Background Spending Authority and  Permanent Appropriations “Backdoor Authority” or “Backdoor  Spending”  These are similar but not identical terms for  spending authority and permanent  appropriations. Backdoor authority and  backdoor spending are colloquial phrases for  budget authority that Congress has provided  in laws other than appropriations acts. This  includes contract authority and borrowing  authority, as well as entitlement authority.  Entitlement authority is a type of permanent  appropriation. It refers to the authority to make  payments for which budget authority is not  provided in advance by appropriation acts to  any person or government if, under the  provisions of law containing such authority,  the U.S. government is legally required to  make such payments. The terms backdoor  authority and backdoor spending refer to the  process by which federal money “goes out the  door.” Annual appropriations are said to go  out the “front door” as the annual  appropriations cycle provides a regularly- scheduled forum where Congress may  exercise oversight over spending. Other  appropriations are said to go out the “back  door” as they do not go through the annual  appropriations process. For the purposes of this report, our definition of spending authority and  permanent appropriations includes the five types of budget authority  described in figure 1. We are defining spending authority as budget   authority made available through laws other than annual appropriation  acts. Also, we are defining a permanent appropriation as budget authority  to incur obligations and make payments that is available permanently by  law without further legislative action. A permanent appropriation may  have been made available through an annual appropriations act or  through laws other than the annual appropriations acts. We are including  both in our inventory based on the intent of the request for developing our  inventory. For some accounts, Congress provides spending authority and  permanent appropriations to allow agencies the flexibility to spend fee  revenue without further legislative action. Specifically, Congress has  authorized some agencies to establish working capital funds—a type of  intragovernmental revolving fund—in which an agency may deposit fees  from federal, and sometimes nonfederal, customers for performing  administrative services, or the sale of government products, within their  statutory authority. For example, in addition to appropriations and  reimbursements from federal agencies, the Department of Energy (DOE)  has a working capital fund with the authority to collect funds. Those  collections are then made available for DOE expenses necessary for the  maintenance and operation of common administrative services for  economy and efficiency, such as office space and communication  services. This and other working capital funds operate as a self- supporting entity conducting business-like activities for the agency. Spending authority and permanent appropriations may be subject to  further restrictions from Congress. For example, in one or more annual  appropriations acts, Congress could restrict the use of some or all of the  budget authority, thereby using the annual appropriations process to  control the use of spending authority and permanent appropriations. For  example, the U.S. Department of Agriculture (USDA) has a permanent  appropriation which states that 10 percent of all receipts from the use and  occupancy of national forest system lands during each fiscal year are  available for maintaining roads and trails within the national forests. In  past annual appropriations acts, Congress has limited that permanent  appropriation by transferring all funds made available for that fiscal year  to the General Fund of the Treasury. Those funds are then unavailable for  obligation unless appropriated once again. Trends in Federal  Spending In fiscal year 2017, the federal government’s total outlays were almost $4  trillion of which about $2.5 trillion was in outlays for mandatory spending.  Mandatory spending, also known as direct spending, refers to budget  authority provided in laws other than appropriations acts and the outlays  that result from such budget authority. Medicare is an example of a  program that is funded by mandatory spending. Discretionary spending,  on the other hand, refers to budget authority that is provided in and  controlled by appropriations acts. During the annual appropriations  process, Congress may choose to appropriate the amount in the  President’s budget request, increase or decrease those levels, eliminate  proposals, or add other programs. For example, most defense and  education programs are funded with discretionary spending. As shown in  figure 2, mandatory spending as a share of all federal spending grew from  about 51 percent in fiscal year 1997 to about 63 percent in fiscal year  2017. Another form of federal spending is net interest, which is primarily  interest paid on debt held by the public. While the majority of the accounts in our inventory have mandatory  budget authority, not all mandatory spending fits our definition of  spending authority and permanent appropriations. For example, while  annually appropriated entitlement programs—such as the Supplemental  Nutrition Assistance Program—are provided for in annual appropriations  acts, they are treated as mandatory spending because the authorizing  legislation entitles beneficiaries to receive payment or otherwise obligates  the government to make a payment. As annually appropriated  entitlements are subject to the annual appropriations process, they did  not meet our definition of spending authority and permanent  appropriations. Conversely, not all spending authority and permanent  appropriations are mandatory spending. For example, our inventory  includes permanent appropriations made available in annual  appropriations acts. The increase in mandatory spending, and corresponding increase in  spending authority and permanent appropriations, has long-term  implications for the nation’s fiscal outlook overall, including the growing  federal debt. The growth in mandatory spending drove federal spending  that outpaced revenue growth in fiscal year 2017 and, absent policy  change, is projected to continue to do so in the future given the aging  population and rising health care costs and their relation to large federal  budget accounts funding programs, such as Social Security and  Medicare. Spending Limits and  Sequestration Sequestration—cancellation of budgetary resources under a presidential  order—was first established in the Balanced Budget and Emergency  Deficit Control Act of 1985 (BBEDCA) to control the deficit. BBEDCA, as  amended, requires OMB to calculate the reduction to budgetary  resources required each year to reduce the deficit by at least an  additional $1.2 trillion, over a 10 year period. A percentage reduction, or  sequestration rate (calculated by OMB), is applied to nonexempt (subject  to sequestration) accounts to achieve the total reduction amount required  for the fiscal year. The sequestration rate varies from year to year based  on a formula outlined in BBEDCA. The annual reduction amount OMB  calculates is split evenly between the defense and nondefense  functions. The calculated amount is then allocated between  discretionary appropriations and mandatory spending in each function in  proportion to the share of total spending within the function. Prior to BBEDCA, the Congressional Budget and Impoundment Control  Act of 1974 (CBA) attempted to limit the creation of new contract authority  and authority to borrow. In 1990, Congress further sought to limit  spending authority by establishing controls over discretionary spending  and a system of controls over legislative changes in mandatory spending.  The Budget Enforcement Act of 1990 (BEA) amended both CBA and  BBEDCA. In addition to establishing dollar limits for total annual  appropriations, BEA contained a “pay-as-you-go” provision requiring that  any legislation that reduced taxes or expanded mandatory spending  programs be offset by mandatory spending cuts or revenue increases.  This provision was to be enforced through sequestration of nonexempt  mandatory spending programs at the end of the congressional session.  Both the discretionary limit and “pay-as-you-go” rules were extended  through fiscal year 2002 and were not subsequently reauthorized. In  2010, the Statutory Pay-As-You-Go Act of 2010 reinstated a version of  the “pay-as-you-go” requirement. The act provided that if the net effect of  mandatory spending and revenue legislation enacted in a year increases  the deficit, then a sequestration of nonexempt mandatory spending will  occur to eliminate the increase. The Budget Control Act of 2011 (BCA) further amended BBEDCA and  revived sequestration as a budgetary enforcement mechanism to reduce  the deficit. BCA established the Joint Select Committee on Deficit  Reduction (Joint Committee). The Joint Committee was tasked with  proposing legislation to reduce the deficit. Such legislation was not  proposed or enacted, which triggered the sequestration process provided  in section 251A of BBEDCA, known as the Joint Committee  sequestration. BBEDCA currently requires a sequestration of mandatory  spending in each year through fiscal year 2027 and a reduction of  discretionary spending limits in fiscal years 2020 and 2021. A  sequestration of discretionary spending could still occur in any year  through fiscal year 2021 if Congress and the President enact  appropriations that exceed discretionary spending limits established by  BBEDCA. As of September 2018, the President has ordered the  sequestration of mandatory spending in each year since fiscal year 2013,  and the sequestration of discretionary appropriations in fiscal year 2013. Reported Use of  Spending Authority  and Permanent  Appropriations Has  Increased  Government-Wide,  and Agencies Using  the Authorities Have  Changed  Reported Budget Authority  Amount Was Higher for  Three of the Five Authority  Types in Fiscal Year 2015,  as Compared to Fiscal  Year 1994 The amount of spending authority and permanent appropriations reported  government-wide grew 88 percent, from fiscal years 1994 through 2015  adjusted for inflation. Specifically, in fiscal year 2015, approximately $3.2  trillion was reported, compared with approximately $1.2 trillion in fiscal  year 1994 ($1.7 trillion in fiscal year 2015 dollars, see figure 3). Although the total reported amount of spending authority and permanent  appropriations increased over time, the changes for each authority type  varied when comparing fiscal years 1994 to 2015 (see figure 4). Reported  budget authority grew for three of the five authority types—permanent  appropriations, offsetting collections, and contract authority—in fiscal year  2015, as compared to fiscal year 1994. For example, about $2.6 trillion  permanent appropriations were reported in fiscal year 2015, up from  approximately $982.5 billion in fiscal year 1994 ($1.5 trillion adjusted for  inflation to 2015 dollars). Generally, the reported amount of permanent  appropriations increased gradually, with the biggest growth occurring in  fiscal year 2008. Borrowing authority decreased, and agencies reported  no use of monetary credits or bartering at any time during fiscal years  1995 through 2015. Table 1 provides comparisons between reported budget authority in fiscal  years 1994 and 2015 for all authority types. The amount of budget authority is not necessarily indicative of the  prevalence of spending authority and permanent appropriations since the  amount of budget authority in different accounts can vary by billions of  dollars. From fiscal years 1995 through 2015, agencies had 1,089  authorities in 902 budget accounts. We previously reported on the use  of 670 authorities in 540 budget accounts in fiscal year 1994. In  comparing fiscal years 1994 to 2015, we found that the number of  accounts with permanent appropriations and offsetting collections increased while contract and borrowing authority decreased. Figure 5  summarizes the number of accounts with each type of authority over the  years. The overall growth in spending authority and permanent appropriations is  driven primarily by permanent appropriations growth. Entitlement  programs, such as Medicare and the Social Security Administration’s  (SSA) Old-Age and Survivors Insurance and Disability Insurance  programs, are funded through permanent appropriations, and are a  significant proportion of budget authority in our inventory, as discussed  below. Since many spending authorities and permanent appropriations  provide agencies budget authority based on program use and eligibility,  demographic and program demand changes can affect the amount of  budget authority. For example, since the Old-Age and Survivors  Insurance and Disability Insurance programs administer benefits based  on eligibility requirements and statutory formulas, the amount of budget  authority used for the programs increases as more people become  entitled. Higher income levels result in higher average benefit amounts  and cost of living adjustments increase monthly benefit amounts for  current beneficiaries. Other factors affected the growth in the use of spending authority and  permanent appropriations to a lesser extent. Enactment of new authorities. From 1995 to 2015, 329 new  authorities for spending authority and permanent appropriations were  enacted. For example, the Housing and Economic Recovery Act of  2008 granted the Department of the Treasury (Treasury) the authority  to purchase any obligations and other securities issued by  government-sponsored enterprises, such as Fannie Mae. According  to the act, Treasury was authorized to use this authority until  December 31, 2009, with certain actions permitted after that date.  This authority resulted in $200 billion in permanent appropriations  reported in both fiscal years 2008 and 2009, and another $46 billion in  fiscal year 2013. Amendment of existing authorities. Some existing authorities were  amended to allow for increased use—permanently or temporarily.  Some authorities have amounts specified by statute—such as  maximum amounts the agency can use or set amounts that the  agency can charge users. For these authorities, increases in the use  of an authority may be attributed to enacted increases in the specified  amounts. For example, the National Flood Insurance Fund reported  an increase of $878 million in offsetting collections in 2012 after  legislation increased the annual limitation on premium increases for  certain insurance premiums. Increased use of spending authority and permanent  appropriations, at agency’s discretion. Other authorities did not  experience statutory changes, but agencies increased the use of the  authorities at their discretion to meet program needs. When no  maximum amount is specified as a limit on the agency’s authority,  variation in use is due to agency discretion in response to  circumstances. For example, the Federal Deposit Insurance  Corporation’s (FDIC) Deposit Insurance Fund account began  reporting increased offsetting collections for amounts assessed  against depository institutions insured by FDIC, in fiscal years 2009  and 2010. The reported collections increased to highs of $26.5  billion in fiscal year 2009 and $57.3 billion in fiscal year 2010, after  reported budget authority levels of $2.2 billion in fiscal year 2006.  According to an agency official and as stated in the FDIC’s 2009  Annual Report, this increase primarily resulted from its adoption of the  Deposit Insurance Fund Restoration Plan and the prepayment of  future risk-based deposit insurance assessments by depository  institutions to provide FDIC with the necessary liquidity to resolve  failed depository institutions during the financial crisis. A FDIC official  stated that the Deposit Insurance Fund Restoration Plan addressed  the need to return the Deposit Insurance Fund to its mandated  minimum reserve ratio of 1.15 percent of estimated insured  deposits. Events other than legislative or agency actions. Programs may  experience increased fee revenue, penalty payment, or use of the  authority for circumstances that do not involve legislative or agency  action. For example, the United States Coast Guard’s Maritime Oil  Spill Programs account reported $743 million in permanent  appropriations in fiscal year 2010 after receiving transfers from the Oil  Spill Liability Trust Fund to assist with cleanup after the 2010  Deepwater Horizon oil spill. Amounts from the Oil Spill Liability Trust  Fund are available to fund federal response activities in the event of  an oil spill or imminent threat of an oil spill on navigable waters of the  United States. In the case of the 2010 Deepwater Horizon oil spill, the  Coast Guard was authorized to obtain one or more advances from the  Oil Spill Liability Trust Fund, as needed to address costs associated  with federal activities in response to the oil spill, with up to a maximum  of $100 million for each advance. As a result of the growth of spending authority and permanent  appropriations from fiscal years 1994 through 2015, more budget  authority is available to agencies that does not require them to await  congressional action to incur obligations. For example, USDA has the  authority to use its portion of the fee for Agricultural Quarantine Inspection  without congressional action. Agencies Reporting the  Largest Amount of  Spending Authority and  Permanent Appropriations  in Fiscal Year 2015 Have  Changed, as Compared to  Fiscal Year 1994 The majority of spending authority and permanent appropriations reported  in fiscal year 2015 was concentrated in large agencies and budget  accounts that fund entitlement programs such as Social Security and  Medicare. The Department of Health and Human Services (HHS)  reported the highest use of spending authority and permanent  appropriations. HHS also had the most accounts in the list of top 10  accounts in fiscal year 2015. This is a change since fiscal year 1994  when SSA reported using the most spending authority and permanent  appropriations. Together, in fiscal year 2015, the top three agencies— HHS, SSA, and Treasury—comprised three quarters of the total  government-wide spending authority and permanent appropriations (see  figure 6). HHS reported the largest amount of spending authority and permanent  appropriations in fiscal year 2015 with about $979 billion, or about 30  percent. (See appendix III for a list of budget authority use by agency for  fiscal year 2015.) HHS’s largest three accounts in our inventory all fund  Medicare. SSA, which oversees the Old-Age and Survivors Insurance  program, the Disability Insurance and Supplemental Security Income  programs, as well as the Special Benefits for Certain World War II  Veterans program, reported about $920 billion or about 28 percent of total  spending authority and permanent appropriations. Programs  administered by HHS and SSA continue to show spending increases  largely as a result of the aging of the population and increasing health  care costs. Treasury reported the third highest amount of spending  authority and permanent appropriations, about $542 billion, the majority of  which is for interest on debt held by the public and intragovernmental  debt. These agency usage patterns are echoed when analyzing spending  authority and permanent appropriations by account. The 10 largest  accounts represented about 72 percent of spending authority and  permanent appropriations in fiscal year 2015, as shown in table 2. All of  these are permanent appropriations, except for the Postal Service’s  Postal Service Fund account which is an offsetting collection that includes  revenue for mail services. Seven of the 10 accounts fund entitlement  programs. Similar to the fiscal year 2015 data for all spending authority and  permanent appropriations, HHS, SSA, and Treasury reported the greatest  use of permanent appropriations in fiscal years 2015, 2005, and 1994   (see figure 7). HHS reported the highest dollar amount of permanent  appropriations for the first time in fiscal year 2006, likely due to rising  health care costs. Permanent Appropriations  Budget authority to incur obligations and  make payments that is available permanently  by law without further legislative action. Contract authority is concentrated, with only five agencies having this  authority from fiscal years 1995 through 2015. Four of these agencies  used the authority, while one agency—the Judicial Branch; Courts of   Appeals, District Courts, and Other Judicial Services—has the authority,  but did not use it. The Department of Defense (DOD) and the Department  of Transportation (DOT) were the two agencies that reported the largest  percentages of dollar amounts of contract authority in fiscal years 1994  and 2015, as well as 2005 (see figure 8). This figure shows three of the  four agencies that reported contract authority in our timeframe. One other  agency, the Department of Housing and Urban Development, used  contract authority in fiscal year 2007. Contract Authority  Authority to incur obligations in advance of  appropriations, including collections sufficient  to liquidate the obligation or receipts. It is  unfunded, and a subsequent appropriation or  offsetting collection is needed to liquidate the  obligations. From fiscal years 1994 through 2015, 15 agencies reported the use of  borrowing authority of varying amounts and an additional two agencies  had unused borrowing authority. Since 1995, seven accounts reported   receiving new borrowing authority across five different agencies including   the Department of Commerce and DOT. USDA reported the largest  dollar amount of borrowing authority in most years, including fiscal years  1994, 2005, and 2015, which represented 73 percent, 82 percent, and 60  percent of each fiscal years’ total borrowing authority, respectively (see  figure 9). USDA’s large share of the total borrowing authority, and most of the  overall variability in our borrowing authority data throughout our  timeframe, is for the Commodity Credit Corporation Fund. The fund  reported about $7.8 billion or 60 percent of government-wide borrowing  authority in fiscal year 2015. The Commodity Credit Corporation has  authority to borrow funds to carry out its programs, which include  providing income and price support to agricultural producers, payments  for conservation practices on farms, assistance in the development of  international agricultural markets, and international feeding programs.  Some of the primary drivers of its borrowing authority variability are  legislation, changes in commodity yields and price, weather disasters,  and market conditions, according to a USDA official. The Railroad Retirement Board (RRB)—which administers a retirement  benefit program similar to Social Security for railroad workers and their  families—began reporting borrowing authority in fiscal year 1996 and  reported the second largest borrowing authority amount in fiscal year  2015. The Railroad Social Security Equivalent Benefit account reported  between about $3 billion and $4 billion per year through 2015. The  Tennessee Valley Authority reported borrowing authority periodically  during our time frame, reporting a high of $3.1 billion in fiscal year 2003.  For more information on the top five accounts for the use of borrowing  authority, see appendix IV. The text box below provides additional  information on the Tennessee Valley Authority account and a Department  of Commerce account. Examples of Different Accounts with and Uses of Borrowing Authority  Tennessee Valley Authority, Tennessee Valley Authority Fund. The Tennessee  Valley Authority is a corporate agency that provides electricity for business  customers and local power companies in parts of seven southeastern states. The  agency is authorized to issue and sell up to $30 billion of bonds, notes, and other  debt instruments at any one time to assist in financing its power program. The  proceeds from these bonds are authorized for the construction, acquisition,  enlargement, improvement, or replacement of electrical power facilities and other  purposes authorized by the Tennessee Valley Authority Act of 1933.  Department of Commerce, Public Safety Trust Fund. The Middle Class Tax Relief  and Job Creation Act of 2012 (the Act) created the First Responder Network  Authority (FirstNet), an independent authority within the Department of  Commerce’s National Telecommunications and Information Administration (NTIA)  and required it to establish a nationwide, interoperable public-safety broadband  network. In order to provide initial funding for FirstNet, NTIA was authorized to  borrow up to $2 billion from the Treasury to implement the program. The Act  required NTIA to reimburse Treasury, without interest, from funds deposited into  the Public Safety Trust Fund.47 U.S.C. § 1427. A couple of accounts had temporary spikes in the use of borrowing  authority from fiscal years 1994 through 2015. Specifically, the  Department of Labor’s Unemployment Trust Fund had several years of  increased use of borrowing authority, with a high of $26.2 billion in fiscal  year 2010. As we have reported, the recession that occurred during 2007  through 2009 sharply increased the number and duration of claims for  unemployment benefits. The National Credit Union Administration’s  Central Liquidity Facility, which was created to improve the general financial stability of credit unions by serving as a liquidity lender to credit  unions experiencing unusual or unexpected liquidity shortfalls, reported  borrowing authority for the first time in our inventory in the amount of  $19.4 billion in fiscal year 2009. The Central Liquidity Facility is  authorized by statute to borrow, from any source, an amount not to  exceed 12 times its subscribed capital stock and surplus. Offsetting Collections Authority  is Widespread among  Agencies The majority of agencies had offsetting collections authority. Offsetting  collections authority generally authorizes agencies to collect fines, charge  fees, or charge for permits among other uses. These functions have a  number of applications across the government. Since fiscal year 1995,   129 accounts received new offsetting collections authority. We did not  rank the top agencies that used offsetting collections because we, and  the agencies when asked, were unable to reliably subtract collections  from federal sources or refunds of prior paid obligations. The text box  below provides examples of accounts with offsetting collections authority. Examples of Different Accounts with and Uses of Offsetting Collections  Department of Transportation (DOT), Motor Carrier Safety Operations and  Programs. The Unified Carrier Registration Act of 2005 tasked DOT with  establishing and implementing the Unified Carrier Registration System to serve as  a repository of information on, and identification of, all foreign and domestic motor  carriers, motor private carriers, brokers, freight forwarders, and others required to  register with DOT. DOT is authorized to collect fees associated with the system,  including registration and filing fees, and may use collected funds for these  activities without further appropriation.  Environmental Protection Agency, Damage Assessment and Restoration Revolving  Fund. Under the Oil Pollution Act, responsible parties for a vessel or a facility from  which oil is discharged are liable for, among other things, damages for injury to,  destruction of, loss of, or loss of use of, natural resources. The Oil Pollution Act  authorizes certain departments and agencies, such as the Department of the  Interior, designated by executive order as a “trustee for natural resource damages”  to recover such damages, and retain and use the funds without further  appropriation to reimburse or pay costs incurred by the trustee with respect to the  damaged natural resources. For the limited purpose of the Deepwater Horizon Oil  Spill, the Environmental Protection Agency was also designated a trustee. The premiums are  placed into a revolving fund, which is available without further appropriation, to pay  claims.  Department of Defense (DOD), Working Capital Fund, Defense Wide. DOD’s  working capital fund is used to charge for goods and services provided to the  military services and other customers. In addition to any funds appropriated to the  working capital fund, the working capital fund may also collect funds from providing  services or procuring supplies, or through the sale and disposal of DOD property.  Funds are available without further appropriation.  33 U.S.C. § 2706(f); see also, 33 U.S.C. § 2702; 40 C.F.R. § 300.600. Six Agencies with Authority for  Monetary Credits or Bartering  Did Not Report Using It Six agencies have the authority to use monetary credits or bartering, but  none of these agencies reported using this authority from fiscal years  1995 through 2015. These are the same agencies that we reported in  1996—the Departments of the Interior and State, DOE, DOD, USDA, and   the Tennessee Valley Authority. OMB staff said that monetary credits are  used infrequently government-wide, and that agencies are not required to  record this type of authority separately in the budget. When we asked, no  other agencies reported having monetary credits or bartering authority.  The text box below provides examples of accounts that are authorized to  use monetary credits or bartering. Monetary Credits or Bartering  Monetary credits or bartering are used by  agencies having the authority to make  purchases by giving the seller credits or  something other than money in dollar  amounts reflecting the purchase price. The  holder of credits may apply them later to  reduce an amount owed to the government in  other transactions. Examples of Different Accounts with Monetary Credits or Bartering  Authority  Department of State, Embassy Security, Construction, and Maintenance. The  Department of State is authorized to exchange property or property interest for the  use of diplomatic and consular establishments in foreign countries or in the United  States. The Department of State is authorized to receive payment in any form, or  in kind, to cover damage to or destruction of diplomatic or consular property  abroad.  Department of Defense (DOD), Operations and Maintenance, Army National  Guard. DOD is authorized to acquire logistic support, supplies and services for the  armed forces deployed outside the United States from specified governments and  international organizations. Supplies or services of equal value may be  exchanged to facilitate these transactions.  10 U.S.C. § 2344; see also 10 U.S.C. § 2341. The Percentage of  Spending Authority  and Permanent  Appropriations  Authorities Subject to  Sequestration in  Fiscal Year 2015  Decreased Compared  to Fiscal Year 1994 The majority of spending authority and permanent appropriations  authorities were exempt from sequestration in fiscal year 2015. This is a  reversal from fiscal year 1994, when the majority of spending authority  and permanent appropriations authorities were subject to sequestration.  Congress first established exemptions to sequestration in the 1980s when  BBEDCA was enacted and has amended them since then. To determine the requisite percentage reduction to nonexempt budgetary  resources pursuant to BBEDCA, OMB must define the sequestrable  base, which is the total of nonexempt budgetary resources within each  function. BBEDCA directs OMB to calculate a sequestration consistent  with special rules and exemptions described by law. OMB provides  guidance to agencies for implementing sequestration, and is also required  under BBEDCA to report to Congress its calculations and other estimates  at various stages. We worked with OMB to classify by OMB’s  sequestration designation the agencies’ spending authority and  permanent appropriations authorities that were in our inventory, as shown  in table 3. Each authority in our inventory is assigned a designation,  which defines how the authority is treated when sequestration is in effect. As shown in table 4, in fiscal year 2015, 57 percent of spending authority  and permanent appropriations authorities were exempt from  sequestration, and therefore were not subject to this budgetary  enforcement mechanism for helping to control the deficit. This is a 20  percentage point increase since fiscal year 1994. Correspondingly, the  proportion of spending authority and permanent appropriations authorities  that were subject to sequestration decreased 35 percentage points from  fiscal year 1994 to fiscal year 2015. The proportion of authorities that was  partially subject to sequestration increased from 4 percent in fiscal year  1994 to 11 percent in 2015. Designations were not available for 11  percent of the authorities in our inventory, due to methodological  differences with OMB data explained in appendix I. None of the  authorities in our inventory were classified as optionally sequestrable and  two were classified as sequestrable/906. The sequestration procedures established under BBEDCA were designed  to serve as a budget enforcement mechanism and thereby reduce the  federal budget deficit. Under current law, sequestration applies to  mandatory spending through fiscal year 2027. Our finding that the  majority of the agencies’ spending authority and permanent  appropriations authorities in our inventory are exempt from sequestration  is consistent with our prior work on mandatory sequestration. In 2016, we  reported that the majority of mandatory spending authority was exempt  from sequestration. Since spending authority and permanent  appropriations permit agencies to obligate budget authority without further  congressional action, when these authorities are exempt from  sequestration, agencies can continue to use these authorities without  reductions when sequestration is in effect. Agency Comments We provided a draft of this report and the online dataset to the Director of  OMB for review and comment. OMB staff provided technical comments,  which we incorporated as appropriate. As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to interested congressional  committees, the Director of the Office of Management and Budget, the  secretaries and agency heads of the departments and agencies in our  review, and other interested parties. In addition, the report is available at  no charge on GAO’s website at http://www.gao.gov. If you or your staff have any questions about this report, please contact  Tranchau (Kris) T. Nguyen at (202) 512-6806 or nguyentt@gao.gov, or  Julia C. Matta at (202) 512-4023 or mattaj@gao.gov. Contact points for  our Offices of Congressional Relations and Public Affairs may be found  on the last page of this report. GAO staff who made key contributions to  this report are listed in appendix V. Appendix I: Objectives, Scope, and  Methodology Our objectives were to (1) identify and analyze federal budget accounts  with spending authority and permanent appropriations, including the  statutory references for the authorities, changes in the number of  accounts and dollar amounts since fiscal year 1994, and other relevant  information; and (2) describe whether the identified accounts are subject  to or exempt from sequestration or subject to any special sequestration  rules or limitations. This report is an update to our previous report that covered spending  authority and permanent appropriations using financial data from fiscal  years 1985 through 1994. For this report, we analyzed data from fiscal  years 1995 through 2015, the most recent year for which data were  available when we began our work. We are also providing an online  dataset of our inventory of accounts with spending authority and  permanent appropriations on our public website at  https://www.gao.gov/products/GAO-19-36. For the purposes of this report, we are defining spending authority as  budget authority made available through laws other than annual  appropriations acts. We are defining a permanent appropriation as budget  authority to incur obligations and make payments that is available  permanently by law without further legislative action. A permanent  appropriation may have been made available through an annual  appropriations act or through laws other than the annual appropriations  acts. A similar but not identical term for spending authority and permanent  appropriations is “backdoor authority”—a colloquial phrase for budget  authority that Congress provided in laws other than annual appropriations  acts. This includes contract authority and borrowing authority, as well as  entitlement authority and the outlays that result from that budget  authority. The term “spending authority and permanent appropriations”  indicates the authority to make obligations and expenditures without  further action from Congress. For purposes of this report, spending  authority and permanent appropriations include five types of budget  authority: contract authority, authority to borrow, monetary credits or  bartering, permanent appropriations, and offsetting collections. For more  detail on the definitions and the inclusions and exclusions for our  inventory of accounts and our reasoning, see appendix II. Data Sources To identify and analyze accounts that used spending authority and  permanent appropriations during this time frame, we used the Office of  Management and Budget’s (OMB) MAX A-11 Data Entry system (MAX).  MAX is a computer system used to collect and process most of the  information required for preparing the President’s budget for the federal  government. Agencies develop their budget information and enter the  data into MAX. The data undergo rigorous review by OMB. MAX contains  numerous edit checks to help ensure data consistency. Thus, we found  the data to be sufficiently reliable for our purposes of identifying our initial  inventory of accounts. We used the Program and Financing Schedule’s Budgetary Resources  line number descriptions in OMB Circular A-11—OMB’s guidance to  agencies for preparing and submitting budget information—to select line  numbers in MAX that align with our definition of spending authority and  permanent appropriations. We reviewed each line number’s description to confirm it met the  definition of spending authority and permanent appropriations. We also  confirmed with OMB staff our understanding of changes to the line  numbers over the years, as well as our approach to implementing  exclusions. MAX does not have specific line numbers for monetary credits  or bartering—agencies report use of monetary credits as cash  equivalents in the budget. This is a broader category than just monetary  credits. OMB staff said that agencies are not required to report monetary  credits elsewhere. Therefore, we are unable to identify agencies’ use of  monetary credits in MAX data. The table below summarizes the line numbers we analyzed while building  our inventory of accounts by authority type. To avoid double counting, we  did not include lines that represent totals. For example, line 6300 was not  in our scope for fiscal years 1995 through 1998 because it represented  total appropriations. However, line 6300 is in our scope for years when it  represented reappropriations, which is a form of permanent  appropriations that would be included in our scope. For offsetting collections, we included line numbers labeled in MAX as  discretionary or mandatory. Although discretionary spending generally  refers to outlays from budget authority that is provided in and controlled  by appropriations acts—which would not be spending authority and  permanent appropriations—OMB staff said this distinction does not  always apply in MAX data. This is partly because, prior to fiscal year  1999, the Program and Financing Schedule did not distinguish between  mandatory and discretionary offsetting collections. Although distinct line  numbers for mandatory and discretionary collections were added, the  designation in MAX is not always correct, according to OMB staff. For fiscal years 1995 through 1998, lines 6800 to 6885 could represent  discretionary or mandatory offsetting collections. Starting with fiscal year  1999, OMB reported discretionary and mandatory collections separately  in the Program and Financing Schedule. Discretionary collections were  reported on lines 6800 to 6885, and mandatory collections on lines 6900  to 6985. In later years, the numbers changed but the distinction between  the two remained. If any dollar amount was reported in MAX on any of the selected lines for  any year from fiscal years 1995 through 2015, we included the account in  our initial inventory. Many accounts reported budget authority amounts  for more than one line number. In other words, they used different types  of spending authority and permanent appropriations, or had multiple uses  of the same authority. To the extent possible, we implemented the  exclusions described in appendix II into the data, resulting in our initial  inventory of accounts. We compared the accounts and authorities identified in our 1996 report  with our MAX data for our initial inventory of accounts. We found five  accounts that were in the 1996 report but not the MAX data, which still  had active budget authority reported in the fiscal years 2013, 2014, or  2015 budgets. We reviewed these for potential inclusion in our inventory  and included three authorities. Data Collection and  Confirmation with  Agencies To learn more about the accounts in our initial inventory, we developed a  data collection instrument (or worksheet) to send to the agencies. After  our review and final agency verification, the results from the worksheets  became our final inventory of accounts as shown in our online dataset.  We took the following steps for collecting and reviewing agency  information. We asked that the agencies review the data for accounts for which  they have responsibility. We asked them to confirm or correct  account information that we obtained from MAX and, if applicable,  from the 1996 report. If information was unavailable from the 1996  report, we asked agencies to provide it. We asked agencies to review  the basic account descriptors (e.g., account names and numbers),  MAX line number(s), budget authority type (which we determined  based on the line number description), source of offsetting collections  (if applicable), and a statutory reference and enactment year for each  authority. We used our 1996 report to identify accounts that may have authority  to use monetary credits or bartering, and asked those agencies to  confirm this information. We asked agencies to identify any accounts  that have authority to use monetary credits or bartering, and to include  the source of the monetary credits or bartered items, and identify their  value in dollars. We asked agencies to identify any additional accounts that have  spending authority and permanent appropriations that were not  presented in the worksheet because they were not identified through  MAX. We confirmed or corrected information in each agency’s completed  worksheet and updated our inventory accordingly. We excluded  accounts from our inventory if we determined that the authority for the  account did not meet the definition of spending authority and  permanent appropriations. When possible, we reviewed the  President’s Budget Appendix to confirm corrections from the  agencies. For some authorities, such as certain offsetting collections,  we relied on the agency’s description of whether the account included  nonfederal sources to make our decision about inclusion in our  inventory. We had discussions with agencies, as needed, to agree on the  presentation of the account information and statutory references. As described above, to compile our inventory and provide statutory  references providing the authorities, we primarily relied on the MAX  database and information agencies provided to us. While we made every  attempt to confirm the information provided by agencies and provided  agencies opportunities to review the information on their accounts, in  some cases we included authorities for which neither we nor the agency  could determine a statutory reference because we could not rule out the  use of spending authority and permanent appropriations. We note that  authorities and the statutes providing them can change over time. Our  inventory of accounts should therefore not be used as a substitute for  original legal research. For some accounts, agencies identified errors in the MAX budget  authority or other fields. We updated our inventory if the agency provided  documentation, such as a SF-133, Report on Budget Execution and  Budgetary Resources. We did not make changes to the budget authority  classifications. For some authorities, we reported no budget authority in  certain fiscal years, but MAX contained a budget authority amount. If an  account had spending authority and permanent appropriations in only  certain years, but reported other budget authority on the same lines that  did not meet our definition, we only reported dollar amounts for the  spending authority and permanent appropriations, when possible. The  changes described above were only applied to our inventory data and not  to the MAX database. From our final inventory, we selected examples of accounts to highlight in  the text boxes in our report. We made these selections based on the  following criteria: variety of size of agencies, the authority was used  sometime from fiscal years 2013 to 2015 (with exception of monetary  credit or bartering authority), different examples of how the budget  authority was used, and large or easy to understand programs. Factors that Affect  Our Totals for  Spending Authority  and Permanent  Appropriations There are several factors that affect our reported total spending authority  and permanent appropriations. In working with agencies, we were unable  to parse out the amounts of budget authority that do not meet our  definition. Therefore, our reported budget authority amounts likely  overstate the amount of spending authority and permanent appropriations  used during the time period of our analysis. Although some agencies informed us that certain offsetting collections  contained collections from federal sources—which would not be  considered spending authority and permanent appropriations—we  could not reliably subtract the federal sources from all accounts  covered in our inventory. While we excluded any account lines that  the agencies reported consisted only of collections from federal  sources, we did not exclude account lines for which we and the  agencies could not reliably separate collections from federal sources  from offsetting collections amounts that meet our definition of  spending authority and permanent appropriations. As a result, our  total budget authority amount for offsetting collections (and our overall  totals) contains budget authority which does not meet our definition of  spending authority and permanent appropriations. The budget authority amounts for offsetting collections may also  include some amounts that consist of refunds of prior paid obligations.  While we excluded any account lines that the agencies reported  consisted only of refunds of prior paid obligations, we did not exclude  account lines for which we and the agencies could not reliably  separate refund amounts from offsetting collections amounts that  meet our definition of spending authority and permanent  appropriations. Additionally, our budget authority amounts include sequestered and  rescinded amounts, which are usually negative in the MAX  database. Sequestered and rescinded funds are not generally  available to agencies, and therefore do not represent spending  authority and permanent appropriations. Some agencies may have  reported sequestered amounts in various budget authority lines in  MAX, which we cannot reliably identify. Therefore to consistently  include these amounts, we retained all sequestration-related lines. As  a result of this inclusion, our totals are decreased by the negative  sequestered amounts. Further, when budget authority amounts were  totaled for each agency, some agency totals were negative. These  negative values were generally small enough that they did not affect  the overall percentages, so we removed them from our rankings of top  agency users of permanent appropriations and borrowing authority. Our inventory includes authorities that may have expired or been  repealed during the time period of our analysis, even if the account is  still active. We also did not examine whether Congress subsequently  restricted or rescinded the agency’s ability to use all or a portion of its  spending authority and permanent appropriations. We did not review  annual appropriations acts or other legislation to identify the extent to  which authorities in our inventory were restricted or rescinded. Identification of  Statutes Providing the  Authorities To note the statutes providing spending authority and permanent  appropriations for the identified accounts, we used the worksheets— described above that were provided or corrected by the agencies—to  collect and review the statutory references and enactment years for each  account and type of authority. We reported only the earliest identifiable  year of enactment for the statute providing the authority. There are some  instances where budget authority data are reported for years prior to the  enactment year for an account’s authority in our data. This may be  stemming from a variety of factors, including repeal of earlier enacted  authorities coupled with newly enacted authorities, and challenges  identifying original enactment dates when sections of the U.S. Code were  recodified. In other instances, neither we nor the agency could determine  a statutory reference because of the age of the data, because the  account or agency no longer exist, or other reasons. These authorities  are included in our inventory because we could not rule out the use of  spending authority and permanent appropriations. These accounts are  categorized in our online dataset as either (1) the agency could not  provide this information—we identified a potentially applicable statutory  reference—or (2) the statutory reference could not be determined. Sequestration  Designation To determine whether the identified accounts are subject to or exempt  from sequestration, or subject to any special sequestration rules or  limitations, we used datasets provided by OMB to identify the  sequestration designation for accounts in our final inventory.  Sequestration designations include sequestrable, partially sequestrable,  exempt, optionally sequestrable, and sequestrable/906. OMB generates the data annually through a government-wide data  collection exercise to calculate the sequestration percentage and  reductions by account as part of a report required under the Joint  Committee process. For authorities that did not have a sequestration  designation in OMB’s data but did report actual budget authority in fiscal  years 2013, 2014, or 2015, we asked OMB to provide additional  sequestration designation information. Authorities that OMB did not  classify, or for which it could not provide additional information, have  “None” listed as the sequestration status in our final inventory. The  primary dataset we used includes accounts with mandatory budget  authority in fiscal year 2015 and the corresponding sequestration  designation. However, to identify the sequestration designation for  accounts in our final inventory with offsetting collections authority that  OMB categorized as discretionary spending, we used the fiscal year 2013  sequestration dataset. The fiscal year 2013 dataset was the most recent  available for which sequestration occurred for discretionary spending  when we began our work, and we used fiscal year 2015 data to match the  end year of our inventory data. We assessed the reliability of the sequestration datasets based on  interviews with OMB staff. OMB staff told us that the data must pass a  series of automated checks, and are reviewed at several points by OMB  staff. Thus, we found the data to be sufficiently reliable for the purpose of  identifying the sequestration status of the accounts in our final inventory.  We confirmed the definition of each sequestration designation with OMB.  In some cases, because of differences in the scope of the data that OMB  collected for Joint Committee reports, a sequestration designation was  not available. For some of those authorities, OMB provided a designation  based on information collected from agencies. We compared the  sequestration designation data from our 1996 report to the designations  in fiscal year 2015 or 2013, as applicable to analyze changes over time. Combining Data to  Develop Our  Inventory Dataset We combined data from the worksheets confirmed by the agency into a  single dataset to create our final inventory of accounts. We also added  the dollar amounts from MAX to create the final dataset we used for  analysis in the report. To combine our data, we had to make several  decisions to help eliminate double-counting and to simplify the  supplemental data that accompanies this report. We have provided a final inventory dataset—which includes the agency  accounts and related budget information, statutory references, enactment  years, and sequestration designation—online as a supplement to this  report. Table 6 lists the variables and definitions used in our online data. We analyzed the final combined dataset for trends and compared it with  the 1996 report. In some cases, we adjusted the fiscal year 1994 dollars  for inflation. Once the inventory of accounts was finalized and we  completed our review, each agency received a statement of facts to  review, which summarized the final inventory information for their agency.  Agencies that have examples of accounts highlighted in our report  received those excerpted examples that are specific to their agencies for  review and comment. We provided OMB the draft report and online data  for review and comment. We conducted this performance audit from March 2016 to November  2018 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives. Appendix II: Additional Description of  Spending Authority and Permanent  Appropriations This appendix provides additional details on how we defined spending  authority and permanent appropriations for the purpose of this report and  how we applied the definition to decide which accounts to include or  exclude from our inventory. We are defining spending authority as budget  authority made available through laws other than annual appropriation  acts. Also, we are defining a permanent appropriation as budget authority  to incur obligations and make payments that is available permanently by  law without further legislative action. A permanent appropriation may  have been made available through an annual appropriations act or  through laws other than the annual appropriations acts. We are including  both in our inventory based on the intent of the request for developing our  inventory. Spending authority and permanent appropriations permit  obligation and expenditures without further action from Congress. These  include permanent appropriations, contract authority, borrowing authority,  offsetting collections, and monetary credits or bartering, all of which are  defined in table 7. In building our inventory of accounts with spending authority and  permanent appropriations authority, we made categorical decisions on  what to include and exclude. We included authorities that met our  definition of spending authority and permanent appropriations, as  described above in table 7. A particular type of offsetting collections— collections from nonfederal sources that were enacted for the first time in  an appropriations act—does not meet our definition, but nonetheless  permits obligation and expenditure without further action from Congress,  and therefore falls within the purview of this request. We included these  authorities in our inventory and included a variable to identify them in our  online dataset. Certain types of budget authority do not meet our  definition of spending authority and permanent appropriations, as  described in table 8. Appendix III: Spending Authority and  Permanent Appropriations Use by Agency  and Authority Type, Fiscal Year 2015 Table 9 lists total spending authority and permanent appropriations  reported by agency in fiscal year 2015. We listed the 24 agencies in the  Chief Financial Officers Act of 1990 as amended, Legislative Branch and  Judicial Branch entities, and Executive Office of the President and other  entities. We did not include monetary credits or bartering in this table  given no agencies reported use of this authority in fiscal year 2015. Appendix IV: Five Largest Permanent  Appropriations, Contract, and Borrowing  Authority Accounts, Fiscal Year 2015 The tables below list the accounts reporting the largest amounts of  budget authority for permanent appropriations, contract authority, and  borrowing authority in fiscal year 2015. We did not rank the agencies that  reported the largest amounts of offsetting collections because we, and the  agencies, when asked, were unable to reliably subtract collections from  federal sources or refunds of prior paid obligations. Agencies did not  report using monetary credits or bartering in fiscal year 2015. Appendix V: GAO Contacts and Staff  Acknowledgements GAO Contacts Staff  Acknowledgments In addition to the contacts named above, Janice Latimer (Assistant  Director), Lisa Motley (Assistant General Counsel), Lindsay Swenson  (Analyst-in-Charge), Michael Bechetti, Shari Brewster, Charles  Culverwell, Ann Marie Cortez, Erika Huber, Susan J. Irving, John Mingus  Jr., Katherine D. Morris, Cynthia Saunders, Albert Sim, and Stewart Small  made key contributions to this report.
Congress can provide budget authority to federal agencies and programs through the annual appropriations process. It can also provide budget authority through laws other than annual appropriations acts, or through permanent appropriations that permit the agency to obligate budget authority without further congressional action. Analysis of these authorities helps provide Congress with visibility into spending authority that is not considered during the annual appropriations process. GAO was asked to update its 1996 report that had provided an inventory of accounts with spending authority and permanent appropriations for fiscal years 1985 through 1994. This report discusses (1) federal budget accounts with spending authority and permanent appropriations, including the statutory references for the authorities, changes in the number of accounts and dollar amounts since fiscal year 1994, and other relevant information; and (2) whether the identified accounts are subject to or exempt from sequestration, or subject to any special sequestration rules or limitations. GAO also is providing an online dataset of the inventory of accounts with spending authority and permanent appropriations on GAO's public website at https://www.gao.gov/products/GAO-19-36 . GAO analyzed Office of Management and Budget (OMB) budget data to identify accounts with spending authority and permanent appropriations. GAO reviewed data through fiscal year 2015 because that was the most recent data available when GAO began its work. GAO reviewed agency information to confirm data and statutory authority. Agencies also reviewed and verified the final data for their accounts. For the sequestration designation, GAO analyzed OMB data for fiscal years 2013 and 2015--the most recently completed years for which sequestration occurred and OMB identified designations when GAO began its work. GAO provided a draft of this report and the online dataset to the Director of OMB for review and comment. OMB staff provided technical comments, which GAO incorporated as appropriate. A total of $3.2 trillion in spending authority and permanent appropriations was reported in fiscal year 2015; an increase of 88 percent from fiscal year 1994 adjusted for inflation in fiscal year 2015 dollars. Fiscal year 1994 was the last year included in GAO's prior work. For the purposes of this report, spending authority and permanent appropriations is budget authority provided to agencies through laws other than annual appropriations acts or available permanently by law without further legislation. These authorities include permanent appropriations, contract authority, borrowing authority, offsetting collections, and monetary credits or bartering. Permanent appropriations were the primary driver of the increase in spending authority and permanent appropriations. Offsetting collections authority--which includes certain fees, fines, and penalties--also grew. Agencies reported no use of monetary credits or bartering. a Permanent appropriations fund federal entitlement programs, such as Medicare, administered by the Department of Health and Human Services (HHS), and the Social Security Administration's (SSA) Old-Age, Survivors, and Disability Insurance program. These programs are a significant proportion of reported budget authority in GAO's inventory of accounts in fiscal year 2015. These programs continue to show spending increases largely as a result of the aging population and rising health care costs and are projected to continue to increase in the future. In fiscal year 2015, 7 of the 10 accounts reporting the largest dollar amounts of spending authority and permanent appropriations funded entitlement programs. Three agencies comprised three quarters of the total government-wide spending authority and permanent appropriations in fiscal year 2015. HHS reported the largest amount of spending authority and permanent appropriations with $979 billion, or about 30 percent--mainly from Medicare. HHS overtook SSA and reported the highest dollar amounts of permanent appropriations for the first time in fiscal year 2006. SSA reported $920 billion, or about 28 percent of total spending authority and permanent appropriations--mainly from its Old-Age and Survivor's Insurance program and the Disability Insurance program. The Department of the Treasury reported the third largest amount--$542 billion, or about 17 percent--the majority of which is for interest on debt held by the public and intragovernmental debt. This interest dropped as a percentage of permanent appropriations since fiscal year 1994, due to lower interest rates that allow the government to borrow money more cheaply. However, interest rates are predicted to rise in the long term, which would increase the net interest costs on the debt. The second largest reported budget authority type was offsetting collections--a total of $421 billion in fiscal year 2015, more than double the fiscal year 1994 amount, adjusted for inflation. The Postal Service reported the largest use of offsetting collections authority in fiscal year 2015 in its Postal Service Fund, which includes revenue from mail services. Sequestration--cancellation of budgetary resources under a presidential order--is a process established in statute which helps to enforce spending limits and thereby control the deficit. In fiscal year 2015, 57 percent of spending authority and permanent appropriations authorities were exempt from sequestration, up from 37 percent in fiscal year 1994. This means that fewer of these authorities were subject to this budgetary enforcement mechanism in fiscal year 2015.