96TH: CONGRESS HOUSE OF REPRESENTATIVES REPORT 1st Session No. 96-435 SECOND CONCURRENT RESOLUTION ON THE BUDGET-FISCAL YEAR 1980 REPORT OF THE COMMITTEE ON THE BUDGET HOUSE OF REPRESENTATIVES TO ACCOMPANY H. Con. Res. 186- REVISING THE CONGRESSIONAL BUDGET FOR THE UNITED STATES GOVERNMENT FOR THE FISCAL YEAR 1980 TOGETHER WITH SUPPLEMENTAL, ADDITIONAL, MINORITY, AND ADDITIONAL MINORITY VIEWS SEPTEMBER 14, 1979.-Committed to the Committee of the Whole House on the State of the Union and ordered to be printed U.S. GOVERNMENT PRINTING OFFICE 48-0690O WASHINGTON : 1979 R 3 I COMMITTEE ON THE BUDGET ROBERT N. GIAIMO, Connecticut, Chairman JIM WRIGHT, Texas DELBERT L. LATTA, Ohio THOMAS L. ASHLEY, Ohio JAMES T. BROYHILL, North Carolina LOUIS STOKES, Ohio BARBER B. CONABLE, JR., New York ELIZABETH HOLTZMAN, New York MARJORIE S. HOLT, Maryland DAVID R. OBEY, Wisconsin RALPH S. REGULA, Ohio PAUL SIMON, Illinois BUD SHUSTER, Pennsylvania NORMAN Y. MINETA, California BILL FRENZEL, Minnesota JIM MATTOX, Texas ELDON RUDD, Arizona JAMES R. JONES, Oklahoma STEPHEN J. SOLARZ, New York WILLIAM M. BRODHEAD, Michigan TIMOTHY E. WIRTH, Colorado LEON E. PANETTA, California RICHARD A. GEPHARDT, Missouri BILL NELSON, Florida WILLIAM H. GRAY III, Pennsylvania MACE BROiDE, Emeoustfe Director WENDELL BELEW, Chief Counsel ALLEN C. GROMMET, Chief Economist BRUCE MEREDITHi, Director,Budget Priorities CONTENTS Page H. Con. Res. 186 ------------------------------------------------- v I. Purpose of resolution ----------------------------------------- 1 II. Overview of resolution ---------------------------------------- 5 III. Economic outlook and fiscal policy ------------------------------ 9 IV. Impact of the economy on the budget -------------------------- 25 V. Energy, defense, and other major budget proposals ---------------- 27 VI. Revenues -------------------------------------------------- 37 VII. The deficit and federal debt ----------------------------------- 39 VIII. Multiyear budget outlook ------------------------------------- 43 IX. Legislative Savings ------------------------------------------ 67 X. Spending by function for Fiscal Year 1980 ---------------------- 69 XI. Appendices: A. Text of resolution ------------------------------------ 141 B. Summary tables ------------------------------------- 144 C. Description of functions ------------------------------- 152 D. Multiyear budget projections: revenues and budget func- tions -------------------------------------------- 165 E. Controllability of federal outlays ------------------------ 233 F. Legislative savings ----------------------------------- 248 G. Federal aid to state and local governments --------------- 252 H. Tax expenditures ------------------------------------ 258 I. Estimating differences from the First Budget Resolution for Fiscal Year 1980 -------------------------------- 269 J. Energy: background including President's proposal --------- 272 Additional views of: Hon. Jim Wright -------------------------------------------- 280 Hon. Norman Y. Mineta -------------------------------------- 281 Hon. Jim Mattox -------------------------------------------- 283 Hons. Louis Stokes and William H. Gray III --------------------- 284 Hon. James R. Jones ----------------------------------------- 286 Hon. Leon E. Panetta ---------------------------------------- 287 Hons. Richard A. Gephardt, Bill Nelson, Leon E. Panetta and Timothy E. Wirth ----------------------------------------- 289 Minority views of Representatives Delbert L. Latta, James T. Broyhill, Barber B. Conable, Jr., Marjorie S. Holt, Ralph Regula, Bud Shuster, Bill Frenzel, and Eldon Rudd ------------------------------------ 291 Supplemental views of Hon. Marjorie S. Holt ------------------------- 305 Additional minority views of Hon. Eldon Rudd ----------------------- 307 (II) 96TH CONGRESS t HOUSE OF REPRESENTATIVES REPORT 1 t Session J I No. 96-435 SECOND CONCURRENT RESOLUTION ON THE BUDGET-FISCAL YEAR 1980 SEPTEMBER 14, 1979.-Committed to the Committee of the Whole House on the State of the Union and ordered to be printed Mr. GiAixo, from the Committee on the Budget, submitted the following REPORT [To accompany H. Con. Res. 186] . PURPOSE OF THE RESOLUTION The Congressional Budget Act provides for the consideration of at least two concurrent resolutions on the budget for each fiscal year. The first budget resolution, which is scheduled for adoption by mid- May, sets preliminary targets for overall spending (budget authority and outlays), revenues, and the public debt as well as budget author- ity and outlay targets for each of the 19 functional categories of the budget. The second budget resolution, scheduled for consideration by the Congress in September, sets binding ceilings on total spending (budget authority and outlays) and a floor for revenues. In addition, the Budget Act provides that the second budget resolution may con- tain language directing House and Senate committees to report legis- lation increasing or decreasing revenues or spending in accordance with the levels set forth in the budget resolution. Congress may not adjourn ske die until it has completed action on the second budget resolution and reconciliation legislation if any is required. In preparing the Second Budget Resolution for Fiscal Year 1980, the Committee relied upon a substantial body of information updat- ing the First Budget Resolution. On July 12, 1979, Congress received a Mid-Session Review of the 1980 Budget, containing revised esti- mates of spending and revenues as well as an undated economic fore- cast. On July 31, 1979, these estimates were revised to reflect new en- ergy estimates. Subsequently, the Congressional Budget Office re- viewed the OMB submission and presented its findings to the Com- mittee. Pursuant to the Committee's invitation to comment on the Second Budget Resolution, a number of House committees have sub- mitted their views on matters relating to the fiscal year 1980 budget. The Committee heard testimony from administration economic and policy advisers, including Treasury Secretary W. Michael Blumen- thal, Office of Management and Budget Director James T. McIntyre, Energy Secretary James R. Schlesinger, and Council of Economic Advisers Vice-Chairman Lyle E. Gramley. In addition, testimony was received from Congressional Budget Office Director Alice M. Rivlin, Federal Reserve Board Chairman Paul A. Volcker, Professor Walter W. Heller and Leif H. Olson, Chairman of the Economic Policy Committee of Citibank. PROVISIONS OF LAW RELATING TO THE SECOND BUDGET RESOLUTION Unlike the First Budget Resolution (H. Con. Res. 107), which es- tablished targets to guide subsequent congressional action on revenue, spending, and debt measures, this resolution establishes a floor on revenues and a ceiling on spending which shall be applicable to all subsequent revenue and spending legislation affecting fiscal year 1980. Once this resolution is adopted, neither House may take any action which would cause spending to exceed the budgeted level for budget authority and outlays, or reduce revenues below the level specified in the resolution. Determinations of the House and Senate Budget Com- mittees are the basis for concluding whether legislation would cause the appropriate levels of spending or revenues to be breached. FLOOR PROCEDUIS FOR THE SECOND BUDGET RESOLUTION The Budget Act provides for special procedures for considering budget resolutions in the House of Representatives and the Senate. The House procedures include the following important elements: (1) A budget resolution may be considered only after a 10-day layover period, which begins the day the report is available to Members. (2) A budget resolution is highly privileged and may be brought to the floor without a rule providing for floor consid- eration. (3) Ten hours are provided for general debate on a budget resolution, with amendments to be read under the 5-minute rule. Five hours are provided for debate on a conference report. (4) It is not in order to recommit or reconsider a budget reso- lution or a conference report on a resolution. Motions to post- pone or to proceed to other business and appeals from rulings of the Chair are to be decided without debate. (5) After the Committee of the Whole has reported, the House may consider such technical amendments as are necessary to make a budget resolution mathematically consistent. THE REcoNCILIATION PROCESS The reconciliation process has been utilized on only one budget resolution to date, the Second Budget Resolution for Fiscal Year 1976, which directed the Ways and Means and Finance Committees to submit legislation decreasing revenues by $6.4 billion. This year the Senate Budget Committee has reported a resolution containing reconciliation language pertaining to expenditures. S. Con. Res. 36, the Second Budget Resolution for Fiscal Year 1980, directs seven committees to reduce spending by a total of $3.15 billion in budget authority and $4.0 billion in outlays. Reconciliation language directs one or more committees of the Congress to submit legislation increasing or decreasing revenues, spending or the limit on the public debt. The purpose of the recon- ciliation process is to require committees to implement the decisions made in the second budget resolution. If the reconciliation directive involves more than one committee in each House, then all committees affected by the directive are to submit their recommendations to the Budget Committee which will assemble all the recommendations into one package for action by the