[House Report 112-577]
[From the U.S. Government Publishing Office]
112th Congress } { Report
2d Session } HOUSE OF REPRESENTATIVES { 112-577
_______________________________________________________________________
SEQUESTRATION TRANSPARENCY ACT
OF 2012
__________
R E P O R T
of the
COMMITTEE ON THE BUDGET
HOUSE OF REPRESENTATIVES
to accompany
H.R. 5872
A BILL TO REQUIRE THE PRESIDENT TO PROVIDE A REPORT DETAILING THE
SEQUESTER REQUIRED BY THE BUDGET CONTROL ACT OF 2011 ON JANUARY 2,
2013, HAVING CONSIDERED THE SAME, REPORTS FAVORABLY THEREON WITH AN
AMENDMENT AND RECOMMENDS THAT THE BILL AS AMENDED DO PASS
together with
MINORITY VIEWS
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
July 2, 2012.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
----------
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COMMITTEE ON THE BUDGET
PAUL RYAN, Wisconsin, Chairman
SCOTT GARRETT, New Jersey CHRIS VAN HOLLEN, Maryland,
MICHAEL K. SIMPSON, Idaho Ranking Minority Member
JOHN CAMPBELL, California ALLYSON Y. SCHWARTZ, Pennsylvania
KEN CALVERT, California MARCY KAPTUR, Ohio
W. TODD AKIN, Missouri LLOYD DOGGETT, Texas
TOM COLE, Oklahoma EARL BLUMENAUER, Oregon
TOM PRICE, Georgia BETTY McCOLLUM, Minnesota
TOM McCLINTOCK, California JOHN A. YARMUTH, Kentucky
JASON CHAFFETZ, Utah BILL PASCRELL, Jr., New Jersey
MARLIN A. STUTZMAN, Indiana MICHAEL M. HONDA, California
JAMES LANKFORD, Oklahoma TIM RYAN, Ohio
DIANE BLACK, Tennessee DEBBIE WASSERMAN SCHULTZ, Florida
REID J. RIBBLE, Wisconsin GWEN MOORE, Wisconsin
BILL FLORES, Texas KATHY CASTOR, Florida
MICK MULVANEY, South Carolina HEATH SHULER, North Carolina
TIM HUELSKAMP, Kansas KAREN BASS, California
TODD C. YOUNG, Indiana SUZANNE BONAMICI, Oregon
JUSTIN AMASH, Michigan
TODD ROKITA, Indiana
FRANK C. GUINTA, New Hampshire
ROB WOODALL, Georgia
Professional Staff
Austin Smythe, Staff Director
Thomas S. Kahn, Minority Staff Director
C O N T E N T S
----------
Page
Introduction..................................................... 3
Summary of Proposed Changes...................................... 3
Legislative History.............................................. 3
Section by Section............................................... 6
Hearings......................................................... 6
Votes of the Committee........................................... 7
Committee Oversight Findings..................................... 9
Performance Goals and Objectives................................. 9
Constitutional Authority Statement............................... 10
Committee Cost Estimate.......................................... 10
Advisory Committee Statement..................................... 10
Applicability to the Legislative Branch.......................... 11
Federal Mandates Statement....................................... 11
Advisory on Earmarks............................................. 11
Changes in Existing Law Made by the Bill, as Reported............ 11
Minority Views................................................... 11
112th Congress } { Report
2d Session } HOUSE OF REPRESENTATIVES { 112-577
=======================================================================
SEQUESTRATION TRANSPARENCY ACT OF 2012
_______
July 2, 2012.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Ryan of Wisconsin, from the Committee on the Budget, submitted the
following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 5872]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Budget, to whom was referred the bill
(H.R. 5872) to require the President to provide a report
detailing the sequester required by the Budget Control Act of
2011 on January 2, 2013, having considered the same, reports
favorably thereon with an amendment and recommends that the
bill as amended do pass.
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Sequestration Transparency Act of
2012''.
SEC. 2. SEQUESTER PREVIEW.
(a) In General.--Not later than 30 days after the date of enactment
of this Act, the President shall submit to Congress a detailed report
on the sequestration required to be ordered by paragraphs (7)(A) and
(8) of section 251A of the Balanced Budget and Emergency Deficit
Control Act of 1985 (2 U.S.C. 901a) for fiscal year 2013 on January 2,
2013.
(b) Contents of Report.--The report required by subsection (a) shall
include--
(1) for discretionary appropriations--
(A) an estimate for each category of the
sequestration percentages and amounts necessary to
achieve the required reduction; and
(B)(i) for accounts that are funded pursuant to an
enacted regular appropriation bill for fiscal year
2013, an identification of each account to be
sequestered and estimates of the level of sequestrable
budgetary resources and resulting reductions at the
program, project, and activity level based upon the
enacted level of appropriations; and
(ii) for accounts that have not been funded pursuant
to an enacted regular appropriation bill for fiscal
year 2013, an identification of each account to be
sequestered and estimates pursuant to a continuing
resolution at a rate of operations as provided in the
applicable appropriation Act for fiscal year 2012 of
the level of sequestrable budgetary resources and
resulting reductions at the program, project, and
activity level;
(2) for direct spending--
(A) an estimate for the defense and nondefense
functions based on current law of the sequestration
percentages and amount necessary to achieve the
required reduction; and
(B) an identification of the reductions required for
each nonexempt direct spending account at the program,
project, and activity level;
(3) an identification of all exempt discretionary accounts
and of all exempt direct spending accounts; and
(4) any other data and explanations that enhance public
understanding of the sequester and actions to be taken under
it.
(c) Agency Assistance.--(1) Upon the request of the Director of the
Office of Management and Budget (in assisting the President in the
preparation of the report under subsection (a)), the head of each
agency, after consultation with the chairs and ranking members of the
Committees on Appropriations of the House of Representatives and the
Senate, shall promptly provide to the Director information at the
program, project, and activity level necessary for the Director to
prepare the report under subsection (a).
(2) As used in this subsection, the term ``agency'' means any
executive agency as defined in section 105 of title 5, United States
Code.
Introduction
----------
Under current law, across-the-board spending reductions are
scheduled to occur on January 2, 2013. These reductions were
enacted as part of the Budget Control Act of 2011 (BCA) and
require the Office of Management and Budget (OMB) to make cuts
in both defense spending and non-defense discretionary spending
(approximately 10-percent and 8-percent respectively).
Subsequent to fiscal year 2013, OMB will determine the exact
amounts to come from discretionary and direct spending at the
start of each calendar year through fiscal year 2021. To date
OMB has refused to provide an official estimate of the spending
reductions that would occur.
Summary of Proposed Changes
This bill does not change current law sequester procedures
but rather establishes a new requirement for OMB to provide
Congress with a report related to the spending reductions
scheduled to take place under the terms of the BCA. The report
is to include information about programs, projects, and
activities that would be reduced under current law to achieve
specified levels in the BCA.
Legislative History
Enacted on August 2, 2012, the BCA authorized an increase
in the public debt limit. Added to this increase were statutory
controls on spending, primarily in the form of establishing
discretionary spending limits from fiscal years 2012 through
2021 and making the Balanced Budget and Emergency Deficit
Control Act of 1985 permanent law.
These limits for fiscal years 2012 and 2013 were divided
into security and nonsecurity categories, with the remaining
years set as a single general discretionary category. These
initial spending limits have been supplanted, though, since the
BCA also included additional procedures that had the effect of
altering the spending limits as set out in the statute. The
Congressional Budget Office provided to the Congress a letter
which indicated that the discretionary spending limits of the
BCA decrease projected spending, including savings from debt
service, by $917 billion over the 10 fiscal years covering 2012
through 2012.
The BCA also established a Joint Select Committee on
Deficit Reduction (Joint Committee) which was tasked with
reporting a bill to reduce the federal deficit by an additional
$1.5 trillion over a 10-year period ending in fiscal year 2021.
Legislation from the Joint Committee would have been considered
under procedures limiting amendment and debate. Under the terms
of the BCA, if legislation from the Joint Committee reducing
the deficit by at least $1.2 trillion was not enacted, then a
procedure would be set in motion to reduce spending by
adjusting the discretionary spending limits downward and
calculating an amount of reductions in direct spending
necessary to achieve the $1.2 trillion (or a portion thereof
were legislation from the Joint Committee achieving some
deficit reduction was enacted).
The Joint Committee was unable to report any proposal
reducing the deficit by any amount and no legislation to that
purpose was enacted by the required January 15, 2012 deadline.
On this date, the automatic spending reduction process was
triggered.
The process that began on January 15, 2012 had the
following ramifications: The statutory discretionary spending
limits were replaced by new spending limits with new
definitions of security and nonsecurity--now effectively
defense and nondefense categories, though the previous terms
are still used. These categories have replaced the
discretionary general category through 2021.
The process has two components: sequestration and
discretionary spending limits reduction. In order to achieve
the $1.2 trillion in deficit reduction, spending reductions
will occur absent a change in law. OMB is charged with
calculating the amount in spending reduction required to
achieve the specified deficit reduction.
Since the Joint Committee didn't achieve any deficit
reduction, the calculation begins with a spending reduction of
the full $1.2 trillion from fiscal year 2013 through fiscal
year 2021. According to the BCA formula, that number is reduced
by 18 percent to account for the reduced cost of debt service
attributable to the lower level of spending. The remaining
amount is divided by nine to account for each of fiscal years
2013 through 2021. This amount is then divided by two so that
it is evenly distributed between reductions in defense and
nondefense accounts.
The spending reductions are further divided between direct
spending and discretionary spending within the defense and
nondefense accounts. The implementation of the spending
reductions is distinct from the calculation of the amounts.
Once the amount is calculated, the BCA requires reductions
through sequestration and reductions to the revised
discretionary spending limits.
The BCA establishes a unique process for FY 2013. Under the
law, with the Joint Committee's failure to achieve at least
$1.2 trillion in deficit reduction, OMB is required to make
across-the-board reductions in non-exempt programs on January
2, 2013. The Congressional Budget Office estimates that this
sequester order will reduce spending by $110 billion.\1\ The
sequestration order affects both discretionary and direct
spending for fiscal year 2013. This means discretionary amounts
appropriated for fiscal year 2013 will be sequestered by the
calculated amount no matter how much is appropriated--it is not
sequestered as a function of the discretionary spending limit
for that fiscal year. In addition, for all fiscal years 2013
through 2021, a direct spending sequester of nonexempt accounts
will be ordered.
---------------------------------------------------------------------------
\1\This estimate, part of CBO's January 2012 current law baseline,
was published in Box 1-2 of the agency's report, ``The Budget and
Economic Outlook: Fiscal Years 2012 To 2022.'' http://www.cbo.gov/
sites/default/files/cbofiles/attachments/01-31-2012_Outlook.pdf. This
is, however, just an estimate. Ultimately, OMB will determine the exact
amount of spending reduction from the sequester.
---------------------------------------------------------------------------
The House has acted to replace the sequester scheduled for
January 2, 2013 with discretionary and mandatory savings. On
April 27, 2012 Chairman Ryan introduced H.R. 4966, the
Sequester Replacement Act of 2012 (SRA). This bill, in addition
to reconciliation legislation that the Budget Committee
reported, replaces the sequester. The SRA lowers the fiscal
year 2013 discretionary limit from $1.047 trillion down to
$1.028 trillion, a $19 billion reduction. Compared to the
sequester scheduled for January 2, 2013, which would lower
discretionary spending to $949 billion for fiscal year 2013,
the SRA would restore $78 billion in discretionary spending.
On May 10, 2012 the House of Representatives passed H.R.
5652, the Sequester Replacement Reconciliation Act of 2012
(SRRA) with the SRA merged into its legislative text. In
addition to provisions affecting the discretionary limit, the
SRRA included mandatory savings of $315 billion over 10 years.
The bill achieved those savings through reforms targeted at
fraud, slowing the growth of federal spending, and eliminating
duplicative spending. On a net basis, taking into account the
change in the discretionary limits and the mandatory savings,
the SRRA achieves four times the deficit reduction that would
have been achieved from the first year of the discretionary
sequester called for under the BCA.
Despite the House's action to pass legislation to replace
the sequester, the Senate has not taken up this legislation or
other legislation to replace the sequester. The President has
not submitted a specific proposal to replace the sequester.
Absent action by Congress to replace this sequester, it will go
into effect on January 2, 2013.
The Committee has worked to assess the impact of the
sequester and to review proposals to replace the sequester,
holding a hearing on April 25, 2012. On April 26, 2012, the
Chairman Ryan wrote the Acting Director of OMB requesting
additional information on the sequester. OMB did not provide
all the information requested. As a result, the Congress and
the American people are confronted with a sequester that will
make deep reductions in programs on January 2, 2013, without
the information on how this sequester will affect individual
programs.
On May 31, 2012, House Republican Conference Chairman Jeb
Hensarling introduced H.R. 5872, the Sequestration Transparency
Act of 2012, which is designed to obtain information about how
this sequester will be applied and its effect on both
nondefense and defense programs. This legislation requires the
President to provide a detailed report that includes the basic
details of the sequester and the actions to be taken under it.
This includes an estimate of the sequestration percentages
and amounts necessary to achieve the required reduction for
each spending category at the program, project and activity
level. On June 27, 2012 the Committee on the Budget met to mark
up H.R. 5872, to which Chairman Ryan offered a manager's
amendment. Adopted by voice vote, the amendment changed the
reporting date in the introduced bill and made conforming and
technical changes. The legislation was reported favorably to
the House by a roll call vote of 30-0.
Section by Section
SECTION 1. SHORT TITLE
This section provides for the short title of the bill:
``Sequester Transparency Act of 2012.''
SECTION 2. SEQUESTER PREVIEW
This section requires the President to submit, not later
than 30 days after the enactment to Congress, a detailed report
on the sequestration of discretionary and direct spending as
required by section 251A of the Balanced Budget and Emergency
Deficit Control Act of 1985 (as amended by the Budget Control
Act of 2011) for fiscal year 2013. This sequestration is
scheduled to occur on January 2, 2013.
The contents of this report must include, for discretionary
spending, sequestration percentages and amounts necessary to
achieve the required reduction of sequestrable budgetary
resources and resulting reductions at the program, project, and
activity level. Those percentages must be calculated relative
to any enacted regular appropriation bills for fiscal year
2013. For spending that has not been funded through regular
appropriation bills but rather through a continuing resolution,
the levels must be identified at a rate of operations as
provided in appropriation Acts for fiscal year 2012.
For direct spending, the report must include an estimate
for functions based on current law of the sequestration
percentages and amount necessary to achieve the required
reduction; and an identification of the reductions required for
each nonexempt direct spending account at the program, project,
and activity level.
The report must include an identification of all exempt
discretionary accounts and direct spending accounts, and any
other data and explanation enhancing the public's understanding
of the sequester.
In order for the Office of Management and Budget to prepare
the report, the head of each executive agency, after
consultation with the chairs and ranking members of the
Committees on Appropriations of the House of Representatives
and the Senate, must promptly provide to the Director
information at the program, project, and activity level.
Hearings
On April 25, 2012, the Committee on the Budget of the House
held a hearing on the Budget Control Act of 2011 and how the
application of an across-the-board cut in both direct spending
and discretionary spending is to occur on January 2, 2013 by
Presidential order.
Those testifying were Daniel I. Werfel, Controller, Office
of Federal Financial Management at the Office of Management and
Budget, and Susan A. Poling, Deputy General Counsel at the
Government Accountability Office. The Office of Management and
Budget is the lead agency responsible for implementing any
sequester. At the hearing, Mr. Werfel declined to provide
specific information in response to Members' questions relating
to what the administration's specific proposal is to avoid the
sequester and how the administration would implement the
sequester if legislation is not enacted by the deadline. Mr.
Werfel indicated that it would be premature for OMB to provide
information on programs whose sequester status is subject to
the agency's review.
The Chairman of the Committee on the Budget wrote to Acting
OMB Director Zients on April 26, requesting additional
information by May 4 on how the administration would execute
the sequester required by the Budget Control Act. Acting
Director Zients responded on May 25, 2012 with a letter calling
on Congress to avoid the sequester and lacked specific detail
on how the sequester would operate citing that ``seven months
remain before the sequester would take effect.'' Acting
Director Zients said that OMB did not maintain a list of which
budget accounts are exempt, non-exempt, or subject to a special
rule, but OMB would produce a list ``at the appropriate time.''
Votes of the Committee
Clause 3(b) of House Rule XIII requires each committee
report to accompany any bill or resolution of a public
character to include the total number of votes cast for and
against each roll call vote, on a motion to report and any
amendments offered to the measure or matter, together with the
names of those voting for and against.
Listed below are the actions taken in the Committee on the
Budget of the House of Representatives on the Sequester
Replacement Act of 2012.
On June 27, 2012, the committee met in open session, a
quorum being present.
Chairman Ryan asked unanimous consent to be authorized,
consistent with clause 4 of House Rule XVI, to declare a recess
at any time during the committee meeting.
There was no objection to the unanimous consent request.
Chairman Ryan asked unanimous consent to dispense with the
first reading of the bill and the bill be considered as read
and open to amendment at any point.
There was no objection to the unanimous consent request.
The committee adopted and ordered reported the
Sequestration Transparency Act of 2012.
The committee took the following votes:
AMENDMENT OFFERED BY CHAIRMAN RYAN
1. This amendment proposed making a change to the reporting
date in section 2(a) by striking ``July 9, 2012'' and inserting
``Not later than 30 days after the date of enactment of this
Act''. The amendment made some technical changes to the bill
text and allowed OMB to request information from federal
agencies related to the program, project, and activity level
necessary for the report.
The amendment was adopted by voice vote.
AMENDMENT OFFERED BY MR. VAN HOLLEN
2. This amendment proposed to rescind the January 2, 2013
sequester, offsetting the higher spending that would result
through revenue increases and certain spending reductions. It
would increase revenues by eliminating certain deductions for
domestic oil and gas companies and raising taxes on individuals
with annual income greater than $1,000,000. The amendment would
reduce spending by eliminating direct payments to farmers;
reforming the Federal Flood Insurance Program; and increasing
retirement contributions paid by Members of Congress.
The amendment was not agreed to by a roll call vote of 10
ayes and 19 noes.
ROLLCALL VOTE NO. 1
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
RYAN X VAN X
(WI) HOLLEN
(Chair (MD)
man) (Rankin
g)
------------------------------------------------------------------------
GARRETT X SCHWARTZ X
(NJ) (PA)
------------------------------------------------------------------------
SIMPSON KAPTUR
(ID) (OH)
------------------------------------------------------------------------
CAMPBEL X DOGGETT
L (CA) (TX)
------------------------------------------------------------------------
CALVERT BLUMENAU X
(CA) ER (OR)
------------------------------------------------------------------------
AKIN X McCOLLUM
(MO) (MN)
------------------------------------------------------------------------
COLE YARMUTH X
(OK) (KY)
------------------------------------------------------------------------
PRICE X PASCRELL X
(GA) (NJ)
------------------------------------------------------------------------
McCLINT X HONDA
OCK (CA)
(CA)
------------------------------------------------------------------------
CHAFFET X RYAN X
Z (UT) (OH)
------------------------------------------------------------------------
STUTZMA X WASSERMA X
N (IN) N
SCHULTZ
(FL)
------------------------------------------------------------------------
LANKFOR X MOORE
D (OK) (WI)
------------------------------------------------------------------------
BLACK X CASTOR X
(TN) (FL)
------------------------------------------------------------------------
RIBBLE X SHULER
(WI) (NC)
------------------------------------------------------------------------
FLORES X BASS X
(TX) (CA)
------------------------------------------------------------------------
MULVANE X BONAMICI X
Y (SC) (OR)
------------------------------------------------------------------------
HUELSKA X ........
MP
(KS)
------------------------------------------------------------------------
YOUNG X ........
(IN)
------------------------------------------------------------------------
AMASH X .........
(MI)
------------------------------------------------------------------------
ROKITA X .........
(IN)
------------------------------------------------------------------------
GUINTA X .........
(NH)
------------------------------------------------------------------------
WOODALL X
(GA)
------------------------------------------------------------------------
3. Mr. Garrett made a motion that the committee report the
bill as amended and that the bill do pass.
The motion was agreed to by a roll call vote of 30 ayes and
0 noes.
ROLLCALL VOTE NO. 2
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
RYAN X VAN X
(WI) HOLLEN
(Chair (MD)
man) (Rankin
g)
------------------------------------------------------------------------
GARRETT X SCHWARTZ X
(NJ) (PA)
------------------------------------------------------------------------
SIMPSON KAPTUR
(ID) (OH)
------------------------------------------------------------------------
CAMPBEL X DOGGETT X
L (CA) (TX)
------------------------------------------------------------------------
CALVERT BLUMENAU X
(CA) ER (OR)
------------------------------------------------------------------------
AKIN X McCOLLUM
(MO) (MN)
------------------------------------------------------------------------
COLE YARMUTH X
(OK) (KY)
------------------------------------------------------------------------
PRICE X PASCRELL X
(GA) (NJ)
------------------------------------------------------------------------
McCLINT X HONDA
OCK (CA)
(CA)
------------------------------------------------------------------------
CHAFFET X RYAN X
Z (UT) (OH)
------------------------------------------------------------------------
STUTZMA X WASSERMA X
N (IN) N
SCHULTZ
(FL)
------------------------------------------------------------------------
LANKFOR X MOORE
D (OK) (WI)
------------------------------------------------------------------------
BLACK X CASTOR X
(TN) (FL)
------------------------------------------------------------------------
RIBBLE X SHULER
(WI) (NC)
------------------------------------------------------------------------
FLORES X BASS X
(TX) (CA)
------------------------------------------------------------------------
MULVANE X BONAMICI X
Y (SC) (OR)
------------------------------------------------------------------------
HUELSKA X ........
MP
(KS)
------------------------------------------------------------------------
YOUNG X ........
(IN)
------------------------------------------------------------------------
AMASH X ........
(MI)
------------------------------------------------------------------------
ROKITA X ........
(IN)
------------------------------------------------------------------------
GUINTA X ........
(NH)
------------------------------------------------------------------------
WOODALL X
(GA)
------------------------------------------------------------------------
4. Mr. Garrett made a motion that, pursuant to clause 1 of
rule XXII, the Chairman be authorized to offer such motions as
may be necessary in the House to go to conference with the
Senate, and staff be authorized to make any necessary technical
and conforming changes to the bill.
The motion was agreed to without objection.
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee on the Budget's
oversight findings and recommendations are reflected in the
body of this report.
Performance Goals and Objectives
With respect to the requirement of clause 3(c)(4) of rule
XIII of the Rules of the House of Representatives, the
performance goals and objectives of this legislation are to
provide both the President and the Congress improved tools to
reconsider spending.
Constitutional Authority Statement
Pursuant to clause 7 of rule XII of the Rules of the House
of Representatives, the committee finds the constitutional
authority for this legislation in Article I, section 9, clause
7.
Committee Cost Estimate
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the committee report incorporates the
cost estimate prepared by the Director of the Congressional
Budget Office pursuant to sections 402 and 423 of the
Congressional Budget Act of 1974.
Congressional Budget Office,
U.S. Congress,
Washington, DC, June 28, 2012.
Hon. Paul Ryan, Chairman,
Committee on the Budget, U.S. House of Representatives, Washington, DC
20515.
Dear Mr. Chairman: The Congressional Budget Office has prepared the
enclosed cost estimate for H.R. 5872, the Sequestration Transparency
Act of 2012.
If you wish further details on this estimate, we will be pleased to
provide them. The CBO staff contact is Matthew Pickford, who can be
reached at 226-2860.
Sincerely,
Douglas W. Elmendorf,
Director.
Enclosure.
cc: Hon. Chris Van Hollen, Ranking Member.
______
congressional budget office cost estimate
june 28, 2012
H.R. 5872: Sequestration Transparency Act of 2012
As ordered reported by the House Committee on the Budget on June 27,
2012
H.R. 5872 would require the President to provide a detailed report
to the Congress within 30 days of enactment regarding detailed plans
for implementing the across-the-board spending cuts for fiscal year
2013 that are required under the Balanced Budget and Emergency Deficit
Control Act. Under that act, the Office of Management and Budget (OMB)
will implement governmentwide spending cuts in 2013. The bill also
would require federal agencies to provide OMB any necessary
information.
CBO estimates that implementing the legislation would have no
significant impact on the federal budget because it would not
significantly increase OMB's workload under current law. Enacting the
bill could affect direct spending by agencies not funded through annual
appropriations, such as the Tennessee Valley Authority and the
Bonneville Power Administration; therefore, pay-as-you-go procedures
apply. CBO estimates, however, that any net increase in spending by
those agencies would not be significant. Enacting H.R. 5872 would not
affect revenues.
H.R. 5872 contains no intergovernmental or private-sector mandates
as defined in the Unfunded Mandates Reform Act and would not affect the
budgets of state, local, or tribal governments.
The CBO staff contact for this estimate is Matthew Pickford. The
estimate was approved by Theresa Gullo, Deputy Assistant Director for
Budget Analysis.
Advisory Committee Statement
No advisory committee within the meaning of section 5(b) of
the Federal Advisory Committee Act was created by this
legislation.
Applicability to the Legislative Branch
The committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act (Public Law
104-1).
Federal Mandates Statement
The committee adopted the estimate of Federal mandates
prepared by the Director of the Congressional Budget Office
pursuant to section 423 of the Unfunded Mandates Reform Act
(Public Law 104-4).
Advisory on Earmarks
In accordance with clause 9 of rule XXI of the Rules of the
House of Representatives, H.R. 3521 does not contain any
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in clause 9(e), 9(f), or 9(g) of rule XXI.
Changes in Existing Law Made by the Bill, as Reported
The Committee advises that existing law will not change as
a result of the enactment of this legislation.
Minority Views
There is general bipartisan agreement that the across-the-
board, meat-ax spending cuts that are scheduled to begin in
January under sequestration will be bad for the country. Not
only will the overall size and immediacy of the cuts put a drag
on a fragile economy, but the arbitrary buzz-saw nature of the
cuts would wreak havoc on defense and non-defense programs
alike.
Defense Secretary Panetta believes that both the magnitude
and the arbitrary nature of the cuts will damage our national
defense. What has received far less attention is the
devastating impact the cuts will have on other vital services
and investments. They will cut the nation's air traffic
controllers and could put air safety at risk. The cuts could
put public safety at risk by cutting the FBI, the COPS program,
border security, and food safety efforts. The sequestration
cuts will reduce our investment in education--in early
education, elementary and secondary education, and special
education for kids with disabilities.
Sequestration will make these cuts in vital services, but
also other cuts in vital investments for our economy in
transportation, science, and research. Scientific research into
treatments and cures to cancer, diabetes, Alzheimer's,
Parkinson's, and other diseases that plague American families
will be put on the chopping block along with our competitive
edge in this important area of research. In fact, a coalition
of universities and groups--including the American Cancer
Society, the Biotechnologies Industry Association, PhRMA, and
others--has concluded that the cuts to the National Institutes
of Health will jeopardize America's competitive edge in medical
research, and will result in the loss of more than 33,000 jobs
in the biotech sector.
Democrats on the Budget Committee voted this week in favor
of getting more detailed information about the negative impacts
of the cuts looming through sequestration next year. But we
think the Congress should be focusing on avoiding the
sequester, something even Republicans agree is an irresponsible
approach to cutting the budget.
That is why Democrats offered a substitute in mark-up that
provides an alternative approach to reducing the deficit in a
credible and stable way. Unfortunately, our substitute was
defeated on a straight party-line vote with every Republican
opposing it. Our substitute would eliminate the sequester in
2013 entirely--both on defense and non-defense spending--and
replace the savings with even greater deficit reduction
accomplished through a balanced approach that both decreases
spending and increases revenues without increasing the tax
burden on middle-income Americans. The Democratic substitute
makes targeted policy choices that promote economic growth
while achieving deficit reduction, maintaining the Medicare
guarantee for seniors, and protecting Social Security and the
social safety net for vulnerable Americans. The substitute also
lays out a framework for replacing the entire ten-year
sequester with a fair, balanced, and bipartisan approach that
reduces the deficit while protecting the middle class, seniors,
and vital services and investments in education, science,
research, and critical infrastructure necessary to compete in
the global economy.
A balanced approach is what every bipartisan group that has
examined the nation's fiscal challenge has concluded that we
need to follow: deficit reduction through a combination of
spending cuts and revenues generated by cutting unnecessary tax
breaks and special interest loopholes. The Budget Control Act
of 2011 already cuts the budget by almost $1 trillion over ten
years, solely through spending cuts. Putting aside the fact the
House Republican budget resolution violates that agreement by
cutting another $19 billion from the 2013 discretionary level,
appropriators are hard at work trying to find a way to make
those cuts in a targeted fashion.
We want to do our job and replace the sequester with
thoughtful, rather than arbitrary, deficit reduction. We should
come together with a balanced approach, as bipartisan groups
have recommended. That means not just cuts to programs but also
cutting tax loopholes and special interest tax breaks.
The substitute Democrats offered this week strikes that
balance. It repeals several costly tax incentives that
subsidize the ``Big 5'' major integrated oil companies. In a
time of record oil profits and high prices at the pump, we do
not need to subsidize big oil companies to do what they would
do in any case: produce oil. The substitute also implements a
``Buffett Rule'' meant to ensure that middle class families
will not confront higher effective tax rates than the wealthy.
Starting in 2013, this substitute imposes a minimum effective
tax rate of 30 percent on adjusted gross incomes above $2
million (to be phased in for taxpayers with income between $1
million and $2 million).
The substitute also refocuses farm subsidies, better
targeting the agriculture safety net while continuing to help
farmers effectively manage risk. It eliminates direct
payments--made regardless of yields, prices, farm income or
size--that are difficult to defend in times of record crop
yields and prices. The substitute also reforms the federal
flood insurance program, including the same language that
passed overwhelmingly on the House floor last summer.
There should be bipartisan support for replacing the
across-the-board sequester cuts to defense and non-defense
programs with deficit reduction from specific spending cuts and
cuts to special interest tax breaks. By refusing to support the
substitute, Congressional Republicans have once again chosen to
protect special interest tax breaks over our investments in
national defense and other vital national priorities. We will
continue to work to reduce the deficit in a rational way,
through a balanced approach that protects key services and
investments, rather than through arbitrary spending cuts under
sequestration.
Chris Van Hollen,
Ranking Member,
Debbie Wasserman Schultz,
Marcy Kaptur,
Tim Ryan,
Gwen Moore,
Allyson Schwartz,
Earl Blumenauer,
Mike Honda,
Betty McCollum,
Suzanne Bonamici,
Karen Bass,
John Yarmuth,
Bill Pascrell, Jr.
Kathy Castor,
Heath Shuler,
Lloyd Doggett.