Hearings of the
Subcommittee on Legislative and Budget Process
The Rescissions Process After the Line Item Veto: Tools for Controlling Spending
Associate General Counsel, General Accounting Office
Mr. Chairman and Members of the Committee:
I am pleased to be here today to discuss the General Accounting Office's role in the congressional rescission process and to provide some perspective on the use and impact of rescissions.
The Impoundment Control Act of 1974 (ICA) was enacted to tighten congressional control over Presidential impoundments and establish a procedure under which Congress could consider the merits of impoundments proposed by the President. Under the ICA the President may propose a rescission when he wishes to withhold funds from obligation permanently or submit a deferral when the withholding of funds is temporary. Funds proposed for rescission may be withheld from obligation for 45 days of continuous congressional session. If Congress does not approve the rescission during this period, the President must release the funds on the 46th day. The ICA also provides a special discharge procedure permitting 20 percent of the members of either house to force a floor vote on any presidential rescission proposal.
Rescissions under the ICA have not historically served as a significant spending reduction tool. Since enactment of the ICA in 1974, Presidents have proposed 1,172 rescissions totaling $75.8 billion dollars. The Congress has accepted 459 of those proposals (39%), totaling $24.9 billion (33%). During this period, Congress has initiated $104.8 billion in rescissions to revise spending decisions.
The Comptroller General's Role
As you know, the President is required to send a copy of the special message proposing rescissions or deferrals to the Comptroller General on the same day it is sent to the Congress. Under the ICA, the Comptroller General is required to review each special message and report his findings to the Congress as soon as practicable. We review each message to verify the facts surrounding, as well as the justification for, and the estimated program effect of, the proposed impoundment. We do this by talking with program officials, reviewing the latest agency budget documents and discussing the proposed rescission with Office of Management and Budget (OMB) officials. We also review each message to ensure that it is not misclassified, such as a rescission proposal reported as a deferral. We report our findings on each special message to the Congress, typically within 25 working days after receipt of the President's message.
The ICA also requires the Comptroller General to report to the Congress any impoundment which the President has failed to report. Obviously, it would be impractical to attempt to continuously review every account of the government, but we have found that this is unnecessary. When an unreported withholding takes place, concerned Members or Committees of the Congress, intended recipients, or our auditors typically bring it to our attention.
After the President submits an impoundment message to the Congress, we are responsible for monitoring the status of affected funds. For example, we monitor deferred budget authority to ensure that the funds are released in time to allow for prudent obligation. Well before the expiration of deferred appropriations, we initiate inquiries at OMB to verify that the funds will not be permitted to lapse. If it appears that a lapse may occur, we report the deferral to the Congress as a de facto rescission. We also monitor the 45-day statutory time limit associated with proposed rescissions to ensure that funds are released promptly following congressional disapproval or the expiration of the 45-day time limit.
If the funds are not promptly released after the expiration of the 45-day period, the Comptroller General is empowered to bring a civil action in the United States District Court for the District of Columbia to require release of the budget authority. Prior to bringing suit, the Comptroller General must report to the Speaker of the House of Representatives and the President of the Senate the circumstances giving rise to the need to bring suit. We may not initiate a suit until the passage of 25 days of continuous session of Congress.
During the initial years of the ICA, we filed suit on one occasion and filed 25-day reports on several other occasions. In each case, the funds were released. In recent years, it has not been necessary to resort to these procedures.
Finally, we provide statistical summaries and analyses on the impoundment process, as an adjunct to the above roles. In the past, we informally provided a variety of data to the Congress. As the level of interest in this area has increased, we have prepared and periodically submitted to the Congress formal summaries of the number and dollar amounts of the President's proposed and enacted rescissions, and of congressionally initiated rescissions. Attachment I summarizes all proposed and enacted rescissions since 1974.
Mr. Chairman, I would now like to turn to our rescission data to provide some perspective on the use of rescissions by both the President and the Congress since the ICA was enacted.
Use of the Rescission Process
Both Republican and Democratic presidents have submitted substantial rescission proposals in each year, save one, since 1974. However, the number and dollar values proposed have varied widely with each administration. See attachment II. For example, the Reagan administration proposed the highest number (245 in 1985) and highest dollar value ($15.4 billion in 1981) as well as the lowest (zero in 1988).
Since 1974, the Congress has approved about 39 percent of Presidential rescission proposals, totaling about 33 percent of the budget authority proposed for rescission. The approval rate varies by administration. In the Clinton administration, Congress has approved about 68 percent of the proposals, covering 55 percent of the budget authority proposed for rescission. In the Bush administration, Congress approved about 20 percent of the proposals, covering 18 percent of the budget authority proposed for rescission. The comparable numbers for the Reagan administration were about 36 percent of both the rescissions proposed and the associated budget authority. In the Carter administration, the comparable numbers were 56 percent of the rescissions proposed and 46 percent of the budget authority.
The Congress, on its own initiative, has made increasing use of rescissions as a tool to revise enacted budget authority.(1) As shown in attachment I, the Congress has not merely reacted to presidential proposals, but has also initiated its own rescissions. Overall, since 1974, congressionally initiated rescissions total nearly $105 billion. When this is added to the presidential proposals accepted by the Congress, the total of nearly $130 billion of enacted rescissions exceeds the nearly $76 billion proposed by all presidents since 1974.(2)
This data suggest an evolution in the use of rescissions as a budgetary tool. In 1974, at the time of enactment of the Impoundment Control Act, the rescission procedure was envisioned as a mechanism to accommodate a President's desire to impound funds by providing for congressional review and approval of presidential rescission proposals. Congress, of course, can always rescind enacted budget authority on its own initiative, either to reduce spending or to adjust spending priorities. Over time, the share of total rescissions enacted each year which were originally proposed by the president has fallen and the share originating in the Congress has increased.
Prior to the enactment of the Balanced Budget and Emergency Deficit Control Act of 1985, Congress enacted approximately $18.6 billion (or about $1.7 billion/year) of the $38 billion proposed for rescission by the president, while enacting approximately $11.2 billion (or $1 billion/year) in congressionally initiated rescissions. From 1985 through 1990, the years under the Balanced Budget Act, Congress enacted approximately $355 million (or $59 million/year) of the $18.5 billion proposed for rescission by the president, while enacting approximately $29.7 billion (or about $5 billion/year) in congressionally initiated rescissions. From 1991 through 1998 under the Budget Enforcement Act of 1990, Congress enacted approximately $5.9 billion (or about $737 million/year) of the $19.3 billion proposed for rescission by the president, while enacting approximately $63.9 billion (or about $8 billion/year) in congressionally initiated rescissions.
The Fiscal and Programmatic Effects of Rescissions
While these statistics highlight Congress' increasing use of rescissions, the relatively small amounts rescinded make clear that rescissions have not been a major tool to reduce spending. Under the ICA, the President can propose rescissions only for funding provided by annual appropriations or supplementals - referred to as discretionary spending. Today this spending represents only about one-third of the budget and is constrained by statutory caps. However, it is the remaining two thirds of the budget, which is spent on such programs as Social Security and Medicare, and interest on federal debt, which has driven the deficits. Under the ICA, the President cannot propose rescissions in mandatory spending.
Also, enacted rescissions do not reduce total spending if the rescinded amount is used to offset spending of an equivalent amount of budget authority in another account. In such cases, the rescission in effect transfers funds from one program to another, thereby shifting budget priorities rather than reducing spending. It is our sense that rescissions are often used to offset new appropriations under the discretionary spending caps. Although not required, Congress has recently offset some or all of emergency appropriations with reductions in other discretionary spending.
Expedited Rescission Proposals
This is not to say that rescissions are unimportant. Certainly, the President's rescission proposals can foster debate between the President and the Congress over funding priorities and cuts in specific programs. To enhance accountability and further public debate over spending priorities, there have been a number of proposals presented in Congress over the years for an expedited rescission process. Although the details of the proposals vary, expedited rescission proposals are designed to ensure rapid and formal congressional consideration of rescissions proposed by the President. An essential element of an expedited rescission procedure is a prompt up-or-down vote in the Congress on the President's proposals to reduce enacted spending authority. Since budget authority is not canceled unless a law rescinding existing budget authority is enacted in accordance with Article I, Section 7 of the Constitution, an expedited rescission process does not present the constitutional issues that led the Supreme Court to strike down the Line Item Veto Act. (Clinton v. City of New York, 118 S.Ct.2091 (1998).)
The necessity for, and the form of, an expedited rescission process are, of course, a matter for Congress to decide. We have one logistical concern. As noted earlier, an expedited rescission process requires a prompt vote, for example, within 10 days of receipt of the President's proposal. Such a timeframe will limit our ability to support congressional review of the President's proposed rescissions.
Conclusion
In summary, Mr. Chairman, we believe that 25 years of experience show that the rescission process has been used, as designed, by presidents to advance their own priorities for spending cuts. But rescissions have also been increasingly used by the Congress as a vehicle to express its own view of changing priorities, especially in an era of tight discretionary spending caps. As the Congress has come to enact greater reductions in budget authority than proposed by presidents, the debate has shifted from deciding whether to cut to deciding where to cut.
Thank you, Mr. Chairman. This concludes my prepared remarks. I would be happy to answer any questions you may have.
