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Bipartisan Budget Act of 2013
Bipartisan Budget Act of 2013
COST ESTIMATE
December 11, 2013
SUMMARY
The legislation, offered as an amendment to H.J. Res. 59, the Continuing Appropriations
Resolution, 2014, would revise the limits on discretionary appropriations for fiscal years
2014 and 2015, allowing for higher levels of funding in those years than is allowed under
the caps and budget enforcement procedures in current law. CBO estimates that, if
appropriations for 2014 and 2015 equaled the revised limits, discretionary outlays would
be roughly $62 billion higher over the 2014-2023 period than if appropriations for those
years equaled the limits in current law. (Nearly $48 billion of the anticipated increase in
discretionary outlays would occur in 2014 and 2015.)
The legislation also would make several changes in programs that are not funded through
annual appropriations, as well as a few changes that would affect federal revenues. In
addition, the bill would extend across-the-board cuts (known as sequestration) in certain
direct spending programs for an additional two years2022 and 2023 beyond the period
during which sequestration will apply under current law; those additional cuts would be the
same percentage of spending required under current law for 2021. CBO and the staff of the
Joint Committee on Taxation (JCT) estimate that, in total, those provisions would reduce
direct spending by about $78 billion and increase revenues by about $7 billion over the
2014-2023 period. Thus, the legislations changes in direct spending and revenues would
reduce deficits by roughly $85 billion over the next 10 years. Some of those changes also
would affect discretionary spending, but such changes would be subject to appropriation
and limited under the caps on annually appropriated funding.
Although enacting the legislation would affect direct spending and revenues,
pay-as-you-go procedures do not apply because the legislation specifies that its budgetary
effects shall not be entered onto the scorecards maintained under the Statutory
Pay-As-You-Go Act of 2010.
The legislation contains no intergovernmental mandates as defined in the Unfunded
Mandates Reform Act (UMRA). It would impose private-sector mandates as defined in
UMRA on airline passengers, sponsors of defined-benefit pension plans, and users of
customs services. CBO estimates that the cost of the mandates would total more than
$1 billion in fiscal year 2015 and more than $2 billion annually beginning in fiscal year
2016. Thus, the aggregate cost of mandates would significantly exceed the annual
threshold established in UMRA for private-sector mandates ($150 million in 2013,
adjusted annually for inflation) during the first five years that the mandates are in effect.
Section 204 of the legislation would amend portions of the Social Security Act that relate to
the Old-Age, Survivors, and Disability Insurance programs under title II of the Social
Security Act. UMRA excludes from its application any legislation that applies to those
provisions of the Social Security Act. Consequently, CBO has not reviewed section 204 for
mandates.
2015
2016
2017
2018
2019
2021
2022
2023
-3.2
-4.6
-3.4
-4.6
-18.1
-19.3
-24.3
-25.5
-18.1
-19.5
-70.5
-78.4
0.9
1.0
1.1
1.3
1.7
6.6
2020
-7.2
-3.0
-2.2
-3.2
-2.5
-4.1
-2.9
-4.6
-3.2
-4.6
-3.5
-4.7
CHANGES IN REVENUESa
Estimated Revenuesb
0.2
0.3
0.5
0.6
0.7
-3.1
-3.1
0
-3.4
-3.4
*
-4.5
-4.5
*
-5.1
-5.1
*
-5.1
-5.1
*
-5.4
-5.4
*
-5.5
-5.5
*
-5.6
-5.6
*
-20.5
-20.5
*
-26.8
-26.7
*
-21.2
-21.2
*
-85.0
-84.9
-0.1
18.5
21.6
0.0
8.6
0.0
3.3
0.0
2.0
0.0
0.6
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
63.2
61.9
63.2
62.4
Memorandum:
BASIS OF ESTIMATE
The legislation would allow for greater spending subject to appropriation than is allowed
under current law by increasing the caps on new discretionary funding in fiscal years 2014
and 2015 (see the Memorandum section of Table 1).
The legislation also would directly affect budget deficits by changing provisions related to
direct spending programs and by amending the Internal Revenue Code. Some of those
changes also would affect discretionary spending, but such changes would be subject to
appropriation and limited under the caps on annually appropriated funding.
Title I Budget Enforcement
The Bipartisan Budget Act of 2013 would increase the caps on discretionary budget
authoritythat is, the caps on new annual appropriationsfor fiscal years 2014 and 2015.
For 2014, the caps on defense and nondefense funding would each be about $22 billion
higher than the current caps (which include the effects of the automatic spending
reductions described in the Budget Control Act of 2011).1 For 2015, the defense and
nondefense caps would each be raised by about $9 billion. CBO estimates that, if
appropriations for 2014 and 2015 equaled the revised limits, discretionary outlays would
be roughly $62 billion higher over the 2014-2023 period than if appropriations for those
years equaled the limits in current law.
The legislation also would extend the automatic spending reductions applied to certain
mandatory spending accounts through 2023 (those reductions are currently in effect
through 2021). The legislation would require that the sequestration percentage applied to
nonexempt mandatory accounts in 2021 be continued and applied in the same manner in
2022 and 2023. CBO estimates that extending those spending reductions for nonexempt
mandatory programs for two additional years would decrease direct spending by
$28 billion over the 2022-2023 period.
In addition, the legislation would make some changes in the Congressional budget process
related to adoption of the budget resolution and budget enforcement within the House of
Representatives and the Senate. Those changes would not, by themselves, have a direct
budgetary impact, but they could affect Congressional decisions about budget-related
legislation in 2014 and future years.
1.
The Budget Control Act of 2011 (Public Law 112-25) established an initial set of caps on annual discretionary
funding as well as a set of lower caps (for 2014 through 2021) that were triggered by the failure of the Joint Select
Committee on Deficit Reduction to achieve a targeted amount of deficit reduction. The lower caps are currently in
place through 2021; the legislation would increase those caps for 2014 and 2015, and leave the caps unchanged
for other years through 2021.
Approve an agreement between the United States and Mexico regarding oil and gas
resources near the international border in the Gulf of Mexico and establish
procedures for implementing future agreements affecting such border areas.
Amend the procedures used to determine the amount of interest that may be paid on
overpayments of oil and gas royalties from federal leases.
Permanently rescind the unobligated balances currently available for purchase of oil
for the Strategic Petroleum Reserve (SPR) and repeal the authority of the SPR
program to acquire oil using royalty-in-kind payments from companies that develop
oil and gas resources under federal leases.
Title IV Federal Civilian and Military Retirement
The bill would make several changes to retirement benefits for employees of federal
agencies. In total, CBO estimates that enacting title IV would reduce spending by
$6.2 billion and increase revenues by $6.0 billion, respectively, over the 2014-2023 period.
Specifically, title IV would:
Increase the contribution rate that federal employees, including those covered under
the Foreign Service Retirement System, pay toward their future retirement benefit
(such contributions are considered revenues to the Treasury). The legislation would
increase contributions by 1.3 percent of pay for federal employees that begin service
on or after January 1, 2014.
Reduce the annual cost-of-living adjustment (COLA) for military retirees under the
age of 62 by 1 percent. Monthly retired pay for those individuals would be
readjusted upward at age 62 as if the COLA reduction had not taken place and
retirees would receive full annual COLAs thereafter.
The COLA provision also would reduce discretionary accrual payments to the
Military Retirement Fund over the 2015-2023 period. While such payments count
against discretionary amounts allocated to the Department of Defense as part of the
annual appropriations process, they are intragovernmental transactions, and do not
result in outlays from the government. If, within the discretionary caps, the
reduction in accrual payments makes possible an offsetting increase in other
appropriations, the net effect would be an increase in outlaysbecause an
intragovernmental payment would be replaced by spending that goes outside the
government.
PAY-AS-YOU-GO CONSIDERATIONS
The Statutory Pay-As-You-Go Act of 2010 establishes budget-reporting and enforcement
procedures for legislation affecting direct spending or revenues. Although enacting the
legislation would affect both direct spending and revenues, pay-as-you-go procedures do
not apply because the legislation specifies that its budgetary effects shall not be entered
onto the scorecards maintained under the Statutory Pay-As-You-Go Act.
Table 2. Estimate of Effects on Direct Spending and Revenues for the Bipartisan Budget Act of 2013
(Millions of dollars, by fiscal year)
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
20142018
20142023
-11,267
-16,774
-28,041
-10
0
-13
0
-26
-50
-25
-8
-20
-100
-26
-8
-17
-150
-27
-8
-15
-160
-28
-9
-14
-170
-28
-9
-13
-180
-29
-9
-14
-190
-30
-9
-15
-200
-31
-10
-15
-210
-32
-10
-88
-460
-119
-33
-159
-1,410
-269
-80
-2
0
-7
0
-50
-14
-44
-2
0
-350
-16
-44
-2
-20
-350
-6
-42
-2
-50
-350
-2
-43
-2
-90
-350
0
-46
-2
-100
-355
0
-47
-2
-110
-355
0
-48
-2
-120
-355
0
-50
-2
-130
-355
0
-51
-2
-130
-355
-40
-173
-15
-160
-1,450
-40
-415
-25
-750
-3,225
-152
-358
-506
-715
-883
-1,037
-1,275
-1,309
-1,016
-6,235
-2,050
-167
0
-362
0
-461
0
-515
0
-553
0
-587
0
-312
0
-84
0
-24
0
0
-2,050
-2,057
-2,050
-3,065
-390
-56
-1,190
-75
-1,250
-75
-1,280
-75
-1,320
-75
-1,360
-75
-1,400
-75
-1,440
-75
-1,480
-75
-1,520
-75
-5,430
-356
-12,630
-731
Continued
Table 2. Estimate of Effects on Direct Spending and Revenues for the Bipartisan Budget Act of 2013 (Continued)
(Millions of dollars, by fiscal year)
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
20142018
20142023
0
0
0
-200
0
-850
0
-1,260
0
-1,090
0
-920
0
-870
0
-860
-3,125
-900
-3,646
-930
0
-3,400
-6,771
-7,880
-277
-3
-624
-4
-486
-4
-173
-4
0
-4
0
-4
0
-4
0
-4
0
-4
0
-4
-1,560
-19
-1,560
-39
0
0
-244
-8
-258
-10
-274
-12
-293
-14
-313
-16
-334
-19
-357
-21
-381
-24
-407
-27
-1,069
-43
-2,862
-150
-3,025
-3,225
-4,132
-4,603
-4,553
-4,714
-4,642
-4,647
-19,348
-25,497
-19,538
-78,387
CHANGES IN REVENUES
Sec. 201
Sec. 203
Sec. 204
Sec. 401
Sec. 402
Collection of UI overpayments
Restriction on access to death master file
Inmates receiving improper payments
Civil Service Retirement
Foreign Service Retirement
0
24
*
24
1
-1
49
16
154
2
-4
50
17
276
3
-9
52
17
400
4
-12
53
17
527
5
-14
55
18
657
5
-14
56
19
788
6
-13
58
19
921
7
-12
60
19
1,057
8
-11
62
20
1,194
9
-26
227
67
1,381
15
-90
517
162
5,998
50
49
220
342
464
590
721
855
992
1,133
1,274
1,664
6,638
-5,639
-5,617
-21
-20,481
-20,457
-24
-26,771
-26,744
-27
-21,202
-21,159
-43
-85,024
-84,874
-150
NET INCREASE OR DECREASE (-) IN THE DEFICT FROM CHANGES IN DIRECT SPENDING AND REVENUES
Net Changes in Deficits
On-budget deficit change
Off-budget deficit change
-3,074
-3,074
0
-3,446
-3,438
-8
-4,474
-4,464
-10
-5,067
-5,055
-12
-5,143
-5,129
-14
-5,436
-5,419
-16
-5,497
-5,479
-19
Sources: Congressional Budget Office and staff of the Joint Committee on Taxation.
Notes:
Components may not sum to totals because of rounding; * = between -$500,000 and $500,000.
OCS = Outer Continental Shelf; SPR = Strategic Petroleum Reserve; FEHB = Federal Employee Health Benefit program; UI = Unemployment Insurance.
Estimates assume enactment near the end of calendar year 2013, and are relative to CBO's May 2013 baseline.
a.
Section 403 would also reduce discretionary accrual payments to the Military Retirement Fund by about $8 billion over the 2015-2023 period. If, within the discretionary caps, the
reduction in accrual payments makes possible an offsetting increase in other appropriations, the net effect would be an increase in outlaysbecause an intragovernmental payment
would be replaced by spending that goes outside the government.
b.
Section 502 would eliminate mandatory payments to nonprofit organizations that service student loans but would not change the need for loan servicing. Because the Department of
Education would still need to make those payments to loan servicers, CBO estimates that this provision would result in additional appropriations that would be roughly the same
magnitude as the mandatory funding that is being eliminated.