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97 IRET Byline 1 (1991)

handle is hein.taxfoundation/iretbyln0097 and id is 1 raw text is: July 2, 1991 No. 97 Reserve (Slush-) Funds in Budget Resolution Subvert OBRA90 The recently passed concurrent resolution on the budget for fiscal year 1992 establishes so-called reserve funds that pave the way for increased spending in five favored areas without running afoul of The reserve one of the key spending stage for a se constraints in the Congressional expensive s budget process. The effect of this initiatives ar provision is to make it far easier i to increase entitlement spending increases and taxes than was envisioned anywhere fro under the 1990 budget agreement $200 billion (the Omnibus Budget bust the bu Reconciliation Act of 1990 - OBRA90). and embarrc Under OBRA90, caps were specified for spending for defense, international, and domestic discretionary outlays. Members of C President pri elections. These caps were translated into limits for various budget functions, and became the ceilings for these budget functions in the fiscal year 1992 budget resolution. The OBRA90 rules governing discretionary spending are very restrictive. With minor exceptions, it is not possible to increase discretionary spending above the caps in the budget agreement. If a bill breaching the discretionary ceilings were to pass, it would, under OBRA90, trigger a sequester of other spending in its category to bring the total back in line with the cap. Projections of outlays for entitlement programs under current law were taken as upper limits under OBRA90, IRET Byline6 spending allowances funds set the ries of extremely ocial spending id matching tax - totalling 'm $50 billion to - designed to dget agreement ss conservative 'ongress and the ior to the 1992 for the various Congressional committees. Ordinarily, any bill subsequently reported out by a committee that increases spending above the committee's allowance is subject to a point of order preventing the bill's consideration on the House or Senate floor. The point of order can be overcome by a simple majority vote in the House, the same number of votes the bill needs to pass. However, in the Senate, the bill must achieve a 60-vote super- majority to overcome the point of order. Alternatively, the committee might seek to amend the budget resolution, which requires action by both Houses, a difficult process. The presence of this super-majority point of order in the Senate under the rules implementing the 1974 Budget Act was an important consideration in setting up the OBRA90 enforcement provisions. What the reserve funds do is create five categories of entitlement spending that may be increased in the future without being subject to the Senate's 60-vote point of order governing breaches in the budget function ceilings. Committees that report out bills to raise spending in the five favored areas will not have to worry about breaching their spending ceilings if the bills have been preceded by passage of, or are accompanied by the reporting out of, a Institute for Research on the Economics of Taxation and these projections became the ceilings for these budget categories in the budget resolution. In contrast with the rules for discretionary outlays, it is possible to pass a bill increasing entitlement spending under OBRA90 if the bill provides for either a tax increase of equal magnitude or a reduction of other entitlements in equal amount to avoid increasing the deficit. Otherwise, the added outlays would trigger an offsetting across-the-board sequester of entitlement spending to keep the deficit constant. However, a bill raising taxes and entitlements would also have to conform to the rules set up under the 1974 Budget Act. In particular, raising entitlement spending could run afoul of the budget resolution outlay ceilings. A concurrent resolution on the budget sets ceilings on outlays and budget authority for the various budget functions. These functional ceilings are translated into IRET is a non-profit, tax exempt 501(c)(3) economic policy research and educational organization devoted to informing the public about policies that will promote economic growth and efficient operation of the free market economy. 1331 Pennsylvania Ave., N.W., Suite 515, Washington, D.C. 20004 Phone: (202) 347-9570

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