oversight

The Budget for Fiscal Year 1991: Compliance With the Balanced Budget and Emergency Deficit Control Act of 1985

Published by the Government Accountability Office on 1990-12-10.

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

                                                                    C--
                  United   States   General   Accounting   Office         1

                  Report to the President and the
                  Congress



J.&ember   1990
                  THE BUDGET FOR
                  FISCAL YEAR 1,991
                  Compliance With the
                  Balanced Budget and
                  Emergency Deficit
                  Control Act of 1985
GAO
             United States
             General Accounting Office
             Washington, D.C. 20548

             Comptroller  General
             of the United States

             B-221498

             December 10, 1990

             The President
             The President of the Senate
             The Speaker of the House
               of Representatives

             We hereby submit our compliance report for fiscal year 1991 as required
             by the Balanced Budget and Emergency Deficit Control Act of 1985, as
             amended. Section 254(i) requires that the Comptroller General report on
             the extent to which each order issued by the President and each report
             issued by the Office of Management and Budget (OMR) and the Congres-
             sional Budget Officta ((‘ISO)under section 254 complies with the require-
             ments of the act. WC are required to certify that each order or report
             complies with the act’s requirements or to indicate the respects in which
             it does not.

             In our opinion, the (‘ISOand OMB reports and the President’s order sub-
             stantially complied with the act except for the requirement to set forth
             estimates through fiscal year 1995 for the discretionary spending limits
             for each category. (‘f%oand OMH informed us. however, that they will pro-
             vide these estimates by February 1991, in ample time to correct any
             potential breach of the outyear spending caps. Accordingly, we do not
             consider this a serious violation of the act.

             In addition, an issucl has arisen concerning a difference between OMB’S
             and CFSO’S scorekeeping treatment of certain existing lease purchase con-
             tracts. This could affect the need to adjust the statutory spending caps
             for future years for conceptual changes. We are examining this matter
             and will report soon on what we found.


              The Budget Enforcement Act of 1990 (title XIII of the Omnibus Budget
Background    Reconciliation Act of 1990, Public Law 101-508) amended the Balanced
              Budget and Emergency Deficit Control Act of 1985 in several significant
              ways. It rescinded the President’s final sequestration order of
              October 15, 1990, and restored the amounts sequestered. The sequester
              had been suspended by five continuing resolutions, the final one
              expiring on November 5. when the Omnibus Budget Reconciliation Act
              of 1990 was enacted.

              The act also revised and extended the deficit targets for fiscal years
              199 1 through 1995. Receipts and disbursements from the Social Security


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                        B-221498




                        The reporting provisions for the CBO and OMH November 1990 reports
                        addressed by this compliance report required that CBO and OMB only
                        address discretionary spending matters. For future years, CBO and OMB
                        will also report on overall deficit and pay-as-you-go matters.

                        tinder the newly revised procedures, CBO issued its final sequestration
                        report on November 6, 1990. It reported that the international discre-
                        tionary category had exceeded its $20.1 billion budget authority target
                        by $395 million, requiring a 1.9 percent sequester in the international
                        category. CBO reported that the budget authority in appropriations and
                        associated outlays for the defense and domestic categories were within
                        their established targets.

                        OMH issued its final sequestration report on November 9, 1990. The Pres-
                        ident’s order, implementing OMB'S sequestration report, was also issued
                        on Piovember 9, 1990. OMH'S report also fulfilled its requirement to issue
                        a report within 5 days of the enactment of an appropriation bill. Like
                        CHO,OMB reported a $395 million breach in the international category,
                        requiring a 1.9 percent sequester. It also reported that the defense and
                        domestic categories were within their budget authority target amounts.

                        As both CHO and OMH reported, the breach in the international category
                        was the result of an error in drafting the foreign operations appropria-
                        tion bill for 1991. An error in the language appropriating funds for the
                        Foreign Military Financing Program account added $403.5 million for
                        loans to the account rat her than stipulating that the amount for the
                        loans was considered to be part of the total amount appropriated for
                        that account.


                         The ob,jective of our review was to determine whether the CBO and OMB
Objective, Scope, and    November 1990 reports and the President’s November order complied
Methodology              with the act’s requirements. Our methodology included a variety of tests
                         to determine whether thr procedures and rules imposed by the act for
                         cant rolling discretionary spending had been followed. Our emphasis was
                         on determining whether UV) and OMH had properly totaled the discre-
                         tionary budget authority provided in fiscal year 1991 appropriation acts
                         for the defense, international, and domestic categories.

                         Our basic criteria were the lists of the discretionary and appropriated
                         entitlement and mandatory budget accounts in the international,
                         defense, and domestic, categories that were referred to in the Omnibus
                         liudget Keconciliation A(? of 1990. In the international category, where


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8.221498




OMB reported only the spending limits applicable to fiscal year 1991.
Both CBO and OMB representatives stated that they were not in technical
compliance with the law in this respect. They stated that the primary
reason for not including the amounts was the tight time constraints for
issuing the reports. Both stated that these estimates will be included in
future reports. According to CnO officials, CR0 plans to issue a report in
.January 1991 that will provide the estimates for fiscal years through
 1995. OIW officials stated that they plan to report these data in Feb-
ruary 199 1. This will provide ample time to adjust appropriation
amounts, if necessary. to avoid breaching the outyear spending caps.
Accordingly, we do not consider this a serious matter.

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

This report was prepared under the direction of James L. Kirkman,
Director, Budget lssucs, who may be reached on (202) 2759573 if you
or your staffs have any questions. Other major contributors to this
report are listed in appendix 1.




Charles A. Bowsher
Comptroller General
of the United States




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Appendix I

Major Contributors to This Report


                        Edith A. Pyles, Assistant Director
Accounting and          Robert M. Sexton, Assignment Manager
Financial Management    Deborah Colantonio, Senior Evaluator
Division, Washington,   Cynthia .Jackson, Staff Accountant
                        Bruce Baker, Staff Evaluator
D.C.

                        .James F. Wiggins, Assistant Director
National Security and   Steven H. Sternlicb, Senior Evaluator
International Affairs   Michael W. Amend. Staff Evaluat,or
Division, Washington,
D.C.
                                          ~-.   _____-
                        Mark C. Speight, Attorney-Adviser
Office of the General
Counsel




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                     B.221498




                     CBO and OMB reports contained a budget account listing showing each
                     account’s discretionary budget authority and sequester amount, we per-
                     formed an account-level analysis. This involved checking each account
                     against the lists referred to in the act to see whether it was properly
                     classified by CBO and OMB as an international discretionary account. We
                     also checked CBO and OMB reported budget authority for the accounts
                     against the amount indicated in the relevant enrolled appropriation bill.
                     Finally, we computed the budget authority total and sequester per-
                     centage for the international category and compared our results with
                     those of CBO and OMB.

                     In the defense and domestic categories, we did not examine each account
                     because of the large number of accounts, the initial unavailability of
                     enrolled appropriation bills, and severe time constraints. Instead, we
                     started with the 13 appropriation conference reports and the total
                     reported budget authority contained in those reports. From these totals,
                     we calculated (using the lists referred to in the act) the mandatory
                     account amounts. The remaining discretionary total for each bill was
                     then compared to the CBO and OMB reported total and breakdown (in the
                     three categories) for the bill. In cases where our computation did not
                     match the CBO and OMB amounts, we contacted staff of those agencies
                     and obtained their explanations, which we checked against language in
                     the enrolled appropriation bills.

                     With respect to CBOand OMB projected outlays for each of the three dis-
                     cretionary categories, our analysis was limited to ascertaining whether
                     the projected amounts fell within the statutory limit as adjusted by a
                     special outlay allowance. We also checked to determine if the special
                     allowance amount used in the CBO and OMn reports agreed with the
                     allowances set forth in the act.

                     Finally, we interviewed cognizant officials in CBO, OMR, and selected con-
                     gressional committees. Our work was conducted in Washington, D.C.,
                     during November 1990.


                     Our tests gave us reasonable assurance that the CBO and OMB final
Overall Compliance   sequestration reports and the President’s order substantially complied
                     with the requirements of the act with the following exception. Section
                     254(g)(2)(A) requires that CBO and OMB issue final sequestration reports
                     setting forth for the current year and each subsequent year through
                     1995 the applicable discretionary spending limits for each category and
                     an explanation of any adjustments in such limits. However, both CROand


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B.221498




trust funds are no longer counted in the calculation of the deficit for the
purpose of determining whether a sequester is needed. The 1991 deficit
target was revised upward to $327 billion and the 1995 target was set at
$83 billion. In addition, the President is required to adjust the deficit
targets through 1995 for economic and technical assumptions when he
submits his annual budgets for fiscal years 1992 and 1993. In his
budgets for fiscal years 1994 and 1995, the President has the option to
adjust the targets.

Furthermore, the act established new procedures for controlling discre-
tionary spending for fiscal years 1991 through 1995. For fiscal years
 1991, 1992, and 1993, separate limits were established for three catego-
ries of discretionary spending-defense, international, and domestic.
For fiscal years 1994 and 1995, the three categories are merged into a
single discretionary category. The President must adjust the spending
limits when he submits the budget for fiscal years 1992 through 1995
 for economic assumptions and for certain technical factors such as
changes in budget concepts. A “breach” (new budget authority or pro-
jected outlays above the specified limit) in any of the categories results
 in a sequester only in the category where the breach occurs.

Mandatory spending on entitlement and similar programs is controlled
for fiscal years 1992 through 1995 under a “pay-as-you-go” process
whereby any new legislation that causes a direct spending increase or a
revenue decrease must be offset so that the deficit is not increased.

The act established new reporting requirements and dates for OMB, CRO,
and GAO. The procedures require OMB to issue a report within 5 days of
the enactment of an appropriation bill. CBO is required to issue a final
sequestration report 10 days after the end of a congressional session,
and OMB and the President have 15 days after the end of a session to
issue a final sequestration report and order, respectively. GAO is
required to issue a compliance report covering the CBO and OMB reports
and the President’s order 30 days after OMB issues its final sequestration
report.’


 ‘Prior to the enactmentof the OmnibusBudgetand ReconciliationAct of 1990on November5, 1990,
 GAO was requiredto issuea report on November15on OMB’sand the President’scompliance.We
 had completedour study at the time the reporting requirementswere changed.Although we did not
 issuea report on November15,we had determinedthat, at the time of their issuance,OMB’sreports
 and the President’sordels were in substantialcompliancewith the act’sprovisionsfor projectingthe
 deficit and calculatingthe sequesterpercentages.Although we identified a few accountswhere we
 believedthat OMBinapprt)priately appliedthe act’srequirements,they did not affect the deficit cal-
 culation DTthe sequesterpercentages.



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