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ment. Although the consideration of two resolutions would be required each year, additional resolutions could also be acted upon as the need

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2. It is recognized that when the budget committees begin their consideration of the first resolution, information as to initiatives for new programs or expansions of existing programs is quite limited. Rather than attempt to specifically allocate funds in the first resolution for these purposes, it is recommended that a "contingency fund" allocation be made to cover proposed new programs and

possible expansions (but not continuations) of existing programs. Amounts in the contingency fund would be allocated to specific programs in the final concurrent resolution considered by the Congress. Appropriations for these new programs would then be provided in a final appropriation bill for the session.

3. In addition to the contingency fund, it is recommended that some leeway be provided in making allocations to the Appropriations Committees' subcommittees. It is suggested that up to 2 percent of the amount allocated to the Appropriations Committees be set aside in a special reserve for these committees to allocate among the various programs as they act on the appropriations bills. This flexibility is needed because final decisions on the appropriations require the careful consideration of these committees before specific totals can be arrived at.

4. It is recommended that the limitations provided in the concurrent resolutions cover all existing spending and budget authority not just that presently going through the Appropriations Committees. In addition, in the case of congressional action providing new program funding, it is recommended that all budget outlays be provided through the Appropriations Committees, except in the case of trust funds created by the levying of a new tax.

5. To provide assurance that a choice be made among competing priorities, when amendments to the concurrent resolutions are offered on the House or Senate floors, a "rule of consistency” would have to be followed in offering floor amendments. Under this rule, if an amendment increasing funds for any purpose is offered to the resolution on the floor, the same amendment would also have to provide for a commensurate decrease in other categories, or alternatively an increase in the overall limitation with provision for either a debt or tax increase. An increase in any item could, of course, be offset by a combination of a decrease in other categories and an increase in the overall ceiling. The matching of decreases and increases would apply not only to budget outlays but also to new budget authority as well, and in the case of new budget authority increases and matching decreases (or increase in the limitation must be for the same years.

While the rule of consistency does not itself require a tax increase, nevertheless if an increase is made in expenditures which would create a deficit in the budget greater than the deficit considered to be appropriate (as shown in the concurrent resolutions), a tax increase is called for at the same time as any additional appropriations in the wrap-in appropriation bill at the end of the session.

6. To be sure that the limitations in the concurrent resolutions are maintained, a series of House and Senate rules changes are recommended:

(a) The House and Senate must complete action on the first concurrent resolution before taking up any appropriations bill (or

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other bill involving budget outlays or new budget authority). The appropriation bills in no event, however, would be delayed beyond May 1, since the Budget limitations would become effective as of that date.

(b) Amendments to the limitations on budget outlays and new budget authority would only be permitted in the concurrent resolutions coming from the Budget Committees and these amendments would be subject to a point of order on any other bill.

(c) Any appropriation measure or other bill affecting expenditures or new budget authority (or a mandatory spending device) which calls for more to be spent or appropriated than provided in the most recent concurrent resolution from the Budget Committees would not be permitted (i.e., it would be subject to a point of order).

(d) In order to make the expenditure limitations mandatory on the President as well as the Congress, the Committees on the Budget could require appropriation bills (or other funding bills) to provide a limitation on expenditures. However, it is expected that this authority may not be exercised until there had been more experimentation with limitations of this type and perhaps the limitations would be provided on a "gross” basis rather than a "net" basis (that is, expenditures before the deduction of agency receipts, etc.).

(e) As another means of assuring compliance with the expenditure limitations, the committee report on any spending measure would be required to include a statement as to the relationship of the appropriations provided by the bill with the estimated current-year spending this is expected to give rise to, together with the spending limit for such purposes under the present concurrent resolution. There should also be an indication in the report as to whether the Committee on the Budget agrees with the estimated relationship of the appropriations and the derivative expenditures for the current year.

(f) Compliance with the five rules set out above, the rule of consistency and the rule relating to the provision for the tax surcharge would be obtained by enabling individual members to raise points of order if these rules are not complied with. These points of order could be waived only in the case of a rule to that

effect approved by a two-thirds vote of the House or Senate. D. Improvements in Appropriation Procedures

1. In order to lessen the demand for permanent appropriations and mandatory spending formulas, it is recommended that where long range planning requirements are involved advance funding in appropriation bills be provided for a period of one, two, or possibly more years in advance.

2. In order to aid the Appropriations Committees in reducing unobligated balances carried over from prior years, they should be given the right to recommend rescissions with respect to these amounts. This will enable the committees to make reductions in what might otherwise develop into uncontrollable funds "already in the pipeline.

3. When appropriation bills are under consideration on the floor, it is recommended that reductions in the bills be considered before increases. Since there will be limitations on these bills both as to new

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budget authority and as to expenditures (because of the allocations made in the limitations by the Committees on the Budget), decreases need to be considered first if any funds are to be available for increases.

4. Because an important cause of delay in appropriation bills has been the awaiting of action on authorizations, it is recommended that except in the case of emergencies legislation providing authorizations be enacted in the fiscal year preceding the fiscal year to which current appropriations relate. E. Improvements in Tax Procedures

1. As indicated above, it is planned that the final wrap-up appropriations bill occurring at the end of the session would also include a surcharge reported by the tax committees under certain conditions. The surcharge would be provided if receipts plus the appropriate deficit, as specified in the concurrent resolutions, did not equal estimated expenditures in the final concurrent resolution. The surcharge which would be applicable in the next year would be sufficient to bring about this balance. In no event, however, would the surcharge be imposed if the level called for was not over 1 percent. It would be the responsibility of the tax committees to report out this portion of the final

wrap-up bill.

2. It is recommended that the tax committees review the proposed revenue legislation in the President's budget (and also social security, public assistance, and other matters before the committees) in sufficient detail so they can make general recommendations to the Committees on the Budget as to whether these expenditure or revenue changes should be taken into account in the concurrent resolution under consideration.

3. Similarly, the tax committees should review their programs for the year and indicate to the Budget Committees any proposals they believe are likely to be enacted which will have an impact on either the expenditure or receipt side of the budget for the current year. II. NEED FOR CONGRESSIONAL BUDGETARY

CONTROLS

A. GENERAL STATEMENT

The basic problem with which the committee has been concerned is the lack of adequate congressional control over the budget. This is illustrated by Appendix Table 1 which shows that in the 54 years (including the current year) since 1920, the budget of the Federal Government has been in a deficit position 37 times. In 32 of these years, the budgets were submitted to Congress with a deficit.

Of the 16 years in which there were surpluses, 10 occurred before 1931. Since that time there have only been 6 years with an administrative, or Federal funds, budget surplus: 1947, 1948, 1951, 1956, 1957, and 1960 Based upon the unified budget basis, 1969 would also be added to this list.

In addition, apart from the World War II years when the deficit in three years exceeded $50 billion each, the largest deficits have occurred in recent years. In 1968, the deficit was $28 billion; in 1970, it was $13

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3 This is based upon the administrative budget or Federal funds budget. The unified budget concept which has been used from 1969 on, although decreasing the size of the budget deficit, would differ only in showing the year 1969 in surplus.

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billion; in 1971, it was $30 billion; in 1972, it was $29 billion; the 1973 estimate is $34 billion; and the 1974 estimate is $28 billion. (On a unified budget basis, the deficits were in 1970, $3 billion; 1971, $23 billion; 1972, $23 billion; 1973 estimate, $25 billion; and 1974 estimate, $13 billion.) The increasing size of the deficits illustrates the need for Congress to obtain better control over the budget. Appendix Table 2 shows the deficits and surpluses in the unified budget, Federal funds and trust funds, from the fiscal year 1960 to date.

The Joint Study Committee believes that the failure to arrive at congressional budgetary decisions on an overall basis has been a contributory factor in the size of these deficits. 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, if expressed, might have been to choose alternatives and also to make spending reductions.

The fact that no legislative committee has the responsibility to decide whether 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 then before Congress.

Despite its institutional problems, Congress has in recent years shown that it can make reductions in spending authority presented by the various administrations. In each of the last 20 years, for example, Congress has enacted appropriation bills which in total have provided less money than was requested by the executive branch. This is shown in Appendix Table 3. As indicated subsequently, however, this table does not take into account the spending increases that have occurred in some of the legislative measures other than appropriations bills.

Despite the difficulty of comparing the relative funding merits of different programs, the Federal Government has managed to shift relative priorities in the budget during the past several years. Beginning with 1965, education and manpower, health and income security have increased in relative importance among the functional categories in the budget. Relative declines have also taken place in other categories including national defense and international affairs and finance. This is indicated in Appendix Table 4. Moreover, to some extent, as is indicated in Appendix Table 5, Congress has modified the relative priorities presented in the executive budgets.

B. HISTORICAL DEVELOPMENT OF DIVISION OF LEGISLATIVE

BUDGETARY AUTHORITY

Until shortly after the Civil War, each House of Congress had single committees which were in a position to consider budgetary matters on an overall basis. The spending and taxing activities initially

were under the jurisdiction of one

committee of each House—the Ways and Means Committee in the House of Representatives and the Finance Committee in the Senate. For the first seventy-five years of the Federal Government, there was no change in this arrangement. The change came as a result of the great amount of financial activity during the Civil War which placed extraordinary burdens upon the two committees. In 1865, three committees with separate jurisdictions were formed from the House Committee on Ways and Means. Taxation and the problem of raising money to finance the Federal Government remained the jurisdiction of the Ways and Means Committee. Control over spending became the jurisdiction of the newly created Appropriations Committee. The Committee on National Banks and Currency, the predecessor of the present House Committee on Banking

and Currency, was formed at the same time.

During the floor debate about this action, opponents as well as proponents of the change expressed misgivings about separating the two spending and taxing functions, but the change was made because of the desire to reduce the workload of the Ways and Means Committee. Two years later, in March 1867, the Senate also separated the two functions and established the Appropriations Committee as a separate entity from the Finance Committee. The jurisdiction of the Banking and Currency Committee was separated from the Finance Committee in 1913, at the start of the 63rd Congress.

In 1885, the House Appropriations Committee lost its exclusive jurisdiction over spending to several legislative committees. By the beginning of this century, the authorization and appropriation functions were combined in the case of the Committees on Military Affairs, Agriculture, Naval Affairs, Foreign Affairs, Indian Affairs, Post Offices and Post Roads, and Rivers and Harbors. Parallel changes also occurred in the Senate. Thus, not only were spending and taxes not considered together, but also there was no overall consideration of various expenditure programs. This meant there was no way at the congressional level for making a choice among competing expenditure programs.

The Budget and Accounting Act of 1921, for the first time, created the concept of an executive budget, and the Bureau of the Budget (now the Office of Management and Budget) became the focal point for executive control over the budget. At the same time, the Congress restored to the Appropriations Committees all authority over appropriations.

Since the action in 1921, although control over appropriations, for the most part, has remained with the Appropriations Committees, other devices, known as “backdoor” or mandatory spending actions (discussed in section D below), have in effect again divided the control over spending among numerous committees. It is estimated that today the Appropriations Committees have effective control over less than 50 percent of the budget (which in turn is restricted by the factor of uncontrollability described below). In addition, coordination of expenditure control of this portion of the budget has been limited because of the practice of separate consideration by the Congress of each of the various annual appropriation bills.

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