Budget Issues

Pursuant to a congressional request, GAO compared defense, nondefense, and total discretionary spending under five discretionary spending paths, focusing on: (1) the Congressional Budget Office (CBO) estimates for the congressional budget resolution for fiscal year 2000; (2) the CBO baseline assuming that discretionary spending complies with the statutory caps through 2002 and grows with inflation thereafter (CBO capped baseline); (3) an alternative CBO baseline assuming that discretionary spending grows with inflation after 1999 and with no projection for emergencies; (4) the Office of Management and Budget (OMB) Mid-Session Review estimate of discretionary spending under the President's budget without the Social Security and Medicare reforms proposed; and (5) the OMB baseline assuming that discretionary spending complies with the statutory caps through 2002 and grows with inflation thereafter (OMB capped baseline).

GAO noted that: (1) OMB's and CBO's budget projections shows that defense discretionary spending grows through 2004, levels off through 2007, and then gradually increases in 2008 and 2009; (2) in contrast, nondefense discretionary outlays would fall sharply through 2002, increase in 2003, and then level off for the rest of the period; (3) assuming that nondefense discretionary spending grows with inflation and total discretionary spending is consistent with the congressional budget resolution, nondefense discretionary spending would fall through 2002, increase in 2003, level out for 2 years, and then steadily fall throughout the rest of the period; (4) without the Social Security and Medicare reform proposals, the defense discretionary spending drops in 2000 and then grows over the rest of the period; (5) in contrast, nondefense discretionary outlays would increase slightly in 2000, then drop through 2002, increase in 2003, level off through 2007, and then increase again in 2008 and 2009; (6) in both paths--defense and nondefense discretionary spending--defense discretionary spending is greater than the nondefense discretionary spending from 2001 through 2009; (7) defense spending under the OMB Mid-Session Review path largely mirrors the congressional budget resolution defense spending through 2004; (8) from 2004 through 2009 defense spending under the OMB Mid-Session Review path is greater than under the congressional budget resolution; (9) nondefense spending under the OMB Mid-Session Review path is greater than under the congressional budget resolution throughout most of the period; (10) CBO's and OMB's projections compares, in terms of outlays associated with constant real resources, total discretionary spending anticipated under the congressional budget resolution and under the OMB Mid-Session Review path with three baselines--CBO inflated, CBO capped, and OMB capped; (11) the CBO and OMB capped baselines show declining spending through 2002 when the statutory budget caps expire and then represent a steady level of resources; (12) under the congressional budget resolution, defense spending after 1999 exceeds nondefense spending, but both defense and nondefense discretionary spending fall in real terms over the period; and (13) defense spending under the OMB Mid-Session Review path is fairly similar to that of the congressional budget resolution from 2000 until 2004, after which point the defense spending under the OMB Mid-Session Review path grows in real terms.