Order Code RL32153
CRS Report for Congress
Received through the CRS Web
Across-the-Board Spending Cuts
in Omnibus Appropriations Acts
Updated August 10, 2004
Robert Keith
Specialist in American National Government
Government and Finance Division
Congressional Research Service ˜ The Library of Congress

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Across-the-Board Spending Cuts
in Omnibus Appropriations Acts
Summary
In four of the past five fiscal years (FY2000, FY2001, FY2003, and FY2004),
Congress and the President brought action on the regular appropriations acts for the
fiscal year to a close by incorporating unfinished acts into an omnibus appropriations
measure. Each of the four omnibus acts included an across-the-board spending cut
to offset part of the measure’s cost. Media reports indicate that an omnibus
appropriations may be used to conclude the regular appropriations cycle for FY2005.
The four across-the-board spending cuts enacted previously ranged in size from
0.22% to 0.65% of covered appropriations, and $1.1 billion to $2.8 billion in savings:
! the 0.38% cut for FY2000 in P.L. 106-113 saved $2.4 billion in
budget authority;
! the 0.22% cut for FY2001 in P.L. 106-554 saved $1.1 billion in
budget authority;
! the 0.65% cut for FY2003 in P.L. 108-7 saved $2.6 billion in budget
authority; and
! the 0.59% cut for FY2004 in P.L. 108-199 saved $2.8 billion in
budget authority.
In addition to the 0.59% cut for FY2004 (applicable to nondefense spending),
P.L. 108-199 required defense rescissions amounting to $1.8 billion to be made by
September 30, 2004. This requirement was repealed by Section 9003(c) of the
Defense Appropriations Act for FY2005 (P.L. 108-287).
The across-the-board cuts may be compared in several ways. First, the range of
appropriations subject to the spending cuts varied under each provision because of
variations in the number of regular appropriations acts covered and the specification
of particular exemptions. Second, the reductions imposed by the percentage cuts had
to be made subject to a percentage limitation or a proportionality requirement. For
example, the FY2000 cut required that Defense accounts be reduced uniformly; with
regard to nondefense accounts, proportional cuts were not required, but no program,
project, or activity (PPA) within an account could be reduced by more than 15%.
Third, the size of the percentage cut was reduced significantly during the course of
legislative action in two of the cases.
The significance of the spending cuts differed with regard to budget
enforcement: (1) the FY2000 cut was needed to avoid a sequester; (2) the FY2001
cut was not needed to avoid a sequester, but it contributed to overall discretionary
spending being below the statutory limits; (3) the FY2003 cut was needed to adhere
to an informal limit reached between congressional leaders and President Bush in the
absence of a budget resolution and the expiration of the statutory limits on
discretionary spending; and (4) the FY2004 cut contributed to adherence to the
discretionary spending levels assumed in the FY2004 budget resolution.
This report will be updated as developments warrant.

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Contents
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Discretionary Spending and Annual Appropriations Acts . . . . . . . . . . . . . . . 1
Constraints on Discretionary Spending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Across-the-Board Spending Cuts in FY2000-FY2004 . . . . . . . . . . . . . . . . . . . . . 3
Similarities and Differences in the Four Provisions . . . . . . . . . . . . . . . . . . . 4
FY2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Budgetary Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Legislative Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Design and Implementation of the 0.38% Spending Cut . . . . . . . . . . . 11
FY2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Budgetary Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Legislative Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Design and Implementation of the 0.22% Spending Cut . . . . . . . . . . . 16
FY2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Budgetary Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Legislative Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Design and Implementation of the 0.65% Spending Cut . . . . . . . . . . . 22
FY2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Budgetary Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Legislative Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Design and Implementation of the 0.59% Spending Cut . . . . . . . . . . . 25
Appendix A. Text of the Across-the-Board Spending Cut Provisions . . . . . . . . 28
FY2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
FY2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
FY2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
FY2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
List of Tables
Table 1. Summary of Across-the-Board Spending Cuts in Omnibus
Appropriations Acts for FY2000-FY2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Table 2. Exemptions From Across-the-Board Spending Cuts
for FY2000-FY2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Table 3. FY2000 Rescissions Made Under the 0.38% Cut . . . . . . . . . . . . . . . . . 13
Table 4. FY2001 Rescissions Made Under the 0.22% Cut . . . . . . . . . . . . . . . . . 18
Table 5. FY2003 Rescissions Made Under the 0.65% Cut . . . . . . . . . . . . . . . . . 23
Table 6. FY2004 Rescissions Made Under the 0.59% Cut . . . . . . . . . . . . . . . . . 27

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Across-the-Board Spending Cuts
in Omnibus Appropriations Acts
In four of the past five fiscal years (FY2000, FY2001, FY2003, and FY2004),
Congress and the President brought action on the regular appropriations acts for the
fiscal year to a close by incorporating unfinished acts into an omnibus appropriations
measure.1 Each of the four omnibus appropriations acts included an across-the-board
spending cut, in the form of rescissions, to offset part of the measure’s cost.2
According to media reports, congressional leaders have endorsed using an
omnibus appropriations measure later in the session to conclude the regular
appropriations cycle for FY2005.
This report examines the use of across-the-board spending cuts in omnibus
appropriations acts for FY2000-FY2004, assessing the budgetary context leading to
the spending cut, recounting the legislative action on the spending cut provision, and
reviewing the provision’s design and implementation.
Background
Discretionary Spending and Annual Appropriations Acts
Discretionary spending, which accounts for roughly one-third of total federal
spending, is spending that is under the control of the House and Senate
Appropriations Committees and is provided in annual appropriations acts. For the
most part, discretionary spending funds the routine operations of the federal
government, including the “salaries and expenses” accounts of most agencies.
Discretionary spending is distinguished from direct spending (also referred to
as mandatory spending), which is controlled by the legislative committees of the
House and Senate through substantive law and funds entitlement and other
mandatory programs, such as Medicare, federal military and civilian retirement, and
unemployment compensation. Discretionary spending and direct spending together
make up total federal spending.
1 For more information on this topic, see CRS Report RL32473, Omnibus Appropriations
Acts: Overview of Recent Practices, by Robert Keith.
2 The spending cuts also required reductions in obligation limitations for accounts where this
was appropriate.

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Each year, Congress and the President enact discretionary spending in the form
of 13 regular appropriations acts, as well as continuing and supplemental
appropriations acts. If action is not completed on all of the regular appropriations
acts toward the end of a congressional session, Congress sometimes will combine the
unfinished appropriations acts into an omnibus measure. An omnibus appropriations
act may set forth the full text of each of the regular appropriations acts included
therein, or it may enact them individually by cross-reference. In addition, significant
portions of omnibus appropriations acts may deal with substantive legislation rather
than appropriations issues.3
Constraints on Discretionary Spending
The House and Senate consider annual appropriations acts, and other budgetary
legislation, within constraints established in a yearly budget resolution required by
the Congressional Budget Act of 1974, as amended.4 Budget resolution policies are
enforced by points of order that may be raised during House and Senate consideration
of spending, revenue, and debt-limit legislation. On occasion, budget policies may
be modified by agreements reached between congressional leaders and the President;
such modifications may be accommodated during legislative action through the use
of waivers of points of order, emergency spending designations, and other budgetary
or procedural devices.
During the period covering FY1991-FY2002, legislative action on annual
appropriations acts also was subject to limits on discretionary spending established
by the Budget Enforcement Act (BEA) of 1990 (which amended an underlying law,
the Balanced Budget and Emergency Deficit Control Act of 1985).5 Under this
statutory mechanism, separate discretionary spending limits were applied to two
different measurements of spending — budget authority and outlays. Budget
authority represents the legal authority for agencies to incur obligations. Annual
appropriations are perhaps the most well known form of budget authority. Outlays
represent the liquidation of the obligation, usually in the form of an electronic funds
transfer or the issuance of a check by the Treasury Department.
The discretionary spending limits were enforced by the sequestration process.6
A sequester involved automatic, largely across-the-board reductions in discretionary
spending in order to eliminate any breach of the limits. A separate sequestration
3 For more information on this topic, see CRS Report RL30619, Examples of Legislative
Provisions in Omnibus Appropriations Acts, by Robert Keith.
4 The Congressional Budget Act of 1974 is Titles I-IX of P.L. 93-344 (July 12, 1974); see
88 Stat. 297. For a general discussion of budget enforcement procedures, see CRS Report
98-721, Introduction to the Federal Budget Process, by Robert Keith and Allen Schick.
5 The BEA of 1990 is Title XIII of P.L. 101-508 (Nov. 5, 1990), the Omnibus Budget
Reconciliation Act of 1990; see 104 Stat. 1388-573 through 628. The 1985 act is Title II
of P.L. 99-177 (Dec. 12, 1985), a measure increasing the public debt limit; see 99 Stat.
1037-1101.
6 The sequestration process is discussed in detail in CRS Report RL31137, Sequestration
Procedures Under the 1985 Balanced Budget Act, by Robert Keith.

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process entailed automatic reductions in mandatory spending if the enactment of
revenue or mandatory spending measures caused a violation of a “pay-as-you-go”
(PAYGO) requirement. Under the Balanced Budget and Emergency Deficit Control
Act of 1985, as amended, the director of the Office and Management and Budget
(OMB) was charged with determining within 15 days after the close of a
congressional session whether a sequester of either kind was required for the fiscal
year.
In order to adhere to restraints imposed by congressional budget resolutions, the
discretionary spending limits, and ad hoc budget agreements between congressional
leaders and the President, or to meet other purposes, Congress and the President from
time to time incorporate across-the-board cuts in discretionary budget authority into
annual appropriations acts. While this report addresses across-the-board spending
cuts in omnibus appropriations acts, the device has been included in other types of
appropriations acts as well. For example, Section 1403 (116 Stat. 898-899) of the
Supplemental Appropriations Act for Further Recovery From and Response To
Terrorist Attacks on the United States, 2002 (P.L. 107-206; August 2, 2002), required
a $350 million cut in prior appropriations throughout the executive branch for
administrative and travel expenses.7
Across-the-Board Spending Cuts in FY2000-FY2004
During the period covering FY2000-FY2004, Congress passed and the President
enacted four omnibus appropriations acts containing across-the-board spending cuts
into law.8
As shown in Table 1, the four acts included across-the-board spending cuts
ranging in size from 0.22% to 0.65% of covered appropriations, and $1.1 billion to
$2.8 billion in savings:
! the 0.38% cut in P.L. 106-113, the Consolidated Appropriations Act
for FY2000, saved $2.4 billion in budget authority;
! the 0.22% cut in P.L. 106-554, the Consolidated Appropriations Act
for FY2001, saved $1.1 billion in budget authority;
! the 0.65% cut for in P.L. 108-7, the Consolidated Appropriations
Resolution for FY2003, saved $2.6 billion in budget authority; and
! the 0.59% cut in P.L. 108-199, the Consolidated Appropriations Act
for FY2004, saved $2.8 billion in budget authority.
7 For further information on this spending cut, see OMB Bulletin 02-05 (July 29, 2002),
Rescissions of Funds in Administrative and Travel Accounts.
8 Another measure, which may be considered an “omnibus” appropriations act, was enacted
into law during this period. P.L. 106-377 combined the FY2001 VA-HUD Appropriations
Act with the FY2001 Energy and Water Development Appropriations Act. The measure is
excluded from this analysis because it did not include an across-the-board cut.

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Table 1. Summary of Across-the-Board Spending Cuts in
Omnibus Appropriations Acts for FY2000-FY2004
Total
Savings
Congress/
Fiscal
Public Law
Date
Percentage
(BA in
Session
Year
Number
Enacted
Reduction
$ billions)a
106th/1
2000
P.L. 106-113
11/29/99
0.38%
2.4
106th/2
2001
P.L. 106-554
12/21/00
0.22%
1.1
107th/2b
2003
P.L. 108-7
02/20/03
0.65%
2.6
108th/1
2004
P.L. 108-199
01/23/04
0.59%
2.8
a “BA” refers to budget authority. Savings amounts were obtained from the following Office of
Management and Budget “Appropriations 7-Day-After Reports” to Congress, available on the
OMB website at [http://www.whitehouse.gov/omb/legislative/7day/index.html]: (1) P.L. 106-
113, January 3, 2000; (2) P.L. 106-554, January 15, 2001; and (3) P.L. 108-7, March 27, 2003;
and, for FY2004, from the Congressional Budget Office.
b. Action on the regular appropriations acts for FY2003 occurred mainly during the second session
of the 107th Congress, but the omnibus appropriations act bringing the process to a close for that
fiscal year was considered and enacted into law during the first weeks of the 108th Congress.
Following a brief discussion of the similarities and differences between the four
spending-cut provisions, each of them is discussed in more detail below.
Similarities and Differences in the Four Provisions
In addition to the size of the percentage cut and the total amount of savings, the
four across-the-board spending cuts may be compared in other ways.
First, the range of appropriations subject to the spending cuts vary under each
provision. The FY2000, FY2001, and FY2004 cuts were made applicable to the
budget authority provided for the relevant fiscal year “in this or any other Act” or a
similar formulation (that is, all of the regular appropriations acts for that year,
including those enacted as freestanding laws). The FY2003 cuts, however, were
made applicable to the 11 regular appropriations acts included in the omnibus
measure, but not to the two measures enacted earlier as freestanding laws (the
Defense and Military Construction Appropriations Acts).9
The coverage was then modified in all four instances by the specification of
appropriations acts or accounts/programs exempted from the cuts. The acts and
accounts/programs exempted under each of the four cuts are summarized in Table
2. (Although the across-the-board spending cut required by the Consolidated
9 The FY2003 cut also was made applicable to advance appropriations for FY2003 enacted
in appropriations laws for prior fiscal years.

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Appropriations Act for FY2004 did not apply to defense spending, such spending
was subject to a requirement elsewhere in the act to rescind $1.8 billion.)
Table 2. Exemptions From Across-the-Board Spending Cuts
for FY2000-FY2004
Fiscal
Public Law
Appropriations Acts
Accounts/Pprograms
Year
Number
Exempted
Exempted
2000
P.L. 106-113
[none]
•Military personnel accounts
2001
P.L. 106-554
•Labor-HHS-Education
•Military personnel accounts
•Specified supplementals for
FY2000
2003
P.L. 108-7
•Defense
•Women, Infants, and
•Military Construction
Children program
•Head Start
•veterans’ medical care
•NASA’s space shuttle
program
2004
P.L. 108-199
•Defense
•Supplementals for FY2004
•Military Construction
Second, the reductions imposed by the percentage cuts were made subject to a
percentage limitation or a proportionality requirement. The FY2000 cut required that
defense accounts be reduced uniformly; with regard to nondefense accounts,
proportional cuts were not required, but no program, project, or activity (PPA) within
an account could be reduced by more than 15%. The FY2001, FY2003, and FY2004
cuts required proportional reductions to all accounts and PPAs.
Third, the size of the percentage cut was reduced during the course of legislative
action in two instances. For FY2000, President Clinton first vetoed an appropriations
act providing for a 0.97% cut before agreeing to the omnibus legislation requiring a
0.38% cut. During consideration of the FY2003 omnibus legislation, the Senate at
one point had endorsed a 2.9% cut, which ultimately was reduced to 0.65%.
Fourth, the significance of the spending cuts differ with regard to budget
enforcement. The FY2000 cut was an integral component of the plan that
successfully avoided a sequester at the end of the session. The FY2001 cut
contributed to overall discretionary spending being below the statutory limits, but the
across-the-board proved to be unnecessary in avoiding a sequester. With regard to
the FY2003 cut, the House and Senate did not reach agreement on a budget
resolution and the statutory discretionary limits had expired the fiscal year before;
nonetheless, the across-the-board cut was necessary in adhering to an informal limit
reached between congressional leaders and President Bush and avoiding a veto of the
omnibus appropriations act. The FY2004 cut contributed to keeping overall
discretionary spending within constraints established by the FY2004 budget
resolution, as modified by an agreement between congressional leaders and President
Bush.

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Finally, the FY2000 and FY2001 cuts instructed the OMB director to report to
Congress (in the President’s annual budget submission) on the implementation of the
reductions, while the FY2004 cut instructed the OMB director to report such
information to the House and Senate Appropriations Committees within 30 days after
enactment. The FY2003 cut did not include any reporting requirement.
FY2000
Budgetary Context. As the federal budget process for FY2000 unfolded in
1999, during the first session of the 106th Congress, a policy emerged of keeping the
level of discretionary spending within the statutory limits while at the same time not
“using” the Social Security surplus (i.e., incurring an on-budget deficit).10 One of the
purposes in adhering to the discretionary spending limits was to avoid a sequester at
the end of the session. 11
In order to enhance its efforts in trying to stay within the discretionary spending
limits, Congress and President Clinton used various budgetary devices and
techniques, including emergency spending designations, advance appropriations,
rescissions, offsets in mandatory programs, obligation and payment delays, and
directed scoring.12 These devices either resulted in upward adjustments in the limits,
as was the case with the emergency spending designations, or were counted as
savings for the fiscal year. According to OMB, the adjustments and savings from
these devices amounted to tens of billions of dollars and averted the need for a
sequester; in the aggregate, discretionary spending enacted for FY2000 was $1.6
billion under the budget authority limit and $3.5 billion under the outlay limit.13
The Congressional Budget Office (CBO) also issued sequestration estimates, but
they were only advisory in nature; only the determinations made by the OMB director
could have triggered a sequester. For FY2000, CBO indicated that discretionary
spending exceeded the limits by $6.7 billion in budget authority and $15.2 billion in
outlays, which would have necessitated an across-the-board cut of about 4%.14
One of the devices used to prevent the violation of the discretionary spending
limits was the inclusion of an across-the-board cut in the omnibus appropriations act
10 This issue is discussed in more depth in CRS Report RL30353, Discretionary Spending
Limits and the Social Security Surplus, by Robert Keith.
11 The application of the process for this fiscal year is explained in detail in CRS Report
RL30363, The Sequestration Process and Across-the-Board Spending Cuts for FY2000, by
Robert Keith.
12 These budgetary devices and techniques are discussed in (1) U.S. Congressional Budget
Office, The Economic and Budget Outlook: Fiscal Years 2001-2010 (Washington: Jan.
2000), pp. 76-77; and (2) U.S. Executive Office of the President, Office of Management and
Budget, OMB Final Sequestration Report to the President and Congress for Fiscal Year
2000 (Washington: Jan. 25, 2000), see especially Table 2 on pp. 4-6.
13 OMB Final Sequestration Report, ibid., Table 6, pp. 13-14.
14 U.S. Congressional Budget Office, Final Sequestration Report for Fiscal Year 2000
(Washington: Dec. 2, 1999), p. 1.

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used to wrap up consideration of the regular appropriations acts for FY2000.
According to estimates made by OMB following the measure’s enactment, the 0.38%
cut was expected to yield savings of $2.351 billion in budget authority and $1.356
billion in outlays for the fiscal year.15 (In the Final Sequestration Report for FY2000,
OMB increased its estimate of the savings in budget authority to $2.357 billion.)
The provision requiring an across-the-board spending cut was included in a
“miscellaneous appropriations” portion of the omnibus appropriations act that
contained other offsets. Savings from the across-the-board cut, combined with the
savings from the other offsets, amounted to $6.827 billion in budget authority and
$9.465 billion in outlays for FY2000.
Without the enactment of the 0.38% spending cut (or comparable offsets), the
FY2000 limit for discretionary budget authority would have been exceeded by about
$0.8 billion and a sequester would have occurred.
Legislative Action. House and Senate interest in an across-the-board
spending cut surfaced relatively late in the session, after much of the annual
appropriations process had been completed. Legislative action on across-the-board
cut proposals encompassed several different annual appropriations measures,
beginning with S. 1650 and including H.R. 3064 and H.R. 3194. The formulation
of the proposal evolved through the different stages of legislative action, from a
sense-of-the-Senate statement, to a 0.97% cut, and finally to a 0.38% cut.
S. 1650. On September 29, 1999, the Senate began consideration of S. 1650,
its initial version of the Labor-HHS-Education Appropriations Act for FY2000. On
October 1, Senator Don Nickles, the assistant majority leader, offered an amendment
(number 1851) to the bill stating the sense of the Senate that an across-the-board cut
in appropriations should be adopted, if necessary, to avoid incurring an on-budget
deficit. On October 6, he offered a further amendment (number 1889) to his
underlying amendment. Amendment number 1889 was similar to the underlying
amendment and focused on “protecting Social Security surpluses,” stating the sense
of the Senate that
Congress should ensure that the fiscal year 2000 appropriations measures do not
result in an on-budget deficit (excluding the surpluses generated by the Social
Security trust funds) by adopting an across-the-board reduction in all
discretionary appropriations sufficient to eliminate such deficit if necessary.16
In describing his amendments, Senator Nickles indicated that an across-the-
board cut of 1% of discretionary appropriations might be needed to eliminate an
estimated overage of about $5 billion; other Senators provided estimates that the
15 See the Office of Management and Budget’s “Appropriations 7-Day-After Report” to
Congress on P.L. 106-113, available on the OMB website at
[http://www.whitehouse.gov/omb/legislative/7day/index.html]
16 The text of amendments number 1851 and 1889, and the accompanying remarks of
Senator Nickles, are found in the Congressional Record of Oct. 1, 1999, pp. S11774-S11780
and S11808.

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overage might be much larger and that a cut of 5.5% might be needed. On October
6, the Senate adopted amendment number 1889 by a vote of 54-46. After tabling
another amendment dealing with the issue, offered by Senator Frank Lautenberg,
Senator Nickles withdrew his underlying amendment. The Senate passed the bill the
next day without an across-the-board cut provision.
H.R. 3064. Following a veto by President Clinton on September 28 of the first
District of Columbia Appropriations Act for FY2000, the House and Senate
developed a second version, H.R. 3064, which also included the Labor-HHS-
Education appropriations for FY2000. The conferees on the measure inserted an
across-the-board cut provision in Section 1001 of Division C of the act. The House
agreed to the conference report on the measure on October 28 by a vote of 218-211;
the Senate agreed to it on November 2 by a vote of 49-48.
Unlike the language that the Senate had considered earlier, Section 1001 set in
place the requirement for a specific cut in discretionary appropriations — 0.97% of
the total provided for each account. The section also provided that the pay of
Members of Congress, a permanent rather than an annual appropriation, would be
subject to the cut. (Under the sequestration process, the pay of Members of Congress
was not subject to reduction.)
Senator Ted Stevens, chairman of the Senate Appropriations Committee,
described the provision as a placeholder — in the face of a certain veto — until the
final necessary reductions could be negotiated with the Clinton Administration:
We have included ... against my best wishes, an across-the-board cut. That is
primarily because only the administration can identify some of the areas we can
reduce safely without harming the programs, and I am confident when we come
to what we call the final period to devise a bill, we will work out with the
administration some offsets that will take care of the bill. I am hopeful we will
have no across-the-board cut, but if it comes, it will not be as large as the one in
this bill right now.17
President Clinton vetoed H.R. 3064 on November 3.18 In his veto message to
Congress, he stated:
I am vetoing H.R. 3064 because the bill, including the offsets section, is deeply
flawed. It includes a misguided 0.97 percent across-the-board reduction that will
hurt everything from national defense to education and environmental programs
... The bill is clearly unacceptable. I have submitted a budget that would fund
these priorities without spending the Social Security surplus, and I am committed
to working with the Congress to identify acceptable offsets for additional
spending for programs that are important to all Americans.
17 See the remarks of Senator Ted Stevens in the Congressional Record of Nov. 2, 1999, p.
S13623.
18 See District of Columbia Appropriations Act, 2000 — Veto Message From the President
of the United States (H.Doc.No. 106-154) in the Congressional Record of Nov. 3, 1999 (No.
153), pp. H11441-H11443.

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H.R. 3194 (P.L. 106-113). The House’s third version of a measure providing
FY2000 appropriations for the District of Columbia, H.R. 3194, became, in
conference, a vehicle for four additional regular appropriations acts and several
legislative measures. In addition to dramatically expanding the scope of H.R. 3194,
the conferees changed its title to the Consolidated Appropriations Act for FY2000.19
The House adopted the conference report on November 18, 1999, by a vote of
296-135; the Senate adopted it the next day by a vote of 74-24. President Clinton
signed the measure into law on November 29 as P.L. 106-113 (113 Stat. 1501-
1537).20
P.L. 106-113 was divided into two parts. Division A set forth the full text of the
FY2000 appropriations for the District of Columbia. Division B provided
appropriations for the remaining four regular appropriations acts (in Section 1000(a)).
Instead of including the full text of each act, however, the subsection enacted
individual measures by cross-reference. Each of the four acts, in a form reflecting
the final budget agreement reached between President Clinton and Congress, was
introduced as a separate bill on November 17, 1999; these four bills were cross-
referenced as introduced on that date.
Section 1000(a) of Division B also enacted five other measures by cross-
reference. Each of these measures also was introduced as a separate bill on
November 17. The first of these other cross-referenced measures, H.R. 3425, dealt
with “miscellaneous appropriations” and included in Title III (Fiscal Year 2000
Offsets and Rescissions) many of the savings required by the budget agreement. In
particular, Section 301 of H.R. 3425 (113 Stat. 1501A-303 and 304) required a
government-wide cut of 0.38% in discretionary appropriations.
The remaining cross-referenced measures dealt with (1) amendments to the
Balanced Budget Act of 1997 pertaining to Medicare and related programs; (2)
authorizations for the State Department; (3) the federal Milk Marketing Orders
program; and (4) the Intellectual Property and Communications Omnibus Reform
Act of 1999.
While the across-the-board cut provision sparked some strong criticism during
House and Senate floor debate on the conference report, its legislative history is
relatively sparse. The joint explanatory statement accompanying the conference
report on the measure merely indicated: “The conference agreement includes several
offsets and rescissions.”21
19 For more detailed information on the contents and structure of the act, see CRS Report
RS20403, FY2000 Consolidated Appropriations Act: Reference Guide, by Robert Keith.
20 On November 19, the House and Senate both passed H.Con.Res. 239, a measure making
a technical correction in the enrollment of the Consolidated Appropriations Act. The
correction dealt solely with a portion of H.R. 3194 containing State Department
authorizations.
21 See H.Rept. 106-479 in the Congressional Record of Nov. 17, 1999 (Part II), pp. H12230-
H12609 (especially p. H12503).

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CRS-10
In the House, Speaker Dennis Hastert and other House leaders discussed it
briefly in the context of reducing waste, fraud, and abuse:
! Speaker Dennis Hastert
This bill also takes a very important first step in eliminating government waste.
Every year our government spends billions and billions of dollars, and we are
saying in this bill, let us take 38 cents out of every $100 that the Federal
Government spends and find waste and abuse. I think that is doable, and I think
next year we ought to do the same thing, over and over again, because that is
what the American people expect us to do.
The across-the-board spending cut in this bill will force the agencies of
government to take a close look at their budget and see what frivolous spending
can be eliminated. Taxpayers deserve to have their money spent responsibly, and
this bill will save the American taxpayers from over $1 billion in excess
spending. (Congressional Record, Nov. 18, 1999 (No. 164), p. H12800.)
! Majority Leader Richard Armey
Beginning in 1998, fiscal year 1999, and now with this budget agreement in
fiscal year 2000, we will have retired a third of a trillion dollars’ worth of debt
for the American people. We will have stopped the raid on Social Security
forever. We will have enforced this with an across-the-board spending reduction
that acknowledges truly it is time now to be disciplined to eliminate waste,
inefficiency, fraud in the use of the taxpayers’ dollars. A new commitment of
good government in government. (Congressional Record, Nov. 18, 1999 (No.
164), p. H12766.)
! Majority Whip Tom DeLay
We tried to cut waste by just suggesting a 1 percent across-the-board cut.
Incredibly, the Democrats maintain that a measly 1 percent of waste could not be
found in the Federal Government. Well, even the President eventually agreed
with us. Now we have an across-the-board spending cut. (Congressional
Record, Nov. 18, 1999 (No. 164), p. H12767.)
Representative David Obey, the ranking minority member of the House
Appropriations Committee, was sharply critical of the provision. In the course of
asserting that the FY2000 appropriations measures involved about $45 billion in
“gimmicks,” he observed:
Another issue at the center of negotiations was whether to include a small
across-the-board cut. This cut was not necessary to reach the offset targets to
make sure the bill was paid for; more than enough money was available from
other sources. It is simply an attempt by the majority to create a symbol that
could be used to pretend that in the midst of this orgy of gimmickry in spending,
that they are continuing to be fiscally responsible. (Congressional Record, Nov.
18, 1999 (No. 164), p. H12742.)
There was hardly any discussion of the provision during Senate consideration
of the conference report. Senator John McCain suggested that it represented an
abdication of budgetary responsibility: “It resorts to an across-the-board budget cut

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CRS-11
to avoid dipping into the Social Security surplus, rather than making the hard choices
among other spending priorities.”22
In his statement made upon signing H.R. 3194 into law on November 29,
President Clinton did not make any reference to the across-the-board cut.23
Design and Implementation of the 0.38% Spending Cut. In fashioning
the 0.38% spending cut, Congress included several important features (the text of the
provision is provided in Appendix A). First, reductions made pursuant to the
provision were to take the form of rescissions of FY2000 budget authority (i.e.,
appropriations and offsetting collections). Rescissions permanently cancel budget
authority.
Second, the required spending cuts were to be applied only to the total
discretionary budget authority made available to each department and agency. Any
mandatory resources made available to a department or agency (e.g., permanent
appropriations to fund an entitlement program) would not be affected by the
requirement.
Third, reductions were to be applied uniformly to each account for the
Department of Defense (and the defense activities of the Department of Energy),
except that no reductions were to be made in military personnel accounts. With
regard to nondefense activities, there was no stated requirement that reductions be
applied uniformly to each department’s or agency’s accounts. However, there was
a requirement that no “program, project, or activity” (PPA) within an account be
reduced by more than 15%.24
Finally, the OMB director was instructed to include in the President’s budget
for FY2001 a report specifying the reductions made to each account under the
requirement.
Unlike the earlier provision in H.R. 3064 providing for a 0.97% cut, pay for
Members of Congress was not made subject to the reductions.
On November 24, 1999, OMB issued Bulletin 00-01, Rescission of FY2000
Discretionary Budget Authority, providing guidance to agencies in how to comply
with the requirement for the 0.38% cut. OMB advised agencies to observe the
following guidelines beyond those specified in the act:
! Reductions should be taken from the least critical funding available
to the agency;
22 See the remarks of Senator John McCain in the Congressional Record of Nov. 19, 1999
(Part II), p. S15036.
23 See his statement in the Weekly Compilation of Presidential Documents (vol. 35, no. 48),
Dec. 6, 1999, pp. 2458-2465.
24 In the case of accounts funded by annual appropriations acts, the PPAs are defined in the
acts and accompanying reports. Generally, PPAs are listed in the President’s budget under
the “Program and Financing” schedule for each account.

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CRS-12
! Reductions should be considered from enacted funding above the
President’s request;
! Wherever possible, no reductions should be taken that would require
reductions-in-force; and
! Agencies should make targeted recommendations rather than an
across-the-board funding cut.
The report required of the OMB director was part of the budget that President
Clinton submitted to Congress on February 7, 2000. The 17-page report was
included in the Analytical Perspectives volume as a separate chapter.25
According to the report, a total of $2,356,909,000 in discretionary budget
authority was rescinded in 492 accounts (see Table 3). This included $9.7 million
for the legislative branch and $14.0 million for the judicial branch.
Reductions in individual accounts ranged from $2 thousand for the “U.S.
Commission for the Preservation of America’s Heritage Abroad” account, to $116.4
million for the “Operation and Maintenance, Navy” account. The largest share of the
cuts, amounting to $1.055 billion and involving 70 accounts, was allocated to
military activities of the Department of Defense. The other departments with cuts in
excess of $100 million included the Departments of Transportation ($179.6 million),
Health and Human Services ($166.8 million), and Education ($108.6 million).
On January 10, 2000, the OMB communications office issued a fact sheet giving
a preliminary assessment regarding implementation of the cuts at the sub-account
level. According to media reports based on the fact sheet, OMB indicated that the
cuts would be applied to three broad areas: (1) programmatic cuts amounting to $1.7
billion; (2) reductions in 2,372 congressional earmarks amounting to $478 million;
and (3) cuts in salaries and expenses amounting to $193 million.26 The three
agencies with the largest numbers of cuts to earmarked projects were the Department
of Transportation (nearly 600 projects amounting to $61 million), the Environmental
Protection Agency (more than 300 projects amounting to $23 million), and the
Department of Housing and Urban Development (nearly 500 projects amounting to
$19 million).
The OMB factsheet indicated that agencies intended to avail themselves of the
authority to cut individual programs and projects within accounts by as much as 15%
in order to spare others from any reduction and to target less-critical ones. Programs
expected to be completely protected from reduction included the Head Start pre-
school program; the Women, Infants, and Children (WIC) program; Superfund, the
Lands Legacy program; and the Clean Water Action Plan, among others. In making
many of the cuts in the Department of Transportation, infrastructure programs were
25 See the section in U.S. Executive Office of the President, Office of Management and
Budget, Budget of the United States Government, Fiscal Year 2001, Analytical Perspectives
(Washington: Feb. 2000), Section 21, “Report on the Government-Wide Rescissions in the
Consolidated Appropriations Act, 2000 (P.L. 106-113),” pp. 381-397.
26 BNA, Inc., “Appropriations: White House Cuts Under FY2000 Budget Trim Spending
by 0.38% or $2.35 Billion,” Daily Report for Executives, Tue., Jan. 11, 2000.

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CRS-13
expected to be cut in order to protect safety-sensitive programs, including operations
of the Federal Aviation Administration and the Coast Guard. Cuts to 180 highway
projects were expected to range from 5% to 12%, while 409 transit projects were
expected to be cut uniformly by 0.38%.27
Table 3. FY2000 Rescissions Made Under the 0.38% Cut
Number of
Rescissions
Category
Accounts
($ millions)
Legislative branch
21
9.733
Judicial branch
9
13.961
Department of Agriculture
33
95.927
Department of Commerce
18
32.691
Department of Defense — Military
70
1,054.939
Department of Education
9
108.643
Department of Energy
21
66.340
Department of Health and Human Services
45
166.847
Department of Housing and Urban Development
2
91.040
Department of the Interior
31
31.346
Department of Justice
15
70.344
Department of Labor
9
33.219
Department of State
25
25.441
Department of Transportation
16
179.638
Department of the Treasury
17
47.117
Department of Veterans’ Affairs
1
79.519
Corps of Engineers
1
15.690
Environmental Protection Agency
7
28.848
Executive Office of the President
15
1.151
Federal Emergency Management Agency
4
12.734
General Services Administration
1
20.022
International Assistance Programs
20
52.495
27 See Daily Report for Executives, ibid., and, in the same issue, “Transportation: OMB
Targets 590 Earmarked Projects For Cuts as Part of 0.38 Percent Reduction.”

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CRS-14
Number of
Rescissions
Category
Accounts
($ millions)
National Aeronautics and Space Administration
3
51.881
National Science Foundation
4
14.866
Small Business Administration
2
3.280
Social Security Administration
3
24.083
All other accounts
90
25.114
Total
492
2,356.909
Source: U.S. Executive Office of the President, Office of Management and Budget, Budget of the
United States Government, Fiscal Year 2001, Analytical Perspectives (Washington: February 2000),
Section 21, “Report on the Government-Wide Rescissions in the Consolidated Appropriations Act,
2000 (P.L. 106-113),” pp. 381-397.
FY2001
Budgetary Context. During the second session of the 106th Congress,
President Clinton and Congress began the budget cycle for FY2001 by
recommending discretionary spending levels well above the existing statutory
limits.28 The assumption was made that the statutory limits eventually would be
raised to accommodate the new levels. The positions reflected in part the fact that
spending for the prior fiscal year, FY2000, was expected to exceed the existing limits
for FY2001 by a substantial margin, and that estimates of the on-budget surplus for
FY2001 and subsequent years were larger than first anticipated.
The FY2001 budget resolution, adopted by the House and Senate in April 2000,
envisioned total discretionary spending for the fiscal year at about $600 billion in
budget authority and $625 billion in outlays. During the following six months,
Congress considered the regular appropriations acts for FY2001 without enacting the
necessary revisions in the discretionary spending limits. On October 18, 2000, the
Republican leadership in Congress proposed increasing the FY2001 limits in order
to accommodate total discretionary spending of $637 billion in budget authority and
$645 billion in outlays, considerably more than had been envisioned by the budget
resolution. After a brief period of negotiation between the parties, the proposal was
incorporated into the conference report on the Foreign Operations Appropriations Act
for FY2001, which President Clinton signed into law on November 6 (P.L. 106-429).
The Foreign Operations Appropriations Act was the eighth of the 13 regular
appropriations acts to be enacted for the fiscal year. The increase in the limits
provided by P.L. 106-249 provided sufficient leeway for the House and Senate to
consider the remaining appropriations measures, particularly the Labor-HHS-
Education Appropriations Act, which was transformed into an omnibus
28 Legislative action on discretionary spending for FY2001 is discussed in detail in CRS
Report RL30696, Discretionary Spending Limits for FY2001: A Procedural Perspective,
by Robert Keith.

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CRS-15
appropriations act (the Consolidated Appropriations Act for FY2001). The 106th
Congress adjourned on December 15, 2000, having completed the annual
appropriations process for FY2001.
The final sequestration report for FY2001, issued by the OMB director on
January 16, 2001, indicated that discretionary spending in total was $6.545 billion in
budget authority and $2.487 billion in outlays below the limits and that no sequester
was necessary.29 CBO’s advisory final sequestration report, issued on December 29,
2000, also indicated that no sequester was necessary.30
The Consolidated Appropriations Act for FY2001 included an across-the-board
cut of 0.22%, yielding savings of about $1.1 billion in budget authority. Unlike the
year before, the cut was not necessary in order to avoid sequestration.
Legislative Action. The annual appropriations process in 2000 was brought
to a close by incorporating three of the 13 regular appropriations acts for FY2001, as
well as a number of legislative measures, into an omnibus bill.31 The Consolidated
Appropriations Act for FY2001, H.R. 4577, enacted the Labor-HHS-Education,
Legislative Branch, and Treasury-Postal Service appropriations acts by cross-
reference. In addition, H.R. 4577 enacted by cross-reference a Miscellaneous
Appropriations Act and the following legislative measures: the Commodity Futures
Modernization Act of 2000 (H.R. 5660); the Medicare, Medicaid, and SCHIP
Benefits Improvement and Protection Act of 2000 (H.R. 5661); the Community
Renewal Tax Relief Act of 2000 (H.R. 5662); the New Markets Venture Capital
Program Act of 2000 (H.R. 5663); and the Small Business Reauthorization Act of
2000 (H.R. 5667).
President Clinton signed the Consolidated Appropriations Act for FY2001 into
law on December 21, 2000 (P.L. 106-554; 114 Stat. 2763-64). The House had agreed
to the conference report on the measure on December 15, 2000, by a vote of 292-60;
the Senate had agreed to it the same day by voice vote.
As initially sent to conference, H.R. 4577 provided FY2001 appropriations only
for the Departments of Labor, Health and Human Services, and Education. In
conference, the coverage of the bill was expanded to cover the Legislative Branch
and Treasury-Postal Service appropriations bills. Prior to the national election,
negotiators from Congress and the Clinton Administration reached a tentative
agreement on total spending included in the bill, including a funding level for Labor-
HHS-Education programs well in excess of the President’s request. Legislative
consideration of the measure was delayed, however, in part because of lingering
29 See U.S. Executive Office of the President, Office of Management and Budget, OMB
Final Sequestration Report to the President and Congress For Fiscal Year 2001
(Washington: Jan. 16, 2001), especially Table 4 on pp. 9 and 10.
30 See Congressional Budget Office, Final Sequestration Report for Fiscal Year 2001
(Washington: Dec. 29, 2000), 13 pp.; it also was released as H.Doc. 107-7 (Jan. 3, 2001).
31 For more information, see CRS Report RS20756, FY2001 Consolidated Appropriations
Act: Reference Guide, by Robert Keith (archived; available from author).

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CRS-16
disagreement over an associated provision dealing with the promulgation of an
ergonomics regulation by the Department of Labor.
When House and Senate conferees resumed their negotiations on H.R. 4577
after the election break, they faced mounting concern over the cost of the bill and the
level of FY2001 appropriations generally. Although the discretionary spending
limits for FY2001 had been raised earlier in the session to accommodate FY2001
spending of about $640 billion, many Members expressed a desire to hold total
appropriations well below this level.32 In response to this concern, the negotiators
scaled back total appropriations by several billion dollars, including significant
reductions in appropriations for Labor-HHS-Education programs. As Representative
David Obey, ranking minority member of the House Appropriations Committee,
noted during House consideration of the conference report on H.R. 4577:
To get an agreement in the last week, we had to cut $3.7 billion from the earlier
agreement, we had to take $1.4 billion from advance funding for LIHEAP, we
had to take $257 million out of handicapped education, $127 million out of
efforts to reduce class size, $180 million out of after-school programs and $200
million out of biomedical research.33
An important part of the reductions in FY2001 appropriations was the across-
the-board cut of 0.22%. The provision was included in one of the measures enacted
by cross-reference, H.R. 5666 (the Miscellaneous Appropriations Act), which also
included other savings provisions. The conference report on the Consolidated
Appropriations Act made only a brief reference to the spending-cut provision,34 and
the provision was not discussed during floor consideration in the House and Senate.
President Clinton did not refer to the spending cut in his remarks upon signing the
bill into law.35
Design and Implementation of the 0.22% Spending Cut. Section 1403
of H.R. 5666 applied the cut, in the form of rescissions, to all discretionary
appropriations except for military personnel spending provided in Title I of P.L. 106-
259 (the Defense Appropriations Act for FY2001), activities funded under the Labor-
HHS-Education Appropriations Act for FY2001, and defense and nondefense
emergency supplemental appropriations for FY2000 provided in Division B of P.L.
106-246 (the Military Construction Appropriations Act for FY2001).
32 For information on actions pertaining to the discretionary spending limits for FY2001, see
CRS Report RL30696, Discretionary Spending Limits: A Procedural Assessment, by Robert
Keith.
33 See the remarks of Representative Obey in the Congressional Record of Dec. 15, 2000
(Part II), pp. H12444-12445.
34 See the reference, under the heading “Chapter 14,” in H.Rept. 106-1033 (Dec. 15, 2000),
p. 621.
35 See his statement in the Weekly Compilation of Presidential Documents (vol. 36, no. 52),
Dec. 22, 2000, pp. 3167-3174.

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CRS-17
According to preliminary estimates prepared at the time of enactment by the
Office of Management and Budget (OMB), the provision was expected to save $1.1
billion. Roughly half of the cuts had to be made in defense spending.
Under Section 1403, the cuts were to be applied on a pro rata basis to each
applicable program, project, and activity. The section instructed the OMB director
to report on these reductions in the President’s budget submission for FY2002. (The
text of Section 1403 is provided in Appendix A.)
On January 5, 2001, OMB issued Bulletin 01-03, Rescission of FY2001
Discretionary Budget Authority, providing guidance to agencies in how to comply
with the requirement for the 0.22% cut.
The report required of the OMB director was part of the budget that President
Bush submitted to Congress on April 9, 2001. The 20-page report was included in
the Analytical Perspectives volume as a separate chapter.36
According to the OMB report, a total of $1,088.962 million in discretionary
spending was rescinded in 632 accounts (see Table 4). This included $5.941 million
for the legislative branch and $8.763 million for the judicial branch.
Reductions in individual accounts ranged from $2 thousand for the “White
House repair and restoration” account to $51.234 million for the “Operation and
Maintenance, Navy” account. The largest share of the cuts, amounting to $487.6
million and involving 67 accounts, was allocated to military activities of the
Department of Defense. The other departments with cuts in excess of $50 million
included the Departments of Transportation ($125.1 million) and Housing and Urban
Development ($68.8 million).
FY2003
Budgetary Context. The budgetary context for FY2003 differed quite
markedly in two key respects from the ones in effect for FY2000 and FY2001. First,
the statutory limits on discretionary spending expired at the end of FY2002. For the
first time in more than a decade, Congress and the President did not have to contend
with the threat of a discretionary spending sequester at the end of the session.
36 See the section in U.S. Executive Office of the President, Office of Management and
Budget, Budget of the United States Government, Fiscal Year 2002, Analytical Perspectives
(Washington: Apr. 2001), Section 21, “FY2001 Government-Wide Rescission,
Consolidated Appropriations Act,” pp. 339-358.

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CRS-18
Table 4. FY2001 Rescissions Made Under the 0.22% Cut
Number of
Rescissions
Category
Accounts
($ millions)
Legislative branch
28
5.941
Judicial branch
11
8.763
Department of Agriculture
70
42.589
Department of Commerce
24
11.712
Department of Defense — Military
67
487.594
Department of Education
0
0
Department of Energy
28
44.503
Department of Health and Human Services
7
8.642
Department of Housing and Urban Development
25
68.753
Department of the Interior
50
22.547
Department of Justice
34
46.212
Department of Labor
0
0
Department of State
23
16.573
Department of Transportation
55
125.143
Department of the Treasury
30
30.925
Department of Veterans’ Affairs
14
49.337
Corps of Engineers
8
10.013
Environmental Protection Agency
8
17.222
Executive Office of the President
15
0.658
Federal Emergency Management Agency
9
5.368
General Services Administration
7
1.470
International Assistance Programs
32
29.070
National Aeronautics and Space Administration
4
31.430
National Science Foundation
5
9.736
Office of Personnel Management
5
0.462
Small Business Administration
4
1.983
Export-Import Bank of the United States
1
2.039
Smithsonian Institution
9
1.270
All other accounts
59
9.007
Total
632
1,088.962
Source: U.S. Executive Office of the President, Office of Management and Budget, Budget of the
United States Government, Fiscal Year 2002, Analytical Perspectives (Washington: April 2001),
Section 21, “FY2001 Government-Wide Rescission, Consolidated Appropriations Act,” pp. 339-358.

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CRS-19
Second, the House and Senate were unable to agree on a budget resolution for
FY2003. This marked only the second time in the history of the congressional
budget process that the House and Senate had failed to agree on a budget resolution.
Although the House put a “deeming resolution” into effect as a basis for the
enforcement of discretionary spending and other budgetary levels, the Senate took
no comparable action.37
Differences regarding the appropriate level of discretionary spending for
FY2003 — the Senate advocated spending about $9 billion more for discretionary
programs than did the House — helped stymie action on most of the regular
appropriations acts during the 2002 session. Following the November elections,
which signaled that the Republicans would regain control of the Senate in 2003,
congressional leaders worked out a plan with the administration to complete the
appropriations process for FY2003 early in 2003, at the beginning of the next
Congress.38
Legislative Action. Toward the beginning of the first session of the 108th
Congress, the House and Senate brought the consideration of the regular
appropriations acts for FY2003 to a close by incorporating the remaining 11 bills into
a single bill, H.J.Res. 2, the Consolidated Appropriations Resolution for FY2003.39
Two of the regular appropriations acts for that fiscal year were enacted in 2002,
during the second session of the 107th Congress, just after the start of the fiscal year.40
In its final form, H.J.Res. 2 provided $397.4 billion in discretionary budget
authority.41
The House passed H.J.Res. 2 by voice vote on January 8, 2003. In its House-
passed form, H.J.Res. 2 was a continuing resolution for FY2003 providing for the
continuation of stop-gap funding through January 31, 2003. It was anticipated,
however, that the Senate would use the measure as a vehicle for incorporating the
remaining regular appropriations acts. The Senate did so, and passed the measure as
amended on January 23 by a vote of 69-29. The House and Senate agreed to the
conference report (H.Rept. 108-10) on February 13, by votes of 338-83 and 76-20,
respectively. H.J.Res. 2 was presented to President Bush on February 19 and he
signed it into law on February 20, as P.L. 108-7 (117 Stat. 11-554).
37 House and Senate practices regarding the use of a “deeming resolution” as a substitute for
a budget resolution are discussed in CRS Report RL31443, The “Deeming Resolution”: A
Budget Enforcement Tool, by Robert Keith.
38 BNA, Inc. Daily Report for Executives, “Republican Appropriators Begin Work of Paring
Down FY2003 Spending Bills,” by Adam Wasch, Wed., Dec. 4, 2002.
39 For more information, see CRS Report RS21433, FY2003 Consolidated Appropriations
Resolution: Reference Guide, by Robert Keith.
40 The Department of Defense Appropriations Act for FY2003 (P.L. 107-248) and the
Military Construction Appropriation Act for FY2003 (P.L. 107-249) were enacted into law
on Oct. 23, 2002.
41 See the remarks of Representative C.W. Bill Young, the chairman of the House
Appropriations Committee, during consideration of H.J.Res. 2 in the Congressional Record
of Feb. 13, 2003, pp. H558-H559.

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CRS-20
The act was organized by division, with each division (A through K)
corresponding to one of the regular appropriations acts. Further, there were five
other divisions (L thorough P), which involved such matters as additional emergency
funding, amendments to the Homeland Security Act of 2002 and the Price-Anderson
Act, and the United States-China Economic and Security Review Commission.
In order to offset part of the costs of the act, an across-the-board cut of 0.65%
was included in Section 601 of Division N (the Division is referred to as the
Miscellaneous Appropriations Act for FY2003). In final form, the cut was expected
to yield $2.647 billion in savings.42
The across-the-board cut provision originated on January 15, 2003, during the
first day of Senate consideration of H.J.Res. 2. It was included as part of a substitute
amendment offered by Appropriations Committee Chairman Stevens and agreed to
by unanimous consent.43 In its initial form, the provision required an across-the-
board cut of 1.6%.
The following day, January 16, the Senate adopted Gregg Amendment number
19, providing additional funds to finance innovative State and local programs dealing
with education and other matters. Part of the amendment provided a mechanism for
increasing the across-the-board cut in Section 601 of Division N by an amount
sufficient to offset the additional funds.44 Senator Ted Kennedy, one of the sponsors
of the amendment, indicated that it would increase the across-the-board cut by
another 1.3%, resulting in a total across-the-board cut of 2.9%.45
The 2.9% cut generated considerable controversy during Senate consideration
of the measure. On January 17, Senator Robert Byrd, ranking minority member of
the Senate Appropriations Committee, offered an amendment (number 36) to strike
it. Chairman Stevens explained that the purpose of the spending cut was to
accommodate two unforeseen needs while staying within the overall limit agreed to
earlier with President Bush:
The offsets listed in title VI, which Senator Byrd would strike, are offsets that are
necessary to achieve basically two things: One is the full funding for the amount
that can be spent of the election reform bill in the 7½ to 8 months that are
remaining, a bill that is absolutely necessary to be funded and put into place if
42 See the table inserted by Representative C.W. Bill Young, the chairman of the House
Appropriations Committee, in the Congressional Record of Feb. 13, 2003, p. H658. The
Senate included an across-the-board cut of nearly 3% in the version of H.J.Res. 2 which it
passed on Jan. 23, 2003. According to the table on page H658, the larger cut would have
yielded savings of $11.392 billion.
43 The text of Stevens Amendment number 1 is set forth in the Congressional Record of Jan.
15, 2003, pp. S867-S992. The across-the-board spending cut, contained in Section 601 of
Division N of the amendment, may be found at page S992.
44 The text of the amendment may be found in the Congressional Record of Jan. 16, 2003,
p. S1036.
45 See the remarks of Senator Kennedy in the Congressional Record of Jan. 16, 2003, pp.
S1037-S1037.

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CRS-21
we are to avoid, or at least try to avoid the problems of the election in the year
2000 ...
Secondly, the tremendous drought disaster areas of the country demand help.
We faced a problem of how to deal with that, so we added the monies for drought
and disaster to this bill and we offset it by an across-the-board cut in all
programs.46
Senator Byrd explained that his objection to the across-the-board cut stemmed
from his concern about its impact on a wide range of domestic programs and his
concern that discretionary spending should not be reduced to offset increases in
mandatory spending included in the omnibus appropriations act:
This country is faced with a cut of 2.9 percent, or $11.4 billion, in domestic
spending. This is no technical adjustment. This is a real cut. Nor can it be
characterized as capturing the savings from agencies operating under a
continuing resolution for 4 months. Don’t you believe that. The President’s
budget for fiscal year 2003 was simply inadequate when it came to critical
domestic programs ...
Approximately $4 billion of the $11.4 billion across-the-board cut is included in
the bill to pay for increased mandatory spending in Medicare, in assistance for
needy families, and for drought relief ...
Once we start down this road of paying for increases in mandatory programs by
cutting domestic funding, where will it stop?47
On February 13, 2003, the House and Senate agreed to the conference report on
H.J.Res. 2.48 During consideration of the conference report, House Members did not
address the across-the-board cut. In the Senate, Chairman Stevens indicated that
various concessions had been made that allowed the across-the-board cut to be
reduced from 2.9% down to 0.65% while retaining increased spending for several
crucial items, including aid for agricultural disasters. He further indicated that the
0.65% cut was necessary to keep the cost of the measure within the limit negotiated
with President Bush, thereby avoiding a veto:
There is a .65 percent across-the-board cut to all discretionary accounts in this
bill to assure that the total remains within the top line that was agreed to by
myself, House Chairman Bill Young, and the President. This is [an] arbitrary
line, I will admit, but in order to get the bill signed, if we joined them together,
it was my judgment we could not risk a final veto from the President of the
United States after working so hard to put them all through in one package. So
46 See the remarks of Senator Stevens in the Congressional Record of Jan. 17, 2003, pp.
S1108-S1109.
47 See the remarks of Senator Byrd in the Congressional Record of Jan. 17, 2003, pp. S1106-
S1107.
48 See H.Rept. 108-10 (Feb. 13, 2003), which includes a brief description of the across-the-
board cut on page 1504.

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CRS-22
we have worked as closely as possible with all concerned to try and make certain
that the bills will be in a form the President could sign it.49
In the statement made upon signing H.J.Res. 2 into law, President Bush
expressed concern about excessive spending in several components of the measure
but did not specifically comment on the across-the-board cut.50
Design and Implementation of the 0.65% Spending Cut. Section
601(a) imposed the cut on the regular appropriations provided in Divisions A-K, as
well as to advance appropriations for FY2003 that were enacted in prior
appropriations acts. The text of Section 601 is provided in Appendix A.
Section 601(b) provided that the 0.65% cut be applied on a proportionate basis
to each account, and to each program, project, and activity within an account.
Finally, Section 601(c) exempted from the reductions the budget authority
provided in the act for specified programs in the following amounts:
! $4.696 billion for the Special Supplemental Nutrition Program for
Women, Infants, and Children (WIC);
! $6.668 billion for the Head Start program;
! $23.889 billion for the Veterans’ Medical Care program; and
! $3.836 billion for NASA’s space shuttle program.
Unlike the across-the-board spending cut provisions for FY2000 and FY2001,
Section 601 did not impose a reporting requirement on the OMB director.
On February 21, 2003, OMB issued Bulletin 03-02, Across-the-Board
Rescission in H.J.Res. 2, providing guidance to agencies on how to comply with the
requirement for the 0.65% cut.
Although the OMB director was not required to report to Congress on the
implementation of the spending cut, data furnished by OMB indicate that a total of
$2,225 million in discretionary spending was rescinded (see Table 5). This included
$21 million for the legislative branch and less than $0.5 million for the judicial
branch. Reductions ranged from $1 million for the National Endowment for the
Humanities and several other agencies to $395 million for the Department of Health
and Human Services.
49 See the remarks of Senator Stevens in the Congressional Record of Feb. 13, 2003, pp.
S2428-S2429.
50 See his statement in the Weekly Compilation of Presidential Documents (vol. 39, no.8),
Feb. 20, 2003, pp. 227-228.

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CRS-23
Table 5. FY2003 Rescissions Made Under the 0.65% Cut
Rescissions
Category
($ millions)
Legislative Branch
21
Judicial Branch
0
Department of Agriculture
100
Department of Commerce
33
Department of Education
334
Department of Energy
150
Department of Health and Human Services
395
Department of Housing and Urban Development
234
Department of Justice
130
Department of Labor
76
Department of State
57
Department of the Interior
151
Department of the Treasury
70
Department of Transportation
98
Department of Veterans Affairs
19
Broadcasting Board of Governors
3
Corporation for National and Community Service
5
Corporation for Public Broadcasting
3
Corps of Engineers-Civil Works
30
Environmental Protection Agency
52
Export-Import Bank of the United States
4
General Services Administration
3
International Assistance Programs
93
National Aeronautics and Space Administration
75
National Science Foundation
35
Small Business Administration
4
Smithsonian Institution
5
Social Security Administration
39
All others
6
Total
2,225
Source: Table derived from unpublished data furnished by the Office of Management and
Budget.

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CRS-24
FY2004
Budgetary Context. The budgetary context for FY2004 differed from the
context in effect for the preceding year. As was the case for the FY2003, the
statutory discretionary spending limits had previously expired; however, unlike
FY2003, the House and Senate reached agreement on a budget resolution for the
fiscal year.
The conference report on the FY2004 budget resolution was agreed to by the
House and Senate on April 11, 2003.51 The measure assumed a level of discretionary
budget authority of about $785 billion for FY2004, the level requested by the Bush
Administration.52 As the legislative strategy for consideration of the regular
appropriations acts for FY2004 developed, congressional leaders reached an
agreement with administration officials to modify the allocation of defense and
nondefense discretionary spending for the year. By shifting funds between fiscal
years, the agreement effectively accommodated roughly $5 billion dollars in
additional nondefense appropriations for FY2004 without raising the overall limit.53
In developing the omnibus appropriations act for FY2004, congressional leaders
and administration officials agreed to accommodate about $4.5 billion dollars in
additional initiatives and to offset their costs, thereby abiding by the overall limit on
discretionary spending agreed to earlier, with $1.8 billion in rescissions of defense
spending and across-the-board cuts in nondefense discretionary spending amounting
to about $2.8 billion.54 According to a press release of the House Appropriations
Committee, some of the additional initiatives included:
... $350 million for the Millenium Challenge Corporation, $1 billion for Election
Reform, $1.3 billion for Veteran’s Medical Care, $1.65 billion for priority
education programs and $50 million for security expenses at the national party
conventions in Boston and New York City.55
Legislative Action. In the waning days of the first session of the 108th
Congress, the House and Senate had cleared six of the 13 regular appropriations acts
51 See the report to accompany H.Con.Res. 95, H.Rept. 108-71, Apr. 10, 2003.
52 See “With Budget Completed, Action on Spending Bills Will Take Center Stage,” by
Joseph J. Schatz, in CQ Today, Apr. 24, 2003.
53 See (1) “Bush Tentatively Backs Adding $5.2 Billion to Get Spending Process Started,”
by Andrew Taylor and Joseph J. Schatz, in CQ Today, June 10, 2003; and (2) “After Getting
Green Light, Appropriators Release 302(b) Allocations,” by Cheryl Bolen, in BNA’s Daily
Report for Executives, June 12, 2003.
54 The Congressional Budget Office estimated that the 0.59% across-the-board spending cut
will yield savings for FY2004 of $2.761 billion in budget authority and $1.407 billion in
outlays.
55 See the Nov. 25, 2003 press release of the House Appropriations Committee, “Highlights
of the FY04 Consolidated Appropriations,” available at [http://appropriations.house.gov].

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CRS-25
for FY2004 and President Bush had signed them into law.56 Congressional leaders
decided to bring action on the remaining seven regular appropriations acts for
FY2004 to a close by incorporating them into a single bill, H.R. 2673, the
Consolidated Appropriations Act for FY2004. The act, which passed the House on
July 14, 2003, and the Senate on November 6, initially provided appropriations only
for the Department of Agriculture and related agencies. It was expanded at the
conference stage to cover the other six regular appropriations acts (see the conference
report, H.Rept. 108-401, Nov. 25, 2003).
The House passed the conference report on H.R. 2673 on the last day of the
session, December 8, 2003, by a vote of 242-176. The Senate considered the
conference report the next day, but did not complete action on the matter. Final
Senate action was delayed until the following month, after the start of the second
session of the 108th Congress. The Senate resumed consideration of the conference
report on January 20, 2004, and agreed to it on January 22, by a vote of 65-28.
President signed the measure into law on January 23 (P.L. 108-199; 118 Stat. 3-457).
The Consolidated Appropriations Act for FY2004 provided $328 billion in
discretionary spending. In addition, $492 billion in mandatory spending was
provided by the act, bringing the total spending in the measure to $820 billion.57
The act was organized into eight divisions, with each of the first seven divisions
(A through G) corresponding to one of the unfinished regular appropriations acts.
The last division, Division H, pertained to “Miscellaneous Appropriations and
Offsets.” As mentioned previously, the costs of some initiatives in the act were
offset by requirements for rescissions in both defense and nondefense spending.
These requirements were set out in Section 168 of Division H.
Design and Implementation of the 0.59% Spending Cut. Section
168(b) required an across an across-the-board cut of 0.59% in all FY2004
appropriations, except for funding provided in the Defense and Military Construction
Appropriations Acts and supplemental appropriations acts. In addition, the cut
applied to advance appropriations for FY2004 provided in prior appropriations acts
and certain contract authority. According to an estimate made by the Congressional
Budget Office, the 0.59% cut was expected to yield about $2.8 billion in savings.
Rescissions made under the 0.59% across-the-board cut had to be made
proportionately at the account and PPA level (Section 168(c)). Additionally, the
OMB director was required to submit a report to the House and Senate
Appropriations Committees “specifying the account and amount of each rescission”
made pursuant to the requirement for the across-the-board cut (Section 168(d)). The
56 The FY2004 regular appropriations acts signed into law are as follows: (1) Legislative
Branch, P.L. 108-83 (Sept. 30, 2003); (2) Defense, P.L. 108-87 (Sept. 30, 2003); (3)
Homeland Security, P.L. 108-90 (Oct. 1, 2003); (4) Interior, P.L. 108-108 (Nov. 10, 2003);
(5) Military Construction, P.L. 108-132 (Nov. 22, 2003); and (6) Energy and Water
Development, P.L. 108-137 (Dec. 1, 2003).
57 House Appropriations Committee, Nov. 25, 2003 press release, ibid.

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CRS-26
OMB report was due within 30 days after enactment of the Consolidated
Appropriations Act.
In addition to the across-the-board cut in nondefense spending required by
Section 168(b) of the act, Section 168(a) required that rescissions of $1.8 billion be
made in Defense appropriations, including unobligated balances made available in
two prior appropriations acts, P.L. 107-38 (the emergency supplemental
appropriations act enacted into law three days after the terrorist attacks of September
11, 2001) and P.L. 107-117 (the Defense Appropriations Act for FY2002). The
subsection exempted from this requirement funds for disaster recovery and assistance
for New York, Virginia, and Pennsylvania relating to the terrorist attacks provided
in P.L. 107-38 (“by the seventh proviso under the heading ‘Emergency Response
Fund’”). All rescissions were required to take effect no later than September 30,
2004, the last day of the fiscal year. Section 168(a) was repealed by Section 9003(c)
of the Defense Appropriations Act for FY2005, which President Bush signed into
law on August 5, 2004, as P.L. 108-287 (118 Stat. 951 et. seq.).
Pursuant to Section 168(a), the director of the Office of Management and
Budget, in consultation with the House and Senate Appropriations Committees and
the Secretary of Defense, was required to determine the amounts to be rescinded from
each affected account; unlike the reductions in nondefense spending, the defense
reductions did not have to be made uniformly. Further, the director was required to
notify the Appropriations Committees 30 days prior to making the rescissions,
indicating which programs, projects, and activities (PPAs) were to have been cut.
The text of Section 168 is provided in Appendix A.
On January 29, 2004, OMB issued Bulletin 04-02, Guidance on Implementing
Across-the-Board Reductions in the Consolidated Appropriations Act, 2004 (H.R.
2673), providing guidance to agencies on how to comply with the requirement for the
0.59% cut.
On March 4, 2004, the OMB director submitted the required report to the House
and Senate Appropriations Committees regarding the implementation of the spending
cut. The OMB report indicated that a total of $2,674.691 million in discretionary
spending was rescinded (see Table 6).58 The spending reductions in accounts,
grouped in the OMB report by appropriations act, ranged from $2.751 million for the
Legislative Branch Appropriations Act to $821.974 million for the Labor-HHS-
Education Appropriations Act.
58 The OMB estimate of total spending reductions is $87 million less than the CBO estimate,
which may be explained largely by the omission of some accounts from the OMB report;
for example, the General Accounting Office was the only entity for which cuts were
identified under the Legislative Branch Appropriations Act although other legislative
entities reported cuts in subsequent budget submissions.

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CRS-27
Table 6. FY2004 Rescissions Made Under the 0.59% Cut
Rescissions
Category
($ millions)
Agriculture and Rural Development Appropriations
105.032
Commerce, Justice, State Appropriations
210.442
District of Columbia Appropriations
3.208
Energy and Water Development Appropriations
158.414
Foreign Operations Appropriations
35.265
Homeland Security Appropriations
217.163
Interior Appropriations
124.032
Labor-HHS-Education Appropriations
821.974
Legislative Branch Appropriations
2.751
Treasury-Transportation Appropriations
418.485
VA-HUD Appropriations
577.926
Total
2,674.691

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CRS-28
Appendix A. Text of the Across-the-Board
Spending Cut Provisions
FY2000
Sec. 301 of H.R. 3425, as Cross-Referenced in P.L. 106-113, the
Consolidated Appropriations Act for FY2000
(113 Stat. 1501A-303 and 304)
Sec. 301. (a) Government-Wide Rescissions. — There is hereby rescinded an
amount equal to 0.38 percent of the discretionary budget authority provided (or
obligation limit imposed) for FY2000 in this or any other Act for each
department, agency, instrumentality or entity of the Federal Government.
(b) Restrictions. — In carrying out the rescissions made by subsection (a),
—
(1) no program, project or activity of any department, agency,
instrumentality or entity may be reduced by more than 15 percent (with
“programs, projects, and activities” as delineated in the appropriations Act
or accompanying report for the relevant account, or for accounts and items
not included in appropriations Acts, as delineated in the most recently
submitted President’s budget),
(2) no reduction shall be taken from any military personnel account,
and
(3) the reduction for the Department of Defense and Department of
Energy Defense Activities shall be applied proportionately to all Defense
accounts.
(c) Report. — The Director of the Office of Management and Budget shall
include in the President’s budget submitted for FY2001 a report specifying the
reductions made to each account pursuant to this section.

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CRS-29
FY2001
Division A, Section 1403 of H.R. 5666, as Cross-Referenced in P.L. 106-
554, the Consolidated Appropriations Act for FY2001
(114 Stat. 2763A-214)
Sec. 1403. (a) Government-Wide Rescissions. — There is hereby rescinded
an amount equal to 0.22 percent of the discretionary budget authority provided (or
obligation limit imposed) for FY2001 in this or any other Act for each department,
agency, instrumentality, or entity of the Federal Government, except for those
programs, projects, and activities which are specifically exempted elsewhere in
this provision: Provided, That this exact reduction percentage shall be applied on
a pro rata basis only to each program, project, and activity subject to the rescission.
(b) Restrictions. — This reduction shall not be applied to the amounts
appropriated in Title I of Public Law 106-259: Provided, That this reduction shall
not be applied to the amounts appropriated in Division B of Public Law 106-246:
Provided further, That this reduction shall not be applied to the amounts
appropriated under the Departments of Labor, Health and Human Services, and
Education, and Related Agencies Appropriations Act, 2001, as contained in this
act, or in prior Acts.
(c) Report. — The Director of the Office of Management and Budget shall
include in the President’s budget submitted for FY2002 a report specifying the
reductions made to each account pursuant to this section.

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CRS-30
FY2003
Division N, Section 601 of P.L. 108-7, the Consolidated Appropriations
Resolution for FY2003
(117 Stat. 550-551)
Sec. 601. (a) ACROSS-THE-BOARD RESCISSIONS. — There is hereby
rescinded an amount equal to 0.65 percent of —
(1) the budget authority provided (or obligation limitation imposed) for
FY2003 for any discretionary account in divisions A through K of this joint
resolution;
(2) the budget authority provided in any advance appropriation for FY2003
for any discretionary account in any prior fiscal year appropriations Act; and
(3) the contract authority provided in FY2003 for any program subject to
limitation contained in this joint resolution.
(b) PROPORTIONATE APPLICATION. — Any rescission made by subsection
(a) shall be applied proportionately —
(1) to each discretionary account and each item of budget authority described
in subsection (a); and
(2) within each such account and item, to each program, project, and activity
(with programs, projects, and activities as delineated in the appropriation Act
or accompanying reports for the relevant fiscal year covering such account or
item, or for accounts and items not included in appropriation Acts, as
delineated in the most recently submitted President’s budget).
(c) The rescission in subsection (a) shall not apply to budget authority appropriated
or otherwise made available by this joint resolution in the following amounts in
the following activities or accounts:
$4,696,000,000 provided for the Special Supplemental Nutrition Program for
Women, Infants, and Children (WIC) in the Department of Agriculture in
division A;
$6,667,533,000 provided for the Head Start Act in the Department of
Education in division G;
$23,889,304,000 provided for medical care in the Department of Veterans
Affairs in division K; and
$3,836,000,000 provided for the Shuttle program in the National Aeronautics
and Space Administration in division K.

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CRS-31
FY2004
Division H, Section 168 of P.L. 108-199, the Consolidated Appropriations
Act for FY2004
(118 Stat. 456-457)
Sec. 168(a). Rescissions. — From unobligated balances of amounts made
available in Public Law 107-38, and in Public Law 107-117, and in appropriations
Acts for the Department of Defense, $1,800,000,000 is hereby rescinded:
Provided, That the Director of the Office of Management and Budget, after
consultation with the Committees on Appropriations of the House and Senate and
the Secretary of Defense, shall determine the amounts to be rescinded from each
account that is to be so reduced: Provided further, That the rescissions shall take
effect no later than September 30, 2004: Provided further, That the Director of the
Office of Management and Budget shall notify the Committees on Appropriations
of the House and Senate 30 days prior to rescinding such amounts: Provided
further, That such notification shall include the accounts, programs, projects and
activities from which the funds will be rescinded: Provided further, That this
section shall not apply to any amounts appropriated or otherwise made available
by the seventh proviso under the heading “Emergency Response Fund” in Public
Law 107-38.
(b) Across-the-Board Rescissions. — There is hereby rescinded an amount equal
to 0.59 percent of —
(1) the budget authority provided (or obligation limitation imposed) for
FY2004 for any discretionary account in divisions A through H of this act
and in any other FY2004 appropriation Act (except any FY2004
supplemental appropriation Act, the Department of Defense Appropriations
Act, 2004, or the Military Construction Appropriations Act, 2004);
(2) the budget authority provided in any advance appropriation for FY2004
for any discretionary account in any prior fiscal year appropriation Act; and
(3) the contract authority provided in FY2004 for any program subject to
limitation contained in any division or appropriation Act subject to paragraph
(1).
(c) Proportionate Application. — Any rescission made by subsection (b) shall be
applied proportionately —
(1) to each discretionary account and each item of budget authority described
in such subsection; and
(2) within each such account and item, to each program, project, and activity
(with programs, projects, and activities as delineated in the appropriation Act
or accompanying reports for the relevant fiscal year covering such account or
item, or for accounts and items not included in appropriation Acts, as
delineated in the most recently submitted President’s budget).
(d) OMB Report. — Within 30 days after the date of the enactment of this section
the Director of the Office of Management and Budget shall submit to the
Committees on Appropriations of the House of Representatives and the Senate a
report specifying the account and amount of each rescission made pursuant to
subsection (b).

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