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To: PaulM who wrote (23304)	11/23/1998 9:25:00 PM
From: Alex	Respond to of 116790

US EMERGENCY SPENDING LOOPHOLE LIKELY TO REMAIN IN 1999 --Analysts Say Tight 2000 Spending Caps May Lead to Future Use of Emergency Designation --Budget Experts Say Emergency Designation Could Be Used for Tax Cuts By John Shaw WASHINGTON (MktNews) - In the weeks since Congress completed its regular legislative business for the year, torrents of criticism have gushed forth from Capitol Hill on the sloppy, undisciplined U.S. budget process. Lawmakers from both parties have expressed deep anger at the way the massive $500 billion omnibus spending bill was assembled this fall and specifically have blasted the way the "emergency" designation was used to allow for about $21 billion more than spending gaps would have allowed. The emergency bill, which was attached to the larger omnibus package, provided funds for such items as anti-terrorism programs, Bosnian peacekeeping operations, farm relief, and upgrading federal computers to deal with the year 2000 glitch. While many lawmakers have slammed the entire end-of-the-year fiscal process, the emergency bill has come under especially harsh attack. Sen. Chuck Hagel, R-Neb. blasted the entire omnibus package, but focused much of his ire on the emergency portion of the bill. "Instead of cutting taxes, paying down the national debt, or even 'saving Social Security,' this bill squanders the first budget surplus in almost three decades, almost a third of the projected surplus is going to more than $20 billion of new spending, not paid for by cutting any other spending," Hagel said last month. Sen. John McCain, R-Ariz., said the omnibus bill made a "mockery of Congress's role in fiscal matters," adding, "the bill is loaded with locality-specific, special interest, pork-barrel spending projects, which are paid for by robbing billions from the budget surplus." Senate Majority Whip Don Nickles said he doesn't approve how the emergency designation was used this fall, and will press next year to tighten it up by requiring 60 votes to allow an item to be considered as an emergency. Congress and the White House created caps on discretionary spending in 1990 and extended them in 1993 and 1997. The caps agreed to last year effectively freeze discretionary spending for five years at about $560 billion. According to a memo by the Senate Budget Committee, budget law does not clearly specify what constitutes an emergency, but the 1990 budget enforcement package contemplated that only "dire" emergencies would be removed from the strictures of the spending caps. In 1991, the Office of Management and Budget under President George Bush suggested using five criteria to determine if spending should be designated as an "emergency." OMB said emergency spending should be: a necessary expenditure that quickly came into being; there is a compelling need for immediate action; its need should have been unforeseen; and it should not represent permanent spending. "Since emergency spending causes the discretionary caps to be adjusted upwards the practical result of emergency spending is obviously to reduce the currently projected budget surplus," the Senate Budget memo adds. Despite all the lamentations now about emergency spending, some analysts doubt the designation will disappear anytime soon. "The emergency exception has now proven itself to be so remarkably versatile that it would be surprising if it were not tried again next year," said Stan Collender, director of budget policy for the Fleishman-Hillard public relations firm. "Once a gimmick has been used successfully and without extraordinary negative political repercussions it tends to be used repeatedly thereafter," he said. In fact, Collender argues, the emergency designation could also be employed to allow for tax cuts without offsets. "It is not hard to see how a deal could be reached under these circumstances. In return for Congress agreeing to use the emergency designation for its domestic priorities, the White House agrees to the emergency designation for some of the revenues changes favored by the House and Senate," Collender said. Market News International Washington Bureau: (202) 371-2121 [TOPICS: MNSBUD] 14:06 EST 11/23 © 1998 Market News Service, Inc. economeister.com