Statement on Signing the Supplemental Appropriations Act, 1987

July 11, 1987

I have signed into law H.R. 1827, which provides supplemental appropriations for fiscal year 1987. It includes essential funding for assistance to the Central American democracies, for high-priority defense requirements, and for military assistance to the Philippines. It also provides needed funding for the Commodity Credit Corporation, the Internal Revenue Service, the Immigration and Naturalization Service, veterans benefits, and a number of other domestic programs.

Before presenting this bill for my signature, the Congress deleted restrictive language that would have limited my authority to test and deploy nuclear weapons, and would have required mandatory compliance with the unratified SALT II agreement. These provisions would have undercut our national security and our negotiating leverage with the Soviets. Had they remained, the bill would have been vetoed.

While I am pleased that this bill includes funding for essential programs and that certain objectionable provisions affecting our national security were deleted, several other aspects of H.R. 1827 require comment.

Section 505 of this bill contains a restriction on the use of funds that is designed to prevent the Secretary of Transportation and the Maritime Administration from adopting rules on the subject of Construction Differential Subsidy (CDS) repayment. I have signed this bill into law based on the understanding that because this restriction on their authority is not retroactive, it will have no effect on vessel owners who previously repaid their subsidies pursuant to a CDS repayment rule published in the Federal Register on June 22, 1987. Instead, this provision of section 505 will affect only further repayments by vessel owners. Were it otherwise, a restriction on rulemaking in this area could cost the taxpayers more than $100 million in payments to vessel owners who have previously repaid their subsidies.

Another restriction on the use of funds in section 505 raises serious constitutional questions. It is designed to prevent the Secretary of Transportation and the Maritime Administrator from participating ``in any judicial action with respect to the repayment of construction differential subsidy for the permanent release of vessels from the restriction in section 506 of the Merchant Marine Act, 1936, as amended.'' The prohibition is subject to the proviso that ``funds may be used to the extent such expenditure relates to a rule which conforms to statutory standards hereafter enacted by Congress.''

As is clear from the proviso lifting the restriction, if and when the Congress alters the existing statutory scheme, this portion of section 505 represents an attempt by the Congress to use a spending limitation as an indirect means of regulating the Executive's interpretation and enforcement of the law, while leaving the law itself substantively unchanged.

Article II of the Constitution assigns responsibility for executing the law to the President. While the Congress is empowered to enact new or different laws, it may not indirectly interpret and implement existing laws, which is an essential function allocated by the Constitution to the executive branch. If the Congress disagrees with a statutory interpretation advanced by the executive branch -- or with the efforts of the executive branch to defend or prosecute judicial action based on that interpretation -- the Congress may, of course, amend the underlying statute. The use of an appropriations bill for this purpose, however, is inconsistent with the constitutional scheme of separation of powers.

Accordingly, I believe it is my constitutional responsibility to interpret this spending restriction in section 505 consistently with the President's power and duty to take care that the laws be faithfully executed -- a power and duty that of necessity include responding to any judicial challenge to past or future actions of the Department of Transportation.

This bill also includes a provision that could permit Rural Electrification Administration borrowers to prepay outstanding Federal Financing Bank loans without paying the premium due under their loan agreement. This could result in a loss of about $2 billion in forgiven premiums. This new subsidy must be considered in light of the more than $50 billion in life-of-loan subsidies that Rural Electrification Administration borrowers will receive on loan advances made since 1973. This provision could have serious adverse effects on the operation of the Federal Financing Bank. As a result, this provision must be interpreted consistently with other provisions of law requiring the Secretary of the Treasury to protect the integrity of the Federal Financing Bank.

H.R. 1827 is a prime example of how not to legislate on budgetary matters. As has been the case with other omnibus appropriations bills that have been presented for my signature, H.R. 1827 presented a choice between many expensive, undesirable, and unnecessary provisions on the one hand, or a shutdown of important government programs on the other. For example, without this bill, funding for loans to farmers would be cut off just as it is needed for summer crops. Yet, to avoid a critical disruption in this program, I must sign away $1.7 billion in unrequested funding for other entirely unrelated programs.

In accordance with my commitment to reduce spending to meet Gramm-Rudman-Hollings deficit reduction targets, I submitted to the Congress a request for supplemental appropriations that were more than offset by proposed spending reductions. The Congress, however, rejected virtually all of these proposed spending reductions, and as a result H.R. 1827 provides $6.67 billion more budget authority than I requested. It misses the goal of deficit-neutrality by more than $6.4 billion.

Note: H.R. 1827, approved July 11, was assigned Public Law No. 100 - 71.