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CBO'S ACCOMPLISHMENTS DURING FY 1996

During fiscal year 1996, CBO continued its primary task of supporting the Congress in developing and enacting the fiscal year 1996 and fiscal year 1997 budgets. In addition to the priority given to balancing the federal budget, major budgetary issues during the year included implementing unfunded mandates reform, reforming government entitlement programs, regulatory reform, and tax reform. In addition, many of the legislative initiatives introduced by the new Congress involve changes to the budget process and have a major impact on the federal budget, all of which require CBO's input. The Unfunded Mandates Reform Act of 1995 (Public Law 1044), which took effect on January 1, 1996, placed significant new requirements on CBO and the agency worked hard to provide the estimates required by this law in a timely manner.

During the year, the Budget Analysis Division (BAD) devoted most of its efforts to supporting the work of the Congress in its efforts to balance the budget over the next several years. In November 1995, the division completed a cost estimate of the conference agreement on the Balanced Budget Act of 1995 using the economic and technical assumptions underlying the budget resolution for fiscal year 1996. In December, as required by the third Continuing Resolution for Fiscal Year 1996 (Public Law 104-56), CBO updated its baseline economic and budget projections and prepared a revised estimate of the Balanced Budget Act. For the rest of the year, the division supported the Congress in its fiscal year 1997 budget formulation and implemented the Unfunded Mandates Reform Act of 1995. As required by the law, BAD's new State and Local Government Cost Estimates Unit reviewed over 700 bills and other legislative proposals to determine whether they contained intergovernmental mandates. In 69 cases, the unit determined that the legislation included one or more intergovernmental mandates and estimated their

cost.

In addition to providing the Congress with regular analyses and projections of the U.S. economy, the Macroeconomic Analysis Division published major studies and prepared testimony in several economic areas, including: the fiscal dividend from balancing the budget; impacts of taxes on labor supply; the long-term budget outlook; generational accounting; and CBO's method for calculating potential output.

Along with its regular revenue scorekeeping reports and revenue cost estimates, the Tax Analysis Division published one paper and three memoranda on subjects of interest to the Congress: The Incidence of Corporate Income Tax, The High Deduction/MSA Option Under Medicare; Exploring the Implications of the Balanced Budget Act of 1995; Projecting Capital Gains Realizations; and The Growth of Federal User Charges: An Update, and provided a large number of other

CBO'S ACCOMPLISHMENTS DURING FY 1996 cont.

The CBO's four program divisions--Natural Resources and Commerce, Health and Human Resources, National Security, and Special Studies--continued to assist the Congress in focusing its debate by organizing and presenting analyses and testimonies that outlined the budgetary effects of numerous policy options and alternatives. The subjects of these analyses included options for reducing the deficit by cutting spending for agricultural programs, the budgetary effects of natural disaster insurance reform, and options for moving to advanced television technology and the effects of proposals related to spectrum auction receipts. Extensive support continued on a broad range of health policy topics and welfare reform proposals that included: cost savings and other effects from proposals for Medicare and Medicaid reform; the private sector impacts of various proposals to modify private health insurance, and the costs and effects of modifying many human resource programs such as limiting the duration of AFDC benefits and proposals for increasing the minimum wage rate and changing other provisions of the Fair Labor Standards Act.

Furthermore, in fulfilling the requirements of the new Unfunded Mandates Reform Act, the program divisions, led by the Natural Resources and Commerce Division, completed private-sector mandate statements on nearly 700 pieces of legislation. Overall, approximately 90 statements found that the bill contained a private-sector mandate as defined by the act, and over 40 percent of the bills with mandates were judged to cause a private-sector cost in excess of the threshold value of $100 million per year in any of the first five years the bill is in effect.

Among the defense budget issues analyzed and published by CBO in fiscal year 1996 were military compensation, tactical aviation and strategic lift programs, veterans' health care, and foreign aid. And government management and budget process issues that were addressed this year included biennial budgets, mandatory spending control mechanism, trends in federal employment, and the budgetary impact of Fannie Mae and Freddie Mac.

During the past year CBO continued to upgrade its network infrastructure to a new topology that is faster, more reliable, and easier to maintain than the older technology it replaced. We also improved the reliability and security of our network by improving server backup systems and virus protection. Finally, CBO began converting its Internet gopher site to a World Wide Web site which we intend to be up and running by the spring of 1997. Currently, CBO's gopher site is accessible through the Legislative Information System site--itself still under construction--on

CHANGES IN CBO'S PLANS FOR FY 1996 AND FY 1997

The CBO actual spending in fiscal year 1996 showed a significant variance from the fiscal year 1996 plan in several areas. Postal costs and printing costs in fiscal year 1996 were $75,000 and $125,000, respectively, below their plans. Both variances resulted from an unexpected drop in the number of published studies, which ended the year at just 60% of the planned level. Spending for interagency ADP and systems, data, and model development projects was also below plan with savings of $400,000 due to lower than planned usage of the HIR computer and reduced demand for ADP systems updates.

The fiscal year 1997 estimate presented here varies from the original request in two major areas. Late in fiscal year 1996, the House Information Resources computer center reduced its billing rates by 37.5%, resulting in savings of about $500,000. These savings will be offset somewhat by increased spending to evaluate and test options for relocating CBO's data base and other mainframe operations in case the House decides to discontinue operating its own mainframe computer. We have also shifted about $300,000 of these savings to upgrade some major software applications, to continue upgrading our network backbone to a wider bandwidth, and to develop and implement a CBO World Wide Web page.

CBO'S GOALS FOR FY 1998

Many of the legislative initiatives planned by the Congress involve changes to the budget process and could have a major impact on federal, state, and local budgets. These actions will require significant input by CBO in both the planning and implementation stages. In fiscal year 1998, the Congressional Budget Office will continue to fulfill its mandate as previously stated and if amended. In order to achieve this goal, the following objectives support this budget request:

To continue to perform our new duties under the Unfunded Mandates Reform Act of 1995 while maintaining the quality and timeliness of the analysis currently being provided the Congress and managing this growing workload with the fewest resources possible;

To employ new data models, computer hardware, and software technologies designed to improve the quality, speed, and efficiency of agency staff; and

To continue efforts to realize savings in administrative costs by improving management information systems and using the most cost-effective methods

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(a) Cost estimates are tracked from the start of the legislative session through November. (b) Includes a comprehensive forecast prepared twice-yearly, plus the quarterly review required by the Balanced Budget and Emergency Deficit Control Act of 1985

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The above tables quantify CBO's main work products. A large number of less formal tasks, which are harder to tabulate, are also performed by CBO. In recent years, the number of formal and informal requests from Congress for CBO assistance has been growing. As a result, the number of informal responses to Congressional requests-in the form of staff memorandum, letter, or telephone response--has been growing significantly, as is the time needed to satisfy these

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