A Lockbox For Savings From Cuts In Appropriations and Entitlement Bills Would Be Likely To Do More Harm Than Good

Publication Date: June 2004

Publisher: Center on Budget and Policy Priorities (Washington, D.C.)

Author(s): Richard Kogan

Research Area: Banking and finance; Government

Keywords: Federal budget; Economic projections; Fiscal future

Type: Report

Abstract:

The Republican Study Committee, a group of conservative House members, has called for creating “Family Budget Protection Accounts” or “lock-boxes,” under which amounts cut by House floor amendments from appropriations bills or entitlement legislation could be locked away, preventing those amounts from being used elsewhere in appropriations or entitlement bills. A recent bill, H.R. 3800, includes this proposal. The proposal may be offered as an amendment to budget-process legislation that the House is expected to consider soon.

Under the proposal, House floor amendments that cut funding in appropriations bills or entitlement legislation would be tallied, and the budget savings from these cuts would be placed in a “lock-box.” Once the appropriations or entitlement legislation in question had been approved by the House, the spending allocation for the committee of jurisdiction for that legislation would effectively be reduced by the amount placed in the “lock-box.” The Budget Committee would enforce this requirement by treating the amount that had been cut on the floor and placed in the lockbox as a cost charged against the budget allocation of the committee of jurisdiction. (Note: The sponsor of a floor amendment to cut funding in an appropriations bill or to cut expenditures in entitlement legislation could state, upon offering the amendment, that rather than going in the lock-box, some or all of the savings from the proposed cut would be used to finance a higher level of funding for another program in the bill or reserved for use by the relevant committee of jurisdiction. Unless such a declaration were made, the savings from the cut would go into the lock-box.)

An example may illustrate how the lock-box would work. Suppose an appropriations bill providing a total of $20 billion is brought to the floor. Suppose that a Member then proposes an amendment to cut $500 million from the bill (and intends that the savings be placed in the lockbox), and the House agrees to the amendment. At this point, the bill costs $19.5 billion. Under the lock-box rules, the $500 million in locked-up savings also would be scored against the bill; the Budget Committee in effect would treat the bill as still costing $20 billion. The Budget Committee would continue to count the locked-up savings against the budget allocation for the Appropriations Committee through the end of the fiscal year. In effect, the budget allocation for the Committee would be reduced by the amount of the cut. The same process would apply to floor amendments to entitlement legislation.

The lockbox proposal may sound appealing as a way to reduce deficits. It has a number of significant drawbacks, however, that make it ill-advised.