Order Code IB10096
Issue Brief for Congress
Received through the CRS Web
Congressional Budget Actions in 2002
Updated August 28, 2002
Bill Heniff Jr.
Government and Finance Division
Congressional Research Service ˜ The Library of Congress

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CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
Overview of the Congressional Budget Process
Budget Resolution
Reconciliation Legislation
Revenue and Debt-Limit Legislation
Appropriations and Other Spending Legislation
Budget Enforcement and Sequestration
LEGISLATION
CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS
CHRONOLOGY
FOR ADDITIONAL READING

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Congressional Budget Actions in 2002
SUMMARY
During the second session of the 107th
budgetary legislation during a congressional
Congress, the House and Senate will consider
session.
many different budgetary measures. Most of
these measures will pertain to FY2003 (which
Budget resolution policies are imple-
will begin on October 1, 2002) and beyond,
mented through the enactment of reconcilia-
but some may make adjustments to the budget
tion bills, revenue and debt-limit legislation,
for FY2002. As the congressional session
and appropriations and other spending mea-
progresses, this issue brief will describe
sures, and enforced by points of order that
House and Senate action on major budgetary
may be raised when legislation is pending on
legislation within the framework of the con-
the House and Senate floor.
gressional budget process and other proce-
dural requirements.
The House adopted its version of the
FY2003 budget resolution, H.Con.Res. 353,
Congress begins its annual budget pro-
on March 20. In the absence of an agreement
cess once the President submits his budget.
with the Senate, the House adopted a resolu-
President Bush submitted his FY2003 budget
tion “deeming” its budget resolution to have
to Congress on February 4, 2002. President
been adopted by Congress for budget enforce-
Bush released his budget update, Mid-Session
ment purposes. The Senate Budget Commit-
Review, on July 15.
tee reported its version of the FY2003 budget
resolution, S.Con.Res. 100, on March 22.
In preparation for congressional action on
the budget, CBO released its annual report on
On August 2, President Bush signed H.R.
budget baseline projections, The Budget and
4775, FY2002 Supplemental Appropriations
Economic Outlook: Fiscal Years 2003-2012,
Act, into law (P.L. 107-206), following the
on January 31. CBO twice updated these
adoption of the legislation by the House (July
budget baseline projections, based on new
23) and the Senate (July 24). Before the
technical assumptions and a revised economic
August recess, the House had adopted five of
forecast, in its report, Analysis of the Presi-
the 13 regular appropriations measures, and
dent’s Budgetary Proposals for Fiscal Year
the Senate had adopted three.
2003, released on March 6, and its report, The
Budget and Economic Outlook: An Update,
Budget legislation also is constrained by
released on August 27.
limits on discretionary spending and a “pay-
as-you-go” (PAYGO) requirement for direct
The Congressional Budget Act of 1974
spending and revenue legislation established
established the congressional budget process.
under the Budget Enforcement Act of 1990, as
The process is centered on the adoption of an
amended.
annual concurrent resolution on the budget.
The budget resolution sets forth aggregate
However, the discretionary spending
spending and revenue levels, and spending
limits and the PAYGO requirement is sched-
levels by major functional area, for at least 5
uled to expire at the end of FY2002 (i.e.,
fiscal years. It is an agreement between the
September 30, 2002), unless Congress and the
House and Senate on a congressional budget
President enact legislation extending these
plan, providing a framework for subsequent
budget policy controls.
Congressional Research Service ˜ The Library of Congress

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MOST RECENT DEVELOPMENTS
The Office of Management and Budget (OMB) and the Congressional Budget Office
(CBO) released revised budget projections this summer. On July 15, 2002, President Bush
released his Mid-Session Review, containing OMB’s revised estimates of the budget
deficit/surplus, receipts, outlays, and budget authority for FY2002 through FY2007. On
August 27, CBO released its budget update report, The Budget and Economic Outlook: An
Update, containing revised budget projections for FY2002 through FY2012.
On August 2, President Bush signed H.R. 4775, FY2002 Supplemental Appropriations
Act, into law (P.L. 107-206), following the adoption of the legislation by the House (July 23)
and the Senate (July 24). Before the August recess, the House had adopted five of the 13
regular appropriations measures, and the Senate had adopted three.
BACKGROUND AND ANALYSIS
During the second session of the 107th Congress, the House and Senate will consider
many different budgetary measures. Most of these measures will pertain to FY2003 (which
will begin on October 1, 2002) and beyond, but some may make adjustments to the budget
for FY2002. As the congressional session progresses, this issue brief will describe House
and Senate action on major budgetary legislation within the framework of the congressional
budget process and other procedural requirements.
This year, Congress faces a significantly different procedural and budget environment
than in recent years. Not only are key enforcement procedures under the Budget
Enforcement Act (Title XIII of P.L. 101-508) set to expire at the end of FY2002 (i.e.,
September 30, 2002), the current and long-term budget outlook has changed considerably
from a year ago. Last year, CBO projected federal surpluses in each fiscal year through
FY2011 and a cumulative surplus of $5.6 trillion for FY2002 through FY2011, under
policies existing at that time.1 In contrast, CBO Director Dan L. Crippen testified before the
House and Senate Budget Committees on January 23, 2002, that CBO now is projecting that
both fiscal years 2002 and 2003 will show small deficits, if current policies remain the same
and the economy performs as CBO forecasts. Further, the projected cumulative surplus for
FY2002 through FY2011 has dropped by $4.0 trillion to $1.6 trillion. The new environment
undoubtedly will have a significant effect on congressional budget actions during this
session.
Overview of the Congressional Budget Process
The congressional budget process consists of the consideration and adoption of
spending, revenue, and debt-limit legislation within the framework of an annual concurrent
resolution on the budget. Additionally, congressional action on budget legislation is
1 Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2002-2011, Jan.
2001.
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constrained by limits on discretionary spending and a “pay-as-you-go” (PAYGO)
requirement for direct spending and revenue legislation.
Congress begins its budget process once the President submits his budget. The
President is required by law to submit a comprehensive federal budget no later than the first
Monday in February. The President’s budget includes estimates of direct spending and
revenues under existing laws, as well as requests for discretionary spending (i.e., funds
provided through the appropriations process) for the upcoming fiscal year. In addition, the
President frequently proposes new initiatives in his budget submission to Congress.
Although Congress is not bound by the President’s budget, congressional action on spending
and revenue legislation often is influenced by his recommendations, as well as subsequent
budgetary activities by the President during the year. The Office of Management and Budget
(OMB) assists the President in formulating and coordinating his budget policies and
activities.
On February 4, 2002, President Bush submitted his FY2003 budget to Congress.
Following the usual practice, the President’s budget was submitted as a multi-volume set
consisting of a main document, which includes the President’s budget message and
information on his 2003 proposals (Budget), and supplementary documents, which provide
special budgetary analyses (Analytical Perspectives), historical budget information
(Historical Tables), and detailed account and program level information (Appendix), among
other things. On July 15, President Bush submitted his Mid-Session Review to Congress.
This report contains revised estimates of the budget deficit/surplus, receipts, outlays, and
budget authority for FY2002 through FY2007, reflecting changed economic conditions and
assumptions and congressional actions. Presidential budget documents are available from
the Government Printing Office or on OMB’s Web site at [http://www.whitehouse.gov/omb].
The Congressional Budget Act (CBA) of 1974 (Titles I-IX of P.L. 93-344) established
the congressional budget process, including a timetable for congressional action on budget
legislation (see Table 1). The process is centered on the adoption of an annual concurrent
resolution on the budget. The budget resolution sets forth aggregate spending and revenue
levels, and spending levels by major functional area, for at least 5 fiscal years. Because the
budget resolution is a concurrent resolution, it is not presented to the President for his
signature and thus does not become law. Instead, it is an agreement between the House and
Senate on a congressional budget plan, providing a framework for subsequent legislative
action on the budget during each congressional session.
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Table 1. The Congressional Budget Process Timetable
On or before
Action to be completed
First Monday in
President submits budget to Congress.
February
February 15
Congressional Budget Office submits economic and
budget outlook report to Budget Committees.
6 weeks after President
Committees submit views and estimates to Budget
submits budget
Committees.
April 1
Senate Budget Committee reports budget resolution.
April 15
Congress completes action on budget resolution.
May 15
Annual appropriations bills may be considered in the
House, even if action on budget resolution has not been
completed.
June 10
House Appropriations Committee reports last annual
appropriations bill.
June 15
House completes action on reconciliation legislation (if
required by budget resolution).
June 30
House completes action on annual appropriations bills.
July 15
President submits mid-session review of his budget to
Congress.
October 1
Fiscal year begins.
Because the budget resolution does not become law, budget policies are implemented
through the enactment of reconciliation bills, revenue and debt-limit legislation, and
appropriations and other spending measures. Congress enforces budget resolution policies
through points of order on the floor of each chamber and the reconciliation process. For
example, any legislation that would cause the aggregate levels to be violated is prohibited
from being considered. Further, the total budget authority and outlays set forth in the budget
resolution are allocated among the House and Senate committees having jurisdiction over
specific spending legislation. Any legislation, or amendment, that would cause these
committee allocations to be exceeded is prohibited. Finally, the House and Senate
Appropriations Committees subdivide their allocations among their respective 13
subcommittees. A point of order may be raised against any appropriations act, or
amendment, that would cause one of these subdivisions to be exceeded.2 Congress also may
use reconciliation legislation (discussed further below) to enforce direct spending, revenue,
and debt-limit provisions of a budget resolution.
2 For more detailed information on these points of order and their application, see CRS Report 97-
865, Points of Order in the Congressional Budget Process, by James V. Saturno.
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In addition to the enforcement procedures associated with the budget resolution, budget
legislation is constrained by statutory limits on discretionary spending and a PAYGO
requirement for direct spending and revenue legislation, both established by the Budget
Enforcement Act (BEA) of 1990 (Title XIII of P.L. 101-508), which amended the Balanced
Budget and Emergency Deficit Control Act of 1985 (Title II of P.L. 99-177).
Currently, adjustable discretionary spending limits exist for the following categories:
highway and mass transit spending for FY2002-FY2003; conservation spending (divided into
six subcategories) for FY2002-FY2006; and other discretionary spending, also called general
purpose discretionary spending, for FY2002. PAYGO generally requires that increases in
direct spending or decreases in revenues due to legislative action are offset so that the net
effects of new legislation do not incur a positive balance on the PAYGO scorecard. The
PAYGO requirement applies to legislation enacted through FY2002, but it covers the effects
of such legislation through FY2006.
The discretionary spending limits and PAYGO requirement are enforced primarily by
sequestration, which involves automatic, largely across-the-board spending cuts in non-
exempt programs. Sequestration is triggered if the director of the Office of Management and
Budget estimates in the final sequestration report at the end of a session that one or more of
the discretionary spending limits will be exceeded or the PAYGO requirement will be
violated. A within-session sequestration is possible if a supplemental appropriations bill
causes the spending levels of the current fiscal year to exceed the statutory limit for a
particular category. The discretionary spending limits, as well as a PAYGO requirement
similar to the statutory one, also may be enforced through points of order while legislation
is being considered on the Senate floor.
The sequestration process established to enforce the discretionary spending limits
expires at the end of FY2002 (i.e., September 30, 2002). The PAYGO sequestration process
continues until the end of FY2006, but only applies to the net effects of legislation enacted
before the end of FY2002.
Budget Resolution
The Congressional Budget Act, as amended, establishes the concurrent resolution on
the budget as the centerpiece of the congressional budget process. The budget resolution sets
forth aggregate spending and revenue levels, and spending levels by major functional area,
for at least 5 fiscal years. Once adopted, it provides the framework for subsequent action on
budget-related legislation.
The congressional budget process timetable sets April 15 as a target date for final
adoption of the budget resolution. The CBA prohibits the consideration of spending,
revenue, or debt-limit legislation for the upcoming year until the budget resolution has been
adopted, unless the rule is waived or set aside.
Following the submission of the President’s budget early in the year, Congress begins
formulating the budget resolution. The House and Senate Budget Committees are
responsible for developing and reporting the budget resolution. In formulating the budget
resolution, the Budget Committees hold hearings and receive testimony from Members of
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Congress and representatives from federal departments and agencies, the general public, and
national organizations. Three regular hearings include separate testimony from the Director
of the Congressional Budget Office (CBO), the Chair of the Federal Reserve Board, and the
Director of OMB.3
The congressional budget resolution, as well as the President’s budget, is based on
budget baselines. The budget baseline is a projection of federal revenue, spending, and
deficit or surplus levels based upon current policies, assuming certain economic assumptions.
The President’s budget baseline, referred to as current services estimates, usually differs from
CBO’s baseline, referred to as baseline budget projections, often due to different economic
and technical assumptions. Baseline projections provide a benchmark for measuring the
budgetary effects of proposed policy changes. On January 31, 2002, CBO released its annual
report on budget baseline projections, The Budget and Economic Outlook: Fiscal Years
2003-2012. On March 6, CBO released its Analysis of the President’s Budgetary Proposals
for Fiscal Year 2003. This report contains estimates of the President’s proposals using
CBO’s economic and technical assumptions. In addition, the report incorporates CBO’s new
technical assumptions and revised economic forecast, as well as updates its budget baseline
projections. On August 27, CBO released its budget update report, The Budget and
Economic Outlook: An Update, containing revised budget projections. CBO reports are
available on its Web site at [http://www.cbo.gov].
Another source of input comes from the “views and estimates” of congressional
committees with jurisdiction over spending and revenues. Within 6 weeks after the
President's budget submission, House and Senate committees are required to submit views
and estimates of budget matters under their jurisdiction to their respective Budget
Committees. These views and estimates, frequently submitted in the form of a letter to the
Chair and Ranking Member of the Budget Committee, typically include comments on the
President's budget proposals and estimates of the budgetary impact of any legislation likely
to be considered during the current session of Congress. The Budget Committees are not
bound by these recommendations. The views and estimates of Senate committees are printed
in the committee report accompanying the Budget Committee-reported budget resolution
(S.Rept. 107-141, pp. 72-164). The views and estimates of House committees are printed
in a separate House Budget Committee print (Serial No. CP-2).
The budget resolution was designed to provide a framework to make budget decisions,
leaving specific program determinations to House and Senate Appropriations Committees
and other committees with spending and revenue jurisdiction. In many instances, however,
particular program changes are considered when formulating the budget resolution. Program
assumptions sometimes are referred to in the reports of the House and Senate Budget
Committees and usually are discussed during floor action. Although these program changes
3 The CBO Director, Dan L. Crippen, presented separate, but identical, testimony before the Senate
and House Budget Committees on Jan. 23, 2002. The testimony is available on CBO’s Web site at
[http://www.cbo.gov]. Federal Reserve Board Chairman Alan Greenspan testified before the
Senate Budget Committee on Jan. 24, 2002. OMB Director Mitchell E. Daniels, Jr., presented
separate, but identical, testimony before the Senate and House Budget Committees on Feb. 5, 2002.
The latter two testimonies are available on the Senate Budget Committee’s Web site at
[http://www.senate.gov/~budget].
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are not binding, committees may be strongly influenced by these recommendations when
formulating appropriations bills, reconciliation measures, or other budgetary legislation.
On March 15, the House Budget Committee reported its version of the FY2003 budget
resolution (H.Con.Res. 353, H.Rept. 107-376), after a mark up on March 13. The Senate
Budget Committee marked up its version (S.Con.Res. 100, S.Rept. 107-141) on March 21,
and reported it to the full Senate the next day (March 22).
The House and Senate consider the budget resolution under procedures generally
intended to expedite final action. In the House, the budget resolution usually is considered
under a special rule, limiting the time of debate and allowing only a few amendments, as
substitutes to the entire resolution. On March 20 (legislative day, March 19), the Rules
Committee reported a special rule (H.Res. 372, H.Rept. 107-380) which allowed only a self-
executing amendment in the nature of a substitute and allowed 3 hours of general debate.
After adopting the rule by a vote of 222-206, the House considered and adopted H.Con.Res.
353 by a 221-209 vote, on March 20. In the absence of an agreement on a FY2003 budget
resolution with the Senate, the House adopted a so-called “deeming resolution.” The special
rule (H.Res. 428) governing the initial consideration of the emergency supplemental
appropriations act (H.R. 4775) included a provision “deeming” the House-adopted budget
resolution to have been agreed to by Congress. The House adopted this special rule by a
216-209 vote on May 22. Under the deeming resolution, the enforcement procedures of the
Congressional Budget Act, such as the limits on spending in the annual appropriations acts,
are effective in the House.4
The Senate considers the budget resolution under the procedures set forth in the CBA,
unless superseded by a unanimous consent agreement. Debate on the initial consideration
of the budget resolution, and all amendments, debatable motions, and appeals, is limited to
50 hours. Amendments, motions, and appeals may be considered beyond this time limit, but
without debate. Consideration of the conference report is limited to 10 hours in the Senate.
As of August 28, the Senate had not considered the Senate Budget Committee-reported
budget resolution on the floor.
Reconciliation Legislation
Congress may implement changes to existing law related to direct spending, revenues,
or the debt limit through the reconciliation process, under Section 310 of the CBA. The
reconciliation process has two stages. First, Congress includes reconciliation instructions
in a budget resolution directing one or more committees to recommend changes in statute to
achieve the levels of spending, revenues, and debt limit agreed to in the budget resolution.
4 The special rule also required the House Budget Committee chairman to submit for printing in the
Congressional Record the committee allocations, referred to as the 302(a) allocations, associated
with the House-adopted budget resolution spending levels. House Budget Committee Chairman Jim
Nussle submitted the allocations on May 22, 2002. See Congressional Record, daily edition, vol.
148 (May 22, 2002), pp. H2929-H2930. With the House-adopted budget resolution deemed to have
been passed by Congress, a point of order may be raised against legislation that would cause these
allocations to be exceeded.
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Second, the legislative language recommended by committees is packaged “without
substantive revision” into one or more reconciliation bills, as set forth in the budget
resolution, by the House and Senate Budget Committees. In some instances, a committee
may be required to report its legislative recommendations directly to its chamber.
Once reconciliation legislation is reported, consideration is governed by special
procedures. These special rules serve to limit what may be included in reconciliation
legislation, to prohibit certain amendments, and to encourage its completion in a timely
fashion. In the House, as with the budget resolution, reconciliation legislation usually is
considered under a special rule, establishing the time allotted for debate and what
amendments will be in order. In the Senate, debate on a budget reconciliation bill, all
amendments, debatable motions, and appeals is limited to not more than 20 hours. After the
20 hours of debate has been reached, consideration of amendments, motions, and appeals
may continue, but without debate.
In both chambers, the CBA requires that amendments to reconciliation legislation be
deficit neutral and germane. Also, the CBA prohibits the consideration of reconciliation
legislation, or any amendment to a reconciliation bill, recommending changes to the Social
Security program. Finally, in the Senate, Section 313 of the CBA, commonly referred to as
the Byrd rule, prohibits extraneous matter in a reconciliation bill.
Neither the House or Senate version of the FY2003 budget resolution (H.Con.Res. 353
and S.Con.Res. 100) contains reconciliation instructions. Therefore, Congress is not
expected to consider reconciliation legislation this year.
Revenue and Debt-Limit Legislation
Congress may adopt revenue and debt-limit legislation individually. Revenue and debt-
limit legislation is under the jurisdiction of the House Ways and Means Committee and the
Senate Finance Committee. Article I, Section 7, of the U.S. Constitution, requires revenue
legislation originate in the House of Representatives, but the Senate may amend a revenue
bill as it chooses.
Most of the laws establishing the federal government's revenue sources are permanent
and continue year after year without any additional legislative action. Congress, however,
typically enacts revenue legislation, changing some portion of the existing tax system, every
year. Revenue legislation may include changes to individual and corporate income taxes,
social insurance taxes, excise taxes, or tariffs and duties.
Revenue legislation is not automatically considered in the congressional budget process
on an annual basis. Frequently, however, the President proposes and Congress considers
changes in the rates of taxation or the distribution of the tax burden. An initial step in the
congressional budget process is the publication of revenue estimates of the President's budget
by CBO. These revenue estimates usually differ from the President's since they are based on
different economic and technical assumptions (e.g., growth of the economy and change in
the inflation rate). Estimates of any congressional revenue-policy proposals are prepared by
CBO, based on Joint Committee on Taxation revenue estimates, and are published in
committee reports or the Congressional Record.
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The budget resolution includes baseline estimates of federal government receipts based
on the continuation of existing laws and any proposed policy changes. The revenue levels
in the budget resolution provide the framework for any action on revenue measures during
the session. A point of order may be raised against the consideration of legislation that
causes revenues to fall below the agreed upon levels for the first fiscal year or the total for
all fiscal years in the budget resolution. This point of order may be set aside by unanimous
consent, or waived by a special rule in the House or by a three-fifths vote in the Senate.
A Senate PAYGO point of order, under Section 207 of the FY2000 budget resolution
(H.Con.Res. 68, 106th Congress), also may be raised against any revenue legislation that
would increase or cause an on-budget deficit for the first fiscal year, the period of the first
5 fiscal years, or the following 5 fiscal years, covered by the most recently adopted budget
resolution. The point of order may be waived by a vote of three-fifths of Senators, or set
aside by unanimous consent.
After months of floor consideration of economic stimulus legislation, the House and
Senate agreed to H.R. 3090, which contained a scaled-down economic recovery package of
business-related tax cuts and an extension of unemployment compensation, by votes of 417-3
on March 7 and 85-9 on March 8, respectively. President Bush signed H.R. 3090, the Job
Creation and Worker Assistance Act of 2002, into law (P.L. 107-147) on March 9.
Federal debt consists of debt held by the public plus debt held by government accounts.
Almost all of the federal debt is subject to a statutory debt limit. The debt held by the public
represents the total net amount borrowed from the public to cover the federal government's
budget deficits. By contrast, the debt held by government accounts represents the total net
amount of federal debt issued to specialized federal accounts, primarily trust funds (e.g.,
Social Security). Trust fund surpluses by law must be invested in special federal government
securities and thus are held in the form of federal debt. Because the statutory limit applies
to the combination of both types of debt, budget deficits or trust fund surpluses may
contribute to the federal government reaching the existing debt limit. So long as federal
budget policy results in an increase in the federal debt, Congress periodically must enact
increases to the debt limit.
The most recent increase in the statutory debt limit was enacted in the Balanced Budget
Act of 1997 (P.L. 105-33). At the time of passage, the increase to $5.95 trillion was
considered sufficient to meet the federal government’s financial needs through mid-
December 1999. The federal government’s surpluses over the last 4 years contributed to the
fact that the statutory debt limit has been sufficient beyond this date. However, Treasury
Secretary Paul O’Neill first indicated in a December 11, 2001, letter to congressional leaders
that the existing debt limit may begin to interfere with the federal government’s financial
responsibilities “as early as February 2002.”5 Therefore, he requested that Congress raise the
debt limit by $750 billion to $6.7 trillion.
5 Bud Newman,“Debt Ceiling Hike Not on House Agenda Before Adjournment, DeLay, Thomas
Say,” BNA Daily Report for Executives, no. 238 (Dec. 13, 2001), p. G-3. Also, for more information
on the current need to raise the debt limit, see CRS Report RS21111, The Debt Limit: The Need to
Raise It After Four Years of Surpluses, by Philip D. Winters.
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On June 11, the Senate adopted S. 2578, legislation to increase the public-debt limit by
$450 billion, by a 68-29 vote. On June 27, the House adopted S. 2578 by a 215-214 vote.
President Bush signed the legislation into law (P.L. 107-199) on June 28.
Appropriations and Other Spending Legislation
Federal spending is categorized into two different types: discretionary or direct
spending. Discretionary spending is controlled through the annual appropriations acts, while
direct spending (which consists mostly of entitlement programs) is determined by existing
law.
Discretionary spending is under the jurisdiction of the House and Senate Appropriations
Committees. Direct spending is under the jurisdiction of the various legislative committees
of the House and Senate. Some entitlement programs, such as Medicaid and certain
veterans’ programs, are funded in annual appropriations acts, but such spending is not
considered discretionary and is not controlled through the annual appropriations process.
The President’s budget includes recommendations for the annual appropriations;
account and program level detail about these recommendations are included in the Appendix
volume of the President’s budget documents. In addition, agencies submit justification
materials to the House and Senate Appropriations Committees. The budget justifications
provide more detailed information about an agency’s program activities than is contained in
the President’s budget documents and are used in support of agency testimony during
Appropriations subcommittee hearings on the President’s budget request.
Congress passes three main types of appropriations measures. Regular appropriations
acts provide budget authority for the next fiscal year, beginning on October 1. The 13
subcommittees of the Appropriations Committees of the House and Senate are each
responsible for one of the 13 regular appropriations acts. Supplemental appropriations acts
provide additional funding for unexpected needs while the fiscal year is in progress.
Continuing appropriations acts, commonly referred to as continuing resolutions, provide
stop-gap funding for agencies that have not received a regular appropriations by the start of
the fiscal year.
Spending allocations to the Appropriations Committees and other committees
accompany the conference report on the budget resolution. Soon after it is adopted, the
House and Senate Appropriations Committees subdivide their spending allocations among
their subcommittees and formally report these suballocations to their respective chambers.
On June 25, 2002, the House Appropriations Committee reported its initial suballocations
to the House (H.Rept. 107-529) and since then has revised the suballocations twice (H.Rept.
107-566 and H.Rept. 107-567).
The House and Senate appropriations subcommittees begin holding extensive hearings
on appropriations requests shortly after the President’s budget is submitted. By custom,
appropriations measures originate in the House. In recent years, the Senate Appropriations
Committee has adopted and reported original Senate appropriations measures, allowing the
Senate to consider appropriations measures without having to wait for the House to adopt its
version. Under this practice, the Senate version is considered and amended on the floor, and
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then inserted into the House-adopted version, when available, as a substitute amendment,
thereby retaining the House-numbered bill for final action.
In addition to the 13 regular appropriations acts, Congress typically acts on at least two
supplemental appropriations measures during a session. Congress also often adopts one or
more continuing resolutions each year because of recurring delays in the appropriations
process. In 2001, for example, Congress passed the 13 regular appropriations measures
individually, two supplementals, and eight continuing resolutions. In some years, such as
in each of the three prior to 2001 (1998-2000), instead of adopting all of the regular
appropriations acts individually, Congress combines several of them into an omnibus
appropriations measure.
On March 21, 2002, President Bush submitted a $27.1 billion emergency supplemental
appropriations request for FY2002 to provide additional resources for the war on terrorism,
homeland security, and economic recovery.6 On May 21, 2002, President Bush submitted
a second FY2002 emergency supplemental appropriations request for $1.1 billion.7
On May 20, 2002, in response to the President’s request, the House Appropriations
Committee reported H.R. 4775, making supplemental appropriations for FY2002 (H.Rept.
107-480). The House considered H.R. 4775 first under an open rule (H.Res. 428) and
subsequently under a closed rule (H.Res. 431) on May 22, 23, and 24. H.R. 4775 was
adopted by the House on May 24 on a 280-138 vote. In the Senate, the Senate
Appropriations Committee reported a FY2002 supplemental appropriations act (S. 2551,
S.Rept. 107-156) on May 22. After incorporating S. 2551 in H.R. 4775 as an amendment,
the Senate began consideration of the supplemental appropriations measure on June 3.
During consideration of H.R. 4775, the Senate invoked cloture by a 87-10 vote on June 6.
The next day (June 7) the Senate passed H.R. 4775, as amended, by a vote of 71-22.
House and Senate conferees resolved the differences between the two versions of the
FY2002 supplemental appropriations measure and filed a conference report (H.Rept. 107-
593) on July 19. The House agreed to the conference report on H.R. 4775 on July 23 and the
Senate agreed to it on the next day by votes of 397-32 and 92-7, respectively. President Bush
signed the supplemental appropriations measure into law (P.L. 107-206) on August 8.
Most of the $28.9 billion provided in H.R. 4775 was designated an “emergency
requirement” and effectively was exempt from budget policy controls on the floor of each
chamber and once enacted into law. About $5.1 billion, however, was provided for
obligation only if the President designated this entire amount an “emergency requirement”
within 30 days of enactment (Section 1404 of P.L. 107-226). On August 13, President Bush
announced that he would not do so, effectively reducing the overall amount of the
supplemental appropriations measure to about $23.8 billion.8
6 The text of the President’s request to Congress is available on the Internet at
[http://w3.access.gpo.gov/usbudget/fy2003/pdf/5usattack.pdf].
7 The text of the President’s request to Congress is available on the Internet at
[http://w3.access.gpo.gov/usbudget/fy2003/pdf/10va_doi.pdf].
8 Adam Wasch,“Bush Rejects ‘Extra’ Spending in FY2002 Supplemental Package,” BNA Daily
(continued...)
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The House and Senate began to consider the regular appropriations bills for FY2003
during the week of June 24 and July 15, respectively. Table 2 provides the dates of
congressional floor action on the 13 regular appropriations bills.9
Table 2. Status of Regular Appropriations Acts for FY2003
Title and bill number(s)
Date passed House
Date passed Senate
Agriculture (H.R. 5263/S. 2801)
)
)
Commerce-Justice (S. 2778)
)
)
Defense (H.R. 5010)
June 27
August 1
D.C. (S. 2809)
)
)
Energy and Water (S. 2784)
)
)
Foreign Operations (S. 2779)
)
)
Interior (H.R. 5093/S. 2708)
July 17
)
Labor-HHS (S. 2766)
)
)
Legislative Branch (H.R. 5121/S. 2720)
July 18
July 25
Mil. Construction (H.R. 5011/S. 2709)
June 27
July 18
Transportation (S. 2808)
)
)
Treasury (H.R. 5120/S. 2740)
July 24
)
VA-HUD (S. 2797)
)
)
Congress often considers major legislation affecting direct spending programs as well.
On several occasions in the past, Congress has included reserve funds in the budget
resolution to accommodate specific direct spending legislation. Under the provisions of a
reserve fund, the chairmen of the House and Senate Budget Committees may revise the
committee spending allocations and other budget resolution levels if certain legislation is
reported by the appropriate committee. Without such an adjustment, direct spending
legislation might be subject to points of order if it was not assumed in the budget resolution
spending amounts.
The House-adopted FY2003 budget resolution, which was deemed by the House to have
been adopted by Congress, includes seven reserve funds, two of which are related to direct
spending legislation. First, Section 202 of H.Con.Res. 353 provides a reserve fund for
legislation reforming the Medicare program, including adding a prescription drug benefit.
8 (...continued)
Report for Executives, no. 157 (Aug. 14, 2002), p. A-13.
9 For the up-to-date status of and further information on the FY2003 appropriations bills, see the
CRS Appropriations Web site at [http://www.crs.gov/products/appropriations/apppage.shtml].
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Second, Section 212 of H.Con.Res. 353 provides a reserve fund for legislation subjecting the
administrative expenses for student loans to the annual appropriations process.
On June 27, House Budget Chairman Jim Nussle, under the authority of Section 202
of H.Con.Res. 353, revised the appropriate spending allocations to accommodate H.R. 4954,
the Medicare Modernization and Prescription Drug Act of 2002.10 Subsequently, the House
considered H.R. 4954 under a closed rule (H.Res. 465), which passed by a vote of 218-213.
The rule provided for an amendment in the nature of a substitute printed in the report
(H.Rept. 107-553) accompanying the rule to be adopted automatically. The rule also
provided that a motion to recommit would be in order. The motion to recommit with
instructions was offered by House Minority Leader Richard Gephardt, and was defeated by
a 204-223 vote. Subsequently, the House adopted H.R. 4954 by a 221-208 vote.
Budget Enforcement and Sequestration
The sequestration process was first established in 1985 by the Balanced Budget and
Emergency Deficit Control Act, commonly known as the Gramm-Rudman-Hollings Act.
The law was amended and modified in 1987, 1990, 1993, and 1997. Most notably, the
Budget Enforcement Act (BEA) of 1990 changed the focus of the sequestration process.
Instead of maximum deficit targets, as provided in the 1985 Deficit Control Act, the BEA
of 1990 tied sequestration to new statutory limits on discretionary spending and a PAYGO
requirement for new direct spending and revenue legislation. The change was intended to
hold Congress and the President accountable for projected budget outcomes that would result
from new legislation, rather than the level of the deficit which could be affected by factors
beyond their direct control, such as economic growth, inflation, and demographic changes.
Currently, adjustable discretionary spending limits exist for the following categories:
highway and mass transit spending for FY2002-FY2003; conservation spending (divided into
six subcategories) for FY2002-FY2006; and other discretionary spending, also called general
purpose discretionary spending, for FY2002. Under the PAYGO requirement, the net effect
of new direct spending and revenue legislation enacted for a fiscal year may not cause a
positive balance (reflecting an increase in the on-budget deficit or a reduction in the on-
budget surplus) on a multiyear PAYGO “scorecard.” For each fiscal year, this scorecard
maintains the balances of the accumulated budgetary effects of laws enacted during the
session and prior years. The PAYGO requirement applies to legislation enacted through
FY2002, but it covers the effects of such legislation through FY2006.
The discretionary spending limits and PAYGO requirement are enforced primarily by
sequestration, which involves automatic, largely across-the-board spending cuts in non-
exempt programs. Sequestration is triggered if the director of the Office of Management and
Budget estimates in the final sequestration report that one or more of the discretionary
spending limits will be exceeded or the PAYGO requirement will be violated. The President
is required to issue a sequestration order cancelling budgetary resources in non-exempt
programs by the amount of any spending limit breach or PAYGO violation. A within-
10 See Congressional Record, daily edition, vol. 148 (June 27, 2002), p. H4322.
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session sequestration is possible if a supplemental appropriations bill causes the spending
levels of the current fiscal year to exceed the statutory limit for a particular category.11
The discretionary spending limits, as well as a PAYGO requirement similar to the
statutory one, also may be enforced through points of order while legislation is being
considered on the Senate floor. First, Section 312(b) of the 1974 CBA prohibits the
consideration of legislation that would cause any of the spending limits to be exceeded.
Second, Section 207 of the FY2000 budget resolution (H.Con.Res. 68, 106th Congress), like
similar provisions in previous budget resolutions, provides a point of order against any direct
spending or revenue legislation that would increase or cause an on-budget deficit for the first
fiscal year, the period of the first 5 fiscal years, or the following 5 fiscal years, covered by
the most recently adopted budget resolution. Both of these points of order may be waived
by a vote of three-fifths of Senators, or set aside by unanimous consent.
Table 3 provides the timetable for sequestration actions. As indicated, OMB and CBO
publish preview and update sequestration reports to provide Congress and the President with
advance notice regarding the possibility of a sequester. If one or both types of sequester are
anticipated, these reports may afford Congress and the President enough warning so that they
can enact legislation to forestall them. The utility of these reports this year, however, may
depend on whether Congress and the President extend the discretionary spending limits and
the PAYGO requirement beyond FY2002. Only an OMB within-session (noted above) or
final sequestration report can trigger a sequester; the CBO sequestration reports are advisory
only.
Table 3. Timetable for Sequestration Actions
Deadline
Action to be completed
5 days before the President’s
CBO sequestration preview report.
budget submission
Date of the President’s
OMB sequestration preview report (as part of the
budget submission
President’s budget).
August 10
Notification regarding military personnel.
August 15
CBO sequestration update report.
August 20
OMB sequestration update report.
10 days after end of session
CBO final sequestration report.
15 days after end of session
OMB final sequestration report; presidential
sequestration order.
11 Under the BEA, if a supplemental appropriations act causes a discretionary spending limit to be
exceeded in the last quarter of a fiscal year (i.e., July 1 through September 30), the spending limit
for the applicable category for the following fiscal year must be reduced by the amount of the
violation. However, this particular procedure will have no effect this year, unless the discretionary
spending limits are extended beyond FY2002.
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As required, CBO released its sequestration preview report on February 1 and its
sequestration update report on August 15. OMB included its sequestration preview report
in the Analytical Perspectives volume of the President’s budget for FY2003, submitted to
Congress on February 2. Its sequestration update report was submitted to Congress on
August 19.
The BEA enforcement procedures, as well as several enforcement procedures tied to the
budget resolution, may be suspended in the event a declaration of war is enacted or if
Congress enacts a joint resolution triggered by the issuance of a “low-growth” report by
CBO.12 With regard to the latter, CBO must notify Congress if actual real economic growth
was less than 1% or estimated real economic growth is projected to be negative for the most
recently reported quarter and the preceding quarter. Upon receiving a low-growth report, the
Senate majority leader is required to introduce a joint resolution suspending the enforcement
procedures, but such action is optional in the House. On January 30, 2002, CBO issued a
low-growth report to Congress (H.Doc. 107-178), and on February 7 the Senate majority
leader subsequently introduced a suspension resolution (S.J.Res. 31). The Senate rejected
by voice vote the suspension resolution on February 14.
In previous years, Congress and the President have enacted statutory provisions to avoid
a sequestration for the upcoming fiscal year or to reduce the likelihood of a sequester in
future fiscal years.13 Most recently, the FY2002 Department of Defense Appropriations Act
(P.L. 107-117) included provisions increasing certain discretionary spending limits for
FY2002 and changing the PAYGO scorecard balance to zero for FY2001 and FY2002.
Specifically for the discretionary spending limits, Division C, Section 101(a), of P.L. 107-
117 increased the budget authority and outlay limits for FY2002 in the general purpose
discretionary category to $681.441 billion and $670.206 billion, respectively, and the outlay
limit for FY2002 in the conservation spending category to $1.473 billion. In addition,
Division C, Section 101(d), of the law authorized an estimating adjustment of 0.12% in the
budget authority limit for all categories for FY2002. Such modifications to the discretionary
spending limits and PAYGO scorecard effectively prevented an end-of-the-session sequester
for FY2002.14
LEGISLATION
H.Con.Res. 353, H.Rept. 107-376
Concurrent Resolution on the Budget for Fiscal Year 2003. Adopted by the House on
March 20 by a 221-209 vote. Reported by the House Budget Committee on March 15.
12 For further information on these suspension provisions, see CRS Report RS20182, Suspension of
Budget Enforcement Procedures During Hostilities Abroad; and CRS Report RL31068, Suspension
of Budget Enforcement Procedures During Low Economic Growth, both by Robert Keith.
13 For detailed information on the several techniques used to avoid a sequester, see CRS Report
RL31155, Techniques for Preventing a Budget Sequester, by Robert Keith.
14 See Office of Management and Budget, OMB Final Sequestration Report to the President and
Congress for Fiscal Year 2002, Jan. 2002.
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S.Con.Res. 100, S.Rept. 107-141
Concurrent Resolution on the Budget for Fiscal Year 2003. Marked up by the Senate
Budget Committee on March 21, and reported to the full Senate on March 22.
CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS
Congressional Budget Office. The Budget and Economic Outlook: Fiscal Years 2003-2012.
January 2002.
Congressional Budget Office. Analysis of the President’s Budgetary Proposals for Fiscal
Year 2003. March 2002.
Congressional Budget Office. The Budget and Economic Outlook: An Update. August
2002.
U.S. Congress. House. Committee on the Budget. Concurrent Resolution on the
Budget–Fiscal Year 2003. Report to accompany H.Con.Res. 353. 107th Congress, 2nd
session. H.Rept. 107-376. Washington: GPO, 2002.
U.S. Congress. Senate. Committee on the Budget. Concurrent Resolution on the
Budget–Fiscal Year 2003. Report to accompany S.Con.Res. 100. 107th Congress, 2nd
session. S.Rept. 107-141. Washington: GPO, 2002.
U.S. Executive Office of the President. Office of Management and Budget. Budget of the
United States Government, Fiscal Year 2003. Washington: GPO, 2002.
U.S. Executive Office of the President. Office of Management and Budget. Mid-Session
Review, Fiscal Year 2003. Washington: GPO, 2002.
CHRONOLOGY
08-02-2002 – President Bush signed H.R. 4775, FY2002 supplemental appropriations act,
into law (P.L. 107-206), following the adoption of the legislation by the
House (July 23) and the Senate (July 24).
07-28-2002 – President Bush signed S. 2578, an act to increase the public-debt limit by
$450 billion, into law (P.L. 107-199), following the adoption of the
legislation by the Senate (June 11) and the House (June 27).
03-22-2002 – Senate Budget Committee reported its version of the FY2003 budget
resolution (S.Con.Res. 100, S.Rept. 107-141) to the full Senate.
03-21-2002 – President Bush submitted a $27.1 billion emergency
supplemental
appropriations request for FY2002 to provide additional resources for the war
on terrorism, homeland security, and economic recovery.
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03-20-2002 – House agreed to its version of the FY2003 budget resolution (H.Con.Res.
353, H.Rept. 107-376) by a 221-209 vote.
03-09-2002 – President Bush signed H.R. 3090, the Job Creation and Worker Assistance
Act of 2002, into law (P.L. 107-147), following the adoption of the
legislation by the House (March 7) and Senate (March 8).
02-04-2002 – President Bush submitted his FY2003 budget to Congress.
FOR ADDITIONAL READING
CRS Report 97-684. The Congressional Appropriations Process: An Introduction, by Sandy
Streeter.
CRS Report 98-721. Introduction to the Federal Budget Process, by Robert Keith and Allen
Schick.
CRS Report RS21175. Perspectives on the Fiscal Year 2003 Budget, by Philip D. Winters.
CRS Issue Brief IB10102. The Budget for Fiscal Year 2003, by Philip D. Winters.
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