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Sequestration Preview Report for Fiscal Year 2001 [i] (February 2000)

handle is hein.congrec/cbo06592 and id is 1 raw text is: SEQUESTRATION PREVIEW REPORT FOR FISCAL YEAR 2001 February 4, 2000 A Congressional Budget Office Report to the Congress and the Office of Management and Budget Pursuant to Section 254 of the Balanced Budget and Emergency Deficit Control Act The Balanced Budget and Emergency Deficit Control Act of 1985 (the Deficit Control Act) requires the Congressional Budget Office (CBO) to issue three sequestration reports each year: a preview report before the President submits his budget to the Congress; an update report in mid-August; and a final report after each Congressional session. This preview report for 2001 fulfills the first of those requirements. It provides CBO's estimates of the discretionary spending caps and pay-as-you-go (PAYGO) balances at the beginning of the second session of the 106th Congress. The statutory caps on discretionary spending detailed in this report would require the Congress and the President to reduce discretionary budget authority for fiscal year 2001 by approximately 5 percent, and discretionary outlays by 4 percent, compared with the levels enacted for 2000, CBO estimates. In addition, any new legislation that increased direct (mandatory) spending or reduced receipts would have to be offset by changes in the opposite direction to avoid an across-the-board cut, or sequestration, in those parts of the budget. No balances are available on the PAYGO scorecard to offset the cost of such legislation because the Office of Management and Budget (OMB) has reset the scorecard to zero, as required by section 1001 of the Consolidated Appropriations Act for fiscal year 2000 (Public Law 106-113). Discretionary Sequestration Report The Deficit Control Act sets limits on discretionary spending and provides for a sequestration if annual appropriations exceed those caps. The limits are in effect through 2002. By law, they are adjusted each year to account for the enactment of emergency appropriations, funding for certain specified activities, and reclassifications of spending. Under the Deficit Control Act, discretionary spending is divided into categories, which change over the 2000-2002 period. For 2000, the act combines defense and most nondefense spending into an overall discretionary category and provides separate categories for violent crime reduction, highway, and mass transit spendingf-l For 2001 and 2002, violent crime reduction spending is folded into the overall discretionary category, so the limits for those years apply to highway spending, mass transit spending, and all other discretionary spending. CBO's current estimates of the limits on discretionary spending differ from the ones it published on December 2 in the Final Sequestration Report for Fiscal Year 2000 (see Table 1). In that report, CBO estimated that spending in the overall discretionary, highway, and mass transit categories exceeded the estimated caps. To eliminate the excess spending, CBO calculated, a sequestration of approximately 4 percent of budget authority in the overall discretionary

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