Discretionary Spending Limits

Discretionary Spending Limits

Order Code RS20008
Updated March 19, 2001
CRS Report for Congress
Received through the CRS Web
Discretionary Spending Limits
Bill Heniff Jr.
Consultant in American National Government
Government and Finance Division
Discretionary spending limits are statutory caps on the level of budget authority and
outlays determined through the annual appropriations process. They were initially
established by the Budget Enforcement Act (BEA) of 1990 (Title XIII of P.L. 101-508)
as part of an agreement between Congress and President George Bush to reduce the
deficit. Twice since, they were extended to enforce agreements between Congress and
President Bill Clinton, most recently to achieve a surplus.
Initially, the 1990 BEA created limits for FY1991-FY1993 in three separate
discretionary spending categories: defense, domestic, and international. Also, limits were
established for total discretionary spending for FY1994-FY1995. In 1993, Congress and
the President extended the total discretionary spending limits through FY1998. A separate
limit was created subsequently for violent crime reduction spending through FY2000 by
the 1994 Violent Crime Control and Law Enforcement Act (P.L. 103-322).
The 1997 Budget Enforcement Act (title X of P.L. 105-33) extended and modified
the discretionary spending limits by establishing separate limits for defense and nondefense
spending (FY1998-1999), violent crime reduction spending (FY1998-FY2000), and other
discretionary spending (FY2000-2002). The 1998 Transportation Equity Act for the 21st
Century (P.L. 105-178) created two additional spending limits on outlays for highway and
mass transit spending (FY1999-2002). More recently, the Interior Appropriations Act,
FY2001 (P.L. 106-291) established limits for conservation spending, including six different
subcategories (FY2002-2006). Table 1 presents the current discretionary spending limits.
Table 1. Discretionary Spending Limits, FY2001-FY2006
(in millions of dollars)
Category
FY2001
FY2002
FY2003
FY2004
FY2005
FY2006
Highway
O 26,920
O 27,925
)
)
)
)
Mass Transit
O 4,639
O 5,419
)
)
)
)
Conservation
)
BA 1,760
BA 1,920
BA 2,080
BA 2,240
BA 2,400
O 1,232
O 1,872
O 2,032
O 2,192
O 2,352
Other Discretionary
BA 640,803
BA 550,333
)
)
)
)
O 613,247
O 539,513
Sources: OMB Final Sequestration Report, pp. 6-7, and Sec. 801(a) of Title VIII, Interior Appropriations Act for
FY2001 (P.L. 106-291; 114 Stat. 922).
Note: BA=Budget Authority; O=Outlays.
Congressional Research Service ˜ The Library of Congress

CRS-2
The joint explanatory statement in the conference report to the Balanced Budget Act
of 1997 (H.Rept. 105-217, pp. 1014-1053) identifies the spending accounts covered under
the “other discretionary” category. Section 8101(c) of the 1998 Transportation Equity
Act lists the spending accounts covered under the “highway” and “mass transit”
categories. Lastly, section 801(c) of the Interior Appropriations Act, FY2001, specifies
the spending accounts covered under the “conservation” category and each subcategory.
Adjustments to the Discretionary Spending Limits
The 1990 BEA required the President to make specific adjustments to the statutory
discretionary spending limits. As modified by the 1997 BEA, adjustments must be made
to reflect: (1) changes in concepts and definitions; (2) discretionary spending designated
by the President as emergency requirements and that Congress so designates in statute; (3)
special outlay allowances (to accommodate estimating differences between the Office of
Management and Budget and the Congressional Budget Office); (4) appropriations for
continuing disability reviews; (5) allowance for International Monetary Fund contributions;
(6) allowance for international arrearages; and (7) appropriations for an earned income tax
credit compliance initiative. The sequestration reports issued by the Office of Management
and Budget (OMB) must reflect these adjustments cumulatively for the applicable fiscal
year and each succeeding year through FY2002.
Enforcing the Discretionary Spending Limits
The discretionary spending limits primarily are enforced by sequestration.
Sequestration is the across-the-board cancellation of budgetary resources in nonexempt
programs. If the applicable spending cap is exceeded through the enactment of legislation,
sequestration is triggered automatically. Generally, the final sequestration Report issued
by OMB 15 days after the end of a session is the only report triggering a sequester. If the
OMB director determines a spending cap has been breached, the President is required to
issue a sequestration order canceling budgetary resources in nonexempt programs only in
the category in which the breach occurs.
Along with the end-of-the-session sequestration, a within-session sequestration may
occur when an appropriation, such as a supplemental appropriation, causes a spending cap
to be breached during a fiscal year. In this case, a sequestration would occur seven days
after the enactment of the appropriation. If a violation of the discretionary spending limits
occurs in the last quarter of the fiscal year (i.e., July 1 through September 30), the
spending limit for the applicable category must be reduced by the amount of the violation
in the following fiscal year.
Although the discretionary spending limits are enforced primarily by the sequestration
process, they also may be enforced procedurally in Congress. The levels set forth in the
annual budget resolution are meant to be consistent with the discretionary spending limits.
Thus, the spending limits may be enforced indirectly through points of order related to the
enforcement of a budget resolution. In the Senate only, the statutory spending caps are
enforceable directly. Section 312(b) of the Congressional Budget Act, as amended,
provides a point of order against the consideration of any measure or amendment that
would exceed these limits.