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CRS8616Fpage11
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CRS8616Fpage11
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CR3-5 A. G-R-H DEFICIT REDUCTION FORMULA The calculation made to determine the size of the percentage reduc- tion in total defense spending in FY 1986 has three basic steps, shown in table II, on page 6. The law stipulates that the maximum deficit reduction required in FY 1986 totals $11.7 billion. The first step (step one, table II) is to divide the total excess deficit in half, associating one
CRS8616Fpage13
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CRS8616Fpage13
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by the Congressional Budget Office or the Office of Management and Budget. Because GAO added $6.3 billion to the OMB/CBO budgetary resources base, GAO estimated the outlay base total from sequesterable budgetary resources to be $1 billion higher than the OMB/CBO figure (a total of $110.3 billion). 2/ The expression "to ‘shelter’ programs" is used by the authors to distinguish between 1) those programs
CRS8616Fpage08
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CRS8616Fpage08
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of terms. II. DEFENSE SPENDING SUMMARY OF G-R-H BUDGET REDUCTIONS Both the joint OMB/CBO and GAO reports calculate that, for FY 1986, $11.7 billion in Federal outlays must be cut to comply with the deficit _l/ The Gramm-Rudman~Hollings Deficit Reduction Process (P.L. 99-177) and the Department of Defense: A Summary Review by Alice C. Maroni and Robert E. Foelber. CRS Report No. 86-7 F. January 6, 1986.
CRS8616Fpage09
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CRS8616Fpage09
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$287.0 billion as estimated by GAO). The $5.4 billion reduction in defense outlays also amounts to a 4.9 percent reduction in "sequesterable" defense outlays (totaling $110.3 billion as estimated by GAO). . The GAO report amended the OMB/CBO report by adjusting total Department of Defense (DOD) unobligated balances to include $6.3 billion in prior year funds identified in the FY 1986 DOD
CRS8616Fpage10
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CRS8616Fpage10
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CRS-4 TABLE I. Reduction Summary, FY 1986 (current dollars in billions; percentages shown in brackets) Direct Loan Spending Obligations and Estimated Category Authority 3/ Loan Guarantees . Outlays National Defense 2/ V 13.8 [572] n/a 5.4 [46Zl Department of Defense 13.3 [552] n/a A 5.1 [4411 All Other Defense-Related .5 [ 22] n/a 3 .2 [ 22] Non-Defense 10.5 [432] 8.9 6.3 [542] Total _c_/ 24
CRS8616Fpage07
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CRS8616Fpage07
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be made. This Alert explains how DOD is affected by the sequestration process, how the President has chosen to use limited options in the FY 1986 budget reduction process, and how the reductions affect the distribution of defense spending. I. BACKGROUND The FY 1986 budget sequestration process mandated by the Balanced Budget and Emergency Deficit Control Act of 1985 (P.L. 99-177), also known
CRS8616Fpage12
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CRS8616Fpage12
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reduction made in the remaining programs in each account (see page 8). b/ Figure reflects outlays from 1) obligated balances of budget authofity and 2) military personnel programs exempted from sequestration (see page 7). 2] Represents an average of the CBO estimate of $112.4 billion and the OMB estimate of $106.2 billion. The GAO estimate totaled $110.3 billion.
CRS86-16Fp13b
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CRS86-16Fp13b
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CRS-9 TABLE III. The Effect of Program Exemptions on the Defense Cut Percentage . Required Defense Alternative Outlay Cut Outlay Base Calculation/Percentage I. Base Case 5.4 172.4 3/ 5.4/172.4 ‘= 3.1% II. After Exempting = 4.9% Personnel Programs 5.4 110.3 2] 5.4/ll0.3 3/ Figure, as estimated by the Congressional Research Service, does not include outlays from obligated balances of budget
CRS86-16Fp13a
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CRS86-16Fp13a
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(see table III). "Sheltered" Programs In addition to most military personnel programs, the President has chosen to "shelter" from the FY 1986 sequestration process a total of $5.2 billion in budgetary resources from a variety of programs. The President's Strategic Defense Initiative (SDI) programs represent over 50 percent -- $2.8 billion -- of the funds “sheltered” and
CRS8616Fpage21
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CRS8616Fpage21
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.5“ 1-14A A0vA14ct nnocummn 1.495 - 14 1.129 350 430 119.145 - 0.014 - 0.444 - 514 1'/A-10 11113111011) 11oA14E1 40.911 - 2.321 341.445 - 11.035 10.302 2.110.219 -109.449 -129.251 -11.502 1/A-10 Aovauct PIOCUIIEIIEII 540 - 29 3.239 . 102 191 201.045 - 10,142 - 10.313 - an C11;-03£111£L1c0P1£n)su12£n s1ALL1014 12.143 031 20.310 - 1.313 1.944 225.502 - 11.390 - 13.334 - 1,141 01:53! ADVANCE
CRS8616Fpage20
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CRS8616Fpage20
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"new" budget authority appropriated in FY 1986 and "old" budget authority appropriated in earlier years but not obligated. The OMB/CBO report lists separately the budget resources available to a PPA for each fiscal year for which un- obligated funds are still available. For the account "Aircraft Procurement, Navy," budgetary resources in FY 1984 and FY 1985 i are still
CRS8616Fpage14
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CRS8616Fpage14
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1984 spending au- thority, FY 1985 spending authority, and FY 1986 spending authority asso- ciated with each program such that the percentage cut in 1) total "seques- terable" budgetary resources for every account and 2) "sequesterable" budgetary resources associated with, for example, FY 1984 or FY 1983, considered separately within each account, would be 4.9 percent. In some
CRS8616Fpage16
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CRS8616Fpage16
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930 Military Construction_d/ 9,334 457 1,347. 66 Family Housing 3,313 162 1,510 74 Revolving and Management - , Funds ' . 1,635 80 6898 44 (dollars in billions) DOD Total 5] 278.4 13.6 105.5 5.1 National Defense 1 Function Total 3] 287.0 14.1 110.3 5.4 3] Figures represent 4.9 percent of "sequesterable" budgetary resources that comprise the budgetary resource base. b/ Figures
CRS8616Fpage15
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CRS8616Fpage15
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CR3-ll c. DISTRIBUTION or BUDGET cq;§_ The 4.9 percentage reduction for national defense programs applies to both budgetary resources and outlays, as shown in table V. Of the $13.3 billion reduction in the Department of Defense budget, as estimated by OMB and CBO, procurement programs account for 50 percent of the cut. Almost 70 percent of the reduction in Department of Defense budgetary
CRS8616Fpage19
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CRS8616Fpage19
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CRS-15% APPENDIX A: Description of a Single Page From the Defense Section of the OMB/CBO Sequestration Report To assist the reader in identifying sequestrations calculated by OMB and CBO for individual programs, projects, and activities (PPAS), this section describes the type of information to be found in the appendix of the OMB/CBO report detailing reductions in defense PPAs.. An actual page
CRS8616Fpage17
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CRS8616Fpage17
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, but by the fresidential discretion allowed in their application. Without changes in P.L. 99-177, the GrammrRudman-Hollings legislation, the overall budget reduction size limitation and the application flexibilities allowed in FY 1986 will not apply in future years.
CRS8616Fpage18
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CRS8616Fpage18
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LIIMJ 1\I
CRS8616Fpage22
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CRS8616Fpage22
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The Gramm-Rudman-Hollings sequestration process for fy 1986
Title
The Gramm-Rudman-Hollings sequestration process for fy 1986: A summary of DOD elements in the OMB/CBO and GAO sequestration reports
Date
1986
Summary
This Alert explains how the Department of Defense is affected by the Gramm-Rudman-Hollings sequestration process, how the President has chosen to use the limited options allowed in the FY 1986 defense budget reduction process, and how the reductions affect the distribution of defense spending.
CRS8616Fpage23
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CRS8616Fpage23
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year basis. Maximum Deficit Amount.-- the level to which the deficit must be reduced in the event that the G-R-H deficit reduction plan takes effect. As defined in the deficit reduction legislation, the maximum deficit ,amount, or target, for FY 1986 is $171.9 billion, for FY 1987, $144.0 billion, for FY 1988, $108.0 billion, for FY 1989, $72.0 billion, for FY 1990, $36.0 billion, and for FY 1991

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