Order Code RL31754
Report for Congress
Received through the CRS Web
Congressional Budget Actions in 2003
Updated May 6, 2003
Bill Heniff Jr.
Analyst in American National Government
Government and Finance Division
Congressional Research Service ˜ The Library of Congress

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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. 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.
In response to President Bush’s $74.7 billion supplemental appropriations
request for FY2003, the House and Senate agreed to the conference report (H.Rept.
108-76) to H.R. 1559, Emergency Wartime Supplemental Appropriations Act, 2003,
by voice vote and unanimous consent, respectively, on April 12. President Bush
signed the legislation into law (P.L. 108-11) on April 16. P.L. 108-11 provides $78.5
billion in supplemental appropriations for FY2003.
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.
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.
On April 11, the House and Senate agreed to the FY2004 budget resolution
(H.Con.Res. 95, H.Rept. 108-71) by votes of 216-211 and 51-50, respectively.
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.

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Contents
Most Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Overview of the Congressional Budget Process . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Budget Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Reconciliation Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Revenue and Debt-Limit Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Revenue Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Debt-Limit Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Appropriations and Other Spending Legislation . . . . . . . . . . . . . . . . . . . . . . . . . 16
Discretionary Spending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Mandatory Spending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Budget Enforcement and Sequestration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Chronology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
For Additional Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Congressional Hearings, Reports, and Documents . . . . . . . . . . . . . . . . . . . 22
CRS Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
List of Figures
Figure 1. Mapping Spending and Revenue Legislation through the
Congressional Budget Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Figure 2. Actual FY2002 Revenues by Source . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Figure 3. Actual FY2002 Outlays
by Major Spending Category . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
List of Tables
Table 1. The Congressional Budget Process Timetable . . . . . . . . . . . . . . . . . . . . 4
Table 2. Budget Baselines, FY2003-FY2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Table 3. Timetable for Sequestration Actions . . . . . . . . . . . . . . . . . . . . . . . . . . 21

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Congressional Budget Actions in 2003
Most Recent Developments
On April 11, 2003, the House and Senate agreed to the FY2004 budget
resolution (H.Con.Res. 95, H. Rept. 108-71) by votes of 216-211 and 51-50,
respectively. The budget resolution sets forth appropriate budgetary levels for
FY2004 as follows: $1,883.3 billion in revenues; $2,247.9 billion in total spending
(budget authority); and $385.0 billion in the unified deficit (i.e., including federal
funds and trust funds).
The following day, in response to President Bush’s $74.7 billion supplemental
appropriations request for FY2003 submitted on March 25, the House and Senate
agreed to the conference report (H. Rept. 108-76) to H.R. 1559, Emergency Wartime
Supplemental Appropriations Act, 2003, by voice vote and unanimous consent,
respectively, on April 12. President Bush signed the legislation into law (P.L. 108-
11) on April 16. P.L. 108-11 provides $78.5 billion in supplemental appropriations
for FY2003 for operations in Iraq, international assistance and Iraqi relief and
reconstruction, homeland security, the legislative branch, and aviation assistance.
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
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 Report RL31795, Congressional
Budget Actions in 2002, by Bill Heniff Jr.

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CRS-2
FY2003 regular appropriations acts to a close.2 The House and Senate also acted on
one supplemental appropriations measure for FY2003 (discussed further below) and
may consider another later in the session.
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 military
operations 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 (see Figure 1).
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.
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.
3 See OMB, Budget of the U.S. Government, Fiscal Year 2004 (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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Figure 1. Mapping Spending and Revenue Legislation through the Congressional Budget Process
The annual budget resolution is the centerpiece of the congressional budget process by setting forth aggregate spending and revenue levels for at least five
fiscal years. Budget resolution policies are implemented through the enactment of appropriations and other spending measures, revenue legislation, and, if
required by the budget resolution, one or more reconciliation bills. Spending amounts are allocated among each House and Senate committee with jurisdiction
over specific spending legislation.
Discretionary spending
Mandatory spending and revenues
and appropriated entitlements
<Full Appropriations Committee
If the annual budget resolution contains
Separate from any reconciliation
subdivides its spending allocation [302(a)
optional reconciliation instructions,
directives, Congress may consider and
allocation] among its subcommittees
Congress considers legislation changing
–or–
adopt individual mandatory spending or
[302(b) allocations].
mandatory spending, revenues, or both
revenue legislation.
through the reconciliation process.
<Each of the 13 appropriations
subcommittees holds hearings and drafts
one of the 13 regular appropriations acts.
<Each legislative committee directed to do
<Each legislative committee may hold
<Full Appropriations Committee reports
so recommends legislative changes to
hearings and consider legislation referred
each appropriations act, which must not
existing law to achieve the mandatory
to it or draft original legislation.
exceed the respective 302(b) allocation.
spending or revenue levels set forth in the
budget resolution and submits those
<Each committee may report to its parent
<Full chamber considers and adopts each
recommendations to the Budget
chamber mandatory spending or revenue
appropriations act.
Committee by a date certain.
legislation, which must not cause direct
spending under the committee’s
<House and Senate resolve differences in
<Budget Committee packages the
jurisdiction to exceed its spending ceiling
conference committees.
committees’ legislative recommendations
[302(a) allocation] or cause revenues to
into one or more omnibus reconciliation
fall below the revenue floor set forth in
<House and Senate separately agree to
measures, “without any substantive
the budget resolution.
conference reports to each appropriations
revision.”
act.
<Full chamber considers individual
<Full chamber considers omnibus
mandatory spending or revenue
<President signs each appropriations act
reconciliation measure under special
legislation.
into law.
procedures that limit the measure’s
contents and floor debate.
<House and Senate resolve differences in
conference committees.
<House and Senate resolve differences in
conference committee.
<House and Senate separately agree to
conference reports to individual
<House and Senate separately agree to
mandatory spending or revenue
co n fer en ce r ep o r t t o o mnibus
legislation.
reconciliation legislation.
<President signs individual mandatory
<President signs omnibus reconciliation
spending or revenue legislation into law.
legislation into law.

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CRS-4
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
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
Date
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 Committees.
submits budget
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.
Source: Section 300 of the Congressional Budget Act of 1974, as amended (P.L. 93-344, 2 U.S.C. 631).
Note: Dates serve as guidelines, except the first and last, which are required by law.
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 Apr. 15, 2003.

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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.
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.7 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.
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).
7 In his FY2004 budget, President Bush proposed to restore and extend for 2 years (FY2004
and FY2005) the statutory limits on discretionary spending and the PAYGO requirement for
direct spending and revenue legislation. See OMB, Budget of the U.S. Government, Fiscal
Year 2004, Analytical Perspectives, pp. 315-316.

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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
public, and national organizations. Two regular hearings include separate testimony
from the CBO director and the OMB director. 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.8 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.9
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.10 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. On March 25, CBO released its revised budget baseline projections in its
report An Analysis of the President’s Budgetary Proposals for Fiscal Year 2004.11
The report also contains estimates of the President’s proposals using CBO’s
economic and technical assumptions, and provides an analysis of the potential
macroeconomic effects of the President’s budgetary proposals.
8 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 Apr. 15, 2003.
9 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 Apr.15, 2003.
10 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 U.S. Government, Fiscal Year 2004.
11 Both reports are available on CBO’s Web site at [http://www.cbo.gov], visited on Apr.
15, 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

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CRS-8
Total
FY2003
FY2004
FY2005
FY2006
FY2007
FY2008
FY2004-FY2008
Congressional Budget Office – March 2003
(revised budget baseline projections)
Outlays
2,137
2,224
2,328
2,417
2,513
2,621
12,103
Revenues
1,891
2,024
2,205
2,360
2,504
2,647
11,741
Total Surplus/Deficit (-)
-246
-200
-123
-57
-9
27
-362
On-budget
-408
-373
-317
-269
-240
-224
-1,423
Off-budgeta
163
173
195
212
231
250
1,061
(revised budget baseline projections–with President Bush’s proposals)
Outlays
2,143
2,245
2,370
2,491
2,606
2,739
12,451
Revenues
1,856
1,907
2,100
2,273
2,433
2,573
11,287
Total Surplus/Deficit (-)
-287
-338
-270
-218
-173
-166
-1,164
On-budget
-452
-512
-464
-429
-404
-416
-2,225
Off-budgeta
165
174
194
211
231
250
1,061
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, An Analysis of the President’s Budgetary Proposals for Fiscal Year 2004, Mar. 2003, pp. 34 and 36.
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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CRS-9
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
Senate Budget Committee print to accompany S.Con.Res. 23, the Senate version of
the FY2004 budget resolution, contains the views and estimates of Senate
committees (S.Prt. 108-19). The House Budget Committee usually compiles the
views and estimates of House committees as a separate committee print, which is
expected to be printed shortly.
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 House Budget Committee marked up and voted to report the House version
of the FY2004 budget resolution (H.Con.Res. 95, H. Rept. 108-37) by a vote of 24-
19 on March 12. During markup, the Committee considered 33 amendments to the
chairman’s mark; two amendments were adopted and 31 amendments were
rejected.12 The Senate Budget Committee marked up and voted to report the Senate
version of the FY2004 budget resolution (S.Con.Res. 23, S.Prt. 108-19) by a vote of
12-11 on March 13. During markup, the Committee considered 32 amendments to
the chairman’s mark; 12 amendments were adopted and 20 amendments were
rejected.13
The congressional budget process timetable sets April 15 as a target date for
final adoption of the budget resolution.14 The CBA prohibits the consideration of
12 For a description of the amendments and the roll call votes, see U.S. Congress, House
Committee on the Budget, Concurrent Resolution on the Budget–Fiscal Year 2004, report
to accompany H.Con.Res. 95, 108th Cong., 1st sess., H. Rept. 108-37, Mar. 17, 2003
(Washington: GPO, 2003), pp. 145-176.
13 For a description of the amendments and the roll call votes, see U.S. Congress, Senate
Committee on the Budget, Concurrent Resolution on the Budget FY2004, committee print
to accompany S.Con.Res. 23, 108th Cong., 1st sess., S.Prt. 108-19, Mar. 2003 (Washington:
GPO, 2003), pp. 66-75.
14 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
(continued...)

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CRS-10
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. On March 20, the House considered H.Con.Res. 95 under a
structured rule (H.Res. 151, H. Rept. 108-44) reported by the House Rules
Committee. The special rule provided that a manager’s amendment in the nature of
a substitute be considered as adopted and made in order only the four amendments
in the nature of a substitute printed in the House Rules Committee report. The House
passed H.Res. 151 by voice vote. During consideration of the FY2004 budget
resolution, the House rejected the four amendments made in order by the special rule.
The House subsequently agreed to H.Con.Res. 95 by a 215-212 vote on March 21.15
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,
14 (...continued)
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.
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. 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.
15 For the consideration and adoption ofH.Res. 151 and H.Con.Res. 95, see Congressional
Record, daily edition, vol. 149, Mar. 20 and 21, 2003, pp. H2138-H2262.

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CRS-11
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. The Senate considered its version of the
FY2004 budget resolution on March 17, 18, 19, 20, 21, 25, and 26. During
consideration of S.Con.Res. 23, the Senate considered 82 amendments; 44
amendments were adopted, 35 amendments were rejected, one amendment was
withdrawn, and two amendments fell on a point of order. On March 26, the Senate
agreed to S.Con.Res. 23, as amended, by a 56-44 vote. Subsequently, the Senate
incorporated its version of the FY2004 budget resolution in the companion measure,
H.Con.Res. 95, as an amendment and agreed to it by unanimous consent.16
After resolving the differences between their respective versions, the House and
Senate agreed to the conference report to accompany the FY2004 budget resolution
(H.Con.Res. 95, H.Rept. 108-71) by votes of 216-211 and 51-50, respectively, on
April 11 (legislative day April 10, for the House).17 H.Con.Res. 95 sets forth
appropriate budgetary levels for FY2004 as follows: $1,883.3 billion in revenues;
$2,247.9 billion in total spending (budget authority); and $385.0 billion in the unified
deficit (i.e., including federal funds and trust funds).
Reconciliation Legislation
Congress may implement changes to existing law related to direct spending,
revenues, or the debt limit through the reconciliation process, provided for in Section
310 of the CBA. The reconciliation process has two stages. First, Congress may
include 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 procedures 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, the CBA provides that 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
16 For the consideration and adoption of the Senate version of the FY2004 budget resolution,
see Congressional Record, daily edition, vol. 149, Mar. 17-21 and 25-26, 2003, pp. S3774-
S4268 and S4334-S4422.
17 For the House and Senate consideration of the conference report to H.Con.Res. 95, the
FY2004 budget resolution, see Congressional Record, daily edition, vol. 149, Apr. 10, 2003,
pp. H3194-H3230, H3279-H3298; and Congressional Record, daily edition, vol. 149, Apr.
11, 2003, pp. S5266-S5293, S5295-S5316, respectively.

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CRS-12
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.18
Both the House and Senate versions of the FY2004 budget resolution provided
for reconciliation legislation covering the period FY2003-FY2013. The House
version, agreed to on March 21, 2003, provided for two separate reconciliation
measures: one for tax cuts (equal to about $730 billion) and the other for mandatory
spending cuts (equal to about $264.5 billion).19 The Senate version, agreed to on
March 26, provided for one reconciliation measure for tax cuts (equal to $350
billion).20
The conference report to H.Con.Res. 95, agreed to by the House and Senate on
April 11, provides for one reconciliation measure, to be reported by the appropriate
committees no later than May 8. The reconciliation directives require the House
Ways and Means Committee to report legislation reducing revenues by $535 billion
and increasing spending by $15 billion for the period FY2003-FY2013, and require
the Senate Finance Committee to report legislation reducing revenues by $522.524
billion and increasing spending by $27.476 billion for the period FY2003-FY2013.
Although both directives call for reconciliation legislation equal to $550 billion for
the period FY2003-FY2013, Section 202 of H.Con.Res. 95 provides a point of order
against Senate consideration of reconciliation legislation reported pursuant to the
directives, or an amendment thereto, that would cause the total revenue reductions
and outlay increases to exceed $350 billion. The point of order, however, would not
apply to a conference report on such reconciliation legislation.21 Nevertheless, during
Senate consideration of the conference report, Senator Charles Grassley, Finance
Committee Chair, reiterated the Senate’s commitment to limiting the reconciliation
legislation conference report to no more than $350 billion. Specifically, he stated:
Let me be clear, without this agreement, the budget resolution conference report
would not pass the Senate today.... I agreed that I would not return from the
conference on the growth package with a number greater than $350 billion in
revenue reductions. This means that, at the end of the day, the tax cut side of the
18 For detailed information on the Byrd rule, see CRS Report RL30862, Budget
Reconciliation Procedures: The Senate’s “Byrd Rule,” by Robert Keith.
19 Amounts are based on reconciliation instructions summary table of the manager’s
amendment to H.Con.Res. 95, available on the House Budget Committee’s Web site at
[http://www.house.gov/budget/reconinstruct04.pdf], visited on Apr. 15, 2003.
20 Section 104 of the Senate-passed version of H.Con.Res. 95.
21 See U.S. Congress, Committee on Conference, Concurrent Resolution on the
Budget–Fiscal Year 2004, conference report to accompany H.Con.Res. 95, 108th Cong., 1st
sess., H.Rept. 108-71 (Washington: GPO, 2003), p. 104.

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CRS-13
growth package will not exceed $350 billion over the period of the reconciliation
instruction.22
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 2).23 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 2. Actual FY2002 Revenues by Source
22 Congressional Record, daily edition, vol. 149, Apr. 11, 2003, p. S5296.
23 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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CRS-14
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. On March 25, CBO released
its report An Analysis of the President’s Budgetary Proposals for Fiscal Year 2004,
which contains estimates of the President’s proposals using CBO’s economic and
technical assumptions, and provides an analysis of the potential macroeconomic
effects of the President’s budgetary proposals.24 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.25
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 505 of the FY2004 budget
resolution (H.Con.Res. 95), also may be raised against any revenue legislation not
assumed in the most recently adopted budget resolution 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 conference report to H.Con.Res. 95, agreed to by the House and Senate on
April 11, allows for revenue reductions of about $1.225 trillion for the period
FY2003-FY2013, below the budget baseline projected levels.26
24 The report is available on CBO’s Web site at [http://www.cbo.gov]. The Joint Committee
on Taxation also released a description and estimates of the revenue provisions contained
in the President’s FY2004 budget proposal, which are available at
[http://www.house.gov/jct/s-7-03.pdf] and [http://www.house.gov/jct/x-15-03.pdf],
respectively, visited on Apr. 15, 2003.
25 See [http://www.house.gov/jct/].
26 Total level of revenue reductions based on Section 101(1)(B) of H.Con.Res. 95 (H.Rept.
108-71). This amount does not include any outlay increases associated with certain tax
credits assumed in the budget resolution.

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CRS-15
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 and the President have enacted legislation to raise this limit.27
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
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.”28 In February 2003,
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.”29 More
recently, Treasury Secretary Snow informed Congress that because of the existing
public-debt limit he “will be unable to invest fully the portion of the Civil Service
Retirement and Disability Fund (CSRDF) not immediately required to pay
beneficiaries,” during the period April 4 through July 11, 2003.30
Pursuant to House Rule XXVII, upon the adoption of the FY2004 budget
resolution, the House Clerk engrossed and transmitted to the Senate a joint resolution
(H.J.Res. 51) increasing the public debt limit by $984 billion, to $7,384 billion.
House Rule XXVII (commonly referred to as the “Gephardt rule” after its author,
27 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.
28 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 Apr. 15, 2003.
29 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
Apr. 15, 2003.
30 Letter to Speaker Hastert from Secretary Snow, dated Apr. 4, 2003, on the Department of
the Treasury’s Web site at [http://www.ustreas.gov/press/releases/reports/deblimit.pdf],
visited on Apr. 15, 2003.

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CRS-16
Representative Richard Gephardt) provides that, upon the adoption of the budget
resolution by Congress, a joint resolution specifying the amount of the public debt
limit contained in the budget resolution automatically is engrossed and deemed to
have passed the House by the same vote as the conference report on the budget
resolution, thereby avoiding a separate vote on the debt-limit legislation. H.J.Res.
51 was deemed to have been adopted by the House on April 11 by a vote of 216-211
(i.e., the vote upon which the House agreed to the FY2004 budget resolution). The
Senate has no comparable automatic engrossment procedure and may consider such
a joint resolution under the regular legislative process. As of May 5, it had not
considered H.J.Res. 51 or other debt-limit legislation.
Appropriations and Other Spending Legislation
Federal spending is categorized into two different types: discretionary or
mandatory spending. Discretionary spending is controlled through the annual
appropriations acts, while mandatory or direct spending (which consists mostly of
entitlement programs) is determined by existing law.
Actual FY2002 federal outlays totaled $2,011 billion (see Figure 3).31 Of this
total amount, $734 billion, or about 36.5%, was discretionary spending (exploded
slices in Figure 3), while $1,277 billion, or 63.5%, was mandatory spending.
Figure 3. Actual FY2002 Outlays
by Major Spending Category
31 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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CRS-17
As noted above, the total budget authority and outlays set forth in the budget
resolution are allocated among the House and Senate committees with jurisdiction
over specific spending legislation. These allocations, commonly referred to as 302(a)
allocations after the applicable section of the Congressional Budget Act, are specified
in the joint explanatory statement accompanying the conference report to the budget
resolution.32 A point of order may be raised against any legislation that would cause
a committee’s spending allocation to be exceeded.
Discretionary Spending. Discretionary spending is under the jurisdiction
of the House and Senate Appropriations Committees. Soon after the budget
resolution is adopted by Congress, the House and Senate Appropriations Committees
subdivide their spending allocations among their subcommittees and formally report
these suballocations to their respective chambers. These suballocations, referred to
as 302(b) allocations after the applicable section of the Congressional Budget Act,
represent the spending ceilings on the individual regular appropriations acts. During
the appropriations process, these suballocations usually are revised several times.
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.
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.
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
House-adopted version, when available, as a substitute amendment, thereby retaining
the House-numbered bill for final action.
32 See U.S. Congress, Committee on Conference, Concurrent Resolution on the
Budget–Fiscal Year 2004, Conference Report to accompany H.Con.Res. 95, 108th Cong.,
1st sess., H.Rept. 108-71 (Washington: GPO, 2003), pp. 123-132.

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CRS-18
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, 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 FY2003.33 On February 20, President Bush
signed the measure into law (P.L. 108-7), thereby bringing action on the FY2003
regular appropriations acts to a close.
In addition to the 13 regular appropriations acts, Congress typically acts on at
least one supplemental appropriations measure during a session. On March 25,
within days of initiating military operations in Iraq, President Bush submitted a $74.7
billion supplemental appropriations request for FY2003 to provide additional
resources for operations in Iraq, international assistance and Iraqi relief and
reconstruction, homeland security, and the legislative branch.34
On April 1, in response to the President’s request, the Senate Appropriations
Committee reported S. 762, Supplemental Appropriations Act to Support Department
of Defense Operations in Iraq for Fiscal Year 2003 (S.Rept. 108-33). The Senate
considered S. 762 on April 2 and 3, and adopted the measure with amendments by
a 93-0 vote on April 3. In the House, the House Appropriations Committee reported
H.R. 1559, Emergency Wartime Supplemental Appropriations Act, 2003 (H.Rept.
108-55) on April 2. The House considered H.R. 1559 under an open rule (H.Res.
172) on April 3, and adopted the measure by a 414-12 vote. Subsequently, on April
7, the Senate passed H.R. 1559 by unanimous consent in lieu of S. 762 after
incorporating the text of S. 762 in H.R. 1559 as an amendment.
House and Senate conferees resolved the differences between the two versions
of the FY2003 supplemental appropriations measure and filed a conference report
(H.Rept. 108-76) on April 12. The House and Senate agreed to the conference report
on H.R. 1559 by voice vote and unanimous consent, respectively, on the same day.35
33 For a guide to the contents of H.J.Res. 2, see CRS Report RS21433, FY2003 Consolidated
Appropriations Resolution: Reference Guide, by Robert Keith.
3 4 A copy of the request is available on OMB’s Web site at
[http://www.whitehouse.gov/omb/budget/amendments/supplemental_3_25_03.pdf]. For a
detailed discussion of President Bush’s supplemental appropriations request, see CRS
Report RL31829, Supplemental Appropriations FY2003: Iraq Conflict, Afghanistan, Global
War on Terrorism, and Homeland Security, by Amy Belasco and Larry Nowels.
35 On April 11, the Senate had agreed by unanimous consent that when the Senate received
the conference report from the House, and with the concurrence of the two Senate leaders,
the conference report would be agreed to by the Senate. See Congressional Record, daily
(continued...)

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CRS-19
President Bush signed the legislation into law (P.L. 108-11) on April 16. P.L. 108-11
provides $78.5 billion in supplemental appropriations for FY2003 for operations in
Iraq, international assistance and Iraqi relief and reconstruction, homeland security,
the legislative branch, and aviation assistance.
Congress also often adopts one or more continuing resolutions each year
because of recurring delays in the appropriations process. As noted above, for
example, Congress passed eight continuing resolutions before completing action on
the FY2003 regular appropriations acts.
Mandatory Spending. Mandatory 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.
On several occasions in the past, Congress has included reserve funds in the
budget resolution to accommodate specific mandatory 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, mandatory spending legislation might be subject to
points of order if it was not assumed in the budget resolution spending amounts.
The FY2004 budget resolution (H.Con.Res. 95), as agreed to by Congress,
includes six reserve funds related to mandatory spending legislation.36 The six
reserve funds provide for the adjustment of committee spending allocations and other
budget resolution levels to accommodate legislation related to (1) Medicare
modernization and prescription drugs; (2) Meidcaid reform; (3) State Children’s
Health Insurance Program; (4) Project Bioshield; (5) health insurance for the
uninsured; and (6) Medicaid coverage for children with special needs.
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.37 Initially applicable through FY1995, they
35 (...continued)
edition, vol. 149, Apr. 11, 2003, p. S5392.
36 See Section 401-406 of H.Con.Res. 95, H.Rept. 108-71.
37 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
(continued...)

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CRS-20
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
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 FY2004 budget resolution (H.Con.Res. 95) extended the Senate PAYGO
point of order through September 30, 2008. 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
37 (...continued)
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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CRS-21
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.
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.
Source: Section 254(a) of the Balanced Budget and Emergency Deficit Control Act of 1985, as
amended (P.L. 99-177, 2 U.S.C. 904).
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.38
Chronology
April 16, 2003 –
President Bush signed H.R. 1559, the Emergency Wartime
Supplemental Appropriations Act, 2003, into law (P.L. 108-11).
38 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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April 12, 2003 –
House and Senate agreed to the conference report (H.Rept. 108-
76) to H.R. 1559, which provides $78.5 billion in supplemental
appropriations for FY2003, by voice vote and unanimous
consent, respectively.
April 11, 2003 –
House (legislative day of April 10) and Senate agreed to the
FY2004 budget resolution (H.Con.Res. 95, H.Rept. 108-71) by
votes of 216-211 and 51-50, respectively.
April 3, 2003 –
Senate passed S. 762, Supplemental Appropriations Act to
Support Department of Defense Operations in Iraq for Fiscal
Year 2003, with amendments by a 93-0 vote. Subsequently, on
April 7, the Senate passed H.R. 1559 by unanimous consent in
lieu of S. 762 after incorporating the text of S. 762 in H.R. 1559
as an amendment.
April 3, 2003 –
House passed H.R. 1559, Emergency Wartime Supplemental
Appropriations Act, 2003, as amended by a 414-12 vote.
March 26, 2003 –
Senate agreed to its version of the FY2004 budget resolution
(S.Con.Res. 23, S.Prt. 108-18) by a 56-44 vote.
March 25, 2003 –
President Bush submitted a $74.7 billion supplemental
appropriations request for FY2003 to provide additional
resources for operations in Iraq, international assistance and
Iraqi relief and reconstruction, homeland security, and the
legislative branch.
March 21, 2003 –
House agreed to its version of the FY2004 budget resolution
(H.Con.Res. 95, H. Rept. 108-37) by a 215-212 vote.
February 3, 2003 – President Bush submitted his FY2004 budget to Congress.
For Additional Reading
Congressional Hearings, Reports, and Documents
Congressional Budget Office. The Budget and Economic Outlook: Fiscal Years
2004-2013. Washington: Jan. 2003.
Congressional Budget Office. An Analysis of the President’s Budgetary Proposals
for Fiscal Year 2004. Washington: Mar. 2003.
U.S. Congress. Committee on Conference. Concurrent Resolution on the
Budget–Fiscal Year 2004. Conference Report to accompany H.Con.Res. 95.
108th Congress, 1st session. H.Rept. 108-71. Washington: GPO, 2003.

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U.S. Congress. House Committee on the Budget. Concurrent Resolution on the
Budget–Fiscal Year 2004. Report to accompany H.Con.Res. 95. 108th
Congress, 1st session. H.Rept. 108-37. Washington: GPO, 2003.
U.S. Congress. Senate Committee on the Budget. Concurrent Resolution on the
Budget FY2004. Committee print to accompany S.Con.Res. 23. 108th
Congress, 1st session, S.Prt. 108-19. Washington: GPO, 2003.
CRS Products
CRS Report RL31829. Supplemental Appropriations FY2003: Iraq Conflict,
Afghanistan, Global War on Terrorism, and Homeland Security, by Amy
Belasco and Larry Nowels.
CRS Report RL31795. Congressional Budget Actions in 2002, by Bill Heniff Jr.
CRS Report RL30297. Congressional Budget Resolutions: Selected Statistics and
Information Guide, by Bill Heniff Jr.
CRS Report 98-721. Introduction to the Federal Budget Process, by Robert Keith
and Allen Schick.
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.
CRS Report RL31784. The Budget for Fiscal Year 2004, by Philip D. Winters.

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