Full text of Budget in Brief : Fiscal Year 1978
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THE
UNITED STATES
BUDGET
IN BRIEF
FISCAL YEAR
THE BUDGET DOLLAR
Fiscal Year 1978 Estimate
WHefe it ((1l11e8#ulII: ..
Corporation
Income Taxes
Individual
Income Taxes
39¢
Social
Insurance
Receipts
29¢
WHefe it I/(le$ ...
Direct
BeneFit
Payments
to Individuals
National
DeFense
26¢
TABLE OF CONTENTS
I.
II.
III.
IV.
V.
VI.
Page
THE PRESIDENT'S BUDGET MESSAGE . . . . . . . . . . . . . . .
BUDGET OVERVIEW ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BUDGET RECEIPTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
THE LONG-RANGE OUTLOOK ....... .. ........ . .....
THE FEDERAL PROGRAM BY FUNCTION. . . . . . . . . . . .
National defense ..... .. ... .. ...... .. . .. .. . .. . ..... . ... . .
International affairs .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General science, space, and technology . . . . . . . . . . . . . . . . . . . . .
Natural resources, environment, and energy . . . . . . . . . . . . . . . .
Agriculture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commerce and transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Community and regional development. . . . . . . . . . . . . . . . . . . . .
Training, employment, and social services . . . . . . . . . . . . . . . . . .
Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Health . ....... . ............ . .... . ........ . .. . .... .. ...
Income security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Veterans benefits and services . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Law enforcement and justice... . . . . . . . . . . . . . . . . . . . . . . . . . .
General government. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revenue sharing and other fiscal assistance . . . . . . . . . . . . . . . . .
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other .. .. ..... ... ............. . . ... . .. . ...... . . . .... . .
THE BUDGET PROCESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BUDGET TABLES. . . . . . . ...... . . .. ... .. . .. ......
GLOSSARY OF BUDGET TERMS .. . . . . . . . . . . . . . . . . . . . .
3
9
17
21
27
28
31
33
34
37
38
40
42
44
45
48
51
53
54
55
57
58
59
64
82
Note. - All years referred to are fiscal years, unless otherwise noted. Details in
the tables, text, and charts of this booklet may not add to totals because of
rounding .
Back-up da ta for charts in this book can be obtained from the Office of M a nagement and Budget, Washington, D .C . 20503.
1
Federal Outlays* as a Percent of GNP
Percent
Percent
3O-r------------~-----------,r- 30
20
20
10
10
0
0
1968
70
72
74
76
78
Fiscal Years
• Includes Outlays of Off-Budget Federal Entities
82
80
Estimate
Projection
Shares of the Budget
Percent
Percent
60
60
50
50
" ' Benefit Payments to
Individuals and Grants
40
40
30
30
National Defense/
20
20
Percent of Total Outlays
10
0
1968 69
Fiscal Years
2
70
71
72
73
74
75
76
10
77
78
Estimate
79
0
BUDGET MESSAGE OF THE PRESIDENT
To the Congress of the United States:
The budget is the President's blueprint for the operation of the
Government in the year ahead. It records his views on priorities
and directions for the future-balancing the American desire to
solve every perceived problem at once with the practical reality
of limited resources and competing needs.
The thirty budgets I have either shaped or helped to shape are
a chronicle of our lives and times. They tell us what we have
aspired to be and what we have been in fact. They tell us about
the growing complexity of our society, about the changing and
growing role of our Government, and about new problems we
have identified and our attempts to solve them.
In shaping my budgets as President, I have sought to renew
the basic questions about the composition and direction of the
Government and its programs. In my reviews of existing and proposed programs and activities I have asked:
-Is this activity important to our national security or sense
of social equity?
-Is this activity sufficiently important to require that we tax
our people or borrow funds to pay for it?
-Must the Federal Government raise the taxes or borrow the
funds or should State or local government do so?
-Should the Federal Government direct and manage the activity or should it limit its role to the provision of financing?
-How has the program performed in the past? Have the
benefits outweighed the costs in dollars or other burdens
imposed?
-Have the benefits gone to the intended beneficiary?
-Does this activity conflict with or overlap another?
As a result of these reviews I have proposed to reverse some
trends and to accelerate others.
I have proposed, and repropose this year, a marked slowdown
in the rate of growth in Government spending. Over the last
three decades, Federal, State, and local government spending
has grown from 18% of GNP to 34% of GNP. Federal spending
growth alone has averaged 10% per year over the last decade.
3
240-400 0 - 77 - 2
And even these percentages do not tell the whole story. As the
budget documents illustrate, there has been a trend over the last
few years toward so-caIled "off-budget" spending. This is an
undesirable practice because it obscures the real impact of the
Federal Government and makes it more difficult for any but the
most technically knowledgeable citizens to understand what their
Government is doing. Therefore, I am calling for legislation to
halt this practice so that our budget system will fully reflect the
financial activities of the Government.
In a related attempt to gain greater control over the rate of
growth of Government spending I have given special attention
this year to spending plans for fi~cal year 1979. For the first time,
the Federal budget shows detailed planning amounts for the year
beyond the budget year. This innovation grows out of my conviction that our only real hope of curbing the growth of Federal
spending is to plan further in advance and to discipline ourselves
to stick to those plans.
Although from the standpoint of deficits of most recent years
the 1978 budget I present shmvs us fairly close to balance in 1979
and shows balanced budgets thereafter, I regret not being able
to show total balance in 1979. The effects on 1978 and 1979
spendinfS of congressional action in the last session rejecting
many of the restraints I proposed for the current fiscal year, 1977,
made this impossible unless I was willing to abandon, at least
in part, the further immediate tax relief I have advocated since
October of 1975 and, for no reason other than being able to show
such a 1979 balance, cut back from program levels I feel are justified. These alternatives were unacceptable, but given the greatly
reduced deficit for 1979 this budget implies, congressional cooperation on the restraints I propose and a slightly better economic
performance in the months ahead than we have used in preparing
this 1978 budget, it is entirely possible that when the 1979 budget
is due to be submitted, a year from now, it could be in total
balance as I have strived to achieve.
With restraint on the growth of Federal spending, we can
begin to provide permanent tax reductions to ease the burden
on middle-income taxpayers and businesses. For too long Government has presumed that it is "entitled" to the additional tax
revenues generated as inflation pushes taxpayers into higher tax
brackets or as the national product increases. We need to reverse
this presumption. We need to put the burden of proof on the
Government to demonstrate the reasons why individuals and busi-
4
nesses should not keep the income and wealth they produce.
AccordinRly. my 10nR-term budget projections assume further
tax relief will be provided, rather than presuming, as has been
the practice in the past, that positive margins of receipts over
expenditures that show up in projections are "surpluses" or "fiscal
dividends" that mmt be used primarily for more Federal spending, on existinR or new programs or both.
One trend has been reversed in the past two years. After several years of decline in real spending for national security purposes the Congress has agreed in substantial part to my recommendations for increases in defense spending. The budget I
propose this year and the planning levels for the succeeding four
years assume a continuation of this real growth trend. My recommendations are the result of a careful assessment of our own
defense posture and that of our potential adversaries. In this
area as in all others, I am recommendinR spending I consider
essential while at the same time proposing savings in outmoded
or unwarranted activities. For the longer term, my recommendations recognize the simple fact that we must plan now for the
defense systems we will need 10 years from now.
This same approach was reflected last year in my recommendations for the Federal Government's basic research and development programs. In spite of the financial pressures on the Federal
budget, I recommended real Rrowth. I am again proposing real
growth for basic research and development programs this year
because I am convinced that ,ve must maintain our world leadership in science and technology in order to increase our national
productivity and attain the better life we want for our people
and the rest of the world.
I am also calling aRain for an end to the proliferation of new
Federal programs and for consolidation of many of the programs
we now have. At last count there are] ,044 programs identified
in the Catalog of Federal Domestic Assistance. While our Nation
has many needs, there is no rational justification for the maze
that has been created.
Overlap and duplication are not the only defects of these
programs; nor are they the most serious. More importantly the
current programs too often fail to aid the intended beneficiaries,
rewarding instead those who have learned how to work the Washington system. Some of these programs fail to pinpoint responsibility and accountability for performance and too many of them
impose a managerial and operating burden on the Federal Gov-
5
ernment, diverting attention from the functions that must be
performed at the Federal level and at the same time usurping the
proper roles of State and local governments and the private
sector.
If we could ever afford the "luxury" of this inefficiency and
ineptitude, we can no longer. Federal programs for health services, elementary and secondary education, child nutrition and
welfare, for example, are areas that desperately need reform.
I called for action last year and prepared detailed legislative proposals. Those who truly care about the needs of our people will
not let another year go by without reform. There is no excuse,
for example, for the Federal Government to have 15 different
child nutrition programs spending over $3 billion per year and
still have 700,000 children from families below the poverty line
who receive no aid. Nor is there any reason to take the money out
of the general taxpayers' pockets to subsidize their own children's school lunch.
It will take real courage to correct these problems and the
others I have identified for congressional action without following the all too familiar pattern of the past-simply adding more
programs. But, increasingly, courage is not a choice; it is an absolute requirement if we are to avoid ever larger, less responsive
government.
The task ahead will not be easy because it will require some
fundamental changes in our expectations for Government. As
a start, we need to understand that income and wealth are not
produced in Washington, they are only redistributed there. As
a corollary, we need to overcome the idea that Members of the
Congress are elected to bring home Federal projects for their
district or State. Until this idea is totally rejected, higher funding
levels for old programs and more new programs will be enacted
each year as Members of the Congress seek to insure their reelection. We also need to overcome the prevalent attitude that only
new programs with multibillion dollar price tags are worthy of
media attention and public discussion and worthy of being judged
bold and innovative. The multitude of programs already in a
budget of more than $400 billion and initiatives to do something
about them are worthy of intense public scrutiny, discussion and
judgment in their own right.
These changes in attitude will require leadership not only by
the executive branch, but, at least equally important, on the part
of each Member of the Congress. Members of the Congress must
6
begin to share the burden of the President in saying no to special
interest groups-even those in their own districts.
The changes that have occurred in the congressional budgetmaking process in recent years provide some basis for optimism
for the future. The new budget committees have begun to provide
a counterbalance to the spending and taxing committees, offering
hope that the total effect of the splintered actions of the other
committees will be given equal weight in the congressional
process.
But more progress is needed. Just as the budget process cannot
do the whole job in the executive branch, it cannot in the Congress either. No matter how streamlined and properly organized
the departments and agencies of the executive branch or the
committees and subcommittees of the Congress become-and
there is surely room for substantial improvement in this respect
at both ends of Pennsylvania Avenue-the executive branch must
continue to refine and the Congress must adopt processes whereby
recommendations to the President or to the House or Senate,
as the case may be, on major issues are developed by task force
groups representing the competing priorities of various departments and agencies and the various congressional committees
and subcommittees. The reason is simply that most major issues
cut across jurisdictional lines, no matter how well drawnenergy, international affairs, and welfare reform, to name but
a few examples. I urge the new Administration to build on what
has been accomplished in this regard in the executive branch.
I urge the Congress promptly to put into place the necessary
counterpart mechanisms. Such improvements in process, coupled
with further progress in the development of the budget process,
will help substantially in addressing and meeting our problems
and attaining the goals we have set for our Nation.
The last thirty budgets record a turbulent period in our history: wars, domestic strife, and serious economic problems. In
the last two years, we have laid the foundation for a positive
future. We have stabilized international relationships and created
the framework for global progress. At home, we have restored
confidence in government while reversing the trends of inflation
and unemployment. Building on this solid base, tbe policies and
programs contained in this budget can help us to fulfill the
promise of America.
GERALD
JANUARY
R.
FORD
17, 1977.
7
Budget Totals Since 1976*
$ Billions
$ Billions
600
600
_Receipts
500
•
Outlays
400
DOff-Budget
Outlays
422.0
373.7
476.9
500
400
300
300
200
200
100
100
0
0
1976
1977
1978
1979
Fiscal Years
Estimate
·Includes Outlays of Off-Budget Federal Entities
Federal Outlays - Constant 1978 Dollars
$ Billions
$ Billions
500-.--------------------------------------.-500
400
400
300
300
200
200
100
100
National Defense
o~----~----~----~----~----~----o
1950
Fiscal Years
8
55
60
65
70
75
79
Estimate
Part I
BUDGET OVERVIEW
The budget is designed to serve several purposes.
• It is an economic document that reflects the taxing and
spending policies of the Government for promoting economic growth, high employment, relative price stability,
and a strong balance-of-payments position.
• It proposes an allocation of resources between the private
and public sectors and within the public sector. Through its
impact on consumption and investment decisions and the
distribution of income it also affects allocation decisions
within the private sector.
• It sets forth the President's request to Congress for appropriation action on existing or new programs and for changes
in tax legislation.
• It is a report to the Congress and the people on how the
Government has spent the funds entrusted to it in past years.
It tells us where we have been: where we are, and where the
President recommends that we go.
Th e budget totals.-The President's budget recommendations
call for outlays of $440 billion in 1978, an increase of 7.01)10
from this year, and $466 billion in 1979, an increase of 5.91)10
from 1978. In the 10 years through 1977 increases in budget
outlays average 10% a year. A number of program restraints
and reforms, resulting in $12.4 billion in savings in 1978 and
$22.4 billion in 1979 will be necessary to hold the increase
in Federal spending to the amounts in this budget. These
spending restraints and reforms make it possible to provide added
funds for high-priority programs, to reduce income taxes in 1977
and again in future years and, at the same time, to reduce the
deficit to near balance in 1979. Most of the savings from spending restraints and program reforms will require congressional
agreement.
The President proposes a reduction in income taxes, retroactive to January 1, 1977, that will provide $7.2 billion of tax
relief in 1977 and $14.7 billion in 1978 relative to extension
of current tax law. He also proposes further income tax cuts
of $7.3 billion in 1980, $19.6 billion in 1981, and $30.6 billion
in 1982 to offset the rise in effective tax rates that would other
9
wise occur as inflation and real growth move taxpayers into
higher tax brackets.
Major changes are also proposed in the structure of the income
tax system, such as integration of individual and corporation
income taxes to eliminate double, taxation of corporate dividends.
An increase in social security tax rates is necessary to maintain
the financial integrity of the system. Taking these tax proposals
into account, total anticipated receipts are $393 .0 billion for
1978, an increase of 11.00/0 from this year, and $454.4 billion for
1979, an increase of 15.60/0 from 1978.
o If-budget outlays.-Not all budget authority and outlays of
Federal agencies are included within the budget totals; some
fiscal entities (most of which carry out loan programs) are required under provisions of law to be excluded from the budget.
Such "off-budget" spending does not differ in nature, in effect,
or in concept from spending under similar programs included
in the budget; financing of this spending adds to F ederal -borrowing requirements and to the Federal debt. The President
recommends legislation to include the transactions of off-budget
Federal entities in the budget beginning with next year's budget.
Additional focus on out-years.-In an effort to focus more
attention on the crucial "outyear" effects of current proposals,
last year's budget discussion of the Federal program by function
noted the next year's effects of major proposals. This budget
goes further. Most tables and charts in this document display
THE BUDGET MARGIN, 1977-82
[In billions of dollarsl
1977
1978
1979
1980
1981
1982
Receipts under current law and
tax proposals and adjustments.
Outlays under current and proposed programs .. .. .........
354. 0
393. 0
454.4
510.0
553. I
587. 3
411.2
440. 0
466. 0
496. 6
527. 0
558. 7
Margin under current
law and
proposed
changes . . . ... .......
Deficit oj off-budget Federal entities.
-57.2
-47.0
-II. 6
13.4
26. I
28. 6
-10.8
-9. 2
-10.9
-12.1
-13. 1
-14.3
Margin including off-budget
Federal entities 1 . . . . . . .
-68.0
-56.1
-22.5
1.4
13.0
14.3
For possible kinds of uses of the margins, see text following next table.
1979 amounts in addition to amounts for the budget year 1978.
These 1979 figures reflect, insofar as practicable, not only the
1979 effects of the 1978 budget, but anticipated 1979 initiatives
as well.
10
The need to look ahead is well demonstrated by the tables
showing the budget margin to 1982 with and without Presidential
budget: proposals. The first table, The Budget Margin, 1977-82,
shows the longer term implications of this budget. The following table, The Margin, 1977-82, Without the President's Proposals, is intended to indicate what such margins in the outyears
might look like if the President's proposed spending restraints
and reforms and proposed tax changes were not adopted.
THE MARGIN, 1977-82 WITHOUT THE PRESIDENT'S PROPOSALS
[In billions of dollars]
1977
1978
1979
1980
1981
1982
360.9
407.6
465.0
526.4
584.6
634.8
411. 2
445.4
472.7
502.1
531. 5
564.8
Deficit of off-budget Federal entities. .
- 50.3
-10. 8
-37.8
- 9.2
-7.7
- 10.9
24.3
-12. 1
53.0
-13. 1
70. 0
- 14.3
Margin, including off-budget Federalentities...........
-61. 1
-46.9
-18.6
12.2
40.0
55. 7
-6.9
-14.9
-10.6
-9. 1
-11.9
-16.9
- 7. 3
- 19. 6
- 30. 6
Receipts under current tax law,
extended... . . .......... .. .
Outlays without proposed increases or restraints ... : .. .. .
Margin, without the President's proposals. ........
MEMORANDUM
Examples of possible use of the
margin: 1
The President's tax program
(net) exclusive of next line
item ...................
The President's proposal to
reduce the average individual income tax rate to
1979 level " " .. .. .. .. .. .
Further reduction of the
average individual income
tax rate to 1977 level. . . . . .
Infiationadjustments 2 • • • • . .
Costs of renewal of antirecession financial assistance and
other temporary programs.
Debt reduction (up to H%
of GNP). . . . . . . . . . . . . . . .
New programs and program
growth .... " .. .. .. ..
Other tax relief for individuals and tax incentives for
business .. " .. .. .. .. .. ..
-2.1
-4.7
- 16. 7
-7.1
- 26. 9
-9.4
- 29. 0
-11.5
- 2. 0
- 2. 8
- 2. 0
-. 7
- .5
-12.6
-13.7
-14.6
(3)
(3)
(3)
(3)
(3)
(3)
1 It is obvious that some of these alternatives are mutually exclusive if the budget is to remain in balance
in 1980-82.
2 This outlay adjustment is for inflation only in programs that were not so adjusted in arriving at the
outlays shown in the table. See text.
3 Amounts are dependent on costs of the particular initiatives undertaken.
The first table illustrates that the President's program yields
a margin of $14.3 billion in 1982 after taking into account the
off-budget outlays. However, the only reason there is a margin
is the automatic increase in the ratio of tax liabilities to per240 - 400 0 - 77 - 3
Il
sonal income that occurs between 1977 and 1979 as inflation
and real growth push taxpayers into higher tax brackets after
1977. (The President's proposed tax cuts for 1980-82 mentioned
earlier would prevent such increases after 1979 ) . Additional
personal income tax cuts of $16.7 billion in 1980, $26.9 billion
in 1981, and $29.0 billion in 1982 would be required to reduce
the tax burden to the proposed 1977 level.
The second table shows the budget margin using current tax
law extended to determine receipts and using a current services
concept to determine outlays. Under that concept, the outlay
estimates reflect the anticipated cost of continuing Federal pro-grams without the policy changes proposed by the President.
Even though outlays on a current services basis are considerably higher than under the Presidentj; program, the margin is
larger because the tax burden is very much higher without the
President's recommendations. His recommended personal income tax reductions and social security tax increases provide
a net reduction in the tax burden of $47.5 billion by 1982.
Even though the margins in the second table are larger than
the margins implied by the President's program, it can easily
be shown that ~n either case there are competing uses of resources
in the 1980's, which could far exceed the margin. The memorandum section of the table clearly illustrates this point. First,
the only reason that there is any margin at all is that automatic
increases occur in thel average personal income tax rate as inflation and real growth push taxpayers into higher tax brackets
after 1977. The first two line items in the memorandum section
illustrate the net effect on such margin of the President's tax
proposals. Since the outlays in the table do not reflect the President's outlay constraints, the President's tax proposals would
more than absorb the margin in 1980, but do leave some margin
in 1981 and 1982. The third line item shows the additional tax
cut that would be necessary to reduce the ratio of individual
income tax liabilities to personal income in the outyears back
down to the 1977 ratio that results from the President's proposals. This would more than absorb the remaining 1981 and
1982 margins.
Current services outlay estimates only adjust indexed programs and major capital purchases forinflation, and, therefore,
imply that the level of other programs in constant dollars erodes
through time. The fourth line item shows the inflati.o n adjustment necessary to prevent such erosion in program levels. The
12
fifth line item shows the impact of limited renewal of antirecession programs enacted as temporary programs. The sixth
line item shows the amount that would be required to reduce
the national debt by one-half of 1 percent of GNP. Obviously,
to attain this level of debt reduction in 1980 there would have to
be some cut in outlays from current services levels. New programs, program growth, or other tax cuts are also possible uses
of the margin, the cost of which would be dependent on the
particular initiatives.
I t is recommended, as a useful next step in the improvement
of the Government's budget process, that next year's budget
also give such additional attention to the second year beyond the
budget year rather than just the first. It would also be useful
for congressional budget data consistently to reflect the longer
range impact of budget year data at each step in the congressional budget process.
Changes in the budget over tim e.-Notwithstanding every
effort to refine and apply the best estimafing techniques available, the estimates set forth in the budget will tum out to be
different from the actual figures recorded at the end of 1978-1
year and 8 months from the time they are submitted to the Congress. There will be many reqsons for the differences. Economic
assumptions underlying the budget estimates are never completely accurate. Differences between actual economic conditions
and those assumed can materially affect both outlays and receipts. Furthermore, the rate at which individuals or States and
localities apply for benefits to which they are automatically
entitled under law can have a major effect on the level of
Federal spending. Finally, congressional rejection of Presidential
decisions and other factors can also cause substantial changes to
the budget estimates. These points are well illustrated by what
happened to the budget for 1976 and the transition quarter,
now completed, and what has happened thus far to the 1977
budget.
Budget proposals.-In his budget message last year, the President stated that an important dimension of the budget is the
way it sorts out priorities and that in formulating the 1977 budget
he tried to achieve fairness and balance:
-between the taxpayer and those who will benefit by Federal
spending;
-between national security and other pressing needs;
-between our own generation and the world we want to leave
to our children;
13
-between those in some need and those most in need;
-between the programs we already have and those we would
like to have;
-between aid to individuals and aid to State and local
governments;
-between immediate implementation of a good idea and the
need to allow time for transition;
-between the desire to solve our problems quickly and the
realization that for some problems, good solutions will take
more time; and
-between Federal control and direction to assure achievement of common goals and the recognition that State and
local governments and individuals may do as well or better
without restraints.
The President's 1978 budget decisions were made on the same
basis. This budget proposes increases for those areas that must
have high priority, such as basic programs that meet essential
human needs, defense and energy. At the same time, to permit
these high-priority increases and yet slow the rate of growth of
total Federal spending to a rate that is compatible with tax relief
and sustainable over time, spending for many programs has been
restrained-in some cases slightly, and, in others, substantially.
Among the major program expansions and new programs
proposed in the 1978 budget are defense modernization, increases
in education and health programs, several important energy
initiatives, increases in research and development programs, and
the Bicentennial land heritage program.
A responsive government adjusts its activities to changing
. national needs. Some programs prove to be ineffective, become
obsolete or outmoded, achieve their purposes, or decline in relative priority. Further, there is a need for continuing evaluation
of the proper Federal role in all program areas.
Unless vigorous and determined efforts are made, programs
that should be restructured, reduced, or terminated continueand their costs grow. In so doing, they can prevent otherwise
efficient governments from operating within the limits of sound
fiscal policy. The 1978 budget incorporates the results of an
intensive effort to identify programs that should be reduced,
terminated, or reformed. A detailed listing is provided in Part 2
of the Budget document.
The budget and the economy.-There is a two-way relationship between the economy and the budget. Both the tax structure
and budget outlays can have a substantial effect on national out14
put, employment, and inflation. At the same time, outlays for
many Federal programs are directly linked to developments in
the economy, and this linkage has become increasingly strong in
recent years. For example, most retirement and other social insurance benefit payments are now tied by law to cost-of-living
indexes. Medicare outlays are affected directly by the price of
medical services. Interest on the debt is linked to general market
interest rates and the size of the budget surplus or deficit, which
in tum are influenced by economic conditions. Of course, to the
extent that outlays rise automatically in response to inflation the
budget is less effective in counteracting inflationary pressures
than it would be if these linkages did not exist.
Another type of linkage to economic events is outlays for unemployment and certain other benefits, which vary with the unemployment rate. In addition, budget receipts vary in accordance
with individual and corporate incomes and the wage base, all of
which respond to both real economic growth and inflation. Thus,
receipts and some benefit payments serve as "automatic stabilizers" for the economy by both restraining inflation and cushioning economic downturns.
The following table presents the underlying economic assumptions that have been used for purposes of developing budget estimates. In keeping with most economic data series, these assumptions are presented on a calendar year basis, whereas the budget
estimates are presented on a fiscal year 9asis. These assumptions
are forecasts of probable economic conditions during 1976, 1977,
and 1978, and are presented to provide the Congress and the public with information tha may be helpful in understanding and
assessing the budget estimates.
Budget trends.-Over the past two decades, there has been
a significant shift in the distribution of Federal resources. Table
5 in Part VI illustrates this shift. Nondefense spending on paySHORT-RANGE ECONOMIC FORECAST
[Calendar years; dollar amou nts in billions]
Forecast
1975
Item
actual
1976
Gross national product:
Current dollars ......... .. ......... .
Constant (1972) dollars:
Amount. .. . .............. . ... .. .
Percent change ............. ... . . .
Prices (percent change):
GNP deflator 1 . . . . . . . . . . . . . • •• . . . .•.
Consumer Price Index 2 • • . • . . . • • . •.•.
Unemployment rate ... .. . ............ .
I
2
1977
1978
$ 1,499
$ 1,693
$ 1,880
$2,092
$ 1, 186
-2.0
$ 1, 265
6.2
$ 1,331
5. 2
$ 1,398
5. 1
7.1
7.0
8.5
4.7
4.8
7. 7
5. 9
5. 3
7. 3
5. 7
5. 2
6.6
Percent change, fourth quarter over fourth quarter.
Percent change , December over December.
15
ments to individuals and grants to State and local governments
rose on an average 9.5 0/0 per year, and a total of more than 5000/0,
even when adjusted for inflation, over the 20-year period ending
in 1976. Before adjustment for inflation, the increase was almost
140/0 per year, or over 1,0000/0. As the addendum to table 5
show~, the largest increases were for direct nondefense payments
to individuals, for programs such as social security and medicare.
The Budget Dollar - Where it Goes
Percent
100
Percent
Percent of Total Outlays
100
75
75
50
50
25
25
o~----~----------~----~----~----~o
1955
1959
1963
1967
1971
1975
1979
Estimate
Fiscal Years
During the same period, spending for defense with a comparable adjustment for inflation declined a total of 110/0, although
it increased 1260/0 before adjustment for inflation. In the 1976
and 1977 budgets, the President initiated a reversal of this trend
toward erosion of the defense budget. He has again proposed
a real increase this year.
The composition of Federal Government receipts has also
changed significantly. The most significant shift has been the
increase in relative importance of social insurance taxes and
contributions from 22.60/0 of total receipts in 1968 to 32.1 % in
1978. By 1982, this percentage is expected to increase further to
33.60/0 .
16
.
PART II
BUDGET RECEIPTS
This section describes the major sources of budget receipts
for 1976 to 1979 and discusses the legislative proposals affecting
them. The economic forecast underlying the estimates through
calendar year 1978 are presented in Part I. Longer range economic assumptions and estimates of receipts are presented in
Part III.
Total budget receipts in 1978 are estimated at $393 billion,
11 % more than the $354 billion estimated for 1977. Receipts
in 1979 are estimated at $454 billion. About 90% of these receipts
result from individual and corporation income taxes and from
payroll taxes levied on wages and salaries, most of which are paid
equally by employers and employees.
Budget Receipts: 1968-1979
$ Billions
$ Billions
5OO~----------------------------------~5oo
400
400
Excise and Other
300
300
Social Insurance Taxes and
Contributions
200
200
100
Individual Income Taxes
o
1968 69
100
Corporation
Income Taxes
0
70
Fiscal Years
71
72
73
74
75
76
77
78
79
Estimate
17
Enacted and Proposed Tax Changes
In the last 2 years, three major laws have changed individual
and corporation income taxes. First, the Tax Reduction Act of
1975 provided a partial rebate of calendar year 1974 individual
income taxes, a number of temporary red~ctions in individual
and .corporation income tax liabilities, generally applicable to
calendar year 1975, and a few p ermanent changes in the tax
structure. The Revenue Adjustment Act of 1975, enacted later
the same year, provided tax reductions for the first 6 months of
calendar year 1976. For corporations, the act extended the temporary rate reductions enacted in the Tax Reduction Act. For
individuals, however, larger temporary reductions were enacted.
The third major act affecting individual and corporation income
taxes (as well as estate and gift taxes) was the Tax Reform Act
of 1976. This act extended some temporary provisions scheduled
to expire and made others perm anent. It also enacted a number
of major tax reforms and other changes. The table below shows
the effect on budget receipts of these acts for 1975-79.
EFFECT OF ENACTED LEGISLATION
[In billions of dolla r s l
Legislation
W75
Tax R educ tion Act of 19 75 .. . .
R evenue Adjustment Act of
1975 .. . . .. ......... . .....
T a x R efor m A c t of 19 76 I . . . . .
- 10.2
TotaL ....... . . . .
Individua l income t a x ....... .
C orporation inc ome ta x ... .. ..
O t h er (larg ely esta te a nd g ift ).
-10. 2
- 15. 8
-9.4
- .8
- 13.2
-2.6
1976
TQ
1977
1978
1979
- 9.9
- .2
.4
2. 8
3. 2
-6.0
- .5
- 2.8
-1. 3
-1 5 . 3
-11. 9
-7. 1
- 3. 5
-16.2
-9.2
-3.9
-3.0
- .4
-1 4.3
-1. 9
-7.9
-. 5
-. 7
- 3.9
1.0
-1.0
*
'Less than $50 million.
1 Includes the effect of interim legislation that extended individual income tax wi thhold ing rates and
corporation income t ax rate reductions from July 1. 1976 to Oct ober 4, 1976, when the T ax R eform Act of
1976 was enacted.
The budget reflects the President's proposal for permanent
income tax reductions to become effective retroactive to January
1977. These reductions-which include replacement of some
temporary provisions of the Tax Reform Act-would reduce
receipts by $7.2 billion in 1977, by $2 2.6 billion in 1978, and by
$27.3 billion in 1979. In comparison to the receipts that would
result from extending the temporary provisions of the Tax Reform
Act, the reductions in receipts are $7.2 billion in 1977, $14.7
billion in 1978, and $13.7 billion in 1979.
In addition to these income tax reduction proposals, the President is making a number of other tax proposals.
18
He is repeating his proposal for corporation income tax integration. Under the current system of taxation, the Federal Government taxes income earned by corporations twice: first when
it is earned by the corporation and again when it is distributed to
the shareholder as a dividend. This double taxation would be
eliminated in six phases, beginning in January 1978, and would
reduce receipts by $1.1 billion in 1978 and $3.1 billion in 1979.
The President is again proposing increases in the social security
tax rate. Under current law, this rate increases from 11.7 0/0 to
12.1 % in January 1978. The proposal increases rates to 12.30/0
in January 1978, to 12.9% in January 1979, and to 13.2 0/0 in
January 1980. The 0.5 percentage point increase scheduled to
occur in .Tanuary 1981 under current law would increase this
rate to 13.7 0/0. These rate increases, which raise receipts by $1.3
billion in 1978 and $6.4 billion in 1979, are needed to place
the social security trust fund on a sound financial basis. In their
absence, the social security system could use up the trust fund's
resources by 1982.
The President is proposing a number of other tax proposals,
including: a tax incentive to encourage investment in high unemployment areas and to thereby stimulate employment; a 15 %
income tax credit applicable to the cost of energy-saving home
improvements; a taxable municipal bond option with a 30%
subsidy to improve the efficiency of the municipal market; and
repeal of the inequitable employee stock ownership plans
(ESOP's) recently enacted by the Congress.
EFFECT OF PROPOSED LEGISLATION ON RECEIPTS
[In billions of dollars1
In comparison to current law:
Individual income tax ................. . ......... .
Corporation income tax. . .
. . .. . . ... .. ... ... . .
Social insurance taxes ...... . .. . . . . . .. . . . . . ... . . .
Other. . ... . ... .
. ......... . ... .
Total. .................................... .
In comparison to extension of temporary tax reductions:
Individual income tax .......................... .
Corporation income tax .................... . .. .. .
Social insurance taxes ..... . .. . . . ... . . . . ... .... . .
Other ........................... .
Total .................. . . . ... .
1977
1978
-6.0
-I. I
.2
-19.2
-4.7
1. 3
.I
-22.5
-8.3
6.4
.I
-6.9
-22.5
-24.3
-6.0
-1.1
.2
-12.4
-3.6
1. 3
.I
-II. 2
-5.9
6. 4
.I
-6.9
-14.6
-10.6
In addition, the President is proposing further income tax
cuts in 1980-82 to offset the rise in effective tax rates that would
240~400 0 - 77 - 4
19
otherwise occur as inflation and real growth move taxpayers
into higher tax brackets. In the absence of legislated tax reductions, this rate rises over time as inflation and real growth move
taxpayers into higher tax brackets. Even with this proposal the
effective tax rate would be higher during 1979 to 1982 than in
1977 because of the rise in the effective rate from 1977 to 1979.
The'preceding table shows the effects of the President's tax proposals both in comparison to present law, under which a number
of temporary provisions of the Tax Reform Act of 1976 would
expire December 31, 1977, and in comparison to extension of
such temporary income tax reductions.
RECEIPTS BY SOURCE
The table below shows budget receipts by source for 1976
to 1979; the estimates reflect recent changes in the tax structure and the President's tax proposals discussed above.
Individual income tax receipts are estimated at $151.1 billion
in 1977, $171.2 billion in 1978, and $205.3 billion in 1979. Corporation income tax receipts are estimated at $56.6 billion in 1977,
$58.9 billion in 1978, and $63.7 billion in 1979.
BUDGET RECEIPTS BY SOURCE
[In billions of dollars]
Source
1976
actual
TQ
actual
1977
1978
estimate
estimate
1979
estimate
Individual income tax ......... . ......
Corporation income tax ... .. .. .. .....
Social insurance taxes and contributions.
Excise taxes ... . ..... . ..............
Other receipts . .. .... ... . .. . .... . ...
131. 6
41. 4
92. 7
17.0
17.3
3B. B
B. 5
25.B
4. 5
4. 3
153. I
56.6
lOB. 9
17.9
17.5
171. 2
5B. 9
126. I
lB. 5
IB .3
205.3
63. 7
146. 2
19. I
20. I
Total. .................... . . .
300.0
BI. B
354.0
393. 0
454.4
Receipts from social insurance taxes and contributions are
expected to total $126.1 billion in 1978, up by $17.2 billion from
1977, and are estimated at $146.2 billion in 1979. These receipts
include social security and other payroll taxes, unemployment
insurance taxes, Federal employee retirement contributions and
premium payments for supplementary medical insurance.
Excise taxes and other receipts, consisting of estate and gift
taxes, customs, and miscellaneous receipts, are estimated to increase steadily, rising from a combined total of $35.5 billion in
1977 to $39.1 billion in 1979.
20
PART 1/1
The Long-Range Outlook
The effects of current decisions extend beyond the budget year.
They establish program trends that have important influences
on the size and composition of budgets for years into the future.
Just as the composition and level of the 1978 budget have been
largely determined by past decisions, the decisions and proposals
it embodies can strongly affect subsequent budgets. Thus, major
program decisions in .the 1978 budget significantly affect the
swing from an estimated $47 billion deficit in 1978 to a budget
that could be balanced within 2 years.
The long-range estimates in the 1978 budget depart significantly from those developed in previous years, with increased
emphasis on the so-called "out years." First, budget figures for
the "budget year plus-one," in this case 1979, were reviewed by
the President in far greater detail than has been the case in the
past, and many decisions for 1978 were based on 1979 budget
implications. Second, general policy assumptions are reflected
in 1980-82 estimates. For example, individual income tax cuts
are proposed in 1980-82 to offset the rise in effective tax rates
that would otherwise occur as inflation and real economic growth
move taxpayers into higher tax brackets.
Economic assumptions.-Economic conditions significantly
affect spending programs and receipts. Decisions on spending
programs and taxes, in turn, significantly influence economic
conditions. The increasingly strong linkages between the economy and the budget mean that any projection of budget receipts
and outlays is in large part determined by the economic assumptions that underlie it.
The fOllowing table presents the economic assumptions that
underlie the long-range budget projections. These assumptions
are derived quite differently from those presented in the shortrange economic forecast in Part I. The longer range assumptions
are not forecasts of probable economic conditions, but rather
projections consistent with moving gradually toward a relatively stable price level and a lower level of unemployment. Any
21
economic forecast is subject to substantial error. Even the 1977
forecast involves considerable uncertainty, but the degree of
uncertainty rises rapidly in attempting to foresee economic
activity in 1978. Beyond 1978, it is impossible to make a forecast with any degree of reliability. It is for this reason that the
data in the following table are projections rather than predictions. They are generated in order to provide a consistent set of
budget estimates. There is no intent to imply that the economy
will follow the exact path derived from these assumptions. Nor
do they represent a blueprint for economic policy.
LONG-RANGE ECONOMIC ASSUMPTIONS
[Calendar years; dollar amounts in billions]
Item
Gross nationa l product :
Current doll ars . . ....... .. . . ... . .. ... . .
Constant (1 972 ) doll ars :
Amount . .............. . .. . .. . .. ... .
Percen t ch a nge ... ... .. .. . .... . ......
Price level (percent ch ange):
GNP defl ator! ........ .. . .. .. .. ........
Consumer Price Index 2 • • • . • • • • . • • . • • • . •
Unemployment r ate (percen t) . ............
1
2
1979
1980
1981
1982
$2, 334
$2, 579
$2,784
$2, 963
1,480
5. 9
1,562
5. 5
1,623
3. 9
1, 680
3. 5
5.2
4.9
5. 7
4. 4
4.3
4.9
3. 5
3. 4
4. 8
2. 5
2.4
4. 7
Per cent chan ge, fou r th qua r ter over fourth quarter.
Per cen t cha nge, December over December.
Other basic assumptions.-The receipts projections are consistent with the foregoing economic assumptions, and with continuation of current tax laws as modified by the proposals
contained in this budget. The outlay and budget authority
projections indicate the degree to which resources would be committed by the continuation of existing and currently proposed
programs at the program levels recommended for 1977, 1978,
and 1979. The projections are not forecasts of future receipts,
outlays, or budget authority, though explicit decisions were in
fact made regarding receipts in the period 1979-82, and in so
far as practicable, for initiatives affecting 1979 outlays and
budget authority.
These projections provide for future cost-of-living adjustments
to most benefit levels, Federal pay raises, and other built-in cost
increases (such as interest ) . They also provide for growth in real
terms for certain programs, including the health and education
block grants, defense procurem ent, construction, and related
activities. The remaining programs are held level in current
22
dollars except where there is an explicit budget recommendation
to increase or decrease program levels over time.
The fiscal outlook.-Under the assumptions used above, receipts are expected to rise 10.6% per year from 1978 to 1982.
Over the same period, outlays are projected to rise 6.2 % per
year. By 1982, a budget margin of $29 billion is projected. After
including outlays of off-budget Federal entities, this margin is
cut in half.
It is sometimes assumed that such a budget margin is automatically available for new outlay programs. However, this conclusion is not warranted. For many spending programs, such
as veterans benefits and a number of grant programs, the projections assume that there will be no outlay increases due to
inflation. An adjustment to hold these programs constant in real
terms would further reduce the 1982 margin. Finally, the attainment of our national economic goals in the 1980's will require
enormous amounts of capital. Most economists would argue that
in an economy that is fully employed the Federal Government
should run a surplus to help foster this increase in capital.
The tables in Part 1 show the budget margin that results in
1980-82 with and without the President's proposals. Possible
uses of that margin are also shown. If the tax burden were to
be reduced to the calendar year 1977 level, instead of the calendar year 1979 level as assumed here, the margin would be
fully absorbed. Similarly, a modest surplus equivalent to onehalf of 1% of 1982 GNP to foster needed capital accumulation
would also fully absorb the 1982 margin.
Receipts.-Receipts are projected to increase by 49% from
1978 to 1982. This increase is attributable largely to growth in
tax bases and enacted and proposed increases in social security
taxes.
The President's budget includes major tax proposals, a number of which would become effective retroactive to January 1,
1977. In addition, the President is proposing a longer range
policy of individual income tax "adjustments" to offset the tendency for such taxes to rise as a share of personal income as rising
real incomes and inflation move people into higher tax brackets.
Over the past two decades, legislated tax reductions have offset
implicit increases of this nature. Without these reductions, total
Federal receipts would have risen to a much larger percentage of
GNP than they now claim.
23
PROJECTED RECEIPTS BY SOURCE
[In billions of dollars]
1978
Individual income tax .. . . ...
Corporation income tax .. .. .
Social insurance taxes and
contributions .. . ... .. .. . .
Excise taxes .. . . . . . .. . .. . . .
Other . . . . .. ... .. . ... . ....
Total budget receipts.
1979
1980
1981
205. 3
63. 7
234. I
69. 7
252. 3
74. 7
146. 2
19. I
20. 1
--393. 0
454.4
164.8
19. 6
21. 9
182. 6
20.0
23.5
171. 2
58.9
126. I
18. 5
18. 3
510. 0
1982
267. 7
78.0
196.5
20. I
25.0
--553. 1
587.3
Individual income taxes rise from $171. 2 billion in 1978 to
$267.7 billion in 1982. Corporation income taxes rise by 320/0
over this same period, from $58.9 billion to $78.0 billion. In
comparison to receipts that would result from extending the
temporary provisions of the tax reform act, tax proposals included in this budget reduce individual and corporation income
taxes by $16.0 billion in 1978 and $61.9 billion by 1982. For
a more detailed discussion of these and other tax proposals,
see Part 4 of the budget.
Social insurance taxes and contributions, which have increased
from only 12.5% of receipts in 1956 to almost 31 % two decades
later, are projected to increase by 56% between 1978 and 1982.
This results from scheduled rate increases, proposed supplemental increases, and an expected increase in the taxable earnings base under current law.
Estate and gift taxes, customs, excise taxes, and miscellaneous receipts are projected at $45 .2 billion in 1982, an increase
of $8.4 billion from 1978. These estimates assume continuation
of the 4 cents per gallon Federal excise tax on gasoline and other
highway trust fund taxes, which are scheduled to decline or expire on September 30, 1979, under current law.
Budget outlay trends.-As shown in the table on the budget
margin, outlays are projected to rise from $440 billion in 1978,
and $466 billion in 1979, to $559 billion in 1982. The major trend
in the composition of the budget outlays over the last 20 years has
been the rapid growth of domestic assistance programs and the
corresponding relative decline in spending for direct Federal
operations, particularly (until recently) defense. Direct Federal
operations include Federal purchases of goods and services for l!se
in Government programs such as defense and space explorations,
24
compensation of Federal employees, payment of interest on the
public debt, and energy research and development. Domestic assistance programs, in contrast, include payments to retired, disabled, unemployed workers, to lower income families and
individuals, and aid to State and local governments.
Over the past two decades, outlays for domestic assistance
have been growing much more rapidly than national output, and
more rapidly than total Federal outlays. As the table below shows,
the projections of 1982 indicate that the proposals in this budget
reverse the latter trend.
BUDGET COMPOSITION
[Percent of total outlays]
Actual
Description
1956
1960
1964
Projected
1968
1972
1978
1982
32.5
45.7
54.4
53.7
Domestic assistance .... . ... .
Payments for individuals:
Direct 1 . . . . . . . . . . . . . . .
Indirect (grants-in-aid).
All other grants-in-aid 1 .. .
(I7. 0) (21. 8) (22. I) (22. I) (30.2) (38.2) (39. 9)
(2.5) (2. 7) (3.0) (3.4) (6.3) (5.8) (6. I)
(2.8) (4.9) (5.5) (7.0) (9.2) (10.4) (7.7)
Direct Federal operations ..
National defense ........
Net interest ............
Other .................
77.7
70.5
69.4
67.5
54.4
45.6
46.4
(56.4) (49.0) (44.5) (44.4) (33.4) (25.5) (28.5)
(7.2) (7.5) (6.9) (6.2) (6.7) (7.1) (6.2)
(I 4. I) (I4. 0) (I 8. 0) (I6. 9) (I4. 3) (I3. 0) (I I. 6 )
.
.
.
.
Total budget outlays ..
1
22.3
100.0
29.4
100.0
30.6
100.0
100.0
100.0
100.0
100.0
Excludes military retired pay and grants classified in t he national defense function .
The detailed composition of the 5-year projections of outlays
and budget authority by rna ior function and agency is shown
in Part 3 of the Budget. While total budget outlays increase by
27 0;0 from 1978 to 1982, outlays for health, income security, and
national defense increase faster than total outlays. Health and
income security outlays rise by 360;0 and 34% respectively. The
5-year national defense projection is calculated on the basis of a
significant real increase and rises by 42 %.
The recent large increases and additions to domestic assistance programs have, until recently, been offset by real reductions
in direct Federal operations, particularly defense. Thus, the rise
in outlays for health and for income security-to 45 % of total
outlays by 1982, compared to 33% in 1971-indicates an increased response to human needs, but also a long-range budgetary problem of fundamental importance if these programs were
to grow in the future at the same rate as they have in the past.
25
The budget cannot accommodate the same rates of growth
in the future, and maintain or increase defense and other direct
Federal activities unless the ' Federal Government assumes an
ever-increasing portion of GNP through increased taxes or continued large deficits.
Controllability.-Some Federal programs-primarily in the
area of domestic assistance-create a legal entitlement to benefits for aU eligible recipients. These payments, termed "openended programs and fixed costs," amounted to 36% of the budget
in 1967. By 1973 they were more than 50 0/0 of the budget and in
1978 they are expected to be 580/0. By 1982 they are projected
to be 62% of the budget. In addition, outlays for "prior-year
contracts and obligations" amount to an additional 150/0 to
20% of the budget and are considered relatively uncontrollable
in the short run. The relatively uncontrollable portion of the
budget thus amounts to 75 0/0 to 80 0/0 of the total in the short run.
The degree of uncontrollability in the budget has obvious
fiscal policy implications. Without changes in legislation, attempts to control total budget outlays fall on an increasingly
smaller proportion of the budget. The President has proposed
legislation to restrain the growth of some of the relatively uncontrollable programs.
26
PART IV
THE FEDERAL PROGRAM BY FUNCTION
This section discusses the budget in terms of the major functions or purposes that Federal policies and programs are intended
to serve, regardless of which agencies are carrying them out,
While budget outlays are the most obvious measure of the Federal Government's effect on resource allocation and income distribution, various fiscal activities outside the Federal budget also
have large economic effects, and can generally be viewed as alternative means of pursuing policy objectives. These activities include spending of off-budget Federal entities, spending of privately owned, Government-sponsored enterprises, guaranteed
loans, and tax expenditures. Major activities in these categories
are discussed in the functional sections that follow. More detailed
discussions are provided in Part 2 of the budget and in the
Special Analyses volume of the budget under "Federal Credit
Programs" and "Tax Expenditures."
Off-budget Federal entities are federally owned and controlled,
but their transactions have been excluded from the budget totals
under provisions of law. Therefore, their spending is not reflected
in budget outlays or in the budget surplus or deficit, though Treasury borrowing to finance their outlays does add to the Federal
debt. Spending by these entities (primarily loans) does not differ
in nature or effect from spending of other Federal programs.
Since they are outside the budget, however, these entities are not
subject to the full budget review and control process. The administration is proposing legislation to include off-budget Federal
entities within the budget, thus telling the public more accurately
what the Government is spending and extending the full budget
control process to these Federal activities.
Government-sponsored enterprises are privately owned organizations that have been established and chartered by the Fedenil
Government to carry out special functions. They primarily support housing but also support agricultme and higher education.
240-400 0 - 77 - 5
27
Guaranteed (or insured) loans are loans made by persons 0r
institutions outside the Government for which the Government
guarantees the payment of the principal or interest in whole or
in part. Loan guarantees may significantly affect resource allocation in the economy by diverting private credit from one activity to another. Most guarantees support housing, although in
recent years they have been used increasingly for other purposes.
Loan guarantees do not result in outlays unless a default occurs,
and are not subjected to the same review and control as budget
outlays. It is imperative that the Congress and the Executive
reach early agreement on an effective control mechanism.
Tax expenditures are those revenue losses attributable to provisions of the individual and corporation income tax laws that
allow a special exclusion, deduction, or exemption from income,
a preferential rate of tax, a special credit, or a deferral of tax
liability. Nearly all tax expenditures are intended either to encourage particular economic activities or to reduce the taxes of
persons in special circumstances. Among the economic activities
encouraged are investment, homeownership, spending by State
and local governments, and support of charities. Among the
persons whose tax burdens are lightened are the aged, the unemployed, and those with large medical expenses. Taxes other than
income taxes also affect the economy, as do tax rates, personal
exemptions, and other characteristics of income taxes that are
not defined as resulting in tax expenditures.
National DeFense
A major determinanf of United States defense policy is the
challenge to American security and a stable world order that is
presented by the military capabilities of the Soviet Union and
its allies. Over the past decade the Soviet Union has continued
to maintain a high rate of growth in defense spending, modernizing every major component of Soviet forces. This includes newgeneration intercontinental and submarine-launched nuclear
missiles, advanced ground and air combat equipment, and
dramatically strengthened naval forces. During this same period,
U.S. defense budgets declined in real terms and modernization
proceeded slowly. Beginning with a Presidential initiative in the
1976 budget, however, U.S. defense spending has been increased
in real terms each year over amounts needed to offset inflation.
28
Following a major review of defense policy, the President has
decided to recommend a continued steady growth in real defense
spending to maintain American military strength relative to
that of the Soviet Union.
Defense Outlays
$ Billions
$ Billions
125.------------------------------------.125
100
100
75
75
50
50
25
25
o
1968 69
0
70
Fiscal Years
71
72 - 73
74
75
76
77
78
79
Estimate
*Military Assistance, Atomic Energy Defense, and Defense Related Activities
During the past year the President also directed a comprehensive study of Navy missions and forces. This review resulted
in a decision to accelerate naval force modernization, building
toward a fleet of about 600 combat ships. Emphasis is to be
placed on smaller aircraft carriers and increased numbers of
lower cost combat ships.
Consistent with these decisions, the major program initiatives
reflected in the budget recommendation for 1978 are to:
• continue to modernize each component of the strategic deterrent forces and initiate full-scale development of an intercontinental ballistic missile to replace the Minuteman
missile;
,
• increase the capability of general purpose combat forces to
fight a high-intensity war by increasing supplies of munitions
29
and other equipment and by reducing maintenance and
overhaul backlogs;
• improve U.S. capability to respond rapidly to the outbreak
of a European conflict by increasing the readiness of troops
deployed in forward areas through better training, increased
ptepositioning of equipment, and improved in-theater mobility;
• enhance the mobility of U.S. forces by increasing airlift
capabilities;
• continue the modernization of general purpose ground and
air forces that are primarily oriented toward deterring a
major war in Europe. In this context, the number of Army
divisions has been increased from 14 to 16. They will be
equipped with new tanks, helicopters, and antitank missiles.
The Air Force will procure new aircraft to fully equip its 26
tactical wings. Navy force modernization will emphasize requirements for control of the seas;
• continue to maximize combined force effectiveness with
allies by encouraging standardization of equipment, joint
training and coordination of support systems, and the buildup of allied capabilities to sustain high-intensity conflict;
• increase research and development funding in 1978 to protect against technological surprise by adversaries and ensure
the deterrent capability of future defense systems;
• update the stockpile of critical and strategic materials to
be able to provide for wartime requirements of vital raw
materials in the event of a major disruption in traditional
overseas supplies; and
• conduct a study to determine the number and type of domestic installations required. A partial construction moratorium is proposed in 1978 pending the results of this review.
The proposed 1978 defense budget, together with projections
for the following 4 years will provide for the modernization and
change needed to maintain the effectiveness of national defense
programs. To provide this effectiveness, outlays are proposed
to increase from $100.1 billion in 1977 to $112.3 billion in 1978
and to $123.8 billion in 1979.
In order to accomplish the improvements proposed for 1978,
while staying within constrained budget levels, additional efficiencies will be required. Reductiom are proposed in personnel costs and support activities judged marginal to defense
ca pabilities.
30
Proposed nuclear weapons actIvItIes are higher than 1977
levels primarily because of ,greater emphasis on advanced research to provide new nuclear weapons for future military needs.
Additional funds are also proposed for safety, environmental,
and physical security improvements.
Military assistance programs are discussed in the international
affairs section.
International AFFairs
The goals of peace and worldwide economic improvement
continue to be the focus of the international affairs activities of
the United States. Outlays for the international affairs function
are estimated to increase $131 million to $7 .3 billion for 1978,
and to $7.6 billion for 1979. Additional outlays for military
assistance, included in the national defense functional totals,
are estimated to decrease from $577 million in 1978 to $494
million in 1979.
Under the military assistance program, the United States provides loans and grants to finance the purchase of materiel and
services to help friendly countries improve their capacity for
self-defense and collective security. The budget continues the
shift from grant military assistance to foreign military sales
credits, thus increasing the self-reliance of recipients.
Outlays for foreign economic and financial assistance are estimated to increase from $5.1 billion in 1977 to $5.2 billion in 1978
and $5.4 billion in 1979. Security supporting assistance, with proposed outlays of $1.4 billion in 1978, provides economic support
to countries of particular strategic importance to the United
States, principally in the Middle East and southern Africa. M ultilateral development assistance takes the form of capital subscriptions to international institutions such as the World Bank
and voluntary contributions to the United Nations Development
Program. Outlays of $1.3 billion are proposed for 1978. Bilateral
dev elopment assistance is administered principally by the Agency
for International Development (AID) and focuses on improving
living standards and overcoming development problems in poorer
nations. Other foreign assistance programs include the food for
peace program, which is expected to supply worldwide over 6
million tons of food to needy countries. The number of Peace
Corps volunteers will decline by over 95'0 from 1977 to 1978 as
the number of fill able requests for volunteers declines.
31
Support for foreign information and exchange programs is
estimated to require outlays of $422 million in 1978 and $446
million in 1979. Estimated outlays for the conduct of U.S. foreign
affairs activities are $1.1 billion in 1978 and $1.2 billion in 1979.
Outlays for international financial programs are estimated to
be $1.1 billion in 1978, and $1.2 billion in 1979. These programs
include primarily the loan, insurance, and guarantee programs
of the Export-Import Bank, which promotes U.S. exports. Outlays to support the Bank's activities are estimated at $1 billion for 1978. Proposed participation in an international
consortium loan to help meet Portugal's temporary balance-ofpayments needs is estimated to require outlays of $300 million
in 1977, $130 million in 1978, and $120 million in 1979. Additiopal stimulus to U.S. exporting is provided by the favorable tax
treatment of domestic international sales corporations, with an
estimated tax expenditure of $1.2 billion in 1978.
Outlays for International Affairs
$ Billions .
$ Billions
8-.------------------------------------.-8
6
6
International Financial
4
4
2
2
o
1968 69
Fiscal Years
32
0
70
71
72
73
74
75
76
77
78
Estimate
79
General Science, Space, and Technology
This function includes primarily programs in space research
and technology and for the expansion of basic scientific knowledge. Estimated outlays are $4.7 billion in 1978 and $5.2 billion
in 1979. In the space program, proposed NASA 1978 outlays
of $3.5 billion, an increase of $153 million over 1977, provide'
for continued work on the manned space shuttle, a reusable
space vehicle for more economic manned access to space in the
1980's and beyond, and for activities in space science and applications. Included in 1978 are funds for the further development
and testing of two prototype shuttle orbiters and for initial procurement of three additional orbiters, providing a national fleet
of five for civilian and military missions. In space science two
major projects are proposed for initiation in 1978-the Earth
orbiting space telescope to study the universe and an orbiter /
probe mission to study the planet Jupiter. Development of Landsat-D is proposed to evaluate further the use of satellites for
global crop forecasting and other space applications.
Outlays for General Science and Space
$ Billions
$ Billions
6.-------------------------------------~6
Total
4
4
Apollo Lunar
Landing Program
2
2
General Science and Basic Research
o
1968 69
70
Fiscal Years
71
72
73
74
75
76
77
78
79
0
Estimate
33
Outlays for general science and basic research programs in
the National Science Foundation (NSF) and the Energy Research and Development Administration (ERDA) are estimated
at $1.2 billion in 1978, an increase of $139 million over 1977.
Proposed funding of basic research by the NSF will be increased substantially as part of a Government-wide effort to
assure 3% real growth in Federal support of basic research. The
NSF also proposes to double its funding of earthquake research
as part of a joint program with the Geological Survey.
Basic research programs of ERDA are proposed to be
strengthened to support fundamental research with potential for
application to energy technologies.
Natural Resources, Environment, and Energy
Programs in this area promote the use, management, and
preservation of our natural resources and environment. Estimated 1978 outlays are $19.7 billion, and for 1979, $20.6 billion.
The oil embargo of 1973 and the subsequent sharp price
increases established by foreign producers highlighted the fact
that the United States no longer had abundant supplies of oil.
Development of domestic energy sources became a high priority.
The increased use of coal, nuclear power and renewable power
sources was encouraged, as was a reduction in the rate of growth
of energy consumption. The Federal Energy Administration
(FEA) and the Energy Research and Development Administration (ERDA) were established to provide initial capability to
plan and execute national energy policy, coordinated by the
Energy Resources Council. New proposals must continue these
efforts.
The energy policy proposed in this budget is a comprehensive
program directed toward decreasing the Nation's energy dependence on foreign producers. A major step in this process is
the proposed consolidation of the FEA, ERDA, and other
energy-related organizations into a cabinet level Department
of Energy, permitting a more effective coordination and execution of the Nation's energy policy. Also supported are : establishment of the $100 billion Energy Independence Authority (EIA)
to encourage domestic energy resource development; deregulation of the price of new natural gas; phaseout of controls on
petroleum; development of a strategic petroleum reserve; pro-
34
duction of the Naval Petroleum Reserves; and resource assessment of the National Petroleum Reserve in Alaska.
Projected 1978 budget outlays for energy programs are estimated to be $6.1 billion, rising to $6.9 billion in 1979. Including off-budget Federal entities, outlays are estimated to be $6.7
billion in 1978 and $8.3 billion in 1979.
The proposed EIA would have resources of $100 billion over a
lO-year period and would provide loans, loan guarantees, and
other assistance to domestic energy projects of critical importance. The Authority would supplement and encourage private
capital investment across a broad spectrum of energy supply,
conservation and energy-related environmental projects and also
work to shorten the time required for energy projects to obtain
clearances and permits from Federal regulatory agencies.
The budget provides for the development of a strategic petroleum reserve to minimize the potential impact of disruption in
world supplies. The proposed reserve would be 500 million
barrels stored by December 1982, with 150 million barrels stored
by December 1978.
Outlays in 1978 for energy research and development are estimated to be $3.4 billion. Major efforts are being devoted to the
breeder reactor and fusion, to the production of synthetic fuel
from coal, and to solar, geothermal, and conservation technologies. High priority is given to implementing the President's
nuclear energy and nuclear nonproliferation policies.
The budget proposes other major energy programs. Energy
resources on Federal lands would be made available for use to
the maximum extent feasible consistent with protecting the environment. Energy conservation programs will encourage increases in the energy efficiency of new automobiles and appliances, and industrial energy uses. Tax expenditures of over $2
billion support the development and production of fossil fuels.
Projected outlays for pollution control and abatement programs increase 14% to $5.9 billion in 1978, primarily reflecting
prior-year commitments for construction of municipal sewage
plants. Proposed 1978 budget authority for this construction
grant program of $4.5 billion is contingent upon enactment of
reforms that ensure the use of the funds for high priority projects
only. This would reduce the lO-year Federal liability for waste
treatment plant construction from $330 billion to $45 billion.
Outlays for water resources and power programs are estimated to increase slightly from $4.8 billion in 1977 to $4.9 billion
35
2 40 - 400 0 - 77 - 6
Outlays tor Natural Resources, Environment, Energy
$ Billions
$ Billions
24-.------------------------------------.-24
Off-Budget
Federal Entities
*
18
18
12
12
6
6
o
1968 69
_ Fiscal Years
70
71
72
73
74
75
76
77
78
79
0
Estimate
*Rural ElectriOCation & Telephone R~ Fund & Energy Independence Authority
\ in 1978. Most projects are being funded to meet orderly construction schedules for ongoing work. To avoid excessive growth
in future spending, no new projects are recommended in 1978.
Conservation and land management outlays are estimated to
be $1.4 billion in 1978, supporting the management of 1 million
square miles of public lands to provide for current development
of resources and for conservation.
The land and water conservation fund is proposed to be fully
funded with $600 million for acquisition of recreation land both
by the Federal Government and through grants to States. Also
proposed is a 1977 supplemental for the Bicentennial Land
Heritage Act, a 10-year, $1.5 billion program proposed by the
_President to expand and improve national parks and wildlife
refuges. Outlays for recreational programs are expected to
increase from $1.4 billion in 1978 to $1.5 billion in 1979.
Outlays for other natural resource programs in 1978 are
estimated to be $1.1- billion. These funds include support for
the Geological Survey's resource surveys and mapping and for
the National Oceanic and Atmospheric Administration's weather
forecasting and marine and coastal programs.
36
Agriculture
The administration's agricultural policy is to minimize Government restrictions on crop production, and provide producers with
protection against severe price declines while permitting market
forces to work. Where this policy has not been followed-in crops
such as peanuts and tobacco--the resulting cumbersome mandatory programs have produced increasing prices and surpluses
acquired at Federal expense. This budget proposes to substitute
an expanded crop insurance program for disaster payments, to
continue the present price support program for grains and cotton,
and to reform the peanut price support program. Projected 1978
outlays for farm income stabilization programs are $1.2 billion.
Outlays for the agriculture function are estimated to decline
from $2.3 billion in 1978 to $1.9 billion in 1979. Proposed increases for research to improve production efficiency, for pest
and disease eradication and for marketing services 4re more
than offset by decreases in outlays for price support and related
programs: This budget provides additional funds for a new
program that would award research grants on a competitive
basis.
Outlays for Agriculture
$ Billions
$ Billions
6
6
5
5
4
4
3
3
2
2
1
1
o
1968 69
0
70
Fiscal Years
71
72
73
74
75
76
77
78
79
Estimate
37
Commerce and Transportation
Programs for commerce and transportation include development and support of several modes of transportation, support
of the housing mortgage market, subsidies to the Postal Service,
aids to business, and regulatory activities. Budget outlays for commerce and transportation programs are estimated to increase
20% to $9.3 billion in 1978 and then decrease to $18.6 billion
in 1979. Total outlays for this function, including off-budget
Federal entities, are estimated to be $21.8 billion in 1978 and '
1979.
Outlays for Federal-aid highways are estimated to be $6.9
billion in 1978 and $6.7 billion in 1979. A $6.5 billion obligation
ceiling is proposed for Federal-aid highways in 1978. This is
a moderate budget expansion from the average $6.1 billion obligation level achieved in 1976 and 1977. This level recognizes
that States require stable assistance to permit orderly highway planning and phased construction of interstate and other
highways.
Outlays for mass transit are estimated to increase to $2.3 billion in 1978 and $2.4 billion in 1979. Major mass transit projects, already supported by the Federal Government, will be fully
funded under existing authorizations, even though some funds
will not be obligated until after 1980. An additional $1.1 billion
of budget authority will be needed for mass transit programs in
1979 and 1980. The budget assumes that no new costly heavy
rapid rail projects will be initiated through 1979. Federal assistance will aid ConRail by providing $2.1 billion of loans through
1981 while subsidies to Amtrak for rail passenger service will be
restrained in order to promote cost effective practices ~n those
programs.
Coast Guard outlays are proposed to increase to an estimated
$1.3 billion in 1978, reflecting fisheries enforcement of the 200mile territorial water limit along with the Coast Guard's continued responsibilities for emergency services and protection of
the marine environment. The budget proposes decreased subsidies for operation and construction of the Nation's merchant
marine fleet from $682 million in 1977 to an estimated $634
million in 1978.
The most important thing the Federal Government ~an do for
housing is to control inflation through sound fiscal and monetary
policies. The Administration is proposing major reforms of Fed38
Outlays for Transportation
$ Billions
$ Billions
18~----------------------------------~,-18
15
15
12
12
Mass Transit
and Railroads
9
6
9
6
Highways and Other
Tra nsportation
3
3
o
1968 69
70
Fiscal Years
71
72
73
74
75
76
77
78
79
0
Estimate
~ Includes Off-Budget Outlays of the Regional Rail Reorganization Program
eral mortgage insurance programs run by the 43-year-old Federal Housing Administration. These reforms will encourage the
development of private insurers while continuing to assure that
credit worthy families have access to insurance for their mortgage loans. Lower downpayment requirements will make homeownership possible for more families.
The Federal Government also aids business and individuals
through several tax expenditures. Major benefits are provided
to business by preferential tax rates on the initial $50 thousand
of corporate earnings subject to tax. Investment tax credits allow
businesses to retain additional money for capital expansion. Individuals receive benefits by favorable tax rates on capital gains
income and by the deduction of mortgage interest and property
taxes from income for Federal tax purposes.
Federal subsidies to the Postal Service reimburse the Postal
Service for public service costs; subsidized mail rates for 2d, 3d,
and 4th class mail; and other costs. The off-budget outlays of
the U.S. Postal Service reflect the net difference between gross
postal expenditures and gross postal receipts.
39
Community and Regional Development
The administration's policies for community and regional development stress local i,nitiative, with Federal assistance supplementing State and local resources. Outlays for community and
regional development are estimated to increase $173 million to
$7.9 billion in 1978. Projected outlays then decline to $7.1 billion
in 1979, as temporary countercyclical programs and others
replaced by community development block grants are phased
out.
New commitments under the community development grant
program are estimated to be $3.5 billion in 1978 and $3.4 billion
in 1979. Outlays for this program reflect the rate at which communities carry out their projects and are expected to be $2.3
billion in 1977 and $3.1 billion in 1978. Under the block grant
program, localities have the option of funding a wide range of
activities, including land acquisition, public construction, and
rehabilitation of structures. The administration strongly supports continuation of this program, which requires reauthoriza-
Outlays for Community and Regional Development
$ Billions
$ Bi!Jjons
9~---------------------------------,-9
Local Public Works - _ _~
Program
6
6
Disaster Relief
and Insurance
*
3
3
o
1968 69
70 71
72
73
74
75
Fiscal Years
Increase in 1973 and 1974 due to Hurricane Agnes
*
40
76
77
78
Estimate
79
0
tion in 1978. The budget propo~es a change in the way funds
are allocated under this program. Entitlements would be calculated under both the current formula (population, poverty, and
housing overcrowding), and an alternative formula (poverty,
loss of population, age of housing), with each community receiving the higher of the two amounts.
The budget proposes phasing out Vista and University Year
for ACTION. These programs have operated long enough to
enable communities and universities to decide whether to support them locally. The ACTION older Americans volunteer
programs are proposed to continue in 1978 and 1979 with
the same numbers of volunteers as at the end of 1977. The Community Services Administration, through its community action
agencies, will primarily coordinate assistance provided through
other Federal agencies aimed at meeting the needs of the economically disadvantaged. Redevelopment of Pennsylvania Avenue in
the National Capital will begin.
Area and regional development outlays are estimated to be
$2.3 billion in 1978. Programs in this category provide support
primarily for economic and rural development, American Indian tribal governments, ~nd Appalachian development.
The newly authorized local public works employment program
provides $2.0 billion to assist State and local governments in areas
of high unemployment for improvement of public facilities. The
administration believes that this program finances low-priority
projects and creates only temporary jobs, and is therefore an
inappropriate means to try to decrease unemployment. No new
budget authority for these grants is recommended. Outlays are
projected to be $0.8 billion in 1977 and 1978.
Assisting American Indian communities in their development
is a continuing concern. Outlays for Indian development programs in this function are estimated to be $712 million in 1978.
Outlays for disaster relief and insurance are estimated to be
$457 million in 1978. Insurance against losses brought about by
natural disasters is primarily the responsibility of individuals and
businesses, with State and local governments responsible for promoting recovery. However, Federal aid is available through the
national flooq insurance program and the Disaster Relief Act.
By the end of 1978, flood insurance is expected to be available in
<;lpproximately 17,000 communities.
41
Training, Employment, and Social Services
This section describes three types of Federal programs, primarily grants-in-aid: those that are designed to help individuals get
jobs, through training, employment services, or as needed, temporary jobs; those that enforce the minimum wage and other
workplace standards; and those that provide social services.
Estimated outlays for employment and training programs will
decline from $6.8 billion in 1977 to $5.3 billion in 1978, and
$4.3 billion in 1979 because of anticipated improvements in the
economy. The largest decrease results' from the proposed phaseout of the program providing temporary employment assistance
to States and localities. Approximately 260,000 jobs have been
funded under this program each year between 1975 and 1976.
A requested 1977 supplemental appropriation will maintain
these jobs through 1977, and phase them out by the end of 1978.
In addition, another temporary employment program-the job
opportunities program-is not proposed to be funded in either
] 977 or 1978.
Outlays in 1978 and 1979 for regular State and local programs
under the Comprehensive Employment and Training Act
(CETA) are estimated at $2.1 billion, the 1977 program level.
Approximately 490,000 training or work opportunities are expected to be provided in each year. Outlays for special sumfuer
youth employment are estimated to be $525 million for 882,000
jobs in 1978 and $450 million for 756,000 jobs in 1979. The Job
Corps is estimated to support 22,700 training opportunities in
1978 and 1979. An additional 22,600 part-time public service
job opportunities for older workers, now authorized by the Older
Americans Community Service Employment Act, will continue
to be provided at a cost of $91 million in 1978 and 1979, using
increased CETA funds in the latter year.
The work incentive (WIN ) program helps those receiving
aid to families with dependent children (AFDC) to find jobs.
Legislation is proposed to extend the WIN job search requirements to applicants as well as recipients of AFDC and to restrict
supportive services to 30 instead of 90 days after job placement.
The outlay estimates of $344 million in 1978 and 1979 reflect
the legislation and will support the level of employment services
attained in the last quarter of 1976.
42
The current level of Federal-State employment service operations will be maintained with 1978 and 1979 outlays of $693
million until an evaluation of its effectiveness can be completed.
The Federal Government sets and enforces standards for wages,
overtime, and other employer-employee relationships, including
collective bargaining, and publishes employment and price
statistics. Outlays for these programs are estimated at $380 million in 1977, $415 million in 1978, and $424 million in 1979.
Grants to States for local services provide a broad range of
services for people with the goal of reducing thejr dependency.
Federal outlays for this program are estimated at $2.5 billion in
1978, and $2.6 billion in 1979. Outlays for vocational rehabilitation are estimated tQ be $839 million in 1978 and 1979, and outlays for services to the elderly and other special groups are
estimated to be $625 million in 1978. In addition, an Allied
Services Act is proposed to demonstrate how to integrate the
delivery of different kinds of social services at the local level.
Outlays for Training, Employment, and Social Services
$ Billions
$ Billions
12
12
Total--~
10
10
\
8
8
Public Service Jobs *
6
6
4
4
2
o~--~~--~~--~~--~~--------~o
1968 69 70 71 72 73 74 75 76
77 78 79
Fiscal Years
Estimate
*Includes EEA, Temporary Employment Assistance & the Job Opportunities Program
43
Education
Public education is primarily a State and local responsibility.
Federal Government programs help to ensure equal access to educational opportunity and provide funds for special educational
services for the handicapped and disadvantaged. Federal outlays
for educational programs are estimated to be $9.6 billion in 1978
and $9.4 billion in 1979.
'
Federal programs for elementary and secondary education
provide assistance to State and local educational agencies through
both formula grants and discretionary project grants. Federal
outlays for elementary, secondary and vocational education programs are estimated to be $5.5 billion in 1978 and $5.4 billion in
1979. This budget proposes a Financial Assistance for Elementary
and Secondary Education Act, consolidating 23 of the present
Federal aid programs into a block grant program that would
enable State and local educational agencies to make the decisions
on programs necessary to solve their local educational problems
while continuing the emphasis on better education for the disadvantaged and handicapped. The funding for this proposal
Outlays for Education
$ Billions
$ Billions
10.------------------------------------,10
8
8
6
6
4
4
2
2
o
1968 69
Fiscal Years
44
0
70
71
72
73
74
75
76
77
78
Estimate
79
would continue to provide support at the 1977 level for the various programs proposed for consolidation.
The impact aid program historically has provided funds to
school districts in areas affected by the presence of the Federal
Government. The budget is again proposing to limit such support to those situations where Federal activities result in an economic hardship for a school district. Under this proposal, an
estimated $317 million in 1978 would be saved.
The budget proposes that Federal funds for higher education
continue to emphasize direct aid to needy students to help them
afford a postsecondary education. Proposed budget authority of
$1.8 billion in 1978 and 1979 will provide basic opportunity
grants of up to $1,400 for 2.1 million undergraduates in each
year. In addition, 1978 budget authority of $44 million is requested for the State student incentive grant program and $250
million is requested for the work study program. The budget
does not request funds for most institutional assistance or other
activities where benefits do not flow directly to students.
Proposed outlays in 1978 are $94 million for the National
Institute of Education, $351 million for the National Foundation on the Arts and the Humanities anq $120 million for the
Smithsonian Institution. Estimated tax expenditures of more
than $2 billion in 1978 will significantly help both students and
nonprofit educational institutions by not including scholarships
in taxable income and by allowing tax deductions for contributions to nonprofit educational institutions and other deductions.
Health
Federal health progr.ams finance and-provide health services,
primarily for the aged and poor. In addition, they pay for health
research, preventive health activities, and training of health personnel. Health outlays are expected to reach $43.2 billion in
1978, an increase of 100/0 over 1977, and $46.7 billion in 1979,
an increase of 8% over 1978.
The 1978 budget proposes to consolidate medicaid and 19 other
health programs into a health block grant program, with estimated 1978 budget authority of $13.2 billion aI).d outlays of
$12.3 billion. Medicaid provides assistance to States in paying for
medical services for low-income persons. Federal medicaid payments have, however, been inequitably distributed among the
States. Moreover, Federal medicaid spending has risen sharply
45
from $2.7 billion in 1970 to $10.2 billion in 1977-an increase of
2780/0 in 7 years. The proposed legislation would overcome inequities in the distribution of Federal funds, eliminate categorical
programs that are unnecessarily narrow, and hold down projected increases in Federal spending. Block grant funds would
be allocated to the States under a formula based on the number
of poor people in the State, overall State tax effort, and average
State per capita income. Funds would be used primarily to meet
the priority health needs of low-income persons. Budget authority
for the new program would increase by 5% annually after 1978.
Medicare finances health insurance coverage for an estimated
26 million aged and disabled Americans. The budget proposes
legislation that would protect _beneficiaries against catastrophic
expense by removing limits on the length of stay in non-psychiatric hospitals and nursing homes and by limiting beneficiaries'
annual spending for covered expenses to $500 per year for hospital and nursing home care and $250 per year for physicians'
services. The recommended legislation would also increase beneficiaries' cost-sharing for the initial part of hospital stays, would
increase the deductible on physicians' charges, and would place
ceilings on medicare payments for h ospital costs and doctors'
charges. In total, these legislative proposals would reduce the
growth of medicare outlays by $1.8 billion, to $24.3 billion, in
1978 and by $3.7 billion, to $26.7 billion, in 1979.
In 1977, medicare arid medicaid outlays will constitute about
820/0 of total Federal health outlays;in 1978, medicare and the
health block grant outlays would represent 85% of the total. Tax
expenditures of $8.7 billion in 1978 will continue to provide
incentives for the purchase of health insurance and reduce the
out-of-pocket costs of large medical expenses.
Estimated outlays for health planning and construction increase from $947 million in 1977 to $1.3 billion in 1978 and 1979.
This increase is largely the result of transferring salaries and expenses of most Federal health program employees to give the
Assistant Secretary for H ealth greater management control.
Estimated outlays of $436 million will be spent in 1978 on the
provision of medical services to American Indians and Alaska
Natives. This will amount to $775 per eligible beneficiary, or
over $3,000 for an eligible family of four. Outlays of $33 million
for the national health service corps would allow placem ent of
physicians and dentists in 453 areas in the United States with
shortages of such personnel. By the end of 1978, the final year
46
of Federal grant support, more than 100 health maintenance
organizations (HMOs) will have received FederaL funds to
demonstrate this alternative form of health care delivery.
With funds requested for 1978, professional standards review
organizations (PSROs) will continue to review medicare hospital admissions in all parts of the country to assure that care is
medically necessary and rendered in an appropriate setting.
Health research outlays are estimated to be $2.0 billion in 1978
and 1979. These research programs support biomedical and
behavioral research related to a broad spectrum of health
problems. Outlays for training health personnel, estimated at
$574 million in 1978, will emphasize programs that encourage
doctors to practice in areas with critical manpower shortages
and improve the specialty distribution of physicians and dentists.
A recently authorized $500 million federally insured loan program for graduate health professions students will be established.
Estimated outlays for the prevention and control of health
problems are $945 million in 1978 and $947 million in 1979.
Funds also increase to assure the safety of medical devices.
Health Outlays
$ Billions
$ Billions
5O~----------------------------------~50
Health Block Grant
40
40
30
30
20
20
10
10
o
1968 69
,
70
Fiscal Years
71 , 72
73
74
75
76
77
78
79
0
Estimate
47
Income Security
Income security programs provide cash payments and benefits
in-kind to maintain living standards for Americans in need. Outlays for income security programs are estimated to increase $5 .8
billion to a total of $143.9 billion in 1978, and to $152.8 billion in
1979. About 32.7 % of the 1978 budget is for income assistance.
There are four types of Federal income security programs:
1. Retirement programs, including social security, railroad retirement and Federal employees retirement programs, that support retired and disabled citizens. It is estimated that 35 million persons will receive benefits in 1978.
2. Unemploym ent insurance programs, including State and
Federal programs that provide income for unemployed persons.
It is estimated that an average of 3.2 million persons will receive
benefits each week in 1978.
3. Other benefits paid in cash provide income for the needy,
including aid to dependent children.
Income Security Outlays
$ Billions
$ Billions
160-.------------------------------------,- 160
120
120
Unemployment
80
80
40
1968 69 70 71 72 73 74 75 76
77 78 79
u~--------------------------~--~~o
Fiscal Years
Estimate
* Includes
- Other Income Assistance Such as Food Stamps, SSI, and AFDC
48
4. Other benefits provided in-kind including food and shelter
programs that provide support to the needy.
In addition, income security benefits are generally excluded
from the definition of incom~ in personal income tax computations. This exclusion results in little or no loss of tax revenue from
the needy, whose income generally is not high enough to be taxable. However, substantial amounts of income security benefits
go to persons with incomes above the poverty line, and significant
tax expenditures result from these exclusions.
Programs closely related to income security programs are discussed in other sections: national security; health; education;
training, employment, and social services; and veterans benefits
and services.
Social security, the world's largest retirement, survivors and
disability insurance program, will provide an estimated average
annuity of $242 per month to retired workers in 1978. Total
1978 beneficiaries, including dependents and survivors, are projected to be 32 million. Outlays for social security increase to
$90.8 billion in 1978 and $99.7 billion in 1979. To restore the
financial integrity of the social security trust fund, increases in
social security taxes and certain program reforms are proposed.
Under recently enacted legislation, the unemployment insurance system is being expanded to provide coverage to 9 million
more employees, including State and local government workers.
The legislation also raised Federal unemployment taxes to speed
repayment of advances to the trust fund made to pay the
Federal share of extended benefit programs. Two temporary programs, enacted in 1974 and amended in 1975 to extend the maximum eligibility from 39 to 65 weeks and to pay benefits for 39
weeks to workers who lacked coverage, will expire in 1977. A
commission to evaluate the system's performance and plan for th_e
future of unemployment insurance will begin work early in 1977.
Federal employees have a comprehensive retirement and disability sys'tem that provides. benefits for 1.6 million individuals in
1978. However, the full costs of this system are not now covered
by employee and agency (employer) contributions. Changes in
this system are planned for inclusion in the 1979 budget. They
would result in larger outlays from each operating agency that
would .be transferred to the retirement trust fund. The current
annual lump sum payment from the Treasury could be phased
out. Proposals are made for administrative and legislative
changes to speed benefit payments and curb abuses in the Federal
J
49
employees compensation program, which pays monthly benefits,
medical bills, and rehabilitation costs for Federal workers hurt
on the job.
Aid to families with dependent children (AFDC ) assists States
and localities in providing public assistance benefits to this needy
group. Federal outlays estimated at $6.6 billion will help provide AFDC benefits to 11.3 million persons in 1978. Legislation
is recommended to provide a standardized calculation of workrelated expenses in determining AFDC benefits.
The supplemental security income (SSI) program will provide
about $5.0 billion in Federal benefits to an estimated 3.9 million
aged, blind and disabled recipients in 1978; this is an increase of
$0.3 billion over 1977 Federal benefit payments. The combined
effect of the requirements for determining eligibility and computing prospective benefits every 3 months generates an intolerable
payment error rate. The Department of H ealth, Education, and
Welfare-by intensively reviewing current management practices, statutes, and regulations-is moving to reduce the number
of errors and to ensure program integrity without sacrificing
equity or incurring substantial new program costs.
The administration is again requesting authority under a proposed Income Assistance Simplification Act to improve and
integrate the various programs aimed at the poor and needy.
Modifications would be within ca.refully prescribed limits and
subject to congressional disapproval. The objective of this proposal is to provide for an orderly transition from the present
jumble of conflicting and overlapping programs to a more rational, equitable, and comprehensive approach to meeting these
needs.
The budget reflects reproposals of major reforms of the food
stamp program and the consolidation of 15 existing categorical
child nutrition programs into a single consolidated block grant to
States. The 15 child nutrition programs have many conflicting,
arbitrary and costly regulations. Also, they provide substantial
Federal subsidies to children regardless of income. The new program would replace the current programs and target aid on the
needy, including 700,000 children not now receiving program
benefits. The reform of the food stamp program would permit
a more equitable distribution of benefits and wpuld restrict participation to those in need.
Housing subsidies will be approved for an estimated 500,000
dwelling units in 1978, obligating \he Government to subsidy
50
payments of up to $26.7 billion. These payments will be made
over a 15-40 year period. The primary source of this assistance
will be the new lower income housing assistance program, which
subsidizes the difference between market rents and a percentage
of tenant income.
Beginning in 1977 and continuing until 1981, the Cuban
refugee program will be gradually phased out. The Cuban
refugees are becoming increasingly integrated into American
society and its economy and are ceasing to represent a special
burden on the resources of States and localities.
Veterans Benefits and Services
The Federal Government operates programs for veterans to
help them adjust to civilian life and to compensate them for sacrifices they made while in the military service. Outlays for veterans programs are estimated to decline from $18.4 billion in 1977
to $18.3 billion in 1978 and $18.0 billion in 1979, with growth
in some program areas offset by decreases in others. The decreases
reflect both a declining demand for GI bill education benefits
and the proposed curtailment of certain benefits no longer justified with all-voluntary armed forces.
Compensation benefits, provided to veterans with serviceconnected disabilities, are estimated to be $5.7 billion in both
1978 and in 1979. Non-service-connected pensions are,provided
to needy wartime-service veterans who are either aged or have
become disabled subsequent to their military service. An estimated 2.3 million such veterans and their survivors will receive
$3.2 billion in pension benefits in 1978 and $3.1 billion,in 1979.
GI bill educational benefits assist veterans making the transition to civilian life by helping them get the education delayed
by their military service. The number of trainees is expected
to continue to drop as the number of eligible veterans becomes
smaller. As a result, outlays are estimated to decline to $3.3
billion in 1978 and $3.0 billion in 1979. The estimates reflect
proposals to end new enrollments in marginally effective courses,
to reduce eligibility for GI bill benefits from 10 years to 8 years,
and to discontinue the VA education loan program. A new education program has been enacted for recruits entering service
after 1976, with VA providing double the amount that these
veterans elect to have withheld from their military wages.
51
Outlays for Veterans Benefits and Services,
$ Billions
$ Billions
20,,------------------------------------,-20
16
16
12
12
8
8
4
4
o
1968 69
Fiscal Years
0
70
71
72
73
74
75
76
77
78
79
Estimate
The Veterans Administration (VA) operates the largest medical care system in the Nation. Outlays for VA medical programs
will reach an estimated $5.1 billion in 1978 and $5.4 billion in
1979. Legislation is proposed again to seek reimbursement from
health insurers for treatment of insured veterans' non-serviceconnected disabilities. In 1978, medical care will be improved
through increased direct care staff, new and expanded special
medical programs, and the addition of over 350 nursing home
beds. Construction of four replacement hospitals is expected to
begin in 1978 and 1979.
Other services for veterans provided by the Federal Government include life insurance, mortgage loan guarantees, job placement, burial payments, and the national veterans cemetery
system. The budget proposes to terminate entitlem,e nt to the
VA housing programs for people joining the Armed Services
after October 1, 1977, because the military pay scales have been
made competitive, and these benefits are therefore no longer
justifiable.
'52
Law EnForcement and Justice
Proposed outlays for Federal law enforcement and justice
programs are $3.8 billion in 1978 and 1979. The Federal Government will provide $827 million in 1978 for criminal justice
assistance to State and local governments. This represents a decrease of 9%, as these governments are encouraged to assume
responsibility for financing successful programs.
The Customs Service is expected to expand programs directed
at the smuggling of narcotics~ and new personnel are requested to
handle increased imports. Additional funds and personnel are
proposed for the Customs Service and the Immigration and
N a turaliza tion Service to staff new ports of en try.
To improve the effectiveness of programs directed at high
level traffickers in narcotics, new staff and funds are proposed
for the Drug Enforcement Administration (DEA) to expand its
national drug intelligence system. The cooperative FederalState-local drug task forces are proposed for DEA funding in
1978.
Outlays fot:' Law Enforcement and Justice
$ Billions
$ Billions
4.0-,--------------------.-4.0
3.0
3.0
Law Enforcement
Assistance
2.0
2.0
Correctional
Judicial
Activities
1.0
o
1968 69
1.0
0
70
Fiscal Years
71
72
73
74
75
76
77
78
79
Estimate
53
The FBI is shifting resources to focus on white collar and organized crime activities. FBI employment is declining in 1977, but
in 1978, modest staff increases are proposed to develop an automated fingerprint identification system. The Bureau of Alcohol,
Tobacco and Firearms' will evaluate the experimental program
to curtail illegal trade in firearms and decide if expansion is
warranted in 1978.
.
Additional prison construction is proposed to relieve overcrowding. Construction of new adult facilities in the south central
and west coast areas is planned, while continuing progress is
made on youth facilities in Alabam'a, California, New York and
the New Jersey-Philadelphia area; on an adult institution in New
York; and on a metropolitan correctional center in Detroit.
General Government
General government programs encompass many basic Federal
activities including those of the legislative branch, the Executive Office of the President and administrative activities that
serve many programs. Estimated outlays in this function are
$3.9 billion in 1978 and $4.0 billion in 19 79.
Internal Revenue Service programs account for more than
45ro of the outlays in this function. An expanded effort to apply
tax laws to high level drug traffickers will be part of the Government-wide program to reduce the drug problem in this country.
The General Services Administration will expand its repair and
alternations program for Federal buildings.
The Federal Financing Bank (FFB ) has become a major
source of financing for Government agencies by purchasing certain loans made or guaranteed by other Government agencies.
Since FFB outlays are not currently included in budget totals,
by law, their purchases have the effect of reducing budget outlays for those agencies which sell their loans to the FFB. Legislation is planned to include the FFB in the budget totals beginning in 1979.
54
Outlays for General Government
$ Billions
$ Billions
14-.-------------------------------------.-14
"-
12
10
/
/
/
/
/
I
/ \
\
12
\
\
\
\
10
,--
r--_ -oJ/
I
I
8
8
I
I
I
6
/
I
/ Federal Financing
Bank (off-budget)
6
I
I
Legislative
Functions
4
I
4
2
2
o
1968 69
70
Fiscal Years
71
72
73
74
75
76
77_ 78
79
0
Estimate
Revenue Sharing and General Purpose Fiscal
Assistance
General revenue sharing outlays will be $6.8 billion in 1978
and $6.9 billion in 1979, reflecting the recent renewal of the
program through 1980. These payments are made to States and
municipalities for purposes that they deem necessary.
During 1977, States and local governments will also receive
$1.2 billion of antirecession fiscal assistance grants. This program
was enacted to assist those jurisdictions in high unemployment
areas. No renewal of this temporary program is proposed.
The District of Columbia will receive an estilQated payment of
$298 million in 1978 to compensate that city for costs associated
with supporting the Federal presence. New York City will continue to receive up to $2.3 billion in loans each year through
June 1978. These loans are purchased by the Federal Financing
Bank, an off-budget Federal entity, and therefore do not currently show as budget outlays. All such loans must be repaid in
full by the city at the end of its fiscal year. Other Federal assist-
55
ance payments will be disbursed to jurisdictions under provisions
of law that allow paym ents in lieu of taxes on Federal lands
and property, shared revenues on leases of Federal lands, and a
return of portions of receipts from timber and mineral sales.
T ax expenditures also provide financi al assistance to State and
local governments. The exemption from taxable income of interest received on State and local securities has a two-fold effect.
States and local governments can borrow at lower interest rates,
saving an estim ated $3 .6 billion in 1978, while individuals can
exclude the interest income from their Federal taxes. Estimated
losses to the Treasury in 1978 under existing legislation are $5.0
billion. In addition, the deductibility of most State and local
taxes from Federal taxable income is estimated to cost the
Federal Treasury approximately $1 3.5 billion.
T he Administration proposes the establishment of a taxable
bond option for State and local governments. Under this program ,
the Federal Government would pay a percentage of the interest
costs of those jurisdictions that agree to issue taxable rather
than tax-exempt securities. Enactment of this program would
reduce the tax expenditure for tax-exempt securities.
Revenue Sharing, General Purpose Fiscal Assistance
$ Billion s
$ Billions
10~------------------------------------.-10
Antirecession Financial
Assistance
8
8
6
6
4
4
2
2
o
1968 69
Fiscal Years
56
70
71
72 ·73
74
75
76
77
78 . 79
Est imate
0
Interest
Budget outlays for the interest function are estimated to rise
. by $1.7 billion in 1978 to a level of $39.7 billion. By 1979, these
costs are estimated to be $42.4. billion. These increases result
primarily from financing unified budget deficits of $57 billion
in 1977, $47 billion in 1978, and $12 billion in 1979. Interest
outlays also include costs of borrowing attributable too the outlays
of off-budget Federal entities.
[In billions of dollars]
Actual
Item
-----1976
TQ
Estimate
1977
1978
1979
Outlays for the interest function ...
Less: Interest received by trust
funds . . .. . . . . . . . . . . . . . . . . .
34. 6
7. 2
38. 0
39.7
42.4
7. 8
.3
8. 2
8. 7
9.7
Net interest ..............
Less: Deposit of earning~, Federal
Reserve System (budget receipts) ... ........ ....... .
26. 8
7.0
29.8
31. I
32.7
5. 5
1.5
6. 0
6.4
6.8
Net impact ............ . . .
21. 3
5.5
23.8
24.7
25.9
Interest paid on Government securities held by certain trust
funds is included in outlays for this function, but is deducted
in calculating budget totals, since these payments are within
the Government and do not reflect transactions with the public. As the table above shows, this deduction reduces interest
outlays by $8.7 billion in 1978 and $9.7 billion in 1979 to a net
interest total of $31.1 billion in 1978 and $32.7 billion in 1979. In
addition, the Federal Reserve banks hold Government securities
as part of their monetary responsibilities. These banks return
most of the interest income on these securities to the Treasury as
budget receipts. The estimated amounts of the receipts are $6.4
billion in 1978 and $6.8 in 1979. If these payments are deducted
from net interest outlays, the net impact- the amount of interest
that must be paid to the public from receipts or additional borrowing-will be an estimated $24.7 billion in 1978 and $25.9
billion in 1979.
One tax expenditure in this function is the optional deferral
of taxes on interest income from U.S. savings bonds. Associated
revenue losses are estimated to be $0.6 billion in 1978.
57
Other
Allowances.-Allowances are included in the budget for
probable civilian agency pay raises and unforeseen contingencies.
By law, Federal pay is annually adjusted on the basis of comparability with the private sector. Last year, the President's
Panel on Federal Compensation recommended major improvements in the system of Federal p ay comparability. These changes
included the use of survey data on secretaries and computer
operators and provided for weighting the survey data to arrive
at average increases. Based on recent private sector earnings data
and economic assumptions consistent \\'ith this budget, the October 1977 and October 1978 Federal pay increases for white collar
employees are estimated to average 6.5 910 and 6.25%, respectively. The President may, however, propose an alternative plan
or mcrease.
The President recently received the R eport of the Commission
on Executive, Legislative and Judicial Salaries. The Commission's report recommended salary increases for Cabinet officers,
judges, Congressmen, and other high level Federal employees in
order to recruit and retain top quality personnel. Pursuant to
statute requiring such a quadrennial review, the President has
made his recommendations in the budget.
Undistributed Offsetting Receipts.-In general, offsetting
receipts are deducted from specific budget items. Exceptions are
made where it would be misleading to make the deduction
against a particular function. These exceptions are:
-employer share, employee retirement, composed of paym ents by Federal agencies to retirement funds of its employees. These payments are estimated to be $4.7 billion
in 19 78 and $5.1 billion in 1979.
- interest on some trust fund balances (discussed in the interest
function ) .
- rents and royalties on the Outer Continental Shelf paid to
the Government on leases of Federal lands expected to contain oil and natural gas. The budget projections assume
six new sales of leases in both 1978 and 1979, on the assumption that the stringent requirements of the National Environmental Protection Act will be met \vithin the planned
time period. These new sales, and receipts from existing
activities, are estimated to total $3.1 billion in 1978 and
$2.5 billion in 1979.
58
PART Y
THE BUDGET PROCESS
The budget sets forth the President's proposed financial plan
of operation for the Federal Government for the upcoming fiscal
year. In raising tax revenues and spending them, the Federal
Government allocates resources between the private and public
sectors of the economy. Within the public sector, the distribution of outlays among individual programs reflects the priorities
that are determined through the interaction of the President,
the executive branch agencies, and the Congress. The budget
process is thus a crucial focus for the determination of national
priorities. This section describes that process, and its four interrelated phases: ( 1) executive formulation and transmittal,
(2) congressional action, (3) budget execution and control, and
( 4) review and audit.
Executive formulation and transmittal.-The President's
transmittal of his budget proposals to the Congress is the result of
many months of planning and analysis throughout the executive
branch. Formulation of this budget, transmitted to the Congress
in January 1977, began in the spring of 1976. Each spring,
agency programs are evaluated, policy issues are identified,
budget projections are made, and preliminary program plans
are then presented to the President.
The President reviews the budget projections in the light of
the economic outlook, and establishes general budget and fiscal
policy guidelines for the fiscal year that begins over a year later,
on October 1. Tentative policy determinations and planning
targets are then given to the agencies as guidelines for the preparation of their budgets.
In the fall , agencies formulate their proposed budgets, which
are reviewed in detail by the Office of Management and Budget
and presented to the President in the context of overall fiscal
policy issues. The budget transmitted to Congress thus reflects
the President's recommendations for individual programs, as
well as total outlays and receipt levels appropriate to the state
59
of the economy. Supplemental budget requests and amendments
may be submitted later to cover needs unforeseen at the time
the budget was formulated.
As a result of the Congressional Budget Act of 1974, the President must update this budget on or before April 10 and July 15,
taking into account newly enacted legislation, new executive
branch recommendations, and new economic assumptions. The
act also requires him to transmit by November 10 current services
estimates for the upcoming fiscal year. These estimates are projections of the budget authority and outlays required to continue
existing programs in the upcoming fiscal year without any policy
changes.
Congressional- action.-The Congress, which can act as it
wishes on the President's budget proposals, begins its formal
review of the budget when the President transmits his current
services estimates. Review of these estimates is intended to lay
a base for consideration of the President's January budget.
Before considering appropriations for a specific program, the
Congress first enacts legislation that authorizes an agency to carry
out that program. Such legislation authorizes an appropriation
for the program, and, in some cases, sets a limit on the amount
that can be appropriated.
Many programs are authorized for several years, or indefinitely; other programs, such as nuclear energy, defense procurement, and foreign affairs, require annual authorization. The
granting of budget authority usually is a separate, subsequent
action. In many cases, budget authority becomes available each
year only as voted by the Congress. In other cases, the Congress
has voted permanent budget authority, under which funds
become available annually without further congressional action.
Under procedures mandated by the Congressional Budget Act
of 1974, the Congress considers budget totals prior to completing action on individual appropriations. The act requires
that the House and Senate Budget Committees receive reports
on budget estimates from all other congressional committees
by March 15, and a fiscal policy report from the Congressional
Budget Office by April l. By May 15, the Congress adopts a concurrent resolution containing budget targets. By September 15,
the Congress completes action on setting budget ceilings, and
by September 25, the Congress completes action on any required
reconciliation bill or resolution. A summary of the congressional
timetable is presented on the following page.
60
CONGRESSIONAL BUDGET TIMETABLE
On or before:
Action to be completed:
November 10_________________ President transmits current servIces
budget.
15th day after Congress conveneL_____________________ President transmits his budget.
March 15____________________ Committees submit reports to budget
committees.
April L_____________________ Congressional Budget Office submits
report to budget committees.
April 15_____________________ Budget committees report first concurrent resolution on the budget to
their Houses.
May 15:- ____________________ . Committees report bills authorizing
new budget authority.
May 15 _____________________ . Congress adopts first concurrent resolution on the budget.
7th day after Labor Day_______ Congress completes action on bills
providing budget authority.
September 15 ________________ . Congress completes actions on second
required concurrent · resolution on
the budget.
September 25 _______________ :... Congress completes action on reconciliation bill or resolution, or both,
implementing second concurrent
resolution.
October L __________________ . Fiscal year begins.
Congressional consideration of requests for appropriations and
for changes in revenue laws follows an established pattern. They
are considered first in the House of Representatives, where the
Ways and Means Committee reviews proposed revenue measures and the Appropriations Committee, through its subcommittees, studies the proposals for appropriations. These committees then recommend the action to be taken by the House of
Representatives. As the appropriations and tax bills are approved
by the House, they are forwarded to the Senate, where a similar
process is followed. In case of disagreement between the two
Houses of Congress, a conference committee (consisting of
Members of both bodies) resolves the issues and submits a report
to both Houses for approval. Measures are then transmitted to
the President, in the form of an enrolled bill, for his approval
or veto. When action on appropriations is not completed by the
beginning of the fiscal year, the Congress may enact a "continuing resolution" to provide authority for the affected agencies to
61
continue operations until their regular appropriations are
approved.
Budget execution and control.-Once approved, the budget
becomes the financial basis for the operations of agencies during
the fiscal year. Most budget authority and other budgetary
resources are made available by the Office of Management and
Budget under an apportionment system designed to ~ssure the
effective and orderly use of available authority.
The Impoundment Control Act of 1974 provides that the
executive branch, in regulating the rate of spending, must report
to the Congress any deferrals or proposed rescissions of budget
authority. Deferrals, which are temporary withholdings of
budget authority, cannot extend beyond the end of the fiscal
year, and may be overturned by either House of the Congress
at any time. Rescissions, which permanently cancel existing
budget authority, must be enacted by the full Congress. If Congress does not approve a proposed rescission within 45 days of
continuous session, the withheld funds must be made available
for obligation.
Review and audit.-Individual agencies are responsible for
assuring that the obligations they incur and the resulting outlays
are in accordance with the laws and regulations. The Office of
Management and Budget reviews program and financial reports
and the General Accounting Office, a congressional agency,
regularly audits, evaluates, and reports on Federal programs.
62
Relation of Budget Authority to 0 utlays
Not all of the new budget authority for 1978 will be obligated
or spent in that year.
- Budget authority for trust funds represents 'm ainly receipts
from special taxes, which are used as needed over a period
of years for purposes specified by law.
- Budget authority for many construction and procurement
programs covers the estimated full cost of projects at the
time they are started, although the outlays will occur over
a number of years as work on the projects progresses.
- Budget authority for subsidized housing programs equals
the maximum Federal payment expected under new authority to make contracts, which extend up to 40 years.
-Budget authority for many loan and guarantee or insurance
programs also provides financing for a period of years or
represents a contingency backup.
As a result of these factors, a substantial amount of budget authority carries over from one year to the next. Most of this is
earmarked for specific uses and is not available for new programs.
Relation of Budget Authority to Outlays-1978 Budget
S Billion.
Figures in brackets represent Federal funds only.
To be spent in 1978
New Authority
Recommended
for 1978
480.4
Outlays
in 1978
440.0
310.7
[243.1]
[319.l]
[349.1]
t
t
t
Unspent Authority
Enacted in
Prior Y~ars
545.7
[385.3]
NOTE:
t
To be spent in
Future Years
399.2
[291.9]
t
Unspent Authority
for Outlays in
Future Years
568.9
The diFfefence between the 10101 budget figures and federal fund, $hown in bmd<ejs eonsbh 01 trust funds and in'erfund
[397.8]
Iran~jOr1S
t
t
t
betwMn fund groups.
63
PART VI
BUDGET TABLES
Page
1. Budget Receipts, Outlays, and Debt, 1969-78 ......... ". . . . . . . .
2.
3.
4.
5.
6.
7.
8.
9.
Budget Receipts by Source and Outlays by Function, 1970-79 . .
Budget Outlays by Function and Subfunction, 1970-79 . . . . . . . . .
Budget Authority and Outlays by Agency, 1976-79. . . . . . . . . . . . .
Composition of Budget Outlays in Current and Constant (fiscal
year 1972) Prices, 1955-79 . . ..... ... . . . .. . " . . . . . . . . . . . . . .
Outlays and Receipts of Trust Funds, 1976-78. . . . . . . . . . . . . . . . .
Federal Finances and the Gross National Product, 1954-79 . ... " .
Summary of Full-Time Permanent Civilian Employment in the
Executive Branch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Budget Receipts and Outlays, 1789-1979 . . . . . . . . . . . . . . . . . . . . .
65
66
68
74
76
78
79
80
81
NOTES
• Backup data for charts in this book can be obtained from the Office of
Management and Budget, Washington, D.C. 20503.
• More detailed budget tables are included in Part 9 of the Budget oj the
United States Government, 1978.
64
Table 1. BUDGET RECEIPTS, OUTLAYS, AND DEBT, 1969-78 (in billions of dollars)
Description
Estimate
TQ
1970
Receipts and outlays:
Receipts:
Federal funds ........... . ...........
Trust funds .. . ......................
Interfund transactions ................
143. 3
52.0
-7.5
143.2
59.4
-8.8
133.8
66.2
-II. 6
148.8
73. 0
-13.2
161. 4
92. 2
-21. 3
181. 2
104.8
-21. I
187. 5
118.6
-25. I
201. I
133. 7
-34.8
Total budget receipts .... .. .... ....
187.8
193.7
188.4
208. 6
232.2
264. 9
281. 0
Outlays:
Federal funds ............. . .. .......
Trust funds ... .......... .. . ....... ..
In terfund transactions ...... . ...... . ..
148. 8
43. 3
-7.5
156.3
49. I
-8.8
163. 7
59.4
-II. 6
178. I
67. I
-13.2
187.0
81. 4
-21. 3
199.9
90. 8
-21. I
Total budget outlays ...............
184. 5
196.6
211. 4
232.0
247. I
269. 6
Outlays, off-budget Federal entities . ......
Outlays including off-budget entities . ......
1971
1912
1973
1974
1975
1976
1977
1978
54. I
32. I
-4.4
237.4
153.6
-36.9
258.9
17\).5
-36.4
300.0
81. 8
354.0
393.0
240.0
Ill. 2
-25. I
270.0
131. 3
-34.8
65. I
34.0
-4.4
303. I
145.0
-36.9
319.3
157. I
-36.4
326. I
366. 5
94. 7
411. 2
440.0
( .... ) ( .... ) ( .... ) ( .... )
(.1)
(1.4)
(8.0)
(7.2)
(184.5) (196.6) (211.4) (232.0) (247. 1) (271. 1) (334. 1) (373.7)
(1.8) (10. 8)
(9.2 )
(96. 5) (422.0) (449.1)
Surplus or deficit (-):
Federal funds ............... ........
Trust funds ........ . ........ .... . . ..
-5.5
8. 7
-13.1
10.3
-29.9
6. 8
-29.3
5. 9
-25.6
10.7
-18.7
14.0
-52.5
7.4
-68.9
2.4
-II. 0
-'2.0
-65.7
8. 5
-60.4
13.5
Total surplus or deficit (-) .........
3.2
-2.8
-23. 0
-23.4
-14.8
-4.7
-45.1
-66.5
-13.0
-57.2
-47.0
Surplus or deficit (-), off-budget Federal
entities . .. . . . .......... .. ....... .
Surplus or deficit (-) including '!!J-budget
entities . .........................
Outstanding debt, end of year:
Gross Federal debt. ............... . ... .
Held by:
Government agencies ................
The public ........................ .
Federal Reserve System .... ........
Others ...........................
O"l
V1
Actual
1060
NA=Not available.
( .... )
( .... )
( .... )
( .... )
( -. 1) ( - 1. 4) (- 8. 0) (-7.2 ) ( - 1. 8)( - 10. 8) (-9.2)
(3.2) (-2.8)( -23.0)( -23.4)( - 14.8) (-6.1)(-53.1)(-73.7)(-14.7)(-68.0)(-56.1)
367. I
382.6
409. 5
437.3
468.4
486. 2
544. I
631. 9
646.4
716. 7
785.0
87. 7
279. 5
54. I
225.4
97. 7
284. 9
57. 7
227.2
105. I
304. 3
65. 5
238.8
113.6
323. 8
71.4
252. 3
125.4
343.0
75. 2
267. 9
140.2
346. I
80.6
265.4
147.2
396. 9
85.0
311. 9
151.
480.
94.
385.
148. I
498. 3
96. 7
401. 6
156.4
560. 3
NA
NA
169. I
615.8
NA
NA
6
3
7
6
Table 2. BUDGET RECEIPTS BY SOURCE AND OUTLAYS BY FUNCTION, 1970-79 (in billions of dollars)
Actual
Description
1970
1971
1972
Estimate
1973
1974
1975
1976
TQ
1977
1978
1979
103. 2
36. 2
64. 5
119.0
122.4
40.6
86.4
16.6
4. 6
131. 6
41. 4
38.8
8. 5
25.8
153. I
171. 2
58.9
205. 3
56.6
108. 9
8.0
4. 5
1.5
1.2
1.6
17.9
5. 9
4. 7
6.9
RECEIPTS BY SOURCE
Individual income taxes ...... . ......... .. .
Corporation income taxes ................. .
Social insurance taxes and con tribu tions . .. . .
Excise taxes . .. ........... . .............. .
Estate and gift taxes ......... . ........... .
Customs duties ......................... . .
Miscellaneous receipts .. .. ...... . ......... .
90.4
86.2
26.8
48.6
16.6
94. 7
3.6
2.4
3. 4
3. 7
5.4
2.6
3.9
3. 3
3. 6
16.3
4. 9
3. 2
3. 9
Total budget receipts ... ..... ..... .
193.7
188.4
208.6
79. 3
76.8
77.4
3.6
3. I
4. 5
3.2
4.2
4.9
4.3
10.4
3.6
3. 9
4. 2
7. 9
13. I
9.0
II. 7
II. 9
II. 6
15. 2
14. 7
17.5
18. 8
22. I
27.6
32.8
45. 3
15.7
32. 2
53. 9
15. 5
38. 6
76. 8
16. 8
5. 0
3, 3
92. 7
17.0
5. 2
4. I
126. I
18. 5
63. 7
146.2
5.8
5. 3
7. 2
19. I
6. 3
5. 9
7. 9
5.4
3. 7
6. 7
232. 2
264.9
281. 0
300. 0
81. 8
354.0
393.0
454.4
75. I
3. 5
78.6
4. 8
4.0
86.6
90.0
22. 5
5. I
2.0
100. I
7. I
112.3
7. 3
122.8
5. 9
4.0
4.4
6.6
II. 3
2. 5
17.2
5. 3
1.2
3. 3
4.4
17. I
4. 7
19. 7
.6
4. 7
1.5
2.9
16. I
7.7
19. 3
7.9
18.6
18. 2
33.4
5.0
8. 7
21. I
39. 3
19.4
43. 2
18. I
46. 7
OUTLAYS BY FUNCTION
National defense 1 . . ... . . . . . . . . . . . . . .
In terna tional affairs ...................... .
General science, space, and technology ..... .
Natural resources, environment, and en ergy ..
Agriculture ............ . ............... . .
Commerce and transportation ....... .. .. . . .
Community and regional development. ..... .
Education, training, employment, and social
services .. .. .. . ...... ......... .. ...... .
Health ................................. .
4.0
5. 2
9. I
4.0
5.5
5. 3
10.6
5.9
4. 9
9. 9
2. 2
9. 5
1.7
13. I
16.0
4. 3
5. 5
4. 9
4.4
2. 3
7.6
5.2
20.6
1.9
7. I
Income security .. ........................
Veterans benefits and services ....... . ..... .
Law enforcement and justice ........ ... . . ..
General government. .. .... .. . . ... ........
Revenue sharing and general purpose fiscal
assistance ..............................
Interest .................................
Allowances 2 ••.• ••.•• ••••••••••••••• • • •••
Undistributed offsetting receipts ........ . ...
Total budget outlays ...............
1-3. I
8. 7
1.0
1.9
55.4
9.8
1.3
2. 2
63.9
10.7
1.6
2.5
73.0
12. 0
2. I
2. 7
84.4
13.4
2. 5
3. 3
108.6
16.6
2. 9
3. I
127.4
18.4
3. 3
2. 9
32.8
4.0
.9
.9
138. I
18.4
3. 7
3. 7
143. 9
18.3
3.8
3. 9
152. 8
18.0
3. 8
4. 0
.5
18.3
.5
19.6
.5
20.6
7. 2
22.8
6. 7
28. I
7. 0
31. 0
7. I
34. 6
2.0
7. 2
8.9
38.0
-6.6
-8.4
-8. 1
-12.3
-16.7
-14.1
-14. 7
-2.6
-15.4
8. I
39. 7
2. 7
-16.4
8. 3
42.4
4. 3
-17.3
196.6
211.4
232.0
247. 1
269.6
326.1
366.5
94.7
411. 2
440.0
466.0
.1
.5
.8
.1
.5
-*
1. I
-.1
.5
1.6
.1
-.1
.6
2. 6
.1
-.1
1.4
3. 2
.1
.1
Outlays oj qff-budget Federal entities:
International affairs . . .... .... . ............
Natural resources, environment, 'and energy . " ...
Commerce and transportation . ...............
Community and regional development . .........
Income security . .........................•
General government . ... . . . ... ....... ... .. .
-. I
*
Outlays oj off-budget Federal entities . .....
.1
1.4
247. 1
271. 1
-.1
-.7
.1
.2
1. 1
.1
6. 4
-*
*
-*
5. 9
2. 6
8. 7
5. 9
6. 2
a
7.2
1.8
10. 8
9.2
10.9
334. 1
373. 7
96.5
422.0
449. 1
476.9
-*
8.
-*
-*
-*
Outlar~
including off-budget Federal
enntles .........................
196.6
211.4
232. 0
1 Includes civilian and military pay raises for the Department of Defense.
, Includes allowances for civilian agency pay raises and contingencies for relatively uncontrollable programs and other requirements.
'$50 million or less.
Table 3. BUDGET OUTLAYS BY FUNCTION AND SUBFUNCTION: 197(}-79 (in billions of dollars)
O"l
OJ
Actual
Function and sub function
National defense:
Department of Defense-Military:
Military personnel. , , , , , , , , , , , , , , . . .. ,
Retired military personnel. . .. .. .. . . . . ,
Operation and maintenance .. . .. .. .... .
Procurement. ..... . . . . . ... . ......... .
Research and development ..... . .... .. .
Military construction and other 1 . . . . . . .
Deductions for offse tting receipts .. . , ....
Subtotal, Department of DefenseMilitary, ........ . ... . ....... . ...
Military assistance . . .... .. . , .. .. .... . . . .
Atomic energy defense activities .. . ..... ..
Defense-related activities . . ...... . ....... .
Deductions for offsetting receipts ........ . .
Estimate
TQ
1970
1971
1972
1973
1974
1975
1976
23.0
2.8
21. 6
21. 6
7. 2
1. I
- .1
22.6
3. 4
20.9
18. 9
7.3
1.6
- .1
23.0
3. 9
21. 7
17. I
7.9
1.7
-.1
23.2
4. 4
21. I
15.7
8.2
.9
-. I
23. 7
5. I
22. 5
15.2
8. 6
2.6
-.2
25.0
6. 2
26. 3
16.0
8. 9
2.8
-.2
25. I
7. 3
27. 9
16. 0
8.9
3.0
-.2
6. 4
1.9
7. 3
3.8
2. 2
.4
77.2
.7
1.4
74. 5
1.0
1.4
- .1
75. 2
.8
1.4
73. 3
.5
1.4
-.2
77.6
.8
1.5
-1.3
85.0
1.0
1.5
-.9
88.0
.5
1.6
-.1
21. 9
.2
.4
*
*
*
-*
-*
*
*
*
-*
*
-*
*
1977
1978
26.2
8.2
31. I
18.7
10.0
3. 9
-.2
26.0
9.0
33. 5
23.8
II. 4
6.0
- .2
26.2
9.7
35.2
28.8
12. 5
8.4
-.1
98.0
.2
.8
-. I
109.5
.6
2. 2
120.8
.5
2.5
.I
*
*
-*
1979
*
Total national defense . . . .. . .. . .....
79.3
76.8
77.4
75. 1
78.6
86.6
90.0
22.5
100.1
122.3
123.8
International affairs:
Foreign economic and financial assistance ..
Conduct of foreign affairs . .. . . .. . . ... . . . .
Foreign information and exchange activities.
International financial programs . .. .. .....
Deductions for offsetting receipts . . .... . . . .
2.9
.4
.2
.2
-.2
2. 9
.4
.2
-.2
- .3
3. 2
.5
.3
.2
-.3
2.9
.5
.3
.5
-.6
2. 9
.6
.3
1.2
-.2
3. 7
.7
.3
1.5
-.3
3. 6
.7
.4
.8
- .4
1.5
.3
.I
.3
-.2
5. I
1.0
.4
1.2
-.5
5. 2
1. I
.4
1. I
-.5
5. 4
1.2
.4
1.2
-.6
Total international affairs .... ... ... .
3.6
3.1
3.9
3.5
4.8
5.9'
5.1
2.0
7.1
7.3
7.6
General science, space, and technology:
General science and basic research .. . .. .. .
Space flight. .... . ....... . .. . ..... . .....
Space science, applications, and technology .
.9
2.3
.9
1.0
2.0
.8
1.0
1.9
1.0
1.0
1.7
1.0
'1. 0
1.7
.9
1.0
1.7
1.0
1.0
2.0
1.0
.3
.5
.3
1. I
2. 0
1.0
1.2
2. 2
1.0
1.3
2.2
1.2
Supporting space activities ... . .. .. . .. . . . .
Deductions for offsetting receipts .. . .......
-
-- -- -.4
.3
.3
.3
.3
.4
.I
.4
-
-
-
-
-
-- -.4
.4
Total general science, space, and
technology .. .. ... . . . ...... ....
4.5
4.2
4.2
4.0
4.0
4.0
4.4
1.2
4.4
4.7
5.2
Natural
resources,
environment, and
energy:
Water resources and power ... ... .... ... ..
Conservation and land management. .. . . . .
Recreational resources .. ...... . . . . . ... . ..
Pollution control and abatement. ........ .
Energy ... .. ........... . . ... .. . .. . . .. . .
Other natural resources ........... . . . .. . .
Deductions for offsetting receipts . . . . . .. . . .
1.7
.7
.4
.4
.9
.4
-.5
2. I
.9
.5
.7
.8
.5
-.5
2. 3
.8
.5
.8
1.0
.6
- .5
2.5
.7
.6
I. I
1.0
.6
-.5
2. 5
.7
.7
2.0
.6
.7
-.7
3. 3
1.3
.8
2. 5
1.6
.8
-.8
3.6
1.2
.9
3. I
2.4
.9
-.8
1.0
.5
.3
I. I
.6
.2
-.4
4.8
1.5
1.2
5.2
4. I
1.0
-.8
4.9
1.4
1.4
5.9
6. I
I. I
-1.0
4. 7
1.4
1.5
6.0
6.9
I. I
-1.0
Total natural resources, environment,
and energy ... ... . . .. . ... .. .... .
4.0
4.9
5.5
5.9
6.6
9.5
11.3
3.3
17.1
19.7
20.6
Agriculture:
Farm income stabilization . . ... . . . . . . .....
Agricultural research and services .. .......
Deductions for offsetting receipts .... .. .. . .
4.6
.6
4.6
.7
4.1
.8
1.5
.8
.8
.9
1.6
.9
.3
.2
1.8
1. I
1.2
1. I
.7
1.2
*
*
*
*
Total agriculture ... ... . . . .. . . .. .. . .
--
3. 7
.6
5.2
4.3
5.3
4.9
2.2
1.7
2.5
.6
2.9
2.3
1.9
.I
1.5
-.3
2. 2
1.8
*
-1.2
1.6
1.5
1.7
2.8
1.9
1.2
1.7
.3
.9
-2. I
2. 3
.2
1.5
- .6
1.4
.5
4. 7
1.2
.9
.5
5.2
1.8
I. I
.5
5.4
1.9
I. I
.7
5.6
2. 2
1.4
.I
-.1
.9
6. 5
2.4
1.5
.I
-.1
.9
9. 3
2.6
1.6
.I
-. I
.2
2. 3
.6
.4
1.0
10. I
2.8
1.9
1. I
II. 3
3.2
2.0
13.1
16.0
17.2
4.7
Commerce and transportation:
Mortgage credit and thrift insurance . ..... .
Postal Service . . .. .... ..... .. ..... .. ... .
Other advancement and regulation of commerce ... . . . . ... . .. . ...... . . . . . ... . . .
Ground transportation . .. . . . ... . .. ... . . .
Air transportation .... . . ... ... . . ... . . . ..
Water transportation .... . . . . . . . .... . . ...
Other transportation .... ... . . . . . . .. . . .. .
Deductions for offsetting receipts .. , .. . .. . .
Total commerce and transportation ..
O'l
<.D
.4
See footnotes at end of table.
-*
9.1
-
-. I
-*
.6
5.6
2. 2
1.2
.I
-.1
10.4
10.6
9.9
*
-
-
*
-*
-
-
-
.1
.1
*
-. I
1.3
11. 3
3. 3
1.8
.I
-. I
16.1
19.3
18.6
'-l
0
Table 3. BUDGET OUTLAYS BY FUNCTION AND SUBFUNCTION: 1970-79 (in billions of dollars)---COntinued
Actual
Function and sublunction
1970
Community and regional development:
Community development. ...............
Area and regional development. ..........
Disaster relief and insurance .............
Deductions for offsetting receipts ..........
Total community and regional development . . .. .. ........ . ... . ......
Education, training, employment, and social
services:
Elementary, secondary, and vocational education .. .. . ...... ....... . . . ..... .....
Higher education .......... .............
Research and general education aids . ......
Training and employment. ...............
Other labor services .....................
Social services ..........................
Deductions for offsetting receipts ..........
Total education, training, employment, and social services .........
Health:
Heal th care services ... ....... ... .... ....
Health research and education ...........
Prevention and control of health problems ..
Health planning and construction .........
General health financial assistance .........
Deductions for offsetting receipts .... ......
Total health .. ............ .. .... . ..
1971
1972
1973
Estimate
1974
2. 3
.6
.3
2.6
.7
.4
3. I
.8
.4
3. I
.9
1.6
3.0
I. I
.8
*
*
*
*
-*
3.2
3.6
4.3
5.5
3. I
1.4
.5
1.6
.1
I. I
3. 5
1.4
.5
2.0
.2
1.4
4.0
1.4
.5
2.9
.2
2. 7
*
*
-*
3. 7
1.5
.7
3. 3
.2
2. 5
7.9
9.0
10.6
1.6
.4
.5
1975
TQ
1976
3. I
.9
.4
3. 5
1.3
.5
1977
I. I
1978
1979
4.9
1.8
.5
.3
.I
4. 9
2.2
.6
5. I
2. 3
.5
*
*
*
-*
*
-*
4.9
4.4
5.3
1.5
7.7
7.9
7.1
4. 7
2. I
.9
4. I
.3
3. 3
1.2
.7
.2
1.9
.I
.9
*
5. 2
3.4
I. I
6.8
.4
4. I
*
5. 5
2. 9
1.2
5. 3
.4
4.0
*
4. 7
2. 7
.8
6. 3
.3
3. 5
-*
5.4
2. 9
1.2
4. 3
.4
4.0
-*
3.8
1.3
.9
2.9
.2
2. 5
-*
*
-*
11. 7
11. 9
11.6
15.2
18.2
5.0
21. 1
19.4
18.1
12. I
1.7
.5
.5
14. 5
2.0
.5
.4
15. 5
2. 3
.6
.4
18.5
2. 3
.8
.5
23.4
2. 7
.9
.7
28. 7
3. I
1.0
.8
7.6
.9
.3
26.0
2.6
.9
1.3
12.3
28. 2
2.5
.9
1.3
13. 8
*
*
*
-*
-*
*
*
*
-*
34. 5
2.8
I. I
.9
*
*
-*
13.1
14.7
17.5
18.8
22. 1
27.6
33.4
8.7
39. 3
43.2
46.7
Income security:
General retirement and disability insurance.
Federal employee retirement and disability ..
U nemploymen t insurance .... .... ...... ..
Public assistance and other income supplements ...............................
Deductions for offsetting receipts ....... . ..
Total income security ....... . ......
Veterans benefits and services:
Income security for veterans .............
Veterans education, training, and rehabilitation ................................
Hospital and medical care for veterans ....
Veterans housing .......................
Other veterans benefits and services .......
Deductions for offsetting receipts ..........
Total veterans benefits and services ..
Law enforcement and justice:
Federal law enforcement and prosecution ...
Federal judicial activities .............. ..
Federal correctional and rehabilitative activities .. . ...... .......... . ......... .
Law enforcement assistance ..............
Deductions for offsetting receipts ..........
Total law enforcement and justice ....
See footnotes at end of table.
31. 3
2. 7
3.4
37. 5
3. 2
6. 2
42.0
3. 8
7. I
51. 7
4. 5
5.4
58.6
5. 6
6. I
69.4
7. 0
13.5
77.2
8. 2
19.5
20. 9
2. 3
4. 0
88. I
9. 7
16.4
95. 7
11. I
13.9
104.7
12.5
11. 0
5. 7
8.6
11. I
11. 4
14. I
18. 8
22.6
24.0
23.2
24. 7
*
*
*
*
*
-*
5.6
*
43.1
55.4
63.9
73.0
84.4
108. 6
127.4
32.8
5. 5
6.0
6. 3
6. 5
6.8
7. 9
8.4
1.0
1.8
.1
.3
1.7
2.0
- .2
.3
2.0
2.4
-.3
.3
2. 8
2. 7
-.4
.4
3. 2
3.0
4.6
3. 7
5. 5
4.0
-.1
.6
*
.4
*
.5
-*
-*
*
-*
138.1
143. 9
152.8
2.1
9.1
9.2
9.1
.8
1.0
- .1
.1
4.1
4.9
-. 3
.6
3. 3
5. I
3. 0
5.4
-.2
.6
*
.6
*
*
*
-*
*
*
*
*
*
*
*
8.7
9.8
10.7
12.0
13.4
16.6
18.4
4.0
18.4
18.3
18.0
.7
.1
.8
.1
1.0
.2
1.2
.2
1. 3
.2
1.6
.3
1.9
.3
.5
.I
2.1
.4
2. 2
.4
2.2
.4
.I
.1
.I
.2
.I
.4
.2
.6
.2
.8
.2
.9
.2
.9
.3
.9
.3
.8
.4
.8
*
*
-*
.1
.2
*
*
*
*
2.5
2.9
3.3
.9
3.7
3.8
3.8
*
-*
1.0
1.3
*
-*
1.6
2.1
-..J
N
Table 3. BUDGET OUTLAYS BY FUNCTION AND SUBFUNCTION: 1970-79 (in billions of dollars)---COntinued
Actual
Function and subfunction
1971
1970
General government:
Legislative functions ..... . ... . . . ... .... .
Executive direction and management .... . .
Central fiscal operations .... . . . . . ..... . ..
General property and records management.
Central personnel management . . . .... . .. .
Other general government . ... ....... . . . .
D~ductions for offsetting receipts . . ....... .
1972
1973
Estimate
1974
1975
*
.2
- .1
1.0
.6
.1
.2
- .1
.4
.1
1.2
.7
.1
.2
-.1
.4
.1
1.2
.9
.1
.2
.... 2
.5
.1
1.3
1.0
.1
.4
-.2
.6
.1
1.8
.4
.1
.5
-. 3
Total general government ..... . .. . .
1.9
2.2
2.5
2.7
3.3
Revenue sharing and general purpose fiscal
assistance:
General revenue sharing .. .. . ..... .......
Other general purpose fiscal ;:wistance ..... .
.5
.5
.5
6. 6
.6
Total revenue sharing and general
purpose fiscal assistance ...... .. . ..
.5
.5
.5
Interest:
Interest on the public debt. .... . .. ... .....
Other interest. . . . . .... . . : . . . . . . ... .. ...
19. 3
-1.0
21. 0
-1.4
Total interest . . ....... . . . .. .. ... . . .
18.3
19.6
.3
.3
*
*
.9
.6
1976
TQ
1977
.7
.1
1.8
.2
.I
.I
.I
.9
.1
2.0
.3
.I
.5
- .3
*
.2
-.1
3.1
2.9
6. I
.6
6. I
.9
7.2
6.7
21. 8
-1.3
24.2
-1.4
20.6
22.8
*
.4
1978
.9
.I
2. I
1979
.9
.I
2. I
.4
.5
- .2
.4
.1
.5
- .2
.6
-.2
.9
3.7
3.9
4.0
6.2
.9
1.6
.4
6. 8
2. I
6.8
1. 3
6.9
1.4
7.0
7.1
2.0
8.9
8.1
8.3
29. 3
-1.2
32. 7
-1.7
37. I
-2. 5
8. I
-.9
42. 0
-4.0
44. 6
-4.9
47.3
-4.9
28. 1
31. 0
34.6
7.2
38.0
39.7
42.4
.I
Allowances:
Civilian agency pay raises .. ~ . . ... .... ....
Con tingencies for;
Relatively uncontrollable programs ... . ..
Other requirements ... . .. ... . . ..... . . .
1.2
2. 3
0
1.5
0
2.0
Total allowances ....... . . . . . . ... .. .
2.7
4.3
Undistributed offsetting receipts:
Employer share, employee retire men t ......
Interest received by trust funds ............
Rents and royalties on the Outer Continental Shelf. ... . ....... .. .... . .......
Total
undistributed
offsetting
receipts .........................
Total budget outlays . . .. ..... .. ....
Outlays of off-budget Federal entities: 2
International affairs: International financial
programs . .. . .. .......... .............
-2.4
-3. 9
-2.6
-4.8
-2.8
-5.1
-2. 9
-5.4
-3.3
-6.6
-4.0
-7.7
-4.2
-7. 8
-1.0
-.3
-4.6
-8.2
-4.7
-8.7
-5.1
-9.7
- .2
-1.1
-.3
-4.0
-6.7
-2. 4
-2.7
-1.3
-2.6
-3. 1
-2.5
-6.6
-8.4
-8.1
-12.3
-16.7
-14.1
-14.7
-2.6
-15.4
-16.4
-17.3
196.6
211.4
232.0
247.1
269.6
326.1
366.5
94.7
411.2
440.0
466.0
-.1
-*
-.1
-.1
-.1
.2
-.1
.5
.6
1. 4
-*
Natural resources, environment, and energy:
Energy ...... ............. ...... .... ..
.1
.5
.5
-*
-*
.8
1.1
*
1.1
.1
-.7
*
.3
1.0
.3
.7
1.8
.8
2. 5
-.1
.8
1.1
1.1
-.7
1.6
2.6
3.2
.1
.1
.1
*
.1
.1
.1
-*
-*
-*
-*
-*
-*
.1
6. 4
5. 9
2. 6
8. 7
5. 9
6.2
.1
1.4
8. 0
7.2
1.8
10. 8
9.2
10.9
247.1
271.1
331.1
373. 7
96. 5
422. 0
449. 1
476. 9
--Commerce and transportation:
Mortgage credit and thrift institutions . ......
Postal Service . . . .. ... . .. ..............
Ground transportation . . . .. .......... . .. .
Total commerce and transportation . .......
Community and regional development: Area and
regional development . ....................
*
Income security: General retirement and disability
insurance . ... . .. .. .... ....... ..... . ...
=;==
General government: Federal Financing Bank . ..
Outlays off-budget Federal entities . .......
Outlays including off-budget Federal entities .
*$50 million
I
'-l
(.);)
2
196.6
211.4
232.0
or less.
Includes allowances for civilian and military pay raises for Department of Defense.
Off-budget Federal entities begin in 1973.
'-l
Table 4. Budget Authority and Outlays by Agency (in millions of dollars)
~
Budget authority
Department or other unit
1976
actual
Legislative branch .. ........ .
The Judiciary .. . .... ..... . . .
Executive Office of the President. ...... .... . ... . .. . ..
Funds appropriated to the
President .. ... ..... .. .....
Agriculture .. .. .. . ... .......
OIl-budget Federal entities . ....
Subtotal incl. off-budget . .
Commerce . .. .. ..... ...... ..
Defense-Military (including
pay r aises) ... . ........ .... .
Defense-Civil ....... .......
Health, Education, and Welfare . .. . ............ .. ...
Housing and Urban Development. . .. . ... . .........
Off-budget Federal entities . .. ..
Subtotal, incl. off-budget ..
Interior ....................
Justice .. ........... . . .. . . . .
Labor ............... . .....
Off-budget Federal entities . ... .
Subtotal, incl. off-budget ..
State . .. .. ....... ... . . . .. . .
Transporta tion .... ........ . .
Treasury . .. . . . ....... .... ..
Oif-budget Federal entities . ... .
Subtotal, incl. qlf-budget ..
Energy Research and Development Administration . .. ....
Environ men tal
Protection
Agency .... . . ... . ...... . .
General Services Administration .. .... ..... . ........ .
TQ
actual
1977
estimate
Outlays
1978
estimate
1979
estimate
1976
actual
TQ
actual
1977
1978
1979
estimate
estimate
estimate
923
345
224
87
971
422
1,051
441
1,211
467
775
325
224
85
1,016
398
1,102
440
1,252
465
69
18
75
72
72
79
16
81
72
72
10,566
15,002
-921
2,956
3,411
13, 173
4,083
12,443
3,846
12,935
3,525
12,796
1,221
3,850
4,467
13,691
4, 729
12,477
(1,089)
(16,091)
(17)
(2,973)
(161)
(13,334)
(125)
(12,568)
(13,050)
(307)
(13, 102)
(-64)
(3,786)
5,149
12,761
(550)
(14,241)
(92)
(12, 853)
(89)
(12,566)
(116)
2,252
466
4, 032
1,907
1,919
2,020
534
3,040
2,931
2,336
95,712
2, 196
23,089
659
108,260
2,495
121 ,704
2,645
134,272
2,642
88,036
2, 124
21,926
583
98,050
2,469
109,523
2,628
120, 795
2,628
128,244
34,248
146,494
161, 106
181,225
128, 785
34,341
147,927
159,385
171,903
28,498
403
20,516
29,677
29,569
7,079
1, 397
7,673
9,070
(750)
(30,319)
(-15)
(7, 064)
8, 722
(750)
(30, 427)
(-3)
(1,394)
(262)
(7, 935)
(738)
(9,460)
(778)
(9,849)
788
551
5,905
3,491
2,436
23,468
3,498
2,445
19,619
3,717
2,401
15, 702
(750) ( .. . ... . )
(29,248)
(403)
(750)
(21,266)
2,541
1,012
4,230
3,646
3,858
2,175
534
2, 328
2, 345
2,403
20,379
3,654
24,403
20,654
19,207
( .. ... .. ) ( . . ... . . ) ( ... . . .. ) ( ... . ... ) ( ....... )
2,293
2,242
25, 727
(-22)
(20,379)
(3,654)
(24, 403)
(20,654)
(19,207)
(25,705)
(- *)
(5,905)
(-14)
(23,454)
(19,603)
(-16)
(15,686)
931
10,276
46, 772
372
4,969
10, 135
1,273
9,126
49,600
1,377
13,045
50,989
1,440
14,387
53,245
1,062
11,936
44,335
316
3,003
9,699
1,255
14,590
49,983
1,364
15, 178
52, 743
(8,946)
(55,718)
1,199
12, 774
50,020
(3,471)
(13,606)
(12, 154)
(61,754)
(60,952)
(10, 461)
(63,706)
(50, 124)
(2,549)
(12,248)
(58, 702)
(5, 878)
(55,861)
(6,174)
(58,918)
(9,963)
(5, 789)
(8,682)
(-16)
4,515
1,264
6,389
7,840
8,321
3, 759
1,051
5,375
6,458
7,771
771
189
1,860
5,303
5,303
3,118
1,108
5,295
6,006
6, 135
161
-12
203
248
290
-92
3
176
263
303
Aeronautics
National
and
Space Administration ... . ..
Veterans Administration . ... . .
Other independent agencies ...
Off-budget Federal entities . ....
Subtotal, incl. o.ff-budget ..
Allowances 1 . •. . .. . •.. . . ... •
Undistributed offsetting receipts:
Employer share, employee
retirement . .... . .... ....
Interest received by trust
funds . . . . . ..... .. . .. . ..
Rents and royalties on the
Outer Continental Shelf. .
Total. . . ... . . .... .. ..
Total, o.ff-budget Federal
entities . ...... .. . . .
Total incl. o.ff-budget
Federal entities . . . ...
.....
CJ1
3,550
932
19,651
4,523
34,510
5,177
(-1,225) ( .. ..... )
(33,285)
(5,177)
3, 723
4,018
4,387
19,047
18,172
18,553
31,151
29,286
32,060
(120) (83,000) ( . . .... . )
(29,406) (114,151) (32,060)
. .... . ..
2,949
4,3II
. .......
3, 706
18,370
21,515
(1,304)
(22,819)
. .......
3,901
18,259
24, 755
(2,465)
(27,220)
2,651
4,331
17,938
25,653
(3,873)
(29,526)
4,3II
953
3,957
5,801
(-715)
(5,086)
-4,242
-985
-4,592
-4,670
-5,107
-4,242
-985
-4,592
-4,670
-5,107
-7,800
-270
-8,201
-8,659
-9,700
-7,800
-270
-8,201
-8,659
-9,700
-2,662
-1,3II
-2,600
-3,100
-2,500
-2,662
-1,3II
-2,600
-3,100
-2, 500
415,336
91,409
435,925
480,440
518,615
366,466
94,746
411,243
439,967
465,967
(3,488)
(13,186)
(93,838)
(11,327)
(1, 767)
(10,785)
(9,561)
(424, 896)
(7, 196)
(94,897) (449,111) (574,278) (529, 942) (373, 662)
MEMORANDUM
1976
Portion available through current action by Congress ..
Portion available without current action by Congress . .
Outlays from obligated balances 2 •••••.• • • •••••• • •.
Outlays from unobligated balances 2 • • • .• . . • . . . • . .•.
Deductions for offsetting receipts:
In tragovernmen tal transactions . . ... . .. .. . .. .....
Proprietary receipts from the public .. ...... .. ....
266,933
201, 724
Total budget authority and budget outlays ..
TQ
1977
1978
55,276
46,677
287, 748
207,635
312,873
228,659
.. .... ..
. .. . . ...
-39,424
-13,898
-5,272
-5,271
415,336
91,409
(9, 156)
(10,899)
(96,513) (422,028) (449,124) (476, 866)
1976
TQ
1977
1978
... .. . . .
158, 321
II 7, 871
71,952
71,644
30,077
16,542
34,952
23, 719
190,490
136,895
84,053
59,26.4
193,791
153,353
102,182
51, 732
-43,316
-16,142
-43,843
-17,249
-39,424
-13,898
-5, 272
-5,271
-43,316
-16,142
-43,843
-17,249
435,925
480,440
366,466
94,746
411,243
439,967
... , ".. .. ...... . . . .... .. .
0$500 thousand or less.
I Includes allowances for civilian agency pay raises and contingencies .
• Outlays from appropriations to liquidate contract authority are included as outlays from balances.
3,670
18,415
19, 160
(1,137)
(20,297)
'-l
0'>
Table 5. COMPOSITION OF BUDGET
~UTLAYS
IN CURRENT AND CONSTANT (FISCAL YEAR 1972) PRICES: 1955-79
(In billions of dollars)
Current prices
Constaut (fiscal year 1972) prices
Nondefense
Fiscal year
1955 ................
1956 ................
1957 . ..... . .. .. .. . ..
1958 ...... , .........
1959 .. ... ... . . .. ... .
1960 ...... . . . .......
1961 ........... . ....
1962 .... ....... . ... .
1963 ... ....... ......
1964 ............. . ..
1965 ................
1966 ..... . ..........
1967 ................
1968 ................
1969 .. . . . ....... .. ..
1970 .... .. ..........
1971 ................
1972 .. .... ........ ..
1973 ..... ... . .......
1974 .. ... . . ... ..... .
-1975 ................
1976 .. .. .. .... . . . ...
TQ .................
1977 estimate ........
1978 estimate ........
1979 estimate .. ......
Total
outlays
68.5
70. 5
76. 7
82.6
92.1
92.2
97.8
106.8
111.3
118.6
118.4
134.7
158. 3
178.8
184. 5
196.6
211. 4
232.0
247. 1
269.6
326. 1
366. 5
94. 7
411. 2
440.0
466.0
National
defense
39.9
39.8
42. 3
43.8
45.9
45.2
46.6
50.4
51. 5
52. 7
48.6
55.9
69. 1
79.4
80.2
79. 3
76.8
77.4
75.1
78.6
86.6
90.0
22.5
100. 1
112.3
123.8
Total
non-
defense
28.6
30. 7
34. 5
38.8
46.2
47.0
51. 2
56.4
59.8
65.8
69.8
78.8
89.2
99.4
104.3
117.3
134.6
154.7
172.0
191. 1
239. 5
276.5
72.2
311. 2
327. 7
342. 2
Payments
for
indi viduals
13.0
13. 8
15.6
19. 4
21. 2
22. 9
25. 9
27. 1
28.7
29.7
30.4
34. 3
40. 1
45. 9
52. 8
59.8
74. 5
85. 3
95. 9
Ill. 1
142.6
167.3
42. 7
183.7
193.6
206. 2
Net
interest
4.8
5.1
5.4
5.6
5.8
6.9
6. 7
6. 9
7.7
8.2
8.6
9.4
10. 3
11. 1
12. 7
14.4
14.8
15. 5
17.4
21. 5
23.3
26.8
7.0
29.8
31. 1
32. 7
Nondefense
All
other
10.8
11. 8
13.5
13. 7
19.2
17.2
18. 6
22.4
23.4
27. 9
30.8
35.1
38.8
42.4
38.9
43. 1
45. 2
53.9
58. 7
58. 5
73.6
82.3
22. 5
97. 7
103.0
103. 3
Total
outlays
134.3
133.0
137.'2
141. 9
153.9
150.8
157. 1
168. 7
170.7
177. 4
173.3
187.9
212. 1
229. 5
223. 1
220.8
223.0
232.0
233.2
231. 4
251. 9
264.4
66. 1
278.0
281. 0
281. 0
National
defense
75.9
73.0
74.0
74. 1
75.3
73.9
74.8
79.3
79.0
78.8
71.0
77.7
93.2
102.2
98.8
91. 1
82. 3
77.4
70.5
68.3
67.0
64.6
15. 7
67.0
70.2
72.5
Total
non-
defense
58. 5
60.0
63.2
67. 7
78. 7
76. 9
82.3
89.4
91. 7
98.6
102.3
1l0.2
118.9
127. 3
124. 3
129. 7
140.8
154. 7
162. 7
163. 1
184.8
199.8
50.4
211. 0
210.8
208.5
Payments
for
individuals
19.9
21. 2
23.2
28.0
30. 1
32. 1
35.8
37.1
38. 7
39. 7
40. 1
44.2
50. 1
55.6
60.9
65. 1
77.2
85.3
92.2
98.0
113.3
124. 1
30. 7
128.0
128.1
129.7
Net
interest
17.7
16.9
16. 1
16.2'
16.5
16.3
16.2
16. 7
16.!l
16.8
16. 7
16.5
.16. 1
16.9
15. 5
15.0
15.2
15.5
15.4
14.3
14.6
16.4
4. 1
17.7
18. 3
18. 1
All
other
20.9
22.0
23.9
23.6
32. 1
28.5
30.3
35. 7
36.2
42.2
45. 5
49.6
52. 7
54.8
47.8
49.6
48. 3
53.9
55. 1
50. 7
57.0
59.3
15.6
65. 3
64. 5
60.6
Current prices
Constant 1972 prices
Addendum: Payments for individuals and grants-in-aid
Total
National
defense
1955 ................
1956 ................
1957 ......... .. ... . .
1958 ............ . .. .
1959 ......... . ......
1960 ........ . .......
1961 ................
1962 ... ... ..........
1963 ... .. .. . ........
1964 ................
1965 ................
1966 .......... . .....
1967 ................
1968 . .. . ....... .. ...
1969 .............. '..
1970 . .... ....... ....
1971 ................
1972 ................
1973 ................
1974 . .... .. .. ..... ..
1975 ................
1976 ......... .. .. . . .
TQ ........ ... ......
1977 estimate ........
1978 estimate ........
1979 estimate . •.. . . ..
......
......
.4
.5
.5
.6
.7
.7
.8
.9
1. 1
1.2
1.4
1.6
1.9
2.1
2.5
2.9
3.4
3. 9
4.4
5. 2
6. 3
7.4
2.0
8.3
9.1
9.9
Addendum: Payments for individuals and grants-in-aid
1
Payments for individuals
Nondefense
14.4
15. 7
17.7
22.0
25.0
27.2
30.1
31. 7
33. 7
36.0
37.4
42.6
50. 2
58.2
65.6
74. 9
91. 8
106.2
124.6
140.3
176.2
206.8
53.5
230. 5
239. 7
250. 1
Direct
National
defense
.4
.5
.5
.6
.6
.7
.8
.9
1.0
1.2
1.4
1.6
1.8
2. 1
2.4
2.8
3.4
3. 9
4.4
5.1
6.2
7.3
1.9
8.2
9.1
9.9
Nondefense
11. 2
12.0
13.6
17. 1
18.6
20.2
23.0
23.8
25.1
25. 9
26. 5
29. 7
35.0
39. 6
45.4
50. 9
63. 7
71. 9
82.8
97. 1
126.5
147.8
37.6
160. 1
168. 1
178.4
Indirect
(grants
in-aid)'
1.8
1.8
2.0
2. 3
2.6
2. 7
2.9
3. 3
3. 5
3.8
4. 0
4. 6
5.1
6. 3
7.4
8.9
10.8
13.4
13. 1
14.0
16. 1
19.5
5.1
23. 5
25. 5
27.8
Total
All other
grants •
1.4
1.9
2. 1
2. 6
3.9
4. 3
4.2
4.6
5.1
6. 3
7.0
8.4
10.2
12. 3
12.9
15.2
17.3
21. 0
28. 7
29. 3
33.6
39. 5
10.8
46. 9
46. 1
44.1
National
defense
.7
.8
.8
.8
.9
1.0
1. 1
1.3
1.4
1.7
1.9
2.1
2.3
2.6
2.9
3.1
3.5
3. 9
4. 3
4.6
5.0
5.5
1.4
5. 8
6.0
6.2
Nondefense
22. 9
24.9
27. 1
32. 7
36.9
39. 5
42.9
44.6
46.8
49.4
50.6
56.4
64. 1
71.5
76.6
82.4
95.5
106.2
119. 1
123. 3
139.4
152. 7
38. 1
159.4
157. 1
155.9
Direct
National
defense
.6
.7
.8
.8
.9
1.0
1. 1
1.2
1.4
1.6
1.8
2.1
2.3
2.5
2.8
3. 1
3. 5
3.9
4. 2
4. 5
5.0
5.4
1.4
5. 7
6.0
6.2
Indirect
Nondefense
17.2
18. 3
20.3
24.6
26.4
28.2
31. 8
32.6
34.0
34.6
34. 9
38.3
43. 7
47.9
52.4
55. 5
66.0
71. 9
79.6
85.6
100.5
109. 7
27.0
Ill. 6
111. 2
112.3
1 The nondefense payments for individuals and grants are referred to as "domestic assistance" in variolls places in the Budget and in the Budget in Brief.
2 All nondefense .
• Includes a small proportion of grants in the national defense function, never totaling $100 million in any year.
1
Payments for individuals
(~rants
Ill-aid) ,
2. 7
2.8
3.0
3.4
3. 7
3.8
4.0
4. 5
4. 7
5. 1
5.2
5.9
6.4
7.6
8. 5
9. 7
11. 2
13.4
12.6
12.4
12.8
14. 5
3.7
16.4
16.8
17.5
All other
grants'
3.0
3. 7
3.9
4. 7
6.9
7. 4
7. 1
7. 5
8. 1
9. 8
10. 5
12.2
14.0
16.0
15. 7
17.3
18.4
21. 0
22. 7
25.3
26. 1
28. 6
7.5
31. 4
29. 1
26.2
Table 6 . OUTLAYS AND RECEIPTS OF TRUST FUNDS (in millions of dollars)
Outlays
Description
Receipts
actual
TQ
actual
estimate
cstimatc
Federal old-age, and survivors, and disability insurance trust funds.
Health insurance trust funds ...... .. .... . ...... . ...........
State and local government fiscal assistance trust fund .... . .. ..
Unemp loyment trust fund .................................
Railroad employees r etirement funds ... .. . . ............ . ....
Federal employees retirement funds .... . ........ .... ... .. ...
Airport and airway trust funds .............................
Highway trust funds .... .. ... .. .... .. .... . ......... . .. ....
Foreign military sa les trust fund ....... . ... . ....... . .... . .. .
V ('terans life insurance trust funds ....... .. .. . . . ........... .
Other trust funds (nonrevolving) ...... . .. . . . . . .. . ... . .... ...
Trust revol. ing funds .... . ..... . . . ..... . ...... . .. . ..... . . .
73, 903
17, 779
6, 243
17,920
3,475
8, 352
547
6,52 1
6,657
704
547
-978
19, 763
4,805
1,588
3,544
921
2,284
92
1, 758
1, 8 13
148
200
62
84,669
21,773
6, 776
15,400
3,72 7
9,855
849
6,053
8,335
696
533
- 1,409
Subtotal ............ . . . . ... . . . . ........... . ....... .
Intrafund transactions ................. . . . ..... . ....... . ..
Proprietary receipts from the public .... . .. . ... . .... . ....... .
Receipts from off-budget Federal entities .. .. ........... .... ..
141 ,669
-1,244
-8, 131
-1,009
36,977
-2
-2,857
-95
Total. ................ ... .. . . .. . . ........ . ...... . .
131,286
34,023
1976
actual
TQ
actual
estimate
92,3 74
24,297
6,8 14
13,300
3,896
11 ,276
1,088
7, 165
8,800
759
708
-884
70,682
18,525
6,355
16,2 15
3, 253
13, 197
1,084
6,000
7, 257
889
622
18, 358
4,937
1,664
3,378
337
1,486
278
1,689
2,539
157
201
81,005
22,998
6,655
15, 700
3,664
16,665
1,371
7, 265
8,800
964
702
90, 172
28, 583
6,855
17,200
3,9 19
16,646
1,49 1
7,520
8,800
1,03 1
835
157,256
-1, 330
-9, 71 5
-1,185
169,593
-1,578
-9,845
-1,113
144,078
- 1,244
-8,13 1
-1,009
35,025
-2
-2,857
-95
165, 788
-1,330
-9,71 5
-1, 185
183,05 1
-1,578
-9,845
-1 , 11 3
145, 026
157,057
133, 695
32, 071
153, 558
170,515
1077
1078
1076
1977
1078
estimate
Table 7. FEDERAL FINANCES AND THE GROSS NATIONAL PRODUCT, 1954-79
(Dollar amounts in billions)
Outlays!
Budget receipts
Year
1954 .... ...
1955 ... . ...
1956 ... . . ..
1957 .. .. .. .
1958 .......
1959 . . . . . ..
1960 .. . . ...
1961. . .....
1962 . . ... ..
1963 .. ... ..
1964 .. .. . ..
1965 .......
1966 ......•
1967 ... .. . .
1968 .. . . . . .
1969 ..... . .
1970 .... ...
1971. .... ..
1972 .. . .. . .
1973 ... . . ..
1974 . .. .. ..
1975 .......
1976 ... ... . .
1977 est .....
1978 est. . . . .
1979 est. ....
-X
c.o
Gross
national
product
363.6
380.0
411. 0
432. 7
442. 1
473.3
497.3
508. 3
546.9
576. 3
616.2
657. I
721. I
774.4
829. 9
903. 7
959.0
1,01 9.3
1,110.5
1,237.5
1,360.9
1,450.6
1,609. 5
1,827.6
2,038.4
2,268.3
Amount
$69. 7
65.5
74.5
80. 0
79.6
79. 2
92. 5
94. 4
99. 7
106.6
112.7
116. 8
130.9
149.6
153. 7
187. 8
193. 7
188.4
208. 6
232. 2
264. 9
281. 0
300. 0
354. 0
393. 0
454.4
Percent
of GNP
19.2
17.2
18. I
18.5
18.0
16.7
18.6
18.6
18. 2
18.5
18. 3
17.8
18. I
19.3
18. 5
20. 8
20. 2
18. 5
18.8
18.8
19.5
19.8
18.6
18 3
19. 3
20.0
Unified budget
Amount
$70. 9
68. 5
70. 5
76.7
82. 6
92.1
92. 2
97. 8
106. 8
111. 3
118.6
118.4
134. 7
158. 3
178.8
184. 5
196. 6
211. 4
232. 0
247. I
269. 6
326. 1
366. 5
411. 2
440. 0
466. 0
Percent
of GNP
19.4
18.0
17. I
17.7
18.7
19.5
18.5
19. 2
19.5
19.3
19.2
18. 0
18.7
20.4
21. 5
20.4
20.5
20. 7
20. 9
19.9
19. 8
22.4
22.8
22. 5
21. 6
20.5
Federal debt, end of year
Off-budget
Federal entities
Amount
.1
1.4
8.0
7. 2
10. 8
9. 2
10.9
Total
Percent
of GNP
*
.1
.6
.4
.7
.6
.7
Amount
$70. 9
68.5
70.5
76. 7
82. 6
92. 1
92. 2
97.8
106.8
Ill. 3
118.6
118.4
134.7
158. 3
178.8
184. 5
196.6
211. 4
232.0
247. I
271. 1
334. I
373. 7
422.0
449.1
476. 9
Total
Percent
of GNP
19. 4
18.0
17. 1
17.7
18. 7
19. 5
18. 5
19.2
19.5
19. 3
19. 2
18.0
18.7
20.4
21. 5
20. 4
20.5
20. 7
20. 9
20.0
19.9
23.0
23.2
23. 1
22.0
21. 0
Amount
$270.8
274.4
272.8
272. 4
279. 7
287.8
290.9
292. 9
303. 3
310.8
316.8
323. 2
329. 5
341; 3
369.8
367. I
382. 6
409. 5
437. 3
468.4
486.2
544. I
631. 9
716. 7
785.0
NA
Held by the public
Percent
of GNP
74. 5
72. 2
66.4
63.0
63. 3
60.8
58. 5
57.6
55.5
53.9
51. 4
49.2
45. 7
44. 1
44.6
40.6
39.9
40.2
39. 4
37.9
35. 7
37. 5
39. 3
39. 2
38. 5
NA
Amount
$224.5
226.6
222. 2
219.4
226.4
235.0
237.2
238.6
248.4
254. 5
257.6
261. 6
264. 7
267. 5
290.6
279.5
284.9
304. 3
323.8
343.0
346. 1
396.9
480. 3
560. 3
615. 8
NA
Percent
of GNP
61. 7
59.6
54. 1
50. 7
51. 2
49. 7
47. 7
46.9
45.4
44. 2
41. 8
39.8
36. 7
34.5
35.0
30.9
29. 7
29.9
29.2
27. 7
25.4
27.4
29. 8
30. 7
30. 2
NA
•. 05% or less.
NA=Not available.
! The 1972-76 data have been revised to include the Export·Import Bank in the unified budget instead of with the off-budget Federal entities. The Exchange Stabilization Fund is
included as an off-budget Federal entity from 1976.
Table 8. SUMMARY OF FULL-TIME PERMANENT CIVILIAN EMPLOYMENT
IN THE EXECUTIVE BRANCH I
Agency
June 30, 1976
actual
Sept. 30
1977
Change
1978
1977-78
estimate
estimate
80,413
28. 823
922, 386
28,648
136,462
14,942
59, 130
51,201
14,471
22,634
71,593
107,877
83, 500
29,500
928,000
29,000
142, 300
15,600
62,000
52,400
16,200
22,800
72,800
112, 100
84,200
29,400
921,200
28,900
142,400
16, 500
62,400
53,800
16, 200
22, 900
74,000
112,600
700
-100
-6,800
-100
100
900
400
1,400
100
100
1,200
500
8, 283
9,481
35,679
8, 700
9, 700
36,000
9,000
9, 700
36, 200
. .. ......
24, 039
192,453
23,800
201,700
23, 700
205, 500
-100
3,800
5, 751
6, 740
3,349
2, 289
12,978
4,136
15,100
8, 559
39,432
6,100
7,000
3, 900
2, 500
13,500
4,400
17,400
8, 700
41,700
6,100
7,100
3, 700
2, 700
13,500
4,600
17,900
8, 700
41,900
Subtotal. .................
Contingencies 2 . . . . . . . . • . . . . • . . . .
1,906,849
1,951,300
2,000
1,954,800
5,000
Subtotal ................ ..
Postal Service ...................
1,906,849
541,499
1,953,300
536,400
1,959,800
540,000
2,448,348
2,489,700
2,499,800
Agricul ture ..................... .
Commerce ............... ...... .
Defense-military functions ........
Defense--civil functions ...........
Health, Education, and Welfare ....
Housing and Urban Development. .
Interior .................... .. ...
Justice .................. . .......
Labor ...................... . .. .
State . ........ .. ... ... ....... .. .
Transportation ... ............ ...
Treasury .................. .. . .. .
Energy. ~esea~ch and Development
AdmInistratIOn ............... .
Environmental Protection Agency ..
General Services Administration ....
National Aeronautics and Space
Administration ................
Veterans Administration ..........
Other:
Agency for International Development .......................
Civil Service Commission ...... .
Federal Energy Administration .. .
Nuclear Regulatory Commission.
Panama Canal ................
Small Business Administration ...
Tennessee Valley Authority .....
United States Information Agency
Miscellaneous ...................
Total. ............... . ....
200
100
-200
200
200
500
200
----- ---- ---- ---. .... ...
.
----
-----
1 Excludes developmental positions under the worker trainee opportunity program
certain statutory exemptions.
, Subject to later distribution.
80
300
3,500
3,000
---6,500
3,600
----
(WTOP)
10,100
as well as
Table 9. BUDGET RECEIPTS AND OUTLAYS, 1789-1979 (in millions of dollars)
Receipts
Outlays
Surplus
or
deficit (-)
1789-1849.
1850-1900 .
1901 - 1905.
1906-1910.
1911 - 1915.
19 16- 1920 .
1,160
14,462
2,767
3, 143
3,517
17,286
1,090
15,453
2, 678
3, 196
3, 568
40,195
+70
-991
+ 119
- 52
- 49
- 22,909
1921 .. ...
1922 .....
1923 . ....
1924.
1925.
1926 .
1927 .
1928.
1929 .
1930.
5,571
4,026
3,853
3,8 71
3,641
3, 795
4,013
3,900
3,862
4,058
5,062
3, 289
3, 140
2, 908
2, 924
2, 930
2,857
2,961
3, 127
3,320
3, 116
1,924
1,997
3,0 15
3, 706
3, 997
4, 956
5,588
4, 979
6,361
8,621
14,350
23,649
44,276
45,216
39, 327
38,394
3,577
4,659
4,598
6, 645
6,497
8,422
7,733
6, 765
8,841
9,456
+509
+ 736
+713
+963
+717
+865
+1,155
+939
+734
+738
-462
-2,735
-2,602
-3,630
-2, 791
-4,425
-2, 777
-1 , 177
-3,862
-3,095
13,634
35, 114
78, 533
91,280
92,690
55,183
34,532
-5,013
-20,764
-54,884
-47,004
-47,474
-15,856
+3,862
Fiscal year
1931.
1932.
1933.
1934 ..
1935.
1936 ..
1937 ...
1938 ...
1939 ..
1940 .
1941.
1942 .
1943.
1944.
1945.
1946 .... .
1947 .....
Fiscal year
Receipts
Out.lays
Surplus
or
deficit (-)
1948 .....
1949 . .. . .
1950 .....
195 1 .... .
1952 .....
1953 .....
1954 .....
1955 .....
1956 .....
1957 .....
1958 .....
1959 .....
1960 .....
41,774
39,437
39,485
29,773
38,834
42, 597
+12,00 1
+603
-3,112
1961 .....
1962 .....
1963 .....
1964 ... . .
1965 .....
1966 . ... .
1967 .. ...
1968.
1969 .
1970 .....
51,646
45, 546
66,204
67,721
69, 574
76, 107
69,719
70,890
65,469
68, 509
74,547
70,460
79, 990
76,741
79,636
82,575
79,249
92, 104
92,492
92, 223
94,389
97,795
99, 676 106,813
106,560 111,311
112,662 118,584
116,833 118,430
130,856 134,652
149,552 158,254
153,671 178,833
187,784 184, 548
193, 743 196,588
+6,100
-1,517
-6,533
-1,170
-3,041
+4,087
+3,249
-2,939
-12,855
+269
-3,406
-7,137
-4,751
-5,922
-1,596
-3,796
-8,702
-25,161
+3,236
-2,845
1971. ....
1972 .. ...
1973 .....
1974 .. .. .
1975 .....
1976 ....
TQ .. ...
1977 est. ..
1978 est. ..
1979 est. ..
188, 392 211,425
208,649 232,021
232,225 247,074
264, 932 269,620
280, 997 326, 105
300,005 366,466
81,773
94,746
354,045 411,243
393,017 439,967
454, 360 465, 967
-23,033
-23,372
-14,849
-4,668
-45,108
-66,46 1
- 12,973
-57,198
- 46,950
-11,607
Totals, including outlays oj f!ff-budget Federal entities
Fiscal year
1973 .. ( . .
1974 .... .
1975 .....
1976 .....
Outlays
of offbudget
Federal
entities
60
1,447
8,041
7,196
Total
outlays
247, 134
271,067
334, 146
373, 662
Tolal
deficit
-14,909
-6,135
-53,149
-73,657
Fiscal year
TO .......
1977 est. ..
1978 est. ..
1979 est. ..
Outlays
of offbudget
Federal
entities
Total
outlays
1,767
10,785
9,156
10,899
96,5 13
422,028
449, 124
476, 866
Total
deficit
-14,740
-67,983
-56,107
-22,506
'$500 thousand or less.
Note.-Certain interfund transactions are excluded from receipts and outlays starting in 1932. For years
pnor to 1932 the amounts of such transactions are not significant.
Refundsof receipts are excluded from receipts and outlays starting in 1913; comparable data arc not available for pnor years.
Data for li89-1939 are for the administrative budget; 1940-1979 are for the unified budget.
In calendar year 1976, the Federal fiscal year was converted from a July I-June 30 basis toan Oct. I-Sept. 30
baSIS. The TQ refers to the transition quarter from July I to Sept. 30, 1976.
Off-budget Federal entity ouUays begin in 1973.
81
GLOSSARY
1
AUTHORIZATION-Basic substantive legislation enacted by Congress
that sets up or continues the legal operation of a Federal program
or agency. Such legislation is normally a prerequisite for subsequent
appropriations, but does not usually provide budget authority (see
below) .
BUDGET AMENDMENT-A proposal, submitted to the Congress by the
President after his formal budget transmittal, but prior to completion of
appropriation action by the Congress, that revises his previous budget
request.
BUDGET AUTHORITY (BA)-Authority provided by law to enter into
obligations that generally result in outlays. It may be classified by the
period of availability (1-year, multiple-year, no-year), by the timing
of congressional action (current or permanent), or by the manner of
, determining the amount available (definite or indefinite). The basic
fOI"l\ls of budge.t authority are:
Appropriations-budget authority provided through .t he congressional appropriation process that permits Federal agencies to incur obligations
and make payments.
Borrowing authority--statutory authority, not necessarily provided
through the appropriations process, that permits Federal agencies to
incur obligations and make payments from borrowed moneys.
Contract authority--statutory authority, not necessarily provided through
.the appropriations process, that permits Federal agencies to enter into
contracts or incur other obligations in advance of an appropriation.
BUDGET RECEIPTS-Money, net of refunds, collected from the public
by the Federal Government through the exercise of its governmental
or sovereign powers and as premiums from voluntary partioipants in
Federal social insurance programs closely associated with compulsory
programs. Excluded are amounts received from strictly business-type
transactions (such as sales, interest, or loans) and payments between
Government accounts. (See offsetting receipts.)
BUDGET SURPLUS ( +) OR DEFICIT ( - ) -The difference between
budget receipts and outlays.
CONCURRENT RESOLUTION ON THE BUDGET-A resolution
passed by both Houses of Congress, but not requiring the signature of
the President, setting forth, reaffirming, or revising specified congressional budget totals for the Federal Government for a fiscal year.
1-These definitions are based on the booklet "Budgetary Definitions," published by
the General Accounting Office in November 1975.
82
CONTINUING RESOLUTION-Legislation enacted by Congress to provide budget authority for specific ongoing activities when a regular
appropriation for such activities has not been enacted by the beginning of the fiscal year.
CONTROLLABILITY-The ability of Congress or the President to control outlays during a fiscal year without changing existing law. The
concept "relatively uncontrollable" includes outlays for open-ended
programs and fixed costs, such as interest on the public debt, and
social security and veterans benefits, as well as outlays .to liquidate prioryear obligations.
.
CURRENT SERVICES ESTIMATES- Projections of estimated budget
authority and outlays for the upcoming fiscal year at the same program
level as and without policy changes from the fiscal year in progress. To
.the extent mandated by existing law, estimates take into account the
budget impact of anticipated changes in economic conditions (such as
unemployment or inflation ), beneficiary levels, pay increases, and benefit changes. The Congressional Budget and Impoundment Control Act
of 1974 requires that the President submit current services estimates to
the Congress by November 10 of each year.
DEFERRAL-Any action or inaction by an officer or employee of the
United States that temporarily withholds, delays, or effectively precludes .the obligation or expenditure of budget authority. Deferrals may
not extend beyond the end of the fiscal year and may be overturned at
any time by either House of Congress.
FEDERAL FUNDS-Funds collected and used by the Federal Government
for the general purposes of ,t he Government. There are four types of
Federal fund accounts: the General fund, special funds, public enterprise (revolving) funds, and intragovernmental funds. The major Federal fund is the general fund, which is derived from general taxes and
borrowing. Federal funds also include certain earmarked receipts, such
as those generated by and used for the operations of Governmentowned enterprises.
FISCAL YEAR-The yearly accounting period for the Federal Government. Beginning with fiscal year 1977, fiscal years for the Federal
Government begin on October 1 and end on September 30. Prior to
fiscal year 1977, the fiscal year began on July 1 and ended on June 30.
The fiscal year is designated by the calendar year in which it ends,
e.g., fiscal year 1977 is the fiscal year ending September 30, 1977.
IMPOUNDMENT-Any action or inaction by an officer or employee of .the
Federal Government that precludes the obligation or expenditure of
budget authority provided by the Congress (see deferral and rescission).
OBLIGATIONS-Amounts of orders placed, contracts awarded, services
rendered, or other commitments made by Federal agencies during a
given period that will require outlays during the same or a future
period.
OFF-BUDGET FEDERAL ENTITIES-Organizational entities, federally
owned in whole or in par.t, whose transactions have been excluded
from the budget totals under provisions of law, e.g., the Federal Financing Bank. These transactions are not included in the budget totals,
but are presented separately in the budget documents.
83
OFFSETTING RECEIPTS-Collections or deposits to receipt accounts
that are offset against budget authority and outlays rather than being counted as budget receipts. They are composed of (1) proprietary
receipts from the public derived from Government activities of a business-type or market-oriented nature that are offset against related
budget authority and outlays; and (2) intragovernmental transactions.
Intragovernmental transactions are payments from governmental accounts to budgetary receipt accounts. Since these payments are from
the Government to itself, they are offset against outlays rather than
being counted as budget receipts.
OUTLAYS-Checks issued, interest accrued on the public debt, or other
payments made, net of refunds and reimbursements.
RESCISSION-Enacted legislation canceling budget authority previously
provided by the Congress.
SUPPLEMENTAL APPROPRIATION-An appropriation enacted as an
addition ,t o a regular annual appropriation act. Supplemental appropriations provide additional budget authority beyond original estimates
for programs or activities (including new programs authorized after
the date of the original appropriation act ) for which the need for funds
is .too urgent to be postponed until the next regular appropriation.
TAX EXPENDITURES-Losses of tax revenue attributable to provisions
of the Federal tax law that allow a special exclusion, exemption, or
deduction from gross income or provide a special credit, preferential
rate of tax, or a deferral of tax liability.
TRANSITION QUARTER-The 3-month period (July 1 to September 30, 1976 ) between fiscal year 1976 and fiscal year 1977 resulting
from the change from a July 1 through June 30 fiscal year to an October 1 through September 30 fiscal year beginning with fiscal year 1977.
TRUST FUNDS-Funds collected and used by the Federal Government
for carrying out specific purposes and programs according to terms of
a trust agreement or statute, such as the social security and unemployment trust funds. Trust funds are not available for the general purposes of the Government. Trus.t fund receipts that are not anticipated
to be used in the immediate future are generally invested in interestbearing Government securities and earn interest for the trust fund.
For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C. 20402 - Price $1.15
Stock Number 04H10l-oDl33-6
84
EXECUTIVE
BRANCH
THE
GOVERNMENT
THE PRESIDENT
:I
ICECUTIVE OFFICE OF THE PRESIDENT/UF,i(E ',.Y
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u,'~ Government Manual 1976/1977
JANUARY 1977
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503
THE BUDGET DOCUMENTS
Data and analyses relating to the budget for 1978 are published in six
documents.
(1) The Budget of the United States Government, 1978 contains the
information that most users of the budget would normally need, including
the Budget Message of the President. The Budget presents an overview of the
President's budget proposals and includes explanations of spending programs,
estimated receipts, and the relationship of the budget to the economy. This
document also contains a description of the budget system and various
summary tables on the budget as a whole. (Price $3.45.)
(2) The Budget of the United States Government, 1978-Appendix contains detailed information on the various appropriations and funds which
comprise the budget.
The Appendix contains more detailed information than any of the other
budget documents. It includes for each agency: the proposed wording ,of
laws which would appropriate funds, budget tables for each account, explanations of the work to be performed and the funds needed, proposed general
provisions applicable to the appropriations of entire agencies or groups of
agencies, and tables on employment. Supplemental proposals for the current
year and new legislative proposals are identified separately. Information is
also provided on certain activities, whose outlays are not part of the budget
totals. (Price $13.00.)
(3) Special Analyses, Budget of the United States Government, 1978 contains 17 special analyses which highlight specified program areas or provide
other significant presentations of Federal data.
This document includes information about: Government finances and
operations as a whole and how they affect the economy; education, training
and employment, health, income security, civil rights, and crime reduction
programs; trends and developments in the areas of Federal aid to s.tate and
local governments, research and development, and environmental protection.
(Price $2.70.)
(4) The United States Budget in Brief, 1978 provides a more concise,
less technical overview of the 1978 budget than the above volumes, and
includes a variety of charts. Summary and historical tables on the Federal
bud~et and debt are also provided. (Price $1.15.)
(5) Issues '78 provides greater background information than any other
general executive branch document on major budget and program decisions
reflected in the President's Budget and on certain maior i~sues confronting
the Nation this year and in the future. Published for the first time with the
1977 budget (as "Seventy Issues"), this document is intended for a general
audience rather than those with particular interests. (Price-not available
at time of publication.)
(6) The Budget of the United States Government, 1978-Supplement
contains the President's recommendations on executive, legislative, and
judicial salaries and is ,transmitted pursuant to section 225 of Public Law
90-206 (2 U.S.C. 351 et seq.). (Price not available at time of publication.)
@FedFRASER