July 25, 2008

CBO Letters To Reid And Conrad Undermines Bogus Attacks On Package Of Noncontroversial Authorization Bills

Senate Majority Leader Harry Reid made the following statement today in response to a letter he received from the Congressional Budget Office (CBO) regarding a package of noncontroversial authorization bills being blocked by some Senate Republicans:

“The Congressional Budget Office has once again undermined bogus claims that our package of authorization bills would increase the deficit.  As CBO pointed out, ‘authorizations do not cause changes in federal spending or revenues.’ 

“It is important to understand that the total level of appropriations is set in the budget resolution and has nothing to do with any authorization bill.  Nor should anyone be confused by CBO’s estimate of the cost of appropriation bills that Congress might or might not choose to enact later.  Those costs would flow only from the subsequent appropriations, not from this authorization bill.

“The bottom line, as CBO’s letter has confirmed yet again, is that our package will have no meaningful impact on the federal deficit.  Nobody should be fooled into believing otherwise.

“It’s hard to understand why some Republicans apparently believe that it’s in their political interests to block legislation that cracks down on child pornographers and keeps kids from drugs.  But it’s now indisputable that their opposition has nothing to do with deficit reduction and everything to do with partisan obstructionism.”

The CBO letter to Senaotr Reid dated July 25, 2008 provided:

The Congressional Budget Office has reviewed S. 3297, a bill to advance America's priorities, as introduced on July 22, 2008. The bill includes numerous provisions that would affect health care, criminal statutes, laws to protect wildlife and the environment, international aid programs, efforts to promote commerce, ocean research, and other government programs.

Most of the bill's provisions would specifically or implicitly authorize increased appropriations for purposes specified in the bill. By themselves - that is, in the absence of subsequent legislation - those authorizations do not cause changes in federal spending or revenues.

Read rest of the letter here.

Earlier in the day Senator Reid made the following statement after the CBO confirmed in another letter to Senator Kent Conrad, Chairman of the Budget Committee, that bills that merely authorize future appropriations have no impact on the federal budget, spending or revenues:

“The Congressional Budget Office has confirmed what we’ve known all along: simply authorizing a future appropriation does not trigger any new spending and does not increase the deficit by a penny.  Now that CBO has spoken definitively, Republicans’ baseless accusations can be seen for what they are.  If some Republican Senators want to argue against cracking down on child pornographers, or keeping kids away from drugs, they can do so.  But no longer can they credibly claim that such legislation would increase the deficit.”

The CBO’s letter to Senator Kent Conrad provides the following question and answers in response to a letter from Senator Conrad dated July 17, 2008, about the impact on the federal budget from enacting legislation that authorizes future appropriations but does not affect direct spending or revenues:

Question #1: Does an authorization of future appropriations provide the authority for federal programs or agencies to incur obligations and make payments from the Treasury?

Answer: No.  A simple authorization of appropriations does not provide an agency with the authority to incur obligations or make payments from the Treasury.

Question #2: Can an agency or program spend money without the authority from Congress to incur obligations and make payments from the Treasury?

Answer: No.  An agency is not allowed to spend money without the proper authority from Congress to incur obligations.  (See 31 U.S.C. 1341, which outlines limitations on expending and obligating funds by officers and employees of the United States Government.)

Question #3: Even if legislation authorizes appropriations for a program, isn’t it the case that a subsequent act of Congress is required before an agency can spend money pursuant to the authorization?

Answer: Yes.  For discretionary programs created through an authorization, the authority to incur obligations is usually provided in a subsequent appropriations act.  An agency must have such an appropriation before it can incur obligations.  (Legislation other than appropriation acts that provides such authority is shown as increasing direct spending.)

Question #4: If no new spending can occur under the authorizing legislation, does it have the effect of increasing the federal deficit and/or reducing the federal surplus?

Answer: No.  An authorization of appropriations, by itself, does not increase federal deficits or decrease surpluses.  However, any subsequent appropriation to fund the authorized activity would affect the federal budget.

Question #5: Would CBO’s projection of federal debt change as a result of enacting legislation that only authorizes future appropriations?  Is it not correct that the agency’s projection of future debt would be identical both before and after the enactment of such legislation?

Answer: Enacting legislation that only authorizes future appropriations would not result in an increase in CBO’s projection of federal debt under its baseline assumptions.

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