Preparatory to passing the recent budget legislation for fiscal 1995/96, Congress passed--and the President signed--the Contract with America Advancement Act, H.R. 3136, containing four sections.

The first section raised the Federal debt limit from $4.9 trillion to $5.5 trillion. This increase provides authority for the government to run further into the red well into fiscal year 1997. Senate Finance Committee Chairperson Roth (R-Del) noted that of the 33 times the debt limit has been raised since 1980, this is the third largest increase. The largest was part of the ill-fated (for President Bush) 1990 budget deal and the second was part of the 1993 budget arrangement worked out by President Clinton.

The second part of the bill introduces the line-item veto. This gives the President the same power over spending enjoyed by 43 governors. Under the law, the President has 10 days to veto or rescind any appropriation; spending measure; targeted, revenue-losing tax benefits affecting 100 or fewer persons; or tax-law-related transition rules affecting 10 or fewer persons. Congress then has 30 days to attempt a two-thirds majority override of the veto or recision.

The third part of the Contract With America Advancement Act provides for more rapid acceleration of the Social Security earnings limit. Currently, the income limit, above which payments to Social Security recipients are reduced, is scheduled to grow from the current $11,520 to $14,400 by 2002. The bill steps up the earnings limit to $30,000 in 2002.

The final part of the law enacts regulatory reform for small business. This part of the law permits court review of regulator compliance with the Regulatory Flexibility Act. The bill also applies to the IRS. The bill requires the IRS to issue "plain English" compliance guides. Finally, Congress reserves the power to reverse Treasury regulations. *