and a tax on capital 
formation. The budget proposal includes three tiers of fees: 
Tier 1 would increase existing fees; Tier 2 would establish new 
permanent fees and tier 3 would permit appropriations 
legislation to set new temporary fees each year to offset the 
remaining SEC funding needs.
    The Committee plans to work with the Appropriations 
Committee to reduce the amount of SEC user fees. In order to do 
so, however, the Appropriators will have to find funds to 
dedicate to the SEC budget amount of $342.9 million and to 
offset the $500 million in collections that go towards deficit 
reduction.
    While the Committee believes that deficit reduction is 
laudable--and critical to the future health of the economy--it 
is counterproductive if accomplished through a tax on capital 
formation.

               housing and community development programs

    This year, the Committee's agenda includes the task of 
fundamentally reforming the way in which the federal government 
addresses the nation's affordable housing and community 
development needs. Proposals for the reform of the Department 
of Housing and Urban Development range from minor modification 
of existing programs to major departmental downsizing to the 
complete elimination of the Department, with its 
responsibilities transferred throughout the government or, in 
most cases, back to the various states and localities. Even HUD 
has proposed a ``Reinvention blueprint'', which would 
consolidate most of the Department programs into performance-
based funds and create a new corporate FHA.
    In any event, it is abundantly clear that the scope of the 
Department's responsibilities must be narrowed and its mission 
must be clarified. There is a need to redirect Federal housing 
and community development policies from HUD micromanagement and 
a ``one size fits all'' mentality to policies that rely on 
state and local decisionmaking.
    In addition to significant organizational, management, and 
program deficiencies, HUD faces a number of complex problems of 
enormous magnitude, including: the need to reduce mortgage loan 
defaults and address the physical deficiencies of insured 
multifamily housing properties; the need to resolve the 
billions of dollars of backlogged public housing rehabilitation 
needs, including increased vacancy rates, and declining public 
housing tenant incomes; and the need to address the escalating 
costs of providing section 8 assistance to lower income 
families. As discussed in the National Academy of Public 
Administration report, the number of HUD programs has grown 
from 50 in 1980 to some 240 today. HUD has neither the 
management or administrative capacity to address this multitude 
of complex programs. Moreover, HUD has drifted from its initial 
``bricks and mortar'' priority to an agency that wants to be 
all things to all people. This simply is not possible.
    The Committee sees the HUD reform process as an opportunity 
to provide the Appropriations and Budget Committees with real 
guidance towards funding decisions that will allow housing and 
community development programs to work effectively on the state 
and local level with an emphasis on fiscal responsibility. To a 
large degree, HUD reform needs to be budget driven in order to 
reflect the tightening budget constraints facing federal 
programs.
    In addition, estimates of HUD's future outlay increases, 
based on current obligations alone, make it clear that 
fundamental reform is needed now in order to prevent an 
uncontrollable budgetary crisis from developing by the end of 
the decade. For example, the cost of existing section 8 
assistance will approach $20 billion annually by the year 2000. 
To meet the increasing costs and demands of HUD housing and 
community development programs and the Nation's housing and 
community development needs, the Committee is committed to a 
complete examination and reform of HUD programs, including 
existing federal approaches to the FHA Multifamily Mortgage 
Insurance Housing programs, the FHA Single Family Mortgage 
Insurance programs, HUD's McKinney Homeless Assistance 
programs, the Section 8 Assisted Housing programs, the Public 
Housing Program, the Community Development Block Grant program, 
and the HOME program. In addition, the Department of 
Agriculture's rural housing programs and HUD's Fair Housing 
programs will be the subject of close scrutiny.
    Nevertheless, the Committee asks the Budget Committee to be 
cognizant of the fact that fundamental reform of HUD will 
require adequate resources to ensure that existing housing and 
community development programs are ``actually'' reformed and to 
ensure that the Department or a successor entity will be 
positioned to accomplish its mission in the future.
    Finally, the overall goal of the Committee is to seek ways 
to contain growing costs to the federal government, to 
consolidate housing and community programs (where appropriate), 
to provide for greater flexibility and responsibility at the 
state and local level, and to facilitate private sector 
involvement in developing solutions to the affordable housing 
and community development needs of the Nation.

                            transit program

    The Administration's fiscal year 1996 budget request for 
the Federal Transit Administration (FTA) is based on a major 
restructuring of the more than thirty grant programs 
administered by the Department of Transportation into a single 
block grant to be called the ``Unified Transportation 
Infrastructure Investment Program (UTIIP)''. The FTA's 
discretionary capital program, as well as its formula capital 
and operating grant level programs, would be consolidated under 
the UTIIP at greatly reduced levels.
    We are halfway through the current fiscal year and the 
administration has failed to submit to Congress any of the 
authorizing legislation needed to create the UTIIP program, 
which is the foundation of its fiscal year 1996 transportation 
budget request. However, in fiscal year 1996, under the 
proposal outlined by the administration, mass transit operating 
grants would be reduced by 30 percent--from the current level 
of $710 million to $500 million. In fiscal year 1995, the 
operating grant program absorbed a 12 percent cut after having 
been level funded at about $800 million for several years.
    The administration's budget for transportation programs 
includes an overall cut of $2.3 billion. Transit's allocated 
share of the cut would result in a $300 million reduction in 
transit capital and a $210 million cut in transit operating 
aid. The across-the-board reduction in operating aid would 
result in fare increases, service cuts, and even elimination of 
service with respect to transit agencies in smaller urbanized 
areas, who rely most heavily on federal operating aid. While 
the largest transit grantees may use federal operating aid for 
as little as five percent of their operating needs, federal aid 
may comprise forty percent or more of the operating budgets for 
smaller transit agencies.
    Transit agencies are facing mounting operating costs as a 
result of federal mandates such as the Americans with 
Disabilities Act, the Clean Air Act, and federal drug and 
alcohol testing requirements. The FTA has estimated these costs 
to be $850 million per year. They include items such as 
equipping fleets and facilities to be handicapped-accessible, 
procuring or retrofitting bus fleets with clean fuel burning 
engines, providing or contracting for paratransit service, etc.
    The administration's budget proposal promises enhanced 
flexibility for states in allocating their new UTIIP funds. 
However, the likelihood of this complex, controversial, and as 
yet unseen proposal being enacted is so remote that we must 
assume a current law-based budget (i.e., the Intermodal Surface 
Transportation Efficiency Act of 1991). Reviewing the 
President's transit budget in the context of current funding 
formulas, transit agencies will face enormous new costs and 
dramatic cuts in federal aid.
    We believe that any necessary cuts should be phased-in to 
enable transit agencies sufficient time to secure additional 
sources of revenue, plan service and route adjustments, and 
work on legislative proposals to better utilize a clearly 
shrinking allocation of federal resources. We urge the Budget 
Committee to consider these issues, as well as transit's role 
in reducing urban traffic congestion, in transporting riders 
from isolated communities to their daily activities, and in 
serving the needs of the poor and elderly. Sufficient resources 
must be provided to enable mass transit users to receive the 
vital services they need.
                        Sincerely,
                                        Alfonse M. D'Amato,
                                           Chairman.
                                ------                                

                                       U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                    Washington, DC, April 20, 1995.
Hon. Pete V. Domenici,
Chairman.
Hon. J. James Exon,
Ranking Member, Committee on the Budget, U.S. Senate, Washington, DC.
    Dear Pete and Jim: In accordance with section 301(d) of the 
Congressional Budget Act, we are pleased to present the views 
of the Senate Committee on Commerce, Science, and 
Transportation concerning President Clinton's FY 1996 budget 
request for programs within the Committee's jurisdiction.
    Our comments are directed to new legislative initiatives, 
deficit reduction options, and economic recovery opportunities. 
We hope you find this information useful as you deliberate the 
budget resolution.

                      transportation (in general)

    The President's FY 1996 budget request for the Department 
of Transportation (DOT) is $36.9 billion, down $2 billion from 
the FY 1995 enacted level. The request also reflects a proposed 
restructuring of the DOT. The ten operating administrations 
within DOT would be folded into three: Intermodal 
Transportation, Aviation and Coast Guard. DOT is also 
considering ways to improve its efficiency by refocusing its 
programs into three categories: a Unified Allocation Account, 
Federal Discretionary Grants and State Infrastructure Banks.
    The Committee supports reducing the size of the federal 
government and streamlining federal programs. However, the 
Committee is concerned such consolidations could hinder its 
efforts to advance national transportation priorities and 
objectives. Therefore, at this time the Committee does not plan 
to consider legislation to consolidate transportation funding 
programs under our jurisdiction nor does the Committee support 
activities by other Committees to move in this direction during 
the first session of the 104th Congress.
    The Committee does support conceptually the President's 
proposal to afford flexibility to states to enable the 
utilization of federal allocations to meet each states' unique 
transportation needs. However, the Committee does not support 
the utilization of trust funds other than for their intended 
purposes.

                                aviation

    The Committee believes its primary emphasis in the area of 
aviation oversight is to ensure safe operation within the 
Nation's air space. As the majority of Federal Aviation 
Administration (FAA) programs are funded by revenues collected 
from the travelling public, these taxpayers should benefit from 
enhanced safety and service.
    As mentioned previously, the President's FY 1996 budget 
reflects the proposed restructuring of the DOT announced by 
Secretary Pena on February 2nd. The budget is intended to 
streamline government, while maintaining safety and improving 
competitiveness. With regard to streamlining government, funds 
previously identified as Airport Improvement Plan funds would 
be placed into a new Unified Transportation Infrastructure 
Investment Program (UTIIP), which would contain, but not co-
mingle, all national transportation infrastructure funds. The 
Administration also continues with its plans to ``corporatize'' 
the FAA air traffic control system in 1997.
    The President's request for $6.9 billion, exclusive of the 
Airport Improvement Program (AIP), is significantly less than 
the $7.825 billion authorized in the FAA Authorization Act of 
1994 (Public Law 103-305). The Committee has some concerns 
regarding the disparity in these figures, especially given the 
fact that an uncommitted Trust Fund balance of $3.3 billion is 
projected for the end of FY 1996.
    The FY 1996 budget request for the AIP is for a $1.5 
billion obligation limitation, which is a slight increase over 
the FY 1995 appropriated level of $1.45 billion, but far short 
of the authorized level of $2.28 billion.
    AIP is a FAA program which provides grants to fund the 
capital needs of the Nation's commercial airports and general 
aviation facilities. The Secretary of Transportation makes 
project grants for airport development and planning with the 
purpose of maintaining a safe and efficient nationwide system 
of public use airports.
    The Committee is concerned AIP has suffered annual 
decreases for the past several years, having gone from $1.9 
billion in 1992 to a level of $1.45 billion for FY 1995. In 
fact, airports have lost more than $1.1 billion in authorized 
funds in the past two fiscal years. The Committee notes that 
under current law, AIP funding can be no less than $1.7 billion 
to ensure airports receive their full entitlement allocation. 
Such an erosion in AIP funding has a dramatic impact on the 
ability of airports to fund needed safety projects and facility 
improvements. In total, FAA has $8 billion in unfunded pending 
grant requests.
    The FAA reports 23 airports experience flight delays of 
20,000 hours or more annually. At the same time, passenger 
enplanements at our Nation's airports are predicted to increase 
from 452 million in 1991 to 861 million in 2005 (a six percent 
annual increase over this 15 year period).
    The growth in demand and the limited amount of AIP funds 
places a tremendous strain on the existing aviation system, and 
will require a commitment to the expansion of system capacity. 
The Committee continues to believe Trust Fund monies should be 
spent for their intended purposes, and surpluses should not be 
allowed to build up while capital needs go unmet.
    The President's request for Operations funding is $4.7 
billion, or a three percent increase over the FY 1995 level, 
but $110 million less than the amount authorized. The Committee 
feels this represents the minimum level of funding needed to 
support Operations. The Committee notes this budget accounts 
for staffing reductions, as well as the addition of 261 
aviation inspectors and support personnel. The Committee 
wonders whether this number will be sufficient to meet the 
safety goals of the existing aircraft fleet, as well as meeting 
the additional certification requirements arising from the 
enactment of Public Law 103-411 (redefining the definition of 
``Public'' aircraft).
    The FY 1996 request includes $1.9 billion for Facilities 
and Equipment (F&E;) which is a nine percent, or $180 million 
decrease from FY 1995. The Committee is concerned the request 
is optimistic, considering the fact that the Advanced 
Automation System (AAS) comprises 22 percent of the F&E; budget, 
and feels $2.032 billion is a more reasonable estimate. 
Although improvement has been reported for specific components 
of AAS, further cost overruns in the project could jeopardize 
other F&E; projects.
    The Research, Engineering and Development (R, E&D;) request 
reflects a three percent increase over FY 1995, to $268 
million. However, this amount falls short of the $280 million 
authorized by the Committee. R, E&D; are critical to continued 
safety and competitiveness in international aviation.
    The Committee also notes the President's FY 1996 budget 
request proposes to zero-fund the Essential Air Service Program 
(EAS), which is authorized through 1998. The Committee does not 
support termination of EAS. The EAS program is a very modest 
program, costing less than one-tenth of one percent of the 
total Department of Transportation budget. Yet it enables 
smaller communities in 30 states to receive air transportation 
and remain linked to the national air transportation system.

                         Surface Transportation

    The Committee plans during this fiscal year to reauthorize 
the pipeline safety programs, Amtrak, and the Local Rail 
Freight Assistance (LRFA) program. In addition, the Committee 
will consider issues related to the further economic 
deregulation of surface transportation and the elimination of 
the Interstate Commerce Commission.

Pipeline safety programs

    All Natural Gas Pipeline Safety Act and Hazardous Liquid 
Pipeline Safety Act programs carried out by the DOT are offset 
by a user fee assessed on the pipeline industry. With enactment 
of Public Law 102-508, the Pipeline Safety Act of 1992, the 
Committee authorized $19.5 million in FY 1995 expenditures for 
DOT's pipeline safety programs. User fees required to offset 
this level of expenditure would have been approximately $38 per 
mile of pipeline owned by natural gas pipeline companies, and 
$31 per mile of pipeline owned by hazardous liquid pipeline 
companies.
    However, appropriators approved additional FY 1995 funding 
of $17.5 million to cover pipeline safety initiatives not 
authorized by this Committee, bringing the actual cost of 
carrying out pipeline safety programs to $37 million. While 
representing no additional federal burden, this cost increase 
means the user fees assessed on gas pipeline companies must 
more than double to $98 per mile. Similarly hazardous liquid 
pipeline companies now must pay about $45 per mile in fees. CBO 
estimates the President's FY 1996 Budget request would increase 
the pipeline safety program to $40 million, further burdening 
industry. In reauthorizing federal pipeline safety programs, 
the Committee will consider whether these additional program 
costs are justified. Specifically, the Committee will seek to 
ensure users fee supported federal programs invest these 
resources appropriately to address risks that pose the greatest 
threat to life, property, and the environment.

Amtrak

    On January 26, 1995, the Committee held an Amtrak Oversight 
Hearing. Testimony presented during the hearing illustrated 
Amtrak's deteriorating financial condition. Amtrak's revenues 
in recent years have fallen far short of those projected. In 
fact, in December 1994, Amtrak announced restructuring plans 
that will reduce its service by 20 percent and eliminate over 
5,000 jobs in order to avoid a $200 million cash shortfall by 
September 30, 1995. Even with this action, Amtrak expects to 
see a $1.3 billion operating shortfall through the year 2000 
despite a federal subsidization level of $1.012 billion for FY 
1995. This subsidy level does not address unmet capital needs 
over the next five years of $3.65 billion across the entire 
system, with $2.35 billion of that amount needed for the 
Northeast Corridor alone.
    Amtrak's real subsidization level is somewhat less than 
$1.012 billion noted above. In fact, its operating subsidy for 
FY 1995 was $392 million, the general capital subsidy was $230 
million, Northeast Corridor improvements were funded at $200 
million and $40 million was designated for New York City 
Farley/Penn Station improvements. The remaining $150 million 
was for mandatory payments that Amtrak must make (e.g. Railroad 
Retirement Board, federal gas tax) but which do not aid 
Amtrak's operations.
    The President's FY 1996 Budget request includes $1.035 
billion for Amtrak (which also includes Northeast Corridor 
Improvements, Pennsylvania Station Redevelopment, and Rhode 
Island Rail Development) within the Unified Transportation 
Infrastructure Investment Program (UTIIP). This amount, which 
is similar to the FY 1995 subsidy, assumes a reduction of $122 
million in operating support, but includes an additional $100 
million to cover costs related to Amtrak's restructuring.
    During this session, the Committee will consider 
alternatives for increasing Amtrak's efficiency, including 
measures that would free the corporation from certain statutory 
restraints which limit its flexibility to operate as a 
competitive commercial entity. In addition, as the request of 
the full Committee and Subcommittee Chairmen, Amtrak has 
commenced a series of regional forums designed to ascertain the 
type and scope of rail system the American public is willing to 
support in the long-term.

Local rail freight assistance

    The Local Rail Freight Assistance (LRFA) program was 
created in 1973 to provide matching funds to help states save 
rail lines that otherwise would be abandoned. Authority for the 
LRFA expired in FY 1994, but the program has continued to 
receive appropriations. A total of thirty states shared in the 
$15 million appropriated for LRFA in FY 1994. In addition, $21 
million in emergency funding was distributed through the LRFA 
program to 27 small railroads hard hit by the Midwest flood 
disaster in FY 1994. In FY 1995, thirty-two states are seeking 
a total of $33 million for 59 rail projects, although the 
program was only appropriated $13 million for FY 1995. The 
President's FY 1996 Budget request includes no LRFA funding. 
The Committee recognizes the support previously made available 
through the LRFA program often has meant the continuation of 
vital rail service to small communities that would not 
otherwise survive and will consider LRFA reauthorization and 
other proposals.

Interstate commerce commission

    The Trucking Industry Regulatory Reform Act, Public Law 
103-311, which originated in the Commerce Committee last 
Congress, further deregulated the trucking industry. It also 
required the Interstate Commerce Commission (ICC) and the DOT 
to examine the remaining statutory responsibilities of the ICC 
in order to recommend to Congress other functions that could be 
modified or eliminated. The President's FY 1996 Budget 
recommends the ICC continue to be funded at the FY 1995 level 
of $33 million. However, the Committee fully anticipates 
legislative action during this session to further reduce and 
transfer to other appropriate agencies statutory 
responsibilities now handled by the ICC.

                             communications

    The Committee will continue its oversight of the various 
sectors of the communications industry, the Federal 
Communications Commission (FCC), the Corporation for Public 
Broadcasting (CPB), COMSAT. and the National Telecommunications 
and Information Administration (NTIA).

Federal communications commission

    The President's request of $224.2 million for the FCC 
reflects a net increase of $38.968 million over the FY 1995 
appropriation.
    In accordance with the Licensing Improvement Act, as part 
of the President's Omnibus Budget Reconciliation Act of 1993 
(Public Law 103-66), the FCC is required to hold auctions for 
radiofrequency spectrum licenses designated for Personal 
Communications Services (and other services). A main intention 
of this provision was to generate revenue for the Federal 
Government. The most recent-- and third--PCS auction generated 
$7.7 billion in additional revenue. This money goes to the U.S. 
Treasury. Due to the nature of these ``auctions'', it is 
difficult for the Committee to estimate how much revenue the 
actions will raise during FY 1996.

Corporation for public broadcasting

    The President has submitted a budget request for CPB of 
$312 million in budget authority for FY 1996, an increase of 
$26.36 million from FY 1995. The Committee believes public 
broadcasting plays an important role in delivering information 
to the American public. However, suggestions have been made 
that CPB should be privatized.
    Among these suggestions are the following: (1) CPB could 
renegotiate sales agreements and improve future agreements to 
get a larger share of the sales of toys, books, clothing and 
other products based on its programming; (2) the signal area 
overlap among public television stations could be eliminated, 
and the excess broadcast spectrum sold; (3) public television 
stations could be moved from costly VHF channels to less costly 
UHF channels; and (4) CPB could consider teaming with other 
information services. The Committee may evaluate the possible 
effects of any of these proposals.

National telecommunications and information administration

    The President's proposed budget for the NTIA is $22.932 
million for FY 1996, an increase of $1.971 million from the 
$20.961 million appropriated in FY 1995.
    In the past few years, the President's budget requests for 
NTIA's Information Infrastructure Grants program have increased 
dramatically--rising from $26 million in 1994 to a level of 
$99.912 million for FY 1996. This grant program is aimed at 
providing clear and visible demonstrations to Americans--at a 
local level--of the advantages of having access to a modern, 
interactive information infrastructure. The Committee will 
consider the justifications for such increases in funding.

                              coast guard

    During this past year, a great deal of attention was 
focused on the Coast Guard's activities; specifically, its 
interception of tens of thousands of Cuban and Haitian migrants 
at sea last summer and its rapid response to several natural 
and environmental disasters across the Nation. The Coast Guard 
must receive sufficient funding to carry out its important 
functions.
    For the U.S. Coast Guard, the President has proposed a 
budget level of $3.7 billion, an increase of 2 percent above 
the FY 1995 enacted level. With respect to the Coast Guard's 
Operating Expense (OE) account, the Administration has 
requested $2.618 billion for FY 1996, compared with $2.608 
billion appropriated for FY 1995. This OE budget emphasizes 
funding for the Coast Guard's drug law enforcement and maritime 
safety, while maintaining the Coast Guard's strong commitment 
to marine environmental protection, fishery law enforcement, 
and search and rescue. To help fund the Coast Guard's operating 
expenses, under the President's request, $25 million would be 
transferred from the Oil Spill Liability Trust Fund to the OE 
account. The Committee held a hearing on March 15th to consider 
the Coast Guard's FY 1996 budget request and will continue its 
review of the Administration's request for the Coast Guard's OE 
account.
    Several other Coast Guard programs have small, but 
significant changes in their funding requirements when compared 
with FY 1995 appropriations. These include the Acquisition, 
Construction, and Improvements (AC&I;) account and the Boat 
Safety account.
    Under the AC&I; account, the Administration has proposed 
$428 million in FY 1996 for capital improvement of the Coast 
Guard's vessels, aircraft, shore facilities, information 
management resources, and aids-to-navigation. The FY 1995 
appropriated amount is $357 million. The Administration request 
includes $32.5 million to be transferred from the Oil Spill 
Liability Trust Fund. The Committee will review the 
Administration's request for the Coast Guard's AC&I; account.
    The President has proposed funding the Coast Guard's Boat 
Safety Grant Program at $30 million in FY 1996, assuming 
enactment of legislation to shift the funding mechanism for the 
Program. These funds will be used to provide financial 
assistance to States to coordinate national recreational 
boating safety programs. The FY 1995 appropriated amount was 
$33 million. The Committee is reviewing the Administration's 
request for the Coast Guard's Boat Safety account.

                         oceans and atmosphere

National Oceanic and Atmospheric Administration

    The Committee is supportive of the services provided 
through the atmospheric, oceanic, and fisheries programs of the 
National Oceanic and Atmospheric Administration (NOAA). The 
total NOAA FY 1996 request is $2.195 billion, an increase over 
the FY 1995 budget authority of $2.014 billion. While the 
Committee wants to ensure that NOAA's mission is not degraded, 
this increase will be evaluated by the Committee to see if 
savings can be found to minimize necessary increases in the 
overall budget authority.
    For NOAA's Operations, Research, and Facilities (ORF) 
account, the Administration has proposed $2.1052 billion. This 
is an increase of $281.9 million over the FY 1995 appropriation 
of $1.8233 billion and includes an increase of $159 million for 
satellite programs.
    The FY 1996 budget request for the ORF account supports 
continuation of the National Weather Service's modernization 
plan, which is scheduled for completion by the end of the 
decade. The plan is aimed at improving the Nation's weather 
forecasting capabilities by acquiring the latest radar, 
satellite, surface observing, and data processing technologies. 
While the Committee supports the modernization effort, it has 
become aware of technical problems in two of the new 
technologies necessary to the plan's success: the Automated 
Surface Observing System (ASOS), which will replace the current 
system of human observers, and the Advanced Weather Interactive 
System (AWIPS), which will integrate radar, satellite, and 
ground data for meteorologists. Failure to resolve these 
problems in a timely manner could significantly increase the 
costs associated with the modernization plan.
    The budget request also includes an increase to the 
National Marine Fisheries Service for FY 1996. It proposes 
$315.8 million, an increase of $40.2 million over the FY 1995 
appropriation. This increase will assist with the agency's 
efforts to build sustainable fisheries, recover protected 
species and promote healthy coastal ecosystems.
    The request for funding the Oceans and Great Lakes program 
proposes a decrease of $27.0 million from the FY 1995 
appropriation for a total FY 1996 request of $64.4 million. 
This decrease includes the program areas of: Marine Prediction 
Research, Sea Grant, Great Lakes outreach efforts and the 
National Undersea Research Program. The Committee will continue 
to review these proposed decreases to the Oceans and Great 
Lakes program.

                            merchant marine

    The Committee plans to continue its oversight of the state 
of the maritime industry and the activities of the Maritime 
Administration (MarAd) and the Federal Maritime Commission 
(FMC). In this regard, the President's budget for FY 1996 
includes a request for $515 million for MarAd and $17 million 
for FMC. These requested amounts are $13 million less than was 
appropriated in FY 1995 for MarAd and $2 million less than was 
appropriated in FY 1995 for FMC.

Maritime administration

    MarAd's budget request for FY 1996 includes no funds for 
additions to and maintenance of the Ready Reserve Force (RRF). 
In FY 1995, MarAd received $150 million for RRF maintenance and 
the Department of Defense (DOD) provided $43 million for fleet 
additions. The Administration is shifting all funding for the 
RRF to the DOD beginning in FY 1996, although MarAd will remain 
responsible for administering the RRF program. The 
Administration has requested $70 million for RRF fleet 
additions and $289 million for RRF maintenance in the FY 1996 
DOD budget.
    Funding for MarAd's Operating Differential Subsidy program 
is being phased out, with the program due to expire at the end 
of FY 1997. MarAd's FY 1996 request includes $175 million to 
commence the Maritime Security Program, a new U.S. flag vessel 
operating support program. The Committee will review the 
Administration's request to initiate the Maritime Security 
Program and evaluate its potential value in maintaining a 
viable U.S. Merchant Marine.
    MarAd's budget request for FY 1996 includes $82 million for 
operations and training, a $6 million increase over FY 1995 
appropriations. The committee will review the Administration's 
MarAd operations and training request, with the possibility of 
a freeze at FY 1995 appropriations levels.
    The Committee believes the maintenance of a strong U.S. 
Merchant Marine is essential to National defense. The Committee 
will review the Administration's FY 1996 requests for MarAd and 
FMC.

                     Science, Technology, and Space

National Aeronautics and Space Administration

    For FY 1996, the President has requested a budget of $14.26 
billion for the National Aeronautics and Space Administration 
(NASA), a decrease of one percent in budget authority from the 
FY 1995 appropriated level of $14.46 billion. With regard to 
all major budget accounts, the FY 1996 budget request is 
consistent with the CBO budget estimate for FY 1996. The FY 
1996 budget request is part of NASA's five-year plan to cut $5 
billion from the funding profile assumed in the President's FY 
1995 budget submission. The Committee is encouraged by NASA's 
commitment to cut funding and by the agency's attempt to 
accomplish savings, not by reducing program content, but 
through work force reductions, restructuring facilities, and 
greater operational efficiencies. Notwithstanding that, the 
Committee cautions that, while fiscal responsibility is 
important, cost cutting at NASA must not come at the expense of 
safety, particularly within the Shuttle program.
    The budget request continues NASA's broad array of programs 
in space science, exploration, and astronomy. Included among 
them are two that the Committee believes to be particularly 
beneficial to the nation: the International Space Station 
program, which remains on schedule for a First Element Launch 
in 1997, and Mission to Planet Earth, NASA's effort to use 
advanced satellite and computer technology to understand and 
predict climate changes affecting the world community.
    The budget request also proposes a Reusable Launch Vehicle 
program aimed at eventually developing a replacement for the 
Space Shuttle. FY 1996 funding would support vehicle design 
work paving the way for a 1996 decision on whether to build a 
test vehicle. The Committee recognizes the need to replace the 
Shuttle, which costs over $400 million a flight to operate. 
Nevertheless, NASA cannot assume the costs of yet another 
billion-dollar program and still cut costs. For this reason, 
the Committee is encouraged by NASA's plans to seek savings by 
(a) requiring the aerospace industry to share the costs of 
constructing any new test or operational vehicles and (b) 
exploring options for privatizing current and future Shuttle 
activities.
    The Committee is disappointed that the FY 1996 budget 
request did not include funding for the construction of new 
wind tunnels. The FY 1995 appropriations legislation for NASA 
had included $400 million for the wind tunnels but only on the 
condition that construction money was requested in the FY 1996 
budget submission. The Committee believes that the omission of 
wind tunnel funding from the budget request was short-sighted 
and will place the U.S. aerospace industry at a competitive 
disadvantage in the development of next-generation aircraft.
    The Committee takes notice of several FY 1995 rescission 
bills pending in Congress that would cut FY 1995 funding for 
certain NASA programs. For instance, the House version of H.R. 
889 would rescind the $400 million for wind tunnel construction 
(see above paragraph). Similarly, H.R. 1158, as reported by the 
Senate Appropriations Committee, would cut $150 million from 
NASA's FY 1995 budget, for the most part rescinding 
appropriated FY 1995 funds not requested by the Administration 
last year.
    The Committee plans to develop NASA legislation which would 
authorize $14.1 billion in budget authority for FY 1996, a 2 
percent decrease from the FY 1995 appropriation of $14.46 
billion. That FY 1996 authorization level would reflect the FY 
1996 budget request less the anticipated FY 1995 rescissions. 
In the Committee's view, that amount should be sufficient to 
continue current (FY 1995) NASA activities through FY 1996 
without compromising safety. In its authorization bill, the 
Committee may also provide for out-year authorizations for FY 
1997 through FY 2000 that are consistent with the annual 
funding levels in NASA's five-year plan to cut $5 billion 
through FY 2000.

National Science Foundation

    For FY 1996, the President has requested a budget of $3.36 
billion for NSF, an increase of 3 percent over the FY 1995 
appropriated level of $3.26 billion. This increase will enable 
NSF to continue the science and education programs that have 
helped sustain U.S. leadership in basic scientific research and 
U.S. competitiveness in world markets. The Committee shares 
jurisdiction with the Committee son Labor and Human Resources 
over six of NSF's seven budget accounts: Research and Related 
Activities; the U.S. Antarctic Program; Academic Research 
Facilities and Instrumentation; Salaries and Expenses; the 
Critical Technologies Institute; and the Office of the 
Inspector General. The agency's seventh account--Education and 
Human resources--remains under the sole jurisdiction of the 
Labor Committee and, for that reason, these views and estimates 
do not address that account.
    The Committee generally supports the programs in the FY 
1996 budget submission. However, the Committee is concerned 
that the budget request specifically rescinded the $132 million 
that was appropriated in last year's FY 1995 appropriations 
legislation to start a new multiagency academic research 
facilities program and requested no FY 1996 funding for that 
initiative. Quality research requires quality facilities and 
laboratories, and the backlog of the Nation's academic research 
infrastructure needs has been estimated at $10 billion. While 
the Committee respects the judgment of the agency that this new 
program cannot be afforded in the FY 1996 budget, the Committee 
believes that the Executive Branch must begin serious 
consideration of interagency programs and policies aimed at 
addressing the facilities problem.
    The Committee plans to develop an authorization bill for 
NSF which would freeze FY 1996 funding at the FY 1995 level, 
i.e., authority should permit the agency to continue current 
activities.

           department of commerce's technology administration

    For FY 1996, the President has requested $1.04 billion for 
the Commerce Department's Technology Administration (TA). TA 
includes the Office of the Under Secretary for Technology; the 
Office of Technology Policy, which provides analytical support; 
the National Technical Information Services (NTIS), a self-
supporting unit that disseminates unclassified technical 
information; and the National Institute of Standards and 
Technology (NIST), which promotes U.S. economic growth by 
working with industry to develop and apply basic technologies, 
measurements, and voluntary product standards.
    The President's FY 1996 NIST request is $1.023 billion, an 
increase of 19.8 percent over the FY 1995 appropriated level of 
$854 million. The NIST request includes $311 million for 
traditional laboratory activities in support of industry (an 
increase over the FY 1995 appropriated level of $264 million). 
The request for NIST's Industrial Technology Services programs, 
which include the Advanced Technology Program (ATP) and the 
Manufacturing Extension Partnership (MEP), is $642 million, an 
increase of 23 percent over the FY 1995 level of $525 million. 
The MEP increase reflects the fact that in FY 1996 NIST will 
assume federal support for the first 22 of 37 locally-run 
Manufacturing Extension Centers that were started with one-time 
funds from the Defense Department's Technology Reinvestment 
Project.
    At a time when other federal science and technology 
programs are facing flat or declining budget profiles, the 
Committee will ask hard questions about NIST's growth. The 
Committee recognizes the ongoing debates about whether NIST's 
technology grant and assistance programs represent a needed 
helping hand to high-technology ventures or inappropriate 
industrial policy. A careful review is needed, just as the 
Committee will continue to examine other federal programs to 
aid civilian industrial technology. Any further budget 
increases for NIST, particularly the ATP and MEP, should be 
based on a consideration of the likelihood of tangible benefits 
from these programs and the appropriate role of the federal 
government in boosting U.S. industrial competitiveness.

            consumer affairs, foreign commerce, and tourism

United States travel and tourism administration

    For FY 1996, the President has requested a budget of $16.3 
million for the United States Travel and Tourism Administration 
(USTTA), a decrease of 2.6 percent in budget authority from the 
FY 1995 appropriation of $16.7 million.
    USTTA coordinates the formulation and execution of national 
policy affecting the U.S. tourism industry and its contribution 
to the Nation's economic development and international trade 
objectives. The Committee generally supports the activities of 
the USTTA, however, the USTTA has been the target of 
privatization proposals for several years. No legislation has 
yet been introduced that would eliminate or ``zero fund'' the 
USTTA, but such legislation is likely since its elimination has 
been consistently suggested in the past.
    We trust this information is helpful to the Budget 
Committee as it prepares the Concurrent Resolution on the 
Budget for FY 1996. We look forward to working with you to 
address these concerns and to answer any questions you may 
have.
                        Sincerely,
                                   Ernest F. Hollings,
                                           Ranking Democrat.
                                   Larry Pressler,
                                           Chairman.
                                ------                                

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                    Washington, DC, March 29, 1995.
Hon. Pete Domenici,
Chairman, Committee on the Budget.
Hon. J. James Exon,
Ranking Democratic Member, Committee on the Budget, U.S. Senate, 
        Washington, DC.
    Dear Senators Domenici and Exon: In accordance with section 
301(d) of the Congressional Budget Act, we are submitting the 
views and estimates of the Committee on Energy and Natural 
Resources on portions of the budget for fiscal year 1996 within 
the jurisdiction of this Committee.
    The enclosed report of the Committee's views and estimates 
was approved by the Committee this morning.
    We appreciate your consideration of our views and look 
forward to working with you and your Committee on the FY 1996 
budget.
            Sincerely,
                                   J. Bennett Johnston,
                                           Ranking Democratic Member.
                                   Frank H. Murkowski,
                                           Chairman.
                                ------                                


         Committee on Energy and Natural Resources, U.S. Senate


           views and estimates on the fiscal year 1996 budget


    In preparing this report, the Committee complied with the 
request from the Budget Committee to use as a base for 
discussing the President's proposed FY '96 budget the FY '95 
levels without any adjustment for indexing (WODI). The 
Committee is aware that the President has assumed a change in 
scoring to permit certain asset sales to be counted and that 
the Budget Committee is contemplating similar action.
    In general, the Committee believes that if its 
recommendations with respect to discretionary and mandatory 
appropriations are followed and its planned legislative 
initiatives are enacted, including asset sales, a net decrease 
(increased revenues plus decreases in funding) in the budget 
accounts assigned to this Committee can be achieved sufficient 
to permit increased funding in certain identified areas. The 
Committee believes that an overall decrease of 4% is achievable 
from the WODI base for FY '96 and an overall decrease of 16% is 
achievable by FY 2000.
                                       U.S. Senate,
                 Committee on Environment and Public Works,
                                     Washington, DC, April 6, 1995.
Hon. Pete V. Domenici,
Chairman.
Hon. J. James Exon,
Ranking Minority Member, Committee on the Budget, U.S. Senate, 
        Washington, DC.
    Dear Mr. Chairman and Senator Exon: In response to your 
letters of January 16, and February 13, 1995, I have prepared 
the following views and estimates report for programs under the 
jurisdiction of the Committee on Environment and Public Works. 
As you have requested, these comments are directed to the 
President's fiscal 1996 budget request, and to the total level 
of federal spending for the five-year period 1996-2000. As in 
previous years, a brief summary of new legislative initiatives 
for this Congress is included.
    I share the concern expressed by your committee in the 
document entitled, ``President Clinton's 1996 Budget; A Brief 
Overview,'' dated February 6, 1995, that Administration 
estimates of annual federal deficits show no significant change 
from approximately $200 billion over the next five years. In 
order to reverse the longstanding trend of deficit spending, it 
is essential that every federal agency and program be 
scrutinized by Congress for real budget savings.
    Using Congressional Budget Office data provided by the 
Budget Committee, this report identifies an estimated $10.416 
billion in potential five-year outlay savings from programs 
under the authorizing jurisdiction of the Committee on 
Environment and Public Works. In proposing these initial 
program reductions, I have made some very difficult choices. It 
is my hope that other committees and committee chairmen have 
done likewise in preparing their views and estimates reports 
this year.

                      New legislative initiatives

    There are seven principal legislative items before the 
Committee on Environment and Public Works this year, including 
reauthorization of the Clean Water Act, the Superfund program, 
and the Endangered Species Act. The Committee has recently 
reported legislation to restore State and local authority over 
shipments of solid waste. In addition, the Committee is 
developing legislation to reauthorize the Water Resources 
Development Act and the Safe Drinking Water Act, as well as 
legislation to designate a National Highway System. As required 
by the recently enacted Unfunded Mandates Reform Act, the 
Committee will work with the Congressional Budget Office as we 
consider legislation that may have budgetary impacts on State, 
local and tribal governments in future years.
    Beyond these specific legislative efforts, the Committee 
will conduct oversight and review of the 1990 Clean Air Act 
Amendments, the Oil Pollution Prevention Act, regulatory reform 
legislation pending in Congress, and the Public Building 
Service at the General Services Administration.

                    specific discretionary programs

1. Environmental Protection Agency

    The EPA budget is comprised of three main components--the 
Operating Programs, the Superfund and Leaking Underground 
Storage Tank (LUST) trust funds, and funds for loans to State 
and local governments for water infrastructure (clean water and 
safe drinking water programs). The total EPA budget request for 
fiscal 1996, which includes the above-listed components, is 
$7.352 billion, an increase of $111 million or 1.5 percent over 
the fiscal 1995 enacted level of $7.241 billion.
    Total EPA budget authority estimates for fiscal 1996-2000 
show a decline after the peak 1996 level of $7.4 billion. 
Fiscal 1997-2000 are projected at $7.1 billion, $7.0 billion, 
$6.9 billion, and $6.7 billion, respectively.
    In broad terms, I support the modest fiscal 1996 increase 
over current-year funding. However, given the federal 
government's present fiscal condition, certain items contained 
in the fiscal 1996 request (which in most cases carryover into 
future years) could be reduced without having a significant 
adverse impact on EPA's current statutory and regulatory 
duties. Suggested budget reductions are provided below by 
category or ``component''.
            Water infrastructure
    The fiscal 1996 request for the Water Infrastructure 
account--which supplies money to States for capitalization of 
water treatment facility revolving loan funds for cities--is 
$2.365 billion, down $404.3 million from current-year funding 
of $2.769 billion.
    This total includes two key elements: (1) Clean Water State 
Revolving Fund (SRF)--for which $1.6 billion is requested in 
fiscal 1996, up $364.8 million or 22.8 percent from current-
year funding of $1.235 billion. This request represents a 
substantial shortfall from the minimum annual levels necessary 
to meet the most recent survey calculations indicating a need 
of more than $137 billion for municipal water quality 
infrastructure improvements. The clean water SRF has been 
instrumental in helping municipalities meet the sewage 
treatment standards required by the Water Pollution Prevention 
and Control Act. The Federal government has used this loan fund 
and its predecessor grant program to contribute more than $60 
billion to State and local governments since the early 1970's. 
This is a program that has proven to be cost effective and of 
tremendous environmental benefit.
    (2) Drinking Water SRF--for which $500 million is requested 
in fiscal 1996, down $200 million or 28.57 percent from 
current-year funding of $700 million. Despite the need for 
capital improvements at drinking water treatment facilities, it 
is regrettable that the Administration chose to tap the clean 
water SRF in fiscal 1994 in an attempt to create a drinking 
water SRF. Because the drinking water SRF program is as yet 
unauthorized and the money is unobligated, congressional 
appropriators have recently chosen to rescind the majority of 
the $1.3 billion appropriated in fiscal years 1994 and 1995.
    For the five-year period beginning in fiscal 1996, the 
combined clean water and drinking water SRF Water 
Infrastructure component projects a flat current law baseline 
of $2.962 billion in budget authority (BA). Outlay (OT) 
projections are as follows: fiscal 1996 ($2.155 billion; fiscal 
1997 ($2.332 billion); fiscal 1998 ($2.951 billion); fiscal 
1999 ($3.249 billion); and fiscal 2000 ($3.162 billion).
    It is my view that outyear savings can be achieved in the 
water infrastructure account. I would support annual outlays of 
$2 billion for the clean water SRF and $500 million for the 
drinking water SRF. If these levels were adopted, an estimated 
$1.349 billion could be saved over five years in outlays.
            Operating programs
    The fiscal 1996 budget request for the Operating Programs 
account--which funds employee salaries, multimedia grants to 
States, and the administration and enforcement of the air, 
water and hazardous waste programs--is $3.362 billion, a $403 
million or 11.9 percent increase over the fiscal 1995 enacted 
level of $2.959 billion. Of the three main components, 
Operating Programs is the most important if EPA is to fulfill 
its central mission of protecting human health and the 
environment.
    The fiscal 1996 Operating Programs request includes a $55.7 
million increase for implementation of the Clean Air Act; a 
total of $656 million for a new State grant consolidation 
program which is designed to provide the States with greater 
flexibility; and a $23 million increase to help implement the 
Climate Change Action Plan.
    In broad terms, I support these initiatives. With respect 
to the grant consolidation proposal, EPA should be encouraged 
to offer States a greater level of flexibility in complying 
with environmental laws. Although I have concerns over how EPA 
will monitor performance among individual States, I am 
encouraged that the Administration is offering new approaches.
    I am also encouraged by EPA's restructuring of the 
enforcement and compliance program. The program now appears 
better positioned to ensure compliance on a multimedia basis. 
This will reduce paperwork burdens for industry and States 
alike.
    For the five-year period beginning in fiscal 1996, the 
Operating Programs component--comprised primarily of the 
Program and Research Operations account (PRO); the Abatement, 
Control and Compliance account (AC&C;); and Research and 
Development (R&D;)--projects a flat current law baseline of $922 
million (BA & OT) for PRO; a relatively flat current law 
baseline of $1.020 billion (BA) and $1.033 billion (OT) for 
AC&C; and, a flat current law baseline of $117 million (BA) and 
$117.8 million (OT) for R&D.;
            Superfund and LUST trust funds
    The fiscal 1996 request for the Superfund and Leaking 
Underground Storage Tank (LUST) trust funds is $1.64 billion, 
up $140 million or 8.5 percent from current-year funding of 
$1.501 billion. Within this category, the Superfund request for 
fiscal 1996 is $1.563 billion and the LUST request is $77.3 
million. For Superfund, I recommend lowering the fiscal 1996 
funding level to the fiscal 1995-enacted level of $1.431 
billion. Carried out over five years, this funding level would 
yield an estimated $658.2 million in outlay savings.
    It is expected that Superfund reform legislation, now being 
developed in the Committee, will alter funding needs for the 
program. Depending on the reform options that advance, EPA 
programmatic costs could be significantly reduced. However, as 
the numerous Superfund proposals are tied to current law 
funding levels, it would be premature to project detailed 
outyear savings beyond those identified above.
    For the five-year period beginning in fiscal 1996, the 
Superfund account projects a gradual current law increase 
through 2000 in BA. BA projections are as follows: fiscal 1996 
($1.471); fiscal 1997 ($1.523 billion); fiscal 1998 ($1.579 
billion); fiscal 1999 ($1.635 billion); and fiscal 2000 ($1.695 
billion) Similar OT projections, with downward numbers for 1999 
and 2000, are as follows: fiscal 1996 ($1.499 billion); fiscal 
1997 ($1.606 billion); fiscal 1998 ($1.682 billion); fiscal 
1999 ($1.635 billion); and fiscal 2000 ($1.610 billion).
    For the five-year period beginning in fiscal 1996, the LUST 
account projects relatively flat current law levels through 
2000. BA projections are as follows: fiscal 1996 ($72 million); 
fiscal 1997 ($75 million); fiscal 1998 ($78 million); fiscal 
1999 ($80 million); and fiscal 2000 ($83 million). OT 
projections are as follows: fiscal 1996 ($69 million); fiscal 
1997 ($71 million); fiscal 1998-2000 ($70 million).

2. Federal highways

    The Intermodal Surface Transportation Efficiency Act 
(ISTEA) was passed by Congress and signed into law on December 
18, 1991. Two years remain of the ISTEA authorization. In 
fiscal 1996 the surface transportation law provides an 
obligation limitation of $18.357 billion with an additional 
$1.85 billion in spending not subject to the limitation for 
minimum allocation, demonstration projects, and emergency 
relief. This provides a total spending level of $20.2 billion 
in fiscal 1996. This compares to an obligation limitation of 
$17.156 billion in fiscal 1995 with additional spending of $2.5 
billion for the categories not subject to the spending 
limitation, or a total spending level of $19.656 billion in 
fiscal 1995.
    Total budget authority estimates for the federal-aid 
highway program for fiscal 1996-2000 are flat through the 
remaining authorization period of ISTEA and show a gradual 
current law rise thereafter through fiscal year 2000, assuming 
reauthorization. BA projections are as follows: fiscal 1996 
($20.785 billion); fiscal 1997 ($20.791 billion); fiscal 1998 
($21.351 billion); fiscal 1999 ($22.035 billion); fiscal 2000 
($22.744 billion). The outlay projections show a gradual rise 
as follows: fiscal 1996 ($16.716); fiscal 1997 ($17.261); 
fiscal 1998 ($17.849); fiscal 1999 ($18.481); fiscal 2000 
($19.113).
    The President's budget request for fiscal 1996 proposes to 
restructure the transportation programs into several large, 
flexible block grant programs to the states. The funding levels 
proposed in the President's budget for fiscal 1996 cannot be 
compared directly to spending for the highway program in fiscal 
1995. The restructuring proposal creates an Intermodal 
Transportation Administration. The majority of the surface 
transportation funds would be provided through the Unified 
Transportation Infrastructure Investment Program (UTIIP). 
Within the UTIIP, approximately $10 billion of flexible funds 
would be available to the states to spend on transportation 
projects; approximately $8 billion would be available for the 
Interstate and National Highway System; and about $2 billion 
could be used for state infrastructure banks. An additional 
$4.3 billion would be available for specific programs and to 
the Secretary for discretionary projects.
    Under the President's restructuring proposal, the states 
would determine how the funds were divided among the federal-
aid highway program and other transportation programs. The 
total spending proposed by the President's budget for fiscal 
1996 on eligible highway and transit programs is approximately 
$2.5 billion less than the amount spent in fiscal 1995. The 
President's budget does not specify where these reductions will 
occur. This decision would be made by the states.
    Five-year outlay savings would be achieved by reducing the 
federal-aid highway obligation limitation. The limitation 
established by the surface transportation law is $18.357 
billion. Reducing the obligation limitation by $1 billion each 
year from fiscal 1996 through fiscal year 2000 will result in 
five-year savings of $3.5 billion.

3. Tennessee Valley Authority--Economic Development Administration--
        Appalachian Regional Commission

    As I indicated to Chairman Domenici in my letter of 
December 6, 1994, it is my view that the Congress should 
carefully consider whether there is a compelling need for 
continued federal participation in programs carried out by the 
TVA, EDA and ARC.
    A substantial reduction of federal participation in these 
three programs would yield estimated outlay savings of $4.224 
billion over five years.

4. U.S. Army Corps of Engineers (Civil Works)

    The President's fiscal 1996 request of $3.68 billion for 
the civil works program at the Army Corps of Engineers is 
comprised of $3.32 billion in new appropriations and $357 
million in programmed carryover from prior years. Of the $3.32 
billion request, $579 million, or 17 percent, would come from 
existing user fees and trust funds, including fuel and ad 
valorem taxes. In the fiscal 1996 request, I am encouraged that 
the Administration has increased funding of environmental 
initiatives, in particular, the $25 million for the Section 
1135 program.
    In an effort to achieve significant Army Corps' budget 
reductions, the Committee on Environment and Public Works will 
this year be considering legislation to reauthorize the 1992 
Water Resources Development Act. By reducing authorized new 
construction levels in this year's Water Resources Development 
Act, I believe that outlay reductions of 15 percent, or an 
estimated $685.2 million over five years, can be achieved from 
the general construction account.
    Total Army Corps civil works BA estimates for fiscal 1996-
2000 show relatively flat levels. Fiscal 1996-2000 are 
projected in BA at: $3.594 billion; $3.602 billion; $3.603 
billion; $3.604 billion; and, $3.605 billion, respectively. For 
OT, fiscal 1996-2000 are projected at: $3.602 billion; $3.596 
billion; $3.598 billion; $3.603 billion; and, $3.604 billion, 
respectively.

5. General Services Administration (Public Buildings Service)

    The President's fiscal 1996 budget request for the Public 
Buildings Service (PBS) at the General Services Administration 
(GSA) is $202.3 million in annual appropriations; $1 billion in 
capital appropriations; and, $4.8 billion in new obligational 
authority, or authority to spend revenues under the Federal 
Buildings Fund.
    The fiscal 1996 PBS request for construction and 
acquisition of facilities in $1 billion, as mentioned above. I 
am confident that as the Committee on Environment and Public 
Works reviews individual project requests this year, we will be 
able to achieve substantial savings in the construction and 
purchase of federal courthouses and office buildings.
    I support GSA's proposal this year to establish a new 
policy and oversight office which would consolidate policy, 
oversight and asset management functions into a single account 
separate from operations.

                               Conclusion

    In shaping the fiscal 1996 budget resolution, it is 
incumbent upon the Congress to not only downsize federal 
bureaucracy through consolidation, and in some cases, a 
complete closure of agencies and programs that have outlived 
their usefulness--but also to ensure that government is more 
responsive to its citizenry.
    To accomplish these goals, as well as balancing the annual 
federal deficit, the Congress will be faced with very difficult 
spending decisions. In this views and estimates report, some 
$10.416 billion in estimated five-year outlay savings is 
proposed. It is my hope that the fiscal 1996 Budget Resolution 
will initiate a multi-year plan to eliminate the federal debt 
with thoughtful, government-wide spending reductions.
    Thank you for your consideration of my views. Please feel 
free to contact me, or have your staff contact Dan Delich at 
224-5762, should you have any questions regarding these 
matters.
            Sincerely,
                                                    John H. Chafee.
                                ------                                

                                       U.S. Senate,
                            Committee on Foreign Relations,
                                    Washington, DC, April 26, 1995.
Hon. Pete V. Domenici,
Chairman, Committee on the Budget, U.S. Senate, Washington, DC.
    Dear Pete: As the Chairman of the Senate Foreign Relations 
Committee, I appreciate the opportunity to share with you and 
the other members of the Budget Committee the views and 
estimates of the international affairs budget function pursuant 
to section 301(d) of the Congressional Budget Act.
    First, let me reiterate my strong support for your efforts 
to reduce all federal spending and to balance the federal 
budget by 2002. The U.S. government's federal debt has now 
reached an unprecedented $4,837,382,183,299.37 and is spiraling 
upward every day. As we rigorously scrutinize our domestic 
spending priorities and make cuts where necessary, so we must 
also examine our international affairs spending to balance our 
bloated federal budget. Every budget function must contribute 
to meet the goal of a balanced budget.

                     Administration Budget Request

    I was highly disappointed that the Clinton Administration 
submitted to Congress a budget for fiscal year 1996 which 
proposes to increase international affairs spending. In the 
current budget climate, the President's budget for foreign aid 
is unrealistic.
    The President's $15.2 billion budget request for foreign 
aid is about $950 million larger than the fiscal year 1995 
appropriated level (6.6 percent increase). While the 
President's budget would cut $87 million for programs which 
support economic growth overseas, it would increase spending in 
the following areas:
          $512 million increase in funding for multilateral 
        development banks (29 percent increase above FY 95);
          $53 million increase for population programs (11 
        percent increase);
          $35 million increase for debt reduction and debt 
        forgiveness (500 percent increase); and
          $24 million increase for environmental aid programs.
    The Clinton budget is unrealistic in its United Nations 
peacekeeping request. The Administration request contemplates 
nearly $1 billion less for U.N. peacekeeping costs than were 
incurred in fiscal year 1995. His budget for peacekeeping 
assumes budget authority for the United Nations peacekeeping 
effort in the former Yugoslavia for only six months of the 
fiscal year. The U.N. Security Council, with United States 
support and encouragement, extended the UNPROFOR mandate on 
March 31, 1995. The State Department estimates that the 
President's fiscal year 1996 request for $445 million for 
assessed U.N. peacekeeping activities will fall short of 
covering actual costs by almost $800 million. The 
Administration has refused to adjust their request to reflect 
expected peacekeeping costs accurately.

            foreign affairs revitalization and consolidation

    As you know, on March 15, I unveiled a plan to restructure 
completely our beleaguered foreign affairs apparatus. At its 
core, this reorganization seeks to abolish the Agency for 
International Development (AID), the U.S. Information Agency 
(USIA) and the Arms Control and Disarmament Agency (ACDA) by 
September 30, 1997.
    The Committee expects to consider this legislation in May 
1995 and has extracted solid support from five former 
Secretaries of State, the Majority Leader of the Senate and the 
Speaker of the House. Seldom before has such a comprehensive 
foreign policy reorganization effort been undertaken by a 
Congressional committee and never has there been such an 
opportunity to achieve enormous cost savings through 
streamlining and eliminating duplication of functions. The plan 
will significantly increase the return on each foreign affairs 
dollar we spend. The Committee fully expects to have completed 
its consideration of authorization legislation prior to the 
consideration of appropriations bills. Therefore, we anticipate 
the Appropriations Committee to appropriate at or below 
authorized levels.
    The Congressional Budget Office has been unable to assist 
the Committee sufficiently in preparing cost estimates 
associated with this reorganization plan because the 
Administration refuses to share relevant budget information 
with CBO. Even when the Committee submitted a query for 
specific information to the heads of the foreign affairs 
agencies on behalf of CBO and the Committee, the agencies 
supplied answers of absolutely no help. For this reason, 
estimating projected cost savings has been difficult. However, 
CBO initial estimates indicate almost $3 billion in cost 
savings over four years through personnel reductions expected 
to be achieved through consolidation of independent agencies 
and elimination of duplication.
    This proposal will revolutionize the way we deal with 
foreign aid. Under this plan, AID missions abroad will be 
closed, and long-term development aid will be delivered through 
a new International Development Foundation, which in turn will 
deliver block grants to non-governmental organizations and 
private voluntary organizations, who will carry out programs on 
the ground. The Foundation will have a sunset provision, so 
that the American people can be sure foreign aid is not a 
perpetual entitlement.
    AID employs more than 9,000 full-time personnel and has 
operating expenses that cost nearly $600 million annually. 
According to Vice President Gore's reinventing government 
effort, it costs American taxpayers between $150,000 and 
$240,000 to keep a single AID employees overseas, exclusive of 
salary. The creation of a Foundation--employing a fraction of 
employees currently at AID--will save close to a billion 
dollars over the next three years in operating expenses alone. 
The closure and sale of AID's overseas missions will save tens 
of millions of dollars over the next several years.
    This plan will eliminate the Arms Control and Disarmament 
Agency--a relic of the Cold War--and place unambiguous 
responsibility for non-proliferation policy into a single 
agency responsible for U.S. foreign policy. ACDA's FY 96 budget 
request is $76.3 million. The proliferation of weapons of mass 
destruction looms as perhaps the greatest threat to our 
national security. Under this proposal, a new Under Secretary 
for International Security Affairs--reporting directly to the 
Secretary of State--will coordinate non-proliferation policy 
and ensure that proliferation issues are given significant 
weight in the formulation of our nation's foreign policy. 
Abolishing ACDA could save an estimated $25 million annually. 
This adds up to over one quarter of a billion dollars over ten 
years.
    The reorganization proposal would eliminate the U.S. 
Information Agency and merge its international exchange, 
broadcasting and public diplomacy functions under the State 
Department's new Under Secretary for Public Diplomacy. By 
reincorporating public diplomacy into the network of foreign 
policy formulation, the U.S. foreign policy message will be 
broadcast with one clear well-informed voice. An office under 
the Under Secretary's office will be charged with identifying 
and coordinating the more than $1.67 billion worth of 
international exchanges funded annually by over 30 Federal 
agencies. That office will also make specific recommendations 
to eliminate the up to $400 million in exchange programs that 
USIA feels are duplicative in the sense that they have 
identical goals and target identical areas of the world. The 
new structure would integrate international exchanges to ensure 
that they are tied into the ultimate objective of fulfilling 
the United States' foreign policy objectives. The Committee 
will work towards the goal of allowing all exchanges to be 
awarded on a competitive basis and expect that there too, 
savings will accrue.
    And finally, this plan will strengthen those charged with 
the implementation of the President's foreign policy. In the 
field, the plan will strengthen the ability of our ambassadors 
to be true foreign policy managers--not just ceremonial 
figures--by giving them more control over the whole U.S. 
civilian presence in their embassies.
    A unified foreign service will consist of the five current 
distinct ``foreign services'' to ensure that our core 
diplomatic apparatus possesses the requisite skills and 
capabilities to advance U.S. interests in the 21st century. It 
will also realize savings over the current arrangement.

Costs of the transition

    It costs money to save money. It is expected that in the 
first two years of the consolidation of the foreign affairs 
agencies, few actual savings will be realized. However, massive 
baseline reductions in budget authority will be realized by 
1997 after consolidation is completed successfully. While 
savings in the first and second year may be offset some by the 
costs incurred to collapse and integrate the foreign affairs 
agencies, out year savings are projected to be impressive. The 
costs of collocating personnel, upgrading telecommunications 
and information systems to integrate the formerly independent 
agencies and footing the bill for the dislocation of personnel 
are just a few of the items for which the federal government 
will be required to fund during the period of transition. 
During this period, it is expected that these costs will be 
funded by current operating accounts of the international 
affairs budget function.

Staff reductions in foreign affairs agencies

    One of the central purposes of consolidating the U.S. 
foreign affairs apparatus is to ensure that American taxpayer 
funds are spent on the programs and activities that are crucial 
to U.S. presence overseas, rather than on salaries and expenses 
for personnel who have duplicative responsibilities and for 
duplicative functions performed throughout the currently 
independent foreign affairs agencies. It is our Committee's 
estimate that once our consolidation plan goes into force, up 
to twenty percent of the full-time and part-time employees 
currently working for the Department of State, the United 
States Information Agency, the Arms Control and Disarmament 
Agency, the Inter-American Foundation and the African 
Development foundation could be reduced.
    We expect these reductions to take place through attrition, 
voluntary retirement incentive programs and, if necessary, 
reductions in force. The largest reductions will derive from 
the current structure of the Agency for International 
Development. If implemented according to the timetable we have 
proposed, these staff reductions are expected to incur 
substantial savings of almost $3 billion over the next four 
years, according to initial CBO estimates.

Voluntary retirement incentives

    One of the central elements of the reorganization plan 
includes a provision to extend the authority to offer voluntary 
retirement incentives through fiscal year 1996 to employees of 
the Department of State, the United States Information Agency, 
the Agency for International Development and the Arms Control 
and Disarmament Agency. It is envisioned that offering 
incentives for early retirement will encourage a steady and 
measured stream of employees leaving government service.
    In order for the Committee to extend this kind of 
authority, it will require a direct 602(a) allocation since 
direct spending costs are associated with buy-outs. The 
Committee would greatly appreciate the Budget Committee's 
assistance in providing this allocation for use in the 
transition to the newly-organized Department of State.

                  foreign policy administrative issues

Decline of the dollar

    The decline in value of the dollar overseas is wreaking 
havoc with the budgets of various federal agencies, most 
notably the Departments of State and Defense. This year alone, 
the Department of State expects that the decline in the dollar 
will push operating costs up by approximately $20 million. If 
the dollar continues along the trend of recent months, the cost 
to the U.S. government to continue, much less expand, 
operations overseas will continue to balloon. The budgets for 
those departments will have to take this issue into account in 
the future. This situation further proves the need for the U.S. 
to rationalize and consolidate the delivery of services and 
functions overseas.

Salary differentials

    The Department of State currently pays salary differentials 
ranging from five percent to twenty-five percent of base pay to 
U.S. personnel assigned to 227 of our 272 posts overseas. The 
Department currently spends $77 million a year on allowances, 
approximately seventeen percent (17%) of the Department's 
budget for salaries. These allowances include payments for 
items such as: hardship differentials, cost of living 
allowances, education for dependents and danger pay.
    While the Committee understands the desire and the 
necessity to pay salary differentials to personnel living and 
operating in particularly harsh or extreme environments, it 
seems excessive to maintain that this is necessary at fully 85% 
of U.S. overseas posts. The Committee recognizes that the 
Department has made progress in improving the administration of 
the allowance system. However, the Committee feels that in 
light of the effort to tighten belts and squeeze budgets the 
Department could find savings of millions of dollars by 
tightening standards for the payment of allowances and reducing 
the number of posts that receive any type of differential. This 
will also reduce costs of other agencies that assign personnel 
overseas since all civilian personnel at overseas posts are 
eligible for these allowances.

Foreign affairs administrative support cost-sharing system

    The Foreign Affairs Administrative Support (FAAS) system is 
the method by which the Department of State and other agencies 
share costs of the common administrative service platform 
necessary to provide all U.S. government employees with a place 
to live and work at U.S. missions overseas. FAAS distributes 
costs on the principle that the Department of State will 
provide and fund all of the core resources necessary to support 
its own people and programs overseas. Other agencies are 
financially responsible for costs of the incremental resources 
established to meet the administrative workload generated by 
their employees.
    For years, the Department of State and other federal 
agencies that assign personnel overseas have debated the equity 
of the FAAS system in determining the costs of services and the 
quality and delivery of individual services. The Department 
funds more than 70% of the support platform's operating costs. 
In an era in which the United States has opened 29 new posts 
since 1993 without State Department personnel increases, but in 
which there has been a dramatic increase in the number of 
personnel assigned overseas by other agencies, the FAAS system 
will have to be scrutinized closely. The Committee will 
recommend that the Department phase-in an administrative 
support system by which other agencies are charged per capita 
share of the costs of maintaining posts overseas. Several 
hundred million dollars of savings could accrue from 
modifications to the FAAS system. The Executive Branch is 
currently considering a proposal to develop a new system 
modelled after a support system used here in the United States. 
We will urge early approval of this system for maximum savings.

                         united nations issues

    As the pressure to cut the budget and end the federal 
deficit continues and even increases in years to come, we will 
be forced to examine more closely the allocation of the 
international affairs budget functions between unilateral, U.S. 
operations and multilateral operations. In the last three 
fiscal years, the central accounts of the Department of State 
have decreased by approximately $700 million. Over the same 
time period, the accounts for contributions to the United 
Nations and other international organizations have ballooned by 
well over $1 billion. As we put off desperately needed 
improvements in the Department of State's infrastructure (both 
physical and human), we must realize that we cannot fund 
multilateral initiatives to the detriment of our national 
security interests in preserving U.S. diplomatic capabilities.

United Nations--International organizations

    The Committee will consider legislation for the Foreign 
Relations Authorization Act for Fiscal Years 1996 and 1997 that 
will include a prohibition on funding and/or directed mandatory 
U.S. withdrawal from the following international organizations 
which should total almost $100 million:

International Labor Organization (ILO)..................     $64,272,000
U.N. Industrial Development Association (UNIDO).........      28,597,000
Inter-American Indian Institute.........................         120,000
South Pacific Commission................................       1,263,000
Pan American Railway Congress Association...............          40,000
Interparliamentary Union................................       1,110,000

    The ILO is a holdover from the League of Nations, with a 
structure and functions that reflect 19th century patterns of 
labor-management-state relations. The ILO's costly and archaic 
tripartite approach (national delegations comprising separate 
government, labor and industry representation) is ill suited to 
an era in which the role of labor unions is vastly diminished. 
To adapt to changing times the ILO has sought to diversify its 
functions by moving into fields (strengthening of democratic 
institutions) largely divergent from its original purpose and 
that can be more effectively served by other means. Any 
benefits the U.S. may receive from membership are 
disproportionate to the substantial $64 million U.S. membership 
assessment.
    UNIDO is not the most effective means to provide the sort 
of development assistance it administers. There is no UNIDO 
function that could not be performed at least as well by other 
existing entities or by the private sector (i.e. development 
banks and investment-oriented national aid programs). Here 
again, the size of the base U.S. assessment ($28 million plus) 
is not commensurate with the return.
    The other international organizations listed are not viewed 
as ones that serve U.S. national interest at a level 
proportionate to the expenditure of U.S. taxpayer funds.

United Nations--Peacekeeping

    The Committee has been adamant that the United States pay 
for no more than 25% of the assessed costs of U.N. peacekeeping 
operations (see Public Law 103-236). The projected savings from 
paying for 25%, rather than 31.4%, of the operations will save 
the United States tens of millions of dollars every year.
    The newly created Office of Inspection and Oversight 
Services (the equivalent of a United Nations Inspector General) 
should be empowered to root out other instances of waste, fraud 
and abuse at the United Nations. If this office conducts it job 
in an efficient and responsible manner, the United States and 
all donor nations to the U.N. should benefit in the long-term. 
The U.S. should advocate an increase in the budget for this 
office because the savings created through the elimination of 
waste, if the office is effective, could be significant.

                   foreign assistance reauthorization

    A primary responsibility of the Committee on Foreign 
Relations is the reauthorization and oversight of U.S. 
bilateral and multilateral foreign assistance programs. These 
programs include all development and economic aid, military and 
other security assistance, funding for multilateral financial 
institutions, United Nations and other international 
organizations assistance, U.S. trade and export programs and 
humanitarian aid assistance.
    The Committee expects to consider a foreign assistance 
authorization bill in May. I have never supported foreign aid 
spending and believe we must make sharp cuts in this area over 
the next several years as part of the overall effort to achieve 
a balanced budget. I believe that Congress can cut at least 
$3.0 billion in foreign aid in 1996.
    I will recommend the following to the Foreign Relations 
Committee.
    Bilateral Economic and Development Assistance--Significant 
reductions--up to 30 percent across-the-board--should be made 
in these accounts in FY 96. In many cases, traditional 
government-to-government aid has failed to accomplish its 
stated goals. Peace Corps funding remains a priority for many 
in Congress, but it too must be reduced to help balance the 
federal budget. The Inter-American Foundation and the African 
Development Foundation should be abolished, resulting in 
savings of at least $45 million annually.
    Multilateral Assistance--While funding for UNICEF continues 
to be a priority in Congress, United States participation in 
most United Nations programs should be terminated. Terminating 
or greatly reducing U.S. participation in these and other U.N. 
programs would result in at least $200 million in savings 
annually. These include:

                                                             Fiscal year
                                                            1996 request
        Program
UN Development Program (UNDP)...........................    $118,000,000
UN Capital Development Fund (UNCDF).....................       1,000,000
UN Development Fund for Women (UNIFEM)..................       1,000,000
World Food Program......................................       2,500,000
Afghanistan Emergency Trust Fund........................         500,000
International Fund for Agricultural Development (IFAD)..       5,000,000
UN Fellowship Program...................................         100,000
UN Population Fund (UNFPA)..............................      55,000,000
UNEP Environment Fund...................................      16,000,000
UNEP--Related Activities................................       1,000,000
Montreal Protocol Multilateral Fund.....................      27,250,000
Habitat.................................................         300,000
International Union for Conservation of Nature (IUCN)...       1,000,000
International Tropical Timber Organization (ITTO).......       1,000,000
Convention on International Trade in Endangered Species 
    (CITES).............................................       1,000,000
Ramsar Convention on Wetlands...........................         750,000
UN Framework Convention on Climate Change (UNFCCC)......       3,000,000
Intergovernmental Panel on Climate Change (IPCC)........         600,000
International Contributions for Scientific, Educational 
    & Cultural Activities...............................       2,050,000
World Heritage Fund.....................................         450,000
World Meteorological Organization/Voluntary Cooperation 
    Program.............................................       3,000,000
World Meteorological Organization/Special Fund for 
    Climate Activities..................................         800,000
OAS Development Assistance Programs.....................      11,000,000

    U.S. contributions to voluntary peacekeeping operations 
should be reduced by at least $60 million from the President's 
FY 96 request. These contributions are in addition to the U.S. 
assessed 31 percent contribution to all U.N. peacekeeping 
operations. Prohibition on reauthorization of the International 
Development Association (IDA) will save taxpayers $1.25 billion 
next year.
    Humanitarian Assistance--The Committee will continue to 
place high priority on programs which help the truly needy. 
Funding for humanitarian assistance programs, including the 
Office of Foreign Disaster Assistance (OFDA), Refugee and 
Migration Assistance, and Emergency Refugee and Migration 
Assistance (ERMA) should be funded at the President's requested 
level.
    Security Assistance--Funding for Camp David countries and 
for anti-terrorism programs will remain a priority. However, 
the overall level of funding for military and security programs 
must be reduced.
    Trade Development Programs--As part of an overall 
reorganization plan, serious consideration should be given to 
combining all U.S. trade and export development programs into 
an enhanced and streamlined Agency for Export Promotion, Trade, 
Development and Investment. TDA, OPIC and the Export-Import 
Bank, which support U.S. commercial interests and open markets, 
should be funded at the President's requested level.
    Thank you again for the opportunity to share my views about 
expected reductions in the international affairs budget account 
in the next five years.
            Sincerely,
                                                       Jesse Helms.
                                ------                                

                                       U.S. Senate,
                         Committee on Governmental Affairs,
                                    Washington, DC, March 31, 1995.
Hon. Pete Domenici,
Chairman, Senate Committee on the Budget, Dirksen Office Building, 
        Washington, DC.
    Dear Mr. Chairman: Pursuant to Section 301(d) of the 
Congressional Budget Act, I am submitting my views and 
estimates with respect to federal spending in the jurisdiction 
of the Senate Governmental Affairs Committee.
    As Chairman of the Committee, I am disappointed that the 
President's FY 1996 budget does not contain significant deficit 
reduction over the next several years. The Administration's 
budget does not recommend meaningful changes or reforms to the 
federal retirement system affecting benefits or health 
insurance benefit changes. I am committed to help reducing the 
deficit in a meaningful and fair manner and do recognize the 
need for possible adjustments to these programs in the coming 
years as we move forward in achieving a balanced budget.
    I also believe that significant savings can be realized 
through a comprehensive reform of the Executive Branch to meet 
the needs of our taxpayers for the 21st Century. As Chairman of 
the Governmental Affairs Committee I will explore possible 
savings through Executive Branch agency consolidations and 
eliminations. The advancement of high technology in the 
workplace will streamline work processes and allow a further 
downsizing of the federal bureaucracy far beyond what was 
contained in the National Performance Review. As you well know, 
these savings realized will be counted toward deficit reduction 
in the discretionary accounts only. This committee is committed 
toward the goal of a balanced budget and will work throughout 
the year to achieve savings.
    The President's Budget for FY 1996 contains two proposals 
that will affect federal employees in the coming years. These 
two proposals are the following:

    1. civil service retirement system--unfunded liability proposal

    President Clinton proposes to correct the current $540 
billion unfunded liability of the Civil Service Retirement 
System. His proposal includes amortizing the unfunded liability 
over a 40 year period by increasing the existing payment from 
the general fund to the retirement trust fund each year, 
beginning in FY 1997.
    This will require agencies to increase their contributions 
by 11.1 percent for a total agency contribution of 18.1 percent 
for most employees. This would add approximately $4,274 for 
each CSRS employee to an agency's salaries and expenses 
account. President Clinton's proposal regarding the unfunded 
liability of the CSRS system does provide a good path toward 
making the retirement system sound. I am concerned, however, 
about the funds needed to implement this proposal, including 
his proposal to increase the discretionary spending caps to 
fund this change.

             2. president's federal employee pay proposals

    The President proposes to give federal civilian employees a 
cost of living adjustment of 2.4 percent increase in January, 
1996, and then a 2.1 percent COLA in each succeeding year. The 
President allocates $1.9 billion for civilian employee pay 
raises in 1996, when over $4 billion is needed to fully fund 
the Federal Employees Pay Comparability Act of 1990, (FEPCA). 
Just as last year, the President does not specify his intention 
as to whether this $1.9 billion should be paid in the form of 
cost of living adjustments or in the form of locality pay 
adjustments. This is disappointing. This is the third 
consecutive year that the President proposes to underfund 
FEPCA.
    Last year, Congress granted buyout authority to the 
Executive Branch and mandated a reduction of 272,000 Full Time 
Equivalent positions over the next 5 years. Most of these 
reductions will come from the Department of Defense 
(approximately 160,000) and I do believe that further 
downsizing throughout the bureaucracy is necessary. It is my 
view that during this period of downsizing the federal 
bureaucracy by 272,000 employees over the next 5 years, the 
remaining workforce must be highly trained and motivated in 
order to meet the needs of all taxpayers in an efficient 
manner.
    I am committed to ensuring that as the bureaucracy further 
downsizes, a more productive workforce remains and is fully 
compensated. This Committee will undertake a thorough 
examination of the civil service systems and recommended 
changes that will improve performance throughout government.

                 federal employees health benefit plan

    This Committee believes that the Federal Employees Health 
Benefits Plan has been a successful program which serves over 9 
million federal employees and annuitants. However, this 
committee believes that modest reforms within FEHBP could be 
made. These reforms could produce significant savings.

                             postal service

    This Committee does not favor any of the various proposals 
that have been advanced to require the Postal Service to 
contribute additional amounts to deficit reduction through 
adjustments in its liability for retiree health benefits. These 
proposals would impose a heavy and inequitable financial burden 
on the Postal Service and its customers. The Committee notes 
that the Postal Service is already paying the costs of these 
benefits attributable to Postal Service employment. Also, this 
Committee does not endorse any variation of prefunding 
proposals for health benefits for future retirees.
    Mr. Chairman, I appreciate the opportunity to comment on 
the areas within the jurisdiction of the Governmental Affairs 
Committee and look forward to working with you this year as we 
move toward balancing the budget in a productive manner.
            Sincerely,
                                      William V. Roth, Jr.,
                                              United States Senate.
                                ------                                

                                       U.S. Senate,
                         Committee on Governmental Affairs,
                                     Washington, DC, April 3, 1995.
Hon. Pete V. Domenici,
Chairman, Committee on the Budget, U.S. Senate, Washington, DC.
    Dear Pete: Pursuant to your letter of January 16, 1995, I 
am submitting my views with respect to Federal spending under 
the jurisdiction of the Governmental Affairs Committee and the 
Fiscal Year (FY) 1996 budget.
    I am pleased that the Administration's proposed FY 1996 
budget does not seek further cuts in Federal retirement and 
health benefits. In 1990, this Committee reported $14.485 
billion in deficit reduction for FY 1991-1995 (P.L. 101-508). 
In 1993, this Committee reported $10.666 billion in deficit 
reduction for FY 1994-1998 (P.L. 103-66). The bulk of this 
deficit reduction came from cuts in Federal retirement 
benefits. Other savings were the result of reforms in the 
Federal Health Benefits Program and in Postal Service 
operations.
    I am alarmed by reports that deep cuts in Federal 
retirement benefits may be sought by others as part of the FY 
1996 budget. These proposals reportedly include significant 
increases in employee payroll contributions to both the Civil 
Service Retirement System (CSRS) and the Federal Employees 
Retirement System (FERS); permanent reductions in COLA 
protection; and increases in retirement age.
    The Congressional Research Service (CRS) recently examined 
CSRS and concluded that CSRS' ``unfunded liability'' was not a 
problem that would increase our budget deficit. Instead, CRS 
concluded that the system was financially sound, with a present 
funding mechanism that ensures that the system will remain 
solvent. Per CRS, its unfunded liability will be ``paid off'' 
under current law.
    At sometime in the future, the CSRS will close and FERS 
will be in place as the Federal retirement system. Using OPM 
estimates for the 21st century, the total value of the FERS 
trust fund will reach 18 times the amount needed to pay annual 
benefits.
    CSRS and FERS benefits represent a contract between the 
employees and the Federal government. These retirement benefits 
are ``deferred compensation.'' And, they are not driving the 
budget deficit. These earned annuities of Federal civilian 
retirees have been and are projected to be, a stable and 
continuing part of the Federal budget well into the 21st 
century.
    In closing, I would like to quote from one constituent 
letter:

          When I went to work for the Federal government almost 
        23 years ago, I was promised a retirement benefit 
        package which was based on length of service at certain 
        ages and was figured a certain way. It was one of the 
        reasons I went to work for the Federal government and 
        have remained a faithful employee. It offered (and 
        still does) security for myself and my wife in our 
        retirement years. In addition, I have made life choices 
        based on that promise. If the retirement age is 
        increased or the benefits are decreased, then the 
        promise will have been broken and I will have been 
        betrayed by the employer to whom I have given 23 of the 
        best years of my working life. The Employee Retirement 
        Income Security Act (ERISA) of 1974 protects private 
        sector workers by making it illegal for their employers 
        to renege on promised income security in retirement. I 
        ask that your committee uphold these same standards.

    Over the past 12 years, we have greatly reformed the 
Federal retirement system. Now, in terms of many features, the 
system is roughly comparable with private-sector programs. It 
is my hope that this year's budget resolution takes into 
consideration previous changes in employee and retiree health 
and retirement benefits. It is my hope that this year's budget 
resolution recognizes that both CSRS and FERS are financially 
solvent and not increasing our budget deficit.
            Sincerely,
                                        John Glenn, Ranking Member.
                                ------                                

                                       U.S. Senate,
                               Committee on Indian Affairs,
                                     Washington, DC, April 3, 1995.
Hon. Pete V. Domenici,
Chairman.
Hon. J. James Exon,
Ranking Minority Member, Committee on the Budget, U.S. Senate, 
        Washington, DC.
    Dear Chairman Domenici and Senator Exon: This letter is in 
response to your request for the views and estimates of the 
Committee on Indian Affairs on the President's Budget Request 
for fiscal year 1996 Indian programs.

               committee hearings and legislative record

    The Committee held two hearings on the President's budget 
request in mid-February, receiving testimony from the 
Department of Interior, the Indian Health Service, the 
Department of Housing and Urban Development, the Department of 
Education, the Environmental Protection Agency, and numerous 
other Federal agencies, tribes and tribal organizations.

                       relative spending patterns

    As in previous years, the Committee asked the Library of 
Congress to prepare an analysis of the Federal spending trends 
on programs for American Indians and Alaska Natives over the 
past twenty years, as well as a comparison of this spending 
relative to Federal spending for other Americans. The results 
of this analysis show that, despite the efforts of the 
Committee on the Budget and the Committee on Appropriations 
over the past decade to respond to the acute needs of Indian 
and Native communities the gap between what the Federal 
government spends on Indians and non-Indians will steadily 
worsen for Indians under the President's 1996 budget request. 
This disparity in per capita Federal expenditures between 
Indians and non-Indians first became negative for Indians in 
1985 and has steadily worsened since. Over this same period, 
the Indian service population has nearly doubled. The most 
recent report prepared by the Library of Congress is attached 
for your review.
    Tribal government are, of course, the governments closest 
to the Indians and Alaska Natives with the most dire and unmet 
needs. Most of the limited Federal funds that have been made 
available for Indian programs have tended to result in an 
expanded Federal bureaucracy rather than an increase in 
tribally-controlled budgets. For Indian people, the fact has 
compounded their problems, as their tribal governments face 
greatly increased responsibilities without corresponding 
financial support. With a few notable exceptions, these 
generalities are perpetuated by the President's 1996 budget 
request. The Administration's budget allows most Indian 
programs only very minor increases in absolute dollars. It also 
proposes to spend a slightly larger portion of these funds at 
the local level. In 1993 constant dollars, the budget request 
reflects a net loss for Indian programs and services.

                             relative need

    Americans Indians and Alaska Natives continue to be the one 
group of Americans which suffers the worst conditions of 
unemployment, dilapidated and overcrowded housing, poor health, 
inadequate education, the lack of basic social and physical 
infrastructure, and other social and economic factors that 
seriously, sometimes critically, erode the dignity and quality 
of life. Recent data released by the Bureau of the Census on 
February 7, 1995, confirms these conclusions in the area of 
housing. According to 1990 census figures, 18% of all American 
Indian households on Reservations are ``severely crowded.'' The 
comparable figure for non-Indians is 2%. Likewise, while 33% of 
all Reservation households are considered ``crowded'', the 
comparable figure for all households nationally is 5%. The 
typical Indian home on a Reservation has 4.4 rooms, nearly a 
whole room less than the national median of 5.3 rooms. 
Approximately 90,000 Indian families are homeless or 
underhoused. One out of every five Indian homes lack complete 
plumbing facilities.
    Nearly one in three Native Americans lives in poverty. The 
number of Indian families below the poverty line is nearly 
three times the national average. One-half of Indian households 
headed by a female live in poverty. One-half of the Indian 
children under the age of six living on reservations live in 
poverty. For every $100 earned by U.S. families, Indian 
families earn $62. The average per capita annual income for an 
Indian living on the reservation is $4,478. Poverty in Indian 
country is a persistent, everyday reality.
    Poor health is the twin sister of poverty. The mortality 
rate for Native Americans for tuberculosis exceeds the national 
rate by four times. The Indian mortality rate for diabetes 
exceeds the national average by 139 percent. Indians are four 
times more likely to die from alcoholism than are other 
Americans. Fetal Alcohol Syndrome rates among Native Americans 
are six times the national average. In some Indian communities, 
reported cases indicate that child abuse has victimized as many 
as one-fourth of the children. By all measures the health 
status of Native Americans lags significantly behind any other 
segment of our population.
    There have always been two basic justifications for Federal 
funding of Indian programs. First, is the solemn commitment of 
the United States to address the compelling human need revealed 
in the statistics like those summarized above. Tribes have 
informed this Committee that the years of underfunding and 
neglect have resulted in an overwhelming backlog of 
underdeveloped social, physical, and human infrastructure. 
Consequently, the amount of resources needed to simply ``catch 
up'' to the rest of America makes continued funding of Indian 
programs absolutely vital. The second basis for Federal-Indian 
appropriations is the unique government-to-government 
relationship between the United States and each tribal 
government arising from well-settled principles of Federal-
Indian law, based on agreements, treaties, statutes, Executive 
Orders, course of dealings, and Federal court rulings.

A. Committee recommendations on the Indian health service budget

    The Indian Health Service (IHS) request for $2.059 billion 
within the Department of Health and Human Services would 
provide an increase of $95.96 million over the fiscal year 1995 
appropriation level, a 4.9% increase for Indian health 
programs. Given the acute levels of unmet need for health care 
in Indian Country, however, the Committee recommends total 
budget authority for the Indian Health Service (IHS) of $2.278 
billion in fiscal year 1996, a $218.84 million increase over 
the fiscal year 1996 request. This recommended increase is 
comprised of $80.54 million for services and $138.3 million for 
facilities. The Committee recommendation would represent an 
increase of $314.8 million on budget authority over the fiscal 
year 1995 appropriation. The Committee generally commends the 
Administration for its fiscal year 1996 budget request for the 
Indian Health Service (IHS) and for abandoning the gross over-
inflation of projected third party collections, a past practice 
of IHS that Congress has repeatedly denounced.
    The increases recommended by the Committee include: (1) 
$9.2 million to restore funds for Indian health purposes that 
previously funded 230 FTE positions proposed for reduction due 
to streamlining and $7.04 million to fund the 176 FTE positions 
IHS proposes to redeploy from other locations to begin to staff 
new facility operations opening in fiscal year 1996; (2) $40 
million to begin to address an annual 2.2% growth in the IHS 
patient population of 1.4 million American Indians and Alaska 
Natives; (3) $24.3 million for unfunded contract support 
requirements for fiscal year 1995 and 1996; (4) $60.6 million 
to begin to address the $606 million construction backlog of 
sanitation deficiencies identified in the 10-year plan; and (5) 
$121.7 million to begin to address the $608.5 million in health 
and staff facility projects on the IHS 5-year plan.
    1. FTE Reductions (+$16.24 million). The first concern of 
the Committee on Indian Affairs regarding the Indian Health 
Service (IHS) budget for fiscal year 1996 are the two 
reductions or redeployments in staffing and related funding 
proposed by the Administration. Each of these reductions will 
have a seriously negative impact on the delivery of health care 
services to American Indians and Alaska Natives. Each reduction 
will also remove funds and functions that would otherwise be 
available for negotiation and transfer to tribes for direct 
service delivery under Self-Determination contracts and Self-
Governance compacts under Public Law 103-413. The first 
proposed reduction involves 230 FTEs which will be lost to 
streamlining or other cutbacks unrelated to tribal assumptions 
of IHS functions under compacts or contracts. This cut of 230 
FTEs represents 13% of the Department-wide reduction of 1,766 
FTEs proposed for fiscal year 1996. Yet IHS's dollar share of 
the total Department-wide budget request is just 1.8%. As with 
last year, the Administration is proposing to saddle IHS with a 
disproportionate share of the Department's FTE cut despite the 
overwhelmingly disproportionate health needs of Native 
Americans. The second FTE reduction involves an additional 176 
FTE positions that will be redeployed from existing operations 
to staff four new health facilities slated to open in fiscal 
year 1996. These 176 FTEs were previously serving the needs of 
other tribes in other locations and other capacities. It is 
reasonable to conclude from this that the IHS redeployment 
proposal will result in a reduction of services to all American 
Indians and Alaska Natives not served by the four new 
facilities. It will reduce the FTE-related funds which are now 
serving all tribes at the Headquarters and Area Office levels 
even as more tribes are beginning to exercise opportunities 
under Public Law 103-413 to have their negotiated share of 
those funds transferred to them for direct tribal operations. 
The proposed IHS approach is inconsistent with the 
understanding reached in prior years that the opening of new 
facilities is to be accompanied by requests for increases in 
operational funds and FTE positions rather than reduction-
oriented redeployments of positions and funds from existing 
operations. Accordingly, the Committee recommends an increase 
of $9.2 million to restore funds for Indian health purposes 
that previously funded 230 FTE positions proposed for reduction 
due to streamlining and $7.04 million to fund the 176 FTE 
positions IHS proposes to redeploy from other locations to 
begin to staff new facility operations opening in fiscal year 
1996.
    2. Population Growth (+$40 million). IHS data indicates 
there are 1.4 million American Indians and Alaska Natives 
served by IHS funded operations, and that this service 
population is growing at an annual rate of 2.2%. At this rate, 
30,800 additional persons will be added to the service 
population in fiscal year 1996, at an average cost of $1,300 
per person out of the $1.816 billion health services budget. 
Accordingly, the Committee recommends an increase of $40 
million to begin to address the additional costs of population 
growth in the IHS patient population.
    3. Unfunded Contract Support Requirements (+$24.3 million). 
IHS has informed the Committee on Indian Affairs that it now 
estimates the unfunded contract support cost need carried over 
from fiscal year 1995 will be $13 million, that new and 
expanded program assumptions in fiscal year 1996 will require 
an additional $15 million, and that ongoing contracts and 
compacts will require an additional $12 million. Last year the 
Congress enacted Public Law 103-413 to expand tribal 
opportunities to contract or compact in order to do for 
themselves what previously had been done for them by Federal 
bureaucrats. But if IHS does not make available contract 
support funds to tribes at levels tribes have negotiated with 
the Inspector General's office, the resulting shortfalls will 
be a major disincentive to expanded tribal assumptions under 
contracts and compacts, thereby preserving intact the present 
Federal service bureaucracy. The Administration's request 
addresses only $15.7 million of this $40 million requirement. 
Accordingly, the Committee recommends an increase of $24.3 
million to address this underfunded shortfall.
    4. Sanitation Facility Construction (+$16.6 million). In 
fiscal year 1990, Congress mandated that IHS prepare a 10-year 
plan to eradicate the backlog of sanitation deficiencies for 
existing Indian homes and communities. Since then, annual 
appropriations have not met the level of need identified each 
year, and population growth, inflation, and more stringent 
environmental regulation have increased the backlog of need. 
IHS now estimates the backlog at $606 million, and has 
requested $44 million to address it in fiscal year 1996. 
Accordingly, the Committee recommends an increase of $16.6 
million, which when added to the $44 million in the fiscal year 
1996 request, would address one-tenth of the need currently 
identified in the 10-year plan. The Committee notes that it 
wishes to work with the Committee on the Budget and the 
Committee on Appropriations this year to explore more cost 
effective and aggressive means to address the overwhelming 
backlog of need by leveraging private capital investment, 
including consideration of how capital leases are scored, a 
Federally-guaranteed loan program, or a tribal investment bank 
that would quicken the pace of construction.
    5. Health Facility Construction (+121.7 million). The 
Administration has requested no funds for new health facility 
construction projects in fiscal year 1996. The Administration's 
5-Year Planned Construction Budget estimates the cost of 
projects already on the IHS new health care facilities and 
staff quarters new construction priority lists at $608.5 
million, and in addition, there are 22 additional facilities 
which will be added to the priority list in the next year or 
so, for which cost estimates have not yet been finalized. 
Accordingly, the Committee recommends an increase of $121.7 
million to address one-fifth of the need identified on the 
current 5-year priority list. As with sanitation facility 
construction, the Committee notes that it wishes to work with 
the Committee on the Budget and the Committee on Appropriations 
this year to explore more cost effective and aggressive means 
to address the overwhelming backlog of need by leveraging 
private capital investment, including consideration of how 
capital leases are scored, a Federally-guaranteed loan program, 
or a tribal investment bank that would permit construction of 
new health facilities to begin again.

B. Committee recommendations on the Bureau of Indian Affairs budget

    The Bureau of Indian Affairs (BIA) fiscal year 1996 
request, within the Department of the Interior, would provide 
for $1.91 billion in current authority, a 9.3% increase of 
$163.3 million over the fiscal year 1995 appropriation level. 
Given the acute levels of poverty and structural under-
development in Indian Country, however, the Committee 
recommends total current budget authority for the BIA of $1.936 
billion in fiscal year 1996, a $25.76 million increase over the 
fiscal year 1996 request. This recommended increase would 
represent an increase of $189.06 million over current 
appropriations for fiscal year 1995. In addition, the fiscal 
year 1996 request includes $447.8 million in permanent 
authority, which are appropriations required for implementation 
of enacted land and water claim settlements and miscellaneous 
trust income payments to Indians. The Committee recommends the 
permanent budget authority of $447.8 million as requested. 
Consequently, the total recommended by the Committee, including 
current and permanent budget authority, is $2.384 billion.
    The Committee generally commends the Administration for its 
fiscal year 1996 budget request for the Bureau of Indian 
Affairs (BIA). The BIA finally has requested funds to implement 
the Indian Child Protection and Family Violence Prevention Act 
of 1990, after neglecting to request any implementing funds for 
the past four fiscal years. Other activities which are slated 
for new or increased funding in the fiscal year 1996 BIA 
request are school operations, self-governance activities, 
tribal courts, school and detention facility construction, 
recently recognized tribes, tribal land consolidation, and 
interest payments to individual Indian money account holders. 
The Committee also commends the BIA for implementing a 
recommendation of the DOI/BIA/Tribe Joint Task Force on BIA 
Reorganization to transfer General Assistance funds to the 
Tribal Priority Allocation Account level where expenditures are 
more subject to tribal self-determination and control.
    Despite the increased funding, significant problems go 
unaddressed in the BIA request. In addition, the BIA budget 
continues to defend and protect an over-sized Federal 
bureaucracy while short-changing tribal needs at the service 
delivery level. Nevertheless, the Committee on Indian Affairs 
recommends a slight increase in the BIA overall budget 
authority because the Committee intends during fiscal year 1996 
to require, by legislative mandate, a dramatic reorganization 
of the BIA so that all funds appropriated for Indians through 
the BIA are spent directly by, or under the direction and 
control of, American Indian and Alaska Native tribal 
governments. The Committee is determined to refashion the BIA 
into a technical support agency serving at the pleasure and 
direction of tribes themselves.
    The increases recommended by the Committee include: (1) 
$19.16 million for general distribution to tribes under the 
Tribal Priority Allocations to begin to address the impact of 
inflation and unmet need on their operations; and (2) $6.6 
million for additional contract support funds in anticipation 
of increased tribal assumptions of BIA activities under 
contracts and compacts.
    1. General Tribal Priority Allocations (+$19.16 million). 
In contrast to previous years, the BIA fiscal year 1996 request 
contains no general increases to the recurring service accounts 
identified to each tribe's operations in order to meet 
inflationary cost increases and unmet needs. In prior years, 
these funds have been essential to meet the needs of many 
smaller tribes whose recurring base of stable funding is 
relatively small. Increases to this account give substance to 
the policy of supporting each tribe's right to set its own 
spending priorities over the limited funds available to it. The 
BIA fiscal year 1996 request includes $766.5 million for Tribal 
Priority Allocations. That total appears larger than the fiscal 
year 1995 amount simply because of internal accounting 
transfers; the request for Tribal Priority Allocations lacks an 
adjustment for cost inflation or unmet need. Accordingly, the 
Committee recommends an increase of $19.6 million for direct 
distribution to tribes, a 2.5% increase.
    2. Unfunded Contract Support Requirements (+$6.6 million). 
The BIA acknowledges that tribal assumption of activities under 
contracts or compacts will dramatically increase in fiscal year 
1996, yet in the Committee's judgment the BIA's request for 
related contract support funding falls far short of what will 
be required. According to the BIA, tribal contracting and 
compacting will increase from $320.3 million in fiscal year 
1994 to an estimated $465 million in fiscal year 1995. BIA 
provided $84.8 million for contract support in fiscal year 1994 
at an average rate of 26.5%, and will provide $103.126 million 
in fiscal year 1995 at an average rate of 22.2%. If contract 
and compact levels do not increase from fiscal year 1995 to 
1996, the BIA's fiscal year 1996 request of $116.6 million for 
contract support costs will still produce an average rate of 
25.1%, significantly below the 1994 rate of 26.5% and simply 
exacerbate the accumulated unfunded requirements of previous 
years. Tribes experienced sharp, unfunded contract support 
shortfalls in both fiscal year 1994 and 1995. Moreover, sharply 
increased levels of tribal contracting and compacting are 
anticipated in fiscal year 1996 because Public Law 103-413 
immediately expanded tribal opportunities to contract or 
compact in order to do for themselves what previously had been 
done for them by Federal bureaucrats. If Congress and the BIA 
do not make available contract support funds to tribes at 
levels tribes have negotiated with the Inspector General's 
office, the resulting shortfalls will be a major disincentive 
to expanded tribal assumptions under contracts and compacts, 
thereby preserving intact the present Federal bureaucracy. An 
additional $6.6 million would bring the total to $123.2 
million, which would equal the average rate of 26.5% funded in 
fiscal year 1994. Accordingly, the Committee recommends an 
increase of $6.6 million to begin to address this underfunded 
shortfall.

C. Committee recommendations on other agencies

    Various Federal agencies maintain programs of direct or 
otherwise measurable benefit to American Indians and Alaska 
Natives. The Committee on Indian Affairs to provide additional 
recommendations on several of these programs as appears below.
    1. Department of Housing and Urban Development (HUD). In 
his testimony before the Committee on Indian Affairs on 
February 14, 1995, Secretary Cisneros set forth a commendable 
plan for dramatically increasing the allocations of HUD funds 
to American Indian and Alaska Native housing and community 
development even as the Department undergoes down-sizing and 
funding reductions. Given the critical housing needs in many 
Indian communities, HUD's fiscal year 1996 request includes a 
dramatic reallocation of HUD funds to support increased funding 
for the new construction of 3,000 housing units, a $36 million 
increase (from $14 million to $50.1 million) in the new 
Affordable Housing Fund, and a $26.8 million increase (from $46 
million to $72.8 million) in the new Community Opportunity Fund 
(formerly Community Development Block Grants). The Committee 
commends the Secretary for his responsiveness to the acute 
housing needs in Indian Country, and recommends to the 
Committee on the Budget that the HUD allocations identified to 
American Indian and Alaska Natives be maintained as requested.
    2. Department of Education. The Department of Education 
request for fiscal year 1996 seeks a $333,000 decrease from the 
fiscal year 1995 appropriation for ``special programs for 
Indian children'' including undergraduate and graduate 
fellowship awards to Indians in the fields of medicine, 
psychology, law, education, business administration, 
engineering, and natural resources. The Administration has 
refused to spend the fiscal year 1995 increase and instead 
proposes to carry it over to fiscal year 1996 in order to 
maintain instead of expand prior year levels of fellowship 
awards. This reduction would seriously undermine recent efforts 
to increase the Federal resources devoted to expanding training 
opportunities for future Indian professionals. Accordingly, the 
Committee recommends that the $333,000 decrease be restored for 
these purposes.
    3. Environmental Protection Agency (EPA). The Environmental 
Protection Agency request for fiscal year 1996 includes a total 
of $85 million for EPA's tribal programs. The Committee 
acknowledges and commends the late but welcome commitment by 
EPA to increase its focus on specific Indian needs which have 
been neglected for decades. Of particular note is the EPA 
request of $15 million for its ``general assistance program'', 
an increase of $6.5 million over the 1995 enacted level. The 
Committee supports this and other increases in the 
Administration's request for fiscal year 1996, which should 
result in significant progress in tribal planning and 
development efforts.

D. Conclusion

    The Committee on Indian Affairs, in its March 29, 1995 
business meeting, favorably adopted the foregoing letter of 
recommendations on the budget views and estimates by an 
unanimous vote. We very much appreciate the opportunity for the 
Committee on Indian Affairs to provide this information on the 
President's Budget for Indian programs for fiscal year 1996 to 
the Committee on the Budget and look forward to working with 
you in the coming year.
                        Sincerely,
                                   John McCain,
                                           Chairman.
                                   Daniel K. Inouye,
                                           Vice-Chairman.
                                ------                                

                    Congressional Research Service,
                                       Library of Congress,
                                 Washington, DC, February 13, 1995.
To: Senate Committee on Indian Affairs, Attention: Steven J.W. Heeley.
From: Roger Walke, Analyst in American Indian Policy, Government 
        Division.
Subject: Indian-Related Federal Spending Trends, FY1975-1996 \1\.
    This memorandum responds to your request that we update the 
analysis of Indian-related budget areas produced in previous 
years to cover fiscal years 1975-1996. This study updates 
analyses presented in the Appendix of the Committee's 
publication Budget Views and Estimates for fiscal years 1989 
(S. Prt. 100-116), 1991 (S. Prt. 101-89), 1992 (S. Prt. 102-
32), and 1993 (S. Prt. 102-91) and included in the Committee's 
materials printed in the Senate Budget Committee's report on 
the concurrent budget resolution for FY1995 (S. Rept. 103-238).
    \1\ Andorra Bruno, Analyst in American National Government, 
assisted in gathering data for FY1975-1995. Garrine Laney, Analyst in 
American National Government, and Megan Perry, Intern, assisted in 
gathering the data for FY1975-1991.
---------------------------------------------------------------------------
    The memorandum summarizes trends in most Indian-related 
areas of the Federal budget over the period FY1975-1996. The 
budget items selected usually account for two-thirds to three-
quarters or more of total Federal spending each year on 
American Indians and Alaska Natives.
    The trends are summarized in tables 1-4, and selected 
trends are illustrated in graphs 1-26. Both tables and graphs 
are based on the data in appendix tables 1-2. For each budget 
area, tables 1-4 show the following measures:
          the average level of spending in each year over the 
        time period;
          the annual change (i.e., the annual trend) in such 
        spending;
          the ratio of the annual change in spending to the 
        average level of spending (called the ``change 
        ratio''); and
          an indicator of the consistency of the annual change.
    Table 1 covers the period FY1975-1996, using current 
dollars. Table 2 covers the same period using constant, or 
inflation-adjusted, 1993 dollars. Tables 3 and 4 present the 
same current- and constant-dollar data for the period FY1982-
1996.
    This memorandum emphasizes constant-dollar figures. Since 
such figures are adjusted for the effects of inflation, they 
are better indicators of real changes in spending.
    This memorandum is not intended to be a complete analysis 
of all the Indian-related budget items selected. Rather it is 
meant to compare trends in major budget items affecting the 
nation's Indian population (particularly those programs 
targeting Indians in federally recognized tribes), on the one 
hand, with trends in parallel budget items affecting the entire 
U.S. population. After a discussion of methodology and sources, 
the memo focuses on budget items in four topical areas--
education, health, housing, and economic development and 
employment training--before examining overall trends.

                        methodology and sources

    The Indian-related budget items chosen for this analysis 
are the Bureau of Indian Affairs (BIA), and some of its 
components, in the Department of the Interior (DOI); the Indian 
Health Service (IHS) and the Administration for Native 
Americans (ANA) in the Department of Health and Human Services 
(HHS); the Office of Indian Education in the Department of 
Education; the Indian Housing Development program in the 
Department of Housing and Urban Development (HUD); and the 
Indian and Native American Employment and Training Program 
(INAP) \2\ in the Department of Labor. According to figures 
from the Office of Management and Budget, these agencies 
annually accounted for about 72 percent of estimated Indian-
related spending government-wide in the period FY1988-1995.
    \2\ The Indian and Native American Employment and Training Program 
was authorized by Section 401 of the Job Training partnership Act 
(JTPA) of 1982 (P.L. 97-300) and began its expenditures in FY1984. 
JTPA's predecessor, the Comprehensive Employment and Training Act 
(CETA), included a similar Indian employment and training program. This 
memo uses CETA Indian program spending for the period FY1975-1983 and 
INAP spending for FY1984 to the present.
---------------------------------------------------------------------------
    For the BIA program categories chosen for the analysis--
education, economic development, natural resources, and tribal 
(formerly ``Indian'') services--the memo contains a break in 
the continuity of the time-series data. The BIA restructured 
its budget presentation for FY1994, based on recommendations 
from the Joint Tribal/BIA/DOI Advisory Task Force on Bureau of 
Indian Affairs Reorganization. The general categories of 
education, economic development, natural resources, and Indian 
services, under which specific programs were grouped in 
previous budget presentations, are not used as general 
categories in the restructured budget presentation. While the 
BIA has applied this restructured presentation to its FY1993 
budget, it has not done so for earlier years. Hence the time-
series data for BIA component programs are internally 
consistent for FY1975-1992 and for FY1993-1996 but may not be 
consistent between the two time periods. In this memo we re-
grouped FY1993-1996 data for relevant BIA programs in the 
general categories of education, economic development, natural 
resources, and Indian services.\3\ We stress that these re-
grouped (or revised) data for BIA components for FY1993-1996 
represent estimates and are not consistent with earlier years. 
Hence computations and statistics for these BIA components for 
FY1975-1996 and for FY1982-1996 are also estimates.
    \3\ The re-grouped figures for FY1993-1994 for these BIA components 
generally produced budget figures that were markedly higher than 
figures for FY1992. This suggests that analytical statistics for these 
BIA components based on the FY1975-1995 time series may be skewed, 
either up or down.
---------------------------------------------------------------------------
    Spending by agencies is measured in this memo in terms 
either of appropriations (or budget authority) or of outlays, 
depending on data availability and on past usage in the 
Committee's study of FY1989. Indian housing data have been 
available as ``use of budget authority,'' and this year we have 
added budget authority data in measuring Federal spending on 
housing in general. (Outlays and budget authority diverge from 
each other more in housing, with its multi-year spending 
patterns, than in other budget areas.)
    To adjust for inflation, current-dollars figures were 
changed into constant dollars. The base year for the constant 
dollars was 1993, and the inflation index used to compute 
constant dollars from current-dollar figures was the Implicit 
Price Deflator for the Gross Domestic Product (GDP). We chose 
Implicit Price Deflator (IPD) instead of the Consumer Price 
Index (CPI) because the former accounts for inflation in the 
entire economy rather than just in consumer purchases, and 
hence is more appropriate for the full range of Indian budget 
areas.

                          statistical measures

    The average, or mean, level of spending during the period 
FY1975-1996 was computed by dividing total spending over the 
time period by the number of years.
    Annual change (annual trend) and trend consistency over the 
FY1975-1996 period were both determined by a time-series linear 
regression analysis. Such an analysis attempts to find the best 
straight line illustrating the relationship between a variable 
(here, a budget item) and time. The annual change is the 
``slope'' of such a straight line (the slope is also known 
technically as the ``coefficient of X'' or the ``regression 
coefficient''). The slope, or annual change, shows how much the 
spending on a budget item changes for every year that passes. 
Trend consistency is the ``coefficient of determination,'' or 
r\2\, generated by a regression analysis. Here, r\2\ can be 
interpreted as follows: if the r\2\ is high (i.e., closer to 
1), then trend, whether up or down, is very consistent; if the 
r\2\ is low (closer to 0), then the trend is very irregular.
    Change ratio denotes the annual change divided by the 
average level of spending. This is to control for the fact that 
the size of a budget item's annual change varies with the total 
amount of dollars spent by an agency. For instance, an annual 
change of $10 million for an agency whose average spending is 
$100 billion a year constitutes a much lower increase, 
proportionally, than the same $10 million increase for an 
agency whose average spending is $50 million a year. The change 
ratio allows one agency's annual change to be compared to that 
of another agency while taking relative budget size into 
account.

                                sources

    Sources for budget data are the respective agencies and the 
annual Budget of the United States Government submitted by the 
President. Budget data collected included historical 
appropriations and outlays and FY1996 budget estimates, by 
agency and by budget function \4\ category. Agencies previously 
contacted include the BIA, IHS, ANA, HUD, Education Department, 
Interior Department, and Labor Department. HUD was not able to 
provide Indian Housing Development Program data for FY1975 and 
FY1977 because the data had been archived.
    \4\ Budget functions represent classifications of budget 
expenditures by major objectives and operations, regardless of the 
agency responsible. Budget functions are further divided into budget 
subfunctions.
---------------------------------------------------------------------------
    U.S. population data came from the Statistical Abstract of 
the United States and the Census Bureau's Current Population 
Reports (Series P-25, Nos. 1104 and 1125). We used the figure 
for total U.S. population, including Armed Forces abroad. 
Indian population data came from the Indian Health Service's 
Trends in Indian Health 1993 and IHS projections, and are based 
on that agency's service population. IHS population estimates 
are updated annually.
    Historical figures for the Implicit Price Deflator for GDP 
were obtained from the Economic Report of the President 
(February 1994) and the Bureau of Economic Analysis; 
projections for 1995 and 1996 came from Data Resources, Inc. 
(DRI).

                               education

    Education data from table 1 show that Indian education 
spending appears to have been growing from FY1975 to FY1996. 
The annual change for BIA education, for instance, shows an 
increase of $13.6 million per year, for a positive change ratio 
of 4.19.\5\ These figures, however, are in current dollars. 
Inflation has not been taken into account. The constant-dollar 
figures in table 2 do take inflation into account. These data 
show that BIA education has actually fallen by $3.8 million a 
year, for a negative change ratio of -0.86, during the period 
FY1975-1996. This pattern--an increase in current dollars and 
actual decline in constant dollars--is repeated in most Indian-
related budget areas.
    \5\ Excludes BIA construction for education. As noted above, the 
time series for BIA education is not internally consistent because of 
BIA budget restructuring for FY 1993-1996. In addition, FY 1991 
appropriations for BIA education programs included forward funding of 
$208,900,000 for the 1991-1992 school year (July-June). For this 
analysis, these funds have been included under FY1991.
---------------------------------------------------------------------------
    Table 2 shows that the U.S. Department of Education budget 
has averaged $23.7 billion in constant 1993 dollars during 
FY1975-1996 and has grown at a rate of $410.1 million a year 
(1.73 change ratio), but with some annual variation (r\2\ of 
.557). In contrast, Office of Indian Education (OIE) programs 
in the Department of Education, which averaged $97.9 million a 
year in constant dollars, fell $2.9 million a year over the 
same time period (-2.95 change ratio). The r\2\ figure for the 
OIE in the Education Department (.721) shows that it has fallen 
fairly consistently over the time period.
    Table 4 compares budget trends in constant dollars during 
the period FY1982-1996. The Department of Education has 
averaged $24.5 billion with an increase of $675.4 million a 
year (2.76 change ratio). BIA education has increased $11.1 
million a year (2.76 change ratio), the same rate as the 
Education Department as a whole, while the Office of Indian 
Education in the Education Department has fallen $1.6 million a 
year (-1.92 change ratio).
    Graphs 1-3 illustrate the trends in education in constant 
dollars for FY1975-1996. Graph 1 shows the generally upward, 
but fluctuating, trend for the Department of Education budget. 
Graph 2 shows a long downward trend with a recently leveled 
off.

                                 health

    Federal health outlays (i.e., the health budget function), 
as shown in table 2, average $58.8 billion in constant 1993 
dollars during FY 1975-1996, increasing at a rate of 3.7 
billion a year, for a change ratio of 6.36, Expenditures of the 
Department of Health and Human Services (HHS), excluding Social 
Security payments and, this year, Social Security 
Administration administrative costs--but HHS still includes 
spending on more than just health--averaged $168.8 billion in 
the same time period, increasing at $9.75 billion a year (5.78 
change ratio). Indian Health Service appropriations, in 
constant dollars, also increased during FY1975-1996, but at a 
lower rate: the IHS's annual increase was $49.9 million, a 
change ratio of 3.85, on an average level of $1.3 billion.
    Spending on the health budget function during FY1982-1996, 
shown in table 4, was at an average level of $68.5 billion in 
constant dollars during the period, with an annual increase of 
$6 billion (8.76 change ratio). HHS outlays averaged $198.2 
billion, increasing $12.9 billion (6.52 change ratio) annually. 
IHS spending showed slightly lesser gains during the same 
period, receiving annual increases of $75.9 million per year, 
for a change ratio of 5.33, on an average level of $1.4 
billion.
    Graphs 4-6 depict the trends in the HHS, health function, 
and IHS budgets for the years FY1975-1996, in constant dollars. 
They show that the increase over time was more consistent for 
HHS (r \2\ of .919) than for the Federal health budget function 
(r \2\ of .800) or the IHS (r \2\ of .794).

                                housing

    Federal housing expenditure trends differ for outlays and 
budget authority during FY1975-1996. Outlays have generally 
risen, on either side of a sudden jump in FY1985, while budget 
authority fell from FY1975 before leveling off after the FY1985 
surge. The trend in Indian Housing Development expenditures (as 
measured in ``use of budget authority'') differs sharply from 
that for Federal outlays for housing and more closely resembles 
that for Federal housing budget authority, except that Indian 
housing development has fallen more steeply. Table 2 shows that 
Department of Housing and Urban Development (HUD) outlays 
averaged $23.0 billion in constant dollars from FY1978 to 
FY1996 \6\ and increased at an annual rate of $301 million, for 
a positive change ratio of 1.31. Outlays for the Federal 
housing assistance subfunction increased even faster, rising 
$829.5 million a year on an average level of $17.3 billion, for 
a positive change ratio of 4.80. Budget authority for HUD, 
however, fell $2.1 billion a year in constant dollars, for a 
negative -6.68 change ratio on average spending of $32.6 
billion. Budget authority in constant dollars for the housing 
assistance subfunction showed the same pattern, falling $1.8 
billion a year on average spending of $25 billion for a 
negative change ratio of -7.01. The Indian Housing Development 
program, as measured by annual budget authority for new 
construction, decreased in constant dollars at an annual rate 
of $66.3 million on average spending of $533.8 million, for a 
negative change ratio of -12.42, a more steeply declining rate 
than for Federal housing budget authority as a whole. Graphs 7 
and 8 illustrate the trends in both outlays and budget 
authority for HUD and the housing assistance subfunction. Graph 
9 depicts the trend for the Indian Housing Program. Graph 10 
combines HUD and housing assistance subfunction outlays with 
Indian housing development budget authority (attempts to 
include Federal housing budget authority data caused scaling 
problems in the graph).
    \6\ The time period for housing data is shortened from FY1975-1996 
to FY1978-1996 because of missing data for Indian housing development 
in FY1975 and FY1977.
---------------------------------------------------------------------------
    Housing trends during FY1982-1996 are mixed compared with 
those for the longer period (see table 4). Indian Housing 
Development program expenditures in constant dollars decreased 
less rapidly than in FY1978-1996, falling at an annual rate of 
$24.4 million (-7.53 change ratio) on an average level of 
$324.6 million. Overall HUD outlays in constant dollars, on the 
other hand, were almost flat, increasing only $99.2 million a 
year (0.41 change ratio) on an average level of $23.9 billion. 
Housing assistance subfunction outlays in constant dollars grew 
faster than HUD spending--a change ratio of 3.06 based on 
increases of $593.2 million a year with an average level of 
$19.4 billion--but still lagged behind the rate for FY1978-
1996. Budget authority trends for HUD and the housing 
assistance subfunction, in constant dollars, were much more 
positive in the FY1982-1996 period than in the longer FY1975-
1996 period. As graphs 7 and 8 show, the greatest fall in 
budget authority for HUD and the housing assistance subfunction 
occurred before FY1984. (The decline in Indian Housing 
Development budget authority, as graph 9 shows, extended until 
FY1990.) HUD's budget authority in constant dollars decline 
only $182 million a year on average spending of $24.5 billion 
during FY1982-1996, a negative change ratio of only -0.74, 
while housing assistance subfunction budget authority actually 
rose in constant dollars, going up $47 million a year on 
average spending of $18.2 billion, for a slightly positive 
change ratio of 0.26.

            economic development and employment and training

    Economic development spending, in constant dollars, has 
declined during the period FY1975-1996 in both the overall U.S. 
budget and the Indian-related budget. Here we compare the U.S. 
community and regional development budget function with the BIA 
economic development program \7\ and with the Administration 
for Native Americans, which provides funding for social and 
economic development projects to Indian tribal governments and 
non-governmental Indian organizations. Measured in constant 
dollars, all three economic development programs have lost 
ground, but the Indian-related ones have fallen slightly 
faster. Table 2 shows that the U.S. community and regional 
development function has declined at an annual rate of $426.3 
million, for a change ratio of -3.65, while averaging $11.7 
billion a year in spending during this period. ANA 
expenditures, with an average level of $47.2 million, have 
decreased by $2.3 million a year, for a negative change ratio 
of -4.81. The BIA economic development program has fallen most 
rapidly, declining by $4.9 million a year--a negative change 
ratio of -5.60--on an average spending level of $87.1 million. 
Graphs 11-13, and the respective r2s for the community and 
ANA (.663), all show that the decline has been more consistent 
over FY1975-1996 for the Indian-related programs.
    \7\ As noted above, the time series for BIA economic development is 
not internally consistent because of BIA budget restructuring for 
FY1993-1996.
---------------------------------------------------------------------------
    Economic development spending during the FY1982-1996 
period, measured in constant dollars, has continued to decline, 
as shown in table 4, but not nearly as fast as in the longer 
period. The Federal community and regional development function 
during this period was nearly flat, dwindling by only $4.5 
million a year (negative change ratio of -0.05) on average 
spending of $9.2 billion. ANA fell only by a negative change 
ratio of -0.74 ($0.3 million a year) on an average level of 
$36.5 million. BIA economic development went down the fastest, 
being reduced by a change ratio of -2.71 ($1.7 million a year) 
on average spending of $63.7 million. The downward trends were 
not at all consistent for any of these economic development 
measures during this period.
    Employment and training expenditures, in constant dollars, 
also declined during FY1975-1996 for both general U.S. programs 
and Indian-related programs. The Federal training and 
employment subfunction fell at an annual rate of $537 million, 
producing a negative change ratio of -5.44 on average spending 
of $9.9 billion. The U.S. Department of Labor fell at a slower 
rate, its larger annual decrease (-$897 million) generating a 
smaller change ratio (-2.27) on higher average spending ($39.5 
billion). The Indian and Native American Employment and 
Training Program (INAP) in the Labor Department had the largest 
negative change ratio, -9.23, based on an annual decrease of 
$12.9 million and average spending of $140 million.\8\ Graphs 
14-16 depict these declines in employment and training 
expenditures.
    \8\ As noted above, the time series used here includes CETA Indian 
programs for FY1975-1983 and the INAP proper for FY1984-1996.
---------------------------------------------------------------------------
    The FY1982-1996 period saw not only a lessening of the 
rates of decline in employment and training expenditures in 
constant dollars for the Labor Department and INAP, but also an 
increase for the training and employment subfunction, as table 
4 shows. The Labor Department's negative change ratio shrank to 
-0.78 because its annual decrease in constant dollars was only 
$273.3 million on average spending of $35.3 billion. The 
training and employment subfunction, on the other hand, showed 
a positive change ratio of 0.32, based on an annual increase of 
$21.9 million and average spending of $6.8 billion, both in 
constant dollars. INAP fell at a far higher rate than the Labor 
Department during FY1982-1996, losing $3.4 million in constant 
dollars annually in spending for a negative change ratio of 
-4.53, based on average spending of $74.2 million.

                          overall budget areas

    This section compares trends over the time period for the 
total BIA budget, overall Indian-program spending,\9\ and the 
Federal non-defense budget \10\ as a whole, using both current 
and constant dollars. For the BIA, table 1 and graph 17 
indicate an increase in spending in current dollars during 
FY1975-1996, with spending going up by $48 million a year 
(change ratio of 4.05) with an average level of $1.2 billion. 
Table 2 and graph 18, however, show that in constant dollars 
there was actually a decline in the BIA budget of $12 million a 
year (-0.75 change ratio), on an average level of $1.6 billion. 
A steady increase (r2 of .827) in current dollars becomes, 
when corrected for inflation, an uneven decline (r2 of 
.119) in constant dollars. As graph 18 shows, the unevenness 
results from a lengthy decline (in constant dollars) followed 
by a recent rise.
    \9\ ``Overall Indian-program spending'' means here the six major 
Indian programs covered in this memo.
    \10\ The Federal non-defense budget used here excludes both 
national defense expenditures and net interest payments on the national 
debt.
---------------------------------------------------------------------------
    Overall Federal non-defense spending, however, departs from 
the pattern for Indian-related spending. Federal spending as a 
whole in current dollars went up during the period FY1975-1996, 
at a rate of $40 billion a year (6.60 change ratio) with an 
average level of $605.8 billion (see table 1). In constant 
dollars, Federal spending still went up, at a rate of $19.1 
billion (2.50 change ratio) on an average level of $765 billion 
(see table 2). Graphs 19 and 20 illustrate these upward trends 
in current and constant dollars.
    The overall Indian-related budget returns to the same 
pattern as the BIA. Current-dollar spending during the FY1975-
1996 period, a shown in table 1, went up at a rate of $114.9 
million a year, a change ratio of 4.15, on an average level of 
$2.8 billion. Constant-dollar spending, however, is shown in 
table 2 to have gone down at a rate of $18.6 million a year 
(-0.50 negative change ratio) on an average spending level of 
$3.7 billion. The small size of the negative change ratio and 
the inconsistency of the trend (r2 of .031) result from 
the same pattern as the for BIA--a long fall followed by a 
recent upward trend. Graphs 21 and 22 demonstrate the two 
trends.
    Population data can be used to get a simple comparison of 
per-capita Federal spending between the overall U.S. population 
and the Indian population. Table 1 includes population data 
similar to the budget data. The data (which include 
projections) show that overall United States population 
increased at a rate of 2,356,014 people a year (0.98 change 
ratio) during the period 1975-1996, with an average level of 
240,157,364 people. The Indian population (as measured by the 
IHS service population) is much smaller, with an average level 
of 996,931, but it has grown much faster, increasing at an 
annual rate of 38,514 persons, for a change ratio of 3.86.
    To get a measure of per-capita Federal spending for each of 
the two groups, we took each year in the FY1975-1996 period and 
divided the overall Federal non-defense budget by the total 
U.S. population, and the overall Indian budget by the Indian 
population. We used current dollars for this measure. Graph 23 
illustrates the resulting current-dollar trends. It shows that 
during the first ten years of the period the Federal government 
spent more per capita on Indians than on the population as a 
whole. After 1985, however, Indians received less expenditure 
per capita, under major Indian-related programs, than the 
population as a whole. Throughout the 1975-1996 period, per-
capita spending on the U.S. population as a whole consistently 
increased, whereas per-capita spending on Indians through major 
Indian-related programs began to fall in 1979, with no 
significant upward change until 1990. Graphs 23A and 23B 
display the two populations' growth trends over the 1975-1996 
period.

                                summary

    The date show that Indian-related spending, corrected for 
inflation, has been going down in almost all areas. Among the 
Indian-related items examined for the FY1975-1996 period, only 
the IHS and two program areas within the BIA, natural resources 
and tribal services (which here includes the BIA's Housing 
Improvement Program), have avoided this trend.\11\ In the 
FY1982-1996 period, however, the BIA natural resources program 
area changes to a negative trend.
    \11\ As noted above, the time series for BIA natural resources and 
tribal services is not internally consistent because of BIA budget 
restructuring for FY1993-1996.
---------------------------------------------------------------------------
    The overall downward trend in Federal Indian spending is 
not obvious if one looks only at current-dollar data. One has 
to look instead at constant-dollar figures. The tables and 
graphs show that, in constant dollars, overall Indian spending 
has tended to go down over the full course of the FY1975-1996 
period, while overall Federal non-defense spending has gone up. 
The latter years of this period, however, have seen upward 
trends in overall Indian spending in constant dollars, though 
not yet enough to change the annual change and change ratio to 
positive numbers.
    When one looks not only at overall Indian spending but also 
at its major components--BIA, IHS, Office of Indian Education 
in the Education Department, Indian Housing Development program 
in HUD, ANA, and INAP--one sees from table 2 and graph 24 that, 
in constant dollars, all major spending items except IHS have 
declined during the period FY1975-1996. Moreover, a comparison 
in constant dollars of overall Indian spending and its major 
parts, on the one hand, with comparable budget items in the 
full Federal budget, on the other, indicates that most Indian-
program spending areas have lagged behind their equivalent 
Federal spending areas. (See graph 25.) This is true even of 
IHS.
    If BIA spending and overall Indian spending were both to 
decline in constant dollars at the same rates of annual change 
during the period FY 1997-2000 as they did during FY 1975-1996 
(-$12 million and -$18.6 million, respectively, in constant 
dollars), as shown in graph 26, then by FY2000 overall Indian-
program spending in 1993 dollars would have fallen from a 
proposed $4.16 billion in F1996 to $4.08 billion in FY2000. BIA 
spending in 1993 dollars would have fallen from a proposed 
$1.78 billion in FY1996 to $1.73 billion in FY2000.
    If you have any questions, or if I can be of further 
assistance, please call me at 707-8641.
                                                       Roher Walke.
    Attachments.
                                ------                                


 TABLE 1.--TRENDS IN SELECTED ELEMENTS OF THE FEDERAL BUDGET IN CURRENT 
                        DOLLARS, FY1975-1996 \1\                        
                      [Dollar figures in millions]                      
------------------------------------------------------------------------
                                                                Trend   
                     Average       Annual     Change ratio   consistency
                    level (A)    change (B)       (B/A)        (r\2\)   
------------------------------------------------------------------------
Education:                                                              
    U.S. Dept.                                                          
     of                                                                 
     Education..     $18,531.1      $1,100.1          5.94         0.926
    Education                                                           
     function...      34,314.2       1,590.8          4.64          .841
    Indian                                                              
     Education                                                          
     Office                                                             
     (U.S. Dept.                                                        
     of                                                                 
     Education).          70.5           1.2          1.65          .510
    BIA                                                                 
     education \                                                        
     2\.........         325.3          13.6          4.19          .642
Health:                                                                 
    U.S. Dept.                                                          
     of Health &                                                        
     Human                                                              
     Services                                                           
     (excluding                                                         
     Social                                                             
     Security                                                           
     Admin.)....     140,778.3      13,272.9          9.43          .926
    Health                                                              
     function...      49,449.0       5,037.0         10.19          .859
    Indian                                                              
     Health                                                             
     Service....       1,050.3          82.4          7.85          .919
Housing:                                                                
    U.S. Dept.                                                          
     of Housing                                                         
     & Urban                                                            
     Devt.                                                              
     (outlays) \                                                        
     3\.........      18,984.2         935.9          4.93          .727
    U.S. Dept.                                                          
     of Housing                                                         
     & Urban                                                            
     Devt.                                                              
     (B.A.) \3\.      24,259.5        -410.7         -1.69          .091
    Housing                                                             
     assistance                                                         
     subfunction                                                        
     (outlays) \                                                        
     3\.........      14,823.6        -366.0         -2.47          .448
    Housing                                                             
     assistance                                                         
     subfunction                                                        
     (B.A.) \3\.      18,543.9        -336.9         -1.82          .069
    Indian                                                              
     Housing                                                            
     Devt. Pgm.                                                         
     in HUD                                                             
     (B.A.) \3\.         366.9         -29.1         -7.94          .561
Economic                                                                
 Development and                                                        
 Training and                                                           
 Employment:                                                            
    Community &                                                         
     regional                                                           
     development                                                        
     function...       8,281.5          99.1          1.20          .064
    Administrati                                                        
     on for                                                             
     Native                                                             
     Americans                                                          
     (HHS)......          32.7           0.1          0.39          .035
    BIA economic                                                        
     development                                                        
      \2\.......          59.4          -0.5         -0.79          .045
    U.S. Dept.                                                          
     of Labor...      28,778.0         720.4          2.50          .359
    Training &                                                          
     employment                                                         
     subfunction       6,741.0         -34.8         -0.52          .012
    Indian &                                                            
     Native Am.                                                         
     Training &                                                         
     Emplt.                                                             
     (DOL) \4\..          88.5          -4.4         -4.95          .285
Natural                                                                 
 Resources:                                                             
    U.S. Dept.                                                          
     of the                                                             
     Interior...       5,001.9         214.3          4.28          .938
    Natural                                                             
     resources                                                          
     function...      14,827.9         627.7          4.23          .914
    BIA natural                                                         
     resources \                                                        
     2\.........         111.3           5.7          5.15          .796
Overall:                                                                
    BIA Total...       1,187.0          48.0          4.05          .827
    BIA tribal                                                          
     services \2                                                        
     \..........         302.1          19.6          6.50          .904
    Overall                                                             
     Indian                                                             
     budget.....       2,769.1         114.9          4.15          .750
    Federal non-                                                        
     defense                                                            
     budget \5\.     605,814.0      40,007.4          6.60          .975
Population:                                                             
    U.S.                                                                
     population.   240,157,364     2,356,014          0.98          .998
    Indian                                                              
     population                                                         
     (IHS ests.)       996,931        38,514          3.86          .985
------------------------------------------------------------------------
\1\ See Appendix table 1 for data used to calculate these figures.      
\2\ Inconsistent time series from FY1993 on, because of BIA budget      
  restructuring. ``BIA education'' excludes BIA education construction. 
\3\ Covers only FY1978-1996. B.A.=budget authority.                     
\4\ FY1975-1983: CETA Indian program. FY 1984-1996: Indian & Native     
  American Training & Employment Program.                               
\5\ Excludes national defense outlays and net interest payments on      
  national debt.                                                        


      TABLE 2.--TRENDS IN SELECTED ELEMENTS OF THE FEDERAL BUDGET IN CONSTANT 1993 DOLLARS, FY1975-1996 \1\     
                           [Constant dollars based on Implicit Price Deflator for GDP]                          
                                          [Dollars figures in millions]                                         
----------------------------------------------------------------------------------------------------------------
                                                       Average       Annual        Change            Trend      
                                                      level(A)      change(B)    ratio(B/A)   consistency(r \2\)
----------------------------------------------------------------------------------------------------------------
Education:                                                                                                      
    U.S. Dept. of Education.......................     $23,702.9        $401.1          1.73            0.557   
    Education function............................      45,260.3          15.8          0.03             .000   
    Indian Education Office (U.S. Dept. of                                                                      
     Education)...................................          97.9           2.9         -2.95             .721   
    BIA education \2\.............................         436.4          -3.8         -0.86             .070   
Health:                                                                                                         
    U.S. Dept. of Health & Human Services                                                                       
     (excluding Social Security Admin.)...........     168,815.4       9,750.5          5.78             .919   
    Health function...............................      58,846.5       3,745.2          6.36             .800   
    Indian Health Service.........................       1,298.4          49.9          3.85             .794   
Housing:                                                                                                        
    U.S. Dept. of Housing & Urban Devt. (outlays)                                                               
     \3\..........................................      22,993.1         301.0          1.31             .141   
    U.S. Dept. of Housing & Urban Devt. (B.A.) \3\      32,586.4      -2,175.6         -6.68             .486   
    Housing assistance subfunction (outlays) \3\..      17,270.1         829.5          4.80             .529   
    Housing assistance subfunction (B.A.) \3\.....      25,047.5      -1,754.6         -7.01             .416   
    Indian Housing Devt. Pgm. in HUD (B.A.) \3\...         533.8         -66.3        -12.42             .638   
Economic Development and Training and Employment:                                                               
    Community & regional development function.....      11,688.1        -426.3         -3.65             .334   
    Administration for Native Americans (HHS).....          47.2          -2.3         -4.81             .663   
    BIA economic development \2\..................          87.1          -4.9         -5.60             .648   
    U.S. Dept. of Labor...........................      39,495.1        -897.0         -2.27             .343   
    Training & employment subfunction.............       9,866.9        -537.0         -5.44             .466   
    Indian & Native Am. Training & Emplt. (DOL)                                                                 
     \4\..........................................         140.0         -12.9         -9.23             .460   
Natural Resources:                                                                                              
    U.S. Dept. of the Interior....................       6,604.3          -6.1         -0.09             .004   
    Natural resources function....................      19,656.4         -58.0         -0.29             .034   
    BIA natural resources \2\.....................         142.7           2.1          1.50             .220   
Overall:                                                                                                        
    BIA Total.....................................       1,587.8         -12.0         -0.75             .119   
    BIA tribal services \2\.......................         383.8           8.5          2.21             .570   
    Overall Indian budget.........................       3,687.3         -18.6         -0.50             .031   
    Federal non-defense budget \5\................     765,040.6      19,148.2          2.50             .917   
----------------------------------------------------------------------------------------------------------------
\1\ See Appendix table 2 for data used to calculate these figures.                                              
\2\ Inconsistent time series from FY 1993 on, because of BIA budget restructuring. ``BIA education'' excludes   
  BIA education construction.                                                                                   
\3\ Covers only FY1978-1996. B.A.=budget authority.                                                             
\4\ FY1975-1983: CETA Indian program. FY1984-1996: Indian & Native American Training & Employment Program.      
\5\ Excludes national defense outlays and net interest payments on national debt.                               


        TABLE 3.--TRENDS IN SELECTED ELEMENTS OF THE FEDERAL BUDGET IN CURRENT DOLLARS, FY 1982-1996 \1\        
                                          [Dollar figures in millions]                                          
----------------------------------------------------------------------------------------------------------------
                                                       Average       Annual        Change            Trend      
                                                      level(A)      change(B)    ratio(B/A)   consistency(r \2\)
----------------------------------------------------------------------------------------------------------------
Education:                                                                                                      
    U.S. Dept. of Education.......................     $21,927.3       1,315.4          6.00             .905   
    Education function............................      38,426.1       2,293.4          5.97             .931   
    Indian Education Office (U.S. Dept. of                                                                      
     Education)...................................          73.7           1.2          1.59             .515   
    BIA education \2\.............................         359.2          22.3          6.21             .697   
Health:                                                                                                         
    U.S. Dept. of Health