Hearings of the
Subcommittee on Legislative and Budget Process
The Rescissions Process After the Line Item Veto: Tools for Controlling Spending
Gary Kepplinger
Associate General Counsel, General Accounting Office
1. Please describe the process by which GAO compiles its data in compliance with the requirements of the existing rescissions process. Give us some idea of the workload and the timetables that you face.
The President is required to transmit a copy of each special message to the Comptroller General on the same day it is transmitted to the Congress. The Office of General Counsel refers each impoundment to the GAO audit division responsible for reviews of the affected government function. The divisions contact agency and OMB officials to obtain documentation and discuss the reasons for the impoundment, verify the amounts in the account, the amount being withheld and the effect the impoundment will have on the program. The divisions also identify any GAO work, which might be relevant to the Congress’ consideration of the issue. The divisions complete a questionnaire, supplied by the Office of General Counsel, designed to verify the facts reported by the President about the impoundment. The Office of General Counsel reviews the division’s reports and prepares a report to the Congress.
After issuing a report on a special message, GAO maintains contact with OMB to monitor the 45 legislative day withholding period for proposed rescissions to ensure funds are released on the 46th day if Congress does not approve the proposal. GAO obtains apportionment forms (standard form 132) and other supporting documentation to confirm the release of funds. GAO also monitors the deferral of budget authority to ensure that the funds are released in time to be prudently obligated before they lapse. If it appears that a lapse of deferred funds might occur, GAO would report to the Congress that the deferral was a de facto rescission.
We do not separately track the staff time spent on review of presidential impoundment messages. In a typical year, several members of the Office of General Counsel and dozens of evaluators are involved in performing these reviews. We have established an internal 25 working day deadline for the review of presidential impoundment messages and the submission of our report to the Congress. Although much impoundment work is routine and noncontroversial, when complex or controversial impoundments are reviewed, extensive audit and legal work may be necessary to resolve the facts and report to Congress.
2. To what extent have rescissions in recent years been enacted as offsets for additional spending in other areas? Do you have data that isolates the use of rescissions to “pay for” emergency spending?
We do not track the extent to which rescissions are enacted as offsets for spending.
3. GAO is viewed as the verification step in this process with respect to the proposals made by the President. Does GAO provide a similar function with respect to rescissions proposed by the Congress?
No.
4. Do you have any data to explore how use of the existing rescissions process might have been impacted by the availability of the Line Item Veto authority? For instance, is there any data to suggest that items that might have been proposed by the President for rescission were instead targeted for cancellation under the new Line Item Veto law?
The Line Item Veto Act was in effect from January 1, 1997 through June 25, 1998 when the Supreme Court held that it was unconstitutional. Clinton v. New York, 118 S. Ct. 2091 (1998). (The last 3 quarters of fiscal year 1997 and the first 3 quarters of fiscal year 1998.) Both the ICA and the LIVA cover discretionary spending. In the case of the Impoundment Control Act (ICA), the President could propose the rescission of discretionary spending. In the case of LIVA, the President could cancel in whole an item of discretionary spending. Of course, the LIVA also permitted the President to cancel in whole any item of new direct spending or any limited tax benefit, items not covered by the ICA. Furthermore, under LIVA upon the cancellation of a dollar amount of discretionary budget authority, the total appropriation for each relevant account was reduced by the dollar amount of the cancellation. Under the ICA no such “lockbox” exists to prevent using amounts rescinded to offset other spending.
Under LIVA, the President exercised the cancellation authority 82 times, of which 79 were for items of discretionary spending. By the time the Supreme Court declared the LIVA unconstitutional, the President had withdrawn or Congress had disapproved several LIVA cancellations. With the exception of LIVA cancellation 97-76, for the remaining discretionary spending cancellations, on July 17, 1998, OMB issued instructions to agencies to release the amounts and prepare reapportionments reflecting the releases and updated budgetary resources.
During the time the LIVA was in effect, although the number of rescission proposals declined, the President continued to use the ICA process. For example in fiscal year 1996, prior to LIVA, the President sent 24 rescission proposals totaling $1.4 billion to Congress. During the second quarter of fiscal year 1997, while LIVA was in effect, the President sent 10 rescission proposals totaling $407 million to Congress. The President did not cancel any items of discretionary spending during the time LIVA was in effect during fiscal year 1997. (LIVA was in effect after January 1, 1997). During fiscal year 1998, the President cancelled 79 items of discretionary spending under LIVA totaling $477 million. (All of the cancellations occurred during the first quarter of fiscal year 1998.) In the second quarter of 1998, after the United States District Court for the District of Columbia ruled that LIVA was unconstitutional in the Clinton v. New York case, the President sent 25 ICA rescission proposals totaling $25 million to Congress. After the Supreme Court found LIVA unconstitutional, the President proposed for rescission the funds ($5.2 million) he had cancelled in LIVA cancellation No. 97-76, involving the Crown Butte mineral rights granted to the state of Montana. The Congress did not enact this rescission proposal and the funds were released on October 16, 1998. Currently, for fiscal year 1999, the President has sent 3 rescission proposals totaling $35 million to Congress.
Many of the discretionary spending cancellations under the LIVA involved canceling entire line items or earmarks contained in appropriation acts or identified in conference reports. By contrast, many rescission proposals involve amounts that are determined to be in excess of requirements for a particular program and not the elimination of the entire program.
5. It has been suggested that implementation of an expedited rescissions process should be done as a supplement to the existing rescissions process, rather than a substitute. What would be the value, in your view, of having two options available to the President?
Should Congress enact an expedited rescission process to permit the President to identify items for rescission within a short time period after enactment of an appropriation act, Congress may wish to retain the ICA procedures. One of the arguments for an expedited rescission process is to permit the President to highlight items of wasteful spending contemporaneously with the passage of an appropriation act. The ICA permits the President to propose funds for rescission for a wide variety of reasons, ranging from fiscal policy to project specific reasons. Accordingly, the ICA procedures allow the President, throughout the life of an appropriation, to review program execution and propose rescissions of unneeded funds or to propose the shift of funds to other priorities. Congress may wish to retain the flexibility inherent in these procedures.
