Budget Policy:

Issues in Capping Mandatory Spending

AIMD-94-155: Published: Jul 18, 1994. Publicly Released: Jul 18, 1994.

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Pursuant to a congressional request, GAO reviewed whether the implementation of a budgetary cap on mandatory spending is a practical way to control the growth of mandatory programs.

GAO found that: (1) although a spending cap on mandatory programs would achieve savings, a cap would have little effect on long-term growth trends in these programs; (2) mandatory program spending is based on eligibility and benefit formulas which a sequester may not change; (3) spending cap advocates believe that the threat of sequestration would force Congress to enact change in the underlying structure of mandatory programs; (4) if sequesters are imposed, agencies may experience problems in successfully reducing mandatory program spending, which could lead to continuous sequestration cycles; (5) there are five design characteristics that make mandatory programs difficult to implement and administer; (6) mandatory programs with high or volatile growth rates would be the most affected by a cap even if Congress specified the approach agencies should follow in sequestering individual programs; (7) mandatory program spending may be difficult to contain, since sequesters of mandatory programs may not alter the future spending base; and (8) Congress is not limited to considering mandatory program caps, since it can enact program changes during reauthorization or reconciliation and vote on whether or not to make program changes when mandatory spending exceeds certain targets.

Matter for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: Separate legislative proposals to establish periodic lookback procedures with respect to deficit reduction progress, including mandatory spending levels, were offered but defeated on the floor of the House and the Senate during the summer of 1997. A motion to consider the lookback proposal offered by Senators Brownback and Kohl on June 27, 1997 as an amendment to the revenue reconciliation bill received 57 votes, failing to get the required 60 votes to waive Section 313(b)(1)(A) of the Congressional Budget Act. A different but related budget enforcement measure, H.R. 2003, was offered but rejected on the House floor on July 23, 1997 by a vote of 81-347. No further action is anticipated.

    Matter: Congress may wish to consider a process under which it periodically assesses mandatory spending and votes on whether and/or how to change mandatory programs to reduce spending. In this process, Congress would examine the causes of growth in mandatory spending and consider changes in the underlying design and benefits structure of mandatory programs to achieve reductions in spending if deemed appropriate.

 

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