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THE
UNITED STATES




IN BRIEF

FISCAL YEAR

1981

12¢

~.......... Corporation

I~come Ta~e~
Individual
Income Taxes

45¢

Social
Insurance
Receipts

30¢

Direct

National
DeFense

Bene~t

24,

Payments
For Individuals

43¢

9,
Grants
to States
and Localities




Net Interest

=, TABLE OF CONTENTS

Page

3
BUD· ET MESSAGE OF THE PRESIDENT ..................... .
G
9
I. BUDGET RECEIPTS ......................... :..................................... .
II. THE LONG-RANGE BUDGET OUTLOOK ........................ . 13
III. MEETING NATIONAL NEEDS: THE FEDERAL
. PROGRAM BY FUNCTION ................-................................ . ·23
National defense ........................................................................ . 25
.
In ternational affairs ........................... ~ ......................... :........... . 27
General science, space, and technology ................................. . 30
Energy ...................................... :.................................................. . 31
Natural resources and environment ...... ~ .............................. . 34
, ~~riculture .................................................................... :........... . 35
Commerce and housin~ credit .................................................. . 37
..
. . . ;. -"1 ,.
. .. )
T ransportatlon ..................................................... ;..................... . 39
Community and re~ional development ................................. . 40
Education .................................................................................... . 43
Trainin~, employment, and social services .......................... .
45
~ealth ......................................................................................... .
48
Income security ................................................................ :.... ~ .... . 51
Veterans benefits and services ............................................... . 54
~dministration of justice ......................................................... .
56
General ~overnmen t ................................................................. . 57
General purpose fiscal assistance .......................................... . 58
In terest ........................................................................................ . 60
Other ........................................................................................... . 61
62
Off-bud~et Federal entities ...................................................... .
IV. THE BUDGET PROCESS ...................................................... . 63
V. BUDGET TABLES .......... :........................................................ . 68
GLOSSARY OF BUDGErf TERMS ........................... ~ .......... . 84
•

~.

_

l'

~

•

~j~w:

4...."

GENERAL NOTES
1. All years referred to are fiscal years, unless otherwise noted.
2. Detaii in the tables, text, and charts of this volume may not add to the
totals because of rounding.
.




1




Budget Totals, 1979·1983
$ Billions

$ Billions

800

799

Receipts

800

Outlays

700

700

600

600

500

500

400

400

300

300

200

200

100

100

o

0 .......
Fiscal Years

1979

1981

1980

Actual

1982

1983

Estimate

Budget Deficits as a Percent of GNP
Percent

Percent

5~--------~----------~----~--~~----~5

4

4

3

3

2

1

1

o

o

1971 72
Fiscal Years

73

74

75

76

77

78

79

80

81

Estimate

BUDGET'MESSAGE OF THE PRESIDENT
To the Congress of the United States.~
This budget for 1981 is prudent and responsible. It continues the
strategy of restraint that I proposed, and the Congress accepted, for
the 1980 budget. At the same time it proposes selected, essential
increases in areas of high priority and great national concern. In
this way it seeks a balance between our needs for budgetary restrain~ and. our 'needs for specific expenditures. I expect the Congress to support it.
Total outlays for 1981 proposed by this budget are $615.8 billion,
an increase of 9%. After allowing for inflation, this budget" is
virtually level 'with' 1980 spending. Total receipts for '1981 are estimated to be $600 billion. In view of current economic conditions,
the only major revenue proposal included in the budget is my
windfall profit tax now b~fore the Congress.
THE BUDGET TOTALS
(In billions of dollars)

1979

actual '

1980

estimate

1981

estimate

1982

estimate

1983

estimate

Budget receipts ........................................,.......
Budget outlays .................................................

466
494

524
564

600
616

691
686

799
774

, Surplus or deficit (-) ....................................

-28

-40

-16

+5

+25

Budget authority .................................

557

654

696

775

868

Thus, I am proposing a deficit of $15.8 billion, the lowest deficit
in 7 years. This reduces the deficit by 60% in comparison to 1980.
More significantly, it is $50 billion less than when I first ran for
the Presidency. As a percentage of the budget, and of the gross
national product, the 1981 deficit is the second lowest of the last
decade.
Economic projections deeply affect this budget. It appears today
that the long economic recovery occurring throughout my first
term may falter this year. I have therefore assumed that there will
be some decline in GNP during the course of 1980, followed by
renewed but moderate growth in 1981. As a result, budget receipts
will be reduced and certain expenditures will increase automatically. This is why the 1981 budget is in deficit. If, contrary to our
assumptions, the economy were to perform strongly enough to keep
the unemploym·e nt rate at its current level, the 1981 budget would
be in surplus.
We must monitor 'the economic outlook carefully. If the economy
begins to deteriorate significantly, I will ,c onsider tax reductions
and temporary spending programs for job creation targeted toward
particular sectors of economic stress. But I believe current economic conditions argue for restraint.




3




I believe that this judgment and this budget recognize that equitable budget restraint is essential in our efforts to control inflation;
that the unemployed should not bear the costs of our anti-inflation
efforts; and most importantly, that we continue to pursue the goals
of full employment, price stability, and balanced growth. The fiscal
and program policies in this budget are essential, I believe, if we
are to move rapidly toward these goals in the 1980's.
Indeed, the restraint proposed in this budget is essential to
achieve these goals. The unacceptably high inflation now prevailing is clearly due to many, deeply imbedded, long-term forces.
Countering this inflation involves sustained action across a wide
spectrum.
• We must reduce our dependence upon foreign oil.
• We must enhance our economy's productivity.
• We must continue our efforts to foster competition and innovation through further deregulation.
• We must sustain compliance with the administration's wage
and price guidelines.
But none of these efforts can succeed unless Federal spending is
controlled. By continuing a clear and consistent policy of restraint,
the 1981 budget insures that the Federal budget will not be an
inflationary force in the economy.
Although I have kept spending in this budget from rising in real
terms, I have found it necessary to increase funds in a few critical
areas. The most important of these are defense, energy, basic research, and the training and employment of our Nation's young
people.

Defense.-The long decline in real spending for defense that
began in 1969 has been reversed. The uncertain and sometimes
hostile world we live in requires that we continue to rebuild our
defense forces. The United States will continue to seek peaceful
means to settle international disputes. But I cannot ignore the
major increases in Soviet military spending that have taken place
inexorably over the past 20 years. I cannot ignore our commitment
to our NATO allies for mutual real increases in our investment in
national defense. I cannot ignore the implications of terrorism in
Iran, or Soviet aggression in Afghanistan.
Therefore, my budget proposes a defense program in 1981 of
$158.2 billion in budget authority, an increase of over 5% in real
terms. Outlays for defense will be $142.7 billion, a real increase of
over 3%.
Moreover, I am committed as a matter of fundamental policy to
continued real increases in defense; and I plan increases in my
defense budgets through 1985. Over the period 1981-85, I am proposing that the defense program level of the United States increase
by $90 billion.

Energy.-This budget reflects the important progress made by
my administration toward a broad and practical program dealing
with the energy problems the Nation will face in the next decade. I
am confident, and the 1981 budget assumes, that early in the 1980

4

session the Congress will pass the crucial measures I proposed last
year: the windfall profit tax, the Ehergy Security Corporation, the
conservation measures, and the Energy Mobilization Board.
With this budget we will have put into place an energy program
composed of the following elements:
(1) Realistic pricing and fair taxes.-My decontrol decision of last
April is now in effect. It is painful, and no one can pretend other
wise. But we cannot have an energy program that maintains illusions. Energy is not cheap, and we must accept that fact.
My windfall profit tax, to be passed early this year, retains a
portion of the profits from energy price increases for the public.
This will insure that increased energy prices will lead to new
public investment in energy production. It will insure also that the
burdens of higher energy costs are fairly shared.
(2) Conservation.-The 1981 budget allocates resources for tax
incentives, low-interest subsidized loans, and other measures to
stimulate more conservation. Conservation is the quickest and
cheapest step we can take to confront our energy problem.
(3) Production.-This budget anticipates the creation of the
Energy Security Corporation to facilitate the development of synthetic fuels and a major new gasohol program. It also supports
continued new investments in those energy initiatives begun in the
last two budgets. We are significantly increasing our expenditures
on fossil fuels, on solar energy, and on nuclear fusion. Nuclear
fission research, on the other hand, declines, while greater emphasis is placed on solving the current problems of nuclear power.
(4) Protection.-As we adjust to the new energy realities, we must
continue to protect those who are most vulnerable. The 1981
budget continues to provide funds for the poor to weatherize their
homes; funds to enable the most disadvantaged Americans to cope
with the rising cost of energy; and funds for energy crisis assistance.
My energy program is, of necessity, a long-term one. But if it is

sustained through the new decade, we will reduce consumption,
increase production from domestic sources, and promote alternate
forms of energy. We will significantly reduce our dangerous reliance upon foreign oil. We will remove a major source of inflation.
Our economy and our Nation will emerge from the 1980's stronger
than they are now.

Basic research.-In the long run, economic growth depends critically on technological development. For many years, this country
has led the world in producing new technology. We are in danger
of losing this leadership. The 1981 budget continues my long-standing commitment to reverse the trends of the past two decades and
provide for major and sustained increases-above the rate of inflation-for research and development programs. Obligations for research and development will increase by 13%; for basic research by
12%. Since 1978, obligations for basic research will have increased
by 40%. I believe that these are among the most important expenditures we can make. The payoff, particularly for basic research, is




5




long-term, but immense. We benefit today-in new industries, in
millions of jobs, in lives saved, and in lives protected-from theinvestments in science made decades ago. We must continue such
investments today to reap similar returns tomorrow.

Human resources.-My budget, restrained as it is, provides
needed support to those Americans who are most in need. Most of
the increase in the 1981 budget over 1980 is due to the automatic
cost-of-living increases in entitlement programs that provide
income to the poor and the elderly. I have continued and improved
these programs. In addition, I have proposed discretionary increases in a wide range of programs affecting those in our society
who are the most disadvantaged.
The budget includes $687 million for proposals to expand health
services to the poor and the underserved, including $403 million to
provide medicaid eligibility for 2 million additional low-income
children and approximately 100,000 pregnant women. The budget
also includes a 24% increase in subsidized housing programs and a
24% increase in elementary and secondary education programs for
the disadvantaged. Overall, I am proposing an increase of $7 billion
in aid to the poor to protect them against the effects of inflation.
At the same time, I am proposing a major initiative that will
enable our Nation's disadvantaged youth to receive a strong basic
education, to find and keep a job. This is a critically important
time for this initiative. In the 1980's, the number of youths entering the labor market will fall. If the young people of the 1980's are
prepared, they will be able to find good jobs and build productive
lives. My initiative will make this preparation possible. It will
couple a strong emphasis on basic education with significant employment opportunity. For those young people who participate, the
programs will be tough and challenging. But they will be extremely worthwhile. Those who complete them will have a major advantage where it counts-in the permanent job market. I consider this
investment in human resources for the 1980's to be as important as
the investments I am proposing for basic research. It is an investment in our most precious resource-the energies and talents of
America's young people.

Agriculture.-Because of the aggression by the Soviet Union
against Afghanistan, I concluded that we could not now permit
that country to benefit from our productive agriculture. On January 4, I announced the suspension of shipments of grain, soybeans,
and their byproducts to the Soviet Union. This budget reflects the
steps necessary to avoid the devastating effects such action could
have had on our farmers and grain shippers. Specifically, the Secretary of Agriculture will:
• purchase contracts entered into with the Soviet Union at
prices at or above those prevailing on January 4;
• if necessary, take title to the grain intended for export to the
Soviet Union and isolate it from the market;
• purchase up to 4 million metric tons of wheat for an international food aid reserve;
6

• increase the loan level for feed grains and wheat by 10 and 15
cents per bushel, respectively; and
• modify the farmer-owned grain reserve to encourage farmers
to place additional grain in the reserve.
On January 19, I announced, as additional steps to avoid the
impact of suspension of shipments, that the Government would:
• increase the 1980 and 1981 Public Law 480 programs in order
to increase grain shipments abroad; and
• purchase corn directly at local levels to stabilize cash markets
and alleviate transportation backups.
I stand ready to take further steps if these actions prove insufficient.

Other commitments.-In other important areas, the 1981 budget
reflects the reorganization accomplishments of the adminis~ration;
continues the significant progress already experienced in urban
and community development; expre~ses my commitments to welfare reform and a national health plan, programs that will begin in
future budget years; and reaffirms my dedication to improved Federal budgeting and management.
The budget anticipates that my welfare reform proposals will
take full effect in 1982, and my national health plan proposal in
1983. Taken together, these programs provide income support and
assured health care to all Americans in need. My national health
plan-which will be phased into operation prudently, consistent
with the state of our economy-minimizes direct governmental
control over health care, restrains the growth of Government, and
provides maximum individual choice. I am continuing t9 seek enactment of my hospital cost containment proposal, which I believe
is an essential part of any national health plan. When fully enacted, these two proposals-welfare reform and the national health
plan-will significantly and permanently improve the lives and
prospects of all Americans.
The 1981 budget includes a $15.5 billion allocation for the new
Department of Education, which the Congress has approved. The
establishment of this Department will require a great deal of effort
in the short run, but it will give our system of education the
consistent attention and high priority it deserves.
This budget also continues the improvement in the budget process I promised 4 years ago. In the 1979 budget we introduced zerobase budgeting, a system we have now used in three budgets ' to
assure the allocation of scarce public resources to the most critical
areas. Last year, in the 1980 budget, we moved to multiyear budgeting. My budget again this year shows not only decisions for 1981,
but the effect of those decisions-in detail-for 1982 and ' 1983. To
the extent feasible, the ' multiyear budget projects also the future
costs of programs such as the national health plan, welfare reform,
defense, energy, and research and development.
This year I have installed a central system to control the use of
Federal credit. In the past, too much has escaped the normal




7




discipline of the budget. This system, which is now in place, recommends specific credit limitations for most credit programs.
THE CREDIT BUDGET TOTALS
(In billions of dollars)

1979

actual

1980

1981

estimate

estimate

New direct loan obligations .......................................
New loan guarantee commitments ............................

51.4
74.7

59.7
75.2

60.7
81.4

Total............................................................

126.1

134.9

142.1

The new system of credit control will permit both the administration and the Congress to improve their understanding of the
credit programs, to measure their important effects, and to determine appropriate levels of credit activity.
This budget reflects continued efforts to improve financial management in Government and to stop illegal or improper use of
taxpayers' money. We are achieving major savings from better
cash .management and stronger internal auditing in Federal
agencIes.
Conclusions.-Proposing a responsible Federal budget is a fundamental task of public leadership. The budget must reconcile a
broad range of legitimate claims for resources with the needs of the
economy and the burdens on the taxpayer. Simultaneously, it
must:
• respect past commitments in its allocations to social security,
to veterans, and to the elderly;
• meet the needs of the present for defense, unemployment
benefits, and health services; and
• invest in the future through research and development,
energy programs, and education.
The budget must do all of these things specifically and in detail.
A budget rests on specific proposals related to specific costs, not on
rhetoric.
A budget also rests on policy. And this budget contains important policy decisions-major departures, new initiatives, larger and
longer-term commitments. Each stands on its own merit. Yet taken
together all of the proposals in this budget can also be characterized in a more general way. They reflect the maturing of the
administration's basic, consistent underlying policy themes: restraint in budgeting the taxpayers' dollars; the strengthening of
our defense; providing energy for the future; improving opportunities for the Nation's youth; and making Government work better.
Ours is a great and complex nation. The existing arrangements
in our society are the result of complex, not always consistent
decisions of the past emerging from a democratic people. Change is
sometimes slow because it rests on consent. But intelligent, consistent leadership, persistently applied, can bring about change in
policies and further the well-being of our society and of its people. I
believe that this budget, and those I have submitted in the past,
support the fundamental policies that will prepare America for the
new decade.
JANUARY

8

28, 1980.

JIMMY CARTER.

PART I

BUDGET RECEIPTS
This ,section describes the major sources of budget receipts and
~he legislative proposals and administrative actions affecting them.
rhe economic assumptions underlying the estimates are presented
,n Part II, together with projections of receipts througl?- 1985.

, Summary
>

Total budget receipts' in 1981 are ,esti,m ated to. be $600 'billion, an
ncrease of $76 billion from the $524 billion estimated for 1980.
leceipts in ~982 and 1983 are estimated to be $,691 billion and $799
)illion', respectively. These estimates include the effects of:
-increases in social security taxes scheduled;
-the proposed windfall profit tax and energy credits that are
part of the administration's energy program;
-administrative actions 'and proposed legislative changes to collect taxes closer to the time when liabilities are incurred; and
-other receipts proposals currently being made.
The estimates of receipts for 1982 and 1983 are based on current
ax law as modified by the tax proposals in this budget. The timing
If tax reductions in future years will depend on the state of the
~conomy, especially on progress in reducing inflation.

Composition of budget receipts.-The Federal tax system relies
,redominantly on income and payroll taxes. In 1981:
• Income taxes paid by individuals and corporations are estimated at $274.4 billion and $71.6 billion, respectively. Combined, these sources account for 58% of the estimated total.
• Social insurance taxes and contributions-composed largely of
payroll taxes levied on wages and salaries, most of which are
paid equally by employers and employees-will yield an estimated $187.4 billion, 31 % of the total.
• Excise taxes are expected to provide $40.2 billion, 7% of the
total; and other receipts are estimated at $26.4 billion, the
remaining 4 % of the total.




9




Budget Receipts, 1971-1983
$ Billions

$ Billions

~~~~~~--~~~~--~--~~~~~~

800

800

700

700

600

600
Excise and Other
500

500
400

Social Insurance Taxes
and Contributions

400

300

300

200

200

100

Individual Income Taxes

Corporation Income
Taxes

100

o~--------------------------------------~o
1971 72 73 74 75 76
77 78 79 80 81 82 83
Fiscal Years

Estimate

Receipts Proposals
Energy program.-As part of the oil price decontrol program, a
windfall profit tax on domestic producers of crude oil was proposed.
Several energy tax credits and a change in the existing foreign tax
credit on oil and gas extraction were also proposed. These proposals
would increase estimated receipts by $6.2 billion in 1980, $14.4
billion in 1981, $18.4 billion in 1982, and $19.6 billion in 1983.
Higher OPEC prices and the phased decontrol of domestic oil
prices will result in added profits for domestic oil producers. Fairness requires that some of these windfall profits be returned to the
Nation as a whole, to be used for public purposes including the
reduction of oil imports, conservation of energy, and mitigation of
the impact of higher energy prices on low-income Americans. The
President, therefore, proposed a windfall profit tax to become effective January 1, 1980. The proposed tax base is equal to the amount
a producer receives for domestically produced crude oil in excess of
a base price and any State severance taxes attributed to the windfall. The tax rate generally is 60%, although it varies in certain
cases, depending on the type of oil.

10

The gross windfall profit tax is estimated to increase receipts by
$7.7 billion in 1980, $20.9 billion in 1981, $28.4 billion in 1982, and
$31.5 billion in 1983. Because the proposed windfall profit tax is an
excise tax, it is deductible for income tax purposes. The net gain
from the windfall profit tax (the gross windfall profit tax less the
net reduction in income taxes due to the deductibility of the windfall profit tax) is estimated at $5.5 billion in 1980, $13.9 billion in
1981, $18.2 billion in 1982, and $19.5 billion in 1983.
The energy program includes several proposed tax credits relating to the conservation and production of energy. These credits are
proposed for: builders who employ passive solar technology in residential and commercial construction; producers of shale oil and
unconventional natural gas; the use of gasohol; the purchase of
solar thermal energy equipment used to produce process heat; and
the purchase of woodburning stoves.
The administration is also proposing to limit the offset to U.S.
taxes from the foreign tax credit on oil and gas extraction to taxes
on income derived from such extraction.

Cash management.-The receipts estimates reflect several initiatives to require income tax payments closer to the time when tax
liabilities are incurred, to require employers to deposit taxes withheld from employees on a more timely basis, and to accelerate the
payment schedule of customs duties and tobacco excise taxes. It is
estimated that these cash management initiatives will increase
receipts by $4.5 billion in 1981, $5.6 billion in 1982, and $2.2 billion
in 1983.
Other receipts proposals.-To improve resource allocation and the
overall efficiency and equity of the tax structure, the administra-

tion proposes that:
• The use of tax-exempt State and local securities for owneroccupied housing be banned, and that such bonds for multifamily housing be restricted to projects in which at least 20%
of the residents are low-income;
• To prevent noncompliance, 10% be withheld from compensation for services paid to certain independent contractors;
• Railroad retirement taxes be increased to alleviate funding
problems for this trust fund;
• Airport and airway trust fund taxes be extended in modified
form beyond their current June 30, 1980 expiration date;
• Employers be required to pay social security taxes On all tips
now subject to employee social security taxes;
• Fees be imposed on oil, petrochemical feed stocks, and inorganic elements to establish a fund to provide for cleanup of
oil and hazardous substances released into the environment;




11




• Medicare premiums be reduced for individ
by
social security;
• Tax withholding on all portfolio interest paid to nonresident
foreigners be eliminated;
• All capital gains realized by foreign investors on real estate
be taxed;
• Local public housing authorities limit the sale of tax-exempt
public housing bonds to the public; and
• The expiration of special tax provisions for certain historic
structures be delayed by 1 year.
EFFECT OF ADMINISTRATIVE ACTIONS AND PROPOSED LEGISLATION

1

(In billions of dollars)
1980

1982

1981

Individual income taxes:
Cash management initiatives ........................................... ..
Energy program 2 •.•..•...•..•••...•••••.••..•......••.•.•...••••.••..••.••••.•
Tax-exempt housing bonds .............................................. ..
Other .................................................................................

-0.4

1.8
-1.1

*
*

0.2
0.3

Subtotal, individuals .................................................

-0.4

Corporation income taxes:
Cash management Initiatives ........................................... ..
Energy program 2 ............................................................ ..
Tax-emempt housing bonds ...............................................
Other .................................................................................

-1.1

Subtotal, corporations ...............................................

1983

1.S
-1.7
O.S

O.S

-2.0

0.3

1.1
0.4

1.1

0.7

*

3.4
-8.3

1.4
-9.8

0.1

1.4
-S.3
0.7

*

0.1

2.0
0.1

4.1
0.1

-1.0

-3.2

-2.9

-4.2

Cash management initiatives ........................................... ..

0.9

0.6

0.2

Railroad retirement tax Increase ...................................... ..
Other ............................................................................... ..

0.3

0.3

0.2

0.3
0.3

0.3

Subtotal, social Insurance ..... :................................. ..

1.4

1.2

0.8

*

20.9
0.2

28.4
0.3
0.3

31.S
0.3
0.4

0.1

0.2
................ .

*

*

7.8

21.S

29.0

32.2

0.2

Social insurance taxes and contributions:

Excise taxes:
Windfall profit tax ............................................................ .
Airport and airway trust fund taxes 3 ............................... .
Oil and hazardous substance cleanup ............................... .
Cash Management initiatives .............................................
Other ................................................................................ .
.
Subtotal, excise taxes ...............................................
Other:
Cash management initiatives ........................................... ..
Other ................................................................................ .

7.7

0.2

Subtotal, other ....................................................... ..

*
*

0.2

*
*
*

Total ....................................................................... .

6.4

21.0

28.0

*

*

:t

*
28.8

*50 million or less.
1 These estimates are based on the direct effect only of legislative changes at a given level of economic activity. Induced effects are taken into
account for forecasting incomes, however, and in this way affect the receipts estimates by major source and in total.
2 Most of these reductions are due to the deductibility of the windfall profit tax in determining income tax liability.
3 These estimates are for increases in airport and airway tax receipts over and above those that would result from extending the current tax rates
beyond their June 30, 1980 expiration date. The extension of current tax rates would add $0.1 billion to receipts in 1980, $0.9 billion in 1981, $0.9
billion in 1982, and $1.0 billion in 1983.

12

PART II

THE LONG-RANGE BUDGET OUTLOOK
This section discusses the long-range budget outlook and the
economic .assumptions underlying that outlook. The first section
presents economic assumptions for calepdar years 1979 through
1985, explains the nature of these assumptions, and discusses policies to reduce unemployment and inflation. The second section
examines the budget's multiyear planning base for fiscal years 1981
to 1983, and the projections for 1984 and 1985.

Economic Assumptions
The economy and the budget are interrelated. Economic conditions significantly affect the budget, and the budget, in turn, influences economic conditions. Both budget outlays and the tax structure have substantial effects on national output, employment, and
inflation. Budget receipts vary with individual and corporate incomes, which respond both to real economic growth and to inflation. Other activities of Government that are not reflected in the
budget totals, such as loan guarantees, off-budget outlays, and regulatory requirements, also affect the economy, although thei~ effect"---is less direct and less easily measured.
Outlays for many Federal programs such as unemployment, retirement and other social insurance benefits are directly linked to
developments in the economy. Interest on the debt is linked to
market interest rates and the size of the budget surplus or deficit,
both of which in turn are influenced by economic conditions. In
addition, budget receipts vary with individual and corporate incomes, which, in turn, respond both to real economic growth and to
inflation.
Because of the complex interrelationships between the budget
and the economy, budget estimates depend to a very significant
extent upon economic assumptions. The economic assumptions
used for developing the budget estimates are presented in the
following tables to assist in understanding the budget estimates
and projections, and the administration's fiscal strategy. These economic assumptions are on a calendar year basis, as is customary
for economic statistics. The budget estimates are for fiscal years.
The short-range economic assumptions for calendar years 1979
(for which only 3 quarters of data were available when the esti-




13

mates were made), 1980, and 1981 are forecasts of probable economic conditions consistent with the administration's budget proposals.
As the table indicates, a mild recession is expected in the first half
of 1980, and some increase in unemployment is likely. Economic
growth is expected to resume in the latter part of the year and
continue through calendar year 1981, with a gradual decline in the
rate of unemployment. Some progress is expected in slowing inflation from the very high rate of last year, but the rate of increase in
consumer prices will still be very high by historical standards. The
rate of increase forecast for the 12 months of calendar year 1981 is
8.6%.
SHORT-RANGE ECONOMIC FORECAST
(Calendar years; dollar amounts in billions)
Item

Gross national product:
Current dollars:
Amount .........................................................................
Percent change: Fourth quarter over fourth quarter .....
Constant (1972) dollars:
Amount .........................................................................
Percent change: Fourth quarter over fourth quarter .....
Incomes (current dollars):
Personal income ................................................................
Wages and salaries ...........................................................
Corporate profits ................................................................
Price level (percent change):
GNP deflator: Fourth quarter over fourth quarte ..............
r
Consumer Price Index: December over Decem 2 ............
ber
Unemployment rates (percent ):
Total: Fourth quarter ...... ...................................................
Insured, annual average 3 ..•.•.......••......•. . .•.......... •. . ............
Federal pay raise (percent)4 .••...••...........•.........•.•.•.......•..••..•
Interest rate, 91-day Treasury bills (percent) 6 .. . ••..• • ..........•. .

Actual
1978

Fore
cast
1979 )

1980

1981

2,128
13.4

2,369
10.0

2,567
7.9

2,842
11.7

1,399
4.8

1,431
0.8

1,423
- 1.0

1,448
2.8

1,717
1,103
206

1,923
1,227
238

2,109
1,342
228

2,314
1,478
242

8.2
9.0

9.1
13.2

9.0
10.4

8.6
8.6

5.8
3.3
5.5
7.2

5.9
3.1
7.0
10.0

7.5
3.9
5 6.2
10.5

7.3
4.0
8.0
9.0

Actual data for the 1979 unem
ployment rate, the Federal pay raise, and the 91-day Treasury bill rate.
CPI for urban wage earners and clerical workers. Two versions of the CPI are now published. The index used here is that currently used, as required
by law, in calculating automatic cost-of-living increases for indexed Federal programs.
3 This measures unemploym
ent under S regular unemployment insurance as a percentage of covered em yment under that program It does not
tate
plo
.
include recipients of extended bene under that program.
fits
4 General schedule pay raises become effective in October of each year -the first month of the ne fiscal year. Thus, the October 1980 pay raise will set
w
new pay scales that will be in effect during fiscal year 1981.
5 This is the projected pay increase for white collar workers and wage board employees. The pay raise for military personnel is estimated to be 7.4%.
6 Average rate on new issues within period. These projections assume, by convention, that interest rates decline with the rate of inflation. They do not
represent a forecast of intere rates.
st
1

2

In contrast to the short-range economic forecast, the longer range
assumptions for the period 1982 to 1985 are not forecasts of probable
economic conditions. Instead, they are projections that assume progress in moving toward the goals of a more fully employed economy
and greater price level stability. In last year's budget, estimates
were presented consistent with achieving the goals qf 4% unemployment and 3% inflation by the end of calendar year 1983. These
goals had been established in the Full Employment and Balanced

14



Growth Act of 1978 (the Humphrey-Hawkins Act). The act· provides for revision of the timetable for achieving these goals, if
necessary, in the 1980 Economic Report of the President. Based on
the performance of the economy during 1979, and its projected
performance during 1980 and 1981, it is apparent that the goals
cannot be achieved in the timetable originally prescribed. As a
result, the long-range economic projections presented in this budget
are consistent with a new schedule for attaining the goals of the
1978 act. The achievement of the 4% unemployment rate goal is
postponed by 2 years to 1985, and the 3% inflation goal is
postponed by 3 years beyond that. These remain ambitious goals
and will require effective long-run policies to reduce both unemployment and inflation. The feasibility of achieving these targets
and the types of policies that might be required during the 198289 period to achieve them, are discussed in this year's Economic
Report of the President. The discussion below summarizes the
major policies directed at unemployment and inflation in the
budget proposals.
LONG-RANGE ECONOMIC ASSUMPTIONS
(Calendar years; dollar amounts in billions)
Assumptions
Item

Gross national product:
Current dollars:
Amount .........................................................................
Percent change: Fourth quarter over fourth quarter .... .
Constant (1972) dollars:
Amount .........................................................................
Percent change: Fourth quarter over fourth quarter .... .
Incomes (current dollars):
Personal income ............................................................... .
Wages and salaries ...........................................................
Corporate profits ............................................................... .
Price level (percent change):
GNP deflator: Fourth quarter over fourth quarter ............ ..
Consumer Price Index: December over December 1 .......... .
Unemployment rates (percent):
Total: Fourth quarter .........................................................
Insured, annual average 2 ................................................. .
Federal pay raise (percent) 3 ............................................... .
Interest rate, 91-day Treasury bills (percent) 4 .................... .

1982

1983

1984

1985

3,206
13.3

3,619
12.6

4,052
11.6

4,498
10.7

1,510
5.0

1,586
5.0

1,664
4.8

1,742
4.6

2,591
1,663
277

2,914
1,874
324

3,256
2,094
369

3,610
2,316
415

7.9
7.8

7.2
7.2

6.5
6.4

5.8
5.7

6.5
3.6
8.0
8.4

5.6
3.0
7.5
7.7

4.8
2.4
7.0
7.0

4.0
2.0
6.5
6.3

CPI for urban wage earners and clerical workers. Two versions of the CPI are now published. The index used here is that currently used, as required
by law, in calculating automatic cost-of-living increases for indexed Federal programs.
2 This indicator measures unemployment under State regular unemployment insurance as a percentage of covered employment under that program. It
does not iriclude recipients of extended benefits under that program.
3 General schedule pay raises become effective in October of each year-the first month of the fiscal year. Thus, the October 1980 pay raise will set
new pay scales that will be in effect during fiscal year 1981.
4 Average rate on new issues within period. These projections assume, by convention, that interest rates decline with the rate of inflation. They do not
represent a forecast of interest rates.
1




15

Policies to reduce unemployment.-As explained in the President's Economic Report, fiscal policy adjustments will probably be
required in future years to maintain economic growth and further
reduce unemployment. The appropriate magnitude and timing of
such adjustments will depend on future economic developments
and cannot now be determined. However, the administration will
propose that further fiscal actions-in particular further tax reductions-be taken between 1982 and 1985, if such actions are required
to sustain the progress of the economy toward the goals of the Act.
Unemployment rates are very high for youth and minorities. The
administration is therefore pursuing several strategies to reduce
the sources of structural unemployment without adding to inflationary pressures.
This budget proposes significant increases in spending for youth
programs. Some existing youth employment and training programs
would be combined and funding increased by $300 million. This
would be combined with a new education component, for which
$900 million is requested for 1981, to form a joint program designed
to provide disadvantaged youth with the basic academic skills and
workplace discipline required to find and keep a job. The Job Corps
training program is being expanded and will provid~ twice the
number of training opportunities made available in 1977. One million summer youth jobs are proposed, the same number as in 1979
and as proposed for 1980.
The budget also proposes maintaining the high level of training
and employment opportunities in the programs for the structurally
unemployed. These programs were revised last year to achieve
greater net employment gains, to direct opportunities more to the
disadvantaged and long-term unemployed, and to improve the preparation of enrollees for private sector jobs. In response to an administration proposal, 1979 legislation authorizes a special program
to help move all job program participants into private sector jobs.
In addition, the Revenue Act of 1978 included an administration
initiative to create a targeted employment tax credit to reduce the
cost to private sector employers of hiring disadvantaged individuals, primarily youth. The employment tax credit for hiring employees placed in jobs under the Work Incentive (WIN) program,
and for hiring other public assistance recipients, was revised to
make it similar to the targeted employment tax credit.
Finally, the administration has proposed reform of the welfare
system which, if enacted promptly, could be fully effective by 1983.
The plan would reform cash assistance programs, further develop
the use of employment and training programs, and direct more jobs
to principal earners in families eligible for cash assistance.

16



Policies to reduce inflation.-The budget proposals help combat
inflation in two ways: first, through overall budget res~raint; and
second, through measures that contribute to lowering rates of price
increase in specific sectors of the economy.
Budget restraint plays a crucial role in the administration's antiinflationary plan. Fiscal and monetary policies seek to create an
economic environment in which inflationary pressures will : abate.
Monetary and fiscal restraint alone will not be sufficient to
reduce the rate of inflation at an acceptable rate. Moderation in
private sector wage settlements and prices is also essential. Braking the momentum of inflation will require continued widespread
compliance by business and labor with the voluntary pay and price
standards established by the administration.
Numerous Federal programs and policies contribute, directly or
indirectly, to holding down rates of price increase in specific sectors
of the economy. Some programs regulate prices directly or promote
competition. Avoiding undue fluctuations of agricultural commodity prices has long been a major objective of Federal policy. Regulation of "natural monopolies" such as electric utilities; antitrust
law enforcement; and programs to foster small business · and
greater competition, all contribute to holding down price increases.
An effort is also being made to let more Government contracts on a
competitive basis, in order to reduce prices paid on government
purchases of goods and services.
The administration is currently pursuing policies to reduce economic regulation in areas-particularly transportation-where regulation tends to stifle competition and maintain unnecessarily high
prices. The Airline Deregulation Act was enacted in 1978. The
administration has proposed modifications to trucking industry regulati6ns and deregulation of rail and intercity bus transportation.
Another significant policy directed against inflation is the administration's proposal for hospital cost containment. This would reduce
price increases in a sector that has raised its prices at excessive
rates for over a decade.
Federal subsidies, tax expenditures, guarantees, insurance,
grants to State and loc~l governments, disaster assistance, and
loans may also help, directly or indirectly, hold down private sector
costs and prices. Housing programs afford examples of each of
these types of · assistance. Federal warning and safety programs
(weather service, Coast Guard, and air traffic control, for example)
also help hold down private sector costs by reducing economic
losses.
Federal pay reforms and restraints on Federal employment will
help reduce upward pressure on private sector wage rates. Policies




17

to promote exports and stabilize the value of the dollar may help
avoid increases in the costs of imports. An important set of Federal
policies seeks to promote capital formation and increased productivity, which are explicit goals of the Full Employment and Balanced Growth Act. Increased productivity is essential to reducing
inflation in the long run. Federal programs and tax policies that
promote productivity growth include the investment tax credit and
Federal support for research and development. In addition, Federal
employment, training, and education programs; equal opportunity
programs, and programs (such as housing) that contribute indirectly to labor mobility all help increase productivity, reduce structural unemployment, and make it possible to achieve employment
goals with less .inflationary pressure.

Budget Projections
The effects of current budget 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 1981 budget have
been determined largely by past decisions, the decisions and proposals it embodies will shape subsequent budgets. Thus, various
proposals in the 1981 budget would significantly reduce the level of
outlays for existing programs in future years. These reductions
both improve the prospects for budgetary balance and help make
room for important initiatives iIi energy, welfare reform, national health insurance, and defense, within budget outlay totals
that do not increase as a share of gross national product (GNP).
Since 1970, budgets have presented projections extending 4 years
beyond the budget year. Last year, a multiyear budget planning
system was established. As a result, outlay estimates for the first 2
years beyond the budget year (1982 and 1983) now receive explicit
policy review, and represent tentative planning targets for executive branch agencies.

Basic assumplions.-The receipts projections presented in this
section are consistent with the foregoing economic assumptions,
and with continuation of current tax laws as modified by the
proposals in this budget. The budget authority and outlay estimates indicate the degree to which resources would be committed
by the continuation during 1982-85 of existing and currently proposed programs at the program levels recommended for 1980 and
1981, and planned for 1982 and 1983. These estimates are not
precise forecasts of future budget authority or outlays. Nor are
they intended as detailed, final recommendations as to future
18



budget levels. They are, however, consistent with the objective of
restraining growth in Federal spending, holding Federal outlays as
a percentage of GNP to the lowest level consistent with national
needs, and moving toward a balanced budget as rapidly as economic conditions and national security considerations permit. The
multiyear budget estimates for 1982 and 1983 represent tentative
administration plans for the long-term scheduling of major new
initiatives and program reductions.
These planning base estimates, and the projections to 1985, allow
for future cost-of-living adjustments to most benefit programs, for
anticipated changes in numbers of eligible beneficiaries, for Federal pay raises, and for other built-in cost changes (such as interest)
consistent with the economic assumptions outlined above. They
allow for real growth of outlays in certain areas, such as defense,
research and development, and energy, and real decline in outlays
in others. The estimates generally assume that programs remain
level in real terms, except where there is an explicit budget recommendation, or multiyear budgeting plan, to increase or decrease
program levels over time.
THE BUDGET OUTLOOK, 1979-85
(In billions of dollars)
Estimate

1979

Projection

actual

1980

1981

1982

1983

1984

Budget outlays ..........................................
Budget receipts .........................................

493.7
465.9

563.6
523.8

615.8
600.0

686.3
691.1

774.3
798.8

838.9
902.6
920.5 1,061.2

Budget surplus or deficit (-) ................

-27.7

-39.8

-15.8

4.8

24.5

81.6

1985

158.6

The budget outlook.-The accompanying table summarizes the
budget outlook from 1980 to 1985 based on current law and proposals in this budget. Receipts are projected to increase by an average
of 15.3% per year from 1981 to 1985, rising from $600 billion to
$1,061 billion. Over the same period, outlays are projected to rise
by an average of 10.0% a year, from $616 billion to $903 billion.
Thus, under these assumptions, the budget is projected to move
into surplus in 1982, with larger surpluses in subsequent years . .
It is unrealistic to assume that, in the future, Federal receipts will
be permitted to rise continually as a percentage of GNP, with an
attendant rise in individual tax burdens. Frequent tax reductions
were enacted in the 1970's to prevent such increases in tax burdens. Thus, projections of significant surpluses in 1983 and subsequent years do not imply that resources of such magnitude will be
available for additional spending.




19

Receipts.-Projected increases in receipts from 1981 to 1985 are
attributable largely to rising nominal-dollar incomes due both to
inflation and to real growth, and to increases in social security
taxes scheduled under current law. The table below shows projected receipts by source and the effect on receipts of administration
tax proposals, other than renewals of expiring provisions.
Individual income taxes are projected to rise from $274.4 billion
in 1981 to $538.3 billion in 1985. Corporation income taxes rise by
66% over this same period, from $71.6 billion to $118.8 billion.
Because the windfall profit tax is an excise tax, it will be deductible from corporation income taxes. Thus, the tax proposals result
in a net decrease in income tax receipts during 1980-84 when
compared to current services levels.
Social insurance taxes and contributions, which increased from
. o~ly 2.5% of GNP in 1958 to 6.0% two decades later, are projected
to increase to 7.0% of GNP by 1985. The social security tax rate,
which increased from 12.1 % to 12.26% of the taxable earnings base
on January 1, 1979, is scheduled under current law to increase to
13.3% on January 1, 1981, and to 13.4% a year later. The maximum taxable earnings base is scheduled to increase annually from
the current level of $25,900 to a projected $42,900 by 1985.
Estate and gift taxes, customs duties, excise taxes (including the
windfall profit tax), and miscellaneous receipts are projected at
$96.3 billion in 1985, an increase of $29.7 billion from 1981.

BUDGET RECEIPTS BY SOURCE
(In billions of dollars)

1979

1980

1981

1982

1983

1984

1985

Individual income taxes .............................
Corporation income taxes·
..........................
Social insurance taxes and contributions ..
Excise taxes ..............................................
Other .........................................................

217.8
65.7
14l.6
18.7
22.1

238.7
72.3
162.2
26.3
24.3

274.4
7l.6
187.4
40.2
26.4

318.7
80.6
215.9
48.0
28.0

38l.4
9l.8
243.4
5l.7
30.5

455.7
105.5270.2
55.6
33.5

538.3
118.8
307.8
59.9
36.4

Total ...........................................

465.9

523.8

600.0

691.1

798.8

920.5 1,061.2

...........

-.4
-l.0
...........
7.8

.7
-2.9
l.2
29.0

*

-4.2
.8
32.2

*

l.1
-3.2
l.4
21.5
.2

*

*

*

*

6.4

21.0

28.0

28.8

33.9

41.1

MEMORANDUM: Effect of Receipts
Proposals:

In comparison to current services:
Individual income taxes ........................
Corporation income taxes .....................
Social insurance taxes ..........................
Excise taxes .........................................
Other ....................................................
Total ...........................................

20



...........
...........

.........
...........

.,

...........

.7 .
-3.2
.9
35.5

l.6
-.8
1.0
39.3

Outlays.-The estimates and projections of outlays shown in this
section are extrapolations (based on the assumed economic trends)
of program costs reflecting current administration policy-including the 1981 budget proposals and the multiyear budget plans for
1982 and 1983. They are estimates of future resources and of the
degree to which those resources are already committed by current
policy. Total budget outlays are projected to increase at an average
annual rate of 10.0% from $615.8 billion in 1981 to $902.7 billion in
1985.
PERCENTAGE COMPOSITION OF BUDGET OUTLAYS
Projection

Estimate

Actual

1967

1973

1979

1981

1982

1983

1984

1985

Direct Federal payments for individuals ......
Other ..........................................................

1.2
42.0

1.8
28.4

2.1
21.7

2.2
21.5

2.3
21.8

2.3
21.7

2.3
22.4

2.4
23.1

Subtotal, national defense ..................

43.1

30.2

23.8

23.7

24.1

24.0

24.7

25.4

Direct Federal payments for individuals ......
Payments for individuals through States
and localities ..........................................
All other grants to States and localities .....
Net interest ................................................
Other ..........................................................

24.1

35.5

40.3

43.0

42.5

44.5

44.6

45.1

3.1
6.5
6.5
16.7

5.8
11.1
7.0
10.4

5.8
10.9
8.6
10.5

6.1
9.5
8.8
8.8

6.1
9.2
7.9
10.2

5.9
8.6
6.8
10.2

6.0
8.1
6.2
10.3

6.1
7.7
5.7
9.9

Subtotal, nondefense ..........................

56.9

69.8

76.2

76.3

75.9

76.0

75.3

74.6

Description

NATIONAL DEFENSE:

NON-DEFENSE:

Total budget outlays ......................

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Budget outlays are projected to increase by $286.9 billion between 1981 and 1985. National defense -and human resources programs account for 91 % of this increase. Most of the increase results from demographic changes and inflation, rather than expansion of the scope of Federal activity through creation of new programs or liberalization of existing ones. National health insurance,
real defense growth, welfare reform, contingencies, and the energy
security programs, together, account for only 27% of the total
1981-85 outlay increase.
While total outlays are projected to increase by 47% from 1981 to
1985, outlays for health, excluding national health insurance, and
national defense are projected to increase faster than the total.
Outlays for these functions rise by 61 % and 57%, respectively.
With the allowance for national health insurance included, health
increases by 109% over the 4-year span. By way of comparison,
GNP is projected to rise by 59% during the same period.
Nearly half, $131.5 billion, of the 1981-85 outlay increase is
relatively uncontrollable, that is, in programs where outlays are
determined by existing statute or by other obligations. Outlays for
open-ended programs and fixed costs are estimated to comprise




21




59% of the budget in 1981, declining in share to a projected 55% in
1985. Outlays from prior-year obligations generally account for an
additional 15% to 18% of the budget. If they continue at this share,
then the total relatively uncontrollable portion would remain at
about 75% of total budget outlays.

Current Services
Current services estimates represent the resources that would be
needed for the forthcoming fiscal year if all Federal programs were
to continue operating at the current program level. The estimates
take into account the budget impact of anticipated changes, in
economic conditions, beneficiary levels, pay increases, and benefit
changes. They do not take into account any future policy changes
proposed by the President or contemplated by the Congress.
Current services estimates provide a basis of comparison that
highlights proposed changes in program levels. Special Analysis A,
contained in a separate budget document, includes a detailed comparison of the President's budget with current services estimates.
The President's outlay recommendations for 1981 are $616 billion,
$4 billion higher than the $612 billion current services level.
Proposed budget receipts are estimated at $600 billion in 1981,
$21 billion above the $579 billion current services estimate.
EFFECTS OF BUDGET PROPOSALS
(In billions of dollars)
Estimates

1979

1980

actual

1981

Receipts:

465.9
Current services ................................................... .
Proposed reductions (- ) .................................. .. ............................
Proposed increases .............................................. .. ............................

517.4
-.1
6.6

579.0
-.3
21.3

465.9

523.8

600.0

Current services ................................................... .
493.7
Proposed reductions (- ) .................................. .. ............................
Proposed increases .............................................. .. ............................

560.6
-.2
3.1

612.0
-9.7
13.5

Budget outlays ........................................ ..
Surplus or deficit (-):

493.7

563.6

615.8

Current services basis ......................................... ..

- 27.7

-43.2

-33.1

Budget surplus or deficit ( - ) .............. ..

-27.7

-39.8

-15.8

Budget receipts ........................................ .
Outlays:

22

PART III

MEETING NATIONAL NEEDS: THE FEDERAL
PROGRAM BY FUNCTION
This section discusses the budget in terms of national needs,
agency missions, and major programs. National needs are defined
in 16 broad areas that provide a coherent and comprehensive basis
for analyzing and understanding the b:udget. Three additional categories discussed in this section-interest, allowances, and undistributed offsetting receipts-do not address specific national needs but
are required to cover the entire budget.
The budget amounts are classified by budget functions so that
budget authority and outlays of budget and off-budget Federal
entities, loan guarantees, and tax expenditures can be grouped in
terms of national needs being addressed. These groupings are made
without regard to agency or organizational distinctions when possible. They are also the categories used by the Congress in developing concurrent resolutions on the budget.
While budget outlays are the most obvious measure of the Federal Government's use of resources, some Federal activities are not
covered by the budget outlay totals. These activities include outlays
of off-budget Federal entities, guaranteed loans, and tax expenditures. Major activities in some of these categories are discussed in
the sections that follow. More detailed discussions are contained in
the other budget volumes.
Off-budget Federal entitities are federally owned and controlled,
but their transactions have been excluded from the budget totals
by law. Their spending is part of total Federal spending, but is not
reflected in the budget totals 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.
- Guaranteed (or insured) loans are loans 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




23

to another. Most guarantees support housing, although in recent'
years they have been used increasingly for other purposes such as
student loans. In general, loan guarantees do not result in budget
outlays unless a default occurs. They are not subject to the same
review and control ~s budget outlays. However, the administration
is proposing a credit control process that would subject both direct
loans and loan guarantees to greater budget discipline.
Tax expenditures are 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.
The major growth in budget outlays over the past decade has
been in payments for individuals and grants to States and localities. The payments for individuals occur mainly in the health and
income security functions. The other .noteworthy trend is the decline in defense spending (in constant dollars) over the 1968-76
period. Despite the recent decline, defense spending has comprised
over 35% of the budget, on average, in the post-war period (194879). Since 1976, defense spending (in constant dollars) has been
increasing and is projected to continue increasing through 1985.




Budget Outlays - Constant 1981 Dollars
$ Billions

$ Billions

700~--~~------------------------------~~~700

600

600

500

500

400

Other Nondefense

Paym~nts

for
Individuals and
Grants

400

300

300

200

200

100

100

National Defense

o--~----------~----------~~~~------~O
1950

Fiscal Years

24

55

60

65

70

75

81

Estimate

National Defense
The 1981 budget provides for significant increases in U.S. defense
capabilities. It proposes budget authority of $161.8 billion in 1981
for national defense. Outlays are estimated at $146.2 billion for
1981, an increase of more than 3% in real terms over the $130.4
billion estimated for 1980. The major defense proposals for 1981
would:
• Upgrade our strategic forces so that initiation of nuclear war
continues to be clearly disadvantageous for the Soviet Union.
• Improve, in cooperation with our NATO allies, the combat
readiness of our forces for the defense of Europe, in order to
make initiation of a conventional war similarly disadvantageous for the Soviet Union and its Warsaw Pact allies.
• Improve our capability to deter and, when necessary, respond
to, crises outside Europe" especially in critical areas such as
Northeast Asia, the Middle East, and the Persian Gulf. .
• Continue to modernize our nav- l forces in order to assure
a
freedom of the seas, maintain maritime and naval lines of
communication, and improve our ability to conduct military
operations wherever we are challenged.
• Maintain our ability to monitor foreign military developments
and activities and to verify arms control agreements.
• Reform military pay to help attract and retain sufficient military personnel in the coming years, as the population of
young people decreases.
• Continue to improve efficiency through greater competition in
the acquisition process, through supply system reforms, and
through better utilization of civilian personnel.
A major determinant of U.S. defense policy is the challenge to
U.S. and Western European security presented by the military
capabilities of the- Soviet Union and its allies. Over the past decade,
growing Soviet defense spending has financed modernization of
major components of Soviet forces. In 1977 and again in 1979, the
members of NATO agreed that they should all increase their defense spending to help maintain the deterrent value of NATO as
the Warsaw Pact increases its military capabilities.
Strategic force improvements would assure that U.S. forces
remain able to deter a nuclear attack on the United States and its
allies. These improvements include full-scale development of a
large, more accurate intercontinental ballistic missile, procurement
of Trident submarines and submarine-launched intercontinental
ballistic missiles, and development of air-launched cruise missiles.




25

The United States and its NATO allies have agreed to modernize
their intermediate range nuclear missile forces in Europe through
the deployment of ground-launched cruise missiles and the new
Pershing II ballistic missile.
The budget includes a variety of programs to improve our conventional forces. These programs would strengthen the forces that
deter or stand ready to respond to nonnuclear military threats
against Western Europe or in other areas. Improvements in artill~ry and antitank weapons and air defense systems, and deployment of new F-15 and A-I0 aircraft will strengthen the combat
capabilities of U.S. forces in Europe. Cooperative programs with
our NATO allies will also continue, including joint purchase and
operation of a fleet of airborne warning and control aircraft, production of the new F-16 fighter aircraft, and a common gun design
for new tanks.
The budget also provides funds for storing additional U.S. Army
equipment in Europe to make possible a more rapid force buildup
there. A sizable increase in the purchase of modern equipment for
our ground forces is also proposed. Warship strength will increase in
1981, and future naval capabilities will be strengthened by starting
construction of 17 ships. The budget gives greater emphasis to rapid
deployment forces, to improve the ability of U.S. forces to respond
quickly to contingencies anywhere in the world.
During 1981 the military services should continue to attract and
retain enough qualified personnel to staff our armed forces adequately. An impending 25% decline in the size of the pool of eligible
18-year-olds over the next 15 years, however, may threaten the long
run success of the - volunteer force. To offset this decline, the
military services are making efforts to increase the rates of reenlistment after the initial period of service, and otherwise improve
personnel retention.
The budget includes measures that would improve the efficiency
of defense operations. These include increasing the degree of competition in the acquisition process, disposing of excess or .obsolete
stocks, and making greater use of commercially available equipment.
Outlays for atomic energy defense activities are estimated to increase by 13.6%, from $3.0 billion in 1980 to $3.4 billion in 1981,
primarily because of increased nuclear missile warhead production
and increased research and development on the safe handling of
nuclear waste.
The major tax expenditure in the defense function arises from
the exclusion from. taxable income of housing and meals provided
to military personnel. This exclusion results in an estimated revenue loss of $1.6 billion in 1981.




26

National Defense Programs (Budget Authority)
$ Billions

$ Billions

210~------------~--~------------------~-210

Atomic Energy
and Defense-Related
Activities

140

140

70

70
Strategic Forces
General Purpose
Forces and Related

0-----------------------------------------0
1977
78
79
80
81
82
83
Fiscal Years

Estimate

International Affairs
Federal support of international programs strives to reduce conflicts by promoting a stable international environment, encouraging widespread economic progress, and bringing greater respect for
human rights. Outlays for international affairs programs are estimated at $10.4 billion in 1980 and $9.6 billion in 1981. An estimated decrease of $1.2 billion in net outlays of the foreign military
sales trust fund more than offsets the $0.4 billion increase in other
programs between 1980 and 1981.
Foreign economic and financial assistance is the largest category
in the international affairs function. Outlays for such assistance
are estimated to be $6.0 billion in 1980 and $6.2 billion in 1981.
These funds provide humanitarian aid to needy people abroad,
promote economic development, and support the foreign policy interests of the United States. For the foreseeable future, the oil
importing developing countries will need considerable assistance to
meet critical import and investment requirements.
The recently created International Development Cooperation
Agency (IDCA) will improve the coordination and effectiveness of
development strategies. It is an umbrella agency that encompasses




27




five development assistance programs. The Director of the IDCA
shares responsibility with the Secretary of the Treasury for developmental aspects of U.S. participation in the multilateral development banks. Outlays to provide support for these banks are
estimated to rise from $0.9 billion in 1980 to $1.0 billion in 1981.
These institutions finance capital projects and related technical
assistance primarily for Third World countries. .
The Agency for International Development (AID) finances technical assistance and capital projects that can serve as models for
larger-scale undertakings by the multilateral development banks.
Outlays for AID's programs are estimated to rise from $1.1 billion
in 1980 to $1.2 billion in 1981.
Food for Peace (Public Law 480 food aid) meets humantarian needs
and promotes economic development abroad. Estimated outlays of
$1.2 billion in 1981 would finance shipments of 6 million metric tons
of food, the same as in 1980. The administration is also proposing to
build a food security reserve of up to 4 million metric' tons for use in
the food aid program.
The economic support fund · finances development projects and
supports the balance of payments of countries whose security is
important to the United States. Outlays for these activities are
estimated to total $2.0 billion in 1981. Because Soviet aggression in
Afghanistan threatens Pakistan, the budget includes a 1980 supplemental appropriation request of $100 million for aid to Pakistan.
Budget amendments will also be proposed for 1981.
In addition to creating the International Development Cooperation Agency, two other major changes have been made in the
organization of foreign economic assistance activities. The Peace
Corps has been given greater autonomy within ACTION, and a
special 'coordin'a tor for refugee affairs has been . established in the
State Department. Outlays of $534 million are estimated for refugee assistance in 1981, $66 million more than the 1980 level. This
level of support will help care for the sharply increased numbers of
Indochinese refugees in Southeast Asia.
Military assistance continues to be an important instrument of
foreign policy by which the U.S. helps allies and friendly countries
to maintain adequate defense capabilities. 'Weapons, equipment,
and services are provided through grants and foreign military sales
credit. Because of decreased reliance on grant assistance, outlays
for military assistance are estimated to decline from $897 million
in 1980 to $751 million in 1981.
Other foreign affairs activities include outlays for the conduct of
foreign affairs, which will increase from $1.4 billion in 1980 to $1.5
billion in 1981, largely because of rising costs of operating our
diplomatic and consular posts abroad and of paying our assessed
share of the budgets of international organizations.
28

In addition, this Nation supports foreign information and exchange activities to increase mutual understanding between Amerin
cans and tbe governments and people of otber natio· s. ':I'otal outlays for these activities are estimated to be $569 million in 1981.
The amounts proposed in the budget should permit operation at
approximately the current annual level with modest increases for
exchange programs and Voice of America broadcasts.
International financial programs advance United States interests
by improving the functioning of the international financial system
and by facilitating U.S. participation in world trade. Outlays for
these activities are estimated to be $1.7 billion in 1980 and $0.7
billion in 1981.
The foreign military sales trust fund facilitates sales of U.S.
military equipment and services to foreign governments. Income
from purchasing governments is estimated to be $1.2 billion higher
in 1981, while outlays to U.S. suppliers are expected to continue at
the 1980 level. Thus, outlays net of receipts are estimated to
decline by $1.2 billion between 1980 and 1981 .
. The primary tax expenditures in this function result from the
deferral of tax on one-half of the profits derived from domestic
international sales operations. The revenue loss resulting from this
deferral is estimated to be $0.5 billion in 1981.

Outlays for International Affairs
$ Billions

$ Billions

12~--------------------------------------~12

10

10
Other Foreign
Affairs Activities

8

8

6

6

4

4

2

2

o

0

1971 72 73
Fiscal Years

74

75 76

77 78

79

80 81

82 83

Estimate

29



310-400 0 - 80 - 4

General Science, Space, and Technology
This function includes many of the Federal Government's programs in basic research, as well as the space programs of NASA.
Outlays for general science, space, and technology are estimated to
be $5.9 billion in 1980 and $6.4 billion in 1981.
The advancement of science and technology is vital to the Nation's economic growth. Because private sector firms cannot be
expected to pay for basic research that may involve high risk or
low financial return, the administration has significantly increased
spending for such research in each of the last 3 years. A further
.increase is proposed to provide growth beyond the rate of inflation.
Much of the scientific research supported by the Federal Government is in pursuit of particular goals, such as providing for the
national defense, improving th~ Nation's health, or developing alternative energy sources. Spending in this function for general
science and technology is through programs of the National Science Foundation and the Department of Energy, which together
are expected to spend $1.6 billion on such programs in 1981. Part of
this will support technological innovation. To prosper in an environment of rising costs and of intense world-wide competition, U.S.
industry needs a technological base second to none. Through a
comprehensive set of policies and needed budget investments, the
administration proposes to encourage technological innovation in
industry.
Total outlays for space programs are expected to be $4.9 billion
in 1981, as compared to $4.5 billion in 1980. The highest priority of
the Nation's space program is to complete development of the
space shuttle. Although technical problems have caused some
delays and increases in cost, the space shuttle is expected to make
its first flig~t late this year. Once the space shuttle fleet is completely operational, it is expected to replace virtually all expendable launch boosters and thereby begin a new era in the exploration and exploitation of space to meet a variety of national needs.
The budget request also includes funds to initiate the development
of a gamma -ray observatory to be launched into space to study the
nature and origin ·of the universe, a national oceanic satellite
system, to provide global weather and ocean data, and advanced
communications t.e chnology to prov~de more efficient worldwide
communications. .
.'
.
In addition to Federal spendilfg programs, the income tax system
promotes research and d'e veiopment by allowing businesses to
deduct all research and development expenditures in the year in
which they are incurred rather than amortize them over several
years. This tax expenditure will result in an estimated revenue loss
of $2.0 billion in 1981.
30



Outlays for General Science, Space and Technology
$ Billions

$ Billions

8

8

7

7

6

6
Apollo Lunar
Landing Program

5

5

4

4

3

3

2

2

1

1

General Science and Basic Research

o--------------~------------------~------o
1971 72 73 74 75 76
77 78 79 80 81 82 83
.

Estimate

Fiscal Years

Energy
Our basic energy problem is simple and unpleasant: as supplies of
cheap oil and natural gas decrease, the price that we pay for energy
will increase. Controls on domestic energy prices have subsidized the
consumption of imported oil, and the rapid OPEC price increases of
the past year have added significantly to inflation and increased
pressure on our balance of payments. Continued dependence on
imported oil subjects our economy to substantial uncertainty and
instability.
The proposals in the budget support the administration's national energy strategy to deal with these energy problems. That strategy includes a rational pricing policy for oil and natural gas; a
windfall profit tax to capture a portion of the increased revenues
that will flow to the oil industry; programs to increase our domestic supplies of energy, including .t he Energy Security Corporation;
and expanded programs to encourage energy 'conservation throughout the Nation. Under the programs proposed by the administration, projected imports of oil by 1990 are estimated to fall to 4.5
million barrels per day from the current daily level of 8.1 million.
Outlays for energy are estimated to increase from $7.6 billion in
1980 to $8.1 billion in 1981.




31

The most important initiative in the energy supply area is the
proposed Energy Security Corporation. Financed by receipts from
the windfall profit tax, the Corporation would provide price, loan,
and purchase guarantees to private sector firms to encourage the
production of unconventional natural gas, oil from coal, and other
synthetic fuels. By 1990, the administration plan anticipates the
equivalent of 2.5 million barrels per day of such synthetic fuels
production, offsetting almost one-third of our current level of oil
imports. The budget proposes $20 billion in budget authority to
promote synthetic fuels activities.
Also included in the administration's program is the proposed
Energy Mobilization Board and the Solar Energy and Conservation
Bank. The Board would reduce the regulatory delays involved in
establishing critically needed energy supply facilities. The proposed
Solar Energy and Conservation Bank would encourage the use of
solar energy and improved conservation measures in homes and
businesses by providing loan subsidies.
Additional emphasis is being placed on alternate sources of
energy, particularly solar energy. The President has announced a
goal of deriving 20% of the Nation's energy from solar sources by
the year 2000, and the budget includes outlays of over $1.1 billion
in 1981 to help reach that goal. Programs to encourage biomass,
the conversio~ of organic materials into relatively clean fuels such
as gasohol, and cleaner, more efficient ways of producing energy
from coal, also receive increased emphasis in the administration's
energy program.
Significant emphasis in nuclear research and development programs will be placed on improving the safety and reliability of the
present generation of nuclear power plants. Increases in funding
for this purpose will be more than offset by reductions in alternative, less-promising nuclear technologies.
The most important administration initiative in energy conservation is the gradual decontrol of domestic oil prices and the proposal
for a windfall profit tax, which would help pay for programs to
reduce oil imports. Some of the conservation programs proposed
include a program ~o reduce utilities' use of fuel oil through conservation and conversion to other fuels and a program to increase the
efficiency of energy use in residences and businesses.
Federal conservation programs also support the development of
technologies to reduce energy use further, in such areas as buildings, industry, and transportation. Conservation grants provide assistance to low-income families, hospitals, and schools for insulation and other conservation measures. Outlays for conservation
programs in the energy function are estimated to be $0.6 billion in
1980 and $1.2 billion in 1981. Tax credits of $739 million will

32



provide added energy-saving incentives to homeowners and businesses.
Emergency energy preparedness programs are intended to cope
with disruptions in energy supply. The programs in this area include regional and strategic petroleum reserves and contingency
plans for gasoline rationing. Budget authority of $2.4 billion and
outlays of $1.3 billion are proposed for these activities in 1981.
Energy information, policy, and regulation includes the information and policy activities of the Department of Energy, as well as
the regulatory activities of the Federal Energy Regulatory Commission, the Economic Regulatory Administration, and the Nuclear
Regulatory Commission. Outlays for these activities are estimated
to be $0.9 billion in 1980 and $1.2 billion in 1981. Additional funds
are proposed for the Nuclear Regulatory Commission as one of
several steps being taken by the administration to improve the
effectiveness of the NRC in the aftermath of the Three Mile Island
accident.
In addition to existing tax expenditures for energy, such as the
oil depletion allowance and the 15% residential energy credit, the
administration has proposed tax expenditures to expand -domestic
energy supplies and encourage energy conservation. Energy tax
expenditures are estimated to be $6.6 billion in 1981.




Outlays for Energy, 1977-1983
$ Billions

$ Billions

15~------------------------------------~15

Total
12

12
Emergency
Preparedness

9

9

6

6

Energy Information,
Policy and Regulation

3
Energy Supply

3

o--------------------------~--~-------o
1977

Fiscal Years

78

79

80

81

82

83

Estimate

33

Natural Resources and Environment
Outlays to support the use and preservation of our natural resources and to improve the environment are estimated at $12.8
billion in 1981, the same level as in 1980.
The Federal Government helps to control air, water, and land
pollution both directly and through Federal financial and technical
assistance to State and local governments. Outlays for pollution
control and abatement are estimated to increase from $4.9 billion
in 1980 to $5.1 billion in 1981.
The budget places a major emphasis on responding to hazardous
waste problems. The Environmental Protection Agency will vigorously enforce existing statutes to stop improper disposal activities
and require remedial actions to correct environmental hazards
caused by chemical dumpsites. The administration has proposed
legislation to establish a fund of up to $1.6 billion to handle the
problems posed by uncontrolled chemical dumpsites. In addition,
estimated outlays of $4.0 billion in 1981 would help State and local
agencies with sewage treatment.
The Federal Government seeks to foster water resources projects
that are environmentally and economically sound. These projects
include flood control, water supply, irrigation, navigation, hydroelectric power development, recreation, wildlife preservation, and
erosion control. Outlays for water resources programs are estimated to be $4.2 billion in 1980 and $4.1 billion in 1981.
A major policy study was undertaken to improve the effectiveness and environmental quality of Federal water programs. The
budget provides for carrying out the policy recommendations of
this study. In addition, planning programs for water resources
continue to be oriented toward projects with high-priority outputs
such as hydropower, urban flood protection, water supply, and
commercial navigation.
Conservation and development of natural resources is a continual
balancing of programs to provide for energy and mineral extraction, recreational opportunities, timber utilization, rangeland management, wildlife protection, and preservation of archeological and
cultural resources. The surface mining of coal is regulated to prevent
degradation of the land, and lands previously mined are reclaimed.
Assistance is also provided to conserve agricultural lands. Outlays
for such conservation and land management programs are estimated
to be $2.3 billion in 1980 and $2.2 billion in 1981.
To preserve unique areas, to conserve fish and wildlife, to meet
the need for recreation, and to protect historical resources, the
Federal Government, either directly or through grants to States,
acquires, develops, and operates parks, recreation areas, historic
sites, and wildlife refuges. Outlays for these and other recreational
resources are estimated to be $1.5 billion in ,1980 and in 1981.
34



Outlays for Natural Resources and Environment
$ Billions

$ Billions

15~--------------------------------------~15

12

12

9

9

6

6

3

3
Water Resources

o------------------------------------~---o
1971 72 73 74 75 76 77· 78 79 80 81 82 83
Fiscal Years

Estimate

Agriculture
The Federal Government seeks to moderate the swings in the
agricultural economy by supporting prices, by helping to create
farmer-held commodity reserves, and by supporting basic research.
The Government also assists farmers in adopting environmentally
sound conservation measures and pollution control practices.
Outlays for the agriculture function are estimated to decrease
from $4.6 billion in 1980 to $2.8 billion in 1981. This decrease
reflects higher asset sales by the agricultural credit insurance
fund, a substitution of loan guarantees for direct loans under the
short-term export credit program, and a decrease in outlays .for the
new export control mitigation program between 1980 and 1981.
Following the Soviet aggression against Afghanistan, the administration took a number of actions, the most important of which
limited Soviet purchases of U.S. grain. This action will add to
budget outlays in both 1980 and 1981. The administration has
pledged that any adverse effects of the limitation of exports to the
Soviet Union sha11 not fall disproportionately on farmers. Through
an export con trol mitigation program, the Department ofAgricul ture is
prepared to purchase at least 13.7 million metric tons of grain and
1.1 million metric tons of soybeans and soybean oil in 1980, and
return them to market at or above the prices prevailing when




35

these exports were suspended. Total outlays for the export control
mitigation program are estimated at $2.0 billion in 1980 and $0.8
billion in 1981.
The administration is continuing to expand agricultural exports
in other markets. New commitments for loan guarantees are being
increased from $1.0 billion in 1980 to $2.0 billion in 1981.
Estimates of price support program costs are highly speculative
and subject to the uncertainties of weather and markets at home .
and abroad. The Commodity Credit Corporation (CCC) administers
the largest farm income stabilization program. Outlays for its price
support and related programs are estimated to fall from $2.8 billion
in 1980 to $2.1 billion in 1981 due to the effects of the export
control mitigation program and substitution of loan guarantees for
direct lending under the short term export credit program.
Farm income stabilization is also provided through Federal crop
insurance against losses from natural hazards. Under proposed
legislation a newall-risk insurance program would replace the
current CCC disaster payments.
Estimated outlays for agricultural research and services are $1.4
billion in 1980 and in 1981. Research would be directed toward
'stimulating innovation in industry, improving health, and managing.
.natural environmental changes.

Outlays for Agriculture
$ Billions

$ Billions .

10~----------------------------------~10

8

8

6

6

4

4

2

2

o

o

1971 72
Fiscal Years

36



73

74

75 76

77

78

79 80

81

82 83

Estimate

Commerce and Housing Credit
The administration seeks to avoid the sharp and disproportionate
reductions in housing credit that, in the past, have typically resulted from tight monetary policies. In support of the Nation's commercial sector, the administration is recommending proposals to
improve our economic productivity. Net outlays for commerce and
housing credit are estimated to decrease from $5.5 billion in 1980
to $0.7 billion in 1981, largely due to · substantial increases in receipts from the sale of loans and other financial assets.
Federal mortgage credit and thrift insurance programs help promote growth and stability in the private housing market. Tax
expenditures and significant reforms for financial institutions provide support in addition to that provided by programs of the Government National Mortgage Administration (GNMA) and the Federal Housing Administration (FHA). GNMA guarantees of mortgage-backed securities are expected to increase to $25 billion in
1981. A new demonstration program of mortgage interest subsidies,
together with the requested level of mortgage purchase commitments, would provide interest subsidies for an additional $2 billion
of mortgages.

Outlays for Commerce and Housing Credit
$ Billions

$ Billions

6~--------------------------------~6

4

4

Postal

2

2

o

o
Mortgage Credit and
Thrift Insurance

-2

-4 ---'-_

__'__"------'-_--'--_...a....-_....L-_i.--~_

1971 72 73 74
Fiscal Year.s



~1n-unn

-2

75 76

77

__'__...I.....____'__,..---L-

-4

78 -'9 80 81 82 83
Estimate

37

n _ Rn - h

The FHA provides mortgage credit and insurance to families not
adequately served by the private market. The FHA plans to write
$21.4 billion of mortgage insurance in 1981, about $2.1 billion more than
estimated for 1980. Further support for the housing market, through
a temporary mortgage assistance payment program, would help
homeowners facing temporary economic difficulties and would reduce FHA insurance claims. In addition, the administration is
proposing that the currently complex statutory authority for FHA
insurance and GNMA mortgage credit activities be simplified and
consolidated.
Additional thrift insurance is provided by deposit insurance
through the Federal Deposit Insurance Corporation and the National Credit Union Administration. Net outlays for the various
mortgage credit and thrift insurance activities are estimated to
total $1.9 billion in 1980, and to decline to $-2.8 billion in 1981.
Receipts from sales of loans and other assets, which are an offset to
gross outlays, are responsible for the negative outlays in 1981.
Continued support for the Postal Service, an independent Federal
entity subsidized by the Government, would be provided through
payments of $1.7 billion in 1980 and $1.6 billion in 1981.
The budget also supports commerce through the Department of
Commerce, the Small Business Administration (SBA) and other
agencies, such as the National Consumer Cooperative Bank.
The budget provides for $4.2 billion of new commitments for
guaranteed business loans. As part of the budget initiatives to assist
businesses owned by minorities or women, the SBA would restructure its business loans program more toward those groups. As a
result, the share of direct business loans approved for minorityowned businesses in 1981 should be 20% higher than current levels.
Outlays to assist small businesses are estimated to total $0.9 billion
in 1981.
As part of the administration plan to increase industrial innovation, the Commerce Department would undertake new efforts to
improve. the Nation's technical knowledge, the patent system, and
the development of small innovative firms
/'
To prevent the 'financial colla- se of the Chrysler Corporation and
p
the resulting unemployment and economic disrupt.ion, up to $1.5
billion in federally guaranteed loans were authorized in 1980.
The tax system provides a variety of incentives for commerce
and housing, such as the 10% tax credit for capital equipment,
credit for rehabilitation of industrial structures, and rapid depreciation methods. Tax preferences include: dividend exclusion, exclusion of interest on certain State and local debt, and certain capital
gains treatments. Tax advantages also accrue to homeowners,
small businesses, credit unions and holders of certain types of
consumer debt.
38



Transportation
The Federal Government, together with State and local governments and the private sector, is committed to meeting the Nation's
transportation needs in a safe, reliable, and increasingly energyefficient manner. Outlays for transportation are estimated to be
$19.6 billion in 1980 and $20.2 billion in 1981.
The administration has requested $16.5 billion for a 10-year
transportation energy initiative. The budget includes outlays of
$0.6 billion in 1981 for the following programs: public transportation investment, auto-use management, fuel economy standards
improvement, and cooperative basic automotive research.
The budget proposes continued construction and renovation of
the Nation's highway system and funding for other programs of
high priority. Total outlays for highways and mass transit are
estimated to be $11.2 billion in 1980 and $11.9 billion in 1981.
The Nation needs transportation industries that are responsive
to the demands of the economy. Therefore, the administration has
proposed deregulation of the railroad and trucking industries. Railroad deregulation will help avoid the threat ,of bankruptcy and the
need for massive subsidies that would result from forcing the railroads to continue absorbing the cost of outdated and inefficient

Outlays for Transportation
$ Billions

$ Billions

24

24

20

20
Water

16
12

16
Railroads

12

8
4

8

Highways and Other*

4

o----~------------~--~~--~~~~~o
1971 72 73 74 75 76
77 78 79 80 81 82 83
Fiscal Years
*Includes Energy Initiative Programs

Estimate

39



regulatory practices. The proposal would ensure an orderly transition to a less-regulated environment. Budget authority of $2.0 billion and outlays of $1.8 billion for railroads are proposed for 1981.
The budget request for the Federal Aviation Administration
(FAA) would increase the number of air traffic controllers to
23,600, and enable the FAA to maintain airspace safety in the face
of continued growth in airline passenger traffic brought about by
deregulation of the airline industry. It provides for continued improvement and expansion of aircraft safety inspections, and review
of airline maintenance and safety procedures. The budget proposes
continuation of the airport and airways trust fund to provide increased capacity and safety for the air transportation system, and to
better balance the sources of revenue with the groups that receive
benefits. Outlays for air transportation are estimated to be $3.8
billion in 1980 and $4.0 billion in 1981.
As the Nation expands its efforts to increase domestic production
of energy, offshore drilling and exploration will increase. The Coast
Guard is increasing its ability to inspect offshore drilling rigs and
to assure that oilspills do not seriously threaten our shorelines . .
The budget also provides support to our Nation's maritime industry. Total outlays for these and other water transportation activities are estimated to be $2.2 billion in 1980 and $2.3 billion in 1981.

Community and Regional Development .
Community and regional development programs provide grants,
loans, loan guarantees, and technical assistance to States, localities,
and Indian tribes. Outlays are estimated to rise from $8.5 billion in
1980 to $8.8 billion in 1981, with an increase in budget authority
from $9.0 billion to $9.8 billion. These funds will focus on two key
objectives: promoting the development of economically and socially
viable areas, and developing a partnership between the public and
private sectors to revitalize economically depressed or declining
areas.
Community development assistance is provided predominantly
through the Department of Housing and Urban Development (HUD).
Its community development block grant program funds local activities such as property acquisition, construction of public facilities,
rehabilitation of buildings, provision of social services, planning and
management, and economic development, primarily for the benefit
of low- and moderate-income residents. Outlays for this program are
estimated to increase from $3.5 billion in 1980 to $3.8 billion in 1981.

40



The urban development action grants program is a major element
of the President's urban policy. This program provides severely
distressed cities and counties with supplemental funding to be used
in conjunction with other public and private funds to stimulate
economic development and neighborhood revitalization. Its outlays
are estimated to double between 1980 and 1981, increasing from $180
million to $365 million.
HUD's rehabilitation loan program offers low-interest loans for
the rehabilitation of residential and commercial structures in specified areas. The rehabilitation of 13,200 single family dwellings and
6,000 multifamily units would be financed by a $240 million rehabilitation loan program. Outlays for this program are estimated to
increase from $170 million in 1980 to $190 million in 1981.
Other community development assistance is provided through
HUD's neighborhood self-help and New Community Development
Corporation programs, through the Neighborhood Reinvestment
Corporation, and through the Pennsylvania Avenue Development
Corporation, an independent agency supporting the revitalization of
the downtown area of our Nation's capital.




Outlays for Community and Regional Development
$ Billions
$ Billions
12~--------------------------------------------------------------------12

Loca I Pu bl ic
Works Program

8

8

Disaster Relief
and Insurance
4

4

Other Area and
,
Regiona I Development

o
1971 72 73 74
Fiscal Years

0
75 76

77

78 79

80 81

82 83

Estimate

41

Other area and regional development is supported through programs of the Department of Agriculture, the Department of Commerce, and the Department of the Interior. Other independent
agencies also provide support. Outlays for area and regional development are estimated to increase from $2.7 billion in 1980 to $3.0
billion in 1981.
The Department of Agriculture administers a variety of programs that will support the President's recently announced small
community and rural development initiative. The 1981 budget provides for $940 million in new direct loan obligations for water
and waste disposal systems and community facilities, as well as
$926 million in new loan guarantee obligations for business and
industrial development. Outlays from these and other development
programs are estimated to increase from $656 million in 1980 to
$784 million in 1981.
The administration proposed legislation to improve the ability of
the Economic Development Administration of the Department of
Commerce to address the economic development problems of rural
and urban areas. Loan guarantee authority of $1.6 billion is req~ested for development assistance to rural and urban areas in
1981, a sharp increase over the $0.9 billion 1980 level. Outlays for
economic development assistance in 1981 are estimated to be $845
million, an increase of $278 million over the 1980 level.
The Department of the Interior provides grants, training, and
technical assistance to strengthen tribal management and planning
abilities. It also encourages economic development through business
development assistance, direct Federal loans, loan guarantees, and
interest- subsidies. Federal Indian programs also fund community
development activities, such as construction of roads, schools, and
irrigation systems. Outlays for the regional development Indian
programs are estimated to be $846 million in 1980 and $861 million
in 1981. Additional assistance to Indian tribes is provided through
other budget functions.
The regional commissions programs are designed to secure Federal-State cooperation in addressing interstate and shared intrastate problems of community and economic development. Legislation has been submitted to extend the regional commissions nationwide and encourage the use of development grants to resolve multistate problems. Outlays are estimated to increase -from $430 milin 1980 to $458 million in 1981.
The Federal Government provides disaster relief and insurance to
supplemental private, State, and local assistance when such assistance is inadequate. In anticipation of more historically normal
require~ents for such assistance, outlays for disaster relief and
insurance are estimated to decline from $1.3 billion in 1980 to $0.9
billion in 1981.

42



Education
The new Department of Education will improve the coordination
and management of Federal education programs. Legislation creating the department was proposed by the administration in recogni- tion of the growing size and complexity of Federal support for education. Requested budget authority for education increases from $15.3
billion in 1980 to $16.5 billion in 1981. Outlays are estimated to be
$14.2 billion in 1980 and $14.4 billion in 1981.
The administration is proposing a major youth education and
training initiative. In 1981, the education component of the initiative
would provide $900 million in grants for supplementary education in
basic academic and employment skills for school districts with high
concentrations of disadvantaged junior and senior high school
students. Local schools would cooperate closely with private
industry and local agencies administering the complementary
training and employment program to assure that students receive
the basic skills and work experience needed for full participation in
the work force. Most of the $7.8 billion in estimated 1981 outlays
for elementary, secondary, and vocational education is to provide
formula and discretionary grants to assist State and local educational agencies. Budget authority of $4.1 billion is requested for
supplementary education services for low-income and low-achieving
students in 1981.
Budget authority increases are proposed for the Indian education, education of the handicapped, bilingual and adult education,
and Head Start programs. Continuation of the 1980 funding level is
requested for occupational and vocational education programs. The
administration proposes to direct the impact aid program, which
assists school districts affected by Federal activities, to districts
that are most adversely affected by those activities. As a result, the
1981 request is $286 million below the 1980 level.
The Head Start program will provide educational, social, health,
and other services to 386,000 low-income, preschool children in
1981. Recent evaluations suggest that children in Head Start projects improve their social and academic skills. The program will
place emphasis on solving the problems of the children of migrant
workers and th~ urb~n poor.
The budget r~q~est for; higher education in 1981 includes $5.6
billion in budget authority and outlays of $5.2' billion~"' for student
assistance and continuing education programs. 'This total "includes
$2.4 billion for the basic educational opportunity grant "
program to
provide students with grants of up to $1,900. The supplemental
educational opportunity grants program, State student incentive
grants, and college work-study programs would be funded at the
same level as in 1980.




t

43

The administration's reauthorization proposal would restructure
the Federal student assistance loan programs by replacing the
current direct and guaranteed student loan programs with a new
program of basic direct loans and supplemental loan guarantees
that would target Federal assistance more directly to students most
in need. The 1981 budget requests $1.6 billion for this new ' program, which would provide loans to 2.6 million students.
The budget requests $430 million for assistance to higher education institutions to help disadvantaged students obtain or continue
post-secondary edl!cation. This amount includes funds for about 850
additional fellowships for graduate studies in the professions, and
increased funding for programs offering placement, counseling, and
other services to disadvantaged college students. Assistance to developing institutions would be increased by $30 million.
Estimated outlays of $1.4 billion in 1981 would support education
research and development, as well as training, cultural activities,
and other general education aids.
Tax expenditures in the education function include the deductibility of many educational expenses and the exclusion of scholarships and fellowships from taxable income. Total tax expenditures
for education are estimated to be $2.7 billion in 1981.

Outlays for Education
$ Billions

$ Billions

18~------------------------------------~~18

15

15

12

12

9

9

6

6

3

3

o------~--~~--~--~----------~------~o

1971 72 73 74

Fiscal Years

44



75 76

77 78 79 80 81 82 83
Estimate

Youth Training and Employment Programs
$ Billions

$ Billions

8~------------------------~---------------'-8

7

7

6

Youth Initiative

5

6
.5

Special
Youth Programs

4

3

4

3
Labor
Dept.

2

2
Training &
Work Programs

1

Ed.

1

Dept.

0

0

1971 73 75
Fiscal Years

77 79

81 83
Estimate

Training, Employment, and Social Services
Training and employment programs help develop work skills,
provide temporary employment and work experience, and increase
long-term employment opportunities for the disadvantaged. The
social services programs help the disabled and the disadvantaged
become self-sufficient. Total outlays for training, employment, and
social .services are expected to be $16.5 billion in 1980 and $17.6
billion in 1981.
The employment situation has improved substantially over the
past few years, with total employment increasing by 9.4 million
since December 1976. Proposed funding in 1981 for training and
employment programs has been increased and directed more
toward the economically disadvantaged and the long-term unemployed. Strategies for job development and job placement in the
private sector will stress programs designed by States and localities
with the aid of Private Industry Councils. Outlays for general
training and employment programs under the Comprehensive Employment and Training Act (CETA) are estim~ted to be $2.8 billion
in 1981. Estimated outlays of $4.4 billion for public service employment would support an average of 450,000 jobs in 1981, the level




.45

expected to be reached at the end of 1980. Jobs for people with
lower incomes and longer periods of unemployment are emphasized.
The labor component of the youth education and training initiative proposes consolidation, replacement, and enhancement of
three experimental programs started as part of the 1977 economic
stimulus effort-the youth employment and training programs, the
youth community conservation and improvement projects, and the
youth incentive entitlement pilot projects. Budget authority for
1981 would be $300 million above the current services level of the
programs to be replaced. Prime sponsors would work closely with
local schools to provide the combination of training in basic skills,
work experience, and workplace discipline that will help youth who
are the most disadvantaged. Because older (18- through 21-year-old)
out-of-school disadvantaged youth are the group most in need of
help, prime sponsors would devote their greatest effort to them.
Outlays for programs designed specifically for youth ,a re estimated
to be $2.6 billion in 1981. The requested funding level would expand
the Job Corps training program to a capacity of 44,000 enrolleesdouble the 1977 level-and provide 1 million part-time summer jobs
for youth. ,
The work incentive (WIN) program helps those receiving aid to
families with dependent children find and retain jobs. Estimated
outlays of $385 million in 1981 would place approximately 286,000
individuals in unsubsidized private sector jobs.
The administration has proposed a welfare reform initiative that
integrates cash assistance with an employment and training strategy, the new targeted employment tax credit, and revisions in the
earned income tax credit. The proposal would ensure that individuals on public assistance have strong incentives to seek and retain
permanent jobs that are not subsidized by the Government.
Job-matching services for workers and employers are provided
free of charge by 2,400 State employment service offices financed
by Federal funds. The 1981 budget request maintains employment
service operations at the 1980 level.
The Federal Government also sets and enforces standards for
wages and hours, welfare and pension plans, and other employer/
employee relationships, including collective bargaining, and publishes employment, wage, and price statistics. Outlays for these and
other labor services are estimated at $563 million in 1980 and $602
million in 1981.
Social services grants to States and localities help the poor, the
elderly, the handicapped, the mentally retarded, homeless or neglected children, and the drug-addicted, including alcoholics. The

46



administration has proposed legislation to significantly improve the
welfare of children and to protect their rights and those of their
parents. Increased funding would be made available for services to
reunite children with their families when feasible, and to facilitate
the adoption of children with special needs.
Programs to aid the elderly provide a broad array of services for
the aged, including 410,000 meals provided to older Americans.
These services are intended to help the elderly to continue to live
in their own homes and communities whenever possible. Outlays
for these services are estimated to be $726 million in 1981, an
increase of $128 million over 1980.
The Community Services Administration supports local social
services agencies and funds demonstration projects to test new
methods of delivering services to the poor. Total outlays for social
services programs are expected to be about $5.5 billion in 1980 and
$5.7 billion in 1981.
The targeted employment tax credit, the work incentive credit,
and the child care tax credit, along with the deductibility of most
•
contributions to social services agencies, are estimated to result in
tax expenditures of $8.4 billion in 1981.




Outlays for Training, Employment, and Social Services
$. Billions
$ Billions
24~------------------------------------~~24

20

20
Total

16

16

12

12

8

8

4

4

Socia I services

o------~------~~--~--~~--------~~-o
1971 72 73 74

75

76

77

78

79 80

Fiscal Years
*Programs Exclusively for Public Service Employment

81

82

83

Estimate

47

Health
The budget emphasizes improved access to health and mental
health services, restraint in health care costs, improved planning
and management of the Nation's health care system, and prevention of disease. It includes a $24.1 billion allowance for the estab- '
lishment of a national health program in 1983. Total outlays for
health are estimated to rise from $56.6 billion in 1980 to $62.4
billion in 1981.
Estimated outlays for medicare of $37.3 billion will help provide
services to 25 million aged and 3 million disabled Americans in
1981. Outlays for medicaid of $15.9 billion in 1981 will finance the
care of 23 million poor people. These spending levels reflect the
effects of proposed reforms to restrain health costs and a number
of proposed benefit improvements.
Legislative proposals to expand services would increase outlays
in 1981 by $0.1 billion for medicare and $0.5 billion for medicaid.
Liberalization of medicare and medicaid coverage for disabled beneficiaries would remove disincentives to their return to work. The
expanded financing of home health services under medicare and
medicaid, and liberalized outpatient mental health benefits under
medicare
would
help
beneficiaries
avoid
unnecessary
institutionalization. Passage of the proposed child health assurance
program would improve services and would extend medicaid eligi, bility to an additional 2 million children and pregnant women.
Inflation in health care costs hinders the ability of the Nation's
citizens to pay for needed health care, strains the national economy, and burdens the Federal budget. During the last 10 years,
hospital costs-the largest component of health care costs-have
grown almost 2Y2 times as fast as the consumer price index. Without hospital cost containment legislation or other major changes in
the health system, national health expenditures are projected to
reach 10.5% of GNP in 1985.
Consequently, the administration is proposing cost-saving reforms that would 'reduce medicare and medicaid outlays by $1.7
billion in 1981. Hospital cost containment legislation would limit
increases in inpatient revenues to a rate consistent with increased
costs, population growth, and needed service improvements. Outlay
savings from this proposal are estimated at $780 million in 1981.
Legislative proposals to reform hospital reimbursement for medicare and medicaid and to make medicare supplementary to private
health insurance for the working aged are also included in the
budget.

48



The budget proposes administrative reform of the Federal health
planning ancj services grants system. The current system of 11
State health plans and 30 separate grant programs results in gaps
and fragmentation of services, poor coordination and management,
and burdensome administrative requirements. The planning
reform would begin consolidating the various health planning requirements. The grant reform would require performance agreements with State and local governments for the delivery of compre~
hensive primary health services to the poor and underserved.
These reforms will be initiated on a voluntary basis with State and
local governments.
Outlays for other health care services are estimated to rise from
$3.8 billion in 1980 to $4.1 billion in 1981. New and expanded
assistance would be provided to States and communities for the
development and delivery of comprehensive mental health services,
especially for the chronically mentally ill and other underserved
populations. Expanded Federal support for primary health care
services would provide additional services to medically underserved
populations. These increases are expected to help support 45 new
community health centers, provide an additional 1,708 National
Health Service Corps health professionals in underserved areas,
and expand family planning and maternal and child health services. Expansion in the direct health care delivery program of
the Indian Health Service would continue the substantial im""
provements in Native American health status achieved during the
1970's. Other Federal programs support a wide range of health
activities, including health maintenance organizations, Public
Health Service hospitals, emergency medical services, alcohol and
other drug abuse treatment services, and St. Elizabeths Hospital.
The 1981 budget reflects the administration's commitment to
effective and innovative disease prevention, health promotion, and
health education programs. New initiatives will focus on eliminating measles, increasing water fluoridation efforts, reducing smoking and other drug abuse, and preventing major diseases.
Federal outlays' for health research are estimated at $3.3 billion
in 1980 and $3.6 billion in 1981. Requested funding would allow the
National Institutes of Health to support 5,000 new and renewed
research grants for a total of ap'p roximately 16,700 research proj_ ects. Increased support would be provided to carry out basic research in the study of degenerative and chronic diseases as well as
research related to mental health and ot'h er health services.
Total outlays for education and training of the .health care workforce are estimated to decline from $652 million in 1980 to $559




49

million in 1981. During the 1960's and 1970's the supply of health
professionals increased substantially. Demographic projections indicate that there is and will continue to be an adequate or excess
supply of personnel in all the major health professions. Therefore,
the 1981 budget continues to concentrate on improving the geographic distribution of health professionals through service commitment scholarships, and on the problem of overspecialization of
medical practice through support of primary care training programs.
Outlays for consumer safety are estimated to increase from $645
million in 1980 to $658 million in 1981. Continued efforts are
proposed for 1981 to assure the safety and efficacy of drugs and
medical devices. Budget outlays to protect American workers from
workplace haza·r ds are estimated to increase from $337 million in
1980 to $369 million in 1981.
In addition to direct Federal spending, Federal income tax laws
help finance health care by excluding health insurance premiums
paid by employers from employees' taxable income and by permitting itemized deductions for health care expenses and healthrelated charitable contributions. The revenue loss in 1981 from
these tax expenditures is estimated to be $20.9 billion.

Outlays for Health
$ Billions

$ Billions

80

80

70'

70

60

60

50

50

Other

40

40

30

30

20

20
Medicare

10

10

..--~--~------~--~-------o

o----------~

1971 72 73 74 75 76

Fiscal Years

50



77

78

79 80 81

82 83

Estimate

-

Income Security
Outlays for i~come security are estimated to rise from $190.9
billion in 1980 to $220.0 billion in 1981. Between 1975 and 1981,
income security outlays, which consist almost entirely of benefit
payments to individuals, will have grown by 160%. Administration
proposals in this area will focus on simplifying program administration, increasing program accountability, decreasing costs by reducing fraud and abuse, and directing benefits to those most in
need. Proposals are also being designed to improve the welfare
system and to offset the effects of rising energy costs on low-income
families.
Social security is the largest single program in the budget. Outlays for social security are estimated to rise from $117.9 billion in
1980 to $136.9 billion in 1981. In 1981, an estimated 36 million people
will receive social security benefits.
The social security system, in the short term, requires greater
flexibility in responding to economic changes. To insure adequate
financing for the operations of each fund, legislation will be proposed
to permit borrowing among the old-age and survivors insurance trust
fund, the disability insurance fund, and the health insurance fund.
Several other Federal retirement programs provide income security. Outlays for railroad -retirement are estimated to increase from
$4.7 billion in 1980 to $5.2 billion in 1981 as a result of increased
benefits. The higher benefits will more than offset the effect on
outlays of an anticipated decline of 21,000 beneficiaries between
1980 and 1981. The administration proposes to increase the railroad industry component of the pension fund revenues by an additional 2% of payroll and to restrain growth in future railroad
retirement benefits. These benefits would be made more consistent
with those of the social security program. Estimated outlays of $2.0
billion in 1981 will provide special benefits for coal miners disabled
by "black lung" disease.
Outlays for Federal civilian employee retirement and disability
programs are estimated to . increase from $14.6 billion in 1980 to
$17.1 billion in 1981. These programs are estimated to have 1.8
million beneficiaries in 1981. Included in the total , for 1981 are
outlays of $381 million for medical payments and compensation to
Federal workers for job-related disabilities. About 48,000 former
Federal employees will continue to receive long-term disability
benefits. Legislation will be submitted to improve this program.
The Pension Benefit Guaranty Corporation is an off-budget Federal entity that protects the vested benefits of private sector em-




51

ployees in covered pension plans if their plan terminates. The
Corporation's income is expected to exceed outlays by $37 million
in 1980 and $44 million in 1981. Legislation has been submitted to
revise the pension insurance program for employees under multiemployer pension plans.
Unemployment recipients are estimated to average 2.9 million
per week in 1980 and 3.4 million per week in 1981. Outlays for
unemployment compensation are estimated to increase from $15.6
billion in 1980 to $18.8 billion in 1981.
The administration has proposed welfare reform to improve the
system of benefits for the needy, to promote opportunities and
incentives for work and training, and to reduce the States' welfare
burden. The basic components of the welfare reform plan include
estaplishing a national minimum benefit level for needy families,
extending nationwide eligibility to two-parent families, expanding
the coverage and increasing the value of the earned income tax
credit, providing additional private and public sector employment
and training opportunities, and providing fiscal relief to the States .
through increased Federal support and improved operation of welfare programs. Provision for this proposal has been made in the
budget allowances. .
Outlays for the supplemental security income (SSI) program,
which will provide benefits to an estimated 4.2 million aged, blind,
and disabled beneficiaries, are estimated at $6.4 billion in 1980 and
$6.9 billion in 1981.
The program of aid to families with dependent children (AFDC)
assists States and localities in providing cash assistance to needy
families. Outlays are estimated at $7.4 billion in 1981 compared
with $7.0 billion in 1980. The 1981 outlay increase results from
moderate increases anticipated in the average benefit payment and
in the number of AFDC families. Errors and abuses in the program
are being reduced through close cooperation between the States
and the Federal Government.
The earned income tax credit aids low-income workers by providing an income tax reduction (credit). If the credit exceeds their tax
liability, a check is issued for the amount of the credit. The cost of
this program, including revenue loss, is estimated to be $1.9 billion
in 1981. Outlays for payments in excess of tax liability are expected
to be $1.6 billion.
The food stamp program increases the ability of needy families
to bq.y food for an adequate diet. Outlays to assist 20.4 million
recipients in 1981 are estimated to be $9.7 billion. Legislation is
pending that would reduce program error rates and improve food
stamp administration.

52



Outlays for other Federal programs to assist States in feeding
children and needy persons are estimated to total $3.8 billion in
1981. Outlays for th~ supplemental food program for women, infants, and childre~ (WIC) are estimated to increase by $168 million
to $903 million in 1981. Studies suggest that WIC has significantly
reduced both infant mortality and the incidence of low-birth-weight
babies.
Housing assistance is currently provided through three major
subsidized housing programs: low-income housing assistance, public
housing, and homeownership assistance. Total outlays for housing
assistance are estimated to rise from $5.3 billion in 1980 to $6.6
billion in 1981. The budget request would provide rental housing
assistance for up to 300,000 additional low-income families, a 25%
increase above the 1980 level. Homeownership assistance to an
additional 25,000 low- and moderate-income households will help
reduce forced relocation.
To help offset the impact of rising fuel costs on low-income
families, the administration is seeking authorization for two new
energy-related income assistance programs. The first program, special energy allowances, provides cash assistance to recipients of

Outlays for Income Security
$ Billions

$ Billions
300~------------------------------------~-300

250

250

200

200
Unemployment
Compensation

150

150

100

100

50

50




o

-

1971 72 73 74

75 76

77

.

0

78 79 80 81 82 83

Fiscal Years
Estimate
*Includes Other Income Assistance Such as Food Stamps, 551 and AFDC

53

supplemental security income and grants to States for energyrelated aid. The Governors would determine how best to use these
grants to meet their State's needs. The second program, energy
crisis assistance, provides grants to States to help low-income families who are experiencing energy-related financial problems. Outlays are estimated at $2.4 billion in 1981. Both of these programs
would be funded by receipts from the windfall profit tax.
Estimated outlays for refugee assistance are $524 million in 1981.
These funds cover costs of cash and medical assistance and social
services for needy refugees. In addition, the Refugee Act of 1979
will establish a permanent and systematic procedure for admitting
and assisting refugees of special concern to the United States.
Tax provisions also provide income security, especially to the
elderly. The exclusion from taxable income of all social security
and most railroad retirement benefits results in estimated tax
expenditures of $9.1 billion in 1981, and the e~tra exemption for
taxpayers who are over 64 or blind and the tax credit for the
elderly, together, reduce 1981 receipts ,by an estimated $2.3 billion.

Veterans Benefits and Services
The Federal Government supports veterans and their dependents
and survivors who have special needs resulting from the sacrifices
that veterans have made in military service to our country. This
administration has achieved a number of improvements in veterans
programs, in particular, reform of the pension program and improvements in medical care. Further improvements in veterans benefits
and services are proposed for 1981. However, several cost-saving
legislative proposals will help to offset the costs of the proposed
improvements. Outlays for veterans benefits and services are estimated to rise from $20.8 billion in 1980 to $21.7 billion in 1981.
Compensation benefits are provided to veterans with serviceconnected disabilities and to their survivors. Legislation will be proposed to provide a 13.0% cost-of-living increase in compensation
benefits effective in October 1980. An estimated 2.6 million veterans and their survivors are expected to receive $8.3 billion in
compens~tion benefits in 1981.
Pensions are provided to needy wartime service vete~ans and to
their dependents anq survivors. The Veterans and Survivors Pension Improvement Act of -1978 sharpened the focus of veterans
pension benefits upon truly needy, 'nonservice-disabled veterans
and provided automatic annual cost-of-living increases. In 1981,
outlays of $4.0 billion will provide pension benefits to an estimated
2.1 million needy veterans and their survivors.

54



The GI bill provides education benefits designed primarily to
assist veterans who entered military service . before 1977 in
readjusting to civilian life. The budget proposes a 10% cost-ofliving increase in GI bill education benefits effective in October
1980. In addition, the budget continues to support the enactment of
legislation extending the period of eligibility from 10 to 12 years
for certain needy and educationally disadvantaged Vietnam-era
veterans. The number of GI bill trainees will continue to drop in
the future as the number of eligible veterans decreases. Thus,
outlays for veterans education, training, and rehabilitation are
estimated to decline from $2.2 billion in 1980 to $1.9 billion in 1981.
The Veterans Administration (VA) operates the largest nationwide medical care system. In 1981, the VA will continue the reordering of its health care program to provide efficient medical care
for veterans with service-connected disabilities while still accommodating the rapidly growing population of eligible elderly veterans.
However, the VA will continue to recognize the medical needs of
service-disabled veterans above all others. Outlays for veterans
hospital and medical care are estimated to be $6.4 billion in 1981.
Veterans compensation and pension benefits are excluded from
taxable income. The revenue losses from these exclusions in 1981
are estimated to be $1.1 billion and $55 million, respectively. GI
bill benefits are also excluded from taxable income.

Outlays for Veterans Benefits and Services
$ Billions

$ Billions

28~--------------------------------~28

24

24

Total

20

20

16

16

12

12




8

8

4

4

Hospital and Medical Care

o
1971 72 73 74
Fiscal Years

0
75

76

77

78 79 80

81

82

83

Estimate-

55

Administration of Justice
The most basic of-all American rights is the equitable administration of justice. The Federal Government expects to spend $4.4
billion in 1980 and $4.7 billion in 1981 to meet these responsibilities.
The principal responsibility for law enforcement has always
rested with State and local governments. In the late 1960's, rising
street crime and social unrest prompted the Federal Government
to provide justice assistance to improve State and local criminal
justice systems. After nearly a decade and a half of such support,
State and local authorities are far better equipped, trained, and
organized to handle their own problems. Given these improvements, the importance of solving crime of national significance,
and continued pressure on Federal resources, the administration
has started to redirect its programs toward those problems that can
best be t:esolved at the national level. Organized crime, white-collar
crime, for~ign intelligence activities, major trafficking in narcotics
and other dangerous drugs, public corruption, denial of civil rights,
and illegal immigration are all problems that are most appropriately handled by the Federal Government. Estimated outlays of $2.3
billion in 1981 would provide support for Federal law enforcement
activities.
To represent the public in civil litigation and criminal prosecution, and to provide those accused of crimes with fair and prompt
trials, budget outlays of nearly $1.5 billion are required in 1981 for
Federal litigative and judicial activities. These funds would be used
to expand the staffs of the Criminal and Civil Rights Divisions of
the Department of Justice, provide more effective use of Federal
litigative resources, and support the Federal judiciary system.
The number of inmates in Federal prisons has dropped since
1978 because of the increased use of minimum security institutions,
shifts in prosecutorial policy, and modifications in parole guidelines. In consequence, it is possible to close 3 antiquated penitentiaries by 1985 and cancel the construction of 2 planned facilities. A
new institution in the northeast and a prison camp in the west are
scheduled to open next year. Outlays of $357 million are estimated
for Federal correctional activities in 1981.
The administration proposed consolidation of criminal justice assistance resulted in the establishment last year of an Office of
Justice Assistance, Research, and Statistics. The new Office will
research criminal and related civil matters, collect and analyze
criminal justice data, and administer State and local grant program,s. Outlays for these programs are estimated to be $618 million
in 1981, compared to $580 million in 1980.

56



Outlays for Administrat_ of Justice
ion
$ Billions

$ Billions

6~----------------------------~----~--~6

5

4
3

4

Justice Assistance
Federal
Correctiona I
Activities

3

---~

2
1

2

Federal Litigative
and Judicial Activities
Federal Law Enforcement
Activities

1

o----------~------~----~~--~~--~---o
1971 72 73 74 75 76 77 78 79 80 81 82 83
Fiscal Years

Estimate

General Government
General government includes a variety of central government
activities such as the legislative branch, the Executive Office of the
President, administration of U.S. territories, and activities related to
tax collection and other fiscal operations, Federal personnel management, and property control and records management. Outlays for
general government are estimated to be $4.9 billion in 1981, about
the same as in 1980.
Special emphasis continues to be given to the President's antiinflation program, which consists of voluntary wage and price
guidelines designed to lower the rate of inflation without disrupting
the economy. The Council on Wage and Price Stability will continue
to monitor wage and price developments and will make recommendations to increase productivity and reduce inflationary pressures.
The Government handles very large amounts of money, and it is
possible to achieve savings simply by improving the way funds are
managed. This year's budget includes several proposals to make
the collection of taxes more efficient and to improve Federal cash
managment.




57

The General Services Administration is upgrading its procurement procedures through increased training, certfication of procurement officers, centralization of procurement functions, installation of commodity managers, and greater audit review. It is also
taking steps to improve the administration of contracts and to
reduce opportunities for fraud and abuse.
In 1978, a comprehensive reform of the Federal civil service
system was enacted into law. The personnel management tasks
previously performed by the Civil Service Commission were broadened and became the responsibility of the Office of Personnel Management. Merit system review, investigation of reprisals against
"whistleblowers," and employee appeals adjudication are now performed by the Merit Systems Protection Board. In 1981, resources
will be focused on carrying out and evaluating these reforms. Special attention will be given to research, executive development, and
improvement of Federal productivity.
In the past, capital improvements projects in the trust territories
were 100% federally financed. To provide incentives for increased
territorial funding and efficiency in local programs and projects, the
budget proposes a 50% Federal matching of territorial tax increases,
and a 90% Federal cost sharing for territorial capital projects funded
by the Department of the Interior.

General Purpose Fiscal Assistance
General purpose fiscal assistance provides Federal aid to State
and local governments without using major restrictions ' or matching requirements. Outlays for this assistance are estimated to be
$8.7 billion in 1980 and $9.6 billion in 1981.
General revenue sharing has been the primary means by which
the Federal Government provides general purpose assistance to
State and local governments. Each jurisdiction may spend the
money for any purpose permissible under its own State and local
laws, subject to minimal Federal controls. Outlays for revenue
sharing are estimated at $6.9 billion in 1981. The administration is
proposing a 5-year reauthorization of general revenue sharing at 1980
levels. The proposed allocation formula will moderately increase the
targeting of payments to communities less able to pay for essential
services from available resources. Revenue sharing payments to State
governments will be continued at about the same amounts and
allocations as the current program. In return, States and local
governments, through broadly-based study commissions, will be
required to assess rigously their responsibilities and fiscal resources,
the structure and impact of Federal assistance programs, and the
quality of municipal financial management. States would be expected
to act on the commissions' recommendations.
58



Legislation authorizing countercyclical and targeted fiscal assistance to States and local governments in 1980, is currently under
consideration in the Congress. The administration proposal would
authorize one-time targeted fiscal assistance payments in 1980, and
countercyclical payments to States and localities whenever the national unemployment rate exceeded 6.5%. The program would
channel funds to jurisdictions experiencing the greatest fiscal distress. Outlays are estimated to rise from $250 million in 1980 to
$1.0 billion in 1981.
The Secretary of the Treasury is authorized to guarantee up to
$1.6 billion of New York City obligations through June 30, 1982.
The loan guarantees are not included in the budget, but $1 million in
administrative costs are.
Tax expenditures also provide financial assistance to State and
local governments. The exemption from taxable income of interest
received on State and local securities has a twofold effect: State
and local governments can borrow at lower interest rates and
individuals can exclude the interest income from their Federal
taxes. Estimated revenue losses to the Treasury in 1981 are $6.5
billion. In addition, the deductibility of most State and local taxes
from Federal taxable income is estimated to add about $17.3 billion
to revenue losses in 1981.

Outlays for General Purpose Fiscal Assistance
$ Billions
$ Billions
10~------------------------------------~-10




8

8

6

6

4

4

2

2

o----~------~--~--~----~--------~---o
1971 72 73 74 75

Fiscal Years

76

77 78

79 80 81 82

83

Estimate

59

Net Interest
The interest function includes interest paid on the public debt
and on refunds of tax collections, as well as interest collections
from the public and from revolving funds. A portion of interest
outlays is paid to trust funds on securities held by the funds. Since
these payments are not made to the public, but consist of offsetting
transactions within the budget, trust fund interest is deducted from
both budget authority and outlays before arriving at the net interest
total. Net interest outlays are estimated to increase substantially,
rising to $51.8 billion in 1980 and $54.2 billion in 1981.
NET IMPACT OF INTEREST OUTLAYS ON THE SURPLUS OR DEFICIT
(In billions of dollars)

1981
estimate

1982
estimate

1983
estimate

Outlays for the interest function .................

52.6

63.3

67.2

68.0

68.3

Less: Interest received by trust funds ..........

10.0

11.5

13.0

14.1

15.4

Net interest ......................................

42.6

51.8

54.2

53.9

53.0

Less: Deposit of earnings, Federal Reserve
System (budget receipts) .......................

8.3

10.1

10.9

11,8

12.9

Net impact ........................................

34.3

41.8

43.4

42.1

40.0

Nominal interest rates are assumed to decline as inflation declines; therefore, outlays for new interest are projected to grow at
a slower rate in 1981, and then decline in 1982 and 1983. This
pattern results from substantially reduced growth in estimated
Federal debt outstanding and from assumed further declines in
interest rates.
As part of their monetary functions, Federal Reserve Banks hold
Government securities. The Banks return a portion of the interest
they receive on those securities back to the Treasury as misc~lla­
neous budget receipts. Deducting these receipts from net interest
shows the net impact of interest on the budget surplus or deficit.
That net impact is estimated at $43.4 billion in 1981.
A tax expenditure arises from the optional deferral of interest
income on U.S. savings bonds. Normally, the interest on these
bonds would be taxed each year as it is credited, but the holder
may defer paying the tax until redemption. The revenue loss from
this tax expenditure is estimated to be $250 million in 1981.

60



•

1980
estimate

1979
actual

· Other
Allowances are included in the budget to cover the administration's compensation reforms for Federal civilian agency employees,
future initiatives, and unforeseen requirements that may arise.
Outlays of $2.6 · billion are estimated for these allowances in 1981.
Funds are included in the allowances for the expected costs of
welfare reform and, beginning in 1983, for the national health
insurance proposal. These allowances represent the net effect on
the surplus or deficit. Decisions to be made at a later date will
determine the program level allocation as well as the mix between
budget authority, outlays, and revenues forgone.
The administration has proposed comprehensive legislation to
improve Federal pay-setting systems and procedures. The legislative proposal would broaden the principle of comparability and
make certain structural changes to bring Federal compensation
rates and practices more closely into line with those of the private
and non-Federal governmental sectors. Both pay and benefitsrather than just pay-would be used to determine comparability.
Compensation scales would be based on State and local government
pay and benefits, as well as on those for private industry. The
Federal wage system for the blue-collar work force would be
changed to improve comparability with local prevailing rates.
These proposals are designed to modernize the management of the
entire Federal compensation program.
Allowances are included in the budget to cover an overall increase in pay of 6.2% for white-collar and blue-collar employees. A
final decision on the level of the October 1980 pay increase will be
made in the late summer after appropriate Presidential review of
recommendations of the President's Compensation Agency, the
Federal Employees Compensation Council, and the Advisory Committee on Federal Compensation, and after a review of economic
conditions at that time. Allowances for a 7.4% increase in military
pay are carried in the defense function.
In general, offsetting receipts are deducted from budget totals at
the agency and function level. Exceptions are made when such
payments are extremely large and would mislead analysis of Federal program trends. Current estimates for rent and royalities on the
Outer Continental Shelf (OCS) assume that seven scheduled OCS
sales will be conducted in 1981. No final decision will be made on
these sales until environmental and other requirements under the
National Environmental Policy Act have been met.




61

Off-Budget Federal Entities
Under current law, some Federal spending activities are excluded from the budget tot als. These federally owned and controlled activities are called off-budget Federal entities. The outlays
resulting from these activities are added to the budget deficit
to derive the total Government deficit to be financed by
borrowing from the public or by other means. The outlays of offbudget Federal entities are shown by function and subfunction at
the end of table 3 in Part V of this volume.
The Federal Financing Bank (FFB), an off-budget entity that
provides financial intermediary services for Federal agencies, accounts for most of the off-budget outlays. Although the FFB outlays
are all classified in a separate subfunction in the commerce and
housing credit function, its activities actually support agency programs in a variety of budget subfunctions. The accompanying table
provides an attribution of FFB outlays to the subfunctions supported
by its activities.
ATTRIBUTION OF FEDERAL FINANCING BANK OUTLAYS
(In billions of dollars)

1978

1979

actual

actual

1980

1981

e
stimate

estimate

Military assistance ...................-............................................ .
.
Supporting space activities ................................................... .
Energy supply ....................................................................... .
Farm income stabilization .................................................... ..

1.5
0.2
2.1
3.6

1.3
0.2
2.3
5.0

2.4
0.1
4.8
2.9

2.0
0.1
4.8
2.5

Mortgage credit and thrift insurance .................................... .

3.4

2.9

1.9

4.9

0.1
Other advancement and regulation of commerce .................. .
0.7
Area and regional development ............................................. .
Higher education ................................................................... .
0.2
Public assistance and other income supplem .................. . .................
ents
0.1
General property and records management .......................... ..
Other subfunctions ................................................................ .
-1.2

0.1
0.8
0.5

0.2
1.0
0.7
1.6

0.2
1.1
-0.2

Total, Federal Financing Bank ............................ .
*$50 m
illion or less.

62



10.6

.................

*

0.1
- 0.1

*

0.8

0.1
1.0

13.2

16.4

16.3

PART IV

THE BUDGET PROCESS
The budget sets forth the President's proposed financial plan of
operation for the Federal Government for the forthcoming fiscal
year and planning ceilings for the 2 subsequent fiscal years. In
raising and spending tax receipts, the Federal Government allocates resources between the private and public sectors of the economy. Within the public sector, the allocation of budget resources
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
1980, began with the multiyear planning target for 1981 published
in the 1980 budget. A more detailed formulation was started in the
spring of 1979. Each spring, policy issues are identified, budget
projections are made, and preliminary program plans are presented to the President. In preparing for the 1981 budget, as for the
previous two, a zero-base (ZBB) review of the entire budget was
conducted.
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, and,
under the multiyear budget planning system, for the 2 fiscal
years beyond. Tentative policy determinations for the budget year
and multiyear planning ceilings for the following 2 years are then
given to the agencies as guidelines for preparing their budgets.




63

In the summer, agencies formulate their zero-base budget requests, which are reviewed in detail in the fall 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 existing and proposed programs, as well as total outlay and receipt
levels appropriate to the state of the economy. Supplemental
budget requests and amendments may be submitted later to cover
unanticipated needs.
As a result of the Congressional Budget Act of 1974, the President must update this budget on or before April 10 and again by
July 15, taking into account newly enacted legislation, new executive branch recommendations, and new economic assumptions. The
act also requires him to transmit current services estimates annually. These estimates represent the budget authority and outlays
required to continue existing programs in the forthcoming fiscal
year without any policy changes, thereby providing a base to compare program initiatives against current spending levels. Current
services estimates for 1981 are transmitted with the President's
budget. See Special Analysis A, Special Analyses, Budget of the
United States Government, 1981.

Congressional action.-The Congress begins its formal review of
the President's budget proposals in January. Before considering
appropriations for a specific program, the Congress first enacts
legislation to authorize agency programs and provide guidance on
funding levels.

Many programs, such as social security and interest, are authorized indefinitely or for several years; other programs, such as education, health, nuclear energy, defense procurement, and foreign
affairs, require annual authorization. The granting of budget authority usually is a separate, subsequent action to program authorization. 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 bills. The act requires that the
House and Senate Budget Committees receive reports on budget
estimates from the other congressional committees by March 15,

64



CONGRESSIONAL BUDGET TIMETABLE

On or before:
15th day after Congress convenes ....
March 15 .............................................. .
April 1....................................................
April 15 ................................................. .

May 15 .................................................. .
May 15 .................................................. .
7th day after Labor Day .................... .

September 15 ....................................... .
September 25 ........................................

October 1 .............................................. .

Action to be completed
President transmits his budget.
Committees submit reports to budget committees.
Congressional Budget Office submits
report to budget committees.
Budget committees report first concurrent
resolution on the budget to their
Houses.
Committees report bills authorizing new
budget authority.
Congress completes action on first concurrent resolution on the budget.
Congress completes action on bills providing budget authority.
Congress completes action on second concurrent resolution on the budget.
Congress completes action on reconciliation bill or resolution, or both, implementing second concurrent resolution.
Fiscal year begins.

and a fiscal policy report from the Congressional Budget Office by
April 1. Under this schedule, the Congress adopts a concurrent
resolution containing budget targets by May 15. It completes action
on setting budget ceilings by September 15, and, by September 25, it
completes action on any required reconciliation bill or resolution. A
summary of the congressional timetable is presented above.
Congressio" al consideration of requests for appropriations and
n
for changes in revenue laws are considered first in the House of
Representatives, where the Ways and Means Committee reviews
proposed 'revenue measures and the Appropriations Committee
studies the proposed appropriations. These committees then recommend the action to be taken by the House of Representatives. After
the appropriation 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 the Congress, a
conference committee (consisting of Members of both bodies) resolves the issues and submits a report to both Houses for approval.
After approval, measures are then transmitted to the President, in
the form of an enrolled bill, for his approval or veto. When appropriation action is not completed by the beginning of the fiscal year,
the Congress may enact a "continuing resolution" to provide authority so that the agencies affected may continue operations until
their regular appropriations are approved.




65

Budget execution and controi.-Once approved, the budget becomes the financial plan 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 assure 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-that is, any effort through administrative action to postpone or
eliminate spending authorized by law. 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
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, 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. In addition,
offices of Inspectors General have been established by law in 12
major departments and agencies.

66



Relation of Budget Authority to Outlays
Not all of the new budget authority for 1981 will be obligated or
spent in that year.
• Budget authority for most major trust funds arises from their
receipts and is used over time as needed for purposes specified
by law.
• Budget authority for most major construction and procurement programs covers the estimated full cost of projects at
the time they are started.
• Budget authority for many loan and guarantee (or insurance)
programs also provides financing for a period of years or
constitutes a contingency backup that may never result in
outlays.
• Government enterprises occasionally receive -budget authority
to be used for general capital purposes over several years.
As a result of these -factors, a large amount of budget authority
carries over from one year to the next. Most is earmarked for
specific uses and is not available for any other program.




67

PART V

BUDGET TABLES
Page

1. Budget Receipts, Outlays, and Debt, 1971-83 .........................
2. Budget Receipts by Source 'a nd Outlays by Function,

69

1971-81..........................................................................................

70

3. 'B udget Outlays by Function and Subfunction, 1971-83........
4. Composition of Budget Outlays in Current and Constant
(fiscal year 1972) Prices, 1958-83 .... ............. ... .......... ........... ....
5. Budget Authority and Outlays by Agency, 1979-81 ..............
6. Federal Finances and the Gross National Product; 195883.. .................................................... ........... ............................. .....
7. Summary of Full-Time Permanent Civilian Employment
in the Executive Branch, 1979-81 ..........................................
8. Budget Receipts and Outlays, 1789-1983 ........ ...... ............. ......

72

NOTES

•
•

68



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 of the United States Government, 1981.

79
80
81
82
83

Table 1. BUDGET RECEIPTS, OUTLAYS, AND DEBT, 1971-83 1
(In billions of dollars)
Estimate

Actual

1977

1978

1979

1980

1981

1982

1983

54.l
32.l
-4.4

241.3
152.8
-36.3

270.5
168.0
-36.5

316.4
189.6
-40.l

347.8
222.2
-46.2

383.2
265.1
-48.3

438.3
307.0
-54.2

515.5
340.7
-57.3

300.0

81.8

357.8

402.0

465.9

523.8

600.0

691.1

798.8

240.l
111.2
-25.l

269.9
131.3
-34.8

65.l
34.0
-4.4

295.8
143.3
-36.3

332.0
155.3
-36.5

362.4
171.3
-40.l

405.7
204.l
-46.2

429.7
234.3
-48.3

480.2
260.3
-54.2

543.6
288.1
-57.3

326.2

366.4

94.7

402.7

450.8

493.7

563.6

615.8

686.3

774.3

(1.4)
(.1)
(211.4) (232.0) (2411) (271.1)

(8.1)
(334.2)

(13)
(373.7)

(8.7)
(1.8)
(96.5) (411.4)

Surplus or deficit (-):
Federal funds ..........................................
Trust funds ..............................................

-29.9
6.8

-29.3
5.9

-25.6
10.7

-18.7
14.0

-52.6
7.4

-68.8
2.4

-11.0
-2.0

-54.5
9.5

-61.5
12.7

-46.l
18.3

-57.8
18.l

-46.5
30.8

-41.9
46.7

-28.1
52.6

Total surplus or deficit (- ) ......

-23.0

-23.4

-14.8

-4.7

-45.2

-66.4

-13.0

-45.0

-48.8

-27.7

-39.8

-15.8

4.8

24.5

Description

1971

1972

1973

1974

1975

1976

Receipts:
Federal funds ..........................................
Trust funds ..............................................
Interfund transactions .............................

133.8
66.2
-11.6

148.8
73.0
-13.2

161.4
92.2
-21.3

181.2
104.8
-21.1

187.5
118.6
-25.l

201.1
133.7
-34.8

Total budget receipts ..................

188.4

208.6

232.2

264.9

281.0

Outlays: 1
Federal funds ..........................................
Trust funds ..............................................
Interfund transactions .............................

163.7
59.4
-11.6

178.l
67.l
-13.2

187.0
81.4
-21.3

199.9
90.8
-21.1

Total budget outlays ...................

211.4

232.0

247.1

269.6

Outlays, off-budget Federal entities
Outlays including off-budget...........

(. ... .)

(. ... .)

TQ

---

(10.3) (12.4) (16.8) (18.1) (15.1) (12.9)
(461.2) (506.1) (580.3) (633.9) (701.4) (7812)

Deficit (-), off-budget Federal
entities....................................... (. ... .) (. ... .) (-.1) ( -1.4) (-8.1) (-13) ( -1.8) (-8.7) (-10.3) (-12.4) (-16.8) (-18.1) (-15.1) (-12.9)
Surplus or deficit (-) including
off-budget.................................. (-23.0) (-23.4) (-14.9) (-6.1) (-53.2) (-73.7) (-14.7) (-53.6) (-59.2) (-40.2) (-56.5) (-33.9) (-10.3) (11.7)
Debt outstanding, end of year:
Gross Federal debt ..................................
Held by the public ...................................
~
~




1

409.5
304.3

437.3
323.8

468.4
343.0

486.2
346.1

544.1
396.9

631.9
480.3

646.4
498.3

Net gains and losses, proceeds and reductions from the transactions of the Exchange stabilization fund are now included in the budget (past year only).

709.l
551.8

780.4
610.9

833.8
644.6

892.8
688.9

939.4
722.0

972.6
731.3

988.8
718.5

Table 2. BUDGET RECEIPTS BY SOURCE AND OUTLAYS BY FUNCTION, 1971-81

-::J

0




(In billions of dollars)
Actual
Description

1971

1972

1973

1974

1975

Estimate

1976

1977

TQ

1978

1979

1980

1981

RECEIPTS BY SOURCE

Individual income taxes ................................
Corporation income taxes .............................

86.2
26.8

94.7
32.2

103.2
36.2

119.0
38.6

122.4
40.6

131.6
41.4

38.8
8.5

157.6
54.9

181.0
60.0

217.8
65.7

238.7
72.3

274.4
71.6

41.7
3.7

46.l
4.4

54.9
6.1

65.9
6.8

75.2
6.8

79.9
8.1

21.8
2.7

92.2
11.3

103.9
13.8

120.l
15.4

138.6
16.8

161.6
18.6

3.2

3.4

3.6

4.l

4.5

4.8

1.3

5.2

5.7

6.1

6.7

7.1

48.6

53.9

64.5

76.8

86.4

92.7

25.8

108.7

123.4

141.6

162.2

187.4

4.7
2.2
5.5
0.6

5.0
2.2
5.3
0.6

5.0
2.3
5.7
0.8

5.2
2.4
6.3
0.8

5.2
2.3
6.2
1.0

5.3
2.5
5.4
0.9

1.3
0.6
1.7
0.3

5.3
2.4
6.7
1.2

5.5
2.4
6.9
1.3

5.5
2.5
7.2
1.5

...............

...............

...............

...............

............ ...

...............

...............

...............

...............

...............

3.6

2.3

2.5

2.l

1.8

2.8

0.6

2.0

2.2

2.0

5.6
2.5
6.9
1.7
7.7
1.8

5.6
2.7
7.l
2.l
20.9
1.8

Total excise taxes ..........................

16.6

15.5

16.3

16.8

16.6

17.0

4.5

17.5

18.4

18.7

26.3

40.2

Estate and gift taxes ...................................
Customs duties ............................................
Miscellaneous receipts .................................

3.7
2.6
3.9

5.4
3.3
3.6

4.9
3.2
3.9

5.0
3.3
5.4

4.6
3.7
6.7

5.2
4.1
8.0

1.5
1.2
1.6

7.3
5.2
6.5

5.3
6.6
7.4

5.4
7.4
9.2

5.8
7.6
10.9

5.9
8.4
12.1

Total budget receipts ..................

188.4

208.6

232.2

264.9

281.0

300.0

81.8

357.8

402.0

465.9

523.8

600.0

Social Insurance taxes and contributions:
Employment taxes and contributions .......
Unemployment insurance .........................
Contributions for other Insurance and
retirement ...........................................
Total social Insurance taxes and
contributions ..............................
Excise taxes:
Alcohol ....................................................
Tobacco ...................................................
Highway ..................................................
Airport and airway ..................................
Windfall profit tax ...................................
Other .......................................................

--




OUTLAYS BY FUNCTION

75.8
4.1
4.2
1.0
3.9
4.3
2.4
8.1
2.9

76.6
4.7
4.2
1.3
4.2
5.3
2.2
8.4
3.4

74.5
4.1
4.0
1.2
4.8
4.9
.9
9.1
4.6

77.8
5.7
4.0
.8
5.7
2.2
3.9
9.2
4.1

85.6
6.9
4.0
2.2
7.3
1.7
5.6
10.4
3.7

89.4
5.6
4.4
3.1
8.1
2.5
3.8
13.4
4.8

22.3
2.2
1.2
.8
2.5
.6
1.4
3.3
1.3

97.5
4.8
4.7
4.2
10.0
5.5

9.8
14.7

12.5
17.5

12.7
18.8

12.3
22.1

15.9
27.6

18.7
33.4

Income security:
Social security .........................................
Other .......................................................

35.2
20.2

39.4
24.5

48.3
24.7

54.9
29.5

63.6
45.0

Total income security .....................

55.4

63.9

73.0

84.4

Veterans benefits and services .....................
Administration of justice ..............................
General government .....................................
General purpose fiscal assistance .................
Interest ........................................................
Allowances 2 .................................................
Undistributed offsetting receipts ..................

9.8
1.3
2.0
.5
19.6

10.7
1.6
2.4
.7
20.6

12.0
2.1
2.6
7.4
22.8

...............

...............

-8.4
211.4

National defense 1 ........................................
International affairs ......................................
General science, space, and technology .......
Energy .........................................................
Natural resources and environment.. ............
Agriculture ...................................................
Commerce and housing credit.. ....................
Transportation ..............................................
Community and regional development. .........
Education, training, employment, and social
services ...................................................
Health ..........................................................

Total budget outlays ...................

14.6
6.3

105.2
5.9
4.7
5.9
10.9
7.7
3.3
15.4
11.0

117.7
6.1
5.0
6.9
12.1
6.2
2.6
17.5
. 9.5

130.4
10.4
5.9
7.8
12.8
4.6
5.5
19.6
8.5

146.2
9.6
6.4
8.1
12.8
2.8
.7
20.2
8.8

5.2
8.7

21.0
38.8

26.5
43.7

29.7
49.6

30.7
56.6

32.0
62.4

72.7
54.7

19.8
13.0

83.9
54.1

92.2
54.0

102.6
57.6

117.9
73.0

136.9
83.1

108.6

127.4

32.8

137.9

146.2

160.2

190.9

220.0

13.4
2.5
3.2
6.9
28.0

16.6
2.9
3.1
7.2
30.9

18.4
3.3
2.9
7.2
34.5

4.0
.9
.9
2.1
7.2

18.0
3.6
3.3
9.5
38.0

19.0
3.8
3.7
9.6
44.0

19.9
4.2
4.2
8.4
52.6

...............

...............

...............

...............

...............

...............

...............

...............

-8.1

-12.3

-16.7

-14.1

-14.7

-2.6

-15.1

-15.8

-18.5

20.8
4.5
4.9
8.7
63.3
.1
-22.3

21.7
4.7
4.9
9.6
67.2
2.6
-25.1

232.0

247.1

269.6

326.2

366.4

94.7

402.7

450.8

493.7

563.6

615.8

* $50 million or less.
Includes civilian and military pay raises for the Department of Defense.
2 Includes allowances for civilian agency pay raises and contingencies for relatively uncontrollable programs, welfare reform and other requirements.
1

*

Table 3. BUDGET OUTLAYS BY FUNCTION AND SUBFUNCTION, 1971-83
-:::J

(In billions of dollars)

~




Actual
Function and subfunction

1971

1973

1972

1974

1975

Estimate

TQ

1976

1977

1978

1979

1980

1981

1983

1982

National defense:
Department of Defense-Military:
Military personnel ...............................
Retired military personnel ...................
Operation and maintenance .................
Procurement .......................................
Research and development. .................
Military construction and other 1 .........
Subtotal, Department of Defense-Military ..........................
Atomic energy defense activities .............
Defense-related activities .........................
Deductions for offsetting receipts ............

Total national defense ................

22.6
3.4
20.9
18.9
7.3
1.4

23.0
3.9
21.7
17.1
7.9
1.5

23.2
4.4
21.1
15.7
8.2
.7

23.7
5.1
22.5
15.2
8.6
2.4

25.0
6.2
26.3
16.0
8.9
2.5

25.1
7.3
27.8
16.0
8.9
2.8

6.4
1.9
7.2
3.8
2.2
.4

25.7
8.2
30.6
18.2
9.8
3.1

27.1
9.2
33.6
20.0
10.5
2.7

28.4
10.3
36.4
25.4
11.2
3.3

30.6
11.9
40.9
27.6
12.9
3.5

31.7
13.7
46.4
30.5
14.8
5.6

32.2
16.1
49.9
36.1
15.9
11.5

32.5
17.9
53.4
43.6
17.8
16.5

74.5
1.4

75.1
1.4
.1

73.2
1.4
-.1

77.6
1.5
-1.2

84.9
1.5
-.8

87.9
1.6

21.9
.4

95.6
1.9

181.7
4.0
.2

*

*

*

*

*
*

161.6
3.6
.2

*

*
*

142.7
3.4
.2

*

*
*

115.0
2.5
.1

127.4
3.0

*
*

103.0
2.1
.1

*

*

*

75.8

76.6

74.5

77.8

85.6

89.4

22.3

97.5

105.2

117.7

130.4

146.2

165.5

185.9

2.8
1.0
.4

3.1
.7
.5

2.4
.8
.5

2.9
1.3
.6

3.6
1.9
.7

3.3
1.1
.7

1.4
.9
.3

3.9
.6
1.0

4.6
.5
1.1

4.7
.6
1.3

6.0
.9
1.4

6.2
.8
1.5

6.8
.6
1.6

7.2
.5
1.8

.2
-.2

.3
.2

*

.3
.6
-.1

.3
.5
-.1

.4
.1
-.1

.1
-.5

*

.3
.1
-.1

*

.4
-.9
-.1

.4
-.6
-.1

.5
-.9
-.1

.5
1.7
-.1

.6
- .7
-.1

.6
.6
-.1

.6
1.2
-.1

4.1

4.7

4.1

5.7

6.9

5.6

2.2

4.8

5.9

6.1

10.4

9.6

10.2

11.2

1.0

1.0

1.0

1.0

1.0

1.0

.3

1.1

1.2

1.3

1.4

1.6

1.6

1.7

*
*

International affairs:
Foreign economic and financial assistance ....................................................
Military assistance ...................................
Conduct of foreign affairs .......................
Foreign information and exchange activities .....................................................
International financial programs ..............
Deductions for offsetting receipts ............

Total international affairs ..........
General science, space, and technology:
General science and basic research .........

2.0

1.9

1.7

1.7

1.7

2.0

.5

2.3

2.3

2.2

2.7

3.0

3.1

2.8

.8

1.0
.3

.9
.3

1.0
.3

1.0

.4

1.0
.3

.4

.3
.1

1.0
.3

1.0
.4

1.2
.4

1.3
.4

1.4
.4

1.6
.6

1.8
.6

*

*

*

*

*

*

*

*

*

*

*

*

*

*

4.2

4.2

4.0

4.0

4.0

4.4

1.2

4.7

4.7

5.0

5.9

6.4

6.9

7.0

.9

1.1

1.0

.5

1.7

.6

............
............

............
............

............
............

............

*

*
*

2.5
.1
.1

*
*

3.3
.1
.1

4.0
.2
.9

4.9
.3
1.0

5.5
.6
.8

4.5
1.2
1.3

4.5
2.5
2.9

4.3
4.1
4.0

.2

.2

.2

.3

.4

.1

.7

.8

*

*

*

*

*

.6
-.1

*

*

*

.7
-.1

.9
-.1

1.2
-.1

1.2
-.1

1.2
-.1

1.0

1.3

1.2

.8

2.2

3.1

.8

4.2

5.9

6.9

7.8

8.1

11.0

13.5

Water resources ......................................
Conservation and land management ........
Recreation resources ...............................
Pollution control and abatement. .............
Other natural resources ...........................
Deductions for offsetting receipts ............

1.8
.9
.5
.7
.5
-.4

2.0
.8
.5
.8
.6
-.4

2.2
.7
.6
1.1
.6
-.5

2.2
.7
.7
2.0
.7
-.7

2.6
1.3
.8
2.5
.8
-.7

2.8
1.2
.9
3.1
.9
-.8

.8
.5
.3
1.1
.2
-.3

3.2
1.3
1.0
4.3
1.0
-.8

3.5
2.0
1.4
4.0
1.2
-1.1

3.9
1.9
1.5
4.7
1.3
-1.2

4.2
2.3
1.5
4.9
1.4
-1.4

4.1
2.2
1.5
5.1
1.5
-1.6

4.6
2.3
1.7
5.4
1.5
-1.8

4.7
2.2
1.8
5.7
1.7
-1.9

Total natural resources and environment. ................................

3.9

4.2

4.8

5.7

7.3

8.1

2.5

10.0

10.9

12.1

12.8

12.8

13.7

14.1

Farm income stabilization ........................
Agricultural research and services ...........
Deductions for offsetting receipts ............

3.7
.6

4.6
.7

4.1
.8

1.5
.8

.8
.9

1.6
.9

.3
.2

4.5
1.1

6.6
1.1

4.9
1.3

3.3
1.4

1.4
1.4

1.5
1.5

2.3
1.6

*

*

*

*

*

*

*

*

*

*

*

*

*

*

Total agriculture ..........................

4.3

5.3

4.9

2.2

1.7

2.5

.6

5.5

7.7

6.2

4.6

2.8

3.0

3.9

Space flight .............................................
Space science, applications, and technology .....................................................
Supporting space activities ......................
Deductions for offsetting receipts ............
Total general science, space,
and technology ........................
Energy:

Energy supply ..........................................
Energy conservation ................................
Emergency energy preparedness ........
Energy information, policy, and regulation .....................................................
Deductions for offsetting receipts ............
r •••••

Total energy .................................
Natural resources and environment:

Agriculture:

-.::J

~




See footnotes at end of table.

-=1

~




Table 3. BUDGET OUTLAYS BY FUNCTION AND SUBFUNCTION, 1971-83-Continued
(In billions of dollars)
Actual

Estimate

1973

1974

1975

1976

TQ

*

1.8
............

-1.2
1.6
............

1.5
1.7
............

2.8
1.9
............

1.2
1.7
............

.3
.9
............

.5
- .1

.5

.6

.7

.9

.9

*

*

*

*

2.4

2.2

.9

3.9

Ground transportation ..............................
Air transportation ....................................
Water transportation ...............................
Other transportation ................................
Deductions for offsetting receipts ............

5.2
1.8
1.1

5.4
1.9
1.1

*
*

*
*

5.6
2.2
1.2
.1

Total transportation ....................

8.1

Function and subfunction

1971

1972

1977

1983

1978

1979

-3.3
2.3
-.1

.2
1.8
............

-.7
1.8
............

1.9
1.7
-.3

-2.8
1.6
-.2

-.5
1.6
-.1

-.5
1.5
-.1

.2

1.1

1.3

1.5

2.1

2.1

2.2

2.2

*

*

*

*

*

*

*

*

*

5.6

3.8

1.4

*

3.3

2.6

5.5

.7

3.2

3.1

6.5
2.4
1.5
.1
-.1

9.3
2.6
1.6
.1

2.3
.6
.4

*

*
*

10.0
2.8
1.7
.1

*

5.6
2.2
1.4
.1
-.1

*

10.4
3.3
1.9
.1
-.1

12.1
3.4
2.0
.1
-.1

13.6
3.8
2.2
.1
-.1

13.8
4.0
2.3
.1
-.1

15.0
4.1
2.4
.1
-.1

16.2
4.4
2.5
.1
-.1

8.4

9.1

9.2

10.4

13.4

3.3

14.6

15.4

17.5

19.6

20.2

21.6

23.2

1.7
.8
.4

2.1
.9
.4

2.0
1.0
1.6

2.1
1.3
.8

2.3
1.1
.4

2.8
1.5
.5

.9
.3
.1

3.4
2.3
.6

3.3
4.9
2.9

4.0
3.9
1.6

4.5
2.7
1.3

5.0
3.0
.9

5.2
3.4
.8

5.3
3.6
1.0

*

*

*

*

*

*

*

*

*

*

*

*

*

*

2.9

3.4

4.6

4.1

3.7

4.8

1.3

6.3

11.0

9.5

8.5

8.8

9.4

9.9

1980

1981

1982

Commerce and housing credit:

Mortgage credit and thrift insurance .......
Postal Service ..........................................
Federal Financing Bank ...........................
Other advancement and regulation of
commerce ...........................................
Deductions for offsetting receipts ............
Total commerce and housing
credit ........................................

-.3
2.2
............

Transportation:

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 ............................................
3.5
1.4
Higher education .....................................
.5
Research and general education aids ......
T
raining and employment ........................
2.0
.2
Other labor services ................................
2.2
Social services .........................................
Youth initiative ........................................ ............
Deductions for offsetting receipts ............
*

4.0
1.4
.5
2.9
.2
3.5

3.7
1.5
.7
3.3
.2
3.3

3.8
1.3
.9
2.9
.2
3.2

4.6
2.D
.9
4.l
.3
3.9

4.7
2.7
.8
6.3
.3
4.0

1.2
.7
.2
1.9
.l
1.0

5.l
3.l
.9
6.9
.4
4.6

5.7
3.5
1.1
10.8
.4
5.0

6.7
4.5
1.2
10.8
.5
5.9

7.3
5.5
1.4
10.4
.6
5.5

7.8
5.2
1.4
11.3
.6
5.7

............

............

............

............

............

............

............

............

............

............

*

*

*

*

*

*

*

*

*

9.8

12.5

12.7

12.3

15.9

18.7

5.2

21.0

26.5

Health care services ................................
Health research .......................................
Education and training of health care
work force ..........................................
Consumer and occupational health and
safety .................................................
Deductions for offsetting receipts ............

12.6
1.1

15.0
1.3

16.0
1.6

19.1
1.7

24.2
1.9

29.4
2.3

7.7
.5

34.5
2.5

.7

.7

.9

.8

.9

1.0

.3

.3

.4

.4

.5

.6

.7

*

*

*

*

*

Total health ..................................

14.7

17.5

18.8

22.1

37.5

42.0

51.7

3.2
6.2

3.8
7.l

8.6

11.1

Total education, training, employment, and social services ...........................................

............

9.2
5.5
1.5
11.8
.6
6.0
.3

9.9
6.2
1.6
12.3
.6
6.3
.8

*

*

*

*

29.7

30.7

32.0

35.0

37.7

39.l
2.8

45.1
3.0

51.6
3.3

57.3
3.6

65.2
3.9

73.9
4.l

1.0

.9

.6

.7

.6

.7

.8

.2

.7

.8

.9

1.0

1.0

1.l

1.1

*

*

*

*

*

*

*

*

*

27.6

33.4

8.7

38.8

43.7

49.6

56.6

62.4

70.8

79.9

58.6

69.4

77.2

20.9

88.6

97.3

108 .5

124.6

144.l

161.3

179.8

4.5
5.4

5.6
6.l

7.0
13.5

8.2
19.5

2.3
4.0

9.5
15.3

10.7
11.8

12.4
10.7

14.6
15.6

17.l
18.8

19.4
17.4

21.7
15.6

11.4

14.l

18.8

22.6

5.6

24.5

26.5

28.6

36.l

40.l

43.6

46.9

Health:

Income security:

General retirement and disability insurance ....................................................
Federal employee retirement and disability .......................................................
Unemployment compensation ...................
Public assistance and other income supplements .............................................
-:]

c..n




See footnotes at end of table.

Table 3. BUDGET OUTLAYS BY FUNCTION AND SUBFUNCTION, 1971-83-Continued

-::J

~




(In billions of dollars)
Actual
Function and subfunction

1971

1973

1972

1974

1975

Estimate

1976

1977

TQ

1978

1979

1980

1981

1983

1982

Deduction for offsetting receipts .............

*

*

*

*

*

*

*

*

*

*

*

*

*

*

Total income security .................

55.4

63.9

73.0

84.4

108.6

127.4

32.8

137.9

146.2

160.2

190.9

220.0

241.7

264.0

6.0

6.3

6.5

6.8

7.9

8.4

2.1

9.2

9.7

10.8

11.7

13.0

14.2

15.2

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

.6

2.8
5.6
.2
.6

2.2
6.4
-.2
.7

1.9
6.4
-.3
.7

1.2
7.5

.4

3.7
4.7
-.1
.5

1.5
6.8

*

.8
1.0
-.1
.1

3.4
5.3

*

5.5
4.0
- .1
.6

.7

.7

*

*

*

*

*

*

*

*

*

*

*

*

*

*

9.8

10.7

12.0

13.4

16.6

18.4

4.0

18.0

19.0

19.9

20.8

21.7

23.2

24.6

•Administration of justice:
Federal law enforcement activities ..........
Federal litigative and judicial activities ....
Federal correctional activities ..................
Criminal justice assistance ......................
Deductions for offsetting receipts ............

.7
.3
.1
.2

.8
.3
.1
.4

1.0
.4
.1
.6

1.1
.4
.2
..
8

1.3
.5
.2
.9

1.5
.7
.2
.9

.4
.2
.1
.2

1.7
.8
.2
.8

1.8
.9
. .3
.7

2.0
1.1
.3
.7

2.2
1.4
.3
.6

2.3
1.5
.4
.6

2.3
1.5
.4
.7

2.4
1.6
.4
.7

*

*

*

*

*

*

*

*

*

*

*

*

*

*

Total administration ·of justice ..

1.3

1.6

2.1

2.5

2.9

3.3

.9

3.6

3.8

4.2

4.5

4.7

4.9

5.0

.3

*

.4
.1
1.2

.5
.1
1.3

.6
.1
1.8

.7
.1
1.8

.2

1.0

.4
.1
1.2

.8
.1
1.9

.9
.1
2.1

.9
.1
2.3

1.1
.1
2.7

1.1
.1
2.8

1.1
.1
2.9

.6
.1
.1

.7
.1
.2

.9
.1
.2

1.0
.1
.4

.4
.1
.4

.1
.1
.4

.1
.1
.4

.2
.1
.5

.2
.1
.6

.3
.2
.7

.4
.2
.5

.5
.2
.5

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 ....................................

General government:
legislative functions ................................
Executive direction and management ......
Central fiscal operations ..........................
General property and records management ...................................................
Central personnel management.. ..............
Other general government .......................

*

.4
.1

*

.2

*

*

*

.

1.1
.1
2.9
.5
.2
.4

Deductions for offsetting receipts ............

-.2

-.2

-.3

-.2

-.2

-.2

-.l

-.2

-.2

-.l

-.2

-.1

-.l

-.l

Total general government ..........

2.0

2.4

2.6

3.2

3.1

2.9

.9

3.3

3.7

4.2

4.9

4.9

5.1

5.1

General revenue sharing ..........................
Other general purpose fiscal assistance ...

............
.5

............
.7

6.6
.7

6.1
.8

6.l
l.1

6.2
l.0

l.6
.5

6.8
2.7

6.8
2.8

6.9
l.s

6.9
l.8

6.9
2.8

6.9
2.8

6.9
2.4

Total general purpose fiscal assistance ....................................

.5

.7

7.4

6.9

7.2

7.2

2.1

9.5

9.6

8.4

8.7

9.6

9.7

9.3

Interest on the public debt. .....................
Other interest ..........................................

2l.0
-l.4

21.8
-l.3

24.2
-l.4

29.3
-l.3

32.7
-l.8

37.1
-2.6

8.1
-.9

4l.9
-3.9

48.7
-4.7

59.8
-7.3

73.3
-10.0

79.4
-12.2

82.0
-14.0

83.6
-15.3

Total interest ...............................

19.6

20.6

22.8

28.0

30.9

34.5

7.2

38.0

44.0

52.6

63.3

67.2

68.0

68.3

Civilian agency pay raises ...............:.......
National health insurance ........................
Contingencies for other requirements ......

............
............
............

............
............
............

...... , .....
............
............

............
............

............
............
............

............
............
............

............
............
............

............
............
............

............
............
............

............
............
.1

l.1
............
l.s

3.3

............

............
............
............

............
6.5

5.3
24.1
7.1

Total allowances ..........................
.

............

............

............

............

............

............

............

............

............

............

.1

2.6

9.8

36.5

-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

-4.5
-8.1

-5.0
-8.5

-5.3
-9.9

-5.9
-11.5

-6.2
-13.0

-6.4
-14.1

-6.5
-15.4

-1.1

-.3

-4.0

-6.7

-2.4

-2.7

-1.3

-2.4

-2.3

-3.3

-4.8

-6.0

-6.0

-6.0

Total undistributed offsetting
receipts ....................................

-8.4

-8.1

-12.3

-16.7

-14.1

-14.7

-2.6

-15.1

- 15.8

-18.5

-22.3

-25.1

-26.4

-27.9

Total budget outlays ...................

211.4

232.0

247.1

269.6

326.2

366.4

94.7

402.7

450.8

493.7

563.6

615.8

686.3

774.3

General purpose fiscal assistance:

Interest:

Allowances:

Undistributed offsetting receipts:

Employer share, employee retirement ......
Interest received by trust funds ..............
Rents and royalties on the Outer Continental Shelf ........................................

-:]
-:]




See footnotes at end of table.

-::)

00




Table 3. BUDGET OUTLAYS BY FUNCTION AND SUBFUNCTION, 1971-83-Continued
(In billions of dollars)
Actual

Estimate

TQ

Function and subfunction

1971

1972-

Outlays of off-budget Federal entities:
Energy: Energy supply .............................

............

............

.1

.5

.5

.2

- .1

.4

.1

Commerce and housing credit.·
Postal Service .....................................
Federal Financing Bank.......................

............
............

............
............

............
............

.8
.1

1.1
6.4

1.1
5.9

- .7
2.6

- .2
8.2

- .5

Total, commerce and housing
credit .........................................

............

............

............

.9

1.5

6.9

1.8

Transportation: Ground transportation ..... ............

.............

............ ..".. "" " ,, ...

*

.1

Community and regional development.Area and regional development ........... ............

............

*

.1

.1

Income security: General retirement and
disability insurance ............................. ............

............

............

............

............ ............

.1
241.1

Outlays off-budget Federal entities.
Outlays including off-budget Federal entities ..................................

211.4

232.0

*$50 million or less.
Includes allowances for civilian and military pay raises for Department of Defense.

1

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

*

............

......... . . ..

............

............

.2
16.4

1.6
16.3

- .1

10.6

- .9
13.2

15.0

.9
11.8

8.0

10.1

12.3

16.6

11.9

14.9

12.7

*

.2

.1

.1

.1

.1

.1

.1

.1

*

.1

.1

.1

.2

.1

.1

.2

*

*

*

*

*

1.4

8.1

1.3

1.8

8.7

10.3

*
12.4

*
16.8

*
18.1

*
15.1

*
12.9

271.1

334.2

313.1

96.5

411.4

461.2

506.1

580.3

633.9

701.4

781.2

Table 4. COMPOSITION OF BUDGET OUTLAYS IN CURRENT AND CONSTANT (FISCAL YEAR 1972) PRICES, 1958-83
(In billions of dollars)

Current prices

Constant (fiscal year 1972) prices
Nondefense

Fiscal year

1958 ............................................................
1959 ............................................................
1960 ............................................................
1961 ...
1962 ............................................................
1963 .............................................................
1964 ............................................................
1965 ............................................................
1966 ......·
......................................................
1967 ............................................................
1968 ............................................................
1969 ............................................................
1970 ............................................................
1971 ............................................................
1972 ............................................................
1973 .............................................................
1974 ............................................................
1975 .............................
1976 ............................................................
1977 ............................................................
1978 ............................................................
1979 ..............................................................
1980 estimate .............................................
1981 estimate .............................................
1982 estimate .......................................... '"
1983 estimate .............................................
H

•••••••••••••••••••••••••••••••••••••••••••••••••••••••

H

-.::J

~




•••••••••••••••••••••••••••••

Total
outlays

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
326.2
366.4
402.7
450.8
493.7
563.6
615.8
686.3
774.3

National
defense

43.7
46.0
45.2
46.6
49.0
50.1
51.5
47.5
54.9
68.2
18.8
79.4
73.6
75.8
76.6
74.5
77.8
85.6
89.4
97.5
105.2
117.7
130.4
146.2
165.5
185.9

T~tal

nondefense

38.9
46.1
47.1
51.2
57.8
61.2
67.1
71.0
79.8
90.0
100.1
105.1
118.0
135.6
155.5
172.5
191.8
240.6
277.0
305.2
345.6
376.0
433.2
469.5
520.8
588.5

Payments
for
individuals

20.5
22.3
23.6
27.3
28.7
30.4
31.6
32.3
36.2
43.1
48.7
55.3
63.2
78.7
90.8
102.1
117.5
150.4
176.6
192.4
206.5
227.5
266.9
302.6
333.4
390.4

Nondefense

Net
interest

5.6
5.8
(l.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
17.3
21.4
23.2
26.7
29.9
35.4
42.6
51.8
54.2
53.9
53.0

All
other

12.7
18.1
16.5
17.1
22.2
23.1
27.3
30.1
34.2
36.7
40.3
37.2
40.5
42.1
49.2
53.1
52.9
67.0
73.7
83.0
103.8
105.9
114.6
112.7
133.5
145.1

Total
outlays

141.6
153.7
150.6
156.7
168.4
170.4
177.1
173.0
187.7
211.8
229.3
222.9
220.6
222.9
232.0
233.3
232.0
253.6
266.6
272.2
282.0
280.0
286.3
286.8
296.6
312.3

National
defense

74.0
75.3
73.8
74.8
77.2
76.8
77JJ
69.3
76.3
92.0
101.4
97.9
90.3
81.2
76.6
70.0
67.9
67.2
65.6
66.5
66.6
69.3
70.7
73.2
76.6
80.0

Total
nondefense

67.6
78.4
76.8
-81.9
91.2
93.6
100.1
103.7
111.4
119.8
127.9
125.0
130.3
141.7
155.5
163.3
164.0
186.4
201.0
205.7
215.4
210.7
215.6
213.5
220.0
232.3

Payments
for
individuals

29.5
31.7
33.1
37.8
39.2
. 41.1
42.1
42.5
46.7
53.8
58.9
63.8
68.8
~1.5

90.8
98.1
103.7
119.5
131.0
132.7
133.1
132.8
138.6
143.3
145.6
158.5

Net
interest

16.2
16.5
16.3
16.2
16.6
16.8
16.7
16.7
16.4
16.1
16.9
15.5
15.0
15.2
15.5
15.4
14.3
14.6
16.4
17.4
17.8
17.0
16.3
15.3
14.2
13.2

All
other

21.9
30.2
27.4
27.9
35.4
35.7
41.2
44.5
48.2
49.8
52.1
45.8
46.6
45.0
49.2
49.8
46.0
52.4
53.7
55.6
64.5
60.9
60.7
54.9
60.2
60.7

Table 5. BUDGET AUTHORITY AND OUTLAYS BY AGENCY
(In millions of dollars)

Budget authority
Department or other unit

1979

actual

Legislative branch ..............................
The Judiciary ................................... ..
Executive Office of the President ...... .
Funds appropriated to the President ..
Agriculture ........................................ .
Commerce ......................................... .
Defense-Military 1 ..........................•
Defense-Civil .................................. .
Education 2 ....................................... .
Energy ...............................................
Health and Human Services 3 .......... ..
Housing and Urban Development ...... .
Interior ...............................................
Justice ...............................................
Labor .................................................
State ..................................................
T nsportation ................................... .
ra
Treasury .............................................
Environmental Protection Agency ..... ..
National Aeronautics and Space Administration .................................. .
Veterans Administration .....................
Other independent agencies 4 ........... .
Allowances 5 ..................................... .
Undistributed offsetting receipts:
Employer share, employee retirement ........................................ .
Interest received by trust funds .. ..
Rents and royalties on the Outer
Continental Shelf lands ............ .
budget authority
and outlays....................

1980

estimate

Outlays

1981

estimate .

1979

1980

actual

1981

estimate

estimate

1,109
1,294
624
520
82
101
5,921
13,031
24,544
24,684
2,595
3,683
125,004 138,635
2,797
2,889
12,635
13,887
10,467
10,325
172,805
195,411
31,135
35,687
4,685
4,649
2,494
2,454
28,619 . 28,051
1,732
2,094
17,237
17,842
64,749
94,139
5,402
4,686

1,304
655
107
11,355
24,622
3,421
158,155
3,046
15,482
10,170
222,949
40,408
4,704
2,654
32,970
2,343
20,503
80,895
5,341

1,077
480
80
2,623
20,636
4,072
115,013
2,908
10,879
7,893
170,303
9,213
4,087
2,522
22,649
1,548
15,486
65,044
4,800

1,331
623
100
9,505
23,624
3,561
127,400
·3,230
12,864
7,681
193,745
11,636
4,219
2,563
27,503
1,971
17,347
75,826
4,984

1,318
649
105
9,263
20,084
3,416
142,700
3,052
13,479
8,689
219,333
11,776
4,242
2,672
31,795
2,171
17,873
80,348
5,197

4,549
20,467
35,815

5,267
21,171
55,334
150

5,734
22,684
48,582
3,115

4,187
19,887
26,776

5,011
20,711
30,304
100

5,437
21,697
33,012
2,570

-5,271
- 9,950

-5,919
-11,539

-6,161
-12,958

- 5,271
- 9,950

- 5,919
-11,539

- 6,161
-12,958

- 3,267

- 4,800

- 6,000

- 3,267 . - 4,800
.

- 6,000

556,732

653,974

696,080

493,673

563,583

615,761

360,136

415,957

432,892

213,741

233,519

254,287

264,626

318,253

351,778

187,374
109,519
51,070

229,739
129,750
50,811

266,429
142,900
40,736

- 49,364

- 58,915

- 63,159

-49,364

-58,915

- 63,159

-18,666

- 21,321

- 25,432

-18,666

- 21 ,321

- 25,432

556,732

653,974

696,080

493,673

563,583

615,761

Total

MEMORANDUM
Portion available through current
action by Congress ....................... .
Portion available without current
action by Congress ...................... ..
Outlays from obligated balances 6 .... .
Outlays from unobligated balances 6 ..
Deductions for offsetting receipts:
Intragovernmental transactions .....
Proprietary receipts from the
public ..................................... ..
Total budget authority
and outlays....................

Includes allowances for civilian and military pay raises for Department of Defense.
This agency assumes the education activities previously performed by the Department of Health, Education, and Welfare (HEW).
3 This agency, formerly part of the Department of Health, Education, and Welfare (HEW), has been designated the Department of Health and Human
Services. It assumed the health and welfare activities of HEW.
4 Includes budget authority and outlays of the General Services Administration formerly displayed separately.
5 Includes allowances for civilian agency pay raises and contingencies.
6 Outlays from appropriations to liquidate contract authority are included as outlays from balances.




1

2

80

j

Table 6. FEDERAL .FINANCES AND THE GROSS NATIONAL PRODUCT, 1958-83
(Dollar amounts in billions)

Budget receipts
Fiscal year

1958 .............................................................................
1959 .............................................................................
1960 .............................................................................
1961 .............................................................................
1962 .............................................................................
1963 .............................................................................
1964 .............................................................................
1965 .............................................................................
1966 .............................................................................
1967 .............................................................................
1968 .............................................................................
1969 .............................................................................
1970 .............................................................................
1971 .............................................................................
1972 .............................................................................
1973 .............................................................................
1974 .............................................................................
1975 .............................................................................
1976 .............................................................................
1971 .............................................................................
1978 .............................................................................
1979 .............................................................................
19.80 estimate ..............................................................
1981 estimate ...............................................................
1982 estimate ..............................................................
1983 -estimate ..............................................................
00
~




* 0.05% or less.

Gross
national
product

442.1
473.3
497.3
508.3
546.9
576.3
616.2
657.l
721.1
774.4
829.9
903.7
959.0
1,019.2
1,110.5
1,237.5
1,359.2
1,457.3
1,621.0
1,843.3
2,060.4
2,313.4
2,518.0
2,764.4
3,107.6
3,513.0

Outlays
Unified budget

Amount

79.6
79.2
92.5

~4.4

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
357.8
402.0
465.9
523.8
560.0
691.1
798.8

Percent
of GNP

18.0
16.7
18.6
18.6
18.2
18.5
18.3
17.8
18.l
19.3
18.5
20.8
20.2
18.5
18.8
18.8
19.5
1~.3

18.5
19.4
19.5
20.1
20.8
21.7
22.2
22.7

Amount

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.l
269.6
326.2
366.4
402.7
450.8
493.7
563.6
615.8
686.3
774.3

Percent
of GNP

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
19.8
22.4
22.6
21.8
21.9
21.3
22.4
22.3
22.1
22.0

Federal debt, end of year

Off·budget
Federal entities

Total

Amount

Percent
of GNP

............
............
............
............
............

............
............

............
............
............
............

............

............
............
............

............
..............

.1
1.4
8.1
7.3
8.7
10.3
12.4
16.8
18.l
15.l
12.9

............
.
........ ...
-.

............
............
............
............
............
............

............
.............

............
............
............

*
.l
.6
.4
.5
.5
.5
.7
.7
.5
.4

Amount

82.6
92.l
92.2
97.8
106.8
111.3
118.6
118.4
134.7
158.3
178.8
184.5
1~6.6

211.4
232.0
247.l
271.1
334.2
373.7
411.4
461.2
506.1
580.3
633.9
701.4
787.2

Total
Percent
of GNP

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
22.9
23.1
22.3
22.4
21.9
23.0
22.9
22.6
22.4

Amount

279.7
287.8
290.9
292.9
303.3
310.8
316.8
323.2
329.5
341.3
369.8
367.l
382.6
409.5
437.3
468.4
486.2
544.1
631.9
709.1
780.4
833.8
892.8
939.4
972.6
988.8

Held by the public
Percent
of GNP

63.3
60.8
58.5
57.6
55.5
53.9
51.4
49.2
45.7
44.l
44.6
40.6
39.9
40.2
39.4
37.9
35.8
37.3
39.0
38.5
37.9
36.0
35.5
34.0
31.3
28.l

Amount

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.l
396.9
480.3
551.8
610.9
644.6
688.9
722.0
731.3
718.5

Percent
of GNP

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
25.5
27.2
29.6
29.9
29.7
27.9
27.4
26.l
23.5
20.5

Table 7. SUMMARY OF FUll-TIME PERMANENT CIVILIAN EMPLOYMENT IN THE EXECUTIVE
BRANCH 1
(Excluding the Postal Service)
As of September 30

1979 2

1980

1981

Change

actual

estimate

estimate

1980-81

Agriculture .............................................................................
Commerce ..............................................................................
Defense-military functions ................................................. ..
Defense-civil functions ....................................................... .
Education 3 ............................................................................ .
Energy ....................................................................................
Health, Education, and Welfare ............................................ ..
Health and Human Services ...................................................
Housing and Urban Development ......................................... ..
Interior ...................................................................................
Justice....................................................................................
Labor .....................................................................................
State ......................................................................................
Transportation ........................................................................
Treasury .................................................................................
Environmental Protection Agency ...........................................
National Aeronautics and Space Administration .................... ..
Veterans Administration .........................................................
Other:
Agency for International Development .............................. .
General Services Administration .........................................
International Communication Agency ............................... ..
International Development Cooperation Agency ................ ..
Nuclear Regulatory Commission .........................................
Office of Personnel Management ..................................... ..
Panama Canal Commission ................................................
Small Business Administration .......................................... .
Tennessee Valley Authority .............................................. ..
Miscellaneous ....................................................................

83,899
29,127
885,990
28,592

85,200
30,800
886,000
28,400
6,100
20,300

85,100
31,200
885,000
28,400
6,000
20,300

-100
400
-1,000

140,900
16,000
55,100
55,700
23,000
21,900
71,700
111,400
11,000
22,600
201,900

138,800
16,000
55,300
55,400
22,700
22,000
72,200
112,000
11,200
22,700
200,800

-2,100

34,700
8,400
5,900
3,100
6,600
8,300
4,700
17,700
45,300

34,900
8,400
5,800
3,400
6,600
8,300
4,700
17,700
45,100

200

Subtotal ..............................
Contingencies 4 ..................................................................... .

1,893,391

1,922,600
700

1,920,000
2,000

-2,600
1,300

Subtotal ....................................................................
Expected lapse .......................................................................

1,893,391

1,923,300
-13,000

1,922,000
-13,000

-1,300

Total .........................................................................

1,893,391

1,910,300

1,909,000

-1,300

r .................................... .

19,005
141,945
16,101
54,343
52,743
22,148
22,130
70,166
109,382
10,153
22,633
193,641
5,753
32,787
8,020
2,839
6,276
11,666
4,372
17,065
42,615

-100

200
-300
-300
100
500
600
200
100
-1,100

-100
300

-200

Excludes Postal Service employment. Actual employment for 1979 was 532,627; employment for 1980 is estimated to be 531,800, and 532,100 for
1981. Also excludes developmental positions under the worker trainee opportunity program, as well as certain statutory exemptions.
2 The 1979 column reflects the organizational structure as of September 30, 1979. Beginning with the 1980 column, the table reflects the changes
from the Department of Health, Education, and Welfare to the Departments of Education and Health and Human Services. The table also reflects the
change from the Agency for International Development to the International Development Cooperation Agency.
3 Section 403 of the Department of Education Organization Act requires that the number of full-time equivalent positions in the Department be
reduced by 500 by the end of 1981. One hundred of that reduction will be taken in full-time permanent positions, the remaining 400 from temporary,
part-time, and intermittent positions.
• Subject to later distribution.
1

82



Table 8. BUDGET RECEIPTS AND OUTLAYS, 1789-1983
(In millions of dollars)

Fiscal year

Budget
receipts

Budget
outlays

Bud~et

surp us
or
deficit ( - )

79,249
92,492

92,104
92,223

-12,855
+269

1961 .................
1962 .................
1963 .................
1964 .................
1965 .................
1966 .................
1967 .................
1968 .................
1969 .................
1970 .................

94,389
99,676
106,560
112,662
116,833
130,856
149,552
153,671
187,784
193,743

97,795
106,813
111,311
118,584
118,430
134,652
158,254
178,833
184,548
196,588

-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 .................
1978 .................
1979 .................

188,392
208,649
232,225
264,932
280,997
300,005
81,773
357,762
401,997
465,940

211,425
232,021
247,074
269,620
326,185
366,439
94,729
402,725
450,836
493,673

-23,033
-23,373
-14,849
-4,688
-45,188
-66,434
-12,956
-44,963
-48,839
- 27,733

1980 est. .........
1981 est. .........
1982 est. .........
1983 est. .........

523,829
599,988
691,097
798,844

563,583
615,761
686,279
774,335

-39,754
-15,773
+4,818
+24,509

Fiscal year

1959 .................
1960 .................

1789-1849 ......
1850-1900 ......
1901-1905 ......
1906-1910 ......
1911-1915 ......
1916-1920 ......

1,160
14,462
2,797
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
3,871
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

+509
+736
+713
+963
+717
+865
+ 1,155
+939
+734
+738

1931. ................
1932 .................
1933 .................
1934 .................
1935 .................
1936 .................
1937 .................
1938 .................
1939 .................
1940 .................

3,116
1,924
1,997
3,015
3,706
3,997
4,956
5,588
4,979
6,361

3,577
4,659
4,598
6,645
6,497
8,442
7,733
6,765
8,841
9,456

-462
-2,735
-2,602
-3,630
-2,791
-4,425
-2,777
-1,177
-3,862
-3,095

1941 .................
1942 .................
1943 .................
1944 .................
1945 .................
1946 .................
1947 .................
1948 .................
1949 .................
1950 .................

8,621
14,350
23,649
44,276
45,216
39,327
38,394
41,774
39,437
39,485

13,634
35,114
78,533
91,280
92,690
55,183
34,532
29,773
38,834
42,597

-5,013
-20,764
-54,884
-47,004
-47,474
-15,856
+3,862
+ 12,001
+603
-3,112

1951. ................
1952 .................
1953 .................
1954 .................
1955 .................
1956 .................
1957 .................
1958 .................

51,646
66,204
69,574
69,719
65,469
74,547
79,990
79,636

45,546
67,721
76,107
70,890
68,509
70,460
76,741
82,575

+6,100
-1,517
-6,533
-1,170
-3,041
+4,087
+3,249
-2,939

BUd~et

Budget
outlays

surp us
or
deficit ( - )

Budget
receipts

Tota/s, including outlays of off-budget Federa/ entities
Outl~S

Fiscal year

1973 .................
1974.................
1975 .................
1976 .................
TQ .....................
1977 .................
1978 .................
1979 .................
1980 est. .........
1981 est. ..........
1982 est. .........
1983 est. .........

of 0 budget
Federal
entities

60
1,447
8,054
7,285
1,785
8,684
10,327
12,428
16,766
18,090
15,078
12,852

Total

Total
outlays

247,134
271,067
334,239
373,724
96,514
411,409
461,163
506,102
580,349
633,8- 1
5
701,357
787,187

bud~et

surp us
or
deficit (-)

-14,908
-6,135
-53,242
-73,719
-14,741
-53,647
-59,166
-40,162
-56,519
-33,862
-10,259
+ 11,657

Data for 1789-1939 are for the administrative budget: data for 1940 and all following years are for the unified budget.
In calendar year 1976, the Federal fiscal year was converted from a July I-June 30 basis to an Oct. 1-'Sept. 30 basis. The TQ refers to the
transition quarter from July 1 to Sept. 30, 1976.
Off-budget Federal entity outlays begin in 1973.

83






GLOSSARY

1

A UTHORIZATION-Basic substantive legislation enacted by Congress that sets up
or continues the legal oper~tion 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 formal request 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 will result in immediate or future outlays. It may be classified by the
period of availability (I-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 forms of budget authority
are:
Appropriations-budget authority provided through the congressional appropriation process that permits Federal agencies to incur obligations and to make
payments.
Borrowing authority-statutory authority not necessarily provided through the
appropriations process, that permits Federal agencies to incur obligations and
to 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, as well as through gifts, contributions, and premiums from voluntary
participants in Federal social insurance programs closely associated with compulsory programs. Excluded are amounts received from strictly business-type
transactions (such as sales, interest, or loan repayments) 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 targets or binding Federal budget totals for the Congress.
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-In the President's budget this refers to the ability of the
President to control budget authority or outlays during a fiscal year without
changing existing substantive law. The concept "relatively uncontrollable
under current law" includes outlays for open-ended programs and fixed costs,

1 These definitions are consistent with those contained in the booklet, "Terms Used in the Budgetary Process",
published by the General Accounting Office in July 1977.

84

such as interest on the public and social security and veterans benefits, and
outlays to liquidate (pay for) prior-year obligations.
CURRENT SERVICES ESTIMATES-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 Act of 1974
requires that the President transmit current services estimates to the Congress. The current services estimates for 1981 are published in Special Analysis A of the 1981 Budget.
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 the 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 collections, such as those generated by and used to finance
a continuing cycle of business-type operations.
FISCAL YEAR-The yearly accounting period for the Federal Government, which
begins on October 1 and ends on the following September 30. The fiscal year is
designated by the calendar year in which it ends; e.g., fiscal year 1981 is the
fiscal year ending September 30, 1981. (From fiscal year 1844 to fiscal year
1976 the fiscal year began on July 1 and ended on the following June 30.)
GOVERNMENT-SPONSORED ENTERPRISES-Enterprises with completely private ownership, such as the Federal land banks and Federal home loans banks,
established and chartered by the Federal Government to perform specialized
credit functions. These enterprises are not included in the budget totals, but
financial information on their operations is published in a separate part of the
appendix to the President's budget.
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).
NATIONAL NEEDS-The end purposes being served by budget authority, outlays,
loan guarantees, and tax expenditures grouped by function. To achieve our
national needs, the Federal Government undertakes major missions that are
supported by basic programs:
Major missions-The purposes being served by the basic programs authorized to
carry out national needs. For purposes of the budget, major missions are
synonymous with subfunctions.
Basic programs-A set of activities directed toward a common purpose or goal,
undertaken in order to meet major missions.
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 some future period.
OFF-BUDGET FEDERAL ENTITIES-Organizational entities, federally owned in
whole or in part, whose transactions belong in the budget under current
budget accounting concepts but that have been excluded from the budget totals
under provisions of law. Information on these entities is presented in various
places in the budget documents.




85




OFFSETTING RECEIPTS- Collections deposited in receipt accounts that are offset
"
against budget authority and outlays rather than being counted as budget
receipts. These collections are derived from other ,Government accounts or
from the public through activities that are of a business-type or marketoriented nature. Offsetting receipts are classified as (1) intragovernmental
transactions or (2) proprietary receipts from the public.
OUTLAYS-Values of 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 to
a regular annual appropriation act. Supplemental appropriation acts 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 t~x revenue attributable to provisions of the
Federal income tax laws that allow a special exclusion, exemption, or deducor
tion from gross income " provide a special credit, preferential rate of tax, or a
deferral of tax liability affecting individual or corporate income tax liabilities.
TRANSITION QUARTER (TQ)-The 3-month period (July 1 to September 30, 1976)
between fiscal year 1976 and fiscal year 1977 resulting from a change in the
fiscal year from July 1 through June 30 to October 1 through September 30,
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. Trust fund
receipts that are not anticipated to be used in the immediate future are
" generally invested in interest-bearing Government securities and earn interest
for the trust fund.
ZERO-BASE BUDGETING (ZBB)-A process that emphasizes management's responsibility for planning, budgeting and evaluation. ZBB provides for analysis of
alternative methods of operation and various levels of effort. It places new
,
programs on an equal footing with existing programs by requiring ranking of
program priorities and thereby provides a systematic basis for allocating resources.

For sale'by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C. 20402
Stock No. 041-001-00184-1

86

THE BUDGET DOCUMENTS
Data and analyses relating to the budget for 1981 are published in four documents:
The Budget of the United States Government, 1981 contains the Budget Message of
the President and presents an overview of the President's budget proposals. It
includes explanations of spending programs in terms of national needs, agency
missions, and basic programs, and an analysis of estimated receipts including a
discussion of the President's tax program. This document also contains a description
of the budget system and various summary tables on the budget as a whole.
The United States Budget in Brief, 1981 is designed for use by the general public.
It provides a more concise, less technical overview of the 1981 budget than the
above volume. Summary and historical tables on the Federal budget and debt are
also provided, together with graphic displays.
The Budget of the United States Government, 1981-Appendix contains detailed
information on the various appropriations and funds that comprise the budget. The
Appendix contains more detailed information than any of the other budget documents. It includes for each agency: the proposed text of appropriation language,
budget schedules for each account, new legislative proposals, 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 schedules of
permanent positions. Supplementals and rescission proposals for the current year
are presented separately. Information is also provided on certain activities whose
outlays are not part of the budget totals.
Special Analyses, Budget of the United States Government, 1981 contains analyses
that are designed to highlight specified program areas or provide other significant
presentations of Federal budget data. This document includes information about:
alternative views of the budget, i.e., current services and national income accounts;
economic and financial analyses of the budget covering Government finances and
operations as a whole, and Government-wide program and financial information for
Federal civil rights and research and development programs; and some major accomplishments.
Instructions for purchasing copies of any of these documents are on the preceding two pages of this volume.







Executive Office of the President
Office of Management and Budget
Washington, D.C. 20503


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102