EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503
STATEMENT OF ADMINISTRATION POLICY
(THIS STATEMENT HAS BEEN COORDINATED BY OMB WITH THE CONCERNED AGENCIES.)
May 7, 1997
S. 672 -- SUPPLEMENTAL APPROPRIATIONS AND RESCISSIONS BILL, FY 1997
This Statement of Administration Policy provides the Administration's views on S. 672, a bill making FY 1997 emergency supplemental appropriations for recovery from natural disasters and for overseas peacekeeping efforts, as reported by the Senate Appropriations Committee.
The Congress and the Administration must work together to ensure that this bill gets enacted as quickly as possible. The recovery of hundreds of thousands of Americans from the tragedy of the recent natural disasters depends upon our action. While FEMA, SBA, the Corps of Engineers, and other Federal agencies are providing immediate relief to the victims of the recent natural disasters, it is essential that this legislation be enacted soon so that the process of long-term economic redevelopment can begin.
The bill as reported by the Committee provides $5.6 billion in urgently needed disaster assistance funds. To ensure that these funds reach the hundreds of thousands of citizens in 33 States who desperately need our help and to support the efficient operation of our troops abroad, it is essential that this bill remain free of extraneous provisions that could slow its progress. Unfortunately, the Committee bill includes a number of such provisions.
As a result of the recent bipartisan budget agreement, it is our understanding that Title VII of the bill providing for an automatic continuing resolution will be dropped from the Committee bill. It is essential that this be done. Based on the Senate Committee bill, which included the automatic continuing resolution, the President had indicated that he would veto it because it includes strongly objectionable extraneous provisions. The Senate Committee bill includes:
The President's budget requests a $100 million FY 1997 supplemental for WIC to maintain the FY 1996 year-end participation level of 7.4 million. Our most recent information from States suggests that a minimum of $76 million in new budget authority is necessary to maintain the FY 1996 year-end participation level. While an improvement over the House Committee's funding level, the $58 million funding level proposed by the Senate Committee would result in State agencies having to cut participation by 75,000 to 100,000 low-income women, infants, and children by year's end. The Administration remains firmly committed to fully funding the WIC program at a participation level of 7.5 million persons in FY 1998 and strongly supports a supplemental of $76 million this year.
Dual Use Technology
The Dual-Use Applications Program helps to develop and incorporate technologies used and tested by the cost-conscious commercial sector into military systems. By adopting these dual-use technologies, the Department will be able to take advantage of cost savings that flow from the production efficiencies of larger-scale commercial manufacturing lines. Reducing funding for this program would result in higher costs for future defense systems. This is an Administration priority and should not be used as an offset.
The President's FY 1998 Budget requests that Congress appropriate funds sufficient to renew all expiring housing assistance contracts in FY 1998 and all future years. The Administration does not object to funding FEMA's Disaster Relief program through the rescission of $3.6 billion of recaptured excess reserves in HUD's assisted housing program, provided that the Congress is committed to approving sufficient resources to renew all expiring housing assistance contracts in FY 1998 and future years.
The Administration appreciates the Senate Committee's speedy approval of supplemental appropriations for the Department of Defense's operations in Bosnia and Southwest Asia. The Department of Defense recognizes that improvements are needed in the fiscal oversight of contingency operations, and it is in the process of establishing systems to develop, monitor, and report contingency operation cost estimates to the Congress. We appreciate the concern of the Committee for the impact of contingency operations on training. However, we are disappointed that the Committee chose not to fund fully the Department's requirements. We request that the Senate restore the $207 million cut for contingency operations so that the Department can meet its full requirements as reflected in the House bill.
The Administration is further concerned that the Senate is proposing to cut off funding for Bosnia operations unless a detailed cost report on all Bosnia related activities is submitted within 60 days. Subjecting the military to such a funding cut off would unnecessarily threaten the viability of ongoing operations. The Administration will work with the Committee outside the constraints of the provision in question to provide any new cost data that was not already presented to the Congress in testimony and written responses over the prior two months.
The Administration appreciates the Committee's provision in Contributions to International Organizations for payment of $100 million of arrearages on past assessed contributions. This is a good first step toward paying the $1.021 billion of arrears owed to the United Nations and other organizations. A successful outcome soon to the ongoing negotiations between the Congress and the Administration on reform and funding for these organizations would bolster U.S. negotiators working to achieve reforms in these organizations. The Administration asks that the $100 million be available to pay arrears not just to the U.N. but also to other organizations.
Extraneous Micro-management Provision.
The Administration strongly objects to the inappropriate and unwise reduction of $1.5 million in funding for non-career personnel in the Department of Housing and Urban Development (HUD). The reduction, targeted at HUD's top officials, would severely impede and potentially cripple Secretary Cuomo's efforts to reform the management of the Department and rebuild public trust in HUD.
Federal Elections Commission
The Administration urges the Senate to include the requested $1.7 million in additional funding for the Federal Elections Commission (FEC) in the Senate version of the bill. The Administration proposed this additional funding for FEC to support additional staff and related costs for investigations and audits pursuant to the Federal Election Campaign Act.
Texas Public Assistance Program Amendment
The Administration understands that an amendment may be offered to mandate that the Administration approve a proposal by the State of Texas to release a "Request for Offers" that could lead to contracting out large portions of the administration of Federal public assistance programs. The Administration supports the objective of making administration of these programs more efficient. However, the Administration strongly opposes this amendment. Any proposal of the scope of Texas' raises many issues of how to judge contractor performance; fairness to current employees of the State; how to ensure fiscal integrity; the impact on families who depend on these programs, and many other issues. The Administration is working with Texas to resolve these issues, as it would in the case of any such proposal. Congressional action is inappropriate while the Administration is reviewing the proposal.
Additional Administration concerns with the bill as reported by the Committee are contained in the attachment.
The Administration looks forward to working with the Congress to
address the following concerns:
Automatic Continuing Resolution for FY 1998
The Administration believes that the provision of the Senate Committee bill that would provide for an automatic continuing resolution (CR) for FY 1998 is extremely ill-advised and clearly extraneous to this bill. The President would veto this bill if it were to contain the Senate Committee language.
The following are among many unfortunate effects that this provision would have.
Disaster Reserve Assistance Program. The Administration urges the Senate to limit livestock indemnity payment eligibility to producers in Presidentially-designated emergency disaster areas. Nationwide eligibility for ad hoc disaster payments for livestock losses could set a costly precedent and would likely dilute the amount of assistance that would be provided to producers who have suffered catastrophic losses.
Army Corps of Engineers
Devils Lake. The Administration is pleased that the Senate Committee has included $5 million for design work related to the construction of an emergency outlet at Devils Lake, North Dakota. The Administration urges the Congress to support this vital project in the FY 1998 Energy/Water Development appropriations bill.
Department of Energy
Brookhaven National Laboratory. On April 23rd, the President proposed $19.7 million for the Department of Energy's Brookhaven National Laboratory for activities related to the remediation of ground water contamination. The Administration urges the Senate to support this proposal. Appropriate offsets were included in our request.
Department of Housing and Urban Development
Public Notice of Contracting by HUD. The Administration opposes section 324 of the Senate Committee bill, which would require reporting in the Federal Register of information on all HUD contracts over $250,000 that were awarded during the prior quarter. HUD, like other Executive agencies, is already required to publish notice in the Commerce Business Daily (CBD) of contract awards likely to result in subcontracting opportunities. (The CBD notice is immediately available each day on the Internet -- duplicative reporting in the Federal Register each quarter would benefit neither contractors nor the public.) The broadened scope of information required by section 324 is of questionable value and would impose both for HUD and GPO an administrative burden and cost that is contrary to the important government wide streamlining and acquisition reforms that Congress enacted over the last several years.
Department of Transportation
Overflight Fees. The Administration objects to the Committee's proposal to exempt general aviation operations from the overflight user fee that was authorized last year. The Administration has strongly supported a user fee-financed Federal Aviation Administration (FAA). To achieve this goal, all users must pay a fair share of the FAA's costs. In addition, the Administration has some concerns regarding the exemption of Canada-to-Canada overflights. Canada is expected to implement a Canadian enroute charge based, in part, on distance flown in Canadian air space, by November 1, 1997. To the extent that this charge makes it less expensive to fly in U.S. airspace than Canadian airspace, the U.S. could end up subsidizing Canadian carriers which are presently flying entirely in Canada
Federal Emergency Management Agency
The Administration opposes the proposed rescission of $5 million from the Federal Emergency Management Agency's (FEMA's) Salaries and Expenses contained in the Senate Committee bill. Rescission of these funds would have a severe, adverse impact on FEMA's ability to manage its continuing disaster operations, which are now ongoing in 49 States and every U.S. territory.
Funding for TWA Flight 800 Investigation
The Administration requests the Senate to fully fund the Administration's $20.2 million supplemental request for the TWA Flight 800 investigation and recovery efforts. Since July 1996, the National Transportation Safety Board (NTSB), the FBI, Navy, and other agencies have worked together on the investigation of the crash. All of these agencies have incurred costs to support this effort. Failure to fund the Administration's request would force the Navy to absorb costs that are unrelated to its core mission, result in other activities being canceled or deferred to cover these unanticipated costs, and hamper the NTSB's efforts to bring closure to this investigation.
Drug Patent Extensions. Section 304 of the Senate Committee bill would allow drug manufacturers to benefit from the full patent extension provided in the Uruguay Round Agreements Act of 1994 for all patents in force on June 8, 1995, as well as benefit from the full amount of patent extension provided under section 156 of title 35, United States Code. Section 304 also targets a specific generic drug application that is pending at FDA for special treatment regarding this general patent extension. The Administration is concerned about the inclusion of patent provisions, either general or specific, in this legislation.
Medicare -- Denver Waiver. The Administration is disappointed that the Senate Committee bill (section 314) would prohibit HCFA from implementing or administering the managed care competitive pricing demonstration in Denver in FY 1997. The Administration strongly believes that no delay is warranted in testing an important alternative payment methodology for Medicare managed care plans. The Administration believes that the project is well designed and has taken into consideration constructive comments from the managed care industry and other concerned parties.
Restriction on Funds Used to Enforce Electronic Tax Transfer System. The Administration objects to section 322 of the Senate Committee bill. This provision is unnecessary as IRS has successfully implemented the Electronic Federal Tax Payment System (EFTPS), which allows Federal tax deposits to be made over the phone or by personal computer. Under section 6302 (h) of the Internal Revenue Code, 1.2 million employers were required to file through EFTPS by July 1, 1997, and as of April 26, 1997, over 995,000 are enrolled. The IRS will not impose penalties on businesses that are simply trying to become acclimated to EFTPS and are trying to comply with the filing requirements.
Cooperative Purchasing. The Administration opposes section 323 of the Senate Committee bill, which would repeal section l555 of the Federal Acquisition Streamlining Act (FASA) of l994. This section of FASA would allow State and local governments, non-profit organizations, and Indian tribes, if they choose to do so, to buy products that are currently available to Federal agencies under contracts negotiated between the General Services Administration (GSA) and private suppliers. Often, GSA is able to leverage the buying power of the Federal Government to obtain very advantageous prices from suppliers, and section l555 allows these other entities to take advantage of those lower prices. Participation by suppliers in the program would be entirely voluntary. Since there would be no requirement for these other entities to buy off the GSA contracts, they would only do so if they felt they were getting a better deal than currently obtainable. Repeal would harm taxpayers in order to protect certain local suppliers who fear this new source of competition.