Savings in Mandatory Outlays in Selected Reconciliation Acts

Savings in Mandatory Outlays in Selected Reconciliation Acts

Order Code RS22277
Updated December 29, 2006
Savings in Mandatory Outlays in Selected
Reconciliation Acts
Robert Keith
Specialist in American National Government
Government and Finance Division
Summary
During the past 25 years, Congress has sent the President 21 measures under budget
reconciliation procedures; 18 were signed into law and three were vetoed. In the 1980s
and 1990s, such legislation often reflected Congress’s most significant efforts to reduce
the deficit through changes in revenue and mandatory spending laws. In recent years,
however, reconciliation has been used mainly to reduce revenues. Most recently, in
2006, Congress and the President enacted reconciliation legislation reducing both
mandatory spending and revenues, yielding a net increase in the deficit.
Some Members have called for renewed deficit-reduction efforts in the 110th
Congress using the reconciliation process. As background on past efforts in this regard,
the role of savings in mandatory outlays in several major reconciliation acts enacted or
vetoed in the 1990s and in 2006 is briefly summarized.
Reductions in mandatory outlays were a significant element in changes made in
selected reconciliation acts in recent years. According to the Congressional Budget
Office, reconciliation acts reduced mandatory outlays over a five-year period by $75
billion (in 1990), $77 billion (in 1993), $107 billion (in 1997), and $39 billion (in 2006);
$249 billion in such reductions were proposed by Congress in 1995, but the legislation
was vetoed. Reductions in Medicare and Medicaid generally have accounted for the
bulk of savings in mandatory outlays in the selected reconciliation acts.
This report will be updated as developments warrant.
The budget reconciliation process is an optional procedure, provided for under the
Congressional Budget Act of 1974 (P.L. 93-344, as amended), that operates as an adjunct
to the annual budget resolution process.1 The chief purpose of the reconciliation process
is to enhance Congress’s ability to change current law in order to bring revenue, spending,
and debt-limit levels into conformity with the policies of the budget resolution.
1 For more information on reconciliation procedures, see CRS Report RL33030, The Budget
Reconciliation Process: House and Senate Procedures, by Robert Keith and Bill Heniff Jr.

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Reconciliation is a two-step process. First, reconciliation instructions are included
in the budget resolution, directing the appropriate committees to develop legislation
achieving the desired budgetary outcomes. Second, the resultant legislation is merged
together by the House and Senate Budget Committees into an omnibus reconciliation
measure that is considered in the House and Senate under expedited procedures (in some
instances, instructed committees may report their legislation directly to the floor).
Reconciliation was first used by the House and Senate during the administration of
President Jimmy Carter, in calendar year 1980 for FY1981. As an optional procedure, it
has not been used every year. During the period covering budget resolutions for FY1981-
FY2007, 18 reconciliation measures were enacted into law and three were vetoed.
From 1980 into the 1990s, reconciliation was used to reduce the deficit through
reductions in mandatory spending, increases in revenues, or a combination of the two.
In more recent years, however, reconciliation was used to reduce revenues and, in a few
instances, to increase spending levels in particular areas. Most recently, in 2006,
Congress and the President enacted reconciliation legislation reducing both mandatory
spending and revenues, yielding a net increase in the deficit.
Some Members have called for renewed deficit-reduction efforts in the 110th
Congress using the reconciliation process. As background on past efforts in this regard,
the role of savings in mandatory outlays in several major reconciliation acts enacted or
vetoed in the 1990s and in 2006 is briefly summarized.
Reconciliation Legislation in 1990, 1993, 1995, 1997, and 2006
During the period from 1990 to the present, the House and Senate completed action
on 12 reconciliation measures and sent them to the President. Five of the 12 acts are
excluded from this discussion because they were not omnibus reconciliation measures
encompassing major changes in both revenues and spending. The Personal Responsibility
and Work Opportunity Reconciliation Act of 1996 (P.L. 104-193) dealt with welfare
reform, and the Economic Growth and Tax Relief Reconciliation Act of 2001 (P.L. 107-
16) and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (P.L. 108-27)
implemented large tax cuts. Two other reconciliation acts, which were vetoed by
President Bill Clinton, also pertained to revenue matters.2
The remaining seven reconciliation acts that the House and Senate completed action
on in five different years during this period, as identified in Table 1, were omnibus bills,
covering an array of issues; the two different reconciliation acts enacted in 1997, and in
2006, are treated as a set for purposes of this report. In the first four years, the acts in the
net reduced — or, in the case of one vetoed measure, proposed to reduce — the deficit
significantly, from between $118 billion and $482 billion over five years. In 2006, the
reconciliation acts reduced mandatory spending and revenues, yielding a net increase in
the deficit. Each of the acts (or sets of acts) in the five years included reductions in
2 President Clinton vetoed the Taxpayer Refund and Relief Act of 1999 on Sept. 23, 1999, and
the Marriage Tax Relief Reconciliation Act of 2000 on Aug. 5, 2000.

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mandatory spending, as well as changes in revenue levels; in some instances, savings in
discretionary spending and debt service savings also were reflected.3
Table 1. Reconciliation Acts Enacted or Vetoed in 1990, 1993, 1995,
1997, and 2006
5-Year
Calendar
Budget
Date
Deficit
Year
Resolution
Resultant Reconciliation Act(s)
Enacted
Impact
1990
H.Con.Res. 310 Omnibus Budget Reconciliation Act of
11-05-90
-$482
1990 (P.L. 101-508)
billion
1993
H.Con.Res. 64
Omnibus Budget Reconciliation Act of
08-10-93
-$433
1993 (P.L. 103-66)
billion
1995
H.Con.Res. 67
Balanced Budget Act of 1995 (H.R.
12-06-95
-$337
2491)
(vetoed)
billion
1997
H.Con.Res. 84
Balanced Budget Act of 1997
08-05-97
-$118
(P.L. 105-33) and Taxpayer Relief Act
billion
of 1997 (P.L. 105-34)
2006
H.Con.Res. 95
Deficit Reduction Act of 2005 (P.L. 109- 02-08-2006
+31
171) and Tax Increase Prevention and
(DRA)
$billion
Reconciliation Act of 2005 (P.L. 109-
and
222)
05-17-2006
(TIPRA)
Source: Prepared by the Congressional Research Service from data published by the Congressional Budget
Office and the Joint Committee on Taxation.
Note: Negative sign (-) indicates deficit reduction; positive sign (+) indicates deficit increase.
Reductions in mandatory outlays were a significant element in changes made in
selected reconciliation acts in recent years (see Table 2). According to the Congressional
Budget Office, reconciliation acts reduced mandatory outlays over a five-year period by
$75 billion (in 1990), $77 billion (in 1993), $107 billion (in 1997), and $39 billion (in
2006); $249 billion in such reductions were proposed by Congress in 1995, but the
legislation was vetoed.
Reductions in Medicare and Medicaid generally accounted for the bulk of savings
in mandatory outlays in the selected reconciliation acts. Taken together, changes in
Medicare and Medicaid accounted for the major share of mandatory outlay savings in
1990 (59%), 1993 (82%), 1995 (69%), and 1997 (111%, when $119 billion in Medicare
and Medicaid savings were partially offset by $12 billion in increases in other programs.)
In 2006, savings in the two programs amounted to 33% of total mandatory outlay savings.
3 For additional information on the deficit impact of these measures, see CRS Report RS22098,
Deficit Impact of Reconciliation Legislation Enacted in 1990, 1993, 1997, and 2006, by Robert
Keith.

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Table 2. Summary of Changes in Mandatory Outlays in Selected
Reconciliation Acts
Net 5-Year Changes in Mandatory Outlays
(amounts in $ billions)
1990
1993
1995
1997
2006
Medicare
-43
-56
-119
-112
-6
Medicaid
-1
-7
-52
-7
-7
Other
-32
-14
-77
12
-26
Total
-75
-77
-249
-107
-39
Medicare and
Medicaid changes as
59%
82%
69%
111%
33%
a percentage of total
Source: Prepared by the Congressional Research Service from data published by the Congressional Budget
Office (see sources for Table 3).
In each of the first four years, the largest amount of mandatory outlay savings
occurred in the Medicare program. The five-year savings in Medicare amounted to $43
billion in 1990, $56 billion in 1993, $119 billion in 1995, and $112 billion in 1997. The
savings were achieved through a combination of lowered benefit payments, increased
premiums, and other changes. The Medicare savings indicated in Table 2 are net figures;
in some instances, even greater savings were offset partially by the costs of program
expansions. In the 1997 reconciliation legislation, for example, Medicare spending was
increased over five years for expanded coverage of clinical preventive services ($4
billion), greater assistance in paying premiums ($1.5 billion), and other initiatives.
Medicaid savings, by comparison, were far more modest in these four years (ranging
from five-year savings of $1 billion to $7 billion), except for the vetoed reconciliation
measure in 1995 ($52 billion over five years).
In 2006, the five-year savings in Medicare ($6 billion) and Medicaid ($7 billion)
nearly were equal.
Net savings over five years from other mandatory spending programs ranged from
$14 billion (in 1993), to $32 billion (in 1990), to $77 billion (in 1995). The net savings
amounts reflected some significant offsetting costs, including $17 billion (in 1990), $19
billion (in 1993), and $12 billion (in 1997) for the earned income tax credit. In 1997, the
costs for the earned income tax credit, along with initiatives for Children’s Health
Insurance ($20 billion), Supplemental Security Income ($10 billion), and other programs,
resulted in a net cost of $12 billion over five years in this category.
Table 3 provides more detailed information on the level of savings in mandatory
outlays over a five-year period for the seven reconciliation acts.

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Table 3. Savings in Mandatory Outlays in Reconciliation Acts
Enacted or Vetoed in 1990, 1993, 1995, 1997, and 2006
(amounts in $ billions)
Fiscal year
5-Year
total
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Omnibus Budget Reconciliation Act of 1990
Medicare
n/a
n/a
n/a
n/a
n/a
-43
Medicaid
n/a
n/a
n/a
n/a
n/a
-1
Other
n/a
n/a
n/a
n/a
n/a
-32
Net
-9
-12
-16
-19
-19
-75
savings
Omnibus Budget Reconciliation Act of 1993
Medicare
-2
-6
-12
-16
-20
-56
Medicaid
a
-1
-2
-2
-3
-7
Other
-3
-2
-3
-2
-3
-14
Net
-5
-9
-17
-21
-26
-77
Savings
Balanced Budget Act of 1995 (vetoed)
Medicare
-6
-13
-23
-35
-42
-119
Medicaid
a
-3
-9
-16
-24
-52
Other
-3
-12
-18
-22
-22
-77
Net
-10
-28
-50
-73
-88
-249
Savings
Balanced Budget Act of 1997 and Taxpayer Relief Act of 1997
Medicare
-6
-16
-29
-20
-41
-112

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Fiscal year
5-Year
total
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Medicaid
1
a
-1
-3
-4
-7
Other
6
6
a
7
-7
12
Net
1
-10
-30
-16
-52
-107
Savings
Deficit Reduction Act of 2005 and Tax Increase Prevention and Reconciliation Act of 2005 b
Medicare
-3
6
-1
-3
-5
-6
Medicaid
a
-1
-2
-2
-3
-7
Other
-2
-1
-2
-16
-4
-26
Net
-5
4
-5
-21
-12
-39
Savings
Sources: Congressional Budget Office, (1) The Economic and Budget Outlook: Fiscal Years 1992-1996, Jan. 1991, Table III-3, p. 66, and unpublished documentation related thereto;
(2) The Economic and Budget Outlook: An Update, Sept. 1993, Table 2-2, p. 29; (3) The Economic and Budget Outlook: December 1995 Update (Memorandum), Dec. 1995, Table
4, p. 16; (4) The Economic and Budget Outlook: An Update, Sept. 1997, Table 10, p. 36, and Table 11, p. 40; and (5) cost estimates on S. 1932 (Jan. 27, 2006) and H.R. 4297 (June
2, 2006).
Note: Details may not add to totals due to rounding. Negative numbers are mandatory savings; positive numbers are mandatory costs. Numbers for the Balanced Budget Act of 1995
are illustrative because it was not enacted by the Nov. 15, 1995 enactment date assumed by its drafters (President Clinton vetoed the measure). Amounts do not reflect debt service
savings. The designation “n/a” means “not available.”
a. Less than $500 million.
b. The Tax Increase Prevention and Reconciliation Act of 2005 was not scored as affecting mandatory outlays.