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appropriate level of revenue or debt, would consult with the Director of the Office of Management and Budget, the Secretary of the Treasury and also with other committees of the House or Senate having jurisdiction in areas affected by the aggregate limitations. The Committees on the Budget, in addition to drawing on the knowledge and expertise of the two basic committees—the appropriations committee and the taxation committee—which account for a significant portion of the membership of each Committee on the Budget, also would receive recommendations on the outlay, receipts and surplus or deficit totals consistent with general economic conditions from the Joint Economic Committee and estimates as to probable revenue levels from the Joint Committee on Internal Revenue Taxation as to probable revenue levels. Because of this, these committees are directed to present their views and recommendations to the Committees on the Budget before the concurrent resolutions are reported. It is also expected that the Committees on the Budget would, to the extent time permits, hold hearings on overall budget levels and the priority status of various programs.

The Committee on the Budget could report out a concurrent resolution of the type referred to above at any time during the year it saw a need for doing so. However, actions would be required on two occasions during each year.

It is recommended that the legislative action taken by the Committees on the Budget be in the form of a concurrent resolution since the proposal here is for a congressional budget. A concurrent resolution passed by both Houses would, with the suggested changes set out below, be binding on the Congress but would not require approval by the President. It also is recommended that the appropriations bills include limits on budget outlays as soon as is practicable. Through these limitations on appropriations bills, the outlay ceilings would be legally binding on both the President and the Congress, since the appropriations are signed by the President.

An important part of the Joint Study Committee's recommendations consists of the assurance provided that taxes will be raised if spending reaches a level where the budget deficit is larger (or surplus smaller) than Congress believes is appropriate in view of the prevailing economic conditions and any other factors the committee (or, ultimately, the Congress) believes should be taken into consideration. It is recommended, therefore, that the concurrent resolutions include not only estimated actual outlays and receipts based upon the expenditure and revenue decisions reached, but also include a deficit or surplus figure which is Congress' best judgment as to what the deficit or surplus in the budget should be in view of the prevailing economic conditions and any other factors taken into account. After Congress considers the final concurrent resolution in each session, the procedures recommended elsewhere in this report assume that there will be a “wrapup” appropriation bill which will take into account any changes provided in the spending level as a result of the second concurrent resolu



5 Actually action would be required with respect to aggregate limitations on three occasions. However, the third orcasion would be a part of the first consideration of the next year's budget, in the same way as the President in presenting a new budget for the coming year also presents revised totals for the budget for the year already half over.

As is pointed out subsequently, there are difficulties at the present time in the use of expenditure limitations in appropriation bills, at least on a "net" basis (that is, expenditures minus receipts of the agency and minus the sale of assets). Because of this, it is recommended that some experimentation be carried on before the Budget Committees exercise this right to require expenditure limitations.


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tion. In that same bill, it is recommended that under certain conditions the imposition of a tax surcharge also be required. It is recommended that a tax surcharge on individuals and corporations, reported out by the tax committees, would be required if the budget outlay and revenue figures result in a deficit (or surplus) which is greater (or, smaller, in the case of a surplus) than the deficit or surplus figure which Congress specified in the concurrent resolutions is appropriate in view of economic conditions and other factors. A de minimis rule would provide that the surcharge need not be imposed where the revenue required is quite small; that is, where the surcharge required for this purpose would be under one percent. (In terms of estimated 1973 income levels, a one-percent surcharge would yield approximately $1.5 billion.) The surcharge would become effective as of the first day of the following calendar year and be applicable in that one year only. The tax committees could, if they saw fit, substitute for the surcharge any other form of taxation they considered more appropriate so long as it provided at least as much revenue for the foIlowing calendar year. If the tax surcharge were not included in the “wrap-up” appropriation bill (where required under the tests set forth above), it is recommended that the provision for appropriations in this case be subject to a point of order and that a rule waiving the point of order require a two-thirds vote.

It is also recommended that the Committees on the Budget develop procedures to present tabulations to Congress on a recurring basis which show the effect on expenditures of existing and proposed legislation. It is believed that such tabulations should be made not only as to the impact of existing and proposed legislation in the current year but also as to its impact for up to 3 to 5 years ahead. It is recommended that this information be made available both with respect to the effect of authorizing legislation and also appropriating or similar legislation. The tabulations also should show the revenue prospects under existing law for the same 3- to 5-year period ahead, and the requirement also should apply to new tax and revenue legislation reported out by the tax committees.

The attention of the Study Committee has also been called to the fact that in recent years, in place of direct Federal expenditures or direct Federal loans, there increasingly has been substituted a Federal guarantee or insurance of loans made by others. These loan guarantees or insurance represent contingent liabilities which may be viewed as several times the size of the national debt. In some cases these contingent liabilities will require Federal expenditures or loans in future years although probably only with respect to a small percentage of the guarantees or loans. However, as a technique for spreading Federal financial assistance outside of the budget this already appears to be an important device and could become still more significant. In view of these factors, it is recommended that the budget committees be given the authority to recommend limitations on the guarantee or insurance of loans by others. However, it is believed that further study needs to be made as to the ease of measuring the varying degrees of significance associated with different types of guarantees (or insurance) and also to obtain a better understanding of the nature and implications of this guarantee or insurance device. In view of these considerations, it is not suggested that a limitation of this type be included initially but rather


that the committees and the joint staff study this problem and have the authority to make provision for limitation in this area in the future if the committees (and Congress) consider this to be appropriate.



1. Timing of action on Concurrent Resolutions

Under the recommendations of the Joint Study Committee, it is contemplated that the action by Congress on the first concurrent resolution would be completed by the first of May. It is believed that completion of action by this date is needed because, under recommendations made below, action on appropriation bills cannot begin until Congress has adopted its recommendations as to overall limitations. Working back from this date, this indicates that the House Budget Committee needs to have completed its hearings and other consideration of the first concurrent resolution by the first of March of each year. It is recommended that the House action be completed within two weeks of this time, the Senate Budget Committee report the resolution two weeks after that and the Senate complete its action on the resolution after two more weeks. However, it is recognized that the Easter recess falls in this period, and therefore, a week has been allowed for this purpose in this time schedule, which could be interposed at varying times depending on when the Easter recess is taken (modifications would also have to be made where the dates for action referred to would otherwise fall on Saturdays or Sundays). The time interval between the completion of the action by the House and the Senate is relatively short, but the Senate committee, although not completing its action before the resolution was passed by the House, could start its work at the beginning of the session by consulting with other committees, holding hearings, analyzing the budget and reaching tentative conclusions while awaiting completion of action by the House. Budget analyses under the supervision of the committees could in fact have been started by the staff even in the prior year. These analyses might begin by showing a detailed report of required expenditures from existing legislation and from existing revenues. This legislative analyses could be patterned after the practice followed by numerous States, including California, which probably uses this procedure more extensively than the other States.

To encourage the completion of action by the House and Senate Committees on the Budget by the dates specified above, it is recommended if the Congress has not completed its action by May 1 that the limitations on outlays and new budget authority, as well as the allocation which the President provides in his budget for categories covered by any of the appropriation bills, are to be treated as the applicable limitations in the same way as if Congress had completed its action on its concurrent resolution by that date

and imposed those limitations. The President's estimates of revenues and budget deficit or surplus also will apply until adoption of the first concurrent resolution. When Congress later completes its action on the concurrent resolution, its limitations, rather than those provided by the President in the budget, would become applicable. It also is recommended that provision be made for a limitation of 30 hours with respect to debate on the concurrent resolution in the House or Senate. This would appear to provide ample time for consideration of the resolution in either body



since, based upon a 5-hour consideration per day, this would cover 6 working days.

A second consideration of a concurrent resolution of the type referred to above also is to be required because it is recognized that despite how carefully limitations are arrived at initially, further experience during the year in any one of a number of areas, or major changes in the international or domestic economic outlook, may necessitate changes in the totals arrived at during the year. The final consideration (and the consideration in the first concurrent resolution in the next year) gives assurance that the Congress will have sufficient flexibility in its budget considerations. In a sense, this resolution is comparable to the Administration's revision of its budget at midyear. Actually, the final revision would occur in the following year since the budget totals for the current year could be changed at the time the resolution for the following year was being considered initially. This is essentially the same procedure as is followed by the President in his presentation of the budget to Congress.

It is also recommended that the second concurrent resolution dealing with the same matters referred to above be required to go through the entire legislative process, including conference committee, and be completed before adjournment. Probably, this would mean action by the House late in July and action by the Senate in September, at least in those years where an October adjournment appears likely. The debate on this also would be limited to 30 hours in each house. It is recommended that this final action in the session be taken on a concurrent resolution even though the House or Senate Committee on the Budget is satisfied with the aggregate totals previously agreed to (as well as the allocation among the various committees). The final action is intended to give assurance that there will be an opportunity for the membership of the House or Senate to work its will on the aggregate limitations and the division of funds among the various programs, whether or not the membership of the House or Senate as a whole agrees with the majority of the members of the Committee on the Budget. 2. Provision for Handling New Programs and Expansions, and for

Providing Leeway in Allocations to Appropriations Committees In the establishment of the first concurrent resolution early in the session, it is believed that it would not generally be feasible, or desirable, to attempt to anticipate in advance the funding requirements of possible new legislation (including expansions, but not continuations under annual authorizations, of existing programs) that might be enacted. Specific ceiling allocations for such legislation should be determined only after there has been an opportunity for any legislative committee involved to review and recommend the legislation and for Congress to take final action. From a practical standpoint this means that specific ceiling allocations should not be determined for new legislative authorizations (and expansions of other programs) until the various bills have been passed and Congress is in a position to weigh the relative priorities of the programs involved and to determine the adjustments and amendments in the initial ceiling that may be warranted.

As a result, it is recommended that the Budget Committees, in preparing the first concurrent resolution, generally not attempt to allocate specific amounts to possible new legislative items, or expansions of

present programs, but rather include a general contingency fund for all such items. The committee report accompanying the resolution could indicate the programs for which the contingency funds are held. The contingency fund would be specifically allocated in the second concurrent resolution. Proposed new legislation needing new budget authority before becoming effective would first be considered by the authorizing committees involved and (as indicated previously) bills could be recommended for consideration by the Congress with the expectation that any initial funding during the budget year would be considered in the wrap-up appropriation based upon any additional ceiling in the second concurrent resolution. If the Congress acts favorably on the proposal to require action on authorization bills in the year before the year in which they become effective (sec. E5, below), contingency funds for proposed legislation might be needed less frequently than would otherwise be the case.

This procedure would provide an opportunity for Congress to consider funding priorities for all leglislative actions taken during the session on a coordinated, integrated basis, by first approving the overall ceiling and allocations before the individual appropriation actions are taken on the individual programs. In summary, no new budget authority or budget outlay would be actually approved for any program unless it is within the overall ceiling in effect at that time.

It is also recognized that the allocation of funds under the initial resolution each year to specific programs, categories, or possibly subcommittees in the case of the Appropriations Committees presents difficulties in determining the precise amounts which it is appropriate to allocate on this basis. To cover problems of this type the Appropriations Committees would in the allocations made in the concurrent resolution be given an emergency reserve (not over 2 percent of the budget outlays or 2 percent of the new budget authority that are referred to the Appropriations Committees) which the Appropriations Committees could allocate to specific programs, categories, or subcommittee appropriation bills. The amount of this reserve allocated to any appropriation bill could not be increased by a floor amendment. The purpose of this emergency reserve provision is to permit the Appropriations Committees to make minor adjustments in the allocation of outlays or new budget authority as their experience in developing the appropriation bills themselves indicates is necessary or desirable. 3. Treatment of Spending not now under Appropriations Committees

The proposed ceiling procedure for implementing new legislation would include legislative bills which previously have granted new budget authority or mandated spending without further action by the Congress. This includes contract authority, borrowing authority, permanent appropriations, and legislative bills mandating spending by establishing payment levels or benefit formulas which have constituted a binding obligation on the part of the Federal government.

Legislation of this type which is sometimes referred to as "backdoor spending” has, in the past, been a major factor in the failure of Congress to exercise effective control over budget totals. It is believed that the procedure outlined above must be applied to these categories of spending if an effective ceiling is to be maintained on the granting of new budget authority.

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