Full text of Mid-Session Review of the Budget : Fiscal Year 2010
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) Mid-Session Review Budget of the U.S. Government Fiscal Year 2010 Office of Management and Budget www.budget.gov Mid-Session Review Budget of the U.S. Government Fiscal Year 2010 Office of Management and Budget www.budget.gov EXECUTIVE OFFICE OF THE PRESIDENT OFFICE OF MANAGEMENT AND BUDGET WASHINGTON D. C. 20503 THE DIRECTOR August 25, 2009 The Honorable Nancy Pelosi Speaker of the House of Representatives Washington, DC 20510 Dear Madam Speaker: Section 1106 of Title 31, United States Code, requests that the President send to the Congress a supplemental update of the Budget that was transmitted to the Congress earlier in the year. This supplemental update of the Budget, commonly known as the Mid-Session Review, contains revised estimates of receipts, outlays, budget authority, and the budget deficit for fiscal years 2009 through 2019. Sincerely, Peter R. Orszag Director Enclosure Identical Letter Sent to the President of the Senate TABLE OF CONTENTS Page Summary............................................................................................................................. 1 Economic Assumptions....................................................................................................... 9 Receipts............................................................................................................................. 15 Expenditures..................................................................................................................... 19 Summary Tables............................................................................................................... 23 i LIST OF CHARTS Policy Receipts by Source in 2010...................................................................................... Page 4 Policy Outlays by Category in 2010................................................................................... 5 Composition of Policy Outlays and Receipts................................................................... 32 LIST OF TABLES Table 1. Page Changes from the May Budget................................................................... 7 Table 2. Economic Assumptions ............................................................................ 11 Table 2a. Economic Assumptions Adjusted for NIPA Revisions ............................ 12 Table 3. Comparison of Economic Assumptions.................................................... 13 Table 4. Change in Receipts................................................................................... 16 Table 5. Change in Outlays.................................................................................... 20 Table S–1. Budget Totals............................................................................................ 25 Table S–2. Effect of Budget Proposals on Projected Deficits.................................... 26 Table S–3. Baseline Projection of Current Policy by Category . ............................... 28 Table S–4. Proposed Budget by Category.................................................................. 30 Table S–5. Proposed Budget by Category as a Percent of GDP................................ 33 Table S–6. Proposed Budget by Category Adjusted for Inflation and Population Growth............................................................................. 35 Table S–7. Bridge from Budget Enforcement Act Baseline to Baseline Projection of Current Policy...................................................... 37 Table S–8. Change in the Baseline Projection of Current Policy from May Budget...................................................................................... 38 Table S–9. Change in Proposed Budget from May Budget....................................... 40 Table S–10. Change in Proposed Budget by Category from May Budget.................. 41 Table S–11. Mandatory and Receipt Proposals........................................................... 43 Table S–12. Bridge Between Total Mandatory and Receipt Proposals and PAYGO Scorekeeping........................................................................ 55 Table S–13. Outlays for Mandatory Programs Under Current Law ......................... 56 Table S–14. Funding Levels for Appropriated (“Discretionary”) Programs by Agency................................................................................. 57 Table S–15. Federal Government Financing and Debt............................................... 60 iii SUMMARY When the President took office, the Nation was experiencing the worst financial and economic crisis since the Great Depression. This decline was not simply the result of a normal downturn in the business cycle; also contributing to it were irresponsible choices made by our public and private institutions that generated a meltdown in our credit and capital markets. As a result, the economy was in the midst of a severe collapse. In the fourth quarter of 2008, real gross domestic product (GDP) was declining at a rate of 5.4 percent per year; household net worth fell by approximately $5 trillion or at a rate of 30 percent per year; consumer confidence had fallen to a 40-year low; and the country had lost 1.7 million jobs, which at that point was the largest quarterly decline since 1945. Many workers saw their retirement accounts dwindle in value, forcing some to delay retirement. As the housing market imploded, others found themselves overextended with mortgage payments they could no longer afford. The economic downturn, combined with the previous Administration’s decisions not to offset in particular three large domestic initiatives (the tax cuts of 2001 and 2003 as well as the Medicare prescription drug benefit), meant that in January 2009, the President faced a deficit of $1.3 trillion, or 9.2 percent of GDP, along with a need to bolster macroeconomic demand to prevent the economy from slipping into a depression. Twenty-eight days after taking office, the President signed into law the American Recovery and Reinvestment Act (ARRA) to stimulate demand, create and save jobs, and begin building a new foundation for future economic growth. The Act was to take effect over a two-year period with 70 percent of all funds disbursed within the first 18 months. ARRA has already provided tax relief and increased unemployment benefits, which have helped arrest the decline in consumer spending that occurred in the second half of 2008. In addition, the Act has provided incentives to revitalize business investment and grants to State and local governments to relieve the strain on their budgets. In April and May, real per capita disposable personal income increased, mainly because of the tax reductions and one-time transfer payments included in the Act. Finally, ARRA provides funds for short-term and long-term investments that will lay a new foundation for long-term economic growth, creating new jobs and growing industries. The Administration contemporaneously acted to address the financial crisis and get credit flowing again through the Financial Stability Plan, and worked to help homeowners facing foreclosure through the Homeowner Affordability and Stability Plan. In addition, the Administration took action to forestall the failure of two of the Nation’s largest automobile manufacturers and to strengthen the non-bank credit market. All together, these efforts—along with the ARRA—increased the deficit in the short run. In fact, 64 percent of the current deficit is directly attributable to rescue and recovery efforts and other countercyclical programs that were essential in preventing a deeper and more costly recession. Despite the demands put on the treasury to respond aggressively to avoid economic collapse, the President in February put forward a Budget that re-oriented the Nation back to a path toward fiscal discipline. This began with an honest assessment of the country’s fiscal situation by accounting transparently for the cost of overseas military operations, natural disasters, expected increases in Medicare payments to physicians, and the real costs of preventing the alternative minimum tax from burdening middle-class taxpayers. The President’s Budget put the Nation on track to bring non-defense discretionary spending to its lowest level, as a share of GDP, since 1962. Moreover, the Budget included a separate volume of program terminations and reductions, detailing 121 programs that do not work or are duplicative and should be eliminated or reduced. CURRENT CONDITIONS Since the Budget was released, the economic outlook has changed dramatically. While the danger of the economy immediately falling into a deep depression has receded, 1 2 the American economy is still in the midst of a serious economic downturn. However, there are hopeful signs. The equity markets have rebounded, and the credit markets have thawed as measured, for example, by the TED spread, the difference between the interest rate that banks charge each other on a three-month loan and the rate at which the Federal Government can borrow over the same period. GDP, while not yet increasing, is not decreasing at the steep rates of the first quarter of this year. And job losses, while unacceptably high, are no longer occurring at the same steep rates. The personal savings rate has been sharply increasing, which, although contributing to weak consumer demand, bodes well for longer-term economic growth. Business-sector productivity also has held up relatively well considering the decline in total output. Earlier this year, instability in the financial system was so great that the Administration chose to include in its Budget a placeholder for a Financial Stabilization Reserve to support $750 billion in asset purchases should additional emergency assistance be needed. In recent months, the Administration’s Financial Stability Plan—by helping to restore confidence in the banking system, putting in place new financing mechanisms to restart credit markets, and working to mitigate the housing crisis—has contributed to greater stabilization of the financial sector. The Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency, and the Office of Thrift Supervision completed the Supervisory Capital Assessment Program in May. This review of 19 bank holding companies with assets exceeding $100 billion was done to make sure that they are adequately capitalized over the next two years even if economic conditions deteriorate beyond expectations. The holding companies that were identified as deficient have put forward plans to secure the capital identified by the assessment, and several have raised capital from private sources. As of June 17, 2009, the Treasury received repayments of $70 billion under the Capital Purchase Program, a program established in 2008 to boost bank capital by purchasing senior preferred stock from financial institutions. MID-SESSION REVIEW Given the increased stability in the financial sector and the influx of private capital into the banking system, the Administration believes that a placeholder for additional financial stabilization efforts in the President’s Budget is no longer warranted. In addition, projected outlays for deposit insurance have been reduced by $78 billion in 2009 due to improved conditions in the banking industry. As a result, the budget deficit for 2009 is now projected to be $1,580 billion, $262 billion lower than estimated in May, or 11.2 percent of GDP, as compared to 12.9 percent projected in May. The Administration’s efforts also have helped stabilize the American automobile industry, save jobs, and helped consumers access credit to purchase cars. The two major auto manufacturers that received assistance through the Troubled Asset Relief Program (TARP), Chrysler and General Motors, have completed difficult but necessary restructuring of their business operations, and emerged from bankruptcy on June 10, 2009, and July 10, 2009, respectively. The Government will continue to monitor its investment in these companies with the goal of selling the Government investments in these firms as soon as practicable and recouping the investment made by taxpayers in these companies. Despite signs of progress, it is now evident that the economic crisis was more severe than was apparent when the President was constructing his budget. The President’s Budget was based on an economic forecast using data available as of late January. The forecast, along with private forecasters at the time who projected similar growth rates, did not fully anticipate the severity of the recession. The new economic projections made for the Mid-Session Review are based on information available through early June 2009. For 2009-2010, the Administration’s projected rate of real GDP growth and unemployment rate are close to the forecast of the Blue Chip Consensus (an average of about 50 privatesector forecasts). Real GDP is expected to decline by 2.8 percent this year and increase by 2.0 percent in 2010. In line with recent recessions, we estimate that job creation will lag economic growth by several months and proj- 3 SUMMARY ect that the unemployment rate will peak at a rate above 10.0 percent on a monthly basis before beginning to decline in the middle of 2010. Thereafter, the Administration expects a relatively long economic expansion, which will proceed most rapidly in 2011-2014 and eventually lower the unemployment rate to below 6 percent. (See the next section of this document for a more detailed discussion of the Administration’s revised economic assumptions.) Along with the vast majority of privatesector forecasters, the Administration anticipates that economic activity will pick up later this year. As a result, the budget deficit is projected to fall in 2010, to $1,502 billion, or 10.4 percent of GDP. Deficits are projected to continue to fall for the next five years from 2011 through 2015 as the economy recovers from the recession, reaching $739 billion in 2015, or 3.9 percent of GDP. However, because of the revised economic forecast, they will not fall as much as had been previously projected in May. Legislative Developments Since the introduction of the President’s Budget, several pieces of legislation have been enacted that affect the Budget. The Congress passed 2009 supplemental appropriations for the wars in Iraq and Afghanistan; however, the enacted legislation includes $14 billion more than the $88 billion requested by the President in the Budget and in an amendment to the Budget. The additional amount reflects $7.3 billion more for overseas contingency operations and international programs, $4.2 billion more for preparation and response to an influenza outbreak, and $1 billion more to promote the purchase of fuel-efficient vehicles. The Administration is also pleased that the Congress passed a provision that allows the FDIC to restore its reserve ratio over time without having to increase premiums charged to insured banks in 2009 and 2010, when bank earnings are likely to be strained. As proposed in the Budget, FDIC premiums will begin to increase steadily beginning in 2011. In addition, the Administration appreciates that the Congress passed a provision to allow the National Credit Union Administration to delay the scheduled increase in member credit union premiums to 2011 from 2010. The Administration continues to urge the Congress to maintain its progress toward passing a health insurance reform bill during the first session of this Congress. The President is committed to health insurance reform that is deficit neutral and that constrains costs, expands access, and improves quality. As discussed below, the Administration continues to identify cost-saving initiatives that will allow health reform to be deficit neutral. Because of policy proposals put forward by the Administration, this Mid-Session Review now identifies a total of $622 billion in savings over 10 years in Medicare and Medicaid (increased from $309 billion in the Budget), which can be used to ensure that health reform will be deficit neutral. This brings the Health Reserve Fund total to $954 billion over 10 years. In addition to health insurance reform, the Administration continues to urge the Congress to pass a clean energy bill that will allow the United States to lead the world in the research and development of clean energy technology. Clean energy investments will help to produce much-needed jobs in the United States, provide a clean source of energy for decades to come, decrease our dependence on foreign oil, and reduce the Nation’s greenhouse gas pollution. MID-SESSION UPDATE The Mid-Session Review reflects action on the Administration’s budget proposals and other legislation, and other policy changes since the Budget was released. For example, as noted above, the updated Budget estimates reflected in the Mid-Session Review no longer contain a placeholder for further financial stabilization efforts. In addition, the MidSession Review incorporates several changes to the baseline, in accordance with the Administration’s statutory Pay-As-You-Go bill, which was transmitted to the Congress on June 9, 2009. Immediately below is a summary of the key factors that have affected the budget estimates since the Budget was released in May. 4 MID-SESSION REVIEW Receipts Outlays The economic downturn continues to have a negative effect on tax receipts, with 2009 receipts projected to be $2,074 billion, $83 billion lower than projected in May and 18 percent lower than actual receipts in 2008. As a percent of GDP, 2009 tax receipts are projected to equal 14.7 percent, significantly lower than the 40-year historical average of 18.3 percent and the lowest since 1950. The biggest factor contributing to the change in the 2009 tax receipt estimates since May was a technical reestimate for both individual and corporate income taxes to reflect recent experience. Outlays for 2009 are expected to be $3,653 billion, or $345 billion lower than forecast in May. This reduction in 2009 outlays is primarily because of the elimination of the placeholder for further financial stabilization efforts, as discussed above, and lower outlays for deposit insurance, which reflect fewer bank failures and increases in the use of losssharing agreements. These reductions in outlays are partially offset by increased outlays for net interest. In addition, as a result of the revised economic outlook, unemployment insurance benefits, including the expansions enacted in the Recovery Act, are now projected to cost more in 2009 than projected in May. Economic growth is forecast to resume later this year, although the growth is expected to begin more slowly than forecast in February, leading to receipts of $2,264 billion in 2010, $68 billion lower than projected in May. In 2011, receipts are expected to grow to 17.1 percent of GDP, and beginning in 2012, receipts are expected to reach their pre-recession levels as a share of GDP and increase modestly thereafter. Outlays for 2010 are now expected to be $3,766 billion, or $175 billion higher than forecast in May. Outlays for 2010 are expected to increase because of a shift in certain TARP outlays from 2009 to 2010, an increase in unemployment insurance benefits, and increases in interest on Government debt resulting Policy Receipts by Source in 2010 Unemployment Insurance 1.4% Excise Taxes 1.8% Medicare Payroll Taxes 5.0% Other Miscellaneous Receipts 2.7% Borrowing and Other Net Financing 39.9% Social Security Payroll Taxes 17.6% Individual Income Taxes 27.3% Corporation Income Taxes 4.3% 5 SUMMARY from the revised economic outlook. For 2011 and beyond, outlays are now forecast to be approximately $100 billion higher in each year than forecast in May. The increase in outlays is due primarily to higher interest outlays for debt held by the public and the budgetary effect of dropping the placeholder for further financial stabilization efforts, which results in lower interest collections from the nonbudgetary credit financing account. Deficit Removal of the placeholder for further financial stabilization efforts and lower deposit insurance outlays are the primary sources of the reduction in outlays that are forecast for 2009; these lower outlays are projected to result in a lower deficit for 2009 than was forecast in May. The 2009 deficit is now expected to be $1,580 billion, or 11.2 percent of GDP, down from $1,841 billion, or 12.9 percent of GDP, projected in May. The updated projections show the deficit falling to 5.0 percent of GDP in 2012 and 4.0 percent of GDP in 2016. Beyond 2009, these deficits are larger than projected in May, largely as a result of the revised economic outlook. Certain spending programs, such as unemployment insurance, automatically increase and revenues automatically decline as a result of a deeper-than-expected recession. Although this helps to ameliorate the economic downturn by stimulating demand, it also leads to higher short-term deficits. The medium-term deficit is overwhelmingly the consequence of policies and resulting deficits the Administration inherited. By 2019, the difference between non-interest spending and revenue, which is also known as the “primary deficit,” is only 0.6 percent of GDP, but interest payments are 3.4 percent of GDP. These interest payments almost entirely represent the cost of the debt accumulated by past administrations and the need to run short-run deficits to help the economy recover from the worst downturn since the Great Depression. Policy Outlays by Category in 2010 Non-Defense Discretionary 18.5% Defense including Overseas Contingency Operations 19.0% Social Security 18.6% Allowance for Disaster Costs 0.2% Net Interest 5.2% Other Mandatory Programs 18.9% Medicare 12.0% Medicaid 7.6% 6 At the end of 2009, debt held by the public net of financial assets is projected to be 48.0 percent of GDP, 1.4 percentage points lower than the 49.4 percent projected in May. Just as the deficit for 2010 and beyond is projected to be higher than projected in May largely because of the revised economic forecast, Government debt held by the public net of financial assets is also projected to be higher. By the end of the projection period, the ratio of debt net of financial assets to GDP is projected to reach 68.9 percent of GDP. Persistent deficits of 4 percent of GDP are higher than desirable. The Administration will be proposing further steps in the 2011 Budget to reduce the deficit and stabilize the debt-to-GDP ratio at a prudent level. THE LONG-TERM FISCAL CHALLENGE The economic crisis and record budget deficits that the President inherited upon taking office will result in continued deficit spending. Although the deficit is projected to decline from current levels to about 4 percent of GDP by 2015 and remain at this level for the rest of the decade, this stability is only temporary, and the long-term deficit outlook remains daunting. The Federal Government’s long-term fiscal shortfall is driven primarily by escalating health care costs. If health care costs continue to grow at their historical rates, Medicare and Medicaid will double as a share of spending on Federal programs within the next 30 years. These growth rates are simply unsustainable and are why slowing the growth in health care costs is the single most important MID-SESSION REVIEW step we can take to put the Nation on firm fiscal footing. For example, slowing the rate of health care cost growth by 0.15 percentage points per year would produce the same amount of savings for the Federal budget as closing the 75-year Social Security shortfall. This is why the President is committed to reforming the health insurance system this year. The Mid-Session Review identifies a total of $954 billion over 10 years to pay for health reform, about two-thirds from savings in Medicare and Medicaid and one-third from revenue measures. The Administration is committed to passing health insurance reform that is deficit neutral over the next 10 years and that is on a stable trajectory as the decade ends. In addition to paying for health insurance reform, the Administration is committed to transformational steps that will move health care to a system that rewards the provision of better care, not more care; bend the health care cost curve; and substantially reduce long-term Federal deficits. That is why it put forward a proposal to establish an Independent Medicare Advisory Council, an independent, non-partisan body of doctors and other health experts with the authority to make recommendations about Medicare payment rates and other reforms. Although health care is at the core of the country’s long-term fiscal problem, the fiscal situation will demand more action once the economic recovery is fully underway. That is why the President is committed to addressing the shortfall in the Social Security system and the other important factors affecting the long-term fiscal situation. 7 SUMMARY Table 1. CHANGES FROM THE MAY BUDGET (In billions of dollars) 20102009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20102014 2019 2010 May Budget deficit ������������������������������������������ 1,841 1,258 929 557 512 536 528 645 675 688 779 Percent of GDP ����������������������������������������������������� 12.9% 8.5% 6.0% 3.4% 2.9% 2.9% 2.7% 3.2% 3.2% 3.1% 3.4% Enacted legislation and policy changes: 2009 Supplemental Appropriations Act ������� 5 8 2 1 * * * * * * * 11 12 Financial stabilization reserve: Direct outlays �������������������������������������������� –250 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... Credit interest effects ������������������������������� 25 42 34 27 23 22 20 18 17 14 12 148 230 Other legislative and policy changes ������������ Debt service ���������������������������������������������������� –8 –* –9 –2 –4 –4 –1 –5 3 –5 8 –4 15 –3 * –2 * –2 * –1 * –* –3 –21 12 –29 Subtotal, policy changes �������������������������������������� –228 39 28 22 21 26 32 16 15 14 12 135 225 Economic and technical reestimates: Receipts ���������������������������������������������������������� Discretionary programs ��������������������������������� 83 –33 68 11 94 11 130 3 144 –2 116 –* 81 –* 51 * 36 * 31 –* 39 * 553 23 791 23 Mandatory: Social Security ������������������������������������������� Medicaid ���������������������������������������������������� Unemployment compensation ����������������� Deposit insurance �������������������������������������� Troubled Asset Relief Program ����������������� Refundable tax credits ������������������������������ Other ���������������������������������������������������������� 2 –4 17 –78 –24 8 8 6 –5 54 –19 62 7 –3 7 –2 31 10 1 2 –10 4 * 20 23 –1 5 –15 1 3 20 21 –2 5 –13 –2 5 15 19 –* 5 –11 –6 7 10 17 –* 3 –8 –9 9 8 1 * 2 –2 –11 –12 –13 11 12 12 6 5 3 * * * * ......... ......... 2 2 2 –2 4 3 15 1 139 53 60 24 –53 –37 52 172 73 60 34 –59 –88 5 –2 –34 107 21 –3 205 59 3 –1 166 66 17 –* 216 61 38 –* 241 52 50 –* 217 40 14 10 2 1 345 413 59 68 74 80 87 129 497 –* ......... ......... ......... ......... –5 –5 179 133 120 114 127 1,045 1,718 Total, changes ����������������������������������������������������������� –262 243 194 238 263 242 211 Total mandatory �������������������������������������� Net interest 1��������������������������������������������������� Allowances for future disaster costs ������������� Subtotal, economic and technical reestimates ���� 150 135 127 139 1,181 1,943 Mid-Session Review deficit �������������������������������������� 1,580 1,502 1,123 796 775 778 739 795 810 815 917 Percent of GDP ����������������������������������������������������� 11.2% 10.4% 7.4% 5.0% 4.6% 4.3% 3.9% 4.0% 3.9% 3.7% 4.0% Note: Positive figures represent higher outlays or lower receipts. * $500 million or less. 1 Includes debt service on all reestimates. ECONOMIC ASSUMPTIONS The economic forecast upon which the 2010 Budget was based was completed at a time when the economy was changing rapidly and when statistical information on conditions in the United States and world economy for 2008:Q4 was either preliminary or not yet released. 1 Over the winter and spring, the incoming information indicated that the economic contraction was even more severe than had been predicted by both Administration and outside forecasters. For this reason, the Administration has revised downward the economic assumptions for the Mid-Session Review. Despite the worsened conditions going into this year, the Administration continues to expect economic output to begin to turn around in the second half of 2009. However, because of the normal cyclical behavior of employment and because growth in late 2009 is predicted to be modest, job creation will lag the turnaround in economic growth for some period of time. RECENT DEVELOPMENTS The decline in real gross domestic product (GDP) from 2008:Q2 through 2009:Q1 was one of the steepest three-quarter declines in U.S. history; real GDP declined at a 4.8 percent annual rate. All of the major components declined except for net exports. The decline in real GDP was a response to the extremely severe disruptions of world credit markets and the related loss of wealth from lower stock and home prices. Following the policy interventions discussed below, the state of freefall has eased, some sectors of the economy have started to expand again, and stability is returning to the financial system (for example, the spreads between U.S. Government rates and private interest rates have narrowed). Credit standards remain tight—the Federal Reserve’s Senior Loan Officer Opinion Survey indicates that most respondents tightened their business lending policies over the three months ending in April 2009, but the number doing so 1 In this document, economic performance is measured in terms of calendar years. Budget figures are measured in terms of fiscal years. edged down for the second consecutive survey in the most recent release (April). The stock market has rebounded from its March lows, with the major indices up more than 40 percent since then. The housing market remains depressed, but there are also indications of stability in the housing market, and some measures of house prices appear to be declining less severely. In December 2008, the Federal Housing Finance Agency national house price index was 199.2; it was 199.8 in May, almost the same level. Existing home sales were larger in June than in December. Housing permits were at an all-time low in April, but they rose in May and June. Inventory investment declined at an annualized rate of $156 billion in the second quarter, reducing real GDP growth by 0.8 percentage points. Inventory swings continue to have large cyclical effects despite the relatively small volume of inventory investment. Inventories are not likely to continue shrinking at this rate and even a moderation in the rate of decline will make a positive contribution to growth in the second half of 2009. The policy response to the recession has been significant, sustained, and speedy. The American Recovery and Reinvestment Act (ARRA) will disburse most of its funds in 2009 and 2010. The withholding schedules have been adjusted for the Making Work Pay tax credit, boosting disposable income for the largest number of working Americans ever. The Recovery Act included a total of $144 billion for State fiscal relief and $81 billion for aid to people directly hurt by the recession (through programs such as unemployment insurance and nutritional assistance). Both of these types of spending started almost immediately following passage of the bill. The State fiscal relief will continue at the same rate over the next six quarters; the aid to people hurt by the recession is concentrated in the 2009 calendar year. Total discretionary funding under the Act amounts to $283 billion, of which $39 billion will be spent before September 30, 2009, with the rest being paid out in 2010 ($122 billion), 2011 ($76 billion), and smaller amounts in later years. Since 9 10 unemployment is likely to be high for some time, it is appropriate for the stimulus to extend into 2010 and 2011. At the same time, monetary policy and financial stabilization efforts have helped revive credit markets while laying the groundwork for a sustained recovery. Employment continued to decline in the second quarter of 2009, but at a slower rate than in the first quarter—an average monthly decline in payroll jobs of 436,000 compared to the prior quarter’s 691,000. Other indicators suggest that policy is already having an effect on aggregate demand. Retail sales, which fell for six straight months at the end of 2008, have stabilized over the past few months. One of the main factors contributing to the strengthening of consumer demand is the tax relief in ARRA, which contributed to a rise in real disposable income in May to the highest level in a year. Housing affordability over the last six months (through June) was higher than at any time since data have been maintained (1971), and housing starts were slightly higher in the second quarter than the first quarter, following several quarters of steep decline. This is partly the result of monetary policy, which has kept interest rates low, and also the measures taken to assure that potential home owners will have access to credit, which together have helped to keep mortgage interest rates down. Overall, some forecasters estimated that ARRA added at least two percentage points to the annual growth rate in the second quarter. With the improvement in financial conditions, some of the flight to quality that pulled down Treasury rates at the end of 2008 has been reversed and yields on long-term Treasury notes have risen in 2009. This healthy development signals an increased willingness on the part of investors to hold a wider range of assets, which is necessary for lending to revive in the private sector and for credit markets to return to normal. Once the recovery takes hold, it is expected to gain momentum as time passes. The economic recovery will mitigate the downward pressure on home prices that has made mortgage debt so risky. With asset values more predictable, credit market restrictions on new lending will likely relax. A revival of normal credit channels will further strengthen the recovery. MID-SESSION REVIEW ECONOMIC PROJECTIONS The Administration expects the recovery to proceed most rapidly from 2011 to 2014 and eventually lower the unemployment rate to below 6 percent. These new economic projections are based on information available through early June 2009. They are summarized in Table 2, which also shows the forecast of GDP and incomes after adjusting for the comprehensive revision to the national income and product accounts released July 31. For 2009 to 2010, the projected rate of real GDP growth and the projected unemployment rate are close to the Blue Chip Consensus forecast (an average of about 50 private-sector forecasts). A comparison with the latest available Blue Chip and CBO forecasts is shown below in Table 3. Real Gross Domestic Product (GDP) and the Unemployment Rate: Real GDP is expected to decline by 2.8 percent this year, and to increase by 2.0 percent in 2010. The growth rate is projected to accelerate in 2011 to 3.8 percent and to exceed 4 percent per year in 2012-2014. Beyond 2014, real GDP growth is projected to converge to a long-run annual growth rate of potential GDP of 2.5 percent. The unemployment rate is projected to peak at a rate above 10.0 percent on a monthly basis before beginning to decline in the middle of 2010. With a return to stronger growth in 2011, the unemployment rate is projected to fall more rapidly in that year. Inflation: Over the 12 months ending in June 2008, the headline consumer price index—CPI-U—rose 4.8 percent, led by sharply higher energy prices. Since 2008:Q3, inflation has declined sharply because of a fall in energy prices and a much reduced rate of increase in food prices. Core consumer price inflation (that is, excluding food and energy prices) has also declined, but much less dramatically than the top-line measure. Core inflation was 2.4 percent between June 2007 and June 2008; over the subsequent 12 months it has averaged only 1.7 percent. Because it is not directly affected by swings in energy and food prices, the core index is a better guide to underlying inflation trends than the overall CPI-U, which is projected to decline 0.7 percent in 2009. The overall CPI-U is projected to revert toward the underlying rate so that it rises in 2010 and eventually converges on a long-run inflation rate of 2.1 percent. 11 ECONOMIC ASSUMPTIONS Table 2. ECONOMIC ASSUMPTIONS 1 (Calendar years; dollar amounts in billions) Actual 2007 Projections 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Gross Domestic Product (GDP): Levels, dollar amounts in billions: Current dollars ������������������� 13,808 14,265 14,122 14,588 15,337 16,259 17,249 18,267 19,258 20,225 21,178 22,130 23,101 Constant (2000) dollars ������ 11,524 11,652 11,324 11,549 11,991 12,507 13,045 13,581 14,073 14,525 14,939 15,333 15,722 Price index (2000 = 100) ����� 119.8 122.5 124.7 126.3 127.9 130.0 132.2 134.5 136.8 139.2 141.8 144.3 146.9 Percent change, Q4/Q4: Current dollars ������������������� 4.9 1.2 0.2 4.1 5.8 6.1 6.1 5.8 5.2 4.9 4.6 4.5 4.3 Constant (2000) dollars ������ 2.3 –0.8 –1.5 2.9 4.3 4.3 4.3 4.0 3.4 3.1 2.7 2.6 2.5 Price index (2000 = 100) ����� 2.6 2.0 1.6 1.2 1.4 1.7 1.7 1.7 1.7 1.8 1.8 1.8 1.8 Percent change, year over year: Current dollars ������������������� 4.8 3.3 –1.0 3.3 5.1 6.0 6.1 5.9 5.4 5.0 4.7 4.5 4.4 Constant (2000) dollars ������ 2.0 1.1 –2.8 2.0 3.8 4.3 4.3 4.1 3.6 3.2 2.8 2.6 2.5 Price index (2000 = 100) ����� 2.7 2.2 1.8 1.3 1.3 1.6 1.7 1.7 1.7 1.8 1.8 1.8 1.8 Incomes, billions of current dollars: Corporate profits before tax ��� 1,886 7,812 6,362 3,096 1,597 8,053 6,548 3,174 1,504 8,037 6,491 2,940 1,730 8,342 6,668 3,172 1,940 8,791 7,036 3,258 2,001 9,320 7,488 3,563 2,095 2,143 2,193 2,192 2,285 2,362 2,470 9,882 10,470 11,045 11,608 12,150 12,705 13,255 7,949 8,437 8,908 9,366 9,808 10,255 10,695 3,768 4,029 4,256 4,498 4,725 4,958 5,196 Consumer Price Index (all urban): 3 Level (1982-84 = 100) ��������� 207.3 Percent change, Q4/Q4 ������� 4.0 Percent change, year/year ��� 2.9 215.2 1.5 3.8 213.8 0.5 –0.7 216.9 1.4 1.4 220.2 1.7 1.5 224.4 2.0 1.9 228.9 2.0 2.0 233.5 2.0 2.0 238.1 2.0 2.0 243.1 2.1 2.1 248.2 2.1 2.1 253.4 2.1 2.1 258.8 2.1 2.1 6.9 5.8 10.0 9.3 9.7 9.8 8.0 8.6 7.5 7.7 6.5 6.8 5.7 5.9 5.5 5.6 5.4 5.5 5.3 5.3 5.3 5.3 5.2 5.2 3.5 3.5 3.4 2.9 2.9 2.0 NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA Employee Compensation ���� Wages and salaries ������������� Other taxable income 2 �������� Unemployment rate, civilian, percent: Fourth quarter level ����������� 4.8 Annual average ������������������� 4.6 Federal pay raises, January, percent: Military 4 ������������������������������ Civilian 5 ������������������������������� 2.7 2.2 Interest rates, percent: 91-day Treasury bills 6 ��������� 4.4 1.4 0.2 1.3 2.6 3.8 4.0 4.0 4.0 4.0 4.0 4.0 4.0 10-year Treasury notes ������� 4.6 3.7 3.6 4.5 4.9 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 NA = Not Available; Q4/Q4 = fourth quarter over fourth quarter. 1 Based on information available as of early June 2009. 2 Rent, interest, dividend, and proprietors’ income components of personal income. 3 Seasonally adjusted CPI for all urban consumers. 4 Percentages apply to basic pay only; percentages to be proposed for years after 2010 have not yet been determined. 5 Overall average increase, including locality pay adjustments. Percentages to be proposed for years after 2010 have not yet been determined. 6 Average rate, secondary market (bank discount basis). 12 MID-SESSION REVIEW Table 2a. ECONOMIC ASSUMPTIONS ADJUSTED FOR NIPA REVISIONS 1 (Calendar years; dollar amounts in billions) Actual 2007 2008 Projections 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Gross Domestic Product (GDP): Levels, dollar amounts in billions: Current dollars ������������������� 14,078 14,441 14,210 14,680 15,433 16,361 17,357 18,381 19,378 20,352 21,311 22,268 23,245 Constant (2005) dollars ������ 13,254 13,312 12,892 13,148 13,651 14,238 14,850 15,461 16,021 16,535 17,006 17,455 17,898 Price index (2005 = 100) ������ 106.2 108.5 110.2 111.6 113.0 114.8 116.8 118.8 120.9 123.0 125.2 127.5 129.8 Percent change, Q4/Q4: Current dollars ������������������� 5.3 0.1 –0.2 4.1 5.8 6.1 6.1 5.8 5.2 4.9 4.6 4.5 4.3 Constant (2005) dollars ������ 2.5 –1.9 –1.7 2.9 4.3 4.3 4.3 4.0 3.4 3.1 2.7 2.6 2.5 Price index (2005 = 100) ����� 2.7 1.9 1.4 1.2 1.4 1.7 1.7 1.7 1.7 1.8 1.8 1.8 1.8 Percent change, year over year: Current dollars ������������������� 5.1 2.6 –1.6 3.3 5.1 6.0 6.1 5.9 5.4 5.0 4.7 4.5 4.4 Constant (2005) dollars ������ 2.1 0.4 –3.2 2.0 3.8 4.3 4.3 4.1 3.6 3.2 2.8 2.6 2.5 Price index (2005 = 100) ����� 2.9 2.1 1.5 1.3 1.3 1.6 1.7 1.7 1.7 1.8 1.8 1.8 1.8 Incomes, billions of current dollars: Corporate profits before tax ��� 1,774 Employee Compensation ������ Wages and salaries ������������� 7,856 6,409 1,463 8,037 6,546 1,378 8,021 6,489 1,585 8,326 6,666 1,777 8,774 7,034 1,832 9,303 7,485 1,919 1,963 2,008 2,008 2,093 2,163 2,262 9,863 10,450 11,024 11,586 12,127 12,680 13,229 7,947 8,434 8,905 9,363 9,805 10,252 10,691 Other taxable income 2 �������� 3,273 3,311 3,130 3,382 3,474 3,804 4,027 4,309 4,551 4,810 5,053 5,301 5,556 After the forecast was completed, the Bureau of Economic Analysis released a comprehensive benchmark revision to the National Income and Product Accounts. Such revisions to the historical data generally occur every five years and include conceptual and classification changes as well as simple data updates based on more detailed information. Table 2a shows how the economic assumptions would change using the revised levels for GDP and its components. 2 Rent, interest, dividend, and proprietors’ income components of personal income. 1 The other main measure of inflation is the chain-type GDP price index. It is projected to rise by 1.6 percent between 2008:Q4 and 2009:Q4, and, following a two-year decline in 2010-2011, to increase in 2012, and eventually to return to a rate of 1.8 percent per year. Interest Rates: The projections for interest rates are based on financial market data and market expectations at the time that the forecast was developed. The three-month Treasury bill rate is expected to average only 0.2 percent in 2009 and then to rise steadily, reaching 4.0 percent by 2013. The yield on the 10-year Treasury note is projected to average 3.6 percent in 2009 and then to rise to 5.2 percent by 2012. Projected real interest rates are assumed to be close to their historical averages in the long run. Incomes and Income Shares: Labor compensation—consisting of wages and salaries and employee fringe benefits such as employer- provided insurance and pensions—is currently 56.9 percent of GDP. It is projected to return gradually over the next six years to its historical average of around 57.4 percent of GDP. The share of corporate profits, which has been temporarily reduced by the recession, is projected to rise during the early stages of recovery but then eventually to decline. The wage share in GDP is also projected to rise from its recent low level, but by less than the increase in total compensation because employee benefits are expected to increase further, holding down the expected rise in wages and salaries. A major health care reform could lead to a reduction in the growth rate of employer-paid health insurance premiums and allow a greater increase in wages and salaries. FORECAST COMPARISONS Table 3 compares the MSR economic assumptions with those for the 2010 Budget and with recent projections by CBO and the Blue Chip Consensus. 13 ECONOMIC ASSUMPTIONS All of these forecasts predict that the economy will begin to recover from the 2008-2009 recession before the end of 2009. The Administration forecasts that real GDP will decline 1.5 percent in 2009 (fourth quarter over fourth quarter). This is the same as CBO’s projection but is a larger reduction than the –1.1 percent in the July Blue Chip Consensus forecast. For 2010, the Administration forecasts real GDP growth of 2.9 percent (fourth quarter over fourth quarter), which is below the CBO forecast of 4.1 percent and similar to the Blue Chip forecast of 2.7 percent. For unemployment, the Administration forecasts an average annual rate of 9.3 percent in 2009 and 9.8 percent in 2010. This is nearly identical to the Blue Chip forecast and notably higher than CBO’s March forecast. Table 3. COMPARISON OF ECONOMIC ASSUMPTIONS (Calendar years; dollar amounts in billions) 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 14,265 14,281 14,257 14,263 14,122 14,291 14,047 14,080 1.1 1.3 1.1 1.1 –2.8 –1.2 –3.0 –2.6 2.0 3.2 2.9 2.0 3.8 4.0 4.0 NA 4.3 4.6 4.1 NA 4.3 4.2 4.0 NA 4.1 2.9 3.5 NA 3.6 2.6 2.7 NA 3.2 2.6 2.5 NA 2.8 2.6 2.4 NA 2.6 2.6 2.3 NA 2.5 2.6 2.2 NA –0.8 –0.2 –0.9 –0.8 –1.5 0.3 –1.5 –1.1 2.9 3.5 4.1 2.7 4.3 4.4 4.1 NA 4.3 4.6 4.1 NA 4.3 3.8 3.9 NA 4.0 2.6 3.2 NA 3.4 2.6 2.6 NA 3.1 2.6 2.4 NA 2.7 2.6 2.3 NA 2.6 2.6 2.2 NA 2.5 2.6 2.2 NA 2.2 2.2 2.2 2.2 1.8 1.2 1.5 1.7 1.3 1.1 0.8 1.4 1.3 1.5 0.5 NA 1.6 1.7 0.6 NA 1.7 1.8 0.6 NA 1.7 1.8 0.9 NA 1.7 1.8 1.4 NA 1.8 1.8 1.5 NA 1.8 1.8 1.6 NA 1.8 1.8 1.6 NA 1.8 1.8 1.6 NA 3.8 3.8 3.8 3.8 –0.7 –0.6 –0.7 –0.6 1.4 1.6 1.4 1.8 1.5 1.8 1.2 NA 1.9 2.0 1.0 NA 2.0 2.1 1.0 NA 2.0 2.1 1.2 NA 2.0 2.1 1.6 NA 2.1 2.1 1.9 NA 2.1 2.1 1.9 NA 2.1 2.1 1.9 NA 2.1 2.1 1.9 NA 5.8 5.8 9.3 8.1 9.8 7.9 8.6 7.1 7.7 6.0 6.8 5.2 5.9 5.0 5.6 5.0 5.5 5.0 5.3 5.0 5.3 5.0 5.2 5.0 5.8 5.8 8.8 9.3 9.0 9.9 7.7 NA 6.6 NA 5.6 NA 5.1 NA 4.9 NA 4.8 NA 4.8 NA 4.8 NA 4.8 NA Nominal GDP: MSR ������������������������������������������������������ Budget �������������������������������������������������� CBO 1 ����������������������������������������������������� Blue Chip ���������������������������������������������� 14,588 15,337 16,259 17,249 18,267 19,258 20,225 21,178 22,130 23,101 14,902 15,728 16,731 17,739 18,588 19,415 20,279 21,181 22,124 23,108 14,576 15,233 15,950 16,684 17,421 18,138 18,873 19,624 20,381 21,164 14,524 NA NA NA NA NA NA NA NA NA Real GDP (year/year): MSR ������������������������������������������������������ Budget �������������������������������������������������� CBO 1 ����������������������������������������������������� Blue Chip ���������������������������������������������� Real GDP (Q4/Q4): MSR ������������������������������������������������������ Budget �������������������������������������������������� CBO 1 ����������������������������������������������������� Blue Chip ���������������������������������������������� GDP Price Index: 2 MSR ������������������������������������������������������ Budget �������������������������������������������������� CBO 1 ����������������������������������������������������� Blue Chip ���������������������������������������������� Consumer Price Index (CPI-U): 2 MSR ������������������������������������������������������ Budget �������������������������������������������������� CBO 1 ����������������������������������������������������� Blue Chip ���������������������������������������������� Unemployment Rate: 3 MSR ������������������������������������������������������ Budget �������������������������������������������������� CBO1 ����������������������������������������������������� Blue Chip ���������������������������������������������� 14 MID-SESSION REVIEW Table 3. COMPARISON OF ECONOMIC ASSUMPTIONS—Continued (Calendar years; dollar amounts in billions) 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Interest Rates: 3 91-Day Treasury Bills: MSR ������������������������������������������� Budget ���������������������������������������� CBO 1 ������������������������������������������ Blue Chip ����������������������������������� 1.4 1.4 1.4 1.4 0.2 0.2 0.3 0.2 1.3 1.6 0.9 0.8 2.6 3.4 1.8 NA 3.8 3.9 3.0 NA 4.0 4.0 3.9 NA 4.0 4.0 4.4 NA 4.0 4.0 4.7 NA 4.0 4.0 4.7 NA 4.0 4.0 4.8 NA 4.0 4.0 4.8 NA 4.0 4.0 4.8 NA 3.7 3.7 3.7 3.6 2.8 2.9 4.5 4.0 3.4 4.9 4.8 4.0 5.2 5.1 4.6 5.2 5.2 5.0 5.2 5.2 5.3 5.2 5.2 5.4 5.2 5.2 5.5 5.2 5.2 5.6 5.2 5.2 5.6 5.2 5.2 5.6 3.7 3.4 4.1 NA NA NA NA NA NA NA NA NA 10-Year Treasury Notes: MSR ������������������������������������������� Budget ���������������������������������������� CBO 1 ������������������������������������������ Blue Chip ����������������������������������� MSR = Mid-Session Review; CBO = Congressional Budget Office (March 2009); Blue Chip = July Blue Chip Consensus forecast. Note: GDP estimates are not adjusted for July 31, 2009 comprehensive National Income and Product Account revisions. Sources: Administration; CBO, A Preliminary Analysis of the President’s Budget and an Update of CBO’s Budget and Economic Outlook, March 2009; July 2009 Blue Chip Economic Indicators, Aspen Publishers, Inc. 1 CBO economic projections include the effects of the American Recovery and Reinvestment Act of 2009, but not the 2010 Budget proposals. 2 Year-over-year percent change. 3 Annual averages, percent; 91-day Treasury bills on discount basis. RECEIPTS The Mid-Session Review estimates of receipts are less than the May estimates by $83 billion in 2009, $68 billion in 2010, and between $31 billion and $144 billion in each subsequent year, for a reduction of $791 billion over the 10-year budget horizon, 2010 through 2019. The effects of revised economic assumptions on collections under current law account for $26 billion of the reduction in 2009, $63 billion of the reduction in 2010, and $691 billion or 87 percent of the reduction over the 10-year budget horizon. Technical revisions attributable to new tax data and collections experience account for $57 billion of the reduction in 2009, $7 billion of the reduction in 2010, and $107 billion of the reduction over 10 years. The reductions in estimates of receipts under current law are partially offset by revisions in the estimates of the Administration’s proposals, which increase receipts by a net $8 billion over 10 years. Revisions in the economic forecast have the greatest effect on individual and corporation income taxes. Reductions in wages and salaries and other sources of taxable personal income reduce individual income taxes under current law by $21 billion in 2009, $46 billion in 2010, and a net $363 billion over 10 years. Reductions in gross domestic product (GDP) and other economic measures that affect the profitability of corporations reduce corporation income taxes by $1 billion in 2009, $2 billion in 2010, and $9 billion to $25 billion in each subsequent year, for a net reduction of $178 billion over 10 years. The revised economic forecast, specifically reductions in the forecast of imports, also has a significant impact on customs duties, reducing collections by $1 billion in 2009, $4 billion in 2010, and $131 billion over 10 years. Social insurance and retirement receipts, which include Social Security and Medicare payroll taxes, unemployment insurance receipts, and railroad retirement and other retirement receipts, decline by $5 billion to $20 billion in each year, 2009 through 2014, and increase by $3 billion to $13 billion in each subsequent year, for a net reduction of $27 billion over 10 years. Reductions in wages and salaries and in proprietor’s income, the tax base for Social Security and Medicare payroll taxes, reduce these receipts in each year. Beginning in 2015, these reductions in payroll taxes are more than offset by increases in unemployment receipts, attributable to increases in State unemployment insurance tax rates and to reductions in credits against the Federal unemployment insurance tax, both reflecting the need to fund increased benefits as unemployment rises. The net increase in other sources of receipts of $2 billion in 2009, $3 billion in 2010, and $7 billion over 10 years, reflects increases in deposits of earnings of the Federal Reserve System, attributable to higher interest rates, that more than offset reductions in excise taxes and estate and gift taxes. Technical reestimates of receipts under current law have the largest effect on corporation income taxes, reducing collections by $25 billion in 2009, $13 billion in 2010, and smaller amounts in each subsequent year, for a net reduction of $71 billion over the 10 years, 2010 through 2019. These revisions in corporation income taxes reflect new tax and collections data that were not available at the time the May estimates were prepared. Technical reestimates reduce individual income taxes by $28 billion in 2009, increase receipts by $19 billion in 2010, and reduce receipts by a net $20 billion over 10 years. Reductions in the estimate of 2009 tax liability and revisions in the timing of collections, based on more recent collections data, are in large part responsible for the reduction in individual income taxes of $28 billion in 2009 and the partially offsetting increase of $19 billion in 2010. Revisions in the individual income tax model, based primarily on updated tax data for prior years, are in large part responsible for the technical revisions in individual income taxes in each subsequent year. Technical revisions, attributable mostly to more recent taxable wage data from employer returns, reduce social insurance and retirement receipts by $3 billion in 2009, $16 billion in 2010, and $59 billion over 10 years. The downward technical revisions in income and payroll taxes are partially offset by net increases in estate and gift taxes and other sources of receipts. The increases in estate and gift taxes reflect increases in the estimated value of estates, attributable in large part to stock market 15 16 MID-SESSION REVIEW Table 4. CHANGE IN RECEIPTS (In billions of dollars) 2010– 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010– 2014 2019 May estimate ��������������������������������������������������� 2,157 2,333 2,685 3,075 3,305 3,480 3,662 3,841 4,021 4,218 4,429 14,879 35,049 Changes in current law receipts: Due to revised economic assumptions: Individual income taxes ������������������� –21 –46 –65 –72 –72 –55 –33 –15 –5 1 –1 –310 –363 Corporation income taxes ���������������� –1 –2 –9 –17 –25 –25 –21 –19 –18 –20 –21 –79 –178 Social insurance and retirement ����� –5 –14 –16 –17 –20 –9 3 8 13 13 13 –77 –27 Customs duties ��������������������������������� –1 –4 –7 –11 –13 –15 –16 –17 –17 –16 –15 –50 –131 Other ������������������������������������������������� 2 3 * * 1 * * * 1 1 1 4 7 Total revised economic assumptions �������������������������������� –26 Due to technical reestimates: Individual income taxes ������������������� –28 Corporation income taxes ���������������� –25 Social insurance and retirement ����� –3 Estate and gift taxes ������������������������ ......... Other ������������������������������������������������� –* Total technical reestimates ������������ –57 Changes in estimates of proposals: Provisions continued in current policy baseline ��������������������������������������������� –* Reform U.S. international tax system � ......... Upper-income tax provisions ��������������� * Other provisions ����������������������������������� –* Total changes in estimates of proposals ��������������������������������������� –* Total changes in receipts ��������� –83 –63 –97 –117 –131 –104 –67 –43 –25 –22 –23 –511 –691 19 –13 –16 1 1 –4 –4 –6 –1 4 –7 –5 –6 3 2 –7 –5 –6 4 1 –7 –4 –6 4 * –6 –6 –7 4 * –5 –7 –* 5 –* –3 –8 –2 5 –1 –1 –9 –2 5 –1 1 –9 –8 6 –1 –6 –31 –39 12 8 –20 –71 –59 38 5 –7 –10 –12 –14 –12 –15 –8 –9 –8 –12 –56 –107 1 –* 1 –* 16 –4 1 * 11 –6 –7 1 12 –6 –7 1 11 –6 –6 2 10 –6 –4 2 8 –7 –3 2 7 –7 –3 2 7 –8 –3 2 7 –8 –3 * 51 –22 –18 4 90 –59 –36 12 13 –1 * 1 –94 –130 –144 –116 1 –81 –* –51 –2 –36 –2 –31 –4 –39 15 –553 8 –791 2 –68 Mid-Session estimate �������������������������������������� 2,074 2,264 2,591 2,945 3,161 3,365 3,582 3,791 3,985 4,186 4,389 14,326 34,259 * $500 million or less. gains since the May estimates were prepared, which are treated as a technical rather than an economic change. Revisions in the estimates of the Administration’s proposals have a minimal effect on receipts in 2009, increase receipts by $2 billion in 2010, and increase receipts by a net $8 billion over the 10-year budget horizon. This increase includes a $90 billion reduction in the estimated cost of permanently extending alternative minimum tax relief, the 2001 and 2003 tax cuts, and estate and gift taxes at parameters in effect for calendar year 2009. The lower cost of extending these temporary tax provisions, which are reflected in the Administration’s baseline projection of current policy, is due in large part to reductions in the economic forecast for wages and salaries and other sources of taxable income. The reduction in the estimated cost of these provisions is largely offset by an $82 billion reduction in the estimated receipt gain from the Administration’s other proposals. This $82 billion reduction is the net effect of reductions in the estimated receipt gain from the proposed reforms of the U.S. international tax system and the proposed increases in taxes on higher-income individuals, and reductions in the cost of the proposed tax reductions for individuals and businesses. Revisions in the estimated receipt gain from the proposed reforms of the U.S. international tax system, attributable primarily to technical revisions in the behavioral response of taxpayers to these changes based on more recent information, reduce receipts by $59 billion over 10 years. Reductions in wages and salaries and other sources of taxable income, particularly dividends, are in large part responsible for the $36 billion reduction in the estimated receipt gain from the proposed increases in taxes on upper-income RECEIPTS taxpayers over 10 years. Reductions in the cost of the proposed tax cuts for individuals and businesses and other initiatives, attributable in large part to reductions in incomes, increase receipts by $12 billion over 10 years. In addition to changes in receipts, the MidSession Review also reflects changes in outlays related to refundable tax credits. These tax credits are classified as outlays to the extent that refunds are in excess of a taxpayer’s tax liability. Seven refundable tax credits, including the Making Work Pay Tax Credit, Child Tax Credit, and Earned Income Tax 17 Credit, combine to have $8 billion in higher outlays in 2009 than the Budget estimated. Over the 10-year budget window, estimating changes increase outlays for refundable tax credits by $34 billion. These changes include revisions in estimates under current law and revisions in estimates of the Administration’s proposals for these credits. The main drivers of the increase are the economic changes resulting from a weakened economy and job market. These decrease wages and increase the number of people who qualify under the income thresholds for these programs. EXPENDITURES Outlays for fiscal year 2009 are now estimated to be $3,653 billion, a $345 billion decrease from the May Budget estimate, due largely to removal of the May Budget’s placeholder for further financial stabilization efforts and to lower projected outlays for deposit insurance. Relative to the May Budget, total outlays have increased by $175 billion in 2010 and $1,152 billion over 10 years. These changes are largely the effect of technical and economic revisions in estimates of major programs since the May Budget release. However, $700 billion of the $1,152 billion increase in outlays is produced by higher interest payments, which themselves result in part from lower receipts. POLICY CHANGES Changes that have resulted from the enactment of legislation and changes in policy since the release of the Budget decrease outlays by $228 billion in 2009 and increase outlays by $39 billion in 2010. Over the 10-year period 2010 through 2019, policy changes increase outlays by $225 billion. The major pieces of legislation that Congress has enacted since the transmittal of the Budget are the 2009 Supplemental Appropriations Act and the Helping Families Save Their Homes Act of 2009. The primary policy change since the Budget is the removal of the placeholder for further financial stabilization efforts. 2009 Supplemental Appropriations Act. The Supplemental Appropriations Act provides discretionary appropriations for overseas contingency operations, largely as proposed in the Budget, along with funding for the International Monetary Fund (IMF), additional emergency funding related to the H1N1 influenza virus, and other items. Relative to the original Budget proposal, the supplemental increases spending by $5 billion in 2009, $8 billion in 2010, and $12 billion over 2010 through 2019. Administration estimates of the Act largely mirror those of the Congressional Budget Office (CBO), except that the Administration scores the subsidy costs of the IMF provisions to be $444 million in budget authority, whereas CBO scores them at $5 billion. Helping Families Save Their Homes Act of 2009. The Helping Families Save Their Homes Act expands the Federal Housing Administration’s foreclosure relief authorities, extends higher limits on deposit insurance, and increases the borrowing authority for the Federal Deposit Insurance Corporation and National Credit Union Administration, allowing those agencies to avoid near-term increases in deposit insurance premiums in the current financial environment. On net, the Act decreases outlays relative to the Budget by $8 billion in 2009 and $9 billion in 2010. Over 2010 through 2019, it increases outlays by $5 billion. Placeholder for further financial stabilization efforts. The Mid-Session Review no longer reflects a placeholder for further financial stabilization efforts. As a result of the completion of the Supervisory Capital Assessment Program and the Administration’s other efforts under the Financial Stability Plan, the substantial amounts of private capital that financial institutions have raised, and the repayments to the Government of $70 billion in investments by the Troubled Asset Relief Program (TARP) since the Budget was issued, it is now significantly less likely that additional funding authority for financial stabilization will be needed. Removing the placeholder has the direct effect of reducing 2009 outlays by $250 billion relative to the Budget. The indirect effects of removing the placeholder on the non-budgetary credit financing accounts reduce interest received from these financing accounts, resulting in an offsetting $25 billion increase in net interest outlays in 2009 and a total 10-year increase of $230 billion. ESTIMATING CHANGES Estimating changes are due to factors other than enacted legislation or changes in policy, including changes in economic assumptions, discussed earlier in this Review, and changes in technical factors. Economic and technical changes reduce estimated outlays for 2009 by $117 billion relative to the Budget estimate, and increase estimated outlays for 2010 by $136 billion. Over the period 2010 through 2019, outlays are $928 billion above the Budget for economic and technical reasons. 19 20 MID-SESSION REVIEW Discretionary appropriations. Outlays for discretionary appropriations decrease by $33 billion in 2009 and increase by $11 billion in 2010 relative to the Budget as a result of technical revisions. These changes largely reflect slower spending in 2009 and higher estimated spending in 2010 of regular and emergency appropriations in the Department of Defense. The Departments of Health and Human Services, State, Homeland Security, and Housing and Urban Development comprise most of the remaining decrease in 2009 and increase in 2010 discretionary spending. The Department of Energy also contributes to the decrease in 2009, while the Department of Education contributes to the increase in 2010. Social Security. Estimating changes reduce outlays for Social Security by $37 billion over the next 10 years. The decrease largely results from lower projections for Cost of Living Adjustments (COLAs) but is offset by recent program experience, anticipated increases in the number of beneficiaries, and updated de mographic assumptions in the 2009 Trustees’ Report resulting in higher average benefit amounts. Table 5. CHANGE IN OUTLAYS (in billions of dollars) 20102009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20102014 2019 May estimate ����������������������������������������������������� 3,998 3,591 3,615 3,633 3,817 4,016 4,190 4,487 4,696 4,905 5,207 18,672 42,157 Changes due to policy: 2009 Supplemental Appropriations Act ��� 5 8 2 1 * * * * * * * 11 12 Financial stabilization reserve: Direct outlays ������������������������������������� –250 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... Credit interest effects ������������������������ 25 42 34 27 23 22 20 18 17 14 12 148 230 Other legislation and policy changes ����� –8 –9 –4 –1 3 8 15 * * * * –3 12 Debt service ��������������������������������������������� –* –2 –4 –5 –5 –4 –3 –2 –2 –1 –* –21 –29 Subtotal, policy ���������������������������������������������� –228 39 28 22 21 26 32 16 15 14 12 135 225 Changes due to reestimates: Discretionary appropriations: Defense (050) ��������������������������������������� –25 5 9 1 * * * * * * * 15 18 Non-defense ����������������������������������������� –8 6 2 2 –2 –* –* –* –* –1 –* 8 6 Social Security ���������������������������������������� 2 6 7 4 1 –2 –6 –9 –11 –12 –13 15 –37 Unemployment compensation ���������������� 17 54 31 20 20 15 10 8 6 5 3 139 172 Supplemental Nutrition Assistance Program ���������������������������������������������� 1 2 2 2 2 2 –* –3 –4 –5 –5 9 –8 Pell Grants ���������������������������������������������� ......... 1 3 3 3 3 3 3 3 3 3 12 27 Medicaid �������������������������������������������������� –4 –5 –2 * 3 5 7 9 11 12 12 1 52 Title 48 energy grants ���������������������������� * 3 4 5 3 * ......... ......... ......... ......... ......... 15 15 Troubled Asset Relief Program �������������� –24 62 1 –1 –2 –* –* * * ......... ......... 60 60 Deposit insurance ����������������������������������� –78 –19 10 23 21 19 17 1 * * * 53 73 Refundable tax credits ��������������������������� 8 7 2 5 5 5 3 2 2 2 2 24 34 Other programs �������������������������������������� –11 –5 –1 5 6 6 5 2 4 –2 –1 11 19 Net interest1 �������������������������������������������� 5 21 3 17 38 50 59 68 74 80 87 129 497 Subtotal, reestimates ������������������������������������ –117 136 72 86 97 101 98 83 84 82 88 493 928 Total change in outlays ������������������������������������� –345 175 100 108 118 127 131 99 99 96 100 628 1,152 Mid-Session estimate ���������������������������������������� 3,653 3,766 3,715 3,741 3,936 4,143 4,321 4,586 4,795 5,001 5,307 19,300 43,309 * $500 million or less. 1 Includes debt service on all reestimates. EXPENDITURES Unemployment compensation. Changes in economic and technical assumptions increase outlays for unemployment benefits by $17 billion in 2009 and $172 billion over the next 10 years. This increase largely results from higher unemployment rates than were assumed in the Budget and also includes the effect of higher claims levels and the extension of benefits in 17 States that have enacted the Total Unemployment Rate trigger. SNAP. Outlays for the Supplemental Nutrition Assistance Program (SNAP), formerly called Food Stamps, are estimated to decrease by $8 billion over the next 10 years due to economic and technical factors. Technical changes increase participation assumptions by about 2 million individuals in 2010 and 2011. This increased participation drives up SNAP program costs in the short term. Projected inflation in food prices is now significantly lower than expected in the May Budget, and this would normally create an offsetting decrease in SNAP outlays. However, the American Recovery and Reinvestment Act (ARRA) provided a special increase in benefit levels above the normal inflation-indexed benefit increase. In the out-years, after inflation increases the normal benefit level above the level provided in ARRA, the slower-thanexpected inflation reduces SNAP outlays relative to the Budget. Medicaid. Projected 2009 Federal outlays for Medicaid have decreased by $4 billion since the Budget, but over 2010 to 2019, total outlays are now expected to be $52 billion higher than in the Budget due to estimating changes. The overall increase over the 10year period is attributable largely to technical changes, including updated utilization projections. In addition, updated economic assumptions of faster growth in wages and hospital prices in later years contribute to the increase in the estimate of Medicaid outlays. Over the 10-year period, technical changes to Recovery Act Medicaid are attributable to updated estimates of State administrative costs under Sec. 4201. Deposit insurance. Federal Deposit Insurance Corporation (FDIC) outlays are $78 billion lower in 2009 than in the May Budget. However, over the following 10 years, net outlays are expected to increase by $73 billion, for a net outlay decrease over 11 years of $5 21 billion. The near-term decreases are mostly due to improved conditions in the banking industry since the May Budget, resulting in fewer expected resolutions of failed banks. In addition, the FDIC has increased its use of loss-sharing agreements instead of deposit payoffs when resolving insolvent institutions. Loss-sharing agreements lower upfront payments by the FDIC, as partnering institutions take over the insolvent banks while the FDIC covers a share of losses of the partnering institution over time. As a result of these lower upfront payments due to fewer bank liquidations and to loss-sharing agreements, the FDIC is now expected to require lower premium levels in later years to maintain balances in the Deposit Insurance Fund. The lower premium collections increase net FDIC outlays from 2011 through 2015 relative to the May Budget. Pell Grants. Outlays under the Administration’s proposal for Pell Grants are now estimated to increase by $27 billion over 2010 to 2019. This increase is driven almost entirely by technical revisions to reflect historic increases in the demand for Pell Grants as more individuals choose to go to college in a weakened labor market. Troubled Asset Relief Program. Relative to the May Budget, outlays from TARP are now expected to decrease by $24 billion in 2009, but rise by $62 billion in 2010 due to technical revisions. The changes are primarily a result of incorporating actual subsidy rates for TARP activity to date as well as new estimates of expected TARP obligations for this fiscal year and next. The estimates reflect the reallocation of $77 billion in TARP repayments within the program’s overall $700 billion limit on holdings of troubled assets, up from $25 billion in reallocations estimated in the May Budget. Title 48 energy grants. Outlays for Title 48 grants in lieu of energy tax credits, enacted in ARRA, increase relative to the May Budget by $15 billion over the next 10 years due to technical revisions to reflect higher-thanexpected demand for this Recovery program. Nearly all of these changes in estimates occur from 2010 to 2013. Net interest. Excluding the debt service associated with policy changes and the credit 22 interest effects of removing the financial stabilization reserve, outlays for net interest are projected to increase by $497 billion over 10 years. Higher debt service costs related to estimating changes in receipts and outlays MID-SESSION REVIEW contribute to a large share of the increase in projected net interest. Interest outlays also increase due to higher interest rates than in the May Budget economic forecast. SUMMARY TABLES (In billions of dollars and as a percent of GDP) Totals 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20102014 20102019 Budget Totals in Billions of Dollars: Receipts ����������������������������������������������������������� Outlays ������������������������������������������������������������ Deficit �������������������������������������������������������� 2,524 2,983 459 2,074 3,653 1,580 2,264 3,766 1,502 Debt held by the public ����������������������������������� Debt net of financial assets ������������������������������� 5,803 5,297 7,856 6,770 9,575 10,590 11,443 12,281 13,126 13,927 14,782 15,651 16,523 17,493 8,230 9,330 10,125 10,899 11,677 12,415 13,210 14,019 14,834 15,751 2,591 3,715 1,123 2,945 3,741 796 3,161 3,936 775 3,365 4,143 778 3,582 4,321 739 3,791 4,586 795 3,985 4,795 810 4,186 5,001 815 SUMMARY TABLES Table S–1. BUDGET TOTALS 4,389 14,326 34,259 5,307 19,300 43,309 917 4,974 9,051 Gross domestic product (GDP) ������������������������������� 14,222 14,116 14,442 15,123 16,021 16,997 18,011 19,016 19,983 20,944 21,890 22,857 Budget Totals as a Percent of GDP: Receipts ����������������������������������������������������������� Outlays ������������������������������������������������������������ Deficit �������������������������������������������������������� 17.7% 21.0% 3.2% 14.7% 25.9% 11.2% 15.7% 26.1% 10.4% 17.1% 24.6% 7.4% 18.4% 23.3% 5.0% 18.6% 23.2% 4.6% 18.7% 23.0% 4.3% 18.8% 22.7% 3.9% 19.0% 22.9% 4.0% 19.0% 22.9% 3.9% 19.1% 22.8% 3.7% 19.2% 23.2% 4.0% Debt held by the public ����������������������������������� Debt net of financial assets ������������������������������� 40.8% 37.2% 55.7% 48.0% 66.3% 57.0% 70.0% 61.7% 71.4% 63.2% 72.3% 64.1% 72.9% 64.8% 73.2% 65.3% 74.0% 66.1% 74.7% 66.9% 75.5% 67.8% 76.5% 68.9% 17.7% 24.0% 6.3% 18.4% 23.5% 5.1% 25 26 Table S–2. EFFECT OF BUDGET PROPOSALS ON PROJECTED DEFICITS (Deficit increases (+) or decreases (–) in billions of dollars) Totals Projected deficits in the baseline projection of current policy1 ���������������������������������������������������������� Percent of GDP ������������������������������������������������������������ Reserve funds: Health reform: Health savings 2 ����������������������������������������������������� Limit the rate at which itemized deductions reduce tax liability to 28 percent 2 �������������������� Reduce the tax gap and make other reforms 2 ������ Net total ���������������������������������������������������������������� Climate revenues: Dedicated to climate policy (clean energy technologies) ����������������������������������������������������� Dedicated to Making Work Pay ���������������������������� Tax cuts for families and businesses 3, 4 �������������������������� Other revenue changes and loophole closers ����������������� Proposed changes in mandatory programs and user fees5 ���� Proposed changes in appropriated (“discretionary”) programs: Cost of overseas contingency operations �������������������� Defense (050) excluding overseas contingency operations ���������������������������������������������������������������� Non-defense discretionary ������������������������������������������ Subtotal, appropriated programs ������������������������� Subtotal, policy proposals ������������������������������������� Credit and other indirect interest effects ���������������������� Debt service ��������������������������������������������������������������������� Total reduction in projected deficits ������������������ Resulting deficits in 2010 Mid-Session Review ���� Percent of GDP ������������������������������������������������������������ 2012 2013 2014 2015 2016 2017 2018 2019 2010– 2019 2009 2010 1,552 11.0% 1,449 10.0% 1,173 7.8% 939 5.9% 938 5.5% 955 5.3% 925 4.9% 988 4.9% 1,013 4.8% 1,031 4.7% 1,145 5.0% 5,454 6.9% 10,555 5.9% ......... –3 –11 –27 –38 –73 –65 –81 –93 –107 –123 –153 –622 ......... ......... ......... ......... –3 ......... –9 –4 ......... –24 –5 ......... –27 –6 ......... –30 –6 ......... –32 –6 ......... –35 –6 ......... –37 –6 ......... –40 –7 ......... –42 –7 ......... –89 –24 ......... –275 –58 ......... ......... ......... 28 ......... * ......... ......... 45 –3 –3 ......... ......... 40 –17 1 –15 –62 78 –27 –5 –15 –63 83 –32 –8 –15 –63 88 –34 –6 –15 –63 92 –35 –4 –15 –63 96 –36 –1 –15 –64 99 –36 2 –15 –64 102 –37 5 –15 –65 105 –38 8 –45 –187 333 –113 –20 –120 –507 827 –295 –10 ......... –12 –60 –92 –101 –106 –109 –112 –115 –118 –121 –370 –944 ......... ......... ......... 28 10 17 15 54 8 7 –44 –20 4 19 –68 –100 –1 29 –72 –106 –3 37 –72 –102 –4 43 –70 –96 –5 47 –70 –89 –6 49 –72 –85 –7 51 –74 –83 –8 53 –76 –80 18 110 –242 –275 –12 352 –604 –709 ......... * * 28 –2 –* 1 53 –29 –2 1 –50 –39 –2 –2 –143 –49 –* –8 –163 –59 1 –16 –177 –68 3 –25 –186 –74 4 –34 –193 –80 7 –44 –203 –87 9 –55 –216 –93 13 –67 –227 –178 –3 –24 –480 –580 33 –248 –1,505 1,580 11.2% 1,502 10.4% 1,123 7.4% 796 5.0% 775 4.6% 778 4.3% 739 3.9% 795 4.0% 810 3.9% 815 3.7% 917 4.0% 4,974 6.3% 9,051 5.1% MID-SESSION REVIEW Upper-income tax provisions dedicated to deficit reduction ������������������������������������������������������������������� 2011 2010– 2014 (Deficit increases (+) or decreases (–) in billions of dollars) Totals 2009 2010 2011 2012 Memorandum, proposed changes in appropriated (“discretionary”) budgetary resources: Overseas contingency operations ������������������������������� ......... –18 –101 –103 Defense (050) excluding overseas contingency operations ���������������������������������������������������������������� ......... 11 7 2 Non-defense discretionary ������������������������������������������ ......... 22 24 41 Total, appropriated funding ��������������������������������� ......... 15 –70 –59 2013 2014 2015 2016 2017 2018 2019 2010– 2014 2010– 2019 –106 –109 –112 –114 –117 –120 –123 –437 –1,024 –1 44 –64 –3 48 –64 –3 47 –68 –4 49 –70 –5 49 –73 –6 49 –77 –7 52 –79 17 178 –241 –8 424 –608 SUMMARY TABLES Table S–2. EFFECT OF BUDGET PROPOSALS ON PROJECTED DEFICITS—Continued * $500 million or less. 1 See Tables S-3 and S-7 for information on the baseline projection of current policy. 2 Non-additive. 3 Includes refundable tax credits. 4 Includes the effects of proposed financing system modifications for the Federal Aviation Administration and of continuing certain expiring provisions through calendar year 2010. 5 Includes PAYGO impact of changes in mandatory programs included in appropriations language. 27 28 Table S–3. BASELINE PROJECTION OF CURRENT POLICY BY CATEGORY 1 (In billions of dollars) Totals 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20102014 20102019 Outlays: Appropriated (“discretionary”) programs: Defense (050) including cost of overseas contingency operations ��������������������������������������� Non-defense discretionary ���������������������������� 612 508 1,120 662 584 1,246 717 681 1,397 715 639 1,353 718 607 1,325 732 595 1,326 747 597 1,344 766 608 1,374 784 622 1,407 803 637 1,440 823 652 1,474 843 667 1,509 3,628 3,118 6,746 7,647 6,304 13,950 612 386 201 ......... 411 1,610 253 ......... 2,983 677 425 258 235 636 2,232 173 2 3,653 702 452 285 70 644 2,152 196 8 3,754 729 497 273 11 590 2,100 288 15 3,756 755 507 284 9 499 2,054 392 18 3,788 792 565 307 6 500 2,170 477 20 3,993 837 631 332 6 489 2,295 542 22 4,204 886 650 360 3 489 2,387 603 24 4,389 939 720 389 1 517 2,566 660 26 4,659 997 751 418 * 526 2,693 716 27 4,876 1,060 780 450 ......... 526 2,817 770 29 5,090 1,128 3,814 871 2,652 483 1,481 ......... 102 553 2,722 3,035 10,771 829 1,895 30 83 5,403 19,495 8,825 6,425 3,580 106 5,333 24,269 5,473 220 43,913 1,146 304 904 149 1,026 206 1,155 275 1,306 325 1,418 355 1,537 359 1,657 392 1,771 412 1,885 431 2,001 451 2,114 474 6,443 1,520 15,870 3,680 Deficit ������������������������������������������������������������������ 658 194 40 9 67 29 28 34 17 2,524 459 653 190 40 9 65 26 23 27 16 2,102 1,552 661 189 50 9 69 19 21 39 16 2,305 1,449 699 202 62 8 79 23 22 41 16 2,583 1,173 734 214 72 8 83 24 23 43 17 2,850 939 775 227 76 9 85 26 24 43 17 3,055 938 823 241 78 9 86 27 25 46 17 3,249 955 866 254 79 9 87 29 27 48 18 3,464 925 919 270 77 9 88 31 29 49 18 3,671 988 958 282 76 9 89 33 31 51 18 3,863 1,013 1,003 294 72 9 88 36 34 53 18 4,059 1,031 1,045 307 73 9 89 38 36 55 18 4,258 1,145 3,691 1,074 339 43 403 119 114 211 83 14,041 5,454 8,482 2,481 715 87 844 286 272 468 172 33,357 10,555 On-budget deficit �������������������������������������������������� Off-budget surplus (–) ������������������������������������������ 642 –183 1,684 –133 1,559 –110 1,302 –128 1,085 –147 1,101 –163 1,135 –180 1,112 –188 1,189 –201 1,210 –197 1,225 –194 1,329 –184 6,182 –728 12,247 –1,692 Subtotal, appropriated programs ������������� Mandatory programs: Social Security ����������������������������������������������� Medicare ��������������������������������������������������������� Medicaid ��������������������������������������������������������� Troubled Asset Relief Program (TARP)2 ������� Other mandatory programs �������������������������� Subtotal, mandatory programs �������������������� Net interest ���������������������������������������������������������� Disaster costs3 ������������������������������������������������������� Total outlays �������������������������������������������������� Receipts: Individual income taxes ��������������������������������������� Corporation income taxes ������������������������������������ Social insurance and retirement receipts: Social Security payroll taxes ������������������������� Medicare payroll taxes ���������������������������������� Unemployment insurance ����������������������������� Other retirement ������������������������������������������� MID-SESSION REVIEW Excise taxes ���������������������������������������������������������� Estate and gift taxes �������������������������������������������� Customs duties ����������������������������������������������������� Deposits of earnings, Federal Reserve System ��� Other miscellaneous receipts ������������������������������ Total receipts ������������������������������������������������� (In billions of dollars) Totals 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20102014 20102019 Memorandum, funding (“budgetary resources”) for appropriated programs: Defense (050) including funding for overseas contingency operations ��������������� Non-defense discretionary ���������������������������� Total, appropriated funding ���������������������� 686 695 694 708 725 742 760 778 797 816 836 856 3,629 7,710 533 1,219 818 1,513 551 1,246 562 1,271 575 1,300 589 1,331 602 1,362 616 1,394 631 1,427 646 1,462 661 1,497 677 1,533 2,880 6,509 6,112 13,822 SUMMARY TABLES Table S–3. BASELINE PROJECTION OF CURRENT POLICY BY CATEGORY 1—Continued * $500 million or less. 1 See Table S-7 for information on adjustments to the Budget Enforcement Act (BEA) baseline. 2 Outlays for TARP in 2011 and subsequent years result from obligations for the Home Affordable Modification Program and the Term Asset-Backed Securities Loan Facility incurred through December 31, 2009. 3 These amounts represent the statistical probability of a major disaster requiring Federal assistance for relief and reconstruction. Such assistance might be provided in the form of discretionary or mandatory outlays or tax relief. These amounts are included as outlays for convenience. 29 30 Table S–4. PROPOSED BUDGET BY CATEGORY (In billions of dollars) Totals 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010– 2014 2010– 2019 Outlays: Appropriated (“discretionary”) programs: Defense (050) including cost of overseas contingency operations ��� Non-defense discretionary ���������������� 612 508 1,120 662 584 1,246 714 698 1,412 663 646 1,309 630 626 1,256 630 624 1,254 639 634 1,273 653 651 1,304 667 669 1,336 682 686 1,368 698 702 1,400 714 720 1,434 3,276 6,690 3,228 6,656 6,504 13,346 612 386 201 677 425 258 702 452 284 728 496 273 754 506 284 791 564 306 835 630 332 884 650 359 937 720 389 996 750 418 1,059 780 450 1,127 871 482 3,811 2,648 1,479 ......... 411 1,610 253 ......... 2,983 235 636 2,232 173 2 3,653 70 642 2,150 196 8 3,766 11 595 2,103 288 15 3,715 9 525 2,078 388 18 3,741 6 526 2,193 468 20 3,936 6 518 2,321 527 22 4,143 3 516 2,411 581 24 4,321 1 546 2,592 631 26 4,586 * 557 2,721 678 27 4,795 ......... 559 2,847 725 29 5,001 ......... 588 3,069 774 30 5,307 102 106 2,805 5,570 10,845 24,486 1,868 5,257 83 220 19,300 43,309 Individual income taxes �������������������������� 1,146 Corporation income taxes ����������������������� 304 Social insurance and retirement receipts: Social Security payroll taxes ������������������� 658 Medicare payroll taxes ���������������������� 194 Unemployment insurance ����������������� 40 Other retirement ������������������������������� 9 Excise taxes ��������������������������������������������� 67 Estate and gift taxes ������������������������������� 29 Customs duties ���������������������������������������� 28 Deposits of earnings, Federal Reserve System ������������������������������������������������� 34 Climate revenues ������������������������������������ ......... Other miscellaneous receipts ����������������� 17 904 121 1,028 164 1,157 290 1,307 351 1,428 381 1,558 385 1,680 416 1,798 435 1,916 454 2,037 474 2,154 498 6,478 16,063 1,571 3,847 653 190 40 9 65 26 23 661 189 51 9 68 19 20 700 202 63 8 71 23 21 734 215 72 8 74 24 23 775 228 76 9 76 26 24 824 241 78 9 77 27 25 867 255 79 9 77 29 27 920 270 76 9 77 31 29 959 282 76 9 78 33 31 1,004 295 72 9 77 36 34 1,046 307 71 9 78 38 36 3,695 1,075 340 43 366 119 114 8,490 2,483 714 87 753 286 271 27 ......... 16 39 ......... 16 41 ......... 16 43 77 17 43 78 17 46 78 17 48 78 17 49 78 18 51 79 18 53 79 18 55 80 18 211 232 83 468 627 171 Subtotal, appropriated programs ��� Mandatory programs: Social Security ����������������������������������� Medicare ��������������������������������������������� Medicaid ��������������������������������������������� Troubled Asset Relief Program (TARP)1 ������������������������������������������� Other mandatory programs �������������� Subtotal, mandatory programs ���� Net interest ��������������������������������������������� Disaster costs2 ������������������������������������������ Total outlays �������������������������������������� 8,815 6,418 3,577 Receipts: MID-SESSION REVIEW (In billions of dollars) Totals 2008 Total receipts ������������������������������������� 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010– 2014 2010– 2019 Deficit ����������������������������������������������������� 2,524 459 2,074 1,580 2,264 1,502 2,591 1,123 2,945 796 3,161 775 3,365 778 3,582 739 3,791 795 3,985 810 4,186 815 4,389 917 14,326 34,259 4,974 9,051 On-budget deficit ������������������������������������� Off-budget surplus (-) ������������������������������ 642 –183 1,712 –133 1,612 –110 1,252 –128 942 –147 938 –163 959 –181 928 –189 997 –202 1,008 –198 1,010 –195 1,102 –185 5,703 10,748 –729 –1,697 Primary deficit ���������������������������������������� Net interest ��������������������������������������������� 206 253 1,406 173 1,305 196 836 288 407 388 307 468 251 527 158 581 164 631 131 678 90 725 143 774 3,106 1,868 3,793 5,257 Memorandum, funding (“budgetary resources”) for appropriated programs: Defense (050) including funding for overseas contingency operations ��� 686 695 687 615 Non-defense discretionary���������������� 533 818 573 586 Total, appropriated funding������������������ 1,219 1,513 1,261 1,201 624 617 1,241 635 632 1,267 648 650 1,298 663 663 1,326 678 680 1,358 693 695 1,388 709 711 1,420 725 729 1,454 3,209 3,058 6,268 6,678 6,535 13,214 SUMMARY TABLES Table S–4. PROPOSED BUDGET BY CATEGORY—Continued * $500 million or less. Outlays for TARP in 2011 and subsequent years result from obligations for the Home Affordable Modification Program and the Term Asset-Backed Securities Loan Facility incurred through December 31, 2009. 2 These amounts represent the statistical probability of a major disaster requiring Federal assistance for relief and reconstruction. Such assistance might be provided in the form of discretionary or mandatory outlays or tax relief. These amounts are included as outlays for convenience. 1 31 Policy Outlays by Category Policy Receipts by Source 2010 Defense including Overseas Contingency Operations 2010 Allowance for Disaster Costs Net Interest Non-Defense Discretionary Other Miscellaneous Excise Taxes Receipts Unemployment Insurance Other Mandatory Programs Social Security 32 Composition of Policy Outlays and Receipts Borrowing and Other Net Financing Medicare Payroll Taxes Social Security Payroll Taxes Medicaid Medicare Individual Income Taxes Corporation Income Taxes 2013 Defense including Overseas Contingency Operations 2013 Allowance for Disaster Costs Excise Taxes Other Miscellaneous Receipts Unemployment Insurance Social Security Medicaid Other Mandatory Programs Medicare Payroll Taxes Social Security Payroll Taxes Medicare Corporation Income Taxes Individual Income Taxes MID-SESSION REVIEW Net Interest Non-Defense Discretionary Borrowing and Other Net Financing (As a percent of GDP) Averages 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010– 2014 2010– 2019 Outlays: Appropriated (“discretionary”) programs: Defense (050) including cost of overseas contingency operations ����������������������������������� Non-defense discretionary ������������������������������ Subtotal, appropriated programs ��������������������� Mandatory programs: Social Security ������������������������������������������������� Medicare ����������������������������������������������������������� Medicaid ����������������������������������������������������������� Troubled Asset Relief Program (TARP) 1 �������� Other mandatory programs ���������������������������� Subtotal, mandatory programs ������������������� Net interest ������������������������������������������������������������ Disaster costs 2 �������������������������������������������������������� Total outlays ���������������������������������������������������� 4.3 3.6 7.9 4.7 4.1 8.8 4.9 4.8 9.8 4.4 4.3 8.7 3.9 3.9 7.8 3.7 3.7 7.4 3.5 3.5 7.1 3.4 3.4 6.9 3.3 3.3 6.7 3.3 3.3 6.5 3.2 3.2 6.4 3.1 3.1 6.3 4.1 4.0 8.1 3.7 3.7 7.3 4.3 2.7 1.4 ......... 2.9 11.3 1.8 ......... 21.0 4.8 3.0 1.8 1.7 4.5 15.8 1.2 * 25.9 4.9 3.1 2.0 0.5 4.4 14.9 1.4 0.1 26.1 4.8 3.3 1.8 0.1 3.9 13.9 1.9 0.1 24.6 4.7 3.2 1.8 0.1 3.3 13.0 2.4 0.1 23.3 4.7 3.3 1.8 * 3.1 12.9 2.8 0.1 23.2 4.6 3.5 1.8 * 2.9 12.9 2.9 0.1 23.0 4.6 3.4 1.9 * 2.7 12.7 3.1 0.1 22.7 4.7 3.6 1.9 * 2.7 13.0 3.2 0.1 22.9 4.8 3.6 2.0 * 2.7 13.0 3.2 0.1 22.9 4.8 3.6 2.1 ......... 2.6 13.0 3.3 0.1 22.8 4.9 3.8 2.1 ......... 2.6 13.4 3.4 0.1 23.2 4.7 3.3 1.8 0.1 3.5 13.5 2.3 0.1 24.0 4.8 3.4 1.9 0.1 3.1 13.3 2.8 0.1 23.5 8.1 2.1 6.4 0.9 7.1 1.1 7.6 1.9 8.2 2.2 8.4 2.2 8.7 2.1 8.8 2.2 9.0 2.2 9.1 2.2 9.3 2.2 9.4 2.2 8.0 1.9 8.6 2.0 4.6 1.4 0.3 0.1 0.5 0.2 0.2 0.2 ......... 0.1 17.7 3.2 4.6 1.3 0.3 0.1 0.5 0.2 0.2 0.2 ......... 0.1 14.7 11.2 4.6 1.3 0.4 0.1 0.5 0.1 0.1 0.3 ......... 0.1 15.7 10.4 4.6 1.3 0.4 0.1 0.5 0.1 0.1 0.3 ......... 0.1 17.1 7.4 4.6 1.3 0.4 0.1 0.5 0.2 0.1 0.3 0.5 0.1 18.4 5.0 4.6 1.3 0.4 0.1 0.4 0.2 0.1 0.3 0.5 0.1 18.6 4.6 4.6 1.3 0.4 * 0.4 0.1 0.1 0.3 0.4 0.1 18.7 4.3 4.6 1.3 0.4 * 0.4 0.2 0.1 0.3 0.4 0.1 18.8 3.9 4.6 1.4 0.4 * 0.4 0.2 0.1 0.2 0.4 0.1 19.0 4.0 4.6 1.3 0.4 * 0.4 0.2 0.2 0.2 0.4 0.1 19.0 3.9 4.6 1.3 0.3 * 0.4 0.2 0.2 0.2 0.4 0.1 19.1 3.7 4.6 1.3 0.3 * 0.3 0.2 0.2 0.2 0.3 0.1 19.2 4.0 4.6 1.3 0.4 0.1 0.5 0.1 0.1 0.3 0.3 0.1 17.7 6.3 4.6 1.3 0.4 * 0.4 0.2 0.1 0.3 0.3 0.1 18.4 5.1 SUMMARY TABLES Table S–5. PROPOSED BUDGET BY CATEGORY AS A PERCENT OF GDP Receipts: Individual income taxes ����������������������������������������� Corporation income taxes �������������������������������������� Social insurance and retirement receipts: Social Security payroll taxes ��������������������������� Medicare payroll taxes ������������������������������������ Unemployment insurance ������������������������������� Other retirement ��������������������������������������������� Deficit �������������������������������������������������������������������� 33 Excise taxes ������������������������������������������������������������ Estate and gift taxes ���������������������������������������������� Customs duties ������������������������������������������������������� Deposits of earnings, Federal Reserve System ����� Climate revenues ��������������������������������������������������� Other miscellaneous receipts �������������������������������� Total receipts ��������������������������������������������������� 34 Table S–5. PROPOSED BUDGET BY CATEGORY AS A PERCENT OF GDP—Continued (As a percent of GDP) Averages 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010– 2014 2010– 2019 On-budget deficit ���������������������������������������������������� Off-budget surplus (–) �������������������������������������������� 4.5 –1.3 12.1 –0.9 11.2 –0.8 8.3 –0.8 5.9 –0.9 5.5 –1.0 5.3 –1.0 4.9 –1.0 5.0 –1.0 4.8 –0.9 4.6 –0.9 4.8 –0.8 7.2 –0.9 6.0 –0.9 Primary deficit ������������������������������������������������������� Net interest ������������������������������������������������������������ 1.4 1.8 10.0 1.2 9.0 1.4 5.5 1.9 2.5 2.4 1.8 2.8 1.4 2.9 0.8 3.1 0.8 3.2 0.6 3.2 0.4 3.3 0.6 3.4 4.1 2.3 2.4 2.8 Memorandum, funding (“budgetary resources”) for appropriated programs: Defense (050) including funding for overseas contingency operations ����������������������������������� 4.8 4.9 4.8 Non-defense discretionary ������������������������������ 3.8 5.8 4.0 Total, appropriated funding ������������������������ 8.6 10.7 8.7 4.1 3.9 7.9 3.9 3.8 7.7 3.7 3.7 7.5 3.6 3.6 7.2 3.5 3.5 7.0 3.4 3.4 6.8 3.3 3.3 6.6 3.2 3.2 6.5 3.2 3.2 6.4 4.0 3.8 7.8 3.7 3.6 7.2 * 0.05 percent of GDP or less. 1 Outlays for TARP in 2011 and subsequent years result from obligations for the Home Affordable Modification Program and the Term Asset-Backed Securities Loan Facility incurred through December 31, 2009. 2 These amounts represent the statistical probability of a major disaster requiring Federal assistance for relief and reconstruction. Such assistance might be provided in the form of discretionary or mandatory outlays or tax relief. These amounts are included as outlays for convenience. MID-SESSION REVIEW (In billions of dollars, based on 2010 prices and population) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Outlays: Appropriated (“discretionary”) programs: Defense (050) including cost of overseas contingency operations ���������������������������������������������������������������������������� Non-defense discretionary ����������������������������������������������������� Subtotal, appropriated programs �������������������������������������� Mandatory programs: Social Security ������������������������������������������������������������������������ Medicare ���������������������������������������������������������������������������������� Medicaid ���������������������������������������������������������������������������������� Troubled Asset Relief Program (TARP) 1 ������������������������������� Other mandatory programs ��������������������������������������������������� Subtotal, mandatory programs ������������������������������������������ Net interest ����������������������������������������������������������������������������������� Disaster costs 2 ������������������������������������������������������������������������������� Total outlays ��������������������������������������������������������������������������� 714 698 1,412 647 630 1,277 598 594 1,193 581 575 1,156 572 567 1,139 567 566 1,133 563 564 1,127 558 561 1,119 554 557 1,111 550 554 1,104 702 452 284 70 642 2,150 196 8 3,766 711 484 266 11 580 2,052 281 14 3,625 716 480 269 9 498 1,973 369 17 3,551 729 520 282 5 485 2,021 432 19 3,627 748 564 297 5 464 2,077 472 20 3,708 768 564 312 2 448 2,095 505 21 3,754 790 607 328 1 460 2,186 532 22 3,867 815 614 342 * 456 2,226 555 22 3,923 841 619 357 ......... 443 2,260 575 23 3,969 868 671 371 ......... 453 2,363 596 23 4,086 1,028 164 1,129 283 1,241 333 1,316 351 1,395 344 1,460 362 1,516 367 1,567 371 1,617 376 1,659 383 661 189 51 9 68 19 20 39 ......... 16 2,264 1,502 683 198 61 8 69 22 21 40 ......... 16 2,529 1,096 697 204 68 8 70 23 22 41 73 16 2,796 755 715 210 70 8 70 24 22 40 71 16 2,913 714 737 216 70 8 69 24 23 41 70 15 3,011 697 754 221 68 7 67 25 23 41 68 15 3,112 642 775 228 64 7 65 26 25 42 66 15 3,196 670 785 231 62 7 64 27 26 42 64 14 3,260 663 797 234 57 7 61 28 27 42 63 14 3,323 647 805 236 55 7 60 29 28 42 61 14 3,380 706 SUMMARY TABLES Table S–6. PROPOSED BUDGET BY CATEGORY ADJUSTED FOR INFLATION AND POPULATION GROWTH Receipts: Individual income taxes ���������������������������������������������������������������� Corporation income taxes ������������������������������������������������������������� Social insurance and retirement receipts: Social Security payroll taxes �������������������������������������������������� Medicare payroll taxes ����������������������������������������������������������� Unemployment insurance ������������������������������������������������������ Other retirement �������������������������������������������������������������������� Excise taxes ����������������������������������������������������������������������������������� Estate and gift taxes ��������������������������������������������������������������������� Customs duties ������������������������������������������������������������������������������ Deposits of earnings, Federal Reserve System ���������������������������� Climate revenues �������������������������������������������������������������������������� Other miscellaneous receipts ������������������������������������������������������� Total receipts �������������������������������������������������������������������������� 35 Deficit ������������������������������������������������������������������������������������������� 36 Table S–6. PROPOSED BUDGET BY CATEGORY ADJUSTED FOR INFLATION AND POPULATION GROWTH—Continued (In billions of dollars, based on 2010 prices and population) 2010 On-budget deficit ��������������������������������������������������������������������������� Off-budget surplus (–) ������������������������������������������������������������������� 2011 2012 2013 2014 2015 2016 2017 2018 2019 1,612 –110 1,221 –125 895 –139 865 –151 858 –162 806 –164 841 –170 824 –162 801 –155 849 –142 Memorandum, funding (“budgetary resources”) for appropriated programs: Defense (050) including funding for overseas contingency operations ���������������������������������������������������������������������������� 687 Non-defense discretionary ����������������������������������������������������� 573 Total, appropriated funding ����������������������������������������������� 1,261 600 572 1,172 592 585 1,178 585 583 1,168 580 582 1,162 576 576 1,152 572 573 1,145 567 569 1,136 563 564 1,127 559 561 1,120 * $500 million or less. 1 Outlays for TARP in 2011 and subsequent years result from obligations for the Home Affordable Modification Program and the Term Asset-Backed Securities Loan Facility incurred through December 31, 2009. 2 These amounts represent the statistical probability of a major disaster requiring Federal assistance for relief and reconstruction. Such assistance might be provided in the form of discretionary or mandatory outlays or tax relief. These amounts are included as outlays for convenience. MID-SESSION REVIEW (Deficit increases (+) or decreases (–) in billions of dollars) Totals 2008 BEA baseline deficit ��������������������������������������������� 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20102014 20102019 459 1,549 1,426 945 625 564 522 437 453 434 400 453 4,081 6,259 ......... ......... ......... * 13 4 65 137 32 232 37 262 44 293 51 317 60 334 70 351 80 368 92 385 192 928 546 2,682 ......... ......... 12 22 28 37 39 41 39 33 29 33 137 311 ......... ......... ......... ......... ......... * ......... –2 27 1 –3 223 2 –3 291 2 –3 334 2 –3 374 2 –3 408 2 –3 432 2 –3 452 2 –3 477 3 –4 509 6 –13 1,249 18 –30 3,527 SUMMARY TABLES Table S–7. BRIDGE FROM BUDGET ENFORCEMENT ACT BASELINE TO BASELINE PROJECTION OF CURRENT POLICY Adjustments to reflect current policies: Index to inflation the 2009 parameters of the AMT ������������������������������������������������������������������ Continue the 2001 and 2003 tax cuts 1 ��������������������� Prevent reduction in Medicare physician payments ��������������������������������������������������������� Continue Diabetes funding, Transitional Medical Assistance and Qualified Individuals programs ����������������������������������������������������������� Correct baseline growth rates for pay increases ����� Subtotal ������������������������������������������������������ Adjustments to reflect costs of emergencies and disasters: Remove non-recurring emergency funding ������� Insert statistical probability of future major disaster costs 2 �������������������������������������������������� Subtotal ������������������������������������������������������ ......... ......... –14 –20 –21 –23 –23 –24 –24 –25 –25 –26 –101 –225 ......... ......... 2 2 8 –6 15 –5 18 –3 20 –3 22 –1 24 1 26 2 27 3 29 3 30 4 83 –17 220 –5 ......... ......... 1 7 11 11 11 11 11 11 11 11 41 95 –15 15 ......... –19 19 ......... –24 24 1 –21 21 7 –18 18 11 –18 18 11 –18 18 11 –19 19 11 –19 19 11 –19 19 11 –20 20 11 –20 20 11 –100 100 41 –197 197 95 Total program adjustments ������������������������������� Debt service on adjustments ����������������������������� Total adjustments �������������������������������������� ......... ......... ......... 2 * 2 23 * 23 224 4 228 298 15 313 343 32 375 384 49 433 419 68 488 445 90 535 466 114 579 491 139 630 524 167 691 1,273 100 1,373 3,617 679 4,296 Baseline projection of current policy deficit ����� 459 1,552 1,449 1,173 939 938 955 925 988 1,013 1,031 1,145 Adjustments to Pell Grants: 3 Reflect cost of funding existing maximum grant award ������������������������������������������������������ Remove Pell Grants from appropriated category ������������������������������������������������������������ Add Pell Grants to mandatory category ����������� Subtotal ������������������������������������������������������ 37 * $500 million or less. 1 In continuing the 2001 and 2003 tax cuts, the estate tax is maintained at its 2009 parameters. 2 These amounts represent the statistical probability of a major disaster requiring Federal assistance for relief and reconstruction. 3 The amount of the reclassification equals the existing and projected amounts of Pell as increased on a one-time basis by the Recovery Act. 5,454 10,555 38 Table S–8. CHANGE IN THE BASELINE PROJECTION OF CURRENT POLICY FROM MAY BUDGET (In billions of dollars) Totals 2009 May deficits in the baseline projection of current policy ��������������������������������������������� Percent of GDP ������������������������������������������ 2010 2011 2012 2013 2014 2015 2016 2017 2018 2010– 2014 2019 2010– 2019 1,617 11.4% 1,270 8.6% 1,043 6.7% 761 4.6% 743 4.2% 788 4.3% 797 4.1% 907 4.5% 949 4.5% 977 4.5% 1,086 4.7% 4,606 9,323 7 * 11 * 9 * 9 * 9 * 10 * 10 * 10 * 10 * 11 * 11 * 49 * 100 1 ......... * 7 7 * 18 1 1 10 –1 1 10 –2 2 10 –2 3 10 –3 3 11 –1 4 13 –* 4 14 –* 5 15 –* 5 16 2 7 58 –1 28 128 63 43 12 118 97 30 4 132 117 15 16 148 131 13 34 177 104 7 42 153 67 –1 46 112 43 –7 50 86 25 –10 51 67 22 –14 53 61 23 –14 55 64 511 109 108 728 691 63 365 1,119 57 7 –5 1 2 1 5 –* 2 1 4 5 17 –64 –8 –38 5 –38 3 –48 2 –51 –1 –53 –* –55 –* –57 –* –59 * –62 * –64 * –229 9 –525 9 –24 –78 12 –2 7 –2 –102 62 –19 15 6 8 –3 42 1 10 5 14 * –1 –12 –1 22 4 41 –2 –* 19 –2 20 3 41 –4 –* 8 –* 19 2 38 –4 –* 3 –* 17 1 38 –1 –* 5 * 2 1 35 1 ......... –18 * 1 * 36 3 ......... –18 ......... * –* 32 5 ......... –23 ......... * –* 32 6 ......... –21 60 53 29 140 –1 –5 61 60 74 31 312 13 –5 –15 Revisions due to enacted legislation: 2009 supplemental appropriations: Non-defense discretionary outlays ��� Mandatory outlays ������������������������� Other legislative changes: Mandatory outlays ������������������������� Debt service on legislative changes ��� Subtotal, enacted legislation �������������������� Revisions due to updated economic assumptions: Receipts ����������������������������������������������� 26 Mandatory outlays ������������������������������ 5 Net interest ����������������������������������������� –1 Subtotal, economics ����������������������������������� 30 Revisions due to updated technical assumptions: Receipts ����������������������������������������������� Discretionary outlays: Defense (050) including funding for overseas contingency operations 1 ���� Other appropriated programs ������� Mandatory outlays: Subtotal, technical revisions �������������������� MID-SESSION REVIEW Troubled Asset Relief Program (TARP) ���������������������������������������� Deposit insurance ��������������������������� Unemployment compensation ������� Other 2 ��������������������������������������������� Net interest ����������������������������������������� Disaster costs �������������������������������������� (In billions of dollars) Totals 2009 Total changes since May ��������������������������� MSR deficits in the baseline projection of current policy ������������������������������������ Percent of GDP ������������������������������������������ Memorandum: May funding (“budgetary resources”) for appropriated programs ������������������������� Change in funding: Defense (050) including funding for overseas contingency operations ��� Other appropriated programs ������� 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010– 2014 2010– 2019 –65 178 130 177 195 167 128 81 64 53 59 848 1,232 1,552 11.0% 1,449 10.0% 1,173 7.8% 939 5.9% 938 5.5% 955 5.3% 925 4.9% 988 4.9% 1,013 4.8% 1,031 4.7% 1,145 5.0% 5,454 10,555 1,537 1,283 1,310 1,341 1,374 1,407 1,441 1,475 1,511 1,548 1,587 6,715 14,277 –46 21 –47 10 –49 9 –51 9 –52 10 –54 10 –56 10 –58 10 –60 11 –63 11 –65 11 –253 47 –556 101 Total change in funding ������������������� –24 –38 –40 –41 –43 –45 –46 –48 –50 –52 –53 –206 –455 MSR funding for appropriated programs ����� 1,513 1,246 1,271 1,300 1,331 1,362 1,394 1,427 1,462 1,497 1,533 6,509 13,822 SUMMARY TABLES Table S–8. CHANGE IN THE BASELINE PROJECTION OF CURRENT POLICY FROM MAY BUDGET—Continued * $500 million or less. 1 Includes effect of shifting the baseline for overseas contingency operations from 2008 enacted funding to 2009 enacted funding. 2 Includes conceptual adjustments to Pell Grants, the child tax credit, and the earned income tax credit to be consistent with the Administration’s PAYGO legislation. The legislation defines the baseline for Pell Grants as the cost of funding the existing maximum award. In addition, the legislation defines the current policy baseline to include all provisions in the 2001 and 2003 tax cuts, as amended and in effect in 2010. Since these two policies are in place for 2009-10 and represent expansions of tax cuts first enacted in the 2001 tax bill, extension of the policies are incorporated in the baseline projection of current policy. 39 40 Table S–9. CHANGE IN PROPOSED BUDGET FROM MAY BUDGET (In billions of dollars) Totals 2009 2010 May Policy deficit ��������������������������������������������������������������� Percent of GDP ���������������������������������������������������������������������������� Change in baseline projection of current policy ������������� 2010 1,841 1,258 13.0% 8.7% 2011 2012 2013 2014 2015 2016 2017 2018 2019 20102014 20102019 929 6.1% 557 3.5% 512 3.0% 536 3.0% 528 2.8% 645 3.2% 675 3.2% 688 3.1% 779 3.4% 3,793 7,108 –65 178 130 177 195 167 128 81 64 53 59 848 1,232 Dedicated to climate policy (clean energy technologies) ����� ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... Dedicated to Making Work Pay ������������������������������������� ......... ......... ......... –* –1 –1 –* –* –* –* –* –2 –3 Placeholder for potential additional financial stabilization efforts �������������������������������������������������������������������������������� Tax cuts for families and businesses1 ���������������������������������� Other revenue changes and loophole closers ���������������������� Mandatory programs and user fees ������������������������������������� Appropriated (“discretionary”) programs:2 –250 * * –7 ......... * * –16 ......... –* 3 –8 ......... –8 5 –9 ......... –8 6 –3 ......... –9 6 4 ......... –10 6 9 ......... –10 6 –7 ......... –10 7 –8 ......... –11 8 –8 ......... –10 9 –7 ......... –24 20 –32 ......... –75 56 –53 Overseas contingency operations ������������������������������������ Defense (050) excluding overseas contingency operations ��������������������������������������������������������������������� Other appropriated programs ����������������������������������������� 40 45 47 48 50 52 54 56 58 60 62 242 532 –* –3 1 –4 1 –7 1 –8 1 –10 1 –10 2 –10 2 –10 2 –11 2 –11 2 –12 5 –38 14 –92 Subtotal, appropriated programs ���������������������������������� Subtotal, change in estimates of policy proposals ���������� 37 –* –221 41 –1 25 42 –1 36 42 7 37 42 7 43 44 6 50 46 4 54 47 3 40 49 3 42 51 3 43 53 3 47 210 18 190 455 36 416 Credit and other indirect interest effects3 ��������������������������������� Debt service ��������������������������������������������������������������������������������� Total change in policy proposals ����������������������������������������� 25 –* –196 42 –1 65 31 –3 64 25 –2 61 24 1 68 22 4 76 21 8 83 18 11 69 16 15 72 13 19 74 10 23 80 144 –2 333 221 73 711 Total changes since May �������������������������������������������������������� –262 243 194 238 263 242 211 150 135 127 139 1,181 1,943 1,580 1,502 1,123 11.2% 10.4% 7.4% 796 5.0% 775 4.6% 778 4.3% 739 3.9% 795 4.0% 810 3.9% 815 3.7% 917 4.0% 4,974 9,051 Change in estimates of proposals: Reserve fund for climate revenues: Upper-income tax provisions dedicated to deficit reduction ����� Percent of GDP ���������������������������������������������������������������������������� * $500 million or less. 1 Includes refundable tax credits and the effects of proposed financing system modifications for the Federal Aviation Administration. 2 Almost all of these changes reflect changes in the baseline (see Table S-8) rather than changes in proposed levels. 3 This change consists almost entirely of effects related to dropping the placeholder for potential additional financial stabilization efforts. MID-SESSION REVIEW August Policy deficit ������������������������������������������������������������������� (In billions of dollars) Totals 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010– 2014 2010– 2019 Change in outlays: Appropriated (“discretionary”) programs: Defense (050) including cost of overseas contingency operations �������������������������������� Non-defense discretionary ������������������������������ Subtotal, appropriated programs ��������������� Mandatory programs: Social Security ������������������������������������������������� Medicare ����������������������������������������������������������� Medicaid ����������������������������������������������������������� Troubled Asset Relief Program (TARP)1 ��������������������� Placeholder for potential additional financial stabilization efforts �������������������������������������� Unemployment compensation ������������������������� Deposit insurance �������������������������������������������� Other mandatory programs ���������������������������� Subtotal, mandatory programs ������������������� Net interest ������������������������������������������������������������ Disaster costs2 ��������������������������������������������������������� Total outlays ���������������������������������������������������� –24 –5 –29 7 10 18 10 5 15 2 4 5 * –1 –1 * –* * * –* * * –* * * –* * * –1 –* * –* * 19 18 37 21 16 37 2 ......... –4 –24 6 ......... –5 62 7 ......... –2 1 4 ......... * –1 1 ......... 3 –2 –2 ......... 5 –* –6 ......... 7 –* –9 ......... 9 * –11 ......... 11 * –12 ......... 12 ......... –13 ......... 12 ......... 15 ......... 1 60 –37 ......... 52 60 –250 17 –101 17 –344 30 –2 –345 ......... 54 –31 15 100 61 –3 175 ......... 31 5 11 53 33 –1 100 ......... 20 23 17 64 39 –* 108 ......... 20 27 14 63 57 –* 118 ......... 15 32 11 60 67 –* 127 ......... 10 36 7 54 77 –* 131 ......... 8 1 4 14 85 ......... 99 ......... 6 * 4 10 89 ......... 99 ......... 5 * –2 2 94 ......... 96 ......... 3 * –1 1 99 ......... 100 ......... 139 55 69 339 257 –5 628 ......... 172 93 81 421 700 –5 1,152 –49 –26 –24 –15 –55 –16 –74 –27 –73 –36 –54 –35 –30 –34 –11 –33 –* –33 8 –37 7 –39 –279 –129 –307 –305 –2 –1 –5 –* –1 ......... –1 3 –22 –7 –1 –* –7 –* –3 11 –19 –8 5 –* –3 1 –7 7 –23 –8 8 –* –2 2 –11 5 –29 –8 10 –* –2 2 –13 4 –20 –6 11 –* –2 2 –15 4 –13 –4 13 –* –3 2 –16 4 –7 –2 17 * –4 2 –17 4 –5 –1 17 * –4 3 –16 4 –2 –1 14 * –5 3 –15 4 –4 –1 9 * –6 3 –14 4 –113 –37 34 –* –16 6 –50 31 –144 –45 104 –* –37 19 –129 52 SUMMARY TABLES Table S–10. CHANGE IN PROPOSED BUDGET BY CATEGORY FROM MAY BUDGET Change in receipts: Individual income taxes ����������������������������������������� Corporation income taxes �������������������������������������� Social insurance and retirement receipts: Social Security payroll taxes ��������������������������� Medicare payroll taxes ������������������������������������ Unemployment insurance ������������������������������� Other retirement ��������������������������������������������� 41 Excise taxes ������������������������������������������������������������ Estate and gift taxes ���������������������������������������������� Customs duties ������������������������������������������������������� Deposits of earnings, Federal Reserve System ����� 42 Table S–10. CHANGE IN PROPOSED BUDGET BY CATEGORY FROM MAY BUDGET—Continued (In billions of dollars) Totals 2009 Climate revenues ��������������������������������������������������� Other miscellaneous receipts �������������������������������� Total receipts ��������������������������������������������������� 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010– 2019 2010– 2014 Change in deficit ������������������������������������������������� ......... ......... –83 –262 ......... –* –68 243 ......... –* –94 194 * –* –130 238 1 –* –144 263 1 –* –116 242 * –* –81 211 * –* –51 150 * –* –36 135 * –* –31 127 * –* –39 139 2 –* –553 1,181 3 –* –791 1,943 On-budget deficit ���������������������������������������������������� Off-budget surplus (–) �������������������������������������������� –265 4 219 24 171 23 213 26 234 29 225 18 204 8 150 –1 141 –5 137 –10 149 –10 1,061 120 1,841 102 Memorandum, funding (“budgetary resources”) for appropriated programs: Defense (050) including funding for overseas contingency operations �������������������������������� 4 ......... * Non-defense discretionary ������������������������������ 14 1 2 Total, appropriated funding �������������������������������� 18 1 2 * 1 2 * * 1 1 –* * 1 –* 1 1 –* 1 1 –* 1 1 –* 1 1 –* 1 1 5 6 5 4 9 * $500 million or less. 1 Outlays for TARP in 2011 and subsequent years result from obligations for the Home Affordable Modification Program and the Term Asset-Backed Securities Loan Facility incurred through December 31, 2009. 2 These amounts represent the statistical probability of a major disaster requiring federal assistance for relief and reconstruction. Such assistance might be provided in the form of discretionary or mandatory outlays or tax relief. These amounts are included as outlays for convenience. MID-SESSION REVIEW (Deficit increases (+) or decreases (–) in millions of dollars) Totals 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010– 2014 2010– 2019 218,336 4,289 537,392 11,633 19,387 17,239 60,153 55,107 Tax Provisions: 1 Tax Cuts for Families and Individuals: 2 Provide making work pay tax credit3 ������������ Expand earned income tax credit3 ���������������� Expand saver’s credit and automatic enrollment in IRAs3, 4 ��������������������������������� Provide American opportunity tax credit3 ���� Total, tax cuts for families and individuals ��������������������������������������������� Tax Cuts for Businesses: Eliminate capital gains taxation on small businesses �������������������������������������������������� Make research and experimentation tax credit permanent ��������������������������������������� Expand net operating loss carryback ����������� Total, tax cuts for businesses �������������������� ......... ......... ......... 30,850 62,158 62,502 62,826 63,093 63,461 63,818 64,130 64,554 ......... 2 1,448 1,425 1,414 1,419 1,433 1,460 1,495 1,537 ......... ......... 200 ......... ......... ......... 736 647 5,219 4,880 6,515 5,528 6,717 6,184 7,037 6,660 7,497 7,238 8,030 7,800 8,709 7,900 9,493 8,270 200 32,235 73,705 75,970 77,141 78,209 79,629 81,108 82,234 83,854 ......... ......... ......... ......... 134 344 700 1,187 1,562 259,251 –664,285 1,908 134 5,835 ......... 3,047 5,362 5,966 6,593 7,226 7,852 8,461 9,058 9,645 10,247 27,800 35,700 –10,700 –10,200 –7,900 –5,600 –3,900 –2,700 –1,800 –1,300 –900 27,800 38,747 –5,338 –4,234 –1,307 1,760 4,296 6,461 8,445 9,907 11,255 28,194 1,300 29,628 73,457 –9,300 69,992 ......... ......... 7,225 7,599 7,980 8,260 8,559 8,869 9,190 9,527 9,873 31,064 77,082 Continue Certain Expiring Provisions Through Calendar Year 2010 3 ������������������������ 38 6,499 5,435 469 376 382 489 570 416 414 441 13,161 15,491 ......... ......... ......... ......... –1,177 –1,576 –1,689 –1,788 –1,875 –1,954 –2,029 –2,112 –2,209 ......... –1,895 –3,419 –3,747 –3,466 –2,961 –2,426 –1,949 –1,554 –1,232 –31 –100 –180 –277 –386 –500 –604 –691 –775 –866 –6,230 –12,527 –974 –16,409 –22,649 –4,410 ......... ......... ......... –2,992 –6,748 –8,082 –8,431 –8,590 –8,545 –8,630 –9,036 –17,822 –61,054 ......... ......... –1,950 –3,384 –3,657 –3,918 –4,160 –4,346 –4,631 –4,996 –5,417 –12,909 –36,459 ......... ......... –3,295 –5,594 –5,822 –6,012 –6,150 –6,206 –6,363 –6,598 –6,869 –20,723 –52,909 Reform U.S. international tax system: Reform business entity classification rules ������������������������������������������������������� Defer deduction of expenses, except R&E expenses, related to deferred income ���� 43 Modify Federal Aviation Administration Financing (non-PAYGO) 5 �������������������������������� Other Revenue Changes and Loophole Closers: Reinstate Superfund taxes ���������������������������� Tax carried interest as ordinary income ������ Codify “economic substance doctrine” ����������� Repeal LIFO method of accounting for inventories ������������������������������������������������� SUMMARY TABLES Table S–11. MANDATORY AND RECEIPT PROPOSALS 44 Table S–11. MANDATORY AND RECEIPT PROPOSALS—Continued (Deficit increases (+) or decreases (–) in millions of dollars) Totals 2009 Reform foreign tax credit: Determine the foreign tax credit on a pooling basis ����� Reform foreign tax credit: Prevent splitting of foreign income and foreign taxes ������������������������������������������������������� Limit shifting of income through intangible property transfers ��������������� Limit earnings stripping by expatriated entities ������������������������������������������������������������� Prevent repatriation of earnings in certain cross-border reorganizations ���� Repeal 80/20 company rules ��������������������� Prevent the use of equity swaps to avoid dividend withholding taxes ������������������ Modify tax rules for dual capacity taxpayers ����������������������������������������������� Combat under-reporting of income on accounts and entities in offshore jurisdictions ������������������������������������������� Subtotal, reform U.S. international tax system �������������������������������������������������� Require information reporting for rental property expense payments ���������������������� 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010– 2019 ......... ......... –1,531 –2,578 –2,624 –2,669 –2,745 –2,852 –2,982 –3,154 –3,357 –9,402 –24,492 ......... ......... –6,708 –18,383 ......... ......... –13 –35 –58 –83 –108 –135 –163 –192 –222 –189 –1,009 ......... ......... –70 –120 –126 –132 –139 –146 –153 –161 –169 –448 –1,216 ......... ......... ......... ......... –19 –97 –31 –132 –32 –138 –33 –142 –34 –145 –35 –146 –36 –150 –38 –156 –39 –162 –115 –509 –297 –1,268 ......... ......... –309 –235 –108 –87 –89 –90 –92 –97 –101 –739 –1,208 ......... ......... –275 –474 –503 –535 –563 –592 –623 –651 –681 –1,787 –4,897 ......... –2,365 –1,461 61 90 –469 –793 –886 –931 –979 –1,027 –4,144 –8,760 –933 –1,732 –1,952 –2,091 –2,194 –2,276 –2,345 –2,404 –2,456 ......... –2,365 –9,953 –14,254 –14,930 –16,171 –17,120 –17,710 –18,469 –19,426 –20,500 –57,673 –150,898 ......... –177 –264 –279 –291 –304 –316 –330 –344 –359 –374 –1,315 –3,038 ......... ......... ......... ......... –500 ......... –500 ......... –500 ......... –600 ......... –600 ......... –600 ......... –600 ......... –700 ......... –700 ......... –2,100 ......... –5,300 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... –1,399 –1,789 –1,115 ......... –5 –9 –9 –835 –8 –749 –7 –562 –6 –279 –6 –153 –6 –113 –6 –5,138 –31 –6,994 –62 ......... ......... –2 –6 –6 –6 –6 –6 –6 –19 –49 ......... ......... –351 –835 –1,022 –1,053 –1,086 –1,124 –1,160 –1,189 –1,215 –3,261 –9,035 –5 –6 MID-SESSION REVIEW Eliminate oil and gas company preferences: Levy tax on certain offshore oil and gas production ���������������������������������������������� Repeal enhanced oil recovery credit6 �������� Repeal credit for oil and gas produced from marginal wells6 ����������������������������� Repeal expensing of intangible drilling costs ������������������������������������������������������� Repeal deduction for tertiary injectants �� Repeal exception to passive loss limitations for working interests in oil and natural gas properties ��������������������� Repeal percentage depletion for oil and natural gas wells ����������������������������������� 2010 2010– 2014 (Deficit increases (+) or decreases (–) in millions of dollars) Totals 2009 Repeal domestic manufacturing tax deduction for oil and natural gas companies �������������������������������������������������������� Increase geological and geophysical amortization period for independent producers to seven years ������������������������ 2010 ......... ......... 2011 2012 2013 2014 2015 2016 2017 2018 2019 –757 –1,310 –1,392 –1,464 –1,531 –1,600 –1,670 –1,745 –1,823 –35 –727 –1,235 ......... ......... –3,059 –4,617 –4,306 –4,217 –4,177 –4,041 –3,807 –3,845 –3,898 –16,199 –35,967 Eliminate advanced earned income tax credit3 ���������������������������������������������������������� ......... –125 –414 –788 –72 –251 –72 –198 –71 –143 –72 –86 –74 –46 –13,292 ......... –74 –262 –4,923 ......... –71 –169 2010– 2019 Subtotal, eliminate oil and gas company preferences ������������������������������������������� Total, other revenue changes and loophole closers ���������������������������������������������������� –45 2010– 2014 –77 –80 SUMMARY TABLES Table S–11. MANDATORY AND RECEIPT PROPOSALS—Continued ......... –2,698 –16,519 –27,391 –32,060 –34,486 –35,451 –35,727 –35,908 –36,778 –38,195 –113,154 –295,213 Upper-Income Tax Provisions Dedicated to Deficit Reduction: Expand the 28-percent rate and reinstate the 36-percent and 39.6-percent rates for those taxpayers with income over $250,000 (married) and $200,000 (single): PAYGO ����������������������������������������������������� ......... ......... Non-PAYGO ��������������������������������������������� ......... ......... –127 –14,508 –27,150 –30,296 –33,746 –37,240 –40,704 –44,237 –47,835 –51,488 –105,827 –327,331 –127 –13,848 –26,136 –29,160 –32,467 –35,818 –39,143 –42,532 –45,997 –49,514 –101,738 –314,742 ......... ......... –6,632 –14,549 –16,709 –18,518 –20,397 –22,291 –24,120 –25,890 –27,600 Total ��������������������������������������������������� Reinstate the personal exemption phaseout and limitation on itemized deductions for those taxpayers with income over $250,000 (married) and $200,000 (single) (non-PAYGO) ���������������������������������������������� Impose 20-percent tax rate on capital gains and dividends for those taxpayers with income over $250,000 (married) and $200,000 (single) (non-PAYGO) ���������������� Total, upper-income tax provisions dedicated to deficit reduction ���������������� Trade Initiatives: Promote trade ������������������������������������������������ 660 ......... –1,626 –8,717 1,014 1,136 1,279 1,422 1,561 1,705 1,838 1,974 1,545 –2,735 –8,114 –11,481 –12,658 –13,743 –14,847 –15,983 4,089 12,589 –56,408 –176,706 –19,647 –88,359 ......... –1,753 –29,197 –39,140 –48,604 –59,099 –67,696 –74,092 –80,395 –86,734 –93,097 –177,793 –579,807 ......... ......... 2 3 Total, tax provisions ���������������������������������������� 27,838 40,995 –6,157 11,011 4 5 9 12 17 21 24 2,359 –6,037 –11,585 –14,278 –17,127 –21,409 –25,845 14 97 42,171 –48,073 45 46 Table S–11. MANDATORY AND RECEIPT PROPOSALS—Continued (Deficit increases (+) or decreases (–) in millions of dollars) Totals 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010– 2014 2010– 2019 Climate Revenues: Dedicated to climate policy (clean energy technologies) ����������������������������������������������������� Dedicated to making work pay tax credit ����������� ......... ......... ......... ......... ......... –15,000 –15,000 –15,000 –15,000 –15,000 –15,000 –15,000 –15,000 –45,000 –120,000 ......... –62,158 –62,502 –62,826 –63,093 –63,461 –63,818 –64,130 –64,554 –187,486 –506,542 Total, climate revenues 7 ��������������������������������� ......... ......... ......... –77,158 –77,502 –77,826 –78,093 –78,461 –78,818 –79,130 –79,554 –232,486 –626,542 ......... ......... –20 –52 –27 –58 –27 –56 –28 –56 –29 –57 –30 –57 –31 –58 –32 –58 –33 –59 –34 –59 –131 –279 –291 –570 ......... –4 –4 –4 –4 –4 –4 –5 –5 –5 –5 –20 –44 ......... –27 –30 –30 –31 –31 –31 –32 –32 –32 –33 –149 –309 ......... –85 –480 –625 –1,225 –1,225 –1,225 –1,225 –1,225 –1,225 –1,225 –3,640 –9,765 ......... ......... ......... ......... ......... ......... –58 850 –4 600 –513 –24 1,000 –34 –170 –524 –689 –700 –712 –724 –733 –743 –751 –10 –9 –7 –5 –4 –3 –3 –3 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 –40 –40 –40 –40 –40 –40 –40 –40 –316 –1,082 –1,093 –1,104 –1,119 –1,128 –1,140 –1,150 –2,426 –108 4,850 –158 –2,061 –6,089 –126 9,850 –358 –7,702 ......... –75 –100 –68 –79 –89 –156 –155 –183 –182 –180 –411 –1,267 ......... 194 313 406 502 552 583 614 646 676 714 1,967 5,200 ......... 370 381 394 407 421 435 450 465 481 497 1,973 4,301 ......... ......... –370 194 –381 313 –394 406 –407 502 –421 552 –435 583 –450 614 –465 646 –481 676 –497 714 –1,973 1,967 –4,301 5,200 Mandatory Initiatives and Savings: 8 Agriculture: Enact Animal Plant and Health Inspection Service (APHIS) fees ���������������������������������������� Eliminate Cotton Storage payments ������������������� Enact Food Safety and Inspection Service (FSIS) performance fee ������������������������������������������������ Enact Grain Inspection, Packers, and Stockyards Administration (GIPSA) fees ��������������������������������� Reduce direct payments to farms with sales above $500,000 ������������������������������������������������� Reduce Crop Insurance premiums/underwriting gains and increase fees ������������������������������������ Reform payments to high-income farmers ��������� Reauthorize Child Nutrition ������������������������������� Reform Market Access Program ����������������������������������� Total, Agriculture ������������������������������������������� MID-SESSION REVIEW Corps of Engineers: Preserve cost-sharing of inland waterways capital costs (receipt effect) 9 ���������������������������� Defense: Implement concurrent receipt policy: Effect on military retirement ������������������������ Accrual payments to the Military Retirement Fund (non-PAYGO) ���������������� Military Retirement Fund offsetting receipts (non-PAYGO) ���������������������������������������������� Total, Defense ������������������������������������������������ (Deficit increases (+) or decreases (–) in millions of dollars) Totals 2009 Education: Eliminate entitlements for financial intermediaries under the Family Federal Education Loan Program ��������������������������������� Make Pell Grant funding mandatory and increase and index maximum awards ������������ Modernize and expand the Federal Perkins loan program ������������������������������������������������������������ Create a new College Access and Completion Fund ������������������������������������������������������������������ Total, Education ��������������������������������������������� Energy: Repeal ultra-deepwater oil and gas research and development program ���������������������������������������� Environmental Protection Agency: Enact pesticide and pre-manufacture notification (PMN) fees ������������������������������������ Health and Human Services (HHS): Create home visitation program ����������������������������������� CHIP impact �������������������������������������������������� Medicaid impact �������������������������������������������� Create a LIHEAP trigger ������������������������������������ Extend TANF supplemental grants �������������������� Promote high-risk insurance pools ��������������������� Improve child support enforcement tools ����������� Enact CMS survey and certification revisit user fee ������������������������������������������������������������������������ Enact CMS survey and certification recertification user fee ������������������������������������� Enact CMS survey and certification offsetting receipts ������������������������������������������������������������� Support teen pregnancy prevention �������������������� Total, HHS ����������������������������������������������������� 2011 2012 2013 2014 2015 2016 2017 2018 2019 ......... –3,636 –6,037 –5,099 –3,605 –3,121 –3,422 –3,752 –3,970 –4,264 –4,535 2010– 2019 –21,498 –41,441 ......... 23 832 1,869 2,777 6,434 4,871 6,248 7,631 9,153 11,006 11,935 50,844 ......... –726 –661 –540 –606 –692 –687 –678 –671 –661 –635 –3,225 –6,557 ......... 100 500 500 ......... –4,239 –5,366 –3,270 500 –934 500 3,121 400 1,162 ......... 1,818 ......... 2,990 ......... 4,228 ......... 2,100 5,836 –10,688 2,500 5,346 ......... –20 –40 –50 –50 –50 –30 –10 ......... ......... ......... –210 –250 ......... –52 –56 –55 –67 –69 –69 –71 –71 –73 –73 –299 –656 ......... ......... ......... ......... ......... ......... ......... 87 ......... –1 329 ......... 20 3 213 –1 –6 414 255 35 3 362 –1 –11 437 319 20 5 528 –2 –22 450 319 ......... 8 710 ......... –37 450 319 ......... 8 904 ......... –55 450 319 ......... 8 1,112 ......... –81 450 319 ......... 8 1,332 ......... –113 450 319 ......... 8 1,564 ......... –149 450 319 ......... 8 1,753 ......... –189 450 319 ......... 8 1,900 –4 –77 2,080 1,212 75 27 8,565 –4 –664 4,330 2,807 75 67 ......... 9 23 23 24 24 25 25 26 26 27 104 233 ......... ......... 23 49 78 82 83 86 88 91 94 231 673 ......... ......... ......... –9 20 458 –46 42 955 –72 48 1,179 –101 49 1,330 –106 50 1,500 –108 50 1,676 –111 50 1,858 –114 50 2,046 –117 50 2,242 –121 50 2,391 –335 209 5,422 –906 459 15,635 ......... –124 –124 –124 –124 –124 –124 –124 –124 –71 ......... –620 –1,063 47 Homeland Security: Enact CBP inspection user fees �������������������������� 2010 2010– 2014 SUMMARY TABLES Table S–11. MANDATORY AND RECEIPT PROPOSALS—Continued 48 Table S–11. MANDATORY AND RECEIPT PROPOSALS—Continued (Deficit increases (+) or decreases (–) in millions of dollars) Totals 2009 Housing and Urban Development: Expand HOPE for Homeowners program ���������� Provide funding for the Affordable Housing Trust Fund ������������������������������������������������������� Total, Housing and Urban Development ������ Interior: Increase return from minerals on Federal lands: Abandoned Mine Lands (AML) Payments to Certified States ������������������������������������������ Fee on nonproducing oil and gas leases �������� Repeal Energy Policy Act fee prohibition and mandatory permit funds ��������������������������������� Reserve funds for insular affairs assistance ������� Recover Pick-Sloan project cost ���������������������������������� Total, Interior ������������������������������������������������� 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010– 2014 2010– 2019 1,237 667 ......... ......... ......... ......... ......... ......... ......... ......... 1,904 1,904 ......... 207 20 1,257 140 807 250 250 250 250 240 240 100 100 ......... ......... ......... ......... ......... ......... ......... ......... 900 2,804 1,000 2,904 ......... ......... –142 –122 –164 –121 –208 –115 –210 –107 –206 –109 –90 –112 –90 –114 –94 –116 –158 –119 –161 –121 –930 –574 –1,523 –1,156 ......... ......... ......... ......... –42 7 –23 –322 –32 6 –23 –334 –33 6 –23 –373 –33 5 –23 –368 –33 5 –23 –366 –33 4 –23 –254 –9 4 –23 –232 –9 4 –23 –238 –9 4 –23 –305 –9 4 –23 –310 –173 29 –115 –1,763 –242 49 –230 –3,102 8,700 2,500 600 600 1,300 1,700 1,700 1,800 2,100 12,400 21,000 –485 –84 –569 124 8,255 –502 –149 –651 651 2,500 –342 –101 –443 1,015 1,172 –355 56 –299 1,217 1,518 –319 –69 –388 1,131 2,043 –328 –6 –334 1,036 2,402 –372 220 –152 1,047 2,595 –407 371 –36 1,083 2,847 –620 1,399 779 1,116 3,995 –1,684 –278 –1,962 3,007 13,445 –3,730 1,637 –2,093 8,420 27,327 –115 –119 –124 –109 –113 –118 –122 –127 –132 –544 –1,156 –87 –21 –86 337 –90 –228 –78 –351 –82 –267 –85 –140 –88 –47 –92 26 –96 47 –402 –263 –845 –644 200 –23 200 332 200 –242 200 –338 200 –262 200 –143 200 –57 200 7 200 19 1,000 –209 2,000 –645 Labor: Change Extended Unemployment Insurance benefits trigger ������������������������������������������������� ......... ......... Implement unemployment insurance integrity legislation: 9 PAYGO ����������������������������������������������������������� ......... ......... Non-PAYGO ��������������������������������������������������� ......... ......... Total ����������������������������������������������������������� ......... ......... Reform Trade Adjustment Assistance ����������������� ......... ......... Total, Labor ���������������������������������������������������� ......... ......... Treasury: Levy payments to Federal contractors with delinquent tax debt: Improve debt collection administrative procedures (receipt effect)9 ������������������������ ......... –77 Increase levy authority to 100 percent for vendor payments (receipt effect) 9 �������������������������������������� ......... –61 Revise terrorism risk insurance program9 ���������� ......... ......... Restructure assistance to New York City: Provide tax incentives for transportation infrastructure (receipt effect) 9 ������������������������������������������������������������ ......... 200 Total, Treasury ����������������������������������������������� ......... 62 MID-SESSION REVIEW 207 (Deficit increases (+) or decreases (–) in millions of dollars) Totals 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2010– 2014 2019 2010– 2019 Veterans Affairs: Implement concurrent receipt policy: Effect on Veterans disability payments �������� ......... 47 49 51 53 54 54 54 53 53 52 254 520 Federal Communications Commission: Auction domestic satellite spectrum ������������������� Provide permanent auction authority ����������������� Enact spectrum license user fee ��������������������������������� Total, FCC ������������������������������������������������������ ......... ......... –50 –50 –100 ......... –200 –300 –75 ......... –300 –375 –25 ......... –425 –450 ......... –200 –550 –750 ......... –200 –550 –750 ......... –200 –550 –750 ......... –200 –550 –750 ......... –200 –550 –750 ......... –200 –550 –750 ......... –200 –550 –750 –200 –400 –2,025 –2,625 –200 –1,400 –4,775 –6,375 Other Independent Agencies: Reflect discrimination claims settlement ����������� Morris K. Udall Scholarship Fund (non-PAYGO) ���� Total, Other independent agencies ��������������� ......... ......... ......... 690 2 692 230 4 234 230 4 234 ......... 4 4 ......... 4 4 ......... 4 4 ......... 4 4 ......... 5 5 ......... 5 5 ......... 5 5 1,150 18 1,168 1,150 41 1,191 ......... ......... ......... ......... –166 –362 –480 –512 –472 –449 –418 –528 –2,859 ......... –1,073 –3,519 –5,577 –8,054 –10,960 –6,539 –4,373 –3,283 –2,620 –2,439 –29,183 –48,437 Social Security Administration: Program integrity: require states and localities to provide pension information (non-PAYGO) Multi-Agency: Implement program integrity allocation adjustments (non-PAYGO) 9 ����������������������������� Total, mandatory initiatives and savings ��� 157 –2,895 506 –5,331 –8,605 –7,212 –4,146 –739 2,029 4,468 36 36 36 36 138 318 9 9 9 9 34 79 158 158 158 158 604 1,394 2 2 2 2 8 18 SUMMARY TABLES Table S–11. MANDATORY AND RECEIPT PROPOSALS—Continued 7,692 –23,537 –14,233 Outyear PAYGO Impact of Changes in Mandatory Programs included in Appropriations Language: Energy, Permanent Reclassification of Power Marketing Administration Receipts to Offset Annual Expenses: 10 Sale and Transmission of Electric Energy, Southwestern Power Administration �������������� ......... ......... 33 34 35 36 36 Sale and Transmission of Electric Energy, Southeastern Power Administration �������������� ......... ......... 8 8 9 9 9 Reclamation Fund, All Other, Sale of Power and Other Utilities �������������������������������������������������� ......... ......... 144 149 153 158 158 Falcon and Amistad Operating and Maintenance Fund Receipts ���������������������������� ......... ......... 2 2 2 2 2 Justice: ......... ......... 238 477 715 953 ......... ......... ......... ......... ......... 2,383 2,383 ......... ......... 425 670 914 1,158 205 205 205 205 205 3,167 4,192 Total, mandatory and receipt proposals and climate policies ������������������������������������������������� 27,995 38,100 –5,226 –70,808 –82,834 –89,917 –93,619 –93,273 –93,711 –95,866 –97,502 –210,685 –684,656 49 Crime Victims Fund Obligation Delay ���������������� Total, outyear PAYGO impact of changes in mandatory programs included in appropriations language ��������������������������������� 50 Table S–11. MANDATORY AND RECEIPT PROPOSALS—Continued (Deficit increases (+) or decreases (–) in millions of dollars) HEALTH REFORM RESERVE FUND Totals 2009 Aligning incentives toward quality: Encourage hospitals serving Medicare beneficiaries to reduce readmission rates ������������������������������������������������������ Create hospital quality incentive payments ���������������������������������������� Encourage primary care physicians to administer the flu vaccine to Medicare beneficiaries ������������������� Enable physicians to form voluntary groups that coordinate care for Medicare beneficiaries and to receive performance-based payments for the coordinated care ���������������������������������� Total, aligning incentives toward quality ��������������������������������������� 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010–2014 2010– 2019 ......... ......... ......... –680 –840 –930 –1,020 –1,110 –1,200 –1,280 –1,370 –2,450 –8,430 ......... ......... –400 –570 –840 –1,170 –1,540 –1,700 –1,830 –1,960 –2,100 –2,980 –12,110 ......... * * * * * * * * * * * * ......... * * * * * * * * * * * * ......... ......... –400 –1,250 –1,680 –2,100 –2,560 –2,810 –3,030 –3,240 –3,470 –5,430 –20,540 ......... ......... ......... –11,220 –16,810 –19,560 –21,680 –25,870 –26,080 –25,820 –30,160 ......... ......... ......... ......... –150 –670 –1,690 –2,520 –3,400 –3,710 –3,960 –820 –16,100 ......... * * * * * * * * * * * * ......... ......... –10 –20 –20 –20 –30 –30 –40 –40 –40 –70 –250 ......... –60 –130 –160 –190 –210 –230 –240 –270 –290 –320 –750 –2,100 a –47,590 –177,200 MID-SESSION REVIEW Promoting efficiency and accountability: Establish competitive bidding for Medicare Advantage ���������������������� Promote efficient provision of acute care through bundled Medicare payments covering hospital and post-acute settings ������������������������� Address financial conflicts of interest in physician-owned specialty hospitals � Ensure that Medicare makes appropriate payments for imaging services through the use of radiology benefit managers ����������� Provide private sector enhancements to ensure Medicare pays accurately �������� 2010 (Deficit increases (+) or decreases (–) in millions of dollars) HEALTH REFORM RESERVE FUND —Continued Totals 2009 Promote cost-effective purchase and delivery of Medicaid prescription drugs by (1) increasing the Medicaid rebate amounts, (2) extending to and collecting rebates on behalf of managed care plans, and (3) applying rebates to new formulations of existing drugs ����������������������������������������������� Promote increased generic medication utilization by establishing a pathway for FDA approval of generic biologics ��������� Expand availability of family planning services under Medicaid �������������������� Ensure appropriate Medicaid payments through use of the National Correct Coding Initiative (NCCI) edits ����������������������������������� Improve Medicare home health payments to align with costs ��������� Reallocate Medicare and Medicaid Improvement Funds ���������������������� 2010–2014 2010– 2019 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 ......... –1,440 –1,720 –1,680 –1,780 –1,900 –2,050 –2,130 –2,270 –2,430 –2,550 –8,520 –19,950 ......... ......... ......... ......... 20 –10 –470 –1,110 –1,330 –1,570 –1,880 10 –6,350 ......... ......... ......... ......... ......... –5 –5 –10 –10 –15 –20 –5 –65 ......... –10 –25 –40 –45 –55 –75 –85 –90 –95 –100 –175 –620 ......... –460 –2,450 –2,730 –3,100 –3,410 –3,760 –4,170 –4,390 –4,580 –5,020 –12,150 –34,070 ......... ......... ......... –23,230 –150 –150 –150 –150 ......... –23,230 –23,830 ......... ......... –1,970 Encouraging Shared Responsibility: Require certain higher-income beneficiaries enrolled in the Medicare drug benefit to pay higher premiums, as is currently required for physician and outpatient services ������������������������ ......... ......... –390 –590 –670 Additional Federal Health Savings: Combine Medicare and Medicaid disproportionate share hospital payments into an uncompensated care assistance fund to hospitals �� ......... ......... ......... ......... –810 –4,335 –15,850 –22,075 –49,070 –30,140 –36,315 –38,030 –38,700 –44,050 –760 –870 –980 –1,110 –1,270 –1,430 –4,780 –10,400 –14,930 –19,570 –25,530 –30,420 –93,300 –280,535 –2,410 –8,070 –5,590 –106,440 51 ......... Total, promoting efficiency and accountability ��������������������������� SUMMARY TABLES Table S–11. MANDATORY AND RECEIPT PROPOSALS—Continued 52 Table S–11. MANDATORY AND RECEIPT PROPOSALS—Continued (Deficit increases (+) or decreases (–) in millions of dollars) HEALTH REFORM RESERVE FUND —Continued Totals 2009 Incorporate productivity adjustments into Medicare payment updates ��������������������������� Pay appropriately for prescription drugs under the Part D program ���� Adopt MedPAC 2010 update recommendations for skilled nursing facilities, inpatient rehabilitation facilities, and longterm care hospitals ������������������������ Adjust equipment utilization factor for physician imaging services to better reflect actual usage ������������� Improve Medicare/Medicaid program integrity ����������������������������������������� 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010–2014 2010– 2019 ......... –10 –1,540 –2,990 –5,200 –7,780 –10,830 –14,550 –18,090 –21,780 –26,720 –17,520 –109,490 ......... ......... –2,230 –4,990 –5,680 –6,870 –8,110 –8,650 –10,740 –13,350 –14,350 –19,770 –74,970 ......... –780 –1,260 –1,100 –1,240 –1,360 –1,500 –1,650 –1,720 –1,810 –1,960 –5,740 –14,380 ......... –260 –630 –580 –510 –530 –560 –620 –690 –750 –810 –2,510 –5,940 ......... ......... –70 –130 –140 –150 –170 –180 –210 –240 –250 –490 –1,540 –5,730 Total, additional federal health savings ���� ......... –1,050 Total, Medicare/Medicaid savings (–) ����� Limit the tax rate at which itemized deductions reduce tax liability to 28 percent ������������������������������������������������� ......... –3,020 –10,855 –27,480 –38,005 –73,400 –65,140 –80,685 –93,190 –106,670 –123,460 –152,760 –621,905 ......... ......... –9,790 –13,580 –21,470 –31,570 –40,580 –51,020 –63,460 –74,510 –8,814 –23,987 –27,095 –29,580 –32,170 –34,676 –37,165 –39,557 –41,845 –89,476 –274,889 –1,108 –7 –13 –4 –1,174 –7 –14 –4 –1,224 –7 –15 –4 –1,284 –7 –17 –5 –1,349 –7 –17 –6 –1,416 –7 –17 –6 –3,954 –29 –52 –11 –10,401 –64 –132 –36 –278 –301 –324 –344 –365 –386 –1,233 –2,953 –1,309 –1,198 –1,398 –1,019 –1,486 –270 –1,571 –282 –1,652 –295 –1,748 –307 –4,504 –4,355 –12,359 –6,528 –2,212 –2,454 –2,710 –2,980 –3,268 –3,570 –7,948 –22,930 MID-SESSION REVIEW Reduce the tax gap/improve compliance and make reforms to close tax loopholes: Reduce the tax gap/improve compliance: ......... –105 –743 –945 –1,053 Expand information reporting ����� Improve compliance by businesses ���� ......... –4 –6 –6 –6 Strengthen tax administration ���� ......... –6 –9 –11 –13 Expand penalties �������������������������� ......... –1 –2 –2 –2 Make reforms to close tax loopholes: Financial institutions and products ������������������������������������ ......... –178 –284 –237 –256 Insurance companies and products ������������������������������������ ......... –408 –695 –955 –1,137 Tax accounting methods ������������������� ......... ......... –217 –1,170 –1,770 Modify estate and gift tax valuation discounts and other reforms �������������������������������������� ......... –410 –1,578 –1,765 –1,983 –51,620 –312,760 (Deficit increases (+) or decreases (–) in millions of dollars) HEALTH REFORM RESERVE FUND —Continued Totals 2009 Subtotal, reduce the tax gap/ improve compliance and make reforms to close tax loopholes �� ......... 2010–2014 2010– 2019 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 –1,112 –3,534 –5,091 –6,220 –6,129 –6,371 –6,040 –6,490 –6,959 –7,457 –22,086 –55,403 ......... ......... ......... ......... ......... ......... ......... ......... ......... –2,241 –2,241 Modify alternative fuel mixture credit �� ......... –2,241 Total, revenues (–) ������������������������������� ......... –3,353 –12,348 –29,078 –33,315 –35,709 –38,541 –40,716 –43,655 –46,516 –49,302 –113,803 –332,533 Total available for benefits (–) �������������� ......... –6,373 –23,203 –56,558 –71,320 –109,109 –103,681 –121,401 –136,845 –153,186 –172,762 –266,563 –954,438 SUMMARY TABLES Table S–11. MANDATORY AND RECEIPT PROPOSALS—Continued * Savings negligible or undetermined at this time. a Beyond the proposals specified below, the Administration has proposed the creation of an independent, executive-branch agency called the Independent Medicare Advisory Council, which would be empowered to make recommendations on annual Medicare payment rates as well as other Medicare reforms, and which could yield substantial cost savings and quality enhancements in the Medicare program over the long term. Note: For receipt effects, positive figures indicate lower receipts. For outlay effects, positive figures indicate higher outlays. For net costs, positive figures indicate higher deficits. 1 Receipt effects unless otherwise noted. 2 The Administration continues to support expanding refundability of the child tax credit by lowering the refundability threshold to $3,000, a well as the expansion of the earned income tax credit for married couples by increasing the phase-out threshold by $5,000 compared to other filers. These policies were shown as “tax cuts for families and individuals” in the May Budget, but they are no longer reflected here, since they are now incorporated in the baseline projection of current policy (see Table S–8). 3 The estimates for this proposal include effects on outlays. The outlay effects included in the totals above are listed below: 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 703 21,678 21,430 21,125 20,845 20,695 20,562 20,469 20,488 2010– 2014 2010– 2019 ......... ......... 64,936 167,995 ......... ......... ......... 1,439 1,417 1,407 1,413 1,429 1,456 1,490 1,532 4,263 11,583 ......... 200 526 1,924 1,985 1,786 1,659 1,705 1,761 1,840 1,937 6,421 15,323 ......... ......... ......... 2,159 2,250 2,326 2,445 2,606 2,707 2,755 2,948 6,735 20,196 ......... 61 21 ......... ......... ......... ......... ......... ......... ......... ......... 82 82 ......... –125 –71 –74 –72 –72 –71 –72 –74 –77 –80 –414 –788 ......... 136 1,179 27,126 27,010 26,572 26,291 26,363 26,412 26,477 26,825 82,023 214,391 53 Provide making work pay tax credit Expand earned income tax credit ���� Expand saver’s credit and automatic enrollment in IRAs ������������������������ Provide American opportunity tax credit ���������������������������������������������� Continue remaining expiring provisions through calendar year 2010 ����������������������������������������������� Eliminate advanced earned income tax credit ��������������������������������������� Total outlay effects of receipt proposals ��������������������������������� 54 Table S–11. MANDATORY AND RECEIPT PROPOSALS—Continued (Deficit increases (+) or decreases (–) in millions of dollars) The estimates for this proposal include start-up costs associated with establishing a new agency to administer the automatic workplace pensions program. The Budget assumes that some aviation excise taxes are modified and replaced with direct user charges. The estimated cost of reducing the excise taxes is reflected here. The user charges are considered discretionary and offset discretionary budget authority and outlays. 6 This provision is estimated to have zero receipt effects under the Administration’s current projections for energy prices. 7 Shown here are those proceeds from auctioning emission allowances that are reserved for clean energy technology initiatives and to compensate families through the Making Work Pay tax cut. These proceeds are included in the grand totals as receipts, though they could alternatively be considered offsets to outlays. Any additional revenue will be used to compensate vulnerable households, communities and businesses for increased energy costs. 8 Outlay effects unless otherwise noted. 9 The estimates for this proposal include effects on receipts. The receipt effects included in the totals above are listed below. 4 5 2009 Preserve cost-sharing of inland waterways capital costs ���������������� ......... 2010 2011 –75 2012 2013 2014 2015 2016 2017 2018 2019 2010– 2014 2010– 2019 –100 –68 –79 –89 –156 –155 –183 –182 –180 –411 –1,267 Implement unemployment insurance integrity legislation: ......... ......... –39 –47 –42 –69 –43 –55 –99 –129 –336 –197 –859 Non-PAYGO ���������������������������� Revise terrorism risk insurance program ����������������������������������������� ......... ......... ......... 10 58 214 89 157 386 541 1,573 282 3,028 ......... ......... 39 493 150 317 511 576 522 416 285 999 3,309 –118 –122 –127 –132 –544 –1,156 –85 –88 –92 –96 –402 –845 200 200 200 200 1,000 2,000 –617 –462 –371 –380 –13,350 –16,640 –97 154 256 934 –12,623 –12,430 Levy payments to Federal contractors with delinquent tax debt: Improve debt collection administrative procedures ����� ......... –77 –115 –119 –124 –109 –113 Increase levy authority to 100 percent for vendor payments ��� ......... –61 –87 –86 –90 –78 –82 Restructure assistance to New York City: Provide tax incentives for transportation infrastructure ������� ......... 200 200 200 200 200 200 Implement program integrity allocation adjustments – IRS ������� ......... –290 –1,119 –2,348 –3,864 –5,729 –1,460 Total receipt effects of mandatory proposals �������������� ......... –303 –1,221 –1,965 –3,791 –5,343 –1,054 10 These proposals would not be subject to PAYGO under the Administration’s PAYGO proposal. MID-SESSION REVIEW PAYGO ������������������������������������ Deficit increases (+) or decreases (–) in millions of dollars Total 1 2010–2019 total mandatory and receipt proposals and climate policies, Table S–11 ���������������������������������������������������������������� Plus 2009 effects: PAYGO includes a “lookback” provision to capture current-year costs. ���������������������������������������������������� 2009–2019 total mandatory and receipt proposals and climate policies, Table S–11 ������������������������������������������������� –684,656 27,995 –656,661 SUMMARY TABLES Table S–12. BRIDGE BETWEEN TOTAL MANDATORY AND RECEIPT PROPOSALS AND PAYGO SCOREKEEPING Adjustments for Non-PAYGO items on Table S–11: Loss of FAA aviation excise tax receipts ����������������������������������������������������������������������������������������������������������������������������������� Savings from not extending upper-income tax cuts. ���������������������������������������������������������������������������������������������������������������� Program integrity and other savings generated by increased discretionary funding. ����������������������������������������������������������� Total, adjustments for non-PAYGO items ������������������������������������������������������������������������������������������������������������������������� –77,082 592,396 49,618 564,932 Adjustments for Extension of Programs Subject to PAYGO in Baseline Projection of Current Policy: Plus Transitional Medical Assistance and Qualifying Individuals Programs ������������������������������������������������������������������������ Plus diabetes programs in Indian Health Services and National Institutes of Health ��������������������������������������������������������� Total, adjustments for extension of programs subject to PAYGO in baseline projection of current policy ����� 15,610 2,205 17,815 Net scoreable PAYGO savings in Administration’s budget ����������������������������������������������������������������������������������������������� –73,914 Totals represent 2009–2019 unless otherwise stated. 1 55 56 Table S–13. OUTLAYS FOR MANDATORY PROGRAMS UNDER CURRENT LAW 1, 2 (In billions of dollars) 2008 Actual Human resources programs: Education, training, employment and social services ���������������������������������������������������������������������������������������� Estimate 2009 2010 2011 2012 2013 2014 Health ���������������������������������������������������������������������������������������������������������������������������������������������������� Medicare ������������������������������������������������������������������������������������������������������������������������������������������������ Income security ������������������������������������������������������������������������������������������������������������������������������������� Social Security ��������������������������������������������������������������������������������������������������������������������������������������� Veterans’ benefits and services ������������������������������������������������������������������������������������������������������������ Subtotal, human resources programs �������������������������������������������������������������������������������������������� 9 227 386 373 612 44 1,650 –18 289 425 479 677 50 1,902 1 317 441 542 702 58 2,059 9 306 474 498 729 65 2,081 11 320 478 421 755 62 2,045 11 345 528 418 792 70 2,164 8 368 591 415 837 75 2,294 Other mandatory programs: National defense ����������������������������������������������������������������������������������������������������������������������������������� International affairs ����������������������������������������������������������������������������������������������������������������������������� Energy ��������������������������������������������������������������������������������������������������������������������������������������������������� Agriculture �������������������������������������������������������������������������������������������������������������������������������������������� Commerce and housing credit �������������������������������������������������������������������������������������������������������������� Transportation �������������������������������������������������������������������������������������������������������������������������������������� Community and regional development ������������������������������������������������������������������������������������������������ Justice ���������������������������������������������������������������������������������������������������������������������������������������������������� General government ����������������������������������������������������������������������������������������������������������������������������� Undistributed offsetting receipts ��������������������������������������������������������������������������������������������������������� Other functions ������������������������������������������������������������������������������������������������������������������������������������� 4 –9 –3 10 25 2 -* * 3 –86 –1 4 –7 –2 18 377 2 2 2 4 –91 1 6 –3 1 19 104 3 1 4 4 –83 1 5 –3 2 19 20 2 1 3 5 –86 1 5 –2 4 11 –15 2 1 2 5 –90 1 5 –3 * 16 –24 2 1 2 4 –94 1 6 –3 –1 16 –24 2 -* 2 5 –98 1 Subtotal, other mandatory programs �������������������������������������������������������������������������������������������� –55 310 55 –31 –77 –89 –97 Total, outlays for mandatory programs under current law ����������������������������������������������������� 1,595 2,213 2,115 2,050 1,968 2,075 2,198 MID-SESSION REVIEW *$500 million or less. This table meets the requirements of Section 221(b) of the Legislative Reorganization Act of 1970. 2 Estimates are based on the Budget Enforcement Act (BEA) baseline. The BEA baseline differs in some instances from current law (see the chapter on “Current Services Estimates” in the Analytical Perspectives volume of the 2010 Budget) and also from the baseline projection of current policy (see Table S-7). 1 (Budget authority in billions of dollars) 2009 2009 Recovery 2010 Enacted Act Request Outyears 2011 2012 2013 Totals 2014 20102014 20102019 SUMMARY TABLES Table S–14. FUNDING LEVELS FOR APPROPRIATED (“DISCRETIONARY”) PROGRAMS BY AGENCY Discretionary Policy by Agency: Departments: Agriculture ����������������������������������������������������������������������������������������������������� International Food Aid and Other Supplemental Funding �������������������� Commerce ������������������������������������������������������������������������������������������������������ Census Bureau ������������������������������������������������������������������������������������������� Defense (DOD) ����������������������������������������������������������������������������������������������� DOD Base, excluding Overseas Contingency Operations ������������������������� DOD 2009 Overseas Contingency Operations—Enacted 1 ����������������������� DOD 2010 Overseas Contingency Operations—Proposed 1,2 �������������������� Education 3 ����������������������������������������������������������������������������������������������������� Energy ������������������������������������������������������������������������������������������������������������ Energy—2009 one-time cost ���������������������������������������������������������������������� Health and Human Services (HHS) 4 ������������������������������������������������������������ HHS—2009 Supplemental Funding, including H1N1 Response ������������ Homeland Security (DHS) 5 ��������������������������������������������������������������������������� Housing and Urban Development ���������������������������������������������������������������� Interior ����������������������������������������������������������������������������������������������������������� Justice ������������������������������������������������������������������������������������������������������������ Labor �������������������������������������������������������������������������������������������������������������� State and Other International Programs Funding 6 ������������������������������������ State and International Programs—2009 Supplemental Funding 6 ������������������ Transportation 7 ��������������������������������������������������������������������������������������������� Budget Authority (BA) ������������������������������������������������������������������������������� Obligation Limitations ������������������������������������������������������������������������������ Treasury ��������������������������������������������������������������������������������������������������������� Veterans Affairs 8 ������������������������������������������������������������������������������������������� 6.9 ......... 7.9 1.0 25.7 ......... 13.8 7.4 26.7 ......... 8.0 1.3 27.1 ......... 7.8 1.0 27.4 ......... 8.5 1.0 27.8 ......... 8.7 1.0 134.6 ......... 46.9 11.7 283.7 ......... 94.6 22.3 659.3 513.4 145.9 ......... 41.4 33.9 7.5 88.1 7.7 42.0 40.7 11.3 25.8 13.1 50.5 13.8 71.5 17.8 53.7 12.6 47.8 0.2 7.4 7.4 ......... ......... 81.1 38.7 ......... 22.4 ......... 2.8 13.6 3.0 4.0 4.8 0.6 ......... 48.1 48.1 ......... 0.3 1.4 ......... 663.8 533.8 ......... 130.0 46.7 26.4 ......... 80.5 ......... 41.1 43.7 12.0 24.0 14.1 52.1 ......... 72.3 57.5 14.8 13.4 53.0 ......... 591.8 541.8 ......... 50.0 53.6 26.4 ......... 84.3 ......... 42.0 45.0 12.2 27.8 13.3 56.4 ......... 64.1 21.3 42.9 13.7 57.0 ......... 600.7 550.7 ......... 50.0 58.5 27.1 ......... 85.5 ......... 41.6 46.6 12.4 28.0 13.4 60.7 ......... 64.1 24.3 39.8 14.2 57.5 ......... 611.1 561.1 ......... 50.0 61.6 27.6 ......... 87.5 ......... 41.1 47.8 12.6 28.1 13.5 65.1 ......... 65.2 23.4 41.8 14.7 58.1 ......... 624.5 574.5 ......... 50.0 64.5 28.2 ......... 90.7 ......... 40.6 49.0 12.8 28.3 13.5 69.6 ......... 66.4 21.4 45.0 15.3 59.2 ......... 3,092.0 2,762.0 ......... 330.0 284.9 135.6 ......... 428.5 ......... 206.5 232.1 62.1 136.2 67.8 303.9 ......... 332.1 147.9 184.2 71.4 284.8 ......... 6,435.1 5,855.1 ......... 580.0 626.4 287.0 ......... 923.5 ......... 423.6 498.8 130.9 285.7 139.1 691.3 ......... 682.9 261.6 421.3 158.7 597.4 ......... 57 Veterans Affairs—2009 one-time cost ������������������������������������������������������� 25.5 1.4 9.4 3.1 58 Table S–14. FUNDING LEVELS FOR APPROPRIATED (“DISCRETIONARY”) PROGRAMS BY AGENCY—Continued (Budget authority in billions of dollars) 2009 2009 2010 Enacted Recovery Request Act Major Agencies: Corps of Engineers ���������������������������������������������������������������������������������������� Corps of Engineers—2009 one-time cost ��������������������������������������������������� Environmental Protection Agency ���������������������������������������������������������������� General Services Administration ������������������������������������������������������������������ National Aeronautics and Space Administration ���������������������������������������� National Science Foundation ����������������������������������������������������������������������������������������� Small Business Administration �������������������������������������������������������������������� Social Security Administration 4 ������������������������������������������������������������������� Corporation for National and Community Service �������������������������������������� National Infrastructure Bank ����������������������������������������������������������������������� Climate Policy (Clean Energy Technologies) ������������������������������������������������������ Other Agencies ����������������������������������������������������������������������������������������������������� 12.0 6.6 7.6 0.8 17.8 6.5 0.6 8.6 0.9 ......... ......... 18.3 4.6 ......... 7.2 5.9 1.0 3.0 0.7 1.1 0.2 ......... ......... 0.3 5.1 ......... 10.5 0.6 18.7 7.0 0.8 9.3 1.1 5.0 ......... 19.8 Outyears 2011 5.2 ......... 10.6 0.7 18.6 7.2 0.9 10.3 1.3 5.0 ......... 18.6 2012 5.2 ......... 10.7 0.6 18.6 8.5 0.9 10.9 1.7 5.0 15.0 18.5 2013 5.3 ......... 10.8 0.6 18.6 9.1 0.9 11.4 2.0 5.0 15.0 18.4 Totals 2014 5.3 ......... 10.9 0.6 18.9 9.7 1.1 12.0 2.4 5.0 15.0 18.4 20102014 26.1 ......... 53.5 3.2 93.4 41.6 4.5 53.8 8.6 25.0 45.0 93.6 20102019 54.8 ......... 110.9 6.4 191.7 97.9 10.5 120.0 25.8 25.2 120.0 192.0 Grand Total, Discretionary Budget Authority ���������������������������������������������� 1,192.3 267.0 1,245.9 1,158.0 1,200.9 1,225.3 1,253.3 6,083.4 12,792.5 Grand Total, Discretionary Budgetary Resources ��������������������������������������� 1,246.1 Memorandum: Grand Total, Discretionary Budgetary Resources adjusted for Inflation and Population �������������������������������������������������������������������������������������������������������� 1,272.3 Grand Total, Discretionary Budgetary Resources as a Percent of GDP ����������� 8.8% 267.0 1,260.7 1,200.8 1,240.7 1,267.1 1,298.3 6,267.6 13,213.8 272.7 1.9% 5,940.0 11,619.7 7.8% 7.1% 1,260.7 8.7% 1,171.8 7.9% 1,177.8 7.7% 1,167.9 7.5% 1,161.9 7.2% The DOD Overseas Contingency Operations totals for 2009 Enacted and 2010 Proposed include amounts that will be transferred to the U.S. Coast Guard in DHS. The Budget includes placeholder estimates of $50 billion per year for Overseas Contingency Operations in 2011 and beyond. These estimates do not reflect any specific policy decisions. 3 Adjusted for advance appropriations, 2009 funding for the Department of Education is $46.2 billion. All numbers exclude funding for Pell Grants. 4 Funding from the Hospital Insurance and Supplementary Medical Insurance trust funds for administrative expenses incurred by the Social Security Administration that support the Medicare program are included in the HHS total and not in the Social Security Administration total. 5 The DHS level includes $1.8 billion for BioShield in 2009 and -$1.6 billion in 2010 for a transfer of BioShield balances to HHS; adjusted for BioShield, the DHS totals for 2009 and 2010 are $40.2 billion and $42.7 billion, respectively. These levels also exclude $0.2 billion in transfers, both in 2009 and 2010, from the Navy to the Coast Guard in Overseas Contingency Operations funding. 1 2 MID-SESSION REVIEW (Budget authority in billions of dollars) The International total includes estimated costs of $0.4 billion for the increases in the U.S. contribution to the IMF Quota and New Arrangements to Borrow, calculated on a credit reform basis with adjustment to the discount rate for market risk. 7 Effective with 2011, the Budget assumes a scenario to modify the financing system of the Federal Aviation Administration that replaces certain aviation excise taxes with direct user charges. The direct user charges are considered to be discretionary and offset discretionary budget authority and outlays, while the aviation excise taxes are considered to be a receipt. Because of this budgetary treatment, this scenario results in lower discretionary budget authority starting in 2011, which is reflected here. It also reduces aviation excise taxes. That is shown in Table S-11. 8 The Veterans Affairs total is net of medical care collections. 6 SUMMARY TABLES Table S–14. FUNDING LEVELS FOR APPROPRIATED (“DISCRETIONARY”) PROGRAMS BY AGENCY—Continued 59 60 Table S–15. FEDERAL GOVERNMENT FINANCING AND DEBT (In billions of dollars) Actual 2008 Estimate 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Financing: Unified budget deficit ��������������������������������������������������������������������������������� Other transactions affecting borrowing from the public: Changes in financial assets and liabilities:1 Change in Treasury operating cash balance ��������������������������������� Net disbursements of credit financing accounts: 459 1,580 1,502 1,123 796 775 778 739 795 810 815 917 296 –102 ......... –200 ......... ......... ......... ......... ......... ......... ......... ......... Direct loan accounts ���������������������������������������������������������������������� 27 436 252 108 73 79 81 75 72 70 71 67 Guaranteed loan accounts ������������������������������������������������������������� 6 4 –6 1 4 5 5 6 5 5 3 –* Troubled Asset Relief Program (TARP) equity purchase accounts ������������������������������������������������������������������������������������� ......... 141 –28 –16 –19 –18 –19 –17 –14 –14 –15 –12 Net purchases of non-Federal securities by the National Railroad Retirement Investment Trust (NRRIT) ���������������������� Net change in other financial assets and liabilities2 ��������������������� –7 –12 –5 –1 –1 –1 ......... ......... ......... ......... –1 ......... –1 ......... –1 ......... –1 ......... –1 ......... –1 ......... –1 ......... Subtotal, changes in financial assets and liabilities �������������������� Seigniorage on coins ���������������������������������������������������������������������������� 310 –1 474 –* 218 –* –108 –1 58 –1 64 –1 66 –1 63 –1 61 –1 60 –1 57 –1 54 –1 Total, other transactions affecting borrowing from the public 309 473 217 –109 57 64 66 62 60 59 57 53 2,053 1,719 1,015 853 839 844 801 855 869 872 971 2,053 1,719 1,015 853 173 156 173 260 2 1 2 2 2,228 1,876 1,190 1,115 839 282 2 1,123 844 294 1 1,140 801 323 2 1,126 855 303 2 1,160 869 296 2 1,168 872 305 2 1,179 971 263 1 1,235 Total, requirement to borrow from the public (equals change in debt held by the public) ������������������������������������� 768 Changes in Debt Subject to Statutory Limitation: Change in debt held by the public ������������������������������������������������������������ Change in debt held by Government accounts ����������������������������������������� Change in other factors ����������������������������������������������������������������������������� Total, change in debt subject to statutory limitation ������������������������� 768 267 3 1,039 Debt issued by Treasury ���������������������������������������������������������������������������� Adjustment for discount, premium, and coverage3 ����������������������������������� Total, debt subject to statutory limitation4 ����������������������������������������������� 9,961 12,187 14,063 15,251 16,365 17,486 18,625 19,749 20,908 22,075 23,253 24,487 –1 1 1 2 4 5 6 7 9 9 10 10 9,960 12,188 14,064 15,254 16,368 17,491 18,631 19,757 20,916 22,084 23,263 24,498 Debt Outstanding, End of Year: Gross Federal debt:5 Debt issued by Treasury ���������������������������������������������������������������������� 9,961 12,187 14,063 15,251 16,365 17,486 18,625 19,749 20,908 22,075 23,253 24,487 MID-SESSION REVIEW Debt Subject to Statutory Limitation, End of Year: (In billions of dollars) Actual 2008 Debt issued by other agencies ������������������������������������������������������������� Total, gross Federal debt ����������������������������������������������������������������� Held by: Debt held by Government accounts ���������������������������������������������������� Debt held by the public 6 ���������������������������������������������������������������������� Estimate 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 25 25 25 24 24 23 23 22 22 20 18 18 9,986 12,212 14,087 15,276 16,388 17,509 18,648 19,772 20,930 22,095 23,272 24,505 4,183 5,803 4,356 4,513 4,686 4,946 5,228 5,522 5,845 6,148 6,444 6,749 7,012 7,856 9,575 10,590 11,443 12,281 13,126 13,927 14,782 15,651 16,523 17,493 5,803 7,856 9,575 10,590 11,443 12,281 13,126 13,927 14,782 15,651 16,523 17,493 SUMMARY TABLES Table S–15. FEDERAL GOVERNMENT FINANCING AND DEBT—Continued Debt Held by the Public Net of Financial Assets: Debt held by the public ������������������������������������������������������������������������������ Less financial assets net of liabilities: Treasury operating cash balance �������������������������������������������������������� 70 70 70 70 70 70 70 70 Total, financial assets net of liabilities ������������������������������������������� 196 –42 ......... 2 25 –46 505 632 884 993 1,066 –39 –45 –43 –40 141 113 97 78 108 149 173 173 20 19 17 17 –46 –46 –46 –46 1,085 1,344 1,260 1,318 1,145 –35 60 173 16 –46 1,382 1,226 –29 41 173 15 –46 1,449 1,301 –24 24 173 13 –46 1,511 1,372 –18 10 173 12 –46 1,572 1,442 –13 –5 173 11 –46 1,632 1,513 –10 –20 173 9 –46 1,689 1,580 –10 –32 173 8 –46 1,743 Debt held by the public net of financial assets ���������������������������� 5,297 6,770 8,230 9,330 10,125 10,899 11,677 12,415 13,210 14,019 14,834 15,751 Credit financing account balances: Direct loan accounts ������������������������������������������������������������������������ Guaranteed loan accounts �������������������������������������������������������������� TARP equity purchase accounts ����������������������������������������������������������� Government-sponsored enterprise preferred stock ��������������������������� Non-Federal securities held by NRRIT ���������������������������������������������� Other assets net of liabilities �������������������������������������������������������������� 372 270 270 70 * $500 million or less. A decrease in the Treasury operating cash balance (which is an asset) is a means of financing a deficit and therefore has a negative sign; that is, the reduction in cash balances reduces the amount that would otherwise be borrowed from the public. An increase in checks outstanding (which is a liability) is also a means of financing a deficit and therefore also has a negative sign. 2 Besides checks outstanding, includes accrued interest payable on Treasury debt, uninvested deposit fund balances, allocations of special drawing rights, and other liability accounts; and, as an offset, cash and monetary assets (other than the Treasury operating cash balance), other asset accounts, and profit on sale of gold. 3 Consists mainly of debt issued by the Federal Financing Bank (which is not subject to limit), debt held by the Federal Financing Bank, the unamortized discount (less premium) on public issues of Treasury notes and bonds (other than zero-coupon bonds), and the unrealized discount on Government account series securities. 4 The statutory debt limit is $12,104 billion, as enacted on February 17, 2009. 5 Treasury securities held by the public and zero-coupon bonds held by Government accounts are almost all measured at sales price plus amortized discount or less amortized premium. Agency debt securities are almost all measured at face value. Treasury securities in the Government account series are otherwise measured at face value less unrealized discount (if any). 6 At the end of 2008, the Federal Reserve Banks held $491.1 billion of Federal securities and the rest of the public held $5,311.6 billion. Debt held by the Federal Reserve Banks is not estimated for future years. 1 61 ) Executive Office of the President Office of Management and Budget Wa s h i n g t o n , D. C . 2 0 5 0 3