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114th Congress    }                                     {       Report
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                     {      114-470
_______________________________________________________________________

                                     


                         CONCURRENT RESOLUTION
                            ON THE BUDGET--
                            FISCAL YEAR 2017

                               ----------                              

                              R E P O R T

                                 of the

                        COMMITTEE ON THE BUDGET
                        HOUSE OF REPRESENTATIVES

                              to accompany

                            H. Con. Res. 125

  ESTABLISHING THE BUDGET FOR THE UNITED STATES GOVERNMENT FOR FISCAL 
  YEAR 2017 AND SETTING FORTH APPROPRIATE BUDGETARY LEVELS FOR FISCAL 
                        YEARS 2018 THROUGH 2026

                             together with

                             MINORITY VIEWS

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


 March 23, 2016.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed












114th Congress    }                                     {       Report
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                     {      114-470
_______________________________________________________________________

                                     


                         CONCURRENT RESOLUTION

                            ON THE BUDGET--

                            FISCAL YEAR 2017

                               __________

                              R E P O R T

                                 of the

                        COMMITTEE ON THE BUDGET

                        HOUSE OF REPRESENTATIVES

                              to accompany

                            H. Con. Res. 125

  ESTABLISHING THE BUDGET FOR THE UNITED STATES GOVERNMENT FOR FISCAL 
  YEAR 2017 AND SETTING FORTH APPROPRIATE BUDGETARY LEVELS FOR FISCAL 
                        YEARS 2018 THROUGH 2026

                             together with

                             MINORITY VIEWS

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


 March 23, 2016.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed
                                    ______

                         U.S. GOVERNMENT PUBLISHING OFFICE 

99-437                         WASHINGTON : 2016              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
                        COMMITTEE ON THE BUDGET

                      TOM PRICE, Georgia, Chairman
TODD ROKITA, Indiana, Vice Chairman  CHRIS VAN HOLLEN, Maryland,
SCOTT GARRETT, New Jersey              Ranking Minority Member
MARIO DIAZ-BALART, Florida           JOHN A. YARMUTH, Kentucky
TOM COLE, Oklahoma                   BILL PASCRELL, Jr., New Jersey
TOM McCLINTOCK, California           TIM RYAN, Ohio
DIANE BLACK, Tennessee               GWEN MOORE, Wisconsin
ROB WOODALL, Georgia                 KATHY CASTOR, Florida
VICKY HARTZLER, Missouri             JIM McDERMOTT, Washington
MARLIN A. STUTZMAN, Indiana          BARBARA LEE, California
FRANK GUINTA, New Hampshire          MARK POCAN, Wisconsin
MARK SANFORD, South Carolina         MICHELLE LUJAN GRISHAM, New Mexico
STEVE WOMACK, Arkansas               DEBBIE DINGELL, Michigan
DAVE BRAT, Virginia                  TED LIEU, California
ROD BLUM, Iowa                       DONALD NORCROSS, New Jersey
ALEXANDER X. MOONEY, West Virginia   SETH MOULTON, Massachusetts
GLENN GROTHMAN, Wisconsin
GARY J. PALMER, Alabama
JOHN R. MOOLENAAR, Michigan
BRUCE WESTERMAN, Arkansas
JAMES B. RENACCI, Ohio
BILL JOHNSON, Ohio

                           Professional Staff

                     Richard E. May, Staff Director
                Thomas S. Kahn, Minority Staff Director
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                            C O N T E N T S

                                                                   Page
Introduction.....................................................     3
Summary Tables--Spending and Revenue:
    Table 1. Fiscal Year 2017 Budget Resolution Total Spending 
      and Revenue................................................    19
    Table 2. Fiscal Year 2017 Budget Resolution Discretionary 
      Spending...................................................    22
    Table 3. Fiscal Year 2017 Budget Resolution Mandatory 
      Spending...................................................    25
Comparison With the President's Budget...........................    29
    Table 4. Summary of Fiscal Year 2017 Budget Resolution.......    34
    Table 5. Fiscal Year 2017 House Budget Resolution vs. the 
      President's Budget.........................................    34
The Economy and Economic Assumptions.............................    37
    Table 6. Economic Projections: Administration, CBO, and 
      Private Forecasters........................................    43
    Table 7. Economic Assumptions of the Fiscal Year 2017 Budget 
      Resolution.................................................    44
    Table 8. Tax Expenditure Estimates by Budget Function, Fiscal 
      Years 2015-2019............................................    45
Macroeconomic Feedback Effects of Pro-Growth Policies............    55
Functional Presentation..........................................    57
    Principal Federal Responsibilities...........................    61
        National Defense.........................................    61
        International Affairs....................................    66
        Overseas Contingency Operations/Global War on Terrorism..    72
        Veterans Benefits and Services...........................    73
        Administration of Justice................................    81
        General Government.......................................    84
        Government-Wide Policy...................................    86
    Domestic Priorities..........................................    91
        General Science, Space, and Technology...................    91
        Energy...................................................    93
        Natural Resources and Environment........................    97
        Agriculture..............................................   101
        Commerce and Housing Credit..............................   101
        Transportation...........................................   104
        Community and Regional Development.......................   112
        Education, Training, Employment, and Social Services.....   115
        Health...................................................   120
        Income Security..........................................   123
        Other Discretionary Spending.............................   125
    Direct Spending..............................................   127
        Social Security..........................................   127
        Medicare.................................................   131
        Medicaid, the Affordable Care Act, and Related Programs..   142
        Income Support, Nutrition, and Related Programs..........   156
        Farm Support and Related Programs........................   162
        Banking, Commerce, Postal Service, and Related Programs..   163
        Student Loans, Social Services, and Related Programs.....   167
        Federal Lands and Other Resources........................   171
        Other Direct Spending....................................   173
    Financial Management.........................................   175
        Net Interest.............................................   175
        Allowances...............................................   176
        Undistributed Offsetting Receipts........................   176
Revenue and Tax Reform...........................................   179
Direct Spending Trends and Reforms...............................   183
    Table 9. Historical Means-Tested and Non-Means-Tested Direct 
      Spending...................................................   186
    Table 10. Projected Means-Tested and Non-Means-Tested Direct 
      Spending...................................................   187
The Long-Term Budget Outlook.....................................   189
Budget Process Reform............................................   191
Regulatory Budgeting.............................................   199
Section-by-Section Description...................................   201
The Congressional Budget Process.................................   223
    Table 11. Allocation of Spending Authority to House Committee 
      on Appropriations..........................................   225
    Table 12. Resolution by Authorizing Committee (On-budget 
      Amounts)...................................................   226
Reconciliation...................................................   229
Statutory Controls Over the Budget...............................   231
Enforcing Budgetary Levels.......................................   237
Accounts Identified for Advance Appropriations...................   243
Votes of the Committee...........................................   245
Other Matters Under the Rules of the House.......................   285
Minority Views...................................................   287
Concurrent Resolution on the Budget--Fiscal Year 2017 
  (legislative text).............................................   289
  
  
  
  
  
  
  
  
  
  
                                                                       
114th Congress    }                                     {       Report
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                     {      114-470

======================================================================



 
                 CONCURRENT RESOLUTION ON THE BUDGET--
                            FISCAL YEAR 2017

                                _______
                                

  ESTABLISHING THE BUDGET FOR THE UNITED STATES GOVERNMENT FOR FISCAL 
  YEAR 2017 AND SETTING FORTH APPROPRIATE BUDGETARY LEVELS FOR FISCAL 
                        YEARS 2018 THROUGH 2026

                                _______
                                

 March 23, 2016.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Tom Price of Georgia, from the Committee on the Budget, submitted 
                             the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                    [To accompany H. Con. Res. 125]

                              INTRODUCTION

                              ----------                              

    The budget this year faces two significant hurdles.
    First, due to continued delays in tackling the government's 
growing fiscal problems, the budget outlook has predictably 
worsened. Since just last August, the projected 10-year budget 
deficit has swollen by $1.5 trillion. That is how much 
additional savings the Budget Committee has had to identify, 
compared with a year ago, to achieve balance within a decade. 
It will require a greater number of policy changes, and swifter 
implementation, than before. These difficulties will continue 
to grow as long as Congress fails to take substantial action 
changing the Federal Government's fiscal course. In time the 
problem will become insurmountable.
    Second, this budget resolution gets no help from the 
economy. The policies of the current administration--excessive 
government spending, regulation, Obamacare, and all the rest--
are weighing down the economy. Growth is anemic, real household 
incomes are stagnant, labor force participation is low, many 
workers are underemployed. Debt stands at historically high 
postwar levels, and continues rising. For the past several 
years, the Congressional Budget Office [CBO] has been lowering 
its projections of average annual economic growth (see further 
discussion in the economics section of this report). A better 
economy would produce more revenue and put less strain on the 
government's safety net programs, easing the policy changes 
needed to attain fiscal sustainability. A stronger economy 
would generate greater revenue, and lower deficits, through 
growth, not tax hikes. CBO reports that an increase in real 
economic growth of just 0.1 percentage point would yield $327 
billion in deficit reduction--of which $286 billion would be 
from revenue.\1\ Under the President's policies, however, the 
recovery is historically weak, adding to the fiscal burdens. In 
the absence of stronger growth, the budget has to rely entirely 
on spending restraint.
---------------------------------------------------------------------------
    \1\Congressional Budget Office, The Budget and Economic Outlook: 
2016 to 2026, January 2016, Table B-1, p. 119.
---------------------------------------------------------------------------
    As was demonstrated in the 1990s, the formula for balancing 
the budget is a combination of fiscal restraint, solid economic 
growth, and limited regulation. Throughout that decade, 
Congress actually reduced annually appropriated 
``discretionary'' spending after adjusting for inflation. In 
1997, following 2 years of confrontation, President Clinton 
finally joined the Republican Congress in striving to surpass 
the timid and unsuccessful pursuit of mere deficit reduction, 
and commit to eliminating deficits--and to do so entirely 
through spending restraint. The Balanced Budget Act of 1997 was 
paired with tax cuts then estimated at $95.3 billion over 5 
years and $275.4 billion over 10 years.\2\ Perhaps not 
surprisingly, economic growth surged: Growth in real gross 
domestic product [GDP] exceeded 4 percent annually in the 
latter part of the decade. With this combination, the plan to 
reach balance in 5 years actually produced surpluses in 1 
year--surpluses that continued to grow.
---------------------------------------------------------------------------
    \2\See the Conference Report on the Taxpayer Relief Act of 1997 
(H.R. 2014), p. 807.
---------------------------------------------------------------------------
    To address today's fiscal problems, and to create a 
foundation for robust growth, this resolution retains 
longstanding convictions about budgeting and governing. It 
reverses the drift toward ever higher spending and larger 
government; it reinforces the innovation and creativity 
stirring in the myriad institutions and communities across the 
country; and it revitalizes the prosperity that creates ever-
expanding opportunities for all Americans to pursue their 
destinies. Like any good budget resolution, this one expresses 
a vision of governing, and of America itself. As described 
further in this report, this fiscal blueprint does the 
following:

     LBalances the budget within 10 years without 
raising taxes, and places the government on a path to paying 
off the debt.

     LEnsures a strong national defense, the highest 
priority of the Federal Government, through robust funding of 
troop training, equipment, and compensation.

     LRestores the principle of federalism, to 
encourage the innovation and creativity of State and local 
governments.

     LCalls for a fairer, simpler tax code to promote 
job creation and a healthy economy--an economy that ensures all 
Americans can prosper and achieve their goals.

     LSaves, strengthens, and secures Medicare, 
Medicaid, and other income security programs.

     LRepeals Obamacare, clearing the way for real, 
patient-centered health care reform.

     LReforms welfare and other automatic spending 
programs.

     LCreates reconciliation to advance solutions 
through Congress and to the President's desk.

    The guiding principles of the resolution follow in this 
introduction.

                          Balancing the Budget

    While some ``experts'' dismiss the balanced budget standard 
as a kind of quaint anachronism, nothing has come to replace it 
as a consensus norm for budgeting. As a result, fiscal policy 
is adrift, and increasingly unsustainable. Some--including the 
current administration--have tried to substitute intellectually 
sophisticated concepts, such as trying to limit deficits or 
debt as a share of the economy--yet there is no agreement on 
what the acceptable upper limits might be. Others have 
suggested allowing ``counter-cyclical'' policies in the near 
term while striving for ``long-term fiscal sustainability''--
with no sound definition of what the latter means. This 
formula, of course, merely rationalizes spending now while 
putting off restraint until later--so the restraint never 
happens.
    The current President's cavalier attitude about deficit 
spending adds to the problem. He has contended that deficits in 
the range of 3 percent of gross domestic product [GDP] are 
acceptable, as long as they remain relatively stable. The 
inevitable result: deficits are growing, inexorably. Only a 
firm commitment to balancing the budget will deliver a truly 
sustainable fiscal outlook.
    Until the early 1960s, policymakers broadly accepted the 
aim of balancing the Federal budget in peacetime. For many, the 
conviction was practical, uncomplicated common sense: 
Government simply should not outspend its resources. For 
others, such as Nobel Laureate James M. Buchanan, balancing 
budgets was an ethical commitment.

          Politicians prior to World War II would have 
        considered it to be immoral (to be a sin) to spend more 
        than they were willing to generate in tax revenues, 
        except during periods of extreme and temporary 
        emergency. To spend borrowed sums on ordinary items for 
        public consumption was, quite simply, beyond the pale 
        of acceptable political behavior. There were basic 
        moral constraints in place; there was no need for an 
        explicit fiscal rule in the written constitution.\3\
---------------------------------------------------------------------------
    \3\James M. Buchanan, ``Clarifying Confusion About the Balanced 
Budget Amendment,'' National Tax Journal, Vol. 48, No. 3, September 
1995, page 347.

    With his alternative views of deficit financing, John 
Maynard Keynes upended the norm of budgeting and challenged its 
ethical underpinnings. As James Q. Wilson put it, Keynes was 
---------------------------------------------------------------------------
more than an important economist:

          [H]e was a moral revolutionary. He subjected to 
        rational analysis the conventional restraints on 
        deficit financing, not in order to show that debt was 
        always good but to prove that it was not necessarily 
        bad. Deficit financing should be judged, he argued, by 
        its practical effect, not by its moral quality.\4\
---------------------------------------------------------------------------
    \4\James Q. Wilson, ``The Rediscovery of Character: Private Virtue 
and Public Policy,'' On Character (Washington DC: The AEI Press, 1995), 
p. 18.

    Although Keynes published his theory in the 1930s, it was 
not until three decades later that deficit financing became 
politically acceptable. Even then, President Johnson insisted 
on balancing his final budget, notwithstanding the costs of the 
Vietnam War and his ambitious Great Society programs. After 
that, however, policymakers increasingly found deficits to be 
tolerable, then acceptable--and then, predictably, deficit 
spending became chronic.
    The practical effect has been devastating. For a time in 
the early 1990s, it appeared the structural gap between outlays 
and revenues was so entrenched it could not be overcome. As 
noted previously, the balanced budgets later in that decade 
resulted from a sustained stretch of spending restraint and an 
unexpected boost in economic output. In January 2001, CBO was 
projecting budget surpluses totaling $5.6 trillion over 10 
years. Following 9-11, as Congress of necessity boosted 
resources for national defense and homeland security, lawmakers 
also gave up restraints on other spending. The tolerance for 
deficits returned, and the government has not seen a balanced 
budget since. In recent years, the red ink exceeded $1 trillion 
annually, so that nearly 40 percent of the government's 
spending was financed with borrowed money.

    It is noteworthy that the loss of surpluses and growth in 
deficits was not the result of tax cuts. In August 2001, and 
again in January 2002, CBO reported that the projected 10-year 
revenue impact of the 2001 tax relief package was about $1.3 
trillion, leaving $3.4 trillion in surpluses (economic and 
technical factors, as well as debt service, accounted for most 
of the remainder).\5\ In January 2002, well after the events of 
9-11, when CBO reported a steeper decline in surpluses, the 
estimated revenue effects of the tax relief package remained at 
$1.3 trillion; roughly $2.7 trillion of the change in the 
surplus/deficit outlook resulted from spending increases and 
economic and technical factors.\6\ Subsequent data show that 
from 2002 through 2011, of the $11.7-trillion total surplus 
reduction/deficit increase, only $1.5 trillion resulted from 
the tax cuts of 2001 and 2003.
---------------------------------------------------------------------------
    \5\Congressional Budget Office, The Budget and Economic Outlook: An 
Update, August 2001, Table 2, p. x.
    \6\Congressional Budget Office, The Budget and Economic Outlook: 
Fiscal Years 2003-2012, January 2002, Summary Table 1, p. xiv.
---------------------------------------------------------------------------
    Today, in the absence of the balanced budget principle, the 
only fiscal guideline is the modern, relativistic pay-as-you-go 
concept, which merely ratifies existing deficits as the measure 
of budgetary rectitude--no matter how large those deficits 
might be. Thus, the proponents of the Affordable Care Act could 
boast the health care program was fiscally ``responsible'' 
because it did not increase deficits--which already exceeded a 
trillion dollars a year--while it recklessly added trillions 
more to government spending.
    The durability of the balanced budget principle is 
demonstrated even by the Keynesian-leaning Congressional Budget 
Office itself. Every time the CBO publishes its regular updates 
of budget and economic conditions, the first item it reports is 
the magnitude of the deficit or surplus--that is, the 
relationship between total outlays and total tax revenue. It is 
the very same measure that underlies the balanced budget 
principle. Further, CBO's clear implication is that the more 
spending exceeds revenue, and the more rapidly the two diverge, 
the more unstable is the government's fiscal condition.\7\ 
There is simply no more straightforward measure of the 
government's fiscal health and stability.
---------------------------------------------------------------------------
    \7\For example, the first three sentences of the summary in the 
recent The Budget and Economic Outlook: 2016 to 2026 (p. 1) read: ``In 
2016, the Federal budget deficit will increase, in relation to the size 
of the economy, for the first time since 2009, according to the 
Congressional Budget Office's estimates. If current laws generally 
remained unchanged, the deficit would grow over the next 10 years, and 
by 2026 it would be considerably larger than its average over the past 
50 years, CBO projects. Debt held by the public would also grow 
significantly from its already high level.''
---------------------------------------------------------------------------
    CBO's projections make clear the temporary decline in 
deficits over the past few years is over; as predicted, 
deficits are now rising again (see Figure 1). Some details 
about that trend include the following:\8\
---------------------------------------------------------------------------
    \8\Congressional Budget Office, The Budget and Economic Outlook: 
2016 to 2026, January 2016.

     LThe deficit in the current year--fiscal year 
2016--will rise to $544 billion, an increase of $105 billion 
---------------------------------------------------------------------------
from the prior year ($439 billion).

     LDeficits will continue to rise in subsequent 
years and reach $1.4 trillion in 2026, CBO estimates. At these 
levels, the deficit would rise from 2.9 percent of GDP in 
fiscal year 2016 and to 4.9 percent in fiscal year 2026--well 
above the 50-year historical average of 2.7 percent of GDP.

     LCBO has increased its 10-year deficit projection 
by $1.5 trillion compared with estimates as recently as last 
August, to $9.4 trillion. That increase is largely due to the 
anemic Obama economy: CBO projects $771 billion less tax 
revenue over 10 years due to ``slower growth in economic output 
over the 10-year projection period.''\9\ This is the result of 
a weakening economic outlook, not because of any tax changes 
legislated by the Congress.
---------------------------------------------------------------------------
    \9\Ibid., p. 11.

    FIGURE 1

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


      CBO also blames $425 billion of the deficit 
increase on reduced revenue due to Congress's recent extension 
of certain tax provisions that were scheduled to expire. That, 
however, is merely an artifact of CBO's scoring conventions. 
These are not new tax cuts; Congress merely continued tax 
relief policies that already existed. By law, CBO is required 
to compare the extension of such tax relief provisions with the 
higher revenue levels that would have occurred if the policies 
had expired as scheduled.\10\ Putting it differently, Congress 
chose not to raise taxes, which would have resulted from 
failing to extend these provisions.
---------------------------------------------------------------------------
    \10\See section 257 of the Balanced Budget and Emergency Deficit 
Control Act of 1985 (Public Law 99-177).

    While the President claims some deficit reduction in his 
own budget--largely from $3.4 trillion in new taxes over 10 
years--he never tries to reach balance. In fact, deficits under 
the President's budget increase starting in 2019, and approach 
$800 billion in 2026. This is largely due to $2.5 trillion in 
spending increases over the decade. This is not a fiscal 
policy; it is an abandonment of sound fiscal norms.
    The chronic and growing deficits that will result will push 
up debt from its already historically high levels. Due to 
profligate spending--and the President's resistance to working 
with Congress on controlling spending--total debt on Obama's 
watch has almost doubled, to nearly $19 trillion. CBO projects 
that debt held by the public will reach $14.0 trillion, or 75.6 
percent of GDP, at the end of fiscal year 2016, up $861 billion 
from its $13.1 trillion level (73.6 percent of GDP) at the end 
of fiscal year 2015.\11\ By the end of fiscal year 2026, CBO 
estimates debt held by the public will reach $23.8 trillion, or 
86 percent of GDP--a $9.8 trillion increase over the next 10 
years. This is by far the highest level of debt since just 
after World War II. A significant difference, however, is that 
the post-war debt resulted from large but temporary surges of 
spending to save the free world. Today's deficits and debt are 
the product of permanent automatic spending programs, and these 
trends are occurring even as the government has reduced its 
spending for military and diplomatic activities overseas.
---------------------------------------------------------------------------
    \11\Debt held by the public increased about $300 billion in 2015 
and is projected to rise by $861 billion in 2016.
---------------------------------------------------------------------------
    Gross Federal debt, which includes funds owed to the Social 
Security Trust Fund and other Federal accounts, is projected to 
rise from $18.1 trillion at the end of 2015 to $29.3 trillion 
in 2026--an $11.2 trillion increase.
    A rising debt level is ultimately unsustainable because its 
growth eventually begins to exceed that of the overall economy. 
As a result, debt service costs absorb an increasing share of 
national income and the country must borrow an increasing 
amount each year--likely in the face of gradually higher 
interest rates--to both fund its ongoing services and make good 
on its previous debt commitments. Ultimately, this dynamic 
leads to a decline in national saving and a ``crowding out'' of 
private investment, sapping economic output and diminishing the 
country's standard of living. In a worst-case scenario, this 
dynamic could also lead to a full-blown debt crisis, which 
would not only be devastating at the macroeconomic level, but 
would also inflict acute pain upon families and businesses.
    Investors and businesses make decisions on a forward-
looking basis. They know that today's large debt levels are 
simply tomorrow's tax hikes, interest rate increases, or 
inflation--and they act accordingly. This debt overhang, and 
the uncertainty it generates, can therefore weigh on growth, 
investment, and job creation.
    Interest payments on the debt (the ``legacy cost'' of 
deficit spending) will sum to a staggering $5.6 trillion over 
the next decade according to CBO. These payments threaten to 
overwhelm other spending priorities in the budget. In 2012, 
Deloitte LLP--a tax, audit, and consulting firm--discussed the 
ways in which debt will hamper U.S. competitiveness in the 
years ahead.

          [A] great variety of meaningful investments will 
        almost certainly be left undone simply because interest 
        payments will push them out of the budget. This is the 
        silent cost of prior debts that, unless explicitly 
        recognized, crucially leads policymakers to 
        underestimate the effect that prior deficits have 
        already had on this decades planned expenditures.\12\
---------------------------------------------------------------------------
    \12\Deloitte LLP, The Untold Story of America's Debt, June 2012.

    Debt service is already projected to dominate the budget. 
Within a decade, the government will reach a point at which it 
spends more on interest payments that it does on national 
defense, Medicaid, Federal education spending, and 
infrastructure, among others (see Figure 2). Interest on the 
debt will become the government's third largest program, 
---------------------------------------------------------------------------
following only Social Security and Medicare.

    FIGURE 2
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    All these factors point to the need for returning to the 
balanced budget standard. It is also the soundest principle for 
limiting government. A balanced budget commitment establishes 
real-time restraint on the expansion of the public sector: The 
size and scope of government, as measured by its spending, may 
not exceed the amount that taxpayers provide and the economy 
will sustain. This empowers the people, on an ongoing basis, to 
hold their government in check.
    The pursuit of balance also has distinct economic and 
fiscal benefits. Nearly all economists, including those at the 
CBO, explain that reducing budget deficits (thereby bending the 
curve on debt levels) increases the pool of national savings 
and boosts investment, thereby raising economic growth and job 
creation.
    The greater economic output that stems from a large deficit 
reduction package would have a sizeable impact on the Federal 
budget. For instance, higher output would lead to greater 
revenues through the increase in taxable incomes. Lower 
interest rates, and a reduction in the stock of debt, would 
lead to lower government spending on net interest expenses. 
Former Federal Reserve Chairman Bernanke has said that putting 
in place a credible plan to reduce future deficits ``would not 
only enhance economic performance in the long run, but could 
also yield near-term benefits by leading to lower long-term 
interest rates and increased consumer and business 
confidence.''\13\
---------------------------------------------------------------------------
    \13\Bernanke speech at the Committee for a Responsible Federal 
Budget Fiscal Accountability conference, 14 June 2011.
---------------------------------------------------------------------------
    For all these reasons, this budget resolution restores the 
balanced budget standard, and then maintains it--putting the 
government on a path to paying off the debt.

                      Automatic Spending Programs

    Just as important as pursuing balance is the way in which 
lawmakers achieve it. Some experts and policymakers advocate a 
mix of spending restraint and tax increases--the so-called 
``balanced'' approach--as if the two were merely opposite sides 
of the same coin. That sterile, policy-neutral concept, 
however, masks the fundamental cause and effect of government 
budgeting: Spending comes first. Spending--one of the best 
measures of the size and scope of government--is how government 
does what it does. Government's programs and activities exist 
only if government spends money to implement them. ``In a 
fundamental sense,'' writes longtime budget expert Allen 
Schick, ``the Federal Government is what it spends.''\14\ It is 
because of spending that the government taxes and borrows. 
Spending is the root cause of all other fiscal consequences.
---------------------------------------------------------------------------
    \14\Allen Schick, The Federal Budget: Politics, Policy, Process 
(Washington DC: The Brookings Institution Press, 2007), page 2.
---------------------------------------------------------------------------
    CBO's own figures further demonstrate that spending control 
is the indispensable element of controlling the budget. In its 
most recent long-term projections, CBO shows that even 
excluding interest payments, government programs will outspend 
revenue persistently over the next 25 years. Indeed, while CBO 
projects tax revenue to rise to historically high levels--19.4 
percent of GDP by 2040, well above the 17.4-percent average of 
the past 50 years--spending will still persistently outpace 
revenue (see Figure 3). The inevitable debt service will drive 
total spending above 25 percent of GDP, generating relentlessly 
deepening deficits. Only by controlling spending can Congress 
alter this disastrous course.\15\
---------------------------------------------------------------------------
    \15\Congressional Budget Office, The 2015 Long-Term Budget Outlook, 
June 2015, Summary Table 1.
---------------------------------------------------------------------------
    That requires controlling automatic, or direct, spending. 
Unlike the government's ``discretionary'' spending, in which 
Congress sets fixed limits on total budget authority, direct 
(or ``mandatory'') spending is open-ended and flows from 
effectively permanent authorizations. Programs funded this 
way--typically called ``entitlements''--pay benefits directly 
to groups and individuals without an intervening appropriation. 
They spend without limit. Their totals are determined by 
numerous factors outside the control of Congress: caseloads, 
the growth or contraction of GDP, inflation, and many others. 
To put it simply, spending in these programs is uncontrolled 
and uncontrollable--because it is designed to be.
    The list of these programs is long and broad. It includes 
the social insurance programs, Social Security and Medicare; 
other health spending, such as Medicaid and the Affordable Care 
Act; income support, nutrition assistance, unemployment 
compensation, disability insurance, student loans, and a range 
of others.

    FIGURE 3
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    In 1965, as President Johnson's Great Society programs were 
being enacted, net direct spending represented about 27 percent 
of the budget. By 1974, when the Congressional Budget Act was 
adopted, it had swollen to 41 percent of total spending. Today 
it has surged to nearly 60 percent. Combined with net 
interest--a mandatory payment in the true sense of the word--
the government's automatic direct spending consumes more than 
two-thirds of the budget,\16\ and in just 10 years it will 
swell to 78 percent\17\ (see Figure 4). It is the main driver 
of the government's debt.
---------------------------------------------------------------------------
    \16\Congressional Budget Office, The Budget and Economic Outlook: 
2016 to 2026, January 2016, Table 3-1.
    \17\Ibid., Table 1-2.
---------------------------------------------------------------------------
    Clearly this problem with direct spending has been building 
for decades, yet lawmakers have found it difficult to build an 
enduring consensus for addressing it. With each year that 
passes, the challenge of spending control grows more difficult, 
because the necessary changes in programs become larger and, in 
many cases, more wrenching. At some point the programs will 
simply collapse under their own weight. Those who claim to 
``protect'' them by resisting reform only ensure their demise.
    Gaining control of spending need not be seen, however, as 
some daunting exercise in ``mindless austerity,'' as the 
President so ominously puts it. As long as reform is necessary, 
it can be approached as an opportunity to save and strengthen 
these programs--to make them better for the people they are 
intended to serve.
    Consider a few examples.
    This report proposes a new Medicare option that would 
transform this retirees' health coverage program from a 
government-run, price-controlled bureaucracy to a personalized 
system in which seniors have the option of choosing their 
health coverage best suited to their needs from a range of 
commercial plans. Traditional fee-for-service Medicare would 
always be an option available to current seniors, those near 
retirement, and future generations of beneficiaries. Fee-for-
service Medicare, along with private plans providing the same 
level of health coverage, would compete for seniors' business, 
just as Medicare Advantage does today. The new program, 
however, would also adopt the competitive structure of Medicare 
Part D, the prescription drug benefit program, to deliver 
savings for seniors in the form of lower monthly premium costs.

    FIGURE 4
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    In short, this Medicare reform would give retired 
Americans, not the government, the ultimate leverage over what 
kind of coverage they will have--and the government provides 
them financial assistance in making the choices.
    Another area of automatic spending, assistance for low-
income Americans, should be revised to encourage self-
sufficiency, not to trap people in dependency. Clearly, persons 
with chronic disadvantages need and deserve a sturdy safety 
net. Others require assistance at particular times of economic 
downturns or personal misfortune. Still, the most compassionate 
way to provide government assistance is to help free 
individuals from the need for it. Welfare programs should 
encourage recipients toward supporting themselves to the 
greatest degree possible. As was proved with the successful 
welfare reform of the 1990s, when struggling people are 
challenged to work and earn on their own, they rise to the 
occasion--and they are better off for it.
    It should be noted, too, that government is not the sole 
source of the many domestic benefits Americans receive--it is 
not even the primary one. Every benefit the government 
ostensibly ``provides'' actually draws from the abundant 
resources of the Nation's free market system. The government 
could not maintain Medicare, or Social Security, or its 
numerous safety net programs without the funding generated by 
the economy. Communities could not build schools and hospitals 
without local economies sufficiently prosperous to support 
them. This is why the fiscal policy of this budget--restraining 
spending and reducing deficits--is crucial to the well-being of 
all Americans. Those who strive to pull themselves out of 
difficulties benefit most from the expanding opportunities and 
rising incomes that only a prosperous economy can provide.
    Finally, policymakers must embrace the recognition that 
government can never substitute for nature's safety net: the 
family. For generation upon generation, the family has been the 
main source of comfort, security, and economic stability for 
the individual. It is where moral values and a sense of 
responsibility grow. The family reinforces the individual's 
place in the larger community. As government seeks to support 
those who lose any connection to a family, it should take care 
not to contribute to the dissolution of families. Government 
programs should aim to strengthen the family, the most 
important and enduring institution in society.

                               Federalism

    The republic of the United States reached a turning point 
in 1936: That was the first peacetime year in which the Federal 
Government's total spending exceeded the combined outlays of 
the State and local governments. ``It can even be argued,'' 
writes Amity Shlaes, ``that one year--1936--created the modern 
entitlement challenge that so bedevils both parties.''\18\
---------------------------------------------------------------------------
    \18\Amity Shlaes, The Forgotten Man: A New History of the Great 
Depression (New York: Harper Perennial, 2008), page 11.
---------------------------------------------------------------------------
    As the 20th century unfolded, the national government's 
dominance--both fiscally and as the central governing 
authority--expanded. This was understandable during times of 
war--especially World War II--when the entire Nation was under 
threat. The notion continued to expand, however, into an ever-
growing range of domestic policies. President Roosevelt's New 
Deal was, of course, a major step. Later came President 
Truman's unsuccessful pursuit of nationalized health care, and 
President Johnson's Great Society. By the late 1980s, health 
care once again got drawn in, with some proposing a single-
payer Canadian-style health care system for the United States. 
In some respects, this trend culminated with Obamacare.
    Over time, States in some respects have been reduced to 
carrying out the wishes of Washington, rather than serving as 
the ``laboratories of democracy.''
    This is precisely contrary to the Founders' vision:

          The powers delegated by the proposed Constitution to 
        the Federal Government are few and defined,'' Madison 
        wrote. ``Those which are to remain in the State 
        governments are numerous and indefinite. The former 
        will be exercised principally on external objects, as 
        war, peace, negotiation, and foreign commerce; with 
        which last the power of taxation will, for the most 
        part, be connected. The powers reserved to the several 
        States will extend to all the objects which, in the 
        ordinary course of affairs, concern the lives, 
        liberties, and properties of the people, and the 
        internal order, improvement, and prosperity of the 
        State.\19\
---------------------------------------------------------------------------
    \19\James Madison, Federalist 45.

    As succinctly put in the Tenth Amendment: ``The powers not 
delegated to the United States by the Constitution, nor 
prohibited by it to the States, are reserved to the States 
respectively, or to the people.''
    Indeed, Madison argued the Federal Government would depend 
on the States--not the other way around: ``The State 
governments may be regarded as constituent and essential parts 
of the Federal Government; whilst the latter is nowise 
essential to the operation or organization of the former.''\20\ 
This point is proved in reality by the countless activities, 
essential to the lives of individuals and communities, that 
predated the national government and would continue without it. 
Even if the 50 States stood as separate entities, they would 
still operate schools and hospitals; they would find ways to 
build roads and bridges; scientific research would continue; 
energy and communications companies would emerge.
---------------------------------------------------------------------------
    \20\Ibid.
---------------------------------------------------------------------------
    This is not to say Americans would be better off without 
the Federal Government. Their security and prosperity are 
vastly enhanced by the voluntary unity reflected in the bonds 
of the national Constitution. The point is simply that the 
Federal Government's principal role is to protect the security 
of the Nation, and to maintain an environment that supports the 
initiative and creativity possible only through the diversity 
of the several States and the bonds of civil society.
    The reversal of this concept that developed over the past 
100 years or so also has fiscal consequences. Federal 
Government resources cannot maintain the overreach of its 
governing ambitions. That is the message of Washington's 
current, catastrophic spending path. To restore fiscal 
sustainability, Congress sooner or later will have to consider 
realigning the roles of different levels of government. It will 
have to reinstitute the practice of federalism.
    This will remain a necessity even if Congress gains control 
of entitlement spending. Yet the fiscal concerns are only part 
of the reason. The increasing centralization of government 
smothers the energy of State and local policymakers. Restoring 
State autonomy will deliver benefits for the entire Nation in 
critical areas such as education, health care, infrastructure, 
energy, the environment, and employment.
    The budget resolution supports these aims. It promotes 
State flexibility in areas such as Medicaid and the 
Supplemental Nutrition Assistance Program. It encourages State 
and local initiative in education. It sheds the conceit that 
Washington knows best what is right for the people. The very 
structure of this report reflects a distinction between those 
activities required of the Federal Government from those best 
suited to States and localities and the private sector (see the 
explanation in Functional Presentation).

                   Restoring Congressional Budgeting

    The congressional budget process, enacted in 1974, has 
rarely worked as designed. Deadlines in the Congressional 
Budget Act are missed far more often than made, rules are often 
skirted, loopholes in spending disciplines exploited. Since 
1998, the House and Senate have failed nine times to agree on a 
budget resolution, the cornerstone of the process.
    These failures have unquestionably worsened in recent 
years. Last year was the first time since 2001 that the House 
and Senate agreed to a 10-year balanced budget plan. In recent 
years, lawmakers manufactured ad hoc procedures that have done 
next to nothing to stabilize the government's catastrophic 
long-term fiscal outlook. For a while, the budgetary 
mismanagement became the new norm. The budget calendar was not 
merely ignored, it was deliberately breached, rendering the 
fiscal year irrelevant and leading to a stream of omnibus 
spending bills of varying durations negotiated by a handful of 
leaders--undermining the committee system and depriving 
lawmakers of the deliberation so central to the legislative 
process. Though Congress has made progress, it is still 
struggling to overcome many of those vices.
    This unraveling does have profound consequences. The first 
and most obvious is that without regular budget resolutions, 
Congress has all but abandoned any serious attempt to manage 
fiscal policy. It is true the Budget Control Act of 2011 
established caps on discretionary spending (which have been 
adjusted upward since then), and applied the automatic 
enforcement regime of sequestration. At the same time, however, 
it did nothing to rein in direct spending, the greatest threat 
to the government's fiscal stability. None of the other 
manufactured procedures employed since then has accomplished 
much along these lines either.
    Equally troubling is the effect on Congress's ability to 
govern. The failure in budgeting is the most visible and 
regular evidence of Congress's decline as a governing 
institution: ``The importance of conflicts over the size and 
distribution of the budget--failure to pass a budget on time or 
at all has become a sign of inability to govern--testifies to 
the overriding importance of budgeting. Nowadays, the State of 
the Union and the state of the budget have become essentially 
equivalent.''\21\
---------------------------------------------------------------------------
    \21\Aaron B. Wildavsky and Naomi Caiden, The New Politics of the 
Budgetary Process--Third Edition (New York: Addison-Wesley Educational 
Publishers Inc., 1997).
---------------------------------------------------------------------------
    Thus, the collapse of budgeting hastens the erosion of 
congressional authority. The more Congress tolerates its fiscal 
ineptitude, the more inept it becomes at legislating in 
general.
    Yet as discouraging as these conditions may be, they can be 
corrected. The restoration of congressional budgeting can 
start, and is essential to, the regeneration of Congress as a 
governing institution. This can follow two tracks.
    First, it is imperative that Congress this year pursue, as 
far as possible, the ``regular order'' of budgeting envisioned 
in the Congressional Budget Act. The existing process is far 
from perfect. It is complicated, time-consuming, and often 
frustrating. The estimating conventions underlying budget 
procedures reflect a distinct bias in favor of higher spending 
and larger government.
    Nevertheless, if employed, the process does provide a 
general schedule for spending and tax bills. The budget 
resolution represents an agenda and work plan in legislative 
form unmatched by any other procedure. It gives coherence to 
the legislature's many fiscal measures that did not exist 
before the Congressional Budget Act was adopted. With the 
creation of the budget resolution, Congress's budget became the 
working blueprint for fiscal policy, embracing lawmakers' 
consensus vision of governing.
    Returning to the regular order also offers lawmakers an 
opportunity to learn for themselves, directly, whether the 
process truly is ``broken,'' and if so by how much. ``I could 
easily argue that the budget process isn't broken at all,'' 
remarked former House Budget Committee Chairman Jim Nussle at a 
September 2011 committee hearing on process reform. ``[T]oday 
the budget process is not even being used or at best is simply 
being ignored.''\22\
---------------------------------------------------------------------------
    \22\Jim Nussle, ``Perspectives on Budget Process Reform,'' 
testimony to the Committee on the Budget, U.S. House of 
Representatives, 22 September 2011.
---------------------------------------------------------------------------
    Recently, various Members and experts in the policy 
community have offered a range of proposals built on a kind of 
problem-solving model. That is, proponents identify a specific 
weakness in the process--say, the difficulty Congress has in 
passing annual spending bills on time--and then offer an 
ostensible solution, such as a 2-year budget and appropriations 
cycle. Some argue that the President should be more involved in 
budget development at the beginning of the process, as a 
possible means of heading off crisis-style confrontations late 
in the year.
    Many of these proposals focus on practical matters--how to 
make budget procedures more efficient and workable, or how to 
enhance enforcement of budget levels. All this is perfectly 
reasonable. A budget process, no matter how skillfully 
designed, is pointless if lawmakers cannot or will not use it, 
or if it fails to achieve real fiscal control.
    Nevertheless, the focus on these piecemeal changes may slow 
the momentum toward the kind of broad rewrite of the process 
that is necessary. The process designed in 1974 was complicated 
to begin with; it merely added new procedures onto existing 
spending and tax practices. Since then, Congress has enacted 
additional layers of complexity, such as the Balanced Budget 
and Emergency Deficit Control Act of 1985, the Budget 
Enforcement Act of 1990, and the Statutory Pay-As-You-Go Act of 
2010, among others. Given all this, it may be time to dismantle 
the entire process and build a new one. The lessons of the past 
four decades of congressional budgeting will certainly inform 
that development. Still, in thinking about a new process, 
lawmakers should step back and ask a threshold question: What 
is the congressional budget process for?
    The obvious first answer is fiscal control. That, however, 
is part of a more fundamental act: the act of governing. 
Because budgeting truly is governing, the budget process should 
be seen as a principal means of exercising constitutional 
government.
    The Constitution does not prescribe how big government 
should be, but it does establish a framework for limiting 
government. One of the best ways to determine that limit is to 
limit spending--one of the best measures of the size and scope 
of government.
    The budget also is Congress's main instrument for 
policymaking, the legislature's essential authority. As Madison 
wrote: ``This power of the purse may, in fact, be regarded as 
the most complete and effectual weapon with which any 
constitution can arm the immediate representatives of the 
people, for obtaining a redress of every grievance, and for 
carrying into effect every just and salutary measure.''\23\ Any 
new budget process should enhance Congress's policymaking role.
---------------------------------------------------------------------------
    \23\The Federalist, No. 58.
---------------------------------------------------------------------------
    The process also must reinforce the balance of powers, one 
of the most critical protections of liberty. For nearly a half 
century after enactment of the 1921 Budget and Accounting Act--
which attempted to straddle the separation of powers by 
establishing an executive-centered budget process modeled after 
Great Britain's--the presidency grew increasingly powerful. 
Starting in the 1950s, presidents began deliberately tying 
their budgets together with their legislative programs, 
increasing their ability to set the legislative agenda, and 
helping sustain what Schlesinger called ``the imperial 
presidency.''\24\ The 1974 Congressional Budget Act was, in 
part, an attempt to restore the legislature's agenda-setting 
role. The new budget process should advance that effort.
---------------------------------------------------------------------------
    \24\Arthur M. Schlesinger Jr., The Imperial Presidency, (New York: 
Houghton Mifflin Company, 2004).
---------------------------------------------------------------------------
    Budgeting also should be an instrument for enhancing 
congressional oversight. There is no better way to get the 
attention of executive agencies than by controlling their 
funding. The budget process should encourage appropriations 
subcommittees and authorizing committees to use the tool of the 
budget aggressively, and to control the ever-expanding 
administrative state.
    Finally, just as the restoration of sound budgeting for how 
the Federal Government spends is critical to the promotion of 
economic growth debt-reduction, federalism, and ordered 
liberty, so too is the introduction of budgeting for how the 
Federal Government directs others to spend: regulatory 
budgeting.
    When regulation is needed, it can be done in more cost-
effective ways. Before it is imposed, Congress can budget for 
how much new regulation, if any, can sustainably be imposed on 
America's economy year by year. The undue brake on economic 
growth that Federal regulation sets must be controlled. It 
makes eminent sense to do that using the kinds of budgeting 
tools Congress applies to put the brakes on runaway Federal 
spending. To date, Congress has not adopted regulatory 
budgeting tools to manage the Federal regulatory footprint in 
the way it manages Federal spending. Neither has it imposed 
robust statutory controls against Federal regulators' abilities 
to burden America's workers and economy with excessively 
expensive and insufficiently effective Federal regulations. The 
time has come to do both.

                               Conclusion

    As described at the outset, this budget resolution 
expresses a vision; its contours are detailed throughout the 
text of this report. It is also an instrument for realizing 
that vision. Its allocations of spending authority implement 
the budget's priorities; its fiscal path--achieving balance 
within 10 years--restores the sound fiscal norm that long kept 
spending, and the size of government itself, in check. It is an 
instrument for true fiscal sustainability, and for maintaining 
America's unique and exceptional brand of constitutional 
government.

                                                                                 TABLE 1.--FISCAL YEAR 2017 BUDGET RESOLUTION TOTAL SPENDING AND REVENUE
                                                                                                        [In millions of dollars]
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                        Fiscal year                             2017         2018         2019         2020         2021         2022         2023         2024         2025         2026            2017-2021             2017-2026
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                 SUMMARY
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total spending:
  BA......................................................    3,900,967    3,848,121    4,007,366    4,179,555    4,309,637    4,449,397    4,651,534    4,839,943    5,000,532    5,173,555        20,245,646            44,360,606
  OT......................................................    3,882,461    3,849,342    3,988,526    4,163,470    4,301,136    4,445,385    4,621,834    4,791,398    4,947,282    5,136,345        20,184,934            44,127,178
On-budget:
  BA......................................................    3,086,332    2,984,016    3,084,551    3,192,964    3,254,411    3,319,284    3,443,779    3,551,204    3,624,651    3,704,462        15,602,273            33,245,653
  OT......................................................    3,072,428    2,990,509    3,071,424    3,182,999    3,252,237    3,321,899    3,420,907    3,509,889    3,578,931    3,675,084        15,569,597            33,076,306
Off-budget:
  BA......................................................      814,635      864,105      922,815      986,592    1,055,226    1,130,113    1,207,755    1,288,739    1,375,882    1,469,093         4,643,372            11,114,954
  OT......................................................      810,033      858,833      917,101      980,471    1,048,900    1,123,486    1,200,927    1,281,509    1,368,352    1,461,261         4,615,337            11,050,872
Revenues:
  Total...................................................    3,521,497    3,659,353    3,789,990    3,958,001    4,117,566    4,285,579    4,464,033    4,653,472    4,859,831    5,075,638        19,046,407            42,384,960
  On-budget...............................................    2,692,937    2,799,875    2,902,418    3,040,763    3,168,226    3,301,656    3,443,940    3,595,338    3,762,041    3,936,429        14,604,219            32,643,623
  Off-budget..............................................      828,560      859,478      887,572      917,238      949,340      983,923    1,020,093    1,058,134    1,097,790    1,139,209         4,442,188             9,741,337
Recommended Change in Revenues:
  Total...................................................      +10,700      +26,000      +43,000      +41,400      +42,000      +41,900      +43,400      +43,400      +42,200      +41,000          +163,100              +375,000
  On-budget...............................................      +10,700      +26,000      +43,000      +41,400      +42,000      +41,900      +43,400      +43,400      +42,200      +41,000          +163,100              +375,000
  Off-budget..............................................            0            0            0            0            0            0            0            0            0            0                 0                     0
Surplus/Deficit (-):
  Total...................................................     -381,672     -198,531     -207,457     -194,777     -181,008     -141,019     -122,876      -76,487      -26,040       28,731        -1,163,444            -1,501,134
  Macroeconomic Impact of Deficit Reduction Path..........      -20,709       -8,542       -8,921       10,692        2,562       18,787       34,925       61,439       61,411       89,438           -24,917               241,084
  On-budget...............................................     -379,491     -190,634     -169,006     -142,236      -84,011      -20,243       23,033       85,449      183,110      261,345          -965,378              -432,683
  Off-budget..............................................       18,527          645      -29,529      -63,233      -99,560     -139,563     -180,834     -223,375     -270,562     -322,052          -173,149            -1,309,535
Debt Held by the Public (end of year).....................   14,400,000   14,726,000   14,976,000   15,190,000   15,436,000   15,576,000   15,808,000   15,934,000   15,812,000   15,960,000
Debt Subject to Limit (end of year).......................   19,848,354   20,314,389   20,647,523   20,904,600   21,161,285   21,296,902   21,510,772   21,598,523   21,373,459   21,412,056
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               BY FUNCTION
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
National Defense (050):
  BA......................................................      559,254      593,759      607,553      619,761      631,991      644,193      657,101      670,425      683,163      698,114         3,012,318             6,365,314
  OT......................................................      566,461      574,049      592,442      605,138      617,088      634,044      641,635      649,501      667,016      681,216         2,955,179             6,228,591
International Affairs (150):
  BA......................................................       39,780       39,778       39,777       38,852       38,726       39,784       40,805       41,694       42,622       43,596           196,913               405,413
  OT......................................................       43,705       40,260       39,273       38,830       38,404       38,893       39,506       40,102       40,735       41,473           200,471               401,179
General Science, Space and Technology (250):
  BA......................................................       30,215       30,855       31,500       32,174       32,879       33,585       34,326       35,070       35,845       36,658           157,623               333,107
  OT......................................................       30,451       30,654       31,174       31,732       32,297       32,957       33,678       34,390       35,148       35,933           156,308               328,414
Energy (270):
  BA......................................................       -2,914        1,601        1,675        1,683        1,747        1,816        1,888        1,959        2,029         -189             3,792                11,295
  OT......................................................        1,442        1,119        1,239        1,155        1,164        1,186        1,218        1,243        1,263         -927             6,119                10,102
Natural Resources & Environment (300):
  BA......................................................       38,641       39,185       39,720       40,862       40,712       41,518       42,878       43,874       44,845       44,026           199,120               416,261
  OT......................................................       41,170       41,109       40,846       42,022       41,151       41,802       43,057       43,489       44,369       43,059           206,298               422,074
Agriculture (350):
  BA......................................................       23,809       23,344       21,067       20,012       19,674       19,600       19,934       19,961       20,283       20,724           107,906               208,408
  OT......................................................       24,912       22,883       20,267       19,399       19,097       19,021       19,502       19,463       19,760       20,195           106,558               204,499
Commerce & Housing Credit (370):
  On-budget:
    BA....................................................       -3,096       -4,977       -7,162       -9,990      -11,207      -11,154      -11,122      -11,361      -10,905      -11,363           -36,432               -92,337
    OT....................................................      -17,777      -22,531      -21,735      -23,337      -25,448      -26,187      -28,281      -29,993      -30,126      -30,184          -110,828              -255,599
  Off-budget:
    BA....................................................          129       -3,473       -3,662       -4,024       -4,392       -4,621       -4,850       -5,087       -5,335       -5,701           -15,422               -41,016
    OT....................................................          205       -3,444       -3,647       -4,014       -4,387       -4,617       -4,845       -5,083       -5,330       -5,696           -15,287               -40,858
Transportation (400):
  BA......................................................       87,879       89,099       90,727       84,831       64,777       65,727       66,762       67,794       68,887       70,000           417,313               756,483
  OT......................................................       90,628       89,793       91,114       92,137       86,962       77,691       73,991       73,041       72,534       72,380           450,634               820,271
Community & Regional Development (450):
  BA......................................................        7,561        6,381        5,721        5,749        5,815        6,021        6,250        6,683        8,183        8,374            31,227                66,738
  OT......................................................       20,693       17,774       15,678       13,538       11,435        8,929        8,113        6,908        8,278        8,442            79,118               119,788
Education,Training,Employment,and Social Services (500):
  BA......................................................       78,795       84,083       85,451       86,862       88,102       88,818       93,490       94,414       95,476       96,049           423,293               891,540
  OT......................................................       91,997       85,833       86,078       87,440       88,757       89,802       92,500       95,172       96,493       97,506           440,105               911,578
Health (550):
  BA......................................................      465,184      366,670      369,978      381,404      390,584      398,225      407,107      416,534      426,598      454,051         1,973,820             4,076,335
  OT......................................................      458,633      375,603      370,695      380,274      388,437      395,694      404,121      413,211      422,901      449,930         1,973,642             4,059,499
Medicare (570):
  BA......................................................      590,086      583,750      643,371      684,911      731,321      817,737      834,731      839,165      914,301      973,544         3,233,439             7,612,917
  OT......................................................      590,068      583,690      643,267      684,816      731,237      817,648      834,638      839,021      914,164      973,401         3,233,078             7,611,950
Income Security (600):
  BA......................................................      497,523      471,709      480,783      491,841      479,718      488,273      497,873      507,892      518,397      529,675         2,421,574             4,963,684
  OT......................................................      491,960      461,357      473,392      483,961      472,117      486,470      491,557      495,442      507,575      525,323         2,382,787             4,889,154
Social Security (650):
  On-budget:
    BA....................................................       37,199       40,124       43,373       46,627       50,035       53,677       57,540       61,645       66,076       70,376           217,358               526,672
    OT....................................................       37,227       40,141       43,373       46,627       50,035       53,677       57,540       61,645       66,076       70,376           217,403               526,717
  Off-budget:
    BA....................................................      918,632      972,586    1,033,289    1,098,345    1,167,189    1,239,765    1,314,911    1,393,028    1,475,537    1,562,058         5,190,041            12,175,340
    OT....................................................      913,954      967,285    1,027,560    1,092,214    1,160,858    1,233,134    1,308,078    1,385,794    1,468,002    1,554,221         5,161,871            12,111,100
Veterans Benefits and Services (700):
  BA......................................................      174,766      173,539      187,777      194,202      200,763      217,151      214,690      211,449      229,055      236,447           931,047             2,039,839
  OT......................................................      182,047      174,275      187,312      193,407      199,856      216,047      213,505      210,297      227,790      235,210           936,897             2,039,746
Administration of Justice (750):
  BA......................................................       64,515       59,085       60,630       62,172       63,250       64,866       66,560       68,275       70,357       73,432           309,652               653,142
  OT......................................................       58,672       59,739       62,389       64,685       64,691       65,051       66,555       68,059       69,986       73,381           310,176               653,208
General Government (800):
  BA......................................................       23,367       22,293       22,087       21,924       21,758       23,680       23,932       24,183       24,426       24,620           111,429               232,269
  OT......................................................       22,749       21,650       21,516       21,629       21,565       23,221       23,647       23,924       24,177       24,391           109,109               228,469
Net Interest (900):
  On-budget:
    BA....................................................      393,678      446,615      499,334      540,201      569,849      594,309      620,683      638,813      648,404      655,665         2,449,676             5,607,550
    OT....................................................      393,678      446,615      499,334      540,201      569,849      594,309      620,683      638,813      648,404      655,665         2,449,676             5,607,550
  Off-Budget:
    BA....................................................      -87,204      -87,518      -88,743      -89,073      -88,311      -85,152      -81,796      -78,044      -72,494      -64,748          -440,850              -823,084
    OT....................................................      -87,204      -87,518      -88,743      -89,073      -88,311      -85,152      -81,796      -78,044      -72,494      -64,748          -440,850              -823,084
Allowances (920):
  BA......................................................      -39,520      -52,890      -54,216      -57,006      -59,733      -61,661      -63,814      -65,767      -67,933      -65,057          -263,365              -587,597
  OT......................................................      -20,821      -38,653      -48,261      -52,626      -56,411      -59,168      -61,148      -63,141      -65,208      -64,663          -216,772              -530,100
Government-Wide Savings (930):
  BA......................................................       34,478       32,662      -29,983      -37,042      -45,175     -115,840      -68,634      -13,285      -81,290     -131,037           -45,059              -455,145
  OT......................................................       14,610       46,700      -22,263      -29,889      -37,802     -107,032      -59,149       -3,260      -74,838     -113,780           -28,644              -386,702
Undistributed Offsetting Receipts (950):
  On-budget:
    BA....................................................      -88,561      -89,314      -81,278      -83,732      -87,842      -91,041      -99,201     -108,213     -114,167     -123,243          -430,727              -966,592
    OT....................................................      -88,561      -89,314      -81,278      -83,732      -87,842      -91,041      -99,201     -108,213     -117,567     -123,243          -430,727              -969,992
  Off-budget:
    BA....................................................      -16,922      -17,490      -18,069      -18,656      -19,260      -19,879      -20,510      -21,158      -21,826      -22,516           -90,397              -196,286
    OT....................................................      -16,922      -17,490      -18,069      -18,656      -19,260      -19,879      -20,510      -21,158      -21,826      -22,516           -90,397              -196,286
                                Overseas Contingency Operations/Global War on Terrorism (970):
  BA......................................................       73,693       26,666       26,666       26,666       26,666            0            0            0            0            0           180,357               180,357
  OT......................................................       38,485       27,762       25,573       25,592       25,598        8,884        3,240          776            0            0           143,010               155,910
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Notes:
 
1. Only on-budget amounts for fiscal years 2017-2026 are entered into the budget resolution legislative text. Off-budget amounts are shown for display purposes only.
2. The Office of Management and Budget and the Congressional Budget Office do not separately track outlays for Overseas Contingency Operations/Global War on Terrorism (GWOT) once funds have been appropriated. The budget, therefore,
  shows in function 970 OCO/GWOT outlays that result from new budget authority occurring in fiscal years 2017-2026 only. Outlays resulting from OCO/GWOT activity prior to fiscal year 2016 are included in budget functions 050 and
  150.



                                                                                   TABLE 2.--FISCAL YEAR 2017 BUDGET RESOLUTION DISCRETIONARY SPENDING
                                                                                                        [In millions of dollars]
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                        Fiscal year                             2017         2018         2019         2020         2021         2022         2023         2024         2025         2026            2017-2021             2017-2026
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                 SUMMARY
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total spending:
  BA......................................................    1,143,292    1,084,135    1,097,737    1,109,745    1,121,753    1,107,096    1,119,848    1,132,970    1,145,469    1,159,356         5,556,662            11,221,401
  OT......................................................    1,202,910    1,165,964    1,162,879    1,169,491    1,171,186    1,157,678    1,154,217    1,157,300    1,172,936    1,184,229         5,872,430            11,698,790
Base Defense (050):
  BA......................................................      551,068      585,469      599,071      611,079      623,087      635,096      647,848      660,970      673,469      687,356         2,969,774             6,274,513
  OT......................................................      557,743      565,121      583,345      596,062      607,911      624,797      632,317      640,020      657,296      670,488         2,910,183             6,135,101
Base Non Defense:
  BA......................................................      518,531      472,000      472,000      472,000      472,000      472,000      472,000      472,000      472,000      472,000         2,406,531             4,766,531
  OT......................................................      606,682      573,081      553,961      547,836      537,677      523,997      518,660      516,505      515,640      513,740         2,819,237             5,407,778
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               BY FUNCTION
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
National Defense (050):
  BA......................................................      551,068      585,469      599,071      611,079      623,087      635,096      647,848      660,970      673,469      687,356         2,969,774             6,274,513
  OT......................................................      557,743      565,121      583,345      596,062      607,911      624,797      632,317      640,020      657,296      670,488         2,910,183             6,135,101
International Affairs (150):
  BA......................................................       35,762       36,732       37,449       38,228       39,058       39,868       40,873       41,747       42,664       43,627           187,229               396,007
  OT......................................................       45,320       41,843       40,767       40,075       39,666       39,927       40,561       41,175       41,830       42,592           207,670               413,754
General Science, Space and Technology (250):
  BA......................................................       30,108       30,755       31,400       32,074       32,779       33,485       34,226       34,970       35,745       36,558           157,116               332,100
  OT......................................................       30,345       30,552       31,074       31,632       32,197       32,857       33,578       34,290       35,048       35,833           155,800               327,406
Energy (270):
  BA......................................................        2,739        2,816        2,880        2,947        3,017        3,086        3,159        3,231        3,309        3,388            14,399                30,572
  OT......................................................        3,101        2,922        2,913        2,972        3,029        3,086        3,149        3,220        3,293        3,370            14,937                31,055
Natural Resources & Environment (300):
  BA......................................................       36,118       37,078       38,081       39,108       40,189       41,263       42,390       43,555       44,748       46,001           190,574               408,531
  OT......................................................       38,039       38,304       38,796       39,601       40,445       41,459       42,508       43,068       44,195       44,969           195,185               411,384
Agriculture (350):
  BA......................................................        6,347        6,514        6,688        6,868        7,052        7,237        7,437        7,635        7,846        8,060            33,469                71,684
  OT......................................................        6,190        6,391        6,597        6,773        6,955        7,138        7,333        7,530        7,737        7,948            32,906                70,592
Commerce & Housing Credit (370):
  On-budget:
    BA....................................................      -12,590      -13,788      -14,999      -16,066      -16,795      -17,066      -17,120      -17,160      -17,196      -17,174           -74,238              -159,954
    OT....................................................      -11,971      -13,495      -15,017      -16,144      -16,865      -17,150      -17,214      -17,257      -17,300      -17,281           -73,492              -159,694
  Off-budget:
    BA....................................................          274          283          294          304          315          326          337          350          361          374             1,470                 3,218
    OT....................................................          273          283          294          304          315          325          337          349          360          373             1,469                 3,213
Transportation (400):
  BA......................................................       29,396       30,093       30,794       31,516       32,277       33,030       33,849       34,675       35,543       34,810           154,076               325,983
  OT......................................................       89,728       89,373       91,020       92,410       87,683       78,818       75,529       74,999       74,918       73,571           450,214               828,049
Community & Regional Development (450):
  BA......................................................        8,158        7,453        6,850        6,227        6,395        6,567        6,741        6,923        7,112        7,308            35,083                69,734
  OT......................................................       20,037       17,513       15,371       12,710       10,646        7,916        6,932        6,853        7,003        7,165            76,277               112,146
Education, Training, Employment, and Social Services
 (500):
  BA......................................................       86,622       95,111       97,058       98,925      100,599      102,355      104,088      105,789      107,587      108,872           478,315             1,007,006
  OT......................................................       93,668       93,784       95,483       97,323       99,033      100,751      102,457      104,146      105,870      107,471           479,291               999,986
Health (550):
  BA......................................................       59,727       61,176       61,837       62,557       63,146       63,765       64,369       64,924       65,270       65,794           308,443               632,565
  OT......................................................       59,606       60,560       60,583       61,267       61,640       62,127       62,600       63,086       63,365       63,822           303,656               618,656
Medicare (570):
  BA......................................................        6,549        6,898        7,263        7,651        8,055        8,482        8,920        9,376        9,846       10,345            36,416                83,385
  OT......................................................        6,581        6,876        7,202        7,587        7,987        8,411        8,847        9,300        9,769       10,262            36,233                82,822
Income Security (600):
  BA......................................................       65,510       66,441       67,571       68,812       69,753       71,233       72,765       74,338       75,929       77,577           338,087               709,929
  OT......................................................       66,595       67,149       67,843       68,675       69,453       70,653       71,929       73,446       75,000       76,613           339,715               707,356
 
Social Security (650):
  On-budget:
    BA....................................................            0            0            0            0            0            0            0            0            0            0                 0                     0
    OT....................................................           28           17            0            0            0            0            0            0            0            0                45                    45
  Off-budget:
    BA....................................................        5,362        5,522        5,688        5,862        6,039        6,219        6,406        6,600        6,800        7,009            28,473                61,507
    OT....................................................        5,384        5,521        5,659        5,831        6,008        6,188        6,373        6,566        6,765        6,972            28,403                61,267
Veterans Benefits and Services (700):
  BA......................................................       74,734       76,948       79,236       81,585       84,012       86,483       89,048       91,700       94,450       97,325           396,515               855,521
  OT......................................................       74,697       76,125       78,554       80,702       83,090       85,506       88,008       90,661       93,346       96,211           393,168               846,900
Administration of Justice (750):
  BA......................................................       55,032       56,471       58,195       59,973       61,811       63,671       65,619       67,618       69,703       72,051           291,482               630,144
  OT......................................................       54,916       56,291       57,905       59,624       61,319       63,151       65,090       67,072       69,137       71,129           290,055               625,634
General Government (800):
  BA......................................................       15,733       14,822       14,480       14,261       13,957       15,788       16,010       16,196       16,353       16,492            73,253               154,091
  OT......................................................       15,190       14,355       14,029       14,047       13,832       15,376       15,750       15,981       16,159       16,324            71,453               151,043
Allowances (920):
  BA......................................................      -33,561      -51,173      -52,103      -54,580      -58,171      -59,731      -61,840      -63,748      -65,966      -67,034          -249,588              -567,907
  OT......................................................      -17,687      -37,171      -46,170      -50,454      -54,639      -57,290      -59,315      -61,286      -63,379      -64,903          -206,121              -512,294
Government-Wide Savings (930):
  BA......................................................       46,511        1,849       -6,662      -14,252      -21,489      -34,061      -45,277      -56,719      -68,103      -79,383             5,958              -277,585
  OT......................................................       26,643       15,887        1,058       -7,099      -14,116      -25,253      -35,792      -46,694      -57,477      -68,700            22,373              -211,542
                                Overseas Contingency Operations/Global War on Terrorism (970):
  BA......................................................       73,693       26,666       26,666       26,666       26,666            0            0            0            0            0           180,357               180,357
  OT......................................................       38,485       27,762       25,573       25,592       25,598        8,884        3,240          776            0            0           143,010               155,910
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------


                                                                                     TABLE 3.--FISCAL YEAR 2017 BUDGET RESOLUTION MANDATORY SPENDING
                                                                                                        [In millions of dollars]
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                         Fiscal year                             2017        2018         2019         2020         2021         2022         2023         2024         2025         2026            2017-2021             2017-2026
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                 SUMMARY
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total spending:
  BA........................................................   2,757,675   2,763,986    2,909,629    3,069,810    3,187,884    3,342,301    3,531,686    3,706,973    3,855,063    4,014,199        14,688,984            33,139,205
  OT........................................................   2,679,551   2,683,378    2,825,647    2,993,979    3,129,950    3,287,707    3,467,617    3,634,098    3,774,346    3,952,116        14,312,505            32,428,388
  On-budget:
    BA......................................................   1,948,676   1,905,686    1,992,796    2,089,385    2,139,012    2,218,733    2,330,674    2,425,184    2,486,343    2,552,489        10,075,554            22,088,977
    OT......................................................   1,875,175   1,830,349    1,914,499    2,019,644    2,087,373    2,170,734    2,273,400    2,359,504    2,413,120    2,498,200         9,727,039            21,441,997
  Off-budget:
    BA......................................................     808,999     858,300      916,833      980,426    1,048,872    1,123,568    1,201,012    1,281,789    1,368,721    1,461,710         4,613,429            11,050,229
    OT......................................................     804,376     853,029      911,148      974,336    1,042,577    1,116,973    1,194,217    1,274,594    1,361,227    1,453,916         4,585,465            10,986,392
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               BY FUNCTION
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
National Defense (050):
  BA........................................................       8,186       8,290        8,482        8,682        8,904        9,097        9,253        9,455        9,694       10,758            42,544                90,801
  OT........................................................       8,718       8,928        9,097        9,076        9,177        9,247        9,318        9,481        9,720       10,728            44,996                93,490
International Affairs (150):
  BA........................................................       4,018       3,046        2,328          624         -332          -84          -68          -53          -42          -31             9,684                 9,406
  OT........................................................      -1,615      -1,583       -1,494       -1,245       -1,262       -1,034       -1,055       -1,073       -1,095       -1,119            -7,199               -12,575
General Science, Space and Technology (250):
  BA........................................................         107         100          100          100          100          100          100          100          100          100               507                 1,007
  OT........................................................         106         102          100          100          100          100          100          100          100          100               508                 1,008
Energy (270):
  BA........................................................      -5,653      -1,215       -1,205       -1,264       -1,270       -1,270       -1,271       -1,272       -1,280       -3,577           -10,607               -19,277
  OT........................................................      -1,659      -1,803       -1,674       -1,817       -1,865       -1,900       -1,931       -1,977       -2,030       -4,297            -8,818               -20,953
Natural Resources & Environment (300):
  BA........................................................       2,523       2,107        1,639        1,754          523          255          488          319           97       -1,975             8,546                 7,730
  OT........................................................       3,131       2,805        2,050        2,421          706          343          549          421          174       -1,910            11,113                10,690
Agriculture (350):
  BA........................................................      17,462      16,830       14,379       13,144       12,622       12,363       12,497       12,326       12,437       12,664            74,437               136,724
  OT........................................................      18,722      16,492       13,670       12,626       12,142       11,883       12,169       11,933       12,023       12,247            73,652               133,907
 
Commerce & Housing Credit (370):
  On-budget:
    BA......................................................       9,494       8,811        7,837        6,076        5,588        5,912        5,998        5,799        6,291        5,811            37,806                67,617
    OT......................................................      -5,806      -9,036       -6,718       -7,193       -8,583       -9,037      -11,067      -12,736      -12,826      -12,903           -37,336               -95,905
  Off-budget:
    BA......................................................        -145      -3,756       -3,956       -4,328       -4,707       -4,947       -5,187       -5,437       -5,696       -6,075           -16,892               -44,234
    OT......................................................         -68      -3,727       -3,941       -4,318       -4,702       -4,942       -5,182       -5,432       -5,690       -6,069           -16,756               -44,071
Transportation (400):
  BA........................................................      58,483      59,006       59,933       53,315       32,500       32,697       32,913       33,119       33,344       35,190           263,237               430,500
  OT........................................................         900         420           94         -273         -721       -1,127       -1,538       -1,958       -2,384       -1,191               420                -7,778
Community & Regional Development (450):
  BA........................................................        -597      -1,072       -1,129         -478         -580         -546         -491         -240        1,071        1,066            -3,856                -2,996
  OT........................................................         656         261          307          828          789        1,013        1,181           55        1,275        1,277             2,841                 7,642
Education, Training, Employment, and Social Services (500):
  BA........................................................      -7,827     -11,028      -11,607      -12,063      -12,497      -13,537      -10,598      -11,375      -12,111      -12,823           -55,022              -115,466
  OT........................................................      -1,671      -7,951       -9,405       -9,883      -10,276      -10,949       -9,957       -8,974       -9,377       -9,965           -39,186               -88,408
Health (550):
  BA........................................................     405,457     305,494      308,141      318,847      327,438      334,460      342,738      351,610      361,328      388,257         1,665,377             3,443,770
  OT........................................................     399,027     315,043      310,112      319,007      326,797      333,567      341,521      350,125      359,536      386,108         1,669,986             3,440,843
Medicare (570):
  BA........................................................     583,537     576,852      636,108      677,260      723,266      809,255      825,811      829,789      904,455      963,199         3,197,023             7,529,532
  OT........................................................     583,487     576,814      636,065      677,229      723,250      809,237      825,791      829,721      904,395      963,139         3,196,845             7,529,128
Income Security (600):
  BA........................................................     432,013     405,268      413,212      423,029      409,965      417,040      425,108      433,554      442,468      452,098         2,083,487             4,253,755
  OT........................................................     425,365     394,208      405,549      415,286      402,664      415,817      419,628      421,996      432,575      448,710         2,043,072             4,181,798
Social Security (650):
  On-budget:
    BA......................................................      37,199      40,124       43,373       46,627       50,035       53,677       57,540       61,645       66,076       70,376           217,358               526,672
    OT......................................................      37,199      40,124       43,373       46,627       50,035       53,677       57,540       61,645       66,076       70,376           217,358               526,672
  Off-budget:
    BA......................................................     913,270     967,064    1,027,601    1,092,483    1,161,150    1,233,546    1,308,505    1,386,428    1,468,737    1,555,049         5,161,568            12,113,833
    OT......................................................     908,570     961,764    1,021,901    1,086,383    1,154,850    1,226,946    1,301,705    1,379,228    1,461,237    1,547,249         5,133,468            12,049,833
Veterans Benefits and Services (700):
  BA........................................................     100,032      96,591      108,541      112,617      116,751      130,668      125,642      119,749      134,605      139,122           534,532             1,184,318
  OT........................................................     107,350      98,150      108,758      112,705      116,766      130,541      125,497      119,636      134,444      138,999           543,729             1,192,846
Administration of Justice (750):
  BA........................................................       9,483       2,614        2,435        2,199        1,439        1,195          941          657          654        1,381            18,170                22,998
  OT........................................................       3,756       3,448        4,484        5,061        3,372        1,900        1,465          987          849        2,252            20,121                27,574
General Government (800):
  BA........................................................       7,634       7,471        7,607        7,663        7,801        7,892        7,922        7,987        8,073        8,128            38,176                78,178
  OT........................................................       7,559       7,295        7,487        7,582        7,733        7,845        7,897        7,943        8,018        8,067            37,656                77,426
Net Interest (900):
  On-budget:
    BA......................................................     393,678     446,615      499,334      540,201      569,849      594,309      620,683      638,813      648,404      655,665         2,449,676             5,607,550
    OT......................................................     393,678     446,615      499,334      540,201      569,849      594,309      620,683      638,813      648,404      655,665         2,449,676             5,607,550
  Off-Budget:
    BA......................................................     -87,204     -87,518      -88,743      -89,073      -88,311      -85,152      -81,796      -78,044      -72,494      -64,748          -440,850              -823,084
    OT......................................................     -87,204     -87,518      -88,743      -89,073      -88,311      -85,152      -81,796      -78,044      -72,494      -64,748          -440,850              -823,084
Allowances (920):
  BA........................................................      -5,959      -1,717       -2,113       -2,426       -1,562       -1,930       -1,974       -2,019       -1,967        1,977           -13,777               -19,690
  OT........................................................      -3,134      -1,482       -2,091       -2,172       -1,772       -1,878       -1,833       -1,855       -1,829          240           -10,651               -17,806
Government-Wide Savings (930):
  BA........................................................     -12,033      30,813      -23,321      -22,790      -23,686      -81,779      -23,357       43,434      -13,187      -51,654           -51,017              -177,560
  OT........................................................     -12,033      30,813      -23,321      -22,790      -23,686      -81,779      -23,357       43,434      -17,361      -45,080           -51,017              -175,160
Undistributed Offsetting Receipts (950):
  On-budget:
    BA......................................................     -88,561     -89,314      -81,278      -83,732      -87,842      -91,041      -99,201     -108,213     -114,167     -123,243          -430,727              -966,592
    OT......................................................     -88,561     -89,314      -81,278      -83,732      -87,842      -91,041      -99,201     -108,213     -117,567     -123,243          -430,727              -969,992
  Off-budget:
    BA......................................................     -16,922     -17,490      -18,069      -18,656      -19,260      -19,879      -20,510      -21,158      -21,826      -22,516           -90,397              -196,286
    OT......................................................     -16,922     -17,490      -18,069      -18,656      -19,260      -19,879      -20,510      -21,158      -21,826      -22,516           -90,397              -196,286
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------


                          COMPARISON WITH THE
                           PRESIDENT'S BUDGET

                              ----------                              

    To this day, more than four decades since the adoption of 
the Congressional Budget Act, some budget ``experts'' still 
describe the congressional budget as a ``response'' to the 
President's. That is true only in terms of timing. Merely as a 
carryover from a 1921 law, the 1974 Budget Act scheduled the 
President's submission before the congressional budget. The 
effect, however, has been more significant than most might 
think--largely because the sequence is taken for granted. Since 
the executive budget process was installed nearly a century 
ago, and increasingly since the 1950s, presidents have used 
this instrument not mainly as an accounting tool--showing the 
fiscal effects of executing existing policies--but as an 
expression of their own policy agenda. Over the course of 50 
years, the President's budget became an ever-more effective 
tool empowering one person to determine the Nation's 
direction--contrary to what the Constitution intended. It is no 
mere coincidence that the practice corresponded with the rise 
of what political historian Arthur M. Schlesinger termed ``the 
imperial presidency.''
    The Obama budgets provide an especially troubling example. 
This President has been notorious in exceeding his authority. 
He has made, for example, numerous legislative changes in his 
own health care program after he had signed it--clearly 
imposing on a prerogative reserved to the Congress. Reflecting 
his own cavalier attitude about fiscal policy, he has submitted 
his budgets late more often than not--including the latest one.
    Worse are the irresponsible policies his budgets continue 
to advance. His latest proposal, for fiscal year 2017, once 
again does not even try to balance. While the House budget 
reduces debt held by the public as a share of the economy, the 
President's budget maintains debt at its historically high 
levels. His budget makes no attempt to confront the 
government's massive fiscal challenges, or to save critical 
programs such as Medicare and Social Security. It is a status 
quo budget that does nothing to advance the conversation about 
maintaining a strong national defense, promoting a more robust 
economy, and ensuring health and retirement security. The 
President's budget expresses the progressive policies that have 
led to a swollen and out-of-control government, and the 
stagnation of economic growth and standards of living.
    For these reasons, the President's budget was not even 
worth the time for a hearing on it--at which the administration 
would presumably attempt to defend the indefensible. Yet to 
further detail its failures, a comparison between the House 
budget and the President's is informative. Here are some 
examples.

     LAs a foundation for the congressional budget, the 
Budget Committee uses the modest economic projections of the 
Congressional Budget Office [CBO], which expects real gross 
domestic product [GDP] to grow by an average of 2.1 percent per 
year over the next decade. For his budget, the President 
employs the more optimistic forecasts of his own economists, 
who expect average annual growth of 2.3 percent per year over 
the next decade. Both figures are disturbingly low, compared 
with the roughly 3-percent average annual growth rate of the 
past 50 years. In addition, the seemingly small difference 
between the two estimates has significant budgetary effects. 
Following a CBO ``rule of thumb,'' that two-tenths percentage 
point difference would give the President roughly $650 billion 
in lower deficits than the Budget Committee faced in writing 
this package. Yet he manages to increase deficits after he 
leaves office.

     LWhile the Committee has developed a plan to 
balance the budget within 10 years, the President's budget 
never balances. It never tries to. In fact, deficits under the 
President's budget begin to increase in 2021, and approach $800 
billion in 2026. This is the product of the President's casual 
attitude that deficits in the range of 3 percent of GDP are 
acceptable. This is not a fiscal policy; it is an abandonment 
of fiscal norms that leads to chronic and growing deficits and 
debt. Only by restoring the goal of balancing the budget in 
peacetime can Congress establish fiscal sustainability. No 
other standard has substituted for this simple conviction. As a 
result, fiscal policy has been adrift.

    FIGURE 5
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


      The House budget resolution reduces spending by 
$6.5 trillion over 10 years compared with current policy 
projections. The President, even in the face of historically 
high levels of debt, increases spending by $2.5 trillion over 
the decade.

      The House budget embraces tax reform that will 
promote growth and encourage work, saving, and investment, and 
it contains no tax increases. The President, by contrast, 
raises taxes by $3.4 trillion over the next decade--and still 
cannot reduce deficits.

      The House budget reduces publicly held debt from 
74 percent of GDP to 57 percent over the decade. The 
President's budget makes no attempt to reduce debt, keeping it 
constant at 74 percent of GDP over the next 10 years. That is 
the highest level of debt since just after World War II. A 
significant difference, however, is that the post-war debt 
resulted from large but temporary surges of spending to save 
the free world. Today's deficits and debt are the product of 
permanent automatic spending programs.

    FIGURE 6
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


      The House budget restores the time-tested 
principle of federalism, encouraging the initiative of State 
and local governments in addressing more of the Nation's 
domestic policy concerns. The President's budget merely repeats 
the failed and crippling notion that Washington knows best, 
directing how individuals should live their lives, how State 
and local governments should govern, and how businesses should 
serve their customers.

      The House budget advances patient-centered, 
personalized health care and health coverage--and this 
principle applies both to commercial insurance and major 
government-sponsored programs such as Medicare. The Obama 
budget predictably clings to the conceit of centralized, 
Washington-based, one-size-fits-all health care--even as its 
failure becomes ever clearer.

      The House budget saves $487 billion over 10 years 
by strengthening Medicare and establishing a patient-centered 
option in Medicare. It achieves another $3 trillion in health 
savings, by repealing Obamacare and allowing greater State 
flexibility in Medicaid. The budget saves $1.5 trillion in 
other automatic spending. The President, by contrast, traps 
increasing numbers of lower income people in Medicaid, where 
many sick individuals cannot get appointments, new 
beneficiaries cannot find doctors, and Medicaid cards are mere 
pieces of plastic. His health care law will increase Federal 
spending for Medicaid and the State Children's Health Insurance 
Program by $1 trillion over the next 10 years, with no 
substantial reforms to improve the program. Meanwhile, he 
imposes $501 billion in new Medicare cuts to medical 
providers--part of the cuts needed to finance Obamacare, at 
least on paper--with no meaningful restructuring of a program 
going bankrupt.

      The House budget provides more resources for 
national security than the President does in fiscal year 2017 
and over 10 years. The President claims illusory defense 
spending increases with no plan to pay for adjusting statutory 
defense spending caps upward.

    The President's budget is a typically unserious set of 
proposals that should nevertheless be taken seriously. It 
expresses and leads a progressive impulse heavy on spending, 
regulation, and debt--one that ultimately views the Nation as 
the government's servant, not the other way around. This 
comparison reflects some of the dangerous and self-defeating 
flaws in that vision.

                               HOUSE BUDGET RESOLUTION VS. THE PRESIDENT'S BUDGET
----------------------------------------------------------------------------------------------------------------
               House Budget Resolution                                    President's Budget
----------------------------------------------------------------------------------------------------------------
Uses modest economic growth projections of the        Relies on more optimistic economic assumptions of White
 Congressional Budget Office.                          House forecasters.
----------------------------------------------------------------------------------------------------------------
Achieves balance within 10 years.                     Never balances; deficits climb starting in 2021 and
                                                       approach $800 billion by the end of the decade.
----------------------------------------------------------------------------------------------------------------
Reduces spending by $6.5 trillion over 10 years.      Spends $2.5 trillion more than the House budget over 10
                                                       years.
----------------------------------------------------------------------------------------------------------------
Calls for growth-promoting tax reform that reduces    Increases taxes by $3.4 trillion over 10 years.
 rates and broadens the tax base. Contains no tax
 increases.
----------------------------------------------------------------------------------------------------------------
Reduces debt held by the public from the current 74   Keeps publically held debt at about three-fourths of
 percent of gross domestic product [GDP] to 57         economic output--the highest level since just after World
 percent within 10 years.                              War II.
----------------------------------------------------------------------------------------------------------------
Restores the principle of federalism, encouraging     Advances the failed notion that Washington knows best,
 the initiative of State and local governments in      dictating how individuals should live, how State and
 addressing more of the Nation's domestic policy       local governments should serve constituents, and how
 concerns.                                             businesses should serve their customers.
----------------------------------------------------------------------------------------------------------------
Promotes patient-centered, personalized health care   Maintains the conceit of centralized, Washington-based,
 both in the private sector and in Medicare.           one-size-fits-all health care.
----------------------------------------------------------------------------------------------------------------
Saves $487 billion over 10 years by strengthening     Increases Federal Medicaid and State Children's Health
 Medicare and establishing a patient-centered          Insurance Program spending by more than $1 trillion over
 Medicare option. Achieves another $3.0 trillion in    10 years due to the President's health care law, with no
 health savings, partly by repealing Obamacare and     substantial reforms to improve the program. Imposes $501
 allowing greater State flexibility in Medicaid.       billion (gross) in new Medicare cuts to hospitals and
 Saves another $1.5 trillion in other direct           skilled nursing facilities, while ignoring the
 spending.                                             fundamental structural flaws in the program.
----------------------------------------------------------------------------------------------------------------
Spends more than the President for national defense   Claims illusory defense spending increases with no plan to
 in fiscal year 2017 and over 10 years.                pay for raising statutory defense spending caps.
----------------------------------------------------------------------------------------------------------------


                                                 TABLE 4.--SUMMARY OF FISCAL YEAR 2017 BUDGET RESOLUTION
                                                                [As a percentage of GDP]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                Average
                                             2017      2018      2019      2020      2021      2022      2023      2024      2025      2026    2017-2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
Deficit(+)/Surplus(-):
  Committee Recommendation...............     +2.0%     +1.0%     +1.0%     +0.9%     +0.8%     +0.6%     +0.5%     +0.3%     +0.1%     -0.1%      +0.7%
  CBO....................................     +2.9%     +2.8%     +3.5%     +3.7%     +4.0%     +4.4%     +4.4%     +4.3%     +4.6%     +4.9%      +4.0%
  President's Budget.....................     +2.6%     +2.3%     +2.6%     +2.4%     +2.4%     +2.8%     +2.7%     +2.5%     +2.7%     +2.8%      +2.6%
Debt Held by the Public:
  Committee Recommendation...............     75.0%     74.0%     72.0%     70.0%     68.0%     66.0%     64.0%     62.0%     59.0%     57.0%       n.a.
  CBO....................................     75.7%     75.7%     76.7%     77.8%     78.8%     80.3%     81.7%     82.8%     84.3%     86.1%       n.a.
  President's Budget.....................     76.5%     76.1%     76.1%     75.8%     75.5%     75.5%     75.4%     75.2%     75.2%     75.3%       n.a.
Outlays:
  Committee Recommendation...............     20.2%     19.3%     19.2%     19.2%     18.9%     18.8%     18.7%     18.6%     18.5%     18.3%      19.0%
  CBO....................................     21.1%     20.9%     21.5%     21.8%     22.0%     22.5%     22.4%     22.3%     22.8%     23.1%      22.0%
  President's Budget.....................     21.5%     21.6%     22.1%     22.3%     22.4%     22.7%     22.6%     22.4%     22.7%     22.8%      21.6%
Revenues:
  Committee Recommendation...............     18.3%     18.4%     18.2%     18.2%     18.1%     18.2%     18.1%     18.1%     18.1%     18.1%      18.2%
  CBO....................................     18.2%     18.1%     17.9%     18.0%     18.0%     18.0%     18.0%     18.1%     18.1%     18.2%      18.1%
  President's Budget.....................     18.9%     19.4%     19.5%     19.8%     20.0%     19.9%     19.9%     19.9%     20.0%     20.0%      19.7%
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                                              TABLE 5.--FISCAL YEAR 2017 HOUSE BUDGET RESOLUTION VS. THE PRESIDENT'S BUDGET
                                                                                                        [In millions of dollars]
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                   Fiscal year                        2017          2018          2019          2020          2021          2022          2023          2024          2025          2026             2017-2021             2017-2026
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                 SUMMARY
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total spending:
  BA............................................     3,900,967     3,848,121     4,007,366     4,179,555     4,309,637     4,449,397     4,651,534     4,839,943     5,000,532     5,173,555        20,245,646            44,360,606
  OT............................................     3,882,461     3,849,342     3,988,526     4,163,470     4,301,136     4,445,385     4,621,834     4,791,398     4,947,282     5,136,345        20,184,934            44,127,178
On-budget:
  BA............................................     3,086,332     2,984,016     3,084,551     3,192,964     3,254,411     3,319,284     3,443,779     3,551,204     3,624,651     3,704,462        15,602,273            33,245,653
  OT............................................     3,072,428     2,990,509     3,071,424     3,182,999     3,252,237     3,321,899     3,420,907     3,509,889     3,578,931     3,675,084        15,569,597            33,076,306
Off-budget:
  BA............................................       814,635       864,105       922,815       986,592     1,055,226     1,130,113     1,207,755     1,288,739     1,375,882     1,469,093         4,643,372            11,114,954
  OT............................................       810,033       858,833       917,101       980,471     1,048,900     1,123,486     1,200,927     1,281,509     1,368,352     1,461,261         4,615,337            11,050,872
Revenues:
  Total.........................................     3,521,497     3,659,353     3,789,990     3,958,001     4,117,566     4,285,579     4,464,033     4,653,472     4,859,831     5,075,638        19,046,407            42,384,960
  On-budget.....................................     2,692,937     2,799,875     2,902,418     3,040,763     3,168,226     3,301,656     3,443,940     3,595,338     3,762,041     3,936,429        14,604,219            32,643,623
  Off-budget....................................       828,560       859,478       887,572       917,238       949,340       983,923     1,020,093     1,058,134     1,097,790     1,139,209         4,442,188             9,741,337
Surplus/Deficit(-):
  Total.........................................      -381,672      -198,531      -207,457      -194,777      -181,008      -141,019      -122,876       -76,487       -26,040        28,731        -1,163,444            -1,501,134
    Macroeconomic Fiscal Impact.................       -20,709        -8,542        -8,921        10,692         2,562        18,787        34,925        61,439        61,411        89,438           -24,917               241,084
    On-budget...................................      -379,491      -190,634      -169,006      -142,236       -84,011       -20,243        23,033        85,449       183,110       261,345          -965,378              -432,683
    Off-budget..................................        18,527           645       -29,529       -63,233       -99,560      -139,563      -180,834      -223,375      -270,562      -322,052          -173,149            -1,309,535
Debt Held by the Public (end of year)...........    14,400,000    14,726,000    14,976,000    15,190,000    15,436,000    15,576,000    15,808,000    15,934,000    15,812,000    15,960,000              n.a.                  n.a.
Debt Subject to Limit (end of year).............    19,848,354    20,314,389    20,647,523    20,904,600    21,161,285    21,296,902    21,510,772    21,598,523    21,373,459    21,412,056              n.a.                  n.a.
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 PRESIDENT'S FY2017 BUDGET AS SUBMITTED
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total Spending:
  BA............................................     4,234,877     4,374,189     4,674,166     4,933,090     5,178,555     5,459,300     5,691,832     5,911,899     6,225,061     6,529,224        23,394,877            53,212,193
  OT............................................     4,147,224     4,352,222     4,644,309     4,879,818     5,124,248     5,415,425     5,625,782     5,826,653     6,151,854     6,462,436        23,147,821            52,629,971
On-budget:
  BA............................................     3,403,270     3,484,403     3,725,153     3,917,538     4,099,023     4,308,739     4,463,956     4,604,220     4,834,174     5,052,751        18,629,387            41,893,227
  OT............................................     3,318,636     3,467,898     3,702,365     3,871,656     4,052,084     4,272,745     4,406,330     4,527,678     4,769,921     4,995,241        18,412,639            41,384,554
Off-budget:
  BA............................................       831,607       889,786       949,013     1,015,552     1,079,532     1,150,561     1,227,876     1,307,679     1,390,887     1,476,473         4,765,490            11,318,966
  OT............................................       828,588       884,324       941,944     1,008,162     1,072,164     1,142,680     1,219,452     1,298,975     1,381,933     1,467,195         4,735,182            11,245,417
Revenues:
  Total.........................................     3,643,742     3,898,625     4,095,054     4,345,701     4,571,990     4,755,848     4,948,853     5,176,519     5,411,188     5,669,299        20,555,112            46,516,819
  On-budget.....................................     2,816,842     3,035,325     3,196,854     3,413,801     3,591,790     3,728,348     3,876,853     4,053,019     4,237,888     4,436,899        16,054,612            36,387,619
  Off-budget....................................       826,900       863,300       898,200       931,900       980,200     1,027,500     1,072,000     1,123,500     1,173,300     1,232,400         4,500,500            10,129,200
Surplus/Deficit(-):
  Total.........................................      -503,482      -453,597      -549,255      -534,117      -552,258      -659,577      -676,929      -650,134      -740,666      -793,137        -2,592,709            -6,113,152
  On-budget.....................................      -501,794      -432,573      -505,511      -457,855      -460,294      -544,397      -529,477      -474,659      -532,033      -558,342        -2,358,027            -4,996,935
  Off-budget....................................        -1,688       -21,024       -43,744       -76,262       -91,964      -115,180      -147,452      -175,475      -208,633      -234,795          -234,682            -1,116,217
Debt Held by the Public (end of year)...........    14,763,197    15,323,508    15,982,242    16,614,892    17,263,523    18,016,476    18,793,499    19,548,109    20,395,652    21,301,880              n.a.                  n.a.
Debt Subject to Limit (end of year).............    20,143,189    20,879,678    21,693,743    22,447,564    23,201,455    24,004,097    24,839,340    25,679,835    26,541,534    27,438,173              n.a.                  n.a.
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            FY2017 HOUSE BUDGET VS. FY2017 PRESIDENT'S BUDGET
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total Spending:
  BA............................................      -333,910      -526,068      -666,800      -753,535      -868,918    -1,009,903    -1,040,298    -1,071,956    -1,224,529    -1,355,669        -3,149,231            -8,851,587
  OT............................................      -264,763      -502,880      -655,783      -716,348      -823,112      -970,040    -1,003,948    -1,035,255    -1,204,572    -1,326,091        -2,962,887            -8,502,793
On-budget:
  BA............................................      -316,938      -500,387      -640,602      -724,574      -844,612      -989,455    -1,020,177    -1,053,016    -1,209,523    -1,348,289        -3,027,114            -8,647,574
  OT............................................      -246,208      -477,389      -630,941      -688,657      -799,847      -950,846      -985,423    -1,017,789    -1,190,990    -1,320,157        -2,843,042            -8,308,248
Off-budget:
  BA............................................       -16,972       -25,681       -26,198       -28,960       -24,306       -20,448       -20,121       -18,940       -15,005        -7,380          -122,118              -204,012
  OT............................................       -18,555       -25,491       -24,843       -27,691       -23,264       -19,194       -18,525       -17,466       -13,581        -5,934          -119,845              -194,545
Revenues:
  Total.........................................      -122,245      -239,272      -305,064      -387,700      -454,424      -470,269      -484,820      -523,047      -551,357      -593,661        -1,508,705            -4,131,859
  On-budget.....................................      -123,905      -235,450      -294,436      -373,038      -423,564      -426,692      -432,913      -457,681      -475,847      -500,470        -1,450,393            -3,743,996
  Off-budget....................................         1,660        -3,822       -10,628       -14,662       -30,860       -43,577       -51,907       -65,366       -75,510       -93,191           -58,312              -387,863
Surplus/Deficit(-):
  Total.........................................      -121,810      -255,066      -341,798      -339,340      -371,250      -518,558      -554,053      -573,647      -714,626      -821,868        -1,429,265            -4,612,018
    Macroeconomic Fiscal Impact.................        20,709         8,542         8,921       -10,692        -2,562       -18,787       -34,925       -61,439       -61,411       -89,438            24,917              -241,084
    On-budget...................................      -122,303      -241,939      -336,505      -315,619      -376,283      -524,154      -552,510      -560,108      -715,143      -819,687        -1,392,649            -4,564,252
    Off-budget..................................       -20,215       -21,669       -14,215       -13,029         7,596        24,383        33,382        47,900        61,929        87,257           -61,533               193,318
Debt Held by the Public (end of year)...........      -363,197      -597,508    -1,006,242    -1,424,892    -1,827,523    -2,440,476    -2,985,499    -3,614,109    -4,583,652    -5,341,880              n.a.                  n.a.
Debt Subject to Limit (end of year).............      -294,835      -565,290    -1,046,220    -1,542,964    -2,040,170    -2,707,195    -3,328,568    -4,081,312    -5,168,075    -6,026,118              n.a.                  n.a.
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------


                  THE ECONOMY AND ECONOMIC ASSUMPTIONS

                              ----------                              


                           An Anemic Recovery

    The economy is still languishing in the weakest recovery of 
the modern era and the expansionist government policies of the 
current administration are among the factors weighing on 
growth.
    The U.S. economy technically emerged from recession nearly 
7 years ago, but the subsequent recovery has been subpar. Since 
2010, real growth in gross domestic product [GDP] has averaged 
only slightly better than 2.0 percent annually, well below the 
3.0 percent historical trend rate of growth in the U.S.
    This trend of prolonged anemic growth has surprised most 
economic forecasters. Back in 2010, the Congressional Budget 
Office [CBO] expected real GDP to grow by a relatively brisk 
3.0 percent annual average over the 10-year budget window. By 
2014, that average slipped to 2.5 percent. In CBO's latest 
economic forecast, expected average real GDP growth fell to 
just 2.1 percent (see Figure 7). CBO has significantly lowered 
its expectation of long-term growth in potential GDP as well, 
due mainly to negative developments in the labor market. CBO 
expects slower growth in the potential labor force later this 
decade, which is linked to the aging of the population and the 
retirement of the baby-boom generation. With a smaller labor 
force, there will also be less business investment and slower 
growth in the country's capital stock. This ``new normal''--if 
that is what it is--is especially troubling because without 
more robust growth the economy will struggle to support the 80 
million retirees expected over the next couple decades, as well 
as the working age population. Standards of living will suffer, 
especially for middle-income earners.
    The President's policies also play a role in this trend. 
The heavy spending promoted by the current administration 
drains economic resources that otherwise would be available for 
growth-producing activities. In addition, the sharp increase in 
government debt--which now stands at near-record post-World War 
II levels--will crowd out additional capital investment in the 
long term. Meanwhile, CBO projects the Affordable Care Act--the 
President's nationalized health program--will create incentives 
for people to work fewer hours over the medium and longer term. 
The overall picture that CBO's latest economic forecast paints 
is that sluggish economic growth has evolved from mainly a 
cyclical issue to a longer-term structural problem. The clear 
downward trend in the economic forecast in recent years has 
raised the hurdle significantly for those trying to correct the 
fiscal imbalance over the next decade. This is important 
because CBO's annual economic assumptions are adopted for the 
budget resolution. As discussed in the next section, however, a 
meaningful change in fiscal policy can repay in stronger 
economic growth and budgetary dividends.

    FIGURE 7
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                   The Benefits of a Stronger Economy

    A stronger economy would provide a number of tangible 
benefits for the average American. Back in the latter part of 
the 1990s, real GDP was growing at a rate of about 4.5 
percent--roughly twice the rate of growth today. From 1995 to 
1999, real median household income grew by $5,000, nearly 10 
percent. Not coincidentally, this was a time when the Federal 
budget achieved a string of surpluses. In contrast, fiscal 
policy today features large deficits combined with a 
historically large stock of government debt--and real median 
income has fallen $3,700, or 6.5 percent, over the past 7 
years.
    A robust labor market also fosters more opportunity and 
upward mobility. Currently, 6 million Americans are working 
part-time due to poor business conditions or because that was 
the only employment option available. In the latter part of the 
1990s roughly half as many Americans faced this problem. A 
stronger economy also naturally alleviates poverty. By the year 
2000, after multiple years of robust economic growth, the rate 
of poverty in the U.S. had declined to a 25-year low. A more 
robust economy also provides more resources to the government 
to maintain a strong safety net.
    Achieving a stronger rate of growth requires the right 
economic policies. This is the central theme of remarks 
delivered in January at the annual meeting of the American 
Economic Association by Stanford University economist John B. 
Taylor.\25\ According to Taylor, key policies needed to bolster 
growth include fundamental tax reform to lower tax rates on 
people and businesses and thus reduce disincentives to work and 
invest; regulatory reforms to scale back and prevent 
regulations, such as Dodd-Frank, that fail cost-benefit tests 
and hamper economic growth; and entitlement reforms to prevent 
a debt explosion and improve incentives. The Congressional 
Budget Office has also concluded that putting the Federal 
budget on a path to balance is essential to creating more 
economic growth and greater prosperity. CBO finds that a 
significant deficit reduction package of $4 trillion would lead 
to growth in real output per capita (a proxy for a country's 
standard of living) of about 5 percent (about $4,000 per 
person) by 2040 compared to the current law trajectory.\26\
---------------------------------------------------------------------------
    \25\John B. Taylor, ``Can We Restart the Recovery All Over Again?'' 
presented at the 2016 annual meeting of the American Economic 
Association, January 2016.
    \26\Congressional Budget Office, The 2015 Long-Term Budget Outlook, 
16 June 2015.
---------------------------------------------------------------------------

                     The Current Economic Situation

    Economic output weakened sharply in the last quarter of 
2015, falling to just 1.0 percent real GDP growth on a 
seasonally adjusted, annualized basis. This weakness echoed how 
the year began--with quarterly growth of just 0.6 percent. For 
the year as a whole, real GDP grew by 2.4 percent (measured on 
a year-over-year basis) in 2015, unchanged from the growth rate 
posted in 2014. Since 2010, real GDP growth has averaged just 
more than 2.0 percent annually, well below the roughly 3.0-
percent historical trend rate of growth in the U.S. Sluggish 
economic growth has contributed to the government's fiscal 
problems. It leads to lower revenue levels than would otherwise 
occur while government spending (on welfare programs, for 
example) is higher. According to CBO, if real GDP growth is 
just 0.1 percentage point lower per year, the budget deficit 
will be higher by $327 billion over 10 years. Conversely, 
stronger economic growth would greatly improve the fiscal 
outlook.
    The pace of job growth appeared to be trending upward at 
the start of 2016. Nonfarm payroll employment increased by 
242,000 in February, compared to 172,000 in January and the 
229,000 average monthly increase posted in 2015. The 
unemployment rate ticked down to 4.9 percent in early 2016, the 
lowest rate in 8 years and down 0.8 percentage point from the 
rate at the start of 2015. The steady decline in the 
unemployment rate, however, masks less healthy underlying 
trends. When discouraged workers, marginally employed, and 
underemployed persons are counted, the unemployment rate is 
closer to 10 percent.\27\
---------------------------------------------------------------------------
    \27\Bureau of Labor Statistics, U-6 Index, Table A-15, March 2016.
---------------------------------------------------------------------------
    Although the overall trend of job gains has been solid of 
late, and the unemployment rate has continued to decline, other 
aspects of the labor market are not as robust. The labor force 
participation rate has increased in recent months, but still 
stands at just 62.9 percent, down roughly 3 percentage points 
since early 2009, and remains near its lowest level since 1978 
(See Figure 8). Long-term unemployment also remains a problem. 
Of the 7.8 million people who are currently unemployed, more 
than 2 million (28 percent) have been unemployed for more than 
6 months. Prior to the recession, only about 17 percent of the 
unemployed were out of work for that long. Long-term 
unemployment has genuinely corrosive consequences. For 
individuals, it erodes their job skills, further detaching them 
from employment opportunities. At the same time, it undermines 
the long-term productive capacity of the economy.

    FIGURE 8
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    In previous episodes when the unemployment rate was at or 
below 5.0 percent, the overall labor market was much healthier 
than it is today. For instance, about a decade ago, in 2005, 
the unemployment rate was trending lower and even dipped below 
5.0 percent. Yet the labor force participation rate was 66 
percent, more than 3 percentage points above the rate today. 
The number of people not in the labor force (or ``on the 
sidelines'') is currently 22 percent higher than the figure 
back in 2005. Similarly, the under-employment rate (which 
includes discouraged and marginally employed persons) is still 
quite elevated at close to 10 percent. A decade ago, that rate 
was about 8.5 percent. Also, more people today are working 
part-time because of poor business conditions or they can only 
find part-time work. Currently, 6 million Americans face this 
problem, whereas that figure was slightly more than 4 million 
in 2005.
    For most of the working population, wage gains have been 
subpar. Average hourly earnings of private-sector workers 
increased by 2.4 percent over the past year. Prior to the 
recession, average hourly earnings were tracking closer to 4 
percent. Likewise, average income levels have remained 
relatively flat in recent years. Real median household income 
declined by roughly $800 in 2014 (latest year available) to 
$53,657. That represents a sharp decline of 6.5 percent, or 
$3,700, since 2007.
    Oil prices have plunged over the past year and a half. 
Since mid-2014, crude oil prices have dropped from just above 
$100 per barrel to less than $30 per barrel early this year. 
Although lower oil prices are a net benefit for consumers (e.g. 
in lower gasoline prices), the price decline has hurt output 
and investment in the growing U.S. energy sector and has 
therefore weighed on the economy's overall growth rate.

    FIGURE 9
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    The sharp decline in oil prices has contributed to the 
downward slide in headline inflation rates. For instance, the 
price index for personal consumption expenditures [PCE] has 
increased by 1.3 percent over the latest 12 months. The so-
called core PCE index (which excludes energy and food prices), 
the Federal Reserve's preferred inflation gauge, has increased 
1.7 percent over the past year. That level of inflation remains 
below the Federal Open Market Committee's 2 percent objective 
for inflation over the longer run.
    After years of an extremely loose monetary policy stance, 
the Federal Reserve finally increased interest rates in 
December. The Fed had been holding interest rates near zero 
since the depths of the financial crisis in 2008. Looking 
ahead, the Fed has signaled that future rate increases will be 
``gradual.'' Despite the Fed's recent move, the yield on the 
10-year Treasury note has declined back below 2 percent in 
early 2016 from a recent peak of 2.4 percent in mid-2015.
    A portion of the fallback in Treasury rates, even as the 
Fed has begun to raise the Federal funds rate, is likely due to 
a ``flight to quality'' on the part of global investors as 
economic prospects outside the U.S. have soured and market 
volatility has increased significantly, particularly in China, 
the world's second largest economy.
    Many global central banks have signaled their intention to 
keep interest rates low and their overall monetary policy 
loose--in contrast to the Federal Reserve's disposition. This 
divergence in central bank policy stances on interest rates, as 
well as the differing economic outlook between the U.S. and the 
rest of the world, has caused the U.S. dollar to appreciate 
vis-a-vis other foreign currencies.
    The U.S. dollar has appreciated more than 11 percent on a 
trade-weighted basis since early 2015. The dollar's 
appreciation tends to dampen the competitiveness of U.S. 
exporters as their goods become more expensive for foreign 
consumers. A stronger dollar, and weaker global growth, has led 
to a fall in exports, a headwind for U.S. growth. Exports of 
U.S. goods and services are down 7 percent over the past 12 
months.
    Mirroring the recent trend in global financial markets, the 
U.S. stock market has experienced renewed volatility and has 
been trending lower in early 2016.

                          The Economic Outlook

    The administration's economic forecast is less hopeful than 
it was last year but it remains more upbeat than either CBO or 
the Blue Chip consensus of private-sector forecasters--who also 
are less optimistic than last year. The administration expects 
real GDP growth of 2.6 percent in calendar years 2016 and 2017, 
2.4 percent in 2018, and 2.3 percent in later years measured on 
a year-to-year basis. CBO--upon whose economic assumptions the 
budget resolution is based--expects real GDP to grow by 2.5 
percent in calendar year 2016, 2.6 percent in 2017, 2.2 percent 
in 2018 and stabilizing at 2.0 percent in 2023 and later years. 
CBO concedes its relatively weak near-term projections are 
somewhat more optimistic than other private and government 
forecasts: ``The economic projections in this report indicate a 
slightly stronger economy in the near term than do the Blue 
Chip consensus forecast (published in January) and the 
forecasts developed by the Federal Reserve (and presented at 
the Federal Open Market Committee's December 2015 
meeting).''\28\
---------------------------------------------------------------------------
    \28\Congressional Budget Office, The Budget and Economic Outlook: 
2016 to 2026, January 2016, p. 32.
---------------------------------------------------------------------------
    The Blue Chip consensus projects real GDP growth of 2.5 
percent in 2016 and also 2017, 2.4 percent in 2018, and 2.2 
percent in later years. Over the 10-year window of the budget 
resolution, the administration's Office of Management and 
Budget [OMB] expects real GDP growth to average 2.3 percent, 
modestly higher than Blue Chip and significantly higher than 
CBO which projects a 2.1 percent growth rate average over this 
period.
    Like other forecasters, the administration expects the 
unemployment rate to decline gradually in the coming years. 
According to OMB, the unemployment rate will average 4.7 
percent in 2016, decline to 4.5 percent in 2017, and rise to 
4.6 percent in 2018. The administration sees the unemployment 
rate rising very gradually in subsequent years before leveling 
off at 4.9 percent in 2023. (By comparison, the unemployment 
rate was 4.6 percent in 2007, the year before the financial 
crisis.) That path is similar in the near term but is more 
optimistic in the latter part of the window than the CBO 
forecast. CBO expects the unemployment rate to average 4.7 
percent in 2016 and decline to 4.4 percent in 2017, before 
rising to 4.6 percent in 2018, 4.8 percent in 2019 and leveling 
off at 5.0 percent in 2020. The Blue Chip consensus sees a 
near-term decline in the unemployment rate similar to both CBO 
and the administration, but is closer to CBO's forecast in the 
latter part of the window. According to Blue Chip, the 
unemployment rate will average 4.8 percent in 2016, decline to 
4.6 percent by 2017, and rise to 4.7 percent in 2018 and 
further in later years before leveling off at 5.0 percent in 
2022.
    The administration expects consumer price inflation, 
measured by the year-to-year percent change in the consumer 
price index, to rise to 1.5 percent in 2016 from 2015's 
unusually low level of 0.1 percent which reflected last year's 
sharp drop in oil prices. The administration expects price 
inflation of 2.1 percent in 2017 and 2.3 percent in 2021 and 
later years. CBO expects price inflation of 1.3 percent in 
2016, 2.3 percent in 2017 and 2.4 percent in 2018 and later 
years. The Blue Chip consensus expects inflation over the next 
two years that is similar to the administration's and CBO's 
forecasts. According to Blue Chip, price inflation will average 
1.6 percent in 2016, 2.3 percent in 2017, and 2.4 percent in 
2018 and 2019 before leveling off at 2.3 percent in later 
years.
    OMB expects interest rates will rise to more normal levels 
in the coming years. The 10-year Treasury note, which was about 
2.1 percent in 2015, is projected to rise to about 2.9 percent 
in 2016, 3.5 percent in 2017, and 3.9 percent in 2018. OMB 
expects the 10-year Treasury to hit 4.2 percent in 2020 and 
remain there in later years. CBO expects interest rates to rise 
to more normal levels as well but sees slightly lower rates 
than the administration for most years. CBO sees the 10-year 
Treasury averaging 2.8 percent in 2016, 3.5 percent in 2017, 
and 3.8 percent in 2018, and then stabilizing at 4.1 percent in 
2020 and later years. The Blue Chip consensus also sees a 
gradual increase in interest rates over the next two years but 
at lower levels than the administration. The Blue Chip 
consensus forecasts the 10-year Treasury note to average 2.6 
percent in 2016, 3.2 percent in 2017, 3.8 percent in 2018 and 
gradually rising further until stabilizing at 4.1 percent in 
2022 and later years.

                                      TABLE 6.--ECONOMIC PROJECTIONS: ADMINISTRATION, CBO, AND PRIVATE FORECASTERS
                                                                    [Calendar years]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       Estimated
                                                          2015     2016    2017    2018    2019    2020    2021    2022    2023    2024    2025    2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Year to Year, Percent Change
--------------------------------------------------------------------------------------------------------------------------------------------------------
Real GDP:
  Administration Budget..............................       2.4     2.6     2.6     2.4     2.3     2.3     2.3     2.3     2.3     2.3     2.3     2.3
  CBO (Jan. 2016)....................................       2.4     2.5     2.6     2.2     1.8     1.9     2.1     2.1     2.0     2.0     2.0     2.0
  Blue Chip (Oct. 2015 and Jan. 2016)................       2.5     2.5     2.5     2.4     2.2     2.2     2.2     2.2     2.2     2.2     2.2     2.2
Consumer Price Index:
  Administration Budget..............................       0.1     1.5     2.1     2.1     2.3     2.2     2.3     2.3     2.3     2.3     2.3     2.3
  CBO (Jan. 2016)....................................       0.1     1.3     2.3     2.4     2.4     2.4     2.4     2.4     2.4     2.4     2.4     2.4
  Blue Chip (Oct. 2015 and Jan. 2016)................       0.1     1.6     2.3     2.4     2.4     2.3     2.3     2.3     2.3     2.3     2.3     2.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 Annual Average, Percent
--------------------------------------------------------------------------------------------------------------------------------------------------------
Unemployment Rate:
  Administration Budget..............................       5.3     4.7     4.5     4.6     4.6     4.7     4.7     4.8     4.9     4.9     4.9     4.9
  CBO (Jan. 2016)....................................       5.3     4.7     4.4     4.6     4.8     5.0     5.0     5.0     5.0     5.0     5.0     5.0
  Blue Chip (Oct. 2015 and Jan. 2016)................       5.3     4.8     4.6     4.7     4.7     4.8     4.9     5.0     5.0     5.0     5.0     5.0
3-Month Treasury Bill:
  Administration Budget..............................         *     0.7     1.8     2.6     3.1     3.3     3.4     3.4     3.3     3.3     3.2     3.2
  CBO (Jan. 2016)....................................       0.1     0.7     1.6     2.5     3.2     3.2     3.2     3.2     3.2     3.2     3.2     3.2
  Blue Chip (Oct. 2015 and Jan. 2016)................       0.1     0.7     1.7     2.8     3.1     3.1     3.1     3.1     3.1     3.1     3.1     3.1
10-Year Treasury Note:
  Administration Budget..............................       2.1     2.9     3.5     3.9     4.1     4.2     4.2     4.2     4.2     4.2     4.2     4.2
  CBO (Jan. 2016)....................................       2.1     2.8     3.5     3.8     4.0     4.1     4.1     4.1     4.1     4.1     4.1     4.1
  Blue Chip (Oct. 2015 and Jan. 2016)................       2.1     2.6     3.2     3.8     4.0     4.0     4.0     4.1     4.1     4.1     4.1     4.1
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
*0.05 percent or less.
 
Sources: Congressional Budget Office, Office of Management and Budget, and Blue Chip Economic Indicators.


                                        TABLE 7.--ECONOMIC ASSUMPTIONS OF THE FISCAL YEAR 2017 BUDGET RESOLUTION
                                                                    [Calendar years]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   2016    2017    2018    2019    2020    2021    2022    2023    2024    2025    2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Year to Year, Percent Change
--------------------------------------------------------------------------------------------------------------------------------------------------------
Real GDP:
  CBO (Jan. 2016)...............................................    2.5     2.6     2.2     1.8     1.9     2.1     2.1     2.0     2.0     2.0     2.0
Consumer Price Index:
  CBO (Jan. 2016)...............................................    1.3     2.3     2.4     2.4     2.4     2.4     2.4     2.4     2.4     2.4     2.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 Annual Average, Percent
--------------------------------------------------------------------------------------------------------------------------------------------------------
Unemployment Rate:
  CBO (Jan. 2016)...............................................    4.7     4.4     4.6     4.8     5.0     5.0     5.0     5.0     5.0     5.0     5.0
3-Month Treasury Bill:
  CBO (Jan. 2016)...............................................    0.7     1.6     2.5     3.2     3.2     3.2     3.2     3.2     3.2     3.2     3.2
10-Year Treasury Note:
  CBO (Jan. 2016)...............................................    2.8     3.5     3.8     4.0     4.1     4.1     4.1     4.1     4.1     4.1     4.1
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                    TABLE 8.--TAX EXPENDITURE ESTIMATES BY BUDGET FUNCTION, FISCAL YEARS 2015-2019\1\
                                                                  [Billions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Corporations                                 Individuals
                      Function                       ------------------------------------------------------------------------------------------   Total
                                                        2015     2016     2017     2018     2019     2015     2016     2017     2018     2019    2015-19
--------------------------------------------------------------------------------------------------------------------------------------------------------
National Defense:
  Exclusion of benefits and allowances to armed       .......  .......  .......  .......  .......      5.8      6.0      6.4      6.8      7.0      31.9
   forces personnel.................................
  Exclusion of military disability benefits.........  .......  .......  .......  .......  .......      0.3      0.3      0.3      0.3      0.3       1.4
  Deduction for overnight-travel expenses of          .......  .......  .......  .......  .......      0.1      0.1      0.1      0.1      0.1       0.5
   national guard and reserve members...............
  Exclusion of combat pay...........................  .......  .......  .......  .......  .......      1.4      1.4      1.5      1.6      1.6       7.5
International Affairs:
  Exclusion of certain allowances for Federal         .......  .......  .......  .......  .......      2.1      2.2      2.3      2.3      2.4      11.2
   employees abroad.................................
  Exclusion of foreign earned income:
    Housing.........................................  .......  .......  .......  .......  .......      1.3      1.3      1.4      1.5      1.6       7.1
    Salary..........................................  .......  .......  .......  .......  .......      6.4      6.7      7.2      7.6      8.0      35.7
  Inventory property sales source rule exception....      1.7      1.7      1.8      1.8      1.8  .......  .......  .......  .......  .......       8.8
  Deduction for foreign taxes instead of a credit...      0.3      0.3      0.3      0.3      0.3  .......  .......  .......  .......  .......       1.3
  Interest expense allocation:
    Unavailability of symmetric worldwide method*...     -1.2     -1.2     -1.2     -1.3     -1.3  .......  .......  .......  .......  .......      -6.2
    Separate grouping of affiliated financial             0.5      0.5      0.5      0.5      0.5  .......  .......  .......  .......  .......       2.5
     companies......................................
  Apportionment of research and development expenses      0.2      0.2      0.2      0.2      0.2  .......  .......  .......  .......  .......       1.1
   for determination of foreign tax credits.........
  Special rules for interest-charge domestic              0.6      0.6      0.6      0.7      0.7  .......  .......  .......  .......  .......       3.2
   international sales corporations.................
  Tonnage tax.......................................      0.1      0.1      0.1      0.1      0.1  .......  .......  .......  .......  .......       0.5
  Deferral of active income of controlled foreign        99.3    108.9    114.0    118.1    123.2  .......  .......  .......  .......  .......     563.6
   corporations.....................................
General Science, Space, and Technology:
  Expensing of research and experimental                  4.7      5.2      5.7      6.0      6.0      0.1      0.1      0.1      0.1      0.1      28.3
   expenditures.....................................
  Therapeutic research credit.......................      0.1      0.1      0.1  .......  .......      0.1      0.1      0.1  .......  .......       0.8
Energy:
  Credit for energy-efficient improvements to         .......  .......  .......  .......  .......      0.5  .......  .......  .......  .......       0.5
   existing homes...................................
  Credit for holders of clean renewable energy bonds    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)      0.1      0.1      0.1       0.6
   (Code sections 54 and 54C)\2,3\..................
  Exclusion of energy conservation subsidies          .......  .......  .......  .......  .......    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.1
   provided by public utilities.....................
  Credit for holders of qualified energy              .......  .......  .......  .......  .......    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.3
   conservation bonds\2,3\..........................
  Energy credit (section 48)........................      1.0      1.5      1.6      1.6      1.7      0.2      0.3      0.2      0.1      0.1       8.3
    Solar...........................................      0.9      1.4      1.5      1.5      1.6      0.1      0.2      0.2      0.1      0.1       7.7
    Geothermal......................................    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)     (\4\)
    Fuel Cells......................................    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)     (\4\)
    Microturbines...................................    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)     (\4\)
    Combined heat and power.........................    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)     (\4\)
    Small wind......................................    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)     (\4\)
    Geothermal heat pump systems....................    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)     (\4\)
  Credits for electricity production from renewable
   resources (section 45):
    Wind............................................      2.2      2.5      3.1      3.3      3.3      0.1      0.2      0.3      0.4      0.4      15.8
    Closed-loop biomass.............................    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.1
    Geothermal......................................    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.1
    Qualified hydropower............................    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.1
    Small irrigation power..........................    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.1
    Municipal solid waste...........................    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.4
    Open-loop biomass...............................      0.3      0.3      0.3      0.3      0.3    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       1.8
  Special rule to implement electric transmission        -0.2     -0.2     -0.2     -0.2     -0.2  .......  .......  .......  .......  .......      -1.0
   restructuring....................................
  Credits for investments in clean coal facilities..      0.2      0.2      0.2      0.2      0.2  .......  .......  .......  .......  .......       1.0
  Coal production credits:
    Refined coal....................................    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)  .......  .......  .......  .......  .......       0.1
    Indian coal.....................................    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)  .......  .......  .......  .......  .......       0.1
  Credits for alternative technology vehicles:
    Other alternative fuel vehicles.................    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)  .......  .......  .......  .......  .......       0.1
  Residential energy-efficient property credit......  .......  .......  .......  .......  .......      1.1      1.2      0.7  .......  .......       3.0
  Credit for plug-in electric vehicles..............    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)      0.2      0.2      0.2      0.2      0.2       1.2
  Credit for investment in advanced energy property.      0.2      0.2      0.2      0.1      0.1      0.1      0.1      0.1      0.1      0.1       1.2
  Exclusion of interest on State and local              (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.2
   government qualified private activity bonds for
   energy production facilities.....................
  Expensing of exploration and development costs,
   fuels:
    Oil and gas.....................................      1.0      1.1      1.1      1.1      1.0      0.3      0.4      0.3      0.3      0.3       7.0
    Other fuels.....................................    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.5
  Excess of percentage over cost depletion, fuels:
    Oil and gas.....................................      1.4      1.3      1.4      1.6      1.6    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       7.4
    Other fuels.....................................      0.2      0.2      0.3      0.3      0.3    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       1.4
  Amortization of geological and geophysical              0.1      0.1      0.1      0.1      0.1    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.7
   expenditures associated with oil and gas
   exploration......................................
  Amortization of air pollution control facilities..      0.4      0.4      0.3      0.3      0.3  .......  .......  .......  .......  .......       1.7
  Depreciation recovery periods for energy-specific
   items:
    5-year MACRS for certain energy property (solar,      0.3      0.3      0.3      0.2      0.2    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       1.3
     wind, etc.)....................................
    10-year MACRS for smart electric distribution         0.2      0.2      0.2      0.2      0.2  .......  .......  .......  .......  .......       1.0
     property.......................................
    15-year MACRS for certain electric transmission       0.2      0.2      0.2      0.2      0.2  .......  .......  .......  .......  .......       1.0
     property.......................................
    15-year MACRS for natural gas distribution line.      0.2      0.2      0.1      0.1      0.1  .......  .......  .......  .......  .......       0.8
  Exceptions for publicly traded partnership with     .......  .......  .......  .......  .......      1.1      1.2      1.2      1.2      1.2       5.9
   qualified income derived from certain energy-
   related activities...............................
Natural Resources and Environment:
  Special depreciation allowance for certain reuse      (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.1
   and recycling property...........................
  Expensing of exploration and development costs,         0.1      0.1      0.1      0.1      0.1    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.5
   nonfuel minerals.................................
  Excess of percentage over cost depletion, nonfuel       0.1      0.1      0.1      0.1      0.1    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.5
   minerals.........................................
  Expensing of timber-growing costs.................      0.3      0.3      0.3      0.3      0.3    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       1.5
  Special rules for mining reclamation reserves.....    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.2
  Special tax rate for nuclear decommissioning            0.2      0.2      0.3      0.3      0.3  .......  .......  .......  .......  .......       1.3
   reserve funds....................................
  Exclusion of contributions in aid of construction     (\4\)    (\4\)    (\4\)    (\4\)    (\4\)  .......  .......  .......  .......  .......       0.2
   for water and sewer utilities....................
  Exclusion of earnings of certain environmental        (\4\)    (\4\)    (\4\)    (\4\)    (\4\)  .......  .......  .......  .......  .......       0.1
   settlement funds.................................
  Amortization and expensing of reforestation             0.1      0.1      0.1      0.2      0.2      0.1      0.1      0.1      0.1      0.1       1.3
   expenditures.....................................
  Special tax rate for qualified timber gain          .......  .......  .......  .......  .......      0.3      0.3      0.4      0.4      0.4       1.8
   (including coal and iron ore)....................
  Treatment of income from exploration and mining of  .......  .......  .......  .......  .......      0.1      0.1      0.1      0.1      0.1       0.5
   natural resources as qualifying income under the
   publicly-traded partnership rules................
Agriculture:
  Expensing of soil and water conservation              (\4\)    (\4\)    (\4\)    (\4\)    (\4\)      0.1      0.1      0.1      0.1      0.1       0.6
   expenditures.....................................
  Expensing of the costs of raising dairy and           (\4\)    (\4\)    (\4\)    (\4\)    (\4\)      0.2      0.2      0.2      0.2      0.1       0.9
   breeding cattle..................................
  Exclusion of cost-sharing payments................    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.1
  Exclusion of cancellation of indebtedness income    .......  .......  .......  .......  .......      0.1      0.1      0.1      0.1      0.1       0.5
   of farmers.......................................
  Income averaging for farmers and fishermen........  .......  .......  .......  .......  .......      0.1      0.2      0.2      0.2      0.2       0.9
  5-year carryback period for net operating losses      (\4\)    (\4\)    (\4\)    (\4\)    (\4\)      0.1      0.1      0.1      0.1      0.1       0.4
   attributable to farming..........................
  Expensing by farmers for fertilizer and soil          (\4\)    (\4\)    (\4\)    (\4\)    (\4\)      0.1      0.2      0.2      0.2      0.2       0.9
   conditioner costs................................
  Cash accounting for agriculture...................    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.1
Commerce and Housing:
  Housing:
    Deduction for mortgage interest on owner-         .......  .......  .......  .......  .......     71.0     77.0     84.3     91.1     96.4     419.8
     occupied residences............................
    Deduction for property taxes on real property...  .......  .......  .......  .......  .......     32.4     34.7     36.9     39.2     41.3     184.5
    Exclusion of capital gains on sales of principal  .......  .......  .......  .......  .......     24.1     29.0     30.6     32.2     34.0     149.9
     residences.....................................
    Exclusion of interest on State and local              0.3      0.4      0.4      0.4      0.4      0.9      0.9      1.0      1.1      1.1       6.9
     government qualified private activity bonds for
     owner-occupied housing\5\......................
    Credit for low-income housing...................      7.3      7.8      8.3      8.6      9.2      0.3      0.3      0.4      0.4      0.4      43.0
    Credit for rehabilitation of historic structures      0.7      0.7      0.7      0.8      0.8      0.2      0.2      0.2      0.2      0.2       4.6
    Credit for rehabilitation of structures, other      (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)      0.1      0.1       0.3
     than historic structures.......................
    Exclusion of interest on State and local              0.3      0.3      0.3      0.3      0.3      0.7      0.7      0.8      0.8      0.9       5.4
     government qualified private activity bonds for
     rental housing.................................
    Depreciation of rental housing in excess of           0.5      0.4      0.4      0.4      0.4      4.2      4.0      3.9      3.9      3.8      22.0
     alternative depreciation system................
  Other business and commerce:
    Exclusion of interest on State and local              0.1      0.1      0.1      0.1      0.1      0.3      0.3      0.3      0.3      0.3       2.1
     government small-issue qualified private
     activity bonds.................................
    Carryover basis of capital gains on gifts.......  .......  .......  .......  .......  .......     -4.6     11.3     10.5      8.9      9.3      35.4
    Deferral of gain on non-dealer installment sales      6.9      6.8      6.7      6.7      6.7      2.1      1.7      1.4      1.2      1.2      41.3
    Deferral of gain on like-kind exchanges.........     11.0     11.1     11.4     11.7     12.2      5.8      5.9      6.0      6.2      6.4      87.7
    Expensing under section 179 of depreciable            4.8      1.8      0.8      0.8      0.6      7.8      2.9      1.3      1.2      1.0      22.9
     business property..............................
    Amortization of business startup costs..........    (\4\)    (\4\)    (\4\)    (\4\)      0.1    (\4\)    (\4\)    (\4\)      0.1      0.1       0.2
    Reduced rates on first $10,000,000 of corporate       4.0      4.2      4.2      4.2      4.2  .......  .......  .......  .......  .......      20.8
     taxable income.................................
    Exemptions from imputed interest rules..........    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)      0.6      0.6      0.7      0.7      0.7       3.4
    Expensing of magazine circulation expenditures..      0.1      0.1    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.1
    Special rules for magazine, paperback book, and     (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.2
     record returns.................................
    Completed contract rules........................      0.9      0.9      0.9      1.0      1.0      0.1      0.1      0.1      0.1      0.1       5.2
    Cash accounting, other than agriculture.........      0.3      0.3      0.3      0.3      0.3      1.8      1.9      1.9      2.0      2.0      11.1
    Credit for employer-paid FICA taxes on tips.....      0.6      0.6      0.6      0.7      0.7      0.7      0.7      0.7      0.8      0.8       6.9
    Deduction for income attributable to domestic        11.7     12.1     12.3     12.6     12.8      4.5      4.6      4.7      4.8      4.8      84.8
     production activities..........................
    Credit for the cost of carrying tax-paid            (\4\)    (\4\)    (\4\)    (\4\)    (\4\)  .......  .......  .......  .......  .......     (\4\)
     distilled spirits in wholesale inventories.....
    Reduced rates of tax on dividends and long-term   .......  .......  .......  .......  .......    131.7    134.6    137.1    140.9    145.4     689.6
     capital gains..................................
    Surtax on net investment income*................  .......  .......  .......  .......  .......    -34.8    -35.9    -36.9    -38.3    -40.0    -186.0
    Exclusion of capital gains at death.............  .......  .......  .......  .......  .......     32.4     32.9     33.8     35.2     36.8     171.3
    Expensing of costs to remove architectural and      (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.1
     transportation barriers to the handicapped and
     elderly........................................
    Exclusion for gain from certain small business    .......  .......  .......  .......  .......      0.9      1.0      1.0      1.1      1.1       5.1
     stock..........................................
    Distributions in redemption of stock to pay       .......  .......  .......  .......  .......    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.2
     various taxes imposed at death.................
    Inventory methods and valuation:
      Last in first out.............................      1.5      1.6      1.6      1.6      1.7      0.3      0.3      0.3      0.3      0.3       9.4
      Lower of cost or market.......................      0.1      0.1      0.1      0.1      0.1    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.4
      Specific identification for homogeneous           (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.1
       products.....................................
    Exclusion of gain or loss on sale or exchange of    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)  .......  .......  .......  .......  .......       0.1
     brownfield property............................
    Income recognition rule for gain or loss from         0.1      0.1      0.1      0.1      0.1      1.0      1.0      1.0      1.0      1.0       5.3
     section 1256 contracts.........................
    Net alternative minimum tax attributable to net      -0.5     -0.5     -0.5     -0.5     -0.5     -0.1     -0.1     -0.1     -0.1     -0.1      -3.0
     operating loss limitation*.....................
    Exclusion of interest on State and local            (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.1
     qualified private activity bonds for green
     buildings and sustainable design projects......
    Depreciation of buildings other than rental           0.2      0.2      0.2      0.2      0.2      0.2      0.2      0.2      0.2      0.2       2.2
     housing in excess of alternative depreciation
     system.........................................
    Depreciation of equipment in excess of the          -20.0    -18.0     -3.1      6.4     13.8     -8.2     -7.4     -1.3      2.6      5.7     -29.6
     alternative depreciation system\6\.............
Financial institutions:
  Exemption of credit union income..................      2.2      2.4      2.5      2.7      2.9  .......  .......  .......  .......  .......      12.7
  Insurance companies:
    Small life insurance company taxable income         (\4\)    (\4\)    (\4\)    (\4\)    (\4\)  .......  .......  .......  .......  .......       0.2
     adjustment.....................................
    Special treatment of life insurance company           2.9      3.2      3.3      3.3      3.3  .......  .......  .......  .......  .......      16.0
     reserves.......................................
    Special deduction for Blue Cross and Blue Shield      0.4      0.4      0.4      0.4      0.5  .......  .......  .......  .......  .......       2.2
     companies......................................
    Tax-exempt status and election to be taxed only       0.1      0.1      0.1      0.1      0.1  .......  .......  .......  .......  .......       0.5
     on investment income for certain small property
     and casualty insurance companies...............
    Interest rate and discounting period assumptions      2.3      2.6      2.6      2.6      2.6  .......  .......  .......  .......  .......      12.7
     for reserves of property and casualty insurance
     companies......................................
    Proration for property and casualty insurance         0.4      0.4      0.4      0.4      0.5  .......  .......  .......  .......  .......       2.1
     companies......................................
Transportation:
  Exclusion of employer-paid transportation benefits  .......  .......  .......  .......  .......      5.0      5.2      5.5      5.7      5.9      27.2
   (parking, van pools, and transit passes).........
  Deferral of tax on capital construction funds of        0.1      0.1      0.1      0.1      0.1  .......  .......  .......  .......  .......       0.5
   shipping companies...............................
  Exclusion of interest on State and local              (\4\)    (\4\)    (\4\)      0.1      0.1      0.1      0.1      0.1      0.1      0.1       0.6
   government qualified private activity bonds for
   highway projects and rail-truck transfer
   facilities.......................................
  Exclusion of interest on State and local              (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.1
   government qualified private activity bonds for
   high-speed intercity rail facilities.............
  Exclusion of interest on State and local                0.2      0.3      0.3      0.3      0.3      0.7      0.7      0.7      0.7      0.8       4.9
   government qualified private activity bonds for
   private airports, docks, and mass-commuting
   facilities.......................................
Community and Regional Development:
  Empowerment zone tax incentives...................      0.2    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.2
  New markets tax credit............................      1.1      1.1      1.2      1.1      1.0    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       5.5
  District of Columbia tax incentives...............    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.1
  Credit for Indian reservation employment..........    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)     (\4\)
  Exclusion of interest on State and local                0.1      0.1      0.1      0.1      0.1      0.3      0.3      0.3      0.4      0.4       2.3
   government qualified private activity bonds for
   sewage, water, and hazardous waste facilities....
  Recovery zone economic development bonds\2,3\.....    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)      0.2      0.2      0.2      0.2      0.2       0.9
  Eliminate requirement that financial institutions       0.5      0.5      0.5      0.5      0.5  .......  .......  .......  .......  .......       2.6
   allocate interest expense attributable to tax-
   exempt interest..................................
  Disaster Relief:
    National disaster relief........................
                                                                                             [Estimate contained in other provisions]
Education, Training, Employment, and Social
 Services:
  Education and training:
    Deduction for interest on student loans.........  .......  .......  .......  .......  .......      2.0      2.1      2.2      2.3      2.4      11.1
    Exclusion of earnings of Coverdell education      .......  .......  .......  .......  .......      0.1      0.1      0.1      0.1      0.1       0.5
     savings accounts...............................
    Exclusion of scholarship and fellowship income..  .......  .......  .......  .......  .......      2.7      2.9      3.0      3.2      3.4      15.2
    Exclusion of income attributable to the           .......  .......  .......  .......  .......      0.2      0.2      0.2      0.2      0.2       0.8
     discharge of certain student loan debt and NHSC
     and certain state educational loan repayments..
    Exclusion of employer-provided education          .......  .......  .......  .......  .......      1.2      1.2      1.2      1.3      1.3       6.2
     assistance benefits............................
    Exclusion of employer-provided tuition reduction  .......  .......  .......  .......  .......      0.3      0.3      0.3      0.3      0.3       1.6
     benefits.......................................
    Parental personal exemption for students aged 19  .......  .......  .......  .......  .......      4.5      4.7      4.9      5.2      5.5      24.7
     to 23..........................................
    Exclusion of interest on State and local              0.2      0.2      0.2      0.2      0.2      0.4      0.4      0.4      0.5      0.5       3.0
     government qualified private activity bonds for
     student loans..................................
    Exclusion of interest on State and local              1.0      1.0      1.0      1.1      1.1      2.6      2.6      2.8      2.9      3.1      19.1
     government qualified private activity bonds for
     private nonprofit and qualified public
     educational facilities.........................
    Credit for holders of qualified zone academy          0.2      0.2      0.2      0.2      0.2      0.1      0.1      0.1      0.1      0.1       1.4
     bonds\2,3\.....................................
    Deduction for charitable contributions to             0.3      0.4      0.4      0.4      0.4      6.2      6.4      6.6      6.8      7.1      35.0
     educational institutions.......................
    Credits for tuition for post-secondary            .......  .......  .......  .......  .......     19.7     21.0     21.2     12.5      9.6      84.0
     education\3\...................................
    Exclusion of tax on earnings of qualified
     tuition programs:
      Prepaid tuition programs......................  .......  .......  .......  .......  .......  .......  .......      0.1      0.1      0.1       0.3
      Savings account programs......................  .......  .......  .......  .......  .......      0.7      0.9      1.1      1.3      1.4       5.5
    Qualified school construction bonds\2,3\........    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)      1.0      1.1      1.2      1.3      1.4       6.0
  Employment:
    Exclusion of employee meals and lodging (other    .......  .......  .......  .......  .......      2.1      2.1      2.2      2.3      2.4      11.1
     than military).................................
    Exclusion of benefits provided under cafeteria    .......  .......  .......  .......  .......     35.2     36.1     37.6     39.4     40.2     188.5
     plans\7\.......................................
    Exclusion of housing allowances for ministers...  .......  .......  .......  .......  .......      0.8      0.8      0.8      0.8      0.8       4.0
    Exclusion of miscellaneous fringe benefits......  .......  .......  .......  .......  .......      7.5      7.7      7.8      8.0      8.2      39.2
    Exclusion of employee awards....................  .......  .......  .......  .......  .......      0.3      0.3      0.3      0.3      0.4       1.7
    Exclusion of income earned by voluntary           .......  .......  .......  .......  .......      3.2      3.2      3.3      3.3      3.4      16.4
     employees' beneficiary associations............
    Special tax provisions for employee stock             1.4      1.5      1.6      1.6      1.7      0.1      0.1      0.1      0.1      0.1       8.3
     ownership plans (ESOPs)........................
    Deferral of taxation on spread on acquisition of     -1.1     -1.2     -1.2     -1.1     -1.1      0.4      0.4      0.3      0.3      0.3      -4.1
     stock under incentive stock option plans*......
    Deferral of taxation on spread on employee stock     -0.1     -0.2     -0.2     -0.2     -0.2    (\4\)    (\4\)      0.1      0.1      0.1      -0.6
     purchase plans*................................
    Disallowance of deduction for excess parachute       -0.2     -0.2     -0.2     -0.2     -0.2  .......  .......  .......  .......  .......      -1.2
     payments (applicable if payments to a
     disqualified individual are contingent on a
     change of control of a corporation and are
     equal to or greater than three times the
     individual's annualized includible
     compensation)\8\*..............................
    Limits on deductible compensation\8\*...........     -0.8     -0.8     -0.9     -0.9     -0.9  .......  .......  .......  .......  .......      -4.3
    Work opportunity tax credit.....................      0.4      0.1  .......  .......  .......      0.1    (\4\)  .......  .......  .......       0.6
  Social services:
    Credit for children under age 17\3\.............  .......  .......  .......  .......  .......     57.1     56.0     55.8     55.6     42.5     267.0
    Credit for child and dependent care and           .......  .......  .......  .......  .......      4.7      4.8      4.8      4.8      4.9      24.0
     exclusion of employer-provided child care\3,9\.
    Credit for employer-provided dependent care.....    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.1
    Exclusion of certain foster care payments.......  .......  .......  .......  .......  .......      0.4      0.4      0.4      0.4      0.4       2.1
  Adoption credit and employee adoption benefits      .......  .......  .......  .......  .......      0.4      0.4      0.4      0.5      0.5       2.2
   exclusion........................................
  Deduction for charitable contributions, other than      1.0      1.1      1.1      1.1      1.1     36.2     37.3     38.5     39.8     41.1     198.4
   for education and health\10\.....................
  Credit for disabled access expenditures...........    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.3
Health:
  Exclusion of employer contributions for health      .......  .......  .......  .......  .......    145.5    143.8    151.4    159.6    169.4     769.8
   care, health insurance premiums, and long-term
   care insurance premiums\11\......................
  Exclusion of medical care and TRICARE medical       .......  .......  .......  .......  .......      2.6      2.7      2.8      2.9      2.9      13.9
   insurance for military dependents, retirees, and
   retiree dependents not enrolled in Medicare......
  Exclusion of health insurance benefits for          .......  .......  .......  .......  .......      0.9      0.9      1.0      1.0      1.1       4.9
   military retirees and retiree dependents enrolled
   in Medicare......................................
  Deduction for health insurance premiums and long-   .......  .......  .......  .......  .......      5.2      5.1      5.4      4.8      4.8      25.3
   term care insurance premiums by the self-employed
  Deduction for medical expenses and long-term care   .......  .......  .......  .......  .......     10.1     11.1     11.4     12.2     13.7      58.5
   expenses.........................................
  Exclusion of workers' compensation benefits         .......  .......  .......  .......  .......      4.9      5.0      5.1      5.2      5.3      25.6
   (medical benefits)...............................
  Health savings accounts...........................  .......  .......  .......  .......  .......      1.8      2.1      2.4      2.8      3.3      12.4
  Exclusion of interest on State and local                0.7      0.7      0.7      0.7      0.7      1.8      1.8      2.0      2.0      2.1      13.1
   government qualified private activity bonds for
   private nonprofit hospital facilities............
  Deduction for charitable contributions to health        1.9      1.9      2.0      2.0      2.1      3.2      3.3      3.4      3.5      3.6      26.7
   organizations....................................
  Credit for purchase of health insurance by certain  .......  .......  .......  .......  .......  .......    (\4\)    (\4\)    (\4\)    (\4\)       0.2
   displaced persons\3\.............................
  Credit for orphan drug research...................      0.8      1.0      1.1      1.2      1.3    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       5.3
  Tax credit for small businesses purchasing              0.2      0.2      0.1      0.1      0.2      1.2      0.9      0.6      0.8      0.9       5.2
   employer insurance...............................
  Subsidies for insurance purchased through health    .......  .......  .......  .......  .......     29.6     53.5     72.5     82.1     84.8     322.5
   benefit exchanges\3\.............................
Income Security:
  Exclusion of workers' compensation benefits         .......  .......  .......  .......  .......      2.7      2.9      3.0      3.2      3.3      15.1
   (disability and survivors payments)..............
  Exclusion of damages on account of personal         .......  .......  .......  .......  .......      1.7      1.7      1.7      1.7      1.8       8.5
   physical injuries or physical sickness...........
  Exclusion of special benefits for disabled coal     .......  .......  .......  .......  .......    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.1
   miners...........................................
  Net exclusion of pension contributions and
   earnings:
    Plans covering partners and sole proprietors      .......  .......  .......  .......  .......      8.0      9.3     10.7     15.5     17.7      61.1
     (sometimes referred to as Keogh plans).........
    Defined benefit plans...........................  .......  .......  .......  .......  .......     48.6     57.4     62.9     69.6     77.0     315.6
    Defined contribution plans......................  .......  .......  .......  .......  .......     72.8     82.7     98.9    117.6    132.9     504.8
  Individual retirement arrangements:
    Traditional IRAs................................  .......  .......  .......  .......  .......     20.9     12.9     13.6     14.5     15.3      77.2
    Roth IRAs.......................................  .......  .......  .......  .......  .......      7.1      7.0      7.7      8.5      9.2      39.5
  Credit for certain individuals for elective         .......  .......  .......  .......  .......      1.2      1.2      1.2      1.2      1.2       6.0
   deferrals and IRA contributions..................
  Exclusion of other employee benefits:
    Premiums on group term life insurance...........  .......  .......  .......  .......  .......      3.2      3.2      3.3      3.3      3.4      16.4
    Premiums on accident and disability insurance...  .......  .......  .......  .......  .......      4.1      4.2      4.4      4.6      4.8      22.2
  Additional standard deduction for the blind and     .......  .......  .......  .......  .......      2.7      2.8      3.0      3.3      3.5      15.3
   the elderly......................................
  Deduction for casualty and theft losses...........  .......  .......  .......  .......  .......      0.4      0.5      0.5      0.5      0.6       2.5
  Earned income credit\3\...........................  .......  .......  .......  .......  .......     72.7     73.3     76.0     73.8     75.6     371.4
  Phase out of the personal exemption for the         .......  .......  .......  .......  .......    -15.0    -15.9    -16.9    -17.9    -19.0     -84.6
   regular income tax, and disallowance of the
   personal exemption and the standard deduction
   against the alternative minimum tax*.............
  Exclusion of survivor annuities paid to families    .......  .......  .......  .......  .......    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.1
   of public safety officers killed in the line of
   duty.............................................
  Exclusion of disaster mitigation payments.........    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.2
  ABLE accounts\12\.................................  .......  .......  .......  .......  .......    (\4\)    (\4\)    (\4\)    (\4\)      0.1       0.1
Social Security and Railroad Retirement:
  Exclusion of untaxed Social Security and railroad   .......  .......  .......  .......  .......     37.6     39.6     41.9     44.2     46.8     210.1
   retirement benefits..............................
Veterans' Benefits and Services:
  Exclusion of veterans' disability compensation....  .......  .......  .......  .......  .......      6.8      7.6      7.4      7.1      7.9      36.8
  Exclusion of veterans' pensions...................  .......  .......  .......  .......  .......      0.2      0.2      0.2      0.2      0.2       0.9
  Exclusion of veterans' readjustment benefits......  .......  .......  .......  .......  .......      1.6      1.8      1.8      1.9      2.0       9.1
  Exclusion of interest on State and local              (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.3
   government qualified private activity bonds for
   veterans' housing................................
General Purpose Fiscal Assistance:
  Exclusion of interest on public purpose State and       9.7      9.8     10.1     10.3     10.6     25.6     26.0     26.7     29.1     29.9     187.7
   local government bonds...........................
  Deduction of nonbusiness State and local            .......  .......  .......  .......  .......     62.2     65.1     68.4     71.7     74.9     342.3
   government income taxes, sales taxes, and
   personal property taxes..........................
  Build America bonds\2,3\..........................  .......  .......  .......  .......  .......      3.2      3.2      3.2      3.2      3.2      16.0
Interest:
  Deferral of interest on savings bonds.............  .......  .......  .......  .......  .......      1.2      1.3      1.3      1.3      1.3       6.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Details may not add to totals due to rounding. An ``*'' indicates a negative tax expenditure for the 2015-2019 period.
 
\1\Reflects legislation enacted by September 30, 2015.
\2\Estimate includes an outlay to State and local governments. For the purposes of this table outlays are attributed to individuals.
\3\Estimate includes refundability associated with the following outlay effects:


 
                                                                      Corporations                                 Individuals
                                                                                                                                                  Total
                                                        2015     2016     2017     2018     2019     2015     2016     2017     2018     2019    2015-19
 
 
                                                     -------------------------------------------------------------------------------------------
 
    Credit for holders of clean renewable energy      .......  .......  .......  .......  .......    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.2
     bonds..........................................
    Credit for holders of qualified energy            .......  .......  .......  .......  .......    (\4\)    (\4\)    (\4\)    (\4\)    (\4\)       0.3
     conservation bonds.............................
    Recovery zone economic development bonds........  .......  .......  .......  .......  .......      0.2      0.2      0.2      0.2      0.2       0.8
    Credit for holders of qualified zone academy      .......  .......  .......  .......  .......      0.1      0.1      0.1      0.1      0.1       0.3
     bonds..........................................
    Credits for tuition for post-secondary education  .......  .......  .......  .......  .......      6.4      7.4      7.8      8.0  .......      29.6
    Qualified school construction bonds.............  .......  .......  .......  .......  .......      1.0      1.1      1.2      1.3      1.4       5.9
    Credit for children under age 17................  .......  .......  .......  .......  .......     33.7     33.9     34.5     35.0     22.1     159.2
    Credit for child and dependent care and           .......  .......  .......  .......  .......      0.9      1.0      1.0      0.9      0.9       4.7
     exclusion of employer-provided child care......
    Credit for purchase of health insurance by        .......  .......  .......  .......  .......  .......    (\4\)    (\4\)    (\4\)    (\4\)       0.1
     certain displaced persons......................
    Subsidies for insurance purchased through health  .......  .......  .......  .......  .......     25.8     46.3     63.0     71.3     73.7     280.1
     benefit exchanges..............................
    Earned income credit............................  .......  .......  .......  .......  .......     63.3     63.7     66.1     63.8     65.3     322.1
    Build America bonds.............................  .......  .......  .......  .......  .......      3.2      3.2      3.2      3.2      3.2      16.0
 
\4\Positive tax expenditure of less than $50 million.
\5\Estimate includes effect of credit for interest on certain home mortgages (Section 25).
\6\Includes bonus depreciation and general acceleration under MACRS.
\7\Estimate includes amounts of employer-provided health insurance purchased through cafeteria plans and employer-provided child care purchased through
  dependent care flexible spending accounts. These amounts are also included in other line items in this table.
\8\Estimate does not include effects of changes made by the Emergency Economic Stabilization Act of 2008.
\9\Estimate includes employer-provided child care purchased through dependent care flexible spending accounts.
\10\In addition to the general charitable deduction, the tax expenditure accounts for the higher percentage limitation for public charities, the fair
  market value deduction for related-use tangible personal property, the enhanced deduction for inventory, the fair market value deduction for publicly
  traded stock and exceptions to the partial interest rules.
\11\Estimate includes employer-provided health insurance purchased through cafeteria plans and TRICARE medical insurance, which are also included in
  other line items on this table.
\12\Estimate does not include outlays due to Medicaid


                     MACROECONOMIC FEEDBACK EFFECTS
                         OF PRO-GROWTH POLICIES

                              ----------                              


    Economic growth is one of the major determinants of revenue 
and spending levels--and therefore the size of budget 
deficits--over a given period. According to the Congressional 
Budget Office [CBO], if growth in real gross domestic product 
is just 0.1 percentage point higher than expected over its 10-
year window, revenue would be $286 billion higher--without tax 
increases--spending would be nearly $41 billion lower, and the 
cumulative deficit would fall by $327 billion.
    Conversely, as noted in the previous section, the lowering 
of economic growth projections raises significant difficulties 
in trying to restore fiscal balance. It poses a challenge for 
this budget resolution, which, as is customary, generally 
adopts CBO's economic assumptions. It also creates a 
disadvantage for congressional budgets compared with those of 
the President. The administration enjoys the luxury of using 
its own economic projections, rather than those of the 
nonpartisan CBO. In addition, the President's budget is a 
``post-policy'' presentation; that is, it incorporates any 
beneficial fiscal or economic effects the administration claims 
will result from its policies--something congressional budgets 
usually have not done.
    CBO has written extensively on the risks to the economy of 
deficits and debt, and how reducing deficits and debt would 
benefit the economy. Other policies likely to boost economic 
growth include fundamental tax reform, increasing domestic 
energy production, and the restoration of incentives for people 
to work, save, and invest.
    CBO's analysis of the fiscal path of this year's House 
budget resolution estimates that reducing budget deficits, 
thereby bending the curve on debt levels, would be a net 
positive for economic growth. According to that analysis, the 
fiscal year 2017 budget would increase real economic output per 
person by 1.7 percent, or about $1,100 in calendar year 2026, 
and by 6.3 percent, or about $4,900 in calendar year 2040 when 
compared with CBO's extended baseline. The analysis concludes 
that deficit reduction creates long-term economic benefits 
because it increases the pool of national savings and boosts 
investment, thereby raising economic growth and job 
creation.\29\ The greater economic output that stems from a 
large deficit-reduction package would have a sizeable impact on 
the Federal budget. For instance, higher output would lead to 
greater revenues through the increase in taxable incomes. Lower 
interest rates and a reduction in the stock of debt would lead 
to lower government spending on net interest expenses.
---------------------------------------------------------------------------
    \29\Congressional Budget Office, ``Budgetary and Economic Outcomes 
Under Paths for Federal Revenues and Noninterest Spending Specified by 
Chairman Price, March 2016,'' March 2016: https://www.cbo.gov/sites/
default/files/114th-congress-2015-2016/reports/51260-
BudgetaryPaths1.pdf.
---------------------------------------------------------------------------
    This year's budget resolution reduces deficits compared to 
CBO's January 2016 baseline by a total of $651 billion over 10 
years due to macroeconomic feedback effects on the budget. 
Lower deficits of $194 billion--consisting of $150 billion in 
higher revenues and $44 billion in lower mandatory outlays--is 
due to revised economic assumptions resulting from the 
macroeconomic feedback effects of legislation enacted late last 
year that made certain tax provisions permanent. These effects 
also include economic developments through the end of calendar 
year 2015 that were not included in the CBO baseline.\30\
---------------------------------------------------------------------------
    \30\Congressional Budget Office preliminary estimate of the 
macroeconomic feedback effects on the budget of recent legislation and 
economic developments not included in the CBO January 2016 baseline, 
released by email to House and Senate Budget Committees on 9 February 
2016.
---------------------------------------------------------------------------
    An additional $216 billion in lower deficits--a combination 
of $225 billion in higher revenues, without tax increases, and 
$9 billion in higher outlays--is due to the macroeconomic 
feedback effects of fully repealing the Affordable Care Act 
[ACA].\31\ CBO and the Joint Committee on Taxation [JCT] 
estimate that repealing the ACA would increase the level of 
gross domestic product by about 0.7 percent, on average, during 
the latter half of the budget window relative to current-law 
projections, mostly by increasing the supply of labor above 
what would be expected under a continuation of the ACA. In 
addition, CBO estimates the fiscal path of this budget 
resolution--which provides 10-year savings in spending of $6.5 
trillion from policy changes and debt service compared to 
current policy--would result in positive macroeconomic feedback 
effects that would further lower the deficit by approximately 
$241 billion.\32\
---------------------------------------------------------------------------
    \31\June 2015 published CBO/JCT estimate shifted forward 1 fiscal 
year of the macroeconomic feedback effects on the budget of a full and 
immediate repeal of the Affordable Care Act.
    \32\Congressional Budget Office, ``Budgetary and Economic Outcomes 
Under Paths for Federal Revenues and Noninterest Spending Specified by 
Chairman Price, March 2016,'' March 2016.

                        FUNCTIONAL PRESENTATION

                              ----------                              

    For decades, the budget resolution and accompanying report 
have presented the function-by-function breakdown in a manner 
that evolved mostly from practical and accounting 
considerations. The arrangement has changed little since 
enactment of the Congressional Budget Act of 1974.
    This resolution retains those conventional categories, as 
do the summary tables in the report. The narrative discussion 
below, however, takes a different approach. While keeping the 
content of the functional categories intact, it arranges them 
differently to reflect two important considerations: the 
crucial role of federalism in the United States' governing 
system, and the increasing burden of automatic spending 
programs (formally called ``direct'' or ``mandatory'' 
spending).
    The standard budget resolution format presents a range of 
government activities largely without distinguishing those of 
principal importance to the national government from those that 
may draw greater initiative from States and localities or the 
private sector. While National Defense and International 
Affairs appear first--as is appropriate for two of the Federal 
Government's main responsibilities--the sequencing of the 
remaining functions seems to lack any logic other than their 
function numbers. There is no reason, for example, why Energy 
(Function 270) should appear before Health (Function 550), or 
Veterans Benefits and Services (Function 700), or 
Administration of Justice (Function 750).
    The narratives below are arranged to make such a 
distinction. The presentation retains the content of each 
functional category, just as in the conventional format, but 
organizes the functional discussions in four broader categories 
as described below. The aim is to provoke a re-evaluation of 
the roles of different layers of government, and to group 
together the government's major domestic benefits programs, 
reflecting their substantial and growing impact on the budget. 
Put another way, the format encourages lawmakers and the public 
to think differently about the budget by looking at it 
differently.
    The groupings are as follows:

    Principal Federal Responsibilities. The first grouping 
consists of those activities clearly associated with the 
national level of government. Everyone would place national 
defense and international affairs in this group, as directed by 
the Constitution itself. That simplistic division, however, 
fails to acknowledge several other categories for which the 
Federal Government also has the central responsibility. These 
include veterans' benefits (an aspect of the compensation for 
military service), Federal courts and law enforcement, and 
general government, the last of which mainly finances the 
Legislative and Executive branches of the Federal Government. 
Also included here are the Overseas Contingency Operations/
Global War on Terrorism, which finance non-recurring military 
and diplomatic activities in the Middle East. The overall 
grouping, using the formal functional titles, is as follows:
     LNational Defense
     LInternational Affairs
     LOverseas Contingency Operations/Global War on 
Terrorism
     LVeterans Benefits and Services
     LAdministration of Justice
     LGeneral Government
     LGovernment-Wide Policy

    Domestic Priorities. This second set of functions draws 
together mainly the discretionary spending for activities that 
may be best administered or initiated by State and local 
governments or the private sector--and most of which would 
exist even if there were no Federal Government. This does not 
suggest they are of lesser priority; indeed, their importance 
is so immediate and direct that they benefit most from the 
initiative of those closest and most directly involved. This 
arrangement aims to encourage greater flexibility for States 
and localities and the private sector to drive these 
activities. (In the conventional format, these are Functions 
250 through 650.) Although the discussion here focuses on the 
discretionary spending in these categories, two sections--
Energy and Transportation -reflect both the discretionary and 
direct spending components. This is because in these areas, the 
two forms of spending are intertwined in ways unlike those of 
other functional categories.
     LGeneral Science, Space, and Technology
     LEnergy (both discretionary and direct)
     LNatural Resources and Environment
     LAgriculture
     LCommerce and Housing Credit
     LTransportation (both discretionary and direct)
     LCommunity and Regional Development
     LEducation, Training, Employment, and Social 
Services
     LHealth
     LIncome Security
     LOther Domestic Discretionary (mainly the 
administration of the Social Security and Medicare Programs)

    Direct Spending Programs. This group reflects solely the 
automatic spending components of Functions 250 through 650 in 
the conventional format. The aim is to show the magnitude of 
these programs--mostly for social insurance and safety net 
programs--in the overall budget. This form of spending is 
largely open-ended and flows from effectively permanent 
authorizations. Most of the programs funded this way pay 
benefits directly to groups and individuals without an 
intervening appropriation. They spend without limit, and their 
totals are determined by numerous factors outside the control 
of Congress: caseloads, the growth or contraction of GDP, 
inflation, and many others.
     LSocial Security
     LMedicare
     LMedicaid, the Affordable Care Act, and Related 
Programs
     LIncome Support, Nutrition, and Related Programs
     LFarm Support
     LBanking, Housing, and the Postal Service
     LStudent Loans, Social Services, and Related 
Programs
     LFederal Lands and Other Resources
     LOther Direct Spending (science, natural 
resources, and community and regional development)

    Financial Management. This final grouping consists of those 
functions that round out the budget's overall financing.
     LNet Interest
     LAllowances
     LUndistributed Offsetting Receipts

                   Principal Federal Responsibilities

                              ----------                              

    The two most obvious responsibilities of the national 
government are providing for the common defense of all the 
constituent States, and conducting diplomacy on behalf of the 
Nation as a whole. Related to these two is the supplemental 
spending for the Overseas Contingency Operations/Global War on 
Terrorism. As part of the compensation for military service, 
the government also offers a range of benefits specifically for 
veterans. The category called Administration of Justice mainly 
reflects funding for Federal law enforcement agencies--such as 
the Federal Bureau of Investigation and the Drug Enforcement 
Administration, among others--as well as the Federal judiciary. 
The vast majority of funding for the General Government 
function supports the Executive and Legislative Branches of the 
Federal Government. Included in this grouping as well are 
several government-wide savings policies.

                            NATIONAL DEFENSE


                            Function Summary

    The Federal Government has no higher responsibility than to 
``provide for the common defense'' of the Nation. No other 
level of government can do this, and it is not an option; it is 
a constitutional duty--one whose gravity is intensifying. The 
global security environment is growing more dangerous, as the 
United States faces increasingly complex and evolving threats 
around the world. These include, but are not limited to, the 
following:

      Russian aggression in Eastern Europe;

      Terrorist activities by the Islamic State and 
other networks;

      The nuclear and missile programs of North Korea 
and Iran;

      China's ambitions to aggressively exert influence 
in the Asia-Pacific.

    As Henry A. Kissinger, former Secretary of State, testified 
to the Senate Armed Services Committee last year on the global 
security environment: ``[W]e haven't faced such diverse crises 
since the end of the Second World War.''\33\ General Martin E. 
Dempsey, former Chairman of the Joint Chiefs of Staff, echoed 
this assessment more recently, testifying that ``the global 
security environment is as uncertain as I've ever seen it . . . 
the world is rapidly changing everywhere, and we're seeing 
significant shifts in an already complex strategic 
landscape.''\34\
---------------------------------------------------------------------------
    \33\Committee on Armed Services, U.S. Senate, ``Global Challenges 
and the U.S. National Security Strategy,'' hearing 29 January 2015.
    \34\Committee on Armed Services, U.S. Senate, ``Counter-ISIL 
(Islamic State of Iraq and the Levant) Strategy,'' hearing 7 July 2015.
---------------------------------------------------------------------------
    Recent terrorist attacks in Paris and San Bernardino, CA, 
reflect this new reality. Americans deserve leaders who are 
committed to executing their constitutional duty to defend the 
Nation. Truly assessing the threats and developing a strategy 
to deter and combat them while mitigating risk as far as 
possible should be the ultimate objective of the administration 
and defense leaders. The President and the Congress must then 
be honest about the true costs of the strategy, and provide 
full funding for its implementation.
    According to the House Armed Services Committee: 
``Reclaiming our role as a global leader does not mean the 
United States must `police' the world; rather, the United 
States must engage when hostile actors threaten our interests 
and must reassure allies in order to preserve the international 
order that the United States has painstakingly established. If 
not, as we have seen in places such as Syria, Ukraine, and the 
South China Sea, others will fill the vacuum and establish an 
order that is inconsistent with our values and our security.'' 
To meet the demands of the 21st century, the committee says, 
the U.S. military needs both strength and agility. ``Military 
strength requires enough capability to deal with a wide array 
of threats--both quality and quantity.'' As for agility, the 
committee argues: ``We must have the military capability able 
to protect us from unknown and unexpected threats. We have to 
be able to learn, to anticipate, and to adapt faster than 
anyone else.''\35\
---------------------------------------------------------------------------
    \35\Committee on Armed Services, U.S. House of Representatives, 
Views and Estimates, 5 February 2016.
---------------------------------------------------------------------------
    Following the prescription above for executing national 
security policy has been challenging in recent years due to 
laws designed to curtail spending and put the Federal 
Government on a fiscally sustainable path. While the Department 
of Defense has been expected to do more in terms of foreign 
engagement, funding for these requirements has been reduced. 
The national defense budget has carried the bulk of 
sequestration's effects after the enactment of the Budget 
Control Act [BCA] of 2011. Compared to the planned defense 
spending requested by then-Secretary Robert M. Gates in 2011--
the last time the Department was able to truly align a funding 
request with a strategy--the automatic enforcement procedures 
of the BCA will arbitrarily cull almost $1 trillion from 
defense, eroding critical warfighting capabilities, 
modernization, and readiness across all the services. According 
to General Dempsey, the Department's request for fiscal year 
2016 was insufficient to execute the national security strategy 
with acceptable levels of risk: the budget request was ``at the 
lower ragged edge of manageable risk'' and offered ``no slack, 
no margin left for error or strategic surprise.''\36\ Yet 
Congress underfunded defense by $5 billion. Every year since 
the BCA was enacted, budgetary prescriptions have been shaping 
national defense strategy, not the other way around, resulting 
in higher risks for service members and the Nation. According 
to the House Armed Services Committee: ``[O]ur national 
security strategy has not evolved to mitigate the risks we face 
or reconcile the resources available to counter those 
threats.''\37\ The mismatch between strategy and funding is 
unacceptable and needs to change.
---------------------------------------------------------------------------
    \36\Committee on Armed Services, U.S. Senate, ``Review of the 
Defense Authorization Request for Fiscal Year 2016 and the Future Years 
Defense Program,'' hearing 3 March 2015.
    \37\Committee on Armed Services, U.S. House of Representatives, 
Views and Estimates, 5 February 2016.
---------------------------------------------------------------------------
    Turning to the fiscal year 2017 budget, the administration 
is requesting $551 billion for base national defense funding 
for the budget year, in line with the Bipartisan Budget Act of 
2015, and $6.2 trillion over the 10-year window. In fiscal 
years 2018 and beyond, the administration assumes base defense 
spending above the Budget Control Act caps claiming ``the 
nation's defense strategy cannot be executed at sequester-
levels of funding.''\38\ While this budget matches the 
administration's fiscal year 2017 defense request, consistent 
with the maximum level allowed under current law, it provides 
$6.3 trillion over the 10-year window, nearly $90 billion above 
the administration's plan. Further, this budget assumes $23 
billion in overseas contingency operations funding to be 
dedicated to base defense requirements, bringing total 
resources for base defense funding to $574 billion (see section 
on Overseas Contingency Operations/Global War on Terrorism). It 
is now more critical than ever to ensure the U.S. military has 
all the resources it needs as it continues to engage in ever-
evolving threats in the Middle East and around the globe.
---------------------------------------------------------------------------
    \38\Department of Defense Office of the Under Secretary of Defense 
(Comptroller) Chief Financial Officer, Defense Budget Overview Fiscal 
Year 2017 Budget Request, February 2016.
---------------------------------------------------------------------------
    The resolution specifies $559.3 billion in total budget 
authority and $566.5 billion in total outlays in fiscal year 
2017, per current law (see Function 050 in the summary tables). 
These amounts include funding to compensate, train, maintain, 
and equip the military forces of the United States. More than 
95 percent of the funding in this function goes to Department 
of Defense military activities. The remainder funds the atomic 
energy defense programs of the Department of Energy, and other 
defense-related activities (primarily in connection with 
homeland security).
    Almost all of defense funding comes through annually 
appropriated, discretionary spending, which in this resolution 
totals $551.1 billion in budget authority and $557.7 billion in 
outlays in fiscal year 2017. This is the established level 
provided for in the Bipartisan Budget Act of 2015, which 
amended the Budget Control Act caps. Direct spending in 2017 
for this category--which includes allowances, offsetting 
receipts, and retirement payments--is $8.2 billion in budget 
authority and $8.7 billion in outlays in fiscal year 2017. The 
10-year totals for the entire defense category are $6.4 
trillion in budget authority and $6.2 trillion in outlays.
    Funding for the Pentagon's non-enduring activities in 
Afghanistan and Iraq is carried in a separate function called 
Overseas Contingency Operations/Global War on Terrorism (see 
Function 970 in the summary tables).

                      Illustrative Policy Options

    Policy development in this area rests with the Committee on 
Armed Services and the Appropriations Subcommittee on Defense. 
They will arrange priorities for maintaining robust national 
defense capabilities while responsibly managing taxpayer 
resources. Some illustrative areas of particular concern 
include the following.

    Military Compensation and Benefits. As discussed in last 
year's budget resolution, the current compensation and benefits 
system for military personnel, retirees, and their families is 
unsustainable. Consequently, the fiscal year 2016 budget 
resolution encouraged the committees of jurisdiction to review 
the recommendations of the Military Compensation and Retirement 
Modernization Commission [MCRMC]\39\ and consider reforms to 
sustain the long-term fiscal health of these programs, 
especially the retirement and health care benefits. In the 
Fiscal Year 2016 National Defense Authorization Act (Public Law 
114-92), the Armed Services Committees successfully included 
substantial reforms to the military retirement system, 
expanding the benefits to all military personnel while 
simultaneously putting the program on a fiscally sustainable 
path. According to the Congressional Budget Office [CBO], the 
new system will yield significant long-term savings in direct 
spending, with expected annual outlay reductions of about 20 
percent, or $10 billion.\40\ This laudable achievement on the 
part of the Armed Services Committee members and the Congress 
will ultimately provide a better and fairer benefit for all 
military personnel in the future, while maintaining the 
benefit's sustainability.
---------------------------------------------------------------------------
    \39\The Fiscal Year 2013 National Defense Authorization Act 
established the MCRMC to conduct a comprehensive review of military 
compensation and retirement systems and ultimately make recommendations 
to do the following: ensure the long-term viability of the All-
Volunteer Force; enable quality of life for military personnel that 
fosters successful recruitment, retention, and careers; and modernize 
and achieve fiscal sustainability for the compensation and retirement 
systems.
    \40\Congressional Budget Office, Cost Estimate of H.R. 1735 
National Defense Authorization Act for Fiscal Year 2016, 11 May 2015.

    Military Health Care. The health care system that benefits 
military personnel, their families, and retirees also needs 
reform. In their findings, the MCRMC members reported that 
``the quality of TRICARE benefits as experienced by service 
members and their families has decreased, and the fiscal 
sustainability of the program has declined.''\41\ In 1990, 
funding for military health care accounted for approximately 4 
percent of the Department's budget; in 2016, the administration 
requested, and Congress appropriated, health care funding 
accounting for 9 percent of the Department's base budget.\42\ 
This increased proportional growth in health care spending 
occurred even as the total defense budget significantly 
increased between 2000 and 2012. Consequently, Congress made 
changes to the system to help rein in cost growth rates, 
including Federal ceiling prices for prescription drugs. 
Nevertheless, more needs to be done. Reforming the military 
health care system is a priority for the House Armed Services 
Committee, which plans on ``examining the whole military health 
care system'' with the goal of ensuring it ``can sustain 
trained and ready health care providers to support the 
readiness of the force and a quality health care benefit that 
is valued by its beneficiaries.''\43\ Once again, this budget 
supports the Armed Services Committee's efforts to tackle this 
issue, and the Budget Committee looks forward to seeing the 
resulting policy recommendations expected later this year.
---------------------------------------------------------------------------
    \41\Military Compensation and Retirement Modernization Commission, 
Final Report of the Military Compensation and Retirement Modernization 
Commission, January 2015, p. 81.
    \42\Congressional Budget Office, Long-Term Implications of the 2016 
Future Years Defense Program, January 2016.
    \43\Committee on Armed Services, U.S. House of Representatives, 
Views and Estimates, 5 February 2016.

    Budget Transparency. Like all government agencies, the 
Department of Defense has a responsibility to account for and 
effectively manage its taxpayer-provided resources. The 
continued failure of the Defense Department to receive a clean 
audit from the Government Accountability Office not only limits 
transparency and congressional oversight of defense programs, 
but also erodes public confidence in the Department's ability 
to effectively spend taxpayer resources. According to the House 
Armed Services Committee: ``For more than 20 years, the 
Comptroller General of the United States has consistently 
identified the financial management of the Department of 
Defense as a high-risk area.''\44\ This is especially 
disconcerting during times of fiscal constraint, when it is 
more important than ever for agencies to complete self-
assessments to make tough decisions on setting priorities with 
limited resources. The Fiscal Year 2010 National Defense 
Authorization Act (Public Law 111-84) required the Department 
to implement the Financial Improvement and Audit readiness 
plan, and the Department expects full auditability by the end 
of fiscal year 2017. The budget anticipates the Pentagon's full 
attention to meeting its auditability goals and continued 
Department efforts to effectively allocate existing resources.
---------------------------------------------------------------------------
    \44\Ibid.

    Defense Industrial Base and Sustainment. A robust 
industrial base is vital to the national security of the United 
States and to military readiness. As defense budgets have 
declined, there has been a much needed focus on the acquisition 
of new weapons systems to modernize the armed forces. Little 
attention, however, has been given to the inescapable fact that 
sustainment is 60 percent to 80 percent of the total lifecycle 
cost of a weapons system, according to the Department of 
Defense.\45\ Therefore, the ongoing health of the defense 
industrial base, in its entirety, also must be carefully 
considered.
---------------------------------------------------------------------------
    \45\Government Accountability Office, Weapon Systems Management: 
DOD Has Taken Steps to Implement Product Support Managers but Needs to 
Evaluate Their Effects, April 2014.
---------------------------------------------------------------------------
    The sustainment industrial base comprises both private 
sector and military facilities, each serving a unique and vital 
role in the maintenance, repair, and overhaul of weapons, 
weapons systems, components, subcomponents, parts, and 
equipment. As budget resources become more scarce, the military 
facilities and private sectors should focus on the areas in 
which each excels, entering into public-private partnerships, 
as appropriate, to save taxpayer dollars and increase the 
warfighter's readiness. Furthermore, the Department should 
learn from recent mistakes and failed policies, which include 
the unnecessary furlough of working capital fund employees or 
managing by end strength. Workload should be one of the key 
drivers when managing depots, arsenals, and ammunition plants 
to ensure the lowest cost to the taxpayer.
    Military depots are the backbone of the organic industrial 
base and are the Nation's insurance policy against the tides of 
economic uncertainty, changes in the defense industry, and 
wartime demands. Additionally, military depots serve as the 
appropriate location to maintain command and control of the 
majority of warfighting systems. The B-52 bomber program, as 
one example, is a reminder that sustainment of weapons systems 
for decades beyond their initially projected lifecycle is here 
to stay and will be essential to meeting military readiness 
needs. Military depots have proven their value to the taxpayer 
for efficiently sustaining systems that are no longer 
profitable or no longer cost-effective to maintain in the 
private sector. During peacetime or war, military depots meet 
military readiness requirements and provide critical and 
necessary skill sets on time and on budget.
    Acquisition reform should reaffirm the value of military 
core statutes and the longstanding balance of workload between 
military depots and the private sector. These key provisions in 
existing law, when vigorously enforced, will ensure that the 
vital security interests of the United States military are met 
through the maintenance of a healthy defense industrial base, 
even during a time of declining budgets.

                         INTERNATIONAL AFFAIRS


                            Function Summary

    The international affairs budget is critical in advancing 
U.S. strategic priorities and interests, especially those 
relating to economic opportunities, national security, and 
American values. That said, duplicative programs, programs 
unrelated to vital U.S. national interests, and inefficiencies 
are prevalent in the budget and should be addressed. This 
budget resolution represents a thorough re-evaluation of 
accounts in this category and gives priority to programs that 
are both integral to the core mission and that effectively and 
efficiently achieve desired outcomes.
    From World War II, through the end of the Cold War, and 
into the 21st century, the United States has remained essential 
to the security of its allies and the international 
community.\46\ The U.S. is vital to international peace, 
security, stability, and the spread of democracy and freedom. 
America needs to maintain a diplomatic and economic engagement 
in the world that will ensure its ``principles of democracy, 
opposition to aggression and intimidation by authoritarian 
regimes, and a strong assistance program that assists allied 
partners.''\47\
---------------------------------------------------------------------------
    \46\The Foreign Policy Initiative, Foreign Policy 2015, 30 
September 2015, http://foreignpolicyi.org/files/uploads/images/2015-09-
30-Foreign%20Policy%202015.pdf.
    \47\Ibid.
---------------------------------------------------------------------------
    According to the Committee on Foreign Affairs, reducing 
poverty through economic growth is a ``key objective of the 
U.S. national security strategy and core responsibility of the 
Federal departments and agencies implementing U.S. foreign 
assistance programs.''\48\ The failure to properly manage 
foreign aid resources will not only doom U.S. development 
programs, but will also continue the cycle of dependence on 
U.S. foreign aid.\49\
---------------------------------------------------------------------------
    \48\Committee on Foreign Affairs, U.S. House of Representatives, 
Views and Estimates, 4 February 2016.
    \49\Ibid.
---------------------------------------------------------------------------
    The United States and its citizens face grave new threats, 
and must ``refrain from pursuing a protectionist and 
isolationist retreat.''\50\ The new challenges America faces 
today require a ``vision and policies anchored not in the 
fatalism of U.S. decline, but rather in a renewed commitment to 
a strong and enduring American global leadership.''\51\
---------------------------------------------------------------------------
    \50\The Foreign Policy Initiative, op cit.
    \51\Ibid.
---------------------------------------------------------------------------
    For this budget category (Function 150 in the summary 
tables), the budget resolution proposes a total of $39.8 
billion in budget authority and $43.7 billion in outlays for 
fiscal year 2017. This funding covers the following: 
international development, food security, and humanitarian 
assistance; international security assistance; the conduct of 
foreign affairs; foreign information and exchange activities; 
and international financial programs. The primary agencies 
responsible for executing these programs are the Departments of 
State, Agriculture, and the Treasury; the U.S. Agency for 
International Development [USAID]; and the Millennium Challenge 
Corporation. Over 10 years the budget totals are $405.4 billion 
in budget authority and $401.2 billion in outlays.
    The majority of the funding is discretionary spending, 
which is $35.8 billion in budget authority and $45.3 billion in 
outlays for fiscal year 2017. Direct spending in this 
function--totaling $4.0 billion in budget authority and -$1.6 
billion in outlays for fiscal year 2017--includes loan 
guarantee programs, payments to the Foreign Service Retirement 
and Disability Fund, and foreign-military sales programs. The 
negative figures reflect receipts from foreign-military sales 
and financing programs.
    As with National Defense, funding for the State Department 
and USAID's incremental, non-enduring civilian activities in 
the frontline states of the global war on terrorism is 
reflected in the category called Overseas Contingency 
Operations/Global War on Terrorism.

                   Reorganize the Department of State

    The Constitution invests foreign-policymaking power in the 
President by granting that office the authority to negotiate 
treaties and appoint ambassadors. To assist the President in 
discharging his foreign affairs duties, the Congress in 1789 
created the Department of State, the first executive department 
established.\52\ The core responsibilities of the Department's 
Secretary are diplomacy, providing foreign policy advice to the 
President, understanding the international environment, and 
advancing U.S. interests abroad.\53\
---------------------------------------------------------------------------
    \52\U.S. Department of State, ``Duties of the Secretary of State,'' 
20 January 2009: http://www.state.gov/secretary/115194.htm.
    \53\Ibid.
---------------------------------------------------------------------------
    An effective American foreign policy depends on a strong 
State Department, but strategic guidance and accountability are 
hard to find. State's diminished relevance can be attributed to 
failings in three principal areas: human resources, programs, 
and the Department's organizational structure.\54\
---------------------------------------------------------------------------
    \54\Quadrennial Diplomacy and Development Review, Enduring 
Leadership in A Dynamic World, 2015: http.//www.state.gov/documents/
organization/241429.pdf.
---------------------------------------------------------------------------
    As identified in the Department's Quadrennial Diplomacy and 
Development Review [QDDR] of 2015, the Department needs to 
modernize how it recruits or acquires necessary skill sets and 
invest in training for employees to meet current and 
forthcoming challenges.\55\ The Department is unable to pivot 
from crisis to crisis efficiently as obsolete skill sets cannot 
be downsized to create room for those in demand. Currently, the 
Department does not give priority to the training of its 
employees, especially with respect to leadership skills. As a 
result, Department staff members do not build expertise 
commensurate with their private sector counterparts.
---------------------------------------------------------------------------
    \55\Ibid.
---------------------------------------------------------------------------
    The 2015 QDDR identified the need to ``deepen expertise in 
planning and performance management.''\56\ This is especially 
true with respect to how the Department deploys foreign 
assistance programs. Currently, monitoring and evaluation of 
Department programs is sporadic and does not inform future 
programming decisions. The Department's goals and objectives 
are vague or broad to the point that they could not reasonably 
be identified. At the country level, goals such as encouraging 
a given country to become more democratic are empty and provide 
no strategic guidance on implementation.\57\ At the program 
level, every program is deemed a success because goals are 
quantitative (e.g. number of people trained or textbooks 
distributed) rather than qualitative. As a result, foreign 
assistance funding does not advance discrete foreign policy 
objectives, and only anecdotal success is identifiable. To 
date, only one country (Greece) has ever ``graduated,'' or 
advanced on both the political and economic scale, to warrant 
an end to U.S. foreign assistance.\58\ Such stark figures 
should call into question the entire foreign assistance model 
as currently employed by the Department of State.
---------------------------------------------------------------------------
    \56\Ibid.
    \57\Ibid.
    \58\Ibid.
---------------------------------------------------------------------------
    With the increase in crises around the world, the 
Department has assumed new responsibilities leading to an ever-
expanding bureaucracy, now desperately in need of rightsizing. 
While the number of assistant secretary positions is capped by 
Congress at 24, the Department has vastly increased its use of 
``special envoys,'' ``ambassadors-at-large,'' ``special 
advisers,'' and ``coordinators.''\59\ Issues that are naturally 
cross-regional or cross-functional are given their own office 
or bureau and associated budget thereby creating redundancy 
with existing offices and activities. The Department has 
struggled to reduce these areas of overlap as bureaus and 
offices fiercely protect budgets and resources.
---------------------------------------------------------------------------
    \59\Ibid.
---------------------------------------------------------------------------
    The Department is now approaching a period of transition 
and new leadership, providing a natural opportunity to 
undertake far-reaching, and long overdue, reforms. In addition 
to the three areas addressed above, State should consider other 
reforms that have been initiated but remain incomplete. For 
example, integrating USAID into the Department of State will 
enable the U.S. to structure more effective foreign assistance 
programs. When it comes to advancing democracy, which is 
inherently tied to America's diplomacy, USAID will be best 
served by being integrated into a single entity responsible for 
all of America's foreign policy.

           Illustrative Discretionary Spending Policy Options

    The committees of jurisdiction--the Committees on Foreign 
Affairs and Agriculture, as well as the Appropriations 
Subcommittee on State, Foreign Operations, and Related 
Programs--should continue effective oversight of international 
affairs programs to ensure resources are used efficiently to 
achieve desired results that ultimately support U.S. national 
interests. While the final policy choices will lie with the 
committees, some options worthy of consideration might include 
the following.

    Reform Food Aid. One of the areas where the international 
affairs budget fails to use taxpayer dollars efficiently and 
effectively is the U.S. international food aid program, 
including Food for Peace (Public Law 480, Title II), which 
provides emergency food assistance abroad and supports 
development programs in developing nations. Its failings result 
primarily from enduring program constraints, including the 
cargo preference (which dictates at least 50 percent of food 
aid must be shipped on U.S. flagged vessels). Other impediments 
include the requirement that 100 percent of food commodities be 
produced in the U.S., and monetization requirements, the 
practice of selling U.S. commodities on foreign markets to fund 
development projects. Several bipartisan efforts have called 
for reforming food programs. According to a 2011 report by the 
Government Accountability Office [GAO], the practice of 
monetization loses an average of 25 cents of every dollar spent 
on food aid.\60\ This budget therefore endorses food aid 
reforms to get maximum benefit out of every dollar spent on 
this program.
---------------------------------------------------------------------------
    \60\Government Accountability Office, International Food 
Assistance: Funding Development Projects through the Purchase, 
Shipment, and Sale of U.S. Commodities Is Inefficient and Can Cause 
Adverse Market Impacts, 23 June 2011.

    Overhaul the Broadcasting Board of Governors. For years, 
the Office of the Inspector General and the Government 
Accountability Office have noted inefficiencies and redundant 
bureaucratic structures within the Broadcasting Board of 
Governors [BBG]. This budget calls for overhauling the 
governing structure and organization of the BBG, with a 
reduction in funds until such changes are made. The BBG, which 
became an independent entity in 1998, is responsible for 
directing and overseeing all U.S. international broadcasting 
services, such as Voice of America. BBG is mostly known for 
programs that educate the world on American culture, society, 
and governance, in addition to promoting democratic principles 
such as human rights and religious freedom. While international 
broadcasts can be an effective tool in executing America's 
foreign policy objectives, BBG fails to efficiently implement 
its mission due to egregious mismanagement, lack of 
accountability, and program overlap. In July 2014, the House 
passed H.R. 4490, the United States International 
Communications Reform Act of 2014, a bipartisan reform bill 
that addresses these problems to improve the management and 
effectiveness of BBG programs. The Committee on Foreign Affairs 
reiterates the critical need to reform the BBG: ``In order to 
confront the challenges posed by Islamic State and Russian 
propaganda, among others, Congress must first fix the 
organization charged with leading this effort.''\61\ 
Consequently, this budget supports a reduction in funding for 
BBG until significant reforms are made as to safeguard taxpayer 
dollars from continued waste at the hands of governmental 
mismanagement.
---------------------------------------------------------------------------
    \61\Committee on Foreign Affairs, U.S. House of Representatives, 
Views and Estimates, 4 February 2016.

    Eliminate Contributions to the Clean Technology Fund and 
the Strategic Climate Fund. The Obama Administration created 
the Clean Technology and Strategic Climate Funds in 2010. They 
provide foreign assistance to support energy-efficient 
technologies intended to reduce energy use and mitigate climate 
change. Borrowing funds abroad to provide financial assistance 
in this area is not a core U.S. foreign policy function--
especially during times of large and mounting debt. In 
addition, the government should not attempt to pick winners and 
losers in terms of which technologies and companies to favor 
and advance abroad. Both programs should be considered for 
---------------------------------------------------------------------------
elimination.

    Reduce Education Exchange Programs. Function 150 includes 
two education exchange accounts intended to encourage mutual 
understanding between Americans and citizens around the world 
through scholarship and leadership programs: Educational and 
Cultural Exchange Programs and the Open World Leadership 
Center. Although their mission is laudable, exchange programs 
are a non-essential component of the foreign-affairs budget and 
should be reduced accordingly. When reduction decisions for 
these accounts are made, the priority should go to programs 
that are in line with U.S. strategic interests and that receive 
matching foreign-government contributions, such as the 
Fulbright Program.

    Reduce Contributions to International Organizations and 
Programs. The United States makes voluntary contributions to 
several multilateral organizations and programs. These often 
duplicate funding provided in the Contributions to 
International Organizations [CIO] account, which makes payments 
to organizations pursuant to treaties the United States has 
signed. Further, United States contributions to the United 
Nations Development Program [UNDP], which has been flagged by 
the Special Inspector General for Afghanistan Reconstruction 
[SIGAR] as problematic, flow through this account. According to 
SIGAR, UNDP's oversight and management of the Law and Order 
Trust Fund for Afghanistan--to which the United States and 
other donors have contributed more than $3 billion since 2002--
is weak, making taxpayer dollars susceptible to fraud, waste, 
and abuse.\62\ Although this budget fully funds the CIO 
account, it does not support voluntary contributions for the 
International Organizations and Programs account, including 
contributions to the UNDP.
---------------------------------------------------------------------------
    \62\John F. Sopko, Special Inspector General for Afghanistan 
Reconstruction, letter to Helen Clark, UNDP Administrator, 12 September 
2014: http://www.sigar.mil/pdf/special%20projects/SIGAR-14-98-SP.pdf.

    Eliminate Funding for Peripheral Foreign-Affairs 
Institutions. The United States funds multiple independent 
agencies and quasi-private institutions through the foreign-
affairs budget. Included in this list are the Inter-American 
Foundation, the African Development Foundation, the East-West 
Center, and the Asia Foundation. These institutions all engage 
in activities that overlap the State Department and USAID 
activities. Consolidating and eliminating funding for multiple 
institutions that perform similar tasks will make U.S. 
engagement with the world more efficient and cost-effective. 
Further, some of these organizations already receive private 
---------------------------------------------------------------------------
funding and could continue with non-government funds.

    Make the Millennium Challenge Corporation Lead Agency on 
Foreign-Development Assistance. The United States has two 
primary foreign-development assistance programs: USAID's 
Development Assistance program and the Millennium Challenge 
Corporation [MCC].\63\ Funding for foreign aid and helping 
other nations rise toward prosperity keep the United States 
safe and strengthen the economy by establishing new trading 
partners and markets. Such development assistance is 
worthwhile, however, only if it produces results for the aid 
recipients.
---------------------------------------------------------------------------
    \63\Committee on Foreign Affairs, U.S. House of Representatives, 
Views and Estimates, 4 February 2016.
---------------------------------------------------------------------------
    America's experience with having two development-assistance 
programs has shown that MCC's model has been more effective in 
achieving results. MCC's emphasis on outcomes rather than 
inputs should be the foundation of all U.S. development-
assistance programs. Other elements of MCC's model that should 
be extended throughout U.S. development-assistance programs 
include the following:

      Strict requirements on recipient countries to 
prove strong commitments to good governance, economic freedom, 
and investment in their citizens in order to be considered for 
aid;

      A willingness of the U.S. government to terminate 
assistance if an aid recipient starts to fail on these critical 
commitments;

      Country ownership, which requires the country to 
plan its own aid projects and lead implementation;

      Strict timelines for aid projects.

    These principles are critical to ensuring the long-term 
sustainability of projects once U.S. assistance concludes. 
Further, MCC's model is resulting in the ``MCC Effect,'' in 
which countries are independently making reforms in favor of 
good governance, economic freedom, and other MCC requirements, 
to qualify for a compact--and the effectiveness of this 
approach appeared early on. For example, in July 2007 the MCC 
signed a compact with Lesotho only after the country passed the 
Legal Capacity of Married Persons Act in 2006 that ensured 
married women, who had previously been legally categorized as 
minors, were granted basic economic, financial, and social 
rights.\64\ In 2010, USAID announced a reform agenda, USAID 
Forward, and claims to be in the process of adopting more 
accountable policy standards, country ownership, and 
timetables. Although some changes have been made to the 
agency's practices, success continues to remain elusive. MCC's 
model is more effective and efficient in delivering foreign 
aid. It also generates the most benefits for the taxpayer 
dollar. For these reasons, the committees of jurisdiction 
should consider making MCC the lead agency on foreign-
development assistance.
---------------------------------------------------------------------------
    \64\Millennium Challenge Corporation, ``One Step Closer to 
Achieving Gender Equality in Lesotho,'' 2013: https://www.mcc.gov/our-
impact/story/story-one-step-closer-to-achieving-gender-equality-in-
lesotho.

    International Religious Freedom. The United States should 
promote freedom of religion or belief around the world, given 
the importance of religious freedom to human rights, economic 
development, stability, and democracy. The independent U.S. 
Commission on International Religious Freedom [USCIRF] has 
provided important oversight and recommendations in this 
regard, including redirecting and conditioning aid. It calls 
for budget justifications to take into account the findings and 
recommendations of USCIRF. Additionally, the Office of 
International Religious Freedom continues to serve as an 
important voice on these issues in the State Department and 
should be supported.

                    OVERSEAS CONTINGENCY OPERATIONS/
                        GLOBAL WAR ON TERRORISM


                            Function Summary

    This category reflects non-enduring funding for the 
execution of Global War on Terrorism [GWOT] and other closely 
related activities, also known as Overseas Contingency 
Operations [OCO]. It provides funding for Department of Defense 
military operations and for the incremental civilian activities 
in Afghanistan, Pakistan, and Iraq led by the Department of 
State and the U.S. Agency for International Development 
[USAID]. The funding is entirely discretionary, with no direct 
spending components.
    The resolution calls for $73.7 billion in total budget 
authority and $38.5 billion in new outlays in fiscal year 2017 
for OCO/GWOT (shown in Function 970 in the summary tables). 
This funding level is consistent with the Bipartisan Budget Act 
of 2015. Due to the evolving nature of contingency operations, 
if the administration determines additional funds are needed to 
execute the war mission, the President should request 
supplemental funding as he deems necessary for these defense 
operations only.

                           Policy Assumptions

    Base Defense Requirements. Russian aggression and the 
growing threats of the Islamic State in the Middle East shape 
the parameters of an increasingly complex and challenging 
security environment. Out of the total OCO funding level of 
approximately $74 billion for fiscal year 2017, this resolution 
assumes $23 billion of these funds will be used for base 
defense requirements. Combined with the $551 billion in base 
National Defense funding (Function 050), the total spending 
level for base defense requirement needs for fiscal year 2017 
is $574 billion. This is consistent with the funding level 
provided in H. Con. Res. 27, the Concurrent Resolution on the 
Budget--Fiscal Year 2016.

    Budgeting for OCO. Funding provided in the OCO/GWOT budget, 
if enacted, will occur 16 years after the 9/11 terrorist 
attacks on the United States, which triggered wars in 
Afghanistan and Iraq. Consistent with the administration's 
plan, this budget supports phasing out the Overseas Contingency 
Operations/Global War on Terrorism designation for both defense 
and civilian programs, and assumes a transition to base budget 
funds in future years.

    OCO Transparency. All Federal program funding should be 
fully transparent and subject to agency accountability and 
congressional oversight. For both defense and civilian efforts 
in the frontline states funded with OCO monies, this budget 
supports full transparency of where the funds have been spent 
in the past, the present, and, if applicable, the future. The 
committees of jurisdiction have ably enforced such 
requirements, including section 1534 of the Fiscal Year 2016 
National Defense Authorization Act, which calls for a 
Comptroller General report on the use of OCO operation and 
maintenance funds for base requirements.\65\
---------------------------------------------------------------------------
    \65\The National Defense Authorization Act for Fiscal Year 2016, 
(Public Law 114-92), section 1534.
---------------------------------------------------------------------------

                     VETERANS BENEFITS AND SERVICES


                            Function Summary

    The Department of Veterans Affairs provides an array of 
benefits to veterans and their families, including disability 
compensation and pensions, education benefits, survivor 
benefits, medical treatment, life insurance, vocational 
rehabilitation, and burial and memorial benefits. The benefits 
are provided through three administrative agencies: the 
Veterans Health Administration, the Veterans Benefits 
Administration, and the National Cemetery Administration.
    The VA budget includes both discretionary and direct 
funding. Discretionary accounts fund medical care, medical 
research, construction programs, information technology, and 
general operating expenses, among other things. Direct spending 
accounts fund disability compensation, pensions, vocational 
rehabilitation and employment, education, life insurance, 
housing, and burial benefits, among other benefits and 
services.
    The budget resolution calls for $174.8 billion in total 
budget authority and $182.0 billion in total outlays in fiscal 
year 2017. Discretionary spending is $74.7 billion in budget 
authority and $74.7 billion in outlays in fiscal year 2017, 
about 4 percent higher than last year's levels for VA's 
discretionary budget. Direct spending in fiscal year 2017 is 
$100.0 billion in budget authority and $107.4 billion in 
outlays. The 10-year totals for budget authority and outlays 
are $2.0 trillion and $2.0 trillion, respectively. This 
resolution accommodates up to $66.4 billion for fiscal year 
2018 in discretionary advance appropriations for medical care, 
consistent with the Veterans Health Care Budget and Reform 
Transparency Act of 2009.

            A Culture of Mismanagement and Wasteful Spending

    For years, the Department of Veterans Affairs [VA] has been 
plagued with problems in health care delivery, business 
processes, and performance across the country. These are the 
products of growing bureaucratic mismanagement, in addition to 
leadership and staffing failures. In 2015, the Government 
Accountability Office added both VA health care and information 
technology acquisitions to their High-Risk List, which calls 
attention to ``agencies and program areas that are high risk 
due to their vulnerability to fraud, waste, abuse, and 
mismanagement, or are most in need of transformation.''\66\
---------------------------------------------------------------------------
    \66\Government Accountability Office, High-Risk Series: An Update, 
February 2015.
---------------------------------------------------------------------------
    The following examples highlight why GAO views the VA as 
high risk.

      VA Medical Construction Projects. The Department 
of Veterans Affairs medical center in Aurora, Colorado cost 
taxpayers $1.7 billion in 2015, more than $1 billion over 
budget.\67,68\ According to an April 2013 GAO report, ``VA's 
largest medical center construction cost increases ranged from 
59 percent to 144 percent, with a total cost increase of nearly 
$1.5 billion and an average increase of approximately $366 
million per project. The schedule delays ranged from 14 to 74 
months with an average of 35 months per project.''\69\
---------------------------------------------------------------------------
    \67\Ibid.
    \68\``Cost of Aurora veteran's hospital leaps to $1.73 billion,'' 
The Denver Post, 18 March 2015: http://www.denverpost.com/news/
ci_27730588/cost-aurora-veterans-hospital-leaps-1-73-billion; and 
``VA's Colorado hospital has a `shocking' sticker price: $1.7 billion. 
Yes, billion,'' The Washington Post, 18 March 2015: https://
www.washingtonpost.com/news/federal-eye/wp/2015/03/18/vas-colorado-
hospital-has-a-shocking-sticker-1-7-billion-yes-billion/.
    \69\Government Accountability Office, VA Construction Additional 
Actions Needed to Decrease Delays and Lower Costs of Major Medical-
Facility Projects, April 2013: http://www.gao.gov/assets/660/
653585.pdf.

      VA Information Technology Systems. In 2015, the 
VA Inspector General highlighted VA information technology [IT] 
systems development--of which the Veterans Benefit Management 
System [VBMS] is a component--as a ``long-standing high-risk 
challenge, susceptible to cost overruns, delays, performance 
problems, and, in some cases, complete project failures.''\70\ 
The Veterans Benefits Administration [VBA] reported it has made 
progress in reducing the backlog claims through VBMS; 
nevertheless, recent audits and reports contradicted that claim 
and did not attribute the decrease in backlogs specifically to 
VBMS. Further, the VBMS budget increased from $580 million in 
2009 to $1.3 billion in 2015, with no end in sight. Even with a 
122-percent increase in funding to end the backlog, VBMS 
continues to fail in providing needed services.
---------------------------------------------------------------------------
    \70\VA Office of Inspector General, Department of Veterans Affairs 
Follow-up Review of the Veterans Benefits Management System, 14 
September 2015: http://www.va.gov/oig/pubs/VAOIG-13-00690-455.pdf.

      Contract Regulation Noncompliance. In 2015, a 35-
page document addressed to VA Secretary McDonald detailed how 
VA officials made $6 billion in medical supply purchases that 
were in direct violation of Federal contracting rules.\71\ The 
document also described a culture of lawlessness and chaos at 
the Veterans Health Administration [VHA]. The VA's failure to 
abide by Federal contracting regulations makes taxpayer dollars 
more susceptible to fraud, waste, and abuse and is 
unacceptable.
---------------------------------------------------------------------------
    \71\``Senator asks VA Chief about `continuing culture of chaos' 
that fails veterans,'' The Washington Post, 22 June 2015: https://
www.washingtonpost.com/news/federal-eye/wp/2015/06/22/senator-to-va-
chief-what-are-you-doing-to-address-continuing-culture-of-chaos-that-
fails-our-veterans/.
---------------------------------------------------------------------------

                            The Way Forward

    VA needs to adopt a new way of thinking to address its most 
challenging problems, such as ensuring access to health care, 
quality and delivery of programs, and cost management. All 
programs should maximize net benefits, and be cost- and target-
efficient.
    All VA programs vulnerable to significant moral hazard 
should require adequate cost sharing to assure that 
beneficiaries commit enough of their own resources to act 
responsibly, with amounts scaled to what they can afford. 
Reducing moral hazard on the part of government agencies and 
program beneficiaries is one of many ways to improve VA 
programs.\72\ Last, Congress should require any VA rule or 
regulation with an annual economic impact of $100 million or 
more to come before Congress for an up-or-down vote before that 
rule or regulation takes effect.\73\
---------------------------------------------------------------------------
    \72\Peter H. Schuck, Why Government Fails So Often and How It Can 
Do Better, 2014.
    \73\Neil Siefring, ``The REINS Act will keep regulations and their 
costs in check,'' The Hill. 16 February 2016: http://thehill.com/blogs/
pundits-blog/economy-budget/250178-the-reins-act-will-keep-regulations-
and-their-costs-in; and Passage of H.R. 427 (H. Rept. 114-214), the 
Regulations from the Executive in Need of Scrutiny Act of 2015 (REINS 
Act), (H.R. 427, H. Rept. 114-214): https://www.congress.gov/bill/
114th-congress/house-bill/427.
---------------------------------------------------------------------------
    VA should conduct a thorough analysis to sort out and 
reassess its missions based on their importance, difficulty, 
and past success. VA leaders can achieve this by thinning out 
the bureaucracy by, among other things, reducing the number of 
layers between top and bottom employees; reducing the number of 
managers; accelerating the hiring and appointments processes 
(working alongside the Congress where appropriate); 
streamlining the disciplinary process; refining performance 
measure metrics; and strengthening oversight and contract 
administration of government private employee contracts.\74\
---------------------------------------------------------------------------
    \74\Schuck, op. cit.
---------------------------------------------------------------------------
    The agency also needs personnel reforms. VA's workforce is 
in serious crisis, experiencing a long-term decline in quality, 
accountability, vision, energy, and professional commitment. No 
organization or Federal agency can function effectively without 
maintaining an effective workforce--and that includes 
disciplining employees when necessary. At the VA, however, it 
is nearly impossible to fire, demote, or suspend staff members 
(civil servants and Senior Executive Service [SES]).\75\ The 
Veterans Committee Chairman remains a strong advocate of 
providing the VA with authority to take such actions when 
justified.
---------------------------------------------------------------------------
    \75\Ibid.
---------------------------------------------------------------------------
    Another way to hold SES and supervisors accountable is to 
change the positions from the General Schedule to a GG schedule 
(excepted service). Within the intelligence community, each 
intelligence organization (i.e., the Defense Intelligence 
Agency, the National Geospatial-Intelligence Agency, the 
National Security Agency, and the National Reconnaissance 
Office) uses the GG schedule that enables the agencies to 
dismiss employees that do not meet performance goals.
    Without these steps, the consequences will be an 
increasingly demoralized, poorly equipped, and undisciplined VA 
workforce. These VA civil servants and Senior Executive Service 
employees are, after all, the implementers and ultimate 
instruments of the VA's policies, and if they are not up to the 
job, then neither is the VA.
    As Congress continues to operate under statutory spending 
caps, all agency budget submissions should receive 
congressional scrutiny to ensure that every taxpayer dollar 
requested is thoroughly justified and used effectively and 
efficiently. Exposing funds to mismanagement is not an option 
during times of fiscal restraint. Moreover, continuing to throw 
more money at a dysfunctional agency that refuses to be 
transparent and accountable, without significant reforms, is a 
disservice to all veterans and the public.

                      Illustrative Policy Options

    While specific policy decisions will fall to the Committee 
on Veterans' Affairs and the Appropriations Subcommittee on 
Military Construction, Veterans Affairs, and Related Agencies, 
the following options reflect ways to apply the principles 
described above.

                         DISCRETIONARY SPENDING

    Limit Awards and Bonuses. In 2014, the Department of 
Veterans Affairs awarded more than $142 million in cash 
bonuses, in addition to $276 million for items including 
retention and relocation payments and rewards for saving money 
on travel and inventive ideas.\76\ Incredibly, the VA 
leadership made these awards the same year that the VA's health 
scandal denied veterans access to VA health care. Committee on 
Veterans' Affairs Chairman Miller has been spearheading VA 
bonus reform and warned: ``Until VA leaders learn this 
important lesson and make a commitment to support real 
accountability at the Department, efforts to reform VA are 
doomed to fail.''\77\ This budget option calls for reducing the 
aggregate amount of awards and bonuses paid to VA employees by 
30 percent. This option was also included in the House-passed 
H.R. 294 Long-Term Care Veterans Choice Act with bipartisan 
support.\78\
---------------------------------------------------------------------------
    \76\Martin Matishak, ``Still Mired in Scandal, VA Awards $142 
Million in Bonuses,'' The Fiscal Times, 11 November 2015: http://
www.thefiscaltimes.com/2015/11/11/Still-Mired-Scandal-VA-Awards-142-
Million-Bonuses; Donovan Slack and Bill Theobald, ``Veterans Affairs 
pays $142 million in bonuses amid scandals,''. USA Today, 11 November 
2015: http://www.usatoday.com/story/news/politics/2015/11/11/veterans-
affairs-pays-142-million-bonuses-amid-scandals/75537586/; Anna 
Giaritelli, ``VA gave 156,000 employees $142 million bonuses in 2014,'' 
the Washington Examiner, 11 November 2015: http://
www.washingtonexaminer.com/va-gave-156000-employees-142-million-in-
bonuses-in-2014/article/2576155.
    \77\Rep. Jeff Miller, Miller Newsletter, 15 November 2015:
    http://jeffmiller.house.gov/news/email/
show.aspx?ID=Z5MPA3CVK5FYYORBX7RZEZH4KM
    \78\Congressional Budget Office cost estimate for H.R. 294, the 
Long-Term Care veterans Choice Act, 2 March 2015: https://www.cbo.gov/
sites/default/files/114th-congress-2015-2016/costestimate/hr2940.pdf.

    Consolidate VA's Transition Assistance Program Goals, 
Plans, Success Program with Other Federal Agencies. Redundant 
Federal programs are leading to million, if not billions, in 
wasteful spending. At a time of increased budget pressure, 
American taxpayers cannot afford to keep buying the same 
service twice. The Transition Assistance Program Goals, Plans, 
Success Program [TAP GPS] is designed to facilitate service 
members' transition to civilian life and is governed by a 
working group from the Departments of Defense, Education, and 
Labor [DOL], the Small Business Administration, and the Office 
of Personnel Management. The working group designs the 
curriculum composed of a 5-day core class focused on job 
hunting skills and VA benefits plus the optional 2-day course 
focused on education, small business, and trades training. TAP 
GPS is taught largely by contractors hired by DOL and VA. 
Unfortunately, instead of combining the training curricula 
requirements into one overarching contract, VA and DOL have 
awarded separate contracts, thus doubling the overhead costs. 
Additionally, VBA leaders have shifted TAP GPS funding to cover 
the costs of other VA non-statutory job placement programs 
unrelated to the statutory TAP GPS program. This option would 
consolidate duplicative VA and DOL transition programs to 
---------------------------------------------------------------------------
achieve greater service member and veteran transition results.

    Establish Accountability Standards for the Veterans 
Benefits Management System. In 2009, VBA initiated efforts to 
address the disability claims backlog by modernizing the way it 
receives and processes benefits claims. The VBA proposed a 
multi-pronged transformation to retrain, reorganize, and 
streamline business processes, in addition to building and 
implementing technology solutions including the Veterans 
Benefits Management System [VBMS]. The intent of transitioning 
to a paperless claims process is to enable a more efficient 
workflow by reducing processing time and minimizing rating 
inconsistencies and errors.
    According to the Committee on Veterans' Affairs, VBMS 
suffers from a range of program problems including inadequate 
cost control, unplanned changes in system and business 
requirements, inefficient contracting practices, and lack of a 
concrete plan to decommission redundant legacy systems.\79\ 
VBMS Program Management Office reports significant increases of 
VBMS life-cycle costs from $580 million in September 2009 to 
about $1.5 billion in January 2015.\80\ As a result, the VA 
cannot ensure an effective return on its investment to 
taxpayers and the total VBMS system development cost remains 
unknown. The VA needs to properly address the above problems if 
it is to decrease the disability claims backlog. Until the VBA 
and the VA's Office of Information Technology are able to 
deliver a reasonable and cost-efficient path forward, including 
an objective and true scope of milestones and progress, VBMS 
resources should be frozen at current levels. This budget 
option would freeze current funding levels for VBMS until the 
VA successfully creates benchmarks that would ensure proper 
progress, good governance, and efficient spending on this 
program.
---------------------------------------------------------------------------
    \79\Committee on Veterans' Affairs, U.S. House of Representatives, 
Fiscal Year 2017 Views and Estimates, 5 February 2015.
    \80\VA Office of Inspector General, Department of Veterans Affairs: 
Follow-up Review of the Veterans Benefits Management System, 14 
September 2015: http://www.va.gov/oig/pubs/VAOIG-13-00690-455.pdf.

    Allow Veterans to Deposit Disability Compensation into the 
Thrift Savings Plan. Similar to a civilian 401k plan, the 
Thrift Savings Plan [TSP] is a government-sponsored retirement 
program that allows Federal employees and military personnel to 
save money for retirement. Once separated from military 
service, veterans are unable to continue contributions into 
their TSP accounts unless employed by the Federal 
Government.\81\ Many non-retired veterans face obstacles that 
may delay--or prevent--financial success. According to a 2014 
National Foundation for Credit Counseling survey, service 
members are more likely to rely or misuse credit cards than 
their civilian counterparts leading to higher debt when they 
transition out of the military.\82\ The survey also found 77 
percent of service members worry about lack of savings to cover 
unexpected expenses, cover retirement, and being able to make 
debt payments on time.\83\ This option would allow non-retired 
veterans the opportunity to invest their disability 
compensation into a TSP account, providing these individuals an 
opportunity to plan for their future retirement.\84\ All 
veterans, not just retirees, should have access to the TSP 
benefit.
---------------------------------------------------------------------------
    \81\David Goldich, ``Substance Over Sound Bite: Better Veterans 
Policy In The NDAA,'' 1 October 2015: http://warontherocks.com/2015/10/
substance-over-sound-bite-better-veterans-policy-in-the-ndaa/.
    \82\Harris Poll, A Survey about Financial Literacy Among the U.S. 
Military, .The survey reflects service members concerns prior to their 
transition to veteran status. Poll, Harris (2014). A Survey about 
Financial Literacy Among the U.S. Military, prepared for The National 
Foundation for Credit Counseling, undated: https://www.nfcc.org/wp-
content/uploads/2013/06/
NFCC_Pioneer_Military_Survey_DATASHEET_and_KEY_FINDINGS_0517141.pdf
    \83\Ibid.
    \84\Goldich, op. cit.

    Improve Oversight of Certain Contractual Arrangements. 
According to a 2015 GAO report to the Chairman of the Veterans' 
Affairs Subcommittee on Oversight and Investigations, the VA 
could not produce proper documentation identifying the extent 
to which it used interagency contracts for services provided by 
another agency in fiscal years 2012 through 2014.\85\ While the 
VA claims it obligated about $1.7 billion to other government 
agencies between fiscal years 2012 through 2014,\86\ GAO's 
analysis of VA's accounting system data found the total amount 
transferred over the same time period was between $2.3 billion 
and $2.6 billion, a difference of $600 million to $900 
million.\87\ These inconsistences place the VA resources at 
risk of fraud, waste, and abuse. The GAO report found 
documentation from the VA's contract management and accounting 
systems were incomplete and the VA's management of contract 
awards lacked justification for granting interagency contracts. 
This option would require the VA to reconcile data between the 
contract management and accounting systems, review interagency 
contracts, and ensure all interagency contracts are properly 
reviewed and documented in both systems.
---------------------------------------------------------------------------
    \85\Government Accountability Office, Veterans Affairs Contracting: 
Improved Oversight Needed for Certain Contractual Arrangements, July 
2015: http://gao.gov/assets/680/671116.pdf.
    \86\Ibid.
    \87\Ibid.
---------------------------------------------------------------------------

                            DIRECT SPENDING

    Modify Housing Stipend Paid to Children Who Use Transferred 
Post-9/11 GI Bill Education Benefits. The GI Bill's primary use 
is assisting a veteran's reintegration into civilian life by 
providing the education and skills necessary to gain meaningful 
employment after military service. To provide both a recruiting 
and retention incentive, the Post-9/11 GI Bill allows each 
military service to determine which service members who meet 
the statutory eligibility requirements to transfer all or some 
of their education benefits to their dependents. Instead of 
targeting the benefit to retain service members with critically 
needed skills, the services have made eligible all service 
members who qualify under the time-in-service requirements. 
Notably, the Military Compensation and Retirement Modernization 
Commission suggested eliminating the housing stipend paid to 
children. This option would revert the Post-9/11 GI Bill back 
to its original intent by focusing resources on veterans 
readjusting into society post military career.

    Prevent VA from Providing Unlimited Amounts for Flight 
Training at Public Schools. Brought to Congress' attention by 
the VA, Veterans Service Organizations [VSOs], and the National 
Association of State Approving Agencies [NASAA], some flight 
schools are exploiting an aviation training tuition loophole in 
the Post-9/11 GI Bill.\88\ Some institutions of higher learning 
have applied extreme costs for flight fees as there are no caps 
in place for such institutions with third-party flight 
contractors. According to representatives from NASAA, some 
student veterans are taking flight classes as electives with no 
cost cap for flight fees.\89\ In response to concerns from 
stakeholders regarding this loophole, the Chairman of the 
Veterans' Affairs Subcommittee on Economic Opportunity 
introduced legislation grandfathering current flight school 
students' tuition for 2 years and making improvements to 
veterans' educational assistance. In 2016, the measure passed 
the House on a bipartisan basis. This option reflects the 
provision in the legislation that applies a tuition cap for 
flight programs at public institutions of higher learning that 
is consistent with other veterans' educational programs.\90\ A 
similar option was also included in the President's fiscal year 
2017 budget request.
---------------------------------------------------------------------------
    \88\Curtis L. Coy, Deputy Under Secretary for Economic Opportunity, 
Veterans Benefit Administration, testimony before the House Veterans' 
Affairs Subcommittee on Economic Opportunity, 19 November 2014: https:/
/veterans.house.gov/witness-testimony/mr-curtis-l-coy-7. The Iraq and 
Afghanistan Veterans of America, the American Legion, and the Veterans 
of Foreign Wars all support closing this loophole.
    \89\Ibid.
    \90\The Veterans Employment, Education, and Healthcare Improvement 
Act (H.R. 3016): https://www.congress.gov/bill/114th-congress/house-
bill/3016/text.

    Round Down Annual Cost-of-Living Allowance to the Next 
Lower Whole Dollar. This option would require VA to round down 
increases in the monthly compensation rate resulting from an 
annual cost-of-living adjustment [COLA] to the next lower whole 
dollar. The VA would apply this round down to both disability 
compensation and dependency and indemnity compensation 
payments. A similar requirement expired at the end of 2013 and 
this option would reinstate this policy. It has also been 
---------------------------------------------------------------------------
included in the President's requests for the past 5 years.

    Reconcile and Properly Manage Concurrent VA and Military 
Drill Compensation. Under statute, reservists and National 
Guard members are prohibited from receiving VA compensation or 
pension benefits and military drill pay concurrently.\91\ 
According to a 2014 VA Inspector General's report: ``VA did not 
process VA benefit offsets to disability compensation benefits 
in a timely manner when reservists earned drill pay 
concurrently during fiscal years 2011 and 2012.'' The report 
also found VBA's VA compensation and military drill 
unprocessing rates for fiscal years 2011 and 2012 were not 
significantly different from a similar 1997 VA Inspector 
General's audit. Therefore, it is likely the VBA has not 
processed offsetting claims since 1997.\92\ This budget option 
calls for immediate recovery of all offsets from previous 
fiscal years in addition to enhanced oversight to ensure the VA 
follows the law and collects drill pay offsets in a timely 
manner.
---------------------------------------------------------------------------
    \91\Title 10--Armed Forces, Subtitle E--Reserve Components, Part II 
Personnel Generally, Chapter 1209--Active Duty, Sec. 12316--Payment of 
certain Reserves while on duty: https://www.gpo.gov/fdsys/granule/
USCODE-2011-title10/USCODE-2011-title10-subtitleE-partII-chap1209-
sec12316, and Title 38, Veterans' Benefits, Part IV--General 
Administrative Provisions, Chapter 53--Special provisions relating to 
benefits, section. 5304, Prohibition against duplication of benefits.
    \92\VA Office of Inspector General, Veterans Benefits 
Administration: Audit of the Management of Concurrent VA and Military 
Drill Pay Compensation, 3 June 2014: http://www.va.gov/oig/pubs/VAOIG-
13-02129-177.pdf.

    Reconcile Post-9/11 GI Bill Monthly Housing Allowance and 
Book Stipend Payments. The size of the current Post-9/11 GI 
Bill program and its associated financial risks are of great 
concern. In 2013, VBA paid about $5.4 billion in housing 
allowances and book stipends to approximately 789,000 students. 
The VA's Inspector General found about $41 million in improper 
or inaccurate payments.\93\ This option would require Congress 
to align education service recovery procedures with Federal 
regulations, and require the VA to review and reconcile book 
stipend collection procedures, and collect outstanding improper 
payments.
---------------------------------------------------------------------------
    \93\VA Office of Inspector General, Veterans Benefits 
Administration: Audit of Post-9/11 G.I. Bill Monthly Housing Allowance 
and Book Stipend Payments, 11 July 2014: http://www.va.gov/oig/pubs/
VAOIG-13-01452-214.pdf.

    Temporarily Reduce VA Reporting Fees to Postsecondary 
Education Institutions. The VA pays schools a reporting fee 
based on the number of students receiving VA educational 
benefits. Title 38 U.S. Code Sec. 3684 mandates that reporting 
fees must be used for the purpose of certifications or 
otherwise supporting programs for veterans.\94\ The usage and 
application of reporting fees has been less and less 
scrutinized. Many institutions have used the reporting fees as 
an offset to their overall budget and personal staff salaries. 
This option would require the VA to verify proper usage of 
reporting fees during every compliance survey and audit. This 
option was also included in Senate-passed legislation, with 
bipartisan support.\95\
---------------------------------------------------------------------------
    \94\Title 38--United States Code Veterans' Benefits (Public Law 
112-7), Sec. 3684:
    https://veterans.house.gov/sites/republicans.veterans.house.gov/
files/documents/Title%2038-SCRAPrint3.pdf.
    \95\Congressional Budget Office, Cost Estimate for S. 1203 the 21st 
Century Veterans Benefits Delivery and Other Improvements Act, 1 
October 2015:
    https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/
costestimate/s1203.pdf.

    Recover Post-9/11 GI Bill Education Overpayments. VA 
provided $11 billion in Post-9/11 GI Bill education benefits to 
almost 800,000 veterans in fiscal year 2015.\96\ According to a 
GAO report in 2015: ``VA identified $416 million in Post-9/11 
GI Bill overpayments in fiscal year 2014, affecting 
approximately one in four veteran beneficiaries and about 6,000 
postsecondary institutions of higher education.'' The VA was 
able to recover $264 million, but has still failed to collect 
the remaining $152 million in overpayments from fiscal year 
2014, and an additional $110 million from prior years.\97\ This 
option would require VA to do the following: (1) recover Post-
9/11 GI Bill education overpayments; (2) address overpayments 
to student veterans and institutions of higher learning; and 
(3) improve its notification process with student veterans and 
those institutions.
---------------------------------------------------------------------------
    \96\Government Accountability Office, Post-9/11 G.I. Bill: 
Additional Actions Needed to Help Reduce Overpayments and Increase 
Collections, October 2015: http://www.gao.gov/assets/680/673230.pdf.
    \97\Ibid.

    Reinstate Eligibility Verification Reports for Pension 
Benefits. In December 2012, VBA officials discontinued 
requesting eligibility verification reports [EVRs]. Under this 
change, veterans and beneficiaries do not have to submit an 
annual EVR to prove eligibility and continue receiving pension 
payments.\98\ Eliminating EVRs represents a serious risk to VA 
that it will not receive changes that affect eligibility. This 
option would require VA to implement Pension and Fiduciary 
Service procedures that confirm veteran and beneficiary 
eligibility, and implement a plan to reduce the amount of 
overpayments due to the changes in income and dependency 
status.\99\
---------------------------------------------------------------------------
    \98\VA Office of Inspector General, Veterans Benefits 
Administration: Audit of Pension Payments, 4 September 2013: http://
www.va.gov/oig/pubs/VAOIG-12-00181-299.pdf; and Department of Veterans 
Affairs Office of Inspector General (2015). Semiannual Report to 
Congress Issue 74/1 April--30 September 2015: http://www.va.gov/oig/
pubs/VAOIG-12-00181-299.pdf.
    \99\Ibid.

    Review All Temporary 100-Percent Disability Evaluations. 
According to a 2014 Inspector General's report, the Veterans 
Benefits Administration has not correctly assessed and 
monitored 100-percent disability evaluations, and failed to 
ensure each temporary 100-percent evaluation had a future 
examination date in the veteran's record. In addition, the 
report estimates the VBA paid more than $85 million in improper 
disability compensation benefits without medical evidence. The 
VBA's continued failure to conduct timely reviews of these 
evaluations will result to an estimated $222.6 million in 
unsupported payments over the next 5 years.\100\ This option 
calls for Congress to change regulations and require the VA to 
monitor temporary 100-percent disability evaluations and allow 
it to recover payments made in error.
---------------------------------------------------------------------------
    \100\VA Office of Inspector General, Veterans Benefits 
Administration: Follow-up Audit of 100 Percent Disability Evaluations, 
6 June 2014: http://www.va.gov/oig/pubs/VAOIG-14-01686-185.pdf.
---------------------------------------------------------------------------

                       ADMINISTRATION OF JUSTICE


                            Function Summary

    In the 15 years since 9-11, Americans have grown accustomed 
to living in an environment of enhanced security. Airports, 
government buildings, major sporting venues, and myriad other 
public facilities now feature the instruments of vigilance that 
have become necessarily common. Yet despite these measures, 
terrorism continues to lurk in the shadows, striking out all 
too unexpectedly--as demonstrated in Boston, Paris, and San 
Bernardino. The President's relatively sanguine attitude--
describing Al Qaeda as ``decimated'' and dismissing the brutal 
Islamic State as a ``jay-vee'' team--does not help. The threat 
of further terrorist acts on America's homeland remains.
    The answer does not lie in throwing more money at the 
challenge. The ongoing risk of domestic terrorism, and the 
tidal wave of government debt, call for better targeting of 
Federal law enforcement funds. Federal tax dollars for the 
Departments of Justice and Homeland Security should be focused 
on administering justice, arresting and prosecuting terrorists, 
protecting and securing the Nation's borders, investigating 
Federal crimes, and seeking punishment for those guilty of 
unlawful behavior. Local law enforcement, in contrast, is the 
responsibility of the States and local communities, and they 
should determine the best course of action in deterring 
localized crime.
    In 2015, more than $2 billion in discretionary grants were 
disbursed by the Department of Justice [DOJ] from three 
sources: Community Oriented Policing Services, the Office of 
Justice Programs, and the Office on Violence Against Women. The 
GAO reported in 2012 that many of DOJ's some 11,000 annual 
grants are awarded without consideration of overlap or 
duplication with other grant programs, and that DOJ should 
better target its grants. GAO's 2015 update of that report 
states that DOJ has only partially addressed this area of 
potential duplication.\101\ According to the President's fiscal 
year 2017 budget, Washington will award $7.2 billion in total 
justice and homeland security grants in fiscal year 2016 to 
State and local governments. The administration needs clear 
guidance from Congress in facing the Nation's continuing 
security threats. Furthermore, it is not the function of the 
Federal Government to finance State and local governments. 
Federal law enforcement needs to focus on its core 
responsibilities.
---------------------------------------------------------------------------
    \101\Government Accountability Office, 2015 Annual Report: 
Additional Opportunities to Reduce Fragmentation, Overlap, and 
Duplication and Achieve Other Financial Benefits, April 2015, p. 209: 
http://www.gao.gov/assets/670/669613.pdf.
---------------------------------------------------------------------------
    The principal activities in this category (Function 750 in 
the summary tables) include Federal law enforcement programs, 
litigation and judicial activities, correctional operations, 
and border security. The function includes most of the 
Department of Justice and several components of the Department 
of Homeland Security [DHS]. Other agencies funded here include 
the Federal Bureau of Investigation [FBI]; the Drug Enforcement 
Administration; the Bureau of Alcohol, Tobacco, Firearms and 
Explosives; the United States Attorneys; legal divisions within 
the Department of Justice; the Legal Services Corporation; the 
Federal Judiciary; and the Federal Bureau of Prisons.
    The vast majority of this category's funding is 
discretionary, provided by the Appropriations Subcommittees on 
Commerce, Justice, Science and Related Activities, and Homeland 
Security. The Committee on the Judiciary and the Committee on 
Homeland Security have the main authorizing duties. The 
resolution calls for $55.0 billion in discretionary budget 
authority and $54.9 billion in outlays for fiscal year 2017. 
The small amount of direct spending in the category--which 
funds certain immigration activities, the Crime Victims Fund, 
the Assets Forfeiture Fund, and the Treasury Forfeiture Fund, 
among others--totals $9.5 billion in budget authority and $3.8 
billion in outlays. The 10-year totals for the function are 
$653.1 billion in budget authority and $653.2 billion in 
outlays.

                      Illustrative Policy Options

    In developing policies to meet their budget targets, the 
committees of jurisdiction cited above should give priority to 
those activities that are essential for the Federal Government. 
This does not necessarily require more funding in each area; it 
means addressing those Federal responsibilities first. The 
proposals below indicate policy options that the committees 
might consider.

                         DISCRETIONARY SPENDING

    Consolidate Justice Grants. In fiscal year 2015, DOJ 
awarded nearly $4.7 billion in total grants to conduct 
research, provide training assistance, and support the State 
and local criminal justice system. The Congressional Research 
Service and GAO have identified overlap and duplication within 
many of these grant programs, and it is clear that they fund 
law enforcement activities that are primarily State and local 
responsibilities. In addition, Federal grants should not be 
awarded to State and local law enforcement agencies unless they 
comply with the Federal law. This includes jurisdictions that 
refuse to honor Federal detainers, harbor illegal aliens, or 
fail to share information on criminal illegal aliens. This 
option streamlines grants into three categories--first 
responders, law enforcement, and victims--while eliminating 
waste, inefficiency, and bureaucracy.

    Eliminate Unnecessary Headquarters and Construction Funding 
for DHS, DOJ, and the Judiciary. Construction funding for 
various agencies within this budget function have increased 
without due oversight and cost-benefit analysis, though the 
committees of jurisdiction have focused on addressing cost 
overruns and increasing accountability. This budget recommends 
reducing DHS and DOJ construction budgets by 15 percent to rein 
in unnecessary construction projects, while exempting those 
agencies involved with border security and immigration 
enforcement. The budget recommends additional scrutiny of cost 
overruns of DHS's St. Elizabeth's project, the largest Federal 
building project in the District of Columbia since the 
Pentagon. Additionally, no funding should be provided for the 
Office of Public Advocate, or any similar or successor 
position, in Immigration and Customs Enforcement. The 
President's fiscal year 2017 budget request includes $1.4 
billion to build a new FBI headquarters, along with the $390.0 
million already provided in the current year's budget. This 
budget questions such a request, given the current, fiscally 
constrained environment.

    Eliminate the Legal Services Corporation. It is the duty of 
State and local governments to provide legal services to those 
individuals unable to provide it for themselves. Local 
jurisdictions are more aware of their citizens' needs and can 
provide more responsive service than the Federal Government. 
Critics have argued that despite restrictions already in place, 
the Legal Services Corporation too often focuses on social 
activist causes rather than advocating for those persons 
needing legal help the most.

                            DIRECT SPENDING

    Permanently Extend Customs User Fees. Continuing the policy 
of the Emergency Unemployment Compensation Extension Act of 
2014, the budget assumes the Bureau of Customs and Border 
Protection continues to collect customs user fees through 
fiscal year 2026, the last year of the budget window. With the 
passage of the Emergency Unemployment Compensation Extension 
Act of 2014, authority to collect these fees expires in 2024. 
The Bipartisan Budget Agreement of 2015 extended customs user 
fee collections through 2025. This budget recommends making 
these customs user fees permanent.

                           GENERAL GOVERNMENT


                            Function Summary

    A government that seeks greater efficiency in its programs 
should demand no less from its own operations. Yet this has not 
been the case with many of the Federal Government's agencies. 
Funding in the category of General Government (Function 800 in 
the summary tables) has increased by roughly 30 percent since 
fiscal year 2007, but no one would contend the additional 
resources have produced a smooth, businesslike operation. The 
budget resolution aims to eliminate identified waste across all 
Federal Government branches and agencies. If a program or 
activity is poorly targeted, ineffective, duplicative of other 
efforts, or could be better performed by the private sector, it 
merits consideration for elimination or restructuring by the 
committees of jurisdiction.
    This category mainly provides funding for the Legislative 
and Executive Branches of the Federal Government. On the 
legislative side, these funds support the operations of 
Congress, including the Congressional Budget Office, the 
Library of Congress, and the Government Accountability Office. 
In the Executive Branch, the category finances the Executive 
Office of the President, including the Office of Management and 
Budget, the Council on Environmental Quality, White House 
salaries, and White House building repair; general tax 
administration and fiscal operations of the Department of the 
Treasury (including the Internal Revenue Service); the Office 
of Personnel Management; the real-property and personnel costs 
of the General Services Administration; general-purpose fiscal 
assistance to States, localities, the District of Columbia, and 
U.S. territories; and other general government activities.
    Most of this funding comes through annual appropriations 
(discretionary spending), which in fiscal year 2017 totals 
$15.7 billion in budget authority and $15.2 billion in outlays. 
Budget authority for direct spending in this area will total 
$7.6 billion, with $7.6 billion in accompanying outlays. Over 
10 years, the budget anticipates $232.3 billion in total budget 
authority and $228.5 billion in outlays.

           Illustrative Discretionary Spending Policy Options

    While specific policy options will be determined by the 
committees of jurisdiction--which include the Committees on 
Transportation and Infrastructure, House Administration, Ways 
and Means, Natural Resources, Oversight and Government Reform--
the discussion above offers practical guidelines they might 
follow. Some potential examples are presented below. Funding 
for Federal operations and mismanagement of properties are just 
a few areas where savings should be achieved. Some other 
potential examples are presented below. This resolution also 
urges the Office of Management and Budget and relevant agencies 
to make a top priority of implementing the data aggregation and 
transparency initiatives in the Digital Accountability and 
Transparency Act.
    Some specific options worthy of consideration are described 
below.

    Decrease Costs of the Government Printing Office by 
Increasing the Use of Electronic Copies. The Government 
Printing Office [GPO] prints thousands of pages of government 
documents each year--most of which have gained a ubiquitous 
online presence. Federal departments and agencies, for example, 
maintain their key budget documents, reports, and data online 
and available to the public. This resolution supports greater 
selectivity in the material GPO prints, allowing users to rely 
more heavily on increased electronic access to materials. It is 
consistent with recommendations to establish a sustainable 
business model for GPO and continue meeting demands to make 
information available in a digital age.\102\
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    \102\National Academy of Public Administration, Rebooting the 
Government Printing Office: Keeping America Informed in the Digital 
Age, January 2013: https://www.gpo.gov/pdfs/about/
GPO_NAPA_Report_FINAL.pdf.

    Terminate the Election Assistance Commission. This 
independent agency was created in 2002 as part of the Help 
America Vote Act to provide grants to States to modernize 
voting equipment. Its mission has been fulfilled. The National 
Association of Secretaries of State, the association of State 
officials responsible for administering elections, has passed 
resolutions stating the Election Assistance Commission [EAC] 
has served its purpose, and funding is no longer necessary. The 
EAC should be eliminated and any valuable residual functions 
---------------------------------------------------------------------------
should be transferred to the Federal Election Commission.

    Accompany Pro-Growth Tax Reform with Responsible Reductions 
to the Internal Revenue Service. The Internal Revenue Service 
[IRS] has more than 90,000 employees and spends in excess of 
$11 billion annually. Additionally, the Internal Revenue Code 
now contains approximately four million words, and each year 
taxpayers and businesses spend more than six billion hours 
complying with filing requirements.\103\ The investigation 
related to the IRS targeting American citizens demonstrates 
that the massive budget has not resulted in the IRS serving 
taxpayers better; rather, it has created a bloated bureaucracy 
filled with inefficiency and abuse.
---------------------------------------------------------------------------
    \103\National Taxpayer Advocate, 2013 Annual Report to Congress, 
December 2013.
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    The President's budget makes the tax code more complex and 
proposes to increase the IRS budget. This resolution calls for 
simplifying the burdensome tax code through tax reform (see the 
Revenue and Tax Reform section of this report), naturally 
reducing the agency's size by promoting policies that lead to 
less reliance on the IRS. As outlined in a 2012 Government 
Accountability Office report, simplifying the tax code may 
reduce accidental errors in tax filing and improve voluntarily 
compliance.\104\ A simplified tax code would have the dual 
benefits of reducing both the time taxpayers devote to 
complying with an overly complex code, and the taxpayer dollars 
needed to administer and enforce it.
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    \104\Government Accountability Office, Opportunities to Improve the 
Taxpayer Experience and Voluntary Compliance, April 2012.

    Scale Back Funding to the Legislative and Executive 
Branches. The budget for the House of Representatives today is 
$188 billion less than it was when Republicans assumed the 
majority in 2011. This budget resolution aims to scale back 
government wherever it has expanded needlessly or beyond its 
proper role. That includes within government operations and 
offices themselves. It also could include reforms such as 
scaling back pensions of former U.S. presidents--recognizing 
their ability to support themselves primarily through other 
means of employment--while providing for their security and 
pensions for any surviving spouses. The resolution recommends 
treating the Legislative and Executive Branch appropriations 
the same as other Federal agencies and programs, and paring 
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costs where possible.

    Further Consolidate Federal Data Centers. This budget 
supports the bipartisan Federal Data Center Consolidation 
Initiative [FDCCI], which was created in 2010 to reverse the 
widespread escalation of Federal data center construction, 
acquisition, management, and maintenance. By increasing 
efficiencies and continued efforts to incorporate cloud 
computing technologies, the Federal Government can 
significantly decrease taxpayer spending on underused 
infrastructure.\105\
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    \105\Chief Information Officer [CIO], Federal CIO Council, ``Data 
Center Consolidation and Optimization'': https://cio.gov/drivingvalue/
data-center-consolidation/.

    Reform Information Technology. The Office of Management and 
Budget and multiple agencies could help the Federal Government 
realize savings by strengthening oversight and taking steps to 
better implement PortfolioStat, a bipartisan-supported process 
to help agencies manage their information technology 
investments.\106\ This budget supports strengthening 
congressional oversight of key Federal agencies' major 
information technology investments. Federal agencies should 
also apply better management of software licenses and the 
Office of Management and Budget should issue a directive to 
assist agencies in doing so.
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    \106\Chief Information Officer [CIO], Federal CIO Council, 
``PortfolioStat'': https://cio.gov/drivingvalue/portfoliostat/.
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                         GOVERNMENT-WIDE POLICY


                            Function Summary

    This category includes various policies that produce 
government-wide savings in multiple categories rather than in a 
single, specific budget function. For fiscal year 2017, the 
resolution calls for $34.5 billion in budget authority and 
$14.6 billion in outlays. The 10-year totals for budget 
authority and outlay savings are -$455.1 billion and -$386.7 
billion, respectively. (The figures appear in Function 930 in 
the summary tables.) As is true elsewhere, specific policies 
will be determined by the appropriate committees of 
jurisdiction.

                      Illustrative Policy Options


                         DISCRETIONARY SPENDING

    The total base discretionary budget authority for fiscal 
year 2017 assumed in the resolution is $1.070 trillion--the 
same level required by the discretionary spending caps in the 
Bipartisan Budget Act [BBA] of 2015. The resolution offers 
approximately $46.5 billion in fiscal year 2017 non-defense 
discretionary savings in several budget functions should 
Congress choose to enact additional deficit reduction for that 
year. Because these additional savings would cause the 
resolution to display a lower total base discretionary level 
than contemplated by the BBA, $46.5 billion in non-defense 
discretionary spending is added back to Function 930 to make 
the total budget resolution base discretionary level match the 
amount specified in the BBA.
    Over the 10-year budget window, the resolution assumes 
$277.6 billion in savings beyond what is contemplated in the 
BCA. Much of the assumed savings can be accomplished by the 
illustrative policy options presented in the various budget 
function summaries in this report. Additional illustrative 
options to achieve further discretionary savings are presented 
below.

    Reduce the Federal Civilian Workforce Through Attrition. 
The budget includes discretionary savings by assuming a 10-
percent reduction in certain agencies of the Federal civilian 
workforce through attrition, whereby the administration would 
be permitted to hire one employee for every three who leave 
government service. National security positions would be 
exempt.

    Reform Civil Service Pensions. The policy described in the 
Income Support, Nutrition, and Related Programs section of this 
report would increase the share of Federal retirement benefits 
funded by the employee. This policy has the effect of reducing 
the personnel costs for the employing agency. The budget 
assumes savings from a reduction in agency appropriations 
associated with the reduction in payments that agencies make 
into the Civil Service Retirement and Disability Fund for 
Federal employee retirement.

    Implement Transition to Shared Services. The current 
structure and operations of the Federal Government requires 
most agencies and departments to maintain and employ their own 
management services. Drawing on improvements made throughout 
the private sector, this budget calls for a bipartisan-
supported, government-wide transition to shared services. 
Moving to cross-agency and interagency support for management 
of internal functions such as information and technology, 
supply chain, financial activities, human resources, and 
administration will not only help government to run more 
effectively, but will also allow individual departments and 
agencies to function better together.\107\
---------------------------------------------------------------------------
    \107\Partnership for Public Service, ``Building A Shared Services 
Marketplace: Recommendations from the Shared Services Roundtable,'' 
March 2015: http://ourpublicservice.org/publications/
viewcontentdetails.php?id=470.
---------------------------------------------------------------------------

                            DIRECT SPENDING

    Reduce Improper Payments/Program Integrity. This budget 
calls for program integrity savings by assuming that Continuing 
Disability Reviews [CDRs] and Supplemental Security Income 
Redeterminations are fully funded and that additional steps are 
taken to reduce improper payments in Medicare, Medicaid, 
Unemployment Insurance, the Earned Income Tax Credit, and other 
programs. By ensuring that all benefits are targeted toward the 
appropriate households, this budget will reduce fraud and 
improper payments in these programs.
    Improper payments are widespread and growing, and now cost 
U.S. taxpayers in the neighborhood of $100 billion per year--
and government departments and agencies seem unable to reduce 
these excessive payments. Even more troubling is the current 
administration's apparent lack of concern and unwillingness to 
take corrective action.
    This is an issue the Budget Committee intends to pursue 
aggressively in the future under the leadership of 
Representative Palmer (R-AL) and other Committee members. The 
Committee believes those departments and agencies that cannot 
decrease the amount of improper payments should be held 
accountable for their inability to stop these inappropriate 
expenditures. The Budget Committee will work with the 
appropriations and authorizing committees exploring numerous 
ideas to effectively address this problem.
    A March 2015 report by the Government Accountability Office 
found that government-wide improper payment estimates pursuant 
to the Improper Payments Information Act of 2002, as amended, 
totaled $124.7 billion in fiscal year 2014, an increase of $19 
billion from the previous year. These improper payments were 
attributable to 124 programs spread among 22 agencies. The 
reported government-wide error rate was 4.5 percent of program 
outlays in fiscal year 2014, compared to 4.0 percent reported 
in fiscal year 2013. Nevertheless, roughly 65 percent of these 
excessive payments--or $80.9 billion--fall in just three 
programs: Medicare fee-for-service, Medicaid, and the Earned 
Income Tax Credit.
    GAO reported that agencies continue to face difficulties in 
reducing improper payments. In addition, GAO found that sharing 
death data can help prevent improper payments to deceased 
individuals or those who use deceased individuals' identities, 
but the Social Security Administration has trouble maintaining 
these data, and other Federal agencies face difficulty 
obtaining them.\108\
---------------------------------------------------------------------------
    \108\Government Accountability Office, ``Improper Payments, 
Government-Wide Estimates and Use of Death Data to Help Prevent 
Payments to Deceased Individuals,'' testimony before the U.S. Senate 
Committee on Homeland Security and Governmental Affairs, 16 March 2015:
    http://www.gao.gov/assets/670/669026.pdf.

    Align the G Fund Investment Return with an Appropriate Risk 
Profile. The resolution assumes savings by correctly aligning 
the rate of return on U.S. Treasury securities within the 
Federal Employee Retirement System's Thrift Savings Plan with 
its investment risk profile. Securities within the G Fund are 
not subject to risk of default. Payment of principal and 
interest is guaranteed by the U.S. Government. Yet the interest 
rate paid is equivalent to a long-term security. As a result, 
those who participate in the G Fund are rewarded with a long-
---------------------------------------------------------------------------
term rate on what is essentially a short-term security.

    Assume Savings in Budget Control Act Continue. The BCA 
established an automatic enforcement mechanism--commonly known 
as a sequester--to ensure a promised level of savings from that 
law was actually realized. These savings were first implemented 
in 2013 and are scheduled to last through 2025. The resolution 
proposes to extend the savings created by the BCA for an 
additional year, although the budget calls on Congress to 
replace the automatic sequester with specific, targeted 
reforms.

                          Domestic Priorities

                              ----------                              

    The budget resolution provides funding for a range of 
priority activities and services that are domestic in nature. 
Although all of them are of national importance--that is why 
they appear in the Federal budget in the first place--they bear 
a special connection to the States and localities that 
constitute the Nation, as well as the vast array of non-
government institutions throughout the country. K-12 education, 
for instance, is a quintessentially local priority. Because 
most Americans do most of their traveling in or near their own 
communities, their own roads and bridges are a fundamental 
local concern. Health care is provided mainly through local 
hospitals and private physicians. All these activities, and 
many others, would exist even if there were no Federal 
Government. Washington did not create them; States and 
localities and the private sector did. These are also the main 
sources of the initiative and creativity that drives these 
domestically centered arrangements. The concept of federalism 
on which America was founded recognizes that fact, and 
encourages the diversity of approaches best furnished by layers 
of government or non-government institutions closer to the 
people served. In grouping these activities together, the 
discussion below seeks to encourage greater flexibility for 
States and localities and the private sector to find new, 
better, and more efficient ways to provide these services. 
While the Federal Government can help in these areas, its role 
should be to support, not to dominate.
    The activities presented here are mainly the discretionary 
spending components in Functions 250 through 650 in the 
conventional budget format. In two areas, however--Energy 
(Function 270) and Transportation (Function 400)--both the 
discretionary and direct spending components are presented. 
This is because in these two categories, discretionary and 
direct spending are uniquely intertwined.

                 GENERAL SCIENCE, SPACE, AND TECHNOLOGY


                Function Summary: Discretionary Spending

    The largest component of this category--about half of total 
spending--is for the space-flight, research, and supporting 
activities of the National Aeronautics and Space Administration 
[NASA]. The function also contains general science funding, 
including the budgets for the National Science Foundation [NSF] 
and the Department of Energy's Office of Science.
    The budget resolution reduces questionable and unjustified 
spending, while supporting core government responsibilities. 
The resolution emphasizes basic research, providing stable 
funding for NSF to conduct priority biological, computing, and 
information sciences; basic research in math and the physical 
sciences; and science, technology, engineering, and math [STEM] 
education. The budget provides continued support for NASA and 
recognizes the vital strategic importance of the United States 
remaining the preeminent space-faring Nation. This budget 
aligns funding in accordance with NASA's core principles: to 
support robust space capability, to allow for exploration 
beyond low Earth orbit, and to support the Nation's scientific 
and educational base.
    The vast majority of this category's funding is 
discretionary, provided by the House Committee on Science, 
Space, and Technology and the Appropriations Subcommittee on 
Commerce, Justice, Science, and Related Activities. The 
resolution calls for $30.1 billion in discretionary budget 
authority and $30.3 billion in outlays in fiscal year 2017. The 
10-year totals for discretionary budget authority and outlays 
are $332.1 billion and $327.4 billion, respectively.

           Illustrative Discretionary Spending Policy Options

    The committees of jurisdiction will determine policies to 
align with the spending levels in the resolution. The options 
below are offered as illustrations of the kinds of proposals 
that can help meet the budget's fiscal guidelines.

    Restore Core Government Responsibilities. In fiscal year 
2016, $66.4 billion was dedicated to research across the 
Federal Government, more than half to applied research. The 
resolution's levels support preserving the Federal scientific 
community's original role as a venue for groundbreaking 
discoveries and a driver of innovation and economic growth. It 
responsibly pares back applied and commercial research and 
development and areas of wasteful spending that do not provide 
a high return on taxpayer resources. The proper role of the 
Federal Government is to support basic research, and funding 
should be distributed accordingly. For example, spending for 
the Department of Energy's Office of Science includes several 
high-risk projects, which in a time of needed fiscal 
constraint, should be embarked on by the private sector 
instead. The Advanced Research Projects Agency-Energy program, 
created specifically for high-risk/high-reward energy projects, 
received almost $300 million in 2015. The Government 
Accountability Office [GAO] and the House Committee on Science, 
Space, and Technology have identified many of these grants as 
neither high-risk/high-reward nor something private industry 
could not take on itself. Of the 44 smaller companies that 
received these grants, GAO found that 18 had received grants 
from private industry for a similar technology. Funding for 
nuclear physics received almost $600 million in 2015 for 
research and development, and grants were issued to research 
groups at 90 public and private universities, along with nine 
federally funded laboratories. Much of the research conducted 
at these universities and laboratories has clear overlap and 
duplication. There must be greater oversight of the grants that 
the Department of Energy awards.
    Similarly, the NSF needs to be more transparent and 
accountable to the taxpayer. Every grant issued should be 
accompanied by an explanation of the project's scientific 
merits and how it serves the national interest as prescribed in 
the House-passed Scientific Research in the National Interest 
Act (H.R. 3293). NSF-funded studies--such as a $1.3 million 
project to measure the effectiveness of koozies in varying 
temperatures;\109\ an $853,000 project investing in a 
winemaking curriculum aimed at teenagers; and a $706,000 
project to fund a shrimp fight club at Duke University 
measuring the punching power of mantis shrimp--do not serve a 
vital national interest. Funding for these programs and 
similarly wasteful or low-return studies should be redirected 
to scientific research that better serves the national 
interest.
---------------------------------------------------------------------------
    \109\A koozie is an insulated sleeve designed to keep a beverage 
cold.
---------------------------------------------------------------------------
    Lastly, in NASA, spending on earth science, not space, has 
increased by more than 60 percent in recent years, even though 
it is not NASA's mission priority. This spending should be cut 
back to previous funding levels and redistributed to those 
missions unique to NASA.

    Reduce Expenses for the Department of Homeland Security's 
Directorate of Science and Technology. The budget recommends 
reductions in management and administrative expenses for the 
Department of Homeland Security's Directorate of Science and 
Technology, while shifting funding to frontline missions and 
capabilities.

                                 ENERGY


                            Function Summary

    The Obama Administration incorrectly believes that climate 
change is a greater threat to Americans than terrorism,\110\ 
which may be why the administration wastes billions of taxpayer 
dollars annually subsidizing green energy projects. In the 
President's budget request for fiscal year 2017, the 
administration requested approximately $3 billion for the 
purposes of energy conservation efforts and research, as well 
as development and commercialization of low- or zero-carbon 
energy sources.\111\
---------------------------------------------------------------------------
    \110\Brian Hughes, ``Josh Earnest: Climate Change a greater threat 
to Americans than terrorism,'' NewsFeeding.Net, 10 February 2015.
    \111\Department of Energy, Fiscal Year 2017 Budget Justification, 
Volume 3, February 2015: http://energy.gov/cfo/downloads/fy-2017-
budget-justification.
---------------------------------------------------------------------------
    In December 2015, the United States joined 195 countries at 
the Paris, France ``COP21'' United Nations Conference in an 
agreement to take steps to limit global warming. This was one 
of the President's international objectives within his Climate 
Action Plan. The Obama Administration entered into the 
agreement without any consultation with Congress. In fact, the 
administration has taken extraordinary steps to limit 
congressional oversight, advice, and consent with respect to 
this agreement. Given the President's inclination to bypass 
Congress, the agreement amounts to nothing more than a 
political gesture rather than a binding legal commitment, which 
would have to go through Congress. The administration's 
ultimate goal is to send billions of dollars to the Green 
Climate Fund--the key financing arm of the United Nations 
Framework Convention on Climate Change--without congressional 
authorization. In light of this executive overreach, the budget 
recommends increased accountability and oversight related to 
the President's Climate Action Plan initiatives.
    Just as troubling was the President's veto of bipartisan 
legislation to develop the Keystone XL pipeline. This 
legislation would expand an existing pipeline that runs from 
the Western Canadian Sedimentary Basin through the southern 
United States to provide more economical transportation of oil. 
A January 2014 report, prepared by the U.S. Department of 
State, concluded that a total of 42,100 jobs throughout the 
United States would be supported by the construction of the 
proposed pipeline.
    Meanwhile, from 2009 through 2013, the White House provided 
more than $67 billion in subsidies to green energy companies 
through tax credits and loan guarantees alone.\112\ Despite the 
excessive subsidies, solar power and wind energy combined only 
grew from 0.9 percent to 2.0 percent of domestic energy 
consumption over the same time period.\113\
---------------------------------------------------------------------------
    \112\Terry M. Dinan, ``CBO Testifies on Federal Financial Support 
for Fuels and Energy Technologies,'' Congressional Budget Office, 13 
March 2013.
    \113\Energy Information Administration, ``Primary Energy 
Consumption by Source'': http://www.eia.gov/totalenergy/data/monthly/
pdf/sec1<7.pdf.
---------------------------------------------------------------------------
    Many of the administration's loan guarantee projects have 
failed. Abound Solar, which received $400 million in loan 
guarantees, was cited by the Colorado Department of Public 
Health and Environment for hazardous waste left from its failed 
solar panels.\114\
---------------------------------------------------------------------------
    \114\Michael Sandoval, ``Bankrupt Abound Solar to Bury Unused Solar 
Panels in Cement,'' The Daily Signal, The Heritage Foundation, 26 
February 2013.
---------------------------------------------------------------------------
    Another grant recipient, A123, was given permission to hand 
out as much as $3.7 million in bonuses to top executives as a 
part of its bankruptcy proceedings.\115\ This is particularly 
problematic, because unlike the private sector, in which this 
company would eventually be held accountable to its investors 
for these payouts, taxpayers have no way of holding the Federal 
Government accountable for each ``investment.''
---------------------------------------------------------------------------
    \115\Paul Chesser, ``A123's Executives Get Their Richly Undeserved 
Bonuses,'' National Legal and Policy Center, 13 November 2012: http://
nlpc.org/stories/2012/11/13/a123s-executives-get-their-richly-
undeserved-bonuses.
---------------------------------------------------------------------------
    This negative return for the American taxpayer has not 
deterred this administration's penchant for failed policies. In 
a never-ending pursuit to appease the far-left political base 
and its liberal agenda, this administration, in its fiscal year 
2017 budget request, has intensified its efforts to pick 
winners and losers within the energy market. The 
administration's budget includes a $10 per barrel tax on 
domestically produced and imported petroleum products to pay 
for President Obama's 21st Century Clean Transportation 
System.\116\
---------------------------------------------------------------------------
    \116\Office of Management and Budget, Budget of the U.S. Government 
for Fiscal Year 2017, 9 February 2016.
---------------------------------------------------------------------------
    This plan would tax low- and middle-class energy consumers 
at the pump and in their homes, to subsidize inefficient 
investments in clean transportation infrastructure. The White 
House National Economic Council confirmed the administration is 
well aware of the harm this will cause consumers by stating: 
``We recognize that oil companies will likely pass on some of 
these costs.''\117\ The Congressional Research Service 
concluded that ``consumers would see higher prices, not only 
directly for gasoline and other consumer products, but, in 
general, for many products to varying degrees,'' and ``. . . 
the fee would likely result in decreased discretionary consumer 
purchasing power which may translate into lower expected 
economic growth.''\118\ With stagnant wages and anemic economic 
growth under this administration, Americans are still 
struggling with the weakest economic recovery since the Great 
Depression. Consumers simply cannot afford this 10-year, $319-
billion tax increase.\119\
---------------------------------------------------------------------------
    \117\Nathan Bomey, ``Obama's $10 oil tax proposal would cost 
motorists,'' USA Today, 5 February 2016, http://www.usatoday.com/story/
money/2016/02/04/president-obama-oil-tax-gasoline/79835274/.
    \118\Congressional Research Service, Subject: $10 Fee/Tax on Oil, 
memorandum to the Senate Energy and Natural Resources Committee, 8 
February 2015.
    \119\Department of the Treasury, General Explanations of the 
Administration's Fiscal Year 2017 Revenue Proposals, February 2016.
---------------------------------------------------------------------------
    None of this is to say that the search for newer 
technologies and low-carbon sources of energy is without 
merit--only that these activities are best suited for the 
private sector. This administration prefers to pick winners and 
losers in the market, which crowds out disfavored energy 
sources, even if they are more reliable and come at 
significantly lower costs. The President was so concerned about 
low-cost energy pushing consumers away from his preferred, more 
expensive options that he named Steven Chu as his first 
Secretary of Energy less than a year after Chu said: ``Somehow 
we have to figure out how to boost the price of gasoline to the 
levels in Europe.''\120\
---------------------------------------------------------------------------
    \120\Neil King Jr. and Stephen Power, ``Times Tough for Energy 
Overhaul,'' The Wall Street Journal, 12 December 2008.
---------------------------------------------------------------------------
    After 7 years, the verdict is in: increased oil and natural 
gas production by private sector companies on private land has 
made the U.S. the world's number one energy producer. The world 
has experienced an energy boom that continues to drive gas and 
other energy prices lower. Yet at least $67 billion of 
government spending has brought the Nation no closer to cost-
effective zero-carbon energy. Technological breakthroughs will 
continue to occur--such as the combination of horizontal 
drilling and hydraulic fracturing that emerged in the mid-
2000s--but the Federal Government must resist the temptation to 
intervene at taxpayers' expense.
    Discretionary spending in this category includes some of 
the civilian energy and environmental programs of the 
Department of Energy [DOE]. It also includes funding for the 
basic operations of the Nuclear Regulatory Commission. A large 
majority of the DOE discretionary budget is allocated to 
commercial and applied research and development for new energy 
technologies--activities that are better left to the private 
sector. It also includes Electricity Delivery and Energy 
Reliability, as well as operations and maintenance accounts for 
some of DOE's direct spending programs, like the Power 
Marketing Administrations.
    According the National Science Foundation, private sector 
companies in the U.S. spent more than $302 billion on research 
and development [R&D;] in 2012. While these efforts focus on 
more than just energy, detailed NSF surveys indicate that 
funding for more efficient fuel consumption, electric vehicles, 
energy efficiency, and fossil fuel R&D; total billions of 
dollars' worth of private sector capital per year. As a result, 
DOE's research and development should focus solely on 
breakthrough innovations.
    Direct spending in this category includes the remaining 
civilian energy and environmental programs at the DOE. It also 
includes the Rural Utilities Service of the U.S. Department of 
Agriculture [USDA], the Tennessee Valley Authority, and the 
Federal Energy Regulatory Commission. (It does not include 
DOE's national security activities, conducted by the National 
Nuclear Security Administration, which are in Function 050, or 
its basic research and science activities, which are in 
Function 250.)
    For fiscal year 2017, the budget resolution provides $2.7 
billion in discretionary budget authority, with $3.1 billion in 
related outlays (shown in Table 2, Function 270). Direct 
spending figures (shown in Table 3, Function 270) are -$5.7 
billion in budget authority and -$1.7 billion in outlays. The 
negative balances reflect the incoming repayment of loans and 
receipts from the sale of electricity produced by Federal 
entities, which are accounted for as ``negative spending,'' as 
well as rescissions of unobligated balances in green energy 
loan programs. Over 10 years, the resolution provides 
discretionary budget authority of $30.6 billion and $31.1 
billion in outlays. Ten-year totals for direct spending are 
-$19.3 billion in budget authority and -$21.0 billion in 
outlays.

           Illustrative Discretionary Spending Policy Options

    In the House, discretionary spending energy programs 
(Function 270 in Table 2) fall under the jurisdiction of the 
Committee on Energy and Commerce. Funding for these programs 
comes from the Appropriations Subcommittees on Energy and Water 
Development, and Related Agencies, and Interior, Environment, 
and Related Agencies. These committees will determine specific 
policy options to meet the budget's fiscal guidelines.
    A central aim of their policies should be to ensure that 
private sector capital is not crowded out by government 
overreach and bureaucratic waste. They should also protect 
taxpayers from poor government decision-making that wastes 
Federal dollars and increases energy prices. Finally, 
streamlining R&D; activities across the Department of Energy 
will increase efficiency, consolidate operations, and reduce 
costs. The following illustration reflects this approach.

    Reduce Funding for Commercial Research and Development. The 
resolution supports maintaining current funding levels for 
basic R&D; activities within the DOE, while significantly 
reducing funding for applied R&D.; Focusing on basic R&D; will 
allow DOE to zero in on cutting-edge discoveries that may lead 
to major improvements in society, such as the Internet, while 
leaving research on the application and commercialization of 
new technologies to the private sector.

              Illustrative Direct Spending Policy Options

    In the process of transforming policy in this area, the 
Committee on Energy and Commerce can be guided in part by 
seeking to reverse the damage caused by the excesses of the 
administration's energy policies. They can also evaluate each 
program's merit by asking a simple question: If this program 
did not exist, would there be a private sector industry or 
entity that would fund similar activities? If the answer is 
```yes,'' the program should be viewed as ripe for reform, or 
even elimination. The options below indicate some possible 
directions the Energy and Commerce Committee could take.

    Rescind Unobligated Balances from the Stimulus Bill's Green 
Energy Programs. The budget recommends rescinding unobligated 
balances in DOE's loan portfolio. Since implementation of the 
American Recovery and Reinvestment Act of 2009, or the stimulus 
bill, these programs have spawned numerous failures, such as 
Solyndra and Abound Solar. The government cannot undo the harm 
that has been done or recover taxpayer dollars from failed 
entities. It can, however, reclaim all of the spending 
authority the administration has not yet obligated to ensure 
that taxpayers are not exposed to further risk for renewable 
energy projects that would not otherwise be market-viable.

    Rescind Funding for Biomass Research and Development. The 
Biomass Research and Development program is a joint initiative 
of the USDA and the DOE, intended to ``carry out research on 
and development and demonstration of (A) biofuels and biobased 
products, and (B) the methods, practices, and technologies for 
the production of biofuels and biobased products.''\121\
---------------------------------------------------------------------------
    \121\U.S. Department of Agriculture, ``Biomass Research and 
Development Initiative Competitive Grants Program,'' Catalog of Federal 
Domestic Assistance: https://www.cfda.gov/
index?s=program&mode;=form&tab;=core&id;= 
416c795f6d234174f72d346d328d0464.
---------------------------------------------------------------------------
    Unreasonable mandates in the Renewable Fuel Standard have 
already forced private sector gasoline refiners and importers 
to spend billions of dollars of their own money to assist 
bringing uneconomic biofuels to market. Piling on millions of 
Federal dollars only perpetuates the problem and exposes 
taxpayers to financial risk.

    Repeal Stimulus-Driven Borrowing Authority Specifically for 
Green Transmission. The $3.25 billion in borrowing authority in 
the Western Area Power Administration's Transmission 
Infrastructure Program provides loans to develop new 
transmission systems aimed solely at integrating renewable 
energy. This authority was inserted into the 2009 stimulus bill 
without the opportunity for debate. Of most concern, the 
authority includes a bailout provision that would require 
American taxpayers to pay outstanding balances on projects that 
private developers fail to repay. The budget rescinds the 
program's unobligated funds, saving taxpayers more than $1 
billion.

                   NATURAL RESOURCES AND ENVIRONMENT


                Function Summary: Discretionary Spending

    America's bountiful environment--her breathtaking parks and 
forests, diverse wildlife, rivers and lakes, and land, water, 
and mineral resources--represent an extraordinary national 
heritage worthy of preservation and responsible stewardship. 
Yet over the years the Federal Government has contorted the 
aims of preservation into a justification for ever more 
centralized regulation.
    For instance, the primary role of the Environmental 
Protection Agency [EPA] is to ensure that the air Americans 
breathe and the water they drink is clean and unpolluted. For 
too long, however, rather than making human health and the 
environment a priority, the EPA has viewed itself as an energy 
policy authority, regulating low-cost, reliable energy sources 
out of the market and mandating increased use of uncompetitive 
and less reliable ones. Given these circumstances, any EPA 
funding should require the EPA Administrator to certify that 
all scientific and technical information and data relied on to 
support a risk, exposure, limitation, regulation, regulatory 
impact analysis, or guidance has been made available to the 
public.
    The Obama Administration's Clean Power Plan--which not only 
regulates power plants but also expands EPA's reach into State 
power markets generally--is a perfect example. The Supreme 
Court recently ruled that implementation should be halted until 
multiple legal challenges against the plan are resolved. The 
EPA estimates the plan will cost energy providers up to $8.8 
billion in annual compliance costs by 2030, a large share of 
which will likely be passed on to taxpayers in the form of 
higher energy prices. Private researchers believe the impact 
could be even more profound, because the EPA did not include in 
their estimate the costs of new transmission infrastructure, 
intermittent resource integrations, or stranded assets. The 
budget recommends withholding any funding to implement this 
program as well as other unnecessary, costly regulatory 
regimes, such as the soon-to-be-proposed ozone standards, the 
proposed ``Waters of the United States'' rule, the stream 
buffer rule, and the ``coal ash'' rule relating to disposal of 
coal residuals.
    The National Association of Manufacturers released a study 
in 2015 indicating that tightening the ozone standard to 65 
parts per billion, the low end of the range being considered by 
the EPA, could cut U.S. gross domestic product by $140 billion 
per year.\122\ Similarly, the Office of Surface Mining's stream 
buffer rule would cause a dramatic decline in domestic coal 
production. This would lead to the elimination of 44,000 to 
77,000 American jobs, according to the National Mining 
Association.\123\ In addition to withholding funding for these 
executive overreaches, Members of Congress have recommended 
their own solutions. The House of Representatives recently 
passed the Supporting Transparent Regulatory and Environmental 
Actions in Mining [STREAM] Act (H.R. 1644), sponsored by 
Representative Mooney (R-WV). This common sense legislation 
would bring transparency and accountability to the regulatory 
overreach of the Office of Surface and Mining; the Senate 
should consider it.
---------------------------------------------------------------------------
    \122\NERA Economic Consulting, Economic Impact of a 65 ppb National 
Ambient Air Quality Standard for Ozone, February 2015.
    \123\National Mining Association, Economic Analysis of Proposed 
Stream Protection Rule: Final Report, October 2015.
---------------------------------------------------------------------------
    On 17 April 2015, the EPA finalized its rule regarding 
disposal of coal combustion residuals from electric utilities, 
known as the ``coal ash'' rule. This rule creates uncertainty 
for plant operators. While EPA appropriately characterized coal 
ash as non-hazardous under Subtitle D of the Solid Waste 
Disposal Act, because of EPA's limited authority under Subtitle 
D, the final rule is flawed: It is self-implementing and 
enforceable only through citizen suits. This means regulated 
entities will have to interpret the rule, and enforcement will 
result in a patchwork of regulatory interpretations made by 
Federal District Courts around the country. The final rule is 
also problematic because State permit programs will not operate 
in lieu of the final rule. Consequently, even if States adopt 
the final rule, regulated entities in compliance with a State 
permit can still be sued for non-compliance with the final 
rule. Furthermore, this rule negatively burdens State and local 
economies. The EPA's own data conclude this regulation will 
cost $735 million per year. The EPA further concluded the cost 
of this rule will outweigh the benefits by two-and-a-half 
times.\124\ This compliance burden will be borne by small 
businesses and local communities in the form of lower wages and 
less economic opportunity.
---------------------------------------------------------------------------
    \124\Environmental Protection Agency, Hazardous and Solid Waste 
Management System; Disposal of Coal Combustion Residuals From Electric 
Utilities, December 2014.
---------------------------------------------------------------------------
    H.R. 1734, which passed the House on 22 July 2015, would 
alleviate both of the key concerns with the final rule. The 
legislation will result in the establishment of enforceable 
State permit programs that directly incorporate EPA's technical 
requirements in the final rule. This means there will be direct 
enforcement of the requirements in the final rule by a 
regulatory agency. The proposed McKinley amendment to H.R. 22 
(also introduced in the Senate as S. 2446) addressed the issue 
in the Statement of Administration Policy from July 2015, and 
in particular would require EPA to review State permit programs 
prior to State implementation.
    The budget focuses on paring back unnecessary spending used 
to carry out overreaching regulatory expansion. This budget 
also emphasizes core government responsibilities, while 
reducing spending in areas of duplication or non-core 
functions. Pursuant to these guidelines, the resolution 
provides $36.1 billion in discretionary budget authority for 
fiscal year 2017, with $38.0 billion in related outlays (see 
Function 300 in Table 2). These funds will finance programs 
within the Departments of Interior, Agriculture, Commerce, and 
Transportation, as well as the Army Corps of Engineers, and the 
EPA.
    Some of the larger spending programs subject to 
appropriations are the EPA's clean water and drinking water 
programs, as well as the agency's environmental programs and 
management account, the Army Corps construction account, 
operations and maintenance accounts, accounts responsible for 
operation of the National Park Service and the Wildland Fire 
Management accounts in the U.S. Forest Service and the 
Department of the Interior.
    The Forest Service and the Interior Department have used a 
large amount of their overall budget allocations toward 
wildfire suppression in the Western region of the U.S. The 
frequency and severity of these wildfires pose a risk to the 
citizens, water, and wildlife of the region. Borrowing for 
wildfires is detrimental to the long-term planning of these 
agencies. This budget acknowledges the need to minimize the 
adverse effects of fire transfers on the budgets of other fire 
and non-fire programs, and the need to responsibly budget for 
wildfires. One solution is the Resilient Federal Forests Act of 
2015 (H.R. 2647), a bipartisan measure introduced by 
Representative Westerman (R-AR) and passed by the House. The 
legislation sets in place responsible forest management and 
wildfire funding solutions.
    This budget recognizes the negative impact of the drinking 
water crisis currently plaguing the people of Flint, Michigan, 
and the greater Michigan area. This crisis is a failure of 
leadership--specifically by the EPA, which was aware of 
dangerously high levels of lead in Flint drinking water in 
April 2015, yet failed to act until January 2016 when they were 
forced to intervene. Nonetheless, Congress has a moral 
obligation to find positive solutions for all the people 
affected by this situation. Members of Congress are engaged in 
a full investigation through public hearings and other 
oversight measures to solve this problem and prevent it from 
happening again. The budget calls for a bipartisan way forward 
to address infrastructure needs of the Flint area and to ensure 
the health and safety of all the children, families, and 
citizens adversely affected by this crisis.

           Illustrative Discretionary Spending Policy Options

    The Committee on Natural Resources is the primary 
authorizer in this area. The Appropriations Subcommittees on 
Energy and Water Development, and Related Agencies, and 
Interior, Environment and Related Agencies are responsible for 
annual funding. As the committees determine policies here, they 
may be guided by the budget's effort to focus on core 
government activities and reduce duplication and waste. Options 
that may help meet budget targets include those described 
below.

    Reduce Environmental Protection Agency Funding. The EPA 
continues to use its budget to implement its unprecedented 
activist regulatory policy to the detriment of States, 
localities, small businesses, and energy consumers. This is 
evidenced in the many ongoing legal challenges facing EPA's 
proposed regulations. The budget reduces annual funding levels 
for the EPA to allow the agency to focus on its core mission of 
simply enforcing laws passed by Congress rather than 
continually attempting to re-write them through regulations.

    Eliminate the EPA Office of Regulatory Policy and 
Management. This office manages the regulatory development 
process for the EPA by providing support and guidance for the 
agency's national and regional offices in developing 
regulations. According to the EPA website, a primary function 
of this office is to ``manage the Agency's policy priority 
agenda.''\125\ As an executive agency merely created to enforce 
congressional statutes, the EPA should have no policy priority 
agenda at all.
---------------------------------------------------------------------------
    \125\Environmental Protection Agency, ``About the Office of 
Policy,'' February 2016: www.epa.gov.

    Cut Waste, Fraud, and Abuse. An examination of the Citizens 
Against Government Waste Congressional Pig Book, similar 
accounts by Senators Flake and Lankford, numerous reports by 
the Government Accountability Office and Federal agencies' 
Inspector Generals, and documents provided by other committees 
expose numerous instances of waste, fraud, and abuse that can 
be removed from the Federal ledger. The most offensive example 
is providing pay for EPA employees suspended for numerous 
---------------------------------------------------------------------------
reasons, including watching pornography during work hours.

    Streamline Climate-Change Activities Across Government. 
This budget resolution reduces spending for numerous climate-
change-related activities and research within this function, 
primarily by reducing overlapping or unproductive policies. It 
also recommends better coordination of programs and funds to 
eliminate duplicative and unnecessary spending. Many of these 
programs are funded within the National Oceanic and Atmospheric 
Administration [NOAA] as well as the EPA.

    Eliminate the National Sea Grant College and Fellowship 
Programs. Since 1966, NOAA has provided Federal funds to 
various universities and academic research organizations across 
33 States to sponsor a variety of marine research, outreach, 
and education projects. The program also funds a National Sea 
Grant Office, which offers fellowship opportunities for 
graduate students. While the premise of these programs is 
reasonable, they illustrate a growing trend within individual 
agencies to offer and fund education-based grants and 
fellowships that are better suited for either the Department of 
Education or provided by State and local government.

                              AGRICULTURE


                Function Summary: Discretionary Spending

    Discretionary funding in the agricultural category supports 
agricultural research, education, and economics; direct and 
guaranteed farm operating and ownership loans; operating 
budgets of the Farm Service Agency, Foreign Agricultural 
Service, and Risk Management Agency; marketing and information 
services; animal and plant health inspection services; 
Department of Agriculture administration; and a variety of 
related programs and activities.
    The budget provides for fiscal year 2017 discretionary 
spending in these areas totaling $6.3 billion in budget 
authority and $6.2 billion in outlays. Over the 10-year period 
of 2017 through 2026, the budget assumes discretionary spending 
of $71.7 billion in budget authority and $70.6 billion in 
outlays. (See Function 350, Table 2).

           Illustrative Discretionary Spending Policy Options

    Funding for discretionary agriculture programs and 
activities will be determined by the Appropriations 
Subcommittee on Agriculture, Rural Development, Food and Drug 
Administration, and Related Agencies. The budget recommends 
giving a higher priority to competitive grant-based 
agricultural research. This type of research funding, in 
contrast to formula-based and other forms, is most likely to 
spur agricultural productivity growth, which is important to 
enhancing the international competiveness of U.S. agriculture 
over the longer term. Also, continued attention should be given 
to streamlining and, where possible, consolidating operations 
and activities across U.S. Department of Agriculture agencies, 
including in its large network of county field offices.

                      COMMERCE AND HOUSING CREDIT


                Function Summary: Discretionary Spending

    Supporting commerce--maintaining an environment that allows 
ingenuity and free enterprise to flourish--is a worthy and 
important role of government. This includes providing necessary 
oversight and regulation of business and commerce. As in many 
other areas, however, the Federal Government has too often 
taken the approach that more money, more red tape, and more 
bureaucracy can answer every problem. A fundamental government 
role is to maintain competitive markets that encourage 
innovation and creativity, and promote efficiency, thereby 
stimulating an expanding range of products and services at 
lower costs for consumers.
    One example is the ruling of the Federal Communications 
Commission [FCC] to re-classify the Internet as a 
telecommunications service, rather than an information service, 
pursuant to the highly regulatory Title II of the 1934 
Communications Act. The reclassification empowers the 
government to regulate rates and give priority to content, 
which will inevitably lead to increased fees and taxes on the 
consumer. This budget rejects the FCC's ``Net Neutrality'' 
rules and generally opposes the government's attempt to 
intervene in the free market. The Committee on Energy and 
Commerce has made commendable efforts to prohibit the FCC from 
onerous regulation of rates for broadband internet access, and 
this budget resolution supports the No Rate Regulation of 
Broadband Internet Access Act (H.R. 2666).
    The resolution envisions a Federal system that supports 
commerce and regulates in an efficient manner, providing 
sufficient oversight where necessary without wasting taxpayer 
monies or stifling free enterprise. Additionally, as it is 
risky for the Federal Government to be in the business of 
picking winners and losers, subsidies to commercial entities 
should be minimized where possible.
    These kinds of activities on the Federal level are 
supported through discretionary spending in the Commerce and 
Housing Credit category (Function 370 in Table 2), where the 
government funds programs through the Departments of Commerce 
and Housing and Urban Development. Entities funded with 
discretionary dollars in this function include the Federal 
Trade Commission, the majority of the Small Business 
Administration, and regulatory agencies such as the Securities 
and Exchange Commission.
    On a unified basis, for fiscal year 2017, the budget 
resolution provides -$12.3 billion in discretionary budget 
authority and -$11.7 billion in outlays (Table 2). The negative 
discretionary budget authority and outlay figures mainly 
reflect the subsidy rates applied to certain loan and loan 
guarantee programs scored under the guidelines of the Federal 
Credit Reform Act, such as Federal Housing Administration and 
Government National Mortgage Association [Ginnie Mae] programs. 
This accounting method is further discussed in the section of 
this report titled ``Banking, Commerce, Postal Service, and 
Related Programs.''

           Illustrative Discretionary Spending Policy Options

    The main committees responsible for funding programs in 
this area are the Committee on Financial Services and the 
Committee on Energy and Commerce. As they make final policy 
determinations, the committees of jurisdiction should aim to 
reduce unwarranted subsidies to big businesses, reform 
inefficient government bureaucracies, and create a climate that 
supports rather than stifles commerce and free enterprise. 
Options worthy of consideration include those cited below.

    Eliminate Corporate Welfare Programs in the Department of 
Commerce. Subsidies to businesses distort the economy, impose 
unfair burdens on taxpayers, and are especially problematic 
given the fiscal problems facing the Federal Government. 
Programs that should be considered for elimination include the 
following:

      The Hollings Manufacturing Extension Program, 
which subsidizes a network of nonprofit extension centers that 
provide technical, financial, and marketing services for small- 
and medium-size businesses. These services are largely 
available in the private market. The program already obtains 
two-thirds of its funding from non-Federal sources, and was 
originally intended to be self-supporting.

      The International Trade Administration [ITA]. 
This agency, within the Department of Commerce, provides trade-
promotion services for U.S. companies. The fees it charges for 
these services do not cover the cost of these activities. 
Businesses can obtain similar services from State and local 
governments and the private market. The ITA should be 
eliminated or should charge for the full cost of these 
services.

      The National Network for Manufacturing 
Innovation. This program, also known as the Advanced 
Manufacturing Technology Consortia, provides Federal grants to 
support research for commercial technology and manufacturing. 
As stated in the Heritage Foundation's The Budget Book: 
``Businesses should not receive taxpayer subsidies; these long-
lived and unnecessary subsidies increase Federal spending and 
distort the marketplace. Corporate welfare to politically 
connected corporations should end.''\126\
---------------------------------------------------------------------------
    \126\The Heritage Foundation, The Budget Book: 106 Ways to Reduce 
the Size & Scope of Government, 2015: p. 94

    Tighten the Belts of Government Agencies. Duplication, 
hidden subsidies, and large bureaucracies are symptomatic of 
many agencies within Function 370. For example, the Securities 
and Exchange Commission [SEC] now has more than 4,000 
employees. Although its funding has grown by more than 60 
percent since 2007, the President, in his annual budget 
submissions, has consistently requested additional increases. 
This resolution questions the premise that more funding for the 
SEC means better, smarter regulation, and recommends reforming 
the agency so it can perform its duties more efficiently.
    Another example is the Federal Trade Commission's budget, 
which has increased 30 percent since 2008. This budget calls 
for assessing the ever-growing spending of Federal agencies, 
determining what levels are necessary to effectively and 
efficiently execute their missions, and adjusting funding 
accordingly.

    Eliminate the Department of Commerce and Consolidate 
Necessary Functions Into Other Departments. Since its 
establishment in 1903, the Commerce Department has expanded in 
size and scope to include many elements whose priorities would 
be better suited in other agencies. As a result, the Department 
of Commerce and its various agencies and programs are rife with 
waste, abuse, and duplication. This budget proposes the 
following dissolution, delegation of authority, and 
consolidation measures:

      Consolidate National Oceanic and Atmospheric 
Administration functions into the Department of the Interior.

      Establish the U.S. Patent and Trademark Office as 
an independent agency.

      Eliminate the International Trade Administration.

      Delegate trade enforcement activities to the 
International Trade Commission.

      Consolidate the Bureau of Industry and Security 
within the Department of State.

      Eliminate the Economic Development 
Administration.

      Consolidate trade adjustment activities within 
the Department of Labor, which already has a duplicate program.

      Consolidate the Minority Business Development 
Agency within the Small Business Administration.

      Consolidate the National Institute of Standards 
and Technology and the National Technical Information Services 
within the National Science Foundation.

      Consolidate the National Telecommunication and 
Information Administration with the Federal Communications 
Commission as an independent agency.

      Consolidate the United States Census Bureau and 
the Bureau of Economic Analysis into the Department of Labor's 
Bureau of Labor Statistics.

                             TRANSPORTATION


                            Function Summary

    A 21st century transportation system is one that enables 
people and goods to move freely, efficiently, and cost-
effectively. To the extent possible, it responds to consumers' 
demands--in this case, the demands of the traveling public. 
Every day, people traveling to and from work and businesses 
moving their products to market expect reliable, safe, and 
convenient means of transportation. They understand they will 
have to pay for what they get, but they likewise expect to get 
what they pay for. All levels of government and the private 
sector fund transportation activities. It is incumbent on 
Congress to consider the proper Federal role within this 
system. Congress especially should identify those needs that 
are of national importance and are Federal in responsibility, 
and then focus on those, rather than be distracted by and spend 
precious funds on ancillary activities. A major component of 
the Nation's transportation system is its vast network of 
highways. This section offers a robust discussion of the 
challenges facing the Federal highway program as well as 
consideration of other categories of transportation.
    The Interstate Highway System dates to 1944 legislation, 
though it was the Federal-Aid Highway Act of 1956 that 
established the program enabling its construction. That same 
year, Congress created the Highway Trust Fund (under the 
Highway Revenue Act of 1956) as a mechanism to ensure that the 
revenue generated from gasoline taxes would ``not be diverted'' 
to purposes other than building the Interstate Highway System. 
For decades the trust fund was self-financing. Then Congress 
began authorizing annual spending out of the trust fund above 
the amount tax receipts collected, and cash shortfalls 
resulted. Congress covered the first shortfall in 2008 with 
cash infusions from general revenues, and it has continued this 
practice for subsequent shortfalls. Notably, these transfers do 
not make the trust fund self-sustaining; rather, they enable 
the Federal Government to meet its financial obligations to 
States on time.
    Federal motor fuel tax rates stand at 18.4 cents per gallon 
for gasoline and 24.4 cents per gallon for diesel. These taxes, 
along with related fees, fill the trust fund and finance 
Federal surface transportation programs. The most recent fuel 
tax increase was enacted in 1993, originally as part of 
deficit-reduction legislation. Two years later, that additional 
tax was redirected to the Highway Trust Fund. Congress must 
approve any fuel tax increases or decreases, which do not 
automatically change with inflation. Federal fuel-economy 
standards are eroding the trust fund's balances. The 
Congressional Budget Office [CBO] projects new Federal fuel-
economy standards will reduce trust fund revenue by 21 percent 
in 2040, when they are fully phased in. To illustrate the 
effect of a 21-percent drop, the CBO estimates that if all cars 
on the road now met the stricter efficiency standards, it would 
mean a $57-billion cumulative reduction in revenue between now 
and 2022.
    Though gas-tax receipts have plateaued, spending continues 
to grow. From 1999 through 2008, outlays outpaced receipts in 
the trust fund by almost $1 billion a year, on average. The 
spending-revenue gap has widened further under the current 
administration, expanding to more than $11 billion a year. 
Recently enacted legislation, the Fixing America's Surface 
Transportation [FAST] Act, reauthorized Federal highway and 
transit programs for 5 years and also provided for a $70-
billion general revenue transfer to the trust fund. The 
transfer is intended to cover projected trust fund deficits, 
which range from $12 billion in fiscal year 2016 to $16 billion 
in fiscal year 2020. The CBO projects the trust fund's transit 
account will face a $2-billion shortfall sometime in fiscal 
year 2021, and the trust fund's cumulative deficits will grow 
from $21 billion in fiscal year 2022 to $108 billion by fiscal 
year 2026.\127\
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    \127\Congressional Budget Office, ``Projections of the Highway 
Trust Fund Accounts''--CBO's January 2016 Baseline, 25 January 2016: 
https://www.cbo.gov/publication/43884.
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    Continuing on the present course will lead to one of two 
outcomes within about 5 years. Under current law, the Highway 
Trust Fund cannot incur negative balances, so spending will 
automatically decrease and the Department of Transportation 
will have to ration and delay reimbursements to States to 
maintain a ``prudent balance'' in the fund. Alternatively, 
Congress will need to provide additional bailouts (i.e. more 
transfers from the general fund) with borrowed money.
    The deterioration of the Highway Trust Fund is a major 
concern reflected in the Transportation category of the budget 
(Function 400 in the summary tables). The function also 
includes ground, air, water, and other transportation funding. 
The major agencies and programs within this function are the 
Department of Transportation (which includes the Federal 
Aviation Administration; the Federal Highway Administration; 
the Federal Transit Administration; motor-carrier, rail, and 
pipeline-safety programs; and the Maritime Administration); the 
Department of Homeland Security (including the Federal Air 
Marshals, the Transportation Security Administration [TSA], and 
the U.S. Coast Guard); the aeronautical activities of the 
National Aeronautics and Space Administration; and the National 
Railroad Passenger Corporation, or Amtrak.
    For these programs and agencies, the budget resolution 
calls for $87.9 billion in budget authority and $90.6 billion 
in outlays in fiscal year 2017. Discretionary budget authority 
in 2017 is $29.4 billion, with outlays of $89.7 billion (see 
Table 2); direct spending is $58.5 billion in budget authority 
and $900 million in outlays (Table 3). Over 10 years, budget 
authority totals $756.5 billion, with outlays of $820.3 
billion.
    The large discrepancy between discretionary budget 
authority and outlays here results from the split treatment of 
the transportation trust funds, such as the Highway Trust Fund, 
through which funding is provided as a type of mandatory budget 
authority, while outlays--controlled by annual limitations on 
obligations set in appropriations acts--are treated as 
discretionary spending. Because of this unique budgeting 
regime, the discussion below examines both categories of 
transportation spending.
    Basic transportation policies in this area fall under the 
jurisdiction of the Committee on Transportation and 
Infrastructure and the Appropriations Subcommittee on 
Transportation, Housing and Urban Development, and Related 
Agencies. Policies for the Transportation Security 
Administration and Federal Air Marshals are determined by the 
Committee on Homeland Security and the Appropriations 
Subcommittee on Homeland Security. These committees will 
determine the policy choices in their jurisdictions. The budget 
supports maintaining essential funding for surface 
transportation, aviation, and safety--offset by reductions in 
other transportation activities of lower priority to the 
Federal Government.

              Illustrative Direct Spending Policy Options

    Ensure the Solvency of the Highway Trust Fund. The Highway 
Trust Fund [HTF] has required large general fund contributions 
totaling $141 billion since 2008. While no trust fund shortfall 
is imminent for several years, the budget resolution continues 
a reform that would require any future general fund transfer to 
the HTF to be fully offset. CBO estimates that, under current 
law, the Highway Trust Fund again will face insolvency during 
fiscal year 2021, the year after expiration of the FAST Act.
    Congress has time to address the systemic factors that have 
been driving the trust fund's bankruptcy. It can continue 
asking general taxpayers to assume an increasing share in the 
cost of Federal transportation programs, as has been the 
practice since the first trust fund bailout. Doing so would 
further unravel the crucial user-pays/user-benefits model that 
proved successful over the program's history--that of a highway 
program funded directly with motorists' user fees. Congress 
could reconsider the mission of the program, including which 
activities belong in a Federal program versus being run by 
State or local governments or even funded by groups in civil 
society. Doing so would allow Congress to distinguish between 
the programs it believes are national in scope and Federal in 
responsibility from those that another level of government 
could provide more effectively. Congress may conclude, for 
example, that it bears some role in the great task of 
rebuilding the decades-old Interstate Highway System, while 
building bicycle and recreational trails, sidewalks, and 
streetcars, which produce local benefits, lies outside its 
purview.
    The budget encourages reform that puts the trust fund back 
on sound financial footing, and it dispenses with the habit of 
raiding general funds and increasing the deficit. It recommends 
sensible reforms to avert the projected bankruptcy of the 
Highway Trust Fund within the budget window, by aligning 
spending with incoming revenues, and it also includes a 
provision to ensure any future general-fund transfers will be 
fully offset.
    Congress has many options to consider. One is exploring 
innovative financing mechanisms to support surface-
transportation infrastructure and safety programs--with, for 
example, further public-private sector partnerships 
demonstrated in the Transportation Infrastructure Finance and 
Innovation Act program. Additionally, the budget recommends 
giving States more flexibility to fund the highway projects 
they feel are most critical. Doing so means reconsidering 
current spending mandates on non-highway projects through 
program set-asides or the eligibility of non-highway activities 
for funding. One possible reform could include a pilot program 
for States to fund their transportation priorities with State 
revenues, opt out of the Federal fuel taxes, and forgo Federal 
allocations. Such reform may be viewed as reflecting an ongoing 
dynamic: that of many States proposing or enacting funding 
solutions to pay for their transportation programs. No two 
States' transportation situations are identical, and thus 
neither their preferred sources of funding nor their spending 
priorities will be the same.

    Restructure the Air Traffic Control System. Upgrading the 
United States' air traffic control [ATC] system, by reforming 
its governance and funding structures, is in the interests of 
air travelers, businesses that operate within the National 
Airspace System, and Federal taxpayers. Without reform, 
improvements such as reduced airport congestion, timely 
technological upgrades, improved service, and stable funding 
for investments will remain out of reach. Restructuring the 
system, on the other hand, would have numerous benefits, 
including attracting a talented workforce, meeting demand in 
the skies, and cost-effectively maintaining the safest ATC 
system in the world. A model successfully adopted by some other 
countries is that of a federally chartered, not-for-profit 
corporation. The corporation operates and modernizes the ATC 
system and is self-funded through service charges paid by 
users. A government entity--the Federal Aviation Administration 
in the U.S.--remains as the safety regulator.
    The budget supports a new approach for providing ATC 
services and modernization, but it does not assume savings from 
this policy. It includes a reserve fund to accommodate the 
budgetary effects of such a proposal, and the reserve fund 
requires the downward revision of the Budget Control Act's 
discretionary spending limits to reflect the reduction in 
appropriated spending on ATC-related activities that should 
occur as part of ATC reform.

                          AN UPGRADE IS NEEDED

    The FAA operates a safe ATC system, but it is not because 
the Federal Government owns and operates it. It is safe due to 
the daily efforts of the FAA's approximately 14,000 air traffic 
controllers and to safety being at the fore of aircraft design 
and maintenance. Technology used by the FAA is obsolete. Its 
computer system relies on ground-based radar, not the Global 
Positioning System [GPS]. As a point of contrast, the thousands 
of travelers who fly daily within the system carry GPS-enabled 
phones. For at least two decades Congress has legislated, with 
little success, reforms requiring the FAA to operate its Air 
Traffic Organization [ATO] like a business and expedite 
modernization. The ATO remains a massive bureaucracy with high 
operating costs, losses in productivity, and a culture that 
resists change. The FAA also has received criticism over its 
implementation of the multibillion-dollar Next Generation Air 
Transportation System [NextGen] program, which is to upgrade 
the ATC system. In a recent letter to the FAA's Administrator, 
the Department of Transportation's Inspector General wrote: 
``While FAA reports improvements in its management of 
acquisitions, major projects continue to experience problems 
that delay the introduction of new technologies, such as 
performance-based navigation; postpone benefits to users; and 
defer the retirement of costly legacy systems . . . 
Notwithstanding reforms, several underlying and systemic 
issues--including overambitious plans, shifting requirements, 
software development problems, ineffective contract and program 
management, and unreliable cost and schedule estimates--affect 
the FAA's ability to introduce new technologies and 
capabilities that are critical to transitioning to 
NextGen.''\128\
---------------------------------------------------------------------------
    \128\See Office of the Inspector General, Department of 
Transportation, FAA Reforms Have Not Achieved Expected Cost, 
Efficiency, and Modernization Outcomes, Audit Report AV-2016-05, 15 
January 2016: https://www.oig.dot.gov/sites/default/files/
FAA%20Organizational%20Structure_ Final%20Report%5E1-15-16.pdf.
---------------------------------------------------------------------------
    Instead, the U.S. needs is a high-tech ATC service provider 
that will respond quickly to market forces. Recognizing this 
need in their respective situations, more than 50 countries--
from Canada, the United Kingdom, and Spain, to Germany, 
Australia, and New Zealand--have remodeled their ATC systems 
over the past few decades. While the countries have adopted 
different corporation models, they have enjoyed similar 
results: consistent or increased safety, modernized systems, 
improved service, and lower costs.
    Likewise, modernization of the United States' ATC system 
would help the U.S. remain competitive. It would allow for 
better cost management, safe and efficient delivery of 
services, and a more direct connection between system users and 
funding.

                           BUDGETARY EFFECTS

    The budget contains a reserve fund to accommodate any 
budgetary effects resulting from ATC system reform. The budget 
would view a new provider of ATC services as independent, and 
therefore it would not support including such an entity's 
spending and revenue as part of the Federal Government's 
budget. Under such reform, Federal spending on ATC and related 
activities should necessarily decrease as soon as the new 
provider assumes operational responsibility and begins 
assessing service charges. Therefore, the budget's reserve fund 
provision requires that the Budget Control Act's discretionary 
spending caps be lowered to reflect this decrease in 
appropriated funding.
    Congress may choose to transition the U.S. ATC system to a 
federally chartered, non-profit corporation model as part of 
reform efforts. As international experience has shown, the 
following factors are typical under this type of model: the new 
ATC services provider would be independent and self-supporting, 
charging its users fees for services it provides. The fees 
would fund daily operations and finance borrowing in private 
capital markets to pay for capital-intensive investments. 
Receipts from the fees would not be deposited into the U.S. 
Treasury but would be managed directly by the ATC provider. 
This entity would operate the ATC system directly and set its 
own budget. It would become the employer of current government 
employees connected to providing ATC services, and it would be 
provide for the health and retirement benefits of new 
employees. A chief executive officer and governing board would 
be composed of aviation stakeholders, and the board would make 
key decisions such as which new technologies and practices to 
adopt. The ATC provider, not Congress, would initiate 
organizational changes, systems upgrades, and investments. The 
budget resolution would view such an entity as independent, not 
as an agent of the Federal Government.

    Phase Out Subsidies for Essential Air Service. Essential 
Air Service [EAS] is a classic example of a temporary 
government program that has become immortal. EAS funding--
originally intended to provide transitional assistance to small 
communities to adjust to the airline deregulation in the late 
1970s--has not only continued but has grown rapidly in recent 
years. The budget recommends phasing out this spending.

           Illustrative Discretionary Spending Policy Options

    Eliminate Funding for Amtrak Operating Subsidies. The 
budget supports eliminating operating subsidies that have 
insulated the National Railroad Passenger Corporation [Amtrak] 
from making the structural changes necessary to start producing 
returns. It also supports reforms enabling Amtrak's management 
to make sound business decisions that ultimately allow it to 
run as a self-supporting business, eliminating the need for 
taxpayer subsidies to the passenger rail service. For example, 
Amtrak's management, in coordination with stakeholders, could 
be empowered to make repair and safety a priority over route 
expansion; eliminate food and beverage service losses once and 
for all; reduce headquarters and administrative costs; and even 
discontinue unprofitable lines or sell them to interested 
private parties who may repurpose the lines. Another option for 
Congress is requiring Amtrak to gradually begin contracting out 
the operation of its lines, as other commuter rail lines in the 
U.S. have done. The aims would be to improve the quality of 
service for riders, reduce costs, and potentially result in a 
greater role for the private sector.
    Provisions in the FAST Act restructured Amtrak funding 
accounts, setting up a National Network account and a Northeast 
Corridor account. Generally routes in the Northeast Corridor 
operate at a profit but have high capital costs, while long-
distance routes in the National Network tend to operate at a 
loss but have low capital costs. The 1997 Amtrak authorization 
law required Amtrak to operate free of subsidies by 2002. Yet 
taxpayers continue subsidizing approximately $45 of the cost of 
the average Amtrak ticket sold.\129\ The budget recommends 
judicious reforms that help Amtrak change course.
---------------------------------------------------------------------------
    \129\Based on fiscal year 2015 ridership of approximately 30.8 
million customers and a $1.4 billion total appropriation.

    Prohibit Funding for High-Speed Rail. High-speed rail is 
not profitable or self-sustaining in the U.S. for several 
reasons. The U.S. has low population densities relative to 
high-speed rail markets in Europe and Asia. American travelers 
have wide access to personal vehicles, along with competitively 
priced air and bus transportation. Both factors mean high-speed 
rail cannot attract sufficient numbers of riders, which in turn 
makes it challenging to meet revenue targets. Several governors 
across the country rejected Federal high-speed rail funding in 
recent years, because they recognized the risk to their 
taxpayers, who would have had to subsidize the proposed lines. 
Only two high-speed rail lines in the world are profitable: one 
in France and another in Japan.\130\ They serve densely 
populated areas where gasoline is expensive. Similar success is 
far from certain in the U.S. Committing American taxpayers to 
such risky projects is not a proper role of the Federal 
Government.
---------------------------------------------------------------------------
    \130\See the Reason Foundation, High-Speed Rail in Europe and Asia: 
Lessons for the United States, May 2013, http://reason.org/files/
high_speed_rail_lessons.pdf.

    Phase Out New Starts Transit Grants. New Starts grants are 
for fixed-guideway mass transit projects that are largely of 
local, not national, benefit. The budget supports phasing out 
these grants to give States and cities time to plan their 
future transportation priorities and spending accordingly. This 
Federal grant money can have the perverse consequence of 
distorting local decisions about which types of transportation 
projects to build. The bias can favor more expensive projects. 
For example, a city may opt to build a new, more expensive rail 
transit project in one part of town at the expense of expanding 
more cost-effective, flexible bus service in an area where that 
service is already in high demand. Without the subsidies, that 
decision may be the reverse. Moreover, if a transit project 
fails to produce promised ridership and revenue levels, local 
citizens must make up the difference to cover operating costs, 
---------------------------------------------------------------------------
often through higher taxes.

    Eliminate TIGER Grants. The Transportation Investment 
Generating Economic Recovery [TIGER] Program was a 2009 
stimulus measure established as a competitive grant program. 
Though the program was intended to drive funding to critical 
transportation needs for the country, more than 60 percent of 
the grants support local transit or so-called ``enhancement'' 
projects. With grantee selection based on vague metrics, 
including ``livability,'' the Department of Transportation has 
failed to provide more information to the public regarding 
documentation of its review process as requested by the 
Government Accountability Office.\131\
---------------------------------------------------------------------------
    \131\See the Reason Foundation, ``Eliminate TIGER Program,'' 17 
February 2015: http://reason.org/news/show/eliminate-tiger-program.

    Make Rail Safety a Priority Through User Fees. The budget 
supports the vital role of the Federal Railroad Administration 
in ensuring freight- and passenger-rail safety, while reducing 
spending on non-essential transportation programs. Without 
compromising the ongoing implementation of technology aimed at 
preventing train crashes, one option in this area would be to 
connect users of the freight and passenger-rail system to the 
funding for safety programs, rather than fund them through 
general revenues. The Congressional Budget Office has included 
such a policy in its compilation of options for reducing the 
---------------------------------------------------------------------------
Federal deficit.

    Require Improved Performance at Washington Metropolitan 
Area Transit Authority [WMATA]. WMATA, commonly called 
``Metro,'' is a local transit authority that operates rail, 
bus, and paratransit services in the Nation's capital and 
nearby communities. In addition to fare box and advertising 
revenue, it receives Federal aid through annual appropriations 
acts. The District of Columbia, Maryland, and Virginia also 
raise matching funds through dedicated sources to pay for 
Metro's services. Congress appropriated $150 million to Metro 
in fiscal year 2016. Approximately 40 percent of Metro's rush 
hour passengers are Federal Government employees. The transit 
agency has been beleaguered by poor performance in several 
areas: low on-time performance, weekly service disruptions, 
maintenance backlogs, smoky rail tunnels, high operating costs, 
and a tragically fatal rail accident in early 2015. In October 
2015, U.S. officials at the Federal Transit Administration 
assumed direct safety supervision of Metro's rail system.
    Customer satisfaction has hovered around 81 percent during 
the past 2 years. More recently, from the first through the 
third quarter of 2015, Metrorail customers' satisfaction 
dropped to 67 percent, and Metro cites unreliable service as 
the primary cause.\132\ Metro's ridership is also falling short 
of projections. In fiscal year 2015, Metrorail ridership was 
higher than in fiscal year 2014 but came up 16.5 million trips 
short of projections. This shortfall includes lower-than-
expected ridership on the new Silver Line, for which expansion 
plans are under way. The budget supports legislative reforms 
that require Metro to contain its costs and operate more like a 
business, rather than continue rewarding the poorly performing 
system with subsidies from Federal taxpayers. Metro customers 
would benefit from more reliable, safer service. Options for 
Metro could range from further reducing administrative costs to 
competitively contracting some of its operating activities, as 
the nearby Virginia Railway Express and the Maryland Area 
Regional Commuter systems have done.
---------------------------------------------------------------------------
    \132\Washington Metropolitan Area Transit Authority, ``Vital 
Signs,'' November 2015, p. 5, http://www.wmata.com/about_metro/
scorecard/documents/Vital_Signs_Q3_2015.pdf.
---------------------------------------------------------------------------

                   COMMUNITY AND REGIONAL DEVELOPMENT


                Function Summary: Discretionary Spending

    Federal funding for economic and community development in 
both urban and rural areas appears in this category. It 
includes Community Development Block Grants; the non-power 
activities of the Tennessee Valley Authority; the regional 
commissions, including the Appalachian Regional Commission; the 
Economic Development Administration; and partial funding for 
the Bureau of Indian Affairs. Homeland Security spending in 
this function includes the State- and local-government grant 
programs of the Department of Homeland Security, as well as 
part of the funding for the Federal Emergency Management 
Agency.
    While supporting these programs related to emergency 
preparedness and critical needs, this resolution urges 
streamlining non-essential community and regional initiatives 
that are not core functions of the Federal Government.
    The majority of this category's funding is discretionary 
and provided by the Appropriations Subcommittees on Financial 
Services; Energy and Water; Agriculture; Interior, Environment, 
and Related Agencies; and Homeland Security. Relevant 
authorizing committees for this category include the Financial 
Services Committee, the Committee on Transportation and 
Infrastructure, and the Committee on Homeland Security.
    The resolution calls for $8.2 billion in discretionary 
budget authority and $20.0 billion in outlays in fiscal year 
2017. The 10-year totals for discretionary budget authority and 
outlays are $69.7 billion and $112.1 billion, respectively. The 
figures appear in Function 450 of Table 2.

           Illustrative Discretionary Spending Policy Options

    As elsewhere, the committees of jurisdiction will make 
final policy determinations. The proposals below indicate 
policy options that might be considered.

    Eliminate Non-Core Programs. At a time when reducing 
spending is imperative for the government's fiscal well-being, 
this resolution recommends taking a hard look at community and 
regional programs, focusing on those that deliver funds for 
non-core Federal Government functions, and consolidating and 
streamlining programs wherever possible. The following programs 
should be considered in this review:

      The Community Development Fund [CDF]. 
Historically, about 80 percent to 90 percent of funding for the 
CDF is spent on the Community Development Block Grant program 
[CDGB], a program that dates to the 1974 Housing and Community 
Development Act of 1974. CDBG is an annual formula grant 
directed to State and local governments. In 2016, Congress 
appropriated $3.0 billion for CDBG. A vast range of activities 
are eligible for funds, such as home water and energy 
efficiency activities, historic preservation, demolishing 
blighted properties, street and sidewalk repairs, job training, 
grants to local businesses, and community planning.
         Local organizations, private business, and sometimes 
local communities at-large are the ultimate recipients of CDBG 
funds. Likewise, the benefits are enjoyed locally, not 
nationally. The program's effectiveness has been compromised 
over the decades by debates over formulas, which have allowed 
wealthier communities to receive funding at the expense of 
lower-income communities; currently there is no maximum 
community poverty rate to determine eligibility for funds, nor 
are communities with high average income limited or excluded. 
Further, wasteful and inefficient projects have received 
grants, and the program has been criticized for incurring 
unnecessarily high administrative costs, which drain funding 
for actual projects.

      The Economic Development Administration [EDA]. 
Although the program purports to give financial aid to 
economically distressed areas, it is nothing more than a mask 
for political pet projects. Essentially, the agency provides 
``grants'' and ``investments'' for local projects, including 
private sector projects that should not be eligible for Federal 
Government's help to begin with. Just as with earmarks, the EDA 
uses taxpayer dollars to target local projects with a very 
narrow benefit--in many cases just one particular company or 
small segment of population, and should be eliminated.

    Focus Department of Homeland Security Urban Area Security 
Initiative Grants. Urban Area Security Initiative grants to 
more than 30 cities have not produced measurable results for 
the most critical municipalities. This option would limit the 
grants to the top 11 cities on a risk-based formula basis.

    Reform the Federal Emergency Management Agency. The budget 
supports implementation of reforms at the Federal Emergency 
Management Agency [FEMA] passed by Congress to improve service 
delivery and cost efficiencies in disaster assistance, while at 
the same time proposing further steps to eliminate overlap and 
inefficiencies.
    The budget also acknowledges the need to look at reforms in 
disaster-relief assistance to ensure those State and local 
governments most in need are receiving the assistance required. 
The disaster declaration is intended as a process to help State 
and local governments receive Federal assistance when the 
severity and magnitude of the disaster exceeds State and local 
resources, and when Federal assistance is absolutely necessary, 
but recent administrations have come to use it almost 
promiscuously. From 1953 through 1992, presidents made 1,153 
total disaster declarations--including Major Disasters 
Declarations, Emergency Declarations, and Fire Management 
Assistance Declarations--for an average of 29 declarations per 
year.\133\ The past three administrations alone have more than 
doubled that number, making in excess of 2,400 declarations to 
date--including a single-year high of 242 by the current 
administration in 2011.
---------------------------------------------------------------------------
    \133\Federal Emergency Management Agency, ``Disaster Declarations 
by Year,'' February 2015.
---------------------------------------------------------------------------
    When disaster relief decisions are not made judiciously, 
limited resources are diverted away from communities that are 
truly in need. This budget supports Government Accountability 
Office recommendations and takes a closer look at the 
following: (1) reducing Federal expenditures by updating 
disaster-declaration-eligibility indicators--such as per-capita 
thresholds and other major disaster metrics--by, for example, 
adjusting for inflation; and (2) providing more scrutiny on 
cost-share levels and waivers. For example, preparedness 
programs such as the Emergency Management Performance Grants 
have shown greater buy-in by State and local governments; 
demonstrated better performance in delivering resources to 
first responders; and ensured efficient and effective response 
operations. These types of reforms will increase transparency 
in the way that disaster declaration decisions are made and in 
accurately measuring a State's capacity to respond to a 
disaster.

    Waste, Duplication, and Abuse of Federal Emergency 
Management Agency Programs. In addition to the reforms listed 
above, this budget proposes the elimination of duplicative 
programs that are not providing their designated benefit, and 
whose funds are not being used for the purposes originally 
intended.

      The Intercity Passenger Rail Grant Program. This 
program, run by FEMA on behalf of the Department of Homeland 
Security [DHS], this program provides security funds solely for 
Amtrak. Amtrak already receives $1.5 billion annually from the 
Federal Government that could be used for funding security 
upgrades. In addition, the Amtrak grant program could be 
eliminated and the Department of Homeland Security could allow 
Amtrak to competitively apply for funding through the Transit 
Security Grant Program, which provides security grants to 
transit systems.

      Intercity Bus Security Grant Program. This is 
another program run by FEMA for the DHS. It was created to 
provide funding for security on intercity bus systems. Many 
grant recipients, however, are private companies whose focuses 
are not public transportation but rather private contracting 
and event transportation. The President has put this grant 
program on the chopping block, stating that the grants are not 
awarded based on risk. The administration believes making risk-
based awards ``is the best way to allocate resources to the 
areas with the greatest need so as to maximize security gains 
for the Nation.''\134\ In addition, this grant program could be 
rolled into the Transit Security Grant Program, which provides 
funding for transit systems.
---------------------------------------------------------------------------
    \134\See Office of Management and Budget, Terminations, Reductions, 
and Savings: Budget of the U.S. Government, Fiscal Year 2012, Page 38: 
https://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/
assets/trs.pdf
---------------------------------------------------------------------------

                    EDUCATION, TRAINING, EMPLOYMENT,
                          AND SOCIAL SERVICES


                Function Summary: Discretionary Spending

    One of the Federal Government's most important goals should 
be creating and supporting an environment of opportunity for 
all Americans. A key component of this endeavor is ensuring 
that all Americans have access to a high-quality education. A 
well-educated workforce drives strong economic performance and 
international competitiveness.
    Education is a national priority and therefore of great 
interest to Washington policymakers. The question is how best 
to advance the cause of quality education. In recent years, the 
primary approach to furthering educational opportunity has 
consisted of creating additional Federal programs and spending 
more money. While pursued with the best of intentions, this 
approach has stripped local entities of opportunities to make 
decisions about how their educational systems and programs will 
be measured. It is biased toward programs that spend more but 
pays little attention to what the country is getting for all of 
that money. Higher spending has not led to higher achievement.
    Principally, Federal support for K-12 education should aim 
to support State and local entities and empower them to produce 
good outcomes for students. It should not seize control from 
States and localities. Real gains in education result from the 
diversity and creativity of State and local educators; 
centralizing rules and standards in Washington risks smothering 
their effectiveness and innovation. The Federal Government does 
have an interest in education, but that interest is chiefly in 
promoting the initiatives of local educators, not dictating 
them.
    In addition to high-quality educational opportunities, 
Americans of all ages must have access to skills- and job-
training that will equip them to compete in the rapidly 
changing global economy. Federal training programs--also a 
major component of discretionary funding in this function--are 
notorious for their failure and duplication. As described 
further below, dozens of Federal training programs have created 
a labyrinth of bureaucracy that consistently fails to produce 
substantial numbers of job placements. In addition to reforming 
training programs so they serve Americans more effectively, 
Congress must make every dollar count by eliminating wasteful, 
duplicative, and ineffective programs.
    For fiscal 2017, the budget resolution in this category 
(Function 500 in Table 2 of this report) provides $86.6 billion 
in discretionary budget authority and $93.7 billion in outlays, 
which primarily goes to the Departments of Education, Labor, 
and Health and Human Services.

           Illustrative Discretionary Spending Policy Options

    The main committees responsible for funding programs in 
this area are the Committee on Education and the Workforce and 
the Appropriations Subcommittee on Labor, Health and Human 
Services, Education, and Related Agencies. They will make final 
policy determinations for discretionary funding, and should aim 
to support America's students and workforce without 
overstepping the Federal Government's boundaries or usurping 
the authority of State and local entities. Options worthy of 
consideration include the following.

    Reform Job-Training Programs. The Bureau of Labor 
Statistics reports that 7.8 million Americans are unemployed. 
Yet they also report 5.6 million job openings. This gap is due 
in part to the failure of the Nation's workforce-development 
programs to successfully match workers' skills with employers' 
needs. In the 113th Congress, the Committee on Education and 
the Workforce made laudable progress toward consolidating these 
programs with enactment of the Workforce Innovation and 
Opportunity Act (Public Law 113-128).
    This budget builds on these efforts by calling for further 
consolidation of duplicative Federal job-training programs and 
improved coordination with the recently reformed workforce 
development system. This budget will also improve the remaining 
programs' accountability by aligning their performance 
indicators with those passed as part of the Workforce 
Innovation and Opportunity Act. A streamlined approach with 
increased oversight and accountability will not only provide 
administrative savings, but will improve access, choice, and 
flexibility, enabling workers and job seekers to respond 
quickly and effectively to whatever specific career challenges 
they face. In addition, the budget recommends a 15-percent 
State flexibility allotment under the Workforce Innovation and 
Opportunity Act.

    Make the Pell Grant Program Sustainable. The Pell Grant 
program is the foundation of Federal student aid, helping low-
income students better afford a college education. After years 
of decisions to raise the Pell Grant award levels, however, the 
program is on unstable financial ground, with real consequences 
for future students. The Congressional Budget Office projects 
the program will face a shortfall again in fiscal year 2022. 
Between fiscal year 2006 and 2016, Pell Grant discretionary 
costs ballooned from $12.8 billion to $23.6 billion. CBO 
estimates the costs will total $28.1 billion by fiscal year 
2026, the last year of the 10-year budget window. Instead of 
confronting the program's cost drivers, previous Congresses 
increasingly relied on mandatory spending to make up for 
discretionary funding deficiencies. Instead of implementing 
necessary, structural reforms to set up the program for long-
term success, lawmakers repeatedly resorted to short-term 
funding patches--a temporary answer that will not prevent 
another severe funding cliff for the program in the future. Any 
reforms to Pell Grants should aim toward helping low-income 
students gain access to higher education. The budget recommends 
making responsible adjustments so that Pell Grants will 
continue to remain available for future students. These include 
the following:

      Roll back certain recent expansions to the needs 
analysis to ensure aid is targeted to needy students. The 
Department of Education attributed 14 percent of program growth 
between 2008 and 2011 to recent legislative expansions to the 
needs-analysis formula. The biggest cost drivers come from 
changes made in the College Cost Reduction and Access Act 
[CCRAA] of 2007, such as the expansions of the level at which a 
student qualifies for an automatic zero Expected Family 
Contribution and the income-protection allowance. These should 
be returned to pre-CCRAA levels.

      Eliminate administrative fees paid to 
participating institutions. The government pays participating 
schools $5 per grant to administer and distribute Pell awards. 
Schools already benefit significantly from the Pell program 
because the aid makes attendance at those schools more 
affordable.

      Consider setting a maximum-income cap that 
accounts for family size and other qualifying factors. 
Currently there is no fixed upper-income limit for a student to 
qualify for Pell. Figures are plugged into a formula to 
calculate the grant amount for which the student qualifies. The 
higher the income level of the student and the student's family 
(and therefore expected family contribution to the student's 
education), the smaller the grant he or she receives.

      Eliminate eligibility for less-than-half-time 
students. Some students eligible for Pell grants may be 
balancing a job and college courses, along with other 
responsibilities. Timely completion of required course credits 
remains important, and the budget supports reserving funding 
for students who are enrolled on at least a half-time basis.

      Consider reforms to Return of Title IV Funds 
regulations. Simple changes to this policy, such as increasing 
the amount of time a student must attend class to withdraw 
without debt owed for back assistance, will increase the 
likelihood of students completing their courses and reduce 
incentives for fraud.

      Adopt a sustainable maximum-award level. The 
Department of Education attributed 25 percent of recent program 
growth to the $619 increase in the maximum award done in the 
stimulus bill that took effect in the 2009-2010 academic year. 
To get program costs back to a sustainable level, the budget 
recommends maintaining the maximum award for the 2016-2017 
award year throughout the budget window. This award would be 
fully funded through discretionary spending.

    Encourage Higher Education Policies That Promote 
Innovation. Federal higher-education policy should focus not 
solely on financial aid but on policies that maximize 
innovation and ensure a robust menu of institutional options 
from which students and their families can choose. Such 
policies should include reexamining the data made available to 
students, to make certain they are armed with information that 
will assist them in making decisions about their individual 
postsecondary education. Additionally, the Federal Government 
should remove regulatory barriers in higher education that act 
to restrict flexibility and innovative teaching, particularly 
as it relates to non-traditional or contemporary models, such 
as online coursework.

    Eliminate Administrative Fees Paid to Schools in the 
Campus-Based Student-Aid Programs. Under current law, 
participating higher-education institutions are allowed to use 
a percentage of Federal program funds for administrative 
purposes. The budget suggests prohibiting this practice. 
Schools already benefit significantly from participating in 
Federal student-aid programs.

    Ensure Federal Early Childhood Programs Work for Children 
and Families. Recently enacted legislation, the Every Student 
Succeeds Act, is intended to scale back Federal overreach into 
local education decisions and reorganize and streamline many 
programs and funding streams. In short, it aims to better 
target resources and shrink bureaucracy. As the legislation is 
implemented, the budget supports giving priority to funding for 
programs with demonstrated success, and facilitating State and 
local efforts. In future legislation, it also supports reforms 
to consolidate or eliminate programs and activities that are 
not improving outcomes for participating children and parents. 
For example, a study released in 2010 by the Department for 
Health and Human Services [HHS], found that the decades-old 
Head Start program was not improving participating children's 
math, language, and literacy skills. Nor was it improving 
parenting practices.\135\ Children and their parents deserve 
better. The administration has since taken regulatory action 
aimed at correcting the program's course, but without engaging 
Congress in discussions about how best to do so. More can be 
done, and the budget supports efforts by the committees of 
jurisdiction to ensure that the focus at HHS is not on 
perpetuating bureaucracy or ineffective programs but on 
adequately supporting parents, expanding parental choice, and 
preparing low-income children for kindergarten and later 
education. Overall, winding down early childhood programs that 
are not working, and resisting efforts to establish or fund new 
programs while existing ones are failing to fulfill their 
promises, is in the best interests of children and their 
parents and taxpayers.
---------------------------------------------------------------------------
    \135\See U.S. Department of Health and Human Services, Head Start 
Impact Study, 15 January 2010: http://www.acf.hhs.gov/sites/default/
files/opre/executive_summary_final.pdf.

    Reform Federal Primary and Secondary Education Programs. 
The Every Student Succeeds Act is aimed at prohibiting Federal 
overreach in the area of academic standards for K-12 education, 
too. Certain provisions prevent the Federal Government from 
coercing States into adopting specific sets of academic 
standards, such as Common Core. Setting standards, devising 
curricula, and conducting related activities are not Federal 
duties; they are of State and local concern. The budget 
supports work to implement these provisions as well as future 
efforts that stop Federal edicts and instead empower States and 
local communities.
    Further, the current structure for K-12 programs at the 
Department of Education is fragmented and ineffective. Many 
programs are duplicative, not working as intended, or are 
highly restricted, serving only a small number of students. 
Given the budget constraints, Congress must focus resources on 
programs that truly help students. The Every Student Succeeds 
Act was crafted to eliminate or consolidate 49 of these 
programs and replace them with a single Student Support and 
Academic Enrichment Grant.\136\ The budget encourages the 
timely transition from a morass of K-12 programs to the new 
streamlined system, which will increase efficiency and empower 
State and local entities. Students and families deserve choice 
and flexibility in their educational decisions. Downsizing the 
number and scope of programs, and making more Federal aid 
dollars portable will make that possible. Federal dollars 
should be spent not on more bureaucracy, but on efforts that 
improve academic outcomes.
---------------------------------------------------------------------------
    \136\Became Public Law 114-95.
---------------------------------------------------------------------------
    The budget also recommends that, as efforts to consolidate 
and streamline are undertaken, the committees of jurisdiction 
continue giving priority to funding for students with 
disabilities provided under the Individuals with Disabilities 
Education Act [IDEA]. IDEA funding has consistently fallen 
short of the 40-percent Federal contribution threshold 
established in statute. In a letter requesting the Budget 
Committee give priority to IDEA funding, Chairman Kline (R-MN) 
of the Committee on Education and the Workforce, along with 
several other House Members, write that inadequate funding 
means ``[S]chool districts struggle to offer special needs 
students the necessary placements, supports, and services to 
which they are legally entitled.''\137\ Congress should refocus 
efforts to support this existing commitment before it 
entertains new education programs or initiatives.
---------------------------------------------------------------------------
    \137\Letter to Budget Committee Chairman Price, M.D. (R-GA) and 
Ranking Member Van Hollen (D-MD), from Chairman Kline and 
Representatives McMorris Rodgers (R-WA), Sessions (R-TX), and Smith (R-
TX), 11 March 2016: http://edworkforce.house.gov/uploadedfiles/
idea_budget_letter_fy_2017.pdf.

    Encourage Private Funding for Cultural Agencies. Federal 
subsidies for the National Endowment for the Arts, the National 
Endowment for the Humanities, and the Corporation for Public 
Broadcasting can no longer be justified. The activities and 
content funded by these agencies go beyond the core mission of 
the Federal Government. The agencies can raise funds from 
private-sector patrons, which will also free them from any risk 
---------------------------------------------------------------------------
of political interference.

    Make Way for State, Local, and Private Funding for Museums 
and Libraries. The Institute of Museum and Library Services is 
an independent agency that makes grants to museums and 
libraries. This is not a core Federal responsibility. This 
function can be funded at the State and local level and 
augmented significantly by charitable contributions from 
private-sector businesses, organizations, and individuals in 
civil society.

    Promote More Private Funding for the Smithsonian 
Institution. The Smithsonian Institution consists of 19 museums 
and galleries, a zoological park, and research and supporting 
facilities. Approximately 26.7 million visitors enjoyed the 
Smithsonian complex in fiscal year 2015. That same year, it 
raised nearly $230 million in private funds. Through Federal 
grants and appropriated funds, general taxpayers contribute 
about 60 percent of its annual budget. The remaining 40 percent 
is derived from trust fund sources and non-Federal funds, 
including private gifts, endowment disbursements, membership 
contributions, external grants, and business income.\138\ The 
budget supports continued efforts by the Smithsonian to 
generate non-Federal revenue. Given the current Federal fiscal 
environment, increased private funding can better enable the 
Smithsonian to expand its collections, improve existing 
facilities, and make business decisions it deems necessary.
---------------------------------------------------------------------------
    \138\See Smithsonian Dashboard, Finances: http://dashboard.si.edu/
finances.

    Eliminate the Corporation for National and Community 
Service. Programs administered out of this agency provide 
funding to students and others who work in certain areas of 
public service. Participation in these programs is not based on 
need. The United States has a long history of robust volunteer 
work and other efforts that provide services to communities and 
individuals. Americans' generosity in contributing their time 
and money to these efforts is extraordinary and should be 
encouraged. The Federal Government already has aid programs 
focused on low-income students, and the oxymoronic act of 
paying ``volunteers'' is not a core Federal responsibility, 
especially in times of high deficits and debt. Further, it is 
much more efficient to have such efforts operate at the State 
and local level by the community that receives the benefit of 
the service.

                                 HEALTH


                Function Summary: Discretionary Spending

    America should maintain its world leadership in medical 
science by encouraging competitive forces to work through the 
marketplace in delivering cures and therapies to patients. 
Federal policies should foster innovation in health care, not 
stifle it. Yet too often the bureaucracy and red tape in 
Washington hold back medical innovation and prevent new 
lifesaving treatments from reaching patients. This resolution 
recognizes the valuable role of government support for 
organizations, such as the National Institutes of Health [NIH], 
but also the indispensable contributions to medical research 
coming from outside Washington.
    In addition to the NIH, programs and agencies that receive 
discretionary funding in this category (Function 550 in Table 
2) include Project Bioshield, the Food Safety and Inspection 
Service, and the Food and Drug Administration. The resolution's 
discretionary totals for fiscal year 2017 are $59.7 billion in 
budget authority and $59.6 billion in outlays. The 10-year 
discretionary totals are $632.6 billion in budget authority and 
$618.7 billion in outlays.

           Illustrative Discretionary Spending Policy Options

    The principal authorizing committees in this category are 
the Committee on Energy and Commerce and the Committee on 
Oversight and Government Reform. Funding is provided by the 
Appropriations Subcommittees on Labor, Health and Human 
Services, Education, and Related Agencies; Agriculture, Rural 
Development, Food and Drug Administration, and Related 
Agencies; and the Legislative Branch. These panels will make 
the actual policy choices, which might be guided by the 
principles and policy options described below.

    Support Global Health Responses. Threats to public health 
must be taken seriously. As the first line of defense for the 
American people, the budget protects funding for the NIH and 
the Centers for Disease Control and Prevention [CDC]. This 
resolution recognizes the importance of resources to combat 
infectious diseases and respond to global health crises, 
ensuring the nation's capability to prepare and act upon 
emerging health threats, such as Ebola, Zika, and the like.

    Foster Medical Research, Innovation, and Development. 
Medical breakthroughs and discoveries are made every day, and 
the pace of medical innovation will continue to quicken due to 
advancements in groundbreaking fields such as genomic medicine, 
biomedical research, and molecular medicine. The NIH and the 
CDC foster fundamental creative discoveries, cures, and 
therapies, and serve as the first line of defense against 
health safety and security threats. The budget resolution 
supports a level of funding for these agencies that enables 
them to continue their important work.
    Regrettably, much of this innovation has faced significant 
hurdles due to Federal over-regulation. For example, a recent 
report from the Mercatus Center at George Mason University 
highlights the proper role the Food and Drug Administration 
[FDA] should have in the 21st Century.\139\ It should not be an 
organization that holds up products for 9 years before 
approving them.\140\ It should not cost innovators close to $20 
million to deal with the FDA's myriad requirements.\141\ Most 
important, patients should not be left to suffer the true costs 
of delaying life-saving devices. This resolution calls for a 
complete examination of the FDA approval process to promote a 
more effective, efficient system that truly safeguards 
Americans' access to innovative cures and therapies.
---------------------------------------------------------------------------
    \139\Jason Briggeman, Joseph V. Gulfo, and Ethan C. Roberts, The 
Proper Role of the FDA for the 21st Century, the Mercatus Center at 
George Mason University, February 2016: http://mercatus.org/sites/
default/files/Gulfo-Proper-Role-FDA-v1.pdf.
    \140\Emergo, ``How long it has historically taken the FDA to clear 
510(k) submissions,'' retrieved 1 February 2016: http://
www.emergogroup.com/resources/research/fda-510k-review-times-research.
    \141\AdvaMed, FDA Impact on U.S. Medical Technology Innovation, 
November 2010: http://advamed.org/res.download/30. 

    Strengthen Oversight and Program Integrity Measures. 
Federal grant programs fund a variety of health care services 
provided by State and local governments. Every dollar made 
available through these programs should be used transparently, 
and in the most effective manner possible, for its intended 
purpose. This budget resolution supports increased program 
integrity measures to prevent fraud and abuse in health care 
---------------------------------------------------------------------------
programs.

    Defend Life and Promote Access to Health Care. This 
resolution supports the long-standing policy to ban Federal 
taxpayer dollars from funding elective abortions and calls for 
a 1-year cessation of Federal funding for Planned Parenthood. 
The resolution would reinvest the Planned Parenthood funding in 
community health centers to promote greater access to care for 
women, men, children, and the unborn.

    Limit Federal Health Coverage Funding for Members of 
Congress and Their Staffs. Currently, Federal contributions to 
the Federal Employee Health Benefits Program grow by the 
average weighted rate of change in these programs. This budget 
supports restricting the growth in these plans to inflation.

    Make Common Sense Reforms to the Occupational Safety and 
Health Administration. The goal of the Occupational Safety and 
Health Administration [OSHA] should be to find ways to make 
even more progress on the excellent record of U.S. businesses 
in preventing workplace accidents, not to unnecessarily punish 
job creators. This budget would provide regulatory relief for 
businesses by preventing OSHA from imposing fines for non-
serious infractions that are corrected within the time allotted 
in the citation, or by the end of the final appeals process.

    Restrict Federal Funding for Advertising Against American-
Made Products and Wasteful Government Activities Such as 
Pickleball. This budget repeals funding from the Prevention and 
Public Health Fund, created as part of the Affordable Care Act. 
The goals of the fund are laudable--and it is a goal of the 
budget to focus on preventing disease rather than simply 
treating people once they become ill. Nevertheless, funding for 
the Prevention and Public Health Fund is over and above the 
amount that Congress has appropriated for the activities 
covered by it. In effect, administrators at the Department of 
Health and Human Services can spend the funds made available 
however they want, without congressional oversight. As the 
Committee on Energy and Commerce has uncovered, the 
administration has used dollars in this fund to promote 
Pickleball, free pet neutering, massage therapy, kickboxing, 
and Zumba.
    Additionally, this budget does not support the use of 
taxpayer dollars to advertise against American-made products. 
Following the passage of the American Recovery and Reinvestment 
Act, the CDC was allocated taxpayer dollars to award grants for 
wellness efforts. These funds were used, however, to run ads 
singling out and attacking legal American products and 
industries that the administration claimed contributed to bad 
health. The CDC does excellent work on early detection, 
prevention, and treatment for breast and cervical cancer, as 
well as on immunizations, flu vaccines, and many other worthy 
efforts. The agency should receive sufficient funding for these 
activities, but no government agency should receive American 
taxpayer dollars to advertise against American-made products

    Target Resources, Improve Outcomes. The budget supports 
better targeting of Federal spending to achieve the country's 
health care goals. For example, the budget calls for 
eliminating duplicative programs at the Department of Health 
and Human Services [HHS]. The budget proposes to merge the 
Agency for Healthcare Research and Quality [AHRQ] into existing 
HHS agencies. The AHRQ's mission and areas of research exist 
within other HHS agencies and are therefore duplicative and 
unnecessary.
    The budget also supports prudent investments to improve 
mental health care and awareness. In 2015, according to NIH, 
nearly 10 million adults in the U.S. lived with severe mental 
illness,\142\ and it is important that the Federal Government 
give priority to treatment of the sickest and most vulnerable 
patients. The Government Accountability Office recently did a 
study that identified more than 100 distinct programs 
supporting individuals with serious mental illness, and found 
interagency coordination for programs severely lacking.\143\ 
Federal dollars should not be squandered on antiquated programs 
that fail to meet patients' needs. The budget calls for Federal 
programs to be reoriented to advance treatment for those facing 
serious mental illness. Any research conducted and grants 
awarded by the Federal Government should be firmly rooted in 
evidence-based practice. Programs and resources in this area 
should focus on psychiatric care for patients and families most 
in need of services.
---------------------------------------------------------------------------
    \142\National Institute of Mental Health, ``Director's Blog: Mental 
Health Awareness Month: By the Numbers,'' 15 May 2015: http://
www.nimh.nih.gov/about/director/2015/mental-health-awareness-month-by-
the-numbers.shtml.
    \143\Government Accountability Office, HHS Leadership Needed to 
Coordinate Federal Efforts Related to Serious Mental Illness, report to 
the Energy and Commerce Subcommittee on Oversight and Investigations, 
December 2014: http://energycommerce.house.gov/sites/
republicans.energycommerce.house.gov/files/114/Analysis/
20150205GAOReport.pdf.
---------------------------------------------------------------------------
    Finally, the budget recognizes that the United States is in 
the midst of a deadly battle with opioid and heroin abuse. 
According to the CDC, drug overdose deaths have increased five-
fold since 1980.\144\ The Committee on Energy and Commerce has 
led an ongoing effort to ascertain which Federal programs have 
been effective in combatting opioid abuse, and which have not--
and why the latter failed. This effort should continue. The 
budget calls for a complete examination of the Federal response 
to the crisis. The government should implement prevention 
activities, and evaluate them to identify effective strategies 
for preventing substance abuse. The budget resolution includes 
a policy statement that describes in greater detail the 
contours of how the Federal Government should respond to the 
ongoing substance abuse crisis.
---------------------------------------------------------------------------
    \144\Margaret Warner, Ph.D., et al, ``Drug poisoning deaths in the 
United States, 1980-2008,'' Centers for Disease Control and Prevention, 
National Center for Health Statistics Data Brief No. 81, December 2011: 
http://www.cdc.gov/nchs/data/databriefs/db81.htm.
---------------------------------------------------------------------------

                            INCOME SECURITY


                Function Summary: Discretionary Spending

    Programs that subsidize food and housing for low-income 
Americans remain largely unreformed, nearly two decades after 
the success of the Personal Responsibility and Work Opportunity 
Act--the major welfare reform bill enacted in 1996. This budget 
proposes to improve work incentives for these programs and 
increase State flexibility.
    Discretionary spending components of this category 
(Function 600 in Table 2) include the Special Supplemental 
Nutrition Program for Women, Infants, and Children; the Low 
Income Housing Energy Assistance Program; housing assistance 
programs; and the Child Care and Development Block Grant. For 
these programs the budget resolution provides $65.5 billion in 
budget authority in fiscal year 2017, and $66.6 billion in 
outlays. The budget assumes discretionary spending of $709.9 
billion in budget authority and $707.4 billion in outlays in 
this area over the 2017-2026 period.

           Illustrative Discretionary Spending Policy Options

    The main committees responsible for funding these programs 
are the Committee on Agriculture; the Committee on Financial 
Services; and the Appropriations Subcommittees on Labor, Health 
and Human Services, Education, and Related Agencies, and on 
Agriculture, Rural Development, Food and Drug Administration, 
and Related Agencies. They will make final policy 
determinations for discretionary funding and should aim to 
provide State flexibility and to expand work incentives. The 
options below are potential policy proposals that follow such 
guidelines.

    Make Responsible Reforms to Housing-Assistance Programs. 
This resolution supports taking actions that would make 
housing-assistance programs more sustainable and direct Federal 
dollars to serve those most in need. Despite dramatic funding 
increases, the Worst Case Housing Needs Report to Congress by 
the Department of Housing and Urban Development [HUD] suggests 
the number of families who are severely rent-burdened or live 
in substandard conditions remains alarmingly high. Reforms are 
needed to ensure assistance is available to those most in need 
and is structured in a way that best enables upward mobility. 
One option would be to gradually expand the Moving to Work 
program to high-performing public housing authorities. Moving 
to Work gives public housing authorities more flexibility in 
how they spend funds so that they can serve families more 
efficiently and effectively. This budget also supports the 
reforms incorporated into the Housing Opportunity Through 
Modernization Act of 2015 (H.R. 3700). Declaring households 
ineligible for assistance if they exceed the income and asset 
limits allows HUD to make sure that housing assistance is being 
provided to those who need it most.

    Reform Supplemental Nutrition Assistance Program [SNAP] 
Outreach Funding. This budget assumes that outreach funding for 
SNAP is reduced, and funds are shifted toward programs that 
facilitate upward mobility, such as properly reformed job-
training programs.

    Eliminate the Emergency Food and Shelter National Board 
Program [EFS]. This is the Federal Emergency Management Agency 
[FEMA] version of the Agriculture Department's The Emergency 
Food Assistance Program [TEFAP]. Both programs provide 
groceries and prepared meals to needy individuals through local 
government and non-profit entities. Providing comparable 
benefits to a similar population, but managing the programs 
separately, is an inefficient use of Federal funds. The sheer 
volume of Federal hunger programs, and the fact they are 
scattered among several agencies, prevent them from being used 
by those people they are intended to help. The Government 
Accountability Office cites the example of a director of a non-
governmental organization who administers the FEMA version of 
the program; the director explains that it is often unclear 
which Federal food assistance programs are available to non-
governmental organizations and which ones are best suited for 
his organization's mission and resources.\145\ After 
eliminating the Emergency Food and Shelter National Board 
Program [EFS], the budget supports requiring the Department of 
Agriculture to adopt any responsibilities currently being met 
by the EFS program and not currently being met by TEFAP.\146\
---------------------------------------------------------------------------
    \145\Government Accountability Office, Domestic Food Assistance: 
Multiple Programs Benefit Millions of Americans, but Additional Action 
Is Needed to Address Potential Overlap and Inefficiencies, 20 May 2015: 
http://www.gao.gov/assets/680/670313.pdf.
    \146\The Department of Homeland Security proposed that the 
Department of Housing and Urban Development take over the Emergency 
Food and Shelter National Board Program, but no consolidation efforts 
were proposed. See Department of Homeland Security, Congressional 
Budget Justification for Fiscal Year 2016, pp. 31-42: https://
www.dhs.gov/sites/default/files/publications/
DHS_FY2016_Congressional_Budget_Justification.pdf.

    Continue Support for Efforts to End Chronic Homelessness. 
Thanks to efforts at the Federal, State, and local levels, 
chronic homelessness in the U.S. has declined by 21 percent 
since 2010. Yet much remains to be done. This resolution urges 
HUD to refocus efforts to accomplish the administration's 
laudable goal of helping to end chronic homelessness by 2020.

                      OTHER DISCRETIONARY SPENDING

    Discretionary spending under the Medicare Program consists 
primarily of administration and management costs. The budget 
resolution totals for fiscal year 2017 are $6.5 billion in 
discretionary budget authority, with $6.6 billion in outlays. 
The 10-year totals in the budget resolution are $83.4 billion 
in discretionary budget authority and $82.8 billion in outlays 
(Function 570 in Table 2). This also includes the budget for 
the Medicare Payment Advisory Commission, a non-partisan, 
independent agency established by the Balanced Budget Act of 
1997 to advise Congress on Medicare payment policies and 
analyze issues affecting beneficiaries, such as access to care, 
quality of care, health care outcomes, and so on.
    For administering the Social Security Programs, the budget 
provides $5.4 billion in discretionary budget authority and 
$5.4 billion in outlays for fiscal year 2017. The 10-year 
totals for discretionary budget authority and outlays are $61.5 
billion and $61.3 billion, respectively (Function 650 in Table 
2). All the budget authority and all but a sliver of residual 
outlays are off budget. The Social Security Administration 
oversees the program.
    The budget assumes that program integrity funding is 
provided to combat waste, fraud and abuse, and reduce improper 
payments. The resolution recommends these resources be provided 
within existing Budget Control Act cap levels for fiscal year 
2017 through fiscal year 2026, thereby saving $10.0 billion 
over 10 years.

                            Direct Spending

                              ----------                              

    Uncontrolled automatic spending (formally called ``direct'' 
or ``mandatory'' spending\147\) has come to dominate the 
Federal budget, and its share of total outlays continues to 
increase. As noted previously, this form of spending is largely 
open-ended and flows from effectively permanent authorizations. 
Most of the programs funded this way pay benefits directly to 
groups and individuals without an intervening appropriation. 
They spend without limit, and their totals are determined by 
numerous factors outside the control of Congress: caseloads, 
the growth or contraction of GDP, inflation, and many others.
---------------------------------------------------------------------------
    \147\The Balanced Budget and Emergency Deficit Control Act (Public 
Law 99-177) defines ``direct spending'' as budget authority provided in 
law other than appropriations acts; entitlement authority; and the 
Supplemental Nutrition Assistance Program (formerly food stamps).
---------------------------------------------------------------------------
    The majority of this spending goes toward the government's 
health programs--mainly Medicare, Medicaid, and now the 
Affordable Care Act. Social Security represents another major 
component. Apart from these, however, there are numerous other 
benefit programs financed with automatic spending. These 
include farm assistance, food stamps, a range of income support 
programs, tuition assistance for college students, and many 
other programs. This section discusses solely the direct 
spending in these areas to reinforce the urgency of getting 
this spending under control.

                            SOCIAL SECURITY


                   Function Summary: Direct Spending

    The prevailing attitude among many in Congress--and in the 
broader policy community--is to deny the inevitable crisis 
facing the Social Security Program. This position ignores the 
unalterable fact that absent structural reform, Social Security 
will fail to fulfill its promises to the Nation's retired and 
disabled persons--and that outcome will occur sooner than 
expected.
    Social Security benefits are financed through payroll taxes 
credited to two trust funds: one for Old-Age and Survivors 
Insurance [OASI], and the second for Disability Insurance [DI]. 
Under current law, both trust funds face insolvency within the 
next 20 years--one in less than 7 years--depleting their 
capacity to pay full benefits. The Social Security Program 
already is running a cash deficit, meaning it is paying more to 
beneficiaries annually than it collects in revenue. If not for 
balances of Treasury securities in the trust funds, built up 
from previous surpluses, the program would be unable to meet 
all its benefit payments now. With each year Congress delays, 
the policy changes needed to correct the program's fiscal 
trajectory will become too large and wrenching to adopt. That 
will lead to sudden, steep reductions in benefits.
    For these reasons, the House adopted a rule for the 114th 
Congress prohibiting legislation that improves the financial 
condition of DI at the expense of the OASI Trust Fund. The rule 
provides an exemption, however, for legislation that improves 
the financial condition of both trust funds.
    The lack of bipartisan congressional action on a long-term 
solution to the problem facing Social Security has resulted in 
many Members of Congress offering their own solutions. One such 
proposal would be a bipartisan commission that would be 
required to study the structural deficiencies within the 
current Social Security system and report back with specific 
legislative proposals for Congress and the President to 
consider.
    This budget calls for a bipartisan way forward by amending 
a current-law trigger that would require the President and 
Congress to begin the process of reforming Social Security.
    Social Security benefits are reflected in the direct 
spending of budget Function 650. It is the largest budget 
category in terms of outlays.
    Under this budget, these benefits total $913.3 billion in 
budget authority in fiscal year 2017, and $908.6 billion in 
outlays. Over 10 years, the totals are $12.2 trillion in budget 
authority and $12.1 trillion in outlays. With respect to the 
budget resolution, these benefits are treated as off budget and 
do not appear in the legislative text. (In this report, they 
appear as off-budget direct spending in Table 3.)
    While the Committee on Ways and Means will determine actual 
policies, the discussion below offers some guiding principles 
to include in the debate.

                       OASI's Looming Insolvency

    Although the OASI Trust Fund is projected to remain solvent 
through 2035, its financial condition is more fragile than that 
estimate suggests.
    Any value in the balances of the Social Security Trust Fund 
is derived from dubious government accounting. The trust fund 
is not a real savings account. From 1983 through 2010, more tax 
revenues were collected by the trust fund than what it paid out 
in Social Security benefits. The government borrowed these 
surplus funds for programs unrelated to Social Security. 
Critics called this a ``raid'' on Social Security that 
threatened retirees' future benefits--but it was not. All the 
borrowed funds were replaced with interest-bearing Treasury 
securities--the only kind of resources the trust fund holds--
that can be redeemed as needed. That is what makes the trust 
fund a trust fund.
    The real problem is that the ability to redeem these 
securities depends entirely on the Treasury's ability to raise 
money through taxes or borrowing. That is especially 
significant now that the program is running a cash deficit, and 
paying out more in benefits than it collects in payroll taxes. 
To pay full benefits, the government must pay back the money it 
owes Social Security. This trend will worsen, because 10,000 
baby boomers are reaching retirement age every day. As stated 
in 2013 by the then-Director of the Congressional Budget Office 
[CBO]: ``[O]n a unified budget basis, taking account of just 
the tax revenues, the dedicated tax revenues, and the benefits, 
[Social Security] is contributing [to] the deficit now. If one 
instead looks at just the balance in the Social Security Trust 
Fund . . . the annual balance is positive now, but will be 
negative within about a half dozen years.''\148\
---------------------------------------------------------------------------
    \148\Douglas W. Elmendorf, Director of the Congressional Budget 
Office, testimony to the Committee on the Budget, U.S. House of 
Representatives, 13 February 2013.
---------------------------------------------------------------------------
    Social Security's fiscal condition warrants a long-term 
solution that keeps the promise made to the Nation's current 
and future retirees.
    This budget calls for a bipartisan path forward in 
addressing the long-term structural problems within Social 
Security. The path will require all parties to first 
acknowledge the fiscal realities of this critical program. 
Short-term policy proposals that merely delay addressing Social 
Security's long-term fiscal challenges are no longer 
acceptable. Neither borrowing between the OASI and DI trust 
funds, nor reallocating the apportionment of payroll tax 
revenues to each fund, is a long-term solution to Social 
Security's fiscal challenges. ``If you want to help both 
programs you're not going to accomplish that by moving money 
around just between them.''\149\
---------------------------------------------------------------------------
    \149\Ibid.
---------------------------------------------------------------------------
    The President's Fiscal Commission elevated the debate, 
suggesting a more progressive benefit structure to ensure that 
the majority of benefits go to the Nation's most vulnerable. 
The Commission also acknowledged the reality of increasing 
longevity and proposed reforms to alleviate the demographic 
problems that are undermining Social Security's finances.
    Certain details of the Commission's Social Security 
proposals, particularly on the tax side, are questionable. This 
budget does not endorse taking more money from families and 
businesses. Nonetheless, the Commission outlined a number of 
bold, positive solutions that would strengthen the long-term 
solvency of Social Security.
    This budget seeks to build on the Fiscal Commission by 
requiring the President to put forward specific solutions to 
fix Social Security's long-term fiscal problem. The budget also 
puts the onus on Congress to offer legislation ensuring the 
long-term solvency of this program. Any policy proposal offered 
regarding the Disability Insurance program should first and 
foremost strengthen the long-term integrity of the program for 
Americans with disabilities (see further discussion below).

                          Starting the Process

    This budget requires the President and Congress to begin 
the process of reforming Social Security by altering a current-
law trigger that, in the event the Social Security Program is 
not sustainable, requires the President, in conjunction with 
the Social Security Board of Trustees, to submit a plan for 
restoring the balance to the fund. This provision would then 
require congressional leaders to put forward their positive 
solutions to ensure the long-term solvency of the Social 
Security Program. While the Committee on Ways and Means would 
make the final policy decisions, this provision would require 
the following:

      If in any year the Board of Trustees of the 
Federal Old-Age and Survivors Insurance Trust Fund and the 
Disability Insurance Trust Fund, in its annual Trustees' 
Report, determine that the 75-year actuarial balance of the 
Social Security Trust Funds in the 75th year is in deficit, the 
Board of Trustees should, no later than the 30th of September 
of the same calendar year, submit to the President 
recommendations for statutory reforms necessary to achieve a 
positive 75-year actuarial balance and a positive annual 
balance in the 75th year.

      No later than the 1st of December of the same 
calendar year in which the Board of Trustees submits its 
recommendations, the President shall promptly submit 
implementing legislation to both Houses of Congress, including 
recommendations necessary to achieve a positive 75-year 
actuarial balance and a positive annual balance in the 75th 
year.

      Within 60 days of the President's submission, the 
committees of jurisdiction to which the legislation has been 
referred shall report the bill, which shall be considered by 
the full House and Senate under expedited procedures.

                          Disability Insurance

    The Social Security Disability Insurance program provides 
an essential income safety net for persons with disabilities 
and their families. Due in large part to the predictable 
consequence of demographic factors and policy decisions, 
however, DI program revenues will be unable to cover the full 
costs of benefits in 2022, according to the Social Security 
Trustees, unless Congress acts.
    In 2015 Congress took the first step toward comprehensive 
Disability Insurance reform that would solve the trust fund's 
long-term financing troubles. The Bipartisan Budget Act of 2015 
included a number of provisions to reduce fraud and increase 
program integrity that strengthened the DI program and extended 
its solvency date to 2022.\150\
---------------------------------------------------------------------------
    \150\Public Law 114-74.
---------------------------------------------------------------------------
    Despite this recent legislation, the structural problems 
facing the DI program remain the same. Under current law, its 
trust fund is expected to be exhausted in 2022. If lawmakers do 
not enact reforms to ensure the long-term solvency of the 
Disability Insurance Program, an immediate 11-percent reduction 
in benefits will be required when the trust fund becomes 
exhausted.\151\
---------------------------------------------------------------------------
    \151\Congressional Budget Office, Estimate of the Effects on the 
OASI and DI Trust Fund of enacting H.R. 1314, the Bipartisan Budget Act 
of 2015, introduced 27 September 2015.
---------------------------------------------------------------------------
    The huge growth in the number of individuals receiving 
Disability Insurance, and the benefits paid to each, have 
contributed heavily to the worsening financial condition of the 
DI trust fund. In 2012, the Congressional Budget Office 
reported that the share of working-age adults receiving 
Disability Insurance benefits rose from 1.3 percent in 1970 to 
4.5 percent in 2011.\152\ Between 1990 and 2013, the total 
number of individuals receiving DI benefits increased from 4.3 
million to 11.3 million, or by 155.8 percent.\153\ Meanwhile, 
tax revenues paid into the DI trust fund have remained 
relatively flat as a share of taxable payroll.
---------------------------------------------------------------------------
    \152\Congressional Budget Office, Policy Options for the Social 
Security Disability Insurance Program, July 2012, p. 2.
    \153\Congressional Research Service, Social Security Disability 
(DI) Trust Fund: Background and Solvency Issue, 21 August 2014.
---------------------------------------------------------------------------
    The demographic factors contributing to the problem include 
the aging of the baby boomers into their most disability-prone 
years, and the increased number of women in the workforce now 
eligible for benefits should they become severely disabled. In 
addition, policymakers have expanded the ways in which 
applicants may qualify for benefits. At the same time, those on 
disability are in many ways prevented from improving their 
situations. If they work too much, they see their benefits cut 
off.

               Principles for Disability Insurance Reform

    Congress and the President should develop bipartisan 
legislation to secure the future of the DI program. This 
legislation should be rooted in principles that do the 
following:

      Ensure benefits continue to be paid to 
individuals with disabilities and their family members who rely 
on them;

      Prevent an 11-percent across-the-board benefit 
cut;

      Make the Disability Insurance program work 
better; and

      Promote opportunity for those trying to return to 
work;

    Consistent with the House rule, reforms should begin to 
improve the financial situation of the Social Security Program.

                       Illustrative Policy Option

    Eliminate the Ability to Receive Both Unemployment 
Insurance and Disability Insurance. This option would eliminate 
concurrent receipt of unemployment and disability insurance, a 
clear example of duplication in the Federal budget. The 
proposal would give the Social Security Administration the 
authority to identify fraud and prevent individuals from 
obtaining benefits from both programs. It is consistent with a 
similar policy proposal the President has made in his budget 
requests. In acknowledging the President's desire to act, this 
budget takes the first step in preventing across-the-board 
benefit reductions to the Social Security Program. This policy 
option could save up to $5.4 billion.

                                MEDICARE


                   Function Summary: Direct Spending

    The Medicare Program, along with Medicaid, reached its 50th 
anniversary in July 2015. By many measures, Medicare has seen 
remarkable successes, such as providing access to health care 
for millions of seniors, and contributing to increased life 
expectancies and decreased rates of poverty among seniors. 
Recent reforms have also introduced choice and market 
competition to the program through Medicare Advantage and 
Medicare Part D, an optional prescription drug benefit, which 
provide seniors with the opportunity to choose from an array of 
private plan options the coverage that best suits their health 
care needs.
    Nevertheless, these successes have been accompanied by 
significant difficulties. Medicare and the other major health 
care programs are projected to consume an ever-increasing 
portion of the Federal budget over time.\154\ In the next 
decade, annual spending on these programs will double, from 
$1.0 trillion to $2.0 trillion, the Congressional Budget Office 
estimates.\155\ Furthermore, the basic benefit for Medicare 
Parts A and B--which cover hospital insurance and supplementary 
medical insurance, respectively--remains a complicated 
structure that conflicts with the experience a majority of 
beneficiaries enjoyed for a lifetime in the private health 
insurance market prior to entering the program. The complexity 
of the benefit structure, along with a multitude of rules and 
regulations, make Medicare a bureaucratic quagmire for both 
beneficiaries and providers. Many providers either no longer 
accept new Medicare patients or refuse to accept Medicare 
altogether simply to avoid the bureaucracy. Under current law, 
Medicare's promise to America's seniors will be broken during 
the next 50 years, as the program will no longer be able to 
provide health security for current or future beneficiaries. 
Such a prospect is unacceptable and actions must be taken to 
save, strengthen, and secure Medicare, ensuring the program's 
long-term sustainability for all generations.
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    \154\Using CBO's descriptions, the major health care programs are 
Medicare, Medicaid, the State Children's Health Insurance Program, and 
the Affordable Care Act's exchanges and associated credits and 
subsidies.
    \155\Congressional Budget Office, The Budget and Economic Outlook: 
2016 to 2026, January 2016.
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    Medicare's most notable challenge lies in its failing 
financial structure, which makes the program unsustainable for 
the long term. Over the past five decades, Medicare has 
expanded to include four parts--Part A, Part B, Part C 
(Medicare Advantage), and Part D (optional prescription drug 
coverage)--each with a different funding mechanism.
    When the Medicare Program began in 1965, it consisted of 
just two essential parts: Part A, coverage for hospital 
services, or hospital insurance [HI]; and Part B, or 
supplementary medical insurance [SMI]. The HI Trust Fund is 
funded primarily through a designated payroll tax of 2.9 
percent that is shared equally by employer and employee. The 
SMI Trust Fund is supported much differently; revenues consist 
of beneficiary premiums, which must account for 25 percent of 
all Part B costs on an annual basis, and transfers from the 
U.S. Treasury's general revenues.
    During the late 1990s, Medicare Part C, or Medicare 
Advantage [MA], was created. Medicare Advantage offers 
beneficiaries private plan options that cover services provided 
under Part A, Part B, and often Part D benefits. The Federal 
Government determines the level of spending per enrollee that 
will be provided to MA plans (with funds from the appropriate 
trust funds used to offset the Part A, Part B, and Part D 
costs), and beneficiaries pay a monthly premium as they do 
under Parts B and D.
    Finally, Medicare Part D, prescription drug coverage, was 
established in 2003. Part D is structured similarly to Part B 
and is a separate account within the SMI Trust Fund. 
Beneficiary premiums account for approximately 25.5 percent of 
costs, with the remaining 74.5 percent funded through general 
revenues.\156\ Unlike any other program in Medicare, however, 
Part D relies on market forces and competition among private 
plans to drive down costs. As a result, year after year Part D 
reports costs millions of dollars lower than projected, while 
still maintaining high quality and beneficiary satisfaction--
lessons that ought to be applied throughout the Medicare 
Program.
---------------------------------------------------------------------------
    \156\Part D also receives payments from States for dually enrolled 
beneficiaries in the program.
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    Medicare currently serves more than 57 million 
beneficiaries, and is the second largest direct, or automatic, 
spending program after Social Security.\157\ In 2015, Medicare 
Program costs totaled $634 billion, and CBO projects spending 
to more than double by 2026, reaching $1.3 trillion that year.
---------------------------------------------------------------------------
    \157\CMS.gov: https://www.cms.gov/fastfacts/.
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    Several factors contribute to the growth in program 
spending over the next decade. Foremost is the aging of the 
population. In 2011, the first baby boomer enrolled in 
Medicare. This generation will continue to age into the program 
over the next two decades at a rate of approximately 10,000 
beneficiaries per day. By the time the baby-boom generation has 
fully aged into Medicare in 2030, the program will cover more 
than 75 million beneficiaries. Such an increase in the 
Medicare-covered population naturally corresponds with an 
increase in program costs, but this effect is further 
exacerbated by a number of additional factors. Since the 
beginning of the program, the average life expectancy has 
increased dramatically while the Medicare retirement age has 
remained unchanged. In 1965, the average life expectancy was 70 
years, meaning Medicare provided 5 years of health care 
coverage on average. Today, life expectancy is almost 80 years, 
and the average Medicare beneficiary remains in the program 
roughly three times longer than those enrolled at its 
inception.
    Additionally, revenues for Part A--supporting the HI Trust 
Fund--cannot meet the costs of the program due to a shrinking 
working-age population. When Medicare was created, there were 
4.5 workers for every beneficiary enrolled in the program, 
which easily sustained the pay-as-you-go funding structure. 
Today, the ratio has declined, with approximately three workers 
per beneficiary. By 2030, when the baby-boom generation has 
fully aged into Medicare, the ratio will be closer to two 
workers per beneficiary, meaning less revenue will be available 
to offset ever-increasing program costs. Finally, although most 
beneficiaries pay into the Medicare Program throughout their 
working years, the Medicare benefit the average person receives 
far exceeds his or her contribution to the program through 
payroll taxes. For example, the present value of lifetime 
Medicare taxes for a married couple earning the average wage 
and retiring at age 65 in 2015 equaled approximately $140,000 
contributed through payroll taxes, but the anticipated lifetime 
Medicare benefit is estimated to be $422,000--roughly three 
times the lifetime contribution.\158\
---------------------------------------------------------------------------
    \158\C. Eugene Stuerle and Caleb Quakenbush, Social Security and 
Medicare Lifetime Benefits and Taxes, Urban Institute, September 2015: 
http://www.urban.org/sites/default/files/alfresco/publication-pdfs/
2000378-Social-Security-and-Medicare-Lifetime-Benefits-and-Taxes.pdf.
---------------------------------------------------------------------------
    These trends play a significant role in Medicare's long-
term outlook. The CBO recently updated enrollment projections 
for Medicare by age group. Currently, the majority of 
beneficiaries are under age 75, but by 2035 there will be more 
Medicare beneficiaries over age 75 than under.\159\ This is 
especially concerning when the difference in Medicare per 
capita spending between older and younger beneficiaries has 
widened. The average spending for a Medicare beneficiary of 85 
years is now more than twice that of a 66-year-old, and 
spending is three times greater for a 95-year-old.\160\ Not 
surprisingly, Medicare costs are expected to rise not only as a 
greater number of beneficiaries enter the program, but also as 
per-capita costs increase with the continued aging of the 
Medicare population. The CBO estimates net program spending to 
grow from 3 percent of gross domestic product [GDP] to 5.1 
percent by 2040. Compared to the other major health care 
programs--Medicaid, the State Children's Health Insurance 
Program, and the Affordable Care Act [ACA]--that are expected 
to grow from 2.2 percent to 2.9 percent of GDP by 2040, this is 
a startling growth rate for a single program.\161\ Furthermore, 
the Medicare Trustees estimate the total amount of unfunded 
obligations for the Medicare Program over the 75-year period to 
equal $3 trillion for the HI Trust Fund and $24.6 trillion for 
the SMI Trust Fund.\162\
---------------------------------------------------------------------------
    \159\The Congressional Budget Office, The 2015 Long-Term Budget 
Outlook, June 2015: https://www.cbo.gov/sites/default/files/114th-
congress-2015-2016/reports/50250/50250-breakout-Chapter2-2.pdf.
    \160\Tricia Neuman, Juliette Cubanski, Jennifer Huang, and Anthony 
Damico, The Rising Cost of Living Longer: Analysis of Medicare Spending 
by Age for Beneficiaries in Traditional Medicare, The Kaiser Family 
Foundation, 14 January 2015: http://kff.org/medicare/report/the-rising-
cost-of-living-longer-analysis-of-medicare-spending-by-age-for-
beneficiaries-in-traditional-medicare/.
    \161\The Congressional Budget Office, The 2015 Long-Term Budget 
Outlook, June 2015: https://www.cbo.gov/sites/default/files/114th-
congress-2015-2016/reports/50250/50250-breakout-Chapter2-2.pdf.
    \162\United States Department of the Treasury. United States 
Government Notes to the Financial Statements for the Years Ended 
September 30, 2014, and 2013: https://www.fiscal.treasury.gov/
fsreports/rpt/finrep/fr/14frusg/NotestoFinancialStatements_2014.pdf.
---------------------------------------------------------------------------
    In the short term, Medicare costs are projected to outpace 
income, creating a shortfall in the HI Trust Fund. In January 
of this year, the CBO reported the HI Trust Fund would be 
exhausted by 2026--4 years earlier than the date estimated by 
the Medicare Trustees--likely due to the decline in projected 
economic growth.\163\ Expenditures from the trust fund, which 
is financed solely through the 2.9-percent payroll tax, have 
exceeded revenues annually since 2008. Although the Medicare 
trustees expect a slight surplus from 2015 through 2023, the 
ratio of revenues to costs declines quickly in the following 
years. The most recent projection, reported by the trustees in 
July 2015, estimated depletion of the HI Trust Fund in 2030. 
Upon depletion, Medicare may only pay for Part A services equal 
to the amount of revenues available in the HI Trust Fund, which 
are expected to cover only 86 percent of promised benefits. The 
Social Security Act is silent on what steps may be taken upon 
depletion of the HI Trust Fund, but beneficiaries' access to 
health care services would certainly be severely reduced 
without action.
---------------------------------------------------------------------------
    \163\Congressional Budget Office, The Budget and Economic Outlook: 
2016 to 2026, January 2016.
---------------------------------------------------------------------------
    Structural reforms to the Medicare Program are necessary to 
ensure the long-term viability of the program without 
compromising beneficiary access to quality care. The Affordable 
Care Act imposed across-the-board cuts on Medicare providers 
and services, and put those savings toward new government 
spending programs rather than to extend the solvency of the 
Medicare Program. Furthermore, the Medicare trustees have 
warned for several years that the low Medicare payment updates 
authorized by the ACA will lead to serious limitations of 
access over the long term, and create perverse incentives in 
the short term that further distort the health care sector. By 
2040, approximately half of hospitals, 70 percent of skilled 
nursing facilities, and 90 percent of home health agencies will 
have negative margins, the Medicare trustees estimate--an 
unsustainable situation that will cause many providers to 
withdraw from the program, and will unquestionably limit access 
to quality care for Medicare beneficiaries.\164\ Furthermore, 
the Independent Payment Advisory Board [IPAB] established by 
the ACA must submit proposals for further spending reductions 
if the estimated rate of growth in Medicare exceeds GDP plus 1 
percent. Without congressional action to achieve the same level 
of savings, the IPAB's proposals will automatically take 
effect. Given these pressures, medical providers have acted 
accordingly, with record rates of consolidation among hospitals 
and physician practices. Medicare currently pays approximately 
67 percent of what private insurance would otherwise pay for 
hospital services. Over time, however, reimbursements for 
services are expected to fall well below providers' overhead 
costs, such as rent, energy, equipment, and the cost of 
employing medical staff. A recent study by the Government 
Accountability Office [GAO] reported that from 2007 through 
2013, the number of vertically consolidated physician practices 
nearly doubled, from 96,000 to 182,000; this occurred more 
rapidly in recent years across all regions and hospital 
sizes.\165\
---------------------------------------------------------------------------
    \164\2015 Annual Report of the Boards of Trustees of the Federal 
Hospital Insurance and Federal Supplementary Medical Insurance Trust 
Funds. July 2015. https://www.cms.gov/research-statistics-data-and-
systems/statistics-trends-and-reports/reportstrustfunds/downloads/
tr2015.pdf.
    \165\Government Accountability Office, Increasing Hospital 
Physician Consolidation Highlights Need for Payment Reform, December 
2015: http://www.gao.gov/assets/680/674347.pdf.
---------------------------------------------------------------------------
    As currently structured, Medicare cannot fulfill the 
promise of health care security for America's seniors. Medicare 
must be saved, strengthened, and secured to restore the trust 
that both current and future retirees will continue to have 
guaranteed access to health care providers, services, and 
treatments. Looking to examples both within the Medicare 
Program and the private sector, positive solutions can be 
discovered that reduce costs while maintaining access to high 
quality care through patient-centered reforms that foster 
competition, restore market forces, expand choices and empower 
individuals, promote innovation, and provide flexibility for 
patients and providers.
    This budget resolution reflects the Medicare Program in the 
direct spending portion of Function 570 (see Table 3). The 
function includes all four program components: Medicare Part A 
Hospital Insurance Program, Part B Supplementary Medical 
Insurance Program, Part C Medicare Advantage Program, and Part 
D prescription drug coverage. For fiscal year 2017, the net 
direct spending totals in the resolution are $583.5 billion in 
budget authority and $583.5 billion in outlays. Over 10 years, 
Medicare direct spending is projected at $7.5 trillion in 
budget authority and $7.5 trillion in outlays.

              Illustrative Direct Spending Policy Options

    As in past years, the President's fiscal year 2017 budget 
ignores the underlying structural flaws in the Medicare Program 
and imposes additional policies that follow the same principles 
of the Affordable Care Act: greater government control in 
strengthening the IPAB and the Federal bureaucracy, coupled 
with further reductions to reimbursements for providers. These 
tactics garner savings without regard for the impact on the 
doctor-patient relationship. In contrast, this budget provides 
policy proposals that protect seniors' health care security. 
The budget offers true structural reforms that generate 
savings, by allowing competition to derive greater 
efficiencies, without the loss of access to high-quality care 
for beneficiaries. The primary authorizing committees--Ways and 
Means and Energy and Commerce--have made a laudable commitment 
to structural Medicare reforms, along with efforts to improve 
transparency and eliminate waste, fraud, and abuse in the 
program.\166,167\
---------------------------------------------------------------------------
    \166\Committee on Ways and Means Committee, Views and Estimates, 5 
February 2016.
    \167\Committee on Energy and Commerce, Views and Estimates on the 
President's Fiscal Year 2017 Budget, 4 February 2016.
---------------------------------------------------------------------------
    The authorizers retain jurisdiction over the Medicare 
Program and the ability to author necessary program reforms, 
but may choose to follow the framework outlined below to ensure 
Medicare's long-term sustainability for America's current and 
future retirees.

    Enhance Quality and Choice in Medicare. Throughout 
Medicare's history, Washington has been slow to innovate and 
respond to transformations in health care delivery. Meanwhile, 
controlling costs in Medicare's open-ended fee-for-service 
system has proved impossible without limiting access or 
sacrificing quality. This is because policies in the main have 
merely controlled prices or payments, not costs; in the absence 
of real structural reform, the factors that drive costs higher 
remain. Today, costs continue to grow, seniors continue to lose 
access to quality care, and the program remains on a path to 
bankruptcy. Inaction will not protect Medicare; it will only 
hasten the program's demise.
    Reform aimed at empowering patients--combined with a 
strengthened safety net for the poor and the sick--will not 
only ensure the fiscal sustainability of this program, the 
Federal budget, and the U.S. economy, but will also guarantee 
that Medicare can fulfill the promise of health security for 
America's seniors. Hence, this budget resolution fully supports 
a patient-centered program that enhances quality and choice in 
Medicare.
    Under this program, traditional Medicare--which would 
always be an option available to beneficiaries--and private 
plans providing the same level of health coverage would compete 
for seniors' business, just as Medicare Advantage does today. 
By adopting the competitive structure of Part D, the 
prescription drug benefit, the program would also deliver 
savings for seniors in the form of lower monthly premium costs.
    This improved program assumes a simplified benefit that 
provides comprehensive coverage for all beneficiaries, rather 
than the complex and fragmented structure in place today. 
Currently, beneficiaries must enroll in three separate programs 
to get the same comprehensive coverage. Seniors are required to 
enroll in Part A for hospitalization; coverage is provided 
separately for physician services and prescription medications, 
through the optional Parts B and D, respectively. None of these 
coverage options, however, offers financial protections for 
seniors, such as annual or lifetime limits, and many must sign 
up for an additional supplemental insurance policy called 
Medigap to obtain a fully comprehensive coverage package.
    Today, only Medicare Advantage (Part C) offers seniors the 
opportunity to choose from a selection of comprehensive 
coverage plans. Not surprisingly, Medicare Advantage enrollment 
has tripled in the past decade and currently serves more than 
16 million seniors.\168\ Medicare Advantage also shows higher 
satisfaction rates than traditional Medicare. Beneficiaries 
were especially satisfied with the overall cost of Medicare 
Advantage plans and with the simplified health process compared 
to traditional Medicare.\169\
---------------------------------------------------------------------------
    \168\Gretchen Jacobson, Anthony Damico, Tricia Neuman, and Marsha 
Gold, Medicare Advantage 2015 Spotlight: Enrollment Market Update, The 
Kaiser Family Foundation, 30 June 2015: http://kff.org/medicare/issue-
brief/medicare-advantage-2015-spotlight-enrollment-market-update/.
    \169\Morning Consult, Seniors Love Their Medicare (Advantage), 30 
March 2015: http://morningconsult.com/2015/03/seniors-love-their-
medicare-advantage/.
---------------------------------------------------------------------------
    The Medicare improvements envisioned in this budget 
resolution would adopt the popular simplified coverage 
structure of Medicare Advantage, and allow seniors more plan 
choices while reducing costs. It would resemble the private 
insurance market, in which the majority of Americans select a 
single health care plan to cover all their medical needs.
    The enhanced program would also continue to offer a robust 
financial benefit to all beneficiaries. In many ways, the 
benefit provided would mirror the Federal Employees Health 
Benefits [FEHB] Program for Federal employees, retirees, and 
their families. FEHB boasts the widest selection of health 
plans in the country, from which its eight million members may 
choose. Plans offered under the FEHB Program may charge 
different premium amounts, competing for individuals' choices, 
and the government pays a certain percentage--or a defined 
contribution--to help offset the cost of coverage. Similarly, a 
Medicare recipient would choose from an array of guaranteed-
coverage options, including traditional Medicare, for a health 
plan that best suits his or her needs.
    The Federal Government contribution would go directly to 
the plan provider, following the current model under both the 
FEHB Program and Medicare Advantage. Furthermore, the 
government payment would be adjusted so the sick would receive 
more financial assistance if their conditions worsened, and 
lower-income seniors would receive additional support to help 
cover premiums and out-of-pocket costs. Wealthier seniors would 
assume responsibility for a greater share of their premiums.
    Additionally, this enhanced Medicare program would ensure 
affordability by fixing the currently broken system and letting 
market competition work as a real check on widespread waste and 
skyrocketing health care costs--as successfully demonstrated 
through the competitive structure adopted by Medicare Part D. 
More than 70 percent of beneficiaries are currently enrolled in 
the prescription drug benefit, which enjoys extremely high 
satisfaction rates among seniors.\170\ In 2015, nearly 90 
percent reported satisfaction with their coverage, and 85 
percent consider the coverage to be a good value.\171\ 
Similarly, this personalized arrangement puts patients in 
charge of how their health care dollars are spent, requiring 
providers to compete against one another on price and quality.
---------------------------------------------------------------------------
    \170\The Kaiser Family Foundation, The Medicare Part D Prescription 
Drug Benefit, 13 October 2015: http://kff.org/medicare/fact-sheet/the-
medicare-prescription-drug-benefit-fact-sheet/#endnote_link_165022-4.
    \171\Morning Consult, National Tracking Poll, conducted 8-13 July 
2015: http://www.medicaretoday.org/pdfs/
2015_Medicare_Today_National_Seniors_Poll.pdf.
---------------------------------------------------------------------------
    The improvements to Medicare derive from a long history of 
bipartisan reform plans based on the defined contribution 
model, or premium support, with a competitive bidding structure 
to lower costs. The 1999 Breaux-Thomas Commission, the 
Domenici-Rivlin 2010 Report, and the 2011 Wyden-Ryan plan all 
put forward this model of reform as it is designed to ensure 
security and affordability for seniors now and into the 
future.\172\ All three recognize two fundamental truths: the 
current path of Medicare is unsustainable, and it is 
unacceptable for Washington to allow the program to fail 
current or future beneficiaries. Each proposal further 
developed the policy with the intent of preserving Medicare 
over the long term without reducing health care access or 
quality.
---------------------------------------------------------------------------
    \172\National Bipartisan Commission on the Future of Medicare, 
Building a Better Medicare for Today and Tomorrow, 16 March 1999: 
http://thomas.loc.gov/medicare/bbmtt31599.html; Bipartisan Policy 
Center, Restoring America's Future, November 2010: http://
bipartisanpolicy.org/wp-content/uploads / sites / default / files / 
BPC%20FINAL%20REPORT%20FOR % 20PRINTER%2002 % 2028%2011.pdf.; Senator 
Ronald L. Wyden and Representative Paul D. Ryan. Guaranteed Choices to 
Strengthen Medicare and Health Security for All: Bipartisan Options for 
the Future, 15 December 2011: http://budget.house.gov/uploadedfiles/
wydenryan.pdf.
---------------------------------------------------------------------------
    The policy continues to garner bipartisan support today. 
Most recently, the President's fiscal year 2017 budget proposal 
included a similar reform to introduce a competitive bidding 
structure into the Medicare Advantage program. His proposal 
fails, however, to offer the benefits of more choice and lower 
costs achieved through the competitive bidding structure to all 
beneficiaries.
    Following these examples, the Congressional Budget Office 
preformed an analysis of two variations of premium support that 
established a defined government contribution using different 
formulas. CBO determined that a Medicare program following the 
premium support model that based the contribution level on an 
average of bids submitted by competing plans would result in 
savings for both beneficiaries and the program. Moreover, it 
would set up a carefully monitored exchange for Medicare plans. 
Health plans that chose to participate in the Medicare exchange 
would agree to offer insurance to all Medicare beneficiaries, 
to avoid cherry-picking, and to ensure that Medicare's sickest 
and highest-cost beneficiaries received coverage.\173\ A 
patient-centered Medicare program would also adopt these 
protections to guarantee better health, better value, and 
better choice for America's seniors, and allow all those in 
traditional, fee-for-service Medicare the same opportunity as 
new retirees to remain there or transition into the improved 
program beginning in 2024.
---------------------------------------------------------------------------
    \173\Congressional Budget Office, A Premium Support System for 
Medicare: Analysis of Illustrative Options, 18 September 2013: http://
www.cbo.gov/sites/default/files/09-18-PremiumSupport.pdf.
---------------------------------------------------------------------------
    This resolution envisions giving seniors the freedom to 
choose plans best suited for them, guaranteeing health security 
throughout their retirement years. Further, it resolves the 
concerns regarding Medicare's long-term sustainability, while 
also lowering costs for beneficiaries. With the adoption of 
patient-centered improvements, this program would preserve the 
positive aspects of traditional Medicare, while modernizing the 
program to reflect the changes to health care delivery in the 
21st century.

    Implement a Unified Deductible and Reform Supplemental 
Insurance. This resolution strengthens the Medicare Program 
through another bipartisan proposal. The outdated and 
fragmented fee-for-service arrangement would be streamlined 
into one benefit, unifying the separate parts of the program, 
which would provide coverage for both hospital and physician 
services. Additionally, the reform would provide common sense 
financial protections for America's seniors and reform 
supplemental insurance policies. This proposal, which was also 
supported by a number of bipartisan commissions including 
Breaux-Thomas, Domenici-Rivlin, and Simpson-Bowles, would allow 
the Medicare benefit to operate more like private health 
insurance coverage.\174\\,\\175\\,\\176\
---------------------------------------------------------------------------
    \174\National Bipartisan Commission on the Future of Medicare, op. 
cit., 16 March 1999; Bipartisan Policy Center, op. cit., November 2010.
    \175\Bipartisan Policy Center, op. cit. November 2010.
    \176\The National Commission on Fiscal Responsibility and Reform, 
The Moment of Truth, December 2010: http://www.fiscalcommission.gov/
sites/fiscalcommission.gov/files/documents/
TheMomentofTruth12<1<2010.pdf.
---------------------------------------------------------------------------
    With this reform, Medicare will have a single, annual 
deductible for medical costs and include a catastrophic cap on 
annual out-of-pocket expenses--an important aspect of the 
private health insurance market to safeguard the sickest and 
poorest beneficiaries that is currently absent from Medicare. 
These reforms build in further protections for beneficiaries 
and for the preservation of the Medicare Program for future 
generations.

    Means Test Premiums for High-Income Seniors. Under current 
law, high-income beneficiaries are responsible for a greater 
share of the premium costs for Medicare's Part B and Part D 
programs, or the optional coverage for physician services and 
prescription drug coverage, respectively. Medicare Advantage 
enrollees receiving coverage for these benefits similarly 
assume a share of the costs. Parts B and D must account for all 
additional program costs net of beneficiary premiums from 
general revenues, because these components of the Medicare 
Program do not have a dedicated income source like the 2.9-
percent payroll tax that funds Part A benefits. Consistent with 
several bipartisan proposals, and the President's fiscal year 
2017 budget, this resolution assumes additional means testing 
of premiums in Medicare Parts B and D for high-income seniors, 
including full responsibility of premium costs for individuals 
with annual income exceeding $1 million.

    Equalize the Retirement Age with Social Security. One of 
the Nation's greatest achievements of the 20th century was the 
dramatic increase in the average life expectancy. As Americans' 
health improves, extending their lives, many enjoy the benefits 
of employment later in life. To further ensure Medicare's long-
term sustainability, this resolution recommends a gradual 
increase of the Medicare retirement age to correspond with that 
of Social Security.

    Reform Payment Systems to Promote Quality and Patient 
Outcomes. Many of the criticisms of the current Medicare 
Program are due to complicated payment systems for myriad 
providers and thousands of services, which encourage the 
fragmented nature of health care and discourage innovation. 
Therefore, this resolution includes payment reforms that would 
create incentives and reward providers for delivering high-
quality, responsive, and coordinated care in the most 
clinically appropriate setting, based on each patient's 
individual medical needs. Such reforms include equal payments 
for services despite the site of care at which the service was 
delivered; coordination of post-acute care through an episodic 
payment; and modification of the Medicare Advantage benefit to 
improve care management for hospice and end-stage renal disease 
[ESRD] patients. Many patients often require additional care 
after hospital stays, but with many sites of care to choose 
from--ranging in both cost and intensity of services--patients 
and their families often suffer due to a lack of care 
coordination. This budget includes reforms that encourage 
providers to coordinate throughout the continuum of care, and 
offers a complementary episodic payment reform.
    Under current law, Medicare's hospice and ESRD benefits are 
carved out of the Medicare Advantage program. The Medicare ESRD 
benefit severely restricts patient access to MA plans, reducing 
patient freedom of choice. Medicare's hospice benefit, however, 
ought to be fully studied to ensure the benefit serves its 
intended purpose. Hospice care was originally designed to 
preserve dignity at the end of life while reducing the 
financial burden that otherwise would have been incurred for 
those who are terminally ill. Although the hospice benefit is 
intended to cover an array of services--including skilled 
nursing services, inpatient care, home health care, drug 
coverage, and palliative care--the Medicare Program spent 
approximately $1 billion on non-hospice services while 
beneficiaries were enrolled in hospice care in 2012.\177\ 
Moreover, a preponderance of evidence suggests that the benefit 
has actually increased, rather than decreased, the amount of 
spending that would have otherwise occurred for a terminally 
ill patient. The increasing concentration of the use of hospice 
care among the very old accounts for almost the entire increase 
in the spending per beneficiary at the end of life. To provide 
integrated, coordinated care for beneficiaries, reduce wasteful 
spending, and offer greater patient choice, this resolution 
assumes Medicare Advantage includes hospice and ESRD within its 
benefits package in a budget neutral manner. Furthermore, it 
calls on GAO to conduct a study examining the Medicare hospice 
benefit to ensure the program serves beneficiaries according to 
the original program design.
---------------------------------------------------------------------------
    \177\Medicare Payment Advisory Commission, Report to the Congress 
Medicare Payment Policy: March 2014: http://www.medpac.gov/documents/
reports/mar14_entirereport.pdf?sfvrsn=0.

    Streamline Support for Graduate Medical Education. All 
Americans benefit from a strong physician workforce. Since the 
creation of the Federal health care programs, Federal funds 
have supported physician training. The congressional report 
from the Social Security Amendments of 1965 comments on the 
need for Federal funds to support hospitals in the education 
and training of physicians, nurses and other medical personnel, 
``until the community undertakes to bear such education costs 
in some other way . . . ''\178\ Instead, the level of Federal 
support has grown over time, and the complexity of the payment 
formulas linked to a hospital's Medicare inpatient volume has 
made accountability and oversight next to impossible. The 
financing structure also props up an antiquated system that 
fails to recognize the rapidly changing care delivery model and 
the demographic shifts within the population--meaning the 
number of physicians is insufficient and cannot meet the 
Nation's needs either in terms of specialty or geography. 
Distributing funds directly to hospitals favors traditional 
acute care institutions and discourages physician training in 
various clinical or lower cost settings of care, including 
children's hospitals, safety net hospitals, ambulatory surgical 
centers, and so on.\179\ The call for reform to enhance 
accountability, transparency, and flexibility in graduate 
medical education has been advanced by the Institute of 
Medicine, the Medicare Patient Advisory Commission, the 
American Enterprise Institute and the Heritage 
Foundation.\180\\,\\181\\,\\182\\,\\183\ This resolution 
recommends that support for medical education should accurately 
reflect the costs of training future physicians and be 
streamlined into a single payment, providing greater freedom 
and flexibility to encourage teaching institutions and States 
to develop innovative approaches to medical education.
---------------------------------------------------------------------------
    \178\Committee on Finance, U.S. Senate, Social Security Amendments 
of 1965 (H.R. 6675), Report to the Committee on Finance, U.S. Senate 
(Rept. 404), 30 June 1965: https://ssa.gov/history/pdf/Downey%20PDFs/
Social%20Security%20Amendments%20of%201965%20Vol%202.pdf.
    \179\Institute of Medicine of the National Academies, Graduate 
Medical Education that Meets the Nation's Health Needs, 29 July 2014: 
http://www.nap.edu/read/18754/chapter/1#xi.
    \180\Ibid.
    \181\Medicare Payment Advisory Commission, Does it Cost More to 
Train Residents or to Replace Them?, September 2013: http://
www.medpac.gov/documents/contractor-reports/
sept13_residents_gme_contractor.pdf?sfvrsn=0.
    \182\American Enterprise Institute, Improving Health and Health 
Care: An Agenda for Reform, December 2015: https://www.aei.org/wp-
content/uploads/2015/12/Improving-Health-and-Health-Care-online.pdf.
    \183\John O'Shea, Reforming Graduate Medical Education in the U.S., 
The Heritage Foundation, 29 December 2014: http://www.heritage.org/
research/reports/2014/12/reforming-graduate-medical-education-in-the-
us.

    Establish an Uncompensated Care Fund. Since 1986, Medicare 
has provided additional financial support to hospitals that 
serve a significant population of low-income patients in the 
form of a disproportionate share hospital [DSH] payment. This 
funding was intended to ensure access for low-income patients 
and those unable to afford the costs of care. Hospitals, in 
addition to receiving a Medicare DSH payment, may also receive 
a Medicaid DSH payment so long as they meet certain 
requirements. This has led to some States engaging in improper 
fund transfers in order to gain additional Federal support of 
State Medicaid budgets through the Federal Medical Assistance 
Percentage.
    Additionally, limiting DSH payments to only hospitals fails 
to recognize the abundance of uncompensated care that occurs 
outside of the hospital setting. Therefore, this resolution 
recommends converting the separate DSH payments into a single 
flexibility fund to support uncompensated care, to more 
appropriately and equitably distribute funds in a targeted 
manner that recognizes all providers serving low-income 
populations.

    Reform Medical Liability Insurance. This resolution also 
advances common sense curbs on abusive and frivolous lawsuits. 
Medical lawsuits and excessive verdicts increase health care 
costs, result in reduced access to care, and contribute to the 
practice of defensive medicine. When mistakes happen, patients 
have a right to fair representation and fair compensation. The 
current tort litigation system, however, too often serves the 
interests of lawyers while driving up costs due to expenses 
associated with the practice of defensive medicine. The costs 
of defensive medicine are often overlooked, but add a 
considerable burden to overall health care spending. According 
to a comprehensive study published in 2010 more than 30 percent 
of health care costs, or approximately $650 billion annually, 
were attributable to defensive medicine.\184\ Even if the costs 
are only a fraction of this projection, such expenses are 
unnecessary and unsustainable for the Medicare Program and 
America's seniors. Therefore, this resolution supports several 
changes to laws governing medical liability.
---------------------------------------------------------------------------
    \184\Jackson Healthcare, Physician Study: Quantifying the Cost of 
Defensive Medicine, 2010: http://www.jacksonhealthcare.com/media-room/
surveys/defensive-medicine-study-2010.aspx.
---------------------------------------------------------------------------

                   MEDICAID, THE AFFORDABLE CARE ACT,
                          AND RELATED PROGRAMS


                   Function Summary: Direct Spending

    One of the worst conceits of Washington is that it can 
centrally manage the entire health care sector. Health care in 
America comprises a vast network of doctors and nurses, 
technicians, medical device manufacturers, pharmaceutical 
makers, hospitals and in-home services, educational 
institutions, financial arrangements, and, above all, 
patients--along with numerous others. It is a complex and 
dynamic set of interactions that employs more than $3 trillion 
of the Nation's resources; it is a sector in which the 
participants themselves--not academics and bureaucrats--are 
clearly best suited to establishing effective and efficient 
means of delivering this uniquely valued service.
    Yet for decades, Federal policymakers have relentlessly 
sought to systematize health care to meet their ideological and 
bureaucratic aims. While no one objects to ensuring health care 
for as many Americans as possible, the government's increasing 
imposition distorts the medical market, drives up prices, 
requires tedious regulations, and undermines Americans' liberty 
in this most important and intimate realm: their health.
    The products of this concept include Medicare (discussed 
previously), Medicaid, and now the Affordable Care Act 
[ACA].\185\ Of these, Medicaid constitutes the majority of 
direct spending in this function (Function 550 in Table 3). The 
totals for fiscal year 2017 are $405.5 billion in budget 
authority and $399.0 billion in outlays. Over 10 years, the 
budget projects direct spending of $3.4 trillion in budget 
authority and $3.4 trillion in outlays.
---------------------------------------------------------------------------
    \185\The Affordable Care Act consists of the two related measures 
enacted in March 2010 that constituted the health care legislation: the 
Patient Protection and Affordable Care Act (Public Law 111-148), and 
the Health Care and Education Reconciliation Act of 2010 (Public Law 
111-152).
---------------------------------------------------------------------------
    Medicaid is a crucial component of the American safety net. 
It provides a fundamental level of security for low-income 
Americans who struggle with long-term illnesses and 
disabilities. These are individuals who are unable to perform 
substantial gainful activities. Medicaid is often the only 
option for people in these difficult circumstances.
    Medicaid is also a vital program for low-income children, 
parents, pregnant women, and seniors. The social safety net 
should catch these individuals when they fall. For those who 
are able-bodied, it should serve as a springboard to help them 
get back up.
    For many, though, Medicaid's promises are empty, its goals 
are unmet, and its dollars are wasted. Sick individuals cannot 
get appointments, and new beneficiaries cannot find doctors, 
making Medicaid synonymous with poor access and little care. In 
fact, according to a study conducted by a team of renowned 
economists from the Massachusetts Institute of Technology, 
Harvard, and Dartmouth, Medicaid's value to its recipients is 
significantly lower than the government's cost of the 
program.\186\ In addition, doctors who provide services to 
Medicaid patients are severely under-reimbursed,\187\ a problem 
made worse by adding more individuals to the system.\188\ 
Without reform, Medicaid will fail to deliver on its promise of 
providing a sturdy health care safety net for the Nation's most 
vulnerable.
---------------------------------------------------------------------------
    \186\Amy Finkelstein, Nathaniel Hendren, and Erzo F.P. Luttmer, The 
Value of Medicaid: Interpreting Results from the Oregon Health 
Insurance Experiment, June 2015, pp. 2, 40, 41: http://
economics.mit.edu/files/10580. Furthermore, the study found that 
Medicaid does not have a ``statistically significant impact on 
mortality or physical health measures'' for recipients.
    \187\The Henry J. Kaiser Family Foundation, ``Medicaid-to-Medicare 
Fee Index,'' Accessed 8 January 2016: http://kff.org/medicaid/state-
indicator/medicaid-to-medicare-fee-index/.
    \188\Congressional Budget Office, The Budget and Economic Outlook: 
2016 to 2026, p. 73. In 2015, the average number of people enrolled in 
Medicaid, on a monthly basis, was 76 million, making Medicaid the 
largest health care provider in the country.
---------------------------------------------------------------------------
    Furthermore, Medicaid spending is not sustainable. The 
program turned 50 last year, but its next 50 years are highly 
uncertain. By 2030, Medicaid, along with Medicare, Social 
Security, and net interest payments, will take up every dollar 
of projected Federal Government revenue. That means that if 
these three programs stay on their current paths, the 
government will no longer be able to afford its other 
priorities and activities--national defense, education, 
transportation, and non-health safety net programs. Congress 
will have to either sharply constrain these programs or put 
very large sums on the government's credit card. The longer 
Congress waits to address the problem, the more intractable it 
becomes.
    According to the CBO, since 1980, Medicaid spending has 
increased by more than 2,500 percent, and by 300 percent of 
gross domestic product. In just the past 15 years, Medicaid 
spending has increased by 200 percent, or 66 percent as a share 
of GDP. The CBO projects Federal spending on this program to be 
$381 billion in fiscal year 2016. This amount is expected to 
grow by 68 percent over the next 10 years, reaching $642 
billion by fiscal year 2026.\189\
---------------------------------------------------------------------------
    \189\Congressional Budget Office, op. cit., pp. 68-69. Also see p. 
73, and pp. 152-153.
---------------------------------------------------------------------------
    This number, however, masks the full cost of Medicaid, 
because it represents only the Federal share of spending. 
States also pay a significant portion of Medicaid costs, and 
their spending on the program is expected to follow these 
upward trends as well. According to the most recent data 
available from the Centers for Medicare and Medicaid Services 
[CMS], total State Medicaid spending is expected to rise from 
about $216.0 billion in fiscal year 2015 to $337.5 billion in 
fiscal year 2023.\190\
---------------------------------------------------------------------------
    \190\Office of the Actuary, Centers for Medicare and Medicaid 
Services, 2014 Actuarial Report on the Financial Outlook for Medicaid. 
This reflects the most recent data available. The 2015 Actuarial report 
will be released some time this summer.
---------------------------------------------------------------------------
    Medicaid's current funding structure (the Federal Medical 
Assistance Percentage [FMAP]) creates a perverse incentive for 
States to expand the program while providing little incentive 
to save. For every dollar a State government spends on 
Medicaid, the Federal Government traditionally has paid an 
average of 57 cents. Expanding Medicaid coverage during boom 
years is tempting for States because they pay less than half 
the cost. Conversely, there is little incentive to restrain 
Medicaid's growth, because State governments only save an 
average of 43 cents for every dollar worth of coverage they 
rescind. The program's expansion under Obamacare exacerbates 
this challenge, with the Federal Government covering 100 
percent of every dollar spent on a State's additional Medicaid 
population in 2016.\191\ CBO estimates the President's health 
care law will increase Federal Medicaid and State Children's 
Health Insurance Program [SCHIP] spending by more than $1 
trillion over the 2017-2026 period. This sharp increase is due 
to the millions of new beneficiaries the Affordable Care Act 
will drive into these programs. In fact, CBO estimates that in 
2025, 14.5 million new enrollees will be added to the Medicaid 
Program as a result of the ACA, three million more than the 
agency projected just last August.\192\
---------------------------------------------------------------------------
    \191\This percentage will decrease over time, falling to 95 percent 
of the costs for a State's additional Medicaid population in 2017, and 
90 percent in 2020 and thereafter.
    \192\Congressional Budget Office, op. cit., p. 114. The comparison 
to 2025 is necessary because that was the last year of the estimating 
period in August.
---------------------------------------------------------------------------

              Illustrative Direct Spending Policy Options

    For all the reasons given above, the budget resolution 
calls for major reforms of the Medicaid Program and repeal of 
the Affordable Care Act. The status quo before the ACA is not 
acceptable, but repeal of the President's law is necessary to 
clear the way for patient-centered health care in America.
    Americans should have more choices in what types of 
coverage options are available so they can pick a plan that 
best fits their unique health care needs. A first step in the 
right direction is eliminating Obamacare's burdensome one-size-
fits-all mandates and regulations that are driving up the price 
of insurance and limiting options. Encouraging a robust, 
competitive insurance market would reduce costs, restore 
flexibility, and provide Americans more options to choose the 
coverage they want for themselves and their families.
    Many Americans face high insurance costs due to pre-
existing conditions. No one should be priced out of the market. 
Those who have a bad injury or illness should also have access 
to quality and responsive care. To guarantee affordable 
coverage, patient-centered health care would provide 
protections for patients with pre-existing conditions, reward 
those who maintain health coverage, and give States--who are 
better equipped to respond to the needs of their communities--
more control over regulating insurance. Finally, patient-
centered health care must break down costly and burdensome 
barriers to innovation so that life-saving technologies and 
treatments are reaching patients in need. By moving health care 
into the 21st Century, America can build on the remarkable 
advancements that have already been made, which make delivery 
of care more effective, efficient, and affordable.
    These principles--affordability, accessibility, quality, 
choices, innovation, and responsiveness--provide the roadmap to 
health care that actually works for patients and providers, a 
responsive network that puts health care decisions in the hands 
of individuals, families, and their doctors, not Washington. 
The budget resolution includes a policy statement that 
describes in greater detail the contours of such a patient-
centered approach.
    The House committees responsible for the program changes in 
these areas are Energy and Commerce, Ways and Means, Education 
and the Workforce, Judiciary, Natural Resources, House 
Administration, and three Appropriations Subcommittees: 
Agriculture, Rural Development, Food and Drug Administration 
and Related Agencies; Labor, Health and Human Services, 
Education, and Related Agencies; and Legislative Branch. These 
panels will determine the exact parameters of structural 
Medicaid reform, as well as those for other policies flowing 
from the fiscal assumptions in this budget resolution. 
Nevertheless, meaningful Medicaid reform and other measures to 
slow the growth of Federal spending, while also providing 
recipients with a benefit that helps improve health outcomes, 
are critical. One set of potential approaches is outlined 
below.

    Provide State Flexibility in Medicaid. One way to 
strengthen and secure the Medicaid benefit is to convert the 
Federal share of Medicaid spending into finite funding amounts 
that each State can tailor to meet its needs. Governors and 
State legislatures are closer to patients in their States and 
know better than Washington bureaucrats where there are unmet 
needs and opportunities to cut down on waste, fraud, and abuse.
    This approach would end the misguided one-size-fits-all 
approach that ties the hands of State governments trying to 
make their Medicaid programs as effective as possible. The 
arrangement would provide each State with the freedom and 
flexibility to tailor a Medicaid program that fits the needs of 
its unique population.
    Even with the limited flexibility of Medicaid's current 
waiver program, States have developed innovative reforms that 
produce cost savings and quality improvements. For example, the 
Healthy Indiana Plan (implemented prior to the ACA) provided 
that State's residents who did not qualify for Medicaid with 
access to health benefits such as physician services, 
prescription drugs, inpatient and outpatient hospital care, and 
disease management, all without additional funding. Other 
States could alter eligibility requirements, for example, or 
move able-bodied adults off the Medicaid rolls. The savings 
generated could then be redirected toward additional 
protections for the most vulnerable populations, or to other 
State health care priorities.
    Regrettably, the more recent trend from the Obama 
Administration has been to limit the flexibility of States to 
overhaul State Medicaid programs this way. For example, the 
Centers for Medicare and Medicaid Services have not approved 
waiver requests from Arkansas, Iowa, Indiana, and Montana, 
which sought to implement premiums for individuals with incomes 
between 50 percent and 100 percent of the Federal poverty 
level. Also, CMS has denied States' requests to waive certain 
Medicaid benefits; has denied most attempts to impose cost-
sharing in amounts greater than those allowed under Federal 
law; and has not approved Pennsylvania's attempt to include a 
work requirement for all able-bodied adults, ages 21-64, as a 
condition of eligibility.\193\
---------------------------------------------------------------------------
    \193\Robin Rudowitz and MaryBeth Musumeci, The ACA and Medicaid 
Expansion Waivers, The Kaiser Family Foundation, 20 November 2015: 
http://kff.org/report-section/the-aca-and-medicaid-expansion-waivers-
issue-brief/.
---------------------------------------------------------------------------
    All States should have the flexibility to adapt their 
Medicaid programs--to design their benefit packages in a way 
that best meets the needs of their State populations; to 
promote personal responsibility and healthy behaviors; and to 
encourage a more holistic approach to care that considers not 
only Medicaid beneficiaries' health conditions, but also their 
economic, social, and family concerns. State legislators and 
governors know their people better than far-away Washington and 
should have the flexibility they need to provide the best care 
to their residents.
    The budget resolution would transform Medicaid from an 
open-ended entitlement back to a quality safety net for the 
Nation's most vulnerable. States would have the option to 
choose one of two possible designs. The first arrangement, 
which has been included in the past several House-passed 
budgets, would combine Medicaid and SCHIP resources into a 
single lump sum that could then be distributed by the State. 
The second option would employ a per-capita-cap methodology to 
account for the variable populations--elderly, disabled, 
children, and adults--within the program.
    The first arrangement would offer the following advantages.

      The designation of funds would rest solely with 
the State. States would be able to spend their own funds at 
whatever level they chose, with sole discretion over 
eligibility requirements, benefits, and provider reimbursement 
rates for both Federal and State sums. Federal Government 
health care mandates would be eliminated, allowing States to 
innovate and design their programs to best meet the unique 
needs of their citizens. For example, States could decide to 
target funds to the most vulnerable, choosing to improve the 
quality of care and access to vital services. As State reforms 
reduce dependence on government assistance, the people helped 
will be more likely to enter the workforce, have insurance, and 
be able to lift themselves up the economic ladder. Under this 
option, States could implement work requirements.

      The reform would encourage State innovation. 
Through this arrangement, both the Federal Government and the 
States would have budgetary certainty, which would create 
strong incentives for the States to manage the Federal funding 
wisely. Any spending that exceeded the amount provided to the 
State would have to be financed by the State. Conversely, the 
funding provided to States would not be reduced if they found 
innovative ways to reduce Medicaid costs. Any savings that a 
State was able to achieve would be returned directly to that 
State's taxpayers. Under a traditional State Flexibility Fund, 
States could, for example, use money saved to support other 
welfare programs, including Temporary Assistance for Needy 
Families, Supplemental Security Income, and the Supplemental 
Nutrition Assistance Program (food stamps) if the need was 
greater in those areas.

      The fiscal outlook would improve for both States 
and the Federal Government. Level funding, provided by a 
traditional State Flexibility Fund, will help States focus on 
expanding private sector employment and getting their citizens 
out of poverty instead of increasing enrollments to collect 
more Federal money. Over the next decade, level funding would 
prevent the Federal Government from borrowing and spending 
money it does not have, and State policymakers would know with 
certainty the amount of Federal assistance they could count on, 
while Federal taxpayers would know its costs.

    The second arrangement would bring its own set of benefits.

      The program design would ensure protections for 
the most vulnerable. This option would provide States with 
designated funding for those persons who are truly in need of 
care and support. Based on the four main eligibility categories 
as currently defined by the Federal Government in the Medicaid 
Program--the elderly, the blind and disabled, nondisabled 
adults, and children--a per-person payment amount would be 
established to account for the average cost of care, per 
enrollee, in each of these four principal categories, and would 
be indexed to a predetermined growth rate. The Federal 
Government would then provide Medicaid funds to the States 
based on the total number of enrollees in each category. This 
option accounts for the variation in spending amongst the four 
different categories, helping target funds to the most 
vulnerable.

      This arrangement would provide certainty for 
State budgets. The per-capita-payments made to the States would 
be made for all enrollees in the program, including anyone who 
might not have been expected to sign up. In times of slow 
economic growth or during a recession, this certainty will 
afford each State the opportunity to provide coverage to those 
who meet the eligibility requirements, without breaking the 
State budget.

      The reform would promote good behavior and 
innovation. States would also be encouraged to use the funds 
carefully, targeting the resources provided to those who need 
them most. States would receive the same amount from the 
Federal Government for each person enrolled according to the 
appropriate category, regardless of how much they spent on each 
enrollee. Further, Federal law would provide the basic template 
for the program to provide accountability for the funds and 
help root out waste, fraud, and abuse.\194\ Reforming Medicaid 
in this way also would enable States to design their Medicaid 
programs in a manner that will best serve their residents. Once 
the eligibility criteria were determined, each State would have 
the flexibility to pursue reforms of their choosing, without 
Washington dictating to the States the type of coverage each 
State should offer. For example, instead of entitling 
beneficiaries to a set of services, States could decide to use 
the per-capita-payment as a defined contribution payment and 
allow the Medicaid beneficiaries to use the amount to choose 
from among a number of competing insurance options. As another 
option for Medicaid beneficiaries, States could decide to use 
part of the per-capita-payment amount to fund Health Savings 
Accounts as part of their State-run design.
---------------------------------------------------------------------------
    \194\Committee on Oversight and Government Reform, Uncovering 
Waste, Fraud, and Abuse in the Medicaid Program, staff report 25 April 
2012: https://oversight.house.gov/wp-content/uploads/2012/04/
Uncovering-Waste-Fraud-and-Abuse-in-the-Medicaid-Program-Final-3.pdf.

    Ultimately, either reform would improve the health care 
safety net for low-income Americans by giving States the 
ability to offer their Medicaid populations more options and 
better access to care. This kind of reform would ease the 
fiscal burdens imposed on State budgets, contribute to the 
long-term stabilization of the Federal Government's fiscal 
---------------------------------------------------------------------------
path, and preserve the Medicaid safety net.

    Establish an Uncompensated Care Fund. In both Medicare and 
Medicaid, hospitals that serve a disproportionately large 
number of low-income patients can qualify for higher payments. 
In Medicaid, hospitals have to meet certain Federal criteria to 
qualify for these payments. The hospitals that do qualify are 
known as Medicaid disproportionate share hospitals [DSH]. 
Currently, States are given discretion in deciding which 
hospitals receive Medicaid DSH payments and the size of those 
payments. That discretion, however, has led to wasteful 
spending, as some States engaged in funding transfers to 
increase their FMAPs above the amount specified in law.\195\ To 
stop that practice, Congress established fixed ceilings on DSH 
payments to each State, but those ceilings have increased over 
time. Additionally, providing DSH payments only to hospitals 
fails to recognize the substantial uncompensated care that 
occurs outside the hospital setting. Therefore, this resolution 
recommends converting the separate Medicaid and Medicare DSH 
payments into a single flexibility fund to support 
uncompensated care, to more appropriately and equitably 
distribute funds in a targeted manner that recognizes all 
providers serving vulnerable populations.
---------------------------------------------------------------------------
    \195\Government Accountability Office, Improving Transparency and 
Accountability of Supplemental Payments and State Financing Methods, 
November 2015: http://www.gao.gov/products/GAO-16-195T.

    Apply Work Requirements to Medicaid. The budget proposes to 
advance a work requirement for all able-bodied adults who are 
enrolled in Medicaid, modeled after the Temporary Assistance 
for Needy Families Program. This proposal would ensure that an 
able-bodied, working-age adult could qualify for Medicaid only 
if he or she were actively seeking employment or participating 
in an education or training program. Work not only provides a 
source of income and self-sufficiency, but also has been 
demonstrated as a valuable source of self-worth and dignity for 
individuals. In fact, employment and self-esteem are so 
intricately tied together that a Gallup-Healthways Well-Being 
Index found: ``Unemployed adults and those not working as much 
as they would like are about twice as likely as Americans who 
are employed full time to be depressed.''\196\ Expanding work 
requirements to Medicaid will allow more people to escape 
poverty while also preserving their self-respect, their self-
reliance, and their courage and determination.
---------------------------------------------------------------------------
    \196\Alyssa Brown and Kyley McGeeney, In U.S., Employment Most 
Linked to Being Depression-Free, Gallup, 23 August 2013: http://
www.gallup.com/poll/164090/employment-linked-depression-free.aspx.

    Eliminate Waste, Fraud, and Abuse. The budget also advances 
several reforms to help root out waste, fraud, and abuse in the 
Medicaid Program. For example, under current law, States are 
required to enroll otherwise qualified immigrants in Medicaid 
while those individuals are arranging documentation verifying 
their U.S. citizenship or satisfactory immigration status. This 
proposal would prevent Federal funding for coverage until 
applicants have provided satisfactory evidence of their 
immigration status. Other reforms include counting lottery 
winnings toward Medicaid eligibility, counting parts of income-
generating annuities toward eligibility, and making Medicaid 
coverage effective the first day of the month after 
application. All these reforms will help target the limited 
Medicaid resources to those who are actually in need of them.
    In addition to these major reforms, the budget recognizes 
several options that can be implemented in the short term that 
will both strengthen and preserve the Medicaid Program. The 
first is to reform the 1115 waiver process. One potential 
improvement would be requiring that waivers be budget-neutral 
in actual costs and to ensure that any new spending does not 
duplicate other Federal programs. Another would be allowing 
States to adopt approved waivers, without having to go through 
the approval process again.
    The second reform is to address the problem of Medicaid 
provider taxes. Currently, 49 States finance a portion of their 
Medicaid spending through provider taxes\197\--a gimmick used 
to garner greater financial assistance from the Federal 
Government and boost State Medicaid budgets. States impose 
taxes on the very same health care providers who are paid by 
the Medicaid Program, increase payments to those providers by 
the same amount, and then use that additional spending to boost 
the amount the Federal Government matches. In short, provider 
taxes decrease transparency by distorting Medicaid funding, and 
dramatically increase Federal spending.\198\ The maximum amount 
a State can tax a provider is 6 percent. The budget recommends 
lowering this number to 5.5 percent immediately, and begin 
completely phasing out the practice over a longer period.
---------------------------------------------------------------------------
    \197\Alaska is the only State that does not have at least one 
provider tax, but the State is evaluating the feasibility of such a 
tax.
    \198\Government Accountability Office, Medicaid Financing: States' 
Increased Reliance on Funds from Health Care Providers and Local 
Governments Warrants Improved CMS Data Collection, July 2014, p. 14: In 
fiscal year 2012, for example, 41 of the 47 States with provider taxes 
reported revenue of $18.8 billion. Also see Brian C. Blase, Medicaid 
Provider Taxes: The Gimmick That Exposes Flaws with Medicaid's 
Financing, The Mercatus Center at George Mason University, February 
2016.

    Repeal the Medicaid Expansions in the Affordable Care Act. 
The ACA created major expansions in the Medicaid Program 
beginning in 2014. As noted previously, the Federal Government 
now pays a significantly larger share of the Medicaid expenses 
for individuals who are newly eligible for Medicaid due to the 
ACA, dramatically increasing Federal spending. Newly eligible 
beneficiaries will also add pressure to already-strained State 
budgets beginning in 2016, when the Federal matching rate 
begins to decrease and the health care law forces States to 
bear some of the expansion costs. According to CBO, 11 million 
new individuals will enroll in Medicaid in 2015, and by 2025, 
there will be 14.5 million new individuals in the program 
because of the ACA.\199\
---------------------------------------------------------------------------
    \199\Congressional Budget Office, op. cit., p. 114.
---------------------------------------------------------------------------
    This expansion not only magnifies the challenges to both 
State and Federal budgets, but also binds the hands of local 
governments in developing solutions that meet the unique needs 
of their citizens. The health care law exacerbates the already 
crippling one-size-fits-all enrollment mandates that have 
resulted in below-market reimbursements, poor health care 
outcomes, and restrictive service availability.
    The budget calls for repealing the Medicaid expansions 
contained in the health care law and removing its burdensome 
programmatic mandates on State governments.

    Repeal the Affordable Care Act Exchange Subsidies. The 
Affordable Care Act represents the worst aspects of 
Washington's conceit that health care decisions can be best 
determined by government bureaucrats rather than by patients, 
families, and their doctors. Six years after its enactment, 
Obamacare has proven to be a failure for families, employers, 
and the health care sector writ large, while 30 million 
Americans still remain without health insurance coverage. 
Rather than becoming more affordable, insurance coverage has 
grown too expensive to purchase or too expensive to use, as 
premiums and deductibles have skyrocketed. In 2014, 7.5 million 
Americans paid the individual mandate penalty, totaling $1.5 
billion. Additionally, in CBO's most recent set of 10-year 
budget estimates, enrollment projections for 2016 were reduced 
by 38 percent from the March 2015 report--down from 21 million 
to 13 million. These results are reflected in recent public 
opinion polls that show the majority of Americans continue to 
oppose the Affordable Care Act.\200\
---------------------------------------------------------------------------
    \200\Andrew Dugan, Americans Tilt More Negative Toward Affordable 
Care Act, Gallup, 13 November 2015. http://www.gallup.com/poll/186629/
americans-tilt-negative-toward-affordable-care-act.aspx
---------------------------------------------------------------------------
    Predictably, the ACA has adversely affected the health care 
market generally, causing the most hardship for individuals and 
families. Americans with employer-provided health care 
coverage--approximately 147 million people--are paying higher 
premiums and higher deductibles under Obamacare.\201\ President 
Obama promised premiums would decline $2,500 per family; 
instead, average premiums in the employer-sponsored market have 
increased by $3,775.\202\ Since 2010, family premiums in the 
employer-sponsored market have increased by 27 percent, to more 
than $17,000 annually. Deductibles are also increasing. 
Deductibles for individual plans in the employer-sponsored 
market are up an average of 67 percent, from $646 in 2010 to 
$1,077 in 2015. This is faster than the rise in individual 
premiums (24 percent), about seven times more than the rise in 
workers' wages (10 percent), and more than cumulative inflation 
over the period (9 percent).\203\ Individuals and families are 
also facing higher prescription drug costs under Obamacare. The 
average person with a plan in the exchange marketplace has to 
pay 46 percent of his or her total drug costs, compared to 20 
percent for someone with employer-sponsored health care, 
according to a recent Health Affairs article.\204\
---------------------------------------------------------------------------
    \201\The Kaiser Family Foundation, 2015 Employer Health Benefits 
Survey, 22 September 2015: http://kff.org/health-costs/report/2015-
employer-health-benefits-survey/.
    \202\The Kaiser Family Foundation, Premiums and Worker 
Contributions Among Workers Covered by Employer-Sponsored Coverage, 
1999-2015. September 2015: http://kff.org/interactive/premiums-and-
worker-contributions/.
    \203\The Kaiser Family Foundation/Health Research & Educational 
Trust [HRET]: http://kff.org/health-costs/press-release/employer-
family-health-premiums-rise-4-percent-to-17545-in-2015-extending-a-
decade-long-trend-of-relatively-moderate-increases/.
    \204\``Out-Of-Pocket Prescriptions Costs Under A Typical Silver 
Plan Are Twice As High As They Are In The Average Employer Plan,'' 
Health Affairs, October 2015. The account is also cited in ``Drug 
prices spike under Obamacare,'' The Washington Examiner, 6 October 
2015: http://www.washingtonexaminer.com/article/2573465?utm-
content=buffer305b8&utm-medium;=social&utm-source;=twitter.com&utm-;
campaign=buffer.
---------------------------------------------------------------------------
    Under the ACA's subsidy structure, government support 
shrinks as income rises, effectively penalizing two-income 
households and creating a disincentive for people to marry. For 
example, two singles can each make $46,680 per year (400 
percent of the Federal poverty level) and still qualify for 
government subsidies. If the two marry, and their combined 
income hits $93,360 per year, they lose their government 
subsidy. A single mother who earns $47,190 per year (300 
percent of the poverty level) can get a subsidy to buy health 
insurance for her and her child. If she decides to marry the 
child's father, who earns $46,680 per year (400 percent of 
poverty), then the family no longer qualifies for the subsidy 
help. The ACA also includes myriad new taxes and penalties to 
offset the roughly $2 trillion in new spending, including an 
increase in the Medicare payroll tax that one tax expert 
described as a ``shockingly inequitable marriage 
penalty.''\205\ The policy taxes wages higher than $200,000 for 
individuals and $250,000 for couples. For example, if a single 
woman and a single man each earns less than the individual 
threshold per year, neither is required to pay the health law's 
additional Medicare payroll tax. If they marry, however, they 
could break the marriage threshold and owe thousands of dollars 
in additional taxes.
---------------------------------------------------------------------------
    \205\Robert Pear, ``New Taxes to Take Effect to Fund Health Care 
Law,'' The New York Times, 8 December 2012: http://www.nytimes.com/
2012/12/09/us/politics/new-taxes-to-take-effect-to-fund-health-care-
law.html?-r=1.
---------------------------------------------------------------------------
    Furthermore, despite the President's promise, ``if you like 
your health care plan, you can keep it''--labeled by PolitiFact 
as the 2013 Lie of the Year\206\--several hundred thousand 
people, across more than a dozen States, lost their plans due 
to the cancellation of policies that did not satisfy the 
coverage requirements mandated by the ACA.\207\ Obamacare also 
has limited access to health care, as more health plans narrow 
networks--limiting the number of physicians and hospitals 
covered under the plan--in an effort to reduce costs, while 
still meeting the requirements mandated by the ACA. As reported 
by Modern Healthcare, 70 percent of plans sold on the Obamacare 
exchanges in 2014 consisted of narrow networks.\208\ According 
to a recent Avalere study, Obamacare networks have 34 percent 
fewer providers compared to commercial plans. On average, 
Obamacare plans have 42 percent fewer oncologists and 
cardiologists and 32 percent fewer primary care 
physicians.\209\ For many patients, especially those in rural 
areas, there are too few in-network providers, and patients are 
forced to travel long distances to find a hospital and doctor. 
Additionally, some plans cover the hospital stay, but not the 
physician, leaving patients with exorbitant bills. According to 
a recent Deloitte survey, only 30 percent of exchange enrollees 
were satisfied with their health coverage plan, significantly 
lower than other types of insurance, including employer-
sponsored coverage, Medicaid, and Medicare.\210\
---------------------------------------------------------------------------
    \206\http://www.politifact.com/truth-o-meter/article/2013/dec/12/
lie-year-if-you-like-your-health-care-plan-keep-it/.
    \207\``More than a Dozen States Plan to Cancel Health Care Policies 
Not in Compliance with Obamacare,'' Fox News, 9 October 2014: http://
www.foxnews.com/politics/2014/10/09/more-than-dozen-states-plan-to-
cancel-health-care-policies-not-in-compliance/?Source=GovD.
    \208\Bob Herman, ``Network Squeeze: Controversies Continue Over 
Narrow Health Plans,'' Modern Healthcare, 28 March 2015:
    http://www.modernhealthcare.com/article/20150328/MAGAZINE/
303289988.
    \209\Avalere, Exchange Plans Include 34 Percent Fewer Providers 
than the Average for Commercial Plans, 15 July 2015: http://
avalere.com/expertise/managed-care/insights/exchange-plans-include-34-
percent-fewer-providers-than-the-average-for-comm.
    \210\Deloitte, Public Health Insurance Exchanges Opening the Door 
for a New Generation of Engaged Health Care Consumers: https://
www2.deloitte.com/content/dam/Deloitte/us/Documents/life-sciences-
health-care/us-lshc-hix-consumer-survey.pdf.
---------------------------------------------------------------------------
    Effects of the law are also felt by employees, their 
employers, and throughout the U.S. economy. Individuals are 
discouraged from work because the premium subsidies become much 
less generous as people earn more income. For the individual or 
family, earning more makes their health coverage more 
expensive. The law's tax increases total more than $1 trillion 
over the next decade, reducing economic growth, wages, and 
work. The Congressional Budget Office estimates that by 2025, 
the ACA will reduce the labor supply by 0.86 percent, or 2 
million full-time-equivalent workers. The individuals who will 
be most affected by this decrease are those who make less than 
275 percent of the Federal poverty level, which translates into 
roughly less than $65,000 in income.\211\
---------------------------------------------------------------------------
    \211\Edward Harris and Shannon Mok, How CBO Estimates the Effects 
of the Affordable Care Act on the Labor Market, Congressional Budget 
Office Working Paper 2015-09, December 2015: http://www.cbo.gov/sites/
default/files/114th-congress-2015-2016/workingpaper/51065-ACA-Labor-
Market-Effects-WP.pdf.
---------------------------------------------------------------------------
    The Affordable Care Act's employer mandate makes full-time 
workers--especially younger and less-skilled workers--more 
costly to hire by requiring employers to provide expensive 
Obamacare-compliant insurance. Under the mandate, employers 
with more than 50 full-time workers who fail to meet certain 
arbitrary health coverage criteria set by the administration 
will be subject to tax penalties of up to $3,000 per worker. 
Because of the mandate's penalty, employers will likely shift 
their hiring toward part-time workers (those who work less than 
30 hours per week) to avoid triggering the ACA's employer 
penalty. There is evidence that this is already occurring. More 
than 2.1 million Americans are now working part-time because 
they cannot find full-time work;\212\ that is nearly double the 
amount seen before the recession.\213\ As the ACA takes full 
effect, this trend toward part-time work will likely increase 
over time. Even the President--by twice unilaterally delaying 
the punitive employer mandate for medium-sized businesses--has 
implicitly acknowledged the damage this tax will cause.\214\ 
New data show a decline in the average hours worked per week by 
lower-wage employees and many more working just below 30 hours 
per week. Roughly 2.6 million people are at risk of having 
their work hours cut. Sixty-three percent of the people most at 
risk are female, and nearly 60 percent are 19-34 years 
old.\215\
---------------------------------------------------------------------------
    \212\Bureau of Labor Statistics, U.S. Department of Labor, The 
Employment Situation--December 2015, 8 January 2016:
    http://www.bls.gov/news.release/pdf/empsit.pdf.
    \213\Bureau of Labor Statistics, U.S. Department of Labor. The 
Employment Situation--December 2007, 4 January 2008. http://
www.bls.gov/news.release/archives/empsit-01042008.pdf.
    \214\Grace-Marie Turner, 70 Changes to ObamaCare . . . So Far, 
Galen Institute, 26 January 2016: http://galen.org/newsletters/changes-
to-obamacare-so-far/.
    \215\Lanhee Chen, Hearing on the Impact of the Affordable Care Act 
(ACA) Employer Mandate's Definition of Full-Time Employee on Jobs and 
Opportunities, Hoover Institution Economic Working Paper 14105, 28 
January 2014: http://www.hoover.org/sites/default/files/14105-chen-
hearing-on-the-impact-of-the-aca-employer-mandates-definition-of-full-
time-employee-on-jobs-and-opportunities.pdf.
---------------------------------------------------------------------------
    The ACA expanded Washington bureaucracy through a number of 
new programs. Many of these programs were either duplicative of 
existing efforts or expend taxpayer dollars with no 
accountability. Still others created new programs exemplifying 
the ideology of Washington knows best. The Prevention and 
Public Health Fund, though intended to support prevention and 
public health activities, provided the administration with 
access to $15 billion that could be accessed without restraint, 
and was raided to supplement the costly ACA exchanges. The law 
also established the Patient-Centered Outcomes Research 
Institute to conduct research on the effectiveness of various 
medical treatments, and imposes a $2 fee for every covered 
life--the epitome of bureaucracy in health care determining the 
cost-benefit of treatments for patients. The Centers for 
Medicare and Medicaid Innovation [CMMI] presents another 
example: CMMI was designed to test new payment models in 
Medicare and Medicaid, but the administration has interpreted 
its authority beyond the ability to ``test'' payment models and 
announced it will ``mandate'' untested payment models that may 
adversely affect quality of care for Medicare and Medicaid 
patients.
    The most egregious program created under the Affordable 
Care Act, however, is the Independent Payment Advisory Board--a 
panel of 15 unelected, unaccountable bureaucrats--charged with 
making coverage decisions on Medicare to decrease program 
spending levels without the authority of Congress.
    Additionally, program management remains famously 
unimpressive. President Obama himself acknowledged the rollout 
of HealthCare.gov--the website to enroll individuals and 
families in health insurance plans available through the health 
exchanges--was a ``well-documented disaster.''\216\ It is also 
the subject of a recent, scathing report by the Inspector 
General of the Department of Health and Human Services 
[HHS].\217\ Despite administration claims to the contrary, the 
website's troubles have continued. On 4 September 2014, the 
administration informed Congress that a hacker uploaded 
malicious software on HealthCare.gov in July of that year. The 
Department did not discover it until late August. Investigators 
attributed the hack to a basic security flaw.\218\ A September 
2015 HHS audit report found that the HealthCare.gov website was 
stored on a network with high-risk cybersecurity flaws, 
jeopardizing the confidentiality of personal information for 
millions of Americans. According to the report, the Centers for 
Medicare and Medicaid Services failed to perform basic 
vulnerability scans that might have uncovered website server 
weaknesses. Another September 2015 HHS audit found 
HealthCare.gov contracts were poorly managed, costing taxpayers 
tens of millions of dollars. According to reports, the total 
cost of the failed enrollment system surpassed $2 billion.
---------------------------------------------------------------------------
    \216\``Obama: `HealthCare.gov `a well-documented disaster,''' The 
Hill, 16 June 2015: http://thehill.com/policy/healthcare/245128-obama-
healthcaregov-a-well-documented-disaster.
    \217\Office of the Inspector General, Department of Health and 
Human Services, HealthCare.gov: CMS Management of the Federal 
Marketplace--A Case Study, February 2016.
    \218\``HealthCare.gov was hacked in July, feds say,'' The Hill, 4 
September 2014. http://thehill.com/policy/healthcare/216700-report-
healthcaregov-was-hacked-in-july.
---------------------------------------------------------------------------
    The administration has also failed to adequately safeguard 
families' incomes. For example, almost one million people 
received faulty Obamacare tax forms. In February 2015, the 
Obama Administration revealed it had botched tax forms for 
800,000 people who purchased insurance through the Federal 
exchange. HHS had incorrect information on about 20 percent of 
forms. According to the administration, about 50,000 people had 
already filed their tax forms using the incorrect information. 
The corrected 1095-A forms were not made available until early 
March. As a result, many refund checks were delayed by weeks, 
if not months. The administration also allowed payment of 
subsidies to more than 300,000 people who did not have legal 
residence. Those who received unlawful premium subsidies likely 
cost Federal taxpayers more than $500 million. Most of this 
money will never be recovered.
    In 2014, in a test of the system, the Government 
Accountability Office was able to enroll 11 of 12 people with 
false identities into subsidized exchange coverage. In mid-
July, the GAO announced that all 11 maintained subsidized 
coverage through 2014 and were re-enrolled in 2015. Some fake 
applicants were approved for subsidized coverage based solely 
on their attestation without any supporting documents.\219\ Six 
of the applicants received notices that their coverage was 
being terminated for failure to submit information or 
documentation. The GAO was able to have five of them reinstated 
just by calling the exchange--and they got higher subsidies. 
The fake applicants received confusing and erroneous 
information from the Federal exchange. The GAO also found that 
Federal contractors continued to accept documents as true 
without attempting to verify their authenticity.
---------------------------------------------------------------------------
    \219\Committee on Finance, U.S. Senate, Nonpartisan Watchdog Finds 
HealthCare.gov Approving Subsidies for Fake Applicants, 15 July 2015: 
http://www.finance.senate.gov/newsroom/chairman/release/?id=3e92ee66-
2bb7-4ca3-8e38-ede4af367db6.
---------------------------------------------------------------------------
    These serious problems are not mere glitches in an 
otherwise smooth-running operation. They are the predictable 
and inevitable result of a program that remains profoundly and 
fundamentally flawed--notwithstanding numerous changes to the 
law. According to the Galen Institute, more than 70 significant 
changes have been made to the law since it was enacted in 
2010--43 of them through unilateral administrative action, 24 
through legislation, and three by the Supreme Court.\220\
---------------------------------------------------------------------------
    \220\Turner, op. cit.
---------------------------------------------------------------------------
    According to CBO estimates, the ACA's health insurance 
exchange subsidies will cost American taxpayers $729.5 billion 
over the next 10 years. The subsidies cost a lot more than 
that, however; they cost Americans the freedom to make 
decisions about their own health care coverage. This budget 
stands for the principles that individuals should be free to 
choose their own health insurance, health care providers should 
not be forced to be complicit in abortion, organizations should 
not be forced to finance activities or make health decisions 
that violate their religious or moral beliefs, and a single-
payer health system--which the ACA will eventually foster if 
left unchecked--is wrong for America. Bureaucrats in Washington 
should not be trusted to determine what type of health 
insurance and how much health care Americans should get; that 
is a decision that should involve the individual and his or her 
doctor.
    For all these reasons, this budget calls for full repeal of 
the Affordable Care Act.\221\
---------------------------------------------------------------------------
    \221\The insurance premium subsidies are provided in the form of 
refundable tax credits. This means some recipients receive the subsidy 
as a reduction in their tax liabilities. If all or part of the credit 
exceeds the individual's tax liability, that portion--the 
``refundable'' part of the credit--is delivered as a payment and 
categorized as an outlay. Most of the subsidies are provided in the 
latter way. See Congressional Budget Office, ``Insurance Coverage 
Provisions of the Affordable Care Act--CBO's January 2015 baseline,'' 
January 2015: http://www.cbo.gov/sites/default/files/cbofiles/
attachments/43900-2015-01-ACAtables.pdf.
---------------------------------------------------------------------------
    As mentioned earlier, however, repealing Obamacare is only 
the first step. The more important effort is to rethink health 
care fundamentally--to shed the hugely arrogant illusion that 
Washington bureaucrats and technicians can somehow control and 
manage the many moving parts that interact to create what is 
known as health care in America. Instead of trying to box this 
immensely valuable service into an homogenous, government-run 
system, policymakers should enlist the creativity of all the 
participants--and also open the door to innovators from outside 
the field, who may be able to deliver unexpected insights--and 
reform health care from the ground up. This should start from 
the most fundamental relationship in medicine: the one between 
the patient and the doctor.

    Limit Federal Employee Health Benefit Growth for Retired 
Members of Congress and Their Staffs and Base Retirement 
Benefits on Length of Service. Currently, Federal contributions 
to the Federal Employees Health Benefits Program grow by the 
average weighted rate of change in these programs. This budget 
supports restricting the growth in these plans to inflation for 
retirees.\222\ The budget also proposes basing Federal employee 
retirees' health benefits on length of service. This option 
would reduce premium subsidies for retirees who had relatively 
short Federal careers.
---------------------------------------------------------------------------
    \222\The budget also restricts growth of the Federal Employees 
Health Benefits Program for current Members of Congress and their 
staffs. The cost savings from this proposal are reflected in the 
discretionary spending section of Function 550.
---------------------------------------------------------------------------

                       INCOME SUPPORT, NUTRITION,
                          AND RELATED PROGRAMS


                            Function Summary

    The War on Poverty began with a promise by President 
Johnson in 1964: ``Our aim is not only to relieve the symptom 
of poverty, but to cure it and, above all, to prevent it.'' 
Over the next five decades, trillions and trillions have been 
spent on anti-poverty programs. The Census Bureau's poverty 
rate offers one measurement of the extent to which poverty was 
cured. Two years after the War on Poverty began, the poverty 
rate stood at 14.7 percent. In 2014, the poverty rate was 
unimproved from 48 years earlier at 14.8 percent. Reflecting on 
the divergence between higher spending and disappointing 
results, in 1988 President Reagan noted: ``The Federal 
Government declared war on poverty, and poverty won.''

    FIGURE 10
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    The Federal Government continues to operate a patchwork of 
more than 90 welfare programs that lack any coordination in 
their efforts to help people escape poverty, for which spending 
by all levels of government exceeds $1 trillion. Multiple 
programs, overlapping services, and differing benefit 
structures often create significant disincentives to work, 
keeping many trapped in a cycle of poverty for years. While 
reforms during the 1990s reduced Temporary Assistance for Needy 
Families [TANF] caseloads by more than two-thirds, and helped 
many cash welfare recipients find work and escape poverty, 
those reforms were limited in scope and affected only a small 
part of the safety net.
    If America is going to cure poverty and prevent it, the 
effectiveness of anti-poverty programs must be measured by the 
number of individuals lifted out of poverty rather than the 
number of dollars being spent. What's more, if the government 
continues running unsustainable deficits and experiences a debt 
crisis, the poor and vulnerable will undoubtedly be the hardest 
hit, as the Federal Government's only recourse will be severe, 
across-the-board cuts. That is why the Committee on the Budget 
has engaged in an initiative called Restoring the Trust for all 
Generations. The initiative calls for solutions that promote 
positive outcomes and results for individuals and their 
families.
    The goal of anti-poverty programs should be self-
sufficiency, not extended dependency. To that end, this budget 
proposes to continue the successful welfare reforms of the 
1990s by improving work requirements for means-tested programs 
to help more people escape poverty and move up the economic 
ladder. It focuses resources in programs that deliver real 
results, restraining spending to reasonable levels, reducing 
improper payments, and allowing States more ability to improve 
programs through policy innovation. It is focused on the 
following principles:

      Expect able-bodied adults receiving welfare to 
work or prepare for work in exchange for receiving benefits. 
Work--especially full-time work--is the surest way to avoid 
poverty. Many welfare programs provide benefits to alleviate 
immediate need, yet few expect able-bodied adults to work or 
assist them in finding and keeping jobs so they can move up the 
economic ladder. This budget proposes that able-bodied 
individuals receiving welfare benefits from a variety of 
programs be required to work or prepare for work in exchange 
for benefits, and that States be held accountable for engaging 
recipients in activities to help them find jobs and stay 
employed.

      Get incentives right when people move from 
welfare to work. The Nation's safety net should be designed to 
help those in need so they can get back on their feet and care 
for themselves and their family. Yet States and other service 
providers may lose money when someone leaves welfare for work, 
meaning they are better off failing than succeeding. Given the 
way the welfare system works now, it may not make sense for 
someone on welfare to work more because they can end up worse 
off in the end. Under this budget resolution, committees across 
Congress would work together to get these incentives right, to 
make sure everyone is better off when someone leaves welfare 
for work.

      Focus welfare programs on outcomes, not inputs. 
The Federal Government often evaluates programs based on 
inputs, such as benefits paid, classes held, or people served. 
Yet very few if any programs are measured based on their 
results to assess whether they are really helping people out of 
poverty and dependency. To make sure taxpayer dollars are spent 
wisely, this budget would require committees overseeing welfare 
programs to work together to develop similar outcome measures 
for their programs. These outcome measures will allow Congress 
and the American people to better judge whether these programs 
are working and whether they should continue, need to be 
reformed, or should end.

      Preserve welfare benefits for those most in need. 
The American public is faced with a steady stream of reports 
revealing how welfare benefits are being paid to those who 
should never receive them. This frustrates taxpayers paying for 
these programs and reduces resources for those who truly need 
access to these benefits. Advances in technology have made it 
possible to more easily protect against fraud and abuse, and 
States are beginning to use these tools more frequently. The 
budget would implement these technological and administrative 
processes across means-tested programs to better protect 
taxpayer dollars allocated for these programs. By reducing 
abuse, these welfare programs will be better focused on those 
who truly need help to move their families forward.

    Finally, no set of government safety net programs can 
replace, or improve upon, nature's safety net: the family. For 
generation upon generation, the family has been the main source 
of comfort, security, and economic stability for the 
individual. It is where moral values and a sense of 
responsibility grow. The family reinforces the individual's 
place in the larger community. Government programs should 
recognize and support those who lose any connection to a 
family. At the same time, however, government should take care 
not to contribute to the dissolution of families. Government 
programs should aim to strengthen the family, the most 
important and enduring institution in society.
    Social scientists across the political spectrum agree that 
children are better off with married parents.\223\ Yet today, 
more than 40 percent of children are born to unwed 
mothers,\224\ and the structure of anti-poverty programs places 
harsh anti-marriage penalties on those who currently depend on 
these programs when it is clear that ``the married, two-parent 
family is one of the best weapons we have in the fight against 
poverty.''\225\ In 2014, the poverty rate for single mother-led 
families was almost five times the poverty rate for married-
couple families, 30.6 percent and 6.2 percent, 
respectively.\226\ This budget proposes to reduce, and wherever 
possible eliminate, the marriage penalties that have been 
unwittingly built into the current welfare system.
---------------------------------------------------------------------------
    \223\``They Do: The scholarly about-face on marriage,'' The Boston 
Globe, 26 April 2015: http://www.bostonglobe.com/ideas/2015/04/25/
scholarly-kiss-for-wedded-bliss/INyenlyr0FIuWzaJDuFWGK/story.html.
    \224\Centers for Disease Control and Prevention, Births: Final Data 
for 2013, National Vital Statistic Report Volume 64, Number 1, 15 
January 2015: http://www.cdc.gov/nchs/data/nvsr/nvsr64/nvsr64_01.pdf.
    \225\Robert L. Doar, Morgridge Fellow in Poverty Studies at the 
American Enterprise Institute, testimony to the Committee on the 
Budget, U.S. House of Representatives, 28 October 2015.
    \226\Carmen DeNavas-Walt and Bernadette D. Proctor, United States 
Census Bureau, Income and Poverty in the United States: 2014, issued 
September 2015: https://www.census.gov/content/dam/Census/library/
publications/2015/demo/p60-252.pdf.
---------------------------------------------------------------------------
    Most of the Federal Government's income-support programs 
are reflected in the direct spending components of Function 
600, Income Security (see Table 3). These include Federal 
employee retirement and disability benefits (including military 
retirees); general retirement and disability insurance 
(excluding Social Security)--mainly through the Pension Benefit 
Guaranty Corporation--and benefits to railroad retirees; 
unemployment compensation; food and nutrition assistance, 
including food stamps and school lunch subsidies; and other 
income-security programs.
    This last category includes: TANF, the government's 
principal cash welfare program; Supplemental Security Income 
[SSI]; and spending for the refundable portion of the Earned 
Income Tax Credit. Agencies administering these and other 
programs in Function 600 include the Departments of 
Agriculture, Health and Human Services, Housing and Urban 
Development, the Social Security Administration (for SSI), and 
the Office of Personnel Management (for Federal retirement 
benefits).
    For these programs, the resolution provides $432.0 billion 
in direct spending budget authority for fiscal year 2017, and 
$425.4 billion in outlays. The 10-year figures are $4.3 
trillion in budget authority and $4.2 trillion in outlays. The 
figures appear in Function 600 of Table 3.

              Illustrative Direct Spending Policy Options

    The main committees responsible for funding programs under 
Function 600 are Ways and Means, Agriculture, Oversight and 
Government Reform, and Education and the Workforce. They will 
make final policy determinations on how to increase State 
flexibility, reduce improper payments, and reform programs to 
eliminate marriage penalties and work disincentives. Some 
potential policy options following these guidelines might 
include the following.

    Strengthen Welfare Work Requirements. Welfare reforms in 
the 1990s led to substantial declines in poverty, increases in 
work, and decreases in government dependency. The Temporary 
Assistance for Needy Families [TANF] program was a central 
feature of these reforms. This budget calls for reforms to 
strengthen TANF work requirements so States will engage more 
recipients in activities leading to self-sufficiency. This 
should include ending States' ability to reduce work targets by 
spending more than required, and blocking the Obama 
Administration from waiving these work requirements altogether. 
This budget also calls for TANF reforms to provide States with 
more options to help people prepare to leave welfare for work, 
and to hold States accountable for their success in getting 
people off welfare and into jobs.

    Convert the Supplemental Nutrition Assistance Program into 
State Flexibility Allotments. Spending on the Supplemental 
Nutrition Assistance Program [SNAP]--formerly known as the Food 
Stamp Program--has increased dramatically over the past 15 
years, growing more than fourfold since 2001. Spending doubled 
from 2001 to the eve of the most recent recession, then doubled 
again during the recession, and has stayed at an elevated level 
during the recovery. Various factors are driving this growth, 
but one major reason is that while the States have the 
responsibility of administering the program, they have little 
incentive to ensure it is run well.
    The budget resolution envisions converting SNAP into an 
allotment tailored for each State's low-income population. 
States would have to satisfy key conditions such as meeting 
work targets, as well as meeting certain program integrity 
requirements (such as preventing the use of benefits outside 
the State of residence, including photo identification on 
electronic benefit transfer [EBT] cards, and restricting the 
program to non-junk food products). This option would make no 
changes to SNAP until 2021, providing States with time to 
structure their own programs.

    Enforce SNAP Work Requirements. H.R. 3102, the Nutrition 
Reform and Work Opportunity Act of 2013, included the 
elimination of waivers from SNAP work requirements for Abled-
Bodied Adults without Dependents. As was demonstrated by the 
welfare reforms of the 1990s, work requirements are central to 
ensuring that public assistance helps individuals transition to 
independence.

    Eliminate Broad-Based Categorical Eligibility. Broad-based 
categorical eligibility allows households to become eligible 
for SNAP by receiving a minimal Temporary Assistance for Needy 
Families fund benefit or service. Typically, an individual is 
made eligible by receiving a TANF brochure or being referred to 
a social service telephone number. This allows individuals to 
qualify for SNAP benefits under less restrictive criteria.

    Eliminate Abuse of the Low-Income Energy Assistance 
Program. The Low Income Energy Assistance Program [LIHEAP] 
provides low-income families with help to pay heating bills. 
However, States can provide as little as $20 in LIHEAP benefits 
in order to increase SNAP benefits (see Categorical Eligibility 
above). The most recent Farm Bill reformed this practice, but 
did not end the abuse entirely--and this proposal would.

    Limit SNAP Account Balances to Reasonable Levels. The SNAP 
program allows benefits to be carried over from month to month. 
In extreme cases, beneficiaries have accrued balances of more 
than $20,000, which goes against the program's purpose as a 
source of food for households who urgently need it. The budget 
proposes to cap a household's SNAP account balance at three 
months' worth of benefits (see Figure 11).

    Reform Supplemental Security Income. Welfare programs 
typically pay benefits on a sliding scale. Supplemental 
Security Income [SSI] is different, paying an average of $630 
for each and every child in a household who receives benefits. 
This reform would create a sliding scale for children on SSI. 
Advocates for individuals with disabilities have expressed 
support in the past for such a step. In 1995, Jonathan M. 
Stein--the lead advocate attorney in the landmark 1990 Supreme 
Court Case expanding SSI eligibility for children and witness 
at a 27 October 2011 Ways and Means Subcommittee hearing on 
SSI--said the following about this proposal: ``[W]e have a long 
list of reforms that we do not have time to get into, but we 
would say for very large families there should be some sort of 
family cap or graduated sliding scale of benefits.''\227\ 
Additionally, Congress should review mental health categories 
in the children's SSI program, which have been the fastest 
growing categories of eligibility. This budget proposes a 
Government Accountability Office [GAO] recommendation that 
Continuing Disability Reviews be conducted every 3 years for 
children on the program who are deemed likely to improve upon 
initially receiving benefits. Additionally, benefits should be 
linked to school attendance except where the Social Security 
Administration finds medical cause. Finally, the budget would 
prevent someone with an outstanding warrant from receiving 
Supplemental Security Income payments.
---------------------------------------------------------------------------
    \227\Committee on Ways and Means, Contract with America: Welfare 
Reform, Part 2, hearing 2 February 1995 (Serial No. 104-44), 
Washington: Government Printing Office, 1995.

    FIGURE 11
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Allow State Flexibility for the Foster Care Program. 
Significant progress has been made among States, advocates, and 
Federal policymakers in developing proposals that would expand 
State flexibility in designing programs and pilot projects 
meant to better prevent child abuse and neglect. Such proposals 
would result in fewer children being removed from their homes, 
allowing more funds to be directed toward prevention efforts, 
as well as reducing the cost of the Nation's foster care 
system.

    Give Schools Flexibility for Meeting National School Lunch 
Program Standards. The Healthy, Hungry Free Kids Act (Public 
Law 111-296) imposed new regulations on the school lunch 
program. No one disagrees with ensuring students have 
nutritious food, but the mandates on localities have the 
unintended consequence of reducing participation in the 
program. This budget calls for allowing schools more 
flexibility to meet nutrition standards.

    Ensure that Certain Groups of Undocumented Workers Remain 
Ineligible for Federal Benefits. In his address to the Nation 
on 20 November 2014, the President said undocumented workers 
receiving deferral of removal under his executive actions 
should not be granted the same benefits that citizens receive. 
As a result of his executive actions that same month, however, 
potentially millions of undocumented workers would become 
eligible for Federal benefits, according to Congressional 
Budget Office estimates. The budget resolution supports 
reversing the overreach of the President's November 2014 
actions and ensures that undocumented workers do not create a 
bigger burden on an already strained public benefit system.

    Strengthen the Earned Income Tax Credit and Child Tax 
Credit Program Integrity. The Earned Income Tax Credit [EITC] 
program is susceptible to fraud and abuse. According to the 
IRS, between 22 percent and 26 percent of EITC payments were 
issued improperly in fiscal year 2013 (between $13.3 billion 
and $15.6 billion). To reduce these errors in the EITC program, 
this budget proposes requiring substantiation of self-
employment income. In addition, the budget would require 
individuals seeking the refundable child tax credit to submit a 
Social Security number for each child in order to claim the 
credit. Under current law, a Social Security number is now 
required in order to claim children under the Earned Income Tax 
Credit.

    Modernize Child Support Enforcement. Enacted in 1975, the 
Child Support Enforcement [CSE] program was created to secure 
child support payments from non-custodial parents for families 
who relied on both the Federal and State governments for 
welfare benefits. The CSE program was designed to reimburse the 
government for those welfare benefits, as well as assist 
families in attaining self-sufficiency. Today, however, two-
thirds of CSE collections are for helping families who have 
never received cash welfare payments from the TANF program--
those it was intended to help. To ensure the CSE program is 
targeted for those who are most in need, this budget proposes 
to return the annual user fee for non-TANF families to its 
original value and index it for inflation. In addition, the 
budget would better align the financial incentives for States 
by modifying the Federal matching rate and the criteria for 
States receiving incentive payments to ensure they are truly 
rewarding innovation and effectiveness.

    Reform Civil-Service Pensions. This budget adopts a policy 
proposed by the President's National Commission on Fiscal 
Responsibility. The policy calls for Federal employees, 
including members of Congress and staff, to make greater 
contributions toward their own defined benefit retirement 
plans. It would also end the ``special retirement supplement,'' 
which pays Federal employees the equivalent of their Social 
Security benefit at an earlier age. This would achieve 
significant savings while recognizing the need for new Federal 
employees to transition to a defined contribution retirement 
system. The vast majority of private sector employees 
participate in defined contribution retirement plans. These 
plans put the ownership, flexibility, and portfolio risk on the 
employee as opposed to the employer. Similarly, Federal 
employees would have more control over their own retirement 
security under this option.

                   FARM SUPPORT AND RELATED PROGRAMS


                   Function Summary: Direct Spending

    While agriculture experienced a period of high market 
prices and incomes during the initial years of this decade, net 
farm income in 2015 fell sharply from 2013's record-high level 
and is projected by the Department of Agriculture to remain 
weak again this year. The Agricultural Act of 2014--otherwise 
known as the Farm Bill--made a number of reforms to 
agricultural policies, most notably by eliminating Direct 
Payments which had cost taxpayers almost $91 billion over the 
past 18 years and were paid regardless of market conditions. 
Significant declines in market prices over the past 2 years are 
expected to result in increased levels of assistance under the 
Farm Bill's new price- and revenue-based programs. While it is 
important to continue reforming agricultural programs, weather 
and market challenges continue to highlight the importance of 
maintaining a safety net for farmers.
    Direct (or ``mandatory'') spending programs in this 
category include direct assistance and loans to food and fiber 
producers, export assistance, agricultural research, and other 
programs.
    The Agriculture Committee has made commendable efforts to 
reduce overall direct spending in this area (Function 350 of 
Table 3). The budget resolution calls for direct spending of 
$17.5 billion in budget authority and $18.7 billion in outlays 
in fiscal year 2017. The 10-year direct spending totals for 
budget authority and outlays are $136.7 billion and $133.9 
billion, respectively.

              Illustrative Direct Spending Policy Options

    Specific policies affecting direct spending in this 
function will be determined by the Agriculture Committee. Among 
the options it may wish to consider are the following:

    Reform Agricultural Programs. The budget proposes that 
additional savings be found in this area. Under this option, 
mandatory agricultural outlays, other than food and nutrition 
programs, would be reduced by $23 billion relative to the 
currently anticipated levels for fiscal years 2017 through 
2026. These savings could be achieved by continuing to reform 
agricultural programs. These proposed savings are coupled with 
significant benefits that will be realized from other 
provisions in this budget, including regulatory relief, 
fundamental tax reform, and stronger economic growth as the 
burden of Federal deficits is lifted from the economy.

                   BANKING, COMMERCE, POSTAL SERVICE,
                          AND RELATED PROGRAMS


                   Function Summary: Direct Spending

    As with its annually appropriated programs, the Federal 
Government has used direct spending in commerce and housing in 
a way that moves from healthy and productive support for 
industry to over-subsidizing corporations and unfairly exposing 
taxpayers to risk. One example is Fannie Mae and Freddie Mac, 
which were placed into Federal conservatorship in 2008 and 
remain a part of the Federal Government. As a result, taxpayers 
remain exposed to Fannie's and Freddie's more than $5 trillion 
of outstanding commitments.
    On a unified basis, the resolution provides $9.3 billion in 
direct spending budget authority and -$5.9 billion in outlays 
in this area in fiscal year 2017 (shown in Function 370 of 
Table 3, Commerce and Housing Credit). Reforms will be 
determined by the Committee on Financial Services, the 
Committee on Energy and Commerce, and the Committee on 
Oversight and Government Reform. Criteria the committees may 
wish to apply include promoting free enterprise and economic 
growth in a responsible way, scaling back corporate welfare, 
and protecting taxpayers from the risk of future bailouts.

              Illustrative Direct Spending Policy Options


                       ON-BUDGET DIRECT SPENDING

    Terminate Corporation for Travel Promotion. In 2010, 
Congress established a new annual payment to the travel 
industry and created a new government agency, the Corporation 
for Travel Promotion (now called Brand USA), to conduct 
advertising campaigns encouraging foreign travelers to visit 
the United States. This budget recommends ending these 
subsidies and eliminating the agency, because it is not a core 
responsibility of the Federal Government to pay, and conduct 
advertising campaigns, for any industry. Moreover, the travel 
industry can and should pay for the advertising from which it 
benefits.

    Reform the Universal Service Fund. The Universal Service 
Fund [USF] provides subsidized telecommunications services 
through four main programs: High-Cost Support, E-rate Program, 
Lifeline Program, and Rural Health Care. The USF is funded 
through mandatory contributions by carriers, who pass these 
costs to consumers as fees on subscribers' telephone bills. 
This budget resolution aims to reform burdensome programs and 
has identified the Lifeline Program, which provides phone 
service subsidies to low-income Americans, as one example. The 
Lifeline Program, under the jurisdiction of the Federal 
Communications Commission, costs taxpayers an estimated $2 
billion a year while being plagued by fraud, waste, and abuse. 
Reforming this program will significantly reduce the burden on 
taxpayers.

    Restrict FDIC Authority Provided by Dodd-Frank to Bail Out 
Bank Creditors. Dodd-Frank expands and centralizes power in 
Washington, exacerbating the root causes of the 2008 financial 
crisis. It contains layer upon layer of new bureaucracy sewn 
together by complex regulations, yet it fails to address key 
problems, such as Fannie Mae and Freddie Mac, that contributed 
to the worst financial unraveling in recent history. Although 
the law is dubbed ``Wall Street Reform,'' it actually 
intensifies the problem of too-big-to-fail by giving large, 
interconnected financial institutions advantages that small 
firms will not enjoy.
    Although the proponents of Dodd-Frank went to great lengths 
to denounce bailouts, the law only sustains them. The Federal 
Deposit Insurance Corporation [FDIC] now has the authority to 
access taxpayers' dollars to bail out the creditors of large, 
`systemically significant' financial institutions. The 
resolution calls for ending this regime, now enshrined into 
law, which paves the way for future bailouts. House Republicans 
put forth an enhanced bankruptcy alternative that, instead of 
rewarding corporate failure with taxpayer dollars, would place 
the responsibility for large, failing firms in the hands of the 
shareholders who own them, the managers who run them, and the 
creditors who finance them.
    The resolution also supports cancelling the ability of the 
Bureau of Consumer Financial Protection (created by Dodd-Frank) 
to fund its operations by spending from the Federal Reserve's 
yearly remittances to the Treasury Department. Dodd-Frank was 
written to provide off-budget financing for the new bureau, 
which is housed within the Federal Reserve but enjoys complete 
autonomy. To preserve its independence as the Nation's monetary 
authority, the Federal Reserve is off budget, and its excess 
earnings from monetary operations are returned to the Treasury 
to reduce the deficit. Now, instead, Dodd-Frank requires 
diverting a portion of those remittances to pay for a new 
bureaucracy with the authority to write far-reaching rules on 
financial products and restrict credit to the very customers it 
seeks to `protect,' outside the annual oversight of Congress 
through the appropriations process.

    Privatize the Business of Government-Controlled Mortgage 
Giants Fannie Mae and Freddie Mac. In 2008, the Federal 
Government placed Fannie Mae and Freddie Mac\228\ into 
conservatorship to prevent them from going bankrupt. The 
Treasury has already provided $187 billion in bailouts to 
Fannie and Freddie and, as mentioned above, taxpayers remain 
exposed to more than $5 trillion in Fannie's and Freddie's 
outstanding commitments as long as the entities remain in 
conservatorship. The Congressional Budget Office [CBO] has 
recorded Fannie and Freddie as explicit financial components of 
the Federal budget, accounting for their liabilities as 
liabilities of the government. In contrast, the administration 
does not fully account for taxpayer exposure to Fannie and 
Freddie, leaving them off budget. Despite recent dividend 
payments by Fannie and Freddie, both enterprises continue to 
assume outsized risks that place taxpayers in jeopardy in the 
event of future downturns in the housing market.
---------------------------------------------------------------------------
    \228\Formally the Federal National Mortgage Association [FNMA] and 
the Federal Home Loan Mortgage Corporation [FHLMC].
---------------------------------------------------------------------------
    This budget suggests putting an end to corporate subsidies 
and taxpayer bailouts in housing finance. It envisions the 
eventual elimination of Fannie Mae and Freddie Mac, winding 
down their government guarantee, and ending taxpayer subsidies. 
In the interim, this resolution seeks to remove distortions to 
allow an influx of private capital back into the housing credit 
marketplace and to advance various measures that would bring 
transparency and accountability to these two government-
sponsored enterprises, which could include measures described 
in H.R. 2767, the Protecting American Taxpayers and Homeowners 
Act of 2013.

    Incorporate Fair-Value Accounting Principles in the Credit 
Reform Act. Not only are taxpayers exposed to the risks of 
Fannie and Freddie, but they are also vulnerable to having to 
bail out another housing giant, the Federal Housing 
Administration [FHA]. The capital ratio of the FHA's Mutual 
Mortgage Insurance fund has remained below the congressionally 
mandated 2 percent level for seven years. Recently, the FHA 
Actuarial Report released on 16 November 2015 notes FHA has 
achieved its 2 percent statutorily-required capital reserve 
ratio, but the report also highlights that FHA continues to 
support more than $1 trillion in mortgage credit risk.\229\ 
Given the precarious financial condition of the FHA, the 
government should adopt measures to control the assumption of 
risk by the FHA as other government-backed entities (such as 
Fannie and Freddie) are wound down. Right now, the government 
accounts for the risks carried by the FHA differently than it 
accounts for those of Fannie Mae and Freddie Mac. These 
differences simply encourage just such a shift in risk.
---------------------------------------------------------------------------
    \229\Committee on Financial Services, U.S. House of 
Representatives, Views and Estimates, 8 February 2016.
---------------------------------------------------------------------------
    The cost of FHA-insured loans are scored by calculating the 
net present value of the cash flows associated with loans and 
discounting those flows using a risk-free marketable Treasury 
security rate. In contrast, the CBO uses fair-value accounting 
for Fannie Mae- and Freddie Mac-guaranteed loans. Fair-value 
accounting recognizes that adverse economic events such as 
market downturns can cause loan defaults to rise; hence it 
reflects the full financial risk incurred by taxpayers for 
backing these loans. In other words, the current budgetary 
treatment of FHA loans understates the full costs associated 
with them, thereby encouraging policymakers to shift risk from 
Fannie and Freddie to the FHA.
    This resolution requires the CBO to provide supplemental 
estimates using fair-value scoring for federally-backed 
mortgages and mortgage-backed securities, regardless of which 
Federal agency is acting as the insurer or guarantor.
    As the government reforms its role in the U.S. housing 
market, which this resolution supports, Fannie, Freddie, and 
FHA loans should be treated with parity and full transparency. 
The current structure of the Federal housing finance system 
socializes potential losses in the housing market among all 
Americans. The housing-finance system of the future, however, 
should allow private-market secondary lenders to fairly, 
freely, and transparently compete, with the knowledge that they 
will ultimately appropriate risk for the loans they guarantee. 
Their viability will be determined by the soundness of their 
practices and the value of their services.

                       OFF-BUDGET DIRECT SPENDING

    Reform the U.S. Postal Service. The U.S. Postal Service 
[USPS] is expected to be self-sustaining and was statutorily 
placed off-budget in the 1989 Omnibus Budget Reconciliation 
Act, where it remains today.
    The mission of the USPS is to ``. . . provide postal 
services to bind the Nation together through . . . 
correspondence of the people'' and ``provide prompt, reliable, 
and efficient services to patrons in all areas.''\230\ It 
boasts an iconic brand name, universal service, and certain 
efficiency advantages in package delivery. In recent decades, 
however, the USPS has faced financial challenges stemming 
largely from reduced demand for its services. Electronic mail 
is ubiquitous, while demand for paper mail has waned. From 2005 
to 2015, for example, first-class mail volume dropped by 36 
percent.\231\ Further, USPS has suffered from inefficiencies in 
its business model. The organization faces financial challenges 
that threaten its long-term viability and will ultimately lead 
to a taxpayer bailout if significant reforms are not 
implemented.
---------------------------------------------------------------------------
    \230\Public Law 91-375.
    \231\United States Postal Service, ``First-Class Mail Volume Since 
1926,'' http://about.usps.com/who-we-are/postal-history/first-class-
mail-since-1926.pdf.
---------------------------------------------------------------------------
    The USPS is unable to meet its financial obligations 
through its own business-like operation and desperately needs 
structural reforms. Since fiscal year 2007, the USPS has run 
annual operating losses; in fiscal year 2015 it defaulted on 
another $5.7 billion payment to prefund the retirement health 
care of its employees.\232\ In 2009, the Government 
Accountability Office added the USPS to its ``high-risk'' list 
due to the Postal Service's ``deteriorating financial 
situation,'' and found that the ``USPS urgently needs to 
restructure to reflect changes in its customers' use of the 
mail, to align its costs with revenues, generate sufficient 
funding for capital investment, and manage its debt.''\233\ In 
its most recent high-risk report update, GAO still has the USPS 
on its list as needing attention by Congress and the 
administration.\234\ According to GAO, as of the close of 
fiscal year 2015, the USPS has approximately $125.0 billion in 
unfunded long-term debt, including accrued health-benefit 
compensation for postal retirees, workers' compensation, and 
debt owed to the Treasury.\235\
---------------------------------------------------------------------------
    \232\Government Accountability Office, ``U.S. Postal Service: 
Financial Challenges Continue,'' testimony before the Senate Committee 
on Homeland Security and Governmental Affairs, 21 January 2016: http://
www.gao.gov/assets/680/674728.pdf.
    \233\Government Accountability Office, High-Risk Series: An Update, 
February 2013: http://www.gao.gov/assets/660/652133.pdf.
    \234\Government Accountability Office, High-Risk Series: An Update, 
February 2015: http://www.gao.gov/assets/670/668415.pdf.
    \235\Government Accountability Office, U.S. Postal Service 
Financial Challenges Continue, testimony before the Committee on 
Homeland Security and Governmental Affairs, U.S. Senate, 21 January 
2016: http://www.gao.gov/assets/680/674728.pdf.
---------------------------------------------------------------------------
    The budget recommends giving the Postal Service the 
flexibility that any business needs to respond to changing 
market conditions, including declining mail volume. Examples of 
the flexibility that should be considered have been included in 
several reform proposals approved by the House Committee on 
Oversight and Government Reform and by the administration, 
including calls to modify both the frequency and type of mail 
delivery. The budget also recognizes the need to reform 
compensation of postal employees who currently pay a smaller 
share of the costs of their health and life insurance premiums 
than do other Federal employees. Taken together, these reforms 
are estimated to save more than $40 billion over 10 years and 
would help restore the Postal Service's solvency.

                    STUDENT LOANS, SOCIAL SERVICES,
                          AND RELATED PROGRAMS


                   Function Summary: Direct Spending

    For many, earning a college degree brings undeniable, long-
lasting benefits, including better employment prospects and 
higher wages.\236\ Thereafter, such financial security enables 
individuals to pursue professional and personal goals, such as 
launching a small business, climbing the career ladder, 
starting a family, and saving for their own children's college 
education. College students enjoy being able to choose within a 
vast arrange of disciplines as well as seize opportunities to 
take courses online and in other contemporary formats. 
Technology will only continue to develop, and new business 
models for delivering instruction will be devised and tested, 
to the benefit of students.
---------------------------------------------------------------------------
    \236\Pew Research Center, The Rising Cost of Not Going to College, 
11 February 2014: http://www.pewsocialtrends.org/files/2014/02/SDT-
higher-ed-FINAL-02-11-2014.pdf.
---------------------------------------------------------------------------
    A strong higher education system--one that increases the 
competitiveness of America's workers--is a benefit to students, 
families, and the Nation as a whole. Recognizing these 
benefits, the Federal Government has provided substantial 
support for higher education, particularly student loans, since 
the 1960s. While support for higher education is important, 
government policies that were designed to help more Americans 
go to college have been accompanied by several troubling 
trends. Federal lending has expanded dramatically, consuming an 
ever-larger share of the student loan market. The government's 
direct loan portfolio has increased from roughly $106 billion 
outstanding in fiscal year 2007 to more than $840 billion 
today. As the Federal Government has broadened access to aid, 
colleges have consistently raised tuition and fees at a rate 
well above inflation. College has become more expensive for 
many Americans and thus less accessible--exactly the opposite 
of what the Federal policies were intended to do. Additionally, 
this dynamic can present students with two unwelcome options: 
choose not to go to college, or take on a sizeable amount of 
debt to pay for surging tuition. Under the former, students may 
miss out on achieving their highest educational potential and 
the lasting benefits college can offer. Taking the latter 
route, students may struggle to pay off their loans, especially 
in today's weak job market.

    FIGURE 12
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Equally problematic is that the way the government 
currently accounts for student loans (and most other Federal 
loan and loan guarantee programs) does not take market risk 
into account. Under these accounting procedures, established in 
the Federal Credit Reform Act of 1990 [FCRA], student loans 
appear less risky and less expensive than they really are. In 
fact, FCRA's rules make issuing loans appear profitable. In a 
report about the budget effects of student loans, the 
Congressional Budget Office explains: ``FCRA accounting does 
not consider some costs borne by the government. In particular, 
it omits the risk taxpayers face because Federal receipts from 
interest and principal payments on student loans tend to be low 
when economic and financial conditions are poor and resources 
therefore are more valuable.''\237\ The Federal Government has 
a perverse incentive to issue more loans, according to FCRA's 
rules, regardless of whether that is what is best for students 
and their families. Further, this accounting structure 
penalizes public policy decisions that would protect students, 
such as by placing annual limits on certain borrowing, because 
they are estimated to cost the government money. Unrealistic 
assumptions in the currently-used accounting methodology cause 
the spending for this section of the resolution--which is bound 
by the same estimating conventions--to be negative: in fiscal 
year 2017, budget authority totals -$7.8 billion, and outlays 
are -$1.7 billion. As explained previously, these figures are 
misleading.
---------------------------------------------------------------------------
    \237\Congressional Budget Office, Options to Change Interest Rates 
and Other Terms on Student Loans, June 2013, p. 2: https://www.cbo.gov/
sites/default/files/113th-congress-2013-2014/reports/44318-
StudentLoans-1Column.pdf.
---------------------------------------------------------------------------
    Rather than foster a system that accelerates tuition 
increases and presents too many students with the difficult 
choice between crippling debt or stopping short of their 
highest educational attainment, this resolution envisions a 
framework that uses Federal dollars more efficiently, accounts 
for student loans in a way that reflects their true cost, and 
invests in a sustainable higher education system that is good 
for students, institutions of higher education, and taxpayers.
    Student loans are a major component of direct spending in 
this category, shown as Function 500 in Table 3. In addition, 
the function reflects numerous other programs supporting higher 
education, and some others that fund social services.

              Illustrative Direct Spending Policy Options

    The transformation of programs in this area will be 
determined primarily by the Committee on Education and the 
Workforce. Committee members may be guided by some of the 
principles described above. Potential policy options include 
those below.

    Repeal New Funding from the Student Aid and Fiscal 
Responsibility Act of 2010. During the debate on the Student 
Aid and Fiscal Responsibility Act [SAFRA], the Congressional 
Budget Office provided estimates showing that projected future 
savings from a government takeover of all Federal student loans 
decreased dramatically when ``market risk'' was taken into 
account. Since that time, the President's National Commission 
on Fiscal Responsibility and the Pew-Peterson Commission on 
Budget Reform have recommended the incorporation of fair-value 
accounting for all Federal loan and loan-guarantee programs to 
enable a true assessment of their cost to taxpayers.
    SAFRA, however, exploited the higher non-adjusted savings 
projection to help subsidize the new health care law and to 
increase spending on several education programs. Although much 
of the funding allocations have already been spent, Congress 
could cancel some of the future spending by repealing recent 
expansions to some Federal income-based repayment programs. The 
Income-Based Repayment Program, created by the College Cost 
Reduction and Access Act of 2007, and accelerated by the Obama 
Administration, is still relatively new. Nevertheless, there 
are concerns that the expansions could disproportionately 
benefit graduate and professional students; they would have 
considerable amounts of debt forgiven, at a steep cost to 
taxpayers. Moreover the expansions could encourage students to 
borrow too much, which is the opposite signal policymakers 
should be sending to them.\238\ Congress should reform these 
programs to ensure they are meeting their intended goals and 
are designed to give students proper incentives and protect 
taxpayer dollars.
---------------------------------------------------------------------------
    \238\See American Enterprise Institute, Balancing Risk and 
Responsibility: Reforming Student Loan Repayment, 19 November 2015, p. 
6-7.

    Accept the Fiscal Commission's Proposal to Eliminate In-
School Interest Subsidies for Undergraduate Students. The 
Federal Government focuses aid decisions on family income prior 
to a student's enrollment and then provides a number of 
repayment protections and, in some cases, loan forgiveness 
after graduation. There is no evidence that in-school interest 
---------------------------------------------------------------------------
subsidies are critical to individual matriculation.

    Simplify the Existing Higher Education Programs to Protect 
Students and Taxpayers. The current Federal aid system is 
unduly complicated and contains provisions that treat students 
inconsistently. Making up the complex system are myriad 
programs offering different types of aid to different eligible 
groups of people, unique requirements that must be fulfilled, 
and an array of repayment options in the case of loans. As the 
House Committee on Education and the Workforce describes it: 
``Many students, particularly first-generation and low-income 
students, are bogged down with the complexity of the current 
system, which ultimately deters them from accessing aid that 
will make college an affordable reality.''\239\ Correcting the 
disparate treatment of students and simplifying both the aid 
and repayment options available to students and parents is of 
paramount importance. Actions taken by the committee of 
jurisdiction to reduce duplication and preferential treatment, 
and make the system less complicated, could include ending the 
Public Service Loan Forgiveness Program and the Teacher Loan 
Forgiveness Program.
---------------------------------------------------------------------------
    \239\Committee on Education and the Workforce, Budget Views and 
Estimates for Fiscal Year 2017, 4 February 4, 2016.

    Phase out Eligibility for TEACH Grants. Understanding all 
of the Federal aid options available is a difficult, time-
consuming endeavor. Students must consider different 
eligibility criteria, program requirements, and penalties. The 
budget supports consolidating current Federal student aid 
programs. One option for the committee of jurisdiction would be 
to phase out the Teacher Education Assistance for College and 
Higher Education [TEACH] Grant Program. TEACH Grants are aimed 
at encouraging promising undergraduate and graduate students to 
teach in high-needs fields in low-income schools. Under the 
program, undergraduate students can receive up to $16,000 
total, and graduate students can receive up to $8,000. They 
must teach subjects such as math, science, and foreign language 
for 4 years within 8 years of graduating. If grant recipients 
do not fulfill the requirement, their grants are converted into 
loans with interest. That means recipients can pursue a 
teaching degree with the expectation of receiving thousands of 
dollars in grant aid to pay for school, only to find themselves 
in a situation, due to any number of factors, in which they 
have a sizeable loan on their hands.\240\ The Government 
Accountability Office has reported several concerning findings 
about the program: one-third of TEACH grants have been 
converted to loans--some erroneously; the program has only a 
19-percent utilization rate among eligible students; and the 
Department of Education does not yet adequately evaluate 
whether or not the program is effective.\241\
---------------------------------------------------------------------------
    \240\Factors ranging from securing and then maintaining a teaching 
position at a qualifying school for four years to completing necessary 
paperwork can make fulfilling the program requirements a challenge. For 
further discussion, see United States Government Accountability Office, 
``Better Management of Federal Grant and Loan Forgiveness Programs for 
Teachers Needed to Improve Participant Outcomes,'' February 2015, 
http://gao.gov/assets/670/668634.pdf.
    \241\Ibid.

    Terminate the Duplicative Social Services Block Grant. The 
Social Services Block Grant is an annual payment sent to 
States--without any matching, accountability, or evaluation 
requirements--intended to help achieve a range of social goals, 
including by providing child care, health, and employment 
services. Most of these activities are also funded by other 
Federal programs designed to support these same services. 
States are given wide discretion to determine how to spend this 
money and are not required to demonstrate the outcomes of this 
spending, so there is no evidence of its effectiveness. The 
budget assumes the elimination of this duplicative spending, 
which saves $17 billion over 10 years

                   FEDERAL LANDS AND OTHER RESOURCES


                   Function Summary: Direct Spending

    The fiscal year 2017 budget resolution continues to support 
policies that will make America's natural resources available 
to producers who can provide a fair return to taxpayers. In 
addition to the receipts the Federal Government collects from 
royalties, rents, and bonus bids, increased economic activity 
on Federal land will create jobs and boost economic output.
    Farm security and rural investment programs and the Fish 
and Wildlife Service's Federal aid in wildlife restoration 
programs are among the largest direct spending programs in this 
category. The remainder is distributed among numerous smaller 
programs. The direct spending budget totals for these programs 
are $2.5 billion in budget authority and $3.1 billion in 
outlays for fiscal year 2017; over 10 years, the figures are 
$7.7 billion in budget authority and $10.7 billion in outlays. 
(See Function 300 in Table 3.)
    Oil and gas production on Federal land has fallen 
significantly under the Obama Administration. Production on 
private lands has increased, however, more than offsetting the 
drop on Federal land. In fiscal year 2009, the U.S. produced 
5.2 million barrels of oil per day, with production on Federal 
property accounting for 33 percent of the total.\242\ By fiscal 
year 2013, the U.S. was producing 7.2 million barrels per day, 
but production on Federal lands represented only 23 percent of 
the total.\243\
---------------------------------------------------------------------------
    \242\Marc Humphries, U.S. Crude Oil and Natural Gas Production in 
Federal and Non-Federal Areas, Congressional research Service, 10 April 
2014.
    \243\Ibid.
---------------------------------------------------------------------------
    Similarly, timber harvests on Federal land have been 
declining for decades since peaking in the late 1980s and early 
1990s. In fiscal year 1988, 14.6 million board feet of timber 
were harvested on Federal land, with a total value of roughly 
$2.5 billion (in 2013 dollars).\244\ In fiscal year 2014, only 
2.4 million board feet were harvested, generating less than 
$150 million.\245\ This dramatic reduction in economic activity 
in States and counties that have Federal lands within their 
borders has wreaked havoc on their ability to fund local 
services, such as schools.
---------------------------------------------------------------------------
    \244\Katie Hoover, National Forest System Management: Overview, 
Appropriations, and Issues for Congress, Congressional Research 
Service, 29 January 2015.
    \245\Ibid.
---------------------------------------------------------------------------
    One large culprit: The administration is keeping Federal 
lands under lock and key, while it continues its politically-
motivated climate change agenda. On 15 January 2016, the Obama 
Administration unilaterally imposed a moratorium on new leases 
for coal mined from Federal land.\246\ This halt deals another 
crushing blow to the coal industry. Mining on Federal lands 
accounts for 40 percent of the coal production in America, and 
approximately 33 percent of U.S. coal reserves is located on 
Federal lands. The Bureau of Land Management itself estimates 
that nearly 1.9 billion tons of coal reserves in nine States 
will be placed off limits due to the Secretarial Order. 
Moreover, Federal coal leases provide thousands of jobs as well 
as revenue for State and local communities. This budget rejects 
the administration's war on coal.
---------------------------------------------------------------------------
    \246\Joby Warrick and Juliet Eilperin, ``Obama Announces Moratorium 
on New Federal Coal Leases,'' The Washington Post, 15 January 2016: 
https://www.washingtonpost.com/news/energy-environment/wp/2016/01/14/
obama-administration-set-to-announce-moratorium-on-some-new-federal-
coal-leases/.
---------------------------------------------------------------------------
    The Federal Government owns ``somewhere between 635-640 
million acres of land--almost a third of the United 
States.''\247\ The government cannot properly manage all this 
land and, as a result, Federal agencies estimate a $19 billion 
maintenance backlog.\248\ The budget resolution supports giving 
States and localities more control over the resources within 
their borders. This will lead to increased resource production 
and allow States and localities to take advantage of the 
benefits of increased economic activity.
---------------------------------------------------------------------------
    \247\House Committee on Natural Resources, Views and Estimates for 
Fiscal Year 2016.
    \248\Ibid.
---------------------------------------------------------------------------

                  Illustrative Direct Spending Options

    As it develops policies in these areas, the Committee on 
Natural Resources may wish to consider the factors above. Below 
are options that could emerge from such consideration.

    Maintaining Existing Land Resources. The President's budget 
seeks to convert certain Federal land acquisition accounts from 
discretionary to direct spending. The Federal Government 
already struggles with a maintenance backlog on the millions of 
acres it controls--a backlog totaling between $17 billion and 
$22 billion--but the administration is seeking to acquire even 
more land. This budget keeps funding for land acquisition under 
congressional oversight, giving States and localities more 
control over the land and resources within their borders.

    Expand Access to Federal Land for Timber Harvest. Timber 
harvest rates on Federal land have been declining for nearly 30 
years. As a result, the States and localities that depend on 
their share of the receipts have been shortchanged the funding 
they expected to receive to pay for schools and other local 
priorities. Increased timber harvests will generate economic 
growth in localities throughout the country, increase receipts 
to the Federal Government, States, and localities, and reduce 
the need for funding replacement programs, such as Secure Rural 
Schools.

    Expand Onshore and Offshore Energy Production. Despite the 
existence of abundant domestic resources, the Federal 
Government has adopted policies that hinder American production 
of oil and natural gas on Federal lands and in Federal waters. 
Breaking free of future dependence on energy supplies from 
countries whose interests differ from those of the U.S. 
requires producing more energy at home.
    Unlocking domestic energy supplies in a safe, 
environmentally-responsible manner will increase receipts from 
bonus bids, rental payments, royalties, and fees. The budget 
allows for greater access in areas such as Alaska, the Outer 
Continental Shelf, the Gulf of Mexico, and the Intermountain 
West.
    In addition, the budget rejects the Obama Administration's 
proposal to redirect funds allocated to the Gulf States through 
the Gulf of Mexico Energy Security Act to the U.S. Treasury. 
This policy, proposed in the President's recent fiscal year 
2017 budget request, would negatively affect State and local 
communities with diverse coastal ecosystems.

                         OTHER DIRECT SPENDING


                 General Science, Space, and Technology

    Almost all the government's science and technology funding 
is discretionary. Nevertheless, there is a small amount of 
direct spending within the National Science Foundation that 
funds the Directorate for Education and Human Resources [EHR]. 
The EHR focuses on science, technology, engineering, and math 
[STEM] programs at all educational levels.
    The resolution calls for $107 million in direct spending 
budget authority and $106 million in outlays in fiscal year 
2017. The 10-year totals are $1.0 billion for both budget 
authority and outlays. The figures appear in Table 3, Function 
250.

                   Community and Regional Development

    The main direct spending component of this function 
(Function 450 in Table 3) is the National Flood Insurance 
Program [NFIP]. The NFIP reauthorization will expire 30 
September 2017. The Committee on Financial Services says: 
``[T]here is little to no private sector alternative to the 
NFIP, exposing taxpayers to virtually all of the Nation's 
insured flood risk. In 1968, Congress recognized that the 
inherent challenges of managing flood risk were too great for 
the private sector and that no viable private sector insurance 
alternative existed. But 47 years later, given the dynamics of 
the market and the information now available, the Committee 
believes the biggest impediment to the development of a private 
flood insurance market is the subsidized monopoly of the NFIP. 
The Committee will explore legislative initiatives to 
facilitate the establishment of a private flood insurance 
market that serves the needs of all Americans and reduces the 
significant financial risk faced by taxpayers.''\249\ Other 
direct spending programs within the function include activities 
such as Community Development Financial Institutions, Rural 
Energy for America, the Bureau of Indian Affairs and Indian 
Education, and activities of the Gulf Coast Restoration Trust 
Fund. The resolution calls for -$597 million in direct spending 
budget authority and $656 million in outlays in fiscal year 
2017. The 10-year totals for direct spending budget authority 
and outlays are -3.0 billion and $7.6 billion, respectively.
---------------------------------------------------------------------------
    \249\Committee on Financial Services, U.S. House of 
Representatives, Views and Estimates, 8 February 2016.
---------------------------------------------------------------------------
    A potential savings option here is to reduce energy 
subsidies for commercial interests. The budget recommends 
spending reductions for rural green-energy loan guarantees. 
These loan guarantees come with Federal mandates that channel 
private investments into financing the administration's 
preferred interests at taxpayers' expense.

                          Financial Management

                              ----------                              

    The remaining categories chiefly concern major non-
programmatic financing mechanisms for the Federal Government. 
Net Interest, for example, represents payments resulting from 
the government's prior borrowing. Allowances is a placeholder 
function for budgetary effects that the Congressional Budget 
Office has not yet assigned to other specific categories. 
Undistributed Offsetting Receipts represents payments to the 
government that are recorded as negative budget authority and 
outlays. These three functions round out the spending 
components of the budget overall.

                              NET INTEREST


                            Function Summary

    One of the worst effects of large, chronic budget deficits 
is the high interest cost it produces. Interest payments yield 
no government services or benefits; they are simply excess 
costs resulting from a history of spending beyond the 
government's means. These costs are reflected in this category 
(Function 900 in Tables 1 and 3), which presents the interest 
paid for the Federal Government's borrowing less the interest 
received by the Federal Government from trust fund investments 
and loans to the public. It is a mandatory payment, in the true 
sense of the word, with no policy options and no discretionary 
components.
    According to CBO, if government programs are not reformed, 
net interest payments are projected to nearly quadruple, from 
$223 billion in fiscal year 2015 to $830 billion by 2026. At 
this rate, interest costs are projected to grow at an average 
annual rate of approximately 12.7 percent--the fastest growing 
major component of the Federal budget. Net interest spending is 
projected to exceed the entire amount spent on the national 
defense base budget by 2024.
    Reducing interest costs will require sustained spending 
restraint. This budget resolution provides such restraint, and 
it reduces net interest by $974.8 billion over 10 years 
compared with the CBO baseline.

                    Summary of Net Interest Payments

    The resolution calls for $306.5 billion of direct spending 
for net interest payments in fiscal year 2017. The proposed 10-
year total for net interest payments are $4.8 trillion.
    On-budget direct spending--or net interest payments 
unrelated to Social Security--is $393.7 billion in fiscal year 
2017 and $5.6 trillion over 10 years. The on-budget figure is 
larger than the budget Function 900 total, because the former 
is offset by off-budget interest payments to the Social 
Security Trust Fund. These off-budget interest payments are 
presented as negative numbers, because they reflect money 
coming into, rather than flowing out of, the Treasury.
    Off-budget direct spending is -$87.2 billion in fiscal year 
2017 and -$823.1 billion over 10 years.

                               ALLOWANCES


                            Function Summary

    The Allowances categories represent place-holders for 
certain budgetary impacts that the CBO has yet to assign to a 
specific budget function. They are presented as Function 920 in 
the summary tables. The particulars of the categories are 
described below.
    In August 2011, the President and Congress enacted the 
Budget Control Act [BCA] of 2011 (Public Law 112-25), which 
provided for significant spending reductions, enforced by 
statutory spending caps, and an automatic enforcement 
procedure. The BCA did not specify a distribution of spending 
reductions in specific budget functions other than for National 
Defense (Function 050) and Medicare (Function 570), even though 
the law does require reductions in non-defense and non-Medicare 
areas of the budget. At the time of its January 2016 baseline 
release, CBO did not provide forward-looking, function-level 
information on what non-defense and non-Medicare reductions are 
under the terms of the BCA. The CBO has, instead, assigned the 
non-defense and non-Medicare reductions required by the BCA to 
Function 920.
    The budget resolution recommends no changes in this 
function, leaving it instead at the CBO baseline levels. The 
CBO baseline for Function 920 includes a total of $587.6 
billion and $530.1 billion in reductions for budget authority 
and outlays over 10-years, respectively, to reflect the impact 
of the BCA on non-defense and non-Medicare spending. The 
following two components are included in the baseline:

      A reduction of $567.9 billion in budget authority 
and $512.3 billion in outlays for non-defense activities, 
needed to comply with the discretionary spending caps set by 
section 101 of the BCA;

      A $19.7 billion and $17.8 billion reduction in 
budget authority and outlays, respectively, to non-Medicare and 
non-defense direct spending programs, necessary to comply with 
the automatic-enforcement procedure (the sequester) mandated by 
the BCA.

                   UNDISTRIBUTED OFFSETTING RECEIPTS


                            Function Summary

    Offsetting receipts to the Treasury are recorded in this 
category as negative budget authority and outlays. Receipts 
appearing here are either intra-budgetary (a payment from one 
Federal agency to another, such as agency payments to the 
retirement trust funds) or proprietary (a payment from the 
public for some kind of business transaction with the 
government). The main types of receipts presented are the 
payments Federal agencies make to employee retirement and 
health care funds; payments made by companies for the right to 
explore and produce oil and gas on the Outer Continental Shelf; 
and payments by those who bid for the right to buy or use 
public property or resources, such as the electromagnetic 
spectrum. The category also contains an off-budget component 
that reflects the Federal Government's share of Social Security 
contributions for Federal employees.
    All transactions in this area are recorded as direct 
spending and appear in Function 950 of Table 3. The resolution 
calls for -$105.5 billion in budget authority and outlays in 
fiscal year 2017 (the minus sign indicates receipts flowing 
into the Treasury). Over 10 years, budget authority and outlays 
total -$1.2 trillion.
    On-budget amounts are -$88.6 billion in budget authority 
and outlays in fiscal year 2017, and -$966.6 billion in budget 
authority and -$970.0 billion in outlays over 10 years.
    Off-budget amounts are -$16.9 billion in budget authority 
and outlays in fiscal year 2017, and -$196.3 billion in budget 
authority and outlays over 10 years. The major program in the 
off-budget category is Federal agency matching payments for 
retirement contributions on behalf of Federal employees to the 
Federal Old Age and Survivors and Disability Insurance Trust 
Fund--or Social Security. The budget resolution recommends no 
policy changes to the off-budget portion of Function 950.

                      Illustrative Policy Options

    Federal Real-Property Sales. The Fiscal Commission 
highlighted potential budget savings from another area where 
the mismanagement of taxpayer-owned assets and the sheer amount 
of unnecessary costs are staggering: Federal real estate and 
other property. The Federal real-property inventory is so 
massive that the report accounting for it lags 2 years behind 
the current budget year. Complex procedural requirements, lack 
of organization, and delayed data reporting provide agencies 
with few incentives to dispose of unneeded properties and even 
fewer repercussions for holding onto these properties 
indefinitely. Real-property management has been on the 
Government Accountability Office's list of ``high risk'' 
government activities since 2003. According to the most recent 
Federal Real Property Profile, from fiscal year 2014, the 
Federal Government owns or leases more than 275,000 buildings 
and 481,000 structures.\250\
---------------------------------------------------------------------------
    \250\General Services Administration, Federal Real Property 
Profile, Fiscal Year 2014: http://www.gsa.gov/portal/content/102880.
---------------------------------------------------------------------------
    The government has a poor track record for real-estate 
asset sales. The fiscal year 2014 report shows that of the 
18,619 assets the Federal Government disposed of in that year, 
5,473, or almost 30 percent, were disposed of by way of 
demolition. Just under 5 percent were disposed of through a 
sale. Many assets were conveyed, or given away, at below-market 
value or for free.\251\
---------------------------------------------------------------------------
    \251\Ibid.
---------------------------------------------------------------------------
    The resolution urges the Office of Management and Budget to 
streamline the asset-sale process; loosen regulations for the 
disposal and sale of Federal property to eliminate red tape and 
waste; set enforceable targets for asset sales; and hold 
government agencies accountable for the buildings they oversee. 
If these actions are done correctly, the Federal Government 
could save billions of dollars from selling unused government 
property.

    Federal Land. Currently, the Federal Government owns nearly 
650 million acres of land--almost 30 percent of the land area 
of the United States. In addition to Federal fleet and real-
property sales, this resolution supports examining Federal 
lands, in consultation with State and local communities, to 
identify where certain lands may be more efficiently managed, 
thus reducing the burden on the Federal Government. Excluded 
from this policy are National Parks, wilderness areas, wildlife 
refuges, and wild and scenic rivers.

    Reduce Strategic Petroleum Reserve [SPR] Through Asset 
Sales. The SPR was created following the energy crisis of 1973 
when OPEC members proclaimed an oil embargo. Since then the 
U.S. has significantly reduced its dependence on overseas oil. 
Furthermore, the recent significant expansion of U.S. oil 
supplies allows the Federal Government to safely draw down the 
number of barrels it holds in reserve. The United States is 
required to hold in reserve a number of barrels equal to 90 
days of net imports, pursuant to an agreement with 
International Energy Agency [IEA] member countries. This policy 
option would draw down reserves within the SPR in accordance 
with its international agreements.

                         REVENUE AND TAX REFORM

                              ----------                              

    The U.S. tax code is notoriously complex, patently unfair, 
and highly inefficient. Its complexity distorts decisions to 
work, save, and invest, which leads to slower economic growth, 
lower wages, and less job creation. This budget proposes to 
address these problems with a reformed tax code that is simpler 
and fairer, and that promotes growth. A revamped tax code could 
raise just as much revenue as does the system in place today, 
without the harmful tax policies embedded in current law (such 
as the Affordable Care Act). A restructured and more efficient 
tax code would also spark greater economic growth and job 
creation.
    The budget resolution's revenue projections--$3.521 
trillion in fiscal year 2017, and $42.385 trillion through 
2026--are built on a tax reform model derived from the 
principles below.

                             The Challenge

    The current tax code is needlessly complex. It is estimated 
that individuals, families, and employers spend more than 6 
billion hours and more than $160.0 billion a year trying to 
negotiate a labyrinth of special rules, deductions, and tax 
schedules. Over the past decade alone, there have been 4,107 
changes to the tax code. Many of the major changes made over 
the years have carved out special preferences, exclusions, or 
deductions for various activities or groups. These loopholes 
exceed $1.0 trillion per year. To put that figure in 
perspective, the government collected about $1.5 trillion in 
individual income taxes last year.
    As the tax code has grown in complexity, the Internal 
Revenue Service has increased its funding requests to support 
an army of tax examiners and agents. To cite just one example, 
the Treasury Department requested about $452.0 million in 
fiscal year 2015 simply to administer the tax elements of the 
Affordable Care Act over those 12 months. Nina E. Olson, the 
National Taxpayer Advocate [NTA], has consistently cited the 
complexity of the tax code as one of the most serious problems 
facing individuals and businesses. In the NTA's 2014 annual 
report to Congress, Olson said: ``I believe we need fundamental 
tax reform, sooner rather than later, so the entire system does 
not implode.''\252\
---------------------------------------------------------------------------
    \252\National Taxpayer Advocate, Annual Report to Congress, Vol. 1, 
2014: http://www.taxpayeradvocate.irs.gov/Media/Default/Documents/2014-
Annual-Report/Volume-One.pdf.
---------------------------------------------------------------------------
    The large amount of tax preferences that pervade the code 
end up narrowing the tax base. A narrow tax base requires much 
higher tax rates to raise a given amount of revenue. Standard 
economic theory shows that high marginal tax rates dampen 
incentives to work, save, and invest, which reduces economic 
output and job creation. Lower economic output, in turn, drains 
off the intended revenue gain from higher marginal tax rates.
    The top tax rate has actually risen and fallen dramatically 
throughout U.S. history, with little effect on tax revenue as a 
share of the economy. For instance, the top U.S. tax rate has 
been as high as 90 percent and as low as 28 percent. Income tax 
revenue has remained fairly steady, despite these sharp rate 
swings. It turns out that the biggest driver of Federal revenue 
is not higher tax rates, but economic growth. A sizable 
majority of economists point out that a broad base and low 
rates are key in a tax system that fosters economic growth and 
competitiveness. Legislators on both sides of the aisle agree 
on this basic principle.
    One hallmark of the U.S. economy is the role of smaller, 
unincorporated businesses. Roughly half of U.S. active business 
income and half of private sector employment are derived from 
business entities (such as partnerships, S corporations, and 
sole proprietorships) that are taxed on a ``pass-through'' 
basis. This means the income flows through to the tax returns 
of the individual owners and is taxed at the individual rate 
structure rather than at the corporate rate. Small businesses, 
in particular, tend to choose this form for Federal tax 
purposes, and the top effective Federal tax rate on such small 
business income can reach nearly 45 percent. For these reasons, 
sound economic policy requires lowering marginal rates on these 
pass-through entities.
    The U.S. corporate income tax rate (including Federal, 
State, and local taxes) sums to slightly more than 39 percent. 
This is the highest rate in the industrialized world. The tax 
itself raises relatively little revenue: only about 10 percent 
of the total Federal tax take comes from taxing corporate 
income. Furthermore, corporate income is taxed twice: first at 
the corporate entity level, as it is earned, and also as the 
shareholder level, when corporations distribute earnings. This 
tax structure discourages investment and job creation, distorts 
business activity, and puts American businesses at a 
competitive disadvantage against foreign competitors. 
Policymakers should consider options to limit such double 
taxation when comprehensive tax reform is considered. Any tax 
that raises little revenue and creates a lot of economic 
distortions is particularly ripe for reform.
    A high corporate tax rate hinders American competitiveness 
by making the U.S. a less desirable destination for investment 
and jobs. Decisions about where to locate a business and make 
investments are becoming more sensitive to country tax rates, 
as global integration increases. Foreign investment is 
important to an economy, because it is a key source of funding 
to finance innovation and jobs. Many countries have been 
lowering their business taxes to increase their 
competitiveness. The U.S. risks falling behind, as it maintains 
a high tax rate while other countries lowering theirs. The U.S. 
corporate tax constrains economic growth and job creation, 
because it deters potential investment. Also, the U.S. tax rate 
differential with other countries fosters a variety of 
complicated multinational corporate behaviors intended to avoid 
the tax--profit shifting, corporate inversions, and transfer 
pricing--which have the effect of moving the tax base offshore, 
destroying American jobs, and decreasing corporate revenue.
    The structure of U.S. international taxation is also out of 
sync with the international standard used by the majority of 
other countries, putting U.S. businesses operating abroad at a 
competitive disadvantage. Most countries operate under a so-
called ``territorial'' system of international taxation, 
whereby their businesses operating abroad are only subject to 
the tax of the country where they do business. The U.S. has an 
antiquated ``worldwide'' system of international taxation, in 
which U.S. multinational businesses operating abroad pay both 
the foreign-country tax and U.S. corporate taxes when profits 
are repatriated. They are essentially taxed twice. This puts 
them at an obvious competitive disadvantage.
    Reforming the U.S. tax code to a more competitive 
international system would boost the competitiveness of U.S. 
companies operating abroad and would also reduce incentives for 
tax avoidance.

                    Solution: Pro-Growth Tax Reform

    Given the many problems with the current system, Congress 
should enact legislation that provides for a comprehensive 
reform of the U.S. tax code to promote economic growth, create 
American jobs, and increase wages. While the Committee on Ways 
and Means will develop the particular policies, these aims can 
be achieved through revenue-neutral, fundamental tax reform 
that does the following:

     LSimplifies the tax code to make it fairer to 
American families and businesses and reduces the amount of time 
and resources necessary to comply with tax laws;

     LSubstantially lowers tax rates for individuals, 
and consolidates the current seven individual income tax 
brackets into fewer brackets;

     LRepeals the Alternative Minimum Tax;

     LReduces the corporate tax rate;

     LTransitions the tax code to a more competitive 
system of international taxation.

    Economists have shown that lowering overall rates and 
broadening the tax base would create greater economic growth 
and support more job creation by the private sector. A faster-
growing economy would help reduce the budget deficit. According 
to CBO, raising real GDP growth by just 0.1 percentage point 
per year would reduce the deficit by $327 billion over the next 
decade.
    This resolution calls for comprehensive tax reform and lays 
out several principles, but it does not assume any particular 
plan. There are many good ideas on this front--growth-oriented 
tax plans that could strengthen the economy and support the 
Nation's spending priorities.
    Representative Woodall (R-GA), for instance, has submitted 
a fundamental tax-reform plan for consideration by the Ways and 
Means Committee. It would eliminate taxes on wages, 
corporations, self-employment, and capital gains, as well as 
gift and death taxes, in favor of a personal consumption tax 
that would provide the economic certainty that American 
businesses, entrepreneurs, and taxpayers desire.
    Representative Goodlatte (R-VA) has also submitted 
legislation that calls for fundamental, pro-growth tax reform. 
This legislation would shape the debate on tax reform by 
establishing a structure to provide for a tax system that 
encourages job creation and a healthy economy. Without 
prescribing any specific tax system, it calls for a low tax 
rate for all Americans, tax relief for working individuals, 
protection for the rights of taxpayers and a reduction in tax 
collection abuses. Additionally, under this legislation, a tax 
system would support savings and investment, and would not 
penalize marriage or families. Similar legislation has twice 
passed the House of Representatives in previous Congresses. The 
114th Congress should consider enacting this legislation.
    The committee report recognizes a number of possible 
solutions as Congress works to enact comprehensive tax reform. 
Congress should recognize the many factors businesses consider 
when they make property and capital investment decisions in the 
United States, such as cash flow impact, the macro-economic 
outlook, duration of investment, and costs of goods and 
services, and the regulatory environment.
    It is no secret that Washington has a spending problem, not 
a revenue problem. (The Congressional Budget Office projects 
Federal revenue will hover right around 18.0 percent of gross 
domestic product throughout the next decade, well above the 
17.4-percent average annual level of the past half century.) 
This is primarily due to the growing costs of health and 
retirement benefits. Therefore, this report discourages 
proposals offered by some members of Congress that seek to 
raise revenue to finance out of control spending, such as a 
financial transaction tax, a bank excise tax, or a carbon tax. 
These proposals would discourage savings and investment and 
increase the costs of individual, family, and employee 
retirement accounts.
    This committee report recognizes that one way to relieve 
the ever-increasing burden of automatic spending is to 
encourage individuals and families to save. Maintaining and 
strengthening the critical role of the private sector in 
helping all Americans achieve retirement security is important. 
Tax reform that encourages taxpayers to save is pro-growth 
economic policy that would consequently enable individuals and 
families to rely less on the Federal Government.
    Congress should consider these and the full myriad of pro-
growth plans as it moves toward implementing the tax reform 
called for under this budget.

                   DIRECT SPENDING TRENDS AND REFORMS

                              ----------                              


                               Background

    Direct spending remains the fastest growing part of the 
spending-driven debt crisis the Nation faces.
    The Congressional Budget Office [CBO] reports that total 
non-interest mandatory spending in fiscal year 2015 was $2.299 
trillion, and will grow to $4.142 trillion by 2026, reflecting 
an average annual growth rate of 5.5 percent--faster than both 
CBO's projection of 2015 nominal economic growth of 3.4 percent 
and CBO's longer-term projection of economic growth of 4.0 
percent. Within overall non-interest mandatory spending, the 
entitlements of Medicare and Social Security are projected to 
continue growing faster than the economy as a whole, with 
Social Security expected to grow from $882 billion in 2015 to 
$1.6 trillion in 2026 and Medicare expected to grow from $634 
billion in 2015 to $1.3 trillion in 2026.
    Over the next decade, the major means-tested automatic (or 
``direct'') spending programs are expected to grow by 4.3 
percent per year--from $744 billion in 2016 to $1.1 trillion in 
2026. Not only are these programs expected to grow in the 
future, but they have grown significantly over the past 40 
years. The Congressional Research Service calculated that 
spending on low-income assistance programs was $2.66 billion in 
inflation-adjusted dollars in 1962, or approximately 2.6 
percent of total Federal outlays and 0.5 percent of gross 
domestic product [GDP]. Over just the past 10 years, major 
means-tested automatic spending programs have grown 7.3 percent 
per year, from $386 billion in 2007 to $744 billion in 2016.
    There are a number of reasons for this growth. Most 
recently, the recession caused significant increases in 
spending on low-income programs. Spending is projected to 
remain at elevated levels for several programs--most notably, 
the Supplemental Nutrition Assistance Program, or SNAP 
(formerly known as food stamps). Over the past 10 years, the 
SNAP program grew at 8.1 percent annually, ballooning from $35 
billion in 2007 to $75 billion in 2016. While this amount is 
projected to remain steady over the next 10 years, it remains 
at elevated levels compared to prerecession levels.
    Other programs have also seen large increases. Supplemental 
Security Income was created as a needs-based program that 
provides cash benefits to aged, blind, or disabled persons with 
limited income and assets. When the program began, the majority 
of payments went toward the aged. As it matured, however, a 
much greater percentage of beneficiaries were under age 18 or 
between the ages of 18 to 64. Over the past decade, spending on 
SSI has grown by 4.8 percent per year.
    The largest means-tested program in the Federal budget is 
Medicaid, the Federal-State low-income health program. Medicaid 
spending- and its related State Children's Health Insurance 
Program [SCHIP]--doubled from $197 billion in 2007 to $394 
billion in 2016. Going forward, the Congressional Budget Office 
[CBO] projects Federal Medicaid and SCHIP spending to reach 
$648 billion in fiscal year 2026. Absent reform, Medicaid will 
not be able to deliver on its promise to provide a sturdy 
health care safety net for society's most vulnerable. Because 
of the flawed incentives in this program, Medicaid grew at 7.7 
percent a year over the past 10 years, and it is projected to 
grow 5.4 percent a year over the next 10 years. This level of 
growth is clearly unsustainable.

                      The Fiscal Year 2017 Budget

    The fiscal year 2017 budget addresses both non-means-tested 
and means-tested direct spending. Most important, it tackles 
the primary drivers of debt and deficits: the government's 
health programs. For Medicare, this budget advances policies to 
put seniors, not the Federal Government, in control of their 
health care decisions. This resolution provides future retirees 
with the freedom to choose a plan best suited for them, and 
guarantees health security throughout their retirement years. 
Under this program, traditional Medicare and private plans--
providing the same level of health coverage--compete for 
seniors' choices, just as Medicare Advantage does today. This 
improved Medicare program would also adopt the competitive 
structure of Part D, prescription drug benefit program, 
providing beneficiaries with a defined contribution to purchase 
coverage and, through competition, deliver savings for seniors 
in the form of lower monthly premium costs. By allowing seniors 
to choose the best plan for them, plans are required to compete 
against each other on price and quality. This means the program 
works better for patients and will save the program for future 
generations of seniors. The program also includes additional 
protections for the most vulnerable. Adjustments would be made 
to the Federal contribution based on the health of the 
beneficiary so that those with illnesses would receive higher 
payments if their condition worsened; lower-income seniors 
would receive additional assistance to help cover out-of-pocket 
costs; and wealthier seniors would assume responsibility for a 
greater share of their premiums.
    For Medicaid, this budget converts the Federal share of 
Medicaid spending into allotments that give States the 
flexibility to tailor their programs to meet their fiscal 
needs, as well as serve the worst off in society. State 
Flexibility Funds would end the misguided one-size-fits-all 
approach that ties the hands of State governments trying to 
make their Medicaid programs as effective as possible. In 
addition, the budget proposes to advance a work requirement for 
all able-bodied adults who are enrolled in Medicaid. Work not 
only provides a source of income and self-sufficiency, but also 
has been demonstrated as a valuable source of self-worth and 
dignity for individuals. Moreover, this budget repeals the 
Medicaid expansions in the President's health care law.
    For the Supplemental Nutrition Assistance Program, this 
budget also calls for converting the current program into a 
flexible allotment tailored to meet each State's needs.
    Additionally, in keeping with a recommendation from the 
National Commission on Fiscal Responsibility and Reform, this 
budget calls for Federal employees--including Members of 
Congress and their staffs--to make greater contributions toward 
their own retirement.
    This budget is premised on the belief that the prospect of 
upward mobility should be in the reach of every American, and 
that priority must be given to maximizing the effectiveness of 
anti-poverty programs across Federal, State, and local 
governments. Congress should work to remove the barriers and 
obstacles that prevent the most vulnerable Americans from 
taking advantage of economic and educational opportunities and 
from moving up the ladder of opportunity to join the middle 
class. By balancing the budget, implementing comprehensive tax 
reform, and reforming means-tested entitlement programs, this 
resolution is designed to accomplish exactly these goals.

               Improving the Accuracy of Budget Estimates

    In addition, the CBO should constantly strive to improve 
and update its estimating practices with respect to both fiscal 
and economic effects. This requires a willingness by the agency 
to advance its methodologies--as it has done in the past. For 
instance, in February of 2014, CBO estimated a significantly 
larger negative employment impact from the Affordable Care Act 
than it had previously done. It did so in part because of the 
work of University of Chicago Economist Casey B. Mulligan, who 
has done extensive work in the area.\253\ Another example is 
the treatment of this budget resolution, which does reflect the 
positive impact of its overall deficit-reducing fiscal policy, 
though it is still based on CBO's independent analysis.
---------------------------------------------------------------------------
    \253\See Congressional Budget Office, The Budget and Economic 
Outlook: 2014 to 2024, February 2014, Appendix C.
---------------------------------------------------------------------------
    Inaccuracies in cost estimates for direct spending 
legislation are to some degree unavoidable. This is due, in 
part, to the nature of the process. CBO must provide estimates 
in a short period of time for legislation that is sometimes 
very complex. Moreover, the estimates often depend on a wide 
array of difficult-to-predict variables such as individuals' 
behavioral responses to changes in program benefits. Though CBO 
routinely uses probability-based scoring techniques to estimate 
the cost of major legislation, accurate cost estimates for 
direct spending legislation remain elusive. CBO endeavors to 
communicate to the Congress the uncertainty of the agency's 
estimates. The agency also monitors the budgetary effects of 
enacted legislation to help improve projections of spending and 
receipts under current law, as well as to improve cost 
estimates for new legislative proposals.
    Members of Congress have an important role to play as well. 
The Budget Committees in the House and Senate have oversight 
responsibilities over CBO. The committees should make greater 
use of this responsibility, conducting regular review of CBO's 
estimating accuracy of previous and future direct spending 
legislation, as Representative Foxx (R-NC) has proposed. The 
committees should work with CBO to provide the Congress with 
periodic analyses of such inaccuracies in CBO cost estimates 
and subsequent adjustments going forward.

                                         TABLE 9.--HISTORICAL MEANS-TESTED AND NON-MEANS-TESTED DIRECT SPENDING
                                                      [Outlays by fiscal year, billions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    Estimated   Average
                                                                                                                                   -----------   annual
                                            2006     2007     2008     2009     2010     2011     2012     2013     2014     2015                growth
                                                                                                                                       2016   ----------
                                                                                                                                               2006-2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
Means-Tested Programs:
  Health Care Programs:
    Medicaid............................    181      191      201      251      273      275      251      265      301      350       381           7.7
    Medicare Part D Low-Income Subsidies     11       17       17       19       21       24       20       22       22       24        28           9.6
    Health insurance subsidies\a,b\.....      0        0        0        0        0        0        0        0       13       27        39          n.a.
    Children's Health Insurance Program.      5        6        7        8        8        9        9        9        9        9        13           8.7
                                         -----------------------------------------------------------------------------------------------------
      Subtotal..........................    197      213      225      277      302      308      279      297      346      411       460           8.8
  Income Security:
    Earned income and child tax              52       54       75       67       77       78       77       79       82       81        83           4.8
     credits\b\.........................
    SNAP................................     35       35       39       56       70       77       80       83       76       76        75           8.1
    Supplemental Security Income........     37       36       41       45       47       53       47       53       54       55        59           4.8
    Family support and foster care\c\...     30       31       32       33       35       33       30       32       31       31        31           0.3
    Child nutrition.....................     14       14       15       16       17       18       19       20       20       22        23           5.1
                                         -----------------------------------------------------------------------------------------------------
      Subtotal..........................    168      170      202      217      247      260      254      266      263      264       271           4.9
  Veterans' Pensions....................      4        3        4        4        4        5        5        5        6        5         6           5.5
  Pell Grants\d\........................      0        0        1        2        4       14       12       16        8       10         7          n.a.
      Subtotal, Means-Tested Programs...    369      386      431      501      557      587      550      584      623      690       744           7.3
Non-Means-Tested Programs\e\............  1,188    1,242    1,349    1,787    1,553    1,648    1,710    1,752    1,753    1,865     1,959           5.1
      Total Mandatory Outlays\f\........  1,556    1,628    1,780    2,288    2,110    2,236    2,260    2,336    2,376    2,555     2,703           5.7
Memorandum:
Pell Grants (Discretionary).............     13       13       15       13       20       21       21       17       23       20        23           5.8
Means-Tested Programs:
  Adjusted for Timing Shifts............    368      389      431      501      557      581      556      584      623      690       737           7.2
Non-Means-Tested Programs:
  Adjusted for Timing Shifts............  1,202    1,241    1,349    1,787    1,553    1,627    1,731    1,752    1,753    1,865     1,927           4.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Congressional Budget Office; staff of the Joint Committee on Taxation.
 
The average annual growth rate over the 2007-2016 period encompasses growth in outlays from the amount recorded in 2006 through the amount projected for
  2016.
 
Data on spending for benefit programs in this table exclude administrative costs that are classified as discretionary but generally include
  administrative costs that are classified as mandatory.
 
SNAP = Supplemental Nutrition Assistance Program; n.a. = not applicable.
 
a. Differs from the amounts reported in Table 3-2 in The Budget and Economic Outlook: Fiscal Years 2016 to 2026 in that it does not include payments to
  health insurance plans for risk adjustment (amounts paid to plans that attract less healthy enrollees) and reinsurance (amounts paid to plans that
  enroll people with high health care costs). Spending for grants to States to establish exchanges is also excluded.
 
b. Does not include amounts that reduce tax receipts.
 
c. Includes the Temporary Assistance for Needy Families program, the Child Support Enforcement program, the Child Care Entitlement program, and other
  programs that benefit children.
 
d. Includes mandatory spending designed to reduce the discretionary budget authority needed to support the maximum award amount set in the appropriation
  act plus mandatory spending that, by formula, increases the total maximum award above the amount set in the appropriation act.
 
e. Does not include offsetting receipts.
 
f. Does not include outlays associated with Federal interest payments.


                                         TABLE 10.--PROJECTED MEANS-TESTED AND NON-MEANS-TESTED DIRECT SPENDING
                                                      [Outlays by fiscal year, billions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                Average
                                                                                                                                                 annual
                                                                                                                                                 growth
                                              2016     2017     2018     2019     2020     2021     2022     2023     2024     2025     2026   (percent)
                                                                                                                                              ----------
                                                                                                                                               2017-2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
Means-Tested Programs:
  Health Care Programs:
    Medicaid..............................    381      401      420      439      460      484      509      536      564      593      642          5.4
    Medicare Part D Low-Income Subsidies..     28       28       27       32       34       37       44       44       45       53       57          7.4
    Health insurance subsidies\a,b\.......     39       57       67       70       71       74       79       82       86       89       93          9.1
    Children's Health Insurance Program...     13       13       11        6        6        6        6        6        6        6        6         -7.6
                                           ---------------------------------------------------------------------------------------------------
      Subtotal............................    460      499      525      546      571      601      637      668      700      740      798          5.7
  Income Security:
    Earned income and child tax                83       82       82       84       86       88       91       93       95       97       99          1.8
     credits\b,c\.........................
    SNAP..................................     75       74       73       73       72       72       72       72       72       73       74         -0.1
    Supplemental Security Income..........     59       56       53       60       61       63       70       67       64       71       74          2.2
    Family support and foster care\d\.....     31       32       32       33       33       33       34       34       34       35       35          1.1
    Child nutrition.......................     23       24       25       26       27       28       29       30       32       33       34          4.2
                                           ---------------------------------------------------------------------------------------------------
      Subtotal............................    271      267      265      274      280      285      296      296      297      309      317          1.6
  Veterans' pensions......................      6        6        6        7        7        7        8        7        7        8        8          2.9
  Pell Grants\e\..........................      7        6        8        8        8        8        8        8        8        8        8          2.3
                                           ---------------------------------------------------------------------------------------------------
      Subtotal, Means-Tested Programs.....    744      778      804      835      865      901      948      979    1,012    1,065    1,130          4.3
Non-Means-Tested Programs\f\..............  1,959    2,018    2,076    2,238    2,377    2,519    2,720    2,829    2,933    3,156    3,362          5.5
      Total Mandatory Outlays\g\..........  2,703    2,796    2,880    3,073    3,243    3,419    3,669    3,808    3,944    4,221    4,492          5.2
Memorandum:
Pell Grants (Discretionary)\h\............     23       25       28       23       24       24       25       25       26       26       27          1.8
Means-Tested Programs:
  Adjusted for Timing Shifts..............    737      778      811      835      865      901      939      979    1,021    1,065    1,130          4.4
Non-Means-Tested Programs:
  Adjusted for Timing Shifts..............  1,927    2,015    2,111    2,238    2,377    2,519    2,669    2,825    2,988    3,156    3,362          5.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Congressional Budget Office; staff of the Joint Committee on Taxation.
 
The projections shown here are the same as those reported in Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2016 to 2026
  (January 2016).
 
The average annual growth rate over the 2017-2026 period encompasses growth in outlays from the amount projected for 2016 through the amount projected
  for 2026.
 
Projections of spending for benefit programs in this table exclude administrative costs that are classified as discretionary but generally include
  administrative costs that are classified as mandatory.
 
SNAP = Supplemental Nutrition Assistance Program.
 
Because October 1 will fall on a weekend in 2016, 2017, 2022, and 2023, certain Federal payments that are due on those dates will instead be made at the
  end of the preceding September and thus be shifted into the previous fiscal year. Those shifts primarily affect outlays for Supplemental Security
  Income, veterans' compensation benefits and pensions, and Medicare.
 
a. Differs from the amounts reported in Table 3-2 in The Budget and Economic Outlook: Fiscal Years 2016 to 2026 in that it does not include payments to
  health insurance plans for risk adjustment (amounts paid to plans that attract less healthy enrollees) and reinsurance (amounts paid to plans that
  enroll people with high health care costs). Spending for grants to States to establish exchanges is also excluded.
 
b. Does not include amounts that reduce tax receipts.
 
c. Differs from the amounts reported in Table 3-2 in The Budget and Economic Outlook: Fiscal Years 2016 to 2026 in that it does not include other tax
  credits that were included in that table.
 
d. Includes the Temporary Assistance for Needy Families program, the Child Support Enforcement program, the Child Care Entitlement program, and other
  programs that benefit children.
 
e. Includes mandatory spending designed to reduce the discretionary budget authority needed to support the maximum award amount set in the appropriation
  act plus mandatory spending that, by formula, increases the total maximum award above the amount set in the appropriation act.
 
f. Does not include offsetting receipts.
 
g. Does not include outlays associated with Federal interest payments.
 
h. The discretionary baseline does not represent a projection of expected costs for the discretionary portion of the Federal Pell Grant Program. As with
  all other discretionary programs, the budget authority is calculated by inflating the budget authority appropriated for fiscal year 2016. Outlays for
  future years are based on those amounts of budget authority and also reflect a temporary surplus of budget authority provided in 2016.


                      THE LONG-TERM BUDGET OUTLOOK

                              ----------                              


    The growing probability of a debt crisis is an urgent 
challenge the United States faces today. The source of the 
crisis is the drift toward ever-expanding government. To avert 
a future debt crisis, Congress needs to stop this encroachment 
and to revive community in American civil society.
    This budget would turn the tide. If the policies 
incorporated in the budget were enacted, they would yield $6.5 
trillion in spending reductions over the next 10 years. It 
reforms government spending programs responsibly. It protects 
key priorities while eliminating waste. It avoids sudden and 
arbitrary cuts to current services, such as those the country 
would experience in a debt crisis.
    These reductions are hardly draconian. Over the years, 
Congress has put two-thirds of the budget on auto-pilot, and 
spending in those areas grows each year. The Congressional 
Budget Office [CBO] has said the current laws and policies 
cannot be sustained. Yet any effort to restrain the growth in 
this spending is cast as a ``cut.''
    Under current policy, the Federal Government will spend 
$50.6 trillion over the next 10 years. Under this proposal, it 
will spend roughly $44.1 trillion. This budget does not make 
sudden cuts. Instead, it increases spending at a more 
manageable rate. For instance, on the current path, spending 
will rise by an annual average of 4.8 percent. Under this 
budget, it will rise by only 2.7 percent.
    Washington cannot keep spending money it does not have. So 
this budget achieves balance in 2026 by bringing spending down 
relative to the size of economy, to 18.3 percent of GDP in 
2026. To achieve this outcome, it puts in place fundamental 
reforms to protect and strengthen Medicare by gradually 
transitioning the program to a premium support model. Along 
with Medicaid and other spending reforms, these changes are 
critical to putting the Nation on sound financial footing.
    The spending path assumed in this budget will result in a 
balanced budget in 10 years and, according to CBO, a growing 
surplus that will lead to a sharp reduction in the national 
debt. CBO says a small budget surplus in 2026 will eventually 
grow to 1.8 percent of GDP by 2040. At the same time, debt held 
by the public will decline from more than 74 percent of GDP 
today to 57 percent of GDP in 2026 and to just 22 percent of 
GDP by 2040--a glide path to fully paying off the national 
debt.
    Over the long term, the budget assumes revenue generally 
follows CBO's extended baseline and is allowed to grow from 
18.1 percent of GDP in 2026 to 19.0 percent of GDP by 2035. 
After that, the budget holds revenue at 19.0 percent of GDP.
    The United States has dealt with financial problems in the 
past. In 1997, a Democratic president and a Republican Congress 
passed the Balanced Budget Act of 1997, which resulted in four 
years of balanced budgets. This budget follows that model. It 
incorporates ideas from both parties to address a pressing 
issue of the day: America's national debt.

                         BUDGET PROCESS REFORM

                              ----------                              

    There is no doubt congressional budget procedures are 
failing. Before last year, Congress had gone 5 straight years 
without passing a budget resolution, the key instrument for 
setting fiscal policy (although the House did pass its own 
budgets for fiscal years 2012 through 2015).
    Yet the lack of budget resolutions is only one symptom of 
congressional failure. As the practice eroded, budget deadlines 
were routinely missed (sometimes deliberately), spending limits 
were breached, oversight was ignored, and separate spending 
bills were typically combined into massive, omnibus measures 
that Members had too little time to study before they must vote 
on them. Although the House and Senate last year did pass a 
reconciliation bill pursuant to the budget resolution--the 
measure repealed the Affordable Care Act--the budget's 
discretionary spending levels were supplanted by a bipartisan 
spending agreement.
    Budgeting is inherently difficult, but current budget 
procedures contribute to the failures cited above. The process 
is complex, immensely time-consuming, frustrating, and 
difficult to understand--and far too often it fails to produce 
the results intended. As a result, over the past several years, 
legislators and policy experts have proposed a variety of 
specific, incremental changes to the process that they believe 
will make it more efficient and effective. Among the ideas 
proposed have been a joint budget resolution--which would call 
for the President's signature or veto--automatic continuing 
resolutions, 2-year budgets and appropriations, and reform of 
budget baselines. What is needed, however, is a thorough 
overhaul of the congressional budget process: ``[T]he time for 
incremental reforms in the budget process is over. The Congress 
should blow it up and start over from first principles.''\254\
---------------------------------------------------------------------------
    \254\Alice M. Rivlin, first director of the Congressional Budget 
Office, testimony to the Committee on the Budget, U.S. House of 
Representatives, 21 September 2011.
---------------------------------------------------------------------------
    The following are some key principles for guiding a 
reevaluation of congressional budgeting procedures.

                  Exercising Constitutional Government

    Although America's Founders had little sense of formalized 
budget practices, they knew control over spending and taxation 
was one of the most powerful instruments of government--one 
that should rest with the legislature. ``This power of the 
purse,'' Madison wrote, ``may, in fact, be regarded as the most 
complete and effectual weapon with which any constitution can 
arm the immediate representatives of the people, for obtaining 
a redress of every grievance, and for carrying into effect 
every just and salutary measure.''\255\
---------------------------------------------------------------------------
    \255\The Federalist, No. 58.
---------------------------------------------------------------------------
    With today's budgets at nearly $4 trillion a year--more 
than one-fifth of the Nation's total economic output--budget 
matters affect nearly every aspect of government. ``The 
importance of conflicts over the size and distribution of the 
budget--failure to pass a budget on time or at all has become a 
sign of inability to govern--testifies to the overwhelming 
importance of budgeting. Nowadays the State of the Union and 
the state of the budget have become essentially 
equivalent.''\256\
---------------------------------------------------------------------------
    \256\Aaron B. Wildavsky, The New Politics of the Budgetary Process 
- Third Edition (New York: Addison-Wesley Educational Publishers Inc., 
1997) p. xxiii.
---------------------------------------------------------------------------
    Most process reform proposals focus on practical matters, 
aiming to establish a process that is more effective, 
efficient, and enforceable. This is perfectly understandable 
and appropriate. A budget process, however skillfully designed, 
is pointless if Congress cannot or will not use it, or if it 
fails to improve management of fiscal policy.
    Still, reformers should view these characteristics in a 
broader context that recognizes the role of budgeting as a 
principal exercise of governing. The process should reinforce 
the American constitutional framework, treating it not as an 
impediment to efficient budgeting but as the fundamental 
platform for public policy.

                          LIMITING GOVERNMENT

    If the Constitution is intended to provide a framework for 
a limited government, a practice of budgeting aimed at limiting 
spending is one of the best ways to achieve it.
    Spending is how government does what it does, the reason 
government taxes and borrows. Hence, spending is the root cause 
of every other fiscal consequence. Total spending also is one 
of the best measures of the size and scope of government and 
its burden on the economy.\257\ As longtime budget expert Allen 
Schick has put it: ``In a fundamental sense, the Federal 
Government is what it spends.''\258\
---------------------------------------------------------------------------
    \257\See Douglas J. Holtz-Eakin, testimony in hearing, Economic 
Effects of Long-Term Federal Obligations, Committee on the Budget, U.S. 
House of Representatives, 108th Cong., 1st Sess., July 24, 2003, http:/
/www.gpo.gov/fdsys/pkg/CHRG-108hhrg88592/html/CHRG-108hhrg88592.htm.
    \258\Schick, The Federal Budget, p. 2.
---------------------------------------------------------------------------
    Controlling spending is therefore a principal means of 
limiting government and should be a focus of the budget 
process. Therefore, measures such as spending caps are 
important, especially if applied to both automatic and 
discretionary spending. They should help control spending and 
force frequent review of automatic spending programs. The main 
point is to recognize that spending is a fundamental expression 
of the size, scope, and nature of government. To limit spending 
is to limit government itself and to validate the principle 
that ``budgeting is governing.''

                 ENHANCING CONGRESS'S POLICYMAKING ROLE

    Budgeting should be viewed as more than merely a mechanical 
process. It should reinforce Congress's constitutional role as 
the policymaking institution of the Federal Government. 
Therefore, the budget resolution--the only legislative vehicle 
that views the government comprehensively--should define the 
priorities guiding its allocation of resources. It should 
reflect the delegation of powers between the Federal and State 
governments as envisioned in the Constitution. Embracing these 
principles gives meaning to the budget resolution as an 
instrument for governing, and provides coherence to the 
spending and tax bills that follow. The budget process also 
should promote the practice of budgeting itself. It should 
compel Congress to exercise this fundamental governing 
responsibility. The best incentive, of course, is simply a firm 
commitment by lawmakers to fulfill their legislative 
obligations, but the process should support that conviction to 
the greatest extent possible.

                   REINFORCING THE BALANCE OF POWERS

    The role of budget procedures in maintaining the 
constitutional order was clearly stated in 1918, as policy 
advocates were promoting the establishment of an executive 
budget process (which came to pass in 1921).\259\ ``When you 
have decided upon your budget procedure you have decided on the 
form of government you will have as a matter of fact. Make the 
executive the dominating and controlling factor in budget-
making and you have, irrespective of what label you put on it, 
an autocratic actual government. If . . . you give the 
dominating and controlling influence to the representatives of 
the people elected to the legislature, you have, irrespective 
of what label you put on it, a democratic or a representative 
actual government.''\260\
---------------------------------------------------------------------------
    \259\The Budget and Accounting Act of 1921 created the Federal 
Government's first formal budget process based in the Executive Branch. 
The act also created the Bureau of the Budget, now the Office of 
Management and Budget.
    \260\Edward Augustus Fitzpatrick, Budget Making in a Democracy (New 
York: The Macmillan Company, 1918).
---------------------------------------------------------------------------
    The Congressional Budget Act of 1974 made the budget a 
concurrent resolution, not requiring the President's signature, 
for a reason. The President still prepares his budget--an 
expression of his own agenda, his own priorities and policy 
proposals--independently of Congress. The President also has 
the important role of either signing or vetoing the spending 
and tax bills that implement the congressional budget. Through 
veto messages, he can encourage--but not compel--changes in 
those measures.
    When Congress fails to conduct its own regular budget 
procedures, it cedes to the administration more control over 
budgetary decisions through its execution of spending and tax 
policies. This is especially true with automatic spending 
programs and their effectively permanent authorizations. 
Because they are not subject to regular congressional review, 
this major part of the budget is arguably controlled by the 
administration and its regulatory apparatus.
    The congressional budget should assertively define the 
allocation of resources in a way that aligns with Congress's 
vision of national priorities. Congress also should 
periodically review all spending programs, especially those 
funded with automatic spending.
    It is worth noting, too, that before 1974, only the 
President had a comprehensive fiscal plan for the government. 
Congress acted on spending and tax bills separately, and they 
were made part of the President's plan, sometimes with 
modifications. With the creation of the budget resolution under 
the Congressional Budget Act of 1974, Congress had its own 
comprehensive fiscal plan, and the President's actions in 
signing spending and tax bills became piecemeal. This 
represented a significant shift in governing authority.

                  CONTROLLING THE ADMINISTRATIVE STATE

    A huge expansion of the Executive Branch bureaucracy has 
accompanied the growth of the Federal Government's role in 
American society during the 20th century. The Progressive 
impulses that promoted this trend relied largely on policy 
``experts'' shielded from political influence. In their 
regulatory capacities, these bureaucrats have come to assume 
authorities of all three branches of government: legislative, 
executive, and judicial. Thus, America's constitutional 
government has increasingly become an administrative state 
largely run by unelected career government employees. Indeed, 
most of the laws passed by Congress simply authorize 
bureaucrats to devise regulations that will control Americans' 
lives.\261\
---------------------------------------------------------------------------
    \261\Jonathan Turley, ``The Rise of the Fourth Branch,'' The 
Washington Post, 26 May 2013: http://articles.washingtonpost.com/2013-
05-24/opinions/39495251_1_federal-agencies-federal-government-fourth-
branch.
---------------------------------------------------------------------------
    Whether the regulatory agencies are `executive agencies,' 
`executive departments,' `Federal departments,' or `independent 
regulatory commissions' is irrelevant. In whatever form they 
may take, the myriad agencies and departments that make up this 
administrative state operate as a `fourth branch' of government 
that typically combines the powers of the other three and makes 
policy with little regard for the rights and opinions of 
citizens.\262\
---------------------------------------------------------------------------
    \262\Joseph Postell, ``From Administrative State to Constitutional 
Government,'' Heritage Foundation Special Report No. 116, 7 December 
2012. p. 5: http://www.heritage.org/research/reports/2012/12/from-
administrative-state-to-constitutional-government.
---------------------------------------------------------------------------
    In addition to taking firmer control of the regulatory 
process itself,\263\ Congress could address this problem 
through budgeting. ``Congress funds the administrative state, 
providing financial support that the bureaucracy values highly. 
As a result of Congress's substantial powers, agencies and 
departments listen carefully when Congress speaks to 
them.''\264\
---------------------------------------------------------------------------
    \263\Ibid., pp. 25-26.
    \264\Ibid., p. 25.
---------------------------------------------------------------------------

             Promoting and Sustaining Fiscal Responsibility

    Budgets exist because resources are finite and needs are 
not. Both individuals and governments go to great lengths 
through budgeting to understand what resources are available 
and how best to allocate them among competing needs. A good 
budget should lead to sustainability, in which resources match 
needs over long periods of time even if temporary imbalances 
occur.
    There also must be honesty in recognizing the true 
difference between ``investments''--that is, legitimate cases 
in which needs temporarily exceed resources, but produce long-
term returns--and chronic deficits where over-consumption 
eventually leads to financial ruin. A good budget must also 
recognize the willingness of participants to provide 
resources--to be taxed--and force reconciliation with spending 
when chronic imbalances occur. The Federal budget is failing to 
provide either sustainability or a rational process that aligns 
spending with taxes.
    Targets for budget sustainability have become a hotly 
debated, partisan topic. The most straight-forward model--one 
that prevailed as a governing standard for most of the Nation's 
history until the 1970s--is a balanced budget, a rapidly 
declining ratio of debt to gross domestic product [GDP], and 
eventual liquidation of the national debt. On the other side, 
sustainability is defined as maintaining the current debt-to-
GDP ratio. Similarly, there is no agreement on the level of 
spending vs. the willingness to be taxed. Spending has averaged 
20.5 percent of GDP over the past 40 years, while revenue has 
averaged 17.4 percent--meaning a chronic deficit of about 3 
percent of total economic output has persisted.
    The current budget process contains no formal rules or 
default targets concerning either sustainability or levels of 
spending and taxation when the two parties cannot agree on 
levels. In theory, budget alignment could be brought about at 
any time by the Congress and President, but in practice it will 
be achieved only when one political party controls both Houses 
of Congress and the Presidency, and even then it is uncertain. 
The absence of default targets for debt, taxes, and spending 
reinforces the status quo, supporting biases in favor of higher 
spending, leading to spending levels that far exceed taxes, an 
ever growing level of debt, and ultimately an unsustainable 
budget outlook.
    A strong argument can be made that the current budget 
system is fatally flawed because it cannot self-correct an 
unsustainable outlook. Many developed countries facing similar 
problems have adopted fiscal rules to deal with this problem. 
Similarly, 49 of the 50 States of the U.S. have adopted some 
type of balanced budget requirement. A critical element of 
these requirements is that they apply regardless of the party 
in power, which guarantees a sensible fiscal outcome even if 
the specific policies in question are hotly debated.
    Given the real risk of an approaching Federal debt crisis 
and the inability of the current political environment to 
prevent it, now is the time to examine whether formal fiscal 
rules that guarantee sustainability and match spending with the 
taxes can be adopted within the Federal budget process.

        Restoring Congressional Control of Spending and Taxation

    For most of the Nation's history, Congress exercised its 
``power of the purse'' through a process in which periodic 
votes on spending was the norm, fixed allotments of funds were 
appropriated, and programs were authorized for finite periods 
of time. With the dramatic growth of automatic spending 
programs as a share of total outlays, Congress has gradually 
lost control of spending, and--perhaps unintentionally--has 
ceded much of its fiscal authority to the Executive Branch.
    The Federal Government's major health, retirement, and 
economic security programs--including Social Security, 
Medicare, and Medicaid--operate on the mechanism of automatic 
spending (formally ``direct'' or ``mandatory'' spending).\265\ 
Typically, once such a program is authorized, the payments flow 
automatically to eligible recipients and continue indefinitely, 
with no limit on total outlays and without regular 
congressional oversight. These automatic spending programs, 
coupled with net interest (a mandatory payment in the truest 
sense of the term) now constitute roughly two-thirds of total 
Federal spending, compared with about one-third in 1965, at the 
dawn of President Johnson's Great Society programs. The share 
of direct spending (including interest) is projected to 
continue increasing relentlessly, reaching 78 percent of the 
budget in just 10 years. This spending threatens to consume all 
Federal tax revenue in the near future if no reforms are made.
---------------------------------------------------------------------------
    \265\Although ``mandatory spending'' is the more common term, it is 
direct spending that has an actual definition in the Balanced Budget 
and Emergency Deficit Control Act of 1985 (Public Law 99-177), which 
describes it as budget authority provided in law other than 
appropriations acts; entitlement authority; and the Supplemental 
Nutrition Assistance Program (formerly food stamps).
---------------------------------------------------------------------------
    Conversely, annually appropriated, or ``discretionary'' 
spending, has plunged from two-thirds of total spending in 1965 
to one-third now, and is projected to continue shrinking 
(Figure 2). These discretionary accounts--which finance 
activities such as national defense, Washington's support for 
K-12 education, veterans' hospitals, homeland security, and the 
operations of government agencies, along with many others--are 
the only form of spending in which Congress directly controls 
the allocation of resources and the total amounts.
    Automatic spending programs, in contrast, are designed to 
evade any semblance of budget discipline: they have an 
unlimited source of funds, most are permanently authorized, and 
they do not require regular votes by Congress to continue 
operating. These features ironically flip the power of the 
purse on its head: money is taken from citizens and spent by 
the government, even without consent from the current Congress. 
Congress can change these programs by changing the underlying 
authorizing legislation, but the changes can take effect only 
if the President agrees and signs the legislation. As a result, 
Congress has lost control over the majority of the budget.
    Many argue that direct spending as currently structured 
explains chronic budget deficits and the growth in national 
debt. Indeed, the budget has been balanced only five times in 
the past 50 years, while at the same time automatic spending 
surged. Clearly, Congress needs to re-establish control over 
automatic spending if it intends to avoid deficits and 
dangerous levels of debt in the future. The specific details of 
how to reform these programs remain vexing, but basic 
principles such as fixed amounts of budgetary resources, finite 
authorizations, and regular votes to continue authorized 
programs should be adopted.

                   Emphasizing Regular Oversight and
                     Review of all Federal Spending

    To gain control of fiscal policy, the budget process should 
encourage regular review of all Federal spending. This is 
especially true with the budget dominated by direct, or 
mandatory, spending. Authorizing committees, who have 
jurisdiction over direct spending programs, hold many hearings 
on programs under their jurisdiction, but it is not clear that 
oversight and review of the effectiveness of direct spending is 
an ongoing priority. This may be partly due to how direct 
spending programs are treated under the budget process. Over 
the next decade, Social Security and the major health 
programs--Medicare, Medicaid, the Affordable Care Act, and the 
State Children's Health Insurance Program--will spend roughly 
$28.2 trillion, representing nearly 90 percent of all expected 
mandatory spending over this period.\266\
---------------------------------------------------------------------------
    \266\Congressional Budget Office, The Budget and Economic Outlook: 
2016 to 2026, January 2016, Table 3-2, pp. 68-69.
---------------------------------------------------------------------------
    While the authorizing committees with jurisdiction over 
these programs could make changes--for example, in a budget 
reconciliation bill pursuant to a budget resolution--such 
permanently authorized direct spending programs tend to reduce 
the incentive for oversight and review of spending. The Social 
Security Program is permanently authorized and is also off 
budget. Consequently, Congress cannot consider changes to 
Social Security under the regular budget or reconciliation 
process.
    Most of the remaining 20 percent of expected direct 
spending is accounted for by programs that are authorized for 
finite periods. The Congress must reauthorize such programs 
when they face expiration if it wishes for them to continue. In 
such cases, there is more incentive for oversight activity by 
the relevant authorizing committees. Nevertheless, the budget 
baselines generated by the Congressional Budget Office assume 
that most direct spending programs will continue, even if their 
authorizations are set to expire.\267\ As a result, when the 
programs are reauthorized, the estimates show little or no 
increase in spending. This situation tends to reinforce the 
status quo and lessens the incentive to review direct spending.
---------------------------------------------------------------------------
    \267\This is pursuant to section 257 of the Balanced Budget and 
Emergency Deficit Control Act of 1985.
---------------------------------------------------------------------------
    The budget process could be changed by enacting explicit 
long-term targets and an annual review for Medicare, Medicaid, 
and Social Security as well as other direct spending 
programs.\268\ Statutory spending caps are currently 
established only for discretionary spending. Establishing 
statutory limits for direct spending programs would tend to 
encourage more regular oversight and review of all Federal 
spending. It could also encourage legislators to reach 
conclusions in a timely manner.
---------------------------------------------------------------------------
    \268\This idea extends Recommendation 2 as discussed on pages 13-14 
of the Bipartisan Policy Center's June 2015 report, ``Proposal for 
Improving the Congressional Budget Process'' to all direct spending 
programs.
---------------------------------------------------------------------------
    Another problem is that even if Congress identifies 
wasteful or obsolete programs, it is difficult to get estimates 
of the savings that could result from eliminating them. This 
diminishes the incentive to pursue such oversight.

                 Reflecting the True Costs of Programs

    One of the successes of the Congressional Budget Act of 
1974 was the Congressional Budget Office [CBO], created to 
provide Congress with independent fiscal and economic analysis. 
Prior to 1974, Congress had to rely on the administration for 
such information.
    Some of CBO's estimates fail to reflect the true costs of 
government programs or legislative proposals, or misrepresent 
likely fiscal outcomes. In many cases, this is due to 
estimating conventions that have been approved by Congress--
some of which contribute toward biases in favor of higher 
spending. Many of these conventions were created by a 
commission convened nearly a half century ago--in 1967, under 
President Johnson--yet they remain in use today.\269\
---------------------------------------------------------------------------
    \269\See the Report of the President's Commission on Budget 
Concepts, 10 October 1967.
---------------------------------------------------------------------------
    One example is the use of budget baselines. Although 
baselines are an important means of estimating the direction of 
Federal spending and revenue, they tend to assume all spending 
will continue to grow, maintaining its relative share of the 
Nation's economic resources. Consequently, the baseline builds 
in assumptions of ever-increasing spending.
    A second example lies in estimates of Federal credit 
programs. Current methodologies understate the costs of Federal 
loans and loan guaranties, because they do not account for 
credit risks arising from these programs. This technique leads 
estimators to conclude the government's direct student loan 
program will result in savings for the government when in fact, 
if default risks were suitably included--by using fair value 
accounting--they would likely show costs to the government.
    A third example is the treatment of user fees and other 
government collections outside of taxes. Many of these fees are 
counted not as additional revenue to the government, but as 
``negative outlays,'' or reductions in spending. This practice 
gives the impression that increasing a fee decreases spending, 
when in fact it does just the opposite: it uses the fees to 
support an increase in spending that is masked by a misleading 
estimating convention.
    Some of these practices also encourage the exploitation of 
estimating conventions to make legislative proposals appear 
less expensive than they are. The gimmicks include timing 
shifts--moving costs into subsequent fiscal years or outside 
the 10-year budget estimating window--or temporary or illusory 
spending offsets.
    In addition, some government-backed entities--such as the 
Federal National Mortgage Association [Fannie Mae] and the 
Federal Home Loan Mortgage Corporation [Freddie Mac] are not 
included in the regular budget accounts, even though they 
represent enormous exposures to taxpayers.
    One other failing in the budget is a lack of accounting for 
regulation. Regulations clearly impose costs, both in direct 
costs for implementation, and also the burden of economic 
costs. The latter are difficult to quantify, but even if it 
were possible, there is no place in the budget to reflect them. 
(This subject is further addressed in the next section of this 
report.)

                               Conclusion

    Considering the great importance of restoring an effective 
and vigorous practice of congressional budgeting--one built on 
the principles described above--the Committee plans to 
undertake a thorough rewrite of the Congressional Budget Act of 
1974, with the hope of enacting a new process early in 2017.

                          REGULATORY BUDGETING

                              ----------                              

    The restoration of sound budgeting for how the Federal 
Government spends taxpayer dollars is critical to the promotion 
of economic growth, debt reduction, federalism, and ordered 
liberty. So too is the introduction of budgeting for how the 
Federal Government directs others to spend: regulatory 
budgeting.
    Excessive and unnecessary regulation is a hidden tax on 
Americans. It regressively taxes the poor, leaves displaced 
workers unemployed or in lower-paying jobs, and often inflicts 
concrete pain in search of illusory benefits. It is one of the 
biggest reasons America's growth rate has failed to yield a 
sufficient recovery during the Obama years.
    Growing research shows that the cumulative burden of 
Federal regulation--and high regulatory uncertainty about what 
regulation may come next--drains America's economy of the 
growth it needs to reduce and eliminate Federal debt. Precious 
manpower and financial resources that productive sectors could 
otherwise spend on innovating, hiring new workers, and rolling 
out new products and services is wasted every day on compliance 
with extensive amounts of new regulation--and the enormous 
numbers of regulations already on the books.
    All too often, this serves only the administrative state, 
not families in search of a living, the poor in search of 
opportunity, and workers in need of a job. Washington's 
regulatory bureaucracy rarely knows both the monetized costs 
and the monetized benefits of even new major regulations that 
it issues. Frequently, the benefits claimed for new regulation 
are not the direct benefits Congress directly sought when it 
passed the relevant regulatory statutes. Instead, they are 
purported ``co-benefits''--side effects--that the bureaucracy 
argues serve some other end.
    None of this can be afforded by an America that must rely 
on private sector growth to help pay down almost $20 trillion 
in Federal Government debt. None of it should be countenanced 
by a Nation founded on the principles of limited government and 
personal liberty.
    None of this, moreover, has to continue. When regulation is 
needed, it can be done in more cost-effective ways. Before it 
is imposed, Congress can budget for how much new regulation, if 
any, can sustainably be imposed on America's economy year by 
year. The undue brake on economic growth that Federal 
regulation sets must be controlled. It makes eminent sense to 
do that using the kinds of budgeting tools Congress applies to 
put the brakes on runaway Federal spending. To date, Congress 
has not adopted regulatory budgeting tools to manage the 
Federal regulatory footprint in the way that it manages the 
Federal spending footprint. Neither has it imposed robust 
statutory controls against Federal regulators' abilities to 
burden America's workers and economy with excessively expensive 
and insufficiently effective Federal regulations. The time has 
come that it should do both.

                     SECTION-BY-SECTION DESCRIPTION

                              ----------                              

    The concurrent resolution on the budget for fiscal year 
2017 establishes an overall budgetary framework. As required 
under the Congressional Budget Act of 1974 [the Budget Act], 
the framework includes aggregate levels of new budget 
authority, outlays, revenues, the amount by which revenues 
should be changed, the surplus or deficit, new budget authority 
and outlays for each major functional category, debt held by 
the public, and debt subject to the statutory limit. This 
resolution also sets forth appropriate budgetary levels for 
fiscal years 2018 through 2026.
    This resolution provides reconciliation instructions to 
authorizing committees to achieve specified deficit reduction 
targets. It includes rulemaking provisions necessary to enforce 
the resolution, procedures for adjusting the budget resolution, 
provisions to accommodate legislation not assumed in the budget 
resolution, and specifies certain policy assumptions underlying 
the budget resolution.
Section 1. Concurrent Resolution on the Budget for Fiscal Year 2017.
    Subsection (a) establishes the budgetary levels for fiscal 
year 2017 and each of the nine ensuing fiscal years, 2018 
through 2026. Section 301(a) of the Budget Act stipulates that 
the budget resolution establish budgetary levels for the fiscal 
year for which such resolution is adopted and at least for each 
of the four ensuing fiscal years.
    In addition to the levels set forth in the fiscal year 2017 
budget resolution, this report provides allocations of budget 
authority and outlays, as required under section 302 of the 
Budget Act, to the Committee on Appropriations. The Committee 
on Appropriations, in turn, suballocates this among its twelve 
subcommittees for spending on the various programs, projects, 
and activities within the jurisdiction of the subcommittees.
    This report provides allocations to each of the authorizing 
committees, with jurisdiction over entitlements and other forms 
of mandatory spending. In addition to an allocation for fiscal 
year 2017, the authorizing committees receive an allocation of 
spending authority over the 10-year period provided for by this 
budget resolution and may not spend more than the allocation 
for the budget year or over the 10-year period.
    Subsection (b) sets out the table of contents of the 
resolution.

                TITLE I--RECOMMENDED LEVELS AND AMOUNTS

Section 101. Recommended Levels and Amounts.
    Section 101, as required by section 301 of the Budget Act, 
establishes the recommended levels for revenue, the amount 
revenue should be changed, total new budget authority, total 
budget outlays, surpluses or deficits, debt subject to the 
statutory limit, and debt held by the public.
    The revenue level operates as a floor against which all 
revenue bills are measured pursuant to section 311 of the 
Budget Act. Similarly, the recommended levels of new budget 
authority and budget outlays serve as a ceiling for spending 
legislation. The surplus or deficit levels include only on-
budget outlays and revenue and do not include most outlays and 
receipts related to the Social Security Program and United 
States Postal Service operations.
    Debt subject to the statutory limit aggregates generally 
refers to the portion of gross Federal debt issued by the 
Treasury to the public or another government fund or account, 
whereas debt held by the public is the amount of debt issued 
and held by entities or individuals other than the U.S. 
Government.
Section 102. Major Functional Categories.
    Section 102, as required by section 301(a) of the Budget 
Act, establishes the budgetary levels for each major functional 
category for fiscal year 2017 and establishes these levels for 
each of fiscal years 2018 through 2026.
    These major functional categories are the following:
          050 National Defense
          150 International Affairs
          250 General Science, Space, and Technology
          270 Energy
          300 Natural Resources and Environment
          350 Agriculture
          370 Commerce and Housing Credit
          400 Transportation
          450 Community and Regional Development
          500 Education, Training, Employment, and Social 
        Services
          550 Health
          570 Medicare
          600 Income Security
          650 Social Security
          700 Veterans Benefits and Services
          750 Administration of Justice
          800 General Government
          900 Net Interest
          920 Allowances
          930 Government-Wide Savings
          950 Undistributed Offsetting Receipts
          970 Overseas Contingency Operations/Global War on 
        Terrorism

               TITLE II--RECONCILIATION AND OTHER MATTERS

Section 201. Fiscal Year 2017 Budgetary Agenda.
    Section 201 sets forth, in a policy statement, the 
budgetary agenda for the House for the second session of the 
114th Congress. Under this framework, the House intends to 
consider legislation achieving savings in mandatory spending 
both through and outside of the reconciliation process, 
controls on new mandatory spending, and other reforms to the 
Federal budget process.
    Paragraph (1) states that the House will consider 
reconciliation legislation as the first step in balancing the 
Federal budget by fiscal year 2026. Paragraph (2) states that 
the House will consider a bill outside of reconciliation to 
achieve $30 billion in savings in fiscal year 2017 and 2018. 
Paragraph (3) states that the House will similarly consider a 
measure to control mandatory spending. Under paragraph (4), the 
appropriate committees will consider each of three budget 
process reforms specified in section 205.
Section 202. Reconciliation in the House of Representatives.
    Subsection (a) specifies a deadline of 90 calendar days 
after the adoption of the budget resolution for the authorizing 
committees to submit reconciliation legislation to the 
Committee on the Budget. These instructions are optional 
procedures permitted under section 301(b) of the Budget Act.
    Subsection (b) sets forth reconciliation instructions to 12 
authorizing committees, pursuant to section 310 of the Budget 
Act, to achieve specified amounts of deficit reduction. The 
instructed committees have jurisdiction over direct spending 
programs for which savings are assumed in the budget 
resolution. The instructed committees and the amount of savings 
are:

 
 
 
 
Committee on Agriculture...............................   $1,000,000,000
Committee on Armed Services............................     $100,000,000
Committee on Education and the Workforce...............   $1,000,000,000
Committee on Energy and Commerce.......................   $1,000,000,000
Committee on Financial Services........................   $1,000,000,000
Committee on Homeland Security.........................      $15,000,000
Committee on the Judiciary.............................   $1,000,000,000
Committee on Natural Resources.........................     $100,000,000
Committee on Oversight and Government Reform...........   $1,000,000,000
Committee on Transportation and Infrastructure.........     $100,000,000
Committee on Veterans' Affairs.........................   $1,000,000,000
Committee on Ways and Means............................   $1,000,000,000
 


    This budget resolution follows the convention of not 
reconciling Senate committees and assumes that the Senate 
budget resolution will include such instructions and be carried 
in the conference agreement nor does it include any instruction 
increasing the debt limit.
    The committees are instructed to achieve specified deficit 
reduction targets rather than changes in budget authority, 
outlays, or revenue. While this instruction provides 
flexibility as to how the savings may be scored, the budget 
resolution assumes savings will be achieved through reductions 
in direct spending. The reconciled amounts are intended to 
serve as a floor on required savings, not a ceiling. The 
targets are for the total of the ten-year period of fiscal 
years 2017 through 2026. These targets will provide the 
committees maximum flexibility in the construction of savings 
while ensuring the budget is balanced within the 10-year 
window.
    The reconciled committees are required to markup 
legislation that meets their reconciliation target and submit 
legislation to the Committee on the Budget instead of reporting 
it directly to the House. Other than submitting their 
legislation to the Committee on the Budget, committees are 
expected to follow regular order in complying with House and 
Committee rules related to markup procedures and reporting 
requirements.
    The Committee on the Budget will then combine the 
submissions and report the bill to the House. Under section 
310(b) of the Budget Act, the Committee on the Budget must 
report the submissions without substantive revision. The 
committees determine their own policies as long as they meet 
the reconciliation targets.
    Subsection (c) authorizes the Chair of the Committee on the 
Budget to revise the appropriate allocations, aggregates, and 
functional levels of this budget resolution upon the 
consideration of a reconciliation measure under section 310 of 
the Budget Act or amendment thereto or the submission of a 
conference report to the House, if such measure is in 
compliance with its reconciliation instructions by virtue of 
section 310(c) of the Budget Act.
Section 203. Policy Statement on Mandatory Savings Outside of the 
        Reconciliation Process.
    Section 203(a) establishes a second option for achieving 
mandatory savings in this budget resolution in the form of a 
policy statement. It states that the House will consider early 
in this session legislation that would achieve not less than 
$30 billion in savings over fiscal years 2017 and 2018 and $140 
billion over the 10-year period of fiscal years 2017 through 
2026.
    This process will begin immediately, with several 
committees reporting the week of 14 March 2016 and other 
committees to follow in subsequent weeks.
    Subsection (b) lists the five committees that will 
participate in moving this legislation. The committees are:
          Committee on Agriculture
          Committee on Energy and Commerce
          Committee on Financial Services
          Committee on the Judiciary
          Committee on Ways and Means

    Subsection (c) lists three potential policies that are 
expected to be part of the package of savings assembled under 
this section:
          Recovering improper Obamacare subsidy payments.
          Eliminating enhanced Medicaid payments for prisoners.
          Ending Medicaid payments for lottery winners.

    This mandatory savings legislative package in this 
resolution is a high priority and the Committee's goal is to 
ensure that the House advances this legislation through the 
Congress. To that end, subsection (d) sets forth a procedure 
for consideration of this mandatory savings package that starts 
with a stand-alone measure that the House would pass. The 
Senate frequently does not act on House legislation. To avoid 
the outcome where this stand-alone bill languishes in the 
Senate, this subsection calls on the House to add the savings 
to one or more other measures with a fiscal impact. For the 
purposes this section, a measure with a fiscal impact is a bill 
that the Joint Committee on Taxation estimates would have a 
revenue impact, a bill that the Congressional Budget Office 
[CBO] estimates would have a budget impact under section 402 of 
the Congressional Budget Act, or an appropriations bill.
    Subsection (e) clarifies that if the House considers an 
omnibus measure containing mandatory savings, the proceeds from 
those savings will be credited to the appropriate committees of 
jurisdiction.
    Section 204. Policy Statement on New Mandatory Spending 
Controls.
    Section 204 provides a third option for controlling 
mandatory spending assumed in this budget resolution. Again in 
the context of a policy statement, it allows the House to 
consider procedural reforms in connection with new mandatory 
spending programs.
    This section mentions five specific measures that the 
appropriate committee will consider as it seeks to provide the 
tools necessary to control spending not subject to annual 
appropriations. The first is a limitation on the 
reauthorization of new mandatory spending programs. Such a 
control could take the form of a rule prohibiting the 
authorization of new entitlement programs or retooling obsolete 
rules from the Budget Act.
    A second measure that could be considered is a requirement 
that mandatory programs be periodically reviewed or even 
reauthorized. Much of the Federal budget is consumed by 
programs that have permanent indefinite appropriations or where 
the authorizations are permanent and the appropriations are 
only nominally provided through the annual appropriations 
process.
    A third measure that may be considered by the Committee on 
the Budget would be a modification of the existing Pay-As-You-
Go [PAYGO] requirements set forth in section 252 of the 
Balanced Budget and Emergency Deficit Control Act of 1985. It 
would modify PAYGO from a rule mandating that the sum of 
legislation increasing direct or mandatory spending or reducing 
revenue must be deficit-neutral or an automatic sequester is 
triggered across a narrow base of mandatory spending programs.
    A fourth measure meriting consideration would modify the 
reconciliation process set forth in section 310 of the Budget 
Act to permit the inclusion of legislation submitted by the 
Committee on the Budget to impose controls over different 
facets of the Federal budget, including statutory limits on 
discretionary spending, Pay-As-You-Go requirements for 
legislation that would increase mandatory spending and 
limitations on measures to authorize new mandatory programs.
    A fifth measure that will be considered would be a 
limitation on the ability to reclassify historically 
discretionary spending programs into mandatory spending 
programs as a means of circumventing the discretionary spending 
limits.
Section 205. Policy Statement on Other Budget Process Reforms.
    Section 205 provides a fourth option for increasing 
scrutiny of and control over the budget. It states that is the 
policy of the House that during the second session of the 114th 
Congress the appropriate committees of jurisdiction and the 
Congress consider the following reforms of the budget process: 
an amendment to the United States Constitution requiring a 
balanced budget, a baseline budgeting measure, requirements 
relating to unauthorized appropriations, and other reforms that 
may be recommended by the appropriate committees of 
jurisdiction.
    These individual measures represent only incremental steps 
to reform the Federal budget process. The Chair of the 
Committee on the Budget has already announced his intention to 
consider a comprehensive overhaul of the Federal budget process 
during the 115th Congress and the Committee on the Budget has 
already held a number of hearings to that end in the 114th 
Congress.

                     TITLE III--BUDGET ENFORCEMENT

                 Subtitle A--Budget Enforcement in the
                        House of Representatives

Section 301. Limitation on Long-Term Spending.
    Subsection (a) requires the Congressional Budget Office, to 
the extent practicable, to prepare an estimate of whether a 
measure would cause a net increase in direct spending in excess 
of $5 billion over the long-term. The applicable periods for 
this section are any of the 4 consecutive 10-fiscal-year 
periods beginning in fiscal year 2026.
    Subsection (b) establishes a point of order against the 
consideration of any measure other than an appropriation 
measures (or amendment thereto or conference report thereon) 
that increases direct spending by $5 billion over the long-
term. The applicable periods for this section are any of the 4 
consecutive 10-fiscal-year periods beginning in fiscal year 
2026.
    Subsection (c) states that application of this section in 
the House shall not apply to any measure for which the Chair of 
the Committee on the Budget adjusts the appropriate levels of 
this budget resolution pursuant to section 402 or 410 of this 
resolution. In other words, the adjusted levels ``snap back'' 
after the measure is considered. This would prevent the 
creation of headroom under which the spending legislation could 
be considered. The adjustment only becomes permanent once the 
measure is enacted.
    Subsection (d) stipulates that for purposes of this 
section, the levels of net increases in direct spending shall 
be determined on the basis of estimates provided by the Chair 
of the Committee on the Budget.
    Section 302. Allocation for Overseas Contingency 
Operations/Global War on Terrorism.
    Subsection (a) provides the Committee on Appropriations 
with a separate allocation for the purposes of Overseas 
Contingency Operations/Global War on Terrorism [OCO/GWOT] under 
section 302(a) of the Budget Act, which is included in the 
allocation tables in this report.
    Subsection (b) stipulates that this separate allocation is 
the exclusive allocation for OCO/GWOT under section 302(b) of 
the Budget Act and permits the Committee on Appropriations to 
suballocate such separate allocation pursuant to section 302(b) 
of the Budget Act.
    Subsection (c) stipulates that, for purposes of enforcing 
the point of order under section 302(f) of the Budget Act, the 
``first fiscal year'' and the ``total of fiscal years'' refers 
to fiscal year 2017 only. This separate allocation is the 
exclusive allocation for OCO/GWOT under section 302(a) of the 
Budget Act. It also stipulates that section 302(c) of the 
Budget Act does not apply to this separate allocation.
    Subsection (d) provides that only appropriations designated 
in an appropriations bill for OCO/GWOT and that are subject to 
the statutory spending limits will be counted against the OCO/
GWOT allocation.
    Subsection (e) ensures that the budget resolution levels 
are not inadvertently adjusted for any OCO/GWOT appropriations 
because these appropriations are already accommodated in the 
separate 302(a) allocation for OCO/GWOT. It specifically 
provides that no adjustment will be made under section 314(a) 
of the Budget Act if an adjustment would be made under section 
251(b)(2)(A)(ii) of the Deficit Control Act.
    Subsection (f) authorizes the Chair of the Committee on the 
Budget to adjust the appropriate budgetary levels related to 
OCO/GWOT in this budget resolution or the Committee on 
Appropriations' 302(a) allocation set forth in this report to 
account for new information.
Section 303. Limitation on Changes in Certain Mandatory Programs.
    Subsection (a) defines the term ``change in mandatory 
programs'' as a provision that: (1) would have been estimated 
as affecting direct spending or receipts under section 252 of 
the Deficit Control Act (as in effect prior to 30 September 
2002) if such provision was included in legislation other than 
appropriation Acts; and (2) results in a net decrease in budget 
authority in the budget year, but does not result in a net 
decrease in outlays over the period of the total of the current 
year, budget year, and all fiscal years covered under the most 
recently agreed to budget resolution.
    Subsection (b) establishes a point of order against any 
provision in a bill or joint resolution or amendment thereto or 
conference report thereon making appropriations for a full 
fiscal year that proposes a change in mandatory programs that, 
if enacted, would cause the absolute value of all such change 
in mandatory programs enacted in relation to a full fiscal year 
to be more than the amount specified under this section. The 
amounts under this subsection are as follows:
          Fiscal Year 2017: $19,100,000,000;
          Fiscal Year 2018: $17,000,000,000; and
          Fiscal Year 2019: $15,000,000,000.

    Subsection (c) stipulates that, for purposes of this 
section, budgetary levels shall be determined on the basis of 
estimates provided by the Chair of the Committee on the Budget.
Section 304. GAO Report.
    Subsection (a) requires the Comptroller General, in 
consultation with the Chair of the Committee on the Budget, the 
Director of the Congressional Budget Office, and the Director 
of the Office of Management and Budget, to submit a 
comprehensive list of all current direct spending programs at a 
date to be specified by the Chair of the Committee on the 
Budget.
    Subsection (b) requires the Chair of the Committee on the 
Budget to publish this comprehensive list of direct spending 
programs in the Congressional Record and on the Committee's 
website in a searchable, sortable, and downloadable format.
    There is not a commonly accepted definition of a 
``program'' in budget and appropriations law. Consequently, 
individual programs, projects and activities are classified by 
each agency according to a variety of standards.
    A comprehensive list of such programs will prove useful in 
developing new procedures governing legislation that 
establishes new mandatory programs, enforcing rules relating to 
earmarks, and in interpreting exemptions to the rules governing 
extension of expiring programs in section 257 of The Deficit 
Control Act.
    A list of accounts will not be received by the Committee on 
the Budget as a fulfillment of this requirement. The Committee 
understands that Executive agencies may have failed to fulfill 
similar requirements in other laws, but views that as 
immaterial to this requirement.
    As part of this project, the Committee on the Budget will 
work closely with the Comptroller General to develop a workable 
definition of a ``program'' and to establish criteria for 
determining what constitutes a ``new program.''
Section 305. Estimates of Debt Service Costs.
    Section 305 authorizes the Chair of the Committee on the 
Budget to direct the Congressional Budget Office to include an 
estimate of debt service costs (if any) resulting from carrying 
out legislation in any estimate prepared pursuant to section 
402 of the Budget Act. Estimated debt service costs will be 
advisory and will not be used for determining whether a measure 
complies with the limits established in the budget resolution 
or other budget rules. This requirement is not intended to 
apply to authorizations of discretionary programs or 
appropriation bills. However, it is intended to apply to 
changes in the authorization level of appropriated 
entitlements.
    The Chair will only request such estimates with large bills 
that could have a noticeable effect on debt service costs.
Section 306. Fair-Value Credit Estimates.
    This section was revised for clarity but the section 
operates in an identical manner to section 3105 of the 
conference report accompanying S. Con. Res. 11, the Fiscal Year 
2016 Concurrent Resolution on the Budget.
    Subsection (a) requires the Congressional Budget Office to 
include a supplemental fair-value estimate, to the extent 
practicable, in its estimate of any legislation that 
establishes or modifies a program providing loans or loan 
guarantees if requested by the Chair of the Committee on the 
Budget.
    Subsection (b) requires the Congressional Budget Office to 
provide a similar supplemental fair-value estimate of any 
legislation providing loans or loan guarantees for student 
financial assistance or housing (including residential 
mortgage).
    Subsection (c) requires the Congressional Budget Office, to 
the extent practicable, to include in its Budget and Economic 
Outlook: 2018 to 2027, a comparison baseline projection for 
student financial assistance, housing (including residential 
mortgage) and other such credit programs on a fair value and 
credit reform basis.
Section 307. Estimates of Major Direct Spending Legislation.
    Section 307 requires the Congressional Budget Office, to 
the extent practicable, to estimate outlay changes during the 
second and third decades of enactment for any direct spending 
legislative provision that either: (1) proposes a change or 
changes to law that the Congressional Budget Office determines 
has an outlay impact exceeding 0.25 percent of the GDP of the 
United States during the first decade or in the tenth year or 
(2) upon the request of the Chair of the Committee on the 
Budget.
Section 308. Estimates of Macroeconomic Effects of Major Legislation.
    This rule is essentially identical to section 3112 of the 
conference report accompanying S. Con. Res. 11, the Fiscal Year 
2016 Concurrent Resolution on the Budget), which effectively 
superseded an earlier version of the rule set forth in clause 8 
of House rule XIII.
    Subsection (a) directs the Congressional Budget Office and 
Joint Committee on Taxation, as applicable, to incorporate in 
the cost estimates for major legislation, to the extent 
practicable, the macroeconomic effects of such legislation 
during the 114th and 115th Congresses.
    Subsection (b) stipulates that these macroeconomic 
estimates are to include, to the extent practicable, a 
qualitative assessment of the budgetary effects of major 
legislation in the 20-fiscal year period beginning after the 
last fiscal year of the most recently agreed to budget 
resolution and an identification of the assumptions and source 
data underlying the estimate.
    Subsection (c) defines major legislation as legislation 
that causes a gross budgetary effect (before incorporating 
macroeconomic effects) and not including timing shifts in any 
fiscal year covered by the budget resolution equal to or 
greater than 0.25 percent of the current projected gross 
domestic product of the United States for that fiscal year. 
Under this subsection, the Chair of the Committee on the Budget 
of the House or Senate, as applicable for direct spending 
legislation, and the Chair or Vice Chair of the Joint Committee 
on Taxation, as applicable for revenue legislation, may 
designate major legislation for which estimates must 
incorporate macroeconomic effects.
    The term ``budgetary effects'' is defined as changes in 
revenues, direct spending outlays, and deficits. Subsection (c) 
defines ``timing shifts'' as provisions that either: (1) cause 
a delay of the date in which outlays flowing from direct 
spending would otherwise occur from one fiscal year to the next 
fiscal year; or (2) cause an acceleration of the date on which 
revenues would otherwise occur from one fiscal year to the 
prior fiscal year.
Section 309. Adjustments for Improved Control of Budgetary Resources.
    Section 309, a long-time feature of budget resolutions, is 
intended to remove a disincentive to subjecting existing 
mandatory programs to annual appropriations. It would 
effectively hold the Appropriations Committee harmless for any 
such conversion and prevent the responsible authorizing 
committee from reaping a windfall that it could otherwise use 
to offset other increases in mandatory spending.
    Under subsection (a), if an authorizing committee reports a 
bill that subjects a mandatory program to annual 
appropriations, the Chair of the Budget Committee can increase 
the 302(a) allocation to the Appropriations Committee by the 
amount of mandatory spending that was previously provided for 
that program. At the same time, the Chair would reduce 302(a) 
allocation of the authorizing committee that reported the bill 
by the same amount. These adjustments would be made upon 
enactment of the legislation.
    Subsection (b) authorizes the Chair to both make the 
adjustments under (a) and affirm the Chair's authority to 
determine the cost estimates used to execute this section.
Section 310. Limitation on Advance Appropriations.
    Section 310 provides a limit on appropriations that first 
become effective in fiscal year 2018.
    Subsection (a) prohibits the consideration of any general 
or continuing appropriations measure from making advance 
appropriations unless the appropriation is included in a list 
of exceptions in the joint statement of managers accompanying 
this report.
    Subsection (b) specifies the list of excluded accounts that 
are eligible for advance appropriations, are referred to in 
this report or joint explanatory statement, as applicable, in 
the section designated as ``Accounts Identified for Advance 
Appropriations.''
    Subsection (c) sets an overall limit for allowable advance 
appropriations. It permits advance appropriations of up to 
$66,385,032,000 for the veterans accounts referenced in 
subsection (b) and referred to in this report. This amount is 
equal to the President's advanced appropriations request for 
fiscal year 2018. It also allows up to $28,852,000,000 in 
advance appropriations for other accounts referenced in 
subsection (b) and referred to in this report.
    Subsection (d) defines an ``advance appropriation'' as any 
new discretionary budget authority provided in a bill, joint 
resolution, amendment, or conference report making general or 
continuing appropriations for a fiscal year following fiscal 
year 2017.
Section 311. Scoring Rule for Energy Savings Performance Contracts.
    This section would estimate in today's dollars the net cash 
flows, both savings and costs, associated with Energy 
Performance Contracts and Utility Service Contracts [ESPC] over 
the period of the contract. This scoring rule would have the 
effect of capturing any long-term energy and budgetary savings 
resulting from these contracts, which cash-based accounting 
does not since most of these savings occur outside of the ten-
year window of cash-based estimates. The scoring rule clarifies 
that these contracts are to be scored as direct spending and 
that no budgetary savings resulting from an ESPC contract may 
be used as an offset for budget enforcement. This scoring rule 
is designed to be policy neutral regarding future ESPCs.
    At the same time, this rule preserves the important 
budgetary principle that these costs are mandatory if imposed 
by an authorization bill and if there is a net cost associated 
with these contracts the costs are attributed to the 
authorizing committee reporting the legislation and with it the 
obligation to cover the cost of the contracts. The rule does 
not change the fact that actual payments made by Federal 
agencies are made through discretionary appropriations.
    Subsection (a) requires the Director of the Congressional 
Budget Office to estimate the net present value basis of any 
legislation that expands the Federal Government's authority to 
enter into ESPCs.
    Subsection (b) stipulates that the net present value is 
calculated as follows: (1) the discount rate must reflect 
market risk; (2) cash flows must include, whether mandatory or 
discretionary spending, payments to contractors under the terms 
of their contracts, payments to contractors for other services, 
and direct savings in energy and energy-related costs; and (3) 
the stream of payments must cover the period of the contracts 
but not to exceed 25 years.
    Subsection (c) defines ``covered energy savings contract'' 
as either: (1) an energy savings performance contract 
authorized under section 801 of the National Energy 
Conservation Policy Act or (2) a utility energy service 
contract as described in the Office of Management and Budget 
Memoranda on Federal use of energy savings performance 
contracting (M-98-13) or Federal use of energy saving 
performance contracts and utility energy service contracts (M-
12-21) or any successor to either memorandum.
    Subsection (d) prohibits the use of any savings calculated 
as a net present value calculation under this section as an 
offset for purposes of budget enforcement in the House.
    Subsection (e) requires that, for purposes of budget 
enforcement, the estimated net present value of the budget 
authority provided by the legislation and outlays flowing 
therefrom to be classified as direct spending.
    Subsection (f) expresses the sense of the House that the 
Director of the Office of Management and Budget, in 
consultation with the Director of the Congressional Budget 
Office, should separately identify the cash flows under 
subsection (b)(2) and include such information in the 
President's annual budget submission to Congress. It further 
specifies that this model should not be extended to other 
areas.
Section 312. Estimates of Land Conveyances.
    Section 312 provides for greater transparency in the 
Congressional Budget Office's estimates for land conveyances. 
The Congressional Budget Office is required to estimate the 
budgetary impact of reported legislation as well as conference 
reports under section 308 of the Budget Act. These estimates 
are used by the Committees on the Budget to enforce the 
spending and revenue limits in the budget resolution during the 
consideration of spending and tax legislation.
    Section 312 specifically requires the Director of the 
Congressional Budget Office to include in the cost estimate for 
any measure conveying Federal land to a non-Federal entity the 
following: (1) the methodology used to calculate the estimate; 
(2) a detailed justification of its estimate of any change in 
revenue, offsetting receipts, or offsetting collections 
resulting from such a conveyance; (3) any information, provided 
by the applicable Federal agency that supports the estimate of 
the Congressional Budget Office must document the source of the 
information and to the extent practicable, the date it was 
compiled by the agency; (4) a description of any efforts to 
independently verify the agency estimate; and (5) a statement 
of assumptions underlying the estimate of budgetary effects 
that would be generated by the transfer of a parcel of land in 
the Congressional Budget Office's baseline projections as of 
the most recent publication or update.
    The Committee intends that the term ``conveyance'' is to be 
interpreted broadly to include, but not limited to, transfers, 
sales, directed sales, and donations.
Section 313. Limitation on Transfers from the General Fund of the 
        Treasury to the Highway Trust Fund.
    Section 313 stipulates that, for purposes of budget 
enforcement, transfers of funds from the general fund of the 
Treasury to the Highway Trust Fund will count as new budget 
authority and outlays equal to the amount of the transfer in 
the fiscal year in which the transfer occurs.
Section 314. Prohibition on the Use of Guarantee Fees as an Offset.
    Section 314 provides that legislation increasing guarantee 
fees will not be counted in the determination of whether such 
legislation complies with the limits established in the budget 
resolution and the accompanying report. The Congressional 
Budget Office's estimates will continue to display the fees, 
but these fees could not be used to offset other provisions. It 
is the intent of the Committee that the savings would also not 
be included in the Current Level reports required by the Budget 
Act, which means that the savings cannot be used to offset 
spending in measures that might be considered after the 
enactment the bill increasing the fees.
Section 315. Prohibition on the use of Federal Reserve Surpluses as an 
        Offset.
    Similar to section 314, section 315 directs the Committee 
on the Budget to not take into consideration the proceeds from 
transfers of surpluses held by the Federal Reserve to the 
Department of the Treasury. Notwithstanding the Congressional 
Budget Office's estimates of these transactions, the Committee 
views the transfer of the Federal Reserves' surpluses as 
essentially a timing shift. It is the intent of the Committee 
that the savings would also not be included in the Current 
Level reports required by the Budget Act, which means that the 
savings cannot be used to offset spending in measures that 
might be considered after the enactment the bill transferring 
the surpluses.

                      Subtitle B--Other Provisions

Section 321. Budgetary Treatment of Administrative Expenses.
    Subsection (a) provides that the administrative expenses of 
the Social Security Administration and the United States Postal 
Service are reflected in the allocation to the Committee on 
Appropriations even though both are technically off-budget. 
This language is necessary to ensure the Committee on 
Appropriations retains control over administrative expenses for 
the agencies through the annual appropriations process. This 
budgetary treatment of administrative expenses for these 
entities is based on the long-term practice of the House and 
Senate Budget Committees.
    Subsection (b) requires administrative expenses to be 
included in the cost estimates for the relevant appropriations 
measure, which are used to determine if a measure exceeds the 
spending limits in the budget resolution.
Section 322. Application and Effect of Changes in Allocations and 
        Aggregates.
    Subsection (a) specifies the procedure for making 
adjustments to the levels established by the budget resolution 
under various reserve funds and other special procedures in 
this resolution. It provides that the adjustments apply while 
the legislation is under consideration and take effect upon 
enactment of the legislation. These adjustments must be printed 
in the Congressional Record.
    Subsection (b) requires, for purposes of budget 
enforcement, that the aggregate and allocation levels resulting 
from adjustments made according to the terms of this resolution 
to have the same effect as if adopted in the originally adopted 
aggregates and allocations.
    Subsection (c) provides that, for purposes of this 
resolution, the appropriate budgetary levels for a fiscal year 
or period of fiscal years shall be determined on the basis of 
estimates made by the Chair of the Committee on the Budget.
    Subsection (d) effectively permits the Chair of the 
Committee on the Budget to exempt legislative measures for 
which adjustments are made under the reserve funds in title IV 
of this budget resolution from the Cut-As-You-Go point of order 
(clause 10 of rule XXI of the Rules of the House of 
Representatives) or section 301 of this resolution.
Section 323. Adjustments to Reflect Changes in Concepts and 
        Definitions.
    Section 323 authorizes the Chair of the Committee on the 
Budget to adjust the appropriate aggregates, allocations, and 
other budgetary levels of this resolution to for any change in 
budgetary concepts and definitions in accordance with section 
251(b)(1) of the Deficit Control Act of 1985. This does not 
include authority to adjust allocations for any statutory 
change in the discretionary spending limits.
Section 324. Adjustments to Reflect Updated Budgetary Estimates.
    Section 324 authorizes the Chair of the Committee on the 
Budget to revise the appropriate aggregates, allocations, and 
other budgetary levels of this resolution to reflect any 
adjustments to the baseline made by the Congressional Budget 
Office in March 2016.
Section 325. Adjustment for Certain Emergency Designations.
    Section 325 clarifies that the Chair of the Committee on 
the Budget has authority to make adjustments to the appropriate 
levels in the budget resolution that are designated as an 
emergency and therefore exempt from the Statutory Pay-As-You-Go 
Act of 2010. It is rare, though not unprecedented, that a 
legitimate emergency requires changes in tax law or direct 
spending programs. A similar process already exists in the 
Budget Act for exempting emergency designated appropriations 
from the budget resolution.
Section 326. Rulemaking Powers.
    Section 326 affirms that the adoption of this budget 
resolution as an exercise of the House's rulemaking power and 
that the House has the constitutional right to change these 
rules.

                        TITLE IV--RESERVE FUNDS

    Title IV establishes 10 reserve funds for health, tax 
reform, trade, education, retirement, and transportation 
legislation. Reserve funds are special procedures that provide 
the committee reporting specific legislation flexibility as to 
the timing and composition of offsets in the measure. The 
mechanism for achieving the flexibility is through adjustments 
the Chair of the Committee on the Budget makes to the 
appropriate levels in the budget resolution to accommodate the 
legislation. Usually, certain conditions must be met to qualify 
for the adjustment--the most frequent being that the measure 
must be for a specified purpose and must be offset over a 
period of 10 years (fiscal years 2017 through 2026). The 
adjustments are usually made to the 302(a) allocations of the 
appropriate committee, the overall ceiling on spending (both 
new budget authority and outlays) and the floor on revenue.
Section 401. Deficit-Neutral Reserve Fund to Reduce Poverty and 
        Increase Opportunity and Upward Mobility for Struggling 
        Americans.
    Section 401 permits the Chair to adjust the levels in the 
budget resolution for legislation that reduces poverty, and 
increases opportunity and upward mobility. Adjustments may be 
made for bills, joint resolutions, conference reports and 
amendments. The amount of the adjustment would be equal to the 
amount the measure increases budget authority and outlays or 
reduces revenue. To qualify for the adjustment, the measure may 
not increase the deficit over the ten-year period or adversely 
impact job creation.
Section 402. Reserve Fund for the Repeal of the President's Health Care 
        Law.
    Section 402 permits the Chair to adjust the levels in the 
budget resolution for legislation that repeals the Patient 
Protection and Affordable Care Act (Public Law 111-148) and the 
healthcare-related provisions of the Health Care and Education 
Reconciliation Act of 2010 (Public Law 111-152). Adjustments 
may be made for bills, joint resolutions, conference reports 
and amendments. The amount of the adjustment is equal to the 
amount the measure increases budget authority and outlays or 
reduces revenue. A legislative measure need not be deficit 
neutral to qualify for an adjustment under this section.
Section 403. Deficit-Neutral Reserve Fund for Promoting Real Health 
        Care Reform.
    Section 403 permits the Chair to adjust the levels in the 
budget resolution for legislation that promotes real health 
care reform. Adjustments may be made for bills, joint 
resolutions, conference reports and amendments. The amount of 
the adjustment is equal to the amount the measure increases 
budget authority and outlays or reduces revenue. To qualify for 
the adjustment, the measure may not increase the deficit over 
the ten-year period.
Section 404. Deficit-Neutral Reserve Fund for Graduate Medical 
        Education.
    Section 404 permits the Chair to adjust the levels in the 
budget resolution for legislation that reforms, expands, access 
to, and improves, as determined by such Chair. Adjustments may 
be made for bills, joint resolutions, conference reports and 
amendments. The amount of the adjustment is equal to the amount 
the measure increases budget authority and outlays or reduces 
revenue. To qualify for the adjustment, the measure may not 
increase the deficit over the ten-year period.
Section 405. Deficit-Neutral Reserve Fund for Trade Agreements.
    Section 405 permits the Chair to adjust the levels in the 
budget resolution for legislation that such Chair determines is 
necessary to implement a trade agreement. Adjustments may be 
made for bills, joint resolutions, conference reports and 
amendments. The amount of the adjustment is equal to the amount 
the measure increases budget authority and outlays or reduces 
revenue. To qualify for the adjustment, the measure may not 
increase the deficit over the ten-year period.
Section 406. Deficit-Neutral Reserve Fund for Reforming the Tax Code.
    Section 406 permits the Chair to adjust the levels in the 
budget resolution for legislation that reforms the Internal 
Revenue Code of 1986. Adjustments may be made for bills, joint 
resolutions conference reports and amendments. The amount of 
the adjustment is equal to the amount the measure increases 
budget authority and outlays or reduces revenue. To qualify for 
the adjustment, the measure may not increase the deficit over 
the ten-year period.
Section 407. Deficit-Neutral Reserve Fund for Revenue Measures.
    Section 407 permits the Chair to adjust the levels in the 
budget resolution for legislation that reduces revenue. 
Adjustments may be made for bills, joint resolutions, 
conference reports and amendments. The amount of the adjustment 
is equal to the amount the measure increases budget authority 
and outlays or reduces revenue. To qualify for the adjustment, 
the measure may not increase the deficit over the ten-year 
period.
Section 408. Deficit-Neutral Reserve Fund for Federal Retirement 
        Reform.
    Section 408 permits the Chair to adjust the levels in the 
budget resolution for legislation that reforms, improves and 
updates the Federal retirement system. To qualify for the 
adjustment, the measure may not increase the deficit over the 
ten-year period.
Section 409. Deficit-Neutral Reserve Fund for Coal Miner Pension and 
        Health Care Funds.
    Section 409 permits the Chair to adjust the levels in the 
budget resolution for legislation that addresses the immediate 
funding shortfall in coal miner pension and health care funds. 
Adjustments may be made for bills, joint resolutions, 
conference reports and amendments. The amount of the adjustment 
is equal to the amount the measure increases budget authority 
and outlays or reduces revenue. To qualify for the adjustment, 
the measure may not increase the deficit over the ten-year 
period.
Section 410. Reserve Fund for Commercialization of Air Traffic Control.
    Section 410 removes scoring impediments that may otherwise 
preclude the consideration of legislation that commercializes 
the operations of the air traffic control system and decreases 
the discretionary spending limits under section 251(c) of the 
Deficit Control Act of 1985 by the amount appropriated to the 
Federal Aviation Administration for air traffic control. This 
reserve fund is necessary because it is anticipated that the 
Congressional Budget Office will score the legislation as if it 
remains a function of the Federal Government.
    Section 410 permits the Chair to adjust the levels in the 
budget resolution for legislation that commercializes the 
operations of the air traffic control system and decreases the 
discretionary spending limits under section 251(c) of the 
Deficit Control Act of 1985 by the amount appropriated to the 
Federal Aviation Administration for air traffic control. 
Adjustments may be made for bills, joint resolutions conference 
reports and amendments. The amount of the adjustment is equal 
to the amount the measure increases budget authority and 
outlays or reduces revenue. Adjustments may be made under this 
section even if the measure is estimated by the Congressional 
Budget Office to increase the deficit.

                 TITLE V--ESTIMATES OF DIRECT SPENDING

    Title V is required under section 3(h) of the Separate 
Orders of H. Res. 5 (114th Congress), which implements the 
Rules of the House of Representatives, and is a requirement for 
the consideration of a concurrent resolution on the budget in 
the 114th Congress. See the section designated ``Direct 
Spending Trends and Reforms'' within this report for more 
information on Title V.
Section 501. Direct Spending.
    Subsection (a) provides the average and estimated average 
rate of growth in means-tested direct spending for the 10-year 
periods before and after fiscal year 2017, respectively. It 
also proposes reforms to the means-tested category of direct 
spending.
    Subsection (b) provides the average and estimated average 
rate of growth in non-means-tested direct spending for the 10-
year periods before and after fiscal year 2017, respectively. 
It also proposes reforms to the non-means-tested category of 
direct spending.

                      TITLE VI--POLICY STATEMENTS

Section 601. Policy Statement on Developing a Bold Agenda
    Subsection (a) sets out findings.
    Subsection (b) states that it is the policy of this 
concurrent resolution that, in the 115th Congress, the 
appropriate committees of jurisdiction in the House should 
consider recommendations developed by the Speaker's task forces 
on health care reform; reducing regulatory burdens; poverty, 
opportunity, and upward mobility; national security; tax 
reform; and restoring constitutional authority.
Section 602. Policy Statement on a Balanced Budget Amendment.
    Subsection (a) sets out findings.
    Subsection (b) states that it is the policy of this 
concurrent resolution that Congress should propose a balanced 
budget amendment for ratification by the States.
Section 603. Policy Statement on Reforming the Congressional Budget 
        Process.
    Subsection (a) sets out findings.
    Subsection (b) states that it is the policy of this 
concurrent resolution that Congress should restructure its 
procedures for making budgetary decisions and reassert its role 
as the government's spending authority by promoting prudent 
spending control, efficient action and greater transparency.
    Subsection (c) states that the Committee on the Budget 
intends to draft legislation during the 115th Congress that 
rewrites the Congressional Budget and Impoundment Control Act 
of 1974.
Section 604. Policy Statement on Economic Growth and Job Creation.
    Subsection (a) sets out findings.
    Subsection (b) states that it is the policy of this 
concurrent resolution to promote economic growth and job 
creation through tax reform and reducing regulatory burdens.
Section 605. Policy Statement on Federal Regulatory Budgeting and 
        Reform.
    Subsection (a) sets out findings.
    Subsection (b) states that the policy of this concurrent 
resolution on Federal regulatory budgeting and reform is to 
promote economic growth, cut red tape, protect the poor and 
working class, and strengthen transparency of regulations.
Section 606. Policy Statement on Tax Reform.
    Subsection (a) sets out findings.
    Subsection (b) states that it is the policy of this 
concurrent resolution that Congress should enact comprehensive 
tax reform that promotes economic growth, creates American 
jobs, increases wages, and benefits American consumers, 
investors, and workers.
Section 607. Policy Statement on Trade.
    Subsection (a) sets out findings.
    Subsection (b) states that it is the policy of this 
concurrent resolution to pursue international trade, global 
commerce, a modern and competitive tax system in order to 
promote job creation in the United States; continued pursuit of 
economic opportunities for American workers and businesses 
through trade agreements that satisfy negotiating objectives; 
and that any trade agreement entered into on behalf of the 
United States should reflect the negotiating objective and 
improved consultation with Congress.
Section 608. Policy Statement on Social Security.
    Subsection (a) sets out findings.
    Subsection (b) states that it is the policy on Social 
Security assumed by this concurrent resolution to ensure 
sustainable solvency of the fund.
    Subsection (c) states that it is the policy of this 
resolution to reform disability insurance and work to address 
its looming insolvency before in occurs in 2022.
    Subsection (d) states that any legislation that improves 
the solvency of the Disability Insurance Trust Fund must also 
improve the long-term solvency of the combined Old Age and 
Survivors Disability Trust Fund.
Section 609. Policy Statement on Replacing the President's Health Care 
        Law and Promoting Real Health Care Reform.
    Subsection (a) sets out findings.
    Subsection (b) states that it is the policy of this 
concurrent resolution that the President's health care law 
should be fully repealed and Congress should pursue real health 
care reforms that put patients, families and doctors in charge 
rather than Washington, DC and encourage increased competition 
and transparency while protecting the ability of all Americans 
to afford health coverage.
Section 610. Policy Statement on Medicare.
    Subsection (a) sets out findings.
    Subsection (b) states that it is the policy of this 
concurrent resolution to preserve the program for those in or 
near retirement and strengthen the program for future 
beneficiaries.
    Subsection (c) sets forth the assumptions of this 
concurrent resolution for an improved Medicare program.
Section 611. Policy Statement on Medical Discovery, Development, 
        Delivery and Innovation.
    Subsection (a) sets out findings on medical discovery, 
development, delivery and innovation.
    Subsection (b) states that it is the policy of this 
concurrent resolution to support the work of medical innovators 
through continued strong funding for the agencies that engage 
in life saving research and development and for Washington to 
unleash the power of innovation by removing obstacles that 
impede the adoption of medical technologies.
Section 612. Policy Statement on Public Health Preparedness.
    Subsection (a) sets out findings on public health 
preparedness.
    Subsection (b) states that it is the policy of this 
concurrent resolution that the House should, within available 
budgetary resources, provide continued support for research, 
prevention, and public health preparedness programs to ensure 
the Nation efficiently and effectively responds to potential 
public health threats.
Section 613. Policy Statement on Addressing the Opioid Abuse Epidemic.
    Subsection (a) sets out findings on the opioid abuse 
epidemic.
    Subsection (b) states that it is the policy of this 
concurrent resolution that Congress should support, using 
available budgetary resources, essential activities, including 
rehabilitation, to reduce and prevent substance abuse.
Section 614. Policy Statement on Higher Education and Workforce 
        Development Opportunity.
    Subsection (a) sets out findings on higher education.
    Subsection (b) states that it is the policy on higher 
education affordability assumed by this concurrent resolution 
targets Federal financial aid, streamlines aid programs, 
stabilizes Pell Grants and removes regulatory barriers.
    Subsection (c) sets out findings on workforce development.
    Subsection (d) states that it is the policy on workforce 
development assumed by this concurrent resolution builds upon 
the Workforce Innovation and Opportunity Act by streamlining 
job-training programs and allowing States to tailor programs to 
their constituencies.
Section 615. Policy Statement on the Department of Veterans' Affairs.
    Subsection (a) sets out findings.
    Subsection (b) states that it is the policy of this 
concurrent resolution that the House Committee on Veterans' 
Affairs should continue its oversight efforts and that the 
Committees on Veterans' Affairs and the Budget should continue 
to monitor the Department of Veterans' Affairs progress to 
ensure its resources are sufficient and efficiently provided to 
veterans.
Section 616. Policy Statement on Federal Accounting.
    Subsection (a) sets out findings.
    Subsection (b) states that it is the policy on Federal 
accounting in this concurrent resolution is to reform current 
budget and accounting practices to allow for greater 
transparency through the use of fair-value accounting for 
credit programs.
Section 617. Policy Statement on Reducing Unnecessary and Wasteful 
        Spending.
    Subsection (a) sets out findings.
    Subsection (b) states that it is the policy of this 
concurrent resolution that each authorizing committee should, 
as part of its annual Views and Estimates letter to the 
Committee on the Budget, identify duplicate programs and submit 
recommendations for programs that should be reduced or 
eliminated, review all programs with unauthorized 
appropriations and reauthorize those that should continue 
receiving funding.
Section 618. Policy Statement on Deficit Reduction Through the 
        Cancellation of Unobligated Balances.
    Subsection (a) sets out findings.
    Subsection (b) states that it is the policy of this 
concurrent resolution that the House adopt the following 
principles: greater Congressional oversight to review and 
identify potential savings from cancelling unobligated balances 
of funds that are no longer needed; the appropriate committees 
of the House should identify and review accounts with 
unobligated balances and rescind such balances that would not 
impede or disrupt the fulfillment of important Federal 
commitments; the House should, with the assistance of the 
Government Accountability Office, the Inspectors General, and 
appropriate agencies, continue to review unobligated balances 
and identify savings for deficit reduction; and unobligated 
balances in dormant accounts should not be used to finance 
increases in spending.
Section 619. Policy Statement on Responsible Stewardship of Taxpayer 
        Dollars.
    Subsection (a) sets out findings.
    Subsection (b) states that it is the policy of this 
concurrent resolution that the House should be a model for the 
responsible stewardship of taxpayer dollars and identify any 
savings that can be achieved through greater productivity and 
efficiency gains in the operation and maintenance of House 
services and resources.
Section 620. Policy Statement on Expenditures from Agency Fees and 
        Spending.
    Subsection (a) sets out findings.
    Subsection (b) states that it is the policy of this 
concurrent resolution for Congress to reassert its 
constitutional prerogative to control spending and conduct 
oversight.
Section 621. Policy Statement on Border Security.
    Subsection (a) sets out findings.
    Subsection (b) states that it is the policy of this 
concurrent resolution that Congress should enact legislation to 
improve border security by utilizing technology along the 
southern and northern borders, constructing fencing along 
southern border, and maintaining or increasing border 
personnel.
Section 622. Policy Statement on Preventing the Closure of the 
        Guantanamo Bay Detention Facility.
    Subsection (a) sets out findings.
    Subsection (b) states that it is the policy of this 
concurrent resolution for Congress to support policies that 
prevent the closure of the Guantanamo Bay detention facility 
and prevent the transfer or release of detainees.
Section 623. Policy Statement on Refugees from Conflict Zones.
    Subsection (a) sets out findings.
    Subsection (b) states that it is policy of this concurrent 
resolution that the United States should suspend admission of 
refugees from high-risk areas such as Syria and Iraq until it 
can ensure that terrorists cannot exploit its refugee 
resettlement programs and vetting processes. While the United 
States should continue its proud tradition of refugee 
resettlement, it should make protecting Americans its highest 
priority before resettling additional refugees.
Section 624. Policy Statement on Moving the United States Postal 
        Service on Budget.
    Subsection (a) sets out findings.
    Subsection (b) states it is policy of this concurrent 
resolution that all receipts and disbursements of the USPS 
should be included in the congressional budget and the budget 
of the Government.
Section 625. Policy Statement on Budget Enforcement.
    Section 625 states that it is the policy of this concurrent 
resolution that the House should strictly enforce this budget 
resolution by adopting the budget resolution before considering 
any spending or tax legislation, enforcing rules preventing the 
authorization of new direct spending programs, complying with 
the discretionary spending limits of the Balanced Budget and 
Emergency Deficit Control Act of 1985, modifying scoring to 
encourage the commercialization of government activities that 
can best be provided by the private sector, and discouraging 
the use of savings identified in the budget resolution as 
offsets for spending or tax legislation.
Section 626. Policy Statement on Unauthorized Appropriations.
    Subsection (a) sets out findings.
    Subsection (b) states that it is the policy of the 
concurrent resolution that unauthorized appropriations should 
be reviewed and reformed to ensure that unauthorized programs 
are reauthorized, reformed, or terminated.

                    THE CONGRESSIONAL BUDGET PROCESS

                              ----------                              


    The spending and revenue levels established in the budget 
resolution are implemented through two parallel, but separate, 
mechanisms: allocations to the authorizing and appropriations 
committees and, when necessary, reconciliation directives to 
the authorizing committees.
    As required under section 302(a) of the Congressional 
Budget Act of 1974, the direct spending levels in the budget 
resolution are allocated to each of the authorizing committees 
in each House of Congress with direct spending authority. The 
resolution's discretionary spending levels are allocated to the 
Committee on Appropriations. These allocations are included in 
the report (or joint statement of managers for a conference 
report) accompanying the concurrent resolution on the budget 
and are enforced through points of order (see the section of 
this report titled: ``Enforcing the Budget Resolution'').
    Amounts provided under ``current law'' encompass programs 
that affect direct spending--for example, health, retirement, 
and other programs that have spending authority or offsetting 
receipts. Amounts subject to discretionary action refer to 
programs that require subsequent legislation to provide the 
necessary spending authority. Amounts provided under 
``reauthorizations'' reflect amounts assumed to be provided in 
subsequent legislation reauthorizing expiring direct spending 
programs.
    Section 302 of the Congressional Budget Act of 1974, as 
modified by the Balanced Budget Act of 1997, requires that 
allocations of budget authority be provided in the report 
accompanying a budget resolution for the fiscal year for which 
it is adopted and at least the 4 ensuing fiscal years (except 
for the Committee on Appropriations, which receives an 
allocation for only the budget year). This budget resolution 
provides allocations of budget authority and outlays for fiscal 
year 2017 and each of the 9 ensuing fiscal years, fiscal years 
2018 through 2026.

               Authorizing Committees--302(a) Allocations

    The report accompanying the concurrent resolution on the 
budget, or the joint statement of managers for a conference 
report, allocates to the authorizing committees an amount of 
new budget authority along with the attendant outlays required 
to fund the direct spending within each authorizing committee's 
jurisdiction. If increases in spending are required within a 
committee's jurisdiction, then the committee may be allocated 
additional budget authority. This occurs when the budget 
resolution assumes a new or expanded direct spending program. 
Such spending authority must be provided through subsequent 
legislation and is not controlled through the annual 
appropriations process.
    Because the spending authority for authorizing committees 
is multi-year or permanent, the allocations established in the 
budget resolution are for the fiscal year for which it is 
adopted and the 9 ensuing fiscal years. As noted, this budget 
resolution provides allocations for authorizing committees for 
fiscal year 2017, commencing on 1 October 2016, and fiscal 
years 2018 through 2026.
    Unlike the Committee on Appropriations, each authorizing 
committee is provided a single allocation of new budget 
authority (divided between current law and expected policy 
action) not provided through annual appropriations. These 
committees are not required to file 302(b) allocations. Bills 
first effective in fiscal year 2017 are measured against the 
level for that year included in the fiscal year 2017 budget 
resolution and also the 10-year period of fiscal years 2017 
through 2026.

                      Committee on Appropriations

    Unlike authorizing committees, the Committee on 
Appropriations receives a lump sum of discretionary budget 
authority and corresponding outlays in the report accompanying 
a concurrent resolution on the budget, or joint statement of 
managers for a conference report, for the fiscal year for which 
it is adopted. This allocation provides the Committee on 
Appropriations with the amount of discretionary spending for 
appropriations measures for that fiscal year. Once a 302(a) 
allocation is provided to the Committee on Appropriations, the 
Committee is then required, in full Committee, to divide this 
allocation among its 12 subcommittees into 302(b) 
suballocations.

                           302(a) ALLOCATIONS

    This budget resolution provides allocations to the 
Committee on Appropriations for fiscal year 2017, commencing on 
1 October 2016.

                           302(b) ALLOCATIONS

    Once a 302(a) allocation is provided to the Committee on 
Appropriations by the budget resolution for the fiscal year for 
which it is adopted, the Committee on Appropriations, in full 
Committee, is required to divide this allocation among its 12 
subcommittees. The amount each subcommittee receives 
constitutes its suballocation, pursuant to section 302(b) of 
the Congressional Budget Act of 1974. Each subcommittee's 
regular appropriations bill is capped at the level of the 
reporting subcommittee's 302(b) suballocation and the bill 
would be subject to a point of order if it exceeds this amount.
    Under this system, while it may seem obvious that the sum 
of the 12 302(b) suballocations must equal the Committee on 
Appropriations' 302(a) allocation, this has not always been the 
case. Under section 314 of the Congressional Budget Act, the 
chair of the Committee on the Budget may adjust the budget 
resolution levels for appropriations measures for continuing 
disability reviews, for combatting health care fraud, and for 
natural disasters. The Committee on Appropriations, however, 
does not always make corresponding adjustments to the 
appropriate 302(b) suballocations. The House is then left with 
unenforceable 302(b) suballocations because these 
suballcoations do not equal the 302(a) allocation of the 
Committee on Appropriations and do not reflect the House's 
actions on the applicable appropriations bills. Without these 
adjustments to the 302(b) suballocations, the House can only 
enforce the overall 302(a) allocation, rendering the entire 
enforcement scheme useless because, even if 11 of the 
appropriations bills are over budget, the 302(a) allocation 
would only be breached by the last bill enacted.
    The Committee on the Budget believes that the Committee on 
Appropriations should be granted greater flexibility in how to 
adjust its 302(b) suballocations. Recognizing that it may 
sometimes be impracticable for the full Appropriations 
Committee to convene and report out revisions to the 302(b) 
suballocations, the Budget Committee believes the applicable 
rules should be modified to give the Committee on 
Appropriations maximum flexibility in making these adjustments. 
One approach would be to grant the Committee on Appropriations 
the authority to choose among the following options: acting as 
a full committee on each adjustment; empowering the Chair of 
the Committee on Appropriations to unilaterally make the 
adjustment (as the Budget Committee does); or making the 
adjustment automatic based on the actual amount of 
appropriations provided in each bill.
    Under section 302(c) of the Congressional Budget Act of 
1974, appropriations acts may not be considered on the floor of 
the House before these 302(b) suballocations are made.
    In general, unless enacted, bills and conference reports 
cease to exist at the end of each Congress (in the House of 
Representatives). Concurrent resolutions that have been enacted 
also cease to exist at the end of each Congress, but when a new 
Congress convenes, concurrent resolutions are extended through 
the organizing resolution of the new Congress. In this way, the 
budget resolution is extended into the new Congress. Hence the 
budget year may change, but for purposes of enforcement, the 
first fiscal year for the budget resolution remains the same.

    TABLE 11.--ALLOCATION OF SPENDING AUTHORITY TO HOUSE COMMITTEE ON
                             APPROPRIATIONS
                        [In millions of dollars]
------------------------------------------------------------------------
                                                                 2017
------------------------------------------------------------------------
Base Discretionary Action:
  BA.......................................................    1,069,599
  OT.......................................................    1,164,425
Global War on Terrorism:
  BA.......................................................       73,693
  OT.......................................................       38,485
Current Law Mandatory:
  BA.......................................................    1,009,960
  OT.......................................................      998,819
------------------------------------------------------------------------


             TABLE 12.--RESOLUTION BY AUTHORIZING COMMITTEE
               [On-budget amounts in millions of dollars]
------------------------------------------------------------------------
                                               2017          2017-2026
------------------------------------------------------------------------
Agriculture:
  Current Law:
    BA..................................          17,630         719,257
    OT..................................          16,465         712,700
  Resolution Change:
    BA..................................          -4,522        -242,646
    OT..................................          -2,514        -237,902
                                         -------------------------------
    Total:
      BA................................          13,108         476,611
      OT................................          13,951         474,798
                                         ===============================
Armed Services:
  Current Law:
    BA..................................         160,810       1,855,353
    OT..................................         160,641       1,849,185
  Resolution Change:
    BA..................................            -527         -12,892
    OT..................................            -509         -12,796
                                         -------------------------------
    Total:
      BA................................         160,283       1,842,461
      OT................................         160,132       1,836,389
                                         ===============================
Financial Services:
  Current Law:
    BA..................................          13,643          99,110
    OT..................................            -300         -58,804
  Resolution Change:
    BA..................................          -4,475         -46,706
    OT..................................          -4,287         -46,286
                                         -------------------------------
    Total:
      BA................................           9,168          52,404
      OT................................          -4,587        -105,090
                                         ===============================
Education & Workforce:
  Current Law:
    BA..................................            -777          22,323
    OT..................................          -6,072          -4,811
  Resolution Change:
    BA..................................         -16,113        -297,126
    OT..................................          -8,474        -273,605
                                         -------------------------------
    Total:
      BA................................         -16,890        -274,803
      OT................................         -14,546        -278,416
                                         ===============================
Energy & Commerce:
  Current Law:
    BA..................................         451,015       6,026,510
    OT..................................         445,796       6,032,709
  Resolution Change:
    BA..................................         -76,515      -2,289,673
    OT..................................         -71,883      -2,281,392
                                         -------------------------------
    Total:
      BA................................         374,500       3,736,837
      OT................................         373,913       3,751,317
                                         ===============================
Foreign Affairs:
  Current Law:
    BA..................................          36,173         310,022
    OT..................................          30,652         296,267
  Resolution Change:
    BA..................................               0               0
    OT..................................               0               0
                                         -------------------------------
    Total:
      BA................................          36,173         310,022
      OT................................          30,652         296,267
                                         ===============================
Oversight & Government Reform:
  Current Law:
    BA..................................         118,281       1,361,661
    OT..................................         116,567       1,327,423
  Resolution Change:
    BA..................................         -14,298        -216,846
    OT..................................         -14,297        -216,788
                                         -------------------------------
    Total:
      BA................................         103,983       1,144,815
      OT................................         102,270       1,110,635
                                         ===============================
Homeland Security:
  Current Law:
    BA..................................           2,570          26,861
    OT..................................           2,351          27,731
  Resolution Change:
    BA..................................            -270         -21,020
    OT..................................            -270         -21,020
                                         -------------------------------
    Total:
      BA................................           2,300           5,841
      OT................................           2,081           6,711
                                         ===============================
House Administration:
  Current Law:
    BA..................................              41             341
    OT..................................              12             106
  Resolution Change:
    BA..................................               0               0
    OT..................................               0               0
                                         -------------------------------
    Total:
      BA................................              41             341
      OT................................              12             106
                                         ===============================
Natural Resources:
  Current Law:
    BA..................................           5,371          57,898
    OT..................................           5,706          60,073
  Resolution Change:
    BA..................................            -797         -13,901
    OT..................................            -581         -12,694
                                         -------------------------------
    Total:
      BA................................           4,574          43,997
      OT................................           5,125          47,379
                                         ===============================
Judiciary:
  Current Law:
    BA..................................          30,073         136,477
    OT..................................          13,950         143,827
  Resolution Change:
    BA..................................         -12,737         -62,654
    OT..................................          -1,495         -62,655
                                         -------------------------------
    Total:
      BA................................          17,336          73,823
      OT................................          12,455          81,172
                                         ===============================
Transportation & Infrastructure:
  Current Law:
    BA..................................          74,688         735,056
    OT..................................          16,662         178,415
  Resolution Change:
    BA..................................             -98        -114,318
    OT..................................             -59          -1,109
                                         -------------------------------
    Total:
      BA................................          74,590         620,738
      OT................................          16,603         177,306
                                         ===============================
Science, Space & Technology:
  Current Law:
    BA..................................             108           1,017
    OT..................................             106           1,017
  Resolution Change:
    BA..................................               0               0
    OT..................................               0               0
                                         -------------------------------
    Total:
      BA................................             108           1,017
      OT................................             106           1,017
                                         ===============================
Small Business:
  Current Law:
    BA..................................               0               0
    OT..................................               0               0
  Resolution Change:
    BA..................................               0               0
    OT..................................               0               0
                                         -------------------------------
    Total:
      BA................................               0               0
      OT................................               0               0
                                         ===============================
Veterans Affairs:
  Current Law:
    BA..................................           1,314         112,141
    OT..................................           7,790         120,113
  Resolution Change:
    BA..................................          -3,113         -48,802
    OT..................................          -1,911         -46,288
                                         -------------------------------
    Total:
      BA................................          -1,799          63,339
      OT................................           5,879          73,825
                                         ===============================
Ways & Means:
  Current Law:
    BA..................................       1,065,279      15,185,324
    OT..................................       1,063,848      15,179,732
  Resolution Change:
    BA..................................         -67,917      -1,648,434
    OT..................................         -67,578      -1,647,819
                                         -------------------------------
    Total:
      BA................................         997,362      13,536,890
      OT................................         996,270      13,531,913
------------------------------------------------------------------------


                             RECONCILIATION

                              ----------                              


    Section 310 of the Congressional Budget Act of 1974 (2 
U.S.C. 641) sets out a special procedure that allows a 
concurrent resolution on the budget to direct one or more 
authorizing committees to produce legislation that changes 
direct spending, revenue, or the debt limit, to bring these 
levels into compliance with assumed changes in direct spending 
and revenue in the budget resolution. Reconciliation directives 
must be included in a concurrent resolution on the budget 
adopted by both Houses to be valid.
    In general, reconciliation directives include the amount of 
budgetary change to be achieved; the time period over which 
such budgetary change should be measured; and a deadline by 
which the authorizing committees must report legislation. When 
more than one authorizing committee receives reconciliation 
directives, each committee considers legislation to comply with 
these directives as it would any other bill, but the 
legislative text and other materials are submitted to the 
Committee on the Budget instead of being reported to the House. 
The Committee on the Budget then incorporates all submissions 
together, without any substantive revision, into a single 
measure and reports it to the House. If the reconciliation 
directives instruct only a single authorizing committee, then 
that committee's bill is reported directly to the House and is 
not submitted to the Committee on the Budget.
    In the House, the Committee on Rules reports a special rule 
governing the consideration of a reconciliation bill. 
Typically, the rule will allow for 2 or 3 hours of general 
debate equally divided between majority and minority. The 
Committee on the Budget determines whether an authorizing 
committee is in compliance with its reconciliation directives 
and relies solely on the Congressional Budget Office's 
estimates when determining compliance. Under section 310 of the 
Congressional Budget Act of 1974, authorizing committees must 
comply with reconciliation directives. If an authorizing 
committee does not comply with its directives, the Committee on 
Rules may make in order amendments that achieve the required 
budgetary changes pursuant to section 311(d)(5) of the 
Congressional Budget Act of 1974.
    A reconciliation bill is a privileged measure in the 
Senate. Distinct from most Senate bills, debate is limited to 
20 hours and only requires a simple majority to pass (51 votes) 
rather than the 60 votes otherwise required for cloture.
    In the Senate, the ``Byrd Rule'' (section 313 of the 
Congressional Budget Act of 1974) limits the content of a 
reconciliation bill. Under the Byrd Rule, provisions that are 
considered ``extraneous'' can be stricken from the bill unless 
60 Senators vote to waive it. If a provision is found to 
violate the Byrd Rule, it is removed from the bill or 
conference report unless 60 Senators vote to waive the rule.
    This Concurrent Resolution on the Budget for Fiscal Year 
2017, as reported by the Committee on the Budget, provides for 
such reconciliation legislation. It instructs 12 authorizing 
committees to submit changes in law necessary to achieve 
specified amounts of deficit reduction. Each authorizing 
committee must submit legislative text and associated material 
to the Committee on the Budget no later than 90 calendar days 
after the adoption of this concurrent resolution.
    For a detailed description of the reconciliation directives 
included in this concurrent resolution on the budget, see Title 
II of the Section-by-Section Description.

                   STATUTORY CONTROLS OVER THE BUDGET

                              ----------                              


    Since 1985, a series of statutory budget controls have been 
superimposed over the congressional budget process through the 
enactment of, and subsequent amendments to, the Balanced Budget 
and Emergency Deficit Control Act of 1985 [Deficit Control 
Act]. This law has been amended several times and generally 
serves as the primary vehicle for statutory controls over the 
budget.

                   The Balanced Budget and Emergency
                      Deficit Control Act of 1985

    The Balanced Budget and Emergency Deficit Control Act of 
1985 [Deficit Control Act] initially was intended to reduce 
deficits by establishing annual maximum deficit limits. These 
limits were enforced through `sequestration,' which involved 
automatic, across-the-board spending reductions required by 
Presidential order if the deficit targets were exceeded. Under 
the Deficit Control Act, a Presidential sequestration order 
must occur within 15 days after the end of a session of 
Congress. Sequestration remained in force for laws enacted 
through the end of fiscal year 2002.

                   The Budget Enforcement Act of 1990

    The Budget Enforcement Act [BEA] of 1990 replaced the 
maximum spending limits originally in the Deficit Control Act 
with annual limits on discretionary spending and controls over 
increases in the deficit, calculated by adding together, for 
each fiscal year, increases in direct spending and decreases in 
revenues, termed ``pay-as-you-go.'' The BEA established 
separate limits for discretionary appropriations, separated 
into three separate categories: domestic, defense, and 
international affairs. These discretionary categories were 
applied through fiscal year 1993, and then combined into a 
single limit on all appropriations for fiscal years 1994 and 
1995.
    Under pay-as-you-go, if the cumulative effect of 
legislation enacted through the end of a session of Congress 
increased the deficit, the amount of that deficit increase for 
the fiscal year following that session would cause a 
sequestration of direct spending by that amount. As with the 
Maximum Deficit Amounts before it, most spending defined as 
`direct' was exempt from any reductions. Other spending 
programs had limitations on the reductions. For example, 
spending decreases in the Medicare program, under pay-as-you-
go, were limited to 4 percent of the program costs.

             The Omnibus Budget Reconciliation Act of 1993

    The Omnibus Budget Reconciliation Act [OBRA] of 1993 
extended a single limit on discretionary spending through 
fiscal year 1998. Any breach of the limit would cause a 
sequestration (again, an across-the-board cut in all nonexempt 
discretionary programs). Programs under these spending limits 
were held harmless for changes in inflation, emergencies, 
estimating differences, and changes in concepts and 
definitions. OBRA 1993 also extended the pay-as-you-go 
enforcement procedures for legislation enacted through fiscal 
year 1998.

                    The Balanced Budget Act of 1997

    The Balanced Budget Act of 1997 [BBA 1997] again revised 
and extended the levels of the discretionary spending limits. 
As amended by OBRA 1993, these limits would have expired at the 
end of fiscal year 1998. BBA 1997 modified the discretionary 
spending limits for fiscal year 1998 and extended them through 
fiscal year 2002. Similarly, the pay-as-you-go requirements 
were extended for legislation enacted through the end of fiscal 
year 2002. The sequestration enforcement mechanism lasted 
through the end of fiscal year 2006 for such legislation, but 
it was turned off by Public Law 107-312, enacted 2 December 
2002.
    BBA 1997 also made numerous technical changes in both the 
congressional budget process and sequestration procedures that 
enforce the discretionary spending limits and pay-as-you-go 
requirements.
    BBA 1997 established separate limits on defense and non-
defense discretionary spending for fiscal years 1998 and 1999. 
These limits were combined into a single limit on discretionary 
spending in fiscal years 2000, 2001, and 2002. Separate 
discretionary spending limits were designed to prevent Congress 
and the President from using savings in one category to offset 
an increase in another category.
    BBA 1997 repealed automatic adjustments in the spending 
limits for changes in inflation and estimating differences 
between the Office of Management and Budget and the 
Congressional Budget Office on budget outlays. It retained 
adjustments for emergencies, estimating differences in budget 
authority, continuing disability reviews and added adjustments 
for the International Monetary Fund, international arrearages, 
and an Earned Income Tax Credit compliance initiative. The 
adjustments are made in the President's final sequestration 
report issued 15 days after the end of a session of Congress. 
Subsequently, additional spending categories for certain 
transportation and conservation spending were added and 
provided for specific spending amounts for these programs. 
While the transportation spending limit was ostensibly a limit 
on funding, it also served the purpose of calculating the 
levels of spending that flowed from the Highway Trust Fund.

                The Statutory Pay-As-You-Go Act of 2010

    No further legislation was enacted to reestablish statutory 
controls on spending and revenue until 2010, when on 10 
February of that year, the Statutory Pay-As-You-Go Act of 2010 
was signed as part of Public Law 111-139, which raised the 
statutory limit on the public debt. The measure amended 
sections of the Deficit Control Act, including the sequester 
base, but it did not establish new discretionary spending 
limits.

                     The Budget Control Act Of 2011

    Enacted on 2 August 2011, the Budget Control Act [BCA] of 
2011 set statutory controls on spending, primarily making the 
Deficit Control Act permanent in its entirety, and it 
reestablished discretionary spending limits for fiscal years 
2012 through 2021. These discretionary spending limits for 
fiscal years 2012 and 2013 were divided into `security' and 
`non-security' categories.\270\ The remaining years were set as 
a single discretionary general category. The BCA also 
authorized an increase in the public debt limit.
---------------------------------------------------------------------------
    \270\Section 102 of the act defines the ``security'' category as 
comprising discretionary appropriations for the Department of Defense, 
the Department of Homeland Security, the Department of Veterans 
Affairs, the National Nuclear Security Administration, the intelligence 
community management account, and all budget accounts in Function 150, 
International Affairs. All other discretionary appropriations were 
grouped together in the non-security category. These were replaced with 
``revised'' security and nonsecurity limits on spending for programs 
which fall inside Function 050, Defense, and outside that function.
---------------------------------------------------------------------------
    The BCA also included additional procedures that had the 
effect of altering the discretionary spending limits under 
section 251(c) of the Deficit Control Act, in particular, by 
extending the security/non-security categories through the end 
of the period.
    The Congressional Budget Office estimated that the 
discretionary spending limits under the BCA would reduce the 
deficit, including savings from debt service, by $917 billion 
over the 10-fiscal-year period covering 2012 through 2021.
    The BCA also established a Joint Select Committee on 
Deficit Reduction tasked with reporting legislation to reduce 
the Federal deficit by an additional $1.5 trillion over a 10-
year period ending in fiscal year 2021, which would have been 
considered under procedures limiting amendment and debate. 
Under the BCA, if legislation reported by the Joint Committee 
reducing the deficit by at least $1.2 trillion was not enacted, 
then a sequestration would be ordered, adjusting the 
discretionary spending limits downward and calculating an 
amount of reductions in direct spending necessary to achieve 
this amount (or a portion thereof if legislation from the Joint 
Committee achieving some deficit reduction was enacted). The 
Joint Committee failed to report any proposals reducing the 
deficit by any amount, and no legislation to that purpose was 
enacted by the required 15 January 2012 deadline. As a result, 
the Joint Committee ceased to exist and the automatic spending 
reduction process was triggered.
    This process established new discretionary spending limits 
and definitions of security and nonsecurity (now effectively 
defense and nondefense, though the previous terms are still 
used) and replaced the statutory discretionary spending limits. 
These categories have replaced the discretionary general 
category through 2021.
    This process had two components: sequestration and reducing 
the discretionary spending limits. To achieve the $1.2 trillion 
in deficit reduction, spending reductions, calculated by the 
Office of Management and Budget, were scheduled to occur absent 
a change in law.
    Because the Joint Committee did not achieve any deficit 
reduction, the calculation begins with a spending reduction of 
the full $1.2 trillion from fiscal year 2013 through fiscal 
year 2021. According to the BCA formula, this number is then 
reduced by 18 percent to account for the reduced cost of debt 
service attributable to the lower level of spending. The 
remaining amount is then divided by nine to account for each of 
fiscal years 2013 through 2021. This amount is then divided by 
two to evenly distribute reductions between defense and 
nondefense accounts.
    The spending reductions are then further divided between 
direct spending and discretionary spending within the defense 
and nondefense accounts.
    The implementation of the spending reductions is distinct 
from the calculation of the amounts. Once the amount is 
calculated, the BCA requires reductions through sequestration 
and reductions to the revised discretionary spending limits.
    The sequestration order affected both discretionary and 
mandatory spending for fiscal year 2013. As a result, 
discretionary amounts appropriated for fiscal year 2013 were 
sequestered by the calculated amount without regard for the 
amount appropriated--i.e., it was not sequestered as a function 
of the discretionary spending limit for that fiscal year. In 
addition, for fiscal years 2013 through 2021, a direct spending 
sequester of nonexempt accounts is ordered.
    This is distinct from the spending reductions for the 
discretionary spending limits for fiscal years 2014 through 
2021: these reductions occur through revising the spending 
limits downward for each of those fiscal years.

                The American Taxpayer Relief Act of 2012

    As part of an agreement to make permanent most tax policies 
first enacted in 2001 and 2003 but scheduled to expire at the 
end of 2012,\271\ the American Taxpayer Relief Act [ATRA] of 
2012 included certain budget process provisions. ATRA reduced 
the BCA fiscal year 2013 sequester by $24 billion--from $109.33 
billion to $85.33 billion for that fiscal year.
---------------------------------------------------------------------------
    \271\These tax policies were temporary because they were enacted 
under the budget reconciliation process. Section 313 of the 
Congressional Budget Act--known as the ``Byrd Rule''--prohibits 
spending and tax legislation enacted through reconciliation from 
increasing the projected deficit outside the 10-year budget window 
compared to what it would have been without those tax policies. 
Consequently, those tax relief policies were required to expire.
---------------------------------------------------------------------------
    It postponed the BCA sequester (under section 251A of the 
Deficit Control Act) by two months, from 2 January 2013 to 1 
March 2013. It also postponed the Deficit Control Act sequester 
(a separate sequestration under section 251(a), which normally 
occurs 15 days after the end of a session of Congress) until 17 
March 2013. This Deficit Control Act sequester enforces the 
spending limit categories rather than requiring a sequester of 
a nominal amount for fiscal year 2013 as under the BCA--and 
applied regardless of where spending is relative to the 
spending limits. It also reset discretionary spending limit 
categories for fiscal years 2013 and 2014, lowering the total 
by $4 billion and $8 billion, respectively.
    The President ordered the fiscal year 2013 BCA sequester, 
as required by law, on 1 March 2013.

                   The Bipartisan Budget Act of 2013

    As a result of the budget conference negotiations between 
House Chairman Ryan and Senate Chairman Murray, the Bipartisan 
Budget Act [BBA] of 2013 increased the discretionary spending 
limits for fiscal years 2014 and 2015 by amending section 251 
of the Deficit Control Act. The BBA 2013 agreement provided $63 
billion in sequester relief over 2 years, split evenly between 
defense and non-defense programs. BBA 2013 set defense 
discretionary spending at $520.5 billion and non-defense 
discretionary spending at $491.8 billion for fiscal year 2014. 
For fiscal year 2015, defense discretionary spending was set at 
$521.3 billion, and non-defense discretionary spending was set 
at $492.4 billion.
    The sequester relief was fully offset by reductions in 
direct spending elsewhere in the budget. BBA 2013 included 
dozens of specific deficit-reduction provisions with mandatory 
savings and non-tax revenue totaling approximately $85 billion. 
This included $28 billion in reductions stemming from a 
provision requiring the President to sequester the same 
percentage of mandatory budgetary resources in 2022 and 2023 as 
will be sequestered in 2021 under current law.

                   The Bipartisan Budget Act of 2015

    The Bipartisan Budget Act [BBA] of 2015 amended section 251 
of the Deficit Control Act to increase the fiscal year 2016 and 
2017 discretionary spending limits by $50 billion and $30 
billion, respectively, equally divided between defense and non-
defense spending each year. These increases in the spending 
categories were offset through reforms reducing direct spending 
spread over a decade elsewhere in the budget. These reforms 
included the following: establishing an overall rate of return 
for insurance providers under the Standard Reinsurance 
Agreement; authorizing the sale of 58 million barrels of oil 
from the Strategic Petroleum Reserve; raising premium rates for 
single employer pension plans; accelerating the due date for 
pension premiums; maintaining the 2016 Medicare Part B premium; 
and rescinding and permanently cancelling $746 million from the 
Department of Justice's Asset Forfeiture Fund among other 
provisions. Additionally, BBA 2015 increased program integrity 
adjustments for Social Security continuing disability reviews 
by $484 million through fiscal year 2021. In the Senate only, 
it provided for allocations, aggregates and other spending 
levels to have the force and effect as the fiscal year 2017 
concurrent resolution on the budget for purposes of the 
Congressional Budget Act of 1974. BBA 2015 also temporarily 
suspended the debt limit through 15 March 2017.

                       ENFORCING BUDGETARY LEVELS

                              ----------                              


                The Concurrent Resolution on the Budget

    The concurrent resolution on the budget establishes 
allocations of spending authority and aggregate levels of both 
spending authority and revenues that are binding on Congress 
when it considers subsequent spending and tax legislation. Any 
legislation that would breach the levels set forth in the 
budget resolution is subject to points of order on the floor of 
the House of Representatives. The concurrent resolution on the 
budget is established pursuant to the Congressional Budget Act 
of 1974, which includes various requirements as to its content 
and enforcement. While a budget resolution sets levels of 
spending, revenue, deficits and debt, it may also include 
special procedures in order to enforce Congressional budgetary 
decisions.
    The levels established in the budget resolution are not 
self-enforcing. Members of the House must raise points of order 
against legislation that breaches the allocations and aggregate 
spending levels established in the budget resolution. If a 
point of order is sustained, the House is precluded from 
further consideration of the measure. It has been the practice 
of the House to waive all points of order in the resolution 
that provides for House consideration of a bill.

               Provisions of the Congressional Budget Act

                             SECTION 302(f)

    Section 302(f) of the Congressional Budget Act of 1974 
prohibits the consideration of legislation that exceeds a 
committee's allocation of budget authority. For authorizing 
committees, this section applies to the fiscal year for which a 
concurrent resolution on the budget is agreed to and the period 
of fiscal years covered by the budget resolution in force. For 
appropriations bills, however, the test measures the budget 
effects in the first fiscal year.

                              SECTION 303

    Section 303 of the Congressional Budget Act prohibits the 
consideration of spending and revenue legislation before the 
House has passed a concurrent resolution on the budget for a 
fiscal year. Legislation that changes revenue or increases 
budget authority in a fiscal year for which a budget resolution 
has not been agreed to violates section 303(a). Section 303(a) 
does not apply to budget authority and revenue provisions first 
effective in a year following the first fiscal year to which a 
budget resolution would apply, or to appropriation bills after 
15 May.

                              SECTION 311

    Under this section, the House is prohibited from 
considering legislation that would exceed the aggregate 
spending limits of budget authority and outlays, or cause 
revenue levels to fall below the revenue floor, established by 
the concurrent resolution on the budget. If a measure would 
cause budget authority or outlays to be greater than the 
ceiling established for the first fiscal year of a budget 
resolution, a section 311 violation occurs.
    Additionally, if a measure would cause revenue to be lower 
than the revenue floor in the first fiscal year or the period 
of years covered by the budget resolution, a section 311 
violation occurs. Section 311 does not apply to measures that 
provide budget authority but do not exceed a committee's 302(a) 
allocations.

                             SECTION 314(f)

    Section 314(f) of the Congressional Budget Act prohibits 
the consideration of any bill, joint resolution, amendment, or 
conference report that would cause the statutory spending 
category limits established in section 251(c) of the Balanced 
Budget and Emergency Deficit Control Act of 1985 (as adjusted 
by procedures set out in section 251A of that Act) to be 
exceeded.

                             SECTION 401(a)

    Section 401(a) of the Congressional Budget Act prohibits 
the consideration of any bill, joint resolution, amendment, or 
conference report that provides: (1) new authority that the 
Government is obligated to make outlays; (2) new authority to 
incur indebtedness; or (3) new credit authority unless such 
measure is subject to the availability of appropriations. It is 
a strict rule because, similar to the House Cut-As-You-Go Rule 
and statutory Pay-As-You-Go, a bill would violate the rule even 
if the budget resolution specifically assumed the increase in 
mandatory spending.

                             SECTION 401(b)

    Section 401(b)(1) of the Congressional Budget Act prohibits 
the consideration of any bill, joint resolution, amendment, or 
conference report that provides new entitlement authority first 
effective in the current fiscal year. This point of order 
prevented Congress from prematurely increasing new entitlement 
authority before the Congress agreed to a budget resolution for 
the forthcoming fiscal year.
    Section 401(b)(2) requires the referral to the Committee on 
Appropriations of any reported authorization bill that 
increases entitlement spending in the forthcoming fiscal year 
if it exceeds the reporting Committee's 302(a) allocation. 
Under this section, the Committee on Appropriations is 
empowered to limit the total amount of new entitlement 
authority provided by that bill.
    The well-intentioned rules under section 401 of the 
Congressional Budget Act have proven ineffective. Congress has 
passed numerous bills that have increased one or more of the 
categories of direct or mandatory spending specified in section 
401. These increases in mandatory spending have included 
entirely new programs, programmatic expansions in existing 
programs, and increases in existing programs that occur under 
current law.
    Section 401(b) was effectively discarded in the 110th 
Congress, when it was last waived by H. Res. 1218. Section 
401(b)(2) was never fully implemented. The referral authority 
under this section has not been used since 1991, during the 
102nd Congress. In its 42-year history, approximately 10 to 15 
bills were referred to the Committee on Appropriations and not 
once did the Committee on Appropriations actually report the 
bill with a spending limitation, as the rule envisioned. The 
Balanced Budget Act of 1997 amended section 401(b) of the 
Congressional Budget Act to make this referral authority to the 
Committee on Appropriations permissive rather than mandatory. 
Since that time, no referrals have been made to the Committee 
on Appropriations under this authority.
    These rules and procedures have failed to control direct 
spending and were effectively sidelined for several reasons. 
First, the rules were so strict that Congress was unwilling to 
enforce them and waived them repeatedly over the years; the 
rule prohibited the creation of certain types of new 
entitlement programs even if the spending was within the 
permissible limits established by the budget resolution and was 
for a preexisting program. Second, the focus on separate 
categories of mandatory spending became obsolete with the 
enactment of the Budget Enforcement Act of 1990 [BEA]. The BEA 
effectively replaced these separate categories of mandatory 
spending with the concept of direct spending, which refers to 
all forms of spending not subject to annual appropriations. 
Finally, the failure of these rules to prevent increases in 
mandatory spending may be attributed to how they are enforced. 
In the House, these rules are waived as part of a resolution 
that provides for the consideration of a bill. The vote on a 
rule is seen as a test of the majority party's discipline and, 
as a result, the rule usually passes on a party line vote.
    The referral process under section 401(b)(2) has also 
proven ineffective in combatting increases in entitlement 
programs. It is not entirely clear why the Committee on 
Appropriations has neither sought referrals of mandatory 
spending bills nor reported the few that have been referred to 
it. The Committee on Appropriations has a disincentive to mark 
up these bills because it would have to stretch limited 
spending authority across more programs or face the enmity of 
proponents of those programs.
    A more mundane reason bills have not been referred to the 
Committee on Appropriations is that it would impose untenable 
timing delays. The Leadership sometimes schedules bills for 
consideration on the House floor shortly after they are 
reported by a Committee. A 15-day referral to the Committee on 
Appropriations would obviously slow the legislative process and 
the Leadership would have to build these time delays into the 
House's legislative schedule.
    The Committee on the Budget believes that the regimen for 
handling new entitlement authority needs to be reevaluated. It 
will begin by reassessing the appropriate level at which the 
rule under section 401 of the Congressional Budget Act should 
apply. One option would be to apply the existing rules at the 
programmatic level. This would preclude entirely new programs 
but allow existing programs to be expanded or reformed if they 
are within the limits established by the budget resolution or 
are offset by reductions in entitlement spending. One obstacle 
to enforcing the rule at the programmatic level, however, is 
that there is no clear definition of what constitutes a 
``program'': There is no commonly accepted definition of the 
term ``program'' in budget or appropriations law. As a result, 
agencies aggregate program, projects, and activities under 
different standards.
    At a minimum, these rules and procedures need to be updated 
to encompass all mandatory spending programs rather than just 
the four obsolete categories for borrowing authority, contract 
authority, credit authority, and new entitlement authority. The 
Committee on the Budget will undertake this update with budget 
process reform.

                 Budget-Related Provisions in the House

    In addition to budget enforcement controls in the 
Congressional Budget Act of 1974, as applied through the 
concurrent resolution on the budget, additional budget 
enforcement rules may be found in the Rules of the House of 
Representatives and in the Separate Orders of the House.

                         CLAUSE 8 OF RULE XIII

    This clause requires the Congressional Budget Office and 
Joint Committee on Taxation to incorporate the macroeconomic 
effects of major legislation into official cost estimates used 
for budget enforcement and other rules of the House. The 
operation of this rule has been superseded by section 308 of 
this resolution.

                          CLAUSE 7 OF RULE XXI

    This clause prohibits the consideration of a concurrent 
resolution on the budget containing reconciliation directives 
(under section 310 of the Congressional Budget Act of 1974) 
that would cause a net increase in direct spending.

                         CLAUSE 10 OF RULE XXI

    This clause prohibits the consideration of legislation that 
increases direct spending over a 6-year period or an 11-year 
period. If such spending is increased in either of these time 
periods, then it must be offset by corresponding decreases in 
direct spending. If an amendment is offered to a measure that 
decreases direct spending in either of these periods, then the 
amendment must also decrease net direct spending by at least 
the same amount. This rule is commonly referred to as Cut-As-
You-Go.

                         CLAUSE 4 OF RULE XXIX

    This clause specifies that the Chair of the Committee on 
the Budget is responsible for providing authoritative guidance 
concerning the impact of a legislative proposition related to 
the levels of new budget authority, outlays, direct spending, 
and new entitlement authority.

  SECTION 3 OF THE SEPARATE ORDERS OF HOUSE RESOLUTION 5 OF THE 114TH 
                                CONGRESS

    House Resolution 5 adopted the rules from the 113th 
Congress and incorporated additional provisions related to the 
budget process.
    Section 3(d) maintains the requirement, from the 112th and 
113th Congresses, that each general appropriations bill include 
a ``spending reduction'' account. This ``spending reduction 
account'' provides a recitation of the amount by which, through 
the amendment process, the House has reduced spending in other 
portions of the bill and indicates that those savings be 
counted toward spending reduction. It also provides that any 
amendment increasing spending relative to the underlying bill 
must include an offset of an equal or greater amount.
    Section 3(h) maintains the requirement from the 113th 
Congress that a concurrent resolution on the budget include a 
section related to ``Means-Tested and Non-Means-Tested Direct 
Spending'' programs. Additionally, the Chair of the Committee 
on the Budget must submit for printing in the Congressional 
Record a statement defining these terms prior to the 
consideration of such concurrent resolution. This requirement 
also applies to any amendments to or conference reports on a 
concurrent resolution on the budget.
    Section 3(q) prohibits the consideration of any legislation 
that reduces the actuarial balance of the Federal Old-Age and 
Survivors Insurance Trust Fund unless such legislation improves 
the overall financial health of the combined Social Security 
Trust Funds.

                        ACCOUNTS IDENTIFIED FOR
                         ADVANCE APPROPRIATIONS

                              ----------                              


             Accounts Identified for Advance Appropriations
                          for Fiscal Year 2018

            (SUBJECT TO A GENERAL LIMIT OF $28,852,000,000)

Labor, Health and Human Services, and Education
          Employment and Training Administration
          Education for the Disadvantaged
          School Improvement
          Career, Technical, and Adult Education
          Special Education
Transportation, Housing and Urban Development
          Tenant-based Rental Assistance
          Project-based Rental Assistance

             Veterans Discretionary Accounts Identified for
              Advance Appropriations for Fiscal Year 2018

            (SUBJECT TO A SEPARATE LIMIT OF $66,385,032,000)

Military Construction, Veterans Affairs
          Veterans Medical Services
          Veterans Medical Support and Compliance
          Veterans Medical Facilities
          Veterans Medical Community Care

                         VOTES OF THE COMMITTEE

                              ----------                              

    Clause 3(b) of House Rule XIII requires each committee 
report to accompany any bill or resolution of a public 
character, ordered to include the total number of votes cast 
for and against on each rollcall vote, on a motion to report 
and any amendments offered to the measure or matter, together 
with the names of those voting for and against. Listed below 
are the rollcall votes taken in the Committee on the Budget on 
the Concurrent Resolution on the Budget for Fiscal Year 2017.
    On March 16, 2016 the Committee met in open session, a 
quorum being present.
    Mr. Rokita asked unanimous consent that the Chair be 
authorized, consistent with clause 4 of House Rule XVI, to 
declare a recess at any time during the Committee meeting.
    There was no objection to the unanimous consent request.
    Chairman Price asked unanimous consent to dispense with the 
first reading of the budget aggregates, function levels and 
other appropriate matter; that the aggregates, function totals 
and other appropriate matter be open for amendment; and that 
amendments be considered as read.
    There was no objection to the unanimous consent request.
    The committee adopted and ordered reported the Concurrent 
Resolution on the Budget for Fiscal Year 2017. The Committee on 
the Budget took the following votes:
    1. An amendment offered by Representatives Van Hollen, 
Yarmuth, Pascrell, Castor, McDermott, Lee, Pocan, Lujan 
Grisham, Dingell, Norcross and Moulton to insert a policy 
statement on women's health care.
    The amendment was not agreed to by a rollcall vote of 10 
ayes and 22 noes.
    Representatives Ryan and Pascrell asked unanimous consent, 
after the closing of the vote, that the record reflect they 
would have voted aye on rollcall vote no. 1.
    There was no objection to the unanimous consent requests.

                           ROLLCALL VOTE NO. 1
------------------------------------------------------------------------
  Name &                     Answer     Name &                   Answer
  State      Aye     No     Present     State      Aye     No    Present
------------------------------------------------------------------------
PRICE                 X               VAN           X
 (GA)                                  HOLLEN
 (Chairma                              (MD)
 n)                                    (Ranking
                                       )
------------------------------------------------------------------------
ROKITA                X               YARMUTH       X
 (IN)                                  (KY)
------------------------------------------------------------------------
GARRETT               X               PASCRELL
 (NJ)                                  (NJ)
------------------------------------------------------------------------
DIAZ-BALA             X               RYAN (OH)
 RT (FL)
------------------------------------------------------------------------
COLE (OK)             X               MOORE         X
                                       (WI)
------------------------------------------------------------------------
McCLINTOC             X               CASTOR        X
 K (CA)                                (FL)
------------------------------------------------------------------------
BLACK                 X               McDERMOTT     X
 (TN)                                  (WA)
------------------------------------------------------------------------
WOODALL               X               LEE (CA)
 (GA)
------------------------------------------------------------------------
HARTZLER              X               POCAN         X
 (MO)                                  (WI)
------------------------------------------------------------------------
STUTZMAN              X               LUJAN         X
 (IN)                                  GRISHAM
                                       (NM)
------------------------------------------------------------------------
GUINTA                X               DINGELL       X
 (NH)                                  (MI)
------------------------------------------------------------------------
SANFORD               X               LIEU (CA)
 (SC)
------------------------------------------------------------------------
WOMACK                X               NORCROSS      X
 (AR)                                  (NJ)
------------------------------------------------------------------------
BRAT (VA)             X               MOULTON       X
                                       (MA)
------------------------------------------------------------------------
BLUM (IA)             X    .........
------------------------------------------------------------------------
MOONEY                X               .........
 (WV)
------------------------------------------------------------------------
GROTHMAN              X               .........
 (WI)
------------------------------------------------------------------------
PALMER                X               .........
 (AL)
------------------------------------------------------------------------
MOOLENAAR             X    .........
 (MI)
------------------------------------------------------------------------
WESTERMAN             X    .........
 (AR)
------------------------------------------------------------------------
RENACCI               X    .........
 (OH)
------------------------------------------------------------------------
JOHNSON               X
 (OH)
------------------------------------------------------------------------

    2. An amendment offered by Chairman Price making technical 
changes to the Chairman's mark.
    The amendment was agreed to by voice vote.
    3. An amendment offered by Representatives Dingell, Van 
Hollen, Yarmuth, Moore, Castor, McDermott, Lee, Pocan, Lujan 
Grisham and Moulton to provide assistance for residents of 
Flint, Michigan. The amendment would also permit Michigan and 
any other State with an emergency declaration because of 
contaminants contained in public drinking water to use its 2016 
Drinking Water State Revolving Fund allotment to offset any 
outstanding debt on loans incurred before this fiscal year, as 
well as lift the 20 percent limit on the amount of such 
allotment that may be used to offset any principal.
    The amendment would increase outlays for Functions 300, 
450, 500 and 550. Outlays for Function 300 would increase by 
the following amounts: $89.967 million for fiscal year 2017, 
$51.609 million for fiscal year 2018, $15.821 million for 
fiscal year 2019, $5.050 million for fiscal year 2020 and 
$4.244 million for fiscal year 2021.
    Outlays for Function 450 would increase by the following 
amounts: $11.907 million for fiscal year 2017, $6.831 million 
for fiscal year 2018, $2.094 million for fiscal year 2019, 
$0.668 million for fiscal year 2020 and $0.562 million for 
fiscal year 2021.
    Outlays for Function 500 would increase by the following 
amounts: $119.074 million for fiscal year 2017, $68.306 million 
for fiscal year 2018, $20.940 million for fiscal year 2019, 
$6.684 million for fiscal year 2020 and $5.617 million for 
fiscal year 2021.
    Outlays for Function 550 would increase by the following 
amounts: $21.169 million for fiscal year 2017, $12.143 million 
for fiscal year 2018, $3.723 million for fiscal year 2019, 
$1.188 million for fiscal year 2020 and $0.999 million for 
fiscal year 2021.
    The amendment was not agreed to by a rollcall vote of 14 
ayes and 21 noes.

                           ROLLCALL VOTE NO. 2
------------------------------------------------------------------------
  Name &                     Answer     Name &                   Answer
  State      Aye     No     Present     State      Aye     No    Present
------------------------------------------------------------------------
PRICE                 X               VAN           X
 (GA)                                  HOLLEN
 (Chairma                              (MD)
 n)                                    (Ranking
                                       )
------------------------------------------------------------------------
ROKITA                X               YARMUTH       X
 (IN)                                  (KY)
------------------------------------------------------------------------
GARRETT               X               PASCRELL      X
 (NJ)                                  (NJ)
------------------------------------------------------------------------
DIAZ-BALA             X               RYAN (OH)     X
 RT (FL)
------------------------------------------------------------------------
COLE (OK)             X               MOORE         X
                                       (WI)
------------------------------------------------------------------------
McCLINTOC             X               CASTOR        X
 K (CA)                                (FL)
------------------------------------------------------------------------
BLACK                 X               McDERMOTT     X
 (TN)                                  (WA)
------------------------------------------------------------------------
WOODALL               X               LEE (CA)      X
 (GA)
------------------------------------------------------------------------
HARTZLER              X               POCAN         X
 (MO)                                  (WI)
------------------------------------------------------------------------
STUTZMAN              X               LUJAN         X
 (IN)                                  GRISHAM
                                       (NM)
------------------------------------------------------------------------
GUINTA                                DINGELL       X
 (NH)                                  (MI)
------------------------------------------------------------------------
SANFORD               X               LIEU (CA)     X
 (SC)
------------------------------------------------------------------------
WOMACK                X               NORCROSS      X
 (AR)                                  (NJ)
------------------------------------------------------------------------
BRAT (VA)             X               MOULTON       X
                                       (MA)
------------------------------------------------------------------------
BLUM (IA)             X    .........
------------------------------------------------------------------------
MOONEY                X               .........
 (WV)
------------------------------------------------------------------------
GROTHMAN              X               .........
 (WI)
------------------------------------------------------------------------
PALMER                X               .........
 (AL)
------------------------------------------------------------------------
MOOLENAAR             X    .........
 (MI)
------------------------------------------------------------------------
WESTERMAN             X    .........
 (AR)
------------------------------------------------------------------------
RENACCI               X    .........
 (OH)
------------------------------------------------------------------------
JOHNSON               X
 (OH)
------------------------------------------------------------------------

    4. An amendment offered by Representatives Yarmuth, Van 
Hollen, Pascrell, Castor, McDermott, Lee, Pocan, Lujan Grisham, 
Dingell and Moulton to adjust revenue and Function 920 levels 
to reflect the adoption of the Border Security, Economic 
Opportunity and Immigration Modernization Act, which was 
proposed in the 113th Congress.
    The amendment would increase aggregate levels of revenue by 
the following amounts: $2.1 billion for fiscal year 2017, $11.5 
billion for fiscal year 2018, $28.0 billion for fiscal year 
2019, $39.1 billion for fiscal year 2020, $45.0 billion for 
fiscal year 2021, $47.7 billion for fiscal year 2022, $55.3 
billion for fiscal year 2023, $65.0 billion for fiscal year 
2024, $77.7 billion for fiscal year 2025 and $87.6 billion for 
fiscal year 2026.
    The amendment would also increase budget authority and 
outlays for Function 920 each by the following amounts: $4.6 
billion for fiscal year 2017, $6.8 billion for fiscal year 
2018, $14.0 billion for fiscal year 2019, $19.8 billion for 
fiscal year 2020, $24.6 billion for fiscal year 2021, $26.6 
billion for fiscal year 2022, $32.2 billion for fiscal year 
2023, $37.4 billion for fiscal year 2024, $44.4 billion for 
fiscal year 2025 and $51.4 billion for fiscal year 2026.
    The amendment would also insert a policy statement on 
immigration reform.
    The amendment was not agreed to by a rollcall vote of 15 
ayes and 19 noes.

                           ROLLCALL VOTE NO. 3
------------------------------------------------------------------------
  Name &                     Answer     Name &                   Answer
  State      Aye     No     Present     State      Aye     No    Present
------------------------------------------------------------------------
PRICE                 X               VAN           X
 (GA)                                  HOLLEN
 (Chairma                              (MD)
 n)                                    (Ranking
                                       )
------------------------------------------------------------------------
ROKITA                X               YARMUTH       X
 (IN)                                  (KY)
------------------------------------------------------------------------
GARRETT                               PASCRELL      X
 (NJ)                                  (NJ)
------------------------------------------------------------------------
DIAZ-BALA     X                       RYAN (OH)     X
 RT (FL)
------------------------------------------------------------------------
COLE (OK)             X               MOORE         X
                                       (WI)
------------------------------------------------------------------------
McCLINTOC             X               CASTOR        X
 K (CA)                                (FL)
------------------------------------------------------------------------
BLACK                 X               McDERMOTT     X
 (TN)                                  (WA)
------------------------------------------------------------------------
WOODALL               X               LEE (CA)      X
 (GA)
------------------------------------------------------------------------
HARTZLER              X               POCAN         X
 (MO)                                  (WI)
------------------------------------------------------------------------
STUTZMAN              X               LUJAN         X
 (IN)                                  GRISHAM
                                       (NM)
------------------------------------------------------------------------
GUINTA                X               DINGELL       X
 (NH)                                  (MI)
------------------------------------------------------------------------
SANFORD               X               LIEU (CA)     X
 (SC)
------------------------------------------------------------------------
WOMACK                X               NORCROSS      X
 (AR)                                  (NJ)
------------------------------------------------------------------------
BRAT (VA)             X               MOULTON       X
                                       (MA)
------------------------------------------------------------------------
BLUM (IA)                  .........
------------------------------------------------------------------------
MOONEY                X               .........
 (WV)
------------------------------------------------------------------------
GROTHMAN              X               .........
 (WI)
------------------------------------------------------------------------
PALMER                X               .........
 (AL)
------------------------------------------------------------------------
MOOLENAAR             X    .........
 (MI)
------------------------------------------------------------------------
WESTERMAN             X    .........
 (AR)
------------------------------------------------------------------------
RENACCI               X    .........
 (OH)
------------------------------------------------------------------------
JOHNSON               X
 (OH)
------------------------------------------------------------------------

    5. An amendment offered by Representatives Pascrell, Van 
Hollen, Yarmuth, McDermott, Lee, Pocan, Lujan Grisham, Dingell 
and Moore to increase mandatory budget authority and outlays in 
Function 550 relating to Medicaid.
    The amendment would increase mandatory budget authority and 
outlays for Function 550 each by the following amounts: $7.0 
billion for fiscal year 2017, $67.0 billion for fiscal year 
2018, $82.0 billion for fiscal year 2019, $88.0 billion for 
fiscal year 2020, $97.0 billion for fiscal year 2021, $109.0 
billion for fiscal year 2022, $121.0 billion for fiscal year 
2023, $135.0 billion for fiscal year 2024, $151.0 billion for 
fiscal year 2025 and $169.0 billion for fiscal year 2026.
    The amendment would adjust the aggregate levels of revenue 
by amounts equal to the aforementioned changes in outlays by 
eliminating tax deductions for oil production and U.S. 
businesses with international operations, changing the 
depreciation schedules for certain equipment, closing loopholes 
in the international corporate tax system, raising taxes on 
high-income individuals and reforming the tax code by repealing 
certain business expense deductions.
    The amendment was not agreed to by a rollcall vote of 14 
ayes and 20 noes.

                           ROLLCALL VOTE NO. 4
------------------------------------------------------------------------
  Name &                     Answer     Name &                   Answer
  State      Aye     No     Present     State      Aye     No    Present
------------------------------------------------------------------------
PRICE                 X               VAN           X
 (GA)                                  HOLLEN
 (Chairma                              (MD)
 n)                                    (Ranking
                                       )
------------------------------------------------------------------------
ROKITA                X               YARMUTH       X
 (IN)                                  (KY)
------------------------------------------------------------------------
GARRETT               X               PASCRELL      X
 (NJ)                                  (NJ)
------------------------------------------------------------------------
DIAZ-BALA             X               RYAN (OH)     X
 RT (FL)
------------------------------------------------------------------------
COLE (OK)             X               MOORE         X
                                       (WI)
------------------------------------------------------------------------
McCLINTOC             X               CASTOR        X
 K (CA)                                (FL)
------------------------------------------------------------------------
BLACK                 X               McDERMOTT     X
 (TN)                                  (WA)
------------------------------------------------------------------------
WOODALL               X               LEE (CA)      X
 (GA)
------------------------------------------------------------------------
HARTZLER              X               POCAN         X
 (MO)                                  (WI)
------------------------------------------------------------------------
STUTZMAN                              LUJAN         X
 (IN)                                  GRISHAM
                                       (NM)
------------------------------------------------------------------------
GUINTA                X               DINGELL       X
 (NH)                                  (MI)
------------------------------------------------------------------------
SANFORD               X               LIEU (CA)     X
 (SC)
------------------------------------------------------------------------
WOMACK                X               NORCROSS      X
 (AR)                                  (NJ)
------------------------------------------------------------------------
BRAT (VA)             X               MOULTON       X
                                       (MA)
------------------------------------------------------------------------
BLUM (IA)                  .........
------------------------------------------------------------------------
MOONEY                X               .........
 (WV)
------------------------------------------------------------------------
GROTHMAN              X               .........
 (WI)
------------------------------------------------------------------------
PALMER                X               .........
 (AL)
------------------------------------------------------------------------
MOOLENAAR             X    .........
 (MI)
------------------------------------------------------------------------
WESTERMAN             X    .........
 (AR)
------------------------------------------------------------------------
RENACCI               X    .........
 (OH)
------------------------------------------------------------------------
JOHNSON               X
 (OH)
------------------------------------------------------------------------

    6. An amendment offered by Representatives McDermott, Van 
Hollen, Yarmuth, Pascrell, Lee, Pocan, Lujan Grisham, Dingell 
and Norcross to strike section 610 of the Chairman's mark and 
insert a policy statement on Medicare.
    The amendment was not agreed to by a rollcall vote of 13 
ayes and 21 noes.

                           ROLLCALL VOTE NO. 5
------------------------------------------------------------------------
  Name &                     Answer     Name &                   Answer
  State      Aye     No     Present     State      Aye     No    Present
------------------------------------------------------------------------
PRICE                 X               VAN           X
 (GA)                                  HOLLEN
 (Chairma                              (MD)
 n)                                    (Ranking
                                       )
------------------------------------------------------------------------
ROKITA                X               YARMUTH       X
 (IN)                                  (KY)
------------------------------------------------------------------------
GARRETT               X               PASCRELL      X
 (NJ)                                  (NJ)
------------------------------------------------------------------------
DIAZ-BALA             X               RYAN (OH)     X
 RT (FL)
------------------------------------------------------------------------
COLE (OK)             X               MOORE         X
                                       (WI)
------------------------------------------------------------------------
McCLINTOC             X               CASTOR        X
 K (CA)                                (FL)
------------------------------------------------------------------------
BLACK                 X               McDERMOTT     X
 (TN)                                  (WA)
------------------------------------------------------------------------
WOODALL               X               LEE (CA)      X
 (GA)
------------------------------------------------------------------------
HARTZLER              X               POCAN         X
 (MO)                                  (WI)
------------------------------------------------------------------------
STUTZMAN              X               LUJAN         X
 (IN)                                  GRISHAM
                                       (NM)
------------------------------------------------------------------------
GUINTA                X               DINGELL       X
 (NH)                                  (MI)
------------------------------------------------------------------------
SANFORD               X               LIEU (CA)     X
 (SC)
------------------------------------------------------------------------
WOMACK                X               NORCROSS      X
 (AR)                                  (NJ)
------------------------------------------------------------------------
BRAT (VA)                             MOULTON
                                       (MA)
------------------------------------------------------------------------
BLUM (IA)             X    .........
------------------------------------------------------------------------
MOONEY                X               .........
 (WV)
------------------------------------------------------------------------
GROTHMAN              X               .........
 (WI)
------------------------------------------------------------------------
PALMER                X               .........
 (AL)
------------------------------------------------------------------------
MOOLENAAR             X    .........
 (MI)
------------------------------------------------------------------------
WESTERMAN             X    .........
 (AR)
------------------------------------------------------------------------
RENACCI               X    .........
 (OH)
------------------------------------------------------------------------
JOHNSON               X
 (OH)
------------------------------------------------------------------------

    7. An amendment offered by Representatives Moore, Van 
Hollen, Yarmuth, McDermott, Lee, Pocan and Dingell to strike 
Title II of the Chairman's mark.
    The amendment was not agreed to by a rollcall vote of 11 
ayes and 21 noes.

                           ROLLCALL VOTE NO. 6
------------------------------------------------------------------------
  Name &                     Answer     Name &                   Answer
  State      Aye     No     Present     State      Aye     No    Present
------------------------------------------------------------------------
PRICE                 X               VAN           X
 (GA)                                  HOLLEN
 (Chairma                              (MD)
 n)                                    (Ranking
                                       )
------------------------------------------------------------------------
ROKITA                X               YARMUTH       X
 (IN)                                  (KY)
------------------------------------------------------------------------
GARRETT               X               PASCRELL
 (NJ)                                  (NJ)
------------------------------------------------------------------------
DIAZ-BALA             X               RYAN (OH)     X
 RT (FL)
------------------------------------------------------------------------
COLE (OK)             X               MOORE         X
                                       (WI)
------------------------------------------------------------------------
McCLINTOC             X               CASTOR        X
 K (CA)                                (FL)
------------------------------------------------------------------------
BLACK                 X               McDERMOTT     X
 (TN)                                  (WA)
------------------------------------------------------------------------
WOODALL               X               LEE (CA)      X
 (GA)
------------------------------------------------------------------------
HARTZLER              X               POCAN         X
 (MO)                                  (WI)
------------------------------------------------------------------------
STUTZMAN              X               LUJAN         X
 (IN)                                  GRISHAM
                                       (NM)
------------------------------------------------------------------------
GUINTA                X               DINGELL       X
 (NH)                                  (MI)
------------------------------------------------------------------------
SANFORD               X               LIEU (CA)     X
 (SC)
------------------------------------------------------------------------
WOMACK                X               NORCROSS
 (AR)                                  (NJ)
------------------------------------------------------------------------
BRAT (VA)                             MOULTON
                                       (MA)
------------------------------------------------------------------------
BLUM (IA)             X    .........
------------------------------------------------------------------------
MOONEY                X               .........
 (WV)
------------------------------------------------------------------------
GROTHMAN              X               .........
 (WI)
------------------------------------------------------------------------
PALMER                X               .........
 (AL)
------------------------------------------------------------------------
MOOLENAAR             X    .........
 (MI)
------------------------------------------------------------------------
WESTERMAN             X    .........
 (AR)
------------------------------------------------------------------------
RENACCI               X    .........
 (OH)
------------------------------------------------------------------------
JOHNSON               X
 (OH)
------------------------------------------------------------------------

    8. An amendment offered by Representatives Lee, Van Hollen, 
Yarmuth, Pascrell, Moore, McDermott, Pocan and Dingell to 
insert a policy statement relating to poverty and increased 
opportunity.
    The amendment was not agreed to by a rollcall vote of 13 
ayes and 22 noes.

                           ROLLCALL VOTE NO. 7
------------------------------------------------------------------------
  Name &                     Answer     Name &                   Answer
  State      Aye     No     Present     State      Aye     No    Present
------------------------------------------------------------------------
PRICE                 X               VAN           X
 (GA)                                  HOLLEN
 (Chairma                              (MD)
 n)                                    (Ranking
                                       )
------------------------------------------------------------------------
ROKITA                X               YARMUTH       X
 (IN)                                  (KY)
------------------------------------------------------------------------
GARRETT               X               PASCRELL      X
 (NJ)                                  (NJ)
------------------------------------------------------------------------
DIAZ-BALA             X               RYAN (OH)     X
 RT (FL)
------------------------------------------------------------------------
COLE (OK)             X               MOORE         X
                                       (WI)
------------------------------------------------------------------------
McCLINTOC             X               CASTOR        X
 K (CA)                                (FL)
------------------------------------------------------------------------
BLACK                 X               McDERMOTT
 (TN)                                  (WA)
------------------------------------------------------------------------
WOODALL               X               LEE (CA)      X
 (GA)
------------------------------------------------------------------------
HARTZLER              X               POCAN         X
 (MO)                                  (WI)
------------------------------------------------------------------------
STUTZMAN              X               LUJAN         X
 (IN)                                  GRISHAM
                                       (NM)
------------------------------------------------------------------------
GUINTA                X               DINGELL       X
 (NH)                                  (MI)
------------------------------------------------------------------------
SANFORD               X               LIEU (CA)     X
 (SC)
------------------------------------------------------------------------
WOMACK                X               NORCROSS      X
 (AR)                                  (NJ)
------------------------------------------------------------------------
BRAT (VA)             X               MOULTON       X
                                       (MA)
------------------------------------------------------------------------
BLUM (IA)             X    .........
------------------------------------------------------------------------
MOONEY                X               .........
 (WV)
------------------------------------------------------------------------
GROTHMAN              X               .........
 (WI)
------------------------------------------------------------------------
PALMER                X               .........
 (AL)
------------------------------------------------------------------------
MOOLENAAR             X    .........
 (MI)
------------------------------------------------------------------------
WESTERMAN             X    .........
 (AR)
------------------------------------------------------------------------
RENACCI               X    .........
 (OH)
------------------------------------------------------------------------
JOHNSON               X
 (OH)
------------------------------------------------------------------------

    9. An amendment offered by Representatives Lujan Grisham, 
Van Hollen, Yarmuth, Castor, McDermott, Lee, Pocan and Dingell 
to insert a policy statement relating to prescription drug 
costs.
    The amendment was not agreed to by a rollcall vote of 13 
ayes and 21 noes.

                           ROLLCALL VOTE NO. 8
------------------------------------------------------------------------
  Name &                     Answer     Name &                   Answer
  State      Aye     No     Present     State      Aye     No    Present
------------------------------------------------------------------------
PRICE                 X               VAN           X
 (GA)                                  HOLLEN
 (Chairma                              (MD)
 n)                                    (Ranking
                                       )
------------------------------------------------------------------------
ROKITA                X               YARMUTH       X
 (IN)                                  (KY)
------------------------------------------------------------------------
GARRETT                               PASCRELL      X
 (NJ)                                  (NJ)
------------------------------------------------------------------------
DIAZ-BALA             X               RYAN (OH)     X
 RT (FL)
------------------------------------------------------------------------
COLE (OK)             X               MOORE         X
                                       (WI)
------------------------------------------------------------------------
McCLINTOC             X               CASTOR        X
 K (CA)                                (FL)
------------------------------------------------------------------------
BLACK                 X               McDERMOTT
 (TN)                                  (WA)
------------------------------------------------------------------------
WOODALL               X               LEE (CA)      X
 (GA)
------------------------------------------------------------------------
HARTZLER              X               POCAN         X
 (MO)                                  (WI)
------------------------------------------------------------------------
STUTZMAN              X               LUJAN         X
 (IN)                                  GRISHAM
                                       (NM)
------------------------------------------------------------------------
GUINTA                X               DINGELL       X
 (NH)                                  (MI)
------------------------------------------------------------------------
SANFORD               X               LIEU (CA)     X
 (SC)
------------------------------------------------------------------------
WOMACK                X               NORCROSS      X
 (AR)                                  (NJ)
------------------------------------------------------------------------
BRAT (VA)             X               MOULTON       X
                                       (MA)
------------------------------------------------------------------------
BLUM (IA)             X    .........
------------------------------------------------------------------------
MOONEY                X               .........
 (WV)
------------------------------------------------------------------------
GROTHMAN              X               .........
 (WI)
------------------------------------------------------------------------
PALMER                X               .........
 (AL)
------------------------------------------------------------------------
MOOLENAAR             X    .........
 (MI)
------------------------------------------------------------------------
WESTERMAN             X    .........
 (AR)
------------------------------------------------------------------------
RENACCI               X    .........
 (OH)
------------------------------------------------------------------------
JOHNSON               X
 (OH)
------------------------------------------------------------------------

    10. An amendment offered by Representatives Castor, Van 
Hollen, Yarmuth, Pascrell, McDermott, Lee, Pocan, Dingell, 
Norcross and Moulton to increase mandatory budget authority and 
outlays in Function 550 for scientific jobs and biomedical 
research.
    The amendment would increase mandatory budget authority in 
Function 550 by $0.720 billion in fiscal year 2017.
    Outlays in Function 550 would increase by the following 
amounts: $0.381 billion for fiscal year 2017, $0.219 billion 
for fiscal year 2018, $0.067 billion for fiscal year 2019, 
$0.021 billion for fiscal year 2020 and $0.018 billion for 
fiscal year 2021.
    The amendment would adjust the aggregate levels of revenue 
by amounts equal to the aforementioned changes in outlays by 
eliminating tax deductions for oil production and U.S. 
businesses with international operations, changing the 
depreciation schedules for certain equipment, closing loopholes 
in the international corporate tax system, raising taxes on 
high-income individuals and reforming the tax code by repealing 
certain business expense deductions.
    The amendment was not agreed to by a rollcall vote of 12 
ayes and 21 noes.

                           ROLLCALL VOTE NO. 9
------------------------------------------------------------------------
  Name &                     Answer     Name &                   Answer
  State      Aye     No     Present     State      Aye     No    Present
------------------------------------------------------------------------
PRICE                 X               VAN           X
 (GA)                                  HOLLEN
 (Chairma                              (MD)
 n)                                    (Ranking
                                       )
------------------------------------------------------------------------
ROKITA                X               YARMUTH       X
 (IN)                                  (KY)
------------------------------------------------------------------------
GARRETT               X               PASCRELL      X
 (NJ)                                  (NJ)
------------------------------------------------------------------------
DIAZ-BALA             X               RYAN (OH)     X
 RT (FL)
------------------------------------------------------------------------
COLE (OK)             X               MOORE         X
                                       (WI)
------------------------------------------------------------------------
McCLINTOC             X               CASTOR        X
 K (CA)                                (FL)
------------------------------------------------------------------------
BLACK                 X               McDERMOTT
 (TN)                                  (WA)
------------------------------------------------------------------------
WOODALL                               LEE (CA)      X
 (GA)
------------------------------------------------------------------------
HARTZLER              X               POCAN         X
 (MO)                                  (WI)
------------------------------------------------------------------------
STUTZMAN              X               LUJAN         X
 (IN)                                  GRISHAM
                                       (NM)
------------------------------------------------------------------------
GUINTA                X               DINGELL
 (NH)                                  (MI)
------------------------------------------------------------------------
SANFORD               X               LIEU (CA)     X
 (SC)
------------------------------------------------------------------------
WOMACK                X               NORCROSS      X
 (AR)                                  (NJ)
------------------------------------------------------------------------
BRAT (VA)             X               MOULTON       X
                                       (MA)
------------------------------------------------------------------------
BLUM (IA)             X    .........
------------------------------------------------------------------------
MOONEY                X               .........
 (WV)
------------------------------------------------------------------------
GROTHMAN              X               .........
 (WI)
------------------------------------------------------------------------
PALMER                X               .........
 (AL)
------------------------------------------------------------------------
MOOLENAAR             X    .........
 (MI)
------------------------------------------------------------------------
WESTERMAN             X    .........
 (AR)
------------------------------------------------------------------------
RENACCI               X    .........
 (OH)
------------------------------------------------------------------------
JOHNSON               X
 (OH)
------------------------------------------------------------------------

    11. An amendment offered by Representatives Pocan, Van 
Hollen, Yarmuth, Pascrell, Ryan, Castor, McDermott, Lee, 
Dingell, Norcross and Moulton to insert a policy statement 
relating to higher education.
    The amendment was not agreed to by a rollcall vote of 12 
ayes and 21 noes.

                          ROLLCALL VOTE NO. 10
------------------------------------------------------------------------
  Name &                     Answer     Name &                   Answer
  State      Aye     No     Present     State      Aye     No    Present
------------------------------------------------------------------------
PRICE                 X               VAN           X
 (GA)                                  HOLLEN
 (Chairma                              (MD)
 n)                                    (Ranking
                                       )
------------------------------------------------------------------------
ROKITA                X               YARMUTH       X
 (IN)                                  (KY)
------------------------------------------------------------------------
GARRETT               X               PASCRELL      X
 (NJ)                                  (NJ)
------------------------------------------------------------------------
DIAZ-BALA             X               RYAN (OH)     X
 RT (FL)
------------------------------------------------------------------------
COLE (OK)             X               MOORE         X
                                       (WI)
------------------------------------------------------------------------
McCLINTOC             X               CASTOR        X
 K (CA)                                (FL)
------------------------------------------------------------------------
BLACK                 X               McDERMOTT
 (TN)                                  (WA)
------------------------------------------------------------------------
WOODALL                               LEE (CA)      X
 (GA)
------------------------------------------------------------------------
HARTZLER              X               POCAN         X
 (MO)                                  (WI)
------------------------------------------------------------------------
STUTZMAN              X               LUJAN         X
 (IN)                                  GRISHAM
                                       (NM)
------------------------------------------------------------------------
GUINTA                X               DINGELL
 (NH)                                  (MI)
------------------------------------------------------------------------
SANFORD               X               LIEU (CA)     X
 (SC)
------------------------------------------------------------------------
WOMACK                X               NORCROSS      X
 (AR)                                  (NJ)
------------------------------------------------------------------------
BRAT (VA)             X               MOULTON       X
                                       (MA)
------------------------------------------------------------------------
BLUM (IA)             X    .........
------------------------------------------------------------------------
MOONEY                X               .........
 (WV)
------------------------------------------------------------------------
GROTHMAN              X               .........
 (WI)
------------------------------------------------------------------------
PALMER                X               .........
 (AL)
------------------------------------------------------------------------
MOOLENAAR             X    .........
 (MI)
------------------------------------------------------------------------
WESTERMAN             X    .........
 (AR)
------------------------------------------------------------------------
RENACCI               X    .........
 (OH)
------------------------------------------------------------------------
JOHNSON               X
 (OH)
------------------------------------------------------------------------

    12. An amendment offered by Representatives Lieu, Van 
Hollen, Yarmuth, Pascrell, Ryan, McDermott, Lee, Pocan, Lujan 
Grisham, Dingell and Norcross to increase mandatory budget 
authority and outlays for Function 300 and Function 550 
relating to safe drinking water and the prevention of childhood 
lead exposure.
    The amendment would increase mandatory budget authority for 
Function 300 by $3.13 billion in fiscal year 2017. Outlays for 
Function 300 would increase by the following amounts: $1.656 
billion for fiscal year 2017, $0.950 billion for fiscal year 
2018, $0.291 billion for fiscal year 2019, $0.093 billion for 
fiscal year 2020 and $0.078 billion for fiscal year 2021.
    The amendment would increase mandatory budget authority for 
Function 550 by $19.8 billion in fiscal year 2017. Outlays for 
Function 550 would increase by the following amounts: $10.478 
billion for fiscal year 2017, $6.011 billion for fiscal year 
2018, $1.843 billion for fiscal year 2019, $0.588 billion for 
fiscal year 2020 and $0.494 billion for fiscal year 2021.
    The amendment would adjust the aggregate levels of revenue 
by amounts equal to the aforementioned changes in outlays by 
eliminating tax deductions for oil production and U.S. 
businesses with international operations, changing the 
depreciation schedules for certain equipment, closing loopholes 
in the international corporate tax system, raising taxes on 
high-income individuals and reforming the tax code by repealing 
certain business expense deductions.
    The amendment was not agreed to by a rollcall vote of 13 
ayes and 20 noes.

                          ROLLCALL VOTE NO. 11
------------------------------------------------------------------------
  Name &                     Answer     Name &                   Answer
  State      Aye     No     Present     State      Aye     No    Present
------------------------------------------------------------------------
PRICE                 X               VAN           X
 (GA)                                  HOLLEN
 (Chairma                              (MD)
 n)                                    (Ranking
                                       )
------------------------------------------------------------------------
ROKITA                X               YARMUTH       X
 (IN)                                  (KY)
------------------------------------------------------------------------
GARRETT               X               PASCRELL      X
 (NJ)                                  (NJ)
------------------------------------------------------------------------
DIAZ-BALA             X               RYAN (OH)     X
 RT (FL)
------------------------------------------------------------------------
COLE (OK)             X               MOORE         X
                                       (WI)
------------------------------------------------------------------------
McCLINTOC             X               CASTOR        X
 K (CA)                                (FL)
------------------------------------------------------------------------
BLACK                 X               McDERMOTT
 (TN)                                  (WA)
------------------------------------------------------------------------
WOODALL                               LEE (CA)      X
 (GA)
------------------------------------------------------------------------
HARTZLER              X               POCAN         X
 (MO)                                  (WI)
------------------------------------------------------------------------
STUTZMAN              X               LUJAN         X
 (IN)                                  GRISHAM
                                       (NM)
------------------------------------------------------------------------
GUINTA                X               DINGELL       X
 (NH)                                  (MI)
------------------------------------------------------------------------
SANFORD               X               LIEU (CA)     X
 (SC)
------------------------------------------------------------------------
WOMACK                X               NORCROSS      X
 (AR)                                  (NJ)
------------------------------------------------------------------------
BRAT (VA)             X               MOULTON       X
                                       (MA)
------------------------------------------------------------------------
BLUM (IA)                  .........
------------------------------------------------------------------------
MOONEY                X               .........
 (WV)
------------------------------------------------------------------------
GROTHMAN              X               .........
 (WI)
------------------------------------------------------------------------
PALMER                X               .........
 (AL)
------------------------------------------------------------------------
MOOLENAAR             X    .........
 (MI)
------------------------------------------------------------------------
WESTERMAN             X    .........
 (AR)
------------------------------------------------------------------------
RENACCI               X    .........
 (OH)
------------------------------------------------------------------------
JOHNSON               X
 (OH)
------------------------------------------------------------------------

    13. An amendment offered by Representatives Ryan, Van 
Hollen, Yarmuth, Pascrell, McDermott, Lee, Pocan, Lujan 
Grisham, Dingell, Norcross and Moulton to increase mandatory 
budget authority and outlays in Function 550 relating to 
prescription opioid and heroin abuse.
    The amendment would increase mandatory budget authority for 
Function 550 by $0.500 billion for fiscal year 2017 and $0.500 
billion for fiscal year 2018. Outlays for Function 550 would 
change by the following amounts: $0.265 billion for fiscal year 
2017, $0.416 billion for fiscal year 2018, $0.198 billion for 
fiscal year 2019, $0.061 billion for fiscal year 2020, $0.027 
billion for fiscal year 2021 and $0.012 billion for fiscal year 
2022.
    The amendment would adjust the aggregate levels of revenue 
by amounts equal to the aforementioned changes in outlays by 
eliminating tax deductions for oil production and U.S. 
businesses with international operations, changing the 
depreciation schedules for certain equipment, closing loopholes 
in the international corporate tax system, raising taxes on 
high-income individuals and reforming the tax code by repealing 
certain business expense deductions.
    The amendment was not agreed to by a rollcall vote of 12 
ayes and 18 noes.

                          ROLLCALL VOTE NO. 12
------------------------------------------------------------------------
  Name &                     Answer     Name &                   Answer
  State      Aye     No     Present     State      Aye     No    Present
------------------------------------------------------------------------
PRICE                 X               VAN           X
 (GA)                                  HOLLEN
 (Chairma                              (MD)
 n)                                    (Ranking
                                       )
------------------------------------------------------------------------
ROKITA                X               YARMUTH       X
 (IN)                                  (KY)
------------------------------------------------------------------------
GARRETT               X               PASCRELL
 (NJ)                                  (NJ)
------------------------------------------------------------------------
DIAZ-BALA             X               RYAN (OH)     X
 RT (FL)
------------------------------------------------------------------------
COLE (OK)             X               MOORE         X
                                       (WI)
------------------------------------------------------------------------
McCLINTOC             X               CASTOR        X
 K (CA)                                (FL)
------------------------------------------------------------------------
BLACK                                 McDERMOTT
 (TN)                                  (WA)
------------------------------------------------------------------------
WOODALL                               LEE (CA)      X
 (GA)
------------------------------------------------------------------------
HARTZLER              X               POCAN         X
 (MO)                                  (WI)
------------------------------------------------------------------------
STUTZMAN              X               LUJAN         X
 (IN)                                  GRISHAM
                                       (NM)
------------------------------------------------------------------------
GUINTA                X               DINGELL       X
 (NH)                                  (MI)
------------------------------------------------------------------------
SANFORD               X               LIEU (CA)     X
 (SC)
------------------------------------------------------------------------
WOMACK                X               NORCROSS      X
 (AR)                                  (NJ)
------------------------------------------------------------------------
BRAT (VA)             X               MOULTON       X
                                       (MA)
------------------------------------------------------------------------
BLUM (IA)                  .........
------------------------------------------------------------------------
MOONEY                X               .........
 (WV)
------------------------------------------------------------------------
GROTHMAN              X               .........
 (WI)
------------------------------------------------------------------------
PALMER                X               .........
 (AL)
------------------------------------------------------------------------
MOOLENAAR             X    .........
 (MI)
------------------------------------------------------------------------
WESTERMAN             X    .........
 (AR)
------------------------------------------------------------------------
RENACCI                    .........
 (OH)
------------------------------------------------------------------------
JOHNSON               X
 (OH)
------------------------------------------------------------------------

    14. An amendment offered by Representatives Moulton, Van 
Hollen, Yarmuth, Pascrell, McDermott, Lee, Pocan, Lujan 
Grisham, Dingell, Norcross and Moore to increase mandatory 
budget authority and outlays for Function 700 relating to 
veterans programs.
    The amendment would increase mandatory budget authority for 
Function 700 by $0.643 billion for fiscal year 2017 and $1.792 
billion for fiscal year 2018. Outlays for Function 700 would 
increase by the following amounts: $0.340 billion for fiscal 
year 2017, $1.144 billion for fiscal year 2018, $0.604 billion 
for fiscal year 2019, $0.186 billion for fiscal year 2020, 
$0.069 billion for fiscal year 2021 and $0.045 billion for 
fiscal year 2022.
    The amendment would also make all discretionary programs at 
the Department of Veterans Affairs subject to advance 
appropriations.
    The amendment would adjust the aggregate levels of revenue 
by amounts equal to the aforementioned changes in outlays by 
eliminating tax deductions for oil production and U.S. 
businesses with international operations, changing the 
depreciation schedules for certain equipment, closing loopholes 
in the international corporate tax system, raising taxes on 
high-income individuals and reforming the tax code by repealing 
certain business expense deductions.
    The amendment was not agreed to by a rollcall vote of 11 
ayes and 19 noes.

                          ROLLCALL VOTE NO. 13
------------------------------------------------------------------------
  Name &                     Answer     Name &                   Answer
  State      Aye     No     Present     State      Aye     No    Present
------------------------------------------------------------------------
PRICE                 X               VAN           X
 (GA)                                  HOLLEN
 (Chairma                              (MD)
 n)                                    (Ranking
                                       )
------------------------------------------------------------------------
ROKITA                X               YARMUTH       X
 (IN)                                  (KY)
------------------------------------------------------------------------
GARRETT               X               PASCRELL      X
 (NJ)                                  (NJ)
------------------------------------------------------------------------
DIAZ-BALA             X               RYAN (OH)
 RT (FL)
------------------------------------------------------------------------
COLE (OK)             X               MOORE         X
                                       (WI)
------------------------------------------------------------------------
McCLINTOC             X               CASTOR
 K (CA)                                (FL)
------------------------------------------------------------------------
BLACK                 X               McDERMOTT
 (TN)                                  (WA)
------------------------------------------------------------------------
WOODALL                               LEE (CA)      X
 (GA)
------------------------------------------------------------------------
HARTZLER              X               POCAN         X
 (MO)                                  (WI)
------------------------------------------------------------------------
STUTZMAN              X               LUJAN         X
 (IN)                                  GRISHAM
                                       (NM)
------------------------------------------------------------------------
GUINTA                X               DINGELL       X
 (NH)                                  (MI)
------------------------------------------------------------------------
SANFORD               X               LIEU (CA)     X
 (SC)
------------------------------------------------------------------------
WOMACK                X               NORCROSS      X
 (AR)                                  (NJ)
------------------------------------------------------------------------
BRAT (VA)             X               MOULTON       X
                                       (MA)
------------------------------------------------------------------------
BLUM (IA)                  .........
------------------------------------------------------------------------
MOONEY                                .........
 (WV)
------------------------------------------------------------------------
GROTHMAN              X               .........
 (WI)
------------------------------------------------------------------------
PALMER                X               .........
 (AL)
------------------------------------------------------------------------
MOOLENAAR             X    .........
 (MI)
------------------------------------------------------------------------
WESTERMAN             X    .........
 (AR)
------------------------------------------------------------------------
RENACCI               X    .........
 (OH)
------------------------------------------------------------------------
JOHNSON               X
 (OH)
------------------------------------------------------------------------

    15. An amendment offered by Representatives Norcross, Van 
Hollen, Yarmuth, Pascrell, Castor, McDermott, Lee, Pocan, Lujan 
Grisham and Dingell to increase mandatory budget authority and 
outlays for Function 500 to reflect the enactment of the 
Paycheck Fairness Act.
    The amendment would increase mandatory budget authority for 
Function 500 by $0.050 billion for fiscal year 2017. Outlays 
for Function 500 would increase by the following amounts: 
$0.028 billion for fiscal year 2017, $0.013 billion for fiscal 
year 2018, $0.004 billion for fiscal year 2019, $0.002 billion 
for fiscal year 2020 and $0.001 billion for fiscal year 2021.
    The amendment would adjust the aggregate levels of revenue 
by amounts equal to the aforementioned changes in outlays by 
eliminating tax deductions for U.S. businesses with 
international operations and closing loopholes in the 
internatio