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Deficit Reductions for Fiscal Year 1990: Compliance With the Omnibus Budget Reconciliation Act of 1989

Published by the Government Accountability Office on 1990-01-26.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                  United   States   General   Accounting   Office
                  Report to the President and the
GAO               Congress



.January   1990
                  DEFICIT
                  REDUCTIONS FOR
                  FISCAL YEAR 1990
                  Complianee With the
                  Omnibus Budget
                  Reconciliation Act of
                  1989
             United States

GAO          General Accounting  Office
             Washington, D.C. 20548

             Comptroller   General
             of the United States

             B-221498

             January 26,199O

             The President

             The President of the Senate

             The Speaker of the House
             of Representatives

             We hereby submit an additional compliance report for fiscal year 1990.
             Section 11002 of the Omnibus Budget Reconciliation Act of 1989 (P.L.
             10 l-239) rescinded the sequester order issued by the President on Octo-
             ber 16, 1989, and required him to issue a new final order complying
             with the terms of the Reconciliation Act. It also required the Office of
             Management and Budget (OMB) to issue a revised sequester report. Sec-
             tion 11002(c) directs the Comptroller General to submit to the Congress
             and the President, within 30 days of the President’s new final order, a
             compliance report with respect to the revised sequester report and new
             final order setting forth the information required under section 253 of
             the Balanced Budget and Emergency Deficit Control Act of 1985, as
             amended. Section 253 requires the Comptroller General to submit to the
             Congress and the President a report on the extent to which the Presi-
             dent’s orders and OMB'S reports have complied with the provisions of the
             act.

             In our opinion, OMB'S revised final sequester report and the President’s
             order complied with the requirements of section 11002 of the Omnibus
             Budget Reconciliation Act of 1989.


             The Balanced Budget and Emergency Deficit Control Act of 1985, as
Background   amended, establishes deficit targets to lead to a balanced unified budget
             by fiscal year 1993. The deficit target for fiscal year 1990 is $100 bil-
             lion. Each year, OMB is required to submit an initial report on the 25th of
             August and a final report on the 15th of October, both of which project
             the fiscal year deficit. If OMB projects a deficit in excess of the target
             amount plus $10 billion, the President must issue a sequester order to
             reduce budgetary resources sufficiently to bring the estimated deficit
             down to the target level.

             OMB'S August and October 1989 reports for fiscal year 1990 each pro-
             jected a deficit of about $116 billion. Since this estimate was above the
              amount that would trigger a sequester ($110 billion), the President
B221499




believe that a fundamentally   different approach to deficit reduction is
needed.

Copies of this report will be provided to the Director of the Office of
Management and Budget, the Director of the Congressional Budget
Office, Members of Congress, and interested congressional committees.
Copies will be made available to other interested parties on request.

This report was prepared under the direction of James L. Kirkman,
Director, Budget Issues, who may be reached on 275-9573 if you or your
staffs have any questions. The major contributors to this report are
identified in appendix I.




Charles A. Bowsher
Comptroller General
of the United States




Page 3                           GAO/AlWD99-49   Reconciliation   Camplimce   Report
Appendix

Major Contributors to This Report


                        Edith A. Pyles, Assistant Director
Accounting and          Robert M. Sexton, Assignment Manager
financial Management    Joseph G. Heisler, Evaluator
Division, Washington,
D.C.

                        Thomas H. Armstrong, Attorney
Office of the General
Counsel




(935070)                Page 4                          GAO/APMD-99-49   Reconciliation   Compliance   Report
                       B-221498




                       issued sequester orders requiring reductions of budgetary resources to
                       reduce outlays by $16 billion and bring the deficit down to the $100
                       billion target level. The $16 billion reduction was, as required by law,
                       divided equally between the defense and nondefense accounts. OMB
                       determined that sequestrable defense resources would have to be
                       reduced by 4.3 percent to effect outlay savings of $8 billion, and seques-
                       trable nondefense resources by 5.3 percent, to produce equal outlay
                        savings.

                       The Omnibus Budget Reconciliation Act of 1989 enacted measures to
                       reduce the budget deficit. As a result of savings in a number of pro-
                       grams, the total amount of across-the-board reductions was reduced.
                       Section 11002 of the act required OMB to issue a revised sequester report,
                       using the October 16th baseline, that would produce a sequester equal to
                        130/365 of the amount previously sequestered. OMB’S revised sequester
                       calculations established across-the-board reductions of 1.5 percent for
                       defense programs and 1.4 percent for nondefense programs. The Presi-
                       dent issued his revised order on December 27,1989, implementing these
                       reductions.


                       The objective of our review was to determine whether OMB and the Pres-
Objective, Scope,and   ident complied with the requirements of section 11002 of the Omnibus
Methodology            Budget Reconciliation Act of 1989 in their revised sequester report and
                       order. We performed a variety of tests to determine whether the proce-
                       dures and rules imposed by section 11002 had been followed. The
                       emphasis was upon ascertaining whether OMB complied with the provi-
                       sions for using the October 16th baseline and computing the revised
                       sequester percentages for defense and nondefense programs. In addi-
                       tion, we verified a random sample of 42 defense and 89 nondefense
                       accounts to determine if the sequester amounts were properly calcu-
                       lated. We also verified the calculations for those programs subject to
                       special rules in section 11002 of the act. We performed our work in
                       December 1989 and January 1990.


                        Our tests gave us reasonable assurance that OMB and the President com-
Compliance by OMB       plied with the requirements of section 11002 of the Omnibus Budget
and the President       Reconciliation Act of 1989. We reiterate, however, that compliance does
                        not necessarily result in meaningful deficit reduction.’ We continue to

                        ‘Deficit Reductions for Fiscal Year 1990: Compliance With the Balanced Budget and Emergency Defi-
                        cit Control Act of 1985 (GAO/AF’MD-90-40,    November 15, 1989).




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