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SPECIAL
ANALYSES
BUDGET OF THE UNITED STATES GOVERNMENT
FISCAL YEAR 1 9 7 2
SPECIAL
ANALYSES
BUDGET OF THE UNITED STATES GOVERNMENT
FISCAL YEAR 1 9 7 2
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, 1972. 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 seven social program areas—education, manpower, health,
income security, crime reduction, housing, and environment.
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: 1971
For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C. 20402 - Price $1.50
TABLE OF CONTENTS
Page
PART 1. ECONOMIC A N D FINANCIAL ANALYSES
5
A. Federal transactions in the national income accounts
7
B. Funds in the budget
C. Borrowing and investments
D. Investment, operating, and other budget outlays
E. Federal credit programs
F. Principal Federal statistical programs
G. Balances of budget authority
H. Civilian employment in the executive branch
PART 2. FEDERAL SOCIAL PROGRAMS
I. Federal education programs
J. Federal manpower programs
K. Federal health programs
L. Federal income security programs
M. Federal programs for the reduction of crime
N. Federal housing progr:ms
0 . Federal environmental programs
PART 3. SPECIAL ASPECTS OF FEDERAL PROGRAMS
P. Federal aid to State and local governments
Q. Federal public works activities
R. Federal research and development programs
22
31
41
67
87
96
105
115
117
134
149
174
197
210
219
231
233
249
271
PART 4. ANALYTIC PROGRAM STRUCTURE
287
S.
Selected agency budgets by program categories
289
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 programs—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, plus additional information on federally aided
credit. Included for the first time is a brief analysis of loan subsidy
costs.
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 0 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 reflects the taxing and spending
policies of the Government for promoting growth of the national
economy, high employment, relative 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 these 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.
The purpose of this analysis is 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 account terms.
It is divided into two major sections: (1) The size and trends 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 $25.9 billion between 1971 and 1972, reaching a total of $225.9
billion in 1972. Expenditures are expected to rise by $15.1 billion,
amounting to $230.1 billion in 1972, and resulting in a deficit of
$4.2 billion.
Table A-l shows total Federal sector receipts and outlays by
category for 1970-72, along with the surplus or deficit. In 1970,
the Federal sector was close to balance, but in 1971 and 1972 it is in
deficit largely because the economy is operating considerably below
its potential. For a discussion of this point see the discussion of the
"full employment surplus" on pp. 9-11 of the budget document.
Trends in Federal sector receipts.—Total Federal sector receipts have risen substantially and there have been major shifts in
the distribution of receipts by category over the past three decades.
7
8
THE BUDGET FOR FISCAL YEAR 1972
Corporate tax receipts dropped from 46.9% of total receipts in 1942,
to 18.5% in 1970 and an expected 19.3% in 1972. In contrast,
social insurance taxes and contributions rose from 14.4% of receipts
in 1942 to 24.6% in 1970 and an expected 27.3% in 1972. Table A-2
provides a comparison of total receipts to the gross national product
(GNP) and each receipt component to a broad measure of the
economic base from which the receipts are derived.
Table A-1. FEDERAL RECEIPTS AND EXPENDITURES IN THE NATIONAL
INCOME ACCOUNTS (in billions of dollars)
Description
1970
1971
1972
RECEIPTS
Personal tax and nontax receipts
Corporate profits tax accruals
Indirect business tax and nontax accruals
Contributions for social insurance
Total receipts
93.7
36.8
19.4
48.9
90.6
35.8
20.3
53.2
99.0
43.5
21.8
61.6
198.7
200.0
225.9
100.8
(78.7)
(22.1)
56.5
(54.5)
(2.0)
22.1
14.0
4.6
—.1
97.9
(74.1)
(23.8)
69.2
(67.0)
(2.2)
27.0
14.6
6.2
.1
102.2
(74.0)
(28.2)
75.0
(72.5)
(2.5)
34.4
14.3
4.2
197.9
215.0
230.1
+.8
-15.0
-4.2
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
Wage accruals less disbursements
Total expenditures
Surplus (+) or deficit ( - )
Personal tax and nontax receipts are the largest receipt category,
with individual income taxes providing the bulk of the money. This
category has provided from 40% to 45% of total Federal income for
most years since World War II. Besides individual income taxes this
category includes estate and gift taxes, fines, and fees paid by individuals. These receipts tend to rise as personal income rises; the sharp
rise as a percent of personal income in 1969 was due mainly to the
income tax surcharge; 1971 is the first full year following the repeal of
the surcharge. There is some tendency for these receipts to rise as a
percent of personal income over time because higher average incomes
which are the result of both economic growth and inflation put people
into higher tax brackets. An offsetting movement results from tax
reductions such as those in 1964 and the Tax Reform Act of 1969.
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 the category of corporation income taxes in the budget because of
two factors: (1) The budget records cash receipts while the Federal
sector records corporations' tax liabilities, and (2) deposits of earnings
SPECIAL ANALYSES
Table A-2. FEDERAL SECTOR RECEIPTS RELATED TO ECONOMIC
ACTIVITY
Personal
Total
Contributions for
Corporate
Time period
oFGNP
of personal
income
profits
GNP
compensation of
employees
5-YEAR AVERAGES
1946-50
1951-55
1956-60
1961-65
1966-70,
17.4
18.8
18.5
18.9
19.9
9.0
10.4
10.5
10.6
11.3
35.2
45.9
43.0
41.0
40.4
3.3
2.9
2.6
2.6
2.1
3.9
3.9
5.0
6.5
7.9
ANNUAL DATA
1963
1964
1965
1966
1967
1968
1969
1970
1971 estimate
19.2
18.9
18.4
18.4
19.1
19.4
21.3
20.8
19.8
10.9
10.6
9.9
10.2
10.6
10.8
12.4
12.0
11.2
41.4
40.4
38.7
37.8
38.3
40.2
42.5
42.9
41.1
2.6
2.5
2.6
2.2
2.0
2.1
2.1
2.0
2.0
6.7
6.7
6.5
6.9
7.9
7.8
8.2
8.3
8.6
by the Federal Reserve System are included in NIA as corporate
profits taxes while the budget treats them 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 46% of corporate profits; from 1955
through 1964 they ranged from 40% to 43%, and dropped to 38%
for the 1965 to 1967 period. The income tax surcharge raised 1968
corporate taxes to more than 42% of corporate profits. While the
expiration of the surcharge at the end of June 1970 reduced 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 paid
by business. 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 they averaged only 14% of total Federal sector
receipts; while from 1966 through 1969 they were less than 11%. By
1972, these are expected to constitute only 9.6% of total Federal
sector receipts.
Contributions for social insurance are the final category of receipts,
and are becoming increasingly important over time. In 1944 they
were slightly over 10% of total receipts; by 1963 they reached 20%
and by 1972 they are expected to be 27.3% of the total. They are
now more than twice as large a percentage of compensation of employees as they were in the 1946-50 period. 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.
10
THE BUDGET FOR FISCAL YEAR 1972
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. While the number of Federal civil service employees has
not grown appreciably since 1966, the increase in average salaries and
the higher rates of contributions by employing agencies and employees
is resulting in continued growth in civil service retirement receipts.
The hospital and supplementary medical insurance funds are relatively
new, but are characterized by rapid growth that is attributable to
both exparsion 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 payments to both of these
funds, but such payments are not classified as social insurance contributions.
There is some growth under the "other" retirement and disability
category, which is principally railroad retirement receipts, while the
veterans insurance contributions (mainly the National Service Life
Insurance fund) are quite stable. The remaining category—unemployment insurance—reached a high of $4.1 billion in 1963; in 1972
it is expected to total $4.2 billion. These receipts finance the benefit
payments and administrative costs under the Federal-State unemployment insurance program. Although Federal military personnel also
earn retired pay, their retirement program is not contributory and the
NIA does not record any retirement contributions under this program.
Table A-3. COMPOSITION OF CONTRIBUTIONS FOR SOCIAL INSURANCE
(in billions of dollars)
Retirement and disability
Fiscal year
Total
social
insurance
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971 estimate
1972 estimate
16.7
18.1
19.9
22.1
23.5
24.6
28.5
35.7
38.3
44.2
48.9
53.2
61.6
Old-age,
Civil
and
disability
insurance
retirement
11.2
12.2
13.5
14.8
16.5
17.3
20.2
24.9
26.5
30.9
34.5
36.2
41.0
1.5
1.7
1.8
1.9
2.1
2.2
2.3
2.5
2.8
3.1
3.7
3.8
3.8
Hospital
and
supplementary
medical
insurance
Othe
0.7
.6
.7
.7
.7
.7
.8
.8
.9
1.0
.9
1.0
1.0
0.9
3.3
4.2
5.3
5.7
7.9
10.9
Unemployment Veterans
insurance life in(includes surance
RRUI)
2.8
3.0
3.3
4.1
3.8
3.8
3.8
3.6
3.4
3.4
3.5
3.6
4.2
0.5
.6
.6
.6
.6
.6
.6
.6
.6
.6
.6
.7
.7
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
SPECIAL ANALYSES
11
categories consist primarily of transfers of income to other groups
which, in turn, can be used to finance their purchase of goods and
services. As chart A-l shows, the composition of Federal sector
expenditures has altered drastically. Total purchases of goods and
services as a percent of GNP are at the lowest point since 1952, while
Chart A-1
Federal Sector Expenditures as a Percent of G N P
1950
Fiscal Years
domestic transfer payments and grants-in-aid have reached record
highs. While this analysis is not devoted to discussing the changing
program composition of the Federal budget, there is extensive discussion of these matters in the main part of the Budget Document.
Purchases of goods and services.—Purchases are divided into two
categories—defense and nondefense. As chart A-2 shows, the principal
fluctuations in total purchases relative to the economy are caused by
changes in defense purchases.
Defense purchases of goods and services.—This is the largest single
component of Federal sector outlays, and includes most of the expenditures of the Department of Defense, the military assistance
program, the Atomic Energy Commission, and other defense-related
12
THE BUDGET FOR FISCAL YEAR 1972
Chart A-S
Federal Sector Purchases as a Percent of G N P
P e r c e n t ••
activities. In recent years, about 40% of defense purchases have gone
directly into compensation of Federal employees; about two-thirds of
this compensation has been paid to military personnel and one-third to
civilian employees. 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 only 4% of the total. The Korean war
raised defense purchases to 13%% of GNP in 1953, followed by a
decline during most of the following 13 years. The increase in defense
spending in conjunction with the Vietnam fighting pushed defense
purchases to a peak of 9.2% of GNP in 1968; subsequent reductions
are expected to result in defense purchases totaling 7.3% of GNP in
1971—the lowest ratio in 20 years.
Nondefense purchases of goods and services.—This category covers
the goods and services consumed in 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. In recent years, about 45% of total nondefense
purchases has gone directly into compensation of Federal employees.
13
SPECIAL ANALYSES
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 the
space program. Subsequent decreases in space expenditures have
been offset by increases in other domestic spending, so that total nondefense purchases were 2.3% or 2.4% of GNP for each year since
1964; in 1971 they are expected to total 2.4% of GNP.
Other Federal sector expenditures.—As table A-l shows, there are
several categories under this heading. The two principal categories
are domestic transfer payments and grants-in-aid. These expenditures
are largely devoted to coping with domestic social problems. As chart
A-3 shows, spending in these areas has risen considerably relative to
the total economy in recent years.
Chart A-3
Federal Sector Expenditures Other Than Purchases as a Percent of GNP
Percent
Percent
jr
15-
10 —
1950
Fiscal Years
Increased spending on defense purchases, grants, and transfers in
1967 and 1968 resulted in a noticeable rise in the total Federal sector
relative to GNP. The relative decline of defense purchases since then
has been offset by the increase in domestic transfers and grants, resulting in a relatively stable total but a considerable change in the
mix from 1969-71; this trend is expected to continue in 1972, especially with the introduction of revenue sharing.
14
THE BUDGET FOR FISCAL YEAR 1972
Domestic transfer payments.—This is the largest category of Federal
sector expenditures that affects the distribution of national income
without constituting a direct Federal consumption of resources. Spending in these programs has expanded rapidly, mainly because of a larger
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 over 70% of retirement and disability payments
and nearly one-half of all domestic transfer payments. Other major
components of retirement and disability are civil service retirement,
railroad retirement, disability insurance, and military retired pay. A
large portion of recent increases is due to liberalization of benefit
levels which have been accompanied by the legislated increases in
social insurance tax rates and base.
Table A-4. DOMESTIC TRANSFER PAYMENTS (in millions of dollars)
Fiscal year
Total
1960
1961
1962
1963
1964
_ .
1965
1966
1967
1968
1969
1970
1971 estimate. _ .
1972 estimate
20.6
23.6
25.1
26.4
27.3
28.3
31.8
37.2
42.4
48.3
54.5
67.0
72.5
Retirement and
disability
13.1
14.4
16.4
18.0
19.1
20.2
23.9
25.3
27.9
31.9
35.5
42.1
46.2
Hospital
and
supplementary
medical
insurance
Veterans
insurance
and
benefits
Food
stamps
*
*
*
*
*
3.2
5.1
6.3
6.8
7.9
8.6
0.1
.1
.2
.2
.5
1.5
1.9
4.4
4.6
4.6
4.8
4.6
4.7
4.7
5.3
5.5
6.2
6.9
8.1
8.7
Unemployment
benefits
2.7
4.2
3.6
3.1
2.9
2.5
2.1
2.1
2.2
2.3
3.0
5.5
4.6
Other
0.4
.4
.5
.5
.6
.8
1.2
1.2
1.4
1.5
1.7
2.1
2.5
•Less than $50 million.
Another large 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 1967, but by 1972 they are expected to provide $8.6 billion to
beneficiaries.
The food stamp program began in 1961 and grew gradually until
1970, when it more than doubled. It is continuing to expand at a rapid
rate. In practice, most expenditures under the income security and
health categories of grants-in-aid provide benefits for the same lowincome groups that are assisted by these food stamps. Total outlays for
the three categories together were $2.5 billion in 1960; in 1965 they totaled $4.0 billion; by 1969 they were $8.5 billion and they are expected
to total $16.0 billion in 1972. This growth reflects the rapid expansion
of public assistance payments in recent years plus expansion of the
food stamp program.
SPECIAL ANALYSES
15
Veterans insurance and benefits constitute a traditional major
category of outlays. Included are transfer payments made by the
Veterans Administration but not Defense Department retired pay,
which is included under retirement and disability. Nearly half of the
increase in this category between 1966 and 1972 was for educational
benefits (the GI bill); most of the remainder of the increase was for
veterans compensation and pensions.
The other major group of domestic transfer payments is unemployment benefits. There has been a gradual rise in expenditures under
this program over time because of higher average benefit payments.
The increase in 1071 reflects current unemployment experience while
1972 shows an expected decline as the economy improves.
" Grants-in-aid.—This group of outlays is composed of many programs
designed to assist State and local governments to (1) provide public
services and (2) finance programs to aid needy people.
Table A-5. FEDERAL G R A N T S - I N - A I D
Fiscal year
Total
1960
1961
1962
1963
1964
1965
1966
1967 .
1968
1969
1970
1971 estimate
1972 estimate
6.8
6.9
7.6
8.4
9.8
10.9
12.7
14.8
17.6
19.1
22.1
27.0
34.4
Income
security
2.3
2.4
2.6
2.9
3.1
3.2
3.3
3.3
4.6
4.9
6.0
8.2
9.5
Health
0.2
.3
.4
.5
.7
.7
1.3
2.0
2.8
3.4
3.8
4.4
4.6
(in billions of dollars)
Education and
manpower
0.5
.5
.6
.7
.8
1.1
2.2
3.2
3.9
3.7
3.9
4.5
4.5
Transportation
3.0
2.6
2.8
3.0
3.7
4.1
4.0
4.0
4.3
4.4
4.5
4.9
5.1
Community
development
and
housing
0.1
.1
.2
.2
.2
.4
.4
.6
.8
.9
1.8
2.1
2.7
Revenue
sharing
and
other l
0.8
.9
.0
.0
.4
5
6
6
ft
2.0
3.0
8.0
1
A general program of revenue sharing is proposed to begin in 1972 with outlays of $4. 0 billion
in that year.
The categories of income security and health are almost entirety
devoted to providing assistance to low-income persons. Most outlays
for these programs—which include public assistance, Medicaid, and
vocational rehabilitation—are established by statutory formulas and
have risen dramatically in recent years. Special Analysis K (Federal
Health Programs) and Special Analysis L (Federal Income Security
Programs) provide more specific coverage of these activities.
Another group of grant programs is devoted to education and manpower activities. The three largest categories of education grants are
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). The Government is emphasizing improved
delivery of educational services and the use of manpower training
16
THE BUDGET FOR FISCAL YEAR 19 72
programs as instruments for moving people from welfare rolls to
productive employment. Special Analysis I (Federal Education
Programs) and Special Analysis J (Federal Manpower Programs)
provide detailed discussion of these programs.
Transportation has been a major component of grant outlays since
the mid-1950's. The highway trust fund has been highly successful in
financing 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 vigorously pursuing a planned increase in outlays for aviation—including significant grants for airport construction. These outlays are
to be financed by aviation 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.
The final category of grants includes the proposed general revenue
sharing payment of $4.0 billion in 1972. Also included in this group
are Federal grants for crime control and for water pollution abatement.
Outlays in 1972 for the President's special revenue-sharing proposals
are largely covered in the other categories. Part 2 of the Budget provides detailed estimates.
A more detailed discussion of grant-in-aid programs is presented
in Special Analysis P of this budget. Although the scope of that analysis differs somewhat from the NIA, most of the programs are common
to both. The principal differences between the Special Analysis P and
the NIA grants are: (1) Special Analysis P 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 P excludes payments for research, while the NIA
includes research payments to public universities as grants; and (3)
Special Analysis P includes aid in kind, while the NIA treats these as
nondefense purchases.
Other Federal sector expenditures.—Four other categories 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; however, interest rates have begun declining, on the average, and should
be lower In 1972 than in 1971.
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 for social security and similar programs to individuals
living abroad. 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.
SPECIAL ANALYSES
17
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 surplus or
deficit of Government enterprises. The largest of these enterprises are
the Commodity Credit Corporation (CCC), the Postal Service, and
the Tennessee Valley Authority.
Wage accruals less disbursements is an adjustment item occasionally
made in the NIA to take account of the fact that wages and salaries
are not always received at the same time as they are earned. National
income is typically recorded in the period when earned, rather than
when received—i.e., an accrual basis of accounting. Personal income,
including wage and salary disbursements, is regularly estimated on a
cash basis—following the usual thinking and practice of households.
Ordinarily, w^age and salary payments disbursed in one period but
earned in the preceding period are approximately offset by those
earned in the current period, but not received until the following
period, making the adjustment between national income and personal
income small or negligible. An exception occurred in 1970 due to a
retroactive pay increase for Federal employees.
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.
430-700 O—71
18
THE BUDGET FOR FISCAL YEAR 19 72,
Table A-6. RELATIONSHIP OF THE BUDGET TO THE FEDERAL SECTOR,
NIA (in billions of dollars)
Description
1970
actual
1971
estimate
1972
estimate
RECEIPTS
Total budget receipts
193.7
Government contribution for employee retirement (grossing) _
Other netting and grossing
Adjustment to accruals
Other
Federal sector, NIA receipts
194.2
217.6
2.8
1.5
1.5
-.1
2.7
1.6
4.4
-.4
198.7
200.0
225.9
196.6
212.8
229.2
—2.1
—1.8
2.7
1.5
1.5
-.5
-1.6
-2.4
2.8
1.5
1.6
.3
-.9
-2.2
2.7
1.6
.5
7
197.9
215.0
230.1
2.7
1.5
.9
-.1
'
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
Other
Federal sector, NIA expenditures
Lending and financial transactions.—The loan account in the budget
includes only those domestic credit transactions where there are definite 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
in the loan account, but also some financial transactions counted
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). CCC nonrecourse
commodity loans are treated as purchases of goods under the national
income accounts concept.
Government contribution for employee retirement.—The contributions
of Government agencies, as employers, to 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; the receipts are
counted as contributions for social insurance. Therefore, the Federal
sector includes the Government's contributions to retirement funds
in both receipts and expenditures. About 70% of this money goes to
the civil service retirement fund and most of the remainder goes for
Federal employees insured under social security.
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
SPECIAL ANALYSES
19
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, these are treated as
receipts, 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 paid by the business
sector in the time period in which the income is earned rather than
when taxes are actually paid; personal income taxes are recorded at the
time of payment by the individual taxpayer. 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
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.
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 certain foreign currency transactions which are not included in the
budget.
20
THE BUDGET FOR FISCAL YEAR 1972
Table A-7. GNP AND FEDERAL SECTOR EXPENDITURES AS A PERCENT
OF GNP (in billions of dollars)
Fiscal year
Total
GNP (in
billions of
Fed<
Total
expendi-
Purch ases
defen se
1949
1950
1951
1952
1953 _1954
.
1955 .
1956
_ ...
1957
1958
1959
I960
1961
1962
1963
1964
1965
1966
1967
1968.
1969
1970
1971 estimate. _ _
260.0
263.3
310.5
337.2
358.9
362.1
378.6
409.4
431.3
440.3
469.1
495.2
506.5
542.1
573.4
612.2
654.2
721.2
769.8
827.3
897.7
956.0
1,012.0
15.2
16.1
14.4
19.6
21.1
20.5
17.8
17.0
17.6
18.9
19.4
18.4
19.3
19.6
19.4
19.1
18.1
18.3
20.1
20.8
20.8
20.7
21.2
4.8
4.8
7.0
12.4
13.6
12.6
10.2
9.6
9.8
10.2
9.9
9.1
9.2
9.3
8.8
8.3
7.5
7.5
8.8
9.2
8.8
8.2
7.3
2.7
2-4
.1
4
2.0
2.1
1.4
.5
1.2
1.3
1.8
1.6
1.7
1.9
2.3
2.4
2.4
2.4
2.3
2.3
2.4
2.3
2.4
Domestic
transfer
payments
3.1
4.3
2.6
2.5
2.6
2.9
3.2
3.1
3.3
4.0
4.2
4.2
4.7
4.6
4.6
4.5
4.3
4.4
4.8
5.1
5.4
5.7
6.6
Grantsin-aid
0.8
.9
.8
.7
.8
.8
.8
.8
.9
.1
.3
.4
.4
,4
,5
.6
.7
1.8
.9
2.1
2.1
2.3
2.7
All
other
3.9
3.7
2.9
2.5
2.2
2.1
2.2
2.1
2.3
2.2
2.2
2.2
2.4
2.4
2.3
2.3
2.3
2.2
2.2
2.1
2.1
2.1
2.3
Table A-8. FEDERAL TRANSACTIONS IN THE NATIONAL INCOME ACCOUNTS, 1961-1972 (in billions of dollars)
Actual
Description
Estimate
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
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
64.5
31.2
15.8
35.7
71.0
34.0
17.1
38.3
89.5
38.9
18.6
44.2
93.7
36.8
19.4
48.9
90.6
35.8
20.3
53.2
99.0
43.5
21.8
61.6
95.3
104.2
110.2
115.5
120.5
132.8
147.2
160.4
191.3
198.7
200.0
225.9
Purchase 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
Wage accruals less disbursements
55.5
(46.7)
(8.9)
25.6
(23.6)
(2.1)
6.9
6.8
3.2
60.9
(50.5)
(10.4)
27.2
(25.1)
(2.1)
7.6
6.8
3.8
63.4
(50.4)
(13.0)
28.5
(26.4)
(2.1)
8.4
7.5
3.6
65.7
(50.9)
(14.7)
29.5
(27.3)
(2.2)
9.8
8.1
3.8
64.4
(48.9)
(15.5)
30.5
(28.3)
(2.2)
10.9
8.5
4.1
71.7
(54.4)
(17.3)
34.2
(31.8)
(2.3)
12.7
9.0
4.5
85.3
(67.7)
(17.6)
39.4
(37.2)
(2.2)
14.8
9.9
5.1
95.2
(75.8)
(19.4)
44.5
(42.4)
(2.1)
17.6
10.9
4.1
100.6
(78.6)
(22.0)
50.5
(48.3)
(2.2)
19.1
12.3
4.1
100.8
(78.7)
(22.1)
56.5
(54.5)
(2.0)
22.1
14.0
4.6
—.1
97.9
(74.1)
(23.8)
69.2
(67.0)
(2.2)
27.0
14.6
6.2
.1
102.2
(74.0)
(28.2)
75.0
(72.5)
(2.5)
34.4
14.3
4.2
Total expenditures, national income basis
98.0
106.4
111.4
116.9
118.5
131.9
154.5
172.3
186.7
197.9
215.0
230.1
-2.7
-2.1
-1.2
-1.4
+2.0
+.9
-7.2
-11.9
+4.6
+.8
-15.0
-4.2
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
Excess of receipts or expenditures (—), national income
basis
Source.— Actual data for 1 9 6 1 - 7 0 are based on the estimates prepared by the D e p a r t m e n t of C o m m e r c e . D a t a for 1971 and 1972 are based on estimates by t h e
Office of M a n a g e m e n t and B u d g e t in cooperation with the D e p a r t m e n t of C o m m e r c e .
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
1970
actual
1971
estimate
1972
estimate
RECEIPTS
Federal funds:
Total in fund accounts
Interfund transactions
Proprietary receipts from the public
146,020
-802
-2,060
143,656
-1,224
-3,295
158,414
-1,311
-3,383
Receipts, Federal funds
143,158
139,137
153,720
Trust funds:
Total in fund accounts
Interfund transactions
Proprietary receipts from the public
61,464
—597
—1,505
68,504
—626
—1,713
77,887
—760
—1,636
59,362
66,165
75,490
Receipts, trust funds
Intragovernmental transactions
—8,778 —11,109 —11,617
Total budget receipts
193,743
194,193
217,593
159,164
-802
169,184
-1,224
181,551
-1,311
—2,060
—3,295
—3,383
156,301
164,665
176,857
51,167
-597
—1,505
61,538
-626
—1,713
66,388
-760
—1,636
49,065
59,200
63,992
—8,778
—11,109
—11,617
196,588
212,755
229,232
2,845
18,562
11,639
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 deficit
FEDERAL
FUNDS
The Federal funds are those which the Government administers
as owner (as distinguished from those administered in a trustee or
22
SPECIAL ANALYSES
23
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
1970
actual
1971
estimate
1972
estimate
RECEIPTS BY SOURCE
Individual income taxes
Corporation income taxes
Excise taxes
Estate and gift taxes
Customs duties
Miscellaneous receipts
Total receipts Federal funds
90,412
32,829
10,351
3,644
2,430
3,492
88,300
30,100
10,650
3,730
2,490
3,867
93,700
36,700
11,115
5,300
2,700
4,205
143,158
139,137
153,720
342
127
36
394
142
50
428
166
55
2,425
1,796
417
8,310
1,079
77,154
1,195
17,435
2,603
857
640
804
430
2,039
19,598
2,453
350
446
3,750
1,510
8,358
2,148
3,047
1,620
302
8,697
1,204
73,368
1,413
21,343
3,333
406
1,071
1,561
466
2,909
20,983
2,275
679
335
3,368
2,353
9,635
2,911
3,212
1,045
419
9,506
1,282
74,972
1,496
23,920
3,888
1,395
1,412
2,032
509
2,151
21,270
2,318
1,364
—275
3,151
1,333
10,302
3,537
500
300
4,019
1,000
950
156,301
164,665
176,857
-13,143
-25,528
-23,137
OUTLAYS BY AGENCY
Legislative Branch
The Judiciary
Executive Office of the President
Funds appropriated to the President:
Foreign assistance
Economic opportunity
Other
Agriculture
Commerce
Defense-Military 1 _ _
.
Defense-Civil
Health, Education, and Welfare
Housing and Urban Development
Interior
__ __
Justice
Labor
State
___
Transportation
Treasury
Atomic Energy Commission
Environmental Protection Agency
General Services Administration
National Aeronautics and Space Administration
Postal Service
Veterans Administration
Other independent agencies
Allowances for:
Added amount for revenue sharing
Pay increases (excluding Department of Defense)
Contingencies
Total outlays Federal funds
Excess of outlays ( - )
__
___ _
Note.— Excludes charges resulting from reclassification in 1970 of certificates of interest issued
by the Commodity Credit Corporation, $1,583 million.
1
Includes allowance for all-volunteer force and civilian and military pay increases for Department of
Defense.
Receipts and outlays.—The receipts of the general and special funds
in 1972 are estimated at $154 billion, as presented in table B-2.
Outlays of all the Federal funds, estimated at $177 billion, are
distributed as shown. The proprietary receipts of the general fund
24
THE BUDGET FOR FISCAL YEAR 19 72
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 $185 billion for 1972, as set forth in table B-3. These transactions
largely flow from the budget authority of $185 billion for the year,
although in part the obligations were authorized by prior years
budget authority.
Table B-3. OBLIGATIONS INCURRED, NET, IN FEDERAL FUNDS
(in millions of dollars)
1970
actual
1971
estimate
1972
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
State
Transportation
Treasury
Atomic Energy Commission
Environmental Protection Agency
General Services Administration
National Aeronautics and Space Administration
Postal Service
Veterans Administration
Other independent agencies
Allowances for:
Added amount for revenue sharing
Civilian and military pay increases (excluding Department of
Defense)
Contingencies
Total
332
126
38
4,822
7,303
1,053
73,245
1,134
18,059
2,606
1,028
862
1,055
439
2,134
19,620
2,282
628
440
3,861
1,567
8,414
2,393
398
145
49
5,400
7,866
1,304
73,753
1,472
22,412
3,312
402
1,225
2,165
494
2,781
21,009
2,540
1,487
530
3,513
2,862
9,716
4,331
513
168
56
4,896
9,525
1,411
76,200
1,619
25,832
5,018
1,400
1,550
2,152
512
2,244
21,277
2,355
2,357
—153
3,270
1,538
10,231
4,637
4,106
153,440
525
500
1,050
1,250
170,191
185,012
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 G, Balances of Budget Authority.
SPECIAL ANALYSES
25
Table B-4. FEDERAL FUND BALANCES OF BUDGET AUTHORITY
(in millions of dollars)
Department or other unit
Start 1970
Obli-
Unobli-
End 1970
Obli-
Unobli-
Obligated
Legislative Branch
26
52
63
32
23
The Judiciary
11
9
12
*
Executive Office of the
*
President __ _
5
1
5
6
Funds appropriated to the
President:
International security
assistance
4 1,994
1,916
61 1,703
International development assistance...
3,981 7,286 4,079 7,532 4,286
Office of Economic Opportunity
806
17
1,075
5 1,147
190 1,101
Other
_.
662
826
184
6,865
1,783 5,848
1,526 5,021
Agriculture
230 1,252
230 1,151
Commerce. __ _
1,207
29,501 14,893 25,483 14,744 25,868
Defense—Military
336
296
235
278
Defense—Civil _ __
293
Health, Education, and
544 9,522
708 8,455
7,910
Welfare
Housing and Urban De7,509 13,527 7,502 15,471 7,481
velopment _
777
780
338
290
610
Interior _
429
276
29
37
55
Justice _
416 1,235
363
Labor.
_ __
632
468
74
46
7
45
13
State
_
948 1,006
814 1,134
1,043
Transportation,
160
134
114
13
Treasury _ _
21
Atomic Energy Commis336 1,362
398 1,096
1,268
sion
Environmental Protection
828
468 1,636
93
Agency
557
General Services Admin314
125
360
120
306
istration
National Aeronautics and
216 1,658
331 1,513
Space Administration. _ 1,405
217 1,371
863
51
803
Postal Service. _
942
861 1,636
809 1,691
Veterans Administration.
4
3
4
3
4
Civil Service Commission.
2,818 2,569 2,903 2,215 3,887
Export-Import Bank.. _
Federal Deposit Insurance
3,000
3,000
Corporation
Federal Home Loan Bank
87
12 7,206
48 3,994
Board
Other independent agen1,842
1,481
1,080
1,680
1,292
cies.
_ _ _
225
Special allowances. _
Total
End 1972
End 1971
Unobligated
Unobli-
Obli-
82
*
111
14
*
6
76
2,163
4,883
8,022
533
21
55
828
1,892 5,045
163 1,381
11,720 27,095
27
175
2,723
12,556
192
416
14
351
11,433
266
14,451
8,612
11,598
382
38
349
11
782
567
1,356
463
25
351
9
3,348
9
1,099
167
104
1,398
271
2,629
365
205
437
169
10,090
1,674
3
1,052
1,777
1,577
871
13
4,825
10,023
1,967
4
8,024
77
180
2,657
27
3,000
3,000
7,352
143
7,513
3,611
1,939
3,080
662
72,432 54,709 69,151 59,100 74,680 68,449 82,840
65,289
*Less than $500 thousand.
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
26
THE BUDGET FOR FISCAL YEAR 1972
fund 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 $25,381 million in 1972, and gross outlays are planned to
total $31,577 million (table B-5), resulting in net outlays of $6,196
million. For 1972 the Postal Service fund receipts include the appropriations from the general fund, whereas in previous years they did not.
Table B-5. PUBLIC ENTERPRISE FUND TRANSACTIONS (in millions of dollars)
Description
Funds appropriated to the President:
Foreign assistance
Other
Agriculture:
Commodity Credit Corporation i
......
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.
Federal Housing Administration
Other
Interior
Labor
Transportation
Treasury.^..
..........
General Services Administration
2
Postal Service
Veterans Administration
Other independent offices:
Export-Import Bank
Farm Credit Administration.
Federal Home Loan Bank
Board:
Federal Savings and Loan
Insurance Corporation __
Other
National Credit Union Administration
Small Business Administration
Tennessee Valley Authority..
U.S. Information Agency
Total
Receipts from the public
Receipts from other accounts...
Applicable receipts
1970
actual
1971
estimate
Gross outlays
1972
estimate
1970
actual
1971
estimate
1972
estimate
137
307
169
326
180
126
881
255
857
214
894
116
4,306
4,869
3,493
8,083
8,072
7,118
2,241
2,797
2,798
2,279
2,339
2,444
48
101
45
45
45
50
57
87
42
17
46
17
14
19
18
18
22
37
174
23
185
31
192
33
168
151
201
110
196
65
150
652
731
164
534
744
156
685
820
346
1,696
727
301
1,616
756
206
1,985
830
781
602
44
282
28
1
10
6,570
687
897
1,035
42
299
93
2
2
6,874
1,006
974
1,194
42
222
36
3
2
10,073
1,100
578
1,307
94
278
132
1
1
8,080
679
711
1,735
174
296
295
2
1
9,227
809
797
1,473
90
220
346
2
2
9,934
719
1,581
4
1,826
4
1,809
5
1,800
4
1,954
4
2,099
5
324
20
204
24
213
26
156
20
62
26
51
31
7
14
19
7
9
10
305
502
322
655
317
750
547
713
*
577
1,080
585
1,258
*
20,632
23,228
25,381
29,146
31,510
31,577
(17,944)
(2,688)
(20,710)
(2,519)
(20,774)
(4,607)
*Less
than $500 thousand.
1
Receipts include advances from foreign assistance and special export programs of $830 million in
1969.
$921
million in 1970, and $933 million in 1971.
2
Receipts include grants from the general fund of $1,472 million in 1972.
SPECIAL ANALYSES
27
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 $75
billion in 1972, with outlays planned at $64 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)
Description
Funds to which receipts are appropriated:
Federal old-age and survivors
insurance trust fund
Federal disability insurance
trust fund
Health insurance trust funds.
Unemployment trust fund_._
Railroad employees retirement funds
Federal employees retirement
funds
Airport and airway trust funds
Highway trust funds
Foreign military sales trust
fund
Veterans life insurance funds.
Other trust funds (nonrevolving)
Trust revolving funds (table B-7)
Subtotal
Interfund transactions
Proprietary receipts from the
public
Total
Outlays
1971
estimate
1972
estimate
27,320
32,000
35,105
31,746
33,190
38,204
2,954
7,149
3,555
3,536
8,262
5,964
3,880
9,033
5,195
4,380
7,489
4,074
4,570
10,201
4,299
4,735
13,189
4,963
1,608
1,914
1,944
1,744
1,895
2,080
2,770
3,575
1,409
4,772
4,705
4,382
3,202
371
4,718
5,473
5,257
1,201
5,759
5,542
1,248
5,908
950
769
935
803
900
824
813
753
980
799
900
833
234
-524
294
-461
317
-566
287
353
285
51,167
61,538
66,388
61,464
68,504
77,887
-597
-626
-760
-597
-626
-760
-1,505
-1,713
-1,636
-1,505
-1,713
-1,636
49,065
59,200
63,992
59,362
66,165
75,490
1970
actual
1970
actual
Receipts
1971
estimate
1972
estimate
28
THE BUDGET FOR FISCAL YEAR .19 72
This group of funds reflects an excess of receipts of $7 to $11.5
billion each year, as follows (in millions of dollars):
1970 actual
1971 estimate
1972 estimate
59,362
49,065
66,165
59,200
75,490
63,992
10,297
6,965
11,499
Total receipts, trust funds
Total outlays, trust funds
Excess of receipts, trust funds
The activities of the trust revolving fund subgroup are shown in
table B-7. Several of such funds, representing mixed-ownership
corporations, were eliminated from the scope of this fund group, when
the enterprises became privately owned during 1969.
Table B-7. T R U S T REVOLVING F U N D TRANSACTIONS (in millions of dollars)
Applicable receipts
Description
1970
actual
Civil Service Commission (employees' life insurance and
health benefits)
Federal Deposit Insurance Corporation
All other trust revolving funds..
Total trust
funds1
Gross outlays
1972
estimate
1970
actual
1971
estimate
1972
estimate
1,415
1,585
1,850
1,230
1,432
1,684
396
124
391
129
454
134
68
113
83
129
52
136
1,411
1,644
1,871
revolving
Receipts from the public
Receipts from other accounts. _
1
1971
estimate
1,935
(1,332)
(603)
2,105
2,438
(1,335)
(770)
(1.465)
(973)
Excludes right-of-way revolving fund which is a part of the highway trust funds.
Balances of the trust funds.—The balances of the trust funds continue to increase, as shown in the following end-of-year figures (in
millions of dollars):
1969 actual
Open book balances
Investments in U.S. securities:
Publicdebt
Agency debt
Total
__.
1970 actuml 197! etlimatt
1972e$timat$
3.891
4,529
5,355
5,303
80.403
2.293
90.654
2.051
97,328
1.616
109,204
1,291
86.587
97,234
104,299
115,797
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.
SPECIAL ANALYSES
29
For 1972, 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.
Table B-8. T R U S T FUND BALANCES (in millions of dollars)
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
Airport and airway trust fund
Highway trust funds
Foreign military sales trust fund
Veterans life insurance funds
Other trust funds (nonrevolving)
Trust revolving funds
Total
As of June 30
1969
ictual
1970
actual
1971
estimate
28,119
3,659
2,353
12,566
4,631
20,491
32,611
5,085
2,735
13,117
4,843
22,496
1,524
605
7,092
538
5,009
86,587
1972
estimate
2,615
468
7,143
589
5,533
33,821
6,138
4,674
11,441
4,875
24,571
830
3,656
513
7,139
647
5,994
36,919
6,994
8,829
11,184
5,035
26,539
669
4,792
513
7,149
614
6,561
97,234
104,299
115,797
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:
Balance available on an authorization basis
Unfinanced contract authorizations:
Airport and airway trust fund
Highway trust funds
Foreign military sale trust fund
Office of Saline Water
Unappropriated receipts:
Available as needed, on an indefinite basis
Available for appropriation by Congress:
Soldiers* Home permanent fund
Airport and airway trust fund
Highway trust funds
Retained as permanent endowment
Balance available on a cash basis
1969
98,344
1970
109,860
1971
116,378
1972
128,090
-11,364
-2,037
-8
—840
-12,478
-1,962
-3
—780
-13,615
-1,832
—688
-14,698
-1,782
23
18
18
18
110
111
108
1,513
6
2,522
6
110
402
3,611
6
4,743
6
86,587
97,234
104,299
115,797
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):
30
THE BUDGET FOR FISCAL YEAR 1972
Receipts regularly offset in individual accounts:
Receipts of public enterprise funds (table B-5)
Receipts of trust revolving funds (table B-7)
Reimbursements to other appropriations and funds:
Department of Defense—Military
Sale of student loan notes, Office of Education
Other agencies
Receipts offset for the budget by agency and function (table 13) _ - _
Total
1970
actual
1971
estimate
1972
estimate
17,944
1,332
20,710
1,335
20,774
1,465
2,530
2,375
_ _
_
906
1,150
3,814
5,273
26,526
30,843
2,372
400
1,129
5,306
31,446
Table B-9. GROSS FLOW OF GOVERNMENT-ADMINISTERED FUNDS
(in millions of dollars)
Description
1970
actual
1971
estimate
1972
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
90,412
32,829
88,300
30,100
93,700
36,700
39,133
3,464
2,701
15,705
3,644
2,430
42,297
3,604
3,072
16,800
3,730
2,490
50,225
4,183
3,151
17,500
5,300
2,700
5,717
17,944
1,522
1,332
3,436
7,338
20,710
1,735
1,335
3,525
7,784
20,774
1,656
1,465
3,901
220,269
225,036
249,039
84,696
5,574
3,787
11,613
4,127
16,453
5,663
7,496
13,745
43,374
9,956
14,704
1,926
81,248
5,916
3,418
12,038
5,423
19,002
6,642
8,643
15,761
55,102
11,638
15,013
2,952
82,486
6,337
3,198
10,648
6,297
20,133
7,802
9,505
16,955
60,330
12,418
14,692
3,908
500
300
4,019
1,000
950
223,114
243,598
260,678
-2,845
-18,562
-11,639
PAYMENTS BY FUNCTION
National defense (including DOD pay increases)
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:
Added amount for revenue sharing
Pay increases (excluding Department of Defense)
Contingencies
Total payments to the public
Excess of payments ( - )
—,._-
SPECIAL ANALYSIS C
BORROWING AND INVESTMENTS
The major fiscal responsibilities of the Federal Government include
not only the collection of revenues and the disbursement of cash
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 balances not currently
required by trust funds and other accounts for outlays; and
• The provision of advice and assistance, including, in many
cases, Government guarantees for borrowing by certain nonFederal 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 limitation 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 factors are significant in determining the impact of the programs contained in the
1972 Federal budget on financial markets.
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
from the public. Borrowing within the Federal Government itself—
Table C-1. NET CHANGES IN FEDERAL BORROWING (in millions of dollars)
Increase or decrease (—)
Description
Gross Federal debt:
Publicdebt (issued by Treasury)
Agency debt (issued by agencies)
Total gross Federal debt l
Less debt held by Government agencies:
Publicdebt
Agency debt
Increase in debt held by the public
1
1972
estimate
Outstanding
end 1972
estimate
17,199 25,926 23,556
-1,739 -1,497 -1,189
419,576
9,824
1970
actual
_..
1971
estimate
15,460
24,429
22,367
429,400
10,355
-293
7,314
-484
12,110
-343
114,594
1,726
5,397
17,600
10,600
313,080
Excludes notes issued to the International Monetary Fund
31
32
THE BUDGET FOR FISCAL YEAR
1972
mainly borrowing from trust funds—only indirectly affects the financial markets.
Table C-l summarizes net changes in Federal borrowing for 1970
through 1972. Net Federal borrowing from the public is expected to be
$17.6 billion in 1971 and $10.6 billion in 1972.
SIZE AND GROWTH OF FEDERAL DEBT
Federal debt has risen over most of the past two decades. During the
15-year period ending with 1970, gross Federal debt rose by about 39%,
and the portion borrowed from the public rose by about 26%. This was
substantially less than the increases of 250% in State and local government debt, 215% in corporate debt, and 220% in personal debt.
Consequently, net borrowing by the Federal Government, although
significant, 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
rates. As a result, no new direct Treasury obligations with long 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 Treasury marketable debt instruments has declined from about 53^> years to about 33^ years, and
the amount of debt that needs refunding each year now exceeds $100
billion.
Table C-2. COMPARISON OF TRENDS IN FEDERAL DEBT, INTEREST, AND
GROSS NATIONAL PRODUCT (in billions of dollars)
Fiscal year
1955
1956
1957
1958
1959
1960
1961
1962
1963 .
1964 .
1965
1966
1967
1968...
1969
1970
1971 estimate
1
__.
Debt held
Gross
Federal by public,
end of
debt, end
1
year
of year
Interest
on debt
held by
public
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
284.9
302.4
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
14.8
15.9
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
382.6
407.0
GNP
for
379
409
431
440
469
495
506
542
573
612
654
721
770
827
898
956
1,012
Debt held
by public
Inter est
as p>er-
of GNP
GNIP
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
29.8
29.9
t of
1.37
M
.39
1 45
1 V
63
1 55
47
1 53
I S3
1.52
1.47
1.53
1.54
59
1 54
1.57
Excludes special notes issued to International Monetary Fund and international lending agencies.
SPECIAL ANALYSES
33
In the aggregate, Federal debt held by the public has risen much
less than the increase in the Nation's gross national product. The
publicly held Federal debt outstanding at the end of 1955 amounted
to almost 60% of the gross national product during the year. By the
close of 1970, the comparable ratio had fallen to only 30% (see table
0-2).
On the other hand, changes in the net interest cost of the debt
held by the public may be more significant than changes in the total
amount of debt. As a result of the general increase in interest rates
since 1960, the amount of interest payable on both new cash borrowings and refundings has increased substantially. Between 1955 and
1970, net interest paid to the public almost tripled (increasing from
$5.2 to $14.8 billion), while the interest-bearing debt was up by only
26%. In that period, interest costs grew more rapidly than the gross
national product. In 1970, net interest paid to the public amounted
to 1.54% of the gross national product, compared with 1.37% in
1955.
BORROWING BY FEDERAL AGENCIES
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.
New or additional borrowing authority was recently granted to
the Postal Service and the Tennessee Valley Authority—$10 billion
and $3.2 billion, respectively. The Postal Service may borrow up to
$2 billion a year and may borrow either from the public or from the
Treasury.
Net changes in outstanding agency debt (other than debt owed to
the Treasury) are shown in table C-3. For both 1971 and 1972, agency
debt repayments will exceed their new borrowings by $1.5 billion and
$1.2 billion, respectively.
About half of the agency debt of $9.8 billion estimated to be
outstanding on June 30, 1972, will consist of $5.4 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.
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 issued 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 Government provides capital for certain of its business-type activities in the form of "debt"; that is, some government enterprises
have, in addition to capital stock, issued notes or other types of debt
430-700 O—71
34
T H E BUDGET FOR FISCAL YEAR 1 9 7 2
instruments to the Treasury (in return for cash). Since these differ only
in form, but not in substance, from other methods of providing capital
to the enterprises, these amounts are not shown as liabilities, but as a
part of the Government's ownership equity on the enterprise statements of financial condition in the Budget Appendix, and these
amounts are similarly excluded from figures on agency "debt" or
"borrowing" throughout the budget documents.
Table C-3. AGENCY BORROWING 1 (in millions of dollars)
Increase or decrease ( - )
Description
1970
actual
Borrowing from the public:
Agriculture:
Commodity Credit Corporation 2
Farmers Home Administration
Rural Electrification Administration
Defense
Health, Education, and Welfare
Housing and Urban Development:
College housing loans
Public facility loans
".
Federal Housing Administration
Government National Mortgage Association
Veterans Administration
Export-Import Bank
Small Business Administration
Tennessee Valley Authority
Allother
Total borrowing from the public
Borrowing from other funds:
Agriculture 2
Defense
Health, Education, and Welfare
Housing and Urban Development:
College housing loans
Public facility loans.
Federal Housing Administration
Government National Mortgage Association
Veterans Administration
Small Business Administration
Tennessee Valley Authority
Total borrowing from other funds
Total agency borrowing^
1971
estimate
—1,583
-198
-44
-74
13
-109
-5
—51
—216
-264
-579
-269
302
2
1972
estimate
Outstanding
end 1972
estimate
-79
-1
-97
58
-77
-3
394
58
1,377
140
-650
-1
—45
—57
-65
-480
-61
470
2
-328
-3
2
—123
-58
-604
-148
530
5
320
102
472
1,011
1,098
808
337
1,966
16
-1,013
-846
8,098
-209
-14
-17
-19
-15
-1
-48
-15
- 3
165
212
59
-208
*
—11
25
128
44
-34
-335
-1
—5
—25
-28
—27
-30
-94
-3
—3
—68
-41
—69
133
43
91
423
459
141
-299
-484
-344
1,726
-3,030
_3,329
-1,497
-1,189
9,824
* Less than $500 thousand.
1
Excludes agency borrowing from Treasury.
2
Transactions for 1970 include repayment of $1,583 million of CCC certificates of interest held
by the public and $7 million held by other funds. The certificates were reclassified on July 1, 1969.
from sales of guaranteed loans to borrowing; the reclassifi cation is excluded from this table.
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
SPECIAL ANALYSES
35
public debt or agency securities. These investments, in turn, are
"cashed" as the money is needed for disbursement. Neither purchases
nor redemptions of these securities are counted as budget outlays or
receipts.
Table C-4.
AGENCY INVESTMENTS IN FEDERAL SECURITIES
(in millions of dollars)
Description
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 hospital insurance trust fund
Federal supplementary medical ins. trust fund
Housing and Urban Development:
Federal Housing Administration
Government National Mortgage Association
Other
Interior: Indian Tribal Funds
Labor: Unemployment trust fund
Transportation: Highway trust fund
Treasury: Exchange Stabilization Fund
Veterans Administration:
Trus t funds
Other
Civil Service Commission: Trust funds
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 l
Labor: Unemployment trust fund
Veterans Administration: Trust funds
Civil Service Commission: Trust funds
Federal Home Loan Bank Board: FSLIC
Railroad Retirement Board: Trust funds
Allother
Total investments in agency debt
Total agency investments in Federal securities.
Increase or decrease ( - )
in investments
1970
actual
3,953
1,392
693
-345
1971
estimate
1972
estimate
Holdings
end 1972
estimate
1,212
1,035
1,744
249
3,142
889
3,909
221
33,815
6,674
8,236
484
134
215
-336
207
28
11
181
553 -1,523
1,089
1,038
-10
-12
233
-251
12
-166
1,135
1,437
629
82
200
11,099
4,775
116
59
1,960
328
173
318
69
36
52
2,202
405
152
98
42
6,815
531
27,047
5,196
2,593
4,765
216
66
66
2,414
310
152
123
19
10,354
7,314
12,110
114,594
—85
—15
—20
—50
—50
505
—50
—3
—48
—65
-75
—5
—38
—100
-70
—35
—4
—8
—100
-25
—100
-50
-7
-110
-6
-6
310
375
160
50
60
-299
-484
-344
1,726
10,055
6,830
11,767
116,320
50
68
148
1
Transactions for 1970 include this investment of $7 million of CCC certificates of interest, reclassified as debt as of July 1, 1969.
As shown in table C-4, net investments by Government agencies
and trust funds in Government securities are estimated to rise $6.8
billion in 1971 and an additional $11.8 billion in 1972. The total
investments of Government agencies and trust funds will reach an
36
THE BUDGET FOR FISCAL YEAR 1972
estimated $116.3 billion by June 30, 1972. This means that they will
hold about 27% of the gross Federal debt. Four major trust funds—
the Federal Old-Age and Survivors Insurance Fund, the Civil Service
Retirement and Disability Insurance Fund, the Unemployment Trust
Fund, and the National Service Life Insurance Fund of the Veterans
Administration—account for three-quarters of these holdings.
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 by 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, accord'ng to
explicit statutes, is fully guaranteed as to principal and interest
by the United States.
The statutory limit based on this definition is $395 billion for the
period beginning July 1, 1970, and ending on June 30, 1971. This
includes a temporary increase of $15 billion, which expires on June 30,
1971, after which the permanent limit of $380 billion becomes effective.
The outstanding debt subject to this limit at the end of 1970, 1971,
and 1972, is compared with the corresponding Federal debt held by
the public and the gross Federal debt in table C-5.
The Federal debt held by the public is projected to increase by
$17.6 billion in 1971 and by $10.6 billion in 1972. The debt subject
to statutory limitation is scheduled to rise by $24.9 billion and $23.6
billion, respectively. The difference 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 the debt subject
to limitation. Since the statutory limit declines, while the debt subject
to limit is rising, an increase in the debt limit will be necessary.
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 $5 billion.
SPECIAL ANALYSES
37
Table C-5. DEBT SUBJECT TO GENERAL STATUTORY LIMITATION
(in millions of dollars)
End of year
Description
Federal debt held by the public
Add: Federal securities held by Government agencies
Gross Federal debt
Deduct:
Public debt not subject to limitation
Agency debt not subject to general limitation:
Departmentof Defense
Export-Import Bank
Tennessee Valley Authority
Participation certificates1
Rural Electrification Administration
Other__.
Total Federal debt not subject to limitation
Federal debt subject to statutory limitation
Add:
District of Columbia Stadium bonds
Special notes held by International Monetary Fund
Total debt subject to statutory limitation
.
_.
1970
actual
1971
estimate
1972
estimate
284,880
302,480
313,080
97,723
104,553
116,320
382,603
407,033
429,400
631
430
430
1,772
1,893
996
4,720
1,679
1,412
1,436
4,540
12
10,024
13
9,510
1,579
808
1,966
3,455
58
27
8,323
372,580
397,523
421,077
20
825
20
825
20
825
373,425
398,368
421,922
1
Represents certificates of participation issued by Government National Mortgage Association
as trustee for 5 departments and agencies (excluding those issued during 1968).
BORROWING BY GOVERNMENT-SPONSORED ENTERPRISES
Six Government-sponsored enterprises, in which there is currently
no Government investment, borrow under Government auspices.
The borrowing programs of all six 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. Four of the six enterprises are systems of regional lending institutions that pool their
borrowings. All of the established enterprises 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 1970 and anticipates expansion in 1971 and 1972 (see table
C-6). Total net new borrowing by the six Government-sponsored
enterprises as a whole is expected to rise by $7.5 billion in 1971, and
by another $9.2 billion in 1972. The large increases in such borrowing
reflect the strong support provided to the housing market by the
Federal National Mortgage Association, the Federal home loan banks,
and the new Federal Home Loan Mortgage Corporation, recently
established to provide a secondary market for residential mortgages.
38
THE BUDGET FOR FISCAL YEAR 1972
Table C-6. NET BORROWING OF GOVERNMENT-SPONSORED ENTERPRISES
(in millions of dollars)
Description
Housing and Urban Development: Federal National
Mortgage Association
Farm Credit Administration:
Banks for cooperatives
._._
Federal intermediate credit banks
Federal land b a n k s . . . .
Federal Home Loan Bank Board:
Federal home loan banks...
Federal Home Loan Mortgage Corporation.__
_
Total....
Increase or decrease (—)
1970
actual
5,087
1971
1972
estimate estimate
3,820
Outstanding
end 1972
estimate
3,645
20,631
116
729
425
43
621
443
76
699
502
1,643
6,287
7,229
4,359
2,120
470
3,000
1,245
15,000
1,715
10,716
7,517
9,167
52,505
GOVERNMENT GUARANTEES OF NON-FEDERAL BORROWING
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 help
private borrowers to buy or build 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,
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
prevailing budget totals. Net additions to guaranteed non-Federal
SPECIAL ANALYSES
39
debt arising from sale of direct loans by four major programs, less
repurchases (puts), are shown in the footnote at the bottom of table
C-7.
As table C-7 indicates, outstanding guaranteed debt of non-Federal
borrowers will increase by $17.9 billion in 1971 and by another $24.5
billion in 1972, primarily because of heavy federally assisted borrowing
for housing. By the end of 1972, such guaranteed debt will amount to
an estimated $167.5 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)
Description
Funds appropriated to the President:
International security assistance
International development assistance
Agriculture: Farmers Home Administration
Commerce:
Economic Development Administration
Trade adjustment assistance
Maritime Administration
Health, Education, and Welfare:
Student loans
Medical facilities loans
Academic facilities loans
Housing and Urban Development:
Low-rent public housing
Community development loans
Federal Housing Administration
New communities fund
Tra nsportation: Federal Railroad Administration
Veterans Administration
District of Columbia
Export-Import Bank
Small Business Administration
All other
Total1
Increase or decrease (—)
1970
actual
Outstanding
end 1972
estimate
1971
estimate
1972
estimate
82
54
2,173
—46
—36
944
—54
65
1,737
348
256
7,633
—11
—1
13
100
1,128
88
296
100
202
1,172
902
500
26
1,425
500
296
4,279
1,000
322
940
287
4,593
1. 113
1,051
376
11,118
95
100
1,125
-88
204
-599
758
550
145
1,187
453
14,530
105
25
2,214
71
936
617
63
10,310
3,791
93,242
200
125
39,379
91
2,894
1,976
363
10,008
17,902
24,472
167,450
1
Includes net increase in outstanding debt resulting from direct loans sold with Federal guarantees
to private lenders minus repurchases (puts) by following programs:
1970
Agriculture: Farmers Home Administration
Housing and Urban Development
Veterans Administration
Export-Import Bank
Total
1 See table E-3.
1971
1972
1,109
1,492
38
146
300
420
2,037
230
432
400
1,293
2,212
3,099
40
THE BUDGET FOR FISCAL YEAR 1972
TOTAL FEDERAL AND FEDERALLY ASSISTED BORROWING
Federally assisted borrowing is expected to grow more than Federal
borrowing from the public in both 1971 and 1972. Table C-8 summarizes the developments in the three categories of borrowing,
together with adjustments necessary to eliminate double counting.
Federal borrowing from the public is expected to increase $17.6
billion in 1971 and grow another $10.6 billion in 1972. Total Federal
and federally assisted borrowing from the public is expected to increase
$38.3 billion in 1971 and $40.6 billion in 1972.
Table C-8. NET BORROWING FROM PUBLIC BY GOVERNMENT,
GOVERNMENT-SPONSORED AND GOVERNMENTGUARANTEED AGENCIES (in billions of dollars)
Increase or decrease (—)
Description
1970
actual
Federal borrowing from the public l
2
1971
1972
estimate estimate
Outstanding
end 1972
estimate
5.4
17.6
10.6
313.1
Debt of Government-sponsored agencies
Less borrowing or repayment (—) of debt held by
Government agencies
10.7
7.5
9.2
52.5
—.4
—.1
*
*
Net Government-sponsored borrowing from public.
11.1
7.6
9.2
52.5
10.0
17.9
24.5
167.5
5.4
.6
4.0
.5
.3
3.7
*
*
21.1
5.5
.3
Net Government-guaranteed borrowing from public by non-Federal borrowers
4.0
13.1
20.8
140.6
Total, Federal and federally assisted borrowing
from public
20.5
38.3
40.6
506.2
3
Government guaranteed debt of non-Federal borrowers _
Less borrowing from Government or Government-sponsored agencies:
Federal National Mortgage Association
Government National Mortgage Association
Federal Home Loan Mortgage Corporation
*Less than $500 thousand.
1 See table C-l.
2 See table C-6.
» See table 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—yields benefits over several years, and
consists of investments in:
• Federal assets of both a physical and financial nature;
• State, local, and private physical assets;
• Developmental expenditures to add to the Nation's capacity for
better education, technical innovation, and health services.
Current outlays—provides benefits in the year that they are made
and consists of:
• Aid and special services to agriculture, business, labor, homeowners, tenants, veterans, and for international commitments
and Federal welfare obligations.
• Ketirement 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.
• Other services and current operating expenses, including transactions such as: operation and administration of Federal departments and agencies; repair, maintenance, and operation of
physical assets; regulatory and control activities; and interest.
Unclassified outlays—which cannot be classified in either of the
above two categories are placed in this residual classification. It
includes:
• Allowance for revenue sharing, containing amounts covering the
President's proposal for general revenue sharing, as well as
additions to the detailed budget estimates that would accompany
the conversion of various Federal aids to proposed special revenuesharing grants;
• Allowance for pay increases for civilian agencies (the corresponding pay increases for the military and civilian personnel of the
Department of Defense are included in the national defense
details);
• Allowance for contingencies; and
• Certain financial adjustments that cannot conveniently, or
precisely, be distributed, such as proprietary receipts and the
employer share of employee retirement.
Each of the major classifications is subdivided so that civil and
national defense outlays can be separately analyzed. The national
defense grouping in this analysis corresponds to the national defense
41
42
THE BUDGET FOR FISCAL YEAR 19 72
function in the budget; the civil grouping includes all other functions
in the budget.
Table D-1. SUMMARY OF INVESTMENT, OPERATING, AND OTHER
BUDGET OUTLAYS (in billions of dollars)
Outlays
1970
1971
1972
actual
estimate
estimate
INVESTMENT-TYPE OUTLAYS
Additions to Federal assets:
Civil:
Loans and other financial investments
3. 1
2.5
2.7
2.2
.6
.3
23.8
3.0
—.4
.4
20.9
3.4
—.3
.6
20.9
6.9
7.8
8.6
*
*
*
16.8
18.7
20.1
8.9
9.0
9.1
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
30.0
32.1
35.1
National defense
32.7
29.9
30.0
28.0
35.4
38.1
1.5
42.8
1.6
51.8
1.6
55.3
14.7
15.0
14.7
5.5
47.2
7.0
45.4
.9
7.9
44.3
3.6
Civil
91.0
109.2
115.9
National defense
48.7
47.9
49.5
—2.4
—3.4
.5
.3
—2.5
—4.7
4.0
1.0
1.0
—2.5
—4.7
196.6
212.8
229.2
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
Other
National defense
Allowances, Department of Defense
Subtotal, current outlays:
UNCLASSIFIED ITEMS
Allowances:
Added amount for revenue sharing
Pay increases (excluding Department of Defense)
Contingencies
Employer share, employee retirement (—)
Proprietary receipts from the public ( - ) 1
Total budget outlays
1
Excludes loan repayments deposited in miscellaneous receipts and offset in the loan and expenditure account as follows:
1970
1971
1972
Loan repayments offset in the loan account
—249
—265
—287
Repayments offset in the expenditure account
—205
—268
—298
Summary.—The primary factors influencing investments and
current outlays in 1972 are:
SPECIAL ANALYSES
43
• The proportion of the budget dedicated to civil purposes is
expected to be $151.0 billion, 66% of the total 1972 budget.
• Additions to Federal civil assets are expected to be $6.4 billion
in 1972, an increase of $0.9 billion, or 16% over 1971.
• Investments in State and local, and private assets will be $8.6
billion, an increase of $0.8 billion, growing by 10%.
• Development investments in education, training, and health
amount to $13.2 billion in 1972, an increase of $1.1 billion, or
10%, over 1971.
• Current outlays for welfare are $11.9 billion, growing at a 24%
rate, up $2.3 billion from 1971.
• Current outlays for Homeowners and Tenants will have an estimated growth of $0.5 billion, and will be $0.9 billion in 1972.
• Retirement and social insurance systems will be $55.3 billion in
1972, an increase of $3.5 billion over 1971, making these benefit
payments 24% of the total 1972 budget.
• As part of a comprehensive new revenue-sharing program, general
revenue sharing with State and local governments is proposed,
amounting to $5 billion on a first full-year basis and adding $3.75
billion to 1972 outlays.
• Significant reductions occur in private assets (down $0.4 billion),
agriculture (down $0.6 billion), international aids (down $0.9
billion), other aids and special services (down $0.3 billion), and
unemployment benefits (down $0.8 billion).
Table D-2. CIVIL INVESTMENTS AND CURRENT OPERATING OUTLAYS
Percent of total outlays
1968
actual
INVESTMENT-TYPE
1969
actual
1970
actual
1972
estimate
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
4. 6
.2
1.4
—. 5
.1
1.8
.1
1.2
.2
.1
1. 5
1
1
3
1
.1
.1
.1
5.8
3. 4
3.0
.6
Subtotal, additions to State, local, and
private assets
Other development outlays:
Education, training, and health
Research and development
Engineering and natural resources surveys x__
Subtotal, additions to Federal assets
Additions to State, local, and private assets:
State and local assets
Private assets
Subtotal, other development outlays
Total, investment-type outlays
See footnotes at end of table.
1971
estimate
1.0
.1
1.4
_ .2
.1
1.0
.2
1.5
-.1
.1
3.2
2.6
2.8
3.0
.6
3.0
.5
3.2
.5
3.3
.4
3.6
3.6
3.5
3.7
3.7
4.5
3.8
.1
4.8
3.5
.1
5.3
3.2
.1
5.7
3.0
.1
5.8
2.9
.1
8.4
8.4
8.5
8.8
8.8
17.8
15.4
15.2
15.1
15.3
r.
44
THE BUDGET FOR FISCAL YEAR 19 72
Table D-2. CIVIL INVESTMENTS AND CURRENT OPERATING OUTLAYS—
Continued
Percent of total outlays
1968
actual
CURRENT OUTLAYS
Current outlays 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
1969
actual
1970
actual
1971
estimate
1972
estimate
2.1
1.0
.4
-.2
4.0
1.0
2.4
1.5
2.3
.9
.4
-.2
4.1
.9
2.5
1.9
2.2
.9
.4
-.0
4.4
.7
3.3
2.4
2.4
1.0
.4
.2
4.8
.7
4.5
2.7
1.9
1.0
.4
.4
4.7
.6
5.2
2.4
Subtotal, current expenses for aids and
special services
12.3
12.7
14.3
16.6
16.6
Retirement and social insurance benefits:
Insurance benefits
Unemployment benefits
Other retirement and social insurance benefits 2_
16.4
1.1
1.1
18.5
1.1
1.3
19.1
1.4
1.3
20.7
2.4
1.3
21.0
1.9
1.2
Subtotal, retirement and social insurance
benefits
18.7
20.9
21.8
24.3
24.1
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
.4
.4
1.7
6.4
.4
.5
-1.6
7.0
.5
.5
1.8
7.5
.5
.7
2.1
7.1
.7
.8
2.2
6.4
Subtotal, other services and current operating expenses
8.9
9.5
10.3
10.4
9.8
Total, current outlays
39.9
43.1
46.3
51.3
50.6
Total, investment-type outlays and current
outlays
57.7
58.5
61.5
66.4
65.9
1
Includes offsets for interbudgetary transactions.
Note.—Subtotals and totals may not add due to rounding.
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 $35.1 billion, approximately 15% of the budget,
and growing at a rate of 9%. Defense investments are $30 billion,
comprising 61% of the 1972 defense budget.
SPECIAL ANALYSES
45
Additions to Federal assets.—This category comprises additions
to both financial and physical assests of the Federal Government.
Civil Federal assets which in 1972 will be $6.4 billion, increasing by
$0.9 billion, or 15% from the 1971 level.
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 tha expenditure account, as well as loans in the loan
account. Other financial investments include the capital provided for
certain international organizations.
Civil loans and financial assets are estimated at $2.3 billion and
represent 1% of the 1972 budget. Loans are expected to increase by
$0.1 billion and other financial investments by $0.1 billion. Special
Analysis E discusses financial investments in greater detail.
Additions to physical assets include outlays for public works,
such as dam construction, flood control projects, Federal power
systems, 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 $3.7 billion in 1972, an increase
of $0. 7 billion over 1971. The major change is in outlays for sites
and direct construction, which are expected to increase by $0.3 billion.
Additions to State, local, and private assets.—Federal outlays
in this category add to State, local, and private assets. Grants 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 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.
Civil additions to State, local, and private assets in 1972 will be
$8.6 billion, an increase of $0.8 billion, primarily in Federal contribution to highways, hospitals, and other facilities. The increase, although substantial, will be at a slower rate, falling from an annual rate
of 14% in 1971 to 10% in 1972. However, the 1972 increase could
be much greater if State and local governments use the discretion permitted under the new revenue-sharing program to add to their physical
assets.
Developmental outlays.—Federal outlays of this type are principally for research and development, education and health, and other
programs that improve the Nation's knowledge, technical skills, and
physical vigor. The Federal outlays shown in this category do not
46
THE BUDGET FOR FISCAL YEAR
1972
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 $20.1 billion, an increase of $1.4
billion from 1971, and is growing by 7%, a decrease from the 11%
rate in 1971.
Civil outlays for education, training, and health are $13.2 billion
in 1972. This amount is 6% of the 1972 outlays, an increase of 10%
over 1971.
Current civil outlays for research and development are $6.7 billion
in 1972 and reflect an increase of $0.2 billion from the 1971 level.
The rate of increase in 1972 is 3%, and maintains the 1971 growth
rate.
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 for civil functions are $115.9 billion, an increase
of $6.7 billion from'1971. The rate of increase, however, will decline
from 20% in 1971 to 6% in 1972.
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,
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 several community development purposes.
SPECIAL ANALYSES
47
Civil outlays will grow at 8%, increasing by $2.7 billion to a 1972
level of $38.1 billion. The rate of growth, however, of this category
has slowed down. There is a 12.7% decrease ($0.6 billion) for agriculture, and a 134% increase ($0.5 billion) for homeowners and
tenants. An area that continues at a high growth rate is welfare aid,
which is expected to be $11.9 billion in 1972, up by $2.3 billion from
1971 and growing at a 24% rate, which is smaller than the 49%
rate being experienced in 1971.
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 retirement and social insurance
benefits is the result of a growing number of recipients as well as
cost-of-living increases. Outlays for these benefits are expected to
rise 7% in 1972, to $55.3 billion. These benefits will be 24% of the
budget in 1972.
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.
These outlays are expected to increase by $0.5 billion and will
reach $22.5 billion in 1972. Increases of $0.2 billion for regulation and
control, and $0.6 billion for other operation and administration
expenses are partially offset by an expected decrease of $0.3 billion
in interest payments.
UNCLASSIFIED
Certain transactions cannot be properly classified into any of the
categories described above. The major examples of such transactions
include revenue sharing and the special allowances for civilian agency
pay increases, and for unforeseeable 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.
Proprietary receipts from the public, arising from market-oriented
or business-type activities of the Government, are unclassified and
48
THE BUDGET FOR FISCAL YEAR 19 72
offset against total outla}Ts to highlight the net impact of the budget.
In addition, Government agency contributions for employee retirement, which help to finance retirement benefits, are deducted as a
lump-sum unclassified amount.
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. They 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
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.
SPECIAL ANALYSES
49
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)
Description
1970
actual
1971
estimate
1972
estimate
Investment-type outlays
ADDITIONS TO FEDERAL ASSETS
Loans:
Loan account—civil:
To domestic and private borrowers:
Department of Agriculture:
Commodity Credit Corporation: Price support and related
prog-ams
Rural Electrification Administration
Farmers Home Administration:
Direct loans
Rural housing insurance
Emergency credit revolving fund
Agricultural credit insurance
Other 1
Other1
Department of Commerce:
Economic development assistance: Industrial development
loans and guarantees
Trade adjustment assistance
Other
Department of Health, Education, and Welfare:
Office of Education: Higher education facilities loans and
other
Other
Department of Housing and Urban Development:
Housing production and mortgage credit: Federal Housing
Administration:
Housing for the elderly or handicapped
College housing loans and other expenses
Federal Housing Administration fund
Special assistance functions
Management and liquidating functions
Community development: Rehabilitation loans
Housing management
Veterans Administration:
Loan guaranty revolving fund
Veterans direct loans
National service life insurance
Other1
Federal Home Loan Bank Board: Federal Savings and Loan
Insurance Corporation
Interstate Commerce Commission: Recoveries on loan
guarantees
Small Business Administration:
Business loans and investment
Disaster loans
Other agencies 1
Total to domestic and private borrowers.
To State and local governments:
Department of Commerce: Economic development facilities
andother._
._..
Department of Health, Education, and Welfare: Office of
Education: Higher education facilities loans and other.__
See footnotes at end of table.
430-700 0—71
50
317
75
354
82
338
52
91
—21
—146
-13
1
42
—475
—33
—74
-6
1
-249
—110
—8
—87
-1
*
19
44
-8
-7
21
58
-7
70
9
59
9
11
16
82
83
—55
671
—79
35
1
44
36
112
645
—102
50
—1
26
14
85
432
—367
39
—1
73
26
92
13
—153
30
96
16
—127
—223
102
18
90
—1
5
—1
44
*
73
54
7
78
85
18
110
85
-9
1,587
986
254
39
27
23
31
25
3
50
THE BUDGET FOR FISCAL YEAR 19 72
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description
1970
actual
1971
estimate
1972
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:
Housing production and mortgage credit: Federal housing
Administration:
Low-rent public housing loans and other activities
College housing loans and other expenses
Community development:
Urban renewal loans and planning advances
Public facility loans
Housing management
Department of Transportation:
Federal Highway Administration: Right-of-way revolving
fund (trustfund)
.
Urban Mass Transportation Administration
District of Coiumbia: Capital outlay loans
Other agencies
Total to State and local governments
To foreign borrowers:
Export-Import Bank of the United States
Other agencies
_
Total to foreign borrowers
—1
56
12
70
10
28
—6
39
*
47
40
*
1
33
*
3
*
90
3
35
*
114
7
35
*
138
16
253
377
285
292
248
2
398
9
292
250
407
._
2,133
1,612
947
Loan account—national defense: To domestic and private borrowers: Other agencies
—2
Total loan account—civil
Total loan accounts
Expenditure account—civil:
To domestic and private borrowers:
Department of Agriculture: Commodity Credit Corporation:
Price support and related programs
Department of Health, Education, and Welfare:
National Institutes of Health:
Health Manpower
Health professions education and nurse training funds.
Office of Education: Higher education
Department of Justice: law enforcement assistance
Other agencies
Total to domestic and private borrowers
To State and local governments: Other agencies
See footnotes at end of table.
—1
—1
2,131
1,611
946
—546
—710
86
18
10
164
18
—6
42
*
212
22
5
32
—1
-28
28
3
— 342
—429
120
—1
3
—5
SPECIAL ANALYSES
51
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description
1970
actual
1971
estimate
1972
estimate
Investment-type outlays—Continued
ADDITIONS TO FEDERAL ASSETS—Continued
Loans—Continued
Expenditure account—civil —Continued
To foreign borrowers:
Funds appropriated to the President: International development assistance
Department of Agriculture: Commodity Credit Corporation:
Public Law 480 credit sales
Department of State
867
777
760
446
-3
471
-3
720
-3
Total to foreign borrowers
1,310
1,245
1,478
Total loan repayments deposited in miscellaneous receipt
accounts
-192
-242
-231
775
576
1,362
Expenditure account—national defense:
To domestic and private borrowers: Funds appropriated to
the President
*
*
-1
To foreign borrowers:
Funds appropriated to the President: International security
assistance:
Military credit sales to Israel
Foreign military credit sales
Other agencies
70
—2
375
179
—2
125
313
3
68
552
441
—13
—26
—67
55
526
373
830
1,101
1,735
2,961
2,712
2,681
Other financial investments—civil:
Investments in quasi-public institutions, trust funds, and international institutions:
Funds appropriated to the President: International financial
institutions
Department of Labor
224
—4
272
—3
352
—2
Total investments in quasi-public institutions, trust funds,
and international institutions
220
269
350
Total expenditure account—civil
Total to foreign borrowers
Total loan repayments deposited in miscellaneous receipt
accounts
Total expenditure account—national defense
Total expenditure accounts
Total loans
See footnotes at end of table.
52
THE BUDGET FOR FISCAL YEAR 19 72
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description
Investment-type
1970
actual
1971
estimate
1972
estimate
outlays—Continued
ADDITIONS TO FEDERAL ASSETS—Continued
Public works—sites and direct construction:
Civil:
Department of Agriculture:
Forest Service:
Forest 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 and other health services and mental
health administration 1
Other 1
Department of the Interior:
Bureau of Indian Affairs:
Construction: Schools and other
Road construction
National Park Service
Bureau of Reclamation:
Construction and rehabilitation
Colorado River Basin project
Other i
Bonneville Power Administration: Construction
Other
Department of Justice:
Federal Prison System
Immigration and Naturalization Service
Department of Transportation:
Coast Guard: Acquisition, construction, and improvements.
Federal Aviation Administration:
Airway system investment and development (airport and
airway trust fund)
Facilities and equipment and construction, National Capital airports
Other
General Services Administration: Public buildings
National Aeronautics and Space Administration
Postal Service
Veterans Administration: Hospitals and other
Tennessee Valley Authority
Other agencies
Total public works, civil
National defense:
Department of Defense—Military:
Military construction.
Family housing
Other
See footnotes at end of table.
97
17
11
125
18
7
130
28
9
702
45
18
14
900
51
30
18
888
57
28
17
19
17
31
33
24
35
31
18
32
33
26
35
44
25
60
140
1
33
102
26
190
13
22
92
35
211
33
20
92
23
2
*
2
1
43
1
33
31
35
119
220
108
3
130
54
77
80
348
38
53
18
144
50
171
87
538
58
11
31
217
43
236
127
609
83
2,200
3,032
3,381
1,130
149
2
1,152
154
4
1,463
202
2
SPECIAL ANALYSES
53
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description
1970
actual
1971
estimate
1972
estimate
Investment-type outlays—Continued
ADDITIONS TO FEDERAL ASSETS—Continued
Public works—sites and direct constructor!—Continued
National defense—Continued
Atomic Energy Commission
259
277
232
Total public works, national defense
1,540
1,586
1,899
Total public works—sites and direct construction
3,740
4,618
5,280
608
30
—513
102
—252
—2
639
—411
—255
—14
—166
—23
16
*
27
5
30
3
2
—133
10
641
—544
—244
52
104
12
53
146
29
59
216
19
168
227
294
National defense:
Department of Defense—Military: Procurement
Atomic Energy Commission
21,584
165
18,448
188
17,936
159
Total major equipment, national defense
21, 749
18,636
18,095
Total major equipment
21,917
18,863
18,389
53
69
73
101
45
127
63
21
161
26
150
26
2
—44
2
—52
2
—52
Major commodity inventories:
Civil:
Department of Agriculture: Commodity Credit Corporation..
Department of the Interior: Helium fund
Total major commodity inventories, civil
National defense:
Funds appropriated to the President: Expansion of defense
production
General Services Administration: Property management and
disposal activities
Other agencies
Total major commodity inventories, national defense
Total major commodity inventories
Major equipment:
Civil:
Department of Transportation: Coast Guard
Postal Service
Other agencies1
Total major equipment, civil
Other physical assets—acquisition and improvement:
Civil:
Department of Agriculture: Reforestation and range improvements and other
Department of Housing and Urban Development: Housing
production and mortgage credit and other
Department of the Interior:
Land and water conservation
Other 1
General Services Administration:
Real property activities
Surplus real property credit sales
See footnotes at end of table.
54
THE BUDGET FOR FISCAL YEAR 19 72
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description
Investment-type
1970
1971
1972
outlays—Continued
ADDITIONS TO FEDERAL ASSETS—Continued
Other physical assets—acquisition and
improvement—Continued
Civil—Continued
Other agencies l
-18
-30
-12
179
220
315
437
322
12
491
Total other physical assets, national defense
437
322
502
Total other physical assets—acquisition and improvement _
616
542
817
30,095
26,460
27,273
161
1
223
3
230
71
31
22
6
77
36
38
5
80
32
61
3
135
141
151
142
88
127
86
104
100
31
208
18
2
20
194
12
7
13
111
11
9
109
43
23
141
72
33
1
170
100
38
2
46
18
35
1
2
60
21
47
*
23
110
38
50
4
64
Total other physical assets, civil
National defense:
Department of Defense—Military
Atomic Energy Commission
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
Rural housing for domestic farm labor and other
Department of Commerce: Economic development facilities
and other
Department of Health, Education, and Welfare:
Health Services and Mental Health Administration: Medical
facilities construction and other
National Institutes of Health: Health manpower
Office of Education:
School assistance in federally affected areas
Higher education^.....
Libraries and educational communication
Social and Rehabilitation Service
Department of Housing and Urban Development:
Community development:
Grants for basic water and sewer facilities
Open space land programs
Grants for neighborhood facilities
Community development planning and management
Department of the Interior:
Land and water conservation
Administration of territories
Bureau of Sport Fisheries and Wildlife
Other
.
Department of Justice: Law enforcement assistance
See footnotes at end of table.
SPECIAL ANALYSES
55
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description
1970
actual
1971
estimate
1972
estimate
Investment-type outlays—Continued
ADDITIONS TO STATE, LOCAL, AND PRIVATE
ASSETS—Continued
State and local assets—Continued
Civil—Continued
Department of Transportation:
Federal Aviation Administration: Grants-in-aid for airports
(airport and airway trust fund in 1971 and 1972)
Federal Highway Administration:
Highway trust fund
Other *___
-.-:-—.National Highway Traffic Safety Administration
Urban Mass Transportation Administration
Environmental Protection Agency
Intergovernmental agencies: Federal contribution, Washington
Metropolitan Area Transit Authority
Other agencies
Total State and local assets, civil
National defense: Department of Defense—Military
Total State and local assets
Private assets:
Civil:
Department of Agriculture:
Soil Conservation Service
Agricultural Stabilization and Conservation Service
Other
Department of Commerce:
Ship construction
National Oceanic and Atomspheric Administration
Department of Health, Education, and Welfare:
Health Services and Mental Health Administration: Medical
facilities construction
National Institutes of Health: Health manpower
Office of Education: Higher education and other
Other___.
National Science Foundation
Other agenciesl
Total private assets, civil
National defense:
General Services Administration
Total private assets
Total additions to State, local, and private assets
See footnotes at end of table.
83
134
147
4,279
4,575
4,561
34
33
43
102
179
177
427
8
287
1,004
16
23
100
11
112
9
5,906
6,824
7,654
16
13
16
5,922
6,837
7,669
146
309
2
153
265
2
152
238
2
89
136
4
184
1
150
57
107
29
29
28
133
61
111
45
24
39
123
53
66
48
24
38
947
972
929
*
*
*
947
972
929
6, 869
7,809
8,599
56
THE BUDGET FOR FISCAL YEAR 19 72
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description
1970
actual
1971
estimate
1972
estimate
Investment-type outlays—Continued
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:
Health Services and Mental Health Administration:
Mental health
Comprehensive health planning and services
Maternal and child health
Regional medical programs
Disease control
Indian health services
Other i
National Institutes of Health:
National Heart and Lung Institute
National Institute of General Medical Sciences
Health manpower
National Library of Medicine
Other
Office of Education:
Emergency school assistance
Elementery and secondary education
School assistance in federally affected areas
Education for the handicapped
Vocational and adult education
Higher education.
Education professions development
Library and educational communication
Research and development
Salaries and expenses
Other
Social and Rehabilitation Service:
Grants to States for public assistance
Work incentives
Rehabilitation services and facilities
Research and training
Assistance to refugees in the United States
Other
Social Security Administration !
Howard University
Office of Child Development
Other
Department of Housing and Urban Development:
College housing loans and other expenses
Other
_
_
.
Department of the Interior: Bureau of Indian Affairs: Education and welfare services
Department of Justice: Law enforcement assistance and other.
Department of Labor: Manpower Administration: Manpower
training services and other
Environmental Protection Agency
Veterans Administration: Medical care and other
Corporation for Public Broadcasting
National Foundation on the Arts and the Humanities l
See footnotes at end of table.
4
1,183
125
14
994
160
24
425
171
163
190
217
100
31
103
30
168
217
237
108
34
120
34
195
221
281
85
59
132
33
26
67
137
24
99
23
56
162
25
105
25
60
246
22
86
1,471
621
66
285
551
166
136
11
47
31
100
1,707
480
75
406
677
138
78
18
47
17
300
1,795
461
87
447
1,033
136
41
27
49
30
2,766
87
436
29
18
4
18
31
3,299
146
530
28
24
6
26
35
33
38
3,437
231
534
22
27
4
28
41
138
16
55
4
30
7
9
8
143
19
178
48
199
65
450
35
95
15
15
1,042
39
115
23
40
1,529
54
116
35
64
SPECIAL ANALYSES
57
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description
1970
actual
1971
estimate
1972
estimate
Investment-type outlays—Continued
OTHER DEVELOPMENTAL EXPENDITURES—Continued
Education, training, and health—Continued
Civil—Continued
National Science Foundation
Smithsonian Institution
Other agencies
Total education, training, and health, civil
National defense: Atomic Energy Commission and other agencies
Total education, training, and health
140
18
27
143
21
39
114
25
36
10,325
12,058
13,204
16
15
14
10,341
12,073
13,218
44
10
59
20
69
21
162
61
45
23
173
68
48
23
173
73
49
21
72
29
18
74
31
32
91
34
47
29
24
111
21
33
879
114
36
33
973
120
43
29
1,054
*
74
15
9
66
16
38
74
17
40
24
53
32
62
36
12
53
45
41
43
48
37
23
52
58
27
59
67
24
66
111
9
56
24
24
71
232
13
68
40
52
118
281
25
83
67
53
137
Research and development:
Civil:
Funds appropriated to the President:
Economic opportunity program
Other
Department of Agriculture:
Agricultural Research Service *
Cooperative State Research Service
Forest Service
Other i
Department of Commerce:
National Oceanic and Atmospheric Administration
National Bureau of Standards
Other
.
Department of Health, Education, and Welfare:
Environmental Health Service: Environmental control
Health Services and Mental Health Administration:
Mental health
Health services research and development
Other
National Institutes of Health
Office of Education:
Vocational and adult education
Research and development
Other
._.__
.....
Social and Rehabilitation Service: Research and training
and other
Other *
Department of Housing and Urban Development: Research
and technology and other
„___
Department of the Interior:
Geological survey
Bureau of Mines: Conservation and development of mineral
resources and other 1
Office of Saline Water: Saline water conversion
Other *
Department of Transportation:
Civil supersonic aircraft development
Coast Guard
.
Federal Aviation Administration l
National Highway Traffic Safety Administration l. - _
Other i
Environmental Protection Agency l
See footnotes at end of table.
58
THE BUDGET FOR FISCAL YEAR 19 72
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description
1970
actual
1971
estimate
1972
estimate
Investment-type outlays—Continued
OTHER DEVELOPMENTAL EXPENDITURES—Continued
Research and development—Continued
Civil—Continued
National Aeronautics and Space Administration
Postal Service
Veterans Administration
National Science Foundation 1
Smithsonian Institution
Other agencies
3,701
30
60
292
20
33
3,331
37
64
330
24
42
3,121
46
64
404
31
55
Total research and development, civil
6,288
6,475
6,668
346
7,166
7
1,346
342
7,281
6
1,309
315
7,504
5
1,252
8,865
8,937
9,077
15,152
15,412
15,745
30
*
33
1
40
1
53
27
21
67
—8
57
26
25
66
—16
60
29
40
73
—16
190
192
226
Total other developmental expenditures
25,684
27,677
29,188
Total investment-type outlays
62, 647
61,946
65,060
65
25
73
26
77
27
153
93
160
88
161
85
3,664
56
8
145
92
4,350
76
*
179
82
3,709
67
National defense:
Department of Defense—Military:
Military personnel
.
Research, development, test, and evaluation
Other
Atomic Energy Commission
Total research and development, national defense
Total research and development
Engineering and natural resources surveys—civil:
Department of Defense—Civil:
Corps of Engineers
The Panama Canal
Department of the Interior:
Geological survey
Other i
.
Environmental Protection Agency
1
Other agencies
Intragovernmental transactions (—)
Total engineering and natural resources surveys
Current Outlays
CURRENT EXPENSES FOR AIDS AND SPECIAL
SERVICES
Agricultural—civil:
Department of Agriculture:
Consumer and Marketing Service l
Foreign Agricultural Service
Agricultural Stabilization and Conservation Service:
Other
Sugar Act program
Commodity Credit Corporation:
Price support and related programs
National Wool Act
Other
Farmers Home Administration 1
Other 1
_
See footnotes at end of table.
193
83
SPECIAL ANALYSES
59
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description
1970
1971
1972
actual
estimate
estimate
Current Outlays—Continued
CURRENT EXPENSES FOR AIDS AND SPECIAL
SERVICES—Continued
Agricultural—civil—Continued
Other agencies
Total agriculture
26
22
13
4,326
5,057
4,416
22
26
48
24
21
54
27
21
56
212
57
277
61
247
63
169
—24
195
-5
267
-14
379
763
1
5
37
391
909
25
7
32
399
992
19
11
23
134
11
—19
124
12
-24
103
28
-25
Business—civil:
Department of Commerce:
Bureau of the Census
National Oceanic and Atmospheric Administration
Patent Office.Maritime Administration:
Operating-differential subsidies and other
Other 1
Department of Defense—Civil:
Corps of Engineers: Operation and maintenance
The Panama Canal
Department of Transportation:
Coast Guard: Navigation aids and other !
Federal Aviation Administration: Operations and other l
Federal Railroad Administration
Other
Civil Aeronautics Board: Payments to air carriers
Small Business Administration: Business loans and investments
and other
Other agencies l
Federal interfund transactions (—)
Total business
1,822
2,102
2,218
14
36
38
664
42
20
14
12
774
54
24
19
18
826
80
30
20
25
767
924
1,018
-249
14
-34
474
-27
25
-257
-343
67
-34
811
-4
28
-126
-388
140
-5
1,303
8
6
-130
-54
399
934
Labor—civil:
Department of the Interior: Bureau of Mines: Health and safety_
Department of Labor:
Manpower Administration: Unemployment trust fund and
other
Workplace Standards Administration
Bureau of Labor Statistics
Other
Equal Employment Opportunity Commission
Total labor
Homeowners and tenants—civil:
Funds appropriated to the President
Department of Housing and Urban Development:
Housing Production and Mortgage Credit:
Federal Housing Administration
Special assistance functions
Other
Housing management: Housing payments and other
Federal Insurance Administration
Other
Federal Home Loan Bank Board
Total homeowners and tenants
See footnotes at end of table
*
60
THE BUDGET FOR FISCAL YEAR 19 72
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description
1970
actual
1971
estimate
1972
estimate
Current Outlays—Continued
CURRENT EXPENSES FOR AIDS AND SPECIAL
SERVICES—Continued
Veterans—civil:
Department of Defense—Civil
Department of Health, Education, and Welfare: Payment to
social security trust funds
Veterans Administration:
Compensation and pensions
Readjustment benefits
Medical care
General operating expenses
Loan guaranty revolving fund
Veterans reopened insurance fund
Veterans special life insurance fund
National service life insurance fund
U.S. Government life insurance fund
Other1
Other agencies
Intragovernmental transactions (—)
26
27
30
11
11
48
5,336
988
1,548
237
—13
—38
—37
593
81
4
11
—128
5,837
1,675
1,767
251
10
—35
—38
624
81
18
7
—129
6,238
1,938
1,896
265
33
—34
—39
641
79
21
7
—260
8,619
10,107
10,864
466
307
33
90
504
355
26
88
658
408
46
73
491
-73
38
544
-120
35
241
-108
26
1,351
1,432
1,343
1,489
28
1,586
40
1,572
50
Total international aids, national defense
1,518
1,626
1,622
Total international aids
2,869
3,059
2,965
145
100
80
440
84
577
299
__
455
102
1,535
522
1
469
14
1,971
561
2
Total veterans
International aids:
Civil:
Funds appropriated to the President:
International security assistance
International development assistance l
President's foreign assistance contingency fund
Peace Corps 1
Department of Agriculture: Commodity Credit Corporation:
Public Law 480 donations of agricultural commodities and
other
Export-Import Bank of the United States
Other agenciesl
Total international aids, civil
National defense:
Funds appropriated to the President: International security
assistance1
Department of Defense—Military: Military construction
Welfare aids—civil:
Funds appropriated to the President: Disaster relief
Department of Agriculture:
Removal of surplus agricultural commodities
Special milk program
Food stamp program
Child nutrition programs
Forest Service
See footnotes at end of table.
SPECIAL ANALYSES
61
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description
1970
actual
1971
estimate
1972
estimate
Current Outlays—Continued
CURRENT EXPENSES FOR AIDS AND SPECIAL
SERVICES—Continued
Welfare aids—civil—Continued
Department of Health, Education, and Welfare:
Health Services and Mental Health Administration: Maternal
and child health
Social and Rehabilitation Service:
Grants to States for public assistance
Special programs for the aging
Youth development and delinquency prevention
Other services
Assistance to refugees in the United States
Social Security Administration: Special benefits for disabled
coal miners
Family assistance and community services
Department of the Interior: Bureau of Indian Affairs: Education
and welfare services
Total welfare aids
45
1
*
4,678
20
3
30
62
6,391
24
7
35
81
7,482
26
12
36
105
10
239
384
664
41
65
69
6,434
9,557
11,876
8
572
24
10
563
27
10
558
26
116
46
74
53
30
55
27
4
77
16
29
8
82
31
30
28
69
34
464
146
146
212
2,004
*
529
185
146
238
2,589
534
193
157
267
2,417
56
63
82
40
47
50
86
380
1,054
-3
46
1,035
5
59
450
150
1,300
22
55
57
56
16
3
72
66
16
4
77
96
17
4
Other aids and special services—civil:
Funds appropriated to the President:
Appalachian regional development programs
Office of Economic Opportunity l
Department of Agriculture: Forest Service
Department of Commerce:
Bureau of the Census: Nineteenth decennial census and other x_
Economic development assistance
Department of Health, Education, and Welfare:
Health Services and Mental Health Administration:
Mental health.
Medical facilities construction
Patient care and special health services
Other !___
--:-—.Social Security Administration:
Federal old-age and survivors insurance trust fund
Federal disability insurance trust fund
Federal hospital insurance trust fund
Federal supplementary medical insurance trust fund
Payment to social security trust funds
Departmental management and other
Department of Housing and Urban Development:
Community development planning and management:
Comprehensive planning grants and other
Community development:
Model cities programs
Community development grants
Urban renewal capita] grants
Other
Departmental management and other
Department of the Interior:
Bureau of Indian Affairs:
Resources management
Tribal funds (trust funds)
Other 1 —
—
Other 1 See footnotes at end of table.
62
THE
BUDGET
FOR
FISCAL
YEAR
1972
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description
1970
actual
1971
estimate
1972
estimate
Current Outlays—Continued
CURRENT EXPENSES FOR AIDS AND SPECIAL
SERVICES—Continued
Other aids and special services—civil—Continued
Department of Transportation:
Federal Highway Administration:
Highway beautification
Highway trust fund
Other 1
...
National Highway Traffic Safety Administration
Other
Postal Service
Other agenciesl
Intragovernmental transactions (—)
14
70
4
50
15
1,299
33
—2,025
21
80
2
66
28
1,898
41
—2,626
30
87
7
53
34
835
42
—2,321
4,733
5,823
5,478
29,516
37,026
39,770
26,266
2,778
4,804
1,979
93
1,592
—5
29,817
3,231
5,820
2,070
1,096
92
1,895
—5
31,026
3,416
6,690
2,300
2,692
95
1,926
—5
37,507
44,016
48,140
Unemployment benefits—civil: Department of Labor: Unemployment trust fund
2,792
5,080
4,270
Other retirement and social insurance benefits—civil:
Civil Service Commission: Civil service retirement and disability fund
Other trust funds
2,752
19
3,181
22
3,552
24
Trust interfund and intragovernmental transactions (—)
—233
—517
— 722
Total, other retirement and social insurance benefits
2,537
2,686
2,854
42,83 6
51, 782
55,264
Total other aids and special services
Total current expenses for aids and special services
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
Proposed legislation
Department of Labor: Unemployment trust fund
Railroad Retirement Board (trust fund)
Trust interfund transactions (—)
Total insurance benefits
Total, retirement and social insurance benefits
See footnotes at end of table.
SPECIAL ANALYSES
63
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description
1970
actual
1971
estimate
1972
estimate
Current Outlays—Continued
OTHER SERVICES AND CURRENT OPERATING
EXPENSES
Repair, maintenance, and operation of physical assets (excluding
special services):
Civil:
Department of Agriculture: Forest Service l
Department of Defense—Civil:
Corps of Engineers:
Operation and maintenance
Flood control and coastal emergencies
Flood control, Mississippi River and tributaries
pther
Miscellaneous accounts
Department of the Interior:
Bureau of Land Managementl
National Park Service l
Bureau of Reclamation 1
Bonneville Power Administration and other
General Services Administration: Public buildings
Tennessee Valley Authority
Other agencies l
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
240
298
240
87
25
29
15
*
88
12
34i
79
95
64
45
351
-179
65
85
115
76
49
399
-160
66
74
123
85
52
421
-157
71
1,062
1,067
21,570
355
227
*
20,340
365
160
*
20,195
402
163
*
22,152
20,866
20,761
23,068
21,928
21,828
916
I
*
114
10
31i
I
*
Total repair, maintenance, and operation of physical assets,
national defense...
_.._
Total repair, maintenance, and operation of physical assets.
Regulation and control—civil:
The Judiciary
Department of Agriculture:
Agricultural Research Service 1
Consumer and Marketing Service 1
Other
Department of Health, Education, and Welfare: Food and Drug
Administration and other
—
Department of Justice:
Legal activities and general administration
Federal Bureau of Investigation
Immigration and Naturalization Service
l
Federal Prison System
-----Law Enforcement Assistance Administration
Bureau of Narcotics and Dangerous Drugs._
Department of Transportation:
Coast Guard
Federal Aviation Administration
Other
See footnotes at end of table.
132
95
117
6
58
102
249
104
67
41
25
57
55
7
148
172
97
135
6
100
144
6
64
76
131
280
119
81
302
36
150
310
122
88
453
50
62
62
8
69
67
6
64
THE BUDGET FOR FISCAL YEAR 1972
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description
1970
1971
1972
Current Outlays—Continued
OTHER SERVICES AND CURRENT OPERATING
EXPENSES—Continued
Regulation and control—civil—Continued
Department of the Treasury:
Bureau of Customs l
Secret Service
Other 1
Environmental Protection Agency
Federal Communications Commission
Federal Deposit Insurance Corporation (trust fund)
Interstate Commerce Commission
National Labor Relations Board
Other agencies 1
Total, regulation and control
20
29
-5
38
23
—328
27
38
117
26
44
*
54
25
-308
28
41
127
29
60
1
58
30
-402
27
44
134
1,071
1,567
1,791
Other operation and administration:
Civil:
International activities:
Department of State:
Administration of foreign affairs *
International organizations and conferences l _.
Educational exchange 1___
Other
United States Information Agency l
Other agencies
Total international activities
Federal financial activities:
Legislative branch: General Accounting Office and other. _
Department of the Treasury:
Bureau of Accounts 1
Bureau of Customs
Bureau of the Mint
Bureau of the Public Debt
Internal Revenue Service
Other_.__
Other agencies
Total Federal financial activities
Other direct Federal programs:
Legislative branch
Executive Office of the President
Department of Commerce:
National Oceanic and Atmospheric Administration 1
National Bureau of Standards
Department of Defense—Civil
Department of the Interior *
Department of theTreasury: Bureau of Accounts and other *_
Environmental Protection Agency
General Services Administration
Civil Service Commission:
Salaries and expenses and other l
Employees life insurance trust fund
Retired employees health benefits trust fund
See footnotes at end of table.
231
139
30
2
187
9
234
154
34
2
190
11
242
176
36
2
192
8
599
625
660
73
81
45
112
18
64
870
17
4
.48
138
26
72
943
20
3
1,204
1,332
50
156
30
78
1,043
23
3
1,470
254
32
284
44
300
49
141
11
67
52
53
*
143
143
11
76
65
182
5
128
167
13
78
93
237
57
104
47
—161
—27
53
154
-2
51
-157
*
SPECIAL ANALYSES
65
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description
1970
actual
1971
estimate
1972
estimate
Current Outlays—Continued
OTHER SERVICES AND CURRENT OPERATING
EXPENSES—Continued
Other operation and administration—Continued
Civil—Continued
Other direct Federal programs—Continued
Other agencies l
I ntrabudgetary transactions (—)
Total other direct Federal programs
Retirement, unemployment, and accident compensation for
Federal employees:
Department of Labor:
Federal unemployment benefits and allowances
Federal workmen's compensation benefits
Department of Transportation: Coast Guard: Retired p a y .
Civil Service Commission: Special payments and annuities.
Other agencies
Intragovernmental transactions
Total retirement, unemployment, and accident compensation for Federal employees
10
—*
16
—*
20
—*
622
851
1,012
183
81
59
273
10
308
84
66
579
17
254
90
71
820
21
—14
606
1,054
1,243
79
73
83
Shared revenues and grants-in-aid:
Department of Agriculture: Forest Service
Department of the Interior:
Bureau of Land Management
Office of Territories
Other
Department of the Treasury:
Bureau of Customs
Internal Revenue Service
District of Columbia: Federal payment
Tennessee Valley Authority
Other agencies
86
45
5
86
58
6
92
64
6
43
85
115
16
8
56
87
143
20
8
66
90
158
27
9
Total shared revenues and grants-in-aid
481
537
595
3,508
4, 395
4,976
22,685
2,849
39
110
64
-803
75
11
—7
21,356
3,394
40
111
59
-497
75
11
—6
19,790
3,744
39
113
67
-310
78
7
-—6
Total other operation and administration, national defense. _
25,024
24,544
23,523
Total other operation and administration
28,531
28,939
28, 500
Total other operation and administration, civil
National defense:
Department of Defense—Military:
Military personnel..
Retired pay, defense
Operation and maintenance
Family housing
Civil d e f e n s e . . . .
Other i
Selective Service System
Other agencies *
Intragovernmental transactions (—)
See footnotes at end of table.
430-700 O—71——5
66
THE BUDGET FOR FISCAL YEAR 1972
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description
1970
1971
1972
19,304
20,800
21,150
113
6
117
7
117
6
119
124
123
—783
-3,936
— 1, 200
- 4 , 711
— 1,272
-5,310
Total interest
14,704
15,014
14,692
Total other services and current operating expenses
67,379
67,451
66,811
945
2,430
Current Outlays—Continued
OTHER SERVICES AND CURRENT OPERATING
EXPENSES—Continued
Interest:
On the public debt
Other interest:
On refunds: Department of the Treasury
On uninvested funds: Department of the Treasury
Total other interest
Intrabudgetary transactions ( — ) : l
Interest on Government capital in enterprises (—)
Interest received by trust funds ( - )
,.
National defense allowances:
Civilian and military pay increases
All-volunteer force
1,150
Total national defense allowances
Total current outlays
UNCLASSIFIED
Payments to other funds *
Allowances for:
Added amount for revenue sharing
Pay increases (excluding Department of Defense)
Contingencies
Employer share, employee retirement (—)
Proprietary receipts from the public ( - ) 2 _ _ _
Total budget outlays
1"Less than $500 thousand.
2 Includes both Federal funds
—
945
3,580
139,730
157,204
165,427
15
31
—41
—2,444
-3,360
500
300
—2,486
-4,740
4,019
1,000
950
—2,461
-4,721
196,588
212,755
229,232
and trust funds.
Excludes loan repayments deposited in miscellaneous receipts and offset in the loan and expenditure account as follows:
1970 1971
1972
Loan repayments offset in the loan account
—249 —265 —287
Repayments offset in the expenditure account
—205 —268 —298
SPECIAL ANALYSIS E
FEDERAL CREDIT PROGRAMS
INTRODUCTION
Federal credit aids—direct loans, Federal insurance or guarantees
of private loans, and interest subsidies—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 foreign economic development and security;
(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
Total
Guarantees and Insurance
Direct Loans—Expenditure Account
20
10
1961
'62
'63
Fiscal Years
'64
'65
'66
'67
'68
'69
'70
'71
'72
Estimate
G7
68
THE BUDGET FOR FISCAL YEAR 19 72
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 combined level of Federal direct loans
and guarantees and insurance of private loans rose steadily at a rate
comparable to the growth of the gross national product. This reflected
both broadening of many existing programs and initiation of new
programs to meet emerging needs.
However, during 1969, the Secondary Market Operations Trust
Fund of the Federal National Mortgage Association (FNMA), the
Federal intermediate credit banks and the banks for cooperatives were
converted from mixed-ownership to privately owned enterprises. As a
result, the trend of the direct
and guaranteed loans as shown in the
chart of new commitments,1 suggests a diminution—but this dip is
only a matter of classification. The outstanding loans of these federally
sponsored enterprises continue to be shown in table E-5—and are
included in an overall summary of Federal and federally assisted
credit in table E-6 and an accompanying chart.
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 share of the interest costs, or both.
Examples of these approaches include: (a) Federally insured loans and
interest subsidies for college students; (b) insured or guaranteed loans
combined with supplementary payments to finance housing for lowand 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 and medical facilities. Other
current proposals to apply these approaches to Federal aid for other
groups are mentioned later in this analysis.
SCOPE OF SPECIAL ANALYSIS
This analysis: (a) summarizes 1970-72 trends in Federal credit
programs; (b) indicates the relationship between the credit programs
and overall budget totals; and (c) provides (for the first time) summary estimates of loan subsidy costs provided during the past year.
Information is summarized for 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
i Sec p. 67.
SPECIAL ANALYSES
69
of guaranteed and insured loans and loans made by Governmentsponsored agencies (not reflected in budget outlays).
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 President's
Commission on Budget Concepts, two specific types of direct loan
programs, accounting for more than one-quarter of direct loan commitments, 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. A major example
of the latter is the nonrecourse commodity loan program of the Commodity Credit Corporation. Disbursements, repayments, and net
outlays for each appropriation and fund account which
finances these
programs are listed in the Appendix to the Budget.2 In the case of programs in the loan account, net lending is also separately identified, for
each applicable account, in Part 6 of the budget.
The tables in this analysis include only data on loans that are both
disbursed and repayable in dollars. Loan disbursements in foreign
currencies are not charged to the budget, and loan repayments in
foreign currencies are not credits to the budget. Current policy requires that, in all new commitments, loans disbursed in dollars be
repaid in dollars. However, a few commitments outstanding at the
time of policy change called for dollar disbursements but permit
repayment in foreign currency.3
The 1972 analysis includes coverage of new credit programs and
changes to existing programs authorized by legislation enacted during
the past 4year. Such legislation, summarized in the last section of this
analysis authorized several important changes in Federal credit
programs.
The analysis also reflects the impact (to the extent that data are
available) on Federal credit programs of proposed legislation: (a)
authorizing insurance of farm operating loans by the Farmers Home
Administration, and revising interest rates on farm ownership loans;
(b) establishing a Rural Telephone Bank; (c) revising student-aid programs to provide subsidized loans to lower income students, and
establishing a National Student Loan Association to help finance
loans to students at all income levels; (d) substituting federally supported borrowing from the public for direct loans to finance public
works and other capital outlays by the District of Columbia; and(e)
creating an Environmental Financing Authority to assist local communities to finance waste treatment projects on reasonable terms by
substituting the Authority's borrowing for local obligations.
2
See Appendix, pp. 1099-1102.
3
The level and trends in direct loans of Government agencies disbursed or repayable in foreign
currencies are as follows (in millions of dollars):
1970
1971
1972
Outstanding, start of year (dollar equivalent)
5,825
5,816
5,793
Disbursements
143
135
125
Repayments—dollars
12
10
10
Repayments—local currencies
140
147
146
Net disbursements
—10
—22
—31
Outstanding, end of year
5,816
5,793
5,762
4
See pp. 84-86.
70
THE BUDGET FOR FISCAL YEAR 1972
N E W COMMITMENTS
New commitments for direct loans and guarantees often give the
best advance indication of trends in the financing impact of these
programs. In a few cases, commitment and loan disbursement occur
simultaneously. But in most others, such as loans for construction
purposes, fairly long leadtimes may elapse between commitment and
disbursement. Although not all commitments result in loans, sometimes because the borrower finds other funds in the meantime, commitments generally stimulate fairly prompt initiation of economic
activity—such as the start of a construction project to be financed at
completion.
In this analysis, commitments are defined to include administrative
reservations as well as final approvals by Federal agencies of direct
loans or of insurance or guarantees of private loans. They are shown
on a gross basis and include the unguaranteed portions of loans
partially covered by Federal guarantees.
Direct loans.—New commitments for direct loans will rise from $10.4
billion in 1970 to $10.9 billion in 1971 and to $11.3 billion in 1972.
This trend is much slower than the growth of federally aided credit
as a whole and reflects efforts to gradually move the Federal Government out of the lending business as a primary lender. Federal credit
policy is moving instead to greater reliance on private credit resources,
confining credit assistance mainly to supplementary credit aids and
devices that provide greater access to credit resources by certain
classes of borrowers in accordance with Federal priorities. Despite the
relatively slow rise in direct lending, however, major increases in
loan commitments from 1970 to 1972 are expected for some programs:
those for Export-Import Bank will rise by $1 billion, and those for
several international assistance programs are to rise by $0.7 billion.
Guarantees and insurance.—New commitments for guarantees and
insurance of private loans are expected to rise rapidly from $27.5
billion in 1970 to $37.8 billion in 1971 and $46.6 billion in 1972.
The 2-year increase from 1970 to 1972 is primarily attributable to
expansion in the volume of mortgage insurance commitments by the
Federal Housing Administration ($10.2 billion), the Veterans Administration ($2.2 billion) and the Farmers Home Administration ($1.1
billion). These increases, mainly for housing purposes, will be made
possible in part by the extensive purchases of such obligations by the
privately owned FNMA, in both 1971 and 1972, and by the somewhat
easier credit conditions anticipated in 1971-72.
In addition, guarantee commitments for community development
and new communities are expected to rise over the 2 years by $1.4
billion. Under authority provided in 1968, GNMA expects to guarantee $1.3 billion in 1971 and $1.6 billion in 1972 in private securities
backed by insured housing loans.5 Outside the housing field, HEW
will increase commitments by $2.1 billion, mostly for insured student
loans, and the Export-Import Bank plans by 1972 to raise its level of
commitments for guaranteed loans by roughly $1.1 billion over the
1970 level.
fi See footnote 1 to table E-1.
SPECIAL ANALYSES
71
Table E-1. NEW COMMITMENTS FOR FEDERAL CREDIT PROGRAMS
CLASSIFIED BY TYPE OF ASSISTANCE AND ACCOUNT (in millions of dollars)
1970 actual
Agency or program
Direct
loans
Guaranteed
and insured
loans
1971 estimate
1972 estimate
Direct
loans
Guaranteed
and insured
loans
Direct
loans
Guaranteed
and insured
loans
683
831
67
52
486
947
96
94
EXPENDITURE ACCOUNT
Funds appropriated to the President:
International security assistance
International development assistance
Agriculture:
Commodity Credit Corporation
Health, Education, and Welfare
Other programs
2,833
217
11
Total, expenditure account
3,937
70
807
51
2,491
281
10
51
4,296
2,772
34
17
119
4,256
190
48
25
119
1,317
386
564
87
2,268
LOAN ACCOUNT
Funds appropriated to the President:
Office of Economic Opportunity
Overseas Private Investment Corporation.
Agriculture:
Commodity Credit Corporation
Rural Electrification Administration
Farmers Home Administration
Commerce:
Economic Development Administration. __
Maritime Administration
Trade Adjustment Assistance
Health, Education, and Welfare
Housing and Urban Development:
Low-rent public housing
Community development loans
Federal Housing Administration
Government National Mortgage Association1
New communities fund
Other mortgage credit
Interior
Transportation......
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
Total, loan account1
Grandtotal1
3
260
470
451
61
91
4
15
1,136
342
470
458
*
110
64
21
959
61
1,521
169
677
1,517
569
16,324
185
640
1,669
952
22,434
995
127
13
3
63
321
75
75
202
307
194
129
2,209
90
452
3
3,720
2,280
6,507
10,444
100
11
92
100
429
Ml
767
1
241
100
3,070
1,548
1,519
26,468
28
160
200
125
2,976
27,431
6,611
37,632
7,016
46,409
27,482
10,907
37,751
11,272
46,599
1,022
236
214
183
3,246
19
343
2
250
200
334
203
163
2,927
13
452
2
446
2
4,887
100
17
35
5,962
71
3,400
1,192
*1 Less than $500 thousand.
To avoid double counting, excludes GNMA commitments for guarantee of mortgage backed
securities—1970-72 amounts are $438 million, $1,301 million, $1,550 million.
72
THE BUDGET FOR FISCAL YEAR 1972
Overlapping commitments.—Total estimated new commitments of
$49 billion in 1971 and of $58 billion in 1972 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. 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 puchases 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.
Federal Loan Account
J Billion,
>
-8.5 1961
'62
FhealY«ai»
'43
*64
'65
*66
'67
'68
*69
10
'71
"72
EtflMte
SPECIAL ANALYSES
73
Table E-2. DISBURSEMENTS AND REPAYMENTS FOR FEDERAL CREDIT
PROGRAMS CLASSIFIED BY TYPE OF ACCOUNT (in millions of dollars)
1970 actual
Agency or program
EXPENDITURE
Disbursements
1971 estimate
Repayments
Disbursements
1972 estimate
Repayments
Disbursements
Repayments
ACCOUNT
Funds appropriated to the President:
International security assistance
International development assistance
Agriculture:
Commodity Credit CorporationHealth, Education, and Welfare. __
Treasury
Other programs
136
899
79
100
554
817
26
130
488
811
117
126
2,811
192
1
23
2,910
1
121
20
2,444
256
2,739
5
34
2,683
1
149
15
41
1,933
1
152
19
Total, expenditure account
4,062
3,231
4,105
3,004
4,084
2,349
1
11
2
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
Trade adjustment assistance
Health, Education, and Welfare
Housing and Urban Development:
Low-rent Public Housing
Community development loans
Federal Housing Administration
Government National Mortgage Association
Other mortgage credit
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
Total, loan account
Grandtotal
Repurchases and sales of loans included above:
Agriculture:
Farmers Home Administration
Health, Education, and Welfare
Housing and Urban Development
Veterans Administration
Export-Import Bank
_
._
Other agencies (GSA)
Total
260
492
2, 105
209
342
175
528
2,141 2,160
9 — 3
8
267
386
516
174
2,705 2.584
304
178
3.038
59
15
7
2
440
8
9
85
116
6
102
9
60
470
720
678
91
816
291
9
44
721
745
650
176
733
513
64
243
826
737
151
270
194
129
1,569
111
342
12
8,313
65
12,375
543
7
609
146
224
69
9
24
56
531
117
3
32
22
52
170
89
39
1,277
21
215
10
435
312
92
203
49
163
1,738 1.490
13
12
217
379
71
152
203
214
183
1.852
18
408
6,182
8,807
9,440
785
205
15
52
7,196
816
664
65
466
51
3
57
553
94
46
1,453
13
212
9
55
8,494
9,413 12,913 10,200 13,524 10,843
1,668
407
2,219
98
38 _
406
260
-.
803
13
2,210
190
-
2,571
430
50
432
400
25
190
4.138
7
300
420
407
—
2,946
74
THE BUDGET FOR FISCAL YEAR 19 72
In accordance with the recommendations of the 1967 President's
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 recoveries. 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" in the "additions to Federal assets" category in Special Analysis D.6
Although repayments on prior loans are customarily offset against
new loan disbursements, the reuse of loan repayments to make new
loans in most instances is as discretionary as the spending of newly
appropriated funds from revenue sources. Therefore, gross disbursements rather than net are the best measure of loan program levels.
Federal guarantees and insurance of private loans, except when accompanied by interest subsidies, ordinarily have only minor and indirect Federal 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.
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 1969-72, sharp reductions in the budgetary impact
of these programs have been occurring. In 1969, gross disbursements
dropped to $13.1 billion, followed by a further decline to $12.1 billion
in 1970; but these are expected to rise somewhat, to $12.9 billion in
1971 and to $13.5 billion in 1972. The 1968-70 decline is mainly
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 increased to
$2.1 billion, but will fall in 1971, to $1.6 billion and in 1972, to $0.9
billion. The declines in 1971 and 1972 result largely from the estimated
increases of $0.7 billion and $1.2 billion in sales of direct loans by six
agencies, together with reductions of $0.4 billion and $0.2 billion in
repurchases by two of these agencies. Details by agency are shown at
the bottom of table E-2.
• See table D-3 on pp. 49-51.
SPECIAL ANALYSES
75
Net loan outlays in the expenditure account fell from $1.9 billion
in 1969 to $0.8 billion in 1970, but will reach $1.1 billion in 1971, and
$1.7 billion in 1972, almost entirely the result of an expected increase
in the net loan expenditures of the Commodity Credit Corporation
from excess repayments of $0.1 billion in 1970 to excess disbursements
of $0.8 billion in 1972.
OUTSTANDING DIRECT AND GUARANTEED LOANS
A useful measure of the growth of Federal credit programs over a
period of years is provided by the total of outstanding direct and
guaranteed loans. By the close of 1972, direct loans outstanding will
total $56 billion and guaranteed loans outstanding will total $167
billion—a gross total of $224 billion.
Outstanding direct loans in the loan account rose by an estimated
$2.1 billion during 1970 and will rise by $1.6 billion in 1971 and by
$0.9 billion in 1972, to a total of $34.2 billion on June 30, 1972. Significant increases over the 2-year period include the Export-Import
Bank ($0.6 billion), the Rural Electrification Administration ($0.7
billion), the GNMA ($0.6 billion), and the Small Business Administration ($0.4 billion). Loans held by the Farmers Home Administration will fall by $1.0 billion.
Outstanding direct loans in the expenditure account will rise by
$1.1 billion in 1971 and $1.7 billion in 1972. The portfolio of foreign
economic assistance loans made by the Agency for International
Development and its successors will rise by $1.4 billion during the
2-year period, accounting for most of the increase.
Outstanding guaranteed and insured loans for both accounts are
expected to rise by an estimated $17.9 billion in 1971 and by $26.5
billion during 1972. The net increase in outstanding loans insured by
the Federal Housing Administration ($25.7 billion) accounts for more
than half of the 1970-72 rise. Other major increases are anticipated
by HUD in its low-rent public housing program ($2.3 billion), the
Farmers Home Administration ($2.7 billion), the Export-Import
Bank ($1.7 billion), the Veterans Administration ($3.3 billion), the
Student Loan Insurance program of the Office of Education ($3.6
billion), and the Small Business Administration ($1.2 billion).
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. The estimated contingent
liability of the Federal Government by the end of 1972 will be $20.7
billion less than the $167.4 billion principal amount of the loans guaranteed and insured. Most of this difference is accounted for by the
veterans loan guarantee program, where the Government's liability
will be $18.7 billion lower than the amount of guaranteed loans
outstanding.
76
THE BUDGET FOR FISCAL YEAR 19 72
Table E-3. OUTSTANDING DIRECT LOANS, AND GUARANTEED AND
INSURED LOANS FOR FEDERAL CREDIT PROGRAMS
CLASSIFIED BY TYPE OF ACCOUNT (in millions of dollars)
1970 actual
Agency or program
1971 estimate
Direct
loans
Guaranteed
and insured
loans
134
8,633
1972 estimate
Direct
loans
Guaranteed
and insured
loans
Direct
loans
Guaranteed
and insured
loans
448
227
662
9,320
402
191
1,033
10,004
348
256
_
49
4,297
1,770
4,240
275
49
5,103
1,755
4,088
297
49
723 20,564
642
22,299
653
EXPENDITURE ACCOUNT
Funds appropriated to the president:
International security assistance
International development assistance...
Agriculture:
Commodity Credit Corporation._
Health, Education, and Welfare
Treasury
_
Other programs
Total, expenditure account
4,537
1,515
4,388
256
19,463
LOAN ACCOUNT
Funds appropriated to the President:
Office of Economic Opportunity
Overseas Private Investment Corporation
Agriculture:
Commodity Credit Corporation
Rural Electrification Administration. _ _
Farmers Home Administration
Commerce:
Economic Development Administration.
Maritime Administration
Trade adustment assistance
Health, Education, and Welfare
Housing and Urban Development:
Low-rent public housing
Community development loans.__
Federal Housing Administration
Government National Mortgage Association*.....
New communities fund
Other mortgage credit.
Interior
Transportation
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
Total, loan account *
Grand t o t a l
1
75
_
_
68
90
3
509
5,343
2,659
57
238
15
302
4,952
584
5,697
2,115
5,896
666
6,035
1,662
7,633
343
73
14
630
414
66
13
926
470
1,952
563
3,379
459
59
58
593
13
1,128
100
5,601
90
751
641
8,072
2,962
67,594
102
888
753
9,123
3,338
78,712
112
961
839
10,310
3,791
93,242
_
4,847
__
3,658
191
7
180
5,391
5,456
95
3
2, 749
973
357
5,714
256
1,658
62
36,040
3,807
203
42
200 __
101
200
3,873
222
77
195
37,165
_
20
1,958
808
15
2,626
1,084
471
5,961
256
1,821
105
31,615
124,352
33,226
142,336
34,172
166,797
51,078
125,076
53,790
142,978
56,472
167,450
20
1,200
1,358
14
2,276
1,204
608
6,360
261
2,016
103
125
39,379
91
2,894
1,976
13
1
To avoid double counting, excludes GNMA guarantees of mortgage backed securities—
1970-72 guarantees outstanding are $438 million. $1,739 million. $3,289 million.
SPECIAL ANALYSES
77
INTEREST SUBSIDIES
Federal credit programs help achieve Federal program objectives
by providing more favorable teims than many borrowers can obtain
from other sources, and often provide access to credit that might
not otherwise be available to them on any terms. Lower interest
rates, longer maturities, and higher loan-to-value ratios are the
most common favorable terms. Forebearance in the event of hardship, and other protection in the event of default or opportunity to
refinance, are also occasional favorable features.
This discussion focuses on the interest subsidies and the various
approaches to measuring both the immediate and long-run costs of
these subsidies. Additional subsidy elements—such as costs of administration and losses, forgiveness of part or all of loan principal under
certain program conditions, or the subsidies resulting from tax-exempt
interest—are not calculated.
Direct loan subsidies.—Unlike most other programs, Government
outlays for direct loans are largely or wholly repayable, generally with
interest, so that the long-run net cost usually is substantially less
than the initial gross outlays. Few direct loan programs are fully
self-supporting, however. Even where statutory interest rate formulas
are designed to reflect Treasury borrowing costs, there is often no additional fee assessed to reimburse the Government for administrative
costs and provision for losses.
The net impact on the budget of the interest rates charged borrowers
on direct loans in any one year includes both the subsidy costs arising
from the new loans made during the year and the subsidy costs
currently attributable to all outstanding loans made in prior years.
By the same token, the loans made each year that provide credit to
borrowers at submarket interest rates will add to the net budget outlays for many years to come, depending on the maturity of the loan.
Once such loans are committed and disbursed, the future costs are
largely predetermined, and the net outlays resulting from the excess
of interest costs over interest receipts are relatively uncontrollable.
Guaranteed and insured loan subsidies.—In recent years, an increasing number of guaranteed loan programs have provided significant
subsidies in order to help meet the needs of their borrowers. In some
cases, guarantee fees or insurance premiums cover part or all of administrative expenses and probable losses; for others there are no such
charges. In some programs, such as in the Farmers Home Administration insured loan programs, the Government agency makes a direct
loan at interest rates below the market and resells the loan with its
guarantee and with a commitment to pay additional interest to the
private purchaser of the loan.
Most important are the increasing number of long-term contracts
to provide debt service grants. These range from commitments to
cover both interest and principal amounts on low-rent public housing
loans, first authorized in 1937, to the more recent practice of underwriting a major share but not all of interest costs on a variety of
housing programs, as well as similar contracts for student loans, and
academic facilities, and on medical facilities loans.
78
THE BUDGET FOR FISCAL YEAR 19 72
Just as is the case with direct loans, the net impact on the budget of
subsidies for guaranteed and insured loans includes both those arising
from new loans and those attributable to outstanding loans made in
prior years. Likewise, these subsidies add to net budget outlays over
future years, and it is appropriate to measure their ultimate net cost
in meaningful terms.
Subsidy measurement.—One way to measure the ultimate net cost
of the successive annu.d subsidy costs of direct loans is in "present
value" terms in accordance with the recommendations of the 1967
President's Commission on Budget Concepts. This is accomplished by
capitalizing future subsidies at an appropriate interest rate. One such
rate might be the rate Treasury must pay for its current longer term
borrowings; another might be the rate which the borrower would have
to pay in the private market for a guaranteed loan. The rates borrowers would have to pay without Government subsidy or guarantee would likewise provide a useful illustration, but these can't be
readily determined—since many borrowers might otherwise be unable
to borrow at any rate.
Table E-4 contains estimates, on both an annual and a presentvalue basis, of the interest subsidy costs attributable to the major
direct loans, as well as to the guaranteed and insured loans made
during 1970. Two rates are used—7}i% and 9%%—to illustrate both
the first year subsidy and the present value of future subsidies under
alternative interest rate assumptions. The lower rate is close to the
average Treasury borrowing rate for 5- to 7-year issues in 1970; the
higher rate approximates the typical gross yield on guaranteed loans
in that year.
Precise subsidy measurements are not available and several assumptions have been required. The estimates are mainly intended to be
illustrative rathei than exact or comprehensive measures. The data
provided here are a first step toward the difficult task of meeting the
widespread interest in the measurement of the cost of loan subsidies.
Loan subsidies, annual basis.—To identify the current budgetary
cost of interest subsidies on new loans, the table presents estimates of
the subsidy costs for the first full year after the loans are disbursed.
This provides a measure of the annual rate of subsidies payable on
new loans that is more meaningful than the subsidies actually paid
on such loans in 1970. On this basis/ the first full-year subsidy cost
for 1970 direct loans is estimated to be $297 million at 7){% a n d
$448 million at 9%%; while the corresponding cost for 1970 guaranteed and insured loans is estimated to be $551 million at 7}&% and
$749 million at 9){%. Price support and economic assistance programs
accounted for more than half of the direct loan subsidies. Housing
loans received well over half of the subsidies for guaranteed and insured loans.
79
SPECIAL ANALYSES
Table E-4. ESTIMATED INTEREST SUBSIDY COSTS AND BENEFITS OF
MAJOR DIRECT LOANS MADE AND GUARANTEED AND INSURED
LOANS COMMITTED IN 1970 (in millions of dollars)
Agency and program
Gross
loan
outlays
Borrower
loan
terms 1
(percent—
years)
Subsidy if rate
were 7 ^ %
lst full
year
Subsidy if rate
were 9ft%
Capitalized
value
1st full
year
Capitalized
value
DIRECT LOANS
Funds appropriated to the President:
Security assistance
Development assistance
Agriculture:
CCC: Price support
CCC: Public Law 480
Farmers Home Administration
Rural Electrification Administration.
Health, Education, and Welfare:
Capital for student loans
Higher education facilities
Housing and Urban Development:
Urban renewal
Low-rent public housing
College housing
FHAfund
Housing for elderly
VA: Insurance policy loans
Export-Import Bank
Small Business Administration:
Business and investment fund
Disaster loan fund
Total, major subsidized direct
loans
136
906
6-10
2-40
1
50
517
3
68
20
609
2,338 3#-1
494 2^-33
4
()
2-33
94
19
7
20
87
226
49
246
140
27
16
29
128
272
100
290
217 3 0-13
102 3-40
16
4
76
46
21
6
95
57
595 !-}{
720 0-%
184 3-40
135 5^-30
106 3-50
195 4-10
1,569 6.3-7^
16
36
7
2
22
46
10
21
43
102
46
63
4
12
16
34
84
28
53
30
65
279 6.2-11
91 3-11
2
3
18
19
6
4
41
297
1,603
448
2,126
987 6.3-33
703 5-40
10
15
118
187
27
28
270
283
3
63
4
179
46
80
6
268
58
22
114
176
9
133
5
21
1,039
168
81
1,628
17
30
144
224
11
189
10
28
1,128
210
102
1,914
35
551
3,484
749
4,296
2
578
497
9,142
4
9
5
6
7
32
44
169
26
GUARANTEED AND INSURED
LOANS (commitments)
Agriculture:
Rural housing insurance
Agricultural credit insurance
Health, Education, and Welfare:
Student loan insurance
Higher education facilities
Housing and Urban Development:
Urban renewal
Low-rent public housing
Interim financing
College housing
Mortgage insurance (subsidized) _ _ _
Export-Import Bank: Portfolio sales..
Total, major subsidized, guaranteed and insured loans
840
120
0—13
3-40
569 1.6-%
1,517 0-40
3,529
0-%
202 3-31
3,228
2-34
406 5.8-4.5
12,101
1
If terms vary these are estimated averages. Interest rates include insurance premiums where these
are2 charged.
Interest
rate shown is for first 10 years only. Rate is 3% for last 30 years.
3
Zero interest rate applies only while student is in school plus 9 months (average period 3 years):
thereafter
rate
is 3% on direct loans, 7% for insured loans.
4
Various interest rates and maturities.
80
THE BUDGET FOR FISCAL YEAR 1972
Loan subsidies, present value basis.—To measure the ultimate net
cost of continuing annual subsidies on loans made or guaranteed in
1970, the table indicates the present value of such subsidies; i.e., the
total amount of all future subsidies on such loans discounted at interest
rates of 7}{% and 9%%. On this basis, the ultimate net cost for direct
loans is $1.6 billion when valued at 7}{% and $2.1 billion when valued
at 9%%.
On guaranteed and insured loans, the calculated present value of
long-term subsidy agreements is $3.5 billion at 7%% and $4.3 billion
at 9%%- The present values at 7}i% for direct loan and for guaranteed
and insured loan subsidies are not properly additive as a measure
of long-run budget effect since in the latter case the Government
actually pays the subsidy based on the private market rate. Moreover,
subsidy elements other than interest are mostly excluded. However,
the present values at 9%% might be aggregated to illustrate that part
of subsidies provided borrowers, not including the value of the
guarantee.
Comparable estimates of subsidy costs for loans expected to be
made or guaranteed in 1971 and 1972 are not available. The reductions which have already occurred in market rates of interest from
the record 1970 levels should tend to reduce the net subsidy outlays
for new lending activity. However, the total volume of subsidized
loans, particularly insured and guaranteed loans, will probably
increase in both 1971 and 1972.
SPECIAL ANALYSES
81
GOVERNMENT-SPONSORED CREDIT PROGRAMS
Seven 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 six 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.
(Actual receipts in 1970 totaled $3.3 billion.)
Table E-5. NET CHANGES IN OUTSTANDING LOANS FOR MAJOR
GOVERNMENT-SPONSORED CREDIT PROGRAMS (in millions of dollars)
Agency
Housing and Urban Development:
Federal National Mortgage Association 1
Farm Credit Administration:
Banks for cooperatives
Federal intermediate credit banks
Federal loan banks
Federal Home Loan Bank Board:
Federal home loan banks
.
Federal Home Loan Mortgage Corporation
Total
Federal Reserve, Board of Governors:
Federal Reserve banks
Increase
1970
actual
5,402
197!
estimate
3,561
21,102
66
642
464
91
722
494
1,907
6,461
7,953
3,823
2,264
315
3,000
—5
15,500
310
10,560
7,786
7,863
53,233
(2)
(2)
(2)
155
742
438
-638
4,035
1972
estimate
Outstanding
end of
1972
estimate
1 Data for Federal National Mortgage Association represent gross unpaid principal amounts.
2
Estimates not available.
One Government-sponsored enterprise is new. The Federal Home
Loan Mortgage Corporation was created by the Emergency Home
Finance Act of 1970 (Public Law 91-351), as a secondary market
facility for mortgages held by savings institutions. The Corporation
began operations in 1971. In addition, legislation is being proposed to
create two other institutions whose borrowing and lending will be
outside budget totals: (1) the Environmental Financing Authority will
serve primarily as a conduit to provide for municipal borrowing from
the private credit markets, substituting the Authority's taxable obligations for the obligations of small municipalities that have difficulty in
obtaining financing on reasonable terms for waste treatment plants;
and (2) the National Student Loan Association will serve primarily
as a secondary market facility to provide liquidity and new capital
to banks and university operated student loan funds by selling its
own federally guaranteed obligations in the private capital markets.
Planning for the two organizations has not been completed and data
for them are not reflected in table E-5.
430-700 0—71
82
THE BUDGET FOR FISCAL YEAR
1972
The six Government-sponsored credit programs—excluding the
Federal Reserve banks (for which no forecasts are available)—
anticipate continued expansion in their lending activity in both 1971
and 1972, though at a slower pace than in 1970. Their total loan portfolios are expected to rise by $7.8 billion in 1971 and by another $7.9
billion in 1972 to $53.2 billion on June 30, 1972. 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 Government-guaranteed 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
Keserve banks). Adjustments are made to exclude double counting,
e.g., cases where loans by the sponsored agencies are also guaranteed
or insured.
During 1970 the aggregate amount of such credit outstanding
increased by $15.9 billion. On the basis of present estimates, further
increases will occur of $23.6 billion in 1971 and $31.4 billion in 1972,
bringing the total outstanding credit and credit assistance to $250
billion on June 30, 1972.
Table E-6. NET CHANGES IN OUTSTANDING FEDERAL AND FEDERALLY
ASSISTED CREDIT (in millions of dollars)
Type of credit assistance
Direct Government loans:
Expenditure account
Loan account
Net, direct loans
Guaranteed and insured loans
Less net increase in holdings by:
Federal National Mortgage Association
Government National Mortgage Association
Export-Import Bank
.
Federal Home Loan Mortgage Corporation
Net, guaranteed and insured loans
1
Government sponsored agencies, loans
Total
1
Excludes Federal Reserve banks.
Increase or decrease in credit
1970
actual
1971
estimate
1972
estimate
Outstanding
end of
1972
estimate
831
2,131
1,10!
1,611
1,735
946
22,299
34,172
2,962
2,712
2,681
56,472
8,418
5,402
590
58
17,901
4,035
542
-58
315
24,473
167,450
3,661
56
-90
—5
21,102
5,506
232
310
2,368
13,067
20,851
140,300
10,560
7,786
7,863
53,233
15,880
23,565
31,395
250,005
83
SPECIAL ANALYSES
Federal and Federally Assisted Credit Outstanding
S Billions
250 —
Loam by
Government
Sponsored
200 —
150 —
1961 '62
'63
Fiscal Y e a n
'64
'65
'66
'67
'68
'69
'70
'71
'72
Estimate
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.
In late 1971 and 1972, improvement in private financial markets is
expected to permit 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, but increased lending by the
new Federal Home Loan Mortgage Corporation is anticipated.
The share of the total expansion accounted for by guaranteed and
insured loans (net) is expected to rise from 15% in 1970 to 66% in
1972, while the share provided by federally sponsored enterprises
drops from 66% to 25%. The share provided by direct Federal loans
also drops—from 19% to 9%.
Federal Credit Policy.—Federal credit programs which the Congress
has placed outside the budget—guaranteed and insured loans, or loans
by federally sponsored enterprises—escape regular review by either
the executive or the legislative branch. The evaluation of these extrabudgetary programs has not always been consistent with that provided regular budget programs. Their effects on fiscal policy have not
been rigorously included in the overall budget process. And their
effects on overall debt management are not coordinated well with the
overall public debt policy. Legislation is therefore to be proposed
which will permit these programs to be reviewed and coordinated
along with other Federal programs.
84
THE BUDGET FOR FISCAL YEAR 1972
SUMMARY OF LEGISLATION AUTHORIZING N E W AND BROADENED
FEDERAL CREDIT PROGRAMS
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.
Department of Agriculture and Small Business Administration
A. Disaster Assistance Act of 1970—Public Law 91-606
(1) Requires partial forgiveness of loan principal, revises interest
formula and liberalizes eligibility requirements on disaster assistance
loans provided by the Small Business Administration and the Farmers
Home Administration; and (2) liberalizes adjustment provisions on
other loan programs in cases of major disasters.
B. Agricultural Credit Insurance Fund Loans—Public Law
91-617.
(1) Requires interest on insured loans sold by this fund to be included in gross income subject to Federal income taxation.
C. Consolidated Farmers Home Act Amendments—Public Law
91-620.
(1) Increases maximum s:ze of farm ownership loans.
Department of Commerce
A. Merchant Marine Act of 1970—Public Law 91-469
(1) Decreases ceiling and broadens ship financing eligible for mortgage insurance; and (2) revises interest payable on ship sales mortgage
installments.
Department of Defense (and other agencies)
A. Defense Production Act amendments—Public Law 91-379
(1) Limits maximum amount of any single loan guarantee; and
(2) prohibits, with prescribed exceptions, use of guarantee authority
to prevent financial insolvency or bankruptcy.
Department of Health, Education, and Welfare
A. Medical Facilities Construction and Modernization Amendments of 1970—Public Law 91-296
(1) Authorizes loan guarantees and loans to modernize and construct medical facilities; (2) authorizes interest subsidies on guaranteed
loans to nonprofit private agencies, and to purchasers of guaranteed
loans to public agencies; and (3) requires that interest and interest
subsidies on guaranteed loans be included in gross income subject to
Federal income taxes.
B. Health Training Improvement Act of 1970—Public Law
91-519.
(1) Authorizes capital contributions to help finance low-interest
loans to students of allied health professions, with partial cancellation
of principal for service in certain areas.
SPECIAL ANALYSES
85
Department of Housing and Urban Development and other agencies
A. Emergency Home Finance Act of 1970—Public Law 91-351
(1) Authorizes FNMA secondary market for conventional mortgages; (2) creates Federal Home Loan Mortgage Corporation to
purchase and sell residential mortgages; and (3) provides interest
subsidy payments to FNMA and FHLMC on mortgage loans to
finance middle-income housing and authorizes insurance of such
mortgages.
B. Housing and Urban Development Act of 1970—Public Law
91-609
(1) Authorizes guarantees of obligations to finance new community
development and related purposes, but requires income of guaranteed
obligations of State development agencies to be subject to Federal
taxation; (2) authorizes loans to pay interest on such obligations; (3)
authorizes grants to State agencies equal to the difference between
the interest rate on guaranteed securities and prevailing rates on
similar tax-exempt issues; (4) authorizes increased interest subsidies
on insured loans by Farmers Home Administration to provide housing
for domestic farm labor; and (5) provides for guarantee of construction
surety bonds by SBA.
C. Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970—Public Law 91-646
(1) Authorizes reimbursement for increased interest costs for replacement housing for homeowners displaced by federally assisted
programs; (2) liberalizes insurance of mortgages for displacees; and
(3) authorizes interest-free loans to nonprofit groups for preliminary
housing expenses.
Department of Transportation
A. Urban Mass Transportation Assistance Act of 1970—
Public Law 91-453
(1) Authorizes loans (and grants) for acquisition and construction
of facilities and equipment and of real property required for mass
transportation assistance.
B. Rail Passenger Service Act of 1970—Public Law 91-518
(1) Authorizes guarantees of obligations of the National Rail
Passenger Corporation issued to finance roadbed improvement and
rolling stock; and (2) authorizes interim loans or loan guarantees for
railroads contracting with NRPC to provide passenger service.
C. Federal-aid Highway Act of 1970—Public Law 91-605
(1) Authorizes compensation for increased mortgage interest rates
payable on housing by owners displaced by highway program.
D. Emergency Rail Services Act of 1970—Public Law 91-663
(1) Authorizes guarantees of trustee certificates of railroads undergoing reorganization.
86
THE BUDGET FOR FISCAL YEAR 1972
Veterans Administration
A. Veterans Housing Act of 1970—Public Law 91-506
(1) Authorizes guaranteed and direct loans to eligible veterans for
mobile homes and lots at interest rates determined by Administrator;
and (2) removes time limit on veteran's eligibility for all types of credit
assistance.
National Credit Union Administration
A. Insurance for credit union shares—Public Law 91-468
(1) Authorizes loans to reopen closed credit unions or to prevent
closing of insured credit unions.
Securities Exchange Commission
A. Securities Investor Protection Act of 1970—Public Law
91-598
(1) Authorizes loans to SIPC fund if assessments and other income
are insufficient.
SPECIAL ANALYSIS F
PRINCIPAL FEDERAL STATISTICAL PROGRAMS
Accurate economic and social statistics are always critical for
intelligent evaluation of national economic activity and performance
of specific Federal programs. Deficiencies in key economic data (e.g.,
gross national product, retail sales, wages, and prices) have complicated the problem of making sound policy choices during the
past few years. Data series developed decades ago too often fail to
focus on the crucial facts needed for effective decision making. Gaps
in our social statistics have hampered the development of adequate
social policy. Statistical detail for States, metropolitan areas and
cities available today does not meet the needs of local authorities in
dealing with social and economic problems under the New Federalism.
Therefore, the principal Federal statistical programs and the resources
requested for 1972 reflect changes needed to strengthen Federal
statistics in these subject areas.
This special analysis includes statistical programs of several agencies
which were not included in the special analysis for 1971 and previous
years. These added programs account for approximately $32
million, or 15 percent of the total budget requests for current statistical
programs for 1972. The costs of these programs are included in the
figures shown for each of the 3 years. It should be noted, however, that
because of this change in program content, the figures for 1970 and
1971 in this special analysis are not comparable with figures for the
same years in the 1971 special analysis.
A general grouping of the statistical activities of the various agencies is reflected in the amounts shown for current statistical programs
(see table 1). Recommendations for 1972 for current statistics total
$209.3 million compared to $188.3 million in the previous year, an
increase of $21 million or 11.2 percent. 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 decennial 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 1972 aggregate $34.2 million. This is only half the total for 1971.
The decrease is accounted for almost entirely by the decline in cost
as the processing and publication of the 19th decennial census comes
to completion, even though work on the 1972 census of governments,
the 1972 economic censuses, and revision of the Consumer Price
Index is building toward the peak which will be reached in 1973.
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
87
88
THE BUDGET FOR FISCAL YEAR 19 72
current programs are summarized in table 1. Information by agencies, for both current and periodic programs, is shown in table 2.
In some cases, these programs represent the entire output of
agencies whose sole 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 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-l. OBLIGATIONS FOR PRINCIPAL CURRENT STATISTICAL
PROGRAMS, BY BROAD SUBJECT AREAS (in millions of dollars)
Program
Labor statistics
Demographic and social statistics
Health, vital and environmental statistics
Population statistics
Educational statistics
Crime statistics
Social security and welfare statistics
Prices and price indexes
Production and distribution statistics
Construction and housing statistics
National income and business financial accounts
Total principal current programs
1970
1971
1972
39.7
50.7
(25.5)
(2.9)
(4.8)
(4.4)
(13.1)
8.0
47.0
9.6
14.0
42.4
63.7
(31.1)
(3.7)
(5.7)
(8.3)
(14.9)
9.4
50.2
7.6
15.0
51.1
69.8
(35.0)
(3.4)
(6.1)
(12.1)
(13.2)
10.0
52.9
10.0
15.5
168.9
188.3
209.3
LABOR STATISTICS
Of the $8.7 million increase requested for labor statistics, about $4
million represents proposals for additional or expanded statistics. The
rest represents increased costs of existing programs at both the Federal
level and in the federally funded portion of work done by cooperating States.
There are two major new projects to be conducted by the Bureau of
Labor Statistics. The first would improve information on the construction industry—work injuries, wages, industrial relations and productivity—as part of a concerted effort, endorsed by the President's
Cabinet Committee on Construction, to develop statistics needed to
solve the problems in this sector of the economy ($1 million). The
second would initiate a complete systems redesign of major BLS data
series preparatory to going over to a new computer system ($500
thousand). The National Institutes of Health proposes to devote additional funds for contract research in the field of health manpower
($500 thousand). Finally, the recently enacted Occupational Health
and Safety Act will require statistical information for program and
evaluation purposes. Although the specific outlines of this program
SPECIAL ANALYSES
89
are not yet determined, estimates of $200 thousand for 1971 and $2
million for 1972 have been included to indicate the expected magnitude.
Much of the increase in 1972 over 1971 represents the increased costs
of existing programs, in particular, the manpower training activity
statistics produced by the Manpower Administration, Department of
Labor. There are also included for the first time in this analysis, funds
for the development of labor market information which the Manpower
Administration transfers to the Bureau of Labor Statistics and to
State employment security agencies. These funds are used to collect
statistics on job vacancies and to develop current estimates of employment by occupation from a sample of employers. These two programs are still in the developmental stage, although national statistics
are being released on job vacancies for manufacturing industries each
month, as well as some information for selected areas. The Manpower
Administration also supports some experimental research on methods
of obtaining improved manpower information in urban poverty areas.
No increase in these programs for labor market information is requested for 1972.
The 1971 budget for the Bureau of Labor Statistics includes funds
($500 thousand) for strengthening price, wage, and productivity
statistics needed by the National Commission on Productivity. In
1972, funds to support this Commission are included in the appropriation request for the Council of Economic Advisers.
The National Register of Scientists and Engineers, now maintained
by the National Science Foundation, is being discontinued in its
present form. Instead, about $375 thousand will be devoted to the
development of new methods for obtaining data on scientific and
technical personnel. In addition, NSF will analyze the impact of
Federal expenditures on scientific and engineering employment ($100
thousand) and examine new methods of making scientific and manpower analyses ($100 thousand). The net result of these changes will
be a reduction of $400 thousand in the NSF budget for manpower
studies.
DEMOGRAPHIC AND SOCIAL STATISTICS
The expansion in the scope of principal Federal statistical programs
included in the special analysis this year affected the demographic and
social statistics most of all. For this reason, an initial effort has been
made to distinguish in the tables as well as in the text some of the more
important areas of social statistics so that the overall changes may be
better understood. In addition to changes in the separate subject areas
noted below, $125 thousand has been included in the 1972 budget
request for the publication of a statistical volume on social indicators
which is now being prepared in the Office of Management and Budget
with the collaboration of the major statistical agencies.
Population statistics.—Work will continue on the updating of the
Current Population Survey with information based on the 1970
Census, part of a 3-year program which was initiated last year. The
Bureau of the Census also plans to continue procedures instituted
last year which are designed to obtain improved estimates of family
income in connection with the March enumeration of the Current
90
THE BUDGET FOR FISCAL YEAR 19 72
Population Survey. An experimental project to use Internal Revenue
Service income tax records to develop local population and income
estimates was discontinued as not likely to be worth the investment
(—$277 thousand).
Health, vital, and environmental statistics.—As a result of a change in
the funding arrangements for the National Nutritional Surveillance
program, there has been an increase of about $2.5 million in the budget
request for the National Center for Health Statistics (NCHS) for
1972 and a corresponding drop in the statistical budget for the remainder of the Health Services and Mental Health Administration
(HSMHA). In 1971, this same program was financed under the
regional medical program of HSMHA with the funds transferred to
NCHS for the actual work.
Aside from this funding change, a major program increase ($2.4
million) is proposed for the work of the National Center for Health
Statistics. About half of the additional funds would be used to speed
up collection of vital statistics which are of particular importance in
the development of current population estimates and projections. The
remainder would be used to inaugurate field collection for the family
growth survey, which will provide data on the family planning practices
of the population, and to produce national statistics on the number
and characteristics of persons receiving subsidized family planning
services. A substantial increase (approximately $1 million) is proposed
for the research and development arm of the National Center for
Health Services for construction of models and for demonstration
projects for cooperative Federal, State, and local health statistics
programs.
Educational statistics.—Moderate increases are proposed for the
National Center for Educational Statistics to obtain additional information needed for long-range educational planning such as: (1)
more detailed characteristics of college-level students, (2) a survey of
2-year colleges to examine their potential in meeting the anticipated
increase in college enrollment, (3) collection of additional data on
elementary and secondary school financing in anticipation of the
needs expressed by the President's Commission on School Finance,
and (4) the start of a longitudinal survey of high school seniors to
examine subsequent educational and work experience.
Social security and welfare statistics.—This grouping includes the
statistical programs of the Social Security Administration and the
Social and Rehabilitation Service, with the exception of health-related
statistical programs. Also included are the statistical activities of the
Office of Economic Opportunity. No program increase is requested
for the Social Security Administration or the Office of Economic
Opportunity. Funds requested for the Social and Rehabilitation
Service show a decrease in 1972 following the completion of a national
demonstration project to assist States and local areas to develop
improved social welfare statistics (—$1.5 million).
Crime statistics.—The principal program increases in this field are
for the National Criminal Justice Information and Statistics Service
in the Law Enforcement Assistance Administration, Department of
SPECIAL ANALYSES
91
Justice. Further work will be done in developing and conducting surveys of crime victims, utilizing the Bureau of the Census for collecting
the data. These studies based on information from victims of crime
will provide new estimates of the total amount of crime and the
characteristics of victims, and will point to possible methods of crime
avoidance and prevention. Other projects include development of
transaction statistics which would follow an offender through each step
of the justice process, and establishment of an information system to
provide data on LEAA grants and subgrants.
The Bureau of Prisons will expand collection of data on inmates and
will undertake statistical prediction studies to determine the probable
effect of educational, vocational training, counseling, and other programs in relation to inmate characteristics.
PRICES AND PRICE INDEXES
The major change in the statistics program on prices is the work
necessary for the revision of the Consumer Price Index which is discussed below under periodic programs. However, increased funds ($220
thousand) are requested for the Bureau of the Census to extend its
development of construction price indexes. There is currently an index
for single family homes and one for multifamily housing is underway.
The increase will be used primarily for nonresidential construction.
Preparation of these indexes is considered of high priority since they
will replace unsatisfactory indexes now being used as GNP deflators
in order to measure changes in the real volume of construction. Also,
part of the funds requested to carry out the program recommended by
the Cabinet Committee on Construction will enable the Bureau of
Labor Statistics to improve data on prices of construction materials
and mobile homes.
PRODUCTION AND DISTRIBUTION STATISTICS
The principal elements of production and distribution statistics for
which changes are planned in 1972 are in the program of the Bureau of
the Census. The monthly retail trade survey sample will be increased
so as to improve the reliability of published estimates by reducing the
sampling variance. Also, as a result of the sample expansion, it will be
possible to publish additional data by kind-of-business detail, as well
as additional States, standard metropolitan statistical areas, and
central cities ($350 thousand). Coverage of the monthly service trade
series will be expanded to include nonprofit organizations; engineering
and architectural services; and accounting, auditing, and bookkeeping
services ($107 thousand). In the manufacturing sector, the quality of
the monthly survey of manufacturers' shipments, inventories, and
orders data will be improved: (a) by a detailed review of the sample
panel to insure that divisional reports of large diversified companies
adequately cover all significant product lines, and (b) by annual
benchmarking to the annual survey of manufactures, which will
be processed on an accelerated time schedule to assure prompter release of the results ($418 thousand).
Funds are requested ($300 thousand) for advance planning and
testing by the Census Bureau of a Government-wide computerized
directory of all U.S. business firms and their establishments (containing
92
THE BUDGET FOR FISCAL YEAR 1972
name, mailing address, industry code, and size code). The directory
will make available to designated Federal agencies, for statistical
purposes only, up-to-date and consistent mailing lists that will assure uniform and complete coverage of specified industries, areas, or
size classes. It will also provide a frame for selection of sample survey
panels which may be benchmarked against a known statistical
universe.
There is a reduction (—$250 thousand) in the request for Economic
Research Service, Department of Agriculture, principally for work on
marketing costs and margins and cost of producing cotton.
CONSTRUCTION AND HOUSING STATISTICS
A new annual housing survey will be initiated with $500 thousand
of the funds requested for the Bureau of the Census. These funds are
intended to finance a national and regional sample, supplemented by
funds from HUD for local data. This survey is considered of high
priority and was endorsed by the President's Cabinet Committee on
Construction. The data obtained will fill many voids in housing information such as: a current check on the size of the inventory; transactions in the existing housing market; rate of deterioration of housing
and of upgrading; and the incomes and demographic characteristics of
families as they move through the housing supply.
A net increase of $1.3 million is requested for the Department of
Housing and Urban Development, which, with savings resulting from
the completion of some projects started in prior years, will finance
the initiation of an annual housing survey in 20-25 SMSA's, providing
data for the central city and the balance of the SMSA separately.
This survey is an integral part of the one described above in connection with the Bureau of the Census. The request also includes funds to
finance HUD's share of a full year's operation of the new mortgage
gross flow series.
NATIONAL INCOME AND BUSINESS FINANCIAL ACCOUNTS
An increase of $500 thousand is requested for 1972 to improve
data in the area of national income and business financial accounts.
Economic accounts.—The budget proposal for the Office of Business
Economics provides for increased budget authority in three areas.
The first will provide new measures for evaluating the impact of
Federal activity and improve our knowledge of the timing of the
fiscal impact ($150 thousand). It will provide comprehensive and
consistent measures of the stages of Federal spending in terms of new
obl^gational authority, placement of orders, production, delivery, and
payment. Second, the extension of bilateral balance-of-payments
accounts ($200 thousand) will increase the accuracy of measures of
U.S. transactions with individual foreign countries by enabling a
detailed reconciliation of U.S. data with comparable figures produced
by other countries. This will assist in country-by-country balance-ofpayments analysis and in the formulation of economic policy. Third,
a new project on evaluating current economic fluctuations ($100
thousand) is directed toward the development of an up-to-date list
SPECIAL ANALYSES
93
of cyclical indicators, the development of broader definitions of
cyclical episodes, and new ways of measuring the cyclical performance
of the economy. This effort builds upon and extends the prior work
of the National Bureau of Economic Research.
Financial statistics.—Two programs designed to improve statistics
on corporate financial developments are proposed in the budget for
the Federal Trade Commission ($126 thousand). One is the extension
of coverage of the principal survey in the area of corporate financial
statistics, the " Quarterly Financial Report/' to include nonmanufacturing industries such as mining, retail and wholesale trade. The other
will provide annual data on total receipts and net income distributed
by major line-of-business for diversified corporations, to improve the
primary industry classification of these businesses and to provide
measures of the nature and extent of their secondary activities.
The budget for the Securities and Exchange Commission has been
reduced (—$170 thousand), largely due to the completion of the
institutional investors survey.
PERIODIC PROGRAMS
19th Decennial Census.—This is the final planned appropriation
request for the 1970 censuses of population, housing and agriculture.
The funds requested will provide for the remaining work of programing,
computer processing, tabulation, and publication of the data.
1972 economic censuses.—The 1972 request represents the second of
a five-stage request for the economic censuses (manufactures, mineral
industries, construction, retail, wholesale, service, transportation, and
other businesses) to be taken covering calendar 1972. This request
covers various preparatory steps including design of report forms,
preparation of mailing lists, writing and testing computer programs,
and determining other collection and processing procedures. The
requested funds provide for a major effort to speed up the issuance of
census publications, with the hope that the publication schedule for
the 1967 censuses can be bettered by from 6 to 12 months.
1972 census of governments.—Information for this quinquennial
census is obtained from State and local governments. The requested
funds provide for the collection of data during the year on such
subjects as taxes and tax valuations, governmental receipts, expenditures, indebtedness, and number of employees. The funds requested
will permit improved data on tax valuations by extending the collection to smaller governmental units.
Revision of the Consumer Price Index.—The 1972 budget request for
the Bureau of Labor Statistics includes $4.2 million for the third year
of a comprehensive revision of the Consumer Price Index, which is
undertaken every 10 years. The 1972 funds include a substantial
amount for the collection of a consumer expenditure survey which will
provide up-to-date weights for the revision of the Consumer Price
Index. Arrangements have been made for these data to be collected
from a sample of families by the Bureau of the Census as agent for the
Bureau of Labor Statistics.
94
THE BUDGET FOR FISCAL YEAR 1972
Table F-2. OBLIGATIONS FOR PRINCIPAL STATISTICAL PROGRAMS, BY
AGENCY (in millions of dollars)
Agency
1970
actual
1971
estimate
1972
estimate
0.4
4.5
16.9
0.5
4.8
18.6
0.5
4.5
18.9
20.1
.2
.4
1.8
2.6
3.5
22.6
.2
.5
1.8
2.9
4.0
24.4
.2
.5
1.8
3.4
4.5
1.2
1.2
1.3
9.3
1.9
4.8
5.1
2.9
12.4
5.9
10.1
3.8
5.7
6.4
4.9
13.4
3.0
15.3
2.3
6.1
6.9
3.4
13.5
4.3
2.8
2.8
4.4
3.6
3.6
8.3
3.6
3.5
12.1
___
24.2
13.0
2.8
26.4
13.0
3.0
.2
29.4
16.3
3.1
2.0
---
.7
3.5
1.0
.5
3.5
1.7
1.0
3.5
1.9
7.6
-9
8.0
.9
-4
1.1
-9
-4
-7
1.5
5.2
1.1
.4
1.4
1.0
.5
.7
1.5
4.9
«8
8.1
1.2
••>
.5
1.8
1.1
.6
.7
1.1
4.9
.6
168.9
188.3
209.3
CURRENT PROGRAMS
Department of Agriculture:
• Agricultural Research Service
• Economic Research Service
Statistical Reporting Service
Department of Commerce:
Bureau of the Census
• Bureau of Domestic Commerce
• Bureau of International Commerce
• Economic Development Administration
• National Marine Fisheries Service
Office of Business Economics
Department of Defense:
• Corps of Engineers
Department of Health, Education, and Welfare:
Health Services and Mental Health Administration:
National Center for Health Statistics
• OtherHSMHA
National Center for Educational Statistics
• National Institutes of Health
• Social and Rehabilitation Service
• Social Security Administration
• Department of Housing and Urban Development
Department of the Interior:
• Bureau of Mines
• Bureau of Sport Fisheries and Wildlife
• Department of Justice
Department of Labor:
Bureau of Labor Statistics
• Manpower Administration
• Workplace Standards Administration
• Occupational Safety and Health
Department of Transportation:
• Office of the Secretary
• Federal Highway Administration
• National Highway Safety Bureau
Department of the Treasury:
• Internal Revenue Service
• Civil Aeronautics Board
• Council of Economic Advisers
• Environmental Protection Agency
• Federal Home Loan Bank Board
• Federal Power Commission
• Federal Trade Commission
• Interstate Commerce Commission
• National Science Foundation
• Office of Economic Opportunity.___
• Securities and Exchange Commission
Total, current programs
-
---
SPECIAL ANALYSES
95
Table F-2. OBLIGATIONS FOR PRINCIPAL STATISTICAL PROGRAMS, BY
AGENCY (in millions of dollars)—Continued
Agency
1970
actual
1971
estimate
1972
estimate
62.7
.4
1.3
24.7
1.4
3.9
PERIODIC PROGRAMS
Department of Commerce: Bureau of the Census:
19th decennial census
1972 census of governments
1972 economic censuses
1967 census of governments
1967 economic censuses
Modernization of computer equipment
Department of Labor: Bureau of Labor Statistics:
Revision of Consumer Price Index
126.8
.2
.1
3.7
.5
Total, periodic programs
131.3
Total, principal statistical programs
300.2
•=Statistical activities only.
1.0
3.0
1.6
4.2
70.0
34.2
258.3
243.5
SPECIAL ANALYSIS G
BALANCES OF BUDGET AUTHORITY
This analysis presents information on balances of budget authority
carried forward at the end of each of the three fiscal years shown in the
budget. 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 occur only subsequent to
the enactment of appropriations or other forms of budget authority.
In the case of most Government accounts, the timelag 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 a balance
year after year.
Amounts that have been obligated are carried forward as obligated
balances until the subsequent payment of the obligations. The sum
of the unobligated and obligated balances constitutes the unexpended
balances.
SUMMARY OF BALANCES BY FOND 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 $148.1 billion of Federal fund
unexpended balances at the end of 1972, the major portion—$82.8
billion (56%)—will have been obligated. Correspondingly, unobligated
Federal fund balances are estimated at $65.3 billion (44% of the
Federal fund unexpended balances).
Trust funds are those administered in a fiduciary or trustee capacity
by the Federal Government for specified purposes, such as social
security programs. Of the $128.1 billion trust fund unexpended balances at the end of 1972, unobligated balances are estimated to be
$114.2 billion (89%). Trust fund obligated balances are estimated to
be only $13.9 billion (11% of trust fund unexpended balances).
96
SPECIAL ANALYSES
97
Table G-l1. SUMMARY OF BALANCES (in millions of dollars)
Description
Balances end oif year
1970
actual
Federal funds:
Unobligated balances
Obligated balances
Total Federal fund unexpended balances
Trust funds:
Unobligated balances
Obligated balances
Total trust fund unexpended balances
Total, Federal and trust funds:
Unobligated balances
Obligated balances
Total unexpended balances
1971
1972
estimate estimate
59,100
69,151
68,449
74,680
65,289
82,840
128,251
143, 129
148,129
97,349
12,511
103,092
13,287
114,204
13,886
109,860
116,379
128,090
156,449
81,662
171,541
87,967
179,493
96,726
238,111
259,508
276,219
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
$65.3 billion Federal fund balances estimated to remain unobligated
at the end of 1972, $26.5 billion (41%) fall into this category.
The major portion of this amount ($20.4 billion) is basically standby
and backup authority that, it is hoped, will not be used in the foreseeable future. For example:
• $7,397 million is available for investment in the International
Bank for Reconstruction and Development and 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.
430-700 O—71
98
THE BUDGET FOR FISCAL YEAR 1972
Table G-2. ANALYSIS OF FEDERAL FUND UNOBLIGATED BALANCES
(in millions of dollars)
Category and agency
Guarantee and insurance programs: 1
Standby and backup authority:
International financial institutions
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
Flood and civil disorder insurance
Federal Housing Administration fund
Urban renewal loans and planning advances
Veterans Administration: Loan guaranty fund
Other agencies...
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
Participation sales fund
.
Veterans Administration: Veterans insurance funds
Department of Agriculture: Rural housing, and agriculture
credit insurance
_
International development assistance:
Housing investment guaranty fund____
Overseas Private Investment Corporation
Other agencies
Total reserves for losses and debt redemption
Total guarantee and insurance programs
Loan programs: l
Department of Housing and Urban Development:
Government National Mortgage Association: Special assistance functions
College housing loans
Public facilities loans
Housing for the elderly or handicapped
.
Department of Agriculture: Farmers home and rural electrification and telephone loans
Veterans Administration: Direct loan revolving fund
_ -Department of Labor: Advances to Employment Security
Administration
International development assistance: Development loans
Small Business Administration
Export-Import Bank
Other agencies
Total loan programs
See footnotes at end of table.
Unobligated balances end of year
1970
actual
1971
estimate
1972
estimate
6,839
7,397
7,397
4,000
750
3,000
4,000
750
3,000
4,000
750
3,000
2,250
1,094
556
339
301
477
260
2,250
942
564
388
250
603
365
2,250
832
557
389
173
662
374
19,866
20,509
20,384
2,439
2,588
2,754
1,203
491
411
1,381
643
467
1,624
358
519
264
669
579
100
88
49
129
74
8I
4V
Ml
™
5,070
6,007
6,087
24,936
26,516
26,471
4,546
2,289
252
46
4,320
1,275
214
41
3,912
876
157
56
514
643
839
763
345
46/
„ 3f8
2,215
^96
379
585
348
400
221
1,052
283
12,041
9,118
350
218
_
7,816
SPECIAL ANALYSES
99
Table G-2. ANALYSIS OF FEDERAL FUND UNOBLIGATED BALANCES
(in millions of dollars)—Continued
Category and agency
Procurement programs: 1
Department of Defense-Military
Department of Agriculture: Removal of surplus agricultural commodities
Other agencies
Total procurement programs
Construction and land programs: 1 2
Postal Service
Department of Transportation:
Urban mass transportation program
Grants in aid for airports and public lands and forest highways.
Tennessee Valley Authority
Department of Defense—Military
Department of Agriculture: Forest roads and trails and rural
environmental assistance
Department of Housing and Urban Development: Grants for
urban renewal; water, sewer, and neighborhood facilities
Department of Interior: Land and water conservation fund and
road construction
Environmental Protection Agency: Construction grants
Other agencies
Total construction and land programs
Research and development programs:
Department of Defense—Military
Other agencies
Other balances: 1
Department of Defense—Military
Department of Agriculture:
Price support and related programs
Rural water and waste disposal grants
Other agencies
Total other balances
Balances of less than $20 million
Total Federal fund unobligated balances
1
1970
actual
1971
estimate
1972
estimate
10,666
7,933
9,020
300
298
300
149
300
97
11,264
8,382
9,427
10,000
9,750
225
157
272
1,526
3,068
65
2,886
1,460
2,462
366
431
418
1,524
1,569
362
250
440
1,196
322
255
581
404
350
404
5,956
20, 6^7
17,999
1,225
242
1,141
117
956
15
1,467
1,258
971
1,182
1,091
1,042
1,646
56
1,025
529
14
561
2,828
2,172
2,146
610
368
458
59,100
68,449
65,289
2,428
1,421
1
Total, research and development programs
2
Unobligated balances end of year
Covers accounts with balances of $20 million or more.
Excludes loans for construction.
Most of the remaining balances of standby and backup authority
are in the Department of Housing and Urban Development, principally for guaranteed private loans in the low-rent public housing
program ($832 million), and for prompt payment to insurance companies of reinsurance claims in flood and civil disorder damage cases
($557 million).
This category also includes balances held as reserves for losses,
which are primarily derived from fees, premiums, and other types of
collections obtained from the protected groups themselves. Most of
100
THE BUDGET FOR FISCAL YEAR 1972
these balances are akin to funds held in trust. Significant items in this
group include $2,754 million in fees and premiums collected from
insured savings and loan institutions, $1,624 million for Federal
housing insurance, $519 million held in reserves for Veterans Administration insurance programs, and $579 million held in reserves for
rural housing and agriculture credit insurance programs of the Department of Agriculture. The Department of Housing and Urban
Development also has $358 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
12%—$7.8 billion—of unobligated Federal fund balances estimated
to be carried over into 1973 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 64% of unobligated balances in this category ($5.0
billion), is in the Department ol Housing and Urban Development,
largely for the special assistance functions of the Government National
Mortgage Association ($3,912 million) and for loans foi college housing
($876 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 wheie 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.
The Department of Agriculture carries sizable, although considerably smaller, unobligated balances for rural housing, electrification,
and telephone loan programs, which are estimated to total $839
million at the end of 1972. The Veterans Administration is estimated
to have balances of $763 million at the end of 1972 for housing loan
programs for veterans.
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 will be fully ussd by the end of 1972 in the
expanded lending program of the Bank.
SPECIAL ANALYSES
101
Procurement programs.—Of the $65.3 billion Federal fund balances estimated to remain unobligated at the end of 1972, o9.4
billion (14%) is attributable to the Government's major procurement programs. Approximately $9.0 billion (95%) 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 leadtime required for such procurement and the application of a fall-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.
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.
Construction and land programs.—Programs in this category—
involving land acquisition and improvement, and construction of
facilities—account for $18.0 billion (28%) of the $65.3 billion Federal
fund balances estimated to remain unobligated at the end of 1972.
Most of these balances are in the Postal Service ($9,750 million),
in the form of borrowing authority provided by the Postal Reorganization Act (Public Law 91-375) of August 1970. Other major balances
include $2,462 million in the Department of Transportation for the
urban mass transportation program, and $2,428 in the Tennessee
Valley Authority, primarily for that agency's power program. Lesser
balances are for the military construction of 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.—Balances relating to
research and development programs amount to $971 million, or approximately 2% of the unobligated Federal fund balances estimated at
the end of 1972.
Most of the unobligated balances in this category estimated at the
end of 1972 are in the Department of Defense—principally for the
development, testing, evaluation, and improvement of weapons
systems and related equipment. The "Other agencies" balance in this
category at the end of 1972 is held by the Environmental Protection
102
THE BUDGET FOR FISCAL YEAR 1972
Agency. As indicated by the declining trend in this entry, balances
held by agencies other than the Environmental Protection Agency—
e.g., the Atomic Energy Commission and the National Aeronautics
and Space Administration—are estimated to be fully utilized by the
end of 1972.
Other balances.—Of the remaining $2.1 billion (3%) of Federal
fund unobligated balances (in accounts with balances of $20 million
or more) to be carried forward into 1973, $1,042 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 Commodity Credit Corporation of the Department of Agriculture will have unobligated balances of $529 million in this category
at the end of 1972, representing commodity price supports and
related programs.
The $561 million shown under "Other agencies" represents scattered
balances among a number of programs such as State and community
highway safety, highway beautification, Federal prison industries,
and grants and other programs under international development
assistance.
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 $82.8 billion Federal fund obligated balances estimated at
the end of 1972, $27.1 billion (33%) are attributable to the military
programs of the Department of Defense. The remaining obligated
balances of $55.7 billion (67%) are scattered among the various
civilian agencies and programs.
The major cause of obligated balances is the long leadtime 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 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 other financial institutions under International development assistance, and to domestic
loans for programs such as rural electrification in the Department of
Agriculture.
SPECIAL ANALYSES
103
Table G-3. FEDERAL FUND OBLIGATED BALANCES (in millions of dollars)
Obligated balances end of year
Description
1970
actual
Department of Defense—Military:
Procurement
Research and development
Operation and maintenance_ __
Construction
Military personnel
Other 1
._
Total Department of Defense—Military
Civilian agencies:
Funds Appropriated to the President:
International development assistance
International security assistance
Office of Economic Opportunity
Appalachian regional development programs
Other
Department of Agriculture:
Commodity Credit Corporation
Rural Electrification Administration
Farmers Home Administration
Agricultural Stabilization and Correlation Service
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) __
Social and Rehabilitation Service (mainly grants to States) _ _
National Institutes of Health
Health Service and Mental Health Administration (mostly
community mental health and hospital construction)
Other
Department of the Interior
Department of Justice (mostly Law Enforcement Assistance
Administration)
Depai tment of Labor (manpower development and training) __
Atomic Energy Commission (mostly research and development) _
Environmental Protection Agency (mostly construction grants) _
Department of Transportation (mostly urban mass transportation, highways and Coast Guard)
Department of Housing and Urban Development:
Community Development (mainly urban renewal fund)
Housing Production and Mortgage Credit: Federal Housing
Administration
_
_
Other
National Aeronautics and Space Administration (mostly research
and development)
Postal Service
Veterans Administration
Export-Import Bank
Other civilian agencies 2
Total civilian agencies
Total Federal fund obligated balances
1
Includes obligated
ment of Defense (1971,
2
Includes obligated
excluding D O D ( 1 9 7 1 ,
$500 million).
balances of allowances
$55 million; 1972, $185
balances of allowances
$25 million; 1972, $75
_.._
1971
estimate
1972
estimate
15,838
3,483
2,970
924
568
1,700
16,234
3,327
2,785
1,221
834
1,467
16,992
3,896
2,816
1,314
892
1,185
25,483
25,868
27,095
4,079
1,703
1,147
451
375
4,286
1,994
806
504
598
4,883
2,163
533
513
315
3,645
1,129
351
257
466
2,781
1,067
431
222
520
2,554
1,115
578
210
588
1,151
235
1,252
293
1,381
416
2,878
2, 536
1,561
3,296
2,915
1,723
4,326
3,301
1,911
1,416
64
780
1,464
124
777
1,453
437
782
276
632
1,096
828
429
1,235
1,362
1,636
567
1,356
1,398
2,629
1,134
1,006
1,099
5,216
5,544
6,555
1,925
361
1,542
395
1,535
522
1,513
863
861
2,903
1,836
1,658
1,371
942
3,887
2,752
1,777
1,577
871
4,825
3,575
43,668
48,812
55,745
69,151
74,680
82,840
for civilian and military pay increases of the D e p a r t million), and for all-volunteer force (1972, $50 million).
for revenue sharing (1972, $87 million); pay i n c r e a s e s ,
million); and contingencies ( 1 9 7 1 , $200 million; 1972,
104
THE BUDGET FOR FISCAL YEAR 19 72
T R U S T F U N D 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 are needed to meet statutory requirements in subsequent years.
Table G-4. T R U S T F U N D BALANCES (in millions of dollars)
Balances end of year
Description
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 fund.
Federal employees life insurance fund.
Highway trust funds
Airport and airway trust fund
National service life insurance fund. __
U.S. Government life insurance fund. _
Foreign military sales trust f u n d . . . . . .
Federal Deposit Insurance Corporation
funds
Other trust funds
Total trust funds
1970
1971
Obli-
30,151
4,800
2,665
2,460
285
12
31,228
5,835
4,377
2,593
303
13
34,320
6,674
8,286
2,599
320
36
47
13,070
4,705
10
50
138
262
11,394
4,720
21
50
155
484
11,137
4,878
23
50
157
22,207
97
225
33
815
7,520
24,247
106
26,180
133
362
24
197
6,173
779
6,003
737
2,132
255
21
969
7,487
428
375
24
212
7,274
606
6,045
698
2,032
284
3
1,126
7,473
751
382
24
262
334
46
4,471
628
326
55
4,856
601
342
54
13,287 114,204
13,886
5,050
840
5,978
778
2,232
4,154
575
97,349
Unobli
1972
Unobliigated
12,511 103,092
Obligated
Unoblii-
Obligated
SPECIAL ANALYSIS H
CIVILIAN EMPLOYMENT IN THE EXECUTIVE BRANCH
Civilian employment in the executive branch will increase modestly
in 1972. New and expanding programs of the civilian sector will be
almost offset by decreases in employment in defense and space programs and by selective reductions in other agencies.
The estimates in this analysis, for both full-time permanent and
total employment, reflect continued vigilant management scrutiny
and the absorption of workload increases through anticipated gains
in employee productivity.
FULL-TIME PERMANENT CIVILIAN EMPLOYMENT
The year 1970 represented a year of administrative control of
Federal employment, in contrast to the rigid formula restrictions for
1969 prescribed b}^ the Revenue and Expenditure Control Act of
1968. These flexible administrative controls succeeded in reducing
the number of full-time permanent Federal civilian employees on
board June 30, 1970, by about 50,000 below the level estimated 6
months earlier in the 1971 budget document. An actual reduction of
about 81,200 was achieved in the year ending June 30, 1970.
For June 30, 1971, full-time permanent civilian employment is
estimated to be 2,574,000—'an increase of about 21,400 from June 30,
1970. New or expanding civilian programs in such areas as environmental protection; crime reduction, including the sky marshal program; increased veterans medical services; and improved Government
building security are contributing to the net increase.
Full-time permanent civilian employment at the end of 1972 is
estimated to be 2,589,300. Forty-one percent of this figure represents
employment in the Department of Defense, 23% will be employed by
the Postal Service, and another 6% is attributable to the Veterans
Administration. These three agencies account for 70% of all full-time
permanent civilian employment in the executive branch.
Table H - l depicts estimated changes in end-of-year employment
levels between 1971 and 1972. While the Department of Defense shows
a net decrease of 17,500, increases for a number of civilian agencies
totaling 27,800 will bring about an expected Government-wide increase
of 15,300, a figure which should be contrasted with the 21,400 increase
estimated for the current year. Despite both increases the number of
Federal employees per thousand of total population has declined
steadily since 1969.
105
106
THE BUDGET FOR FISCAL YEAR 19 72
Table H-1. SUMMARY OF FULL-TIME PERMANENT CIVILIAN
EMPLOYMENT IN THE EXECUTIVE BRANCH
Agency
As of June
1970
actual
2
Department of Agriculture
82,553
Department of Commerce
25,427
Department of Defense, military functions
1,129,642
Department of Defense, civil functions
30,293
Department of Health, Education, and Welfare....
* 99, 657
Department of Housing and Urban Development. _
14,661
2
Department of the Interior
56,570
Department of Justice
38,013
Department of Labor
10,217
Department of State
23,618
Department of Transportation
63,879
Department of the Treasury
86,020
Atomic Energy Commission
7,033
2
Environmental Protection Agency
5 , 778
General Services Administration
36,400
National Aeronautics and Space Administration
31,223
Postal Service
565,618
Veterans Administration
148,497
Other agencies:
Agency for International Development
14,486
Civil Service Commission
5,214
Office of Economic Opportunity
2,387
Selective Service System
6, 665
Small Business Administration
4,015
Tennessee Valley Authority
12,657
The Panama Canal
14,635
United States Information Agency
9,989
2
Miscellaneous Agencies
27,414
Subtotal
Allowance for contingencies
Total
l
1971
estimate
1972
estimate
85,600
87,300
1.700
28,400
29,600
1.200
1,079,500 1,061,600 -17,900
30,900
31,300
400
105,300 102,100 -3,200
16,000
16,700
700
58,000
59,100
1,100
43,600
46,800
3.200
11.600
12,100
500
23,600
23.700
100
69,600
71,900
2.300
93,500 100,400
6.900
7,000
7,000
6,700
8,900
2,200
39,900
41,600
1,700
29,900
28,400 -1,500
585,200 590,500
5,300
154,400 160,800
6,400
14,000
5,500
2,500
6,500
4,100
13,300
14,800
9,900
29,700
11.100
5.900
2.500
6.500
4,200
13,300
14.900
9,900
31,200
2,552,571 2,569,000 2,579,300
3
Change
1971-72
5,000
-2,900
400
100
100
1,500
10,300
10,000
5,000
2,552,571 2,574,000 2,589,300
15,300
1
2
3
Excludes disadvantaged worker-trainees in the Public Service Careers program.
Reflects reallocations of positions to the Environmental Protection Agency.
Subject to later distribution.
Note: Totals may not add due to rounding.
In a number of agencies, increased employment in 1972 results from
program workload, services, and payments that rise under present law
with an expanding population, a growing economy, and the shifting of
emphasis in national priorities. Most of the 1972 increases in employment occur in:
(1) The Department of the Treasury, up 6,900, largely for increased
audit capabilities in the Internal Revenue Service to enhance the
equity of Federal revenue collections. Other increases are for the
Secret Service (in part to effect establishment of the Executive
Protective Service), the Bureau of Customs, coin and currency
manufacturing activities, and for fiscal services.
(2) Veterans Administration, up 6,400, to provide better medical
care for an increased caseload.
(3) The Postal Service, up 5,300, 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.
SPECIAL ANALYSES
107
(4) The Department of Justice, up 3,200, the largest segment to
satisfy increased demands on the FBI. Smaller increases are also
provided for the Federal Prison System and in the Immigration and
Naturalization Service. The number of deputy U.S. marshals will be
increased to provide adequate courtroom security.
(5) The Department of Transportation, up 2,300, primarily to
increase the number of air traffic controllers and maintenance technicians. Smaller increases are provided for the Urban Mass Transportation Administration, the Federal Highway Administration, the
National Highway Safety Bureau, and the Coast Guard.
(6) The Environmental Protection Agency, a newly created agency,
has an estimated 1972 employment level of 8,900 of which about
5,800 represent transfers from other agencies. Another 3,100 positions—900 in 1971 and 2,200 in 1972—will be provided as a net
increase for this vital function.
(7) The Department of Agriculture, up 1,700, for support of credit
programs (Farmers' Home Administration, Rural Electrification
Administration), increased research and development, increased
forestry efforts, consumer protection, and an expanding food stamp
program.
(8) The General Services Administration, up 1,700, for increases
in building security personnel and in service, maintenance, and
construction activities.
(9) The Department of Commerce, up 1,200, for the most part in
the National Oceanic and Atmospheric Administration.
(10) The Department of the Interior, up 1,100, reflecting increases
in; the Bureau of Land Management, Indian and territorial programs,
geological survey efforts, wildlife and the National Park Service,
and power programs.
Significant employment decreases will occur in four agencies;
(1) The Department of Defense, down 17,500, due to a continuing
decline in manpower requirements.
(2) The Department of Health, Education, and Welfare, down 3,200.
This decrease results mainly from a change in the way the Department
meets its responsibilities with respect to Federal beneficiaries.
(3) The Agency for International Development will decline by
2,900 as a result of the President's reform and reorganization of
foreign assistance programs. A substantial portion of the decline is in
overseas employment.
(4) The National Aeronautics and Space Administration, down
1,500, in response to a phasedown of space program activity.
TOTAL FEDERAL PERSONNEL
"Total Federal personnel" encompasses employment in the legislative and judicial branches, armed services personnel, and Federal
civilian employment in the executive branch.
Within the category of total Federal civilian employment, full-time
permanent employees account for nearly 89%. The remainder is
made up of part-time employees, intermittent employees (thosje
employed
on an irregular or occasional basis), and full-time temporary
emp]oyees (those in positions occupied for less than a year).
The various employment categories are shown in table H-2.
108
THE BUDGET FOR FISCAL YEAR 1972
Table H-2. TOTAL FEDERAL GOVERNMENT EMPLOYMENT
As of June
Description
1970
actual
1971
estimate
1972
estimate
Civilian employment in the executive branch:
Full-time permanent *
Other than full-time permanent2
Armed services personnel on active duty:
Department of Defense...
Department of Transportation (Coast Guard)
2,552,571 2,574,000
331,334
320,300
2,589,300
306,600
3,065,508 2,698,700
38,000
39,200
2,504,800
39,600
Subtotal.
Legislative and Judicial personnel
5,987,413 5,632,200
37,602
5,440,300
Total
6,025,015
1
2
Excludes disadvantaged worker-trainees in the Public Service Careers program.
Excludes summer and part-time workers under the President's Youth Opportunity Campaign
and merchant seaman on vessels under Federal shipping contracts.
PERSONNEL COMPENSATION AND B E N E F I T S
Table H - 3 presents selected data of the Federal payroll and related
costs.
Table H-3. PERSONNEL COMPENSATION AND BENEFITS (in millions of dollars)
Description
Civilian personnel costs: 2
Direct compensation
Personnel benefits
1970
actual
1971
estimate l
1972
estimate l
__
27,258
2,255
29,000
2,500
29,600
2,700
Total
Armed Forces personnel costs: 3
Direct compensation
Personnel benefits
29,513
31,500
32,300
16,690
3,961
16,000
3,900
14,700
3,600
20,651
19,900
18,300
Total
1
Excludes budget allowances of $1.5 billion for 1971 and $3.6 billion for 1972 for military and
civilian
pay increases effective January 1971 and January 1972.
2
Excludes Members and officers of Congress.
2
Excludes Reserve components.
SPECIAL ANALYSES
109
The various pay components which comprise direct compensation
are: basic pay; premium pay for overtime, holidays, Sundays, night
work, and hazardous duty; and post differentials for overseas duty.
Related personnel benefits include the Government's share of Federal
retirement and old-age survivor's and disability insurance costs;
employee's life insurance; health insurance and benefits; and similar
payments. Also included are cost-of-living and quarters allowances,
uniform allowances (when paid in cash) and, in the case of military
personnel, allowances for subsistence, reenlistment bonuses, and certain other cash payments.
Obligations to be incurred for civilian personnel compensation and
benefits in 1972 are estimated at $32.3 billion.
Some of the personnel compensation is offset by proprietary receipts, while compensation of others is paid from public enterprise
funds (such as the Postal Service). The cost of these employees, included in table H-3, amounts to $7.4 in 1972. After allowing for the
offsets, the remaining cost of Federal civilian employee compensation
is only 10.4% of the budget totals.
Government pay scales for "blue collar" workers have for many
years been subject to administrative adjustments to correspond to
local prevailing wages in private industry. As wages in private industry have advanced, Federal compensation for such workers has
also increased.
Salary rates for most other Federal workers are adjusted under the
law for comparability with rates paid for the same levels of work in
private enterprise, as determined on the basis of appropriate annual
surveys conducted by the Bureau of Labor Statistics. The recently
enacted "Federal Pay Comparability Act of 1970" authorizes the
President to make pay adjustments on January 1, 1971, and for each
succeeding year thereafter to establish comparability between Federal
and private enterprise salary rates.
Under this act an average salary increase of 5.96% has been authorized, effective in January of 1971. An equivalent increase, in military
basic pay only, of 7.9% also has been authorized, as required by law.
As a result, Federal salaries in 1971 will correspond to 1970 private
enterprise rates. Total allowances for general civilian and military
pay increases of $3.6 billion are carried in the 1972 budget to cover
the January 1971 increase, a possible further adjustment effective
January 1972, and certain wage-board adjustments for 1972.
GEOGRAPHICAL DISTRIBUTION OF EMPLOYMENT
Table H-4 presents the geographical distribution of Federal civilian
employment. Most Federal employees—82%—work in the various
States. The Washington, D.C., metropolitan area (including bordering
areas of Maryland and Virginia) accounts for less than 11%, while
the remaining 7% are in foreign countries and in U.S. territories
and possessions. Employees in foreign countries are, for the most part,
nationals of the countries in which they work.
110
THE BUDGET FOR FISCAL YEAR 1972
Table H-4. FEDERAL CIVILIAN EMPLOYMENT BY GEOGRAPHICAL
LOCATION (as of June 1970)
Location
Washington, D.C., metropolitan
area 2
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho.
Illinois._
_.
Indiana
Iowa
Kansas . ,
,-_
Kentucky
, „
Louisiana
,.
,
Maine
_,1
3
Maryland
Massachusetts
Michigan.
T...
Minnesota
Mississippi
,
..,
Missouri
Montana
Nebraska
Nevada
—
New Hampshire
New Jersey
._.
New Mexico
___
New York
North Carolina
_._.
North Dakota
Ohio
1
2
3
Total employment l
320,970
55,672
14,808
27,504
16,908
308,395
42,359
19,688
4,732
69,486
76,467
26,974
8,582
112,320
42,539
18,264
22,625
35,863
28,597
15,926
63,958
65,662
53,329
29,818
21,100
66,182
10,668
15,093
8,521
5,226
67,384
25,717
178,647
37,866
8,055
99,146
Location
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah....
Vermont
Virginia3
Washington..
West Virginia
Wisconsin
Wyoming
Undistributed 4 ..
Summer Youth..-x
Total employment l
._
Total United States
2,709,749
Outside United States:
Territories and possessions... :i .
Foreign countries
Total Outside United States
U.S. citizens
Foreign nationals 5 _ . . - ^ - . . . _
Total employment
Legislative and judicial
55,293
24,868
139,837
14,626
29,345
9,614
41,923
149,743
39,992
3,720
76,710
54,640
13,287
26,150
5,352
-402
-44,038
36,328
175,430
211,758
(53,759)
(157,999)
_ 2,921,507
—37,602
Total executive branch
2,883,905
Distributed as follows:
Full-time permanent
(2,552,571)
Temporary, part-time and intermittent
(331,334)
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.
4
Merchant seamen on vessels under Federal shipping contracts.
5
Excludes 102,780 foreign nationals provided to the Department of Defense under contract agreements, or other arrangements with foreign governments which provide for the furnishing of personal
services.
SPECIAL ANALYSES
111
TRENDS IN WORKLOAD
Although civilian employment is being reduced in some activities
and agencies of the executive branch, the pressures of economic expansion, population growth, and social problems are such that workload increases in a number of programs are necessary. Some of these
increases are:
• Food stamp participants are expected to increase by 30%.
• The number of federally inspected meat and poultry processing
plants is expected to rise by 10%.
• Rural housing loans are estimated to increase by 52%.
• Mail volume and delivery stops are expected to increase by 3.1%
and 2.6%, respectively.
• FBI investigations are expected to increase by 125,000.
• It is estimated that there will be 12 million additional inspections
by the Immigration and Naturalization Service.
• Population in Federal prisons can be expected to increase by
1.5%.
• Potential and actual cases completed by the Justice Department
are expected to increase by 11%.
• The number of landings and takeoffs at airports with FAA
towers is expected to rise by almost 10%.
• The number of tax returns filed with the Internal Revenue
Service will increase by 2.5% to 111.3 million, and there will be
an 11% increase in the number of tax returns audited.
• The number of persons arriving in the country for processing
through customs is expected to increase by 6% and formal cargo
entries by 8%.
• Coin production at U.S. mints will increase by 5.7% to meet the
coinage needs of the economy.
• The number of veterans who will avail themselves of educational
opportunities or on-the-job training is expected to increase by
more than 10%.
This list represents some of the major workload increases expected
in 1972. The growth in manpower needs has been kept to a minimum
by requiring steadily greater productivity.
POPULATION AND GOVERNMENT EMPLOYMENT
COMPARISONS
For more than 18 years, the ratio of Federal employment to total
employment in all governmental units—Federal, State, and local—
has been declining. This proportion is estimated to be less than 22%
in 1972, as shown on the following chart.
112
THE BUDGET FOR FISCAL YEAR
1972
Government Civilian Employment
Millions of Employe
14 —
10-
8—
(78%)
1965
1970 1972
Estimate
The ratio of Federal civilian employment to population (see table
H-5) has been decreasing since 1968 and is expected to be 13.8 per
thousand in 1972.
Table H-5 covering the period 1942-72, presents a comparison of
total Federal civilian employment in the executive branch with State
and local government employment, and the U.S. population. The
Federal employment data includes temporary and part-time personnel.
SPECIAL ANALYSES
Table H-5.
113
GOVERNMENT EMPLOYMENT AND POPULATION, 1942-72
Government employment
1942
1943
_.
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953. _ _
1954
_.
1955
1956
1957
1958
1959
I960 2
1961
1962
1963 3
19643
1965 _
1966 .
1967
1968
1969 4
19702
1971 2
1972
Popu lation
Federal
State and
All govern-
Federal as
branch x
(thousands)
ments
(thousands)
umts
(thousands)
all governmental
units
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
2,371
2,407
2,485
2,490
2,469
2,496
2,664
2,877
2,951
2,980
2,884
2,894
2,896
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
7,683
8,259
8,730
9,141
9,496
9,929
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
10,179
10,923
11,607
12,092
12,476
12,813
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
24.6
24.4
24.8
24.4
23.9
22.5
22.2
21.8
Total
United
States
(thousands)
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
205,537
207,597
209,934
Federal
ment per
1,000
population
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
14.1
14.0
13.8
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 temporary employees for the decennial census.
3
Excludes 7,41 1 project employees in 1963 and 406 project employees in 1964 for the public works
acceleration
program.
4
On Jan. 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 5this table after and including 1969.
An official projection of State and local government employment 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.
430-7W O—71
PART 2
FEDERAL SOCIAL PROGRAMS
115
INTRODUCTION
Part 2 furnishes Government-wide program and financial information in seven social program areas—education, manpower, health,
income security, crime reduction, housing, and environment. I t
includes the special analyses designated I through O.
The figures used in these analyses differ from the data shown under
somewhat similarly titled categories of the functional classification
used in P a r t 5 of the Budget and elsewhere. I n 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. I n 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 the first six of these
purposes is evidenced in the tabulation below. This is n o t a complete
representation, however, since some resources also go into other social
programs t h a t are not explicitly covered by a special analysis in this
volume. Also, outlays relating to the environment, set forth in Special
Analysis O, are not included in the following tabulation:
FEDERAL OUTLAYS FOR SELECTED SOCIAL PROGRAMS, 1972
[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
12,639
3,739
20,300
76,964
1,900
1,066
—17,072
99,536
Depart'
ment of
Defense
897
19
1,912
3,955
All
agencies
705
-211
13,536
3,758
22,212
80,919
1,900
1,771
-17,283
7,277
106,813
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 $12,026 million for 1972 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.
116
SPECIAL ANALYSIS I
FEDERAL EDUCATION PROGRAMS
PART I—OVERVIEW
The 1972 Federal budget provides outlays of $13.5 billion for aid
to education, an increase of $0.9 billion over 1971. This amount
comprises 5.9% of total Federal spending in 1972 and represents
about a fivefold rise in education outlays since 1962.
Federal education programs may be viewed as serving two functions.
First, they support education directly by aiding educational institutions and individuals attending them. This function is served principally by the programs of the Office of Education. Also included are
Head Start projects, now administered by the Office of Child Development, assistance for former servicemen under the GI bill,
payments to students who are children of deceased or disabled social
security beneficiaries, and education of American Indians and overseas dependents of U.S. military personnel. Loans for college housing
provided by the Department of Housing and Urban Development
also fall within this category. These programs constitute 60% of total
Federal spending for education.
Table 1-1. MAJOR FEDERAL EDUCATION ACTIVITIES (in billions of dollars)
Program
Office of Education programs (HEW)
Head Start (HEW)
NSF science education
College housing loans (HUD)
Education of American Indians (Interior) and overseas dependents
(DOD)
GI education benefits (VA)
Social security benefits for children in school (HEW)
Subtotal, direct support
Research at academic institutions * (20 agencies)
Health and other scientific manpower training 1 (7 agencies)
Training of Federal and other public employees at educational
institutions (12 agencies)
Agricultural extension (Agriculture)
Education aid to foreign countries (AID)
Child nutrition (Agriculture)
Allother
Subtotal, other education..
Total
1
Outlays
1971
1970
1972
4.1
.3
.1
.2
4.4
.3
.1
.1
4.8
.4
.1
.1
.3
.9
.5
.4
1.5
.6
.5
1.7
.6
6.4
7.5
8.1
1.5
.6
1.5
.6
1.7
.5
.4
.1
.1
.6
1.2
.4
.2
.2
.8
1.5
.4
.2
.2
.8
1.6
4.5
5.2
5.4
10.9
12.7
13.5
Excludes portion included in Office of Education.
117
118
THE BUDGET FOR FISCAL YEAR 19 72
Federal programs also support education as a means of meeting
other national objectives. Examples of programs in this category are:
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 40% of total outlays for education.
Federal outlays for education have risen almost $11 billion since
1962. Of this amount, $4.6 billion has been allocated to elementary
and secondary education, a fivefold increase. Federal investment in
higher education has risen $4.7 billion and is now four times the 1962
level. Of the total spending in U.S. education institutions, Federal education funds account for 23%. Table 1-2 summarizes the trend in
Federal outlays by level of education since 1962.
Table 1-2. FEDERAL OUTLAYS FOR EDUCATION (1962-72) (in billions of dollars)
Actual
Elementary and secondary
Higher
Adult and other.
Total
Estim;cited
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
0.9
10
1.0
1.6
1.7
8
3 3
36
10
3.6
4.4
6
2.7
.9
3 7
4 4
6
13
? 0
8
2 6
1.3
1,7
1 5
4.3
51
15
5.0
5.8
1.9
55
60
70
2.8
3.2
3.5
4.1
6.2
7.9
9.3
9.5
10.9 12.7 13.5
The remainder of part I of this analysis highlights Federal education
policies and budget proposals for 1972 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 1972 BUDGET
In education, as in other domestic fields, the Federal Government
is emphasizing reform and renewal to improve performance and concentrate resources on meeting urgent national problems.
Over the next year a number of significant proposals will be made:
• The administration will recommend a new and expanded program
of special revenue sharing with the States and localities for elementary and secondary education. This proposal will draw together the wide array of overlapping and bewildering authorities
for categorical grants into four broad areas of national interest
and provide additional funds during 1972.
• One of the most pressing public concerns for the past 20 years has
been the attempt to overcome the adverse educational impact of
racial isolation in our Nation's schools. Progress in school desegregation has been accelerating, particularly in the last few years.
SPECIAL ANALYSES
119
To expedite and encourage the early completion of this change,
the administration is requesting a total of $1.5 billion in 1971 and
1972 for grants to desegregating schools.
• To insure that no qualified student who wants to go to college will
be barred by lack of financial resources, a basic revision of the
existing Office of Education student aid programs will be recommended.
• To spur innovation in institutions of higher education, a National
Foundation for Higher Education will be proposed under new
legislation. As a new independent Federal agency, the Foundation
will assist colleges to experiment with new educational forms and
techniques.
• The administration also has requested that a National Institute of
Education be established within HEW to bring to education the
intensity and quality of research and experimentation which the
Federal Government has developed in space and medical research
areas.
• Education will be affected fundamentally by administration proposals to (a) share a fixed and growing portion of the Federal tax
base with the States—to use as they determine—under a program
of general revenue sharing (see Special Analysis P) and (b)
reform the Nation's failing welfare system to free States of a
significant portion of fast-growing welfare costs and lead to a more
stable home environment for thousands of children. (See Special
Analysis L.)
The significant increases in outlays for education in 1972, compared
to those in 1971, are (in millions of dollars):
Special revenue sharing for elementary and secondary education
Emergency school assistance
Education of children from low-income families
College student assistance
National Foundation for Higher Education
Academic research, all agencies
National Foundation for the Arts and the Humanities
National Institutes of Health
92
200
59
264
30
160
26
147
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 36% 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 16% of all Federal outlays for education, primarily for medical
education and research programs conducted at colleges and universities.
The remaining 48% of total Federal education outlays are distributed among 28 Federal departments and agencies, of which the largest
shares are accounted for by the Department of Defense, the Veterans
Administration, the Department of Agriculture, the National Science
Foundation, and the Office of Economic Opportunity.
120
THE BUDGET FOR FISCAL YEAR 1972
Table 1-3. FEDERAL OUTLAYS FOR EDUCATION BY AGENCY
(in millions of dollars)
1962
Federal agency
Actual
Agriculture
Defense
Health, Education, and Welfare:
Office of Education
Other H E W
Housing and Urban Development
Interior
National Science Foundation, __
Office of Economic Opportunity
Veterans Administration
Other2.
Total Federal o u t l a y s . . .
1970
actual
Percent
1971
estimate
1972
Estimate
Percent
454
467
17
17
910
1,042
1,244
1,087
543
381
20
14
4,109
1,820
4,443
1,969
227
84
183
9
3
6
216
249
464
235
319
502
167
364
546
1
3
4
161
264
5
9
456
916
706
430
1,514
879
290
1,734
1,072
2
12
7
2,764
100
10,888
12,662
1,225
1,104
10
8
M.830
2,204
36
16
13,536
100
1
Includes $92 million for special revenue sharing for elementary and secondary education.
- Includes Commerce, Justice, State, Transportation, AEC, AID, EPA, 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 1972, outlays for preschool, elementary, and secondary education
will amount to $5,458 million, an increase of $471 million over 1971.
Federal funds supply about 1 1 % 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 48% of the total is for grants to States and local school districts
under programs administered by the Office of Education. Another 1 1 %
Table 1-4. FEDERAL OUTLAYS FOR PRESCHOOL, ELEMENTARY, AND
SECONDARY EDUCATION BY AGENCY AND PROGRAM (in millions of dollars)
Agency and program
1970
actual
Agriculture: Child nutrition
Defense: Education of overseas dependents
Health, Education, and Welfare:
Office of Education:
Emergency school assistance
Grants to States and school districts
Demonstration projects
Office of Child Development: Head Start
Interior: Indian education
Labor: Neighborhood Youth Corps in school
National Science Foundation: Science Education
Other Federal agencies
Total
1971
estimate
1972
estimate
593
131
808
139
816
159
100
2,350
2,492
300
330
134
58
37
344
317
335
157
62
41
536
300
2,661
305
351
182
72
35
577
4,277
4,987
5,458
SPECIAL ANALYSES
121
is for Head Start and other demonstration projects which are developing new approaches to education.
Table 1-5 displays Federal outlays by sublevel and type of support.
The following paragraphs describe current Federal actions by sublevel.
Table 1-5. FEDERAL OUTLAYS FOR ELEMENTARY AND SECONDARY
EDUCATION BY SUBLEVEL AND TYPE OF SUPPORT (in millions of dollars)
Sublevel and type of support
Total, elementary and secondary
Preschool
Elementary and secondary
Vocational education
Other
Current operations
Facilities and equipment
Student support
Teacher training
Educational research
1
1970
actual
4,277
1971
estimate
4,987
1972
estimate
15,458
356
402
425
3,298
3,785
4,046
197
426
262
537
286
611
3,519
166
177
220
200
4,065
208
206
248
260
4,332
249
219
252
314
Total includes an undistributed amount of $92 million for special revenue sharing.
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 this special analysis are:
• The new Office of Child Development (OCD), located in the
Department of Health, Education, and Welfare, to provide leadership and coordination for all Federal programs for preschool
children.
• Head Start, operated by OCD under delegation from the Office
of Economic Opportunity, demonstrating and providing a variety
of services—educational, medical, and social—for 263,000 3to 5-year-old children. In 1972, Head Start will give special attention to serving the children of persons eligible for assistance
under the proposed welfare reform.
• Kindergarten and prekindergarten supported under grants to
schools for the education of the disadvantaged at the option of
local school districts.
Other programs, not included in Special Analysis I tabulation, also
support services which have a potentially significant impact on the
development of child learning abilities:
122
THE BUDGET FOR FISCAL YEAR
1972
• Day care services provided in conjunction with Federal manpower and social service programs. Principal efforts include Work
Incentive training 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
welfare reform to expand and improve day care services for
welfare recipients. In 1972, these improved services will be provided to 200,000 children at a cost of $850 per child.
• Nutrition programs of the Department of Agriculture and health
research being conducted by the National Institute of Child
Health and Human Development.
Table 1-6 provides details on the enrollment of children in federally
supported preschool programs.
Table 1-6. NUMBER OF CHILDREN ENROLLED IN DAY CARE AND CHILD
DEVELOPMENT PROGRAMS (in thousands)
i
Program
Head Start:
Full year—full day
Full year—part day
Summer 1
Office of Education (preschool-kindergarten)
Subtotal, included in education analysis
Training related day care for welfare recipients (HEW)
AFDC supported day care (HEW)
Other (manpower, OEO migrant, child welfare services)
Subtotal, not included in the education analysis
Total
1970
actual
1971
estimate
1972
estimate
89
174
209
342
89
174
209
370
89
186
150
400
814
842
825
58
264
36
117
348
39
200
400
41
358
504
641
1,172
1,346
1,466
1
Reduction in Head Start summer program reflects a continued conversion from summer to fullyear programs.
Elementary and secondary.—The 1972 budget reflects a commitment
to improve the effectiveness of Federal efforts by reforming programs to insure that Federal funds are allocated to areas of greatest
need.
An important element of the administration's reform of Federal
grant programs will be a proposal to adopt an expanded program of
special revenue sharing for elementary and secondary education. This
proposal will pull together the large number of narrow-purpose categorical grants to States and local districts into four broad areas
reflecting national educational priorities. These will include compensatory education for the disadvantaged, education of children affected
by handicapping conditions, assistance to schools in areas impacted
by Federal activities, and vocational education. Flexible funds for
the general support of education will also be provided.
This significant new proposal would become effect January 1, 1972,
and would provide $3 billion during the first full year, an increase of
SPECIAL ANALYSES
123
$192 million in budget authority over the amounts requested in the
1972 budget for existing programs. The programs and funds involved
are summarized in table 1-7.
Table 1-7. SPECIAL REVENUE SHARING FOR ELEMENTARY AND
SECONDARY EDUCATION (in millions of dollars)
Programs included in 1972 budget
Department of Agriculture:
School lunch program
Related grants
Department of Health, Education, and Welfare:
Office of Education:
Aid to federally affected areas
Educationally deprived children
Library resources
Supplementary services
Equipment and minor remodeling
Strengthening State agencies
Education for the handicapped
Vocational education
Subtotal
Additional amounts for special revenue sharing:
First full-year basis
Fiscalyear 1972 (50%)
Total, full-year basis
Total, fiscal year 1972
1972 estimate
Budget
authority
Outlays
175
18
171
17
440
1,500
80
143
33
35
384
487
1,440
73
142
39
27
34
382
2,808
2,812
192
(96)
3,000
2,904
188
(92)
3,000
2,904
The special revenue-sharing proposal would retain the essential
framework of national policy but give States and localities a wider
degree of discretion as to how they would meet their own local problems. The proposal would also permit a large margin of flexibility to
move funds from one broad purpose to another to enable States to
respond to their own priorities.
A total of $1.5 billion is provided for the proposed Emergency School
Assistance Act for 1971 and 1972. Project grants will be made to local
school districts which are desegregating under court order or attempting to overcome the educational disadvantages of racial isolation.
Funds made available in 1971 and 1972 will be spent in succeeding
years to allow for the careful development of programs to achieve
these objectives.
The administration's proposals for general Federal revenue sharing
and welfare reform will have a 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.
124
THE BUDGET FOR FISCAL YEAR 1972
The President's Commission on School Finance is undertaking a
review of the financial structure of elementary and secondary education and will recommend basic reforms to place the financing of our
schools on a sound and stable basis.
Vocational education.—The Federal Government supports vocational
education programs serving 6 million secondary school students
through grants to States. These grants will be included in the special
revenue-sharing proposal for elementary and secondary education in
1972. This will give the States greater flexibility and responsibility in
meeting their particular vocational education needs, while preserving
an area of high national emphasis. The 1972 budget also provides for
a strengthened research and development program to help redirect
vocational programs to focus more on the special needs of the disadvantaged and the handicapped, to build closer ties between schools
and employers, and to develop new and improved course offerings.
The Department of Labor administers the Neighborhood Youth
Corps in-school program which provides grants for work and study
programs to help financially needy youth to remain in school. Grants
also are made for construction of vocational schools by the Appalachian
Regional Commission, a cooperative Federal-State economic development agency.
In addition to the $286 million in outlays for these vocational
education programs in secondary schools in 1972, the Federal Government will spend $200 million for vocational and technical education
programs in postsecondary technical schools and junior colleges and
for programs for adults w^ho wish to upgrade their vocational skills.
Other programs.—Outlays in this category are primarily for support
of education 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 1972, outlays for this purpose
are estimated to increase by $53 million to $268 million. Initial startup funds are provided under proposed legislation for a National Institute of Education. The Institute, an agency in the Department of
Health, Education, and Welfare, will serve as a focal point for educational research and experimentation in the United States. Working
with researchers, school officials, teachers, scientists, humanists, and
others, it will help identify educational problems, develop programs to
alleviate these problems, and assist school systems to put the results of
educational research and development into practice.
Other initiatives of the Government include support for (a) experimental schools to develop and evaluate changes in curriculums,
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 Child Development), including a
planned variation experiment in the Head Start program. The 1972
budget also continues to emphasize the 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 1-8 summarizes the Federal education research and development outlays by program and agency.
SPECIAL ANALYSES
125
Table 1-8. FEDERAL OUTLAYS FOR PRESCHOOL, ELEMENTARY, AND
SECONDARY EDUCATION RESEARCH AND DEVELOPMENT
(in millions of dollars)
Agency and program
Office of Education:
National Institute of Education.
Experimental schools
Follow Through
Sesame Street
National assessment
Handicapped children
Vocational research
Other research and development
Office of Child Development:
Head Start evaluation and research
Early education research and development
1970
1971
___
38
1
1
17
2
82
*
55
1
3
22
19
100
3
10
50
3
5
28
38
109
7
1
11
4
11
11
149
215
268
*
Total
1972
'"Less than $500 thousand.
Federal assistance to strengthen teaching resources is provided
through several agencies. The 1972 budget places priority on demonstration projects to improve the selection, preparation, certification,
and utilization of all educational personnel. "On-the-job" training for
education personnel will be provided through the Teacher Corps and
Career Opportunities program.
About 85% of project participants under the Education Professions
Development Act are already in the educational system, and 45% are
from minority groups. Four-fifths of the funds for these projects are
directed to poverty area schools, half of the funds support demonstration projects for installing innovative practices in elementary and
secondary schools, and one-fifth of the funds support training of
personnel in critical shortage (early childhood, special education,
bilingual education, and vocational education). The number of education personnel trained in these federally assisted programs is shown in
table 1-9.
Table 1-9. NUMBER OF TEACHERS AND OTHER EDUCATION PERSONNEL
RECEIVING TRAINING
Agency and program
Office of Education:
Education Professional Development Act:
Teacher Corps
Career Opportunities Program
Other personnel training and development
Teachers of the handicapped
Office of Child Development:
Head Start: Short-term training
National Science Foundation._
Total
_
.__
1970
actual
_.._
1971
estimate
1972
estimate
3,653
8,000
53,668
4,822
4,647
10,000
48,687
4,400
5,291
12,000
43,208
4,400
7,500
57,210
8,500
36,208
8,500
32,000
134,853
112,442
105,399
126
THE BUDGET FOR FISCAL YEAR
1972
HIGHER EDUCATION
Federal outlays for higher education will total $6 billion in 1972.
This is 44% of total Federal outlays for education and about 25% of
the estimated total expenditures of U.S. colleges and universities in
1972.
Table 1-10. FEDERAL OUTLAYS FOR HIGHER EDUCATION BY AGENCY
AND PROGRAM (in millions of dollars)
Agency and program
Defense:
Academic research
Other
Subtotal, Department of Defense
Health, Education, and Welfare:
Office of Education:
Student assistance
Construction of facilities
Institutional and personnel development
Subtotal, Office of Education
Other Health, Education, and Welfare:
Academic research-health services
Fellowships and traineeships-health professions
NIH 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
National Science Foundation
Other
Total, higher education
1970
actual
1971
estimate
1972
estimate
219
278
206
314
209
311
497
520
520
610
437
220
708
374
287
800
201
308
1,369
1,309
1,710
619
285
137
51
563
188
1,843
677
281
147
49
594
268
3,016
196
1
665
360
447
137
3
1,101
341
495
46
10
1,260
363
449
5,809
6,047
1,267
586
280
139
51
502
152
5,142
Table 1-10 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 54% of
total Federal expenditures. Major Federal programs include: (a) grants
and loans to college 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.
SPECIAL ANALYSES
127
Table I—11 indicates how Federal funds are distributed by type of
institution. In 1972, 2-year institutions are estimated to receive 11%
of Federal outlays, 4-year institutions, 42%, and graduate and professional schools, 17%.
Table 1-11. FEDERAL OUTLAYS FOR HIGHER EDUCATION BY TYPE OF
INSTITUTION (in millions of dollars)
Types of institution
2-year institutions
Other undergraduate
Graduate and professional
Other
1970
__.
_
Total
1971
1972
483
2,288
863
1,508
645
2,604
1,010
1,551
687
2,576
1,073
1,711
5,142
5,809
6,047
Table 1-12 shows Federal expenditures for higher education by type
of support. Approximately 50% of the Federal funds are used for student aid, 20% for institutional aid, and 30% are for research and
training. The following paragraphs discuss current Federal activities
by type of support.
Table 1-12. 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
actual
___
._
1971
estimate
1972
estimate
2,128
2,769
3,033
659
800
674
715
766
472
1,508
25
21
1,549
22
80
1,710
5
61
5,142
5,809
6,047
Student aid.—Funds for student aid programs will total an estimated
$3 billion in 1972. A basic revision of the existing student assistance
programs of the Office of Education will be proposed to insure that no
qualified student who wants to go to college will be barred by lack
of funds. Under this proposal, grants, work-study payments, and
subsidized loans will be provided to lower income undergraduate
students with the amount of aid related to family income. Over 2.5
million students will receive benefits from this program. Legislation
also will be proposed to establish a National Student Loan Association
to provide loan capital to banks and colleges for loans to students at
all income level. The improved access to federally guaranteed loans
will help almost 1 million undergraduate and graduate students to
finance their education.
128
THE BUDGET FOR FISCAL YEAR 1972
Table 1-13. UNDERGRADUATE STUDENT SUPPORT i (outlays in millions of dollars;
number of students in thousands)
Total outlays
1970
actual
Defense
1971
estimate
Number of students
1972
estimate
1970
actual
1971
estimate
1972
estimate
83
86
86
62
53
49
Health, Education, and Welfare.
1,049
1,240
1,350
2,133
2,407
3,979
Office of Education
Social Security Administration
Health agencies and other. _.
615
751
843
1,703
1,945
3,500
401
33
451
38
475
32
402
28
432
30
455
24
Veterans Administration
National Science Foundation.__
539
4
894
5
1,028
2
506
3
679
4
746
2
1,675
2,225
2,466
2,704
3,143
4,776
Total
1
Involves some duplication because students may be assisted under more than 1 program.
Tables 1-13 and 1-14 indicate the funds expended and the awards
made to undergraduate and graduate students by major agency.
The Veterans Administration will provide grants to 900,000 returning veterans who are enrolled at institutions of higher education. Outlays of $594 million will be paid in 1972 under provisions of the Social
Security Act to students under age 22 who are the children of retired,
decreased, 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 202,000
such students will be aided in 1972.
Table 1-14. GRADUATE STUDENT S U P P O R T 1 (outlays in millions; number of students
in thousands)
Total outlays
1970
actual
Health, Education, and Welfare.
Veterans Administration
National Science Foundation..__
Other
Total
1
1971
estimate
Number of students
1972
estimate
1970
actual
1971
estimate
1972
estimate
257
126
34
16
262
208
33
16
262
232
27
16
100
101
8
4
104
135
5
4
104
145
3
4
433
519
537
213
248
256
Involves some duplication because students may be assisted under more than 1 program.
Institutional support.—Federal outlays for institutional support will
total $1.2 billion in 1972 with $766 million for current operations
and $472 million for facilities and equipment.
SPECIAL ANALYSES
129
The primary elements of aid under current operations in table
1-12 are:
• Cost-of-education allowances paid to institutions of higher education as 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; and
• Department of Defense funds for college ROTC activities.
To spur reforms in higher education, a National Foundation for
Higher Education, funded at $100 million in budget authority, will
be recommended under new legislation. An independent Federal
agency, the Foundation will provide funds to colleges and universities
that wish to experiment with new educational forms and techniques
and assist in the development of national policy in higher education.
Continuing efforts will be devoted in 1972 to meeting the special
needs of predominantly black institutions. Budget authority is increased under several Federal programs to help these institutions
improve their educational capability.
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 $520 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.
Research and training.—Federal outlays of $1.7 billion for research
and training in 1972 include $1,710 million for academic research, $5
million for educational research, and $61 million for teacher training.
Funds for educational research will support experimental projects
to study and test means of changing traditional structures and curriculums in higher education. The National Science Foundation programs will upgrade science curriculums and facilitate the incorporation
of computers in college instruction.
Several Federal agencies have programs for the training of college
and university personnel. The National Science Foundation supports
programs 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. Office of Education
programs will develop training models for new careers in higher
education experiments with innovative training techniques and improvements in teacher education programs at the graduate level.
430-700 O—71
130
THE BUDGET FOR FISCAL YEAR 19 72
Federal outlays for academic research represent 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). Federal programs for academic research are discussed
also in the special analysis, "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 1972, the
estimated Federal outlays for these programs will total $2 billion,
or 14% of all Federal education expenditures. These outlays are
summarized in table 1-15.
nible
1-15. FEDERAL OUTLAYS FOR ADULT EDUCATION AND OTHER
ACTIVITIES (in millions of dollars)
1971
i
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
_
_
1972
estimate
66
125
269
51
19
17
80
160
408
49
28
38
83
171
474
34
42
64
547
763
868
15
9
381
15
12
396
15
12
393
406
422
419
193
324
243
438
247
456
1,470
1,868
1,990
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 650,000 men and women
who have had less than 8 years of formal schooling will be supported
by outlays of $83 million in 1972, 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.
SPECIAL ANALYSES
131
The Department of Agriculture will spend $171 million in 1972
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 3 million adults who will upgrade or
acquire new work skills. Almost 400,000 individuals will benefit in 1972
from the Veterans Administration readjustment benefits programs to
widows and wives of deceased or seriously disabled veterans. The
Defense Department will support off-duty education programs for
333,000 servicemen in 1972.
Other programs covered by this category totaling $108 million
in 1972 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 financing new public television and
radio programs.
• The National Foundation on the Arts and the Humanities with
a doubled budget authority in 1972 to aid various cultural
activities, support State arts councils, and fund 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 education institutions are not involved.
The military services account for the major part of this continuing
education effort ($393 million or 94% in 1972), 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.
Table 1-16. 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
1970
actual
1971
estimate
1972
estimate
3,659
2,352
2,092
3,725
2,626
2,350
3,713
2,839
2,500
21
392
379
21
412
383
21
412
380
132
THE BUDGET FOR FISCAL YEAR 1972
In 1972, an estimated 21,000 Federal civilian, 412,000 State and local,
and 380,000 military personnel will receive graduate, professional, or
other education.
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, $364 million for
Bureau of Indian Affairs welfare and training programs, and $35
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 denned 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 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 functions.—
All programs classified in the budget functional category for education
(see part 5 of the Budget Document) are included in this special
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 1972, outlays for programs classified under
the budget functional category of education total $6.1 billion.
In addition this analysis includes outlays of $7.4 billion for 1972
for programs classified
under such other budget functional categories
as "national defense7' and "health." These activities use education—
most often graduate training or research at academic institutions—
as a means of accomplishing their primary objectives.
SPECIAL ANALYSES
133
The amounts tabulated in this analysis include some programs also
covered in other special analyses. For example, outlays of about $1.5
billion in 1972 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 $1.7 billion in outlays for 1972 for research in academic
institutions are reflected in both this special analysis and Special
Analysis R, "Federal Research, Development, and Related Programs/ 7
Table 1-17 summarizes the outlays included in this analysis which
are also included in other special analyses and by major budget
functional categories.
Table 1-17. 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
1970
actual
_.
1971
estimate
1972
estimate
5,022
5,513
6,086
1,158
1,195
1,199
180
155
277
61
52
39
4
237
147
398
59
86
121
58
1,091
1,148
1,163
1,424
1,514
1,313
1,462
1,734
68
79
916
61
241
134
367
68
96
143
11
1,398
1,450
54
72
1,418
1,508
2,077
1,550
2,328
1,710
1,500
SPECIAL ANALYSIS J
FEDERAL MANPOWER PROGRAMS
SCOPE OF THE ANALYSIS
A wide variety of public and private economic and social activities
have some effect on the work force. This analysis covers only a limited
group of Federal programs 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. Programs serving this objective provide skill
training, work experience, job placement assistance, and related social
and health services.
The programs in this analysis generally: (1) operate outside the
normal educational processes; (2) give services for periods of less than
1 year; (3) provide skill training and job opportunities for nonprofessional jobs; and (4) target on the disadvantaged sector of the population. The analysis covers all programs classified as Manpower
Training and Employment Services in the functional classification of
the budget, and programs which are directed toward similar objectives
but are included under other functional classifications such as Income
Security, National Defense, Community
Development and Housing,
and Veterans Benefits and Services.1 It excludes all professional training and programs which are part of the normal educational process,
such as vocational education. These programs are included in Special
Analysis I, "Federal Education Programs."
1972
BUDGET OVERVIEW
The major emphasis of the 1972 budget for manpower programs is
the consolidation of many narrow categorical programs administered
by the Department of Labor into a broad special revenue sharing
grant to States and local communities for manpower training. Total
outlays for manpower programs will exceed $3.7 billion, an increase of
13% over 1971 and 62% over 1969. This increase reflects continued
commitment to manpower programs as a means of helping unemployed
and underemployed individuals become self-sufficient through regular
employment.
The $444 million increase in 1972 over 1971 is concentrated in two
major areas:
• $197 million for programs covered by the new manpower reform
legislation. A total of $2.0 billion in budget authority will be
provided during the first full year under this special revenue
sharing measure.
• $78 million for the Work Incentive Program (WIN) to lay the
foundation for expanded training efforts under the welfare reform
proposal. This increased effort will enroll 187,000 welfare recipients
in training and provide day care for 200,000 children.
» See part 5 of the Budget of the United Stales, 1972.
134
SPECIAL ANALYSES
Table J-1. 1972 B U D G E T H I G H L I G H T S 1
Program
Special revenue sharing for manpower training:
Existing authorities
Additional amounts
Work incentive program
Veterans programs
Vocational rehabilitation
Other work and training programs
Employment service
Other placement and support programs
Total
135
(in millions of dollars)
Outlays
1969
actual
1970
actual
1971
estimate
1972
estimate
2
1,073
1,056
1,331
27
89
363
180
293
290
75
140
441
232
325
295
123
235
533
319
344
428
1,375
153
201
279
543
347
363
497
2,313
2,563
3,314
3,758
1
Due to differences in appropriation patterns, many outlay adjustments have been made to show
programs in a corresponding manner. For example, WIN totals are reduced because Federal administrative costs and research funds are included in its budget unlike most manpower programs. Vocational
rehabilitation is increased to reflect funds received from social security trust funds.
2
An additional $68 million is included elsewhere for Program Direction, Research, and Support
and Computerized Job Matching. See table J-2.
1972 LEGISLATIVE PROGRAM
Major reforms of the grant-in-aid system are an important part of
the overall revenue sharing package proposed to take effect on January 1, 1972. The purpose of these reforms is to overcome:
• The "fiscal crunch" that is preventing effective action by States
and local communities in meeting pressing domestic needs; and
• Administrative rigidities caused by the proliferation of special
purpose, narrowly based grant programs.
In the past, various Federal manpower programs focused on
small target groups within the overall disadvantaged population
or on a particular technique for providing services. Little attention was given to either measuring or meeting overall community
needs. In addition, manpower programs generally operated on a
direct contract basis, often with many individual sponsors in a single
community. These administrative arrangements hindered the development of an overall community approach to meeting manpower needs.
The new manpower reform proposal addresses these deficiencies. It
is based on the original administration proposal submitted to the
Congress in August 1969. The legislation will consolidate various
statutory authorities into a single comprehensive program in the
Department of Labor. Under the new authority:
• State and local governments will have prime responsibility for
planning and administering manpower training efforts. This decentralization will enable local citizens to develop comprehensive
strategies for meeting manpower needs in their own areas.
• All categorical programs administered by the Department of
Labor, except the Federal-State Employment Service, will be
included. Broad flexible authority will permit the tailoring of
manpower services to meet the needs of individual participants
and local labor market conditions.
136
THE BUDGET FOR FISCAL YEAR 1972
• A major portion of the funds will be allocated to States by
a formula based on size of labor force and the incidence of unemployment and poverty. Within States, law will require a large
part of these funds to be allocated on a similar basis to local
communities.
• Remaining funds will be used by the Secretary of Labor to supplement State and local programs which provide exemplary
services, support research and development projects, and provide
training and technical assistance to State and local program
operators.
• To qualify for these funds, State and local governments must
provide a comprehensive framework for planning and delivering
manpower services. This comprehensive framework would involve the active participation of public employment offices, local
educational institutions, vocational rehabilitation, and welfare
programs.
Additional special revenue sharing funds as shown in table J-2 below
will be requested upon enactment of this legislation.
Table J-2. FEDERAL FUNDS FOR MANPOWER REFORM LEGISLATION
(in millions of dollars)
Description
Items included in budget details for 1972:
Department of Labor:
Manpower training services
Subtotal
Additional amounts from general revenues:
Full-year basis
Fiscal year 1972 (50%)
Total, full-year basis
Total, fiscal year 1972
Budget
authority
Outlays
1,565
1,443
1,565
1,443
435
(217)
2,000
1,782
307
(153)
1,750
1,596
Closely related to manpower reform legislation is the proposed
reform of the Nation's welfare system. Strong work requirements will
be built into the new program. All recipients who are able to work,
except mothers of preschool children, must register with their local
Employment Service office. Training efforts will be greatly expanded to
provide the means to self-support for those recipients who cannot b e
placed directly into employment. Major incentives for work and
training will be provided by:
• Insuring that individuals will always gain financially by going to
work.
• Establishing quality child care services for mothers who are at
work or in training.
• Increasing monetary allowances to offset fully the costs of travel
and other training-related expenses incurred by enrollees.
This large-scale effort to train and place welfare recipients in
productive employment will build upon the experience of the Work
Incentive Program. It will be administered in conjunction with the
manpower reform legislation and the vocational rehabilitation
program.
SPECIAL ANALYSES
137
Legislation will be resubmitted to strengthen the process for eliminating barriers to equal employment for minority groups. Under this
legislation the Equal Employment Opportunity Commission could file
civil suits in the district courts when it is unable to obtain voluntary
compliance with title VII of the Civil Rights Act of 1964.
SOCIAL AND ECONOMIC OBJECTIVES OF MANPOWER PROGRAMS
Most manpower programs were initiated to serve persons who
would otherwise be unable to obtain self-sustaining employment.
The programs fill a gap between the educational system which initially prepares persons 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 capability of
manpower programs to reach and serve the disadvantaged make
them an important tool in attacking the Nation's social problems.
Manpower programs also complement national economic policy.
Effective job placement and training programs train and place enrollees in skill shortage occupations. In a tight labor market, 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 can be used to increase
the skills of the work force and serve as a source of income support
for unemployed workers.
MAJOR MANPOWER PROGRAMS
This section of the analysis summarizes the different manpower
programs by type of program—either work and training, job placement assistance, or program direction, research, and support.
Work and training programs.—Besides providing skill training,
work and training programs generally offer remedial education,
counseling, and other supportive services. However, most of the current programs are limited to a single major service approach.
• On-the-job training programs target on existing job vacancies,
usually by reimbursing employers for the added costs of hiring
and training unskilled workers. This reimbursement may include
a payment for the employee's lower initial productivity.
• Institutional training programs provide vocational skill instruction in a classroom setting away from the jobsite. Enrollees
receive monetary allowances while in training.
• Work support programs create federally subsidized jobs in the
public sector. Unemployed persons learn work skills and habits
to prepare them for regular employment, and receive wages for
their work.
• Rehabilitation programs focus on the training of physically or
mentally disabled persons. They are separately classified since
health services account for 18% of total costs in these programs,
significantly higher than in other manpower programs.
Use of these different approaches to training often reflects employer
preferences or traditional methods of entry into a particular occupa
138
THE BUDGET FOR FISCAL YEAR 19 72
tion or industry. For example, production line workers such as
assemblers in the automobile industry are generally trained on the
job. On the other hand, most secretaries learn their basic job skills in
the classroom.
Individual trainee needs are also an important factor in the selection
of the service approach. In on-the-job training programs the trainee
is hired for a specific job, and then trained. This guarantee of employment may be an essential start to successful training of many of the
hard-core unemployed. However, institutional training can provide a
broader training base not limited to one particular job, giving the
trainee more job mobility and security.
In contrast to on-the-job and institutional training, work support
programs provide transitional employment opportunities and necessary remedial services for individuals who are temporarily unable to
find regular employment due to: (1) youthful inexperience, (2)
economic dislocation, (3) minor personality disorders, or (4) age discrimination.
In recent years, two comprehensive programs—the Work Incentive
Program (WIN) and the Concentrated Employment Program (CEP)—
have been initiated to provide a complete range of work and training
services. WIN serves recipients of public assistance, and CEP serves
disadvantaged persons in limited geographical areas of high unemployment. Both provide on-the-job and institutional training, work
support, and supportive services, and are valuable models for the
operation of a comprehensive community manpower program.
Table J-3. WORK AND TRAINING PROGRAMS
(outlays in millions of dollars, individuals in thousands)
Outlays
New enrollees *
Program
1969
al
Special revenue sharing for manpower
training:
Existing authorities:
Job opportunities in the business
sector
Public service careers
Manpower development and
training institutional training.
Job Corps
Neighborhood Youth Corps inschool and summer
Neighborhood Youth Corps outof-school
Operation Mainstream
Concentrated employment program
Additional amounts
Work incentive program
On-the-job training for veterans
Veterans vocational rehabilitation _ _
Vocational rehabilitation
Social services trainipg
Other programs
Total
1
1970
al
1971
1972
1969
al
1970
al
1971
1972
est.
107
17
136
18
219 ]
97
136
4
177
4
226 )
39
248
236
260
144
292
158
135
53
182
194
236 1,375
430
130
43
436
130
45
411 1,085
106
37
98
42
109
50
140
164
170
27
49
40
363
44
136
75
87
53
441
107
125
123
164
71
533
143
176
153
201
203
77
543
175
172
64
12
127
48
13
112
113
81
49
10
368
55
212
92
70
13
411
69
202
125
99
16
442
86
218
74
11
1,731 1,943 2,541 2,898 1,745 1,819 2,027 2,194
Estimated new enrollees during a year, less overlap due to persons served more than once.
120
187
104
16
385
108
189
SPECIAL ANALYSES
139
Under the manpower reform proposal, States and local communities
will be given the opportunity to determine the mix of on-the-job training, institutional training, and work support best suited to local labor
market conditions and the needs of unemployed and underemployed
persons in their areas.
Table J-3 presents the outlays and numbers of individuals served by
various Federal work and training programs. In 1972, the proposed
manpower reform will pull together the large number of separate programs administered by the Department of Labor. The remainder of
this section includes a brief description of these programs as they currently exist. However, under the new legislation it is expected that
States and localities will develop new programs and adapt old ones to
meet their specific needs.
On-the-job training.—The primary on-the-job training programs
are Job Opportunities in the Business Sector (JOBS), Public Service
Careers (PSC), Veterans OJT, and Project 100,000.
The JOBS program, operated in conjunction with the National
Alliance of Businessmen, provides employment and training opportunities in private industry for disadvantaged persons. PSC is a similar
program in the public sector. Components which seek to upgrade
workers from low-level jobs have recently been initiated in these
programs.
A special JOBS Optional component (formerly the MDTA-OJT
program) is utilized by smaller employers who cannot provide a
wide range of supportive services. JOBS, JOBS Optional, and PSC
will all be incorporated in the new State and local manpower delivery
system.
Veterans OJT is provided by the Veterans Administration to former
servicemen pursuing an approved course of full-time apprenticeship
or other on-the-job training. The program is growing rapidly to serve
the rising number of eligible veterans.
Project 100,000, operated by the armed services, will enlist 55,000
recruits during 1972 who do not meet entrance requirements, and
provide special remedial services to enable them to perform military
duties.
Institutional training.—MDTA institutional training and the Job
Corps are the major institutional training programs. Both of these
programs will be covered by the manpower reform proposal.
The institutional training program, conducted under the authority
of the Manpower Development and Training Act (MDTA), provides
training through skill centers, special training courses, and individual
referral to regular public and private training. Seventy MDTA skill
centers have been established, each of which provides training in a
variety of occupations, as well as necessary remedial education and
other supportive services at a single location.
The Job Corps has been redirected to emphasize smaller centers in
major cities. This change will permit more individual attention for
enrollees, training that is targeted on local labor market needs, and
integration of centers into comprehensive State and local manpower
programs. Job Corps centers are already training Neighborhood Youth
Corps and WIN enrollees on a nonresidential basis, and Job Corps
enrollees are receiving vocational training in MDTA skill centers.
140
THE BUDGET FOR FISCAL YEAR
1972
During 1971, more trainees will enter the institutional component
of the Work Incentive Program (WIN) than any other institutional
program. The rapid growth of the WIN program since its inception
in 1969, reflects the continued commitment to manpower programs
as a vehicle for reducing welfare dependency. Expansion of WIN will
provide the foundation for the increased training efforts contemplated
under the welfare reform program.
Institutional training is also a major component of the Concentrated Employment Program (CEP) Other major institutional programs include training programs for Indians, offenders, and welfare
recipients operated by the Departments of the Interior, Justice, and
Health, Education, and Welfare, respectively.
Work support.—The principal work support programs are the
Neighborhood Youth Corps (NYC) and Operation Mainstream. In
addition, CEP provides a substantial amount of work support. All of
these activities will become a part of the comprehensive State and
local manpower effort covered by the new legislation.
The Neighborhood Youth Corps, through its in-school and summer
projects, provides part time or summer employment for needy high
school students to enable them to stay in school. Out-of-school projects
provide remedial services and jobs for school dropouts to enable them
to return to school or obtain a marketable skill.
Operation Mainstream provides employment opportunities to
chronically unemployed workers, principally in rural areas where jobs
are severely limited.
Rehabilitation.—Two programs focus on the rehabilitation of
physically or mentally handicapped persons: the Federal-State vocational rehabilitation program administered by the Department of
Health, Education, and Welfare, and the vocational rehabilitation
program for disabled veterans administered by the Veterans Administration. These programs are not included in the manpower reform
legislation and will remain essentially unchanged in 1972.
Under the Federal-State vocational rehabilitation program, currently 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 case-by-case basis. It is estimated that 288,000 individuals will be rehabilitated under this program in 1972. A heavy emphasis will be given to assisting the culturally and socially disadvantaged,
especially public assistance recipients and criminal offenders.
The veterans vocational rehabilitation program provides similar
services to persons with a service-connected disability. In addition to
counseling and training, veterans receive subsistence allowances,
disability compensation, tuition, books, and fees.
Job placement assistance.—These programs promote a smoothly
operating labor market by matching job vacancies with qualified
workers, and by overcoming barriers created by job discrimination.
They develop and disseminate information on employer and employee
needs, and counsel and test job seekers. Other services include "outreach" to unemployed people, and job development and job restructuring efforts with employers.
SPECIAL ANALYSES
141
Table J-4. JOB PLACEMENT ASSISTANCE PROGRAMS (in millions of dollars)
Program
Outlays
1969
actual
1970
actual
1971
estimate
1972
estimate
Employment service
Computerized job placement
Project transition
Other
293
5
14
27
325
6
14
27
344
26
14
29
363
28
13
29
Subtotal, placement services
Equal employment opportunity activities
Child care for employed mothers
339
9
88
372
13
93
414
21
162
434
29
222
437
478
597
685
Total
The Federal-State Employment Service (ES), operated by the
States, accounts for 53% of 1972 outlays in this category. The ES,
with 2,100 local offices and 31,000 employees, provides not only placement services for the general work force, but also makes special efforts
to place the disadvantaged, including graduates of manpower training
programs. Up to 11 million persons are expected to receive services
in 1972.
Computerized job banks will be installed in all major labor markets
by 1972 to assist in job placement efforts. The job bank provides
comprehensive listings, updated daily, of available jobs in a metropolitan area. More automated job matching systems will also be
tested in 14 States. Job matching is a much more complex task than a
job bank, requiring the computer to compare a large number of differing characteristics of both applicants and jobs.
Project Transition provides counseling, testing, limited skill training, and job placement assistance to servicemen prior to discharge.
The Defense Department will spend $13 million on this program in
1972.
In 1972, outlays for the Equal Employment Opportunity Commission will increase by $7 million, a 40% increase over 1971. The
Commission attempts to reduce barriers to employment of minority
groups and others by identifying and eliminating discriminatory
practices.
The Office of Federal Contract Compliance, in conjunction with the
15 major Federal contracting agencies, will insure that affirmative
action plans are undertaken by Federal contractors to provide equal
employment opportunities. To increase minority employment participation in the construction trades, it has devised the ''Philadelphia
Plan" and voluntary "hometown" programs which set employment
goals for Federal construction contractors.
Manpower research, development, and evaluation.—Under
the proposed manpower legislation, Federal efforts will be strengthened
to provide information and technical assistance to States and local
communities on methods to improve program performance. One
important device for obtaining such information is through research
and development (R. & D.) and evaluation activities.
Table J-5 summarizes Federal resources for manpower R. & D. and
evaluation efforts, primarily funded by the Department of Labor and
the Office of Economic Opportunity. In addition, other agencies carry
142
THE BUDGET FOR FISCAL YEAR 19 72
Table J-5. PROGRAM DIRECTION, RESEARCH, A N D SUPPORT
(in millions of dollars)
Program
Research and development
Evaluation
Subtotal
Program direction
Labor market information
Planning and technical assistance.
Subtotal
Total
Outlays
1969
actual
1970
actual
1971
estimate
1972
estimate
29
4
26
2
28
6
25
5
33
28
34
30
73
30
10
72
32
11
82
38
22
82
41
23
113
115
142
146
146
143
176
176
out R. & D. activities affecting manpower, especially the Departments
of Defense, and Health, Education, and Welfare, and the Veterans
Administration.
Research and development programs seek to understand and affect
the operation of labor market mechanisms. Research is conducted
in a nonoperating environment while developmental activities (often
termed experiments or demonstrations) seek to develop or demonstrate
new service techniques in an operational setting.
The Office of Economic Opportunity will continue its efforts to reform State and local civil service systems to permit the hiring of qualified persons who may lack formal academic credentials. In conjunction
with the National Civil Service League, a demonstration effort called
Project Pacemaker is attempting to document unnecessary barriers
to employment of the disadvantaged and provide technical assistance
to States and cities in remedying the problems.
The Department of Labor has initiated an important study of the
dynamics of labor market behavior. A 5-year longitudinal survey of
youth under 25, women 30 to 44 years of age, and men aged 45-59
is being used to gain insight on the high youth unemployment rates,
movement of women in and out of the labor force, and changes in
employment patterns of men approaching retirement age.
Evaluation activities seek to determine what works, to what extent,
and under what conditions. Evaluation efforts generally focus on
recently initiated programs or major program changes. A major
longitudinal evaluation of four manpower programs is nearing completion. It examines the effects of the Job Corps, JOBS, MDTA
institutional and NYC out-of-school on employment and earnings of
participants and compares them with similar groups of nonparticipants. A similar study is being conducted on the WIN program. The
impact of job banks on ES operations and their effect on service to
clients will be examined during 1972.
Program direction and support.—Major efforts are underway
to improve the effectiveness of manpower programs through administrative reforms and improved information. In the last few years a
number of administrative actions have been taken to decentralize
decisionmaking. At the same time, efforts have been made to improve
SPECIAL ANALYSES
143
the capacity of States and local communities to assume greater
responsibilities in manpower planning and programing.
At the Federal level:
• Greater authority was delegated to the Regional Manpower
Administrators, and uniform regional boundaries with OEO,
HEW, and HUD were adopted to improve interdepartmental
coordination of manpower and other social programs.
• Regional manpower offices were reorganized from a categorical
program basis to a geographic area basis to provide closer contacts with individual States and communities.
At the State and local level:
• The interagency Cooperative Area Manpower Planning System
(CAMPS) has been strongly emphasized. CAMPS has provided
a vehicle for coordination of planning efforts by various State
and local manpower agencies.
• During 1969 and 1970, grants were made to 49 Governors and
106 mayors to develop their own manpower planning capability
for their role as chairmen of CAMPS committees.
• Administration of the JOBS optional component was delegated
to the States in 1971 as a transitional step in the development
of State capability.
PERSONS SERVED
Enrollment and training levels.—Man-years of training and new
enrollments are the output measures used in this analysis. Man-years
is the average enrollment during the year and new enrollments are
the number of different people served during each fiscal year. In a
few programs, e.g., NYC in-school 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
there are periods where no significant amounts of services are provided,
e.g., persons awaiting services in the Concentrated Employment Program. The analysis uses a man-years of service estimate to exclude
such periods. Table J-6 shows the various measures by service approach.
Table J-6. TOTAL ENROLLMENT AND TRAINING LEVELS IN 1970 *
(in thousands)
Approach
Man-years
Man-years
of service
Enrollees
New
enrollees
On-the-job training
Institutional training
Rehabilitation
Postschool work support
170
275
511
75
167
254
511
69
342
467
428
114
332
433
424
107
Subtotal, postschool
In-school work support
031
200
1,000
200
1,351
764
1,295
524
1,231
1,200
2,115
1,819
Total
1
Excludes Job Placement Assistance programs in which the enrollment concept does not apply.
144
THE BUDGET FOR FISCAL YEAR
1972
Characteristics.—The 10.4 million adults who were poor in 1969, of
whom about half were in the labor force but earning less than a
poverty wage, is a rough representation of the universe of need for
manpower programs. The universe actually may be considerably
larger, since many persons earn slightly more than the poverty
standard and are vulnerable to skill obsolescence and unemployment.
However, many poor adults are not good candidates for manpower
services because of ill health, old age, or conflicting family responsibilities. For these individuals income maintenance programs are more
appropriate.
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, the manpower programs
administered by the Department of Labor emphasize services to poor
persons who are not suitably employed, and 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 such as
racial discrimination. This focus on the disadvantaged avoids displacement of private training efforts which are generally targeted on
different groups.
Table J-7. CHARACTERISTICS OF CIVILIAN LABOR FORCE, ADULT
POVERTY POPULATION, AND MANPOWER
PROGRAM PARTICIPANTS
Characteristics
Average number (millions)
Percent:
Aged21 orless
Aged 55 or more
Male
.
Less than high school education
8th grade education or less
Poor
Public assistance recipients
Disabled
Minority races
Total U.S.
work force
1969
(age 16-64)
civilian, noninstitutional
77.5
14
14
62
37
17
7
1
2
()
11
Poverty
population
1969
(age 16-64)
civilian, noninstitutional
Manpower
program
participants
1970
estimate (age 1
14 and above)
10.4
23
19
39
66
38
100
26
(2)
21
1.3
36
6
58
56
13
73
23
35
40
1
All entries are estimates. Excludes Job Placement Assistance and In-school programs.
2 Not available.
Table J-7 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.
The number of individuals served by manpower programs is a growing proportion of the poverty population. In 1970 manpower programs
served about 12% of the 10.4 million poor adults. By 1972 it is estimated that a larger percentage of the poor will be served as adult
enrollments rise over 33% from 1970.
SPECIAL ANALYSES
145
Table J-8. CHARACTERISTICS OF ENROLLEES BY APPROACH
IN 1970 (in percent)
Approach
Poor
Less
than M[inority
high
races
school
education
Aged
21 or
less
Male
DisPublic
assistance abled
recipients
On-the-job training _
Institutional training
Rehabilitation
__
Postschool work support
58
83
68
96
48
57
55
82
42
52
22
57
43
37
22
61
82
43
57
53
9
45
11
26
3
5
100
2
Subtotal, postschooL_
In-school work support
73
99
56
98
40
57
36
100
58
44
23
30
35
0
80
68
45
54
57
26
25
Total
As indicated in table J-8 above, the characteristics of enrollees
served by different approaches vary considerably. In 1970, OJT
enrollees were still among the least disadvantaged because on-the-job
training programs tend to enroll those most job-ready. Institutional
programs now serve high proportions of welfare clients and educationally disadvantaged primarily due to the growth of the WIN program. Most disabled persons are served by rehabilitation programs
targeted to their special needs. The postschool work support programs
focus on the most disadvantaged groups and provide a source of shortterm employment and income for individuals 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-9.
Table J-9. DISTRIBUTION OF COSTS BY APPROACH IN 1970
(in percent)
Approach *
Service
Remedial education _
Skill training.__
Work supervision
Child care
Health
Recruitment, counseling, and placement
Other supportive services 2
Program administration. _
Allowances
Total
OJT
Institutional
Work
support
Rehabilitation
1
6
0
0
18
Job
placement
assistance
*
*
1
17
*
*
*
5
33
5
12
22
*
11
1
10
2
13
1
*
11
*
*
5
2
11
29
25
7
38
29
70
15
9
*
100
100
100
100
10(
1
27
*
60
2
*Less
than 0.5%.
1
Excludes Program Direction, Research, and Support. Includes State and local shares.
- Includes payments to employers to compensate for lower productivity of trainees and amounts
which could not be allocated to other services.
http://fraser.stlouisfed.org/
430-700 O—71
10
Federal Reserve Bank of St. Louis
146
THE BUDGET FOR FISCAL YEAR 1972
Most OJT programs reimburse employers for the cost of 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 wages for work performed,
and work supervision. 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. This need will be somewhat reduced with the
enactment of welfare reform legislation providing basic income support to all needy families with children although incentive allowances
will still be provided.
Although a comprehensive array of services is provided by manpower programs 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 24% of the child care is provided for WIN enrollees, even though WIN accounts for only 12% of
all postschool women enrolled. Consolidation and coordination of
programs under manpower reform legislation 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-10. UNIT COSTS BY APPROACH IN 1970 *
Approach
On-the-job-training
Institutional training
Rehabilitation
Postschool work support
Subtotal postschool
In-school work support
Total
Average
ParticiMan-year duration pant unit
unit cost of enrollcost
estimate
ment
estimate
(years)
$1,900
2,800
1,150
3,800
0.55
.54
1.17
.51
$1,050
1,500
1,350
1,950
1,850
1,600
.78
.28
1,400
450
1,800
.58
1,050
1
Based on man-years of service. Includes State and local share, if any. Excludes child care components. All dollar amounts rounded to nearest 50.
In 1970, unit costs were highest for institutional training programs,
reflecting the high cost of skill training combined with maintenance
payments. Both man-year and participant costs are lowest for inschool programs, because they are part-time or of short duration.
OJT costs are also low because the employers' payment of salary costs
obviates the need for allowances in most cases. In all approaches except
rehabilitation, the participant unit cost is lower than the man-year
cost because the duration of enrollment is less than 1 year.
SPECIAL ANALYSES
147
Within all approaches, unit costs vary widely among individual
programs reflecting the intensity of services and the clientele group
served. For example, the Work Incentive Program pays lower allowances than most programs because enrollees are already receiving
welfare payments. Job Corps has a high unit cost because housing and
meals are provided in addition to an intensive training program.
MANPOWER FUNDS BY AGENCY
The following table shows manpower obligations and outlays by
administering agency and program. Two agencies—the Departments
of Labor, and Health, Education, and Welfare will account for 86%
of all manpower outlays in 1972, about the same as in 1971.
Table J-11. FEDERAL FUNDS FOR MANPOWER PROGRAMS BY
ADMINISTERING AGENCY (in millions of dollars)
Agency and program
Obligjitions
Outlays
1972
1972
1969
36
34
34
259
30
32
33
32
36
34
293
30
32
33
10
14
7
14
5
14
5
13
10
14
7
14
5
14
5
13
24
21
19
19
24
21
19
19
132
9
386
9
6
195
15
483
9
4
269
38
561
10
6
377
78
599
8
130
3
363
8
30
193
15
441
8
2
288
43
533
9
4
373
69
543
9
4
542
705
884 1,062
534
659
877
999
Department of Housing and Urban
Development:
Community development _
19
24
29
6
*
6
29
36
Department of the Interior:
On-the-job training for Indians. _
Institutional training for Indians.
Indian placement assistance
3
18
4
3
29
6
3
31
6
3
31
6
2
18
4
2
26
5
3
31
6
3
31
6
24
38
39
39
24
33
39
39
Office of Economic Opportunity:
0 E 0 Manpower
Job Corps _
Subtotal, 0E0
Department of Defense:
Project 100,000
Proj ect Transition
Subtotal, Defense...
1969
1970
36
278
32
315
1971
1970
1971
Department of Health, Education,
and Welfare:
Social services training and child
care
Work incentive child care
Vocational rehabilitation
Foster Grandparents
Expired programs
Subtotal, HEW
Subtotal, Interior
*Less than $500 thousand.
14S
THE BUDGET FOR FISCAL YEAR
1972
Table J-11. FEDERAL FUNDS FOR MANPOWER PROGRAMS BY
ADMINISTERING AGENCY (in millions of dollars)—Continued
Agency and Program
Obligations
1969
actual
Department of Justice:
Training for offenders
Department of Labor:
Special revenue sharing for manpower training:
Existing authorities
Additional amounts
Work incentive training
Employment service
Computerized job placement
ES labor market information.....
BLS labor market information.__
OFCC and age discrimination
Program
administration
and
other
Subtotal, Labor
Veterans Administration:
On-the-job training for veterans._
Veterans vocational rehabilitation.
Veterans assistance centers
1970
actual
1971
est.
2
3
965 1,344
1,496
Outlays
1972
cst.
1969
actual
4
6
100
293
5
19
9
1
81
325
12
21
9
1
52
344
30
23
10
3
1,484
217
189
363
30
24
11
4
88
119
148
1,480
1,911
1970
actual
2
1971
est.
3
837 1,056
1972
cst.
4
1,331
6
26
293
5
19
9
1
67
325
6
21
9
1
97
344
26
23
10
3
1,375
153
155
363
28
24
11
4
145
87
108
151
134
2,106 2,468
1,276
1,592
1,985
2,247
53
40
1
87
164
53
71
1
2
198
77
2
49
40
1
87
164
53
71
1
2
203
77
2
94
141
237
276
90
141
237
281
Equal Employment Opportunity
Commission:
Equal employment opportunity...
9
13
16
27
9
12
18
25
All Federal agencies—Disadvantaged
youth programs
61
67
74
74
61
67
74
74
2,956 3,444
4,010
2,313
2,563 3,314
3,758
Subtotal, VA
Total
2,569
SPECIAL ANALYSIS K
FEDERAL HEALTH PROGRAMS *
General overview.—Federal spending for health in 1972 is estimated at $22.2 billion, an increase of $1.5 billion over 1971. As indicated in table K-l, Federal health outlays will comprise 9.7% of
total Federal expenditures in 1972 and will account for more than
one-fourth of all expenditures, public and private, for health. By
contrast, only a decade ago, Federal outlays for health were $3.7
billion—less than 4% of total Federal budget outlays and 12% of total
national expenditures for health.
This shift began in 1967 with the implementation of the Medicare
and Medicaid legislation, which finances a significant portion of the
health care costs of the aged and the poor. In 1966, total Federal
health expenditures were $5.2 billion, of which only 19% helped
finance the cost of health care for the general public. In 1967, Federal
health outlays rose to $10.8 billion, of which 48% were spent to finance health care, principally for the aged and the poor. In 1972,
total Federal outlays for this purpose are estimated at $14.1 billion,
or 64% of all Federal health expenditures.
Table K-l. FEDERAL OUTLAYS FOR HEALTH COMPARED TO THE TOTAL
FEDERAL BUDGET AND TO TOTAL NATIONAL EXPENDITURES FOR
HEALTH (dollars in billions)
1960
Federal outlays for health
Total Federal budget outlays.
Total national health expenditures __
Federal health outlays as percent of:
Total Federal budget outlaysTotal national health expenditures
_.
1962
1967
$3.5
$3.7
$92.2 $106.8
$26.4
$30.2
1968
$10.8
$158.3
$47.9
1970
1971
1972
$14. 1 $18. 1 $20.7
$178. 9 $196. 6 $212.8
$53. 6 $67. 2
NA
$22.2
$229.2
NA
3.8
3.5
6.8
7.9
9.2
9.7
9.7
13
12
23
26
27
NA
NA
NA.= Not available.
HEALTH POLICIES AND THE 1972 BUDGET
The outlays for medical and health related activities of all Federal
agencies are grouped by major program categories in table K-2 for
the years 1970-72. Similar historical data for selected prior years
are shown in table 14 on page 170 of this analysis.
1
Coverage of this Analysis. The Health Analysis includes all the medical and health programs classified
in the "Health" function in Part 5 of the Budget Document, as well as health aspects of programs in
agencies which are assigned to other functions in the budget. The largest of this latter group are the
health programs in the Department of Defense and the Veterans Administration. The addition of
health outlays from programs and agencies functionally classified elsewhere in the budget account
for the $22.2 billion reported in this analysis compared to the $16.0 billion reported in Part 5 of
the budget.
Both Part 5 and this analysis use the same categorical framework to distribute health outlays.
However, for technical reasons Part 5 does not make as detailed a distribution in the outlays from
a single appropriation as is done in this analysis. Thus, some outlays are assigned in this analysis to
a different category.
149
150
THE BUDGET FOR FISCAL YEAR 1972
Table K-2. FEDERAL OUTLAYS FOR MEDICAL AND HEALTH-RELATED
ACTIVITIES BY CATEGORY (in millions of dollars)
1970
actual
Development of health resources, total. _„..._._._
Health research (including special cancer initiative)
Training and education (including special new program)
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 services
Hospital 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
197!
estimate
1972
estimate
_
(3,264) (3,579)
(3,828)
1,577
1,742
1,843
969
1,049
1,128
539
566
619
179
222
238
(14,080) (16,238) (17,458)
3,058
3,276
3,334
11,022
12,962
14,124
__
(722)
(876)
(926)
434
515
530
111
160
170
177
200
226
18,066
20,693
22,212
The 1972 Federal health program emphasizes increased Federal
leverage and leadership to stimulate basic reforms in the Nation's
health sector. A new program for health will be presented to the
Congress in calendar 1971 directed toward the expansion of preventive programs and the achievement of greater equity and
efficiency in the delivery of health services. Among the new initiatives
to be proposed are a health protection program for low-income families
with children to take effect after 1972, a new $100 million cancer
research program, a special research program on sickle cell anemia,
and reforms and increases affecting the training and geographic
distribution of health manpower.
The 1972 budget also reflects proposed changes in existing programs designed to improve the effectiveness of Federal health programs and to ensure that both Federal and other national expenditures on health will result in more equitable and efficient health
care. The following measures will be taken:
• Cost control procedures and policies will be increased in Medicare and Medicaid. Although outlays in these programs continue
to rise as more people are served and as medical care costs rise,
the increase in benefit payments is estimated at 8% in 1972
compared to an increase of 17% in 1971;
• Health professions schools will be allowed greater flexibility in
their use of Federal institutional grant funds and will be provided
a more stable and higher level of basic support for their educational costs;
• The focus of those Federal programs aimed at improving our
health care delivery system will be sharpened and will include
greater use of and experiments with health maintenance organizations (HMO), which stress ambulatory and preventive health
care;
• Emphasis will be placed on preventive health efforts through
increases in biomedical research, environmental health, family
planning services, treatment and rehabilitation of drug addicts
and alcoholics, consumer protection, and occupational health
activities; and
SPECIAL ANALYSES
151
• Direct care programs in the VA will be improved by increasing
the ratio of staff to patients and by expanding specialized
medical services.
DEVELOPMENT OF HEALTH KESOURCES
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 $3,828 million
in 1972, an increase of $249 million over 1971.
Health research.—One of the keys to the prevention of disease is
acquiring an understanding of disease processes through health
research. Because the fruits of health research can benefit all segments
of society, it is appropriate that the Federal Government assume
major responsibility for support of this activity. The Federal Government accounts for 60% of national health research expenditures; with
industry accounting for 29%; and foundations, voluntary health
agencies, and others the remaining 11%.
Federal expenditures for health research, which approximated $100
million in 1950, will total $1,843 million in 1972. Table K-3 displays
some of the areas of federally supported health research. This research
is conducted principally in medical schools, universities, and other
nonprofit institutions which account for an estimated 63% of total
Federal health research expenditures. Federal laboratories and clinics
will spend approximately 25%, and industry another 12%.
Table K-3. FEDERAL OUTLAYS FOR HEALTH RESEARCH (in millions of dollars)
1970
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
(550)
(976)
181
147
85
90
17
146
310
(51)
1,577
1971
estimate
1972
estimate
(581)
(1,106)
210
166
87
98
33
184
328
(55)
(580)
(1,205)
257
171
91
98
44
217
326
(58)
1,742
1,843
Some 13 Federal agencies support biological and medical research
(see table K-17). The Department of Health, Education, and Welfare
will account for 70% of total Federal health research expenditures in
1972, principally through the National Institutes of Health. The
programs it supports range from basic investigations designed to
promote the understanding of biological and life processes, including
factors that interfere with normal life functions, to efforts focused on
new treatment and prevention methods of the most prevalent diseases.
In 1972, as in 1971, increases for HEW health research will be directed
toward exploiting research leads for the prevention and control of
disease. Reflecting this, cancer research will be significantly accelerated
152
THE BUDGET FOR FISCAL YEAR 19 72
through a new $100 million program. Research on arteriosclerosis will
also be intensified with the aim of understanding the factors associated
with a high risk of heart attacks. Research will be substantially
expanded on sickle cell anemia, a hereditable disease that affects one
in every 400-500 young blacks. Research will be conducted on childhood illnesses and disabilities and on safe and effective means of enabling parents to plan the number and spacing of their children. Other
high priority research areas include lung disease, tooth decay, drug
abuse, and alcoholism.
Both the newly established Environmental Protection Agency and
HEW will intensify efforts to understand the effects on man of environmental pollutants. EPA's health research programs are treated
in more detail in Special Analyses O and R of this volume.
The health research programs of the Department of Defense and
the Veterans Administration, which together provide 9% of Federal
health research support, are concerned with factors affecting the health
of servicemen, including the care and rehabilitation of those with
service-connected injuries. VA health research also emphasizes the
medical problems of aging veterans. Many of these research activities
are of broad national interest and are coordinated with HEW.
In 1972, the National Aeronautics and Space Administration will
continue to support health research as part of its man-in-space program
and its studies on the extraterrestrial origin of life. The Atomic Energy
Commission will study the biological effects of radiation, the use of
radiation in the solution of health problems such as the treatment of
cancer, and the protection of man from exposure to radiation. The
Department of Agriculture supports research on diseases affecting
animal and plant products, which in turn have health or economic
consequences for man, and on the role of insects as disease carriers.
The Agency for International Development supports health research
to assist less developed countries contain population growth and the
spread of disease. The National Science Foundation supports basic
research in biology and biochemistry.
Training and education.—The rise in demand for medical
services since 1965, generated in part by Medicare and Medicaid, has
not been paralleled by adequate increases in the supply of health
manpower. Consequently, the Federal Government has assumed an
obligation to assist in expanding this resource. Federal outlays for
health training and education will increase by $79 million to $1,128
million in 1972 and will support the training of physicians, dentists,
nurses, paramedical personnel, and other types of health professionals.
Among the institutions responsible for the training of health manpower, medical schools play a key role and warrant special attention.
Since 1950, Federal support for medical school programs has been
largely for their biomedical research activities. Although these funds
have also indirectly aided in improving physician education, only
since 1965 has direct Federal assistance been available for the expansion of medical student enrollments. Federal funds to increase medical
student enrollments (and enrollments in schools of dentistry, osteopathy, pharmacy, podiatry, optometry, and veterinary medicine)
have been directed through grants for the construction of classroom
and teaching hospital space, for "institutional support" (i.e., grants
for operating expenses and curriculum improvements), and for student
SPECIAL ANALYSES
153
aid (loans and scholarships). The number of students entering 113
medical schools in 1972 will exceed 11,600, a 23% increase over the
5-year period 1968-72 compared to only a 7% increase over a like
period prior to 1965.
Table K-4. FEDERAL FUNDS T O MEDICAL SCHOOLS
(obligations in millions of dollars)
Agency
Department of Health, Education, and Welfare
National Institutes of Health
Research
Education
Construction
Health Services and Mental Health Administration
Research
Education
Construction
Social and Rehabilitation Service
Research
Education
Atomic Energy Commission:
Research
Department of Defense:
Education
National Aeronautics and Space Administration:
Research
Department of Housing and Urban Development
Education
Construction
National Science Foundation:
Research
Veterans Administration:
Research
Total
Research
Education
Construction
1970
actual
1971
estimate
1972
estimate
767.6
836.3
1,015.7
(635.1)
453.1
79.4
102.6
(117.8)
42.1
72.3
(703.6)
498.0
125.6
80.0
(118.1)
43.0
73.3
(875.7)
544.6
248.4
82.7
(125.4)
44.3
74.3
3.4
1.8
6.8
(14.7)
14.6
.1
(14.6)
14.6
(14.6)
14.6
14.6
14.5
14.6
.5
.7
.7
1.8
1.9
1.9
(4.0)
(4.4)
(4.7)
3.9
4^0
4lO
7.0
7.0
7.0
.5
.8
.8
i
. i
(796.0)
533.7
152.4
109.9
•7
(865.6)
579.8
200.0
85.8
(1.045.4)
627.8
324.1
93.5
Total Federal support for medical school research, education and
construction programs in 1972 will amount to an estimated $1,045
million, as shown in table K-4. Although approximately 60% of this
amount is for research programs, support for the educational programs of medical schools is increasing at a faster rate than for research,
and shows a significant increase in 1972. The increase in funds for
educational programs in 1972, along with an amended Health Alanpower Act, will provide medical, dental, and other health professions
schools with greater stability and flexibility in the use of Federal
funds. A special $95 million program will be supportive of these aims
and of many of the reforms and efficiencies recommended for medical
and dental schools by the Carnegie Commission on Higher Education.
In 1972, 12 Federal agencies will fund programs to train research and
health care personnel. The number of these individuals who will be
aided in 1972 for some part of their education by various Federal
programs is indicated in table K-5.
154
THE BUDGET FOR FISCAL YEAR 1972
Table K-5. FEDERAL AGENCIES SUPPORTING HEALTH TRAINING IN
1972
Numbers of students and trainees aided in—
Dentistry
and
other
pro- 2
fessions
Nursing
19,238
21,799
20,632
5,510
34,370
17,406
3,239
1,263
3,263
22
Medicine 1
Department of Health, Education, and Welfare
Veterans Administration
Department of Labor
Department of Defense
Agency for International Development
Environmental Protection Agency
Other agencies
1
2
3
Paramedical
professions
Research
Other
health
training 3
15,225
85,495
2,470
1,193
8,400
62,585
5,955
2,567
861
6,291
48
5,152
1,566
31
250
50
230
2
156
6,533
3,307
3,785
Includes medical students, interns, and residents.
Includes pharmacy, optometry, podiatry, veterinary medicine, etc.
Includes short-term training.
Among Federal agencies, the National Institutes of Health in HEW
will continue to be the largest supporter of health manpower training.
The Veterans Administration, through its 169 hospitals, most of which
are affiliated with medical schools, also trains large numbers of health
professionals. The Department of Labor, under the Manpower
Development Training Act, supports the training of the greatest
number of paramedical personnel of any Federal agency.
Construction of health care facilities.—Federal outlays for
construction of health care facilities, including environmental health
facilities, are estimated at $620 million in 1972, an increase of $54
million over 1971. 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.
Of the total outlays of $229 million in 1972 for construction of
federally owned and operated hospitals and health facilities, 82%
will be expended by the Veterans Administration and the Department
of Defense. These expenditures will concentrate on modernizing and
replacing existing facilities rather than adding to total bed capacity.
The largest Federal program to support construction of community operated health facilities is the medical facilities construction
program (Hill-Burton) in the Department of Health, Education, and
Welfare. In its 25 years of operation through June 1970, the HillBurton program has authorized construction or modernization of
almost 457,000 hospital and long-term care beds and over 1,500 outpatient and rehabilitation facilities with a total cost of over $12 billion,
of which almost $3.6 billion represents the Federal share.
Recently enacted revisions to the Hill-Burton program provide new
support mechanisms for meeting the Nation's changing needs for
health facilities. Beginning in 1971, Federal support for hospital
modernization and construction of long-term care centers is available
through Federal guarantees and subsidies of loans obtained in the
private market. Hospitals and long-term care facilities are able to
SPECIAL ANALYSES
155
repay these loans through income generated from patient charges
and third-party insurance payments including Medicare and Medicaid.
By the end of 1972, this program will guarantee and subsidize a
cumulative total of $1 billion in loans.
With hospitals and long-term facilities assisted through the loan
guarantee program, direct Federal grant support will be limited to
those facilities which ordinarily do not generate income sufficient to
repay long-term mortgages and which, in addition, have the potential
for either avoiding or shortening the need for hospitalization. The 1970
legislative revisions substantially increased the grant authorizations
for ambulatory care facilities (hospital outpatient departments, clinics,
community health centers) and the 1972 budget provides the full
amount authorized by the law for construction of these facilities—
$70 million. It is anticipated that this total will generate approximately $266 million worth of construction and assist 243 ambulatory
care projects. The outlay impact of the increased program level will be
reflected in subsequent years.
Total outlays for federally supported construction of hospitals and
other facilities will remain virtually level as a result of funds obligated
in prior years when the support program was heavily hospital grantoriented. In 1972, however, grant obligations for hospitals are significantly lower and will result in outlay reductions in subsequent years.
Table K-6. HOSPITAL AND HEALTH FACILITY CONSTRUCTION
O u t l a y s (in millions of dollars)
1970
Federally supported construction of
hospitals and other facilities:
Hospitals, new
Hospitals, modernized and replacedLong-term care facilities
Environmental health facilities
Ambulatory care facilities
Other
Total, federally supported
Federal hospitals and health facilities:
Hospitals, new
Hospitals, modernized and replaced.
Long-term care facilities
Environmental health facilities
Ambulatory care facilities
Other
Total, Federal
Total, construction
_
__
1971
1972
121
113
104
91
77
9
67
33
94
80
13
73
24
102
81
15
60
28
397
396
390
32
73
24
4
9
46
78
1
30
3
12
66
105
3
29
2
23
142
169
229
539
566
620
Number of beds (or projects) '
1970
1971
1972
9,609
8.478
8.092
8,178
7,040
7,128
6,889
5,845
6,497
(89)
(89)
90
1,316
70
1,043
(5)
(10)
(68)
264
2,095
(2)
•Less
that $500 thousand.
1
Represents beds and projects which become available in each of the 3 years, irrespective of
the year(s) of related outlays.
Other Federal programs also help supply funds for construction of
community health facilities. The Department of Housing and Urban
Development provides mortgage insurance (but without an interest
subsidy) for construction of hospitals, nursing homes, and group prac
156
THE BUDGET FOR FISCAL YEAR 1972
tice facilities. It is estimated that the volume of mortgage insurance
commitments in 1972 by HUD will total $524 million, an increase of
$111 million over 1971 and will support construction or modernization of 5,500 hospital beds and almost 20,000 proprietary and private
nonprofit long-term care beds.
Organization and delivery of health services.—The 1972 budget
continues to place priority on improving the efficiency of the health
care system and in combating the continued rise in health care prices.
Cost increases are due to general economic conditions, wage increases, and increased demand for medical services generated in part
by Federal financing programs. These factors are aggravated by scarce
manpower resources in many areas and the reimbursement mechanisms of private and public insurance programs which frequently do
not discourage the use of higher priced inpatient facilities when lower
cost ambulatory care would be appropriate. As a result, many providers of health care lack the incentive to minimize cost while assuring
a high standard of care.
In 1972, more than $238 million will be directed to programs designed to alleviate these problems. Efforts will be made to expand the
use of paramedical manpower, to encourage the use of ambulatory
care, to improve the mechanisms and capability for regional health
care planning, and to increase experimental and other approaches to
better utilization of health care technology.
To improve planning for the development and allocation of health
resources at the State and local level, the partnership for health program
will spend $26 million in 1972, an increase of $6 million over 1971.
This will fund 14 new areawide planning agencies and aid the conversion of 34 existing agencies from the organizational to the planning
stage. In total, 151 areawide planning agencies will be working toward
a more coherent and efficient health system. The regional medical
program (RMP) will concentrate grants to those regions that have
been most productive and will reduce awards to those RMP's that
have exhibited the least potential for playing a catalytic role in moving
the local health care system toward improved accessibility and quality
of care. The major emphasis in 1972 will be directed toward more
efficient utilization of professional and allied health personnel; the
development of new ways to improve quality control and decrease
costs of care in hospitals; promotion of early detection of disease; and
improved treatment of heart, stroke, cancer, and kidney disease.
The National Center for Health Services Research and Development is
the principal research agency concerned with improving the organization, delivery, and financing of health services. Its 1972 research
program will be directed into the following areas: development of
experimental community based health delivery systems, simplified
financing mechanisms and cost containment methods including a
broad research and evaluation effort on health maintenance organizations, experiments in the training and utilization of new types of
health services manpower, and the development of a cooperative
Federal-State-local health statistics system. In addition, the National
Center will retain primary responsibility for coordinating joint
RMP-CHP efforts to improve health planning and organization of
the health care delivery system.
SPECIAL ANALYSES
157
Table K-7. FEDERAL OUTLAYS FOR IMPROVING THE ORGANIZATION
AND DELIVERY OF HEALTH SERVICES (in millions of dollars)
Purpose of expenditure
Area wide planning
Improving and implementing technology
Manpower utilization
Health care systems
Total
1970
actual
1971
estimate
39
30
48
62
42
34
52
95
179
222
1972
estimate
51
31
52
104
238
In other efforts to encourage efficiency and reduce costs, several
agencies in HEW will experiment with new reimbursement arrangements, including prepaid comprehensive health care programs and
negotiated fees. Additional funds in HEW and OEO will be channeled
into experiments related to the use of new medical manpower, including
physicians' assistants, that offer promise for alleviating health manpower shortages, particularly in rural and inner city areas where
physicians are often scarce. OEO will also concentrate on developing
community-wide health networks designed to serve persons living in
poverty areas by linking together the various health care resources in a
community into a more responsive system. Both the Veterans Administration and the Department of Defense will undertake experiments
in health services delivery, including use of systems analysis for
designing and operating a modern acute care hospital.
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. Medicare and Medicaid comprise the major portion of
the first category of funds, outlays for which will rise $1,162 million in
1972. Outlays for Federal direct care programs will increase by only $58
million during 1972, reflecting the substitution of more efficient facilities in the private sector for some of the older, outmoded Federal
institutions and a reduction in the Defense Department's medical care
program.
Payment for hospital and medical service.—Medicare.—Through
reimbursements for institutional care, physician visits, and a wide
range of outpatient services, the Federal Medicare program pays approximately 47% of the total personal health care costs for the aged.
Total expenditures by the program will exceed $9 billion in 1972, of
which 70% will represent payments for services provided in hospitals,
extended care facilities, and through home health agencies, and 25%
will represent payments to physicians and other outpatient care
facilities. The remaining 5% consist of administrative costs and other
payments designed to improve the operation of the program.
Medicare, by removing the financial obstacles to the receipt of
medical services for persons over 65, has significantly influenced
158
THE BUDGET FOR FISCAL YEAR
19 72
Table K-8. 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
Number admitted
(in thousands)
1970
1971
1972
1970
1971
1972
3,058
3,276
3,334
1,679
415
81
882
1,792
452
93
940
1,818 1,925 1,827 1,716
473
163
166
166
104
35
37
37
939 61,540 58,743 56,163
Provision of hospital and medical services, indirect
11,022 12,962 14,124
General hospital inpatients
Psychiatric hospital inpatients
Long-term care inpatients
Physician services—Office, home, or institution
Outpatient visits and other services
Total
5,997
233
1,060
7,261
246
1,190
8,102
212
863
1,890
207
833
2,328
1,403
2,512
1,752
2,838 \J(] cU
2,108 \l[}'^
2,125
218
960
7 4 ^
l% o w
2,296
223
1,035
97 «R7
'
z/ 00/
14,080 16,238 17,458
the utilization of these services. Hence, to the extent that their
expanded demand increased more rapidly than the capacity of the
health care system to deliver services, Medicare has been both the
cause and the victim of the rapid rise in medical prices.
From 1968 to 1972, hospital admissions under Medicare are estimated to have increased by 15%. When adjusted for population
growth, the increase is reduced to 8.5%. Similar increases have occurred in the number of aged persons who receive benefits for physician
and other outpatient services. As a result of these utilization patterns,
total benefit payments under Medicare increased 53% from 1968 to
1971. A large portion of the increase can, of course, be attributed to the
21% rise in medical care prices during the 1968-70 period. The table
below displays the pattern of utilization and costs in the program.
a. Hospitals:
^68
1969 1970 1971 1972
Admissions (in thousands)
5,655 5,918 6,093 6,338 6,508
Admissions per 1,000 covered aged
291
296
305
312
316
Benefit payments (in millions)
$3,300 $4,220 $4,439 $5,372 $5,766
b. Extended care facilities:
Admissions (in thousands)
448.5 507.6 476.0 514.0 540.0
Admissions per 1,000 covered aged
23.0
25.0
23.8
25. 3
26. 2
Admissions as a percent of hospital admissions. __
7.9
8.6
7.8
8.1
8.3
Benefit payments (in millions)
$330
$390
$295
$350
$450
c. Physicians' services:
Individuals meeting deductible (in thousands)-. 8,810 8,990 9,200 9,500 9,400
Benefit payments (in millions)
$1,142 $1,500 $1,771 $1,832 $1,965
d. Medical prices, percent increase from prior years (as
of June in year shown):
Medical care services
7.1
8.7
6.8
Hospital daily service charge
12.2
13.0
12.1
Physicians'fees
5.5
7.3
7.6
To counteract cost escalation, extensive administrative actions
have been undertaken. Intensified efforts have been made to achieve
more careful review of the level of care provided in hospitals and
SPECIAL ANALYSES
159
extended care facilities, to enforce utilization review requirements,
and to reject unreasonable physician fee increases.
These efforts have been partially successful as reflected by the
1970 fiscal and statistical data for hospital and ECF care. Benefit
payments to hospitals increased 5% in 1970 compared with 28% in
1969. Outlays for ECF care actually declined over 1969. The average
length of stay in hospitals decreased from 13.5 days in 1969 to 12.9
days in 1970.
To contribute further to this effort, legislation will be proposed
that will extend cost sharing arrangements with Medicare beneficiaries to encourage the utilization of less costly but appropriate
alternatives to hospitalization such as extended care facilities and home
health agencies. The legislation will also promote the use of more
efficient health care delivery mechanisms such as health maintenance
organizations.
Medicaid.—Program costs for the Medicaid program in 1972 are
derived from estimates submitted by States adjusted to reflect improved administrative controls over program abuses and proposed
legislation to curtail overutilization of institutional services through
limitations on Federal matching and cost sharing with Medicaid beneficiaries. The cost to the Federal Government, representing approximately 54% of the total program costs, are estimated to be $3.4 billion
in 1972, a 4% increase over 1971. The small increase is in marked
contrast to increases in prior year costs, which averaged about 20%
per year from 1968 through 1971. The following table depicts the cost
increases and other selected program indicators for the period 1968-72.
1968
Payments to medical vendors (millions)
Percentage increase over prior year (%)
Adminstrative costs (millions)
Percent of payments to categorically needy (%)
Number of States and jurisdictions in program (as of
beginning of each year)
Recipients of service (millions of persons)
Aged
Blind and disabled
Children under 21
Otheradults
1969
1970
1971
1972
$1,731 $2,191 $2,604 $3,102 $3,216
55
27
19
19
4
$77
$94
$115
$148
$168
NA
66
69
77
78
40
11.5
43
12.9
* 52
15.0
52
17.0
52
19.0
2.6
.9
5.2
2.8
2.9
1.1
5.9
3.0
3.0
1.3
7.4
3.3
3.1
1.5
8.7
3.7
3.1
1.7
10.1
4.2
1
Two States, Arizona and Alaska, are not participating in the Medicaid program.
NA=Not available.
It should be noted that in the years 1967-69 most of the inciease
in Medicaid recipients is attiibutable to a rise in the number of States
and jurisdictions in the program. In the latter years, however, the
rise in the number of persons receiving medical assistance results
largely from increases in the number of public assistance recipients.
As a result of the substantial increase in the public assistance rolls, a
major shift is occurring in the distribution of payments between
categorically needy and medically indigent persons. The percentage
of total Medicaid payments on behalf of the medically indigent has
declined from 31% in 1968 to an estimated 22% in 1972.
In terms of the types of services provided, Medicaid is heavily
weighted toward inpatient hospital care and nursing homes. In 1971,
160
THE BUDGET FOR FISCAL YEAR 19 72
hospitals and nursing homes accounted for approximately two-thirds
of all Federal Medicaid outlays, while services rendered by physicians
represented 13%, outpatient hospital services, drugs, and other care,
22%. In an effort to modify these proportions so that greater emphasis
is placed on more cost-effective ambulatory and preventive care, legislation will be proposed to discourage unnecessary utilization of institutional care by limiting Federal matching for care provided in
nursing homes and mental hospitals to that needed for active treatment, and by instituting cost-sharing provisions for care provided in
general hospitals. Higher Federal matching will be provided for all
ambulatory care to encourage greater use of hospital outpatient
clinics, comprehensive health centers, and physicians services.
A major restructuring of the Medicaid program will be proposed as
part of the administration's new family health protection plan to be
submitted to the 92d Congress. However, this program will be
implemented after 1972.
Maternal and child health and family planning.—The major goal of
the MCH program is to provide health services to mothers and
children, especially in rural areas or areas suffering from economic
distress. The program directly supports the operation of clinics which
provide comprehensive maternal and infant care, and a complete
range of medical and dental services for children and youth from lowincome areas. The benefits of this program can be seen from the sharp
reduction in the infant mortality rate for population groups served by
infant care centers and the nearly 50% decrease in the number of
hospital stays required by enrollees in children and youth health care
programs. In 1972, grants will total $75 million to provide necessary
health care for over 2.7 million mothers, infants, and children, and
over $59 million to provide case-finding, diagnosis and treatment to
over 500,000 crippled children throughout the country.
Increases in the 1972 budget are designed to carry out the mandate
of the President to deliver family planning services to all low-income
women who want but cannot afford such services. When all projects
funded in 1972 are operational, nearly 3 million of the estimated
5 million women in need will be receiving services through federally
subsidized programs.
Federal employee's health benefit program (FEHB).—The Federal
Government offers a choice of at least five types of health insurance
plans, including prepaid comprehensive group plans, to its 2.6 million
active and retired civilian employees, and their dependents. In 1972,
Federal payments will increase by $158 million to $521 million,
reflecting the full-year impact of new legislation adjusting the proportion of Federal payments to total payments from 23% to 40% in
January 1971. The increase in the Federal share will result in a slight
decline in employee and annuitant premiums in 1972, even though
there has been an increase in medical prices and greater utilization
of health services.
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. Out
SPECIAL ANALYSES
161
lays for this purpose have declined from 49% of total Federal health
expenditures in 1960 to 15% in 1972, 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 $3,334 billion in 1972, an increase of $58 million over
1971.
The Department of Defense provides full medical care to its active
and retired military personnel, and their dependents. In 1972, the
DOD will operate 190 military hospitals and will contract with
community facilities to care for its beneficiaries. Outlays to operate
this health care system will be $1,359 million in 1972, $51 million less
than in 1971. This decline in expenditures is the result of the reduction
in the size of the Armed Forces and their number of dependents, offset
to some extent by the higher costs of care in community facilities.
The Veterans Administration will concentrate on providing quality
medical care to veterans with service-connected disabilities by operating 169 hospitals, 103 long-term care facilities, and 206 outpatient
clinics, with total expenditures for direct care programs estimated at
$1.8 billion in 1972, an increase of $139 million over the 1971 level.
Within this total, however, greater emphasis will be placed on outpatient and nursing home treatment. In 1972, there will be a slight
rise in the number of patients treated in VA hospitals to 805,000,
while the number of outpatients treated will rise from 6.7 million to
7.1 million.
The average monthly turnover rate in VA general hospitals is
estimated to rise from 72.3% in 1971 to 73.5% in 1972, and the ratio
of staff to patients is expected to increase by 6%. As a result of recent
legislation liberalizing entitlement to dental care and expanding benefits to Vietnam veterans, outpatient medical and dental treatment
by private physicians and dentists is expected to remain high.
The Department of Health, Education, and Welfare will explore
opportunities for using community or other Federal facilities to provide
quality medical care to the 234,000 primary beneficiaries of the Public
Health Service. Under this policy, consideration will be given to the
potential of converting the existing PHS facilities to community use.
Similarly, the National Institute for Mental Health will transfer
the operation of Fort Worth Hospital to the Department of Justice
to permit that agency to expand its capacity to treat narcotics addicts
who have been convicted of a felony. HEW will continue to operate a
direct care program for American Indians, lepers, and persons
committed or voluntarily presenting themselves for mental health
treatment at Saint Elizabeths Hospital in Washington, D.C.
Distribution of health care outlays by age groups and economic status.—Table K-9 distributes 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 have
been excluded from the following table since they are designed to
serve the entire Nation and are not normally allocable by population
group or income.
430-700 O—71——11
162
THE BUDGET FOR FISCAL YEAR 1972
Table K-9 indicates that the largest health care expenditure increase
in absolute terms will be for the aged, rising by $645 million to $10.6
billion in 1972; however, the largest percentage increase over 1971
will be for children, reflecting the administration's emphasis on
improving the health of our Nation's youth. Approximately 39% of
total health care expenditures will be directed at the needy in 1972.
Table K-9. ESTIMATED HEALTH CARE OUTLAYS BY POPULATION AND
INCOME GROUPS (in millions of dollars)
1969
1970
1971
Total, all recipients
12,794
14,074
16,228
17,446
Aged (65 and over)
Other adults (19-64)
Children and youth (0-18)
8,071
3,427
1,295
8,567
3,585
1,922
9,924
4,071
2,233
10,569
4,360
2,517
5,384
6,340
6,786
3,281
1,218
618
3,219
1,037
1,128
3,741
1,236
1,363
3,835
1,359
1,592
7,678
8,690
9,886
10,657
4,790
2,210
677
5,347
2,548
794
6,182
2,833
871
6,733
3,000
925
Indigent, total
Aged (65 and over)
Other adults (19-64)
Children and youth (0-18)
Nonindigent, total
Aged (65 and over)
Other adults (19-64)
Children and youth (0-18)
~5jl6
1972
Aged.—Over 60% of Federal personal health care outlays will be on
behalf of the aged. The 1972 increase for this age group of $645
million over 1971 is almost entirely attributable to the Medicare and
Medicaid programs. In 1972, 31% of Federal Medicaid payments will
support medical services for the aged, although they comprise 16%
of the program's beneficiaries. Federal funds in total continue to pay
for approximately 60% of the personal health care costs of the aged.
Other adults.—In 1972, nonaged adults will receive $4.4 billion in
health care services paid for by the Federal Government. Over twothirds of these funds will be directed toward the nonindigent, the
bulk of which will pay for health care rendered to veterans, the decreasing number of military servicemen, and Federal employees, as
well as eligible dependents. Of the $1.4 billion which will be spent by
the Federal Government for hospital and medical care for needy
adults, $855 million will come from Medicaid, $148 million from the
Veterans Administration, and the remaining $356 million from a
number of smaller programs, including OEO's neighborhood health
centers, the vocational rehabilitation program, and the maternal and
child health program.
Children and youth.—Federal health outlays for children from birth
to 18 years will increase 13% to $2.5 billion in 1972. Of the $284
million increase over 1971, $229 million is attributable to Medicaid,
bringing the program's support for children's health care services to
$1.4 billion. Other significant increases are provided by the maternal
and child health and Indian health service programs. Outlays by the
Department of Defense for such services to children of servicemen
SPECIAL ANALYSES
163
will decline by $18 million, reflecting the reduced size of the Armed
Forces.
Virtually all of the increase in health care outlays for children and
youth will benefit needy families, raising these expenditures to $1.6
billion, or 63% of the total directed to this age group. Of total Medicaid outlays, over 4 1 % will support health care for children, an
increase from 36% in 1971, representing the administration's policy of
directing an increasing proportion of outlays toward needy children.
National and Federal expenditures by age.—The Social Security
Administration has published data on total public and private expenditures in 1969 for personal health care. The role of Federal programs
in this sector is summarized in the following table. In 1969, children
accounted for 11% of the total Federal outlays for personal health
care; in 1972, as indicated in table K-9, their share will increase to
almost 15%. This trend, accompanied by the expected emphasis on
child health in the proposed family protection program, should result
in further changes in the Federal role in subsequent years.
Table K-9a. TOTAL NATIONAL AND FEDERAL EXPENDITURES FOR
PERSONAL HEALTH CARE BY AGE GROUPS, 1969 (dollars in billions)
Age group
Age (65 and over)
Other adults (19 to 65)
Children and youth (0 to 18) _
Total
]
Federal
expenditures
Total national
expenditures
Dollars
Percent
distribution
$13.5
30.7
8.4
26
58
16
52.6
100
Percent
Federal
of total
Percent expendiDollars
tures
clistribution
$7.7
3.3
1.4
1 1 2 4
62
17
11
57
11
17
100
24
Excludes $0.4 billion in Medicare and Medicaid administrative expenses.
PREVENTION AND CONTROL OF HEALTH PROBLEMS
Expenditures for the prevention and control of health problems
will increase by $50 million to $926 million in 1972. The Federal
Government will continue to promote comprehensive health care
with emphasis on disease prevention and environmental protection.
This section includes a discussion of only those activities that arc
primarily directed toward this topic. Many activities described in
other sections of this analysis (e.g., manpower training, drug regulation, family planning, and selected aspects of health research) also
relate to the prevention and control of health problems.
Table K-10. FEDERAL OUTLAYS FOR THE PREVENTION AND CONTROL
OF HEALTH PROBLEMS
(in millions of dollars)
Disease prevention and control
Environmental control
Consumer protection
Total
1970
actual
1971
estimate
1972
estimate
434
111
177
515
160
200
530
170
226
722
876
926
164
THE BUDGET FOR FISCAL YEAR 1972
Disease prevention.—A basic principle that underlies the Federal
health strategy is the promotion of preventive care, which can result
in significant savings in terms of human life and economic costs while
preserving the Nation's limited health resources. The following are
examples of Federal prevention efforts:
• The National Communicable Disease Center (NCDC) spearheads
Federal efforts to combat contagious disease through research,
data gathering and dissemination, the maintenance of surveillance
systems, and the provision of scientific and technical assistance
to State and local health departments.
• Public education activities are conducted in such areas as nutrition, smoking, drug abuse, and automotive safety.
• OEO, Maternal and Child Health Service, the Indian Health
Service, and Community Health Services provide consumer
education to persons eligible to receive direct care.
• Several Federal agencies undertake activities to raise nutritional
standards. In 1972, the Food and Drug Administration will
develop nutritional guidelines for prepared foods and will propose
labeling requirements to assist the consumer in assessing the
nutritional content of his diet. Research on the prevalence and
cause of malnutrition is undertaken by NCDC and the National
Center for Health Statistics.
• New initiatives are being undertaken to encourage physicians to
provide preventive health care to their patients, in particular
through measures to stimulate the development of HMO's.
• Efforts to prevent and control disease abroad are undertaken by
the Agency for International Development, the Peace Corps, and
international agencies to which the United States contributes
financially such as the World Health Organization and the Pan
American Health Organization. Outlays in 1972 by AID, State
Department, and the Peace Corps for these purposes will be
$177 million.
Environmental control.—The principal agency concerned with
environmental control is the newly created Environmental Protection
Agency (EPA). Efforts to reduce and control factors and practices that
adversely affect the health of our Nation will be intensified through
support of research and control programs in such areas as air and
water pollution, pesticide and radiation hazards, solid waste disposal,
and noise abatement.
To reduce air pollution, special emphasis will be placed on developing a low emission advanced automotive power system and on further
strengthening State and local air pollution control agencies through
increased funding and technical assistance. Air quality standards will
be determined for the estimated 250 air quality control regions which
will be established by March 31, 1971, and which will encompass the
whole United States. EPA will continue to support short-term training
programs to increase the numbers of qualified scientists, administrators, and other personnel in air pollution control and will conduct research to develop the technology to control sulfur and nitrogen
oxides and other air pollutants.
Continued efforts will be made to develop solid waste recycling
techniques. Revised guidelines for proper operation of municipal
incinerators and sanitary landfills are being developed. All State and
SPECIAL ANALYSES
165
local plans approved by the Office of Solid Wastes in EPA must conform to existing solid wastes guidelines. Programs promoting water
hygiene will be expanded and accelerated in 1972 to ensure nationally
acceptable public water supplies.
Additional resources are expected to be allocated by EPA later in
the year for air pollution and solid wastes programs to implement the
provisions of the Clean Air Act Amendments of 1970 and the Resource
Recovery Act of 1970. These funds are not included in this analysis.
Consumer protection.—Consumer protection activities are an
essential part of disease prevention. Most Federal departments have
programs aimed at safeguarding the health and safety of the individual from illness and injury resulting from unsafe products.
The Department of Transportation sets and enforces safety standards for automobiles. The Department of Agriculture has the responsibility of assuring the wholesomeness of meat and poultry products,
and will commence inspection of egg products and processing plants
during 1972. Under its new legislative mandate, the Department of
Commerce will emphasize improved fish processing techniques and
the inspection and grading of commercial fishery processing plants.
The Food and Drug Administration (FDA) has the lead role in
the fields of food, drug, and product safety. FDA's outlays will
increase by $15 million to $94 million, reflecting the high priority
placed on consumer protection. In 1972, the FDA will place greater
emphasis on ensuring the safety of foods through increased food inspection activities; expanded research on the presence of toxic chemicals,
poisonous metals, and micotoxins; the initiation with industry of a
cooperative quality assurance program; and increased inspection of
imported foods. It will also conduct research into the prevalence of
drug residues in food-producing animals. FDA will improve its drug
review procedures so as to provide the public with needed drugs more
rapidly and with greater assurance of safety, and will accelerate removal of ineffective drugs from the market. The agency will establish
a testing and monitoring program to determine the safety and efficacy
of medical devices. During 1972, FDA will begin operation of a
National Center for Food and Drug Safety Evaluation to determine
the health effects of chemicals and drugs taken by man in small doses
but over long periods of time.
SPECIAL IMPACT PROGRAMS
Several programs have been selected for extended discussion in
this section because of their special significance in the 1972 budget.
Outlays for these programs are classified in one or more of the major
categories in table K-2.
Drug abuse and alcoholism.—Efforts to combat drug abuse and
alcoholism will be expanded, as obligations in these areas rise $23.5 million to $173 million in 1972. The National Institute of Mental Health
and the Office of Economic Opportunity- are the major Federal agencies
responsible for programs in drug abuse and alcoholism and both
emphasize community-based prevention, treatment, and rehabilitation.
Legislation previously in effect, which authorized only the funding
of treatment programs for narcotic addicts, has been broadened to
166
THE BUDGET FOR FISCAL YEAR
1972
encompass a wide variety of comprehensive approaches to prevent
and treat all forms of drug abuse. Under new alcoholism legislation,
NIMH will establish a National Institute on Alcohol Abuse and
Alcoholism to coordinate the Federal effort against this disease.
The new drug abuse and alcoholism legislation provides for expansion of preventive measures through education and public information
projects. NIMH's National Clearinghouse for Drug Abuse Information will continue to gather and disseminate the most current data
available to increase public knowledge of the facts about drug use,
and the Clearinghouse and the Bureau of Narcotics and Dangerous
Drugs will produce public service messages to increase public awareness of the dangers of drug abuse.
The 1972 budget will also support expanded programs in the development of paramedical and other personnel to deal with the drug
abuser and alcoholic and will increase Federal support of research
directed towards improving our knowledge of the causes, habits, and
treatment procedures to be used in controlling these diseases. In addition, research on the actual effects of drugs and alcohol on man will
be undertaken by NIMH.
TableK-ll. ESTIMATED OBLIGATIONS FOR CIVILIAN DRUG ABUSE AND
ALCOHOLISM PROGRAMS (dollars in millions)
1969
estimate
1970
estimate
1971
estimate
1972
estimate
$21.9
1.4
2.2
$40.1
13.4
12.8
4.5
7.7
$46.1
13.7
14.5
3.0
$18.7
6.7
4.5
3.0
5.6
28.5
38.5
78.5
84.5
1.2
0.2
0.4
3.5
3.7
1.5
6.2
6.0
2.0
7.0
6.0
3.1
1.8
8.7
14.2
16.1
14.1
16.3
17.8
19.1
44.3
63.5
110.5
119.7
NA
NA
13.3
3.3
9.2
17.9
3.8
14.3
22.1
3.8
16.6
30.9
40.2
1.2
5.5
1.6
6.6
4.8
8.4
23.3
39.1
53.4
DRUG ABUSE
Treatment and rehabilitation:
Health, Education, and Welfare—National Institute
of Mental Health
Justice
Office of Economic Opportunity
Housing and Urban Development—Model Cities. __
Other
Subtotal
Education and training:
National Institute of Mental Health
Office of Education
Bureau of Narcotics and Dangerous Drugs
Subtotal
Research and other support—Health, Education, and
Welfare
Total, drug abuse
10.2
ALCOHOLISM
Treatment and rehabilitation:
Health, Education, and Welfare:
National Institute of Mental Health
Social and Rehabilitation Service
Veterans Administration
Subtotal
Education and training: Health, Education and Welfare,
Research—Health, Education and Welfare
Total, alcoholism
NA= Not available.
NA
NA
SPECIAL ANALYSES
167
In 1971, a 13-member Commission on Marihuana and Drug Abuse
will be established by the President to conduct a comprehensive study
of marihuana. Its agenda will include the following topics: the extent
of marihuana's use in the United States, an evaluation of existing
laws related to its use, a study of marihuana pharmacology and its
short- and long-term effects, its relation to other drugs and to crime,
and factors related to the international control of marihuana. The
Commission will also conduct a comprehensive investigation of the
causes of drug abuse.
Health Maintenance Organizations.—HMO's are medical organizations that provide patients comprehensive medical care, generally
on a prepaid basis. They are characterized by an organizational structure that establishes incentives to deliver comprehensive health services at lower overall costs than more traditional medical programs.
These incentives tend to discourage unnecessary hospitilization and to
encourage preventive and ambulatory care.
Many Federal employees can enroll in this kind of program as one
of several health insurance options available to them. The administration is again recommending legislation to facilitate the use of
HMO's under Medicare. In addition, HEW will conduct research and
evaluation of the organization, cost, and effectiveness of HMO's and
will provide technical assistance to groups desiring to establish
HMO's. Also, health care providers may apply to HUD for mortgage insurance for construction and major equipment for group
practice facilities.
Indians.—Outlays for Indian health services will be increased in
1972 by $12 million to strengthen maternal and child health programs
and expand community-based mental health services. The continued
reduction in the number of inpatients served by the hospitals of the
Indian Health Service will result in an improved ratio of staff to
patients and a higher quality of care. Consistent with the President's
message on Indians (July 8, 1970) requesting a reallocation of an
additional $10 million for Indian health programs, expanded support
will be provided in both 1971 and 1972 by OEO, the Department of
Labor, and other health programs in HEW. These funds will be used
to alleviate major Indian health problems such as infection of the
inner ear, mental health, alcoholism, and maternal and child health as
well as expand Indian community health projects and develop Indian
health manpower. Indicators of improved health among Indians
include a 47% reduction in infant mortality during the last decade and
a 59% reduction in deaths caused by TB. In total, outlays for Indian
health services and facilities in 1972 will exceed $152 million.
Family planning.—The ability of families to decide the number and
spacing of their children through family planning is one of the most
effective measures for reducing infant and maternal mortality and for
improving the physical and mental health of the family. Federal
support of family planning programs will increase from $135 million
in 1971 to $189 minion in 1972. These funds will support an expanded
program of biomedical and attitudinal research, train health personnel
to deliver family planning services, and provide family planning services to approximately 2.8 million of the 5 million poor women in the
United States who face financial or other barriers to receiving them.
168
THE BUDGET FOR FISCAL YEAR
1972
Table K-12. ESTIMATED OBLIGATIONS FOR FAMILY PLANNING
SERVICES AND RESEARCH (in millions of dollars)
1970
Services to low-income persons in the United States (total)
1971
1972
70.0
98.2
141.9
Health, Education, and Welfare (total)
48.0
72.2
120.4
National Center for Family Planning Services
Maternal and Child Health
Other HEW
Office of Economic Opportunity
22.8
18.1
22.0
33.6
17.0
21.6
26.0
90.9
17.0
12.5
21.5
24.7
37.1
46.8
16.3
1.1
7.3
28.0
1.1
8.0
38.0
1.3
7.5
Research (total)
National Institutes of Health
Food and Drug Administration
Agency for International Development_
7.1
To provide better coordination among all the family planning activities within HEW, a new Office of Deputy Assistant Secretary for Population Affairs has been established in the Office of the Assistant Secretary for Health. The function of this new office is to establish departmentwide goals and strategies in family planning and population
activities and to coordinate and focus these activities through the
Center for Population Research and the National Center for Family
Planning Services.
The 1972 OEO family planning program will provide family planning
services to over 400,000 women and will initiate new projects to improve the delivery of services to teenagers, rural families, and other
hard-to-reach groups. OEO will also investigate new ways to involve
private industry in the support and encouragement of family planning.
$10 million worth of projects which were initiated by OEO in prior
years will be transferred to the National Center for Family Planning
Services in 1972 consistent with the effort to make the latter the lead
Government agency in the delivery of family planning services.
Other health centers programs.—Obligations will increase by
$40 million to support 241 community-based, comprehensive health
projects, which have been established to provide health care resources
to poor rural and urban areas and to demonstrate new and improved
methods of delivering health services. Both OEO and HEW projects
are typically designed around a single location, usually a "neighborhood health center" or other type of outpatient facility, and include
preventive and diagnostic services, outpatient treatment, in-home
care of the chronically ill and other home-health services rehabilitation services, dental services, and drugs. Auxiliary services such as
casefmding, community outreach, and foliowup are also offered.
Neighborhood residents participate in planning and guiding program development and fill many new paraprofessional health jobs.
The period of Federal support for staffing Community Mental
Health Centers (CMHC) has been extended from 51 months to 8
SPECIAL ANALYSES
169
years jto allow the centers more time to obtain alternative sources of
financial support. During 1972, major efforts will be made to evaluate
to what extent and under what conditions these centers are effective
in controlling mental health problems and allowing patients to perform
productive roles. Greater efforts will be made to obtain stable financial
support for centers through reimbursements and third-party health
insurance payments so that currently committed Federal funds can
be released to extend support to new centers. In 1972, the Federa
program level for CMHC's will increase by $15 million to $105 million
TabIeK-13. FEDERALLY FUNDED HEALTH CENTERS
Total Federal obligations (millions)
Partnership for Health
Maternal and Child Health
NIMH
OEO 1
Number of centers funded
__
Partnership for Health
Maternal and Child Health
NIMH (operating grants)
OEO 1
Number of persons served in year (thousands) _
Partnership for Health
Maternal and Child Health
NIMH
OEO
1969
1970
1971
1972
$183.0
$214.6
$327.9
$382.6
10.0
75.0
46.0
52.0
20.0
75.8
47.6
71.2
60.0
82.8
90.1
95.0
78.0
89.5
105.1
110.0
395
463
534
590
18
110
218
49
26
115
255
67
46
116
307
65
55
116
349
70
837
1,212
1,690
2,027
5
532
NA
300
39
573
NA
600
260
630
NA
800
385
642
NA
1,000
1
In addition to 49 neighborhood health centers (of which 16 were transferred to HEW in 1971 and
several more will be transferred in 1972), the OEO numbers include comprehensive health care projects in outpatient departments, group practice projects, and community network projects.
HISTORICAL RESUME
Table K-2 classifies Federal health outlays for the years 1970
through 1972.
The following table K-14 distributes Federal health
outlays b}r function for the period 1960 through 1969. The data for
1960 are not strictly comparable with data for other years since they
represent "funds provided77 rather than outlays.
170
THE BUDGET FOR FISCAL YEAR
1972
Table K-14. 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 services2
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
I960 1
1963
1964
1965
1966
1967
1968
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 3,111
1,547 1,528
687
805
290
380
439
450
378
391
470
612
82
100
166
1969
2,165
2,783
2,904
2,936
3,521
7,831 10,764 12,794
1,701
1,877
1,971
2,022
2,199
2,552
2,738
2,860
464
906
933
914
1,322
5,279
8,025
9,934
326
346
393
418
451
540
565
651
3,508
4,658
5,103
5,161
5,928 10,801 14,132 16,556
1
Report of the Committee on Government Operations, U.S. Senate: "Coordination of Federal
Agencies" programs in biomedical research and in other scientific areas, report No. 142, Mar. 30,
1961.
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 parts of the Civil Service Commission and the Environmental Protection Agency, the outlays of these agencies are, because
of their major purpose, assigned to functions other than Health (650)
in part 5 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 areas. They will
thus include, where pertinent, the same outlays which are tabulated
in this analysis.
TableK-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 Institutes of Heajth
Food and Drug Administration
Social Security Administration
Social and Rehabilitation Service
Other...
Department of Defense
Veterans Administration
Department of Housing and Urban Development
Department of Agriculture
Environmental Protection Agency (predecessor agencies)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
Other agencies
Agency contributions to employee health funds
Total outlays for health, 1970
650
650
650
650
650/700
051
800
550
350
650
150
550
250
058
906
604
150
605
Health
research
Training
and
Construeeducation
tion
1,083.9
130.3
905.7
18.3
653.0
155.4
481.1
.7
349.0
341.2
6.2
29.6
88.8
61.8
9.5
6.4
79.7
95.0
1.3
.4
52.5
67.3
7.8
38.5
34.5
3.3
4.7
4.7
4.5
92.1
102.5
.6
28.0
43.4
113.7
4.3
3.5
9.6
57.2
1,576.8
968.8
539.1
Organization and
delivery
161.4
135.1
26.3
14.1
1.4
Direct
Federal
hospital
and
medical
Indirect
Federal
hospital
and
medical
153.0 10,293.2
153.0
268.7
1,396,2
1,475:3
1.3
7,149.2
2,866.9
8.4
263.7
86.5
8.0
126.0
.6
41.2
.1
.4
.7
33.3
4.3
199.0
179.0
3,057.9
11,022.2
Prevention and
control
of health
problems
Total
340.3 13,033.9
275.4 1,459.2
4.3 1,423.6
68.6
49.6
7,149.2
11.0 2,918.2
15.2
19.9 1,900.9
1, 800.0
17.3
193.1
154.5
88.1
48.9
97.4
84.9
127.3
92.7
103.1
41.4
.2
113.7
30.1
25.2
31.5
196.8
48.4
199.0
722.4
18,066.2
TableK-16. FEDERAL OUTLAYS FOR MEDICAL AND HEALTH-RELATED ACTIVITIES BY AGENCY, 1971
(in millions of dollars)
Training
Funccode
Department of Health, Education, and Welfare
Health Services and Meantal Health Administration _ _
National Institutes of Health
__
Food and Drug Administration
Social Security Administration
Social and Rehabilitation Service
Other
Department of Defense
__
_
Veterans Administration._ __
_
_
Department of Housing and Urban Development
Department of Agriculture
Environmental Protection Agency
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.
Other agencies
Agency contributions to employee health funds
Total outlays for health, 1971
Ojganization
research
1,185.6
136.8
995.3
23.6
687.4
151.2
517.9
1.0
348.8
318.7
6.9
2.1
650/700
29.9
051
800
550
350
650
150
550
250
058
906
604
150
605
89.4
67.1
9.6
7.6
84.8
115.5
40.0
57.6
12.2
10.4
10.8
56.6
70.2
9.5
7.0
5.9
7.0
650
650
650
650
delivery
189.1
160.2
28.9
16.2
8.8
Direct
Indirect
Preven-
and
medical
and
medical
of health
problems
170.8 12,017.8
170.8
325.8
.1
.4
35.9
5.3
295.6
377.7 14,977.2
295.8 1,559.3
4.5 1,553.5
55.9
82.5
8,262.0
21.5 3,491.5
28.2
19.3 1,934.3
2,053.3
51.3
174.7
214.7
172.5
137.2
32.2
157.3
150.8
99.8
101.9
68.3
.4
126.1
32.6
27.6
33.0
259.7
71.3
295.6
3,276.4 12,961.6
875.8 20,693.1
1,410.1
1,695.5
142.8
8.0
2.1
97.7
101.5
.5
30.0
61.1
126.1
4.5
3.0
14.4
71.4
.3
1,742.3
1,049.2
565.5
222.4
8,262.0
3,420.1
9.9
274.1
124.8
33.0
67.9
TableK-17. FEDERAL OUTLAYS FOR MEDICAL AND HEALTH-RELATED ACTIVITIES BY AGENCY, 1972
(in millions of dollars)
Functional
code
Department of Health, Education, and Welfare
Health Services and Mental Health Administration
National Institutes of Health
Food and Drug Administration
Social Security Administration
Social and Rehabilitation Service
Other
Department of Defense
Veterans Administration
Department of Housing and Urban Development
Department of Agriculture
Environmental Protection Agency
Agency for International Development
Office of Economic Opportunity
T-r — 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, 1972
650
650
650
650
650/700
051
800
550
350
650
150
55
°
250
058
906
604
150
605
500
Health
research
Training
and
education
Construetion
1,296.7
166.4
1,074.2
29.4
767.9
158.1
591.2
1.1
332.4
301.5
6.6
2.4
26.6
87.9
71.8
8.2
9.3
87.6
115.9
14.7
7.2
83.5
104.7
8.9
39.3
72.1
10.9
8.0
6.1
Organization and
delivery
195.6
168.1
27.4
Direct
Federal
hospital
and
medical
140.2 13,012.6
140.2
405.3
.1
1,358.8
16.3 1,798.9
9.5
9,033.2
3,563.9
10.2
274.5
119.8
40.0
9.7
15
82.6
100.3
Indirect
Federal
hospital
and
medical
]44
-°
-7
2.0
.4
104.7
31.6
125.2
5.3
2.4
49.7
9.4
1,842.9
1,128.1
.2
.2
78.1
1.5
619.5
238.0
36.3
,
3,334.3
.4
10.3
416.5
14,123.5
Prevention and
control
of health
problems
Total
389.1 16,134.5
298.8 1,638.4
4.9 1,704.5
65.3
98.1
9,033.3
20.2 3,633.6
26.6
19.4 1,911.7
2,227.5
58.4
189.8 229.1
89.4 169.5
141.3 168.0
15
9.7
84.5
100.7
.4
105.1
125.2
32.0
38.1
34.0
64.4
249.7
416.5
925.8 22,212.2
SPECIAL ANALYSIS L
FEDERAL INCOME SECURITY PROGRAMS
Federal income security programs provide essential income protection for millions of Americans. In 1972, social security will benefit
27 million, public assistance and welfare reform will aid 14 million, and
food stamps will help 11 million.
These programs are characterized by:
—Rapid growth, particularly in recent years—rising from $60
billion in 1970 to almost $81 billion in 1972;
—Piecemeal development, stemming from different time periods of
enactment and divergent goals;
—Varying forms, ranging from cash based on contribution (or need)
to benefits in kind (such as housing or medical care); and
—An emergent income strategy, seeking to knit related programs more
closely together to increase their combined effectiveness.
INCOME STRATEGY
Many of the administration's highest priority goals involve the
restructuring of income security programs. Reform of food stamps
and unemployment compensation were important accomplishments in
calendar year 1970. The administration has proposed, and will press
again this year, the reform of the Nation's two basic income security
systems:
—Welfare reform, the most complete overhaul of any domestic
program in a generation; and
—Social security, with benefit increases, automatic adjustments for
rises in the cost of living, and other improvements.
The principles of the administration's income strategy are:
—Equity.—Benefits should be distributed in a consistent manner
among beneficiaries with similar circumstances. For example,
programs paying benefits based on need should consider all
resources in determining benefits.
—Adequacy.—Benefits should bear a reasonable relationship to need,
and be adjusted periodically to maintain that adequacy. Examples
include recent amendments to the food stamp program providing
allotments large enough to purchase a nutritionally adequate diet,
and the proposed national standards under welfare reform.
—Graduated benefits.—Disproportionate drops in benefits as income
rises should be avoided as a disincentive to increased earnings
(where that possibility exists). As a general rule, where benefits
are related to income, that relationship should resemble a straight
line rather than a series of steps or notches.
—Self-regulation.—The lag of program benefits behind changed circumstances can cause serious hardship in some instances. An effort
is being made to make programs more self-adjusting with changes
in basic conditions. Examples include:
174
SPECIAL ANALYSES
175
• Food stamps (enacted) and social security (proposed), where
benefits would be adjusted automatically for changes in the
cost of living. (Financing would also be automatic under social
security.)
• Unemployment insurance, where extended benefits will be
automatically triggered by changed economic circumstances.
These principles will also be applied this year in integrating food
stamp benefits with welfare reform, and harmonizing veterans compensation and pension programs with other income security programs.
OVERVIEW: 1972
Federal outlays for income security programs will total an estimated
$80.9 billion in 1972—over one-third of the total Federal budget and
7% of the Gross National Product (GNP).
Table L-l. FEDERAL OUTLAYS FOR INCOME SECURITY PROGRAMS
1970
actual
1971
estimate
Federal outlays for cash benefits (millions):
Social security (OASDI)
Federal employee benefits
Veterans benefits
Public assistance
Unemployment insurance
Railroad retirement
Other programs
Proposed legislation included above
$29,045
5,768
5,340
3,868
2,886
1,586
74
$34,090 $37,576
6,873
7,549
5,829
6,243
5,243
6,257
5,172
4,365
1,890
1,922
336
522
(1,067) (3,196)
Subtotal, outlays, cash benefits
48,567
59,433
1972
estimate
64,434
Federal outlays for in-kind benefits (millions):
Food and nutrition
Healthcare
Housing
Proposed legislation included above
1,590
9,576
475
Subtotal, outlays, in-kind benefits
11,641
14,738
Total, benefit outlays
60,209
74,171
80,919
Federal outlays for administration
1,960
2,247
2,367
2,783
3,171
11,143 12,026
812
1,288
(13) (—801)
16,485
Cash payments account for 80% of total income security outlays,
with social security programs the largest by far. Benefits in kind will
constitute the balance—distributed primarily for medical care, followed by food and housing benefits.
HISTORICAL DEVELOPMENT AND PURPOSES
The historical basis of income security programs lies in the retirement insurance and welfare legislation of the 1930's and the veterans
benefits programs dating from the Revolutionary War. Programs have
been added to this basic bloc, until there are now almost 40 programs
within 12 agencies. Previous analyses have focused on the programs;
this analysis is a transition to examination of the persons and functions
176
THE BUDGET FOR FISCAL YEAR 1972
served by the programs: the aged, the disabled, the unemployed,
mothers with small children and no breadwinner, and the just plain
poor, who cannot earn quite enough to live decently through their
own efforts.
FUNDAMENTAL REFORM: WELFARE AND SOCIAL SECURITY
Income security programs are under intensive review for necessary
reform. The most sweeping changes proposed to the Congress in the
coming year involve the Nation's two basic income maintenance
programs: welfare and social security.
Welfare reform.—The present welfare system is a failure—in the
eyes of recipients and taxpayers alike. It lacks incentives for selfsupport or family cohesion. Conversely, it often creates a greater
sense of dependency. The rapid increase in welfare recipients compounds the problems of existing welfare programs:
—Three States experienced caseload increases of 50% or more in
1970; 10 more saw rolls rise by one-third or more.
—Costs have doubled in 5 years, and threaten serious financial
problems for many State treasuries.
Welfare reform is focused on the basic problems of present welfare
programs. It will:
—Provide national eligibility standards—covering all poor families
with children for the first time, and setting up a computerized
cross-check of eligibility and income;
—Establish minimum benefit standards (at $1,600 for a family of
four with no income and $110 per month for the aged, blind, or
disabled);
—Require States where payments are now higher to supplement the
basic Federal allowance up to the old payment level or the U.S.
Census Bureau poverty standard—whichever is lower;
—Establish strong work incentives and requirements:
• requiring all able-bodied adults (except mothers with preschool
children) to register for, and accept, suitable work and training;
• reducing benefit payments by $500 for each adult family
member who refuses suitable work or training, and cutting
State supplementary payments by a proportionate amount;
• exempting the first $720 of earnings in computing benefits—
smoothing the transition from welfare to work; and
• increasing incentives to earn by reducing benefits by 50% for
earnings over $720 per year (with the rate not to exceed 67%
where State supplementation is required).
—Offer increased opportunities and funds for training and child
care, to enable the many recipients who desire work—but lack
the requisite skills or adequate care for their children—to achieve
their goal of self-support;
—Provide substantial fiscal relief to States—amounting to roughly
a half billion in the first year and growing over time.
These reforms will take effect during 1973. The 1972 budget provides $581 million in budget authority and $502 million in outlays
to do the advance planning and lay the sound administrative foundation to insure effective operation in the ensuing years.
SPECIAL ANALYSES
177
Social security.—Major administration proposals for changes in
the social security program involve:
—Providing automatic benefit increases to keep pace with the cost
of living (the Consumer Price Index);
—Raising benefits 6% across the board, retroactive to January 1,
1971, as the first step in adjusting benefits to rising costs;
—Financing benefits with automatic changes in the "wage base"
(raising the maximum earnings subject to the social security
payroll tax in step with increased earnings in the economy);
—Liberalizing the earnings or retirement test (the amount of permissible income before benefits are reduced) by permitting up to
$2,000 of earnings with no benefit loss and providing a 50% offset
from that point without limit; and
—Increasing widow's benefits to the full amount of her deceased
husband's entitlement.
The combined tax rate for social security cash programs under
current law is scheduled to rise from 8.4% to 9.2% effective January 1,
1971. Proposed legislation would hold the rate to 8.4% for cash programs, while raising the rate for medical programs by a comparable
0.8% to keep these programs financially sound. It will also be proposed
that the maximum earnings subject to tax be raised from $7,800 per
year to $9,000—effective retroactively to January 1, 1971—the same
timing as for the 6% benefit increase.
Housing.—Benefits to low-income families are provided both in
cash and in kind. One of the most difficult in-kind programs to mesh
with cash assistance is the public housing program. The administration will introduce legislation again this year to scale public housing
benefits with income, thus ameliorating the serious work disincentive
which can result when a small increase in earnings may abruptly
terminate eligibility for subsidized housing.
Legislation will be resubmitted in 1972 to achieve major reforms of
both subsidized and unsubsidized housing programs. The objective
will be to simplify and consolidate these programs. The research and
technology program of the Department of Housing and Urban Development will emphasize the development of means to improve
housing management and prevent the deterioration and abandonment
of housing resources.
Medical benefits.—Similarly, the administration has promised a
reform of the Medicaid program to overcome any work disincentives.
The reform proposal will be submitted in the 92d Congress.
Proposed legislation on the in-kind health benefit programs, Medicare and Medicaid, would curtail overutilization of hospital and
other services. The proposals would provide increased program control of Medicare, and increased emphasis in Medicaid on preventive
medical care and restrain cost increases for institutional services.
RECENT PROGRAM DEVELOPMENTS
A number of significant improvements were made in income security
programs in calendar year 1970.
430-700 O—71
12
178
THE BUDGET FOR FISCAL YEAR 1972
Food and nutrition.—Food stamp program reform has been
emphasized in the administration's effort to eliminate hunger and
malnutrition in the United States. Modifications in program benefits
were instituted early in calendar year 1970. Thus, program changes
provided for a level of benefits which permit recipients to purchase
an adequate diet at a cost which, in most cases, is less than 30% of
family income.
Eecently enacted legislation proposed by the administration confirms these modifications, and further, will permit the issuance of food
stamps free to families with little or no income—as proposed by the
administration. It also provides for automatic increases in stamp
allotment with rises in the cost of living, and better administrative
integration with public assistance cash programs.
Participation in the food stamp program will increase from 3.2
million persons at the end of 1969 to an estimated 11 million in 1972.
Average benefits under the program have increased from $6.62 per
person per month to nearly $14 per person per month this year.
Outlays under the program have increased from $248 million in 1969
to almost $1.5 billion in 1971 and are budgeted at $1.9 billion in 1972.
In addition to the food stamp program, the distribution of commodities to needy families reached 3.8 million persons in 1970. As
the food stamp program continues to expand into new areas, the
number of persons receiving commodities is expected to decline,
and the level of program benefits will be improved.
There are only 10 counties in the country which do not yet operate
or have plans for either a food stamp or commodity distribution program, compared with 440 in that situation in the^ summer of 1969.
The child nutrition program, as a result of legislation approved in
May 1970 and increased funding in 1971, will be able to provide free
or reduced-price lunches for all needy children in schools with lunch
programs. The total number of children receiving benefits under the
school lunch program is expected to reach 26 million in 1971 and 1972.
In view of the increased attention to a nutritionally balanced child
nutrition program and increased efforts to reach needy children in
particular, the administration is again proposing the termination of
the special milk program.
Unemployment
insurance.—The 91st Congress^ enacted the
most significant improvements in the unemployment insurance program since passage of the original law in 1935. This historic legislation proposed by administration:
—makes an additional 4.8 million persons eligible for benefits;
—provides for up to 13 additional weeks of benefits automatically
when insured unemployment exceeds 4.5%; and
—improves the financial and administrative structure of the
system.
The unemployment insurance program is a dual responsibility of
Federal and State Governments. The Federal Government pays the
administrative costs of the program (estimated at $411 million in 1972)
and evaluates State laws to determine that they are in conformant^
with criteria established by law. State governments pay the costs of
benefits (estimated at $4.3 billion in 1972) and administer the program.
SPECIAL ANALYSES
179
Benefit levels vary among the States because the law allows States to
establish their own benefit levels. However, it has been a generally
accepted principle that unemployment benefits should be equal to 50%
of a worker's wage. The President, in signing the unemployment insurance bill in August 1970, called upon the States to voluntarily
increase their benefit maximums by 1972 to two-thirds of the average
wage in the State. This w^ould enable 80% of the workers to receive
benefits equal to 50% of their wages. At present it is estimated that
only about 40% of the States pay benefits equal to at least 50% of
wages. This change would increase the adequacy of benefits and help
the program better accomplish its goals.
Veterans benefits.—Veterans income security needs are met
through disability compensation (for service-connected disability), and
pensions (for non-service-connected disability).
Veterans disability compensation was amended July 1, 1970, to provide increased rates of disability compensation, and more liberal
criteria for widows' eligibility for benefits. The increases in rates of
compensation ranged from 8% to 12%, depending upon the degree
of disability. Additional allowances supplementing the compensation
payable to veterans who are 50% or more disabled with dependents
were also increased by an average of 8%.
Pension benefits are payable, on a needs basis, to wartime veterans
and dependents of deceased veterans for non-service-connected disability and death. Recent legislation increased pensions by an average
of 9.6%, with slightly higher rates for veterans at the upper end of
the income scale.
In the year ahead, a special effort will be made to explore the ways
in which veterans compensation and pension programs can be brought
into conformity with the basic principles of the administration's income strategy.
Railroad retirement benefits.—The contribution base for the
railroad retirement system continues to decline as the work force in
this industry declines. Faced with a beneficiary roll now significantly
larger than the work force that must finance benefits, and with the
demand for further benefit increases in the future, the system is now
being studied by a special Commission on Railroad Retirement to
recommend reforms in the program.
Civil service retirement
and military retirement.—These
benefits were automatically increased with the cost of living by 5.6%
on August 1, 1970.
INCOME STRATEGY AND TARGET GROUPS
The analytical structure applied to income security expenditures is
particularly important in the context of an emergent income strategy.
The analysis below is organized by target group—with programs
combined which serve persons in similar circumstances, even though
the nominal criteria for receipt of benefits may be quite diverse.
180
THE BUDGET FOR FISCAL YEAR 1972
The administration's income strategy embodies two fundamental
goals:
—that all persons should have an adequate living standard; and
—that individuals should be aided in securing the capacity to
achieve this standard by their own efforts.
Where self-support is possible in part, or in the future, income security programs provide present support, or supplementary support. At
the same time, other efforts are made to remedy the cause of the
temporary or longer term poverty. Income security programs must
not undermine the will for dignity and independence of the person
being aided as do our present welfare programs.
Where self-support is not possible, income security programs provide the wherewithal to live decently. Where the transfers in the
former category should be on a fairly temporary basis, the groups
aided here may have to receive permanent program benefits.
In structuring income security programs for analysis, we ask: How
do we assist people who are:
—disabled;
—aged;
—or more generally, share some particular situation or circumstance which impedes their capacity for self-support.
This contrasts with a focus on programs and has the analytical
advantage of identifying:
—the range of eligibility requirements or tests for different programs
which meet the needs of similar circumstances;
—the meshing of overlapping programs, and the offset, if any, to
multiple benefits; and
—the restrictiveness or selectivity of programs covering similar
groups.
The analytical categories used in this analysis include: (1) annuitants; (2) other aged beneficiaries; (3) the disabled; (4) mothers with
dependent children; and (5) transitional low income groups.
Annuitants and other aged beneficiaries comprise the largest categories. Annuitants, account for 29% of total benefit outlays for all
categories in 1970, with benefits for other aged comprising 33%. The
disabled ($8.2 billion), mothers and children ($5.0 billion), and transitional low income ($5.6 billion) are the remaining categories.
The largest relative increase will occur in the transitional low income
group—which will increase by an estimated $5 billion in 1972 over
1970, or 62%.
[Dollars in millions]
Outlays
Annuitants
Other aged
Percent
of total
Increase Percent
1970-1972 increase
1970-72
1970
1971
1972
$17,199
19,924
$20,328
23,138
$22,376
25,264
28.6
33.1
$5,177
5,340
30.1
26.8
Disabled
8,247
9,847
10,916
13.7
2,669
32.4
Mothers and children
Transitional low income
5,002
5,566
6,129
9,584
6,997
9,970
8.3
9.2
1,995
4,404
39.8
79.1
Other
4,271
5,145
5,396
7.1
1,125
26.3
60,209
74,171
80,919
100.0
20,710
34.4
Total
Annuitants.—There are four federally run contributory retirement
systems: social security (OASI), railroad retirement, civil service, and
the foreign service retirement system. Outlays for these four programs
these trust funds during their working life.
SPECIAL ANALYSES
181
Other income security benefits are basically financed by taxes levied
on different groups of persons than those receiving the payment. This
is not the case for these benefits to persons based on a contributions
history. The reforms needed here would: (1) rationalize the calculation
of changes in benefit provisions in relation to funding, (2) provide for
timeliness in adjustments to changes in price levels, and (3) improve
administration.
The coverage of these retirement plans is suggested by their names,
with social security reaching most wage and salary workers and many
self-employed persons in the United States.
In all four systems, the benefit calculations are based upon the
history of contributions.
Under old-age and survivors insurance (OASI), 10,206,000 retired
workers received pensions in 1970 related to the amounts paid into
the system. Some 404,000 recipients in 1970 are primary beneficiaries
under the railroad retirement system, but about 40% of these retirees
are also recipients of social security benefits. A total of 461,500 persons
are beneficiaries of the civil service retirement system and 1,850 of
the foreign service retirement system, with little or no overlap between
these two Federal employee systems. At least 40% of beneficiaries of
the two Federal civilian employee systems are also receiving social
security.
The probable total number of primary beneficiaries of all the contributory retirement systems is thus 10.7 million persons in 1970,
and 11.8 million in 1972.
Outlays of the social security system constitute a fairly constant
85% of the annuities to the primary beneficiaries under the four
contributory retirement systems. These annuity-type outlays constituted $17.2 billion in 1970 and will rise to $22.4 billion in 1972. The
1972 expenditure represents an increase of 10% over the estimated
1971 level.
There is a wide range among the systems in the average benefit
per primary beneficiary, reflecting the differences among them in
contribution rates—from $143 per month for OASI to $707 per month
for the foreign service.
Table L-2. ANNUITIES TO PRIMARY BENEFICIARIES IN CONTRIBUTORY
RETIREMENT SYSTEMS: ANNUITY BENEFIT, BENEFICIARIES,
AND AVERAGE PAYMENTS BY SYSTEM
Benefit outlays (millions)
1970
actual
1971
est.
1972
est.
Number of primary
beneficiaries (thousands)
1970
1971
1972
actual
est.
est.
Old-age and survivors
insurance...
$14,661 $17,363 $19,191 10,206
Railroad Retirement
Board....
874
1,036
1,034
404
Civil Service Commission
1,651
1,914
2,134
462
Foreign Service retirement
13
15
17
2
Total
17,199
20,328
22,376
Average monthly
payments
1970 1971 1972
actual est.
est.
10,746 11,240 $120 $134 $143
405
404
180
213
213
484
506
298
330
352
2
2
589
666
707
....
....
182
THE BUDGET FOR FISCAL YEAR 19 72
As a possible analogue to an annuity, one important consideration
is the economic rate of return on "investment" or contribution. Preliminary calculations for the civil service system indicate that the
return on the contributions of the employee plus the matching contribution of the Federal Government—represented by the expected
benefits to the primary beneficiary—is on the order of magnitude of
9%. (This is for persons retiring, 1960, 1965, or 1970.) They also indicate that the benefits to the retired Federal employee represent a return of approximately 12% on his own contributions to the system.
Other aged.—The largest portion of Federal income security
outlays are directed to the needs of the aged. The programs from
which the aged draw benefits range from welfare and Medicaid
through veterans compensation and pensions to social security and
Medicare. Underlying all these program outlays is the presumption
that persons past a certain age (for example, 65) are generally not
self-supporting through their own current earnings.
This category includes those programs or parts of programs which
benefit the aged, but where the benefit outlay to a specific individual
is based upon criteria other than his or her own contribution. The
criterion of the program may be a contributions history of some
related person, and is not necessarily based on an}7 measure of need.
This definition includes benefits to aged widows under contributory
retirement programs, and to the widows of uniformed servicemen;
benefits to the wives of annuitants which are based upon the husband's
contribution history; the minimum benefit payments under social
security which, in effect, put a floor under the payments made based on
earnings; payments to aged retirees from the uniformed services, who
make no contribution to their retirement system; public assistance to
the aged; Medicaid benefits to elderly persons; Medicare; and certain
in-kind benefits to needy, aged persons.
In 1970, $19.9 billion in benefit outlays to the aged was made under
the above program segments, some 33% of total income security outlays in that year. It is estimated that in 1972, $25.3 billion will be
spent, 30% of all income security outlays. In 2 years these expenditures
have increased by $5.3 billion, 26% of the increase in all income
security outlays between 1970 and 1972.
Benefits to aged persons present difficult problems of meshing,
consistency, and equity among the various program benefits. This is
due in good part to the multiplicity of program payments serving this
target group, and to the maturity of the programs of which they are
a part.
Aged widows.—Aged widows account for $7.2 billion in benefit outlays in 1972—or 28% of all benefits to the aged outside of annuities to
primary beneficiaries. Some 3,488,000 aged widows received benefits
from social security in 1970 with 1,118,000 widows covered in other
programs. There is considerable overlap of these other program
beneficiaries with those covered by social security.
Widows of annuitants under the four contributory retirement
systems have limited entitlement to annuities after the death of the
primary beneficiary. For example, there is incomplete vesting—or the
automatic right to benefits. Remarriage of the widow may, depending
upon the particular program, terminate the widow's benefit based upon
SPECIAL ANALYSES
183
her husband's contribution. Under social security, benefits depend
upon age (either 62 or 60—at a reduced rate) and other earned
income. Civil service benefits for widows depend upon the election by
the retiree of benefits financed through a reduction in his own annuity
while still living, and are available to the widow regardless of age, or
other income.
Retired members of the uniformed services similarly can elect a
reduced annuity to provide survivors benefits. For veterans benefits,
the surviving widow of a veteran who was receiving compensation for
a service-connected disability is entitled to survivors benefits and the
widow of a veteran who had been receiving a pension for non-serviceconnected disability will also receive a continued, but smaller, pension.
Military retirement benefits to widows are not adjusted for income,
while those for veterans' widows are, with 10% of social security
benefits excluded from countable income.
Aged wives of retirees.—Under OAS1 and railroad retirement, $2.8
billion will be paid in 1972 as benefits to women in their capacity as
wives of covered retirees. This entitlement is independent of any contribution history of their own, and requires only that they exceed a
particular age, although it will vary with both her husband's and her
own earned income. Where a wife has dual entitlement under social
security based upon her earnings history, as well as her husband's, she
will receive only the larger benefit. In 1972, 346,000 wives will have
dual entitlement in which the wife's benefit exceeds the benefit based
upon own earnings.
Payments based on the minimum.—In 1970, $1.6 billion of social
security outlays were paid in the form of statutory minimum amounts
to retired workers, to the dependents of such retired workers, and to
noninsured beneficiaries age 72 and over. This will rise to $1.7 billion
in 1972. A total of 2.7 million persons received such minimum benefit
payments in 1970 and will have fallen to 2.4 million during 1972.
Aged retirees of the uniformed services.—The retirement systems for
the uniformed and military services are wholly federally financed, and
therefore the benefits paid cannot be related to a contributions history.
Aged retirees from the military and other uniformed services (those
over 65), plus compensation and pension recipients receiving benefits
from the Veterans Administration for disability (also over age 65)
received $1.4 billion of benefits in 1970 and will receive an estimated
$1.6 billion in 1972. There are 968,000 persons under these programs
at an average benefit level of $1,685 per year in 1972.
Medicare.—Since enactment of medicare in 1965, the aged have been
the beneficiaries of a unique income security program for medical
service provision in the event of nonchronic illness. All persons over 65
with social security coverage and those who were age 65 and over in the
year of enactment are automatically provided with hospitalization
insurance and can elect supplementary medical insurance which
covers doctors' services. Twenty million persons are now covered by
this program. Medicare has cost-sharing provisions (being strengthened to enforce responsible utilization of scarce medical facilities and
resources) and cutoffs on benefits.
184
THE BUDGET FOR FISCAL YEAR 19 72
Table L-3. BENEFITS FOR THE AGED EXCEPT ANNUITIES TO PRIMARY
BENEFICIARIES: BENEFIT OUTLAYS, BENEFICIARIES,
AND AVERAGE PAYMENT
Benefit outlays
Number of beneAverage monthly
(millions)
ficiaries
(thousands)
payments
1970
1971
1972
1970
V^Tl
VT12 7970 1971 1972
actual
est.
est
actual
est.
est. actual est. est.
Benefits to aged widows:
Social security (OASDI)
members
$4,201
Railroad employees
320
Federal civilian employees.
213
Uniformed service members
.
629
Benefits to aged wives of retirees:
Old-age and survivors insurance
2.090
Railroad retirement
189
Minimum benefit payments,
old-age and survivors insurance
1.561
Aged retirees,
uniformed,
services
1,433
Medicare
6,783
Public assistance to the aged:
Old-age assistance, assistance to refugees, and to
Indians
Medicaid
In-kind benefits to needy
aged:
Food
Housing
Total.
1
$5. 032 $5,765 3.488 3.636 3.795 $100 $115 $127
381
418 269 272 277 99 117 128
248
280 139 147 155 128 141 151
675
721
710
742
769
74
76
78
2,377
229
2,583
224
2,752
179
2,811
179
2.804
179
63
88
70
107
77
104
1.671
1.663
2.693
2,570
2,431
48
54
57
1,543
7,868
1.631
8,597
987
9,200
971
9,500
968
9,800
121
61
132
69
140
73
1,270
988
1,545
1,145
1,716 2,085 2.143 2,225
1,144 P)
p)
p)
51
P)
60
p)
64
P)
112
135
235
193
269 1.712 2,264 2,342
254
546
637
742
5
21
9
25
10
29
19,924 23,138 25,264
Number of eligible persons receiving reimbursed services not known.
Medicare outlays will rise from $6.8 billion in 1970 to an estimated
$8.6 billion in 1972, financed in good measure from contributions under
OASDHI. In 1970, 9.2 million persons actually received medical care
for which Federal payment was made.
Public assistance for the aged.—Approximately one-eighth of the
outlays benefiting aged persons (excluding annuities to primary beneficiaries of the contributory retirement systems) are made under welfare programs. In 1970, $1.3 billion of cash grants were made to the
aged, almost entirely through old-age assistance. This amount will
reach $1.7 billion in 1972, assisting some 2.2 million aged persons in
1972. Old-age assistance, provided within each of the 50 States, has
State-determined eligibility tests and benefit levels. Medical assistance, or Medicaid, furnished another $1 billion in 1970 of benefits to
needy aged persons. Medicaid covers costs of chronic illness and the
cost-sharing of medicare where aged persons are not able to meet these
from their own resources. Medicaid also has State-determined eligibility and benefit levels. Within the welfare-type benefit category are also
included in-kind program benefits which pay part of the costs of food
and shelter. One-half billion dollars of in-kind benefits, excluding
SPECIAL ANALYSES
185
medical benefits, will reach aged persons through food stamps, commodity surplus distribution, public housing, and rent and interest supplements.
Disabled.—The disabled constitute the second target group for
whom there is a presumption of permanent inability to achieve selfsupport. Eligibility for an income security benefit for the disabled
person may be based on: membership in a contributory retirement
system (OASDI, or civil service), on military service, on occupation
(coal miner), or on indigency (welfare).
Six million persons in the United States are currently receiving
income security benefits from Federal programs on the basis of medically verified physical or mental disability. The disabled will receive
$8.2 billion in 1970 and these benefits will reach $10.9 billion in 1972—
an increase of almost one-third. The increases are distributed among
the types of programs from which disabled persons draw income security benefits: disability insurance provisions of retirement systems; disability compensation for persons with wartime military service; public
assistance to adults and disabled male heads of families; Medicaid;
and special benefits to disabled coal miners.
About $3.5 billion was provided to the disabled covered by retirement systems in 1970. Members of the social security system and the
railroad retirement system are eligible for retirement benefits computed on their earnings history to the date of permanent disability.
They receive additional benefits for dependent children residing with
them although not for a nonaged wife. Federal civilian employees
receive a disability benefit based on total disability for his previous
occupation—paying a minimum benefit of 40% of the average of his
highest 3 years of earnings. However, when he reaches age 65 this
benefit is decreased to the retirement annuity to which his contributions to date of disability retirement actually entitled him.
The uniformed services have an entirely different method of computing benefits to the disabled. Rather than relating benefits to previous levels of earnings, they are scaled to the degree of physical
impairment. Disability retirement from the military, and veterans
compensation and indemnities, are both provided for disabilities which
are presumptively service-connected. Veterans' pensions provide
benefits to persons who have seen wartime military service for nonservice-connected but presumptively total disability where financial
need can be demonstrated. Veterans compensation accounts for 77%
of the $3.1 billion of disability benefits provided for uniformed services
in 1970. All three programs will rise proportionately to a total of $3.7
billion in 1972, increasing at an average annual rate of 10.2% per year
over the 2-year interval.
Under the recently enacted (December 1969) Federal Coal Mine
Health and Safety Act, compensation is paid to black lung victims
in amounts related to the workmen's compensation law provided for
Federal employees (FECA). Eligible persons began registering for
benefits in the spring of 1970. By 1972, benefits to disabled coal miners
will be paid in the amount of $247 million.
186
THE BUDGET FOR FISCAL YEAR 19 72
Table L-4. BENEFITS FOR THE DISABLED: BENEFIT OUTLAYS,
BENEFICIARIES, AND AVERAGE PAYMENT
Benefit outlays
Number of beneAverage monthly
(millions)
ficiaries
(thousands)
payments
1970
1971
1972
1970
1971
1972 1970 1971 1972
actual
est.
est.
actual
est.
est. actual est. est.
Civilian covered employment:
Disability insurance
$2,778 $3,329 $3,622
Federal civilian employees.
559
649
732
Railroad employees.
__
144
162
157
Coal miners
6
141
247
Uniformed services:
Military service-connected
disability
2,637 3,001 3,268
Other
443
450
475
Public assistance to the disabled, including refugees
and Indians:
Aid to the blind
56
60
62
Aid to the permanently
and totally disabled,.__
531
666
803
AFDC (disabled male heads
of family)
267
398
500
Medicaid
789
909
953
In-kind benefits to needy
disabled:
Food
35
76
87
Housing
2
6
10
Total
1
8,247
9,847
397 1,487 1,560 $166 $187 $193
209
218 233 259 280
200
35,
34 333 386 385
36
44
84 250 267 245
2
106
118
117
123
124
132
84
58
60
62
945 1,075
55
59
62
29
074 2,129 2,199
306
299
314
80
801
83
22
28
0)
0)
0)
0)
0)
354
13
539
25
558
39
8
13
12
20
988 1,192 1,452
13
21
10,916
Number of eligible persons receiving reimbursed services not known.
Public assistance is provided for disabled persons under three categories: the blind, the permanently and totally disabled, and the disabled heads of families who meet the asset and income eligibility tests
for aid to families with dependent children. There are great diversities
among the program benefits, depending upon the State of residence,
in this as in other welfare programs.
Approximately 1,397,000 persons receive disability benefits under
social security. Another 200,000 individuals receive benefits through
Federal civilian employee programs. Allowing for overlap, some 1.5
million persons receive disability benefits calculated on their previous
earnings. In 1970 there were 141,000 veterans under age 65 receiving
disability benefits under military retirement, 1,933,000 (under 65)
receiving veterans compensation, and 313,000 (under 65) receiving
veterans pensions; in total, 2.4 million persons receive disability
benefits based upon uniformed service. It is estimated that by 1972,
84,000 disabled coal miners will be receiving special benefits under the
black lung program.
Approximately 1.1 million adults and three-quarters of a million
children are supported by welfare payments predicated upon the
disability of the adult. These persons are all eligible for Medicaid
benefits. An additional 251,000 disabled persons not on public assistance received benefits under Medicaid in 1970. It is estimated that in
1972, 1.7 million adults and 1.1 million children will be supported by
public assistance based upon disability.
SPECIAL ANALYSES
187
Mothers and dependent children.—Benefit eligibility varies considerably for the last target group for whom self-support is not assumed
to be universally possible. This group includes mothers with dependent children, and no male breadwinner.
These mothers receive income security benefits under two types
of programs. $3.1 billion in 1970 was provided to covered widows of
employees under OASDI. Some 1,363,000 families received survivors
benefits from social security, and an additional 240,000 families received other program benefits. These benefits parallel widows benefits under each of the systems, with the addition of allowances for
dependents.
Beginning in 1970, benefits are provided to widows and their
children of deceased coal miners suffering from black lung disease.
By 1972, these outlays will reach $12 million for this target group.
It is estimated that 4,000 families will receive these benefits, with
an unknown degree of overlap with social security.
The second source of assistance to mothers with dependent children
are means-tested programs—dominated by welfare. Approximately
$1 billion of cash payments was made in 1970 to women with preschool
children. These AFDC families with preschoolers received an additional half-billion dollars' worth of medical services. Estimates are
not available for the other in-kind benefits provided to this group.
The number of families was estimated to be almost 1 million, rising
in 1972 to 1.4 million. Cash payments and medical services to femaleheaded AFDC families with preschool children will reach $2.5 billion
in 1972.
Table L-5. BENEFITS FOR MOTHERS AND DEPENDENT CHILDREN
AND NO HUSBAND: BENEFIT OUTLAYS, BENEFICIARIES
AND AVERAGE PAYMENT
Benefit outlays
(millions)
1970
1971
1972
actual
est.
est.
Benefits to widows of
covered employees:
Old-age and survivors
insurance
$3,114 $3,620 $4,043
Railroad employees __
19
25
28
Federal civilian employees
70
80
90
Uniformed
service
members
324
343
360
Coal miners
8
12
Public Assistance:
A F D C : Mothers
with p r e s c h o o l
children:
Cash payments
1,001 1,477 1,830
Medical services
474
575
634
Total
1
5,002
6,129
Number of beneficiaries
(thousands)
1970
1971
1972
actual
est.
est.
1,363 1,402 1,421
13
13
14
$190 $215
122 160
$237
167
37
39
41
158 171
183
190
200
2
209
4
142 143
144
3,577 4,486 5,332
P)
6,997
Number of eligible persons receiving reimbursed services not known.
Average monthly
payments
1970 1971 1972
actual
est. est.
23
(l)
27
O
29
O
188
THE BUDGET FOR FISCAL YEAR 1972
There is much scope for analyzing the range of eligibility requirements and benefit levels in the programs serving this target group.
Overlap and inconsistencies make this group of programs a prime
target for reform and harmonization with the income strategy.
Transitional low income.—The bulk of the population of the
United States—48%—are able-bodied men and women, as compared
to 10% who are aged. A much smaller proportion of the beneficiaries
and outlays under programs are made on behalf of the able-bodied
temporary poor.
The intent of income security outlays for able-bodied men and
women is to tide over such persons during intervals when they cannot
support themselves, until other measures correct the causes of such
inability to provide self-support.
Benefits are available from a range of programs, with great variation
in benefits and in the stringency of eligibility requirements. There is a
great potential for harmonizing and rationalizing outlays for this
target group, and it is one of the main foci of welfare reform. In many
cases, there is not much consistency in the distribution of these
benefits. The pyramiding of separate programs leads, in some instances, to disproportionate decreases in income security benefits when
own income rises, creating incentive effects adverse to the fundamental aim of these programs, that of ending dependency on Government benefits.
The major system of unemployment insurance, constituting 93%
of unemployment benefits paid in 1970, is State administered. This
means that provisions, benefit levels, and duration of benefit availability vary—depending upon place of residence. Some 5.8 million
persons were aided with unemployment insurance in 1970 and it is
anticipated that 7.4 million persons will receive unemployment benefits in 1972. These outlays total $3.1 billion in 1970, rising to $5.4
billion in 1971 and declining to $4.6 billion in 1972, as the economic
situation improves. There are separate unemployment insurance
programs basically similar in intent for Federal employees and
ex-servicemen, and for railroad employees. A fourth unemployment
benefit of up to 16 months' duration (as compared to 9 months, with
extended benefits, in State unemployment insurance) is trade adjustment benefits which provide living expenses, extended during vocational reeducation, for persons in industries especially affected by
competitive imports.
A second set of programs providing income security benefits to
able-bodied men and women are means-tested cash and in-kind benefit
programs. Approximately $1.3 billion was spent in 1970 under cash
assistance to families with able-bodied unemployed fathers, cash
assistance to families in the AFDC program with all children in school,
to Cuban refugees and Indians, and in providing medical care, food,
and housing in-kind benefits to these groups. In-kind food and housing
benefits were also provided through public housing, food stamps, child
nutrition programs, and commodity distribution to other low-income
families and children. These outlays will reach a level of $2 billion in
1972. It is estimated that 700,000 families in this category received
welfare benefits in 1970, and over 1 million families will receive such
benefits in 1972.
SPECIAL ANALYSES
189
Table L-6. BENEFITS FOR TRANSITIONAL LOW INCOME AND OTHER:
BENEFIT OUTLAYS, BENEFICIARIES, AND AVERAGE PAYMENT
Number of
beneficiaries
(thousands)
Benefit outlays
(millions)
1970
actual
1971
est.
1972
est.
Temporary joblessness:
Unemployment insurance system
$2,793 $5,080 $4,270
Other unemployment
insurance
277
361
355
Longer term joblessness:
Cash: AFDC:
Unemployed fathers-. 100
142
169
Mothers with all
children in schools
667
985 1,220
Other1-..
43
68
83
Longer term joblessness:
In-kind:
Medical
360
444
485
Food 2
1970
actual
1971
est.
Average monthly
payments
1972
est.
5,394 8,266 6,910
1970 1971 1972
actual est. est.
$264 $290 $321
386
430
458
217
234
243
321
450
498
26
26
28
2,384 2,991 3,555
80
118
135
23
47
27
48
29
51
(3)
(3)
(3)
2,000
3,500
4,000
(3)
(3)
14
16
(3)
328
687
888
18
661
1,204
1,475
10,000 15,000 16,000
6
7
8
337
613
1,025
2,245 2,896 4,274
12
18
20
Subtotal, transitional low income
5,566
9,584
9,970
Uniformed services retirees under 65
Other
2,305
1,966
2,740
2,405
3,014
2,382
Subtotal, other..
4,271
5,145
5,396
Total
9,837 14,729 15,366
Low-income families and
children:
Food
Housing2
...
571
614
__._
663
336
372
....
397
1
Includes all AFDC-related assistance to refugees, and Indians.
2 Includes all benefits to AFDC and UF families.
Number of eligible persons receiving reimbursed services not known.
3
Additional benefit outlays to able-bodied men and women are made
to uniformed services retirees under the age of 65. Some 571,000
persons received $2.3 billion upon retirement after at least 20 years of
service in the military forces. This outlay will reach $3 billion in 1972.
FEDERAL AID TO THE POOR
In 1969 (the latest year for which statistics are available), there were
24.3 million persons—12% of all Americans—with incomes below the
poverty line as defined by the U.S. Census Bureau ($3,720 for a family
of four). Of the total, about one-half (47%) were children and youth
under the age of 21, one-third were adults between the ages of 21 and
64, and one-fifth were 65 years of age or older. In terms of residency,
the total was fairly evenly divided between the Nation's metropolitan
and non-metropolitan areas.
190
THE BUDGET FOR FISCAL YEAR 1972
Table L-7. FEDERAL AID TO THE POOR BY ACTIVITIES
(in billions of dollars)
Category
1968
actual
1969
actual
11.3
(10.4)
Income security
Cash benefits
In-kind benefits
Education
Health
Manpower __
Other
10.2
(9.6)
(.6)
1.5
3.8
1.4
.6
4.7
1.4
.6
Total
17.6
19.5
(:?
1970
1971
1972
13.2
(11.8)
(1.4)
1.8
5.7
1.6
.7
17.1
(14.3)
(2.8)
2.1
6.3
1.9
.9
19.2
(15.7)
(3.4)
2.2
6.8
2.0
.9
23.0
28.3
31.1
Income security programs, excluding Medicare and Medicaid, represent 62% of the Federal aid that will be provided to the poor in 1972.
These programs are complemented by a variety of other programs
designed to deal with specific problems in assisting the poor to raise
their standards of living. As indicated in table L-7, the aggregate
amount of Federal resources addressed to the needs of the poor in
1972 is $31.1 billion, an increase of 10% over 1971 and 77% over
1968. Most of this increase is accounted for by programs which provide
income support for individuals and families, either through cash benefits or through such in-kind benefits as food stamps and medical
assistance. Sizable increases have also been provided for the more
specialized programs, notably manpower training, education, and
health.
Table L-8. FEDERAL AID TO THE POOR BY ANALYTICAL CATEGORIES
(in billions of dollars)
Category
Poverty entitlement!
Human investment
Maintenance
Normal entitlement
Human investment
Maintenance
Total
1968
actual
1969
actual
1970
actual
1971
estimate
1972
estimate
8.1
(2.9)
(5.2)
9.5
(.7)
(8.8)
9.2
(2.8)
(6.4)
10.4
(.8)
(9.6)
11.3
(3.1)
(8.2)
11.6
(•9)
(10.7)
15.1
(3.8)
(11.2)
13.2
(1.0)
(12.2)
17.4
(4.1)
(13.2)
13.8
(1.0)
(12.8)
17.6
19.5
23.0
28.3
31.1
Table L-8 distributes Federal outlays for the poor by eligibility
criteria. Poverty entitlements include programs such as Medicaid, food
stamps and public housing directed to the poor specifically by reason
of their poverty. Normal entitlements include programs from which
the poor receive benefits for reasons other than poverty, such as social
security benefits which the poor receive because they have an earnings
history. Human investment programs include all Federal activities that
actively promote the development of work skills, education, economic
development, and similar activities to assist the poor to break out of
poverty. Maintenance programs comprise both cash and in-kind payments such as public assistance and food stamps.
SPECIAL ANALYSES
191
PROGRAM EXPENDITURES
Income security outlays will reach $80.9 billion in 1972. Of this,
the largest program is OASDI, at $37.6 billion. 26.9 million persons
will receive OASDI benefits in 1972. The second largest program is
Medicare at $8.6 billion, serving 20 million of these same persons.
Next in size is public assistance at $6.3 billion.
Following are tables by program and by agency showing outlays
and beneficiaries in 1970, 1971, and 1972.
Table L-9. FEDERAL OUTLAYS FOR INCOME SECURITY BENEFITS, BY
DEPARTMENT AND PROGRAM
Department, agency and program
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
Special benefits for disabled coal miners
Assistance to refugees
Public Health Service officers retirement
Medical care for retired commissioned officers
Proposed legislation included above
Total, Health, Education, and Welfare
Veterans Administration:
Disability and dependency and indemnity compensation
Veterans and survivors pensions
Life insurance (net subsidy)
Other veterans benefits
Total, Veterans Administration
Department of Labor:
Unemployment insurance (State programs)
Railroad unemployment
Unemployment compensation for Federal employees and ex•
servicemen
Trade adjustment activities
Employees compensation
Total, Labor
Department of Defense—Military:
Military retirement
Medical care for retirees
Total, Defense
Benefit outlays (in millions of
dollars)
1970
actual
1971
estimate
1972
estimate
26,267
2,778
4,804
1,979
30,761
3,329
5,827
2,041
33,954
3,622
6,347
2,250
3,868
2,612
7
50
9
2
5,243
3,072
224
64
11
2
(1,020)
6,257
3,216
375
90
13
2
(2,297)
42,376
50,574
56,126
2,974
2,255
18
93
3,323
2,392
18
96
3,582
2,526
20
114
5,340
5,829
6,243
2,793
93
5,080
92
4,270
95
ioa
anc
loo
1
132
JVJ
14
152
Tex
LJ1*
20
177
3,203
5,643
4,816
2,849
179
3,394
201
3,744
211
3,028
3,595
3,955
192
THE BUDGET FOR FISCAL YEAR 19 72
Table L-9-FEDERAL OUTLAYS FOR INCOME SECURITY BENEFITS, BY
DEPARTMENT AND PROGRAM—Continued
Department, agency and program
Department of Agriculture:
Food stamps
Child nutrition
Special milk
Removal of surplus commodities
Proposed legislation included above
Benefit outlays (in millions of
dollars)
1970
actual
1971
estimate
1,490
673
102
487
(35)
1.941
667
14
527
(35)
1,551
2,752
3,149
2,518
1
2,923
1
3,266
1
2, 519
2,924
3,267
1,586
1,890
(25)
1.922
(62)
Total, Railroad Retirement Board
1, 586
1,890
1,922
Department of Housing and Urban Development
475
812
1,288
475
812
1,288
59
67
71
59
67
71
16
19
21
16
19
21
39
31
22
39
31
22
16
34
37
34
37
1
2
1
2
Total, Agriculture
Civil Service Commission:
Civil service retirement
Special annuities (CSC)
Total, Civil Service Commission
Railroad Retirement Board:
Railroad retirement
Proposed legislation included above
Total, Housing and Urban Development
Department of Transportation:
Coast Guard Retirement
Total, Transportation
Department of State:
Foreign Service Retirement
Total, State
Office of Economic Opportunity:
Emergency Food Program
Total, Office of Economic Opportunity
551
379
102
519
1972
estimate
Department of the Interior:
General Assistance to Indians
Total, Interior
16
Department of Commerce:
NOAA officers retirement
1
Total, Commerce
1
Total, Federal Outlays
60,209
74,171
80,919
SPECIAL ANALYSES
193
Table L-10. RETIREMENT BENEFITS: BENEFIT OUTLAYS, BENEFICIARIES
AND AVERAGE PAYMENTS BY PROGRAM
Benefit outlays
(millions)
1970
actual
Number of beneficiaries
(thousands)
1971
est.
1972
est.
1970
actual
1971
est.
1972
est.
Average monthly
payments
1970
actual
Social security:OASI $18,577 $21,710 $23,739 16,099 16,589 16,934 $96
Federal employee retirement system:
Military retirement—.
2,325
2,809
3,100
602
649
701 321
Civil service retirement
1,651 1,914 2,134
462
484
506 298
Coast Guard retirements
56
63
68
12
13
13 375
Foreign service retirement
13
15
17
2
2
2 589
PHS officers retirement
7
9
10
1
1
1 754
NOAA officers retirement
1
1
1
*
*
* 885
Railroad retirement.
1,087 1,294 1,287
614
615
614 148
Proposed legislation
included above.._
(420) (1,270)
.___
Total
23,717
27,815
30,356
1971
est.
1972
est.
$109
$117
361 369
330 352
417 427
666 707
849 919
947 1,044
175 175
....
.... ....
•Less than $500 thousand.
Table L-11. DISABILITY BENEFITS: BENEFIT OUTLAYS, BENEFICIARIES
AND AVERAGE PAYMENTS BY PROGRAM
Benefit outlays
(millions)
1970
actual
Number of beneficiaries Average monthly
(thousands)
payments
1971
1972
est.
est.
1970
actual
wf\
\9T2
est.
est.
1970 1971
actual
est.
1972
est.
Social security (DI)
$2,778 $3,329 $3,622 2,490 2,656 2,780 $93 $104 $106
Veterans benefits:
Disability compensation._
2,382 2,685 2,910 2,065 2,113 2,181 96 106 111
Other compensation
17
18
32
Federal employee retirement
systems:
Military retirement
487
573
631 141 151 161 288 317 327
Civil service retirement.. _
478
555
618 184 193 201 217 240 256
Coast Guard retirement. _
3
3
3
1
1
2 154 171 175
Foreign service retirement.
2
2
3
*
*
* 637 678 737
PHS officers retirement...
2
2
3
*
*
* 680 850 928
NpAA officers retirement.
*
*
*
*
*
* 633 726 859
Special benefits for disabled
coal miners
6
141
247
2
44
84 250 267 245
Railroad retirement (permanent disability)
86
110
104
36
35
34 199 262 257
Employees compensation.__
78
92
111
16
16
16 407 479 576
Railroad unemployment
(temporary disability) ___
58
52
53
27
25
25 179 173 177
Proposed legislation included
above
(98) (208)
.... —- —Total disability benefits
"Less than $500 thousand.
430-700 0—71
13
6,377
7,562
8,337
—_ —- —-
194
THE BUDGET FOR FISCAL YEAR
1972
Table L-12. SURVIVORS BENEFITS: BENEFIT OUTLAYS, BENEFICIARIES
AND AVERAGE PAYMENTS BY PROGRAM
Benefit outlays
(millions)
1970
actual
1971
est.
Number of
beneficiaries
(thousands)
1972
est.
1970
actual
1971
est.
Average monthly
payments
1972 1970 1971 1972
est. actual est. est.
Social security: OASI
$7,690 $9,051 $10,215 6,723 6,994 7,233
Veterans benefits:
Dependents indemnity
compensation
471
477
480
592
638
673
561
Other veterans benefits. _
79
82
540
584
76
325
Railroad retirement
461
505
322
330
388
Federal employee retirement systems:
8
Military retirement
10
8
12
13
9
454
514
Civil service retirement. _
291
389
309
326
Coast Guard retirement.
*
*
*
*
*
*
Foreign Service retire*
*
*
1
1
1
ment
*
*
*
*
*
*
PHS officers retirement __
*
*
*
*
*
NOAA officers retirement
*
Special benefits for disabled
*
128
25
coal miners
1
83
67
35
37
9
Employees compensation _ _
33
9
9
Proposed legislation in(549) (1,716) .
Total, survivors
benefits
9,180 10,814
$95 $108 $118
105
12
100
112
12
118
117
12
128
104
111
107
116
123
107
120
132
108
204
203
125
204
209
125
220
215
132
306
324
343
12,168
*Less than $500 thousand.
Table L-13. UNEMPLOYMENT BENEFITS: BENEFIT OUTLAYS,
BENEFICIARIES, AND AVERAGE PAYMENTS BY PROGRAM
Benefit outlays
Number of beneficiaries Average weekly
(millions)
(thousands)
.payments
1970
1971
1972
1970 1971
1972 1970 1971 1972
actual
est.
est.
actual
est.
est. actual est. est.
Unemployment benefits:
Workers insured under
Statelaws
$2,793 $5,080 $4,270 5,393 8,266 6,910
Unemployment compensation for Federal employees and ex-service400
305
254
336
377
183
men
21
22
23
42
Railroad unemployment. _
40
35
Trade adjustment activi20
3
6
10
14
ties
- -_
1
Total, unemployment
benefits
3,012
5,439
4,586
$61
$67 $74
49
63
63
56
63
47
51
54
SPECIAL ANALYSES
195
Table L-14. WELFARE BENEFITS: BENEFIT OUTLAYS, BENEFICIARIES,
AND AVERAGE PAYMENTS BY PROGRAM
Benefit outlays
(millions)
1970
Actual
1971
Number of
beneficiaries
(thousands)
1972
Public assistance (Federal share):
Old age assistance
$1,242 $1,509 $1,666
Aid to the blind
60
62
Aid to the perma56
nently and totally
disabled
797
662
Aid to families with
528 3,002 3,719
dependent children. 2,034
Emergency assistance.
10
8
12
Total public assistance (Federal share)
3,868
5,243
Average monthly
payments
1970
actual
1971
1972
2,048
80
2,098
83
798
940
7,270
11
1970
actual
1971
1972
2,169
84
$51
58
$60
60
$64
62
1,070
55
59
67
9,119 10,837
11
12
23
60
27
81
29
85
102
43
108
46
114
48
6,257 10,207 12,250
14,172
Total (State and
local share) _ _ _ (2,777) (3,797) (4,720)
Veterans pensions:
Veterans
Survivors
1,351
903
1,391
1,001
1,439
1,087
1,105
1,744
1,075
1,829
1,050
1,896
Total, veterans
pensions .
2,255
2,392
2,526
2,929
2,904
2,946
Assistance to refugees __
50
64
90
76
93
115
55
58
65
General assistance to
Indians.
16
34
37
36
64
70
37
44
44
6,189
7,733
8,910
Total
196
THE BUDGET FOR FISCAL YEAR
1972
TableL-15. BENEFITS IN KIND: OUTLAYS AND BENEFICIARIES FOR
SELECTED PROGRAMS
Benefit outlays (millions)
1970
actual
Food and nutrition:
Food stamps
Child nutrition
Special milk
.
Removal of surplus commodities
OEO emergency assistance...
Health care:
Medicare
Medicaid (Federal outlays)__
Medicaid (State and local
payments)
Housing:
Public housing
Rent supplements
Home ownership and rental
housing assistance
Other programs
Proposed legislation included
above
Total, benefits in kind...
1971
estimate
Number of beneficiaries
(thousands)
1972
estimate
1970
actual
1971
estimate
1972
estimate
$551
379
102
$1,490
673
102
$1,941
667
14
4,300
20,594
16,700
9,000
26,055
16,700
11,000
26,055
0
519
39
487
31
527
22
29,853
1,200
32,278
950
31,919
650
6,783
2,612
7,868
3,072
8,597
3,216
20,000
11,658
20,300
13,787
20,600
15,747
(2,460)
(2,912)
(3,081)
433
19
616
44
752
88
2,780
79
3,100
162
3,453
297
22
181
152
203
448
213
339
800
1,390
858
2,736
920
(13)
11,641
14,738
(-801)
16,485
_
__
SPECIAL ANALYSIS M
FEDERAL PROGRAMS FOR THE REDUCTION OF CRIME
The Federal crime reduction program is designed to reverse the
trend of rising crime in our Nation, and to limit the great losses in both
economic and human resources associated with the trend. Recognizing that State and local governments have the broadest responsibilities
for controlling crime, the Federal Government will provide increased
technical and financial assistance to State and local law enforcement.
Federal law enforcement will be improved and intensified in certain
areas of high national priority such as attacking the problem of
organized crime, and controlling large scale trafficking in narcotics
and dangerous drugs. The Federal crime reduction program is a comprehensive effort to: (1) determine the nature and extent of the crime
problem and the causes of criminal behavior; (2) prevent crime
through programs directed at acute national problems such as juvenile
delinquency, alcoholism, narcotic addiction, and drug abuse; (3) increase the deterrent to criminal action by improving the effectiveness
of police and investigators at all levels of government; (4) develop a
system of corrections, both in institutions and in the community, that
can truly rehabilitate men; and (5) assure that the criminal law is
responsive to the needs of society, and is administered with fairness
and efficiency.
ACCOMPLISHMENTS OF THE PAST YEAR
There were numerous accomplishments during the past year,
including a variety of legislative enactments which will permit more
effective crime reduction activities. Among the most significant accomplishments were:
• Enactment of the Organized Crime Control Act of 1970 which
will increase in a variety of ways the ability of the Government
to investigate and prosecute members of organized crime. The
act will permit broader Federal investigations of large-scale illegal
gambling activities and thereby reduce gambling profits available
to organized crime for investment in other enterprises. Also,
title XI of the act will permit greater control to be exercised
over the illegal distribution and use of explosive materials.
• Establishment by the Attorney General in June 1970 of a National
Council on Organized Crime to coordinate Federal organized
crime enforcement. The Council has set a goal of breaking up
organized crime within 6 years. In 1970, FBI investigations alone
led to the conviction of 461 organized crime and gambling
figures, and the Justice Department has supervised the prosecution and conviction of 33 top echelon organized crime leaders.
• Enactment of the Comprehensive Drug Abuse Prevention and
Control Act of 1970. This major reform of our narcotics and
dangerous drug laws will enhance our enforcement ability, and
provide for expanded prevention and rehabilitation programs.
Earlier in the year, the President announced greatly expanded
197
198
THE BUDGET FOR FISCAL YEAR 1972
Federal programs for drug education and training. In addition,
Federal enforcement of drug laws has been intensified during
the year. The Bureau of Narcotics and Dangerous Drugs and
the Bureau of Customs are now engaged in cooperative efforts
which are destroying major criminal systems for illegally importing and distributing narcotics and drugs. Also, during the year,
the United States has devoted particular attention to seeking and
obtaining improved international cooperation in controlling the
illegal traffic in narcotics and drugs.
• Progress in carrying out the President's directive of last year to
initiate reforms in our correctional systems. Several Federal
agencies now have programs underway to provide special institutions and treatment for juvenile offenders, addicts, and mentally disturbed and violent offenders. Comprehensive community
correctional centers are now being planned or constructed in a
number of urban areas. The recent enactment of the Omnibus
Crime Control Act of 1970 authorizes a new program in the Law
Enforcement Assistance Administration for improving correctional programs and facilities. This authority will permit great
improvements in probation and parole services throughout the
country.
• A landmark statement by the Chief Justice of the United States
concerning problems of the Federal courts. The Chief Justice
suggested the trial of criminal cases within 60 days after indictment, and called for consideration of a variety of reforms to increase the efficiency of the courts. The Congress authorized 61
additional district court judgeships during the year, enacted an
increase to provide court executives for each of the 11 Federal
circuit courts, and amended the Criminal Justice Act to assure
improved defense services for poor persons.
Table M-1. FEDERAL OUTLAYS FOR THE REDUCTION OF CRIME BY
AGENCY* (in thousands of dollars)
Outlays
1970
actual
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
Department of Transportation
Treasury Department
Atomic Energy Commission
General Services Administration
National Aeronautics and Space Administration
Postal Service
Veterans Administration
Other independent agencies
Total Federal outlays..
1
2
_
__._
_
57,125
5,732
3,307
59,923
4,550
17,198
508,584
5,888
10,032
115,868
116
19,013
1,000
26,394
21,866
320
1971
estimate
1972
estimate
62,375
79,370
15,540
16,330
3,945
4,074
86, 723
99,880
23,055
27,480
18,630
21,222
929,312 1,259,107
8,103
32,525
40,857
66,600
158,620
176,361
136
153
31,918
43,585
1,395
1,270
32,923
37,215
29,874
34,686
485
300
856,916 1,443,891
1,900,158
Does not include Department of Defense or nondomestic outlays for crime reduction.
Outlays estimated by the Office of Management and Budget.
SPECIAL ANALYSES
199
• The completion of a major study by the National Commission on
Reform of Federal Criminal Laws which recommends comprehensive revisions in the structure and substance of Federal criminal
law. These recommendations will now be studied by the executive
departments and other interested organizations and will provide a
focus for future discussions and action to reform criminal law.
• Progress in the effort to reduce crime in the District of Columbia.
The number of police on the streets of the District has been increased, a greater number of narcotic addicts are being treated
and thereby taken off the streets, reforms have been realized in
the court system with the enactment of the District of Columbia
Court Reform and Criminal Procedure Act of 1970, and improvements are being made in the correctional system. This combination of programs has slowed the increasing rate of crime in the
District, and demonstrated that a concerted systemwide effort to
reduce crime in a large city can work.
1972 BUDGET HIGHLIGHTS
Federal outlays for programs to reduce crime will total $1,900
million in 1972. This compares with $1,444 million in 1971 and is
122% more than was spent for these programs in 1970. It is estimated
that expenditures of all governments—State, local, and Federal—for
crime reduction programs will be almost $11.5 billion in 1972. Of the
$1,900 million of Federal expenditures in 1972, $804 million or 42%
of the total will be directed to assisting State and local governments.
This compares with 38% of Federal expenditures devoted to such
purposes in 1971, and 21% in 1970. Assistance to State and local governments for all aspects of law enforcement will be increased by 45%
in 1972.
The Departments of Justice and Treasury have the largest crime
reduction programs with expenditures in 1972 of $1,259 million and
$176 million, respectively. In 1971 and 1972 these Departments are
emphasizing programs for the control of (1) the narcotics and drug
traffic, (2) organized crime, and (3) terrorist activities, bombings and
illegal use of explosives. Other agencies with rapidly expanding crime
reduction programs are the Department of Labor (manpower development programs for offenders), and the Department of Transportation
(protection of air commerce and control of aircraft hijacking).
CRIME REDUCTION PROGRAM BY ACTIVITIES
The budget outlays reported by this special analysis cover all
domestic Federal programs directly related to or closely associated
with crime reduction, except
outlays associated with programs of the
the Defense Department.1 The analysis includes certain programs of
1
Defense Department outlays for crime reduction are not included in the tables and totals used
in this analysis. However, a summary of Defense Department outlays for law enforcement are estimated as follows (in millions of dollars):
1970
Department of the Air Force
Department of the Navy
Department of the Army
Total Department of Defense
1971 1972
281,601
8,788
314,928
297,231
11,805
306,483
296,729
12,616
295,552
605,317
615,519
604,897
200
THE
BUDGET FOR FISCAL YEAR
1972
the 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 not requiring police powers, 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 Office of
Management and 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
1970
actual
1971
estimate
1972
estimate
Crime research and statistics:
Statistics on crime, criminals, and criminal justice system
Research on criminal behavior and sociology of crime
Program total
Reform of criminal laws
1,866
12,636
4,612
37,840
7,535
51,825
14,502
42,452
59,360
634
1,387
1,461
3,122
5,934
4,765
19,886
19,996
9,240
51,692
41,182
25, 587
65,367
50,718
29,012
52,244
124,395
149,862
221,037
150, 174
31,699
44, 725
11,967
242,022
233, 651
50,592
68, 411
20,926
252,221
306,042
62,427
75,597
29,616
459,602
615,602
725,903
2,662
44,679
2,790
33,392
2,971
1,918
429
14,630
84,409
9,676
130,565
24,993
14,311
3,431
20,734
104,298
12,865
171,797
34,211
18,939
4,405
88,841
282,015
367,249
Services for prevention of crime:
Public education on law observance, enforcement, and criminal justice
Special programs for rehabilitation of alcoholics and narcotic
addicts
Prevention and control of juvenile delinquency
Development of other community crime prevention services. _
Program total
Federal criminal law enforcement and Federal police:
Enforcement in support of Federal systems
General Federal law enforcement
Federal police
Specialized activities against organized crime
Support for Federal law enforcement
Program total
Assistance to State and local police activities:
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.
SPECIAL ANALYSES
201
Table M-2. FEDERAL OUTLAYS FOR THE REDUCTION OF CRIME BY
MAJOR PROGRAM AND SELECTED ACTIVITY 1 (in thousands of dollars)—Con.
Outlays
Major program and selected activity
1970
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 administration of justice
Other supporting programs
Program total
Rehabilitation of offenders:
Operation and construction of Federal correctional institutions
Federal probation, parole, and community treatment
Federal inmate education and training
Federal inmate medical treatment
Other programs supporting Federal corrections
Assistance to States and localities for improved correctional
programs
Program total
Planning and coordination of crime reduction programs
Total Federal outlays
1
2
1971
estimate
1972
estimate
22, 845
54, 786
28,523
60,303
31, 875
72, 649
1,717
5,501
19,816
7,986
27,276
12,506
84,849
116,628
144,306
78,095
15, 635
5,979
5,057
430
95,640
16,599
7,659
5, 735
637
147,258
19, 771
9,712
9,481
1,032
34,150
104,364
221,847
139,346
230,634
409,101
16,898
30,778
42,916
856,916 1,443,891
1,900,158
Does not include Department of Defense or nondomestic outlays for crime reduction.
Outlays estimated by the Office of Management and Budget.
Crime research and statistics.—Crime research and statistics includes
those Government activities designed to produce statistics and
knowledge concerning crime, criminals, and the criminal justice system, and those which develop improved methods and techniques for
the operation of the system.
• Outlays of $59 million will be devoted to crime research and
statistics in 1972. Of this amount $7.5 million is for statistical
activities and $51.8 million for research. This compares with
$42.5 million spent for research and statistics in 1971.
• LEAA will fund a "pilot cities program" which is designed to
determine the value of comprehensive systemwide applications
of improved law enforcement methods and technologies in several
medium sized cities. New statistical programs of LEAA will be
utilized to measure the impact of these improved methods on
crime in the pilot cities.
• The National Institute of Mental Health will continue studies of
a wide range of issues in the areas of crime, delinquency, corrections, and individual violence, and will conduct basic and applied
research on the nature and causes of law-violating behavior,
recognizing that progress toward more effective crime prevention
will depend upon a sound knowledge base.
• NIMH is also conducting an in-depth study and analysis of the
entire juvenile justice system in the 50 States and the District of
Columbia.
202
THE BUDGET FOR FISCAL YEAR 19 72
• LEAA, in cooperation with the National Bureau of Standards,
will develop a laboratory to define performance standards for law
enforcement equipment and develop uniform procedures for
measuring its quality.
• The Atomic Energy Commission is continuing to work with LEAA
and the Bureau of Narcotics and Dangerous Drugs to find new
applications of neutron activation analysis and other techniques
in scientific crime investigations.
• The Office of Economic Opportunity will devote over $2 million
in 1972 to research concerning the process by which felony offenders
can best be reintegrated into community life, and how State and
local laws can be best utilized to assist in this process.
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.
• Over $1.4 million will be spent for law reform in 1972. Over $1.1
million of this amount will support law reform efforts of State
and local governments.
• The Department of Justice and other Federal agencies will
study the recommendations of The National Commission on Reform of Federal Criminal Laws with a view to modernizing our
criminal law to assure that it is responsive to our present social
needs.
• The Justice Department has developed and proposed a model
State narcotics and dangerous drug law. This model law has been
adopted by the National Conference of Commissioners on Uniform State Laws and made available to the States. Several States
have already enacted the law.
• LEAA is supporting projects to develop a criminal law revision
clearing house which will collect and distribute information about
law revision activities throughout the United States.
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 outlays for Federal crime prevention programs will be
$149.9 million in 1972. This is 20% more than was spent for such
purposes in 1971, and 187% more than the $52.2 million devoted
to crime prevention in 1970.
• In 1972 increased attention will be devoted to the problems of
juvenile delinquency. LEAA grants will support a great variety
of projects and programs for the rehabilitation of juvenile offenders, and for prevention of delinquency among groups of youth
where the risk of delinquency is high.
• The Youth Development and Delinquency Prevention Administration in HEW will give emphasis to the development of model
SPECIAL ANALYSES
203
systems for the prevention and control of delinquency and provide technical assistance to utilize the knowledge obtained from
the model systems developed.
• The National Institute of Mental Health will conduct both institutional and community based treatment programs for narcotic
addicts. In 1972, treatment and rehabilitative after care will be
provided for an estimated 24,000 addicts.
• Both the Office of Economic Opportunity and the Veterans Administration will fund alcoholism and drug addict treatment units
in 1972. The VA will add 17 alcoholism treatment units and 14
drug dependence units to provide effective treatment and rehabilitation of veterans.
• A 3-year drug information program will be undertaken jointly by
the Department of Health, Education, and Welfare, the Department of Justice, and the Department of Defense. A series of
publications will be produced to provide accurate and factual
information on drugs.
Federal criminal law enforcement and Federal police.—Law enforce-
ment 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 programs against organized crime and air piracy.
• $725.9 million in outlays will support Federal investigative and
police activities in 1972. This compares with total outlays of
$615.6 million in 1971 and $459.6 million in 1972 for this purpose.
Outlays for Federal efforts against organized crime will be $75.6
million in 1972 or an increase of 69% over funds spent to combat
organized crime in 1970.
• In a statement of September 11, 1970, the President said that the
menace of air piracy must be met immediately and effectively. A
special program has been developed to place highly trained "sky
marshals" on commercial flights and to greatly increase security
measures at air terminals to prevent weapons and explosives from
being carried aboard aircraft.
• The Bureau of Narcotics and Dangerous Drugs has developed an
intelligence system which concentrates on identifying the major
drug trafficking organizations responsible for most of the hard
narcotics brought into the country. The Bureau of Customs has
established a new intelligence system to help identify smugglers
at border stations and other points of entry, and is employing a
number of new enforcement techniques to limit the introduction
of narcotics and drugs into the country.
• The FBI will increase efforts to destroy major organized crime
operations, investigate terrorist bombings, and carry out investigations of a variety of Federal crimes.
• Both the U.S. Marshals and the General Services Administration
will increase personnel assigned to assure the safety of Federal
204
THE BUDGET FOR FISCAL YEAR
1972
judges and provide necessary security for Federal courtrooms and
other Federal buildings. Over $46.6 million will be spent for these
programs in 1972.
• The U.S. Marshals Service is increasing training for its personnel
in order to meet the increased demands upon it, including those
resulting from air piracies, courtroom violence, and increased
need for witness security.
• The Treasury Department will spend $7.5 million in 1972 for
further construction of the Federal Law Enforcement Training
Center which will train 8,700 agents annually from 17 participating Federal enforcement organizations.
• The Internal Revenue Service will conduct over 7,700 tax fraud
investigations in 1972, and will carry out a variety of new
responsibilities under title XI of the Organized Crime Control
Act of 1970, concerning the licensing and control of explosives.
• In 1970, for the first time, the Tax Division in the Department
of Justice received more than 1,000 tax fraud cases including 106
involving racketeers. Over 600 defendants were convicted,
including 25 in the racketeer category.
• The Secret Service obtained over 3,000 convictions in 1970
involving check and bond forgeries and counterfeiting. The
Secret Service will continue to participate with other Federal
enforcement agencies in the organized crime program.
• The Immigration and Naturalization Service's Border Patrol
officers located 18,747 smuggled aliens in 1970. This was a 59%
increase over the number of smuggled aliens in 1969 which was a
previous all-time record. The Patrol also apprehended 3,298
persons for smuggling aliens into the country.
• In 19707 U.S. game management agents and other personnel
made 7,066 apprehensions of violators of Federal wildlife conservation laws that resulted in jail sentences of 15,370 days and
147,620 days of probation.
Assistance to State and local police.—This includes Federal efforts to
provide or improve activities which support or upgrade State and
local police and investigative agencies.
• Outlays to assist State and local police will total $367.2 million
in 1972, an increase of $85.2 million over 1971, and $278.4 million
over 1970. Over $104 million will be spent to train and educate
State and local police and almost $19 million will support State
and local efforts against organized crime.
• Several Federal investigative agencies provide direct training
assistance to State and local police. In 1970 the FBI provided
training to over 260,000 police officers in over 8,500 training
sessions. In the same year the Bureau of Narcotics and Dangerous
Drugs trained 60,103 officers in a total of 980 2-week law enforcement schools and shorter 1- to 3-day seminars.
• The LEAA program has been the principal source of Federal
funds for improving police operations. LEAA will spend $295
million in 1972 for a broad range of projects determined to be
priority needs by State and local governments. Almost 50% of
LEAA's total program is for direct support and improvement in
police activities. Police improvement projects are being undertaken in all the States and major cities of the country.
SPECIAL ANALYSES
205
• The Veterans Administration, in cooperation with experts in
the field of law enforcement, has developed a model on-the-job
training program for policemen. It provides 13 months of training
and related academic instruction, leading to a journeyman's
status for the trainee. Over 30,000 men will participate in this
program in 1972.
• LEAA's law enforcement education program provides financial
assistance to State and local police officers to gain college credits.
In 1970, 38,229 police officers availed themselves of assistance
under this program.
• In 1972, the FBI will provide indexing services for Project
Search, an automated system for exchanging criminal records
among Federal, State, and local law enforcement and criminal
justice agencies.
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.
• Expenditures of $144.3 million will support all programs for the
prosecution of criminal cases and the administration of criminal
justice in 1972, over $27 million of which will be to assist State and
local prosecution and courts. The operation of Federal court
systems will require outlays of $72.6 million in 1972 and $31.9
million will be spent to conduct criminal prosecutions.
• During 1970, there were (excluding transfers) 38,102 criminal
cases commenced in the U.S. district courts, compared with
33,585 in 1969. The district courts terminated 34,962 criminal
cases in 1970 as compared with 30,578 in 1969. As of June 30,
1970, there were 20,910 pending criminal cases in the district
courts. Appeals in criminal cases and appeals in habeas corpus
cases and other prisoner cases again are the fastest growing part
of the caseload in the courts of appeals. In 1970, the increase in
appeals from district court cases was reflected in habeas corpus
appeals by Federal prisoners, up 16.7%, and in appeals from
denials of motions to vacate sentence, up 26.3%.
• Indian courts disposed of about 79,323 criminal cases during 1970
and the trend for the current year indicates this figure will exceed
80,000.
• At the State and local level LEAA is financing studies of integrated court systems; providing court management studies;
training juvenile court judges; and funding a number of projects
to upgrade both prosecutive services and public defender systems.
Rehabilitation oj offenders.—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, probation and
parole services, and other supportive functions.
• Over $409 million of Federal funds will be devoted to the custody
and rehabilitation of criminal offenders in 1972. This compares
with $230.6 million spent in 1971 and $139.3 million in 1970. Over
206
THE BUDGET FOR FISCAL YEAR 1972
$221.8 million will be for assistance to State and local correctional
systems and programs. This is an increase of 113% of such assistance provided in 1971 and 550% more than assistance provided
in 1970.
• In 1972 the Bureau of Prisons plans to have construction underway on four new prison facilities, including a specialized research
prison for violent offenders. Also, funds are budgeted to plan
seven additional facilities, including five metropolitan correctional centers. The Fort Worth narcotic addict treatment facility
will be converted to a prison medical center.
• During 1970, 13,000 Federal inmates (63% of the total Federal
inmate population of 20,687) participated in educational programs. High school equivalency testing was administered for
2,471 inmates with 1,845 or 75% passing and becoming eligible
for the diploma equivalent. Over 5,240 were trained through
vocational programs.
• In 1972 the Office of Education will spend about $1 million to
improve library services for approximately 69,000 inmates in 250
institutions.
• The Department of Labor has developed a five-State model program to provide State employment security agencies with the
staff to link inmates to existing manpower resources. The Department of Labor will also fund expanded inmate training programs
(during 1970, 49 projects were funded, serving 3,248 trainees)
and will continue an experimental program of pretrial diversions
to determine whether intensive counseling and manpower services
can provide a successful alternative to the usual process of
arraignment, trial and sentencing.
• In 1971, LEAA will begin implementation of a new correctional
system improvement program authorized by the Omnibus Crime
Control Act of 1970. Over $97 million will be budgeted for this program in 1972. The program will provide State and local governments up to 75% of the cost of developing and implementing
projects for new or improved correctional facilities and programs.
These funds will be used to improve rehabilitative programs both
in institutions and in the community and will be available for
expanded probation and parole services.
• Under the President's authority with respect to clemency matters,
82 pardons and 14 commutations of sentence were granted in 1970,
and 432 pardon petitions and 266 commutation petitions were
denied.
Planning and coordination.—Included are Federal support of State
and local planning and coordination of crime reduction activities.
• Outlays of $42.9 million will support planning and coordination
of federally guided crime reduction programs in 1972. The principal funding agency for supporting State and local law enforcement planning is the Law Enforcement Assistance Administration
in the Department of Justice.
SPECIAL ANALYSES
207
Table M-3. FEDERAL OUTLAYS FOR THE REDUCTION OF CRIME BY
MAJOR PROGRAM AND AGENCY 1 (in thousands of dollars)
Outlays
Major program and agency
1970
actual
Crime research and statistics:
The Judiciary 2
Office of Economic Opportunity
Department of Health, Education, and Welfare
Department of Justice
Department of Transportation
Atomic Energy Commission
National Aeronautics and Space Administration
Postal Service....
Program total
Reform of criminal laws:
Department of Justice
Other independent agencies
Program total
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
Department of Transportation
Postal Service
Veterans Administration
Program total
Federal Criminal law enforcement and Federal police:
Department of Agriculture
Department of the Interior
Department of Justice
Department of Labor
Department of Transportation
Treasury Department
General Services Administration
Postal Service
Other independent agencies
Program total
Assistance to States and local police activities:
Department of Health, Education, and Welfare
Department of the Interior
Department of Justice
Treasury Department
General Services Administration
Veterans Administration
Program total
See footnotes at end of table.
80
1971
estimate
1972
estimate
4,751
7, 227
485
116
1, 000
843
144
300
5,435
32,900
1,195
136
1, 395
947
253
2,200
5, 478
48,316
1,254
153
I, 270
436
14,502
42,452
59,360
387
247
1,202
185 .
1,461
634
1,387
1,461
12,800
55, 737
19, 000
545
24,690
1,063
60
10,500
13, 330
66,449
22,500
624
33,095
800
64
13.000
3,400
32, 352
3,565
469
3,896
508
54
8,000
52,244
124,395
149,862
3,307
15,389
274,692
"594
9,037
115,000
16,013
25,497
73
3,945
16,454
338,875
3,103
38,597
157,094
25,318
31,916
300
4,074
18,310
385,244
3,125
64, 544
174,806
38,785
36,715
300
459,602
615,602
725,903
2,077
483
68,547
868
3,000
13,866
2,575
540
251,400
1,526
6,600
19,374
3,075
714
335,419
1,555
4,800
21,686
88,841
282,015
367,249
208
THE BUDGET FOR FISCAL YEAR
1972
Table M-3. FEDERAL OUTLAYS FOR THE REDUCTION OF CRIME BY
MAJOR PROGRAM AND AGENCY1 (in thousands of dollars)—Continued
Outlays
Major program and selected activity
1970
actual
Administration of criminal justice:
The Judiciary 2
Department of Health, Education, and Welfare
Department of the Interior
Department of Justice
Department of Transportation
Program total
Rehabilitation of offenders:
The Judiciary 2
Office of Economic Opportunity
Department of Health, Education, and Welfare
Department of Housing and Urban Development
Department of the Interior
Department of Justice
Department of Labor
Program total
Planning and coordination of crime reduction programs:
Department of Housing and Urban Development
Department of Justice
Program total
Total Federal outlays
1
2
1971
estimate
1972
estimate
43,959
703
135
40,050
2
48,723
700
234
66,969
2
62,880
700
309
80,415
2
84,849
116,628
144,306
13,086
2,332
20,040
725
722
97,147
5,294
13,508
2,440
22,276
4,055
857
182,498
5,000
16,237
800
24, 178
4,980
1,265
332,241
29,400
139,346
230,634
409,101
260
16,638
30,778
42,916
16,898
30,778
42,916
856,916
1,443,891
1,900,158
Does not include Department of Defense or nondomestic outlays for crime reduction.
Outlays estimated by the Office of Management and Budget.
SPECIAL ANALYSES
209
Table M-4. 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
1969
(*)
$103, 739
$177, 251
(})
554,614
679,665
$530,643
658,353
856,916
Federal personnel:
2
2
Full-time Federal criminal investigators
12,618
12,818
U.S. attorneys and assistant attorneys (man-years on
criminal workload)
480
560
Attorneys—Criminal division (man-years)
168
168
U.S. district court judgeships
341
341
State and local crimes: 3
Serious crimes recorded (UCR-table 2)
4,466,600 4,989,700
Violent crimes recorded (UCR—table 2)
588,800
655,100
Rate of serious crimes per 100,000 inhabitants (UCR—
table 2)
2,235
2,471
Rate of violent crimes per 100,000 inhabitants (UCR—
table 2)
295
324
Percent index crimes cleared by arrest (UCR—table 13)_.._
20.9
20.6
Percent found guilty of persons charged by police (UCR—
table 1 5 ) . . . .
Federal investigations:
FBI, investigative matters received
Immigration and Naturalization Service (investigations
completed)
Postal Service, 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 4
Federal criminal cases terminated 4
Federal criminal cases pending 4
Federal criminal cases pending over 6 months 5
Federal criminal defendants convicted
High echelon organized crime figures convicted
Corrections:
Average Federal jail population
Average Federal prison population
Court commitments to Federal institutions
Average Federal prison sentences (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
1970
2
14,610
630
206
402
(i)
(i)
«
(i)
(*)
66.7
65.5
(*)
820,830
859,666
882,254
9,268
181,153
9,372
27,989
87,197
11,394
200,812
8,135
28,175
79,892
12,794
211,166
7,711
32,040
99,390
79,891
30,714
29,492
14,763
4,340
26,660
23
83,608
33,585
30,578
)7,770
5,078
29,450
29
89,139
38,102
34, 962
20,910
5,710
30,500
33
3,438
19,677
11,653
44.5
3,866
20,239
11,162
45.2
4,284
20,687
11,300
46.0
36,785
5,840
36,985
5,445
38,409
5,142
2,891
16
2,521
2,369
96
1 Not available.
2
3
CSC
jobs
classified i n
series
1811
as
of
October
31.
From uniform crime reports—calendar years 1968 and 1969 (FBI).
*5 Excludes transfers.
Excludes pending cases of fugitives.
fl
Includes probation, parole, and mandatory release; estimate by the Office of Management and
Budget.
4 3 0 - 7 0 0 O—71
14
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 fQr 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;
and
• Provide 1 certain other types of indirect support for housing production.
This analysis concentrates on the financial and budget impact of
Federal and federally assisted housing activities. In particular, it concentrates on federally assisted financial commitments (which usually
precede starts) and on outlays (which usually follow completions).
SUMMARY
Federal budget outlays for housing excluding the impact of asset
sales are expected to total $4.1 billion in 1972, compared to $3.4
billion in 1971 and $2.6 billion in 1970. The change from 1971 to 1972
is primarily a reflection of increased outlays for housing for low- and
moderate-income families, consisting of:
• An increase of $476 million in payments on outstanding longterm subsidy contracts supporting housing for low- and moderateincome families; and
• A $447 million increase in insured loans originated in rural areas
for subsequent sale by the Farmers Home Administration.
The impact of these increases, however, is partially offset by a $457
million increase in the sale of financial assets and other reductions, with
the result that net budget outlays (after taking account of these sales)
increase by only $300 million.
In addition to activities included within the Federal budget totals,
Government-sponsored enterprises (the Federal National Mortgage
Association, the Federal Home Loan Mortgage Corporation, and the
Federal home loan banks) are expected to borrow $8.2 billion for
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.
210
SPECIAL ANALYSES
211
investment in housing, compared to $11.6 billion in 1971. 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 $22.3 billion total which
is estimated to be forthcoming from private investors for federally
assisted housing programs, a marked decrease from the $27.5 billion
estimated for 1971.
Table N-1. SUMMARY OF FEDERAL HOUSING PROGRAMS
(in millions of dollars)
1970
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,
2,646
—883
1,763
14,950
(13, 787)
1971
estimate
1972
estimate
3,362
—1,892
4,120
—2,349
1,470
27,546
(11,570)
1,771
22,338
(8,175)
Table N-2. BUDGET OUTLAYS FOR HOUSING PROGRAMS
(in millions of dollars)
1970
actual
Budget outlays for housing by agency:
Department of Housing and Urban Development.
Department of Defense
Department of Agriculture
Veterans Administration
Federal Home Loan Bank Board
Small Business Administration
Other agencies
Total
Financial asset sales included above:
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
Federally operated housing
_
Research and development on housing
Other assistance for housing
Total
1971
estimate
1972
estimate
1,001
1,410
1,452
610
127
97
625
705
-82
-167
60
36
-454
-100
-136
81
45
-284
-132
63
49
1,763
1,470
1,771
845
38
1,592
300
230
1,688
432
883
1,892
2,349
-195
-917
-34
-80
-490
-624
847
543
917
876
1,347
5
542
8
49
9
563
45
57
8
644
25
66
1,763
1,470
795
1,771
212
THE BUDGET FOR FISCAL YEAR
1972
Units completed.—In combination, Federal housing programs are
expected to assist in the completion for occupancy of 1,006,000 units
of new or substantially rehabilitated housing in 1972, compared with
493,000 and 912,000 units in 1970 and 1971, respectively. In addition, these programs will facilitate the sale in 1972 of an estimated
1,209,000 units of existing housing, about the same as in 1970 and 1971.
Of the new or rehabilitated units, 501,000 in 1972 will be subsidized
for low- and moderate-income families, compared with 169,000 in
1970 and 402,000 in 1971.
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 1972, the Federal Government expects to
make commitments to assist a total of 1,296,000 units of new and
rehabilitated housing, including 570,000 subsidized units for low- and
moderate-income families. This represents a major increase over the
490,000 subsidized units committed in 1971 and the 411,000 units
Table N-3. HOUSING UNITS COMMITTED UNDER FEDERAL PROGRAMS
(in thousands of units)
New or rehabilitated
Type of assistance
Guaranteed or insured financing:
Guaranteed or insured mortgages. _ _
Insurance on deposits in thrift institutions
Direct Federal financing without subsidy.
Subsidized housing for special groups:
Subsidy combined with
financing...
Subsidy without Federal capital investment:
Low- and moderate-income families
Direct Federal construction or acquisition:
Military family housing
Other
Less: Estimated duplication 1
Total
1970
actual
324
Existing
1971
1972
estimate estimate
1970
actual
1971
1972
estimate estimate
154
352
215
421
192
733
502
768
674
894
678
15
68
70
8
9
1
31
54
40
83
85
87
411
490
570
49
37
52
1,296
1,375
1,573
4
*
—8
8
*
—8
931
1,179
1,662
•Less than 500 units.
Represents estimate of insured or guaranteed mortgages purchased by thrift institutions.
1
SPECIAL ANALYSES
213
committed in 1970. Commitments to assist the sale of existing houses
are expected to total 1,662,000 in 1972, compared to 1,375,000 in 1970
and 1,573,000 in 1971. Of the 1972 total, 52,000 represent subsidized
units for low- and moderate-income families, compared to 37,000
in 1971 and 49,000 in 1970.
DESCRIPTION OF FEDERAL HOUSING PROGRAMS
The following material describes the various types of Federal programs to aid housing. I t 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).
Table-4. HOUSING UNITS MADE AVAILABLE UNDER FEDERAL PROGRAMS
(in thousands of units)
New or rehabilitated
Existing
Type of assistance
1970
actual
Guaranteed or insured financing:
Guaranteed or insured mortgages.__
Insurance on deposits in thrift institutions
Direct Federal financing without subsidy
Subsidized housing for special groups:
Subsidy combined with financing
Subsidy without Federal capital investment:
Low-and moderate-income families
Direct Federal construction or acquisition:
Military family housing
Other
Less: Estimated duplication *
Total
1971
estimate
1972
estimate
1970
actual
1971
estimate
1972
estimate
93
232
256
510
570
622
146
8
195
6
182
2
356
14
478
14
446
1
72
79
64
83
85
87
169
402
501
56
38
53
8
*
—3
3
*
—5
493
912
1,006
6
1
*
—5
1
*
*
*
*
1,186
1,209
*
*
1,020
*
*Less than 500 units.
Represents estimate of insured or guaranteed mortgages purchased by thrift institutions.
1
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 deposits in thrift institutions
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 in-
214
THE BUDGET FOR FISCAL YEAR
1972
surance 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 previously collected on
most of the new loans guaranteed was eliminated by the Veterans
Housing Act of 1970.
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 in 1972
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 1972) is addressed to meeting the needs of low- and moderate-income families. This includes some loans containing an "interest
credit" feature, under which the borrower pays reduced interest rates,
depending on income. The balance of the 1972 program consists of
loans at a fixed interest rate, below the current market rate. In both
cases the Government makes up the difference betweenr the rates
charged to borrowers and those necessary to place loans w ith private
investors.
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. The direct loan program in the Veterans
Administration is being terminated in 1972, and replaced by greater
activity under the loan guaranty program. Additional Veterans
Administration staff arc being added to insure the availability of
private credit in rural areas and small towns.
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 moderate-income 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 SBA program is
SPECIAL ANALYSES
215
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 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 HDD's
urban renewal program and grants for farm labor housing available
from the Farmers Home Administration. A total of 87,000 units
are expected to be made available under grant programs in 1972,
compared to 85,000 in 1971.
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 439,000 units available for occupancy in 1972,
representing a large part of the housing for low- and moderate-income
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 $1,347 million in 1972 as
new subsidy contracts are added to the continuing costs of contracts
approved in prior years.
In 1971, as authorized by the Emergency Home Finance Act of
1970, the Federal Home Loan Bank Board began a new program of
interest subsidy payments on home mortgages. The 1971 appropriation
of $85 million and the proposed 1972 appropriation of the same amount
will be used to reduce the mortgage interest payments of eligible homeowners by $20 per month for the first 5 years of the mortgage. (An eligible family is one wiiosc income is below the median for its area, and is,
without the subsidy, insufficient to support a mortgage on a suitable
home priced below the median for the area.) It is estimated that
70,000 units will come under payment in both 1971 and 1972, resulting
in outlays of $3.6 million in 1971, and $25.1 million in 1972.
Subsidized housing for special groups: Assistance to sponsors of
housing for IOVJ- 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 1972 are
expected to total $8 million, of which OEO's assistance to housing
216
THE BUDGET FOR FISCAL YEAR 19 72
development corporations represents $4 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.
Federally operated housing.—The predominant activity in this category is the provision of family housing for military personnel, totaling
almost 6,400 units to be made available in 1972. This includes a
small number of leased units which will be added to the inventory in
that year. In addition, about 51 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.
Research and development.—The HUD research and technology program is the primary focus for Federal research and development in
housing. As the HUD program, Operation Breakthrough, nears completion in 1972, increasing emphasis will be given to encouraging large
volume production through the systems and methods developed under
Operation Breakthrough. Major new HUD efforts include developing
ways to improve housing management and to prevent the deterioration
and abandonment of housing. In conjunction with HUD, the Building
Research Division of the National Bureau of Standards will expand its
program to develop improved building codes and standards. Outlays
for Operation Breakthrough are expected to total $17 million in 1972,
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 levejs 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
gage statistics on housing production and mortgage flows and the
housing component of the decennial census. Outlays for this category
are estimated to total $3 million in 1972.
Equal housing opportunity.—This program aims to provide equal
housing opportunity through the enforcement of laws, the administration of Federal assistance programs, and the provision of educational and other assistance. HUD and the Department of Justice have
major responsibility for enforcement of the fair housing laws. All
Federal agencies with housing or related programs are responsible for
administering their programs in a manner to insure equal housing
opportunity.
Undistributed administrative expenses.—These outlays, totaling $29
million in 1972, represent the costs of operating programs covering
more than one program category, which it is not feasible to divide
among categories.
SPECIAL ANALYSES
217
HOUSING ACTIVITIES OF GOVERNMENT-SPONSORED ENTERPRISES
Three Government-sponsored enterprises, outside the budget, are
of major importance in housing production. These are the 12 Federal
home loan banks, the Federal National Mortgage Association (FNMA)
and the Federal Home Loan Mortgage Corporation (FHLMC).
All three 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 purchases FHA-insured and VAguaranteed mortgages directly. The FHLMC purchases primarily
"conventional" mortgages (those not federally insured or guaranteed).
All have the result of increasing the total supply of mortgage financing.
The net increase in home loan bank advances in 1972 is expected to
total $3.0 billion, while the net increase in FNMA mortgage holdings
is estimated at $2.6 billion. The net increase in FHLMC mortgage
holdings is estimated at $0.8 billion.
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 1972. This
includes a $12.1 billion increase in savings at thrift institutions regulated by the Federal home loan bank system which, together with
$3.0 billion in advances from the home loan banks, will permit
these institutions to increase their housing investments by $15.1 billion. Of this total, about $2.6 billion will be in mortgages insured or
guaranteed by the Federal Government. Of the remaining $4.5 billion
increase in outstanding guaranteed mortgages, $2.9 will be held by
FNMA and GNMA, and $0.8 billion by "the FHLMC, leaving $0.9
billion for purchase by other private investors. These investors will
also purchase an estimated $1.2 billion of tax-exempt notes and
bonds financing the construction of low-rent public housing and will
finance $8.2 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 and sell securities based on these mortgages to other investors,
promising to pass on the principal and interest collections. GNMA
expected to guarantee performance by the issuers of $2.1 billion of
these securities in 1972. This amount will constitute part of the net
increase in outstanding guaranteed or insured mortgages shown in
table N-5.
218
THE BUDGET FOR FISCAL YEAR
1972
Table N-5. NET FEDERALLY ASSISTED PRIVATE INVESTMENT IN HOUSING
(in millions of dollars)
1970 actual
Increase in outstanding guaranteed or insured mortgages:
Federal Housing Administration!
Veterans Administration
Farmers Home Administration
1971 est. 1972 est.
1,592
1,204
682
6,729
-139
1,206
3,872
1,973
1,300
3,477
7,795
7,145
-2,303
— 5,626
—593
-3,528
— 3,096
—608
—562
-2,627
— 2,648
—217
—774
—5,045
1
880
9,092
—3,824
17,189
—2,266
15,100
—3,005
5,268
14,923
12,095
Increase in outstanding guaranteed public housing bonds and notes.
940
1,052
1,188
Increase in outstanding borrowings from the public by Government-sponsored enterprises:
Federal National Mortgage Association
Federal Home Loan Bank System
9,428
4,359
9,450
2,120
5,175
3,000
Subtotal
13,787
11,570
8,175
Total
14,950
27,546
22,338
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
Federal Home Loan Mortgage Corporation
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 banks
Net from other private investors
1
Includes property improvement loans and some nonhousing mortgages.
SPECIAL ANALYSIS O
FEDERAL ENVIRONMENTAL PROGRAMS
This analysis identifies Federal funding for selected environmental
activities. It covers:
Pollution control and abatement activities;
Sewer and water programs;
Selected activities to protect and enhance the environment; and
Activities to understand, describe, and predict environmental
conditions.
POLLUTION CONTROL AND ABATEMENT
Federal funding for pollution control and abatement activities in
1972 will increase significantly over 1970 and 1971:
[In millions of dollars]
1970
actual
Budget authority
Obligations
Outlays
1971
estimate
1972
estimate
Percent
increase
over 1971
1,432
1,071
1,828
2,036
3,127
3,088
71
52
751
1,176
2,014
71
The largest share of the increase is for grants to State and local
governments for construction of municipal waste treatment facilities.
Grants were made for 1,050 treatment facility projects in 1970; 1,650
grants are expected in 1971, and 2,000 in 1972. Grants also provide
support for pollution control agency operations and for planning.
Budget authority for grants will increase by 89% over 1971, from
$1,108 million to $2,089 million. Outlays will increase by 112%,
from $533 million to $1,131 million.
Table 0-1. POLLUTION CONTROL AND ABATEMENT ACTIVITIES
(in millions of dollars)
Budget authority
Type activity
Financial aid to State and local
governments
Research, development, and
demonstration
Federal abatement and control
operations
Manpower development
Reduce pollution from Federal
facilities.....
Program direction and other
Separate transmittal 1
Total
1970
actual
1971
estimate
874
1,108
344
Outlays
1972
estimate
1970
actual
1971
estimate
1972
estimate
390
2,089
426
288
296
533
378
1.131
398
80
16
123
19
122
20
72
12
98
15
117
19
11
48
113
62
13
250
135
85 -
32
52
88
61
4
185
110
56
1,432
1,828
751
1,176
2,014
3,127
1
Not reflected in preceding activity lines are proposals that will be transmitted subsequently
for $13 million in budget authority for 1971, and $85 million for 1972 for EPA for implementing
air quality and solid waste legislation and other activities.
219
220
THE BUDGET FOR FISCAL YEAR
1972
Funding will also increase for:
• Research, development, and demonstration activities which include efforts to determine and describe pollution sources and
effects and to develop and demonstrate technology for monitoring
and controlling pollution (work is performed in Federal laboratories and under contracts and grants with educational institutions, industry, and others);
• Direct Federal pollution control operations including planning,
monitoring, and surveillance; standard setting and enforcement;
and technical assistance; and
• Manpower development, ranging from training of treatment
plant operators to researchers at the graduate level.
Budget authority win increase by 121%, from $113 million to
$250 million, primarily in the Department of Defense, for remedial
projects to reduce pollution from Federal facilities—as required by
Executive Order 11507, February 4, 1970. This is a major step toward
the goal of having all essential Federal projects underway by December
31, 1972.
Agencies involved.—Major Federal activities to control and abate
pollution were consolidated in the Environmental Protection Agency
(EPA) on December 2, 1970, by Reorganization Plan No. 3. However,
several other agencies carry on important pollution control activities,
as indicated in table O-2.
Table 0-2. POLLUTION CONTROL AND ABATEMENT ACTIVITIES—BY
AGENCY (in millions of dollars)
Agency
Environmental Protection Agency »
.Defense—Military
Atomic Energy Commission
Agriculture
Defense—Civil
Interior
Transportation
Commerce
General Services AdministrationNational Aeronautics and Space
Administration
National Science Foundation. __
Other agencies
Total
Outlays
Budget authority
1970
actual
1971
estimate
1972
estimate
1970
actual
1971
estimate
1972
estimate
1,046
89
120
60
3
36
17
19
1
1,297
126
125
96
11
47
49
28
1
2,440
193
127
77
56
68
60
29
19
388
39
116
91
3
37
11
22
695
83
126
93
\\
48
17
28
1
1,359
147
125
107
56
65
54
34
1
21
7
12
17
13
18
16
17
25
15
7
23
17
12
36
13
14
38
1,432
1,828
3,127
751
1,176
2,014
J
Funding shown above for EPA has been adjusted to include activities actually carried out by
Departments of Health, Education, and Welfare; Agriculture; Interior; Atomic Energy Commission; and Federal Radiation Council prior to Dec. 2, 1970. The budget authority adjustment is $42
million in 1970 and $14 million in 1971, and the related outlay adjustment is $37 million in 1970
and $17 million in 1971
SPECIAL ANALYSES
221
Funding for EPA will increase sharply in 1972. Budget authority for
activities now carried on by EPA will increase by 88% in 1972 from
$1,297 million to $2,440 million. Outlays will increase by 96% from
$695 million to $1,359 million. EPA's program of grants for waste
treatment facilities will be doubled—from $1 billion to $2 billion annually with the goal of assisting States and localities in reducing the
Nation's backlog of treatment facilities needs. Other major increases
will provide for implementing the new air quality and solid waste
legislation, for increasing grants for State and local pollution control
agency operations, increasing planning activities, increasing research
on water supply purity, expanding cost-sharing arrangements with
private industry to develop technology for controlling sulfur oxides,
expanding the program for developing low-pollution motor vehicles,
and increasing EPA's efforts directed toward identifying the magnitude
of pollution problems and determining benefits and costs associated
with alternative corrective actions.
Other agencies also carry out important pollution control and abatement activities. For example, the Department of Defense will expand
its effort to reduce pollution from its industrial production facilities
and military bases and step up research on abating pollution from
naval vessels and jet engine run-up facilities.
The Atomic Energy Commission will continue its major program of
research, development and monitoring relating to effects of ionizing
radiation.
The Department of Agriculture makes grants and loans for waste
treatment facilities in smaller localities and conducts research on
agriculturally related pollution such as pesticides, animal and crop
processing wastes, and fertilizer and plant nutrients. Increases in 1972
are largely for reducing pollution from facilities in national forests.
Pesticide registration activities, formerly conducted in the Department, were transferred to EPA.
The Department of the Interior will continue research relating to
pollution sources and effects, will expand activities to reduce pollution
from facilities in the national parks, and will increase research in
methods of converting coal to lo^vy pollution fuels. Water pollution
control and certain pesticides activities were transferred to EPA.
The Corps of Engineers will construct dikes for the containment of
polluted material dredged from Great Lakes harbors.
The Department of Transportation will increase funding significantly
for work on reducing aircraft engine noise, studying environmental
effects of supersonic aircraft and reducing pollution from Coast Guard
installations.
The Department of Commerce provides grants for waste treatment
facilities under economic development programs and the National
Oceanic and Atmospheric Administration conducts research on sources
and effects of pollution and engages in environmental monitoring.
The General Services Administration will have increased funding in
1972 for pollution reduction at Federal installations.
The National Aeronautics and Space Administration activities consist
primarily of research and development on reduction of aircraft noise.
222
THE BUDGET FOR FISCAL YEAR
1972
Most pollution abatement activities of the Department of Health,
Education, and Welfare have been transferred to the Environmental
Protection Agency, including air pollution, solid waste, pesticides
standards, water hygiene, and certain radiation activities.
Media polluted and pollutants.—Pollution control and abatement
activities are generally focused on reducing pollution in air or water
or reducing adverse effects of particular pollutants such as pesticides
or radiation. Table 0-3 summarizes the total Federal effort in terms
of media polluted and also identifies funding associated with selected
pollutants. Among the media, water pollution currently receives the
greatest share—80%—of total Federal pollution control obligations.
This large share is a result of grants and loans for construction of
municipal waste treatment facilities.
Air pollution control efforts account for 11% of the total. Principal
Federal efforts in 1972 will be directed toward research, development,
and demonstration; grants to State and local air pollution control
agencies; and direct Federal operations such as monitoring, standard
setting, and enforcement. Funds to implement new air quality legislation will be proposed in a subsequent request to the Congress. Activities relating to pollution of land are for research and other activities concerned with effects of acid mine drainage, nutrients, pesticides, and other substances.
Federal pollution control activities relating to radiation, pesticides,
solid wastes, and noise are largely confined to research relating to
effects, control technology, and standard setting and enforcement.
Funds to implement new solid waste legislation will be contained in
a subsequent request.
Table 0-3. POLLUTION CONTROL AND ABATEMENT ACTIVITIES—BY
MEDIA OR POLLUTANT (in millions of dollars)
Media or pollutant
Media polluted:
Water:
Construction grants and loans
Other
Air
Land
.
Other (e.g., living things, materials)
Multi-media (i.e., more than one of above)
TotaP
Selected pollutants: 2
Solid wastes
Pesticides
Radiation
Noise
Obligations
1970
actual
1971
estimate
1972
estimate
491
186
189
35
100
69
1,256
296
234
42
97
98
1,974
425
341
46
110
107
1,071
2,023
3,003
20
30
116
36
39
42
124
43
50
54
129
66
1
Excludes $13 million in 1971 and $85 million in 1972 for EPA which will be proposed in a separate
transmittal (see footnote for table O-l).
2
These funds are included in the "media" breakdown above.
SPECIAL ANALYSES
223
Excluded from the funding shown above for pollution control and
abatement activities are:
• activities to reduce or avoid the use of pesticides. Funding for such
activities is expected to be approximately $57 million in 1972 for
both research and education programs, largely carried out by
the Department of Agriculture; and
• activities that are carried on for some other primary purpose but
which also contribute to the reduction of pollution. For example,
extensive activities to hold soil in place to preserve soil productivity, such as those financed by the Department of Agriculture, and
other erosion control activities by Corps of Engineers and Department of Transportation (highways), have been excluded from this
analysis even though these activities also serve to reduce sediment
pollution of water.
SEWER AND WATER PROGRAMS
Federal programs of grants and loans for the construction of sewer
and water systems are directed toward a variety of objectives, including economic development, urban and rural development, and in some
cases, pollution control.
[In millions of dollars]
Budget authority
Obligations
Outlays
1970
actual
1971
estimate
252
409
364
500
422
382
Percent
1972
increase
estimate over 1971
1
124
* 389
446
17
1
Budget authority and obligations for water and sewer grants will decline in 1972 as grant programs
administered by HUD and Agriculture are merged into Special revenue-sharing programs.
Grants and loans to finance w^ater system and sewer line construction
are made by five Federal agencies. The Department of Housing and
Urban Development, as a part of its community development efforts,
provides assistance for basic sewer and water facilities. $100 million
in new grant reservations will be made by December 31, 1971. On
January 1, 1972, the program will be folded into the Urban Community
Development Special Revenue-Sharing Program. Public facility loans,
about 67% of which are used to finance sewer and water facilities, will
be increased by 62% in 1972.
The Department of Agriculture provides grants and loans for basic
sewer and water facilities in rural communities with population not in
excess of 5,500 people. Approximately one-half of the $25 million
budgeted for grants will be obligated prior to January 1, 1972, and the
remainder will be folded into the Rural Community Development
Special Revenue-Sharing Program. Agriculture's loans, about 78% of
which are used for water and sewer facilities, will be increased by 18%.
The Department of Commerce provides assistance to municipalities
as a part of its economic development efforts. Budget authority will
not increase, but outlays for this program will increase by 27% from
$62 million in 1971 to $79 million in 1972. Other agencies providing
sewer and water system grants are the Appalachian Regional Commission and the Department of the Interior (for the Trust Territory).
Grants and loans made by Environmental Protection Agency,
Agriculture, Commerce, and Housing and Urban Development for
waste treatment plants and interceptor sewers are included in the
section on pollution control and abatement.
THE
224
BUDGET FOR FISCAL YEAR 19 72
Table 0-4. SEWER AND WATER P R O G R A M S (in millions of dollars)
Budget authority
1970
Purpose:
Sewer grants
Sewer loans
Water system grants
Water system loans
___
Total
Agencies:
Housing and Urban Development
Agriculture
Commerce (economic development)
Other agencies
Total
1971
l
Outlays
1972
1970
1971
1972
102
4
142
4
205
3
287
4
44
4
71
5
72
14
112
165
88
17
138
139
116
18
168
144
252
500
124
364
382
446
135
25
350
52
0
27
133
164
168
140
192
163
81
11
84
14
84
13
60
6
62
12
79
12
252
500
124
364
382
446
SELECTED ENVIRONMENTAL ENHANCEMENT ACTIVITIES
Federal funding will increase for environmental protection and enhancement activities such as providing recreational areas and open
space, fish and wildlife preservation, and beautification programs.
[In millions of dollars]
Budget authority
Obligations
Outlays
1970
actual
1971
estimate
628
586
553
875
748
730
Percent
1972
increase
estimate oter 1971
1,108
1,018
846
27
36
16
Protection and enhancement activities.—The Federal Government
provides grants to State and local governments for acquiring land for
recreational purposes, for preserving open space and historic properties,
and for fish and wildlife refuges. Aid is also provided for research and
planning; construction and maintenance of recreational facilities and
wildlife refuges; and for promoting beautification such as highway
landscaping. Similar activities are also carried on directly by several
Federal agencies. Funding for many of these activities will increase
sharply. For example, budget authority for grants to State and local
governments to acquire recreational and open space lands will increase
by 61%, from $140 million in 1971 to $226 million in 1972. Grants for
development of recreational areas will increase by 127%, from $120
million in 1971 to $272 million in 1972.
SPECIAL ANALYSES
225
Table 0-5. SELECTED ENVIRONMENTAL PROTECTION AND
ENHANCEMENT ACTIVITIES (in millions of doHars)
Activity
—
Budget authority
Outlays
1971
estimate
1972
estimate
80
140
226
51
75
107
55
3
51
120
7
56
111
6
63
53
2
45
53
7
60
100
7
69
62
116
112
62
79
87
252
440
679
214
lib
371
85
138
98
68
158
151
158
181
197
163
177
1
56
66
10
2
37
66
10
2
48
73
11
1
34
63
10
2
36
71
10
193
2
44
Subtotal
376
434
429
339
454
474
Total
628
875
1,108
553
730
846
Financial aid to State and local
governments:
Purchase recreation and open
space lands
_ .
Develop recreational areas, related activities
Historic properties
Preserve fish and wildlife
Beautification
(e.g., highways)
Subtotal
Direct Federal activities:
Purchase nationally important
areas
__
__
Develop recreational facilities,
related activities
__
Historic properties
Park roads and trails
Preserve fish and wildlife
Beautification
1970
actual
1970
actual
1971
1972
73
11
Agencies involved.—The Department of the Interior accounts for approximately 61% of the environmental protection and enhancement
activities described in this section. Interior's budget authority for
these programs will increase by 13%, from $552 million in 1971 to $624
million in 1972. Most Interior activities are carried out by the Bureau
of Outdoor Recreation, including the land and water conservation
fund; the Bureau of Sport Fisheries and Wildlife; and the National
Park Service. The 1972 budget for the land and water conservation
fund provides a major increase for grants to State and local governments to help them meet the increasing demand for local recreation
areas, especially those located in or near major cities. Federal land
purchases financed from the fund are made by several Federal agencies
to preserve nationally important natural and historic areas, including
endangered species habitats. Newly authorized areas for which funds
are provided to begin initial acquisition in 1972 are Apostle Islands
National Lakeshore, Sleeping Bear Dunes National Lakeshore,
Voyageurs National Park, Gulf Islands National Seashore, Chesapeake
and Ohio Canal Historic Park, and Andersonville National Historic
Site. Emphasis will also be placed on acquisition of lands in older
natural preservation areas and parks such as Everglades National
Park. The Bureau of Sport Fisheries and Wildlife provides assistance
to State and local governments for fish and wildlife restoration and
establishes Federal refuges. The National Park Service emphasizes
resource protection, construction and maintenance of visitor facilities
at national park system areas and park roads, trails, and highways.
430-700 O—71
15
226
THE BUDGET FOR FISCAL YEAR
1972
The Department of Housing and Urban Development provides grants
to help States and localities acquire and develop open space lands. In
1972, the open space program will be reoriented to help meet the growing recreational needs in urban areas. New emphasis will be given to
the development of small neighborhood parks in and around cities.
To support this initiative, budget authority will increase by 167%,
from $75 million to $200 million.
The Department of Transportation provides assistance to State and
local governments for highway beautification activities, including
control of advertising and junkyards, landscaping, and scenic easements. Budget authority for such DOT activities will increase by
11%, from $97 million to $108 million.
The Department of Agriculture carries out a variety of environmental enhancement activities, particularly through the Forest
Service. The 1972 budget authority will increase by 16%, from $83
million in 1971 to $96 million in 1972.
The Corps of Engineers provides facilities for water based recreation at reservoirs and other public works.
The Department of Commerce provides assistance to State and local
governments through its economic development programs for the
development of recreational areas.
Table 0-6. SELECTED ENVIRONMENTAL ENHANCEMENT ACTIVITIES, BY
AGENCY (in millions of dollars)
Outlays
Budget authority
1970
actual
Interior _ _
Housing and Urban Development
Transportation
__
Agriculture
Defense—Civil
_
Commerce
Other agencies
Total
1970
actual
1971
estimate
1972
estimate
1971
estimate
1972
estimate
366
552
634
307
452
517
75
42
81
75
97
83
200
108
96
43
51
80
12
60
81
100
69
43
12
8
46
13
10
47
14
10
43
20
9
46
9
10
628
875
1,108
553
730
94
47
8
10
846
UNDERSTANDING, DESCRIBING, AND PREDICTING THE ENVIRONMENT *
Federal agencies conduct a wide variety of activities to understand,
describe, and predict environmental conditions. Objectives range from
the provision of routine weather forecasts to the scientific understanding of complex ecological systems. Funding for these activities wall
increase in 1972.
[In millions of dollars]
Budget authority
Obligations
Outlays
1970
estimate
1971
estimate
719
710
702
867
880
810
Percent
1972 increase
estimate over 1971
950
956
917
10
9
13
Activities.—Over half of the funding for this category supports
environmental observation and measurement to describe and predict
weather and ocean conditions and disturbances such as earthquakes.
1
This section excludes activities reported under Pollution control and abatement.
SPECIAL ANALYSES
227
Budget authority will increase by 9%, from $486 million in 1971 to
$528 million in 1972 for research, development, and operational
activities in this category. Funding will also be increased, but less
sharply, for:
• Locating and describing natural resources;
• Survey activities to describe the physical environment for the
purpose of preparing maps and charts; and
• Weather modification.
Additional emphasis will be placed upon research to develop a
better understanding of the impact of the environment on man, for
which budget authority will be increased by 42%, from $33 million
in 1971 to $47 million in 1972; and on ecological and other basic environmental research, for which budget authority will be increased by
51% from $49 million in 1971 to $74 million in 1972.
Table 0-7. UNDERSTANDING, DESCRIBING AND PREDICTING THE
ENVIRONMENT, BY TYPE ACTIVITY (in millions of dollars)
Activity
Observe and predict weather and
ocean conditions, disturbances:
Research and development _ _
Operations
Locating and describing natural
resources:
Research and development- _
Operations
Physical environmental surveys:
Research and development _ _
Operations
Weather modification
Research on environmental impact on man _
Ecological and other basic environmental research. _ . _
Total
Outlays
Budget authority
1970
actual
e
1972
itimate
1971
1970
actual
1971
estimate
1972
estimate
120
299
139
347
154
374
105
305
128
343
152
375
100
61
145
74
140
75
95
60
no
74
124
74
4
54
12
4
60
16
4
66
17
4
54
12
4
57
16
4
65
17
26
33
47
25
30
38
44
50
75
41
48
68
719
867
950
702
810
917
Agencies involved.—In this overall category, the Department of Commerce accounts for about one-fourth of all Federal activities. The
Department's activities are carried out by the National Oceanic and
Atmospheric Administration which was created on October 3, 1970,
by Reorganization Plan No. 4, and includes the former Environmental
Science Services Administration and activities transferred from the
Departments of the Interior, Defense, and Transportation and the
National Science Foundation. NOAA carries on a wide range of
environmental observation and prediction activities, including
weather, river and marine forecasting; mapping and charting; development of instrumentation; data dissemination; and related
research. Budget authority will increase by 4%, from $226 million in
1971 to $235 million in 1972, with increases providing for improved
public weather services; hurricane and tornado warnings; weather
modification experiments; earthquake and seismic research; satellite
procurement; and development of ocean data buoys.
228
THE
BUDGET FOR FISCAL YEAR
1972
Table 0-8. UNDERSTANDING, DESCRIBING AND PREDICTING THE
ENVIRONMENT, BY AGENCY (in millions of dollars)
Budget authority
Agency
Commerce1
Defense—Military
National Science Foundation...
National Aeronautics and Space
Administration
Interior
Agriculture
Health, Education, and Welfare.
Transportation
Smithsonian Institution
Other agencies
Total
1970
actual
1971
estimate
Outlays
1972
estimate
1970
actual
1971
estimate
1972
estimate
193
178
60
226
194
92
235
185
161
190
178
61
219
194
88
245
185
136
87
103
51
17
17
9
3
129
117
53
21
18
10
7
117
131
52
25
22
16
7
75
102
51
17
17
8
2
88
116
54
20
18
9
6
106
129
52
23
22
14
6
719
867
950
702
810
917
i Funding shown above for Commerce has been adjusted to include activities actually carried out
by the Departments of Defense, Interior, and Transportation and National Science Foundation
prior to Oct. 3, 1970. The budget authority adjustment is $25 million in 1970 and $9 million in 1971,
and the related outlay adjustment is $15 million in 1970, $14 million in 1971, and $7 million in 1972
Within the Department of Defense, both the Navy and the Air
Force carry out weather and ocean observation and prediction, and
mapping and charting activities important to military operations.
Funding for these DOD activities will decline slightly in 1972.
The National Science Foundation supports research activities
important to the understanding of environmental problems. Budget
authority will increase by 75%, from $92 million in 1971 to $161
million in 1972, with the increases providing for greater emphasis in
nearly all areas of environmental research through such programs as
the International Biological Program, and the International Decade
of Ocean Exploration.
The National Aeronautics and Space Administration conducts
activities concerned with the application of satellite technology to
atmospheric sciences and measurement of earth resources.
The Department of the Interior carries out such activities as geologic
investigations, topographic mapping, weather modification, and water
resources research. Increases in 1972 will provide principally for
expansion of Interior's work on application of remote sensing data
from aircraft and spacecraft to earth resource measurement.
The Department of Agriculture conducts such activities as soil and
river basin surveys, research and surveys relating to forest and timber
management, and basic ecological research.
The Department of Health, Education, and Welfare conducts a variety
of activities relating to environmental impact on man, principally
research at the Department's National Institute of Environmental
Health Sciences.
The Department of Transportation conducts oceanographic and
meteorological research and surveys, largely through the Coast
Guard.
SPECIAL ANALYSES
229
The Smithsonian Institution conducts a variety of programs dealing
with environmental impact on man and is developing baseline
ecological information. Increases in 1972 will provide for substantial
expansion of ecological research.
OTHER ENVIRONMENTAL ACTIVITIES
The meaning of the term "environment" is still subject to widely
varying definitions. This first special analysis of Federal funding for
environmental activities has been limited to selected areas. Among
the areas of federally funded activity important to environmental
understanding and environmental quality not included in this analysis
are:
Environmental education;
Preventing or correcting environmental degradation resulting
from public works or natural resource exploitation;
Management of public lands;
Population control and population distribution;
Programs that are justified and conducted for some other primary
purpose (e.g., R. & D. on improved methods for producing energy
and undergrounding high-voltage electric transmission lines) but
which may have significant environmental quality or natural
resource conservation benefits; and
Federal activities conducted outside the United States, including
scientific activities overseas financed with special foreign currency.
PART 3
SPECIAL ASPECTS OF FEDERAL
PROGRAMS
231
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 P through R.
Special Analysis P 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 Q 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 cooperative and nonprofit groups.
Special Analysis R identifies Federal programs for the conduct of
research and development, and for facilities related to such activities.
232
SPECIAL ANALYSIS P
FEDERAL AID TO STATE AND LOCAL GOVERNMENTS
Federal Aid to State and Local Governments
,*,
30
25-
20
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
Fitcal Years
1972
Estimate
HIGHLIGHTS or THE 1972 AID PROGRAM
This year promises to be a turning point in the history of our
federal system. In 1972, total Federal aid to State and local governments, including the new revenue-sharing proposals, will total $38.3
billion. This amount will be $8 billion more than in 1971—a 26%
increase in 1 year—and 4.8 times the amount in 1962. In the last 3
years, major reforms have been made in restructuring Federal aid
programs to reduce program rigidity and increase program effectiveness. Proposed initiatives for 1972 will offer unprecedented proposals
for change:
• Sharing of Federal revenues with State and local governments
in the form of unrestricted general revenue sharing funds, combined with broad purpose special revenue sharing grants without
matching requirements.
233
234
THE BUDGET FOR FISCAL YEAR 19 72
• Fundamental reform of the welfare system (to become effective
in 1973) by applying national eligibility standards, improving
work incentives, broadening coverage to the working poor, and
providing fiscal relief to the States.
• Medicaid reforms to emphasize incentives for more efficient use
of hospitalization and extended care facilities.
The fastest growing major Federal aid programs in 1972, as in the
last 5 years, are those related to income support and services for the
poor, environmental protection and improvement, and law enforcement.
HISTORICAL PERSPECTIVES
Federal aid to State and local governments has been a part of the
American federal system since the country's earliest days. Under the
Articles of Confederation, the Congress provided grants of Federal
land in 1785 to support education in the Northwest Territory.
Although Federal grants have a long history, the major growth in
the number of grant programs and amounts of money provided has
occurred only in the past two decades. The composition of the total
grant program has changed significantly in this time period, as shown
in table P - l . The three functions comprising human resource programs—education and manpower, health, and income maintenance—
show a rapid growth during the 1960-72 period—rising from 47% of
Federal aid in 1960, and reaching an expected 56% in 1972. On the
other hand, commerce and transportation programs declined from 43%
of the total in 1960, to an expected 14% in 1972.
Table P-1. 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
General revenue sharing
Other
Total
1955
actual
1950
actual
1965
actual
I960
actual
1970
actual
1972
estimate
11
5
55
8
3
19
3
14
4
47
4
2
43
3
10
4
33
5
2
40
5
10
7
29
3
3
21
11
18
15
26
1
2
1
2
3
3
100
100
100
100
100
100
5
2
21
0)
2
4
14
10
15
12
29
11
i Less than 0.5%.
While Federal grants have been growing, State and local governments have raised from their own sources about four times the amount
of aid they have received from the Federal Government.
SPECIAL ANALYSES
235
Table P-2. STATE AND LOCAL GOVERNMENT FINANCES, 1950 AND 1970
Source
In billions of dollars
1950
1970
Average
annual
percentage
increase
Revenue:
Own revenue
Federalaid
18.8
2.3
107.0
24.4
Total
21.1
131.4
9.5
22.3
132.0
9.3
Expenditures
9.0
12.5
This table is based on the National Income Accounts to permit comparison between levels of
government, and differs slightly from the measure of aid used in other parts of this analysis. For a
more complete discussion of different measures of aid, see the section on definitions in this analysis.
STATE AND LOCAL FISCAL PROBLEMS
State and local governments have been faced with critical financial
problems in recent years. An imbalance exists between demands for
higher levels of public services and funds available to finance these
services. State and local government receipts from their own sources
(excluding Federal grants) rose from a war-time low of 4.8% of GNP
in 1944 to 10.5% in 1969, but the demand for expanded services rose
even faster.
State and local governments rely principally on consumer and
property taxes, which do not grow at a rate sufficient to keep up with
the growth in demand for public services. Thus, States have been
forced to raise tax rates frequently—instituting new taxes or raising
tax rates in more than 450 instances since 1959. In 1969, 36 State
legislatures approved new taxes or increased existing ones that will
augment tax receipts b}^ $4 billion. This is significantly larger than
the $1.3 billion and $2.5 billion added to State tax receipts in 1965
and 1967 respectively. An additional 12 States raised tax rates in the
first 6 months of 1970. In addition to State tax increases, local property
taxes were raised frequently during the decade.
The response of the Federal Government to the fiscal problems of
State and local governments has been to increase Federal grants from
$2 billion in 1950 to $24 billion in 1970. The results have been profound—Federal grants greatly contributed to raising the standards
and levels of State and local services, improved the national highway
network, and helped professionalize State and local personnel. While
effective in many instances, this rapid growth in Federal grants has
been accompanied by many undesirable problems, including:
• Overlapping programs at the State and local level;
• Program delaj-s and uncertainty;
• Unnecessary limitations on the authority and responsibility of
Governors and mayors; and
• The creation of competitive State and local governmental institutions.
236
THE BUDGET FOR FISCAL YEAR 19 72
While certain ongoing Federal grant programs were aimed at
problems of national interest, they often lost sight of the fact that the
real national interest lies in the strength and ability of the State and
local governments to carry out their responsibilities.
REFORM OF THE GRANT SYSTEM
In recognition of these problems, the administration has proposed
basic reforms in Federal Government programs and institutions, and
in the structure of Federal aid to State and local governments. These
changes embrace three basic concepts: sorting out appropriate governmental roles, improving the basic programs, and modernizing management.
Basic reform is being undertaken in such major functional areas as
welfare, pollution control, unemployment insurance, and mass transit.
The proposed welfare reform should help to alleviate the financial
pressures on State and local governments immediately, saving States
more than $400 million, with more significant savings in the long run,
and taking a major step toward resolving the problem of poverty in
America. A new Environmental Financing Authority is being developed
to tackle the pollution problem without placing additional pressure on
State and local bond markets. The administration has designed the
first fundamental overhaul of the unemployment compensation system
since the 1930's.
A long-needed overhaul of management processes in Federal aid
and other programs is being carried out. The regional boundaries of the
major domestic departments of the Federal Government have been
modified so that their headquarter cities and the regions that they
cover conform. This facilitates cooperation between Federal agencies
and makes it easier for grant recipients by having the agencies' regional
offices in the same cities. A new Office of Intergovernmental Relations
has been created in the Office of the Vice President. In order to foster
more rational decisionmaking on the whole range of domestic programs,
the administration has established a new Domestic Council, which
provides a forum for considering all of the various Federal activities
and functions that affect the States and their subdivisions.
Government is being decentralized in several ways—through
revising grant program procedures, through a proposed overhaul of
the manpower training programs, and, most importantly, through the
innovation of revenue sharing. In the grant area, the administration
has also recommended legislation that would:
• Authorize the President to consolidate closely related programs;
• Simplify funding of those grant programs that are closely related
and in the same agency;
• Authorize joint funding of projects across agency lines; and
• Offer assistance to Governors and mayors in improving their
policy planning and implementation capacity in social welfare
programs.
REVENUE SHARING
The most innovative reform of the federal system is the proposal
for a program of sharing Federal revenue with State and local governments. In describing the revenue sharing program, the President
stated: "Ultimately, it is our hope to use this mechanism to so
SPECIAL ANALYSES
237
strengthen State and local government that by the end of the coming
decade, the political landscape of America will be visibly altered, and
States and cities will have a far greater share of power and responsibilities for solving their own problems."
The major characteristics of the administration's revenue sharing
plan are:
—launching a bold new program of general revenue sharing with
State and local governments without any program or project
restrictions, with this portion to grow each year as the personal
income tax base of the Federal Government grows;
—providing six special revenue sharing grants for State and local
governments in special broadly defined areas of national concern,
without any requirement of matching funds; and
—maintaining only those existing grant programs for which there
is a clear, continuing national requirement.
It is contemplated that the general, unrestricted, revenue sharing
portion of the new plan would become effective on October 1, 1971;
the remainder would go into effect by January 1, 1972. On & first fullyear basis, appropriations and other budget authority totaling $16
billion would be devoted to the new revenue sharing system:
—five billion dollars for general revenue sharing, which would be
paid in equal quarterly installments to State and local governments starting in the fourth quarter of this calendar year; and
—eleven billion dollars for special revenue sharing grants, which
State and local governments would have to spend in the functional
area for which they are designated—transportation, education,
urban and rural community development, manpower training,
and law enforcement.
The general revenue sharing funds will be distributed primarily on
the basis of the population of each State, with an equitable passthrough to local governments, while the special revenue sharing program funds will be distributed in various ways, depending upon what
is appropriate for each broad program area.
Table P-3. BUDGET AUTHORITY PROPOSED FOR REVENUE SHARING
PLAN, FIRST FULL YEAR
Description
General revenue sharing
Special revenue sharing:
Urban community development
Rural community development
Education
Manpower training
Law enforcement
Transportation
Total
Billions
$5.0
2.0
1.0
3.0
2.0
.5
2.6
16.1
The resources for general revenue sharing would come from revenues
generated from the Federal personal income tax base and would be all
new money. Funds for special revenue sharing would come from the
conversion of a set of narrower categorical grants into the new pro
238
THE BUDGET FOR FISCAL YEAR 19 72
gram. For 1972, the budget includes specific proposals totaling $10.4
billion of budget authority (and corresponding outlays of $9.5 billion)
for the grants to be converted to special revenue sharing. Thus, an
additional $0.7 billion is being proposed for the first full year's budget
authority of the special revenue sharing grants. The outlay effect for
this addition is estimated at $0.5 billion. For a full discussion of the
revenue-sharing program, see Part 2 of the Budget.
SIGNIFICANT FEATURES OF FEDERAL AID IN 1972
Federal aid expenditures for grants and shared revenues will grow
$8 billion in 1972, reaching a level of $38 billion. In addition, there
will be $281 million of net lending to State and local governments,
not including the lending activity that is being encouraged in the
non-Federal sector with Federal interest subsidies.
In total, Federal aids provided about 18% of State and local
revenues in 1970, and is estimated to provide 22% in 1972. The largest
portion of direct Federal aid is administered by the Department of
Health, Education, and Welfare.
Table P-4. FEDERAL-AID EXPENDITURES BY AGENCY (in millions of dollars)
Agency
Executive Office of the President
Funds Appropriated to the President
Department of Agriculture
Department of Commerce
Department of Defense—Military
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
Department of the Treasury
Environmental Protection Agency
Veterans Administration
District of Columbia
Other
Allowance for general revenue sharing
Total outlays for Federal aid
1970
actual
1971
estimate
1972
estimate
*
*
1,794.0
1,774.5
1,259.6
1,731.7 2,989.0 3,455.0
158.0
156.8
168.4
37. 1
34.2
38.6
22.2
8.6
3. 8
12,029.6 14, 716.6 16,505. 2
1, 780.4 2, 348. 7 3,012.5
258.1
308.3
400.6
41.2
337.3
528.7
1,045.1
1,734.4 2,249.5
4.8
5.7
6.1
4,520.0 4,937.2 5,069.2
128.1
142.9
155.9
202.8
460.1 1,041.1
17.9
22.8
26.0
114.6
143.0
158.0
69.2
176.6
190.0
4,019.0
23,954.7
30,296.7
38,288.2
Apart from direct Federal aid, many other Federal activities that
are not included in this analysis affect the finances of State and local
governments. For example, the exemption of interest on State and
local bonds from Federal income taxes reduced interest costs to State
and local governments by $2.0 billion in 1970. This exemption results
in about $3.0 billion in "lost" revenues to the U.S. Treasury. Similarly,
since taxpayers may deduct State and local taxes from Federal taxable
income, a portion
of State and local taxes is offset by a reduction in
the taxpayers7 Federal liability. In 1970, the value of this deduction
in terms of tax savings to individuals was approximately $8.5 billion.
SPECIAL ANALYSES
239
Table P-5. FEDERAL-AID OUTLAYS IN RELATION TO TOTAL ]FEDERAL
OUTLAYS AND TO STATE-LOCAL REVENUE
Federal aid
As a percent of—
Fiscal year
Amount
(millions)
1959
1960
1961
1962_ .
1963
1964
1965
1966__
1967
1968
1969
1970
1971 estimate
1972 estimate
1
2
.
._
_ . _
$6, 669
7,040
7,112
7,893
8,634
10,141
10,904
12,960
15,240
18,599
20,255
23,955
30,297
38,288
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
14.2
16.7
Domestic
Federal
outlays !
15.9
16.4
15.4
15.8
16.5
17.9
18.4
19.2
19.5
20.9
21.3
21.9
23.4
26.5
State-local
revenue 2
13.5
12.7
12.0
12.3
12.5
13.4
13.4
14.2
15.3
16.9
17.4
18.2
20.2
22.4
Excluding outlays for defense, space, and international programs.
Excludes State-local revenue from publicly operated utilities and liquor stores.
THE IMPACT OF FEDERAL AID
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, rising from 7.4% of the total in 1962
to an estimated 16.7% in 1972. In terms of civilian domestic programs, 26.5% of Federal outlays will take the form of aids to State and
local governments in 1972. Because of successful efforts by State and
local governments to increase revenues from their own sources, the
relative increase in the impact of Federal aid has not been quite as
marked on their budgets as it has been on the Federal budget. Nevertheless, Federal aid has risen as a proportion of State and local revenues, from 13% in 1960 to an estimated 22% in 1972.
The pattern of State and local spending has been influenced by those
Federal grants that require the recipient government to match Federal aid funds with its own resources. In 1966, State and local governments provided an estimated $5.5 billion of their own funds to match
the $13 billion of Federal grants spent in that year. In the last few
years, State and local government matching funds have accounted for
10% to 14% of general expenditures out of their own revenue sources.
The elimination of matching requirements for the programs absorbed
by the special revenue sharing grants will reduce these numbers
and allow State and local governments greater freedom in the use of
their resources.
In 1969, the distribution of Federal aids on a regional basis ranged
from a high of more than $4 billion in the Southeast and Mideast,
to a low of $0.7 billion in the Rocky Mountain area. On a per capita
basis, however, the Rocky Mountain area ranked highest with grant
payments of $136 per capita, while the Great Lakes with $74 and
Plains region with $93 per capita were lowest. Population density and
240
THE BUDGET FOR FISCAL YEAR 1972
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 primarily because of aid for highway construction and shared revenues to thinly populated Western States.
The population density of the Rocky Mountain area is the lowest of
the regions; per capita aid is the 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.
Table P-6. REGIONAL DISTRIBUTION OF FEDERAL AID, FISCAL 1969
Region
New England
Mideast
Great Lakes
Plains
Southeast
Southwest
Rocky Mountain
Far West
United States
Total
(in millions
of dollars)
Per capita
Percent of
State and
local government general
revenue
1,173
4,113
2,989
1,511
4,530
1,714
665
3,043
101.93
97.01
74.92
93.40
107.21
116.33
136.30
115.25
17.9
15.2
14.0
17.0
22.8
21.2
23.3
14.9
20,287
100.47
17.4
Sources: "Federal Aid to States—Fiscal year 1969," Department of the Treasury, and "Governmental
Finances in 1968—69," Bureau of the Census. These reports provide additional information concerning
State distribution of Federal grants.
Per capita aid is also inversely related to per capita income. There
are two reasons for this relationship. Some grant programs require
lower matching ratios for the relatively poorer States. Other programs
such as those for public assistance, and elementary and secondary
education, are designed as aids to the disadvantage*! and tend to flow
to States having proportionately more individuals with lower incomes.
This reflects the growing impact of fiscal equalization provisions
characteristic of a number of the more recent grant programs. For a
State-by-State, }>rogram-by-program accounting of Federal grants,
see the forthcoming Treasury Department publication "Federal Aid
to States—Fiscal Year 1970".
Within the rising total of Federal assistance to State and local
governments, another important qualitative shift is taking place—the
increasing emphasis on urban areas. Between 1960 and 1970, the
major population growth in America occurred in the metropolitan
complexes. Today, about 70% of the population lives in 233 metropolitan areas. In 1972, approximately $26.8 billion of the $38 billion
of total Federal aids will be spent in standard metropolitan statistical
areas (SMSA's). This is an increase of about $22 billion, or nearly
600% over the amount of aid provided to these urban areas in 1962,
and $12.8 billion in the last 4 years. The major increases in Federal
grants for urban areas occurred in law enforcement, public assistance,
and income security.
Standard metropolitan statistical areas 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
SPECIAL ANALYSES
241
that urban population which places heavy pressure on public service
requirements—areas where population growth and population density
are high. The amounts shown in table P-7 are estimates based on
the best information available.
Table P-7. FEDERAL-AID OUTLAYS IN URBAN AREAS (in millions of dollars)
Function and program
National defense
Agriculture and rural development:
Donation of surplus commodities
Other
Natural resources:
Environmental protection
Other
Commerce and transportation:
Economic development
Highways
Airports
Urban mass transportation
Other
Community development and housing:
Community action program
Urbanrenewal
Publichousing
Water and sewer facilities
ModelCities
Other
Education and manpower:
Head Start and Follow Through
Elementary and secondary
Higher education
Vocational education
Employment security administration
Manpower activities
Othe™
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
PuWic assistance
Child nutrition, special milk and food stamps
Other
General government:
Law enforcement
National Capital region
Other
Other functions
General revenue sharing
Total, aids to urban areas
1961
actual
1964
actual
1969
actual
1972
estimate
10
28
30
33
128
27
231
40
313
104
294
81
24
30
8
10
79
101
773
170
1,398
36
158
1,948
36
104
2,225
83
122
5
147
2,646
117
289
6
549
975
570
110
420
278
1
5
106
105
159
136
36
2
17
432
786
257
52
8
75
222
5
28
303
3
264
14
29
344
64
7
256
1,262
210
179
449
530
77
97
1,457
113
393
317
1,271
704
48
66
4
18
29
8
34
48
89
J9
50
139
80
1 ]J?
1.731
28
54
113
y
66
203
JW
i MA
2,074
r*>
283
247
3,022
482
148
4UU
5.581
I. o™
>IU
A, A
»co
J>
5
12 813
'
140
4
iOn
37
1,170
131
3
61
1,450
168
16
25
38
9
\'
85
27
2
3,893
5,588
14,045
26,848
i Tentative estimated impact calculated on the basis of population includes both direct passthrough and discretionary State allocations.
430-700 O—71
http://fraser.stlouisfed.org/
Federal Reserve Bank of St. Louis
16
242
THE BUDGET FOR FISCAL YEAR 19 72
Besides the programs discussed in this analysis, there are many
Federal programs that have an important bearing on urban development, such as direct Federal construction and various loan and loan
insurance activities. The Department of Housing and Urban Development estimated 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 insured or guaranteed loans. While the tabulations are not
fully comparable, these estimates provide a perspective on the dimensions of urban area expenditures not covered by this analysis.
TYPES OF GRANTS
Federal aid to State and local governments as reflected in budget
outlays take several forms: Grants; shared revenues, usually counted
as grants; and loans. Shared revenues are payments of a share of Federal revenues from a particular source—such as receipts from timber
sales—which are paid to State and local governments. Grants are nonrepayable resources provided by the Federal Government in support of
a State or local program of service to the public.
In practice, there are two types of grants—those with "strings"
attached, or conditional grants, and those with "no strings" attached,
or unconditional grants. Only the former are presently in use in the
United States, but the President's revenue sharing proposal is designed
to change this.
Conditional grants may be divided into project grants and formula
grants. Project grants are a relatively recent development in the United
States and are designed to meet specific problems. That is, a project
grant is given for a specific program need, such as demonstration
grants for education. The recipient must take the initiative in applying
for the grant, and it is up to the discretion of the granting agency
whether or not the particular project involved merits funding. Project
grants accounted for an estimated $9.4 billion in 1969 and $11.7 billion
in 1970 of total Federal aid.
In contrast, formula grants are allocated to all eligible jurisdictions
for selected functions on the basis of some formula. The formula
criteria may include the fiscal capacity of the recipient government,
total or relevant population in the area, such as the number of poor
people, or both.
Matching requirements on Federal grants specify the portion of the
project or program cost that the recipient is required to provide in
order to receive the Federal grant. Matching requirements vary widely
depending on the program. For some programs, the matching rates
are uniform for recipient governments. In other cases, differential
rates have been established so that governments with lower fiscal
capacity are required to meet lower matching requirements than those
with higher fiscal capacity.
Revenue sharing, a third type of grant, has been discussed in another
part of this analysis.
Three different statistical series showing Federal aid to State and
local governments are produced by the Federal Government. Table
P-8 shows the principal differences between these three series over a
6-year period.
SPECIAL ANALYSES
243
Table P-8. THREE MEASURES OF FEDERAL AID TO STATE AND LOCAL
GOVERNMENTS 1964-1969 (in billions of dollars)
1964
Budget (Special Analysis P)
Principal exclusions:
Agricultural commodities
Foodstamps
Certain OEO payments
Add payments for research
All other (net)
Federal payments (Census)
Exclude low-rent public housing
All other (net)
Grants-in-aid, National Income Accounts
1965
1966
1967
1968
1969
10.1
10.9
13.0
15.2
18.6
20.3
—.5
(-1)
.8
-.3
—.5
(—l)
(— *)
.9
-.2
-.3
-.1
-.2
.9
-.2
-.3
_ |
-.5
1.0
-.3
-.5
-.2
-.8
1.1
-.1
-.7
-.2
-.8
1.1
-.3
10.1
—.2
-.1
11.1
—.2
«
13.1
2
2
15.0
-.2
19.4
-.3
0)
18.1
-.3
-.2
9. 8
10. 9
12. 7
14. 8
17.6
19. 1
0)
1
Less than $50 million.
(See: Special Analysis A).
As the table indicates, there is a growing divergence between the
series shown in this analysis and the other series. The principal cause
of this divergence over these years was the treatment of payments
by the Office of Economic Opportunity as will be discussed below.
Although these payments will be relatively stable in the years 197072, the rapid growth of food stamps will continue to widen this gap.
The series used in this analysis is focused on showing Federal aid
to States for programs either operated directly by State or local
governments or coordinated through or approved by State agencies.
It includes outlays whether cash payments or in-kind, and includes
aid to the Governments of Puerto Rico and the Virgin Islands. The
basic focus is on programs aimed to serve the public but not directly
administered by the Federal Government. Therefore, it excludes
payments for purchases of services to the Federal Government, such
as research conducted by public universities.
Both the census and the national income accounts (NIA) definitions
are designed to match their other definitions for data encompassing
the entire economy. They exclude payments to private, nonprofit
agencies even if coordinated under a State plan, since this money
is reported in the private sector. The principal example of this is
OEO, where a considerable amount of money the budget includes as
grants goes to private nonprofit entities.
Both the census and the NIA definitions exclude payments in-kind
from grants—such as food stamps or commodities donated under the
school lunch program—and also exclude payments to territories or
possessions. However, they focus on cash payments, so payments for
research conducted by public universities is included in their data,
as these universities are included as part of the State/local sector in
their various tabulations.
There are various other—relatively minor—differences between
the three series. The one major outlay included in the budget and
census series but excluded from the NIA series are payments for
low-rent public housing, which the NIA counts as purchases by the
Federal Government rather than grants.
Further information on the NIA series may be found in Special
Analysis A.
244
THE BUDGET FOR FISCAL YEAR 1972
Table P-9. FEDERAL AID TO STATE AND LOCAL GOVERNMENTS *
(expenditures in millions of dollars)
Functional
code
Agency and program
National defense:
Executive Office of the President: Office of Emergency
Preparedness—Federal contributions to State and
local planning
Department of Defense—Military:
Civil defense shelters and financial assistance
Construction of Army National Guard centers
Atomic Energy Commission
Total, national defense
finance
1971
estimate
1972
estimate
059
051
051
058
27.0
10.1
9.3
26.2
8.0
7.6
28.6
10.0
4.3
---
46.4
41.8
42.9
4.8
5.5
.2
5.8
.2
___
4,8
5.7
6.0
351
352
352
352
354
355
355
354
355
433.7
25.4
6.2
8.4
19.2
106.4
448.5
38.2
1.5
4.0
12.4
24.4
137.5
1.4
1.4
463.1
61.0
2.0
2.0
14.0
24.4
161.4
10.1
.6
600.8
667.9
738.6
401
93.4
100.7
98.8
402
19.9
20.7
20.7
402
402
78.7
.9
73.2
.8
82.8
.8
401
19.4
5.9
1.0
401
2.8
2.7
2.8
402
401
403
405
86.2
1.5
*
43.2
85.7
.9
.1
58.0
92.3
.8
.2
62.7
405
405
45.7
*
60.0
*
110.0
*
International affairs and finance:
Department of State:
East-West Cultural and Technical Interchange
Center
153
International Center, Washington, D.C
151
Total, international affairs and
1970
actual
Agriculture and rural development:
Department of Agriculture:
Commodity Credit Corporation and Consumer and
Marketing Service: Removal of surplus agricultural
commodities and value of commodities donated __
Rural water and waste disposal facilities
Mutual and self-help housing
Rural housing for domestic farm labor
Resource conservation and development
Consumer protective programs
_
Cooperative agricultural extension service
Water Bank Act Program
Other
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:
Flood control
Payments to States, Flood Control Act of 1954
(shared revenue) _ _ _
Department of the Interior:
Payments to States and counties (shared revenue)..
Bureau of Reclamation
Mine drainage and solid waste disposal
Fish and wildlife restoration and management
Outdoor recreational areas (Land and Water Conservation Fund)
Preservation of historic properties
See footnotes at end of table.
SPECIAL ANALYSES
245
Table P-9. FEDERAL AID TO STATE AND LOCAL GOVERNMENTS *
(expenditures in millions of dollars)—Continued
Agency and program
Functional
code
1970
actual
1971
estimate
1972
estimate
Natural resources—Continued
Federal Power Commission: Payments to States (shared
revenue)
Tennessee Valley Authority: Payments in lieu of taxes
(shared revenue)
Water Resources Council
Environmental Protection Agency
401
*
401
401
401
16.1
2.4
194.2
20.0
3.5
444.8
26.8
3.0
1,029.6
606.4
877.2
1,532.4
.8
184.4
3.0
264.2
282.4
.4
.9
.5
2.8
.2
156.5
2.1
.4
.9
152.2
4.6
32.9
1.0
28.4
.5
4,299.5
104.5
83.2
1.3
4,590.5
179.2
134.0
4.6
31.6
1.3
13.0
4,579.8
290.3
147.0
5.2
4,865.3
5,365.8
5,525.8
656.4
679.2
358.1
035.0
72.0
.6
140.5
33.0
50.0
4.0
655.5
442.3
1,300.0
100.0
2.0
170.0
38.0
48.0
3.0
758.9
.3
150.0
3,005.1
3,691. 7
Total, natural resources
Commerce and transportation:
Funds appropriated to the President:
Public works acceleration
507
Appalachian development
507
Department of Commerce:
State marine schools
502
Regional development
507
Promotion of tourism
506
National Bureau of Standards
506
National Oceanic and Atmospheric Administration, _ 506
Economic development assistance
507
Department of the Interior: Resources management,__ 507
Department of Transportation:
Forest and public lands highways
503
Highway beautification
503
Highway safety
___ 503
Federal-aid highways (trust fund) _ _ _
_ 503
Urban mass transportation facilities
503
2
Federal aid for airports and airways
501
Other
502
Total, commerce and transportation
.5
8.9
.4
.2
..1
158.3
5.8
Community development and housing:
Funds appropriated to the President:
Office of Economic Opportunity: Community Action
programs
551
647.8
Department of Housing and Urban Development:
Model city grants
551
75.7
Urban renewal
552
1,053.7
Open space land and urban beautification
552
43.4
New community assistance
552
Grants for basic water and sewer facilities
553
109.0
Grants for neighborhood facilities
553
23.4
Urban planning grants
554
41.2
Community development training programs
554
2. 4
Low-rent public housing programs, __ _
_ 555
435.9
National Homeownership Foundation, __
555 _ _
CoTmunity dev.lopm nt
_ - 553 _ Total, community development and housing
See footnotes at end of table.
_. -
2,432. 5
246
THE BUDGET FOR FISCAL YEAR 19 72
Table P-9. FEDERAL AID TO STATE AND LOCAL GOVERNMENTS *
(expenditures in millions of dollars)—Continued
Agency and program
Education and manpower:
Funds appropriated to the President: Office of Economic Opportunity 3
Department of Health, Education, and Welfare:
Elementary and secondary education
Office of Child Development
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
Education professions development
Work incentive activities
Emergency school assistance
Department of Labor:
Manpower development and training activities
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 the Humanities.
Corporation for Public Broadcasting
Equal Employment Opportunities Commission
Other
Functional
code
Total, health
See footnotes at end of table.
1971
estimate
1972
estimate
601
899.9
796.9
601
601
601
601
601
602
602
603
608
608
601
604
601
1,469.5
1,703.7
622.0
31.1
3.1
342.0
(101.3)
285.2
104.9
1.4
86.1
81.4
464.0
33.0
12.2
313.3
(96.6)
404.9
65.9
1.5
109.4
138.3
94.9
1,789.5
138.4
437.9
34.4
8.7
175.4
(46.0)
445.9
42.1
1.6
113.9
223.4
290.0
604
420.9
991.0
1,443.5
604
327.7
374.5
395.0
601
608
608
609
----
16.3
.3
15.0
.9
3.7
19.6
5.9
23.0
1.4
.4
26.7
5.5
35.0
2.8
.4
4,711.4
5,553.8
5,866.1
651
651
651
651
653
272.0
(149.6)
45.4
122.0
74.3
240.8
(133.2)
68.1
180.9
80.5
214.3
(123.3)
71.8
178.8
71.8
651
653
651
653
652
652
653
652
652
185.8
145.9
9.2
10.0
1.0
1.6
1.9
235.8
2,726.8
181.7
147.3
6.0
16.7
2.2
1.3
3.4
204.2
3,250.1
178.8
175.8
3.0
12.1
.3
1.2
250.6
3,383.6
--
3,831.4
4,383.3
4,542.2
Total, education and manpower
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 and mental health
facilities
Mental health services and development
Health services
Environmental health
Indian health services and facilities
Patient care and health services
Communicable and chronic diseases
Maternal and child health
Medical assistance
1970
actual
256.0
SPECIAL ANALYSES
247
Table P-9. FEDERAL AID TO STATE AND LOCAL GOVERNMENTS i
(expenditures in millions of dollars)—Continued
Functional
code
Agency and program
1970
actual
1971
estimate
1972
estimate
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 __ _ _
Community services
703
61. 0
54.0
42.0
702
703
703
703
703
702
702
703
4,716.2
441. 4
3.6
296.5
16.1
558.7
379.4
_____
6,439.8
544. 5
6.6
368.9
13.9
1,507.3
618.4
7,531.6
554.0
11.9
411.0
14.3
1,943.3
570.1
162.0
_._
6,472.7
9,556.3
11,240.2
Veterans benefits and services:
Veterans Administration:
Aid to State homes
804
Grants for construction of State nursing homes.. _ _ 804
Administrative expenses.
_ _ 804
14.0
3.4
.5
16.8
5.0
.9
17.7
7.5
.7
17.9
22.7
25.9
909
48.7
62.6
84.3
909
908
14.1
41. 2
16.1
337. 3
17.3
528. 7
909
85.2
87.0
90.0
909
__
_.-
114.6
15.8
42.9
143.0
100.0
55.9
158.0
112.2
65.9
362.5
801.9
1,056.4
Total, income security
Total, veterans benefits and services
___
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)
National Capital region:
Federal payment to District of Columbia
Washington Metropolitan Transit Agency
Other
__
Total, general government
Allowance for general revenue sharing
_ ___
4
Total, grants and shared revenues
___
_ _..
4,019.0
23,954.7
30,296.7
38,288.2
* Less than $100 thousand.
1
Grants-in-aid unless otherwise specified. Excludes loans which are shown separately in table P— 10.
23 Federal funds in 1970; trust funds in 1971 and 1972.
Manpower programs transferred to Labor Department.
4
For fiscal 1972; differs from first full-year basis.
Note.— This table is based on the existing system of grant programs; the adoption of revenue
sharing could change the functional distribution of the 19/2 figures.
248
THE BUDGET FOR FISCAL YEAR 19 72
Table P-10. FEDERAL LOANS TO STATE AND LOCAL GOVERNMENTS
Agency and program
Agriculture and rural development:
Farmers Home Administration
Net outlays
1970
actual
1971
estimate
1972
estimate
-.1
Total, agriculture and rural development. _
-.1
Natural resources:
Department of the Interior: Reclamation loans.
2.9
3.6
13.0
2.9
3.6
13.0
38.9
27.2
23.3
—.2
3.1
—.2
35.0
—.2
35.0
41.8
62.0
58.1
—1.2
—1.9
33.0
12.0
.1
87.3
10.0
—7.4
34.4
29.9
99.4
37. 0
31.6
26.8
4.7
55.6
70.5
27.6
87.2
97.3
32.3
-.2
—. 4
-.4
1.8
-.1
-1.4
90.5
4. 9
4.4
-1. 4
113. 7
-1.5
137.8
90.5
116.8
140.3
252.2
379.1
280.7
Total, natural resources
Commerce and transportation:
Department of Commerce: Economic development assistance, _
Department of Transportation:
Mass transportation facilities
Highway construction
Total commerce and transportation
Community development and housing:
Department of Housing and Urban Development:
Low-rent public housing fund
Housing management revolving fund
Community development
Total, community development and housing
Education and manpower:
Department of Health, Education and Welfare: Higher education activities
Department of Housing and Urban Development: College housing
Total, education and manpower
General government:
Department of Defense—Civil
Department of the Interior:
Administration of territories
Alaska public works
General Services Administration: General activities
District of Columbia
Total, general government
Total
SPECIAL ANALYSIS Q
FEDERAL PUBLIC WORKS ACTIVITIES
The Federal budget provides for the direct construction of public
works, and for grants and loans to assist State and local government
construction. This analysis brings together information on budget
authority and outlays for these purposes. In addition, information is
provided on grants and loans to aid construction by private cooperatives and nonprofit groups. Not included are Federal activities
affecting the level of private construction, such as Federal procurement, leases, loans, loan guarantees, interest subsidies, and tax
concessions.
SUMMARY
Federal outlays for construction of public works are expected to
increase sharply from $9.8 billion in 1970 to $11.6 billion in 1971 and
$13.0 billion in 1972. The increase of one-third over the 2-year period
reflects primarily the expansion of major Federal programs to improve
the quality of our environment and to meet pressing needs of a growing
economy for power, water supplies, air and ground transportation,
and other facilities.
Outlays for both direct Federal construction programs and assistance for State and local projects will rise during the 2 years. Major
increases in Federal civil projects will be for postal facilities, public
buildings, water resources and related power projects, and airway
systems. Grant outlays for municipal waste treatment facilities will
rise from $176 million in 1970 to $1 billion in 1972, and Federal-aid
highway grants will increase by nearly $300 million to a level of $4.6
billion in 1971 and 1972. National defense public works will also
increase to $1.9 billion in 1972.
Table Q-1. FEDERAL OUTLAYS FOR PUBLIC WORKS, 1963-72
(in millions of dollars)
Total
Federal
outlays
Fiscal year
1963
1964
1965
1966
1967
1968
1969
1970
_
_
_-
_. _
1971 estimate
1972 estimate
7,196
8,346
8,886
9,428
9,572
9,520
9,683
9,791
11,607
12,979
Direct Federal construction
Total
3,704
4,019
4,152
4,693
4,483
3,972
3,932
3,740
4,618
5,280
Civil
2,321
2,691
2,800
3,014
2,752
2,460
2,186
2,200
3,032
3,381
Defense
1.383
1,328
,352
,679
,731
1,513
,746
,540
,586
,899
Grants
3,302
4,186
4,567
4,446
4,730
5,264
5,479
5,796
6,653
7,420
Net
lending
190
142
167
289
359
284
272
255
336
279
Note.—In this and the following tables, nonconstruction costs are excluded; proposed legislation
is included for the years 1971 and 1972. 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.
249
250
THE BUDGET FOR FISCAL YEAR
1972
Total budget authority requested for public works programs in 1972
is $13.9 billion, compared with $19.7 billion in 1971. The larger amount
for 1971 reflects $3.25 billion of additional borrowing authority for the
Tennessee Valley Authority power program enacted in 1971 and $3
billion of budget authority available over 5 years for urban mass
transportation grants.
Trends in Federal outlays for public works are shown in table Q-l
over a 10-year period, distinguishing between grants and loans to
State and local governments and direct Federal civil and defense
works. The accompanying chart portrays graphically the changes in
the amounts of grants and direct works over the years.
Federal Expenditures for Public Works
6.0-
5.8
Grants
5.0-
40
3.4
3.0
3.02.2
2.0-
1.0-
1963
1964
Fiscal Years
1965
(966
1967
1968
(969
(970
!97(
(972
Estimate
FACTORS AFFECTING FEDERAL PUBLIC WORKS
The volume and types of construction in various Federal programs
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-fourth in the early 1950's. Within the public sector, about one-eighth is direct Federal construction and the
remainder is State and local government construction, much of which
is federally aided.
In this analysis 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. Detailed planning and the cost of sites for specific
construction projects are included. Preliminary planning and surveys
prior to the selection of a site, general-purpose land acquisitions, such
SPECIAL ANALYSES
251
as for parks and forests, and general maintenance and repair are excluded from this analysis.
Total outlays for Federal public works activities remained generally
constant from 1966 to 1970 because of restrictive budget policies and
efforts to combat inflationary pressures. Under the full-employment
budget policy of the 1972 budget, intended to promote an orderly
expansion of the economy without losing ground in the fight against
inflation, selective increases are proposed to meet urgent economic and
environmental problems.
Other major factors affecting the magnitude of Federal construction
programs are:
• The construction moratorium imposed by the President in September 1969 to relieve inflationary pressures was terminated in
June 1970. The 75% deferral of new construction contracts during
1970 resulted in shifting some $300 million of budget outlays from
1970 to later years. Under the President's policy, the projects
deferred in 1970 will not be accelerated, but will now proceed under
normal program schedules.
• Some new projects funded in the 1970 and 1971 budgets have been
delayed to avoid aggravating inflationary conditions in local
construction market areas and to comply with outlay ceilings
imposed by the Congress. Almost all of these new projects are now
programed for starting in 1971 and 1972.
• Construction costs are continuing to rise rapidly, adding to budget
outlays. The Department of Commerce's composite index of construction costs increased nearly 8% in the year ending September 1970, about the same as in the prior year.
• Under the budget proposals, some Federal-aid programs are being
replaced by loan guarantee and interest subsidy programs. This
has the effect of reducing 1971 and 1972 outlays summarized in
this analysis.
• The President's proposals for new general and special revenuesharing programs, described in part 2 of the Budget, will likely
increase the level of State and local construction as the new
programs develop.
DIRECT FEDERAL PUBLIC WORKS
Outlays for direct Federal construction are shown by agency in
table Q-2. About two-thirds of the $5.3 billion of 1972 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.
Water resource and related power generation and transmission
facilities built by a number of agencies—principally the Corps of
Engineers, the Bureau of Reclamation, the Bonneville Power Administration, and the Tennessee Valley Authority—are the predominant types of construction in the civil works category. Roads
and other facilities required in the national forests, parks, and other
public lands are another large classification of civil works. Most
Federal office buildings are built by the General Services Administration. Research facilities are built by many agencies.
252
THE BUDGET FOR FISCAL YEAR 19 72
Outlays for defense public works will increase $313 million in 1972,
after some decline in earlier years. Modernization and improvements
will be required to support the missions of the armed services.
Table Q 2. DIRECT FEDERAL PUBLIC WORKS: OUTLAYS AND 1972
BUDGET AUTHORITY BY AGENCY (in millions of dollars)
Outlays
Program and agency
1970
actual
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
Department of Justice: Federal Prison System
Department of Transportation:
Coast Guard
Federal Aviation Administration
General Services Administration
National Aeronautics and Space Administration
Postal Service
Veterans Administration
Tennessee Valley Authority
Other
1971
1972
estimate estimate
Budget
authority
1972
estimate
115
766
143
980
159
973
201
921
19
31
24
19
49
32
175
102
2
59
35
225
92
2
69
60
264
92
43
66
88
213
90
57
33
108
130
54
77
80
348
110
31
172
144
50
272
87
538
171
35
230
217
43
236
127
609
200
36
412
270
56
345
110
33
273
2,200
3,032
3,381
3,190
420
333
366
161
2
259
473
336
331
166
3
277
678
439
308
241
*
232
642
429
333
310
Subtotal national defense public works
1,540
1,586
1,899
1,920
Total direct Federal public works
3,740
4,618
5,280
5,110
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
207
*Less than $500 thousand.
GRANTS AND N E T LENDING FOR PUBLIC WORKS
Federal outlays to aid State and local government construction are
summarized by agency in table Q-3. These Federal grants and loans
supplement State and local resources used to build facilities such as
roads, water, sewer, and waste treatment facilities, airports, and
schools.
The requirements for State or local matching of Federal grants differ
considerably among the various programs. The Federal grant is commonly expressed as a percentage of the total cost of an eligible project.
The percentage may be uniform for all eligible projects, or may vary
by program in accordance with such factors as population and relative
financial ability of the State and local governments.
SPECIAL ANALYSES
253
Depending upon program requirements, Federal disbursements may
represent advances or reimbursements to the State and local authorities for the Federal share of construction put in place. Grants which
indirectly support State and local construction activities, such as
interest subsidies and contributions for purposes such as public housing and hospital and medical care, are not included in this analysis.
The lead time between budget authorizations and expenditures tends
to be longer for Federal grants than for Federal direct construction,
principally because of the time required for State and local governments to arrange for their share of the project financing and to comply
with other eligibility and performance requirements. Two developments promise to facilitate State and local programing. The President
has recommended additional revenue sharing to enable the States to
set their own priorities. He has also requested multiple-year budget
authority for some programs to reduce some of the planning
uncertainties.
About two-thirds of the Federal outlays for construction grants in
1972 will be for highways financed from trust funds administered by
the Federal Highway Administration in the Department of Transportation. A major share of the 1972 trust fund outlays relate to the
interstate system of limited access roads initiated in 1956, for which
the Federal share is 90%. The total cost of the 42,500 mile system,
including the non-Federal share, is currently estimated at $70 billion.
To continue financing the construction of the 28% of the system
mileage not currently open to traffic, the Federal-Aid Highway Act
of 1970 includes $9.9 billion in new authorizations for 1972 through
1976. The act also increases the Federal share of the cost of other
highway-aid programs from 50% to 70%, beginning in 1974.
The outlook is for substantial increases in State and local construction of airports, mass transit facilities, and waste treatment facilities.
The Federal-aid programs for these types of facilities are being enlarged and modified. In the Department of Transportation, the Federal Aviation Administration wi'l employ matching grants and user
charges to help finance airport facilities under the Airport and Airway
Development and Revenue Act of 1970. The Urban Mass Transportation Administration will administer a Federal grant program providing
up to two-thirds of net project costs. Contract authority of $3 billion
for this program has been provided over a 5-year period to permit
communities to arrange in advance for their share of the cost.
The program to provide grants for waste treatment works was transferred from the Department of the Interior to the new Environmental
Protection Agency, and increased emphasis is being given to pollution
control programs in the new agency. Legislation is proposed to authorize appropriations of $2 billion in 1972 and a total of $6 billion for
1972 through 1974 to finance the Federal share of the estimated $12
billion of waste treatment plant construction over this period.
Within the Department of Health, Education, and Welfare, the
Health Services and Mental Health Administration administers
programs for public hospitals and mental health centers. A new program of loan guarantees and interest subsidies (not included in this
analysis) is being implemented. By the end of 1972, a total of $1
billion of loans will have been guaranteed and subsidized to aid in
the construction of hospitals and other health facilities. In response
254
THE BUDGET FOR FISCAL YEAR
1972
Table Q-3. GRANTS AND NET LENDING FOR PUBLIC WORKS: OUTLAYS
AND 1972 BUDGET AUTHORITY, BY AGENCY (in millions of dollars)
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
Administration
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
.
Department of Justice: Law Enforcement Assistance
Administration
Department of Transportation:
Federal Aviation Administration
Federal Highway Administration
Urban Mass Transportation Administration
Environmental Protection Agency
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
Administration
Department of Health, Education, and Welfare: Office
ofEducation
Department of Housing and Urban Development
Department of the Interior: Bureau of Reclamation. _
Department of Transportation:
Federal Highway Administration
Urban Mass Transportation Administration
District of Columbia
Other agencies
Subtotal lending
Repayments
Total net lending
Outlays
1970
actual
Budget
authority
1972
estimate
1971
estimate
1972
estimate
161
223
230
217
77
27
84
42
83
63
95
2
134
19
139
6
144
1
146
1
142
88
256
132
127
86
226
174
104
100
135
210
38
79
9
45
26
18
34
21
60
38
140
28
2
23
64
79
83
4,312
102
179
16
7
134
4,608
177
427
100
\\
147
4,604
287
1,004
112
19
15
5,597
-85
2,005
188
36
5,782
14
6,642
11
7,407
13
8,636
18
5,796
6,653
7,420
8,653
40
28
24
14
33
842
4
27
897
5
5
922
14
10
3
35
89
2
35
57
122
5
143
5
63
35
1,013
-758
1,176
-840
1,148
-869
122
-7
255
336
279
115
to recent changes in the Hill-Burton program, Federal outlays for
grants to aid construction of medical facilities are expected to decline
in 1972. The National Institutes of Health administer programs
of Federal grants for teaching facilities in the health professions
and for health research facilities. The Office of Education grants for
SPECIAL ANALYSES
255
higher education facilities will decline in 1972, as more use of interest
subsidies on private loans for these purposes is anticipated.
The Department of Housing and Urban Development's program of
grants for basic water and sewer facilities is being funded on an interim
basis, pending enactment of community development special revenuesharing legislation. The Department also provides construction grants
for neighborhood facilities and loans to State and local governments
which help finance construction of public facilities, college housing,
and low-rent housing. The Department of Commerce provides grants
as well as loans for construction of public facilities required under
economic development assistance programs.
CIVIL PUBLIC WORKS
The following sections provide additional details on civil works
construction. For most direct Federal projects, the responsible agencies
conduct preliminary studies and surveys and obtain authorizing
legislation for specific projects, where necessary, before construction
appropriations may be enacted. In the case of water resource projects,
coordinated long-range economic, hydrologic and land-use projections
are employed to help assure economic design of facilities for each
comprehensive river basin. Outlays for such preliminary planning,
surveys and investigations are not included in the summary tables
in this analysis.
New and continuing work.—For direct Federal projects underway in
1972, table Q-4 indicates the total cost, the progress through the budget
year, and the estimated outlays required to complete construction.
Table Q-4. ESTIMATED COST OF 1972 DIRECT FEDERAL CIVIL PUBLIC
WORKS, BY CONTINUING AND NEW WORK (in millions of dollars)
Program and agency
Total
estimated
Federal
cost
Outlays
Prior to
1972
1972
estimate
Required
to cornplete
Continuing work:
Department of Agriculture: Forest Service
Department of the Army: Corps of Engineers—Civil
Department of the Interior:
Bureau of Indian Affairs
National Park Service
Bureau of Reclamation
Bonneville Power Administration
Department of Transportation:
Coast Guard
Federal Aviation Administration
Urban Mass Transportation Administration
General Services Administration
National Aeronautics and Space Administration. _.
Postal Service
Veterans Administration
Tennessee Valley Authority
Other
Total continuing work
211
15,363
139
7,631
73
952
6,780
624
1,566
7,817
447
404
33
4,378
224
62
56
258
85
158
1,477
3,181
137
57
608
46
560
1,140
602
433
1,949
1,770
28
172
14
153
1,052
323
259
907
945
21
128
20
176
34
203
109
583
177
8
309
12
231
53
77
65
459
648
33,193
16,661
2,937
13,595
256
THE BUDGET FOR FISCAL YEAR 19 72
Table Q-4 ESTIMATED COST OF 1972 DIRECT FEDERAL CIVIL PUBLIC
WORKS, BY CONTINUING AND NEW WORK (in millions of dollars)—Continued
al
:e"d
Fcdi ral
Outlays
Prior to
1972
1972
estimate
Required
to complete
New projects and features in 1972:
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
Bureau of Reclamation
Bonneville Power Administration
Department of Justice: Federal Prison System
Department of Transportation:
Coast Guard
Federal Aviation Administration
Urban Mass Transportation Administration
Environmental Protection Agency
General Services Administration
National Aeronautics and Space Administration. _.
Postal Service
Veterans Administration
Tennessee Valley Authority
Other
Total new projects and features
168
119
Total advance planning
Total direct civil public works
7
19
22
80
40
53
35
270
12
28
184
53
291
63
1,276
70
2
2
.
_
._.
_
1
4
_-
86
4
82
109
6
13
5
3
6
26
16
75
33
25
13
103
2
3
16
6
33
9
22
19
22
167
10
25
168
47
258
54
,250
51
2,783
16
361
2,405
77
33
17
28
7
21
3
1
1
3
20
6
83
13
13
139
13
29
8
14
3
3
5
81
2
15
4
2
3
4
3
6
26
3
10
4
6
1
77
5
6
32
7
5
423
151
84
188
36,399
16,828
3,381
16,188
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
National Park Service
Bureau of Reclamation
Department of Justice: Federal Prison System
General Services Administration
National Aeronautics and Space Administration
Veterans Administration
Tennessee Valley Authority
Other
.
4
Outlays for continuing work—those projects started with funds
appropriated in years prior to 1972—are estimated at $2.9 billion in
1972, about 87% of the total for direct civil works construction. After
1972, an additional $13.6 billion in outlays will be required to complete
these projects.
SPECIAL ANALYSES
257
New projects recommended for starting in 1972 are estimated to
cost $2.8 billion of which $361 million wilt be spent in 1972.
Partly as a result of the 1970 construction deferral, outlays by the
Corps of Engineers will be over $200 million higher in 1971 than in
1970, and those of the Bureau of Reclamation, $50 million higher.
Most of the projects added by the Congress to the 1971 budget are
expected to be started in 1972. The Corps of Engineers is programing
35 projects and the Bureau of Reclamation eight projects for starting
in 1972.
The Tennessee Valley Authority builds powerplants, transmission
lines, and other facilities needed to meet rapidly growing regional
needs for electricity. An increase in borrowing authority of $3,250
million was provided in 19 71 to supplement proceeds from power
revenues for the construction of such facilities. The Watts Bar nuclear
powerplant will be started in 1972.
The Bonneville Power Administration will construct additional
transmission facilities to connect hydroelectric powerplants with the
Federal grid and to serve increasing loads in the Pacific Northwest.
The roadbuilding program of the Forest Service is being expanded
to meet growing needs for lumber and recreation.
The General Services Administration will begin construction of
eight new buildings and the superstructures of three major buildings
started in prior years. Legislation is proposed to supplement direct
work with lease construction. The new Postal Service will begin construction in 1972 of facilities with an estimated total cost of $291
million, as part of a modernization program to provide better postal
service.
The Federal Aviation Administration will continue to modernize
and improve facilities required for the airway system, including the
automation of air route traffic control centers and airport traffic
control towers. The Federal Railroad Administration and the Urban
Mass Transportation Administration are cooperatively developing
research facilities for high-speed ground transportation.
The Veterans Administration will begin a replacement hospital in
San Francisco, and will continue the program to modernize other
hospitals. Funds are recommended in 1972 for the Federal Prison
System to construct three institutions and for planning and site
acquisition of seven others.
Advance planning and site acquisitions.—Outlays for detailed
architectural and engineering planning and site acquisitions for some
projects are normally made prior to the start of construction. Outlays
for these purposes are included in table Q-4, and separately identified
for those projects to be started in later years.
Authorized reserve oj civil public works.—Most Federal 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 size and planning status of the
authorized reserve is shown in table Q-5.
430-700 O—71
17
258
THE BUDGET FOR FISCAL YEAR 1972
Table Q-5. RESERVE OF PRESENTLY AUTHORIZED PROJECTS AND
PROGRAMS FOR UNDERTAKING AFTER 1972 (in billions of dollars)
Cost of authorized reserve
Estimated
total
Federal
cost
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 _
Transportation: Federal Aviation
Administration
General Services Administration. __
Veterans Administration
Tennessee Valley Authority
Other agencies
Total
Status of plans as of
June 30, 1971
Contract
In
Not
could process started
be let
Status of plans as of
June 30. 1972
Contract
In
Not
could process started
be let
0.8
10.1
0.2
.8
0.6
6.5
2.7
0.2
1.6
0.6
5.8
2.7
.2
*
*
0.2
*
*
0.1
.2
*
.1
.2
*
.1
.1
.4
1.9
.6
*
1.3
.2
.4
.2
.2
.6
*
1.4
.2
.4
.1
.2
.2
.4
.7
.8
.2
1.7
.2
.1
.3
*
.3
*
.1
.5
*
.5
.2
.3
.1
.4
.1
.2
1.4
.1
.1
.6
.1
1.0
*
.1
.1
.7
.1
18.0
3.0
8.6
6.3
5.0
7.8
5.1
*Less than $50 million.
PUBLIC WORKS BY FUNCTION
Table Q-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 the major functional categories
used in the budget. Each such major function, with the exception
of interest, includes public works programs, although the level of
budget authority and outlays varies widely.
The commerce and transportation and natural resources functions,
taken together, account for $9.4 billion or 85% of the outlays for civil
construction in 1972. Grants for highways, airports, mass transportation, and other public facilities account for the predominant share of
the outlays in the commerce and transportation function. This
function also includes substantial programs for direct construction of
facilities such as post offices, aviation control systems, and Coast
Guard structures. Direct construction—principally of water resources
projects—is the major component of the natural resources function.
The trend of outlays for the major types of water resource developments is shown in the accompanying chart, and table Q-6 provides
details for the individual agencies and types of construction.
259
SPECIAL ANALYSES
t : , ; - . ; . „ .
:
••;.••;;:,...
Outlays (or Water Resources and Related
ater Supply and Waste Disposal
Multiple-purpose with Hydroelectric Power
Flood Control and Beach Erosion
I
1964
I
I
I
1965
Fiscal Yeafs
1971
kfTtfVKlTC
'
Construction outlays for the remaining civil functions will total
$1.7 billion in 1972. Outlays will range from $10 million in each of
the international and income security functions to $652 million for the
general government function. Community development and housing,
education, and health functions each include outlays for construction
in excess of $200 million.
NATIONAL DEFENSE PUBLIC WORKS
National defense public works include many types of facilities built
in the United States and abroad to support the missions of the armed
services. Outlays for these purposes are expected to increase by $315
million to $1.9 billion in 1972.
Department ojDefense—Military.—Outlays for construction required
for tactical, strategic, and general purpose forces are expected to
increase in 1971 with a further increase in 1972. The figures reflect
the lifting of the deferral of 75% of new construction contracts in
260
THE BUDGET FOR FISCAL YEAR
1972
Table ^ 6 . OUTLAYS FOR WATER RESOURCES AND RELATED
DEVELOPMENTS (in millions of dollars)
Program and agency
1970
actual
1971
estimate
1972
estimate
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
62.2
273.6
6.4
2.3
.6
7.5
65.0
454.7
7.9
2.6
3.1
8.0
63.8
382.1
1.0
3.5
6.3
11.7
Total flood control works
Beach erosion control: Army: Corps of Engineers—Civil
352.6
2.5
541.3
3.4
468.4
3.9
15.5
16.2
15.9
4.3
64.7
3.8
7.0
67.8
3.7
12.0
61.3
13.0
88.3
94.7
102.2
189.2
.1
216.5
.3
.8
161.2
.3
2.7
189.3
217.6
164.2
Multiple-purpose dams and reservoirs with hydroelectric power
facilities:
Army: Corps of Engineers—Civil
Interior: Bureau of Reclamation
Tennessee Valley Authority
269.2
63.0
13.4
321.9
118.6
24.1
303.0
173.7
35.5
Total multiple-purpose facilities
Powerplants: Tennessee Valley Authority
345.6
261.7
464.6
378.1
512.2
396.6
Power transmission facilities:
Interior:
Bureau of Reclamation
Bonneville Power Administration
Southwestern Power Administration
Tennessee Valley Authority
23.1
101.9
3.1
59.5
10.0
92.5
3.6
73.0
10.1
92.2
2.5
78.9
Total power transmission facilities
187.6
179.1
183.7
5.2
21.9
7.3
38.2
7. 3
61.0
75.5
76.9
99.2
109.0
43.7
23.9
.3
176.4
140.5
46.0
29.1
.7
422.0
170.0
40.0
15.5
.1
1,000.0
455.9
760.7
1,393.1
1,883.5
2,639.5
3,224.2
Irrigation 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 Seaway Corporation
Tennessee Valley Authority
Total navigation facilities
Water supply and waste disposal facilities:
Funds appropriated to the President: Appalachian regional development programs (grants)
Agriculture: Farmers Home Administration (grants)
Commerce: Economic Development Administration (primarily
grants)
_
Housing and Urban Development:
Grants
Loan disbursements
Interior: Bureau of Reclamation
State: International Boundary and Water Commission
Environmental Protection Agency (grants)
Total water supply and waste disposal
Total water resources and related developments
SPECIAL ANALYSES
261
1971 and the program to modernize facilities of the armed services.
Budget authority of $1.7 billion is recommended in 1972 for new and
improved troop housing, replacement of inadequate hospital and
community support facilities, 9,684 new family housing units, and
other military facilities. The modernization program is an important
element in achieving progress toward an all-volunteer force.
Atomic Energy Commission.—Outlays for construction of atomic
energy facilities are expected to decline from 1971 to 1972. Work will
continue on the world's largest accelerator for research in high energy
physics, and a medium energy physics accelerator at Los Alamos,
N. Mex., will be virtually completed. Outlays will increase for construction of the fast flux test facility for the fast breeder civilian
power reactor development program, but outlays for facilities to provide new weapons capabilities will decline. Major modifications to
existing weapons facilities will be made to further improve fire prevention and safety features.
AID
TO COOPERATIVES AND NONPROFIT
GROUPS
In some instances, private nonprofit institutions provide services
similar to those provided by State and local governments and are also
eligible for Federal aid. Federal outlays to aid construction by such
private institutions are included in table Q-7, but are not included in
the totals for public works in other parts of this analysis.
Table Q-7. FEDERAL OUTLAYS FOR CONSTRUCTION BY COOPERATIVES
A N D N O N P R O F I T G R O U P S (not included in public works) (in millions of dollars)
Program and agency
1970
actual
1971
estimate
1972
estimate
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 College
Howard University
150
133
57
101
2
2
61
97
1
14
53
46
1
11
312
306
234
492
528
510
6
70
41
9
109
-205
6
58
51
-194
30
-223
Total net lending
472
449
367
Total Federal outlays
784
755
601
Total expenditures
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
123
262
THE BUDGET FOR FISCAL YEAR 19 72
Table Q-8. FEDERAL PUBLIC WORKS ACTIVITIES (in millions of dollars)
By major function and agency
BUDGET AUTHORITY
Function, agency, and program
1970
actual
OUTLAYS
1971
estimate
1972
estimate
3.5
5.8
1970
actual
1971
estimate
1972
estimate
0.9
4.8
4.5
.1
.1
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
.2
.2
.2
.2
11.5
7.7
5.0
Total international affairs
andfinance
3.7
6.0
12.6
12.7
9.7
53.2
25.0
56.3
54.3
50.0
43.0
2.4
4.6
10.3
6.1
8.6
1.4
1.4
.6
2.9
.3
4.8
.3
4.4
.2
21.9
38.2
61.0
Space Research and
Technology
National Aeronautics and Space
Administration: Research and
space flight facilities
Agriculture and Rural
Development
Department of Agriculture:
Laboratories, research facilities, and Library
Cooperative State Research
Service: Grants for research
facilities
Soil Conservation Service:
Grants for resource conservation and development.
Plant materials center
Farmers Home Administration:
Grants for rural water and
sewer systems
Rural renewal loans
Grants for farm labor
housing
Total agriculture and
rural development. _
1.0
3.4
.4
5.7
.3
46.0
100.0
5.2
-.1
2.5
2.5
2.5
5.2
4.0
2.0
55.7
113.1
7.7
41.8
54.9
76.7
263
SPECIAL ANALYSES
Table CH. FEDERAL PUBLIC WORKS ACTIVITIES (in millions of dollars)—Con.
By major function and agency
Function, agency, and program
BUDGET AUTHORITY
OUTLAYS
1971
estimate
1972
estimate
.7
82.2
.6
91.2
.6
89.4
.5
74.3
.6
79.3
.6
78.5
181.9
186.5
200.5
114.7
143.1
158.8
742.0
12.9
19.4
894.7
27.6
5.9
894.2
26.7
1.0
747.7
18.1
19.4
950.2
29.6
5.9
945.0
27.8
1.0
14.5
16.8
22.4
16.1
21.0
15.4
35.6
101.9
140.0
26.0
33.8
60. 5
3.8
2.9
.5
3.6
3.1
3
4.3
5.1
4.4
3.2
6.7
5. 0
48.4
38.2
87.6
32.0
35.4
59.5
305.5
229.0
212.6
174.5
225. 2
264.1
4.9
—1.4
.8
8.4
-1.5
.1
10.0
-1.5
4.4
-1.4
.8
5. 1
-1. 5
1
14.5
-1.5
94.7
88.2
90.0
101.9
92. 5
92.2
3.1
1.0
1.9
3.1
3. 6
2.5
.4
.3
.6
6
.4
14.6
.9
4.5
1970
actual
1970
actual
1971
estimate
1972
estimate
CIVIL PUBLIC WORKS—
Continued
Natural Resources
Department of Agriculture:
Soil Conservation Service:
Flood prevention and watershed protection:
Direct work
Grants
Forest Service: Roads, research, recreational and
protective facilitiesJ
Department of Defense—Civil:
Corps of Engineers—Civil:
Flood control, navigation and
multiple-purpose 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 Sport Fisheries and
Wildlife: Facilities
National Park Service: Parkways, roads, buildings and
utilities^
Bureau of Reclamation:
Irrigation and multiple-purpose projects with power l
Small irrigation projects:
Loans
Repayments
Grants
Power transmission facilities:
Bonneville Power Administration
Southwestern Power Administration
Office of Saline Water: Facilities
Department of State: International Boundary and
Water Commission: Water
resources
projects
and
Chamizal settlement
See footnotes at end of table.
6.2
10.4
264
THE BUDGET FOR FISCAL YEAR 19 72
Table Q-8. FEDERAL PUBLIC WORKS ACTIVITIES (in millions of dollars)—Con.
By major function and agency
Function, agency, and program
BUDGET AUTHORITY
1972
1970
1971
actual
istimate
stimate
OUTLAYS
1970
actual
1972
stimate
1971
CIVIL PUBLIC WORKS—
Continued
Natural Resources—Con.
Environmental
Protection
Agency:
Buildings and facilities
Grants for waste treatment
and other facilities
Tennessee Valley Authority:
Power, water resources, and
chemical facilities
Total natural resources..
1.0
1.4
2.6
803.3
1,006.0
2,005.1
179.0
427.4
1,004.5
28.7
3,283.9
33.5
348.4
538.3
608.6
2,386.0
6,001.4
3,825.1
1,868. 7
2,605.9
3,350. 3
226.3
235.3
216.8
160.7
223.0
229.9
.8
3.0
134.3
39.9
-1.0
139.3
27.9
-.6
144.4
24.0
-.7
.5
6.6
7.4
3.1
.9
.1
1.9
1.2
1.2
11.1
12.7
11.5
17.8
25.9
25.0
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 Administration:
Development facilities:
Grants
Loans
Repayments
Regional Action Planning
Commissions: Grants for
regional development facilities
National Oceanic and Atmospheric Administration:
Structures
_
Grants for facilities
National 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. ___ -._
See footnotes at end of table.
163.2
11.3
.4
146.0
14.0
146.0
14.0
23.6
23.6
1.2
2.1
.2
30.0
30.0
.2
30.0
.4
SPECIAL
265
ANALYSES
Table Q-8. FEDERAL PUBLIC W O R K S ACTIVITIES (in millions of dollars)—Con.
By major function and agency
Function, agency, and program
OUTLAYS
BUDGET AUTHORITY
1970
actual
1970
actual
1971
estimate
1972
estimate
1971
estimate
1972
estimate
28.2
13.2
36.3
33.0
31.0
34.8
1.9
7.0
19.6
1.3
4.7
10.5
224.0
538.3
392.0
106.9
167.0
220.0
920.0
193.2
15.0
83.2
134.0
147.0
4.0
14.5
21.5
3
4. 1
6.8
47.1
46.6
-19.2
32. 9
28. 4
31.6
5,378.7
100.0
501.1
100.0
5,595.0
4,279. 3
3. 1
4,575. 4
35. 0
4,565.9
35.0
4.0
8.0
12.0
2.7
4.0
9.0
142.0
14.0
3,019.4
48.0
30.0
-84.8
102.3
22.0
287.2
-.2
14.0
177.2
57.0
-57.2
.1
.3
.3
76.9
271.8
236.1
CIVIL PUBLIC WORKS—
Continued
Commerce and
Transportation—Con.
Department of Transportation:
Coast Guard: Shore facilities
and navigation aids
Federal Aviation Administration:
Dulles and National Airports
Airway system investment
and development (trust
funds) 3
Airport
grants
(trust
funds) 3
Federal Highway Administration:
Grants for highway safety,
rail-highway
crossings,
territorial and Chamizal
highways
Forest and public lands
highway grants (trust
funds) 3
Federal-aid highways and
other trust funds:
Grants
Loans.
Federal Railroad Administration: Research facilities,__
Urban Mass Transportation
Administration: Transportation facilities:
Research facilities
Grants
Loans
Repayments
St. Lawrence Seaway Development Corporation: Alterations
Postal Service: Post offices, improvements and alterations. _
Federal Communications Commission : Facilities
Total
commerce
transportation
476.6
344.8
.1
(2)
and
See footnotes at end of table.
101.2
-.2
7,382.4
10,430.3
6,794.9
5,087.8
5,887.7
6,051.1
266
THE BUDGET FOR FISCAL YEAR 19 72
Table Q-8 FEDERAL PUBLIC WORKS ACTIVITIES (in millions of dollars)—Con.
By major function and agency
BUDGET AUTHORITY
Function, agency, and program
1970
actual
1971
estimate
1972
estimate
OUTLAYS
1970
actual
1971
estimate
1972
estimate
CIVIL PUBLIC WORKS—
Continued
C o m m u n i t y Development
and Housing
Department of Housing and
Urban Development:
Low-rent public housing:
Loans
Repayments
New community assistance
grants
Grants for neighborhood facilities
Grants for water and sewer
facilities
Public facility loans
Repayments. _ __
Liquidating programs:
Loans
Repayments
.
Federal Home Loan Bank
Board: Headquarters
Total community development and housing. _
745.0
-733.0
826.0
-816.0
.6
2.0
23.4
33.0
38.0
109.0
43.7
-4.7
140.5
46.0
-5.8
170.0
40.0
-7.0
4.9
-6.5
6.0
-5.7
-2.0
-5.2
. .2
2.2
5.4
720.2
-721.4
2.5
5.0
5.0
40.0
40.0
40.0
135.0
350.0
8.4 .
185.9
395.0
45.0
168.9
228.8
251.2
11.1
3.0
10.9
3.0
5.0
9.3
3.9
31.1
12.0
19.8
12.0
13.3
59.8
43.0 _
207.8
33.0
-1.5
194.3
26.9
-2.1
111.4
5.0
-2.5
17.5
11.7
10.7
73.0
-17.4
99.8
-29.4
57.6
-30.0
Education and 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
Libraries and educational facilities (grants)
Department of Housing and
Urban Development:
College housing loans
Repayments
Department of the Interior:
Bureau of Indian Affairs:
Schools and other facilities:
Direct work
Grants
National Science Foundation:
Research facilities
7.8
7.1
26.2
19.8
36.4
4.0
31.4
33.2
44.1
4.0
2.6
4.5
4.1
2.3
5.0
4.0
267
SPECIAL ANALYSES
Table Q-8. FEDERAL PUBLIC WORKS ACTIVITIES (in millions of dollars)—Con.
By major function and agency
BUDGET AUTHORITY
1972
1970
1971
actual
estimate estimate
1970
actual
OUTLAYS
1972
1971
estimate estimate
CIVIL PUBLIC WORKS—
Continued
Education and Manpower—
Continued
Smithsonian Institution:
John F. Kennedy Center for
Performing Arts
Museums
Total education and manpower
1.3
1.9
3.2
10.9
2.6
1.6
10.1
11.0
124.4
90.3
62.0
394.6
383.0
240.6
3.5
4.0
12.5
Health
Department of Health, Education, and Welfare:
Food and Drug Administration: Buildings
Environmental Health Service: Buildings
Health Services and Mental
Health Administration:
Grants for mental health
centers
Grants for medical facilities.
Loans for medical facilities _
Indian health facilities
Grants for Indian health
facilities
Other facilities, including
St. Elizabeths Hospital 1 .
National Institutes of Health:
Grants for health, educational research, and library facilities
Buildings and facilities
Social Security Administration: Buildings and district
offices (trust funds)
Environmental Protection
Agency: Research facilities
Total health
14.0
77.5
19.0
79.7
30.0
18.7
38.2
30.0
18.8
2.0
2.2
2.0
19.5
122.4
17.2
107.7
12.4
91.0
15.4
21.2
19.2
.3
2.2
.3
.2
.1
.1
3.8
9.3
5.2
95.9
105.8
78.5
3.3
87.6
3.2
85.8
5.0
99.8
7.8
1.8
1.8
1.3
1.8
1.8
.2
3.4
1.6
1.3
28.0
211.4
236.1
198.8
255.7
255.8
244.9
6.4
9.2
9.7
6.4
9.2
9.7
6.4
9.2
9.7
6.4
9.2
9.7
Income Security
Social Security Administration:
Buildings and district offices
(trust funds)
Total income security
See footnotes at end of table.
268
THE BUDGET FOR FISCAL YEAR 19 7*2
Table Q-8 FEDERAL PUBLIC WORKS ACTIVITIES (in millions of dollars)—Con.
By major function and agency
Function, agency, and program
BUDGET AUTHORITY
1970
actual
OUTLAYS
1971
estimate
1972
estimate
1970
actual
1971
estimate
1972
estimate
.6
.2
2.3
.1
2.9
.1
.6
.8
2.3
.6
2.8
.1
81.4
74.6
110.2
79.6
86.6
127.2
4.0
7.5
8.0
3.5
.1
5.0
(2)
CIVIL PUBLIC WORKS—
Continued
Veterans Benefits and
Services
Department of Defense—Civil:
Army: Cemeteries
Soldiers' Home (trust fund) _
Veterans Administration:
Medical care facilities.
Grants for construction of
State extended care facilities .
...
Corregidor-Bataan Memorial.
Total veterans benefits
and services.
86.2
84.6
121.2
84.5
94.5
6.3
16.2
71.1
.6
7.1
__
7.5
_
137.6
General Government
Legislative Branch:
Architect of the Capitol:
Buildings and James Madison Memorial Library. __
United States Tax Court:
Court building
Department of Defense—Civil:
Army: Power and water systems, Ryukyu Islands:
Loan repayments._N
Panama Canal: Improvements
.
Department of the Interior:
Office of Territories: Public
facilities in Samoa, Guam,
and the Trust Territory
of the Pacific Islands:
Grants
Loans
Repayments
Alaska public works: Loan
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
See footnotes at end of table.
14.9
19.8
1.2
—.2
—.4
—.4
1.0
.6
3.6
1.7
2.0
2.6
23.1
4.8
-.3
31.2
4.4
-.4
27.8
5.5
-.5
18.0
2.2
-.3
21.2
5.3
-.4
37.8
4.9
-.5
-(2)
~(2)
~(2)
.3
1.6
.4
.1
.6
1.3
.1
18.4
57.0
2.2
2.3
42.9
13.5
50.3
79.3
1.5
22.7
64.0
SPECIAL
269
ANALYSES
Table Q-8. FEDERAL PUBLIC WORKS ACTIVITIES (in millions of dollars)—Con.
By major function and agency
Function, agency, and program
BUDGET AUTHORITY
1970
actual
OUTLAYS
1971
estimate
1972
estimate
5.0
36.5
.2
.2
1970
actual
1971
estimate
1972
estimate
CIVIL PUBLIC WORKSContinued
General Government—Con.
Treasury Department:
Federal Law Enforcement
Training Center
Bureau of Customs: Border
facilities
Bureau of Engraving and
Printing: Air conditioning..
Bureau of the Mint: Philadelphia, and Denver Mints
Secret Service: Training facilities
General Services Administration:
Construction of public buildings, sites and planning
Central Intelligence Agency:
Headquarters
District of Columbia:
Grants
Loans
Repayments
Grant to Washington Metropolitan Area Transit Authority
1.0
1.8
1.5
.7
2.1
7.5
(2)
.2
2
.1
.2
4.0
1.8
3.1
.5
.7
.1
( )
72.7
226.3
270.0
130.1
143.9
216.9
61.5
-3.3
34.2
-4.0
62.8
-4.9
88.7
-3.3
122.4
-4.0
142.8
-4.9
126.1
180.0
188.0
15.8
100.0
112.2
Total general government
309.6
564.4
813.7
262.0
428.0
651.8
Total civil public works__
10,801.2
17,952.9
11,940.5
8,237.2
10,010.5
11,066.7
34.1
124.2
46.1
217.0
25.4
284.9
11.3
149.3
12.5
153.5
39.4
201.7
1.9
1.8
3.2
5
4.5
3.7
1.7
3.0
3.0
3.0
.3
259.8
607.0
592.2
410.7
459.0
663.0
10.0
10.0
33.5
8.0
10.4
11.2
9.6
5.4
7.9
7A
13.1
15.9
10.1
8.0
4.0
10.0
NATIONAL DEFENSE
PUBLIC WORKS
Department of Defense—Military:
Interservice activities:
Construction, Defense agencies
Family housing
Civil defense:
Grants for emergency centers
- _ .._
Civil defense facilities
Army:
Construction
Construction, Army Reserve
Construction, Army National Guard:
Grants
_- Direct work
_
See footnotes at end of table.
.9
4.2
270
THE BUDGET FOR FISCAL YEAR 197»2
Table Q-8 FEDERAL PUBLIC WORKS ACTIVITIES (in millions of dollars)—Con.
By major function and agency
Function, agency, and program
BUDGET AUTHORITY
1970
actual
1971
estimate
1972
estimate
300.0
305.1
417.8
9.6
5.0
284.7
OUTLAYS
1970
actual
1971
estimate
1972
estimate
326.2
328.9
430.8
10.9
7.2
7.4
7.9
284.3
316.6
348.2
316.0
295.0
5.3
4.0
5.7
5.6
5.2
3.5
13.2
8.0
10.6
11.9
9.5
9.8
1,059.6
1,505.2
1,731.1
1,294.7
1,320.3
1,680.0
184.5
206.1
206.7
259.0
276.6
232.0
1,244.1
1,711.3
1,937.8
1,553.7
1,596.9
1,911.9
Total civil and defense
public works
12,045.3 19,664.2 13,878.2
9,790.9
11,607.4
12,978.6
NATIONAL DEFENSE
PUBLIC WORKS-Con.
Department of Defense—Military—Continued
Navy:
Construction
Construction, Naval Reserve...
Air Force:
Construction.......
_
Construction, Air Force Reserve...
..__
Construction, Air National
Guard.....
Total, Department of
Defense-Military..
Atomic Energy Commission:
Facilities
Total national defense
public works
1
2
3
Includes small amounts from trust funds.
Less than $50 thousand.
Includes amounts from predecessor program financed from general funds.
SPECIAL ANALYSIS R
FEDERAL RESEARCH AND DEVELOPMENT PROGRAMS
The 1972 Budget reflects a further positive and concerted effort to
apply science and technology to assist in achieving a broad range of
national goals. Total Federal obligations for the conduct of research
and development will increase by 7.6%, from $15.6 billion in 1971 to
$16.7 billion in 1972. Expenditures will increase from $15.3 billion
to $15.7 billion. In addition, $0.6 billion will be obligated for research
and development facilities in 1972. Expenditures for this purpose will
also be $0.6 billion in 1972.
In addition to increased direct funding, steps being taken by the
Federal Government through regulation and control will stimulate
nonfederally financed research and development. For example,
more stringent air quality standards for automobile emissions will
encourage private research and development on improved engines to
lessen pollution.
CONDUCT OF EESEAECH AND DEVELOPMENT
Through the funds included in the 1972 budget for the conduct of
research and development the Nation can make greater use of its
scientific capabilities and resources to deal more effectively with major
national problems. For example:
• Research on cancer will be accelerated through a new $100 million
program;
• Research in the Department of Transportation on highway safety
will increase by $28 million, or 100%;
• Research and development for an improved air traffic control
system will increase by $14 million or 16% in 1972;
• Research and development by the Department of Justice to
improve law enforcement and reduce crime will more than double
in 1972;
• Research in the marine and atmospheric sciences under the
National Oceanic and Atmospheric Administration will increase
the equivalent of 10% over 1971;
• NASA will launch an experimental Earth Resources Technology
Satellite to demonstrate the use of satellite information in the
management of our natural resources;
• The Atomic Energy Commission program to develop a liquidmetal fast-breeder power reactor to help meet growing electric
power needs will increase by $18 million, or more than 20%,
over 1971; and
• Support by the National Science Foundation of a broad range of
environmental research will increase by $66 million or 60% in
1972.
The 1972 increase also provides for strengthening defense research
and development to meet changing threats in this vital area of national
271
272
THE BUDGET FOR FISCAL YEAR 1972
concern. The increase of $909 million in Defense obligations for research and development in 1972 will:
Assure continued strategic effectiveness;
Provide for modernization of U.S. forces committed to NATO;
Improve the effectiveness and protection of the individual
soldier;
Provide for modernization of the naval forces of this country; and
Strengthen the technological base which supplies knowledge for
long-range military development.
Finally the 1972 Budget provides additional funds to promote
basic and applied research essential to the general advancement of
technology and economic growth and to the long-term progress of
society. This is reflected in part in the budget of the National Science
Foundation which provides for an overall increase in research and
development from $343 million in 1971 to $495 million in 1972.
Conduct of Research and Development (Obligations)
$ Billions
18 —
Tot
15 —
I960
1962
Fiscal Years
1964
1966
1968
1970
1972
Estimate
SPECIAL ANALYSES
273
Table R-l. CONDUCT OF RESEARCH AND DEVELOPMENTi (in millions of dollars)
Obligations
Department or agency
]f)7Q
actual
Defense—Military functions
National Aeronautics and Space Administration
Health, Education, and Welfare
Atomic Energy Commission
Transportation
National Science Foundation
Agriculture
Interior
Commerce 2
Environmental Protection Agency 2___
Office of Economic Opportunity
Veterans Administration
Housing and Urban Development
Smithsonian Institution
Justice
Labor
All other
Total
]9J]
]()J2
Expenditures
]97,
19?2
actual
estimate estimate
]97Q
estimate
estimate
7,338
7,400
8,309
7,424
7,543
7,734
3,825
1,251
1,346
315
288
289
160
124
75
101
59
30
20
10
21
79
3,382
1,506
1,307
468
343
312
188
157
118
116
62
52
22
11
24
87
3,215
1,637
1,251
566
495
321
213
181
132
100
62
49
31
25
25
125
3,699
1,235
1,346
246
293
288
153
118
38
76
58
14
20
5
20
64
3,319
1,359
1,307
414
330
309
188
133
82
88
61
55
24
14
24
82
3,109
1,477
1,251
543
403
314
207
151
96
94
62
50
31
21
25
98
15,331
15,555
16,737
15,098
15,332
15,666
1
In this table and tables R-3, R-4, and R-5 "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 R - l , R-4, and R-5 are
listed
in the same agency sequence.
2
The obligations and expenditures reported for Commerce and the Environmental Protection
Agency in this and the following tables for 1970 and 1971 include a portion, but not all, of the research
and development activities conducted by other agencies in these years and transferred to the National
Oceanic and Atmospheric Administration of Commerce in October 1970 under Reorganization Plan
No. 4 of 1970, or to the Environmental Protection Agency in December 1970 under Reorganization
Plan No. 3 of 1970. Therefore, the 1970 and 1971 figures for these agencies do not reflect the full level
of the activities transferred to the new agencies. Figures for the other agencies are adjusted to avoid
duplication or omission.
RESEARCH AND DEVELOPMENT FACILITIES
Obligations for the support and construction of facilities to conduct
research and development will decrease by $132 million, from $718
million in 1971 to $586 million in 1972.
The decrease in 1972 results chiefly from a decline in the overall
construction program of the Atomic Energy Commission due to
completion of projects initiated in prior years. Among the projects
included in the 1972 budget of the Commission are funds for continued
construction of the 200 Bev accelerator for high energy physics and
the fast flux test facility related to further development of civilian
nuclear power.
430-700 0—71
18
274
THE BUDGET FOR FISCAL YEAR
19 72
Table R-2. RESEARCH AND DEVELOPMENT FACILITIES (in millions of dollars)
Department or agency
j
^
Obligations
~
i972
1970
Expenditures
wf\
1972
al
Defense—Military functions
National Aeronautics and Space Administration
Health, Education, and Welfare
Atomic Energy Commission
Transportation
National Science Foundation
All other
Total
140
162
160
141
163
153
33
12
264
5
26
17
92
10
354
26
24
50
56
13
243
56
21
37
54
5
270
4
31
28
50
16
312
21
29
36
43
22
272
39
28
35
497
718
586
534
628
592
RESEARCH AND DEVELOPMENT IN COLLEGES AND
UNIVERSITIES
A significant measure of Federal support of science is the level of
grant and contract funds to universities for research and development.
Major growth is estimated in the 1972 budget for this purpose with
a larger role for the National Science Foundation in such support.
Total obligations for the conduct of research and development in
universities will increase by 14.7%, from $1,653 million in 1971 to
$1,896 million in 1972.
Through the funds of the National Science Foundation, as well as
other agencies, support is provided not only to insure the vitality of
fundamental research efforts but also to develop and support focused
research efforts to increase our understanding of the major problems
of society and their solution, and to advance the Nation's economic
growth and welfare. The increase in research will also provide for
the training of a greater number of science and engineering graduate
students through employment on the research projects, and will help
develop needed capabilities in academic institutions to undertake
research on important national, regional, and local problems.
Table R-3. CONDUCT OF RESEARCH AND DEVELOPMENT IN COLLEGES
AND UNIVERSITIES * (in millions of dollars)
Expenditures
Obligations
Department or agency
Health, Education, and Welfare
National Science Foundation
Defense—Military functions
National Aeronautics and Space Administration
Atomic Energy Commission
Agriculture
All other
Total
1970
actual
1972
1971
estimate estimate
1971
estimate
1972
estimate
649
225
218
773
253
207
880
381
205
628
272
222
685
252
208
744
298
209
131
100
68
88
125
95
77
123
110
86
83
152
143
100
65
72
138
95
76
109
128
86
81
132
1,479
1,653
1,896
1,502
1,565
1,678
1970
actual
1
Amounts reported in this table are included in the totals for conduct of research and development
in table R-1
SPECIAL ANALYSES
275
CONDUCT OF RESEARCH
This section and the following section cover separately the conduct
of research and the conduct of development, which are treated together
in the sections above.
The capability of this Nation to develop new products and services,
ranging from weapons systems to the cure of cancer, depends on the
continued and sustained investment in a broad range of research, both
basic and applied.
The 1972 budget reflects increased Federal support for a widening
range of research. Total obligations for research will increase from
$5,959 million in 1971 to $6,509 million in 1972. Expenditures will go
from $5,775 million in 1971 to $6,115 million in 1972.
Significantly, the portion of funds obligated for research outside of
defense, atomic energy and space programs will increase by 13.8%
from $2,541 million in 1971 to $2,891 million in 1972. This reflects
continuation of efforts to make more effective use of research in
newer areas of national concern.
Table R-4. CONDUCT OF RESEARCH (in millions of dollars)
Department or agency
Defense-Military functions
National Aeronautics and Space Ad"
ministration
Health, Education, and Welfare
Atomic Energy Commission
Transportation
National Science Foundation
Agriculture
Interior
Commerce
.
Environmental Protection Agency
Office of Economic Opportunity
Veterans Administration
Housing and Urban Development
Smithsonian Institution
Justice
Labor
All other
Total
f^j
actual
Obligations
Expenditures
~
~T970
1^971
1972
1972
estimate estimate
actual estimate estimate
1,549
1,472
1,625
1,577
1,494
1,577
1,428
1,140
433
48
273
280
120
85
44
21
56
7
20
7
11
40
1,523
1,369
423
55
324
302
133
104
74
23
60
13
22
8
12
42
1,582
1,478
411
65
468
311
150
130
83
25
60
13
31
16
13
49
1,381
1,140
433
41
280
278
116
85
26
20
57
4
20
3
11
34
1,495
1,243
423
47
315
299
134
95
47
22
59
13
24
10
12
43
1,530
1,338
411
58
384
304
146
110
57
23
60
9
31
14
13
50
5,564
5,959
6,509
5,506
5,775
6,115
CONDUCT OF DEVELOPMENT
Development draws on knowledge gained from research for the
design, testing and evaluation of new and improved materials,
processes and systems. Federal funding for development has been
mainly in support of defense, space and atomic energy programs
where the Government is the primary consumer of the products
developed. The substantial increase in funding for development in
1972 is largely attributable to Defense requirements for new and
improved weapons systems and equipment. There is also a significant
276
THE BUDGET FOR FISCAL YEAR 19 72
increase for development in the Department of Transportation, particularly for improved urban mass transportation.
Total obligations for development will increase from $9,595 million
in 1971 to $10,228 million in 1972; and expenditures will increase from
$9,557 million in 1971 to $9,550 million in 1972.
Table R-5. CONDUCT OF DEVELOPMENT (in millions of dollars)
Obligations
Department or agency
| 9 ? 0
actual
Defense—Military functions
National Aeronautics and Space Administration
Health, Education, and Welfare
Atomic Energy Commission
Transportation
National Science Foundation
Agriculture
Interior
Commerce
Environmental Protection Agency
Office of Economic Opportunity
Veterans Administration
Housing and Urban Development
Justice
Labor
All other
Total
]9?]
Expenditures
| 9 ? 2
1 9 ? 0
,
9 7 2
estimate
5.789
5,928
6,684
5.848
6.050
2.397
110
913
267
15
9
40
39
31
80
2
23
3
9
40
1,859
137
883
413
18
10
55
53
44
93
2
39
3
12
46
1,633
159
840
501
27
10
63
51
49
75
2
36
8
12
78
2.318
95
913
205
13
9
37
33
12
57
2
10
1
9
30
1.824
116
883
367
15
10
54
38
35
67
2
42
4
11
39
1,579
139
840
485
19
10
61
41
39
70
2
41
7
12
48
9,767
9,595
9,592
9,557
9,550
10,228
actual
]f)?]
estimate
estimate estimate
6,157
PROGRAMS OF AGENCIES WITH MAJOR RESEARCH
AND DEVELOPMENT ACTIVITIES
DEPARTMENT OF DEFENSE—MILITARY
The total Department of Defense 1972 obligations for research and
development, including facilities, will increase by $907 million over
the 1971 level, reaching a total of $8,469 million.
For the conduct of research, obligations in 1972 are estimated to
increase by $153 million. Continued emphasis will be given to areas
of fundamental and applied research of military significance such as
electronics, oceanography, materials science and lasers.
Obligations for development programs and operation of test and
evaluation facilities will reach a level of $6,684 million in 1972, an
increase of $756 million above the 1971 level. This increase will provide
for programs in the strategic areas that are essential to assure the
future effectiveness of our deterrent capability. These include the B - l
aircraft, antiballistic missile defense and the undersea long-range
ballistic missile system (ULMS). The increase will also provide for
major improvements in the capability of our general purpose forces
and will fund new initiatives, including support for the individual
soldier, suppression of enemy air defense, and accurate artillery fire.
Increases in tactical warfare programs include the F-15 fighter to
establish and maintain air superiority and the AX close-air support
SPECIAL ANALYSES
277
aircraft. For naval forces, program emphasis will be given to new designs for ships and submarines and to antisubmarine warfare and
fleet defense.
Partially offsetting these increases are decreases for systems phasing
down or completing development. These include the F-14 fighter/
interceptor, the Minuteman intercontinental ballistic missile system,
the Poseidon fleet ballistic missile system, the S-3A antisubmarine warfare aircraft, the Air Force short-range attack missile, the F - l l l tactical fighter, the Mk-48 torpedo, and the Army Lance missile system. In
addition, funding of the Eastern Test Range will be transferred in 1972
from the Air Force research, development, test and evaluation appropriation to the Air Force operations and maintenance appropriation
and, therefore, is not included in the 1972 development total. A more
detailed explanation of development trends is given in the budget
appendix on pages 310-316.
Table R-6. DEPARTMENT OF DEFENSE—MILITARY RESEARCH AND
DEVELOPMENT AND RELATED FACILITIES (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
Programwide 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
1970
actual
1971
estimate
1972
estimate
494
497
545
1,457
2,185
1,704
2,024
2,069
2,069
618
317
311
462
324
330
504
496
363
1,147
1,204
1,399
443
448
50
357
490
50
324
1,549
5,789
7,400
1,472
5,928
8,309
1,625
6,684
140
162
160
7,478
7,562
8,469
366
7,338
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
All activities of the National Aeronautics and Space Administration
are classified as research and development and are included in this
analysis.
With the phasedown of the Apollo lunar landing program, emphasis
in space activities is moving toward a balanced program which will
be guided by three purposes—exploration, scientific knowledge, and
practical application. In the area of manned space flight, in addition
to completion of the remaining Apollo missions, there will be an increase in the earth orbital manned flight program for Skylab, an
experimental manned space station to test man's ability to live and
278
THE BUDGET FOR FISCAL YEAR 19 72
work in space. To reduce substantially the cost of future space operations in earth orbit, development will begin on the engine for a space
shuttle.
Research funding for space sciences will support the design of experiments and instrumentation for the Grand Tour unmanned missions to
the outer planets in the late 1970's. Similar support will be provided
for the 1975 Viking unmanned orbiter-lander exploration of Mars.
Increases will occur in space astronomy to provide for initial development of the High Energy Astronomy Observatory which will study
celestial X-ray and gamma-ray sources and cosmic rays. Funding in
space applications will provide for the launch of an experimental
Earth Resources Technology Satellite, which is to demonstrate the use
of space acquired information in the management of natural resources.
Work will continue on advancing satellite capabilities in communications, navigation, geodesy, and meteorology. Development will be
initiated on a Short Take Off and Landing (STOL) aircraft to provide
technology for improved short haul transportation systems. The level
of effort on the long-term joint NASA/AEC nuclear rocket development program (NERVA) will be reduced in order to concentrate
resources on specific space missions now envisaged in the 1970's.
Table R-7. NATIONAL AERONAUTICS AND SPACE ADMINISTRATIONRESEARCH AND DEVELOPMENT AND RELATED FACILITIES
(in millions of dollars)
Program and type of activity
Conduct of research:
Manned space
flight
Space sciences
Space applications
Space Research and Technology
Aeronautical Research and Technology
Supporting activities
Research and program management
1970
actual
148.0
315.7
131.4
143.3
95. 7
165.2
424.2
Subtotal, research plan
Subtotal, research obligations
Conduct of development:
Manned space
flight
Space sciences
Space applications
Space Research and Technology
Supporting activities
Research and program management
1,423.5
(1,428.4)
Subtotal, development plan
Subtotal, development obligations
Research and development facilities, budget plan
Research and development facilities, obligations
2,389.2
(2,397.1)
50.1
(33.4)
1,882.0
65.7
6.6
32.1
124.8
278.0
1971
estimate
168.9
310.2
159.1
127.6
102.0
172.9
433.3
1972
estimate
135.3
470.7
185.9
104.0
110.0
156.6
419.6
1,474.0 1,582.1
(1,523.0) (1,582.1)
1,262.2
74.7
19.3
37.0
121.1
285.1
1,151.2
74.1
18.5
111.4
277.8
1,799.4 1,633.0
(1,859.2) (1,633.0)
25.0
56. 3
(92.1)
(56.3)
Total budget plan
3,862.8
3,298.4
3,271.4
Total obligations
3,858.9
3,474.3
3,271.4
SPECIAL ANALYSES
279
HEALTH, EDUCATION, AND WELFARE
Obligations for research and development by the Department of
Health, Education, and Welfare will increase by $134 million to a level
of $1,650 million in 1972.
Biomedical research and development will continue to grow in 1972
with particular emphasis on disease prevention. Areas to receive
continued emphasis include research on heart and lung disease, sickle
cell anemia, dental caries, family planning, infant and child health,
environmental pollution, drug abuse and alcoholism.
An additional $100 million in 1972 will fund a special cancer research
initiative.
Further details about Federal biomedical programs may be found in
Special Analysis K of this volume.
The Office of Education supports a broad range of efforts to improve
education through experimentation, development and demonstrations.
Although the total research and development program will decline
slightly, increased support will be provided in 1972 for an experimental
schools program to test and develop, in a comprehensive fashion, alternative methods of improving the learning of children in actual school
situations. Greater emphasis will also be placed on the Sesame Street
program for pre-school-aged children, and on a national assessment of
the educational attainment of the population.
Table R-8. HEALTH, EDUCATION, AND WELFARE—RESEARCH AND
DEVELOPMENT AND RELATED FACILITIES (in millions of dollars)
Activity
1970
actual
Conduct of research and development:
National Institutes of Health
Health Services and Mental Health Administration
Office of Education
Social and Rehabilitation Service
Food and Drug Administration
All other
Subtotal, research and development
Research and development facilities
Total obligations
1971
estimate
1972
estimate
869
177
88
52
21
44
,054
195
134
64
24
35
32
1,251
12
1,506
10
1,637
13
1,263
1,516
1,650
1,179
218
122
57
29
ATOMIC ENERGY COMMISSION
Operating costs of the Atomic Energy Commission for conduct of
research and development will decrease from $1,307 million in 1971
to $1,251 million in 1972, and obligations for related construction and
equipment will total $243 million in 1972, as compared to $354 million
in 1971.
Funds for AEC's basic and applied research programs in the physical
and biomedical sciences and in weapons technology will decline by
approximately $12 million from the 1971 level, essentially all in the
physical research program.
280
THE BUDGET FOR FISCAL YEAR 19 72
AEC's development programs include design and testing of nuclear
weapons, development of advanced reactors for power and propulsion,
and development of peaceful uses of radioisotopes and nuclear explosives. Funds for development programs will decline by about $43
million from the 1971 level. These reductions are primarily in the
underground testing of nuclear weapons; in the NERVA nuclear
rocket engine development program, which will be reduced in scope;
and in the development of small electric power systems for space
applications. These reductions will be partially offset by a significant
acceleration of the program to develop an economic liquid-metal
fast-breeder power reactor.
The AEC budget for research and development facilities in 1972
provides for obligations of $243 million, which is $111 million less
than the 1971 level. This reduction is primarily due to completion of
construction projects initiated in prior years. Included in the 1972
amount is $48 million of obligations for continuation of construction
of the 200 Bev accelerator for high energy physics near Chicago.
Also included is $22 million of obligations for the fast flux test facility
at Hanford, Wash., which will be used in the fast-breeder power
reactor development program.
Table R-9. ATOMIC ENERGY COMMISSION—RESEARCH AND
DEVELOPMENT AND RELATED FACILITIES (in millions of dollars)
Activity
Conduct of research:
Physical research
Biomedical research
Weapons research
Other programs
Total, conduct of research, obligations
Conduct of development:
Reactor development
Weapons development and testing
Special nuclear materials (production)
Plowshare
Other programs
Total, conduct of development, obligations
Research and development facilities obligations
Total obligations
1970
actual
1971
estimate
1972
estimate
278
87
66
2
272
86
64
1
260
86
64
1
433
423
411
423
436
28
14
12
434
402
26
7
14
412
380
30
5
13
913
883
840
264
354
243
1,610
1,660
1,494
DEPARTMENT OF TRANSPORTATION
Obligations for the Department of Transportation for research
and development, including facilities, will increase from $495 million
in 1971 to $622 million in 1972.
For air transportation, obligations will increase from $87 million in
1971 to $102 million in 1972. This will permit the continuation of
advanced research and development on equipment and techniques to
SPECIAL ANALYSES
281
fully automate certain elements of the air traffic control system so
that the system will be capable of handling increasing volumes of
aircraft safely. Also, obligations for development of a civil supersonic
transport will increase slightly from $234 million to $235 million in
1972.
For ground transportation, obligations will increase by 66%, from
$143 million in 1971 to $237 million in 1972. In the case of highways,
much of the total increase from $52 million in 1971 to $85 million in
1972 is in the highway safety program. Funds will be allocated for
additional demonstrations of measures to control driving by chronic
alcoholics, and for improving the lifesaving characteristics of motor
vehicle structures and systems. Additionally, major funding will be
used for highway planning and research grants to States and for direct
programs for research and development on reduction in traffic congestion, improved highway durability, and bridge structural safety.
In the area of urban mass transportation, obligations for research and
development will increase by $51 million, and research and development related to railroads will increase by $9 million. The increases
are for initiating projects that will involve constructing new types of
urban transportation systems in selected localities, for expanding
railroad safety research in order to reduce loss of life and property
caused by railroad accidents, and to continue work on high-speed,
ground transportation systems.
For water transportation, obligations will increase by $6 million to
$22 million in 1972. The increase includes efforts directed toward search
and rescue effectiveness, and development of commercial vessel safety
standards, maritime pollution control and abatement systems, and
more effective means for reducing pollution.
In all of the Department's research and development projects,
increased attention will be given to the environmental effects of
transportation and to the study of multi- and inter-modal transportation systems and technology.
NATIONAL SCIENCE FOUNDATION
National Science Foundation obligations for research, development
and related facilities will increase by $149 million, from $367
million in 1971 to $516 million in 1972. This increase results from a
substantial growth in the total Foundation budget, and from an important change in emphasis in NSF programs toward increased support
for research project efforts and away from support of programs for
the general expansion of training and research capacity. This increase
will provide a larger role for the Foundation in the total Federal
support of research.
The Foundation's scientific research project support will be increased substantially in 1972 to permit support of important basic
research efforts which have previously received support from other
agencies, and to increase research efforts in those areas of basic research where new knowledge is required to solve some of the serious
environmental and social problems facing the Nation. There w^ill be
significant increases for research in the environmental, biological,
physical and social sciences.
282
THE BUDGET FOR FISCAL YEAR 19 72
Provision has been made in 1972 for the support of the National
Magnet Laboratory and the Interdisciplinary Laboratories (materials
research laboratories) now funded by the Department of Defense.
Funds are also included for the transfer of funding responsibility for
logistic support for the U.S. Antarctic research program from the
Department of Defense to the Foundation.
The Foundation's national and special research programs will be
more than doubled in 1972 to permit expansion and initiation of major
coordinated research efforts focused on the development of scientific
knowledge for the solution of national problems and advancing the
Nation's technology and economic productivity.
Table R-10. NATIONAL SCIENCE FOUNDATION—RESEARCH AND
DEVELOPMENT AND RELATED FACILITIES (in millions of dollars)
Program and type of activity
1970
actual
Conduct of research:
Scientific research project support:
Physical sciences and mathematics
Environmental sciences
Biological and medical
Social sciences and engineering
National and special research programs:
International biological program
Other environmental sciences research
Polar research programs
Oceanographic research ship operations and facilities
Research focused on major national problems
National research centers:
Astronomy research
Atmospheric research
All other research
Subtotal, conduct of research
Conduct of development
Research and development facilities
Total obligations
1971
estimate
1972
estimate
64
25
41
32
71
27
44
34
96
37
58
67
4
8
7
8
12
7
24
10
8
29
10
31
30
14
74
14
10
48
17
14
39
273
15
26
324
18
24
18
17
16
468
27
21
314
367
516
DEPARTMENT OF AGRICULTURE
Obligations for the Department of Agriculture for research and
development, excluding related facilities, will increase from $312
million in 1971 to $321 million in 1972.
The cooperative relationship with the State Agricultural Experiment
Stations and schools of forestry will be further strengthened in 1972
and additional funds are provided for Federal sharing of increased
costs. The research capabilities of the 16 colleges established by the
Second Morrill Act of 1890 will be expanded in keeping with the administration's concern to assist minority institutions of higher
education.
Research emphasis in the Department will continue to be focused
on solving environmental pollution problems, including disposal of
animal wastes and devising safer means of pest control. Additional
funding is provided for research on plant microorganisms or viruses,
seeking methods to prevent widespread destruction of crops if these
agents were ever introduced into this country.
SPECIAL ANALYSES
283
DEPARTMENT OF THE INTERIOR
Obligations for the Department of the Interior for research, development, and related facilities will increase from $197 million in 1971 to
$217 million in 1972. Obligations for the Bureau of Commercial
Fisheries, which has been transferred to the National Oceanic and
Atmospheric Administration in the Department of Commerce, and
the Federal Water Quality Administration, which is now part of the
Environmental Protection Agency, are not included in the above
figures.
There will again be a substantial increase for research on ways to
reduce health and safety hazards in coal and metal-nonmetallic mining.
Emphasis will be placed on fire, explosion, and cave-in prevention, and
the reduction of dusts that cause respiratory diseases. Obligations for
this program will increase from $4 million in 1970 to $21 million in
1971 and $33 million in 1972.
Research and development will also be increased 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 fuel to electricity.
DEPARTMENT OF COMMERCE
Research and development by the Department of Commerce will
increase by $24 million to $181 million in 1972, primarily due to increases in the oceanic and atmospheric related activities of the new
National Oceanic and Atmospheric Administration (NOAA). NOAA
came into existence on October 3, 1970, as a result of Reorganization
Plan No. 4. It is comprised of various marine related activities which
were formerly in the Departments of the Interior, Defense, and
Transportation, and the National Science Foundation, and the activities of the former Environmental Science Services Administration of
the Department of Commerce.
In 1972, NOAA will strengthen its research on weather modification,
improved detection and tracking of violent storms, and development
of new methods for more accurate weather observation and forecasting. NOAA will also conduct research directed toward conservation,
development, and improved management of our commercial fishery
resources. NOAA will devote increased resources in 1972 to preparation for two international projects, the International Field Year for
the Great Lakes and the tropical experiment of the Global Atmospheric Research Program. It will also provide necessary instrumentation for laboratory and onsite calibration of oceanographic instruments to improve the accuracy and reliability of oceanic data.
Further details on the overall marine science programs of the Federal
Government will be contained in the Fourth Annual Report of the
Council on Marine Resources and Engineering Development.
The National Bureau of Standards will expand its research programs
aimed at development of improved standards of physical measurement, advancement in computer technology and pollution abatement
technology, and development of industrial and consumer products
standards. Additional emphasis will also be given to building technology and flammable fabrics research programs.
284
THE BUDGET FOR FISCAL YEAR 19 72
Table R-11. DEPARTMENT OF COMMERCE—RESEARCH AND
DEVELOPMENT AND RELATED FACILITIES (in millions of dollars)
Activities
National Oceanic and Atmospheric Administration
National Bureau of Standards
Maritime Administration
Allother
Subtotal, research and development
Research and development facilities
Total obligations
1970
1971
1972
69
30
12
13
89
32
23
13
109
34
25
13
124
3
157
10
181
4
127
167
185
ENVIRONMENTAL PROTECTION AGENCY
The Environmental Protection Agency will conduct research and
development in the areas of water and air pollution, pesticides, radiation, and solid wastes. Obligations for research and development will
be $155 million in 1972, including $23 million for facilities. In addition,
but not included in this analysis, EPA will obligate $32 million for
demonstration projects closely related to EPA's research and development efforts; and additional funds will be obligated to research and
development from an $85 million request which will be transmitted
separately for implementing new air quality and solid waste legislation and for expanding other EPA programs.
Water quality research and development activities for 1972 will
include control methods for industrial pollutants; agricultural pollution problems; and research relating to community drinking water
requirements and general water quality programs, including pesticides,
heavy metals (such as mercury and copper), nitrilotriacetic acid
(NTA) and temperature and oxygen tolerances.
Air quality research and development programs are carried out to
determine the nature, extent and behavior of air pollutants and their
effects on man, and to develop means for the control of pollutants.
Increased emphasis in 1972 will be placed on fuel additives; community aspects of local air quality; emission standards for mobile
air pollution sources; development of low pollution vehicles; and on a
cost-sharing program with industry to develop technology for controlling sulfur oxides.
Solid waste research and development activities will focus on means
for achieving low-cost recovery and reuse of materials and energy and
on incentives to encourage recycling. EPA will also carry out expanded
research and studies on pesticides, radiation, and toxic materials.
Obligations for research and development activities in 1970 and
part of 1971 are based on programs which were conducted in the
Departments of Health, Education, and Welfare; Interior; and
Agriculture, and which were transferred to EPA on December 2, 1970.
SPECIAL ANALYSES
285
Environmental protection and other Federal environmental activities
are discussed more fully in Special Analysis O of this volume.
OTHER SIGNIFICANT RESEARCH PROGRAMS
The Department of Housing and Urban Development will obligate
$49 million for research and development in 1972. Emphasis will shift
from Operation Breakthrough, as it nears completion, to other
research and technology areas, including developing ways to improve
housing management and prevent the deterioration and abandonment
of housing. Ongoing efforts which will continue include developing
municipal and regional information systems, gathering and evaluating
data on housing, improving community environment, and applying
university resources to overcoming problems of housing and community development.
Research and development by the Department of Justice will more
than double in 1972, with an increase from $11 million in 1971 to $25
million in 1972. Emphasis will be given to applying research and development to improve law enforcement activities and reduce crime.
The Office of Economic Opportunity will continue a substantial
research and development effort, with 1972 obligations of $100 million.
Research and development efforts include analysis of the causes of
poverty, identification of needs, and the design, conduct, and evaluation of social experiment projects with the objective of alleviating
poverty and promoting equality of opportunity.
PART 4
ANALYTIC PROGRAM
STRUCTURE
287
INTRODUCTION
Part 4, Special Analysis S, presents the budgets of a number of
agencies in terms of the program structure used for program planning
and evaluation in each agency.
Program structures rarely conform to the organizational structure
or appropriation pattern of an agency. This presentation, therefore,
provides a different perspective from the view presented in Part 6
of the Budget, and cannot be directly interrelated with those data.
288
SPECIAL ANALYSIS S
SELECTED AGENCY BUDGETS BY PROGRAM CATEGORIES
This analysis reports the budget authority of a number of Federal
agencies by program structure for the years 1970, 1971, and 1972.
This structure arose from efforts to identify more precisely the relationship between agency budgets and agency objectives. It is, therefore,
different from the more frequently used appropriation structures,
which may reflect programs, organizational structure, objects of expenditure, etc., and sometimes present the various operating segments
of an agency.
Program structures provide insight into the objectives of Federal
agencies; and the allocation of budget authority provides a measure
of the relative priorities of an agency's programs. For some programs,
however, budget authority may not be the best measure of the agency's
priorities or relative program levels. For example, a more meaningful
measure for a loan program may be the commitments that flow from
consideration of loan applications.
Several caveats should be observed in using the data reported
here. First, because program structures are created within each agency
separately, there is no guarantee that similar program titles in different
agencies describe identical objectives. Consequently, the amounts
recommended for a particular program should not be cumulated across
agency lines. In addition, the ability of agencies to attribute budget
authority to the program structure varies widely, since the program
structure often does not have a direct relationship to the appropriation structure which provides an operational basis for intra-agency
budget allocations. Statistical allocations are used where necessary
to distribute appropriation requests to program structures.
Twenty-one agencies with budgets representing approximately 95%
of the total recommended 1972 budget authority are included in this
analysis. The Environmental Protection Agency, created in 1971,
appears for the first time.
As the program planning and evaluation systems of the several
agencies continue to improve in coverage and precision, the limitations
described above will tend to disappear, and the ability of Government
executives to allocate funds efficiently, on the basis of more accurate
knowledge of the costs and effects of Federal programs, will be increased significantly.
DEPARTMENT OF AGRICULTURE
The 15 program categories of the Department of Agriculture, plus
General administration and Program support, reflect the goals of
increasing the capacity to produce those agricultural and forest
products needed for domestic and export consumption Avhile assuring
adequate returns to producers, expanding export markets, assuring a
430-700 0—71
19
289
290
THE BUDGET FOR FISCAL YEAR 1972
decent home for every American, eliminating hunger and malnutrition
in the pnited States, protecting public health, promoting economic
and social development of rural areas in achieving balanced growth,
and promoting agricultural development in friendly foreign countries.
The recently enacted Agricultural Act of 1970 and the Food Stamp
Act of 1970 represent the major new program thrusts for 1972.
Principal program level increases recommended are food assistance
programs, cooperative research and extension programs, inspection
of meat and poultry, timber management, rural housing loans and
x
environmental quality.
Table S-1. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
DEPARTMENT OF AGRICULTURE (in millions of dollars)
Program category
1970
actual
1971
estimate
1972
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 *
Public facility and business expansion
Resource protection and environmental improvement
Recreation, wildlife, and natural beauty
Timber
General administration
Program support
4,739
3,000
3,959
625
141
920
89
4
650
152
703
117
4
589
154
1,321
1,506
2,696
3,126
132
42
29
42
427
251
57
362
5
46
149
48
37
59
479
317
59
381
6
50
160
48
38
90
695
262
69
398
Total distributed to programs above
Deduction for offsetting receipts
9,419
-490
8,907
-550
11,083
-590
8,929
8,357
10,493
Total budget authority, Department of Agriculture
1
108
8
7
51
Budget authority does not reflect program level.
DEPARTMENT OF COMMERCE
The Department of Commerce is engaged in a wide range of activities to promote the Nation's economic development and technological advancement.
The reduction in budget authority for the Periodic data production
program results from the completion in 1971 of major elements of data
processing for the decennial census. Activitity will continue in 1972 on
other, smaller periodic censuses.
The major change within the Economic development assistance
category is the increase in District programs. This reflects the continued increase in the number of development districts eligible for
funding assistance.
The Promotion of industry and commerce category is primarily
aimed at improving the U.S. balance of trade. There is a significant
increase in this area to provide trade adjustment assistance to industries adversely affected by imports.
SPECIAL ANALYSES
291
Reorganization Plan Number 4 of 1970 created a new agency
designed to provide a unified approach to the problems affecting the
oceans and atmosphere through a centralized organization capable of
dealing with these problems. Programs going into the National Oceanic
and Atmospheric Administration include activities of the Environmental Science Services Administration and the Bureau of Commercial
Fisheries, the Data buoy program from the Coast Guard, and the sea
grant program of the National Science Foundation. Program increases
for 1972 include funds for the International Field Year of the Great
Lakes (to be conducted jointly with Canada), research to determine
the effect of heavy metal contaminants (including mercury) on fish,
a program to meet our international commitments for a research
program of tropical air experiments, and work with various States on
national fisheries problems.
Promotion of the merchant marine reflects the administration's
intent 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 S-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
Periodic data production program
Reimbursable data production and statistical services
Construction and analysis of national economic accounts
Category total
Economic development assistance:
Urban programs
District programs
Indian programs
Other area assistance
Research
Regional programs
General administration
Category total
Promotion of industry and commerce:
Domestic business activities
Trade adjustment assistance
International business development
Export control
Field program operations
Participation in U.S. expositions
Foreign direct investment regulation
Promotion of travel to the United States
Pollution control
Promotion of minority business enterprise
Category total
1970
actual
1971
estimate
1972
estimate
20.2
165.9
3.9
3.6
22.6
43.9
3.5
4.0
24.4
17.7
3.5
4.6
193.6
74.0
50.2
17.8
108.3
16.8
83.0
2.3
30.7
21.0
39.9
102.2
26.5
60.1
2.2
53.7
21.9
40.0
128.1
26.5
34.3
1.9
53.8
22.7
279.8
306.4
307.3
7.2
12.4
14.3
108.0
24.2
5.8
21.6
6.0
5.8
24.1
6.2
1.5
3.2
4.5
1.2
2.8
4.6
.3
1.9
2.6
5.9
.3
3.5
49.5
53.9
164.5
292
THE BUDGET FOR FISCAL YEAR 1972
Table S-2. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
DEPARTMENT OF COMMERCE (in millions of dollars)—Continued
Program category and subcategory
1970
actual
1971
estimate
1972
estimate
National oceanic and atmospheric services:
Environmental prediction and warning
Mapping, charting and marine description
Solid earth monitoring and services
Ocean fisheries and living resources
Environmental satellite
Sea grant
Databuoy....
Tropical experiment
International field year for the Great Lakes
Retired pay, commissioned officers
Executive direction and administration
108.4
31.8
10.5
53.9
9.7
1.2
10.1
.5
1.4
13.8
140.5
46.6
11.8
50.8
33.6
15.2
13.0
2.5
3.2
1.6
16.9
225.6
281.0
335.7
24.8
7.8
2.0
.9
1.3
2.5
27.2
8.7
2.0
2.0
1.3
2.8
27.6
9.8
2.2
2.5
1.2
2.9
39.3
44.0
46.0
48.7
4.4
55.0
5.0
57.1
5.7
2.6
5.0
53.3
62.6
67.8
34.7
209.6
215.6
242.0
254.3
244.8
Category total. _
244.3
457.6
499.1
Ge neral administration.
6.7
7.0
7.2
1,092.2
-29.6
-6.6
1,286.5
-38.3
-13.4
1,477.8
-36.1
-13.4
1,055.9
1,234.8
1,428.2
Category total
Physical measurements and standards:
Basis for Nation's physical measurement system
Scientific and technological services for industry and government.
Technical basis for equity in trade
Technical services to promote public safety
Technical information services
Central technical support
Category total
Technology:
Grant and issuance of patents and registration of trademarks._
Dissemination of technical information
Telecommunications, research, engineering, analysis, and technical services
State technical services.
C ategory total
Promotion of the merchant marine:
Flee t development
Flee t operations
Total distributed to programs above.
Deductions for offsetting receipts
I ntragovernmental transactions
Total budget authority, Department of Commerce
DEPARTMENT OF DEFENSE
125.0
35.4
10.5
46.8
27.6
7.0
13.0
.3
MILITARY
The military forces of the Department of Defense provide the
strength to assure our security. These forces—together with the forces
of our allies with whom we maintain close partnership—are designed
to deter aggression and to counter it effectively where necessary.
The function of the Strategic forces program is to deter nuclear
attack or to retaliate, should deterrence fail. To assure our strategic
SPECIAL ANALYSES
293
deterrent capability against an increasing threat will require an
increase of 4.1% over 1971 budget authority.
The mission of the General purpose forces is to meet contingencies
requiring military force below the level of strategic nuclear retaliation.
The withdrawal of U.S. forces from Vietnam, and an intensive
review of overall manpower requirements, allows a reduction in the
size of General purpose forces. Increases in budget authority are
provided to maintain these forces at a high level of readiness, and
to procure equipment which will permit the modernization of its
operations. Budget authority recommended for General purpose forces
in 1972 will be increased by 4.8% over 1971.
The Research and development program assumes greater significance as efforts are made to exploit program opportunities to upgrade
overall force capabilities. New R. & D. initiatives will be instituted to
improve both strategic and general purpose capabilities. The 1972
budget authority requested for this program represents an increase of
18.9% over 1971.
Table S-3. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
DEPARTMENT OF DEFENSE—MILITARY (in millions of dollars)
Program category and subcategory
1970
actual
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 general personnel activities, _
(Retired pay included in category above)
7,074.8
26,523.9
5,424.4
1,610.9
2,545.2
4,823.7
8,993.9
13, 685. 2
(2, 858.4)
Administration and associated activities
Support to other nations l
Undistributed, contributing to programs above, _ _
1, 460. 2
2,146.9
__
Total distributed to programs above
Undistributed nonprogram financing adjustments
Total budget authority, Department of Defense—Military
1
1971
estimate
1972
estimate
7,336.6
7,639.4
23,038.6 24,142.3
5,190.5
5,601.8
1,295.1 1,139.4
2,666.5
3,118.2
5,128.9
6,098.5
8,292.0
8,725.1
13, 780. 8 13, 628. 7
(3, 387.0) (3, 744.0)
1,559.7
2,295.4
1,000.0
1, 491. 3
2,459.1
3,760.0
74,289.1
—135.9
71,584.1 77,803.8
—176.2 —141.1
74,153.2
71,407.9
77,662.7
Excludes Military Assistance and foreign military credit sales
DEPARTMENT OF DEFENSE—CIVIL*. ARMY CORPS OF ENGINEERS
The civil works program of the Army Corps of Engineers provides
for the planning, development and management of water and related
land resources in each of the Nation's 19 major river basin 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. The Columbia-North Pacific region
294
THE BUDGET FOR FISCAL YEAR
1972
continues to require the largest proportion of funds during 1970-72,
followed by the Ohio region. For allocation of funds in terms of type
of projects, see Special Analysis Q, Federal Public Works Activities.
Table S-4. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
DEPARTMENT OF DEFENSE—CIVIL: ARMY CORPS OF ENGINEERS
(in millions of dollars)
Program category
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 90-364)
1970 budgetary reserve to be applied in 1971
1971 budgetary reserve to be applied in 1972
Offsetting proprietary receipts
Total budget authority, Army Corps of Engineers, Civil.__
1970
actual
1971
estimate
1972
estimate
18.7
58.2
85.0
134.5
31.0
56.6
1.1
68.1
136.4
120.6
6.8
34.7
2.3
.7
44.3
169.4
6.8
.6
.1
67.1
30.3
101.2
141.7
197.2
44.3
84.5
1.2
102.8
127.3
145.5
10.5
63.4
4.8
.5
78.1
223.6
14.6
2.6
.4
44.4
29.8
104.0
126.9
210.0
88.4
89.3
1.6
92.7
111.5
133.5
17.5
60.6
3.5
.5
72.8
243.2
20.6
2.0
.4
52.8
1,043.0
-43.8
157.4
1,418.9
1,461.6
—7.3
-157.4
45.6
—7.5
—45.6
—8.3
1,149.3
1,299.6
1,407. 7
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.
Increases in budget authority requested for Education programs
reflect two major areas of emphasis: emergency school assistance for
desegregating local education agencies; and the revision of existing
student aid programs to insure that no qualified student who wants
to go to college will be barred by lack of funds.
Budget authority increases requested for programs which support
Health objectives are essentially contained in two health financing
programs: Medicare and Medicaid. While the increases reflect changes
in the cost and use of health services, they also take into account
counter-balancing legislative proposals to help solve the problems of
rising medical cost and overutilization of hospital services.
The requested increases in total budget authority in support of Social and rehabilitation services fall equally into the social services
grants to States (part of public assistance program) and the work incentive (WIN) program which includes child care.
SPECIAL ANALYSES
295
Total budget authority requested for programs which support Income security objectives increases by $8 billion. This includes a
request of $580 million for the welfare reform proposed legislation.
The remainder is accounted for by maintenance payment grants and
Social Security OASDI programs. Maintenance payment grants to
States—a part of the public assistance program—rises by $1.8 billion.
Budget authority for Social Security OASDI programs increases by
$3.3 billion as a result of proposed legislation. It should be noted that
for these programs budget authority is the "income to the trust
fund"; tables specifying program outlays should be used to determine
1972 program costs for these programs.
Table S-5. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE
(in millions of dollars)
Program category and subcategory
Education:
Development of basic skills
Development of vocational and occupational skills
Development of academic and profe^n^J skills
Library and community drvp , •
General research (nonallocabi* resu. n, _
General support
Category total
Health:
Development of health resources
Prevention and control of health problems
Provision of health services
General support
Category total
Social 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 total
Income security:
Aged assistance
Disability assistance
Other individual and family support
Increasing knowledge
General support
_ _
Category total
Executive direction and management (departmental management)
1970
actual
1971
estimate
1972
estimate
2,412.6
391.3
948.0
46.7
64.1
44.7
3,281.6
479. 7
1,014.2
58.2
29.6
47.2
4,070.6
433. 6
1,980.4
19.5
34.6
49.0
3,907.3
4,910.5
6,587.7
2,068.6
383.0
12,133.3
48.4
2,468.9
385.4
16,112.8
57.5
2,584.9
367.6
19,144.6
64.7
14,633.2
19,024.6
22,161.9
682.5
542.6
122.3
37.9
781.4
788.3
139.2
40.0
1,001.4
1,013.4
108.8
41.3
1,385.3
1,748.9
2,164.9
24,720.5
4,935.2
11,024.9
8.0
299.5
25,899.0
5,473.9
12,367.4
9.0
384.7
29,551.7
5,927.1
15,215.3
11.0
409.6
40,988.1
43,134.0
51,114.6
40.5
51.9
56.0
Total distributed to programs above
Net deductions for interfund transactions and receipts from the
public not distributed above
60,954.3
69,869.9
82,085.0
-2,641.5
-3,209.7
-3,295.3
Total budget authority, Department of Health, Education, and Welfare
58,312.8
66,660.2
78,789.7
296
THE BUDGET FOR FISCAL YEAR 1972
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
The Department of Housing and Urban Development has two
primary objectives: to facilitate the workings of the private housing
industry in meeting the Nation's need for decent, safe, and sanitary
housing for all Americans; and, to help local governments develop
the managerial capacity and resources necessary to meet local
problems.
In 1972, primary emphasis will be on reforming community development and housing programs to improve the degree to which they serve
broad national objectives and meet State and local needs and priorities.
Legislation will be proposed to: simplify and consolidate the large
number of housing programs; fold several of the categorical programs
(urban renewal grants, model cities grants, water and sewer grants,
and rehabilitation loans) into a more flexible program of community
development special revenue sharing; and, establish a new community
development planning and management program to assist localities
to develop the capacity to manage their resources more effectively.
Table S-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. _
1970
actual
1971
estimate
1972
estimate
3,391
2
974
80
1,451
66
3,393
1,054
1,517
178
393
1,044
1,078
1,280
805
575
6
575
8
9
581
583
9
Improving management of community development activities
54
54
103
Improving management of departmental programs and resources:
Research and demonstrations in urban technology
23
41
45
76
82
107
99
123
152
Category total
Assuring adequate and efficient local public and private facilities
and services
Improving the physical environment of urban communities
Improving the social environment of urban communities:
Creating model neighborhoods in demonstration cities
Fair housing and equal opportunity
Category total
Provide executive direction, general support and others
Category total
Adjustmentstobudgetauthority.net
Total budget authority, Department of Housing and Urban
Development
—55
5,384
3,432
3,629
SPECIAL ANALYSES
297
Recommended budget authority for 1972 is somewhat misleading
in the case of community planning, management, and development
programs, since this figure reflects conversion to the new type of grant
programs in mid-1972. However, the numbers show the new trend. In
particular, housing assistance for low- and moderate-income families
will rise to an estimated $1.5 billion; funding of a level of $1 billion
is recommended for the new community development special revenuesharing program; the comprehensive planning program, reoriented and
reformed as part of the transition to an entirely new program, will
operate in 1972 at double the previous level; and, the open-space land
program will be increased to a level of $200 million, reflecting a new
orientation for the program with emphasis being given to smaller
neighborhood parks in and around cities.
DEPARTMENT OF THE INTERIOR
The Department of the Interior has responsibility for helping to
manage, conserve, and develop the Nation's water, energy, minerals,
timber, forage, fish and wildlife, and outdoor recreation resources. It
also has major responsibilities for Indian and territorial affairs.
Programs dealing with Water and power, including basin wide and
regional planning, maintenance of the Nation's basic water data
network, and development of the water resources of the western
portion of the Nation, will remain at approximately the 1971 funding
level.
The Minerals program, involving management to assure an adequate supply of the Nation's needs consistent with conservation
objectives, will experience two major changes in budget authority
recommended for 1972: an increase of $10.7 million is required for
accelerated Mining health and safety programs; and a decrease of
$70.4 million (in the Special programs item) will result from a decision
by the Secretary of the Interior to terminate contract purchases of
helium because of changes in anticipated future supply and demand.
Within the Land, forage, timber program two significant
budgetary changes are anticipated: Earth study and measurement
increases by 19%, including $3.5 million for the Earth Resource
Observation Systems (EROS) research program in cooperation with
the National Aeronautics and Space Administration; while funds
allocated to Fire protection reflect the uncertainties of occurrence.
The Recreation use and preservation program category reflects
the rising commitment to provide Federal assistance to State and local
governments to help them provide more local recreation areas, as well
as to assure Federal preservation of nationally important natural and
historic areas. The Road construction—National Park Service (Federal Highway Administration) increase reflects $30 million in new
contract authority granted in the Federal Highway Act.
The program structure for Indians reveals the wide variety
of objectives supported by Bureau of Indian Affairs programs, and the
special importance placed on education. Budget authority in 1972
for the Territories category contains increases for expanded education,
health, community facilities, and economic development programs.
298
THE BUDGET FOR FISCAL YEAR 1972
Table S^-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 fuels
Gaseous fuels
Solid fuels
Nonenergy uses of fuels
Mining health and safety
Special programs
Environmental protection
General support
Category total
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
Recreation use and preservation:
Planning and assistance
Land acquisition
Recreation development
Road construction—National Park Service (Federal Highway
Administration)
Management/operations/maintenance/protection
Rare or endangered species
Wildlife habitat and production—including migratory birds
Fish habitat and production
General support
Category total
1970
1971
22.1
52.3
298.8
9.0
116.9
79.4
1.1
21.1
24.1
60.6
232.2
10.3
102.9
85.2
22.4
24.2
61.2
220.9
4.0
106.5
98.1
1.0
23.0
600.7
537.7
538.9
10.5
11.5
14.3
17.4
12.6
8.3
3.9
1.4
25.9
49.5
5.8
2.5
12.0
15.2
13.4
17.7
12.6
11.0
3.7
1.2
54.9
76.7
6.4
2.7
13.1
16.0
13.3
17.6
11.7
13.7
6.1
1.3
65.6
6.3
8.2
2.7
163.6
227.5
175.6
9.3
48.9
1.8
12.1
11.3
9.9
14.3
31.3
2.3
5.4
9.4
52.9
2.0
12.0
12.3
10.1
16.3
30.5
2.5
5.5
10.8
63.0
2.2
12.0
12.3
10.8
21.9
17.2
2.6
5.6
146.6
153.5
158.4
15.7
119.9
44.5
23.4
275.9
114.8
27.1
280.0
180.3
41.0
103.0
1.5
68.5
31.8
6.2
20.0
115.0
1.7
70.1
38.0
6.8
50.0
124.5
2.3
80.8
40.7
6.8
432.1
665.7
792.5
1972
SPECIAL ANALYSES
299
Table S-7. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
DEPARTMENT OF THE INTERIOR (in millions of dollars)—Continued
Program category and subcategory
Indians:
Education program support
Educational research and development
Education personnel training
School construction
Elementary and secondary education
Post-secondary education
Adult education
Job training and placement
Reservation development
Community services (including welfare)
Transportation
Repair and maintenance, B & U
Claims and treaty obligations
General support
Tribal funds
Miscellaneous funds
1970
actual
1971
estimate
1972
estimate
13.2
14.3
.3
16.0
99.1
6.0
4.0
35.3
45.2
39.2
34.6
19.6
.2
10.3
103.4
6.0
10.5
117.9
9.8
4.8
39.2
49.3
62.2
35.7
21.2
3.7
10.2
131.9
5.8
15.6
.4
.2
26.2
126.2
19.0
4.8
39.2
60.6
67.5
36.2
23.5
25.2
10.4
68.8
5.8
Category total
432.1
516.8
529.6
Territories:
Trust Territory
American Samoa
Guam
Virgin Islands
Office of Territories
48.1
7.2
7.8
14.4
.5
59.8
8.2
8.7
16.5
.5
65.7
11.2
10.0
17.7
.6
Category total
78.0
93.7
105.2
91.2
6.6
10.9
91.5
6.5
12.8
98.8
6.5
14.3
108.7
110.8
119.6
1,961.8 2,305.7
-811.4 -1,738.8
—31.2
—58.0
2,419.8
-887.3
1,119.1
1,532.5
Other programs:
Payments to Treasury, States, and subdivisions
Secretarial direction and administrative support (solicitor)
Secretarial direction and administrative support (secretary)
Category total
Total distributed to programs above (Federal and trust
funds)
Offsetting proprietary receipts
Intragovernmental transactions
Total budget authority, Department of the Interior
508.9
DEPARTMENT OF JUSTICE
Department of Justice efforts are directed toward reducing the rate
of criminal law violations in our Nation, and insuring the proper and
equitable enforcement of civil law and civil rights protection. In the
area of crime control, the Department is fostering a close partnership
of State, local and Federal Government law enforcement programs.
Program funding for civil law and civil rights protection continues to
reflect the administration's strong commitment to the protection of
the civil rights of all individuals, the prosecution of cases involving
water and air pollution control, and to the administration and enforcement of immigration and naturalization laws.
300
THE BUDGET FOR FISCAL YEAR 1972
Major program budget increases are shown for the Reduction of
crime, for which program budget authority will increase by approximately $26 million over 1971; Law enforcement assistance, which will
increase by $169 million over 1971; Correction of Federal offenders,
which will increase by almost $66 million over 1971; and Control
of narcotics and dangerous drug abuse, which will increase by $13
million over 1971.
Table S-8. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
DEPARTMENT OF JUSTICE (in millions of dollars)
Program category and subcategory
Reduction of 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_
Technical assistance
Development of information and statistical programs
Category total
Correction of Federal offenders:
Construction
Repairs and improvements
Custody and physical security of offenders
Inmate care and maintenance
Operations of institutions
Rehabilitation of offenders
Assistance to non-Federal correctional systems
1970
actual
1971
estimate
1972
estimate
28.8
54.3
80.8
1.6
48.0
54.0
85.9
1.9
65.2
56.9
90.9
2.3
165.5
189.8
215.3
21.0
242.8
7.5
21.7
5.7
1.0
26.0
491.4
7.5
26.1
12.4
4.0
35.0
618.1
21.0
34.0
18.5
9.7
299.7
567.4
736.3
3.9
1.5
22.5
8.9
36.2
19.3
.2
.5
20.2
2.0
27.9
10.4
39.4
22.2
.3
.6
71.1
3.0
33.1
15.0
39.8
25.4
.4
.8
93.0
123.0
188.6
27.7
1.9
1.0
.7
.8
42.0
2.4
1.3
1.4
1.6
54.0
2.8
1.7
1.5
1.6
32.1
48.7
61.6
37.1
29.7
29.8
1.0
.5
25.4
1.1
.5
32.9
1.3
.5
35.5
64.0
64.2
67.1
Research
Category total
Control of narcotics and dangerous drug abuse:
Law enforcement
Treatment of narcotics and dangerous drug offenders
State and local assistance
Education
Research
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. _.
Category total
SPECIAL ANALYSES
301
Table S^8. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
DEPARTMENT OF JUSTICE (in millions of dollars)—Continued
Program category and subcategory
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
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 total
Support of the Federal judicial system:
Facilitation of litigation
Protection of the integrity of the judicial system
Category total
Immigration and naturalization:
Control of persons entering the United States
Control of aliens in the United States
Naturalization
Central information record
Category total
General administration:
Executive direction
Administrative support
Category total
Deductions for offsetting receipts
Total budget authority, Department of Justice
1970
actual
1971
estimate
1972
estimate
1.8
1.0
1.8
17.4
1.5
.2
.7
3.4
2.1
1.2
2.1
26.7
1.6
.2
.8
4.5
2.3
1.3
2.3
30.6
1.7
.3
.8
5.6
27.8
39.2
44.9
4.7
4.6
1.1
5.1
4.9
1.2
5.4
5.1
1.5
10.4
11.2
12.0
8.1
7.7
5.7
5.6
3.6
1.7
8.9
8.6
6.9
6.6
3.8
1.9
9.3
9.3
7.3
7.2
4.1
2.7
32.4
36.7
39.9
19.9
2.5
24.3
5.5
30.9
9.1
22.4
29.8
40.0
60.0
32.9
6.1
8.8
67.9
36.4
6.7
10.0
71.8
38.0
6.8
10.1
107.8
121. 0
126.7
2.4
5.1
2. 6
5. 8
2.3
7.0
7.5
8. 4
9.3
—1.3
—1.5
—1.5
861.3
1,237.9
1,540.2
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
302
THE BUDGET FOR FISCAL YEAR 19 72
Department's program structure, are: (a) Manpower training 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) workplace standards programs
to achieve improved wages, safety, and general working 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 training and employment
assistance, which has grown rapidly. Within this category On-the-job
and Institutional training have been areas of concerted effort, reflecting the emphasis on providing services to the disadvantaged who
experience difficulty in obtaining suitable employment.
Table S-9. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
DEPARTMENT OF LABOR (in millions of dollars)
Program category and subcategory
Manpower training and employment assistance:
On-the-job training—private sector
On-the-job training—public sector
Institutional training
In-school work support
Post-school work support
Special targeting
Computerized job placement
Employment assistance
Planning, evaluation, and research
Program support
Category total
Income maintenance:
Workers compensation (Federal)
Unemployment insurance (Federal)
Unemployment insurance (State)
Administration
Category total
Workplace standards administration
Labor management relations
Data collection, analysis, and dissemination
General support
Total distributed to program above
Proposed for separate transmittal
Deductions for offsetting receipts
Total budget authority, Department of Labor
1970
actual
184.1
49.0
308.0
76.4
49.6
9.3
367.4
4.8
67.7
1971
estimate
260.7
126.8
483.3
224.8
165.8
177.9
22.3
393.1
4.5
105.4
1972
estimate
260.5
125.8
521.0
235.5
165.8
172.8
22.3
395.0
4.9
142.8
1,116.3
1,964.6
2,046.4
60.1
187.9
3,368.9
347.8
109.8
266.4
3,507.2
406.5
90.0
260.0
4,130.4
444.8
3,964.7
4,289.9
4,925.2
37.3
13.1
24.8
15.2
5,171.4
—3.9
5,167.5
41.3
17.1
28.3
19.5
70.9
21.8
33.9
20.5
6,360.7
62.6
—5.0
7,118.7
6,418.3
7,114.7
—4.0
SPECIAL ANALYSES
303
DEPARTMENT OF TRANSPORTATION
The Department of Transportation was created to promote greater
comfort, safety, speed, efficiency, and reliability in all modes of transportation. Under this broad guideline, the Department works to
develop and improve privately operated transportation services; to
promote cooperation among carriers, labor, governments at all levels,
and other interested parties in achieving transportation objectives; to
stimulate research and development efforts in all phases of transportation; to provide general leadership in identifying and solving
transportation problems; and to develop national transportation
policies to accomplish these objectives.
The program structure developed for the Department gives perspective to the programs and the constituent units of the Department,
and aids in the 'evaluation of alternative investment strategies.
The program structure provides a basis for viewing various transportation modes as interdependent components of an overall system,
since the development of a balanced transportation system in each
area requires that alternative "mix" strategies be considered to
achieve an optimum effect. For example, expenditures for urban transportation must be considered in light of the tradeoffs between mass
transit and highways. Similarly, expenditures for inter-urban transportation must be made after consideration of highway, railroad, and
aviation alternatives.
The Urban Mass Transportation Act of 1970 provided $3.1 billion
from 1971-75 for the Mass transit program. The $3.1 billion is shown as
1971 budget authority. Also of particular note are the funds for Federal
financial assistance to the National Railroad Passenger Corporation
in the Interurban transportation program in 1971. General transportation safety shows a substantial increase over 1971 due primarily to
the fact that for the highway safety State and community grant program, the 1970 Highway Act rescinded authorizations previously made
for 1970 and 1971 while providing new authorizations for 1972 and
1973.
Table S-10. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
DEPARTMENT OF TRANSPORTATION (in millions of dollars)
Program category and subcategory
1970
actual
1971
estimate
1972
estimate
2,306.1
176.6
2,411.3
3,100.0
2,372.6
Category total
(Trust funds)
2,482.7
(2,306.1)
5,511.3
(2,411.3)
2,372.6
(2,372.6)
Interurban transportation:
Highways
Rail
Air.
Water
3,055.7
15.3
1,937.9
81.2
3,134.3
62.7
1,813.2
73.1
3,179.2
34.5
1,828.4
82.3
Category total
(Trust funds)
5,090.1
(3,895.7)
5,083.3
(3,843.5)
5,124.4
(4,594.9)
Urban transportation:
Highways
Mass transit
304
THE BUDGET FOR FISCAL YEAR
19 72
Table S-10. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
DEPARTMENT OF TRANSPORTATION (in million of dollars)—Continued
Program category and subcategory
1970
actual
1971
estimate
International transportation:
Highways
Air.
Water
85.0
43.6
5.0
210.0
38.1
20.0
235.0
36.1
Category total
128.6
253.1
291.1
103. 3
20.0
315.8
5.6
105.7
158.9
13.7
148.2
26.3
101.1
91.7
16.7
415.6
25.0
59.8
550.4
(52.7)
448.2
(94.1)
608.8
(145.5)
82.3
312.3
58.7
97. 8
356.5
66.5
113.7
411.3
71.0
453.3
(163.3)
520.8
(195.1)
596.0
(304.7)
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
(Trustfunds)
General support:
General research, development, and planning
Administration
Coast Guard retired pay
Category total
(Trustfunds)
1972
estimate
Total distributed to programs above._
Deductions for offsetting receipts and intragovernmental
transactions
8, 705.1
11, 816. 7
8,992.9
-19.9
-647.8
-545.1
Total budget authority, Department of Transportation..
8,685.2
11,168. 9
8,447.8
DEPARTMENT OF THE TREASURY
The Department of the Treasury is responsible for the fiscal, debt
management and monetary operations of the Federal Government. It
also has major responsibility for prescribing Federal policies affecting
the U.S. balance of payments. The Treasury program structure reflects the operating elements of the Department, which are funded
principally by annual appropriations and, to a lesser extent, through
reimbursements and miscellaneous funds.
The Department's functions are grouped into five program categories. Expansion of revenue collection operations, particularly
auditing of tax returns, as a result of growth in the number and
complexity of tax returns filed, requires substantially increased program funding. Not included in the program structure are interest on
the public debt, which accounts for most of the Department's budget
authority, and several permanent appropriations. These are aggregated in the adjusting entry in the table.
SPECIAL ANALYSES
305
Table S-11. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
DEPARTMENT OF THE TREASURY (in millions of dollars)
Program category and subcategory
1970
actual
Administration of Government finances:
Public debt
Issuance, payment, and servicing of Government checks__
General activities
1971
estimate
1972
estimate
65.0
47.7
5.4
70.4
46.8
7.1
77.2
49.6
7.4
118.1
124.3
134.2
171.3
86.1
101.2
25.8
293.5
34.3
37.9
19.4
85.4
66.4
189.0
93.8
106.8
25.2
299.8
34.0
40.8
21.8
94.7
74.7
221.4
102.2
114.5
28.0
339.3
36.6
43.5
23. 6
109.5
79.2
921.3
980.6
1,097.8
Manufacture and distribution of coins, currency, and other
financial instruments
20.0
20.2
30.3
Special law enforcement:
Tax fraud investigations—racketeer segment
Alcohol and firearms investigations
Other investigations
Security responsibilities
16.7
29.6
43.2
16.0
30.7
39.8
49.7
25.8
34.4
43.9
56.8
37.5
17.7
25.9
! 56.7
123.2
171.9
229.3
9.7
10.2
11.2
1,192. 3
1,307.2
1,502.8
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
General activities
Category total
Policy determination and related activities
Total distributed to programs above
Items not included in the program structure:
Interest
.
.
Other appropriations not included in the program structure,
Deductions for offsetting receipts
Intragovernmental transactions
Total budget authority, Department of the Treasury.. _ _
1
19,424.9 20,923.7 21,273.4
200.4
357. 7
397. 8
-1,187.8 -1,590.2 -1,878.2
—84.3
—89.1
—90.5
19,545. 7
20,909.4
21,205.4
Includes $36.5 million for construction of facilities, Federal Law Enforcement Training Center.
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 peaceful applications of
atomic energy.
The major trends reflected in the following table include an increase
in production of enriched uranium for civilian powerplants; a decrease
in plutonium production due to reduced requirements; an increase in
production of nuclear weapons and a decreased level of activity in
the underground testing of such weapons; a reduction in the scope of
430-700 O—71
20
306
THE BUDGET FOR FISCAL YEAR 19 72
the NERVA nuclear rocket program (conducted jointly with NASA)
and in other space-related programs; acceleration of the program to
develop an economic liquid-metal fast-breeder nuclear power reactor;
some reduction in the level of support for basic and applied research
in the physical sciences; and a temporary reduction in the revenues
realized from the sale of uranium enrichment services to industry.
TableS-12. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
ATOMIC ENERGY COMMISSION (in millions of dollars)
Program category and subcategory
Procurement and production of source and special nuclear materials:
Procurement of uranium concentrates
Production of special nuclear materials
1970
actual
1971
estimate
1972
estimate
50.6
352.7
18.1
419.8
1.7
400.9
Category total.
403.3
437.9
402.6
Military applications:
Nuclear weapons
Naval propulsion reactors.
975.3
135.3
1,009.7
154.3
989.6
144.3
1,
110.6
1,110.6
1,164.0
1,133.9
51.9
38.1
48.4
35.6
15.0
24.7
90.0
84.0
39.7
10.9
23.5
117.2
1.4
2.8
11.5
33.4
175.6
1.0
2.7
8.7
28.8
157.2
155.8
224.2
197.2
3.7
7.3
14.2
1.4
1.0
7.7
7.5
1.0
6.7
5.2
25.2
17.6
12.9
215.2
186. 6
94. 9
210. 9
180. 4
95. 1
190.0
168.2
94.5
496.7
486.4
452.7
106.2
15.9
115.9
14.0
99.5
13.3
122.1
129.9
112.8
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 reactors
Terrestrial electric power development
Isotopes development
Civilian applications of nuclear explosives (Plowshare)
Category total
Basic and applied research in the physical and biomedical sciences:
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
2.5
SPECIAL ANALYSES
307
Table S-12. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
ATOMIC ENERGY COMMISSION (in millions of dollars)—Continued
Program category and subcategory
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
Adjustments to budget authority
Total budget authority, Atomic Energy Commission
1970
actual
1971
estimate
1972
estimate
11.9
111.2
9.7
7.2
28.0
1.0
14.2
121.6
7.8
8.4
19.8
2.0
15.9
120.4
4.5
7.5
21.8
169.0
173.8
170.1
2,572.7
-352.3
2,717.8
-409.7
2,521.9
-271.0
2,220.4
2,308.1
2,250.9
ENVIRONMENTAL PROTECTION AGENCY
The Environmental Protection Agency's mission is to conduct an
integrated attack on environmental pollution related to water, air,
radiation, pesticides, and solid wastes, recognizing the critical relations
between types of pollutants, sources of pollution, and standards and
control techniques in pollution areas.
Budget authority request for the Water quality abatement and
control program is increased by approximately $1 billion. This results
in doubling the funding level for the construction grant program to
enable the municipal sector to comply with established water quality
standards; strengthening State and interstate agency programs
through increased financial and technical assistance; expanding areawide basin planning activities; and rectifying deficiencies identified
in the 1971 Community Water Supply Study. Increases recommended
for the Air pollution abatement and control program provide for continuation of the program for the development of a low emission advanced power system, acceleration in the development of sulfur oxide
pollution control techniques, and nominal expansion in technical and
financial assistance to State and local air pollution control agencies.
In the Pesticides abatement and control and Radiation abatement
and control categories, the 1972 level provides for strengthening standards and monitoring programs. The Solid wastes management increase
will allow additional emphasis on recycling and the development of
economic incentives, continued development of the gas-turbine incinerator concept, and an increased capability to provide assistance
and information to bring about implementation of the techniques
developed. The estimate for Facilities provides funding to initiate
the construction of a laboratory facility in Cincinnati, Ohio.
Undistributed budget authority will be used to support existing
programs and new and expanded program activities necessary to
implement the Clean Air Amendment of 1970, the Resource Recovery
Act of 1970, and several major legislative proposals to be introduced
to the 92d Congress.
308
THE BUDGET FOR FISCAL YEAR 19 72
TableS-13. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
ENVIRONMENTAL PROTECTION AGENCY (in millions of dollars)
Program category
Water quality abatement and control
Air pollution abatement and control
Pesticides abatement and control
Radiation abatement and control
Solid wastes management
Facilities.
Program direction and support
1970
actual
18.2
20.4
Total distributed to programs above
Undistributed, proposed for separate transmittal, existing and new
legislation
1,004.0
1, 273.4
2,365.8
13.0
85.0
Total budget authority, Environmental Protection Agency, _
1,004.0
.1
1,116.3
106.8
H1.7
M. 4
M3.8
1972
estimate
2,138.3
128.9
17.2
8.6
19.2
28.0
25.6
1
881.2
104.5
1971
estimate
1,286.4
2,450.8
Amounts are for part year only, December 2 through June 30.
GENERAL SERVICES ADMINISTRATION
The General Services Administration provides central logistical
services common to all Federal agencies as well as the direct public
services of the National Archives and the Presidential libraries. In
the agency's program structure, these services are grouped into six
major categories.
Changes in budget authority estimates from 1971 to 1972 reflect
trends in program requirements Government-wide as well as the effects
of GSA's operations. The Facilities category shows some increase in
budget authority to acquire building space to meet long-delayed
requests. An increase in facilities management reflects the necessity
for strengthened security of Federal buildings and increased building
upkeep standards from the abnormally low levels of recent years.
Legislation will be proposed to initiate a substantial reduction in the
large backlog of building projects by means of lease-construction.
Analyses indicate this method will offer economies over Federal construction and ownership when both direct and indirect effects are
considered in the long run.
-Reductions in the Supply services category reflect lower sales to user
agencies together with improvements in general inventory management. The increases in Other property management and disposal
services and in Agency direction and support services are necessary to
achieve the very substantial "offsetting receipts," of which almost
$900 million derives from sale of stockpile materials no longer necessary for anticipated needs. Sales of surplus real property, and sites
and designs in support of the proposed lease-construction initiative,
also contribute to offsetting receipts. On an overall basis, offsetting
receipts exceed gross budget authority by almost $200 million for 1972.
SPECIAL ANALYSES
309
Table S-14. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
GENERAL SERVICES ADMINISTRATION (in millions of dollars)
Program category and subcategory
1970
actual
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 disoosal
Strategic and critical materials disposal
Service direction
___
Category total
Agency direction and support services:
Executive direction
Allowances and services to former Presidents
Administrative operations
Category total
_
Total distributed to programs above
Deductions for offsetting receipts
1971
1972
133.4
298.8
2.0
267.0
358.8
2.5
314.7
380.6
2.5
434.2
628.3
697.8
66.7
1.3
2.0
4.4
68.7
1.6
22.1
4.6
67.5
1.7
2.1
4.6
74.4
97.0
75.9
14.9
7.3
.7
.8
15.3
8.6
.7
.8
15.8
9.0
.7
.8
23.7
25.4
26.3
2.6
.4
2.1
.2
.7
2.7
.3
2.2
.2
.8
2.7
.3
2.2
.3
.8
6.0
6.2
6.3
12.8
4.4
6.9
2.0
1.3
12.4
6.2
7.0
5.0
1.3
12.6
6.6
9.2
7.0
1.3
27.4
31.8
36.7
1.2
.3
15.2
1.3
.4
16.2
1.8
.4
18.1
16.7
17.9
20.3
582.4
-188.3
806.7
863.3
-365.4 -1,051.4
Total budget authority, General Services Administration
394.1
441.1
-188.1
310
THE BUDGET FOR FISCAL YEAE
1972
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
The National Aeronautics and Space Administration is responsible
for conducting civilian aeronautical and space programs, including
manned and unmanned space exploration and research for the solution
of the problems of flight.
In 1972, funds are provided for the continued manned exploration of
the moon; the extension of man's capability to live and work in space;
the unmanned exploration of the planets and the universe; and the
development of practical applications of space technology. In the
Earth orbital manned space flight category, funds are included for
development of the engine for a space shuttle and for Skylab, an
experimental space station. Funds for Lunar exploration decrease
due to continued phasedown of the Apollo program. Funding increases
for Planetary exploration will provide for the initiation of development
activities for the Grand Tour unmanned missions to the outer planets
and for proceeding with the development of the Viking unmanned
orbiter-lander exploration of Mars. Under the Space science category
woik will start on a High Energy Astronomy Observatory. Space applications will focus on an Experimental Earth Resources Technology
Satellite, and experiments in communications, navigation, geodesy,
and meteorology. Under Aeronautics research and technology, funds
will be included for initiation of development of a Short Take Off and
Landing (STOL) aircraft.
Table S-15. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
(in millions of dollars)
Program category and subcategory
Lunar exploration
Earth orbital manned space
Planetary exploration
Space science:
Astronomy
Space physics
Space biology
Category total
Space applications:
Earth surveys
Meteorology
Communications and navigation.
Category total
Space research and technology
Aeronautics research and technology
Supporting activities:
Tracking and data acquisition
Other supporting activities
Research and program management
Total support activities
flight
1970
actual
1971
estimate
1972
estimate
1,674.7
378.1
174.7
910.9
528.3
163.3
616.2
694.3
335.6
86.6
45.6
13.7
83.3
44.4
7.9
87.0
55.3
145.9
135.6
142.3
40.0
47.5
50.4
82.8
53.8
47.0
72.1
54.1
78.7
137.9
183.6
204.9
175.4
100.5
165.9
102.0
104.0
116.5
278.0
98.3
702.2
290.0
112.4
718.4
264.0
108.2
697.4
1,078.5
1,120.8
1,069.6
SPECIAL ANALYSES
311
Table S-15. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
(in millions of dollars)—Continued
Program category and subcategory
Total distributed to programs above
Financing adjustments
Deductions for offsetting receipts
Total budget authority, National Aeronautics and Space
Administration
1970
actual
1971
estimate
1972
estimate
3,865.7
—114.0
—5.9
3,310.3
3,283.4
—13.3
—13.4
3,745.8
3,297.0
3,270.0
POSTAL SERVICE
The nine categories of the Postal Service's program structure
describe both the basic postal service function of acceptance, processing, transportation and deliver}^ of mail, and necessary support
activities.
Between 1971 and 1972, the estimated increases in funding for
Services at small post offices, Window and collection services, Delivery
services, and Processing of mail amount to $175.6 million or 2.6%. Of
this increase, $151.5 million is a result of the step compression agreement negotiated with the labor unions effective November 14, 1970.
This agreement accelerates the rate at which postal workers receive
in-grade step increases. The remaining $24.1 million represents a 0.4%
increase, necessary to cover a projected 3.1% increase in mail volume.
The funding of support activities is growing faster than the growth
in mail volume. Most notable rates of growth are found in: Law enforcement, 18.8%; Research, development, and engineering, 72.1%;
Administration, 21.5% (partly due to the aforementioned step
compression); and 1.8% in Logistical postal support.
Table S-16. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
POSTAL SERVICE (in millions of dollars)
Program category and subcategory
Services at small post offices:
Postal operations at small offices
Collection and city delivery
Special delivery
Rural delivery routes
Category total
Window and collection services:
Window and vending services
Collection services
Support services
Category total
Delivery services:
City delivery
Special delivery
Rural delivery routes
Support services
Category total
1970
actual
1971
estimate
1972
estimate
1,469.6
877.1
16.7
420.3
1,709.3
1,011.5
19.4
477.9
1,768.9
1,030.7
20.3
496.5
2,783.7
3,218.1
3,316.4
142.4
39.9
30.8
163.2
46.7
35.6
167.7
49.3
36.8
213.1
245.5
253.8
570.5
44.4
10.5
3.5
652.4
51.5
12.0
4.1
674.9
53.8
12.5
4.3
628.9
720.0
745.5
312
THE BUDGET FOR FISCAL YEAR 19 72
Table S-16. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
POSTAL SERVICE (in millions of dollars)—Continued
Program category and subcategory
Processing of mail:
Platform operations
Mail preparation—originating mail
Mail distribution
Support services
Category total
Transportation:
Local transportation service
Intercity transportation.
International transportation
1970
actual
349.9
93.8
2,026.9
79.6
358.2
94.4
2,057.9
83.2
2,208.4
2,550.2
2,593.7
88.4
532.7
169.0
101.3
558.3
174.4
106.4
598.1
176.1
790.1
834.0
880.6
18.6
6.8
3.2
25.6
8.9
3.8
31.9
10.0
3.6
28.6
38.3
45.5
1.8
37.3
10.1
2.0
7.4
35.5
18.3
3.0
11.2
70.9
24.3
4.1
51.2
64.2
110.5
39.4
72.3
285.8
40.3
59.9
101.4
329.1
47.5
67.5
110.6
350.0
125.2
437.8
537.9
653.3
248.3
679.5
719.8
805.3
648.7
903.5
927.8
1,525.1
1,552.2
8,069.6
9,733.3
—6,502.4 —6,871.5
190.5
9,872.9
10,151.5
—8,613.1
-66.7
Law enforcement:
Postal crimes and prohibited mailings
Administration
Support services
Category total
Research, development, and engineering:
General research
Applied research and development
Engineering
Administration
Category total
Category total
Logistical postal support:
Capital investment
Expense
Category total
Total obligations
.
Net postal revenues (including reimbursements)
Net unobligated budget authority
Total budget authority, Postal Service
1972
estimate
303.3
80.9
1,756.6
67.6
Category total
Administration:
Headquarters administration
Regional and intermediate level administration
Post Office administration
Other administrative costs
1971
estimate
1,757. 5
12,734. 7
1,471. 7
VETERANS ADMINISTRATION
The Veterans Administration provides a wide range of services for
veterans and their dependents, classified by the program structure
into Income security; Education, training, and rehabilitation; Housing;
and Hospital and medical care. Income security accounts for about 64%
of Veterans Administration budget authority for 1972. Increases in
SPECIAL ANALYSES
313
this category continue to result from the impact of increased numbers
of Vietnam war veterans and the liberalization of other benefits.
The largest percentage increase in budget authority for 1972 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 made by private lenders. In 1972, the number of home
loans guaranteed is expected to be 265,000, an increase of 30,000 over
1971. Neither of these programs requires budget authority for 1972;
budget authority shown in this table under Housing is for the payment
of interest insufficiencies on outstanding participation certificates.
The Hospital and medical care program is concerned with the efficient administration of medical attention to veterans. Medical care
will be improved by increasing the staff-to-patient ratio and by phasing down outmoded facilities. The increase in budget authority
recommended for Construction of facilities reflects the need to replace
or rehabilitate aging facilities.
TableS-17. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
VETERANS ADMINISTRATION (in millions of dollars)
Program category and subcategory
Income security:
Compensation for veteran disabilities
Compensation to survivors
Other compensation
Veterans pensions
Survivors pensions
Burial allowance and related benefits
Veterans life insurance trust fund
Veterans life insurance revolving fund
Category total
Education, training, and rehabilitation:
Readjustment educational assistance to veterans
Rehabilitative training of disabled veterans
Educational assistance to dependents of deceased and disabled
veterans
Other benefits
Category total
Housing:
Payment of participation certificate interest insufficiencies
Category total
Hospital and medical care:
Direct medical care
Medical and prosthetic research
Research and development in health services
Education and training
Medical support and miscellaneous services
Construction of facilities
Category total
1970
actual
1971
estimate
1972
estimate
2,396.9
595.6
4.2
1,359.4
909.0
74.9
752.9
7.3
2,715.7
641.1
4.8
1,404.5
1,006.7
78.0
799.1
5.1
2,908.0
677.3
4.7
1,441.3
1,092.1
81.4
833.1
6.5
6,100.2
6,655.0
7,044.4
936.9
41.8
1,542.9
58.0
1,762.0
64.6
51.8
13.6
73.3
22.0
77.2
28.1
1,044.1
1,696.2
1,931.9
4.8
6.1
5.9
4.8
6.1
5.9
1,585. 6
58.9
2.4
95.3
21.7
73.2
, 757.7
61.5
1,881. 9
115.6
51.2
66.5
62. 1
2. 3
116. 0
53. 4
98. 0
1,837.0
2,055.3
2,213.7
2.8
314
THE BUDGET FOR FISCAL YEAR 19 72
TableS-17. 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
1970
actual
1971
estimate
1972
estimate
242.6
252.1
266.2
9,228.7
10,664.7
11,462.1
-478.7
-493.6
-508.4
8,750.0
10,171.1
10,953. 7
NATIONAL SCIENCE FOUNDATION
The National Science Foundation supports a broad range of scien"
tific research to increase the understanding of natural phenomena and
fundamental life processes, and to improve our abilities to solve major
national problems. Applied research efforts are being strengthened.
These will enable us to cope more effectively with major societal and
environmental problems, such as pollution, health, and transportation, and advance the Nation's technology and economic productivity.
The Institutional support for science and science education support
programs reflect a change in the Foundation's programs toward increased support for research efforts and away from the general
expansion of training and research capacity.
Table S-18. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
NATIONAL SCIENCE FOUNDATION (in millions of dollars)
Program category
Scientific research project support
Specialized research facilities and equipment
National and special research programs
National research centers
National sea grant program
Computing activities in education and research
Science information activities
International cooperative scientific activities
I ntergovernmental science program
Institutional support for 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
1970
1971
1972
actual
estimate
estimate
161.7
6.5
39.1
27.2
9.0
16.9
13.4
1.7
.5
44.7
120.2
2.0
19.7
176.9
5.8
82.9
37.1
6.2
15.0
12.0
2.2
.4
34.5
100.6
2.4
21.3
259.8
5.8
166.6
40.4
462.6
-22.6
-1.2
497.3
8.6
-1.1
622.2
-.2
-1.1
438.8
504.8
620. 9
17.5
10.8
4.0
1.0
12.0
77.3
2.7
24.3
SPECIAL ANALYSES
315
OFFICE OF ECONOMIC OPPORTUNITY
The principal concern of the Office of Economic Opportunity is the
development of innovative approaches for solving the problems of the
poor. The agency's budget for 1972 reflects OEO's continuing concern
for research and development activities in social program areas,
ranging from manpower, health, and education, to economic development and housing. OEO will give particular attention in 1972 to experiments designed to test the effectiveness of private market mechanisms
for delivering social services to the poor.
The principal cause for the reduction of OEO budget authority in
1971 and 1972 is the transfer of major operating programs to other
Federal agencies. In 1971, the Work and training program was transferred to the Department of Labor; in 1972 the Head Start and the
Follow Through programs will be funded directly to the Department
of Health, Education, and Welfare.
Table S-19. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
OFFICE OF ECONOMIC OPPORTUNITY (in millions of dollars)
Program category and subcategory
Employment:
Research, experimentation, and evaluation
Development and demonstration
Work and training
Category total
Economic development:
Research, experimentation, and evaluation
Development and demonstration
Special impact I-D
Rural loans
Category total
Education:
Research, experimentation, and evaluation
Development and demonstration
Category total
Early childhood development:
Research, experimentation, and evaluation
Development and demonstration
Head Start
Follow Through
Category total
Health:
Research, experimentation, and evaluation
Health and nutrition
Category total
1970
actual
1971
estimate
1972
estimate
2.7
3.1
752.7
1.5
5.6
2.7
5.2
758.5
7.1
7.9
.4
11.5
36.2
3.5
.9
2.0
36.1
6.0
1.7
2.1
25.8
51.6
45.0
29.6
3.8
6.2
10.9
3.8
11.0
3.7
10.0
14.7
14.7
5.1
2.8
325.3
70.3
5.5
6.0
360.0
69.0
403.5
440.5
6.0
1.7
157.3
1.4
189.1
.9
159.5
159.0
190.5
160.4
6.0
316
THE BUDGET FOR FISCAL YEAR 19 72
Table S-19. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
OFFICE OF ECONOMIC OPPORTUNITY (in millions of dollars)—Continued
Program category and subcategory
Other community assistance:
Research, experimentation, and evaluation
Development and demonstration
Community action operations
Special Indian programs
Special migrant programs
Legal services
VISTA
National summer youth
Category total
1970
actual
4.8
6.7
368.2
33.2
19.3
54.7
34.2
General support:
Executive direction and administration
Total distributed to programs above.
Intragovernmental transactions and obligations lapsing
Total budget authority, Office of Economic Opportunity_.__
1972
estimate
3.3
10.9
368.4
36.9
23.2
61.0
36.2
3.3
10.2
346.0
37.9
22.7
61.0
524.1
539.9
514.1
1.4
2.1
5.1
6.0
3.7
.9
4.2
7.0
5.5
7.5
5.6
16.2
27.7
27.4
16.0
18.0
17.9
1,938.9
8.7
1,283.4
39.6
778.0
—.3
1,947.6
1,323.0
777. 7
33.0
3.0
Basic research:
Research, experimentation, and evaluation
Development and demonstration (non add)
Planned demonstrations and experimentation
Resource mobilization and demonstration
Legal development and demonstration
Health development and demonstration
Program administration
Category total
1971
estimate
9.0
4.0
3.0
6.3
SMALL B U S I N E S S ADMINISTRATION
The Small Business Administration provides financial and managerial assistance to small businessmen and assists businessmen and
homeowners adversely 7affected 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.
Program levels are shown in parentheses and indicate the continuing emphasis on assistance to minority businesses. Increased
program levels result primarily from the expanded participation of
private lending institutions in SBA's guaranteed loan programs.
SPECIAL ANALYSES
317
Table S-20. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
SMALL BUSINESS ADMINISTRATION (in millions of dollars)
Program category
Stimulate small business in deprived areas l
Program level 2
.
.
Promote minority entrepreneurial opportunity 1
2
Program level
.
Promote small business contributions to economic growth and
x
competitive environment
Program level 2
Financial aid to victims of disasters or displacement1
___
Program level 2
General support
Total budget authority, Small Business Administration....
1
2
1970
actual
1971
estimate
1972
estimate
(153.0)
74.4
(436.0)
112.0
(252.0)
(219.0)
175.0
(214.0)
25.8
63.0
69.0
(372.0) (410.0)
128.0 130.0
(246.0) (139.0)
26.4
27.3
(246.0)
200.8
403.8
81.0
(480.0)
120.0
(320.0)
427.3
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 budget authority recommendation for 1972 provides for wage
and cost increases for all programs. It also provides for additional
radio broadcasts to the Soviet Union and the Middle East under the
Soviet Union and East Europe and the Near East and South Asia
program categories.
Table S-21. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
UNITED STATES INFORMATION AGENCY (in millions of dollars)
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
ctual
1971
estimate
1972
estimate
37.1
23.1
28.2
26.9
19.7
17.2
31.1
36.7
23.2
28.6
26.2
19.8
21.7
31.7
37.5
23.5
29.3
27.0
20.4
23.4
32.3
183.3
-.6
187.9
-.6
193.4
-.6
182.7
187.3
192.8
@FedFRASER