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TABLE OF CONTENTS

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I. Introduction...

II. Tentative recommendations-

III. Basic problem before committee:

A. General statement of the problem..

B. History of development of Division of Legislative Budget

Authority --

C. Limited overall budget consideration.

D. Splintering of appropriation process.

E. Effect of uncontrollable expenditures-

F. Lack of coordination between tax and expenditure policy --

G. Relationship of authorization process to appropriation

process--

H. Budgetary control through establishment of ceilings ---

Appendix:

Table 1. Comparative data on the Federal budget estimates

originally submitted to Congress and the final budget

results, fiscal years 1921-74.-

Table 2. Outlays, receipts and surpluses or deficits in the unified

budget, Federal funds and trust funds, fiscal years

1960–74..

Table 3. Totals of regular annual, supplemental and deficiency

appropriation bills, as enacted, and comparison with

estimates considered, 83d through 92d Congresses--

Table 4. Percentage distribution of total budget outlays by

major functions, fiscal years 1965–74...

Table 5. Appropriation actions, by bill, fiscal years 1969–73

(during the last two sessions of Congress)--

Table 6. Impact of congressional actions on budget totals,

fiscal years 1969-73..

Table 7. Controllability of budget outlays, fiscal years 1967

and 1974 (estimated)

Table 8. Analysis of unobligated and obligated balances (end

of year) fiscal year 1973.-

Table 9. Estimated effect of calendar year tax liabilities of tax

actions since 1962.-

Table 10. Aggregate Federal individual income tax liability as a

percentage of adjusted gross income in taxable re-

turns, 1952–71..

Table 11. Relationship of individual income tax receipts and

personal income on national income accounts basis,

calendar years 1951–71..

Table 12. Comparison of dates of last congressional action on

annual authorizations and related appropriation acts,

90th Congress, 2d session, to 92d Congress, first

session

Table 13. Authorizations and appropriations by agency and

function, fiscal years 1966–70 (programs with fixed

authorizations only).

Table 14. Legislative actions relating to the fiscal year 1973

budget----

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I. INTRODUCTION

a

In the enactment last session of the legislation temporarily increasing the public debt limit (P.L. 92–599), Congress made provision for establishment of the Joint Study Committee on Budget Control because of its keen awareness of the disturbing fiscal situation facing the nation and the compelling need to find meaningful ways to deal with it.

In its consideration of the debt ceiling legislation, Congress rejected the President's proposal for imposing a rigid spending ceiling for fiscal year 1973 because it would delegate to the President the responsibility of Congress to establish spending priorities. However, if Congress is to effectively maintain and carry out its Constitutional power over the purse, it is evident that it must establish an effective permanent mechanism for budget control which will assure a more comprehensive and coordinated review of budget totals and determination of spending priorities and spending goals, together with a determination of the appropriate associated revenue and debt levels.

Section 301(b) of P.L. 92–599 specifically provides that the Joint Committee shall make a full study and review of:

the procedures which should be adopted by the Congress for the purpose of improving Congressional control of budgetary outlay and receipt totals, including procedures for establishing and maintaining an overall view of each year's budgetary outlays which is fully coordinated with an

overall view of the anticipated revenues for that year, . . It should be noted that the charter given the Joint Study Committee on Budget Control is not to recommend procedures to reduce or increase spending or to reduce or increase taxes. Rather, the objective is clearly to propose procedures for “improving Congressional control of budgetary outlay and receipt totals” and for assuring full coordination of an overal view of each year's budgetary outlays" with an "overall view of the anticipated revenues for that year.” It should also be noted that this report deals with procedures to improve Congressional control of the budget rather than attempting to deal specifically with the current budgetary problems with respect to the fiscal year 1974.

The members of the Joint Committee fully appreciate the importance and complexity of the task which they have been given and are pursuing an in-depth study in an effort to recommend new and improved budgetary control procedures which will provide a comprehensive, sound, workable system encompassing all Congressional actions affecting the budget process.

The next section of this interim report presents the tentative recommendations of the Joint Study Committee. In large part these are stated in terms of principles. The committee plans to convert these principles into specífic legislative recommendations in the near future.

(1)

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Part III of the report presents in general form the basic problem before the committee which led to the tentative recommendations referred to above.

II. TENTATIVE RECOMMENDATIONS

Because of the difficulty of taking into account all of the different aspects of the problem, the Joint Study Committee, in the short time available to it, has as yet been unable to reach final conclusions as to a solution to the problems of legislative budgetary control. Nevertheless, it has concluded that the legislative process should include an opportunity for the Congress to examine the budget from an overall point of view, together with a congressional system of deciding priorities. It also believes that ways of preventing further splintering off of control from the Appropriations Committees should be found as well as ways of speeding up authorizations. While not having yet worked out the details of its proposals, the committee nevertheless can subscribe to the following as general principles:

a

1. There should be a mechanism for Congress to

(a) determine the proper level of expenditures for the coming fiscal year after full consideration of the fiscal, economic, monetary and other factors involved,

(6) provide an overall ceiling on expenditures and on budget authority for each year, and

(c) determine the aggregate revenue and debt levels which appropriately should be associated with the expenditure and

budget authority limits. The limitations referred to above should be provided only if Congress also makes provision for a system whereby it can make the decisions on budget priorities that will guide it as to where reductions are to be made in the event that this becomes necessary.

The committee favors provision for limitations on both expenditure and new obligational authority so an impact, to the extent possible, will be felt in the current year (as a result of the expenditure limitation) and also so that control will be obtained over future growth, (as a result of the budget authority limitation). At the same time however, it is essential that Congress develop ways of making its own decisions on budget priorities so that realistic control over the purse can be regained by the Congress, as intended by the Constitution. Any mechanism for establishing these limitations also needs to provide an opportunity to review and make recommendations as to overall tax and debt policies, since these also are an essential part of the Government's fiscal policy.

2. Any limitation on expenditures and new obligational authority should cover not only budgetary outlays handled through the Appropriations Committees but also any legislation which provides funding separately from the annual appropriation process.

Because of the increasing number in recent years of legislative bills, other than appropriation bills which provide for funding, any meaningful overall control of spending and budget authority also must apply to these types of spending.

3. Initial action taken with respect to expenditure ceilings and new obligational authority limitations should occur early in each session of the Congress, but there should be a procedure established for reconsideration of these ceilings in the latter part of each Congressional session.

Because many decisions as to spending are not made until well along in a Congressional session, it is important that a procedure for flexibility in budget ceilings be provided, so there is an adequate opportunity for review of these ceilings in the latter part of the sessions.

4. A procedure should be developed for allocating the appropriate portions of expenditure and budget authority ceilings to various committees having jurisdiction over the legislation affecting the budget.

Provision must be made for the application of the expenditure and budget authority ceilings to each committee having jurisdiction over spending. Also a way of subdividing these amounts on a broad program basis must be found if Congress is to make its own decisions as to priorities.

5. Procedures should be developed to assure compliance with the expenditure and budget authority ceilings.

To provide expenditure and budget authority guidelines which could be ignored at will does not meet the problem of requiring ani examination of competing priorities. A nonbinding expenditure ceiling has already been tried, and failed.

6. Procedures should be developed to present to Congress the effect on expenditures of existing and proposed legislation, not only in the current year, but also for years up to 3 to 5 years ahead. Such information should be made available currently both with respect to the effect of authorizing legislation and legislation directly making funds available for expenditure.

7. An organization to implement the control procedures outlined above probably should encompass the formation of permanent legislative committees on the budget. The appropriations and tax committees in the case of each House should be adequately represented in the membership of the budget committee. A legislative committee of this type is needed so there will be an opportunity for overall review of tax and expenditure policy.

8. Any permanent legislative committees on the budget of the type referred to above should have an adequate nonpartisan, professional staff which will need to develop skill in translating funding actions into expenditure and budget authority totals for the current year, but also for up to three to five years ahead. Such a staff might well be a joint staff for separate House and Senate committees.

9. There also should be an opportunity for Congress to review periodically the different ways in which budget authority and expenditures are in fact authorized or incurred. In practice, these have changed from time to time, and it is not at all certain that expenditure mechanisms used in one period of time will necessarily continue to be desirable.

89-900—73-2

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