Order Code RL31754
Report for Congress
Received through the CRS Web
Congressional Budget Actions in 2003
February 25, 2003
Bill Heniff Jr.
Analyst in American National Government
Government and Finance Division
Congressional Research Service ˜ The Library of Congress

Congressional Budget Actions in 2003
Summary
During the first session of the 108th Congress, the House and Senate will
consider many different budgetary measures. Most measures will pertain to fiscal
year (FY) 2004 (which will begin on October 1, 2003) and beyond. Some also will
pertain to the budget for FY2003. As the session progresses, this report will describe
House and Senate action on major budgetary legislation within the framework of the
congressional budget process and other procedural requirements.
As the 108th Congress began, only two of the 13 regular appropriations acts for
FY2003 (which began on October 1, 2002) had been enacted into law. Since the start
of FY2003, federal government agencies and programs funded in regular
appropriations acts not yet enacted into law received temporary appropriations
provided by eight successive continuing resolutions (CRs), generally at a rate of
operations not to exceed the FY2002 enacted level.
On February 13, 2003, the House and Senate agreed to the conference report to
the Consolidated Appropriations Resolution, 2003 (H.J.Res. 2), which contains the
11 remaining regular appropriations acts for FY2003. On February 20, President
George W. Bush signed the measure into law (P.L. 108-7), thereby bringing action
on the FY2003 regular appropriations acts to a close. Later in the session, Congress
is expected to act on supplemental appropriations for FY2003, to provide additional
funds for the war on terrorism and homeland security and for possible military action
in Iraq.
Congress typically begins its annual budget process once the President submits
his budget for the upcoming fiscal year. President Bush submitted his FY2004
budget to Congress on February 3, 2003. In preparation for congressional action on
the FY2004 budget, the Congressional Budget Office released its annual report on
budget baseline projections, The Budget and Economic Outlook: Fiscal Years 2004-
2013
, on January 29, 2003.
The congressional budget process is centered around 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. Budget resolution policies are implemented through the
enactment of reconciliation bills, revenue and debt-limit legislation, and
appropriations and other spending measures, and enforced by points of order that may
be raised when legislation is pending on the House and Senate floor.
For FY1991 through FY2002, Congress and the President were constrained by
statutory limits on discretionary spending and a “pay-as-you-go” (PAYGO)
requirement for direct spending and revenue legislation established under the Budget
Enforcement Act of 1990, as amended. These constraints were enforced by a
sequestration process after legislative action for a session of Congress ended. Budget
enforcement mechanisms expired at the end of FY2002. It is not clear whether
Congress and the President will restore these budget enforcement mechanisms,
establish similar but modified ones, or take no action in this area.

Contents
Most Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Overview of the Congressional Budget Process . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Budget Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Reconciliation Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Revenue and Debt-Limit Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Revenue Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Debt-Limit Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Appropriations and Other Spending Legislation . . . . . . . . . . . . . . . . . . . . . . . . . 12
Budget Enforcement and Sequestration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
For Additional Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Congressional Hearings, Reports, and Documents . . . . . . . . . . . . . . . . . . . 16
CRS Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
List of Figures
Figure 1. Actual FY2002 Revenues by Source . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Figure 2. Actual FY2002 Outlays
by Major Spending Category . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
List of Tables
Table 1. The Congressional Budget Process Timetable . . . . . . . . . . . . . . . . . . . . 3
Table 2. Budget Baselines, FY2003-FY2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Table 3. Timetable for Sequestration Actions . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Congressional Budget Actions in 2003
Most Recent Developments
On February 13, 2003, the House and Senate agreed to the conference report to
the Consolidated Appropriations Resolution, 2003 (H.J.Res. 2), which contains the
11 of the 13 regular appropriations acts for fiscal year (FY) 2003. On February 20,
President George W. Bush signed the measure into law (P.L. 108-7), thereby bringing
action on the FY2003 regular appropriations acts to a close.
On February 3, President Bush submitted his FY2004 budget to Congress. In
preparation for congressional action on the FY2004 budget, the Congressional
Budget Office released its annual report on budget baseline projections, The Budget
and Economic Outlook: Fiscal Years 2004-2013
, on January 29, 2003.
Introduction
During the first session of the 108th Congress, the House and Senate will
consider many different budgetary measures. Most of these measures will pertain to
FY2004 (which will begin on October 1, 2003) and beyond. Some also will pertain
to the budget for FY2003. As the congressional session progresses, this report will
describe House and Senate action on major budgetary legislation within the
framework of the congressional budget process and other procedural requirements.
The House and Senate began 2003 with unfinished budgetary matters left over
from the 107th Congress. At the start of the 108th Congress, only two of the 13
regular appropriations acts for FY2003 had been enacted into law.1 The federal
agencies and programs funded in the 11 remaining regular appropriations acts were
provided temporary appropriations by successive continuing resolutions since the
beginning of the fiscal year. On February 20, 2003, President Bush signed into law
the Consolidated Appropriations Resolution, 2003 (H.J.Res. 2, P.L. 108-7), which
contains the 11 remaining regular appropriations acts, thereby bringing action on the
FY2003 regular appropriations acts to a close.2 The House and Senate also are
expected to act on supplemental appropriations for FY2003 later in the session.
1 The enacted regular appropriations acts are the Defense Appropriations Act, 2003 (P.L.
107-248) and the Military Construction Appropriations Act, 2003 (P.L. 107-249). For
further information on budget actions in 2002, see CRS Issue Brief IB10096, Congressional
Budget Actions in 2002
, by Bill Heniff Jr.
2 For a guide to the contents of H.J.Res. 2, see CRS Report RS21433, FY2003 Consolidated
Appropriations Resolution: Reference Guide
, by Robert Keith.

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Congress faces an unfavorable budget outlook, exacerbated by an uncertain
economic and geopolitical environment. According to the Office of Management
and Budget (OMB) and the Congressional Budget Office (CBO), current budget
projections under existing law, without any legislative changes, show annual deficits
in the unified budget (i.e., including federal funds and trust funds) in each of the next
few fiscal years.3 When various proposed spending increases and tax cuts are taken
into account, the projections indicate annual deficits for the foreseeable future. For
example, OMB projects that if President Bush’s FY2004 budget policy proposals are
enacted into law, annual unified budget deficits, ranging from $178 billion to $307
billion, will continue through FY2008.
In addition, the “soft” economy continues to put a damper on federal revenues.
Also, the spending for the war on terrorism and homeland security, and for possible
military action in Iraq, could increase the scarcity of current and future federal
government resources. Such factors potentially could worsen the already unfavorable
budget outlook.
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.
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 controlled 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. OMB assists the President in formulating and coordinating his
budget policies and activities.
On February 3, 2003, President Bush submitted his FY2004 budget to Congress.
Following the usual practice, the President’s budget was submitted as a multi-volume
set consisting of a main document that includes the President’s budget message and
information on his 2004 proposals (Budget) and supplementary documents that
provide special budgetary analyses (Analytical Perspectives), historical budget
information (Historical Tables), and detailed account and program level information
(Appendix), among other things. The FY2004 budget documents include a new
3 See OMB, Budget of the United States Government, FY2004 (Washington: GPO, 2003),
table S-1, p. 311 (for projections with President Bush’s budget proposals included) and table
S-13, p. 330 (for projections under existing law); CBO, The Budget and Economic Outlook:
Fiscal Years 2004-2013,
Jan. 2003, table 1.1, p. 2 (for CBO’s budget baseline projections,
under existing law).

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volume relating to President Bush’s management agenda (Performance and
Management Assessment
).4
The Congressional Budget Act (CBA) of 1974 (Titles I-IX of P.L. 93-344, 88
Stat. 297-332) established the congressional budget process, including a timetable for
congressional action on budget legislation (see Table 1). The process is centered
around 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.
Table 1. The Congressional Budget Process Timetable
On or before
Action to be completed
First Monday in February
President submits budget to Congress.
February 15
Congressional Budget Office submits economic and budget
outlook report to Budget Committees.
Six 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.
Budget resolution policies are implemented through the enactment of revenue
and debt-limit legislation, appropriations and other spending measures, and, if
required by the budget resolution, one or more reconciliation bills. 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.
4 T h e s e d o c u m e n t s a r e a v a i l a b l e o n O M B ’ s W e b s i t e , a t
[http://www.whitehouse.gov/omb/budget/fy2004/], visited on Feb. 21, 2003.

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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.5 The budget
resolution also contains spending levels by functional categories (e.g., national
defense), but these are not enforceable. Congress also may use reconciliation
legislation (discussed further below) to enforce direct spending, revenue, and debt-
limit provisions of a budget resolution.
For FY1991 through FY2002, Congress and the President also were constrained
by statutory limits on discretionary spending and a “pay-as-you-go” (PAYGO)
requirement for direct spending and revenue legislation.6 Unlike the enforcement
procedures associated with the budget resolution, which are employed while
legislation is considered on the floor of each chamber, the discretionary spending
limits and PAYGO requirement were enforced by a sequestration process generally
after legislative action for a session of Congress ended. These budget enforcement
mechanisms, however, expired at the end of FY2002 (i.e., September 30, 2002).
At the beginning of the 108th Congress, it was not clear whether Congress and
the President would restore these budget enforcement mechanisms, establish similar
but modified ones, or take no action on additional budget controls. In the event
Congress considers restoring or modifying these budget enforcement mechanisms
during 2003, the last section of this report provides an overview of how they
operated.
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.
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
it, the Budget Committees hold hearings and receive testimony from Members of
Congress and representatives from federal departments and agencies, the general
5 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.
6 These constraints were first established by the Budget Enforcement Act (BEA) of 1990
(Title XIII of P.L. 101-508, Omnibus Budget Reconciliation Act of 1990, 104 Stat. 1388-
573-1388-630), which amended the Balanced Budget and Emergency Deficit Control Act
of 1985 (Title II of P.L. 99-177, 99 Stat. 1038-1101).

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public, and national organizations. Three regular hearings include separate testimony
from the CBO director, the OMB director, and the chair of the Federal Reserve
Board. On January 30, 2003, CBO Acting Director Barry B. Anderson presented
CBO’s baseline budget projections for FY2004-FY2013 during testimony to the
Senate Budget Committee.7 On February 4, the day after President Bush’s FY2004
budget was submitted to Congress, OMB Director Mitchell E. Daniels Jr. provided
an overview of the budget request, and defended it, before the House Budget
Committee.8
The congressional budget resolution, as well as the President’s budget, is based
on budget baselines (see Table 2). The budget baseline is a projection of federal
revenue, spending, and deficit or surplus levels based upon current policies, assuming
certain economic conditions. The President’s budget baseline, referred to as current
services estimates, is included in the budget documents submitted to Congress.9 The
President’s baseline usually differs from CBO’s baseline, referred to as baseline
budget projections, because of different economic and technical assumptions.
Baseline projections provide a benchmark for measuring the budgetary effects of
proposed policy changes. On January 29, 2003, CBO released its annual report on
budget baseline projections, The Budget and Economic Outlook: Fiscal Years 2004-
2013
.10
7 Mr. Anderson’s written testimony is available on CBO’s Web site at
[http://www.cbo.gov/showdoc.cfm?index=4031&sequence=0], visited on Feb. 21, 2003.
8 Mr. Daniel’s written testimony is available on the House Budget Committee’s Web site at
[http://www.house.gov/budget/hearings/danielsstmnt020403.htm], visited on Feb. 21, 2003.
9 See the summary table S-13 in the main Budget volume, p. 330, and chapter 15 of the
Analytical Perspectives volume, pp. 295-348, for detailed baseline estimates. OMB, Budget
of the United States Government, FY2004
.
10 The report is available on CBO’s Web site at [http://www.cbo.gov], visited on Feb. 21,
2003.

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Table 2. Budget Baselines, FY2003-FY2008
(in billions of dollars)
Total
FY2003
FY2004
FY2005
FY2006
FY2007
FY2008
FY2004-FY2008
Office of Management and Budget – February 2003
(current services estimates–without President Bush’s proposals)
Outlays
2,131
2,189
2,276
2,384
2,440
2,541
11,794
Revenues
1,867
2,031
2,235
2,352
2,469
2,593
11,681
Total Surplus/Deficit (-)
-264
-158
-40
5
29
51
-114
On-budget
-425
-330
-237
-207
-199
-192
-1,170
Off-budgeta
160
172
197
211
228
243
1,056
(current services estimates–with President Bush’s proposals)
Outlays
2,140
2,229
2,343
2,464
2,576
2,711
12,323
Revenues
1,836
1,922
2,135
2,263
2,398
2,521
11,239
Total Surplus/Deficit (-)
-304
-307
-208
-201
-178
-190
-1,084
On-budget
-468
-482
-407
-412
-406
-433
-2,140
Off-budgeta
163
175
199
211
228
243
1,056

CRS-7
Total
FY2003
FY2004
FY2005
FY2006
FY2007
FY2008
FY2004-FY2008
Congressional Budget Office – January 2003
(budget baseline projections)
Outlays
2,121
2,199
2,298
2,387
2,479
2,583
11,945
Revenues
1,922
2,054
2,225
2,370
2,505
2,648
11,802
Total Surplus/Deficit (-)
-199
-145
-73
-16
26
65
-143
On-budget
-361
-319
-268
-228
-205
-185
-1,206
Off-budgeta
162
174
195
212
231
250
1,063
Sources: Office of Management and Budget, Budget of the United States Government, Fiscal Year 2004 (Washington: GPO, 2003), pp. 312 and 330;
Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2004-2013, Jan. 2003, pp. 4-5.
a. Off-budget surpluses comprise surpluses in the Social Security trust funds as well as the net cash flow of the Postal Service.

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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, each House and Senate committee is required to
submit views and estimates of budget matters under its jurisdiction to its respective
Budget Committee. These views and estimates, frequently submitted in the form of
a letter to the chair and ranking minority 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 often are printed in the committee report accompanying the
budget resolution in the Senate and compiled as a separate committee print in the
House.
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 the budget resolution is formulated. 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 are not binding,
committees may be strongly influenced by the recommendations when formulating
appropriations bills, reconciliation measures, or other budgetary 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. 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. The Senate considers the budget resolution under
the procedures set forth in the CBA, sometimes as modified 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.
In years Congress is late in adopting, or does not adopt, a budget resolution, the
House and Senate independently may adopt a “deeming resolution” for the purpose
of enforcing certain budget levels. A deeming resolution, typically in the form of a
simple resolution, specifies certain budget levels normally contained in the budget
resolution, including aggregate spending and revenue levels, spending allocations to
House and Senate committees, spending allocations to the Appropriations
Committees only, or a combination of these. In some cases, an entire budget
resolution, earlier adopted by one chamber, may be deemed to have been passed.
Under a deeming resolution, the enforcement procedures related to the Congressional
Budget Act, as discussed below, have the force and effect as if Congress had adopted
a budget resolution.

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In 2002, for example, in the absence of an agreement on an FY2003 budget
resolution with the Senate, the House adopted a resolution deeming the House-
adopted FY2003 budget resolution (H.Con.Res. 353, 107th Congress) to have been
agreed to by Congress. The Senate did not take any similar action.
At the beginning of the 108th Congress, the House agreed to deem the FY2003
budget resolution adopted by the House during the 107th Congress (H.Con.Res. 353)
to have been adopted by the 108th Congress. Under this deeming resolution, the
enforcement procedures of the Congressional Budget Act will have the force and
effect on budget legislation pertaining to FY2003 and beyond in the House as if the
budget resolution had been adopted by Congress, until Congress adopts an FY2004
budget resolution.11
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. Second, the legislative language
recommended by these committees is packaged “without any 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, it is considered under 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, and on 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
11 See Sec. 3(a)(4) of H.Res. 5, adopted on Jan. 7, 2003. Also, the provision required the
House Budget Committee chair to submit for printing in the Congressional Record the
committee allocations associated with the spending levels contained in H.Con.Res. 353, and
other related budget information. In the absence of official committee chair assignments,
Sec. 2 of H.Res. 14, adopted by the House on Jan. 8, 2003, provided that Rep. Jim Nussle,
the prospective House Budget Committee chair (see H.Res. 24), could submit the committee
allocations. He did so on the same date. See Congressional Record, daily edition, vol. 149,
Jan. 8, 2003, pp. H74-H75.

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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.
Revenue and Debt-Limit Legislation
Congress may adopt individual revenue and debt-limit measures without
employing the optional reconciliation process as well.
Revenue Legislation. 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 has considerable latitude
to amend a revenue bill received from the House.
Most of the laws establishing the federal government’s revenue sources are
permanent and continue year after year without any additional legislative action (see
Figure 1).12 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.
Figure 1. Actual FY2002 Revenues by Source
12 Chart created by CRS based on data from Congressional Budget Office, The Budget and
Economic Outlook: Fiscal Years 2004-2013
, p. 150.

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Revenue legislation is not considered automatically 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).
Cost estimates of any congressional revenue proposals are prepared by CBO, based
on revenue estimates made by the Joint Committee on Taxation (JCT), and are
published in committee reports or in the Congressional Record, as well as available
on JCT’s Web site.13
The budget resolution includes baseline estimates of federal government
revenues 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. A motion to waive the point of order
requires a three-fifths vote (i.e., 60 Senators if there are no vacancies). The Senate
PAYGO rule is scheduled to expire on April 15, 2003.
Debt-Limit Legislation. The amount of money the federal government is
allowed to borrow generally is subject to a statutory limit (31 U.S.C. 3101). From
time to time, Congress adopts legislation to raise this limit.14
Federal debt consists of debt held by the public plus debt held by government
accounts. 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 (non-negotiable) federal
government securities and thus are held in the form of federal debt. The combination
of both types of debt is subject to the statutory public debt limit. Therefore, budget
13 See [http://www.house.gov/jct/], visited on Feb. 21, 2003.
14 For further information on debt-limit legislation, see CRS Report 98-453, Debt-Limit
Legislation in the Congressional Budget Process
, by Bill Heniff Jr.; CRS Report RS20645,
Recent Changes in Federal Debt and Its Major Components, by Philip D. Winters; CRS
Report RS21111, The Debt Limit: The Need to Raise It After Four Years of Surpluses, by
Philip D. Winters; and CRS Report 98-805, Public Debt Limit Legislation: A Brief History
and Controversies in the 1980s and 1990s
, by Philip D. Winters.

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deficits or trust fund surpluses may contribute to the federal government reaching the
existing debt limit.
The most recent increase in the public debt limit was enacted as an independent
measure (P.L. 107-199, 116 Stat. 734) in June 2002. The debt-limit measure
increased the statutory limit by $450 billion, to $6,400 billion. In December 2002,
however, the Administration indicated that the “debt subject to the limit may reach
the statutory ceiling in the latter half of February 2003.”15
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.
Actual FY2002 federal outlays totaled $2,011 billion (see Figure 2).16 Of this
total amount, $734 billion, or about 36.5%, was discretionary spending (exploded
slices in Figure 2), while $1,277 billion, or 63.5%, was direct spending.
Figure 2. Actual FY2002 Outlays
by Major Spending Category
15 Letter to Speaker J. Dennis Hastert from Kenneth Dam, deputy secretary, Department of
the Treasury, dated Dec. 24, 2002, on the Department of the Treasury’s Web site at
[http://www.ustreas.gov/press/releases/po3718.htm], visited on Feb. 21, 2003. More
recently, Treasury Secretary John W. Snow informed Congress that because of the existing
public-debt limit he “will be unable to fully invest the Government Securities Investment
Fund (‘G-Fund’) of the Federal Employees Retirement System in special interest-bearing
Treasury securities, beginning on February 20, 2003.” See letter to Speaker Hastert from
Secretary Snow, dated Feb. 19, 2003, on the Department of the Treasury’s Web site at
[http://www.ustreas.gov/press/releases/js46.htm], visited on Feb. 21, 2003.
16 Chart created by CRS based on data from Office of Management and Budget, Budget of
the U.S. Government, Fiscal Year 2004
, p. 312.

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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 is 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. Each of the 13 subcommittees of the Appropriations Committees of the
House and Senate is 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 regular appropriations by the start of the fiscal year.
In addition to the 13 regular appropriations acts, Congress typically acts on at
least one supplemental appropriations measure during a session. Also, because of
recurring delays in the appropriations process, Congress often adopts one or more
continuing resolutions each year. In 2001, for example, Congress passed the 13
regular appropriations measures individually, two supplementals, and eight
continuing resolutions. In some fiscal years, such as in each of the three prior to
FY2001 (FY1998-FY2000), instead of adopting all of the regular appropriations acts
individually, Congress combined several of them into an omnibus appropriations
measure.
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. During the appropriations process, these suballocations
usually are revised several times.
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 then inserted into the

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House-adopted version, when available, as a substitute amendment, thereby retaining
the House-numbered bill for final action.
At the outset of the 108th Congress, only two out of the 13 regular appropriations
acts for FY2003 had been enacted into law. Since the start of FY2003, the federal
government agencies and programs not yet funded in regular appropriations acts
received temporary appropriations in eight successive continuing resolutions (CRs).
Congress and President Bush provided temporary funding through: October 4, 2002
(P.L. 107-229); October 11 (P.L. 107-235); October 18 (P.L. 107-240); November
22 (P.L. 107-244); January 11, 2003 (P.L. 107-294); January 31 (P.L. 108-2);
February 7 (P.L. 108-4); and February 20 (P.L. 108-5).
On February 13, 2003, the House and Senate agreed to the conference report to
the Consolidated Appropriations Resolution, 2003 (H.J.Res. 2), which contains the
11 remaining regular appropriations acts for FY2003.17 On February 20, President
George W. Bush signed the measure into law (P.L. 108-7), thereby bringing action
on the FY2003 regular appropriations acts to a close.
Budget Enforcement and Sequestration
Beginning in 1990, Congress and the President were constrained by statutory
limits on discretionary spending and a pay-as-you-go (PAYGO) requirement for
direct spending and revenue legislation.18 Initially applicable through FY1995, they
were modified and extended in 1993 to apply through FY1997, and extended again
in 1997 to apply through FY2002. In each case, the budgetary controls were
designed to enforce 5-year budget agreements between Congress and the President.
Without any legislative action by Congress and the President to extend the budget
enforcement mechanisms further, they expired at the end of FY2002 (i.e., September
30, 2002).
In the event Congress considers restoring or modifying these budget
enforcement mechanisms during 2003, an overview of how they operated is provided
below.
Since 1990, the statutory limits had applied to different categories of
discretionary spending. During some periods, discretionary spending was combined
into a single category; at other times it was divided into two or more broad
categories, such as defense and nondefense spending. Currently, adjustable
17 For a guide to the contents of H.J.Res. 2, see CRS Report RS21433, FY2003 Consolidated
Appropriations Resolution: Reference Guide
, by Robert Keith.
18 The discretionary spending limits and the PAYGO requirement were first established by
the Budget Enforcement Act (BEA) of 1990 (Title XIII of P.L. 101-508, Omnibus Budget
Reconciliation Act of 1990, 104 Stat. 1388-573-1388-630), which amended the Balanced
Budget and Emergency Deficit Control Act of 1985 (Title II of P.L. 99-177, 99 Stat. 1038-
1101). The limits were extended in 1993 (Title XIV of P.L. 103-66, Omnibus Budget
Reconciliation Act of 1993, 107 Stat. 683-685) and in 1997 (Budget Enforcement Act of
1997, Title X of P.L. 105-33, Balanced Budget Act of 1997, 111 Stat. 677-712).

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discretionary spending limits still exist for highway and mass transit spending for
FY2003 and conservation spending (divided into six subcategories) through FY2006,
but the sequestration process to enforce them expired on September 30, 2002.
Under the PAYGO requirement, the net effect of new direct spending and
revenue legislation enacted for a fiscal year could 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
maintained the balances of the accumulated budgetary effects of laws enacted during
the current session and prior years. The PAYGO requirement applied to legislation
enacted through FY2002, but it covered the effects of such legislation through
FY2006.
The discretionary spending limits and PAYGO requirement were enforced
primarily by sequestration, which involved automatic, largely across-the-board
spending cuts in non-exempt programs. Sequestration was triggered if the OMB
director estimated in the final sequestration report at the end of a session that one or
more of the discretionary spending limits would be exceeded or the PAYGO
requirement would be violated. A within-session sequestration was possible if a
supplemental appropriations bill caused 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 expired statutory one, also
could have been enforced through points of order while legislation was being
considered on the Senate floor. (The House did not provide for similar points of
order.)
The Senate PAYGO point of order still exists, but is scheduled to expire on
April 15, 2003. Under the Senate PAYGO rule, a point of order may be raised
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. A
motion to waive this point or order requires a vote of three-fifths of Senators (i.e., 60
Senators if there are no vacancies).
Table 3 provides the timetable for sequestration actions. As indicated, OMB
and CBO were required to 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 were anticipated, these reports could
have afforded Congress and the President enough warning so that they could enact
legislation to forestall them. Only an OMB within-session or final sequestration
report could have triggered a sequester; the CBO sequestration reports were advisory
only.

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Table 3. Timetable for Sequestration Actions
Deadline
Action to be completed
Five days before the
CBO sequestration preview report.
President submits budget
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.
At the end of the 107th Congress, Congress passed and President Bush signed
legislation (P.L. 107-312, 116 Stat. 2456) that removed the positive balances on the
PAYGO scorecard through FY2006, thereby preventing any future PAYGO
sequestration unless the budget enforcement mechanism is restored.19
For Additional Reading
Congressional Hearings, Reports, and Documents
Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years
2004-2013 (Washington: Jan. 2003). The document is available on CBO’s Web
site at [http://www.cbo.gov], visited on Feb. 21, 2003.
Barry Anderson, Acting Director, CBO, Testimony before the Senate Budget
Committee, Jan. 30, 2003. The testimony is available on CBO’s Web site at
[http://www.cbo.gov], visited on Feb. 21, 2003.
CRS Products
CRS Issue Brief IB10096, Congressional Budget Actions in 2002, by Bill Heniff Jr.
CRS Report 98-721, Introduction to the Federal Budget Process, by Robert Keith
and Allen Schick.
19 For further information on the recent removal of PAYGO balances, see CRS Report
RS21378, Termination of the “Pay-As-You-Go” (PAYGO) Requirement for FY2003 and
Later Years
, by Robert Keith.

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CRS Report RL30297, Congressional Budget Resolutions: Selected Statistics and
Information Guide, by Bill Heniff Jr.
CRS Report 97-684, The Congressional Appropriations Process: An Introduction,
by Sandy Streeter.
CRS Report RL30343, Continuing Appropriations Acts: Brief Overview of Recent
Practices, by Sandy Streeter.