June 15, 1976
Page 18335
Mr. MUSKIE. Mr. President, I am restrained to make some observations about the pending bill and this amendment, in view of the first concurrent budget resolution, so that Members be aware of the implications from that point of view.
First of all, may I make the point that the budget resolution contains $1.1 billion in budget authority for energy above what was in the President's budget. We start with that.
Second, this is an authorization bill and not an appropriations bill, and we do not try to impose the same kind of budgetary disciplines upon authorization bills as we do on appropriations bills with some exceptions.
Nevertheless, there are implications when we approve authorizing bills that I think we ought to have in mind when we can see the accumulation of pressures on the appropriations process coming down the line.
As I have stressed many times before, Mr. President, the congressional budget process is not a line item process and the Budget Committee is not a line item committee. The other standing committees of the Senate do that job through individual authorization and appropriation bills.
The Budget Committee's job is to advise the Senate of potential problems with respect to the broad function of budget targets and budget aggregates. My reason for speaking today is that there is a potential problem of breaching the budget targets in the general area of energy.
Although the Budget Committee does not deal in line items, we obviously had to make some assumptions with regard to major program areas in order to arrive at meaningful budget targets.
In the case of energy, it is our assumption that the first budget resolution targets would allow funding of about $5 billion in budget authority and $4 billion in outlays for fiscal year 1977.
That is only our assumption, but I would point out that if the levels for energy are increased over these levels some other area of the budget will have to be cut unless we wish to increase the deficit.
The problem before us is that Congress is now considering a wide variety of energy legislation that, if fully funded at the authorization levels, would result in levels far in excess of our first budget resolution assumptions, more than $1 billion higher in the case of budget authority and about $500 million higher in the case of outlays.
Mr. President, I ask unanimous consent to have printed in the RECORD at this point a table showing these various pieces of energy legislation and their projected costs.
There being no objection, the table was ordered to be printed in the RECORD, as follows:
[Table omitted]
Mr. MUSKIE. I realize that the FEA bill before us today — by that I mean the bill reported by the committee — is only a small part of this total. And I also realize that many of the authorizations may not be fully funded. But we do know that high authorizations put pressure on the Committee on Appropriations to increase funding levels.
I must therefore advise the Senate that the Appropriations Committee, in several instances, will have to fund energy programs at well below the level of authorizations if we are to stay within the budget resolution targets.
The Budget Committee intends to monitor closely each spending bill that comes before the Senate to review whether the amounts provided are consistent with the budget resolution and to insure that the resulting functional spending totals are within the targets set by Congress in the first concurrent resolution of the budget.
In summary, I support this bill and I congratulate the chairman, the distinguished Senator from Connecticut, and the members of the Committee on Government Operations for reporting it at a level that is slightly below the current policy levels for this activity. But I put my colleagues on notice that we must consider carefully whether to load this bill down with other major authorizations which will exacerbate the overall problem on energy legislation that I have just discussed.
With respect to these amendments, amendment No. 1802, which I understand was approved by voice vote this afternoon, would provide off-budget energy conservation obligation guarantees to industry, nonprofit organizations, State and other governmental units. The total amount of outstanding obligations is limited to $2 billion in fiscal year 1977 and $2 billion in fiscal year 1978. My concern here is that it is an off-budget proposal, and it has been the attempt of the budget process to bring as much Government spending as possible on-budget where we can watch, control, and evaluate it in the light of other budget priorities.
With respect to amendment No. 1801, the amendment now before us, the proposal for energy conservation centers authorizes $25 million in fiscal 1977, the homeowners provision, that is, interest, subsidies, and reductions in loan which authorizes $100 million in 1977, the small business provision is $60 million over 3 years, and the winterization provision is $55 million in the first year. For the 3 years, I think Senator KENNEDY had the right figures, it is something between $800 million and $900 million in all. The first year costs then are about roughly $200 million in authorization. Am I correct?
Mr. HOLLINGS. Yes.
Mr. MUSKIE. $205 million. Now that is an authorization with respect to those items. It is not an appropriation. Authorizations do put pressure on the Appropriations Committee, and to the extent that these were not assumed in the first concurrent resolution they add to the potential pressures upon the Appropriations Committee, and I simply notify the Senate on that point.
Mr. HOLLINGS. If the distinguished chairman would yield, I think that it is correct to state that they were assumed, referring to the chairman's figures, in the energy conservation act, S. 3424.
We discussed that within committee at the time we were marking up. The energy conservation act, S. 3424 and energy conservation in buildings, H.R. 8650, had already been introduced prior to the first concurrent resolution. Under the distinguished chairman's figure of $165 million in budget authority for S. 3424 and $55 million for H.R. 8650, that would come to a total of $220 million, whereby the present amendment, including the one that we have already adopted, amendment No. 1802, plus the amendment now under consideration to be voted upon, amendment No. 1801, would amount to only $205 million.
If the Senator would yield further, since comments were made that give the impression we went helter-skelter and it was not considered, that the Senator's own Budget Committee never even heard of it, I wish to clarify that point.
On the contrary, this matter was discussed, and I am sure the distinguished chairman will remember when we discussed conservation. We pointed out the bill at that time, and at that time, rather than $4 billion, it was a $10 billion obligation guarantee bill. So we considered it.
It is within the budget. It is within the budget authority right now. Of course, I share the concern of the chairman of the Budget Committee, as a member of the Budget Committee, that in any of these off-budget matters, we have to watch very closely what the experience is and how we grow and how we go.
These matters were considered and were before the Budget Committee, not as line items, but the particular measures were in the Budget Committee documentation, the numbers and the amounts and everything else. I am sure that a little debate ensued with respect to energy conservation, and I recall definitely referring to the conservation bills in the debate at that time.
Mr. MUSKIE. I say to the Senator that my recollection of it is reinforced by my discussion with the staff, that there was discussion of conservation. After that general discussion, the total target for function 300 was cut, I think pursuant to an amendment by Senator BELLMON, and after that cut there was no attempt to allocate dollars to any of the items that have been discussed as legitimate proposals in the energy field. So that we now have pending before us — and the table I have put in the record will indicate that — the total proposals, in the shape of authorizations and appropriations, of $6.166 billion in budget authority and $4.726 billion in outlays, as against 5.1 and 4.2 that were included in the budget resolution.
With respect to the pending legislation, I suspect that we discussed in one form or another, most if not all of them, but we did not, in a line item way, assign dollars to them so that they came within the $5.1 billion and the $4.2 billion.
So I cannot say to the Senator that I can find a way to squeeze $6.1 billion in budget authority found in pending energy legislation into $5.1 billion that is assumed in the first concurrent resolution; nor can I squeeze $4.7 billion of outlays into $4.2 billion, which is in the first concurrent resolution — even though we discussed the subject matter covered by this legislation.
What I am saying to the Senator and the other Members of the Senate is not designed to denigrate any one of these objectives. What am saying is that if we approve any of this legislation, the Appropriations Committee then is going to have a tough job, if we enact all this, to stay within the totals of the budget resolution and fully fund all these proposals.
So that when we are talking about dollars, we should understand that we cannot be talking about full funding of these various proposals without cutting something else somewhere in this function, without increasing the deficit. That is all I am saying. All I am saying is that we are piling up pressures on this function to which we should be alerted and which we should bear in mind.
This is not the second concurrent resolution. I cannot raise a point of order about this bill or this amendment, nor do I intend to; but the facts are there. Because of our concern about the energy crisis, because it is a legitimate concern, because of all the ideas that are being generated, we are piling up pressures which are working against the functional targets of the first concurrent resolution, and I consider it my responsibility to inform the Senate of it.
I agree with the Senator that we did talk about conservation legislation and this particular bill, but we never did move from that discussion to a particular line item dollar sign for this bill.
Mr. HOLLINGS. Mr. President, again referring to the distinguished chairman's own listing of amounts and subject matter, in which he referred to the $6.1 billion and the task of trying to squeeze that into a finalized figure in the first concurrent resolution of $5.1 billion, I can suggest no better way than what we are doing presently. We are taking an 8-percent cut from the $220 million that was allowed under the chairman's own figure. If the really large item, ERDA, S. 3105, which is $4.254 billion, takes a similar cut in their budget and some of the others — there are actually 9 or 10 items listed here — get below their amount, I think we will be squeezing enough to satisfy the ceiling. In other words, I am starting to squeeze with the Senator from Maine. We are below the amounts the Senator has given, so we have not caused a squeeze; but we have started a process that, hopefully, others will follow, so that we can help the Senator squeeze it in.
Mr. MUSKIE. The Senator from South Carolina refers to these numbers as the chairman's own figures. These are not my figures.
Mr. HOLLINGS. The first concurrent resolution.
Mr. MUSKIE. No, this does not come from the first concurrent resolution. This comes from the price tag of the legislation that is pending. We did not assume these numbers in the first concurrent resolution.
Mr. HOLLINGS. We have already reduced the figures. I am just using all the Senator's figures. He just put them in the RECORD. The total amount allowed under the figures of the Senator from Maine for the two amendments is $220 million.
Mr. MUSKIE. Where does the Senator get the $220 million?
Mr. HOLLINGS. $165 million and $55million. It is a combination of those two.
Mr. MUSKIE. We did not allow those two numbers.
Mr. HOLLINGS. Let us use different language. The ones the Senator listed — $165 million and $55 million, to get to thefinal total of $6.1 billion. Our total amounted to $220 million. Rather than $220 million, we actually have cut down to $205 million.
Mr. MUSKIE. I accept no parentage for any of these figures, except to the extent that the staff has done this with the help of the CBO. These are the authorization levels in the legislation itself.
I did not put those numbers in the legislation. They are the amounts authorized in pending energy legislation and I am simply advising the Senate of their budgetary implications.
All I am saying is that the only figure on here for which the Budget Committee and the Senate are responsible is the $5.1 and $4.2 figures at the bottom. All I am saying is that we cannot include everything above that $5.1 in the $5.1 and stay within the budget. If the Senator started the process of squeezing those numbers down, that is fine, but he has to squeeze them by $1 billion.
Mr. HOLLINGS. Right.
Mr. MUSKIE. To accumulate a billion dollars in order to get down to the $5.1 billion.
What the Senator is saying is that what he has done with this bill is to reduce it following his original figures in his bill.
Mr. HOLLINGS. The old original figures as submitted by the Senator from Maine in the record are $165 and $55 million. The Senator submitted those as authorizations. What I am saying is that we have reduced those authorizations. What better way is there to squeeze and to reduce? If everybody similarly reduces their authorization figures, to which list the Senator refers and which he has submitted in the RECORD, we will be well within the $5.1 billion. The key large item of course, the $4.2 billion of ERDA, S. 3105.
What we are trying to do is not breach the figures. We are trying to help with the squeeze, and we are similarly concerned.
With that, Mr. President, we are ready to vote.
SEVERAL SENATORS. Vote! Vote!
Mr. MUSKIE. I did not pick out the Senator's amendment as a particular item. All I am saying is that, taken together with everything else, we have this problem, and I hope we will look at it.
I am ready to vote.
Mr. FORD. Mr. President, I should like to ask the Senator from Maine a question.
In the estimate he gave the Senator from South Carolina, we are over the budget how much — 200 and some odd million dollars?
Mr. HOLLINGS. No.
Mr. MUSKIE. No. If we approve the pending legislation and fully fund it, we will be a billion dollars over the budget and budget authority and a half million over the budget outlays — if we fund all. It will not be this bill in particular that is responsible, but it will be the total.
Mr. FORD. The total picture. If we authorize the amount over what the Budget Committee recommended, then the possibility is that the pressure is there and the Senator is trying to tell us the pressure is going to be applied?
Mr. MUSKIE. Yes, as it is with a lot of other authorization bills.
Mr. FORD. I understand. Would the Senator tell me what he did with the $4 billion loan guarantee item?
Mr. MUSKIE. That has already been accepted.
Mr. FORD. I understand, but how was that handled in the Committee on the Budget? Is that something the Senator does not expect to factor into the books?
Mr. MUSKIE. The $4 billion is off budget.
Mr. FORD. But we are authorizing $4 billion in loan guarantee?
Mr. MUSKIE. That is correct, and it is off budget
Mr. FORD. It is off budget and the Senator is not even considering that $4 billion that might be sitting out here as a problem of loss to the budget.
Mr. MUSKIE. The problem of off-budget agencies still exists. It is not one that we have come to grips with as effectively as we should. We have not dealt with those already in the budget.
Mr. HOLLINGS. Let me clarify one thing that the Senator from Kentucky asked.
On the off-budget amounts, where we provide the loan guarantees, we look at the experience. The best testimony we had was less than 2 percent loss of these particular loan guarantees. At a particular time when the Committee on Commerce was reporting it out, for example, at a $10 billion ceiling, that would have been $200 million. Now, at the present $4 billion level, it is down to $80 million. So we are helping with what the chairman is talking about, with respect to squeeze. We are trying to get it down and the actual figures, the authorization figures, in our amendment are less than listed before the Budget Committee.
Mr. FORD. Is the Senator giving a buffer, then, of $80 million in there that will be left in surplus in order to pay oft the 2 percent we lose?
Mr. HOLLINGS When we consider the entire budget and the financial impact, yes, we are trying to get our hands on it and look at it in that light.
Mr. FORD. But the chairman says it is off budget?
Mr. HOLLINGS. No, not the authorized amounts.
Mr. FORD. If we take everything into consideration, it is off budget?
Mr. HOLLINGS. No, sir, we are not off budget, because we have come down. We have come down $15 million and cut back the loan guarantees from $10 billion to $4 billion.
The distinguished chairman used a list. When the Senator from Maine submitted this list, he said, "Here are the total authorizations." He listed all of these, 13 in all. In listing these 13, at the time we passed the concurrent resolution, they had certain budget authority amounts in those 13 proposals. Of the two conservation measures that we have under present consideration, they have been reduced. They have been reduced from a total of $165 million and $55 million — that is S. 3424 and H.R. 8650 — reduced from that total of $220 million down, I say to the Senator from Kentucky, to $205 million. Then S. 3424, originally being considered as included in this list, had an off-budget financial impact, considering a 2 percent loss as a maximum estimate, which was $200 million, but has now been reduced to only $80 million.
What we have been doing, if we adopt this amendment, is not exacerbating or overrunning or even coming up to the levels as first presented to our Committee on the Budget, but lessened budget authority by about $15 million and lessened off-budget impact; S. 3424 being at $10 billion at that time, now cut back to $4 billion by a lesser impact of $120 million.
Mr. FORD. The Senator said he was operating a bank back in South Carolina and he was getting ready to make some loans on which he is going to lose $80 million. In this authorization, we are making loans or going to guarantee loans on which we know we are going to lose — at least past history indicates we are going to lose — $80 million.
Mr. HOLLINGS. Two percent or $80 million.
Mr. FORD. What we are going to lose is $80 million.
Mr. HOLLINGS. Right.
Mr. FORD. Where does that factor in so when things come out even, we know we are going to offset the loss?
Mr. HOLLINGS. In the off-budget amounts.
Mr. FORD. So the Senator is factoring in that — we are not factoring in $80 million so we can offset the loss we are going to have in loan guarantees?
Mr. HOLLINGS. That is right.
Mr. FORD. The Senator is saying my statement is corrrect, that he has not factored in the $80 million to offset the loss.
Mr. HOLLINGS. You have to factor in your losses. That is one of the tasks of the Budget Committee, to take what we call the macroeconomic — everything, not only what we call revenue spending but, coming up tomorrow, the tax spending. Everything is included.
Mr. MUSKIE. I think I might be able to add to the information which the Senator from Kentucky is seeking.
Loan guarantees are traditionally off budget, because they are expected to be repaid, and it is only the defaults that then come on budget when they appear. When they do, apparently it would amount, on the basis of experience, to about 2 percent, or $80 million. The appropriations then must be provided for in the appropriations bills and then on budget. In other words, any defaults come on budget.
In this instance, it is off budget because it is a loan guarantee, and that is the way loan guarantees are conventionally and traditionally handled.
Let me say on this next point, I am for the conservation approach to saving energy. I would like the Senator from South Carolina to understand that. I think he understands it, in any case.
Mr. HOLLINGS. I know that well, yes sir.
Mr. MUSKIE. All I am trying to do is keep Senators informed of how the budget pressures are developing in this particular function, because this particular function is under unusually heavy pressure this year. It seems to me that we ought to bear that in mind when we decide whether or not to vote for this amendment or this bill so that we are not caught, maybe later on down the road, and find ourselves in a difficult position to support a piece of energy legislation that we are for, but find that we cannot be for at that point, because we will have approached the budget targets.
Mr. BUMPERS. Will the Senator yield for a question?
Mr. MUSKIE. Yes.
Mr. BUMPERS. The ERDA authorization bill which came out of the Committee on Interior and Insular Affairs some time ago is now on the calendar ready for action. I assume that authorization comes within the same function that this bill comes within, in the Budget Committee's—
Mr. MUSKIE. That is the ERDA bill. S. 3105?
Mr. BUMPERS. Yes.
Mr. MUSKIE. That is a big one.
Mr. BUMPERS. It is my understanding, and I must confess I am not fully enlightened on the way the function system of the Committee on Budget works, but I had an impression we were somewhere between $80 and $83 million over budget in the ERDA authorization bill. Being a member of the Committee on Interior and being a great champion of almost everything in that authorization, I should hate to be assigned the authorization of deciding which $83 million would be cut out of that.
My question, I suppose, is really this :
When you add this amount of money which was not anticipated, then, of course, that is going to be that the ERDA authorization will have to be reduced by that much more; will it not?
Mr. HOLLINGS. Will the Senator yield at that point?
Mr. BUMPERS. I am happy to.
Mr. HOLLINGS. To comment on the expression, "not anticipated," I should like to say it was anticipated. In fact, we reduced the anticipation.
I have been having a difficult time. We not only knew about off-budget, but we used an amount. The amount on off-budget has come down from $10 billion to $4 billion.
On the amounts authorized in the other parts of the bill we have come down from $220 million to $205 million. So it was anticipated. We have not, when we adopted this amendment, brought further pressures on the ERDA bill that the Senator is now asking about.
Mr. MUSKIE. The staff advises me that S. 3105, which is the ERDA bill to which the Senator referred, is about $400 million above what was assumed in the budget resolution in function 300.
So if we were to fund a lot of these other items on the table which I have put into the RECORD today, that would put the squeeze on the ERDA authorization, no question about that. ERDA by the way contains three functional categories.
Mr. BUMPERS. That answers my question, I think, I say to the Senator.
Mr. McCLURE. Will the Senator yield?
Mr. HOLLINGS. First, I wish to ask unanimous consent to make certain that the RECORD indicates that the distinguished Senator from Kansas (Mr. PEARSON) and the distinguished Senator from New Hampshire (Mr. DURKIN) be added as cosponsors to amendments 1801 and 1802.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. HOLLINGS. I want to thank the Senator from Kansas for the role he played in our committee in providing leadership on these measures, as well as my distinguished friend from New Hampshire.
I shall say one more thing, then I think I will yield because we are ready to vote. I am very interested in ERDA. I serve on the Appropriations Subcommittee and we are trying very hard to stimulate increased activity on coal gasification, nuclear power, and other energy supply systems.
However, we are also very concerned that conservation get its fair share as well, especially in light of the high leverage of energy conservation investments.
I yield to the Senator from Idaho.
Mr. McCLURE. Mr. President, I would like to discuss one aspect of the discussion that has taken place.
First, let me state that I commend the Senator from Maine, the chairman of the Budget Committee, for undertaking this discussion this afternoon of the budgetary implications of the various actions taken.
One of the problems we have in the Budget Committee is how to treat the unliquidated liability of loan guarantees which are off budget. In this particular instance I do not know how we arrive at a figure. Perhaps the Senator from South Carolina can tell me how we arrive at a figure for budgetary impact of the liability of the Federal budget for loans that are defaulted.
I understood it would be a 2 percent loss ratio on the $4 billion that would be guaranteed; is that correct?
Mr. HOLLINGS. Information supplied by the people in HUD administering the FHA home improvement loan program indicates that they have less than a 2 percent gross default rate; that is, prior to recovery.
Mr. McCLURE. Is that 2 percent of the total?
Mr. HOLLINGS. Yes.
Mr. McCLURE. What is the length of the maturity of the loans that would be guaranteed under this amendment?
Mr. HOLLINGS. Fifteen years in the case of energy conservation measures other than renewable resource energy measures. The corresponding figure for renewable resource energy measures is 25 years.
Mr. McCLURE. So that if there is a 2 percent loss over a 15 year period, it is an $80 million loss over a 15 year period and not in fiscal year 1977.
Mr. HOLLINGS. That is correct.
Mr. McCLURE. Or is it?
Mr. HOLLINGS. That is correct.
Mr. McCLURE. The reason I ask the question is if we faced an $80 million loss each fiscal year, it is a lot more than a 2 percent loss in each of the fiscal years or is it a total over the life of 15 years?
Mr. HOLLINGS. The total over the life of the program.
Mr. McCLURE. Total over the entire life of the program?
Mr. HOLLINGS. Right.
Mr. McCLURE. Then it would seem to me that the impact in fiscal 1977 would be far less than the 2 percent of $4 billion.
Mr. HOLLINGS. That is right. The actual Federal expenditures in any given year arising from defaults should be very small. We have also reduced the size of the obligation guarantee program from $10 billion to $4 billion, thus further reducing the amounts that might be paid out.
Mr. McCLURE. I thank the Senator. This underscores the continuous liability in loan guarantees. There has to be some kind of reasonable experience by which we can judge what future impact it will have upon the various functions of the budget. But it seems to me that the Senator from Maine is exactly correct in raising the issue as we go through the authorization process to determine whether or not we really understand what it is we are doing to the pressures within each function of the budget category with respect to the first concurrent resolution.
If we do not address ourselves in that way, we will have built pressures upon the budget that will simply render the first concurrent resolution as almost utterly meaningless, and we will end up as a matter of course always passing a second concurrent resolution that is far larger than the first concurrent resolution.
So I wish to commend the Senator from Maine, the chairman of the committee, for having raised this issue, and again to highlight the difficulty of making the estimates of the contingent liability of all budget loan guarantees.
I thank the Senator.