[House Report 112-378]
[From the U.S. Government Publishing Office]
112th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 112-378
_______________________________________________________________________
BASELINE REFORM ACT OF 2012
__________
R E P O R T
of the
COMMITTEE ON THE BUDGET
HOUSE OF REPRESENTATIVES
to accompany
H.R. 3578
together with
MINORITY VIEWS
January 30, 2012.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
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 PAUL TONKO, New York
TODD C. YOUNG, Indiana KAREN BASS, California
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
Baseline Reform Act of 2012...................................... 1
Introduction................................................. 3
Summary of Proposed Changes.................................. 3
Legislative History.......................................... 4
Hearings..................................................... 6
Section by Section........................................... 6
Votes of the Committee....................................... 7
Committee Oversight Findings................................. 8
Budget Act Compliance........................................ 9
Performance Goals and Objectives............................. 10
Constitutional Authority Statement........................... 10
Committee Cost Estimate...................................... 10
Advisory Committee Statement................................. 10
Applicability to the Legislative Branch...................... 10
Federal Mandates Statement................................... 10
Advisory on Earmarks......................................... 10
Changes in Existing Law Made by the Bill, as Reported........ 10
Views of Committee Members................................... 15
112th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 112-378
======================================================================
BASELINE REFORM ACT OF 2012
_______
January 30, 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. 3578]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Budget, to whom was referred the bill
(H.R. 3578) to amend the Balanced Budget and Emergency Deficit
Control Act of 1985 to reform the budget baseline, having
considered the same, report favorably thereon with an amendment
and recommend 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 ``Baseline Reform Act of 2012''.
SEC. 2. THE BASELINE.
Section 257 of the Balanced Budget and Emergency Deficit Control Act
of 1985 is amended to read as follows:
``SEC. 257. THE BASELINE.
``(a) In General.--(1) For any fiscal year, the baseline refers to a
projection of current-year levels of new budget authority, outlays, or
receipts and the surplus or deficit for the current year, the budget
year, and the ensuing nine outyears based on laws enacted through the
applicable date.
``(2) The baselines referred to in paragraph (1) shall be prepared
annually.
``(b) Direct Spending and Receipts.--For the budget year and each
outyear, estimates for direct spending in the baseline shall be
calculated as follows:
``(1) In general.--Laws providing or creating direct spending
and receipts are assumed to operate in the manner specified in
those laws for each such year and funding for entitlement
authority is assumed to be adequate to make all payments
required by those laws.
``(2) Exceptions.--(A)(i) No program established by a law
enacted on or before the date of enactment of the Balanced
Budget Act of 1997 with estimated current year outlays greater
than $50,000,000 shall be assumed to expire in the budget year
or the outyears. The scoring of new programs with estimated
outlays greater than $50,000,000 a year shall be based on
scoring by the Committees on the Budget or OMB, as applicable.
OMB, CBO, and the Committees on the Budget shall consult on the
scoring of such programs where there are differences between
CBO and OMB.
``(ii) On the expiration of the suspension of a provision of
law that is suspended under section 171 of Public Law 104-127
and that authorizes a program with estimated fiscal year
outlays that are greater than $50,000,000, for purposes of
clause (i), the program shall be assumed to continue to operate
in the same manner as the program operated immediately before
the expiration of the suspension.
``(B) The increase for veterans' compensation for a fiscal
year is assumed to be the same as that required by law for
veterans' pensions unless otherwise provided by law enacted in
that session.
``(C) Excise taxes dedicated to a trust fund, if expiring,
are assumed to be extended at current rates.
``(D) If any law expires before the budget year or any
outyear, then any program with estimated current year outlays
greater than $50,000,000 that operates under that law shall be
assumed to continue to operate under that law as in effect
immediately before its expiration.
``(3) Hospital insurance trust fund.--Notwithstanding any
other provision of law, the receipts and disbursements of the
Hospital Insurance Trust Fund shall be included in all
calculations required by this Act.
``(c) Discretionary Spending.--For the budget year and each of the
nine ensuing outyears, the baseline shall be calculated using the
following assumptions regarding all amounts other than those covered by
subsection (b):
``(1) Estimated appropriations.--Budgetary resources other
than unobligated balances shall be at the level provided for
the budget year in full-year appropriation Acts. If for any
account a full-year appropriation has not yet been enacted,
budgetary resources other than unobligated balances shall be at
the level available in the current year.
``(2) Current-year appropriations.--If, for any account, a
continuing appropriation is in effect for less than the entire
current year, then the current-year amount shall be assumed to
equal the amount that would be available if that continuing
appropriation covered the entire fiscal year. If law permits
the transfer of budget authority among budget accounts in the
current year, the current-year level for an account shall
reflect transfers accomplished by the submission of, or assumed
for the current year in, the President's original budget for
the budget year.
``(d) Up-To-Date Concepts.--In calculating the baseline for the
budget year or each of the nine ensuing outyears, current-year amounts
shall be calculated using the concepts and definitions that are
required for that budget year.
``(e) Asset Sales.--Amounts realized from the sale of an asset shall
not be included in estimates under section 251, 251A, 252, or 253 of
this part or section 5 of the Statutory-Pay-As-You-Go Act of 2010 if
that sale would result in a financial cost to the Government as
determined pursuant to scorekeeping guidelines.''.
SEC. 3. ADDITIONAL CBO REPORT TO BUDGET COMMITTEES.
Section 202(e) of the Congressional Budget Act of 1974 is amended by
adding at the end the following new paragraphs:
``(4)(A) After the President's budget submission under
section 1105(a) of title 31, United States Code, in addition to
the baseline projections, the Director shall submit to the
Committees on the Budget of the House of Representatives and
the Senate a supplemental projection assuming extension of
current tax policy for the fiscal year commencing on October 1
of that year with a supplemental projection for the 10 fiscal-
year period beginning with that fiscal year, assuming the
extension of current tax policy.
``(B) For the purposes of this paragraph, the term `current
tax policy' means the tax policy in statute as of December 31
of the current year assuming--
``(i) the budgetary effects of measures extending the
Economic Growth and Tax Relief Reconciliation Act of
2001;
``(ii) the budgetary effects of measures extending
the Jobs and Growth Tax Relief Reconciliation Act of
2003;
``(iii) the continued application of the alternative
minimum tax as in effect for taxable years beginning in
2011 pursuant to title II of the Tax Relief,
Unemployment Insurance Reauthorization, and Job
Creation Act of 2010, assuming that for taxable years
beginning after 2011 the exemption amount shall equal--
``(I) the exemption amount for taxable years
beginning in 2011, as indexed for inflation; or
``(II) if a subsequent law modifies the
exemption amount for later taxable years, the
modified exemption amount, as indexed for
inflation; and
``(iv) the budgetary effects of extending the estate,
gift, and generation-skipping transfer tax provisions
of title III of the Tax Relief, Unemployment Insurance
Reauthorization, and Job Creation Act of 2010.
``(5) On or before July 1 of each year, the Director shall
submit to the Committees on the Budget of the House of
Representatives and the Senate, the Long-Term Budget Outlook
for the fiscal year commencing on October 1 of that year and at
least the ensuing 40 fiscal years.''.
Introduction
Representative Rob Woodall (R-GA-7) introduced H.R. 3578,
the ``Baseline Reform Act of 2012,'' on December 7, 2011. This
bill reforms the ``baseline,'' to ensure it provides a neutral
starting point in assessing the budgetary impact of spending
governed by the appropriations process.
Summary of Proposed Changes
The Baseline
The Balanced Budget and Emergency Deficit Control Act of
1985 (P.L. 99-177) requires the Congressional Budget Office
[CBO] and the Office of Management and Budget [OMB] to prepare
projections of federal spending and revenues. This bill
requires that such projections cover a ten-year period, which
is the budget window that has become standard in recent years,
and specifies the assumptions the two agencies must use in
making these projections.
``Discretionary spending'' refers to spending that is
dependent on enactment by the Congress of appropriation laws
providing authority to agencies to spend money. Current law
requires CBO and OMB to assume that such spending will continue
over the course of the budget window and increase by inflation.
These requirements added approximately $1.4 trillion in outlays
(over ten years) to the discretionary baseline in 2011.
In addition, there are special exceptions that require CBO
and OMB to assume additional increases in the baseline for
expiring housing contracts, social insurance administrative
expenses, and annualization of federal employee pay. In
aggregate, these special exceptions added approximately $12
billion (over ten years) to the discretionary baseline last
year.
This assumption of additional spending in the baseline
evidences a bias toward additional spending. It also creates
the anomalous situation where a program's funding could be
increased in comparison to the previous year but still be
called a cut because the funding level is below the
inflationary increase assumed in the discretionary baseline.
The bill removes the inflationary assumption and the
special exceptions from the discretionary baseline, requiring
that the baseline assume neither an increase nor a decrease for
these programs. The baseline provides information to the
Congress and does not govern what is contained in the budget
resolution or the appropriations bills that provide legal
spending authority. As a result, changing the baseline does not
change funding for these programs, but it does remove an upward
bias in spending by comparing spending to previous year's
levels and not an inflated baseline.
The rules for producing the direct spending and revenue
baselines are left unchanged as are the rules for assets sales
and the use of up-to-date concepts.
Current Policy Projection
Under section 257 of the Balanced Budget and Emergency
Deficit Control Act of 1985, CBO is required to assume that
most expiring tax provisions will expire as specified in
statute when formulating its revenue baseline. While this is an
accurate measure to score the budgetary impact of legislation
as compared to current law, it does not provide a useful
measure of how changes in law would affect current policies. As
a result, the administration, CBO, the Congress, and outside
groups frequently use a different baseline that reflects
current policy instead of current law. Under current law, major
tax relief is scheduled to expire. This tax relief was extended
on a bipartisan basis in 2010.
The bill does not change the current law baseline. Section
3 of the bill requires the production of a current tax policy
baseline that assumes the extension of the Economic Growth and
Tax Relief Reconciliation Act of 2001 (P.L. 107-16); the Jobs
and Growth Tax Relief Reconciliation Act of 2003 (P.L. 108-27);
extension of the so-called ``AMT fix'' to keep the Alternative
Minimum Tax from effecting additional taxpayers; and the
extension of the estate, gift, and generation-skipping transfer
tax provisions of title III of the Tax Relief, Unemployment
Insurance Reauthorization, and Job Creation Act of 2010 (P.L.
111-312).
Long-Term Budget Outlook
In 1996, CBO concluded that the 10-year time frame they
used for preparing budget projections was not sufficient to
``show the dramatic effects on the federal budget of the
projected long-term demographic changes in the U.S.
population.''\1\ Beginning as a special chapter in the May 1996
edition of its annual Economic and Budget Outlook, the CBO has
since annually prepared a standalone report on the long-term
budget outlook. The analysis and projections included in this
report have become an integral part of the Budget Committees'
work.
---------------------------------------------------------------------------
\1\Congressional Budget Office, Long-Term Budgetary Pressures and
Policy Options, March 1997 http://www.cbo.gov/doc.cfm?index=10&type=0
---------------------------------------------------------------------------
Section 3 of the bill codifies CBO's current practice of
providing this report no later than July 1 of each year. The
Committee, however, urges the CBO to publish this report as
early as possible each year so that its analysis can inform the
Members of the Committee as they prepare the annual budget
resolution.
Legislative History
Legislation in the 103d Congress
In 1993, Representative Jim Ramstad [R-MN-3] introduced
H.R. 323, the Common Sense Budget Act of 1993. It would have
required the President's budget submission to include
comparisons of proposed expenditures and appropriations for the
budget year with the prior fiscal year.
In 1994, the House considered H.R. 4907, Baseline Reform
Act of 1994, offered by Representative John Spratt (D-SC-5).
Representative Spratt's bill would have added a ``current
funding baseline'' to accompany the existing--and what the bill
called ``current policy''--baseline. The current funding
baseline assumed an adjustment for expiring housing contracts
but no adjustments for inflation. The House, however, passed an
amendment in the nature of a substitute, previously introduced
as H.R. 4914 and as part of H.R. 4434, which would have
repealed the automatic adjustment in the caps for changes in
inflation.
Rules Amendments Made in the 104th Congress
In the 104th Congress, the House Rules were amended by the
organizing resolution (H. Res. 6) by inserting a requirement
that a cost estimate of a bill include a comparison of funding
levels to the previous year's level: Clause 3(c)(2) of rule
XIII of the House of Representatives for the 112th Congress
requires of the contents of a report on a bill: ``* * * an
estimate of new budget authority shall include, when
practicable, a comparison of the total estimated funding level
for the relevant programs to the appropriate levels under
current law.''
In the 104th Congress, the Rules of the Committee on the
Budget were amended to require that the report of the Committee
to accompany a concurrent resolution on the budget include a
comparison of the estimated or actual levels for the year
preceding the budget year with the proposed spending and
revenue levels for the budget year (Rule 25 of the Rules of the
Committee on the Budget for the 112th Congress).
``Comprehensive Budget Process Reform Act of 1999''
On February 25, 1999, H.R. 853, Comprehensive Budget
Process Reform Act of 1999 (106th Congress) was introduced in
the House of Representatives by Representative Jim Nussle [R-
IA-2]. Sections 611 and 612 of that Act amended the President's
Budget submission requirements and the Congressional Budget Act
of 1974 respectively to similarly compare budget year
discretionary spending to the prior year's spending level. This
is similar to the provisions of this Act, though not identical.
This bill failed of passage in the House on May 16, 2000.
``Spending Control Act of 2004''
On March 16, 2004, H.R. 3973, the Spending Control Act of
2004 (108th Congress) was introduced in the House of
Representatives by Representative Jim Nussle [R-IA-2]. Section
5 of the Act removed the requirement that emergency-designated
or global war on terrorism-designated spending be continued in
the baseline under section 257 of the Balanced Budget and
Emergency Deficit Control Act of 1985. This is similar to
certain provisions of this Act, though not identical. H.R. 3973
was reported from the Committee on the Budget on March 19, 2004
but was not considered on by the House.
``Spending, Deficit, and Debt Control Act of 2009''
On October 29, 2009, H.R. 3964, the ``Spending, Deficit,
and Debt Control Act of 2009'' was introduced in the House by
Representative Jeb Hensarling [R-TX-5]. The bill eliminates the
automatic inflation increases for discretionary programs built
into the baseline projections of future spending needs and
requires budget estimates to be compared with the prior year's
level, not a calculation of the level to which they should be
increased.
``Zero-Baseline Budget Act of 2011''
On March 3, 2011, H.R. 920, the ``Zero-Baseline Budget Act
of 2011'' was introduced in the House by Representative Louie
Gohmert [R-TX-1]. It amends the Balanced Budget and Emergency
Control Act of 1985 to change the formula the CBO must use to
calculate its discretionary baseline. The bill was designed to
eliminate any sequential and cumulative automatic increases in
the baseline for inflation (or for any other reason) and
exclude emergency and supplemental spending. The baseline would
be the aggregate of the non-emergency appropriations bill for
that year.
Legislation in the 112th Congress
On December 7, 2011, Members of the House Budget Committee
introduced a comprehensive package of ten legislative budget
process reform bills designed to fundamentally reform the
budget process. Included in this package was H.R. 3578, the
``Baseline Reform Act of 2011,'' introduced by Representative
Rob Woodall [R-GA-7].
Hearings
In 2011, the House Budget Committee held two budget process
reform hearings to examine the budget process.
The first hearing, ``The Broken Budget Process:
Perspectives From Former CBO Directors,'' was held on September
21, 2011, with former CBO Directors Rudolph Penner and Alice
Rivlin testifying.
The second hearing, ``The Broken Budget Process:
Perspectives From Budget Experts,'' was held on September 22,
2011, with Philip Joyce (University of Maryland), the Honorable
Jim Nussle (Chairman of the Committee on the Budget, 2001
through 2007, United States House of Representatives) and the
Honorable Phil Gramm (former United States Senator, 1985--2002)
testifying.
Section by Section
SECTION 1. SHORT TITLE.
This section provides for the short title of the Act:
``Baseline Reform Act of 2011''.
SECTION 2. THE BASELINE.
This section amends section 257 of the Balanced Budget and
Emergency Deficit Control Act of 1985 (P.L. 109-59) to remove
the increases in the discretionary baseline attributable to
inflation, expiring housing contracts, social insurance
administrative expenses, and pay annualization. The
discretionary spending in the baseline to be calculated uses
the following assumptions:
(1) For any estimated appropriations, the budgetary
resources other than unobligated balances are to be at
the level provided for the budget year in full-year
appropriation acts. If a full-year appropriation has
not been enacted, budgetary resources, other than
unobligated balances, are to be at the level available
in the current year.
(2) For any continuing appropriation in effect for
less than an entire year, the current-year amount is
assumed to equal the amount that would be available if
that continuing appropriation lasted the entire fiscal
year. If law permits the transfer of budget authority
among budget accounts in a current year, the current
level is to reflect transfers assumed in the
President's original budget.
This section makes a number of technical and typographic
corrections, but no other substantive modifications to current
law.
SECTION 3. ADDITIONAL CBO REPORT TO BUDGET COMMITTEES.
This section amends section 202(e) of the Congressional
Budget Act of 1974 by requiring the Director of the
Congressional Budget Office to submit, together with the
analysis of the President's budget submission, a supplemental
budget projection that assumes the extension of the Economic
Growth and Tax Relief Reconciliation Act of 2001; the Jobs and
Growth Tax Relief Reconciliation Act of 2003; extension of the
``Alternative Minimum Tax fix''; and the extension of the
estate, gift, and generation-skipping transfer tax provisions
of title III of the Tax Relief, Unemployment Insurance
Reauthorization, and Job Creation Act of 2010.
It requires the Director of the Congressional Budget Office
submit the agency's Long-Term Budget Outlook on or before July
1 of each year and that the outlook cover at least a 40-fiscal-
year period.
Votes of the Committee
Clause 3(b) of rule XIII of the Rules of the House of
Representatives 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 rollcall 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 Baseline Reform
Act of 2012.
On January 24, 2012, the committee met in open session, a
quorum being present.
Chairman Ryan asked unanimous consent to be authorized,
consistent with clause 4 of rule XVI of the Rules of the House
of Representatives, 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 Baseline
Reform Act of 2012 by a rollcall vote of 21 ayes and 12 noes.
The committee took the following votes:
H.R. 3578
------------------------------------------------------------------------
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
(NJ) (PA)
------------------------------------------------------------------------
SIMPSON X KAPTUR
(ID) (OH)
------------------------------------------------------------------------
CAMPBEL X DOGGETT X
L (CA) (TX)
------------------------------------------------------------------------
CALVERT X BLUMENAU X
(CA) ER (OR)
------------------------------------------------------------------------
AKIN X McCOLLUM X
(MO) (MN)
------------------------------------------------------------------------
COLE YARMUTH X
(OK) (KY)
------------------------------------------------------------------------
PRICE X PASCRELL X
(GA) (NJ)
------------------------------------------------------------------------
McCLINT X HONDA X
OCK (CA)
(CA)
------------------------------------------------------------------------
CHAFFET X RYAN X
Z (UT) (OH)
------------------------------------------------------------------------
STUTZMA X WASSERMA X
N (IN) N
SCHULTZ
(FL)
------------------------------------------------------------------------
LANKFOR X MOORE X
D (OK) (WI)
------------------------------------------------------------------------
BLACK X CASTOR
(TN) (FL)
------------------------------------------------------------------------
RIBBLE X SHULER
(WI) (NC)
------------------------------------------------------------------------
FLORES X TONKO X
(TX) (NY)
------------------------------------------------------------------------
MULVANE X BASS X
Y (SC) (CA)
------------------------------------------------------------------------
HUELSKA X ........
MP
(KS)
------------------------------------------------------------------------
YOUNG X ........
(IN)
------------------------------------------------------------------------
AMASH X ........
(MI)
------------------------------------------------------------------------
ROKITA X ........
(IN)
------------------------------------------------------------------------
GUINTA X ........
(NH)
------------------------------------------------------------------------
WOODALL X
(GA)
------------------------------------------------------------------------
Mr. Honda, made a unanimous consent request to let the
record reflect he would have voted no on the roll-call vote.
Mr. Garrett made a motion that, pursuant to clause 1 of
rule XXII of the Rules of the House of Representatives, 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.
Budget Act Compliance
The provisions of clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives and section 308(a)(1) of the
Congressional Budget Act of 1974 (relating to estimates of new
budget authority, new spending authority, new credit authority,
or increased or decreased revenues or tax expenditures) are not
considered applicable. The estimate and comparison required to
be prepared by the Director of the Congressional Budget Office
under clause 3(c)(3) of rule XIII of the Rules of the House of
Representatives and sections 402 and 423 of the Congressional
Budget Act of 1974 submitted to the committee prior to the
filing of this report are as follows:
Congressional Budget Office,
U.S. Congress,
Washington, DC, January 27, 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. 3578, the Baseline Reform Act of 2012.
If you wish further details on this estimate, we will be pleased to
provide them. The CBO staff contact is Jared Brewster, who can be
reached at 226-2880.
Sincerely,
Douglas W. Elmendorf,
Director.
Enclosure:
cc: Hon. Chris Van Hollen, Ranking Member.
______
congressional budget office cost estimate
january 27, 2012
H.R. 3578: Baseline Reform Act of 2012
As ordered reported by the House Committee on the Budget on January 24,
2012
H.R. 3578 would change certain assumptions governing baseline
budget projections and require the Congressional Budget Office to
provide a supplemental report to the House and Senate Committees on the
Budget. CBO estimates that enacting H.R. 3578, by itself, would not
have a significant impact on the federal budget. Any impact on the
budget would depend on the extent of future legislative actions by the
Congress and the President. Enacting H.R. 3578 would not affect direct
spending or revenues; therefore, pay-as-you-go procedures do not apply.
The legislation would change the way in which appropriations for
individual accounts are projected in CBO's baseline. Under H.R. 3578,
projections of such spending would still be based on the current year's
appropriations, but would not be adjusted for inflation going forward.
Other adjustments to discretionary projections of future discretionary
spending would also be eliminated. (In its baseline, CBO assumes that
appropriations through 2021 will comply with the caps and other
provisions of the Budget Control Act of 2011; as a result, the method
of extrapolating discretionary spending may not affect the totals
reported in CBO's projections.)
Furthermore, H.R. 3578 would require CBO to provide the budget
committees a supplemental report showing the effects of extending
certain tax policies not currently assumed in CBO's baseline. It would
also require that CBO produce its Long-Term Budget Outlook annually.
Any additional administrative costs to implement H.R. 3578 would be
insignificant, because CBO already carries out similar activities.
H.R. 3578 contains no intergovernmental or private-sector mandates,
as defined in the Unfunded Mandates Reform Act and--by itself--would
have no impact on the budgets of state, local, or tribal governments.
Any budgetary effects would depend on subsequent legislative action.
The CBO staff contact for this estimate is Jared Brewster, who can
be reached at 226-2880. The estimate was approved Theresa Gullo, Deputy
Assistant Director for Budget Analysis.
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
modify the rules for creating the budgetary baseline to provide
a neutral starting point for the annual consideration of
discretionary appropriations and ensure Congress has timely
access to supplementary information on the fiscal environment
both in the medium and long term.
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.
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. 3578 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
of the Rules of the House of Representatives.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
BALANCED BUDGET AND EMERGENCY DEFICIT CONTROL ACT OF 1985
* * * * * * *
PART C--EMERGENCY POWERS TO ELIMINATE DEFICITS IN EXCESS OF MAXIMUM
DEFICIT AMOUNT
* * * * * * *
[SEC. 257. THE BASELINE.
[(a) In General.--For any budget year, the baseline refers to
a projection of current-year levels of new budget authority,
outlays, revenues, and the surplus or deficit into the budget
year and the outyears based on laws enacted through the
applicable date.
[(b) Direct Spending and Receipts.--For the budget year and
each outyear, the baseline shall be calculated using the
following assumptions:
[(1) In general.--Laws providing or creating direct
spending and receipts are assumed to operate in the
manner specified in those laws for each such year and
funding for entitlement authority is assumed to be
adequate to make all payments required by those laws.
[(2) Exceptions.--(A)(i) No program established by a
law enacted on or before the date of enactment of the
Balanced Budget Act of 1997 with estimated current year
outlays greater than $50,000,000 shall be assumed to
expire in the budget year or the outyears. The scoring
of new programs with estimated outlays greater than
$50,000,000 a year shall be based on scoring by the
Committees on Budget or OMB, as applicable. OMB, CBO,
and the Budget Committees shall consult on the scoring
of such programs where there are differenes between CBO
and OMB.
[(ii) On the expiration of the suspension of a
provision of law that is suspended under section 171 of
Public Law 104-127 and that authorizes a program with
estimated fiscal year outlays that are greater than
$50,000,000, for purposes of clause (i), the program
shall be assumed to continue to operate in the same
manner as the program operated immediately before the
expiration of the suspension.
[(B) The increase for veterans' compensation for a
fiscal year is assumed to be the same as that required
by law for veterans' pensions unless otherwise provided
by law enacted in that session.
[(C) Excise taxes dedicated to a trust fund, if
expiring, are assumed to be extended at current rates.
[(D) If any law expires before the budget year or any
outyear, then any program with estimated current year
outlays greater than $50,000,000 that operates under
that law shall be assumed to continue to operate under
that law as in effect immediately before its
expiration.
[(3) Hospital insurance trust fund.--Notwithstanding
any other provision of law, the receipts and
disbursements of the Hospital Insurance Trust Fund
shall be included in all calculations required by this
Act.
[(c) Discretionary Appropriations.--For the budget year and
each outyear, the baseline shall be calculated using the
following assumptions regarding all amounts other than those
covered by subsection (b):
[(1) Inflation of current-year appropriations.--
Budgetary resources other than unobligated balances
shall be at the level provided for the budget year in
full-year appropriation Acts. If for any account a
full-year appropriation has not yet been enacted,
budgetary resources other than unobligated balances
shall be at the level available in the current year,
adjusted sequentially and cumulatively for expiring
housing contracts as specified in paragraph (2), for
social insurance administrative expenses as specified
in paragraph (3), to offset pay absorption and for pay
annualization as specified in paragraph (4), for
inflation as specified in paragraph (5), and to account
for changes required by law in the level of agency
payments for personnel benefits other than pay.
[(2) Expiring housing contracts.--New budget
authority to renew expiring multiyear subsidized
housing contracts shall be adjusted to reflect the
difference in the number of such contracts that are
scheduled to expire in that fiscal year and the number
expiring in the current year, with the per-contract
renewal cost equal to the average current-year cost of
renewal contracts.
[(3) Social insurance administrative expenses.--
Budgetary resources for the administrative expenses of
the following trust funds shall be adjusted by the
percentage change in the beneficiary population from
the current year to that fiscal year: the Federal
Hospital Insurance Trust Fund, the Supplementary
Medical Insurance Trust Fund, the Unemployment Trust
Fund, and the railroad retirement account.
[(4) Pay annualization; offset to pay absorption.--
Current-year new budget authority for Federal employees
shall be adjusted to reflect the full 12-month costs
(without absorption) of any pay adjustment that
occurred in that fiscal year.
[(5) Inflators.--The inflator used in paragraph (1)
to adjust budgetary resources relating to personnel
shall be the percent by which the average of the Bureau
of Labor Statistics Employment Cost Index (wages and
salaries, private industry workers) for that fiscal
year differs from such index for the current year. The
inflator used in paragraph (1) to adjust all other
budgetary resources shall be the percent by which the
average of the estimated gross domestic product chain-
type price index for that fiscal year differs from the
average of such estimated index for the current year.
[(6) Current-year appropriations.--If, for any
account, a continuing appropriation is in effect for
less than the entire current year, then the current-
year amount shall be assumed to equal the amount that
would be available if that continuing appropriation
covered the entire fiscal year. If law permits the
transfer of budget authority among budget accounts in
the current year, the current-year level for an account
shall reflect transfers accomplished by the submission
of, or assumed for the current year in, the President's
original budget for the budget year.
[(d) Up-to-Date Concepts.--In deriving the baseline for any
budget year or outyear, current-year amounts shall be
calculated using the concepts and definitions that are required
for that budget year.
[(e) Asset Sales.--Amounts realized from the sale of an asset
shall not be included in estimates under section 251, 252, or
253 if that sale would result in a financial cost to the
Federal Government as determined pursuant to scorekeeping
guidelines.]
SEC. 257. THE BASELINE.
(a) In General.--(1) For any fiscal year, the baseline refers
to a projection of current-year levels of new budget authority,
outlays, or receipts and the surplus or deficit for the current
year, the budget year, and the ensuing nine outyears based on
laws enacted through the applicable date.
(2) The baselines referred to in paragraph (1) shall be
prepared annually.
(b) Direct Spending and Receipts.--For the budget year and
each outyear, estimates for direct spending in the baseline
shall be calculated as follows:
(1) In general.--Laws providing or creating direct
spending and receipts are assumed to operate in the
manner specified in those laws for each such year and
funding for entitlement authority is assumed to be
adequate to make all payments required by those laws.
(2) Exceptions.--(A)(i) No program established by a
law enacted on or before the date of enactment of the
Balanced Budget Act of 1997 with estimated current year
outlays greater than $50,000,000 shall be assumed to
expire in the budget year or the outyears. The scoring
of new programs with estimated outlays greater than
$50,000,000 a year shall be based on scoring by the
Committees on the Budget or OMB, as applicable. OMB,
CBO, and the Committees on the Budget shall consult on
the scoring of such programs where there are
differences between CBO and OMB.
(ii) On the expiration of the suspension of a
provision of law that is suspended under section 171 of
Public Law 104-127 and that authorizes a program with
estimated fiscal year outlays that are greater than
$50,000,000, for purposes of clause (i), the program
shall be assumed to continue to operate in the same
manner as the program operated immediately before the
expiration of the suspension.
(B) The increase for veterans' compensation for a
fiscal year is assumed to be the same as that required
by law for veterans' pensions unless otherwise provided
by law enacted in that session.
(C) Excise taxes dedicated to a trust fund, if
expiring, are assumed to be extended at current rates.
(D) If any law expires before the budget year or any
outyear, then any program with estimated current year
outlays greater than $50,000,000 that operates under
that law shall be assumed to continue to operate under
that law as in effect immediately before its
expiration.
(3) Hospital insurance trust fund.--Notwithstanding
any other provision of law, the receipts and
disbursements of the Hospital Insurance Trust Fund
shall be included in all calculations required by this
Act.
(c) Discretionary Spending.--For the budget year and each of
the nine ensuing outyears, the baseline shall be calculated
using the following assumptions regarding all amounts other
than those covered by subsection (b):
(1) Estimated appropriations.--Budgetary resources
other than unobligated balances shall be at the level
provided for the budget year in full-year appropriation
Acts. If for any account a full-year appropriation has
not yet been enacted, budgetary resources other than
unobligated balances shall be at the level available in
the current year.
(2) Current-year appropriations.--If, for any
account, a continuing appropriation is in effect for
less than the entire current year, then the current-
year amount shall be assumed to equal the amount that
would be available if that continuing appropriation
covered the entire fiscal year. If law permits the
transfer of budget authority among budget accounts in
the current year, the current-year level for an account
shall reflect transfers accomplished by the submission
of, or assumed for the current year in, the President's
original budget for the budget year.
(d) Up-To-Date Concepts.--In calculating the baseline for the
budget year or each of the nine ensuing outyears, current-year
amounts shall be calculated using the concepts and definitions
that are required for that budget year.
(e) Asset Sales.--Amounts realized from the sale of an asset
shall not be included in estimates under section 251, 251A,
252, or 253 of this part or section 5 of the Statutory-Pay-As-
You-Go Act of 2010 if that sale would result in a financial
cost to the Government as determined pursuant to scorekeeping
guidelines.
* * * * * * *
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CONGRESSIONAL BUDGET ACT OF 1974
* * * * * * *
TITLE II--CONGRESSIONAL BUDGET OFFICE
* * * * * * *
DUTIES AND FUNCTIONS
Sec. 202. (a) * * *
* * * * * * *
(e) Reports to Budget Committees.--
(1) * * *
* * * * * * *
(4)(A) After the President's budget submission under
section 1105(a) of title 31, United States Code, in
addition to the baseline projections, the Director
shall submit to the Committees on the Budget of the
House of Representatives and the Senate a supplemental
projection assuming extension of current tax policy for
the fiscal year commencing on October 1 of that year
with a supplemental projection for the 10 fiscal-year
period beginning with that fiscal year, assuming the
extension of current tax policy.
(B) For the purposes of this paragraph, the term
``current tax policy'' means the tax policy in statute
as of December 31 of the current year assuming--
(i) the budgetary effects of measures
extending the Economic Growth and Tax Relief
Reconciliation Act of 2001;
(ii) the budgetary effects of measures
extending the Jobs and Growth Tax Relief
Reconciliation Act of 2003;
(iii) the continued application of the
alternative minimum tax as in effect for
taxable years beginning in 2011 pursuant to
title II of the Tax Relief, Unemployment
Insurance Reauthorization, and Job Creation Act
of 2010, assuming that for taxable years
beginning after 2011 the exemption amount shall
equal--
(I) the exemption amount for taxable
years beginning in 2011, as indexed for
inflation; or
(II) if a subsequent law modifies the
exemption amount for later taxable
years, the modified exemption amount,
as indexed for inflation; and
(iv) the budgetary effects of extending the
estate, gift, and generation-skipping transfer
tax provisions of title III of the Tax Relief,
Unemployment Insurance Reauthorization, and Job
Creation Act of 2010.
(5) On or before July 1 of each year, the Director
shall submit to the Committees on the Budget of the
House of Representatives and the Senate, the Long-Term
Budget Outlook for the fiscal year commencing on
October 1 of that year and at least the ensuing 40
fiscal years.
* * * * * * *
Views of Committee Members
Clause 2(l) of rule XI of the Rules of the House of
Representatives requires each committee to provide two days to
Members of the committee to file Minority, additional,
supplemental, or dissenting views and to include such views in
the report on legislation considered by the committee. The
following views were submitted:
MINORITY VIEWS
Although there are large differences in budget priorities
between the parties, we share a common goal of putting the
federal budget on a fiscally sustainable path. We all want the
federal government to be efficient, to focus scarce resources
where they can do the most good, and to not waste a single dime
of taxpayer dollars. And we want our budget laws to help
support those goals.
Budget process rules and laws can make a difference. For
instance, the PAYGO principle that has been in effect at
different periods has played a useful role in preventing the
deficit from getting even worse. But budget process changes
will never be a substitute for tackling the difficult fiscal
questions facing us today. It is not that the budget process
does not work, it is that Congress has failed to follow the
rules already on the books.
The Budget Committee has held two hearings on the general
topic of budget process reform and the recommendations crossed
party lines. Former Budget Committee Chairman Jim Nussle, a
Republican witness, testified that ``It may not be that the
budget process is broken. It may not be, in other words, that
tools are broken, but it may be the fact that the tools are not
even being used.'' Similarly, Dr. Philip Joyce, former
Congressional Budget Office (CBO) staff member and a Democratic
witness, testified that ``My main message is that most of the
tools that you need to solve the budget problems faced by the
country are already in your toolbox. If the goal is to deal
with the larger fiscal imbalance that faces us, the most
important thing to do is to make use of them, not search for
more tools.''
The reason we are not following the existing budget rules
is that Republicans have shown a lack of political will and an
unwillingness to compromise. Until Republicans are willing to
support a balanced approach, we will never address the urgent
need to put Americans back to work and to put our nation on a
path toward long-term fiscal sustainability. Unfortunately, the
Baseline Budget Reform Act of 2012 does nothing to create a
single job, to reduce the deficit by a single penny, or to put
the country on a fiscally sustainable path.
Instead, this bill would obscure the size of the fiscal
problem facing us. The bill mandates a fundamental change in
how CBO forecasts future discretionary spending in its
baseline, requiring CBO to assume that current spending is set
below real purchasing power levels in all future years rather
than have it track growth in overall prices. Over the next few
years, this change may not affect CBO's baseline total estimate
of discretionary spending because the total baseline will
reflect the discretionary caps under the Budget Control Act.
However, a permanent approach to budgeting and forecasting that
fails to account for the real cost of goods and services will
present a distorted picture of the federal budget outlook. The
American public should not be deceived to believe that the
government can maintain the same level of services while real
funding is cut. Over time, as programs are slowly starved,
backlogs will increase and program failures, such as terrible
conditions at the former Walter Reed Army Medical Center that
came to light in 2007, are inevitable.
Other provisions in the bill ask for supplemental
information and reports that are already being produced by CBO
on a routine basis. Requiring this information via legislation
is not necessary, and does nothing to move us forward to
improve the government's fiscal outlook or the economy.
It is imperative that we get Americans back to work and get
our fiscal house in order. The bill does nothing to achieve
either goal. Instead, it pretends that budget process reform in
the form of changing the way the discretionary baseline is
calculated is the answer to solve our very real problems.
Chris Van Hollen.
Mike M. Honda.
Earl Blumenauer.
Paul Tonko.
Bill Pascrell, Jr.
Gwen Moore.
Betty McCollum.
Allyson Y. Schwartz.
Debbie Wasserman Schultz.
Karen Bass.