July 28, 1998


(Sponsors: Stevens (R), Alaska; Campbell (R), Colorado)

This Statement of Administration Policy provides the Administration's views on S. 2312, the Treasury and General Government Appropriations Bill, FY 1999, as reported by the Senate Appropriations Committee. Your consideration of the Administration's views would be appreciated.

The Administration appreciates efforts by the Committee to accommodate the President's priorities within the 302(b) allocation. The President's FY 1999 Budget proposes levels of discretionary spending for FY 1999 that conform to the Bipartisan Budget Agreement by making savings in mandatory and other programs available to help finance this spending. In the Transportation Equity Act, Congress -- on a broad, bipartisan basis -- took similar action in approving funding for surface transportation programs paid for with mandatory offsets. We want to work with the Congress on mutually agreeable mandatory and other offsets that would be used to increase high priority discretionary programs, including those funded by this bill. In addition, we hope that the Senate will reduce funding for lower priority and unrequested discretionary programs.

Below is a discussion of our specific concerns with the Committee-reported bill. We look forward to working with the Senate to resolve these concerns as the bill moves forward.

Year 2000 Computer Conversion

In the FY 1999 Budget, the President requested more than $1 billion for Year 2000 (Y2K) computer conversion. In addition, the budget anticipated that additional requirements would emerge over the course of the year and included an allowance for emergencies and other unanticipated needs. It is essential to make Y2K funding available quickly and flexibly as new needs arise. The Administration appreciates the Committee's action to provide $3.25 billion in contingent emergency funding for this purpose. We urge Congress to leave as much as possible of the reserve unallocated so that funds are available to address emerging needs.

Obligation Delays

The Administration strongly objects to language in the Senate Committee bill that would impose $592 million in obligation delays on Treasury programs. These provisions would prevent expenditure of funds before September 30, 1999, effectively reducing program levels for FY 1999 and seriously hindering Treasury program operations. For example:

  • For the IRS, the obligation delay of $175 million for Tax Law Enforcement would result in a six-percent reduction in personnel and a loss of substantial tax collections. The $69 million obligation delay for Information Systems would effectively halt IRS' modernization efforts until the following fiscal year, jeopardizing efforts to refocus the IRS on providing good customer service for taxpayers.

  • For Treasury Enforcement, the obligation delay of $28 million for Customs' Salaries and Expenses would hinder Customs' efforts to combat drug smuggling across the southern tier of the United States and to detect shifts in trafficking patterns, and would inhibit maintenance of essential equipment. The $23 million obligation delay against Customs' Operations and Maintenance, Air and Marine Interdiction Programs account would lead to a reduction in interdiction flight hours, cripple essential maintenance for air and marine fleets, and result in a deterioration of air and marine fleet assets. The $14 million in obligation delays for the Secret Service would cause unacceptable risks to Presidential safety.

Internal Revenue Service

The Administration appreciates congressional support for IRS information technology investments. However, the Administration urges the Senate to adopt the $210 million for modernized information systems provided in the House bill.

U.S. Customs Service

The Administration is concerned about the funding level for Customs' Automated Commercial Environment (ACE). Without major revisions to the existing system, Customs cannot keep up with increasing trade volumes nor can it be responsive to the requirements stated in the 1993 Modernization Act and the needs articulated by industry. The Committee has funded only $8 million of the requested $56 million level, and has imposed an obligation delay against the $8 million provided, which would cause the modernization effort to come to a halt. To accommodate the full amount requested, the Administration has proposed funding the majority of ACE requirements through a user fee paid by those who stand to benefit most from this system, the trade community.

Bureau of Alcohol, Tobacco and Firearms (ATF)

The Administration appreciates the efforts of the Committee to fully fund the President's Youth Crime Gun Interdiction Initiative. This initiative is an important part of the Administration's overall strategy to curb youth gun violence.

The Administration requests reconsideration of funding for the Violent Crime Coordinator initiative, as the U.S. Attorneys have requested additional ATF support for bringing cases involving violent criminals to the Department of Justice for prosecution.

We are concerned about the Committee's lack of support for ATF headquarters relocation.

U.S. Secret Service

The Administration is concerned that by redirecting $13 million to Secret Service travel costs, the Committee has effectively undermined other Secret Service funding needs, resulting in a probable deterioration of critical equipment and an undermining of the Service staffing needed to provide for the protection of the President and foreign dignitaries.

Law Enforcement Vehicles

The Administration objects to the elimination of funding for Treasury law enforcement vehicle replacement. Replacement funds are critical from a public safety perspective, as aging vehicles present an inordinate risk to the lives of both Treasury personnel and the public.

Federal Law Enforcement Training Center

The Administration urges the Senate to adopt the funding level for the Federal Law Enforcement Training Center (FLETC) proposed by the President. In particular, the Committee makes no provisions for funding of a dormitory for FLETC's Glynco campus. This dormitory is needed to help FLETC absorb the increased law enforcement training needs of the Immigration and Naturalization Service and the Bureau of Indian Affairs.

Unanticipated Needs

The Committee bill fails to provide the requested $1 million to enable the President to meet unanticipated needs in furtherance of the national interest, security, or defense. The Administration urges the Senate to include this amount to ensure that the President has the same ability to meet such needs as previous Presidents have had.

Pay Raise for Federal Judges and Senior Executives

The Administration is disappointed that the bill includes a proposal to eliminate the 1999 pay raise for Federal judges and employees paid under the Executive Schedule. Failure to provide pay raises for senior executives is eroding the value of their pay and causing severe pay compression in the executive ranks. Pay adjustments have been made for such individuals only once in the last five years. If continued, this failure will affect the Government's ability to attract and retain the executive talent that it needs. We urge the House to restore the pay raise for Federal judges and employees paid under the Executive Schedule.

Office of National Drug Control Policy (ONDCP)

The Administration appreciates the support the Committee has provided for drug control efforts in general, and for ONDCP in particular. The Administration encourages the Senate to provide the full amount requested for ONDCP's Special Forfeiture Fund, especially the national youth anti-drug media campaign. The Senate could fully fund the budget request for the media campaign by reducing amounts earmarked by the Committee for unrequested ONDCP programs. The Administration opposes bill language that would bar funding for: new ads, Internet programming, joint efforts with the entertainment industry, partnerships with community and other organizations, and evaluation of the effectiveness of the media campaign. Unless the Senate rectifies these problems, our efforts to meet the targets established in ONDCP's performance measures would be negatively affected.

Federal Buildings Fund

The Administration is pleased that the Committee has provided $14 million for the design of a new Department of Transportation Headquarters. Providing for a Government-owned building would save taxpayers approximately $190 million, in present value terms, compared to the cost of entering into a lease.

The Committee bill would delay the availability of funding until September 30, 1999, for the repair and alterations program ($324 million), rental of space program ($52 million), and building operations program ($31 million). The Administration is concerned that a delay in obligations would essentially eliminate the FY 1999 basic repairs and alterations program, which provides for emergency repairs and ensures the operational continuity of facilities.

The Administration is also concerned that the Committee bill provides over $500 million for 15 unrequested Federal courthouse construction projects.

Morris K. Udall Foundation

The Administration is concerned about the lack of funding for the Morris K. Udall Scholarship and Excellence in National Environmental Policy Foundation, particularly the lack of funding for the U.S. Institute for Environmental Conflict Resolution, as authorized in PL 105-156. The Administration believes that the Institute would provide valuable assessment, mediation, and training services to Federal agencies to resolve environmental disputes, thus reducing expenses due to lengthy litigation costs.

Federal Election Commission

The Administration urges the Senate to fully fund the Federal Election Commission (FEC) at the level requested by the President and provided by the House, $36.5 million.

Paperwork Reduction Act and Congressional Review Act

The Administration shares the Committee's interest in improving the implementation of the Congressional Review Act and the Paperwork Reduction Act. However, we have concerns with several provisions of the Committee bill. We would like to work with the Committee to resolve these outstanding issues.

Language Provisions

  • The Administration strongly objects to section 117 of the Committee bill. This provision would undermine the authority of the President to use assets of countries under economic sanctions pursuant to the Trading with the Enemy Act or the International Economic Powers Act as leverage when economic sanctions are used to modify the behavior of a foreign state, or are used in negotiations with that state in an effort to normalize relations.

  • The Administration objects to language tying obligation of funds for Customs automation modernization improvements to GAO certification to Congress that measures have been established "to enforce compliance with the architecture." The Administration has no control over the nature or timing of any prospective GAO review and certification.

  • The Administration is concerned that section 115 of the Treasury General Provisions could limit the Secretary's discretion in determining how best to stimulate increased electronic tax filing, which reduces IRS errors, permits more timely refunds to taxpayers, and lowers IRS tax processing costs.

  • The Administration supports the Joint Financial Management Improvement Program and urges the Senate to include language in Title VI that was included in the House Committee-reported version of the bill that would provide up to $3 million from Government-wide credit card rebates in support of that program.

  • There are several provisions in the bill that purport to require congressional approval before Executive Branch execution of aspects of the bill. The Administration will interpret such provisions to require notification only, since any other interpretation would contradict the Supreme Court ruling in INS vs. Chadha.

Federal Employees Health Benefits Program

The Administration would strongly oppose any amendment to the bill that would restrict Federal Employees Health Benefits Program (FEHBP) coverage for abortions except in situations where the life of the mother is endangered or the pregnancy is the result of rape of incest. While the President believes that abortion should be safe, legal, and rare, Federal employees and their families should not be precluded from choosing to purchase health insurance policies with broader coverage.

The Administration would support an amendment that requires coverage of prescription contraceptives by health plans participating in the Federal Employees Health Benefits Program (FEHBP). We support improvements in basic health care coverage for women and the goal of the amendment -- to reduce unwanted pregnancies and the need for abortions. Any such amendment should give authority to the Office of Personnel Management to waive the requirement for plans that are sponsored by organizations whose religious or conscientious beliefs do not support artificial methods of contraception.

Potential Objectionable Amendments

It is our understanding that a number of objectionable and extraneous amendments may be offered, such as an amendment to repeal the current tax code effective December 31, 2002. The Administration strongly urges the Senate to oppose such amendments so that an acceptable bill can be sent to the President. If the tax repeal provision was presented to the President, the Secretary of Treasury has stated that he would recommend veto of the bill. If further objectionable and extraneous amendments are offered, we will provide additional views.

With regard to the amendment that would terminate the tax code, it would be irresponsible for Congress to enact legislation to terminate the tax code without having already provided a reform plan to replace it. Many families, for example, would refrain from buying homes because of the uncertain tax treatment of mortgage interest and property taxes (as well as other State and local taxes). Many businesses would hire fewer workers and make fewer capital investments because of uncertainties in how taxes would affect the return on productive assets. Furthermore, the uncertainty of the size of future receipts would raise the specter of increased Federal deficits, which in turn would raise interest rates and weaken or destroy economic growth.