Statement on Signing the Omnibus Budget Reconciliation Act of 1983

I have today approved H.R. 4169, the Omnibus Budget Reconciliation Act of 1983.

A key provision of this bill, which is a vital part of the deficit reduction down payment, is to shift the annual cost-of-living adjustments (COLAs) in government retirement programs to the same timing and method of computation as is used in the social security system. In enacting this provision, which will produce budgetary savings of $5.6 billion over fiscal years 1984-1989, we are asking Federal retirees to accept a delay in their next COLA payment until December 31, 1984, in the case of military retirees and January 1, 1985, for civilian retirees. A similar delay has already been enacted for persons receiving other Federal benefits such as social security, veterans pensions and compensation, and supplemental security income.

To ensure timely, proper benefit payments to Federal retirees, action on the COLA delay must be taken immediately. That is why I have signed H.R. 4169 despite misgivings about other parts of this bill.

For example, the bill, which was developed last year, will increase from 3 1/2 percent to 4 percent the pay raise already granted to Federal civilian employees as of January 1984. Although I consider this increase undesirable, the additional budgetary costs are far less than the savings that will be achieved from the COLA provision.

The bill also has an obsolete provision calling for a domestic economic summit conference consisting of the President, congressional leaders, and others responsible for economic policy development, to develop a comprehensive deficit reduction plan within 45 days. In light of the extensive discussions that have been held between the executive branch and the Congress this year on ways to reduce the projected budget deficits and the proposals already under active consideration by the Congress, I believe we should view the required conference as having taken place and therefore unnecessary.

The most serious problem I have with H.R. 4169 concerns its amendments to loan programs of the Small Business Administration. These amendments could result in unacceptably large increases in Federal budgetary costs unless both the administration and the Congress are prepared to take steps necessary to avoid that contingency.

Specifically, by substantially lowering interest rates for SBA's disaster loans, H.R. 4169 will have the effect of making farm enterprises once again eligible for them instead of their relying on loans available from the Farmers Home Administration. This reverses reforms that have resulted in significant budget savings in recent years.

H.R. 4169 also reauthorizes a nonphysical disaster lending program and expands it to authorize loans to small businesses adversely affected by the Payment-in-Kind (PIK) program and currency devaluations.

Although these programs are subject to ceilings on the total amount of loans that may be made, actual demand for such loans may well exceed those ceilings. I am, therefore, directing the Small Business Administration to control the costs associated with these programs to the maximum extent possible through its implementing regulations.

In addition, if necessary to constrain the budgetary impact of these programs, the administration will work with the Congress to enact appropriate modifications of the small business loan provisions.