The Fiscal Responsibility Act

Highlights:

The bill contains two budgetary reforms:  a constitutional balanced 
budget amendment and a permanent line-item veto.  

Supporters of a balanced budget amendment argue that Congress has shown 
itself both unwilling and incapable of balancing the federal budget.  A 
constitutional amendment is necessary to force lawmakers to do what, on 
their own, they cannot:  get a handle on out-of-control spending.  
Opponents of the idea argue it will transfer budget decision-making to 
the courts, will result in massive cuts in Social Security and usurp 
Congress' constitutional authority to control government purse strings.

Proponents of the line-item veto maintain that given our current deficit 
situation, the president should have the authority to single out 
unnecessary and wasteful spending provisions in bills passed by 
Congress.  Many critics assert, however, that the line-item veto will 
give too much power to the executive branch to control federal spending 
-- a responsibility clearly given to the legislative branch in the U.S. 
Constitution.


Background:

The Impetus

Perpetual annual deficits, compounded by the fact that the federal 
government has not ended a fiscal year in surplus since 1969, has led 
many economists, former presidents, Members of Congress and the public-
at-large to call for more stringent and binding budget mechanisms -- 
mechanisms that Congress will not be able to routinely waive or ignore.  
Many Americans have become disillusioned with a Congress that has 
consistently found ways to circumvent the few budgetary restraints it 
has set for itself:

In 1985, Congress passed the Balanced Budget and Emergency Deficit 
Control Act (P.L. 99-177; popularly known as Gramm-Rudman-Hollings) to 
establish steadily-declining deficit targets, supposedly bringing a 
balanced budget in FY 1991.  In September 1987, faced with a projected 
budget deficit of $183 billion for FY 1988 (far exceeding the $108 
billion target), Congress revised the law (P.L. 100-119) and adopted 
higher deficit levels supposedly bringing a balanced budget in FY 1993.  
In 1990, and again in 1993, Congress revised and extended these targets 
-- postponing a balanced budget indefinitely. 

Congressional budget rules allow the House to automatically raise the 
ceiling on the federal debt without a separate vote -- protecting 
members from the difficult decision of increasing the federal debt.

These and other actions demonstrate to many that Congress has neither 
the will nor the desire to cut wasteful government spending and enact a 
balanced budget.

The BBA's Recent History

In addition to the line-item veto, one of the more rigorous proposals 
that has garnered significant popular and congressional support is the 
balanced budget amendment.  A June 11,1992 Investors' Business Daily 
article cited a Washington Post/ABC News poll finding that 75 percent of 
Americans favor a balanced budget amendment.  However, Congress has been 
considering balanced budget amendments since 1936 with little success.  
The closest Congress ever came to passing one was in 1986 when the 
Senate defeated a balanced budget resolution by one vote. 

The House last considered a balanced budget amendment in March 1994.  At 
that time, four different versions of the amendment were debated.  The 
first, a Stenholm/Smith (OR) resolution, would have amended the U.S. 
Constitution to require that total outlays for any fiscal year not 
exceed total receipts for that year unless three-fifths of the House and 
three-fifths of the Senate vote to incur a deficit.  The authors made an 
exception for any fiscal year in which a declaration of war is in effect 
or the U.S. is engaged in a military conflict that poses a threat to 
national security.  Their proposal also required (1) a three-fifths roll 
call vote in each chamber to increase the public debt limit and (2) that 
a majority of the membership of each chamber approve a tax increase.  On 
final passage, it failed 271-153 -- 12 votes shy of the two-thirds 
margin.  

The House also rejected a Kyl substitute giving the president the line-
item veto, limiting outlays to 19 percent of GDP for a given fiscal 
year, and requiring a three-fifths vote in both chambers to waive the 
requirement, and a Wise/Pomeroy/Price substitute allowing a majority of 
the House and Senate to waive the balanced budget requirement in times 
of war, military conflict or economic recession and exempting Social 
Security.  Although the House adopted a Barton/Tauzin amendment 
requiring three-fifths roll-
call votes of the total membership of the House and Senate or a 
declaration of war to waive the balanced budget amendment, and a three-
fifths vote to increase the debt limit or raise taxes, it was not 
considered to be finally adopted since the substitutes were considered 
under king-of-the-hill procedures (i.e., the last amendment adopted in 
committee of the whole is reported back the House for a vote on final 
passage).  Because the Stenholm/Smith (OR) amendment was considered and 
passed after passage of the Barton/Tauzin amendment, only the former was 
considered to have been adopted in the Committee of the Whole.  Only the 
Stenholm/Smith (OR) version was reported back to the House, where it 
failed to receive the necessary two-thirds vote.

A few weeks prior to House consideration of the BBA, the Senate debated 
a similar resolution, rejecting it on March 1, 1994 by a vote of 63-37 
-- four votes short of the required two-thirds margin.  That measure 
(S.J.Res. 41), sponsored by Senator Simon, would have made the balanced 
budget requirement effective two years after its ratification or in 
2002, whichever came later.  During consideration, the Senate also 
rejected an alternative resolution offered by Senator Reid (1) ensuring 
that courts cannot impose tax hikes if Congress fails to balance the 
budget, (2) exempting Social Security, (3) allowing Congress to waive 
the balanced budget requirement in times of economic recession, and (4) 
permitting the government to borrow for infrastructure needs.  It was 
defeated 22-78.

Amendments to the Constitution

As stipulated in the U.S. Constitution, amendments to our founding 
document must be approved by two-thirds of those present and voting in 
both the House and Senate and three-fourths (38) of the 50 state 
legislatures.  The Constitution has been amended 27 times, including 
amendments protecting the free exercise of religion; protecting the 
right to keep and bear arms; protecting against unreasonable searches 
and seizures; guaranteeing the right to a speedy and public trial; 
protecting against cruel and unusual punishment; abolishing slavery; 
guaranteeing equal protection under the law to all; giving Congress the 
power to tax; prohibiting the manufacture, sale or transportation of 
alcohol and then later repealing this prohibition; and giving women the 
right to vote.  The most recent constitutional amendment -- prohibiting 
a congressional pay raise from taking effect during the Congress in 
which it was adopted -- was ratified on May 7, 1992.

Line-Item Veto

A rescission bill rescinds or cancels, in whole or part, budget 
authority previously granted by Congress to reduce spending or because 
budget authority is no longer needed.  Under current law, rescissions 
proposed by the president must be transmitted in a special message to 
Congress.  Under the 1974 Impoundment Control Act (ICA; P.L. 93-344), 
Congress must complete action on a rescission bill within 45 days of 
continuous session after receipt of the proposal or else the budget 
authority must be made available for obligation.

Budget rules governing rescissions stipulate that if the Appropriations 
Committee does not act on rescissions submitted by the president within 
25 days of continuous session, one-fifth of the members of the House can 
call for discharge of the bill from committee.  (House rules for other 
bills require a waiting period of 30 days and that a majority of members 
sign a discharge petition.)

The Impoundment Control Act of 1974 was the congressional response to 
the Nixon Administration's fondness for rescinding or deferring budget 
authority previously approved by Congress.  This confrontation 
intensified in the 92nd and 93rd Congresses as President Nixon used the 
impoundment tool to reorder national priorities and alter programs 
supported by lawmakers.  In the ICA, Congress required the president to 
inform it of all proposed rescissions and deferrals and submit specific 
information regarding each proposal.  The original provisions of the ICA 
allowed a deferral to take effect unless either the House or the Senate 
took action to disapprove it -- effectively providing for a one-house 
veto.  This procedure was invalidated by the 1983 Supreme Court decision 
in I.N.S. v. Chadha.  In 1986, a federal district court ruled that the 
president's deferral authority under ICA was no longer available, since 
it was inextricably linked to the one-house veto provision in the law.  
The lower court decision was upheld by the appeals court in 1987.  
Congress responded to these rulings with the Balanced Budget Affirmation 
Act (P.L. 100-119), which did away with policy-based deferrals and 
amended the ICA to comply with the court's decision. 
  
The current debate on presidential authority arises out of the fact that 
presidents can veto appropriations bills in their entirety but not in 
part.  Supporters of the line-item veto argue that the president should 
be able to selectively weed out wasteful pork-barrel spending in an 
otherwise good bill.  This Congress, over 20 line-item veto bills have 
been introduced.  The House also has twice passed so-called "expedited 
rescissions" legislation (H.R. 1578 and H.R. 4600), which require 
presidential rescissions to be approved by Congress under accelerated 
committee and floor procedures.  Another version of the line-item veto, 
considered as an amendment to these bills, is the "enhanced rescission" 
proposal, which forces Congress to pass a disapproval bill to block 
proposed presidential cuts.  A constitutional line-
item veto or a stand-alone legislative line-item veto has never been 
considered by the House -- all line-item veto proposals have been 
considered as amendments to other bills, and have either failed or been 
dropped from the final version of the legislation.  Forty-three of the 
nation's governors have a line-item veto authority of some sort.

 
Provisions:

Balanced Budget Amendment

The bill amends the U.S. Constitution to require that total outlays for 
any fiscal year do not exceed total receipts for that year. The 
resolution defines "receipts" as all receipts except those derived from 
borrowing, and "outlays" as all outlays except principal payments on the 
debt.  It requires that the president submit, and Congress pass, a 
balanced budget each fiscal year unless three-fifths of the whole House 
and three-fifths of the whole Senate vote to incur a deficit.  The 
resolution waives the balanced budget requirement for any fiscal year in 
which a declaration of war is in effect or the U.S. is engaged in an 
"imminent and serious threat to national security."  A joint resolution 
indicating this situation must be adopted by a majority of the total 
membership of each house and must be signed by the president.  

The bill stipulates that the federal public debt will be limited to its 
level on the first day of the second fiscal year beginning after 
ratification of the BBA.  The limit may only be increased by a three-
fifths roll call vote in each chamber.  Tax increases must also be 
approved by a three-fifths majority of the membership of each house.  

Finally, the bill mandates that all associated votes must be roll call 
votes, and that the balanced budget requirement will take effect in FY 
2002 or the second fiscal year after it is ratified, whichever is later.

Line-Item Veto

The bill gives the president a permanent legislative line-item veto.  
Under this procedure, the president could strike any appropriation or 
targeted tax provision (a provision that provides special treatment to a 
particular taxpayer or limited class of taxpayers) in any bill.  The 
president is required to submit his rescission proposal within 20 
calendar days (not including weekends or holidays) after Congress 
finally passes a bill or resolution and must submit a separate 
rescission proposal for each piece of legislation.  The president's 
proposed rescissions are to take effect unless Congress disapproves them 
in an up or down vote within 20 days after receipt of the proposal.  If 
the president vetoes the disapproval bill, Congress would have to 
override it by a two-thirds vote.

The bill also sets forth the procedures for Senate consideration of a 
proposed rescission, including limiting debate time on a disapproval 
bill to 10 hours.

Finally, The bill limits a disapproval bill to only those matters 
relating to the proposed rescissions transmitted by the president and 
stipulates that a disapproval bill is unamendable.  These provisions, 
however, are made in accordance with House rules and may be waived by 
the Rules Committee at any point.

This bill is identical to the Michel/Solomon amendment offered during 
House consideration of H.R. 4600, the Expedited Rescissions Act of 1994.  
The amendment was rejected 205-218 on July 14, 1994 (Roll Call #327).