Federal Budget Process Reform: Analysis of Five Reform Issues

Federal Budget Process Reform:
Analysis of Five Reform Issues
July 1, 2002
James V. Saturno
Specialist on the Congress
Government and Finance Division
Bill Heniff Jr.
Analyst in American National Government
Government and Finance Division

Federal Budget Process Reform:
Analysis of Five Reform Issues
Summary
This report examines several budget process reform options that have received
prominent congressional consideration in recent years: an extension of the Budget
Enforcement Act; a joint budget resolution; an emergency reserve fund; an automatic
continuing resolution; and biennial budgeting. For each reform option, the analysis
includes a summary of the procedural issues related to the reform option, the
arguments that have been raised for and against the proposal, and the legislative
history of past proposals.
First, key enforcement procedures under the Budget Enforcement Act (BEA) of
1990 expire at the end of FY2002 (i.e., September 30, 2002). These include the
statutory caps on discretionary spending and the “pay-as-you-go” (PAYGO)
requirement for direct spending and revenue legislation. Possible considerations
related to an extension of these budget enforcement procedures include the time
frame covered, possible categories for caps on discretionary spending, the types of
automatic or permissible adjustments to the caps, and the application of the PAYGO
requirement.
Second, a joint budget resolution would require the President’s signature,
thereby formally and directly involving the President in congressional deliberations
on the budget early in the process. Under the existing budget process, there is a
concurrent resolution on the budget that represents an agreement between the House
and Senate concerning overall budget policy. It is not presented to the President for
his signature, and thus does not become law.
Third, proposals for an emergency reserve fund are intended to change the way
Congress and the President budget for emergencies and other unanticipated
situations. Instead of appropriating funds for such situations as the need arises,
emergency reserve fund proposals would require Congress and the President to set
aside money for such purposes in the budget, with the appropriation of such funds
tied to meeting specific criteria of what constitutes an emergency.
Fourth, an automatic continuing resolution would provide an automatic source
of funding for discretionary activities in the event one or more regular appropriations
acts are not enacted by the start of a new fiscal year. This reform proposal is
intended to prevent a shutdown of the federal government due to the expiration of
funding.
Finally, biennial budgeting proposals would change the budget cycle to 2 years
from one year. This reform has been discussed as a way of promoting better
management of both Congress’s and the administration’s budgetary workload.
Biennial budgeting proposals could involve multiyear authorizations, 2-year budget
resolutions, 2-year appropriations, or some combination of the three.
This report will be updated to reflect changes in congressional concerns or
actions.

Contents
In troduction ......................................................1
The Basic Framework of the Budget Process............................2
The Budget Cycle..............................................4
The Budget Resolution and Reconciliation..........................5
The Appropriations Process......................................6
Budget Enforcement and Sequestration.............................7
Discretionary Spending Caps.................................7
Pay-As-You-Go ...........................................8
Reforming the Process..........................................8
Extension of Budget Enforcement Mechanisms..........................9
Background .................................................10
Options and Discussion........................................12
Legislative History............................................14
Joint Budget Resolution............................................14
Background .................................................15
Options and Discussion........................................16
Legislative History............................................17
Budgeting for Emergencies.........................................18
Background .................................................19
Options and Discussion........................................22
Legislative History............................................24
Automatic Continuing Resolutions...................................25
Background .................................................25
Options and Discussion........................................27
Legislative History............................................28
Biennial Budgeting...............................................30
Background .................................................30
Options and Discussion........................................31
Legislative History............................................33
List of Tables
Table 1. Spending Designated as Emergency Requirements,
FY1991-FY2002 .............................................22
Table 2. Regular Appropriations Enacted by October 1 and
Continuing Resolutions Enacted, by Fiscal Year, FY1990-FY2002.....26
Table 3. Dates of Enactment of Last Regular Appropriations Legislation,
FY1996-FY2002 .............................................31

Federal Budget Process Reform:
Analysis of Five Reform Issues
Introduction
The budget has become a central issue in American politics because it reflects
decisions concerning how big the federal government should be and priorities for
what the government should do. How those decisions should be made, by whom and
under what constraints has also become a part of the modern political dialog.
Although the basic framework for budgeting has remained relatively stable in recent
years, there has been a recurring reexamination of the budget process to determine
if it works to meet the changing demands of government.¹
In an earlier era of government reform, William F. Willoughby, the director of
the Institute for Government Research, wrote that:
Among the specific problems of public administration none exceeds in
importance that of the establishment of an orderly and efficient system for the²
handling of the financial affairs of the government.
Arguably, this is no less true today than it was then, and its salience is illustrated
by the number and variety of proposals made to change one or more aspects of the
budget process in recent years.
This report includes five reform issues on which Congress has consistently
demonstrated a high level of interest, focused on specifically defined reform
proposals. Some of these issues, such as biennial budgeting, have extensive
legislative histories. These proposals represent just a part of the total spectrum of
proposals that have been discussed, both inside and outside of Congress. This report
does not include those reform issues that are primarily conceptual in nature. Such
issues reflect a level of dissatisfaction with the current process, but they generally are
not focused on a specific single reform option. Examples of these include:
!authorization/appropriations issues, which concern the relationship between
authorizations and appropriations, including timing and sequencing issues;

¹ For a brief summary of the evolution of the budget process, see U.S. Congress, Joint
Committee on the Organization of Congress, Organization of the Congress, 103^rd Cong., 1^st
sess., H.Rept. 103-413, vol. 2 / S.Rept 103-215, vol. 2 (Washington: GPO, 1993), pp. 109-

114.

² William F. Willoughby, The National Budget System (Baltimore: Johns Hopkins
University Press, 1927), p. 1.

!reconciliation process issues, which concern the amount of time available for
considering reconciliation bills, the specificity allowed for reconciliation
instructions, whether reconciliation may be used only to create budgetary
savings, and the application of the Byrd Rule prohibiting extraneous
provisions in reconciliation bills in the Senate;
!impoundment reform issues, which concern amended deferral rules or an
expedited rescission process; and
!budget presentation and structure issues, which concern separate
presentations for regulatory, capital, or tax expenditure budgets, as well as
other issues related to the timing or contents of the President’s budget or mid-
session review.
This report also does not include proposals to reform the budgetary mechanisms
for specific programs, such as instituting off-budget status for trust funds or
establishing a lock-box mechanism as part of Social Security and Medicare reform
proposals.
Finally, this report does not include reform proposals based on amending the
U.S. Constitution, such as presidential item veto authority, a limitation on the
authority of the federal government to raise taxes, or a balanced budget requirement.³
For a more comprehensive accounting of current budget process reform
measures and their legislative history, see CRS Report RL31479, Federal Budget
Process Reform: Proposals and Legislative Actions in the 107^th Congress, by Bill
Heniff Jr.
The Basic Framework of the Budget Process
Although the Constitution requires that “All Bills for raising Revenue shall
originate in the House of Representatives,” it is otherwise silent regarding specific⁴
guidelines for the consideration of revenue or spending legislation. The
Constitution, however, does provide Congress authority “To lay and collect Taxes,
Duties, Imposts and Excises, to pay the Debts and provide for the common Defence
and general Welfare of the United States”⁵ and requires that “No Money shall be⁶
drawn from the Treasury, but in Consequence of Appropriations made by Law.”
Through these provisions, the Constitution grants Congress the “power of the purse.”

³ For more on these issues, see CRS Issue Brief IB89148, Item Veto and Expanded
Impoundment Proposals, by Virginia A. McMurtry; CRS Report 97-379, A Balanced Budget
Constitutional Amendment: Background and Congressional Options, by James V. Saturno;
and CRS Report 98-368, A Tax Limitation Constitutional Amendment: Issues and Options
Concerning a Super-Majority Requirement, by James V. Saturno.
⁴ Article I, section 7.
⁵ Article I, section 8.
⁶ Article I, section 9.

This general authority has been subsequently fleshed out through a number of laws
and congressional rules that underpin the federal budget process.⁷ Two statutes in
particular provide much of the basic legal framework.
The first key statute is the Budget and Accounting Act of 1921 (P.L. 13, 67^th
Congress, 42 Stat. 20-27). Now codified in title 31 of the United States Code, this
Act established the statutory basis for an executive budget process. It gives the
President responsibility for submitting to Congress a proposed budget for the entire
federal government at the beginning of each year. It also created the Bureau of the
Budget (reorganized as the Office of Management and Budget (OMB) in 1970) to
assist him in carrying out his responsibilities, and the General Accounting Office
(GAO) to assist Congress as the principal auditing agency of the federal government.
The second key statute is the Congressional Budget and Impoundment Control
Act of 1974 (P.L. 93-344, 88 Stat. 297-339). The provisions of this Act have been
modified on a number of occasions, but it remains the statutory basis for the
congressional budget process. The Act provides for the annual adoption of a
concurrent resolution on the budget as a mechanism for coordinating and facilitating
congressional budgetary decision making. It also established the House and Senate
Budget Committees with jurisdiction over the annual budget resolution, and created
the Congressional Budget Office (CBO) to provide budgetary information and
analysis to Congress independent of the executive branch.
In addition, the Balanced Budget and Emergency Deficit Control Act of 1985,
as amended (Title II of P.L. 99-177, 99 Stat. 1038-1101), has had significant impact
on budgetary procedures and outcomes by creating additional control mechanisms.
This Act established the sequester mechanism as a means to enforce statutory budget
requirements. Currently, there are separate mechanisms to control direct spending
and revenues (the pay-as-you-go, or PAYGO, process) and discretionary spending
(spending caps).⁸ The budgetary impact of all legislation is scored by OMB, and
reported three times each year (a preview with the President’s budget submission, an
update with the mid-session review of the budget, and a final report within 15 days
after Congress adjourns). If the final report for either the PAYGO or spending caps
indicates that the statutory requirements of that mechanism have been breached, the
President is required to issue an order making across-the-board cuts of nonexempt
spending programs subject to that control mechanism.

⁷ For more on the budget process, see CRS Report 98-720, Manual on the Federal Budget
Process, by Robert Keith and Allen Schick, and CRS Report 98-721, Introduction to the
Federal Budget Process, by Robert Keith and Allen Schick. For more information on
specific aspects of the budget process, see the fact sheets on the CRS Web site at
[ ht t p: / / www.cr s.gov/ pr oduct s / gui des/ budget / e xpl anat i ons/ Budget Expl anat i ons.sht ml ] .
⁸ The Balanced Budget and Emergency Deficit Control Act of 1985 was amended to include
these mechanisms by the Budget Enforcement Act of 1990 (Title XIII of P.L. 101-508,
Omnibus Budget Reconciliation Act of 1990, 104 Stat. 1388-573-1388-630). Originally
enacted with a sunset date of FY1995, they have been extended twice, through FY1998
(Title XIV of P.L. 103-66, Omnibus Budget Reconciliation Act of 1993, 107 Stat. 683-685)
and through FY2002 (Budget Enforcement Act of 1997, Title X of P.L. 105-33, Balanced
Budget Act of 1997, 111 Stat. 677-712).

The Budget Cycle
The President is required to submit to Congress a proposed budget by the first
Monday in February. Although this budget does not have the force of law, it is a
comprehensive examination of federal revenues and spending, including any
initiatives recommended by the President, and is the start of extensive interaction
with Congress.
The President’s budget submission is itself the result of a process that typically
began 10 months earlier. During this stage, federal agencies prepare budget requests
under a variety of internal procedures. OMB plays a coordinating role in this process
through communications, circulars, and bulletins providing instructions, schedules,
and other materials to ensure that budget requests adhere to standardized conventions
and formats.
Agency budget requests are subsequently reviewed by OMB, and the agencies
notified of the OMB director’s recommendations for changes through a “passback”
in the fall prior to the President’s submission. Agencies may appeal these
recommendations to the director, and in some cases, directly to the President. Once
final decisions on the budget requests are made, agencies revise their requests
accordingly, and prepare supporting materials for inclusion in the President’s budget
submission.
The President’s budget submission does not complete administration action.
Agency officials testify at congressional hearings and provide written budget
justifications. In addition, the President is required to submit a formal mid-session
review of the budget by July 15 of each year,⁹ and may also submit additional
budgetary requests during the year.
Within 6 weeks of the President’s budget submission, congressional committees
are required to submit their “views and estimates” of spending and revenues within
their respective jurisdictions to the House and Senate Budget Committees. These
views and estimates, along with information gleaned from hearings testimony, CBO
reports, and other sources, are then used by each Budget Committee in drafting and
reporting a concurrent resolution on the budget to its respective house.
Although it does not have the force of law, the budget resolution is a central part
of the budget process in Congress. As a concurrent resolution, if adopted in the same
form by each house, it represents an agreement between the House and Senate that
establishes congressional budget priorities, and defines the parameters for all
subsequent budgetary actions.¹⁰ The spending, revenue, and public debt limit laws
necessary to implement decisions agreed to in the budget resolution subsequently are
enacted separately. Discretionary spending, which is enacted through the

⁹ For more on this requirement, see CRS Report 98-605, The President’s Budget: Timing
of the Mid-Session Review, by Robert Keith.
¹⁰ A concurrent resolution is the legislative form used to make agreements between the
House and Senate. Concurrent resolutions are not sent to the President for signature or veto.
They are not a legislative form used to make law.

appropriations process, involves annual actions that must be completed before the
beginning of a new fiscal year on October 1. The reconciliation process may be used
to change laws affecting direct spending or revenues. Reconciliation typically
follows a timetable established in the budget resolution for that year. Other
budgetary legislation, such as changes in direct spending or revenue laws separate
from the reconciliation process, changes in the public debt limit, or authorizing
legislation, are not tied directly to the annual budget cycle. However, such legislation
could be a necessary part of budgetary actions in any given year.
After appropriations and other budgetary legislation become law, the executive
branch again becomes the focus of the budget process. After the end of the
congressional session, the President is required to determine if a sequester is
necessary to remedy any breach of the limits established under the Balanced Budget
and Emergency Deficit Control Act.
The executive branch is also responsible for the execution of spending laws.
Funds provided in statutes are apportioned to the appropriate agencies and programs
in accordance with the Antideficiency Acts (31 U.S.C. 1341-42; 1511-1519), which
prohibit agencies from obligating funds in excess of levels provided in law.
The President also may propose adjustments in spending laws under the
provisions of the Impoundment Control Act of 1974 (Title X of P.L. 93-344). The
Act defines two types of impoundments: deferrals and rescissions. Deferrals delay
the spending of funds, while rescissions permanently cancel budgetary resources.
Deferrals remain in effect unless overturned by Congress, but rescissions require the
approval of Congress through the enactment of a law. The President must report
both deferrals and rescissions to Congress. If Congress does not enact legislation
approving the President’s rescission proposals within 45 days of continuous session,
the President must make the funds available for obligation.
The Budget Resolution and Reconciliation
The budget resolution represents an agreement between the House and Senate
concerning the overall size of the federal budget, and the general composition of the
budget in terms of functional categories. The amounts in functional categories are
translated into allocations to each committee with jurisdiction over spending in a
process called “crosswalking” under Section 302(a) of the Congressional Budget Act.
Legislation considered by the House and Senate must be consistent with these
allocations, as well as with the aggregate levels of spending and revenues. Both the
allocations and aggregates are enforceable through points of order. These allocations
are supplemented by non-binding programmatic assumptions often included in the
reports from the Budget Committees that accompany the budget resolution in each
house.
In some years, the budget resolution includes reconciliation instructions.
Reconciliation instructions direct specified committees to recommend changes in
laws affecting revenues or direct spending programs within their jurisdiction in order
to implement budget resolution policies. All committees receiving such instructions
must submit legislative language to the Budget Committee in their respective
chamber, which packages them as an omnibus measure and reports the measure

without substantive revision. In some cases, a single committee may be instructed
to report reconciliation legislation directly. A reconciliation bill would then be
considered, and possibly amended, by the full House or Senate. In the House,
reconciliation bills are typically considered under the terms of a special rule. In the
Senate, reconciliation bills are considered under limitations imposed by Sections 305,
310, and 313 of the Congressional Budget Act. These sections limit debate on a
reconciliation bill to 20 hours and limit the types of amendments that may be
considered.
The Appropriations Process
The annual appropriations process provides funding for discretionary spending
programs through 13 regular appropriations bills. Congress must enact these
measures prior to the beginning of each fiscal year (October 1) or provide interim
funding for the affected programs through a “continuing resolution.” By custom,
appropriations bills originate in the House, but may be amended by the Senate, with
any differences negotiated by a conference committee. Congress may also enact
supplemental appropriations measures during the course of a fiscal year to provide
funding for additional or unanticipated purposes.¹¹
The House and Senate Appropriations Committees are organized into 13
subcommittees, each of which is responsible for developing one of the 13 regular
appropriations bills. Each bill is subsequently considered by the full committee.
Appropriations bills are constrained in terms of both their purpose and the amount
of funding they provide. Appropriations are constrained in terms of purpose because
the rules of both the House (Rule XXI) and the Senate (Rule XVI) generally require
authorizations prior to consideration of appropriations for an agency or program.
Authorizations are legislation that establish, continue, or modify an agency or
program, and explicitly or implicitly authorize the enactment of appropriations for
that purpose. Authorizations may be temporary or permanent, and their provisions
may be general or specific, but they do not themselves provide funding. Although
House and Senate rules generally prohibit unauthorized appropriations, both provide
exceptions in their respective rules and the prohibition itself may be waived.
Constraints in terms of the amount of funding exist on several levels. For
individual items or programs, funding might be limited to the level recommended in
authorizing legislation. Total spending for a fiscal year (including both direct and
discretionary spending) is limited to the level established in the budget resolution
under Section 311 of the Budget Act. Also, since FY1991, the level of discretionary
spending provided in appropriations acts has been limited by discretionary spending
caps. These spending caps are described below. Finally, the allocations from the
budget resolution made to the Appropriations Committees under Section 302(a) of
the Budget Act provide limits that may be enforced procedurally through points of
order in the House and Senate during consideration of the legislation. These
allocations must be consistent with the discretionary spending caps.

¹¹ For more on the appropriations process, see CRS Report 97-684, The Congressional
Appropriations Process: An Introduction, by Sandy Streeter.

Section 302(b) of the Budget Act further requires the House and Senate
Appropriations Committees to subdivide the amounts allocated to them under the
budget resolution among their subcommittees. These suballocations are required to
be made as soon as practicable after a concurrent resolution on the budget is agreed
to. Because each subcommittee is responsible for formulating a single general
appropriations bill, the process of making suballocations effectively determines the
spending level for each of the 13 regular appropriations bills. Legislation (or
amendments) that would cause the suballocations made under 302(b) to be exceeded
is subject to a point of order. The Appropriations Committees usually issue revised
subdivisions over the course of appropriations actions to reflect changes in spending
priorities effected during floor consideration or in conference.
Budget Enforcement and Sequestration
Budget enforcement procedures were first adopted as part of the Balanced
Budget and Emergency Deficit Control Act of 1985. As amended by the Budget
Enforcement Act of 1990, the Act provides two separate mechanisms: spending caps
in Section 251, designed to limit discretionary spending to a designated level; and the
PAYGO process in Section 252, designed to limit changes in the level of revenues
and direct spending by new legislation. In both cases, the mechanism is enforced
both during congressional consideration of budgetary legislation and by a presidential
sequester order after the end of a congressional session. If legislation is enacted that
would violate the discretionary spending caps or the PAYGO requirement, the
President is required to issue an order for an across-the-board spending cut of
nonexempt spending programs within that category. Although ultimate enforcement
of these mechanisms is through a presidential order, by enforcing the allocations and
aggregates for spending and revenues provided in the budget resolution that are
consistent with these limits, Congress may also use points of order to enforce them
during consideration of budgetary legislation.
Discretionary Spending Caps. The control mechanism applied to
discretionary spending programs is straightforward: the level of discretionary
spending has been subject to statutory spending limits from FY1991 through
FY2002. These limits were extended generally on two occasions. (The extension
and modification of this mechanism is one of the options discussed in this report.)
Currently, adjustments may occur automatically under procedures provided in the Act
(e.g., to reflect amounts designated as emergency spending or changing concepts and
definitions). The spending caps may also be adjusted through specific legislative
action.
In some years, discretionary spending has been divided into multiple categories.
In FY1991-FY1993, discretionary spending was divided among defense,
international, and domestic spending. In FY1994-FY1997 there was a single
category for discretionary spending generally. A separate category for violent crime
reduction was established for FY1995-FY2000.¹² When discretionary spending caps

¹² A separate sequestration process was established to enforce outlay limits for the Violent
Crime Reduction Trust Fund in Title XXXI of the Violent Crime Control and Law
(continued...)

were extended in Budget Enforcement Act of 1997 to cover FY1998-FY2002,
separate categories were established for defense and nondefense spending for
FY1998 and 1999 (in addition to that for violent crime reduction for FY1998-
FY2000), with a single general discretionary spending limit for FY2000-FY2002.
Further categories were subsequently established for highway, mass transit, and
conservation spending.¹³
Discretionary spending limits are enforced through a presidential sequester
order. Enacting spending legislation that would cause a spending cap to be exceeded
would subject all nonexempt spending within that category to an across-the-board cut
sufficient to reduce spending to the level of the limit. Currently, there are no general
discretionary spending limits for fiscal years beyond FY2002. Also, because Section
275 of the Balanced Budget and Emergency Deficit Control Act provides a sunset for
the sequester mechanism, there is no means to enforce spending limits for special
categories beyond FY2002.
Pay-As-You-Go. The PAYGO process is not based on achieving a specific
level of deficit or surplus, but instead focuses on the net impact of legislation. Under
the PAYGO process, Congress is not prohibited from enacting legislation increasing
direct spending or decreasing revenues. Instead, the budgetary impact of all
legislation changing direct spending or revenues is tracked by OMB for inclusion in
its sequestration reports on a PAYGO scorecard. Amounts on the PAYGO scorecard
reflect spending and revenue changes for a fiscal year based on legislation enacted
in prior years as well as the current year. All such changes must be offset so that
there is not a net balance remaining on the PAYGO scorecard for any fiscal year. If
the net effect of all such legislation is to cause a positive balance for a fiscal year on
the PAYGO scorecard, the President must issue a sequester order to reduce spending
in all nonexempt direct spending accounts to eliminate the balance.
The PAYGO provisions currently apply only to legislation enacted before
October 1, 2002, but the enforcement process is scheduled to remain in effect through
September 30, 2006, to capture the budgetary effects of such legislation in the
outyears.
Reforming the Process
While the general framework of the budget process has remained relatively
stable in recent years, Congress has continued to examine the question of how
budgetary decisions should be made, by whom, and under what constraints.

¹² (...continued)
Enforcement Act of 1994 (P.L. 103-322, 108 Stat 2102-2108). This provision was
subsequently modified to harmonize it with the extension of discretionary spending caps in
Budget Enforcement Act of 1997 (Title X of P.L. 105-33).
¹³ Categories for highway and mass transit spending were established for FY1999-2003 in
Subtitle A of Title VIII of the Transportation Equity Act for the 21^st Century (P.L. 105-178,

112 Stat. 488-492). Section 801(a) of the Interior Appropriations Act for FY2001 (P.L. 106-

291, 114 Stat. 1025-1029) set limits on conservation spending for FY2002-2006 in six
different subcategories.

Key enforcement procedures under the Budget Enforcement Act of 1990 (i.e.,
discretionary spending caps and PAYGO) expire at the end of FY2002. Whether
Congress should extend either or both of these mechanisms, in what form and for
how long, are questions that could be addressed in the 107^th Congress. Other
proposed reforms would add new mechanisms or procedures to the current process.
There is no unifying theme for this diverse group of proposals, no single “problem”
that they are all intended to “correct.” Rather, they address diverse viewpoints
concerning the current process. Some proposals have been directed toward
improving management of the congressional budgetary workload; some have been
directed toward promoting better cooperation between Congress and the President;
and others have been directed toward providing greater enforcement for
congressional rules or decisions.
The options discussed in this report are five specific options on which Congress
consistently has expressed a high level of interest. They are as follows:
!extending the duration of budgetary control mechanisms, in order to retain the
budgetary discipline that has been in place since 1990;
!establishing a joint budget resolution that would require the President’s
signature, thereby formally and directly involving the President and Congress
in deliberations on the budget early in the process;
!establishing an emergency reserve fund, in order to change the way Congress
and the President budget for emergencies and other unanticipated situations;
!creating an automatic continuing resolution to provide an automatic source of
funding for discretionary activities and prevent a federal government
shutdown; and
!changing to a biennial budget, lengthening the budget cycle to 2 years from
one year as a way of promoting better management of both Congress’s and the
administration’s budgetary workload.
Extension of Budget Enforcement Mechanisms
Most of the budget enforcement mechanisms under the Congressional Budget
Act are permanent.¹⁴ In contrast, key enforcement procedures first established by the
Budget Enforcement Act (BEA, Title XIII of P.L. 101-508, the Omnibus Budget
Reconciliation Act of 1990) expire at the end of FY2002 (i.e., September 30, 2002).
Under the BEA, budget legislation is constrained by statutory limits on discretionary
spending and a “pay-as-you-go” (PAYGO) requirement for direct spending and
revenue legislation. The spending caps and PAYGO requirement are enforced by
sequestration–which involves automatic, largely across-the-board spending cuts–and

¹⁴ The three-fifths vote requirements in the Senate to waive certain points of order and to
sustain an appeal of a ruling of the chair regarding those points of order expire on Sept. 30,

2002. See Section 904 of the CBA.

by points of order while legislation is considered on the Senate floor. The
discretionary spending sequestration process and the Senate points of order expire at
the end of FY2002. The PAYGO requirement also expires at the end of FY2002, but
the PAYGO sequestration process covers the net effects, through FY2006, of new
direct spending and revenue legislation enacted before the end of FY2002. In his
FY2002 budget, President Bush proposed to extend the BEA enforcement procedures
for several years. In his FY2003 budget, however, President Bush did not explicitly
advocate an extension of these procedures, but indicated that his “Administration will
work with Congress ... to develop budget enforcement mechanisms,” including
extending the BEA procedures.¹⁵
Background
The Budget Enforcement Act was enacted to modify the budget enforcement
procedures established in 1985 by the Balanced Budget and Emergency Deficit
Control Act (Title II of P.L. 99-177), commonly known as the Gramm-Rudman-
Hollings Act. The Balanced Budget Act created a sequestration process tied to
annual maximum deficit targets established in law, declining to zero by FY1991.¹⁶
If the budget deficit exceeded those target levels (plus a margin-of-error amount in
some years), automatic across-the-board spending cuts would be triggered to bring
the deficit to within the allowable level. The process was intended to provide an
incentive to Congress and the President to reduce the deficit through legislative
action to avoid an automatic sequestration. The Budget Enforcement Act of 1990
changed the focus of the sequestration process. Instead of maximum deficit targets,
the BEA tied sequestration to new statutory limits on discretionary spending and a
“pay-as-you-go” (PAYGO) requirement for new direct spending and revenue
legislation. The change was intended to hold Congress and the President accountable
for projected budget outcomes that would result from new legislation, rather than the
level of the deficit, which could be affected by factors beyond their direct control,
such as economic growth, inflation, and demographic changes. The BEA procedures
were extended in 1993 and 1997.¹⁷
Currently, adjustable discretionary spending limits exist for the following
categories: highway and mass transit spending for FY2002-FY2003; conservation
spending (divided into six subcategories) for FY2002-FY2006; and other
discretionary spending, also called general purpose discretionary spending, for
FY2002.¹⁸ Under the PAYGO requirement, the net effect of new direct spending and

¹⁵ Office of Management and Budget, Analytical Perspectives, Budget of the United States
Government, FY2003 (Washington: Jan. 2002), p. 283.
¹⁶ The deficit targets were revised in 1987 to require a balanced budget by FY1993 by the
Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987 (P.L. 100-119,

101 Stat. 754-788).

¹⁷ Title XIV of the Omnibus Budget Reconciliation Act of 1993 (P.L. 103-66) and the
Budget Enforcement Act of 1997 (Title X of P.L. 105-33), respectively.
¹⁸ At one time or another, separate caps existed for the following different categories of
discretionary spending: defense, international, domestic, nondefense, violent crime
(continued...)

revenue legislation enacted for a fiscal year may not cause a positive balance
(reflecting an increase in the on-budget deficit or a reduction in the on-budget
surplus) on a multiyear PAYGO “scorecard.” For each fiscal year, this scorecard
maintains the balances of the accumulated budgetary effects of laws enacted during
the session and prior years. The PAYGO requirement applies to legislation enacted
through FY2002, but it covers the effects of such legislation through FY2006.
The discretionary spending limits and PAYGO requirement are enforced
primarily by sequestration, which involves automatic, largely across-the-board
spending cuts in non-exempt programs. Sequestration is triggered if the OMB
director estimates in the final sequestration report that one or more of the
discretionary spending limits will be exceeded or the PAYGO requirement will be
violated. The President is required to issue a sequestration order cancelling
budgetary resources in non-exempt programs within the applicable spending category
by the amount of any spending limit breach or PAYGO violation. A within-session
sequestration is possible if a supplemental appropriations bill causes the spending
levels of the current fiscal year to exceed the statutory limit for a particular category.
If a supplemental appropriations act causes a discretionary spending limit to be
exceeded in the last quarter of a fiscal year (i.e., July 1 through September 30), the
spending limit for the applicable category for the following fiscal year must be
reduced by the amount of the violation.¹⁹
The discretionary spending limits, as well as a PAYGO requirement similar to
the statutory one, also may be enforced through points of order while legislation is
being considered on the Senate floor. First, Section 312(b) of the 1974 CBA
prohibits the consideration of legislation that would cause any of the spending limits
to be exceeded. Second, Section 207 of the FY2000 budget resolution (H.Con.Res.
68, 106^th Congress), like similar provisions in previous budget resolutions, provides
a point of order against any direct spending or revenue legislation that would increase
or cause an on-budget deficit for the first fiscal year, the period of the first 5 fiscal
years, or the following 5 fiscal years, covered by the most recently adopted budget
resolution. Both of these points of order may be waived by a vote of three-fifths of
Senators, or set aside by unanimous consent. Both of these points of order expire at
the end of FY2002.

¹⁸ (...continued)
reduction, highway, mass transit, and conservation. The initial BEA of 1990 required the
adjustment of the spending caps to accommodate various factors. The 1997 extension
modified the set of various factors. Currently, the spending caps must be adjusted to reflect:
(1) changes in concepts and definitions; (2) discretionary spending that the President
designates as emergency requirements and that Congress so designates in statute; (3) special
outlay allowances (to accommodate estimating differences between OMB and CBO); (4)
appropriations for continuing disability reviews; (5) allowance for International Monetary
Fund contributions; (6) allowance for international arrearages; and (7) appropriations for
an earned income tax credit compliance initiative.
¹⁹ Unless the discretionary spending limits and the associated sequestration process are
extended beyond FY2002, this particular procedure will have no effect this year.

Options and Discussion
Many Members of Congress, as well as outside observers, agree that the budget
enforcement mechanisms associated with the BEA promoted fiscal discipline
throughout the 1990s, and contributed to the federal government achieving a unified
budget surplus in FY1998–the first in almost 30 years. Some have argued that such
fiscal discipline mechanisms are necessary even in times of surpluses and that the
BEA should be extended for this purpose. The return of budget deficits, at least in
the short term, has further increased the interest in some form of budget enforcement
procedures beyond FY2002.²⁰
The success of the 1990 BEA, and its extensions in 1993 and 1997, is generally
attributed to the fact that the procedures were used to enforce multiyear agreements
on budget policies. Thus, a consensus on budget policies was a prelude to the
creation and previous extensions of the BEA procedures. Presumably, then, an
agreement on budget policies would be critical to the success of any extension
beyond FY2002. An extension of the BEA by itself is not likely to create a
consensus on budget policies where none exists.
If Congress and the President decide that these budget enforcement mechanisms
should be extended, they will need to decide whether the BEA procedures should be
extended in their current form or modified. Possible questions Congress might
consider include:²¹
!What time frame should the extension cover? The initial BEA of 1990 and its
extensions in 1993 and 1997 each covered 5 fiscal years.²² Congress might
want to base the time frame on the number of fiscal years determined to be
necessary to achieve a specific budget goal (e.g., an on-budget balance). For
instance, the 1997 extension was intended to produce a unified balanced
budget at the end of the 5 fiscal years. However, the initial 1990 BEA and the
1993 extension were not intended to achieve a specific budget goal at the end
of their 5 fiscal years, other than a certain amount of deficit reduction.
!Should one overall discretionary spending cap be established, or should
separate caps for different categories of discretionary spending be
established? Under an overall discretionary cap, any breach would result in
a sequester in all non-exempt discretionary programs. Under separate caps,
any breach of one or more of the caps would result in a sequester only in non-

²⁰ For the latest budget projections, see Congressional Budget Office, An Analysis of the
President’s Budgetary Proposals for Fiscal Year 2003 (Washington: Mar. 2002).
²¹ This is not intended to be an exhaustive list of issues Congress may consider in extending
the BEA. For additional issues, see U.S. Congress, House Committee on the Budget,^th
Forthcoming Extension/Modification of the Budget Enforcement Act, hearing, 107 Cong.,^st

1 sess., June 27, 2001 (Washington: GPO, 2002); and U.S. Congress, House Committee^th^st

on the Budget, Federal Budget Process: Structural Reform, hearing, 107 Cong., 1 sess.,
July 19, 2001 (Washington: GPO, 2002).
²² The 1990 BEA covered FY1991-FY1995; the 1993 extension covered FY1994-FY1998;
and the 1997 extension covered FY1998-FY2002.

exempt programs within the violating category. Therefore, an advantage of
separate caps is that they ensure a violation and subsequent sequester in one
category would not harm programs in other categories. In addition, they
would prevent spending cuts in one category from being used to increase
spending in another category. A disadvantage of separate caps is that they
would reduce the flexibility of Congress and the President by limiting the
ability to make tradeoffs between programs in different categories.
!What, if any, adjustments to the spending caps should be allowed? Many
would agree that some adjustments, or “safety valves,” are necessary to make
the spending caps realistic and secure their compliance. This may be
especially important at this time because of the uncertainty of future demands
on federal resources for the war on terrorism and homeland security. An
adjustment for such purposes may be desirable in any extension of
discretionary caps. While other existing adjustments may be reexamined, the
adjustment for spending designated as an emergency requirement, in
particular, has been criticized by many in Congress as a costly loophole, which
has been used to circumvent the statutory spending caps rather than respond
to true emergencies.²³ Critics have proposed eliminating the emergency
designation adjustment, assuming a certain level of emergency spending
within the new caps, specifying criteria in statute regarding what constitutes
an emergency, or a combination of these. Proponents of an emergency
spending adjustment argue that realistic discretionary spending caps would
prevent the misuse of the emergency designation. For more on this issue, see
the discussion of budgeting for emergencies later in this report.
!Should the PAYGO requirement for new direct spending and revenue
legislation be modified to permit direct spending increases or tax cuts as long
as no on-budget deficit results? Under the existing PAYGO requirement, any
on-budget surplus cannot be used for direct spending increases or tax cuts.²⁴
Opponents of the current requirement argue that this should be changed to
apply only to new direct spending or revenue legislation that would increase
the on-budget deficit or cause an on-budget deficit, similar to the current
PAYGO point of order in the Senate.²⁵ Proponents of the existing requirement
argue that any on-budget surplus should be used for debt reduction, or to
extend the solvency of the Social Security and Medicare trust funds, instead
of direct spending increases or tax cuts.

²³ For example, see U.S. Congress, House Committee on the Budget, H.R. 853, The
Comprehensive Budget Process Reform Act of 1999, 106^th Cong., 1^st sess., Aug. 5, 1999
(Washington: GPO, 1999), pp. 38-46; and U.S. Congress, House Committee on Rules, H.R.^th^st

853, The Comprehensive Budget Process Reform Act of 1999, 106 Cong., 1 sess., Aug.

5, 1999 (Washington: GPO, 1999), pp. 67-70.

²⁴ For a more detailed discussion of the application of the PAYGO requirement under a
budget surplus, see CRS Report 98-97, The Budget Enforcement Act: Fact Sheet On Its
Operation Under a Budget Surplus, by James V. Saturno.
²⁵ Section 207 of the FY2000 budget resolution (H.Con.Res. 68, 106^th Cong.).

Legislative History
For at least the last 2 years, there has been congressional interest in modifying
and possibly extending the BEA procedures beyond FY2002. The emergence of
budget surpluses contributed to increased fiscal demands (i.e., for spending increases
and tax cuts), which arguably made existing budget enforcement constraints
inappropriate.²⁶ Nevertheless, a consensus began to emerge that some ongoing
constraints on budget policy were necessary even in times of surpluses, but different
ones than those created in times of deficits.
In the last few years, Congress and the President have made ad hoc
modifications to the BEA to avoid a sequester for the upcoming fiscal year or to
reduce the likelihood of a sequester in future fiscal years.²⁷ Most recently, the
Defense Appropriations Act for FY2002 (P.L. 107-117) included provisions
increasing certain discretionary spending limits for FY2002 and changing the
PAYGO scorecard balance to zero for FY2001 and FY2002. Such modifications to
the discretionary spending limits and PAYGO scorecard effectively prevented an
end-of-the-session sequester for FY2002.²⁸
A more comprehensive description of congressional actions on this issue
appears in the CRS Report RL31479, Federal Budget Process Reform: Proposals
and Legislative Actions in the 107^th Congress.
Joint Budget Resolution
Conflict is inherent in budgeting because decisions are made regarding who
receives benefits and who does not, and who pays and who does not. By itself the
process in which these decisions are made cannot eliminate substantive differences
in budgetary goals within Congress or between Congress and the President. A
structure for consideration of budgetary decisions, however, can sometimes reduce
or exacerbate budgetary conflict. Some Members of Congress argue that the annual
adoption of the congressional budget in the form of a concurrent resolution, without
the formal involvement of the President, discourages cooperation between Congress
and the President early in the process. They argue that this contributes to the
recurring inability of Congress and the President to enact spending and tax legislation

²⁶ For example, the FY2002 budget resolution (H.Con.Res. 83) assumed discretionary
spending amounts much higher than the existing caps for FY2002, as well as direct spending
and revenue legislation that would have violated the PAYGO requirement. In addition,^st^th
during the 1 session of the 107 Congress, legislation was introduced in the House (H.R.
3084) and Senate (S. 1575) to revise the discretionary spending caps for FY2002, and in the
former to eliminate the existing balance for FY2002 on the PAYGO scorecard as well. The
House Budget Committee reported H.R. 3084 favorably on Dec. 13, 2001 (H.Rept. 107-

338), but no further action was taken on that legislation or the Senate bill.

²⁷ For detailed information on these modifications, see CRS Report RL31155, Techniques
for Preventing a Budget Sequester, by Robert Keith.
²⁸ Office of Management and Budget, OMB Final Sequestration Report to the President and
Congress for Fiscal Year 2002 (Washington: Jan. 2002).

by the beginning of the fiscal year. Some Members of Congress, as well as President
Bush,²⁹ have proposed to transform the annual congressional budget from a
concurrent resolution to a joint resolution, and thereby formally and directly involve
the President in congressional deliberations on the budget early in the process. Like
bills, joint resolutions are a legislative form used to make law.
Background
Prior to the Congressional Budget Act (CBA) of 1974 (Titles I-IX of P.L. 93-
344), Congress did not adopt an overall budget plan, but rather considered
authorization, revenue, and appropriations legislation separately. There was no
formal mechanism in place to develop, consider, and approve a comprehensive
congressional budget plan. The 1974 CBA established the annual concurrent
resolution on the budget as the centerpiece of the congressional budget process. The
budget resolution sets forth aggregate spending and revenue levels, and spending
levels by major functional area, for at least 5 fiscal years. The budget resolution also
may contain reconciliation instructions directing one or more committees to
recommend legislative changes to achieve the levels of direct spending, revenues,
and the debt limit agreed to in the budget resolution. Because the budget resolution
is in the legislative form of a concurrent resolution, it is not presented to the
President for his signature, and thus does not become law. Instead, if adopted with
the same language by both the House and Senate, it constitutes an agreement between
the House and Senate on a congressional budget plan, providing a framework for
subsequent legislative action on budgetary legislation during a session of Congress.
During the development and consideration of the Congressional Budget Act,
Congress intentionally decided to express its overall budget plan in the form of a
concurrent resolution in order to create a budget process “independent of the
President and dependent solely on congressional action” under which Congress
would be “unconstrained by presidential preferences.”³⁰ The concurrent budget
resolution provides Congress with its own statement of budget policy, generally as
a response to the President’s budget. Critics argue that this process highlights, and
may even encourage, the conflict between the two branches during the initial
formulation of budget policies each year. They further argue that this process makes
it more difficult for the two branches to cooperate later in the process when
substantive spending and revenue measures require the President’s signature. In
particular, critics claim that this disincentive for early cooperation in the process
contributes to the recurring inability of Congress and the President to enact the
regular appropriations acts by the beginning of the fiscal year on October 1. In the
27 years since the creation of the budget resolution in 1974, all regular appropriations
bills were enacted by the start of the fiscal year only four times, in 1976, 1988, 1994,
and 1996.

²⁹ Office of Management and Budget, Analytical Perspectives, Budget of the United States
Government, FY2003 (Washington: Jan. 2002), pp. 283-284.
³⁰ Allen Schick, Congress and Money (Washington: Urban Institute, 1980), p. 60.

Options and Discussion
Some Members of Congress have proposed transforming the concurrent
resolution on the budget into a joint resolution, requiring the President’s signature.
They argue that a joint budget resolution would be more effective in guiding budget
policy by formally and directly involving the President in congressional deliberations
on the budget early in the process. According to proponents, this early involvement
would foster cooperation between the two branches, leading to less conflict when
spending and tax legislation implementing budget resolution policies are finalized
later in the session.
Proponents of a joint budget resolution point to the apparent success of budget
summits, where congressional leaders and the President have negotiated an
agreement on an overall budget plan and then implemented that agreement with the
subsequent enactment of legislation. A recent example is the inter-branch
negotiations that led to the 1997 bipartisan budget agreement.³¹ A joint budget
resolution, advocates argue, would formalize these negotiations, effectively requiring
Congress and the President to begin negotiations on the budget early in the process
each year. They claim that early negotiations and the requirement that the President
sign the budget resolution would increase the likelihood of the two branches reaching
an agreement over broad budget policies. If an early agreement is not reached,
proponents argue that at the very least the formal process would force Congress and
the President to confront the disagreements early in the process, instead of at the end
when there is a rush to enact all the appropriations measures by the start of the new
fiscal year in order to avoid a government shutdown.
Critics of a joint budget resolution counter that formalizing early negotiations
between Congress and the President would not guarantee agreement on budget
policies. They contend that interbranch negotiations and any subsequent agreement
largely depend on the degree of consensus on budget policy, rather than budget
procedures. Opponents further argue that requiring the President to sign the budget
resolution may even make an agreement more difficult to reach by aggregating the
budget disputes into one piece of legislation and thereby raising the political stakes.
Opponents also argue that agreement on broad budget policies would not
prevent disagreements from arising over details in subsequent legislation
implementing those policies. Thus, they contend that transforming the concurrent
budget resolution into a joint resolution would not itself result in more timely
enactment of budgetary legislation, as intended by its supporters. The 1997
bipartisan budget agreement is cited as an illustrative example. Even though
Congress and the President agreed to a broad 5-year plan to balance the budget by
FY2002 in late spring 1997, final action on budgetary legislation implementing the
agreement did not occur until well after the start of the new fiscal year. Only one
regular appropriations measure for FY1998 was enacted by October 1, and the final

³¹ For a summary of these negotiations and the subsequent agreement, see “Pact Aims To
Erase Deficit by 2002,” CQ Almanac (Washington: Congressional Quarterly, Inc., 1997),
pp. 2-18 to 2-23.

two regular appropriations measures for FY1998 were not enacted until November

26 (i.e., 57 days late).³²

Finally, critics claim that a joint budget resolution would result in a cession of
power to the President. They argue that, by providing the President an opportunity
to veto the budget resolution, Congress would be giving up its independence to
formulate and adopt its own overall budget plan, as the President does with his
annual budget submission to Congress. Proponents, however, counter that a joint
budget resolution would not provide the President with any more power than he
already exercises under the existing budget process. They point to the fact that the
President’s signature is required on the spending and revenue legislation
implementing the budget resolution policies; thus, a joint budget resolution would
simply entail obtaining the President’s approval at the beginning of the process
instead of only at the end.
Legislative History
Early congressional interest in converting the concurrent resolution on the
budget into a joint resolution coincided with the practice of negotiating budget
agreements between congressional leaders and the President, commonly referred to
as budget summits, beginning in the late 1980s.³³ Since then, a joint budget
resolution has been a perennial component of budget process reform proposals in
Congress. Between 1989 and 2000, at least 26 bills were introduced that would have
converted the concurrent budget resolution into a joint budget resolution. On March
31, 1998, the Task Force on Budget Process of the House Budget Committee held the
first hearing specifically concerned with the question of whether the concurrent
budget resolution should be converted into a joint resolution.³⁴ This hearing, along
with other hearings on the subject of budget process reform by the task force, led to
the introduction in the House of a comprehensive budget process reform bill
containing a joint resolution component, during the 105^th Congress (H.R. 4837, the
Comprehensive Budget Process Reform Act of 1998).
No action was taken in the 105^th Congress, but the legislation was reintroduced
in the 106^th Congress with virtually identical language as H.R. 853, the

³² The Military Construction Appropriations Act for FY1998 (P.L. 105-45) was enacted on
Sept. 30, 1997, and the Foreign Operations Appropriations Act for FY1998 (P.L. 105-118)
and the Commerce, Justice, State, and Judiciary Appropriations Act for FY1998 (P.L. 105-

119) were enacted on Nov. 26, 1997.

³³ For early discussions of joint budget resolution proposals, see U.S. Congress, House
Committee on Government Operations, Reform of the Federal Budget Process: An Analysis^th^st
of Major Proposals, 100 Cong., 1 sess. (Washington: GPO, June 1987), pp. 75-77; U.S.
Congress, Senate Committee on Governmental Affairs, Proposed Budget Reforms: A^th^nd
Critical Analysis, 100 Cong., 2 sess. (Washington: GPO, Apr. 1988), pp. 28-32; and
Congressional Budget Office, Should the Budget Resolution Be a Law? (Washington: May

1990).

³⁴ U.S. Congress, Task Force on Budget Process, House Committee on the Budget,
Converting the Concurrent Budget Resolution into a Joint Resolution: Should the Budget^th^nd
Be a Law?, hearing, 105 Cong., 2 sess., Mar. 31, 1998 (Washington: GPO, 1998).

Comprehensive Budget Process Reform Act of 1999. Title I of H.R. 853 provided
an annual joint resolution on the budget to replace the concurrent budget resolution.³⁵
Hearings on the bill were held by the House Rules Committee on May 12 and 13,

1999,³⁶ and by the House Budget Committee on May 20, 1999.³⁷ Subsequently, H.R.

853 was ordered reported (amended) by the House Budget Committee (H.Rept. 106-

198, part 2) on June 17, 1999, and by the House Rules Committee (H.Rept. 106-198,

part 3) on June 23, 1999.³⁸ The legislation, however, was defeated on the House
floor by a vote of 166-250 on May 16, 2000.³⁹
Budgeting for Emergencies
In recent years, some Members of Congress have shown an interest in changing
the way Congress and the executive budget for emergencies or unanticipated
situations. Currently, Congress provides additional funds during the fiscal year,
usually in supplemental appropriations, to respond to specific natural disasters and
other emergency, or unanticipated, situations. Congress and the President usually
designate the additional spending as an “emergency requirement,” effectively
exempting it from budget constraints established under the Budget Enforcement Act⁴⁰
(BEA) of 1990, as amended. Some Members of Congress, as well as President
George W. Bush,⁴¹ have proposed to change this practice by creating a reserve fund
for emergencies, with the appropriation of such funds tied to meeting specific criteria
regarding what constitutes an emergency.

³⁵ For a detailed description and analysis of this legislation, see CRS Report RL30236, H.R.
853, The Comprehensive Budget Process Reform Act: Summary of Provisions, by James
V. Saturno.
³⁶ U.S. Congress, House Committee on the Rules, Budget Process Reform, hearing, 106^th
Cong., 1^st sess., May 12 and 13, 1999 (Washington: GPO, 1999).
³⁷ U.S. Congress, House Committee on the Budget, H.R. 853, The Comprehensive Budget
Process Reform Act of 1999, hearing, 106^th Cong., 1^st sess., May 20, 1999 (Washington:
GPO, 1999).
³⁸ H.R. 853 also was referred to the House Appropriations Committee, but only for
consideration of the provision providing for a permanent automatic continuing resolution
(Subtitle D of Title VI). The House Appropriations Committee ordered the bill reported
adversely (amended) on June 22, 1999 (H.Rept. 106-198, part 1).
³⁹ For the consideration of H.R. 853 on the House floor, see Congressional Record, daily
edition, vol. 146, May 16, 2000, pp. H3078-H3145.
⁴⁰ The BEA of 1990 (Title XIII of P.L. 101-508) amended the Balanced Budget and
Emergency Deficit Control Act of 1985 (Title II of P.L. 99-177). The BEA procedures were
extended and modified by the Omnibus Budget Reconciliation Act of 1993 (P.L. 103-66,
specifically Title XIV) and by the Budget Enforcement Act of 1997 (Title X of P.L. 105-

33).

⁴¹ Office of Management and Budget, A Blueprint for New Beginnings (Washington: Feb.
28, 2001), p. 173. However, President Bush did not include an emergency reserve fund
among the budget process reform proposals in his FY2003 budget.

Background
Natural disasters and other emergency situations often lead to demands on
Congress and the President to provide additional federal spending after the regular
appropriations acts for the current fiscal year have been enacted into law.⁴² The
sudden or unpredictable nature of such emergencies makes spending requirements
difficult to anticipate so that the additional spending often is considered in an
environment of urgency, with little or no comprehensive analysis of the appropriate
level of such federal spending. Some believe this practice of budgeting for
emergencies might lead to unnecessary or wasteful spending. In addition, some
believe that the existing budgetary treatment of emergency spending provides an
incentive to designate non-emergency spending as an emergency requirement in order
to circumvent the constraints of the BEA.
Prior to the Congressional Budget Act (CBA) of 1974 (Titles I-IX of P.L. 93-
344), there was no formal mechanism in place to develop, consider, and approve an
overall congressional budget plan. Consequently, there was no formal mechanism
in Congress to budget for unanticipated spending. The 1974 CBA established the
annual budget resolution as a means for Congress to propose an overall budget plan,
providing a framework for subsequent spending and revenue legislation. With the
annual budget resolution, Congress could budget for emergency situations by
including spending amounts for such expected but unpredictable purposes in its
overall budget plan. In fact, Section 301(a)(2) of the original act required that the
budget resolution include a separate spending allocation “for contingencies” out of
the total spending amount. However, no budget resolution has included a separate
allocation for contingencies, and the requirement for contingency spending was
removed from the CBA by the Balanced Budget and Emergency Deficit Control Act
of 1985 (Title II of P.L. 99-177).
The current budgetary treatment of emergency spending has its roots in the 1987
and 1989 budget summit agreements between congressional leaders and the
President.⁴³ In both agreements, Congress and the President agreed to limits on the
overall level of appropriations provided in the annual 13 regular appropriations acts
and also that neither the Congress nor the President would “initiate supplementals
except in the case of dire emergency.”⁴⁴ This exception to the agreed-upon spending

⁴² Such additional spending may be intended to respond to a sudden natural disaster, but it
also may be intended to respond to an anticipated situation when the total amount necessary
may be unanticipated. An example of the latter would be the emergency spending provided
for Desert Shield/Desert Storm in FY1991-FY1992. In 1990, Congress and the President
anticipated that additional spending would be necessary to conduct a war in the Persian
Gulf, but could not anticipate the total amount of spending necessary.
⁴³ William G. Dauster, “Budget Emergencies,” Journal of Legislation, vol. 18, no. 2 (1992),
pp. 249-315.
⁴⁴ Quoted in Ibid, p. 252. For the full text of the 1987 agreement, see “Summit Agreement
Between the President and the Joint Leadership of Congress,” Congressional Record, vol.
134, May 11, 1988, p. 10435. For the full text of the 1989 agreement, see “White House
Statement on the Bipartisan Budget Agreement, April 14, 1989,” U.S. President, Public
(continued...)

caps was intended to provide a “safety valve” for spending that both Congress and
the President could agree was a dire emergency. Neither agreement included a
definition of what constituted a dire emergency, but instead relied on the normal
legislative process to ensure a mutual agreement on supplemental appropriations.
In 1990, Congress and the President established new statutory procedures to
enforce a multi-year budget agreement. The Budget Enforcement Act of 1990
created statutory limits on discretionary spending and a “pay-as-you-go” (PAYGO)
requirement for new direct spending and revenue legislation. The discretionary
spending limits and PAYGO requirement would be enforced by sequestration, which
involves automatic, largely across-the-board spending cuts in non-exempt programs.
These enforcement mechanisms were modified and extended in 1993 and 1997, and
generally expire at the end of FY2002 (i.e., September 30, 2002).⁴⁵
The 1990 BEA also formalized the limitation on budgeting for emergencies
embodied in the previous budget summit agreements. The act effectively exempts
from the statutory caps all discretionary spending the President designates as
“emergency requirements” and that Congress so designates in statute.⁴⁶ In addition,
provisions in new direct spending and revenue legislation designated as emergency
requirements by the President and Congress are exempt from the PAYGO
requirement.⁴⁷ The emergency designation also effectively exempts such spending,
or tax cuts, from congressional budget constraints, such as the aggregate levels
established in the budget resolution, when legislation is considered on the House and
Senate floor.
As with the previous budget summit agreements, the BEA does not define what
constitutes an emergency requirement. According to the law, an emergency
requirement is whatever Congress and the President agree to designate as such. In

1991, responding to a congressional directive to report on the unfunded costs of dire

⁴⁴ (...continued)
Papers of the Presidents, (Washington: GPO, 1990), George Bush, 1989, vol. I, pp. 424-

426.

⁴⁵ For a fuller discussion on these and other budget enforcement procedures, see CRS Report

98-721, Introduction to the Federal Budget Process, by Robert Keith and Allen Schick.

⁴⁶ Section 251(b)(2)(A) of the Balanced Budget Act of 1985, as amended by the BEA,
requires the OMB director to adjust the statutory limits by the total appropriations
designated as emergency requirements and the outlays flowing from such appropriations.
The 1990 BEA language also specifically exempted the costs associated with Desert
Shield/Desert Storm from the statutory spending limits by designating them to “ be treated
as emergency funding requirements.” For further discussion on the statutory and
congressional rules related to the emergency designation, see CRS RS21035, Emergency
Spending: Statutory and Congressional Rules, by James V. Saturno.
⁴⁷ As amended in 1990, Section 252(d)(4)(B) of the Balanced Budget and Emergency Deficit
Control Act of 1985 requires the OMB director to exclude the costs of such provisions in
calculating the net costs of new direct spending and revenue legislation enacted during a
congressional session for PAYGO purposes. The emergency designation has been used four
times for legislation subject to PAYGO (Section 6 of P.L. 103-6; Section 3309(c) of P.L.

105-206; Section 101(b) of P.L. 107-42; and Section 502 of P.L. 107-147).

emergencies, the Office of Management and Budget (OMB) developed the following
five criteria the President would use to determine whether a spending provision
would qualify as an emergency requirement:⁴⁸
!necessary expenditure–an essential or vital expenditure, not one that is merely
useful or beneficial;
!sudden–quickly coming into being, not building up over time;
!urgent–pressing and compelling need requiring immediate action;
!unforeseen–not predictable or seen beforehand as a coming need; and
!not permanent–the need is temporary in nature.
In addition to these non-binding criteria, the House and Senate have adopted
rules to discourage the use of the emergency designation. In the House, clause 2(e)
was added to Rule XXI in 1995 to prevent non-emergency spending from being
reported in, or offered as an amendment to, an appropriations bill that contains an
emergency designation. In the Senate, Section 205 of the FY2001 budget resolution
(H.Con.Res. 290, 106^th Congress) prohibits an emergency designation for any
provision of legislation, except for defense discretionary appropriations. The rule
may be waived by a three-fifths vote or set aside by unanimous consent.⁴⁹ The rule
includes the OMB criteria as guidelines for designating provisions of legislation as
emergency requirements, but does not require emergency designations meet these
criteria.
Notwithstanding the OMB guidelines and congressional budget rules, critics
have argued that the emergency designation has been used for non-emergency
spending in order to circumvent budget constraints. As evidence, critics point to the
increase in emergency-designated spending in recent years. For instance, emergency-
designated spending for FY1999 was more than three times the annual average for
the preceding 7-year period (see Table 1).⁵⁰ Emergency-designated spending for
FY2000 was more than four times that annual average.⁵¹

⁴⁸ The congressional directive was included in an Emergency Supplemental Appropriations
Act (chapter III of P.L. 102-55, 105 Stat. 293), and OMB’s response, including the criteria,
was contained in a report entitled, “Report on the Costs of Domestic and International
Emergencies and on the Threats Posed by the Kuwaiti Oil Fires,” transmitted to Congress
on June 27, 1991. Dauster, “Budget Emergencies,” p. 275.
⁴⁹ The current rule does not have an expiration date. An earlier, temporary, version of the
rule was included in the budget resolution for FY2000 (Section 206 of H.Con.Res. 68, 106^th
Congress).
⁵⁰ FY1991 was not included in these calculations because it predominately consisted of
spending for Desert Shield/Desert Storm, which was offset completely by foreign
contributions.
⁵¹ For additional information on emergency-designated spending trends, see Congressional
Budget Office (CBO), “Emergency Spending Under the Budget Enforcement Act”
(Washington: Dec. 1998); and CBO, “Emergency Spending Under the Budget Enforcement
Act: An Update” (Washington: June 1999).

Table 1. Spending Designated as Emergency Requirements,
FY1991-FY2002
(millions of dollars of budget authority)
Fiscal YearDefenseNon-DefenseTotal
1991 44,387 1,459 45,846
1992 7,527 8,784 16,311
1993 642 5,487 6,129
1994 1,497 12,289 13,786
1995 2,448 5,949 8,397
1996 982 3,764 4,746
1997 2,107 7,219 9,326
1998 2,833 3,070 5,903
1999 17,570 16,656 34,226
2000 17,833 26,418 44,251
2001 14,196 14,548 28,744
2002 3,870 18,330 22,200
^Source:^C^oⁿ^g^r^es^sⁱ^on^al^Bu^dg^et^O^f^fⁱ^{ce. D}^a^t^a^{are cu}^rren^t^as^of^A^p^ri^l^{25, 2002.}
Options and Discussion
Proposals to reform the existing process of budgeting for emergencies largely
involve establishing a reserve fund for emergencies, with the appropriation of such
funds tied to meeting specific criteria concerning what constitutes an emergency.
Proponents of an emergency reserve fund argue that the average annual amount
of overall emergency spending can be projected based on past experience, even
though specific emergencies cannot be predicted. Therefore, they further argue that
an expected amount of emergency spending should be incorporated into the overall
amount of spending in the President’s budget and the budget resolution, as well as
any statutory spending limits if they are extended beyond FY2002. Proponents of an
emergency reserve fund suggest that an historical average of actual emergency
spending would provide sufficient funds to meet specific emergencies as they arise.
For instance, the most recent emergency reserve fund proposal (H.R. 853, 106^th
Congress, the Comprehensive Budget Process Reform Act of 1999) required that
such a fund be based on a 5-year rolling average of actual emergency spending.
Some critics have questioned whether setting aside funds for unknown
emergency situations is appropriate, particularly when the federal budget shows a
deficit. The money set aside for an emergency reserve fund presumably would
require limiting, and may even require reducing, spending for ongoing programs and

activities. Making such choices at the beginning of the budget process would require
Congress to make tradeoffs between specific ongoing programs and general
emergency situations. That is, Congress would be required to make offsetting cuts
in ongoing programs without knowing what specific situation or purpose it was
financing, or even if all of the funding would be needed. In contrast, under the
current process, Congress can weigh the merits of spending for ongoing programs
with those of a specific emergency situation. Some may argue that this existing
process allows Congress to make more rational budgetary tradeoffs. In addition,
setting aside a large specified amount of funds may provide an incentive to
appropriate more funds than necessary in order to spend the entire amount in the
reserve fund by the end of the fiscal year. In contrast, the current process does not
provide any incentives to spend a specific amount on emergencies, but only an
amount determined as emergency situations arise.
Emergency reserve fund proposals also require that appropriations from the
reserve fund meet specific criteria regarding what constitutes an emergency.
Proponents often suggest variations of the OMB criteria issued in 1991. For
instance, H.R. 853 (106^th Congress) defined an emergency as a situation that requires
new spending “for the prevention or mitigation of, or response to, loss of life or
property, or a threat to national security” and is unanticipated. This proposal defined
an unanticipated situation as one that is sudden, urgent, unforeseen, and temporary.
Critics of enacting specific criteria into law often argue that such mechanisms
could hinder the ability of Congress and the President to respond to emergency
situations quickly. They maintain that any specific criteria would not eliminate the
subjective nature of the decision-making process. Instead, they argue that a reserve
fund mechanism tied to specific criteria would give a few decision makers,
presumably the chairs of the Budget Committees, effective control over emergency
spending decisions. Therefore, disagreements over the application of the specific
criteria with those in Congress who would be responsible for releasing such funds
potentially could cause unnecessary delays in responding to emergency situations.
In addition, a requirement to meet each criterion might neglect the unique
circumstances of any given emergency situation. For instance, the urgency of a
particular situation may outweigh the failure to meet all criteria.
Proponents of an emergency reserve fund mechanism also propose to eliminate
the emergency designation process associated with the Budget Enforcement Act. As
noted above, spending designated as an emergency by Congress and the President is
effectively exempt from the statutory spending caps. If the BEA procedures are not
extended beyond FY2002, the emergency designation issue will be irrelevant. If the
BEA procedures are extended, proponents argue that new discretionary spending
limits should assume a certain level of emergency spending, based on an historical
average, making an adjustment for emergency-designated spending unnecessary.
They maintain that the emergency designation process is a “costly” loophole, which
has been used to circumvent the statutory spending caps rather than respond to true
emergencies. Opponents, however, argue that allowing adjustments for unanticipated
spending provide a necessary safety valve within the restrictive spending constraints.
They claim that this safety valve is essential to the effectiveness of the spending caps
to restrain discretionary spending.

Legislative History
Since the first federal statutory control on emergency spending was established
in 1990 under the BEA, Congress has expressed an interest in the possibility of
further limits. Legislation to create a reserve fund for natural disasters and other
emergency situations was introduced at least as early as the 103^rd Congress (1993-
1994).⁵² On June 23, 1998, the Task Force on Budget Process of the House Budget
Committee held a hearing on the general subject of the budgetary treatment of
emergencies.⁵³ This hearing, along with other hearings on the subject of budget
process reform by the task force, led to the introduction in the House of a
comprehensive budget process reform bill containing an emergency reserve fund
during the 105^th Congress (H.R. 4837, the Comprehensive Budget Process Reform
Act of 1998).
No action was taken on this legislation in the 105^th Congress, but the proposal
was reintroduced in the 106^th Congress as H.R. 853, the Comprehensive Budget
Process Reform Act of 1999. Title II of H.R. 853 required the budget resolution to
include an emergency reserve fund and tied the allocation of those funds to whether
the spending met specific criteria of what constitutes an emergency.⁵⁴ Hearings on
the bill were held by the House Rules Committee on May 12 and 13, 1999,⁵⁵ and by
the House Budget Committee on May 20, 1999.⁵⁶ Subsequently, H.R. 853 was
ordered reported (amended) by the House Budget Committee (H.Rept. 106-198, part

2) on June 17, 1999, and by the House Rules Committee (H.Rept. 106-198, part 3)

on June 23, 1999.⁵⁷ The legislation, however, was defeated on the House floor by a
vote of 166-250 on May 16, 2000.⁵⁸
Notwithstanding this unsuccessful effort to create an emergency reserve fund,
the House and Senate have adopted rules to discourage the use of the emergency

⁵² During the period covering the 103^rd Congress - 106^th Congress (1993-2000), at least 12
bills were introduced that would have created a reserve fund for emergencies.
⁵³ U.S. Congress, Task Force on Budget Process, House Committee on the Budget,
Budgetary Treatment of Emergencies, hearing, 105^th Cong., 2^nd sess., June 23, 1998
(Washington: GPO, 1998).
⁵⁴ For a detailed description and analysis of this legislation, see CRS Report RL30236, H.R.
853, The Comprehensive Budget Process Reform Act: Summary of Provisions, by James
V. Saturno.
⁵⁵ U.S. Congress, House Committee on the Rules, Budget Process Reform, hearing, 106^th
Cong., 1^st sess., May 12 and 13, 1999 (Washington: GPO, 1999).
⁵⁶ U.S. Congress, House Committee on the Budget, H.R. 853, The Comprehensive Budget
Process Reform Act of 1999, hearing, 106^th Cong., 1^st sess., May 20, 1999 (Washington:
GPO, 1999).
⁵⁷ H.R. 853 also was referred to the House Appropriations Committee, but only for
consideration of the provision providing for a permanent automatic continuing resolution
(Subtitle D of Title VI). The House Appropriations Committee ordered the bill reported
adversely (amended) on June 22, 1999 (H.Rept. 106-198, part 1).
⁵⁸ For the consideration of H.R. 853 on the House floor, see Congressional Record, daily
edition, vol. 146, May 16, 2000, pp. H3078-H3145.

designation associated with the BEA, as mentioned above. First, the House added
clause 2(e) to Rule XXI in 1995 to prevent non-emergency spending from being
reported in, or offered as an amendment to, an appropriations bill that contains an
emergency designation. Second, the Senate created a temporary point of order in
1999 prohibiting an emergency designation for any provision of legislation, except
for defense discretionary appropriations, and requiring a three-fifths vote to waive
it.⁵⁹ In 2000, the Senate subsequently made this point of order permanent in the
FY2001 budget resolution (Section 205 of H.Con.Res. 290, 106^th Congress).
Automatic Continuing Resolutions
Delays in the consideration and enactment of appropriations have been a source
of chronic difficulties in the budget process. When delays prevent the enactment of
regular appropriations before the start of the fiscal year (October 1), Congress and the
President typically enact stop-gap funding in the form of continuing resolutions
(CRs). If neither the regular appropriation for an agency nor a continuing resolution
is enacted, funding will lapse for that agency. Such a lapse, or funding gap, will
result in a shutdown of the affected agency. One possible reform of the budget
process that has been proposed is to provide for the automatic continuation of
appropriations at the start of a fiscal year in the absence of an agency’s regular⁶⁰
appropriation, to avert shutdowns.
In some ways, an automatic continuing resolution is an alternative to biennial
budgeting as a method for dealing with delays in the consideration and enactment of
budgetary legislation. Rather than provide a longer, defined period for consideration,
an automatic continuing resolution would provide an indefinite period, and alleviate
the most dire consequence of failure to enact appropriations in a timely fashion.
Background
Continuing resolutions have been employed to provide temporary funding of
federal agencies and programs since 1876, and have become a regular part of the
annual budget cycle. Since the start of the fiscal year was shifted to October 1
beginning with FY1977, there have been only 3 years for which no continuing
resolutions have been enacted, FY1989, 1995, and 1997.⁶¹ Table 2 (below) shows
the number of regular appropriations bills that were enacted at the beginning of the
new fiscal year since FY1990.

⁵⁹ Section 206 of the FY2000 budget resolution (H.Con.Res. 68, 106^th Cong.).
⁶⁰ For more on funding gaps and automatic continuing resolutions, see CRS Report
RL30339, Preventing Federal Government Shutdowns: Proposals for an Automatic
Continuing Resolution, by Robert Keith.
⁶¹ Although all of the regular appropriations act were enacted prior to October 1, 1976, for
FY1977, two continuing resolutions were enacted to fund certain unauthorized programs
that had been omitted from regular appropriations acts.

There are no requirements concerning the duration of continuing resolutions.
Some may provide funding for a single day, while others may provide funding for
several weeks, or even through the end of the fiscal year.⁶² Consequently, the number
of continuing resolutions enacted can vary independent of the length of time after
October 1 required to complete action on appropriations. In addition to regular
appropriations bills enacted, Table 2 shows the number of continuing resolutions that
have been enacted since FY1990.
Table 2. Regular Appropriations Enacted by October 1 and
Continuing Resolutions Enacted, by Fiscal Year,
FY1990-FY2002
Number of RegularNumber of Continuing
Fiscal YearAppropriations Enacted byResolutions Enacted
October 1
199013
199105
199234
199311
199423
1995130
1996014
1997130
199816
199916
200047
2001221
200208
^Source:^C^a^len^d^ars^of^th^{e Hou}^s^{e of}^R^e^pres^en^tativ^es^.
There are also no requirements concerning the form in which appropriations
must be provided in continuing resolutions. Because continuing resolutions are
generally written for short periods of time they are usually framed in terms of rates
of spending (roughly the annual level of funding divided by the duration of the CR)
rather than specific amounts of money. Continuing resolutions typically provide
funds at some formula-driven rate, such as some percentage of the previous year’s
rate, or the rate provided in an appropriations bill passed by the House (or Senate),
but not yet ready for transmittal to the President. However, continuing resolutions
may also provide exceptions to such formulas, providing more or less funding as

⁶² From the late 1970s through the late 1980s, it was common practice for continuing
resolutions to become vehicles for one or more regular appropriations acts. This practice
reached its peak in FY1987 and 1988, when the final continuing resolution incorporated all

13 regular appropriations acts.

deemed necessary for specific agencies or programs. It should also be noted that in
most cases, continuing resolutions provide funds only for the continuation of funding
for existing agencies and programs, and not for any new spending initiatives.
Continuing resolutions are necessary because a lapse in funding for an agency
or program will result in a shutdown of the affected agency. This is because the
Antideficiency Act generally prohibits an agency from entering into any obligation
to spend federal funds in the absence of appropriations.⁶³ As a result, in the event of
a funding gap, federal agencies are required to shut down all non-emergency
functions and activities. The Budget Enforcement Act subsequently provided that
the exception for emergencies does not include “ongoing, regular functions of
government the suspension of which would not imminently threaten the safety of
human life or the protection of property.”⁶⁴
One factor complicating the consideration of an automatic continuing resolution
in recent years has been how they are regarded under the current system of budgetary
control. The current system differentiates between discretionary and direct spending.
Although continuing appropriations are considered discretionary spending, an
automatic continuing resolution would be regarded as direct spending because it
would provide legal authority to obligate funds outside of the regular appropriations
process. As a result, the cost estimate for H.R. 853 and S. 558 prepared by CBO
would have a significant impact on the PAYGO process.⁶⁵ Under current procedures,
the consideration of a bill to provide an automatic continuing resolution could thus
be potentially subject to points of order enforcing PAYGO. The enactment of a
measure containing direct spending could also be problematic under current
procedures, and could trigger a sequester if it were not offset (by reductions in other
direct spending, increases in revenues, or some combination of both) or if statutory
language was not also enacted to make compensatory adjustments to the PAYGO
scorecard.
Options and Discussion
The main feature for distinguishing among the possible options for an automatic
continuing resolution has been the funding level. Proposals have been discussed that
would provide funding at the level of the previous fiscal year (or the previous fiscal
year’s level adjusted for inflation); a set percentage of the level of the previous fiscal
year (such as 95% or 98%); the House- (or Senate-) passed level; or even the level
recommended in the President’s budget.

⁶³ First enacted in 1870, and strengthened in 1905 and 1906, the Antideficiency Act is
codified at 31 U.S.C. 1341-1342, 1511-1519. The application has also been clarified by
Attorney General opinions, notably those issued by Benjamin Civiletti in 1980 and 1981.
For more on the impact of shutdowns on federal operations, see CRS Report 98-844,
Shutdown of the Federal Government: Causes, Effects, and Process, by Sharon S. Gressle.
⁶⁴ Section 13213 of P.L. 101-508 (104 Stat. 1388-621).
⁶⁵ For a discussion of the scoring of the automatic continuing resolution provisions in H.R.

853 (106^th Cong.), see H.Rept. 106-198, part 2, pp. 142-143 and H.Rept. 106-198, part 3, pp.^th

108-109, and in S. 558 (106 Cong.), see S.Rept. 106-15, pp. 7-9.

To some observers, a shutdown of the federal government is a disproportionate
consequence of delays in enacting regular appropriations. They suggest that it would
be better to provide for the automatic continuation of current appropriations, allowing
the appropriations process to proceed in an orderly, if not timely, fashion. Without
the threat of a government shutdown, Congress and the President would be able to
enact spending laws without a crisis atmosphere.
Proponents of an automatic continuing resolution also point to the costs of a
federal government shutdown. These costs include not only the direct costs to the
government of a shutdown, but also pay for federal workers during the period of the
shutdown, which has been customary even though work is not performed. It also
includes less direct costs, such as the costs to beneficiaries of federal programs whose
benefits might be delayed, and private sector entities whose business with the
government is disrupted.
Opponents of an automatic continuing resolution counter by suggesting that an
automatic funding mechanism would be a strong disincentive for lawmakers to reach
an agreement on new appropriations. They assert that, while a government shutdown
is an undesirable outcome, it provides all sides with an incentive to reach agreement.
Therefore, by eliminating the threat of a shutdown, an automatic continuing
resolution could undercut that incentive, and budget agreement might be more
difficult to achieve.
Opponents also argue that by providing a guarantee for a level of funding in the
absence of new legislation, an automatic continuing resolution could provide an
advantage in negotiations to those who are opposed to the proposed new level of
spending, and thus, an incentive not to reach agreement. In such a situation, the level
provided for by the automatic continuing resolution would be a critical issue. A level
of 98% or 100% of the previous year’s funding level could be seen by some as
providing adequate funding, leaving little incentive to negotiate. Proposals to use the
President’s proposal as the fallback level could provide little incentive for the
President to negotiate the level of appropriations. This, opponents argue, would
undermine Congress’s constitutional responsibility to wield the power of the purse
since it negates their ability to exercise deliberate choice in making appropriations.
Legislative History
Although the idea of an automatic continuing resolution has been discussed for
a number of years, it has received formal consideration by Congress on only a few
occasions.
In the 105^th Congress, a proposal was considered in both the House and Senate
in conjunction with a supplemental appropriations measure for FY1997 (S. 672). In
that case, the proposal would have provided for an automatic continuation of
appropriations, if necessary, for FY1998, but would have had no effect beyond that
year. The proposal, as originally formulated, would have continued funding in
FY1998 at 98% of the FY1997 level. An amendment was offered during Senate
consideration that would have struck the provision from the bill on May 7, 1997.
The provision was subsequently modified by unanimous consent to continue funding

at 100% of the FY1997 level. On May 8, the amendment was tabled by a vote of 55-

45, and the provision was retained in the bill.⁶⁶

In the House, a provision identical to the Senate-passed version was offered as
an amendment to the House version of the FY1997 supplemental appropriation bill
(H.R. 1469). The amendment was adopted by a vote of 227-197 on May 15, 1997.⁶⁷
Accordingly, the provision was included in the bill when it was sent to President
Clinton, however, the bill was vetoed on June 7, 1997. Among the reasons cited by
the President in his veto message was that the funding level that would be provided
in FY1998 under the automatic continuing resolution provision was below the level
of funding for FY1998 already agreed to by the President and Congress. A
subsequent supplemental appropriations measure was later enacted into law without
the continuing appropriations provision.
In the 106^th Congress, the Senate considered a number of possible budget
process reforms. On January 19, 1999, S. 93, The Budget Enforcement Act of 1999,
was introduced by Senator Pete V. Domenici, and referred to the Committee on
Governmental Affairs and the Committee on the Budget, jointly, pursuant to the
order of August 4, 1977. The two committees held a joint hearing on budget process
reform on January 27, 1999, and the Governmental Affairs Committee reported the
automatic continuing resolution provision in Title IV of S. 93 separately as S. 558,
the Government Shutdown Prevention Act (S. Rept. 106-15). S. 558 would have
provided continuing appropriations during FY2000 and FY2001 at the lower of the
level requested in the President’s budget or the prior-year level. The Senate took no
further action on the proposal in the 106^th Congress.
In the House, H.R. 853, The Comprehensive Budget Process Act of 1999, was
introduced by Representatives Jim Nussle and Benjamin Cardin on February 25,
1999, and referred to the Committee on the Budget.⁶⁸ It was also referred to the
Committee on Rules and the Committee on Appropriations for consideration of
provisions within their respective jurisdictions. Subtitle D of Title VI, providing for
a permanent automatic continuing resolution tied to the prior-year level of funding,
was referred to the Committee on Appropriations. Hearings on the bill were held by
the Rules Committee on May 12 and 13, 1999, and the Budget Committee on May
20, 1999. The bill was subsequently reported (amended) adversely by the
Appropriations Committee (H.Rept. 106-198, part 1), and ordered reported
(amended) by the Budget Committee (H.Rept. 106-198, part 2), and the Rules
Committee (H.Rept. 106-198, part 3).
The adverse report of the Appropriations Committee recommended that the
automatic continuing resolution provision be dropped from the bill. As reported

⁶⁶ See vote no. 61 in the Congressional Record, daily edition, vol. 143, May 8, 1997, p.
S4172.
⁶⁷ See vote no. 134 in the Congressional Record, daily edition, vol. 143, May 15, 1997, p.
H2761.
⁶⁸ For a more comprehensive discussion of H.R. 853 and its consideration, see CRS Report
RL30236, H.R. 853, The Comprehensive Budget Process Reform Act: Summary of
Provisions, by James V. Saturno.

from the Committees on the Budget and Rules, the provision was modified to
exclude funding for one-time increases in response to emergencies from calculations
of the prior-year level. H.R. 853 was subsequently considered by the House under
the terms of H.Res. 499 (H.Rept. 106-613). This special rule provided for
consideration of a base text that did not include a provision for an automatic
continuing resolution, but allowed for one to be offered as an amendment. On May
16, 2000, the amendment providing for an automatic continuing resolution was
rejected 173-236.⁶⁹
Biennial Budgeting
One of the chief congressional complaints about the budget process in recent
years has been the amount of time it requires. Despite the perceived or actual
permanence of much federal spending, the process of formulating, enacting, and
executing budgets has remained characteristically annual. This annual budget cycle
poses a dilemma for Congress. On the one hand, annual review of spending
legislation can afford Congress the opportunity to maximize its influence concerning
the operation of various programs and policies. On the other hand, annual action on
budgetary matters consumes a significant amount of Congress’s time, resulting in a
desire by some Members to reduce the number or frequency of budget measures that
need to be considered. One possible reform that has been proposed to accomplish
this is to change the budget cycle to 2 years from one year.⁷⁰
Background
The efficient operation of an annual budget cycle is, in many ways, dependent
on the timely enactment of budgetary legislation. Consideration of budget questions
in the form of concurrent resolutions on the budget, authorization measures, regular
appropriations, supplemental appropriations, continuing resolutions, public debt
legislation, revenue measures, and reconciliation bills are often closely linked so that
delays in consideration of one measure will have an impact on several other
budgetary measures. One consequence of this is that budgetary legislation,
particularly final action on regular appropriations measures, has significantly
contributed to the need for extended congressional sessions. As shown in Table 3,
final action in recent years on the last regular appropriations bill (either separately or
as part of an omnibus measure) has occurred an average of 75 days after the start of
the fiscal year on October 1. Considering budgetary legislation with a duration of 2
years might be one way to reduce the likelihood that Congress would need to endure
extended sessions as frequently.

⁶⁹ See vote no. 187 in the Congressional Record, daily edition, vol. 146, May 16, 2000, p.
H3143.
⁷⁰ For more information on biennial budgeting, see CRS Report RL30550, Biennial
Budgeting: Issues and Options, by James V. Saturno.

Table 3. Dates of Enactment of Last Regular Appropriations
Legislation, FY1996-FY2002
Fiscal YearPublic LawDate of EnactmentDays AfterOctober 1
1996104-134April 26, 1996209
1997104-208September 30,19960
1998105-118November 26, 199757
105-119
1999105-277October 21, 199821
2000106-113November 29, 199960
2001106-553December 21, 200081
106-554
2002107-115January 10, 2002102
107-116
107-117
^Source:^C^a^len^d^ars^of^th^{e Hou}^s^{e of}^R^e^pres^en^tativ^es^.
One consistent source of support for biennial budgeting has been the presidency.
The administrations of the past four Presidents have all supported the idea of biennial
budgeting.⁷¹ One of the most visible examples of this occurred during the Clinton
Administration. The 1993 report of the National Performance Review (the Gore
report) noted, “Considerable time could be saved—and used more effectively—in
both the executive and legislative branches of government if budgets and
appropriations were moved to a biennial cycle.”⁷²
Options and Discussion
Because budgeting for the federal government encompasses a number of
processes, biennial budgeting can have several meanings. Biennial budgeting can
involve 2-year budget resolutions, 2-year appropriations, and multiyear
authorizations. In addition, biennial budget proposals typically require that executive
branch planning and performance reviews be revised so that they be based on a 2-
year cycle.
Typically, biennial budgeting proposals, such as H.R. 981 (107^th Congress, the
Budget Responsibility and Efficiency Act of 2001), include all three aspects of

⁷¹ Most recently, the Administration of George W. Bush made biennial budgeting a part of
its initial budget proposals. A Blueprint for New Beginnings (Washington: GPO, 2001), pp.

171, 174.

⁷² U.S. Office of the Vice President, Creating a Government That Works Better and Costs
Less: Mission-Driven, Results-Oriented Budgeting, Accompanying Report of the National
Performance Review (Washington: GPO, 1993), p. 59.

congressional budgeting, although proposals embracing only one or two are possible
options. For example, the biennial budgeting component of a reform proposal
reported by the Senate Rules and Administration Committee in 1994 (S. 1824, 103^rd
Congress, the Legislative Reorganization Act of 1994) included 2-year budget
resolutions and multiyear authorizations, but not 2-year appropriations. Another
significant option concerns the period for which money will be appropriated. One
option would be to retain the current system of fiscal years, and enact budgetary
legislation allocated between two one-year periods. Alternately, biennial
appropriations could provide funding for the entire 2-year fiscal period, increasing
flexibility for apportioning money over the course of the biennium.
Advocates of biennial budgeting feel that reducing the number of times that
Congress has to consider budget questions will likewise reduce the amount of time
consumed by the process. Supporters project that the benefits of a 2-year cycle
would include more time for Congress to conduct agency and program oversight, and
more time for budget planning within Congress, as well as better long-range planning
by federal agencies and by state and local governments.
Proposals to convert the federal budget process to a 2-year cycle are also favored
by some who believe that a 2-year cycle provides greater flexibility with regard to
deadlines. Without the pressure to enact budgetary legislation every year, there
would be greater time available for making decisions within the budget cycle, and
more efficient coordination of budgetary decisions. This, they assert, would result
in fewer delays and more timely enactment of necessary legislation.
Supporters also point to the multiyear nature of the summit agreements between
Congress and the President that have been a part of the budget process for more than
a decade as evidence of the efficacy of multiyear budgeting, and as a major factor in
recent years for promoting more efficient consideration of budgetary legislation.
Critics of biennial budgeting have countered by arguing that some of the
projected benefits could prove to be illusory. Reducing the number of times that
Congress considers budget matters, they suggest, may only raise the stakes, and
thereby heighten the possibility for conflict and increased delay. In addition, enacting
a budget resolution and spending legislation every other year could be effective in
reducing congressional workload or aiding longer-term planning only in the second
year of the cycle. With only a limited ability to anticipate future conditions, critics
argue that a 2-year cycle could require Congress to choose between allowing the
President greater latitude for making budgetary adjustments, or engaging in mid-
cycle corrections to a degree that could nullify any anticipated time savings or
planning advantages. Furthermore, they argue that annual review of appropriations
requests is an important part of oversight that would be lost under a biennial budget,
with no guarantee that a separate oversight session would be effective.

Legislative History
Almost from the time that the Congressional Budget Act was enacted in 1974,
budget process reform has been a topic of congressional interest, and biennial
budgeting was discussed at least as far back as the 95^th Congress (1977-1978).⁷³
Hearings on the subject of budget process reform have often included testimony
concerning biennial budgeting. In addition, on several occasions both the House and
the Senate have conducted hearings specifically on the topic of biennial budgeting.⁷⁴
In addition to hearings, congressional interest has been demonstrated by survey,⁷⁵ and
by cosponsorship of those proposals that have been introduced.⁷⁶
In the House, jurisdiction over budget process reform generally is currently
shared by the Committees on Rules and the Budget. Both have considered the issue
of biennial budgeting. During the 106^th Congress, the House Committee on Rules
conducted three days of hearings on the subject of biennial budgeting.⁷⁷ The House
subsequently considered a biennial budget proposal in the form of an amendment
during consideration of H.R. 853, the Comprehensive Budget Process Reform Act.⁷⁸
On May 16, 2000, the amendment providing for a biennial budget was rejected, 201-

217.⁷⁹

In the 107^th Congress, a biennial budgeting proposal was reported and placed on
the Union Calendar for the first time. On March 13, 2001, H.R. 981, The Budget
Responsibility and Efficiency Act, was introduced in the House by Representative

⁷³ For a more detailed discussion of earlier consideration of biennial budgeting, see U.S.
Congress, Senate Committee on Rules and Administration, Improving the Operation of the
Legislative Branch of the Federal Government, and for Other Purposes, report to^rd^nd
accompany S. 1824, 103 Cong., 2 sess., S.Rept. 103-297 (Washington: GPO, 1994), pp.

10-14.

⁷⁴ Printed hearings specifically addressing the issue of biennial budgeting include: U.S.
Congress, House Committee on Government Operations, The Vice President’s National^rd
Performance Review—Recommending A Biennial Budget Process, hearings, 103 Cong.,^st

1 sess., Oct. 7, 1993 (Washington: GPO, 1994); and U.S. Congress, Senate Committee on^th

Governmental Affairs, S. 261—Biennial Budgeting and Appropriations Act, hearings, 105^st
Cong., 1 sess., Apr. 23, 1997 (Washington: GPO, 1997).
⁷⁵ For example, 85% of Representatives and 87.5% of Senators responding to a 1987 survey
indicated that they agreed or strongly agreed with the idea of appropriating on a 2-year^th
schedule. Congress Speaks–A Survey of the 100 Congress (Washington: Center for
Responsive Politics, 1988), pp. 34.
⁷⁶ For example, H.Res. 396 (106^th Congress), a resolution expressing the sense of the House
that a biennial budgeting bill should be enacted, was introduced on Nov. 18, 1999, with 245
cosponsors.
⁷⁷ U.S. Congress, House Committee on Rules, Biennial Budgeting, hearings, 106^th Cong.,

2^nd sess., Feb. 16, Mar. 10, and 16, 2000 (Washington: GPO, 2000).

⁷⁸ CRS Report RL30236, H.R. 853, The Comprehensive Budget Process Reform Act:
Summary of Provisions, by James V. Saturno.
⁷⁹ See vote no. 186 in the Congressional Record, daily edition, vol. 146, May 16, 2000, p.
H3127.

Charles F. Bass, and referred to the Committee on the Budget for a period ending not
later than April 13, 2001, and in addition to the Committee on Rules and the
Committee on Government Reform for a period to be determined subsequently by
the Speaker. The period of the referrals was extended on several occasions and the
measure was reported with an amendment by the Committee on the Budget on
September 5, 2001 (H.Rept. 107-200, part 1). Rather than put the federal budget on
a 2-year cycle, the committee amendment substituted a proposal for the creation of
a Commission on Federal Budget Concepts that would evaluate and make
recommendations on a number of budget process issues. The Committee on Rules
subsequently reported the measure on November 14, 2001 (H.Rept. 107-200, part 2),
and the Committee on Government reform was discharged from further consideration
on the same day. As reported by the Committee on Rules, H.R. 981 included 2-year
budget resolutions, 2-year appropriations, and multiyear authorizations.
In the Senate, jurisdiction over the budget process is shared by the Committees
on Governmental Affairs and the Budget under the order of August 4, 1977, which
provides that if one committee reports a measure, the other has 30 days to report or
be discharged from further consideration. Proposals for a 2-year budget cycle have
previously been reported by the Governmental Affairs Committee in 1988 (S. 2478,
S.Rept. 100-499), 1990 (S. 29, S.Rept. 101-254), and 1997 (S. 261, S.Rept 105-72).
All three of these proposals took a comprehensive approach to biennial budgeting,
and included 2-year budget resolutions, 2-year appropriations, and multiyear
authorizations.
Also, in 1993, both the Senate and House members of the Joint Committee on
the Organization of Congress included proposals for a 2-year budget cycle in their
recommendations to their respective chambers (S.Rept. 103-215, vol. 1, and H.Rept.
103-413, vol. 1). In the Senate, these recommendations were subsequently
introduced as S. 1824, referred to the Committee on Rules and Administration, and
reported in 1994 (S.Rept. 103-297). As noted above, in contrast to the
comprehensive approach to biennial budgeting taken most biennial budgeting
proposals, S. 1824, as reported, included 2-year budget resolutions and multiyear
authorizations, but not 2-year appropriations.
The most recent biennial budgeting measure to be reported in the Senate is S.
92 (106^th Congress). On January 19, 1999, two bills were introduced by Senator Pete
V. Domenici including biennial budgeting provisions: S. 93, The Budget
Enforcement Act of 1999, and S. 92, The Biennial Budgeting and Appropriations
Act. Both were referred to the Committee on Governmental Affairs and the
Committee on the Budget, jointly. The two committees held a joint hearing on
budget process reform on January 27, 1999, including the subject of biennial
budgeting. S. 92 was subsequently considered by the Committee on Governmental
Affairs on March 4, 1999, and ordered reported with an amendment (a complete
substitute making a number of technical corrections). A written report was filed on
March 10, 1999 (S.Rept. 106-12). The Senate took no further action on the proposal
in the 106^th Congress.