The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
SPECIAL
ANALYSES
BUDGET OF THE UNITED STATES
FISCAL YEAR 1 9 7 1
SPECIAL
ANALYSES
BUDGET OF THE UNITED STATES
FISCAL YEAR 1 9 7 1
FOREWORD
This volume of Special Analyses contains facts and figures on various
features of the recommendations transmitted by the President in
The Budget of the United States Government, 1971. The purpose of this
volume is to present special analytical information about significant
aspects of Government activities. This complements the detailed
financial and program information which is contained in the Budget
Appendix.
Part 1 provides analyses and tabulations which cover Government
finances and operations as a whole, and reflect the ways in which
Government finances affect the economy.
Part 2 furnishes Government-wide program and financial information in six social program areas—education, manpower, health,
income security, crime reduction, and housing.
Part S discusses trends and developments in selected areas of
Government activity—aid to State and local governments, public
works, and research and development.
Part 4 presents the budgets of a number of the larger agencies in
terms of the program categories used for program planning and
evaluation in each agency.
GENERAL NOTES
1. All years referred to are fiscal years, unless otherwise noted.
2. Detail in the tables, text, and charts of this volume may not
add to the totals because of rounding.
U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 1970
For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C. 20402 - Price $1.50
TABLE OF CONTENTS
Page
PARTI. ECONOMIC AND FINANCIAL ANALYSES
A.
B.
C.
D.
E.
F.
G.
H.
5
Federal transactions in the national income accounts
Funds in the budget
.
Borrowing and investments
Investment, operating, and other budget outlays
Federal credit programs
Principal Federal statistical programs
Balances of budget authority
Civilian employment in the executive branch
'
I9
2^
2r
6->
8'
89
99
PART 2. FEDERAL SOCIAL PROGRAMS
I.
J.
K.
L.
M.
N.
10?
Federal education programs
Federal manpower programs
_
Federal health programs..
Federal income security programs
Federal programs for the reduction of crime
Federal housing programs
_
111
130
147
172
194
206
PART 3. SPECIAL ASPECTS OF FEDERAL PROGRAMS
0 . Federal aid to State and local governments
P. Federal public works activities
Q. Federal research, development, and related programs
PART 4. ANALYTIC PROGRAM STRUCTURE
R. Selected agency budgets by program categories
217
219
236
255
267
269
_
3
PART 1
ECONOMIC AND FINANCIAL
ANALYSES
INTRODUCTION
Part 1 provides analyses and tabulations which cover Government
finances and operations as a whole, and reflect the ways in which Government finances affect the economy. These special analyses encompass those designated A through H.
Special Analysis A presents the Federal budget estimates in terms
of the national income accounts. It is designed to explain the relationships of the unified budget of the Federal Government to the national
income accounts, which constitute the most widely used measure
of aggregate economic activity in the United States.
Special Analysis B classifies budget information by the groups of
funds (Federal and trust) which comprise the budget. It also presents
aggregate data on the gross receipts and outlays of all funds.
Special Analysis C summarizes current developments and trends in
borrowing and in investments in U.S. Government securities made
by the Treasury Department and other Federal agencies. It includes
information on the potential impact of Government and Governmentsponsored programs on the capital market.
Special Analysis D analyzes budget outlays in terms of the duration
and nature of the benefits derived, distinguishing those of an investment or developmental type from those which primarily yield current
benefits. Apart from this analysis and the distribution between the
loan account and the expenditure account, the U.S. budget, unlike
those of some other governments, includes outlays which are for
"capital" or investment type activities in the same accounts in which
"current" activities and costs are shown.
Special Analysis E covers Federal credit aids—direct loans and
insurance or guarantee of private loans. It includes all transactions in
the loan account, and also the credit transactions which are in the
expenditure account.
Special Analysis F reflects the year-to-year level of activity under
the principal programs of the Federal Government for collecting
current statistics, and current spending for periodic statistics obtained
in census-type surveys usually conducted every 5 or 10 years.
Special Analysis 6 analyzes the unobligated and obligated balances
of budget authority for Federal and trust funds carried forward at
the end of each fiscal year.
Special Analysis H deals with the levels of civilian employment in
the executive branch. It also contains figures on total Federal personnel (including military personnel).
SPECIAL ANALYSIS A
FEDERAL TRANSACTIONS IN THE NATIONAL INCOME ACCOUNTS
The budget is designed to serve many purposes:
• To serve the broadest national objectives, it proposes an allocation
of resources between the private and public sectors, and within the
public sector;
• It is an economic document that embodies the taxing and spending
policies of the Government for promoting growth of the national
economy, high employment, price stability, and strengthening of
the Nation's balance-of-payments position;
• It sets forth the President's requests to Congress for appropriation
action on existing or new programs, and changes in tax legislation;
and
• It is a report to the Congress and the people on how the Government
has spent the funds entrusted to it in past years.
No single budget concept can completely satisfy all purposes. The
budget document and related Treasury reports are designed to provide complete, detailed information on the finances of the Federal
Government. For those concerned with aggregate economic activity
in the country, however, the national income accounts (NIA) of the
United States are the most widely used measures—and interest is
focused heavily on the Federal sector of these accounts.
This analysis is designed to explain the relationships of the budget
to the Federal sector of the national income accounts, and to translate the budget estimates into national income terms. It is divided
into two major sections: (1) the size and trend.s of major components in the Federal sector; and (2) the relationship between the Federal sector and the budget.
FEDERAL SECTOR RECEIPTS AND EXPENDITURES
Total receipts in the Federal sector of the NIA are estimated to
rise by $3.6 billion between 1970 and 1971, reaching a total of $205.4
billion in 1971. Expenditures are expected to rise by $5.7 billion,
amounting to $203.8 billion in 1971, and resulting in a surplus of
$1.6 billion.
Trends in Federal sector receipts.—The largest receipts category
by far is personal tax and nontax receipts. The principal component of
this group is individual income taxes, but it also includes estate and
gift taxes, fines, fees, and gifts. This has been the largest category since
World War II, fluctuating between 38% to 47% of total Federal
sector receipts.
Changes in personal tax receipts depend mainly on changes in personal incomes and on individual income tax rates. Such receipts rose
from 7.7% of personal income in 1950 to 12.7% in 1954 as a result of
tax increases to finance the Korean war. From 1955 through 1968, they
ranged between 9.9% and 10.9% of personal income, but rose in 1969,
because of the income tax surcharge, to reach 12.6% of personal
income—the second highest proportion since 1948. As a result of the
reduction in the surcharge in the first half of 1970 and its expiration at
8
THE BUDGET FOR FISCAL YEAR
1971
Table A-1. FEDERAL RECEIPTS AND EXPENDITURES IN THE NATIONAL
INCOME ACCOUNTS (in billions of dollars)
Description
1970
estimate
1971
estimate
90.5
40.0
18.6
43.6
95.5
38.8
19.1
48.3
93.6
38.4
20.5
52.9
192.7
201.8
205.4
101.1
(78.9)
(22.2)
50.3
(48.2)
(2.2)
18.9
12.3
4.1
100.8
(77.9)
(22.8)
56.9
(54.7)
(2.2)
22.4
13.6
4.5
96.9
(72.1)
(24.5)
65.0
(62.8)
(2.2)
24.8
13.3
4.1
186.7
198.1
203.8
+6.0
+3.6
+1.6
1969
actual
RECEIPTS
Personal tax and nontax receipts
Corporate profits tax accruals
Indirect business tax and nontax accruals
Contributions for social insurance
Total receipts
EXPENDITURES
Purchases of goods and services
_
Defense
_
Nondefense
_
__
Transfer payments
Domestic ("to persons")
Foreign
Grants-in-aid to State and local governments
Net interest paid
___
Subsidies less current surplus of Government enterprises
Total expenditures
Surplus ( + ) or deficit ( - )
the end of June 1970, total personal income tax receipts will rise only
slightly and will decline relative to personal income in both 1970 and
1971. The reduction in personal income tax rates for most taxpayers,
under the recent tax reform bill, is expected to reduce the relative proportion even further in future years.
During the period 1944 through 1966, corporate profits tax accruals
constituted the second largest receipt category, supplying, on
balance, about half as much revenue as personal taxes. This category
differs from what the budget shows as corporation income taxes because of two factors: (1) the budget records cash receipts while the
Federal sector records corporations' tax liabilities, and (2) deposits of
earnings of the Federal Reserve System are included in NIA corporate
profits while the budget treats these as miscellaneous receipts.
Over the past two decades corporate profits tax accruals have
fluctuated widely as a percent of corporate profits. In the 1952-54
period they averaged more than 5 1 % of corporate profits; from 1955
through 1967 they ranged from 34% to 50%, averaging less than 39%
for the period as a whole. The income tax surcharge raised 1968 corporate taxes to more than 45% of corporate profits. While the expiration
of the surcharge at the end of June 1970 will reduce these taxes, the
repeal of the investment tax credit and certain other provisions of the
recent tax reform bill will offset part of the reduction.
Indirect business tax and nontax accruals consist primarily of excise
taxes, customs duties, and Federal receipts on rents and royalties.
Over the past 20 years, this category has decreased in importance as a
source of revenues. For the period 1946 through 1950, they provided
about 19% of total Federal sector receipts; from 1951 through 1965
SPECIAL ANALYSES
they averaged only 14% of total Federal sector receipts; while from
1966 through 1969 they were less than 11%.
While excise taxes in general have become less important as a source
of receipts, those that are levied as user charges are an increasing part
of the total. The principal example of this is the highway trust fund,
which currently accounts for about one-fourth of indirect business
taxes. The proposed aviation user charges will also add receipts to this
category.
Contributions for social insurance constitute the final category of
receipts. As the table below indicates, these are becoming an increasingly important portion of Federal sector receipts.
Table A-2. SOCIAL INSURANCE CONTRIBUTIONS, PERSONAL INCOME,
AND TOTAL FEDERAL SECTOR RECEIPTS, SELECTED YEARS
(dollar amounts in billions)
Fiscal year
Personal
income 1
1946
1951
1956
1961
1966
1969
1970 estimate.
1971 estimate.
172
243
323
406
564
718
775
NA
Total
Federal
sector
receipts
38.4
60.8
75.8
95.3
132.8
192.7
201.8
205.4
Contributions for
social
insurance
5.8
6.6
10.2
18.1
28.5
43.6
48.3
52.9
Contributions as
percent df—
Personal
income
2.4
2.7
3.2
4.5
5.1
6.1
6.2
NA
Total
Federal
sector
15.1
10.9
13.5
19.0
20.4
22.6
23.9
25.8
1
Average of seasonally adjusted quarters.
NA=Not available.
In 1967, social insurance contributions exceeded corporate profits
tax accruals, and thus became the second largest category of Federal
sector receipts. As table A-3 shows, there are three main growth areas
in the social insurance group: Old-age, survivors, and disability
insurance (OASDI), civil service retirement, and the health insurance
trust funds.
Growth of OASDI receipts results from larger numbers of insured
taxpayers, higher rates of taxation, and a rising tax base. The civil
service retirement fund is financed by employer and employee
contributions. The hospital and supplementary medical insurance
funds are relatively new, but are characterized by rapid growth,
because of both expansion of coverage and higher rates. These higher
rates are required because of the particularly rapid growth in utilization and costs in this area. The general fund makes contributions to
both of these funds, but such contributions are not classified as social
insurance contributions.
There is some growth under the other retirement and disability
category, which is mainly railroad retirement receipts, while the
veterans insurance contributions (mainly the National Service Life
Insurance fund) are quite stable. The remaining category—unemployment insurance—declined from a high of $4.1 billion in 1963 to
the current level of $3.4 billion. These receipts finance the benefit
10
THE BUDGET FOR FISCAL YEAR 1 9 7 1
payments and administrative costs under the Federal-State unemployment insurance program.
Table A-3. COMPOSITION OF CONTRIBUTIONS FOR SOCIAL INSURANCE
(in billions of dollars)
Retirement and disability
Fiscal year
I960
1961
1962
1963
1964
1965
1966
1967
1968
1969
l970estimate____
1971 estimate____
Total
social
insurance
Old-age,
survivors,
and
disability
insurance
16.7
18.1
19.9
22.1
23.5
24.6
28.5
35.8
38.0
43.6
48.3
52.9
11.2
12.2
13.5
14.8
16.5
17.3
20.3
25.0
26.4
30.5
34.3
36.8
Civil
service
r etirement
1.5
1.7
1.8
1.9
2.1
2.2
2.3
2.5
2.7
2.9
3.3
3.5
Other i
0.7
.6
.7
.7
.7
.7
.8
.8
.9
.9
1.0
1.1
Hospital
and
supplementary
medical
insurance
0.9
3.3
4.2
5.5
5.8
7.6
Unemployment
insurance
(includes
RRUI)
2.8
3.0
3.3
4.1
3.8
3.8
3.8
3.7
3.3
3.4
3.4
3.4
Veterans
life insurance
0.5
.6
.6
.6
.6
.6
.6
.5
.5
.5
.5
.5
i Mainly railroad retirement.
Trends in Federal sector expenditures.—Federal sector expenditures, like receipts, are divided into several major groupings, depending
upon the nature of the transaction. The primary division is between
purchases of goods and services (chiefly for defense) and all other
transactions. Purchases represent that portion of the Nation's output
that is bought directly by the Federal Government; the other categories consist primarily of transfers of income to other groups which,
in turn, can be used to finance the purchase of goods and services. As
the accompanying chart illustrates, there have been significant shifts
in the relative size of the various Federal sector expenditure components over the past two decades.
The chart shows the trend of Federal sector expenditures as a
percent of gross national product (GNP). Since our population continues to grow, some increase in the demand for governmental services
would be expected. In addition, price and cost increases have led to
higher expenditures. The comparison of Federal sector expenditures
with GNP provides a reasonable adjustment for these factors. Table
A-7 provides the basic data used in the chart.
Defense purchases of goods and services.—This is the largest single
component of Federal sector outlays, including most of the expenditures of the Department of Defense, the military assistance program, the Atomic Energy Commission, and other defense-related
activities. Defense purchases have fluctuated widely in the past
three decades, varying with the state of international tensions. At the
peak of World War II, they constituted over 40% of GNP—yet in
4 years they dropped to less than 4% of the total. The Korean war
raised defense purchases to 13%% of GNP in 1953, with subsequent
declines during most of the following 13 years. The Vietnam war in
11
SPECIAL ANALYSES
Federal Sector Expenditures Relative to Gross National Product
Ptretnt
25-
1951
1953
Fiscal Yean
1955
1957
(959
1961
(963
1965
1967
(969
Estimate
1967 and 1968 increased the proportion of GNP going to defense
purchases, but this proportion dropped in 1969 and the decline is
expected to continue through 1971.
Nondefense purchases of goods and services.—This category covers
the goods and services consumed by Federal civilian operations
including such programs as maintenance of national forest, park, and
recreation areas; space exploration; promotion of commerce; construction of flood control and navigation projects; operation of the
Federal airway system; a wide variety of medical and other scientific
research; Federal law enforcement activities; and maintenance of
veterans hospitals.
Nondefense purchases varied considerably as a proportion of GNP
during the decade from 1951 through 1960; they rose from 1.6% of
GNP in 1960 to 2.4% in 1964, largely as a result of expansion of
12
THE BUDGET FOR FISCAL YEAR 197.1
purchases to finance the space program. Since that time nondefense
purchases have been a very stable proportion of GNP.
Domestic transfer payments.—This is the largest category of Federal
sector expenditures that affect the distribution of national income
without constituting a direct Federal consumption of resources. Spending in these programs has expanded rapidly largely because of a higher
number of beneficiaries and higher benefit payments under the social
insurance programs. Around two-thirds of the payments are for retirement and disability, with the Old-Age and Survivors Insurance fund
(OASI) constituting nearly 70% of retirement and disability payments
and around one-half of all domestic transfer payments. Other major
components of this category are civil service retirement, railroad
retirement, disability insurance, and military retired pay. The growth
in these programs in 1970 and 1971 is due partly to liberalized benefits
and expanded coverage, and particularly to the increases enacted in
the most recent session of Congress.
Table A-4. DOMESTIC TRANSFER PAYMENTS (in billions of dollars)
Fiscal year
1960
1961
1962
1963
1964
1965
1966
1967....
1968...
1969
1970 estimate.
1971 estimate.
Total
20.6
23.6
25.1
26.4
27.3
28.3
31.8
37.3
42.4
48.2
54.7
62.8
Retirement and
disability
13.1
14.4
16.4
18.0
19.1
20.2
23.9
25.3
27.9
31.8
35.7
40.4
Hospital
and supplementary
medical
insurance
3.2
5.1
6.3
7.2
8.4
Veterans
insurance
and
benefits
Unemployment
benefits
4.4
4.6
4.6
4.7
4.6
4.7
4.7
5.3
5.5
6.1
6.8
7.0
2.7
4.2
3.6
3.1
2.9
2.5
2.1
2.1
2.2
2.3
3.0
3.4
All other
0.3
.4
.5
.5
.6
.8
1.1
1.3
1.6
1.7
2.1
3.5
The second largest group of domestic transfer payments is for medical care under the hospital and supplementary medical insurance
programs. There were no benefit payments under these programs prior
to the introduction of Medicare in 1967, but by 1971, they are expected
to reach $8.4 billion. A much older, but less rapidly expanding, group
of transfer payments is veterans benefits. The principal growth since
1968 is due to enactment of educational benefits for veterans serving
since the Korean war.
Unemployment benefits constitute another major category of domestic transfer payments. Changes in the level of these payments are
determined primarily by changes in the level of insured unemployment. In 1971, these outlays are expected to rise to $3.4 billion, but
as table A-4 shows, this is still lower than in 1961 despite the substantially larger labor force.
Current Federal efforts to reduce deprivation and malnutrition
have resulted in two significant growth items—the proposed welfare
reform program and the food stamp program. Traditional Federal
Government outlays for welfare have taken the form of grants-in-aid
13
SPECIAL ANALYSES
to States. The proposed welfare reform will result in substantially
increased Federal outlays in the near term. Some of these outlays will
be direct Federal transfer payments to individuals—amounting to
$0.5 billion starting in 1971—while the bulk of the funds will still be
classified as grants-in-aid. Similarly, the food stamp program is being
expanded rapidly. In 1967, food stamps provided $0.1 billion of domestic transfers; by 1971, they are expected to total $1.2 billion.
Grants-in-aid.—This group of outlays is composed of many programs designed either to assist State and local governments to provide
public services or else to assist their financing of benefit programs for
needy people. The largest expenditures in this category are for public
assistance, Medicaid, and vocational rehabilitation. As table A-5
shows, spending for these programs rose from $2.1 billion in 1960 to
$5.6 billion in 1968 and an estimated $8.0 billion in 1970. In 1971
these grants are expected to total $9.1 billion.
Table A-5. FEDERAL G R A N T S - I N - A I D (in billions of dollars)
Fiscal year
Total
Public
assistance
and
Education
Community
I960
1961
_
1962
.- .
1963 . . . . -_ .
1964
1965
1966
„.
1967
1968
1969
1970 estimate.
1971 estimate
1
6.8
6.9
7.6
8.4
9.8
10.9
12.7
14.8
17.6
18.9
22.4
24.8
2.1
2.2
2.5
2.8
3.0
3.2
3.7
4.4
5.6
6.6
8.0
9.1
Other
housing
rehabilitation 1
0.7
.8
.9
.9
1.0
1.4
2.4
3.5
4.2
4.2
4.3
4.6
3.0
2.6
2.8
3.0
3.7
4.1
4.0
4.0
4.3
4.4
4.7
4.8
0.1
.1
.2
.2
1.0
1.1
1.2
1.4
.2
1.8
.4
.4
.6
.6
.7
1.6
1.9
2.0
2.1
2.3
2.9
3.0
3.8
4.4
I
1
Includes Medicaic^.
A second type of grant is for education and manpower. The three
largest categories of education grants are for elementary and secondary
education (which are focused heavily on economically deprived areas),
higher education, and Federal aid to impacted areas (for school
districts with children of Federal civilian or military personnel).
Emphasis is being given by the Government to improve the delivery
of educational services and the use of manpower training programs as
instruments for moving people from welfare rolls to productive
employment.
Transportation has been a major component of grant outlays since
the mid-1950's. The highway trust fund has been highly successful
in developing a nationwide system of roads that is unsurpassed in the
world. While progress toward completion of this system is continuing,
the basic focus of expansion in the transportation field is now concentrated in two other areas: aviation and urban mass transit. The vast
expansion of air travel in recent years has greatly strained the capacity
of our national airport and airway system. The Government is vigor
14
THE BUDGET FOR FISCAL YEAR 1971
ously pursuing a planned increase in outlays for aviation—including
significant grants for airport construction. These outlays aie to be
financed by user charges rather than by the general taxpayer.
The community development and housing area is receiving increasing
assistance from Federal grants. While the vast majority of urban
construction is provided and financed privately, there are key public
facilities such as water systems, waste treatment plants, slum clearance, open space and recreation facilities, that have received and are
receiving large infusions of Federal money.
Another notable expansion of grant expenditures is for crime prevention. This program provides funds for a wide range of improvements in local law enforcement and criminal justice activities.
A more detailed analysis of grants-in-aid programs is presented in
Special Analysis O of this budget. The definitions of grants are not
the same for that analysis as they are for the NIA, but most of the
programs are common to both. The principal differences between the
Special Analysis O and the NIA grants are: (1) Special Analysis O
includes some outlays (mainly for food stamps, the Office of Economic
Opportunity, and hospital construction) that the NIA treats as
transfer payments; (2) Special Analysis O excludes payments for
research, while the NIA includes research payments to public universities as grants; and (3) Special Analysis O includes aid in kind,
while the NIA grants are only cash payments.
Other Federal sector expenditures,—Three categories—net interest
paid, foreign transfer payments, and subsidies less current surplus of
Government-sponsored enterprises—complete the Federal sector expenditures. The principal growth in recent years is for net interest
paid. This growth has been caused in part by a larger outstanding
debt, but primarily by higher interest rates.
Foreign transfer payments are mainly of three types—expenditure
of dollars to assist economic development programs, grants of foreign
currencies that are earned from sale of surplus agricultural products,
and payments to individuals living abroad for social security and
similar programs. Although payments to individuals are gradually
rising (roughly proportionate with the rise in GNP), total foreign
transfer payments have been stable (and a declining proportion of
GNP) for many years.
Subsidies less current surplus of Government enterprises consists of
two elements that are consolidated for statistical reasons: (a) Subsidy payments to resident businesses; and (b) the "current surplus"
or "deficit" of Government enterprises.
(a) A subsidy is a monetary grant to a unit engaged in commercial
activities (mainly businesses and farms). Examples of subsidies are
Government payments to farmers for land retirement, payments to
air carriers, and the operating differential subsidy of the Maritime
Administration.
(b) Government enterprise is the term applied to those functions
of the Government (usually appearing in the budget as public enterprise revolving funds) for which operating costs are to a great extent
covered by the sale of goods and services to the public, as distinguished
from those financed by tax receipts. Government enterprises conduct operations that are of a business-type nature. The difference
between their sales and current operating expenses constitutes the
15
SPECIAL ANALYSES
surplus or deficit of Government enterprises. The largest of these
enterprises are the Commodity Credit Corporation (CCC), the Post
Office, and the Tennessee Valley Authority.
RELATIONSHIP OF THE BUDGET TO THE FEDERAL SECTOR OF THE
NATIONAL INCOME ACCOUNTS
Conceptually, the national income accounts include all the Nation's
current income and production activities, and do not measure transactions—such as loans—that represent an exchange of assets rather
than income or production. Loan transactions have a significant economic impact, affecting both income and output, but they are best
analyzed as part of credit rather than fiscal policy. Special Analysis
C (Borrowing and Investment) and Special Analysis E (Federal Credit
Programs) are both designed to facilitate a study of the financial
market implications of the budget.
Budget outlays are divided into two major segments—the expenditure account and the loan account. All transactions included in the
loan account are excluded from the Federal sector, so this discussion
focuses exclusively on how the Federal budget expenditure account
relates to the Federal sector account.
Table A-6 shows the major differences between the budget and the
Federal sector estimates. These differences are explained in the following paragraphs.
Table A-6. RELATIONSHIP OF THE BUDGET TO THE FEDERAL SECTOR,
NIA (in billions of dollars)
Description
1969
1970
1971
RECEIPTS
Total budget receipts
Government contribution for employee retirement (grossing)
_
____
Other netting and grossing
_
Adjustment to accruals
Other
Federal sector, NIA receipts
187.8
199.4
202.1
21
1.3
1.7
-.2
2.4
1.4
-.9
-.4
2.6
1.4
-.5
-.2
192.7
201.8
205.4
184.6
197.9
200.8
-1.5
-1.0
-2.9
-1.8
— 7
-1.9
2.1
1.3
.7
-.3
.9
2.4
1.4
1.7
-.3
-.2
2.6
1.4
1.3
-.2
.5
186.7
198.1
203.8
EXPENDITURES
Total budget outlays
Loan account
Financial transactions in the expenditure account
Government contribution for employee retirement (grossing')
_
Other netting and grossing
- Defense timing adjustment
-Dollar expenditures tofinanceagricultural exports
Other
-_
Federal sector, NIA expenditures
Lending and financial transactions.—The loan account in the budget
includes only those domestic credit transactions where there are def
16
THE BUDGET FOR FISCAL YEAR 1971
inite requirements for full repayment of the loans, plus all foreign
loans made on commercial terms. Credit programs that do not meet
these requirements are included in the expenditure account. The
Federal sector, however, excludes not only all lending transactions
included in the loan account, but also some financial transactions
included as expenditures in the budget—such as foreign loans of the
Agency for International Development, and tobacco and foreign
loans in the Commodity Credit Corporation (CCC). Certain credit
transactions in the expenditure account—like most CCC nonrecourse
commodity loans—are treated as purchases of goods under the national
income accounts concept.
Government contribution for employee retirement.—The Civil Service
and Foreign Service Retirement programs are financed by employer
and employee contributions. Retirement benefits under these programs are recorded as expenditures in the budget and as transfer
payments in the Federal sector accounts. The contributions of Government agencies, as employers, to these retirement trust funds are
deducted from total budget expenditures since these contributions
represent intragovernmental transactions. However, the NIA considers Government payments for employee retirement to be part of
the compensation paid to Government employees who, in turn, make
their trust fund contributions. Therefore, the Federal sector includes
the Government's contributions to employee retirement funds in
both receipts and expenditures. Likewise, contributions by the Government on behalf of its employees who are covered by the old-agje,
survivors, disability, and health insurance programs are included in
Federal sector receipts and expenditures. These adjustments affect
total receipts and expenditures equally and thus do not alter either
the budget or Federal sector surplus or deficit.
Other netting and grossing.—The budget normally counts as receipts
only income from taxation or revenues due to the exercise of governmental power to compel payment. Money received in the course of
business-type transactions, therefore, are normally shown as offsets
against expenditures. For instance, receipts from two major insurance
programs operated by the Veterans Administration (National Service
Life Insurance and U.S. Government Life Insurance) are netted
against expenditures in the budget since these programs are voluntary,
commercial-type activities. However, in the NIA, the receipts are
treated in the same way as receipts from compulsory Government insurance programs. These adjustments also affect total receipts and
expenditures equally and thus do not alter either the budget or Federal
sector surplus or deficit.
Timing adjustments.—The budget records receipts at the time the
cash is collected regardless of when the income is earned; expenditures (except interest) are generally recorded at the time the checks are
issued. The NIA attempts to record most receipts in the time period
in which the income is earned rather than when taxes are actually paid.
For instance, corporate income taxes in the NIA are recorded as taxes
when the profits are earned (accrued) regardless of when the cash is
received by the Treasury.
The principal timing adjustment on the expenditures side is for
defense purchases. Procurement items (such as ships or airplanes) are
17
SPECIAL ANALYSES
recorded in the Federal sector as defense purchases at the time of
delivery to the Federal Government rather than when they are fabricated or when they are paid for; work in process is counted as part of
private business inventories until the articles are completed and
delivered to the Government. Both the budget and the Federal sector
record public debt interest when it accrues.
Dollar expenditures to finance agricultural exports.—The Commodity
Credit Corporation facilitates the export of agricultural products by
accepting foreign currencies in payment for such commodities.
This expendituie of dollars is included in the budget but excluded
from the Federal sector on the ground that it is an exchange of financial
assets: Dollars for foreign currencies. When the foreign currencies thus
acquired are spent, they are then counted as Federal sector
expenditures.
Other.—This category includes some miscellaneous adjustments,
largely for certain specialized aspects of the national income accounts,
such as purchase and sale of land, which are included in the budget
but not in the national income accounts. Certain nondefense timing
adjustments are included here because of the difficulty in separating
them from other adjustment categories. It also includes adjustments
for the expenditure of foreign currency acquired as described in the
preceding paragraph.
The following tables provide additional basic data relevant to the
Federal sector.
Table A-7. GNP AND FEDERAL SECTOR EXPENDITURES AS A PERCENT
OF GNP (in bUIions of dollars)
Federal sector expenditures as a percent of GNP
Fiscal year
1951
1952
1953
1954
1955
1956
1597
1958
1959
I960
1961
1962
1963_
1964
1965
__ .
_ .
.-_.-
1966
._
1967
1968
1969
1970 estimate
http://fraser.stlouisfed.org/
390-700 O—70
Federal Reserve Bank of St. Louis
Total
GNP
(in billions of
dollars)
Total
expenditures
Defense
Nondefense
310.5
337.2
358.9
362.1
378.6
14.4
19.6
21.1
20.5
17.8
7.0
12.4
13.6
12.6
10.2
1.1
1.4
2.0
2.1
1.4
2.6
2.5
2.6
2.9
3.2
0.8
.7
.8
.8
.8
2.9
2.5
2.2
2.1
2.2
409.4
431.3
440.3
469.1
495.2
17.0
17.6
18.9
19.4
18.4
9.6
9.8
10.2
9.9
9.1
1.5
1.2
1.3
1.8
1.6
3.1
3.3
4.0
4.2
4.2
.8
.9
.1
.3
.4
2.1
2.3
2.2
2.2
2.2
506.5
542.1
573.4
612.2
654.2
19.3
19.6
19.4
19.1
18.1
9.2
9.3
8.8
8.3
7.5
1.7
1.9
2.3
2.4
2.4
4.7
4.6
4.6
4.5
4.3
.4
.4
.5
.6
.7
2.4
2.4
2.3
2.3
2.3
721.2
768.8
828.0
900.6
960.0
18.3
20.1
7.5
8.8
9.1
8.8
8.1
2.4
2.3
2.4
2.5
2.4
4.4
4.8
5.1
5.3
5.7
.8
9
U
U
\J.3
2.2
2.2
2.1
2.1
2.1
20.8
20.7
20.6
Purchases
Domestic
Grantstransfer
in-aid
payments
AH
other
Table A-8. FEDERAL TRANSACTIONS IN THE NATIONAL INCOME ACCOUNTS, 1960-1971 (in billions of dollars) 1
Actual
Description
Esti mate
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
42.5
22.3
13.2
16.7
43.6
20.3
13.3
18.1
47.3
22.9
14.2
19.9
49.6
23.5
15.0
22.1
50.7
25.7
15.6
23.5
51.3
27.7
16.9
24.6
57.6
31.0
15.7
28.5
64.4
31.1
16.1
35.8
71.3
34.3
17.2
38.0
90.5
40.0
18.6
43.6
95.5
38.8
19.1
48.3
93.6
38.4
20.5
52.9
94.8
95.3
104.2
110.2
115.5
120.5
132.8
147.3
160.9
192.7
201.8
205.4
101.1
(78.9)
(22.2)
50.3
(48.2)
(2.2)
18.9
12.3
96.6
100.8
(77.9) (72.1)
(22.8) (24.5)
56.9
65.0
(54.7) (62.8)
(2.2) (2.2)
22.4
24.8
13.6
13.3
RECEIPTS, NATIONAL INCOME BASIS
Personal taxes and nontaxes
Corporate profits tax accruals
Indirect business tax and nontax accruals
Contributions for social insurance
-_
Total receipts, national income basis
EXPENDITURES, NATIONAL INCOME BASIS
Purchases of goods and services
Defense
Nondefense
_ __
_
Transfer Davments
Domestic ("to persons")
Foreign
_
Grants-in-aid to State and local governments
Net interest paid
Subsidies less current surplus of Government enterprises
71.7
64.4
55.5
63.4
95.3
85.3
52.7
60.9
65.7
(45.0) (46.7) (50.5) (50.4) (50.9) (48.9) (54.4) (67.7) 75.8
(8.9) (10.4) (13.0) (14.7) (15.5) (17.3) (17.6) 19.5
39.4
27.2
44.5
34.2
30.5
25.6
28.5
29.5
(20.6) (23.6) (25.1) (26.4) (27.3) (28.3) (31.8) (37.3) (42.4)
(1.8) (2.1) (2.1) (2.1) (2.2) (2.2) (2.3) (2.2) (2.1)
14.8
7.6
17.6
12.7
10.9
6.9
8.4
9.8
__ __
6.8
&f
__
Total expenditures, national income basis _ _
Excess of receipts ( + ) or expenditures (—), national income basis.
1
7.0
2.3
6.8
3.2
6.8
3.8
7.5
3.6
8.1
3.8
8.5
4.1
9.0
4.5
9.9
5.1
10.8
4.1
91.3
98.0
106.4
111.4
116.9
118.5
131.9
154.6
172.4
+3.5
-2.7
-2.1
-1.2
-1.4
+2.0
+.9
- 7 . 2 -11.5
4.1
186.7
4.5
4.1
198.1
203.8
+6.0 +3.6 +1.6
A reproduction of table 18, part 5, of the Budget Document.
Source.—Actual data for 1960-69 are based on the estimates prepared by the Department of Commerce. Data for 1970 and 1971 are based on estimates by the Bureau
of the Budget in cooperation with the Department of Commerce.
SPECIAL ANALYSIS B
FUNDS IN THE BUDGET
This analysis classifies budget information by the groups of funds
which comprise the budget. It also presents information on the gross
receipts and expenditures of all funds in the aggregate.
BREAKDOWN OF TOTALS, BY FUND GROUPS
Table B-l shows the breakdown of total budget receipts and outlays between the Federal funds and the trust funds. The two groups
together, after deducting for transactions that flow between them,
make up the budget totals.
Table B-l. BUDGET RECEIPTS AND OUTLAYS, BY FUND GROUP
(in millions of dollars)
Description
1969
actual
1970
estimate
1971
estimate
RECEIPTS
Federal funds:
Total in fund accounts
_
Interfund transactions
Proprietary receipts from the public
Receipts, Federal funds
Trust funds:
Total in fund accounts _.
Interfund transactions..
._
Proprietary receipts from the public
Receipts, trust funds
_
_
Intragovernmental transactions
_
Total budget receipts
146,211
-644
-2,238
152,647
-827
-2,241
152,250
-1,064
-3,586
143,329
149,579
147,600
54.237
-523
-1,705
60,422
-542
-1,739
66,385
-580
-1,698
52.009
58,141
64,107
-7,547
-8,335
-9,605
187,792
199,386
202,103
151.700
-644
-2,238
159,771
-827
-2,241
159,587
-1,064
-3,586
148,819
156,703
154,936
45,512
-523
-1,705
51.798
-542
-1,739
57,718
-580
-1,698
43,284
49,517
55,440
-7.547
-8,335
-9,605
184,556
197,885
200,771
3,236
1,501
1,331
OUTLAYS
Federal funds:
Total in fund accounts
Interfund transactions.
Proprietary receipts from the public
_
Outlays, Federal funds
Trust funds:
Total in fund accounts
Interfund transactions _
Proprietary receipts from the public
Outlays, trust funds
Intragovernmental transactions
Total budget outlays
Budget surplus
FEDERAL FUNDS
The Federal funds are those which the Government administers
as owner (as distinguished from those administered in a trustee or
19
20
THE BUDGET FOR FISCAL YEAR 197,1
fiduciary capacity). There are four subgroups of Federal funds—the
general fund, special funds, public enterprise funds, and intragovernmental revolving and management funds.
Table B-2. FEDERAL FUND RECEIPTS AND OUTLAYS (in millions of dollars)
Description
1969
actual
1970
estimate
1971
estimate
RECEIPTS BY SOURCE
Individual income taxes..
Corporation income taxes
Excise taxes
Estate and gift taxes. _
Customs duties
_ _ _
Miscellaneous receipts
_
_
__
_
Total receipts Federal funds
87,249
36,678
10,585
3,491
2,319
3,008
92,200
37,000
10,872
3,500
2,260
3,747
91,000
35,000
12,059
3,600
2,260
3,681
143,329
149,579
147,600
276
108
31
340
124
39
367
130
45
1,781
1.813
1,269
8,342
857
77,875
1,252
15,382
1,558
816
1.700
1,841
1.327
8.419
1,078
76,504
1,257
17.324
2,776
1,168
1,640
1,285
1,284
7,952
1,015
71,190
1,400
19,867
3,317
902
515
690
920
422
743
811
1,749
OUTLAYS BY AGENCY
Legislative Branch
The Judiciary
Executive Office of the President
Funds appropriated to the President:
Economic assistance
Economic opportunity
Other
_
Agriculture
Commerce
Defense—Military
Defense—Civil
Health, Education, and Welfare
Housing and Urban Development - _
Interior
Justice
____
_
Labor
Post Office
State
Transportation
._
Treasury
Atomic Energy Commission
General Services Administration
National Aeronautics and Space Administration
Veterans Administration
Other independent agencies.
Allowances for:
Revenue sharing
Civilian and military pay increases
Contingencies
-.
.-
-
1,820
17,013
2,450
985
430
382
454
2,208
19.193
2.461
2,618
19,154
2,411
1,247
28
424
454
4,248
7.459
1.496
3.886
8,402
2,495
3,400
8,197
2,591
175
300
1.400
275
900
Total outlays Federal funds
148,819
156,703
154,936
Excess of outlays (—)
-5,489
-7,124
-7,337
Note.—Excludes extraordinary outlays or credits (—) relating to purchase and redemption of
securities of enterprises converted in 1969 from mixed-ownership to private corporations, as follows:
1969, $22 million; 1970, — $18 million. Excludes charges resulting from reclassification in 1970 of
certificates of interest issued by the Commodity Credit Corporation, $1,583 million. Also excludes
transfers to the Federal National Mortgage Association in 1969, $75 million.
Receipts and outlays.—The receipts of the general and special funds
in 1971 are estimated at $148 billion, as presented in table B-2.
Outlays of all the Federal funds, are estimated at $155 billion,
distributed as shown. The proprietary receipts of the general fund
21
SPECIAL ANALYSES
and special funds, the interfund receipts, and the receipts of the public
enterprise funds and the intragovernmental funds, have all been offset
in arriving at the outlays for each agency.
Obligations.—The obligations (net) for Federal funds are estimated
at $163.1 billion for 1971, as set forth in table B-3. These transactions
largely flow from the budget authority of $163.4 billion for the year,
although in p>art the obligations were authorized by prior years'
budget authority.
Table B-3. OBLIGATIONS INCURRED, NET, IN FEDERAL FUNDS
(in millions of dollars)
1969
actual
1970
estimate
1971
estimate
BY AGENCY
Legislative Branch
_
_
The Judiciary
_
Executive Office of the President
Funds appropriated to the President
Agriculture
Commerce
___
_
Defense—Military
Defense—Civil
Health, Education, and Welfare
Housing and Urban Development
Interior
_
Justice
_.
Labor
Post Office
State.
Transportation
Treasury
_
Atomic Energy Commission
General Services Administration _
National Aeronautics and Space Administration.
Veterans Administration
_.
Other independent agencies
Allowances for:
Revenue sharing
<
__
Civilian and military pay increases
Contingencies
Total.
292
108
31
4,676
9,644
963
76,755
1,216
15,876
1,796
1,011
533
713
1,114
411
1,922
16,939
2,603
347
4,040
7,574
1.277
149,841
344
125
39
5,101
7,441
1,116
77,422
1,225
17,264
385
130
46
4,569
7,916
1.149
71,708
1,523
4,305
20,095
3.899
392
4,045
8,408
4,034
8,277
7,052
1,661
838
1,075
1,405
439
2,364
19,131
2,621
1.533
1.124
1,852
667
474
2,801
19.071
2.363
194
3,351
175
500
275
1,400
1.200
161,469
163,058
Balances of prior authority.—Table B-4 shows the balances of
budget authority carried forward in Federal funds at the end of each
fiscal year. To the extent that valid Government obligations have been
incurred and remain unpaid, amounts sufficient to pay them may be
carried over into the next year. Unobligated balances may be carried
forward in accordance with specific provisions of law, usually in
order to permit completion of projects as contemplated at the time
the appropriations were first made, but also to provide funding for
activities of a continuing nature (such as business-type enterprises)
or for standby emergency purposes (such as1 backup for insurance of
the Federal Deposit Insurance Corporation).
1
For a more detailed review of balances, see Special Analysis C, Balances of Budget Authority.
22
THE BUDGET FOR FISCAL YEAR 197,1
Table B-4. FEDERAL FUND BALANCES OF BUDGET AUTHORITY
(in millions of dollars)
Start 1969
Obligated
Legislative Branch
26
The Judiciary
11
Executive Office of the President
_
Funds appropriated to the
President:
International financial institutions
1,226
Military assistance
1,371
Economic assistance:
3,671
Office of Economic Opportunity
982
Other
645
Agriculture
5,556
Commerce
1,087
Defense—Military
30,875
Defense—Civil
331
Health, Education, and Welfare
__. 7,766
Housing and Urban Development
__. 17,568
Interior
923
Justice
38
Labor
_.
466
Post Office
620
State
62
Transportation
686
101
Treasury
1,115
Atomic Energy Commission
General Services Administra208
tion
National Aeronautics and
1,614
Space Administration
699
Veterans Administration
3
Civil Service Commission
2,996
Export-Import Bank
Federal Deposit Insurance
Corporation
Federal Home Loan Bank
61
Board
1,313
Other independent agencies
Allowances for contingencies
TotaL
End 1971
End 1970
End 1969
Department or other unit
Unobligated
Obligated
Unobligated
46
32
11
52
*
Obligated
Unobligated
Obligated
Unobligated
54
12
41
6,427 1,585 6,633 1,834 6,839 2,254
1,280
5 1,299
5 1,346
703 3,211
576 2,923
418 3,052
6,839
5 1,007
1,182
663
112
838
5,890 1,304 5,864
125 1,357
1,223
30,415 10,314 30,933
243
388
264
5
425
1,829
145
8,848
11
422 8,261
223
8
111
2,566
251
14,805
233
1,075
5
615
167
6,865 1,783
1,184
226
29,501 14,893
296
278
959 8,099
12,562
461
32
332
21
18
796
10
385
36
12
707 8,033
49
464
17,490 13,533 9,070 13,228 9,708 12,148
590 2,241 3,548
385 1,610
1,117
41
39
290
37
151
55
346 1,184
349
363
471
735
84 1,247
961
51
803
3
2
74
13
54
45
783 1,381 3,407
814 1,199
1,043
-3
-7
140
12
137
115
1,380
1,428
1,268
68
235
168
21 1,514
380 1,405
331 1,564
817 1,481
896
1,984
809 1,691
5
4
4
3
4
3
2,687 2,818 2,569 3,562 1,174 5,052
1,674
4
3,000
3,000
380
130
355
3,000
324
3,000
3,697
52 3,990 -19 7,223 -29
2,096 1,288 1,677 1,483
975 1,591
500
200
7,350
550
72,024 54,961 172,688 54,548 77,022 49,099 82,541 51,065
*Less than $500 thousand.
» Deficiencies brought forward of $7 million at start of 1969 and $14 million at start of 1970 have
been offset against balances brought forward.
PUBLIC ENTERPRISE FUNDS
The public enterprise funds are a subgroup of Federal funds, and data
thereon are included on a net basis in tables B-2 through B-4. The
public enterprise funds carry on a cycle of business-type operations,
primarily with the public, on behalf of the Government. Some are
incorporated enterprises; others are unincorporated. The general fund
23
SPECIAL ANALYSES
usually supplies them with capital, although in a few cases they may
borrow from the public.
Receipts and outlays.—Receipts of public enterprise funds are estimated at $24,581 million in 1971, and gross outlays are planned to total
$31,411 million ftable B-5), resulting in net outlays of $6,830 million.
The Commodity Credit Corporation and the postal fund are the
largest enterprises, together accounting for slightly over half of the
business of this subgroup of funds.
Table B-5. PUBLIC ENTERPRISE FUND TRANSACTIONS (in
Gross outlays
Applicable receipts
Description
Funds appropriated to the President:
Economic assistance
Other
Agriculture:
Commodity Credit Corporation 1 .
Farmers Home Administration
Federal Crop Insurance Corporation
Commerce
- __
Defense:
Military
Civil (Panama Canal Company) .
Health, Education, and Welfare....
Housing and Urban Development:
College housing loan fund
Urban renewal fund
Low-rent public housing fund
Government National Mortgage
Association _ _
Federal Housing Administration-.
Other
_ _ _
Interior
Labor
Post Office.
_
Transportation
Treasury
._ _ _
General Services Administration
Veterans Administration
Other independent offices:
Export-Import Bank
Farm Credit Administration
Federal Home Loan Bank Board:
Federal Savings and Loan Insurance Corporation
Other
Small Business Administration.._
Tennessee Valley Authority
United
States
Information
Agency
Total...
Receipts from the public
Receipts from other accounts
million, of dollars)
1970
estimate
1971
estimate
935
460
925
297
873
174
5.110
3.560
8.247
1,817
9,485
2,601
8,809
2,811
48
155
51
121
55
166
52
130
51
91
10
167
23
14
174
38
15
182
39
23
159
122
28
177
141
22
188
157
139
315
278
147
419
144
448
612
422
341
887
630
372
1.468
1.069
294
1.530
1.068
1.652
1.684
63
1.360
59
1,533
58
1.652
1.819
102
1,654
123
1.790
130
49
284
47
345
49
348
92
280
131
341
112
345
6,353
24
*
*
701
6.686
28
2
2
744
7,857
29
2
2
1,074
7.273
168
*
*
799
7,933
184
2
1
845
8.238
306
2
2
705
1.596
96
1.738
4
1.953
4
1.842
4
2,339
4
2,148
4
362
20
317
430
222
521
345
512
166
23
353
554
74
19
416
617
68
521
602
736
44
*
*
*
*
20,600
22,758
28,997
32,229
1969
actual
1970
estimate
1971
estimate
104
235
195
269
167
316
3.918
1.549
5.789
2.283
47
184
24,581
1969
actual
28
508
979
31,411
(17.453) (19.837) (21.610)
(3.147) (2.921) (2.971)
•Less than $500 thousand.
1
Includes advances from foreign assistance and special export programs of $830 million in 1969,
$921 million in 1970. and $933 million in 1971.
24
THE BUDGET FOR FISCAL YEAR 1(97,1
TRUST FUNDS
The trust funds are administered in a fiduciary capacity by the
Government. They include one subgroup, trust revolving funds, which,
like the public enterprise funds, carry on a businesslike cycle of operations and are normally stated on a net basis (outlays less receipts).
Receipts and outlays.—Trust fund receipts are estimated at $64
billion in 1971, with outlays planned at $55 billion, as shown in
table B-6. The transactions of the Federal old age and survivors'
insurance fund are far larger than any other trust fund.
Table B-6. OUTLAYS AND RECEIPTS OF TRUST FUNDS (in millions of dollars)
Receipts
Outlays
Description
1970
1971
1969
1970
27,376
30,794
27,348
31,531
33,444
2,994
7,538
3,426
3,397
8,774
3,818
3,705
7,255
3,852
4,345
7,431
3,915
5,006
9,829
3,950
1,680
1,816
1,614
1,704
1,854
2,827
4,427
737
278
-454
3,226
4,395
955
754
273
-484
3,776
4,690
959
751
288
4,236
5,170
1,020
766
305
4,643
5,613
980
795
271
45,512
Subtotal
Interfund transactions
-523
Proprietary receipts from the public. -1,705
51,798
-542
-1,739
57,718
-580
-1,698
54,237
-523
-1,705
60,422
-542
-1,739
66,385
-580
-1,698
43,284
49,517
55,440
52,009
58,141
64,107
1969
Funds to which receipts are appropriated:
Federal old-age and survivors insurance trust fund._ __ __ _
24,690
Federal disability insurance trust
fund
2,613
Health insurance trust funds
6,598
Unemployment trust fund
2,792
Railroad employees retirement
funds
1,498
Federal employees retirement
funds
1,826
Highway trust fund
4,151
Foreign military sales trust fund _
1,062
Veterans life insurance funds
703
288
Other trust funds (nonrevolving) _
-708
Trust revolving funds (table B-7) __
Total
970
1971
estimate
Note.—Excludes extraordinary outlays or credits (—) relating to purchase and redemption of
securities of enterprises converted in 1969 from mixed-ownership to private corporations as follows:
1969, $450 million; 1970, - $ 3 5 0 million; 1971, —$100 million. Also, excludes the extraordinary
credits of the trust revolving funds for those enterprises noted in table B~7.
This group of funds reflects an excess of receipts of $8.6 or $8.7
billion each year, as follows (in millions of dollars):
1969 actual
Total receipts, trust funds,
Total outlays, trust funds
Excess of receipts, trust funds
1970 estimate
1971 estimate
52,009
43,284
58,141
49,517
64,107
55,440
8,725
8,624
8,667
25
SPECIAL ANALYSES
The activities of the trust revolving fund subgroup are shown in
table B-7. Several of these, representing mixed-ownership corporations, were eliminated from the scope of this fund group, when the
enterprises became privately owned during the past fiscal year.
Table B-7. T R U S T REVOLVING F U N D TRANSACTIONS (in millions of dollars)
Gross outlays
Applicable receipts
Description
1970
estimate
1969
actual
1971
estimate
1969
actual
Federal intermediate credit banks *_
Banks for cooperatives1
Federal National Mortgage Association l
Civil Service Commission (employees' life insurance and health
benefits)
Federal Deposit Insurance Corporation
__
All other trust revolving funds
3,620
1,049
3,289
1,170
435
418
Total trust revolving funds. _
Receipts from the public
Receipts from other accounts
1970
estimate
1971
estimate
1,229
1,384
1,206
1,388
1,542
367
383
404
54
50
46
105
115
126
106
152
159
6,784
1,885
2,072
6,076
1,431
1,589
(6,207)
(577)
(1,278)
(607)
(1.441)
(631)
1,038
1
Excludes extraordinary receipts in 1969 resulting from the conversion of the three mixed-ownership
enterprises to private corporations, $10,352 million. Also excludes, in 1969, transfers received by the
Federal National Mortgage Association from Federal funds, prior to the conversion, $75 million.
Balances of the trust funds.—The balances of the trust funds continue to increase, as snown in the following end-of-year figures (in
millions of dollars):
Open book balances
Investments in U.S. securities:
Public debt
Agency debt
Total
1968 actual
1969 actual
4,355
3,884
1970 estimate
4,369
1971 estimate
4,861
___
71,982
2,438
80,403
2,293
89,194
1,991
97,743
1,868
_.._
7SJ74
86,580
95,555
104,472
The breakdown of the balances by fund is disclosed in table B-8.
The amounts include both open book balances with Treasury and
investments in U.S. securities. Part of the balances is obligated, part
is unobligated. The balances on an authorization basis exceed the
cash balances because for a few accounts budget authority is not the
same as receipts; these differences are listed in the note appended to
the table.
For 1971, as in many recent years, the largest net investments are
expected to be those of the trust funds established by the Social
Security Act as amended.
26
THE BUDGET FOR FISCAL YEAR 1971
Table B-8. T R U S T FUND BALANCES (in millions of dollars)
As of June 30
Description
Federal old-age and survivors insurance trust fund__.
Federal disability insurance trust fund
Health insurance trust funds
Unemployment trust fund
Railroad retirement accounts
Federal employees retirement funds
Highway trust fund
Foreign military sales trust fund
Veterans life insurance funds
Other trust funds (nonrevolving)
Trust revolving funds
Total
1968
actual
1969
1970
1971
25,548
2,587
1,737
532
4,768
28,119
3,659
2,353
12,566
4,633
20,491
1,521
605
7,092
534
5,008
32,341
5,010
2,287
13,100
4,719
21,969
2,224
655
7,188
600
5,461
35,011
6,640
3,342
13,228
4,799
23,407
3,406
680
7,229
784
5,945
78,774
86,580
95,555
104,472
11,618
4,551
18,631
982
709
7,111
Note.—The balances shown here cover the amounts on deposit with Treasury, and the U.S. securities held. In addition, certain funds have authority to obligate in advance of receiving moneys, and
to borrow from the public. The reconciliation is as follows:
1971
1970
1968
1969
Balance available on an authorization basis
96,572
98, 337 107,535 116,316
Unfinanced contract authorizations:
Highway trust fund
—9,945 -11,258 -12,314 -13,429
-160
-225
Right-of-way revolving fund
-100
Foreign military sales trust fund
—2, 187
-2,037 -1,867 -1,737
-2
-14
Other
-22
Undrawn authorizations to borrow:
Federal National Mortgage Association
—2,862
Banks for Cooperatives
—970
Federal Intermediate Credit Banks
-2,970
Unappropriated receipts:
21
Available as needed, on an indefinite basis
21
66
23
Available for appropriation by Congress:
114
112
108
110
Soldiers' Home permanent fund
Highway trust fund
3, 406
978
1,513
2, 223
Retained as permanent endowment
6
6
6
6
Balance available on a cash basis
78,774
86,580
95,555
104,472
FLOW OF GOVERNMENT-ADMINISTERED FUNDS
Although the main budget figures offset certain receipts in arriving
at the outlays, it is possible to reconstruct the data to reflect the gross
receipts and outlays, without offsets. Table B-9 presents such a
statement. It differs from the unified, comprehensive budget only
with respect to grossing and netting, and the distribution here of the
nonfunctional adjustments to outlays shown in other tables. The
items which are grossed here, but treated as offsets elsewhere, are
as follows (in millions of dollars):
1969
actual
Receipts regularly offset in individual accounts:
Receipts of public enterprise funds (tableB-5)
Receipts of trust revolving funds (tableB-7)
Reimbursements to other appropriations and funds:
Department of Defense—Military
Other agencies:
Sale or redemption of non-Federal securities (trust funds)
Other
Receipts offset for the budget by agency and function (table 12)
Total
_
1970
tstimatt
1971
estimate
17,453 19,837 21,610
6,207 1,278
1,441
2,376
2,466
2.498
645
729
4,192
795
4,211
927
5,538
31,602 28,587 32,014
27
SPECIAL ANALYSES
Table B-9. GROSS FLOW OF GOVERNMENT-ADMINISTERED FUNDS
(in millions of dollars)
Description
1969
actual
1970
estimate
1971
estimate
RECEIPTS BY SOURCE
Individual income taxes
Corporation income taxes
Social insurance taxes and contributions:
Employment taxes and contributions
Unemployment insurance
Contributions for other insurance and retirement...
Excise taxes
Estate and gift taxes
Customs duties
Other receipts from the public:
General and special funds
Public enterprise funds
Trust funds (excluding trust revolving funds)
Trust revolving funds
Reimbursements to appropriations and other funds _
Total receipts from the public _
87,249
36,678
92,200
37,000
91,000
35,000
34,236
3,328
2,353
15,222
3,491
2,319
38,914
3,340
2,551
15.940
3,500
2,260
42,842
3,335
2,931
17.520
3,600
2,260
5,387
17,453
1,720
6,207
3,750
6,132
19,837
1,760
1,278
3,261
7,435
21,610
1,717
1,441
3,426
219,393
227,973
234,117
85,451
5,708
4,275
15,467
3,958
83,917
6,289
3,923
13,288
4,354
14,859
5,938
7,035
12,270
37,720
8,761
12,976
1,738
16,726
5,870
7,735
13,985
43,415
9,813
14,350
2,331
78,636
6,019
3.421
12,929
5,144
17,351
6,031
8,337
15,807
49,966
9,995
13,827
2,749
175
300
275
1,400
900
PAYMENTS BY FUNCTION
National defense
International affairs and finance
Space research and technology
Agriculture and rural development
Natural resources
Commerce and transportation
Community development and housing
Education and manpower
Health.
Income security
__
Veterans benefits and services
Interest
General government
Allowances for:
Revenue sharing-,
_
Civilian and military pay increases
Contingencies
Total payments to the public.
Excess of receipts
__.
_.
-.
216,157
226,472
3,236
1*501
SPECIAL ANALYSIS C
BORROWING AND INVESTMENTS
The major fiscal responsibilities of the Federal Government include
not only the disbursement of cash and the collection of revenues
necessary to finance the day-to-day operations of Government programs, but also:
• The borrowing of additional cash to meet requirements not covered
by current revenues and to refinance maturing obligations;
• The management and investment of funds not currently required
by trust and other accounts for outlays; and
• The provision of advice and assistance, including, in many cases,
Government guarantees, for borrowing by certain non-Federal
borrowers.
This analysis summarizes current developments and trends in
borrowings and in investments in U.S. Government securities made
by the Treasury Department and other Federal agencies. It also
includes discussion of the statutory limitations on the Federal debt,
and summarizes current and expected developments in borrowing by
Government-sponsored enterprises and in Government-guaranteed
debt issued by non-Federal borrowers. All of these are significant
factors in determining the impact on financial markets of the Federal
programs contained in the 1971 budget.
BORROWING FROM AND REPAYMENT TO THE PUBLIC
One measure of the impact of Federal fiscal policies on the economy
and on financial markets is the volume of net Government borrowing
Table C-1. NET CHANGES IN FEDERAL BORROWING (in millions of dollars)
1968
actual
Gross Federal debt:
Public debt (issued by Treasury)
Agency debt (issued by agencies)
Total gross Federal debt 2
Less debt held by Government agencies:
Public debt
Agency debt
Net Federal borrowing from the public.
1969
actual l
1970
1971
estimate1 estimate
Outstanding
end 1971
estimate
22,476
5,944
7,526
856
9,232
-3,232
8,170
-402
370,297
12,206
28,420
8,382
6,000
7,769
382,503
4,329
991
8,888
537
8,975
-391
9,112
-143
102,902
2,318
23,100
-1,044
-2,583
-1,200
277,283
1
The data are adjusted to exclude changes in debt and investment resulting from conversion in
1969 of three former mixed ownership enterprises to private ownership and from reclassification in
1970 of certificates of interest issued by the Commodity Credit Corporation. For details see footnotes
in tables C— 3 and C— 4.
3
Excludes debt held by International Monetary Fund.
28
29
SPECIAL ANALYSES
(or repayment of borrowing) from the public. Borrowing within the
Federal Government itself—mainly borrowing from trust funds—
only indirectly affects the financial markets.
The budget surpluses achieved in 1969 and projected for 1970 and
1971 enable the Government to make net repayments on the total
debt held by the public. These repayments make funds available that
help meet heavy demands for funds from other sources—thus reducing
pressures on financial markets. This situation contrasts to that in
1968 when net Government borrowing from the public absorbed $23.1
billion.
SIZE AND GROWTH OF FEDERAL
DEBT
Federal debt has risen gradually over most of the past two decades—
much more slowly than debt of other major borrowers. During the
15-year period ended on June 30, 1969, gross Federal debt rose by
about 35%, and the portion owned by the public rose by about 25%.
This compares with increases of 280% in State and local government
debt, 240% in corporate debt, and 265% in personal debt. Consequently, net new borrowing by the Federal Government has become
a relatively smaller factor in financial markets.
In recent years, however, an increasing portion of the Federal
securities sold has been in relatively short maturities. The present
4#% statutory ceiling on interest rates payable on marketable issues
with maturities exceeding 7 years is substantially below long-term
market levels. As a result, no new direct Treasury obligations with
longer maturities have been issued since January 1965. This has
tended to concentrate Federal borrowing in the short end of the market
and to increase both the gross dollar volume and the number of offerings each year. Since 1965, the average length of the Treasury marketTable C-2. COMPARISON OF TRENDS IN FEDERAL DEBT, INTEREST AND
GROSS NATIONAL PRODUCT (in billions of dollars)
Fiscal year
1954
1955..
1956
..
1957
1958
1959_.
196O._
1961.
1962
1963
1964
1965
1966__
1967
1968_
1969
1970
_ _
.
.._„
Gross
Federal
debt—end
of year 1
Debt held
by public
—end of
year
270.8
274.4
272.8
272.4
279.7
287.8
290.9
292.9
303.3
310.8
316.8
323.2
329.5
341.4
369.8
367.1
374.7
224.5
226.6
222.2
219.4
226.4
235.0
237.2
238.6
248.4
254.4
257.6
261.6
264.7
267.5
290.6
279.5
278.5
Interest
on debt
held by
public
5.2
5.2
5.6
6.0
6.4
6.5
8.1
7.9
8.0
8.8
9.4
10.0
10.6
11.8
12.8
14.3
15.6
GNP
for
year
362
379
409
431
440
469
495
506
542
573
612
654
721
766
823
901
959
Debt held
by public
as percent
of GNP
62.0
59.8
54.3
50.9
51.5
50.1
47.9
47.2
45.8
44.4
42.1
40.0
36.7
34.9
35.3
31.0
29.0
Interest
as percent of
GNP
1.4
.4
.4
.4
.5
.4
.6
.6
.5
.5
.5
.5
.5
.5
.6
1.6
1.6
1
Excludes special notes issued to International Monetary Fund and international lending
agencies.
30
THE BUDGET FOR FISCAL YEAR 1971
able debt has declined from over 5 years to less than 4 years, and the
amount of debt that needs refunding each year now exceeds $100
billion.
In the aggregate, Federal debt held by the public has risen much
more slowly than the increase in the gross national product. The
publicly held Federal debt outstanding at the end of 1954 amounted
to 62% of the gross national product during the year. By the close of
1969, the comparable ratio had fallen to 3 1 % (see table C-2).
From a budgetary standpoint, changes in the net interest cost of
the debt held by the public are more significant than changes in the
total amount of debt. As the result of the general increase in interest
rates in recent years, the amount of interest payable on both new
cash borrowings and refundings has increased substantially. Between
1959 and 1969, net interest paid to the public on the Federal debt
more than doubled (increasing from $6.5 billion to $14.3 billion),
while the interest-bearing debt was up by only 20%. In that period,
the rise in interest costs roughly kept pace with the growth in the
gross national product. In 1959, net interest paid to the public was
about 1.4% of the gross national product, compared with 1.6% in
1969.
BORROWING BY FEDERAL AGENCIES
Certain business-type activities of Federal agencies are wholly
or largely financed by borrowing. In most cases, the funds these
agencies require are borrowed from the Treasury. They affect Federal
debt indirectly, when the Treasury borrows to finance the agencies'
outlays. Outstanding agency debt to the Treasury on June 30, 1969,
totaled $28.1 billion.
Some Government agencies are authorized to issue their own debt
instruments to the public or to other Government agencies and funds.
Such agency borrowing is part of the Federal debt, as the term is
used in the summary tables of the budget. Since the disbursement
of such borrowed money represents a budget outlay, the authorization
to borrow likewise represents budget authority.
Net changes in outstanding agency debt (other than debt owed to
the Treasury) are shown by agency in table C-3. For both 1970 and
1971, agency debt repayments will exceed their new borrowing by
$3.2 billion and $0.4 billion, respectively. Of these amounts, net
repayments of borrowing from the public will account for $2.8 billion
and $0.3 billion, respectively.
31
SPECIAL ANALYSES
Table C-3. AGENCY BORROWING * (in millions of dollars)
Increase or decrease (—)
Description
1969
actual
Borrowing from the public:
Agriculture:
Commodity Credit Corporation 2
Farmers Home Administration
Defense
Health, Education, and Welfare...
Housing and Urban Development:
College housing loans
___
Public facility l o a n s - - . - - .
Federal Housing Administration
.--?--Government National Mortgage Association _
Federal National Mortgage Association 3
Veterans Administration
Export-Import Bank
Farm Credit Administration:
Banks for cooperatives 3
Federal intermediate credit banks 3-_
Small Business Administration
_.
Tennessee Valley Authority
All other
Undistributed4
Total borrowing from the public.
Borrowing from other funds:
Agriculture2
Defense
__
_
Health, Education, and Welfare
Housing and Urban Development:
College housing loans
Public facility loans
Federal Housing A Jministration
Government National Mortgage Association.
Federal National Mortgage Association3
Veterans Administration
_
Farm Credit Administration:
3
Banks for cooperatives
Federal intermediate credit banks 3
Small Business Administration
Tennessee Valley Authority
__
Undistributed4Total borrowing from other fundsTotal agency borrowing*
-28
-74
6
1970
estimate
-1,583
-286
-71
-3
1971
estimate
-89
-79
-I
Outstanding
end 1971
estimate
357
1,456
127
-107
-4
-21
-145
-65
1,289
106
574
1,197
-101
-706
-75
-354
1,309
1,412
-164
351
*
-58
440
5
1,455
14
319
-2,841
-259
9,889
69
-14
6
-118
-15
-1
-45
278
227
78
236
*
13
49
-72
105
-55
94
5
63
36
-42
-2
-6
-56
-5
-1
-6
-33
723
44
99
-24
-10
366
-64
-63
-29
100
-391
-143
2,318
-3,232
-402
12,206
339
-2
55
-48
221
80
215
-291
-158
139
*
-9
-1
29
593
-36
-15
-1
401
* Less than $500 thousand.
1
Excludes agency borrowing from Treasury.
changes in agency debt prior to conversion, and exclude following net changes in agency debt
resulting from conversion to private ownership (in millions):
From
From other
public
funds
Total
Federal National Mortgage Association
_
-5,528
-508
-6,036
Banks for cooperatives..
—1,390
—1,390
Federal intermediate credit banks
_
-3,432
-149
-3,581
Total
-10,350
-657
-11,006
* Adjustment between two sections of the table is to offset other figures for the changes in agency
debt held as instruments by mixed-ownership enterprises at time of conversion to private ownership
(see footnote 1 to table C-4).
32
THE BUDGET FOR FISCAL YEAR 1971
More than half of the agency debt of $12.2 billion estimated to
be outstanding on June 30, 1971, will consist of $7.1 billion in certificates of participation in pools of loans issued in prior years by the
Government National Mortgage Association, as trustee on behalf of
the Departments of Agriculture, Health, Education, and Welfare, and
Housing and Urban Development, the Veterans Administration, and
the Small Business Administration. No further issuance of such
certificates of participation is currently planned for 1970. Of the
$1,315 million in certificates maturing in 1971, an estimated $893
million will be refunded and the remaining $422 million retired.
Other major types of agency debt include portfolio certificates and
debentures sold by the Export-Import Bank, family housing mortgages
issued by the Department of Defense and the Coast Guard, revenue
bonds by the Tennessee Valley Authority, and debentures by the
Federal Housing Administration (in payment of some of the insurance
claims arising from Federal mortgage insurance). The only significant
increases in agency borrowing from the public are $0.4 billion by
TVA in both 1970 and 1971.
Two other types of agency borrowing transactions are included
in the 1969 and 1970 columns of table C-3. During 1969, three major
groups of Government-sponsored credit agencies completed conversion to private ownership and were reclassified as private agencies.
The outstanding debt of these agencies at the time of conversion
totaled $11,006 million. These are discussed in more detail in the
section dealing with borrowing by Government-sponsored agencies.1
In addition, as of July 1, 1969, certificates of interest of the Commodity
Credit Corporation totaling $1,590 million, which were formerly
treated as sales of guaranteed loans, were reclassified as agency borrowing. The issuance of such certificates was suspended in August 1969
and liquidation of outstanding certificates is expected to be completed in 1970.
AGENCY INVESTMENTS IN FEDERAL SECURITIES
Trust funds and some public enterprise funds accumulate cash in
excess of current requirements in order to meet possible future claims
and demands. Such temporary cash surpluses are usually invested in
public debt or agency debt securities. These investments, in turn, are
"cashed" as the money is needed for disbursement. Neither purchases
nor redemptions of these securities are counted in budget outlays
or receipts.
As table C-4 indicates, net investments by Government agencies
and trust funds in Government securities are estimated to total $8.6
billion in 1970 and $9.0 billion in 1971. The total investments of
Government agencies and trust funds will reach an estimated $105.2
billion by June 30, 1971. This means that they will hold about
27% of the gross Federal debt. Four major trust funds—the Federal
Old-Age and Survivors Fund, the Civil Service Retirement and Disability Fund, the Unemployment Trust Fund, and the National Service Life Insurance Fund—account for three-quarters of these holdings.
i See pp. 35-36.
SPECIAL
33
ANALYSES
Table C-4. AGENCY INVESTMENTS IN FEDERAL
(in millions of dollars)
SECURITIES
Increase or decrease (—)
Description
1969
Investment in public debt (issued by Treasury):
Health, Education, and Welfare:
Federal old-age and survivors ins. trust fund...
Federal disability insurance trust fund
Federal supplementary medical ins. trust fund..
Federal hospital insurance trust fund
Housing and Urban Development:
Federal Housing Administration
_
Government National Mortgage Association
Other
Labor: Unemployment trust fund
Transportation: Highway trust fund
Treasury: Exchange Stabilization Fund
Veterans Administration:
Trust funds___
_
Other
_
Civil Service Commission: Trust funds
Farm Credit Administration: Trust funds1
Federal Deposit Insurance Corp.: Trust fund
Federal Home Loan Bank Board: FSLIC
Railroad Retirement Board: Trust funds
All other.
Total investments in public debt
Investment in agency debt:
Health. Education, and Welfare:
Federal old-age and survivors ins. trust fund...
Federal disability insurance trust fund
_..
Federal hospital insurance trust fund
Housing and Urban Development:
Federal Housing Administration.
Government National Mortgage Association 2__.
Labor: Unemployment trust fund
Treasury: Exchange Stabilization Fund
Veterans Administration: Trust funds
Civil Service Commission: Trust funds
Farm Credit Administration: Trust fund
_.
Federal Home Loan Bank Board: FSLIC...
_
Railroad Retirement Board: Trust funds
All other.
_
.
Total investments in agency debt
Total agency investments in Federal securities _
1970
1971
Holdings
end 1971
estimate
2,765
1.151
77
631
3.823
1.304
-308
250
3.628
1,595
174
-379
32.959
6.256
224
1.761
167
501
29
1.174
534
-724
208
-241
21
554
707
-23
247
126
7
263
1.182
1.310
893
60
13.052
3.402
-137
63
1.972
17.
313
216
131
8
212
59
1.630
51
57
1.575
6.858
480
23.676
337
154
275
15
360
121
98
8
4.850
2.391
4.599
130
8.888
8,975
9.112
102.902
220
-10
-15
-20
-10
625
85
70
-3
105
-100
-25
175
90
29
71
-10
-5
-6
-78
-65
-6
-8
-73
69
157
127
-105
-15
-10
-10
365
485
-80
-8
-20
-6
160
110
65
537
-391
-143
2,318
9.425
8.583
8.969
105.220
1
Transactions for 1969 include only changes in investments prior to conversion to private ownership and exclude following changes resulting from such conversion:
Farm Credit Administration:
Banks for cooperatives
Federal intermediate credit banks
Treasury
Agency
—51
—160
—23
—13
deht
deht
Tolal
—74
—173
Total
-211
-36
-247
Transactions of other funds exclude disinvestments of debt of the former mixed-ownership corporations, after conversion to private ownership, as follows: 1969, $185 million; 1970, $368 million; and
1971. $100 million.
* Transactions for 1970 include disinvestment of $7 million of CCC certificates of interest, reclassified as debt as of July 1, 1969.
390-700 O—70
3
34
THE BUDGET FOR FISCAL YEAR
1971
LIMITATIONS ON FEDERAL DEBT
Since enactment of the Second Liberty Bond Act in 1917, a general
statutory limitation has been placed on the amount of certain types of
Federal debt that can be outstanding at any one time. The limit
currently applies to a special definition of the debt, consisting of:
• All public debt issued by the Treasury since September 1917,
whether held by the Government or the public;
• Agency debt in the form of participation certificates issued during
1968 under the Participation Sales Act of 1966; and
• Other debt issued by Federal agencies which, according to explicit
statutes, is fully guaranteed as to principal and interest by the
United States.
The statutory limit based on this definition is $377 billion for the
period beginning April 7, 1969, and ending on June 30, 1970. This
includes a temporary increase of $12 billion, which expires on June 30,
1970, after which the permanent limit of $365 billion becomes effective.
The actual and estimated debt subject to this definition outstanding
on June 30, 1968, 1969, 1970, and 1971, compared with the Federal
debt held by the public and the gross Federal debt on the same dates,
are shown in table C-5.
Table C-5. DEBT SUBJECT TO GENERAL STATUTORY LIMITATION
(in millions of dollars)
1971
estimate
1968
actual
1969
actual
1970
estimate
Federal debt held by the public
Add: Federal securities held by Government agencies.
290,629
79.140
279,483
87,661
278,483
96,251
277,283
105,220
Gross Federal debt
369,769
367,144
374,734
382,503
654
636
430
425
1,951
2,571
525
4,650
5,888
5,007
1,863
2,472
728
5,350
1,777
1.767
1,015
4,888
1,683
1,412
1,455
5,601
9
9
9
14
Total Federal debt not subject to limitation.
21,255
11,058
9,886
10,590
Federal debt subject to statutory limitation
___
Add:
District of Columbia Stadium bonds
Special notes held by International Monetary
Fund
348,514
356,087
364,848
371,913
20
20
20
20
2.209
825
825
825
350.743
356,932
365,693
372,757
-
.-
Deduct:
Public debt not subject to limitation
_
Agency debt not subject to general limitation:
Department of Defense.«.
Export-Import Bank
Tennessee Valley Authority
Participation certificates*
Federal National Mortgage Association
Farm Credit Administration
Other
_
Total debt subject to statutory limitation
1
Represents certificates of participation issued by Government National Mortgage Association
as trustee for 5 departments and agencies (excluding those issued during 1968).
SPECIAL ANALYSES
35
While the Federal debt held by the public is projected to decline
by $1.0 billion in 1970 and by $1.2 billion in 1971, the debt subject to
statutory limitation is scheduled to rise by $8.8 billion and $6.9 billion,
respectively. This is due primarily to the fact that the debt subject
to limitation includes most of the debt held by Government trust
funds and other agencies and the estimated increases in such holdings
equal or exceed the rise in debt subject to limitation.
On the basis of present estimates, the debt subject to limitation
will slightly exceed the permanent limit of $365 billion, which becomes
effective on June 30, 1970. The President has announced his intention
to recommend an increase in the limit prior to that time.
In addition to the broad range of Treasury and agency obligations
subject to the general debt limitation, borrowing by other agencies
in most cases is subject to explicit statutory authorization; e.g., outstanding revenue bonds issued by the Tennessee Valley Authority are
currently limited to $1,500 million.
BORROWING BY GOVERNMENT-SPONSORED ENTERPRISES
Five types of Government-sponsored enterprises, in which the
Government investment has now been retired, continue to borrow
under Government auspices. Three of these—the Federal National
Mortgage Association, the banks for cooperatives, and the Federal
intermediate credit banks—completed the shift to private ownership
during 1969.
The borrowing programs of all five types of enterprises are subject
to Federal supervision. All, in addition, consult the Treasury Department, either by law or custom, in planning their market offerings. The
Federal National Mortgage Association and the Federal home loan
banks are required to obtain Treasury approval of the terms and
timing of specific offerings and the Treasury Department is authorized
to purchase limited amounts of their obligations. All except the
Federal National Mortgage Association are systems of regional lending
institutions that pool their borrowings. All have a long history of
successful financial performance. Hence, despite the absence of
explicit Federal guarantees, the obligations of these enterprises are
sold at interest rates only slightly higher than those obtained on direct
Treasury issues.
Each of these Government-sponsored agencies expanded its borrowing in 1969 and anticipates further expansion in 1970 and 1971
(see table C-6). Total net new borrowing in 1970 will reach a new
peak of almost $11.0 billion, primarily because of the strong support
provided to the housing market by fche Federal National Mortgage
Association and the Federal home loan banks. While some improvement in this market is anticipated in 1971, net new borrowing by the
five types of Government-sponsored enterprises as a whole is expected
again to be substantial, with the total outstanding debt rising by an
estimated $7.7 billion.
36
T H E BUDGET FOR FISCAL YEAR 1 9 7 1
Table C-6. NET BORROWING OF GOVERNMENT-SPONSORED
ENTERPRISES (in millions of dollars)
Increase or decrease (—)
1970
estimate
1971
estimate
2,043
5,151
4,342
17.571
i 659
458
44
416
582
73
459
556
1,525
5.113
6,997
820
4,780
2,300
12,601
3,965
10,973
7,730
43,806
1969
actual
Housing and Urban Development: Federal National
Mortgage Association
Farm Credit Administration:
Banks for cooperatives
.
Federal intermediate credit banks
Federal land banks
Federal Home Loan Bank Board: Federal home
loan banks
Total
1
Outstanding
end 1971
estimate
1
Excludes net borrowing in 1969 prior to conversion to full private ownership; FNMA $149
million, banks for cooperatives $160 million; and Federal intermediate credit banks —$197 million.
GOVERNMENT GUARANTEES OF NON-FEDERAL BORROWIISFG
Seven departments and seven independent Federal agencies guarantee in whole or in part obligations issued by specific groups of nonFederal borrowers. Net changes in outstanding guaranteed debt of such
borrowers are shown by agency and program in table C-7. The bulk
of the obligations so guaranteed are mortgage loans to private borrowers to purchase or construct housing; these are insured by the
Federal Housing Administration or the Farmers Home Administration, or guaranteed by the Veterans Administration.
In these and other programs, Government insurance or guarantees
reduce or eliminate the risk of loss for private lenders and thus broaden
the access of eligible borrowers to financial markets or improve
the terms on which they can obtain needed funds. In some cases,
the Federal agency provides direct or indirect subsidies; e.g., by
payment of (1) most of the debt service on bonds issued by local public
authorities to finance construction of low-rent public housing—as well
as placement fees on public housing and urban renewal notes when
market rates exceed 6%, (2) the full amount of interest payments
during school and service years on most insured loans to students,
plus incentive payments to lenders during the life of loan to the extent
necessary to provide equitable returns, and (3) supplementary interest
payments by the Farmers Home Administration in placing loans with
private lenders. In a few cases, a Federal agency sponsors offerings of
guaranteed obligations for a number of borrowers simultaneously; e.g.,
the periodic offerings of guaranteed public housing notes and bonds
and urban renewal notes by the Department of Housing and Urban
Development.
In many cases, guarantees of non-Federal obligations have only an
indirect effect on the budget. Nevertheless, they help to assure financing of programs or projects that, in the absence of such support, otherwise might have been financed elsewhere on less favorable terms, if
at all. In some cases, sales of direct Federal loans to private lenders
with the aid of Federal guarantees enable the program in question to
make new loans that otherwise could not have been made within
37
SPECIAL ANALYSES
prevailing budgeted totals. Net additions to guaranteed non-Federal
debt arising from sale of direct loans by five major programs, less repurchases (puts), are shown in a footnote at the bottom of table C-7.
As table C-7 indicates, outstanding guaranteed debt of non-Federal
borrowers will increase by $10.6 billion in 1970 and by another $18.3
billion in 1971, primarily because of heavy federally assisted borrowing
for housing. By the end of 1971, such guaranteed debt will amount to
an estimated $145.1 billion. The volume and trends in this type of
financial assistance are discussed
more fully in Special Analysis E,
"Federal Credit Programs".1
Table C-7. NET GOVERNMENT-GUARANTEED BORROWING BY
NONFEDERAL BORROWERS (in millions of dollars)
Increase or decrease (—)
1969
actual
Funds appropriated to the President:
Military assistance
___
Economic assistance l
Agriculture:
Commodity Credit Corporation__
_
Farmers Home Administration
Commerce:
Economic Development Administration.
Maritime Administration
Health, Education, and Welfare:
Student loans
Medical facilities loans
Housing and Urban Development:
Urban renewal loans
Public housing loans
Guaranteed communities loans
Federal Housing Administration
Mortgage-backed securities
Veterans Administration
District of Columbia
Export-Import Bank
_
Interstate Commerce Commission
Small Business Administration
All other
Total 3_
1970
Outstanding
end 1971
estimate
1971
115
51
90
366
25
513
482
1,268
667
340
587
2,258
5,523
12
55
14
23
24
131
63
775
632
713
704
92
2,810
92
445
878
371
1,043
40
5,202
500
130
456
3,502
9,601
95
76,080
1,500
36,945
135
4,519
131
1,450
86
145,056
4,367
1,558
1,426
55
7,877
1,000
1,888
439
-9
162
-19
1,179
365
-2
115
1,301
-10
481
-4
9,694
10,612
18,331
-10
1
2
Includes in 1971 Overseas Private Investment Corporation.
Figures exclude reduction of $1,590 million in guaranteed loans as result of reclassincation on
July 1, 1969. of certificates of interest of Commodity Credit Corporation as Federal agency debt.
3 Includes net increase in outstanding debt resulting from direct loans sold with Federal guarantees
to private lenders minus repurchases (puts) by following programs:
l969
I970
1971
Agriculture:
.
.
Commodity Credit Corporation
667
Farmers Home Administration
552
768
2,507
Housing and Urban Development
50
100
Veterans Administration
1
61
526
Export-Import Bank
_
378
34
500
Total
i See pp. 73-74.
1,598
913
3,633
38
THE BUDGET FOR FISCAL YEAR 1 9 7 1
TOTAL FEDERAL AND FEDERALLY ASSISTED BORROWING
As the foregoing analysis indicates, in contrast to the net repayment
of the Federal debt held by the public experienced in 1969 and estimated for 1970 and 1971, federally assisted borrowing has been increasing and further increases are projected. Table G-8 summarizes
the developments in these three categories of borrowing, together with
adjustments necessary to eliminate double counting.
Federal borrowing from the public is expected to decline $2.6 billion
in 1970 and drop another $1.2 billion in 1971. In contrast, total Federal
and federally assisted borrowing from the public is expected to increase
$12.8 billion in 1970 and $19.1 billion in 1971. In 1970, the bulk of the
increase is accounted for by the increase of $11.3 billion in borrowing
of Government-sponsored agencies. However, in 1971, most of the
increase arises from the net expansion of $12.5 billion in Governmentguaranteed borrowing from the public by other non-Federal borrowers.
Table C-8. NET BORROWING FROM PUBLIC BY GOVERNMENT, GOVERNMENT-SPONSORED AND GOVERNMENT-GUARANTEED AGENCIES
(in billions of dollar*)
Increase or decrease (—)
1969
actual
Federal borrowing from or repayment (—) to public*
a
Outstanding
end 1971
estimate
1970
estimate
1971
estimate
-1.0
-2.6
-1.2
277.3
43.8
Debt of Government-sponsored agencies
Less borrowing or repayment (—) of debt held by
Government agencies
4.0
11.0
7.7
-1.1
-.4
-.1
Net Government-sponsored borrowing from
public
5.1
11.3
7.8
43.8
9.7
10.6
18.3
145.1
1.7
.6
5.6
.4
4.6
.3
18.5
5.1
.5
1.0
1.5
Government guaranteed debt of non-Federal borrowers 8
_
Less borrowing from Government or Governmentsponsored agencies:
Federal National Mortgage Association. _
Government National Mortgage Association
Less guarantees of securities backed by insured
debt
Net Government-guaranteed borrowing from
public by non-Federal borrowers. _
7.5
4.1
12.5
119.9
T o t a l Federal and federally assisted borrowing from public
11.6
12.8
19.1
441.0
*Lets than
» See table
2 See table
' See table
$500 thousand.
C-l.
C-6.
C-7.
SPECIAL ANALYSIS D
INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
This analysis focuses on the distinction between outlays that are
of an investment or "capital" nature and outlays directed to operating, or "current," purposes.
To facilitate the analysis, the outlays presented in the budget
as loan and expenditure accounts are classified in the following
three categories:
Investment-type outlays—consisting of:
• Tangible investments in Federal assets of both a physical and
financial nature;
• Tangible investments in State, local, and private physical assets;
• Intangible investments in the developmental capability of our
Nation as represented by its capacity for better education, increased technical innovation, and improved health for our
citizens.
The purpose of this classification is to identify outlays that yield
benefits over several years and to distinguish between those outlays
and funds that provide benefits in the year in which they are made.
Funds that accomplish their purpose within the year are placed in
the following category.
Current outlays—consisting of:
• Aid and special services to agriculture, business, labor, homeowners, tenants, veterans, and for international commitments
and Federal welfare obligations.
• Retirement and Social Insurance representing Federal trusts
established to provide an assured income to contributors or their
families in the event of unemployment, retirement, disability, or
death.
Outlays that cannot be classified in either of these two categories
are placed in the following residual classification.
Unclassified outlays—consisting of:
• Allowance for revenue sharing;
• Allowance for pay increases;
• Allowance for contingencies ;
• Adjustments for financial activity between agencies and special
funds that are wholly within the Federal Government.
• Other services related to: (a) repair, maintenance, and operation
of physical assets; (b) regulatory and control activities; (c) operation and administration of Federal departments and agencies; and
(d) interest on the debt and miscellaneous Federal funds and
accounts.
Each of the major classifications is subdivided so that civil and national defense outlays can be separately analyzed. Wherever possible,
adjustments have been made to remove the effect of transactions that
are wholly within the Government (interfund and intragovernmental
transactions) and to reflect receipts that can most meaningfully be
applied against outlays for market-oriented or business-type activities.
39
40
THE BUDGET FOR FISCAL YEAR 1971
Summary.—The primary factors influencing investments and
current outlays in 1971 are:
• The proportion of the budget dedicated to civil purposes has
continued to grow. Civil outlays are expected to be $130.3 billion,
65% of the total 1971 budget—a significant increase when compared with the 1970 budget, in which civil outlays are expected
to be only 62% of the total.
• The administration's determination to stem inflation is reflected
in important decreases in investments and current outlays.
Civil additions to Federal assets, for example, are expected to be
$5.4 billion in 1971, a reduction of $2.1 billion, or 28%, from 1970.
• A reordering of priorities, to direct additional resources to the
most pressing domestic problems. The areas being given greater
priority are development investments in education, training, and
health, and current outlays for welfare. The investment in education, training, and health is $11 billion in 1971, an increase
of $1.1 billion, 11%, over 1970. Current outlays for welfare
are $7.9 billion, or 29%, up $1.8 billion from 1970. The major
reductions are in investments for loans, down $2.3 billion, in
major commodity inventories, down $0.6 billion, and in current
outlays for business, down $0.9 billion.
• The built-in increases in current outlays necessary to honor the
obligations of our retirement and social insurance systems. These
outlays will be $49.3 billion, an increase of $5.7 billion over 1970,
making these benefit payments 24.5% of the total 1971 budget.
Table D-l. CIVIL INVESTMENTS AND CURRENT OPERATING OUTLAYS
(in billions of dollars)
Outlays
1971 estimate
1970 estimate
1969 actual
Amount
Percent
of budget
Amount
Percent
of budget
Amount
Percent
of budget
3.2
.1
1.8
3.7
1.8
1.4
0.7
.1
.4
.2
.6
.3
2.2
.4
.2
1.2
.2
.1
2.4
.6
.2
1.2
.3
.1
3.0
-.1
.3
1.5
.2
.1
.2
.1
.2
.1
Subtotal, additions to Federal assets 1 . _ _ _
6.3
3.4
7.5
3.8
5.4
2.7
Additions to State, local, and private assets:
State and local assets
Private assets
5.6
1.1
3.0
.6
6.2
1.0
3.1
.5
6.7
.9
3.4
.4
Subtotal, additions to State,
local, and private assets x _.
6.7
3.6
7.2
3.6
7.6
3.8
INVESTMENT-T YPE
OUTLAYS
Additions to Federal assets:
Loans
Other financial investments
Public worksites and direct construction
Major commodity inventories
Major equipment
__
Other physical assets—acquisition and improvement
See footnotes at end of table.
.1
41
SPECIAL ANALYSES
Table D-1. CIVIL INVESTMENTS AND CURRENT OPERATING
OUTLAYS—Continued
(in billions of dollars)
Outlays
1969 actual
1970 estimate
1971 est imate
of budget
of budget
of budget
INVESTMENT-TYPE
OUTLAYS—-Con.
Other development outlays:
8.8
6.5
4.8
3.5
.2
.1
Subtotal, other development
outlays J
15.5
Total, investment-type outlays1..
__._
Education, training, and health __
Research and development
Engineering and natural resources surveys 2
9.9
6.4
5.0
3.2
11.0
6.1
5.5
3.1
.1
.2
.1
8.4
.2
16.5
8.3
17.3
8.6
28.4
15.4
31.2
15.7
30.3
15.1
Current expenses for aids and
special services:
Agriculture 2
Business 2
Labor .
Homeowners and tenants 2
Veterans 2
International aids _ _
Welfare aids _ ._
Other aids and special services 2__
4.2
1.7
.7
-.5
7.6
1.6
4.7
3.4
2.3
.9
.4
-.2
4.1
.9
2.5
1.8
4.5
2.0
.9
.1
8.6
1.5
6.1
4.5
2.3
1.0
.5
.1
4.3
.8
3.1
2.3
5.4
1.1
1.0
.5
8.9
1.4
7.9
4.9
2.6
.5
.5
.2
4.4
.7
3.9
2.5
Subtotal, current expenses
for aids and special services l
23.4
12.7
28.2
14.3
31.1
15.5
34.1
2.1
18.5
1.1
38.1
2.6
19.2
1.3
43.1
2.9
21.4
1.5
2.4
1.3
2.8
1.4
3.2
1.6
38.6
20.9
43.5
22.0
49.2
24.5
CURRENT OUTLAYS
Retirement and social insurance
benefits:
Insurance benefits
Unemployment benefits
Other retirement and social insurance benefits 2
Subtotal, retirement and
social insurance benefits 1_
Other services and current operating expenses:
Repair, maintenance and operation of physical assets (excluding special services)
Regulation and control
Other operation and administration
Interest 2
.8
.9
.4
.5
.9
1.2
.4
.6
.9
1.4
.5
.7
2.9
13.0
1.6
7.0
3.4
14.4
1.7
7.3
3.5
13.8
1.7
6.9
Subtotal, other services and
current operating expenses1
17.5
9.5
19.8
10.0
19.7
9.8
79.6
43.1
91.6
46.3
100.0
49.8
107.9
58.5
122.7
62.0
130.3
64.9
Total, current outlays
1
Total, investment-type outlays and current outlays J .
1
Subtotals and totals may not add due to rounding.
2
Includes offsets for interbudgetary transactions.
42
THE BUDGET FOR FISCAL YEAR 1 9 7 1
OUTLAYS OF AN INVESTMENT NATURE
Outlays of an investment nature are divided into three categories:
(1) additions to Federal assets; (2) additions to State, local, and private
assets; and (3) developmental outlays. The investment-type portion of
civil outlays is $30.3 billion, amounting to approximately 15% of the
budget for both years. Defense investments are $30.2 billion and are
now 42% of the 1971 defense budget—a reduction of 0.5% from 1970.
A principal component of investments is civil Federal assets which
in 1971 will be $5.4 billion, having declined by $2.1 billion, or 28%,
from its 1970 level.
Additions to Federal assets.—This category comprises additions
to both financial and physical assets of the Federal Government.
The financial assets are primarily direct loans—for example, loans
to finance private housing construction and encourage homeownership,
to help small businesses, to finance rural electric and telephone systems,
and to promote economic development abroad. Federal financial assets
include both loans and other financial investments that are classified
in the expenditure account, as well as loans in the loan account. Other
financial investments include the capital provided for certain international organizations and for supersonic aircraft development.
Civil loans and financial assets are now $2 billion and represents 1%
of the 1971 budget. As a result of increased asset sales, civil investment in loans and financial assets decreased by $2.1 billion from
the 1970 budget. (Special Analysis E discusses financial investments
in greater detail, pp. 65 to 80.)
Additions to physical assets include outlays for public works,
such as dam construction, flood control projects, and Federal power
systems. They also include changes in major commodity inventories
and outlays for major equipment (including military equipment) and
for the acquisition and improvement of real property and other physical assets.
Additions to civil physical assets are $3.4 billion in 1971, a small
decrease of $11 million over 1970. The major change is in commodity
inventories, which are expected to return $77 million due to the
excess of receipts from sales over new outlays.
Additions to State, local, and private assets.—Federal outlays
in this category add to State, local, and private assets. Grants-in-aid
that add to the physical assets of State and local governments are
primarily for the construction of highways (mainly through the highway trust fund), hospitals, airports, waste-treatment works, watershed
protection projects, schools in federally affected areas, and public
facilities under regional economic development programs for depressed
regions.
Outlays that increase the value of privately owned assets are largely
for the conservation and improvement of private farmland and water,
for grants for construction of private nonprofit hospitals and other
health facilities, and for construction subsidies to the merchant fleet.
SPECIAL ANALYSES
43
Civil additions to State, local and private assets is $7.6 billion, an increase of $0.4 billion primarily in Federal contribution to highways,
hospitals, and other facilities necessary at the State and local level.
These increases, however, have been kept to a much slower growth
rate falling from an annual rate of 8% in 1970 to 5.9 %in 1971.
Developmental outlays.—Federal outlays of this type are principally for research and development, education and health, and other
programs that improves the Nation's knowledge, technical skills, and
physical vigor. The Federal outlays shown in this category do not
fully reflect the Government's contribution to the productivity of the
economy. Certain other programs that further this end are classified
in accordance with their principal purpose; thus, veterans educational
benefits are listed as veterans aids rather than as developmental outlays. Similarly, the training of military personnel or other Government personnel is treated as an operating expense and not as part of
the Government's education and training programs.
Civil developmental outlays are $17.3 billion, an increase of $0.8
billion from 1970, to become 8.6% of the budget instead of the 8.3%
that it was in 1970.
Civil outlays for education, training and health are $11.9 billion in
1971. This amount is 5.5% of the 1970 outlays—larger than in 1970
(5%), reflecting the increased concern of the administration for the
need to maintain the resources that in the long run, will help determine the Nation's ability to grow.
Current civil outlays for research and development are $6.1 billion
in 1971 and reflect a small decline from the 1970 level. The rate of
decline in 1971 is 4.2%, as compared with 1.5% in 1970.
OUTLAYS OF A CURRENT NATURE
Outlays of a current nature are divided into the following categories: (1) current expenses for aids and special services; (2) retirement and social insurance benefits; and (3) other services and current
operating expenses.
The current outlays portion of civil outlays are $100 billion, an
increase of $8.4 billion from 1970. The rate of increase, however,
declined from 15.2% in 1970 to 9.2% in 1971.
Current expenses for aids and special services.—Outlays classified under this heading provide aids or special services to certain
groups, mainly in the year in which the outlays are made. In addition
to such items as outlays for the farm programs of the Commodity
Credit Corporation, maritime operating subsidies, veterans pensions,
and grants to foreign nations for economic and military assistance,
this category includes: (1) administrative and other operating expense,
attributable to investment-type programs that benefit specific
groups; and (2) the costs of maintaining the physical assets related
to those programs.
Only part of the Federal Government's aid to special groups is
reflected in this classification, which is limited by definition to current expenses. For example, subsidies for the construction of private
merchant ships are classified as additions to private assets. Similarly,
44
THE BUDGET FOR FISCAL YEAR 1 9 7 1
outlays for which the Federal Government receives assets or collateral
(as the acquisition of farm commodities by the Commodity Credit
Corporation) are treated as additions to Federal assets. Many indirect
Government aids are excluded from this classification either because
they are not reflected in outlays or cannot be readily measured.
Examples of such indirect benefits are preferential tax treatments.
Although outlays in this category essentially provide a direct aid
or special service yielding immediate benefits, some of the items
included contribute indirectly to the Nation's future development.
Among these are grants for slum clearance and urban renewal.
The rate of growth of all classifications in this category has slowed
down, except for aid to homeowners, tenants, and agriculture which
show higher growth rates than in 1970. There is an 18% increase
for agriculture as compared with 9.3% in 1970, and a 239% increase
for homeowners and tenants. Significant areas of decline are business,
$1.1 billion, a reduction of $0.9 billion from 1970, and a change from
the 19.3% growth rate of 1970 to a cutback of 45.2% in 1971 and
international aid, $1.4 billion, reduced $0.1 billion and accelerates the
1970 cutback rate of 4.9% to 9.4% in 1971. An area that continues
at a high growth rate is welfare aid, which is expected to be $7.9 billion
in 1971, up by $1.8 billion from 1970 and growing at a 29.4% rate,
which is slightly smaller than the 30.1% rate of the 1970 budget.
Retirement
and social insurance benefits.—This category
applies only to trust funds. It covers benefit programs that: (1) are
financed from special taxes or contributions; and (2) provide insurance
against the loss of income due to unemployment, retirement, disability,
or death. It does not include outlays for Government employees'
health and life insurance expenditures, which are in the form of premium payments to approved companies.
A large part of the growth in current outlays is due to necessary
increases for retirement and social insurance benefits. Outlays for
these benefits are expected to exhibit a growth rate of 13% in 1971,
and rise to $49.2 billion. Social insurance benefits are now 38% of all
outlays for civil purposes and 25% of the budget.
All of the retirement and social insurance categories exhibited an
increase. Insurance benefits, $43.1 billion, with a growth rate increasing
from 11.7% to 13.1%. Unemployment benefits, $2.9 billion, with a
rate of growth declining from 34.6% in 1970 to 10.7% in 1971.
Other services and current operating outlays.—The outlays
reported under this heading support a wide range of activities. They
consist mainly of: pay and subsistence of military personnel; repair,
maintenance, and operation of physical assets of the national military
establishment and general purpose public buildings; conduct of
foreign affairs; tax collection; payment of interest on the national
debt; and operation and administration of other direct Federal
programs not elsewhere classified. Other benefits and social insurance
benefits, $3.2 billion, slowing the rate of growth from 17.2% in 1970
to 14.2% in 1971.
SPECIAL ANALYSES
45
UNCLASSIFIED
Certain transactions cannot be properly classified into any of the
categories described above. The major examples of such transactions
include revenue sharing and special allowances for: (1) pay increases
and (2) unforeseen contingencies.
Interfund and intragovernmental receipts arise as a result of
transactions between Government agencies or funds. These transactions occur entirely within Government accounts and are deducted
from outlays to avoid double counting. In order to provide a measure
of outlays by character, most interfund and intragovernmental
receipts are allocated to a particular category whenever possible. Thus,
for example, interest received by the social security and other trust
funds is deducted from the Interest category in order to derive a
measure of interest outlays affecting the public.
Government agency contributions for employee retirement, which
help to finance retirement benefits, are deducted as a lump-sum unclassified amount. In addition, proprietary receipts from the public,
arising from market-oriented or business-type activities of the Government, are unclassified and offset against total outlays to highlight the
net impact of the budget.
RELATIONSHIP TO CAPITAL BUDGET
The U.S. Government does not produce a capital budget in the
sense of a long-range program for the acquisition of assets, with
separate financing of capital outlays. Some foreign governments and
some State and local governments fund a portion of their capital
expenditures by separate borrowing and exclude most or all such
expenditures from their computation of budget totals, except for
annual charges to amortize^ these capital outlays over a number of
years.
While not a precise measure of the difference between capital and
current items, this analysis does provide useful general magnitudes.
However, it does not make any allowance for depreciation and obsolescence on existing physical assets, anticipated losses on loan programs,
or profit or loss on sales of assets at figures different from their book
value. Agencies record such allowances for transactions only where
the data will serve program and management needs, as in the case of
the public enterprise funds. As a result, it is not possible to determine
directly from this analysis the net addition to the value of federally
owned assets.
Recoverability of outlays.—-In general, Government outlays for
assets are not expected to be recovered by specific revenues. However,
most loans, investment in commodity inventories, the construction of
powerplants, and outlays for range and forest improvements on public
domain and national forest lands are offset in whole or in part by
receipts to the Treasury through repayments and sales, specific
charges, or recoveries. Where activities are carried on through revolving funds, such as in the case of most loan programs, receipts are
credited directly against disbursements and only the difference is
46
THE BUDGET FOR FISCAL YEAR 1971
included in the total of outlays in the budget and in this analysis. All
other receipts from the public arising from market-oriented or businesstype activities of the Government are offset against total outlays.
Whether recovered by specific revenues or not, investment and
developmental outlays for both physical and human capital add to
the wealth and income of the Nation, and by helping to expand the
tax base, augment the Government's potential future revenues.
However, this analysis does not attempt to measure the degree of
recoverability of developmental outlays, the potential gain in public
revenues that will be forthcoming from them, nor the duration of
future benefits and their discounted present value.
Table D-2. SUMMARY OF INVESTMENT, OPERATING, AND OTHER
BUDGET OUTLAYS (in millions of dollars)
Outlays
1969
actual
1970
estimate
1971
estimate
INVESTMENT-TYPE OUTLAYS
Additions to Federal assets:
Civil:
Loans and otherfinancialinvestments
Physical assets:
Public works
_
Major commodity inventories
Major equipment and other physical assets
National defense
Additions to State, local, and private assets:
Civil
National defense
Developmental outlays:
Civil
National defense
Subtotal, investment-type outlays:
Civil
National defense
3,374
4,122
2,013
2,186
353
370
26,645
2,426
554
410
23,830
2,961
-77
495
21,140
6,659
17
7,193
14
7,617
15
15,482
9,186
16,502
8,994
17,277
9,030
28,424
35.848
31,207
32,838
30,286
30,185
23,355
1,705
38,571
28,228
1,468
43,524
31,071
1,408
49,229
16,716
-628
-11
-3,099
4,545
44,912
18,940
19,142
-1,041
-3,781
5,451
46,430
-4,273
5,872
43,698
79,448
46,617
91,554
47,898
100,000
45,106
CURRENT OUTLAYS
Current expenses for aids and special services:
Civil
National defense
Retirement and social insurance benefits—civil
Other services and current operating expenses:
Civil:
Interest
Interest on Government capital in enterprises (—)
Interest on capital in enterprise (—)
Interest received by trust funds (—)
Other
_._
_
National defense
Subtotal, current outlays:
Civil
National defense
See footnotes at end of table.
SPECIAL
47
ANALYSES
Table D-2. S U M M A R Y OF INVESTMENT, OPERATING, A N D OTHER
B U D G E T OUTLAYS (in millions of dollars)—Continued
Outlays
1969
1970
1971
UNCLASSIFIED ITEMS
Payments to other funds
Allowances:
Revenue sharing
Civilian and military pay increases
Contingencies
Employer share, employee retirement (—)_
Proprietary receipts from the public (—) *_
Total budget outlays.
19
20
19
1,,400
-2,018
-3,781
175
300
-2,307
-3,800
900
-2,366
-5,034
184,556
197,885
200,771
275
1
Excludes loan repayments deposited in miscellaneous receipts and offset in the loan and expenditure
account as follows:
1969
1970 1971
Loan repayments offset in the loan account
—249 — 232
—254
Repayments offset in the expenditure account (net of adjustments).- —161 —179 —250
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET
OUTLAYS
(in millions of dollars)
Description
1971
1969
1970
actual
estimate
Investment-type outlays
ADDITIONS TO FEDERAL ASSETS
Loans:
Loan account—civil:
To domestic and private borrowers:
Department of Agriculture:
Commodity Credit Corporation:
Storage facilities loans
_
_.
Export credit sales
Rural Electrification Administration
Farmers Home Administration:
Direct loans
Rural housing insurance
Emergency credit revolving fund
Agricultural credit insurance
___
Other 1
Soil Conservation Service__
_
_
__.
Department of Commerce:
Economic development assistance: Industrial development loans and guarantees
Maritime Administration
Department of Health, Education, and Welfare:
Office of Education: Higher education facilities loans
and other
Social and Rehabilitation Service
Department of Housing and Urban Development:
Renewal and housing assistance:
Rehabilitation loans
College housing
See footnotes at end of table.
82
3
229
-2
31
349
-36
28
325
-18
61
9
204
1
2
-21
316
-53
-30
-4
2
-28
-695
-10
-142
-9
1
24
-7
52
-9
32
-7
52
3
59
4
76
19
25
67
41
98
37
24
48
THE BUDGET FOR FISCAL YEAR 1971
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description
1969
actual
1970
estimate
1971
estimate
Investment-type outlays—Continued
ADDITIONS TO FEDERAL ASSETS—Continued
Loans—Continued
Loan account—civil—Continued
To domestic and private borrowers—Continued
Department of Housing and Urban Development—Con.
Mortgage credit:
Special assistance functions
Management and liquidating functions
_
Participation sales.
__ _.
Secondary market operations trust fund
_._
Federal Housing Administration
. _ _ __
Housing for the elderly or handicapped
Community disposal operations.
__
Metropolitan development __ __
.
__
General Services Administration: Surplus real property
credit sales and other
Veterans Administration:
Loan guaranty revolving fund.
Veterans direct loans. .
.. _
. . . __
National service life insurance. . .
.
__ _ _
1
Other
_
Civil Service Commission: Retirement and disability fund.
Farm Credit Administration:
Banks for cooperatives
Federal intermediate credit banks.. _
_ __
Railroad Retirement Board (trust fund)
Small Business Administration:
Business loans and investment
Disaster loans
_
._ _.
Other agencies
Total to domestic and private borrowers.._^___
To State and local governments:
Department of Agriculture: Farmers Home Administration: Direct loans and other
Department of Commerce: Industrial development loans
and guarantees
Department of Health, Education, and Welfare: Office of
Education: Higher education facilities loans and other. _
Department of Housing and Urban Development:
Renewal and housing assistance:
Urban renewal fund
Low-rent public housing
.
College housing
.
..
Metropolitan development: Public facility loans and
other
. . . .
Department of Transportation:
Federal Highway Administration: Right-of-way trust
fund
Urban Mass Transportation Administration. _
District of Columbia: Capital outlay loans
Other agencies
Total to State and local governments. _
To foreign borrowers: Export-Import Bank
Total loan account—civil
See footnotes at end of table.
442
114
-293
177
19
79
1
509
-104
550
-196
-4
54
-1
2
60
39
-1
6
28
22
142
47
59
5
-595
129
69
64
7
-203
-74
56
9
46
158
57
38
123
-278
-50
-11
-6
25
744
1,787
-7
-36
63
66
25
18
37
22
40
31
34
37
13
82
7
*
66
46
12
47
44
37
34
40
35
-4
*
65
11
5
103
7
*
146
7
372
366
398
718
1,481
2,902
408
311
683
49
SPECIAL ANALYSES
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description
1971
1970
1969
Investment-type outlays—Continued
ADDITIONS TO FEDERAL ASSETS—Continued
Loans—Continued
Loan account—national defense: To domestic and private
borrowers: Other agencies
Expenditure account—civil:
To domestic and private borrowers:
Department of Agriculture: Commodity Credit Corporation: Price support loans
Department of Health, Education, and Welfare:
National Institutes of Health:
Health manpower
Other
Office of Education: Higher education
Other agencies.-_
Total to domestic and private borrowers
To State and local governments: Other agencies
To foreign borrowers:
Funds appropriated to the President: Economic assistance.
Department of Agriculture: Commodity Credit Corporation: Public Law 480 credit sales
Other agencies
-4
-2
*
400
-459
-428
18
4
135
8
25
106
11
602
-293
-286
2
18
21
931
851
807
419
402
396
23
19
159
1
'
-3
-3
-1
Total to foreign borrowers
1,347
1,249
1,202
Total loan repayments deposited in miscellaneous
receipt accounts (net of adjustments)
-161
-168
-214
Total expenditure account—civil
1,789
806
723
*
*
8\
238
-11
-36
57
70
202
3,322
3,776
1,608
74
36
10
150
90
16
185
-4
-4
__
Expenditure account—national defense:
To domestic and private borrowers: Other agencies
-I
To foreign borrowers: Funds appropriated to the President:
Military assistance
58
Total loan repayments deposited in miscellaneous receipt
accounts
Total expenditure account—national defense
__
Total loans
Other financial investments—civil:
Investments in quasi-public institutions, trust funds, and
international institutions:
Funds appropriated to the President:
Inter-American DeveloDment Bank
International Development Association
Asian Development Bank
Provision for exDanded multilateral assistance
Department of Labor
See footnotes at end of table.
90
20
40
-3
50
THE BUDGET FOR FISCAL YEAR 1971
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description
1969
actual
1970
estimate
1971
estimate
Investment-type outlays—Continued
ADDITIONS TO FEDERAL ASSETS—Continued
Other financial investments—civil—Continued
Investments in quasi-public etc—Continued
Department of Transportation: Civil supersonic aircraft
development
Farm Credit Administration:
Short-term credit investment
Banks for cooperatives investment
-64
-28
Total investments in quasi-public institutions, trust
funds and international institutions
105
163
275
415
607
102
18
12
122
18
9
771
45
25
23
752
44
18
20
898
55
30
19
14
21
23
36
22
28
29
19
42
40
21
38
40
20
33
165
30
6
109
24
37
135
28
12
98
40
93
197
18
9
94
35
46
72
1
41
134
*
130
65
58
278
60
143
60
93
364
59
246
1
162
72
71
496
66
2,186
2,426
2,961
81
Public works—sites and direct construction:
Civil:
Department of agriculture:
Forest Service:
Roads and trails
Other 1
_
_
_-_
Other
_
------:
Department of Defense—Civil:
Corps of Engineers:
Construction, general
Flood control, Mississippi River and tributaries
Construction, local funds (trust funds)
Other 1 ..
__.
Department of Health, Education, and Welfare:
Indian health facilities
Other 1
.Department of the Interior:
Bureau of Indian Affairs:
Construction: Schools and other
Road construction
National Park Service 1
Bureau of Reclamation:
Construction and rehabilitation
Upper Colorado River storage project
Other ! „ . .
-.--.----:
Bonneville Power Administration *
Other
-.
Post Office Department
Department of Transportation:
Coast Guard: Acquisition, construction, and improvements
Federal Aviation Administration
Other
.--.- — :
: — --.General Services Administration: Public buildings
National Aeronautics and Space Administration
Veterans Administration: Hospitals and other
Tennessee Valley Authority
Other agencies
_
Total public works, civil See footnotes at end of table.
165
36
51
SPECIAL ANALYSES
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description
1969
actual
1970
estimate
1971
estimate
Investment-type outlays—Continued
ADDITIONS TO FEDERAL ASSETS—Continued
Public works—sites and direct construction—Continued
National defenseDepartment of Defense—Military:
Military construction
Family housing
_
Other
Atomic Energy Commission
1,365
136
2
1,093
150
2
1.116
131
2
243
293
275
Total public works, national defense.._
1.746
1,538
1,525
Total public works—sites and direct construction
3,932
3,964
4,486
337
16
500
53
-119
42
353
554
-77
National defense:
Funds appropriated to the President: Expansion of defense
production
_
Other agencies.
169
26
21
25
-157
Total major commodity inventories, national defense
195
46
-129
Total major commodity inventories
548
599
-205
25
24
2
148
21
159
52
4
5
51
57
14
23
187
239
261
23.988
168
21.550
180
18.904
188
Total major equipment, national defense
24.156
21.730
19.092
Total major equipment
24.343
21.969
19.353
__
Major commodity inventories:
Civil:
Department of Agriculture: Commodity Credit Corporation.
Department of the Interior: Helium fund
Total major commodity inventories, civil
28
Major equipment:
Civil:
Department of Commerce:
Environmental science services administration: Satellite
operations and other
Other
-Post Office Department
Department of Transportation:
Federal Aviation Adm inistration
Other agencies
-
Total major equipment, civil
National defense:
Department of Defense—Military: Procurement
Atomic Energy Commission
See footnotes at end of table.
_
t
101
52
THE BUDGET FOR FISCAL YEAR 1971
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description
1970
1969
1971
Investment-type outlays—Continued
ADDITIONS TO FEDERAL ASSETS—Continued
Other physical assets—acquisition and improvement:
Civil:
Department of Agriculture: Reforestation and range improvements and other
Department of Housing and Urban Development: Mortgage credit and other
Department of the Interior:
Land and water conservation
Other 1 .....
.--.- — :
General Services Administration:
Sale of fixed assets—surplus real property credit sales. __
Real property activities... t
Veterans Administration
Other agencies 1
44
59
67
74
50
60
78
34
107
28
159
38
-28
2
-12
-10
-45
2
-16
-15
-52
2
-28
-12
Total other physical assets, civil_
183
171
234
National defense:
Department of Defense—^Military..
Atomic Energy Commission
5
490
5
444
1
449
Total other physical assets, national defense
495
448
450
Total other physical assets—acquisition and improvement.
678
683
26,532
Total additions to Federal assets
ADDITIONS TO STATE, LOCAL, AND PRIVATE
ASSETS
State and local assets:
Civil:
Funds appropriated to the President:
Appalachian regional development
Public works acceleration
Department of Agriculture:
Watershed improvement
Flood prevention
Rural water and waste disposal grants
Other
----Department of Commerce: Economic development facilities
and other
Department of Health, Education, and Welfare:
Health Services and Mental Health Administration:
Medical facilities construction
Other
National Institutes of Health: Construction of health educational research, and library facilities
Office of Education:
Elementary and secondary education
Higher education
Other
Social and Rehabilitation Service
Department of Housing and Urban Development:
Renewal and housing assistance: Grants for neighborhood
facilities
See footnotes at end of table.
222
138
2
204
4
59
22
24
12
75
23
34
15
78
25
31
\7
126
137
156
104
14
114
17
112
18
53
127
130
20
247
26
*
33
244
28
9
27
237
14
17
26
38
53
SPECIAL ANALYSES
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description
1969
1971
1970
Investment-type outlays—Continued
ADDITIONS TO STATE, LOCAL, AND PRIVATE
ASSETS—Continued
State and local assets—Continued
Civil—Continued
Department of Housing and Urban Development—Con.
Metropolitan development:
Grants for basic water and sewer facilities
Open space land programs
_._
New community assistance
_.
Department of the Interior:
Construction grants for waste treatment works and other
pollution control
Land and water conservation
Administration of territories
Other
......
Department of Transportation:
Federal Aviation Administration: Airways and airports...
Federal Highway Administration:
Highway trust fund..
__
State and community highway safety programs
Forest highways
Other 1 .
.
.—
Urban Mass Transportation Administration
Intergovernmental agencies: Federal contribution, Washington Metropolitan Area Transit Authority
Other agencies
Total State and local assets, civil.
National defense: Department of Defense—MilitaryTotal State and local assets
Private assets:
Civil:
Funds appropriated to the President: Appalachian regional
development programs
Department of Agriculture:
Soil conservation
Agricultural stabilization and conservation
Other
Department of Commerce: Ship construction.__
Department of Defense—Civil: Columbia River flood control
Department of Health, Education, and Welfare:
Health Services and Mental Health Administration:
Mental health
Medical facilities construction
National Institutes of Health
Office of Education: Higher education and research and
training
Other
National Science Foundation
See footnotes at end of table.
55
1
146
71
2
139
44
17
1
166
73
23
3
366
89
32
7
104
92
139
4,067
18
31
8
136
4,335
64
24
4.252
63
12
130
257
6
19
20
27
122
31
5,571
6,234
6,736
16
14
15
5,588
6,248
6,751
18
33
26
133
3%
-1
97
144
313
-2
266
-26
43
119
18
19
147
90
112
15
150
84
17
158
69
17
137
72
69
7
56
67
12
36
67
25
24
52
54
THE BUDGET FOR FISCAL YEAR 1971
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description
1969
actual
1970
estimate
1971
estimate
Investment-type outlays—Continued
ADDITIONS TO STATE, LOCAL, AND PRIVATE
ASSETS—Continued
Private assets—Continued
Civil—Continued
Other agencies
12
21
12
959
881
959
881
6,676
7,207
7,633
3
1,232
97
10
1,290
130
23
700
171
29
11
38
8
43
6
134
35
127
242
46
37
92
30
20
157
20
181
214
79
22
101
17
20
23
64
109
25
20
169
5
215
234
91
25
110
11
19
23
62
159
22
18
96
,757
55
261
567
181
119
43
14
35
1,789
58
322
711
138
75
46
26
30
Total private assets, civil
National defense: Atomic Energy Commission (trust fund).
Total private assets
Total additions to State, local, and private assets
OTHER DEVELOPMENTAL EXPENDITURES
Education, training, and health:
Civil:
Funds appropriated to the President:
Appalachian regional development programs
Economic opportunity program
.
Department of Agriculture: Extension service
Department of Health, Education, and Welfare:
Consumer Protection and Environmental Health Service:
Environmental and air pollution control
Other—---.—.Health Services and Mental Health Administration:
Mental health
Health services research and development
Comprehensive health planning and services
Maternal and child health
Regional medical programs
Communicable diseases
Indian health services
_
Chronic diseases
1
Other
_
National Institutes of Health:
National Heart and Lung Institute
National Institute of General Medical Sciences
Health manpower
National Library of Medicine
National Institute of Neurological Diseases and Stroke
OtherOffice of Education:
Elementary and secondary education
Education for the handicapped
Vocational and adult education
Higher education
Education professions development
Community education
Salaries and expenses
Civil rights education
Other
See footnotes at end of table.
25
62
76
17
21
67
44
260
440
30
93
42
8
39
55
SPECIAL ANALYSES
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in million, of dollar!)—Continued
Description
1969
actual
1970
estimate
1971
estimate
Investment-type outlays—Continued
OTHER DEVELOPMENTAL EXPENDITURES—Continued
Education, training, and health—Continued
Civil—Continued
Department of Health, Education, and Welfare—Continued
Social and Rehabilitation Service:
Grants to States for public assistance
..
Rehabilitation services and facilities
Research and training
__
Assistance to refugees in the United States
Other
.
Social Security Administration
1
Other -..
Department of Housing and Urban Development:
College housing fund: Interest subsidies
Other
Department of the Interior:
Bureau of Indian Affairs: Education and welfare services..
Other
-_-_-Department of Labor: Manpower Administration:
Manpower training activities: Grants and contracts
Manpower Administration operating expenses and other..
Veterans Administration: Medical care and other
National Foundation on the Arts and the Humanities 1
National Science Foundation
Other agencies x
Total education, training, and health, civil
National Defense: Atomic Energy Commission and other
Total education, training, and health
Research and development:
Civil:
Funds appropriated to the President:
Economic opportunity program
Other
Department of Agriculture:
Agriculture Research Service x
Cooperative State Research Service
Forest Service
Other 1
Department of Commerce:
Environmental Science Services Administration
National Bureau of Standards
Other
.
Department of Health, Education, and Welfare:
Consumer Protection and Environmental Health Service:
Air pollution control
Other
Health Services and Mental Health Administration:
Mental health
_
._
Health services research and development
Other
National Institutes of Health
See footnotes at end of table.
2.315
350
29
17
1
2
2,644
487
28
18
2
21
32
2,892
540
30
25
2
24
40
53
*
61
5
79
5
117
14
148
14
167
\7
374
26
77
12
148
61
412
36
92
23
148
84
1,322
39
99
40
143
93
8,805
9,906
10,956
18
17
15
8,822
9,923
10,971
17
11
38
20
60
24
156
58
40
18
156
61
43
22
161
72
47
23
26
28
17
28
30
18
29
30
19
24
34
41
46
51
47
100
11
45
859
112
35
44
881
116
44
42
906
56
THE BUDGET FOR FISCAL YEAR 1971
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description
1969
actual
1970
estimate
1971
estimate
Investment-type outlays—Continued
OTHER DEVELOPMENTAL EXPENDITURES—Continued
Research and development—Continued
Civil—Continued
Department of Health, Education, and Welfare—Continued
Office of Education: Research and training and other
Social and Rehabilitation Service: Research and training
and other
Social Security Administration
Department of Housing and Urban Development
Department of the Interior:
Geological Survey
Bureau of Mines: Development of mineral resources
and other l
Bureau of Commercial Fisheries
Office of Saline Water: Saline water conversion
Federal Water Polution Control Administration
Other 1 ..
Post Office Department
Department of Transportation:
Federal Aviation Administration
Federal Highway Administration
Other
--:-—.National Aeronautics and Space Administration —
Veterans Administration
National Science Foundation1
Other agencies1
93
97
99
40
6
9
41
7
18
52
8
26
35
39
40
36
30
26
25
44
21
44
23
26
31
45
27
57
32
22
34
53
41
43
27
26
4,187
52
39
60
3,832
59
300
68
71
60
53
64
3,343
61
320
87
Total research and development, civil _
6,492
6,392
6,124
National defense:
Department of Defense—Military:
Military personnel__
...
Research, development, test, and evaluation.
Other
Atomic Energy Commission
295
7,457
10
1,406
322
7,300
7
1,348
306
7,382
8
1,372
9,168
8,977
9,015
15,660
15,369
15,138
27
36
30
49
24
47
47
-9
51
26
50
50
56
29
45
48
-12
185
205
197
Total other developmental expenditures
24,668
25,496
26,307
Total investment-type outlays
64,272
64,045
60,471
Total research and development, national defense _
Total research and development
51
280
Engineering and natural resources surveys—civil:
Department of Defense-yCivil: Corps of Engineers.
Department of the Interior:
Geological Survey
Federal Water Pollution Control Administration .
Otheri.._
Other agencies 1
Intragovernmental transactions (—)
Total engineering and natural resources surveys.
See foo
end of table.
57
SPECIAL ANALYSES
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description
1969
actual
1970
estimate
1971
estimate
Current Outlays
CURRENT EXPENSES FOR AIDS AND SPECIAL
SERVICES
Agriculture—citil:
Department of Agriculture:
Consumer and Marketing Service:
Removal of surplus agricultural commodities
Other 1 ...
_.
Foreign Agricultural Service
Agricultural Stabilization and Conservation Service:
Sugar Act program
Commodity Credit Corporation:
Price support and related programs
National Wool Act...
_
Other....
;-.-----.
Rural Electrification Administration: Loans and other.._
Farmers Home Administrationx
Other1
Farm Credit Administration1
Other agencies..
_
_
Intragovernmental transactions (—)
Total agriculture.
Business—ciril:
Department of Commerce:
Bureau of the Census
_
Patent Office
Maritime Administration:
Ship operation subsidies
Other
Other 1 ..
Department of Defense—Civil:
Corps of Engineers: Operation and maintenance
The Panama Canal
—
Post Office Department
Department of Transportation:
Coast Guard: Navigation aids and other *
._.
Federal Aviation Administration: Operations and other
1
Other -.......
.
Civil Aeronautics Board: Payments to air carriers
Small Business Administration: Business loans and investments
and other
Other agencies
_
Federal interfund transactions (—)
Total business.
415
53
24
471
59
25
462
56
28
87
147
93
152
133
3,296
68
6
85
9
63
-57
3,500
58
12
-6
13
-3
4,200
4,589
5,415
25
42
22
47
24
49
195
4
62
206
9
72
193
11
75
136
-25
57
170
-19
200
192
-16
-787
349
639
380
746
6
44
6
37
374
844
8
31
138
-1
-15
79
38
-19
91
15
-22
1,655
1,975
,082
29
99
124
9
16
34
618
69
696
71
759
79
18
20
117
65
__*
4,286
65
9
15
195
64
14
Labor-aril:
Department of Health, Education, and Welfare: Work incentives
--.
Department of the Interior: Bureau of Mines: Health and
safety
Department of Labor:
Manpower Administration: Unemployment trust fund and
other1
Other
fo
nd of table.
58
THE BUDGET FOR FISCAL YEAR 1971
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
1969
actual
Description
1970
estimate
1971
estimate
Current Outlays—Continued
CURRENT EXPENSES FOR AIDS AND SPECIAL
SERVICES—Continued
Labor civil—Continued
Equal Employment Opportunity Commission
_
Total labor.
Homeowners and tenants—civil:
Funds appropriated to the President
Department of Housing and Urban Development:
Renewal and housing assistance:
Rehabilitation loans
Low-rent public housing
Mortgage credit:
Rent supplement program..
Homeownership and rental housing assistance.
Federal Housing Administration fund
Special assistance functions
Secondary market operations (trust fund)
Other
__
Federal Insurance Administration
__.
Other
Federal Home Loan Bank Board
Intragovernmental transactions (—)
Total homeowners and tenants _
13
18
895
1,013
-1
339
-1
457
-2
634
5
1
-226
-11
19
19
-246
36
41
102
-280
67
-13
-19
27
-143
-23
__*
35
-111
-450
137
464
22
24
26
4,899
\\
28
-234
5,292
974
1,523
236
-37
-35
594
82
12
24
-129
5,342
1,179
1,543
238
-37
-35
620
80
25
20
-130
7,551
8,559
8,870
991
892
105
101
890
-16
100
555
569
456
733
-1
-194
-29
-33
21
-308
-13
Veterans—civil:
Department of Defense—Civil
Veterans Administration:
Compensation and pensions
Readjustment benefits
Medical care
General operating expenses
Veterans reopened insurance fund
Veterans special term insurance fund
National service life insurance fund
United States Government life insurance fund.
Other L . .
Other agencies
Intragovernmental transactions (—)
Total veterans.
International aids:
Civil:
Funds appropriated to the President:
Economic assistance x
Private investment assistance
Peace Corps *
Department of Agriculture: Commodity Credit Corporation:
Public Law 480 donations of agricultural commodities and
other
See footnotes at end of table.
681
1,363
205
-36
-35
568
78
59
SPECIAL ANALYSES
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description
1970
1969
1971
stimate
Current Outlays—Continued
CURRENT EXPENSES FOR AIDS AND SPECIAL
SERVICES—Continued
International aids—Continued
Civil—Continued
Export-Import Bank of the United States_
Other agencies 1
-120
37
-117
47
-116
37
1.569
1,492
1.352
1,690
15
1,445
24
1,381
27
Total international aids, national defense
1,705
1.468
1,408
Total international aids
3,274
2.960
2.760
Total international aids, civil.
National defense: Funds appropriated to the President:
Military assistance *
Department of Defense—Military: Military construction. __
__
Welfare aids—civil:
Funds appropriated to the President: Disaster relief.._
Department of Agriculture:
Special milk program
Child nutrition programs
_-_
Food stamp program _
Department of Health, Education, and Welfare:
Social and Rehabilitation Service:
Grants to States for public assistance
Programs for the aging
Assistance to refugees in the United States
Other
Social Security Administration: Special benefits for disabled
coal miners
----:
Family assistance legislation
Department of the Interior: Bureau of Indian Affairs: Education and welfare services
Total welfare aids .
Other aids and special services—civil:
Funds appropriated to the President:
Appalachian regional development programs
Economic opportunity program 1
Department of Agriculture: Forest Service
Department of Commerce: Bureau of the Census: Nineteenth
decennial census and other l
Economic development assistance.__
Department of Health, Education, and Welfare:
Health Services and Mental Health Administration:
Patient care and special health services
Mental health
Other 1
Social and Rehabilitation Service: Work incentives
See footnotes at end of table.
20
145
115
102
237
248
81
302
575
17
314
1,249
3,961
16
47
27
4,831
28
62
42
5,379
27
79
47
20
150
500
42
51
30
4.689
6.128
7,928
4
560
21
5
502
25
22
45
137
52
6
521
24
65
53
73
25
14
39
77
28
15
75
60
THE BUDGET FOR FISCAL YEAR 1971
Table D-3.
INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description
1969
actual
1970
estimate
1971
estimate
Current Outlays—Continued
CURRENT EXPENSES FOR AIDS AND SPECIAL
SERVICES-Continued
Other aids and special services—civil—Continued
Department of Health, Education, and Welfare—Continued
Social Security Administration:
Payment to social security trust funds
Federal old-age and survivors insurance trust fund
Federal disability insurance trust fund
Federal hospital insurance trust fund
Federal supplementary medical insurance trust fund
Other
Other
Department of Housing and Urban Development:
Renewal and housing assistance: Urban renewal fund
Comprehensive planning grants and other metropolitan
development
Model Cities programs
Departmental management and other
Department of the Interior:
Bureau of Indian Affairs:
Resources management
Tribal funds (trust funds)
Other i
Other
Post Office Department....
Department of Transportation:
Federal Highway Administration:
Highway Beautification
Highway trust fund
Other
Other1.....
Railroad Retirement Board
Other agencies 1
Intragovernmental transactions (—)
Total other aids and special services
Total current expenses for aids and special services
2,147
454
131
104
194
2,004
484
155
145
214
43
54
2,589
516
164
133
234
*
70
535
1,042
1,036
39
15
35
52
300
49
55
109
18
2
704
60
86
15
3
779
53
530
56
67
66
15
3
803
21
62
18
10
15
15
-2,076
23
66
20
18
17
19
-2,025
25
81
23
28
147
21
-2,581
3,408
4,454
4.947
25,060
29,696
32,479
23,732
2,443
4,654
1,645
97
1,533
26,356
2,798
5,225
1,949
93
1,663
29,706
3,191
6,325
2,078
94
1,669
34,104
38,084
43,063
2,061
2,620
2,947
RETIREMENT AND SOCIAL INSURANCE BENEFITS
Insurance benefits—civil:
Department of Health, Education, and Welfare:
Federal old-age and survivors insurance trust fund
Federal disability insurance trust fund
Federal hospital insurance trust fund
Federal supplementary medical insurance trust fund
Department of Labor: Unemployment trust fund
Railroad Retirement Board (trust fund)
Total insurance benefits
Unemployment benefits—civil: Department of Labor: Unemployment trust fund
See footnotes at end of table.
61
SPECIAL ANALYSES
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description
1969
actual
1970
1971
Current Outlays—Continued
RETIREMENT AND SOCIAL INSURANCE
BENEFITS—Continued
Other retirement and social insurance benefits—civil:
Civil Service Commission: Civil service retirement and disability fund
Other trust funds
Trust interfund transactions (—)
_
_
2,401
15
-10
2,803
18
-1
3,200
21
-1
Total other retirement and social insurance benefits
2,406
2,820
3.219
38,571
43,524
49,229
207
225
224
137
148
133
40
86
64
40
311
-126
64
50
102
73
48
362
-180
61
29
105
76
49
375
-116
61
Total retirement and social insurance benefits
OTHER SERVICES AND CURRENT OPERATING
EXPENSES
Repair, maintenance, and operation of physical assets (excluding
special services):
Civil:
Department of Agriculture: Forest Service *
Department of Defense—Civil: Corps of Engineers and
other...
Department of the Interior:
Bureau of Land Management*
_.
National Park Service 1
l
Bureau of Reclamation
Other
General Services Administration: Public buildings
Tennessee Valley Authority
Other agencies 1
Total repair, maintenance, and operation of physical
assets, civil
National defense:
Department of Defense—Military:
Operation and maintenance
Family housing. ._
Atomic Energy Commission
General Services Administration
822
937
22,185
336
122
*
21,461
382
173
*
19,611
411
157
*
Total repair, maintenance, and operation of physical
assets, national defense
22,644
22,016
20,179
Total repair, maintenance, and operation of physical
assets
23,466
22,904
21,116
109
129
134
85
92
4
89
118
6
93
127
6
Regulation and control—civil:
The Judiciary
Department of Agriculture:
Agricultural Research Service l
Consumer and Marketing Service *
Other
See footnotes at end of table.
62
THE BUDGET FOR FISCAL YEAR 1971
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
1970
estimate
1969
actual
Description
1971
estimate
Current Outlays—Continued
OTHER SERVICES AND CURRENT OPERATING
EXPENSES—Continued
Regulation and control—civil—Continned
Department of Health, Education, and Welfare:
Consumer Protection and Environmental Health Service:
Food and drug control
Air pollution control and other
Utner
Department of Justice:
Legal activities and general administration
Federal Bureau of Investigation
Immigration and Naturalization Service. _
Federal Prison System 1
Law Enforcement Assistance Administration
Bureau of Narcotics and Dangerous Drugs
Department of Transportation:
Coast Guard
..
Federal Aviation Administration
Other
Treasury Department:
Bureau of Customs 1
__
Secret Service
__
___ _ _
1
Other
Federal Deposit Insurance Corporation (trust fund)
Interstate Commerce Commission.
__
National Labor Relations Board
l
Other agencies
_
___
Total regulation and control
__
Other operation and administration:
Civil:
International activities:
Department of State:
Administration of foreign affairs 1
International organizations and conferences
Educational exchange *
Other
United States Information Agency *
Other agencies
53
22
l
--
Total international activities
Federal financial activities:
Legislative branch: General Accounting Office
Treasury Department:
Bureau of Accounts *
Bureau of Customs
_
Bureau of the Mint
_
_
Bureau of the Public Debt
Internal Revenue Service
_
Other
Other agencies
Total Federal financial activities
See footnotes at end of table.
.
_
--
--
52
28
60
41
L
Z
L
85
214
90
51
22
16
104
242
102
59
152
26
113
251
109
66
320
31
43
46
6
48
56
7
55
62
8
14
23
-313
25
34
132
22
32
-3
-333
27
38
153
25
43
-2
-359
26
37
163
854
1,154
1.408
214
127
41
226
139
34
176
12
185
8
226
155
38
2
188
9
572
594
617
59
69
74
46
95
16
57
746
15
-4
46
113
21
64
848
19
-2
47
125
26
68
904
18
-4
1.029
1,177
1,257
2
63
SPECIAL ANALYSES
Table D-3, INVESTMENT, OPERATING, AND, OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description
1969
1970
1971
Current Outlays—Continued
OTHER SERVICES AND CURRENT OPERATING
EXPENSES—Continued
Other operation and administration—Continued
Civil—Continued
Other direct Federal programs:
Legislative branch 1
Executive Office of the President
_
Department of Commerce:
Environmental Science Services Administration *
National Bureau of Standards
_
Department of Defense—Civil
_
1
Department of the Interior . _ .
_
!
Treasury Department: Bureau of Accounts and other _ __
General Services Administration *_
_
Civil Service Commission:
Salaries and expenses and other *
Employees life insurance trust fund
Retired employees' health benefits trust fund
Other agencies *
Intrabudgetary transactions (—)
204
26
247
34
262
40
103
6
60
44
62
146
113
11
67
52
156
142
119
12
70
56
66
120
25
-152
1
9
_*
65
-147
-26
13
56
-154
-2
14
___
536
726
661
Retirement, unemployment, and accident compensation for
Federal employees:
Department of Labor:
Unemployment compensation for Federal employees
and ex-servicemen and trade adjustment activities
Employees' compensation claims and expenses
Department of Transportation: Coast Guard: Retired pay.
Civil Service Commission: Special payments and annuities_
Other agencies
_
___
I ntr a governmental transactions (—)
126
67
53
114
14
-72
185
81
60
115
16
-73
200
85
64
284
20
-236
302
384
417
53
79
87
78
43
31
1
88
46
33
1
92
52
49
1
35
80
85
23
43
87
127
24
49
87
133
28
429
528
576
2,868
3,409
3,528
Total other direct Federal programs,
Total retirement, unemployment, and accident compensation for Federal employees
_
Shared revenues and grants-in-aid:
Department of Agriculture: Forest Service
Department of the Interior:
Bureau of Land Management
Office of Territories
Bureau of Sport Fisheries and Wildlife
Other
Treasury Department:
Bureau of Customs
Internal Revenue Service
District of Columbia: Federal payment
Other agencies
-Total shared revenues and grants-in-aid
Total other operation and administration, civil
See footnotes at end of table.
_
64
THE BUDGET FOR FISCAL YEAR 1971
Table D-3 INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description
1969
actual
1970
estimate
1971
Current Outlays—Continued
OTHER SERVICES AND CURRENT OPERATING
EXPENSES—Continued
Other operation and administration—Continued
National defense:
Department of Defense—Military:
Military personnel
Retired pay, defense
Operation and maintenance
Family housing
Civil defense
Other1....
Selective Service System
Other agencies *
Intragovernmental transactions (—)
21,078
2,444
42
94
65
-1,523
65
9
-8
21,979
2,857
39
93
58
-693
74
20,605
3,193
39
80
58
-537
75
13
-7
11
-7
Total operation and administration, national defense-
22,268
24,414
23,519
Total other operation and administration
25.136
27,824
27,047
16,588
18,800
19.000
1
120
7
1
128
11
1
128
13
128
140
142
__
Interest:
On the public debt.
Other interest:
On refunds:
Department of the Interior
Treasury Department
On uninvested funds: Treasury Department.
Total other interest
l
Intrabudgetary transactions (—):
Interest on Government capital in enterprises (—) _
Interest on other capital in enterprises
Interest received by trust funds (—)
-628
-11
-1,041
-3,099
-3,781
-4,273
__.
12,977
14,351
13,827
Total other services and current operating expenses.
62,434
66,232
63,398
126,065
139.452
145,106
19
20
19
-2,018
-3,781
175
300
-2.307
-3,800
-2.366
-5,034
184,556
197,885
200,771
Total interest
Total current outlays
UNCLASSIFIED
Payments to other funds 1—
Allowances for:
Revenue sharing
_
Civilian and military pay increases
_
Contingenci es
Employer share, employee retirement (—).
Proprietary receipts from the public (—) 2_
Total budget outlays.
1'"Less than $500 thousand.
2 Includes both Federal funds
and trust funds.
Excludes loan repayments deposited in miscellaneous receipts and offset in the
penditure accounts as follows:
1969
Loan repayments offset in the loan account
— 249
Repayments offset in the expenditure account
—161
275
1,400
900
loan and ex1970 1971
— 232 —254
—179 —250
SPECIAL ANALYSIS E
FEDERAL CREDIT PROGRAMS
INTRODUCTION
Direct loans and Federal insurance or guarantees of private loans
continue to play a major role in Government programs for: (a)
improvement of housing and encouragement of homeownership; (b)
development of agricultural and other natural resources; (c) assistance
to economic development and military preparedness abroad; (d) promotion of business, especially exports, transportation, and small business generally; (e) redevelopment of communities and regions; and
(f) aid to higher education. In addition, Government-sponsored private
lending agencies provide major credit assistance in the first two of
these areas.
Federal Credit Programs
New Commitments for Direct Loans and Guaranteed and Insured Loans
Total
Direct Loans—Expenditure Account
I960
1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971
Fiscal Years
Estimate
65
390-700 O—70
5
66
THE BUDGET FOR FISCAL YEAR 1971
Federal credit programs help borrowers to help themselves. In
several programs, credit aids are part of a package of Federal assistance. Such a package sometimes also includes, for example,
grants to provide necessary public facilities for depressed areas;
grants for work-training, education, and other types of community
action to help combat poverty; technical aids to help underdeveloped
countries plan and construct basic transportation systems; or management advice to help rural residents plan, develop, and operate their
farms productively.
From 1961 through 1968, the overall level of Federal credit assistance—measured by the volume of direct loans and of guarantees and
insurance of private loans—rose steadily at a rate comparable to the
rise in the gross national product. This reflected both broadening of
many existing programs and initiation of new programs to meet
emerging needs.
During the fiscal year 1969 the Secondary Market Operations Trust
Fund of the Federal National Mortgage Association, the Federal
intermediate credit banks and the banks for cooperatives were converted from mixed-ownership to wholly private enterprises. As a result,
only part of their operations in 1969 and none in 1970 or 1971 are
included in the budget. Tables E-l, E-2, and E-3 reflect in total and
detail the impact of this shift from public to private status.
The increasing emphasis on private financing has also caused major
changes in the package of credit assistance made available in recent
years. These changes would be extended still further by proposed legislation. Instead of relying primarily on direct loans with their major
immediate budgetary impact, Federal agencies are encouraging greater
private financing by undertaking to guarantee or insure such private
funds against loss, to pay a large enough share of the interest cost
to enable eligible borrowers to qualify for the loans, or to combine
the two approaches. Examples of this approach in existing programs,
include: (a) federally insured loans and interest subsidies for college
students; (b) insured or guaranteed loans combined with supplementary payments to finance housing for low and moderate income families
in both urban and rural areas; and (c) payment of a portion of the
interest on privately financed loans for college housing and academic
facilities. Other current proposals to apply this approach to Federal
aid for other groups are mentioned later in this analysis.
SCOPE OF SPECIAL ANALYSIS
This analysis: (a) summarizes 1969-71 trends in Federal credit
programs; (b) indicates the relationship between the credit programs
and overall budget totals; and (c) discusses certain subsidy aspects
of credit programs. It provides information on the level and trends of
all direct loan and loan guarantee and insurance programs operated
by Federal agencies and trust funds—including both currently active
programs and programs in process of liquidation.
In addition, a final table summarizes net changes in outstanding
amounts both of direct Federal loans (included in the budget) and of
guaranteed and insured loans and loans made by Governmentsponsored agencies (not reflected in budget outlays).
SPECIAL ANALYSES
67
The principal disbursements and repayments of most of the direct
Federal loans covered by this analysis are included in the loan account.
In addition, in line with the recommendations of the 1967 Commission on Budget Concepts, two specific types of direct loan programs,
accounting for about one-third of direct loan commitments in 1970
and 1971, are reflected in the expenditure account; these programs
comprise: (a) foreign loans made largely on noncommercial terms; and
(b) other loans where the terms of the loan contract make repayment
in certain respects contingent rather than mandatory. Disbursements,
repayments, and net outlays for each appropriation and fund account1
which finance these programs are listed in a table in the Appendix.
In the case of programs in the loan account, net lending is also separately identified, for each applicable account, in Part 5 of the budget.
As in previous years, the analysis excludes all borrowing operations
of Federal agencies, whether from the Treasury or the public. Sales
of certificates of participation in pools of loans by the Export-Import
Bank and by the Government National Mortgage Association
as trustee for several agencies are treated as borrowing. Similarly, beginning with the fiscal year 1970, sales of certificates of interest by
the Commodity Credit Corporation, formerly classified as sales of
guaranteed loans, are treated as agency borrowing.
The tables in the 1971 analysis include only data on loans that
are both disbursed and repayable in dollars. The 1970 analysis had
also included loans disbursed in dollars but repayable in foreign
currency. The change in the analysis is in line with current policy
which requires that 2on all new commitments loans disbursed in dollars
be repaid in dollars.
The 1971 analysis covers credit programs administered by 10
departments and 12 other agencies. The estimates for 1970 and 1971
include credit aid authoiized by legislation enacted during the past
year. Such legislation, summarized in the last section of this analysis,3
authorized several important changes in Federal credit programs.
The analysis also reflects the impact on credit programs of proposed
legislation: (a) authorizing direct loans, loan guarantees, and interest
subsidies to help finance modernization and construction of medical
facilities; (b) substituting federally supported borrowing from the public in place of direct Federal loans to finance public works and other
capital outlays by the District of Columbia; (c) permitting sales of
direct loans by the Veterans Administration at prices consistent with
market yields; and (d) expanding ship mortgage insurance as part of
the program to revitalize the Merchant Marine. Credit assistance
would also be provided in unspecified amounts under other proposals:
(e) authorizing loans for advance acquisition of necessary land for
urban mass transportation projects; (f) establishing a Rural Telephone
Bank and authorizing more flexible interest rates for future direct
1
2
See appendix, pp. 1081-84.
The level and trends in direct loans of Government agencies disbursed or repayable in foreign
currencies are as follows (in millions of dollars):
1969
1970
1971
Outstanding, start of year (dollar equivalent)
5,629
5,825
5,850
Disbursements
334
175
\\7
Repayments—dollars
12
7
7
Repayments—local
currencies
125
142
159
Nev disbursements
196
25
—50
Outstanding, end of year
5,825
5,850
5,801
* See pp. 79-80.
68
THE BUDGET FOR FISCAL YEAR 1971
loans to rural telephone borrowers; (g) authorizing Farmers Home
Administration to insure taxable obligations and pay interest subsidies on borrowing by public agencies; and (h) establishing an
environmental financing authority.
NEW COMMITMENTS
New commitments are the best single measure of short-run trends
in most Federal credit programs. They also often give the best advance
indication of trends in the financing impact of these programs, since
changes in the level of new commitments frequently precede corresponding changes in the volume of loans disbursed by either public
agencies or private lenders and in the purchase of goods and services
by the ultimate borrowers.
In this analysis, commitments are defined as approvals by Federal
agencies of direct loans or of insurance or guarantees of private loans.
They are shown on a gross basis, including administrative reservations, commitments that do not later result in actual credit extensions, and the unguaranteed portions of loans partially covered by
Federal guarantees.
Direct loans.—New commitments for direct loans fall from $15.9
billion in 1969 to $13.3 billion in 1970 and to $12.3 billion in 1971. The
sharp drop from 1969 to 1970 reflects primarily (a) the conversion to
private ownership of the three major groups of Federal agencies with
1969 commitments of $4.7 billion and (b) nonrecurring 1969 loans of
$1.7 billion to the newly private FNMA—all of which were repaid by
the end of the fiscal ye&r. On the other hand, commitments of the
Export-Import Bank are expected to rise by $1.9 billion in 1970 and
by another $0.6 billion in 1971,.,
Guarantees and insurance.—New commitments for guarantees and
insurance of private loans are expected to rise rapidly from $25.3 billion
in 1969 to $30.2 billion in 1970 and $39.1 billion in 1971.
The 2-year increase is primarily attributable to expansion in the
volume of mortgage insurance commitments by the Federal Housing
Administration ($6.6 billion), the Veterans Administration ($1.3
billion), and the Farmers IJome Administration ($0.9 billion). These
increases, almost entirely for housing purposes, will be made possible
in part by the extensive purchases of such obligations by the privately
owned FNMA, in both 1970 and 1971, and by the somewhat easier
credit conditions anticipated in 1971.
In addition, guarantee commitments in urban renewal and public
housing programs are expected to rise by $1.2 billion, primarily to
accelerate expansion of low-rent public housing construction. Under
authority provided in 1968, GNMA expects to guarantee $0.5 billion
in 1970 and $1 billion in 1971 in private securities backed by insured
housing loans. Outside the housing field, the Export-Import Bank
plans by 1971 almost to double the $1.7 billion of commitments made
for guaranteed loans in 1969.
69
SPECIAL ANALYSES
Table E-1. NEW COMMITMENTS FOR FEDERAL CREDIT PROGRAMS
CLASSIFIED BY TYPE OF ASSISTANCE AND ACCOUNT (in millions of dollars)
Agency or program
1971 estimate
1970 estimate
1969 actual
Direct
loans
Guaranteed
and
insured
loans
Direct
loans
Guaranteed
and
insured
loans
Direct
loans
Guaranteed
and
insured
loans
226
723
55
216
250
859
100
295
235
1,161
150
535
2,647
225
666
3,057
189
32
EXPENDITURE ACCOUNT
Funds appropriated to the President:
Military assistance
Economic assistance l
Agriculture:
Commodity Credit Corporation
Health, Education, and Welfare
Other programs
Total, expenditure account.
15
3,837
937
4,387
2,715
164
36
395
4,311
685
LOAN ACCOUNT
Funds appropriated to the President:
Office of Economic Opportunity
Agriculture:
Commodity Credit Corporation
Rural Electrification Administration
Farmers Home Administration..
Commerce:
Economic Development Administration.
Maritime Administration
Health, Education, and Welfare
Housing and Urban Development:
Renewal and Housing Assistance
Metropolitan Development
Federal Housing Administration
Government National Mortgage Association
Federal National Mortgage Association-.
Interior
General Services Administration
Veterans Administration:
Housing loans and guarantees
Insurance policy loans
District of Columbia..
_.
Export-Import Bank
Farm Credit Administration:
Banks for cooperatives
__
Federal intermediate credit banks
Federal Home Loan Bank Board
Small Business Administration
Other agencies or programs
Obligations of federally sponsored enterprises
.__
13
221
470
489
895
76
1
14
10
142
687
681
45
355
71
94
23
14
200
794
1,987
718
42
2,817
150
14.429
193
636
42
188
16,742
35
1.779
24
300
1.125
3.209
250
21.063
17
45
359
4.017
441
158
150
3.200
~2."o6o"
470
2
519
532
113
668
5
24.366
8.883
29.838
38.388
25.303
13.280
30.233
39,073
150
110
1,298
1.516
Tra"
500
851
1.000
6
17
52
6
4.200
455
5.300
153
190
3.850
115
3.389
1,059
2,872
38
248
87
*
19
357
71
825
2
132
15.936
•Less than $500 thousand.
Including in 1971 the Overseas Private Investment Corporation.
1,136
212
470
415
4
12,099
1
14
2.557
782
14
28
Total, loan accountGrand total
19
223
470
433
70
THE BUDGET FOR FISCAL YEAR
1971
Overlapping commitments.—Total estimated new commitments of
$51.4 billion in 1971 include several cases where two or more types of
Federal assistance are provided for the same borrower or on the same
property or project at different stages in the financing process. For
example, commitments by GNMA are for purchase of mortgages
insured or guaranteed by other Federal agencies. In several programs,
the same authority is used both to make direct loans and to guarantee
or insure private loans. This is true of certain programs of the Farmers
Home Administration, and in urban renewal and public housing
programs of the Department of Housing and Urban Development. In
the latter cases, the allocation of direct loan and guarantee commitments is estimated on the basis of past experience.
DISBURSEMENTS AND REPAYMENTS
Gross disbursements for direct loans have the most immediate
impact on the budget. In long-established programs, or in programs
involving short-term loans, however, the cash outflow required for
such disbursements usually is largely or wholly offset by repayments
on the outstanding portfolio of loans. This is true for most of the
credit extensions by the Farmers Home Administration and the
Commodity Credit Corporation, as well as for the interim financing
of public housing and urban renewal projects.
On the other hand, long-term loans, such as those to finance construction of college housing and academic facilities or rural electrification and telephone systems, as well as purchases of mortgages to
help finance residential housing, can have a major net impact on the
budget, since repayments in the early years often fall short of new
loans.
I
o
-2.5-
1960
1961 1968 1963 1964 1965 1966 1967 1968 1969 1970
Fiscal Years
1971
Estimate
SPECIAL ANALYSES
71
Federal guarantees and insurance of private loans, except when
accompanied by interest subsidies, ordinarily have only minor and
indirect budget consequences. Principal disbursements of Federal
funds normally occur only when the borrower defaults, or in a few
programs when holders of such insured loans exercise their repurchase
options.
In accordance with the recommendations of the Commission on
Budget Concepts, both the budget as a whole and this analysis
segregate and treat separately net lending—the excess of principal
disbursements over collections of all credit programs in the loan
account. The gross data on disbursements are also adjusted to reflect
writeoffs, losses, and xecoveries. As a result, the net lending in any
year equals the change between the loans outstanding in the loan
account at the beginning of the year and the total outstanding at the
end of the year.
The same principles are followed in deriving the gross and net loan
expenditures for credit programs in the expenditure account. As a
result, the net loan disbursements for all credit programs in the loan
account and the totals for the credit programs in the expenditure
account are identical with the outlays shown as "loans" in1 the "additions to Federal assets" category in Special Analysis D. For those
loan programs in the expenditure account not financed through revolving funds, repayments are sepaiately recorded in miscellaneous
receipts, rather than netted against expenditures for each program.
Over the 1959-68 period, gross disbursements for all Federal programs in the loan account rose from $7.9 billion to $20.4 billion. Net
lending ranged from a low in 1963—when repayments exceeded new
loan disbursements by $0.1 billion—to peaks of $5.1 billion in 1967
and $6.1 billion in 1968.
'
By contrast, in 1969-71, sharp reductions in the budgetary impact
of these programs are occurring. In 1969, gross disbursements dropped
to $17.0 billion, followed by a further decline to $13.8 billion in 1970
and $12.6 billion in 1971. All of this decline can be accounted for by^
the conversion to private ownership of three major groups of lending
agencies, which disbursed $11.4 billion in loans during 1968 and $4.2
billion in the portion of 1969 prior to their shifts to private ownership.
Net lending—the excess of disbursements over receipts in the loan
account—in 1969 dropped to $1.5 billion. In 1970, it will increase to
$2.9 billion, but will fall in 1971, to $0.7 billion. The decline in 1971
results from the estimated increases of $1.9 billion in sales of direct
loans by four agencies, together with a reduction of $0.8 billion in
repurchases by two of these agencies. Details by agency are shown at
the bottom of table E-2.
Net loan outlays in the expenditure account will fall from $1.9 billion
in 1969 to $0.9 billion in 1970 and 1971. This is almost entirely the
result of reduction in the net loan expenditures of the Commodity
Credit Corporation from $0.8 billion in 1969 to a modest excess of
repayments in 1970 and 1971. Net loan disbursements for the foreign
economic assistance programs of the Agency for International Development will remain relatively unchanged at about $0.8 billion each
year. This is partly because most of such loans permit deferment of
principal repayments during several early years.
1
See table D-2 on pp. 47-49.
72
THE BUDGET FOR FISCAL YEAR 1 9 7 1
Table £-2. DISBURSEMENTS AND REPAYMENTS FOR FEDERAL CREDIT
PROGRAMS CLASSIFIED BY TYPE OF ACCOUNT (in millions of dtllars)
1969 actual
Dis- i Repayments
bursementt
EXPENDITURE ACCOUNT
Funds appropriated to the President:
Military assistance
Economic assistance
Agriculture:
Commodity Credit Corporation
Health, Education and Welfare..
Treasury Department
. .
Other programs
_
Total, expenditure account
1971 estimate
!970efltimtte
Agency or program
Disbursements
Repayments
Disbursements
Repayments
77
957
19
139
139
923
68
116
262
881
59
137
1.801
1
46
12
3,106
160
29
3.163
•
121
12
2.632
135
_
2,620
201
55
9
39
2.664
1
148
14
_
3.919
2,018
4.357
3.481
3.948
3.023
9
12
16
12
11
14
221
402
1,765
137
172
1.444
223
505
2.413
194
157
2,140
212
492
2.580
220
167
3,439
50
I
100
8
8
5
99
62
101
10
9
6
137
12
7
8
842
48
297
618
4
277
1.247
44
125
1.035
5
1.050
40
130
129
884
6
71
2.439
249
17
28
1.883
72
5
23
662
256
698
344
17
45
5
18
16
52
5
32
327
150
108
1,668
138
86
43
1.303
396
158
149
2,136
199
87
46
1,418
388
153
190
1,903
664
88
44
1.592
1,059
2,872
36
208
88
934
3.158
15
225
12
519
458
174
524
255
76
19
352
115
24
257
42
132
1.058
13,117
11.640
9.489
6,589
8.604
7,921
17.036
13.659
13.846
10,070
12.552
10.944
830
407
350
1,598
50
61
384
2,914
100
526
500
1.180
2.093
407
4,040
LOAN ACCOUNT
Funds appropriated to the President:
Office of Economic Opportunity
_
Agriculture:
Commodity Credit Corporation
Rural Electrification Administration
Farmers Home Administration
Commerce:
Economic Development Administration.
Maritime Administration
.
Health, Education, and Welfare
Housing and Urban Development:
Renewal and Housing Assistance
Metropolitan Development
Federal Housing Administration
Government National Mortgage Association - Federal National Mortgage Association _
Interior General Services Administration
Veterans Administration:
Housing loans and guarantees
Insurance policy loans
District of Columbia
. _
Export-Import Bank
Farm Credit Administration:
Banks for cooperatives
Federal intermediate credit banks Federal Home Loan Bank Board.
Small Business Administration
Other agencies or programs _
Obligations of federally sponsored enterprises
Total, loan account
Grand total
_
___
Repurchases and sales of financial assets
included in above totals:
Agriculture:
Commodity Credit Corporation, net
Farmers Home Administration
Housing and Urban Development
_
Veterans Administration
Export-Import Bank
Total
•Less than $500 thousand.
405
405
667
958
*
1
378
2.005
5
SPECIAL ANALYSES
73
OUTSTANDING DIRECT AND GUARANTEED LOANS
The best index of the level of Federal credit programs over a period
of years is provided by total outstanding direct and guaranteed
loans. By the close of 1971, these will amount to $176.4 billion in the
loan account and an additional $22.5 billion in the expenditure account—or a gross total of $198.9 billion.
Outstanding direct loans in the loan account will rise by an estimated $2.9 billion during the current fiscal year and by $0.7 billion
in 1971, to a total of $33.1 billion on June 30, 1971. Significant increases
over the 2-year period include the Export-Import Bank ($1.0 billion),
the Rural Electrification Administration and the GNMA (each $0.7
billion), HUD's renewal and housing assistance programs—mainly
college housing loans—($0.4 billion) and the Small Business Administration ($0.3 billion). Loans held by the Farmers Home Administration will fall by $0.6 billion.
Outstanding loans in the expenditure account will rise by $2.5 billion
in 1970 and $0.9 billion in 1971. An increase of $1.5 billion in CCC
direct loans results indirectly from reclassification of $1.6 billion in
certificates of interest as agency debt. At the same time, the portfolio
of foreign economic assistance loans made by the Agency for International Development will rise by $1.6 billion during the 2-year period.
Outstanding guaranteed and insured loans for both accounts are
expected to rise by an estimated $9.0 billion in 1D70 and by a record
$18.3 billion during 1971. The net increase in outstanding loans insured by the Federal Housing Administration ($13.1 billion) accounts
for almost half of the 1969-71 rise. Other major increases are anticipated by HUD in its renewal and housing assistance programs ($3.3
billion), the Farmers Home Administration ($2.8 billion), the ExportImport Bank ($2.5 billion), the Veterans Administration ($2.0 billion),
the Student Loan Insurance program of the Office of Education ($1.4
billion), and the Small Business Administration ($0.8 billion). The
only significant decrease is the elimination of $1.6 billion in guaranteed
certificates of interest of the CCC, because of the reclassification of
this item.
The amounts shown include both the guaranteed and unguaranteed
portion of outstanding loans in order to give a more complete picture
of the economic impact of these programs and to tie in better with
banking statistics. The estimated contingent liability of the Federal
Government by the end of 1971 will be $19.9 billion less than the
$145.1 billion principal amount of the loans guaranteed and insured.
Most of this difference is accounted for by the veterans loan guarantee
progrnm, where the Government's liability will be $16.4 billion lower
than the amount of guaranteed loans outstanding.
INTEREST RATES AND MATURITIES
Two of the major ways in which Federal credit programs help
achieve program objectives are by providing more favorable interest
rates or maturities than many borrowers can obtain from other
sources. Table E-4 summarizes the current range of interest rates
charged by the various major credit programs on direct loans (or
74
THE BUDGET FOR FISCAL YEAR 1971
Table E-3. OUTSTANDING DIRECT LOANS, AND GUARANTEED AND
INSURED LOANS FOR FEDERAL CREDIT PROGRAMS CLASSIFIED BY
TYPE OF ACCOUNT (in millions of dolliri)
1969 actual
Agency or program
Direct
loans
1970 estimate
Guaranteed
Direct
loans
insured
loans
Guaranteed
insured
loans
1971 estimate
Direct
loans
Guaranteed
and
insured
loans
349
9.387
482
1,268
EXPENDITURE ACCOUNT
Funds appropriated to the President:
Military assistance
Economic assistance l
Agriculture: Commodity Credit Corporation
Health, Education, and Welfare
Treasury Department
Other programs
_
4.829
245
4.708
262
Total, expenditure account.
17.360
2.345 • 19.826
85
89
87
458
5.026
2.694
487
5,375
2,970
3,266
5.700
2,112
375
73
455
644
2,106
63.001
3.658
406
703
11,220
40
68,203
3.824
440
762
76.080
195
172
18
49
4,661
207
199
500
21
49
5,015
218
219
1,500
24
49
2.650
868
266
5.421
166
34.927
2.848
938
370
6.139
161
1,734
547
35.057
2,571
1.003
516
6.450
155
1,829
619
36.945
77
7.837
366
389
147
8,644
3.046
1.326
1.590
4.579
1.486
457
755
4.547
1.621
4.560
286
1,212
20.751
1.750
LOAN ACCOUNT
Funds appropriated to the President:
Office of Economic Opportunity
Agriculture:
Commodity Credit Corporation
Rural Electrification Administration
Farmers Home Administration.
Commerce:
Economic Development Administration.
Maritime Administration
Health, Education, and Welfare
Housing and Urban Development:
Renewal and Housing Assistance
Metropolitan development
Federal Housing Administration
Government National Mortgage Association
Interior
_
General Services Administration
Veterans Administration:
Housing loans and guarantees
Insurance policy loans
District of Columbia
_
Export-Import Bank
Federal Home Loan Bank Board
Small Business Administration
Other agencies or programs
Obligations of Federally-sponsored enterprises
286
82
360
3.446
367
708
2.679
25
622
1.394
9.806
4.256
1.531
451
20
2,039
*
603
176
479
39
20
3,218
969
161
428
66
584
5,523
63
775
2,902
13.103
95
135
4.519
1.450
144
Total, loan account.
29.496 115,358
32,395 125,513
33,078 143,306
Grand total
46.856 117,703
52,221 126,725
53,829 145.056
*Less than $500 thousand.
l Including, in 1971, the Overseas Private Investment Corporation.
75
SPECIAL ANALYSES
prevailing on insured or guaranteed loans) and the customary maturities for both direct and insured and guaranteed loans. These terms
are on newly committed loans by currently active programs, and do
not necessarily correspond to those on outstanding loans, or on loans
covered by commitments made in earlier years.
Interest rates charged on direct loans vary both among the numerous Federal credit agencies and sometimes among the types of loans
made by a single agency. Some of the differences in rates reflect
differences in the cost of providing the loan (including the cost of
borrowing the necessary funds), of administering the several types of
loans, and of incurring the varying degrees of risk of probable loss.
Table E-4. INTEREST RATES AND MATURITIES FOR MAJOR ACTIVE
CREDIT PROGRAMS CLASSIFIED BY AGENCY OR PROGRAM,
DECEMBER 1969
Guaranteed and
insured loans
Direct loans
Agency or program
Interett
rate
(percent)
Maturity
(years)
interest
rate
(percent)
Maturity
(years)
EXPENDITURE ACCOUNT
Funds appropriated to the President:
Military assistance
Economic assistance
_
_
Agriculture: Commodity Credit Corporation
Health, Education, and Welfare
1
5-10
5-40
2-5
MO
M-20
414
1-30
9-9i/2
6-9i/2
1-7
5-25
LOAN ACCOUNT
Office of Economic Opportunity
Agriculture:
Commodity Credit Corporation
Rural Electrification Administration
Farmers Home Administration
Commerce:
Economic Development Administration
Maritime Administration
Health, Education, and Welfare
Housing and Urban Development:
Renewal and Housing Assistance
Metropolitan Development
Federal Housing Administration
Government National Mortgage Association..
Interior
General Services Administration
Veterans Administration:
Housing loans and guarantees
Insurance policy loans
District of Columbia
Export-Import Bank
Federal Home Loan Bank Board
Small Business Administration
_
5-40
1-50
53/4-6%
12-40
8!/4-8i/2
3-10
20-25
5.6-6.0
1/4-40
9-12
1/2-40
3-6
0-5%
O-81/2
./.-50
1-40
1-40
0-50
8-10
1-40
3-W/2
0-8'/ 2
6I/4-71/2
71/2-81/2
7-30
7-30
0-6'/4
6
4-7.2
6-10
1-30
V2-10
1-30
1 When commodity loan is repaid by forfeiting collateral, no interest it charged. On export loans
lower
interest is charged during initial grace period.
3
On student loans, maturities begin when student leaves school and exclude period of military.
Peace
Corps, or Vista service.
1
In addition, property improvement loans are insured for 4}£% to 5H% discount per year (or an
effective
ti annu l rate of 6.8% to 10.6%). and with maturities of 6 months to 7 years.
« Indefinite.
76
THE BUDGET FOR FISCAL YEAR 1971
In many cases, the rate charged is governed by statutory limits or
formulas. Frequently, these are intended to assure loans at rates
below those prevailing in the private market or below the cost to
the Government, in order to provide special assistance to particular
groups of borrowers as a method of accomplishing Federal program
objectives. In some cases, the rates charged reflect mainly Government borrowing costs in earlier periods, rathei than current market
yields of Government obligations.
Interest rates charged borrowers on insured and guaranteed loans
tend to correspond more closely to market rates of interest on comparable loans by private lenders—allowing for the reduction or removal of
the normal private credit risk. Numerous changes in the statutory
provisions governing interest rates have provided greater administrative flexibility to adjust rates to correspond with the changing conditions of the private credit market.
In a few cases, interest rates paid by the borrowers on insured
loans are set below the market rate and a secondary market is provided to assure the willingness of the private lender to originate
the loans. The Federal Housing Administration for example, was
authorized in the Housing Act of 1961 to insure certain types of
loans to finance moderate-income housing at rates (currently 3%),
well below those prevailing in the private market and GNMA has
been purchasing all of such mortgages. This program is now being
gradually replaced by direct interest subsidies on privately financed
loans.
In other cases, the Federal agency pays part of the interest cost
necessary to obtain private financing. For example, the Farmers Home
Administration, in selling direct loans (on an insured basis) to private
investors undertakes to make supplementary interest payments
sufficient to assure market yields to the purchasers. In several of its
programs, the Department of Housing and Urban Development makes
contracts to pay part of the interest, and in certain programs both
principal and interest, in order to reduce or eliminate the financing
costs on private borrowing used to acquire housing for lowor moderate-income families, as well as to finance college housing.1
Unlike most other programs, Government outlays on credit programs are largely or wholly repayable with interest, so that the
ultimate net cost is normally low. Some programs are fully selfsupporting; in others, income from interest payments or insurance
and guarantee fees covers most of the current expenses, and sometimes provides reserves for future losses. But a substantial number
of credit programs contain an element of subsidy; e.g., by payment
of interest subsidies on guaranteed loans, or by lending at more
favorable interest rates than prevail in the private market.
Three major groups of self-supporting credit agencies in 1969, were
converted to private ownership. Other major direct loan programs
are being shifted to insured loans, with explicit provision for interest
supplements to be separately provided in order to reduce the costs
to low or moderate income borrowers while maintaining gross interest
rates high enough to be attractive to private lenders. The net effect
of several of these programs will be to transfer most or all of the
1
For more detailed discussion, see Special Analysis N "Federal Housing Activities," pp.214-15.
77
SPECIAL ANALYSES
interest subsidies on future loans to the expenditure account. This
approach permits a considerable expansion in insured loans, both
under existing and proposed legislation, while at the same time adding
to the current costs the necessary amounts of interest subsidies.
Maturities, both on direct and on insured or guaranteed loans,
often are substantially more liberal than on private loans of similar
types. Private lenders are often limited by law or supervisory policy
to shorter maturities. When a Federal agency insures or guarantees
the loans, however, these limitations customarily do not apply.
Lenders can safely extend their loan maturities and borrowers can
take advantage of lower periodic installments to acquire assets
yielding income or tangible benefits over a long period of years.
GOVERNMENT-SPONSORED CREDIT PROGRAMS
Six major types of Government-sponsored privately owned institutions administer credit programs. The programs of these institutions
are neither included in the budget totals, nor subject to budgetary
control. Detailed schedules and explanatory statements of five of .these
groups and of the Board of Governors of the Federal Reserve System
are printed as annexed budgets in Part III of the Appendix. The operations of the Federal Reserve banks have no direct effect on budget
totals, but payments of excess Federal Reserve earnings are regularly
made to the Treasury and become budget receipts.
The five Government-sponsored credit programs—excluding the
Federal Reserve banks (for which no forecasts are available)—
anticipate continued expansion in their lending activity in both 1970
and 1971. Their total loan portfolios are expected to rise by a record
Table E-5. NET CHANGES IN OUTSTANDING LOANS FOR MAJOR
GOVERNMENT-SPONSORED CREDIT PROGRAMS (in millions of dollars)
Increases
Agency
Total
1970
estimate
1971
estimate
1,442
5,648
4,600
18,538
*17
1701
583
97
436
577
103
479
582
1,795
5,270
7,716
1,524
4,487
2,400
13.300
4,267
11,245
8,164
46,619
1,469
(3)
1969
actual *
Housing and Urban Development:
Federal National Mortgage Association 2
Farm Credit Administration:
Banks for cooperatives
Federal intermediate credit banks
_
Federal land banks
Federal Home Loan Bank Board:
Federal home loan banks
_
Federal Reserve, Board of Governors:
Federal Reserve banks. »
1
___:
Outstanding end
of 1971
estimate
(3)
(3)
1
1969 data exclude following net changes prior to conversion to private ownership: Federal National Mortgage Association, $223 million; banks for cooperatives, $123 million; and Federal intermediate
credit banks, —$278 million.
9
Data for Federal National Mortgage Association represent gross unpaid principal amounts.
3
Estimates not available.
78
THE
BUDGET FOR FISCAL YEAR
1971
amount of $11.2 billion in 1970 and by another $8.2 billion in 1971 to
$46.6 billion on June 30, 1971. Most of the 2-year increase represents
purchases of insured and guaranteed housing mortgages by the Federal
National Mortgage Association and advances by the Federal home
loan banks to member institutions engaged almost entirely in home
mortgage lending. Hence, these programs, like the Governmentguaranteed and insured loans previously discussed, are currently being
devoted largely to supporting the housing market.
SUMMARY OF FEDERAL AND FEDERALLY ASSISTED CREDIT
Changes in the outstanding volume of credit either directly provided
or given major assistance by the types of programs discussed in this
analysis are summarized in table E-6. The coverage includes direct
Government loans, Government-guaranteed and insured loans, and
loans of Government-sponsored enterprises (excluding the Federal
Reserve banks). Adjustments are made to exclude double counting,
e.g., cases where loans by these agencies are also guaranteed or insured.
During the fiscal year 1969, the aggregate amount of such credit
outstanding increased by $15.1 billion. On the basis of present estimates, further increases will occur of $19.1 billion in 1970 and $22.3
billion in 1971, bringing the total outstanding credit and credit
assistance to $220.4 billion on June 30, 1971.
In addition to the rapid rise in total volume of Federal and federally assisted credit, sharp shifts in the year-to-year pattern will
occur. During the current 1970 fiscal year and to a lesser extent in 1971,
Table E-6.
NET CHANGES IN O U T S T A N D I N G FEDERAL AND FEDERALLY
ASSISTED CREDIT (in millions of dollars)
Increasei or decrease n credit
Type of credit assistance
Direct Government loans:
Expenditure account
Loan account
1969
actual
1970
estimate
1971
estimate
Outstanding end
of 1971
estimate
1,901
M.476
2,466
2,900
925
683
20,751
33,078
2 3,377
5,365
1,608
53,829
Guaranteed and insured loans
Less net increase in holdings by:
Federal National Mortgage Association
Government National Mortgage Association __
Less guarantees of securities backed by insured
mortgages
9,694
9.022
18,331
145,056
1,665
560
5,648
404
4,600
348
18,538
5,069
500
1,000
1,500
Net, guaranteed and insured loans
7,469
2,470
12,523
119,941
M,267
11,245
8,164
46,619
15,113
19,080
22,295
220,389
Net, direct loans
Government-sponsored agencies, 3 loans
Total
1
Excludes change of $11,824 million in amounts of outstanding direct loans resulting from conversion
to private ownership.
3
Direct loan data for 1969 include and other data exclude following loans made or purchased prior
to conversion to private ownership: Federal National Mortgage Association. $177 million (acquisition cost); banks for cooperatives, $123 million; and Federal intermediate credit banks, —$278
million.
1
Excludes Federal Reserve banks.
SPECIAL ANALYSES
79
the five Government-sponsored credit agencies—especially the Federal
National Mortgage Association and the Federal home loan banks—
will provide an increased share of the total expansion. By contrast,
because of the tight credit market, the rise in the outstanding volume
of guaranteed and insured loans will be about the same as in 1969,
and even this rise will only be possible because of the sizable purchases
of such loans by FNMA.
In 1971, improvement in private financial markets is expected to
accommodate a significant increase in the volume of guaranteed and
insured housing loans, with somewhat less dependence upon FNMA
purchases. The same improvement should also reduce needs for
advances by the home loan banks.
SUMMARY OF LEGISLATION AUTHORIZING NEW
FEDERAL CREDIT PROGRAMS
AND
BROADENED
The following summary lists all legislation authorizing new Federal
credit programs or revising existing programs in major respects
enacted during the last session of Congress. It excludes simple extensions in expiring laws and increases in funds for continuing programs.
I. Agency for International Development
A. Foreign Assistance Act of 1969—Public Law 91-175
(1) Establishes Overseas Private Investment Corporation authorized to make direct loans, guarantees, and investments and otherwise
stimulate U.S. private investment abroad; (2) broadens Latin American housing guarantee program; and (3) authorizes pilot program of
community development loan guarantees for Latin America.
II. Department of Health, Education, and Welfare
A. Emergency Insured Student Loan Act of 1969—Public
Law 91-95
Authorizes payment of special incentive allowances up to 3 % of
the principal amount of future insured student loans to assure eligible
holders equitable returns.
III. Departments of Housing and Urban Development and Agriculture
A. Housing and Urban Development Act of 1969—Public
Law 91-152
(1) Lowers down payments on sales housing loans insured by the
Federal Housing Administration and increases maximum mortgage
amounts for these and other insured loans; (2) authorizes FHA loan
insurance for mobile homes; (3) liberalizes terms on which the Government National Mortgage Association can purchase and sell insured
mortgages; (4) authorizes supplemental grants to encourage urban
renewal loans from private sources; and (5) authorizes the Secretary
of Agriculture to lend funds to public or private nonprofit organizations to provide sites for rural housing for low- and moderate-income
families.
80
THE BUDGET FOR FISCAL YEAR 1971
IV. Federal Home Loan Bank Board and Small Business Administration
A. Credit program amendments and interest rate control
extension—Public Law 91-151
(1) Requires Secretary of the Treasury to lend to the Federal home
loan banks when necessary to supply reasonable amounts of funds to
the mortgage market; and (2) directs the Small Business Administration to increase loans to small business investment companies by $70
million.
V. Small Business Administration and Department of Agriculture
A. Disaster Relief Act of 1969—Public Law 91-79
Authorizes partial cancellation of principal and/or waiver of interest
due, and liberalizes other standards on certain disaster loans made by
the Small Business Administration and on similar emergency loans
made by the Secretary of Agriculture.
SPECIAL ANALYSIS F
PRINCIPAL FEDERAL STATISTICAL PROGRAMS
Principal statistical programs of the Federal Government in the
1971 budget, summarized in this analysis, seek to provide accurate,
comprehensive, and timely information on the functioning of the
economy and on the welfare of the people, for both Government and
general public use. During the recent past, deficiencies in official statistics have handicapped the formulation of social and economic policy.
A substantial improvement in the promptness and accuracy of current
economic indicators is required to discern and interpret economic
trends. Existing measures of health, public safety, poverty, and education have proved to be inadequate to meet pressing needs for information for actions to improve social conditions. These statistical gaps must
befilled.To carry out the New Federalism and provide adequate information required by local authorities in dealing with social and economic problems, more statistical detail for States, metropolitan areas,
and large central cities is required. The changes in principal Federal
statistical programs for 1971 emphasize these needs.
A general grouping of the statistical activities of the various agencies
is reflected in the amounts shown for current statistical programs (see
table F-l). Recommendations for 1971 for current statistics total
$161.2 million compared to $141.2 million in the previous year, an increase of $20 million. In addition to these continuing activities, the
Federal Government conducts a number of periodic programs, such
as the Census of Population and Housing every 10 years, the Economic
Censuses every 5 years, and the periodic revision of the Consumer
Price Index. Amounts required for these programs fluctuate widely
from year to year depending upon the nature and periodicity of the
activities. Recommendations for the periodic programs for 1971 aggregate $56.7 million, most of which represents costs of processing and
publishing the 19th decennial census.
To indicate the interrelationships of the statistical programs carried
out by different agencies and to aid in evaluating the Government's
overall statistical system, the significant components of current Federal
statistical activity are brought together and classified by broad subject
areas. These areas and the amounts involved for current programs are
summarized in table F-l. Information by agencies, for both current
and periodic programs, is shown in table F-2. When adjustments are
made because of reorganization of statistical units or activities, or new
fields are covered, figures are carried back to both the current and
previous years so that all 3 years covered by the special analysis are
on a comparable basis.
In some cases, these programs represent the entire output of agencies
whose whole function is to develop general-purpose statistical information. In other instances, an agency's general-purpose statistical
output is a byproduct of its principal activities. Consequently, the
81
390-700 O—70
6
82
THE BUDGET FOR FISCAL YEAR 1971
current statistical programs covered in this analysis include the entire
program of some agencies and only a small part of the programs of
others.
A brief description of the major program changes is shown below
by broad subject areas. Adjustments made for additional amounts
required for strengthening existing programs, increased pay costs,
and for savings resulting from increased productivity are not itemized
in descriptive statements but are reflected in the totals.
Table F-1. OBLIGATIONS FOR PRINCIPAL CURRENT STATISTICAL
PROGRAMS, BY BROAD SUBJECT AREAS (in millions of dollars)
Program
Labor statistics (Departments of Agriculture, Interior, and
Labor; National Science Foundation)__
Demographic and social statistics (Departments of Agriculture,
Commerce, Health, Education, and Welfare, and Justice; National Science Foundation; Office of Economic Opportunity)...
Prices and price indexes (Departments of Agriculture, Commerce, and Labor)
Production and distribution statistics (Departments of Agriculture, Commerce, Defense, Interior, and Transportation; Civil
Aeronautics Board; Interstate Commerce Commission)
Construction and housing statistics (Departments of Commerce
and Housing and Urban Development; Federal Home Loan
Bank Board)
National income and business financial accounts (Departments
of Agriculture, Commerce, and Treasury; Federal Trade Commission; Securities and Exchange Commission)
Total, principal current programs
1969
actual
1970
estimate
1971
estimate
27.8
29.7
32.4
44.2
52.2
63.3
7.0
7.7
8.9
31.5
34.3
36.9
4.1
4.6
5.6
12.1
12.7
14.1
126.7
141.2
161.2
LABOR STATISTICS
Of the $2.7 million increase requested for labor statistics, about $1
million represents increased costs of existing programs at both the
Federal level and in cooperating States. Much of the balance would
be used to increase substantially the amount of small area information
available on employment and wages and to develop more detailed
projections of the labor supply. Monthly data on employment, hours,
and earnings would be provided for 37 additional standard metropolitan statistical areas (thus including every SMSA). Expanded
industry coverage would permit the publication of more information
on trade and service industries at the State level. Additional work
on projections of labor supply would permit the publication of projections by age, sex, and color for the 100 largest standard metropolitan statistical areas. Greater occupational and industrial detail
in manpower requirements projections would supply much needed
additional estimates at the national level and, in combination with
increased capabilities for furnishing technical guidance to State and
local governments, would provide a basis for improving manpower
projections made by State and local agencies. About $400 thousand
is included in the budget of the Bureau of Labor Statistics for these
purposes.
SPECIAL ANALYSES
83
The community wage information program would be strengthened
by expanding industry coverage in the present 90 area wage survey
program to include all nonagricultural industries; by publishing
wage data for 10-15 large central cities instead of two; and by extending the program to enough smaller communities to permit publication
of national and regional estimates. An additional $300 thousand is
requested in the budget for the Bureau of Labor Statistics for this
purpose. BLS is being called on to develop information on occupational
earnings in State and local governments and $160 thousand is requested
for this work.
A special post-Censal survey to provide more detailed information
on education, training, and career patterns of scientific and technical
personnel is planned; $300 thousand is included in the budget request
for the National Science Foundation to carry out this survey.
An expansion of the health and safety statistical activities of the
Bureau of Mines will be necessary in order to implement the recently
enacted Federal Coal Mine and Health Safety Act of 1969. An additional $600 thousand is included for the Bureau of Mines to accomplish
this.
DEMOGRAPHIC AND SOCIAL STATISTICS
An increase of $11.1 million is requested for 1971 to expand and
improve the Government's demographic and social statistics.
Population statistics.—Of the program changes proposed for 1971,
the laigest and most important aie concerned with maintaining
and improving the accuracy and timeliness of current population
statistics in the 1970's. Tne address register and maps used to
conduct the 1970 Census are to be up-dated on the basis of information
being developed in the taking of the census. A 3-year program to
modernize the sample used in the Current Population Survey on the
basis of 1970 Census information is to be inaugurated. The FederalState cooperative program for producing annual estimates of population for small areas (a progiam in which some 40 States are participating) is to be stiengthened.
It is also proposed to expand the information made available
through the Current Population Survey by developing annual socioeconomic data on ethnic minorities, especially on persons of Spanish
heritage (Spanish-Americans, Mexican-Americans, Puerto Ricans,
etc., as a group).
The 1971 budget for the Bureau of the Census includes $1.6 million
for these programs.
Health and vital statistics.—All of the program increases are for
work to be performed by the National Center for Health Statistics.
They include the initial funding of family growth studies for use in the
design and management of family planning and infant and maternal
health programs ($166 thousand); making the family planning services
reporting system fully operational ($150 thousand); design and testing
of the fourth cycle of the Health Examination Survey, which will include the National Nutrition Surveillance program ($119 thousand);
and a small amount ($65 thousand) to provide consultation and
technical assistance to local areas wishing to conduct health surveys
in their own jurisdictions.
84
THE BUDGET FOR FISCAL YEAR 1971
Educational statistics.—Changes in the 1971 program include: (1)
the development of information from high school and post-high school
students to improve higher educational planning, to provide a better
basis for the analysis of problems of dropouts, and to gain new insights into the transition from secondary education into work status
or into further education; (2) the development of information to better
judge the impact of Federal assistance to improve programs of science,
mathematics, and foreign language, and school library facilities; (3)
the measurement of the extent to which occupational training is taking
place in nonpublic schools; (4) studies of the characteristics of educational broadcasting and the development of measures of the effects of
radio and TV on the content and process of education; and (5) exploratory efforts to develop quantitative measures of educational achievement. The costs of these new programs ($2.3 million) are partially
offset by adjustments in existing programs.
Social Security statistics.—Program increases for Social Security
statistics in fiscal year 1971 are concentrated in the continuing program to examine the changes over time in income and living patterns
of retirees ($150 thousand); in an expansion of the program to provide national data to analyze the retirement process ($50 thousand);
in a followup study of the disabled population after the 1970 Census
($500 thousand); in continuing studies of the costs and coverage of
prescription drugs in the medicare program ($200 thousand); and
in a number of other studies of the medicare program ($225 thousand). Increases in processing costs will add another $500 thousand
to the costs of Social Security statistics in fiscal year 1971. These
increases are partly offset by the completion or phasing out of other
statistical research activities.
Economic opportunity.—It is proposed to increase substantially the
research and statistical activities of the Office of Economic Opportunity ($2 million) in order to provide expanded evaluation of Federal programs to aid the poor.
The work of the Economic Research Service, Department of Agriculture, aimed at developing indicators of rural economic and social
well-being will continue at an expanded level. The budget provides
an additional $262 thousand for this activity.
Crime statistics.—The principal changes proposed for the Federal
Government's crime statistics program in fiscal year 1971 are associated with the activities of the National Criminal Justice Information
and Statistics Service in the Law Enforcement Assistance Administration. It is proposed that LEAA proceed with the development of a
directory of all public criminal justice agencies in the United States,
that it conduct a national census of jail and juvenile facilities, and,
by contract with the Census Bureau, that it plan, test, and conduct a
survey to develop victimization experiences. Additional funds included in the budget for LEAA in fiscal year 1971 ($3 million) will
also provide funds to continue Project SEARCH (System for Electronic Analysis and Retrieval of Criminal Statistics).
SPECIAL ANALYSES
85
PRICES AND PRICE INDEXES
An increase of $1.2 million is requested for 1971 to improve price
statistics. Most of the proposed changes seek to improve the accuracy
of these data. Work now in progress to improve the Wholesale Price
Index would be extended to develop (1) data on prices of industrial
products which are based on actual transactions rather than list prices,
and (2) a general price index as a tool for analyzing the relationship
between prices and price changes in different parts of the economy
($195 thousand).
In the Bureau of the Census, current work on the development of
construction price indexes would be expanded. Work on price indexes
for nonresidential construction would begin, starting with school and
hospital construction. Quarterly national and annual regional indexes
for new single family homes would also be developed ($233 thousand).
The budget for the Statistical Reporting Service, Department of
Agriculture, includes funds to update commodity coverage and the
weights used in computing the Indexes of Prices Paid by Farmers
($80 thousand).
In addition to these program changes to improve the accuracy of
price data, a proposal to expand the amount of retail price information
available for local areas is included in the 1971 program of the Bureau
of Labor Statistics; $250 thousand is requested to provide retail price
information for 16 large cities and to develop additional intracitv
data in order to obtain information on prices paid by consumers with
different levels of income.
PRODUCTION AND DISTRIBUTION STATISTICS
An increase of $2.6 million is requested for 1971 to expand statistics
on production and distribution of goods and services.
The Bureau of the Census will develop and test better estimating
techniques for compiling retail trade statistics and procedures for
speeding up reports from retail stores ($300 thousand). Coverage of the
current series on services will be expanded ($115 thousand) to include
nonprofit organizations, engineering and architectural services, and
accounting, auditing and bookkeeping services. Census will start compiling an annual series on industrial mergers, acquisitions, and disposals
($54 thousand).
Funds proposed for the Economic Research Service, Department of
Agriculture, would permit testing the feasibility of using remote
sensing techniques in land use inventorying ($52 thousand) and provide statistical support to a study of the impact of world agricultural
development and adjustments on U.S. foreign trade ($200 thousand).
Additional funds ($1.1 million) are requested for the Statistical
Reporting Service, Department of Agriculture, to continue work on a
multiframe estimating procedure to improve livestock estimates. Minor
increases totaling $95 thousand are requested for programs designed
(1) to improve the accuracy of quarterly farm grain stocks estimates,
(2) to investigate possible uses of remote sensing for measuring acreages in crops, and (3) to explore other statistical techniques for
improving crop and livestock estimates.
The Department of Transportation will launch a long-range program
to expand transportation statistics, concentrating on the highest
86
THE BUDGET FOR FISCAL YEAR 1971
priority needs for information set forth in the report of the Secretary
of Transportation to the House Committee on Appropriations in
May 1969 ($700 thousand).
CONSTRUCTION AND HOUSING STATISTICS
An increase of $1 million is requested to improve and extend construction and housing statistics. The long-range program to improve
the reliability of current statistics on construction activity will focus
on (1) reducing the sampling error in present monthly estimates of
the value of nonresidential construction put in place, (2) providing
data on the construction of office buildings and stores, and (3) expanding the collection of data in the form of progress reports on hotels,
motels, and dormitories. An additional $224 thousand is included in
the budget for the Bureau of the Census for these purposes.
The Bureau of the Census will inaugurate a program whose objective
is better to define problem housing areas. It will develop and test (1)
new and improved inquiries and indicators to identify poor housing,
and (2) statistical indicators—physical, social, and economic—of the
effects of neighborhood deterioration ($245 thousand).
The 1971 budget proposal for the Department of Housing and Urban
Development includes two new programs that will improve information on the available housing supply. One program will develop measures of residential demolition; the other (by contract with the Bureau
of the Census) will extend the quarterly national survey of residential
vacancies to cover a small number of selected local areas ($200
thousand).
The 1971 statistical program of the Federal Home Loan Bank
Board covers the purchase of computer time and program services in
connection with the development of a management information system and the provision of a number of additional statistical services
($300 thousand).
NATIONAL INCOME AND BUSINESS FINANCIAL ACCOUNTS
An increase of $1.4 million is requested for 1971 to improve data on
national income and business financial accounts.
Economic accounts.—The budget estimates for the Office of Business
Economics include amounts for monthly estimates of GNP ($220
thousand), preparing input-output tables on an annual basis instead
of every 5 years ($110 thousand), developing new measures of the
impact of Federal activity ($150 thousand), and preparing quarterly
estimates of nonfarm investment ($110 thousand).
An additional $160,000 included in the budget request for the
Economic Research Service will be used to improve sources of data
and methods of estimating farm income.
Government statistics.—A major effort to improve current information
relating to the finances and employment of local governments is
proposed in the 1971 program for the Bureau of the Census. An
amount of $320 thousand is included to develop annual data for local
governments in 72 standard metropolitan statistical areas and in 47
large counties. The present program is limited to local governments
SPECIAL ANALYSES
87
in 37 SMSA's. Figures will be developed for each central city and
each county in the 72 largest SMSA's and for selected major local
governments in large counties outside SMSA's. The reports will
include a number of analytic measures to make the data more useful.
The Internal Revenue Service statistical program for 1971 provides
for advanced work on the Taxpayer Compliance Measurement Program, and a special analysis of schedule H of the corporate tax return
(Reconciliation of Book Profits to Earnings and Profits). An increase
of $500 thousand is proposed for these purposes.
PERIODIC PROGRAMS
19th Decennial Census.—The decrease in the budget request for
fiscal year 1971 stems from substantial completion of data collection
activities. In fiscal year 1971, there will be data collection for the
components of inventory change and residential financing surveys
of the Census of Housing. The only other data collection activity
remaining to be done in fiscal year 1971 is the Census Employment
Survey in poverty sections of selected urban and rural areas. Most
of the 1971 request will be used to pay for the processing and publication of 1970 census materials.
1972 economic censuses.—The budget requests for the Bureau of the
Census contain $1.4 million, the initial appropriation for the 1972
Censuses of Business, Manufactures, Mining, and Transportation.
The funds will be used to develop the specifications and basic operating
plans for the collection, processing, and publication of 1972 census
materials.
1972 Census of Governments.—The requested $120 thousand will be
used to develop operational plans and procedures for taking the census.
Census oj Agriculture.—The increase of $7.4 million covers the
completion of data collection activities, the processing of returns,
some of which has been deferred from fiscal year 1970 because of
reduced funds, and the commencement of publication of census
materials.
Survey of population change.—An amount of $200 thousand is recommended to prepare for a large-scale sample survey of changes in the
social and economic characteristics of the population planned for
fiscal year 1973.
Large-scale data processing equipment purchase.—The budget request
would permit the Bureau of the Census to buy (1) two computers
now leased by the Bureau under a lease-purchase agreement, (2)
additional computer core memory, (3) a data-transmission system
between Jeffersonville, Ind., and Washington, as well as to replace
high-speed printers, remote terminals, and related equipment.
Revision of the Consumer Price Index.—The 1971 budget request for
the Bureau of Labor Statistics includes $1.5 million for the second
year of a comprehensive revision of the Consumer Price Index. This
revision is undertaken every 10 years.
T H E BUDGET FOR FISCAL YEAR
1971
Table F-2. OBLIGATIONS FOR PRINCIPAL STATISTICAL PROGRAMS, BY
AGENCY (in millions of dollars)
Agency
1969
actual
1970
stimate
1971
CURRENT PROGRAMS
Department of Agriculture:
Economic Research Service: Statistical activities
Statistical Reporting Service
Department of Commerce:
Bureau of the Census
Office of Business Economics
Department of Defense:
Corps of Engineers: Domestic shipping statistics
Department of Health, Education, and Welfare:
National Center for Educational Statistics
National Center for Health Statistics
Social Security Administration: Statistical and research activities
Social and Rehabilitation Service: Statistical and research
activities
Department of Housing and Urban Development:
Statistical activities
Department of the Interior:
Bureau of Mines: Mineral and safety statistics
Department of Justice: Crime statistics
Department of Labor:
Bureau of Labor Statistics
Manpower Administration:
U.S. Training and Employment Service: Statistical activities
Office of Manpower Research: Statistical activities
Department of Transportation: National transportation statis-
tics-
Department of the Treasury:
Internal Revenue Service: Statistical reporting
Civil Aeronautics Board: Statistical and research activities
Federal Home Loan Bank Board: Statistical activities
Federal Trade Commission: Financial statistics
Interstate Commerce Commission: Reports and statistics
National Science Foundation: Statistics and special analyses
Office of Economic Opportunity: Statistical and research activities.
Securities and Exchange Commission:
Operational and business statistics and institutional investors
study. __
___
Total, current programs. __
3.5
14.7
3.6
16.5
4.3
17.8
18.1
3.1
19.6
3.4
22.7
4.1
1.1
1.1
1.2
3.2
8.1
5.0
9.2
7.1
9.9
18.5
20.0
21.5
.9
1.5
1.5
.7
.7
.9
2.6
1.6
3.1
2.9
3.7
5.7
22.0
23.5
26.1
3.4
3.7
3.7
3.7
3.7
3.7
.3
.5
1.2
6.9
.8
.9
.4
.8
4.
6.6
6.6
.9
1.1
.4
.8
4.4
8.0
7.1
1.0
1.4
.5
.7
4.8
10.0
1.0
.6
126.9
141.2
161.2
17.9
145.3
.2
50.3
.3
1.4
.2
3.0
7.1
4.6
.1
PERIODIC PROGRAMS
Department of Commerce: Bureau of the Census:
19th decennial census
1972 census of governments
1972 economic censuses
Survey of Population Change
Modernization of computer equipment
1967 economic censuses
.
1967 census of governments
Department of Labor: Bureau of Labor Statistics:
Revision of Consumer Price Index
Total, periodic programs.__
Total, principal statistical programs.
.6
1.5
SPECIAL ANALYSIS G
BALANCES OF BUDGET AUTHORITY
This analysis presents information on balances of budget authority
carried forward at the end of each fiscal year. These balances may be
obligated or unobligated; the latter occur only when the source of
authority permits their use in subsequent years.
Such balances of budget authority are a natural outgrowth of the
Federal budget system, in which outlays can only occur subsequent to
the enactment of appropriations or other forms of budget authority.
In the case of most Government accounts, the time lag between appropriations of budget authority, obligations of funds, and related outlays is relatively short, and appropriations not obligated by the end
of the fiscal year expire. However, in other cases, such as major procurement and construction programs, obligations and outlays may
occur over a period of years after the budget authority is granted, and
balances are carried forward until the authority is obligated and
spent. In still others, authority is provided for standby emergency
purposes (such as backup for insurance of bank deposits); if such
authority is not needed or used, it is carried forward as part of the
balance year after year.
Amounts that have been obligated are carried forward until the
subsequent payment of such obligations. Such amounts are known
as obligated balances. The sum of the unobligated and obligated
balances constitutes the unexpended balances.
SUMMARY OF BALANCES BY FUND GROUPS
Table G-l provides a breakdown of unexpended balances of
budget authority under Federal funds and trust funds, and shows the
unobligated and obligated amounts in each of the fund groups.
Federal funds are those collected and used by the Federal Government, as owner. Of the estimated $133.6 billion of Federal fund
unexpended balances at the end of 1971, the major portion—$82.5
billion (62%) will be obligated. Correspondingly, unobligated Federal fund balances are estimated at $51.1 billion (38%) of the Federal
fund unexpended balances.
Trust funds are those received and administered in a fiduciary or
trustee capacity by the Federal Government for specified purposes,
such as social security programs. Of the $116.3 billion trust fund
unexpended balances at the end of 1971, unobligated balances are
estimated to be $103.7 billion (89%). Trust fund obligated balances
are estimated to be only $12.6 billion (11%) of trust fund unexpended
balances.
89
90
THE BUDGET FOR FISCAL YEAR 1971
Table G-1. SUMMARY OF BALANCES (in million* of dollars)
Bala nces end-of-:rear
Federal funds:
Unobligated balances
Obligated balances
___
Total Federal fund unexpended balances
Trust funds:
Unobligated balances
Obligated balances
_
_
Total trust fund unexpended balances
Total unexpended balances: Federal and trust funds
_
1969
1970
1971
54,548
72,688
49,099
77,022
51,065
82,541
127,236
12 ,121
133,606
87,057
11,279-
96,008
11,527
103,748
12,568
98,337
107,535
116,316
225,572
233,656
249,922
Note—Excludes balances rescinded or lapsing at the end of the year.
FEDERAL FUND UNOBLIGATED BALANCES
There are a variety of reasons for the unobligated balances in
Federal funds. These are reflected in the categories used in table
G-2. These categories are not mutually exclusive, since an individual
item might be placed in more than one category, but they do serve
to illustrate the basic characteristics of the balances. For purposes
of this analysis, the categories cover only those accounts with balances of $20 million or more. Accounts with unobligated balances of
less than $20 million are shown in the aggregate at the end of the
table.
Guarantee and insurance programs.—The Federal Government
provides guarantees and insurance in certain areas, notably in housing
and banking activities. In these kinds of programs, appropriations and
other budget authority are provided for contingency backup, reserves,
and debt redemption. To the extent such authority is not used,
the amounts are carried forward as unobligated balances. Of the
$51.1 billion Federal fund balances estimated to remain unobligated
at the end of 1971, $25.9 billion (51%) fall into this category.
The major portion of this amount ($19.7 billion) is basically standby
and backup authority that, it is hoped, will not be used in the foreseeable future—for example:
• $5,715 million is available for investment in the International
Bank for Reconstruction and Development and $1,124 million for
other international financial institutions, if these institutions
make a "call" upon member nations for more paid-in capital;
• $4,750 million is available for the Federal home loan banks and
for the Federal Savings and Loan Insurance Corporation;
• $3,000 million is available for the Federal Deposit Insurance
Corporation; and
• $2,250 million is available for loans to the Federal National
Mortgage Association.
91
SPECIAL ANALYSES
Table G-2. ANALYSIS OF FEDERAL FUND UNOBLIGATED BALANCES
(in millions of dollars)
Unobligated balances end-of-year
Category and agency
1969
actual
1970
1971
Guarantee and insurance programs: 1
Standby and backup authority:
International financial institutions:
International Bank for Reconstruction and Development..
Other
Federal Home Loan Bank Board:
Investment in Federal Home Loan Banks
Federal Savings and Loan Insurance Corporation
Federal Deposit Insurance Corporation
Department of Housing and Urban Development:
Loans to Federal National Mortgage Association
Low rent public housing and urban renewal.
Flood and civil disorder insurance.
Federal Housing Administration fund
Veterans Administration: Loan guaranty fund.
Other
Total standby and backup authority _
Reserves for losses and debt redemption:
Federal Home Loan Bank Board:
Federal Savings and Loan Insurance Corporation
Department of Housing and Urban Development:
Federal Housing Administration Fund
Government National Mortgage Association: Participation
sales fund
Veterans Administration: Veterans insurance funds
Department of Agriculture: Rural housing, agriculture credit,
and Federal crop insurance
Economic Assistance: Foreign investment guaranty fund and
Overseas Private Investment Corporation
Other
Total reserves for losses and debt redemption.
Total guarantee and insurance programs
5,715
918
5,715
1,124
5,715
1,124
1,000
750
3,000
4,000
750
3,000
4,000
750
3,000
2,250
1,597
538
278
554
260
2,250
1,373
553
287
417
'260
2,250
1,176
552
213
618
260
16,860
19,729
19,658
2,232
2,457
2,589
1,042
1,235
1,477
855
351
564
410
698
468
463
112
787
115
90
147
33
177
35
5,148
4,958
6,231
22,008
24,687
25,889
2,224
2,836
2,557
2,952
726
2,736
591
2,601
589
648
494
397
341
345
348
363
604
2,569
418
350
283
1,174
375
400
227
""262
10,845
9,184
7.381
1
Loan programs:
Department of Housing and Urban Development:
Government National Mortgage Association: Special assistance functions
Loans for college housing, public facilities, and housing for
the elderly or handicapped
>
Veterans Administration: Direct loan revolving fund
Department of Agriculture: Farmers Home and Rural Electrification loans
Department of Labor: Advances to Employment Security
Administration
Economic Assistance: Alliance for progress and other development loan programs
Small Business Administration
Export-Import Bank
Other
Total loan programs.
See footnotes at end of table.
92
THE BUDGET FOR FISCAL YEAR 197,1
Table G-2 ANALYSIS OF FEDERAL FUND UNOBLIGATED BALANCES
(in millions of dollars)—Continued
Unobligated balances end-of-year
Category and agency
1969
actual
1971
estimate
1
Procurement programs:l
Department of Defense—Military _
Department of Agriculture: Removal of surplus agricultural
commodities.__ ,
__ _ _ _ _
Other
Total procurement programs
1970
estimate
.
11,007
6,760
5,457
300
187
300
13
300
344
11,494
7.073
6,101
65
150
350
161
3,350
96
157
101
1,599
310
1,359
153
152
1,461
356
895
2,930
50
1,106
324
351
3,741
3,528
8,207
949
517
779
740
1,466
779
740
1,219
1,675
274
1,071
1,207
1,298
319
560
1,466
536
229
228
4,239
3,384
2,459
755
465
287
54,548
49,099
51,065
12
Construction programs:
Department of the Interior:
Construction grants for waste treatment__
Parkway, road, and other construction
•__
Department of Transportation:
Urban mass transportation program
Grants-in-aid for airports, and public lands highways
Department of Defense—Military
Department of Agriculture: Forest roads and trails
Other
Total construction programs
1
Research and development programs:
Department of Defense—Military _ _
Other
Total research and development programs
__
1
Other balances:
Department of Defense—MilitaryDepartment of Housing and Urban Development
Department of Transportation
Other agencies
Total other balances
Balances of less than $20 million
Total Federal fund unobligated balances
1
1
Covers accounts with balances of $20 million or more.
Excludes loans for construction.
Most of the remaining balances in this category are in the Department of Housing and Urban Development, which has an estimated
$1,941 million in balances to support various kinds of programs. Of
this amount, $1,176 million is backup for guaranteed private loans
in the low-rent public housing and urban renewal programs, and $552
million is available for prompt payment to insurance companies of
reinsurance claims in flood and civil disorder damage cases.
SPECIAL ANALYSES
93
The remaining unobligated balances in this category ($6.2 billion)
are derived from fees, premiums, and other types of collections
obtained from the protected groups themselves. Most of these balances
are held as reserves for losses, and are akin to funds held in trust.
Significant items in this group include $2,589 million in fees and
premiums collected from insured savings and loan institutions,
$1,477 million for Federal housing insurance, and $468 million held
in reserves for Veterans Administration insurance programs. The
Department of Housing and Urban Development also has $698 million for payment to holders of participation certificates as they mature,
which is in the nature of debt redemption.
Loan programs.—Another sizable category of unobligated balances results from the financing of loan programs. Approximately
14%—$7.4 billion—of unobligated Federal fund balances estimated
to be carried over into 1972 is in loan programs.
These programs generally are financed through revolving or business-type funds, which are established to carry on a cycle of operations,
mainly with the public. Most of these funds are expected to be selfsustaining over a period of years. Their capital requirements are
supplied through appropriations or other forms of budget authority.
As they generate receipts from their own operations, the funds pay
interest on their borrowings and repay unneeded capital. Balances
relating to the revolving funds usually consist of amounts on deposit
with the Treasury or of undrawn authorizations to borrow either from
the Treasury or directly from the public.
Approximately 70% of unobligated balances in this category
($5,158 million), is in the Department of Housing and Urban Development, largely for the special assistance functions of the Government
National Mortgage Association ($2,557 million) and for loans for
college housing, public facilities, and housing for the elderly or handicapped ($2,601 million).
Many of the programs in the Department of Housing and Urban
Development require budget authority on a long-leadtime basis in
order to provide assurance to the potential borrower or contractor
that adequate financing will be available when needed. The requirements for these programs are complex, and considerable time and
money are required on the part of the applicant to develop a project
to the stage where the Government can enter into a firm legal obligation. To deal with this problem, a reservation system has been worked
out under which the Government—on its books—sets aside sufficient
financing at the time it is convinced the applicant can develop a
project that will meet requirements. These reservations are converted into legal obligations when an acceptable application is submitted and approved. The amounts so reserved are counted as unobligated until the final agreement or legally binding contract is
actually consummated.
94
THE BUDGET FOR FISCAL YEAR 197il
In the absence of this reservation system, many potential applicants
would be unwilling to spend the time and money needed to develop
applications, and projects needed to accomplish Federal objectives
would not be started. On the other hand, if the Government negotiated
with applicants in the absence of fund availability, the Congress and
the executive branch could be faced with demands for additional
appropriations from applicants who felt the Government had made a
moral commitment to finance the project once it encouraged development of the application. The reservation system, therefore, protects
applicants against wasted effort, and enables the Government to
attain its objectives more effectively and to improve its control over
the amount of outlays to which it is committed.
The Veterans Administration also carries sizable, although considerably smaller, unobligated balances for housing loan programs,
totaling $589 million at the end of 1971.
The Export-Import Bank has had sizable unobligated balances in
past years. As indicated by data for the 3-year period covered by
this budget, these balances are being progressively utilized in the
expanded lending program of the Bank.
Major procurement programs.—Of the $51.1 billion Federal
fund balances estimated to remain unobligated at the end of 1971,
$6.1 billion (12%) is attributable to the Government's major procurement programs. Approximately $5,457 million (90%) of the balances
available for procurement is for the acquisition by the Department of
Defense of capital equipment, such as aircraft, missiles, ships, combat
vehicles, and other weapons. These sizable balances are due to the
relatively long lead time required for such procurement and the application of a full funding policy.
Full funding has the effect of setting a limit on the size of the specific
program or project. This approach discloses to Congress the estimated
full cost involved before the work actually begins, and requires that
the Congress approve the estimated full cost before the project is
undertaken. Full funding also provides the executive branch with
more flexibility in programing work if economic or other conditions
change, and in making more efficient use of resources in the conduct
of the work.
Under the full funding concept, it should be recognized that funds
may be "committed" to a given purpose, even though legally unobligated. For example, in the Department of Defense, funds are committed when the contracting organizations are directed to proceed
with procurement—that is, before invitations to bid are issued. Thus,
funds are clearly earmarked for specific projects when contractors
are asked to bid. This avoids having bidders go to the expense of responding to an invitation to bid, only to find that no contract can be
awarded due to unavailability of funds. The practice of so earmarking
funds is an important aspect of the Department of Defense's system
for program and financial controls, and provides assurance to the business community that contracts will be awarded when an acceptable
bid is developed.
SPECIAL ANALYSES
95
Within the 3 years covered by this budget, the balances for military
procurement are reduced by approximately 50%—in part because of
rescissions in 1971, but mainly because of the decrease in the overall
procurement program of the Department of Defense.
Major construction programs.—Major construction programs
account for $8.2 billion (16%) of the $51.1 billion Federal fund balances estimated to remain unobligated at the end of 1971. Most of
these balances are for the waste treatment construction grant program
($3,350 million, or 41%) of the Department of the Interior and for the
urban mass transportation program ($2,930 million, or 36%) of the
Department of Transportation. These are two major new initiatives
of this administration. The balances are attributable primarily to
proposed legislation that provides budget authority to be used over
a 5-year period. Lesser balances ($1,106 million) are for military
construction by the Department of Defense.
The full-funding policy discussed above under procurement also
applies to these major construction programs. However, there are a
few that are funded on an incremental basis, principally for reclamation, rivers and harbors, and flood control projects. In these programs
only small unobligated balances are sometimes carried forward.
Unobligated balances of loans for construction are excluded here.
Such balances are included under loan programs.
Research and development programs.—Another category of
unobligated balances relates to research and development programs.
Approximately 2% of the unobligated Federal fund balances estimated
at the end of 1971—$740 million—is for research and development.
All of the unobligated balances in this category estimated at the
end of 1971 are in the Department of Defense—principally for the
development, testing, evaluation, and improvement of weapons systems and related equipment. The "Other" balances are held by the
National Aeronautics and Space Administration, the Atomic Energy
Commission, the Department of Transportation (for civil supersonic
aircraft development), and the National Science Foundation. It is
anticipated that these balances will be fully obligated in 1970 and 1971.
Other balances.—Of the remaining $2.5 billion (5%) of Federal
fund unobligated balances (in accounts with balances of $20 million or
more) to be carried forward into 1972, $1,466 million is in the Department of Defense, mainly for industrial fund operations. These balances
are characteristic of industrial fund activity—they are attributable
to the time lag that occurs between receipt of a work order by the
fund, and completion of the work required under the order.
The Department of Housing and Urban Development will have
unobligated balances of $536 million in this category at the end of 1971,
representing primarily urban renewal grant authority that is reserved for obligation when acceptable applications are developed (as
described above under loan programs).
The remaining $457 million represents scattered balances among
a number of programs such as State and community highway safety,
buildings management, and outdoor recreation.
96
THE BUDGET FOR FISCAL YEAR
197,1
FEDERAL FUND OBLIGATED BALANCES
Table G-3 presents the major Federal fund obligated balances.
Such balances are composed of the unpaid portion of obligations incurred by the Government in the form of orders placed, contracts
awarded, and services received.
Of the $82.5 billion Federal fund obligated balances estimated at
the end of 1971, $32.2 billion (39%) are attributable to the military
programs of the Department of Defense and military assistance to our
allies. The remaining obligated balances of $50.3 billion (61%) arc
scattered among the various civilian agencies and programs.
The major cause of obligated balances is the long lead time required
in the procurement, construction, and research and development
activities of the Federal agencies.
There is also a considerable time lag involved in grants for capital
outlays, where the State or local government must be assured of the
availability of Federal funds before it lets a construction contract,
but the related Federal payments are phased out over several years as
work is performed. This applies to urban renewal in the Department of Housing and Urban Development; urban mass transportation
and airport facilities in the Department of Transportation; hospital,
health, and higher education in the Department of Health, Education,
and Welfare; and similar construction grant programs.
Loan programs also account for sizable obligated balances due to
the lag between the signing of the loan contract that creates the
obligation, and the payments over a period of time as cash is needed
by the borrower. This applies to loans to foreign borrowers such as
those made by the Export-Import Bank and the Agency for International Development, and to domestic loans for programs such as rural
electrification in the Department of Agriculture.
Table G-3. FEDERAL FUND OBLIGATED BALANCES (in millions of dollars)
Obligated balances end-of-year
Description
1969
actual
Department of Defense—Military:
Procurement
Operation and maintenance
Research and development
Construction
Military personnel
Other
Total Department of Defense—Military
Military assistance
_
1970
estimate
1971
estimate
18,814
3,097
3,519
1,098
697
2,276
19,753
3,036
3,758
1,031
1,950
m
19,616
2,893
3,760
1,764
1,009
1,891
29,501
30,415
30,933
1,346
1,280
U9<T
97
SPECIAL ANALYSES
Table G-3. FEDERAL FUND OBLIGATED BALANCES (in millions of dollars)—Con.
Obligated balances end-of-year
Description
1969
actual
Civilian agencies:
Funds appropriated to the President:
Economic assistance
International financial institutions
Office of Economic Opportunity
Other
Department of Agriculture:
Commodity Credit Corporation
Rural Electrification Administration
Other
Department of Commerce (mostly economic development and
maritime programs) __
Department of Defense—Civil
Department of Health, Education, and Welfare:
Office of Education (mainly grants to colleges, universities,
local school districts, and other educational institutions) _ _
Health services and mental health (mostly community
mental health and hospital construction)
National Institutes of Health
Social Rehabilitation Service (mainly grants to States)
Other
Department of Housing and Urban Development:
Renewal and housing assistance (mainly urban renewal and
low-rent public housing)
Metropolitan development
Model cities and governmental relations
Mortgage credit (mostly Government National Mortgage
Association—special assistance functions)
Other
.
Department of the Interior (principally grants for waste treatment and public outdoor recreation)
Department of Labor (manpower development and training).Post Office Department (contribution to the postal fund)
Department of Transportation (mainly airport facilities and
development; and urban mass transportation)
Atomic Energy Commission (mostly research and development)
National Aeronautics and Space Administration (mostly research and development)
Veterans Administration (mainly veterans compensation and
pensions)
Export-Import Bank
Other civilian agencies
1970
1971
3,211
1,585
1,075
614
2,923
1,834
1,182
838
3,052
2,254
1,007
664
4,702
1,159
1,004
3,719
1,117
1,054
3,889
1,095
1,184
296
1,223
264
1,357
388
3,203
2,729
2,474
1,451
1,538
1,791
116
1,487
1,559
2,093
165
1,457
1,589
2,429
312
4,791
712
243
5,296
775
514
6,074
792
654
1,725
19
2,445
40
2,113
75
1,117
471
803
1,610
735
961
2,241
1,184
1,247
1,043
1,199
1,381
1,268
1,428
1,380
1,405
1,564
1,514
809
2,818
1,734
817
3,562
2,128
896
5,052
2,878
Total civilian agencies.
41,887
45,261
50,328
Total Federal fund obligated balances..
72,688
77,022
82,541
390-700 O—70
98
THE BUDGET FOR FISCAL YEAR 1 9 7 1
TRUST FUND BALANCES
The balances of trust funds are shown in table G-4. The amounts
include both unobligated and obligated balances of trust fund authorizations. The unobligated balances include both the open book balances and investments in U.S. securities. The investments in such
securities are held until funds arc needed to meet statutory requirements in subsequent years.
Table G-4. T R U S T FUND BALANCES (in millions of dollars)
Balances end-of-year
Description
Unobligated
Federal old-age and survivors insurance trust fund..
Federal disability insurance trust
fund
_
Federal hospital insurance trust
fund
Federal supplementary medical insurance trust fund
Unemployment trust fund
Railroad retirement accounts
Civil service retirement and disability fund
Federal employees health benefits
funds
Federal employees life insurance
fund
Highway trust fund l
National service life insurance fund.
U.S. Government life insurance
fund
Foreign military sales trust fund
Federal Deposit Insurance Corporation funds
Other trust funds
Total trust funds.
1971
1970
1969
Obligated
Unobligated
Obligated
Unobligated
Obligated
26,145
1,974
29,956
2,385
32,520
2,491
3,459
201
4,756
254
6,363
276
1,957
18
2,210
11
3,077
16
372
12,526
4,502
6
38
131
50
13,059
4,572
17
38
147
224
13,189
4,649
26
38
20,230
204
21,674
234
23,081
105
26
103
13
107
4,264
5,915
654
7,102
332
5,783
6,040
801
6,691
340
6,519
6,102
822
2,415
23
227
786
2,315
21
207
749
2,135
955
7,286
356
22
282
3,870
475
290
53
4,181
523
311
57
4,522
511
329
62
87,057
11,279
96,008
11,527
103,748
12,568
150
267
12
revolving fund for all 3 years; and Forest highways and Public lands
* Includes
includes Right-of-way
Kight
highways for 1971.
SPECIAL ANALYSIS H
CIVILIAN EMPLOYMENT IN THE EXECUTIVE BRANCH
In July 1969, statutory controls on the hiring of Federal civilian
employees were replaced by more flexible administrative controls.
Under these administrative controls, full-time permanent employment at the end of fiscal year 1970 will be 90,700 less than that planned
by the outgoing administration in the original 1970 budget.
It is planned that Government-wide full-time permanent employment will not increase in fiscal year 1971. Increases in 1971 to
accommodate new programs and an expanding Federal workload for
a growing population will be offset by decreases in employment in
the Defense Department and by selective reductions in a number of
agencies made possible by changing program emphases and improved
efficiency and productivity.
The estimates in this analysis for both full-time permanent and total
employment reflect continued vigilance over employment levels and
sustained efforts by agency managers to absorb workload increases
through productivity improvements and modern management techniques.
FULL-TIME PERMANENT CIVILIAN EMPLOYMENT
In fiscal year 1969, reductions in Federal employment were required
by section 201 of the Revenue and Expenditure Control Act of 1968.
Because section 201 imposed a formula for the reduction of employment with little regard for the growing Federal workload, the administration sought, and the Congress agreed, to rescind that section of the act effective in July 1969. The formula that had been imposed by the law resulted in a reduction of 57,177 in the full-time
permanent Federal civilian employment covered by the act. This was
partially offset by increases in agencies which Congress had exempted
from the law. There was a net reduction in full-time permanent employment of 36,350. Full-time permanent employment on June 30,
1969, was 2,633,762.
The level of full-time permanent civilian employment in the executive branch anticipated for June 30, 1970, is 2,602,800, or 42,900 fewer
than the 2,645,700 announced on April 15, 1969, and 90,700 fewer
than estimated in January 1969. Reductions have been applied selectively to various agencies taking account of workload, productivity,
and other related factors. The bulk of the decrease falls in the Department of Defense. Other agencies with major overseas employment
will bea,r a share of the cutback. The overall reduction will be attained
even with the provision for a substantially increased personnel contingency allowance, which is designed to give the President greater
flexibility in reallocating personnel resources than was possible under
the employment limitations of the Revenue and Expenditure Control
Act of 1968.
99
100
THE BUDGET FOR FISCAL YEAR 1971
Full-time permanent civilian employment is estimated to reach
2,597,200 by the end of fiscal year 1971. About 43% of these employees
will work in the Department of Defense, another 23% in the Post
Office, and about 6% in the Veterans Administration. These three
agencies account for about 72% of all permanent full-time employment in the executive branch.
Table H-l displays the estimated changes in yearend civilian fulltime permanent employment between fiscal years 1970 and 1971.
The total anticipated increase in the civilian agencies of about 45,200
and in the contingency allowance of 5,000 is offset by a reduction of
approximately 55,800 in the Department of Defense resulting in a
Government-wide decrease of 5,600.
Table H-l. SUMMARY OF FULL-TIME PERMANENT EMPLOYMENT IN
THE EXECUTIVE BRANCH
As of June
Agency
Department of Defense, Military and Military
Assistance
Post Office Department
Subtotal.
Department of Agriculture
Department of Commerce
-.
Department of Defense, Civil
Department of Health, Education, and Welfare..
Department of Housing and Urban Development.
Department of the Interior
Department of Justice
Department of Labor
Department of State
Department of Transportation
__.
Treasury Department
Atomic Energy Commission
General Services Administration
_
National Aeronautics and Space Administration..
Veterans Administration
Other agencies:
Agency for International Development
Civil Service Commission
Office of Economic Opportunity
Selective Service System
Small Business Administration
Tennessee Valley Authority
The Panama Canal
United States Information Agency
Miscellaneous Agencies
Subtotal.
Allowance for contingencies.
Total
1
1970 i
estimate
1971 i
estimate
1,225.877
562,381
1,165,900
567,000
1,110,100
585,000
-55,800
18,000
1,788.258
1,732,900
1,695,100
-37,800
83,425
25,364
31,214
102,941
14,307
58,156
35,106
9,723
24,658
60,386
79,982
7,047
36,176
31,733
147,606
83,000
25,600
30,700
102,500
14,900
59,300
37,600
10,300
23,900
63,600
86,700
7,000
36,400
31,400
148,500
85,300
26,700
31,000
105,100
16,000
61,100
39,100
10,800
23,400
70,300
93,500
6,900
36,800
30,600
150,200
2,300
1,100
300
2,600
1,100
1,800
1,500
500
-500
6,700
6,800
-100
400
-800
1,700
15,753
4,970
2,856
6,584
4,099
11,987
14,731
10,500
26,200
15,000
5,300
2,400
6,600
4,100
12,300
14,700
10,200
27,800
14,400
5,500
2,500
6,500
4,100
13,300
14,900
10,100
28,900
-600
200
100
-100
845,504
859,900
887,100
27,200
10,000
15,000
"Tooo
1,000
200
-100
1,100
2,633,762 2,602,800 2,597,200 ~5,600
Excludes diaadvantaged worker-trainees in the Public Service Careers program.
Note: Totals may not add due to rounding.
Change
1970-71
1969
actual
SPECIAL ANALYSES
101
The employment increase in the civilian agencies for 1971 is required
to provide more public services for an expanding population and a
growing economy. Ten agencies account for the bulk of the necessary
employment increases:
(1) The Post Office Department, up 18,000, to service an increase
in mail volume and a substantial rise in the number of delivery stops
caused mainly by more patrons in suburban areas.
(2) The Treasury Department, up 6,800, mainly for rising workloads in Internal Revenue Service operations related to the processing
of tax returns filed and audited.
(3) The Department of Justice, up 1,500, primarily for increased
Federal law enforcement activities and for an expected 11 million
additional inspections by the Immigration and Naturalization
Service.
(4) The Department of Transportation, up 6,700, principally in
the Federal Aviation Administration to operate new facilities and to
service an increase in landings and takeoffs at airports with FAA
control towers.
(5) The Department of Housing and Urban Development, up
1,100, primarily in the Federal Housing Administration to process a
large increase in mortgage insurance applications and for increased
workload in the Fair Housing and Equal Opportunity program.
(6) The Veterans Administration, up 1,700, to extend specialized
medical services, such as units for intensive coronary care and alcoholic
treatment, and to provide better medical care for an increasing
caseload.
(7) The Department of Health, Education, and Welfare, up 2,600,
primarily to handle the increased workload of the Social Security
Administration in such areas as processing claims, maintaining earnings records and changing beneficiary status.
(8) The Department of Agriculture, up 2,300, largely to service an
increaso in the rural housing loan program for low and moderate income
families, for increases in food assistance, meat and poultry inspection
programs, and for facilitating increased timber sales.
(9) The Department of Commerce, up 1,100, for a variety of increased services including more export and travel promotions, improved weather forecasting and the establishment of new air quality
control units.
(10) The Department of the Interior, up 1,800, mainly to expand
coal mine health and safety inspections, to increase educational
services for American Indians and to speed up the issuance of construction grants for local waste treatment plants.
Offsetting these increases, employment has been reduced in defense,
space, and overseas programs. Most of the employment decreases
occur in four agencies:
(1) The Department of Defense, down 55,800, due to declining
manpower requirements.
(2) The National Aeronautics and Space Administration, down 800,
reflecting the closing of the Electronic Research Center and the
slowing pace of the space program.
(3) The State Department, down 500, as the Department seeks
to accomplish its work with fewer staff.
(4) Agency for International Development, down 600, due to a
generally reduced level of activity.
102
THE
BUDGET FOR FISCAL YEAR
1971
TOTAL FEDERAL PERSONNEL
Approximately 89% of total Federal civilian employment is made
up of full-time permanent employees. The remainder consists of parttime employees, intermittent employees (those employed on an
irregular or occasional basis) and full-time temporary employees (those
in positions occupied for less than a year).
Total Federal Government employment also includes Armed
Services personnel and employment in the legislative and judicial
branches. These figures are given in table H-2.
Table H-2. TOTAL FEDERAL GOVERNMENT
Description
Civilian employment in the executive branch:
Full-time permanent 1
_
Other than full-time permanent 2
Armed Services personnel on active duty:
Department of Defense
Department of Transportation (Coast Guard)
_
Subtotal
Legislative and judicial personnel
_ __
Total
EMPLOYMENT
1969
actual
1970
estimate
1971
estimate
2,633,762
346,368
2,602,800
322,000
2,597,200
322,000
3,459,423
39,304
3,160,700
38,300
2,908,100
38,700
6,478,857
36,285
6,123,800
5,866,000
6,515,142
1
2
Excludes Public Service Careers disadvantaged worker-trainees in 1970 and 1971.
Excludes summer workers under the President's Youth Opportunity Campaign; merchant seamen
on vessels under Federal shipping contracts; employees for the 19th decennial census; disadvantaged
students employed part time in 1970 and 1971.
PERSONNEL
COMPENSATION
AND
BENEFITS
Selected data on the total Federal payroll and related costs are
shown in table H-3.
Table H-3. PERSONNEL COMPENSATION AND BENEFITS (in millions of dollars)
Description
Total civilian personnel costs: 2
Direct compensation
Personnel benefits
____
1969
actual
_ _ _ _
Total
Total armed forces personnel costs:
Direct compensation
Personnel benefits
Total
1970
estimate 1
1971
estimate 1
24,663
2,013
26,700
2,200
26,700
2,300
26,676
28,900
29,000
14,519
4,338
15,700
4,400
14,700
4,200
18,857
20,100
18,900
3
_
__
1
Excludes budget allowance of $0.2 billion for the postal pay adjustment part of the proposed
»ostal
reform for 1970 and $1.4 billion for military and civilian pay increases for 1971.
2
Excludes
Members and officers of Congress.
3
Excludes Reserve components.
SPECIAL ANALYSES
103
Direct compensation includes regular pay; special pay for overtime,
Sunday, holiday, and standby time; differentials for night work and
overseas duty, flight and hazardous duty, etc. Related personnel
benefits include the Government's share of Federal retirement and
old-age survivors' and disability insurance costs; employees' life
insurance, health insurance and benefits, and similar payments; they
also include cost-of-living and quarters allowances, uniform allowances
(when paid in cash) and, in the case of the military personnel, allowances for subsistence, reenlistment bonuses, and certain other cash
payments.
The obligations to be incurred for civilian personnel compensation
and benefits in 1971 are estimated at $29 billion.
Some of the personnel compensation is offset by proprietary receipts
and compensation of others is paid from public enterprise funds (such
as the Post Office). The cost of these employees, included in table H-3,
amounts to over $7.5 billion in 1971.
Government pay scales for "blue collar" workers have for many
years been subject to administrative adjustment to correspond to
local prevailing rates in private industry. As wages in private industry
advanced, Federal compensation for such workers also increased.
Pay for most other Federal workers has been set by statute. In
December 1967, the Congress enacted pay legislation which authorized
the President, without additional congressional approval, to set salary
rates consistent with the standards set forth in the 1962 Salary Reform
Act. The third and final step under the 1967 act was accomplished
when Federal pay rates were adjusted in July 1969 to achieve comparability with 1968 private industry salary levels.
In order to make Federal salaries comparable to 1969 private enterprise rates, an average civilian and military pay increase of 5.75% is
proposed effective in January 1971. An overall allowance of $1.4
billion is carried in the budget to cover this increase for 1971. This
figure includes the 1971 cost for adjustments in postal field
service pay accompanying postal reform.
GEOGRAPHICAL DISTRIBUTION OF EMPLOYMENT
The geographical distribution of Federal civilian employment is
given in table H-4. Most Federal employees—over 81%—work in the
various States. Less than 11% work in the Washington, D.G>, metropolitan area (including nearby Maryland and Virginia). The remaining
8% are in foreign countries and in U.S. territories and possessions.
Most of the employees in foreign countries are nationals of the countries in which they work.
104
THE BUDGET FOR FISCAL YEAR
1971
Table H-4. FEDERAL CIVILIAN EMPLOYMENT BY GEOGRAPHICAL
LOCATION (as of June 1969)
Total
employment l
Location
Washington, D.C.,
area
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
metropolitan
, __
J
328,077
58,092
15,350
27,644
17,494
326,338
44,143
20,065
4,712
72,488
79,655
29,213
8,428
118,339
44,931
18,588
23,988
38.647
29,869
8,624
3 68,450
68,048
55,275
29,914
21,194
68,620
10,878
16,296
9,027
13,495
70,460
26,974
187,767
38,874
Total
employment l
Location
24,936
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Undistributed
Summer youth
Total United States
149,183
16,143
31,314
9,979
42,686
153,409
41,247
3,811
3 84,041
58,100
13,706
26,701
5,414
*-5,825
-54,174
2,772,081
Outside United States:
Territories and possessions
Foreign countries
Total outside United States. _ _
U.S. citizens
Foreign nationals
37,574
206,760
5
244,334
(58,477)
(185,857)
Total employment
Legislative and judicial
3,016,415
-36,285
Total executive branch. __
Distributed as follows:
Full-time permanent
Temporary, part time, and
intermittent
2,980,130
(2,633,762)
(346,368)
7,942
105,793
57,718
Distribution by State is partially estimated.
Includes employees of the executive branch and of the legislative and judicial branches.
Excludes employment within the Washington, D.C., metropolitan area, which includes the
District of Columbia and the adjacent counties and cities in Maryland and Virginia.
sf"
Merchant seamen on vessels under Federal shipping
contracts.
Excludes 114,658 foreign nationals provided to the Department of Defense unde
ments, or other arrangements with foreign governments which provide for the furnishing of personal
SPECIAL ANALYSES
105
TRENDS IN WORKLOAD
An increasing population and a steadily expanding economy create
an unavoidable increase in the volume of work under certain government programs. While defense and space programs have been reduced,
domestic programs are increasing in 1971; for example:
• Participants in the food stamp program will rise by 38%.
• Establishments with Federal meat inspectors will increase by 58%
while the volume of poultry inspected will rise by 5%.
• The number of persons served by the Federal Medicaid programs
will increase by 10%.
• There will be a 10% increase in participants in manpower training programs for unemployed and underemployed workers.
• There will be a 6% increase in workload of the Social Security
Administration in such areas as processing claims, maintaining
earnings records, and changing beneficiary status.
• Mail volume will increase 2.4% and there will be a substantial
rise in the number of delivery stops.
• Tax return processing under the Tax Reform Act of 1969 will increase in complexity and there will be an 11% increase in tax
returns audited.
• FBI investigations are expected to increase by 5,000.
• Family planning assistance will reach 2.25 million women in 1971,
an increase of 42%.
• Landings and takeoffs at airports with FAA towers will increase
by over 5%.
• The number of persons arriving in this country will increase by
5.4% and cargo entries will increase by 7%.
• There will be 11 million additional inspections by the Immigration and Naturalization Service.
These are a few of the many workload increases expected in 1971.
The growth in related manpower needs is kept to a minimum by requiring steadily greater productivity.
POPULATION AND GOVERNMENT EMPLOYMENT COMPARISONS
The following chart shows the total Government,Civilian Employment and the ratio of Federal to State and local civilian employment.
For the past 20 years the proportion of Federal to total employment
in all governmental units has been declining and is estimated to be
at 22% in 1971.
106
THE BUDGET FOR FISCAL YEAR 1971
Government Civilian Employment
Millions of Employe
14-
10-
01
J942
1945
1950
End of Fiscal Year
A historical comparison of total Federal civilian employment in the
executive branch (including temporary and part-time employment)
with employment by State and local governments and U.S. population for 1942-71 is shown in table H-5.
The ratio of Federal civilian employment to population has been
decreasing since 196N and is estimated to be 14 per thousand in 1971.
107
SPECIAL ANALYSES
Table H-5. GOVERNMENT EMPLOYMENT AND POPULATION, 1942-71
Government employment
Fiscal year
1942
1943
1944
1945
1946
1947 . .
1948
.
1949
1950
1951 . -1952
1953
1954
1955 .
1956
1957
1958 .-.1959
1960
1961
1962
1963 1964
1965
1966
1967
1968
1969
1970 (estimate)
1971 (estimate)
Population
Federal
State and All govern- Federal as
Total
Federal emUnited
all governbranch 1
ments
units
States
per 1,000
(thousands) (thousands) (thousands) mental units (thousands) population
2,272
3.274
3.304
3.787
2.666
2.082
2,044
2.075
1,934
2.456
2.574
2.532
2.382
2,371
2,372
2,391
2,355
2,355
2
2,371
2,407
2,485
3
2,490
3 2,469
2,496
2,664
2,877
2,951
45
2,980
5
2.925
5
2,919
3,310
3,184
3,092
3,104
3,305
3,568
3,776
3,906
4,078
4,031
4,134
4,282
4,552
4.728
5,064
5,380
5,630
5,806
6,073
6,295
6,533
6,834
7,236
7,700
8,320
8,898
9,437
9,516
(66)
()
5,582
6.458
6,396
6,891
5,971
5,650
5,820
5,981
6,012
6,487
6.708
6,814
6,934
7,099
7,436
7,771
7,985
8,161
8,444
8,702
9,018
9,324
9,705
10,196
10,984
11,775
12,388
12,496
40.7
50.7
51.7
55.0
44.6
36.8
35.1
34.7
32.2
37.9
38.4
37.2
34.4
33.4
31.9
30.8
29.5
28.9
28.1
27.7
27.6
26.7
25.4
24.5
24.3
24.4
23.8
23.8
23.0
22.4
135,361
137.250
138,916
140,468
141,936
144,698
147,208
149,767
152,271
154,878
157.553
160.184
163.026
165.931
168,903
171,984
174,882
177,830
180,684
183,756
186,656
189,417
192,120
194,592
196,920
199,118
201,166
203,635
16.8
23.9
23.8
27.0
18.8
14.4
13.9
13.9
12.7
15.9
16.3
15.8
14.6
14.3
14.0
13.9
13.5
13.2
13.1
13.1
13.3
13.1
12.9
12.8
13.5,
14.4
14.7
14.6
14.2
14.0
1
Covers total end-of-year employment in full-time permanent, temporary, part-time, and intermittent positions except for summer workers under the President's Youth Opportunity Campaign;
merchant seamen on vessels under Federal shipping contracts; and beginning in 1970, excludes Public Service Careers program disadvantaged worker-trainees and disadvantaged students employed
part
time.
2
Includes piece-rate census workers employed for the decennial census.
s
Excludes 7,41 1 project employees in 1963 and 406 project employees in 1964 for the public works
acceleration
program.
4
On January 1, 1969, 42,000 civilian technicians of the Army and Air Force National Guard converted by law from State to Federal employment status. They are included in the Federal employment
figures in this table after and including 1969.
5
Excludes temporary, part-time, and intermittent employees for the 19th decennial census: 883
in 6 1969, 134,400 in 1970, 3,000 in 1971.
An official projection of State and local government employment for 1970 and 1971 is not available. The percentages shown for these years are consistent with a range of reasonable estimates based
on recent trends in population and State and local government activity.
PART 2
FEDERAL SOCIAL PROGRAMS
109
INTRODUCTION
Part 2 furnishes Government-wide program and financial information in six social program areas—education, manpower, health,
income security, crime reduction, and housing. It includes the special
analyses designated I through N.
The figures used in these analyses differ from the data shown under
somewhat similarly titled categories of the functional classification used
in Part 4 of the Budget and elsewhere. In the functional classification,
each activity is categorized according to its major purpose; thus all
the military spending of the Department of Defense falls into the functional category, National defense. Tn these special analyses, however,
all spending for education, health, etc., is included, even if the activity
has a different primary purpose. Thus the tabulations here are more
comprehensive with regard to these particular types of social programs.
The Government's commitment of resources to these purposes is
evidenced in the tabulation below by the totals for 1971 budget
outlays in the various analyses. This is not a complete representation,
however, since some resources also go into other social programs that
are not explicitly covered by a special analysis in this volume.
FEDERAL OUTLAYS FOR SELECTED SOCIAL PROGRAMS
[In millions of dollars]
Outlays
Description
Special analysis:
I. Education
J. Manpower
K. Health
L. Income security
M. Reduction of crime
N. Housing
Deduction for duplications included above
Total
Civilian
agencies
Departof
Defense
All
9,689
3,216
18,604
68,393
1,257
283
-14,726
963
20
1,998
3,193
449
-16
10,652
3,236
20,602
71,586
1,257
732
-14,742
86,716
6,607
93,323
Some activities of the Government serve more than one social
purpose; for example, the Medicare and Medicaid programs may be
considered as a part of both the Federal health and income security
programs. About $11,888 million for 1971 is included in both the health
and income security categories. Thus, in adding the six categories to
a total, a deduction must be made to avoid double counting.
110
SPECIAL ANALYSIS I
FEDERAL EDUCATION PROGRAMS
PART I—OVERVIEW
Federal budget outlays for education are estimated at $10.7 billion
for 1971, an increase of $597 million over 1970 and more than five
times the level in 1960. Education outlays represent 5% of all Federal
spending compared with only 2% in 1960.
Federal programs discussed in this analysis serve two main purposes. The first is to support educational institutions as such, or to
support individuals who are attending such institutions. This purpose is achieved principally through activities of the Office of Education (OE), education benefits paid to former servicemen under
the GI bill, and payments to students who are children of deceased
or disabled social security beneficiaries. Also included are the Head
Start, Follow Through, and other education programs funded by
the Office of Economic Opportunity (OEO), science education programs in the National Science Foundation, college housing loans in
the Department of Housing and Urban Development, education of
American Indians under the Department of the Interior, and education of dependents of U.S. military personnel overseas. These activities
represent 61% of the total Federal spending for education.
The second purpose is to support education as a means for accomplishing other national objectives. Included in this category are such
Table 1-1. MAJOR FEDERAL EDUCATION ACTIVITIES (in billions of dollars)
Outlay*
Program
1969
actual
1971
1970
3.5
.5
.1
.2
3,7
.5
.1
.2
3.9
.5
.1
.2
.2
.6
.5
.3
.9
.5
.3
t.l
.5
5.6
6.2
6.5
1.4
.6
1.4
T~4
.5
.1
.2
.7
.6
.1
.2
.8
.6
.2
.2
1.0
Subtotal, other education
3.4
3.9
4.2
Total
9.0
10.1
10.7
Office of Education programs (HEW)
Head Start and Follow Through (OEO)
NSF science education
College housing loans (HUD)
Education of American Indians (Interior) and overseas dependents (DOD)
GI education benefits ( V A ) . . _
Social security benefits for children in school (HEW)
Subtotal, direct support
1
Research at academic institutions (19 agencies)
Health and other scientific manpower training ! (9 agencies)
Training of Federal and other public employees at educational
institutions (12 agencies)
Agricultural extension (Agriculture)
Education aid to foreign countries (AID)
All other
._
* Excludes portion included in Office of Education.
Ill
112
THE BUDGET FOR FISCAL YEAR 1971
diverse activities as support of university research to extend medical
knowledge, training of manpower to improve delivery of health
services, agricultural extension services, Agency for International
Development assistance to schools and colleges abroad, and professional training of military officers. Such activities account for 39%
of total outlays for education.
Table 1-1 identifies the principal groups of Federal activities included
in this analysis.
Since 1960, Federal education outlays have risen more than $8
billion. Of this amount, $3 billion has been for elementary and secondary education, over an eightfold increase. The Federal investment
in higher education has risen by $4 billion and is now almost five
times the 1960 level. Federal education funds provide 14% of the
total spending in U.S. education institutions. Table 1-2 summarizes
the trend in Federal outlays by level of education since 1960.
Table 1-2. FEDERAL OUTLAYS FOR EDUCATION (1960-71) (in billions of dollars)
Actual
Category
1960 1961
Elementary and second0.4
ary
Higher
1.1
Adult and other
.5
2.0
Total _.
Estimated
1962 1963 1964 1965 1966 1967 1968 1969 1970 1971
0.5 0.5 0.6 0.6 0.8 2.2 2.8 3.2 3.1 3.3
1 ? 1 ^ 1 6 1 7 ? n ? 7 1 6 4 4 4 4 5.0
5
9 1 ? 1 ? 1 6 1.8
8
8
6
6
3.5
*> 3
9.0 10.1
10.7
2.1
2.4
2.8
3.1
3.6
5.8
7.5
8.8
19
The remainder of part I of this analysis highlights Federal education
policies and budget proposals for 1971, and indicates the degree to
which different Federal agencies are supporting education. Part II
discusses the principal Government programs by level of education.
Part III contains technical notes on coverage and scope of the analysis
and the relationship to other analyses in the Federal budget.
EDUCATION POLICIES AND THE 1971 BUDGET
The Government has taken on many new responsibilities in education over the past decade and there are now literally hundreds of
separate Federal grants, loans, and direct services. These programs
were developed with the expectation that they would improve school
programs and raise academic achievement. AH too often this expectation has not been fulfilled.
In the field of domestic policy, the Federal Government is placing
special emphasis on basic reforms to improve program performance.
Major actions are necessary to achieve better performance and
vitally needed reform in the critical area of education. The Government is concerned more with the outputs of the Nation's education
system (e.g., proportion of students able to read adequately) than with
SPECIAL ANALYSES
113
the inputs (e.g., number of teachers). Looking broadly at Federal
education programs, the purpose of the Government and its role and
direction in education can be organized under six points. These points
and the principal budget outlay data which are pertinent to them are
highlighted in the following paragraphs.
First, broader support is required for State and local government.
New initiatives of the Administration which will fundamentally affect
education include (a) a proposed plan for sharing a fixed and growing
portion of the Federal tax base with the States to use as they determine, (b) a reform of the Nation's failing welfare system which will
free States of a significant portion of fast-growing welfare costs and
lead to a more stable home environment for thousands of children,
and (c) consolidation of narrow purpose elementary and secondary
grants into broader purpose ones to give States more choice in use of
funds. More grant consolidations will be proposed for the coming
year.
Second, greater use will be made of research, experimental projects,
and systematic evaluation to develop better approaches to education.
The Nation should apply those techniques for advancement and renewal which have been successful in such fields as agriculture and
space.
Budget outlays (dollars in millions)
• Office of Education research, development, and
evaluation
_
_
._
• Follow Through.
._.
• OEO experimentation in education
_
• Vocational exemplary projects
_
• Dropout prevention projects
_.
1970 estimate
1971 estimate
Change
102
46
4
6
7
114
55
14
17
10
+12
+9
+10
+11
+3
Third, more emphasis will be given to needs of younger children
where the developmental process is still underway. This is a critical
period in which educational deprivation often begins and the future
course of a life may be determined.
Budget outlays (dollars in millions)
1970 estimate
• Head Start experimental projects
• Office of Child Development planning, coordination,
research, and statistics
• OEO day care experimentation
1971 estimate
Change
8
16
+8
2
5
20
+5
+18
Fourth, the budget proposes reduction, redirection or elimination of
activities which are outdated, which fail to achieve their objectives,
or which are not reaching high priority targets. Legislation will be
proposed to revise the authorizations for payments to schools in
federally affected areas, a program which provides funds disproportionate to the financial impact of Federal property on school tax
revenues and often far in excess of fiscal need. The budget also proposes termination of operational grants to land-grant institutions;
such funds are but a minute source of revenue for these institutions
which collectively are among the strongest and most prestigious
institutions of higher education in the Nation.
390-700 O—70
8
114
THE BUDGET FOR FISCAL YEAR 1971
Budget outlays (dollars in millions)
• Assistance to schools in federally affected areas
• Assistance to land grant colleges
• University extension
1970 estimate
397
12
9
1971 estimate
340
2
Change
—57
—12
—7
Fifth, the Federal Government will, as a primary objective, support
programs for individuals who need special educational services in
order to realize their full potential. For example, in 1971, it is estimated
that outlays for education of individuals from low-income families
will total $2.8 billion, or 26% of the total Federal education spending.
Budget outlays (dollars in millions)
1970 estimate
• Title I, education of the disadyantaged
• Grants, work-study, and special services for college
students from low-income families
• Social security payments for youth in school or
college
_
1971 estimate
Change
1,140
1,249
+110
340
381
+41
+22
474
496
• Agricultural extension programs
130
171
+41
• Education of American Indians
• Model Cities grants
153
50
165
100
+12
+50
Sixth, greater use will be made of the resources of the private credit
market to assist individuals and institutions in meeting heavy one-time
costs which can be repaid over a period of years. Through Federal
guarantees and subsidies, $1.7 billion is estimated for support of
education in 1971 in addition to the Federal outlays reflected in
this analysis.
Budget outlays (dollars in millions)
• Guaranteed loans to Students:
Interest costs paid by Federal Government
(Total volume of loans made to students by
private lenders)
...
• Construction of college academic facilities:
Interest costs paid by Federal Government
(Total volume of loans made to institutions by
private lenders)
.
. _.
• Construction of college housing facilities:
Cumulative interest contracted by Federal Government
(Total volume of loans made to institutions by
private lenders)
1970 estimate 1971 estimate
109
140
Change
+31
(794)
(940)
(+146)
10
20
+10
(435)
(478)
(+43)
12
21
(50)
(240)
+9
(+190)
In addition to the foregoing actions reflected in the 1971 budget,
significant changes are occurring in other activities included in the
Education special analysis. Educational benefits for returning servicemen will increase from $894 million in 1970 to an estimated $1,078
million in 1971. These amounts provide for increased levels of participation of veterans in such benefits and for needed increases in the payment rates to keep abreast of rising costs. Increases are also estimated
for training of health services manpower ($78 million), research and
development at academic institutions ($26 million) and support of
education in foreign countries under AID programs ($30 million).
115
SPECIAL ANALYSES
FEDERAL SUPPORT OF EDUCATION BY AGENCY
Table 1-3 provides a summary of total Federal outlays for education by administering agency. It shows that only two-fifths of these
outlays are for programs administered by the U.S. Office of Education, the Federal Government's principal agency for education
programs. Other parts of the Department of Health, Education, and
Welfare account for one-fifth of all Federal outlays for education,
primarily for medical education and research programs conducted at
colleges and universities.
The remaining two-fifths of total Federal education outlays are
distributed among 24 Federal departments and agencies, of which
the largest shares are accounted for by the Department of Defense, the
Veterans Administration, the National Science Foundation, and the
Office of Economic Opportunity.
Table 1-3. FEDERAL OUTLAYS FOR EDUCATION BY AGENCY
(in millions of dollars)
Federal agency
Agriculture _
Defense
Health, Education, and WelfareOffice of Education
Other HEW
Housing and Urban Development
Interior
National Science Foundation
Office of Economic Opportunity.
Veterans Administration
Other 1 ....
. .
Total Federal outlays
1960
1969
actual
1970
estimate
.1971
Estimate Percent
Actual
Percent
109
338
5
17
190
897
243
937
299
963
3
9
450
197
203
67
22
10
120
6
3,473
1,565
180
215
3,737
1,772
285
273
3,867
1,913
264
309
378
179
19
9
719
756
980
810
1,170
835
36
18
2
3
5
5
11
8
2,041
100
9,008
10,055
10,652
100
10
488
525
489
529
489
542
1 Includes Commerce, Justice, State, Transportation, AEC, AID, NASA, National Foundation
on the Arts and the Humanities, Small Business Administration, Smithsonian Institution, TVA,
USIA, GPO, and Library of Congress.
PART II—FEDERAL OUTLAYS FOR EDUCATION BY LEVEL
PRESCHOOL, ELEMENTARY, AND SECONDARY EDUCATION
In 1971, outlays for preschool, elementary, and secondary education
will amount to $3,490 million, an increase of $198 million over 1970.
Federal funds supply about 8% of national expenditures on elementary
and secondary education in public and nonpublic schools.
Table 1-4 displays Federal outlays by agency and major program.
Nearly two-fifths of the total is for Title I of the Elementary and
Secondary Education Act providing support for school remedial,
health, and other services for children from low-income families. Head
Start and assistance to schools in federally affected areas each represent one-tenth of the total Federal outlays.
Table 1-5 displays Federal outlays by sublevel and type of support.
The following paragraphs describe current Federal actions by sublevel.
116
THE BUDGET FOR FISCAL YEAR
1971
Table 1-4. FEDERAL OUTLAYS FOR PRESCHOOL, ELEMENTARY AND
SECONDARY EDUCATION BY AGENCY AND PROGRAM (in millions of dollars)
Agency and program
Office of Economic Opportunity:
Head Start
Follow Through
Neighborhood Youth Corps in school
Other
Defense:
Education of overseas dependents
Health, Education, and Welfare:
Office of Education:
Educationally deprived children
Education of the handicapped
Dropout prevention and bilingual education
Aid to federally affected areas
Supplementary services
Education professions development
Vocational education
Educational research and development
Civil rights education
Other___.__
Social Security (student benefits)
Other HEW programs
Interior:
Indian education
Other
National Science Foundation: Science education.
Other Federal agencies
Total
1969
actual
1970
estimate
1971
estimate
350
18
61
14
324
46
62
13
327
55
62
39
108
128
135
1,073
54
1
398
322
65
154
83
8
38
91
16
1,140
70
14
397
209
126
179
91
14
36
95
19
1,249
78
19
340
173
130
205
98
26
38
99
31
104
14
59
55
124
18
55
132
134
28
48
176
3,087
3,292
3,490
Table 1-5. FEDERAL OUTLAYS FOR PRESCHOOL, ELEMENTARY AND
SECONDARY EDUCATION BY SUBLEVEL AND TYPE OF SUPPORT
(in millions of dollars)
Sublevel and type of support
Total preschool, elementary and secondary
Preschool
___
Elementary and secondary
Vocational education
Other.
Current operations
Facilities and equipment
Student support
Teacher training
Educational research
_
1969
actual
1970
1971
3,087
3,292
3,490
416
2,172
226
272
408
2,261
268
355
447
2,368
298
377
2,581
123
99
148
136
2,660
124
104
215
189
2,796
122
110
218
244
SPECIAL ANALYSES
117
Preschool.—Research findings strongly support the contention
that a child's potential is determined to a significant extent by the
nature of his environment during the first 5 years of life. In order
to break the chain of inherited disadvantage from poverty, it is necessary to reach children before they enter school. Many questions remain
unanswered as to what action should be taken by persons outside the
family and what objectives are to be accomplished. The Federal
Government is supporting the exploration of such questions through
several complementary efforts. Those included in the tabulations of
this special analysis are:
• A new Office of Child Development (OCD), created in the Department of Health, Education, and Welfare to provide leader^
ship and coordination for all Federal programs for preschoochildren.
• Head Start, funded by the Office of Economic Opportunity and
administered by OCD, providing a variety of services—educational, medical, and social—for 248,000 three- to five-year-old
children. The results of recent studies on the retention of developmental gains made by Head Start children have been disappointing. Consequently, increased funding is allowed in 1971
for systematic testing of a variety of approaches to preschool.
• Kindergarten and prekindergarten supported under Title I of
the Elementary and Secondary Education Act at the option
of local school districts.
• The Office of Economic Opportunity program of day care
experimentation in 1970, which will be continued and expanded
in 1971. Analysis will be made of the total need for day care,
of the costs of day care services under varying conditions and of
alternative methods of service organization and delivery.
• Preschool and day care activities supported through a portion
of the Model Cities grants, made by the Department of Housing
and Urban Development.
Other programs, not included in Special Analysis I tabulations,
also support services which have a potentially significant impact on
development of child learning abilities:
• Day care services provided through Federal manpower and socia
service programs. Principal efforts include Work Incentive train"
ing and day care, and funds for social services supported by
Assistance to Families With Dependent Children and Child
Welfare grants under the Department of Health, Education, and
Welfare. The Administration has proposed in the Family Assistance Program (FAP) to expand and improve day care services for
Family Assistance recipients.
• Nutrition programs of the Department of Agriculture and health
research being conducted by the National Institute of Child
Health and Human Development.
118
THE BUDGET FOR FISCAL YEAR 1971
Table 1-6 details the enrollment of children in federally supported
preschool programs. (Note: no estimates available for Model Cities
program).
Table 1-6. NUMBER OF CHILDREN ENROLLED IN PRESCHOOL PROGRAMS
(in thousands)
1969
Head Start:
Full year
Experimental __
Title I—ESEA-_
0 E 0 day care experimentation..
217
__
Work Incentive day care (HEW)
Other HEW day care 1
Other (manpower, OEO local initiative)
Subtotal, not included in education analysis
1
.
. _
342
248
10
342
5
15
559
601
615
4
28
2
27
38
3
65
44
34
68
112
593
669
111
__ .
.
__
1971
248
6
342
. _
Subtotal, included in education analysis
Total
1970
3
Includes children supported by non-Federal funds in the Child Welfare Services Program.
Elementary and secondary.—The important features of the 1971
budget involve efforts to make Federal programs function more
successfully and provide broader support for State and local school
systems.
Simplification of grant administration and decentralization of
decisionmaking in education will be furthered. A principal example
of this effort is the proposal to consolidate four separate State formula
grants—for books, equipment, counseling, and exemplary services—
administered by the Office of Education. States will be encouraged
to use this consolidated grant to fund "start up" costs associated
with new education models.
The administration's proposals for Federal revenue sharing and
welfare reform will have significant impact on the financing of elementary and secondary education. The Federal revenues to be
returned to the States each year in increasing amounts will be used by
States and local governments as they see fit and without Federal
strings. Education, which accounts for over two-fifths of State and
local government spending, is certain to be a major beneficiary of
this revenue sharing measure. Also, the proposed welfare reform will
lift from the States and local governments much of the pressure from
rising welfare costs which have drained away funds from other
purposes, such as education. The Federal Government will undertake
SPECIAL
119
ANALYSES
a review of the financial structure of elementary and secondary education, leading to basic reforms which will place the financing of our
schools on a sound and stable basis.
The Federal Government will also focus increasingly on actions
which will lead to improved educational performance at the elementary-secondary school level. The 1971 budget provides for expansion of
research and experimentation activities to develop more effective
techniques, as discussed below. A major review of the compensatory
education programs for the poor under title T of the Elementary and
Secondary Education Act is being conducted in order to increase the
effectiveness of these Federal funds. The budget also places a special
emphasis on programs to develop, evaluate and disseminate better
techniques for education of children whose learning ability is impaired
by physical and mental handicaps. A reform of school assistance to
federally affected areas will be proposed to concentrate payments on
those districts where Federal impact is greatest.
Table 1-7 indicates the number of children participating in federally
aided programs for the disadvantaged in elementary and secondary
schools.
Table 1-7. NUMBER OF CHILDREN AIDED BY ELEMENTARY AND
SECONDARY PROGRAMS FOR THE DISADVANTAGED (in thousands)
Program
Education of children from low income families, Title I.
Follow Through
__
_
Dropout prevention
Bilingual education
_
_
_..
Special classes for mentally and physically handicapped
American Indians
_
1969
actual
1970
estimate
7,558
7,558
35
42
27
182
57
62
80
36
182
59
1971
estimate
7,558
70
80
36
182
62
Vocational education.—The Federal Government has supported
vocational education programs through grants to States since 1917.
With Federal assistance, vocational programs are being redirected to
broader and more technological training, to occupational preparation
for students not going on to college and to geographic areas of high
unemployment and school dropout. This redirection will require the
development of new and improved course offerings, the provision of
closer ties between schools and employers and a focus on the special
needs of the disadvantaged and the handicapped. The 1971 budget
provides increased funds for Office of Education grants to States for
(a) cooperative programs which combine part-time work in private
industries and public agencies with related schooling; and (b) project
grants to States, local schools and other agencies to develop, dem-
120
THE BUDGET FOR FISCAL YEAR 1971
onstrate and test improved vocational techniques and curricular
materials.
The Department of Labor administers the Neighborhood Youth
Corps in-school program which provides grants for work and studyprograms to help financially needy youths to remain in school. Grants
are also made for construction of vocational schools by the Appalachian Regional Commission, a cooperative Federal-State economic
development agency.
In addition to the $298 million in outlays for these vocational education programs in secondary schools in 1971, the Federal Government will spend $126 million for vocational and technical education
programs in post-secondary technical schools and junior colleges and
for programs for adults who wish to upgrade their vocational skills.
Table 1-8. NUMBER OF SECONDARY SCHOOL STUDENTS IN VOCATIONAL
EDUCATION (in thousands)
Vocational program
Occupational programs:
Office of Education:
Basic grants to States
Cooperative work education
Department of Labor: Neighborhood Youth Corps in-school
program
Subtotal, occupational
Consumer and homemaking education: Office of Education.
1969
actual
1970
estimate
1971
estimate
2,849
3,273
88
3,693
150
100
100
100
2,949
1,500
3,461
1,500
3,943
1,500
Other programs.—Outlays in this category are primarily for support
of educational research, development and demonstration projects,
and education personnel training programs.
The Federal Government is a major source of funds for support of
education research and development. In 1971, outlays for this purpose
are estimated to increase by $55 million to $244 million. New initiatives
of the Government include support for (a) experimental schools to
develop and evaluate changes in curricula, staffing, and organization
as they affect student performance in actual school situations (Office
of Education) and (b) a variety of research and experimental projects
(Office of Economic Opportunity), including a test of the effectiveness
of educational "vouchers". The 1971 budget also puts greater emphasis on evaluation of existing Federal aid programs, and supports
an expansion of a national assessment of educational achievement
being conducted by the Education Commission of the States.
Table 1-9 summarizes the Federal education research and development outlays by program and agency.
121
SPECIAL ANALYSES
Table 1-9. FEDERAL OUTLAYS FOR PRESCHOOL, ELEMENTARY, AND SECONDARY EDUCATION RESEARCH AND DEVELOPMENT (in millions of dollars)
Agency/Program
Office of Education:
Experimental schools
District of Columbia Model School
R. & D. laboratories, centers, general research
Handicapped children
Vocational exemplary projects
Dropout prevention
National assessment, statistics, and evaluation studies _
All other
_.
Office of Economic Opportunity:
Follow Through
Head Start evaluation and research
Other education R. & D
All other (primarily National Science Foundation)
Total.
1969
1970
1971
ittimtte
2
3
I
1
70
11
6
7
10
8
6
3
57
12
17
10
20
16
18
2
8
17
46
8
4
15
55
16
14
17
136
189
244
*
75
10
•Less than $500 thousand.
Federal assistance is provided through several agencies to strengthen
teaching resources. The 1971 budget places priority on (a) attracting
individuals with varying interests, abilities, and experience to careers
in education, (b) increasing the efficiency of school staff through
use of pupil tutors and teacher aids, and (c) improving the quality
of education for the disadvantaged through retraining of existing
staff. Federal grants assist the training of staffs from entire schools
within poverty areas and "on-the-job" training for education
personnel, especially through the Career Opportunities Program.
In addition, grants are made to provide upgrading in the basic
subjects of reading, writing and mathematics for teachers in desegregating schools. This latter program complements assistance authorized by the Civil Rights Act of 1964 which authorizes seminars
and short-term institutes for schools about to desegregate. The
number of education personnel trained in these federally assisted
programs is shown in table 1-10.
' • *
Table 1-10. NUMBER OF TEACHERS AND OTHER EDUCATION PERSONNEL
RECEIVING TRAINING
Agency and program
Office of Education:
Education Professions Development Act:
Teacher Corps
Career Opportunities Program
Teachers in desegregating schools
State grants
Retraining other experienced teachers .
Civil Rights Educational Assistance
Teachers of the handicapped
Office of Economic Opportunity:
Head Start: Short-term training
National Science Foundation
Total
1971
stimate
1969
1970
3,594
4,843
864
12,700
39,125
8,468
18,864
4,389
8,000
12,000
12,700
31,463
11,020
15.928
5,282
8,650
20,000
12,700
45,996
20,750
16,865
50,000
40,055
50,000
45,195
50,000
29.433
178,513
190,695
209,676
122
THE
BUDGET FOR FISCAL YEAR
HIGHER
1971
EDUCATION
Federal outlays for higher education will total $5.3 billion in 1971.
This is 50% of total Federal outlays for education and about onequarter of the estimated total expenditures of U.S. colleges and universities in 1971.
Table 111.
FEDERAL OUTLAYS FOR H I G H E R EDUCATION BY AGENCY
A N D PROGRAM (in millions of dollars)
Agency and program
1969
Defense:
Academic research
Other
Subtotal, Department of Defense
Health, Education, and Welfare:
Office of Education:
Student aid:
Educational opportunity grants
Work-study
NDEA loans
Insured loans
Facilities—grants and loans
Other OE programs._
__ .
Subtotal, Office of Education
_ __
_.
_
Other Health, Education, and Welfare:
Academic research-health sciences
Fellowships and traineeships-health professions
N I H facilities construction
Social and rehabilitation research and training
Social Security (student benefits)
Other
Subtotal, Other Health, Education, and Welfare
Housing and Urban Development:
College housing
Other _ _ _ _ _
Veterans Administration:
Readjustment benefits-Other
_ .
_
.
National Science Foundation _
Other
Total, higher education
.
_
_
1970
1971
243
86
225
90
224
93
329
315
317
91
95
187
138
160
162
176
160
142
44
122
155
418
245
417
276
431
269
1,080
1,275
1,333
545
580
594
390
11
39
366
37
452
148
42
379
48
513
161
43
397
65
1,450
1,649
1,773
178
1
226
9
150
16
516
73
301
450
708
84
298
472
854
91
316
436
4,379
5,036
5,285
Table 1-11 indicates the major Federal agencies and programs contributing to higher education. The Department of Health, Education,
and Welfare provides the largest amount of support with 59% of total
Federal expenditures. Major Federal programs include: (a) grants
123
SPECIAL ANALYSES
and loans to undergraduate students by the Office of Education; (b)
grants and loans for the construction of facilities by OE, NIH, and
the Department of Housing and Urban Development; (c) fellowship
and traineeship programs by several agencies; (d) project grants for
academic research by several agencies; and (e) payments to college
students from the Veterans Administration and the Social Security
Administration.
Table 1-12 indicates how Federal funds are distributed by type of
institution. In 1971, 2-year institutions are estimated to receive
11% of Federal outlays, 4-year institutions, 38%, and graduate and
professional schools, 49%.
Table 1-12. FEDERAL OUTLAYS FOR HIGHER EDUCATION BY TYPE OF
INSTITUTION (in millions of dollars)
1969
actual
Types of institution
2-year institutions
Other undergraduate
Graduate and professional
Other
__.
Total
1970
estimate
1971
400
1,633
2,275
71
500
1,967
2,488
81
566
2,012
2,613
94
4,379
5,036
5,285
Table 1-13 shows Federal expenditures for higher education by type
of support. Approximately 44% of the Federal funds are used for
student aid, 27% for institutional aid and 29% are for research and
training. The following paragraphs discuss current Federal activities
by type of support.
Table 1-13. FEDERAL OUTLAYS FOR HIGHER EDUCATION BY TYPE OF
SUPPORT (in millions of dollars)
Type of support
Student support
Institutional support:
Current operations
Facilities and equipment
Research and training:
Academic research
_
Educational research
Teacher training
Total .
1970
estimate
1971
estimate
1,688
2,084
2,315
452
761
558
875
587
816
1,365
11
87
1,3?8
39
92
1,418
48
101
4,379
5,036
5,285
1969
Actual
-
_
- -
Student aid.—Funds for student aid programs will total an estimated $2.3 billion in 1971. Grant programs for low-income students,
veterans educational benefits, and subsidized loan programs for all
students using private capital are growing rapidly. A total of 3.5
million graduate and undergraduate students will be aided from 1971
funds.
124
THE BUDGET FOR FISCAL YEAR 1971
The Office of Education administers student aid programs which
mainly assist undergraduates. Three of these programs have been
initiated to help increase the number of capable but economically
disadvantaged students entering college:
• Educational opportunity grants providing assistance for students
of exceptional financial need;
• Direct ("NDEA") loans providing low-interest, long-term repayment loans to needy students;
• Work-study grants assisting students earning a portion of their
college expenses through employment opportunities.
The Guaranteed Student Loan Program is available to students of
all income levels. While the student is in school, the Government pays
the interest on loans made by private lenders. After graduation the
student pays the interest up to a maximum rate of 7%. A special
allowance, currently 2]^% of the principal amount of insured student
loans, is paid to lenders when financial market conditions make such
payments essential to achieve the purposes of the program.
Table 1-14. UNDERGRADUATE STUDENT S U P P O R T i (outlays in millions of dollars;
number of students in thousands)
Total outlays
Agency
1969
actual
Defense
Health, Education, and Welfare
Office of Education
Social Security Administration
Health agencies and other
Veterans Administration
National Science Foundation
Total
1
__
_
1970
estimate
Number of students
1971
1969
1970
1971
estimate
27
32
34
220
179
179
765
932
1.004
1.985
2.116
2,291
377
366
21
531
379
21
581
397
26
1,563
376
46
1,681
397
38
1,835
418
38
429
5
582
4
701
4
543
3
699
3
766
4
1,225
1,550
1,744
2.751
2,997
3,240
Involves some duplication because students may be assisted under more than 1 program.
Tables 1-14 and 1-15 indicate the funds expended and the awards
made to undergraduate and graduate students by major agency.
The Veterans Administration will provide grants to 917 thousand
returning veterans who are enrolled at institutions of higher education.
Outlays of $397 million will be paid in 1971 under provisions of the
Social Security Act to students who are the children, under age 22, of
retired, deceased, or disabled beneficiaries. Finally, several Federal
agencies offer fellowships and traineeships to support graduate, professional, and postdoctoral students in a variety of fields. A total of 118
thousand such students will be aided in 1971.
125
SPECIAL ANALYSES
Table 1-15. G R A D U A T E S T U D E N T S U P P O R T * (outlays in millions; number of students
in thousands)
Total Outlay*
Agency
1969
actual
239
Health, Education, and Welfare...
Office of Education
Health agencies
Other
_
Veterans Administration
National Science Foundation
Other
Total
1
_
Number of students
1971
1970
estimate estimate
268
278
1969
actual
121
1971
1970
estimate estimate
107
107
41
55
53
4
3
2
182
16
194
18
207
18
101
16
92
12
93
12
W~
211
41
15
24T
101
138
48
15
8
5
8
4
15?
463~
535
571
235
257
38
12
7
4
269
Involves some duplication because students may be assisted under more than 1 program*
Institutional support.—Federal outlays for institutional support will
total $1.4 billion in 1971 with $587 million for current operations
and $816 million for facilities and equipment.
The primary elements of aid under current operations in table 1-13
are:
• Cost-of-education allowances paid to institutions of higher education as a part of fellowship and traineeship grants, largely in the
natural and health sciences, by the National Science Foundation
and HEW;
• Grants to institutions made by HEW for the training of students
in the health professions and rehabilitation services;
• Grants made by the Office of Education to developing colleges
which are not yet quality academic institutions and to college
libraries;
• Department of Defense funds for college ROTC activities.
The Department of Housing and Urban Development and the
Office of Education support the construction of college and university
classrooms, laboratories, libraries, and dormitories. The method of
support has been shifting from direct Federal grants and loans to
Federal interest subsidy payments on loans made to institutions of
higher education by private lenders. Approximately $500 million in
loans for new construction will be supported by the Office of Education
interest subsidy payments. About $300 million of new construction
will be supported by the HUD college housing program.
Grants are also made by the National Institutes of Health for
construction of health facilities at medical, dental, nursing, and
other health professions schools and by the National Science Foundation for construction of university science facilities and the renovation
of graduate laboratory space.
Research arid training.—Federal outlays of $1.6 billion for research
and training in 1971 include $1,418 million for academic research, $48
million for educational research, and $101 million for teacher training.
Funds for educational research will support experimental projects to
study and test means of changing traditional structures and curricula
126
THE BUDGET FOR FISCAL YEAR 1971
in higher education. The National Science Foundation will support
programs to upgrade science curricula and facilitate the incorporation
of computers in college instruction. Research on 2-year institutions
will be supported by the Office of Education.
Several Federal agencies support programs for the training of
college and university personnel. The National Science Foundation
supports fellowships, institutes, and research training to improve the
competence of college teachers. Under the Education Professions
Development Act, the Office of Education will give special attention
to personnel development in junior colleges, technical institutes,
and liberal arts colleges. Training models for new careers in higher
education and experiments with innovative training techniques will
be used in the Office of Education program.
Federal support of academic research represents about two-thirds of
the total expenditures for sponsored research performed by universities. The major agencies supporting research are HEW (medical,
health, and welfare research), DOD (research related to military requirements), and the National Science Foundation (research in all
fields of science). In 1971, increased emphasis will be placed on research
related to major domestic problem areas and environmental issues.
Federal support of academic research is discussed also in Special
Analysis Q, Federal Research, Development and Related Programs.
ADULT EDUCATION AND OTHER ACTIVITIES
A significant portion of Federal outlays for education are devoted
to adult and various community education programs. In 1971, the
estimated Federal outlays for these programs will total $1.9 billion, or
18% of all Federal education expenditures. These outlays are summarized in table 1-16. Table 1-17 provides information on the number of
people benefiting from these programs.
Table 1-16. FEDERAL OUTLAYS FOR ADULT EDUCATION AND OTHER
ACTIVITIES (in millions of dollars)
1969
Adult and continuing education:
Adult basic
Extension
Continuing education
Public library services
.
Public broadcasting
National Foundation on the Arts and the Humanities
.
Subtotal .
Training of public employees:
Federal civilian _
. .
State and local
Federal military
Subtotal.
Foreign educational activities
Other
Total...
- -
.
1970
1971
67
97
75
130
85
171
195
68
257
55
290
42
9
8
21
15
30
24
445
554
641
21
22
428
22
46
458
22
52
478
470
525
552
278
348
268
380
292
391
1,541
1,727
1,876
SPECIAL ANALYSES
127
Adult and continuing education.—This category includes Federal
programs which provide educational opportunities for adults who
either have not participated fully in the formal educational process in
their youth or wish to continue their acquisition of knowledge and
skills through less formal means.
Adult basic education classes enrolling over 700 thousand men and
women who have had less than 8 years of formal schooling will be
supported by outlays of $85 million in 1971, mostly by the Office of
Education and the Office of Economic Opportunity. These programs,
largely in low-income areas, will enable adults to overcome English
language limitations and to prepare for occupational training leading
to more profitable employment.
The Department of Agriculture will spend $171 million in 1971 to
support instruction in agriculture, home economics, and related subjects
through land-grant college extension activities. Increases will provide
for nutrition education and professional assistance in community
development. The Office of Education will support vocational education programs for 2.5 million adults who will upgrade or acquire
new work skills. Over 350 thousand individuals will benefit in 1971
from the Veterans Administration readjustment benefits programs to
provide adult and continuing education for veterans and the children,
widows, and wives of deceased or seriously disabled veterans. The
Defense Department will support off-duty education programs for
370 thousand servicemen in 1971.
Other programs covered by this category totaling $96 million in
1971 include:
• Office of Education grants to States for public library services
and educational broadcasting facilities.
• The Federal grant to the Corporation for Public Broadcasting,
a publicly supported, private nonprofit institution, providing
operating assistance and interconnection of local educational TV
stations and financing new public television and radio programs.
• The National Foundation on the Arts and the Humanities which
aids various cultural activities, supports State arts councils, and
funds programs in colleges and universities to improve the
quality of instruction in the humanities.
Training of public employees.—This analysis includes Federal programs designed to assist public employees in increasing their professional skills through graduate education and other courses at educational institutions. Inservice and on-the-job training are excluded since
educational institutions are not involved.
The military services account for the major part of this continuing
education effort ($478 million or 87% in 1971), utilizing both institutions of higher education and their own educational facilities.
Training of civilian employees of the Federal Government, as well as
State and local employees, is supported by the various branches of the
Armed Forces, the Foreign Service Institute in the Department of
State, the law enforcement training program of the Department of
Justice, and the public health and rehabilitation manpower activities
of HEW. In 1971, an estimated 20 thousand Federal civilian, 412
thousand State and local, and 385 thousand military personnel will
receive some type of graduate, professional, or other education.
128
THE BUDGET FOR FISCAL YEAR 1971
Table 1-17. NUMBER OF INDIVIDUALS BENEFITING FROM FEDERAL
PROGRAMS FOR ADULT EDUCATION AND OTHER ACTIVITIES
(in thousands)
Sublevel and program
Adult and continuing education:
Adult basic
Vocational education
Other continuing education
Training of public employees:
Federal civilian
State and local
Federal military
1969
1970
599
2.497
1,948
659
2.507
2.092
725
2.512
1.638
19
293
390
19
392
379
20
412
385
1971
Foreign education.—The Federal Government supports foreign students attending colleges and universities in the United States and provides assistance to educational institutions in foreign countries. The
principal Federal agencies involved are the Agency for International
Development, the Peace Corps and the Department of State.
Other Federal support for education.—This category covers a number
of Federal activities that do not fall conveniently into any other
categories. This includes the Library of Congress and the National
Agricultural Library, the educational activities of the Smithsonian
Institution, and the Small Business Administration, $92 million for
Bureau of Indian Affairs welfare and training programs, and $129
million for research supported by the National Science Foundation
outside academic institutions.
PART III—COVERAGE OF THE EDUCATION SPECIAL ANALYSIS
This analysis includes all Federal programs which have the direct
support of educational activities as a major purpose or which involve
the use of educational resources to achieve other purposes. For this
analysis, education is defined as (1) a student-teacher relationship
primarily for the transmission of organized knowledge, as distinguished from occupational skill, or (2) the provision of services to
the community at large aimed at expanding individuals' opportunities
for professional or career advancement, for civic involvement or for
a more meaningful and satisfying leisure. Any Federal program with
outlays of $500,000 or more which supports any educational activity
meeting this definition is included in this analysis.
This analysis does not include scientific research conducted outside
of academic institutions (other than that in laboratories and other
science projects of the National Science Foundation and Smithsonian
Institution). Also, it does not include scientific research conducted in
university-managed centers under Federal contracts. Finally, it excludes the school lunch and special milk programs, university service
contracts—for example, to operate mental health centers—and many
inservice training programs for Federal civilian employees.
Relationship to other special budget analyses and budget Junctions.—All
programs classified in the budget functional category for education
(see part IV of the Budget Document) are included in this special
129
SPECIAL ANALYSES
analysis. These include all the programs of the Office of Education
and the National Science Foundation, as well as Office of Economic
Opportunity education activities, college housing loans and education
of American Indians. For 1971, outlays for programs classified under
the budget functional category of education total $5.4 billion.
In addition this analysis includes outlays of $5.3 billion for 1971
for programs classified under such other budget functional categories
as "national defense" and "health." These activities use education—
most often graduate training or research at academic institutions—as
a means of accomplishing their primary objectives.
The amounts tabulated in this analysis include some programs also
covered in other special analyses. For example, outlays of about
$1.5 billion in 1971 are included in both this analysis and Special
Analysis K, Federal Health Programs, for university and other postsecondary programs which help train medical personnel. In addition,
approximately $1.5 billion in outlays for 1971 for research in academic institutions are reflected in both this special analysis and Special
Analysis Q, Federal Kesearch, Development and Related Programs.
Table 1-18 summarizes the outlays included in this analysis which
are also included in other special analyses, and by major budget
functional categories.
Table 1-18. FEDERAL EDUCATION OUTLAYS BY MAJOR BUDGET FUNCTIONAL CATEGORIES AND RELATIONSHIP TO OTHER SPECIAL
BUDGET ANALYSES (in millions of dollars)
Major functional category and special budget analysis
Functional categories:
Education
Other categories:
National defense
International affairs and finance
Space research and technology
Agriculture
Natural resources
Commerce and transportation
Community development and housing
Manpower
Health
.
Income security
Veterans benefits and services
General government
Special analyses:
Federal health programs
Federal manpower programs
Federal income security programs
_.
Federal research, development and related programs
390-700 O—70
9
1969
actual
1970
estimate
1971
estimate
4,835
5,253
5,389
1,012
275
160
163
1,054
263
1,073
295
113
51
48
98
61
144
204
64
68
155
62
1,010
1,181
517
719
60
540
980
78
1,214
1,398
89
457
109
474
1,426
1,449
255
67
74
211
62
1,269
574
1,170
97
1,495
119
496
1,475
SPECIAL ANALYSIS J
FEDERAL MANPOWER PROGRAMS
COVERAGE AND SCOPE OF T H I S ANALYSIS
Almost all public and private economic activities affect the size,
composition, and quality of the work force. A limited grouping of
Federal programs, described in this special analysis, are intended to
influence directly the quality and composition of the work force by
increasing the skills and employment opportunities of individuals in
the work force, or those who desire to be in it but who are vocationally
unprepared or face other barriers to employment. The programs provide skill training, rehabilitation, job placement, temporary employment, and related social services such as day care.
One method of differentiating these training programs is by their
operating characteristics. Generally the programs: (1) operate outside
the normal educational processes; (2) provide services for periods of
less than 1 year; (3) provide skill training and job opportunities for
nonprofessional jobs; and (4) are targeted to the disadvantaged sector
of the population. The analysis covers all programs classified as Manpower Training in the functional code of the budget, and some programs from other functional
classifications such as Health and Welfare,
National Defense,1 and Veterans. It excludes all professional training
and programs which are part of the normal educational process, such
as vocational education. These are included in Special Analysis I,
Federal Education Programs.
1971
BUDGET OVERVIEW
The 1971 budget provides $3.2 billion for manpower programs,
an increase of 20% over 1970 and 55% over 1968. The increase reflects
the importance of manpower programs in helping the disadvantaged
to become self-sufficient through regular employment.
Within the $535 million increase in 1971 over 1970, the following
programs will receive special emphasis :
• $154 million for the Job Opportunities in the Business Sector
(JOBS) program, which has been revised and expanded from the
131 largest cities to a nationwide basis.
• $61 million for the Work Incentive (WIN) program, which will
provide job training for 180,000 welfare recipients and day care
for 233,000 children.
• $52 million for the Vocational Rehabilitation program to rehabilitate 288,000 handicapped individuals.
• $30 million for increased costs of the Employment Service including Job Banks in 25 additional cities.
1
This year the coverage of this special analysis has been changed to exclude the skill training
programs for military personnel conducted by the Department of Defense. This effort, while increasing
civilian skills, is conducted primarily for national defense purposes. Project 100,000 and Project
Transition continue to be included.
130
131
SPECIAL ANALYSES
• $26 million for the Public Service Careers program, a major new
on-the-job training effort in the public sector.
• $25 million for the additional first-year costs of the proposed
Manpower Training Act.
The number of new enrollees will reach 2.1 million in 1971, an
increase of 173,000 over 1970. The distribution of this increase highlights the priorities in the 1971 budget:
• 47,000 or 27% in the Work Incentive program;
• 46,000 or 27% in JOBS/OJT;
• 22,000 or 13% in the Neighborhood Youth Corps out-of-school
program;
• 20,000 or 12% in the Vocational Rehabilitation program;
• 15,000 or 9% in On-the-job training for veterans; and
• 23,000 or 13% in all other programs.
The following table summarizes the distribution of Federal funds
and individuals enrolled during the period 1968-71.
Table J-1. FEDERAL OUTLAYS AND INDIVIDUALS SERVED BY PROGRAM
(Outlays in millions of dollars, individuals in thousands)
Outlays
Program
1968
Vocational Rehabilitation
Employment Service
Job Opportunities in the Business Sector/On-the-job training..
Manpower Development and
Training Institutional training.
Neighborhood Youth Corps inschool and summer
Concentrated Employment Program
Work Incentive Program
__ _
Job Corps
Neighborhood Youth Corps
out-of-school
On-the-job training for veterans.
Other programs3
Total
1
2
3
1969
New enrollees
1970
1971
1968
1969
l
1970
1971
c«t.
281
312
351
317
478
350
530
380
330
368
432
452
68
104
192
346
107
136
156
202
203
197
205
212
140
135
148
152
198
182
212
215
429
445
427
68
0
318
140
33
258
189
138
180
212
199
192
374
54
0
65
127
81
53
152
133
47
155
180
49
143
5
490
106
49
488
100
92
566
121
115
714
94
19
331
74
49
309
37
65
338
59
80
370
2.086
2.225
2,702
3.236
1.514
1.761
1,953
2.126
Estimated new enrollees during a fiscal year, less overlap due to persons served more than once.
Enrollment not applicable.
For some programs enrollment data are not applicable.
1971 LEGISLATIVE PROPOSALS
The budget anticipates enactment by 1971 of three legislative
proposals which will make major changes in the shape and effectiveness of manpower programs.
The Manpower Training Act is directed at improving the effectiveness of many of the present manpower programs by proposing basic
changes in the system for delivering services:
132
THE BUDGET FOR FISCAL YEAR 1971
• Manpower programs administered by the Department of Labor
and funded under the Manpower Development and Training Act
and the Economic Opportunity Act will be consolidated under
one funding authority to eliminate overlap and duplication.
• Categorical programs will be eliminated, and flexible funding
provided, to give States and local governments more freedom in
designing and operating programs tailored to the needs of each
participant and responsive to local labor markets.
• Responsibility for administration of manpower programs will be
decentralized to the States and metropolitan areas in three stages.
Each State will administer 25% of its allotment under the Act
when the Governor has designated a "lead agency" and a comprehensive State manpower plan has been developed; 6 6 ^ %
when a comprehensive manpower agency has been organized, and
when local prime sponsors have been named in major metropolitan areas by the Governor and local heads of government; and
100% when standards of effective performance are met.
• Additional resources—10% of the amount appropriated under
the Act—will be "triggered" if the national unemployment rate
reaches 4.5% for 3 consecutive months. This is designed to
ease the impact of adjustments in the national economy on the
labor force.
The training programs incorporated in the Manpower Training
Act will have 1971 outlays of $1.6 billion. In addition, the FederalState employment service system, with outlays of $380 million, will
be an integral part of the planning and coordinating processes of the Act.
Thus 61% of the total 1971 Federal manpower funds will be programed
under the Act. Upon enactment of the Family Assistance Program,
additional resources for manpower will also be administered through
the delivery system proposed by the Act.
The Family Assistance Program, in addition to reforming the welfare system, emphasizes incentives to work. AH recipients who are
able to work, except mothers of preschool children, will be required
to accept suitable employment or training. In order to meet this
workload a substantial expansion of training and day care opportunities is planned.
The incentives to encourage work and training are:
• Recipients will be required to register with State employment
services which will provide individually tailored plans and services
to help them become self-supporting;
• Recipients referred to training will receive an extra $30 per
month while in training, and reimbursement for travel and other
necessary expenses;
• A substantial part of earnings will be disregarded in computing
cash benefits for recipients already employed or employed after
training.
In summary, the Family Assistance Program will concentrate manpower services on those who are now dependent on income maintenance
but who are able to become self-supporting if appropriate training and
services are provided.
Legislation has been proposed to strengthen the process for eliminating barriers to equal employment for minority groups. The Equal
SPECIAL ANALYSES
133
Employment Opportunity Commission will be authorized to file civil
suits in the District Courts when it is unable to obtain voluntary
compliance with the Civil Rights Act of 1964.
SOCIAL AND ECONOMIC OBJECTIVES OF MANPOWER PROGRAMS
Manpower programs are designed to increase employment opportunities for those who are unable to obtain or maintain suitable
employment and to improve the performance of the economy by
increasing productivity and facilitating the movement of workers to
jobs.
Social objective.—Most manpower programs were initiated to serve
disadvantaged persons who would otherwise be unable to obtain suitable employment. The programs fill a gap between education programs
which prepare people for their careers, and income security programs
which provide income for persons who are unable to work because of
age, incapacity, or economic conditions.
The expanding ability of manpower programs to reach the disadvantaged, and the new findings of research, experimental, and
evaluation efforts make manpower programs a more important tool
in attacking the Nation's social problems. While some data showing
personal income and other gains from individual programs exist, the
programs can not be compared on the basis of their results because
similar data are not available for each program. Further data on
program effectiveness are necessary in order to establish the degree
to which the current mix of manpower programs is successful.
Economic objective.—The use of manpower programs to complement
national economic policy is inherent in the program designs. The
effective operation of job placement and training programs requires
that persons be placed or trained to meet skill shortages. Under tight
labor market conditions, such activities reduce inflationary pressures
by increasing the productivity of marginal workers and by enabling
employers to obtain skilled workers who would otherwise be
unavailable.
During periods of high unemployment, work and training programs
increase the skills of the work force and can serve as a source of
income support for unemployed workers. Manpower programs can be
targeted to specific geographic areas to alleviate problems resulting
from national economic changes.
MAJOR PROGRAM APPROACHES
In this section of the analysis, programs are classified into six
manpower service approaches. Some are classified entirely under one
approach; others, such as the Work Incentive program (WIN) and the
Concentrated Employment Program (CEP) which use multiple techniques, are split among several approaches.1 WIN provides a com1
Due to differences in appropriation patterns many outlay adjustments are made. For example,
in table J-2 MDTA Institutional is increased to reflect costs budgeted under MDTA Program Services.
Job Corps is reduced because program direction costs are included in its budget unlike most other
manpower programs.
134
THE BUDGET FOR FISCAL YEAR 1971
prehensive range of manpower and supportive services for AFDC
recipients, including referral to State employment services for training
and employment. CEP concentrates a broad range of services—from
testing and counseling, through work and skill training, to job
placement—on a limited number of rural and urban areas of high
unemployment.
In the past the emphasis has been on developing approaches by
which manpower goals could be achieved. Now the concern is to refine
and perfect the application of these approaches. The Manpower Training Act is the chief vehicle for this reform. The Act will consolidate
programs and decentralize planning and operating responsibility to
State and local governments. Under the proposed reform, the classification by approach used in this analysis should continue to be a
useful method for summarizing the delivery of manpower services.
$ Billions
Federal Outlays for Manpower Activities
1962
1963
1964
Fiscal Years
1965
1966
1967
1968
- 4
1969
1970
1971
Estimate
Institutional training.—Institutional training programs provide
vocational skill instruction in a classroom setting and remedial education, health, child care, and counseling services.
135
SPECIAL ANALYSES
Table J-2. INSTITUTIONAL TRAINING PROGRAM LEVELS
(Outlays in millions of dollars, individuals in thousands)
Individuals served
Outlays
Program
1969
MDTA Institutional-__
Job Corps
CEP
Work Incentive.
Other
Total
New enrollees
Man-years
1970
1971
1969
1970
1971
1969
1970
1971
230
236
52
28
58
233
163
91
118
98
241
175
103
146
161
53
31
15
19
62
52
21
28
62
85
54
23
29
90
107
135
53
63
11
85
148
47
91
123
120
152
49
93
168
137
604
703
826
180
248
303
408
529
599
The largest of these programs, serving 152,000 people, is the Institutional Training Program conducted under authority of the Manpower
Development and Training Act. In 1971, additional training opportunities are provided in skill centers and special emphasis is given to
training returning veterans and persons in rural areas.
In 1969 the Job Corps was reorganized and a lower program level
was set. Fifty-nine less efficient centers were closed. Thirty new centers, established to serve local youths and target training to the local
labor market, will be opened in 1970. Training outlays will fall to
$175 million in 1971, $124 million less than in 1968. The redirected
Job Corps will serve 49,000 enrollees, many of them in the 30 new
community residential centers.
The largest component of the Work Incentive Program and the Concentrated Employment Program is institutional training. Outlays will
rise from $80 million in 1969 to $249 million in 1971, and the numbers
of individuals served rise from 135,000 to 261,000. Generally, WIN
and CEP purchase training services from existing community-based
sources, and in this way help to strengthen the capability of communities to undertake the expanded program envisioned by the Manpower Training Act and Family Assistance Program.
Other major institutional programs include manpower components
of the Model Cities program, and training programs for Indians and
prisoners operated by the Departments of Interior and Justice,
respectively.
On-the-job training (OJT).—These programs provide training
for existing job vacancies, usually by reimbursing employers for the
added costs of hiring and training unskilled workers. This reimbursement may cover job training costs, the cost of remedial education
and other services, and a payment to the employer for the employee's
lower initial productivity.
136
T H E BUDGET FOR FISCAL YEAR 1 9 7 1
Table J-3. ON-THE-JOB TRAINING PROGRAM LEVELS
(Outlays in millions of dollars, individuals in thousands)
Individuals served
Outlays
Program
1969
JOBS/OJT
Veterans OJT
Public Service Careers. _
Project 100,000
Other
Total
New enrollees
Man-years
1970
1971
1969
1970
1971
1969
1970
est.
1971
est.
125
49
17
10
35
214
92
25
7
44
373
115
51
7
49
53
35
3
8
9
81
69
7
6
13
130
84
19
6
14
136
49
4
87
27
156
65
18
62
25
202
80
32
60
26
236
382
595
108
176
253
303
326
400
Outlays for these programs will increase sharply, from 11% of the
Federal manpower total in 1969 to 18% in 1971, mainly as a result of
contracts funded in prior years in the largest OJT program, Job
Opportunities in the Business Sector (JOBS). This program, operated
in conjunction with the National Alliance of Businessmen, was expanded from the 131 largest cities to a nationwide program in 1970.
It was also redesigned to increase its effectiveness and to provide
opportunities for upgrading the skills of persons already employed. In
addition to private industry's efforts to employ and train the disadvantaged through Federal contracts, many employers will hire the disadvantaged at no cost to the Government. In 1971, as JOBS expands
to become nationwide, the smaller MDTA-OJT program, which reimburses employers only for training costs, will be merged with JOBS.
"National" MDTA-OJT contracts will be continued because of
their unique advantages for involving unions and trade associations.
Veterans OJT is provided by the Veterans Administration to former
servicemen whose education or training was interrupted by military
service. Participants receive a stipend when pursuing an approved
course of full-time apprenticeship or other on-the-job training. The
program is growing rapidly because of the rising numbers of returning
Vietnam veterans.
The experience of JOBS with private employers prompted a new
initiative in 1970, the Public Service Careers (PSC) program. PSC
will increase the hiring and training of disadvantaged persons for
regular positions in Federal, State, and local governments by providing
reimbursement for training and related costs. Outlays of $51 million in
1971, the first full year of PSC, will permit 32,000 individuals to
participate.
Project lOOfiOO, operated by the Armed Services, will in 1971
lower entrance standards for about 60,000 recruits, and provide them
with special supportive services so that they can meet military
standards.
Rehabilitation.—Rehabilitation
programs assist physically or mentally disabled persons to be restored to productive lives. They provide
diagnosis, counseling, medical restoration, and vocational training,
137
SPECIAL ANALYSES
which are supplementary to income and services received by the
disabled from family income, workmen's compensation and disability
and medical insurance.
Table J-4. REHABILITATION PROGRAM LEVELS
(Outlays in millions of dollars, individuals in thousands)
Iindividuals served
Outlays
1Wan-years
Program
Vocational Rehabilitation
Veterans Vocational
Rehabilitation
_
Total
.__.
New enrollees
1969
1970
367
499
553
463
501
561
368
432
452
40
52
55
9
12
12
14
17
17
407
551
608
472
513
573
382
449
469
1971
1969
1970
1971
1969
1970
1971
est.
Under the Federal-State Vocational Rehabilitation program, the
largest single manpower program, clients are prepared for competitive
employment, homemaking, or sheltered employment. State rehabilitation agencies determine client needs and purchase services on a caseby-case basis. Outlays increased by $132 million in 1970 partially as
a result of increasing the Federal matching rate from 75% to 80%. It
is estimated that 288,000 individuals will be rehabilitated under this
program in 1971. A heavy emphasis will be given in 1971 to assisting
the culturally and socially disadvantaged, especially public assistance
recipients and criminal offenders.
The 1968 amendments to the Vocational Rehabilitation Act provided greater flexibility in serving disabled persons. Important changes
include authority for extended evaluation of persons whose severity
of disability previously precluded consideration; provision of services
to members of the family to achieve the rehabilitation of a disabled
person; and provision of other facilities and services which may be
expected to contribute substantially to the rehabilitation of a group of
handicapped individuals.
The Veterans Vocational Rehabilitation program provides similar
services to persons who suffered a service-connected disability. The
services are funded and administered by the Veterans Administration.
In addition to counseling and training, the veteran receives a subsistence allowance, disability compensation, tuition, books, and fees.
Work support.—Work support programs create temporary jobs,
usually in the public sector, which terminate when the Federal subsidy
ends. The programs provide the unemployed with work skills and
work habits, offer enrollees an opportunity to stay in school, or
provide enrollees with wages for useful work. Seventy percent of
program costs is in the form of enrollee wages for work by persons
who otherwise would be unemployed.
138
T H E BUDGET FOR FISCAL YEAR
1971
Table J-5. WORK SUPPORT PROGRAM LEVELS
(Outlays in million, of dollars, individual, in thousands)
Individuals served
Outlays
Program
Man-years
1969
actual
N Y C in-school
summer
Other
1970
1971
1969
1970
est.
New enrollees
1971
est.
1969
actual
1970
est.
1971
est.
and
Subtotal, in-school
N Y C out-of-school __
CEP
Mainstream _
Other
Total
182
65
212
71
215
68
150
34
157
32
160
32
429
93
445
102
427
102
247
106
56
37
35
284
100
59
41
18
283
121
67
41
26
184
44
10
10
21
189
34
18
12
7
192
34
18
13
16
522
74
44
11
17
547
37
42
11
13
529
59
43
9
18
481
502
538
269
260
273
669
650
658
The largest work support effort is the Neighborhood Youth Corps
in-school and summer programs which offer work to needy high school
students. Unlike other manpower programs, which provide remedial
services for those who have left school, these programs are primarily
preventative—to keep youth in school, and to aid the transition
from school to work. Funds have been reprogramed in 1970 to permit
about the same number of youths to participate in the summer of
1970 as in the summer of 1969.
The Neighborhood Youth Corps out-qf-school program offers work
experience and related services to poor out-of-school youths. This,
the largest manpower program offering year-round employment, has
been redesigned in 1970 to stress counseling, basic education, and
other services needed to enable 59,000 enrollees to return to school,
to enter other training programs, or to obtain regular employment.
Operation Mainstream provides employment opportunities to older
workers in rural areas where employment opportunities are limited.
An estimated 9,000 individuals will be served in 1971.
In addition, CEP provides significant amounts of work support as
part of its array of services.
Job placement assistance.—These programs promote a smoothly
operating labor market by assisting employers to find qualified
workers, and by overcoming barriers created by job discrimination
and workers' lack of knowledge. They develop and disseminate
information on employer and employee needs, and counsel and test
job seekers. Other services include "outreach" to find unemployed
people, and job development and job restructuring efforts with
employers.
139
SPECIAL ANALYSES
Table J-6. JOB PLACEMENT ASSISTANCE PROGRAM LEVELS
(Outlays in millions of dollars)
Outlays
Program
Employment Service
Project Transition
Equal Employment Opportunity Commission
Other
Total
1969
actual
1970
estimate
1971
estimate
298
14
9
33
332
15
13
50
366
14
18
91
354
410
489
The Federal-State Employment Service (ES), operated by the States,
accounts for 75% of 1971 outlays in this category. The ES, with
2,100 local offices and 41,000 employees, provides not only placement
services for the general work force, but also makes special efforts to
place the disadvantaged, including those served by other manpower
programs. Up to 11 million persons are expected to receive such
services in 1971. A new development assisting job placement efforts
is computerized Job Banks, which will be installed in 81 cities by 1971.
More automated job matching systems are being tested in 14 States.
Project Transition provides counseling, testing, limited skill training, and job placement assistance to servicemen prior to discharge.
The Defense Department will spend about $14 million on this program in 1971 for about one-third of a million servicemen.
In 1971, outlays by the Equal Employment Opportunity Commission
will increase by $9 million over 1969, a 100% increase. The Commission
attempts to reduce barriers to employment of minority groups and
others by investigating and conciliating complaints of discrimination.
The Office of Federal Contract Compliance, working in conjunction
with the 15 major Federal contracting agencies, will increase its surveillance of the employment practices of Federal contractors. In order
to increase minority group employment in the construction trades, it
has devised the "Philadelphia Plan" which sets employment goals for
Federal construction projects.
Manpower research and development.—As part of the effort to
improve program performance, more emphasis will be given to research
and development (R. & D.) related to manpower programs. Outlays
will rise 30% between 1970 and 1971.
Table J-7 summarizes the Federal resources for manpower R. & D.,
largely from the Department of Labor and the Office of Economic
Opportunity. In addition, other agencies carry out R. & D. activities
affecting manpower, especially the Department of Defense, and the
Social and Rehabilitation Service and the National Institutes of
Health of the Department of Health, Education, and Welfare.
140
THE BUDGET FOR FISCAL YEAR
1971
Table J-7. PROGRAM DIRECTION, RESEARCH AND SUPPORT PROGRAM
LEVELS * (in millions of dollars)
Outlays
Program
1969
actual
Experimental and Demonstration
Research
Evaluation
1971
estimate
21
5
4
25
6
5
34
7
7
31
36
47
73
30
10
75
32
11
36
19
Subtotal, Program Direction and Support
113
117
133
Total
143
153
180
Subtotal, Research and Development
Program Direction
Labor Market Information
Technical Assistance
1
1970
estimate
n
These programs do not include enrollments, except relatively small numbers in E. & D. projects.
Experimental and demonstration programs develop or demonstrate
new service techniques in an operational setting. Substantial increases
are proposed in these activities for 1971. The Office of Economic
Opportunity, as the principal innovative arm for the Government's
social programs, will receive the bulk of this increase. One new approach being tested will provide vouchers to unemployed job seekers
in certain States and communities to enable them to purchase the
training or work experience of their choice.
Research activities are designed to develop or discover new knowledge in a nonoperational setting. The research program administered by the Department of Labor includes support of Ph. D. dissertations, grants to established researchers, and support of five university-based, interdisciplinary research centers. In 1970 and 1971
increases are provided for behavioral research focusing on such topics
as the attitudes of the disadvantaged to the world of work.
Evaluation activities seek to determine what works, to what extent,
and under what conditions. Most evaluation efforts have been on-site
reviews to indentify critical operating problems. This reflected the
rapid buildup of manpower programs during the past decade with
consequent implementation problems. Recently, the evaluation effort
has shifted to include fundamental and broad assessment of program
effectiveness. A major study initiated in 1969 is a longitudinal assessment of the graduates of six programs serving disadvantaged youths.
Results of this study will begin to be available within the next year.
Similar studies have been launched, or will be shortly, on the Work
Incentive and Public Service Careers programs, and MDTA skill
centers.
Program direction.—The effectiveness of individual programs
depends both on national program administration and on the delivery
of services at the local level. To improve national program administration, several recent steps have been taken:
141
SPECIAL ANALYSES
• The Manpower Administration was reorganized to centralize
responsibility for manpower programs in a new organization—
the U.S. Training and Employment Service.
• The Job Corps was delegated from OEO to the Department of
Labor so it could be better integrated with other manpower
programs.
• Nearly every major manpower program was reexamined and new
operating procedures instituted to improve operating effectiveness.
• In accord with the overall government effort, greater authority
and responsibility was delegated to the Regional Manpower
Administrators.
The 1971 program anticipates increased resources for technical
assistance to State and local governments in the operation of manpower
programs. In addition, increases are provided for the collection of more
labor market information, including data on local job opportunities,
to assist in community manpower planning and execution. In 1971,
outlays for these purposes will be $133 million.
PEOPLE SERVED
Man-years of training and new enrollments are the program impact
measures used in this analysis. Man-years is the average enrollment
during the year and is the best measure to compare program levels
among programs. New enrollments is the number of different people
served during each fiscal year. In a few programs, e.g., NYC inschool and summer, a significant number of people enroll in more
than one program within a single year, or in the same program several
years in succession. In these cases this analysis uses a net figure which
deducts the overlap. In some programs man-year data include periods
where no significant amount of services are provided, e.g., persons
awaiting services in the Concentrated Employment Program, and
the analysis uses a man-years of service estimate to account for this.
Table J-8. AGGREGATE ENROLLMENT LEVELS IN MANPOWER
PROGRAMS i (in thousands)
Measure
1968
actual
1969
actual
1970
estimate
1971
estimate
Enrollment beginning of year
New enrollments during the year
Enrollees terminating during the year.
Enrollment end of year
950
1,650
1,550
1,050
1,050
1,900
1,600
1,350
1,350
2,100
1,850
1,600
1,600
2,300
2,100
1,800
Man-years (average enrollment)
1,000
1,150
1,350
1,550
New enrollment (less overlap)
Man-years of service
1,500
950
1,750
1,050
1,950
1,200
2,150
1,400
1
Excludes Job Placement Assistance programs for which the concept of enrollment does not ajpply.
All enrollment numbers rounded to nearest 50,000.
In 1971, average enrollment will increase by 14% over 1970. JOBS,
WIN, and Vocational Rehabilitation account for 78% of this increase.
142
THE
BUDGET FOR FISCAL YEAR
19 7,1
Characteristics.—The 10.9 million adults who were poor in 1968, of
whom about half were working but earning less than a povertywage, is a rough representation of the universe of need for manpower
programs. The universe actually may be considerably larger, since
many earn little more than the poverty standard and are vulnerable to skill obsolescence and unemployment. However, many poor
adults are not candidates for manpower services because of health, age,
and conflicting family responsibilities.
The focus of most Federal manpower programs on the poverty
universe reflects the judgment that persons with severe employment
handicaps are least likely to be able to improve their employment
experience without assistance. For example, all of the manpower
programs administered by the Department of Labor emphasize services to poor persons who are not suitably employed and who are either
(1) school dropouts, (2) under 22 years of age, (3) 45 years of age or
over, (4) handicapped, or (5) subject to special employment obstacles.
This focus avoids displacement of private efforts which are generally
targeted at different groups.
The number of individuals served by manpower programs is a
growing proportion of the poverty population. In 1968 manpower
programs served about 7 % of the 10.9 million poor. By 1971 it is
estimated that a larger percentage of the poor will be served as average
enrollment rises over 50% from 1968. The role of manpower programs
in serving the disadvantaged is illustrated in the table below:
Table J-9. ESTIMATED CHARACTERISTICS OF CIVILIAN LABOR FORCE,
ADULT POVERTY POPULATION, AND MANPOWER PROGRAM
PARTICIPANTS
Characteristics
Average number (millions)
Percent:
Aged 21 or less
Aged 55 or more
Male
._
....
Less than high school education
8th grade education or less
Poor
Welfare recipients
Disabled
Total U.S.
work force
1968
(age 16-64).
civilian, noninstitutional
75.6
14
14
63
39
20
7
1
Poverty
population
1968
(age 16-64),
~*~'ilir ~
institutional
Manpower,
programs,
participants
1969
(a
14 and above) 1
10.9
19
19
39
69
50
100
22
Minority races
1
2
1.2
40
7
60
62
17
73
21
38
42
All entries are estimates. Excludes Job Placement Assistance and In-School programs.
Not available.
Table J-9 indicates that manpower programs are meeting their
intended targets: the poor, the less educated, members of minorities,
youth, and welfare recipients. Older persons are a small part of the
population served since employment is often less appropriate than
income support.
As indicated in table J-10 below, the characteristics of enrollees
served by different approaches vary considerably.
143
SPECIAL ANALYSES
Table J-10. ESTIMATED CHARACTERISTICS OF ENROLLEES BY APPROACH
IN 1969 (in percent)
Approach
OJT
_
Institutional training
Rehabilitation
Post-school work support
Subtotal post-school
In-school work support
Total
Poor
__
Less
than
Minority
high
races
school
education
Aged
21 or
less
Male
Welfare
recipient
Disabled
51
81
70
95
53
67
56
85
45
57
22
53
47
43
24
65
79
55
56
51
9
34
11
38
3
7
100
2
73
100
62
97
42
58
40
100
60
54
21
31
38
0
83
75
48
63
58
25
24
In 1969, OJT enrollees were among the least disadvantaged because
the OJT programs enrolled those most job-ready. In 1971, this distribution is expected to change because of the growth of the JOBS
program which reaches the "hard core" disadvantaged. Institutional
programs serve high proportions of welfare clients and educationally
disadvantaged and will reach even more disadvantaged clients in 1971
with the growth of the WIN program. Most disabled persons are
served by rehabilitation programs specifically targeted to their needs.
The work support programs focus on the most disadvantaged groups
and provide a source of income for those who have no immediate
prospects for regular jobs.
SERVICES PROVIDED
Each major program approach provides a substantially different
mix of services, as shown in Table J—11.
Table J—11. ESTIMATED DISTRIBUTION OF COSTS BY APPROACH IN 1969
(in percent)
Approach
Service
Institutional
OJT
Remedial education _
Skill training
_ __
Work supervision.
__
Child care
_.
Health
Recruitment, counseling, and placement.
Program administration
Other supportive services 2
Allowances.- __
TotaL
l
Work
support
Rehabilitation
Job
placement
assistance
2
22
1
*
1
11
9
20
34
9
25
*
2
2
9
15
4
35
1
*
11
*
*
4
11
2
70
0
5
0
0
19
28
7
27
15
1
1
1
2
*
70
22
3
*
100
100
100
100
100
*Less
than 0.5%.
1
Excludes Federal Program Direction, Research, and Experimentation. Includes State and local
shares.
2
Includes payments to employers to compensate for lower productivity of trainees and amounts
which could not be allocated to other services.
144
THE BUDGET FOR FISCAL YEAR 1971
Most OJT programs reimburse employers (who provide training
and other supportive services), although a few programs provide
allowances and other services directly to enrollees. The institutional
programs focus on remedial education and skill training. Work
support programs emphasize payment of allowances for work performed, and work supervision. The job placement assistance programs provide counseling, placement, and such services as child care
to allow parents to work. Overall, allowances are the largest part of
manpower costs, reflecting the need of enrollees for income support
while participating in training.
Although a comprehensive array of services is provided in total, the
actual services available to each enrollee are often limited to those
of the particular program in which he participates. For example,
in 1971 over 77% of the child care is provided for WIN enrollees,
even though WIN accounts for only 18% of all post-school women
enrolled. Consolidation and coordination of programs under the
Manpower Training Act will better enable enrollees to receive the
services which are most appropriate to their needs.
In addition to the great variance in services provided by program
and approach, there are significant differences in overall unit costs.
Table J-12. ESTIMATED MAN-YEAR AND PARTICIPANT UNIT COSTS BY
APPROACHi
Approach
OJT
Institutional training
Rehabilitation
Post-school work support
Subtotal post-school
In-school work support
Total
1969
man-year
unit
cost
estimate
1971
Man-year
unit
cost
estimate
Average
duration
of enrollment
(years)
Participant unit
cost
estimate
$2,200
3,500
1,150
3,150
$2,400
3,150
1,300
3,550
.56
.57
1.16
.52
$1,350
1,800
1,500
1,850
1,900
1,550
2,150
1,700
.74
.25
1,600
450
1,900
2,100
.59
1,200
i Based on man-years of service. Includes State and local share, if any. All dollar amounts rounded
to nearest 50.
In 1969 unit costs are highest for institutional training programs,
reflecting the intensive services provided to participants. By 1971,
the Job Corps decrease and redirection, and the growth of other less
costly programs, will considerably reduce unit costs. Both man-year
and participant costs are lowest for in-school programs, because they
are part time or of short duration. OJT costs are also low because the
employers' payment of salary avoids the need for allowances in most
cases. However, OJT costs are rising due to the more intensive level
of services provided by the JOBS program. Unit costs for post-school
work support will rise substantially because of the new NYC out-ofschool program with its enriched educational services. In all cases
145
SPECIAL ANALYSES
except Rehabilitation, the participant unit cost is lower than the manyear cost because the duration of enrollment is less than one year.
In all approaches, unit costs vary widely among individual programs reflecting the intensity of services. For example, Job Corps and
Vocational Rehabilitation provide a wider range of services than most
other programs. However, a larger part of the variance is due to other
factors. The Work Incentive program, for example, pays lower allowances than most programs because enrollees are already receiving
welfare payments. Project 100,000 has a low-unit cost because only
incremental training costs over normal military training are attributed to the program.
MANPOWER FUNDS BY AGENCY
The following table shows manpower obligations and outlays by
agency, appropriation, and functional code. Three agencies—Labor,
OEO, and HEW—account for 89% of all manpower outlays in 1970.
With the proposed transfer of OEO manpower programs to the
Department of Labor under the Manpower Training Act, Labor and
HEW alone will account for 81% in 1971.
Table J-13. MANPOWER
FUNDS BY AGENCY, APPROPRIATION
FUNCTION (in millions of dollars)
Agency and appropriation
Office of Economic Opportunity:
Economic Opportunity Act
Economic Opportunity Act
Manpower Training Act transfer
Functional
code
604
551
604
Subtotal, OEO
Department of Defense:
Military Personnel:
Army, Navy, Marine Corps, and Air Force. _ 051
Operation and Maintenance:
Army, Navy, Marine Corps, and Air Force.. 051
Research, Development, Test, and Evaluation,
Army..
. .
. . . . 051
Subtotal, HEW
See footnote at end of table.
Obligations
Outlays
1969
1970
1971
1969
1970
1971
780
32
811
37
881
48
-689
882
36
778
50
802
66
-622
812
848
240
918
828
246
8
8
8
8
8
8
16
14
13
16
14
13
*
*
*
24
22
20
24
22
20
603
703
604
703
703
701
4
351
33
38
16
530
199
75
9
22
371
115
40
16
10
478
138
55
6
20
17
14
499
130
58
9
20
24
539
170
78
10
22
701
1
2
2
1
2
2
443
708
852
542
731
844
Subtotal, Defense
Department of Health, Education, and Welfare:
Vocational Education
Rehabilitation Services and Facilities
Work Incentives
Grants to States for Public Assistance
Programs for the Aging
Federal Disability Insurance Trust Fund
Federal Old-Age and Survivors Insurance Trust
Fund .
AND
146
THE BUDGET FOR FISCAL YEAR 1971
Table J-13. MANPOWER FUNDS BY AGENCY, APPROPRIATION AND
FUNCTION (in millions of dollars)—Continued
Functional
code !
Agency and appropriation
Department of Housing and Urban Development:
Model Cities programs.
Community Development Training
V>1
554
Subtotal HUD
Outlays
Obligation 5
1969
1970
1971
1969
1970
*
18
1
38
2
14
*
38
1
40
1
*
19
40
14
40
42
1971
Department of the Interior:
Education and Welfare Services
601
24
38
41
24
38
41
Department of Justice:
Federal Prison Industries Fund
908
2
3
4
2
3
4
Department of Labor:
Manpower Development and Training Activities.
Manpower Administration, S. & E
Bureau of Apprenticeship and Training, S. & E-_
Bureau of Employment Security, S. & E__ ___
Grants to States for Employment Security
Wage and Labor Standards, S. & E
Bureau of Labor Statistics, S. & E
Federal Contract Compliance and Civil Rights—
Manpower Training Act
604
609
604
609
609
609
609
609
604
374
32
9
18
318
412
40
8
18
350
608
62
7
401
30
9
19
317
672
40
7
16
350
748
61
7
8
*
8
1
9
1
9
1
760
Subtotal, Labor
Veterans Administration:
ComDensation and Pensions
Readjustment Benefits
General Operating Expenses
Subtotal, VA
801
802
809
- _
Equal Employment Opportunity Commission:
Equal Employment Opportunity Commission,
S. & E
All Federal agencies—Disadvantaged
Programs
Total
*Less than $500 thousand.
Youth
609
380
1
9
380
2
10
714
667
838 1,781
786 1,096 1,873
20
56
13
27
103
15
29
127
16
20
60
13
27
104
15
29
126
16
90
145
172
94
146
171
9
13
18
9
13
19
61
68
68
61
68
68
2,225 2,701 3,236 2,474 2,984 3.329
SPECIAL ANALYSIS K
FEDERAL HEALTH PROGRAMS 1
General overview.—Federal outlays for health are estimated at
$20.6 billion in 1971, an increase of $1.8 billion over the 1970 level.
As indicated in table K - l , Federal spending for health in 1971 will rise
to 10.5% of Federal outlays for all purposes and will continue to
account for more than one-fourth of all public and private expenditures for health. The higher share of Federal health outlays beginning
in 1967 reflects the enactment of Medicare and Medicaid, through
which the Federal Government assumed responsibility for a significant
portion of the health care needs of the aged and the poor.
Table K-1. TOTAL FEDERAL OUTLAYS, FEDERAL OUTLAYS FOR HEALTH,
AND TOTAL NATIONAL EXPENDITURES FOR HEALTH i (dollars in billions)
I960
1965
1967
1968
1969
1970
1971
Total Federal Outlays..
$92.2 $118.4 $158.4 $178.9 $184.6 $197.9 $200.8
Federal Outlays for Health _
$5.2 $10.8 $14.1 $16.6 $18.8 $20.6
$3.5
Federal Health outlays as percent of
10.5
total Federal outlays
7.9
8.2
4.4
6.2
3.8
10.0
Total National Health Expenditures
$26.4 $38.9 $48.2 $53.9 $60.3
NA
NA
Federal Health outlays as percent of to28
13
13
22
26
tal National Health expenditures
1
Historical data on total public and private health expenditures shown in table K-1, are published
by the Department of Health, Education, and Welfare in the Social Security Bulletin. The HEW
tabulation estimates lower Federal outlays than in this analysis, primarily because it excludes outlays
for medical training and education, Federal agency contributions for employee health programs,
Department of State, and AID expenditures for overseas health programs and the Department of
Agriculture's outlays for meat and poultry inspection. Within the more restricted HEW definition
Federal outlays were 11% of the total in 1960 and rose to 25% in 1969.
NA=Not available.
Table K-2 distributes Federal health outlays by program categories
for the years 1969-71. The major factor in the yearly increase continues to be Medicare and Medicaid, both 77of which are included in
"Provision of hospital and medical services. Outlays from these two
programs account for $11.6 billion and 83% of the total $1.8 billion
increase over 1970. In 1965, only 19% of Federal outlays for health
was directed towards financing personal health care for the general
population. By 1967, this proportion had risen to 48%, and in 1971,
147
148
THE BUDGET FOR FISCAL YEAR 1971
total outlays for this purpose are expected to equal $13 billion, or
63% of all Federal expenditures for health.
Table K-2. FEDERAL OUTLAYS FOR MEDICAL AND HEALTH-RELATED
ACTIVITIES BY CATEGORY (in millions of dollars)
1969
Development of health resources, total
Health research
Training and education
Construction of hospitals and health facilities
Improving the organization and delivery of health services
Provision of hospital and medical services, total
Direct Federal hospital and medical servicesHospital and medical services, indirect
Prevention and control of health problems, total
Disease prevention and control
Environmental control
Consumer protection
Total outlays from Federal and trust funds. _-
_
1970
1971
3,111
3,498
3,640
1,528
805
612
166
1,622
951
705
220
1,660
1,033
712
235
12,794
14,486
16,096
2,860
9,934
3,147
11,339
3,116
12,980
651
803
866
411
86
154
489
134
181
504
163
199
16,556
18,787
20,602
The large and relatively uncontrollable increases in Medicare and
Medicaid tend to obscure other important directions reflected in the
1971 budget proposed by the administration. Excluding these programs, Federal health outlays rise from $8,637 million in 1970 to an
estimated $8,972 million in 1971. Highlights of these increases, discussed in the appropriate sections below, will:
•
•
•
•
•
•
•
1971 increase
(dollars in millions)
Increase the supply of trained health manpower, principally via programs in HEW, VA,
Defense, and Labor
82
Increase the construction of facilities providing care to ambulatory patients, thereby
offering less expensive, but medically appropriate alternatives to hospitalization, primarily through HEW programs
18
Increase the attack on air pollution and other environmental factors principally via HEW,
Agriculture, DOT and Interior programs
52
Increase family planning services and research, domestically through OEO and HEW
programs, and overseas through AID programs
93
Improve the efficiency of the Nation's organization and delivery of health services through
HEW, VA and OEO programs
29
Increase services offered through special and comprehensive centers for mothers and
children, the poor, and the mentally ill including narcotics and alcoholics, through programs in HEW and OEO
60
Increase HEW's biomedical research, particularly in cancer, heart and lung disease and
tooth decay, to exploit recent breakthroughs in our knowledge
38
Because of the time lag, a significant part of the increase in program
level for ambulatory care facilities and biomedical research provided
in the 1971 budget, will not be reflected in higher outlays until 1972.
SPECIAL
149
ANALYSES
DEVELOPMENT OF HEALTH RESOURCES
Federal programs aimed at enlarging the health resources of the
Nation include health research, health manpower training and education, construction of medical and health facilities, and efforts directed
toward improving the organization and delivery of health services.
The combined outlays for these programs will rise to almost $3.6
billion in 1971.
Health research.—Thirteen Federal agencies are engaged in the support of health research aimed at the solution of a range of problems
from the prevention and cure of human diseases and of plant and
animal diseases related to human health, to insuring the health of our
astronauts in space. These agencies will spend $1,660 million for
mission-related health research in 1971, an increase of $38 million over
1970, and $132 million over 1969 (see tables K-14 through K-16).
The Federal Government currently provides about 60% of all funds
spent in the United States for health research, with industry contributing 28%, and foundations, voluntary health agencies, and
others contributing 11%. Federal health research funds are spent
largely in the Nation's medical schools, universities, and other nonprofit institutions, accounting for about 63% of Federal health research
expenditures. Federal laboratories and clinics account for 25%, with
about 12% going for support of research conducted by industry and
others. Some of the purposes for which Federal health research funds
are spent are indicated in table K-3.
The Department of Health, Education, and Welfare, will account
for 72% of total Federal health research expenditures in 1971. Because
the health role of HEW represents the broadest mandate to protect
and improve the health of the American people, the health research
supported by HEW spans a broad spectrum of inquiry ranging from
research aimed at the solution of specific health problems (such as
cancer, heart disease, mental illness, and the purity of our food, drugs,
and environment), to basic biomedical research aimed at increasing
our understanding of the biological, physical, mental, and environmental factors which affect life processes.
Table K-3. FEDERAL OUTLAYS FOR HEALTH RESEARCH (in millions of dollars)
1969
actual
Basic research
Categorical research and development
Cancer
Cardiovascular
Mental health
Neurological and visual
Population and family planning
Environmental health
Other categorical research and development
Research facilities construction
Research, total
1970
estimate
562
903
(170)
(142)
(76)
(88)
(54)
(87)
(286)
62
583
971
(166)
(143)
(85)
(87)
(67)
(112)
(311)
67
1,528
1,622
1971
estimate
569
1,035
(182)
(155)
(88)
(86)
(72)
(135)
(3,7)
1,660
150
THE BUDGET FOR FISCAL YEAR 1971
In 1971, HEW health research increases will be concentrated on
high priority health problems and on exploiting new research leads
which provide clues to the prevention or control of certain diseases.
Research on viruses implicated as the cause of cancer will be significantly expanded, as will research on the relationship of heart
disease and risk factors associated with the incidence of cardiovascular
disease. Research aimed at eliminating the cause of dental caries will
be increased along with greater support for research on pulmonary
diseases.
High priority has been accorded efforts to eliminate diseases and
disabilities affecting infants and children. Research on these problems
and on the development of safe and effective means of contraception
will be increased markedly. Consistent with intensified efforts to
improve our environment, research on the biological action of environmental pollutants will be increased. Support for research on
the mental and social problems of drug abuse and alcoholism will
also increase in 1971.
The health research supported by the Veterans Administration
has as its focus service-connected disabilities or diseases, and the
medical problems of aging veterans, with particular emphasis on
mental illness, dental diseases and clinical pharmacology. DOD research, which is directed towards the care and rehabilitation of war
casualties, plus VA research support, will equal 9% of total Federal
outlays for health research in 1971.
The National Aeronautics and Space Administration supports a
health research component directed toward insuring the health of
astronauts in space. The 1971 program will also support environmental health research on the control of noise pollution from aircraft, and the use of aerial and satellite mapping of sources of pollution,
erosion, and other ecological problems.
The Atomic Energy Commission, concerned with the health implications of nuclear energy, will continue its research on the interaction of radiation with living matter. This research will focus on
three areas: understanding the biological effects of radiation; protecting man from exposure to radiation; and the utilization of radiation to help in the solution of health problems, such as the treatment
of cancer and the development of radioisotope tracers for use in biomedical experimentation. In addition, collaboration between HEW
and AEC scientists has resulted in improved techniques for separating
viruses for use in the production of vaccines of higher purity and
with fewer adverse side effects.
The health research supported by the Department of Agriculture
is focused largely on the consequences of diseases affecting animal
and vegetable products. Research is also conducted on the role
of insects as carriers of disease in efforts to develop prevention
and control methods. The Agency for International Development
will concentrate its research activities on new means of fertility
control and new approaches to the control and eradication of epidemic
and endemic diseases in less developed countries. Other health research activities include basic research in biology and biochemistry
supported by the National Science Foundation.
SPECIAL
151
ANALYSES
Training and education.—One of the factors contributing to the
present inability of the health care system to meet the demand for
health services is the shortage of trained individuals to deliver these
services. For the past 20 years, Federal support for medical school
programs concentrated on biomedical research which has grown
from under $100 million in 1950 to over $1,600 million in 1970. While
indirectly assisting the education of medical students, the expenditure
of these funds in medical schools was almost exclusively for research
projects and research training programs. These funds have enabled
medical schools to increase their full-time faculty to 20,500 in 1970, a
422% increase over 1950, and the number of pre- and post-doctoral
(largely research) students to 17,000, a 208% increase over 1950. Over
the same period, the number of interns and residents in Medical
school programs increased by 280%, to nearly 23,000. The number
of medical students, however, had increased by only 42%, to an
estimated 37,200.
In order to increase the supply of physicians and other health
service manpower, the Federal Government in recent years has
undertaken direct efforts to stimulate the training of more health
professional and paramedical personnel. These efforts have concentrated on expanding the enrollments of health professions schools
through construction, institutional, and student aid; on increasing
the numbers and types of paramedical personnel; and on increased
use of Federal facilities to provide training for all types of health
personnel.
Ten Federal agencies are engaged directly in the support of education programs to train medical, dental, nursing, paramedical, and
other health professional personnel. The number of health professionals
who will be aided for some part of their education by Federal agencies
in 1971 is indicated in table K-4.
Table K-4 FEDERAL AGENCIES SUPPORTING HEALTH MANPOWER
TRAINING IN 1971
Students and trainees
Physicians l
Department of Health, Education, and
Welfare_____
Veterans Administration
Department of Labor
Department of Defense
Office of Economic Opportunity
Other agenci es
1
2
Dentists
Nurses
Other
professionals 2
19,144
17,400
15,670
1,200
40,713
22,000
17,825
4,425
3,083
2,930
74
481
232
2,495
995
424
1,028
Paramedicals
515
4,679
14,220
6,797
3,387
419
Includes medical students, interns and residents.
Includes pharmacists, optometrists, podiatrists, veterinarians, etc.
The Department of Health, Education, and Welfare, principally
through the health manpower programs of the National Institutes of
Health, supports the training of the largest number of physicians,
dentists, nurses, and other health professionals. In 1970, HEW initiated the Physician Augmentation Program to enroll 1,000 medical
152
THE BUDGET FOR FISCAL YEAR 1971
students in addition to the increase originally planned by medical
schools. In 1971, as in 1970, the HEW program of direct loans and
scholarships for health professions students will be concentrated on
assisting students from income backgrounds under $10,000. The Veterans Administration, through its 166 hospitals, most of which are
associated with medical schools, trains large numbers of all types of
health manpower for its own and the Nation's health care system.
The Department of Labor, through the Manpower Development
Training Act, supports the training of the greatest number of paramedical personnel of any Federal agency, followed by the Defense
Department.
In 1971, Federal outlays for health training and education will
rise to $1,033 million, an increase of $82 million over 1970 and $228
million over 1969. These outlays, by type of professional training
supported and by type of training space constructed, are distributed
as shown in table K-5. Included in the expenditures under "all other
training" is support for short-term training of nurses and paramedical
personnel and continuing education programs for physicians.
Table K-5. FEDERAL SUPPORT FOR HEALTH TRAINING
Outlays (in mi! lions
of dollars)
1969
Physicians:
Training
School construction _
Dentists:
Training
School construction
Nurses:
Training
School construction _
Other health professions:
Training
School construction _ _
Paramedical training
Research training _ _
All other training
Total
1
___
_
1970
First-year spaces
addedi
1971
1969
1970
1971
176
61
203
96
241
97
284
343
443
30
12
36
24
50
27
61
242
177
62
11
67
13
70
23
1,174
500
500
8]
4
62
205
101
98
11
65
218
120
105
13
71
214
122
247
290
147
805
951
1,033
Numbers reflect results of obligations in given year.
Construction of health care facilities.—Federal outlays are
estimated at $712 million in 1971, compared to $705 million in 1970.
These expenditures will be used to build or modernize health care
facilities operated by Federal agencies for their own beneficiaries, or
to support construction of community facilities to serve the general
population. Federal outlays accounted for approximately 15% of the
$2.4 billion total national expenditures for health facility construction in 1969.
The Federal Government will spend $153 million in 1971 for construction of its own hospitals and health facilities, primarily those
operated by the VA, the Department of Defense, and the Department
SPECIAL ANALYSES
153
of Health, Education, and Welfare. These expenditures will concentrate on modernizing existing facilities to increase operating efficiency,
adjust to the changing needs of beneficiaries, and adapt to improve
medical technology. As another means of improving the effectiveness
of the Nation's medical delivery system, the VA and HEW are considering common construction so that a single facility can serve beneficiaries of both systems.
The largest Federal program to support construction of communityoperated health facilities is the Medical Facilities Construction
(Hill-Burton) program of the Department of HEW. From its enactment in 1946 through 1970, the Hill-Burton program approved construction or modernization of about 467,000 hospital and long-term
care beds costing about $12 billion, of which $3.7 billion represents
the Federal share. Through Hill-Burton grants, national shortages of
hospital beds have been virtually eliminated.
Now, however, new conditions and changing needs make sole reliance on grant programs or emphasis on additional hospital beds inappropriate. With medical price increases and the inability of the
health system to deliver services effectively, there is growing recognition of the need to develop ambulatory care facilities (hospital
outpatient departments, clinics, and community centers), particularly
where they can serve as more efficient and economical alternatives
to hospital care. In addition, the growth of third party payments (e.g.,
private insurance, Medicare and Medicaid) to cover the costs, including depreciation, of hospital and skilled nursing home care, has improved the ability of these institutions to finance needed capital
improvements through borrowing.
Based on these factors, the 1971 budget reflects a major program
shift in the medical facilities construction program: directing grants
toward ambulatory care facilities; relying upon guaranteed loans with
interest subsidies for construction and modernization of private nonprofit hospitals and long-term care facilities; and providing direct
loans for public institutions.
A comparison of actual budget authority in 1969 with the 1971
budget request emphasizes the program shift. Grants for construction
of hospitals and skilled nursing homes were $228 million in 1969 and
are replaced in the 1971 budget by $500 million in loan guarantee
authorizations and $30 million in direct loans. Grants for ambulatory
care facilities rise from $18 million in 1969 to $40 million in the 1971
budget. It is estimated that the mortgage guarantee and direct loan
programs will construct or modernize 8,400 hospital beds while the
grant program will support 140 ambulatory care facilities.
Other Federal programs also help supply funds for construction of
community health facilities. The Department of Housing and Urban
Development provides grants for sanitation facilities, loans to smaller
communities to construct essential health facilities, and mortgage
insurance (but without an interest subsidy) for construction of hospitals, nursing homes and group practice facilities. It is estimated
that the volume of mortgage insurance commitments in 1971 by
HUD will total $255 million, an increase of $96 million over 1970,
which will construct or modernize over 1,000 hospital beds and 16,820
proprietary and nonprofit long-term care beds. HEW grants available
for the construction of community mental health centers have assisted
154
THE BUDGET FOR FISCAL YEAR 1 9 7 1
in the construction of 376 centers from 1965 through 1969. An estimated 97 centers will be built in 1970 and 1971. Table K-6 shows
health facility construction trends for 1969-71.
Table K--6. HOSPITAL A N D HEALTH FACILITY CONSTRUCTION
Outlays (in millions of dollars)
1969
Federal hospitals and health
facilities:
Hospitals, new, modernized and
replaced.
Long-term care facilities. _
Ambulatory care facilities
Environmental health facilities
Other health facilities
Federally supported construction
of hospitals and health facilities:
Hospitals, new, modernized and
replaced.
Long-term care facilities
Ambulatory care facilities
Environmental health facilities
Other health facilities
Total
1970
1971
Volume of loan guaranteed
commitments
1969
1970
1971
99
126
19
18
11
5
20
7
110
1
3
26
14
174
74
75
130
13
191
86
93
157
19
174
90
97
182
16
28
113
5
23
113
24
184
185
53
612
705
712
146
160
422
Organization and delivery of health services.—In their "Re-
port on the Health of the Nation's Health Care System/' on July 10,
1969, HEW Secretary Robert Finch and Assistant Secretary Roger
Egeberg said: "Expansion of private and public financing for health
services has created a demand for services far in excess of the capacity
of our health system to respond. The result is a crippling inflation in
medical costs causing vast increases in Government health expenditures for little return, raising private health insurance premiums and
reducing the purchasing power of health dollars of our citizens."
The 1971 budget mounts a concerted effort to alleviate these problems, through programs to expand manpower, construct ambulatory
care facilities, and fund comprehensive health centers. Besides these
efforts, the 1971 budget estimates outlays of $213 million, an increase
of $29 million over 1970 for domestic programs which are oriented
toward experimental approaches and innovative concepts in the delivery of health care. In addition, the Agency for International
Development will expend $22 million for similar programs overseas.
Over 80% of the domestic outlays result from the following three
programs in the Department of Health, Education, and Welfare.
The Partnership for Health program will spend $26 million in 1971,
an increase of $3 million, to assist States, regions and local communities to create a planning framework within which health needs and
resources can be analyzed, priorities established, improved health
care systems designed and alternative courses of action evaluated and
recommended.
SPECIAL ANALYSES
155
By 1971, State planning agencies in all 50 States, the District of
Columbia and five territories, will have completed the organizational
phase of their activities and become involved in substantive review
and analyses and priority determination. Areawide health planning
groups will be increased from 113 in 1970 to 125, and their funding
expanded. Recognizing the potential of planning agencies to bring
rational considerations to bear on resource development, proposed
legislation provides that plans and projects to contruct health care
facilities must be presented for their review. Further, the Administration has proposed that Medicare and Medicaid reimbursements
for depreciation be limited to medical facilities whose construction
proposals have been approved by State health planning agencies.
Through the Regional Medical Programs substantial progress has
been made in fostering cooperation among medical schools, local health
departments, physicians, hospitals, and community groups to achieve
prompt delivery to the patient of existing and new medical knowledge
and technology, and to carry qualitative improvements in the health
care system to all parts of the Nation. To this end, the program will
fund advanced education and training for 188,000 doctors and nurses,
support certificate training for 21,000 allied health personnel, and
finance approximately 170 patient care demonstration and diagnostic
screening projects. Outlays in 1971 are estimated to be $68 million,
an increase of $19 million over 1970. The increase will permit funding
of operational projects in all 55 Regional medical programs.
The National Center for Health Services Research and Development is the principal research arm of the national effort to improve the
organization, delivery and financing of health services. In 1971, the
National Center will focus its attention on developing and evaluating
new organizational structures for health care and training health
researchers. In addition, the Center will finance and evaluate a
special series of experiments in health planning and systems organization conducted through local RMP and Partnership agencies. Budget
authority to finance the expanded program will increase from $37
million in 1970 to $50 million in 1971.
To achieve closer coordination among the programs and accelerate
efforts to improve the effectiveness of the health care delivery system,
proposed legislation to continue the programs will also establish a
common direction and unified set of objectives.
In other efforts to encourage efficiency and reduce costs, several
studies have been initiated by HEW using Medicare, Medicaid, and
Maternal and Child Health reimbursement payments to experiment
with (1) the comparative advantages of prepaid group practice and
fee for service care, (2) the application of industrial engineering techniques to establish performance standards for hospitals and other providers of health care, and (3) the use of financial incentives to encourage
providers to operate within preset target costs. In addition, the Office of
Economic Opportunity will spend $12 million for projects which focus
on restructuring rural health delivery systems, reorganizing hospital
outpatient departments, and developing prepayment plans for the
poor.
The Veterans Administration is also devoting efforts to redesigning
156
THE BUDGET FOR FISCAL YEAR
1971
its system of delivering health services to veterans. In 1971, the VA
will spend almost $26 million in implementing management and manpower utilization techniques to improve health services for its beneficiaries and to continue development of an automated hospital information system.
PROVISION OF HOSPITAL AND MEDICAL SERVICES
The Federal Government provides for hospital and medical care
in two ways: (1) by financing the costs of health services obtained by
eligible beneficiaries in non-Federal facilities or from private physicians; and (2) by directly operating health care facilities for certain
groups of beneficiaries entitled to receive medical services at Government expense. Outlays for both of these categories are estimated to
reach $16.1 billion in 1971, an increase of 11% over the 1970 level
(see table K-7) and 78% of all Federal health outlays in 1971.
Table K-7. PROVISION OF HOSPITAL AND MEDICAL SERVICES
Outlays
(in millions of dollars)
Provision of direct Federal hospital
and medical services
General hospital inpatients
Psychiatric hospital inpatients___
Long-term care inpatients _ _ _
Outpatient visits and other services
Provision of hospital and medical
services, indirect
General hospital inpatientsPsychiatric hospital inpatients
Long-term care inpatients
Physician services—Office, home
or institution
Outpatient visits and other services
Total
Nu mber ja|d mitted
(in thousands)
1969
1970
1,678
365
66
2,226
129
40
2,196
130
40
2,147
131
42
1,036
1,007
67,597
68,208
67,196
9,933
11,339
12,980
5,486
153
1,133
6,223
184
1,348
7,421
141
1,422
7,527
166
1,091
7,988
193
1,199
8,326
201
1,307
1,961
2,319
2,518
1,201
1,264
1,478
55,541
61,564
66,627
12,793
14,486
16,096
1969
1970
1971
2,860
3,147
3,116
1,543
314
57
1,696
351
64
946
1971
Payment for hospital and medical service.—Medicare.—In 1971,
Medicare will continue efforts to achieve its dual objectives of assuring
older citizens access to quality medical care and relieving the aged
and their families of a major portion of the burden of paying for
health services.
As Medicare moves toward achieving these purposes, it has necessarily increased the demand for services. While a comparison of preand post-Medicare patterns of utilization by the aged is not currently
available, during the first three years of the Medicare program, admissions to hospitals and extended care facilities and use of physicians'
services increased substantially. The pattern is expected to continue
in 1970 and 1971 as shown in the table below:
SPECIAL ANALYSES
a. Hospitals:
1967
Admissions (in thousands)
4,967
Admissions per 1,000 covered aged
263
Benefit payments (in millions of dollars) _ _
$2,200
b. Extended care facilities:
l
Admissions (in thousands)
198.6
l
Admissions per 1,000 covered aged
__
10.5
Admissions as a percent of hospital admissions...
* 4.0
l
Benefit payments (in millions of dollars)
$94
c. Physicians' services:
Individuals meeting deductible (in thousands)... 6,900
Benefit payments (in millions of dollars)
$481
d. Medical prices, percent increase from prior year
(as of June in year shown):
Medical care services
9.2
Hospital daily service charge
21.9
Physicians' fees
_
7.3
1
157
1968
1969
1970
1971
5.655 5,918 6.233 6,529
313
323
296
291
$3,300 $4,220 $4,726 $5,752
448.5 507.6 567.0 622.0
23.0 25.0 28.5 30.6
9.5
9.1
8.6
7.9
$330 $390 $448 $512
8.810 8,990 9.320 9.660
$1,142 $1,500 $1,789 $1,855
7.1
12.2
5.5
8.7
13.0
7.3
Data represents half-year experience only since benefits began January 1, 1967.
From 1968 to 1971 (1967 was somewhat atypical), hospital admissions under Medicare are estimated to increase 15%. When adjusted
for population growth, the rise is still 11%. Similarly, the number of
aged persons who expend more than $50 a year for physicians' and
other outpatient services is expected to increase 9% over the 4-year
span.
During the same period, benefit payments for hospital insurance increased 74.3%, and 62.4% for physicians fees. In addition to the utilization increase, the sharp rise in medical prices was a major factor in the
growth in benefit payments. From July 1966 to June 1969 the cost of
medical care services increased 27.1%. By comparison, the overall
consumer price index, with medical care excluded, rose 15.9% during
the same period.
Medicare's rising costs are having a direct impact on the program's
financing provisions. Effective January 1, 1970, the deductible paid by
an aged person admitted to a hospital increased from $44 to $52. In
addition, the monthly premium paid by each enrollee in the Supplementary Medical Insurance program will increase on July 1, 1970,
from $4 to $5.30. Finally, in order to assure actuarial soundness of
the hospital insurance trust fund, legislation will be proposed to
increase the share of the Social Security combined payroll tax allocated
to the Medicare program from 1.2% to 1.8% effective January 1, 1971.
Efforts to contain Medicare costs have been intensified over the
past year. Primarily, they take the form of more careful review of
the level of care provided in hospitals and extended care facilities,
enforcing utilization review requirements, reviewing physician bills
and rejecting unreasonable physician fee increases. In addition the
administration has proposed legislation which would: (1) limit Medicare and Medicaid depreciation payments to medical facilities whose
capital improvements have been approved by the State health planning agency; (2) bar from the program, hospitals, physicians, and
other health service providers found guilty of flagrant abuses; (3)
expand utilization review authority to include the initial need for
hospitalization.
Medicaid.—On the basis of estimates submitted by the States, but
adjusted to reflect proposed legislation, total Federal, State, and local
158
THE BUDGET FOR FISCAL YEAR 1971
medical assistance payments on behalf of the needy are expected to
rise from $5.1 billion in 1970 to $5.5 billion in 1971. The Federal
share of these payments will increase 9.3%, from $2.61 billion in 1970
to $2.86 billion in 1971. Higher outlays reflect an increase in the
number of persons served from 10.2 million in 1970 to 11.3 million
in 1971, a continued rise in medical prices, greater utilization of
services by beneficiaries, and an expansion of the program to all 54
States and jurisdictions by the end of 1971.
In terms of the types of services provided, Medicaid is heavily
weighted toward inpatient hospital care and nursing homes. In 1970,
hospitals and nursing homes accounted for approximately 67% of all
Federal Medicaid outlays, while services rendered by physicians
represented 11.6%, outpatient hospital services 4.6%, and drugs, 6%.
In an effort to reverse these proportions, legislation will be proposed
to discourage overutilization of institutional patient care and encourage greater use of hospital outpatient clinics, comprehensive
health centers, and home health services.
As in the past, eight States will receive approximately 60% of
Federal Medicaid payments, reflecting their more liberal income eligibility standards, larger populations, and wider scope of available health
services. When totalMedicaid payments, including Federal, State, and
local contributions are calculated, these eight States represent an even
larger proportion of the program reaching almost 75% in 1971. These
States, however, account for only about a third of the Nation's poor,
an indication that a substantial unmet need for medical assistance for
the poor continues to exist in many areas.
Maternal and Child Health Service,—Whereas Medicaid's emphasis
is the elimination of financial barriers to medical care for the poor,
the Maternal and Child Health Service, in contrast, concentrates on
bringing health services into areas where health resources are not
available or are insufficient to meet the health needs of the poor.
The major thrusts of the programs of the Maternal and Child
Health Service are to reduce infant and maternal deaths and birth
defects, and provide family planning services to women who want
but cannot afford such services. In 1971, the Maternal and Child
Health Service will grant $241 million to provide necessary health care
for over 2 million mothers, infants, and crippled children. A portion
of these grants will be matched by $163 million in State expenditures.
Federal Employees Health Benefit program (FEHB) .—Civilian
Federal employees and retired employees and their families are
offered a choice of five types of health insurance plans, including
group practice plans, with the Federal Government contributing a
fixed amount per participant but not more than 50% of the premium.
While premiums have increased since 1961, the per capita Federal
payment has remained relatively constant so that the proportion of
Federal payments to total premiums has declined from 37% in 1961
to 23% in 1971. During the same period, Federal payments increased from $121 million to $249 million, and employee contributions rose from $200 million to $817 million, reflecting in part
the growth in employees, their dependents, and annuitants participating in the program to 7.9 million in 1971. In addition to the in
SPECIAL ANALYSES
159
crease in participants, the rise in program costs is attributable to
increasing medical prices and greater utilization of health services by
FEHB participants.
Providing medical care directly to Federal beneficiaries.-—The Federal
Government provides direct Medical care for members of the Armed
Forces and their dependents, retired servicemen and their dependents,
veterans, merchant seamen and American Indians. Outlays for this
purpose have declined from 49% of total Federal health expenditures in 1960 to 15% in 1971, primarily as a result of the rapid growth
in Federal outlays for payment of hospital and medical care through
the Medicare and Medicaid programs. Direct Federal care still
remains a major program element, however, with outlays expected
to total $3.1 billion in 1971, a decrease of $31 million from 1970.
To provide health services for the Nation's 2.9 million military
personnel, retired military personnel, and dependents of both groups,
the Department of Defense will maintain 251 hospitals and 54,414
beds in 1971 and contract with community medical facilities. Outlays
to operate this health care system will decrease to $1,785 million, down
$37 million from the 1970 level.
This decrease in expenditures is the result of the reduction in the
size of the Armed Forces and number of dependents, offset to some
extent by civilian and military pay increases and the higher cost for
care in community facilities.
The Veterans Administration operates 166 hospitals, 98 long-term
care units and 202 outpatient clinics, one of the largest health care
systems in the world. In 1971, 822,000 beneficiaries will be admitted
to VA hospitals and extended care facilities, and medical outpatient
visits will increase from 6,947 million in 1969 to 7,852 million in 1971.
Outlays for medical care within the VA system will increase to $1,474
million and outlays for contract care will rise to $88 million. Legislation will be proposed to require health insurance plans to reimburse
VA hospitals for the cost of care provided to their policyholders
when their hospitalization is not service-connected.
The VA medical system will continue to improve the quality of
patient care and the efficiency with which it is delivered. Ninety-four
VA hospitals are affiliated with medical schools, representing 18% of
all university affiliated hospitals in the country. The number of specialized medical services will also continue to rise in 1971. For example,
intensive coronary care beds will increase from 629 in 1969 to 1,422
by the end of 1971. Similarly, the average monthly patient turnover
rate has increased from an overall average of 9% in psychiatric hospitals and 81% in general hospitals in 1965, to an estimated 22% and
103%, respectively, in 1971.
The Department of HEW will operate eight general hospitals, two
narcotic hospitals, one leprosarium, 51 Indian health facilities, a
Federal mental institution, and 30 PHS outpatient clinics in 1971.
These facilities will service over 400,000 American Indians and natives
of Alaska, nearly 200,000 American seamen, 132,000 U.S. Coast Guard
personnel and their dependents, narcotics addicts, and persons committed or voluntarily presenting themselves for treatment at St.
Elizabeths Hospital in Washington, D.C. Of the $3,116 million expended for direct care, $133 million will provide expanded health
160
THE BUDGET FOR FISCAL YEAR
1971
services to the Indian population and sanitation facilities for approximately 7,310 Indian families, bringing the total number of Indian
homes provided with sanitation facilities to 48,000.
Distribution of health care outlays by age groups and economic status.—Table K-8 distributes the Federal outlays for the
"provision of hospital and medical services" category among three
major age groups and between indigent and nonindigent persons.
Funds expended for categories relating to the development of health
resources and for the prevention and control of health problems
are designed to serve the entire Nation and are not normally allocable
by population group or income.
Table K-8 indicates that the largest health expenditure increase
both in percentage and in absolute terms, will be for the aged, rising
13% in 1971 from $9.2 billion to $10.5 billion. The second largest percentage increase will be for children and youth, a 9% increase over
1970, reflecting the administration's emphasis on providing health
services during infancy and early childhood. In 1971, $6.2 billion will
be spent to provide or finance health care services for the needy, an
increase of 9% over 1970, and an increase of 95% over 1967.
Of total outlays in 1971 for provision of health services, 65% will
be on behalf of the aged. The 1971 increase of $1.3 billion over 1970
is almost entirely attributable to increased outlays under the Medicare
program. Medicaid payments for the aged will decrease slightly in
1971, reflecting the administration's proposal to reduce support for
long term care in nursing homes and mental hospitals. Despite the
decrease, Medicaid benefits remain heavily weighted toward the aged.
In 1971, 44% of the Federal Medicaid payments will go for the aged,
although they comprise 30% of the program's beneficiaries. Federal
funds in total continue to pay approximately 60% of the personal
health care costs of the aged. In 1966, prior to Medicare and Medicaid,
the Federal share was 15%.
Table K-8. ESTIMATED HEALTH CARE OUTLAYS BY POPULATION AND
INCOME GROUPS (in millions of dollars)
1967
1969
1970
1971
Total, all recipients
7,831
12,793
14,485
16,096
Aged (65 and over)
Other adults (19-64)
Children and youth (0-18)
4,379
2,535
917
8,071
3,427
1,295
9,237
3,814
1,443
10,473
4,059
1.564
Indigent, total
3,178
5,116
5,672
6,192
Aged (65 and over) _
Other adults (19-64)
Children and youth (0-18)
1,968
850
360
3,281
1,218
618
3,581
1,398
693
3,797
1,587
808
4,653
7,678
8,813
9,094
2,411
1,685
577
4,790
2,210
677
5,656
2,417
740
6,676
2,472
756
Nonindigent, total
Aged (65 and over)
Other adults (19-64)
Children and youth (0-18)
SPECIAL ANALYSES
161
Although total outlays for all the aged increase 13% in 1971 over
1970, outlays for the aged indigent will rise only 6%. The more rapid
increase in outlays for the nonindigent results primarily from the enactment of the 15% increase in cash benefits for Social Security beneficiaries which reduced the percentage of the indigent aged from 34.5% on
January 1, 1969, to 30% on January 1, 1970.
Federal health outlays for children from birth to 18 years will increase 9% to $1.6 billion in 1971. Of the $131 million increase over
1970, $90 million is attributable to Medicaid which will provide almost
$600 million in services to this age group. Outlays by the Department
of Defense for children of servicemen will decline slightly to $596
million, reflecting the reduced size of the armed forces. Other significant
increases are provided by OEO and the Maternal and Child Health
program.
Virtually the entire increase in health outlays for children and
youth will be aimed at needy families. In 1971, 52% of outlays will
serve poor children as compared to 1967 when only 39% of services for
children and youth went to the poor. This reflects the administration's
policy of directing an increasing proportion of outlays toward needy
children.
In 1971, $4.1 billion will be spent to provide medical services to
nonaged adults. More than half of these funds will be directed toward
the poor, the bulk of which will pay for health care rendered to veterans,
servicemen and Federal employees, as well as eligible dependents. Of
the $1.6 billion which will be spent for hospital and medical care to
needy adults, $805 million will come from Medicaid, $480 million from
the Veterans Administration and the remaining $300 million from a
number of smaller programs including OEO's neighborhood health
centers, the Vocational Rehabilitation program and the Maternal and
Child Health program. Seventy-seven percent of the increase over
1970 for nonaged adults will be for the poor. This reflects primarily
the increase of $137 million in Medicaid outlays.
PREVENTION AND CONTROL OF HEALTH PROBLEMS
Significant savings in terms of human life and economic productivity,
conservation of our limited health resources, and avoidance of needless
pain and suffering have been achieved in recent years by increased
efforts to prevent and control health problems. Efforts in this area
will be increased in 1971 with total outlays of $866 million. Some of
the activities classified under the two previous categories—Development of Health Resources and Provision of Health Services—could
also be included in this category (e.g., portions of health research,
manpower training, planning of health services, and family planning).
However, because of the difficulty of separating prevention activities
from medical treatment activities in such programs, only those
programs which in their totality are directed toward prevention and
control are included in this category.
Until recently, the principal activities under this category were of
the traditional "public health" character—that is, efforts directed at
large population groups to prevent or control a specific disease, such
as tuberculosis. Although such activities are still important and are
390-700 0—70
11
162
THE BUDGET FOR FISCAL YEAR 1971
strongly supported by State and local governments, the trend being
emphasized by the Federal Government is toward comprehensive
health care which includes prevention activities, and toward an attack
on environmental factors, which, in addition to their immediate impact,
often produce subtle and long-term effects on health.
Table K-9. FEDERAL OUTLAYS FOR THE PREVENTION AND CONTROL OF
HEALTH PROBLEMS (in millions of dollars)
1969
Disease prevention and control
Environmental control
Consumer protection
Total
1970
1971
411
186
154
489
M34
181
504
M63
199
651
804
866
1
Does not include environmental research shown under "Health Research" (1969—$87. 1970—
$112. 1971—$135).
Disease prevention.—The movement from categorical disease
programs toward comprehensive health care is accentuated in this
year's budget with the major thrust being made in the various health
center programs which are described under Special Impact programs.
While the emphasis is shifting from categorical to comprehensive
programs, critical disease areas will continue to receive concentrated
efforts. Through the Regional Medical program, education and training programs will be sponsored to increase public awareness of the
relationship between nutrition and health, the adverse effects of
smoking on health, and the methods available to treat kidney diseases ranging from transplantation to utilization of artificial kidney
machines.
In 1963-64 an estimated 20,000 to 30,000 children with birth defects
were born to mothers who had contracted rubella (German measles)
during pregnancy. With the licensing of a new vaccine in June 1969,
a joint Federal-State-private effort was launched to inoculate 55
million children age 1 through 14. With the $16 million requested in the
1971 budget, almost $42 million will have been allocated to immunize
children in low-income families and to motivate other families to obtain
the vaccine through their private physicians.
Disease surveillance conducted by the National Communicable
Disease Center (NCDC) provides a national alarm system to isolate
outbreaks of contagious diseases. All cases of 36 different diseases are
reported weekly to the center in Atlanta by State health departments.
State surveillance is supported, in part, by grants from the Partnership for Health program. Followup support such as vaccine and
epidemiologic personnel is often furnished by the NCDC.
In order to improve the health status of many of the remote communities in its region, the Appalachian Regional Commission has
allocated over $17 million of its 1971 budget to develop health care programs to reduce disease and improve the environment. Almost half of
this sum will be used for mental health programs.
Through three programs, the United States has maintained its
commitment to improve the health care and health conditions of
other Nations. The Peace Corps has enlisted the voluntary services
163
SPECIAL ANALYSES
of doctors, nurses, and others with medical knowledge, to aid underdeveloped nations develop a health care capability. Over half of the
$12 million spent by the program is for training and treatment in areas
of nutritional deficiencies, communicable disease control and eradication, sanitation, education of indigenous populations, and development of demographic surveys.
In cooperation with other international health organizations such
as WHO and the Pan American Health Organization, the Agency for
International Development (AID)/ supplies technical assistance and
financial support to less developed countries for family planning,
disease control and eradication, environmental health, nutrition and
research. The State Department also provides grants for these purposes
to WHO and PAHO, both of which train health workers and award
fellowships for study in certain selected fields aimed at improving
health care and services. In 1971 outlays by AID and the Department
of State for disease control purposes will be $138.3 million.
Environmental control.—Reflecting the growing awareness of
the impact of environmental factors on health, outlays for environmental health in 1971 including environmental research, will total
$298 million, a 73% increase over 1969. These outlays provide for
research and control efforts in such areas as air pollution, solid wastes,
radiation hazards, occupational safety and health, public water
supplies, environmental sanitation, and noise control.
Outlays for the control of air pollution in 1971 will total $104
million, a 31% increase over 1970. Special emphasis will be placed
on the development of technology to control the wastes, and on the
strengthening of institutional arrangements for enforcement and
control.
In 1971 56% of the national air pollution budget will be obligated
for research on control technology. As table K-10 demonstrates, controls already required by the Federal Government will reduce carbon
monoxide emissions by 1980 to half the 1967 level and hydrocarbon
emissions to one-third. However, unless new control technology is
developed, these emissions will rise again because of the growing
number of vehicles. Research on vehicle emission control will be
increased in 1971 in cooperation with private industry.
Table K-10. VEHICLE EMISSION CONTROL i (in millions of tons per year)
1967
Vehicle emissions prevented by
control devices:
Hydrocarbons
_
Carbon monoxide. _
Vehicle emissions released to the
atmosphere:
Hydrocarbons
Carbon monoxide
1
2
(2)
(2)
16
61
1971
1980
1985
1969
1970
1
4
2
9
4
15
20
11
42
17
66
21
82
25
99
15
59
14
57
13
53
12
50
8
39
5
31
6
35
7
42
1968
5
1975
Data furnished by the National Air Pollution Control Administration. HEW.
Less than 500 thousand tons.
Efforts to develop feasible control technology for sulfur oxides,
nitrogen oxides, and other pollutants from stationary sources will also
164
THE BUDGET FOR FISCAL YEAR 1971
be increased in 1971, but the private sector will be asked to provide a
substantial portion of the financing for the prototype tests of these
control processes.
The strengthening of institutional arrangements for enforcement and
control of air pollution will also receive major emphasis in 1971 with
increased financial and technical assistance to the States and localities,
many of which will be engaged in establishing standards under
HEW's guidance. Most of the standard setting will be centered in the
57 Air Quality Control Regions which will have been established
by HEW by the end of 1970. These regions contain 53% of the urban
population.
State and local expenditures for air pollution control exclusive of
Federal funding have increased by 213% since 1965 and are now
estimated at about $30 million. In the past, the State and local air
pollution control agencies have had considerable difficulty in obtaining
qualified personnel to handle their scientific, technical, and administrative problems. In an effort to help meet this need, HEW will
devote special attention to the distribution of trained manpower
by concentrating on short-term specialty training programs and
recruitment efforts and a new effort to assign Federal personnel to
States and communities to work under the supervision of State and
local air pollution control agencies.
Accidents from all causes continue to fill half of the Nation's hospital beds. In response to this problem the Departments of Labor,
Interior, and HEW will increase their research and enforcement
activities to prevent accidents and diseases in the workplace, with
special emphasis on coal mining. These accident-related activities are
in addition to other safety programs not shown in this analysis including the rail, boat, highway, and traffic safety programs of the
Department of Transportation.
The outlays for other environmental health programs will remain
at essentially the same level as in 1970. However, HEW will begin
review of State solid waste management plans developed as a first
step toward improving the 90% of our land disposal sites which do
not meet minimum criteria and the 70% of our municipal incinerators
which do not have any air pollution controls. In addition, increased
emphasis will be placed on the development of productive economic
incentives for industry and the consumer to reduce the amount of
solid wastes generated.
Consumer protection.—Programs to protect the consumer from
illness and injury resulting from hazardous drugs, foods, pesticides,
and household products will be expanded in 1971, with outlays totaling
$199 million.
The Department of Agriculture has initiated cooperative programs
with the States to assure that all meat and poultry are suitable for
human consumption. This program will increase to $125 million,
a rise of 39% over 1969. Other food protection programs, including
those of the Food and Drug Administration and the Bureau of Commercial Fisheries, will increase by 17% in 1971, and will emphasize
research on the health effects of food additives and pesticides.
SPECIAL ANALYSES
165
New efforts will be directed at associating particular drugs or products (such as toys, appliances, tools, and household cleaners) with
reports of adverse effects or accidents in order to provide a sharper
focus for the Federal Government's regulatory efforts.
Standards have already been set for radiation from color television
sets as part of a new emphasis on preventing exposure of the public
to hazardous radiation from electronic products. Standards will be
set soon for microwave ovens and other electronic products.
SPECIAL IMPACT PROGRAMS
Several programs have been selected for extended discussion in
this section because of their special significance in the 1971 budget.
Outlays for these programs are classified in one or more of the major
categories in table K-2.
Family planning.—In his Message on Population, July 18, 1969,
the President established as a national goal, "the provision of adequate
family planning services within the next 5 years to all those who want
them but cannot afford them." Funds to meet this objective and to
assist other nations will increase from $125 million in 1970 to $218
million in 1971. The funds will expand both biomedical and attitudinal
research, train health personnel to deliver family planning services,
and provide family planning services to over 2.2 million of the 5
million poor women referred to by the President. This compares to
1.6 million served in 1970 and 1.0 million in 1969.
Almost all domestic family planning funds will be spent by HEW
and OEO, with obligations rising to $103.0 million and $24.0 million
in the two agencies, respectively. Of the HEW obligations $28.3 million
will be used by NIH to train research personnel and to further its
research efforts in reproductive physiology and improved methods of
contraception. With funds totaling about $61.6 million in 1971 from
the Maternal and Child Health program and from new legislative
authority, the new National Center for Family Planning Services will
undertake increased research in the sociological and attitudinal aspects
of family planning and provide family planning services to an estimated 1.6 million low-income women. An additional 2.3 million women
will be served by other programs in HEW, notably Medicaid, with
obligations for family planning services estimated at $6.1 million in
1971.
OEO's 1971 funds will enable the agency to reach 0.4 million
women, 50,000 more than served by the agency in 1970. Most of the
funds will be directed through an estimated 250 Community Action
Agencies and other institutions sponsoring family planning programs.
A portion of OEO's 1971 outlays will be used to explore innovative
ways of providing family planning services to women residing in rural
and other areas isolated from easy access to information and physicians7 services.
Internationally, the State Department and AID are expected to
make about $90 million available in 1970 compared to a comparable
figure of $51 million in 1970 for international family planning activities,
both through contributions to international organizations and in
direct aid to 31 foreign governments.
166
THE BUDGET FOR FISCAL YEAR
Table
1971
K-ll. ESTIMATED OBLIGATIONS FOR FAMILY PLANNING
SERVICES, RESEARCH, AND TRAINING (in millions of dollars)
1968
Services J to low income persons (total)
1969
1970
1971
16.0
34.7
57.8
91.7
Health, Education, and Welfare (total)
7.5
20.9
35.8
67.7
National Center for Family Planning Services
Maternal and Child Health
Medicaid
Office of Economic Opportunity.
_
6.0
1.5
8.5
18.4
2.5
13.8
31.8
4.0
22.0
43.8
17.8
6.1
24.0
8.4
20.3
22.8
36.4
7.7
.6
.1
11.4
.6
.3
15.5
1.1
6.2
28.3
1.1
7.0
35.2
47.3
44.5
90.2
34.6
.6
44.7
2.6
41.8
2.7
86.0
4.2
59.6
102.3
125.1
2I8.3
Research
National Institutes of Health
_
Food and Drug Administration
Agency for International Development
International activities (total)
Agency for International Development
Department of State
Total
1
__.
Includes training.
Federally supported health centers.—In recent years compre-
hensive community based health centers have been established to
overcome the problems posed by inadequate health care resources in
poor rural and urban areas. While each agency supporting health
centers (OEO, Maternal and Child Health Service, NIMH and Partnership for Health) must meet certain specific objectives contained in
their authorizing legislation, all are concerned with bringing into
low-income areas health resources—clinics, physicians and health
workers—that are either nonexistent, in short supply or not readily
accessible.
In addition to creating health care resources, the centers seek a
comprehensive and personal approach to the delivery of medical care,
the utilization of scarce resources in more effective and efficient ways,
and the application of modern health technology. Many sponsor
training and employment programs for residents of the communities
served by the health centers and encourage participation of the poor
in the planning and operation of the centers. It is becoming increasingly
evident that the care being provided through the centers is having
an impact on the health status of the poor. In areas served by
maternity and infant care centers of the Maternal and Child Health
Service for example, reductions of up to 33% in infant deaths have
occurred after the establishment of the center in the area.
In 1971, 517 health centers will be funded wholly or in part with
$289 million in Federal project grants, an increase of 67 centers
and $60 million over 1970. As indicated in table K-12, the majority
of the centers are for the treatment of mental illness, mothers, infants
and children. The number of comprehensive health centers serving
the entire community will also be significantly increased in 1971 by
Partnership for Health. Part of the increase derives from the transfer of
167
SPECIAL ANALYSES
a number of centers previously funded by OEO that have reached
full operational status. It is estimated that all federally supported
centers will serve approximately 1,976 million persons in 1971.
Table K-12. FEDERALLY FUNDED HEALTH CENTERS
1968
Total Federal obligations (millions)
_
1969
1970
1971
146.5
193.7
228.7
288.5
4.1
66.4
43.0
33.0
10.4
75.0
56.0
52.3
20.7
76.1
58.0
74.0
32.4
83.1
83.0
90.0
___
_
8
111
156
43
18
111
218
49
25
112
258
49
35
115
298
49
Number of persons served in year (thousands):
Partnership for Health
Maternal and Child Health
NIMH
0
380
23
532
137
550
171
560
177
135
300
300
391
500
495
750
1
Partnership for Health
Maternal and Child Health
NIMH
_ _ .
OEO1
_
Number of centers funded:
Partnership for Health1
Maternal and Child Health
NIMH (operating grants)
OEO1
OEO
1
. . .
._
Some centers will be shifted from OEO to Partnership for Health in 1971.
Narcotic addiction and alcoholism—Emphasis in the 1971 budget
has been placed on a four-pronged attack on drug abuse and alcoholism
in cooperation with local programs. The major thrust in this attack
will be an expansion of specialized narcotic addict treatment clinics.
Funds for treatment centers supported by OEO grants and NIMH
community assistance projects will rise from $10 million in 1970 to
$17.6 million in 1971. These funds will continue 31 centers now in
operation and add 21 additional centers. Similarly, outlays of $6
million will support 24 specialized centers to treat alcoholism. In
addition, outlays to assist over 1,600 self-committed addicts receiving
treatment services in their home area will rise to $7.7 million from the
1970 level of $5 million.
Increased public information on drug abuse and alcoholism will
also be carried forward by NIMH and the Bureau of Narcotics and
Dangerous Drugs. Almost $4 million has been allocated in 1971 for
production of movies, spot radio and television messages, and other
educational material.
The third focal point will be the training of personnel as diverse as
former drug addicts and educators, law enforcement officers and
alcoholics in a wide variety of treatment procedures. This training
program will spend $4.5 million in both 1970 and 1971. In addition,
NIMH will increase fellowships for research study in both drug abuse
and alcoholism, as well as widen support to institutions providing such
training.
Research supported and conducted by NIMH has brought significant breakthroughs both in understanding the effects of drugs and
168
THE BUDGET FOR FISCAL YEAR
1971
alcohol on man and in finding chemical processes which can begin
to reverse the processes of addiction and alcoholism. More refinements
and testing of remission agents will be a key part of the research
program supported by a budget of over $27 million in 1971.
HISTORICAL
RlssuMf;
Table K-2 classifies Federal health outlays for the years 1969
through 1971. The following table K-13 distributes Federal health
outlays by function for the period 1960 through 1968. The data for
1960 are not strictly comparable, representing "funds provided" rather
than outlays.
Table K-13. FEDERAL OUTLAYS FOR MEDICAL AND HEALTH-RELATED
ACTIVITIES BY CATEGORY (in millions of dollars)
Development of health resources, total
Health research
Training and education
Construction of hospitals
and health facilities
Improving the organization and delivery of
health services 2
Provision of hospital and
medical services, total...
Direct Federal hospital
and medical services
Hospital and medical services, indirect
Prevention and control of
health problems, total
Total outlays from
Federal and trust
funds
19601
1963
1964
1965
1966
1967
1,017
510
217
1,529
892
257
1,806
1,069
298
1,807
1,040
317
1,956
1,167
410
2.430
1,364
593
2,803
1,547
687
290
380
439
450
378
391
470
82
100
1968
2.165
2,783
2,904
2,936
3,521
7,831
10,764
1,701
1,877
1,971
2,022
2,199
2,552
2,738
464
906
933
914
1,322
5,279
8,025
326
346
393
418
451
540
565
3,508
4.658
5.103
5,161
5,928
10,801
14.132
1
Report of the Committee on Government Operations, U.S. Senate: "Coordination of Federal
Agencies" programs in bio medical research and in other scientific areas, report No. 142, Mar. 30.
2
Not tabulated in 1960-66 as a separate subcategory.
EXPENDITURES FOR HEALTH ACTIVITIES BY AGENCY
The following tables distribute the health-related expenditures of
Federal agencies by the categories used in this analysis. Except for
HEW and a small part of the Civil Service Commission, the outlays
of these agencies are, because of their major purpose, assigned to
functions other than Health (650) in Part 4 of the budget document.
The tables, therefore, indicate the predominant budget functional
code for each agency. Other special analyses such as those on Research
and Development, Education, and Manpower also include all Federal
outlays in their area. They will thus include, where pertinent, the
same outlays which are tabulated in this analysis.
Table K-14. FEDERAL OUTLAYS FOR MEDICAL AND HEALTH-RELATED ACTIVITIES B \r AGENCY, 1969
(in millions of dollars)
Funccode
Department of Health, Education, and Welfare
Health Services and Mental Health Administration
National Institute of Health
Consumer Protection and Environmental Health Service..
Social Securitv Administration
Social and Rehabilitation Service.Other
Department of Defense
Veterans Administration
Deoartment of Housins and Urban DeveloDment
Department of Agriculture
Agency for International Development
Office of Economic ODDortunitv
National Aeronautics and Soace Administration
Atomic Enersv Commission
Civil Service Commission
Department of Labor
Deoartment of State
National Science Foundation
..
Department of Commerce
Other agencies
Agency contributions to employee health funds__
Total outlays for health, 1969 _.
Health
Training
1,109.5
126.5
895.6
58.4
554.3
135.7
400.4
10.1
322.7
316.3
5.6
650/700
29.0
051
800
83.8
52.2
8.1
6.0
119.9
77.5
40.1
2.6
.8
.1
71.8
45.7
118.4
20.9
.8
11.1
13.1
28.5
650
650
650
650
550
350
150
550
250
058
906
604
150
605
500
110.4
94.3
.3
23.4
3.1
8.1
1,527.7
.7
116.0
100.3
15.6
Direct
Indirect
Preven-
medical
and
medical
of health
problems
120.8
120.5
.3
1,395.6
1,310.3
805.5
612.0
1.8
20.8
126.0
28.1
2.8
3.8
5.3
34.7
6,597.7
2,387.8
8.1
213.1
65.1
379.9
267.1
5.4
105.7
133.2
65.9
.2
1.2
9,217.0
220.4
166.1
1.4
.1
40.7
14.9
.3
2.6
21.8
32.6
1.4
246.6
27.2
2,860.3
9,933.2
651.5
11,820.3
1,286.9
1,322.6
174.2
6,597.7
2,427.8
14.3
1,905.1
1,571.6
119.2
173.4
121.2
126.0
110.6
95.0
40.7
47.3
25.0
27.2
8.4
104.6
246.6
16,556.4
TabIeK-15. FEDERAL OUTLAYS FOR MEDICAL AND HEALTH-RELATED ACTIVITIES BY AGENCY, 1970
(in millions of dollars)
Functional
code
Department of Health, Education, and Welfare
Health Services and Mental Health Administration
__
National Institute of Health
_
.
Consumer Protection and Environmental Health Service
Social Security Administration-_
Social and Rehabilitation Service..
Other
Department of Defense
__
Veterans Administration
Department of Housing and Urban Development
Department of Agriculture
Agency for International Development
Office of Economic Opportunity
National Aeronautics and Space Administration
Atomic Energy Commission
-Civil Service Commission
Department of Labor
Department of State
-National Science Foundation..
_
Department of Commerce
._
Other agencies
Agency contributions to employee health funds
_
Total outlays for health, 1970.
650
650
650
650
650/700
051
800
550
350
150
550
250
058
906
604
150
605
500
Health
research
Training
and
Construe-
Organization and
delivery
medical
160.9
132.4
916.8
81.8
672.9
166.9
484.9
358.2
345.5
9.8
29.9
10.2
6.5
3.0
.9
80.3
62.9
130.5
52.1
73.6
150.9
25.2
3.0
12.5
......
35.6
1.0
43.2
8.6
115.2
101.1
.3
26.3
3.5
19.3
1,621.7
Direct
Federal
hospital
10.9
92.2
11.5
155.5
137.3
18.2
131.9
131.5
.3
1.515.4
1,463.6
4.8
51.8
951.0
705.1
220.4
7,537.8
2,753.0
7.9
232.0
77.7
439.8
291.1
7.8
124.4
16.4
22:3
147.9
Total
13,477.0
1.456.9
1.437.5
217.1
7.537.8
2.812.9
15.4
2.032.6
1.795.2
154.0
206.8
176.3
148.9
115.5
101.7
41.2
51.7
41.2
18.5
.3
3.3
25.0
34.7
3.6
251.7
41.5
153.4
251.7
3.147.3
11,338.6
803.5
18.787.6
1.5
.2
2.3
10,557.7
252.2
Prevention and
control
of health
problems
163.6
108.1
.6
28.1
3.0
3.4
Indirect
Federal
hospital
and
medical
28.4
29.7
8.3
TableK-16. FEDERAL OUTLAYS FOR MEDICAL AND HEALTH-RELATED ACTIVITIES BY AGENCY, 1971
(in millions of dollars)
Functional
Department of Health, Education, and Welfare
Health Services and Mental Health Administration
National Institute of Health .
Consumer Protection ;and Environmental Health Service
Social Securitv Administration
Social and Rehabilitation Service
Other
Department of Defense
,_
Veterans Administration
DeDartment of Housincr and Urban Development
Department of Agriculture
Agency for International Development_ _-___
Office of Economic Opportunity
National Aeronautics and Space Administration
Atomic Enenzv Commission
Civil Service Commission
Department of Labor.
_
_ _
Department of State
National Science Foundation
Department of Commerce _
_._ _ . . _ » _ _ _ .
Other agencies
_
»_
Agency contributions to employee health funds
Total outlays for health, 197L
650
650
650
650
650/700
051
800
550
350
150
550
250
058
906
604
150
605
500
Health
Training
and
Construe-
1,193.0
135.9
929.3
97.3
748.3
170.8
554.2
13.4
347.1
334.0
3.7
30.5
84.2
63.0
9.8
7.7
128.7
99.4
44.4
9.6
9.3
10.1
62.2
54.2
178.7
6.7
6.8
111.8
94.2
.3
25.8
3.9
29.8
1,660.0
tion and
173.1
154.9
18.2
Indirect
hospital
control
medical
services
medical
services
problems
140.1
139.7
.4
25.6
2.6
Preven-
Direct
hospital
1.463.7
1,473.5
22.1
12.0
12,145.8
317.7
8,774.4
3,034.3
9.5
238.0
88.1
165.9
464.8
292.7
8.0
143.1
20.9
20.7
175.6
110.2
.4
31.5
2.8
3.0
4.2
3.7
48.8
1,032.8
711.6
235.5
Total
of Ii*ji1f-h
1.7
.2
46.5
21.0
.3
3.6
28.1
36.5
7.6
256.9
64.5
3,115.7
12,979.5
15,212.1
1,545.7
1,513.4
253.8
8.774.4
3,105.3
27.4
1,997.6
1,803.8
181.3
219.4
155.4
177.9
111.8
94.6
46.5
58.1
31.4
28.8
7.6
191.4
256.9
866.9 20,602.0
SPECIAL ANALYSIS L
FEDERAL INCOME SECURITY PROGRAMS
Overview.—The Federal Government plays a major role in providing
income security for individuals and families. Income security is
extended through transfer payments. Payments may be made in cash
or "in kind."
This analysis groups cash benefit programs according to the basis
for benefit determination. The three program classifications are:
income replacement programs such as social security and unemployment
insurance, which relate benefits to wage histories; income support
programs like public assistance, which make payments based on need;
and income compensation programs which base benefits on some other
measure of impairment to earning capacity (disability compensation
for veterans is the largest program in this third group). Programs
providing assistance in kind are classified by the type of benefit
provided. The three groups of in-kind benefit programs are health
care programs (Medicare and Medicaid), food and nutrition programs
such as the food stamp program, and housing programs (public housing
and rent supplements). Following the discussion of cash and in-kind
benefit programs, a summary of Federal aid to the poor is presented.
Federal budget outlays for programs included in this analysis will
total $71.6 billion in 1971. This amount is 36% of total budget outlays, and 54% of nondefense spending. Income security outlays
constitute 97% of Federal domestic transfer payments and 35% of
Federal aid to State and local governments in the national income
accounts. Trust funds account for 70% of Federal income security
payments.
Cash payments make up 80% of total payments in 1971 (social
security payments alone are 47% of the total). The largest in-kind
benefit program is Medicare, with 1971 outlays of $8.8 billion. Table
L-l summarizes the outlays for these programs, with subtotals for
cash and in-kind benefit programs. A detailed listing for each program,
by agency, is provided in table L-16.
172
SPECIAL
173
ANALYSES
Table L-l. FEDERAL OUTLAYS FOR INCOME SECURITY P R O G R A M S
Federal outlays for cash benefits (millions):
Social security (OASDI)
Federal employee benefits
Veterans benefits
Public assistance
Unemployment trust fund
Railroad retirement
Other programs
Proposed legislation
Subtotal, outlays, cash benefits.
Federal outlays for in kind benefits (millions):
Food and nutrition
Health care
Housing
Proposed legislation
Subtotal, outlays, in kind benefitsTotal, benefit outlays
Federal outlays for administration
Total, outlays, income security _
1969
1970
$26,175
4,938
5,285
3,370
2,158
1,533
49
$29,154
5,800
5,679
4,081
2,713
1,620
88
44
$32,897
6,557
5,846
4,647
3,046
1,695
239
552
43,508
49,179
55,479
1,150
8,481
344
1,530
9,711
2,201
11,377
476
1971
stimate
663
-215
9,975
11,717
14,026
53,483
1,668
60,896
1,920
69,505
2,081
55,151
62,816
71,586
Historical perspective.—Although there are substantial income
security expenditures from private and from State and local sources,
Federal outlays constitute an increasing portion of these payments.
Total cash benefits have risen from $1.1 billion in 1929 to $58.2 billion
in 1967, with the Federal Government accounting for almost 70%
in recent years. Private income security expenditures are mostly for
employee pension plans which, together with social security and public
employee retirement systems, constitute the primary source of income
for most of our elderly citizens. In addition to employee retirement,
State and local governments help finance two other major types of
income security payments: workmen's compensation for those
disabled by work-related injuries; and the non-Federal share of public
assistance payments to the poor. Table L-2 illustrates
the distribution of income security expenditures by source.1
1
The data in tables L-2 and L-3 are compiled from publications of the Social Security Administration and are not exactly comparable with the budget data in the other tables.
174
THE BUDGET FOR FISCAL YEAR
1971
Table L-2. INCOME SECURITY EXPENDITURES FOR CASH BENEFITS BY
SOURCE OF FUNDS, FOR SELECTED FISCAL YEARS
Cash benefits (in billions]
1929
Income replacement programs:
Federal
State and local
Private
Income support programs:
Federal
State and local
Private.
_
Income compensation programs:
Federal. _
_
_.
State and local
_
Private
Cash benefits, total:
Federal
State and local
Private. _ _ _ _
1950
1960
1967
$2.1
2.8
1.0
$14.3
5.0
3.6
$30.7
6.7
7.2
0.1
NA
1.5
1.9
NA
2.2
2.1
NA
4.3
3.7
0.5
0.6
2.6
3.9
5.1
0.7
0.4
NA
6.2
4.7
M.O
20.4
7.1
40.1
10.4
7.7
$0.1
0.3
NA
(i)
23.6
1 Less than $50 million.
Does not include private expenditures for income support.
N A = Not available.
2
Total income security expenditures have grown as a percentage of
gross national product (GNP) from 5% in 1950 to 8% in 1967. Similarly, the Federal portion of the total has displayed impressive growth,
rising from 2% of GNP in 1950 to 5% in 1967.
Table L-3. INCOME SECURITY EXPENDITURES FOR CASH BENEFITS AS
A PROPORTION OF GROSS NATIONAL PRODUCT, FOR SELECTED
FISCAL YEARS
Gross national product (billions)
Income security expenditures (cash benefits):
Total (billions)
As percent of GNP
Federal (billions)
As percent of GNP
1
2
1929
1950
$101.0
1
$0.7
1
1960
1967
$263.3
$495.2
$768.8
2$11.9
5
$6.2
2
2
$31.1
6
$20.4
4
$58.2
8
$40.1
5
Does not include any private expenditures.
Does not include private expenditures for income support.
Proposals for reform.—Income security programs are continually evolving through both legislation and administrative regulation as problems with existing program structures are identified. The
most common adjustments deal with: the inadequacy of benefits; inequities in benefits among different beneficiary groups and in the
financing burden among different taxpayer groups; definitions of
benefit entitlement; and effects on individual behavior and incentives. The following two sections discuss proposed legislation and the
more important steps taken in the past year to meet these recurring
problems.
175
SPECIAL ANALYSES
In the past year, income security programs have become a high
priority area for basic system reform, and several Administration
proposals are now under consideration by the Congress. Estimated
1971' outlays for these proposals total almost $1 billion, and the costs
for the first full year of effect are expected to be $6.4 billion (see
table L-4).
The most important legislative proposal before the Congress is the
family assistance program (FAP). This proposal would replace the outmoded Federal-State program of aid to families with dependent children (AFDC) with a new Federal income maintenance program for all
poor families with children, thereby aiding the working poor for the
first time.
Table L-4. REFORM PROPOSALS FOR INCOME SECURITY PROGRAMS
(in millions of dollars)
Additional outlays over
existing program
Proposal
1970
Family Assistance legislation
Food stamps L
_
Social security
Railroad retirement
Unemployment insurance
VA compensation and pensions.
Medicaid
_
Special milk 1
Total.
1971
+500
+674
+44
+44
First
full
year
-52
-215
-64
+4,400
2
+825
+1,300
+104
+170
-52
-300
-81
+955
+6,366
+104
+8
1
These proposals are a part of authorizing legislation and are not carried in the "proposed legislation"
entries
in other tables.
2
This estimate assumes enactment of FAP; in the absence of FAP, the food stamp proposal would
cost $1.9 billion in the first full year.
Under FAP, a family of four with no other income would receive
$1,600 a year. The basic allowance would be reduced by 50% of annual2
earnings in excess of $720, and by 50% of all nonearned income.
Total income increases with earnings; thus a strong work incentive is
provided. An eligible recipient is entitled to keep the first $720 of annual earnings and to retain 50% of his earnings thereafter. For an
AFDC-eligible family entitled to higher benefits under the existing
AFDC program, the FAP payment would be supplemented by the
State so that no family's income would decline. To maintain work incentives and to decrease the long-run need for income supplementation, able-bodied male heads of families receiving FAP benefits, and
female heads with no pre-school-age children, would be required to
register with State employment agencies. Additional training and day
care would be provided for those needing these services.
The family assistance legislation also proposes an improvement in
adult public assistance programs by setting a national minimum income standard for recipients. Payments under old age assistance
2
The benefit is reduced dollar for dollar for income from VA pensions and farm subsidies; welfare
income is completely disregarded.
176
THE BUDGET FOR FISCAL YEAR 1971
(OAA), aid to the blind (AB), and aid to the permanently and totallydisabled (APTD) would guarantee recipients a total income of at
least $90 per person per month. The legislation also calls for the
modification of the more restrictive eligibility provisions of current
welfare programs for these categories.
To reduce the fast-rising burden of welfare spending on State and
local governments, the family assistance proposal would replace present Federal-State matching formulas with a more generous formula
for Federal reimbursement of State payments under OAA, AB, and
APTD. The proposal also guarantees that no State would have to
spend at a rate higher than 90% of its existing program level. Thus,
every State would save at least 10% of its anticipated welfare outlays.
This relief is expected to total about $500 million in the first full year
of operation.
Closely related to FAP is the Administration's expanded and revised
food stamp program. Major modifications are being made administratively in 1970 to meet the needs of the poor more fully. The Administration's legislative proposal, still pending in Congress, will permit
further improvements in 1971.
Taken together, FAP and the improved food stamp program
would provide significantly improved benefit levels for many poor
families. A family of four with no other income would receive a total
of $2,464 annually—$1,600 in cash from FAP, and $864 in the form
of the food stamp bonus ($1,272 in stamps less a purchase price of
$408). Table L-5 shows the impact of Administration proposals on
family income for a male-headed family living in one of the 26 States
that does not have an AFDC program for unemployed fathers.
Table L-5. IMPACT OF FAMILY ASSISTANCE AND FOOD STAMP
PROPOSALS ON FAMILY INCOME i
Existing benefits
Earnings
Public
assistance 2
Food
stamp
bonus 3
Family
assistance
Food
stamp
bonus
$0
0
0
0
0
$696
$1,600
1,600
1,210
$864
$0
720
1,500
3,000
4,000
1
2
3
Proposed benefits
480
384
288
288
460
0
624
480
408
312
Increase in
total income
$1,768
1,744
1,306
580
24
Data are on an annual basis for a male-headed family of four.
For a State with no AFDC program for unemployed fathers.
This schedule is now being replaced with one very similar to the proposed benefit schedule.
Legislation has been proposed which will extend unemployment
insurance coverage to an additional 5.3 million workers, including
many low-wage workers greatly in need of protection. Workers with
marginal skills will be encouraged to undertake retraining to reduce
their vulnerability to unemployment. Abuses that have permitted unwarranted benefits to be collected will be remedied. The economic
stabilization effects of unemployment insurance will be increased by
automatically extending benefits for up to 13 additional weeks during
times of high unemployment. Finally, the financing of the system will
be strengthened by increasing the taxable wage base from $3,000 to
SPECIAL ANALYSES
177
$6,000 over a period of 5 years. This change will increase revenues
and make financing more equitable.
Additional social security legislation has been proposed to improve
equity under the system. One proposal calls for an increase in the
annual amount of earnings that would be exempt under the retirement test from $1,680 to $1,800 to reflect the increase in average
wages since the last adjustment. In addition, benefits would be reduced by $1 for every $2 of earnings in excess of $1,800. The current
dollar-for-dollar offset of earnings over $2,880 against benefits would
be eliminated. Other changes would reduce the benefit computation
point from age 65 to age 62 for men (as it is now for women), and
increase the widow's benefit from 82J4% to 100% of the husband's
primary benefit. This legislation will be effective in 1972.
To help finance improvements in income security programs, there
must be a continuing effort to discontinue obsolete or duplicative programs. Examples in this budget include proposed legislation to discontinue payment of veterans compensation for cases of arrested
tuberculosis and to include railroad retirement income in computing
certain VA pension benefits. It is also proposed that the Department
of Agriculture terminate the special milk program at the end of the
1970 school year as other food programs which more directly benefit
the poor are expanded. These proposals, coupled with legislation
placing new restrictions on Federal reimbursement for long-term care
under Medicaid, will reduce income security outlays by $331 million
in 1971.
Recent program developments.—The recently enacted Tax Re-
form Act of 1969 includes provisions improving social security benefits.
Effective January 1, 1970, old age and survivors and disability insurance (OASDI) benefits were increased by 15%, more than offsetting
the erosion in real benefits due to inflation since the last benefit increase (effective February 1968). This benefit increase will result in
payment increases of $1.7 billion in 1970 and $4.3 billion in 1971.
The maintenance payments made by the Federal-State public assistance programs to the needy who are aged, blind, disabled, or in families
with dependent children were substantially altered in 1969 by the
implementation of the 1967 amendments to the Social Security Act.
The most important changes associated with these amendments were
designed to improve work incentives for family heads in the AFDC
program. The dollar-for-dollar
offset of earnings against benefits
(the 100% tax rate 3 on earnings often associated with public assistance) was replaced by a system that disregards earnings of $30 a month
and one-third of any earnings in excess of $30 for benefit determination.
This change lowers the marginal tax rate for AFDC from 100% to
66%%. This increased inducement to earn was coupled with the work
incentive program, which provides training, day care, and other
supportive services to AFDC recipients to assist them toward economic independence.
Other important changes, dealing primarily with public assistance
eligibility, have been brought about by court decisions and new Federal
regulations. For example, the courts have eliminated State residency
3
The "tax rate," as used in this Analysis, refers to the proportion of beneficiary income that an
income security program takes as an offset against the program benefit. For example, a dollar-fordollar offset of earnings against the benefit constitutes a "100% tax rate" on earnings. In this case,
if a family with a monthly benefit of $100 experienced an increase in earnings of $25, the benefit
would be reduced to $75. If the program disregards all income in computing benefits, the "tax rate"
is 0%.
390-700 O—70
12
178
THE BUDGET FOR FISCAL YEAR 1971
requirements as eligibility criteria. At the direction of the Department
of Health, Education, and Welfare, States are now experimenting
with an affidavit form of income determination, which may replace
the case-by-ease, detailed investigation method.
Recent legislation increased benefits paid to the survivors of veterans
with service-connected disabilities (dependency and indemnity compensation), effective December 1, 1969. Under the new law, the minimum
monthly payment to a widow and two children will rise from $161 to
$210, a 30% increase.
Two automatic cost-of-living benefit increases of 4.0% and 4.3%
were granted by the military retirement program during calendar 1969.
The automatic increases for civil service retirees during the year were
3.9% and 4.0%.
In enacting the Civil Service Retirement Amendments of 1969, the
Congress provided an extra 1% cost-of-living increase
to reduce the
time lag in the automatic adjustment procedure,4 gave retirement
credit for unused sick leave, and improved survivors' benefits. The
most significant change, however, altered the salary base for civil
service retirement benefit computation
from the average for the
highest 5 years to the highest 3 years.5 Outlays for these added benefits
are estimated to be $63 million for 1970 and $156 million for 1971.
These costs wTill be financed primarily by raising both the employer
and employee contributions to the civil service retirement trust fund
from &%% to 7% of basic pay.
The President recently signed the Federal Coal Mine Health and
Safety Act, a measure aimed at reducing the incidence of pneumoconiosis (black lung disease) among coal miners and the extent of
suffering for its victims. One provision calls for Federal compensation
to black lung victims in monthly amounts ranging from $136 to $272.
This new compensation program, effective December 1969, will cost
$20 million in 1970 and $150 million in 1971.
Faced with the task of improving and reforming income security
programs, public policymakers and the research community have
recognized the need for testing program proposals. Thus, several
scientifically designed income maintenance experiments have been
undertaken. The first such experiment, a test of a "negative income
tax" among poor families headed by male adults in New Jersey, was
launched by the Office of Economic Opportunity in 1968. It is designed
to test the recipients' behavioral responses to receipt of a need-tested
income supplement in terms of work effort, consumption patterns,
family stability, and other variables. Since then, other experiments
have been started or planned by OEO and the Department of Health,
Education, and Welfare to test these and other critical elements of
program design and methods for implementing family assistance.
Outlays for these projects will total $18 million in 1971.
Cash benefit programs.—For the purposes of this Analysis, Federal
income security programs are organized by method of payment and
program goal. There are two methods of payment:
4
Legislation has been enacted which will add an extra 1 % to automatic cost-of-living adjustments
in 5 military retirement pay as well.
A similar change in benefit computation for foreign service retirement is now under consideration by the Congress.
SPECIAL
179
ANALYSES
(1) benefits can be paid in cash without any restrictions on use; or
(2) payments can be made in kind, or in cash but only for the consumption of specific items.
Thus, programs can offer either unrestricted or restricted assistance.
In general, cash benefit programs attempt to provide beneficiaries
some assured level of living. It is important to distinguish maintenance levels related to: (1) a former earnings level (income replacement); (2) a minimum income level (income support); or (3) some
other measure, such as a presumed future earning capacity (income
compensation).
Table L-6. CASH BENEFIT PROGRAMS: BENEFIT OUTLAYS AND BENEFICIARIES FOR INCOME REPLACEMENT PROGRAMS
Benefit outlays (millions)
1969
actual
1970
estimate
Cash benefit programs (income replacement) :
Social security:
OASI
$23,732 $26,356
DI
2,798
2,443
Federal employee retirement
systems:
Military
.___
2,444
2,857
Civil service
2,192
2,554
Coast Guard.
53
60
Foreign service
13
16
PHS officers
7
9
Judiciary
6
5
1
ESSA officers
1
1
Special annuities (CSC)
1
Federal employees compensation.
95
111
Veterans benefits
2
2
2,899
Unemployment insurance
2,285
1,620
Railroad retirement
1,533
44
Proposed legislation
Total, cash benefits for income replacement
34,806
39,334
Number of beneficiaries
(thousands)
1971
estimate
1969
actual
$29,706
3,191
22,227
2,335
22,846
2,487
23,457
2,637
3,193
2,933
64
18
11
6
1
1
130
2
3,247
1,695
104
692
891
14
2
1
#
*
1
23
1
936
978
753
939
14
2
1
*
*
1
23
1
1,192
986
825
989
15
2
1
1970
1971
1
23
1
1,277
990
44,302
"Less than 500.
Income replacement.—The largest proportion of Federal income
security benefits are paid through income replacement programs
(about 64% of total outlays in 1971). These benefits are designed as a
partial replacement of income lost due to retirement, disability, unemployment, or death of a breadwinner. Eligibility is generally dependent
upon work force attachment. Benefit amounts are usually related
to prior earnings.
Retirement benefits.—The bulk of income replacement payments
are made to retirees (see table L-7). Federal programs for retirement
include the nearly universal protection offered tc workers by old
age and survivors insurance (OASI) under social security, a fed
180
THE BUDGET FOR FISCAL YEAR 1971
erally administered retirement system for the railroad industry, and
several retirement systems for Federal employees. With the exception
of the systems for the uniformed services (the Armed Services, the
Coast Guard, and the commissioned officers of the Public Health Service and the Environmental Science Services Administration) and some
very small programs, all retirement systems are financed primarily by
employer/employee payroll taxes, although specific statutes do require
some contributions from general revenues.
The largest of these systems is the old age and survivors insurance
system which now protects more than 87 million workers in covered
employment. OASI will pay benefits of $21.8 billion to 17 million
retirees and their dependents in 1971. The system is funded by payroll taxes levied equally upon employees and employers as a percentage of wages up to the maximum taxable wage of the individual
(presently $7,800 a year).
Benefit amounts are computed on the basis of the average earnings
received over the individual's lifetime work history. However, in
order to mitigate the adverse effect of lower wages in the early years
of the individual's work history, retirees may begin their work history
in 1950 and, in addition, may drop from the calculation the 5 years
of lowest earnings. The benefit in 1971 for the average retiree will
amount to roughly 35% of his average covered wage. A minimum
benefit of $64 a month has been established to provide a higher
retirement income for the worker with low wages or a short period
of covered employment.
Table L-7. CASH BENEFIT PROGRAMS FOR INCOME REPLACEMENT:
RETIREMENT BENEFITS, BENEFICIARIES, AND AVERAGE PAYMENTS
BY PROGRAM
Benefit outlays
(millions)
1969
1970
1971
Average monthly
payments
Number
of beneficiaries
(thousands)
1969
1970
1971
Retirement benefits:
Social security
(OASI)
$17,318 $19,280 $21,757 16,264 16,609 16,972
Federal employee retirement
systems:
Military _
Civil service
Coast Guard
Foreign service
PHS officers.
Judiciary
ESSA officers
Special annuities
(CSC)
Railroad retirement, _
Veterans benefits
Proposed legislation
Total retirement
benefits
*Less than 500.
1969
actua
$89
2,006 2,354 2,635
1,439 1,679 1,929
60
49
56
12
10
14
8
10
6
5
5
4
1
1
1
555
443
12
1
1
*
*
604
467
12
2
1
*
*
660
301
491
271
13
348
2
581
1
643
* 3,380
*
462
1
1
1,067 1,120
2
2
31
1
611
1
1
615
1
1
616
1
1
1,164
2
83
21,903 24,549 27,661
70
146
129
1970
$97
1971
$107
325 333
300 327
377 388
630 660
727 798
3,460 3,470
470 505
74
152
132
76
157
133
SPECIAL ANALYSES
181
The railroad retirement system combines social security with a
supplementary staff pension system. Benefits are related to wages
but, unlike social security, the computation formula includes a
factor for length of service. The railroad retirement payroll tax rate
may be increased independently, but any social security tax rate
increase automatically increases the railroad retirement rate by the
same amount. There is a statutory guarantee that a railroad retirement benefit will be at least 10% higher than what the benefit would
be if it were computed under the social security formula. Adjustments
between the funds are made each year to put the social security
system in the same financial position in which it would have been
if railroad employment had been covered by the Social Security Act.
The transfer of funds takes into account both benefits paid and
taxes collected by the railroad retirement system.
The railroad retirement system has now reached maturity. The
number of beneficiaries, 616,000 in 1971, will remain at this level for
several years and then gradually decline. The number of employees
covered under the system, 830,000 in 1971, will continue to decline
as technology reduces the need for manpower in the industry.
Retired Federal employees eligible for benefits will number 1.7
million in 1971 (99% are retired civil servants or military personnel).
Payments, reaching $4.7 billion in 1971, are growing at an annual
rate of 16%, reflecting beneficiary growth, Federal pay raises, the
automatic cost-of-liying increases provided for the two largest programs, and the benefit increases provided by the Civil Service Retirement Amendments of 1969 (see page 178).
Disability benefits.—Most of the retirement systems discussed above
protect covered employees against income loss due to permanent disability. In addition, Federal employees are entitled to compensation
for work-related injuries, and railroad employees are entitled to
benefits for temporary disabilities. Disabled military personnel may
choose between military disability pay and veterans disability compensation. (Workmen's compensation programs for non-Federal employees, which provide most of the compensation for short-term
disabilities, are State programs and have no impact on the Federal
budget.)
182
THE BUDGET FOR FISCAL YEAR
1971
Table L-8. CASH BENEFIT PROGRAMS FOR INCOME REPLACEMENT:
DISABILITY BENEFITS, BENEFICIARIES, AND AVERAGE PAYMENTS
BY PROGRAM
Benefit outlays
(millions)
1969
1970
1971
Number
of beneficiaries
(thousands)
1969
Disability benefits:
Social security (DI)-$2,443 $2,798 $3,191 2,335
Federal employee ret i r e m e n t systems:
Military
429
492
129
546
Civil service
422
493
178
566
Coast Guard
4
2
3
4
Foreign service
1
*
1
1
PHS officers
*
1
1
1
ESSA officers
*
t
t
t
Railroad retirement
(permanent disability)
80
82
84
38
Federal employees
compensation
90
13
62
72
Railroad unemployment (temporary
disability)
56
50
52
25
Proposed legislation
3
6
Total disability
benefits
3.497
3.996
Average monthly
payments
1970
1971
2,487
2,637
$87
$94
$101
141
187
2
*
*
*
157
197
2
*
*
*
277
198
169
582
555
460
291
220
184
633
567
462
290
239
189
651
578
503
37
36
175
185
193
13
13
397
462
577
23
23
186
181
188
1969
1970
1971
4.541
f Less than $500 thousand.
* Less than 500.
Disability insurance (DI), under social security, is the largest
income security program for the disabled. Beneficiaries will total
2.6 million in 1971, and payments are expected to be $3.2 billion. To
qualify for DI, a worker must be totally and permanently disabled;
i.e., unable to engage in any substantial gainful activity for a period
expected to last a year or more. He must also meet specific coverage
and insurance requisites set forth in the law. Under these circumstances, his benefit is computed as if he were eligible for old age
retirement without having reached age 65. Since his average lifetime
work history is of a shorter duration than a retiree's, his benefit will
not be depressed by periods of lower wage bases and lower wage
levels; consequently, the disability payment for the primary beneficiary averages somewhat higher than the regular retirement payment.
Permanently disabled railroad employees under age 65 will number
36,000 in 1971. An employee in the railroad industry may receive a
retirement annuity if he is less than 60 years of age, has 20 years of
service, and is permanently disabled for work in his regular occupation. He may receive a disability pension at any age if he is perma
nently disabled for any regular employment. The disability benefit
follows the same formula as the regular retirement benefit, which
includes a length of service factor; consequently, the disability benefit
will be less than that for retirement. Disability beneficiaries over age
65 are included with retirees in table L-7.
183
SPECIAL ANALYSES
The total number of disabled workers benefiting from the systems
for Federal employees will grow to 365,000. Average benefits are
generally lower than those for the corresponding retiree groups.
Survivor benefits,—Federal retirement and disability systems also
provide survivors' benefits to protect the families of beneficiaries and
covered workers. Out of a total of $8.9 billion for survivors' benefits
in 1971, $7.9 billion will be paid under OASI. Another $486 million
will be paid to the families of deceased Federal employees, and the
remainder will go to survivors of railroad retirement beneficiaries.
Table L-9. CASH BENEFIT PROGRAMS FOR INCOME REPLACEMENT:
SURVIVOR BENEFITS, BENEFICIARIES, AND AVERAGE PAYMENTS
BY PROGRAM
Benefit outlays
(millions)
1969
actual
1970
est.
1971
est.
Number
of beneficiaries
(thousands)
1969
actual
Survivor benefits:
Social security
(OASI)....
$6,415 $7,076 $7,949 5,963
Railroad retirement418
386
329
447
Federal employee
retirement systems:
Military
9
10
12
7
Civil service
330
382
438
271
Coast Guard.
*
t
t
t
*
Foreign service
PHS officers
*
t
t
t
Judicial survivors
*
1
1
trust fund
1
*
ESSA officers
t
t
t
Special annuities
*
1
1
1
(CSC)
Federal employees
10
40
34
39
compensation
15
10
Proposed legislationTotal survivor
7,179 7,940 8,906
benefits
Average monthly
payments
1969
actual
1970
est.
1971
est.
1970
est.
1971
est.
6,237
334
6,485
338
$90
98
$95
104
$102
110
8
9
300
*
110
101
100
583
208
113
112
100
630
208
115
122
100
660
212
364
119
344
137
361
155
113
115
119
283
325
333
285
*
10
fLcss than $500 thousand.
•Less than 500.
Survivor benefits add to the cost of retirement systems by extending
the period of benefit payment beyond the death of the worker. Since
survivor benefits can begin before the worker would have actually
retired, this extension can be considerable. Consequently, most systems pay lower rates for survivors than for retirees, not only on the
assumption that living costs for the family will be lower without the
deceased member of the family, but also because of the costs of
providing such coverage.
The social security system pays benefits to about 2.6 million wives
of living retirees and 3.5 million widows and widowers. Social security
pays a widow 823/2% of the retiree's benefit. Proposed legislation
would increase this ratio to 100%.
184
THE BUDGET FOR FISCAL YEAR
1971
Other Federal retirement systems vary with regard to the amount
paid to widows. The civil service system pays the widow 55% of the
employee's base annuity, although the retiree must reduce his
own annuity in order to provide for survivor benefits. On the other
hand, unlike social security, the widow does not have to reach any
specific age in order to be eligible for benefits.
The military retirement system does not provide survivor benefits
at all under the regular system. Instead, a "contingency option"
plan is provided by which a member of any of the uniformed services
may elect to accept reduced retirement pay during his lifetime. The
survivor benefits are financed solely by the elected permanent reductions in retirement pay; there is no Government contribution.
However, if the serviceman dies on active duty from service-connected
causes, his widow is entitled to survivor benefits under the dependency
and indemnity compensation program administered by the Veterans
Administration.
Unemployment benefits.—Unemployment benefits will be paid to a
total of 5.4 million beneficiaries in 1971, or a weekly average of 1.4
million. Unemployment insurance programs, which are administered
by the States, are funded primarily by employer taxes paid into a
Federal trust fund with separate State accounts. Trust fund payments
are also made to the Railroad Retirement Board for unemployed
railroad workers, and payments are made from Federal funds for all
State beneficiaries who are Federal employees or ex-servicemen.
Average weekly benefits vary by State, from $27.98 in North Carolina to $59.55 in Connecticut (for total unemployment, March 1969).
Table L-10. CASH BENEFIT PROGRAMS FOR'INCOME REPLACEMENT:
UNEMPLOYMENT BENEFITS, BENEFICIARIES, AND AVERAGE PAYMENTS BY PROGRAM
Benefit outlays
(millions)
1969
actual
1970
est.
1971
est.
Unemployment benefits:
Workers insured under State laws
$2,061 $2, 620 $2,952
Unemployment compensation for Federal employees and
ex-servicemen
127
185
200
Railroad unemployment
.
41
43
42
Trade adjustment
activities
1
1
t
Total unemployment benefits.. 2,229
fLess than $500 thousand.
•Less than 500.
2,849
3,195
Number
of beneficiaries
(thousands)
Average weekly
payments
1969
actual
1970
est.
1971
est.
1969
actual
895
1,153
1,238
$44
51
71
71
19
18
*
*
1970
est.
1971
est.
$46
$48
47
50
54
18
41
46
45
*
60
77
77
SPECIAL ANALYSES
185
Income support.—Need-related cash benefit programs, offering income support to the poor, are shown in table L - l l . These programs
base eligibility and benefits primarily on current income. However, no
present program provides income supplementation to all the poor.
Instead, these programs focus on specific categories of the poor population: the aged, the blind, the disabled, families with children headed
by females, and other groups.
The Federal-State public assistance programs constitute the largest
income support system. States make payments to the poor under
OAA, AB, APTD, and AFDC (17 States also have emergency assistance programs, and 24 States have AFDC for unemployed fathers).
The total program is now 57% Federal. The average monthly caseload of 8.9 million in 1969 included an estimated 30% of all poor
people.
Table L-11. CASH BENEFIT PROGRAMS: BENEFIT OUTLAYS, BENEFICIARIES, AND AVERAGE PAYMENTS FOR INCOME
SUPPORT PROGRAMS
Benefit outlays
(millions)
Number
of beneficiaries
(thousands)
1969
actual
1970
1971
Cash benefit programs (income support) :
Public assistance—maintenance payments (Federal share):
Old age assistance
Aid to the blind
Aid to the permanently and totally disabled
Aid to families with dependent children
Emergency assistance
$1,174
52
427
1,714
3
$1,367
$1,457
58
514
61
2,131
Total, public assistance—maintenance payments:
(Federal share)
(State and local share)
3,370
(2,319)
1969
actual
1970
Average monthly
payments *
1971
estimate
2,541
12
2,023
80
710
6,076
13
2,072
82
802
7,098
39
2,094
83
864
7,988
52
4,081
4,647
8,902
10,093
11,081
(2,950)
(3,463)
1,307
842
1,339
911
1,304
968
2,018
1,674
1,954
1,745
1,657
1,810
Total, veterans pensions-
2,149
2,250
2,272
3,692
3,699
3,467
Assistance to refugees
General assistance to Indians..
Proposed legislation
40
9
52
15
70
18
48
22
61
33
77
36
Veterans pensions:
Veterans
Survivors
Total cash benefits for income support.
1
1970
1971
$70
91
82
42
32
$76
96
86
45
47
$78
99
91
48
40
54
42
57
44
66
45
68
35
71
37
75
39
I
494
5,568
6,398
Averages are based on total payments, including State and local contributions.
576
1969
actual
7,501
SPECIAL ANALYSES
187
Public assistance programs have four basic shortcomings:
(1) They fail to cover all the poor;
(2) Benefits are very low in some States, with average monthly
payments below $20 per AFDC recipient in some cases;
(3) Until recently, benefits were structured so that work was discouraged, and family stability is still being undermined by the
preferred treatment of the female-headed family;
(4) Indignities
are often suffered by recipients due to welfare
agencies7 efforts to investigate and regulate recipient behavior.
The most rapidly growing assistance category under existing legislation is AFDC. In 1971 a monthly average of 2 million families will
be helped; 5% of these will be headed by unemployed fathers. The
average monthly benefit per recipient will rise from $44.80 to $47.95,
partly due to improvements in State payment levels, and in part due
to the mandatory earnings disregard effective July 1, 1969.
The adult categories, once larger than AFDC, are now smaller as
social security has reduced the need for aid to the aged and disabled.
Most of the increase in total payments ($3.1 billicn in 1970 to $3.4
billion in 1971) is the result of increases in benefit levels. The newly
authorized vendor payments to intermediate care facilities on behalf
of recipients are growing rapidly (from $95 million in 1969 to $402
million in 1971). Projections for both AFDC and the adult categories
will require revision with congressional action on the family assistance
legislation.
In August 1969, State and local governments spent $39 million for
general assistance to the needy. There is no Federal participation in
these programs, which are spotty in coverage and vary widely in
payment levels.
The Veterans Administration pays pensions to veterans and survivors
based on need. Pensions of $1.3 billion will be paid in 1971 to 1.7
million veterans with non-service-connected disabilities (the test for
disability decreases in stringency with increasing age). Benefits are
based on income, although income is not as strictly defined as it is
under public assistance. The survivors of veterans may also qualify
for pensions (1.8 million will do so in 1971).
The other cash benefit payments based on need will total $88 million in 1971. One of these programs, assistance to Cuban refugees, is
growing at a rate of 25%, as the continuing orderly evacuation of
political refugees from Cuba brings an increasing percentage who are
elderly, infirm, or unskilled.
Income compensation.—These
programs base benefits on
measures other than income loss or need, such as indemnification for
impairment of earning capacity. Most of the programs discussed here
are designed to aid veterans.
188
THE
BUDGET
FOR F I S C A L Y E A R
1971
TableL-12. CASH BENEFIT PROGRAMS: BENEFIT OUTLAYS, BENEFICIARIES, AND AVERAGE PAYMENTS FOR INCOME COMPENSATION
PROGRAMS
Benefit outlays
(millions)
1969
1970
1971
Cash benefit programs
(income compensation) :
Veterans benefits:
Disability compensation
$2,127 $2,350 $2,431
Dependency and indemnity compensation __
635
531
588
Life insurance (Fed40
eral funds)
_
36
33
Life insurance (trust
466
453
funds)
443
Special benefits for dis150
20
abled coal miners.
-46
Proposed legislation
Total, cash benefits
for income compensation. _ _
3,134
3.447
Average monthly
payments
Number
of beneficiaries
(thousands)
1969
1970
1971
1969
1970
1971
2,805
2.839
2.869
$63
$69
$71
470
476
476
94
103
111
12
12
13
447
457
470
17
62
200
200
3.676
Veterans disability compensation totaling $2.4 billion will be paid
to 2.9 million veterans with service-connected disabilities in 1971.
Payments are intended to replace the average earning capacity lost
due to varying degrees of disability. Payments under this program
vary from $23 monthly for a service-connected disability of 10% to
$400 for total disability. Reacting to claims that benefits were inadequate for the totally disabled relative to the lightly disabled,
Congress raised the benefit for 100% disability by one-third in
August 1968.
Survivors of veterans with service-connected disabilities are eligible
for dependency and indemnity compensation (DIC). In 1971,476,000 survivors will receive payments of $635 million. Payments are based on
the military pay grade of the veteran. Other veterans benefits, primarily from life insurance funds, will total $506 million in 1971.
A new compensation program for miners suffering from "black
lung" disease was initiated in December 1969. Benefits for eligible
miners are determined by the formula used for compensating Federal
employees with work-related injuries. However, in the case of Federal
employee compensation, benefits are based on actual salaries up to a
certain maximum. For a miner, the benefit is based on the salary
for a grade 2 civil servant rather than on the miner's actual wage.
Benefits in kind.—A wide variety of Federal programs can be
considered to provide income security benefits restricted to specific
uses (benefits in kind). The coverage of this analysis is limited to
those programs that are the most closely related to cash benefit
programs. Programs providing assistance in kind are grouped into
SPECIAL ANALYSES
189
health care, food and nutrition, and housing programs. Benefit
outlays for these programs will total $14.0 billion in 1971, an increase
of $2.3 billion over 1970.
Health care.—Two health care programs are included in this
Analysis. The larger in terms of Federal outlays is the Medicare program. Financed from two Social Security trust funds, the program
constitutes a Federal health insurance system for the elderly. Benefits
include hospitalization, funded by payroll taxes, and outpatient medical services, financed by enrollee premiums. Virtually the entire aged
population is eligible for the former, and over 95% for the latter.
Medicare benefit outlays will total $8.4 billion in 1971.
The other health care program closely related to income security
is the Medicaid program. This program is administered by the States
and provides the poor with health services. The States are partially
reimbursed from Federal funds, the Federal matching ratio ranging
from 50% for a State ranking high in per capita income to 83% for
the poorest States. Many Medicaid beneficiaries also receive cash
payments from public assistance (about 60% in 1971), but Medicaid
eligibility also extends to additional poor people in 28 States.
Two States—California and New York—account for half of this
program's total benefit outlays, which will reach $5.8 billion in 1971
(of which $3.0 billion will be Federal) under existing legislation.
Food and nutrition.—Several food and nutrition programs are
considered to be very closely related to cash benefit programs. Two of
the largest are the food stamp and commodity distribution programs.
The food stamp program, which has become a major vehicle for the
Administration's attack on hunger and malnutrition, expands the
food purchasing power of needy households by permitting them to
purchase food stamps with a redemption value greater than the stamp
purchase price. This "stamp bonus" increases as income decreases;
under the Administration's proposed legislation, stamps would be
provided free to the very poor. This program has grown very rapidly,
from only $35 million in 1965 to $575 million in 1970. Outlays are
expected to grow to $1.2 billion in 1971.
The other major food program aimed at poor families is the commodity distribution program. Under this program, the Federal Government furnishes the poor, as certified by State welfare agencies, with
surplus commodities. State and local governments pay most of the
administrative costs. This program now exists in 1,169 project areas
and another 1,612 such areas have the food stamp program. The remaining 382 areas in the country are expected to have one of these
programs by July 1970.
Two other Department of Agriculture programs—child nutrition
and special milk—help feed about 25 million school children. The
special milk program is being phased out in favor of more comprehensive child nutrition efforts. The child nutrition program is being
directed more toward aiding needy children (it is expected that almost
all needy school children will receive free or reduced price lunches in
1971). An OEO program of emergency food assistance will spend $33
million in 1971 in the process of helping a monthly average of 400,000
people.
190
THE
BUDGET FOR FISCAL YEAR
1971
Housing.—Housing programs included in this Analysis provide
decent housing for low-income families. The Department of Housing
and Urban Development contracts to make periodic payments which
reduce the occupancy costs to a level within the means of the poor.
Under the low rent public housing program (1971 outlays, $622
million) and the rent supplement program (1971 outlays, $41 million),
the payments cover both principal and interest on the bond or mortgage financing the dwelling, and may cover part of the operating costs
as well. Public housing is owned or leased by an agency of the local or
State government, while rent supplement units are privately owned.
Eligibility for admission to a public housing or a rent supplement
unit is determined primarily by family income. Specific income standards for public housing are set by the local housing authorities. Every
public housing resident pays some level of rent; in most cases the
rent varies with income. Families in rent supplement units generally
pay rent equal to 25% of income.
Table L-13. IN KIND BENEFIT PROGRAMS: BENEFIT OUTLAYS AND BENEFICIARIES BY PROGRAM
Benefit outlays
(millions)
1969
1970
1971
est.
$2,182 $2,537 $2,974
(1,806) (2,478) (2,835)
4,283
4,472
5,255
4,654
1,645
5,225
1,949
6,325
2,078
4,400
9,000
4,500
9,300
4,500
9,700
229
550
260
101
10
547
498
364
101
20
1,200
485
466
U
33
3,224
25,458
20,618
17,000
112
5,424
29,502
24,402
17,000
231
7,472
29,670
24,720
339
5
457
19
622
41
-215
785
12
878
36
978
67
9,975
11,717
14,026
1969
Health care:
Public assistance—Medicaid:
(Federal share)
(State and local share)
Medicare:
Hospital insurance
Supplementary medical insurance.
Food and nutrition:
Food stamps
Removal of surplus commodities
Child nutrition
Special milk
OEO emergency assistance
Housing:
Public housing
Rent supplements
Proposed legislation
Total, in kind benefits_
Number
of beneficiaries
(thousands)
1970
1971
381
Program interrelationships.—Individuals
are often entitled to
benefits from several programs. Table L-14 demonstrates the extent of
such overlap. Social security programs, serving as an almost universal
base system of income security, have the largest degree of common
clientele with other programs. Many recipients of income support programs receive social security, but there is also considerable overlap
with Federal retirement programs. Public assistance recipients are also
in receipt of benefits in kind. There is a significant overlap with Medicaid, food stamps, commodity distribution, and public housing. Un-
191
SPECIAL ANALYSES
fortunately, data are not available to accurately assess the full extent
of program complementarity or duplication.
Table L-14. EXTENT OF OVERLAP AMONG BENEFICIARIES OF SELECTED
INCOME SECURITY PROGRAMS
also receiving:1
Program
OASDI
OASDI
Civil service retirement
VA pensions
Old age assistance
AFDC
MedicaicL _
Medicare
Food stamps
_ _
Commodity distribution _ _.
Public housing _
100
40
74
57
8
NA
2 92
NA
NA
NA
Public
assistance
(OAA, AB,
APTD,
AFDC)
8
NA
NA
100
100
60
NA
60
58
58
2*
Based on latest available estimates.
Represents overlap in coverage rather than beneficiaries.
NA=Not available.
Because of program overlap, changes in one program's benefits
can affect benefits paid under other programs. The important link
in this benefit interrelationship is through each program's treatment
of income from other income security programs. In general, the more
a benefit is viewed as an earned right (e.g., OASDI, Federal employee
retirement) the less likely the benefit depends on other program
benefits. The more the benefit is related to need, the more likely it
is reduced because of other program benefits. A hierarchy has been
established among income support programs. VA pensions disregard
all welfare income, public assistance disregards food stamps but taxes
VA pensions at 100%. Food stamps taxes both VA pensions and
public assistance at 25% on average. Most programs do not relate
benefit amounts to the receipt of benefits in kind, due to uncertainty
about the valuation of such benefits; however, eligibility for in kind
assistance often hinges on eligibility for cash assistance.
Federal aid to the poor.—Income security programs constitute a
major part of the broad array of Federal resources providing assistance
to the more than 24 million poor Americans (those whose incomes fall
below the level defined as the poverty line). Despite the strength of
our social and economic structure, poverty exists for many in terms
of poor housing, poor nutrition, inadequate health care, underemployment and unemployment, lack of marketable skills, and lack of
education.
The aggregate amount of Federal resources addressed to the needs
of the poor has shown a steady increase. The 1971 budget provides
$32.9 billion, an increase of $3.2 billion over 1970 and $6.7 billion
over 1969 (see table L-15). Most ot this increase is accounted for by
programs which provide direct income support for individuals and
families whose incomes are below the poverty level. In addition to
192
THE
BUDGET
FOR F I S C A L Y E A R
1971
direct income assistance, other social programs have focused resources
and program activities on the problems of poverty.
Table L-15. FEDERAL AID TO THE POOR
(In billions of dollars)
Category
Education
__
Employment assistance
Health assistanceMaintenance of individuals and families:
Income assistance
Other maintenance assistance
_
Research, demonstration, and other support
Total
1969
actual
1970
estimate
1971
estimate
2.2
2.3
1.6
5.3
1.7
5.9
2.7
2.3
6.4
15.1
1.6
0.4
17.1
2.3
0.4
17.8
3.3
0.4
26.2
29.7
32.9
TableL-16. FEDERAL OUTLAYS FOR INCOME SECURITY BENEFITS, BY
DEPARTMENT AND PROGRAM
Department, agency and program
Benefit outlays
(in millions of dollars)
1969
Department of Health, Education, and Welfare:
Social security:
Old-age and survivors insurance
Disability insurance
Hospital insurance
Supplementary medical insurance
Public assistance:
Maintenance payments
Medicaid
Assistance to refugees
Public Health Service officers retirement
Special benefits for disabled coal miners
Proposed legislation
Total, Health, Education, and Welfare
Veterans Administration:
Disability and dependency and indemnity compensation.
Veterans and survivors pensions
Life insurance (Federal funds)
Life insurance (trust funds)
Other veterans benefits
Proposed legislation
Total, Veterans Administration
Department of Labor:
Unemployment insurance (State programs)
Railroad unemployment
Unemployment compensation for Federal employees and exservicemen
Trade adjustment activities
Federal employees compensation
Total, Labor_
1970
1971
2,443
4,654
1,645
$26,356
2,798
5,225
1,949
$29,706
3,191
6,325
2,078
3,370
2,182
40
7
4,081
2,537
52
9
20
4,647
2,974
70
11
150
285
38,073
43,027
49,437
2,658
2,149
33
443
2
2,938
2,250
36
453
2
3,0662,272
40
466
2
-52
5,285
5,679
2,061
97
2,620
93
5,794
—
2,952
94
127
*
95
2,380
185
1
111
200
1
130
3,010
3,377
$23,732
193
SPECIAL ANALYSES
TableL-16. FEDERAL OUTLAYS FOR INCOME SECURITY BENEFITS, BY
DEPARTMENT AND PROGRAM—Continued
Benefit outlays
(in millions of dollars)
1969
actual
Department of Defense:
Military retirement. _
_
Total. Defense
Department of Agriculture:
Food stamps
Removal of surplus commodities
Child nutrition
Special milk
___ . _
_ . . _ _ .__
Total, Agriculture
Department of Housing and Urban Development:
Public housing
_
___
Rent supplements
___
Total, Civil Service Commission
2,444
2.857
3,193
229
550
260
101
547
498
364
101
1,200
485
466
17
1.140
1,510
2,168
344
476
663
2.192
1
2,554
1
2,933
1
2.193
2,555
2,934
1,533
1,620
44
1,695
104
1,533
1,664
1,799
53
60
64
_.
53
60
64
__
10
20
33
10
20
33
13
16
18
13
16
18
9
15
18
9
15
18
5
6
6
_.
5
6
6
_
1
1
1
1
1
53,483
60,896
69,505
_
_
Total, Railroad Retirement Board
_
Total, Transportation
-
Office of Economic Opportunity:
Emergency assistance.
Total, OEO
Department of State:
Foreign service retirement
_
Total, State
Department of the Interior:
General assistance to Indians
Total, Interior
__
The Judiciary:
Judges retirement and survivors annuity fund
Total, Judiciary
Department of Commerce:
ESSA officers retirement
_ _
Total, Commerce
_
Total, Federal outlays
*Lc«« than $500 thousand.
3i90-7O0 O—70
3,193
622
4]
Department of Transportation:
Coast Guard retirement
2,857
457
19
_
Railroad Retirement Board:
Railroad retirement
Proposed legislation
2.444
339
5
_. . . .
Total, Housing and Urban Development
Civil Service Commission:
Civil service retirement
Special annuities (CSC)
13
1971
1970
1
SPECIAL ANALYSIS M
FEDERAL PROGRAMS FOR THE REDUCTION OF CRIME
The objective of the Federal crime reduction program is to reduce
the rate of criminal law violations in our Nation, and thereby limit the
great economic and social costs of crime. To reach this objective the
Federal Government will continue to increase assistance to State and
local governments, undertake a wide range of programs designed to
improve the methods and techniques of crime prevention and law
enforcement, and maintain the high quality of justice necessary to the
functioning of a free society. These programs will (1) improve enforcement of criminal laws at all levels of government, and thereby increase
the perceived risk to criminals of detection and punishment for criminal
acts; (2) develop a system of corrections which reforms the behavior of
individuals rather than merely restricts their liberty for a period of
time; (3) upgrade the administration of criminal justice so that those
accused of crime are provided a prompt and fair trial; and (4) increase
our understanding of the nature and extent of crime.
ACCOMPLISHMENTS OF THE PAST YEAR
The accomplishments of the past year reflect the very high priority
the administration has placed on combating crime and improving our
entire system of criminal justice. Events of particular importance
during the past year were:
• A strong Administration commitment to an intensive effort to rid
our Nation of the corrupting influence of organized crime. The
new Administration requested an addition of $25 million to the
1970 budget for this purpose. The President transmitted a special
message to Congress on organized crime calling for new legislation
to attack the problem, and indicating his intention to increase
the number of Federal organized crime strike forces to 20 in 1971.
• Major new initiatives to control the abuse of narcotics and
dangerous drugs. The strong commitment of the President to
the achievement of drug abuse control was evidenced by (1) a
successful effort in the Nation's Capital to destroy a major
criminal system of drug distribution; (2) development of a program to apply similar efforts in other major cities; (3) an intensification of the Nation's program to control illegal entry of narcotics across our southern borders; and (4) a 100% expansion in
the number of agents involved in enforcement of smuggling laws.
The President transmitted a special message to the Congress on
control of narcotics and dangerous drugs indicating that the
Federal Government would meet the drug problem with all
techniques available, including public education, treatment,
enforcement, assistance to State and local officials, and international cooperation.
• A landmark statement of Presidential policy on the reform of the
Federal Correctional System. On November 13, 1969, the Presi194
195
SPECIAL ANALYSES
dent issued a 13-point program for the modernization and reform
of Federal corrections which calls for particular emphasis on programs for juveniles, narcotics addicts, alcoholics, and the mentally
ill; expansion of community-based programs; and for much better
evaluation of correctional programs and research looking toward
the development of more effective rehabilitation. The President
has asked the Attorney General to develop a 10-year plan for
reforming Federal correctional activities.
• Major new developments in intergovernmental cooperation including (1) initiation of intergovernmental organized crime strike
forces and planning for an intergovernmental narcotics enforcement task force; (2) expansion of the FBI's National Crime Information Center to service 48 of the 50 States; (3) development by
10 States through the Law Enforcement Assistance Administration (LEAA) of a demonstration criminal justice information and
statistics system (Project Search) which may become a prototype
for a nationwide system; (4) initiation,of a six-State project
receiving LEAA funds and technical assistance from the Criminal
Division of the Department of Justice to develop a prototype
computerized system for storage and retrieval of organized crime
intelligence data; (5) special emphasis on the crime problems of
the District of Columbia including proposals for law reforms,
court reorganization, and joint efforts to combat the narcotics
traffic in the Nation's Capital; and (6) implementation of the Law
Enforcement Assistance program which is designed as a partnership effort among Federal, State, and local governments to plan
and carry out a comprehensive nationwide reform of law enforcement and criminal justice activities.
Table M-1. FEDERAL OUTLAYS FOR THE REDUCTION OF CRIME
BY AGENCY * (in thousands of dollars)
Outlays
Agency
The Judiciary 2
_
Office of Economic Opportunity
_
_.
Department of Agriculture
Department of Health, Education, and Welfare. __
Department of Housing and Urban Development.
Department of the Interior
Department of Justice
_
Department of Labor
Post Office Department
Department of Transportation
Treasury Department
Atomic Energy Commission
_
General Services Administration
National Aeronautics and Space Administration. _
Veterans Administration
Other Independent Agencies
_
Total Federal outlays.
1
2
1969
actual
1970
estimate
1971
estimate
272
10,663
212
55,510
5,095
3,602
60,167
13,660
18,565
598,942
4,900
27,904
11,663
125,578
159
4,377
1,172
15,457
590
58,054
11,295
3,810
75,765
23,600
19,713
830,428
6,100
36,509
12,475
141,903
149
13,333
1,238
22,501
465
658,353
947,341
1,257,338
48,485
7,446
3,158
45,433
526
15,523
390,315
2,839
31,899
10,995
90,344
243
Does not include Department of Defense or nondomestic outlays for crime reduction.
Outlays estimated by the Bureau of the Budget.
196
THE BUDGET FOR FISCAL YEAR 1 9 7 1
1971 BUDGET HIGHLIGHTS
In 1971 total Federal outlays for the reduction of crime will amount
to over $1,257 million. This compares with $947 million estimated
to be spent in 1970 and is 91% more than outlays for crime reduction
in 1969. Recognizing that the heaviest burden of enforcing our
criminal laws rests upon State and local governments, major emphasis
in 1971 will be given to programs for improving State and local criminal
justice systems and for assisting communities in preventing crimes
and delinquency. Of the $1,257 million of 1971 Federal outlays
reported in this analysis, $518 million, or 41%, will be for programs
or projects which assist State and local governments in their crime
reduction efforts. Outlays of the Law Enforcement Assistance Administration are expected to total $368 million in 1971, an increase of
$190 million over 1970. Budget authority of $480 million is requested
for this program in 1971. All States have prepared comprehensive
law enforcement improvement plans under the LEAA's block grant
program and implementation of a wide range of planned projects
will occur in 1970 and 1971. Numerous projects for the prevention of
crime funded under the Model Cities program will supplement LEA A
funded programs in meeting the crime problems of certain urban
areas.
Other major highlights of the 1971 Crime Reduction Budget include:
• $43 million for crime research and statistics which is a 60% increase of funds spent for these purposes in 1970 and a 221% increase over such outlays in 1969.
• An 80% increase over 1970 in funds for crime prevention including
public education, juvenile delinquency prevention, and narcotic
addict rehabilitation.
o The expenditure of $56 million for special Federal enforcement
against organized crime, and $18 million to support the efforts of
State and local governments in combating organized crime. This
compares with $24 million spent for all such programs in 1969.
• $5 million in new budget authority for further construction of a
consolidated Federal Law Enforcement Training Center at Beltsville, Md., to provide 13 Federal police and investigative agencies
with modern facilities for basic and advanced training, and $14
million to complete construction and equip a new FBI National
Academy which will provide greatly expanded programs of
training for State and local law enforcement personnel.
• Outlays of $177 million to carry out Federal correctional programs, and assist State and local correctional systems. A major
new prison and jail construction program will be undertaken in
1971 and treatment and rehabilitation projects will be expanded
both in prisons and in the community.
CRIME KEDUCTION PROGRAM BY ACTIVITIES
The budget outlays reported under this special analysis cover all
domestic Federal programs directly related to or closely associated
with crime reduction, except outlays associated with programs of the
Defense Department.1 The analysis includes certain programs of the
1
The Bureau of the Budget estimate of Department of Defense outlays for crime reduction is
$500 million in 1969.
197
SPECIAL ANALYSES
Judiciary even though the basic function of the Judiciary is to assure
the administration of justice rather than to reduce crime. It excludes
general social programs (even though such programs may indirectly
reduce crime) unless they are clearly within the context of crime
reduction or prevention (e.g., vocational training of prisoners; treatment of juvenile delinquents). Also, the analysis does not include
background investigations for employment, administrative inspections, guarding functions, or investigations primarily of a regulatory
nature which may in rare cases result in the application of criminal
sanctions. Where activities involve both civil and criminal proceedings
(e.g., operation of courts) an allocation of outlays to the criminal
function has been estimated by the Bureau of the Budget.
Table M-2. FEDERAL OUTLAYS FOR THE REDUCTION OF CRIME BY
MAJOR PROGRAM AND SELECTED ACTIVITY * (in thousands of dollars)
Outlays
Major program and selected activity
1969
actual
1970
estimate
1971
Crime research and statistics:
Criminal justice statistics
Research and developmentProgram total
Reform of criminal l a w s . .
1,691
11,752
6,497
20,423
10,788
32,421
13,443
26,920
43,209
346
1,037
1,452
2,485
25,242
14,911
5,142
13,616
29,147
35,655
25,367
30,614
48,080
61,297
46,850
47,780
103,785
186,841
197,762
122,493
12,728
23,242
209,279
151,117
17,153
50,075
230,967
163,191
22,741
55,924
356,225
427,624
472,823
5,170
8,161
14,717
2,050
17,036
1,700
22,206
4,750
640
187
6,826
57,898
4,377
41,627
12,230
6,900
205
13,467
93,945
5,049
59,657
31,813
17,800
190
53,739
138,224
236,638
Services for prevention of crime:
Public education
Alcoholic and addict rehabilitation
Prevention and control of juvenile delinquency. _
Other community services for crime reduction
Program total
Federal criminal law enforcement:
Enforcement in support of Federal systems
General Federal law enforcement
Federal police
Specialized activities against organized crime
Program total
Law enforcement support:
Support of Federal law enforcement
Assistance to States and localities for:
Intelligence and information systems
Education and training of enforcement officers
Laboratory support
General police activities
Control of civil disorders
_
__
Combating organized crime
Other
Program total
See footnotes at end of table.
198
THE BUDGET FOR FISCAL YEAR 1971
Table M-2. FEDERAL OUTLAYS FOR THE REDUCTION OF CRIME BY
MAJOR PROGRAM AND SELECTED AGENCY 1 (in thousands of dollars)-Con.
Outlays
Major program and selected activity
1969
actual
Administration of criminal justice:
Conduct of Federal criminal prosecutions
_.
Operation and support of Federal court systems 2
Assistance to States and localities for improved administering of justice
.
Other supporting programs
_
__
Program total
.
.
Rehabilitation of offenders:
Operation of Federal correctional institutions
.
Federal probation, parole, and community treatment
Federal inmate education and training
Assistance to States and localities for improved correctional
progress
Other programs supporting Federal corrections
Program total
_
__ _
Planning and coordination of crime reduction programs.
Total Federal outlays
1
2
1970
estimate
1971
estimate
18,827
43,875
22,538
52,964
25,002
55,023
1.036
4,800
9,089
4,951
25,116
5,310
68,538
89,542
110,451
71,082
13,830
4,194
79,373
15,730
5,316
90,336
16,963
7,248
11,211
5,065
29,555
5,963
56,083
6,694
105,382
135,937
177,324
12,900
24,272
28,600
658,353
947,341
1,257,338
Does not include Department of Defense or nondomestic outlays for crime reduction.
Outlays estimated by the Bureau of the Budget.
Crime research and statistics.—Crime research and statistics includes
the various Government activities designed to produce statistics and
knowledge concerning crime, criminals, and the criminal justice system,
and to develop improved methods and techniques for the operation
of the system.
• The Department of Justice (LEAA) will continue development
of a comprehensive criminal justice statistics and information
service. Included will be a prototype system for exchanging criminal history information among States, statistics on victimization,
assessments of the economic impact of crime, and a survey of the
Nation's jails. The FBI will continue to maintain a nationwide
system of reported crime data and publish this information
periodically.
• The National Institute of Mental Health will support an expanded
program of basic and applied research on the nature and causes
of crime and delinquency. The Institute will develop better knowledge of a broad range of aggressive, violent, and destructive
behavior.
• The Department of Justice (LEAA) will develop improved detection and apprehension techniques including nighttime viewing
devices, voice print equipment and better police radio and communications gear. The FBI will further develop automated fingerprint identification techniques and the Bureau of Narcotics and
SPECIAL ANALYSES
199
Dangerous Drugs will improve its program to identify and test
new dangerous substances susceptible to abuse.
• The AEC will develop applications of neutron activation analysis
to problems of forensic medicine and science, and NASA will fund
a variety of projects for planning and evaluating police patrol
and detection techniques.
• Research on improved correctional practices will be undertaken
by both the Bureau of Prisons and NIMH. LEAA will provide
funds for similar research in the States. LEAA, NIMH, and the
Federal Judicial Center will study ways to improve court procedures and methods.
Reform of criminal laws.—Criminal law reform includes government
efforts to improve the effectiveness of the Nation's laws and assure
that they accurately reflect the values and standards of society.
• Drafting and presenting many of the Federal Government's
criminal legislative proposals is a principal Department of Justice
responsibility. The Department has developed and the Congress
is now considering major reforms in narcotic and drug laws, and
important changes in the criminal laws of the District of Columbia
and in the structure and organization of its courts.
• The National Commission on Reform of Federal Criminal Laws
will complete its study by November 1970, and recommend to
the President and the Congress a revision of the entire Federal
criminal code.
• The Bureau of Narcotics and Dangerous Drugs will foster enactment by the States of a Uniform Controlled Dangerous Substances Act. A revised draft has been completed and is being
discussed with interested groups.
• The Law Enforcement Assistance Administration will provide
over $1 million in 1971 to aid State and local activities connected
with criminal law reform.
Prevention of crime.—Crime prevention includes government efforts
to limit or render less probable the commission of criminal acts by
means other than direct enforcement or general correctional activities.
Included are public education, alcoholic and addict rehabilitation,
treatment of juvenile delinquents, and projects to improve policecommunity relations.
• Total Federal outlays for juvenile delinquency prevention will
exceed $61 million in 1971. Of this amount $13 million will be
spent under the Juvenile Delinquency Prevention and Control
Act of 1968 for rehabilitation and community-based prevention
services to juveniles. In 1969 planning grants were made to 37
States, and by 1971 it is anticipated that all States will have comprehensive juvenile delinquency prevention plans. Seventeen preventive service projects will increase to 46 new projects in 1970
and 55 in 1971. LEAA will also provide $32 million for State and
local juvenile delinquency projects in 1971. HEW (Office of Education) will devote $16 million for improving education for
institutionalized delinquent children.
• A variety of crime prevention projects will be undertaken by
communities with funds of the Department of Housing and Urban
200
THE BUDGET FOR FISCAL YEAR 1971
Development (Model Cities). Projects will include halfway
houses and foster homes for juveniles, improved juvenile probation services, addiction treatment centers, and police-community
relations activities.
• Twenty-nine VA hospitals operate alcoholism treatment units.
In 1971 the VA is requesting $1.3 million for nine additional
alcoholism units. The units are encouraged to also treat veterans
with drug abuse problems.
• OEO, NIMH, and the Bureau of Prisons will provide treatment
for narcotic addicts. OEO supports seven projects offering community-based rehabilitation services to 8,000 persons. During
1970 and 1971 OEO will explore new ways of dealing with addiction in poverty communities. NIMH will provide primarily
community-based treatment for an estimated 15,000 narcotic
addicts in 1971. The Bureau of Prisons will provide treatment
within prisons and aftercare in the community following release
from prison for over 1,100 addicts.
• A 3-year drug information program will be initiated by HEW,
Justice, and the Defense Department utilizing radio, TV and
printed media.
Federal criminal law enforcement.—Law enforcement involves direct
Federal Government efforts to detect, identify, and apprehend violators of criminal laws. Representative programs include criminal
investigations, policing of certain Federal areas, and special concerted
activities against organized crime. (See workload tables following
table M-3.)
• Enforcement in support of Federal systems will require $231 million of outlays in 1971, an increase of 10% over 1970 and a 17%
increase over 1969. These activities include enforcement of internal revenue, currency, postal, customs, immigration, and
selective service laws.
• General Federal law enforcement activities will require outlays of
$163 million in 1971, an increase of 8% over 1970, and 33% over
1969. Activities include enforcement of criminal laws relating to
narcotics and drugs, civil rights, conservation, and investigations
of bank robberies and thefts from interstate commerce.
• Federal police activities are conducted in certain areas in the
National Park Systems, on Indian reservations and within other
areas of Federal responsibility. Agencies with principal responsibilities are the Interior and Treasury Departments. The outlay
increase in 1971 for police activities results primarily from the
establishment within the Secret Service of an Executive Protective Service which will, among other duties, extend greater protection to foreign diplomatic missions.
• Direct Federal outlays for combating organized crime will be
$56 million in 1971, an increase of 141% over funds spent for
this purpose in 1969. Federal agencies most involved in this
program are Internal Revenue Service, FBI, Justice's Criminal
Division, U.S. attorneys and U.S. marshals, Bureau of Customs,
Secret Service, and the Labor and Post Office Departments.
SPECIAL ANALYSES
201
Law enforcement support.—This includes Federal efforts to provide
or improve activities which support or upgrade Federal, State, and
local police and investigative agencies.
• Of the total Federal outlays in 1971 for activities supporting law
enforcement, $15 million will be for support of Federal enforcement, and $222 million for support of State and local enforcement.
The principal channel for funding State and local support programs will be the Law Enforcement Assistance Administration in
the Department of Justice.
• A number of Federal agencies will participate in providing training for State and local enforcement officers. LEAA funds totaling
$62 million will go for State- or local-administered police training
in 1971. The Office of Education expects to fund enrollment of
115,000 persons in vocational education classes in law enforcement
in 1971. The Veterans Administration plans to provide financial
assistance to 24,000 veterans participating in law enforcement
training on the job or in school. BNDD will provide training on
drug enforcement to over 22,000 police officers in 1971, and the
FBI will open a new national academy which will provide training to 3,000 officers annually. In its field training program, the
FBI participated in over 7,800 training courses attended by over
233,000 officers during the past year.
• LEAA will provide funds for loans to full-time students and inservice officers in programs leading to college degrees. As many
as 100,000 students will be aided in 1971.
Administration oj criminal justice.—This category includes the
preparation and prosecution of criminal cases, operation of court
systems, trial of cases, provision of defense counsel in certain cases,
and related and supportive activities.
• During fiscal year 1969 there were (excluding transfers) 33,585
criminal cases commenced in U.S. district courts, compared
with 30,714 in 1968. The district courts terminated 30,578 criminal
cases in 1969 as compared with 29,492 in 1968. As of June 30, 1969,
there were 17,770 pending criminal cases in district courts as
compared with 14,763 pending in 1968.
• The Federal Magistrates Act will be in full effect by November
1971. U.S. magistrates will have powers beyond those of U.S.
commissioners, and may assist judges in pre-trial or discovery
proceedings and review applications for post-trial relief of convicted persons.
• Legal representation will continue to be provided Federal criminal defendants who cannot otherwise afford to retain counsel.
Outlays for this purpose will exceed $4 million in 1971.
Rehabilitation of ofenders.—These programs include government
custody and rehabilitation of criminal offenders. Specific projects
include the supervision and operation of correctional institutions,
inmate and offender treatment and training programs, and supportive
functions.
• Outlays for supporting and upgrading correctional and rehabilitation programs will exceed $177 million in 1971, an increase of 30%
over 1970 and 68% over 1969. Of the total, over $56 million will
support correctional programs of State and local governments.
202
THE BUDGET FOR FISCAL YEAR
1971
• A major prison and jail construction program will be initiated in
order to modernize prison facilities and build new jails within
multipurpose facilities providing diagnostic services and treatment
within the community.
• Treatment of offenders in the community will be emphasized.
During 1971 the Bureau of Prisons will operate 16 community
treatment centers servicing an estimated 2,000 persons.
• During 1971 the Bureau of Prisons will provide vocational
training for 10,000 Federal inmates (compared with 6,200 in
1969).
• The Department of Labor will train approximately 2,300 inmates
of State correctional institutions in various occupational shortage
areas at a cost of $3 million in fiscal year 1971 as well as in 1970.
• OEO will continue an experiment to provide college preparatory
courses for prison inmates and post-release assistance to former
inmates on the campus.
• The Office of Education will provide basic education for over
26,000 inmates in State and local institutions in 1971.
Planning and coordination of crime reduction programs.—Included
are Federal support of State and local planning and coordination of
crime reduction activities.
• The Justice Department, HEW, and HUD all fund major programs which are devoted wholly or in part to supporting local
efforts to prevent crime. It is essential that these programs be
carefully planned and coordinated at each level of government.
Funds are made available under these programs for comprehensive State and local planning and coordination. At the Federal
level the Department of Justice (under Executive Order 11396) is
responsible for effective program coordination.
Table M-3. FEDERAL OUTLAYS FOR THE REDUCTION OF CRIME BY
MAJOR PROGRAM AND AGENCY i (in thousands of dollars)
Outlays
Major program and agency
1969
actual
1970
estimate
1971
estimate
Crime research and statistics:
The Judiciary 2
Department of Health, Education, and Welfare..
Department of the Interior
Department of Justice
Post Office Department
Department of Transportation
Atomic Energy Commission
National Aeronautics and Space Administration _
Total
6,413
196
519
243
272
78
6,216
10
18,266
368
651
159
1,172
33,883
262
13,443
26,920
43,209
134
212
747
290
27
1,260
165
346
1,037
Reform of criminal laws:
Department of the Interior..
Department of Justice
Other independent agencies _
Total.
nd of table.
146
6,400
12
1,119
149
1,238
1,452
203
SPECIAL ANALYSES
Table M-3. FEDERAL OUTLAYS FOR THE REDUCTION OF CRIME BY
MAJOR PROGRAM AND AGENCY 1 (in thousands of dollars)—Continued
Outlays
Major program and agency
Services for prevention of crime:
Office of Economic Opportunity
Department of Health, Education, and Welfare. __
Department of Housing and Urban Development.
Department of the Interior
Department of Justice
Post Office Department
Department of Transportation
Veterans Administration
Total.
Federal criminal law enforcement:
Department of Agriculture
Department of the Interior
Department of Justice
Department of Labor
Post Office Department
Department of Transportation. _
Treasury Department
Other independent agencies
Total .
Law enforcement support:
Office of Economic Opportunity
Department of Health, Education, and Welfare.
Department of the Interior
Department of Justice
Post Office Department
Department of Transportation
Treasury Department
General Services Administration
Veterans Administration
Total.
Administration of criminal justice:
The Judiciary 2
Department of Health, Education, and Welfare.
Department of the Interior
Department of Justice
Department of Transportation
Total.
Rehabilitation of offenders:
The Judiciary 2
Office of Economic Opportunity
Department of Health, Education, and Welfare.
Department of the Interior
Department of Justice
_.
Department of Labor
_
Total.
See footnotes at end of table.
1969
actual
5,400
1970
estimate
1971
estimate
8,400
59,916
23,300
475
51
843
3,700
2,600
45,627
13,400
471
36,402
60
1,125
4,100
47,780
103,785
186,841
3,158
3,602
15,349
244,858
1,900
26,645
9,842
3,810
16,372
32,293
266
444
4,783
13,397
208,647
31,083
9,596
90,344
86,527
73
1,150
7,000
264,895
3,100
35,382
125,128
300
10,161
138,803
300
356,225
427,624
472,823
581
1,335
110
1,636
1,554
117,866
831
43
110
2,136
1,429
200,194
450
4,377
896
43,360
569
35
792
43
6,963
11,357
3,100
13,333
15,501
53,739
138,224
236,638
36,573
759
374
30,830
2
42,146
860
591
44.198
900
630
45,943
2
64,721
2
68,538
89,542
110,451
11,845
1,465
5,313
412
13,286
13,710
2,385
5,828
578
2,785
83,508
2,839
110,860
3,000
6,413
768
150,648
3,000
135,937 |
177,324
105,382 !
204
THE BUDGET FOR FISCAL YEAR 1971
Table M-3. FEDERAL OUTLAYS FOR THE REDUCTION OF CRIME BY
MAJOR PROGRAM AND AGENCY 1 (in thousands of dollars)—Continued
Outlays
Major program and Agency
1969
Planning and coordination of crime reduction programs:
Department of Housing and Urban Development
Department of the Interior.
Department of Justice
__ __ __
260
12,640
260
12
24,000
28,300
12,900
24,272
28,600
658,353
947,341
1,257,338
Total
Total Federal outlays
1
2
1971
1970
300
Does not include Department of Defense or nondomestic outlay for crime reduction.
Outlays estimated by the Bureau of the Budget.
SELECTED CRIME REDUCTION DATA (dollars in thousands)
1968
Federal outlays for crime reduction:
Federal crime reduction outlays assisting States and localities...
Federal crime reduction outlays for reduction of Federal crimes _
Total Federal outlays for reduction of crime
Federal personnel:
Full-time Federal criminal investigators
_
_
U.S. attorneys and assistant attorneys (man-years on criminal workload)
Attorneys—Criminal division (man-years)
U.S. district court judgeships
State and local crimes: 3
Serious crimes recorded (UCR—table 2)
Violent crimes recorded (UCR—table 2)
Rate of serious crimes per 100,000 inhabitants (UCR—table 2)
Rate of violent crimes per 100,000 inhabitants (UCR—table 2)
Percent index crimes cleared by arrest (UCR—table 13)
Percent found guilty of persons charged by police (UCR—table 15) _.
Federal investigations:
FBI, investigative matter received
_
_
_
Post Office, criminal caseload
_
_
IRS, tax fraud investigations..
___
Bureau of Customs (cases closed)
_
_
Secret Service (cases closed)
_
Disposition of Federal criminal matters:
Investigative matters presented for prosecutive decision—prosecution
declined
_
_
Federal criminal cases commenced i
Federal criminal cases terminated *
_
__
Federal criminal cases pending 4
_
5
Federal criminal cases pending over 6 months __
Federal criminal defendants convicted
_
See footnotes at end of table.
0)
(l)
$530,643
2
1969
$103,739
554,614
658,353
12,618
480
168
341
2 12,818
560
168
341
4,466,600
588,800
2,235
295
20.9
66.7
820,830
181,153
9,372
27,989
87,197
0)
0)
0)
0)
(l)
0)
859,666
200,812
8,135
28,175
79,892
0)
30,714
29,492
14,763
4,340
26.660
83,483
33,585
30,578
17,770
5,078
29,450
205
SPECIAL ANALYSES
SELECTED CRIME REDUCTION DATA (dollars in thousands)—Continued
1968
Corrections:
Average Federal jail population
Average Federal prison population
Court commitments to Federal institutions
Average Federal prison sen tences (months)
Persons under supervision of Federal Probation System (end of year) 6_
Federal paroles granted
_
Warrants issued for violation of conditions of release from prison
Executive clemency petitions granted
3.438
19,677
11.653
44.5
36,785
5.840
2,891
16
1969
3,866
20,239
11,162
45.2
36,985
5,445
2.521
1 Not available.
2 CSC jobs classified in series 1811 as of October 31.
From uniform crime reports—calendar year 1968 (FBI).
Excludes transfers.
Excludes pending cases of fugitives.
Includes probation, parole and mandatory release; estimate by the Bureau of the Budget.
3
4
5
6
SPECIAL ANALYSIS N
FEDERAL HOUSING PROGRAMS
COVERAGE AND SCOPE OF THE ANALYSIS
A wide variety of Federal programs and activities have a direct or
indirect impact on the production of housing. These include programs of direct Federal construction of housing (primarily for civilian
employees or military personnel), basic involvement in mortgage
financing, and subsidies for housing for low- and moderate-income
families. In addition, major activities outside the Federal budget, involving both Government-sponsored enterprises and private investment, occur as a direct result of Federal programs and policies. This
analysis summarizes the impact of these Federal programs and activities. Programs are included if they:
• Assist the production or sale of family housing;
• Assist in preventing deterioration of the existing housing stock; or
• Provide certain
other types of indirect support for housing
production.1
RELATIONSHIP OF THE ANALYSIS TO THE ANNUAL HOUSING GOALS
REPORT
Section 1603 of the Housing and Urban Development Act of 1968,
as amended (42 U.S.C. 1441c) requires an annual report to the
Congress on progress in the production of new or rehabilitated
housing and in the reduction of substandard housing. This special
analysis is consistent with the data being developed for the Annual
Housing Goals Report which will be submitted by February 15, 1970.
The focus of the two differs substantially, however. This analysis
concentrates on the financial and budget impact of Federal and
Federally assisted housing activities. The Annual Housing Report,
on the other hand, discusses the entire housing sector and the factors
affecting it, including both Federal and non-Federal activities.
The Annual Housing Report uses housing starts as a measure of
production. Since starts are not readily translated into budget impact,
this analysis concentrates on federally assisted financial commitments
(which usually precede starts) and on outlays (which usually follow
completions).
1
Activities excluded from this analysis include: Housing allowances which are paid to civilian
employees, military personnel, or beneficiaries of income maintenance programs; the production of
dormitories or barracks or housing outside the United States and its possessions; and programs which
assist housing only by providing land and supporting facilities.
206
207
SPECIAL ANALYSES
SUMMARY
Federal budget outlays for housing excluding the impact of asset
sales are expected to total $3.6 bilSon in 1971, compared to $2.8
billion in 1970 and $1.8 billion in 1969. The change from 1970 to 1971
is primarily a reflection of increased outlays for housing for low- and
moderate-income families, consisting of:
• An increase of $294 million in payments on outstanding long-term
subsidy contracts supporting housing for low- and moderateincome families; and
• A $615 million increase in insured loans originated in rural areas
for subsequent sale by the Farmers Home Administration.
The impact of these increases, however, is more than offset by a $1.9
billion increase in the sale of financial assets and other reductions,
with the result that net budget outlays (after taking account of
these sales) decline from $1.9 billion to $0.7 billion.
In addition to activities included within the Federal budget totals,
Government-sponsored enterprises (the Federal National Mortgage
Association and the Federal Home Loan Banks) are expected to
borrow $6.7 billion for investment in housing, compared to $10.3
billion in 1970. This decline reflects the anticipation of somewhat
easier credit conditions, permitting a major growth in mortgage
credit to be financed with less support from these institutions. This
is reflected also in the $22 billion total which is estimated to be forthcoming from private investors for federally assisted housing programs,
a marked increase from the $14 billion estimated for 1970.
Table N-1. S U M M A R Y OF FEDERAL H O U S I N G P R O G R A M S
(in millions of dollars)
1969
actual
Budget outlays for housing programs, excluding proceeds from
sale of financial assets
Less: Proceeds from sale of financial assets
Net budget outlays for housing programs
Federally assisted private investment in housing
Borrowings by Government-sponsored enterprises included above.
1970
estimate
1971
estimate
1,842
-581
2,798
-936
3,593
-2,861
1.261
1,862
732
12,276
(3,829)
13,617
(10,282)
22,102
(6,741)
208
THE BUDGET FOR FISCAL YEAR 1971
Table N-2. BUDGET OUTLAYS FOR HOUSING PROGRAMS
(in millions of dollars)
1969
actual
1970
estimate
Budget outlays for housing by agency:
Department of Housing and Urban Development.
Department of Defense
Department of Agriculture
Veterans Administration
Federal Savings and Loan Insurance Corporation.
Small Business Administration
Other agencies
Total.
876
415
15
194
-289
-1
51
1.261
870
435
341
202
-154
71
1971
estimate
1,203
449
-625
-272
96
-117
11
84
1,862
732
Financial asset sales included abore:
Department of Housing and Urban Development.
Department of Agriculture
Veterans Administration
Total.
Budget outlays for housing by type of programs:
Guaranteed or insured financing
Direct Federal financing without subsidy
Subsidized housing for special groups:
Financing combined with subsidy
Subsidy without Federal capital investment
Assistance to sponsors of housing for low- and moderateincome families
_
Federal construction or acquisition of housing
Preventing deterioration of existing housing
Research and development on housing
Other assistance for housing
Total.
580
1
50
825
100
61
2,235
526
581
936
2,861
-168
117
-14
125
-1,336
-56
459
358
687
495
739
789
13
215
110
8
150
21
223
120
10
197
35
221
140
20
178
1,261
1,862
732
Units completed.—In combination, Federal housing programs are
expected to assist in the completion for occupancy of 989,000 units of
new or substantially rehabilitated housing in 1971, compared with
698,000 and 806,000 units in 1969 and 1970, respectively. In addition,
these programs will facilitate the sale in 1971 of an estimated 1,018,000
units of existing housing, about the same as in 1969 and 1970. Of the
new or rehabilitated units, 418,000 in 1971 will be subsidized for lowand moderate-income families, compared with 151,000 in 1969 and
244,000 in 1970.
Units committed.—The completion or sale of a unit frequently
follows by lengthy periods the first commitment on the part of the
Federal Government affecting that unit. For example, the agreement
to insure a mortgage or provide a subsidy for a multifamily unit may
predate by 18 months to 3 years the time when that unit is ready for
occupancy. This lag reflects the time required to plan and construct
the project. It is commonly much shorter for single-family homes.
Because of this lag, the units made available for occupancy in any
year largely reflect commitments made by the Government in prior
years, and commitments made in any year will result in units becoming
available in subsequent years. In 1971, the Federal Government
expects to make commitments to assist a total of 1,214,000 units of
new and rehabilitated housing, including 545,000 subsidized units
209
SPECIAL ANALYSES
for low- and moderate-income families. This represents a major increase over the 451,000 subsidized units committed in 1970 and the
225,000 units committed in 1969. Commitments to assist the sa e of
existing houses are expected to total 1,309,000 in 1971, compared to
1,304,000 in 1969 and 1,220,000 in 1970. Of the 1971 total, 52,000
represent subsidized units for low- and moderate-income families,
compared to 51,000 in 1970 and 44,000 in 1969.
Table N-3. HOUSING UNITS COMMITTED UNDER FEDERAL PROGRAMS
(in thousands of units)
New or rehabilitated
Type of assistance
1969
actual
Guaranteed or insured financing:
Guaranteed or insured mortgages:
Low- and moderate-income
families
Others
Insurance on deposits in thrift
institutions
Direct Federal financing without
subsidy _ __
Subsidized housing for special
groups:
Subsidy combined with financing:
Low- and moderate-income
families
Others
Subsidy without Federal capital
investment:
Low- and moderate-income
families
Direct Federal construction or acquisition:
Military family housing
Other
Less: Estimated duplication *
Totals
Existing
1970
estimate
1971
estimate
35
261
66
263
124
300
397
368
5
1969
actual
1970
estimate
1971
estimate
10
806
15
727
20
826
385
494
477
464
6
6
10
12
11
48
5
41
19
32
10
*
*
*
142
344
389
34
36
31
8
*
-40
3
*
-37
6
*
-38
*
*
-49
*
2
-48
-46
861
1,074
1,214
1,304
1,220
1,309
*Less than 500 units.
Represents estimate of insured or guaranteed mortgages purchased by thrift institutions.
1
DESCRIPTION OF FEDERAL HOUSING PROGRAMS
The following material describes the various types of Federal programs to aid housing. It follows the organization of the tabular material
on budget outlays (table N-2), units committed (table N-3) and units
made available (table N-4).
Guaranteed or insured financing,—In terms of total housing units
affected, the predominant characteristic of Federal housing programs
is an emphasis on facilitating the flow of private mortgage credit
through the use of insurance and guarantee programs. Leading examples are the insured loan programs in the Federal Housing Administration of the Department of Housing and Urban Development
(HUD) and the Farmers Home Administration of the Department of
Agriculture (USDA), the home loan guarantees of the Veterans
Administration (VA), and the insurance of deposits in thrift institu390-700 O—70
-14
210
THE BUDGET FOR FISCAL YEAR
1971
Table N-4. HOUSING UNITS MADE AVAILABLE UNDER FEDERAL
PROGRAMS
(in thousands of units)
New or rehabilitated
Type of assistance
Guaranteed or insured financing:
Guaranteed or insured mortgages:
Low- and moderate-income
families
Others
Insurance of deposits in thrift
institutions
Direct Federal financing without
subsidy
Subsidized housing for special
groups:
Subsidy combined with financing:
Low- and moderate-income
families _
Others._Subsidy without Federal capital
investment:
Low- and moderate-income
families
Direct Federal construction or acquisition:
Military family housing
Other
.
Less: Estimated duplication 1
Totals
1969
actual
Existing
1970
estimate
1971
estimate
34
166
58
195
109
204
397
368
16
1969
actual
1970
estimate
1971
estimate
10
541
15
518
20
542
385
494
477
464
9
6
10
11
U
40
5
57
19
71
10
*
*
*
76
129
237
23
38
25
3
*
-40
8
*
-37
5
*
-38
*
*
-49
-48
-46
698
806
989
1,030
1,013
1,018
2
*Less than 500 units.
Represents estimate of insured or guaranteed mortgages purchased by thrift institutions.
1
tions by the Federal Savings and Loan Insurance Corporation (FSLIC).
Budget outlays from insurance programs are a relatively small part
of the total. In HUD mortgage insurance operations and in the FSLIC,
fees, premiums, and other revenues generally exceed insurance claims,
permitting reserves to be built up to cover possible losses in the future.
VA's loan guarantee program generally operates at a loss, as the bulk
of the loans now outstanding were guaranteed without the collection of
fees. A one-time fee is now collected on most of the new loans guaranteed, in order to cover part of the costs of the program.
The USD A in its housing programs serves as mortgage originator
and servicer as well as insurer. In this capacity, it may actually supply
a portion of the financing required for the loans it insures, generally
on an interim basis pending sale of the loans to private investors.
The inventory of loans held is expected to decline by $694 million
in 1971 through the use of a new instrument in the sale of loans. The
bulk of the Farmers Home Administration insured housing loan
program (all of it in 1971) is addressed to meeting the needs of lowand moderate-income families. This includes some loans (about 25%
of the 1971 program) containing an interest credit" feature, under
which the borrower pays reduced interest rates, depending on in
211
SPECIAL ANALYSES
come. The balance of the 1971 program consists of loans at a fixed
interest rate, below the current market rate. In both cases the Government makes up the difference between the rates charged to borrowers
and those necessary to place loans with private investors.
Table N-5. FINANCIAL IMPACT OF GUARANTEE AND INSURANCE
PROGRAMS (in millions of dollars)
Estimated requirements for funds:
Federally insured or guaranteed mortgages and public housing
bonds originated in the private sector with private financing.
Sale to private investors of insured or guaranteed mortgages
originated or purchased by Federal agencies
Mortgages purchased by Federal agencies
Gross private funds required for federally guaranteed or
insured housing financing l
1969
1970
1971
12,496
14,918
18,351
581
-712
936
-981
2,861
-823
12,366
14,873
20,389
1 Includes funds provided by repayments on outstanding mortgages and by payment of claims Ion
defaulted mortgages. In each case, some portion is reinvested in mortgages, reducing the net requirement for funds.
Direct Federal financing without subsidy.—This category includes
programs which provide direct loans, or their equivalent in the
form of Government purchase of mortgages, but without attaching
an explicit subsidy to the loan. These programs are generally designed
to serve areas where private mortgage credit is not readily available
(e.g., rural areas and small towns) or to finance mortgages which the
private market is not prepared to accept (such as mortgages on housing of new and experimental character, or housing in urban renewal
areas). While the number of units affected by these programs is small
compared to that of the insurance and guarantee programs, the budget
impact is larger. This reflects the fact that each unit results in outlays
at the time the unit is produced equal to almost the full cost of the
unit. In some cases, this budget impact can be reduced through sale
of the direct loan to a private investor. The primary unsubsidized
direct loan programs are those in the Veterans Administration and
portions of the activity of the Special Assistance Fund in HUD's
Government National Mortgage Association.
Subsidized housing for special groups: Financing combined with
subsidy.—This category covers Federal programs which provide a
subsidy while simultaneously providing part or all of the capital
financing required for the production of the housing unit. The most
common method is the low interest rate direct loan, which is used
in several programs in HUD and in the Small Business Administration's Disaster Loan program. Assistance to low- and moderateincome families is the predominant objective in the case of HUD,
including, in the case of the Rehabilitation Loan program, helping
present owner-occupants restore their housing to standard condition. The SB A program is aimed at assisting the victims of natural
disasters. Two other HUD programs (Direct Loans for Housing
for the Elderly and GNMA Special Assistance for Low- and Moderate-Income Housing) are being phased out in favor of the much
212
THE BUDGET FOR FISCAL YEAR 1971
larger program of Rental Housing Assistance. This latter program
(discussed below) relies on private, rather than Federal, financing of
the mortgage.
In addition to low-interest loans, there are several programs which
provide a one-time capital grant to reduce the cost of housing to the
occupant. These include rehabilitation grants provided under HUD's
Urban Renewal program and grants for Farm Labor Housing available from the Farmers Home Administration. A total of 18,000 units
are expected to be made available under grant programs in 1971,
compared to 12,000 in 1970.
Subsidized housing for special groups: Subsidy without Federal
capital investment.—This category includes programs under which the
Federal Government subsidizes a dwelling unit for which the basic
capital financing is provided by private investors at market rates of
interest. The programs in this category (Low-Rent Public Housing,
Rent Supplements, Rental Housing Assistance and Homeownership
Assistance) are expected to add 262,000 units available for occupancy
in 1971, representing a large part of the housing for low- and moderateincome families produced in that year. Under these programs, the
Federal Government agrees to provide an annual (or monthly) payment on behalf of a specified unit of housing, with the subsidy contract usually running for the life of the mortgage or bond issued to
finance the unit. This may be for a period of up to 40 years. In the
case of the Homeownership and Rental Housing assistance programs,
the payment represents a part of the interest cost on the mortgage. In
the case of Low-Rent Public Housing and Rent Supplements, the
payment commonly covers both principal and interest on the bond or
mortgage and may cover a part of the operating costs as well. In all
four programs, the subsidy payment can be flexible, with rising income
on the part of the occupant being reflected in a lower subsidy. Outlays
for these programs will continue to rise steadily, reaching $789
million in 1971 as new subsidy contracts are added to the continuing
costs of contracts approved in prior years.
Subsidized housing for special groups: Assistance to sponsors of housing
for low- and moderate-income families.—This category includes programs of grants and loans to groups developing and operating housing
for low^- and moderate-income families. Outlays in 1971 are expected to
total $35 million, of which OEO's assistance to housing development
corporations represents $24 million. Also included are programs of
assistance to nonprofit sponsors funded in HUD, Agriculture, and the
Appalachian Regional Commission, and certain assistance to Indian
tribes provided by Interior.
Direct Federal construction or acquisition of family housing.—The
predominant activity in this category is the construction of family
housing for military personnel, totaling almost 6,500 units to be made
available in 1971. This includes a small number of leased units which
will be added to the inventory in that year. In addition, about 170
units will be completed for civilian employees of a number of other
Federal agencies. This consists of housing for employees who must, of
necessity, be stationed in areas where adequate private housing is
not available.
SPECIAL ANALYSES
213
Preventing deterioration of the housing stock.—Programs in this
category are aimed at maintaining the quality of existing units, rather
than producing additional units. These activities are included in the
analysis because the quality and durability of the existing supply of
homes is a key determinant of the volume of new housing required to
meet the physical shelter needs of the Nation. Maintaining units in a
structurally sound and livable condition reduces the requirement for
replacement units and increases the proportion of new units which
constitute a net addition to the housing supply.
This category includes the costs of routine maintenance and repair
of the inventory of federally owned housing. These costs are estimated to total about $124 million in 1971. This category also includes
concentrated code enforcement programs and rehabilitation projects
(funded in HUD's Urban Renewal program) which assist local efforts
to maintain housing quality. Outlays for these programs ($16 million
in 1971) represent only the Federal share of the costs of actually
carrying out assisted code enforcement and administering rehabilitation activities. Rehabilitation grants and loans, usually made in conjunction with assisted code enforcement programs and rehabilitation
projects, are included in the category of subsidized housing. The cost of
certain improvements in physical facilities which may also be provided
in a rehabilitation or code enforcement program are not included in the
analysis.
Research and development.—Operation Breakthrough, under HUD's
authority for Urban Research and Technology is the primary focus
for Federal research and development in housing. The objective of
this program is to achieve broad advances in market aggregation
site acquisition and development, and planning, design and construction of housing. Outlays for Operation Breakthrough are expected
to total $12 million in 1971, while other outlays for research and
development in housing will total $8 million. This latter amount
includes programs in HUD (other than Breakthrough), the Department of Agriculture, and the Department of Health, Education, and
Welfare.
Statistical and market analysis.—In order to provide policymakers
at all levels of Government and the private sector with information
on housing needs and production and the condition of financial markets related to housing, the Federal Government.maintains an ongoing
program of statistical and market analysis. These activities range
from short-range analyses of individual housing markets to broad
gauge statistics on housing production and mortgage flows and the
housing component of the decennial census. Outlays for this category
are estimated to total $16 million in 1971.
214
THE BUDGET FOR FISCAL YEAR 1971
Undistributed administrative expenses.—These outlays, totaling $162
million in 1971, represent the costs of operating programs covering
more than one program category, which it is not feasible to divide
among categories. The largest item ($130 million) consists of the
routine operating costs, excluding maintenance and repair, of the
Defense family housing program.
HOUSING
ACTIVITIES
OF
GOVERNMENT-SPONSORED
ENTERPRISES
Two types of Government-sponsored enterprises, outside the
budget, are of major importance in housing production. These are the
12 Federal Home Loan banks and the Federal National Mortgage
Association (FNMA). Both operate to channel funds into mortgages
by borrowing in the capital markets and directing these funds into
mortgages. In the case of the Federal Home Loan banks, the investment takes the form of advances to thrift institutions which, in turn,
invest the bulk of their assets in home mortgages. FNMA, on the other
hand, purchases FHA-insured and VA-guaranteed mortgages directly.
Both have the result of increasing the total supply of mortgage financing. The net increase in Home Loan Bank advances in 1971 is expected
to total $2.4 billion, while the net increase in FNMA mortgage holdings is estimated at $4.6 billion. Both amounts are below the levels
estimated for 1970, in anticipation of somewhat easier credit conditions
which will require less support for the mortgage market from these
institutions.
FEDERALLY ASSISTED PRIVATE INVESTMENT IN HOUSING
The vast bulk of housing in the United States is financed privately,
including most of that portion which is federally assisted. Directly or
indirectly, Federal housing programs are expected to affect decisions
by private investors involving some $22 billion in 1971. This includes
an $8.4 billion increase in savings at thrift institutions regulated by the
Federal Home Loan Bank System which, together with $2.4 billion in
advances from the Home Loan banks, will permit these institutions to
increase their housing investments by $10.8 billion. Of this total, about
$1.2 billion will be in mortgages insured or guaranteed by the Federal
Government. Of the remaining $10.5 billion increase in outstanding
guaranteed mortgages, $4.6 will be held by FNMA and $0.4 by
GNMA, leaving $5.5 billion for purchase by other private investors,
together with $1.4 billion of tax-exempt notes and bonds financing
the construction of low-rent public housing and $6.7 billion of
borrowings by FNMA and the Federal Home Loan banks.
In order to facilitate investment in Government insured or guaranteed mortgages, the Government National Mortgage Association is
authorized to guarantee mortgage-backed securities. Under this program, private financial institutions accumulate a supply of mortgages
215
SPECIAL ANALYSES
and sell securities based on these mortgages to other investors, promising to pass on the principal and interest collections. GNMA is expected
to guarantee performance by the issuers of $1 billion of these securities
in 1971. This amount will constitute part of the net increase in outstanding guaranteed or insured mortgages shown in table N-6.
Table N-6. NET FEDERALLY ASSISTED PRIVATE INVESTMENT
IN H O U S I N G (in millions of dollars)
1969
Increase in outstanding guaranteed or insured mortgages:
Federal Housing Administration L .
_ __
Veterans Administration
Farmers Home Administration
Subtotal
Less net increase in holdings by:
Thrift institutions regulated or insured by the Federal Home
Loan Bank System (estimated)
Federal National Mortgage Association
Government National Mortgage Association
Net from other private investors
Increase in assets of thrift institutions regulated or insured by the
Federal Home Loan Bank System
Less net increase in advances from Federal Home Loan b a n k s . . .
Net from other private investors
Increase in outstanding guaranteed public housing bonds and
notes
Increase in outstanding borrowings from the
Government-sponsored enterprises:
Federal National Mortgage Association.__ ___
Federal Home Loan banks
Subtotal
Total
1
2
public
_
1970
1971
4,368
1,558
244
5,201
130
354
7,877
1.888
1.904
6,170
5,685
11,669
-650
-1,665
-556
-950
-5.648
-405
-1,180
-4,600
-354
3,299
-1,318
5,535
5.794
-1,524
8.097
-4,487
10,800
-2,400
4,270
3.610
8,400
878
1.043
1,426
2 2,291
1,538
5,502
4,780
4,441
2.300
3,829
10,282
6,741
12,276
13,617
22,102
by
Includes property improvement loans and some nonhousing mortgages.
Includes $195 million of net borrowing from the public which occurred prior to the conversion
of FNMA to private status.
PART 3
SPECIAL ASPECTS OF FEDERAL
PROGRAMS
217
INTRODUCTION
Part 3 discusses trends and developments in selected areas of
Government activity—aid to State and local governments, public
works, and research and development. It groups these three special
analyses, those designated O through Q.
Special Analysis 0 summarizes Federal grants to State and local
governments as well as loans and indirect assistance. It traces the
development of Federal aids over time and relates them to the finances
of both the Federal Government and State and local governments.
This analysis also provides a profile of Federal grants by region, and
that portion benefiting metropolitan areas.
Special Analysis P brings together information on Federal construction and federally aided State and local public works. It also includes
information on major Federal programs affecting construction by
private cooperatives and nonprofit groups.
Special Analysis Q identifies Federal programs for the conduct of
research and development, and for facilities related to such activities.
In addition, it provides information on Government-wide activities
in the marine and space sciences.
218
SPECIAL ANALYSIS O
FEDERAL AID TO STATE AND LOCAL GOVERNMENTS
Federal Aid to State and Local Governments
I960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970
Fiscal
iscal Yi
Years
1971
Estimate
HIGHLIGHTS OF THE 1971 AID PROGRAM
In 1971, total Federal aid to State and local governments of $27.6
billion will be $3.5 billion more than in 1970, and nearly four times
the amount in 1961.
Major steps have been taken in 1969 and 1970 to revise the structure
of Federal aid programs as a means of reducing rigidity and overlap,
and increasing program effectiveness. Federal aid programs in several
major areas have been reformed. Federal aid initiatives in the 1971
budget include:
• The first quarterly installment on revenue sharing of $275 million;
• The Family Assistance Program, with initial outlays of $500
million;
• A revamped Food Stamp program of $1,250 million, reaching
an estimated 7.5 million Americans;
• A new environmental financing authority to ease the pressures in
State and local bond markets;
• A new 12-year program to assist urban transportation, through $10
billion of grants to communities to modernize and expand mass
transit facilities and services; and
• A $190 million increase for the Law Enforcement Assistance
Administration for broad-purpose block grants to States.
219
220
THE BUDGET FOR FISCAL YEAR 1 9 7 1
The fastest growing grant programs in 1971 are those to provide
medical care for the needy, income support for the poor, and improved
public facilities and services in urban centers. Total aids for metropolitan or urban areas will be an estimated $19 billion in 1971. (Included
in these amounts are grants to States that are channeled to urban
areas.)
HISTORICAL PERSPECTIVE
Federal aid to State and local governments predates the Constitution. Under the Articles of Confederation, the Congress provided
grants of Federal land in 1785 to support education in the Northwest
Territory. This policy was reaffirmed in 1787, the year of the adoption
of the Constitution.
Grants and other forms of Federal aid have grown rapidly over the
past two decades. At the same time, State and local governments
raised from their own resources four times the amount of Federal aid.
Table 0-1. STATE AND LOCAL GOVERNMENT FINANCES, 1948 AND 1968
In billions of dollars
Source
1968
1948
Revenue:
Own revenue
Federal aid
Total
Expenditures.
Average
annual
percentage
increase
15.6
2.0
87.8
18.3
9.0
11.7
17.6
106.2
9.4
17.4
107.6
9.5
Source: Department of Commerce; National Income Accounts—Calendar Year.
The Federal-Aid Highway Act of 1956 significantly modified the
pattern of aid to State and local governments. It moved commerce
and transportation programs to a dominant position in Federal
assistance (43% of the total) by 1960.
The increase in human resource programs during the 1961—71 period
caused these programs to rise to 46% of Federal aid in 1965 and 59% in
1971. Commerce and transportation declined to 40% in 1965 and 19%
in 1971.
Table 0-2. PERCENTAGE DISTRIBUTION OF FEDERAL AIDS TO STATE
AND LOCAL GOVERNMENTS BY FUNCTION
Function
Agriculture and rural development
Natural resources
>
Commerce and transportation
Community development and housing...
Education and manpower
_>
Health...
Income security _
Other....
Total
1
Less than 0.5%.
1950
actual
I960
actual
1965
actual
1971
estimate
11
5
55
1
8
3
19
3
14
4
47
2
4
2
43
3
10
4
33
1
5
2
40
5
10
7
29
2
4
3
19
11
17
14
28
4
100
100
100
100
100
5
2
21
0)
1955
actual
SPECIAL ANALYSES
221
State-local fiscal problems.—An imbalance exists between public
services demands on State and local governments and the revenues
produced by their tax systems, which tend to be relatively unresponsive to economic growth.
State and local expenditures, as measured in the national income
accounts, rose by $90 billion from 1948 to 1968, whereas revenue from
their own sources increased $72 billion. Over the same period, State
and local debt rose by more than $110 billion.
State and local governments rely principally on consumer and
property taxes, which grow at a rate barely sufficient to keep up with
the growth in the economy. In an attempt to meet growing service
demands, States made more than 300 rate increases in major taxes
over the last decade (1960-69). In calendar year 1969, 36 State
legislatures approved new taxes or increased existing ones that will
augment tax receipts by a record $4 billion. This is significantly larger
than the $2.5 billion and $1.3 billion added to State tax receipts in
1967 and 1965, respectively. Local property taxes were also raised
frequently during this period.
Personal income tax receipts, which accounted for 45% of total
Federal revenues but only about 8% of total State and local government revenues, are estimated to increase by roughly 15% for every
10% rise in GNP.
The response of the Federal Government to the fiscal plight of State
and local governments over the past two decades has been to increase
Federal grants from less than $2 billion in 1948 to over $18 billion in
1968. While effective in many instances, this rapid growth in Federal
grants has been accompanied by:
• Overlapping programs at the State and local level;
• Increased administrative costs;
• Program delays and uncertainty;
• A decline in the authority and responsibility of chief executives,
as grants have become tied to functional bureaucracies; and
• Creation of new and frequently competitive State and local
governmental institutions.
In recognition of these problems, the administration has proposed
basic reforms in the structure of many Federal aid programs. This
involves increased emphasis on broader and less conditional forms of
aid through revenue sharing and the streamlining of conditional aid
through administrative reform and grant consolidation.
SIGNIFICANT FEATURES
Federal aid expenditures will grow $3.5 billion over 1970, reaching
a record level of $27.6 billion in 1971.
Direct assistance.—The principal forms of existing direct financial
assistance to States and localities are grants, shared revenues from
natural resource activities, and loans.
In 1971, Federal grants are estimated to reach $27.2 billion, accounting for 98% of total Federal aid. Shared revenues will account
for an additional $436 million. Loans will provide some $429 million
in net assistance in 1971, not including the lending activity that is
being encouraged in the private sector with Federal interest subsidies.
222
THE BUDGET FOR FISCAL YEAR 1971
In total, Federal aid now provides 18% of State and local revenues.
In terms of direct cash flow, about seven-eights of the total goes to the
States, with the balance going to local jurisdictions. However, the
State channels part of this Federal grant money into metropolitan
areas.
As shown in table 0-3, the Department of Health, Education,
and Welfare administers the largest total of Federal aid programs.
Table 0-3. FEDERAL-AID OUTLAYS BY AGENCY
(in millions of dollars)
Agency
Executive Office of the President
Funds appropriated to the President:
Economic opportunity programs
Other (primarily Appalachia)
Department of Agriculture
Department of Commerce
_
Department of Defense:
Military
_
_
Civil
Department of Health, Education, and Welfare. __
Department of Housing and Urban Development.
Department of the Interior
Department of Justice
_.
Department of Labor
_._
Department of State
_
_
Department of Transportation
__
Treasury Department..
_
Veterans Administration
National Capital region *
Other.
Allowance for revenue sharing.
Total outlays for Federal aid.
1969
actual
1970
estimate
1971
estimate
1,406.5
162.2
1,534.0
150.4
1,371.2
332.6
1,943.2
161.6
895.5
316.8
2,756.3
178.8
34.4
17.7
10,123.8
1,109.3
401.7
28.4
629.3
6.3
4,401.6
115.3
14.5
92.0
27.5
32.4
23.0
11,747.8
2,107.3
494.4
156.9
703.9
5.5
4,698.5
130.0
20.2
147.4
43.3
34.2
10.7
12,762.1
2,560.3
753.7
338.0
1,471.0
5.9
4,791.3
136.0
22.8
262.4
53.1
275.0
20,254.9
24,119.2
27,623.9
1 Includes Federal Payments to the District of Columbia in the following amounts: 1969, $85.9
million; 1970, $127.5 million; 1971. $140.3 million.
Indirect assistance.—Apart from direct Federal aid, many other
Federal activities that are not included in this analysis affect the
finances of State and local governments. Examples are State and local
participation in Federal employee training programs and technical
assistance provided by Federal agencies. States and localities also
have first call on obtaining (at relatively nominal costs) surplus land
and equipment of the Federal Government.
State and local governments also receive special benefits through
the tax system. Interest cost savings that result from the exemption
of interest on State and local bonds from Federal income taxes are
estimated at $2.05 billion in 1969. The Federal credit for payment of
State inheritance and estate taxes has encouraged States to make more
effective use of this resource at a Federal revenue cost of $350 million.
Similarly, since taxpayers may deduct local property taxes from
Federal taxable income, a portion of State and local taxes is offset by a
reduction in the taxpayers' Federal liability. In 1969, the value of this
deduction in terms of tax savings to individuals was approximately
$2.25 billion. Other State and local taxes deducted from Federal tax
liability amounted to an additional $4.25 billion with approximately
half accounted for by personal income taxes in 1969.
SPECIAL ANALYSES
223
NEW DIRECTIONS FOR THE SEVENTIES
The Federal aid policies of the administration have been summarized under the heading the New Federalism, which encompasses:
• Responsible decentralization.—Efforts are being made to support
and strengthen leadership at the State and community levels
through measures such as revenue sharing, the proposed Manpower Training Act of 1969, and the revision of grant program
procedures.
• Basic systems' reform.—Basic reform is being undertaken in major
functional areas as in the case of welfare, unemployment insurance,
and mass transit.
• Effective implementation of Government policies.—Management
processes for Federal aid programs are being overhauled.
Revenue sharing.—Major characteristics of the administration's
revenue sharing proposal are:
• Predictability.—The amounts to be shared will be based on a
specified percentage of the personal income tax base.
• Expanding scale.—Along with the natural growth in the base,
the percentage applied to the base will grow in amount from
one-sixth of 1% for the last half of 1971, to 1% by 1976. The
absolute amounts will rise from $275 million in 1971 to an
estimated $4 billion for 1975. The first quarterly payment of
$275 million will be made in the final quarter of 1971, with the
second payment under the 1971 appropriation to be made early
in 1972.
• Unconditional.—Revenue sharing funds will not be tied to specific programs, processes, or requirements. The allocation of
funds will be based on formulas prescribed by law and linked to
data prepared on a regular basis by the Department of Commerce.
• Distribution by need and effort.—The amount to be shared with any
given State will be based on State population, adjusted for combined State and local tax effort. States with greater relative
revenue effort will get more than they would otherwise. (Table 0-4
shows the State distribution of revenue sharing based on a $1
billion fund to facilitate percentage comparisons.)
• Guarantees funds for cities and counties.—To place a minimum
guarantee on the share of funds that cities, counties, and townships would receive, the administration's bill stipulates that
States must "pass-through" to each such local jurisdiction the
same relative share of the total State allocation that the local
jurisdictions' revenue total bears to total State-local revenue.
224
THE BUDGET FOR FISCAL YEAR 1971
Table CM. STATE AND LOCAL SHARES UNDER ADMINISTRATION
REVENUE SHARING PROPOSAL
I Illustrative outlays of $1 billion)
In millions of dollars
State
State
total
Alabama
. . .
Alaska
Arizona
Arkansas.
_
California
. _
Colorado
Connecticut
Delaware..
District of Columbia
Florida
Georgia
. _
_ _.
...
. . .
Hawaii
.
Idaho
Illinois
.
Indiana
_ .
Iowa
..
Kansas
Kentucky
.
Louisiana.
Maine
Maryland.
. . _ _ .
Massachusetts.
Michigan
..
Minnesota
Mississippi
_. . _
Missouri
_
_.
Montana
._ _
Nebraska
Nevada
New Hampshire. . . . .
_
New Jersey
New Mexico
New York
North Carolina
North Dakota.
.
_ .
. . .
Ohio
Oklahoma
Oregon .
PennsylvaniaRhode Island
South Carolina
- _ _
_
South Dakota
Tennessee
Texas
.
Utah
. .
Vermont .
Virginia .
Washington
West Virginia
_
Wisconsin
> ..
_
Wyoming
_
_
United States total1
.
i Detail may not add due to rounding.
Local
share
State
share
18.0
1.6
10.3
10.0
107.3
11.9
12.1
2.8
4.5
31.7
22.3
4.8
4.3
42.8
24.3
15.2
12.3
15.4
22.2
4.7
17.4
26.9
42.8
21.5
13.4
20.5
4.0
6.9
2.6
2.9
30.2
6.6
108.5
24.3
4.6
43.5
13.5
11.3
50.3
3.9
12.6
4.2
18.5
49.6
6.1
2.3
19.8
17.9
8.9
24.0
2.2
4.5
.5
2.2
1.6
33.2
2.9
6.0
.4
4.5
9.2
4.9
1.4
.9
10.7
5.3
3.8
3.8
3.2
3.9
2.0
7.9
13.9
10.5
6.0
3.2
5.0
1.5
2.1
.9
1.0
11.9
1.1
45.6
7.6
1.2
12.0
2.8
2.2
12.2
1.7
1.9
1.2
8.0
12.5
1.1
.4
8.0
3.1
1.4
6.8
.5
22.4
17.3
3.5
3.4
32.1
19.1
11.4
8.6
12.1
18.3
2.7
9.5
13.0
32.2
15.6
10.2
15.5
2.5
4.8
1.7
2.0
18.2
5.5
62.9
16.7
3.4
31.5
10.7
9.1
38.1
2.2
10.7
2.9
10.4
37.1
4.9
1.9
11.8
14.8
7.5
17.1
1.6
1,000.0
300.1
699.9
13.5
1.1
8.1
8.4
74.0
8.9
6.1
2.4
SPECIAL ANALYSES
225
Improving the delivery system.—Major efforts are also under-
way to improve the delivery system for Federal assistance programs.
They include reorganization within the executive branch, proposals for
consolidation of related assistance programs, joint funding, and the
restructuring of existing programs. A concerted effort is being made to
decentralize decisionmaking for Federal assistance programs and to
simplify administrative requirements and make them more consistent.
Executive reorganization.—Policy implementation must be effective
if the services are to reach and benefit the intended recipient. A beginning has been made in the area of organization through steps taken to:
• Modify the regional boundaries of the major domestic agencies in
the field so that their headquarter cities are the same and the
regions which they cover conform;
• Restructure the Manpower Administration of the Labor Department and the Office of Economic Opportunity;
• Create the Office of Intergovernmental Relations in the Office of
the Vice President; and
• Strengthen the Office of Executive Management in the Bureau
of the Budget.
Administrative improvements.—The proliferation of grant programs
has impaired our ability to achieve program goals efficiently. As a
major step toward improving administration, proposals have been
advanced which would:
• Authorize the President to consolidate closely related programs
if Congress, within 60 days, does not disapprove his proposal;
• Provide for joint funding of closely related grant programs in
a single package to achieve a particular objective within a given
agency; and
• Authorize joint funding of projects across agency lines.
Within the executive branch, the Bureau of the Budget and the 10
Federal agencies on the Urban Affairs Council initiated the "Federal
Assistance Review" to decentralize and simplify the administration
of Federal aid programs. Under this review, technical assistance
teams, consisting of representatives from the Bureau of the Budget
and other Federal agencies, are also providing recommendations to
State and local governments for improving their capacity for the
coordination, planning, and evaluation of Federal aid programs.
IMPACT OF FEDERAL AID
Federal aid in relation to Federal out*ays and State-local
revenues.—The rapid increase in Federal aid to State and local
governments has become an increasingly important factor in the
finances of all levels of government. Federal aid has risen sharply as a
proportion of Federal outlays in the past decade—going from 7% of
the total in 1961 to an estimated 14% in 1971. In terms of civilian
domestic programs, 23% of Federal outlays will take the form of
aids to State and local governments in 1971. Because of successful
efforts by State and local governments to increase revenues from
226
THE BUDGET FOR FISCAL YEAR 1971
their own sources, the relative increase in the impact of Federal aid
has not been quite as marked for the recipient State and local governments as it has been for the Federal Government. Nevertheless,
Federal aid has risen as a proportion of State and local revenues
moving from 13% in 1960 to an estimated 18% in 1970.
Table 0-5. FEDERAL-AID OUTLAYS IN RELATION TO TOTAL FEDERAL
OUTLAYS AND TO STATE-LOCAL REVENUE
Federal aid
As a percent of—
Fiscal year
1959.
I960. .
1961.
1962.
1963. _
1964
1965
1966
1967
1968
1969.
1970 estimate
1971 estimate
Amount
(millions)
_.
6,669
7,040
7,112
7,893
8.634
10,141
10,904
12.960
15.240
18,599
20,255
24,119
27,624
Total
Federal
outlays
7.2
7.6
7.3
7.4
7.8
8.6
9.2
9.7
9.6
10.4
11.0
12.2
13.8
Domestic
Federal
outlays 1
15.9
16.4
15.4
15.8
16.5
17.9
18.4
19.2
19.5
20.9
21.3
21.8
23.0
State-local
revenue 2
(3)
13.5
12.7
12.0
ii.3
12.5
13.4
13.4
14.2
15.3
16.9
17.4
18.2
1
3
Excluding outlays for defense, space, and international programs.
Excludes State-local revenue from publicly-operated utilities, and liquor stores.
> Not available.
Matching requirements.—The pattern of State and local spending
is influenced to some extent by Federal grants requiring the recipient
government to match Federal-aid funds with its own resources. The
matching, or cost-sharing requirements are of two kinds: variable
matching (which takes account of the differing abilities of recipient
governments to support aided functions), and fixed ratio matching
(under which each grantee is required to share in the same proportion
of program cost).
In 1966, State and local governments provided an estimated
$5.5 billion of their own funds to receive the $13 billion of Federal
grants spent in that year. This means that, on the average, recipients
raise $1 for every $2 forthcoming from the Federal Government.
However, State and local government matching funds account for
only about 10% to 14% of general expenditure out of their own
revenue sources. Public assistance and highways account for the largest share of total required matching funds. In 1971, required matching funds will rise to an estimated range of $14 billion to $16
billion.
227
SPECIAL ANALYSES
Regional distribution of Federal aids.—In 1968, the distri-
bution of Federal aids on a regional basis ranged from a high of more
than $4 billion in the Southeast to a low of $621 million in the Rocky
Mountain area. When account is taken of population differences,
the Rocky Mountain area ranked highest with grant payments
reaching nearly $130 per capita, while the Great Lakes and Mideast
regions were lowest with $67 and $87 per capita, respectively.
Population density and per capita income are the two major factors
that accounted for this wide variation.
Generally, the level of per capita aid is inversely related to population density. The population density of the Rocky Mountain area is
the lowest of the regions, per capita aid is highest. At the other end
of the scale, per capita aid is lowest in the Great Lakes area and the
Mideast where population density is greatest. This inverse relationship
stems primarily from aid for highway construction and other grants
where program needs are not a direct function of population density.
Table Q-6. REGIONAL DISTRIBUTION OF FEDERAL AID, FISCAL 1968
Total
(in millions
of dollars)
Region
New England
Mideast. _
Great Lakes
Plains
Southeast
Southwest
Rocky Mountain
Far West
United States
_
_-
_
Per capita
Percent of
State and
local government general
revenue
1,072
3,729
2,646
1,455
4,110
1,621
621
2,853
93.63
87.48
66.82
90.59
94.03
100.27
129.69
109.36
18.2
15.5
14.2
17.8
22.8
22.4
22.9
16.3
118,601
93.07
18.0
1
Includes $497 million for Puerto Rico, Virgin Islands, and other adjustments.
Sources: "Annual Report of the Secretary of the Treasury," and "Governmental Finances in
1967—68," Bureau of the Census. These reports provide additional information concerning State
distribution of Federal grants.
Equalization.—Per capita aid is also inversely related to per
capita income. There are two reasons for this relationship. Some
grant programs, such as grants for hospital construction, require
lower matching by the relatively poorer States. Other programs,
such as those for public assistance and elementary and secondary
education, are designed as aids to the disadvantaged and tend to
flow to States having proportionately more individuals with lower
incomes.
The latter tendency reflects the growing impact of fiscal equalization provisions common to a number of the more recent grants programs. These provisions are designed to help States and localities
with limited resources participate more effectively in many jointly
financed programs. Federal aids on the whole are mildly equalizing,
being inversely related to per capita income. This equalizing tend-
228
THE BUDGET FOR FISCAL YEAR 1971
ency decreased from 1967 to 1968—the latest
year for which data
are available for State and local governments.1
Aid in urban areas.—Between 1960 and 1968, more than 75% of
the population growth occurred in the metropolitan complexes. Today,
about two-thirds of the population lives in 233 metropolitan areas.
In 1971, approximately $19 billion of the $28 billion of total Federal aids will be spent in standard metropolitan statistical areas
(SMSA's). This is an increase of about $15 billion or nearly 300%
over the amount of aid provided to these urban areas in 1961, and
almost $5 billion in the short span of only 3 years.
The major increases in Federal Grants for urban areas occur in law
enforcement, Model Cities, and public assistance. This analysis includes programs that provide financial assistance to urban communities to help them meet their public service needs. It also includes
grants made to States that subsequently benefit metropolitan areas.
Standard metropolitan statistical areas (SMSA's) were chosen as
the definition of "urban" because they are the urban unit for which
information on Federal aids is most generally available. These areas
cover the bulk of the urban population and place heavy pressure on
public service requirements: high population density and rapid population growth. The amounts shown in table 0-7 are approximations
based on the best information readily available.
There are a number of other Federal programs that have an important bearing on urban development including direct Federal construction and various loan and loan insurance activities. No attempt
has been made to add up all the various forms of funds. However, the
Department of Housing and Urban Development estimates that the
total Federal financial commitment for urban social and community
development aids is about $44 billion in 1971—compared to $21
billion in 1964. The Department's figures indicate the magnitude of
Federal financial involvement in communities of 2,500 population or
over, as measured by obligations or commitments—including loans
insured or guaranteed.
While the tabulations are not fully comparable, the estimates of the
Department of Housing and Urban Development do serve to put in
perspective the dimensions of urban-area expenditures not covered by
this analysis.
Because of limitations of the data, it is not possible to trace funds
directly from the Federal Government to most metropolitan areas.
However, a pilot study conducted in San Francisco traced $23 million
that went directly to the city in 1968 and an additional $41 million
that went through the State or other related intervening jurisdictions,
subsequently benefiting the city. The total of $64 million accounted for
10% of San Francisco's total revenues in that year.
In recent years, the States have become increasingly responsive to
the needs of the urban areas. There are now 27 State Offices or Councils
of Community Affairs. Many other States have special advisors to
coordinate State aid to urban areas.
1
Excluding Alaska, Hawaii, and the District of Columbia, the correlation between per capita
grants and per capita income in 1967 was —0.338. This equalizing effect decreased in 1968 with
the correlation coefficient still negative at —0.182.
One of the most effective grants in terms of allocating funds inversely to income is title I of the
Elementary and Secondary Education Act, with more than half of the variation in these grants among
the States explained by variations in per capital income. (The simple correlation coefficients were
-0.747 in 1967 and -0.714 in 1968.)
229
SPECIAL ANALYSES
Table 0-7. FEDERAL-AID OUTLAYS IN URBAN AREAS (in millions of dollars)
Function and program
1961
actual
National defense
Agriculture and rural development:
Donation of surplus commodities.
Other
Natural resources:
Water pollution control
_
Other
1964
actual
1969
actual
1971
10
28
30
31
128
27
231
40
313
104
431
155
24
30
8
10
79
101
161
205
158
104
1,398
36
1,948
36
2,225
83
139
2,349
Commerce and transportation:
Economic development
__
Highways
Airports
_
Urban mass transportation
__
Other
Community development and housing:
Community action program
Urban renewal
Public housing
Water and sewer facilities
Model Cities
Other
_
Education and manpower:
Head Start and Follow Through
Elementary and secondary
___
Higher education
___
Vocational education
_
_
Employment security administration
Manpower activities
Other
_
Health:
Hospital construction
__
Regional medical program.
Mental health
Maternal and child health
.
Comprehensive health planning and services. ._
Health educational facilities
Medical assistance
Health manpower
Other
Income security:
Vocational rehabilitation
Public assistance
--Child nutrition, special milk and food stamps
Other
-
106
105
159
136
36
17
Total, aids to urban areas.
449
776
478
95
450
102
256
265
1,258
184
217
593
712
162
274
14
29
344
1,262
210
48
66
4
18
29
34
48
89
19
50
139
80
64
7
140
179
449
530
77
106
1,713
28
54
37
1,170
131
3
25
-
432
786
257
52
8
75
222
5
28
303
61
,450
168
16
General government:
Law enforcement
National Capital region
Other....
Other functions
Revenue sharing.
_
5
71
231
3
122
---
38
9
2
87
18
65
170
120
156
2,141
68
68
247
3,022
482
148
408
4,094
969
17
85
27
237
140
146
160
184
3,893
5,588 ,
14,045 .
18,748
230
THE BUDGET FOR FISCAL YEAR
1971
Table 0-8. FEDERAL AID TO STATE AND LOCAL GOVERNMENTS i
(expenditures in millions of dollars)
Agency and program
Funcional
code
National defense:
Executive Office of the President: Office of Elmergency
Preparedness—Federal contributions to State and
local planning
059
Department of Defense—Military:
Civil defense shelters and financial assistance
051
Construction of Army National Guard centers
_- 051
Atomic Energy Commission
058
Total, national defense. _
International affairs and finance:
Department of State:
East-West Cultural and Technical Interchange Center.
International Center, Washington, D.C
_
153
151
Total, international affairs and finance
Agriculture and rural development:
Department of AgricultureCommodity Credit Corporation and Consumer and
Marketing Service: Removal of surplus agricultural
commodities and value of commodities donated
351
Rural water and waste disposal facilities
352
Mutual and self-help housing
35?
Rural housing for domestic farm labor
_ 352
Resource conservation and development
354
Consumer protective programs
355
Agricultural Research Service: Grants for basic
scientific research
___
355
Agricultural experiment stations
__
355
Cooperative agricultural extension service
355
Payments to States, territories, and possessions, Consumer and Marketing Service
_. 355
See footnotes at end of table.
1970
estimate
*
*
1971
estimate
23.2
11.0
26.1
24.7
8.4
5.7
7.7
9.6
40.1
42.0
41.8
6.1
5.2
.3
5.6
.3
6.1
5.5
5.9
609.7
27.9
549.4
34.0
692.2
30.8
2.8
7.2
1.3
5.7
8.4
2.1
10.2
7.6
6.0
9.9
23.3
25.1
8.9
8.7
58 0
80.9
60 2
111.2
78.5
0 7
148.4
1.6
1.6
1.6
807.2
803.8
995.3
401
81.5
97.7
103.1
40?
20.8
24 6
24.3
402
402
52.9
79.1
86.6
.9
1.0
1.0
401
15.1
20.4
7.9
401
2 7
2 6
2 8
401
161.1
192.3
393.5
40?
13
1 6
18
Total, agriculture and rural development
Natural resources:
Department of Agriculture:
Watershed protection and flood prevention
Grants for forest protection, utilization, and basic
scientific research
National forest and grassland funds; payments to
States and counties (shared revenue)
Assistance to States for tree planting
Department of Defense—Civil: Corps of Engineers:
Payment to California, flood control
_
Payments to States, Flood Control Act of 1954
(shared revenue)
___
Department of the Interior:
Water pollution control
_
Payments to States and counties from grazing receipts,
grasslands, and sales of public lands (shared
revenue)
_
Bureau of Reclamation:
Grants
Payments to Arizona. Nevada, and Klamath reclamation area (shared revenue)
__
1969
actual
401
401
4
.7
.8
.8
231
SPECIAL ANALYSES
Table 0-8. FEDERAL AID TO STATE AND LOCAL GOVERNMENTS—Con.
(expenditures in millions of dollars)
Agency and program
unc. onal
cod
1969
actual
1971
1970
Natural resources—Continued
Department of the Interior—Continued
Office of Saline Water
Payments from grant lands: Oregon, California, and
Coos and Douglas Counties (shared revenue)
Mineral Leasing Act payments (shared revenue)
Mine drainage and solid waste disposal
Aid for commercial fisheries
Payment to Alaska from Pribilof Island fund (shared
revenue)
Fish and wildlife restoration and management
_
Wildlife refuge fund and grasslands payments (shared
revenue)
_
Outdoor recreational areas (Land and Water Conservation Fund)
__
Preservation of historic properties_
___
Department of State: Pacific Halibut Commission
Federal Power Commission: Payments to States (shared
revenue)
Tennessee Valley Authority: Payments in lieu of taxes
(shared revenue)__
__
_.
Water Resources Council
401
.3
.5
402
403
403
409
25.6
51.4
32.1
"To"
53.9
.1
7.6
32.0
58.0
.1
6.2
409
405
.3
6.2
.3
7.9
.1
8.6
405
30.8
33.0
47.0
405
405
409
44.4
*
.3
72.8
88.6
5.0
14.5
2.4-
16.1
2.4
20.0
3.0
517.9
647.0
889.4
507
507
2.0
154.9
4.2
243.4
271.8
502
506
506
.4
4.4
.4
4.0
.4
3.0
.5
506
506
507
507
.2
.4
145.3
1.3
156.8
1.7
.4
1.0
174.5
401
401
401
Total, natural resources.
Commerce and transportation committee:
Funds appropriated to the President:
Public works acceleration
Appalachian development
Department of Commerce:
State marine schools
_
Office of State Technical Services
Promotion of tourism
National Bureau of Standards: Research on fire prevention through improvement of housing construction
_
Natural gas pipeline safety
Economic development assistance —
Department of the Interior: Resources management
Department of Transportation:
Chamizal Memorial Highway
Forest and public lands highways._
Highway beautification
Highway safety
Federal-aid highways (trust fund)
Urban mass transportation facilities
_.
Federal-aid airport program
Airports planning and development-_ _
Other
503
503
503
503
503
503
501
501
503
Total, commerce and transportation..
38.0
20.3
18.4
4,085.1
6.2
1.0
4.0
31.7
21.9
32.6
24.2
64.0
63.1
4.270.4
4,353.9
129.8
.2
90.0
2.3
.9
256.5
89.0
50.0
3.5
4,710.1
5,109.4
5,248.0
615.0
541.3
561.1
135.9
103.7
Community development and housing:
Funds appropriated to the President:
Office of Economic Opportunity: Community Action
programs
See footnotes at end of table.
551
232
THE BUDGET FOR FISCAL YEAR 1971
Table 0-8. FEDERAL AID TO STATE AND LOCAL G O V E R N M E N T S - C o n .
(expenditures in millions of dollars)
Agency and program
unc-]
tional;
code
1969
actual
1970
estimate
1971
estimate
285.3
1,049.0
55.0
.5
119.0
26.0
500.0
1,035.0
Community development and housing—Continued
Department of Housing and Urban Development:
Model city grants
Urban renewal
Open space land and urban beautification
New community assistance
Grants for basic water and sewer facilities
Grants for neighborhood facilities
Advance acquisition of land
Urban planning grants
Urban information and technical assistance
Community development training programs
Low-rent public housing program
National Homeownership Foundation
Alaska housing
551
552
552
552
553
553
553
554
554
554
555
555
555
Total, education and manpower.
See footnotes at end of table.
80.2
10.6
.1
32.4
.8
.6
342.7
1.0
1,669.8
Total, community development and housing.
Education and manpower:
Funds appropriated to the President: Office of Economic
Opportunity:
Work and training programs..
Head Start and Follow Through
Department of Housing and Urban Development:
College housing—
Department of Health, Education, and Welfare:
Elementary and secondary education — _
(Portion for educationally deprived children)
Assistance to schools in federally affected areas
Education of the handicapped.__
Civil rights education
Higher education activities....-(Portion to private institutions) .—
Vocational education
Libraries and community services
Special institutions for the blind and deaf
Corporation for Public Broadcasting. ._
_
Education professions development
Work incentive activities
Department of Labor:
Manpower development and training activities
Manpower Training Act
Grants to States for administration of employment
security programs (trust fund)
Department of Interior: Bureau of Indian Affairs:
Education and welfare services
.National Foundation on the Arts and Humanities
Other
9.3
533.8
43.3
1.0
44.0
1.4
3.4
460.7
71.0
2.0
146.0
38.0
2.0
45.0
4.4
637.7
.3
1.0
2,587.6 | 3,042.2
(
604
601
471.7
319.8
514.5
315.4
331.4
602
53.1
61.0
79.0
1,359.0
,676.3
601
601
601
601
601
602
602
603
608
608
608
601
604
1,404.3
(1,073.3)
5.0
26.5
30.6
1.3
15.0
84.0
132.8
604
604
41.2
38.1
44.3
696.0
609
588.1
665.8
730.7
601
609
600
13.5
20.0
.2
7.5
21.7
398.0
22.1
1.4
349.6
(68.6)
255.4
67.8
1.3
14.1
4,063.5
(1,140.0) (1,249.0)
122.0
397.0
26.5
11.1
352.6
(64.4)
257.4
84.3
24.9
20.5
306.5
(59.2)
309.6
52.2
1.4
22.5
93.4
193.0
4.9
4,342.5 I 4,730.4
233
SPECIAL ANALYSES
Table 0-8. FEDERAL AID TO STATE AND LOCAL GOVERNMENTS—Con.
(expenditures in millions of dollars)
Agency and program
Func-|
tional
code
1969
actual
1970
estimate
1971
estimate
Health:
Department of Health, Education, and Welfare:
Hospital construction
(Portion to private, nonprofit institutions) _ _
Health manpower
__
Comprehensive health planning and services__.
Regional medical programs
Construction of health educational facilities
Mental health
Health services
Environmental health
Dental health care
Indian health services and facilities
Patient care and health services
Family planning service
Communicable and chronic diseases
Maternal and child health
Medical assistance._
Other
651
651
651
650
650
651
651
651
653
651
652
652
653
653
652
652
651
Total, health.
254.6
(127.3)
35.4
118.8
26.6
133.4
62.2
25.8
32.7
.3
.8
1.6
14.5
272.0
(140.1)
59.3
156.7
27.0
190.9
70.1
16.4
42,5
4.2
2.0
1.2
249.6
(123.2)
85.2
181.8
26.3
195.8
81.4
7.1
49.1
4.9
1.4
1.2
4.0
.5
207.9
2,855.5
199.2
2,284.7
2.2
3.6
189.5
2,612.4
1.7
3,192.7
3,649.6 3,951.6
Income security:
Funds appropriated to the President: Disaster relief
Public assistance:
Income maintenance payments
Social services for welfare recipients
Juvenile delinquency
Vocational rehabilitation
Administration on Aging
Food stamp
___
Child nutrition program and special milk
703
6.8
703
703
703
703
703
702
702
3,652.3
343.3
.8
352.8
Total, income security..
11.3
234.3
336.0
85.0
50.0
4,368.4 4,889.5
531.1
497.5
9.5
6.3
561.6
499.0
15.2
558.5
378.6
13.5
1,218.8
327.1
4,937.7 I 6,408.5 I 7,601.0
Veterans benefits and services:
Veterans Administration:
Aid to State homes
Grants for construction of State nursing homes..
Administrative expenses
12.5
1.8
.2
15.1
4.0
1.1
16.8
14.5
20.2
22.8
909
46.6
57.5
71.9
909
908
12.6
28.4
11.2
156.9
12.2
338.0
910
80.2
87.0
87.0
904
35.1
43.0
49.0
804
804
804
Total, veterans benefits and services-
5.0
.9
General government:
Department of the Interior:
Grants to territories
Internal revenue collections, Virgin Islands (shared
revenue)
Department of Justice: Law enforcement assistance
Treasury Department:
Tax collections for Puerto Rico (shared revenue)
Bureau of Customs: Refunds, transfers and expenses
of operation, Puerto Rico and the Virgin Islands
(trust fund share revenue)
See footnotes at end of table.
234
T H E BUDGET FOR FISCAL YEAR
1971
Table O-«. FEDERAL AID TO STATE AND LOCAL GOVERNMENTS—Con.
(expenditures in millions off dollars)
Func-
Agency and program
1969
1970
1971
code
General government—Continued
National Capital region:
Federal payment to District of Columbia
Washington metropolitan area transit program __
Dulles sewer project
85.0
6.1
.9
127.4
19.9
.1
140.3
122.1
295.0
503.1
820.5
909
909
909
Total, general government
275.0
Allowance for revenue sharing
20,254.9
Total, grants and shared revenues
24,119.2 27,623.9
"Less than $500 thousand.
Grants-in-aid unless otherwise specified. Excludes loans which are shown separately in table O-9.
Manpower programs transferred to Labor Department.
1
2
Table 0-9. FEDERAL LOANS TO STATE AND LOCAL GOVERNMENTS
Net outlays
Disbursements
Agency and program
1969
1970
1971
1969
1970
1971
Agriculture and rural development:
Department of Agriculture:
Soil Conservation Service
Farmers Home Administration
Total, agriculture and rural development
0.8
64.6
0.5
71.5
53.5
0.8
62.7
0.5
65.6
25.1
65.4
72.0
53.5
63.5
66.1
25.1
1.3
1.9
.6
1.3
1.9
.6
5.7
5.1
5.3
4.4
3.7
3.9
7.0
7.0
5.9
5.7
5.6
4.5
18.6
37.6
23.2
18.1
36.6
22.0
5.0
40.0
-.2
35.0
4.8
40.0
-.3
35.0
82.6
58.2
17.9
81.4
56.7
Natural resources:
Department of Agriculture: Soil conservation
_ __ _
Department of the Interior: Reclamation loans
Total, natural resources
Commerce and transportation:
Department of Commerce: Economic
development assistance
_
Department of Transportation:
Mass transportation facilities
_
Highway construction
Total commerce and transportation.
See footnotes at end of table.
18.6
235
SPECIAL ANALYSES
Table 0-9. FEDERAL LOANS TO STATE AND LOCAL GOVERNMENTS—Con.
Disbursements
Agency and program
1969
actual
Net outlays
1970
1971
estimate estimate
1969
actual
1970
1971
estimate estimate
Community development and housing:
Department of Housing and Urban
Development:
Renewal and housing assistance
Metropolitan develoDment
Total, community development and
housing
992.5
49.4
884.5
43.6
50.0
42.5
6.8
38.3
58.3
32.4
566.2 1,041.9
928.1
92.5
45.1
90.7
513.2
53.0
Education and manpower:
Department of Health, Education, and
Welfare:
Higher education activities
_.
Department of Housing and Urban Development: College housing.
41.2
35.9
41.0
39.7
33.7
38.5
105.0
90.0
72.0
81.7
65.6
46.9
Total, education and manpower
146.2
125.9
113.0
121.4
99.3
85.4
-.2
-.4
General government:
Department of Defense—Civil: Ryukyu
Islands
__
Department of the Interior: Administration of Territories
Department of Justice: Law enforcement facilities
General Services Administration: General activities
District cf Columbia:
Capital outlays
Other
National Capital Planning Commission
7.4
4.8
5.3
7.1
4.4
4.9
2.4
13.7
18.0
2.4
13.7
18.0
-1.4
-1.4
-1.4
149.9
40.4
64.8
103.3
145.9
_*
.1
67.4
40.4
109.0
40.4
.1
Total, general government. _ _
117.6
213.6
72.9
119.9
167.0
Total
921.0 1,497.4 1,372.4
373.9
417.4
429.4
•Less than $500 thousand.
168.0
SPECIAL ANALYSIS P
FEDERAL PUBLIC WORKS ACTIVITIES
To aid in understanding the Federal role in construction programs
of the Federal, State, and local governments, this analysis brings
together information on budget authority and outlays for direct
Federal public works and for Federal grants and loans to assist State
and local construction. The analysis also includes a separate tabulation
of outlays for major Federal programs to aid construction by private
cooperatives and nonprofit groups. Federal activities that affect the
level of private construction, such as Federal procurement, leases,
loans, loan guarantees, interest subsidies, and tax concessions, are not
included.
Summary and background.—Federal outlays for public works are
estimated to reach $11.3 billion in 1971, about $1 billion more than in
1970. All of the increase will be in civil construction programs. Outlays
for defense public works will be held to about the same level as in 1970,
but will be $221 million below the 1969 level.
Larger outlays for civil public works reflect primarily budget recommendations for expansion in selected program areas to meet pressing
economic and environmental problems. Major increases will be for
airways and airports, urban mass transit facilities, and waste treatment
plants. Outlays for water resources and power projects are also expected to rise as projects started in earlier years reach higher construction levels. Most other construction programs are being held at or
below theii 1970 levels.
Table P-l shows Federal outlays for public works, including net
lending, over a 10-year period; the accompanying chart indicates
trends in outlays for the three major segments—grants in aid, direct
Federal civil works, and defense construction.
Table P-1. FEDERAL OUTLAYS FOR PUBLIC WORKS, 1962-71
(in millions of dollars)
Total
Federal
outlays
Fiscal year
1962
1963
1964 _
1965.
1966.
1967
1968
1969
.__
1970 estimate..
1971 estimate..
__
.
.
6,938
7,196
8,346
8,886
9,428
9,572
9,520
9,683
10,336
11,331
Direct Federal construction
Total
3,693
3,704
4,019
4,152
4,693
4,483
3,972
3,932
3,964
4,486
Civil
2,085
2,321
2,691
2,800
3,014
2,752
2,460
2,186
2,426
2,961
Grants
1,608
1,383
1.328
,352
,679
,731
,513
,746
,538
57.5
Net
lending
Defense
3,037
3,302
4,186
4,567
4,446
4,730
5,264
5,479
6,048
6,508
207
190
142
167
289
359
284
111
324
337
Note.— In this and the following tables, nonconstruction costs are excluded; proposed legislation is
included for the years 1970 and 1971. Details may not add because of rounding. Net lending in years
prior to 1967 does not reflect those repayments deposited to miscellaneous receipts, which for 1967
and later years are netted against disbursements.
236
237
SPECIAL ANALYSES
Federal Expenditures for Public Works
$ Billions
7.06.5
6-0
Civil
6.0
•
Grants
5.5
5.0-
4.0 -
3.0
3.0
2.2
2.4
2.0
1.0-
1962
1963
Fiscal Years
1964
1965
1966
1967
J968
1969
1970
1971
Estimate
In most construction programs, outlays lag behind new budget
authority because of the time required for project construction. New
authority of $17.9 billion is recommended for public works programs
in the 1971 budget, $6.7 billion more than in 1970. Most of the increase
is accounted for by major new proposals to provide authority for
multiyear programs needed to control water pollution, modernize and
expand mass transit facilities in our major cities, and improve our air
transportation system.
Construction is defined to include the design and production of
fixed structures and physical improvements to land, including new
works and major additions, alterations, or improvements of existing
works. Public works figures in this analysis include detailed project
planning and the cost of sites for specific construction projects. Preliminary planning and surveys prior to selection of a site and generalpurpose land acquisitions, such as for parks and forests, are excluded,
as are general maintenance and repair.
Total private and public construction represents a large segment
of the Nation's economic activity. In recent years, construction,
including maintenance and repairs, has accounted for about 13% of
the gross national product. The volume of public construction and the
types of structures being built are of widespread interest because of the
effect on the construction industry and on the level of economic activity. Currently, the public sector accounts for about one-third of
total new construction put in place, as compared with one-sixth in
1947. Within the public sector, about one-eighth is direct Federal
238
THE BUDGET FOR FISCAL YEAR 1971
construction and the remainder is construction by State and local
governments, much of which is financed with Federal assistance.
The increasing dollar volume of public construction reflects in large
measure growing Federal programs to assist in meeting State and
local needs. By contrast, direct Federal construction has not made a
relatively large contribution to recent growth. Available data indicate
that Federal construction put in place was about 20% of the $20
billion total for public works in calendar year 1964 and about 12%
of the $28 billion total in 1968. Over the same period, private construction increased from $46 billion to $57 billion, or 24%, while total
public construction increased by 36%.
DIRECT FEDERAL PUBLIC WORKS
Outlays for direct Federal construction are shown by agency in
table P-2. About two-thirds of 1971 outlays for direct Federal construction will be for civil programs of the Federal Government, with
the remaining one-third for facilities of the Department of Defense
and the Atomic Energy Commission.
Restrictive budget policies have limited direct Federal construction
for several years. In addition, in September 1969, the President
directed Federal agencies to reduce new construction contracts by
75% to help relieve inflationary pressures on the construction industry
and to release resources needed for housing and other private construction. State and local governments and businessmen also were
urged to cut back their construction plans. Reports from Federal
agencies indicate that a total of $1.5 billion of obligations for direct
Federal construction are being deferred in 1970. Federal lease construction contracts which would have resulted in $300 million of
private construction are also being deferred.
Although budget policies have restrained direct Federal public works
in recent year's, outlays in 1970 are now expected to be somewhat
higher than in 1969, and to increase by over $500 million in 1971. The
relatively sharp increase in 1971 reflects a number of factors: (1)
many of the larger projects started in earlier years will reach a higher
construction stage; (2) budget recommendations for new and expanded programs will increase outlays in selected areas; (3) the
construction deferral curtailed 1970 outlays by some $300 million;
and (4) continuing increases in construction costs contribute to larger
outlays. Outlays would be even higher in 1971 had it not been for the
effect of the 1970 cutback.
Within the direct civil public works category, a number of agencies—
principally the Corps of Engineers, the Bureau of Reclamation, the
Bonneville Power Administration, and the Tennessee Valley Authority—are building water resource and related power generation and
transmission facilities which account for well over half of total outlays for direct Federal civil works. Another large category of civil
works consists of roads and other facilities required in connection
with the national forests, parks, and other public lands. The General
Services Administration builds most Federal office buildings. Research
facilities are built by many of the other Federal agencies.
The direct defense public works include facilities in the United
States and abroad to support the missions of the armed services.
The level of outlays for such purposes is being reduced in 1970 from
the 1969 level, with little additional change anticipated in 1971.
239
SPECIAL ANALYSES
Table P-2. DIRECT FEDERAL PUBLIC WORKS: OUTLAYS AND 1971 BUDGET
AUTHORITY BY AGENCY (in millions of dollars)
Outlays
Program and agency
1969
actual
1970
estimate
1971
estimate
Budget
authority
1971
estimate
Civil public works:
Department of Agriculture: Forest Service
Department of the Army: Corps of Engineers—
Civil
Department of Health, Education, and Welfare:
Health Services and Mental Health Administration
Department of the Interior:
Bureau of Indian Affairs__
National Park Service
_-_
Bureau of Reclamation
Bonneville Power Administration
Post Office Department
Department of Transportation:
Coast Guard
_
_
Federal Aviation Administration
General Services Administration
National Aeronautics and Space Administration..
Veterans Administration
Tennessee Valley Authority
Other
_
104
120
140
118
840
814
982
891
24
29
29
18
48
42
200
109
37
61
38
175
98
93
60
33
224
94
165
14
17
197
91
308
46
11
130
65
58
278
131
41
134
143
60
93
364
162
36
246
162
72
71
496
151
17
274
169
35
77
223
104
2,186
2,426
2,961
2,551
436
425
494
146
2
243
436
308
334
165
2
293
463
306
315
163
1
275
668
331
309
265
Subtotal national defense public works
1,746
1,538
1,525
1,752
Total direct Federal public works
3,932
3,964
4,486
4,303
Subtotal civil public works.
National defense public works:
Department of the Army...
Department of the Navy
Department of the Air Force
Interservice activities
Civil defense centers and shelters
Atomic Energy Commission
178
GRANTS AND N E T LENDING FOR PUBLIC WORKS
Federal outlays to aid State and local government construction
are summarized by agency in table P-3. Federal grants and loans
supplement State and local resources and provide incentives to build
roads; water, waste treatment and sewer facilities; airports, hospitals,
schools and other facilities.
Many Federal-aid programs now require that projects proposed for
Federal support be consistent with comprehensive planning for development of the area or region. To facilitate this objective, the Department
of Housing and Urban Development will contract to provide $60
million in comprehensive planning grants to State and local governments in 1971.
240
THE BUDGET FOR FISCAL YEAR 1971
Table P-3. GRANTS AND NET LENDING FOR PUBLIC WORKS: OUTLAYS
AND 1971 BUDGET AUTHORITY, BY AGENCY (in millions of dollars)
Outlays
Program and agency
Grants to State and local governments:
Funds appropriated to the President: Appalachian
regional development programs
Department of Agriculture:
Soil Conservation Service
Farmers Home Administration
Department of Commerce: Economic development
assistance
Department of the Army: Corps of Engineers—
Civil
Department of Health, Education, and Welfare:
Health Services and Mental Health Administration
National Institutes of Health
Office of Education
.
Department of Housing and Urban Development..
Department of the Interior:
Bureau of Outdoor Recreation
Office of Territories
Federal Water Pollution Control Administration.
Department of Justice: Law Enforcement Assistance Administration
Department of Transportation:
Federal Aviation Administration
Federal Highway Administration
Urban Mass Transportation Administration
Washington Metropolitan Transit Authority
Other civil
_
Subtotal civil grants. _
Department of Defense
Total grants
_
Lending to State and local governments:
Department of Commerce: Economic development
assistance
_.
Department of Health, Education, and Welfare:
Office of Education
Department of Housing and Urban DevelopmentDepartment of the Interior: Bureau of Reclamation
Department of Transportation: Federal Highway
Administration
District of Columbia
__
_
Other
..
Repayments and other
__
Total net lending
1969
actual
Budget
authority
1971
estimate
1970
estimate
1971
estimate
138
204
222
221
67
27
79
84
37
77
26
156
156
8
7
22
88
126
15
40
136
20
118
53
289
91
131
127
300
146
130
130
275
186
200
27
17
139
40
23
166
38
32
366
31
30
4,005
2
11
19
136
6
8
92
4,372
127
20
12
139
4,289
254
122
15
220
5,395
2.740
180
28
5,466
13
6,037
12
6,495
14
13,447
18
5,479
6,048
6,508
13,465
19
38
23
38
41
440
32
734
36
536
6
5
5
4
67
9
-309
40
109
6
-640
35
150
5
-454
100
28
4
-3
272
324
337
171
104
4,106
Federal grants vary by program. The Federal share is commonly
expressed as a percentage of the total project cost, and may be uniform
for all projects in some programs or variable in others in accordance
with such factors as population and relative financial ability of the
States.
SPECIAL ANALYSES
241
By far the largest outlays for construction grants are those of the
Federal Highway Administration in the Department of Transportation,
which administers several highway programs financed from trust funds.
The National System of Interstate and Defense Highways—a 42,500mile network of limited access roads—is nearing completion and now
has 28,750 miles open to traffic. An additional 5,259 miles of this system
are under construction, and 6,615 miles are in engineering design or
right-of-way acquisition status. The Federal share of the cost of this
system is 90%. For most other highway programs, the Federal share
is 50%.
The Federal Aviation Administration administers a program providing for 50% of the cost of certain airport facilities. Legislation is recommended to provide matching grants and increased user charges to
help finance new airport facilities estimated to cost $5 billion over
the next 10 years. The Urban Mass Transportation Administration
provides grants for up to two-thirds of net project costs of mass
transportation facilities. Legislation is proposed to provide contract
authority of $3.1 billion over 5 years to permit communities to arrange
in advance for their share of new project costs.
Within the Department of Health, Education, and Welfare, the
Office of Education provides grants for higher education facilities and
libraries on a matching basis, and for elementary and secondary schools
on the basis of the increased number of children of Federal employees.
No new budget authority is being requested for these programs in 1971.
A major reform is being proposed in the program of assistance to
schools in federally affected areas, and greater use will be made of
Federal interest subsidy grants on private loans for higher education
facilities. The Health Service and Mental Health Administration
administers grants for public hospitals and mental health centers, and
the National Insitutes of Health provide grants for teaching facilities
in the health professions, and for health research and library facilities.
The Department of Housing and Urban Development provides
grants for basic water and sewer facilities and neighborhood facilities. In the Department of the Interior, grant programs are administered by the Federal Water Pollution Control Administration
for waste treatment works and related research facilities, and by the
Bureau of Outdoor Recreation for recreation facilities.
As part of the major new proposals to improve environmental
quality, legislation is recommended to provide $4 billion of contract
authority over 5 years to the Department of the Interior for grants
to communities for the construction of waste treatment works. Of
that amount, $800 million would be allocated in 1971 and in each of
the succeeding four fiscal years. The total Federal share would stimulate about $10 billion of construction.
Federal loans on favorable terms are also available to State and
local governments for construction of certain types of public works
such as public housing, water and sewer developments, and urban
rehabilitation.
CIVIL PUBLIC WORKS
The following sections provide additional details on civil works
construction. For most direct Federal projects, the need for construction is determined by preliminary studies and surveys by the responsible agencies. For many of the larger projects, such studies become the
390-700 O—70
16
242
THE BUDGET FOR FISCAL YEAR 1971
basis for specific authorizing legislation required before appropriations
may be enacted. In other programs, individual projects are considered
authorized on the basis of general legislation.
New and continuing work.—For projects underway in 1971, table
P—4 indicates the total cost, the progress through the budget year,
and the estimated outlays required to complete the projects.
Table P-4. ESTIMATED COST OF 1971 DIRECT FEDERAL CIVIL PUBLIC
WORKS, BY CONTINUING AND NEW WORK (in millions of dollars)
Program and agency
Continuing work:
Department of Agriculture: Forest Service
Department of the Army: Corps of Engineers—
Civil _ _
Department of Health, Education, and Welfare:
Health Services and Mental Health Administration
Department of the Interior:
Bureau of Indian Affairs
National Park Service
Bureau of Reclamation
_
Bonneville Power Administration. _ _ _ _ _ _ _
Post Office Department
_
Department of Transportation:
Coast Guard
Federal Aviation Administration
General Services Administration
_
National Aeronautics and Space Administration
Veterans Administration
Tennessee Valley Authority.__ __
Other
Total continuing work
New projects and features in 1971:
Department of Agriculture: Forest Service
Department of the Army: Corps of Engineers—
Civil
-.-_
Department of Health, Education, and Welfare:
Health Services and Mental Health Administration
Department of the Interior:
Bureau of Land Management
Bureau of Indian Affairs
_
_ _
__
Bureau of Reclamation
__ _
Bonneville Power Administration
Department of Justice: Federal Prison System
Post Office Department
_
_ _ __
Department of Transportation:
Coast Guard
Federal Aviation Administration.
Treasury Department
General Services Administration
National Aeronautics and Space Administration. __
Veterans Administration
_ __ __
Tennessee Valley Authority
Other
__
Total new projects and features.. __
Total
estimated
Federal
cost
Outlays
Prior
to
1971
Required
to
complete
1971
estimate
188
120
68
15,202
7,645
944
6,613
88
43
24
22
679
424
33
54
31
219
1,427
7,558
586
284
4,129
278
143
200
1,363
3,210
221
37
87
104
145
90
27
28
471
538
1,265
319
1,624
1,556
134
232
1,155
160
501
892
122
127
68
39
444
117
216
179
43
119
31,930
15,979
2,475
13,479
72
78
17
784
18
5
13
17
9
6
3
11
48
36
150
829
27
52
2
2
42
17
336
*
6
1
38
15
320
19
102
30
58
60
25
2,099
*
8
124
3
15
3
23
50
9
29
384
*
680
548
6
15
297
7
196
16
87
27
35
10
15
1,681
=
243
SPECIAL ANALYSES
Table P-4. ESTIMATED COST OF 1971 DIRECT FEDERAL CIVIL PUBLIC
WORKS, BY CONTINUING AND NEW WORK (in millions of dollars)— Continued
Program and agency
Total
estimated
Federal
cost
Outlays
1971
estimate
Prior
to
1971
Required
to
complete
Advance planning and site acquisition prior to start
of construction:
Department of the Army: Corps of Engineers—
CiviL...
Department of Health. Education, and Welfare:
Health Services and Mental Health Administration
Social Security Administration
Department of the Interior:
Bureau of Land Management
Bureau of Indian Affairs
._
.
Bureau of Sport Fisheries and Wildlife
National Park Service ___
Bureau of Reclamation
_
Department o{ justice: Federal Prison System
Post Office Department
Department of Transportation: Coast Guard
General Services Administration
National Aeronautics and Space Administration..
Veterans Administration
Tennessee Valley Authority
Other
Total advance planning
Total direct civil public works
85
26
21
39
7
3
2
1
1
5
2
5
2
5
30
3
3
2
*
3
5
25
31
3
6
3
*
22
7
72
2
141
11
20
3
10
87
3
1
1
2
7
22
1
20
2
9
2
5
434
134
102
202
34,463
16,142
2.961
15,361
50
1
35
6
10
2
'Less than $500 thousand.
Outlays for those projects which were started in years prior to 1971
are estimated at $2.5 billion in 1971,. about 84% of the total for
direct civil works construction. An additional $13.5 billion of outlays
is estimated to be required after 1971 to complete these projects.
New projects recommended for starting in 1971 are estimated to cost
$2.1 billion, of which $384 million will be spent in 1971.
The 1971 budget includes provision for the Corps of Engineers to
begin 16 projects and for the Bureau of Reclamation to initiate three
new projects and one project resumption. The Tennessee Valley
Authority will start a flood control project and two generating units
as well as other improvements. The Bonneville Power Administration
will add substation and transmission capacity to the Federal electric
power grid in the Pacific Northwest. The General Services Administration will start 12 new public buildings and the superstructures of three
others, and the Post Office Department will begin 29 post offices.
The Bureau of Prisons will replace the New York Detention Center
and will begin planning, and in some instances acquire sites, for six
additional prisons or correctional centers. The Government Printing
244
THE BUDGET FOR FISCAL YEAR 1 9 7 1
Office will acquire a site and develop plans for a new plant in the
Washington metropolitan area.
Public works planning and surveys.—Prior to undertaking construction, preliminary planning, surveys, and investigations are generally
required. Before construction of individual water resource projects,
coordinated long-range economic, hydrologic, and land-use projections
are also employed in comprehensive river basin planning to help assure
economic design of facilities. As indicated earlier, outlays for such
studies are not included in the summary tables in this analysis.
Outlays for advance planning and site acquisition for projects to be
undertaken after 1971 are shown in table P-4.
Authorized reserve of civil public works.—Most agencies that regularly
build civil works projects maintain an authorized reserve which is
drawn upon as necessary to fulfill program needs and budgetary policy.
Projects in such reserve status require only appropriations and detailed planning for starting. The current planning status of the
authorized reserve is summarized in table P-5.
Table P-5. RESERVE OF PRESENTLY AUTHORIZED PROJECTS AND
PROGRAMS FOR UNDERTAKING AFTER 1971 (in billions of dollars)
Agency
Agriculture: Forest Service
Army: Corps of Engineers—
Civil
Health, Education, and Welfare:
Health Services
Interior:
Bureau of Land Management. _
Bureau of Sport Fisheries and
Wildlife
Bureau of Reclamation.
Bonneville Power Administration. _
Post Office
Transportation: Federal Aviation Administration _
General Services Administration.
Veterans Administration
Tennessee Valley Authority
Other agencies
Total
Estimated
total
Federal
cost
Status of plans as of
June 30. 1971
Status of plans as of
June 30. 1970
Contract
could
be let
In
process
0.9
0.2
0.7
9.2
2.4
5.4
.2
*
.2
.3
1.9
Contract
could
be let
In
process
0.3
0.7
1.4
3.1
4.9
1.2
.1
.1
*
.1
.1
*
.1
.2
*
.1
.1
*
1.2
.2
.2
.2
.4
*
1.4
.1
.5
.2
*
.1
.4
.7
.2
.5
.9
.9
.3
2.4
.3
.1
.2
*
.2
*
.2
.7
*
18.6
4.6
Not
started
.5
.5
Not
started
.4
.3
.3
.4
.1
*
.2
2.1
.2
.2
.5
*
.8
*
.1
1.5
.2
8.1
5.9
6.7
7.6
4.3
.6
.4
.1
*Less than $50 million.
Civil public works by function.—Table P-8 at the end of this analysis
provides detailed information on budget authority and outlays for
public works programs by agency and program grouped according to
245
SPECIAL ANALYSES
the major functional categories used in the budget. Each major function, with the exception of interest, includes public works programs,
although the level of budget authority and outlays varies widely.
Only two civil functions—commerce and transportation and natural
resources—include public works activities with outlays in excess of a
billion dollars. In 1971, these two functions taken together account
for $8.1 billion or 83% of the total $9.8 billion of outlays for civil
construction. Direct construction—principally of water resources
projects—is the major component of the natural resources construction
activities. The trend of outlays for the major types of water resource
developments is shown in the accompanying chart, and table P-6
provides details for the individual agencies and types of developments.
Outlays for Water Resources and Related Developments
$ Billions
2.5
2.0-
1.5-
Multiple-purpose with Hydroelectric Power
1.0-
.5Flood Control and Beach Erosion
1962
1963
Fiscal Years
I
I
i
L
1964
1965
1966
1967
1968
1969
1970
1971
Estimate
Some of the remaining civil functions—such as the international
veterans, space, and income security functions—include principally
direct Federal construction. Others—such as community development
and housing, education and manpower, and health functions—include
principally programs to aid State and local construction. Taken together, outlays for construction activities in the former group are
estimated at $185 million in 1970 and at $166 million in 1971, or a
decrease of 10%. In the latter group taken together, outlays are estimated at $953 million and $950 million, a negligible change from 1970
to 1971.
246
THE BUDGET FOR FISCAL YEAR 1971
Table P-6. OUTLAYS FOR WATER RESOURCES AND
DEVELOPMENTS (in millions of dollars)
Program and agency
1969
actual
Flood control works:
Agriculture: Soil Conservation Service (mostly grants) _.
Army: Corps of Engineers—Civil
__
Grants
Interior: Bureau of Reclamation..
_
_.
State: International Boundary and Water Commission.
Tennessee Valley Authority
RELATED
1970
estimate
1971
estimate
66.6
289.6
15.1
10.6
7.0
8.0
79.1
316.2
20.4
3.0
.4
9.2
84.1
417.6
7.9
3.3
3.8
6.7
396.9
1.5
428.3
3.7
523.4
2.6
16.1
16.8
16.9
8.2
79.0
4.4
4.0
56.7
4.2
6.0
64.6
3.9
107.7
81.7
91.4
204.1
203.6
196.5
.2
.1
.3
.7
.3
204.4
203.9
197.5
Multiple-purpose dams and reservoirs with hydroelectric power
facilities:
Army: Corps of Engineers—Civil
_ _.
Interior: Bureau of Reclamation..
Tennessee Valley Authority
__
300.5
65.9
12.2
254.3
65.0
13.7
313.2
111.7
10.4
Total multiple-purpose facilities
Thermal-electric powerplants: Tennessee Valley Authority.
378.6
184.4
333.0
262.3
435.3
388.6
24.6
64.1
25.1
98.4
4.7
71.6
94.2
3.6
74.8
202.6
199.8
184.7
24.4
34.0
30.8
80.2
39.5
119.0
35.7
146.0
35.0
Total flood control works
Beach erosion control: Army: Corps of Engineers—CivilIrrigation and water conservation works:
Agriculture: Soil Conservation Service (mostly grants).
Interior:
Bureau of Indian Affairs
Bureau of Reclamation
Loan and grant program
_
_
Total irrigation works.
Navigation facilities:
Army: Corps of Engineers—Civil
Transportation: Saint Lawrence
Corporation
Tennessee Valley Authority—
Seaway
Development
_
Total navigation facilities.
Power transmission facilities:
Interior:
Bureau of Reclamation
Bonneville Power Administration
Southwestern Power Administration.
Tennessee Valley Authority.
Total power transmission facilities.
Water supply and waste disposal facilities:
Agriculture: Farmers Home Administration (grants)
Housing and Urban Development:
Grants
Loan disbursements
Interior:
Bureau of Reclamation
Federal Water Pollution Control Administration (grants).
State: International Boundary and Water Commission
Total water supply and waste disposal
Total water resources and related developments.
109.4
4.5
12.1
19.9
25.4
134.5
.1
158.0
.4
32.4
322.5
.5
298.6
372.5
567.2
1,774.7
•1,885.2
247
SPECIAL ANALYSES
NATIONAL DEFENSE PUBLIC WORKS
Table P-8 also provides information on budget authority and outlays for national defense public works by agency and program.
Department ojDefense—Military.—Outlays for construction required
for strategic and general war forces and for general support are expected
to decrease in 1970 and remain at about the same level in 1971. The
figures shown reflect the impact of the deferral of 75% of new construction contracts in 1970, and the continued restraints in 1971.
Budget authority of $1.6 billion is recommended in 1971 for new
and replacement construction for the armed services, a 50% increase
over the 1970 level. This includes the design and construction of
facilities required for the Safeguard antiballistic missile system, for
replacement of deteriorated hospital facilities, for new and improved
troop housing, and for 8,000 new family housing units.
Atomic Energy Commission.—Budget authority and outlays for
construction of atomic energy facilities are expected to decline slightly
from 1970 to 1971. Work will continue on the world's largest accelerator for research in high-energy physics and on a medium-energy
accelerator as well as facilities for the fast breeder civilian power
reactor development program. In 1971, design will begin on a project
to increase the capacity of the uranium enrichment plants as part of
the long-term Cascade Improvement Program.
AID TO COOPERATIVES AND NONPROFIT GROUPS
In some instances, Federal aid programs provide support to private
nonprofit institutions which provide services similar to those furnished by State and local governments. Table P-7 provides information on Federal outlays to aid construction by such private institutions. These outlays are not included in the totals for public works
in other parts of this analysis.
Table P-7. FEDERAL OUTLAYS FOR CONSTRUCTION BY COOPERATIVES
AND NONPROFIT GROUPS (not included in public works) (in million* of dollar*)
Program and agency
1969
actual
1970
1971
Expenditures:
Grants for private construction:
Department of Health, Education, and Welfare:
Health Services and Mental Health Administration:
Medical facilities construction
National Institutes of Health: Health educational research and library facilities
Office of Education: Higher education facilities
Gallaudet CollegeHoward University
Total expenditures
150
158
137
80
69
1
3
64
64
2
7
65
59
1
19
303
295
281
248
THE BUDGET FOR FISCAL YEAR
1971
Table P-7. FEDERAL OUTLAYS FOR CONSTRUCTION BY COOPERATIVES
AND NONPROFIT GROUPS (not included in public works) (in millions of dollars)—Con.
Program and agency
1969
actual
1971
estimate
1970
estimate
Lending:
Department of Agriculture: Rural Electrification Administration : Electrification and telephone facilities.__
Department of Health, Education, and Welfare:
Health Services and Mental Health Administration: Medical
facilities
Office of Education: Higher education facilities
Department of Housing and Urban Development: College
housing- _
_ _ _
Repayments..
402
505
492
54
1
52
15
67
91
-198
124
-185
51
-198
348
496
427
651
791
708
Total net lending
Total Federal outlays
.__
Table P-8. FEDERAL PUBLIC WORKS ACTIVITIES (in millions of dollars)
By major function and agency
OUTLAYS
BUDGET AUTHORITY
Function, agency, and program
1969
1970
1971
1969
1970
1971
CIVIL PUBLIC WORKS
International Affairs and Finance
Department of State:
Foreign Service buildings
Cultural and Technical Interchange
Center, Hawaii (grant)
International Center, Washington, D.C.
(grant)
United States Information Agency: Radio
facilities and special international exhibitions
Total international
finance
3.6
1.1
3.2
3.2
.7
.2
3.1
.2
.2
7.7
12.3
7.3
1.0
affairs and
1.1
1.0
3.6
11.6
16.0
10.7
32.9
53.2
34.6
65.3
60.0
72.0
Space Research and Technology
National Aeronautics and Space Administration: Research and space flight
facilities
__ __
- 70-15
249
SPECIAL ANALYSES
Table P-8. FEDERAL PUBLIC WORKS ACTIVITIES (in millions of dollars)—Con.
By major function and agency
BUDGET AUTHORITY
Function, agency, and program
1969
actual
OUTLAYS
1970
1971
estimate estimate
1969
actual
1.6
11.2
12.1
8.9
1.7
1.0
1.4
1970
1971
estimate estimate
CIVIL PUBLIC WORKS—Continued
Agriculture and Rural Development
Department of Agriculture:
Laboratories, research facilities, and
Library
Cooperative State Research Service:
Grants for research facilities
Soil Conservation Service: Resource
conservation and development: Grants.
Farmers Home Administration:
Grants for rural water and sewer
systems
Rural renewal loans
Grants for farm labor housing
Total agriculture and rural development
Natural Resources
Department of Agriculture:
Soil Conservation Service: Flood prevention and watershed protection:
Direct work
Grants
Forest Service: Roads, research, recreational and protective facilities1
Department of Defense—Civil: Corps of
Engineers—Civil:
Flood control, navigation and multiplepurpose projects with power
Trust funds
Grants
Department of the Interior:
Bureau of Land Management: Roads
and other facilities
-_
Bureau of Outdoor Recreation: Grants
for recreation facilities
Office of Coal Research: Demonstration plants
- __ _Bureau of Commercial Fisheries:
Facilities
Grants
Bureau of Sport Fisheries and Wildlife:
Facilities
National Park Service: Parkways, roads,
buildings and utilities *
Bureau of Reclamation:
Irrigation and multiple-purpose projects with power *
_
_ __
Loans, small irrigation projects
Repayments
Grants, small irrigation projects
See foo
end of table.
.5
3.6
1.0
.8
4.3
7.4
2.9
3.5
4.0
28.0
1.3
4.2
46.0
24.0
2.5
34.0
.7
5.7
30.8
2.5
24.4
1.2
2.7
34.9
=====
57.4
35.5
44.1
57.0
51.1
.2
59.2
.2
65.5
.1
69.1
.2
63.7
.2
75.6
.4
80.3
179.6
187.9
117.9
104.0
120.4
140.0
838.3
18.7
15.1
740.4
15.8
20.4
862.9
27.6
6.6
815.6
24.6
15.1
795.7
18.2
20.4
952.3
29.6
7.9
18.9
16.1
14.6
13.1
17.4
15.9
22.5
30.9
31.2
26.7
40.0
38.1
2.5
7.8
8.0
1.0
10.1
7.2
1.2
2.3
1.0
.8
.7
.8
2.7
1.9
.7
1.4
1.9
4.3
2.6
4.5
3.4
5.8
5.7
50.3
17.0
42.2
38.1
33.3
197.2
3.0
-1.3
299.0
5.3
-1.4
.4
197.1
4.4
-1.4
200.0
5.7
-1.3
175.3
5.1
-1.4
.4
224.0
5.3
-1.4
6.0
250
THE BUDGET FOR FISCAL YEAR 1971
Table P-8. FEDERAL PUBLIC WORKS ACTIVITIES (in millions of dollars)—Con.
By major function and agency
BUDGET AUTHORITY
1969
actual
1970
1971
OUTLAYS
1970
1969
1971
estimate
CIVIL PUBLIC WORKS—Continued
Natural Resources—Continued
Department of the Interior—Continued
Power transmission facilities:
Bonncville Power Administration *
Southwestern Power Administration._
Federal Water Pollution Control Administration:
Buildings and facilities
_
Grants for waste treatment works and
research facilities.
_
Department of State:
International Boundary and Water
Commission: Water resources projects
and Chamizal settlement_
Facilities for International Pacific Halibut Commission (grant)
_
Tennessee Valley Authority: Power, water
resources, and chemical facilities
Total natural resources
103.0
4.0
220.5
5.8
109.4
4.5
98.4
4.7
94.2
3.6
.5
2.2
1.8
803.8 4,004.9
139.2
166.4
366.5
4.2
9.2
.9
4.2
364.4
496.0
96.9
3.1
.4
90.9
2.2
.2
27.2
24.6
223.2
277.9
,723.2 2.375.0 5,683.9 1,857.4 1,960.5 2,507.1
Commerce and Transportation
Funds appropriated to the President:
Appalachian regional development programs: Grants for highways, education, and health facilities
Public works acceleration: Grants
Department of Commerce:
Economic development assistance:
Development facilities grants
Development facilities loans
__
Repayments
Environmental Science Services Administration : Structures
Bureau of Standards: Buildings
Maritime Administration: Improvements
Department of Defense—Civil: Panama
Canal Company: Canal and harbor improvements
_
__
_
Department of the Interior: Bureau of
Indian Affairs: Roads
Post Office Department: Post offices, improvements and alterations
Department of Transportation:
Coast Guard: Shore facilities and navigation aids
_
__
Federal Aviation Administration:
Air traffic control, navigation and research facilities
Dulles and National Airports
See footnotes at end of table.
310.6
220.4
221.4
137.5
2.0
203.6
4.2
221.6
153.6
26.4
152.9
21.6
156.3
38.0
125.9
18.6
-.6
136.3
37.6
-.4
156.0
23.2
-.4
.1
.9
3.4
.2
.5
.1
2.3
.4
2.7
1.0
.8
.2
(2)
13.3
14.5
14.4
18.8
21.1
20.0
30.0
30.0
89.7
199.3
308.3
36.5
93.2
164.6
42.3
28.2
16.9
46.4
41.3
36.2
120.0
.7
224.0
1.9
190.0
11.0
70.9
1.4
132.0
135.0
6.0
251
SPECIAL ANALYSES
Table P 8. FEDERAL PUBLIC WORKS ACTIVITIES (in millions of dollars)—Con.
By major function and agency
BUDGET AUTHORITY
OUTLAYS
Function, agency, and program
1969
I
I
1970
'
1971
1969
I
1970
I 1971
CIVIL PUBLIC WORKS—Continued
Commerce and Transportation—Con.
Department of Transportation—Con.
Federal Aviation Administration—Con.
Federal-aid airport program: Grants..
Proposed legislation for airways and
airport development:
Direct work
Grants
Federal Highway Administration:
Forest and public land highway
grants 3
_ _
Chamizal Memorial Highway: Grant
Federal-aid highways and other trust
funds:
Grants
Loans
- .
Alaskan highway grant and other
Federal Railroad Administration: Alaska
70.0
46.5
11.0
46.9
103.7
80.0
72.5
220.0
46.6 -136.2
4.0
Total commerce and transportation.
89.0
2.3
105.0
50.0
31.7
4.0
.9
5,376.6 5,348.2 5,531.0 4,067.6 4,336.1 4,284.7
40.0
35.0
100.0 100.0 100.0
3.0
.6
.6
Urban Mass Transportation Administration: Transportation facilities:
Grants
Loans
_.
Repayments
St. Lawrence Seaway Development
Corporation: Alterations
Federal Communications Commission:
Facilities
_
38.0
90.0
148.3
(')
150.7 2,740.0
.1
253.8
-.2
126.8
1.0
-.2
.2
.3
.7
136.1
.1
(')
-.3
(*)
6,516.7 6,668.8 9,470.0 4,819.5 5,319.7 5,599.6
Community Development and
Housing
Department of Housing and Urban Development:
Grants for neighborhood facilities
Low-rent public housing:
Loans. .
.
_ _ _ _ _ _ _
Repayments. _
New community development grants
Grants for water and sewer facilities
Public works planning:
Loans
_ __
Repayments and other.
Public facility loans
Repayments
Liquidating programs: Repayments...
Federal Home Loan Bank Board: Headquarters
_
Total community development and
housing
_
See footnotes at end of table.
35.0
165.0
3.2
26.0
38.0
40.0
2.5
135.0
285.8 598.0 423.0
-273.1 -598.0 -411.0
2.0
10.0
.5
80.2 119.0 146.0
150.0
3.3
3.2
8.4
203.2
10.6
40.0
189.2
203.2
5.2
-6.2
47.8
-3.8
-.2
7.4
-6.0
42.0
-4.7
-.2
3.6
-5.0
40.0
-5.8
-.2
.4
.4
5.4
146.6
184.4
236.0
252
THE BUDGET FOR FISCAL YEAR 1 9 7 1
Table P-8. FEDERAL PUBLIC WORKS ACTIVITIES (in millions of dollars)—Con.
By major function and agency
OUTLAYS
BUDGET AUTHORITY
1969
1970
1971
1969
1970
1971
estimate
CIVIL PUBLIC WORKS—Continued
Education a n d Manpower
Department of Health, Education, and
Welfare:
Office of Education:
Schools in federally affected areas:
At Federal installations
Grants
___
Higher education facilities:
Grants.. _
_ _ _ _ _
___
Loans _
____
Repayments. _
Community education facilities
(grants)
Department of Housing and Urban Development:
College housing loans.
Repayments
Department of the Interior: Bureau of
Indian Affairs: Schools and other facilities
National Science Foundation: Research
facilities
Smithsonian Institution:
John F. Kennedy Center for Performing
Arts
Museums
Total education and manpower
2.4
20.0
6.5
33.3
5.8
26.7
247.0
40.5
-1.0-
244.0
32.5
-1.5
236.8
36.0
-1.9
9.2
22.4
22.7
11.6
200.0
101.2
-19.5
86.3
—20.7
68.9
-22.0
13.0
1.1
79.6
33.0
11.1
3.0
43.0
25.3
26.2
14.3
29.3
39.6
39.5
4.3
1.3
4.6
5.9
5.9
3.0
14.9
12.5
1.3
1.3
16.3
3.9
12.6
6.0
10.7
380.4
98.4
20.2
468.4
467.0
415.1
.4
4.5
6.5
Health
Department of Health, Education, and
Welfare:
Consumer Protection and Environmental Health Services: Buildings
Health Services and Mental Health
Administration:
Grants for mental health centers
Grants for medical facilities
Indian health facilities. _
Grants for Indian health facilities
Other facilities, including St. Elizabeths Hospital*
National Institutes of Health:
Grants for health, educational research, and library facilities
Buildings and facilities
Social Security Administration: Buildings and district offices (trust funds)
Total health
See footnotes at end of table.
.3
7.2
114.5
17.3
.9
14.0
67.5
19.0
2.0
22.5
18.0
13.6
104.2
14.3
.3
15.6
114.0
22.8
1.2
16.1
112.4
22.4
1.4
.2
2.3
.1
9.2
6.3
6.7
65.6
88.3
1.0
88.3
53.3
1.0
127.3
7.4
130.4
1.9
2.2
1.1
2.2
1.1
196.6
130.0
301.4
298.9
205.7
196.3
253
SPECIAL ANALYSES
Table P-8. FEDERAL PUBLIC WORKS ACTIVITIES (inmillionsof dollars)—Con.
By major function and agency
OUTLAYS
BUDGET AUTHORITY
1969
1970
* *
1971
1969
1970
*
1971
stimate
CIVIL PUBLIC WORKS—Continued
Income Security
Social Security Administration: Buildings
and district offices (trust funds)
Total income security
7.9
9.5
6.2
7.9
9.5
6.2
7.9
9.5
6.2
7.9
9.5
6.2
1.0
.7
.2
.2
1.2
.1
4.1
1.7
1.2
1.1
1.5
.2
19.4
86.9
76.8
57.6
92.7
70.8
4.0
4.0
7.5
1.8
.8
4.0
.1
5.0
25.1
91.2
85.6
65.9
99.2
77.5
1.2
6.3
15.6
2.1
3.8
9.6
Veterans Benefits and Services
Department of Defense—Civil:
Army: Cemeteries
Soldiers' Home (trust fund).
Veterans Administration:
Medical care facilities
Construction of State nursing homes
grants
Corregidor-Bataan Memorial
Total veterans benefits and services.
General Government
Legislative Branch:
Architect of the Capitol: Buildings and
James Madison Library
- Government Printing Office: Building
3.4
3.9
Department of Defense—Civil:
Army: Power and water systems,
Ryukyu Islands:
Loans
Repayments
_. .
Canal Zone Government: Improvements.
Department of the Interior:
Office of Territories: Public facilities in
Samoa, Guam, and the Trust Territory of the Pacific Islands:
Grants
Loans
Repayments
Department of Justice:
Immigration and Naturalization Service: Border facilities
Federal Prison System: Prison facilities.
Law Enforcement Assistance Administration: Grants for police stations,
correctional institutions and court
buildings
Treasury Department:
Federal Law Enforcement Training
Center
Bureau of Customs: Border facilities
Bureau of Engraving and Printing: Air
conditioning
Bureau of the Mint: Philadelphia Mint.
Secret Service: Training facilities
See footnotes at end of table.
-7.8
m
12.8
4.1
-.3
(2)
.4
.8
-.4
1.5
4.3
-.2
3.2
-.4
3.1
30.4
23.5
4.5
4.6
__m ** - . 4
16.6
7.4
-.3
22.6
4.8
-.3
32.0
5.3
_ 4
.3
1.2
1.6
23.7
2.7
.2
2.9
1.3
9.8
13.0
19.0
2.0
11.0
1.0
.1
5.0
.2
.4
.1
3.1
.2
.3
5.7
.6
1.8
.7
-.2
1.3
1.8
.7
(*)
.4
5.0
.1
254
THE BUDGET FOR FISCAL YEAR
1971
Table P-8. FEDERAL PUBLIC WORKS ACTIVITIES (in millions of dollars)—Con.
By major function and agency
OUTLAYS
BUDGET AUTHORITY
Function, agency, and program
1969
actual
1970
estimate
62.9
69.6
168.5
130.3
.1
142.9
(*)
162.2
.9
73.5
-2.6
.1
61.5
-5.7
20.0
27.5
-4.0
.9
67.4
-2.6
.1
109.0
-5.7
7.3
149.9
-4.0
43.8
126.1
180.0
6.1
19.9
122.1
189.8
304.8
4%. 7
240.5
312.5
518.1
1971
1969
actual
1970
1971
estimate estimate
CIVIL PUBLIC WORKS—Continued
General Government—Continued
General Services Administration: Construction of public buildings, sites and
Central Intelligence Agency: Headquarters.
District of Columbia:
Grants
Loans
Repayments
Grant to Washington Metropolitan Area
Transit Authority
Total general government.
Total civil public works.. _
9,320.9 10,045.3 16,169.6 7,923.3 8,787.2 9,792.4
NATIONAL DEFENSE PUBLIC
WORKS
Department of Defense—Military:
Interservice activities:
Construction, Defense agencies
Family housing
Civil defense:
Grants for emergency centers
Federal emergency centers
-.
Army:
Construction
Construction, Army Reserve
Construction, Army National Guard
(grants)
Navy:
Construction
—
Construction, Naval Reserve
Air Force:
Construction
Construction, Air Force Reserve
Construction, Air National Guard
41.8
48.7
33.9
124.8
45.6
219.4
10.0
136.1
15.0
150.0
32.0
131.1
2.4
1.9
1.8
3.2
5.1
2.1
3.9
1.7
2.5
1.4
504.1
3.0
237.2
10.0
658.0
10.0
434.9
1.5
426.5
9.0
453.1
10.0
2.7
15.0
15.0
8.4
7.7
11.0
291.5
5.0
300.0
9.6
326.1
5.0
418.4
6.5
300.3
8.0
300.9
6.0
260.8
4.3
8.3
284.3
5.3
13.2
297.2
4.0
8.0
480.5
2.8
10.3
320.0
4.3
10.0
300.0
5.0
10.0
Total, Department of DefenseMilitary
: - - . - — - 1,172.6 1,037.1 1.591.5 1.516.5 1,256.3 1,263.0
243.4
275.1
292.9
178.4
339.4
184.5
Atomic Energy Commission: Facilities
Total national defense public works. 1,512.1 1,221.6 1,769.8 1,760.0 1,549.2 1,538.1
Total civil and defense public works. 10,832.9 11,266.9 17,939.4 9,683.3 10,336.4 11330.6
1
2
1
Includes small amounts from trust funds.
Less than $50 thousand.
Legislation proposed to include forest and public land highways in trust funds in 1971, and
1971 amounts are included in trust funds.
SPECIAL ANALYSIS Q
FEDERAL RESEARCH, DEVELOPMENT, AND RELATED PROGRAMS
This analysis identifies Federal obligations and expenditures for the
conduct of research and development and for facilities related to these
activities.
Total Federal obligations for research and development, including
facilities, will be $15.8 billion in 1971 compared to $16.4 billion in 1970.
Increases totaling $0.1 billion are provided for a number of civilian
agencies. These are more than offset by decreases of $0.1 billion for
the Department of Defense and of $0.6 billion for the National
Aeronautics and Space Administration, primarily as a result of a
decline in requirements for the manned lunar landing program. Total
expenditures will decrease from $15.9 billion to $15.7 billion.
The 1971 budget initiates efforts to make more effective use of the
Federal research and development dollar and to foster research more
directly related to the understanding and solution of a broad range of
national problems. Emphasis is being placed on research and development relating to environmental, education, housing, transportation,
and crime problems. In this process more attention has been given to
research and development which can effectively assist in achieving both
specific agency objectives and the broader goals of the administration.
Research.—Total Federal obligations for the conduct of research will
increase from $5.5 billion in 1970 to $5.8 billion in 1971. Expenditures
will increase from $5.5 billion in 1970 to $5.6 billion in 1971.
Obligations for Research
5 -
4 -
1969
1970
.1971
Estimate
255
256
THE BUDGET FOR FISCAL YEAR 1971
Table Q-1. CONDUCT OF RESEARCH 1 (in millions of dollars)
Obligations
Expenditures
Department or agency
1969
actual
Defense—Military functions
National Aeronautics and Space
Administration
Health, Education, and Welfare....
Atomic Energy Commission
National Science Foundation
Agriculture
Interior
Commerce
Transportation
Veterans Administration.
_
Office of Economic Opportunity
Housing and Urban Development. _
Smithsonian Institution
Justice
Allother
Total
1970
1971
estimate
1969
actual
1970
1971
estimate
1,401
1,425
1,493
1,462
1,401
1,461
,308
,174
417
1,530
1,139
424
277
272
176
65
1,461
1,312
490
1,428
1,259
,086
256
253
155
54
50
48
11
6
16
3
418
344
286
190
46
6
58
5,198
5,540
151
264
169
56
64
18
4
16
3
42
63
51
55
12
8
17
4
54
5,172
5,450
31
21
20
10
12
18
262
257
,153
424
284
55
38
48
76
71
62
55
22
417
5A
183
418
307
286
187
65
62
56
22
10
20
7
62
5,574
1
In this table and tables Q-2 and Q—3 "obligations" and "expenditures" for AEC are both
accrued costs which approximate obligations and expenditures for analysis purposes. Detail in all
tables may not add to totals due to rounding. For ease of comparison, tables Q— 2 and Q—4 are
listed in the same agency sequence.
Development.—The Federal Government finances development to
design, fabricate, test, and evaluate prototypes of materials, devices,
systems, or processes to accomplish specific agency missions. These
include prototypes of complex devices such as military weapons,
space vehicles, and nuclear reactors and of systems for such purposes
as missile defense and communications.
Total obligations for the conduct of development are estimated to
decrease from $10.1 billion in 1970 to $9.4 billion in 1971. Expenditures will decrease from $9.8 billion in 1970 to $9.7 billion in 1971.
Table Q-2. CONDUCT OF DEVELOPMENT (in millions of dollars)
Expenditure!
Obligations
Department or agency
Defense—Military functions
National Aeronautics and Space
Administration
_
Health, Education, and Welfare
Atomic Energy Commission
National Science Foundation
Agriculture. _
Interior
__
.
Commerce.
_ __
Transportation. _ _ __
_ _
Office of Economic Opportunity
Housing and Urban Development._
Justice
Allother
_ ...
Total
1970
estimate
1971
estimate
6,180
6,115
6,134
1,838
167
901
16
15
52
17
138
59
39
19
2,870
89
989
18
15
46
18
53
39
8
2
2,336
112
923
15
15
48
16
78
25
14
4
1,903
140
901
13
15
53
16
49
60
34
40
54
10,090
9,425
10,360
9,742
9,407
1970
estimate
1971
estimate
6,271
6,305
6,104
2,682
93
989
18
14
57
17
73
24
12
3
2,394
117
923
17
15
51
18
127
46
22
7
34
10,285
1969
actual
1969
actual
92
52
25
10
257
SPECIAL ANALYSES
Obligations for Development
% Billions
is
1961
1962 1963 1964 1965
1966 1967
1968 1969
Fiscal Yeats
1970 1971
Estimate
Academic research and development.—In 1971, total Federal obligations for research grants and contracts in colleges and universities will
increase by $114 million over 1970. It is anticipated that much of this
increase will be utilized to assist those in academic institutions who
wish to undertake research, within or across disciplines, related to
a better understanding of the nature and impact of the problems
faced by contemporary society.
Table Q-3. SUPPORT OF RESEARCH AND DEVELOPMENT IN COLLEGES
AND UNIVERSITIES (in millions of dollars)
Expenditures
Obligations
Department or agency
1969
actual
Health, Education, and Welfare
National Science Foundation .
DefenseAtomic Energy Commission
National Aeronautics and Space
Administration _ _ . _. .
Agriculture
All other
Total
390-700 O—7C
-17
1970
estimate
1971
estimate
604
219
243
101
641
213
225
100
653
230
224
97
88
81
98
144
61
55
131
69
70
105
80
87
1,532
1,426
1,449
1,475
1970
estimate
1971
estimate
663
210
247
101
617
225
223
100
678
270
220
97
128
62
60
110
70
73
1,471
1,418
1969
actual
258
THE BUDGET FOR FISCAL YEAR 1971
Research and development facilities.—Obligations and expenditures
for research and development facilities are as follows:
Table Q-4. RESEARCH AND DEVELOPMENT FACILITIES (in millions of dollars)
(Dbligations
Department or agency
Defense—Military functions
National Aeronautics and Space
Administration
Health, Education, and Welfare..„
Atomic Energy Commission
_
National Science Foundation Agriculture
_
_
Interior
Commerce
Transportation
Veterans Administration _
All other
Total
1969
1970
Expenditures
1971
1969
1970
1971
197
181
165
208
187
174
55
47
301
27
11
29
3
6
5
1
80
7
374
23
7
30
4
15
6
1
55
33
240
24
5
29
6
17
9
1
70
46
248
62
15
16
3
5
3
1
63
58
276
42
15
37
5
7
6
72
54
320
27
9
28
5
17
4
681
727
585
677
696
1
712
PROGRAMS OF AGENCIES WITH MAJOR RESEARCH AND
DEVELOPMENT ACTIVITIES
DEPARTMENT OF DEFENSE—MILITARY
The total Department of Defense 1971 obligations for research and
development, including facilities, will decrease by $148 million from the
1970 level reaching a total of $7,763 million.
For the conduct of research, obligations in 1971 are estimated to
increase by $68 million. Continued emphasis will be given to areas of
particular military significance such as electronics, marine technology,
propulsion technology, and guidance technology. Fundamental research providing scientific knowledge needed for advances in military
technology will also be pursued.
Obligations for development programs and operation of test and
evaluation facilities will reach a level of $6,104 million in 1971, a
decrease of $200 million below the 1970 level. This decrease reflects
the completion or phasing down of development on operational systems
such as the F - l l l and FB-111 aircraft, the Minuteman intercontinental ballistic missile system, and the Poseidon fleet ballistic missile
system. Advanced and engineering development programs, however,
show significant increases in 1971. These include the Air Force F-15
air superiority fighter; antiballistic missile technology; separate sea
and land based tactical air defense systems; the S-3A carrier based
antisubmarine aircraft; an undersea long-range missile system; and
the subsonic cruise armed decoy. A more detailed explanation of
development trends is given in the Budget Appendix on pages 294-300.
259
SPECIAL ANALYSES
Table Q-5. DEPARTMENT OF DEFENSE—MILITARY
DEVELOPMENT (in millions of dollars)
Purpose and budget title
Conduct of research and development:
Research, development, test, and evaluation:
Military sciences
_
_
Aircraft and related equipment__
Missiles and related equipment
Military astronautics and related equipment
Ships, small craft, and related equipment
Ordnance, combat vehicles, and related equipment _
Other equipment
Program wide management and support
Emergency fund
_
Other appropriations
_
Total, conduct of research and development, obligations.
Total, conduct of research, included above. _
Total, conduct of development, included above.
Research and development facilities, obligations _
Total obligations
_
RESEARCH
1969
actual
584
1,055
2,427
1,064
330
351
1,161
309
1970
estimate
AND
1971
estimate
391
540
1,607
2,324
678
290
314
1.146
336
75
429
573
1,664
2,227
482
376
329
1,159
348
50
389
7,672
1,401
6,271
7,729
1,425
6,305
7,597
1,493
6,104
197
7,869
181
7,910
1165
7,763
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
All activities of the National Aeronautics and Space Administration
are considered as research and development and are included in this
analysis.
Following completion of the expensive development phase of the
Apollo lunar landing program and the planned suspension of Saturn V
launch vehicle and spacecraft production, the emphasis on development within NASA will be shifting to the manned Apollo Applications Workshop program and to the technology studies required for
a space shuttle and a space station. Manned lunar missions will be
continued during 1971.
Research funding for space sciences will support the design of
unmanned experiments and instrumentation for the 1973 Venus/
Mercury and Pioneer-Jupiter missions. Increases will occur in space
applications for synchronous meteorological satellites and for the experimental Earth Resources Technology Satellites scheduled for
launch in the early 1970's. In cooperation with the Departments of
Agriculture, Interior, and the Navy these satellites will be used to
conduct experiments in the use of space acquired information in the
management of natural resources. Work will continue on advancing
capabilities in communications, navigation, traffic control, meteorology, and geodesy. NASA work on NERVA nuclear rocket engine
development also increases in 1971. Related work on NERVA is
conducted by the Atomic Energy Commission.
260
THE BUDGET FOR FISCAL YEAR
1971
Table Q-6. NATIONAL AERONAUTICS AND SPACE ADMINISTRATIONRESEARCH AND DEVELOPMENT (in million, of dollars)
Program and type of activity
Conduct of research:
Manned space flight
Space sciences
Space applications
Space technology
Aviation technology
Supporting activities
Research and program management-
1969
1970
1971
82
290
102
158
95
154
372
181
319
131
144
96
144
430
157
309
157
127
102
155
454
Subtotal, conduct of research, budget plan_
Subtotal, conduct of research, obligations. _
Conduct of development:
Manned space flight
Space sciences
Space applications
Space technology
Supporting activities
Research and program management
1,253
(1,308)
1,445
(1,530)
1,461
(1,461)
2,096
51
7
28
138
276
851
62
8
32
146
258
1,317
74
24
37
147
238
Subtotal, conduct of development, budget plan_
Subtotal, conduct of development, obligations. _
Research and development facilities, budget plan
Research and development facilities, obligations
2,596
(2,682)
2,357
(2,394)
(55)
(80)
1,838
(1,838)
35
(55)
Total budget plan 1 .
3,881
3,855
3,333
Total obligations....
4,045
4,004
3,354
1
"Budget plan" represents the distribution of new budget authority, including financing adjustments from prior years. "Obligations" reflect funds obligated from new budget authority and from
unobligated funds brought forward from prior years.
HEALTH, EDUCATION, AND WELFARE
Obligations of the Department of Health, Education, and Welfare
for research and development, including facilities, will increase by
$197 million to a level of $1,459 million in 1971.
Biomedical research and development will be significantly expanded
in 1971 in areas where there are clues to the prevention or curing of
diseases. A major increase will be made in efforts to understand the
relationship of viruses to cancer and in studies of the correlation
between heart disease and risk factors implicated in cardiovascular
disease. Other health-related research to be emphasized includes
population and family planning, drug abuse, and alcoholism, and infant and child health.
Added impetus will be given in 1971 to developing the technology to
control air pollution and to examining the health effects of environmental pollutants, food additives, and pesticides.
Additional details about Federal biomedical programs may be found
in Special Analysis K of this volume.
SPECIAL ANALYSES
261
Educational research and development will stress the improvement
of reading skills, early child development, and evaluation of the impact of educational programs. A prime component of these evaluation
efforts will be expanded support of the national study of the educational attainment of the population being administered by the Education Commission of the States. An increase provided for the experimental schools program, initiated in 1970, will test, develop, and
demonstrate comprehensive new approaches to increasing student
achievement in actual school situations.
ATOMIC ENEKGY COMMISSION
Operating costs of the Atomic Energy Commission fof conduct of
research and development will total $1,320 million, and obligations for
related construction and equipment will total $240 million.
The Commission's research program will continue in 1971 at approximately the same dollar level as in 1970. Funds will be redirected within
the physical and biomedical research programs in 1971 to accommodate
higher priority areas of research. One major particle accelerator for
high energy physics research will be shut down and other elements of
the physical research program reduced to permit an increase in research
associated directly with construction of two major new accelerators,
more effective use of other new facilities, and expansion in controlled
thermonuclear research.
The Commission's development programs include design and testing
of nuclear weapons, development of improved reactors, and development of peaceful uses of radioisotopes and nuclear explosives. There
will be an increase in 1971 in the reactor development program for
development of improved nuclear propulsion plants for naval ships
and for fabrication of the demonstration core for the Light Water
Breeder Reactor civilian power program. These increases will be
largely offset by decreases within the reactor development program.
Funds are also included to enable AEC to participate with industry
in a cooperative project to demonstrate the technology of the Liquid
Metal Fast Breeder Reactor civilian power program.
The Plowshare program, which seeks to develop peaceful applications of nuclear explosives, is being reduced and redirected in 1971
to shift program emphasis from excavation experiments to various
underground engineering applications, principally the exploitation of
marginal deposits of natural resources.
The AEC's budget for 1971 provides for obligations of $65 million
and expenditures of $68 million (compared with obligations of $70
million and expenditures of $35 million in 1970) for continued construction of the 200 Bev accelerator, located near Chicago. Also
included in 1971 are expenditures for continuation of several major
construction projects initiated in previous years and for procurement
of capital equipment.
262
THE BUDGET FOR FISCAL YEAR 1971
Table Q-7. ATOMIC ENERGY COMMISSION—RESEARCH AND DEVELOPMENT (in millions of dollars)
Program
Conduct of research:
Physical research
Biomedical research
Weapons research...
Other programs
1969
actual
274
86
1970
estimate
1971
54
3
278
87
57
2
274
86
57
417
424
418
443
498
26
13
9
424
447
28
14
10
432
424
25
8
Total, conduct of development, expenditures
989
923
901
Research and development facilities expenditures. _
248
276
320
1,654
1,623
1,640
___
__
Total, conduct of research, expenditures
Conduct of development:
Reactor development
_
Weapons development and testing-.
Production of special nuclear materials
Plowshare __
Other programs
Total expenditures__1
1
12
NATIONAL SCIENCE FOUNDATION
The total obligations of the National Science Foundation for research and development, including facilities, will increase from $317
million in 1970 to $384 million in 1971. This reflects a marked effort
to give support to research in areas where new scientific understanding
is needed to aid in the solution of pressing problems affecting mankind.
Increased funds are planned for research—within and across disciplines—on the environment, including studies of atmospheric processes,
oceanography and ecological systems, and on other problems of our
society.
Research to improve man's understanding and use of the seas and
the coastal zone will be expanded under the National Sea Grant
program and under the International Decade of Ocean Exploration
for which the Foundation has been assigned lead agency funding
responsibility. Funds are also included for the initiation of an Arctic
Research program which will be principally directed to ecological
studies of Alaska's North Slope.
Funding for 1971 includes $3.8 million to modify the 1,000-foot radio
astronomy antenna at the Arecibo Observatory in Puerto Rico which
will substantially improve the scientific usefulness of the instrument.
DEPARTMENT OF AGRICULTURE
Obligations for the Department of Agriculture for research and
development, including facilities, will increase from $294 million in
1970 to $306 million in 1971.
Research on rural community development, to be conducted
primarily by the State experiment stations, will increase in 1971 in
SPECIAL ANALYSES
263
keeping with the administration's concern with the economic develment of rural America by local initiative supported by local institutions. Additional funding is also included for ongoing research programs at the State experiment stations and schools of forestry.
Emphasis will also be given to research on reducing the cost of
producing beef and milk, on methods for utilizing remote sensing
data, on increasing timber production, in determining the comparative
advantage of U.S. farm products in world trade and on reducing
pollution from animal wastes.
DEPARTMENT OF THE INTERIOR
Obligations for the Department of the Interior for research, development, and related facilities will increase from $257 million in 1970
to $272 million in 1971.
One of the primary areas of emphasis will be pollution control and
prevention. This research will help attain the long-range goal of an
adequate supply of water suitable in quality for recreational, agricultural, and other public uses. Efforts to develop low-cost processes
for converting saline water to fresh water will be expanded. Funds are
also included to initiate Federal participation in an ongoing joint
private-public research program to reduce the costs of placing highvoltage transmission lines underground.
Research to reduce fatalities and injuries and to improve health
conditions in coal mines will be intensified, with emphasis on dust
control, prevention of cave-ins, and rescue techniques.
More research will be undertaken on technology for conversion of
coal to fuel gas and synthetic petroleum in order to augment present
reserves of energy resources. Research will also be intensified on magnetohydrodynamics (MHD), a promising technology involving direct
conversion of coal to electricity with minimal air and water pollution.
DEPARTMENT OF TRANSPORTATION
Obligations of the Department of Transportation for research and
development, including facilities, will increase from $204 million in
1970 to $226 million in 1971.
The increase in the Office of the Secretary of $9 million will expand
long-range research efforts to automate more fully the air traffic control system. The main emphasis is on new systems concepts and new
technology.
FAA obligations will be $72 million, about the same level as 1970.
However, a much larger portion of 1971 funds will be directed toward
development of the components of air traffic control system to meet
the air traffic growth forecast for the post-1975 era.
The Coast Guard will obligate $27 million in 1971, an increase of $10
million over 1970. The increase is mainly for the national ocean data
buoy project to provide improved meteorological and oceanographic
data from ocean areas.
The Federal Highway Administration program will increase from
$43 million in 1970 to $61 million in 1971. The increase reflects greater
264
THE BUDGET FOR FISCAL YEAR 1971
emphasis on motor vehicle and highway safety research to expand our
knowledge of the causes of highway accidents, injuries, and deaths.
The results of this research will aid in improving the crash resistance
of vehicle structures, in minimizing highway accident deaths and
injuries, and in improving driver ability to avoid accidents.
The Federal Railroad Administration will obligate $23 million in
1971, the same level as 1970. The main thrust of the program will be on
development and testing of an experimental high-speed tracked air
cushion vehicle.
Research and development in the Urban Mass Transportation
Administration will amount to $20 million in 1971. The program will
be directed toward solutions of problems in user and community
acceptance; stimulating private investments in promising areas of
technological innovation; and influencing institutional constraints
which inhibit the development and application of new systems.
DEPARTMENT OF COMMERCE
The Department of Commerce will obligate $99 million for research
and development and related facilities in 1971, an increase of $12
million over 1970.
The Environmental Science Service Administration will increase research designed to improve the detection and tracking of violent
storms and extend forecasting and data gathering programs. Additional effort will be devoted to satellite sensing devices, weather
modification studies, and the automation of aeronautical charting
production.
The Maritime Administration will focus primarily on research to
reduce the costs of constructing, operating, and maintaining the
American Merchant Marine.
GOVERNMENT-WIDE MARINE SCIENCE AND SPACE PROGRAMS
MARINE SCIENCE
Obligations for marine science, technology, and related activities
will increase by approximately $24 million to a total of $540 million
in 1971.
The major thrust in the new and expanded programs in civilian
agencies is directed toward observing, measuring, and understanding
conditions and trends in the environment and man's impact upon it.
Increases are provided in the National Science Foundation for the
International Decade of Ocean Exploration, for the Ocean Sediment
Coring program, for Arctic research, and for expanding the National
Sea Grant program—particularly to support coastal zone research.
Funds are provided in the Department of the Interior for the new
coastal zone management grant program and for the initiation of a
lake restoration program. Increases in the Department of Transportation will permit expansion of advanced development of ocean data
buoys for monitoring weather and sea conditions. In the Department
of Commerce, increases are provided in the Maritime Administration
for beginning a long-term program for reducing ship operating costs—
a part of the Administration's maritime program.
265
SPECIAL ANALYSES
Within the Department of Defense, the Advanced Research
Projects Agency will expand work on surface effects vehicles for use
in the Arctic. Increases of $42 million in civilian marine programs are
partially offset by reductions in Navy, chiefly in deep submergence
development and charting and mapping programs.
Table Q-8
FEDERAL MARINE SCIENCE, TECHNOLOGY AND RELATED
ACTIVITIES * (in millions of dollars)
Department or agency
1969
actual
Defense 2
Interior
_
National Science Foundation _. ._ _
Commerce
__
_
Transpo rta tion
Atomic Energy Commission
Health, Education, and Welfare
State.
.
_
_
Agency for International Development
Smithsonian Institution
National Aeronautics and Space Administration
_ -
Total obligations
-
_
1970
estimate
1971
estimate
261
81
265
99
247
95
35
38
41
49
63
59
20
11
7
7
2
2
31
10
7
8
3
2
43
10
9
8
3
2
2
2
2
465
516
540
1
The definition of marine science and technology used in this table is considerably broader
than research and development. Included are such diverse activities as mapping and charting,
marine environmental observation and prediction, planning for and development of coastal
areas for conservation and recreation, loans for promoting the expansion of fishing industries in
developing countries, and contributions to international organizations engaged in ocean related
activities. These figures are not strictly comparable to those shown for marine science and technology
last
year.
2
Excludes development of the Navy's surface effects ships program which will increase from
$8 million in 1970 to $20 million in 1971.
SPACE
In 1971 budget authority and expenditures for total Federal space
programs will decline, primarily as a result of the cancellation of the
Air Force's Manned Orbiting Laboratory, completion of the expensive development phase of the Apollo lunar landing program and
the planned suspension of Saturn V launch vehicle and spacecraft
production.
The operational meteorological, communications, and navigation
satellite systems of the Departments of Commerce and Defense are
included in the space piogram totals although they are not included
in the totals for research and development.
NASA programs are described in table Q-6 and on pages 825-831
of the Budget Appendix.
Department of Defense funding supports satellite development,
portions of missile development, and range operations. This includes
communications, navigation, and nuclear detection satellite programs.
Estimates for the Atomic Energy Commission reflect slight decreases related to the development of the NERVA nuclear rocket and
space nuclear electric power sources for space applications. Funds
for Interior and Agriculture support their participation in the Earth
Resources Technology Satellite project. National Science Foundation
space related activities are for research rockets and satellite and
observation instruments.
266
THE BUDGET FOR FISCAL YEAR 119 71
Table Q-9. FEDERAL SPACE PROGRAMS (in nullions of dollars)
Budget authority
Department or agency
1969
actual
National Aeronautics and Space
Administration *
Defense
Atomic Energy Commission
Commerce
Interior
National Science Foundation
Agriculture
Total
1
_
Expenditure! t
1970
estimate
1971
estimate
3.827
2,013
118
20
2
2
1
3.552
1,756
102
7
3
2
1
3.148
1.674
99
26
4
2
2
5.983
5.423
4.954
1969
actual
1970
estimate
1971
estimate
4,083
2,095
116
31
2
2
1
3,710
1,820
103
27
3
2
1
3.219
1,690
104
24
4
2
2
6.330
5.666
5.045
Excludes amounts f or aviation technology.
HISTORICAL SUMMARY
The table below gives historical data on total research and development expenditures by major agency.
Table Q-10. EXPENDITURES FOR RESEARCH AND DEVELOPMENT,* 1954-71
(in millions of dollars)
Fiscal year
1954
1955
1956
1957.
1958
1959___
1960
1961
1962
1963
1964
1965-.
1966
1967___
1968___
1969
1970 estimate.
1971 estimate.
Department of
Defense *
2,487
2.630
2.639
3.371
3,664
4,183
5.654
6,618
6.812
6,849
7.517
6.728
6.735
7.680
8,164
7,858
7,714
7,782
NASA*
90
74
71
76
89
145
401
742
1.251
2.539
4.171
5.093
5.933
5.426
4.724
4.252
3.889
3.403
AEC
383
385
474
657
804
877
986
.111
.284
.336
.505
.520
.462
.467
.594
.654
.623
.640
D/HEW
63
70
86
144
180
253
324
374
512
632
793
738
879
1.075
1.283
1.221
1.323
1.377
1 Including research and development facilities.
2
Includes civil functions.
' National Advisory Committee for Aeronautics prior to 1958.
NSF
4
9
15
31
34
54
64
83
113
153
203
206
241
277
315
342
342
347
Other
121
140
161
183
220
294
315
356
409
490
518
604
768
917
950
882
998
1.147
Total
3.148
3.308
3.446
4.462
4.991
5.806
7.744
9.284
10.381
11.999
14.707
14.889
16.018
16.842
17.030
16.208
15,889
15,696
PART 4
ANALYTIC PROGRAM
STRUCTURE
267
INTRODUCTION
Part 4, Special Analysis R> presents the budgets of a number of the
larger agencies in terms of the program structure used for program
evaluation and planning in each agency.
The program structures do not always conform to the organizational structure or appropriation pattern of an agency. This presentation, therefore, provides a different perspective from the view presented in Part 5 of the Budget, and cannot be directly interrelated
with those data.
268
SPECIAL ANALYSIS R
SELECTED AGENCY BUDGETS BY PROGRAM CATEGORIES
In this analysis Federal financial data are displayed in terms
of the program structures of selected agencies for the three years
covered by the budget. Program structures are developed to reflect the major objectives and outputs of agency expenditures and are
intended for use primarily in program evaluation and planning.
This is in contrast to appropriation structures, which reflect objects of
expenditure, such as personnel pay and construction and are useful
for the control function of budgeting. Twenty agencies are included
in this analysis; they account for $201.3 billion, 93% of the recommended budget authority for 1971.
Budget authority shown in this way reveals the relative magnitudes
of effort being devoted to each objective as well as information on
the changes in the level of effort over time. The tables, however, make
no claim to show how efficiently or effectively various objectives are
being achieved. Comments accompanying the tables are designed to
draw attention to the most significant aspects of the tables, to give
some additional explanation of the program objectives, and to interpret
changes over time in the most significant program categories.
Because the program structure is by agency and not governmentwide, caution should be used in making interagency comparisons.
Similar wording in titles in two or more agencies may relate to different
objectives. Also, the classification may or may not conform either to
the organizational or appropriation structures of an agency. In
several cases, the amounts shown by program category and subcategory are derived by distribution of appropriation totals, and
statistical allocations have been used where necessary to distribute
appropriations to the agency program structure. Further subdivision
of the program structure into program elements is available, but was
not included because of the length and detail of the agency program
structure.
Improvements are being made in agency program structures.
These changes offer prospects for better identification of major
agency objectives, greater flexibility in displaying program data by
multiple objectives, elimination of unnecessary detail or fragmentation
of operating program data, and further development of a governmentwide program structure into which agency structures could fit. In
addition, efforts are being directed toward relating financial data
to pertinent output, benefit, beneficiary, and social impact data. These
efforts should add to the usefulness of program structures in program
planning and policy analysis in the years ahead.
DEPARTMENT OF AGRICULTURE
The program structure consists of 15 categories and comprehensively
reflects the major objectives of the Department of Agriculture.
269
270
THE
BUDGET FOR FISCAL YEAR
1971
These objectives can be conveniently grouped into seven departmental goals: (1) enhance farm incomes, (2) improve agricultural
production and marketing, (3) expand exports of agricultural
commodities, (4) reduce and eventually eliminate hunger and malnutrition, (5) assure the wholesomeness of meat and poultry and
protect the public from harmful pesticides and other hazards, (6)
enhance rural development, and (7) manage public timber resources
effectively.
Major changes in program levels for 1971 include: a rapid expansion in Food and nutrition to implement the President's new Food
Stamp program and extend food assistance to needy families in all
areas of the country on a full-year basis; nearly doubling the housing
loan program through insured and guaranteed loans to help meet the
rural share of the national housing goals; selective increases in programs to promote the economic and social development of rural areas,
placing greater reliance on States and local community leadership;
and reductions in programs contributing to excess agricultural production capacity.
Table R - l . PROGRAM D I S T R I B U T I O N OF BUDGET A U T H O R I T Y
DEPARTMENT O F A G R I C U L T U R E (in millions of dollars)
1969
actual
1970
estimate
1971
estimate
Farm income
Agricultural production capacity
Agricultural marketing and distribution system
Food for peace
Export market development
Foreign agricultural development
Food and nutrition
Health and safety
Youth development and family living
Community development services
Housing l
Public facility and business expansion
Resource protection and environmental improvement.
Recreation, wildlife, and natural beauty
Timber
General administration
Program support
6,176
595
133
301
35
4
1,039
111
40
28
135
413
225
71
341
5
40
4,673
620
145
921
70
4
1,516
132
42
31
42
445
240
• 61
368
5
45
4,184
407
144
933
65
1
4
2,089
144
45
53
56
403
225
60
312
6
50
Total distributed to programs aboveDeduction for offsetting receipts
9,691
-516
9,361
-564
9,181
-604
9,176
8,797
8,577
Total budget authority, Department of Agriculture.
1
Budget authority does not reflect program level.
DEPARTMENT OF COMMERCE
The Department of Commerce engages in a wide range of activities,
which are directed toward assisting the economic development of the
country.
The reduction in budget authority for Periodic data production
results from the completion in 1970 of major elements of data collection for the decennial census. Activity will increase in 1971 on other
smaller periodic censuses.
271
SPECIAL ANALYSES
Within the Economic development assistance category, the decrease
in Other area assistance from 1970 to 1971 is more than offset by the
increase in District programs. This reflects the double effect of the
continued increase in the number of development districts and the
policy of giving preference to projects within districts as opposed to
isolated redevelopment areas.
I h e Promotion of industry and commerce category is primarily
aimed at improving the U.S. balance of trade. Eighty-one percent of
the increase in budget authority for the category will be used for this
objective.
Increases for Environmental science services are primarily for improvements in forecasts and warnings of natural disasters such as
floods, hurricanes, tornadoes, and severe storms. Approximately 45%
of the increase in budget authority is for restoration of financing of
the operation of weather satellites that were financed in 1970 by
prior year appropriations.
Promotion of the merchant marine reflects the Administration's
new program to modernize the U.S. Merchant Marine fleet, to make
it more competitive in world trade, to decrease fleet operating subsidies, and to reduce the fleet's dependence on public construction
subsidies in future years.
Table R-2. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
DEPARTMENT OF COMMERCE (in millions of dollars)
Program category and subcategory
General purpose data production and economic analysis:
Current data production programs
Periodic data production programs
Statistical services
Construction and analysis of national economic accounts _
Category total
Economic development assistance:
Regional programs
District programs
Urban programs
Other area assistance
Indian programs
Special problem area programs
Research
General administration
Category total.
Promotion of industry and commerce:
Business assistance
International business development
Export control
Field program operations
Foreign direct investment regulation
Promotion of travel to the United States._
Promotion of minority business enterprise.
Category total
1969
actual
1970
estimate
1971
estimate
18.1
24.4
19.6
159.5
22.7
55.2
3.9
3.1
3.6
3.4
3.1
4.1
49.5
186.2
85.0
26.9
84.1
31.2
81.4
20.0
16.0
3.0
19.6
31.0
79.3
21.5
88.2
27.5
9.5
2.2
20.6
56.9
114.8
30.0
66.2
27.4
282.1
279.8
319.9
6.3
16.8
5.5
5.1
3.7
4.5
6.9
21.7
5.8
5.7
3.1
4.5
1.2
7.8
27.2
5.9
6.3
3.0
6.5
1.6
41.8
48.9
58.3
3.0
21.6
272
THE BUDGET FOR FISCAL YEAR 1971
Table R-2. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
DEPARTMENT OF COMMERCE (in millions of dollars)—Continued
I
Program category and subcategory
Environmental science services:
Weather forecasts and warnings
River andfloodforecasts and warnings
Earth description, mapping, and charting
Marine description, mapping, and charting
Telecommunications and space services
Environmental satellite
Retired pay, commissioned officers
95.6
4.1
14.1
Category total
Physical measurements and standards:
Basic measurements and standards
Materials measurements and standards
Technological measurements and standards
Category total
Technological development and utilization:
Grant and issuance of patents and registration of trademarks.
State technical service
Transfer of technology
_
Category total
_.
Promotion of the merchant marine:
Fleet development
Fleet operation
_
_
_
Category total
1969
actual
_
1970
estimate
1971
estimate
120.3
6.8
17.3
22.4
6.6
22.7
1.2
104.5
4.2
15.0
27.2
6.4
10.0
1.2
166.7
168.5
208.4
13.2
17.3
6.1
12.7
19.0
6.6
15.7
20.4
8.6
36.6
38.3
44.7
42.5
5.3
3.9
47.6
.3
4.5
51.1
51.7
52.4
55.9
123.9
213.9
28.0
236.1
221.5
198.9
337.8
264.1
27.3
6.6
28.8
1.4
General administration
Total distributed to programs above
Deductions for offsetting receipts
Intergovernmental transactions_
_
_
Total budget authority, Department of Commerce
1,169.6
DEPARTMENT OF DEFENSE—MILITARY
The military programs of the Department of Defense provide for
the security of the United States and protect its vital interests abroad.
These programs have been subjected to the most comprehensive
reexammation ever taken. Because not all of the activities planned
when this Administration took office are now required, the defense
needs of the United States can safely be met in 1971 within lower
budget levels.
The Strategic forces must at all times constitute a deterrent against
an evolving nuclear threat. To accomplish this will require budget
273
SPECIAL ANALYSES
authority of about $7.7 billion in 1971, compared with $7.1 billion
in 1970 and $8.2 billion in 1969.
The General purpose forces must be substantial to cope with a wide
range of contingencies other than general nuclear war. At the same
time U.S. allies should be expected to carry the principal burden for
their internal defense. In accord with these considerations, the general
purpose forces will require the largest share of the military budget in
1971. It is, however, a declining share. This decline, which also reflects
falling manpower levels, can be seen in the budget requirements of
the other defense programs which support the strategic and general
purpose forces.
The Research and development program provides for the aggressive,
but prudent and selective effort, to ensure that our forces in the
future will be equipped to meet effectively an evolving threat.
Table R-3. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
DEPARTMENT OF DEFENSE—MILITARY (in millions of dollars)
Program category
1969
1970
1971
Strategic forces
General purpose forces
Intelligence and communications
Airlift and sealift
Guard and Reserve forces
Research and development
Central supply and maintenance
Training, medical, and other general personnel activities
(Retired pay included in category above)
Administration and associated activities
Support to other nations
8, 174.0
29, 131.9
5, 585.3
1, 497.2
2, 125.5
4, 594.6
9, 311.8
12, 369.3
(2, 450.0)
1, 307.5
2, 040.8
7.091.5
7,712.8
26.418.1 24,023.5
5,313.0
5,115.3
1,597.9
1,428.6
2,498.0
2,465.4
4,767.5
5,396.2
8,358.4
9,283.0
12,913.2 12,550.1
(2,859.0) (3,194.0)
1,485.5
1,462.9
2,419.4
2,273.1
Total distributed to programs above
Undistributed nonprogram financing adjustments
76,137.9
832.5
73,618.2
-134.5
70,955.2
-157.6
76,970.4
73.483.8
70,797.6
Total budget authority, Department of Defense.
DEPARTMENT OF DEFENSE
CIVIL: ARMY CORPS OF ENGINEERS
The civil works program of the Army Corps of Engineers provides
for the planning and development of water and relatea land resources
in each of the Nation's 19 major regions. These regions, together with
the General support category, as set forth below, provide the focus for
management of the civil works program.
The long-range objective of the Corps in project planning is to
relate projects to the needs of the people of each river basin or region
as defined in the Water Resources Council's comprehensive planning
program and national assessment. Flood control continues to require
the largest proportion of funds, followed by multiple purpose power
facilities and navigational facilities during 1969-71. For allocation
of funds in these terms, see Special Analysis P, Federal Public
Works Activities.
274
THE BUDGET FOR FISCAL YEAR U971
Table R-4. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
DEPARTMENT OF DEFENSE—CIVIL: ARMY CORPS OF ENGINEERS
(in millions of dollars)
1969
actual
New England region
__
Middle Atlantic region
Gulf and South Atlantic region
Ohio region
Great Lakes region
Upper Mississippi region
Souris-Red-Rainy region
Missouri River region
Arkansas-White-Red region
Lower Mississippi region
_
Rio Grande region
Texas Gulf region
Colorado region
Great Basin region
California region. _
Columbia-North Pacific region
Alaska region
Hawaiian Islands region
Puerto Rico and Virgin Islands region.
General support
Total distributed to programs above...
1969 reserve (Public Law 9 0 - 3 6 4 ) . . . - . .
1970 budgetary reserve to be applied in 1971 _
Offsetting proprietary receipts
Total budget authority, Army Corps of Engineers, Civil. _
1
1970
estimate
1971
estimate
19.5
59.4
94.6
149.7
37.7
76.3
.9
88.0
167.4
117.5
9.1
43.1
1.7
.1
51.6
215.6
6.2
.8
.5
62.1
18.7
66.7
98.6
147.1
38.1
60.4
1.1
72.7
141.2
123.0
5.4
40.5
2.5
.4
48.0
166.5
1,201.8
43.8
1,362.5
-8.3
1,106.Q
-43.8
192.4
-7.3
1,237.3
1,147.3
1,262.6
6.8
.8
.1
67.4
28.8
95.9
122.3
188.1
44.7
80.0
1.4
94.5
123.8
141.9
11.7
58.4
5.5
.8
79.0
222.7
14.7
1.6
.3
46.4
1-92.4
-7.5
Exclusive of budgetary reserve for contract-deferral program.
DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE
The broad objectives of the Department are reflected by four
program categories: Education, Health, Social and rehabilitation
services, and Income security and their associated subcategories.
Budget authority requests for educational programs increase $337
million over 1970 with special emphasis in all subcategories on experimentation with new techniques. The Health subcategories reflect
the rapid rise in health-related costs, especially Provision of health
services; emphasis on increasing the supply of health manpower;
and the concern for improving the organization and delivery of health
services. The subcategories under Social and rehabilitation services
reflect the emphasis on improving individual capability for selfsupport through various public assistance programs primarily administered by State and local governments. Income security is primarily provided through social insurance and public assistance
programs. Increases in Other individual and family support include
275
SPECIAL ANALYSES
growth in the Aid to Families with Dependent Children program
and $500 million in 1971 for the initiation of the Family Assistance
Program. Increasing knowledge provides funds for program experimentation to assure improved performance in the future. (See also
Special Analyses I, K, and L.)
Table R-5. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE
(in millions of dollars)
Program category and subcategory
1969
actual
Education:
Development of basic skills
__.
Development of vocational and occupational skills.
Development of academic and professional skills...
Library and community development
_
General research (nonallocable research)
General support
__.
Category total.
Health:
Development of health resources
Prevention and control of health problems.
Provision of health services
General support
Category totalSocial and rehabilitation services:
Improving individual capability for self-support
Improving the social functioning of individuals and families..
General development of social and rehabilitation resources...
General support
_
Category totalIncome security:
Aged assistance
Disability assistance
Other individual and family support
Increasing knowledge
General support
_
_.
Category total
Executive direction and management (Office of the Secretary)..
Total distributed to programs above
Net deductions for interfund transactions and receipts from the
public not distributed above
_
Total budget authority, Department of Health, Education, and Welfare
1970
estimate
1971
estimate
2,347.6
276.8
874.7
85.0
39.5
42.9
1,963.1
309.7
892.3
46.8
33.5
47.3
2,243.5
398.7
871.5
30.5
35.9
49.9
3,666.6
3,292.7
3,629.9
2,107.7
461.2
9,753.5
67.4
2,060.5
480.0
10,571.8
63.4
2,127.0
499.0
13,251.8
70.5
12,389.8
13,175.8
15,948.3
586.0
297.1
109.8
91.2
754.4
415.8
108.2
132.3
877.7
412.1
123.3
140.2
1,084.1
1,410.7
1.553.3
28,238.5
4,144.8
1,890.8
32,609.9
4,889.1
2,400.3
34,628.5
5,707.2
3,413.9
.8
8.7
9.6
322.3
361.3
451.6
34,597.1
40,269.3
44,210.8
26.0
38.5
45.0
51,763.6
58,187.0
65,387.4
-526.5
-550.3
-584.0
51,237.1
57,636.7
64.803.4
276
THE BUDGET FOR FISCAL YEAR 1971
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
The fundamental objective of the Department's programs is to
assist in the realization of a "decent home and a suitable living environment for every American family, thus contributing to the development and redevelopment of communities.'' This objective is
evident in the major categories. The first category relates specifically
to housing and mortgage markets. The next four categories contain
programs which help to improve the general urban environment by
assisting State and local governments with the costs of public facilities, urban redevelopment, and management of community development activities.
In 1971, budget authority for the Department's housing programs
will total nearly $1 billion. In addition, several housing programs
improve the efficiency of mortgage markets (e.g., guarantee of mortgage-backed securities and insurance of home loans) usually without
requiring budget authority. Even in the case of programs which do
require budget authority—mainly those which help to provide housing for low- and moderate-income families—a comparison of the 1970
and the 1971 figures is misleading because the 1970 totals include
nonrecurring authority to purchase mortgages, which the Department will use in ways that do not result in large budget outlays.
Budget authority requested for programs in the four categories
designed to improve the general urban environment is about $2
billion for 1971. Urban Renewal and Model Cities account for $1.6
billion. There are selected increases in other community development
programs.
The Department's research and demonstration in urban technology
will grow to $55 million in 1971—more than double the 1970 level.
This will support Operation Breakthrough: an effort to assure the
ability of the homebuilding industry to meet future housing needs.
Other research and technology projects are designed to improve the
process of urban development.
Table R-6. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
(in millions of dollars)
Program category and subcategory
Assuring decent housing for all Americans:
Assuring an adequate supply of low- and moderate-income
housing...
Promoting the efficient functioning of private housing markets..
1969
actual
1970
1971
1,293.2
1.5
2,642.1
2.4
923.2
6.1
1,294.7
2,644.5
929.3
Assuring adequate and efficient local public and private facilities
and services
203.2
180.8
193.2
Improving the physical environment of urban communities
(urban renewal)
1,047.8
1,077.5
1,085.0
Category total
277
SPECIAL ANALYSES
Table R-6. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT—(Continued)
(in millions of dollar,)
Program category and subcategory
Improving the social environment of urban communities:
Model cities and governmental relations
Fair housing and equal opportunity
1969
actual
__
Category total
Improving management of community development activities:
Improving governmental planning and executive management
of community development
Additional education and training for efficient urban development and management
Category total
_
__
Improving management of departmental programs and resources:
Research and demonstrations in urban technology
Provide executive direction and general support
__
Liquidate assets of terminated and other programs
Category total__
Adjustments to budget authority, net
Total budget authority, Department of Housing and
Urban Development
_
1970
estimate
1971
estimate
312.5
2.0
575.0
6.3
575.0
11.3
314.5
581.3
586.3
43.8
50.0
60.0
3.5
3.5
3.5
47.3
53.5
63.5
18.2
59.1
40.1
23.0
76.9
55.0
84.8
117.5
99.9
139.8
-11.8
2.0
.2
3,013.2
4,639.6
2,997.3
DEPARTMENT OF THE INTERIOR
The Department of the Interior is concerned with the management*
conservation, and development of the Nation's water, energy, minerals, timber, forage, fish, wildlife, and outdoor recreation resources.
It also has major responsibilities for Indian and territorial affairs.
Implicit in many of the Department of the Interior's activities is an
overall concern for the quality of the environment, which is reflected
in a number of program categories and subcategories.
The largest single environmental program is water pollution control,
which is included in the Management and supply subcategory of
Water and power. This category reflects the initiation of the 5-year
$4 billion water pollution control program for constructing of waste
treatment plants. It also includes grants to States to improve waterquality management. Water data and support functions includes training for waste treatment plant operators; support for higher education
in engineering, biology, and related fields; basinwide and regional planning; and maintenance of the Nation's basic water data network.
Research includes projects dealing with water quality, subsurface
waste storage, conversion of salt water to fresh water, weather modification, underground power transmission, demonstration of waste
treatment facilities, and basic research on hydrologic phenomena.
The subcategories under Minerals represent various objectives
including enhancing the usefulness of our mineral resources through
278
THE BUDGET FOR FISCAL YEAR H971
research, efficient management of mineral resources on Federal lands
and improvement in Mining health and safety, which rises significantly
in fiscal year 1971 as a result of the passage of Federal Coal Mine
Health and Safety Act of 1969.
The Land, forage, timber category includes research in geology,
earthquakes and volcanic phenomena; and fire protection and land
restoration programs. Transportation funds are used for road building
associated with Timber production. Funds for Fire protection in
1969-71 reflect the uncertainties of fire occurrence.
The Recreation use and preservation category reflects large increases in fiscal year 1971 for land acquisition, an essential step in
park development. In addition, the program structure reveals the
rough distribution of effort among Land acquisition under the Land
and Water Conservation fund, construction of facilities, and operation, and gives some indication of the rising commitment for Federal
park and recreational areas.
The program structure for the Indians category reveals the wide
variety of objectives supported by Bureau of Indian Affairs programs and the especial importance of Elementary and secondary
education programs. Reservation development shows a decrease in
1971 because of the financing of Indian roads from prior-year balances.
Budget authority in 1970 and 1971 for the Trust Territory contains increases for expanded education, health and economic development programs.
Table R-7. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
DEPARTMENT OF THE INTERIOR (in millions of dollars)
Program category and subcategory
Water and power:
Water data and support functions
Research
Management and supply
Recreation development and construction
Transmission and distribution of power
Operation and maintenance
Emergency funds not subject to advance allocation
General support
_
Category total.
Minerals:
Information, support and regulatory functions
Classification, leasing, and sale
Geologic sources
Primary nonfuel minerals supply
Liquid fuel
__.
Gaseous fuels—
Solid fuels
Nonenergy uses of fuels
Mining health and safety
Special programs
Environmental protection
General support
_
_.
Category total..
1971
estimate
42.1
87.8
107.5
123.3
46.3
105.8
4,217.6
10.6
106.4
80.6
84.5
1.0
1.0
25.6
10.9
24.9
279
SPECIAL ANALYSES
Table R-7. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
DEPARTMENT OF THE INTERIOR (in million* of dollars)—Continued
Program category and subcategory
Land, forage, timber:
Land classification and disposition.
Earth study and measurement
Earth hazards
Land utilization, protection, and restoration.
Timber production
._
Livestock forage production _
_
Transportation system
Fire protection
0 & C allocation to Forest Service
General support__
Category total.
Aquatic living commercial resources:
Established
fisheries
__
Developing fisheries
General research
Services, facilities, and equipment..
General support
Category totalRecreation use and preservation:
Planning and assistance
Land acquisition—LWCF
—
Land acquisition—Other
Development and construction—adding new capacity
Development and construction—supplementing existing
capital
Other road construction
_.
Management/operations/maintenance—new capacity
Management/operations/maintenance—existing capital
Resource protection—NPS
Rare or endangered species
Wildlife habitat and production—including migratory
birds
Fish habitat and production
Indian fish and wildlife
General support
Category total.
Indians:
Preschool education
_.
Elementary and secondary education...
Post-secondary education
Educational research and development.
School construction _
Reservation development
Community services
Repair and maintenance, B and U
Claims and treaty obligations
General support
Tribal funds
Category total.
1969
actual
8.0
42.2
1.6
11.6
9.5
8.8
16.9
17.5
1970
estimate
8.6
45.9
1.8
11.9
10.9
9.7
14.5
31.3
2.0
1971
estimate
9.1
49.6
1.9
12.0
11.7
9.8
13.1
5.1
6.9
2.5
5.2
123.1
141.8
121.7
22.6
2.5
7.1
20.5
2.9
8.4
14.6
3.6
17.2
4.4
15.7
2.7
8.3
15.5
4.7
50.4
53.5
46.9
13.3
15.8
112.8
11.3
60.8
23.0
294.3
12.9
7.9
12.2
1.3
1.3
1.9
102.7
2.3
1.3
2.1
4.9
189.9
13.6
28.3
2.8
1.8
13.0
41.6
.9
80.9
2.8
1.1
97.5
3.3
62.3
26.2
69.4
29.9
1.1
5.5
1.7
6.2
72.6
31.4
1.6
6.3
430.6
436.4
601.1
3.5
7.3
116.8
8.7
.6
.9
89.8
5.1
106.7
6.3
.3
9.1
55.4
16.6
.2
14.9
79.0
79.6
19.1
.2
12.7
106.0
14.2
101.6
19.6
.2
13.1
70.1
376.5
425.2
383.2
15.6
74.2
48,9
88.8
280
THE BUDGET FOR FISCAL YEAR 1071
Table R-7. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
DEPARTMENT OF THE INTERIOR (in millions of dollars)—Continued
1969
actual
Territories:
Trust Territory
American Samoa
Guam __
Virgin Islands
Office of Territories
1970
estimate
1971
estimate
__
30.0
7.6
6.1
13.2
.4
48.1
7.2
7.5
11.5
.4
60.0
8.2
8.3
12.5
.5
__
57.3
74.7
89.6
Other programs:
Payments to Treasury, States, and subdivisions
Secretarial direction and administrative support (solicitor).
Secretarial direction and administrative support (secretary) _
83.8
5.6
S.7
93.7
6.7
10.9
98.1
7.3
12.0
98.1
111.3
117.4
2,050.8
-1,043.4
-40.3
2,882.4
-962.3
-31.4
6,147.6
-1,638.1
967.2
1,888.6
4,509.5
__
_
Category total
Category t o t a l Total distributed to programs above (Federal and trust
funds)
Offsetting proprietary receipts
Intragovernmental transactions
- Total budget authority, Department of the Interior
DEPARTMENT OF JUSTICE
The Department of Justice is charged with the enforcement of
Federal laws, the rehabilitation of Federal offenders, the control of
immigration and naturalization, and the general legal representation
of the Federal Government. In the past 3 jrears, it has also assumed
the important task of providing financial aid to State and local law
enforcement agencies.
The program structure shows the allocation of the Department's
budget in terms of its major objectives. These allocations show the
emphasis being placed upon the Administration's fight against crime
and narcotics, and its concern with effective enforcement of civil
rights laws. Improvement of State and local law enforcement operations shows a major program increase of $188.7 million in 1971.
Funds for control of narcotics and dangerous drug abuse increase by
about 30% over the 1970 level and are nearly double the 1969 level.
Additional funds for Correction of Federal offenders reflect the Administration's commitment to improve the Federal prison system. Budget
authority for civil rights and community relations activities increases
so that the 1971 level is nearly 150% of the 1969 level. This reflects
the Administration's strong commitment in this area.
Consumer protection has been made a separate category in this
table to emphasize the importance the Administration attaches to
this developing area of the Department's activities.
(Special Analysis M in Part 2 of this volume reviews the Federal
programs for the reduction of crime.)
281
SPECIAL ANALYSES
Table R-8. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
DEPARTMENT OF JUSTICE (in millions of dollars)
1969
actual
Reduction in crime:
Organized crime
Interstate crime—
Federal crime
Crime prevention
_
_ __
.
Category total
__
_
_
_
Law enforcement assistance:
Improvement of State and local law enforcement planning
Improvement of State and local law enforcement operations
Research and development of devices, systems, and procedures.
Support to law enforcement personnel for education and
training... _
_. _
Development of information and statistical programs.
Program support
Category total
Correction of Federal offenders:
Custody and physical security of offenders .
Inmate care, maintenance and operation of institutions
Rehabilitation of offenders..
.
Assistance to non-Federal correctional systems
Research
Program support
Category total
___
Control of narcotics and dangerous drug abuse:
Law enforcement
Treatment of narcotics and dangerous drug offenders
State and local assistance
Drug abuse prevention
Program support
__
Category total.__
Internal security and governmental integrity:
Integrity of Government personnel. . _
_
Security of Government, Government programs, and Government property
_
_
Security of Government international affairs
Identification, exposure, and control of subversive movements.
Program support
Category total
Civil rights and community relations:
Equal employment opportunity
Housing
_
Public education
_
Interference with civil rights
Voting
Federally assisted programs
Public accommodations and facilities
Community relations assistance
Category total
390-700 O—70
18
_
_
.
1970
estimate
1971
estimate
18.2
48.0
74.4
1.5
23.2
58.9
80.9
1.8
25.2
59.6
82.3
1.9
142.1
164.8
169.0
19.0
53.1
3.0
21.0
244.5
7.5
26.0
433.2
19.0
8.8
2.2
20.5
1.0
4.1
25.4
4.0
6.0
86.1
298.6
513.6
18.7
34.3
15.4
.1
.4
.8
21.6
50.3
18.8
.3
.5
.9
27.7
68.0
25.3
.8
.7
1.1
69.7
92.4
123.6
17.2
1.0
.2
1.2
2.1
24.2
1.8
.9
1.9
2.7
30.9
3.1
1.0
2.1
3.7
21.7
31.5
40.8
26.4
26.6
26.9
.9
.3
24.8
.1
1.0
.4
28.8
.1
1.1
.5
29.1
.1
52.5
56.9
57.7
1.0
.6
.9
16.3
1.6
.9
1.3
19.2
1.8
1.1
21.8
. 7/
Q
1 0
.3
.5
3.3
.3
.5
5.0
28.0
33.0
.3
.4
2.3
22.5
1.5
282
THE BUDGET FOR FISCAL YEAR 1>971
Table R-8. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
DEPARTMENT OF JUSTICE (in millions of dollars)—Continued
Program category and subcategory
Competition in the American economy:
Anticompetitive conduct
Anticompetitive market structures
Governmental intervention and influence
Category total
Legal representation of and advice to Federal officers and agencies:
Integrity of the revenue system
Defense of monetary claims
Recovery of money owed the United States
Integrity of administrative action
__
Land acquisition
_
_
Protection and development of natural resources
_
Category totalSupport of the Federal judicial system:
Facilitation of litigation
.
Protection of the integrity of the judicial systemCategory total
_
Immigration and naturalization:
Control of persons entering the United StatesControl of aliens in the United States
Naturalization
Central information record
Program support
Category totalGeneral support:
Executive direction
Personnel. _
_
---Management support information.
Administrative services
_
Category totalConsumer protection
Deductions for offsetting receipts _
Total budget authority, Department of Justice.
1969
1970
1971
.9
4.6
4.6
1.1
4.9
4.9
1.2
8.7
10.3
11.0
6.9
6.6
5.2
4.8
3.1
1.3
8.0
7.9
6.1
5.4
3.5
1.6
8.2
8.0
6.4
5.8
3.6
1.7
27.9
32.5
33.7
15.0
2.2
19.4
2.6
20.2
2.7
17.2
22.0
22.9
46.9
27.4
4.8
7.3
4.8
54.5
5.4
8.3
5.5
59.2
33.5
5.9
9.2
5.9
91.2
104.9
113.7
1.9
.4
.7
3.1
2.4
.6
1.0
3.4
2.5
.7
1.4
3.9
6.1
7.4
8.5
-1.7
.5
-1.7
1.3
-1.7
543.8
847.9
1,127.1
4.2
3.6
31.2
DEPARTMENT OF LABOR
The Department of Labor's primary mission is to improve the
working and living conditions of the Nation's work force. The principal means through which this mission is pursued, as reflected in
the Department's program structure, are: (a) Manpower development
and employment assistance, to help workers prepare for and obtain
employment; (b) provision of Income maintenance to workers injured
at work or involuntarily unemployed; (c) Wage and labor standards
programs to achieve improved wages, safety, and general working
SPECIAL
283
ANALYSES
conditions of workers; (d) measures to improve relations between
organized labor and management; (e) collection and analysis of basic
data on employment and working conditions of workers; and (f)
management support for the above activities.
The largest of these areas is Income maintenance, largely in
the unemployment insurance program, which provides income to
workers involuntarily unemployed. In recent years a major thrust
of the Department has centered on Manpower development and employment assistance, which has grown rapidly. Within this category
On-the-job and Institutional training loom large, reflecting the emphasis
on providing services to the disadvantaged who experience difficulty in
obtaining suitable employment.
Table R-9. P R O G R A M D I S T R I B U T I O N OF B U D G E T A U T H O R I T Y
D E P A R T M E N T O F LABOR (in millions of dollars)
Program category and subcategory
1969
actual
Manpower development and employment assistance:
On-the-job training
Institutional training
Work experience
Special targeted training
Employment assistance
Research, development, and evaluation
Program services
1970
estimate
1971
estimate
350.0
226.1
31.4
309.0
23.2
86.4
284.6
206.1
26.4
49.6
350.5
23.6
123.8
772.0
1,064.6
1,194.7
69.0
149.2
3,221.9
322.7
60.5
135.0
3,228.3
320.0
110.2
199.5
3,203.8
351.9
3,762.8
3,743.8
3,865.4
Wage and labor standards
_
Labor management relations
Data collection, analysis, and dissemination.
General support
_
32.1
9.0
22.0
14.4
35.1
13.1
24.2
16.2
38.6
17.2
27.7
18.7
Total distributed to programs above.
Proposed for separate transmittal
4,612.3
4,897.0
50.3
5,162.3
663.5
4,612.3
4,947.3
5,825.8
102.9
206.1
13.0
Category total.
Income maintenance:
Workers compensation (Federal)
Unemployment insurance (Federal) _
Unemployment insurance (State).__
Administration
Category total.
Total budget authority, Department of Labor.
76.0
379.7
25.1
137.8
POST OFFICE DEPAKTMENT
The eight categories of the Post Office Department's program
structure describe both the basic postal service function of acceptance,
processing, transportation, and delivery of the mail, and necessary
support activities.
Between 1970 and 1971 the estimated increases in funding for Direct
services to mailers, Processing of mail, and Delivery services are all
under 1.5%, reflecting some productivity increases and an approximate 2.4% growth in mail volume. The funding of support activities
284
THE BUDGET FOR FISCAL YEAR 1'971
is growing faster than the growth in mail-volume: approximately 5%
for Administrative postal support, 9% for Enforcing postal laws
and regulations, 31% for Research, development, and engineering,
and 68% for Capital investment within the Logistical postal support
category. It is this increased investment in new facilities and mechanized mail processing equipment plus improvement in management
techniques, and Research, development, and engineering, which, over
time, should achieve slower cost growth in the basic operating
functions.
Table R-10. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
POST OFFICE DEPARTMENT (in millions of dollars)
Program category and subcategory
Direct services to mailers:
Combined postal services at small post offices _
Window and vending services
Collection service
Category total.
Processing of mail:
Combined mail processing at medium-size post offices _
Platform operations
Mail preparation
Mail distribution
Category total.
Delivery services:
Government vehicle service mail transportation.
Preparation of mail for delivery
City delivery
Special delivery
Rural delivery
Category total.
Transportation:
Intercity transportation
International transportation..
1969
actual
1970
estimate
765.4
1971
estimate
713.1
224.0
63.4
242.6
66.7
775.4
246.2
67.5
1,000.5
1,074.8
1,089.1
378.4
244.1
1,241.3
408.6
265.6
79.6
,333.0
414.8
271.0
75.8
1,344.2
1,940.4
2,086.9
2,105.8
62.8
67.9
624.0
1,209.2
69.7
636.8
76.5
579.2
,131.1
61.6
400.1
62.2
417.2
1,222.7
64.3
422.0
2,234.8
2,380.4
2,415.5
520.4
48.8
46.0
543.4
51.6
45.8
559.0
56.7
45.4
615.2
640.7
661.0
15.8
12.2
20.2
13.7
23.1
14.2
28.0
33.9
37.3
2.8
16.2
4.6
10.0
27.0
10.8
12.3
34.7
15.8
23.6
47.8
62.8
Other transportation servicesCategory total
Enforcing postal laws and regulations:
Postal crimes and prohibited mailings _
Administrative compliance
Category total.
Research, development, and engineering:
General research
Applied research and development
Engineering
Category total.
285
SPECIAL ANALYSES
Table R-10. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
POST OFFICE DEPARTMENT (in millions of dollars)—Continued
Program category and subcategory
Administrative postal support:
Departmental administration
Regional administration
Post office administration
Category total.__
1969
-
_._
Logistical postal support:
Capital investment- _
Expense
—
Category total
Total obligations
Net postal revenues
Net unobligated budget authority
Total budget authority, Post Office Department
1970
1971
stimate
32.4
66.1
445.3
47.2
79.4
503.3
55.4
87.3
516.7
543.7
629.9
659.4
245.7
596.1
352.5
683.1
590.8
740.6
841.8
1.035.5
1,331.5
7,228.1
-6,114.4
95.5
7,930.0
-6,525.3
33.0
8,362.5
-7,695.0
-84.2
1,209.2
1,437.7
583.3
DEPARTMENT OF TRANSPORTATION
The basic objective of the Department of Transportation is to
promote greater comfort, safety, speed, efficiency, and reliability in
all modes of transportation. In addition, the Department supports
science objectives, for example, by providing ice-breaking services
for scientific exploration of the polar regions. The program structure
below was developed with these objectives in mind.
Expenditures on one mode of transportation often affect other
modes as well; for example, a new urban highway may encourage users
of mass transit to commute by driving, thus placing the suppliers of
mass transit in financial straits and causing traffic congestion. Likewise, more fully reflecting the cost of air travel by imposing user fees
may result in some air travelers switching to rail travel, such as in
the Northeast Corridor between Washington and New York. The
various modes of transportation must be viewed not in isolation but
as interdependent parts of a system.
Table R - l l below shows the increase in emphasis on Urban transportation. In addition, it shows that, while funds for Highways
continue to exceed those for other individual modes, emphasis on
urban mass transit and air transport is increasing relative to highways and water. This change in emphasis is being made in order to
achieve a more balanced transportation system. The increase for
Interurban Air transportation reflects the Administration's new program to increase the capacity of the air traffic control system; the
increase for international air transportation reflects the new commitment to build a prototype supersonic transport. Both of these programs will, over time, pay for themselves—the former by aviation
user charges and the latter by royalties from sales of supersonic
transport aircraft. The program level for general transportation safety
will increase slightly in 1971. The decrease in budget authority shown
in the table results from the fact that highway safety grants will be
financed from prior-year unobligated balances.
286
THE BUDGET FOR FISCAL YEAR
1971
Table R-ll. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
DEPARTMENT OF TRANSPORTATION (in millions of dollars)
Urban transportation:
Highways
Mass transit
_
Category total
(Trust funds)
1970
1971
2,337.4
168.5
2,338.6
176.6
2,338.2
3,100.0
2,505.9
2,515.2 5,438.2
(2,331.0) (2,331.0) (2,331.0)
fnterurban transportation:
Highways
Rail
Air
Water
Intermodal
3,053.8
17.4
828.8
66.8
2.4
3,058.2
15.4
1,121.3
74.1
2.1
3,054.8
26.2
1,346.9
69.7
2.0
4,271.1 4,499.6
3,969.1
(3,032.1) (3,032.1) (3,032.1)
Category total __
(Trust funds)
International transportation:
Highways
Air
Water _
_
Category total
General transportation safety and other national interests:
National security, boundaries, and treaties
Support of science
General transportation safety
Maritime pollution control
Other highway programs
Category total
(Trust funds)
General support:
General research, development, and planning.. __
Administration
Coast Guard retired pay
Category total.._
(Trust funds)
1969
_
__
__
Total distributed to programs above
Deductions for offsetting receipts
Total budget authority. Department of Transportation
2.0
-30.0
44.6
85.0
44.6
20.0
290.0
39.0
16.6
129.6
349.0
176.1
65.8
131.1
1.9
99.0
190.3
66.7
151.6
6.3
103.0
179.2
123.2
80.9
6.8
99.0
474.0
(50.0)
517.9
(50.0)
489.1
(50.0)
96.0
298.1
53.0
101.3
332.6
59.7
113.6
351.9
64.5
447.2
(165.1)
493.5
(165.4)
530.1
(166.9)
7,412.7
-20.4
7,927.4 11,305.9
-25.3 -121.4
7,392.3
7,902.0 11,184.6
TREASURY DEPARTMENT
The Treasury Department is responsible for the fiscal, debt management and monetary operations of the Federal Government. In addition, it has major responsibility for Federal policy affecting the U.S.
balance of payments. The Treasury program structure deals with the
operating elements of the Department, which are funded mainly
through annual appropriations; however, Treasury also receives a
substantial amount of reimbursements and other miscellaneous funds.
287
SPECIAL ANALYSES
The Department's functions are grouped into program categories
as shown in table R-12. Funds for the collection of revenues are increasing as a result of the rising number of tax returns audited and the
increasing complexity of the returns filed. Not included in the program
structure are interest on the public debt, which accounts for most of
the budget authority for the Department, and several permanent appropriations. These are aggregated in the adjusting entry in the table.
Table R-12. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
TREASURY DEPARTMENT (in million* of dollars)
Program category and subcategory
Administration of Government finances:
Public debt
_
~
_.
Issuance, payment and servicing of Government checks.
General activities.__
__
1969
actual
1970
estimate
1971
estimate
59.5
44.0
4.8
65.7
45.1
5.2
67.5
46.2
5.5
108.3
115.9
119.2
150.4
66.3
83.0
26.9
259.7
31.3
34.7
17.6
79.4
65.1
169.7
75.0
99.9
26.7
279.0
30.9
39.2
22.1
95.3
74.1
180.1
79.8
101.5
33.5
300.5
32.1
40.5
23.1
814.3
911.9
972.4
Manufacture and distribution of coins, currency, and other financial instruments
_
_
15.1
19.3
19.7
Special law enforcement:
Tax fraud investigations—racketeer segment.
Alcohol and firearms investigations..
Other investigations
Security responsibilities
General activities
8.8
23.6
24.9
11.1
.9
23.0
29.9
37.4
16.3
1.9
23.9
31.8
42.8
26.8
6.2
69.3
108.5
131.6
7.9
9.8
9.7
1,015.0
1,165.4
1,252.6
Category total.
Collection of revenue:
Revenue accounting and processing
Taxpayer assistance and services
Delinquent accounts operation
Delinquent returns operation.
Audit of tax returns
Tax fraud investigations—taxpayers in general
Taxpayer appeals
Alcohol and tobacco revenue and regulatory controls.
Collection of customs duties
General activities
Category total.
Category total
Policy determination and related activities
Total distributed to programs above
Items not included in the program structure:
Interest on the public debt
Other appropriations not included in the program structure..
Deductions for offsetting receipts
Intragovernmental transactions
Total budget authority, Treasury Department.
101.0
80.3
18,800.0 19,000.0
362.4
439.0
326.2
-896.7 -1,208.4 -1,452.1
-84.1
-85.7
-88.5
16,588.2
16,944.2
19,111.8
19,077.1
288
THE BUDGET FOR FISCAL YEAR 1971
ATOMIC ENERGY COMMISSION
The Atomic Energy Commission conducts a variety of production,
research and development, and supporting activities to discharge its
responsibilities for national defense and the peaceful applications of
atomic energy.
The major trends reflected in the following table include termination in 1971 of the procurement of uranium concentrates; an
increase in production of enriched uranium for civilian powerplants;
a decrease in plutonium production due to reduced requirements;
completion of funding for a large nuclear weapons production facility;
an increase in research and development on improved propulsion
reactors for naval ships; continuation of the liquid metal fast breeder
reactor program as a top priority program in the Development of
central station nuclear power category; the shutdown of an accelerator
under High-energy physics research to release resources for higher
priority areas of basic research; and an increase in revenues.
Table R-13. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
ATOMIC ENERGY COMMISSION (in millions of dollars)
Program category and subcategory
1969
actual
Procurement and production of source and special nuclear
materials:
Procurement of uranium concentrates. _
Production of special nuclear materials
Category total
Military applications:
Development and production of nuclear weapons
Development of naval propulsion reactors
Category total
Development of space applications:
Space propulsion
__.
Space electric power
Category total
.
___
._
_
Development of central station nuclear power:
Converter reactors
._
Advanced converter and low-gain breeder reactors.
High-gain breeder reactors
. .
Desalting applications
General research and development
. _ -
Category total.
Development of other civilian applications:
Merchant ship propulsion reactors
Terrestrial electric power development
Isotopes development
Civilian applications of nuclear explosives
Category total _
_
1970
estimate
1971
estimate
101.5
363.9
51.0
363.8
18.2
397.8
465.5
414.8
416.0
1.066.9
131.7
1,029.1
135.1
954.6
148.8
1,198.6
1,164.2
1,103.4
57.7
48.8
53.3
39.8
47.0
37.0
106.5
93.1
84.0
15.4
33.6
102.3
2.2
2.8
14.6
25.6
176.9
1.4
2.8
12.9
32.1
101.1
1.0
2.5
156.3
221.3
149.7
4.4
8.1
13.7
1.4
3.8
6.8
15.0
2.4
6.8
8.8
26.2
27.0
18.0
289
SPECIAL ANALYSES
Table R-13. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
ATOMIC ENERGY COMMISSION (in millions of dollar*)—Continued
Program category and subcategory
1969
actual
Basic research:
High-energy physics research
Other physical research
Biomedical research
Category total
Nuclear science and technology support:
Supporting reactor development activities
Training, education, and information.
___
Category total
General support:
Regulation
Program direction and administration__
Community support
Security investigations
Cost of work for others
Construction planning and design
Category total
Total distributed to programs above
Revenues
Other adjustments to budget authority, net
Total budget authority, Atomic Energy Commission
1971
estimate
174.6
208.4
100.9
220.1
187.5
95.2
211.9
182.1
94.8
483.9
502.8
488.8
140.1
17.4
128.9
15.8
103.3
13.9
157.5
144.6
117.1
9.4
97.9
6.3
7.2
11.8
112.0
10.0
12.8
116.0
7.8
8.4
24.2
.9
8.5
42.9
3.0
142.8
188.2
169.3
2,737.1
-1.4
2,756.1
-186.3
-346.1
2,546.2
-228.0
44.8
2,615.8
2,223.7
2,363.0
21.1
_
1970
estimate
-119.9
GENERAL SERVICES ADMINISTRATION
The General Services Administration provides Federal agencies with
logistical support in the form of building space and supplies; data
processing, transportation, communications, and records services;
property and stockpile management, and other services in common
demand. Direct public services are also provided in the operation of
the National Archives and the Presidential libraries.
The six major categories in the agency's program structure aggregate
similar services, and help focus analysis on the extent of demand as
well as on the economical supply of logistical support. Between 1970
and 1971, the budget authority requests reflect both general economies
in operations governmentwide and specific economies in GSA's
operations. The increase in the Facilities category will satisfy the
most urgent requirements for building space. The lack of significant
increase in Supply services and Agency direction and support services
reflects emphasis on economy and restraint in program operations
governmentwide. The decrease in Transportation and communications services results from elimination of motor transport management
surveys except when agencies pay for them. The increase in Records
services is necessitated by unpostponable preservation of irreplaceable
historical documents. The increase in Other property management
and disposal services represents additional costs in selling stockpiles
no longer necessary to meet anticipated requirements. This additional
290
THE BUDGET FOR FISCAL YEAR 1971
investment of $2.4 million in this category will return to the Treasury
an estimated additional $442.3 million in 1971, about $184 for each
additional dollar of cost.
Table R-14. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
GENERAL SERVICES ADMINISTRATION (in millions of dollars)
Program category and subcategory
1969
Facilities:
Acquisition
Management
Service direction
Category total
Supply services:
Provision of supplies
Supply management
Automated data management services
Service direction
Category totaL.
Records services:
Management
Archival services
Federal Register
Service direction
Category total
__
Transportation and communications services:
Transportation (other than motor equipment)
Motor equipment
__
Communications
Public utilities
Service direction
Category total
Other property management and disposal services:
Property management
_
Real property disposal __
_
Personal property disposal
_
Program support
Service direction
Category total
Agency direction and support services:
Executive direction
_
Allowances and services to former Presidents
Presidential transition
Administrative operations
_
Category total
_
Total distributed to programs above
Deductions for offsetting receipts
__-_
Total budget authority, General Services Administration. _
1971
1970
95.3
287.3
1.7
134.2
298.1
1.9
217.3
325.2
2.0
384.3
434.2
544.5
63.6
1.1
1.7
2.8
67.3
1.2
1.9
3.9
67.5
1.2
1.9
3.9
69.2
74.3
74.5
13.2
5.8
.6
.7
14.8
6.9
.7
.8
14.8
7.9
.7
.8
20.2
23.1
24.2
2.5
.4
1.9
.1
.7
2.6
.5
2.0
.2
.7
2.5
.3
2.1
.2
.7
5.6
6.0
5.9
13.0
4.4
7.8
.8
.7
13.9
4.9
8.1
.7
13.3
4.9
11.1
1.1
.7
26.6
28.7
31.1
2.0
.3
.9
13.6
1.2
.3
1.2
14.7
15.4
16.8
16.2
16.9
522.8
-184.4
582.7
-214.8
697.1
-657.3
338.4
367.9
39.9
].}
.3
291
SPECIAL ANALYSES
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
The National Aeronautics and Space Administration is responsible
for conducting research on flight problems both within and outside
the earth's atmosphere. Space exploration with manned and unmanned
vehicles is also conducted. Budget authority is distributed to the
functions reflected in the program structure shown below.
In 1971, additional funds are provided for earth orbital manned
space flight to provide for the definition of a manned reusable earthto-orbit space shuttle and a semipermanent earth orbital space
station. Lunar exploration funding requirements decrease due to
completion of the expensive development phase of the Apollo lunar
landing program and the planned suspension of the Saturn V launch
vehicle and spacecraft production. Space applications requirements
increase as efforts accelerate in such areas as synchronous meteorological satellites, earth resources technology satellites, and experiments in communications, navigation, geodesy, and traffic control.
Table R-15. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
(in millions of dollars)
Program category and subcategory
Earth orbital manned space flight
Lunar exploration
Planetary exploration
Astronomy
Space physics
Life sciences
Space applications:
Earth surveys
Meteorology
Communications and navigation
1969
actual
61.5
65.6
490.0
947.0
157.9
92.5
57.3
52.8
21.3
53.0
35.1
41.1
48.3
49.4
73.6
66.9
45.7
109.4
138.8
186.2
169.5
94.7
158.1
101.2
154.8
102.0
279.7
74.6
648.0
278.0
97.6
688.4
298.0
113.8
692.3
1,002.3
1,064.0
1,104.1
3,883.6
113.5
-6.2
3,858.4
3,344.6
-6.0
""-14.6
3,990.9
3,734.9
3,330.0
___
_
___
Category total___
Space technology
Aircraft technology
Supporting activities:
Tracking and data acquisition
Other supporting activities
Research and program management
_
_
Total support activities
Total, distributed to programs above
Financing adjustments
Deductions for offsetting receipts
Total, budget authority, National Aeronautics and Space
Administration
1971
estimate
328.6
1,674.2
178.3
97.6
51.6
66.0
141.4
2,017.8
110.3
111.1
_
1970
estimate
-117.5
VETERANS ADMINISTRATION
The Veterans Administration provides a wide range of services for
veterans and their dependents, such as income security, education,
housing, and medical services. Income security accounts for over 70%
of Veterans Administration budget authority. Major increases can be
expected in future years as a result of the liberalizations of benefits
and the impact of increased numbers of Vietnam war veterans.
292
THE BUDGET FOR FISCAL YEAR 1>971
The largest increase in budget authority for 1971 is in the Education,
training, and rehabilitation category. This change is largely a response
to the number of veterans of the Vietnam war who will enroll in higher
and continuing education under the readjustment benefits program.
The Housing programs of the Veterans Administration guarantee
home loans and make direct loans to eligible veterans who lack access
to private mortgage markets. In 1971, the number of loans guaranteed
is expected to be 222,000, about the same as in 1970. There will be
about 11,500 direct loans in 1971. Neither of these programs requires
additional budget authority for 1971. Budget authority shown in this
table under Housing is to finance interest insufficiencies on outstanding
participation certificates.
The concern of the Veterans Administration in Direct medical care is
to administer efficiently the medical care it provides by stressing outpatient care, where possible, especially pre- and post-hospital care.
Medical and prosthetic research is aimed primarily at the middle and
older age groups which make up the bulk of VA patients.
Table R-16. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
VETERANS ADMINISTRATION (in millions of dollars)
Program category and subcategory
Income security:
Compensation for veterans disabilities..
Compensation to survivors
Other compensation
Veterans pensions
Survivors pensions
Burial allowances and related benefits. _
Veterans life insurance trust funds
Veterans life insurance revolving funds.
Proposed for separate transmittal
Category totalEducation, training, and rehabilitation:
Readjustment education assistance to veterans
Rehabilitative training of disabled veterans
Educational assistance to dependents of deceased and disabled
veterans
Other benefits
Proposed for separate transmittal
Category total.
Housing:
Servicing and management of loans and properties .
Category total
Hospital and medical care:
Direct medical care
Medical and prosthetic research
Research and development
Education and training
Medical support and miscellaneous services.
Construction of facilities
Proposed for separate transmittal
Category total.
1969
actual
1970
estimate
2,141.2
534.6
3.5
1,315.3
847.7
2,208.0
532.4
3.9
1,292.5
904.7
68.6
73.9
767.1
757.7
3.9
1971
estimate
2,434.3
636.2
4.1
1,305.9
971.0
78.1
795.3
6.0
273.0
5.1
-106.0
5,672.5
6,061.6
6,124.0
638.4
30.2
668.6
38.7
990.4
41.3
41.8
9.9
51.3
9.6
223.3
63.1
11.3
90.0
720.3
991.5
1,196.1
9.5
6.2
6.3
9.5
6.2
6.3
1,375.6
48.1
1.8
79.1
36.5
11.9
1,520.4
57.7
2.8
92.4
39.2
73.2
1,580.9
59.3
2.8
99.8
42.2
66.5
-40.0
1,553.1
1,785.5
1.811.5
293
SPECIAL ANALYSES
TablcR-16. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
VETERANS ADMINISTRATION (in millions of dollars)—Continued
Program category and subcategory
Other veterans benefits and services: General operating expenses. _
Total distributed to programs above
__
Deductions for offsetting receipts and intragovernmental transactions
Total budget authority, Veterans Administration
1969
1970
206.5
8,161.9
236.7
9,081.5
239.2
9,377.1
-496.7
-486.0
-498.8
7,665.1
8,595.5
8,878.3
1971
NATIONAL SCIENCE FOUNDATION
The fundamental purpose of the National Science Foundation is
to aid the development of knowledge in rewarding fields of scientific
endeavor. Funds are included to support basic research and education
in the academic disciplines. Major emphasis will increasingly be placed
on promoting activities where a new understanding is needed to help
solve pressing societal problems, including those of the environment.
This will involve multidisciplinary approaches. The Foundation's
activities are reflected in the program structure shown below.
Table R-17. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
NATIONAL SCIENCE FOUNDATION (in millions of dollars)
Program category and subcategory
Support of scientific research:
Scientific research project support
Specialized research facilities and equipment
National research programs
National research centers
Category total
National Sea Grant program
Computing activities in education and research
Science information activities
International cooperative scientific activities
Institutional support of science
Science education support
Planning and policy studies
Program development and management
Total distributed to programs above
Adjustment to budget authority, net
Deductions for offsetting receipts
Total budget authority, National Science Foundation.
1969
actual
1970
estimate
176.0
7.2
13.5
28.6
175.0
225.3
235.7
9.6
6.0
17.0
10.7
1.8
37.7
115.2
2.4
16.5
6.0
27.5
27.2
17.0
14.0
1971
estimate
191.0
6.2
59.0
37.1
293.3
13.0
15.0
14.0
121.7
2.5
19.5
2.2
55.5
96.9
2.9
20.5
432.6
463.4
513.3
-32.6
-2.2
-23.4
-1.1
-.3
-1.1
397.8
439.0
512.0
1.9
41.5
OFFICE OF ECONOMIC OPPORTUNITY
The Office of Economic Opportunity is the major focus of innovative
activity for social programs within the Federal Government. The
294
THE BUDGET FOR FISCAL YEAR 1971
principal means by which this overall objective is served are employment and education programs, health services, community betterment
programs, and research and evaluation of social programs. In 1971,
major increases are planned for improvement of individuals and
families through health and education services, and a large relative
increase is planned for research and evaluation, reflecting increasing
emphasis on developing effective social programs.
TableR-18. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
OFFICE OF ECONOMIC OPPORTUNITY (in millions of dollars)
1969
actual
Employment:
Job training and work experience assistance _
Other employment assistance
Category total
Individual and family improvement:
Compensatory and other educational assistance
Health assistance
Other individual and family assistance
Category total
Community betterment:
Resource mobilization assistance
Volunteer assistance
_ _
Housing assistance
__
Legal assistance
Loan assistance
Economic development assistance
Other community betterment assistance
_ __
_
___
_
Category total
Poverty research and evaluation:
Research
Evaluation
Category total
General support
Proposed for separate transmittal
Offsetting proprietary receipts__
_-
_
_
__
__
Total budget authority, Office of Economic Opportunity-_
1970
estimate
1971
estimate
701.4
23.5
602.5
23.5
611.8
23.5
724.9
626.0
635.3
606.4
98.0
11.2
599.0
134.5
22.2
627.3
180.5
40.8
715.6
755.7
848.6
266.1
32.8
12.3
45.4
6.0
24.9
71.6
267.9
37.0
15.7
54.9
10.0
33.0
63.2
273.3
39.0
17.4
61.0
5.0
34.0
61.6
459.1
481.7
491.3
31.5
3.7
55.6
13.0
70.0
19.0
35.2
68.6
89.0
12.9
16.0
-.4
_ 5
16.0
-662.0
-.4
1.947.3
1,947.5
1,457.8
SMALL BUSINESS ADMINISTRATION
The Small Business Administration provides financial and managerial assistance to small businessmen and assists businessmen and
homeowners adversely affected by disasters. Agency objectives are
reflected in the agency's five program categories. However, budget
authority does not reflect the true effects of the loan programs because proceeds from loan repayments can be reloaned without additional budget authority. The large increase in budget authority for
1971 will occur because receipts from prior lending and the sale of
assets are not sufficient to fund 1971 lending programs.
Program levels are shown in parentheses and show that the 1971
budget places a major emphasis on assistance to minority business
295
SPECIAL ANALYSES
enterprises by increasing loans and loan guarantees to $270 million, an
increase of 5 1 % over the preceding year. Loans and guarantees supporting programs for general economic growth constitutes the largest
category, $373 million in fiscal year 1971. Small business loans and
guarantees in deprived areas also show a modest increase, from $242
in 1970 to $265 in 1971.
TableR-19. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
SMALL BUSINESS ADMINISTRATION (in millions of dollars)
1969
actual
Program category
Stimulate small business in deprived areas *
Program level2
Promote minority entrepreneurial opportunity *
Program level2
Promote small business contributions to economic growth and
competitive environment1
Program level2
Financial aid to victims of disasters or displacementl
Program level2
General support
Total budget authority, Small Business Administration. __
1
2
1970
estimate
1971
estimate
(194.7)
(241.5)
(86.3)
(177.6)
70.2
(265.0)
90.6
(270.0)
~(263.~8J
(52.0)
21.2
(338.2)
175.0
(295.0)
24.9
55.2
(373.0)
26.0
(96.0)
30.1
21.2
199.9
272.1
Budget authority reflects the effect of offsetting receipts.
Program level includes direct and guaranteed loans.
UNITED STATES INFORMATION AGENCY
The United States Information Agency carries out informational
programs overseas to further the goal of influencing public attitudes
in other countries and to foster a better understanding of U.S. foreign
policy objectives. The agency programs are carried out in 112 countries
through a variety of communications techniques. The major program
categories shown below are based on a subcategory buildup by country
and the mix of the various media products used in each.
The only major increase in 1971 is in Soviet Union and East Europe,
for additional U.S. exhibits and other activities. Changes in the
other regions are for wage and cost increases. The General support
increase occurs primarily because of the requirement for an appropriation for activities supported from prior year balances in 1969 and 1970.
Table R-20. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
UNITED STATES INFORMATION AGENCY (in millions of doUars)
1969
actual
Program category
East Asia and Pacific
Africa
Near East and South Asia
Latin America
West Europe
Soviet Union and East Europe
General support
_
Total distributed to programs above
Deductions for offsetting receipts..
_
;
Total budget authority, United States Information Agency.
1970
estimate
1971
estimate
35.2
22.9
27.0
27.2
19.4
16.1
28.9
36.7
22.8
27.9
26.6
19.5
17.0
30.7
37.0
23.3
28.2
26.8
19.6
21.2
32.4
176.7
-.6
181.2
-.6
188.5
-.6
176.1
180.6
187.9
@FedFRASER