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FOIA Number: 2012-0769-F
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the William J. Clinton
Presidential Library Staff.
Collection/Record Group:
Clinton Presidential Records
Subgroup/Office of Origin:
Council on Environmental Quality
Series/Staff Member:
Kathleen (Katie) McGinty
Subseries:
OA/ID Number:
2618
FolderID:
Folder Title:
Energy [1]
Stack:
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Section:
Shelf:
Position:
S
61
5
8
1
PHOTOCOPY
PRESERVATION
February 16, 1992
To: Katie
From: Pam
Talking Points on Economic Package:
o
Energy Efficiency
- Weatherization programs will get an additional $50 million in
FY 1993. States will be required to match federal funds to gain
a grant. With the state funds, 62,5000 additional homes will be
weatherized.
- The Energy Policy Act required new research programs and
demonstrations/commercialization of renewable and conservation
technologies. The package includes a total of $1.4 billion in
funding above the baseline for these projects.
- "Model Projects" in Industrial and Energy Conservation: $20
million in cost-shared federal funding will be available for
model projects that demonstrate or accelerate the commercial
acceptance of advanced energy saving technologies and products.
- Federal Energy Management: The Administration will spend
nearly $2 billion between FY 94-97 to increase energy efficiency
in federal buildings.
o Alternative Fueled Vehicles
- The purchase and/or conversion of gasoline powered vehicles
will be funded for an additional $30 million.
o Interior Cost Savings Projects:
- Implement a federal irrigation water surcharge. This proposal
would authorize a per acre-foot surcharge on water sales to
reclamation projects throughout the West. Revenue from the
surcharge would be deposited into a special fund for use in
mitigating irrigation-caused adverse impacts on fish and
wildlife. (Save $15M)
- increase grazing fees (Save $35 M). The amount to be raised
will be negotiated with DOI and USDA.
- permanently extend hardrock mining holding fees and royalties -
save $357M. This is an extension of last year's legislation
passed by Congress that authorized a $100 per claim holding fee
on all hardrock claims on Federal lands (previously only $2-$5
was needed to buy the claim) for one year --now the
Administration would like to permanently extend the fee. The
Administration is seeking the extension of this law as well as a
12.5% royalty fee on all minerals discovered/extracted.
- phaseout below-cost timber sales - $28 million. The exact
forests have not been designated, but any forest with a three-
year run of below cost timber sales is likely to be targeted.
The phaseout will be stretched over three years.
EPA stimulus projects:
- Expand EPA voluntary green programs $23M
- Watershed Resource Restoration $47 M
Green lights, computers, etc.
- Wastewater Treatment SRF $845M
Environmental Infrastructure:
- In USDA, $188M and DOI, $349M for enviro infrastructure such as
trail building, parks, etc.
OTHER
USDA
- Increase Rural Water and Wastewater Loans by $470 million
- Increase Funds for Watershed Projects $47 million
- Rural Development Administration loans $1.1 billion
- Forest for the Future $30 M
- Tree Planting $41M
- National Research Initiative on food safety & sustainable ag -
$30 M
- Forestry Research Initiatives $20
- Wetlands Reserve Program - maintained at levels of $373 for
FY 94
DOI
- Historic Preservation funding $23 M
EPA
- Drinking water SRF $600 M
- Clean Water SRF $1,200M
- Completion of Wastewater Treatment Grants $1.9 B in savings
- Increase Private sector financing of Superfund $109 M
ENERGY TAX
EITC
WEATHERIZATION LOW Income Home Energy Assistance Plan (LIHEAP)
ITC & R&D tax credits
more efficient
technologies.
February 16, 1993
TO:
AGJ
FROM:
MER
RE:
Energy tax message for enviros briefing
GENERAL: It's important for the environmentalists to understand
how critical it is for them to frame this tax in terms that will
increase its support. Which means adding to their language a
sense of context and economic fairness.
In talking with the leaders of the environmental groups
today, you should make this case to them. That is, in talking
about the tax, they should talk about its environmental benefits
and more.
Celinda's internals make clear that if this is simply
about raising revenues, we face strong opposition (75 percent
oppose an energy tax that will increase utility bills; 91 percent
resent an energy tax because it will increase their bills and 81
percent because it hits the poor hardest). The environment
message sells, but it isn't enough.
MESSAGE:
O PUT IT IN CONTEXT of the overall economic plan: higher
taxes on the rich, on corporations; cuts in government spending
and wasteful perks; tax breaks for working poor families and
increased funds for weatherization for low income homes to
protect low income families from the impact of the tax; and, the
fact this energy tax is phased in over three years;
O REDUCE POLLUTION AND INCREASE CONSERVATION: there's a
reason for this tax that goes beyond deficit reduction -- it's
the only tax that will help reduce pollution, protect and improve
the environment, and increase energy conservation -- important
long term goals for America.
O TARGET REVENUE by emphasizing that these funds will go to
deficit reduction and, perhaps more importantly, to change
behavior for the country's long-term good;
NOTE: On the question of competitiveness, that is, the
argument that higher energy costs will make our businesses less
competitive, the answer is that the energy tax must be taken in
the context of the broader economic package which gives
businesses an incentive to invest, to create jobs, and helps by
accelerating the development of energy efficient technologies.
####
1
February 15, 1993
MEMORANDUM FOR THE VICE PRESIDENT
FROM KATIE
SUBJECT: MEETING WITH ENVIROS ON STIMULUS PACKAGE
You will be meeting again with the heads of the largest
enviro groups to brief them on the environmental aspects of the
stimulus package. Attendees will include:
Jay Hair, NWF
George Frampton, Wilderness Society
Jim Maddy, LCV
Fred Krupp, EDF
Jane Perkins, FOE
John Adams, NRDC
Rodger Schlickheisen, Defenders
Johnathan Lash, WRI
Ben Chavis, United Church of Christ
You will want to extensively brief them on the energy tax
options.
Talking Points on energy tax:
*
The administration is proposing a modest broad-based energy
tax designed to
*
reduce the deficit and thereby stimulate private
investment;
*
make our economy more energy efficient;
*
improve the environment; and
*
enhance national security by reducing energy
imports.
*
The tax is based on the energy content of fuels (called a
Btu tax for "British thermal units") along with a national
security premium on oil to discourage imports and help
encourage domestic natural gas. The tax is levied on energy
sales to industries and utilities. The energy tax will be
phased in over three years, at which point it will provide
$22 billion dollars annually for the treasury. (The phased-
in supplemental petroleum tax is delayed for one year for
home heating oil, in order to protect consumers in the
Northeast who heat homes with oil.)
*
Because it applies to all energy products, the tax will not
unduly burden any region, industry, or consumer segment.
The U.S. spends about $500 billion on energy every year, so
that a tax generating $22 billion in net revenues will not
seriously increase overall energy expenditures. When fully
phased in:
*
Gasoline prices would increase by about 8 cents, a
6% increase;
*
Electric bills would increase by less than 4%; and
*
Natural gas prices would increase by about 4%.
*
Home heating oil prices will increase by about 8%,
but the full impact will be delayed by one year.
*
Annual energy expenditures by a family of four
with $40,000 per year in income are about $2,600.
The tax would increase expenditures by about $125
per year.
*
Other elements of the Administration energy plan makes the
entire revenue package progressive -- that is, people with
lower incomes pay much smaller amounts than do higher income
persons.
*
Expanded earned income tax credit will reduce
overall tax burden of lower income families;
*
Expanded low-income energy assistance programs
will target lower income families in regions of
higher energy prices
*
Additional Food Stamp Assistance will further help
lowest income families.
The Administration has ensured that those persons who can
afford to pay a little extra for energy will help reduce the
deficit, while protecting those least able to contribute.
*
Because the energy tax is phased in, relatively small, and
based primarily on energy content, the tax will encourage
overall energy efficiency, while avoiding significant shifts
in fuel markets which would pit regional interests against
each other.
*
The energy tax combined with other measures will enhance
American competitiveness:
*
Reducing the deficit will lower stubbornly high
long-term interest rates;
*
Targeted investment tax credits will increase
private investment;
Permanent R&D tax credit will spur private sector
innovation;
Expanded energy conservation programs at EPA and
DOE will help industrial and commercial energy
users to help control energy costs.
Incentives for expanded use of natural gas will
encourage the use of this domestic clean energy
source.
Manufacturing extension programs will emphasize
energy efficient technology for small and medium
sized firms.
American companies will still face much lower
energy prices than our main economic rivals in
Europe and Japan.
The energy tax will reduce dependence on foreign oil, reduce
the U.S. trade deficit, enhance national security, and
restore U.S. leadership role in international environmental
protection:
Reduction in oil use would come primarily from
imports, most of which comes from unstable regions
of the globe;
*
U.S. oil imports account for over half of our
trade deficit;
*
Since the 1950s, the U.S. has spent over a
trillion dollars to ensure the free flow of oil
from the Persian Gulf.
The U.S. can regain international leadership role
in responding to the threat of climate change. An
energy tax would give the U.S. strategic leverage
in negotiating strong international environmental
commitments.
The European Community has indicated that it would
follow the U.S. lead and tax pollution-causing
energy use in their member countries.
*
The environmental benefits from energy conservation include
reduces emissions of carbon dioxide (the most important
greenhouse gas), automobile emissions that cause urban smog,
and emissions from factories and utilities that contribute
to acid rain. The projected reductions in carbon dioxide
will help the U.S. meet international goals for greenhouse
gas reductions.
*
The adoption of an energy tax represents a vigorous
commitment to deficit reduction, fairness, competitiveness,
energy conservation, and global environmental protection.
Combined with other essential elements in President
Clinton's economic plan, the overall package will ensure
that the economy will create jobs as we pull out of
recession now, and will invest appropriately so that the
U.S. standard of living will increase as we enter the 21st
century.
Note: Attached are OMB documents on major items in the
environmental budget. I am also attaching a memo done for me by
Hazel O'Leary's chief of staff that outlines some of the
important conservation and efficiency investments in the package.
INTERNATIONAL INITIATIVES (these are all approximate figures):
Climate Change Country Studies to implement Framework Convention
on Climate Change: $12.5 million in FY'94
Montreal Protocol Fund: $28.5 million for FY'94
Global Environment Facility: $50 million in FY'94
Forests for the Future: $150 million in FY'94
Population: thru AID and UNPF: $400-500 million in FY'94
UNEP: 22 million
This paper will provide you with a general description of the elements pertaining to
DOE included in the stimulus and investment programs. Please keep in mind that the
information is somewhat general, given the lack of available information.
Regarding outreach, as we discussed today on the budget and energy tax issue, we
should communicate the information to the conservation, renewable and environmental
communities, industry, Congress and the states. As more information is provided, we
can develop a more specific paper for distribution. As we discussed, we should meet
with the groups which follow on Thursday and Friday to discuss energy tax and budget
packages. What follows are the groups and those responsible for initiating the
meeting.
Electric, gas, oil, coal
Rich Rosenzweig
Conservation, renewable energy,
and environmental
Rich Rosenzweig/Katie McGinty
Senate energy and environment committees
Katie McGinty
House Energy and Commerce Committee
Rich Rosenzweig
States
Rich Rosenzweig
Consumers
Rich Rosenzweig
We can further discuss this at the public liaison meeting on Monday.
Budget Facts
MESSAGE: The initiatives which follow begin to address the Administration's
commitment to encourage efficiency, renewables and natural gas while using the
Department's assets to encourage long-term economic growth.
Stimulus Package
Weatherization: ($50 million in addition to the FY 1993 appropriation of $185
million.) States will be required to match federal funds to gain a grant. With
the state funds, 62,500 additional homes will be weatherized, reducing energy
use and putting low-income people to work.
Funding for "Model Projects" in Building and Industrial Conservation: There will
be a one-time solicitation which will provide $20 million in cost-shared federal
funding (50%) for model projects that demonstrate or accelerate the commercial
acceptance of advanced energy saving technologies and products. Such model
demonstrations, particularly in the building industry. will create jobs and lead to
energy efficiency and reduce energy use in the building sector.
* aualysis ri: buline
key 14-
A energy hill comparism
Increased Spending on Non-Defense Cooperative Research and Development
Agreements at the Labs (CRADAs): CRADAs are a mechanism by which labs
can work with industry to transfer technology developed in labs to the private
sector. The money goes to the labs to pay for R&D in the CRADA. The
laboratory work is proprietary to the private sector which holds the patent rights.
The stimulus initiative provides $50 million for the CRADA initiative. This will
allow 250 lab scientists to work with industry to develop new technologies. In
addition, $50 million appropriated to defense labs in FY 1993 for R&D of
nuclear weapons will be redirected to CRADAs for dual-use technologies.
Alternative Fuel Vehicles (AFVs): This initiative provides increased funding for
acquisition of AFVs for the fleet and for conversion of existing vehicles. The
initiative proposes $30 million in FY 1993 for the purchase and/or conversion of
petroleum- based gasoline powered vehicles to AFVs. The increased funds in
the Administration proposal will be used to accelerate the schedule of
purchases of new vehicles and convert existing vehicles. This meets an
important campaign commitment, and as important, it will create a market for
AFVs and reduce pollution and oil use in the transportation sector, which
accounts for 70% of U.S. oil use.
Investment Package
Weatherization: This is the same program listed in the stimulus package
section. However, the program will receive an additional $100 million per year
from FY 1994-97. With 1:1 leveraging of state and federal funds, it is estimated
that an additional 500,000 homes will be weatherized over the projected
number from FY 1994-97.
Increased Funding for Renewable Energy and Conservation Programs: The
Energy Policy Act of 1992 requires establishment of new efficiency standards,
authorization for new research programs, and demonstration and
commercialization of renewables and conservation. The initiative includes $200
million in FY 1994, increasing to $500 million in FY 1997 for a total of $1.4
billion over the baseline. The funds will be distributed to four areas, solar and
renewable energy, industrial transportation and building conservation R&D.
These initiatives will provide major energy, environmental and economic
benefits.
Federal Energy Management: The Energy Policy Act of 1992 requires that
federal agencies reduce energy consumption by 20% per square foot in 2000.
The Administration will spend nearly $2.0 billion between FY 1994-97 to
achieve this goal. This initiative will reduce energy use and the government's
energy bill. The four largest energy using agencies (DOD, DOE, GSA, and VA)
will receive increased direct funding for in-house energy management
programs. A fund will be established for the other agencies at DOE for energy
efficiency projects.
Increased Natural Gas Use: There will be increased R&D spending that will
help to ensure that enhanced R&D will be relevant to the needs of the industry
and marketplace. Natural gas R&D will be increased by $22 million in FY 1994
to an additional $119 million in FY 1997 from the baseline.
Increased Funding for CRADAs: This is the same program as mentioned in the
stimulus package section. In an attempt to begin fulfilling its technology
transfer mission as assigned by the National Competitiveness and Technology
Transfer Act, DOE has been attempting to develop cooperative agreements
with the private sector for joint projects. There are more requests for funding
than can be accommodated, given current funding levels. To accommodate
these requests, DOE will receive an additional $50 million per year from FY
1994-97.
Large Science Projects:
0 Advanced Neutron Source-This facility would fund design and construction
to produce isotopes for medical use, treatment and research, and to perform
applied research utilizing neutron scattering. Industry, universities, and labs
would be users. The heart of the facility would be a new research reactor
which would have the most intense beams of steady state neutrons in the
world. The proposal adds $437 million over the FY 1994-97 period.
O Superconducting Super Collider--It is possible that the SSC will have benefits
such as miniature electronic devices, high efficient motors and super fast
surface transportation systems. The SSC is intended to answer fundamental
question on the nature and origin of matter and energy. This high power proton
collider will achieve energy levels needed to detect heretofore unseen particles
and confirm or require fundamental rethinking of basic theories of physics. The
SSC will help American science and scientists break into new frontiers of
knowledge.
Concerns about SSC magnets, cost and schedule controls necessitate slowing
down the rate of construction until these issues are addressed. This will add
three years to the project and $1.8 billion. The U.S. is committed to the project
and will seek foreign participation in the project. The proposal adds an
additional $112 million in the base period.
15-Feb-93
Environmental Budget: Major Items
(changes to baseline)
(dollars in millions)
Stimulus
1993
Wastewater Treatment State Revolving Funds (EPA)
845
Watershed Resource Restoration (EPA)
47
"Green" Programs (EPA)
23
Rural Water/Wastewater Loans and Grants (USDA)
750
Watershed Projects (USDA)
47
Nat. Res. Protection and Env. Infrastructure (USDA)
188
Nat. Res. Protection and Env. Infrastructure (Interior)
349
Historic Preservation Repair and Maintenance (Interior)
23
TOTAL STIMULUS (budget authority)
2,249
Investment
1994
Drinking Water State Revolving Funds (EPA)
600
Clean Water State Revolving Funds (EPA)
1,200
Environmental Technology (EPA)
36
Watershed Resource Restoration (EPA)
30
"Green" Programs (EPA)
15
Rural Water/Wastewater Loans and Grants (USDA)
300
Forests for the Future (USDA)
30
Tree Planting Initiative (USDA)
41
National Research Initiative (USDA)
30
Forestry Research Initiative (USDA)
20
Wetlands Reserve Program (USDA)
:
Natural Resource and Environ. Infrastructure (Interior/USDA)
239
Recreational Land Acquisition and State Grants (LWCF)
11
TOTAL INVESTMENT (budget authority)
2,541
Savings
1997
Completion of Wastewater Treatment Constr. Grants (EPA)
1,947
Private Sector Financing of Superfund Cleanups (EPA)
109
Federal Irrigation Water Surcharge (Interior)
15
Grazing User Fees (Interior/USDA)
35
Hardrock Mining Holding Fees and Royalties (Interior)
357
Phaseout Below-Cost Timber Sales (USDA)
28
Reduce or Stretch-Out Water Project Constr. (Interior/Army)
92
Increased Inland Waterway User Fees (Army)
460
TOTAL SAVINGS (outlays)
3,043
February 15, 1993
Environmental Budget: Major Items
(changes to baseline)
I. Stimulus
Environmental Protection Agency
Wastewater Treatment State Revolving Funds -- ($845M in 1993 BA)
This proposal would provide $845 million in capitalization grants to State Revolving
Funds (SRFs), which make low-interest loans to municipalities for construction of
sewage treatment facilities. This would accelerate completion of an $18 billion
wastewater treatment grant authorization that is scheduled to end in FY 1994. The
funding would supplement $2.5 billion in FY 1993 enacted funding for EPA wastewater
treatment grants.
Watershed Resource Restoration -- ($47M in 1993 BA)
This proposal would supplement current funding with an additional $47 million for non-
point source grants under Section 319 of the Clean Water Act. Non-point source
pollution, such as runoff from farms, mining sites and city streets, is now the largest
cause of pollution in our Nation's waters. Reductions in non-point source pollution
will help restore watersheds and estuaries, leading to increased numbers of fish and
other aquatic life, and improving fishing and recreational opportunities in urban,
suburban, and rural areas.
Expand EPA's Voluntary "Green" Programs -- ($23M in 1993 BA)
This proposal would expand EPA's voluntary "Green" programs by $23 million in FY 1993
over the current $8 million funding level. During the past two years, EPA launched its
"Green Lights" program to encourage Fortune 500 companies to convert profitably into
more energy-efficient lighting, which will reduce electricity generation and reduce
greenhouse gas emissions. These programs can be expanded to include energy-efficient
industrial motors, heating/ventilation/air conditioning (HVAC), residential clothes
washers and dryers, and heat pumps.
Department of Agriculture
Increase Rural Development Administration (RDA) Rural Water and Wastewater Loans by
$470 Million, and Grants by $280 Million
This proposal increases the RDA FY 1993 loan authority from $600 million to $1.1
billion and its grant authority from $390 million to $672. To comply with clean water
standards set by EPA, rural America's water and wastewater needs total roughly $10
billion by the year 2000. Often many small, poor, rural communities are unable to meet
these clean water and wastewater standards without Federal assistance.
Increase Funds for Watershed Projects (SCS) -- ($47M in 1993 BA)
This proposal would provide an additional $47 million in FY 1993 to help reduce a
backlog of Soil Conservation Service (SCS) emergency watershed projects that are
currently eligible for Federal assistance. These projects address local watershed
problems caused by soil erosion, sedimentation, and flood damage. SCS projects may
also improve water quality and supply in rural areas.
Natural Resource Protection and Environmental Infrastructure Initiative -- ($188
million in 1993 BA)
This proposal would provide $188 million in FY 1993 to protect and rehabilitate
America's inventory of natural and rural assets, restore facilities that protect these
resources, and improve public access to them. This funding would complete the
inventory of ready-to-go resource protection projects, facility maintenance,
rehabilitation and construction and other similar projects that stimulate economic
growth and employment in rural areas.
2
Department of the Interior
Natural Resource Protection and Environmental Infrastructure Initiative -- ($349M in
1993)
This proposal would protect and rehabilitate America's inventory of natural and
cultural assets, restore the facilities that protect these resources, and improve
public access to them. This funding would complete the inventory of ready-to-go
resource protection projects, facility maintenance, rehabilitation and construction and
other similar projects that stimulate economic growth and employment in rural and urban
areas. The work would be located at resource areas managed by the Department of the
Interior (National Park Service, Fish and Wildlife Service, Bureau of Land Management,
and Bureau of Indian Affairs). Funds will supplement existing National Park Service
operating programs such that facilities or services previously scheduled to be closed
in 1993 will remain open.
Historic Preservation Funding for Repair and Deferred Maintenance Projects -- ($23M in
1993 BA)
The Administration proposes $23 million to fund a backlog of brick and mortar
rehabilitation projects, emergency surveys, engineering reports, and deferred
maintenance at National Trust for Historic Preservation Museum properties across the
Nation, and other priority State and tribal projects.
II. Investment
Environmental Protection Agency
Drinking Water State Revolving Funds -- ($600M in 1994 BA; $1B per year 1995-97)
This proposal would provide $1 billion per year in new capitalization grants to State
Revolving Funds in FY 1995-97 for the purpose of making low-interest loans to help
municipalities comply with Safe Drinking Water Act (SDWA) requirements. EPA estimates
that States and localities will need to invest $10 billion in drinking water
infrastructure through 1998 to meet SDWA requirements. In the past, the Federal
3
Government has not provided funding to meet the capital costs of these SDWA
requirements other than in rural areas.
Clean Water State Revolving Funds -- ($1,200M in 1994 BA; $2B per year 1995-97)
This proposal would provide $2 billion per year in FY 1995-97 under a new authorization
for capitalizing Clean Water State Revolving Funds (SRFs). These SRFs would make low-
interest loans to municipalities for construction of projects to address water quality
problems. These funds would help municipalities comply with recent requirements for
stormwater control and help implement management plans for restoring estuaries.
Increase Investment in Environmental Technology -- ($36M in 1994 BA; $625M total for
1995-97)
This proposal would increase funding for environmental engineering and technology
development by $36 million in FY 1994, a total of $625 million through 1998, and a
total of $1.85 billion over nine years. The focus of this initiative would be long-
term research and pollution prevention by EPA, other Federal agencies, and the private
sector. The goal is to develop more advanced environmental systems and treatment
techniques that can yield environmental benefits and increase exports of "green"
technologies.
Watershed Resource Restoration -- ($30M in 1994 BA; $50M per year 1995-97)
This proposal would double the current funding level of $50 million annually for non-
point source grants under Section 319 of the Clean Water Act. Non-point source
pollution such as runoff from farms, mining sites and city streets, is now the largest
cause of pollution in our Nation's waters. Reductions in non-point source pollution
would help restore watersheds and estuaries, leading to increased numbers of fish and
other aquatic life, and improving fishing and recreational opportunities in urban,
suburban, and rural areas.
Expand EPA's Voluntary "Green" Programs -- ($15M in 1994 BA; $25M per year 1995-97)
This proposal would provide an additional $25 million annually for EPA's voluntary
"Green" programs in FY 1995-1997. During the past two years, EPA launched its "Green
4
Lights" program to encourage Fortune 500 companies to convert profitably into more
energy-efficient lighting, which will reduce electricity generation and greenhouse gas
emissions. These programs can be expanded to include energy efficient industrial
motors, heating/ventilation/air conditioning (HVAC), residential clothes washers and
dryers, and heat pumps.
Department of Agriculture
Increase Rural Development Administration (RDA) Rural Water and Wastewater Loans by
$300 Million, and Grants by $200 Million Per Year for 1995 to 1997 -- (1994 Loans --
$180M; 1994 Grants --$120M)
This proposal would increase RDA loan authority from $600 million to $780 million and
its grant authority from $390 million to $510 million FY 1994. Without Federal
assistance, small water and wastewater systems face extraordinarily large increases in
water and sewer charges associated with evolving environmental standards. To comply
with clean water standards set by EPA, rural America's water and wastewater needs total
roughly $10 billion by the year 2000. Often many small, poor, rural communities are
unable to meet these clean water and wastewater standards without Federal assistance.
Forests for the Future -- ($30M in 1994 BA; $50M per year 1995-97)
Recognizing the importance of global forests, the budget would propose an investment of
$50 million per year for 1994-1997, towards the international goal of reducing world-
wide deforestation. At the 1992 Rio "Earth Summit", the U.S. proposed that all
countries join in doubling international forest assistance. This investment would be a
downpayment towards the commitment to fund initial partnership activities with both
foreign nations and domestic and international non-governmental organizations.
Tree Planting -- ($41M in 1994 BA; $263M 1994-1997)
This proposal would provide $41 million for an expanded tree planting initiative. The
program has two principal components: a rural initiative providing cost-sharing to non-
industrial private forest land owners for tree planting; and an urban initiative
focusing on technical assistance and community grants to promote urban tree planting
and forestry practices. Reforestation and stand improvement on these lands can result
5
in increased environmental benefits such as removing more carbon dioxide from the air.
National Research Initiative (NRI) Grants -- ($30M in 1994 BA; $480M 1995-97)
The Nation faces major challenges to ensure the food supply's safety and quality,
sustain natural resources, and continue the competitiveness of U.S. agricultural
products in global trade. In order to meet these challenges, this proposal would
provide $180 million in 1994 to fund an additional 500 research projects for food
safety, sustainable agricultural production, and decreased environmental impact.
Forestry Research Initiative -- ($20M in 1994 BA; $287M 1995-97)
This proposal would provide $300 million over four years to the Forest Service to allow
it and other USDA research agencies to increase the breadth and depth to which forestry
research areas are investigated. The proposal would provide the necessary information
to help the Nation develop sound forest-related policies that would both provide
resources to meet ever-increasing demands from the population and sustain forest
ecosystems.
Wetlands Reserve Program (WRP)
Full funding of the Wetlands Reserve Program would be maintained, allowing one million
wetlands acres to be enrolled under permanent easements by the end of 1995: $373
million in 1994 and $414 million in 1995 would be included for the WRP.
Departments of the Interior and Agriculture
Natural Resource Protection and Environmental Infrastructure Initiative -- $239M in
1994 BA; $1,710M total 1994-97)
The proposal would provide $239 million in 1994 to protect and rehabilitate America's
inventory of natural and cultural assets, restore the facilities that protect these
resources and improve public access to them. This funding would complete the inventory
of read-to-go resource protection projects, facility maintenance, rehabilitation and
construction and other similar projects that stimulate economic growth and employment
6
in rural and urban areas. Interior bureaus afected are the National Park Services,
Fish and Wildlife Service, and Bureau of Land Management.
Federal Recreational Land Acquisition and State Grants (Land and Water Conservation
Fund, LWCF) at FY 1994 baseline level (about $260 million).
III. Savings
Environmental Protection Agency
Completion of Wastewater Treatment Construction Grants -- ($1.9B in 1997 outlays
savings)
With the $846 million in wastewater stimulus funding provided in FY 1993, the $18
billion authorization under the 1987 Water Quality Act, which was designed to end
Federal assistance, would be virtually completed a year ahead of schedule. As these
loans are repaid, States would be able to make a new round of loans due to the self-
sustaining nature of the State Revolving Funds. The Budget also proposes (under
Investment) a new $2 billion annual authorization for capitalizing Clean Water State
Revolving Funds for low-interest loans to municipalities to address water quality
problems.
Increase Private Sector Financing of Superfund Cleanups -- ($109M in 1997 outlay
savings)
More aggressive use of Superfund's enforcement mechanisms could achieve even greater
private financing of these cleanups without affecting protection of human health and
the environment. The proposal would preserve Federal Superfund money only for sites
where there are no viable private parties to undertake the cleanup to ensure that the
greatest number of sites can be cleaned up within the limited funding available in the
Superfund trust fund.
7
Department of the Interior
Implement a Federal Irrigation Water Surcharge -- ($15M in 1997 outlay savings)
This proposal would authorize a per acre-foot surcharge on water sales to Reclamation
projects throughout the West (except for the Central Valley Project in California, for
which a similar surcharge was recently enacted). Revenue from the surcharge would be
deposited into a special fund for use (subject to appropriation) in mitigating
irrigation-caused adverse impacts on fish and wildlife. The surcharge would also
encourage more rational water use that would reduce the harmful impacts of non-point
source pollution.
Increase Grazing Fees -- ($35M in 1997 outlay savings)
This proposal would increase grazing fees on public lands as negotiated by the
Secretaries of Interior and Agriculture, who would be given the flexibility to develop
alternative approaches to the current formula.
Permanently Extend Hardrock Mining Holding Fees and Institute Hardrock Mining Royalties
($357M in 1997 outlay savings)
This proposal would permanently authorize charging a $100 per claim holding fee on all
hardrock claims on Federal lands and would establish a 12.5 percent royalty to the
gross value of the hardrock minerals extracted from mining claims on public lands. The
claimant would be relieved of annual work requirements, which should increase
flexibility on timing the development of claims. It would also reduce unnecessary
ground disturbance to satisfy current law. The new royalty would be phased in over
three years to reduce the impact on the mining industry and local communities.
Receipts from hard rock mining royalties would be shared with the States where the
mining occurs.
Phaseout Below-Cost Timber Sales -- ($28M in net 1997 outlay savings)
Timber sales from some National Forests do not cover the costs to the Government of
making the timber available for sale. This proposal would gradually eliminate sales in
those forests where timber-sale program costs exceed timber-sale revenue.
8
Department of the Interior/U.S. Army Corps of Engineers
Reduce or Stretch-Out Construction Funding for Low-Priority Water Projects -- ($92M in
1997 outlay savings)
This proposal would reduce or stretch-out funding for certain Army Corps of Engineers
and Bureau of Reclamation water resources projects. These projects are often
environmentally destructive.
U.S. Army Corps of Engineers
Phase in Increased Inland Waterway User Fees -- ($460M in 1997 outlay savings)
This proposal would increase the Federal fuel tax over several years to $1.00 in 1997.
The revenue would be used to offset the cost of operating and maintaining the inland
waterway system.
9
Wastewater and Drinking Water State Revolving Fund (SRF) Funding Summary
Baseline
1993
1994
1995
1996
1997
1998
Wastewater Treatment
BA
2,500
2,568
2,634
2,700
2,768
2,837
OL
2,372
2,381
2,535
2,628
2,662
2,692
Changes to Baseline
1994-97
1994-98
1993
1994
1995
1996
1997
1998
Total
Total
Stimulus:
Complete SRF Wastewater
BA
+845
--
--
--
--
--
--
--
Authorization in FY 1993
OL
+39
+179
+272
+172
+72
+34
4695
+729
NDD Savings:
End Current Wastewater Grants
BA
--
-2,418
-2,484
-2,550
-2,618
-2,687
-10,070
-12,757
(except $150M/yr NAFTA)
OL
--
-109
-624
-1,424
-1,947
-2,207
-4,104
-6,311
Investment:
Drinking Water SRF
BA
:
+600
+1,000
+1,000
+1,000
+1,000
+3,600
+4,600
OL
--
+24
+172
+440
+692
+840
+1,328
+2,168
Clean Water SRF (Stormwater)
BA
--
+1,200
+2,000
+2,000
+2,000
+2,000
+7,200
+9,200
OL
--
+54
+344
+900
+1,402
+1,666
+2,700
+4,366
Net Change:
SRF Wastewater and
BA
+845
-618
+516
+450
+382
+313
+730
+1,043
Drinking Water
OL
+39
+148
+164
+88
+219
+333
+619
+952
Total
SRF Wastewater and
BA
3,345
1,950
3,150
3,150
3,150
3,150
Drinking Water
OL
2,411
2,529
2,699
2,716
2,881
3,025
Environmental Protection Agency
Question #1: What are the impacts of the wastewater and drinking water proposals?
Answer:
There are three pieces to the proposal on EPA wastewater funding. The first
is to provide $845 million in FY 1993 stimulus through additional
capitalization grants to the State Revolving Funds (SRFs) in FY 1993.
The second piece is to eliminate current EPA wastewater funding (except $150
million per year to support NAFTA) reflecting the near completion in FY 1993
of the existing $18 billion authorization. This authorization was designed
to end Federal assistance. Current funding consists of roughly $400 million
in earmarked grants for seven cities (Boston, New York, Los Angeles, San
Diego, Seattle, Baltimore, and Detroit) and $2 billion in capitalization
grants for wastewater SRFs. This reduction is largely offset by the third
piece of the proposal, which is the $2 billion per year in capitalization
grants for Clean Water SRFs ($1.2 billion in FY 1994) under a new
authorization that is included in the investment package.
The distinction between the $2 billion in wastewater SRFs funding cut in the
savings package and the $2 billion in Clean Water SRF funding provided in
the investment package is that the new funding (which requires legislation)
will place a greater emphasis on stormwater control projects and will be
eligible for a broader class of projects. Consequently, the main effect of
the savings and stimulus proposals taken together is the elimination of the
earmarked grants for the seven cities. These targeted grants have been
strongly supported by the Congressional delegations of the affected States
and opposed by the other States.
The drinking water proposal in the investment package provides $1 billion
per year in EPA funding ($600 million in FY 1994) for construction projects
to ease the burden on municipalities of complying with Safe Drinking Water
Act requirements. This would require additional legislation as EPA
currently has no authority to provide such assistance. The distribution of
funds among States will need to be determined. It should also be noted that
for exclusively rural areas, the Rural Development Administration, has
received an increase of $752 million for water and wastewater loans and
grants in the stimulus proposals and $500 million annually FY 1995-98 for
water and wastewater grants and loans ($300 million in FY 1994) in the
investment proposals.
To: marla
From: pam
Re: Quick WTI update.
On January 8, 1993, Region 5 EPA issued a test burn permit
for WTI, allowing them to begin limited burning of hazardous
wastes. The citizens' groups filed for a temporary restraining
order that same day to prevent WTI from beginning the burn. On
January 15, Judge Ann Alrich of a federal district court in Ohio
issued the TRO. A hearing was set for Jan. 22 to determine a
whether a preliminary injunction should be issued against the
facility. That hearing was postponed until Feb. 7 to give the
new administration time to prepare for the hearing. This
injunction hearing will end Tues or Wed of this week. We have
heard mixed reactions on what will happen. It's anyone's guess.
One of the points of the hearing that has incensed enviros
is the testimony of an EPA scientist that revealed that EPA knew
that a "preliminary assessment done by the Office of Research and
Development does show that risks from beef and milk consumption
can be 1,000 times higher than risks from inhalation near the WTI
facility." EPA has in the past relied solely upon inhalation
exposure to toxins as a basis for risk assessment in judging air
borne sources of pollutants. Now, however, in this hearing, one
question has become whether food-chain exposure should be
considered as a health risk in these assessments. This has major
repercussions throughout EPA, in all types of areas, if it is
determined in this hearing that EPA is at fault for not using
food-chain risks in their assessment of the WTI facility.
Related to the hearing and FYI, on Friday, Feb. 5, Carol
Browner was to meet with these citizen's groups to hear their
story before the Ohio hearing. However, part way thru the
meeting, Browner recused herself from this issue when she found
out that the group her husband works with, Citizen Action, was on
record as opposing the incinerator. She turned her involvement
over to Dick Morganstern, Acting Deputy Administrator (and a
Reagan-Bush appointee). So the citizen's groups are upset about
the implications of the fox guarding the henhouse
On another point, a judge in Ark. ruled this weekend that a
hazwaste incinerator in Jacksonville (you may remember this
Vertac plant. ) may not burn waste containing dioxin because the
judge believes that the EPA standards for judging incinerator
test burns are inadequate. Put simply, test burns at
incinerators burn material OTHER than what will eventually be
incinerated. I.e. they burn heating oil, old junk, whatever, so
that the plant's equipment can be tested prior to actual
operation. However, enviros have argued for years that these
test burns give no indication for how good a job the incinerator
will do on the hazardous stuff. This is especially the case with
dioxin. The EPA believes that incineration destroys 99.9999% of
the dioxin in hazwaste. However, enviros believe that 99.999999%
should be destroyed in order to protect public health -- and that
test burns are inadequate for testing this higher dioxin level.
So they filed this suit in Ark. as a test case for making EPA
prove that 1) 99.9999% destroyed is adequate and 2) test burns
really work.
Recommendation from Katie on both these points: Al should
not comment on on-going cases (could prejudice the outcome and
therefore would be inappropriate). However, he should speak
generally to the need for a re-assessment of how we determine
risks. Sometimes we overestimate risks and our standards are too
high; othertimes we fail to perceive the full magnitude of the
risk we face (for example -- one chemical acting alone may not be
dangerous. But, it may become dangerous when it comes into
contact with another chemical and we don't currently test for
these "synergistic" effects. -- Al should support scientific
efforts to improve our risk assessment capabilities.
Environmental Preview?
In what we fear may be 3 preview
other industries. Von Roll will create
of Clinton administration environmen-
new jobs and preserve old ones.
tal policies, Al Gore promised earlier
No doubt some of the local oppe-
this month to block a crucial EPA per-
nents are sincere chemophobes. Terr:
mit for a hazardous waste incinerator
Swearingen quit her nurse's job and
in East Liverpool. Ohio. On his Senato-
has poured $25,000 into the fight ther
rial stationery. with his position as
husband is a dentist). She goes is
vice president-elect typed in. he cast
Washington at least once a week and
his lot with a Greenpeace campaign
has testified on Capitol Hill and made
explicitly billed as an effort to stop
the TV rounds. "I spend every second
the incineration industry nationwide.
of every day on this. There's nothing
Von Roll. a 170-year-old Swiss con
else in my life right now.' she tells
pany. designed. built and would oper-
us. not sounding particularly unful-
ate the plant. It has already spent 13
filled. "The idea of incinerating any-
years jumping through political hoops,
thing. I'm opposed to."
winning the approval of every court
Not everyone in East Liverpool can
and agency it came before. Indeed.
afford such exquisite standards. An
the plant would be running today ex-
old pottery-making capital. the town
cept that the company chose to add an
has slid downhill since the 1970s. Vet
expensive spray dryer so water
Roll would mean hundreds of "good
wouldn't have to be discharged into
jobs at good wages." not to mention
the Ohio River. Von Roll is a world
$2.3 million a year in tax receipts. And
leader in antipollution technology and
chasing out a foreign investor who
East Liverpool would be its North
bringing state-of-the-art technology
American showcase.
isn't exactly the best advertisement
Greenpeace dreams that the town
for Ohio, or for an administration
will become the "Waterloo of the in-
pushing global competitiveness.
WALL
cineration industry, according to
Greenpeace's agitprop has
Scott Sederstrom. an activist who par-
"scarred and divided this city. a in
achuted in from Boston for the holy
cal businessman, Larry Walton. tolc
wars. Von Roll's early partners got
one reporter. "Greenpeace will move
fed up with the delays two years ago.
on after this, but we have to live here.
and Von Roll bought them out. Now
The group's various outfits budgeted
Greenpeace denounces this as a "cor-
at least $8 million for the toxics jihad
porate shell game" and thus a reason
in 1990. Beth Newman from the Chi-
for canceling the plant's permits. Mr.
cago office belly-landed in East Liver
Gore harrumphs that, of course. ev.
pool almost two years ago and has
erything must be put on hold while the
been busy improving the natives ever
lapdog General Accounting Office in-
since. "Any facility that wants to spew
vestigates. Meanwhile, the company
four and a half tons of lead into 8
is losing $115.000 a day on top of the
schoolyard deserves the death pen-
$160 million already invested.
alty. she preached to the local press.
Naturally, Mr. Gore couches his
(Actually, the plant would emit less
meddling as solicitude for "the health
than 76 pounds of lead a year. about
and safety of the residents." That
the same as a pre-1970s car.)
didn't stop a busload of East Liver-
At bottom Greenpeace is theologi-
pool residents from trekking all the
cally opposed to any form of waste dis-
way to Washington last week to march
posal. Presumably then society would
in front of Greenpeace's offices. The
have to stop making waste. and
protesters want the plant and the jobs
Mother Earth would revert to a pris-
it would bring.
tine. pre-industrial state. In other
The phrase "hazardous waste" is
words. where most nature lovers rec-
understandably worrisome to people.
ognize that technology is the only hope
but plants like the one in East Liver-
for solving most environmental prob-
pool aren't dealing with anthrax and
lems, the Greenpeace Luddites turn
nerve gas. They cremate things like
this on its head. They see environmen-
dry-cleaning fluids, drugs that are
talism as the club with which they II
past their expiration dates, and paint
beat down technology
sludge from auto plants. This stuff is
All through the campaign Mr. Gore
handled by hundreds of thousands of
bragged that pollution control would
people every day. It rolls along the
vield a jobs bonanza. On ABC this
highways and railroads at all hours. It
month he warned that "if we keep ar-
has to go somewhere. and burning It is
guing among ourselves," Japan "will
the safest method of disposal.
eat our lunch" in the battle for this
What's more. anything coming out
global market. But the still-evolving
of Von Roll's smokestack is bound to
Mr. Gore seems mainly to be "argu-
be cleaner than the gunk billowing
ing" with himself these days. And it's
from dozens of other industrial plants
hardly encouraging that on his first
in the Ohio Valley. Up the road. a sin-
outing as the new administration en-
gle zinc smelter puts out 32,000 pounds
vironmental czar. he's lined up with
of lead in one year. By helping to clean
the antitechnology pagans in the envi-
up after Ohio's paint. chemical and
ronmentalist camp.
75
01-08-93 12:33PM
FROM SEN. AL GORE
TO 99731537
P002
W&g 1-8-93
Gore on a Von Roll
On Wednesday the state of Ohio
ocratic Senator hig on environment
gave approval for a test burn at a new,
tells us through an aide, "This issue
state-of-the-art hazardous waste incin-
isn't the winner it appeared to be."
erator in East Liverpool. All that re-
mains is for EPA's Region Five to give
Greenpeace doesn't like incinera-
the nod. This project has become a
tors because they get rid of industrial
litmus test of the Clinton administra-
waste. and Greenpeace would rather
tion's direction on environmental mat-
get rid of industry. Fixing on bogus le-
ters. even before Mr. Clinton has
galisms, the group is painting Von Roll
moved into the Oval Office.
as a fly-by-night outfit. Mr. Gore has
Von Roll, the builder, has spent
lent credibility to this cynical non-
S160 million and 13 years to get this
sense by ordering up a GAO "investi-
far. Then Greenpeace seems to have
gation" into the plant's ownership and
visited Al Gore in a dream, and now
licensing. Von Roll, founded in 1823,
the Veep-elect vows to torpedo the
sees East Liverpool as a showcase for
project. Caught in the middle is Re-
its world-class technology. The incen-
gion Five's Valdas Adamkus of EPA.
tives are stacked in favor of a superb
the last career civil servant in a job
plant. "That gives me a lot of comfort
that nowadays goes to political ap-
that we've got an up-front operator,"
pointees. Next week his future boss
Ohio EPA's Paul Anderson tells us.
and a Gore protege, Carol Browner,
Incinerating toxics is better than
comes up for confirmation hearings.
letting them leach into the soil and wa-
Mr. Adamkus is probably reaching for
ter from landfills. According to U.S.
a Stress Tab about now.
News & World Report. Bill Clinton pro-
Mr. Gore's spokesperson, Marla
moted incineration in Arkansas, and
Romash, says the Veep-elect discov-
Hillary sat on the board of an incinera-
ered the incinerator when campaign-
tion company. Mr. Gore himself has
ing in Ohio and has "spent months
voted for laws that encouraged incin-
studying" the issue. Funny, EPA and
eration and touted technology as a pol-
its Onio counterpart have spent years
lution solution and jobs-creator. Now,
studying the issue. but haven't been
based on something he saw out the
asked to brief anybody on Mr. Gore's
campaign bus window. he may sink
staff. Ms. Romash says there are "se-
hundreds of anti-pollution jobs in a
rious safety questions." Both EPA and
state that just voted for his boss.
Ohio's environmental agency give Von
Who's steering this environmental
Roll top marks for safety. As one Dem-
czar?
Wall
Gore Vows to Block Incinerator Start-Up,
the incinerator was cleared by President-
elect Clinton. Mr. Gore believes "the facts
in the case are compelling enough to
Suggesting He'll Play an Activist Role
warrant an investigation" by Congress's
General Accounting Office, she said.
Environmentalists have long been criti-
By TIMOTHY NOAH
nal, highly ironic context."
cal of the Bush administration's Environ-
Staff Reporter of THE WALL STREET JOURNAL
Nobel Prize-winning economist Robert
mental Protection Agency and Ohio state
WASHINGTON - Albert Gore, in a
Solow, a Clinton supporter, said it would
regulators for allowing the waste facility,
move highly unusual for a vice president-
be a mistake to reject Mr. Summers be-
which is located 1,100 feet from an elemen-
elect, pledged that the Clinton administra-
cause of the memo. "Larry Summers may
tary school, to be built. Mr. Gore spoke out
tion would block a hazardous-waste incin-
have said something impolitic, but if you
against the incinerator during two cam-
erator in Ohio from starting operation.
pursue what he was saying, it made.
paign visits to the site, and directed his
And in another sign that Mr. Gore is
sense." If he was rejected for that reason,
Senate staff to investigate the matter.
exerting strong influence on the Clinton
Mr. Solow said, "we would be losing a very
But company spokeswoman Carol Coo-
THE WALL STREET JOURNAL
administration's environmental agenda,
good CEA chairman for a very poor rea-
kerly said, "This plant and its emissions
12/8
the Tennessee senator was instrumental in
son."
are far below levels that the EPA said are
blocking the nomination of Lawrence Sum-
Mr. Gore's comments on the Ohio incin-
safe." In response to questions raised by
mers, a Harvard economist who is chief
erator appeared in a news release issued
Mr. Gore about alleged irregularities in
economist of the World Bank, to be chair-
yesterday by the "office of the vice
EPA procedures for approving the plant,
man of the Council of Economic Advisers.
president-elect," but bearing a U.S. Senate
she said, "the EPA has handled this most
Mr. Summers, who now isn't expected to
letterhead. In the statement, Mr. Gore
complex issue carefully and thoroughly."
get the job, outraged environmentalists
said, "the new Clinton-Gore administra-
Rich Guimond, EPA deputy assistant
who got a copy of an internal World Bank
tion would not issue" a permit allowing the
administrator for solid waste, said the
memo that appeared to mock their con-
incinerator to conduct a "test burn" until
plant hasn't yet been issued an EPA permit
cerns.
certain health and safety questions are
to conduct a test burn, a procedure that
In a section of the memo titled "Dirty
answered. The incinerator is owned by
allows regulators to assess whether a new
Industries," Mr. Summers wrote: "Just
Von Roll America Inc., a unit of the Swiss
incinerator's emissions meet federal stan-
between you and me, shouldn't the World
company Von Roll, and is located in East
dards.
Bank be encouraging more migration of
Liverpool, Ohio.
Mr. Guimond also said the agency
the dirty industries" to Third World coun-
The vice president-elect's stand against
hasn't formally heard from Mr. Gore
tries? After the outery, Mr. Summers
Mr. Summers and the incinerator are the
about the incinerator, but added that
argued in another memo that this and
strongest indications yet that Mr. Gore
"the agency needs to be judicious" about
other provocative comments weren't
intends to push his strong environmental
blocking a test-burn permit, because any
meant to be taken literally, but rather were
views as vice president.
action by the EPA at this late date may
intended to create a "sardonic counter-
Marla Romash, a spokeswoman for Mr.
invite legal action against the EPA by the
point," and should be read in their "origi-
Gore, said that the senator's statement on
company.
February 15, 1993
MEMORANDUM FOR THE VICE PRESIDENT
FROM KATIE
SUBJECT: MEETING WITH ENVIROS ON STIMULUS PACKAGE
You will be meeting again with the heads of the largest
enviro groups to brief them on the environmental aspects of the
stimulus package. Attendees will include:
Jay Hair, NWF
George Frampton, Wilderness Society
Jim Maddy, LCV
Fred Krupp, EDF
Jane Perkins, FOE
John Adams, NRDC
Rodger Schlickheisen, Defenders
Johnathan Lash, WRI
Ben Chavis, United Church of Christ
You will want to extensively brief them on the energy tax
options.
Talking Points on energy tax:
*
The administration is proposing a modest broad-based energy
tax designed to
*
reduce the deficit and thereby stimulate private
investment;
*
make our economy more energy efficient;
*
improve the environment; and
*
enhance national security by reducing energy
imports.
*
The tax is based on the energy content of fuels (called a
Btu tax for "British thermal units") along with a national
security premium on oil to discourage imports and help
encourage domestic natural gas. The tax is levied on energy
sales to industries and utilities. The energy tax will be
phased in over three years, at which point it will provide
$22 billion dollars annually for the treasury. (The phased-
in supplemental petroleum tax is delayed for one year for
home heating oil, in order to protect consumers in the
Northeast who heat homes with oil.)
*
Because it applies to all energy products, the tax will not
unduly burden any region, industry, or consumer segment.
The U.S. spends about $500 billion on energy every year, so
that a tax generating $22 billion in net revenues will not
seriously increase overall energy expenditures. When fully
phased in:
*
Gasoline prices would increase by about 8 cents, a
6% increase;
*
Electric bills would increase by less than 4%; and
*
Natural gas prices would increase by about 4%.
*
Home heating oil prices will increase by about 8%,
but the full impact will be delayed by one year.
*
Annual energy expenditures by a family of four
with $40,000 per year in income are about $2,600.
The tax would increase expenditures by about $125
per year.
*
Other elements of the Administration energy plan makes the
entire revenue package progressive -- that is, people with
lower incomes pay much smaller amounts than do higher income
persons.
*
Expanded earned income tax credit will reduce
overall tax burden of lower income families;
*
Expanded low-income energy assistance programs
will target lower income families in regions of
higher energy prices
*
Additional Food Stamp Assistance will further help
lowest income families.
The Administration has ensured that those persons who can
afford to pay a little extra for energy will help reduce the
deficit, while protecting those least able to contribute.
*
Because the energy tax is phased in, relatively small, and
based primarily on energy content, the tax will encourage
overall energy efficiency, while avoiding significant shifts
in fuel markets which would pit regional interests against
each other.
*
The energy tax combined with other measures will enhance
American competitiveness:
*
Reducing the deficit will lower stubbornly high
long-term interest rates;
*
Targeted investment tax credits will increase
private investment;
*
Permanent R&D tax credit will spur private sector
innovation;
*
Expanded energy conservation programs at EPA and
DOE will help industrial and commercial energy
users to help control energy costs.
*
Incentives for expanded use of natural gas will
encourage the use of this domestic clean energy
source.
*
Manufacturing extension programs will emphasize
energy efficient technology for small and medium
sized firms.
*
American companies will still face much lower
energy prices than our main economic rivals in
Europe and Japan.
*
The energy tax will reduce dependence on foreign oil, reduce
the U.S. trade deficit, enhance national security, and
restore U.S. leadership role in international environmental
protection:
*
Reduction in oil use would come primarily from
imports, most of which comes from unstable regions
of the globe;
*
U.S. oil imports account for over half of our
trade deficit;
*
Since the 1950s, the U.S. has spent over a
trillion dollars to ensure the free flow of oil
from the Persian Gulf.
*
The U.S. can regain international leadership role
in responding to the threat of climate change. An
energy tax would give the U.S. strategic leverage
in negotiating strong international environmental
commitments.
*
The European Community has indicated that it would
follow the U.S. lead and tax pollution-causing
energy use in their member countries.
*
The environmental benefits from energy conservation include
reduces emissions of carbon dioxide (the most important
greenhouse gas), automobile emissions that cause urban smog,
and emissions from factories and utilities that contribute
to acid rain. The projected reductions in carbon dioxide
will help the U.S. meet international goals for greenhouse
gas reductions.
*
The adoption of an energy tax represents a vigorous
commitment to deficit reduction, fairness, competitiveness,
energy conservation, and global environmental protection.
Combined with other essential elements in President
Clinton's economic plan, the overall package will ensure
that the economy will create jobs as we pull out of
recession now, and will invest appropriately so that the
U.S. standard of living will increase as we enter the 21st
century.
Note: Attached are OMB documents on major items in the
environmental budget. I am also attaching a memo done for me by
Hazel O'Leary's chief of staff that outlines some of the
important conservation and efficiency investments in the package.
INTERNATIONAL INITIATIVES (these are all approximate figures):
Climate Change Country Studies to implement Framework Convention
on Climate Change: $12.5 million in FY'94
Montreal Protocol Fund: $28.5 million for FY'94
Global Environment Facility: $50 million in FY'94
Forests for the Future: $150 million in FY'94
Population: thru AID and UNPF: $400-500 million in FY'94
UNEP: 22 million
This paper will provide you with a general description of the elements pertaining to
DOE included in the stimulus and investment programs. Please keep in mind that the
information is somewhat general, given the lack of available information.
Regarding outreach, as we discussed today on the budget and energy tax issue, we
should communicate the information to the conservation, renewable and environmental
communities, industry, Congress and the states. As more information is provided, we
can develop a more specific paper for distribution. As we discussed, we should meet
with the groups which follow on Thursday and Friday to discuss energy tax and budget
packages. What follows are the groups and those responsible for initiating the
meeting.
Electric, gas, oil, coal
Rich Rosenzweig
Conservation, renewable energy,
and environmental
Rich Rosenzweig/Katie McGinty
Senate energy and environment committees
Katie McGinty
House Energy and Commerce Committee
Rich Rosenzweig
States
Rich Rosenzweig
Consumers
Rich Rosenzweig
We can further discuss this at the public liaison meeting on Monday.
Budget Facts
MESSAGE: The initiatives which follow begin to address the Administration's
commitment to encourage efficiency, renewables and natural gas while using the
Department's assets to encourage long-term economic growth.
Stimulus Package
Weatherization: ($50 million in addition to the FY 1993 appropriation of $185
million.) States will be required to match federal funds to gain a grant. With
the state funds, 62,500 additional homes will be weatherized, reducing energy
use and putting low-income people to work.
Funding for "Model Projects" in Building and Industrial Conservation: There will
be a one-time solicitation which will provide $20 million in cost-shared federal
funding (50%) for model projects that demonstrate or accelerate the commercial
acceptance of advanced energy saving technologies and products. Such model
demonstrations, particularly in the building industry, will create jobs and lead to
energy efficiency and reduce energy use in the building sector.
* aualysis ri: buline
24 94-
A energy hill comparism
Increased Spending on Non-Defense Cooperative Research and Development
Agreements at the Labs (CRADAs): CRADAs are a mechanism by which labs
can work with industry to transfer technology developed in labs to the private
sector. The money goes to the labs to pay for R&D in the CRADA. The
laboratory work is proprietary to the private sector which holds the patent rights.
The stimulus initiative provides $50 million for the CRADA initiative. This will
allow 250 lab scientists to work with industry to develop new technologies. In
addition, $50 million appropriated to defense labs in FY 1993 for R&D of
nuclear weapons will be redirected to CRADAs for dual-use technologies.
Alternative Fuel Vehicles (AFVs): This initiative provides increased funding for
acquisition of AFVs for the fleet and for conversion of existing vehicles. The
initiative proposes $30 million in FY 1993 for the purchase and/or conversion of
petroleum- based gasoline powered vehicles to AFVs. The increased funds in
the Administration proposal will be used to accelerate the schedule of
purchases of new vehicles and convert existing vehicles. This meets an
important campaign commitment, and as important, it will create a market for
AFVs and reduce pollution and oil use in the transportation sector, which
accounts for 70% of U.S. oil use.
Investment Package
Weatherization: This is the same program listed in the stimulus package
section. However, the program will receive an additional $100 million per year
from FY 1994-97. With 1:1 leveraging of state and federal funds, it is estimated
that an additional 500,000 homes will be weatherized over the projected
number from FY 1994-97.
Increased Funding for Renewable Energy and Conservation Programs: The
Energy Policy Act of 1992 requires establishment of new efficiency standards,
authorization for new research programs, and demonstration and
commercialization of renewables and conservation. The initiative includes $200
million in FY 1994, increasing to $500 million in FY 1997 for a total of $1.4
billion over the baseline. The funds will be distributed to four areas, solar and
renewable energy, industrial transportation and building conservation R&D.
These initiatives will provide major energy, environmental and economic
benefits.
Federal Energy Management: The Energy Policy Act of 1992 requires that
federal agencies reduce energy consumption by 20% per square foot in 2000.
The Administration will spend nearly $2.0 billion between FY 1994-97 to
achieve this goal. This initiative will reduce energy use and the government's
energy bill. The four largest energy using agencies (DOD, DOE, GSA, and VA)
will receive increased direct funding for in-house energy management
programs. A fund will be established for the other agencies at DOE for energy
efficiency projects.
Increased Natural Gas Use: There will be increased R&D spending that will
help to ensure that enhanced R&D will be relevant to the needs of the industry
and marketplace. Natural gas R&D will be increased by $22 million in FY 1994
to an additional $119 million in FY 1997 from the baseline.
Increased Funding for CRADAs: This is the same program as mentioned in the
stimulus package section. In an attempt to begin fulfilling its technology
transfer mission as assigned by the National Competitiveness and Technology
Transfer Act, DOE has been attempting to develop cooperative agreements
with the private sector for joint projects. There are more requests for funding
than can be accommodated, given current funding levels. To accommodate
these requests, DOE will receive an additional $50 million per year from FY
1994-97.
Large Science Projects:
O Advanced Neutron Source-This facility would fund design and construction
to produce isotopes for medical use, treatment and research, and to perform
applied research utilizing neutron scattering. Industry, universities, and labs
would be users. The heart of the facility would be a new research reactor
which would have the most intense beams of steady state neutrons in the
world. The proposal adds $437 million over the FY 1994-97 period.
O Superconducting Super Collider--It is possible that the SSC will have benefits
such as miniature electronic devices, high efficient motors and super fast
surface transportation systems. The SSC is intended to answer fundamental
question on the nature and origin of matter and energy. This high power proton
collider will achieve energy levels needed to detect heretofore unseen particles
and confirm or require fundamental rethinking of basic theories of physics. The
SSC will help American science and scientists break into new frontiers of
knowledge.
Concerns about SSC magnets, cost and schedule controls necessitate slowing
down the rate of construction until these issues are addressed. This will add
three years to the project and $1.8 billion. The U.S. is committed to the project
and will seek foreign participation in the project. The proposal adds an
additional $112 million in the base period.
15-Feb-93
Environmental Budget: Major Items
(changes to baseline)
(dollars in millions)
Stimulus
1993
Wastewater Treatment State Revolving Funds (EPA)
845
Watershed Resource Restoration (EPA)
47
"Green" Programs (EPA)
23
Rural Water/Wastewater Loans and Grants (USDA)
750
Watershed Projects (USDA)
47
Nat. Res. Protection and Env. Infrastructure (USDA)
188
Nat. Res. Protection and Env. Infrastructure (Interior)
349
Historic Preservation Repair and Maintenance (Interior)
23
TOTAL STIMULUS (budget authority)
2,249
Investment
1994
Drinking Water State Revolving Funds (EPA)
600
Clean Water State Revolving Funds (EPA)
1,200
Environmental Technology (EPA)
36
Watershed Resource Restoration (EPA)
30
"Green" Programs (EPA)
15
Rural Water/Wastewater Loans and Grants (USDA)
300
Forests for the Future (USDA)
30
Tree Planting Initiative (USDA)
41
National Research Initiative (USDA)
30
Forestry Research Initiative (USDA)
20
Wetlands Reserve Program (USDA)
--
Natural Resource and Environ. Infrastructure (Interior/USDA)
239
Recreational Land Acquisition and State Grants (LWCF)
1:
TOTAL INVESTMENT (budget authority)
2,541
Savings
1997
Completion of Wastewater Treatment Constr. Grants (EPA)
1,947
Private Sector Financing of Superfund Cleanups (EPA)
109
Federal Irrigation Water Surcharge (Interior)
15
Grazing User Fees (Interior/USDA)
35
Hardrock Mining Holding Fees and Royalties (Interior)
357
Phaseout Below-Cost Timber Sales (USDA)
28
Reduce or Stretch-Out Water Project Constr. (Interior/Army)
92
Increased Inland Waterway User Fees (Army)
460
TOTAL SAVINGS (outlays)
3,043
February 15, 1993
Environmental Budget: Major Items
(changes to baseline)
I. Stimulus
Environmental Protection Agency
Wastewater Treatment State Revolving Funds -- ($845M in 1993 BA)
This proposal would provide $845 million in capitalization grants to State Revolving
Funds (SRFs), which make low-interest loans to municipalities for construction of
sewage treatment facilities. This would accelerate completion of an $18 billion
wastewater treatment grant authorization that is scheduled to end in FY 1994. The
funding would supplement $2.5 billion in FY 1993 enacted funding for EPA wastewater
treatment grants.
Watershed Resource Restoration -- ($47M in 1993 BA)
This proposal would supplement current funding with an additional $47 million for non-
point source grants under Section 319 of the Clean Water Act. Non-point source
pollution, such as runoff from farms, mining sites and city streets, is now the largest
cause of pollution in our Nation's waters. Reductions in non-point source pollution
will help restore watersheds and estuaries, leading to increased numbers of fish and
other aquatic life, and improving fishing and recreational opportunities in urban,
suburban, and rural areas.
Expand EPA's Voluntary "Green" Programs -- ($23M in 1993 BA)
This proposal would expand EPA's voluntary "Green" programs by $23 million in FY 1993
over the current $8 million funding level. During the past two years, EPA launched its
"Green Lights" program to encourage Fortune 500 companies to convert profitably into
more energy-efficient lighting, which will reduce electricity generation and reduce
greenhouse gas emissions. These programs can be expanded to include energy-efficient
industrial motors, heating/ventilation/air conditioning (HVAC), residential clothes
washers and dryers, and heat pumps.
Department of Agriculture
Increase Rural Development Administration (RDA) Rural Water and Wastewater Loans by
$470 Million, and Grants by $280 Million
This proposal increases the RDA FY 1993 loan authority from $600 million to $1.1
billion and its grant authority from $390 million to $672. To comply with clean water
standards set by EPA, rural America's water and wastewater needs total roughly $10
billion by the year 2000. Often many small, poor, rural communities are unable to meet
these clean water and wastewater standards without Federal assistance.
Increase Funds for Watershed Projects (SCS) -- ($47M in 1993 BA)
This proposal would provide an additional $47 million in FY 1993 to help reduce a
backlog of Soil Conservation Service (SCS) emergency watershed projects that are
currently eligible for Federal assistance. These projects address local watershed
problems caused by soil erosion, sedimentation, and flood damage. SCS projects may
also improve water quality and supply in rural areas.
Natural Resource Protection and Environmental Infrastructure Initiative -- ($188
million in 1993 BA)
This proposal would provide $188 million in FY 1993 to protect and rehabilitate
America's inventory of natural and rural assets, restore facilities that protect these
resources, and improve public access to them. This funding would complete the
inventory of ready-to-go resource protection projects, facility maintenance,
rehabilitation and construction and other similar projects that stimulate economic
growth and employment in rural areas.
2
Department of the Interior
Natural Resource Protection and Environmental Infrastructure Initiative -- ($349M in
1993)
This proposal would protect and rehabilitate America's inventory of natural and
cultural assets, restore the facilities that protect these resources, and improve
public access to them. This funding would complete the inventory of ready-to-go
resource protection projects, facility maintenance, rehabilitation and construction and
other similar projects that stimulate economic growth and employment in rural and urban
areas. The work would be located at resource areas managed by the Department of the
Interior (National Park Service, Fish and Wildlife Service, Bureau of Land Management,
and Bureau of Indian Affairs). Funds will supplement existing National Park Service
operating programs such that facilities or services previously scheduled to be closed
in 1993 will remain open.
Historic Preservation Funding for Repair and Deferred Maintenance Projects -- ($23M in
1993 BA)
The Administration proposes $23 million to fund a backlog of brick and mortar
rehabilitation projects, emergency surveys, engineering reports, and deferred
maintenance at National Trust for Historic Preservation Museum properties across the
Nation, and other priority State and tribal projects.
II. Investment
Environmental Protection Agency
Drinking Water State Revolving Funds -- ($600M in 1994 BA; $1B per year 1995-97)
This proposal would provide $1 billion per year in new capitalization grants to State
Revolving Funds in FY 1995-97 for the purpose of making low-interest loans to help
municipalities comply with Safe Drinking Water Act (SDWA) requirements. EPA estimates
that States and localities will need to invest $10 billion in drinking water
infrastructure through 1998 to meet SDWA requirements. In the past, the Federal
3
Government has not provided funding to meet the capital costs of these SDWA
requirements other than in rural areas.
Clean Water State Revolving Funds -- ($1,200M in 1994 BA; $2B per year 1995-97)
This proposal would provide $2 billion per year in FY 1995-97 under a new authorization
for capitalizing Clean Water State Revolving Funds (SRFs). These SRFs would make low-
interest loans to municipalities for construction of projects to address water quality
problems. These funds would help municipalities comply with recent requirements for
stormwater control and help implement management plans for restoring estuaries.
Increase Investment in Environmental Technology -- ($36M in 1994 BA; $625M total for
1995-97)
This proposal would increase funding for environmental engineering and technology
development by $36 million in FY 1994, a total of $625 million through 1998, and a
total of $1.85 billion over nine years. The focus of this initiative would be long-
term research and pollution prevention by EPA, other Federal agencies, and the private
sector. The goal is to develop more advanced environmental systems and treatment
techniques that can yield environmental benefits and increase exports of "green"
technologies.
Watershed Resource Restoration -- ($30M in 1994 BA; $50M per year 1995-97)
This proposal would double the current funding level of $50 million annually for non-
point source grants under Section 319 of the Clean Water Act. Non-point source
pollution such as runoff from farms, mining sites and city streets, is now the largest
cause of pollution in our Nation's waters. Reductions in non-point source pollution
would help restore watersheds and estuaries, leading to increased numbers of fish and
other aquatic life, and improving fishing and recreational opportunities in urban,
suburban, and rural areas.
Expand EPA's Voluntary "Green" Programs -- ($15M in 1994 BA; $25M per year 1995-97)
This proposal would provide an additional $25 million annually for EPA's voluntary
"Green" programs in FY 1995-1997. During the past two years, EPA launched its "Green
4
Lights" program to encourage Fortune 500 companies to convert profitably into more
energy-efficient lighting, which will reduce electricity generation and greenhouse gas
emissions. These programs can be expanded to include energy efficient industrial
motors, heating/ventilation/air conditioning (HVAC), residential clothes washers and
dryers, and heat pumps.
Department of Agriculture
Increase Rural Development Administration (RDA) Rural Water and Wastewater Loans by
$300 Million, and Grants by $200 Million Per Year for 1995 to 1997 -- (1994 Loans --
$180M; 1994 Grants --$120M)
This proposal would increase RDA loan authority from $600 million to $780 million and
its grant authority from $390 million to $510 million FY 1994. Without Federal
assistance, small water and wastewater systems face extraordinarily large increases in
water and sewer charges associated with evolving environmental standards. To comply
with clean water standards set by EPA, rural America's water and wastewater needs total
roughly $10 billion by the year 2000. Often many small, poor, rural communities are
unable to meet these clean water and wastewater standards without Federal assistance.
Forests for the Future -- ($30M in 1994 BA; $50M per year 1995-97)
Recognizing the importance of global forests, the budget would propose an investment of
$50 million per year for 1994-1997, towards the international goal of reducing world-
wide deforestation. At the 1992 Rio "Earth Summit", the U.S. proposed that all
countries join in doubling international forest assistance. This investment would be a
downpayment towards the commitment to fund initial partnership activities with both
foreign nations and domestic and international non-governmental organizations.
Tree Planting -- ($41M in 1994 BA; $263M 1994-1997)
This proposal would provide $41 million for an expanded tree planting initiative. The
program has two principal components: a rural initiative providing cost-sharing to non-
industrial private forest land owners for tree planting; and an urban initiative
focusing on technical assistance and community grants to promote urban tree planting
and forestry practices. Reforestation and stand improvement on these lands can result
5
in increased environmental benefits such as removing more carbon dioxide from the air.
National Research Initiative (NRI) Grants -- ($30M in 1994 BA; $480M 1995-97)
The Nation faces major challenges to ensure the food supply's safety and quality,
sustain natural resources, and continue the competitiveness of U.S. agricultural
products in global trade. In order to meet these challenges, this proposal would
provide $180 million in 1994 to fund an additional 500 research projects for food
safety, sustainable agricultural production, and decreased environmental impact.
Forestry Research Initiative -- ($20M in 1994 BA; $287M 1995-97)
This proposal would provide $300 million over four years to the Forest Service to allow
it and other USDA research agencies to increase the breadth and depth to which forestry
research areas are investigated. The proposal would provide the necessary information
to help the Nation develop sound forest-related policies that would both provide
resources to meet ever-increasing demands from the population and sustain forest
ecosystems.
Wetlands Reserve Program (WRP)
Full funding of the Wetlands Reserve Program would be maintained, allowing one million
wetlands acres to be enrolled under permanent easements by the end of 1995: $373
million in 1994 and $414 million in 1995 would be included for the WRP.
Departments of the Interior and Agriculture
Natural Resource Protection and Environmental Infrastructure Initiative -- $239M in
1994 BA; $1,710M total 1994-97)
The proposal would provide $239 million in 1994 to protect and rehabilitate America's
inventory of natural and cultural assets, restore the facilities that protect these
resources and improve public access to them. This funding would complete the inventory
of read-to-go resource protection projects, facility maintenance, rehabilitation and
construction and other similar projects that stimulate economic growth and employment
6
in rural and urban areas. Interior bureaus afected are the National Park Services,
Fish and Wildlife Service, and Bureau of Land Management.
Federal Recreational Land Acquisition and State Grants (Land and Water Conservation
Fund, LWCF) at FY 1994 baseline level (about $260 million).
III. Savings
Environmental Protection Agency
Completion of Wastewater Treatment Construction Grants -- ($1.9B in 1997 outlays
savings)
With the $846 million in wastewater stimulus funding provided in FY 1993, the $18
billion authorization under the 1987 Water Quality Act, which was designed to end
Federal assistance, would be virtually completed a year ahead of schedule. As these
loans are repaid, States would be able to make a new round of loans due to the self-
sustaining nature of the State Revolving Funds. The Budget also proposes (under
Investment) a new $2 billion annual authorization for capitalizing Clean Water State
Revolving Funds for low-interest loans to municipalities to address water quality
problems.
Increase Private Sector Financing of Superfund Cleanups -- ($109M in 1997 outlay
savings)
More aggressive use of Superfund's enforcement mechanisms could achieve even greater
private financing of these cleanups without affecting protection of human health and
the environment. The proposal would preserve Federal Superfund money only for sites
where there are no viable private parties to undertake the cleanup to ensure that the
greatest number of sites can be cleaned up within the limited funding available in the
Superfund trust fund.
7
Department of the Interior
Implement a Federal Irrigation Water Surcharge -- ($15M in 1997 outlay savings)
This proposal would authorize a per acre-foot surcharge on water sales to Reclamation
projects throughout the West (except for the Central Valley Project in California, for
which a similar surcharge was recently enacted). Revenue from the surcharge would be
deposited into a special fund for use (subject to appropriation) in mitigating
irrigation-caused adverse impacts on fish and wildlife. The surcharge would also
encourage more rational water use that would reduce the harmful impacts of non-point
source pollution.
Increase Grazing Fees -- ($35M in 1997 outlay savings)
This proposal would increase grazing fees on public lands as negotiated by the
Secretaries of Interior and Agriculture, who would be given the flexibility to develop
alternative approaches to the current formula.
Permanently Extend Hardrock Mining Holding Fees and Institute Hardrock Mining Royalties
($357M in 1997 outlay savings)
This proposal would permanently authorize charging a $100 per claim holding fee on all
hardrock claims on Federal lands and would establish a 12.5 percent royalty to the
gross value of the hardrock minerals extracted from mining claims on public lands. The
claimant would be relieved of annual work requirements, which should increase
flexibility on timing the development of claims. It would also reduce unnecessary
ground disturbance to satisfy current law. The new royalty would be phased in over
three years to reduce the impact on the mining industry and local communities.
Receipts from hard rock mining royalties would be shared with the States where the
mining occurs.
Phaseout Below-Cost Timber Sales -- ($28M in net 1997 outlay savings)
Timber sales from some National Forests do not cover the costs to the Government of
making the timber available for sale. This proposal would gradually eliminate sales in
those forests where timber-sale program costs exceed timber-sale revenue.
8
Department of the Interior/U.S. Army Corps of Engineers
Reduce or Stretch-Out Construction Funding for Low-Priority Water Projects -- ($92M in
1997 outlay savings)
This proposal would reduce or stretch-out funding for certain Army Corps of Engineers
and Bureau of Reclamation water resources projects. These projects are often
environmentally destructive.
U.S. Army Corps of Engineers
Phase in Increased Inland Waterway User Fees -- ($460M in 1997 outlay savings)
This proposal would increase the Federal fuel tax over several years to $1.00 in 1997.
The revenue would be used to offset the cost of operating and maintaining the inland
waterway system.
9
Wastewater and Drinking Water State Revolving Fund (SRF) Funding Summary
Baseline
1993
1994
1995
1996
1997
1998
Wastewater Treatment
BA
2,500
2,568
2,634
2,700
2,768
2,837
OL
2,372
2,381
2,535
2,628
2,662
2,692
Changes to Baseline
1994-97
1994-98
1993
1994
1995
1996
1997
1998
Total
Total
Stimulus:
Complete SRF Wastewater
BA
+845
--
--
--
--
--
--
--
Authorization in FY 1993
OL
+39
+179
+272
+172
+72
+34
+695
+729
NDD Savings:
End Current Wastewater Grants
BA
--
-2,418
-2,484
-2,550
-2,618
-2,687
-10,070
-12,757
(except $150M/yr NAFTA)
OL
--
-109
-624
-1,424
-1,947
-2,207
-4,104
-6,311
Investment:
Drinking Water SRF
BA
--
+600
+1,000
+1,000
+1,000
+1,000
+3,600
+4,600
OL
--
+24
+172
+440
+692
+840
+1,328
+2,168
Clean Water SRF (Stormwater)
BA
--
+1,200
+2,000
+2,000
+2,000
+2,000
+7,200
+9,200
OL
--
+54
+344
+900
+1,402
+1,666
+2,700
+4,366
Net Change:
SRF Wastewater and
BA
+845
-618
+516
+450
+382
+313
+730
+1,043
Drinking Water
OL
+39
+148
+164
+88
+219
+333
+619
+952
Total
SRF Wastewater and
BA
3,345
1,950
3,150
3,150
3,150
3,150
Drinking Water
OL
2,411
2,529
2,699
2,716
2,881
3,025
Environmental Protection Agency
Question #1: What are the impacts of the wastewater and drinking water proposals?
Answer:
There are three pieces to the proposal on EPA wastewater funding. The first
is to provide $845 million in FY 1993 stimulus through additional
capitalization grants to the State Revolving Funds (SRFs) in FY 1993.
The second piece is to eliminate current EPA wastewater funding (except $150
million per year to support NAFTA) reflecting the near completion in FY 1993
of the existing $18 billion authorization. This authorization was designed
to end Federal assistance. Current funding consists of roughly $400 million
in earmarked grants for seven cities (Boston, New York, Los Angeles, San
Diego, Seattle, Baltimore, and Detroit) and $2 billion in capitalization
grants for wastewater SRFs. This reduction is largely offset by the third
piece of the proposal, which is the $2 billion per year in capitalization
grants for Clean Water SRFs ($1.2 billion in FY 1994) under a new
authorization that is included in the investment package.
The distinction between the $2 billion in wastewater SRFs funding cut in the
savings package and the $2 billion in Clean Water SRF funding provided in
the investment package is that the new funding (which requires legislation)
will place a greater emphasis on stormwater control projects and will be
eligible for a broader class of projects. Consequently, the main effect of
the savings and stimulus proposals taken together is the elimination of the
earmarked grants for the seven cities. These targeted grants have been
strongly supported by the Congressional delegations of the affected States
and opposed by the other States.
The drinking water proposal in the investment package provides $1 billion
per year in EPA funding ($600 million in FY 1994) for construction projects
to ease the burden on municipalities of complying with Safe Drinking Water
Act requirements. This would require additional legislation as EPA
currently has no authority to provide such assistance. The distribution of
funds among States will need to be determined. It should also be noted that
for exclusively rural areas, the Rural Development Administration, has
received an increase of $752 million for water and wastewater loans and
grants in the stimulus proposals and $500 million annually FY 1995-98 for
water and wastewater grants and loans ($300 million in FY 1994) in the
investment proposals.
Natural Gas Industry Issues Affecting Energy Tax Modeling Results
The model being used does not accurately relect the recent changes in natural gas industry
technology and regulation. As a result, the model misrepresents the ability of the industry to
respond to the changes in market conditions that result from some forms of energy taxes
described in the scenarios.
I. Wellhead Market for Natural Gas
The natural gas wellhead market is now a competitive commodity market with gas to
gas competition determining natural gas wellhead prices. This market has developed a
strong seasonal pattern (see attached graph). Long term model results driven by
annual solutions (even if a quarterly seasonal pattern is overlaid on that solution) miss
the nature of the competitive market.
- An indicator of such results is a close correlation between the relative changes of
oil and gas prices between scenarios. Gas price changes correlate to oil price
changes only when the relative prices allow oil to capture a noticeable percentage
of "off-peak" markets(i.e. when sufficient excess natural gas pipeline capacity
exists). Such conditions do not currently exist and are not expected to exist in
most base case scenarios.
Movement along (upward) an extremely inelastic 20 year supply curve is inconsistent
with a mature competitive commodity market. Like world oil markets, short-term
increases in the demand and/or price of natural gas result in the development of
technology which shift the entire supply curve. Resource depletion effects are
overwhelmed by technology improvements which lower drilling costs and improve
productivity. The dynamics of the nested short-run supply curves do not support the
long-term gas price increases indicated by the model.
II. Natural Gas Transmission and Distribution Pricing
The natural gas industry has undergone a complete regulatory restructuring culminating
with the implementation of FERC Order 636 over the next year. Transmission and
distribution pricing of the model is based on a largely static cost allocation formula
embedded in a regulatory structure that no longer exists. Natural gas retail prices
should reflect a flexibility in transmission and distribution pricing the beginnings of
which can be seen in the period from 1984 through 1991 (see attached Table 1).
Model results between scenarios must reflect the dynamic nature seasonal "selective
discounting" and State Public Utility Commission response in the face of by-pass of
the distribution company through direct pipeline interconnect.
- An indicator of this failing in the model results would be a disproportionate loss in
large volume industrial or electric generation gas demand between scenarios.
Under Order 636, a "secondary market" for released firm capacity competes with
pipeline interruptable transportation. Such competition between differing firms will
insure that off-peak discounting will occur with the limit being only variable cost
(economic shutdown point).
Even for primary market firm transportation contracts, the Order 636 environment will
result in discounting of pipeline reservation fees to maximize revenue, not the "death
spiral" behavior embedded if the revenue requirement is held constraint in the face of
changes in natural gas demand that is seen in the model.
The long-term dynamics of the natural gas transportation and distribution market are
driven by changes in incremental pipeline infrastructure investment and are best
described by a "Putty/Clay" model formulation of labor/capital/materials. The model
does not capture these dynamics between scenarios in terms of infrastructure
investment overtime.
III.
End-use Natural Gas Markets
The natural gas end-use market responds to the seasonal wellhead market and to
competitive forces in the transmission and distribution industry. Without
differentiating the market prices in each service sector (residential, commercial,
industrial and electric utility) the model cannot accurately predict demand response
between scenarios.
- As a result, the model shows virtually no cross-elasticity between gas and coal in
the short-term either by direct gas use vs. coal over wire or in existing coal fired
power plants. There has, in fact recently been significant short-term elasticity
between gas and coal. This trend will be accelerated by phase-one of the Clean
Air Act.
Dynamic responses are particularly poor in regard to new market development
(alternative fuel vehicles, natural gas cooling, cofiring of natural gas with coal and
reburn technology).
Monthly Natural Gas Consumption and
Wellhead Prices
2.4
2.8
2.2
2.6
2
2.4
1.8
2.2
Trillion Cubic Feet
1.6
2
$/Mcf
1.4
1.8
1.2
1.6
1
1.4
0.8
1.2
1984
1985
1986
1987
1988
1989
1990
1991
1992
Gas Consumption
Gas Price ($/Mcf)
'
Table 1
Average Retail Natural Gas Prices
($Mcf)
Electric
Residential
Commercial
Industrial
Utility
1984
6.12
5.55
4.22
3.70
1991
5.84
4.89
2.51
2.17
Change in
-0.28
-0.66
-1.71
-1.53
Retail Price
Includes adjustment for transportation deliveries of gas.
Source: DOE, Monthly Energy Review; 1991 estimated from first 11 months data.
DEPARTMENT OF AGRICULTURE
1994 Budget Passback
Stimulus (1993) :
$4 million in FY 93 BA to add 160 meat and poultry inspectors in the Food Safety and
Inspection Service.
Includes $348 million for rural water and wastewater loans and grants.
Funds rural very-low income housing repair loans and grants ($7 million).
Includes $188 million for Forest Service enhanced natural resource protection and
environmental infrastructure (including trails).
Includes $47 million for emergency watershed project repair and construction.
$71 million to begin full funding for a special Supplemental Food Program for Women,
Infants, and Children (WIC).
$23 million for the Emergency Food Assistance Program (TEFAP) for commodities to be
delivered early in FY 1994. This would ensure a smooth flow of commodities while
waiting for FY 1994 funds. FY 1994 funding will maintain approximately the FY 1993
level of commodity deliveries.
$38 million for repair and maintenance activities and hazardous waste clean-up at
Agricultural Research Service facilities.
$56 million for the Child and Adult Care Food Program to pay for meals for children
added to Head Start as a result of funds provided under the Stimulus package.
Investments (1994-97)
Over $17 billion in total BA FY 1994-1997 is included for Investments above baseline
levels, including:
00
$871 million for water and wastewater and grants (FY 1997 outlays = $176
million, 1994-1997 = $331 million) i part of the rural development initiative.
2
00
$2.4 billion for business and housing loans and grants (FY 1997 outlays = $454
million, 1994-1997 = $1,155 million) ; also part of the rural development
initiative.
00
$2.7 billion for the Women, Infants, and Children (WIC) program, to begin
covering all eligible, so that the President's "full" funding commitment would
be met by the end of FY 1996 (FY 1997 outlays = $1 billion, 1994-1997 = $2.7
billion).
00
$9 billion in Food Stamp increases to help offset the effects of the energy tax
on low-income households. ($1 billion in FY 1994, $2 billion in FY 1995, and $3
billion per year after FY 1995).
00
$565 million for Forest Service enhanced natural resource protection and
environmental infrastructure (FY 1997 outlays = $168 million, 1994-1997 = $506
million).
00
$120 million in funding for a Food Safety Initiative to hire additional meat and
poultry inspectors (+200 FTEs) and perform interagency research to reduce the
level of food-borne pathogens (FY 1997 outlays = $34 million, 1994-1997 = $111
million).
00
$287 million for Forestry Research to improve domestic ecosystem management, and
$180 million for Forests for the Future international forestry assistance
(combined FY 1997 outlays = $155 million, 1994-1997 = $431 million).
00
$263 million for a Tree Planting Initiative, to increase tree planting in both
rural and urban areas (FY 1997 outlays = $76 million, 1994-1997 = $246 million).
00
$480 million for the National Research Initiative Competitive Grants Program to
support high priority agricultural, food, and environmental research (FY 1997
outlays = $110 million, 1994-1997 = $188 million).
00
$1.2 billion for the Child and Adult Care Food Program to pay for meals for
children added to Head Start as a result of funds provided under the Investment
package. (FY 1997 outlays = $.3 billion, FY 1994-1997 outlays = $.8 billion).
3
Proposed Discretionary Reductions (savings in outlays)
To fulfill the President's goal to downsize the Federal Government, a Farm Service
Agency would be created from current USDA agencies serving farmers at the county
level. The proposal would improve service for farmers while reducing staff needs at
the USDA National, State and local levels (Savings in FY 1997 = $307 million, 1994-
1997 = $730 million).
REA loans would be made at Treasury rates while preserving $25 million in five-
percent loans each year for "needy" electric borrowers (Savings in FY 1997 = $150
million, 1994-1997 = $374 million).
Phase out below-cost timber sales over four years (Savings in FY 1997 = $86 million,
1994-1997 = $274 million).
Increase meat and poultry inspection fees to cover all overtime work (Savings in FY
1997 = $104 million, 1994-1997 = $416 million).
Reduce lower-priority, earmarked agricultural research and facility construction
(Savings in FY 1997 = $112 million, 1994-1997 = $262 million).
Specific agriculture user fees would be increased to cover the full cost to the
Government of providing commodity grading, over-time inspection, and other services.
(Affects Agricultural Marketing Service, Federal Grain Inspection Service, and the
Agricultural Cooperative Service) (Savings in FY 1997 = $16 million, 1994-1997 = $59
million).
Foreign Agricultural Service (FAS) lower-priority programs would be reduced with
remaining funds targeted to those agriculture sectors that most need Federal
assistance in order to enhance U.S. agricultural exports (Savings in FY 1997 = $10
million, 1994-1997 = $40 million).
Streamline the Economic Research Service (ERS), reducing lower-priority economic
research (Savings in FY 1997 = $17 million, 1994-1997 = $61 million).
FmHA direct farm loans would be cut by 25 percent and subsidized guarantees would be
increased by an equal amount; subsidized guarantees would be targeted to beginning
4
farmers as authorized by the 1992 Farm Credit Improvement Act (Savings in FY 1997 =
$10 million, 1994-1997 = $31 million).
Streamlining savings represent a freeze level for non-salaries and expenses accounts
not affected by other proposals, and selected reductions in lower-priority programs
(savings in FY 1997 = $76 million, 1994-1997 = $227 million).
Technical adjustments and miscellaneous changes, such as FTS 2000 price savings, and
the removal of one-time disaster assistance from the baseline (Savings in FY 1997 =
$12 million, FY 1994-1997 = $47 million).
Proposed Entitlement Savings (savings in outlays)
o
Commodity Credit Corporation farm payments (CCC) would be better directed to family-
sized farmers. Farm payment recipients would be limited to those making less than
$100,000 in off-farm income (Savings in FY 1997 = $140 million, 1994-1997 = $470
million). Also, wool and mohair direct support payments would be limited to $50,000
per person (Savings in FY 1997 = $66 million, 1994-1997 = $212 million.
Reforms contained in the 1990 Farm Bill would be extended starting in FY 1996:
"triple base" acres would be increased from 15 to 25 percent, with corresponding
increases in fees on "non-program" crops, and the 0/92 and 50/92 programs would be
eliminated. Also, eliminate honey program subsidies in FY 1994. (Savings in FY
1997 = $1.8 billion, 1994-1997 = $2.9 billion).
o
Reform crop insurance by basing indemnities on area (county) yield, rather than on
individual farm experience (combined mandatory and discretionary savings in FY 1997 =
$426 million, 1994-1997 = $1.3 billion). Also, annual commodity disaster payments
would be reduced by increasing the loss threshold from 35 to 40 percent and funded on
a mandatory basis through a Presidential declaration of an emergency.
o
Phase in increased grazing fees over four years to approximate fair market value
(Savings in FY 1997 = $13 million, 1994-1997 = $28 million). Secretary would be
given flexibility to negotiate higher fees consistent with these savings targets.
5
Increase recreation fees; would increase existing fees and add entrance fees at
specific national forest recreation areas (Savings in FY 1997 = $13 million, 1994-
1997 = $46 million); no increase greater than $3 per site or activity.
Reduce Food Stamp administrative expenses. Beginning April 1, 1994, match all State
administrative expenses at 50 percent. AFDC and Medicaid matching rates will also be
set at 50 percent.
Market Promotion Program (MPP) would have its current appropriation level of $148
million extended permanently (Savings in FY 1997 = $52 million, 1994-1997 = $208
million).
Across-the-Board Reductions (savings in outlays)
Pay adjustment -$124 - million BA in FY 94; due to Government-wide changes in pay.
FTE reduction -$10 million BA in FY 1994; FY 1994 FTE level of 109,669; -2,812
(-2.5%) from FY 1993; pursuant to the Executive Order. (Most of the savings from FTE
reductions were assumed in the Farm Service Agency proposal)
Other administrative efficiencies -$66 million BA in FY 1994; -3% pursuant to the
Executive Order.
Limits on R&D Grant Overhead -$16 million BA in FY 1994.
February 16, 1993
DEPARTMENT OF COMMERCE
1994 Budget Passback
Stimulus (1993)
EDA. An increase of $94M targeted to assist economically distressed communities.
NOAA. An increase of $81M will support weather service modernization and procure-
ment of computers and other equipment to enhance program-related research efforts.
NIST. An increased of $117M is proposed for NIST programs -- $103M for the advanced
technology program and $14M for networking and computer applications.
NTIA/Information Highways. To promote faster introduction and expansion of networks
between universities, businesses, schools and libraries, $64M in new grant funds is
proposed. A new program.
MBDA. To meet anticipated 1993 budget shortfall, an increase of $1.9M is provided.
Investments (1994-97)
Weather Service Modernization. Provides funds in 1994 (+$155M over baseline) to
finance the multi-year capital modernization program. Most increases are for weather
satellites and improved weather detection technologies (e.g. doppler radars).
National Institute of Standards and Technology (NIST). Grows from 1993 enacted of
$381M to $1,369M by 1997. Increase over 1994 baseline is $181M and over 1997
baseline is $931M.
OO Advanced Technology Program grants: Program expands from $68M in 1993
(enacted) to $758M by 1997.
00 Manufacturing Extension grants: increased to support over 100 manufacturing
outreach and technology centers nationwide by 1997. Program expands from $19M
in 1993 (enacted) to $92M by 1997.
00
In-house research in NIST labs doubled over five-year period.
Economic Development Administration. $33M will be available in 1994 and $55M will be
available annually 1995 through 1998 as a part of the Defense conversion initiative.
NTIA/Information Highways. Provides $54M in 1994 (baseline is zero) and $150M
annually in 1995-1997 to expand the number of networks between universities,
businesses, schools and libraries.
FCCSET Initiatives. Additional funds may be provided in a separate passback.
Non-Defense Discretionary Reductions
Bureau of Export Administration (BXA). Reduce 1994 BXA funding $6M below baseline
consistent with recent reductions in license applications. Stress bilateral/multi-
lateral agreements to control technology exports to unstable countries.
NOAA. Eliminate $65M in 1994 spending for low priority programs, projects, and
demonstrations, usually those earmarked by Congress.
EDA - Trade Adjustment Assistance. Eliminate trade adjustment assistance to firms
(-$13M below 1994 baseline). Secretary Brown mentioned this as a low-priority
program.
Pay Adjustment. No pay raise in 1994 and pay raise reduced by one percent in each
year, 1995-1997. Omit locality pay in 1994; implement revised locality pay system
beginning in 1995. Savings of $38 million in 1994 and $94 million in 1997.
FTE Reduction. Implement Executive Order on 100,000 FTE reduction. Savings of $29M
in 1994 and $233M in 1997.
Other Administrative Efficiencies. Implement Executive Order on Deficit Control and
Productivity Improvement in the Administration of the Federal Government. Savings of
$21M in 1994 and $97M in 1997.
Entitlements
Auction Spectrum. Support legislation to require the FCC to auction radio spectrum.
This legislation would transfer 200 megahertz from the Federal Government to the FCC
for assignment using auction. Need to work ASAP with Dingell to ensure that auction
proposal is not foreclosed by fast-moving House legislation.
Patent and Trademark Office. Extend existing (OBRA) user fees beyond sunset date of
1995 (or increase other existing patent fees by some amount). Provide for indexing
for out-years. Yields in excess of $110M annually starting in 1996.
February 16, 1993
National Defense Talking Points
Post-Cold War military forces will be shaped for new requirements and highly ready:
--
1.4 million men and women on active duty,
:
capable forward presence of roughly 100,000 troops in Europe, and
--
force readiness will be maintained at high levels.
Hardware programs:
--
major weapons systems will be assessed as the entire Defense program is reviewed
this Spring,
--
systems will continue our technological superiority,
--
airlift and sealift adequate for new challenges,
--
funding for SDI will be reduced, pending a strategic review, and
--
science and technology programs remain a high priority.
National Defense Program will be affordable:
--
planned national defense funding over next 4 years fulfills the promise of an
additional $60 billion in program savings,
--
program savings combined with government-wide pay and benefit changes and
additional reductions to offset projected under-funding result in total outlay
savings of $37 billion in 1997.
Defense planning will deal with new fiscal and management challenges.
--
Most recent 5-year budget plan of the previous administration may have:
00 understated costs of forces and hardware, and
00 overstated the savings from planned Defense Management Reforms and overhead
consolidations.
--
Liabilities, such as for environmental clean-up, may be greater than previously
anticipated.
--
A task force is reviewing these funding and management issues.
Department of Energy Defense Programs
--
3% real increase (after inflation) per year for environmental clean-up, and
--
no nuclear weapons production and only 15 tests of weapons through 1996.
To ameliorate the economic effects of reductions, the plan includes new initiatives for
defense conversion.
-- continued funding for the Department of Defense for dual-use technology and
manufacturing programs,
--
additional funding for DOD's Office of Economic Adjustment and for the Economic
Development Administration in the Department of Commerce for community
diversification programs,
:
about $9 billion in 1994-97 in investment initiatives of the Departments of
Energy, Transportation and Commerce and NASA for technology programs and high
technology product acquisition, creating "market pull" for defense industries
and their workforce,
--
$5.4 billion in 1994-97 to the Department of Labor for dislocated worker
training, and
:
funding for the Department of Energy for training, employee assistance, and
community assistance programs.
EDUCATION DEPARTMENT
1994 Budget Passback
Stimulus (1993)
Chapter 1 Summer Programs. $500M for FY 1993 only. (No change from prior passback.)
Appropriation language proposed so that at least 80% of the money is spent at the
local level by Sept. 30, 1993.
Chapter 1 Census Offset. $235M for 1993 only. Added since prior passback phone
call. Provides partial offset for loss of funds in some areas due to shift from 1980
to 1990 Census data for fund allocations.
Pell shortfall: 1993-1994 and prior years. No change from prior passback. $2.024B:
$1.371B for old shortfalls; $.653B for 1993-1994. Fully funds current shortfall
estimates through 1993-1994 school years.
Investments (1994-1997)
Apprenticeship. No change in 1997: outlays of $495M. 1994 BA reduced from $450M to
$270M since prior passback call. Labor and ED are collaborating on policy.
Allowance for Reform and Initiatives. No change in 1997: outlays of $2.7B. 1994 BA
reduced from $1.45B to $870M since prior passback. The allowance is for:
-- Elementary and secondary: "Safe Schools"; Systemic School Reform; reauthorization
of Elementary and Secondary Education Act; other programs.
-- Postsecondary: Pell grants and other higher education programs.
Non-Defense Discretionary Reductions. No change from prior passback.
Reform Campus-based Aid. Reduce BA for supplemental grants, loan capital, work-study
$200M below 1993; freeze remaining $1.2B in outyears; give schools flexibility to
shift funds among activities. Outlay savings: $275M in 1997.
Phase-out Impact Aid "b". Three year phase-out of Impact Aid "b" payments to school
districts. No cuts in the much larger "a" payments. Outlay savings: $145M in 1997.
o
"streamlining": Eliminate, restructure or reduce other programs. 1997 outlay
savings: $620M, derived as follows (Secretary has discretion on how to achieve) :
-- Eliminate consumer/homemaking.1997 outlay saving: $37M.
-- Reduce outlays one-third for 60 programs with less than $50 million in 1993 BA.
1997 outlay savings: $186M.
-- Freeze BA at 1993 level for most other programs. 1997 outlay savings: $398M.
Entitlements. No change from prior passback.
O
Direct Loans. Legislation to expand and modify Direct Loan pilot with goal of full
implementation of Direct loans in 1997. 1997 outlay savings: $1.3B. Prepare loan
repayment options, including repayments adjusted to annual income, to permit more
people to take low wage community service jobs.
State Default Fee. States to share costs if default rate of students in State's
schools exceeds 20 %. States may pass on costs to schools. 1997 outlay savings:
$131M.
Other
Across The Board Cuts. 1997 outlay savings: $71M. Savings from: FTE reductions (-50
in 1993, rising to -198 by 1995) ; lower administrative expenses; lower research costs
per new policy to cut grantee overhead; no 1994 pay raise.
Technical increases. Amounts increased over baseline. 1997 outlays: $135M. 1994 BA
increase: $148M. Provides for: continuing Pell and student loan processing
contracts; improvements in accounting systems; continuing planned expansions of
statistics programs; National Assessment of Educational Progress, State-based and
national assessments.
DEPARTMENT OF ENERGY
1994 Budget Passback
STIMULUS (1993)
Weatherization Grants. Increase funding by $47 million to help weatherize homes of
lower income households and create jobs quickly.
Federal Energy Efficiency. Increase funding for DOE in-house energy management and
Federal Energy Management Program Activities (by $13 million in FY93).
DOE Laboratories. Increase funding for Cooperative Research and Development
Agreement (CRADAs) at the National Laboratories by $47 million in FY93.
Institutional Conservation Program. Increase funding by $19 million for model
projects demonstrating energy conservation in buildings and industrial processes.
Alternative Fuel Vehicles. Increase funding by $28 million for conversion to or
acquisition of alternative fuel vehicles for Federal fleet.
INVESTMENT (1994-98)
Funding for Conservation and Renewable Energy. Propose $3.5 billion over the FY
1994-98 baseline as part of the investment package, including:
-- $1.9 billion over 1994-98 for renewable energy and conservation R&D, most of which
is intended for implementation of the Energy Policy Act;
-- $460 million over 1994-98 baseline for low-income weatherization grants; and
-- $292 million over FY94-FY98 baseline for DOE in-house energy management and
Federal Energy Management Program (FEMP) activities, including an efficiency fund
that DOE will administer on behalf of a number of smaller agencies.
Government-wide, the buildings energy conservation program would increase by $94
million in FY 1994 and a total of $1.4 billion over baseline between FY 94-98.
Government-wide, the buildings energy conservation program would increase by $94
million in FY 1994 and a total of $1.4 billion over baseline between FY 94-98.
Technology Transfer. Add $30 million in 1994 for Cooperative Research and
Development Agreements at the non-defense laboratories (for a total of $230 million
above the baseline in FY 1994-98).
Other Energy R&D/Technology Increases. Other technology initiatives above the
baseline include increased fusion energy R&D funds, increased gas utilization R&D
($263 million between 1994 and 1998) and initiation of the Advanced Neutron Source at
Oak Ridge ($1.2 billion between 1994 and 1998).
Environmental Restoration and Waste Management. The clean-up program would be
increased by three percent above baseline.
SAVINGS
Uranium Enrichment. To pave the way for the creation of the U.S. Enrichment
Corporation, one of the enrichment operating plants would be closed (located in
Portsmouth, Ohio -- not Paducah, KY). Produces savings of 241 million in outlays in
1994 and $1.3 billion between 1994 and 1997.
Nuclear Reactor Research. Stops nuclear reactor research considered commercially
unviable. Produces saving of about $103 million in outlays in 1994 and $1 billion
between 1994 and 1998.
PMAs. We are withdrawing our debt payment reform proposal and BPA conservation
initiative. We will retain a savings marker of $300 million BA in the outyears but
the nature of the savings proposal is to be worked out with Congress.
Strategic Petroleum Reserve (SPRO). We are proposing to reduce SPRO acquisitions by
one-third. Currently, DOE adds about 20,000 barrels per day. (The 20,000 is
acquisition for non-defense purposes; another 15,000 is acquired for defense
purposes.) This proposal reduces acquisition to just over 13,000 barrels per day.
SSC Will Continue. The SSC is funded at $108 million above the baseline in 1994
(total FY94 funding of BA $640 million). Baseline funding is assumed in the
outyears. The project would be stretched out, adding about 3 years and $1.8 billion
to the schedule. This stretch-out will provide a breather to review magnets and
costs and evaluate current contractor, and fix any problems with cost and schedule
controls.
DEFENSE PROGRAMS
Total FY 1994 BA for DOE defense activities is $11.6 billion. Part of this ($5.5
billion) is for defense-related nuclear waste cleanup, which is funded at 3 percent
above the baseline. This will require DOE to renegotiate some environmental
compliance agreements it entered into with States and EPA and to undertake some
reforms in the way it operates this program.
All other defense activities related to weapons production, stockpiling, and testing
are $1 billion below the FY 1993 level ($6.0 billion). This funding level conforms
with prior decisions to stop producing and reduce testing of nuclear weapons.
$100 million (part of the $11.6 billion above) is to provide assistance to workers
and communities who lose jobs because of defense-related cuts for DOE.
OTHER
Streamlining/FTE Cuts. Other cuts, which affect all Federal agencies, will also be
taken in an effort to improve the efficiency and streamline the Department's
administrative operations. This includes a reduction in the overhead allowance for
grants to universities (from 26 percent to 22 percent).
Alaska Power Sale. The Administration supports the sale of the Alaska Power
Administration to the State and other publicly-owned utilities. No budget effects.
FCCSET. Federal Coordinating Council for Science, Engineering and Technology R&D
initiatives are funded above baseline.
February 16, 1993
ENVIRONMENTAL PROTECTION AGENCY
1994 BUDGET PASSBACK
STIMULUS (1993) :
Watershed Resource Restoration Grants -- provide $47M in 1993 BA in Sec. 319 non-
point source grants pursuant to Administrator Browner's request.
Green Programs -- provide $23M in 1993 BA to greatly expand EPA's existing "green
programs" to promote energy efficiency and reduce greenhouse gas emissions pursuant
to Administrator Browner's request.
Wastewater State Revolving Funds (SRFs) -- provide $845M in 1993 BA to virtually
complete the $18B authorization under the Clean Water Act.
INVESTMENT (1994-97) :
$1 Billion per year for Drinking Water State Revolving Funds (SRFs) ($599M in
1994) -- establish new drinking water SRFs to help municipalities comply with Safe
Drinking Water Act requirements ($692M in 1997 outlays; $1,328M in 1994-97 outlays).
$2 Billion per year for Clean Water State Revolving Funds ($1,198M in 1994)
Emphasizing Stormwater Projects ($1,402M in 1997 outlays; $2,700M in 1994-97
outlays)
Environmental Technology -- expand environmental technology research by $36M in FY
1994 BA and $1.85B over nine years ($127M in 1997 outlays; $271M in 1994-97 outlays).
Watershed Resource Restoration and Green Programs -- investment funding for these
items included in the stimulus package would be continued at $50M and $25M in BA per
year respectively for 1995-97 ($30M and $15M respectively for 1994).
PROPOSED REDUCTIONS: (all Discretionary -- EPA has only minor Mandatory spending)
Completion of Wastewater Construction Grants -- provide wastewater funding under
current authorization ($150M per year) only to support NAFTA (including funding for
colonias in Texas, New Mexico, and Arizona). Reduces 1997 outlays by $1,947M and
1994-97 outlays by $4,104M.
Increase Private Sector Superfund Financing -- reduce funding by $118M in FY 1994 BA
for EPA cleanups by increasing private sector cleanup activity through increased
enforcement. Reduces 1997 outlays by $109M and 1994-97 outlays by $308M.
Eliminate One-Time Building Projects -- would eliminate from the baseline two one-
time building projects added by Congress to EPA's budget in 1993.
CROSSCUTTING REDUCTIONS:
100,000 FTE Reduction Savings -- $17M in 1994 BA savings due to 2.5 percent 1994 FTE
cut pursuant to Presidential Executive Order. EPA's share of the FTE reduction is
448 FTE in 1994 (-179 FTE in 1993).
Administrative Efficiencies -- $8M in 1994 BA savings due to 3 percent 1994
administrative expense cut pursuant to Presidential Executive Order.
Pay Adjustment -- $30M in 1994 BA savings due to changes in Federal pay assumptions.
streamlining Savings -- $34M in 1994 BA savings due to elimination of inflation from
the baseline for object classes and programs not affected by other changes.
Other Crosscutting Reductions -- $3M in 1994 BA savings due government-wide limits on
R&D grant overhead and $1M due to FTS 2000 price reductions.
February 16, 1993
Department of Health and Human Services
HHS-wide Talking Points
To preserve maximum Secretarial flexibility to allocate resources, maintain consistency with Clinton
priorities, and achieve deficit reductions levels, the following reductions may be allocated within HHS.
Reduction of 100,000 Federal Positions
On February 10, 1993, the President issued an Executive Order reducing 100,000 Federal positions over
the next three fiscal years. To achieve the President's goal by FY 1996, HHS' contribution is over
1,000 FTE in FY 1993 and over 10,000 FTE over FYs 1993-1996. At least 10 percent of the reductions
shall come from the SES, GS-15 and GS-14 levels or equivalent.
Deficit Control and Productivity Improvement in the Administration of the Federal Government
The President is committed to achieving real reductions in the administrative costs of Federal
agencies. To meet this goal by FY 1997, HHS shall reduce its administrative overhead (defined as
expenditures for contractual services and supplies) by approximately $150 million in FY 1994 and
approximately $1.7 billion in FYs 1994-1997.
streamlining
To achieve the President's goal of streamlining agency programs, HHS's share of additional
administrative reductions is over $300 million in FY 1994 and over $3 billion over FYs 1994- 1997.
Stimulus (1993)
Head Start (Summer). An increase of $500 million to fund a summer Head Start program to help
disadvantaged children retain the social and intellectual gains made during the school year.
Ryan White Act. An increase of $200 million to respond to the President's pledge to fully fund the
Ryan White Act.
Immunizations. An increase of $300 million through the national vaccine program to finance vaccine
purchase, certain personnel expenses, vaccine safety and research, the development of a national
tracking system, and a community based outreach and information campaign.
NIH Higher Performance Computing Applications. A $9 million increase to develop applications of
advanced computer and networking technology for health care.
Social Security Administration. A supplemental in FY 1993 for the Social Security Administration for
purchase of computers and other equipment and processing disability determinations -- $302 million in
FY 1993, $120 million in FY 1994, and $200 million in succeeding years.
Investment (1994-97)
No specific amount has been set aside for reforming welfare.
Head Start (Summer). Continues the summer Head Start program at $514 million in 1994.
Head Start Program Growth. As pledged in Putting People First, this proposal begins fully funding
Head Start. Head Start funding would increase by $785 million in 1994 and by $3.1 billion in 1997,
and is complemented by Medicaid-related spending for child health and the Child Care feeding program
in the Department of Agriculture's Child and Adult Care Food Program.
Ryan White Act. A $120 million increase in 1994, with total additional funding of approximately $1.4
billion for 1993-1997.
AIDS, Women's Health. Research and Other Public Health Initiatives. Includes an additional $1,272
million in 1994 for funding HIV/AIDS, women's health, and other priority research efforts; immunizing
young children; and promoting public health.
Low Income Home Energy Assistance. Funds will be sought to alleviate the impact of the energy tax
increase on low income households.
Added budget authority of $333 million in FY95, $667 in FY96, and
$1 billion in FY97 and FY98.
NIH High Performance Computing Applications. Includes an increase of $24 million in 1994 to continue
the activities begun in 1993 to develop applications of advanced computer and networking technology
for health care.
Substance abuse treatment. A $90 million increase in 1994 to create treatment capacity where is it
needed most and for hard-to-treat populations, especially pregnant women and women with children.
Social Security Administration. A dedicated automation investment fund to improve service and
productivity at the Social Security Administration of about $1 billion. Spending is estimated at
about $145 million in FY94 and $245 million in each of the succeeding four years. This is above
currently budgeted investment levels.
Parenting and Family Support. Discretionary funds of $60 million in FY94 ($1.1 billion over FY94-97)
will be set aside to respond to sensitive, emerging issues in parenting and family support, including
activities that would help disadvantaged parents work with their children at home.
Medicaid and AFDC State Administrative Expenses. Beginning April 1, 1994, match all Medicaid and AFDC
State administrative expenses at 50%. Food Stamp match rates would also be set at %50. Limited
hardship waivers will be available.
Technical Adjustments to the Baseline
NIH Breast Cancer Research. The NIH 1994 baseline continues over $200 million for the breast cancer
research funds that originally appropriated to the Defense Department in 1993. This policy fully
funds the out-year costs of these multi-year grants.
Entitlements
Medicare. Proposed changes have been discussed that would save $3.0 billion in FY94, $15.5 billion in
FY97, and $53.9 billion over five years. Final details of the design and pricing of the SMI premium
need to be resolved. (NOTE: These details involve savings of about $1 billion.)
Medicaid. Proposed changes would save $225 million in FY94, $2.1 billion in FY97, and $8.7 billion
over five years. The proposals would permit States to use prescription drug formularies to control
growing drug costs, close loopholes that allow individuals to divest assets in order to receive
Medicaid-covered long term care, and fix a technical error in OBRA 90 to remove the mandate that
States cover personal care services.
Child Support Enforcement. Expanded child support activities including those in Putting People First
and many of the Interstate Commission on Child Support recommendations. The proposals are targeted to
produce billions of dollars in increased child support collections and medical support. Federal
savings are currently estimated at $27 million in FY94 and $505 million over FY94-98.
Social Security Administration. Seek Social Security Act changes that would charge States a small fee
for the administration of State supplements to the Supplemental Security Income program. The monthly
fee would be $1.67 per beneficiary in the first year, $3.33 in the second year, and $5 in the third
year.
Non-Defense Discretionary Reductions
Health Professions Curriculum Assistance. Reduce funding for health professions curriculum assistance
by $27 million in 1994, recognizing that most health professionals are no longer in short supply.
Curriculum assistance grants targeted specifically for primary care, nursing, and disadvantaged
assistance would receive funding increases.
Food and Drug Administration User Fees. Collect $200 million in 1994 from the drug industry for the
value conferred by FDA certification of the safety and effectiveness of drug, medical devices, and
other FDA-regulated products.
Reduce Overhead Rate on University R&D. Adjust the budgets for civilian R&D grant-making agencies to
reflect an upper limit on administrative and facilities-related overhead charges, consistent with
streamlining overhead in Federal departments and with Putting People First. The HHS share will save
$223 million in 1994.
February 16, 1993
TALKING POINTS - INTERNATIONAL AFFAIRS
Overall international affairs outlays have been reduced by $1.4 billion in 1994 and
$2.4 billion during 1994-97.
Within the amounts remaining, programs will be restructured to make funds available
for key Clinton Administration foreign policy initiatives.
Among the initiatives, greatest emphasis has been placed on programs to promote
democracy abroad, particularly in the former Soviet Union. Funding for a Radio Free
Asia is provided.
The budget would make the United States current in its legal obligations to
multilateral institutions and would meet all known needs for UN peacekeeping
operations.
Other major initiatives supported include non-proliferation activities, population
control, the international environment, competitiveness, refugees and humanitarian
emergency relief.
Savings have been taken in traditional security assistance programs, which must be
redesigned for the needs of the post-cold war world. Funding for countries involved
in the Middle East peace process, mainly Israel and Egypt, will not be cut.
Funding for Agency for International Development programs, particularly those that
may export jobs, has been cut pending reorganization of that agency.
International radio broadcasting will be streamlined with attendant savings, but
Radio and TV Marti broadcasting to Cuba and will be maintained.
Export financing for capital goods will be held level while the program, is
reoriented for greater effectiveness.
February 16, 1993
Presidential Decisions on the FY 1994 Budget
Talking Points -- Secretary Cisneros
Department of Housing and Urban Development
STIMULUS:
President adopted most of the Secretary's stimulus proposals.
Expand the Community Development Block Grant (CDBG) with $2.5 billion in 1993 BA
and modify to assure faster spending. Modifications include:
-
Remove current restraints on public services spending;
-
Enforce a strict recapture provision on any unspent CDBG stimulus funds
after 1994;
-
Provide the HUD Secretary authority to waive statutory or regulatory
provisions that impede fast spending.
--
Accelerate HOME expenditures, (No new money.)
New regulations and other options to accelerate expenditure of funds will be
mutually developed by OMB and HUD staff.
Accelerate Public Housing Modernization expenditures, (No new money.) Shorten
the grant-making process and streamline information requirements. HUD and OMB
staff will work out details.
Add $423 million for HUD's Supportive Housing program. This expansion of HUD's
homeless funding in 1993 is consistent with the Secretary's request in his
February 3rd letter to you. The supplemental will include modifications to
accelerate current slow spending, and will enforce a strict recapture provision
for any stimulus funds unspent after 1994.
INVESTMENT:
President selected several HUD programs for special emphasis in his
investment program. He added BA of $15.3 billion from FY 1994-1998
for HUD investments. (HUD 1997 outlays were increased $1.4 billion
above the OMB baseline to accommodate these additional investments.)
--
Increase basic (non-stimulus) Community Development Block Grant (CDBG) program)
by $90 million in FY 1994, and $150 million in FY 1995-1998, (+$690 million of
BA 1994-1998; 1997 outlays of $4.4 billion are $137 million above the OMB
revised baseline.)
:
Increase HUD's Low-Income Housing Preservation and Restoration programs, This
increase assures that sufficient funds are available to preserve, rehabilitate,
and restore the financial soundness of current low-income rental housing.
(+$4.1 billion of BA 1994-1998) ;
--
Invest to assist more low-income households with housing, Expands two HUD
programs: (a) increase rental assistance to 100,000 new housing vouchers in 1998
(from nearly 40,000 in FY 1993; gradual increase each year), and (b) double HOME
grants to State and local governments to the full amount authorized ($2.2
billion in FY 1994; FY 1993 base is $1.1 billion), and maintain at that level
through FY 1998. (+$6.8 billion in BA in FY 1994-FY 1998).
:
Invest more in homeless programs by increasing HUD's Supportive Housing Program
by $180 million in FY 1994 and $300 million in FY 1995-FY 1998. This provides a
more permanent solution to homelessness. (1997 outlays of $300 million are $138
million above the OMB revised baseline.)
:
Increase public housing operating subsidies. This increase will assure full
funding of authorized operating subsidies for public housing units. Also
includes reforms to eliminate paying subsidies for vacant units.
:
Fund Community Partnership Against Crime initiative. Funding for this new
program will allow HUD to work with local public housing authorities in an
intense effort to reduce crime in public housing. ($690 million in BA, FY 1994-
FY 1998.
Increase funding for HOPE for Severely Distressed Public Housing initiative.
This proposal increases the funds available for rehabilitating severely
dilapidated public housing units from the level of $300 million in BA provided
in FY 1993, to $483 million in FY 1994, and $600 million annually in years FY
1995-FY 1998. ($1.26 billion in BA, FY 1994-FY 1998; $374 million in outlays,
FY 1994-FY 1998)
Fund HOPE Youthbuild initiative. This proposal provides resources to employ,
train, and educate economically disadvantaged young adults in rehabilitating
public and other low-income housing. ($48 million in BA in FY 1994, $368
million in FY 1994-FY 1998; $106 million in outlays in FY 1994-FY 1998)
TAX INITIATIVE FOR HOUSING: As part of his tax package, the President has approved
the following tax changes to support housing.
Extend the Low Income Housing Tax Credit permanently;
Extend Mortgage Revenue Bonds permanently;
Propose creation of enterprise zones, Treasury, OMB and HUD staff should work
together to develop program details for final proposal similar to that in H.R.
11. President has approved tax expenditures of $1.2 billion in 1997 for
enterprise zones ($2.4 billion tax expenditures between 1994 and 1997).
NON-DEFENSE DISCRETIONARY PROGRAM SAVINGS:
To help meet his 1997 deficit reduction target, the President decided to reduce
or reform several HUD programs. In addition, the President asks HUD to
contribute its share toward government-wide savings initiatives. (Total
estimated 1997 outlay savings are $1.5 billion below the revised OMB baseline.)
--
Eliminate funding for Special Purpose Grants. These were added in the 1993
Appropriations process as "pork" items. The unauthorized projects violate the
principles of open and fair distribution of HUD resources, which were enacted in
the 1989 HUD Reform Act.
--
Modify administrative fees for Federally-assisted housing from 7.65 percent of
rents to 6.0 percent of rents. HUD fees are paid to local public housing
authorities, which administer Federal housing subsidy programs. These fees
substantially exceed the costs of the services the local entities perform.
According to GAO and HUD studies, this proposal would gradually reduce these
fees to a uniform level more consistent with service costs.
--
Reallocate new construction funding from Public and Indian Housing and Elderly
and Handicapped housing to HOME block grants. This proposal increases
flexibility of local communities without diminishing the number of housing units
being assisted. Only 70 percent of HUD new construction funds are transferred
to HOME because of the state/local match requirement in HOME.
--
Reform HUD's preservation program to eliminate excessively costly subsidies paid
to private landlords to continue to operate rental units as low-income housing.
Limits subsidy to the cost of a housing voucher. Also eliminates homeownership
option.
Government-wide savings, HUD is asked to bear its share of reductions needed
to achieve the President's goals of: (1) a reduction of 100,000 FTE in federal
civilian employment and (2) an across the board reduction in certain
administrative costs.
--
Additional savings to streamline government. In addition to the specific
discretionary program savings the President has approved, the President asks
that you plan to achieve additional savings to meet his objective of
streamlining government.
Although these additional savings must be met in the aggregate (1997 outlay
savings of $656 million for HUD), you may reallocate them among your programs to
reflect the consolidation and efficiency steps you believe are most appropriate.
My OMB staff are prepared to work with your staff to develop the necessary
detailed budget allocations by program.
ENTITLEMENT SAVINGS:
These proposals save $227 million in BA and outlays for
1997.
:
FHA Insurance Reforms, Reforms will reduce insurance losses by removing
legislative and regulatory impediments, and improving management. These reforms
will re-establish the FHA insurance programs as effective government financing
vehicles.
Propose GNMA REMICS (Real Estate Mortgage Investment Conduits). Reduces
mortgage costs to borrowers by enabling intermediaries to match investor
investment preferences more precisely. The government's charge for guaranteeing
REMICS will capture some of the efficiency gain of a REMIC for deficit
reduction. The rest will accrue to the homeowner.
February 16, 1993
DEPARTMENT OF THE INTERIOR
FY 1994 BUDGET PASSBACK
STIMULUS:
Total BA of $460M ($745M requested by Secretary Babbitt), including:
-- Enhanced Natural Resource Protection and Environmental Infrastructure (+$349M),
including the National Parks (+$230M), Wildlife Refuges (+$88M), and other
Public Lands
-- Bureau of Indian Affairs (BIA) school operations and Economic Development on
Indian reservations (+$88M)
-- Historic Preservation repair and maintenance, National Park Service (+$23M)
INVESTMENT:
Natural Resource Protection and Environmental Infrastructure (+$160M in FY94 BA)
including National Parks, Wildlife Refuges, and Public Lands
Bureau of Indian Affairs Dam Safety (+$18M in FY94 BA)
Public land highways and Indian reservation roads (+$32M in FY94 BA) funded
through Department of Transportation's Highway Trust Fund
PROPOSED REDUCTIONS:
Entitlements:
Phase in increased Grazing Fees over four years to approximate fair market value
(Bureau of Land Management) (-$22M in FY97 outlays; -$48M in FY 94-97 outlays);
Secretary would be given flexibility to negotiate higher fees consistent with these
savings targets.
Permanently extend Hardrock Mining Holding Fees; continues proposal similar to
FY 1993 enacted (-$80M in FY97 outlays; -$320M in FY 94-97 outlays)
Institute Hardrock Mining Royalty; based on 12.5 percent of gross production
phased in over three years (-$277M in FY97 outlays; -$471M in FY 94-97 outlays)
Permanently extend 50% Net Receipt Sharing for On-shore oil, Gas, and Coal
Extracted from Federal Lands (not OCS) ; (-$45M in FY97 outlays; -$170M in FY 94-97
Increase outlays). Recreation Fees; would increase existing fees and add new sites at national
parks, refuges, and public lands (-$45M in FY97 outlays; -$147M in FY 94-97
outlays); except at national park units, no increase greater than $3 per site or
activity.
Implement a Federal irrigation water surcharge (non-Central Valley Project)
(-$15M in FY97 outlays; -$45M in FY 94-97 outlays)
Reform Commonwealth of Northern Mariana Islands Funding Agreement (-$10M in FY97
outlays; -$31M in FY 94-97 outlays)
Discretionary:
Reduce construction funding for selected Bureau of Reclamation water projects
(-$42M in FY97 outlays; -$163M in FY 94-97 outlays)
Eliminate one-time Interior funding for disaster relief; eliminates FY 1992
contingent supplementals (-$68M in FY97 outlays; -$250M in FY 94-97 outlays)
BIA Enhanced School Operations (+$60M BA in FY94, +$60M in FY 97 outlays; +$240M in
FY 94-97 outlays)
Indian Land and Water Rights Claim Settlements (+$200M BA in FY 94, +$200M in FY 97
outlays; +$800M in FY 94-97 outlays)
ACROSS-THE-BOARD CUTS PURSUANT TO PRESIDENTIAL DECISIONS:
Pay adjustment -$83M BA in FY94; due to Government-wide changes in pay.
FTE reduction - -$68M BA in FY94; FY94 FTE level of 75,989; -1,948 (-2.5%) from
FY 93; pursuant to the Executive Order.
Other administrative efficiencies - -$40M BA in FY94; -3% pursuant to the Executive
Order.
Limits on R&D Grant Overhead -$2M BA in FY94.
-2-
February 16, 1993
DEPARTMENT OF JUSTICE
1994 Budget Passback
stimulus.
None planned.
Investments/Crime Initiative.
Community Policing/"Cops on the Beat." $50M is provided in 1994 ($300M by 1997) to
initiate a program to aid States and localities to enhance their community policing
activities. Funds may be used to: recruit and hire new officers; provide special
training; or support community programs to reduce crime. Program is consistent with
last year's crime bill and "Putting People First."
Police Corps. $25M is provided in 1994 ($150M by 1997) to establish a program that
provides scholarships to would-be police officers in exchange for a commitment to
service as a State or local police officer. Candidates would receive a yearly
stipend for tuition, books, and expenses. Program is consistent with last year's
crime bill and "Putting People First."
Brady Bill/Criminal Records Upgrade. $25M is provided in 1994 ($50M in 1995 and
beyond) to initiate grants to states to upgrade criminal records infrastructure and
to establish a computer interface with the FBI's criminal records databases. Initial
year funding will be split between grants to States and FBI startup and operating
costs. Thereafter, grants to states will be increased and FBI operations will be
funded. Program is consistent with last year's crime bill and recent Presidential
support of Brady Bill.
Detention and Care of Federal Prisoners. $199M over 1994 baseline ($274M by 1997)
will help the Bureau of Prisons and Marshals to house and feed an increased number of
detainees and prisoners and to meet higher room and board and medical costs. Also
includes funds to open new prisons.
All Other Law Enforcement. $91M over 1994 baseline ($126M by 1997) is provided
principally to INS, and FBI to enable agencies to continue to improve their services.
Among the increases are: 1) $9M for FBI's fingerprint identification improvement
project (this would fully fund the Department's request) ; 2) $35M for detention/
deportation of criminal aliens by INS; 3) $10M for additional INS inspectors at land
border ports of entry; 4) $8 million for improving INS data and communications
capabilities; 5) $10M for implementation nationwide of the FBI's program to contract
background investigations to former agents; 6) $11M for rent payments to GSA; and 7)
$8M for the Community Relations Service to process and resettle Haitians and Cubans.
Non-Defense Discretionary Reductions
DOJ Program Streamlining. The grant programs within the Office of Justice Programs
(e.g., State and local drug grants) would be funded at 1993 enacted levels (-$17M
from baseline in 1994) and funding for new law enforcement training facilities at
Quantico, VA, for DEA would be eliminated (-$8M from 1994 baseline). The current
training capacity at Quantico, coupled with facilities at Treasury's Federal law
enforcement training center in Georgia (FLETC), provide sufficient resources to
fulfill current Justice law enforcement training needs.
Prison Construction. Limited new future construction is proposed for 1994 and 1995,
and no new construction in 1996 and beyond (-$71M from 1994 baseline). Does not
affect all construction projects currently planned and funded. This reduction is in
recognition of the fact that there is an unobligated balance in this account of over
$1.6B at the start of 1993 and significant progress has been made in reducing prison
overcrowding. Prison overcrowding will be reduced to less than 10% by 1997 with
funding already available for new construction. (Prison repair and modernization
would be maintained at $114M in 1994 and adjusted for inflation through 1998.)
Pay Adjustment. No pay raise in 1994 and pay raise reduced by one percent in each
year, 1995-1997. Omit locality pay in 1994; implement revised locality pay system
beginning in 1995. Savings $139M in 1994 and $340M in 1997.
FTE Reduction. Implement Executive Order on 100,000 FTE reduction. Savings $82M in
1994 and $703M in 1997.
Other Administrative Efficiencies. Implement Executive Order on Deficit Control and
Productivity Improvement in the Administration of the Federal Government. Savings of
$50M in 1994 and $189M in 1997.
Entitlements. None
Other Items.
DOJ is requested to examine the feasibility of charging fees for processing various
INS forms to offset part of the costs of land border inspection (the potential is
about $7M annually) and to propose extending the land border crossing fee pilot
project.
DOJ is requested not to increase basic rates of pay for lawyers or law enforcement
officers.
DEPARTMENT OF LABOR
STIMULUS
Emergency Unemployment Compensation: Policy is unchanged: extend the current program of 20/26 additional weeks
of benefits through October 2nd. Those receiving benefits when the program ends will receive 15 additional weeks.
-- Estimates include State administration costs.
-- Language has been drafted so extension can be done through authorization or appropriations action.
Summer Youth Employment and Training: No change from prior passback. $1 B is added to existing funds available for
the summer of 1993.
Community Service Employment for Older Americans: $32 M add-on would finance 5,300 job slots bringing the total
slots up nearly to the 1993 authorized job slot floor of 70,000.
o
Worker Profiling: $14 M is included for FY 93 for enhanced counseling/labor exchange activity to help identify quickly
and provide services to the structurally unemployed to get them back to work.
INVESTMENT
Dislocated Worker Assistance; $40 M reduction in 1997 outlays (now $1.960 B). In FY 1994, $1.2 B (an $800 M
reduction from the earlier $2 B level) is added to the baseline for a new comprehensive worker adjustment program
(baseline is $725 M for Trade Adjustment Assistance and Economic Dislocation and Worker Adjustment Assistance acts).
$2 B is added for FY 1995-98.
Summer Youth Employment and Training: No change to 1997 outlays ($625 M). The investment change reduced the
1994 additional amount from $625 M to $375 M (FY 93 stimulus is $1 B). FY 1995-98 is $625 M.
Community Service Employment for Older Americans No change in 1997 outlays of $35 M. The investment change
reduced the FY 1994 add-on from $35 M to $21 M (FY 93 stimulus is $32 M). The FY 1995-98 level is $35 M.
Worker Profiling: No change in 1997 (no outlays). An additional $9 M, the level after the investment change is
provided in FY 94.
Job Corps:
-- 50/50 Plan: $41 M drop in 1997 outlays (now $202 M). Capacity will be increased by 50 centers (from 112
centers to about 162) by about the year 2001. Instead of $222 M, the program starts at $133 M in FY 1994 (an
amount determined after the investment change); amounts vary in outyears based on DOL planning estimates.
-- Maintenance: $5 M decrease in 1997 outlays (now $45 M). $30 M (as opposed to $50 M before the 40%
change) is provided in FY 1994 and $50 M each year FY 1995-98 for backlogged maintenance and relocation
costs at existing Job Corps centers.
Youth Apprenticeship: A $5 M drop in outlays in 1997 (now $495 M). (Also being passed back to Education because
the Secretaries are collaborating). Instead of starting at $450 M, FY 1994 will be $270 M level), rising to $500 M in
1995-98.
One-Stop Shopping: No change to 1997 outlays ($250 M). $150 M provided in FY 1994 (as opposed to $250 M before
the ratchet) and $250 M each year for FY 1995-98 for the Employment Service for a common point of access to
information on jobs/job training in communities.
Skill Standards: Covered in the_allowance for education initiatives. Funds are to establish a national system of voluntary
skill standards.
Staffing: An additional 365 FTE are added for the approved initiatives. The cost of those staff are to be absorbed in the
amounts approved for the initiatives.
ENTITLEMENT SAVINGS: No change from prior passback.
None.
DISCRETIONARY SAVINGS: No change from prior passback.
o
Streamlining: $53 M in FY 1994 is included in a lump sum that the Secretary can decide how to allocate.
-- Amount derived by freezing at the FY 1993 appropriated level the Job Training Partnership Act (JTPA)
programs for which increases were not requested.
ACROSS-THE-BOARD FTE AND OVERHEAD REDUCTIONS
o
DOL's FTE are reduced by 198 in FY 1993 and by 792 in FY 1995. The overhead cut is about $10 M in FY 1994 and
$52 M in FY 1997.
February 16, 1993
NATIONAL AERONAUTICS & SPACE ADMINISTRATION
1994 Budget Passback
stimulus (1993)
o
Networking and Computing Applications. NASA will receive $5M in 1993 as part of a
four-agency effort to accelerate high performance computing applications as proposed
in Senator Gore's Information Infrastructure and Technology Act (S.2937). Funding
will continue in 1994-1998 as part of the Administration's investment package.
Investments (1994-1997)
Crosscutting High Performance Computing. Continues funding in 1994-1998 for the
four-agency program to accelerate high performance computing (HPC) applications ($12M
in 1994 growing to $50M in 1997).
Civil Aviation Research. Augments NASA aeronautics research to support the
development of technologies for high-speed and subsonic civil aviation ($57M in 1994
growing to $247M in 1997).
Short-haul Aircraft Research. Augments NASA aeronautics research to support the
development of technologies for short-haul aircraft ($5M in 1994 growing to $20M in
1997).
Non-Defense Discretionary Savings
o
Redesign Space Station and Add New Technology Investments. Provides $588M in 1994
and $643M in 1997.
--
Redesign Space Station. The current Space Station design ($100 billion future
mortgage) is fraught with cost overruns and its capabilities have been
dramatically reduced from that promised originally. This proposal would
redesign Space Station with a less expensive approach that achieves many of the
research goals. This would include the creative use of the Shuttle and
increased manned space cooperation with the Russians.
--
New Technology Investments. Provides a broad range of investments in space
transportation, space science, space technology, aeronautics, and institutional
technology areas. These investments will help chart a new course for NASA and
can provide a more meaningful contribution to the U.S. economy. A major
component includes smaller science missions that cost less and provide results
sooner.
Government-Wide Reductions. Government-wide FTS 2000, FTE, pay, R&D grant overhead,
and other administration efficiency savings. This saves $140M in 1994 growing to
$387M in 1997.
All Other NASA Programs
All other programs (like Mission to Planet Earth, Cassini, and the Space Shuttle) are
funded at the requested level.
Summary
Would like to strengthen NASA by making a valuable investment in new technology,
simplify the space station, and place NASA on a steady, sustainable budget growth
path.
February 16, 1993
DEPARTMENT OF TRANSPORTATION
FY 1994 BUDGET PASSBACK
Stimulus Spending (1993)
Highways. Fully fund ISTEA (1993-97), including a $2,976 million supplemental in
1993.
Transit. Increase transit program by $752 million over the baseline for 1993. of
this increase, $270 million would be earmarked for discretionary program bus and van
purchases and the remaining $482 million would be spent on formula-allocated capital
grants.
Airport Grants. Provide an increase of $250 million in obligation limitation to fund
fully the 1993 authorizations (from $1,800 million to $2,050 million).
Amtrak. Provide increase of $188 million in 1993 for Amtrak capital projects.
Investment Spending (1994-98)
Highways. In addition to providing full-funding for ISTEA in 1994-1997, provide
additional funds (above ISTEA) for Public Lands Highways and Indian Reservation
Roads: +$36 million in 1994, increasing to +$240 million by 1997. 2.5 cents of gas
tax currently planned for deficit reduction will be diverted to the Highway Account
of the Highway Trust Fund starting on October 1, 1995.
Also, increase "smart cars/smart highways" funding by $70 million in 1994, reaching
$100 million over the baseline by 1997. This increased Intelligent Vehicle Highway
System (IVHS) funding is for accelerated operational tests, increased research and
development, advanced technology development (e.g., artificial intelligence
applications), and acceleration of the National Advanced Driving Simulator and
Automated Highway System.
Transit. Provide increase of $600 million over the baseline in 1994 and $1.0 billion
in each year from 1995-1998 for formula-allocated capital grant programs.
Airport Improvement Grants and Air Traffic Control Modernization. The Federal
Aviation Administration's (FAA) Airport Improvement Program would be increased by $30
million in 1994 and $50 million per year thereafter over the baseline. The air
traffic control modernization program would be increased by $120 million in 1994 and
$200 million per year thereafter over the baseline. This will enable the FAA to
continue to address critical equipment deficiencies and prepare for future air
Defense Discretionary Reductions
Maritime Administration- Ready Reserve Force. Ready Reserve Force funding (function
054) is reduced to $234 million in 1994 and in 1997. This reduction is below the
baseline by $221 million and $270 million, respectively, and reflects the overall cut
in defense spending.
Maritime Military Useful Loan Guarantees. This program is zeroed out in all years
from 1994 through 1998. Savings of $54 million in 1994 and $59 million in 1997.
Entitlements/Revenues
General Aviation Fees. This will assess the general aviation community for more of
the costs they impose on the aviation system. Aircraft registration and renewal fees
are proposed to be increased on a graduated basis over four years, reaching $270 per
aircraft by 1997 (yielding $18 million of fees in 1994 and $58 million in 1997 fees.)
traffic growth.
Maqlev/High-Speed Rail. Release ISTEA contract authority in 1994-1997 (+60 million
in 1994, +$175 million in 1997) and provide an additional $575M in budget authority
in 1994-1998 ($75 million in 1994, $125 million in 1997). These funds may be spent
either on high-speed rail or maglev, whichever the Secretary finds to be superior.
This requires a legislative change regarding ISTEA funding.
Alcohol Safety and Other DOT Capital. Increase funding by $67 million over the
baseline in 1994 and $100 million in 1995-98 to reduce alcohol-related traffic
accidents, increase the use of safety belts and motorcycle helmets, and improve oil
pollution abatement capability by replacing outdated equipment.
Non-Defense Discretionary Reductions
Transportation Lower Priority Programs. Reduce funding for lower priority programs
and projects totaling $361 million in 1994, going to $389 million in 1997. As one
among several examples of possible reductions are highway demonstration projects.
Airport Operations. FAA Operations would be reduced by $62 million per year below
the baseline to reflect the FAA's transition from a period of expanding its workforce
due to rapid air travel growth to a period of slower growth and stable workforce.
DOT Streamlining. Several DOT grant and contract programs are frozen at 1993 enacted
levels (e.g., a portion of FAA research and development, motor carrier safety, and
several small, outmoded railroad grant programs are terminated). Savings of $23
million in 1994 and $46 million in 1997.
Civilian Pay Adjustment. No pay raise in 1994 and pay raise reduced by one percent
in each year 1995-97. Omit locality pay in 1994; implement revised locality pay
system beginning in 1995. Savings of $128 million in 1994 and $313 million in 1997.
Military (Coast Guard) Pay Adjustment. No pay raise in 1994 and pay raise reduced by
one percent in each year 1995-97. Savings of $37 million in 1994 and $90 million in
1997.
FTE Reduction. Implement Executive Order on 100,000 FTE reduction. Savings of $67
million in 1994 and $131 million in 1997.
Other Administrative Efficiencies. Implement Executive Order on Deficit Control and
Productivity Improvement in the Administration of the Federal Government and realize
savings in FTS 2000 contract costs. Savings of $32 million in 1994 and $151 million
in 1997.
DEPARTMENT OF THE TREASURY
Talking Points for Passback
Stimulus
Internal Revenue Service -- Tax System Modernization (TSM) Acceleration: The
President has approved an additional $148 million in FY 1993 to accelerate the IRS's
TSM projects and other ADP equipment replacement schedules. TSM is an ongoing, $8
billion, decade-long (FY1990 - FY2001) effort to modernize the IRS.
Investment
Internal Revenue Service -- Tax System Modernization (TSM) Increase (1997 outlays
plus $696 million above baseline) : The Budget will provide funding of $2.1 billion
above the baseline during the FY 1994 - FY 1997 period; $98 million in FY 1994,
increasing to $731 million in FY 1997 for IRS Tax System Modernization (TSM)
projects.
Over the long term, TSM will modernize IRS functions, allowing the IRS to move from
an antiquated and disjointed computer system to an up-to-date, automated approach to
processing taxes. TSM will enable IRS to reduce the risks and costs associated with
maintaining its current systems. It will deliver productivity savings, reduce burden
placed on public, and support improved compliance efforts.
Community Development Banks (1997 outlays plus $110 million above baseline) : The
Administration will propose funds for community development banks to provide loans in
distressed communities where capital sources are limited and discrimination in
lending may be prevalent. This program has been placed in Treasury, although the
final determination has not been made regarding which agency should have authority
for the program. Assumes funding of $60 million in FY 1994, increasing to $111
million in FY 1997. OMB and Treasury staff need to work out details.
Non-Defense Discretionary Savings
Bureau of Alcohol, Tobacco and Firearms (BATF) -- User Fees: Alcohol label
processing and laboratory analysis fees, producing an estimated $5 million annually
will be proposed to cover the costs of these BATF activities.
Government-wide Savings: The President expects the Treasury to bear its share of the
savings necessary to achieve his objectives for (1) reducing Federal civilian
employment by 100,000 FTE and (2) cutting administrative expenses.
Additional Savings from Streamlining Government (1997 outlay reductions of $68
million from revised OMB baseline): In addition to the previously described specific
changes to your programs the President has approved, the President asks that you plan
to achieve additional savings to meet his objectives for streamlining government.
Although these additional savings must be met in the aggregate, you may reallocate
them among your programs to reflect the consolidation and efficiency steps you
believe are most appropriate. My OMB staff are prepared to work closely with your
staff to develop the necessary detailed budget allocations by program.
Technical Adjustments to Non-Defense Discretionary Savings
Internal Revenue Service -- Revenue Initiative: The President has approved an
additional $150 million and 2,000 FTE (3,200 positions) to raise revenues through
additional audits and collections of tax debts. This will allow IRS to pursue, among
other issues, non-compliance by foreign-controlled corporations. OMB, Treasury and
IRS staff should work together to develop an initiative package so that the highest
feasible yields from this investment are realized.
Entitlement Savings
United States Customs Service -- Merchandise/Passenger Processing Fees Extension:
The Merchandise and Passenger Processing Fees due to expire in FY 1995 will be
extended through FY 1998. The extension of these fees collected by Customs to cover
some of the costs associated with processing passengers and merchandise are expected
to increase revenues by approximately $550 million per year.
The passenger fee assesses a flat charge on international air and sea passengers
arriving in the U.S., and other fees on certain commercial conveyances. The
merchandise fee is a capped ad valorem fee assessed on the value of commercial
imports at entry.
United States Customs Service -- Overtime Reform: Overtime reform legislation will
be proposed to curb current overtime abuses in Customs' Inspector overtime
compensation provisions. It will reduce overtime costs by about $18 million
annually. The Passenger Processing Fee, which currently pays for inspector overtime
and other processing costs, will also be changed to allow these savings to be
realized for deficit reduction.
United States Customs Service -- Enhanced Harbor Maintenance Fee collections:
Legislation will also be proposed to provide Customs with $5 million from the
existing Harbor Maintenance Trust Fund for enhanced enforcement of Harbor Maintenance
Fee collections. Customs collects these fees for the Army Corps of Engineers subject
to appropriation. Currently these fees are used to offset Corps costs of maintaining
harbors. The savings resulting from the enhanced enforcement ($10 million in FY 1994
increasing to $65 million by FY 1997) will be used to reduce the deficit.
Shorten Maturity of Debt Securities ($3.9 billion outlay reduction from 1997
baseline): This figure represents an estimate of interest cost savings that might
result from a potential shortening of the maturity of securities issued by the
Treasury. The Treasury Department is currently conducting a study of the appropriate
maturity composition of the Federal debt. Within the next few months, the study will
be completed and OMB will be provided with updated estimates of cost savings,
consistent with the Treasury's policy conclusions.
Addendum
Multinational Development Banks: Provides all multilateral development bank (MDB)
arrearages and all current MDB commitments including the new funding for the World
Bank's International Development Association (IDA).
Assess Examination Fees for state-chartered, FDIC-insured Banks: This proposal would
eliminate an incentive for banks and thrifts to shift from Federal to State charters
in order to avoid OCC and OTS examination fees. FDIC and Fed supervised State-
chartered banks would pay the same fees as national banks, but that they also be
allowed to take credit for amounts they pay to State regulators.
VETERANS AFFAIRS (VA)
stimulus (FY93)
o
Facility maintenance backlog: $235m (v. $250m before stimulus cut) for non-
recurring maintenance and repair projects that can be completed quickly in medical
facilities and cemeteries.
Investment:
o
Medical Care -- FY97 outlays are $800m above baseline. FY94 outlays are $280m above
baseline to help support initiatives such as:
-- compliance with residency workload limits
-- continued implementation of automated drug dispensing
-- activation of new facilities.
Entitlement Savings: No change from prior passback
o
Proposals are largely permanent extensions of laws now in effect:
-- IRS match on income reported by pensioners (OBRA 90) savings begin in FY98.
-- $90 for pension recipients in Medicaid nursing homes (OBRA 90) savings begin in
FY98.
-- $2 per prescription copayment (OBRA 90) savings begin in FY98.
-- Medical care cost recovery from third parties (OBRA 90) reduces outlays by $407m
in FY97 from the baseline.
-- Housing loan fee of 2% (increase similar to OBRA 90) reduces outlays by $157m in
FY97 from the baseline.
--
2.5% fee and 10% downpayment for second and subsequent use of housing guarantee
reduces outlays by $17m in FY97 from the baseline.
--
Resale losses considered in housing program (93 approp) saves $21m in FY97 from
the baseline.
--
Restoration of 9:1 contribution ratio in GI bill program reduces outlays by $98m
in FY97 from the baseline.
--
Excess funds used to pay administrative costs in insurance programs saves $31m
in FY97 from the baseline.
Discretionary Spending Reductions
Medical Care:
--
Only one savings initiative -- use a prospective payment system to allocate
resources; designed to promote better use of resources in the base; savings from
the baseline: FY94--$100m: FY97--$400m.
--
Net result of investment and savings -- In FY97, total outlays are $277m below
the baseline. For 94, the BA mark is $606m above the 93 enacted level.
--
"Comparable $1b increase" for Medical Care -- The FY93 stimulus ($220m estimate
for Medical Care) and the 94 increase of $606m total over $800m above the
current FY93 funding level. The pay freeze will save VA $200m. Therefore, the
$800m is comparable to previous $1b increases that included pay raises.
o
Construction: No Change from prior passback
--
Long term: investments to be considered through the Health Task Force.
--
Short term: In 97, outlays are $134m below the baseline. 94 BA level is $362m,
$131m below the 93 enacted level. Funds to be used in accordance with two broad
guidelines:
o
Projects are to be fully funded so that they do not mortgage the future.
Planning process must take into account factors that are critical to
stemming VA and national health care costs: health care resources
available in the community, veterans' consumption of VA health care, and
how the project fits into the VA medical system as a whole.
Across-the-Board Reductions
Overhead outlays have been reduced from the baseline by $14m in FY94 and $70m in
FY97. "Overhead" cost categories that included program activities were exempted from
the cut (e.g., contract nursing home care in the medical account).
FTE has cut of 2,304 in FY93 and 9,216 in FY97.
--
Impact of across-the-board FTE cut was partially offset by adding staff for
Investment and other priorities before the cut was taken.
NATIONAL SCIENCE FOUNDATION
1994 Budget Passback
Stimulus (1993)
o
Research and Development. Attempts to restore NSF's research activities to the
requested FY 1993 level. The focus will be on investment in fundamental research,
including strategic areas such as understanding the climate system, advanced
supercomputers and digital computer networks, biotechnology, materials processing,
advanced manufacturing, and math and science education. This proposal includes $188
million in FY 1993.
Network and Computing Applications. To develop applications using advanced computers
and communication networks in fields such as health care, education, manufacturing,
and access to libraries. This proposal includes $19 million in FY 1993.
Investments (1994-97)
Crosscutting high performance computing. To continue the investment made in the
Stimulus package focused on developing applications using advanced computers and
communication networks in fields such as health care, education, manufacturing, and
access to libraries. This investment includes $36 million in FY 1994 and $150
million in FY 1997.
Research and Development. Augments NSF's support for competitively awarded
scientific and engineering research activities at U.S. universities and colleges,
including fundamental research in such areas as understanding the climate system,
advanced supercomputers and digital computer networks, biotechnology, materials
processing, advanced manufacturing, math and science education. This investment
grows from $331 million in FY 1994 to $1,054 million in FY 1997.
Savings.
Government-wide Reductions. Government-wide reductions in pay, FTE, administration
efficiency savings, and limits on R&D grant overhead will save $66 million in FY 1994
and $79 million in FY 1997.
February 9, 1993
TO:
Katie McGinty
Director, Office of Environmental Policy
FROM:
Jonathan Wiener fw
CEA (x.5012)
SUBJECT: Forests Conservation in the FY'94 Budget
As you requested, attached is a draft paper explaining why
forests conservation is worthy of investment in FY'94, and the
funding that could be provided (an agency breakdown, with
offsets).
This builds on the work we have done in assembling "FFI,"
but suggests a bolder and improved approach in several areas.
My understanding is that what OMB will be passing back to
agencies (today?) currently contains: $50 million additional for
international forest conservation in the USDA/Forest Service, but
no additional funds (above FY'93 adjusted for inflation) for this
function in EPA or other agencies.
O
This would be a reduction from the $150 million
proposed at Rio.
As requested by the transition team, USDA/FS has drawn
up a breakdown of how it could usefully employ at least
$50 million in additional funds for international
forest conservation. I believe other agencies could do
similarly. Of course, the philosophy is to invite
proposals by interested countries and organizations,
not dictate to other countries from Washington.
As Tom Lovejoy pointed out, putting all the eggs in the
USDA/FS basket may not be ideal. EPA, Interior, State
and AID each bring special expertise and capabilities.
Hence the attached funding breakdown includes funds in
other agencies (as well as the $50 million in USDA/FS).
draft 2/9/93
BOLDER and BETTER FORESTS CONSERVATION
Significant emphasis and funding for better forest conservation
is critically important:
o
The U.S. must "[e]xert international leadership to advance
our own nation's interest in a healthier global environment,
a stable global climate, and global biodiversity.
Explore partnerships and joint ventures with developing
countries to preserve and protect rainforests
(Putting
People First (1992), pp. 94-95, 98.)
Valuable forest resources are under stress:
:
Tropical forests are being lost at over 17 million
hectares (42 million acres) per year (FAO 1990). This
rate is over 35% faster than in 1980, and is still
rising: by 1992 it appears to have accelerated to 19
million hectares lost per year. Every minute an area
of forest the size of a football field is lost.
Tropical forests occupy less than 7% of the
world's land area but harbor 50% of the Earth's
biological diversity.
--
Temperate and boreal forests in Europe are degraded by
air pollution, especially in Eastern Europe, sometimes
suffering die-backs of 25% or more. Forests in Russia
are under imminent threat of unmanaged logging.
While U.S. forests are stable in total area, they
are often highly fragmented, and there is pressure to
harvest the last old-growth areas.
Much forest clearing and fragmentation is uneconomic as well
as ecologically unwise. It is the result of perverse
economic incentives (such as tax rules, subsidies and
property tenure rules) that encourage permanent conversion
of forest lands to non-forest uses, and of managing forests
for timber value alone rather than for the full range of
biological resource values.
Forests provide valuable biodiversity (in addition to
valuable nuts, berries, and fibers, about 40% of medicines
in use today are derived from forest plant and animal
species), store greenhouse gases (acting as a sink for about
a half of the greenhouse gases emitted by humans), prevent
erosion, filter the air, and are homes to native peoples.
The U.S. has proposed and begun an initiative on forests
conservation -- "FFI" (see below) That initiative is
important and visible. It could be improved; it could be
bolder and better, more creative, more effective. Stopping
or scaling back now would send the wrong signal, damaging
2
U.S. diplomatic credibility, undercutting the credibility of
the pledge to "explore partnerships to protect rainforests"
(above), and setting back the effort to conserve the Earth's
dwindling forests.
The "Forests for the Future Initiative" (FFI)
At the G-7 Summit in July 1990, the U.S. led the call to
action on global forests conservation, urging that a global
forests convention be negotiated by the Rio Earth Summit.
Those negotiations produced the Statement on Forest
Principles adopted at Rio, but not a legally binding
agreement because important forested countries like Malaysia
and India objected to international mandates on their
natural resources.
At Rio (June 1992) the U.S. redoubled its emphasis on the
urgent need for better conservation of the Earth's forests.
In the "Forests for the Future Initiative" (FFI), the U.S.
proposed not a universal global agreement but a cooperative
approach of work with those countries and organizations
interested in achieving prompt progress on forest
conservation.
:
In FFI, the U.S. proposed a goal of halting the loss of
the Earth's forests by 2000, and called for a worldwide
doubling of forest conservation assistance (to $2.7
billion annually) to meet that goal through
"cooperative partnerships."
:
As a downpayment, the U.S. promised in FFI to offer
$150 million in additional international forests
conservation assistance in FY'94 (above the $120
million in bilateral forest conservation assistance
planned in FY'93). The January 6, 1993 budget
statement included this $150 million increase for FFI,
to be placed in the USFS and EPA budgets for FY'94.
FFI began in 1992-93 through "Initial Partnership
Activities" with eight countries (Belize, Brazil,
Ghana, Guatemala, Indonesia, Mexico, Papua New Guinea,
and Russia) and two international organizations (ITTO
and FAO). Funding for these Initial Activities totals
$16 million in FY'93, from USFS, AID, EPA and State.
These FFI activities embody several innovative
approaches to forest conservation and also include
action on U.S. forests. (See FFI booklet, Jan. 1993.)
The opportunity now exists to improve on FFI, to make it
bolder, more creative, and more effective.
3
Improving on FFI: toward a "New World Arbor" ?
Sustain or enlarge funding. The $150 million recommended
for FY'94 is important for international forests
conservation, yet would be a minor increase in the context
of the Federal budget. Stepping back would send the wrong
signal. A funding breakdown and offsets are suggested in
Table 1 below.
Leverage funding through cost-share challenges to private
industry. USG funding should in part be offered in the form
of cost-share challenges -- matching funds -- to private
partners such as industry and foundations.
--
Pharmaceuticals manufacturers will invest in
biodiversity conservation (similar to the Merck-INBio
deal in Costa Rica).
:
Electric utilities will invest in carbon storage (as
they are starting to do today in Russia, Guatemala,
Malaysia, and Paraguay), driven in part by Title 16 of
the Energy Policy Act of 1992, the "joint
implementation" provision of the Climate Convention,
and state utility commission policies. EDF and AES are
working to expand such GHG-offset activities by
utilities.
Through cost-sharing, the government (i) builds financial
support outside the federal budget, (ii) borrows the skills
and self-interest of the private partner -- a bottom-line-
conscious entity putting up its own funds -- to help
evaluate activities, select those of real promise, and
monitor program activities to ensure performance.
Increase public and NGO input. Host a series of workshops
involving conservation groups, business groups, and other
members of the public to inform forests conservation choices
and approaches. Invite these groups to propose activities
for funding. Attention should be given to the views and
needs of local communities who use the forests, both in
developing countries and in the US.
Invite proposals from interested countries and
organizations. Instead of deciding within the confines of
the USG what activities to fund and then telling foreign
countries our decisions, US forests conservation efforts
should pursue a cooperative, partnership approach. The US
should publish general criteria for the activities it would
like to participate in, and then invite interested countries
and organizations to submit proposed activities.
This approach helps (i) lessen concerns about
sovereignty and the "donor-recipient" dynamic; (ii) maximize
scope for creativity and effectiveness by motivating and
selecting best proposals; and (iii) increase the chance for
4
local enthusiasm that will carry the conservation activity
forward along with (and after) USG support.
As a corollary, NGOs should be seen as potential
partners in carrying out activities; not all activities
should be government-to-government NGOs often have the
best on-the-ground expertise and long-term perspective.
Several of the FFI "Initial Partnership Activities" already
involve NGOs (e.g. WWF, EDF).
Small grants. Establish a small-grants window for direct
assistance to information/awareness, community-based
development, and other activities of community groups, local
organizations and native peoples.
Address all forest types. All forest types in all regions
of the planet, including temperate and boreal forests in the
Northern hemisphere, are in need of better management.
Moreover, developing countries often see calls to "save the
tropical forests" as a combination of disproportionate blame
for forest problems and a North grab to lock up the South's
sovereign natural resources. US efforts should thus
address all forest types in all areas.
Work toward incentive-based policy reform. Much forest loss
is the result of perverse policies that are economically
wasteful as well as ecologically unwise. These include tax
subsidies for clearing land, property rules that grant
ownership only upon clearing land, absence of property
rights (thus motivating itinerant clearing and short-term
use of land), and so forth. Below-cost sales in the US are
another example. Studies indicate that in some countries
forest depletion is substantially diminishing net national
income.
US policies should work to help countries understand
the economic losses their policies entail, and to reform
those policies in ways that are both environmentally and
economically sound.
Improve management of US forests. Conservation of US
forests is important and needed, and shows that the US is
taking to heart what it is asking other countries to do. As
part of FFI, USFS and BLM instituted an "ecosystem
management" in June 1992 across all federal forests. This
new approach emphasizes management of forests for their
total resource value, including recreation, wildlife and
biodiversity as well as timber. One consequence will be the
phase-out of clearcutting as a standard timber harvest
practice on the federal forests.
More progress could be made on US forests, including:
ensuring sound implementation of "ecosystem management";
phasing out below-cost timber sales; changing from a "gross"
to "net" basis the share of timber sales receipts received
5
by counties; reducing road building and other fragmentation;
holding a summit on Pacific Northwest timber issues;
targeting afforestation under incentive programs like the
Conservation Reserve Program.
Continue multi-agency approach. A key feature of FFI has
been to bring together all the relevant US forests agencies,
international and domestic, to share ideas and learn from
one another. In the new Administration, the Department of
Interior (esp. the Park Service and Fish & Wildlife Service,
which already conduct conservation activities overseas)
would seem a likely candidate to increase its domestic and
international efforts at forest conservation.
A new multi-agency Task Force, similar to the FFI Task
Force, should be established, chaired by a Cabinet-level or
other Senior official. "Cluster group" organization should
be continued.
Fund through domestic agencies with line expertise. Putting
the funding in the already-growing international activities
of USDA/FS, DOI, and EPA ensures that the funding is truly
new and not just rearrangements of existing Overseas
Development Assistance (ODA). It also builds on the
expertise of these agencies in biodiversity conservation,
forest and park management, and greenhouse gas sequestration
-- key aspects of innovative forest conservation approaches.
Work with the Congress. Congress will want to be persuaded
of the value of this activity for domestic constituencies;
presentations by conservation groups (e.g. WWF, IUCN, EDF,
WRI) and private sector partners (e.g. pharmaceutical
companies, electric utilities) could be influential.
Also, Committees will be concerned about funding
international activities through domestic agencies. (i)
This is not a new concept; USDA/FS and DOI have conducted
forest conservation efforts abroad for decades, and EPA/OIA
has existed for 20 years and funds successful programs in
China and Poland; (ii) the USDA/FS role was made formal in
the 1990 Farm Act, which elevated international forestry to
a full fourth component of the agency's strategic mission;
and (iii) the involvement of all types of agencies reflects
the seamless global nature of environmental issues, in which
the distinction between "domestic" and "foreign" no longer
really applies. We all benefit from global forests
conservation.
Involve additional industrialized countries. An initial
goal of FFI was to double worldwide international forest
conservation assistance to $2.7 billion. More needs to be
done to bring other countries into the effort.
6
Table 1
"New World Arbor"
FY'94 Budget proposal
Additional FY'94
Available funds via
Agency
for Forests/NWA
FY'94 Offsets
Uses of funds
USFS
50
Reduce timber salvage surplus -100
Sustainable mgmt.
No new USFS roads
Biodiv. conservn.
for timber harvesting
-100
Research
Training
EPA
20
Superfund cuts
- 20
GHG sequestration
Biodiv. conservn.
DOI
50
Market pricing of grazing land - 5
Park mgmt.
Market pricing of water
-500
Biodiv. conservn.
Market pricing of mining land -600
Training
State/AID
30
Sustainable mgmt.
Biodiv. conservn.
Research
150
+ Cost-share
matching funds
50
Total
200
7
*Alternate/additional source of funds: Farm subsidy gambit.
Links the issues of farm subsidies and the environment;
forces Europe to give on one or both.
(1) Argue that crop output and export subsidies are bad for
the environment. Output subsidies induce run-off pollution;
Europe's higher subsidies have led to pesticide and fertilizer
use per acre that are several times the US average. Export
subsidies, meanwhile, undercut developing countries' farm
products and keep them from earning a fair return in world food
markets, thus chaining them to a pattern of low-value itinerant
agriculture that involves substantial forest clearing.
(2) Announce that the US will pledge X percent of its
reduction in farm subsidies under the GATT to international
forest conservation, if the EC will do the same. Since the EC
spends about 4 times more on crop subsidies than the US, for an
equal percentage of a roll back in farm subsidies, the EC would
need to contribute 4 times more to forest conservation. E.g. the
US would pledge 5% of a GATT rollback to forests; for a 50%
rollback by both sides, the US share would be 5% times $8 billion
rolled back = $400 million, and the EC share would be 5% times
$40 billion rolled back = $2 billion.
Europe can point out the unequal dollar amounts that this
proposal would generate, but only by highlighting its own
disproportionately large subsidy levels. Or Europe can refuse to
play, thereby refusing to help conserve forests. The pressure is
on Europe to help out in either trade or forests or both.
GEORGE MILLER, CALIFORNIA, CHAIRMAN
U.S. house of Representatives
DON YOUNG, ALASKA
PHILIP R. SHARP INDIANA
RANKING REPUBLICAN MEMBER
EDWARD J MARKEY MASSACHUSETTS
JAMES V HANSEN, UTAH
AUSTIN J MURPHY PENNSYLVANIA
BARBARA F VUCANOVICH NEVADA
NICK JOE RAHALL II, WEST VIRGINIA
Committee on
ELTON GALLEGLY CALIFORNIA
BRUCE F VENTO. MINNESOTA
ROBERT F SMITH, OREGON
PAT WILLIAMS. MONTANA
RON DE LUGO. VIRGIN ISLANDS
Natural Resources
CRAIG THOMAS. WYOMING
JOHN J. DUNCAN. JA TENNESSEE
SAM GEJDENSON. CONNECTICUT
JOEL HEFLEY COLORADO
RICHARD H. LEHMAN, CALIFORNIA
JOHN T DOOLITTLE, CALIFORNIA
BILL RICHARDSON, NEW MEXICO
Mashington, DC 20515-6201
WAYNE ALLARD, COLORADO
PETER A. DEFAZIO. OREGON
RICHARD H. BAKER, LOUISIANA
ENI FH. FALEOMAVAEGA, AMERICAN SAMOA
KEN CALVERT CALIFORNIA
TIM JOHNSON. SOUTH DAKOTA
SCOTT McINNIS. COLORADO
LARRY LAROCCO. IDAHO
RICHARD W POMBO. CALIFORNIA
NEIL ABERCROMBIE, HAWAII
JAY DICKEY ARKANSAS
CALVIN M. DOOLEY CALIFORNIA
CARLOS ROMERO-BARCELO. PUERTO RICO
KARAN ENGLISH. ARIZONA
KAREN SHEPHERD. UTAH
NATHAN DEAL. GEORGIA
DANIEL P BEARD
MAURICE D. HINCHEY. NEW YORK
STAFF DIRECTOR
ROBERT A. UNDERWOOD, GUAM
PATSY T MINK, HAWAII
February 7, 1993
RICHARD MELTZER
HOWARD L. BERMAN, CALIFORNIA
GENERAL COUNSEL
LANE EVANS. ILLINOIS
DANIEL VAL KISH
THOMAS J. BARLOW III. KENTUCKY
REPUBLICAN STAFF DIRECTOR
THOMAS M. BARRETT, WISCONSIN
The Honorable Albert Gore, Jr.
Vice President
Attention: Ms. Katie McGinty
The White House
Washington, D.C. 20500
Dear Mr. Vice President:
I am enclosing for your review a copy of a memorandum prepared by our deficit reduction
working group in the House. This memorandum outlines several administrative, management
and policy reforms available to the Administration and the Congress for achieving significant
deficit reduction.
The memorandum was prepared for the President following your meeting with the Whip
organization last Thursday. Together with the other signatories, I am hopeful it will be of
use to you and the Administration in developing a sound deficit reduction package.
Please do not hesitate to contact me or John Lawrence, my administrative assistant, if we can
be of further assistance.
With best wishes,
GEORGE MILLER
Chairman
1
February 5, 1992
To: The President
(Copy: Director, Office of Management and Budget)
From: Congressman George Miller
Congressman Mike Synar
Congressman Charlie Stenholm
Congressman Dan Glickman
Subject: Options for Deficit Reduction
During the meeting of the House Democratic Whip organization on February 4, you
requested that we forward to you a series of budget options developed by our House working
group on deficit reduction.
The following preliminary considerations offer you a very substantial source of
supplemental revenues for the budget package. Some of these options represent
administrative and management improvements in Executive agencies or departments. Others
represent savings attributable to policy changes, some of which have received favorable
attention from the House of Representatives in the recent past. Cost savings are not available
in each case, and some savings levels are not agreed upon. However, precise levels of
savings could easily be developed by OMB, CBO and Committee staffs.
Although some of the savings are "small" by Washington standards, we note that
according to the Congressional Research Service, the average taxpayer pays less than
$500,000 in taxes throughout his or her entire lifetime. A savings of a few million dollars a
year, every year, which may seem insignificant to Washington policymakers, is hardly
insignificant to that average American.
While each of us does not necessarily endorse each of these options, we believe they
warrant strong consideration by the Administration if we are to have a comprehensive budget
and reconciliation package.
Sample Deficit Reduction Options List
1. Impose 20% cap on indirect/overhead expenses for federal grants and prohibit
certain dues, meals, trips and gifts.
Federal agencies provide tens of thousands of grants to academic and other
researchers. Universities typically require academicians to add so-called "indirect costs" to
the grant, increasing the size of the grant request to federal agencies by 100% and more in
some cases. These costs are attributed to everything from secretarial time spent preparing
2
grants to a portion of library expenses attributable to use by researchers. By contrast,
foundations and other non-public funding sources rarely pay more than 20% for indirect
costs. Congressional investigators have also found substantial excesses in claims made for
indirect costs, the most notable being the Stanford University case which led many
universities to revise their claims (but did not impose any limitation on indirect costs as a
percentage of the overall grant).
Estimated Savings: $
2. Mandate biennial review and recomputation of federal fees, rents, and require
payment for provision of normal services by government agencies and offices.
Congressmen Leon Panetta and George Miller initiated a General Accounting Office
review of the appropriateness of fees charged by the U.S. for those utilizing the services of
federal agencies and departments. The Departments of Interior and Commerce served as the
targets of the initial inquiry. GAO found that many fees and other costs have not been
revised in years, often decades, and no longer represent fair market value for the service
provided. In many cases, departments and agencies are incapable of even delineating whether
a fee is charged. There is no systematic process to assure periodic revision of fees to account
for changing costs, and many departments lack even a centralized system for reviewing and
accounting for fees. By way of a minor example, the Bureau of Land Management lost $26
million over a 5 year period by ignoring a statutory requirement to charge a user fee for
processing applications for geophysical exploration on public lands or to charge fair market
value for the use of lands for this exploration.
Estimated Savings: $
3. Require repayment of interest-free component for municipal and industrial water on
timely basis, and increase interest rates to private sector equivalency.
Water districts that benefit from a federally constructed water storage and delivery
system often have two repayment obligations: one that is charged interest, and one that is
interest-free. The Inspector General has found that districts generally pay the interest-bearing
debt first, deferring the interest-free debt because they accrue no additional penalty for the
delay. In addition, the interest rate charged for repayment should be revised, as it was set
erroneously at 3.5% rather than 5.116%, according to the Inspector General. This alone
would add more than $400 million to long term repayments by a single California district.
Many other districts may enjoy a similar savings, at taxpayers' expense, because of the
decision by an Interior assistant secretary to select the lower interest rate.
Estimated Savings: $2.1 billion +.
4. Charge market value for grazing fee permits.
3
Grazing permits on western federal lands are as little as one-fifth those charged on
private lands. Only a very small number of ranchers benefit from this subsidy and many of
them are large corporations. The fees not only fail to even recover the costs of the grazing
program but also have grievous environmental impacts because of overgrazing, pollution from
cattle, and denuding of lands, especially streams and streambanks. Many large holders of
subsidized grazing permits (including foreign-owned companies) sublease their rights, making
millions of dollars not shared by taxpayers who own the land in the first place. The House
has voted to increase grazing fees on a number of occasions, but the fee formula is
established by executive order and need not be legislated to achieve fair market value.
Estimated 5 Year Savings: $975 million.
5. Eliminate third tier management at Bureau of Land Management.
Recent congressional testimony indicated serious over-bureaucratization in BLM.
Estimated 5 Year Savings: $250 million.
6. Consolidate mapping responsibilities in U.S. Geological Survey.
Testimony of the USDOI-IG also criticized duplication in agency mapping functions.
Relying on a single mapping agency -- the world-renowned USGS -- could eliminate
duplication of personnel and expensive materials.
Estimated Saving: $70 million.
7. Eliminate Unjustified Expenditures for Nuclear Energy R&D
For over 30 years the commercial nuclear power industry has enjoyed large federal
subsidies which are no longer justified. Government subsidies for certification and
standardization of advanced reactor designs, and for demonstrations of the Early Site Permit
process and nuclear license renewal process, could be largely eliminated, allowing private
industry to pursue these technologies based on market considerations, rather than federal
subsidies.
Estimated 5-Year savings: $600 million.
8. Convert student loan guarantees to a direct loan program; recover through IRS.
The Bradley-Miller initiative, which was not included in 1992's post-secondary
education law, would have converted the current guaranteed loan program to a direct loan
and expanded eligibility. Regardless of how eligibility and amounts are treated, elimination
of the middle man saves substantial amounts of money. In addition, the Internal Revenue
4
Service should be utilized for repayment of the loan, improving accountability and tracking of
loan recipients and reducing defaults.
Estimated 5 Year Savings: $1.5 billion.
9. Impose minimum royalties and reasonable patent fees on hardrock mining
production on public lands.
Unlike current users of public water, oil, gas, and other resources, those who patent
claims on hardrock minerals on public lands pay no royalties and only minimal fees. The
source of the disparity is the 1872 Mining Law which has never been significantly amended.
Its policy concerning royalties is clearly outdated, having been designed to encourage the
settlement of the West. Over 3.2 million acres of land have been patented by private
companies under this law. The law, which has been heavily attacked and the subject of many
efforts at reform, has resulted in such anomalies as large resource companies acquiring
billions of dollars in public minerals for only $2.50 an acre. According to GAO, $65 billion
in resources remain on public lands awaiting development and as matters now stand, the
public will receive virtually nothing from development of those assets.
Estimated 5 Year Savings: $500 million
(at 8% royalty)
10. Mandate tighter collection of mineral royalties.
A 1992 report of the House Interior Committee documented the continuing
mismanagement of royalty collection and the substantial undercollection of funds owed
taxpayers under existing laws and leases. These findings parallel many of the Linowes
Commission in the early 1980s, which resulted in the creation of the Minerals Management
Service (MMS), whose operations have been a source of continuing embarrassment and
ineptitude.
Estimated 5 Year Savings: $5 billion.
11. Aggressively implement BLM's drainage program
The Bureau of Land Management has failed to aggressively implement its oil and gas
drainage program. Federal and Indian lessees are supposed to protect their leased lands from
loss of royalty revenue because the oil and gas is drained off the lands. There is currently a
backlog of 25,000 cases. The potential loss of royalties ranges from $18 - $59 million
annually.
Estimated 5 Year Savings: Ranges from $74
million to $236 million.
5
12. Recover costs for processing permits for exploration on BLM lands.
BLM does not recover costs for geophysical exploration on public lands, even though
this is required by law.
Estimated Savings: $5 million annually.
13. Phase out/end below cost timber sales.
An estimated 50% of federal timber -- or timber on seven out of nine national forests
-- is sold at prices lower than what it costs the government to conduct the sale and to build
the roads to provide access to the timber. Losses from sales over the last 14 years are
estimated to be $7 billion.
Estimated 5 Year Savings: $260 million.
14. Reduce appropriations for, and administratively cancel two long-term timber
contracts in, the Tongass National Forest (Alaska).
The Tongass contracts, signed in the 1950's, provide timber at prices vastly below fair
market value to two pulp mills, one of which is owned by a consortium of Japanese
corporations.
Estimated Savings: $30 million annually until the
year 2011
15. Cancel Voice of America Transmission Tower in Israel
The radio tower initially planned has been long-delayed and currently is unneeded
given our access to Eastern Europe and other sites through alternative, cheaper means. The
tower has been the subject of intensive protest and litigation within Israel because of
allegations of substantial environmental impacts, particularly on bird migration.
Estimated Saving: $ 250 million.
16. Modify National Park concessions contracts.
The USDOI-IG has severely criticized concessions contracts for including
"unreasonably low franchise fees." The IG estimates federal revenues losses of $83 million
in the 1984-1988 period alone, and estimates the 1993 figure will be nearly $24 million.
Other estimates of Federal revenue losses due to below-market rents range up to $250 million
annually. Lower fees have been justified in the past by the concessionaires' promise of
6
undertaking capital improvements, but these have generally not occurred.
Estimated savings: up to $250 million annually.
17. Create a Commission to examine the structures, programs and functions of all
federal agencies and departments, and to recommend specific measures to eliminate
unnecessary or duplicative management and overhead, abolish outdated board and
commissions, and integrate operations of various agencies and departments.
As just one example of such redundancies, the Democratic Caucus Task Force on
Government Waste pointed out that three different federal agencies have responsibility for
catfish research. The Task Force report provides illustrative ways to streamline government,
an initiative that should be adopted by the Democratic Administration both to reduce
operational costs of government, and to illustrate that government has not been run like a
business over the past dozen years.
Estimated Long-Term Savings: $3-5 billion annually.
18. Require repayment of federal Power Marketing Administration debt to cover the
government's true cost of providing power.
Federal taxpayers subsidize the electricity rates charged by the federal Power
Marketing Administrations (Bonneville Power Administration, Western Area Power
Administration, Southeastern Power Administration, Alaska Power Administration and
Southwestern Power Administration). This subsidy can be either reduced or eliminated
through requiring a fixed repayment schedule and utilizing interest rates that reflect the actual
federal cost of borrowing. Although this reform would significantly increase the cost of
federally subsidized electricity, this power would still be one of the least expensive power
sources available in the entire nation.
Estimated 5-Year Savings: $1-2 billion.
19. Eliminate or restrict the use of subsidized federal irrigation water to produce
certain crops.
Irrigation water made available from Federal Bureau of Reclamation projects in the 17
Western States is used for the production of crops considered "surplus," by USDA, on 40%
of Federally-irrigated cropland. This creates a "double subsidy", with Federally-subsidized
water supplied by one agency being used to grow crops which have officially been declared
to be in surplus by another agency. Financial support is provided by the USDA for not
growing these crops. The annual "double subsidy" has been estimated by Bureau of
7
Reclamation economists at between $203 million and $830 million. This reform has passed
the House of Representatives on several occasions.
Estimated savings: $203-850 million annually.
20. Maximize National Park-National Forest Collection Fees
The IG reports that the Park Service has neither initiated entrance fee programs at all
national parks authorized to collect entrance fees nor maximized its fee collection program at
parks presently charging such fees. Inadequate staff resources frequently result in unattended
fee booths, or park concessioner employees being paid to collect fees. If the Park Service
were to be more aggressive in collecting recreation and entrance fees, and estimated $117
million could have been collected in 1991. If legislative and other restrictions were removed
from parks presently prevented from collecting fees, an additional $151 million would have
been recovered. In addition, the Forest Service could charge nominal fees for a diverse
number of recreational activities (fishing, camping, entrance) as many states now do. The
potential for revenues from such a source is significant.
Estimated Additional Revenue: $300 million + annually.
21. Tighten criteria for federal land exchanges.
The Department of the Interior often enters into land exchanges with private
landholders for the purpose of acquiring highly desirable lands for a variety of purposes (park
expansion, environmental protection, consolidation of holdings, etc.) Various investigations
have demonstrated a gross lack of standardization in the valuation of lands offered for
exchange, and frequent manipulation of valuation (particularly in Alaska) that benefits private
owners at public expense. A standard mechanism must be developed to guide future
exchanges and prevent the kinds of abuses that have cost taxpayers hundreds of millions of
dollars, and resulted in the federal government acquiring ownership of marginally valuable or
unusable lands.
Estimated 5 Year Savings: $2.5 billion
22. Reduce the number of federal aircraft and tighten usage of remaining planes.
The number of government owned or leased planes in the Executive Branch doubled
to almost 1,400 in the 1980's. This fleet costs taxpayers about $750 million per year to
operate and maintain. Civilian agencies also lease or charter about 5,000 more aircraft at an
additional cost of at least $100 million annually. GAO has published a series of highly
critical reports on aircraft purchase and use, and agency IG's have cited similar abuses
including unnecessary travel, unjustified purchase or lease, inappropriate cost comparisons
and lax oversight. The Administration could eliminate 50% of the planes in the
government's fleet of agency/department non-military planes, require strict justification for
8
remaining planes, impose greater OMB/GSA central management and control of planes, and
tighten control over their use, encouraging use of commercial air travel.
Est. 5 year Savings: $1-1.5 billion
23. Tighten controls on year end spending by all departments and agencies.
Operating under a "use it or lose it" mentality, agencies and departments typically
spend more in the last quarter of each fiscal year than the average for the first three quarters.
Abuses are well-known and documented. The House Democratic Task Force on Government
Waste, which reviewed this issue in its June 1992 report, revealed that "by some estimates,
agencies spend 48% more in the final month of the fiscal year than was spent on average in
the 11 previous months."
Est. 5 year Savings: $500 million
24. Require all federal departments and agencies to use lower class (i.e., 3rd, 4th V.
1st) and/or other non-priority mail whenever possible, and to initiate other actions to
reduce federal mail and delivery costs.
The government spends conservatively $1.5 billion each year on mail and overnight
and other special delivery costs. OMB recently directed agencies and departments to switch
from penalty to commercial mail to ensure improved accountability over agency mailings and
to increase use of certain postal service discount programs. Additional initiatives could save
substantial amounts. For example, the Postal Service estimates that agencies spend $400
million per year on overnight service. Much of this is unnecessary. Switching to 2 day
service cuts the cost in half.
Estimated 5 year Savings: $.6-1.0 billion
25. Improve DOD inventory control and reduce new purchases of materials already in
surplus stock.
For over 20 years, GAO, defense auditing agencies and congressional committees
have highlighted continuing problems concerning DOD's purchase of billions of dollars in
goods when those same materials are already in surplus. According to the House Armed
Services Committee, DOD recently reported it had about $2 billion in unneeded inventory
and another $9 billion in excess inventory. GAO recently calculated DOD's excess
inventory at more than $34 billion! GAO also recently found that DOD routinely
purchases 10% more than it needs for its inventory.
Estimated 5 year Savings: $12.5-20 billion*
(*Procurement and contracting reforms for all departments and agencies could substantially reduce savings further prohibiting payment for "employee morale expenses"; revising federal
contractor indemnification policies; tightening restrictions on sole source contracting; improving compliance with the Brooks ADP Act; and requiring that contractor award fees are paid
only upon satisfactory performance throughout the entire period of the contract.)
9
26. Phase out Dependent Care Tax Credit for wealthiest families.
The House approved, as part of the 1990 child care bill, a phase out of the DCTC for
families earning in excess of $70,000 in adjusted gross income (AGI). The credit would
have been eliminated for families with greater than $90,000 AGI. This change would
concentrate child care benefits on lower and middle income working families. Only about
15% of eligible families would be affected by the phase out, and most would continue to
receive some of the credit.
Estimated 5 year Savings: $1 billion
NRDC-WASHINGTON OFFICE ID:202-783-5917
FEB:08'93
19:29 No 012 P. 01
NR
DC
Natural Resources
Defense Council
1350 New York Ave., N.W.
Washington, 'DC 20005
202783-7800
Fax,202 783-5917
MEMORANDUM
TO:
Katie McGinty
DL
FROM:
Daniel Lashof
PHOTOCOPY
DATE:
February 8, 1993
PRESERVATION
RE:
Green Energy Taxes
We had a useful meeting with Roger Altman this morning. Attached is a follow-up memo that
should also be useful to you.
Nelson Hay and Mike German of AGA would like to set up a joint NRDC-AGA meeting with
you. They have done some analysis of carbon-tilted taxes that should be useful. Please let me
know if this can be arranged.
- Set to Chry Ka
- ask greg when next
descussion of the u
happenery R
10006 Revised Paper
40 West 20th Street
71 Stevenson Street
61 South Olive Street
212 Merchant St, Suite 203
24
New York, New York 10011
San Francisco 94105
Los Angeles; CA 90014
Honolulu, Hawaii 96813
212-727-2700
415777-0220
213-892-1500
808 533 - 1075
Fax 212 727-1773
Fax 415-495-5996
Fax.213 629-5389
Fax 808 521 6841
NRDC-WASHINGTON OFFICE ID:202-783-5917
FEB 08 93
19:30 No.:012 P.02
NR
DC
Natural Resources
PHOTOCOPY
Defense Council
PRESERVATION
1350 New York Ave., N.W.
Washington, DC 20005
202 783-7800
Fax 783-5917
MEMORANDUM
TO:
Roger Altman, Deputy Secretary
Department of the Treasury
DL
FROM:
Daniel Lashof, Senior Scientist
Natural Resources Defense Council
DATE:
February 8, 1993
RE:
Green Energy Taxes
Thank you for taking time to meet with us this morning. As we said, the environmental
community is prepared to work hard for the President's budget package. Our ability to mobilize
public support for any energy tax will depend on the extent of the environmental benefits that it
will produce. By opting for a pollution-based energy tax you can take your message directly to
the public: You will be doing the right thing for the country and the planet despite the
opposition of inside-the-beltway energy industry lobbyists.
I thought it would be useful to illustrate several options for expressing pollution-oriented taxes on
a BTU basis. The attached table illustrates a range of tax structures running from a pure BTU
formulation to a pure carbon tax formulation. The tax structure becomes progressively more
environmental as you move toward the right. In each case the rates are set to raise $50 billion
per year in gross revenue when fully phased in.¹
Recognizing the political difficulties that a pure carbon tax would face in the Senate, I believe
that a "BTU tax with pollution adjustments" has both political and environmental advantages of a
pure BTU tax. Although taking this approach is likely to engender a debate about the form and
size of the pollution adjustment, that is preferable to debating the merits of the energy tax itself.
Based on 1990 energy consumption as reported on a BTU basis in Annual Energy Outlook 1993 (DOE/EIA-0383)
The BTU charge for hydropower is calculated at a rate of 10,000 BTU/kWh primary energy equivalent
100% Recycled-Paper
40 West 20th Street
71 Stevenson Street
617 South Olive Street
212 Merchant Sf.) Suite 203
New York, New York 10011
San Francisco: CA 94105
Eos Angeles, CA.90014
Honolulu, Hawaii 96813
212 727-2700
415 777-0220
213 892-1500
808 533-1075
Fax 212 727-1773
Fax 415 495-5996
Fax 213 629-5389
Fax 808-521-6841
NRDC-WASHINGTON OFFICE ID: 202-783-5917
FEB 08:93
19:31 No 0126P#05
PHOTOCOPY
PRESERVATION
A clean-fuel credit for natural gas or a pollution surcharge for coal and oil can be defended in
general n-externality grounds. Renewables, other than hydropower, should be exempt We
recommend that any pollution surcharge be combined into a single effective tax rate, as indicated
on the attachment, in order to prevent the pollution component from being pulled off before
enactment. We also recommend that tax rates be indexed for inflation at the end of any
predetermined phase in schedule.
An ad valorem tax is much more problematic than any of the BTU-based options. At the retail
level and ad valorem tax is the most visible and least popular form of energy tax (according to the
Business Week poll). If applied to producer prices an ad valorem tax could favor coal and
increase pollution.
1 Externality values for coal and oll have been estimated as $2.46-$5.76 and $1.87-$6.48; respectively, per Million BTU of
energy input to electric utilities compared to $0.78-$0.95 per Million BTU for natural gas. (R. Ottinger, et al.,
Environmental Costs of Electricity, 1990):
NRDC-WASHINGTON OFFICE ID 202-783-5917
FEB 08:93
19:32:No 012 P:04
PHOTOCOPY
PRESERVATION
EFFECTIVE TAX RATES IN DOLLARS PER MILLION BTU
BASED ON ENERGY TAX REVENUES OF $50 BILLION PER YEAR
BTU WITH CLEAN-
BTU-CARBON
BTU
FUEL CREDIT
HYBRID
CARBON
15%
25%²
75%:25%
3
50%:50%⁴
Natural Gas
0.62
0.54
0.49
0.60
0.57
0.53
Petroleum
0:62
0.64
0.66
0.63
0.63
0.65
Coal
0.62
0.64
0.66
0.70
0:78
0.95
Nuclear
0.62
0.64
0.66
0.47
0.31
0.00
Hydro
0.62
0.64
0.66
0.47
0.31
0.00
BTU WITH POLLUTION
SURCHARGE
15%⁵
25%
Natural Gas
0.56
0.53
Petroleum
0.65
0.66
Coal
0.65
0.66
Nuclear
0.56
0.53
Hydro
0.56
0:53
1
The tax rate applied to natural gas is reduced by 15% to reflect a clean fuel credit.
2 The tax rate applied to natural gas is reduced by 25% to reflect a clean fuel credit:
3
Tax rate is based 75% on BTU content and 25% on carbon content.
4 Tax rate is based 50% on BTU content and 50% on carbon content.
5
A 15% pollution/energy-security surcharge is applied to the tax rate for coal and oil
6
A 25% pollution/energy-security surcharge is applied 10 the tax rate for coal and oil.