Statement of Administration Policy: H.R. 2072 - Dire Emergency Supplemental Appropriations and Transfers, Urgent Supplementals, and Correcting Enrollment Errors Bill, 1989

(House Floor)
(Sponsor: Whitten (D), Mississippi)

The bill reported by the Appropriations Committee is unacceptable. The Administration does not support waiving the Congressional Budget Act for a bill that increases the deficit for discretionary programs in FY 1989 by $1.2 billion and in FY 1990 by $0.6 billion.

The bill includes $2.2 billion in discretionary spending, with only $0.1 billion in specific program offsets. Over one-third of this amount.is simply forward funding of FY 1990 programs, not FY 1989 dire emergencies, such as:

• $250 million in payments to individuals of Japanese ancestry interned during World War II;
  
  
• much of the $822 million for anti-drug activities; and
  
  
• most of the $242 million for the homeless and public housing subsidies.

The Administration supports these programs and has requested funds for these in the FY 1990 budget.

When submitting the Administration's supplemental request, the President included only those proposals that were considered dire emergencies. Moreover, the President included almost $1 billion in proposed offsets to ensure that the net effect of Executive Branch discretionary requests would not increase either the FY 1989 or FY 1990 deficits.

The President and Congress have recently reached agreement on substantive deficit reductions for FY 1990. It is fiscally irresponsible to, at the same time, add substantially to the deficit in FY 1989 and FY 1990. The FY 1990 outlays will make discretionary ceilings much more difficult to attain. This is a bad first step towards meeting the FY 1990 Gramm-Rudman-Hollings target.

We understand that Rep. Foley will offer an amendment that would cancel .57 percent of fiscal 1989 funds for activities not required by law, except for accounts receiving supplemental appropriations. This amendment is unacceptable to the Administration. It breaks the 1987 Bipartisan Budget Agreement by violating the discretionary spending categories as stated in the Agreement and enacted as part of the Omnibus Reconciliation Act of 1987. The bill would reduce the levels of budget authority for defense and international affairs programs even further below the levels provided for in the 1987 Agreement and increase the budget authority for domestic discretionary programs even further above the levels provided for in the 1987 Agreement.

The across-the-board cancellation of .57 percent of FY 1989 authority would reduce Defense funding by $1.7 billion with the following impact on DOD:

• The 1989 level would be cut to about 2 percent below 1988 in real terms, following several years of decline.
  
  
• Reduction would fall severely on Military Personnel Operations and Maintenance where there is little flexibility to absorb reductions later in the year. There would be disproportionate cuts in training and operating rates leading to.a decline in force readiness.
  
  
• There would be serious impact on morale and retention of key personnel.
  
  
• There will be disruption in Procurement and Research and Development programs. Five to ten construction projects would be eliminated.

In addition, if the reduction in international affairs funding must be taken from unapportioned/unobligated funds, then ESF funds for Egypt will be reduced with no equivalent cut in aid to Israel. Such a reduction would be counter to the spirit of equal treatment under the Camp David Accord. If cuts were made against accounts for which obligations have been made, we would have to recover funds already disbursed to Israel.

We understand that Congressman Conte will offer a compromise to the bill. Although this compromise bill would provide more funding in certain areas than requested by the Administration, we would be willing to support the bill in the spirit of constructive compromise. But in our view, fiscal responsibility requires that we go no further.

The supplemental bill presented to the full House should contain only dire emergency spending. The discretionary funding should be offset to the maximum extent possible. The offsets for domestic discretionary programs should come only from domestic discretionary accounts, not defense or international affairs accounts. If the bill passed by the House does not substantially meet these tests, the Director of the Office of Management and Budget would recommend to the President that he veto the bill.