Congressional Budget Actions in 2002
During the second session of the 107th Congress, the House and Senate will consider many different budgetary measures. Most of these measures will pertain to FY2003 (which will begin on October 1, 2002) and beyond, but some may make adjustments to the budget for FY2002. As the congressional session progresses, this issue brief will describe House and Senate action on major budgetary legislation within the framework of the congressional budget process and other procedural requirements.
Order Code IB10096
Issue Brief for Congress
Received through the CRS Web
Congressional Budget Actions in 2002
Updated December 31, 2002
Bill Heniff Jr.
Government and Finance Division
Congressional Research Service ˜ The Library of Congress
CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
Overview of the Congressional Budget Process
Budget Resolution
Reconciliation Legislation
Revenue and Debt-Limit Legislation
Appropriations and Other Spending Legislation
Budget Enforcement and Sequestration
LEGISLATION
CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS
CHRONOLOGY
FOR ADDITIONAL READING
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Congressional Budget Actions in 2002
SUMMARY
During the second session of the 107th
The House adopted its version of the
Congress, the House and Senate considered
FY2003 budget resolution, H.Con.Res. 353,
many different budgetary measures. Most of
on March 20. In the absence of an agreement
these measures pertained to FY2003 (which
with the Senate, the House adopted a resolu-
began on October 1, 2002) and beyond, but a
tion “deeming” its budget resolution to have
supplemental appropriations measure for
been adopted by Congress for budget enforce-
FY2002 was enacted as well. This issue brief
ment purposes. The Senate Budget Commit-
describes House and Senate action on major
tee reported its version of the FY2003 budget
budgetary legislation within the framework of
resolution, S.Con.Res. 100, on March 22, but
the congressional budget process and other
did not consider it on the Senate floor.
procedural requirements.
On August 2, President Bush signed H.R.
Congress begins its annual budget pro-
4775, FY2002 Supplemental Appropriations
cess once the President submits his budget.
Act, into law (P.L. 107-206).
President Bush submitted his FY2003 budget
to Congress on February 4, 2002. President
On October 23, President Bush signed
Bush released his budget update, Mid-Session
into law the first two FY2003 regular appro-
Review, on July 15.
priations acts: the Defense Appropriations
Act, 2003 (P.L. 107-248) and the Military
In preparation for congressional action on
Construction Appropriations Act, 2003 (P.L.
the budget, CBO released its annual report on
107-249). In the absence of final action on the
budget baseline projections, The Budget and
remaining 11 regular appropriations acts,
Economic Outlook: Fiscal Years 2003-2012,
Congress passed and President Bush signed
on January 31. CBO twice updated these
into law a fifth continuing resolution (CR) for
budget baseline projections, based on new
FY2003 (P.L. 107-294) on November 23. The
technical assumptions and a revised economic
CR provides temporary appropriations throu-
forecast, in its report, Analysis of the Presi-
gh January 11, 2003, for federal government
dent’s Budgetary Proposals for Fiscal Year
agencies and programs funded in those acts.
2003, released on March 6, and its report, The
Budget and Economic Outlook: An Update,
The statutory limits on discretionary
released on August 27.
spending and the “pay-as-you-go” (PAYGO)
requirement for direct spending and revenue
The Congressional Budget Act of 1974
legislation established under the Budget En-
established the congressional budget process.
forcement Act of 1990, as amended, expired
The process is centered on the adoption of an
on September 30, 2002. Also, Congress
annual concurrent resolution on the budget.
passed and President Bush signed legislation
Budget resolution policies are implemented
(H.R. 5708, P.L. 107-312) that reduced the
through the enactment of reconciliation bills,
positive balances on the PAYGO scorecard to
revenue and debt-limit legislation, and appro-
zero, thereby preventing any future PAYGO
priations and other spending measures, and
sequestration due to projected increases in the
enforced by points of order that may be raised
deficit as a result of direct spending and reve-
when legislation is pending on the House and
nue legislation enacted prior to the end of
Senate floor.
FY2002.
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MOST RECENT DEVELOPMENTS
On November 22, Congress adjourned sine die. Before ending the session, Congress
and President Bush completed action on two of the 13 FY2003 regular appropriations acts:
the Defense Appropriations Act, 2003 (P.L. 107-248) and the Military Construction
Appropriations Act, 2003 (P.L. 107-249) on October 23. In the absence of final action on
the remaining 11 regular appropriations acts, Congress passed and President Bush signed
a fifth continuing resolution for FY2003 (P.L. 107-294), which provides temporary
appropriations through January 11, 2003, for federal government agencies and programs
normally funded in those acts.
BACKGROUND AND ANALYSIS
During the second session of the 107th Congress, the House and Senate considered many
different budgetary measures. Most of these measures pertained to FY2003 (which began
on October 1, 2002) and beyond, but a supplemental appropriations measure for FY2002 was
enacted as well. This issue brief describes House and Senate action on major budgetary
legislation within the framework of the congressional budget process and other procedural
requirements.
In 2002, Congress faced a significantly different procedural and budget environment
than in the few years before. Not only were key enforcement procedures under the Budget
Enforcement Act (Title XIII of P.L. 101-508) scheduled to expire at the end of FY2002 (i.e.,
September 30, 2002), the current and long-term budget outlook had changed considerably
from the year before. At the beginning of 2001, CBO projected federal surpluses in each
fiscal year through FY2011 and a cumulative surplus of $5.6 trillion for FY2002 through
FY2011, under policies existing at that time.1 In contrast, CBO Director Dan L. Crippen
testified before the House and Senate Budget Committees on January 23, 2002, that CBO
projected that both fiscal years 2002 and 2003 would show small deficits, if current policies
remained the same and the economy performed as CBO forecasted. Further, the projected
cumulative surplus for FY2002 through FY2011 dropped by $4.0 trillion to $1.6 trillion.
The new environment undoubtedly had a significant effect on congressional budget actions
during the session.
Overview of the Congressional Budget Process
The congressional budget process consists of the consideration and adoption of
spending, revenue, and debt-limit legislation within the framework of an annual concurrent
resolution on the budget. Additionally, congressional action on budget legislation is
constrained by limits on discretionary spending and a “pay-as-you-go” (PAYGO)
requirement for direct spending and revenue legislation.
1 Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2002-2011, Jan.
2001.
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Congress begins its budget process once the President submits his budget. The
President is required by law to submit a comprehensive federal budget no later than the first
Monday in February. The President’s budget includes estimates of direct spending and
revenues under existing laws, as well as requests for discretionary spending (i.e., funds
provided through the appropriations process) for the upcoming fiscal year. In addition, the
President frequently proposes new initiatives in his budget submission to Congress.
Although Congress is not bound by the President’s budget, congressional action on spending
and revenue legislation often is influenced by his recommendations, as well as subsequent
budgetary activities by the President during the year. The Office of Management and Budget
(OMB) assists the President in formulating and coordinating his budget policies and
activities.
On February 4, 2002, President Bush submitted his FY2003 budget to Congress.
Following the usual practice, the President’s budget was submitted as a multi-volume set
consisting of a main document, which includes the President’s budget message and
information on his 2003 proposals (Budget), and supplementary documents, which provide
special budgetary analyses (Analytical Perspectives), historical budget information
(Historical Tables), and detailed account and program level information (Appendix), among
other things. On July 15, President Bush submitted his Mid-Session Review to Congress.
This report contains revised estimates of the budget deficit/surplus, receipts, outlays, and
budget authority for FY2002 through FY2007, reflecting changed economic conditions and
assumptions and congressional actions. Presidential budget documents are available from
the Government Printing Office or on OMB’s Web site at [http://www.whitehouse.gov/omb].
The Congressional Budget Act (CBA) of 1974 (Titles I-IX of P.L. 93-344) established
the congressional budget process, including a timetable for congressional action on budget
legislation (see Table 1). The process is centered on the adoption of an annual concurrent
Table 1. The Congressional Budget Process Timetable
On or before
Action to be completed
First Monday in
President submits budget to Congress.
February
February 15
Congressional Budget Office submits economic and budget outlook report
to Budget Committees.
6 weeks after
Committees submit views and estimates to Budget Committees.
President 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.
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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.
Because the budget resolution does not become law, budget policies are implemented
through the enactment of reconciliation bills, revenue and debt-limit legislation, and
appropriations and other spending measures. Congress enforces budget resolution policies
through points of order on the floor of each chamber and the reconciliation process. For
example, any legislation that would cause the aggregate levels to be violated is prohibited
from being considered. Further, the total budget authority and outlays set forth in the budget
resolution are allocated among the House and Senate committees having jurisdiction over
specific spending legislation. Any legislation, or amendment, that would cause these
committee allocations to be exceeded is prohibited. Finally, the House and Senate
Appropriations Committees subdivide their allocations among their respective 13
subcommittees. A point of order may be raised against any appropriations act, or
amendment, that would cause one of these subdivisions to be exceeded.2 Congress also may
use reconciliation legislation (discussed further below) to enforce direct spending, revenue,
and debt-limit provisions of a budget resolution.
In addition to the enforcement procedures associated with the budget resolution, budget
legislation was constrained by statutory limits on discretionary spending and a PAYGO
requirement for direct spending and revenue legislation, both established by the Budget
Enforcement Act (BEA) of 1990 (Title XIII of P.L. 101-508), which amended the Balanced
Budget and Emergency Deficit Control Act of 1985 (Title II of P.L. 99-177).
As consideration of the FY2003 budget began, adjustable discretionary spending limits
existed for the following categories: highway and mass transit spending for FY2002-
FY2003; conservation spending (divided into six subcategories) for FY2002-FY2006; and
other discretionary spending, also called general purpose discretionary spending, for FY2002.
PAYGO generally required that projected increases in direct spending or decreases in
revenues due to legislative action were offset so that the net effects of the new legislation did
not increase the deficit or reduce the surplus. 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 involves automatic, largely across-the-board spending cuts in non-
exempt programs. Sequestration was triggered if the director of the Office of Management
and Budget estimated in the final sequestration report after the end of a session that one or
more of the discretionary spending limits had been exceeded or the PAYGO requirement had
been 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
2 For more detailed information on these points of order and their application, see CRS Report 97-
865, Points of Order in the Congressional Budget Process, by James V. Saturno.
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similar to the statutory one, also could have been enforced through points of order while
legislation was considered on the Senate floor.
The sequestration process established to enforce the discretionary spending limits
expired at the end of FY2002 (September 30, 2002). The PAYGO sequestration process
continues until the end of FY2006 for the projected increases in the deficit as a result of
direct spending and revenue legislation enacted prior to the end of FY2002. However,
Congress passed and President Bush signed legislation (H.R. 5708, P.L. 107-312) that
reduced the positive balances on the PAYGO scorecard through FY2006 to zero, thereby
preventing any future PAYGO sequestration.
Budget Resolution
The Congressional Budget Act, as amended, establishes the concurrent resolution on
the budget as the centerpiece of the congressional budget process. The budget resolution sets
forth aggregate spending and revenue levels, and spending levels by major functional area,
for at least 5 fiscal years. Once adopted, it provides the framework for subsequent action on
budget-related legislation.
The congressional budget process timetable sets April 15 as a target date for final
adoption of the budget resolution. The CBA prohibits the consideration of spending,
revenue, or debt-limit legislation for the upcoming year until the budget resolution has been
adopted, unless the rule is waived or set aside.
Following the submission of the President’s budget early in the year, Congress begins
formulating the budget resolution. The House and Senate Budget Committees are
responsible for developing and reporting the budget resolution. In formulating the budget
resolution, the Budget Committees hold hearings and receive testimony from Members of
Congress and representatives from federal departments and agencies, the general public, and
national organizations. Three regular hearings include separate testimony from the Director
of the Congressional Budget Office (CBO), the Chair of the Federal Reserve Board, and the
Director of OMB.3
The congressional budget resolution, as well as the President’s budget, is based on
budget baselines. The budget baseline is a projection of federal revenue, spending, and
deficit or surplus levels based upon current policies, assuming certain economic assumptions.
The President’s budget baseline, referred to as current services estimates, usually differs from
CBO’s baseline, referred to as baseline budget projections, often due to different economic
and technical assumptions. Baseline projections provide a benchmark for measuring the
3 The CBO Director, Dan L. Crippen, presented separate, but identical, testimony before the Senate
and House Budget Committees on Jan. 23, 2002. The testimony is available on CBO’s Web site at
[http://www.cbo.gov]. Federal Reserve Board Chairman Alan Greenspan testified before the Senate
Budget Committee on Jan. 24, 2002. OMB Director Mitchell E. Daniels, Jr., presented separate, but
identical, testimony before the Senate and House Budget Committees on Feb. 5, 2002. The latter
two testimonies are available on the Senate Budget Committee’s Web site at
[http://www.senate.gov/~budget].
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budgetary effects of proposed policy changes. On January 31, 2002, CBO released its annual
report on budget baseline projections, The Budget and Economic Outlook: Fiscal Years
2003-2012. On March 6, CBO released its Analysis of the President’s Budgetary Proposals
for Fiscal Year 2003. This report contains estimates of the President’s proposals using
CBO’s economic and technical assumptions. In addition, the report incorporates CBO’s new
technical assumptions and revised economic forecast, as well as updates its budget baseline
projections. On August 27, CBO released its budget update report, The Budget and
Economic Outlook: An Update, containing revised budget projections. CBO reports are
available on its Web site at [http://www.cbo.gov].
Another source of input comes from the “views and estimates” of congressional
committees with jurisdiction over spending and revenues. Within 6 weeks after the
President’s budget submission, House and Senate committees are required to submit views
and estimates of budget matters under their jurisdiction to their respective Budget
Committees. These views and estimates, frequently submitted in the form of a letter to the
Chair and Ranking Member of the Budget Committee, typically include comments on the
President’s budget proposals and estimates of the budgetary impact of any legislation likely
to be considered during the current session of Congress. The Budget Committees are not
bound by these recommendations. The views and estimates of Senate committees are printed
in the committee report accompanying the Budget Committee-reported budget resolution
(S.Rept. 107-141, pp. 72-164). The views and estimates of House committees are printed
in a separate House Budget Committee print (Serial No. CP-2).
The budget resolution was designed to provide a framework to make budget decisions,
leaving specific program determinations to House and Senate Appropriations Committees
and other committees with spending and revenue jurisdiction. In many instances, however,
particular program changes are considered when formulating the budget resolution. Program
assumptions sometimes are referred to in the reports of the House and Senate Budget
Committees and usually are discussed during floor action. Although these program changes
are not binding, committees may be strongly influenced by these recommendations when
formulating appropriations bills, reconciliation measures, or other budgetary legislation.
On March 15, the House Budget Committee reported its version of the FY2003 budget
resolution (H.Con.Res. 353, H.Rept. 107-376), after a mark up on March 13. The Senate
Budget Committee marked up its version (S.Con.Res. 100, S.Rept. 107-141) on March 21,
and reported it to the full Senate the next day (March 22).
The House and Senate consider the budget resolution under procedures generally
intended to expedite final action. In the House, the budget resolution usually is considered
under a special rule, limiting the time of debate and allowing only a few amendments, as
substitutes to the entire resolution. On March 20 (legislative day, March 19), the Rules
Committee reported a special rule (H.Res. 372, H.Rept. 107-380) which allowed only a self-
executing amendment in the nature of a substitute and allowed 3 hours of general debate.
After adopting the rule by a vote of 222-206, the House considered and adopted H.Con.Res.
353 by a 221-209 vote, on March 20. In the absence of an agreement on a FY2003 budget
resolution with the Senate, the House adopted a so-called “deeming resolution.” The special
rule (H.Res. 428) governing the initial consideration of the emergency supplemental
appropriations act (H.R. 4775) included a provision “deeming” the House-adopted budget
resolution to have been agreed to by Congress. The House adopted this special rule by a
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216-209 vote on May 22. Under the deeming resolution, the enforcement procedures of the
Congressional Budget Act, such as the limits on spending in the annual appropriations acts,
are effective in the House.4
The Senate considers the budget resolution under the procedures set forth in the CBA,
unless superseded by a unanimous consent agreement. Debate on the initial consideration
of the budget resolution, and all amendments, debatable motions, and appeals, is limited to
50 hours. Amendments, motions, and appeals may be considered beyond this time limit, but
without debate. Consideration of the conference report is limited to 10 hours. The Senate
did not consider the Senate Budget Committee-reported budget resolution on the floor.5
Reconciliation Legislation
Congress may implement changes to existing law related to direct spending, revenues,
or the debt limit through the reconciliation process, under Section 310 of the CBA. The
reconciliation process has two stages. First, Congress includes reconciliation instructions
in a budget resolution directing one or more committees to recommend changes in statute to
achieve the levels of spending, revenues, and debt limit agreed to in the budget resolution.
Second, the legislative language recommended by committees is packaged “without
substantive revision” into one or more reconciliation bills, as set forth in the budget
resolution, by the House and Senate Budget Committees. In some instances, a committee
may be required to report its legislative recommendations directly to its chamber.
Once reconciliation legislation is reported, consideration is governed by special
procedures. These special rules serve to limit what may be included in reconciliation
legislation, to prohibit certain amendments, and to encourage its completion in a timely
fashion. In the House, as with the budget resolution, reconciliation legislation usually is
considered under a special rule, establishing the time allotted for debate and what
amendments will be in order. In the Senate, debate on a budget reconciliation bill, all
amendments, debatable motions, and appeals is limited to not more than 20 hours. After the
20 hours of debate has been reached, consideration of amendments, motions, and appeals
may continue, but without debate.
4 The special rule also required the House Budget Committee chairman to submit for printing in the
Congressional Record the committee allocations, referred to as the 302(a) allocations, associated
with the House-adopted budget resolution spending levels. House Budget Committee Chairman Jim
Nussle submitted the allocations on May 22, 2002. See Congressional Record, daily edition, vol.
148 (May 22, 2002), pp. H2929-H2930. With the House-adopted budget resolution deemed to have
been passed by Congress, a point of order may be raised against legislation that would cause these
allocations to be exceeded. For further information on “deeming resolutions,” see CRS Report
RL31443, The “Deeming Resolution”: A Budget Enforcement Tool, by Robert Keith.
5 On June 5, during the consideration of the Emergency Supplemental Appropriations Act (H.R.
4775), Sen. Rick Santorum offered an amendment (no. 3765) that contained the text of S.Con.Res.
100, but the amendment was tabled by a 96-0 vote. See Congressional Record, daily edition, vol.
148 (June 5, 2002), pp. S5018-S5021.
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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 or any amendment.
Although Congress did not complete action on a FY2003 budget resolution, neither the
House or Senate version of the FY2003 budget resolution (H.Con.Res. 353 and S.Con.Res.
100, respectively) contained reconciliation instructions. Consequently, Congress did not
anticipate considering reconciliation legislation in 2002.
Revenue and Debt-Limit Legislation
Congress may adopt revenue and debt-limit legislation individually. Revenue and debt-
limit legislation is under the jurisdiction of the House Ways and Means Committee and the
Senate Finance Committee. Article I, Section 7, of the U.S. Constitution, requires revenue
legislation originate in the House of Representatives, but the Senate may amend a revenue
bill as it chooses.
Most of the laws establishing the federal government’s revenue sources are permanent
and continue year after year without any additional legislative action. Congress, however,
typically enacts revenue legislation, changing some portion of the existing tax system, every
year. Revenue legislation may include changes to individual and corporate income taxes,
social insurance taxes, excise taxes, or tariffs and duties.
Revenue legislation is not automatically considered in the congressional budget process
on an annual basis. Frequently, however, the President proposes and Congress considers
changes in the rates of taxation or the distribution of the tax burden. An initial step in the
congressional budget process is the publication of revenue estimates of the President’s
budget by CBO. These revenue estimates usually differ from the President’s since they are
based on different economic and technical assumptions (e.g., growth of the economy and
change in the inflation rate). Estimates of any congressional revenue-policy proposals are
prepared by CBO, based on Joint Committee on Taxation revenue estimates, and are
published in committee reports or the Congressional Record.
The budget resolution includes baseline estimates of federal government receipts based
on the continuation of existing laws and any proposed policy changes. The revenue levels
in the budget resolution provide the framework for any action on revenue measures during
the session. A point of order may be raised against the consideration of legislation that
causes revenues to fall below the agreed upon levels for the first fiscal year or the total for
all fiscal years in the budget resolution. This point of order may be set aside by unanimous
consent, or waived by a special rule in the House or by a three-fifths vote in the Senate.
A Senate PAYGO point of order, under Section 207 of the FY2000 budget resolution
(H.Con.Res. 68, 106th Congress), also may be raised against any revenue legislation that
would increase or cause an on-budget deficit for the first fiscal year, the period of the first
5 fiscal years, or the following 5 fiscal years, covered by the most recently adopted budget
resolution. The point of order may be waived by a vote of three-fifths of Senators, or set
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aside by unanimous consent. It expired on September 30, 2002. On October 16, however,
the Senate agreed by unanimous consent to S.Res. 304, as amended, to restore and extend
the point of order through April 15, 2003.6
After months of floor consideration of several variations of economic stimulus
legislation, the House and Senate agreed to H.R. 3090, which contained a scaled-down
economic recovery package of business-related tax cuts and an extension of unemployment
compensation, by votes of 417-3 on March 7 and 85-9 on March 8, respectively. President
Bush signed H.R. 3090, the Job Creation and Worker Assistance Act of 2002, into law (P.L.
107-147) on March 9.
Federal debt consists of debt held by the public plus debt held by government accounts.
Almost all of the federal debt is subject to a statutory debt limit. The debt held by the public
represents the total net amount borrowed from the public to cover the federal government’s
budget deficits. By contrast, the debt held by government accounts represents the total net
amount of federal debt issued to specialized federal accounts, primarily trust funds (e.g.,
Social Security). Trust fund surpluses by law must be invested in special federal government
securities and thus are held in the form of federal debt. Because the statutory limit applies
to the combination of both types of debt, budget deficits or trust fund surpluses may
contribute to the federal government reaching the existing debt limit. So long as federal
budget policy results in an increase in the federal debt, Congress periodically must enact
increases to the debt limit.
The most recent prior increase in the statutory debt limit was included in the Balanced
Budget Act of 1997 (P.L. 105-33). At the time of passage, the increase to $5.95 trillion was
considered sufficient to meet the federal government’s financial needs through mid-
December 1999. The federal government’s surpluses over the last 4 years contributed to the
fact that the statutory debt limit has been sufficient beyond this date. However, Treasury
Secretary Paul O’Neill first indicated in a December 11, 2001, letter to congressional leaders
that the existing debt limit may begin to interfere with the federal government’s financial
responsibilities “as early as February 2002.”7 Therefore, he requested that Congress raise the
debt limit by $750 billion to $6.7 trillion.
On June 11, the Senate adopted S. 2578, legislation to increase the public-debt limit by
$450 billion, by a 68-29 vote. On June 27, the House adopted S. 2578 by a 215-214 vote.
President Bush signed the legislation into law (P.L. 107-199) on June 28. The $450 billion
increase is considered to be sufficient to meet the federal government’s financial needs
through early 2003.8
6 The resolution also restored and extended the three-fifths vote requirement for certain waivers of
the Congressional Budget Act of 1974, through April 15, 2003.
7 Bud Newman,”Debt Ceiling Hike Not on House Agenda Before Adjournment, DeLay, Thomas
Say,” BNA Daily Report for Executives, no. 238 (Dec. 13, 2001), p. G-3. Also, for more information
on the current need to raise the debt limit, see CRS Report RS21111, The Debt Limit: The Need to
Raise It After Four Years of Surpluses, by Philip D. Winters.
8 Bud Newman,”House Passes, Sends to President Bush Bill Hiking Debt Ceiling by $450 Billion,”
BNA Daily Report for Executives, no. 126 (Jul. 1, 2002), p. G-4.
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Appropriations and Other Spending Legislation
Federal spending is categorized as one of two different types: discretionary or direct
spending. Discretionary spending is controlled through the annual appropriations acts, while
direct spending (which consists mostly of entitlement programs) is determined by existing
law.
Discretionary spending is under the jurisdiction of the House and Senate Appropriations
Committees. Direct spending is under the jurisdiction of the various legislative committees
of the House and Senate. Some entitlement programs, such as Medicaid and certain
veterans’ programs, are funded in annual appropriations acts, but such spending is not
considered discretionary and is not controlled through the annual appropriations process.
The President’s budget includes recommendations for the annual appropriations;
account and program level detail about these recommendations are included in the Appendix
volume of the President’s budget documents. In addition, agencies submit justification
materials to the House and Senate Appropriations Committees. The budget justifications
provide more detailed information about an agency’s program activities than is contained in
the President’s budget documents and are used in support of agency testimony during
Appropriations subcommittee hearings on the President’s budget request.
Congress passes three main types of appropriations measures. Regular appropriations
acts provide budget authority for the next fiscal year, beginning on October 1. The 13
subcommittees of the Appropriations Committees of the House and Senate are each
responsible for one of the 13 regular appropriations acts. Supplemental appropriations acts
provide additional funding for unexpected needs while the fiscal year is in progress.
Continuing appropriations acts, commonly referred to as continuing resolutions, provide
stop-gap funding for agencies that have not received a regular appropriations by the start of
the fiscal year.
Spending allocations to the Appropriations Committees and other committees
accompany the conference report on the budget resolution. Soon after it is adopted, the
House and Senate Appropriations Committees subdivide their spending allocations among
their subcommittees and formally report these suballocations to their respective chambers.
On June 25, 2002, the House Appropriations Committee reported its initial suballocations
to the House (H.Rept. 107-529) and revised its suballocations four times (H.Rept. 107-566,
H.Rept. 107-567, H.Rept. 107-656, and H.Rept. 107-738). Although there was no official
allocation made, Senator Robert Byrd, chair of the Senate Appropriations Committee (SAC),
submitted for printing in the Congressional Record the SAC-approved FY2003
subcommittee allocations on June 28 and revised allocations on July 26.9
9 Congressional Record, daily edition, vol. 148 (June 28, 2002), p. S6323, and Congressional
Record, daily edition, vol. 148 (July 26, 2002), p. S7417. These subcommittee allocations, however,
were not enforceable under the Congressional Budget Act in the Senate because Congress had not
adopted a budget resolution for FY2003 nor had the Senate, in the absence of a budget resolution,
passed a “deeming resolution.”
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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.
In addition to the 13 regular appropriations acts, Congress typically acts on at least one
supplemental appropriations measure during a session. Congress also often adopts one or
more continuing resolutions each year because of recurring delays in the appropriations
process. In 2001, for example, Congress passed the 13 regular appropriations measures
individually, two supplementals, and eight continuing resolutions. In some years, such as
in each of the three prior to 2001 (1998-2000), instead of adopting all of the regular
appropriations acts individually, Congress combines several of them into an omnibus
appropriations measure either at the time of initial floor consideration or at the time they are
reported from conference.
On March 21, 2002, President Bush submitted a $27.1 billion emergency supplemental
appropriations request for FY2002 to provide additional resources for the war on terrorism,
homeland security, and economic recovery.10 On May 21, 2002, President Bush submitted
a second FY2002 emergency supplemental appropriations request for $1.1 billion.11
On May 20, 2002, in response to the President’s request, the House Appropriations
Committee reported H.R. 4775, making supplemental appropriations for FY2002 (H.Rept.
107-480). The House considered H.R. 4775 first under an open rule (H.Res. 428) and
subsequently under a closed rule (H.Res. 431) on May 22, 23, and 24. H.R. 4775 was
adopted by the House on May 24 on a 280-138 vote. In the Senate, the Senate
Appropriations Committee reported a FY2002 supplemental appropriations act (S. 2551,
S.Rept. 107-156) on May 22. After incorporating S. 2551 in H.R. 4775 as an amendment,
the Senate began consideration of the supplemental appropriations measure on June 3.
During consideration of H.R. 4775, the Senate invoked cloture by a 87-10 vote on June 6.
The next day (June 7) the Senate passed H.R. 4775, as amended, by a vote of 71-22.
House and Senate conferees resolved the differences between the two versions of the
FY2002 supplemental appropriations measure and filed a conference report (H.Rept. 107-
593) on July 19. The House agreed to the conference report on H.R. 4775 on July 23 and the
Senate agreed to it on the next day by votes of 397-32 and 92-7, respectively. President Bush
signed the supplemental appropriations measure into law (P.L. 107-206) on August 8.
Most of the $28.9 billion provided in H.R. 4775 was designated an “emergency
requirement” and effectively was exempt from budget policy controls during consideration
10 The text of the President’s request to Congress is available on the Internet at
[http://w3.access.gpo.gov/usbudget/fy2003/pdf/5usattack.pdf].
11 The text of the President’s request to Congress is available on the Internet at
[http://w3.access.gpo.gov/usbudget/fy2003/pdf/10va_doi.pdf].
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on the floor of each chamber and after being enacted into law. About $5.1 billion, however,
was provided for obligation only if the President designated this entire amount an
“emergency requirement” within 30 days of enactment (Section 1404 of P.L. 107-206). On
August 13, President Bush announced that he would not do so, effectively reducing the
overall amount of the supplemental appropriations measure to about $23.8 billion.12
The House and Senate began consideration of the regular appropriations bills for
FY2003 during the week of June 24 and July 15, respectively. By the start of FY2003 on
October 1, the House had adopted five of the 13 regular appropriations measures, and the
Senate had adopted three.13
In the absence of any regular appropriations acts enacted by October 1, Congress passed
and President Bush signed into law a continuing resolution (H.J.Res. 111, P.L. 107-229).
The measure provided temporary appropriations for FY2003 through October 4 for federal
government agencies and programs funded in the 13 regular appropriations bills.
Subsequently, Congress and President Bush extended the temporary funding through October
11 (H.J.Res. 112, P.L. 107-235), October 18 (H.J. Res. 122, P.L. 107-240), November 22
(H.J.Res. 123, P.L. 107-244), and January 11, 2003 (H.J.Res. 124, P.L. 107-294).
On October 23, President Bush signed into law the first two FY2003 regular
appropriations acts: the Defense Appropriations Act, 2003 (P.L. 107-248) and the Military
Construction Appropriations Act, 2003 (P.L. 107-249). As Congress adjourned sine die on
November 22, the federal government agencies and programs funded in the remaining 11
regular appropriations acts were provided temporary funding through January 11, 2003, by
the last continuing resolution (H.J.Res. 124) adopted during the second session of the 107th
Congress. President Bush signed this continuing resolution into law (P.L. 107-294) on
November 23.
Congress often considers major legislation affecting direct spending programs as well.
On several occasions in the past, Congress has included reserve funds in the budget
resolution to accommodate specific direct spending legislation. Under the provisions of a
reserve fund, the chairmen of the House and Senate Budget Committees may revise the
committee spending allocations and other budget resolution levels if certain legislation is
reported by the appropriate committee. Without such an adjustment, direct spending
legislation might be subject to points of order if it was not assumed in the budget resolution
spending amounts.
The House-adopted FY2003 budget resolution, which was deemed by the House to have
been adopted by Congress, included seven reserve funds, two of which were related to direct
spending legislation. First, Section 202 of H.Con.Res. 353 provided a reserve fund for
legislation reforming the Medicare program, including adding a prescription drug benefit.
Second, Section 212 of H.Con.Res. 353 provided a reserve fund for legislation subjecting
the administrative expenses for student loans to the annual appropriations process.
12 Adam Wasch,”Bush Rejects ‘Extra’ Spending in FY2002 Supplemental Package,” BNA Daily
Report for Executives, no. 157 (Aug. 14, 2002), p. A-13.
13 For the up-to-date status of and further information on the FY2003 appropriations bills, see the
CRS Appropriations Web site at [http://www.crs.gov/products/appropriations/apppage.shtml].
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On June 27, House Budget Chairman Jim Nussle, under the authority of Section 202
of H.Con.Res. 353, revised the appropriate spending allocations to accommodate H.R. 4954,
the Medicare Modernization and Prescription Drug Act of 2002.14 Subsequently, the House
considered H.R. 4954 under a closed rule (H.Res. 465), which passed by a vote of 218-213.
The rule provided for an amendment in the nature of a substitute printed in the report
(H.Rept. 107-553) accompanying the rule to be adopted automatically. Subsequently, the
House adopted H.R. 4954 by a 221-208 vote. No further action was taken on this legislation.
Budget Enforcement and Sequestration
The sequestration process was first established in 1985 by the Balanced Budget and
Emergency Deficit Control Act, commonly known as the Gramm-Rudman-Hollings Act.
The law was amended and modified in 1987, 1990, 1993, and 1997. Most notably, the
Budget Enforcement Act (BEA) of 1990 changed the focus of the sequestration process.
Instead of maximum deficit targets, as provided in the 1985 Deficit Control Act, the BEA
of 1990 tied sequestration to new statutory limits on discretionary spending and a PAYGO
requirement for new direct spending and revenue legislation.
As consideration of the FY2003 budget began, adjustable discretionary spending limits
existed for the following categories: highway and mass transit spending for FY2002-
FY2003; conservation spending (divided into six subcategories) for FY2002-FY2006; and
other discretionary spending, also called general purpose discretionary spending, for FY2002.
Under the PAYGO requirement, the net projected 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 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 involves automatic, largely across-the-board spending cuts in non-
exempt programs. Sequestration was triggered if the director of the Office of Management
and Budget estimated in the final sequestration report that one or more of the discretionary
spending limits would be exceeded or the PAYGO requirement would be violated. The
President was required to issue a sequestration order cancelling budgetary resources in non-
exempt programs by the amount of any spending limit breach or PAYGO violation.
The discretionary spending limits, as well as a PAYGO requirement similar to the
statutory one, also could have been enforced through points of order while legislation was
being considered on the Senate floor. First, Section 312(b) of the 1974 CBA prohibited the
consideration of legislation that would cause any of the spending limits to be exceeded.
Second, Section 207 of the FY2000 budget resolution (H.Con.Res. 68, 106th Congress), like
similar provisions in previous budget resolutions, provided a point of order against any direct
spending or revenue legislation that would increase or cause an on-budget deficit for the first
14 See Congressional Record, daily edition, vol. 148 (June 27, 2002), p. H4322.
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fiscal year, the period of the first 5 fiscal years, or the following 5 fiscal years, covered by
the most recently adopted budget resolution. Both of these points of order could have been
waived by a vote of three-fifths of Senators. The Senate PAYGO point of order expired on
September 30, 2002. On October 16, however, the Senate agreed by unanimous consent to
S.Res. 304, as amended, to restore and extend the point of order through April 15, 2003.15
Table 2 provides the timetable for sequestration actions. As indicated, OMB and CBO
publish preview and update sequestration reports to provide Congress and the President with
advance notice regarding the possibility of a sequester. If one or both types of sequester were
anticipated, these reports could have afforded Congress and the President enough warning
so that they could enact legislation to forestall them. The utility of these reports in 2002,
however, was ultimately informational only because Congress and the President did not
extend the discretionary spending limits and the PAYGO requirement beyond FY2002. Only
an OMB within-session (noted above) or final sequestration report could have triggered a
sequester; the CBO sequestration reports were advisory only.
Table 2. Timetable for Sequestration Actions
Deadline
Action to be completed
5 days before the President’s
CBO sequestration preview report.
budget submission
Date of the President’s
OMB sequestration preview report (as part of the
budget submission
President’s budget).
August 10
Notification regarding military personnel.
August 15
CBO sequestration update report.
August 20
OMB sequestration update report.
10 days after end of session
CBO final sequestration report.
15 days after end of session
OMB final sequestration report; presidential
sequestration order.
As required, CBO released its sequestration preview report on February 1, its
sequestration update report on August 15, and its final sequestration report on December 4.16
OMB included its sequestration preview report in the Analytical Perspectives volume of the
President’s budget for FY2003, submitted to Congress on February 2. OMB released its
sequestration update report on August 19 and its final sequestration report on December 6.17
15 The resolution also restored and extended the three-fifths vote requirement for certain waivers of
the Congressional Budget Act of 1974, through April 15, 2003.
16 These sequestration reports are available on CBO’s Web site at [http://www.cbo.gov].
1 7 These sequestration reports are available on OMB’s Web site at
[http://www.whitehouse.gov/omb].
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The BEA enforcement procedures, as well as several enforcement procedures tied to the
budget resolution, may have been suspended in the event a declaration of war was enacted
or if Congress enacted a joint resolution triggered by the issuance of a “low-growth” report
by CBO.18 With regard to the latter, CBO was required to notify Congress if actual real
economic growth was less than 1% or estimated real economic growth is projected to be
negative for the most recently reported quarter and the preceding quarter. Upon receiving
a low-growth report, the Senate majority leader was required to introduce a joint resolution
suspending the enforcement procedures, but such action was optional in the House. On
January 30, 2002, CBO issued a low-growth report to Congress (H.Doc. 107-178), and on
February 7 the Senate majority leader subsequently introduced a suspension resolution
(S.J.Res. 31). The Senate rejected by voice vote the suspension resolution on February 14.
At the end of FY2002, the PAYGO scorecard reflected a positive balance for each year
from FY2002 through FY2006. Table 3 provides the estimated balances on the PAYGO
scorecard at the end of FY2002. If no other legislative action was taken by the Congress and
President Bush, a sequestration likely would have been required. However, on November
14, the House passed by a 366-19 vote H.R. 5708, which required the OMB director to
reduce the balances on the PAYGO scorecard to zero. The next day the Senate passed the
legislation by unanimous consent. On December 2, President Bush signed H.R. 5708 into
law (P.L. 107-312), thereby preventing any PAYGO sequestration through FY2006 for the
projected increases in the deficit as a result of direct spending and revenue legislation enacted
prior to the end of FY2002.
Table 3. Estimated PAYGO Scorecard Balances at the End of FY2002
(in millions of dollars)
FY2002
FY2003
FY2004
FY2005
FY2006
Receipt effect
-114
-87,728
-106,935
-109,501
-127,256
Outlay effect
2,206
37,338
40,005
32,127
16,483
Net budget cost
2,320
125,066
146,940
141,628
143,739
OMB balance for
sequester in 2003
127,386
S o u r c e : O f f i c e o f M a n a g e m e n t a n d B u d g e t W e b s i t e a t
[http://www.whitehouse.gov/omb/legislative/paygo/index.html], accessed on Nov. 13, 2002.
18 For further information on these suspension provisions, see CRS Report RS20182, Suspension of
Budget Enforcement Procedures During Hostilities Abroad; and CRS Report RL31068, Suspension
of Budget Enforcement Procedures During Low Economic Growth, both by Robert Keith.
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LEGISLATION
H.Con.Res. 353, H.Rept. 107-376
Concurrent Resolution on the Budget for Fiscal Year 2003. Adopted by the House on
March 20 by a 221-209 vote. Reported by the House Budget Committee on March 15.
S.Con.Res. 100, S.Rept. 107-141
Concurrent Resolution on the Budget for Fiscal Year 2003. Marked up by the Senate
Budget Committee on March 21, and reported to the full Senate on March 22.
CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS
Congressional Budget Office. The Budget and Economic Outlook: Fiscal Years 2003-2012.
January 2002.
Congressional Budget Office. Analysis of the President’s Budgetary Proposals for Fiscal
Year 2003. March 2002.
Congressional Budget Office. The Budget and Economic Outlook: An Update. August
2002.
U.S. Congress. House. Committee on the Budget. Concurrent Resolution on the
Budget–Fiscal Year 2003. Report to accompany H.Con.Res. 353. 107th Congress, 2nd
session. H.Rept. 107-376. Washington: GPO, 2002.
U.S. Congress. Senate. Committee on the Budget. Concurrent Resolution on the
Budget–Fiscal Year 2003. Report to accompany S.Con.Res. 100. 107th Congress, 2nd
session. S.Rept. 107-141. Washington: GPO, 2002.
U.S. Executive Office of the President. Office of Management and Budget. Budget of the
United States Government, Fiscal Year 2003. Washington: GPO, 2002.
U.S. Executive Office of the President. Office of Management and Budget. Mid-Session
Review, Fiscal Year 2003. Washington: GPO, 2002.
CHRONOLOGY
11-23-2002 – President Bush signed into law a fifth continuing resolution for FY2003 (P.L.
107-294), providing temporary appropriations through January 11, 2003, for
federal government agencies and programs funded in the 11 regular
appropriations acts not yet enacted.
10-23-2002 – President Bush signed into law the first two FY2003 regular appropriations
acts: the Defense Appropriations Act, 2003 (P.L. 107-248) and the Military
Construction Appropriations Act, 2003 (P.L. 107-249).
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08-02-2002 – President Bush signed H.R. 4775, FY2002 supplemental appropriations act,
into law (P.L. 107-206), following the adoption of the legislation by the
House (July 23) and the Senate (July 24).
07-28-2002 – President Bush signed S. 2578, an act to increase the public-debt limit by
$450 billion, into law (P.L. 107-199), following the adoption of the
legislation by the Senate (June 11) and the House (June 27).
03-22-2002 – Senate Budget Committee reported its version of the FY2003 budget
resolution (S.Con.Res. 100, S.Rept. 107-141) to the full Senate.
03-21-2002
– President Bush submitted a $27.1 billion emergency
supplemental
appropriations request for FY2002 to provide additional resources for the war
on terrorism, homeland security, and economic recovery.
03-20-2002 – House agreed to its version of the FY2003 budget resolution (H.Con.Res.
353, H.Rept. 107-376) by a 221-209 vote.
03-09-2002 – President Bush signed H.R. 3090, the Job Creation and Worker Assistance
Act of 2002, into law (P.L. 107-147), following the adoption of the
legislation by the House (March 7) and Senate (March 8).
02-04-2002 – President Bush submitted his FY2003 budget to Congress.
FOR ADDITIONAL READING
CRS Report 97-684. The Congressional Appropriations Process: An Introduction, by Sandy
Streeter.
CRS Report 98-721. Introduction to the Federal Budget Process, by Robert Keith and Allen
Schick.
CRS Report RS21175. Perspectives on the Fiscal Year 2003 Budget, by Philip D. Winters.
CRS Report RL30343. Continuing Appropriations Acts: Brief Overview of Recent
Practices, by Sandy Streeter.
CRS Issue Brief IB10102. The Budget for Fiscal Year 2003, by Philip D. Winters.
CRS-16
Issue Brief for Congress
Received through the CRS Web
Congressional Budget Actions in 2002
Updated December 31, 2002
Bill Heniff Jr.
Government and Finance Division
Congressional Research Service ˜ The Library of Congress
CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
Overview of the Congressional Budget Process
Budget Resolution
Reconciliation Legislation
Revenue and Debt-Limit Legislation
Appropriations and Other Spending Legislation
Budget Enforcement and Sequestration
LEGISLATION
CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS
CHRONOLOGY
FOR ADDITIONAL READING
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Congressional Budget Actions in 2002
SUMMARY
During the second session of the 107th
The House adopted its version of the
Congress, the House and Senate considered
FY2003 budget resolution, H.Con.Res. 353,
many different budgetary measures. Most of
on March 20. In the absence of an agreement
these measures pertained to FY2003 (which
with the Senate, the House adopted a resolu-
began on October 1, 2002) and beyond, but a
tion “deeming” its budget resolution to have
supplemental appropriations measure for
been adopted by Congress for budget enforce-
FY2002 was enacted as well. This issue brief
ment purposes. The Senate Budget Commit-
describes House and Senate action on major
tee reported its version of the FY2003 budget
budgetary legislation within the framework of
resolution, S.Con.Res. 100, on March 22, but
the congressional budget process and other
did not consider it on the Senate floor.
procedural requirements.
On August 2, President Bush signed H.R.
Congress begins its annual budget pro-
4775, FY2002 Supplemental Appropriations
cess once the President submits his budget.
Act, into law (P.L. 107-206).
President Bush submitted his FY2003 budget
to Congress on February 4, 2002. President
On October 23, President Bush signed
Bush released his budget update, Mid-Session
into law the first two FY2003 regular appro-
Review, on July 15.
priations acts: the Defense Appropriations
Act, 2003 (P.L. 107-248) and the Military
In preparation for congressional action on
Construction Appropriations Act, 2003 (P.L.
the budget, CBO released its annual report on
107-249). In the absence of final action on the
budget baseline projections, The Budget and
remaining 11 regular appropriations acts,
Economic Outlook: Fiscal Years 2003-2012,
Congress passed and President Bush signed
on January 31. CBO twice updated these
into law a fifth continuing resolution (CR) for
budget baseline projections, based on new
FY2003 (P.L. 107-294) on November 23. The
technical assumptions and a revised economic
CR provides temporary appropriations throu-
forecast, in its report, Analysis of the Presi-
gh January 11, 2003, for federal government
dent’s Budgetary Proposals for Fiscal Year
agencies and programs funded in those acts.
2003, released on March 6, and its report, The
Budget and Economic Outlook: An Update,
The statutory limits on discretionary
released on August 27.
spending and the “pay-as-you-go” (PAYGO)
requirement for direct spending and revenue
The Congressional Budget Act of 1974
legislation established under the Budget En-
established the congressional budget process.
forcement Act of 1990, as amended, expired
The process is centered on the adoption of an
on September 30, 2002. Also, Congress
annual concurrent resolution on the budget.
passed and President Bush signed legislation
Budget resolution policies are implemented
(H.R. 5708, P.L. 107-312) that reduced the
through the enactment of reconciliation bills,
positive balances on the PAYGO scorecard to
revenue and debt-limit legislation, and appro-
zero, thereby preventing any future PAYGO
priations and other spending measures, and
sequestration due to projected increases in the
enforced by points of order that may be raised
deficit as a result of direct spending and reve-
when legislation is pending on the House and
nue legislation enacted prior to the end of
Senate floor.
FY2002.
Congressional Research Service ˜ The Library of Congress
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MOST RECENT DEVELOPMENTS
On November 22, Congress adjourned sine die. Before ending the session, Congress
and President Bush completed action on two of the 13 FY2003 regular appropriations acts:
the Defense Appropriations Act, 2003 (P.L. 107-248) and the Military Construction
Appropriations Act, 2003 (P.L. 107-249) on October 23. In the absence of final action on
the remaining 11 regular appropriations acts, Congress passed and President Bush signed
a fifth continuing resolution for FY2003 (P.L. 107-294), which provides temporary
appropriations through January 11, 2003, for federal government agencies and programs
normally funded in those acts.
BACKGROUND AND ANALYSIS
During the second session of the 107th Congress, the House and Senate considered many
different budgetary measures. Most of these measures pertained to FY2003 (which began
on October 1, 2002) and beyond, but a supplemental appropriations measure for FY2002 was
enacted as well. This issue brief describes House and Senate action on major budgetary
legislation within the framework of the congressional budget process and other procedural
requirements.
In 2002, Congress faced a significantly different procedural and budget environment
than in the few years before. Not only were key enforcement procedures under the Budget
Enforcement Act (Title XIII of P.L. 101-508) scheduled to expire at the end of FY2002 (i.e.,
September 30, 2002), the current and long-term budget outlook had changed considerably
from the year before. At the beginning of 2001, CBO projected federal surpluses in each
fiscal year through FY2011 and a cumulative surplus of $5.6 trillion for FY2002 through
FY2011, under policies existing at that time.1 In contrast, CBO Director Dan L. Crippen
testified before the House and Senate Budget Committees on January 23, 2002, that CBO
projected that both fiscal years 2002 and 2003 would show small deficits, if current policies
remained the same and the economy performed as CBO forecasted. Further, the projected
cumulative surplus for FY2002 through FY2011 dropped by $4.0 trillion to $1.6 trillion.
The new environment undoubtedly had a significant effect on congressional budget actions
during the session.
Overview of the Congressional Budget Process
The congressional budget process consists of the consideration and adoption of
spending, revenue, and debt-limit legislation within the framework of an annual concurrent
resolution on the budget. Additionally, congressional action on budget legislation is
constrained by limits on discretionary spending and a “pay-as-you-go” (PAYGO)
requirement for direct spending and revenue legislation.
1 Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2002-2011, Jan.
2001.
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Congress begins its budget process once the President submits his budget. The
President is required by law to submit a comprehensive federal budget no later than the first
Monday in February. The President’s budget includes estimates of direct spending and
revenues under existing laws, as well as requests for discretionary spending (i.e., funds
provided through the appropriations process) for the upcoming fiscal year. In addition, the
President frequently proposes new initiatives in his budget submission to Congress.
Although Congress is not bound by the President’s budget, congressional action on spending
and revenue legislation often is influenced by his recommendations, as well as subsequent
budgetary activities by the President during the year. The Office of Management and Budget
(OMB) assists the President in formulating and coordinating his budget policies and
activities.
On February 4, 2002, President Bush submitted his FY2003 budget to Congress.
Following the usual practice, the President’s budget was submitted as a multi-volume set
consisting of a main document, which includes the President’s budget message and
information on his 2003 proposals (Budget), and supplementary documents, which provide
special budgetary analyses (Analytical Perspectives), historical budget information
(Historical Tables), and detailed account and program level information (Appendix), among
other things. On July 15, President Bush submitted his Mid-Session Review to Congress.
This report contains revised estimates of the budget deficit/surplus, receipts, outlays, and
budget authority for FY2002 through FY2007, reflecting changed economic conditions and
assumptions and congressional actions. Presidential budget documents are available from
the Government Printing Office or on OMB’s Web site at [http://www.whitehouse.gov/omb].
The Congressional Budget Act (CBA) of 1974 (Titles I-IX of P.L. 93-344) established
the congressional budget process, including a timetable for congressional action on budget
legislation (see Table 1). The process is centered on the adoption of an annual concurrent
Table 1. The Congressional Budget Process Timetable
On or before
Action to be completed
First Monday in
President submits budget to Congress.
February
February 15
Congressional Budget Office submits economic and budget outlook report
to Budget Committees.
6 weeks after
Committees submit views and estimates to Budget Committees.
President 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.
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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.
Because the budget resolution does not become law, budget policies are implemented
through the enactment of reconciliation bills, revenue and debt-limit legislation, and
appropriations and other spending measures. Congress enforces budget resolution policies
through points of order on the floor of each chamber and the reconciliation process. For
example, any legislation that would cause the aggregate levels to be violated is prohibited
from being considered. Further, the total budget authority and outlays set forth in the budget
resolution are allocated among the House and Senate committees having jurisdiction over
specific spending legislation. Any legislation, or amendment, that would cause these
committee allocations to be exceeded is prohibited. Finally, the House and Senate
Appropriations Committees subdivide their allocations among their respective 13
subcommittees. A point of order may be raised against any appropriations act, or
amendment, that would cause one of these subdivisions to be exceeded.2 Congress also may
use reconciliation legislation (discussed further below) to enforce direct spending, revenue,
and debt-limit provisions of a budget resolution.
In addition to the enforcement procedures associated with the budget resolution, budget
legislation was constrained by statutory limits on discretionary spending and a PAYGO
requirement for direct spending and revenue legislation, both established by the Budget
Enforcement Act (BEA) of 1990 (Title XIII of P.L. 101-508), which amended the Balanced
Budget and Emergency Deficit Control Act of 1985 (Title II of P.L. 99-177).
As consideration of the FY2003 budget began, adjustable discretionary spending limits
existed for the following categories: highway and mass transit spending for FY2002-
FY2003; conservation spending (divided into six subcategories) for FY2002-FY2006; and
other discretionary spending, also called general purpose discretionary spending, for FY2002.
PAYGO generally required that projected increases in direct spending or decreases in
revenues due to legislative action were offset so that the net effects of the new legislation did
not increase the deficit or reduce the surplus. 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 involves automatic, largely across-the-board spending cuts in non-
exempt programs. Sequestration was triggered if the director of the Office of Management
and Budget estimated in the final sequestration report after the end of a session that one or
more of the discretionary spending limits had been exceeded or the PAYGO requirement had
been 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
2 For more detailed information on these points of order and their application, see CRS Report 97-
865, Points of Order in the Congressional Budget Process, by James V. Saturno.
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similar to the statutory one, also could have been enforced through points of order while
legislation was considered on the Senate floor.
The sequestration process established to enforce the discretionary spending limits
expired at the end of FY2002 (September 30, 2002). The PAYGO sequestration process
continues until the end of FY2006 for the projected increases in the deficit as a result of
direct spending and revenue legislation enacted prior to the end of FY2002. However,
Congress passed and President Bush signed legislation (H.R. 5708, P.L. 107-312) that
reduced the positive balances on the PAYGO scorecard through FY2006 to zero, thereby
preventing any future PAYGO sequestration.
Budget Resolution
The Congressional Budget Act, as amended, establishes the concurrent resolution on
the budget as the centerpiece of the congressional budget process. The budget resolution sets
forth aggregate spending and revenue levels, and spending levels by major functional area,
for at least 5 fiscal years. Once adopted, it provides the framework for subsequent action on
budget-related legislation.
The congressional budget process timetable sets April 15 as a target date for final
adoption of the budget resolution. The CBA prohibits the consideration of spending,
revenue, or debt-limit legislation for the upcoming year until the budget resolution has been
adopted, unless the rule is waived or set aside.
Following the submission of the President’s budget early in the year, Congress begins
formulating the budget resolution. The House and Senate Budget Committees are
responsible for developing and reporting the budget resolution. In formulating the budget
resolution, the Budget Committees hold hearings and receive testimony from Members of
Congress and representatives from federal departments and agencies, the general public, and
national organizations. Three regular hearings include separate testimony from the Director
of the Congressional Budget Office (CBO), the Chair of the Federal Reserve Board, and the
Director of OMB.3
The congressional budget resolution, as well as the President’s budget, is based on
budget baselines. The budget baseline is a projection of federal revenue, spending, and
deficit or surplus levels based upon current policies, assuming certain economic assumptions.
The President’s budget baseline, referred to as current services estimates, usually differs from
CBO’s baseline, referred to as baseline budget projections, often due to different economic
and technical assumptions. Baseline projections provide a benchmark for measuring the
3 The CBO Director, Dan L. Crippen, presented separate, but identical, testimony before the Senate
and House Budget Committees on Jan. 23, 2002. The testimony is available on CBO’s Web site at
[http://www.cbo.gov]. Federal Reserve Board Chairman Alan Greenspan testified before the Senate
Budget Committee on Jan. 24, 2002. OMB Director Mitchell E. Daniels, Jr., presented separate, but
identical, testimony before the Senate and House Budget Committees on Feb. 5, 2002. The latter
two testimonies are available on the Senate Budget Committee’s Web site at
[http://www.senate.gov/~budget].
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budgetary effects of proposed policy changes. On January 31, 2002, CBO released its annual
report on budget baseline projections, The Budget and Economic Outlook: Fiscal Years
2003-2012. On March 6, CBO released its Analysis of the President’s Budgetary Proposals
for Fiscal Year 2003. This report contains estimates of the President’s proposals using
CBO’s economic and technical assumptions. In addition, the report incorporates CBO’s new
technical assumptions and revised economic forecast, as well as updates its budget baseline
projections. On August 27, CBO released its budget update report, The Budget and
Economic Outlook: An Update, containing revised budget projections. CBO reports are
available on its Web site at [http://www.cbo.gov].
Another source of input comes from the “views and estimates” of congressional
committees with jurisdiction over spending and revenues. Within 6 weeks after the
President’s budget submission, House and Senate committees are required to submit views
and estimates of budget matters under their jurisdiction to their respective Budget
Committees. These views and estimates, frequently submitted in the form of a letter to the
Chair and Ranking Member of the Budget Committee, typically include comments on the
President’s budget proposals and estimates of the budgetary impact of any legislation likely
to be considered during the current session of Congress. The Budget Committees are not
bound by these recommendations. The views and estimates of Senate committees are printed
in the committee report accompanying the Budget Committee-reported budget resolution
(S.Rept. 107-141, pp. 72-164). The views and estimates of House committees are printed
in a separate House Budget Committee print (Serial No. CP-2).
The budget resolution was designed to provide a framework to make budget decisions,
leaving specific program determinations to House and Senate Appropriations Committees
and other committees with spending and revenue jurisdiction. In many instances, however,
particular program changes are considered when formulating the budget resolution. Program
assumptions sometimes are referred to in the reports of the House and Senate Budget
Committees and usually are discussed during floor action. Although these program changes
are not binding, committees may be strongly influenced by these recommendations when
formulating appropriations bills, reconciliation measures, or other budgetary legislation.
On March 15, the House Budget Committee reported its version of the FY2003 budget
resolution (H.Con.Res. 353, H.Rept. 107-376), after a mark up on March 13. The Senate
Budget Committee marked up its version (S.Con.Res. 100, S.Rept. 107-141) on March 21,
and reported it to the full Senate the next day (March 22).
The House and Senate consider the budget resolution under procedures generally
intended to expedite final action. In the House, the budget resolution usually is considered
under a special rule, limiting the time of debate and allowing only a few amendments, as
substitutes to the entire resolution. On March 20 (legislative day, March 19), the Rules
Committee reported a special rule (H.Res. 372, H.Rept. 107-380) which allowed only a self-
executing amendment in the nature of a substitute and allowed 3 hours of general debate.
After adopting the rule by a vote of 222-206, the House considered and adopted H.Con.Res.
353 by a 221-209 vote, on March 20. In the absence of an agreement on a FY2003 budget
resolution with the Senate, the House adopted a so-called “deeming resolution.” The special
rule (H.Res. 428) governing the initial consideration of the emergency supplemental
appropriations act (H.R. 4775) included a provision “deeming” the House-adopted budget
resolution to have been agreed to by Congress. The House adopted this special rule by a
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216-209 vote on May 22. Under the deeming resolution, the enforcement procedures of the
Congressional Budget Act, such as the limits on spending in the annual appropriations acts,
are effective in the House.4
The Senate considers the budget resolution under the procedures set forth in the CBA,
unless superseded by a unanimous consent agreement. Debate on the initial consideration
of the budget resolution, and all amendments, debatable motions, and appeals, is limited to
50 hours. Amendments, motions, and appeals may be considered beyond this time limit, but
without debate. Consideration of the conference report is limited to 10 hours. The Senate
did not consider the Senate Budget Committee-reported budget resolution on the floor.5
Reconciliation Legislation
Congress may implement changes to existing law related to direct spending, revenues,
or the debt limit through the reconciliation process, under Section 310 of the CBA. The
reconciliation process has two stages. First, Congress includes reconciliation instructions
in a budget resolution directing one or more committees to recommend changes in statute to
achieve the levels of spending, revenues, and debt limit agreed to in the budget resolution.
Second, the legislative language recommended by committees is packaged “without
substantive revision” into one or more reconciliation bills, as set forth in the budget
resolution, by the House and Senate Budget Committees. In some instances, a committee
may be required to report its legislative recommendations directly to its chamber.
Once reconciliation legislation is reported, consideration is governed by special
procedures. These special rules serve to limit what may be included in reconciliation
legislation, to prohibit certain amendments, and to encourage its completion in a timely
fashion. In the House, as with the budget resolution, reconciliation legislation usually is
considered under a special rule, establishing the time allotted for debate and what
amendments will be in order. In the Senate, debate on a budget reconciliation bill, all
amendments, debatable motions, and appeals is limited to not more than 20 hours. After the
20 hours of debate has been reached, consideration of amendments, motions, and appeals
may continue, but without debate.
4 The special rule also required the House Budget Committee chairman to submit for printing in the
Congressional Record the committee allocations, referred to as the 302(a) allocations, associated
with the House-adopted budget resolution spending levels. House Budget Committee Chairman Jim
Nussle submitted the allocations on May 22, 2002. See Congressional Record, daily edition, vol.
148 (May 22, 2002), pp. H2929-H2930. With the House-adopted budget resolution deemed to have
been passed by Congress, a point of order may be raised against legislation that would cause these
allocations to be exceeded. For further information on “deeming resolutions,” see CRS Report
RL31443, The “Deeming Resolution”: A Budget Enforcement Tool, by Robert Keith.
5 On June 5, during the consideration of the Emergency Supplemental Appropriations Act (H.R.
4775), Sen. Rick Santorum offered an amendment (no. 3765) that contained the text of S.Con.Res.
100, but the amendment was tabled by a 96-0 vote. See Congressional Record, daily edition, vol.
148 (June 5, 2002), pp. S5018-S5021.
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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 or any amendment.
Although Congress did not complete action on a FY2003 budget resolution, neither the
House or Senate version of the FY2003 budget resolution (H.Con.Res. 353 and S.Con.Res.
100, respectively) contained reconciliation instructions. Consequently, Congress did not
anticipate considering reconciliation legislation in 2002.
Revenue and Debt-Limit Legislation
Congress may adopt revenue and debt-limit legislation individually. Revenue and debt-
limit legislation is under the jurisdiction of the House Ways and Means Committee and the
Senate Finance Committee. Article I, Section 7, of the U.S. Constitution, requires revenue
legislation originate in the House of Representatives, but the Senate may amend a revenue
bill as it chooses.
Most of the laws establishing the federal government’s revenue sources are permanent
and continue year after year without any additional legislative action. Congress, however,
typically enacts revenue legislation, changing some portion of the existing tax system, every
year. Revenue legislation may include changes to individual and corporate income taxes,
social insurance taxes, excise taxes, or tariffs and duties.
Revenue legislation is not automatically considered in the congressional budget process
on an annual basis. Frequently, however, the President proposes and Congress considers
changes in the rates of taxation or the distribution of the tax burden. An initial step in the
congressional budget process is the publication of revenue estimates of the President’s
budget by CBO. These revenue estimates usually differ from the President’s since they are
based on different economic and technical assumptions (e.g., growth of the economy and
change in the inflation rate). Estimates of any congressional revenue-policy proposals are
prepared by CBO, based on Joint Committee on Taxation revenue estimates, and are
published in committee reports or the Congressional Record.
The budget resolution includes baseline estimates of federal government receipts based
on the continuation of existing laws and any proposed policy changes. The revenue levels
in the budget resolution provide the framework for any action on revenue measures during
the session. A point of order may be raised against the consideration of legislation that
causes revenues to fall below the agreed upon levels for the first fiscal year or the total for
all fiscal years in the budget resolution. This point of order may be set aside by unanimous
consent, or waived by a special rule in the House or by a three-fifths vote in the Senate.
A Senate PAYGO point of order, under Section 207 of the FY2000 budget resolution
(H.Con.Res. 68, 106th Congress), also may be raised against any revenue legislation that
would increase or cause an on-budget deficit for the first fiscal year, the period of the first
5 fiscal years, or the following 5 fiscal years, covered by the most recently adopted budget
resolution. The point of order may be waived by a vote of three-fifths of Senators, or set
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aside by unanimous consent. It expired on September 30, 2002. On October 16, however,
the Senate agreed by unanimous consent to S.Res. 304, as amended, to restore and extend
the point of order through April 15, 2003.6
After months of floor consideration of several variations of economic stimulus
legislation, the House and Senate agreed to H.R. 3090, which contained a scaled-down
economic recovery package of business-related tax cuts and an extension of unemployment
compensation, by votes of 417-3 on March 7 and 85-9 on March 8, respectively. President
Bush signed H.R. 3090, the Job Creation and Worker Assistance Act of 2002, into law (P.L.
107-147) on March 9.
Federal debt consists of debt held by the public plus debt held by government accounts.
Almost all of the federal debt is subject to a statutory debt limit. The debt held by the public
represents the total net amount borrowed from the public to cover the federal government’s
budget deficits. By contrast, the debt held by government accounts represents the total net
amount of federal debt issued to specialized federal accounts, primarily trust funds (e.g.,
Social Security). Trust fund surpluses by law must be invested in special federal government
securities and thus are held in the form of federal debt. Because the statutory limit applies
to the combination of both types of debt, budget deficits or trust fund surpluses may
contribute to the federal government reaching the existing debt limit. So long as federal
budget policy results in an increase in the federal debt, Congress periodically must enact
increases to the debt limit.
The most recent prior increase in the statutory debt limit was included in the Balanced
Budget Act of 1997 (P.L. 105-33). At the time of passage, the increase to $5.95 trillion was
considered sufficient to meet the federal government’s financial needs through mid-
December 1999. The federal government’s surpluses over the last 4 years contributed to the
fact that the statutory debt limit has been sufficient beyond this date. However, Treasury
Secretary Paul O’Neill first indicated in a December 11, 2001, letter to congressional leaders
that the existing debt limit may begin to interfere with the federal government’s financial
responsibilities “as early as February 2002.”7 Therefore, he requested that Congress raise the
debt limit by $750 billion to $6.7 trillion.
On June 11, the Senate adopted S. 2578, legislation to increase the public-debt limit by
$450 billion, by a 68-29 vote. On June 27, the House adopted S. 2578 by a 215-214 vote.
President Bush signed the legislation into law (P.L. 107-199) on June 28. The $450 billion
increase is considered to be sufficient to meet the federal government’s financial needs
through early 2003.8
6 The resolution also restored and extended the three-fifths vote requirement for certain waivers of
the Congressional Budget Act of 1974, through April 15, 2003.
7 Bud Newman,”Debt Ceiling Hike Not on House Agenda Before Adjournment, DeLay, Thomas
Say,” BNA Daily Report for Executives, no. 238 (Dec. 13, 2001), p. G-3. Also, for more information
on the current need to raise the debt limit, see CRS Report RS21111, The Debt Limit: The Need to
Raise It After Four Years of Surpluses, by Philip D. Winters.
8 Bud Newman,”House Passes, Sends to President Bush Bill Hiking Debt Ceiling by $450 Billion,”
BNA Daily Report for Executives, no. 126 (Jul. 1, 2002), p. G-4.
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Appropriations and Other Spending Legislation
Federal spending is categorized as one of two different types: discretionary or direct
spending. Discretionary spending is controlled through the annual appropriations acts, while
direct spending (which consists mostly of entitlement programs) is determined by existing
law.
Discretionary spending is under the jurisdiction of the House and Senate Appropriations
Committees. Direct spending is under the jurisdiction of the various legislative committees
of the House and Senate. Some entitlement programs, such as Medicaid and certain
veterans’ programs, are funded in annual appropriations acts, but such spending is not
considered discretionary and is not controlled through the annual appropriations process.
The President’s budget includes recommendations for the annual appropriations;
account and program level detail about these recommendations are included in the Appendix
volume of the President’s budget documents. In addition, agencies submit justification
materials to the House and Senate Appropriations Committees. The budget justifications
provide more detailed information about an agency’s program activities than is contained in
the President’s budget documents and are used in support of agency testimony during
Appropriations subcommittee hearings on the President’s budget request.
Congress passes three main types of appropriations measures. Regular appropriations
acts provide budget authority for the next fiscal year, beginning on October 1. The 13
subcommittees of the Appropriations Committees of the House and Senate are each
responsible for one of the 13 regular appropriations acts. Supplemental appropriations acts
provide additional funding for unexpected needs while the fiscal year is in progress.
Continuing appropriations acts, commonly referred to as continuing resolutions, provide
stop-gap funding for agencies that have not received a regular appropriations by the start of
the fiscal year.
Spending allocations to the Appropriations Committees and other committees
accompany the conference report on the budget resolution. Soon after it is adopted, the
House and Senate Appropriations Committees subdivide their spending allocations among
their subcommittees and formally report these suballocations to their respective chambers.
On June 25, 2002, the House Appropriations Committee reported its initial suballocations
to the House (H.Rept. 107-529) and revised its suballocations four times (H.Rept. 107-566,
H.Rept. 107-567, H.Rept. 107-656, and H.Rept. 107-738). Although there was no official
allocation made, Senator Robert Byrd, chair of the Senate Appropriations Committee (SAC),
submitted for printing in the Congressional Record the SAC-approved FY2003
subcommittee allocations on June 28 and revised allocations on July 26.9
9 Congressional Record, daily edition, vol. 148 (June 28, 2002), p. S6323, and Congressional
Record, daily edition, vol. 148 (July 26, 2002), p. S7417. These subcommittee allocations, however,
were not enforceable under the Congressional Budget Act in the Senate because Congress had not
adopted a budget resolution for FY2003 nor had the Senate, in the absence of a budget resolution,
passed a “deeming resolution.”
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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.
In addition to the 13 regular appropriations acts, Congress typically acts on at least one
supplemental appropriations measure during a session. Congress also often adopts one or
more continuing resolutions each year because of recurring delays in the appropriations
process. In 2001, for example, Congress passed the 13 regular appropriations measures
individually, two supplementals, and eight continuing resolutions. In some years, such as
in each of the three prior to 2001 (1998-2000), instead of adopting all of the regular
appropriations acts individually, Congress combines several of them into an omnibus
appropriations measure either at the time of initial floor consideration or at the time they are
reported from conference.
On March 21, 2002, President Bush submitted a $27.1 billion emergency supplemental
appropriations request for FY2002 to provide additional resources for the war on terrorism,
homeland security, and economic recovery.10 On May 21, 2002, President Bush submitted
a second FY2002 emergency supplemental appropriations request for $1.1 billion.11
On May 20, 2002, in response to the President’s request, the House Appropriations
Committee reported H.R. 4775, making supplemental appropriations for FY2002 (H.Rept.
107-480). The House considered H.R. 4775 first under an open rule (H.Res. 428) and
subsequently under a closed rule (H.Res. 431) on May 22, 23, and 24. H.R. 4775 was
adopted by the House on May 24 on a 280-138 vote. In the Senate, the Senate
Appropriations Committee reported a FY2002 supplemental appropriations act (S. 2551,
S.Rept. 107-156) on May 22. After incorporating S. 2551 in H.R. 4775 as an amendment,
the Senate began consideration of the supplemental appropriations measure on June 3.
During consideration of H.R. 4775, the Senate invoked cloture by a 87-10 vote on June 6.
The next day (June 7) the Senate passed H.R. 4775, as amended, by a vote of 71-22.
House and Senate conferees resolved the differences between the two versions of the
FY2002 supplemental appropriations measure and filed a conference report (H.Rept. 107-
593) on July 19. The House agreed to the conference report on H.R. 4775 on July 23 and the
Senate agreed to it on the next day by votes of 397-32 and 92-7, respectively. President Bush
signed the supplemental appropriations measure into law (P.L. 107-206) on August 8.
Most of the $28.9 billion provided in H.R. 4775 was designated an “emergency
requirement” and effectively was exempt from budget policy controls during consideration
10 The text of the President’s request to Congress is available on the Internet at
[http://w3.access.gpo.gov/usbudget/fy2003/pdf/5usattack.pdf].
11 The text of the President’s request to Congress is available on the Internet at
[http://w3.access.gpo.gov/usbudget/fy2003/pdf/10va_doi.pdf].
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on the floor of each chamber and after being enacted into law. About $5.1 billion, however,
was provided for obligation only if the President designated this entire amount an
“emergency requirement” within 30 days of enactment (Section 1404 of P.L. 107-206). On
August 13, President Bush announced that he would not do so, effectively reducing the
overall amount of the supplemental appropriations measure to about $23.8 billion.12
The House and Senate began consideration of the regular appropriations bills for
FY2003 during the week of June 24 and July 15, respectively. By the start of FY2003 on
October 1, the House had adopted five of the 13 regular appropriations measures, and the
Senate had adopted three.13
In the absence of any regular appropriations acts enacted by October 1, Congress passed
and President Bush signed into law a continuing resolution (H.J.Res. 111, P.L. 107-229).
The measure provided temporary appropriations for FY2003 through October 4 for federal
government agencies and programs funded in the 13 regular appropriations bills.
Subsequently, Congress and President Bush extended the temporary funding through October
11 (H.J.Res. 112, P.L. 107-235), October 18 (H.J. Res. 122, P.L. 107-240), November 22
(H.J.Res. 123, P.L. 107-244), and January 11, 2003 (H.J.Res. 124, P.L. 107-294).
On October 23, President Bush signed into law the first two FY2003 regular
appropriations acts: the Defense Appropriations Act, 2003 (P.L. 107-248) and the Military
Construction Appropriations Act, 2003 (P.L. 107-249). As Congress adjourned sine die on
November 22, the federal government agencies and programs funded in the remaining 11
regular appropriations acts were provided temporary funding through January 11, 2003, by
the last continuing resolution (H.J.Res. 124) adopted during the second session of the 107th
Congress. President Bush signed this continuing resolution into law (P.L. 107-294) on
November 23.
Congress often considers major legislation affecting direct spending programs as well.
On several occasions in the past, Congress has included reserve funds in the budget
resolution to accommodate specific direct spending legislation. Under the provisions of a
reserve fund, the chairmen of the House and Senate Budget Committees may revise the
committee spending allocations and other budget resolution levels if certain legislation is
reported by the appropriate committee. Without such an adjustment, direct spending
legislation might be subject to points of order if it was not assumed in the budget resolution
spending amounts.
The House-adopted FY2003 budget resolution, which was deemed by the House to have
been adopted by Congress, included seven reserve funds, two of which were related to direct
spending legislation. First, Section 202 of H.Con.Res. 353 provided a reserve fund for
legislation reforming the Medicare program, including adding a prescription drug benefit.
Second, Section 212 of H.Con.Res. 353 provided a reserve fund for legislation subjecting
the administrative expenses for student loans to the annual appropriations process.
12 Adam Wasch,”Bush Rejects ‘Extra’ Spending in FY2002 Supplemental Package,” BNA Daily
Report for Executives, no. 157 (Aug. 14, 2002), p. A-13.
13 For the up-to-date status of and further information on the FY2003 appropriations bills, see the
CRS Appropriations Web site at [http://www.crs.gov/products/appropriations/apppage.shtml].
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On June 27, House Budget Chairman Jim Nussle, under the authority of Section 202
of H.Con.Res. 353, revised the appropriate spending allocations to accommodate H.R. 4954,
the Medicare Modernization and Prescription Drug Act of 2002.14 Subsequently, the House
considered H.R. 4954 under a closed rule (H.Res. 465), which passed by a vote of 218-213.
The rule provided for an amendment in the nature of a substitute printed in the report
(H.Rept. 107-553) accompanying the rule to be adopted automatically. Subsequently, the
House adopted H.R. 4954 by a 221-208 vote. No further action was taken on this legislation.
Budget Enforcement and Sequestration
The sequestration process was first established in 1985 by the Balanced Budget and
Emergency Deficit Control Act, commonly known as the Gramm-Rudman-Hollings Act.
The law was amended and modified in 1987, 1990, 1993, and 1997. Most notably, the
Budget Enforcement Act (BEA) of 1990 changed the focus of the sequestration process.
Instead of maximum deficit targets, as provided in the 1985 Deficit Control Act, the BEA
of 1990 tied sequestration to new statutory limits on discretionary spending and a PAYGO
requirement for new direct spending and revenue legislation.
As consideration of the FY2003 budget began, adjustable discretionary spending limits
existed for the following categories: highway and mass transit spending for FY2002-
FY2003; conservation spending (divided into six subcategories) for FY2002-FY2006; and
other discretionary spending, also called general purpose discretionary spending, for FY2002.
Under the PAYGO requirement, the net projected 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 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 involves automatic, largely across-the-board spending cuts in non-
exempt programs. Sequestration was triggered if the director of the Office of Management
and Budget estimated in the final sequestration report that one or more of the discretionary
spending limits would be exceeded or the PAYGO requirement would be violated. The
President was required to issue a sequestration order cancelling budgetary resources in non-
exempt programs by the amount of any spending limit breach or PAYGO violation.
The discretionary spending limits, as well as a PAYGO requirement similar to the
statutory one, also could have been enforced through points of order while legislation was
being considered on the Senate floor. First, Section 312(b) of the 1974 CBA prohibited the
consideration of legislation that would cause any of the spending limits to be exceeded.
Second, Section 207 of the FY2000 budget resolution (H.Con.Res. 68, 106th Congress), like
similar provisions in previous budget resolutions, provided a point of order against any direct
spending or revenue legislation that would increase or cause an on-budget deficit for the first
14 See Congressional Record, daily edition, vol. 148 (June 27, 2002), p. H4322.
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fiscal year, the period of the first 5 fiscal years, or the following 5 fiscal years, covered by
the most recently adopted budget resolution. Both of these points of order could have been
waived by a vote of three-fifths of Senators. The Senate PAYGO point of order expired on
September 30, 2002. On October 16, however, the Senate agreed by unanimous consent to
S.Res. 304, as amended, to restore and extend the point of order through April 15, 2003.15
Table 2 provides the timetable for sequestration actions. As indicated, OMB and CBO
publish preview and update sequestration reports to provide Congress and the President with
advance notice regarding the possibility of a sequester. If one or both types of sequester were
anticipated, these reports could have afforded Congress and the President enough warning
so that they could enact legislation to forestall them. The utility of these reports in 2002,
however, was ultimately informational only because Congress and the President did not
extend the discretionary spending limits and the PAYGO requirement beyond FY2002. Only
an OMB within-session (noted above) or final sequestration report could have triggered a
sequester; the CBO sequestration reports were advisory only.
Table 2. Timetable for Sequestration Actions
Deadline
Action to be completed
5 days before the President’s
CBO sequestration preview report.
budget submission
Date of the President’s
OMB sequestration preview report (as part of the
budget submission
President’s budget).
August 10
Notification regarding military personnel.
August 15
CBO sequestration update report.
August 20
OMB sequestration update report.
10 days after end of session
CBO final sequestration report.
15 days after end of session
OMB final sequestration report; presidential
sequestration order.
As required, CBO released its sequestration preview report on February 1, its
sequestration update report on August 15, and its final sequestration report on December 4.16
OMB included its sequestration preview report in the Analytical Perspectives volume of the
President’s budget for FY2003, submitted to Congress on February 2. OMB released its
sequestration update report on August 19 and its final sequestration report on December 6.17
15 The resolution also restored and extended the three-fifths vote requirement for certain waivers of
the Congressional Budget Act of 1974, through April 15, 2003.
16 These sequestration reports are available on CBO’s Web site at [http://www.cbo.gov].
1 7 These sequestration reports are available on OMB’s Web site at
[http://www.whitehouse.gov/omb].
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The BEA enforcement procedures, as well as several enforcement procedures tied to the
budget resolution, may have been suspended in the event a declaration of war was enacted
or if Congress enacted a joint resolution triggered by the issuance of a “low-growth” report
by CBO.18 With regard to the latter, CBO was required to notify Congress if actual real
economic growth was less than 1% or estimated real economic growth is projected to be
negative for the most recently reported quarter and the preceding quarter. Upon receiving
a low-growth report, the Senate majority leader was required to introduce a joint resolution
suspending the enforcement procedures, but such action was optional in the House. On
January 30, 2002, CBO issued a low-growth report to Congress (H.Doc. 107-178), and on
February 7 the Senate majority leader subsequently introduced a suspension resolution
(S.J.Res. 31). The Senate rejected by voice vote the suspension resolution on February 14.
At the end of FY2002, the PAYGO scorecard reflected a positive balance for each year
from FY2002 through FY2006. Table 3 provides the estimated balances on the PAYGO
scorecard at the end of FY2002. If no other legislative action was taken by the Congress and
President Bush, a sequestration likely would have been required. However, on November
14, the House passed by a 366-19 vote H.R. 5708, which required the OMB director to
reduce the balances on the PAYGO scorecard to zero. The next day the Senate passed the
legislation by unanimous consent. On December 2, President Bush signed H.R. 5708 into
law (P.L. 107-312), thereby preventing any PAYGO sequestration through FY2006 for the
projected increases in the deficit as a result of direct spending and revenue legislation enacted
prior to the end of FY2002.
Table 3. Estimated PAYGO Scorecard Balances at the End of FY2002
(in millions of dollars)
FY2002
FY2003
FY2004
FY2005
FY2006
Receipt effect
-114
-87,728
-106,935
-109,501
-127,256
Outlay effect
2,206
37,338
40,005
32,127
16,483
Net budget cost
2,320
125,066
146,940
141,628
143,739
OMB balance for
sequester in 2003
127,386
S o u r c e : O f f i c e o f M a n a g e m e n t a n d B u d g e t W e b s i t e a t
[http://www.whitehouse.gov/omb/legislative/paygo/index.html], accessed on Nov. 13, 2002.
18 For further information on these suspension provisions, see CRS Report RS20182, Suspension of
Budget Enforcement Procedures During Hostilities Abroad; and CRS Report RL31068, Suspension
of Budget Enforcement Procedures During Low Economic Growth, both by Robert Keith.
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LEGISLATION
H.Con.Res. 353, H.Rept. 107-376
Concurrent Resolution on the Budget for Fiscal Year 2003. Adopted by the House on
March 20 by a 221-209 vote. Reported by the House Budget Committee on March 15.
S.Con.Res. 100, S.Rept. 107-141
Concurrent Resolution on the Budget for Fiscal Year 2003. Marked up by the Senate
Budget Committee on March 21, and reported to the full Senate on March 22.
CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS
Congressional Budget Office. The Budget and Economic Outlook: Fiscal Years 2003-2012.
January 2002.
Congressional Budget Office. Analysis of the President’s Budgetary Proposals for Fiscal
Year 2003. March 2002.
Congressional Budget Office. The Budget and Economic Outlook: An Update. August
2002.
U.S. Congress. House. Committee on the Budget. Concurrent Resolution on the
Budget–Fiscal Year 2003. Report to accompany H.Con.Res. 353. 107th Congress, 2nd
session. H.Rept. 107-376. Washington: GPO, 2002.
U.S. Congress. Senate. Committee on the Budget. Concurrent Resolution on the
Budget–Fiscal Year 2003. Report to accompany S.Con.Res. 100. 107th Congress, 2nd
session. S.Rept. 107-141. Washington: GPO, 2002.
U.S. Executive Office of the President. Office of Management and Budget. Budget of the
United States Government, Fiscal Year 2003. Washington: GPO, 2002.
U.S. Executive Office of the President. Office of Management and Budget. Mid-Session
Review, Fiscal Year 2003. Washington: GPO, 2002.
CHRONOLOGY
11-23-2002 – President Bush signed into law a fifth continuing resolution for FY2003 (P.L.
107-294), providing temporary appropriations through January 11, 2003, for
federal government agencies and programs funded in the 11 regular
appropriations acts not yet enacted.
10-23-2002 – President Bush signed into law the first two FY2003 regular appropriations
acts: the Defense Appropriations Act, 2003 (P.L. 107-248) and the Military
Construction Appropriations Act, 2003 (P.L. 107-249).
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08-02-2002 – President Bush signed H.R. 4775, FY2002 supplemental appropriations act,
into law (P.L. 107-206), following the adoption of the legislation by the
House (July 23) and the Senate (July 24).
07-28-2002 – President Bush signed S. 2578, an act to increase the public-debt limit by
$450 billion, into law (P.L. 107-199), following the adoption of the
legislation by the Senate (June 11) and the House (June 27).
03-22-2002 – Senate Budget Committee reported its version of the FY2003 budget
resolution (S.Con.Res. 100, S.Rept. 107-141) to the full Senate.
03-21-2002
– President Bush submitted a $27.1 billion emergency
supplemental
appropriations request for FY2002 to provide additional resources for the war
on terrorism, homeland security, and economic recovery.
03-20-2002 – House agreed to its version of the FY2003 budget resolution (H.Con.Res.
353, H.Rept. 107-376) by a 221-209 vote.
03-09-2002 – President Bush signed H.R. 3090, the Job Creation and Worker Assistance
Act of 2002, into law (P.L. 107-147), following the adoption of the
legislation by the House (March 7) and Senate (March 8).
02-04-2002 – President Bush submitted his FY2003 budget to Congress.
FOR ADDITIONAL READING
CRS Report 97-684. The Congressional Appropriations Process: An Introduction, by Sandy
Streeter.
CRS Report 98-721. Introduction to the Federal Budget Process, by Robert Keith and Allen
Schick.
CRS Report RS21175. Perspectives on the Fiscal Year 2003 Budget, by Philip D. Winters.
CRS Report RL30343. Continuing Appropriations Acts: Brief Overview of Recent
Practices, by Sandy Streeter.
CRS Issue Brief IB10102. The Budget for Fiscal Year 2003, by Philip D. Winters.
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