While

this executive authority

to impound funds may be

useful to prevent unnecessary expenditures, it should not be used as a primary tool to reduce federal spending and deficit levels. Policy and program revisions to control the growth of federal spending should be accomplished through the authorization and appropriations processes.

NAM's Fiscal Policy Committee believes that the President should retain the authority to rescind and defer federal expenditures. Therefore, before any changes are made in the Budget Act regarding impoundment procedures, Congress should consider the following recommendations:

1.

2.

Line item veto authority should not be granted.

The provision of Title X, Section 1001 (4) of the

Budget Act, known as the "Fourth Disclaimer 1

be clarified.

should
This provision attempts to
define which federal appropriations are subject to
impoundment by the President. The Congress, the
Office of Management and Budget (OMB), and the General
Accounting Office (GAO) differ in their interpretation
of the duration and scope of this provision. We
believe that:

The Fourth Disclaimer was intended to be a permanent, rather than a temporary, provision of law.

O Only entitlements2, as narrowly defined by

Title IV Section 401 (c) (2) (C) of the Budget Act, should not be subject to presidential impoundment.

1Fourth Disclaimer, as defined in the

Congressional

Budget and Impoundment Control Act, PL 93-344, 31 USC 1401:

Section 1001. Nothing contained in the Act, or in any
amendments made by this Act, shall be
construed as

(4)

superseding any provision of law which requires the obligation of budget authority or the making of outlays thereunder.

2Entitlements, as defined in the Budget Act, PL 93-344

(2) For purposes of paragraph (1), the term
"spending authority" means authority (whether
temporary or permanent)

(C)

to make payments (including loans and
grants), the budget authority for which
is not provided for in advance by
appropriations Acts, to any person or
government if, under the provisions of
the law containing such authority, the
United States is obligated to make such
payments to persons or governments who
meet the requirements established by such
law.

Such term does not include authority to
insure or guarantee the repayment of
indebtedness incurred by another person

government.

or

D. Entitlement Reform

concerned

The NAM has long been with the growth in entitlement programs and their impact on the economy. The "uncontrollable" nature of these programs has hindered numerous efforts aimed at bringing federal spending more in line with

revenues.

Our Fiscal Policy Committee believes that entitlement reform should be undertaken to ensure that necessary programs accomplish their objectives in an efficient and cost-effective This entitlement reform can be achieved through existing congressional oversight procedures. However, the procedures must be strengthened to ensure greater congressional accountability.

manner.

The business community has its own responsibility in these efforts. Recommendation and implementation of constructive alternatives will assist in reforming entitlement programs. Successful entitlement reform initiatives will lead to the achievement of the common goal of economic stability. Therefore, we recommend the following:

1.

The congressional authorization committees should
study all

entitlement programs within their jurisdiction to determine which programs, if any, should remain as entitlements and which can be reconstituted as regularly authorized and appropriated programs. Pursuant to this task, Congress should determine if the original purpose of the program is still valid; if the eligibility criteria are too broad; and whether benefits are excessive.

2. Congress should not create any new entitlement
programs.
This would not preclude Congress from
creating new programs. Rather, it would ensure
congressional control of spending levels that would
otherwise be relinquished if the benefits were
established as entitlements.

3.

4.

5.

Any periodic

should

Automatic cost-of-living adjustments for entitlement
programs should be eliminated.
adjustments that Congress deems necessary
require a recorded vote.

A congressional study should be initiated to evaluate the feasibility of the private sector administration and/or management of federal entitlement programs.

Uniform scorekeeping measures should be adopted by both Houses of Congress. The current methods used by the House and Senate differ in the way they assess spending levels, thereby producing misleading comparisons.

are

NAM's Fiscal and Monetary Policy Committee believes that in order to maintain the integrity of the congressional budget process, enforcement mechanisms, such as reconciliation, necessary. However, as Congress has expanded its use of reconciliation in the past few years, it has become apparent the process needs to be strengthened and defined in order to help achieve fiscal discipline. Therefore, we recommend the following:

1.

The first concurrent budget resolution should be made binding and the mandatory second concurrent budget resolution shall be eliminated. In addition, Congress shall have the option to attach reconciliation instructions to concurrent budget resolutions.

2. The current statutory ten day limit for Congress to complete action on a reconciliation bill or resolution, included in Title III, Section 310 (d) of the Congressional Budget and Impoundment Control Act of 1974, is insufficient. The time restraints included in the Budget Act were associated with the need for Congress to adopt a second concurrent budget resolution and reconciliation, if mandated, prior to the beginning of a new fiscal year, October 1. With our recommendation to require only one concurrent budget resolution, these time constraints are mitigated. We look forward to working with Congress to determine a more appropriate timetable for committees to make their recommendations to fulfill reconciliation

congressional

instructions

and

for

final

action on a reconciliation bill or

resolution.

3. The Budget Committees and Congress should codify the option to include provisions for reducing spending for both discretionary programs and entitlements

reconciliation instructions.

in

4.

The amount of savings achieved in reconciliation bills shall be measured on the same basis used by the budget resolution which required them.