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Letter to the Honorable Pete V. Domenici 1 (October 1997)

handle is hein.congrec/cbo8265 and id is 1 raw text is: October 29, 1997 Honorable Pete V. Domenici Chairman Committee on the Budget United States Senate Washington, D.C. 205 10 Dear Mr. Chairman: As requested in your letter of October 16, the Congressional Budget Office (CBO) has examined whether the pay-as-you-go procedures set forth in section 252 of the Balanced Budget and Emergency Deficit Control Act of 1985 (the Deficit Control Act) apply in a year for which the Office of Management and Budget projects a budget surplus. CBO agrees with your conclusion that the pay-as-you-go procedures apply in every year through 2006, whether there is a total budget surplus or not. We find that the procedures for computing the amount of a pay-as-you-go sequestration are clearly specified in law and in no way depend on the projection of a deficit or surplus. Moreover, the law establishes no mechanism for turning off the sequestration process if a surplus is projected. The Deficit Control Act is straightforward about how the Office of Management and Budget (0MB) determines whether a pay-as-you-go sequestration is required. 0MB is directed simply to add up the cost estimates it has submitted for each direct spending or revenue bill that has been enacted. If the sum of all estimated increases in direct spending and reductions in receipts exceeds the sum of all estimated reductions in direct spending and increases in receipts, a sequestration must take place. The law calls the sum of the net increase in direct spending and the net reduction in receipts the net deficit increase. The use of that terminology follows section 3(6) of the Congressional Budget Act, which defines deficit as the amount by which outlays exceed receipts during a fiscal year. Under that definition, if receipts exceed outlays, the amount of the deficit is negative.

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