June 14, 1977
Page 18997
Mr. MUSKIE. Mr. President, the bill now before us, the Omnibus Multilateral Development Institution Act of 1977, is a vital element of our Nation's commitment to peaceful economic and political development in the third world. As a former member of the Foreign Relations Committee, I can attest to the significant contributions international lending institutions have made to the developing countries. We must continue to support the valuable work of these organizations.
I firmly believe that since we have taken the leadership in establishing these multilateral institutions, we have a moral obligation to meet our commitments to their continued success if we expect them to attract capital from other countries. International cooperation such as that promoted by the IFI’s has a stabilizing effect on international affairs. Clearly, this is in the interests of the United States. In carrying out this commitment to the IFI's, the President and our representatives before the IFI's should have our support in order to meet responsibilities of leadership which we as a nation must continue to assume.
Mr. President, let me now address certain aspects of H.R. 5262 which involve the budget process.
First, the first budget resolution targets for the International Relations Function are $9.3 billion in budget authority and $7.3 billion in outlays. If fully funded, the six authorization bills reported by the Committee on Foreign Relations, including H.R. 5262, would exceed the budget resolution target by $200 million in outlays.
Mr. President, I ask unanimous consent that a table showing the potential status of function 150 be printed at this point in the RECORD.
There being no objection, the table was ordered to be printed in the RECORD, as follows:
[Table omitted]
Mr. MUSKIE While I continue to endorse our commitment to the international lending institutions, I must warn my colleagues that the international affairs function must conform to the same budget restraint and discipline as the other functions of the budget.
Mr. President, I ask the Senate to bear in mind that historically, the Appropriations Committee has made significant cuts from the authorized levels for these programs and this will undoubtedly take care of the possible outlay overrun. While I am not objecting to the levels authorized by H.R. 5262 and will not object to the levels authorized in the other Foreign Relations Committee bills which will be considered, I am prepared to vote for a lower appropriation level.
In the second budget resolution, significantly lower levels for the international affairs function will probably be set. Such reductions would take into account the cuts in budget authority which are necessary to meet the outlay target of the first budget resolution.
This brings me to the second issue which I want to raise. The Foreign Relations Committee report accompanying H.R. 5262 makes a number of oblique references to the Budget Act and specifically to section 401(A) which, the report contends, need not necessarily apply to U.S. contributions to IFI's. Specifically the report states:
It is not absolutely clear that this bill, without the various provisos, would be subject to a point of order under section 401(A).
Mr. President, let me be clear. This bill would be subject to a point of order without the various provisos making such commitments subject to appropriations acts. Section 401 was designed to deal with "back door" spending. The legislative history of the Budget Act reveals quite clearly a policy in favor of subjecting to the Budget and Appropriations procedures all, I repeat, all budget authorizations not specifically exempted under the act. Section 401(a) makes any legislative measure providing new spending authority subject to a point of order unless the bill or resolution contains a proviso making it effective "only to such extent or in such amounts as are provided in appropriation acts." I fail to find any reference in the legislative history of the Budget Act which would suggest that foreign affairs or U.S. contributions to IFI's justify a special exemption. No ambiguity exists. International obligations of the United States as well as domestic ones are subject to the appropriations process. I conclude therefore that the provisos contained in the House version of this bill are necessary to avoid violating section 401(A) of the act.
Furthermore, Mr. President, the report notes that only the paid-in portion of the capital contribution is subject to an appropriation. No convincing case has been made that callable capital should be exempt from congressional budget and appropriations processes. It is my opinion that appropriating the full amount of callable capital helps the hard loan IFI's by strengthening their overall financial integrity as well as their ability to attract private capital on reasonable terms.
I would point out that the first budget resolution assumptions for the international affairs function assumed full appropriation of any callable capital amounts. Should the Congress make a different assumption, it is my judgment that the second budget resolution ceilings would have to be adjusted downward accordingly, rather than allowing the budget authority to be used for new or expanded programs not included in the March 15 reports to the Budget Committee.
Mr. President, I remind my colleagues that a similar effort to carve out an exception to the Budget Act for Federal assistance to housing and community development in S. 1523 was defeated by an overwhelming majority on June 6. In supporting my amendment, the Senate has indicated that it unequivocally wishes to preserve the integrity of the budget and appropriations processes and that it will not brook efforts by any authorizing committee to directly or indirectly undermine the Budget Act. For these reasons, I support the amendments offered by my colleagues from the AppropriationsCommittee which are clearly consonant with the guiding spirit of the Budget Act.
Mr. BELLMON. Mr. President, the bill before us is the first of several major authorizations this year within function 150, International Affairs. Since these authorization bills are expected to be taken up in sequence, I believe this is an appropriate time to discuss the relationship between these bills and the targets set by Congress when it passed the budget resolution.
The targets set by Congress for function 150 are $9.3 billion in budget authority and $7.3 billion in outlays. If one assumes the pending authorization bills in this function will be fully funded, and then adds the official estimate for the Export-Import Bank, and prior year authorizations and offsetting receipts, then the total comes out above the functional targets in the first budget resolution by $0.5 billion in budget authority and $0.3 billion in outlays. This is a substantial discrepancy, Mr. President, and I want to share my concerns with my colleagues in the Senate.
This bill also raises a serious legal issue involving the proper role of any authorization bill versus the proper role of the appropriations process. This issue involves "back door" spending and prior commitments of future year resources — practices which led to and were presumably closed by the passage of the Budget Act in 1974. This issue has been debated as part of an amendment offered by members of the Appropriations Committee and my thoughts on this issue were more thoroughly detailed at that time.
So I would like to focus on the budget issues relating to this bill and this function of the budget. What happened during the establishment of the fiscal year 1978 targets is easily explained. The Budget Committee recommended to the Senate targets for function 150 which assumed modest cuts in the President's budget request. These targets were accepted by the Senate. At conference, the House receded from its slightly higher figures and accepted the Senate numbers without change — although it did not accept the whole Senate rationale on how these targets were set.
The Congress then passed the conference report t containing the original Senate targets for function 150. Now, when we look at the sum of all the authorizing bills in the function, we find they total not a little less than the President's request, but more than his request by about $200 million in both budget authority and outlays.
So, Mr. President, because the authorizations so far total more than the Presidential request while the budget intent was to total a little less than the President's requests, we cannot say that fiscal
restraint has yet been exercised in this budget function. Yet, we cannot afford to have these budget targets exceeded, one function after another, without risking a significant increase in the deficit which is the product of those budget targets. That deficit is $64.65 billion and I do not wish to add pressure to increase that deficit.
Mr. President, some people will say there is no problem here. They will make two arguments: First, an expected downward reestimate of Export-Import Bank spending; and second, historic Appropriations Committee actions. The latter argument has some merit, but the former argument gives me concern and appears to be inconsistent with congressional efforts to get the budget under control.What is being suggested is that a new, and as yet unofficial, downward reestimate will allow this package of authorization bills totaling more than the President's request to fit within functional targets which are below the President's request.
I have trouble with this position. The Budget Committee has normally taken account of reestimates of uncontrollableprograms in the second budget resolution by adjusting the target downward or upward as appropriate. We simply cannot take advantage of downward reestimates to expand programs or to insert new programs into the budget.
Furthermore, Mr. President, this argument also seems ill-advised from the point of view of authorizing committees. Reestimates will not always be downward. Surely these authorizing committees will not want to see their programs cut at the last minute to absorb "upward" reestimates which happen to take place between the first and second budget resolutions. The Budget Committee has not forced such action in the past and this has been a fair and appropriate procedure. We must be evenhanded with both upward and downward reestimates in truly uncontrollable areas.
Where does this leave us, Mr. President? I think it means we have to recognize that the authorizing bills, if fully appropriated, push function 150 over the targets set in the first budget resolution. If this were the only consideration, I would feel duty bound to oppose one or more of the foreign affairs bills before us. Fortunately, however, there is another way budgetary discipline can be upheld.
The Appropriations Committees have a history of not fully funding the bills in this function. This is especially true for the bill before us now, the Multilateral Development Lending Institutions Act. Traditionally, administration requests for these international financial institutions — IFI's — have been reduced by an average of 20 percent. This year the House Appropriations Foreign Operations Subcommittee has trimmed almost $500 million — about 20 percent from the authorizations for international financial institutions — in addition to cutting small amounts from most other requests in function 150. If sustained in the full committee and on the House floor and concurred in by the Senate, this action would eliminate the overage in budget authority.
However, this action alone will not bring the function's outlays down to the target level because of the slow spendout of IFI funds.
In view of the strong expectation that Appropriations Committee actions will eliminate the overage in budget authority and some of the overage in outlays, I will not oppose the bill before us now, which appears likely to bear the brunt of the Appropriations Committees'cuts in any case. However, as a member of the Appropriations Committee, I intend to work toward additional cuts on other appropriations bills involving function 150 so that the budget restraint intended for this function, as for all other functions, is fulfilled.
Mr. President, the multilateral development lending institutions, such as the World Bank group, make an important contribution to the efforts of many countries to develop their human and natural resources to meet their people's aspirations for a better life. The money the U.S. contributes to most of the institutions involved in this bill is probably more productive dollar for dollar in achieving lasting economic development than the funds in the other authorization bills in this function. The United States played a major role in setting up these lending institutions years ago. Now that other countries are increasing their share of the financial contributions, we should continue to keep our contribution sizable.
In conclusion, Mr. President, I would like to make clear my continuing concern over the budget pressures on this function as a whole. While I will not oppose this particular bill, it is not yet clear to me that subsequent authorizing legislation in function 150 will not cause spending problems and I intend to work for lower levels of spending in the corresponding appropriations bills.