S. 672 -- SUPPLEMENTAL APPROPRIATIONS AND RESCISSIONS BILL, FY 1997
(Sponsor: Stevens (R), Alaska)

This Statement of Administration Policy provides the Administration's views on S. 672, a bill making FY 1997 emergency supplemental appropriations for recovery from natural disasters and for overseas peacekeeping efforts, as reported by the Senate Appropriations Committee.

The Congress and the Administration must work together to ensure that this bill gets enacted as quickly as possible. The recovery of hundreds of thousands of Americans from the tragedy of the recent natural disasters depends upon our action. While FEMA, SBA, the Corps of Engineers, and other Federal agencies are providing immediate relief to the victims of the recent natural disasters, it is essential that this legislation be enacted soon so that the process of long-term economic redevelopment can begin.

The bill as reported by the Committee provides $5.6 billion in urgently needed disaster assistance funds. To ensure that these funds reach the hundreds of thousands of citizens in 33 States who desperately need our help and to support the efficient operation of our troops abroad, it is essential that this bill remain free of extraneous provisions that could slow its progress. Unfortunately, the Committee bill includes a number of such provisions.

As a result of the recent bipartisan budget agreement, it is our understanding that Title VII of the bill providing for an automatic continuing resolution will be dropped from the Committee bill. It is essential that this be done. Based on the Senate Committee bill, which included the automatic continuing resolution, the President had indicated that he would veto it because it includes strongly objectionable extraneous provisions. The Senate Committee bill includes:

• a provision that would create an automatic continuing resolution for FY 1998. While the goal of ensuring that the Government does not shut down again in the absence of enacted appropriations is a worthy one, such a provision is clearly extraneous to this emergency disaster relief legislation. The particular version included in the Committee bill is premature, prejudging the outcome of the budget talks by locking in low levels of discretionary spending. Such language is unacceptable, and, as a result, the President would veto this bill if this language is included. Further details are included in the Attachment.

• a provision prohibiting the Department of Commerce from developing a plan in FY 1997 for the 2000 decennial census that would use any sampling whatsoever. The Administration strongly opposes the provision. The Secretary of Commerce has indicated that he would recommend that the President veto this bill if it were to contain this provision. Without sampling, the cost of the decennial census will increase dramatically as its accuracy, especially with regard to minorities and groups that are traditionally undercounted, will decrease. The 1990 decennial census was the first to be less accurate than the one that preceded it. Congress instructed the Census Bureau to consult with the National Academy of Sciences to find a way to improve the results. These experts unanimously recommended the use of statistical sampling.

• a provision that would waive certain provisions of the Endangered Species Act (ESA). The Administration strongly opposes the provision. The Secretary of the Interior has indicated that he would recommend that the President veto this bill if it were to contain this provision. Such a waiver is unnecessary and could result in waiver of the ESA for routine, non-emergency operations and maintenance. Current law allows Federal agencies to implement effective emergency procedures in order to accommodate the ESA during emergency responses to floods, and these procedures are routinely utilized.

• a provision that would prevent the Department of the Interior from promulgating rules on RS 2477 and prohibit implementation of the Department's January 1997 policy guidance on that legislation. The Administration strongly opposes this provision. The Secretary of the Interior has indicated that he would recommend that the President veto this bill if it were to contain this provision. The scope of this provision far exceeds a similar but more limited provision in the FY 1997 Interior Appropriations Act. The Administration believes that the January 1997 policy fairly balances the interests of a right-of-way claimant with Federal land planning and management responsibilities. States should not be permitted now to expand rights granted under a Federal statute repealed more than 20 years ago.

• a provision establishing a block grant to States to assist legal immigrants losing their eligibility for Supplemental Security Income (SSI). The Administration would oppose a block grant for this purpose. A block grant would fail to ensure that legal immigrants are provided protections wherever they live in our country and would not provide long-term protection. It would also force States to recreate an administrative structure that already exists for SSI. The Administration would also oppose any amendment to establish a block grant for providing services to legal immigrants under Medicaid. The Administration has proposed legislation to restore SSI and Medicaid benefits for disabled legal immigrants and children of legal immigrants.

  As a result of the recent bipartisan budget agreement, the Administration strongly supports a simple extension of benefits through the end of the fiscal year to ensure that the Congress has sufficient time to enact the Administration's legislative proposals and to ensure that benefits for needy legal immigrants are not abruptly curtailed.

The President's budget requests a $100 million FY 1997 supplemental for WIC to maintain the FY 1996 year-end participation level of 7.4 million. Our most recent information from States suggests that a minimum of $76 million in new budget authority is necessary to maintain the FY 1996 year-end participation level. While an improvement over the House Committee's funding level, the $58 million funding level proposed by the Senate Committee would result in State agencies having to cut participation by 75,000 to 100,000 low-income women, infants, and children by year's end. The Administration remains firmly committed to fully funding the WIC program at a participation level of 7.5 million persons in FY 1998 and strongly supports a supplemental of $76 million this year.

Dual Use Technology

The Dual-Use Applications Program helps to develop and incorporate technologies used and tested by the cost-conscious commercial sector into military systems. By adopting these dual-use technologies, the Department will be able to take advantage of cost savings that flow from the production efficiencies of larger-scale commercial manufacturing lines. Reducing funding for this program would result in higher costs for future defense systems. This is an Administration priority and should not be used as an offset.

Assisted Housing

The President's FY 1998 Budget requests that Congress appropriate funds sufficient to renew all expiring housing assistance contracts in FY 1998 and all future years. The Administration does not object to funding FEMA's Disaster Relief program through the rescission of $3.6 billion of recaptured excess reserves in HUD's assisted housing program, provided that the Congress is committed to approving sufficient resources to renew all expiring housing assistance contracts in FY 1998 and future years.

Bosnia

The Administration appreciates the Senate Committee's speedy approval of supplemental appropriations for the Department of Defense's operations in Bosnia and Southwest Asia. The Department of Defense recognizes that improvements are needed in the fiscal oversight of contingency operations, and it is in the process of establishing systems to develop, monitor, and report contingency operation cost estimates to the Congress. We appreciate the concern of the Committee for the impact of contingency operations on training. However, we are disappointed that the Committee chose not to fund fully the Department's requirements. We request that the Senate restore the $207 million cut for contingency operations so that the Department can meet its full requirements as reflected in the House bill.

The Administration is further concerned that the Senate is proposing to cut off funding for Bosnia operations unless a detailed cost report on all Bosnia related activities is submitted within 60 days. Subjecting the military to such a funding cut off would unnecessarily threaten the viability of ongoing operations. The Administration will work with the Committee outside the constraints of the provision in question to provide any new cost data that was not already presented to the Congress in testimony and written responses over the prior two months.

U.N. Arrearages

The Administration appreciates the Committee's provision in Contributions to International Organizations for payment of $100 million of arrearages on past assessed contributions. This is a good first step toward paying the $1.021 billion of arrears owed to the United Nations and other organizations. A successful outcome soon to the ongoing negotiations between the Congress and the Administration on reform and funding for these organizations would bolster U.S. negotiators working to achieve reforms in these organizations. The Administration asks that the $100 million be available to pay arrears not just to the U.N. but also to other organizations.

Extraneous Micro-management Provision.

The Administration strongly objects to the inappropriate and unwise reduction of $1.5 million in funding for non-career personnel in the Department of Housing and Urban Development (HUD). The reduction, targeted at HUD's top officials, would severely impede and potentially cripple Secretary Cuomo's efforts to reform the management of the Department and rebuild public trust in HUD.

Federal Elections Commission

The Administration urges the Senate to include the requested $1.7 million in additional funding for the Federal Elections Commission (FEC) in the Senate version of the bill. The Administration proposed this additional funding for FEC to support additional staff and related costs for investigations and audits pursuant to the Federal Election Campaign Act.

Texas Public Assistance Program Amendment

The Administration understands that an amendment may be offered to mandate that the Administration approve a proposal by the State of Texas to release a "Request for Offers" that could lead to contracting out large portions of the administration of Federal public assistance programs. The Administration supports the objective of making administration of these programs more efficient. However, the Administration strongly opposes this amendment. Any proposal of the scope of Texas' raises many issues of how to judge contractor performance; fairness to current employees of the State; how to ensure fiscal integrity; the impact on families who depend on these programs, and many other issues. The Administration is working with Texas to resolve these issues, as it would in the case of any such proposal. Congressional action is inappropriate while the Administration is reviewing the proposal.

Other Issues

Additional Administration concerns with the bill as reported by the Committee are contained in the attachment.

ATTACHMENT

ADDITIONAL CONCERNS

S. 672 -- SUPPLEMENTAL APPROPRIATIONS AND RESCISSIONS BILL, FY 1997

(AS REPORTED BY THE SENATE COMMITTEE)

Automatic Continuing Resolution for FY 1998

The Administration believes that the provision of the Senate Committee bill that would provide for an automatic continuing resolution (CR) for FY 1998 is extremely ill-advised and clearly extraneous to this bill. The President would veto this bill if it were to contain the Senate Committee language.

The following are among many unfortunate effects that this provision would have.

• Critical services and functions would be reduced, including Veterans Medical Care, highway construction, food assistance for Women, Infants, and Children (WIC), education (e.g., Head Start and Pell Grants), the environment (e.g., cleaning up Superfund sites and maintaining and improving our national parks), and research and technology (NIH, NASA, and NSF).

• Core functions of government would be undermined:
  • Many of the new border patrol agents being hired this year would have to be RIFed, and the proposal to hire another 500 in FY 1998 would be blocked.

  • The FAA would be unable to hire the additional 500 air traffic controllers and 173 security personnel proposed in the FY 1998 Budget, and the number of existing air traffic controllers would have to be cut to the lowest level since 1988. Aviation safety inspections would also be reduced.

  • Reduced IRS tax law enforcement would result in $350-$500 million in lost revenues, and tax refunds could be delayed five to ten days.

  • The proposed increase of 544 FBI agents would be blocked, and planned prison activations would be curtailed.

  • Social Security processing time for initial disability claims could increase by roughly 50 days (+37 percent) beyond the currently-projected 135 days, and about 65,000 fewer appeals decisions (-10 percent) could be reached.

• Defense spending would be reduced $6 billion below the Administration's request and the FY 1997 enacted level, undermining our ability to support the world's strongest military force. The current force structure would have to be reduced by at least 30,000, and procurement of new systems such as the New Attack Submarine would have to be canceled.

• An average of 700,000 fewer women, infants, and children per month would receive food and other services through WIC.

• Up to 52,000 fewer children would participate in Head Start (presuming that the quality of the program would be maintained).

• College aid would be cut by $1.8 billion, allowing a maximum Pell grant level of only $2,620 -- compared with the $3,000 level proposed by the President -- and eliminating nearly 400,000 students from the program. No new aid would be available to older students.

• NIH would be cut by $592 million (4.5 percent) from the proposed FY 1998 funding level of $13.1 billion. The number of NIH-funded new research projects could be cut by over 1,350 in FY 1998.

• America's global leadership would be undermined since it would be very unlikely that a Foreign Operations appropriations bill could be enacted into law. The provision of the Senate Committee bill would require cuts in payments to Israel and Egypt or -- because Congress would almost inevitably modify it -- almost no funds would remain for economic support for other nations.

• Roughly 7,000 fewer Direct Single Family Rural Housing Loans would be issued, a reduction of 37 percent.

• The Federal crop insurance program would be terminated.

• New national parks and heritage areas authorized in the 1996 Omnibus Parks bill could not move forward in Kansas, Massachusetts, Oklahoma, West Virginia, Virginia, Tennessee, Georgia, Pennsylvania, Iowa, South Caroline, Ohio, and New York.

• Some 52,000 economically disadvantaged adults and 28,000 dislocated workers would be denied employability services and training, while 10,000 low-income youth would be denied summer jobs.

• VA Medical Care would be denied to 200,000 veterans.

• The President's goal of cleaning up 900 Superfund sites by the year 2000 would effectively be precluded.

Disaster Reserve Assistance Program. The Administration urges the Senate to limit livestock indemnity payment eligibility to producers in Presidentially-designated emergency disaster areas. Nationwide eligibility for ad hoc disaster payments for livestock losses could set a costly precedent and would likely dilute the amount of assistance that would be provided to producers who have suffered catastrophic losses.

Army Corps of Engineers

Devils Lake. The Administration is pleased that the Senate Committee has included $5 million for design work related to the construction of an emergency outlet at Devils Lake, North Dakota. The Administration urges the Congress to support this vital project in the FY 1998 Energy/Water Development appropriations bill.

Department of Energy

Brookhaven National Laboratory. On April 23rd, the President proposed $19.7 million for the Department of Energy's Brookhaven National Laboratory for activities related to the remediation of ground water contamination. The Administration urges the Senate to support this proposal. Appropriate offsets were included in our request.

Department of Housing and Urban Development

Public Notice of Contracting by HUD. The Administration opposes section 324 of the Senate Committee bill, which would require reporting in the Federal Register of information on all HUD contracts over $250,000 that were awarded during the prior quarter. HUD, like other Executive agencies, is already required to publish notice in the Commerce Business Daily (CBD) of contract awards likely to result in subcontracting opportunities. (The CBD notice is immediately available each day on the Internet -- duplicative reporting in the Federal Register each quarter would benefit neither contractors nor the public.) The broadened scope of information required by section 324 is of questionable value and would impose both for HUD and GPO an administrative burden and cost that is contrary to the important government wide streamlining and acquisition reforms that Congress enacted over the last several years.

Department of Transportation

Overflight Fees. The Administration objects to the Committee's proposal to exempt general aviation operations from the overflight user fee that was authorized last year. The Administration has strongly supported a user fee-financed Federal Aviation Administration (FAA). To achieve this goal, all users must pay a fair share of the FAA's costs. In addition, the Administration has some concerns regarding the exemption of Canada-to-Canada overflights. Canada is expected to implement a Canadian enroute charge based, in part, on distance flown in Canadian air space, by November 1, 1997. To the extent that this charge makes it less expensive to fly in U.S. airspace than Canadian airspace, the U.S. could end up subsidizing Canadian carriers which are presently flying entirely in Canada

Federal Emergency Management Agency

The Administration opposes the proposed rescission of $5 million from the Federal Emergency Management Agency's (FEMA's) Salaries and Expenses contained in the Senate Committee bill. Rescission of these funds would have a severe, adverse impact on FEMA's ability to manage its continuing disaster operations, which are now ongoing in 49 States and every U.S. territory.

Funding for TWA Flight 800 Investigation

The Administration requests the Senate to fully fund the Administration's $20.2 million supplemental request for the TWA Flight 800 investigation and recovery efforts. Since July 1996, the National Transportation Safety Board (NTSB), the FBI, Navy, and other agencies have worked together on the investigation of the crash. All of these agencies have incurred costs to support this effort. Failure to fund the Administration's request would force the Navy to absorb costs that are unrelated to its core mission, result in other activities being canceled or deferred to cover these unanticipated costs, and hamper the NTSB's efforts to bring closure to this investigation.

General Provisions

Drug Patent Extensions. Section 304 of the Senate Committee bill would allow drug manufacturers to benefit from the full patent extension provided in the Uruguay Round Agreements Act of 1994 for all patents in force on June 8, 1995, as well as benefit from the full amount of patent extension provided under section 156 of title 35, United States Code. Section 304 also targets a specific generic drug application that is pending at FDA for special treatment regarding this general patent extension. The Administration is concerned about the inclusion of patent provisions, either general or specific, in this legislation.

Medicare -- Denver Waiver. The Administration is disappointed that the Senate Committee bill (section 314) would prohibit HCFA from implementing or administering the managed care competitive pricing demonstration in Denver in FY 1997. The Administration strongly believes that no delay is warranted in testing an important alternative payment methodology for Medicare managed care plans. The Administration believes that the project is well designed and has taken into consideration constructive comments from the managed care industry and other concerned parties.

Restriction on Funds Used to Enforce Electronic Tax Transfer System. The Administration objects to section 322 of the Senate Committee bill. This provision is unnecessary as IRS has successfully implemented the Electronic Federal Tax Payment System (EFTPS), which allows Federal tax deposits to be made over the phone or by personal computer. Under section 6302 (h) of the Internal Revenue Code, 1.2 million employers were required to file through EFTPS by July 1, 1997, and as of April 26, 1997, over 995,000 are enrolled. The IRS will not impose penalties on businesses that are simply trying to become acclimated to EFTPS and are trying to comply with the filing requirements.

Cooperative Purchasing. The Administration opposes section 323 of the Senate Committee bill, which would repeal section l555 of the Federal Acquisition Streamlining Act (FASA) of l994. This section of FASA would allow State and local governments, non-profit organizations, and Indian tribes, if they choose to do so, to buy products that are currently available to Federal agencies under contracts negotiated between the General Services Administration (GSA) and private suppliers. Often, GSA is able to leverage the buying power of the Federal Government to obtain very advantageous prices from suppliers, and section l555 allows these other entities to take advantage of those lower prices. Participation by suppliers in the program would be entirely voluntary. Since there would be no requirement for these other entities to buy off the GSA contracts, they would only do so if they felt they were getting a better deal than currently obtainable. Repeal would harm taxpayers in order to protect certain local suppliers who fear this new source of competition.