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FYI Number 62: June 14, 2007

President Would Veto House Version of FY 2008 DOE Funding Bill

The language in yesterday's Statement of Administration Policy issued by the Office of Management and Budget (OMB) regarding H.R. 2641, the Energy and Water Development Appropriations bill could not be clearer: "if H.R. 2641 were presented to the President, he would veto the bill."

Congress and the Bush Administration are headed toward a fiscal train wreck because of a fundamental disagreement about the level of discretionary spending in the upcoming fiscal year. While there was a fair amount of grumbling and some creative bookkeeping in previous years, the Republican leadership was able to keep total spending within the parameter set by President Bush. As fully expected, the new House and Senate Democratic leaders disagree with the Administration about the level of FY 2008 discretionary spending. (This spending is in contrast to mandatory spending for entitlement programs and interest on the national debt.)

Earlier this year, OMB statements indicated that appropriations bills would be vetoed if total discretionary spending exceeded the Administration's limit. The statements were somewhat hazy about timing, e.g., would only the bill which exceeded the overall spending limit be vetoed? Since the congressional leadership intends to send the Defense bill to the president as the last of the twelve appropriations bills, it would have presented a considerable dilemma to the White House. OMB removed any uncertainty by announcing this week that the president would veto the first three bills that the House Appropriations Committee has sent to the House floor in their current form (Homeland Security; Energy and Water; and Military Construction and Veterans Affairs). In almost identical language in three Statement[s] of Administration Policy issued this week, OMB raised objections about overall spending and earmarking. The following is the language regarding the Energy and Water Development Appropriations Bill:

"The Administration strongly opposes H.R. 2641 because, in combination with the other FY 2008 appropriations bills, it includes an irresponsible and excessive level of spending and includes other objectionable provisions.

"The President has proposed a responsible plan for a balanced budget by 2012 through spending restraint and without raising taxes. To achieve this important goal, the Administration supports a responsible discretionary spending total of not more than $933 billion in FY 2008, which is a $60 billion increase over the FY 2007 enacted level. The Democratic Budget Resolution and subsequent spending allocations adopted by the House Appropriations Committee exceed the President’s discretionary spending topline by $22 billion, causing a 9 percent increase in FY 2008 discretionary spending and a nearly 10 percent increase in the projected deficit for FY 2008. In addition, the Administration opposes the House Appropriations Committee’s plan to shift $3.5 billion from the Defense appropriations bill to non-defense spending, which is inconsistent with the Democrats’ Budget Resolution and risks diminishing America’s war fighting capacity. In combination with other spending bills, H.R. 2641 would lead to spending and tax increases that put economic growth and a balanced budget at risk.

"H.R. 2641 exceeds the President’s requests for programs funded in this bill by $1.1 billion, part of the $22 billion increase above the President’s request for FY 2008 appropriations. The Administration asked that Congress demonstrate a path to live within the President’s topline and cover the excess spending in this bill through reductions elsewhere. Because Congress has failed to demonstrate such a path, if H.R. 2641 were presented to the President, he would veto the bill."

The Statement of Administration Policy on the Energy and Water Development bill offered the Administration's additional views on specific provisions of the legislation. Selections follow:

"AMERICAN COMPETITIVENESS INITIATIVE: The Administration commends the Committee’s implementation of the President’s American Competitiveness Initiative with its strong support for the Office of Science."

"ADVANCED ENERGY INITIATIVE: The Administration appreciates the broad support for the President’s Advanced Energy Initiative, but the unrequested funding provided in the bill, particularly the significant increases provided for the Office of Energy Efficiency and Renewable Energy, are not necessary to achieve performance goals."

"YUCCA MOUNTAIN: The Administration appreciates the Committee’s support for the Yucca Mountain nuclear waste repository program and its recognition of the enormous costs of delay in fulfilling the Government’s responsibility for disposing of the Nation’s nuclear waste."

SEQUESTRATION (Fossil Energy Research and Development): "The Administration agrees with the bill’s focusing of efforts within Fossil Energy Research and Development on technology for carbon capture and sequestration, but the funding levels are excessive. In particular, savings could be realized by terminating the Innovations for Existing Plants program -- rather than creating a new mission for this program -- and the oil and gas technology programs, as well as by moderating the proposed increases in Sequestration and Advanced Research."

"NUCLEAR ENERGY RESEARCH AND DEVELOPMENT: The Administration is disappointed with the reduction to the Global Nuclear Energy Partnership (GNEP), a key part of the Administration’s strategy to promote the use of nuclear energy domestically and internationally, and for the funding reduction for Nuclear Power 2010, a program that will assist companies with the nuclear licensing process. GNEP can extend the useful life of the Yucca Mountain nuclear waste repository by reducing the waste placed in the repository. GNEP is also gaining growing support from other nuclear supplier countries, which a cut in funding would put at risk. The Administration urges the House to restore funding for these critical programs."

"NATIONAL NUCLEAR SECURITY ADMINISTRATION (NNSA): The Administration appreciates the Committee’s support for the important work of NNSA. Of particular note is the Committee’s support for the vital work of the Administration’s priority non-proliferation programs.

"The Administration notes the Committee’s continued interest in the effort to eliminate 34 metric tons of weapons-grade plutonium through the creation of mixed oxide fuel. However, the reduction of $284 million would result in the termination of construction and procurement activities for the MOX facility and in lay-offs of approximately 500 contractor employees. In addition, the Administration disagrees with the Committee’s decision to change the structure of the fissile materials disposition program, which involves interdependent facilities that should be managed in one program.

"The Administration understands the need to work with the Committee on a plan for transforming the nuclear weapons stockpile and complex that is aimed at assuring bipartisan support. However, the Administration strongly opposes the Committee’s decision to eliminate funding for the Reliable Replacement Warhead (RRW). Congress has consistently supported this vital effort to modernize the nuclear weapons stockpile. Failure to continue the program will contribute to increasing concern about weapon performance/reliability and may in turn require the maintenance of a larger size stockpile than was contemplated with RRWs.

"The Administration strongly opposes the reduction for Weapons Activities of approximately $600 million from the President’s request. At the lower funding level, activities and programs critical to transform the nuclear weapons complex and allow it to become more cost-effective and responsive to rapidly changing requirements will be severely curtailed."

The House may consider H.R. 2641 as early as today or tomorrow. While passage is expected in the House, the final bill's parameters will not be settled until a way can be found to bridge the $22 billion gap between the White House and the Democratic congressional leadership on total spending for FY 2008.

Richard M. Jones
Media and Government Relations Division
American Institute of Physics
fyi@aip.org
301-209-3095

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