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[House Report 112-378]
[From the U.S. Government Publishing Office]

112th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     112-378
_______________________________________________________________________

                                     

 
                      BASELINE REFORM ACT OF 2012

                               __________

                              R E P O R T

                                 of the

                        COMMITTEE ON THE BUDGET

                        HOUSE OF REPRESENTATIVES

                              to accompany

                               H.R. 3578

                             together with

                             MINORITY VIEWS

January 30, 2012.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed
                        COMMITTEE ON THE BUDGET

                     PAUL RYAN, Wisconsin, Chairman
SCOTT GARRETT, New Jersey            CHRIS VAN HOLLEN, Maryland,
MICHAEL K. SIMPSON, Idaho              Ranking Minority Member
JOHN CAMPBELL, California            ALLYSON Y. SCHWARTZ, Pennsylvania
KEN CALVERT, California              MARCY KAPTUR, Ohio
W. TODD AKIN, Missouri               LLOYD DOGGETT, Texas
TOM COLE, Oklahoma                   EARL BLUMENAUER, Oregon
TOM PRICE, Georgia                   BETTY McCOLLUM, Minnesota
TOM McCLINTOCK, California           JOHN A. YARMUTH, Kentucky
JASON CHAFFETZ, Utah                 BILL PASCRELL, Jr., New Jersey
MARLIN A. STUTZMAN, Indiana          MICHAEL M. HONDA, California
JAMES LANKFORD, Oklahoma             TIM RYAN, Ohio
DIANE BLACK, Tennessee               DEBBIE WASSERMAN SCHULTZ, Florida
REID J. RIBBLE, Wisconsin            GWEN MOORE, Wisconsin
BILL FLORES, Texas                   KATHY CASTOR, Florida
MICK MULVANEY, South Carolina        HEATH SHULER, North Carolina
TIM HUELSKAMP, Kansas                PAUL TONKO, New York
TODD C. YOUNG, Indiana               KAREN BASS, California
JUSTIN AMASH, Michigan
TODD ROKITA, Indiana
FRANK C. GUINTA, New Hampshire
ROB WOODALL, Georgia

                           Professional Staff

                     Austin Smythe, Staff Director
                Thomas S. Kahn, Minority Staff Director

                            C O N T E N T S

                                                                   Page
Baseline Reform Act of 2012......................................     1
    Introduction.................................................     3
    Summary of Proposed Changes..................................     3
    Legislative History..........................................     4
    Hearings.....................................................     6
    Section by Section...........................................     6
    Votes of the Committee.......................................     7
    Committee Oversight Findings.................................     8
    Budget Act Compliance........................................     9
    Performance Goals and Objectives.............................    10
    Constitutional Authority Statement...........................    10
    Committee Cost Estimate......................................    10
    Advisory Committee Statement.................................    10
    Applicability to the Legislative Branch......................    10
    Federal Mandates Statement...................................    10
    Advisory on Earmarks.........................................    10
    Changes in Existing Law Made by the Bill, as Reported........    10
    Views of Committee Members...................................    15

112th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     112-378

======================================================================

                      BASELINE REFORM ACT OF 2012

                                _______
                                

January 30, 2012.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Ryan of Wisconsin, from the Committee on the Budget, submitted the 
                               following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 3578]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Budget, to whom was referred the bill 
(H.R. 3578) to amend the Balanced Budget and Emergency Deficit 
Control Act of 1985 to reform the budget baseline, having 
considered the same, report favorably thereon with an amendment 
and recommend that the bill as amended do pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Baseline Reform Act of 2012''.

SEC. 2. THE BASELINE.

  Section 257 of the Balanced Budget and Emergency Deficit Control Act 
of 1985 is amended to read as follows:

``SEC. 257. THE BASELINE.

  ``(a) In General.--(1) For any fiscal year, the baseline refers to a 
projection of current-year levels of new budget authority, outlays, or 
receipts and the surplus or deficit for the current year, the budget 
year, and the ensuing nine outyears based on laws enacted through the 
applicable date.
  ``(2) The baselines referred to in paragraph (1) shall be prepared 
annually.
  ``(b) Direct Spending and Receipts.--For the budget year and each 
outyear, estimates for direct spending in the baseline shall be 
calculated as follows:
          ``(1) In general.--Laws providing or creating direct spending 
        and receipts are assumed to operate in the manner specified in 
        those laws for each such year and funding for entitlement 
        authority is assumed to be adequate to make all payments 
        required by those laws.
          ``(2) Exceptions.--(A)(i) No program established by a law 
        enacted on or before the date of enactment of the Balanced 
        Budget Act of 1997 with estimated current year outlays greater 
        than $50,000,000 shall be assumed to expire in the budget year 
        or the outyears. The scoring of new programs with estimated 
        outlays greater than $50,000,000 a year shall be based on 
        scoring by the Committees on the Budget or OMB, as applicable. 
        OMB, CBO, and the Committees on the Budget shall consult on the 
        scoring of such programs where there are differences between 
        CBO and OMB.
          ``(ii) On the expiration of the suspension of a provision of 
        law that is suspended under section 171 of Public Law 104-127 
        and that authorizes a program with estimated fiscal year 
        outlays that are greater than $50,000,000, for purposes of 
        clause (i), the program shall be assumed to continue to operate 
        in the same manner as the program operated immediately before 
        the expiration of the suspension.
          ``(B) The increase for veterans' compensation for a fiscal 
        year is assumed to be the same as that required by law for 
        veterans' pensions unless otherwise provided by law enacted in 
        that session.
          ``(C) Excise taxes dedicated to a trust fund, if expiring, 
        are assumed to be extended at current rates.
          ``(D) If any law expires before the budget year or any 
        outyear, then any program with estimated current year outlays 
        greater than $50,000,000 that operates under that law shall be 
        assumed to continue to operate under that law as in effect 
        immediately before its expiration.
          ``(3) Hospital insurance trust fund.--Notwithstanding any 
        other provision of law, the receipts and disbursements of the 
        Hospital Insurance Trust Fund shall be included in all 
        calculations required by this Act.
  ``(c) Discretionary Spending.--For the budget year and each of the 
nine ensuing outyears, the baseline shall be calculated using the 
following assumptions regarding all amounts other than those covered by 
subsection (b):
          ``(1) Estimated appropriations.--Budgetary resources other 
        than unobligated balances shall be at the level provided for 
        the budget year in full-year appropriation Acts. If for any 
        account a full-year appropriation has not yet been enacted, 
        budgetary resources other than unobligated balances shall be at 
        the level available in the current year.
          ``(2) Current-year appropriations.--If, for any account, a 
        continuing appropriation is in effect for less than the entire 
        current year, then the current-year amount shall be assumed to 
        equal the amount that would be available if that continuing 
        appropriation covered the entire fiscal year. If law permits 
        the transfer of budget authority among budget accounts in the 
        current year, the current-year level for an account shall 
        reflect transfers accomplished by the submission of, or assumed 
        for the current year in, the President's original budget for 
        the budget year.
  ``(d) Up-To-Date Concepts.--In calculating the baseline for the 
budget year or each of the nine ensuing outyears, current-year amounts 
shall be calculated using the concepts and definitions that are 
required for that budget year.
  ``(e) Asset Sales.--Amounts realized from the sale of an asset shall 
not be included in estimates under section 251, 251A, 252, or 253 of 
this part or section 5 of the Statutory-Pay-As-You-Go Act of 2010 if 
that sale would result in a financial cost to the Government as 
determined pursuant to scorekeeping guidelines.''.

SEC. 3. ADDITIONAL CBO REPORT TO BUDGET COMMITTEES.

  Section 202(e) of the Congressional Budget Act of 1974 is amended by 
adding at the end the following new paragraphs:
          ``(4)(A) After the President's budget submission under 
        section 1105(a) of title 31, United States Code, in addition to 
        the baseline projections, the Director shall submit to the 
        Committees on the Budget of the House of Representatives and 
        the Senate a supplemental projection assuming extension of 
        current tax policy for the fiscal year commencing on October 1 
        of that year with a supplemental projection for the 10 fiscal-
        year period beginning with that fiscal year, assuming the 
        extension of current tax policy.
          ``(B) For the purposes of this paragraph, the term `current 
        tax policy' means the tax policy in statute as of December 31 
        of the current year assuming--
                  ``(i) the budgetary effects of measures extending the 
                Economic Growth and Tax Relief Reconciliation Act of 
                2001;
                  ``(ii) the budgetary effects of measures extending 
                the Jobs and Growth Tax Relief Reconciliation Act of 
                2003;
                  ``(iii) the continued application of the alternative 
                minimum tax as in effect for taxable years beginning in 
                2011 pursuant to title II of the Tax Relief, 
                Unemployment Insurance Reauthorization, and Job 
                Creation Act of 2010, assuming that for taxable years 
                beginning after 2011 the exemption amount shall equal--
                          ``(I) the exemption amount for taxable years 
                        beginning in 2011, as indexed for inflation; or
                          ``(II) if a subsequent law modifies the 
                        exemption amount for later taxable years, the 
                        modified exemption amount, as indexed for 
                        inflation; and
                  ``(iv) the budgetary effects of extending the estate, 
                gift, and generation-skipping transfer tax provisions 
                of title III of the Tax Relief, Unemployment Insurance 
                Reauthorization, and Job Creation Act of 2010.
          ``(5) On or before July 1 of each year, the Director shall 
        submit to the Committees on the Budget of the House of 
        Representatives and the Senate, the Long-Term Budget Outlook 
        for the fiscal year commencing on October 1 of that year and at 
        least the ensuing 40 fiscal years.''.

                              Introduction

    Representative Rob Woodall (R-GA-7) introduced H.R. 3578, 
the ``Baseline Reform Act of 2012,'' on December 7, 2011. This 
bill reforms the ``baseline,'' to ensure it provides a neutral 
starting point in assessing the budgetary impact of spending 
governed by the appropriations process.

                      Summary of Proposed Changes

The Baseline

    The Balanced Budget and Emergency Deficit Control Act of 
1985 (P.L. 99-177) requires the Congressional Budget Office 
[CBO] and the Office of Management and Budget [OMB] to prepare 
projections of federal spending and revenues. This bill 
requires that such projections cover a ten-year period, which 
is the budget window that has become standard in recent years, 
and specifies the assumptions the two agencies must use in 
making these projections.
    ``Discretionary spending'' refers to spending that is 
dependent on enactment by the Congress of appropriation laws 
providing authority to agencies to spend money. Current law 
requires CBO and OMB to assume that such spending will continue 
over the course of the budget window and increase by inflation. 
These requirements added approximately $1.4 trillion in outlays 
(over ten years) to the discretionary baseline in 2011.
    In addition, there are special exceptions that require CBO 
and OMB to assume additional increases in the baseline for 
expiring housing contracts, social insurance administrative 
expenses, and annualization of federal employee pay. In 
aggregate, these special exceptions added approximately $12 
billion (over ten years) to the discretionary baseline last 
year.
    This assumption of additional spending in the baseline 
evidences a bias toward additional spending. It also creates 
the anomalous situation where a program's funding could be 
increased in comparison to the previous year but still be 
called a cut because the funding level is below the 
inflationary increase assumed in the discretionary baseline.
    The bill removes the inflationary assumption and the 
special exceptions from the discretionary baseline, requiring 
that the baseline assume neither an increase nor a decrease for 
these programs. The baseline provides information to the 
Congress and does not govern what is contained in the budget 
resolution or the appropriations bills that provide legal 
spending authority. As a result, changing the baseline does not 
change funding for these programs, but it does remove an upward 
bias in spending by comparing spending to previous year's 
levels and not an inflated baseline.
    The rules for producing the direct spending and revenue 
baselines are left unchanged as are the rules for assets sales 
and the use of up-to-date concepts.

Current Policy Projection

    Under section 257 of the Balanced Budget and Emergency 
Deficit Control Act of 1985, CBO is required to assume that 
most expiring tax provisions will expire as specified in 
statute when formulating its revenue baseline. While this is an 
accurate measure to score the budgetary impact of legislation 
as compared to current law, it does not provide a useful 
measure of how changes in law would affect current policies. As 
a result, the administration, CBO, the Congress, and outside 
groups frequently use a different baseline that reflects 
current policy instead of current law. Under current law, major 
tax relief is scheduled to expire. This tax relief was extended 
on a bipartisan basis in 2010.
    The bill does not change the current law baseline. Section 
3 of the bill requires the production of a current tax policy 
baseline that assumes the extension of the Economic Growth and 
Tax Relief Reconciliation Act of 2001 (P.L. 107-16); the Jobs 
and Growth Tax Relief Reconciliation Act of 2003 (P.L. 108-27); 
extension of the so-called ``AMT fix'' to keep the Alternative 
Minimum Tax from effecting additional taxpayers; and the 
extension of the estate, gift, and generation-skipping transfer 
tax provisions of title III of the Tax Relief, Unemployment 
Insurance Reauthorization, and Job Creation Act of 2010 (P.L. 
111-312).

Long-Term Budget Outlook

    In 1996, CBO concluded that the 10-year time frame they 
used for preparing budget projections was not sufficient to 
``show the dramatic effects on the federal budget of the 
projected long-term demographic changes in the U.S. 
population.''\1\ Beginning as a special chapter in the May 1996 
edition of its annual Economic and Budget Outlook, the CBO has 
since annually prepared a standalone report on the long-term 
budget outlook. The analysis and projections included in this 
report have become an integral part of the Budget Committees' 
work.
---------------------------------------------------------------------------
    \1\Congressional Budget Office, Long-Term Budgetary Pressures and 
Policy Options, March 1997 http://www.cbo.gov/doc.cfm?index=10&type=0
---------------------------------------------------------------------------
    Section 3 of the bill codifies CBO's current practice of 
providing this report no later than July 1 of each year. The 
Committee, however, urges the CBO to publish this report as 
early as possible each year so that its analysis can inform the 
Members of the Committee as they prepare the annual budget 
resolution.

                          Legislative History

Legislation in the 103d Congress

    In 1993, Representative Jim Ramstad [R-MN-3] introduced 
H.R. 323, the Common Sense Budget Act of 1993. It would have 
required the President's budget submission to include 
comparisons of proposed expenditures and appropriations for the 
budget year with the prior fiscal year.
    In 1994, the House considered H.R. 4907, Baseline Reform 
Act of 1994, offered by Representative John Spratt (D-SC-5). 
Representative Spratt's bill would have added a ``current 
funding baseline'' to accompany the existing--and what the bill 
called ``current policy''--baseline. The current funding 
baseline assumed an adjustment for expiring housing contracts 
but no adjustments for inflation. The House, however, passed an 
amendment in the nature of a substitute, previously introduced 
as H.R. 4914 and as part of H.R. 4434, which would have 
repealed the automatic adjustment in the caps for changes in 
inflation.

Rules Amendments Made in the 104th Congress

    In the 104th Congress, the House Rules were amended by the 
organizing resolution (H. Res. 6) by inserting a requirement 
that a cost estimate of a bill include a comparison of funding 
levels to the previous year's level: Clause 3(c)(2) of rule 
XIII of the House of Representatives for the 112th Congress 
requires of the contents of a report on a bill: ``* * * an 
estimate of new budget authority shall include, when 
practicable, a comparison of the total estimated funding level 
for the relevant programs to the appropriate levels under 
current law.''
    In the 104th Congress, the Rules of the Committee on the 
Budget were amended to require that the report of the Committee 
to accompany a concurrent resolution on the budget include a 
comparison of the estimated or actual levels for the year 
preceding the budget year with the proposed spending and 
revenue levels for the budget year (Rule 25 of the Rules of the 
Committee on the Budget for the 112th Congress).

``Comprehensive Budget Process Reform Act of 1999''

    On February 25, 1999, H.R. 853, Comprehensive Budget 
Process Reform Act of 1999 (106th Congress) was introduced in 
the House of Representatives by Representative Jim Nussle [R-
IA-2]. Sections 611 and 612 of that Act amended the President's 
Budget submission requirements and the Congressional Budget Act 
of 1974 respectively to similarly compare budget year 
discretionary spending to the prior year's spending level. This 
is similar to the provisions of this Act, though not identical. 
This bill failed of passage in the House on May 16, 2000.

``Spending Control Act of 2004''

    On March 16, 2004, H.R. 3973, the Spending Control Act of 
2004 (108th Congress) was introduced in the House of 
Representatives by Representative Jim Nussle [R-IA-2]. Section 
5 of the Act removed the requirement that emergency-designated 
or global war on terrorism-designated spending be continued in 
the baseline under section 257 of the Balanced Budget and 
Emergency Deficit Control Act of 1985. This is similar to 
certain provisions of this Act, though not identical. H.R. 3973 
was reported from the Committee on the Budget on March 19, 2004 
but was not considered on by the House.

``Spending, Deficit, and Debt Control Act of 2009''

    On October 29, 2009, H.R. 3964, the ``Spending, Deficit, 
and Debt Control Act of 2009'' was introduced in the House by 
Representative Jeb Hensarling [R-TX-5]. The bill eliminates the 
automatic inflation increases for discretionary programs built 
into the baseline projections of future spending needs and 
requires budget estimates to be compared with the prior year's 
level, not a calculation of the level to which they should be 
increased.

``Zero-Baseline Budget Act of 2011''

    On March 3, 2011, H.R. 920, the ``Zero-Baseline Budget Act 
of 2011'' was introduced in the House by Representative Louie 
Gohmert [R-TX-1]. It amends the Balanced Budget and Emergency 
Control Act of 1985 to change the formula the CBO must use to 
calculate its discretionary baseline. The bill was designed to 
eliminate any sequential and cumulative automatic increases in 
the baseline for inflation (or for any other reason) and 
exclude emergency and supplemental spending. The baseline would 
be the aggregate of the non-emergency appropriations bill for 
that year.

Legislation in the 112th Congress

    On December 7, 2011, Members of the House Budget Committee 
introduced a comprehensive package of ten legislative budget 
process reform bills designed to fundamentally reform the 
budget process. Included in this package was H.R. 3578, the 
``Baseline Reform Act of 2011,'' introduced by Representative 
Rob Woodall [R-GA-7].

                                Hearings

    In 2011, the House Budget Committee held two budget process 
reform hearings to examine the budget process.
    The first hearing, ``The Broken Budget Process: 
Perspectives From Former CBO Directors,'' was held on September 
21, 2011, with former CBO Directors Rudolph Penner and Alice 
Rivlin testifying.
    The second hearing, ``The Broken Budget Process: 
Perspectives From Budget Experts,'' was held on September 22, 
2011, with Philip Joyce (University of Maryland), the Honorable 
Jim Nussle (Chairman of the Committee on the Budget, 2001 
through 2007, United States House of Representatives) and the 
Honorable Phil Gramm (former United States Senator, 1985--2002) 
testifying.

                           Section by Section

SECTION 1. SHORT TITLE.

  This section provides for the short title of the Act: 
``Baseline Reform Act of 2011''.

SECTION 2. THE BASELINE.

  This section amends section 257 of the Balanced Budget and 
Emergency Deficit Control Act of 1985 (P.L. 109-59) to remove 
the increases in the discretionary baseline attributable to 
inflation, expiring housing contracts, social insurance 
administrative expenses, and pay annualization. The 
discretionary spending in the baseline to be calculated uses 
the following assumptions:
          (1) For any estimated appropriations, the budgetary 
        resources other than unobligated balances are to be at 
        the level provided for the budget year in full-year 
        appropriation acts. If a full-year appropriation has 
        not been enacted, budgetary resources, other than 
        unobligated balances, are to be at the level available 
        in the current year.
          (2) For any continuing appropriation in effect for 
        less than an entire year, the current-year amount is 
        assumed to equal the amount that would be available if 
        that continuing appropriation lasted the entire fiscal 
        year. If law permits the transfer of budget authority 
        among budget accounts in a current year, the current 
        level is to reflect transfers assumed in the 
        President's original budget.
  This section makes a number of technical and typographic 
corrections, but no other substantive modifications to current 
law.

SECTION 3. ADDITIONAL CBO REPORT TO BUDGET COMMITTEES.

  This section amends section 202(e) of the Congressional 
Budget Act of 1974 by requiring the Director of the 
Congressional Budget Office to submit, together with the 
analysis of the President's budget submission, a supplemental 
budget projection that assumes the extension of the Economic 
Growth and Tax Relief Reconciliation Act of 2001; the Jobs and 
Growth Tax Relief Reconciliation Act of 2003; extension of the 
``Alternative Minimum Tax fix''; and the extension of the 
estate, gift, and generation-skipping transfer tax provisions 
of title III of the Tax Relief, Unemployment Insurance 
Reauthorization, and Job Creation Act of 2010.
  It requires the Director of the Congressional Budget Office 
submit the agency's Long-Term Budget Outlook on or before July 
1 of each year and that the outlook cover at least a 40-fiscal-
year period.

                         Votes of the Committee

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires each committee report to accompany any 
bill or resolution of a public character to include the total 
number of votes cast for and against each rollcall vote, on a 
motion to report and any amendments offered to the measure or 
matter, together with the names of those voting for and 
against.
    Listed below are the actions taken in the Committee on the 
Budget of the House of Representatives on the Baseline Reform 
Act of 2012.
    On January 24, 2012, the committee met in open session, a 
quorum being present.
    Chairman Ryan asked unanimous consent to be authorized, 
consistent with clause 4 of rule XVI of the Rules of the House 
of Representatives, to declare a recess at any time during the 
committee meeting.
    There was no objection to the unanimous consent request.
    Chairman Ryan asked unanimous consent to dispense with the 
first reading of the bill and the bill be considered as read 
and open to amendment at any point.
    There was no objection to the unanimous consent request.
    The committee adopted and ordered reported the Baseline 
Reform Act of 2012 by a rollcall vote of 21 ayes and 12 noes.
    The committee took the following votes:

                                H.R. 3578
------------------------------------------------------------------------
 Name &                      Answer    Name &                    Answer
 State     Aye       No     Present     State     Aye     No     Present
------------------------------------------------------------------------
RYAN        X                         VAN                  X
 (WI)                                  HOLLEN
 (Chair                                (MD)
 man)                                  (Rankin
                                       g)
------------------------------------------------------------------------
GARRETT     X                         SCHWARTZ
 (NJ)                                  (PA)
------------------------------------------------------------------------
SIMPSON     X                         KAPTUR
 (ID)                                  (OH)
------------------------------------------------------------------------
CAMPBEL     X                         DOGGETT              X
 L (CA)                                (TX)
------------------------------------------------------------------------
CALVERT     X                         BLUMENAU             X
 (CA)                                  ER (OR)
------------------------------------------------------------------------
AKIN        X                         McCOLLUM             X
 (MO)                                  (MN)
------------------------------------------------------------------------
COLE                                  YARMUTH              X
 (OK)                                  (KY)
------------------------------------------------------------------------
PRICE       X                         PASCRELL             X
 (GA)                                  (NJ)
------------------------------------------------------------------------
McCLINT     X                         HONDA                X
 OCK                                   (CA)
 (CA)
------------------------------------------------------------------------
CHAFFET     X                         RYAN                 X
 Z (UT)                                (OH)
------------------------------------------------------------------------
STUTZMA     X                         WASSERMA             X
 N (IN)                                N
                                       SCHULTZ
                                       (FL)
------------------------------------------------------------------------
LANKFOR     X                         MOORE                X
 D (OK)                                (WI)
------------------------------------------------------------------------
BLACK       X                         CASTOR
 (TN)                                  (FL)
------------------------------------------------------------------------
RIBBLE      X                         SHULER
 (WI)                                  (NC)
------------------------------------------------------------------------
FLORES      X                         TONKO                X
 (TX)                                  (NY)
------------------------------------------------------------------------
MULVANE     X                         BASS                 X
 Y (SC)                                (CA)
------------------------------------------------------------------------
HUELSKA     X                         ........
 MP
 (KS)
------------------------------------------------------------------------
YOUNG       X                         ........
 (IN)
------------------------------------------------------------------------
AMASH       X                         ........
 (MI)
------------------------------------------------------------------------
ROKITA      X                         ........
 (IN)
------------------------------------------------------------------------
GUINTA      X                         ........
 (NH)
------------------------------------------------------------------------
WOODALL     X
 (GA)
------------------------------------------------------------------------

    Mr. Honda, made a unanimous consent request to let the 
record reflect he would have voted no on the roll-call vote.
    Mr. Garrett made a motion that, pursuant to clause 1 of 
rule XXII of the Rules of the House of Representatives, the 
Chairman be authorized to offer such motions as may be 
necessary in the House to go to conference with the Senate, and 
staff be authorized to make any necessary technical and 
conforming changes to the bill.
    The motion was agreed to without objection.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee on the Budget's 
oversight findings and recommendations are reflected in the 
body of this report.

                         Budget Act Compliance

    The provisions of clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives and section 308(a)(1) of the 
Congressional Budget Act of 1974 (relating to estimates of new 
budget authority, new spending authority, new credit authority, 
or increased or decreased revenues or tax expenditures) are not 
considered applicable. The estimate and comparison required to 
be prepared by the Director of the Congressional Budget Office 
under clause 3(c)(3) of rule XIII of the Rules of the House of 
Representatives and sections 402 and 423 of the Congressional 
Budget Act of 1974 submitted to the committee prior to the 
filing of this report are as follows:

                       Congressional Budget Office,
                                             U.S. Congress,
                                  Washington, DC, January 27, 2012.
Hon. Paul Ryan, Chairman,
Committee on the Budget, U.S. House of Representatives, Washington, DC 
        20515.
    Dear Mr. Chairman: The Congressional Budget Office has prepared the 
enclosed cost estimate for H.R. 3578, the Baseline Reform Act of 2012.
    If you wish further details on this estimate, we will be pleased to 
provide them. The CBO staff contact is Jared Brewster, who can be 
reached at 226-2880.
            Sincerely,
                                      Douglas W. Elmendorf,
                                                          Director.

Enclosure:
    cc: Hon. Chris Van Hollen, Ranking Member.
                                 ______
                                 
               congressional budget office cost estimate
                            january 27, 2012

                 H.R. 3578: Baseline Reform Act of 2012

As ordered reported by the House Committee on the Budget on January 24, 
                                  2012

    H.R. 3578 would change certain assumptions governing baseline 
budget projections and require the Congressional Budget Office to 
provide a supplemental report to the House and Senate Committees on the 
Budget. CBO estimates that enacting H.R. 3578, by itself, would not 
have a significant impact on the federal budget. Any impact on the 
budget would depend on the extent of future legislative actions by the 
Congress and the President. Enacting H.R. 3578 would not affect direct 
spending or revenues; therefore, pay-as-you-go procedures do not apply.
    The legislation would change the way in which appropriations for 
individual accounts are projected in CBO's baseline. Under H.R. 3578, 
projections of such spending would still be based on the current year's 
appropriations, but would not be adjusted for inflation going forward. 
Other adjustments to discretionary projections of future discretionary 
spending would also be eliminated. (In its baseline, CBO assumes that 
appropriations through 2021 will comply with the caps and other 
provisions of the Budget Control Act of 2011; as a result, the method 
of extrapolating discretionary spending may not affect the totals 
reported in CBO's projections.)
    Furthermore, H.R. 3578 would require CBO to provide the budget 
committees a supplemental report showing the effects of extending 
certain tax policies not currently assumed in CBO's baseline. It would 
also require that CBO produce its Long-Term Budget Outlook annually. 
Any additional administrative costs to implement H.R. 3578 would be 
insignificant, because CBO already carries out similar activities.
    H.R. 3578 contains no intergovernmental or private-sector mandates, 
as defined in the Unfunded Mandates Reform Act and--by itself--would 
have no impact on the budgets of state, local, or tribal governments. 
Any budgetary effects would depend on subsequent legislative action.
    The CBO staff contact for this estimate is Jared Brewster, who can 
be reached at 226-2880. The estimate was approved Theresa Gullo, Deputy 
Assistant Director for Budget Analysis.

                    Performance Goals and Objectives

    With respect to the requirement of clause 3(c)(4) of rule 
XIII of the Rules of the House of Representatives, the 
performance goals and objectives of this legislation are to 
modify the rules for creating the budgetary baseline to provide 
a neutral starting point for the annual consideration of 
discretionary appropriations and ensure Congress has timely 
access to supplementary information on the fiscal environment 
both in the medium and long term.

                   Constitutional Authority Statement

    Pursuant to clause 7 of rule XII of the Rules of the House 
of Representatives, the committee finds the constitutional 
authority for this legislation in Article I, section 9, clause 
7.

                        Committee Cost Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the committee report incorporates the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to sections 402 and 423 of the 
Congressional Budget Act of 1974.

                      Advisory Committee Statement

    No advisory committee within the meaning of section 5(b) of 
the Federal Advisory Committee Act was created by this 
legislation.

                Applicability to the Legislative Branch

    The committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act (Public Law 
104-1).

                       Federal Mandates Statement

    The committee adopted the estimate of federal mandates 
prepared by the Director of the Congressional Budget Office 
pursuant to section 423 of the Unfunded Mandates Reform Act 
(Public Law 104-4).

                          Advisory on Earmarks

    In accordance with clause 9 of rule XXI of the Rules of the 
House of Representatives, H.R. 3578 does not contain any 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as defined in clause 9(e), 9(f), or 9(g) of rule XXI 
of the Rules of the House of Representatives.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

BALANCED BUDGET AND EMERGENCY DEFICIT CONTROL ACT OF 1985

           *       *       *       *       *       *       *

  PART C--EMERGENCY POWERS TO ELIMINATE DEFICITS IN EXCESS OF MAXIMUM 
DEFICIT AMOUNT

           *       *       *       *       *       *       *

[SEC. 257. THE BASELINE.

  [(a) In General.--For any budget year, the baseline refers to 
a projection of current-year levels of new budget authority, 
outlays, revenues, and the surplus or deficit into the budget 
year and the outyears based on laws enacted through the 
applicable date.
  [(b) Direct Spending and Receipts.--For the budget year and 
each outyear, the baseline shall be calculated using the 
following assumptions:
          [(1) In general.--Laws providing or creating direct 
        spending and receipts are assumed to operate in the 
        manner specified in those laws for each such year and 
        funding for entitlement authority is assumed to be 
        adequate to make all payments required by those laws.
          [(2) Exceptions.--(A)(i) No program established by a 
        law enacted on or before the date of enactment of the 
        Balanced Budget Act of 1997 with estimated current year 
        outlays greater than $50,000,000 shall be assumed to 
        expire in the budget year or the outyears. The scoring 
        of new programs with estimated outlays greater than 
        $50,000,000 a year shall be based on scoring by the 
        Committees on Budget or OMB, as applicable. OMB, CBO, 
        and the Budget Committees shall consult on the scoring 
        of such programs where there are differenes between CBO 
        and OMB.
          [(ii) On the expiration of the suspension of a 
        provision of law that is suspended under section 171 of 
        Public Law 104-127 and that authorizes a program with 
        estimated fiscal year outlays that are greater than 
        $50,000,000, for purposes of clause (i), the program 
        shall be assumed to continue to operate in the same 
        manner as the program operated immediately before the 
        expiration of the suspension.
          [(B) The increase for veterans' compensation for a 
        fiscal year is assumed to be the same as that required 
        by law for veterans' pensions unless otherwise provided 
        by law enacted in that session.
          [(C) Excise taxes dedicated to a trust fund, if 
        expiring, are assumed to be extended at current rates.
          [(D) If any law expires before the budget year or any 
        outyear, then any program with estimated current year 
        outlays greater than $50,000,000 that operates under 
        that law shall be assumed to continue to operate under 
        that law as in effect immediately before its 
        expiration.
          [(3) Hospital insurance trust fund.--Notwithstanding 
        any other provision of law, the receipts and 
        disbursements of the Hospital Insurance Trust Fund 
        shall be included in all calculations required by this 
        Act.
  [(c) Discretionary Appropriations.--For the budget year and 
each outyear, the baseline shall be calculated using the 
following assumptions regarding all amounts other than those 
covered by subsection (b):
          [(1) Inflation of current-year appropriations.--
        Budgetary resources other than unobligated balances 
        shall be at the level provided for the budget year in 
        full-year appropriation Acts. If for any account a 
        full-year appropriation has not yet been enacted, 
        budgetary resources other than unobligated balances 
        shall be at the level available in the current year, 
        adjusted sequentially and cumulatively for expiring 
        housing contracts as specified in paragraph (2), for 
        social insurance administrative expenses as specified 
        in paragraph (3), to offset pay absorption and for pay 
        annualization as specified in paragraph (4), for 
        inflation as specified in paragraph (5), and to account 
        for changes required by law in the level of agency 
        payments for personnel benefits other than pay.
          [(2) Expiring housing contracts.--New budget 
        authority to renew expiring multiyear subsidized 
        housing contracts shall be adjusted to reflect the 
        difference in the number of such contracts that are 
        scheduled to expire in that fiscal year and the number 
        expiring in the current year, with the per-contract 
        renewal cost equal to the average current-year cost of 
        renewal contracts.
          [(3) Social insurance administrative expenses.--
        Budgetary resources for the administrative expenses of 
        the following trust funds shall be adjusted by the 
        percentage change in the beneficiary population from 
        the current year to that fiscal year: the Federal 
        Hospital Insurance Trust Fund, the Supplementary 
        Medical Insurance Trust Fund, the Unemployment Trust 
        Fund, and the railroad retirement account.
          [(4) Pay annualization; offset to pay absorption.--
        Current-year new budget authority for Federal employees 
        shall be adjusted to reflect the full 12-month costs 
        (without absorption) of any pay adjustment that 
        occurred in that fiscal year.
          [(5) Inflators.--The inflator used in paragraph (1) 
        to adjust budgetary resources relating to personnel 
        shall be the percent by which the average of the Bureau 
        of Labor Statistics Employment Cost Index (wages and 
        salaries, private industry workers) for that fiscal 
        year differs from such index for the current year. The 
        inflator used in paragraph (1) to adjust all other 
        budgetary resources shall be the percent by which the 
        average of the estimated gross domestic product chain-
        type price index for that fiscal year differs from the 
        average of such estimated index for the current year.
          [(6) Current-year appropriations.--If, for any 
        account, a continuing appropriation is in effect for 
        less than the entire current year, then the current-
        year amount shall be assumed to equal the amount that 
        would be available if that continuing appropriation 
        covered the entire fiscal year. If law permits the 
        transfer of budget authority among budget accounts in 
        the current year, the current-year level for an account 
        shall reflect transfers accomplished by the submission 
        of, or assumed for the current year in, the President's 
        original budget for the budget year.
  [(d) Up-to-Date Concepts.--In deriving the baseline for any 
budget year or outyear, current-year amounts shall be 
calculated using the concepts and definitions that are required 
for that budget year.
  [(e) Asset Sales.--Amounts realized from the sale of an asset 
shall not be included in estimates under section 251, 252, or 
253 if that sale would result in a financial cost to the 
Federal Government as determined pursuant to scorekeeping 
guidelines.]

SEC. 257. THE BASELINE.

  (a) In General.--(1) For any fiscal year, the baseline refers 
to a projection of current-year levels of new budget authority, 
outlays, or receipts and the surplus or deficit for the current 
year, the budget year, and the ensuing nine outyears based on 
laws enacted through the applicable date.
  (2) The baselines referred to in paragraph (1) shall be 
prepared annually.
  (b) Direct Spending and Receipts.--For the budget year and 
each outyear, estimates for direct spending in the baseline 
shall be calculated as follows:
          (1) In general.--Laws providing or creating direct 
        spending and receipts are assumed to operate in the 
        manner specified in those laws for each such year and 
        funding for entitlement authority is assumed to be 
        adequate to make all payments required by those laws.
          (2) Exceptions.--(A)(i) No program established by a 
        law enacted on or before the date of enactment of the 
        Balanced Budget Act of 1997 with estimated current year 
        outlays greater than $50,000,000 shall be assumed to 
        expire in the budget year or the outyears. The scoring 
        of new programs with estimated outlays greater than 
        $50,000,000 a year shall be based on scoring by the 
        Committees on the Budget or OMB, as applicable. OMB, 
        CBO, and the Committees on the Budget shall consult on 
        the scoring of such programs where there are 
        differences between CBO and OMB.
          (ii) On the expiration of the suspension of a 
        provision of law that is suspended under section 171 of 
        Public Law 104-127 and that authorizes a program with 
        estimated fiscal year outlays that are greater than 
        $50,000,000, for purposes of clause (i), the program 
        shall be assumed to continue to operate in the same 
        manner as the program operated immediately before the 
        expiration of the suspension.
          (B) The increase for veterans' compensation for a 
        fiscal year is assumed to be the same as that required 
        by law for veterans' pensions unless otherwise provided 
        by law enacted in that session.
          (C) Excise taxes dedicated to a trust fund, if 
        expiring, are assumed to be extended at current rates.
          (D) If any law expires before the budget year or any 
        outyear, then any program with estimated current year 
        outlays greater than $50,000,000 that operates under 
        that law shall be assumed to continue to operate under 
        that law as in effect immediately before its 
        expiration.
          (3) Hospital insurance trust fund.--Notwithstanding 
        any other provision of law, the receipts and 
        disbursements of the Hospital Insurance Trust Fund 
        shall be included in all calculations required by this 
        Act.
  (c) Discretionary Spending.--For the budget year and each of 
the nine ensuing outyears, the baseline shall be calculated 
using the following assumptions regarding all amounts other 
than those covered by subsection (b):
          (1) Estimated appropriations.--Budgetary resources 
        other than unobligated balances shall be at the level 
        provided for the budget year in full-year appropriation 
        Acts. If for any account a full-year appropriation has 
        not yet been enacted, budgetary resources other than 
        unobligated balances shall be at the level available in 
        the current year.
          (2) Current-year appropriations.--If, for any 
        account, a continuing appropriation is in effect for 
        less than the entire current year, then the current-
        year amount shall be assumed to equal the amount that 
        would be available if that continuing appropriation 
        covered the entire fiscal year. If law permits the 
        transfer of budget authority among budget accounts in 
        the current year, the current-year level for an account 
        shall reflect transfers accomplished by the submission 
        of, or assumed for the current year in, the President's 
        original budget for the budget year.
  (d) Up-To-Date Concepts.--In calculating the baseline for the 
budget year or each of the nine ensuing outyears, current-year 
amounts shall be calculated using the concepts and definitions 
that are required for that budget year.
  (e) Asset Sales.--Amounts realized from the sale of an asset 
shall not be included in estimates under section 251, 251A, 
252, or 253 of this part or section 5 of the Statutory-Pay-As-
You-Go Act of 2010 if that sale would result in a financial 
cost to the Government as determined pursuant to scorekeeping 
guidelines.

           *       *       *       *       *       *       *

                              ----------                              

CONGRESSIONAL BUDGET ACT OF 1974

           *       *       *       *       *       *       *

TITLE II--CONGRESSIONAL BUDGET OFFICE

           *       *       *       *       *       *       *

                          DUTIES AND FUNCTIONS

  Sec. 202. (a) * * *

           *       *       *       *       *       *       *

  (e) Reports to Budget Committees.--
          (1) * * *

           *       *       *       *       *       *       *

          (4)(A) After the President's budget submission under 
        section 1105(a) of title 31, United States Code, in 
        addition to the baseline projections, the Director 
        shall submit to the Committees on the Budget of the 
        House of Representatives and the Senate a supplemental 
        projection assuming extension of current tax policy for 
        the fiscal year commencing on October 1 of that year 
        with a supplemental projection for the 10 fiscal-year 
        period beginning with that fiscal year, assuming the 
        extension of current tax policy.
          (B) For the purposes of this paragraph, the term 
        ``current tax policy'' means the tax policy in statute 
        as of December 31 of the current year assuming--
                  (i) the budgetary effects of measures 
                extending the Economic Growth and Tax Relief 
                Reconciliation Act of 2001;
                  (ii) the budgetary effects of measures 
                extending the Jobs and Growth Tax Relief 
                Reconciliation Act of 2003;
                  (iii) the continued application of the 
                alternative minimum tax as in effect for 
                taxable years beginning in 2011 pursuant to 
                title II of the Tax Relief, Unemployment 
                Insurance Reauthorization, and Job Creation Act 
                of 2010, assuming that for taxable years 
                beginning after 2011 the exemption amount shall 
                equal--
                          (I) the exemption amount for taxable 
                        years beginning in 2011, as indexed for 
                        inflation; or
                          (II) if a subsequent law modifies the 
                        exemption amount for later taxable 
                        years, the modified exemption amount, 
                        as indexed for inflation; and
                  (iv) the budgetary effects of extending the 
                estate, gift, and generation-skipping transfer 
                tax provisions of title III of the Tax Relief, 
                Unemployment Insurance Reauthorization, and Job 
                Creation Act of 2010.
          (5) On or before July 1 of each year, the Director 
        shall submit to the Committees on the Budget of the 
        House of Representatives and the Senate, the Long-Term 
        Budget Outlook for the fiscal year commencing on 
        October 1 of that year and at least the ensuing 40 
        fiscal years.

           *       *       *       *       *       *       *

                       Views of Committee Members

    Clause 2(l) of rule XI of the Rules of the House of 
Representatives requires each committee to provide two days to 
Members of the committee to file Minority, additional, 
supplemental, or dissenting views and to include such views in 
the report on legislation considered by the committee. The 
following views were submitted:

                             MINORITY VIEWS

    Although there are large differences in budget priorities 
between the parties, we share a common goal of putting the 
federal budget on a fiscally sustainable path. We all want the 
federal government to be efficient, to focus scarce resources 
where they can do the most good, and to not waste a single dime 
of taxpayer dollars. And we want our budget laws to help 
support those goals.
    Budget process rules and laws can make a difference. For 
instance, the PAYGO principle that has been in effect at 
different periods has played a useful role in preventing the 
deficit from getting even worse. But budget process changes 
will never be a substitute for tackling the difficult fiscal 
questions facing us today. It is not that the budget process 
does not work, it is that Congress has failed to follow the 
rules already on the books.
    The Budget Committee has held two hearings on the general 
topic of budget process reform and the recommendations crossed 
party lines. Former Budget Committee Chairman Jim Nussle, a 
Republican witness, testified that ``It may not be that the 
budget process is broken. It may not be, in other words, that 
tools are broken, but it may be the fact that the tools are not 
even being used.'' Similarly, Dr. Philip Joyce, former 
Congressional Budget Office (CBO) staff member and a Democratic 
witness, testified that ``My main message is that most of the 
tools that you need to solve the budget problems faced by the 
country are already in your toolbox. If the goal is to deal 
with the larger fiscal imbalance that faces us, the most 
important thing to do is to make use of them, not search for 
more tools.''
    The reason we are not following the existing budget rules 
is that Republicans have shown a lack of political will and an 
unwillingness to compromise. Until Republicans are willing to 
support a balanced approach, we will never address the urgent 
need to put Americans back to work and to put our nation on a 
path toward long-term fiscal sustainability. Unfortunately, the 
Baseline Budget Reform Act of 2012 does nothing to create a 
single job, to reduce the deficit by a single penny, or to put 
the country on a fiscally sustainable path.
    Instead, this bill would obscure the size of the fiscal 
problem facing us. The bill mandates a fundamental change in 
how CBO forecasts future discretionary spending in its 
baseline, requiring CBO to assume that current spending is set 
below real purchasing power levels in all future years rather 
than have it track growth in overall prices. Over the next few 
years, this change may not affect CBO's baseline total estimate 
of discretionary spending because the total baseline will 
reflect the discretionary caps under the Budget Control Act. 
However, a permanent approach to budgeting and forecasting that 
fails to account for the real cost of goods and services will 
present a distorted picture of the federal budget outlook. The 
American public should not be deceived to believe that the 
government can maintain the same level of services while real 
funding is cut. Over time, as programs are slowly starved, 
backlogs will increase and program failures, such as terrible 
conditions at the former Walter Reed Army Medical Center that 
came to light in 2007, are inevitable.
    Other provisions in the bill ask for supplemental 
information and reports that are already being produced by CBO 
on a routine basis. Requiring this information via legislation 
is not necessary, and does nothing to move us forward to 
improve the government's fiscal outlook or the economy.
    It is imperative that we get Americans back to work and get 
our fiscal house in order. The bill does nothing to achieve 
either goal. Instead, it pretends that budget process reform in 
the form of changing the way the discretionary baseline is 
calculated is the answer to solve our very real problems.

                                   Chris Van Hollen.
                                   Mike M. Honda.
                                   Earl Blumenauer.
                                   Paul Tonko.
                                   Bill Pascrell, Jr.
                                   Gwen Moore.
                                   Betty McCollum.
                                   Allyson Y. Schwartz.
                                   Debbie Wasserman Schultz.
                                   Karen Bass.

                                  
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