Statement of Administration Policy: H.R. 5161 - Commerce, Justice, and State Appropriations Bill, 1987

(Senate)
(Sponsors: Smith (D), Iowa, Whitten (D), Mississippi, Rudman (R), New Hampshire, Hatfield (R), Oregon)

The President's senior advisers will recommend a veto of the bill reported by the Senate Committee. The Committee scores its action as being $4.0 billion below the Administration's request. These reductions were achieved in part by the Committee's decision not to approve the proposed $2.3 billion purchase of the Small Business Administration's loan portfolio from the Federal Financing Bank for sale to the public and by cutting badly needed funding for international operations and diplomatic security. When adjusted to a comparable basis, this bill exceeds the Administration's request by more than $325 million.

Past economic activity as well as revised economic assumptions point to slower growth and a higher projected deficit than was forecast earlier. In the Administration's opinion, as well as that of the Congressional Budget Office, the Congressional Budget Resolution, including its allocation to the Commerce-Justice-State Appropriations Subcommittee, will be inadequate to avoid the necessity of a Gramm-Rudmann-Hollings sequester. The Administration believes Congress should act to cut spending in areas of lower priority in this bill so that a sequester, which would hit high-priority and low-priority areas alike, can be avoided.

The enclosure details funding provisions that are objectionable to the Administration. The most seriously objectionable ones are:

• $140 million for the Economic Development Administration's planning and public works grants, which the Administration proposed to terminate in 1987;
• $169 million for SBA direct business loans and $3.1 billion in SBA guaranteed loans;
• NOAA increase of $142 million in excess of the President's request to fund low priority and unnecessary programs;
• $74 million above the President's request for the Office of Justice Programs;
• failure to terminate the Maritime Administration's Title XI ship construction loan guarantee program, which has experienced more than $1 billion in defaults in 1986; and
• $306 million for the Legal Services Corporation, which the Administration proposed to terminate in 1987;

The Administration objects strongly to deep and dangerous cuts to key foreign affairs activities. These reductions would restrict seriously the President's ability to achieve his national security objectives. The Committee has reduced the request for the State Department by $1.63 billion, or 43% on a base of $3.8 billion. Also large reductions were made in the request for the United States Information Agency and the Board for International Broadcasting. The resulting amounts are inadequate to meet the needs of our diplomacy. The reductions are most harmful in the vital diplomatic security program, with respect to international organizational contributions, and for the regular salaries and expenses account. Unless these cuts are restored, particularly for the diplomatic security program, the nation's representatives abroad will be left even more vulnerable to attacks.

The Administration strongly supports continuation of the Commission on Civil Rights at the $12.6 million level of the President's 1987 budget request. The action of the Committee, which would reduce the appropriation by 50 percent (to $6 million) should be reversed by the Senate. More important, the administrative restrictions approved by the Committee would make it exceedingly difficult for the Commission to perform its function as a national resource for the furtherance of civil rights.

Finally, the Administration strongly opposes general provision 609 that would ratify the California-Nevada compact for the apportionment of the Carson, Truckee, Walker rivers and provide that the Federal Government agrees to be bound by its terms. The compact unilaterally abrogates Federal rights and responsibilities to Indian tribes and other entities. Ratification is acceptable only if it includes language proposed by the Administration specifically protecting the Federal obligations and responsibilities.

99:115,79
September 11, 1986

COMMERCE, JUSTICE, STATE APPROPRIATION BILL, 1987
OBJECTIONABLE PROVISIONS

I. FUNDING LEVELS

• Small Business Administration (SBA). The Administration objects to the funding provided by the Senate Committee to continue SBA credit activity and other ineffective programs. The Committee provides for $169 million in direct business loans (including $78 million in Federal Financing Bank direct loans guaranteed by SBA) and $3.1 billion in guarantees. Although the bill is $2.3 billion less than the requested budget authority level, the bulk of the difference is composed of resources to repurchase SBA-guaranteed assets from the Federal Financing Bank in order to sell these assets to the public. Because the Committee has not adopted this proposal, $2.5 billion in offsetting receipts that would have accrued to the Federal Government from the portfolio sale are not achieved. A $17.3 million reduction from the requested level for salaries and expenses is claimed also by the Senate because of the transfer of $92 million from the Disaster Loan Fund to the salaries and expenses account. The total amount of obligational authority provided for this account actually exceeds the requested level by $75 million.
  
  
• International Affairs. The Administration is deeply concerned about the ill-founded reductions in funding for International Affairs programs. The Senate Committee action would reduce the President's request for the Department of State by $1.6 billion or 43%. Also large reductions were made in the request for the U.S. Information Agency and the Board for International Broadcasting. These reductions would cripple the United States in carrying out its foreign policy. The Committee action would deny funds for basic needs on diplomatic operations and would severly curtail the Administration's program for enhanced diplomatic security placing lives in jeopardy. Moreover, the amounts provided for the BIB and USIA would force a sharp curtailment of U.S. international broadcasting, information, and exchange of persons programs at a time when the need for and promise of such programs is great. BIB is especially injured by this level because of exchange losses.
  
  
• Legal Services Corporation. The Administration objects to appropriating $306 million for the Legal Services Corporation (LSC) when private attorneys and other Federal programs can provide civil legal aid. The Administration requests no further appropriations for LSC and proposes that LSC not be reauthorized.
  
  
• Economic Development Administration (EDA). The Administration opposes the $140 million increase for EDA planning, technical assistance, economic adjustment, and public works grants and the $150 million in loan guarantee authority. The Administration continues to believe that EDA programs should be terminated because no new net job creation has been demonstrated.
  
  
• National Oceanic and Atmospheric Administration (NOAA). The Administration objects to the addition of $142 million to the President's request for NOAA. This increase would fund a number of unnecessary and low priority programs in areas such as fisheries management, market research, industry assistance and sea grants. The Administration also objects to funding NEXRAD from the General Fund. The President's Budget recommends that NOAA's portion of this program be funded from the Aviation Trust Fund because NEXRAD primarily benefits aviation users. The Administration also objects to the specificity of the accompanying report, the new and unnecessary reporting requirements, and the attempts to redirect the administration of NOAA in report language.
  
  
• International Trade Administration (ITA). The Administration objects to the continuation of funding for the technical assistance grants portion of the Trade Adjustment Assistance (TAA) Program because the program simply does not work. Less than 4 percent of firms certified as adversely affected by import competition will experience sales or employment improvement that could be attributed to TAA.
  
  The Administration opposes the reduction of 8 permanent positions and $225 thousand in the steel related activities of the International Trade Administration. In the past three years, the Office of Compliance Agreements' work load has increased 400 percent and this reduction will result in abandonment of the monitoring of steel compliance agreements with countries such as East Germany, Hungary, Finland, Austria, and Venezuela.
  
  
• Maritime Administration. The Administration disagrees with the distribution of budget authority among maritime programs in the Senate Committee version of the bill. We believe strongly that continued Federal assistance to State maritime schools cannot be justified given the current oversupply of merchant marine officers and the relatively small percentage of the State school students graduating with a Naval Reserve obligation.
  
  In addition, the Administration objects to the absence of any language in the Senate Committee version of the bill to preclude new Title XI loan commitments in 1987. Inaction leaves intact the arbitrary and inflated limitation on 1987 loan guarantee commitments contained in H.R. 4175. We believe that no new commitments after 1986 are warranted given the record level of defaults in 1986 ($1.2 billion to date) and the oversupply of vessels throughout the industry.
  
  
• Office of Justice Programs (OJP). The Administration opposes the increase of $74 million, which includes funding for Juvenile Justice, State and Local Assistance, Mariel Cubans, and Regional Information Systems Sharing programs. These programs have accomplished their original objectives and are now the responsibility of State and local governments for continued funding. We commend the Committee's action to terminate the State and Local Assistance program.
  
  
• Immigration and Naturalization Service (INS). The Administration supports the concept behind the INS user fee established by this bill, but has potential concerns regarding operation of the user fee fund and the possibility that fees will be used to augment INS programs.
  
  
• Drug Enforcement Administration (DEA). The Administration opposes the continued funding of the DEA diversion control grant program. The activities to be funded by this program are properly the responsibility of State governments.
  
  
• State Justice Institute. The Administration opposes the inclusion of $7 million for the State Justice Institute. The purpose of this program would primarily benefit State court systems. Therefore, funding by State government is more appropriate.
  
  
• Public Telecommunications Facilities Program. The Administration strongly objects to the continued funding of $18 million for the Public Telecommunications Facilities, Planning and Construction Program (PTFP). Over 95 percent of the public is already capable of receiving public telecommunications programming. Because the program has achieved its purpose — to make public broadcasting available to the American public — it should be ended.
  
  
• U.S. Travel and Tourism Administration (USTTA). The Administration objects to continued funding of the U.S. Travel and Tourism Administration. State and local governments and private industry are far better able to promote international tourism than the Federal Government because they can respond much more quickly and effectively to the everchanging tourism market.
  
  
• Office of Productivity, Technology, and Innovation (OPTI). The Administration opposes restoration of funding for the Office of Productivity, Technology, and Innovation. The Administration proposed to phase out OPTI by the end of 1987 because it has fulfilled its mission.
  
  
• Census. The Administration objects to the decrease of $14 million for Periodic Censuses and Programs. The cyclical nature of the periodic censuses requires that obligations be incurred in 1987 for data capture equipment for the quinquennial censuses of agriculture and economics and for the 1990 decennial census.
  
  
• National Bureau of Standards. The Administration objects to the lack of funding for the Cold Neutron Research Facility and requests that this facility be funded by reductions in funding for the Centers for Fire and Building Research and the Institute for Computer Science and Technology as well as other programs.
  
  
• Civil Rights Commission. The Administration strongly supports continuation of the Commission on Civil Rights at the $12.6 million level of the President's 1987 budget request. This action of the Committee, which would reduce the appropriation by 50 percent (to $6 million) should be reversed by the Senate. More important, the administrative restrictions approved by the Committee would make it exceedingly difficult for the Commission to perform its function as a national resource for the furtherance of civil rights.

II. LANGUAGE PROVISIONS

• The Administration cannot accept general provision 609 that would ratify the California-Nevada compact for the apportionment of the Carson, Truckee, Walker rivers and provide that the Federal Government agrees to be bound by its terms. The compact unilaterally abrogates Federal rights and responsibilities to Indian tribes and other entities. Ratification is acceptable only if it includes language proposed by the Administration specifically protecting the Federal obligations and responsibilities.

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