FY02 BUDGET RESOLUTION

Congress recently approved, with my support, the Fiscal Year (FY) 2003 Budget Resolution or H. Con. Res. 353. The resolution serves as an outline detailing how much the federal government will spend during the coming fiscal year and provides a balanced framework for winning the war on terrorism and funding important domestic programs. The measure passed the House by a vote of 221-209.

In the midst of war, with a recovering economy, this budget resolution not only supports our troops but also takes significant steps to improve education, protect social security and provide prescription drugs for seniors. Our top priority is winning the war on terrorism, but not to the exclusion of programs that help the unemployed and ignite economic growth. This budget is a good road map for where America should be in 2003.

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H.Con.Res. 353
FY 2003 Budget Resolution

Summary

H.Con.Res. 353, the FY 2003 Budget Resolution, provides the three fundamental securities the Government is obligated to protect: national security; economic security; and personal security.

• Security for the Nation. This plan supports the President's request for winning the war against terrorism overseas and enhancing the safety of America's homeland. In addition, it promotes scientific research that can speed the discovery of technologies capable of improving the lives of all Americans.
• Security of a Growing Economy. The budget returns to the practice of paying down debt, further easing the burden of Government on the economy. It maintains the tax reductions enacted last year, and provides for an additional $66 billion of tax relief in over the next 5 years - principally through measures to help workers and working families. It further contributes to the economy through investments in agriculture, energy, and the environment.
• Security for Ourselves and Our Families' Future. Because America is a community of individuals, the budget helps Americans in pursuing their own destinies - by supporting education, health care, and retirement security.

NATIONAL SECURITY

The budget provides the President with the resources necessary to meet the priority of winning the war and strengthening our homeland security, while investing in the future of the armed forces and increasing funding for veterans.

Winning the War. The budget provides $393.8 billion for national defense -the largest increase in 20 years. Those resources will be used to win the war on terror by: supporting troops with specific antiterrorism mission; enhancing intelligence for funding programs that proved effective in Afghanistan; and by providing special munitions.

Securing the Homeland. Homeland defense and security became the nation's top priority in the aftermath of September 11 and the subsequent threat of biological weapons. The budget provides $37.7 billion for homeland security in FY 2003, nearly double what was spent before September 11. Those resources will protect Americans in a variety of ways including:

• First responders: $3.5 billion to help local police, fire, and emergency personnel get the training, personnel, and equipment they need to respond to a terrorist attack.
• Bioterrorism: $5.9 billion to counter bioterrorism through research, vaccine stockpiles, improved information networks, and enhancements in the health care system.
• Secure Borders: $10.6 billion (22 percent increase) to secure America's borders, including increases for the INS, Customs Services, and Coast Guard to hire additional agents and implement better information systems.
• Aviation Security: $4.8 billion for aviation security to implement new airport security equipment and to hire more screeners and law enforcement personnel.
• Food Supply Safety: $880 million to protect the nation's food supply including enhanced consumer protection efforts, pest and animal disease prevention, and research.

Investing in the Future. The budget continues the effort to modernize the armed forces for 21st century combat while maintaining readiness and supporting the men and women in uniform. H.Con.Res. 353 includes:

• 4.1 percent across-the-board pay raise for military personnel, on top of this year's 4.6 percent raise;
• $68.7 billion for military procurement;
• $140.4 billion (a $12.7 billion increase) for readiness to conduct operations; and
• $53.9 billion for research, development, testing, and evaluation.

Keeping our Promise to Veterans. The budget recognizes the immeasurable contributions of our 25 million veterans, and responds by building on the extensive enhancements we've provided for veterans benefits in the past few years, including:

• Veterans' Healthcare: Provides $23.2 billion (11 percent increase) to ensure veterans receive high-quality healthcare. (Does not assume the $1,500 deductible proposed by the administration).
• Concurrent Receipt: Provides reasonable, generous support, and paves the way for real benefit.
• Entitlement Benefits: Provides support to ensure veterans receive accurate and timely entitlement benefits.
• Veterans' Cemeteries: Continues our commitment to ensure that veterans ' cemeteries remain national shrines.

ECONOMIC SECURITY

The goal of the budget is to foster economic growth and create jobs, while investing in agriculture, transportation, trade, and energy.

• Paying off Debt -The budget makes sure the government lives within its means so we can return to paying down debt by 2004.
• Agriculture - Funds a comprehensive farm bill that maintains an adequate safety net for farmers by expanding market opportunities and reducing regulatory burdens.
• Transportation - Secures America's infrastructure by supporting critical homeland security initiatives like aviation security and fully funding highway and highway safety programs.
• Trade - Promotes trade and access to American products.
• Energy - Meets America's energy needs by providing for our immediate demands, while advancing our efforts toward future energy solutions. The budget funds priority programs, such as weatherization for the poor, and weapons stockpile stewardship.

PERSONAL SECURITY

The budget ensures a more secure future for American families by investing in education, healthcare, and retirement security.

Education - The budget includes a 14.3 percent average annual increase for education, including:

• $1 billion increase for Special Education - full funding of IDEA within ten years;
• $1 billion increase in Title I grants to low-income schools;
• $1 billion for Reading First program;
• $130 million increase for Head Start;
• $100 million for charter school construction;
• tax credit to help parents transfer their child from a failing school;
• $2.85 billion to give states and school districts the flexibility to train, recruit, and retain quality teachers;
• 3.6 percent increase for minority colleges; and
• Maintains the maximum Pell Grant at a historic high of $4,000.

Healthcare - Continues the commitment to strengthening America's healthcare safety net and expanding access to quality, affordable healthcare.

• Medicare Prescription Drugs: $350 billion for prescription drug coverage for seniors and reforms to strengthen and preserve Medicare.
• National Institutes of Health (NIH): Completes the 5-year effort to double the funding for NIH to help researchers find cures faster for diseases like cancer, Alzheimer's and Parkinson's.
• Veterans Healthcare: provides $23.9 billion (12 percent increase) to ensure veterans receive high-quality healthcare.
• Health Center Programs: provides $114 million increase, allowing for the expansion of rural health centers to serve more Americans in rural areas.

Retirement Security - The budget strengthens Medicare and Social Security, provides funding for a prescription drug benefit, and pays down historic amounts of debt.

• Provides $350 billion for prescription drug coverage for seniors and Medicare reforms to strengthen and preserve the program.
• Guarantees seniors will see no change in current benefits, while preserving Social Security for future retirees.
• Builds on our sizeable down-payment on Social Security reform - retiring nearly ½ trillion dollars in public debt - by getting back on track to paying down debt by 2004.

BACKGROUND

Overview of the Federal Budget Process

Typically, the arrival of the President's budget on Capitol Hill signals the beginning of the annual budget process in Congress - a process that can last more than eight months and require passage of scores of bills and resolutions. After receiving the President's budget, Congress drafts a budget resolution - a spending plan that defines in broad terms how much the government will take in through taxes (and other receipts), and spend on all government accounts during the coming fiscal year. The House and Senate Budget Committees each draft their own version, bring them to their respective chambers for approval, iron out differences in conference, and return the resulting version to their chambers for adoption. Because the President's signature is not required, the resolution does not carry the force of law (although the 1974 Congressional Budget Act establishes points of order to force Congress to abide by the limits it sets for itself). Discretionary spending is allocated to the Appropriations Committees in both chambers, which must be subdivided among the 13 Appropriations subcommittees. The budget resolution can also instruct specific committees to increase revenues or reduce spending in programs not controlled by annual appropriations. These changes are achieved through a reconciliation bill.

Throughout the process, Congress passes authorization bills that set the maximum amounts that may be spent in specific fiscal years for individual discretionary programs as well as goals for those programs. By using their spending allocations, each of the 13 appropriations subcommittees in each chamber report appropriations bills - bills that provide budget authority (also called obligational or spending authority) to programs within the limits set by the authorizations. If all 13 appropriations bills are not enacted before the new fiscal year (October 1), then Congress must pass and the President must sign a continuing resolution to provide temporary funding at current levels for government operations and programs to avert a government shutdown. In 1995, the budget impasse between President Clinton and Congress resulted in two partial government shutdowns and 13 continuing resolutions before a budget deal for FY 1996 could be reached. As spending bills are enacted, their funding levels for individual accounts supersede the continuing resolution.

What is the Budget Resolution?

A budget resolution serves as a blueprint for congressional spending decisions. It sets the total levels for budget authority, outlays, incoming revenues, direct-loan obligations, and loan guarantee commitments, as well as the public debt ceiling for the upcoming fiscal year. While the budget resolution itself does not enact or fund any specific proposals or initiate any new government programs, it assumes that the authorizing and appropriating committees will do so, and sets aggregate numbers to guide their decisions. A vote in favor of the resolution implies acceptance of the assumptions on which the resolution's funding levels are based. Under the 1974 Budget Act, Congress must adopt a budget resolution by April 15. However, since 1975, Congress has rarely met this deadline.

The budget resolution is broken into broad, conceptual "functions," which group common governmental services or benefits. For example, the national defense function includes programs run by the Department of Defense as well as nuclear weapons research at the Department of Energy. Conversely, it is not uncommon for an agency to receive funding from more than one function. Complicating the process, the 13 regular appropriations bills that Congress must act on annually use their own groupings.

Every budget resolution contains two sets of figures: budget authority and outlays.

• Budget authority (BA) refers to the amount of new money to be made available for government expenditures.
• Outlays are the amount that a program actually spends during a fiscal year.

BA and outlays need not correspond since funds may be authorized in one year but spent in another. Another important distinction in the budget discussion is the difference between discretionary and mandatory spending.

• Discretionary spending is what Congress appropriates each year through the 13 appropriations bills.
• Mandatory spending, under standing authority, automatically occurs year after year.

Most entitlement programs are not funded through the annual appropriations process. The largest component of mandatory spending comes from entitlement programs such as Social Security and Medicare, which must provide specified benefits to all eligible recipients.

With adoption of the budget resolution, total budget authority and outlays are allocated among the appropriate House and Senate committees with program jurisdiction; these are called "section 302(b)" allocations (also known as 602(a) allocations between 1990 and 1997, before being changed by the 1997 Balanced Budget Act). Members may raise points of order to ensure that later congressional spending and revenue bills remain consistent with the section 302(b) allocations.

In 1985, the Balanced Budget and Emergency Deficit Control Act (P.L. 99-177; popularly known as Gramm-Rudman-Hollings [GRH]) amended the 1974 Congressional Budget Act to require the budget resolution to include binding aggregate and functional amounts of new direct-loan obligations and primary loan-guarantee authority. Credit budget levels now must be allocated among the appropriate committees of jurisdiction and legislation that exceeds these amounts is subject to a point of order. In addition, GRH amended the act to allow the House to consider general appropriations bills beginning May 15 for the upcoming fiscal year even if the budget resolution has not been adopted. Furthermore, GRH requires the House to complete action on all regular appropriations bills by June 30 (the House may not consider an adjournment resolution for more than three calendar days in July if its appropriations bills for the upcoming fiscal year are not completed by this date).

Debt Limit. The Budget Act requires each budget resolution to prescribe a debt limit reflecting the budgetary and economic assumptions of the resolution. Following a 1979 House rules change, if the public debt limit specified in a budget resolution differed from the statutory ceiling, the Clerk of the House automatically prepared a resolution amending the current level. The House voted on a budget resolution, which included the debt limit resolution, releasing the House from a separate vote on the debt ceiling (this was referred to as the Gephardt rule). The Senate did not adopt this rule, and the Senate Finance Committee retains jurisdiction over the proposed debt-level change. The House also could consider debt-limit legislation originating in the Ways and Means Committee. The 104th Congress eliminated the Gephardt rule, requiring Congress to deal with the debt limit and the budget as separate measures.

Reconciliation

Reconciliation language directs one or more of the authorizing committees to submit legislation to make statutory changes that conform to the budget authority, outlays, and revenue levels outlined in the budget resolution. (The term "reconciliation" is derived from the fact that committees must reconcile their spending programs with Congress' overall goals as detailed in the budget resolution.) Reconciliation language in the budget resolution deals with either total spending or revenue changes for each committee instructed, not with specific program reductions or tax measures. In other words, the Budget Committee's overall numbers are binding, but it is up to individual committees to decide how they will reach their targets. If the reconciliation instructions affect more than one committee, the committees involved may be directed to submit their recommendations to the Budget Committee, which will package them in omnibus legislation for Floor consideration. The Budget Act requires Congress to complete action on a reconciliation bill reported pursuant to instructions in the budget resolution by June 15 (although it is typically superceded by a timetable established as part of the reconciliation instructions). Once both chambers have approved the final version of an omnibus budget reconciliation bill, it is sent to the president for his signature. Since its inception in 1980, the reconciliation process has evolved into the primary means of controlling entitlement and mandatory program spending.

Under the Budget Act, as amended by GRH, it is not in order to use a reconciliation bill to change Social Security or to introduce amendments that would result in a net increase in outlays or a net decrease in revenues. In addition, committees receiving reconciliation instructions may shift up to 20 percent of deficit reductions between revenue increases and spending cuts.

Entitlements

Entitlement legislation obligates the federal government to pay benefits to anyone meeting stipulated program eligibility requirements. Since many entitlement activities are tied to the price indices, an increase in these indices results in increased Federal program funding. In an effort to control entitlement spending, the Budget Act makes any bill containing a new entitlement subject to a point of order unless the entitlement becomes effective no earlier than the fiscal year beginning in the calendar year during which the bill is reported. If any entitlement exceeds the budget authority amount allocated to committees, the bill is referred for 15 days to the Appropriations Committee, which may recommend an amendment to limit total new spending authority. In 1983, Social Security was moved off-budget, except for the purpose of calculating the maximum deficit. However, the 1990 Omnibus Reconciliation Act removed Social Security from deficit calculations as well.

Off-Budget Activity

Off-budget Federal entities (such as Social Security Trust Funds and the U.S. Postal Service) are Federally owned and controlled programs whose transactions are excluded from the unified budget. GRH permanently amended the 1974 Budget Act to place all off-budget entities, except Social Security, in the congressional budget resolution.

Legislative History

H.Con.Res. 353 was introduced by Rep. Nussle on March 15, 2002. It was reported from the Budget Committee on March 14, 2002 by a vote of 23-17.