Supplemental Appropriations for FY2002: Combating Terrorism and Other Issues
Released: 2002-08-30T00:00:00

Most Recent Developments

On August 13, President Bush announced that he would not utilize $5.1 billion of contingentemergency spending Congress had provided as part of a $28.9 billion FY2002 SupplementalAppropriation ( P.L. 107-206 ; H.R. 4775).

The funding designated as contingent emergency spending was either not requested by the President or reflected higher levels for certain programs than in the Administration's request. Underthe terms of P.L. 107-206 , the President had 30 days after enactment (September 1) to decidewhether to designate all or none of the $5.1 billion as emergency funding. If he chose to agree withCongress and use the $5.1 billion, he would have had to submit a budget amendment specifying theemergency designation. The August 13 decision, however, has the effect, in terms used by the WhiteHouse, of a "pocket veto" by the President of the contingent emergency spending. Funds that willnot be used include about $500 million for DOD funding, $275 million for veterans' medical care,and about $700 million for foreign assistance including $250 million in aid for Israel and thePalestinians, and $200 million in HIV/AIDS funding. White House officials said, however, that theAdministration would seek about $1 billion of the $5.1 billion as an amended FY2003 appropriationrequest, including funds for Israel, the Palestinians, international HIV/AIDS, and theTransportation Security Agency. (See Table 4 below for a complete list of the affected programs.)

The President's decision not to use the contingency funds makes significant changes in the policy priorities endorsed by Congress. DOD lost about $1 billion in contingency funds, butmaintained a 56% share of total funding in P.L. 107-206 compared with 50% in the bill as clearedby Congress. Homeland security funds for preparedness activities had been allocated over $750million in the enacted appropriation but two-thirds of that amount was designated contingentemergency and will not be spent. Likewise, Congress had included nearly $1.9 billion for securityof infrastructure and personnel in the enacted bill, two-thirds of which is contingent emergencymoney. Resources for preparedness and infrastructure/personnel security purposes had accountedfor 9% of the appropriation cleared by Congress, but represent only 4% of funds that are nowavailable.

As a result of the President's August 13 decision not to utilize the contingent emergency funds, the size of the FY2002 supplemental appropriation drops from $28.9 billion to $23.9 billion. Thetotal includes $13.4 billion for defense, $1.2 billion in foreign aid and embassy security aimed atcombating terrorism aborad, $5.5 billion for New York, and $4.4 billion for homeland security. Funding for Pell grants ($1 billion) and other, non-terrorism related activities, combined withrecessions and offsets, brings the total appropriation to $23.9 billion.

Introduction

Submitted on March 21, 2002 as an emergency supplemental request to combat terrorism, mostof the Administration's $28.4 billion request was not subject to the budget ceilings that apply toFY2002. The Administration's request was split almost evenly between the Department of Defense(DOD) ($14 billion) and other agencies ($14.4 billion). Like the Emergency Terrorism Response(ETR) supplemental, the first supplemental to combat terrorism, the FY2002 request would provideadditional funding for the war in Afghanistan, New York City, and airport security. Other policypriorities, such as bioterrorism and investigative activities, received less emphasis in this request.The Administration also included new funding proposals and policy provisions in foreign assistance.

On the defense side, the request included $14 billion to continue support of the war in Afghanistan, enhance security at defense installations, increase munition stockpiles, and upgradecommand, control, communications and intelligence. Over half of DOD's request was related tocontinued prosecution of the war in Afghanistan. Like the first supplemental to combat terrorism,the DOD request included substantial funding for intelligence and classified programs.

The Administration requested general provisions that would grant the Department of Defense new authorities to select the recipients and administer up to $580 million in funds that could be usedto support foreign governments who play a significant role in assisting the U.S. in the "global waron terrorism." (1) These proposed authorities, whichwould set new precedents, generated somecontroversy on the Hill.

On the non-defense side, the request provided $5.5 billion in additional aid for New York, whose needs were considered by some Members of Congress to have been shortchanged in the firstemergency supplemental. The $5.5 billion included in the request is intended to fulfill thePresident's March 10, 2002 pledge to the new Mayor of New York, Michael Bloomberg, to provideNew York City with a total of $21.5 billion to help it recover from the terrorist attacks. (2)

The NewYork aid would be dedicated to additional disaster recovery activities, rebuilding mass transit andutility infrastructure, and community development block grants.

Finally, another potential arena for controversy was the Administration's request for $4.4 billion for the newly established Transportation Security Administration (TSA) to upgrade aviation securitywhere there remains considerable uncertainty about the extent of the funding needed, as well as thesize of the new federal workforce required to provided the augmented airport security.

Composition of FY2002 Emergency Supplemental Request

Of the $28.4 billion request by the Administration, 49% would be provided to the Departmentof Defense (DOD) with the remaining $14.4 billion split among non-defense agencies (see Table1 ), including the Administration's request of $1.3 billion for Pell grants.

The Distribution of Funds by Agency

As discussed below, the funds requested by the Administration would not only support the continued prosecution of the war in Afghanistan and related areas for the remainder of the year, butalso homeland security activities. Such activities included maintaining higher security levels atstateside bases and combat air patrols on both coasts, and building up DOD's stocks of precisionguided munitions and enhancing various command, control, communications and classifiedprograms (see below).

The major changes to the Administration's request made by the House and the Senate and final conference action are shown in Table 1 and discussed below and in the individual sections oncongressional action.

For non-defense agencies, under the Administration's request, the Transportation Department would receive $6.6 billion, a quarter of the total request to pay for new explosive detectionequipment and civilian guards at airports and to rebuild public mass transportation in New YorkCity. (3) Funding requests for the Federal EmergencyManagement Agency (FEMA) and theDepartment of Housing and Urban Development (HUD) was also part of the aid for New York City.The Labor Department's request was for aid for dislocated workers. The Administration's requestalso included $1.6 billion for the State Department and USAID for various foreign assistanceinitiatives, focused primarily on those countries deemed to be "front-line" states in the war againstterrorism. The Administration's February budget also included $1.3 billion for Pell grants that wasto be offset by rescissions in the Labor, HHS funding. (4)

Table 1. Allocations of Funds in FY2002 Emergency Supplemental to Combat Terrorism by Agency (in billions of dollars ofdiscretionary budget authority)

Notes :

a Reflects President Bush's decision not to designate $5.1 billion in contingent emergencyfunding.

b Includes all spending, emergency, contingent emergency, and non-emergency spendingoffset byrescissions and offsets. Also includes Administration's request for Pell grants that wassubmitted in Administration's FY2003 budget.

c Pell grant funds. The Administration had requested $1.3 billion for FY2002 supplementalPellgrants in its regular FY2003 budget submission in February.

d Excludes $1.1 billion increase in mandatory spending for VA disability claims that was requestedby the Administration on May 21, 2002, and included by the Senate, and in the enacted version.

e "Other" includes activities unrelated to homeland security and combating the war onterrorism,such as funds for election reform and HIV/AIDS, as well as miscellaneous rescissions andoffsets.

Sources: Letter of President Bush to the Speaker of the House transmitting the FY2002 EmergencySupplemental request, March 21, 2002, available on GPO's Web site at http://w3.access.gpo.gov/usbudget/fy2003/amndsup.html ; H.R. 4775 as passed by the House and Senate, H.Rept.107-480 , S.Rept. 107-156 , H.Rept. 107-593 , and CRS calculations. Totals may not add due torounding.

Policy Priorities in the Administration's Request and the Enacted Verison

Funding proposed in the FY2002 supplemental could be grouped into several major categories for purposes of identifying and understanding significant policy priorities and how these prioritiescontinue or depart from resource allocations enacted last year in the FY2001 Emergency TerrorismResponse (ETR) supplemental. Major policy priorities are defined the text box below, and Figure1 and Figure 2 and Table 2 below for the policy priorities and theamounts requested for each policyarea in the Administration's request and compares them with the ETR supplemental and with House,Senate, and conference action.

Similarities Between FY2002 Request and ETR. Both emergency supplementals emphasized defense and recovery needs, with physical security ofinfrastructure and aviation close behind. Although DOD would receive substantial funding in boththe Emergency Terrorism Response (ETR) supplemental of 2001and the new supplemental, DOD'sshare in the FY2002 request was almost 10 percentage points more than in the enacted level of theFY2001 supplemental. (Congress decreased the Administration's request for DOD in the FY2001supplemental from 53% to 43% of the total, partly in anticipation of a second supplemental foradditional costs of the war.) (5) The purposes for theDOD funding were also similar - prosecuting thewar, enhancing security at military bases, and investing more in surveillance and reconnaissance,also referred to as command, control, and communication programs.

Both supplementals also targeted substantial resources for the recovery needs of New York City. The second supplemental placed greater emphasis on aviation security, reflecting the cost ofcarrying out new security standards enacted after the attacks.

Differences Between FY2002 Request and ETR. Because much of the funding was provided in the wake of the attacks, the second supplementalincluded less monies than in the first supplemental for victim relief and for investigation and lawenforcement efforts to unravel terrorist networks. The second supplemental also included somewhatmore for foreign aid, but would distribute it in much larger proportions for security assistance ratherthan for humanitarian relief activities as was the case in the ETR supplemental. This reflected theAdministration's priority to aid front-line states, including Pakistan, Jordan, and others who werecooperating with U.S. efforts to combat terrorism. (See below).

Proposed and Final Congressional Funding by Policy Priorities

As of the completion of floor action, both the House and the Senate proposed significant changes to the policy priorities reflected in the Administration's request as well as the total amountof funding (see Figure 1 and Figure 2 below). With a total of $28.8 billion,the House bill wasabout $350 million above the Administration's request and reflected a similar mix of policypriorities. At $31.5 billion, the Senate bill was $3 billion higher than the Administration's requestand reflected significantly different policy choices (see Table 2 and Table 3 . See Table A-2 forspecifics on items funded).

Compared to the Senate bill, the House placed greater emphasis on funding for defense: 55% vs. 45% of the total in the supplemental and $1.8 billion more than requested by the Administration. This higher level primarily reflected the belief among House appropriators that the cost of activatingreservists would be higher than anticipated by the Administration. Dissatisfied with the validity ofthe Administration's estimates of cost, the House bill reduced the Administration's request foraviation security, which the Senate funded fully.

Both houses provided higher funding levels for security, with much of the increase concentrated in enhancing security at Department of Energy facilities as well as additional funding to securenuclear materials in the former Soviet Union (see Table A-2 ). Both housesfully funded theAdministration's request for recovery funds for New York City. Although both houses providedsimilar shares for international security assistance, the total was $150 million higher than theAdministration's request because of additional aid for Israel and the Palestinians (see foreignoperations section, and Table A-2 ). Both houses also reduced the Administration's proposedfundingfor aid to dislocated workers (see below).

The largest difference between the houses and with the Administration was the proposed funding levels for homeland security activities. The Senate provided $2.8 billion more than theAdministration and $2.2 billion more than the House for bioterrorism, preparedness, and securityactivities. That additional funding would renovate a research facility on animal pathogens ($278million), provide additional grants for communications and safety equipment and training for firstresponders, and spend additional resources on security in various agencies (see Table A-2 in theappendix). For discussion of conference issues, see below.

In the final conference version of the bill, Congress changed the mix of spending proposed by the Administration (see Figure 1 and Figure 2 below and Table2 ). For example, Congressincreased security funding requested by the Administration threefold - from $625 million to $1.8billion, with additional funding for nuclear weapons and DOE facilities as well as internationalsafeguard activities, the Coast Guard, and port security measures. Congress also provided additionalfunding for international security assistance, and to preparedness activities, such as first responderprograms. Congress also provided less funding for victim relief by dropping $400 million in fundingfor dislocated workers. Congress did, however, accord about the same relative priority as theAdministration to Defense, and aviation security.

Notes for Figures 1, 2, and 3: Policy priorities are defined in box, "Spending Category Definitions." "Other" includes spending that is not related to combating terrorism (e.g., VA medical care andelection reform).

Sources: Administration request of March 21, 2002, and House and Senate reports.

Table 2. Policy Priorities in the FY2002 Supplemental and the Emergency Terrorism Response Act (percent of total discretionary budgetauthority)

Note: For definition of policy priorities, see box above.

a Reflects President Bush's decision not to designate $5.1 billion in contingent emergency funding.

b Includes Administration request of $1.3 billion for Pell grants in its February 2002 budgetsubmission. Excludes $1.1 billion increase in mandatory VA disability payments requested bythe Administration on May 21, 2002, and included in the Senate bill.

c 'Other' includes non-emergency appropriations, rescissions, offsets, and funding itemswhich donot fit into categories for combating terrorism as defined in box (e.g. election reform,HIV/AIDS funding, VA medical care).

Sources: Letter of President George Bush to Speaker of the House, the Honorable J. Dennis Hastert, transmitting the FY2002 Emergency Supplemental request, March 21, 2002. See also http://w3.access.gpo.gov/usbudget/fy2003/amndsup.html ; various versions of H.R. 4775, H.Rept.107-48 , S.Rept. 107-156 , and H.Rept. 107-593 . Calculations and categorizations of spending areby CRS. Totals may not add due to rounding.

Table 3. FY2002 Emergency Supplemental by Policy Priorities (millions of dollars of discretionary budget authority)

Notes: For definition of policy priorities, see box above.

a Reflects President Bush's decision not to designate $5.1 billion in contingent emergency funding.

b Excludes mandatory $1.1 billion in funding for additional disability payments for veteransthat theAdministration requested on May 21 and the Senate, and the conference included in its bill.Includes non-emergency spending offset by rescissions and offsets and spending that does notrelate to combating terrorism (see other).

c The Administration's request for the Transportation Security Administration was revisedfrom $4.4billion to $3.4 billion based on information provided to the appropriators by the Office ofManagement and Budget.

d 'Other' includes funding for election reform, HIV/AIDS/VA medical care and disasterassistanceas well as rescissions and offsets.

Sources: Letter of President George Bush to Speaker of the House, the Honorable J. Dennis Hastert, transmitting the FY2002 Emergency Supplemental request, March 21, 2002. See also http://w3.access.gpo.gov/usbudget/fy2003/amndsup.html ; H.Rept. 107-48 , S.Rept. 107-156 , and H.Rept. 107-593 . Calculations are by CRS.

Congressional Issues Raised by the President's Request

A variety of issues about both the amounts and the composition of the President's request foremergency supplemental spending of $28.4 billion, as well as the policy implications raised byseveral general provisions that were included in the request arose during congressional debate. Although there was broad support for defense requests, particularly now, last year Congresssignificantly adjusted both the total amount as well as the types of spending requested by theAdministration in the first supplemental's defense request. (6)

Several Members offered amendments to add funding in several areas, and raise the debt ceiling as desired by the Administration. (7) At the same time,the Administration, as well as some Membersof Congress, repeatedly raised concerns about increases above the total requested. (8)

Status of H.R.4775

On May 24, the House passed H.R. 4775 by a vote of 280 to 138, and on June 7, 2002, the Senate passed its version of the bill (substituted for the text of H.R. 4775) by a vote of 71 to 22. TheHouse reported its version of H.R. 4775 on May 20 ( H.Rept. 107-480 ), and the Senate reported itsversion on May 29 (S. 2551, S.Rept. 107-156 ). Although conferees met, and floor action in bothhouses was originally anticipated for the week before the July 4th recess, agreement was not reached.

On June 17, the Administration issued its views on the ongoing conference, stating its general agreement with the House version and its strong opposition to the overall spending level in theSenate bill and to several policy provisions, including restrictions on the President's ability todesignate spending as emergency, to spend international family planning assistance, and to cancelthe Army's Crusader program (see discussion below under likely conference issues and foreignoperations). (9)

Although Congress had hoped to resolve outstanding issues and pass the bill before the July 4th recess, that proved not to be possible. Shortly before recessing in response to the President's urging,the House passed a freestanding increase of $450 billion in the debt ceiling, matching the Senate'saction earlier, and resolving one of the issues that had deadlocked the conference. (10)

The President threatened to veto the supplemental if the total exceeded the House level of $28.8 billion, using the Administration's scoring of two savings proposals included in the House bill. Ifeither the savings proposals were dropped or CBO scoring was adopted, the House bill would cost$30.1 billion rather than $28.8 billion that was reported. (11)

After returning from the July 4th recess, the conferees reached agreement on a total spending level of $30.4 billion, apparently relying on CBO scoring. The conferees' attempt to complete aconference version were derailed by the Administration's opposition to the overall spending levelagreed to by the conferees. The Administration objected to the total and proposed a series ofdecreases in spending and offsets to reduce the total to $28.8 billion, including:

an unspecified cut of $400 million in defense spending;

a $220 million reduction in spending for the Transportation SecurityAdministration;

a $150 million cut in renovation spending for thePentagon;

a $100 million cut for AMTRAK;

an $80 million reduction in embassy security funding;and

a $50 million cut in aid for Pakistan and Jordan;

Administration estimates of savings for capping the airline emergency loanprogram. (12)

Although appropriators had also requested cuts from unspent monies appropriated in last year's Emergency Terrorism Response supplemental, the Administration proposed only $250 million insavings. As of March 31, 2002, agencies had obligated only about half of the appropriated funds,with some agencies at much lower levels. (13)

Senate appropriators used some of the Administration's proposals to develop a bipartisan $28.8 billion package developed by Senate Appropriations Chair Robert Byrd and Ranking Minority TedStevens using some of the cuts proposed by the Administration. That package was rejected by HouseAppropriations Chair Bill Young. (14) Congressional appropriators also rejected OMB's estimates of$1.1 billion in savings from the airline loan program, an estimate of savings that exceeded CBO'sestimate by about $800 million, and that Congressman Obey suggested was overstated because onlya couple of loan applications were received by the June 28, 2002 deadline.

In testimony before the House Budget Committee on July 16, OMB Director Mitch Daniels stated that the Administration would veto any bill that exceeded $28.8 billion. He further suggestedthat the Administration was considering reducing its request to as low as $18 billion because the totalamount of funding might not easily be spent in the months remaining in the fiscal year, a positionendorsed by Senate Minority Leader Lott. Most of the funding in the supplemental could beavailable beyond 2002.

DOD Comptroller Dov Zakheim also warned that DOD needed the supplemental to avoid facing cutbacks in operations because training funds have been shifted to fund the war on terrorism. Senator Lott suggested, however, that DOD and other agencies could accommodate a smallersupplemental by shifting monies from other accounts. (15) The appropriators, on their part, were facingnew pressures from western members to add $1 billion in emergency spending to combat wildfires,droughts, and floods, spending that the Administration was reportedly refusing to consider anemergency, instead requiring that it be offset with cuts in other spending. (16)

On July 18, the House and Senate reached agreement on a spending compromise of $28.9 billion that was developed by House appropriators. The Administration reportedly was satisfied thatthe bill met its spending goal. (17) That packagebecame the conference version of the supplemental.

Conference Version

On July 23rd, the House passed the conference version of H.R. 4775, with a funding total of $28.9 billion in discretionary budget authority. The Senate passed the bill the following day and thePresident signed the bill on August 2 ( P.L. 107-206 ). The bill generally sets funding levels betweenthe House and Senate levels and includes rescissions and offsets of about $3 billion. The conferenceversion (see H.Rept. 107-593 ) also resolves outstanding differences on policy issues. (The $28.9billion total in discretionary budget authority does not include $1.1 billion in higher mandatoryspending for VA pensions.) (18) (This updatediscusses the major changes in the conference version.)

Resolution of Major Funding Issues. Generally splitting the difference between the two houses, the conference version of the bill includes thefollowing spending levels:

$14.5 billion for the Department of Defense ($500 million above the request);

$6.7 billion for homeland security ($1 billion to $2 billion above the request)with

$3.85 billion for the Transportation Security Administration ($550 millionbelow the request);

$201 million for first responders;

$175 million for grants to fire departments;

$100 million for emergency FEMA grants;

$175 million for the FBI.

$5.5 billion for New York (the same as the request); and

$2.1 billion for foreign assistance and embassy security, including new fundingfor

$200 million for international HIV/AID funding;

$200 million for aid to Israel;

$50 million for aid to the Palestinians; and

$201 million for embassy security.

The conference bill also includes about $3 billion in savings and offsets, made up of about $600 million in defense funding that was not needed, and about $400 million for a new building for theCenter for Disease Control, as well as a variety of rescissions from previous supplementals. Thecontroversial estimate of savings of over $1 billion from halting the emergency loan program forairlines is not included. (19)

Designating Funds as Emergencies. The conference version of H.R. 4775 resolves one of the most contentious policy issues in the FY2002supplemental, the "all or none" provision that required the President to accept all Congressionaldesignations of non-defense funding as emergency in order to spend any of those funds. Underbudget rules, both the Congress and the President must designate a spending item as an "emergency"in order that the amount will not count against discretionary spending caps that remain in placethrough FY2002. The bill splits funding into two parts.

about $24 billion where Congress adopts the same emergency designation as in the President's request;

about $5.1 billion that Congress designates as "contingent emergency" spending where the President has the choice of designating all or none of that funding as anemergency. In other words, if the President wants to spend any of that $5.1 billion, all of the fundingmust be designated as emergency monies to be spent. (20)

That $5.1 billion in contingent emergency funding includes new items added by Congress such as $200 million for aid to Israel, $50 million in aid for the Palestinians, $400 million for electionreform, $205 million for AMTRAK, $275 million for additional funding for medical care forveterans, and $200 million in international aid for HIV/AIDS/malaria and tuberculosis. Fundingincreases above the Administration's request such as an additional $1 billion for DOD are also inthe contingent emergency portion.

On August 13, President Bush announced that he would not utilize the $5.1 billion of contingent emergency spending. The decision has the effect, in terms used by the White House, ofa "pocket veto" by the President of the contingent emergency funds. Table 4 provides a completelist of items designated by Congress as contingent emergency that will now not be allocated. Despitethe President's decision, White House officials said that the Administration most likely would seekabout $1 billion of the $5.1 billion as an amended FY2003 appropriation request, including fundsfor Israel, the Palestinians, international HIV/AIDS, and the Transportation Security Agency.

Table 4. Contingent Emergency Funding Enacted in the FY2002 Emergency Supplemental (millions of dollars of discretionary budgetauthority)

Notes:

a For details on the purposes of each program, see Table A-2 at the end of this report.

b The President's request included some funding for this program. The amounts shown onthis lineare those that exceeded the President's request and were designated as contingent emergencyspending.

c Amounts in these columns represent the amount over the President's request included inHouse-and Senate-passed bills, regardless of whether they were designated as emergency or contingentemergency funding.

Change to the Highway Trust Fund Formula. Theconference version of H.R. 4775 bill also includes a change in the formula for setting funding levelsfor highway spending that would increase highway funding by $4.4 billion from $23.4 billion to$27.7 billion. This spending is not counted in the $28.9 billion total for the bill. (21)

Releasing Funding for International Family Planning. The conference version of the bill does not include any language thataddresses whether the Administration is required to spend $34 million in FY2002 funds forinternational family planning as a contribution to the U.N. Population Fund. The Senate version ofthe bill included language requiring that the Administration release the funds if a State Departmentinvestigating team found that the Chinese government did not engage in coercive family planningpractices. The Secretary of State determined on July 21 that the $34 million for family planning willnot be provided to the UNFPA. (22)

Change to Rural Medicare Formulas and Textile Trading Preferences. Rejecting requests from some lawmakers, the conferees droppedHouse provisions that would have authorized more generous Medicare payment formulas for ruraldoctors in certain states to encourage them to remain. The conferees did, however, include aprovision that closed a loophole which allowed South American exporters to undercut U.S. textilemanufacturers thus threatening American jobs.

House Action

On May 9, 14, and 15, 2002, the House Appropriations Committee marked up the President's $27.1 billion emergency supplemental spending measure, producing a bill that totaled $29.8 billion,about $2.7 billion above the request. Further changes made during markup pared the chairman'smark to $29.4 billion.

On May 22, 23, and 24, the House debated H.R. 4775, passing the bill just after 2:30 a.m. on the 24th by a vote of 280 to 138. As passed, the bill totaled $28.8 billion, or about $600 millionbelow the reported level. That decrease resulted from two actions:

deletion of the proposal to end the grant program to airlines provided in the Air Transportation Safety and Stabilization Act enacted after the terrorist attacks (eliminating savingsof $250 million); and

changing the scoring of the savings for the temporary cap on loans to airlinesprovided under that act (increasing savings from $393 million to $1,254million). (23)

House Markup. As reported, H.R. 4775 included:

$1 billion for Pell student financial assistance ($276 million less than the request). (24)

$15.8 billion for defense ($1.8 billion higher thanrequested).

$5.8 billion for homeland security ($522 million above the proposal), including$3.9 billion for the new Transportation Security Administration ($550 million less thanrequested).

$1.6 billion for foreign assistance (about $350 million more than proposed),mainly for security aid to the "front-line" states in the war on terrorism, but also including $200million to combat global HIV/AIDS and other infectious diseases, and $200 million for Israel and$50 million for Palestine.

$175 million in grants to first responders, as requested, but provided throughthe Justice Department rather than FEMA, as proposed.

$450 million for election administration reform.

During markup, the Committee also agreed to move the first responders funds from the Office of Homeland Security as initially proposed in committee to the Justice Department, a change moreacceptable to the Administration, and dropped a proposal to double the tax on airline tickets, aprovision that was strongly opposed by the airline industry. Instead, the Committee further reducedthe amount of funding provided to the Transportation Security Administration.

To offset the $2 billion in the supplemental that was not designated as emergency spending, the Committee included a variety of rescissions and offsets. The rest of the spending in the bill isdesignated as emergency spending and does not need to be offset.

According to OMB Director Mitch Daniels, the Administration was "comfortable" with the House markup of the supplemental. (25) Reportedly,however, some fiscal conservatives were upsetthat the total in the bill exceeded the Administration's request, including the Committee's decisionto provide the Administration with an additional $1.8 billion for the Defense Department, whichSecretary Rumsfeld said in hearings was not needed. (26) Since the additional funds for DOD weredesignated as "contingent emergency" funds, the Administration would not have to spend the money.

The Rules Committee adopted a "deeming" resolution that would set overall spending levels for FY2003 at $759 billion as provided in the House budget resolution, H.Res. 353, and the leveldesired by the Administration. The bill also called on the government to take "all steps necessary"to protect "the full faith and credit of the government," placeholder language that would permit thetwo houses - if they reached agreement - to include language that would raise the debt ceiling. Meanwhile, Democratic members of the Budget Committee who hoped to attract some moderateRepublicans to a proposed floor amendment that would couple an immediate increase in the debtceiling that is desired by the Administration with a new requirement that the President submit aproposal to balance the budget by 2007 were not able to bring their proposal to the floor. (27)

The Rules Committee also added the following three specific provisions, which proved to be controversial during floor debate:

a provision providing for adjustments in certain Medicare payments for hospitals and physicians in certain counties in New York and Pennsylvania;

a revision of the Caribbean Basin Economic Recovery Act that would requirethat preferential trade treatment only apply to apparel articles that are dyed, printed, and finished inthe U.S.; and

a provision that would allow the Postal Service to continue to use the bypassmail system in Alaska on main routes and in the bush country. (28)

Policy Provisions Adopted During Markup. The Committee also adopted a number of policy amendments, including:

Increasing Fund for Highways . The appropriators added a provision that would restore FY2003 highway funding to the authorized level by voiding a $4.4 billion reductionthat is required by current statute. That statute sets highway funding based on revenues to theHighway Trust Account. (29) While there is generalsupport for increasing FY2003 highway fundingto the authorized level, there could be controversy over this provision, which some feel may resultin the permanent elimination of the formula that ties highway funding to revenues rather than aone-time waiver of the formula.

Limiting DOD's Responsibility for Water Use Under the Endangered Species Act . DOD is responsible for water consumption on its own installations and in thesurrounding area. The Committee's markup would limit this responsibility to its own installations. Some may argue that the provision was unnecessary because a recent court case in Arizona alreadystruck down a far-reaching Fish and Wildlife Service opinion that would have made DODresponsible for use of water in the surrounding area. Some may also be concerned because theamendment could be seen as setting a precedent for exempting DOD from other environmentalprovisions as proposed by the Administration in a separate legislative package thisyear. (30)

Reimbursing Allies in the Global War on Terrorism. The bill revised the Administration's proposal to allow DOD to provide military aid to foreign nations who support theU.S. in the "global war on terrorism." The bill narrowed the scope, required joint notification fromthe Departments of State and Defense (rather than giving DOD sole authority) as well as approvalof the Appropriations Committees to use up to $100 million to reimburse foreign nations for "thecosts of goods, services, or use of facilities provided in direct support of operations by U.S. militaryforces in the global war on terrorism." (31)

Military and Logistical Support . The bill did, however, include the original language requested by the Administration that gave sole discretion to the Secretary of Defense toreimburse "key cooperating nations," including Pakistan and Jordan, up to $420 million altogetherfor "logistical and military support provided to United States military operations in the global waron terrorism." (32)

Exempting U.S. Military Forces from International Military Court. The bill adopted an amendment proposed by Representative DeLay that exempts U.S. military forces whoparticipate in peacekeeping operations from being prosecuted in the International Criminal Court forwar crimes. Although the U.S. has already signed the agreement, both President Clinton andPresident Bush have voiced concerns about the agreement. (33)

Other Changes During Markup. In the final day of markup, the Committee also softened several controversial amendments.

The bill adopted report language opposing cancellation of the Army's Crusader howitzer rather than language proposed by Congressman Sabo that would have prohibited theAdministration from cancelling the system.

The bill required that the Administration report by July 31 whether it will release international family planning monies after investigating whether allegations that Chinaengages in forced abortion rather than requiring the Administration to release the funds as originallyproposed by Representatives Lowey and Kolbe.

House Floor Action. During House debate on the bill, the chief areas of controversy - some of which also surfaced on the Senate side - includedthe following.

Raising the Debt Ceiling. Some members argued that the language in H.R. 4775 providing that the U.S. government would take "all steps necessary toguarantee the full faith and credit of the Government" was an indirect way of raising the debt limitwithout requiring a direct vote by members. (34) The language would permit the issue of raising thedebt ceiling to be raised during conference. Majority Leader Daschle said that he would prefer topass a stand-alone bill and S. 2551, the Senate version of the supplemental, does not includelanguage about raising the debt limit.

The "Deeming" Resolution. H.R. 4775 provided that House Concurrent Resolution 353, the budget resolution passed by the House, would be "deemed"to have passed both houses and hence would guide the appropriations committees in their action onFY2003 appropriations actions. That resolution set total discretionary budget authority at $759billion, the level proposed by the Administration assuming that its proposal for accrual funding ofbenefits for civilian government workers is not approved. (35) Some Members raised concerns that thelevel in the House resolution would not provide adequate funding in FY2003. The Senate versionof the supplemental did not include "deeming" language.

Provisions about Medicare Payments, Andean Trade Preference Rules and Alaskan Mail. Members raised issues about the appropriateness of addingprovisions that would benefit particular areas or that would alter trade rules as part of thesupplemental. The House also deleted controversial provisions on monies included for familyplanning (see discussion below under foreign operations).

Senate Action

On May 21, 2002, the Senate Appropriations Committee marked up the FY2002 emergency supplemental (S. 2551/ S.Rept. 107-156 ) producing a bill that totaled $31.0 billion in discretionarybudget authority, $2.2 billion above the House level and $2.6 billion above the request. (Anadditional $1.1 billion in mandatory benefit payments to veterans was also included that wasrequested by the Administration on May 21 because more veterans are becoming eligible fordisability payments as the backlog of claims is reduced. (36) )

After returning from the Memorial Day recess, the Senate debated the bill June 3 and 4 and then invoked cloture. (37) After further debate on June5 and 6, the Senate passed H.R. 4775 at 12:28 a.m.on the morning of June 7 by a vote of 71 to 22. (The Senate adopted the number of the House bill,inserting its version as a substitute.)

After passage, the bill totaled $31.5 billion, or $500 million higher than the reported level, reflecting the effect of three amendments adopted on the floor (see below). Although a variety ofother amendments were adopted during floor debate, most allocated funding previously appropriatedor made minor changes in language. (38)

Senate Markup. S. 2551 differed substantially from both the Administration's request and the House-passed bill in both overall and specificfunding levels for individual agencies and programs and in policy language. The following issueswere debated on the Senate floor and became significant issues during conference.

Emergency Designation of Spending. Section 2002 of Title 2 in the Senate version of H.R. 4775 provided that funds in the bill would not be availableto the President unless he designated all funds as "emergency spending" that were designated thatway in the bill. This "all or none"provision, which applied to all emergency funding except for thatprovided to the Department of Defense, was opposed by the Administration, and was not includedin the House bill. The Balanced Budget and Emergency Deficit Control Act of 1985, as amended,provides that both the President and Congress must designate funding as emergency in order forthose monies to be exempt from budgetary ceilings. This provision would limit the President'sdiscretion to make those designations. A similar provision was proposed in the House andwithdrawn after protests from the Administration. (39) (See Table 4 and discussion above regardingthe outcome of this issue.)

Senate Confirmation of Director of Homeland Security. S. 2551 included a provision (Chapter 11, Section 1102) thatrequired that within 30 days after enactment, the Administration must establish a position for aDirector for Homeland Security who would be confirmed by the Senate.

Over the last several months, Senator Byrd has asked that Director of Homeland Security Tom Ridge testify before congressional committees. The Administration has rejected that request on thebasis that Tom Ridge is an advisor to the President within the White House, and hence is notrequired to testify before Congress. (40) The Housebill did not include this provision. This provisionbecame less controversial in light of the Administration's announcement of plans to create a newcabinet level Homeland Security agency.

Overall Spending Level. The Administration stated its concern about the overall level of the Senate bill that was above the Administration's request -by about $2.5 billion - and that the funding priorities differ substantially with that of the request. Although the Senate bill provided the same funding as requested by the Administration for defense,S. 2551 provided considerably more funding than requested for homeland defense (e.g. funding forfirst responders), as well as other areas (see Table A-2 and discussion below). TheAdministrationopposed the funding level in the Senate bill.

Funding Issues. In addition to these general provisions, and differences in the overall funding level, there were substantial differences in fundingfor particular agencies and programs (see Appendix A-1 and A-2 andindividual sections below) asdescribed below.

Transportation Security Administration : S. 2551 provided $4.4 billion, as requested by the Administration, compared to $3.9 billion in the House bill.

First Responders : S. 2551 included about $1 billion or twice as much as the Administration requested for various grants and programs located in both FEMA and the JusticeDepartment.

Port Security and Coast Guard : S. 2551 provided almost $1 billion for various port security efforts, well above that in the House bill or the Administrationrequest.

Bioterrorism and Water Safety : the Senate bill provided additional funding for testing of drinking water systems ($100 million), and infectious disease programs (almost $400million) not in the Administration request or the House bill.

Nuclear Safety : S. 2551 provided an additional $100 million for nuclear non proliferation efforts, and $200 million for improved security at nuclear labs in theU.S.

Areas of Agreement. Both the House and Senate provided $450 million for election reform, though with differing provisions about implementation. And both houses added funds for assistance to Israel. Both houses also raised funding for highwaysand provided funding for Pell grants. The Administration requested an additional $1 billion forpayments to eligible veterans on May 21, reflecting an unanticipated draw down in the backlog ofclaims. Although only the Senate included the funding in their bill, this increase did not becomecontroversial because the funding was mandatory, i.e. required by existing law.

Senate Floor Action. On June 3 and June 4, the Senate debated S. 2551, substituting its version of the bill in H.R. 4775 as passed by the House. OnJune 4, the Senate adopted an amendment proposed by Senator Byrd that deleted a provision in thebill that would temporarily cap emergency loans provided in the wake of the terrorist attack to giverelief to airlines. (41) On June 4, the Senate passeda cloture motion that limited debate to 30 hours andlimited amendments to those ruled as germane by the Chair. As amended on the floor, the total costof the bill increases to $31.5 billion (see below). (42)

Rejected Amendments. The Senate rejected anamendment proposed by Senators Gregg and Feingold that would set total spending limits for thenext 5 years, as well as re-institute various budget enforcement mechanisms to check spending thatlapse in 2002. Since both houses have not adopted a concurrent resolution on the budget forFY2003, there are no overall targets for spending for this or later years. In addition, Congress is nolonger subject to enforcement tools, such as pay go - which requires that changes to entitlementprograms that increase spending are offset - and sequestration - which require across-the-board cutsif budget ceilings are exceeded. (43) Proposals toinclude an increase in the debt ceiling were alsorejected on the floor.

Amendments that Increase Funding. The Senate adopted the following three amendments that increased total spending in H.R. 4775 from $31.1billion to $31.5 billion:

a $100 million increase in funding for international assistance for HIV/AIDS (making the level $200 million, the same level as in the House bill);

a $22 million increase in funding for flood recovery in Michigan and Illinois;and

deletion of the cap on the airline credit program (eliminating savings of $393million).

Policy Amendments Passed. In addition, the Senate, like the House, added the American Servicemembers' Protection Act, an act originally proposed inthe 106th Congress intended to shield U.S. service members from being subject to the jurisdictionof the International Criminal Court. The proposed legislation prohibits the participation of U.S.service members in U.N. peacekeeping missions unless there are protections that would ensure thatthey would not be subject to the court. The President, however, is also permitted to waive certainrestrictions in the Act, subject to various reporting requirements.

Although the U.S. signed the Treaty establishing the International Criminal Court, former President Clinton voiced reservations about it and President Bush withdrew U.S. support for theTreaty on May 6, 2002; the court was set up in July 2002. (44) The Senate also adopted an amendmentby Senator Dodd that allowed the President to cooperate with the court in the pursuit of internationalefforts to bring to justice Saddam Hussein, Slobodan Milosovic, Osama bin Laden, or other foreignnational accused of war crimes. (45)

See individual sections below for background discussion of potential issues, and see Appendix A-1 and A-2 for breakouts of the Administration's funding request, and House and Senate actionby agency, bill and line item.

Conference Matters

Funding Issues. Several issues were difficult to resolve in conference, including the overall funding level in the bill and funding levels for individualagencies and programs.

Overall Funding Level. Although the total for the Senate bill was $2.6 billion above the House level, the discrepancy in funding levels was actuallycloser to $4.4 billion when the House's $1.8 billion increase for the Department of Defense wastaken into account. (46) Although the Administrationstated that the additional funding in the Housebill for DOD - for paying the cost of activating reservists, and additional funding for spares anddepot maintenance - was not necessary, the House provided the funds on a "contingent emergency"basis, meaning that the President could decide whether to spend the monies. The other significantdifference in funding between the House and the Senate was the additional $3 billion for homelandsecurity activities in the Senate bill, including more spending for bioterrorism, preparednessactivities, and security enhancements (see section on policy priorities above).

Determining the overall difference in funding between the two bills was complicated by differences in scoring between OMB and CBO. Although the House reported the total for its billas $28.8 billion, if the bill was scored using CBO's numbers, the total would be $30.1 billion, a totalthat was closer to the Senate level, and above the Administration's request. Although Congressgenerally uses CBO's estimates, the House chose to use higher OMB estimates of savings for severaloffsets.

Although the conferees reached agreement on a total spending level of $30.4 billion after returning from the July 4th recess, the Administration objected to that total and proposed a series ofdecreases in spending and offsets to reduce the total to $28.8 billion. That proposal was rejected byCongressional appropriators, in part because of concern that OMB's estimates overstated savings. (47) Although OMB's proposals for cuts in spending reduced the overall total, several members objected,and suggested that the Administration look elsewhere for savings, including some from last year'sEmergency Terrorism Response supplemental. (48)

"All or None" Provision. The White House objected not only to the funding level in the Senate bill but also threatened to veto the bill if Section 2002 inthe Senate, the "all or none" provision, was included. That provision required that the Presidentdesignate as emergency spending all non-defense funding that is classified as "contingentemergency" spending in the bill in order to spend any of those funds. In other words, the Presidentwould not have the prerogative of spending only some of the "contingent emergency" spending aswould be the case in the House bill.

According to the 1985 Balanced Budget and Emergency Deficit Control Act as amended, both the President and Congress must agree that spending is emergency for those funds to be exempt frombudgetary controls over total spending. (49) (Thefinal year that those budgetary controls apply isFY2002.) If Section 2002 was adopted, however, the President would no longer have the prerogativeto select the spending that would be classed as emergency spending and, hence, not subject to budgetcontrols. All non-emergency spending must be offset by cuts in other programs or offsets. According to Senator Byrd, a similar provision was included in the 2001 Supplemental. (50) (See Table4 and discussion above regarding the outcome of this issue.)

Budget Controls and Increase in the Debt Ceiling. Some members suggested that the FY2002 supplemental should be the vehicle for Congress to adoptbudgetary controls on overall spending levels for FY2003 through FY2007 and for an increase in thedebt ceiling that is desired by the Administration. Ordinarily, those controls would be included ina concurrent budget resolution, but there appeared to be little prospect for passage. The House hadpassed a "deeming" resolution in the rule for H.R. 4775 that set levels that matched those in theirbudget resolution, but the Senate did not include any overall spending levels. (51)

In comparing the concurrent budget resolution passed by the House and the resolution reported by the Senate Budget Committee, the two houses are $19 billion apart in the total allocated fordiscretionary spending in FY2003. Negotiations between the two houses and with the Administrationto resolve this issue are currently underway, however, so a compromise may be reached. (52) The twohouses could choose to adopt the higher level for non-defense spending on the Senate side byallocating $10 billion that the Administration requested be set aside for a contingency fund to coverthe cost of the war on terrorism in FY2003. (53) Ifthat solution is adopted, an FY2003 supplementalrequest for costs of the war would be needed. Reaching common overall totals for discretionaryspending in FY2003 would make it considerably easier for the two houses to resolve FY2003appropriations bills.

The House also adopted "placeholder" language that would permit conferees to include an increase in the debt ceiling. Before leaving for the July 4th recess, the House followed Senate actionand passed a freestanding $450 billion increase in the debt ceiling, eliminating this issue.

Funding for Transportation. The House and the Senate were $2.3 billion apart in their recommended spending levels for the TransportationDepartment, with the Senate providing $7.4 billion and the House, $5.1 billion. Part of that total,however, reflected the inclusion by the House of a cap on emergency airline loans that was projectedto save $1.3 billion. The Senate eliminated that cap during floor action by a vote of 91 to 4. (54) Theremaining $1 billion difference between the houses reflected the Senate's proposal to add morefunding for the Coast Guard ($373 million) and to provide the full amount requested by theAdministration for aviation security rather than reducing the request ($550 million). Although bothhouses were dissatisfied with the Administration's presentation of its plans for aviation security, theSenate chose not to cut the request.

Funding to Secure Nuclear Facilities and Materials. The Senate bill provided $328 million, some $80 million more than the House, to secure Departmentof Energy nuclear facilities and to safeguard nuclear materials in the former Soviet Union. Althoughthe goals were similar, each bill emphasized different security measures or locations (see TableA-2 ).

Policy Issues for Conference. Several significant policy issues needed to be resolved in conference.

U.N. Family Planning Assistance. The Senate, but not the House, included language that would require the U.S. to release $34 million to the U.N.Population Fund (UNFPA) for family planning activities as long as the President found that Chinais not engaging in coercive family planning practices. Although the House bill initially includedsimilar language (but giving the President discretion about the funding level), that language wasdeleted on the floor. (see section on Foreign Operations below).

DOD's Role in Military Aid Allocations. The House and the Senate bill included different language governing a proposed new role for DOD in theadministration of up to $520 million in military assistance. Neither house adopted the broadlanguage proposed by the Administration. Although both houses would permit DOD to transfer upto $420 million to Pakistan, Jordan, or other cooperating nations for military and logistical supportto U.S. forces, the Senate bill placed control of those funds with the State Department, whereas theHouse bill made that DOD's prerogative. Moreover, only the House provided $100 million thatcould be used to reimburse foreign government for goods, services, or the use of facilities thatsupport U.S. operations in the fight against terrorism, language that was narrower than requested bythe Administration. The Senate bill did not include this provision (see Foreign Operations sectionbelow).

Restrictions on DOD's Ability to Cancel the Crusader Program. Since early May when DOD announced that the Army's Crusaderartillery system would be cancelled, this issue has generated substantial controversy in Congress,with the White House threatening a veto of any bill that placed any statutory restrictions oncancellation. (55) In a June 20 letter to Senator Byrd,Chair of the Appropriations Committee, OMBDirector Mitch Daniels reiterates this position, stating that the President's senior advisors wouldrecommend a veto of the FY2002 supplemental if House report language that restricts his ability tocancel the Crusader artillery program is made statutory. (56) The House report directed that theSecretary of Defense "shall take no action that would precipitously stop work on the Crusaderprogram until Congress had made a definitive judgment in legislation on the future of theprogram." (57) The Senate bill included no languageon this issue. The House-passed version of theFY2003 DOD Authorization bill (H.R. 4546) retained funding for the Crusader system, while theSenate version as amended on the floor, gave the Secretary of Defense the authority to re-allocatethe funds.

Placement of Funding for First Responders. The House and the Senate differed not only in the amount of funding provided for grants to firstresponders (e.g. firefighters, rescue teams, emergency operations centers) but also in which agencyadministers those grants. The Administration requested that FEMA administer $327 million inequipment and training grants, as part of its traditional roles in disaster planning. The House andSenate provided funding for first responders not only to FEMA but also to the Department of Justice,which in recent years has administered grants for first responders in a law enforcement context. Some consider that reliance on the Justice Department is more appropriate for funding designed tocombat terrorism. This issue was considered in the context of the President's new proposal to foldFEMA into a new agency to combat terrorism.

Placement of Funding for Election Reform. The House and the Senate both provided $450 million for election reform, but the House temporarilylodged the funds in the Executive Office of the President and the Senate placed the funds in theJustice Department. Both houses provided that the program would follow the provisions in theirrespective versions of H.R. 3295, the Martin Luther King, Jr., Equal Protection of Voting Rights.The House objected to the funds being administered by the Justice Department.

Areas of Agreement. Several policy areas in which the two bills were similar included the following.

Aid to Israel and Palestine : both bills provided $250 million in foreign assistance, split between Israel ($200 million) and the Palestinians ($50 million) (see foreignoperations section below);

Funding for HIV/AIDS : both bills provided $200 million for HIV/AIDS tobe distributed to the Global Fund to combat HIV/AIDS, malaria, and tuberculosis or otherorganizations;

International Criminal Court (ICC) : both bills included the AmericanServicemembers' Protection Act, which prohibits the U.S. from participating in U.N. peacekeepingefforts unless U.S. service members are not subject to the international court and limits U.S.cooperation with the court. After reporting to Congress, however, the President could waive someprovisions. The Senate bill also included a separate exemption that would allow the U.S. tocooperate with the ICC in the prosecution of Saddam Hussein, or other terroristleaders.

Administration's Request for the Department of Defense

The Administration requested $14 billion for the Department of Defense in the FY2002 emergency supplemental. If enacted, DOD would receive a total of $31.1 billion in emergency fundsfrom P.L. 107-38 enacted last year and the new supplemental. This includes not only funding forthe war itself but other initiatives as well. In FY2003, DOD is requesting an additional $20.1 billionto continue the "global war on terrorism."

Table 5 below compares the Administration's request for DOD to the amounts included in theETR, the first emergency supplemental, and to funding for the same purposes in the FY2003 request.This table combines the new functional categories adopted by the Defense Department in its FY2002emergency request with those used in the first emergency supplemental to combat terrorism. (58)

Table 5. Comparison of DOD's FY2002 Supplemental with ETR and the FY2003 Request (millions of dollars)

NA = Not applicable; NS = Not specified; [ ] = Included within other category.

Notes:

a. Includes funding to increase the industrial capacity and purchase additional smart munitions toenlarge DOD stocks, as well as unmanned aerial vehicles used for surveillance.

b. Funding to be distributed to unspecified allies who provide military and logistical support to U.S.forces in the "global war on terrorism."

c. Erecting additional barriers and purchasing surveillance and detection equipment to improvesecurity at U.S. military installations; cost of those activated reservists performing guard dutiesat U.S. installations is not specified within "mobilization of reservists."

d. DOD's support to FEMA and New York City; combat air patrols, later in military operations.

e. Cost of stationing National Guard at airports, now funded by TSA.

f. New Homeland Commander in Chief (CINC) set up by DOD after the attack; cost of keepingprisoners at Guantanamo Bay.

g. Cost of retaining additional Air Force personnel needed for the war on terrorism.

h. Cost of carrying out DOD's proposed new nuclear policy to upgrade strategic missiles.

i. Unspecified costs in FY2002 request; funds potential increase in fuel prices in ETR.

Sources: Department of Defense, FY2002 Supplemental request to continue the global war onTerrorism, March 2002; http://www.dtic.mil/comptroller/fy2003budget/fy2002_supp.pdf ; CRS Report RL31187(pdf) , Combating Terrorism: 2001 Congressional Debate on Emergency SupplementalAllocations by [author name scrubbed] and [author name scrubbed], March 20, 2002; OMB, Budget of the United StatesGovernment, Fiscal Year 2003, Appendix , February 2002, p. 277, and CRS calculations.

To preserve flexibility to respond to changes in the pace of operations of the war in Afghanistan and its use of reservists at home, DOD requested that $11.3 billion of the $14 billion be appropriatedto the Defense Emergency Response Fund (DERF), a transfer account from which DOD can movemonies into and out of other appropriations accounts as needs arise without returning to Congressfor prior approval. DOD contends that funding flexibility is needed because of the uncertainties ofevents in the next several months.

Congress has expressed some concern about use of the DERF, in part because it makes tracking of emergency funds more difficult since funds lose visibility as they are combined with those in theregular appropriation accounts, a problem acknowledged by DOD's comptroller, Dov Zakheim. (59) The remaining $2.7 billion of DOD's request would be in regular appropriation accounts whereCongress must be consulted about re-allocations.

The Administration's proposal included several general provisions that would give DOD new authorities to dispense funds to nations who work with the U.S. in the worldwide war on terrorism. These general provisions generated concerns in appropriations hearings on foreign operations (seebelow).

Using DOD's illustrative allocations, Table 4 compares the Administration's priorities in thissecond supplemental with its request in the ETR and the FY2003 budget request. The secondemergency supplemental placed more emphasis on continuing to carry out the war in Afghanistanand related areas and paying for the costs of mobilizing reservists, with less emphasis on command,control and communication and classified programs.

In its regular FY2003 budget proposal, DOD also asks Congress for substantial flexibility by requesting $20.1 billion in the DERF account. That total includes $10 billion to "fund continuedoperations for the war on terrorism." (60) TheAdministration includes no details about the use of thesefunds and acknowledges that this figure is only a rough estimate reflecting the uncertainty aboutfuture plans to combat terrorism in Afghanistan or elsewhere. The remaining $10.1 billion arerequested in the broad functional categories shown below.

The Cost of the War in Afghanistan. DOD's request did not explicitly provide an estimate of total cost to continue the war in Afghanistan inFY2002. DOD did, however, estimate that the cost of military deployments will be $10.4 billion,of which $3.7 billion was provided in the first emergency supplemental. DOD's request for anadditional $6.7 billion reflected its belief that costs in the remainder of the year were likely to becomparable to those experienced in the first third. (61) This approach assumed that despite the defeatof the Taliban and Al Qaeda forces, military operations by U.S. forces would continue to requireabout the same resources. (62) Based on thisconservative approach, DOD estimated that wartimemilitary operations in 2002 would cost about $865 million per month. (63)

That cost for military deployments included the resources to deploy and support units and their equipment, to operate equipment at a higher operating tempo to carry out wartime operations, torotate deployed forces between stateside and overseas, to pay active duty forces at higher levels, andto repair and replace equipment damaged or destroyed in combat. DOD's deployment cost did notinclude the expense of activating reservists supporting Afghan operations or the cost of replacingmunitions expended during the war.

According to a recent estimate prepared by the Congressional Budget Office that uses these categories and relies on actual cost data from operations as well as DOD's experience in otheroperations, the cost of the war in Afghanistan in the second half of FY2002 will be about $750million per month, about 75% of CBO's estimated cost for the first half of the year. CBO's lowercost estimate for the second half of the year reflects the recent withdrawal of naval forces, lowermunitions usage, and the absence of certain one-time costs incurred at the beginning of the conflict. (64) If the number of forces remained the same but the pace of operations slowed, CBO estimates thatthe monthly cost of the war would drop to about $600 million per month. (65)

The difference between DOD and CBO's estimates is somewhat greater than appears from the figures above because CBO's numbers include not only deployment costs but also the cost ofreplacing expended munitions and the cost of activating about 20,000 reservists, whereas DODincludes those costs elsewhere. If DOD's figures are adjusted to be comparable to those used byCBO, DOD's estimate of the total cost of the war for the year would be about $12.4 billion ratherthan the $10.2 billion assumed by CBO, a $2.2 billion difference. (66)

Mobilizing Reservists. The second largest piece of DOD's FY2002 supplemental request was $4.1 billion to pay for the cost of activated reservistsfor the last eight months of the year. (DOD's request assumed that $1 billion was provided in thefirst emergency supplemental. (67) ) That proposalgenerated concern in Congress among someMembers who believe that this amount may not be adequate to fund the reservists currently on activeduty. (68)

According to DOD, the $4.1 billion in its request assumed a level of 80,000 reservists for the remainder of the year, a number that is close to the 81,235 reservists currently on active duty. (69) DODassumed that the number of reservists would fall in the latter part of the year as the frequency ofcombat air patrols on the east and west coast - carried out primarily by Air Force reservists - isreduced and as the services trim the number of activated reservists who are currently carrying outguard duty at stateside military installations.

Although DOD did not provide definitive information about the tasks that reservists are performing, it appears that many of the reservists activated by the services are being used as guardsat U.S. military installations, reflecting the heightened concerns of the military in the wake of theterrorist attacks. Some have suggested that the number of guards could be reduced as DODcompletes security enhancements for bases - such as more fences and barriers - for which $1.6billion was allocated in the first emergency supplemental. DOD could also reduce the cost by usingcivilian rather than military to perform these duties. In fact, DOD has requested lifting the currentstatutory provision on contracting out security duty functions in the 2002 supplemental in order topermit DOD to use private guards who would be considerably less costly than the $66,000 per personcost of relying on activated reservists. (70)

In its regular FY2003 budget, DOD requested an additional $2.6 billion to improve physical security at military installations but has not specified whether reservists would continue to be usedas guards at military installations (see Table 3 above). If that request is approved, DOD wouldreceive a total of $3.9 billion over two years for additional physical security at bases.

Increasing Munitions Stockpiles and Unmanned Aerial Vehicles. Another major DOD initiative begun in the first emergency supplementalwas to expand current industrial capacity to produce precision-guided or "smart munitions,"particularly, the weapon of choice in Afghanistan - the Joint Direct Attack Munitions (JDAMs). DOD requested $4 billion for weapons and munitions in the ETR, the FY2002 supplemental and theFY2003 request, including the funding for JDAMs (see Table 5 ). This category funds not onlysmart munitions but also replacement and an increase in the number of Global Hawk (unmanned airvehicles - UAVs) and Predators (armed UAVs) that are being used for surveillance andreconnaissance in Afghanistan.

Concerned that JDAMs were being consumed faster than they could be replaced, DOD requested and received funding to increase the current productive capacity of about 1,500 per month.According to DOD, the additional funding requested in the FY2002 supplemental "will allow theJDAM production rate to increase in a more orderly manner," will achieve the new, higher deliveryrate of 2,800 missiles per month in August 2003 rather than July 2004, and will purchase anadditional 17,900 missiles. (71)

Although some have questioned whether the plan to double productive capacity this quickly is realistic, apparently the military leadership were convinced by the manufacturers that a doubling ofcapacity in about a year is possible. Any expansion will be dependent on both the level and timingof funding. The high expenditure rates for JDAMs that were experienced in the early part of the war,which generated such concern among the military, may also have fallen in more recent months asthe nature of the war has shifted towards surveillance rather than combat.

DOD's FY2002 request for weapons and munitions also included replacing one Global Hawk UAV and two sensor packages, and accelerating the production of Predator UAVs to two vehiclesper month. (72) DOD also plans to purchaseadditional UAVs with funds provided in the firstemergency supplemental, and with funds requested in the FY2003 budget. (73)

Command, Control, Communications, and Classified Programs. If the levels requested in the FY2002 supplemental and the FY2003budget request are approved, DOD would receive an additional $11.2 billion in command, control,communications, and classified programs to combat terrorism. (These funds would be in additionto the $33.6 billion in the 2000 budget before the buildup to combat terrorism. (74) ) There is littlevisibility on most of this request because many of the programs are classified. For example, of the$1.5 billion requested in the FY2002 supplemental, $1.4 billion is for classified programs. Similarly,there is no unclassified information on the FY2003 request of $3.1 billion, which includes $2.6billion for classified programs, and $540 million for continuity of operations, that is, for plans toprotect key government personnel and facilities in case of attack.

Coalition Support. DOD's FY2002 request also included up to $550 million that DOD could distribute to countries who aid the U.S. in the "war onterrorism," including $420 million for those countries who provide military and logistical support,indigenous forces who support the U.S., and other foreign governments who fight terrorism. Theseproposed new general provision would represent a new use of DOD funds, as well as signal a newrole for DOD in the distribution of assistance to foreign governments as discussed below.

House Action on the Administration's Defense Request. There were several significant changes to the House bill during markup,but no changes to the bill during floor consideration.

House Markup. In markup, the House Appropriations Committee (HAC) recommended $15.808 billion for the Department of Defense, an addition of$1.786 billion. The additional funds were requested as contingent emergency funds leaving it up tothe President to decide whether the additional funds are needed. In testimony before the SenateAppropriations Committee on May 7, 2002, Secretary of Defense opposed proposed increases toDOD's funding to activate reserves, stating that " ... we have not asked for that money ... theadministration is not requesting $1.4 billion." (75)

The committee also provided $378.4 million for Department of Energy defense-related activities, an increase of $352 million over the request, and $30 million for military construction, forwhich no money was requested. As the Administration requested, HAC provided most of the moneyfor defense in the Defense Emergency Response Fund (DERF), agreeing that the Pentagon needsflexibility in allocating the funds. The committee did, however, extend last year's requirement forquarterly reports on the allocation of DERF funds and required DOD to track war costs separatelyas part of the regular reporting.

Major Funding Changes. The major committee changes to the request included:

$790 million added for reserve mobilization costs in the DERF. This has been a controversial matter. On May 7, Secretary of Defense Rumsfeld told the Senate AppropriationsCommittee that DOD had not requested and did not need the additional funds. The Administrationspecifically objected to the original draft of the House Appropriations Committee bill, which wouldhave required the Administration to release the added money for reserve mobilization in order togain access to the other defense money. That provision was reportedly altered in committee markupby an amendment offered by Committee Chairman Bill Young.

$604 million added in the DERF for additional support of service counter-terrorism operations.

$117 million for Army overseas operations not provided in theDERF.

$100 million to accelerate chemical demilitarization.

$36.5 million for F-15 radio upgrades.

$20 million in research and development for remote chemical-biologicalweapons detection.

$30 million for classified projects.

$30.5 million for military construction projects.

$125 million for the Department of Energy for security at nuclear weaponsfacilities and for weapons and material transportation security.

$128 million for additional security for Corps of Engineersfacilities.

$5 million for the Department of Energy for international non-proliferationmeasures, including implementation of the U.S.-North Korea "AgreedFramework."

$67 million for the Department of Energy for security at environmental cleanupsites.

$16.6 million for the Department of Energy for security of facilities closureprojects.

Major Policy Changes. The Committee also revised the language in two controversial provisions proposed by the Administration, which would havepermitted the Department of Defense to provide $30 million to "indigenous forces" and $100million to "foreign nations," in defense articles, services, training, for their support to the U.S. in theglobal war on terrorism.

In addition to reducing the funding to $100 million, the Committee required that the Secretaries of State and Defense send a joint notification and receive approval from the AppropriationsCommittees. The bill also limited reimbursements to support by foreign nations of U.S. militaryforces (see also section on congressional action below). The Committee apparently did not modify,however, a similar provision requested by the Administration, which gave DOD sole authority to useup to $420 million to reimburse nations who provide military and logistical support to the war onterrorism.

Senate Action on the Administration's Defense Request. The Senate made no changes in funding of the DOD request in markupor on the floor. The Senate provided the same amount of funding, and the same distribution asrequested by the Administration: $14.0 billion overall, with $11.3 billion of that total in the DefenseEmergency Response Fund for war-related costs. Since the House provided $1.8 billion above theAdministration's request for additional operating expenses and paying to activate reservists, theoverall funding level will be a conference item. The House provided the funds as a contingentemergency, allowing the President to decide whether the funds are in fact, needed.

The Senate did, however, include different language than the House or the Administration governing the provision of aid to nations who aid the U.S. in the war on terrorism, making this aconference issue (see discussion below).

Foreign Aid to "Front-Line" States

The Administration sought $1.28 billion in additional FY2002 Foreign Operations funding, primarily to increase economic, military, and counter-terrorism assistance to so-called "front-line"states in the war on terrorism. Although the complete list remains classified, the United States hasplaced a growing priority on increasing assistance to over 20 nations representing not just thosebordering Afghanistan or located in the region, but including countries globally that have committedto helping the United States in the war on terrorism. Administration officials have publicallyidentified some of those front-line states for whom supplemental assistance is sought. (76)

As finalized by Congress, the Administration receives $1.8 billion more in foreign aid funding, over $500 million above the request, and a level that roughly doubles the amount of assistanceallocated in FY2002 for emergency foreign assistance to combat terrorism. Beginning in October2001, the President distributed $1.5 billion for Foreign Operations programs, drawn from the $40billion emergency terrorism supplemental approved by Congress shortly after September 11 ( P.L.107-38 ). The proposed supplemental also included several policy changes related to foreign aidactivities that may raise controversy during congressional debate.

Nevertheless, with the President's August 13 decision not to spend supplemental funds designated as contingent emergency, about one-third, or $622 million, of the $1.8 billion total willnot be available. Major activities affected by the White House decision include:

Israel aid - $200 million

Palestinian aid - $50 million

Afghanistan aid and refugee relief - $174 million

Philippine military aid - $30 million

International HIV/AIDS, malaria, and tuberculosis - $200million

The White House said, however, that the President supports more aid to Israel, the Palestinians, and for HIV/AIDS, and will seek other means to gain congressional approval for these activities in thefuture. This suggests that President Bush may submit an amendment to his pending FY2003 ForeignOperations budget proposing these additional amounts. Whether he will also request cuts in thepending appropriation to off-set these increases is uncertain.

Funding Issues. The content of the $1.28 billion foreign aid supplemental sharply contrasted with the types of assistance previously provided tofront-line states and appeared to respond somewhat to critics, including many in Congress, whoargued that the President's FY2003 Foreign Operations budget did not adequately address the newterrorism threat. Much of the $1.5 billion emergency aid already distributed focused on two areas:1) economic support to Afghanistan and neighboring countries in anticipation of food shortages,displacement and other social disruptions that would occur during the military campaign; and 2)efforts to stabilize the security and economic situation in Pakistan and demonstrate support forPresident Musharraf. By contrast, the proposed $1.28 billion supplemental would distributeadditional economic and military assistance among 23 countries in all regions of the world.

When the Administration announced its FY2003 budget request in early February, officials said that amounts for Afghan reconstruction needs beyond 2002 would be added to the request later,though a decision about whether to seek supplemental foreign aid this year had not been reached. Initial congressional reaction, however, was critical, with Appropriation Subcommittee chairmen Representative Kolbe and Senator Leahy, calling the request inadequate in face of the war onterrorism. (77) The budget plan for FY2003 includeslarge amounts for a few key front-line states -Jordan, Pakistan, and India. But for many others, aid would grow only modestly, leading some tocharacterize the request as a "business-as-usual" foreign aid budget.

In several respects the $1.28 billion supplemental proposal reflected what many said should have been incorporated in the FY2003 plan. Although like the FY2003 budget, the request includedsignificant amounts for Pakistan ($145 million) and Jordan ($125 million), it distributed considerableamounts of aid to Central Asian states that would not receive substantial increases in FY2003 andto nations globally. Key highlights included:

Afghanistan - $250 million in economic, military, and counter-narcotics support. This comes on top of $297 million pledged for reconstruction needs thisyear.

Middle East - in addition to Jordan, nearly $80 million (mostly military aid) for three key regional countries - Bahrain, Oman, and Yemen - that have provided considerablesupport to the United States.

Philippines - $40 million to help Manila combat its own terrorist insurgency in the Mindanao region.

Africa - $55 million to several key regional states cooperating in the war on terrorism.

Central Asia - $135 million for five regional states, exceeding amounts requested for FY2003 for Kyrgyz Republic, Tajikistan, and Uzbekistan.

Turkey - $228 million, primarily for economic support.

Colombia - $35 million, with most focused on anti-kidnaping training.

Table 6 provides details on country and program distributions in the supplemental request, andcompares that request to enacted aid levels for FY2001 and 2002, and to requested amounts forFY2003.

Table 6. FY2002 Supplemental Compared with Enacted & Requested ($s - millions)

Sources: Department of State and House Appropriations Committee.

a The Conference agreement earmarks funds for only a few countries and programs, as noted in thetable. The Administration much report to Congress 30 days after enactment with specificallocations of the funds. The table does not include rescissions, which for Foreign Operationsprograms total $269 million in the conference agreement.

b Because of the President's decision not to spend money designated as "contingentemergency," allor part of these amounts will not be available. See discussion above.

Policy Issues. The supplemental request included several general provisions that would change current policy positions regarding the distribution ofmilitary aid, assistance to Colombia, and conditions under which regular foreign aid is transferred. Each were closely examined during congressional debate.

DOD's Role in Military Aid Allocations. Currently, the State Department receives funding through the Foreign Military Financing (FMF) account of theForeign Operations Appropriations and provides broad policy direction for U.S. military assistanceprograms. DOD frequently administers FMF activities, but under the policy guidance of the StateDepartment. The Administration proposed in the FY2002 supplemental to grant DOD authority touse up to $30 million to support indigenous forces engaged in activities combating terrorism and upto $100 million to support foreign government efforts to fight global terrorism. The $130 milliontotal would come from defense funds, and be directed by the Secretary of Defense and be available"not withstanding any other provision of law." A third provision proposed $420 million in DODOperation and Maintenance funding for payments to Pakistan, Jordan, and "other key cooperatingstates for logistical and military support provided" to U.S. military operations in the war on terrorismthat would also be under DOD's policy purview.

DOD officials said that these provisions were essential to help reimburse countries for costs they incur in assisting U.S. forces engaged in the war on terrorism. The United States had to delaypayments to Pakistan for support provided in Operation Enduring Freedom because of competingdemands on regular military aid funds and the absence of agreements between DOD and the Pakistanmilitary that would allow such transfers out of the defense budget. Nevertheless, critics charged thatsuch a change would infringe on congressional oversight and the State Department's traditional rolein directing foreign aid policy and resource allocations. By including a "notwithstanding" proviso,the request further would remove human rights and other conditions that must be observed bycountries in order to qualify for U.S. security assistance.

At a House hearing on April 18, Deputy Secretary of State Armitage told the Foreign Operations Appropriations Subcommittee that although the State Department supports the "intent"of the provisions, the Administration drafted the legislation in a "rather poor way" and that theauthority "is a little broader in scope than we really intended." Secretary Armitage pledged that bothState and DOD officials would work with Congress to adjust the provisions in a way that wouldprotect the prerogatives of the Secretary of State as the "overseer of foreign policy and foreign aid." (78)

Colombia Aid Restrictions. An additional supplemental general provision sought to broaden DOD and State Department authorities to utilizeunexpended Plan Colombia, FY2002 and FY2003 appropriations to support Colombia's "unifiedcampaign against narcotics trafficking, terrorist activities, and other threats to its national security." (79) The provision would broaden significantly the scope of how U.S. assistance could be used byColombia - not only for counter narcotics operations, but also for military actions against Colombianinsurgents and any other circumstances that threatened Colombian national security. (80)

Although the most immediate effect of the change would be to permit the United States to expand how it shares intelligence information with Colombian security forces, the provision wouldalso allow helicopters and other military equipment provided over the past two years to fight drugproduction to be used against any threat to Colombia's security.

The Administration, however, did not ask Congress to soften two other Colombia aid restrictions concerning a 400 person limit on U.S. personnel inside Colombia and the prohibition ofaid to Colombian military and police units that are engaged in human rights violations (Leahyamendment). Despite the inclusion in the request that past and future FY2003 aid be available"notwithstanding any provision of law" - except for the two restrictions noted above - Administration officials said they are not seeking to remove other enacted conditions on Colombianaid, such as those related to human rights and aerial coca fumigation. Coupled with a pendingFY2003 $98 million military aid request to help protect Colombia's oil pipeline and otherinfrastructure against guerilla activity, critics argued that the U.S. objective in Colombia is shiftingfrom one of combating narcotics production and trafficking to a counter-terrorism and insurgencystrategy.

Removal of Restrictions for Other Economic and Military Assistance. The Administration's supplemental submission asked Congressto provide most of the economic and military aid funds "notwithstanding any other provision oflaw." This is a relatively unusual request for foreign aid appropriations, usually reserved forsituations where humanitarian assistance or aid in support of the highest U.S. foreign policy interestswould be prohibited due to existing legislative restrictions on assistance to governments that violatehuman rights, engage in weapons proliferation, came to power through a military coups, do notcooperate in counter-narcotics activities, or a series of other similar aid conditions.

Because of its sweeping and broad nature, Congress has often been reluctant to enact such a waiver without fully understanding the implications of excluding foreign aid restrictions. Moreoften, Congress prefers to waive specific legislative constraints rather than approvingacross-the-board waivers. Administration officials have said that the impediments apply toAfghanistan, Yemen, and Ethiopia because they are overdue in making debt payments to the U.S.(Brooke amendment, section 512 of the Foreign Operations Appropriations, FY2002) and to Coted'Ivoire because of the military coup against a democratically elected government in 1999 (section508 of the Foreign Operations Appropriations, FY2002).

Congressional Action on the Administration's Foreign Aid Request. House, Senate, and conference action increased foreign aid fundingproposed by the President, but limited to some extent policy provisions and waivers sought by theWhite House. The enacted measure also added a new issue into the supplemental debate - additionalfunding to fight global HIV/AIDS - but dropped a Senate-added provision concerning the status ofU.S. contributions to the U.N. Population Fund (UNFPA).

As passed Congress, the supplemental includes $1.8 billion in new Foreign Operations funds, over $500 million above the request. The House had included $1.82 billion, while the Senatemeasure provided $1.78 billion. New items added by both the House and Senate, and included inthe final bill, were $200 million in assistance to Israel, $50 million for the Palestinians, and $200million to combat HIV/AIDS, malaria, and tuberculosis. The HIV/AIDS money can be used tosupport the President's new mother-to-child transmission initiative, but conferees stated that $100million of the total should be used as an additional contribution to the Global Fund to CombatHIV/AIDS, Tuberculosis, and Malaria. If followed, this recommendation by Congress would cutin half the amount the President pledged for his initiative in FY2002. (As noted above, however,aid for Israel, the Palestinians, and HIV/AIDS was designated as a contingent emergency, moneywhich the President decided he will not spend.)

Both versions increased aid to Afghanistan for reconstruction and security support above the President's $250 million request: the House by $120 million and the Senate by roughly $110 million. The conference agreement does not set a specific amount for Afghanistan. (Since a large amountof aid set for Afghanistan and for refugees in and around Afghanistan - about $184 million - isdesignated as contingent emergency funds, the President's decision to not spend these amounts willreduce amounts provided in the enacted bill for Afghanistan.) The Senate bill added $15 millionto create an international exchange program for students from countries with large Muslimpopulations, and conferees set the total at $10 million. In most cases, the conference agreement didnot set specific country allocations, leaving that at the discretion of the President. The legislationdirects the executive branch to report on such allocations within 30 days of enactment. (see Table6 , above).

On policy issues, the final bill removes the requested "notwithstanding any provision of law" provisos, but waives the "Brooke amendment" regarding debt payments in arrears. This will permitmost of waivers the Administration sought. On Colombia, the final bill includes language similarbut less sweeping than the Administration's request. It would allow Colombia to use Americanforeign aid (money managed by the State Department) for a unified campaign against narcoticstrafficking, against organizations designated as terrorist groups, and for humanitarian rescueoperations. All current restrictions on Colombian aid, however, would remain in effect. The billfurther adds a new requirement regarding the newly elected Colombian President and policiesregarding human rights, military reforms, and financial commitments to implement other reforms.

Congress denied DOD's request for authority to use $30 million to support indigenous forces engaged in activities combating terrorism, but approved $390 million for payments to Pakistan,Jordan, and other cooperating states for logistical and military support provided. Although thisprovision gives the Administration some flexibility, the law also requires notification to theappropriate Congressional committees 15 days in advance of any reimbursements, and reportlanguage specifies that reimbursements are to cover only goods, services, or the use of facilities thatare in direct support of U.S. military operations. (81)

H.R. 4775, as passed by the House, had approved DOD's request for $100 million to support foreign government efforts to fight global terrorism, but with significant changes. Transfers wouldbe limited, however, only to reimbursements for the costs of goods, services, or use of facilities byU.S. military forces and any proposed commitment of funds must be submitted jointly to theCommittees by the Secretaries of State and Defense 15 days in advance for Committee approval. The Senate measure and the final bill did not include a provision related to this issue.

During House Committee markup, another contentious foreign aid policy issue was introduced. Since mid-January, the White House has maintained a hold on U.S. contributions to the U.N.Population Fund (UNFPA) because of allegations that UNFPA is participating in the managementof coercive family planning practices in China. If the White House determines that this is the case,UNFPA would become ineligible for American contributions. For FY2002, Congress provided "notto exceed" $34 million for UNFPA, and some Members have criticized the White House for delayinga decision regarding UNFPA's eligibility. A State Department investigation team spent two weeksin China during May.

After initially adopting an amendment by Representatives Lowey and Kolbe (32-31) that would require the President to transfer the full $34 million to UNFPA by July 10 if the State Departmentteam concludes that UNFPA is not involved in coercive family planning practices in China, theCommittee approved a further amendment by Representative Tiahrt that over-rode the Lowey/Kolbeprovision. The Tiahrt amendment required the President to determine whether UNFPA participatesin the management of coercive family planning practices by July 31, 2002, but said nothing abouthow much the President must contribute. Prior to final passage of H.R. 4775, however, the secondrule (H.Res. 431) under which the bill was debated deleted both amendments from the legislation. As such, the House-passed measure does not include any language regarding UNFPA. Nevertheless,the Senate bill includes language nearly identical to Lowey/Kolbe text.

Under any of these amendments, a determination that UNFPA is involved in coercive practices would result in the termination of U.S. support. Without such a determination, however, the Senateand Lowey/Kolbe amendments would require the President to transfer the full $34 million. Underthe Tiahrt provision, however, the President could reduce the U.S. contribution to something lessthan $34 million to express displeasure over alleged coercive family practices in China andUNFPA's involvement. The White House strongly opposed the Senate language.

Conferees agreed to drop all UNFPA language from the final bill, leaving the decision entirely up to the President. Subsequently, on July 23, the White House announced the U.S. would withholdthe $34 million transfer.

Aviation Security Issues (82)

Established on November 19, 2001, by the Aviation and Transportation Security Act (ATSA) ( P.L. 107-71 ), the new Transportation Security Administration (TSA) is responsible for the securityof all modes of transportation. Responsibility for airport security is transferred from FederalAviation Administration (FAA) control to the new agency.

To pay for enhancements in aviation security mandated in the new law, the ATSA may collect fees from passengers, and air carriers. The Administration is also requesting a supplementalappropriation of $4.4 billion to pay for enhanced airport security.

In hearings, controversy is developing about several issues, including:

whether the TSA will be able to meet the new security requirements that were enacted in the wake of the terrorist attacks;

whether the funding requested in the FY2002 emergency supplemental isadequate and sufficiently defined in the request;

whether the size of the aviation security workforce can be accurately estimatedat this time;

the appropriate mix of types of explosive detection equipment for baggagescreening; and

whether TSA should reimburse airports fully for federally-required increasesin security costs rather than funding those costs with airport capital improvementfunds.

New Security Requirements. To enhance aviation security, the Aviation and Transportation Security Act required several significant changes in currentprocedures, including:

the screening of all individuals, goods, property, vehicles, and other equipment that move within secure areas at airports;

the replacement of privately-hired contract screeners with federal workers byNovember 19, 2002;

the use of federal workers for all screening activities at all but five commercialairports (where pilot programs using contract private screeners under federal oversight would beused) for two years;

the deployment of Federal Air Marshals on every passenger flight that maypresent a high security risk; and

the installation of explosive detection systems in place at airports by December31, 2002.

Cost of Enhanced Aviation Security. At least some members of Congress expected that the TSA would be able to cover its budget requirementswith the proceeds of two fees it was authorized to levy - a security fee on passenger tickets and a feeon the airlines. On an annual basis, the passenger fee is estimated to bring in about $1.5 billion andthe airline fee about $700 million. (83) As the costsof carrying out the enhanced security are becomingclearer, however, it appears that these fees may not be sufficient.

In the FY2002 emergency supplemental, the Administration requested $2.5 billion as an emergency appropriation and an additional $1.9 billion as a "contingent emergency"appropriationto be held in reserve until the Administration has a better understanding of what the TSA's needsare. For FY2003, the President requested $4.8 billion for the agency.

Among other issues that arose were whether Congress would approve funds designated as contingent emergency funds, if Congress would not know how the monies would be spent, whetherairports can meet the current deadline for deploying explosive detection systems, the size of the newfederal workforce to be hired, and the adequacy of the Administration's request.

Funding Issues. The Administration's proposal that Congress approve $1.9 billion as a contingent emergency, with no detail about costs, was notwell received by some appropriators, who likened it to signing blank checks. On the other hand, theDOT's Inspector General suggested that Congress actually make an even larger portion of theAdministration's request - $2 to $2.25 billion rather than $1.9 billion - contingent on TSAsubmitting periodic detailed budget estimates in light of the uncertainty surrounding the agency's needs for the current fiscal year.

The Transportation Security Administration has not definitely decided the number or the type of explosive detection systems needed to check baggage. Nor does the agency know the size of therequired total workforce. One machine under consideration is the size of a small minivan and relieson computed tomography (CT), the same technology used for medical purposes. These largemachines cost $1 million apiece but require fewer screeners than a smaller, less sophisticated, andcheaper machine that relies on swabbing of bags to detect explosive materials, and would cost$45,000 each but require more screeners and be more intrusive.

When the Act was passed, it was estimated that about 30,000 employees would be needed for aviation security. The new requirement to screen luggage as well as passengers could require anadditional 25,000 to 30,000 employees. With other administrative personnel, some have estimatedthat the number of TSA employees could reach 70,000. (84)

Another significant unknown is the cost of reconfiguring airports to make use of the explosive detection systems. One estimate puts this cost at $2 billion. (85) It is not yet clear who would pay forthis additional cost. Nor is it clear whether enough machines can be manufactured in time to meetthe deadline. These uncertainties about the types of machines, the size of the workforce, and thelikelihood of meeting statutory deadlines have already surfaced during congressional considerationof the Administration's request for $4.4 billion in emergency supplemental funding for TSA.

House Action on the Administration's Aviation Request. In markup, the House Appropriations Committee reduced spending forthe Transportation Security Administration by $550 million, to $3.9 billion. After initially addinga provision that would double the tax on airline tickets - thus providing a $150 million offset - theHouse panel voted to delete the section, which faced strong opposition from the airline industry. Instead, the committee reduced the amount of funding for the Transportation Security Administrationin the supplemental by an additional $150 million. The supplemental funding for enhanced aviationsecurity included:

$630 million to purchase explosive detection systems to screen baggage;

$850 million to remodel airports so they can accommodate the new devices;and

$75 million to improve port security. (86)

No changes were made during House floor debate.

Senate Action on the Administration's Aviation Request. Although both the House and the Senate were dissatisfied with thejustification materials provided by the new Transportation Security Administration (TSA) for itsplans and funding for aviation security, the House reduced the Administration's $4.4 billion requestto $3.85 billion and the Senate provided the entire amount. The Senate was also concerned aboutthe privacy implications raised by the TSA's decision to opt for more trace detection machines whichrequire that passengers open their bags.

In addition to aviation security, the Senate's bill provided an additional $200 million for various port security initiatives that would develop ways to inspect cargo at high volume ports. The total inFY2002 would be nearly $300 million. S. 2551 also provided additional funding for securitymeasures at the perimeters of airports and for bus operations as well (see Appendix A-2 ). DuringSenate floor debate, a provision that would cap emergency loans to airlines was struck (see above).

Aid to New York City

In a Rose Garden meeting with Governor George Pataki and New York City Mayor Michael Bloomberg on March 7, President Bush pledged to give New York City a total of $21.5 billion inaid to help the city recover from the terrorist attacks on September 11, 2001. This announcement wasintended to meet the President's earlier commitment shortly after the attacks to give the city morethan $20 billion in aid as well as respond to congressional concerns raised during debate about theEmergency Terrorism Response (ETR) supplemental. Congressional concern paralleled the languageincluded in the ETR, which called for not less than $20 billion to be "allocated for disaster recoveryactivities and assistance related to the terrorist acts in New York, Pennsylvania, and Virginia onSeptember 11, 2001." (87)

Combining the request for $5.5 billion for aid to New York in the FY2002 emergency supplemental with $5 billion in business tax credits for Lower Manhattan passed by the House inearly March, and funding already provided in the ETR, the Administration contends that New YorkCity would receive a total of $21.5 billion. (88) TheFY2002 emergency supplemental included $5.5billion in funding for aid to New York provided by FEMA disaster assistance, CommunityDevelopment block grants and transportation grants to rebuild mass transit, and roads. (89)

FEMA Request. (90) Of the Administration's $3.1billion request for the Federal Emergency Management Agency (FEMA), $2.75 billion, or 88%, wasfor the Disaster Relief Fund (DRF) administered by FEMA. (91) That fund is used to help communitiesrecover from and rebuild after major disasters as designated by the President under the StaffordAct. (92) Combined with $6.6 billion allocated toFEMA in the first emergency supplemental, the totalfor disaster assistance would be $9 billion, a historic high for eligible costs. According to FEMA,most of the funds allocated to New York City in the first emergency supplemental were releasedwithin two months of the attack. (93)

Some, however, contended that considerably more recovery assistance was needed. For example, a report issued by a partnership of economic development organizations in New York Cityreported that "the city's economy will sustain a gross loss of approximately $83 billion due to theattack, including $30 billion in capital losses, $14 billion in cleanup and related costs and $39 billionin loss of economic output to the economy." (94) Only some of those types of costs, however, wouldbe eligible for FEMA funding.

The Stafford Act limits FEMA assistance to individuals and families, state and local governments, and non-profit organizations that provide essential services. Although some haveargued that the Stafford Act should be amended to authorize federal assistance to for-profitenterprises such as utilities and medical centers, others want to retain the current criteria, and relyon other federal programs to aid private corporations.

HUD Community Development Block Grants. (95) In order to meet the needs of utilities and other businesses - reportedly in need of millions of dollarsin assistance after the September attacks - the Administration's request included $750 million forthe Community Development Block Grant (CDBG) program administered by the Department ofHousing and Urban Development (HUD). According to press reports, these funds were intendedprimarily to help Con Edison and Verizon rebuild their facilities. (96)

One of the chief advantages of these grants is that state and other eligible local governments are given broad discretion and flexibility in the use of funds. Although the Community DevelopmentBlock grants program is designed to foster economic development and benefit primarily low- andmoderate-income persons, Congress has routinely waived specific programmatic requirements, andused the funds to support disaster recovery efforts, including assistance to Oklahoma City followingthe bombing of the Alfred Murrah Building, and to aid utilities affected by disasters, notably the icestorm that paralyzed much of New England in 1998. (97)

Under the 2001 Emergency Terrorism Response supplemental, New York City received $2.7 billion in CDBG funding for disaster recovery activities that is to be administered by the LowerManhattan Development Corporation (LMDC). A non-profit corporation created to direct theredevelopment of the World Trade Center area, the Lower Manhattan Development Corporation isto use those funds to assist individuals, non profits, and small businesses recover from economiclosses resulting from the September 11, 2001, terrorist attacks.

The President's proposed FY2002 supplemental appropriations request would appropriate $750 million in additional CDBG assistance to be administered by the LMDC. These funds would be usedto rebuild utility infrastructure damaged or destroyed by the September 11, 2001 attacks, and toreimburse New York State and New York City's regular CDBG allocation for costs incurred inresponse to the September 11 attack on the World Trade Center.

Transportation Grant Funds. The Administration's FY2002 emergency supplemental included $1.8 billion to pay the costs ofrebuilding Manhattan's public mass transit that would not be covered by FEMA funds for disasterrecovery as well as $167 million to repair roads like the West side highway that are eligible forfederal funds.

FEMA funds can only be used to remove debris, and repair and replace subways and train stations, but not to redesign or modernize current systems as desired by New York officials. In ameeting with Members of Congress in mid-April, New York officials outlined a proposal tomodernize and rebuild the Lower Manhattan transportation system that would cost $7.3 billion. (98) Those plans could require using a mix of FEMA funds from those already available or the newrequest as well as tapping other sources in the FY2002 emergency supplemental. Congress facedsome pressure to add to or re-allocate funds included in the Administration's request to help NewYork City to carry out these plans.

House Action on the Administration's New York City Request. Action taken by the House Appropriations Committee during its markup provided the full $5.5 billion in aid to New York City, as requested. The panel, however, allocated$175 million for first responder support to the Department of Justice rather than FEMA, as proposed. Initially, the Committee recommended that the money be managed by the Office of HomelandSecurity, but switched to the Justice Department after White House objections. No changes weremade on the House floor.

Senate Action on Administration's New York City Request. Like the House, the Senate provided the $5.5 billion in aid for New Yorkthat was requested by the Administration. New York City might also receive additional fundingunder the various first responder grants programs.

Aid for Dislocated Workers

The Administration supplemental proposed $750 million in assistance for dislocated workers. In markup, the Committee reduced that request to $300 million. Of $450 total aid, $190 millionwould be provided as National Emergency Grants to be used for projects that would link high-growthsectors where there are shortages of workers with state, community college, and DOL trainingprograms. The remaining $110 million would restore a previous rescission of monies for states fordislocated worker assistance.

House Action on Aid to Dislocated Workers. TheHouse bill provided $300 million in aid for dislocated workers, $450 million below the request. Thefunds were also limited to National Emergency grants and Workforce Investment Act grants, withno funding for demonstration programs or long-term economic assistance (see Appendix A-2 ).Nochanges were made on the floor.

Senate Action on Aid to Dislocated Workers. The Senate bill provided $400 million in aid, with some funding targeted to demonstration projectsand long-term assistance (see Appendix A-2 ) though the total provided was $350 million belowtherequest. The Senate bill called for targeting assistance to those states whose funds were reduced asa result of changes in award formulas, and to those states who have spent most of their funds. (99) Nochanges were made on the Senate floor.

Appendix - FY2002 Emergency Supplemental Request Organized by Appropriations Bill and Account

The following 13 tables provide details of the $27.1 billion FY2002 emergency supplementalallocation, organized according to appropriation bills and accounts.

Table A-1. Summary of All Appropriations Bills ($s - millions, discretionary budget authority)

Notes:

a The Administration included a request for $1.3 billion in supplemental funding for FY2002Pellgrants in its FY2003 budget, with equal offsets from reductions in funds added by Congress toLabor, HHS, and the Department of Education. The House and the Senate AppropriationsCommittees both provided $1 billion for Pell grants and scored the offset as zero.

b Does not include $1.1 billion in mandatory spending for veterans eligible for disabilitypayments,requested by the Administration on May 15, 2002, and included in the Senate and enactedversion.

c Totals include emergency, contingent emergency spending, rescissions and offsets, andnon-emergency spending.

Table A-2 below lists the funding in the FY2002 Supplemental that was requested by the Administration and enacted by Congress.

Availability and Type of Funds

As enacted, H.R. 4775 provided that funding would be available for FY2002 unless designated otherwise. (100) The table below shows thoseaccounts where Congress extended the availability offunds beyond FY2002.

As shown in Table A-2, which follows, Congress also appropriated funds in several categories:

emergency funds as designated by both the president and Congress (designatedby "E");

contingent emergency funds to be designated as emergency funds if thepresident submits a budget request including that designation (designated by"C");

non-emergency funds (designated by "N"); and

rescissions and offsets (designated as "R").

Emergency funding is not counted against the statutory ceilings that are in effect for FY2002 as part of the 1997 Budget Enforcement In a general provision referred to as the "all or none"provision, H.R. 4775 stipulates that in order to spend any of the funding designated as "contingentemergency," the president must designate all funding in that category as an emergency. (101) About $5billion in H.R. 4775 is designated as contingent emergency funding. The bill provides that thePresident had thirty days from passage of the bill to decide whether to submit a budget amendmentthat designates this $5 billion as emergency funding. The $2.9 billion in non-emergency fundingprovided in H.R. 4775 is offset by rescissions or offsets so that no additional funding is scored inFY2002. Table A-2 below notes the type of funding applying to individual appropriation accounts.

Rescissions and offsets cancel out $2.9 billion of non-emergency spending.

Purposes and Spending Category

The description of the purposes for the funding shown in Table A-2 below is based on conference action (see H.Rept. 107-593 ). The table also includes funding for comparable purposesthat was provided by the Emergency Terrorism Response supplemental ( P.L. 107-38 ), the emergencysupplemental passed on September 14, 2001, in the wake of the terrorist attacks.

Table A-2 codes spending in individual appropriation accounts by eleven broad policy priorities developed by CRS. Those categories are described in the box on page 6. See Figures 1 and 2 , and Table 3 for the funding and share of the total for each category.

Table A-2. FY2002 Supplemental: Administration Request andCongressional Action by AppropriationAccount (millions of dollars)

Notes:

* = non-emergency spending.

a Spending categories are described in box on page 6 above.

b Defense Emergency Response Fund is a transfer account, where DOD can move moniesinto other appropriations without being subject to normalreprogramming requirements, which require that DOD notify Congress in advance of transfers betweenappropriations accounts or other changes.

c The Administration requested a $1.276 billion increase in Pell grants in FY2002 in its original FY2003 budget, and proposed that the funds be offsetby eliminating all congressional increases in the Department of Education that were passed by Congress. Thesefunds were not requested in theemergency supplemental request submitted by the Administration on March 21, 2002. Congressional scoring scoresthe Administration's proposedoffset as zero.

d The House Appropriations Committee is proposing that funding for election reform beappropriated to OMB to be transferred to other agencies onceauthorizing legislation that sets up programs to improve the administration of elections is enacted.

Sources: Letter of President George Bush to Speaker of the House, the Honorable J. Dennis Hastert, transmitting the FY2002 Emergency Supplementalrequest, March 21, 2002. See also http://w3.access.gpo.gov/usbudget/fy2003/amndsup.html , HouseAppropriations Committee tables, H.R. 4775, HouseAppropriations Committee, Making Supplemental Appropriations for Further Recovery from and Responseto Terrorist Attacks on the United States forthe Fiscal Year 2002, and for other purposes , H.Rept. 107-480 , and calculations by CRS.