OMB COST ESTIMATE
FOR PAY-AS-YOU-GO CALCULATIONS

Report No: 567
Date: 01/25/2002

1. LAW NUMBER: P.L.107-107 (S. 1438)
2. BILL TITLE: National Defense Authorization Act for Fiscal Year 2002
3. BILL PURPOSE: (1) Authorizes FY 2002 appropriations for Department of Defense programs; (2) authorizes a military pay raise and other military benefits; (3) provides for a round of base closures and realignment in 2005; (4) authorizes the closure of the Navy live-fire training facility in Vieques, Puerto Rico; (5) authorizes FY 2002 appropriations for Department of Energy national security programs; and (6) makes other modifications to national security and related programs.

 

4. OMB ESTIMATE: P.L. 107-107 contains many provisions that increase or decrease direct spending. The increases in direct spending include new funding for radiation exposure compensation related to the government's nuclear weapons program, increased occupational illness compensation for civilian employees of the Department of Energy, and increased veterans' education benefits. The decreases in direct spending include lower health care benefit payments for certain military retirees and new sales proceeds from selling naval vessels and materials in the National Defense Stockpile.

	(Fiscal years; in millions of dollars)
	2001	2002	2003	2004	2005	2006
Net costs....................................	0	86	-234	-208	-253	-274

 

5. CBO ESTIMATE:

	(Fiscal years; in millions of dollars)
	2001	2002	2003	2004	2005	2006
Net costs....................................	0	146	-221	156	92	103

 

6. EXPLANATION OF DIFFERENCES BETWEEN OMB AND CBO ESTIMATES:

CBO scores pay-as-you-go costs of $276 million over the 2002 through 2006 period, while OMB scores savings of $883 million. The difference is largely due to different scoring for the provisions decreasing health care benefit payments for certain military retirees. CBO assumes that under current law, the Department of Defense would have implemented the regulations required by these provisions in 2004, and therefore, scores the reduced spending as savings only in 2003. OMB scores the reduced spending in every year after 2003, because these regulations were not assumed in its baseline.

7. CUMULATIVE EFFECT OF DIRECT SPENDING AND REVENUE LEGISLATION ENACTED TO DATE:

	(Fiscal years; in millions of dollars)
	2001	2002	2003	2004	2005	2006
Outlay effect..............	5,503	18,465	23,822	23,530	22,819	8,215
Receipt effect............	-69,768	-34,950	-84,843	-104,138	-105,314	-123,755
Net costs....................	75,271	53,415	108,665	127,668	128,133	131,970