I. SUMMARY

The Joint Study Committee on Budget Control was established in legislation enacted last session that temporarily increased the debt limitation (P.L. 92-599). The charter given the committee was to propose procedures for "improving congressional control over budgetary outlay and receipt totals" and to assure full coordination of an "overall view of each year's budgetary outlays" with an "overall view of the anticipated revenues for that year."

Before making the recommendations included in this report, the Joint Committee studied extensively the record of the past. This indicated that in the 54 years since 1920, the budget of the Federal Government has been in a deficit position 37 times.1 Of the 16 years in which there were surpluses, 10 occurred before 1931. In the 43 years since 1931, there have been only 6 years in which there were surpluses.2 Moreover, apart from World War II years, the largest deficits have occurred in recent years. Since 1968, the deficit on a Federal funds basis has ranged from $13 billion to $34 billion in each year. Even on a unified budget basis, from 1971 through 1973, the deficits have ranged from $23 billion to $25 billion, and the estimate for the fiscal year 1974 is $13 billion.

The constant continuation of deficits plus their increasing size illustrates the need for Congress to obtain better control over the budget. The Joint Study Committee has concluded that the failure to arrive at congressional budget decisions on an overall basis has been a contributory factor in this picture. The present institutional arrangements in many cases appear to make it impossible to decide between competing priorities with the result that spending is made available for many programs where the preference might have been to make choices among the programs rather than providing for spending in all

cases.

The fact that no committee has the responsibility to decide whether or not total outlays are appropriate in view of the current situation appears to be responsible for much of the problem. Perhaps still more critical for the process is the distribution of jurisdictions over components of the budget among several different congressional committees. As a result, each spending bill tends to be considered by Congress as a separate entity, and any assessment of relative priorities among spending programs for the most part is made solely within the context of the bill before Congress.

In dealing with these problems, the Joint Study Committee, on February 7, 1973, released an interim report on improving congressional control over budgetary outlay and receipt totals. This report

1 This is based upon the administrative budget or Federal funds budget. The unified budget concept which has been used since 1969 would differ only in showing the year 1969 in surplus. Based upon the unified budget, there would be one more year in which there was a surplus. (1)

contained eleven tentative recommendations for improving the legislative process of budget consideration. To obtain the reactions of the Congress and the public to these tentative recommendations, the Study Committee held hearings on them from March 6 through March 15, 1973. In these hearings, more than half of those who appeared and who submitted written statements were members of the House and Senate who have interested themselves in this problem of congressional budgetary control. The committee received numerous worthwhile suggestions in these hearings and many of them have been incorporated in its recommendations which follow.

In its interim report, the Study Committee concluded that the legislative process should include an opportunity for the Congress to examine the budget from an overall point of view, together with an improved congressional system of deciding priorities. It also expressed the view that ways of preventing further splintering of control from the Appropriations Committees should be found as well as ways of speeding up authorizations. The committee's study since that time has reenforced its view as to the correctness of these general opinions. To implement them, the committee in Part IV of this report presents a set of detailed recommendations.

The recommendations can be summarized as follows:

A. Formation of Committees on the Budget

1. A special committee on the budget would be established in both the House and Senate to provide a way of reviewing the budget on an overall basis.

2. The committee in the House would have 21 members and the committee in the Senate would have 15 members. In both cases, onethird of the members would be drawn from the Appropriations Committees, one-third from the Ways and Means or Finance Committee and one-third from legislative committees generally. The Study Committee believed that the financing committees needed to have important representation on the committee, but that at the same time, it was important that the legislative committees which might have differing points of view also be well represented. By making use of the membership of the financing and legislative committees on this committee, the Committee on the Budget in each case, in a sense, does not wholly represent a new additional committee, but rather in large part a combination of the views of the existing financing and legislative committees. 3. Appointments from the appropriations and taxation committees would be made by the committees from which the members are selected. Members from the legislative committees would be appointed by the leadership in the House and Senate. Selection of the members on this basis would give assurance that the committees are representative of the House and Senate and responsive to them.

4. The chairman of each committee would alternate each year from among the members of the appropriations and tax committees. When a member of the Appropriations Committee was chairman of the House committee, a member of the Finance Committee could be chairman of the Senate committee and vice versa. This gives assurance that the leadership of the committees will take into account differing points of view.

5. The two committees would be provided with a joint staff headed by a Legislative Budget Director. It is important that the director and

the staff be highly trained, professional and nonpartisan. The director and the joint staff in this case, in a sense, will give Congress its own center of congressional budgetary operations, much along the lines of the Legislative Analyst and staff of California's Joint Legislative Budget Committee who provides the legislature in effect with its own budget director. The director and staff not only would provide assistance to Congress in developing its priorities, but also would provide the service to Congress of listing the effect of existing and proposed legislation (appropriations and authorizations) on budgetary expenditures for periods of up to three to five years ahead.

B. Responsibilities of Committees on the Budget

1. The committees would report out for the consideration of the House and Senate at least two concurrent resolutions (one early and one late in the session). These would be reported after obtaining the views and recommendations of the Appropriations Committees, the Tax Committees, the Joint Economic Committee, and the Joint Committee on Internal Revenue Taxation on the matters referred to below which relate to their jurisdictions. The concurrent resolutions would assure overall budget consideration:

(a) providing overall limitations on budget outlays (expenditures and net lending) and on new budget authority (new obligational authority),

(b) providing for the appropriate level of revenue collections and level of the public debt (including the authority to direct the tax committees to raise or lower the aggregate level of Federal revenues), and

(c) dividing up the maximum permitted budget outlays and new budget authority (provided in (a) above) among the various subcommittees of the Appropriations Committees based on recommendations from those committees. In addition, allocations would be made to other committees having jurisdiction over budget outlays or new budget authority. The amounts allocated could be divided by programs.

2. In addition to the items referred to above, it is recommended that the concurrent resolutions contain a surplus or deficit figure which represents what the Budget Committee (or, subsequently, the Congress) believes to be appropriate in view of the prevailing economic conditions and any other factors the committee (or, ultimately, the Congress) believes should be taken into consideration. After the passage of the final concurrent resolution, these recommendations elsewhere call for a final appropriation "wrap-up" bill. It is recommended that this bill include not only appropriations (for any additional amounts permitted by the second resolution) but also, under certain conditions, a tax surcharge. A tax surcharge on individuals and corporations, reported out by the tax committees, would be required if the budget outlay and revenue figures set forth in the final concurrent resolution would lead to a larger deficit (or smaller surplus) than the figure set forth in the concurrent resolution indicates the Congress believes is appropriate. Any such surcharge would not, however, be imposed if the excess of the "estimated actual deficit" over the deficit considered appropriate (as set forth in the concurrent resolution) was not large enough to require a surcharge of at least one

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percent. The surcharge would become effective as of the first of the following calendar year. The tax committees could, if they saw fit, substitute for the surcharge any other form of taxation providing the equivalent revenue. The passage of the wrap-up appropriation bill would be subject to a point of order if the surcharge were not included where the conditions set forth above existed. The point of order arising from the omission of a surcharge under these conditions could be waived only by a rule waiving points of order which is passed by a two-thirds vote.

3. The budget committees would also, on a continuing basis, tabulate the effect on expenditures and revenues of existing and proposed legislation. It would show this effect not only for the current year, but for periods of up to three to five years ahead. This would take into account both authorizing and appropriating legislation.

4. The Budget Committees would also have the authority to include in the concurrent resolutions a limitation with respect to loans made by others which are guaranteed or insured by the Federal Government. It is not suggested at this time that a limitation of this type be required in the concurrent resolutions because it is believed that further study is needed as to the nature and desirability of any such limitation. It is recommended, however, that the Budget Committees be given the authority to include in the concurrent resolutions a limitation of this type.

C. Procedures Under Which Resolutions Relating to Limitations Would Be Handled

1. It is recommended that there be at least two concurrent resolutions considered by the Congress each year dealing with the budgetary matters set forth above (see B, 1 above). Action on the first resolution would be completed by May 1 in order to provide sufficient time for consideration of the appropriation bills after that time. An appropriate schedule would call for the House committee to report its first concurrent resolution to the House about March 1-after hearings and committee deliberations. From then through May 1, with allowance for a traditional recess at Easter-time, at two-week intervals the House would complete its consideration, the Senate committee would report its resolution, the Senate would complete its action, the conference committee would meet, and the Congress would act on the conference report. To give assurance that the action is completed, however, the debate in each case is limited to 30 hours. If the Congress should not obtain passage of its first concurrent resolution by May 1, the limitations on outlays and net budget authority, the estimated receipts and projected deficit or surplus and the allocation which the President provides in his Budget which are covered by any appropriation, tax or public debt bill are to be treated as the applicable limitations or estimates in the same way as if Congress had enacted its own on that date. The Presidential recommendations are to be effective until such time as the congressional current resolution is adopted.

A second resolution would be considered by the House and Senate in the fall after more complete information is available as to probable expenditure and revenue requirements (usually the House action could be expected in July and the Senate action in September). The debate in this case would also be limited, but because of the uncertainty as to the time of adjournment, there is no schedule for legislative action, and Congress would only be required to complete its action before adjourn