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L^vyjiy^ise L
OF THE
UNITED STATES
GOVERNMENT
FISCAL YEAR
1981
THE BUDGET DOCUMENTS
Data and analyses relating to the budget for 1981 are published
in four documents:
The Budget of the United States Government, 1981 contains the
Budget Message of the President and presents an overview of the
President's budget proposals. It includes explanations of spending
programs in terms of national needs, agency missions, and basic
programs, and an analysis of estimated receipts including a discussion of the President's tax program. This document also contains a
description of the budget system and various summary tables on
the budget as a whole.
The United States Budget in Brief, 1981 is designed for use by the
general public. It provides a more concise, less technical overview
of the 1981 budget than the above volume. Summary and historical
tables on the Federal budget and debt are also provided, together
with graphic displays.
The Budget of the United States Government„ 1981—Appendix
contains detailed information on the various appropriations and
funds that comprise the budget. The Appendix contains more detailed information than any of the other budget documents. It
includes for each agency: the proposed text of appropriation language, budget schedules for each account, new legislative proposals,
explanations of the work to be performed and the funds needed,
proposed general provisions applicable to the appropriations of
entire agencies or groups of agencies, and schedules of permanent
positions. Supplemental and rescission proposals for the current
year are presented separately. Information is also provided on
certain activities whose outlays are not part of the budget totals.
Special Analyses, Budget of the United States Government, 1981
contains analyses that are designed to highlight specified program
areas or provide other significant presentations of Federal budget
data. This document includes information about: alternative views
of the budget, i.e., current services and national income accounts;
economic and financial analyses of the budget covering Government finances and operations as a whole, and Government-wide
program and financial information for Federal civil rights and
research and development programs; and some major accomplishments.
Instructions for purchasing copies of any of these documents are
on the last two pages of this volume.
GENERAL NOTES
1. All years referred to are fiscal years, unless otherwise noted.
2. Detail in the tables, text, and charts of this volume may not add to the
totals because of rounding.
II
TABLE OF CONTENTS
Page
PART 1. THE BUDGET MESSAGE OF THE PRESIDENT
PART 2. BUDGET SUMMARY
Overview of the budget
Major budget proposals
Proposed legislation that would reduce Federal spending
Budget authority
Federal civilian employment and pay
Federal debt
Control of Federal credit activities
Making Government work better
PART 3. ECONOMIC ASSUMPTIONS AND THE LONG-RANGE BUDGET
OUTLOOK
Economic assumptions
•
The 5-year budget outlook
The longer range budget outlook
PART 4. BUDGET RECEIPTS
Summary
Receipts proposals
Changes in budget receipts
Receipts by source
PART 5. MEETING NATIONAL NEEDS: THE FEDERAL PROGRAM BY
FUNCTION
Introduction
National defense
International affairs
General science, space, and technology
Energy
Natural resources and environment
Agriculture
Commerce and housing credit
Transportation
Community and regional development
Education, training, employment, and social services
Health
Income security
Veterans benefits and services
Administration of justice
General government
General purpose fiscal assistance
Interest
Allowances
Undistributed offsetting receipts
PART 6. PERSPECTIVES ON THE BUDGET
III
MX
1
2
6
13
15
16
16
17
21
29
30
37
48
59
60
61
70
72
75
76
88
104
120
129
154
169
178
194
206
217
242
258
278
287
296
302
308
311
313
315
CONTENTS
Page
Relationship of budget authority to outlays
Alternate budget proposals
Fiscal activities outside the Federal budget
Budget funds and the Federal debt
Reconciliation of relatively uncontrollable outlays and of receipts
PART 7. THE BUDGET SYSTEM AND CONCEPTS
The budget process
Coverage of the budget totals
Budget authority and related transactions
Collections
Other transactions
Basis for budget
figures
PART 8. THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT
Explanatory note
Legislative branch
The Judiciary
Executive Office of the President
Funds appropriated to the President
Department of Agriculture
Department of Commerce
Department of Defense—Military
Department of Defense—Civil
Department of Education
Department of Energy....,
Department of Health and Human Services
Department of Housing and Urban Development......
Department of the Interior
Department of Justice
Department of Labor
Department of State
Department of Transportation
Department of the Treasury
Environmental Protection Agency
National Aeronautics and Space Administration
Veterans Administration
Other independent agencies
Allowances
Budget totals
Off-budget Federal entities
Attribution of Federal Financing Bank outlays
PART 9. SUMMARY TABLES
Explanatory note relating to the summary tables
Table 1. Budget summary
Table 2. Budget receipts, outlays, and budget authority
Table 3. Budget authority and outlays by agency
Table 4. Budget authority and outlays available through current action by
Congress
Table 5. Relation of budget authority to outlays
Table 6. Obligations incurred, net
Table 7. Balances of budget authority
Table 8. Summary of full-time permanent civilian employment in the executive branch
Table 9. Budget financing and outstanding debt
Table 10. Budget receipts by source
326
33^
345
353
3^
3^
3152
367
368
371
372
373
382
385
388
397
409
417
426
431
435
440
454
459
470
473
478
481
489
496
498
500
503
541
542
545
546
549
550
551
552
553
554
555
556
557
558
559
560
CONTENTS
V
Page
Table 11. Offsetting receipts by type
Table 12. Budget authority by function and agency
Table 13. Outlays by function and agency
Table 14. Legislative proposals for major new and expanded programs in
the 1981 budget, projection of costs
Table 15. New direct loan obligations by agency
Table 16. New loan guarantee commitments by agency
Table 17. Controllability of budget outlays, 1971-81
Table 18. Budget receipts by source, 1971-81
Table 19. Budget outlays by function, 1971-81
Table 20. Federal transactions in the national income accounts, 1970-81
Table 21. Federal finances and the gross national product, 1958-83
Table 22. Composition of budget outlays in current and constant (fiscal year
1972) prices: 1958-83
Table 23. Budget receipts and outlays, 1789-1983
INDEX
563
566
577
590
596
597
598
600
602
611
612
613
614
615
PART 1
THE BUDGET MESSAGE
OF THE
PRESIDENT
THE BUDGET DOLLAR
Fiscal Year 1981 Estimate
BUDGET MESSAGE OF THE PRESIDENT
To the Congress of the United States:
This budget for 1981 is prudent and responsible. It continues the
strategy of restraint that I proposed, and the Congress accepted, for
the 1980 budget. At the same time it proposes selected, essential
increases in areas of high priority and great national concern. In
this way it seeks a balance between our needs for budgetary restraint and our needs for specific expenditures. I expect the Congress to support it.
Total outlays for 1981 proposed by this budget are $615.8 billion,
an increase of 9%. After allowing for inflation, this budget is
virtually level with 1980 spending. Total receipts for 1981 are estimated to be $600 billion. In view of current economic conditions,
the only major revenue proposal included in the budget is my
windfall profit tax now before the Congress.
THE BUDGET TOTALS
(In billions of dollars)
1979
actual
Budget receipts
Budget outlays
Surplus or deficit ( - )
Budget authority
1980
estimate
1981
estimate
1982
estimate
1983
estimate
466
494
524
564
600
616
691
686
799
774
-28
— 40
-16
+ 5
+ 25
557
654
696
775
868
Thus, I am proposing a deficit of $15.8 billion, the lowest deficit
in 7 years. This reduces the deficit by 60% in comparison to 1980.
More significantly, it is $50 billion less than when I first ran for
the Presidency. As a percentage of the budget, and of the gross
national product, the 1981 deficit is the second lowest of the last
decade.
Economic projections deeply affect this budget. It appears today
that the long economic recovery occurring throughout my first
term may falter this year. I have therefore assumed that there will
be some decline in GNP during the course of 1980, followed by
renewed but moderate growth in 1981. As a result, budget receipts
will be reduced and certain expenditures will increase automatically. This is why the 1981 budget is in deficit. If, contrary to our
assumptions, the economy were to perform strongly enough to keep
the unemployment rate at its current level, the 1981 budget would
be in surplus.
We must monitor the economic outlook carefully. If the economy
begins to deteriorate significantly, I will consider tax reductions
and temporary spending programs for job creation targeted toward
M3
M4
THE BUDGET FOR FISCAL YEAR 1981
particular sectors of economic stress. But I believe current economic conditions argue for restraint.
I believe that this judgment and this budget recognize that equitable budget restraint is essential in our efforts to control inflation;
that the unemployed should not bear the costs of our anti-inflation
efforts; and most importantly, that we continue to pursue the goals
of full employment, price stability, and balanced growth. The fiscal
and program policies in this budget are essential, I believe, if we
are to move rapidly toward these goals in the 1980's.
Indeed, the restraint proposed in this budget is essential to
achieve these goals. The unacceptably high inflation now prevailing is clearly due to many, deeply imbedded, long-term forces.
Countering this inflation involves sustained action across a wide
spectrum.
• We must reduce our dependence upon foreign oil.
• We must enhance our economy's productivity.
• We must continue our efforts to foster competition and innovation through further deregulation.
• We must sustain compliance with the administration's wage
and price guidelines.
But none of these efforts can succeed unless Federal spending is
controlled. By continuing a clear and consistent policy of restraint,
the 1981 budget insures that the Federal budget will not be an
inflationary force in the economy.
Although I have kept spending in this budget from rising in real
terms, I have found it necessary to increase funds in a few critical
areas. The most important of these are defense, energy, basic research, and the training and employment of our Nation's young
people.
Defense.—The long decline in real spending for defense that
began in 1969 has been reversed. The uncertain and sometimes
hostile world we live in requires that we continue to rebuild our
defense forces. The United States will continue to seek peaceful
means to settle international disputes. But I cannot ignore the major
increases in Soviet military spending that have taken place inexorably over the past 20 years. I cannot ignore our commitment to our
NATO allies for mutual real increases in our investment in national
defense. I cannot ignore the implications of terrorism in Iran, or
Soviet aggression in Afghanistan.
Therefore, my budget proposes a defense program in 1981 of
$158.2 billion in budget authority, an increase of over 5% in real
terms. Outlays for defense will be $142.7 billion, a real increase of
over 3%.
THE BUDGET MESSAGE OF THE PRESIDENT
M5
Moreover, I am committed as a matter of fundamental policy to
continued real increases in defense; and I plan increases in my
defense budgets through 1985. Over the period 1981-85, I am proposing that the defense program level of the United States increase
by $90 billion.
Energy.—This budget reflects the important progress made by
my administration toward a broad and practical program dealing
with the energy problems the Nation will face in the next decade. I
am confident, and the 1981 budget assumes, that early in the 1980
session the Congress will pass the crucial measures I proposed last
year: the windfall profit tax, the Energy Security Corporation, the
conservation measures, and the Energy Mobilization Board.
With this budget we will have put into place an energy program
composed of the following elements:
(1) Realistic pricing and fair taxes.—My decontrol decision of last
April is now in effect. It is painful, and no one can pretend otherwise. But we cannot have an energy program that maintains illusions. Energy is not cheap, and we must accept that fact.
My windfall profit tax, to be passed early this year, retains a
portion of the profits from energy price increases for the public. This
will insure that increased energy prices will lead to new public
investment in energy production. It will insure also that the burdens
of higher energy costs are fairly shared.
(2) Conservation.—The 1981 budget allocates resources for tax
incentives, low-interest subsidized loans, and other measures to
stimulate more conservation. Conservation is the quickest and
cheapest step we can take to confront our energy problem.
(3) Production,—'This budget anticipates the creation of the
Energy Security Corporation to facilitate the development of synthetic fuels and a major new gasohol program. It also supports
continued new investments in those energy initiatives begun in the
last two budgets. We are significantly increasing our expenditures
on fossil fuels, on solar energy, and on nuclear fusion. Nuclear fission
research, on the other hand, declines, while greater emphasis is
placed on solving the current problems of nuclear power.
(4) Protection.—As we adjust to the new energy realities, we must
continue to protect those who are most vulnerable. The 1981
budget continues to provide funds for the poor to weatherize their
homes; funds to enable the most disadvantaged Americans to cope
with the rising cost of energy; and funds for energy crisis assistance.
My energy program is, of necessity, a long-term one. But if it is
sustained through the new decade, we will reduce consumption,
M4
THE BUDGET FOR FISCAL YEAR 1981
increase production from domestic sources, and promote alternate
forms of energy. We will significantly reduce our dangerous reliance upon foreign oil. We will remove a major source of inflation.
Our economy and our Nation will emerge from the 1980's stronger
than they are now,
Basic research.—In the long run, economic growth depends
critically on technological development. For many years, this country has led the world in producing new technology. We are in
danger of losing this leadership. The 1981 budget continues my
long-standing commitment to reverse the trends of the past two
decades and provide for major and sustained increases—above the
rate of inflation—for research and development programs. Obligations for research and development will increase by 13%; for
basic research by 12%. Since 1978, obligations for basic research
will have increased by 40%. I believe that these are among the
most important expenditures we can make. The payoff, particularly for basic research, is long-term, but immense. We benefit today—
in new industries, in millions of jobs, in lives saved, and in lives
protected—from the investments in science made decades ago. We
must continue such investments today to reap similar returns tomorrow.
Human resources.—My budget, restrained as it is, provides needed
support to those Americans who are most in need. Most of the
increase in the 1981 budget over 1980 is due to the automatic cost-ofliving increases in entitlement programs that provide income to the
poor and the elderly. I have continued and improved these programs.
In addition, I have proposed discretionary increases in a wide range
of programs affecting those in our society who are the most
disadvantaged.
The budget includes $687 million for proposals to expand health
services to the poor and the underserved, including $403 million to
provide medicaid eligibility for 2 million additional low-income
children and approximately 100,000 pregnant women. The budget
also includes a 24% increase in subsidized housing programs and a
24% increase in elementary and secondary education programs for
the disadvantaged. Overall, I am proposing an increase of $7 billion
in aid to the poor to protect them against the effects of inflation.
At the same time, I am proposing a major initiative that will
enable our Nation's disadvantaged youth to receive a strong basic
education, to find and keep a job. This is a critically important
time for this initiative. In the 1980's, the number of youths entering the labor market will fall. If the young people of the 1980's are
prepared, they will be able to find good jobs and build productive
THE BUDGET MESSAGE OF THE PRESIDENT
M7
lives. My initiative will make this preparation possible. It will
couple a strong emphasis on basic education with significant employment opportunity. For those young people who participate, the
programs will be tough and challenging. But they will be extremely worthwhile. Those who complete them will have a major advantage where it counts—in the permanent job market. I consider this
investment in human resources for the 198CTs to be as important as
the investments I am proposing for basic research. It is an investment in our most precious resource—the energies and talents of
America's young people.
Agriculture.—Because of the aggression by the Soviet Union
against Afghanistan, I concluded that we could not now permit that
country to benefit from our productive agriculture. On January 4, I
announced the suspension of shipments of grain, soybeans, and
their byproducts to the Soviet Union. This budget reflects the steps
necessary to avoid the devastating effects such action could have
had on our farmers and grain shippers. Specifically, the Secretary
of Agriculture will:
• purchase contracts entered into with the Soviet Union at
prices at or above those prevailing on January 4;
• if necessary, take title to the grain intended for export to the
Soviet Union and isolate it from the market;
• purchase up to 4 million metric tons of wheat for an international food aid reserve;
• increase the loan level for feed grains and wheat by 10 and 15
cents per bushel, respectively; and
• modify the farmer-owned grain reserve to encourage farmers
to place additional grain in the reserve.
On January 19, I announced, as additional steps to avoid the
impact of suspension of shipments, that the Government would:
• increase the 1980 and 1981 Public Law 480 programs in order
to increase grain shipments abroad; and
• purchase corn directly at local levels to stabilize cash markets
and alleviate transportation backups.
I stand ready to take further steps if these actions prove insufficient.
Other commitments.—In other important areas, the 1981 budget
reflects the reorganization accomplishments of the administration;
continues the significant progress already experienced in urban
and community development; expresses my commitments to welfare reform and a national health plan, programs that will begin in
future budget years; and reaffirms my dedication to improved Federal budgeting and management.
M4
THE BUDGET FOR FISCAL YEAR 1981
The budget anticipates that my welfare reform proposals will
take full effect in 1982, and my national health plan proposal in
1983. Taken together, these programs provide income support and
assured health care to all Americans in need. My national health
plan—which will be phased into operation prudently, consistent with
the state of our economy—minimizes direct governmental control
over health care, restrains the growth of Government, and provides
maximum individual choice. I am continuing to seek enactment of
my hospital cost containment proposal, which I believe is an essential part of any national health plan. When fully enacted, these two
proposals—welfare reform and the national health plan—will significantly and permanently improve the lives and prospects of all
Americans.
The 1981 budget includes a $15.5 billion allocation for the new
Department of Education, which the Congress has approved. The
establishment of this Department will require a great deal of effort
in the short run, but it will give our system of education the
consistent attention and high priority it deserves.
This budget also continues the improvement in the budget process I promised 4 years ago. In the 1979 budget we introduced zerobase budgeting, a system we have now used in three budgets to
assure the allocation of scarce public resources to the most critical
areas. Last year, in the 1980 budget, we moved to multiyear budgeting, My budget again this year shows not only decisions for 1981, but
the effect of those decisions—in detail—for 1982 and 1983. To the
extent feasible, the multiyear budget projects also the future costs of
programs such as the national health plan, welfare reform, defense,
energy, and research and development.
This year I have installed a central system to control the use of
Federal credit. In the past, too much has escaped the normal
discipline of the budget. This system, which is now in place, recommends specific credit limitations for most credit programs.
THE CREDIT BUDGET TOTALS
{in fallens of <WUn)
estrufe
1S!0
1331
e*/rj!t
51.4
74.7
59.7
75.2
60.7
81.4
126.1
134,9
142.1
1379
New direct loan obligations
New loan guarantee commitments
Total
The new system of credit control will permit both the administration and the Congress to improve their understanding of the
credit programs, to measure their important effects, and to determine appropriate levels of credit activity.
THE BUDGET MESSAGE OF THE PRESIDENT
M9
This budget reflects continued efforts to improve financial management in Government and to stop illegal or improper use of
taxpayers' money. We are achieving major savings from better cash
management and stronger internal auditing in Federal agencies.
Conclusions.—Proposing a responsible Federal budget is a fundamental task of public leadership. The budget must reconcile a
broad range of legitimate claims for resources with the needs of
the economy and the burdens on the taxpayer. Simultaneously, it
must:
• respect past commitments in its allocations to social security,
to veterans, and to the elderly;
• meet the needs of the present for defense, unemployment
benefits, and health services; and
• invest in the future through research and development,
energy programs, and education.
The budget must do all of these things specifically and in detail.
A budget rests on specific proposals related to specific costs, not on
rhetoric.
A budget also rests on policy. And this budget contains important policy decisions—major departures, new initiatives, larger and
longer-term commitments. Each stands on its own merit. Yet taken
together all of the proposals in this budget can also be characterized in a more general way. They reflect the maturing of the administration's basic, consistent underlying policy themes: restraint in
budgeting the taxpayers' dollars; the strengthening of our defense;
providing energy for the future; improving opportunities for the
Nation's youth; and making Government work better.
Ours is a great and complex nation. The existing arrangements
in our society are the result of complex, not always consistent
decisions of the past, emerging from a democratic people. Change is
sometimes slow because it rests on consent. But intelligent, consistent leadership, persistently applied, can bring about change in
policies and further the well-being of our society and of its people.
I believe that this budget, and those I have submitted in the past,
support the fundamental policies that will prepare America for the
new decade.
JIMMY CARTER.
JANUARY 2 8 , 1 9 8 0 .
PART 2
BUDGET SUMMARY
1
310-000 0 - 80 - 2
BUDGET SUMMARY
This part of the budget summarizes the President's major budget
proposals and discusses significant changes in the way the Government conducts its business.
OVERVIEW OF THE BUDGET
Inflation is the most serious economic problem facing the Nation
today. Accordingly, this budget proposes continued restraint on the
growth of Federal spending, which was also the hallmark of the
administration's budget last year. Overall, this budget, adjusted for
inflation, limits spending in 1981 to about the same level as in
1980.
Restraint has been applied carefully. For the third consecutive
year, zero-base budgeting has been used to establish priorities that
put taxpayers' dollars to best use. Desirable new programs have
been deferred. Increases in existing programs have been limited.
Past efforts to achieve program efficiencies and improve management are beginning to pay off; further efforts in this direction are
undertaken in this budget. Reductions in lower priority programs
have been proposed; specific outlay reductions of S9.7 billion from
current service levels are proposed.
Total outlays increase by $52 billion between 1980 and 1981.
Virtually all of this increase derives from three sources: the uncontrollable programs in the budget, such as interest on the debt and
benefit payments for individuals, and increased spending for
energy and defense.
Benefit payments under retirement, disability, health care, and
similar programs rise because of automatic cost-of-living adjustments and because of the normal annual increases in the number
of eligible beneficiaries. Interest on the public debt increases because of the effect of high interest rates and because of increases in
debt outstanding.
Expenditures for essential defense modernization—primarily to
strengthen NATO-related and strategic capabilities and to increase
our flexibility to meet crises in other areas—are proposed to increase in real terms.
Necessary increases are provided for programs that will increase
energy production and conservation and reduce our reliance on
foreign oil.
2
BUDGET SUMMARY 19
The remainder of the budget shows selective increases for critical
areas, such as for the President's youth initiative and for low
income housing, but, overall, is reduced in real terms.
Budget Outlays—Constant 1981 Dollars
This budget moves back toward balance in 1981, following a rise
in the deficit in 1980. This pattern of budget deficits reflects the
effects of the economic activity expected during the next two years,
with an expected economic downturn during the first half of calendar year 1980 and a recovery thereafter. If, contrary to our assumptions, the economy were to perform strongly enough to keep
the unemployment rate at its current level, the budget deficit
would be much smaller in 1980, and by 1981 the budget would be
in surplus.
The major policy changes in the budget can be highlighted by
comparing the administration's recommendations with current
services estimates. Current services estimates are projections of the
costs of existing programs under existing law. They include outlay
changes that result from increased numbers of beneficiaries entitled to receive payments and higher benefit levels due to increases
in the cost of living, and added outlays necessary to maintain
program levels in the face of rising costs. They do not include
increases or decreases in the program level due to policy changes.
M4
THE BUDGET FOR FISCAL YEAR 1981
EFFECTS OF BUDGET PROPOSALS
(In billiOrtS of doftarj)
htmtn
1979
actual
Receipts:
Current services
Proposed reductions ( - )
Proposed increases
Budget receipts
Outlays:
Current services
Proposed reductions ( - )
Proposed increases
Budget outlays
Surplus or deficit ( - ) :
Current services basis
Budget surplus or deficit ( - )
mo
1331
465.9
517.4
-.1
6.6
579.0
-.3
21.3
465.9
523.8
600.0
493.7
560.6
-.2
3.1
612.0
-9.7
13 5
493,7
563.6
615.8
-27.7
-43.2
-33.1
-27.7
-39.8
-15.8
Current services estimates provide a basis for identifying the
effects of policy changes recommended in the budget. Policy
changes include both proposed legislation and appropriations requested for discretionary increases or decreases in program levels.
Special Analysis A, which accompanies this budget, contains a
detailed comparison between the 1981 budget estimates and the
current services estimates.
The budget recommendations would result in 1981 outlays of
$615.8 billion—$3.7 billion above the current services level. Areas
where major increases over current services occur are: defense
spending excluding pay, which is $5.4 billion over current services
levels in 1981; energy-related programs, which are $2.4 billion
higher; and countercyclical fiscal assistance, which would add $1.0
billion to current services spending levels. The principal reductions
from current services include: —$2.7 billion for the administration's pay reform proposals, which make Federal compensation
more comparable with other sectors; —$0.8 billion for hospital cost
containment; —$0.8 billion for higher education, primarily for student loan reforms; —$0.8 billion for agriculture export credit sales
which are converted to a guaranty program; and —$0.5 billion for
reform of the school lunch and child nutrition programs, primarily
to focus them on the needy. The following table identifies major
program increases and reductions, relative to current services
levels, in the 1981 program. Major legislative reduction proposals
are discussed in a separate section, below.
5
BUDGET SUMMARY
BUDGET AUTHORITY AND OUTLAY INCREASES AND DECREASES RELATIVE TO CURRENT
SERVICES
(In btHions of dollars)
Outlays
Budget authority
Program
Decreases:
Defense—Military pay reform
Civilian agencies pay reform
Medicare and medicaid—hospital cost containment
Other medicare and medicaid reforms
Net interest
Higher education programs
School lunch and other child nutrition programs
Federal impact aid to education
Agricultural export credit sales...
Public assistance program reform
Rail subsidies
Highway construction
Social security and railroad retirement
Other
Subtotal, decreases
Increases:
Defense—Military, program increases
Allowance for contingencies and welfare reform
Countercyclical fiscal assistance
Transportation energy conservation program
Heating bill assistance for low income families
Strategic petroleum reserve
Synthetic fuels promotion
Other energy programs
Social services
Economic development initiative
Atomic energy defense activities
Environmental programs
Housing assistance
International programs
Science and space programs
Crop insurance and food security reserve
Child health assurance program (medicaid)
Youth initiative:
Education
Training and employment
Other
1980
1931
1980
1981
*
.5
-1.6
.1
-1.7
-1.0
-.8
-.6
-1.2
-.8
—.5
—.3
-.8
-.2
-.3
-.2
-.2
-1.1
-.3
-7.2
-.2
-9.7
.9
.2
.4
1.3
9.1
2.0
1.0
1.5
.9
.1
.2
.1
5.4
1.5
1.0
.6
.8
-1.7
-1.1
-.2
-.1
*
-.1
-1.2
-.5
-.5
-.4
-.2
-.2
»
-.2
-.1
*
*
*
*
2.3
17.8
1.0
.5
.6
*
1.0
.4
.5
.1
*
*
*
.1
.3
.3
.1
.3
.2
.4
.9 ,
.3
.9
Subtotal, increases
23.7
25.7
Total, changes from current services, net
23.4
18.4
1.0
.5
.3
.2
.1
.1
*
.1
.5
.4
*
.3
.1
.7
3.1
13.5
3.0
3.7
*$50 mdlton or less
Receipts under the tax proposals in this budget are expected to
be $600 billion in 1981, $21 billion higher than the current services
level. The major increases over current services result from the
administration's windfall profit tax proposal and cash management
proposals to require tax payments closer to the time that liabilities
are incurred.
M4
THE BUDGET FOR FISCAL YEAR 1981
Tax receipts tend to grow more rapidly than the economy as a
whole, raising tax burdens and restraining growth. Because it is
the long-term policy of this administration to limit tax burdens,
periodic tax reductions will carefully be considered between now
and 1985. Such tax reductions will permit taxpayers to share the
benefits of spending restraint. The appropriate timing, magnitude,
and composition of tax cuts in the 1982-85 period, however, depend
upon future economic conditions and therefore must be determined
at a later time.
The 1981 budget proposals are directed toward reducing inflation. Restrained monetary and fiscal policy together are designed
to help create an environment in which inflationary pressures will
ease. The budget supports this effort by reducing the budget deficit
to $16 billion, the lowest level since 1974. In relation to the size of
the economy, this deficit is 0.6% of GNP, well below the 2.0%
average of the 1970*8.
Budget Deficits as a Percent of G N P
Percent
P«rcut
MAJOR BUDGET PROPOSALS
Tax proposals.—The budget reflects the administration's windfall
profit tax proposal, which is designed to capture a part of the
windfall profits of domestic oil producers that result from decontrol
of domestic oil prices and rapid increases in world oil prices. This
BUDGET SUMMARY
7
tax is an essential component of the administration's energy initiatives and is estimated to increase excise tax receipts by $20.9
billion in 1981. These receipts will provide resources that will make
it possible to finance specific energy-related programs. In part because the proposed tax is an excise tax, and thus deductible for
income tax purposes, it reduces income tax receipts and produces a
net increase in receipts of $13.9 billion in 1981.
The receipts estimates also reflect administrative actions and
legislative proposals to require that tax payments be made closer to
the time that liabilities occur. Under current law, some taxpayers,
particularly large corporations, can defer tax payments well
beyond the time when liabilities accrue or when they withhold
taxes from employees' paychecks. Such deferrals amount to interest-free loans from the Federal Government. These cash management initiatives will increase receipts by $4.5 billion in 1981 and by
$5.6 billion in 1982. (See Part 4 for a more detailed description of
these and other tax proposals).
Defense and international.—Since taking office, this administration has deliberately and steadily achieved increases in defense
resources. The U.S. and its allies recognize that our military capabilities must be strengthened to play a more constructive and
stabilizing role in the international arena. Therefore, the budget
proposes significant increases in the resources necessary to assure
our national security. Defense outlays will be $142.7 billion in 1981,
an increase of $15.3 billion from 1980. Both strategic and conventional forces will be strengthened. In the strategic area, substantial
funding increases are provided for development of the MX, a new
land-based missile system. Funding of the new Trident missile, a
replacement for the Polaris and Poseidon submarine-launched missiles, continues. Air launched cruise missiles are being developed
and procured.
In conjunction with our NATO allies, continued emphasis will be
given to modernizing our NATO-oriented forces and improving our
ability to reinforce units in Western Europe. Our ability to deploy
forces rapidly elsewhere in the world will also be improved. Overall, defense program increases in excess of 5% in real terms will
result in a corresponding increase in defense spending of over 3%
in 1981. Additional increases in real terms in both program levels
and spending levels are projected for the next several years.
The budget proposals for international affairs are designed to
help meet the near-term challenges to stability in many areas of
the world, as well as supporting our longer term interests worldwide. In 1980, supplemental appropriations are proposed for foreign
economic and military assistance in response to the Soviet invasion
of Afghanistan. Other adjustments in spending for international
M4
THE BUDGET FOR FISCAL YEAR 1981
programs may be necessary as further requirements become
clearer.
Energy.—Outlays for energy programs in 1981 are estimated to
be $8.1 billion, $0.4 billion more than in 1980 and $1.3 billion more
than in 1979. The Nation's energy problems became even more
apparent last year with rapid escalation of OPEC prices and the
accompanying drain of dollars to pay for OPEC oil. The 1981
budget reflects the administration's initiatives to reduce oil imports
and to expand programs in domestic energy supply and conservation.
The administration's energy strategy continues to concentrate
upon reducing the Nation's dependence on foreign oil in order to
increase our energy security. A basic element of that strategy is
the decontrol of oil and natural gas prices. In addition, the proposed windfall profit tax will ensure that the costs of more expensive energy are equitably shared, and will finance programs to help
offset rising energy costs for low income families, reduce petroleum
imports, promote domestic energy supply, and encourage energy
conservation. Many of these programs were proposed to the Congress last year, some were enacted, and several, including the
windfall profit tax, the Energy Security Corporation, and the
Energy Mobilization Board, were near final congressional action at
the end of the last session of Congress. The goal of these programs
is to reduce oil imports from the current level of 8.1 million barrels
per day to 4.5 million barrels per day by 1990.
To help reduce oil imports, the administration's energy program
seeks to develop a broad range of alternative energy sources, including additional incentives for domestic oil and natural gas production, opening up the National Petroleum Reserve in Alaska to
private exploration and development, the production of synthetic
fuels, and advanced research on renewable energy forms such as
solar power. Energy conservation will be encouraged both by the
higher prices that result from decontrol and by new programs to
foster more efficient energy use by individuals, businesses, and
government agencies. All existing sources of energy, including nuclear power, must play a part in restoring our national energy
security. Nuclear power programs in the 1981 budget continue a
shift away from support of advanced reactor types such as the
breeder reactor, with greater resources devoted to increased efficiency and safety in existing nuclear plants. Staffing and funding
for the Nuclear Regulatory Commission have been significantly
increased to correct deficiencies uncovered following the accident
at Three Mile Island.
The administration has proposed programs that increase support
for mass transit, encourage car pooling, and improve the efficiency
BUDGET SUMMARY
9
of automobile engines. The budget includes $1.5 billion in budget
authority and $0.6 billion in outlays for these programs in 1981,
with significant increases in outlays expected in 1982 and beyond.
The administration also proposed a program to assist those lowincome families least able to pay higher energy prices. For 1980,
the Congress enacted a program of special energy allowances and
energy crisis assistance for such families, providing the $1.6 billion
requested by the administration. The administration proposes that
outlays be expanded to a total of $2.4 billion in 1981, and that this
level be maintained through 1990.
Increases in Budget Outlays from 1980
Education, training, and employment.—The budget requests substantial increases in spending for education, training, and employment programs, especially those aiding our Nation's disadvantaged
youth. Continued high levels of youth unemployment, especially
among minorities, creates a serious and long-term national problem. The most compelling reason for increasing efforts to improve
employment opportunities for youth is the evidence that poor initial
job experience, especially for those just leaving school, can adversely
affect employment and earnings for a lifetime.
M4
THE BUDGET FOR FISCAL YEAR 1981
In 1977 this administration proposed and the Congress enacted
new training and employment programs for youth- Since 1977,
outlays for special programs for youth training and employment
have risen threefold, from $777 million that year to an expected
$2.3 billion in 1980. During this same period the administration
proposed and the Congress enacted a program directed at improving
the capacity of educational systems to teach basic skills. The program has grown to a proposed $40 million in 1981.
The problems of unemployment are greatest among minority and
disadvantaged youth, who are disproportionately concentrated in
central cities and rural poverty areas. Some of these difficulties are
due to discrimination, some to lack of contacts in the job market,
and some to poor preparation in basic literacy and arithmetic
skills. In this budget, the President is recommending a major new
initiative and $2.0 billion in budget authority ($1.2 billion above
current services) to help solve the problems of youth unemployment. The initiative is proposed to grow to $2.8 billion in 1982.
The budget proposals would provide grants to help secondary
schools in areas with high concentrations of poor and educationally
disadvantaged youth. Needy students in these schools would be
assisted through programs that provide the basic academic and
employment skills required to get and hold jobs that can lead to
advancement. For this part of the program, $900 million in budget
authority is proposed for 1981.
The budget proposes to consolidate and enhance three of the
experimental programs started in 1977. Needy youth in school
would be provided developmental work experience, in the private
sector as much as possible, that would reinforce the skills being
learned in the education program. Those out of school would be
provided a mix of training and work experience designed to give
each participant an opportunity to acquire the basic skills required
by potential employers. For this portion of the program, $1,125
million of budget authority would be provided for 1981, $300 million above the current services level for existing programs. Administration of the summer youth employment program would be integrated with the new program, eliminating administrative problems
now hampering local programs. In 1981, the summer program will
finance 1 million part-time jobs, the same level financed in 1979
and proposed for 1980. Continued expansion of the Job Corps training program to 44,000 training opportunities for youth, double the
1977 level, is also proposed. Other training and employment programs will continue to be funded at high levels during 1981. Outlays for public service jobs are estimated to be $4.4 billion in 1981,
providing for 450,000 jobs.
BUDGET SUMMARY
11
The budget also includes the administration's welfare reform
initiative, which will integrate the delivery of cash assistance with
an overall employment and training strategy. This proposal would
insure that individuals receiving public assistance have strong incentives to seek permanent employment, and would provide work
and training for principal earners in eligible families. The budget
estimates for start up costs during 1981 and for operational costs for
1982-85 are included in the allowance for contingencies.
The budget requests $5.6 billion for assistance to higher education under the higher education reauthorization proposal that the
administration has submitted to the Congress. Included in that
proposal is the creation of a major new student assistance direct
loan program under which the Federal Government would provide
postsecondary 1.25 million loans averaging $720 in 1981. A 10%
increase in G.I. bill benefits to assist veterans education and training under the post-Korean readjustment program is also proposed.
Health.—Federal programs for health care have significantly increased access to medical care for the poor and the aged. Despite
this progress, serious problems of financing, coordinating, and providing access to health care persist. The 1981 budget proposes
several initiatives to address these problems.
Hospital cost containment and other cost-saving proposals in this
budget reflect the administration's continued commitment to restrain inflation in health care costs. These proposals would save
the Federal Government approximately $1.7 billion in 1981, including $0.8 billion from hospital cost containment. Additional savings would be realized by State and local governments and by
individuals.
The administration has proposed a national health plan which
will provide comprehensive coverage for an additional 15 million
poor, limit out-of-pocket expenditures for the elderly, and provide
protection against catastrophic health expenses for all Americans.
The plan would provide comprehensive coverage of prenatal and
infant care services. Program expansions included in this plan are
timed to occur after proposals to control inflation in health care
costs are in place. The national health plan is estimated to cost
$24.1 billion in 1983, its first year of operation.
The budget includes major health planning and grant consolidation proposals. These administrative reforms aim at integrating the
current system of 11 State health plan requirements and 30 separate grant programs. The grant reforms would initiate comprehensive performance agreements with State and local governments for
delivery of primary health services to the poor and underserved,
M4
THE BUDGET FOR FISCAL YEAR 1981
and would improve the coordination of planning and decisionmaking.
Basic research.—Basic research is essential to maintaining the
Nation's long-term prospects for industrial growth, agricultural
productivity, a safe environment, medical advances, energy sufficiency, and national security. This budget continues the administration's commitment to increasing support for basic scientific inquiry and for advancing the frontiers of technological developments. It calls for total spending of $5.1 billion in 1981 for basic
research, an increase of nearly 3% in real terms over 1980. This
sustained commitment will lay the foundation for American scientific and technical preeminence in the future.
Agriculture.—The role of the Federal Government in protecting
American farmers against the vagaries of weather and excessive
fluctuations in prices is long established and widely accepted.
Recent events have highlighted the importance of this role. Following the Soviet aggression against Afghanistan, the administration
has significantly limited Soviet grain purchases from the United
States while at the same time taking actions to assure that any
adverse effects of the export limitation do not fall disproportionately on farmers. The budget estimates include $2.0 billion in 1980
and $0.8 billion in 1981 for an export control mitigation program.
These outlays will cover the costs of stabilizing the market for
grain, soybeans, and their products at prices equal to or above
those existing at the time of the suspension of shipments to the
Soviet Union. These actions will avoid sharp drops in agricultural
commodity prices that would adversely affect the American
farmer.
General purpose fiscal assistance.—General revenue sharing, the
largest general-purpose fiscal assistance program, is currently
scheduled to expire at the end of 1980. This program provides
funds to almost every general-purpose unit of government in the
United States, many of which have no other direct contact with the
Federal Government. The administration is proposing a 5-year extension of a modified version of general revenue sharing at the
1980 level of $6.9 billion per year.
This proposal will introduce a new and more cooperative approach to intergovernmental relations in the 1980's, and forge a
closer partnership among Federal, State, and local governments.
Revenue-sharing payments to State governments will be continued
contingent upon those governments cooperation in a participatory
process designed to strengthen the fiscal condition of both States
and localities. At the same time, the proposed formula for allocating funds to local governments is being revised to increase the
BUDGET SUMMARY
13
share of payments to communities less able to finance essential
services from their own resources.
In addition, this budget provides funds in 1980 for a 1-year
targeted fiscal assistance program that would provide general purpose fiscal assistance to localities with high unemployment and low
economic growth. It also provides funds, beginning in 1980, for a
countercyclical fiscal assistance program to aid State and local
governments during periods of high unemployment. Immediate
action on these proposals is needed to assist State and local governments in meeting their commitments during 1980 and 1981. Combined outlays under these two proposals would be $250 million in
1980 and $1.0 billion in 1981.
PROPOSED LEGISLATION THAT WOULD REDUCE
FEDERAL SPENDING
The budget restraint required to counter the current severe inflation has made it essential to propose a number of reductions in
Federal programs. Zero-base budgeting is well suited to this task.
With the zero-base budgeting process, it has been possible to compare
programs and to judge where the largest dollar savings could be
achieved with the least sacrifice in program performance and service
to the public.
This budget includes a number of legislative proposals that
would reduce Federal spending. Savings would be achieved through
several health-related proposals, modification of entitlement programs to relate benefits more closely to need or to earned rights,
increased administrative efficiencies, and reduction of waste, fraud,
and abuse. In addition, this budget contains proposals to reform
Federal compensation practices and procedures, place the railroad
retirement system on a solid financial footing, and dispose of excess
materials in the national stockpile of strategic materials. Together,
the legislative proposals will reduce Federal spending by $5.6 billion in 1981 and by significantly larger amounts in subsequent
years.
Savings under legislative proposals do not represent all of the
savings proposed in this budget. Some are planned under existing
administrative authorities or take the form of lower appropriation
requests. Discussion of these kinds of reductions is included in
Special Analysis A, which compares current services estimates
with the President's budget.
Hospital cost containment is the most urgent anti-inflation measure proposed in the budget. Enactment of this proposal would serve
four objectives. It would reduce Federal outlays significantly, hold
down the costs to State and local governments of providing health
care services, slow the growing direct burden imposed on consumers, and contribute importantly to reducing inflation. The proposal
consists of a national voluntary limit on hospital expenditure in
M4
THE BUDGET FOR FISCAL YEAR 1981
OUTLAY SAVINGS FROM LEGISLATIVE PROPOSALS
(In nations cf doiUn)
U3C
Health programs:
Hospital cost containment
Revision to make medicare benefits for the working aged
supplementary to private insurance
Elimination of bonus to hospitals for provision of routine
nursing services to medicare beneficiaries
limitation on payments to hospitals to the nursing home
rate for long-term case services
Implementation of joint audit for medicare and medicaid..
Establishment of financial penalties to deter abuse of
medicare and medicaid programs
Competitive bid purchasing for equipment and services....
Other health care cost control proposals
-1620
-2,390
— 170
-260
-295
-191
-245
-305
— 20
-32
-30
-32
-35
-32
-23
-12
-69
-23
-18
-90
-23
-24
-97
-1,297
-2.318
-3,201
- 1 7 1 2 -2.015
- 1,016
-1,134
—2.177
-1,302
-2728
-3,199
-3,479
-69
-217
-430
-186
-206
-214
-432
-478
-513
-249
-181
-164
-70
-102
-136
-1,006
-1.184
-1,457
-55
-32
-48
-30
-41
-28
-45
-321
-365
-362
-45
-409
-442
-431
-203
-203
Federal compensation reform:
Department of Defense-Military
Civilian agencies and programs
Total, Federal compensation reform
Total, income security programs
Veterans benefits and services:
Elimination of Gl bill benefits for correspondence courses
and general flight training
Elimination of certain dental benefits
Reimbursement by health insurers for certain medical
care given insured veterans
Total, veterans benefits and services
Increase in sales from the Federal strategic and critical
materials stxkpile to adjust the inventory to current
requirements
Total
mi
-780
Total, health programs
Income security programs:
Disability insurance reforms, including revision of benefit
computations, increased work incentives, improved administration, and other changes
State financial liability for errors in food stamp program
administration
Targeting of child nutrition and special milk program
subsidies to the most needy
Changes to the aid to families with dependent children
(AFDC) program and related programs to simplify
eligibility and administration, reduce fraud and abuse-,
and improve the child support enforcement program....
Reform of the railroad retirement program to restore the
solvency of the railroad industry pension fund
im
-16
-79
-95
-178
-318
- 5,643
— 7,346
-203
-8771
BUDGET SUMMARY
15
creases, and standby mandatory controls on inpatient revenues if
the voluntary limit is not met. These limitations would force hospital managers to curb excessive spending for unnecessary equipment, expansion of unnecessary facilities and wasteful operating
practices.
Enactment of hospital cost containment legislation would yield
national savings of $11.9 billion over the 1981 to 1983 period,
including $4.8 billion in Federal outlay savings. The failure of the
Congress to enact such legislation in calender year 1979 will cost
the Federal Government an estimated $1.3 billion. Other legislative
proposals in the health care area would result in Federal savings of
$0.5 billion in 1981 and $2.0 billion in the period 1981 to 1983.
The administration has also proposed comprehensive legislation
to reform and improve Federal compensation systems and procedures. The proposal would broaden the principle of comparability
and bring Federal compensation more closely into line with the
non-Federal sector.
Fraud and error will be reduced in the food stamp program by
creating financial incentives for States to improve administration.
Legislation has been proposed requiring States with excessive error
rates in administering the program to share in the cost of such
errors. Legislation has also been proposed to reduce meal subsidies
for students from higher income families so that Federal child
nutrition aid may be better targeted to those who are most in need.
Major cost-saving proposals are discussed in more detail in Part
5 of the Budget The table on page 14 summarizes the legislative
cost-saving proposals included in the budget. Many of the proposals
relate to health and income security programs. Since an overwhelming percentage of spending in these programs is for entitlements, reductions can be made only through the enactment of
changes to authorizing legislation. In contrast, reductions in most
other Federal programs may be accomplished through the appropriations process without modification of substantive legislation.
BUDGET AUTHORITY
All budget outlays depend on the legal authority to spend money
provided by the Congress. Such "budget authority'—usually in the
form of appropriations—results in outlays, some of which occur
during the fiscal year for which the budget authority is granted
and the rest of which occur in subsequent years. For 1981, the
President is requesting new budget authority of $696.1 billion,
$18.4 billion above the current services level of $677.6 billion.
In 1980, outlays are estimated at 86.2% of budget authority for
that year. This percentage is somewhat below recent experience for
two reasons. First, budget authority in 1980 is increased by $15
billion for borrowing authority for TVA powerplant construction.
M4
THE BUDGET FOR FISCAL YEAR 1981
This authority, last replenished in 1976, is needed once every few
years. It results in outlays over a period of years that are largely
offset by proceeds from the sale of power. Second, the administration has proposed increases in budget authority of almost $18 billion for establishing the Energy Security Corporation. In 1981,
outlays are expected to be 88.5% of budget authority, which is
more in line with recent historical experience.
BUDCET AUTHORITY
(in t x t a d
fciUn)
actual
Available through current action by the Congress
Available without current action by the Congress.
Deductions for offsetting receipts
Total, budget authority
1330
360.1
264.6
_
-68.0
1331
416,0
318 3
-80.2
432.9
351.8
-88.6
556.7
654.0
696.1
556.7
630.6
677,6
MEMORANDUM
Budget authority, current services basis
FEDERAL CIVILIAN EMPLOYMENT AND PAY
The 1981 budget meets the President's objective of holding Federal civilian employment to the minimum necessary for the efficient
and effective operation of the Government. Full-time permanent
employment in the executive branch (excluding the Postal Service)
is estimated to be 1,909,000 by the end of 1981, a small reduction
from 1980, and below the level that existed when the administration took office. Employment at the end of 1981 is in keeping with
the statutory employment limitation contained in the Civil Service
Reform Act of 1978.
As noted earlier, the administration has proposed comprehensive
legislation to reform and improve Federal pay-setting systems and
procedures. The legislative proposal would broaden the principle of
comparability to (1) take into account both pay and benefits instead
of just pay; and (2) include data from State and local governments
as well as data from private industry. The Federal wage system for
the blue collar work force would be modified to repeal those provisions of law that undermine the prevailing rate principle. These
proposals will improve the comparability system.
FEDERAL DEBT
During 1981, Federal debt held by the public is expected to
increase from $689 billion to $722 billion, a rise of $33 billion. The
corresponding growth during 1980 is expected to be $44 billion.
BUDGET SUMMARY
17
About half of the 1981 debt increase is due to the anticipated
budget deficit and half is due to the activities of the off-budget
Federal entities (discussed in Part 6 of this document). Other factors, such as changes in cash balances held by the Treasury, also
affect the debt. Gross Federal debt, which includes debt held in
Federal Government accounts (primarily trust funds), is projected
to rise by $59 billion in 1980 and $47 billion in 1981.
FEDERAL DEBT
(In billions of dollars)
1980
estimate
1979
actual
Debt outstanding, end of fiscal year:
Gross Federal debt
Debt held by the public
833.8
644.6
1981
estimate
892.8
688.9
939.4
722.0
CONTROL OF FEDERAL CREDIT ACTIVITIES
A year ago, in the 1980 Budget, the administration announced its
intention to establish a system to control Federal credit activities.
This budget carries out that commitment.
Federal credit programs have been controlled to some extent
through the normal budget process. Budget authority and outlays
for most direct loans of the Federal Government are, under the
normal budget rules, included in the budget, and limitations of
various kinds have been placed on some guarantee programs in the
past. However, there is increasing concern about control over Federal guarantees of private loans, which do not generally result in
budget oulays except in cases of default. Guarantees are large and
growing, and can often substitute for on-budget direct lending or
other outlays in order to escape budget controls. In fact, many
federally guaranteed loans are converted to off-budget direct loans
when they are financed through the Federal Financing Bank
(FFB), the activities of which are excluded by law from the budget.
The table below shows the totals of the credit budget, which is
measured by new obligations for direct loans and new commitments for loan guarantees.1 In 1981, direct loan obligations increase by 1.7% over 1980 compared with a 16.1% increase in the
previous year. Loan guarantee commitments, on the other hand,
increase 8.3% in 1981 after increasing only a small amount in
1980. The total increase for direct loans and loan guarantees together is 5.3% in 1981.
1
Direct loan obligations and loan guarantee commitments by agency are presented in tables 15 and 16 of Part
9 of this document.
M4
THE BUDGET FOR FISCAL YEAR 1981
THE CREDIT BUDGET TOTALS
(inrnmct {ftbrs}
mo
1373
New direct loan obligations:
On-budget
Off-budget
Total, new direct loan obligations
New loan guarantee commitments 1
Total
iTo avoid double counting, wdudes rarmttwits
direct loans nude by another Government account.
1911
KtifTJite
BSflUEl
actual
33.9
17.5
36.4
23.3
35.4
25.3
51.4
74.7
59 7
75 2
60.7
81.4
126.1
134.9
142.1
for guarantee ct teara previously guaranteed and for guarantee by x x Gcverttwrrr iccewit ct
As shown by amounts outstanding, the total size of Federal
credit is large. On-budget direct loans outstanding are expected to
decline very slightly in 1981 after a moderate increase in 1980. Offbudget direct loans outstanding increase significantly in 1981, to
$90.8 billion, due to large increases in the holdings of loans by the
FFB. The FFB serves as a financial intermediary for the efficient
financing of obligations issued, sold, or guaranteed by Federal
agencies. Loan guarantees outstanding increase sharply in this
period—by $24.7 billion in 1980 and $30.9 billion in 1981—and
reach $253.2 billion. The average annual increase in direct loans
and loan guarantees outstanding is 13.1% from the end of 1979 to
the end of 1981.
LOANS AND LOAN GUARANTEES OUTSTANDING END OF YEAR
(In btlTioftt d defers)
1973
actual
Direct loans:
On-budget
Off-budget
Loan guarantees1
Total
l
1911
1930
estimate
n^rj*?
79.9
57.5
197.7
85.4
74.2
222.3
84,8
90.8
253.2
335.1
381.9
428.8
To avoid douMe counting, excludes loans previousfy guaranteed and guaranteed (cans heW as direct leansfcyGcver-rer.t j c c x r t i
Net direct loan outlays are equal to the change in direct loans
outstanding; net loan guarantees are equal to the change in loan
guarantees outstanding. Net loan outlays and net loan guarantees
also measure the net addition to credit advanced by the Federal
Government. Conceptually, they are analogous to budget outlays.
On-budget net loan outlays increase only slightly between 1979 and
1980, and then fall by $6.2 billion, to - $ 0 . 6 billion, in 1981. The
sharp decline is the result of reduced loans for farm support,
disaster assistance, and transportation; higher repayments of existing loans; and an increase in sales of loans. Off-budget net loan
outlays are unchanged at $16.6 billion in 1981, after an increase of
$3.0 billion in 1980. Net loan guarantees increase sharply through
BUDGET SUMMARY
19
out this period, reaching $30.9 billion in 1981, $11.9 billion higher
than in 1979. The growth is primarily the result of increased
guarantees for economic development, the energy initiative, and
housing.
NET LOAN OUTLAYS AND LOAN GUARANTEES
(In b i t e of dollars)
1979
actual
1980
estimate
1981
estimate
Net loan outlays:
On-budget
Off-budget
......
Net loan guarantees 1
5.0
13.6
19.0
5.5
16.6
24.7
-0.6
16.6
30.9
Total
37.7
46.8
46.9
1
To avoid double counting, excludes loans previously guaranteed and guaranteed loans made as direct loans by Government accounts.
The credit control system works in tandem with the conventional
budget system. Wherever appropriate, the administration is requesting annual appropriation bill limitations on credit programs,
whether they are direct loans or guarantees, and whether they are
included in the budget or are off-budget. The limitations are on
new obligations for direct loans and new commitments for loan
guarantees. These requests were developed as part of the normal
budget review process.1 The new system has three long-range goals.
• First, at the program level, the system should ensure that
credit programs meet the purposes for which they were intended, that they do so effectively, and that the level of
resources is justified.
• Second, the system should result in closer examination of the
allocation of credit and real resources across broad sectors of
the economy.
• Third, the system should encourage more careful consideration of the impact of total Federal credit activity on the
economy as a whole—on the borrowing needs of the private
sector, and on economic growth, inflation, and employment.
At this stage in the development of the credit control system, the
administration is proposing that certain credit programs be subject
only to the control provided by authorizing legislation. Appropriation bill limitations have not been proposed for these programs,
which include insurance programs, such as the Federal Deposit
Insurance Corporation, and entitlement programs, under which
qualified recipients have a legal right to direct loans or loan guarantees. These are analogous to relatively uncontrollable outlays in
the regular budget and comprise a large portion of Federal credit
activity. In addition for the 1981 budget, some credit activities in
the housing sector have been exempted from annual limitations
due to current uncertainty in the housing markets.
1
The new system is discussed more fully in the Introduction to Part 5 of the budget
M4
THE BUDGET FOR FISCAL YEAR 1981
For purposes of this new credit control system, coverage has been
restricted to direct Federal activities. Therefore, for example, lending activities by the privately owned Government-sponsored enterprises have been excluded from the credit control system because
of their private ownership, although their activities are considered
in analyzing the impacts of Federal credit programs.
The limitations set for this first year of the credit control system
are summarized in the following table.
FEDERAL CREDIT LIMITATIONS
(In bifcra of <Jcflan)
1911
Limitations on direct loan obligations
Limitations on loan guarantee commitments
Total limitations
27.2
32.5
.....
M7
In 1981, total direct loan obligations covered in the credit control
system are expected to reach $60.7 billion. About half of those
obligations ($27.2 billion) are proposed to be subject to appropriations bill limitations, largely because the direct lending activity of
the FFB is intended to be controlled at the point at which the loans
are guaranteed by other agencies. Of the $27.2 billion in obligations
Loan Guarantees Outstanding
BUDGET SUMMARY
21
proposed to be subject to limitations, $24.7 billion is expected to be
obligated.
Loan guarantee commitments covered in the credit control
system are expected to be $81.4 billion in 1981. Because a number
of programs are subject only to authorizing legislation, the proposed limitations are $32.5 billion, or two-fifths of the total. Of the
$32.5 billion in commitments proposed to be subject to limitations,
$31.8 billion is expected to be committed.
MAKING GOVERNMENT WORK BETTER1
Credit control is but one of many ways in which this administration is making Government work better. Efforts to ensure that
Government uses all of its resources efficiently must be unending.
Waste, mismanagement, fraud, and inefficiency must be eliminated
through prompt and effective efforts to improve Government performance.
This administration has initiated specific programs designed to
make Government work better. Government-wide reforms, as well
as specific actions to meet problems unique to particular programs,
have been undertaken to promote efficiency and improve program
management. Some of the major Government-wide initiatives to
date include:
Civil service reform.—One of the most far reaching of the President's management improvement efforts has been the reform of
our hundred-year-old civil service system. Under this reform, Federal managers have been given greatly increased authority, flexibility, and incentives to manage the Federal workforce. Civil service reform will increase the efficiency of the Federal Government
by making it easier to recruit, retain, and reward dedicated, competent and productive Federal employees. Also, as discussed earlier,
the President has proposed a comprehensive reform of the systems
used to determine compensation of Federal civilian workers.
Regulatory reform and paperwork reduction.—The Government's
regulatory functions have expanded greatly in recent years in response to concern regarding activities that potentially threaten the
public welfare. Increased regulatory activity, however, has spurred
growing frustration over the negative consequences of regulatory
efforts, including the rising costs of compliance with Government
regulations for businesses and the increased paperwork burden
involved. To ensure that the Government's regulatory role is carried out in the most effective and least burdensome manner, the
administration has initiated a comprehensive regulatory reform
program.
1
An expanded discussion of this theme is found in Section 2 of the Special Analyses volume of the 1981
Budget, in a presentation entitled "Improving the Efficiency of the Federal Government."
M4
THE BUDGET FOR FISCAL YEAR 1981
Early in 1978, Executive Order No. 12044 was issued, which
required agencies to assess the economic consequences of all major
new regulations, to write regulations in clear and simple English,
to eliminate unnecessary rules, and to revise needed regulations.
Legislation is pending to make these reforms law and to extend
them to the independent regulatory agencies. To encourage simplification of regulations, improve analysis of them, and make public
participation in the regulatory process more effective, the President has created the Regulatory Council to review conflicting or
overlapping regulations and to advise the public well in advance of
any major rules that are proposed. The administration proposed
and the Congress approved deregulation of the airlines, and legislation has been submitted for deregulation in the trucking and railroad industries.
Regulatory reform initiatives have been combined with a broad
program to reduce Government paperwork. At his first Cabinet
meeting, the President directed agency heads to take steps to
reduce paperwork burdens. A vigorous program on the part of the
agencies in the past 2 years has reduced by almost 15% the
number of hours the public spends filling out Federal forms. In
addition, an Executive order has recently been signed establishing
a mandatory "paperwork budget" for all executive branch agencies
and requiring a "sunset" review of all existing Federal forms. The
administration has also proposed legislation to consolidate, simplify, and in some cases eliminate various reports required by
Congress, and has endorsed legislation to control the overall paperwork burden on the public.
Reorganization.—Better organization can make Government
more effective in its mission and more accountable to the public.
To improve the organization and management of the Federal Government, the administration initiated the President's Reorganization Project. Since 1977, the President has proposed 13 reorganization initiatives to Congress, and all have been approved. These
initiatives have strengthened the Federal Government's capacity to
deal effectively with such critical issues as energy, education, national security and crisis management, and international trade and
development.
In 1979, for example, reorganization authority was used to consolidate enforcement functions related to the Alaska Natural Gas
Transportation System under a single Federal inspector, creating a
unique institution to manage the Federal role in a critical energy
project. The President has also proposed new energy reforms to
help reduce our dependence on foreign oil, including creation of an
Energy Mobilization Board to expedite energy projects, and an
Energy Security Corporation to spur development of a domestic
BUDGET SUMMARY
23
synthetic fuels industry. In addition, the President will soon transmit to Congress a reorganization plan to strengthen the internal
management and effectiveness of the Nuclear Regulatory Commission, increasing the ability of the Commission Chairman to integrate and lead the agency in activities requiring prompt and disciplined action.
One of the most significant accomplishments of the reorganization effort was achieved when Congress approved creation of the
Department of Education, giving education the Cabinet voice, the
national leadership and the improved management this important
function deserves.
The Congress also approved a major reorganization to strengthen
the Federal Government's international trade functions, increasing
the Government's capacity to improve the export performance and
import competitiveness of U.S. industry.
In 1979, a reorganization plan combined several U.S. international development assistance programs into a new International Development Cooperation Agency to improve coordination of U.S.
economic policies affecting the developing countries.
In addition, several reorganization initiatives are underway to
strengthen the management and coordination of our national security apparatus. The President recently approved a report on national security policy integration that has led to more effective
coordination among national security agencies.
Zero-base budgeting (ZBB).—1This is the third budget that has
used zero-base budgeting. ZBB has required managers to examine
programs at various funding levels and then rank the programs in
order of importance. This requires explicitly identifying priorities,
setting objectives, and developing alternatives for carrying out
agency missions. Through this system agencies develop more effective programs with available resources.
Multiyear budgeting.—This is the second budget prepared under
a new 3-year planning system. Although 5-year budget projections
have been published since 1970, explicit plans rarely extended
beyond the budget year. The multiyear planning approach results
in a better understanding of the longer run effects of current and
proposed programs, and therefore in better decisions.
Eliminating fraud and waste.—As a result of legislation supported by the administration, the President has in place Inspectors
General in 15 departments and agencies. Their major role is to
eliminate waste, fraud and error in the Federal Government. In
addition, in May, 1979, the Executive Group to Combat Fraud and
Waste in Government was established to insure a concerted administration effort to develop more effective procedures and better
trained personnel to deal with fraud and waste.
M4
THE BUDGET FOR FISCAL YEAR 1981
In the food stamp program, pending legislation would establish a
system under which administrative funds could be withheld from a
State with excessive errors in the certification of recipients. It is
expected that this potential liability would be a sufficient incentive
to improve State administration of the program. It is estimated
that this system could save a total of about $1.0 billion from 1981
through 1985. This effort would be supplemented by allowing
States to establish eligibility on the basis of the income of the
previous month, rather than an estimate of the next month's
income. Clients would also be required to report their income more
frequently while participating in the food stamp program.
The Inspectors General in the Departments of Agriculture and
Health and Human Services have instituted computer matching
systems to compare names of welfare recipients with names of
persons receiving State unemployment benefits, or the names of
wage earners from payroll data for Federal, State, or local governments. This fairly simple technique frequently identifies recipients
whose income makes them ineligible. It is highly effective in the
detection of fraud.
Financial management.—The administration, in consultation
with the Congress and the Comptroller General, has developed a
Financial Priorities program to improve management of Federal
funds. These priorities include examining accounting systems, improving internal control and cash management, resolving audit
findings promptly, and other measures to improve agency financial
systems. This program has built upon the work of the cash management project, which initiated over 80 measures to strengthen
cash management in the Federal Government. These initiatives
have already resulted in interest savings of more than $400 million
a year, and further annual interest savings of $1 billion are expected in subsequent years through more timely collection of cash
payments, controlling disbursements and reducing idle balances.
Audit reform.—The administration has improved its coordination
of Federal, State, and local audits of federally assisted programs. A
single audit is now required of each recipient of Federal aid; previously a recipient could have been audited for each of several programs, resulting in duplication by Federal auditors and unnecessary disruption to the grantee. The single audit will be based on a
standard audit guide that replaces almost a hundred different
guides that had been in use. New rules have been issued for relying
on audits made by State and local governments, for audit resolution, and for audit followup.
Management improvement.—The administration has taken concrete steps to strengthen agency commitments to ongoing manage
BUDGET SUMMARY
25
ment improvement and evaluation activities. New guidelines have
been issued to agencies on how they should establish systematic
approaches to assessing their management and program operations, focusing on the results of program activities and their relevance to the Federal budget. Another important management
improvement initiative was the establishment, in September 1979,
of the President's Management Improvement Council, consisting of
representatives from private industry, labor unions, universities,
and Federal, State, and local governments. The Council has advised
on management solutions to problems in the Government's debt
collection programs, health care financing administration, administrative services programs, and travel expenditures by Federal agencies.
Federal grants system reform.—State and local governments received more than $80 billion in grants in 1979 from the Federal
Government, compared with fewer than $60 billion in 1976. Only
25 programs account for 81% of this total, while almost 466 separate grant programs account for the remaining 19%. The administration has taken major steps to simplify and streamline the management of Federal grants. The administration has proposed consolidation or simplification of grant programs in 10 areas to facilitate more efficient grant administration. Steps have been taken to
improve audit regulations by developing standard audit rules for
State and local grants, allowing a single, coordinated audit on a
Government-wide basis. In addition, since June 1977, 16 Federal
agencies have been working to reform and standardize planning
requirements associated with more than 160 grant programs.
Productivity.—The President has established the National Productivity Council to improve coordination of Federal programs that
increase productivity in the private and public sectors. The Council
has addressed a wide range of issues, including improved ways of
measuring productivity, a new productivity improvement program
for the Federal workforce, expanded federally supported labor-management cooperation projects, Federal research and development
that increases productivity, and the Federal role in improved State
and local government productivity.
In addition, as a result of a study of industrial innovation, the
President recently announced nine areas where the Federal Government can encourage innovation. These include increasing and
enhancing the transfer of technical information, improving our
regulatory system, and facilitating labor-management adjustments
to innovation.
The Government-wide reforms described above have contributed
significantly to improving the organization and management of the
Federal Government. These initiatives will continue and expand as
M4
THE BUDGET FOR FISCAL YEAR 1981
necessary to promote efficiency and improve program management.
Individual projects.—In addition to these Government-wide efforts, individual agencies continually undertake hundreds of smaller and less conspicuous projects. They may receive little or no
recognition, but in total, they have a significant effect on the
capacity of Government to deliver services more effectively and
more efficiently. The following sections describe just a few of these
projects, some of which are specific improvements resulting from
the Government-wide efforts.
Restructuring of programs in ways that make it easier to attain
objectives,—In 1979 the Economic Development Administration
(EDA) found it worthwhile to delegate expanded authority to Regional Directors. As a result, fewer than 25% of all EDA projects
now need to be approved in Washington. In addition, plans are
continuing that would expand the number of regional offices from
6 to 10. This should improve the coordination of these programs
with other Federal agencies and provide better service to EDA's
clients.
Simplification of program requirements.—As a result of a change
in policy, food stamp eligibility standards were recently simplified.
Eligibility status and benefit levels were recalculated for the entire
food stamp caseload of over 18 million people in 1979. Benefits
were reduced for many recipients at the upper end of the eligibility
scale and about 3.6 million new and very poor recipients were
brought into the program primarily due to the elimination of the
requirement to purchase food stamps. About 600,000 of the highest
income recipients were completely eliminated from the program.
These changes produced a net increase of 3.0 million recipients
during the first 6 months of 1979, and directed food stamp benefits
to those most in need.
Another example of program simplification resulted from the
Social Security Financing Amendments of 1977. Employers now
report employee wages annually rather than quarterly, a change
that has significantly reduced administrative costs and paperwork
for both the private sector and the Federal Government.
Improvements in service delivery.—Grant consolidations, or other
actions to give States and localities more flexibility in the use of
grant funds, were approved or have been achieved or proposed in
10 program areas:
• Consolidations have been achieved in three areas. Grants in
the cooperative forestry program were authorized to be consolidated in the Cooperative Forestry Act of 1978. Some pro
BUDGET SUMMARY
27
grams for the elderly were consolidated in the 1978 Amendments to the Older Americans Act, and some consolidations
were requested by the administration and approved by the
Congress in 1979 for vocational rehabilitation.
• Legislation that would permit consolidation in four areas (airport development, economic development, energy conservation, and environmental programs) is currently before the
Congress.
• Three additional areas for consolidation are in this budget:
health programs, youth training and employment programs,
and fish and wildlife grants. New consolidations are proposed
for vocational rehabilitation in addition to those already
achieved.
Termination of programs.—Large budget savings are usually
achieved through cutting back or redirecting large programs,
rather than through program terminations. Programs that are
completely terminated tend to be small and, individually, the savings achieved through termination are not large compared to the
budget totals. Such terminations, however, are essential if Government is to be efficient. A few of the programs already terminated
or proposed for termination in this budget are:
• health professions training programs that are not targeted to
meeting health needs of underserved populations. These terminations affect general aid for the training of doctors, dentists, nurses, and other health professionals.
• grants for the development of private, non-profit home health
agencies. Where needed, funds are provided through medicare
and medicaid reimbursements, and this separate grant program is no longer necessary.
• certain highway programs. These include aid for roads that
are not part of the Federal-aid highway system, the Alaska
highway, access highways to some public recreation areas,
and demonstration projects for railroad crossings.
Administrative or management improvements that increase productivity or save dollars or personnel.—The Federal Government is
the world's largest user of information technology. The use of
computers for analysis and data processing throughout the Government has significantly increased program efficiency. For example:
• Social security applicants can now frequently complete their
applications with a single visit to the local office because of
computer access to social security employment records. Formerly, a second visit was necessary with delays of weeks
while records were processed manually and mailed to the
local offices.
M4
THE BUDGET FOR FISCAL YEAR 1981
• The Internal Revenue Service has installed an automated
data system to check the accuracy and currency of taxpayer
identification data, enabling the Service to reduce its staff by
200 individuals.
• The Department of the Treasury has increased significantly
the use of electronic funds transfer as an improved Government payment system. These transfers now account for approximately 25% of all Treasury payments, and by 1985 this
could increase to 55%. This has not only saved resources but
also decreased the chances of theft and forgery of Government checks.
In addition to the use of computers, Government saves funds and
reduces personnel through other efforts. For example, since January 1977, the Department of Defense has eliminated approximately
24,000 military and civilian positions as a result of base realignments, consolidations, and closures. The estimated annual savings
that will ultimately result from these actions are over $375 million.
In addition, final decisions are pending on actions that would increase the annual savings to over $500 million a year.
Elimination of wasteful practices.—The Federal Government is
committed to phasing out its own use of gas-guzzling automobiles
by requiring new automobiles to be more fuel efficient. Beginning
with model year 1978, the new passenger vehicle fleet purchased or
leased by Federal agencies must exceed the national average fleet
fuel economy standards required by the Energy Policy and Conservation Act. For model year 1980, for example, the national average
is 20 miles per gallon, while Federal purchases must average at
least 24 miles per gallon. Since about one-sixth of the Federal fleet
is replaced each year, major progress has already been made.
In 1978, the Social and Rehabilitation Service was eliminated,
and all cash benefit programs were consolidated in the Social Security Administration. The Health Care Financing Administration
was established to manage medicare and medicaid and the title XX
social services program was combined with the other services programs in the Office of Human Development Services. These actions
streamlined administration of the programs and improved services
to the public.
These are just a few examples of hundreds of specific projects
that agencies undertake regularly to improve their effectiveness.
Such efforts will continue to make Government work better.
PART 3
ECONOMIC ASSUMPTIONS AND
THE LONG-RANGE BUDGET
OUTLOOK
29
ECONOMIC ASSUMPTIONS AND THE LONGRANGE BUDGET OUTLOOK
This part of the budget discusses the long-range budget outlook
and the economic assumptions and demographic trends underlying
that outlook. The first section presents economic assumptions for
calendar years 1979 through 1985, explains the nature of these
assumptions, and discusses policies to reduce unemployment and
inflation. The second section examines the budget's multi-year
planning base for fiscal years 1981 to 1983 and the projections for
1984 and 1985. The third section discusses population change and
economic trends, and their long-term effects on the budget.
ECONOMIC ASSUMPTIONS
The economy and the budget are interrelated. Economic conditions significantly affect the budget, and the budget, in turn, influences economic conditions.
Both budget outlays and the tax structure have substantial effects on national output, employment, and inflation. Budget receipts vary with individual and corporate incomes, which respond
both to real economic growth and to inflation. Variations in receipts, as well as some benefit payments, such as unemployment
compensation, can serve as "automatic stabilizers" for the economy
by restraining growth during boom periods and cushioning economic downturns. Other activities of Government that are not reflected
in the budget totals, such as loan guarantees, off-budget outlays,
and regulatory requirements, also affect the economy, although
their effects are generally less direct and less easily measured.
Conversely, outlays for many Federal programs are directly
linked to developments in the economy. For example, most retirement and other social insurance benefit payments are now tied by
law to cost-of-living indexes. Medicare and medicaid outlays are
affected directly by the price of medical services. Interest on the
debt is linked to market interest rates and the size of the budget
surplus or deficit, both of which in turn are influenced by economic
conditions. Outlays for certain benefits, such as unemployment
compensation and food stamps, vary with unemployment and incomes and are thereby linked to the state of the economy.
Because of the complex interrelationships between the budget
and the economy, budget estimates depend to a very significant
extent upon economic assumptions. The economic assumptions
30
31
OUTLOOK
used for developing the budget estimates are presented in the
following tables to assist in understanding the budget estimates
and projections and the administration's fiscal strategy. These economic assumptions are on a calendar year basis, as is customary
for economic statistics, whereas the budget estimates are for fiscal
years.
During 1977 and 1978, employment rose at a 4.1% average
annual rate, a rate virtually unprecedented for peacetime. The
SHORT-RANGE ECONOMIC FORECAST
(Calendar years; dollar amounts in billions)
Forecast
Item
Major economic indicators:
Gross national product, percent change, fourth quarter
over fourth quarter:
Current dollars
Constant (1972) dollars
GNP deflator (percent change, fourth quarter over fourth
quarter)
Consumer Price Index (percent change, December over
December) 2
Unemployment rate (percent, fourth quarter)
Annual economic assumptions:
Gross national product:
Current dollars:
Amount
Percent change, year over year
Constant (1972) dollars:
Amount
Percent change, year over year
Incomes:
Personal income
Wages and salaries
Corporate profits
Price level:
GNP deflator:
Level (1972 = 100), annual average
Percent change, year over year
Consumer Price Index: 2
level (1967 = 100), annual average
Percent change, year over year
Unemployment rates:
Total, annual average
Insured, annual average 2
Federal pay raise, October (percent) 4
Interest rate, 91-day Treasury bills (percent) <
Actual
1978
1979 '
1980
1981
13.4
4.8
10.0
0.8
7.9
-1.0
11.7
2.8
8.2
9.1
9.0
8.6
9.0
5.8
13.2
5.9
10.4
7.5
8.6
7.3
2,128
12.0
2,369
11.4
2,567
8.3
2,842
10.7
1,399
4.4
1,431
2.3
1,423
-0.6
1,448
1.7
1,717
1,103
206
1,923
1,227
238
2,109
1,342
228
2,314
1,478
242
152.1
7.3
165,5
8.9
180.4
8.9
196.3
8.8
195.3
7.6
217.6
11.4
243.4
11.8
265.8
9.2
6.0
3.3
5.5
7.2
5.8
3.1
7.0
10.0
7.0
3.9
* 6.2
10.5
7.4
4.0
8.0
9.0
»Actual data for the 1979 unemployment rate, Federal pay raise, and 91-day Treasury bill rate.
* CPI for urban wage earners and clerical workers. Two versions of the CPI are now published. The index shown here is that currently used, as
required by law, in calculating automatic cost-of-lrving increases for indexed Federal programs.
»This indicator measures unemployment under State regular unemployment insurance as a percentage of covered employment under that program. It
does not include recipients of extended benefits under that program.
* General schedule pay raises become effective in October of each year-the first month of the fiscal year. Thus, the October 1980 pay raise will set
new pay scales that will be in effect during fiscal year 1981.
1
This is the projected pay increase for white collar workers and wage board employees. The pay raise for military personnel is estimated to be 7.4%.
* Average rate on new issues within period. These projectors assume, by convention, that interest rates decline with the rate of inflation. They do not
represent a forecast of interest rates.
M4
THE BUDGET FOR FISCAL YEAR 1981
unemployment rate fell from 7.8% in December 1976 to 5.9% in
December 1978—despite the unusually rapid growth of the labor
force. During 1979, employment continued to rise, though at a less
rapid pace, and the unemployment rate remained about level.
During the same period, however, inflation, as measured by the
increase in the Consumer Price Index (CPI), accelerated substantially. Measured December over December, this index rose 63A%
during 1977, 9 l A% during 1978, and an estimated 13 to 13 l A%
during 1979. The 1979 increase was strongly affected by oil price
increases.
LONG-RANGE ECONOMIC ASSUMPTIONS
(Calendar year?, dofiar amounts « blliafl)
AiUiirctcrs
1332
Major economic indicators:
Gross national product, percent change, fourth quarter
over fourth quarter:
Current dollars
Constant (1972) dollars
GNP deflator (percent change, fourth quarter over fourth
quarter)
Consumer Price Index (percent change, December over
December) 1
Unemployment rate (percent, fourth quarter)
Annual economic assumptions:
Gross national productCurrent dollars:
Amount
Percent change, year over year
Constant (1972) dollars:
Amount
Percent change, year over year
Incomes:
Personal income
Wages and salaries
Corporate profits
Price level:
GNP deflator:
Level ( 1 9 7 2 = 1 0 0 ) , annual average
Percent change, year over year
Consumer Price Index:»
Level ( 1 9 6 7 = 1 0 0 ) , annual average
Percent change, year over year
Unemployment rates:
Total, annual average
Insured, annual average 2
Federal pay raise, October (percent) *
Interest rate, 91-day Treasury bills (percent) 4
1533
1334
1935
133
5.0
12.6
5.0
11.6
48
10.7
4.6
7.9
7,2
65
58
7.8
6,5
7.2
5.6
64
4.8
5.7
4.0
3,206
12.8
3,619
12.9
4,052
12.0
4,498
11.0
1510
4.3
1.586
5.0
1.65-4
4.9
1.742
4.7
2,591
1,653
277
2,914
1.874
324
3,256
2,094
369
3.610
2.316
415
212.3
8.2
228.1
7.4
243.5
68
258.3
6.1
287.4
8.2
303,8
7.4
329 8
6.8
349.7
6.1
6.8
3.6
8.0
8.4
5.9
30
7.5
7.7
5.1
2.4
7.0
7.0
4.3
2.0
6.5
6.3
«CP! for urban m p earners and clerical wcrters. Two versions of the CPI are new putiitf-ed
r d m tfewn *ert a im? &r?tfry used. tf
requiredfcylaw. in eaJculatng automats cost-offing increases for indexed Federal p c f r i m
1
This indicator measures uremploynwt under State regular unemployment insurance as a percentage cf cawed r w * « s ^ e r
j r r r ^ - it
does not indude recipients of extended benefits under But program.
1
General sdiedute pay raises become effects in October of eatf y e a r - t ^ fr>t ronn cf tN» fiscal p x V - a . ^ O t f t e t 133? w race «*it set
new pay scales But wtll be in effect during fiscal year 1933.
4
Average rate on new issues
period. These projections assume, by arvwtxjn. tftat irternt n ' n
net
represent a forecast of interest rates.
r*
;t rfjen to
OUTLOOK
33
The short-range economic assumptions for calendar years 1979
(for which only three quarters of actual data were available when
the forecast was made), 1980, and 1981 are forecasts of probable
economic conditions consistent with the administration's budget
proposals.
As the table indicates, it now appears likely (although, given the
limitations of economic forecasting, by no means certain) that the
sustained economic expansion that began in 1976 will come to an
end in 1980. A mild recession is expected in the first half of 1980,
and some increase in unemployment is likely. Economic growth is
expected to resume in the latter part of the year and continue
through calendar year 1981, with a gradual decline in the rate of
unemployment. Some progress is expected in slowing inflation from
the very high rate of last year, but the increase in consumer prices
will still be very high by historical standards. The rate of increase
forecast for the 12 months of calendar year 1981 is 8.6%.
The economic outlook will have to be monitored carefully. If the
economy should begin to deteriorate significantly, the administration will consider tax reductions and temporary spending programs, such as those for jobs and public works, targeted toward
particular sectors of economic stress. Present conditions, however,
do not argue for less fiscal restraint than is proposed in this budget.
The economic forecasts for 1980 and 1981 are subject to substantial margins of error. For periods further in the future, economic
assumptions are subject to even greater uncertainty. Hence, in
contrast to the short-range economic forecast, the longer range
assumptions for the period 1982 to 1985 are not forecasts of probable
economic conditions. Instead, they are projections that assume progress in moving toward the goals of a more fully employed economy
and greater price level stability.
In last year's budget, estimates were presented consistent with
achieving the goals of 4% unemployment and 3% inflation by the
end of calendar year 1983. These goals had been established in the
Full Employment and Balanced Growth Act of 1978 (the Humphrey-Hawkins Act). The act provides for revision of the timetable
for achieving these goals, if necessary, in the 1980 Economic Report
of the President Given the performance of the economy during
1979, and its projected performance during 1980 and 1981, it is
apparent that the goals cannot be achieved in the timetable originally prescribed in the act. As a result, the long-range economic
projections presented in this budget are consistent with a new
M4
THE BUDGET FOR FISCAL YEAR 1981
schedule, presented in the Economic Report, for attaining the goals
of the 1978 act. The achievement of the 4% unemployment rate
goal is postponed by 2 years to 1985, and the 3% inflation goal is
postponed by 3 years beyond that. These remain ambitious goals
and will require effective long-run policies to reduce both unemployment and inflation. The feasibility of achieving these targets
and the types of policies that might be required during the
1982-88 period to achieve them are discussed in the Economic
Report The discussion below summarizes the major policies directed at unemployment and inflation in the budget proposals.
Policies to reduce unemployment—Fiscal policy adjustments will
probably be required in future years to maintain economic growth
and further reduce unemployment. The appropriate magnitude and
timing of such adjustments will depend on future economic developments and cannot now be determined. However, the administration will propose that further fiscal actions—in particular further
tax reductions—be taken between 1982 and 1985 if such actions are
required to sustain the progress of the economy toward the goals of
the Humphrey-Hawkins Act.
As the Humphrey-Hawkins Act declares, "aggregate monetary
and fiscal policies have been unable to achieve" the economic goals
established in the act "and therefore must be supplemented by
other measures designed to serve these ends." Unemployment rates
are very high for youth and minorities. The administration is
therefore pursuing several strategies to reduce the sources of structural unemployment without adding to inflationary pressures.
The budget proposes significant increases in resources for youth
programs. A new program, conducted jointly by the Departments of
Education and Labor, is proposed to provide disadvantaged youth
with the basic academic skills and workplace discipline required to
obtain and keep a job. For 1981, the budget requests $900 million
for the education part of this program, which will assist secondary
schools in areas with concentrations of disadvantaged youth. The
part of the program to be conducted by the Department of Labor
would replace three current youth employment and training programs. This part of the program would help place the students in
jobs, and provide training and employment services for needy outof-school youth. For 1981, the budget requests $1,125 million for the
Department of Labor portion of the program, $300 million more
than would be needed to continue the programs to be replaced. In
1982, a further $800 million increase in funding is planned for the
combined program.
The Job Corps training program is being expanded and will
provide twice the number of training opportunities made available
OUTLOOK
35
in 1977. One million part-time summer youth jobs are proposed for
1981, the same number as proposed for 1980.
The budget also proposes maintaining the high level of training
and job opportunities in the programs for the structurally unemployed. These programs were revised last year to achieve greater
net employment gains, to direct job opportunities more to the
disadvantaged and long-term unemployed, and to improve the preparation of enrollees for private sector jobs. In response to an
administration proposal, 1978 legislation authorized a special program to help move all program participants into private sector
jobs. In addition, the Revenue Act of 1978 included an administration initiative to create a targeted employment tax credit to reduce
the cost to private sector employers of hiring disadvantaged individuals, primarily youth. The employment tax credit for hiring
employees placed in jobs under the work incentive (WIN) program
and for hiring other public assistance recipients was revised to
make it similar to the targeted employment tax credit.
Finally, the administration has proposed reform of the welfare
system which, if enacted promptly, could be fully effective by 1983.
The plan would reform cash assistance programs, further develop
the use of employment and training programs, and direct more jobs
to principal earners in families eligible for cash assistance.
These employment and training policies are discussed in more
detail in Part 5, and their relationship to the goals of the Full
Employment and Balanced Growth Act is analyzed in the Economic Report of the President
Policies to reduce inflation,—The Full Employment and Balanced
Growth Act specifies that "The President shall initiate specific
policies to reduce the rate of inflation, including recommendations
to the Congress where necessary, and include recommendations
within the Economic Report and the President's budget to the
extent practicable."
The budget proposals help combat inflation in two ways: first,
through overall budget restraint; and second, through measures
that contribute to lowering rates of price increase in specific sectors of the economy.
Budget restraint plays a crucial role in the administration's antiinflationary plan. Fiscal and monetary policies seek to create an
economic environment in which inflationary pressures will abate.
Monetary and fiscal restraint alone, however, will not be sufficient
to reduce the rate of inflation at an acceptable rate. Moderation in
private sector wage settlements and prices is also essential. Braking the momentum of inflation will require continued widespread
compliance by business and labor with the voluntary pay and price
standards established by the administration.
M4
THE BUDGET FOR FISCAL YEAR 1981
Numerous Federal programs and policies contribute, directly or
indirectly, to holding down rates of price increase in specific sectors
of the economy. Some programs regulate prices directly or promote
competition. Avoiding undue fluctuations of agricultural commodity prices has long been a major objective of Federal policy. Regulation of "natural monopolies" such as electric utilities, antitrust law
enforcement, and programs to foster small business and greater
competition all contribute to holding down price increases. An
effort is also being made to award more Government contracts on a
competitive basis, especially for defense procurement, in order to
reduce prices that the Government pays for goods and services.
The administration is currently pursuing policies to reduce economic regulation in areas—particularly transportation—where regulation has tended to stifle competition and maintain unnecessarily
high prices. The Airline Deregulation Act was enacted in 1978. The
administration has proposed modifications to trucking and rail industry regulations and supports reduced regulation of intercity bus
transportation. Another significant policy directed against inflation
is the administration's proposal for hospital cost containment. This
proposal would reduce price increases in a sector where inflation
has been excessive for over a decade.
Federal subsidies, tax expenditures, guarantees, insurance,
grants to State and local governments, disaster assistance, and
loans may also help, directly or indirectly, to hold down private
sector costs and prices. Housing programs afford examples of each
of these types of assistance. Federal warning and safety programs
(weather service, coast guard, and air traffic control, for example)
also help hold down private sector costs by reducing economic
losses.
Federal pay reforms and restraints on Federal employment will
help reduce upward pressure on private sector wage rates. Policies
to promote exports and stabilize the value of the dollar may help
avoid increases in the costs of imports. An important set of Federal
policies seeks to promote capital formation and increased productivity, which are explicit goals of the Humphrey-Hawkins Act,
Increased productivity is essential to reducing inflation in the long
run. Federal programs and tax policies that promote productivity
growth include the investment tax credit and Federal support for
research and development. In addition, Federal employment, training, and education programs, equal opportunity programs, and programs (such as support of housing mortgage markets) that contribute indirectly to labor mobility all help increase productivity,
reduce structural unemployment, and make it possible to achieve
employment goals with less inflationary pressure.
OUTLOOK
37
Some proposals that have anti-inflation aspects are noted or
discussed in more detail in other parts of the Budget, particularly
Part 5, and in the Economic Report of the President
THE 5-YEAR BUDGET OUTLOOK
The effects of current budget decisions extend beyond the budget
year. They establish program trends that have important influences on the size and composition of budgets for years into the
future. Just as the composition and level of the 1981 budget have
been largely determined by past decisions, the decisions and proposals it embodies will shape subsequent budgets. Thus, various
proposals in the 1981 budget would significantly reduce the level of
outlays for existing programs in future years. These reductions
both improve the prospects for budgetary balance and help make
room for the important initiatives in energy, welfare reform, national health insurance, and increased defense capabilities, within
budget outlay totals that do not increase as a share of GNP.
Since 1970, budgets have presented projections extending 4 years
beyond the budget year. Last year, a multiyear budget planning
system was established. As a result, outlay estimates for the first 2
years beyond the budget year (1982 and 1983) now receive explicit
policy review, and represent tentative planning bases for executive
branch agencies. Projections for 1984 and 1985 are extrapolations
of the 3-year planning estimates for 2 years beyond the planning
period.
The estimates and projections through 1985 are summarized in
this section. Part 5 of the budget displays and discusses in more
detail the budget authority and outlay estimates of each budget
function for the 3-year planning period, 1981-83.
Basic assumptions.—The receipts projections presented in this
section are consistent with the foregoing economic assumptions,
and with continuation of current tax laws as modified by the
proposals in this budget. The budget authority and outlay estimates indicate the degree to which resources would be committed
by the continuation during 1982-85 of existing and currently proposed programs at the program levels recommended for 1980 and
1981, and planned for 1982 and 1983. These estimates are not
precise forecasts of future budget authority or outlays. Nor are
they intended as detailed, final recommendations as to future
budget levels. They are, however, consistent with the objective of
restraining growth in Federal spending, holding Federal outlays as
a percentage of GNP to the lowest level consistent with national
needs, and moving toward a balanced budget as rapidly as economic conditions and national security considerations permit. The
multiyear budget base figures for 1982 and 1983 represent tentative
M4
THE BUDGET FOR FISCAL YEAR 1981
administration plans for the long-term scheduling of major new
initiatives and program reductions.
These planning base estimates, and the projections to 1985, allow
for future cost-of-living adjustments to most benefit programs, for
anticipated changes in numbers of eligible beneficiaries, for Federal pay raises, and for other built-in cost changes (such as interest) consistent with the economic assumptions outlined above. They
allow for real growth of outlays in certain areas, such as defense,
research and development, and energy, and real decline in outlays
in others. The estimates generally assume that programs remain
level in real terms, except where there is an explicit budget recommendation, or multiyear budgeting plan, to increase or decrease
program levels over time.
The budget outlook.—The following table summarizes the budget
outlook from 1980 to 1985 based on current law and proposals in
this budget. Receipts are projected to increase by an average of
15.3% per year from 1981 to 1985, rising from $600 billion to $1,061
billion. Over the same period, outlays are projected to rise by an
average of 10.0% a year, from $616 billion to $903 billion. Thus,
under these assumptions, the budget is projected to move into
surplus in 1982, with larger surpluses (or budget margins) in subsequent years. In the event, however, these large projected surpluses
are unlikely to occur.
THE BUDGET OUTLOOK, 1 9 7 M 5
(In billions of dollars)
Estimate
1979
actual
Budget outlays
Budget receipts
Budget surplus or deficit ( - )
...
..
Projection
1980
1981
1982
1983
1984
493.7
465.9
563.6
523.8
615.8
600.0
686,3
691.1
774.3
798.8
838.9
920.5
902.6
1,061.2
-27.7
-39.8
-15.8
4.8
24.5
81.6
158.6
1985
It is unrealistic to assume that Federal receipts will be permitted
in the future to rise continually as a percentage of GNP, with an
attendant rise in individual tax burdens. Frequent tax reductions
were enacted in the 1970's to prevent such increases in tax burdens. In addition to preventing growing tax burdens, future tax
reductions may be required as incentives to business investment
and innovation, to raise productivity and reduce inflation.
Thus, projections of significant surpluses in 1983 and subsequent
years do not imply that resources of such magnitude will in fact be
available for additional spending. Indeed, holding future tax burdens to levels consistent with recent experience will require stringent control of budget outlays if the budget is to be kept near
OUTLOOK
39
balance in these years. The timing and structure of future tax
reductions, however, cannot be projected in detail far in advance of
events; they depend critically on economic developments, especially
on progress in reducing inflation, and on the appropriate level of
aggregate public sector savings, as discussed in the Economic
Report of the President
BUDGET RECEIPTS BY SOURCE
(In Mfions of dollars)
Individual income taxes
Corporation income taxes
Social insurance taxes and contributions..
Excise taxes
Other
Total
MEMORANDUM: Effect of receipts
proposals:
In comparison to current services:
Individual income taxes
Corporation income taxes
Social insurance taxes
Excise taxes
Other
Total
1979
1980
1981
1982
1983
1984
1985
217.8
65.7
141.6
18.7
22.1
238.7
72.3
162.2
26.3
24.3
274.4
71.6
187.4
40.2
26.4
318.7
80.6
215.9
48.0
28.0
381.4
91.8
243.4
51.7
30.5
455.7
105.5
270.2
55.6
33.5
538.3
118.8
307.7
59.9
36.4
465.9
523.8
600.0
691.1
798.8
920.5
1,061.2
-.4
-1.0
1.1
-3.2
1.4
21.5
.2
.7
—2.9
1.2
29.0
-4.2
i
32.2
.7
-3.2
.9
35.5
1.6
-.8
1.0
39.3
*
*
21.0
28.0
7.8
*
6.4
*
28.8
33.9
*
41.1
• 550 million of less.
The estimates of receipts shown in this section are extrapolations
(based on the assumed economic trends) of the receipts that would
result under existing tax law and the tax proposals in this budget.
Projected increases in receipts by source from 1981 to 1985 are
attributable largely to rising nominal-dollar incomes due both to
inflation and to real growth, and to increases in social security
taxes scheduled under current law. The table above shows projected receipts by source and the effect on receipts of administration
tax proposals, other than those renewals of expiring provisions that
are included in the current services receipts estimate.
Individual income taxes are projected to rise from $274.4 billion
in 1981 to $538.3 billion in 1985, a 96% increase. Corporation
income taxes rise by 66% over this same period, from $71.6 billion
to $118.8 billion.
Tax proposals included in this budget result in a net decrease in
income tax receipts in each year except 1985. Since the proposed
windfall profit tax is an excise tax, it will be deductible from
business income for income tax purposes. The estimates of income
tax receipts reflect reductions of $7.5 billion in 1981 from the
deductibility of the proposed windfall profit tax; these reductions
M4
THE BUDGET FOR FISCAL YEAR 1981
are projected to reach $15.8 billion in 1985. For a more detailed
discussion of this and other tax proposals, see Part 4 of this Budget
Social insurance taxes and contributions, which were only 2.5%
of GNP in 1958 but had reached 6.0% two decades later, are
projected to rise to 7.0% of GNP by 1985. The combined employeremployee social security tax rate, which rose from 12.1% to 12.26%
of the taxable earnings base on January 1,1979, is scheduled under
current law to increase to 13.3% on January 1,1981, to 13.4% a year
later, and to 14.1% on January 1,1985. The taxable earnings base is
scheduled to increase annually, rising from its current level of
$25,900 to a projected $42,900 by 1985.
SOCIAL SECURITY TAX RATE AND TAXABLE EARNINGS BASE
(Calendar years)
Tax rate (FICA, percent)
Taxable earnings base (dollars) 1
1979
1980
1981
1982
1983
1984
1985
12.26
22,900
12,26
25,900
13.3
29,700
13.4
32,400
13.4
35,400
13.4
39,000
14.1
42,900
'The taxable earnings base figures for 1982-85 are estimates based on an automatic adjustment mechanism. The figures for earlier years are
scheduled under current law.
Excise taxes are projected to rise from $26.3 billion in 1980 to
$40.2 billion in 1981 and to $59.9 billion in 1985. These estimates
reflect $7.7 billion in 1980 and $20.9 billion in 1981 from the proposed
windfall profit tax; excise tax receipts from this proposal are projected to rise to $38.9 billion in 1985. The 1985 estimate also reflects $4.4
billion from the extension of the Highway trust fund taxes that are
scheduled to expire September 30, 1984.
Estate and gift taxes, customs duties, and miscellaneous receipts
are projected at $36.4 billion in 1985, an increase of $10.0 billion
from 1981.
The estimates and projections of budget authority and outlays
shown in this section are extrapolations (based on the assumed
economic trends) of program costs reflecting current administration
policy—including the 1981 budget proposals and the multiyear
budget plans for 1982 and 1983. They are estimates of future resources and of the degree to which those resources are already
committed by current policy. Total budget outlays are projected to
increase at an average annual rate of 10.0% from $615.8 billion in
1981 to $902.6 billion in 1985.
The major change in the composition of budget outlays over the
last 10 years has been the rapid growth in payments for individuals and the corresponding relative decline in resources devoted to
other programs. Until 1977, spending for national defense (in constant dollars) was declining. This trend has been reversed and real
defense spending is projected to continue increasing through 1985.
41
OUTLOOK
This would keep our defense effort at a little over 5% of gross
national product in the early 1980's, compared to about 10% in the
mid-1950's.
PERCENTAGE COMPOSITION OF BUDGET OUTLAYS
Actual
Description
Estimate
Projection
1967
1973
1979
1981
1982
1983
1984
1985
NATIONAL DEFENSE:
Direct Federal payments for individuals
Other
1.2
42.0
1.8
28.4
2.1
21.7
2.2
21.5
2.3
21.8
2.3
21.7
2.3
22.4
2.4
23.1
Subtotal, national defense
43.1
30.2
23.8
23.7
24.1
24.0
24.7
25.4
24.1
35.5
40.3
43.0
42.5
44.5
44.6
45.1
3.1
6.5
6.5
16.7
5.8
11.1
7.0
10.4
5.8
10.9
8.6
10.5
6.1
9.5
8.8
8.8
6.1
9.2
7.9
10.2
5.9
8.6
6.8
10.2
6.0
8.1
6.2
10.3
6.1
7.7
5.7
9.9
56.9
69.8
76.2
76.3
75.9
76.0
75.3
74.6
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
NON-DEFENSE:
Direct Federal payments for individuals ....
Payments for individuals through States
and localities
All other grants to States and localities,,
Net interest
Other
Subtotal, nondefense
Total budget outlays
Budget outlays are projected to increase by $286.9 billion between 1981 and 1985. National defense and human resources programs, including national health insurance and welfare reform,
account for 91% of this increase. Most of the increase results from
demographic changes and inflation, rather than expansion of the
scope of Federal activity through creation of new programs or
liberalization of existing ones. This may be seen from the fact that
the major planned initiatives included in the projections, national
health insurance, welfare reform and contingencies, real growth in
defense, and the energy security programs, account for only 27 % of
the total projected 1981-85 outlay increase.
Projections of budget authority and outlays are shown by function and by agency on pages 45 to 47. While total outlays are
projected to increase by 47% from 1981 to 1985, outlays for health,
excluding national health insurance, and national defense are projected to increase faster than the total. Outlays for these functions
rise by 61% and 57%, respectively. With the allowance for national
health insurance included, health outlays increase by 109% over
the 4-year span, even with enactment of hospital cost control and
other savings measures. By way of comparison, GNP is projected to
rise by 58% from calendar year 1981 to 1985. Trends in the functional composition of the budget are discussed further in the introduction to Part 5.
M4
THE BUDGET FOR FISCAL YEAR 1981
The high-employment budget is an analytical concept based on
the budget estimates that would result were the economy continuously operating at a high level of employment. The unemployment
rate at high employment is estimated to be 5.1% currently and to
decline to 4.8% by the end of 1985. These rates are comparable to a
rate of about 4.0% in 1955, adjusted for changes in the composition
of the labor force.
High-employment outlays exclude that portion of outlays for unemployment insurance benefits and certain other programs that
occur because the economy is not continuously operating at high
employment. They thus eliminate the fluctuations in actual outlays
for these programs due to year-to-year changes in the unemployment rate. High-employment receipts are similarly computed on
the basis of the estimated yield of the existing (or proposed) Federal tax system if the economy were continuously at high employment. This eliminates year-to-year fluctuations in actual receipts
due to deviations in the rate of economic growth from its long-term
trend. The difference between the adjusted receipts and outlay
estimates is the high-employment budget margin. Changes in this
margin from one year to the next are a rough measure of the
direction and magnitude of discretionary fiscal policy actions (i.e.,
excluding the effects of automatic stabilizers).
HIGH-EMPLOYMENT RECEIPTS AND OUTLAYS
{In billions of dollars)
Estimates
1979
High-employment receipts
High-employment outlays
High-employment budget margin
1980
1981
Projections
1982
1983
1984
1985
479
491
561
557
660
603
749
674
840
766
938
835
1,052
904
-12
4
57
75
74
103
148
High-employment outlays are estimated at $603 billion in 1981
and $904 billion in 1985. High-employment receipts are projected to
increase from $660 billion in 1981 to $1,052 billion in 1985. The
high-employment margin shifts sharply in the direction of surplus
in 1981, rising by $53 billion. This large rise reflects the very
restrictive fiscal posture proposed in the 1981 budget. By 1985, the
projected high-employment margin rises to $148 billion.
Controllability.—Outlays in any one year are considered to be
relatively uncontrollable when the program level is determined by
existing statute or by contract or other obligations. Relatively uncontrollable outlays are grouped into two major categories: openended programs and fixed costs, outlays for which are generally
43
OUTLOOK
mandated by law; and payments from prior year contracts and
obligations, outlays for which are required because of previous
actions, such as entering into contracts. As recently as 1967, openended programs and fixed costs accounted for only 36% of total
outlays. By 1973 they were more than 50% of the budget and in
1981 they are estimated to be 59%. The substantial growth since
1967 has been due primarily to the rapid increase in benefit payments for individuals. Outlays for the existing open-ended programs and fixed costs are projected to be 55% of budget outlays in
1985. With renewal of general revenue sharing and enactment of
welfare reform and national health insurance before 1985, however, outlays in this category would be 60% of the budget total in
that year.
CONTROLLABILITY OF BUDGET OUTLAYS
(In billions of dollars)
1981
Relatively uncontrollable under present law«:
Open-ended programs and fixed costs:
Social security and railroad retirement....
Medical care
Other payments for individuals
Net interest
General revenue sharing (existing law)..
Other open-ended programs and fixed
costs
Total, open-ended programs and fixed
costs, current law
1982
1983
1984
1985
142.1
53.9
102.5
54.8
1.7
159.8
62.0
108.3
54.6
178.5
70.9
113.9
53.9
197.1
80.9
117.7
53.4
216.0
92.2
123.4
53.4
10.1
9.2
10.2
11.1
11.5
365.1
393.*
427.3
460.2
496.6
- . 1
*
-.8
5.1
.7
-.4
.7
-1.4
6.9
1.3
24.1
-.7
.9
-2.0
6.9
1.7
27.1
-1.0
1.1
-3.1
6.9
2.2
30.4
-1.3
1.3
—4.6
6.9
2.5
Proposed changes in open-ended programs
and fixed costs:
National health insurance
Disability (social security)
Military retirement pay
Changes to medicare and medicaid
General revenue sharing (renewal)
Other
Outlays from prior-year contracts and obligations 1
Relatively controllable outlays
101.4
150.3
291.7
322.7
352.2
377.8
Undistributed employer share, employee retirement
-6.2
-6.4
-6.5
-6.7
-6.9
615.8
686.3
774.3
838.9
902.6
Total budget outlays
' Outlays from prior-year contracts and obligations are relatively uncontrollable in the budget year. In the longer run, most of them can be controlled
(e.g., by not entering into contracts); therefore, they are not projected beyond the budget year. Historical data for this category, and estimates for 1980
and 1981 are shown separatefy in table 17, Part 9.
Outlays from prior-year contracts and obligations account for an
additional 15% to 18% of the budget and are classified as relatively
uncontrollable in the short run. This category is not projected
beyond the budget year because for future years these amounts are
generally controllable now—before the contracts and other obliga
M4
THE BUDGET FOR FISCAL YEAR 1981
tions under which they will occur have been entered into. However, it is likely that at the time each budget is prepared the total
relatively uncontrollable portion will continue to comprise about
75% of total outlays for the year ahead.
The fact that such a large proportion of the budget is relatively
uncontrollable has important policy implications. Without legislative changes to restrain the growth in relatively uncontrollable
programs, the burden of efforts to control total budget outlays
must fall disproportionately on a small portion of the budget. Success in restraining that portion causes it to shrink even further
relative to the uncontrollable portion. The administration has proposed legislation to restrain the growth of some of the relatively
uncontrollable programs. On the other hand, the welfare reform
and national health insurance initiatives will, upon enactment, add
to relatively uncontrollable outlays. The administration has instituted a multiyear planning system to provide greater control of the
Federal budget. With a longer planning horizon, a greater portion
of the budget can be considered "relatively controllable."
OUTLOOK
45
BUDGET AUTHORITY BY FUNCTION
(In billions of dollars)
Estimates
1981
National defense
Military personnel
Retired pay
Operation and maintenance
Procurement
Other
International affairs
General science, space, and technology
Energy
Natural resources and environment
Agriculture
Commerce and housing credit
Transportation
Community and regional development
Education, training, employment, and social
services
Education
Training and employment
Social services and other
Health
.
Medicare
Medicaid
Other
Income security
Social security
Federal employee retirement
Unemployment compensation....
Public assistance and income supplements..
Other
Veterans benefits and services
Administration of justice
General government
General purpose fiscal assistance
Interest
Allowances:
Civilian agency pay raises
National health insurance
Contingencies and other
Undistributed offsetting receipts:
Employer share, employee retirement
Interest received by trust funds
Rents and royalties on the Outer Continental Shelf
Total budget authority
1982
Projections
1983
1984
1985
205.3
(32.9)
(17.8)
(56.0)
(54.7)
(43.9)
14.2
7.0
12.4
15.4
4.5
6.8
25.5
10.2
228.3
(33.1)
(19.7)
(60.3)
(63.9)
(51.3)
16.0
6.7
11.8
15.7
4.2
7.1
26.1
11.1
253.2
(33.7)
(21.5)
(66.0)
(71.3)
(60.6)
17.2
6.5
11.6
15.5
4.7
7.0
26.9
10.7
37.4
(17.6)
(12.4)
(7.5)
83.2
(53.4)
(19.0)
(10.8)
285.7
(150.5)
(28.2)
(23.0)
(76.7)
(7.3)
23.8
4.9
5.3
9.7
68.0
39.4
(19.0)
(12.7)
(7.7)
94.5
(61.3)
(21.6)
(11.7)
310.5
(169.8)
(29.7)
(23.8)
(79.5)
(7.6)
24.9
5.0
5.0
9.3
68.3
41.3
(20.1)
(13.2)
(8.0)
106.5
(69.5)
(24.4)
(12.4)
335.3
(190.1)
(31.2)
(23.9)
(82.1)
(8.0)
26.1
5.2
5.2
8.8
68.9
42.1
(21.4)
(12.5)
(8.2)
120.6
(79.3)
(27.5)
(13.3)
369.6
(219.9)
(32.5)
(22.6)
(86.1)
(8.5)
27.1
5.4
5.3
8.9
70.0
1.1
3.3
2.0
7.9
5.4
24.1
8.5
7.6
27.1
10.9
9.7
30.4
11,2
—6.2 - 6 . 4
- 1 3 . 0 —14.1
-6.5
-15.4
— 6.7
-16.7
— 18.2
161.8
(32.0)
(13.7)
(48.6)
(40.5)
(26.9)
16.9
6.9
7.4
13.3
5.5
5.9
23.6
9.8
183.4
(32.5)
(16.1)
(52.3)
(47.3)
(35.3)
14.2
6.9
9.2
14.7
4.2
6.6
23.2
9.7
34.8
(16.5)
(11.9)
(6.5)
71.5
(45.0)
(16.5)
(10.1)
251.5
(131.1)
(26.5)
(19.4)
(67.5)
(7.0)
22.7
4.7
4.9
9.6
67.2
-6.9
—6.0
—6.0
-6.0
-6.0
-6.0
696.1
775.1
868.5
940.4
1,022.6
MEMORANDUM
Budget authority, off-budget Federal entities....
24.2
22.4
24.1
27.5
20.3
Budget authority, including off-budget Federal
entities
720.2
797.5
892.5
967.9
1,042.8
M4
THE BUDGET FOR FISCAL YEAR 1981
BUDGET OUTLAYS BY FUNCTION
(In billions of dollars)
Estimates
National defense
Military personnel
Retired pay
Operation and maintenance
Procurement
Other
International affairs
General science, space, and technology
Energy
Natural resources and environment
Agriculture
Commerce and housing credit
Transportation
Community and regional development
Education, training, employment, and social
services
Education
Training and employment
Social services and other
Health
Medicare
Medicaid
Other
Income security
Social security
Federal employee retirement
Unemployment compensation
Public assistance and income supplements..
Other
Veterans benefits and services
Administration of justice
General government
General purpose fiscal assistance
Interest
Allowances:
Civilian agency pay raises
National health insurance
Contingencies and other
Undistributed offsetting receipts:
Employer share, employee retirement
Interest received by trust funds
Rents and royalties on the Outer Continental Shelf
Total budget outlays
Projections
1981
1982
1983
1984
1985
146.2
(31.7)
(13.7)
(46.4)
(30.5)
(23.9)
9.6
6.4
8.1
12.8
2.8
.7
20.2
8.8
165.5
(32.2)
(16.1)
(49.9)
(36.1)
(31.2)
10.2
6.9
11.0
13.7
3.0
3.2
21.6
9.4
185.9
(32.5)
(17.9)
(53.4)
(43.6)
(38.5)
11.2
7.0
13.5
14.1
3.9
3.1
23.2
9.9
207.3
(32.8)
(19.7)
(57.6)
(50.7)
(46.6)
12.2
6.8
14.0
14.4
4.5
3.0
24.2
10.1
229.7
(33.4)
(21.5)
(63.0)
(57.2)
(54.5)
13.0
6.6
11.8
14.7
5.2
2.7
24.9
10.3
32.0
(14.4)
(11-3)
(6.3)
62.4
(37.3)
(15.9)
(9.2)
220.0
(136.9)
(17.1)
(18.8)
(40.1)
(7.2)
21.7
4.7
4.9
9.6
67.2
35.0
(16.3)
(11.8)
(6.9)
70.8
(42.4)
(18.4)
(10.1)
241.7
(154.3)
(19.4)
(17.4)
(43.6)
(7.0)
23.2
4.9
5.1
9.7
68.0
37.7
(17.7)
(12.3)
(7.7)
79.9
(48.1)
(21.0)
(10.9)
264.0
(172.0)
(21.7)
(15.6)
(46.9)
(7.7)
24.6
5.0
5.1
9.3
68.3
39.7
(18.9)
(12.9)
(7.9)
89.7
(54.4)
(23.6)
(11.7)
284.4
(190.0)
(24.0)
(13.7)
(48.6)
(8.1)
25.7
5.2
5.3
8.8
68.9
40.6
(20.1)
(12.3)
(8.2)
100.3
(61.1)
(26.7)
(12.5)
307.9
(208.3)
(26.2)
(12.0)
(53.0)
(8.4)
26.9
5.3
5.3
8.9
70.0
7.4
27.1
9.4
9.5
30.4
9.7
1.1
3.3
1.5
6.5
5.3
24.1
7.1
-6.2
-13.0
-6.4
-14.1
-6.5
-15.4
-6.7
-16.7
-6.9
-18.2
—6.0
-6.0
-6.0
-6.0
-6.0
615.8
686.3
774.3
838.9
902.6
18.1
15.1
12.9
11.3
14.4
633.9
701.4
787.2
850.2
917.0
MEMORANDUM
Outlays, off-budget Federal entities
Outlays, including off-budget Federal entities...
OUTLOOK
47
BUDGET AUTHORITY BY AGENCY
(In billions of doflars)
Estimates
Department or other unit
Legislative and Judicial branches
Funds appropriated to the President
Agriculture
Commerce
Defense—Military
Defense—Civil
Education
Energy
Health and Human Services
Housing and Urban Development
Interior
Justice
Labor
State
Transportation
Treasury
Environmental Protection Agency
National Aeronautics and Space Administration
Office of Personnel Management
Veterans Administration
Other agencies
Allowances
Undistributed offsetting receipts
Total budget authority
Projections
1981
1982
1983
1984
1985
2.0
11.4
24.6
3.4
158.2
3.0
15.5
10.2
222.9
40.4
4.7
2.7
33.0
2.3
20.5
80.9
5.3
5.7
26.7
22.7
22.0
3.1
-25.1
2.2
13.0
25.6
3.7
179.4
3.9
16.6
11.0
254.8
47.6
5.0
2.7
37.0
2.5
20.0
81.8
5.8
5.8
28.5
23.8
19.1
12.0
-26.4
2.1
14.8
27.0
3.9
201.0
3.8
17.9
12.9
286.5
48.8
5.3
2.8
38.2
2.6
22.1
81.5
6.4
5.8
30.2
24.9
19.2
38.8
-27.9
2.1
15.6
27.7
3.9
223.7
3.7
19.0
12.6
318.3
51.4
5.5
2.9
38.9
2.7
22.7
81.5
6.7
5.5
31.8
26.1
21.1
46.4
-29.3
2.2
15.9
28.8
4.0
248.3
3.7
20.2
12.7
363.4
53.8
5.8
3.0
37.0
2.8
23.5
82.5
6.5
5.2
33.2
27.1
21.8
52.1
-31.1
696.1
775.1
868.5
940.4
1,022.6
BUDGET OUTLAYS BY AGENCY
(In billions of dollars)
Estimates
Department or other unit
Legislative and Judicial branches
Funds appropriated to the President
Agriculture
Commerce
Defense—Military
Defense—Civil
Education
Energy
Health and Human Services
Housing and Urban Development
Interior
Justice
Labor
State
Transportation
Treasury
Environmental Protection Agency
National Aeronautics and Space Administration
Office of Personnel Management
Veterans Administration
Other agencies
Allowances
Undistributed offsetting receipts
Total budget outlays
Projections
1981
1982
1983
1984
1985
2.0
9.3
20.1
3.4
142.7
3.1
13.5
8.7
219.3
11.8
4.2
2.7
31.8
2.2
17.9
80.3
5.2
5.4
17.4
21.7
15.7
2.6
-25.1
2.1
11.1
23.8
3.5
161.6
3.4
15.3
10.8
246.1
13.8
4.5
2.8
30.9
2.4
19.1
81.3
5.5
5.9
19.7
23.1
15.9
10.0
-26.4
2.1
13.4
25.7
3.7
181.7
3.4
16.8
12.2
274.2
15.3
4.9
2.8
29.6
2.5
20.3
81.1
5.7
5.9
22.1
24.6
17.1
37.3
-27.9
2.2
14.0
27.4
3.9
202.8
3.3
17.8
13.4
301.5
16.9
5.2
2.9
28.3
2.6
21.0
81.2
5.9
5.7
24.4
25.7
17.2
44.7
-29.3
2.2
14.5
28.8
3.9
224.8
3.3
19.0
11.5
331.6
19.7
5.5
3.0
26.2
2.7
21.5
82.2
6.2
5.4
26.8
26.9
17.5
50.4
-31.1
615.8
686.3
774.3
838.9
902.6
M4
64 THE BUDGET FOR FISCAL YEAR 1981
THE LONGER RANGE BUDGET OUTLOOK
As the preceding section notes, 5-year budget projections represent a rough approximation of future budget trends. For some
analytical purposes, however, a 5-year planning horizon is much
too short. This has long been apparent to the actuaries of insurance and pension systems, for example, who must frequently make
calculations that reach decades into the future. Such calculations
are subject to error because they rely on assumptions about future
events that cannot be known in advance, such as the long-run
course of the economy. Yet some preparation for the longer-range
future is essential. Federal responsibilities in such areas as energy,
education, retirement, health, research and development, and defense raise long-range issues, the resolution of which will significantly affect the size and composition of the Federal budget, in
somewhat foreseeable ways, well into the 21st century.
Specifically, Federal Government responsibilities and how they
are carried out in the longer range are particularly important in
several areas emphasized in the 1981 budget:
• Reduction of our dependence on foreign sources of energy and
the development of secure long-range alternative energy supplies are essential to economic prosperity.
• Understanding and planning for the large increase in the size
of the over-65 aged population that lies three decades ahead
will affect a broad range of policies, from pension financing to
retirement age.
• The gradual aging of the population has implications for
health services and long-term care strategies.
• Consideration of possible economic developments due to
changing age structure in society may help improve housing
policy, affect savings patterns, and influence national investment strategy,
• Maintaining a strong defense requires long-term planning,
weapons development, and personnel recruitment and compensation strategies.
• Basic research is an essential condition for strong technological development, but realization of its benefits often takes
decades.
• Education and training requirements will vary in future decades, as the school-age and college-age populations decline,
increase, and probably decline again, and as labor markets
adjust.
The sections that follow consider some of these issues. The first
topic considered is likely demographic trends. This is because demography is the most significant factor affecting the budget that is
fairly predictable.
Population change.—The Federal Government exists to serve the
needs of the American people. The size and composition of its
OUTLOOK
49
budget, therefore, is a reflection of the size and composition of the
U.S. population, and of the needs of various segments of that
population. The budget is particularly sensitive to the age structure of the population, because many programs (e.g., education and
retirement) serve specific age groups. As last year's Budget noted
(pp. 52-57), the most prominent fact about the U.S. population age
distribution today is the existence of a huge "age-lump" consisting
of the postwar baby boom generation, and preceded and followed
by the "baby busts" of the 1930's and early 1940's (World War II),
and the late 1960's and 1970's, as the chart below shows. During
the depression of the 1930's relatively few children were born—
fewer than 2Vz million in most years. After the Second World War
A g e Distribution of U.S. Population, 1980
Population of tach Ag« (Millions)
Population at eoeh Age (Millions)
came the "baby boom," which peaked in 1957 when 4.3 million
children were born. Now, although there are many more women of
prime child-bearing age (the women born during the boom), their
fertility is only half that of their mothers, and in recent years only
about 3 million children have been born annually. The numbers of
this baby boom generation—especially in comparison to the relatively small generations preceding and following them—have significant and relatively predictable (but frequently overlooked) implications for American society and the economy.
50
THE BUDGET FOR FISCAL YEAR 1981
Over the course of the life-cycle, from youth to old age, people
make different demands upon, and contributions to, society, the
economy, and government. Children need support, education, and
adult supervision. Young adults seek housing of their own and
jobs—and it is from this age group that the armed services recruit.
Middle-aged workers are at their peak earning, saving, and taxpaying years. The elderly need pension support and more health
care, and other assistance, than younger people generally require.
Thus the baby boom generation and the changing age structure
of our population have significant implications for government
programs.
Education.—Although the first impact of the baby boom was no
doubt on maternity wards in hospitals, its first major impact on
government was public education. This began with the enormous
pressure to expand elementary school facilities and employment.
Between 1950 and 1970, elementary school enrollment rose by 63%.
But between 1970 and 1980, enrollments declined by an estimated
16%, and by 1985, they should decline by a further 5V2%.
The same phenomenon is now overtaking secondary education;
between 1976 and 1992 the number of 14- to 18-year-olds in the
U.S. population is projected to decline by 24%. Higher education,
which has experienced the same boom, now faces the same shrinkage in its traditional student age-group, about 4 years later than
the secondary schools.
As the output of the American educational system declines in
quantity, improvements in quality should become increasingly
important, if the Nation is to benefit from steadily advancing technological sophistication. This year the new Cabinet-level Department of Education will begin to operate. A key role of the new
department will be to assist in the adjustment of American education to the demographic changes and new economic demands of the
decades ahead.
State and local governments bear most of the burden and responsibility for education in this country. The baby boom has had its
major effect on their budgets, which rose from less than 7% of
GNP in 1948 to over 15% in 1975, but have since dropped to 14%.
Economic considerations.—As members of the baby boom generation have completed their schooling, they have entered the labor
force. During the 1970's, the civilian labor force grew by 22 million
(27 V2%)—compared to only IVz million during the 1950's (an 11%%
increase) and 12 million during the 1960's (18%). During the 1980's,
rapid growth will continue, but at a declining rate. During the
1990*8, the rate of growth of the labor force is likely to be only
about a third of the rate experienced during the 1970,s.
Growth of the labor force is one of two key determinants of longterm economic growth; the other is the rate of growth of productiv
OUTLOOK
51
ity, or output per worker. Economic growth, relative to population
increases, is the primary determinant of our national standard of
living. It also influences the growth in resources available to the
Federal budget. The Federal budget has been roughly one-fifth of
the gross national product (GNP) throughout the postwar period;
but during periods of rapid economic growth, it is easier to fund
Federal services or reduce the size of the budget as a percent of
GNP.
The massive influx of the baby boom generation into the labor
force during the late 1960's and the 1970's helps to explain some of
the anomalies of economic performance during this period. Unemployment averaged 6.2% for the 1970's, compared to a 4.6% average for the 1947-69 period. This occurred despite extraordinarily
rapid increases in employment during the decade. Productivity
growth averaged only half a percent per year, 1973-79, in contrast
to a 2*4% per year average, 1947-73. Entry of the baby boom
generation into the labor force helps account for this deterioration in
productivity from the mid-1960's onward. It does this in two ways:
first, inexperienced young workers are, on average, less productive
than their older, more experienced colleagues. Second, business
investment has not matched the accelerated growth of the labor
force; indeed, the Nation's stock of productive capital grew somewhat less rapidly during the 1970's than during the preceding
postwar years. Thus, as the baby boom flooded the job market, the
amount of capital plant and equipment per worker grew much less
rapidly than it had in the past—with an adverse effect upon productivity.
As labor force growth slows in future years, and as the number
of teenagers in the labor force begins to decline, labor productivity
should rise, labor markets may tighten and it is possible that labor
shortages will develop. If so, the need to continue a high level of
Federal investment in training, employment, and labor services
should be reexamined.
There are grounds for optimism about the strength of capital
investment in the 1990's, as well. The slow growth of the labor
force should induce businesses to invest heavily in order to substitute capital for scarce and relatively expensive labor. At the same
time, new products and new methods of production resulting from
a higher rate of technological innovation may also tend to stimulate new investment. With investment strong and labor force
growth slow, the amount of capital per worker would grow rapidly
(in contrast to its sluggish pace in the 1970*8), contributing to
productivity gains.
Ample savings should be available to finance high rates of investment as the baby boom generation reaches the peak saving and
peak earning years of middle age. Indeed, Government policies may
52
THE BUDGET FOR FISCAL YEAR 1981
be necessary to stimulate the rate of business investment sufficiently to insure that it matches a high savings rate.
National defense.—Long-term considerations affect several major
aspects of our defense force: technology, weapons procurement, and
personnel. Beginning in 1969, outlays in constant dollars for national defense declined more or less steadily until 1977. Meanwhile,
the Soviet Union was building its military strength. Therefore, the
recent trend of growth in real U.S. defense expenditures is projected
in this budget to continue through at least 1985. This kind of
commitment is necessary not only to improve the ability of our
Armed Forces to respond to potential aggression quickly, but also to
invest in the development of technology and in the major weapons
procurement that are essential to increase the relative strength of
our defense over the long term.
Moreover, the expected decline in the number of new entrants to
the labor force over the next 15 years will be felt by the Armed
Forces as well as by the civilian labor market. In 1977, males
recruited into the Armed Forces represented approximately 20% of
that year's cohort of 18-year-olds. Since the draft ended in 1973, the
armed services have had to compete directly with civilian job opportunities for recruits. They have been relatively successful to date. If
the Armed Forces are to maintain their present force levels, however, then either the percentage of each year's cohort of 18-year-old
males recruited will have to increase substantially over time as the
potential pool shrinks, or women will have to make up a much
higher percentage of recruits. Alternatively, retention rates will
have to be increased. Future budgets could be affected substantially
if additional adjustments in military pay and benefits relative to
private sector compensation become necessary.
Research and development—The Federal budget financed over
60% of the Nation's research and development during the 1960's,
but this share dropped to about 50% by the mid-1970's, contributing substantially to a marked decline in overall R. & D. spending
as a percentage of GNP. (One reason for the substantial Federal
role in research and development is the fact that benefits from
R. & D. may be difficult for an individual firm to capture for itself;
hence the private sector has little incentive to finance the basic
research that is so vital to technological advance.) As U.S. preeminence in technology has declined, other developed nations have
increased their research and development efforts substantially and
are challenging U.S. leadership in high-technology exports.
This budget reflects long-term measures to reverse the recent
decline in the rate of technological innovation. Federal support for
basic research has increased substantially in recent budgets, and is
increased further under this budget's proposals.
OUTLOOK
53
Since the benefits from research—especially basic research—may
sometimes take decades to affect productivity, the accelerated research effort now getting underway could spur productivity growth.
well into the 1990's. By then, increases in the size of the work force
may be contributing relatively little to economic growth, so that
high rates of productivity growth from new technology will be
particularly welcome.
Energy.—The most painfully apparent resource constraint facing
us today is energy supplies. The various factors that have led to
the present situation and the administration's long-range policies
to improve it are explained in the energy section of Part 5 of the
Budget Energy investments represent one of the most comprehensive long-range budget strategies the United States has undertaken.
The administration's program seeks to reduce U.S. demand for
imported oil significantly below current levels by 1990.
The budget reflects a variety of measures that support this longterm objective by encouraging energy conservation, encouraging
shifts from consumption of imported oil to consumption of domestically produced coal, supporting commercial production of synthetic
oil and gas, and exploring the potential of alternatives to conventional power sources—such as solar power and fusion power. Under
the proposals in this budget, nearly a quarter of all outlays for
nondefense R. & D. would be devoted to energy.
Housing.—As they reach the age at which they form their own
households and seek homes of their own, the members of the
maturing baby boom generation are contributing to the current
strong demand for housing, and will continue to do so during the
1980's. Once the baby boom is housed, however, housing demand
will slacken considerably, and residential construction will no longer
compete so strongly with business investment for available savings.
Over the 1980-85 period, annual increases in demand for housing due to demographic change are estimated to average more than
1.5 million units per year. This incremental demographic demand
is projected to decline in the mid-1980's with the annual demand
during the last half of the decade averaging fewer than 1.3 million
units annually. During the 1990's, these demographic trends should
cause an even larger drop in the incremental demand for housing.
For the decade as a whole, the annual incremental demographic
demand is projected to average fewer than 950,000 units, almost
40% below the demographic demands projected for the 1980-85
period.
The changing population age structure during the next 20 years
is also likely to contribute to a shift in housing demand pressures
54
THE BUDGET FOR FISCAL YEAR 1981
by type of unit demanded, from rental housing for younger households, to single family homes for middle-aged households. During
the first half of the 1980's over one-third of the incremental
demand pressure on housing will be due to increases in the numbers
of young households with heads between 25 and 34 years of age.
During the last half of the 1980's, this age group is projected to
contribute only about 13% of the incremental demand for housing,
and during the 1990,s, the change in demand from this age group is
projected to turn negative.
The administration has responded to these demographic pressures on housing by instituting reforms in mortgage credit markets
that facilitate the flow of savings to meet the current strong
demand for housing financing, and by focusing Federal expenditure
subsidies on those lower income families living in substandard
housing. Federal housing programs have sufficient flexibility to
meet changing housing demand conditions. They support and supplement the dominant role of the private market in meeting housing demands. In fact, the private housing sector in the United
States has proved highly responsive to changes in the demand for
housing, except where institutional barriers or the lack of effective
market demand from low-income households have arisen.
The administration's reforms to financial institutions have allowed mortgage credit markets to compete more effectively for
savings, particularly during the current period of high interest
rates. This has reduced the flow of savings to nonhousing investments that would otherwise have occurred. As the demographic
demand pressures on housing drop off substantially, the demand
for mortage credit will likewise decline, freeing more of the available supply of savings for business capital investment. However, the
probable decline of the housing construction industry after 1990
may by itself pose significant public policy issues.
Retirement and health.—Although the baby boom generation
promises to make tremendous contributions to our economy and
standard of living during its prime working years, it is important
to bear in mind that this generation, too, will eventually retire.
The contributions of its members to the Nation's output will diminish and the burden of supporting their retirement benefits and
meeting their growing needs for health care will fall upon a
shrunken labor force. Much of that burden is likely to be transmitted
through the Federal budget in the form of much higher outlays—and
taxes-—for social security, medicare, and other programs.
Under fairly conservative assumptions about future fertility and
life expectancy in the United States, the ratio of elderly (retirement age) persons to persons of working age would approximately
OUTLOOK
55
double between the years 2005 and 2035, reaching one person of
retirement age for each two persons still of working age. The
current ratio is about one to five. Since programs providing retirement and health care benefits for the elderly now make up nearly
38% of the Federal budget, this implies that there are likely to be
major pressures on the budget to rise, as a percentage of GNP,
during that period.
The problem projected to arise during the 2005-2035 period is
now distant in time, but should not be ignored. The Nation should
begin to prepare for a transition a quarter of a century hence.
Some of the actions that might alleviate the problem include encouraging later retirement age, developing more part-time jobs for
those who wish to be semiretired, and examining what future
benefit levels are realistic.
The Federal Government has played a major role in financing
the Nation's system of hospitals and the education of doctor's and
other health professionals. It is now clear that while some geographic areas are underserved, the Nation as a whole has sufficient
capacity in the health sector. As a result, financing of some aspects
of health care—for example, the direct Federal financing of medical
schools—has been curtailed. Moreover, as explained in the health
section of Part 5 of the Budget, the administration proposes to limit
Federal assistance for the training of health professionals to specific
specialties where shortages are still projected.
Another consideration in long-range health planning is to provide adequate facilities for the retired as that age group increases.
Long-term care.—People 65 and older constitute the fastest growing segment of the U.S. population. Between 1980 and 2030, the
elderly population will double absolutely and proportionately to
total 55 million and 22% of the population. Within this overall
growth, there will be a significant "aging of the aging." If present
trends continue, the population 85 and older will triple by 2035.
The changes in the size and composition of the elderly population
suggest the need for greater attention to the problem of providing
long-term care. Long-term care should not be thought of solely in
terms of placing individuals in costly facilities, such as nursing
homes, chronic disease hospitals, and psychiatric hospitals. Longterm care might be better addressed in terms of providing support
to individuals who need continuing assistance in carrying out the
tasks of daily living. This concept reflects a growing national emphasis on promoting the independent functioning of the disabled.
Indeed, the majority of the elderly who might otherwise be institutionalized can and do live in the community with social, medical,
income, and housing support—much of which is provided by their
families and friends.
56
THE BUDGET FOR FISCAL YEAR 1981
The need for long-term care increases with age. Recent surveys
suggest that 13% of the 65-74 year age group face some form of
limitation in their ability to function without help. This incidence
of impairment increases to 33% for the 75-84 year age group, and
to 66% for those 85 and over.1 These data, combined with the
Growth of Population A g e Groups, ( 9 5 0 - 2 0 5 0
inpending increase and change in the elderly population mentioned
above, indicate that the number of elderly in need of long-term
care will increase steadily, and more than double between 1980 and
2030. The 1981 budget reflects a number of actions to deal with
long-term care needs better, both now and in the future.
• Efforts are underway to fill gaps in our knowledge and to
examine long-term care alternatives, in order to improve policies and programs in this area. Pilot projects will test ways of
combining elements of long-term-care support available from
organized programs, families, and friends, and will explore
alternative ways of providing care in group housing arrangements.
• Funding for research on senility, which affects approximately
one-half of the nursing home population, will be increased.
' Estimates derived from 1977 National Nursing Home Survey and unpublished tabulations from 1977 Health
Interview Survey.
OUTLOOK
57
• Legislation will be submitted to the Congress that will allow
States to provide community-based services, funded by medicaid, to people who are now eligible for medicaid assistance
only if they enter a nursing home. Other legislation will
eliminate the requirement that medicare beneficiaries must
be hospitalized for 3 days before they can use home health
benefits covered by hospital insurance.
• Funds in the 1981 budget also will strengthen programs that
encourage families, friends, and volunteers to help the elderly
needing long-term care to remain in the community. The senior
companion program will be expanded to include every State.
Increased funding will be requested for community and inhome meals and social services for the aged, programs that
often help those in need of long-term care.
The longer range budget response.—Europe's population has a
substantially more mature age structure than ours. In 1975 the
median age in Western Europe was 33.1 years, 15% higher than for
the United States. A larger percentage of the European population
is elderly, and Europe is already experiencing the higher level of
demand on pension, retirement, and health care systems that will
come later in the United States. Not surprisingly, total Government taxes, at all levels, tend to be substantially higher as a
percentage of national product than in the United States—generally more than 40% compared to a little over 30% in the United
States, despite the fact that we spend proportionately more on
defense. This larger role of government in Europe may well be due
in large part to their more elderly populations. The European
experience in this regard should be examined for the light it may
shed on how U.S. society can meet future problems. It suggests
that the pressures to increase the proportion of GNP allocated to
the public sector will not decrease in the foreseeable future. The
Nation will need to face increasingly difficult choices if we are to
succeed in avoiding the general trend experienced by most other
mature industrialized countries of the free world—that of steady
growth of the public sector.
Not all of the issues discussed here can or even should be reflected in the 1981 budget. Yet to a considerable degree this budget
does reflect a growing consciousness of long-term considerations.
• In education, for example, programs are targeted to specific
areas of concern, especially disadvantaged youths. This emphasis recognizes that although demographic trends suggest
that there is less overall need to increase funds for education,
there remain specific needs of national concern.
• The budget emphasizes a long-range commitment to building
a stronger national defense force.
58
THE BUDGET FOR FISCAL YEAR 1981
• The budget recognizes the need to shift emphasis in health
programs and to promote appropriate long-term care for the
elderly.
• The budget provides long-term commitments for additional
low-income housing.
• The need to increase our investment in basic research in real
terms is reflected in the budget.
• Finally, the budget provides the policy framework and the
resources for long-term energy self-sufficiency.
In these and other ways, the 1981 budget reflects the administration's commitment to the Nation's future.
PART 4
BUDGET RECEIPTS
59
BUDGET RECEIPTS
This section of the budget describes the major sources of budget
receipts for 1979 to 1983 and discusses the legislative proposals and
administrative actions affecting them. Detailed estimates of budget
receipts by source are shown in table 10 of Part 9. The economic
assumptions underlying the estimates are presented in Part 3 together with estimates of receipts for 1984-85 and estimates of receipts at high employment. Part 6 contains an analysis of the
difference between actual receipts for 1979 and the budget estimates for 1979 made 2 years ago. In addition, Part 7 explains the
conceptual basis for classifying certain amounts collected by the
Federal Government as budget receipts and other amounts as offsetting collections.
SUMMARY
Total budget receipts in 1981 are estimated to be $600.0 billion,
an increase of $76.2 billion from the $523.8 billion estimated for
1980. Receipts in 1982 and 1983 are estimated to be $691.1 billion
and $798.8 billion, respectively. These estimates include the effects
of:
• increases in social security taxes scheduled under current
law;
• the proposed windfall profit tax and energy credits that are
part of the administration's energy program;
• administrative actions and proposed legislative changes to collect taxes closer to the time when liabilities occur; and
• other receipts proposals currently being made.
The estimates of receipts for 1982 and 1983 are based on current
tax law as modified by the tax proposals and administrative actions
in this budget. The timing of tax reductions in future years will
depend on the state of the economy, especially on progress in
reducing inflation.
Composition of budget receipts.—The Federal tax system relies
predominantly on income and payroll taxes. In 1981:
• Income taxes paid by individuals and corporations are estimated at $274.4 billion and $71.6 billion, respectively. Combined, these sources account for 58% of estimated budget
receipts.
• Social insurance taxes and contributions—composed largely of
payroll taxes levied on wages and salaries, most of which are
60
61
BUDGET RECEIPTS
paid equally by employers and employees—will yield an estimated $187.4 billion, 31% of the total.
• Excise taxes imposed on selected products, services, and activities are expected to provide $40.2 billion, 7% of the total.
• Estate and gift taxes, customs duties, and miscellaneous receipts are estimated at $26.4 billion, the remaining 4% of the
total.
Under the tax policy assumptions presented in this budget, the
income tax share of total receipts is projected to rise to 59% by
1983, 2 percentage points more than projected for 1981. Social
insurance taxes are projected to fall as a share of total receipts
from 31% in 1981 to 30% in 1983. The projected share of all other
receipts declines by 1 percentage point between 1981 and 1983.
BUDGET RECEIPTS BY SOURCE
(In billions of dollars)
1979
actual
Source
Individual income taxes
Corporation income taxes
Social insurance taxes and contributions
Excise taxes
Estate and gift taxes
Customs duties
Miscellaneous receipts
Total, budget receipts
1980
estimate
1981
estimate
1982
estimate
1983
estimate
217.8
65.7
141.6
18.7
5.4
7.4
9.2
238.7
72.3
162.2
26.3
5.8
7.6
10.9
274.4
71.6
187.4
40.2
5.9
8.4
12.1
318.7
80.6
215.9
48.0
6.4
8.6
13.0
381.4
91.8
243.4
51.7
7.1
9.2
14.2
465.9
523.8
600.0
691.1
798.8
RECEIPTS PROPOSALS
Energy program.—On April 5, 1979, the President announced the
phased decontrol of domestic oil prices beginning on June 1, 1979,
and ending with the expiration of price control authority on September 30, 1981. As part of the decontrol program, a windfall profit
tax on domestic producers of crude oil was proposed. Several
energy tax credits and a change in the existing foreign tax credit
on oil and gas extraction were also proposed. These proposals,
which are described in greater detail below, are estimated to result
in a net increase in receipts of $6.2 billion in 1980, $14.4 billion in
1981, $18.4 billion in 1982, and $19.6 billion in 1983.
Windfall profit to.—Higher OPEC prices and the phased decontrol of domestic oil prices will result in high profits for domestic oil
producers. Fairness requires that some of these windfall profits be
returned to the Nation as a whole, to be used for public purposes
including the reduction of oil imports, conservation of energy, and
mitigation of the impact of higher energy prices on low-income
Americans. The President, therefore, proposed a windfall profit tax
to become effective January 1, 1980. The proposed tax base is equal
62
THE BUDGET FOR FISCAL YEAR 1981
to the amount a producer receives for domestically produced crude
oil in excess of a base price and any State severance taxes attributed to the windfall. The tax rate generally is 60%, although it varies
in certain cases, depending on the type of oil.
The gross windfall profit tax is estimated to increase excise tax
receipts by $7.7 billion in 1980, $20.9 billion in 1981, $28.4 billion in
1982, and $31.5 billion in 1983. Because the proposed windfall profit
tax is an excise tax, it is deductible for income tax purposes. The
administration has proposed, however, that gross income for purposes of calculating percentage depletion be reduced by the windfall profit amount as determined before any severance tax adjustment. The net gain from the windfall profit tax proposal—the gross
windfall profit tax less the reduction in income taxes due to the
deductibility of the tax plus the gain from the denial of percentage
depletion—is $5.5 billion in 1980, $13.9 billion in 1981, $18.2 billion
in 1982, and $19.5 billion in 1983.
Each house of Congress has passed its own version of a windfall
profit tax; differences between the two are being resolved by a
Conference Committee. It is anticipated that a windfall profit tax
will be enacted early in 1980. The windfall profit tax proposal
presented in this budget follows generally the administration's position presented to the Senate Finance Committee.
Energy tax credits.—The proposed energy program includes several income tax credits to stimulate the conservation and production of energy. These credits are estimated to reduce receipts by
$0.1 billion in 1980, $0.3 billion in 1981, $0.4 billion in 1982, and
$0.6 billion in 1983. Each credit is described briefly below:
• Tax credit for commercial passive solar construction.—A tax
credit of up to $10,000 per building would be provided to
builders who employ passive solar technology in the construction of new buildings. The amount of the credit would be $20
per million Btu that were saved in excess of a specified level
above the Building Energy Performance Standard baseline.
• Tax credit for residential passive solar construction.—A tax
credit of up to $2,000 per unit would be provided to builders
who use passive solar technology in new residential units. The
amount of the credit would be based on the amount of energy
conserved as a result of the passive solar design.
• Tax credit for process heat.—The cost of solar thermal energy
equipment used to produce process heat in agricultural and
industrial applications would be eligible for an additional investment tax credit of 15%.
• Gasohol. Fuels that are at least 10% alcohol are currently
exempt from the 4-cent-per-gallon Federal excise tax on gasoline and diesel fuels. This exemption would be extended to
BUDGET RECEIPTS
63
January 1, 2000.1 In cases where alcohol is used as a fuel that
is suitable for use in internal combustion engines, but is
ineligible for the excise tax exemption, a taxable tax credit of
up to 40 cents per gallon would be provided.
• Woodburning stoves.—The cost of purchasing a qualified
woodburning stove would be eligible for a tax credit of 15%,
up to a maximum of $300.
• Oil shale tax credit.—A $3-per-barrel tax credit would be
provided to domestic producers of shale oil. The credit would
phase out as the price of imported oil, adjusted for inflation,
increases from $22.00 to $27.56 per barrel.
• Unconventional natural gas tax credit.—Unconventional natural gas derived from tight sands, Devonian shale, coal seams,
and geopressured brine would be eligible for a production tax
credit of $0.50 per thousand cubic feet.
Foreign tax credit on oil and gas extraction.—Under current law,
foreign income taxes may be offset dollar for dollar against U.S.
income taxes. These foreign income taxes may be used, in general,
only to offset U.S. income taxes on foreign source income. The
administration is proposing legislation to assure that foreign taxes
on income from oil and gas extraction be used to offset U.S. taxes
only on that income, rather than U.S. taxes on all foreign source
income. This proposal is estimated to increase receipts by $0.9
billion in 1980, and $0.7 billion in 1981, 1982, and 1983.
Cash management.—The receipts estimates reflect several initiatives to require taxpayers to make income tax payments closer to
the time when tax liabilities are incurred, to require employers to
deposit taxes withheld from employees on a more timely basis, and
to accelerate the payment schedule of customs duties and tobacco
excise taxes. It is estimated that these cash management initiatives, which are described in more detail below, will increase receipts by $4.5 billion in 1981, $5.6 billion in 1982, and $2.2 billion in
1983.
Employer deposits of taxes.—Under current law, the times at
which withheld income and payroll taxes and the employer's share
of payroll taxes must be remitted to the Treasury depend on the
amount of such taxes withheld by the employer. The larger the
accumulated taxes, the sooner they must be paid. The proposed
changes, which can be accomplished by administrative action, will
accelerate the deposits by large employers. At the same time, the
1
This exemption reduces the receipts of the Highway trust fund.
64
THE BUDGET FOR FISCAL YEAR 1981
changes will give relief to about 550,000 very small employers
(quarterly withheld taxes of less than $1,000), who will pay their
entire liability in one quarterly payment; and the frequency of
required deposits will be reduced for an additional 980,000 employers. Employers with quarterly withheld taxes of $1,000 to $13,000
will be required to make only one deposit per month. These
changes, which will be phased in during calendar years 1981 and
1982, are expected to increase receipts by $2.6 billion in 1981, $1,8
billion in 1982, and $0.6 billion in 1983.
Individuals1 payments of estimated taxes.—Under current law,
individuals whose tax liabilities exceed withheld taxes by $100 or
more are required to make estimated tax payments 4 times a year.
Because these quarterly payments are only estimated, a substantial
deviation is permitted before penalties are applied for underpayment. Generally, there is no penalty so long as estimated tax
payments plus withheld taxes exceed 80% of tax liabilities shown
on the tax return.
Taxpayers who make estimated tax payments pay their taxes
substantially later than they would if their liabilities were withheld. In addition, such taxpayers need to pay only 80% of their
liabilities in the year in which they accrue. To reduce the advantages of paying taxes through estimated payments and at the same
time avoid burdening the taxpayer with paying small amounts of
estimated tax, the following legislative changes are proposed:
• Increase the minimum percentage of liabilities to be met by
withheld and. estimated payments from 80 to 85%.
• Increase from $100 to $300 the amount by which liabilities
must exceed withheld payments before estimated payments
are required.
• Eliminate penalties for underestimation of tax when estimated tax payments are not required.
These proposed changes are estimated to increase receipts by
$0.1 billion in 1981, $0.3 billion in 1982, and $0.1 billion in 1983.
Corporation income tax payments.—Corporations are generally
required to pay 80% of their corporate income tax liability through
estimated tax payments. For corporations that keep accounts on a
calendar year basis, the estimated tax payments are due on the
fifteenth of April, June, September, and December. The remainder
of the tax liability is due in two equal installments after the close
of the year, payable on March 15 and June 15.
The required level of estimated tax payments has several exceptions. A major one is that corporations can make estimated payments on the basis of the previous year's tax liability. Thus, a
corporation with a loss in the preceding year need not pay any
estimated tax.
BUDGET RECEIPTS
65
The receipts estimates for 1981 and beyond reflect several proposed changes to require tax payments closer to the time the
liabilities occur and to make tax payments conform more closely to
actual liabilities. These proposed changes, which require legislation, include:
• Raising the required level of estimated tax payments from
80 to 85%.
• Requiring corporations with calendar year accounting to pay
the liability remaining at the end of the year in a single
payment due on March 15.
• Modifying the provision that allows corporations to make estimated payments on the basis of the prior year's tax liability.
Large corporations will be required to make estimated payments that are at least 60% of the current year liability, if
that amount exceeds the prior year liability.
In addition, to meet better the cash needs of the Treasury, which
are heaviest at the beginning of each month, it is proposed that
estimated corporate tax payments be made on the first of the
month rather than the 15th. This will be achieved by accelerating
two of the estimated payments by one-half month and by delaying
the other two by one-half month.
These changes will be phased in during calendar years 1981 and
1982 and are estimated to add $1.4 billion to receipts in 1981, $3.4
billion in 1982, and $1.4 billion in 1983.
Other cash management initiatives.—The administration is also
proposing to accelerate the collections of customs duties and tobacco excise taxes beginning in 1981. Importers and brokers currently
have 10 days to submit customs duties after they have been collected. The administration is reviewing several options to reduce this
delay. The collection of tobacco excise taxes from large manufacturers will also be accelerated. Currently, these taxes are due within
15 days after each semimonthly collection period. The revised
regulations will require payment within 3 days after each weekly
collection period. These changes, which can be accomplished by
administrative action, will increase receipts by $0.4 billion in 1981,
but will have no significant effect on receipts in subsequent years.
Restrictions on tax-exempt housing bonds.—State and local governments use some of the proceeds from tax-exempt borrowing to
provide mortgage funds for private housing. The tax exemption of
interest on State and local securities makes it possible to provide
such funds at interest rates well below the rates for private mortgages. At first, tax-exempt housing bonds were used mainly to
assist low-income, multifamily housing; recently, there has been a
dramatic increase in the use of such bonds for owner-occupied
66
THE BUDGET FOR FISCAL YEAR 1981
housing, including housing purchased by middle and upper income
families.
To halt this abuse of the tax-exempt borrowing privilege and to
stem a huge potential loss in tax revenues, the administration
supports legislation to ban the use of tax-exempt bonds for owneroccupied housing. The ban would apply to such bonds issued after
April 25, 1979, with exceptions allowed for bonds in process as of
that date. The administration is also proposing to restrict the use
of tax-exempt bonds for multifamily housing to projects in which
at least 20% of the residents qualify as low-income under present
HUD definitions.
This proposal is estimated to increase receipts by $0.1 billion in
1980, $0.8 billion in 1981, $2.5 billion in 1982, and $5.2 billion in
1983.
Other receipts proposals•—The administration is proposing a
number of other actions to improve resource allocation and the
overall efficiency and equity of the tax structure.
Tax distinction between employees and independent contractors.—
Under current law, a worker classified as an "independent contractor" rather than as an "employee" receives favorable withholding
and employment tax treatment:
• An employer is required to withhold income and social security taxes on wages paid to an employee. Withholding of these
taxes is not required on payments made to an independent
contractor. Thus, tax compliance by independent contractors
is extremely poor.
• The combined employer-employee social security tax rate
(12.26% in 1980 and 13.3% in 1981) is higher than the selfemployed rate paid by independent contractors (8.1% in 1980
and 9.3% in 1981).
There is no clear method to distinguish between employees and
independent contractors under current law. As a result, this unclear distinction has become a frequent source of controversy between taxpayers and the Internal Revenue Service and has resulted in substantial revenue losses to the Treasury each year. To
prevent tax noncompliance by independent contractors, the administration is proposing that effective January 1, 1981, 10% be withheld from compensation for services paid to certain independent
contractors. It is estimated that this proposal would increase revenues by $0.6 billion in 1981, $0.6 billion in 1982, and $0.7 billion in
1983.
Railroad retirement taxes— The budget estimates reflect proposed legislation to increase railroad retirement payroll taxes to
alleviate funding problems of the Railroad Retirement trust fund.
BUDGET RECEIPTS
67
The largest part of the increase in receipts results from the elimination of the taxable earnings maximum (currently $1,850 per
month) on the employer portion of the tax. This legislation is
proposed to become effective January 1, 1981, and would increase
receipts by $0.3 billion in each of the years 1981 through 1983.
Airport and airway trust fund taxes.—These taxes are generally
scheduled to expire on June 30, 1980. Legislation has been proposed
to extend the current freight waybill and passenger ticket taxes,
and certain other taxes, at their present rates. The legislation also
changes the current 7 cents per gallon tax on aviation fuel to an ad
valorem tax of 10% of the price of aviation fuel effective July 1,
1980. A 6% tax on new aircraft and avionics is also being proposed
to become effective October 1, 1980. In comparison to extending the
current tax rates beyond their June 30, 1980 expiration date, these
proposals are estimated to increase receipts by a relatively small
amount in 1980, $0.2 billion in 1981, $0.3 billion in 1982, and $0.3
billion in 1983.
Employer social security tax on tips.—Under current law, employers pay social security taxes on a limited part of the cash tips
received by their employees, whereas employees pay social security
taxes on all cash tips. Legislation is being proposed, to become
effective January 1, 1981, to require employer social security tax
payments on all tips now subject to employee social security taxes.
This legislation is expected to increase receipts by a small amount
beginning in 1981.
Oil and hazardous substance cleanup.—The administration is
proposing legislation to establish a fund to assure adequate and
timely cleanup of oil and hazardous substances which significantly
threaten public health and the environment. This new fund, which
will replace several existing pollution control funds, will also be
used to address the problems of uncontrolled chemical dumpsites
which contain hazardous wastes threatening public health and the
environment. The fund will be financed primarily by fees paid by
industry. This legislation, proposed to become effective October 1,
1980, is estimated to increase receipts by $0.2 billion in 1981, $0.3
billion in 1982, and $0.4 billion in 1983.
Reduction in premiums of uninsured individuals.—Individuals
not insured under social security may obtain supplementary medical insurance (medicare) coverage by paying a monthly premium
based on hospital costs of the previous 2 years. In an effort to
restrain inflation in health care costs, the administration is proposing hospital cost-containment legislation to limit increases in revenues for inpatient care. This legislation, proposed to become effec-
68
THE BUDGET FOR FISCAL YEAR 1981
tive October 1, 1980, will have no effect on receipts in 1981 and
1982 and an insignificant impact in 1983.
Withholding tax on interest paid to foreigners.—Current law requires a withholding tax of 30% on interest (and other payments,
such as dividends, rents, royalties, etc.) paid to nonresident foreigners. However, because of numerous statutory and treaty exemptions, collections are very small. The administration proposes to
eliminate withholding on all portfolio interest paid to nonresident
foreigners. This is expected to encourage foreign investment in the
United States, help the balance of payments and the value of the
dollar, and spur domestic capital formation. It is estimated that
this proposal will reduce receipts by relatively small amounts
through 1983.
Taxation of foreign investment in U.S. real estate.—Most nonresident foreign investors in U.S. real estate are able to avoid capital
gains taxation when they sell their investments. This reduction in
receipts results not from any specific exemption, but rather from
opportunities for tax avoidance inherent in current law. The administration proposes taxing all capital gains realized by foreign
investors on real estate effective January 1, 1980. A withholding
mechanism to aid the enforcement is also proposed. The proposal is
expected to increase receipts by relatively small amounts through
1982, and by $0.1 billion in 1983.
Tax-exempt public housing bonds.—Local housing authorities
have traditionally borrowed from the public on a tax-exempt basis
to obtain financing for the construction of public housing. The
Federal Government then makes annual payments to amortize the
debt. The administration proposes that beginning in 1980 a portion
of short-term, tax-exempt notes now sold by local housing authorities directly to the public would be converted into long-term bonds
to be purchased by the Federal Financing Bank (FFB), an entity of
the Treasury Department. To pay for these purchases, taxable
Treasury debt instruments would be issued. The interest differential between the taxable rate and the tax-exempt rate would be
paid to the FFB by the Department of Housing and Urban Development. This proposal can be accomplished by administrative action.
Historic preservation.—Under the Tax Reform Act of 1976, expenditures to rehabilitate structures certified by the Department of
the Interior to be historic became eligible for special accelerated
methods of depreciation; the demolition of such structures became
subject to special tax disincentives. These provisions are generally
scheduled to expire on June 30, 1981, and December 31, 1980,
respectively.
69
BUDGET RECEIPTS
Because tax returns on projects using these tax incentives have
been filed relatively recently, information has not been available
for assessing the impact, usefulness, and efficiency of these provisions. With data now becoming available, the administration will
undertake an evaluation of the operation of these provisions during
the coming year. The administration, therefore, is proposing a 1year extension of these provisions, which is estimated to reduce
receipts by relatively small amounts through 1983.
EFFECT OF ADMINISTRATIVE ACTIONS AND PROPOSED LEGISLATION
1
(In billions of dollars)
1980
Individual income taxes:
Cash management initiatives
Energy program *
Tax-exempt housing bonds
Other
Subtotal, individuals
Corporation income taxes:
Cash management initiatives
Energy program 3
Tax-exempt housing bonds
Other
Subtotal, corporations
1981
1.5
-1.7
0.5
0.3
-0.4
1.1
0.7
-1.1
0.1
1.4
-5.3
0.7
0.1
3.4
—8.3
2.0
0.1
1.4
—9.8
4.1
0.1
-3.2
-2.9
-4.2
0.9
0.3
0.2
0.6
0.3
0.3
0.2
0.3
0.3
1.4
1.2
0.8
20.9
0.2
0.2
0.2
28.4
0.3
0.3
31.5
0.3
0.4
*
*
21.5
29.0
32.2
*
*
*
*
•
-1.0
Subtotal, social insurance
Subtotal, excise taxes
Other.Cash management initiatives
Other
Subtotal, other
Total
1983
1.8
-1.1
0.2
0.3
-0.4
Social insurance taxes and contributions:
Cash management initiatives
Railroad retirement tax increase
Other
Excise taxes:
Windfall profit tax
Airport and airway trust fund taxes *
Oil and hazardous substance cleanup
Cash management initiatives
Other
1982
7.7
*
0.5
-2.0
1.1
0.4
0.1 ..
7.8
0.2
*
»
*
0.2
6.4
21.0
_*
*
28.0
*
28.8
• 5 0 million or less.
1
These estimates are based on the direct effect only of legislative changes at a given level of economic activity. Induced effects are taken into
account (or forecasting incomes, however, and in this way affect the receipts estimates by major source and in total.
* These reductions art in large part due to the deduct&iity of the windfall profit tax in determining income tax liability.
3
These estimates are for increases in airport and airway tax receipts over and above those that would result from extending the current tax rates
beyond their June 30, 19S0 expiratw date The extension of current tax rates would add $0.1 billion to receipts in 1980, $0.9 billion in 1981, $0.9
tuition in 1982, and $1.0 billion in 1983.
70
THE BUDGET FOR FISCAL YEAR 1981
CHANGES IN BUDGET RECEIPTS
Budget receipts are estimated to rise by $57.9 billion in 1980 and
$76,2 billion in 1981. The year-to-year changes can be divided between the part due to growth in the tax base and the part due to
revisions in the tax structure. Under the tax rates and structure in
effect on January 1, 1978, receipts would have risen by $58.4 billion
in 1980 and $50.8 billion in 1981. Thus, the combined effect of
administrative actions and enacted and proposed tax law changes,
which is shown in the accompanying table, decreases the growth in
receipts by $0.5 billion in 1980 and increases the growth in receipts
by $25.4 billion in 1981- The corresponding increases for 1982 and
1983 are $17.1 billion and $9.0 billion, respectively.
1980
Growth in receipts (in billions of dollars):
Under existing law and administrative actions and proposed legislation
Under tax rates and structure in effect Jan. 1 , 1 9 7 8
Difference
1981
1982
1983
57.9
58.4
76.2
508
91.1
RO
107.7
98J
-.5
25.4
17.1
9.0
71
BUDGET RECEIPTS
CHANGES IN BUDGET RECEIPTS
{In billions of dollars)
1979
Receipts under tax rates and structure in
effect January 1, 1978 1
Administrative actions:
Acceleration of State and local deposits of
social security taxes effective July 1,
1980
Sugar import proclamation
Waiver of import duties and fees on crude
oil and petroleum products 2
Enacted legislative changes:
Revenue Act of 1978
Energy Tax Act of 1978
Foreign Earned Income Act of 1978
Social security taxable earnings base increases: * 5
$17,700 to $22,900 effective Jan. 1,
197 9
$22,900 to $25,900 effective Jan. 1,
198 0
$25,900 to $29,700 effective Jan. 1,
198 1
$29,700 to $32,400 effective Jan. 1,
198 2
$32,400 to $35,400 effective Jan. 1,
198 3
Social security tax rate increases:4
12.1% to 12.26% effective Jan. 1,
1979
12.26% to 13.3% effective Jan. 1,
1981
13.3% to 13.4% effective Jan. 1 , 1 9 8 2
Increase in SMI (medicare) premium
Other
Total, receipts under existing legislation
Proposed changes:
Energy program
Cash management initiative
Tax-exempt mortgage bonds
Other
Total, receipts under existing and
proposed legislation4
1980
1981
1982
1983
467.9
526.3
577.1
651.1
749.8
*
2.2
.1
.4
.1
.3
.1
.2
.1
- .3
-.6
-4.4
-1.0
—.6
-21.7
-.9
-.3
-25.1
-1.1
-.3
-29.0
-1.2
-.3
-33.1
-1.1
-.3
3.0
9.7
11.8
14.4
17.5
1.3
4.3
5.6
7.2
1.5
5.0
6.7
1.1
3.6
1.3
1.1
.2
-O.
465.9
465.9
1.7
1.9
2.1
2.4
9.2
16.5
1.5
1.6
-3.9
.5
-^9
.8
-1.7
14.6
1.0
1.2
—2.9
517.4
579.0
663.1
770.0
6.2
.1
.1
14.4
4.5
.8
1.3
18.4
5.6
2.5
1.5
19.6
2.2
5.2
1.8
523.8
600.0
691.1
798.8
> These figures assume a social security taxable earnings base of J17,700.
•Pursuant to Presidential Proclamation No. 4655, fees and customs duties on imported crude oil and petroleum products may be waived by the
Secretary of Energy through June 30,1980. For budget purposes, it is assumed that such fees and duties will be waived until that date. As of the time
this budget was completed, no determination had been made as to whether the authority granted under Proclamation No. 4655 would be extended
beyond June 30, 1980, and this budget includes for periods beyond that date revenues received from such import fees and customs duties.
«If the taxaite eanwgs base were not changed to reflect increased earnings, the effective social security tax rate on earnings would fall. The
amounts included in legisiatrve changes that can be attributed to keeping taxes and average earnings in the same relationship that existed in 1978 are:
S0.9 billion in 1979, *4.1 Mian m 1980. J8.6 billion in 1981, 515.2 billion in 1982, and $23.9 billion in 1983.
«These estimates include both the direct and indirect effects of administrative action and legislative changes,
•Technical note: When the tax rate and the taxaNe earnings base increase at the same time, dividing up the total effect on receipts is arbitrary to
some small extent because of an interaction effect. The increase in receipts due to this interaction effect is attributed to the rate and base changes in
proportion to the increases in receipts than would occur if the rate and base were each changed separately.
72
THE BUDGET FOR FISCAL YEAR 1981
RECEIPTS BY SOURCE
Individual income taxes.—Individual income tax receipts are estimated at $238.7 billion in 1980 and $274.4 billion in 1981, an
increase of $35.6 billion. The major proposal affecting individual
income taxes in 1981 is the cash management initiative, which is
estimated to increase receipts by $1.8 billion. The proposed energy
program reduces individual income tax receipts by an estimated
$0.4 billion in 1980 and $1.1 billion in 1981.
Individual income taxes in 1982 and 1983 are projected at $318.7
billion and $381.4 billion, respectively. These figures reflect a rise
in the average tax rate on personal income as inflation and real
growth move taxpayers into higher tax brackets. The administration is extremely concerned about the significant rise in tax burdens implied in these estimates, and is committed to reducing these
burdens as soon as economic conditions allow. However, as discussed earlier, the timing, form, and size of any future legislated
tax reductions depends on the future performance of the economy,
especially progress in reducing inflation.
Corporation income taxes.—Corporation income tax receipts are
estimated at $72.3 billion in 1980 and $71.6 billion in 1981. The
proposed energy program, primarily the deductibility of the proposed windfall profit tax, reduces estimated receipts by $1.1 billion
Budget Receipts: 1971-1983
BUDGET RECEIPTS
73
in 1980 and $5.3 billion in 1981. These estimates reflect other
proposed changes, which add $0.1 billion to receipts in 1980 and
$2.2 billion in 1981. Corporation income tax receipts in 1982 and
1983 are estimated at $80.6 billion and $91.8 billion, respectively.
These estimates reflect reductions of $8.3 billion in 1982 and $9.8
billion in 1983 due to the proposed energy program. Other proposed
changes, primarily the cash management initiatives and the restrictions on tax-exempt housing bonds, are estimated to increase
receipts by $5.4 billion in 1982 and $5.6 billion in 1983.
Social insurance taxes and contributions.—This category includes
social security and railroad retirement taxes, unemployment insurance taxes and deposits, Federal employee retirement contributions, and premium payments for supplementary medical
insurance.
Receipts from this source are expected to be $162.2 billion in
1980 and $187.4 billion in 1981. These figures reflect the scheduled
increase in the combined employer-employee social security tax
rate from 12.26 to 13.3% on January 1, 1981, and annual increases in the social security taxable earnings base from $22,900 in
1979 to $25,900 in 1980 and $29,700 in 1981. The 1980 estimate also
includes $2.2 billion from an administrative action announced in
November 1978 to accelerate State and local deposits of social
security taxes effective July 1, 1980. The 1981 estimate reflects an
increase of $0.9 billion from the cash management proposals.
The estimates for 1982 and 1983 are $215.9 billion and $243.4
billion, respectively. These estimates reflect a scheduled rise in the
combined employer-employee social security tax rate—from 13.3
to 13.4% on January 1, 1982—and annual increases in the taxable
earnings base.
Excise taxes.—Excise taxes are levied on a variety of products,
services, and activities. Receipts from these taxes are estimated at
$26.3 billion in 1980 and $40.2 billion in 1981. These estimates
reflect the proposed windfall profit tax, which is estimated to increase receipts by $7.7 billion in 1980 and $20.9 billion in 1981.
These estimates also reflect the continued phase-out of the telephone excise tax that is scheduled under current law, and proposed
legislation to continue in a modified form the airport and airway
taxes that are currently scheduled to expire on June 30, 1980. The
1981 estimate includes an additional $30 million attributable to
enactment of the Inland Waterways Revenue Act of 1978, which
levied a tax on liquid fuel used in vessels engaged in commercial
waterway transportation, effective October 1, 1980.
74
THE BUDGET FOR FISCAL YEAR 1981
The estimates for 1982 and 1983 are $48.0 billion and $51.7
billion, respectively. These estimates include $28.4 billion from the
proposed windfall profit tax in 1982 and $31.5 billion in 1983.
Other receipts.—Estate and gift taxes, customs duties, and miscellaneous receipts (the largest of which are deposits of earnings by
the Federal Reserve System) are estimated to total $24.3 billion in
1980, $26.4 billion in 1981, $28.0 billion in 1982, and $30.5 billion in
1983.
Proprietary receipts.—In addition to budget receipts, the Government receives significant proprietary income from the public. This
income is derived from various market-oriented activities—such
as interest, rents, royalties, and the sale of Government property,
products, and services. Since this income arises from business-type
transactions rather than from taxation, it is treated as an offset to
related outlays and budget authority rather than as budget receipts. Proprietary receipts from the public are shown in table 11
of Part 9.
PART 5
MEETING NATIONAL NEEDS:
THE FEDERAL
PROGRAM BY FUNCTION
75
INTRODUCTION
National needs and the functional classification.—This section
discusses the budget according to national needs, agency missions,
and major programs. National needs are grouped in 16 broad areas
that provide a coherent and comprehensive basis for analyzing and
understanding the budget. Three additional categories—interest,
allowances, and undistributed offsetting receipts—do not address
specific national needs but are included in order to cover the entire
budget.
The budget resources devoted to meeting national needs are classified by budget functions so that budget authority and outlays of
budget and off-budget Federal entities, loan guarantees, and tax
expenditures can all be grouped according to the national needs
being addressed. To the extent feasible, these groupings are made
without regard to agency or organizational distinctions. Each Federal activity is classified in the function that defines its most
important purpose, even though many activities serve more than
one purpose. This is necessary so that the sum of the functional
categories equals the budget totals. They are also the categories
used by the Congress in the concurrent resolutions on the budget.
Multiyear budget presentation.—This section of the budget continues to include detailed data on budget authority and outlays for 2
years beyond the budget year. This reflects the 3-year planning
system adopted by the administration. The system provides information on a regular basis on the longer term effect of current
budget decisions. It also provides the means for phasing in, or
phasing out, programs on a systematic basis.
Ten years: 1971-81.—During the 10-year span ending with the
1981 budget, total outlays are estimated to have nearly tripled,
going from $211 billion in 1971 to $616 billion in 1981. A very large
portion of this increase was the result of inflation, but budget
outlays in constant prices are expected to be nearly 30% higher in
1981 than a decade earlier, while prices paid are expected to be
around 125% higher. Within the total increase in spending there
were marked disparities. For example, energy programs in 1981 are
estimated to be nearly seven times the 1971 level. Health spending
will quadruple, and income security (which includes the social security program) will also quadruple. Because of their higher than
average growth from high base levels, total spending on health and
income security together is expected to equal 46% of budget out76
77
INTRODUCTION
lays in 1981; a decade earlier they accounted for 33% of the total.
Other functions whose spending more than triples include administration of justice; natural resources and environment; education,
training, employment, and social services; and community and regional development. In contrast, defense outlays are up only 93%
between 1971 and 1981, and declined by 10% after adjustment for
inflation. General science, space, and technology spending is up
only 54% in current prices—reflecting the phaseout of the manned
space program—while outlays for the agriculture and the commerce and housing credit functions are estimated to be lower in
1981 than in 1971.
Major budget trends.—In considering how the budget has
changed over the years, it is helpful to aggregate function totals
into larger clusters in order to observe broad trends in Federal
spending. These aggregations are made more meaningful when
compared with the size of the total economy (as measured by the
GNP), as is done in the following chart. The tables on the following
2 pages show budget outlays by larger cluster and by the functions
comprising each larger cluster at 5-year intervals from 1956 to
1976, and for each of the years 1979 through 1983. Tables showing
budget authority and outlays for each major function, subfunction,
and basic program are included in each of the subsequent sections
Budget Outlays as a Percent of G N P
Percent
Percent
THE BUDGET FOR FISCAL YEAR 1981
78
BUDGET OUTLAYS BY LARGER CLUSTER AND BY FUNCTION, 1956-76
(In billions of dollars)
Actual
1956
National defense1
Human resources:
Income security
Social security
Other
Health
Education, training, employment, and social
services
Veterans benefits and services
Subtotal, human resources
Net interest:
Interest
Interest received by trust funds
Subtotal, net interest
All other
International affairs
General science, space, and technology
Energy
Natural resources and environment
Agriculture
Commerce and housing credit
Transportation
Community and regional development
Administration of justice
General government
General purpose fiscal assistance
Undistributed offsetting receipts (except interest)
Subtotal, all other
Total budget outlays
1961
1966
1971
1976
39.7
46.6
54.9
75.8
89.4
9.9
(5.5)
(4.4)
,4
21.4
(12.2)
(9.3)
.9
28.9
(20.2)
(8.7)
2.6
55.4
(35.2)
(20.2)
14.7
127.4
(72.7)
(54.7)
33.4
.6
4.9
1.1
5.7
4.4
5.9
9.8
9.8
18.7
18.4
15.7
29.1
41.8
89.8
198.0
6.3
-1.2
8.1
-1.4
11.3
-1.9
19.6
-4.8
34.5
-7.8
5.1
6.7
9.4
14.8
26.7
2.4
.1
.2
.9
3.5
.5
1.4
.1
.3
.7
.1
3.2
1.0
.5
1.8
2.6
1.2
4.0
.3
.4
1.2
.2
5.6
6.7
.6
2.7
2.4
3.2
5.7
1.1
.6
1.4
.3
4.1
4.2
1.0
3.9
4.3
2.4
8.0
2.9
1.3
2.0
.5
5.6
4.4
3.1
8.1
2.5
3.8
13.4
4.8
3.3
2.9
7.2
-.3
-1.0
-1.7
-3.7
-6.9
9.9
15.3
28.6
31.0
52.3
134.7
211.4
366.4
70.5
97.8
* The national defense function.
of this part of the budget. These tables include data for the last
actual year (1979), the current year (1980), and the multiyear
budget planning period (1981-83). In addition, tables showing projected budget authority and outlays by agency and major function
for the years 1984 and 1985 appear in Part 3 (Economic Assumptions and the Long-Range Outlook) of this document.
Data underlying the chart show that:
• Federal spending relative to the total economy rose significantly throughout most of this period. In 1966, Federal budget
outlays were equal to 18.7% of the GNP; the total rose to
20.7% in 1971 and 22.6% in 1976. Under the President's
budget program, this trend is being halted. Total budget outlays are estimated at 22.3% of GNP for both 1980 and 1981.
79
INTRODUCTION
BUDGET OUTLAYS BY LARGER CLUSTER AND BY FUNCTION, 1979-83
(In billions of dollars)
Estimate
Actual
1979
National defense
1
Human resources:
Income security
Soci3l security
Other
Health
Education, training, employment, and social
services
Veterans benefits and services
Subtotal, human resources
Net interest:
Interest
Interest received by trust funds
Subtotal, net interest
All other
International affairs
General science, space, and technology
Energy
Natural resources and environment
Agriculture
Commerce and housing credit
Transportation
Community and regional development
Administration of justice
General government
General purpose fiscal assistance
Allowances
Undistributed offsetting receipts (except interest)
Subtotal, all other
Total budget outlays
1980
1981
1982
1983
117.7
130.4
146.2
165.5
185.9
160.2
(102.6)
(57.6)
49.6
190.9
(117.9)
(73.0)
56.6
220.0
(136.9)
(83.1)
62.4
241.7
(154.3)
(87.4)
70.8
264.0
(172.0)
(92.0)
79.9
29.7
19.9
30.7
20.8
32.0
21.7
35.0
23.2
37.7
24.6
259.4
298.9
336.2
370.7
406.3
52.6
-9.9
63.3
-11.5
67.2
-13.0
68.0
-14.1
68.3
-15.4
42.6
51.8
54.2
53.9
53.0
6.1
5.0
6.9
12.1
6.2
2.6
17.5
9.5
4.2
4.2
8.4
10.4
5.9
7.8
12.8
4.6
5.5
19.6
8.5
4.5
4.9
8.7
.1
9.6
6.4
8.1
12.8
2.8
.7
20.2
8.8
4.7
4.9
9.6
2.6
10.2
6.9
11.0
13.7
3.0
3.2
21.6
9.4
4.9
5.1
9.7
9.8
11.2
7.0
13.5
14.1
3.9
3.1
23.2
9.9
5.0
5.1
9.3
36.5
-8.5
— 10.7
-12.2
-12.4
— 12.5
74.0
82.5
79.1
96.2
129.2
493.7
563.6
615.8
686.3
774.3
• The national defense function.
• Major changes in defense spending relative to the economy
have occurred over this period. In 1966, the first year of major
U.S. combat involvement in Vietnam, national defense spending was equal to 7.6% of the GNP. Defense spending rose
significantly faster than the economy in the next 2 years due
to the Vietnam war, peaking at 9.5% in 1968, and then fell to
5.1% in 1978 and 1979. In 1981 defense spending is anticipated to be equal to 5.3% of the GNP; under the President's
planning guidance, it is expected to remain at that percentage
(rising in real terms) at least through 1983.
80
THE BUDGET FOR FISCAL YEAR 1981
• While national defense spending was fluctuating relative to
the GNP, human resources programs more than doubled relative to the economy between 1966 and 1976. Such spending
declined by 1% of GNP from 1976 to 1979 and is expected to
grow by about the same percentage between 1979 and 1981.
The 1981 figure does not include the effects of allowances for
pay raises and contingencies, which are included in the "all
other nondefense" grouping.
• The "other" category is made up of net interest and all other
outlays, including allowances. There has been no major trend
in totals for the category relative to the GNP, However, the net
interest component rose from 1.3% of GNP in 1966 to 1.5% in
1971 and 1.6% in 1976; it is estimated at 2.0% in 1981, but is
projected to decline relative to GNP in subsequent years as the
budget deficit is reduced or eliminated, inflation and interest
rates decline, and the GNP grows.
The historical table on outlays by function and subfunction (table
19 in Part 9 of this document) extends back to 1971. Data on
budget outlays by larger cluster beginning in 1940, by major function^ beginning in 1948, and by subfunction beginning in 1962 are
- available upon request from the Office of Management and Budget,
but are not printed in this document because of space constraints.
Credit and credit control—In past years, each national needs
section in this part of the budget contained special presentations
on loan and loan guarantee programs where these programs were
significant. This year, the budget reflects a comprehensive and
systematic review of Federal credit activities, and includes for 1981
recommended annual appropriation limitations for a wide range of
Federal credit activities. The credit control system covers both onand off-budget Federal loan and loan guarantee programs. The credit
totals are discussed in Part 2 and substantial information on credit
activities is given in Special Analysis F (Federal Credit Programs) of
the Special Analyses volume and in the Budget Appendix.
There are three forms of Federal and federally assisted credit
activity: direct loans by the Federal Government, Federal guarantees or insurance of private lending, and direct loans by Government-sponsored enterprises. In addition, Federal tax advantages
(called "tax expenditures") affect the cost of private and State and
local borrowing. Neither tax expenditures nor lending by Government-sponsored enterprises is included in the Federal credit control program, although the effects of both are considered in developing overall credit policies.
For direct loans, the credit tables in each national needs section
show the new loans made, the offsetting loan repayments, sales
and adjustments, and the net loan outlays. For loan guarantees,
INTRODUCTION
81
the tables show new loan guarantees and net loan guarantees. The
sum of these transactions (direct loans plus loan guarantees) equals
the total program included in the Federal credit control system. The
tables show data for 1979 through 1981.
The exact meaning of the term "credit" is not a matter of clear
definition or agreement. For purposes of the new control system,
coverage has been initially restricted to activities that are unambiguously part of the Federal Government and primarily oriented
toward credit. The special analysis on Federal credit programs is
broader in its coverage. The differences between the coverage of
the credit control system and the special analysis arise from three
primary causes:
1. Privately owned Government-sponsored credit enterprises are
excluded from the credit control system (as they are from the
budget) because of their private ownership. They are included in
the credit special analysis because of their Federal sponsorship.
2. In several programs, Federal loan guarantees cover less than
100% of the principal of any guaranteed loan. The credit control
system includes only the Federal contingent liability, which is the
amount of loan principal actually guaranteed, whereas the credit
special analysis shows the full value of loans made with total or
partial Federal loan guarantees.
3. Many other activities are clearly similar to regular credit
activities but their most significant program characteristics are of
a noncredit nature. For example, Federal price guarantees or long
term lease agreements have important credit attributes as well as
their noncredit program characteristics. Transactions of this sort
are currently excluded from the credit control system, although
they are frequently controlled by some other means in the budget.
As the credit control system evolves, present exclusions will be
reviewed.
The table below shows—for the total of net lending and loan
guarantees—the difference between those Federal credit programs
included in the credit control system and the total Federal and
federally assisted credit activities reported in the credit special
analysis.1
TOTAL FEDERAL CREDIT AND CREDIT CONTROL—1981 ESTIMATES
(In billions of dollars)
Net lending and loan guarantees in the Federal credit control system
Federal and federally assisted credit excluded from the credit control system:
Privately owned Government-sponsored enterprise loans that are not federally guaranteed....
Nonguaranteed portions of loans partially guaranteed by the Federal Government
All other
13.8
8.8
1.8
Net Federal and federally assisted credit (Special Analysis F)
71.2
'See Special Analysis F (Federal Credit Programs) for additional details.
310-000
0 - 8 0
7
46.9
82
THE BUDGET FOR FISCAL YEAR 1981
All credit programs are controlled through the basic legislation
authorizing the programs and setting the conditions under which
they can operate. This normally does not provide control over the
annual levels of program activity. Therefore, under the new credit
control system, annual controls are proposed, where appropriate,
through dollar limitations on program activity. This takes the form
of proposed appropriation language for each affected account that
would set an annual ceiling (limitation) on the authority to incur
obligations for direct loans (gross lending) and the authority to
enter into loan guarantee commitments.
A number of programs are included in the credit control system
that are not subject to specific annual limitations in appropriations
acts in this year's budget. In such instances, estimates of expected
activity are made, displayed in the Budget Appendix, and included
in credit control totals. There are two general reasons why programs are exempted from credit control through limits in appropriations acts.
• Emergency assistance programs and some insurance programs, such as those of the Federal Deposit Insurance Corporation, may use loans as one means of carrying out their
responsibilities. Specific annual limitations could hamper
their ability to do so efficiently, and would not effectively
restrain total credit demand on the economy in any case.
• Entitlement programs, under which any qualified recipient
has a legal right to loans or loan guarantees, are essentially
uncontrollable through the appropriations process. While included in the control system, such programs are best controlled through changes in the basic authorization laws that
establish legal entitlements.
In addition, for the 1981 budget, the administration is not proposing specific limitations for the basic insuring activities of the Federal Housing Administration, for guarantee levels of the Government National Mortgage Association's mortgage-backed securities,
for energy conservation lending activities of the Tennessee Valley
Authority (TVA) or for the agricultural export credit activities of
the Commodity Credit Corporation. These exceptions, which will be
reviewed during the coming year for the 1982 budget, reflect a
concern that the new credit control system not be perceived as
restricting credit to the housing industry at a time when it may be
entering a period of relative weakness, to unduly constrict the
TVA's new energy conservation loans, or to restrict the President's
authority to expand agricultural export activities.
The activities of the Federal Financing Bank (FFB), discussed
below, are a special case. The FFB does not conduct credit programs on its own—rather, it services any eligible program that is
authorized to use its financing. Therefore, control must be established on the agencies using the Bank services.
83
INTRODUCTION
FEDERAL LOANS AND LOAN GUARANTEES IN THE CREDIT CONTROL SYSTEM BY MAJOR
FUNCTION—1981 ESTIMATES
(In millions of dollars)
Subject to
appropriation
bill
limitations
Exempt from
appropriation
bill
limitations
Total
Direct Loans
International affairs
Energy
Natural resources and environment
Agriculture
Commerce and housing credit
Transportation
Community and regional development
Education, training, employment and social services.
Health
Income security
Veterans benefits and services
General government
General purpose fiscal assistance
Purchase of direct loans from other accounts { - ) .
New direct loans to the public
Repayments, loan sales, and other adjustments
(-)
4,520
1,466
18
...
3,801
8,783
425
1,664
951
163
2
1
1
174 , , ,
-13,086
797
5,624
27,405
22
1,208
205
305
785
36,351
8,885
5,317
1,466
18
9,425
36,188
447
2,872
1,156
163
307
786
1
174
-13,086
45,236
—29,250
15,986
Net loan outlays
Loan Guarantees
National defense
International affairs
General science, space and technology
Energy
Agriculture
Commerce and housing credit
Transportation
Community and regional development
Education, training, employment and social services.
Health
Income security
Veterans benefits and services
Secondary guarantees of loans that are already
guaranteed ( - )
Guarantees of direct loans ( - )
New guarantees to the public
10,825
9,584
30
8,995
101
7,347
5,866
59,565
2,222
4,769
2,160
268
10,825
9,584
-40
-25,093
-25,701
-25,133
-25,701
27,347
33,551
60,898
-30,000
30
8,995
101
4,502
354
5,934
2,129
2,915
2,160
268
2,845
5,512
53,631
93
1,854
„
Repayments and other adjustments ( - )
Net loan guarantees
Total, net loan outlays and loan guarantees
See Part 7 for a further discussion of this requirement.
30,898
46,884
84
THE BUDGET FOR FISCAL YEAR 1981
There are inevitable differences between the authority to obligate or to make guarantee commitments and the actual disbursement of cash or entering into loan guarantees; for purposes of
control, the budget must focus on the authority, but the tables in
this part of the budget focus on the actual or anticipated value of
the transactions themselves. This focus on the volume of loans
made or loan guarantees entered into, when presented along with
budget outlays, provides a more complete view of Federal activities
in a particular area.
The table on Federal loans and loan guarantees in the credit
control system shows the total estimated volume of new loans and
loan guarantees—both on- and off-budget—by major function in
1981. Since a substantial number of loan assets are sold by one
account to another (primarily to the FFB), these sales must be
deducted to arrive at the total of new loans extended to the public.
Similarly, since some loans are guaranteed more than once and
since direct loans made by the FFB are also guaranteed, a deduction must be made to avoid double-counting to arrive at a total of
new loan guarantees extended to the public. The sum of the direct
lending and loan guarantees measures total new credit activity
extended to the public under the credit control system. The table
distinguishes the portion subject to appropriation bill limitations
from the portion that is not.
National needs and agency missions.—In keeping with the requirements of the Congressional Budget Act of 1974, the national
needs presentation is supported by analyses of agency missions and
major programs. In general, subfunction totals that comprise each
major functional category represent the resources devoted to
agency missions. No significant change has been made in the
budget functional structure from that used in the preceding
budget. Although each Federal activity is classified in one function that defines its most important purpose so that the budget
total will consist of mutually exclusive functions, many activities
serve more than one national need or major mission. Therefore, the
subsections in this part of the budget contain subsidiary information that identifies, to the extent feasible, those programs whose
primary objective is to meet one category of national needs but
that also make substantial contributions toward meeting other national needs.
Two categories of budget authority and outlays are treated differently in the actual from the estimated years in the national needs
framework:
• Future increases in Federal pay are not distributed by budget
account, program, or agency. These are reflected in two
INTRODUCTION
85
allowances for pay increases—one for the Defense Department and one for the rest of the Government. Hence, the
functional total for national defense includes the pay allowance for the Department of Defense, military functions; the
nondefense total includes the nondefense pay allowance, but
the allowance is not distributed among the nondefense functions.
• The budget contains an allowance for contingencies to cover
unanticipated requirements. It also includes amounts necessary to finance welfare reform. The allowance does not represent a specific budget request and the Congress is not asked to
provide an appropriation for that purpose. Hence, no actual
outlays are made from the contingency allowance; any contingencies are financed and fully reported in the appropriate
function, so the contingency allowance for all past periods is
always zero. In addition, a separate allowance is included for
the President's national health insurance plan, which starts
in 1983.
Attribution of the Federal Financing Bank (FFB) outlays to sponsoring agency and functions.—The FFB is an entity in the Treasury
Department that, by law, is outside of the budget totals. The FFB
performs two significant roles: (1) it is a source of capital for some
Federal programs, and (2) it makes or finances most of the Federal
Government's direct loans. The FFB's role as a source of debt
capital for Federal agencies does not involve outlays and, therefore,
will not be discussed in this section. The FFB's role as an offbudget Federal entity, however, has major implications for both the
credit control system and the distribution of off-budget outlays by
function.
The FFB borrows money from the Treasury to finance whatever
programs are authorized to use the FFB as a source of funding.
The Bank's net outlays are composed almost entirely of loans made
and loan assets purchased by the FFB, offset by their repayments.
The FFB has no loan losses, only minimal administrative costs, and
a policy of charging interest rates of one-eighth of one percent
higher than the interest rates it pays to the Treasury, so that the
interest income and expense largely offset each other.
The FFB does not initiate programs; rather, it makes loans to
finance credit programs of other Federal agencies and programs. It
does not make any loans or purchase any financial assets unless
they are guaranteed by some other Federal Government entity. Its
resources are available without restriction for all eligible programs.
Therefore, the Bank does not ration its credit. This has created a
situation in which both on- and off-budget agencies or accounts sell
direct loans to the FFB or issue loan guarantees (which do not
count as outlays) that are converted into off-budget direct loans
(outlays) of the FFB. The FFB facilitates financing, but financing
86
THE BUDGET FOR FISCAL YEAR 1981
through the FFB does not change either the budget treatment of
the transactions involved or the degree of control that can be
exercised over them. Accordingly, there is no plan to control directly the extension of credit by the FFB; rather, the credit control
system aims at controlling obligations for new loans and commitments for new loan guarantees by the parent programs and accounts that may lead to subsequent FFB outlays. Net FFB income is
returned to the general fund and is treated as offsetting receipts in
the budget.
All FFB budget authority and outlays are shown in the commerce and housing credit function. In addition, the FFB outlays
are attributed to the programs being served. This attribution
is shown in a new memorandum entry that has been added to each
applicable functional table. Since the attributed FFB totals in the
memorandum entries are already included in the commerce and
housing credit function, they cannot be added to the functions to
which they are attributed without double-counting.
The Full Employment and Balanced Growth Act—Section 4(a) of
the Full Employment and Balanced Growth Act of 1978 provides
that the President's budget shall incorporate the programs and
policies that the President deems necessary to achieve the mediumterm annual numerical goals specified in the Act for employment
and unemployment, production, real income, productivity, and
prices. These goals are presented in the President's "Economic
Report" and are discussed in Part 3 of the "Budget". Programs and
policies to achieve these goals are discussed throughout this section. This act also specifically provides that the budget should
include recommendations for specific policies to reduce the rate of
inflation.
In addition, the Act states that policies and programs set forth in
the President's budget shall include, to the extent deemed appropriate by the President, a consideration of a broad range of issues.
Among those specifically mentioned are energy; transportation; the
environment; small business; agriculture; land and water conservation; rural development; urban development; employment; health
care; education and training; child care; social services; housing;
aid to State and local governments; national defense and international programs; the effect on the interregional distribution of jobs
and income of Federal procurement, grants, contracts, and the
closure of military bases; job dislocation resulting from Federal
laws, regulations, and policies; improving the competitiveness of
the United States in international trade; and balancing the budget.
As the national needs sections that follow demonstrate, the
issues listed in the Act were among those weighed carefully in the
process of developing the President's budget recommendations.
Policy conclusions and the reasons for them are put forth in this
INTRODUCTION
87
part of the budget. No attempt, however, has been made to include
specific references to the act in each instance where one of the
issues listed above is discussed.
Tax expenditures.—Tax expenditures are features of the tax law
that provide special benefits or incentives. They are revenue losses
under the individual and corporate income tax laws that are attributable to special exclusions, exemptions, or deductions from gross
income, or to special credits, preferential rates of tax, or deferrals
of tax liabilities for special classes of taxpayers. They are one of
several means by which the Federal Government can carry out
policy objectives. In most cases, tax expenditures can be viewed as
alternatives to other instruments of Government policy such as
outlays, loan guarantees, regulations, and other tax law provisions.
The most important tax expenditures are discussed in the national needs sections that follow so that they may be compared with
the outlays and loan guarantees that serve the same broad purpose. Tax expenditures are discussed further in Part 6 and in
Special Analysis G, "Tax Expenditures." The latter includes a listing and an analysis of all tax expenditures, along with a discussion
of their definition and measurement.
Other Federal fiscal activities.—The Federal Government allocates resources by means other than those reflected in budget
outlays, tax expenditures, and loan guarantees. Outlays of the offbudget Federal entities, which are federally-owned and controlled
but excluded from the budget under provisions of laws, are similar
in nature to budget outlays. The largest off-budget entity by far is
the Federal Financing Bank, discussed above.
The regulation of economic activity also has a major impact on
the economy in many sectors. Finally, provisions of the tax law
affect the allocation of resources among private uses and the distribution of income among individuals in many important ways not
covered by tax expenditures. Federal taxes other than income taxes
have economic effects, as do tax rates, personal exemptions, and
other features of the income tax structure that are not treated as
tax expenditures.
The national needs sections that follow include information on
off-budget Federal entities and discuss major issues regarding economic regulation. Off-budget Federal entities and privately owned,
Government-sponsored enterprises are also discussed in Part 6 of
the Budget
88
THE BUDGET FOR FISCAL YEAR 1981
NATIONAL DEFENSE
National Needs Statement
• Protect America's people, its institutions, and its lands
from foreign aggression.
• Improve the current overall military balance between
the United States and its allies, and the Soviet Union
and its allies.
• Deter a nuclear attack on the United States, or its forces,
or on other nations whose security is important to us,
and assure that should deterrence fail, the United States
can inflict unacceptable damage on the Soviet Union in
retaliation.
• Maintain, with our allies, sufficient military power to .
counter aggression anywhere in the world,
• Seek international agreements to limit and reduce all
armaments, to prevent proliferation of nuclear weapons
technology, to restrict arms trade, to settle disputes by
peaceful means, and to strengthen international
stability.
To meet these national needs, the 1981 budget proposes $161.8
billion in budget authority for national defense. Outlays are estimated at $146.2 billion in 1981, increasing to $165.5 billion in 1982.
Department of Defense.—The basic national security objectives of
the United States are to provide for its physical security as a free
Nation; to maintain its fundamental institutions and values; and to
advance and protect U.S. interests in the world. To achieve these
objectives we must be able to deter attacks on the United States,
our allies and friends; to prevent others from imposing their political will on the United States by military means; to influence
international affairs from a position of recognized strength; and to
fight successfully when necessary. We seek to deter armed conflict,
to establish and maintain stability, to promote international security through arms control and other international agreements, and
to prevent the proliferation of nuclear weapons.
Our national security does not depend solely on the military
forces we can field; it is also affected by the strength of hostile
forces that may confront them. Our forces are adequate to protect
us against today's threats, but Soviet military capability is growing, Our forces must be increased if they are to contain Soviet
aggression and continue to assure our security in the future. This
NATIONAL DEFENSE
89
NATIONAL NEED: DEFENSE, MILITARY
(Functional code 051; in billions of dollars)
Budget authority
Major missions and programs
Strategic forces 1
General purpose forces
Intelligence and communications
Airlift and sealift
Guard and reserve
Research and development 3
Central supply and maintenance
Training, medical, and other general personnel
activities
Administration and associated activities
Support of other nations
1979
actual
1980
estimate
1981
estimate
1982
estimate
1983
estimate
8.0
47.4
8.0
1.7
6.9
10.9
13.0
10.3
51.6
9.1
2.0
7.6
11.8
14.5
11.7
58.3
10.6
2.4
8.7
14.1
15.6
13.3
66.1
12.0
2.7
9.9
16.0
17.7
14.9
74.1
13.5
3.1
11.1
17.9
19.8
26.4
2.3
.4
28.7
2.5
.6
32.9
3.0
.9
37.3
3.3
1.1
41.7
3.6
1.3
125.0
138.6
158.2
179.4
201.0
Prior-year funds and other financial adjustments
-.2
J
.6
.6
.5
Total obligational authority
124.8
139.3
158.7
180.0
201.5
Total, budget authority
' Excludes SO. 7 M a i in 1980 and 5 1 6 billion in 1981 for MX missile, included in R. & D. category.
*bcludes R. & D. in other program areas on systems approved for production.
will require a sustained commitment over a period of years. The
United States and its NATO (North Atlantic Treaty Organization)
allies have made that commitment, each promising to increase its
defense spending by 3% or more per year in real terms.
The United States has met this 3% real growth commitment
during the past 2 years. In light of recent international developments, the 1981 budget goes beyond this commitment. It reflects a
real program increase, in total obligational authority and budget
authority, of more than 5%. From 1981 through 1985, real program
growth of more than 4% per year is projected. This represents a
major—but clearly necessary—commitment to strengthening our
defense capabilities. The defense levels projected for 1981 through
1985 are cumulatively about $100 billion higher than the amounts
that would be needed simply to maintain the 1980 level in real
terms.
The increased level of defense resources proposed for 1981 would
help preserve strategic deterrence, improve the combat effectiveness and readiness of our NATO forces, and enhance our capability
to deter conflict worldwide through the rapid deployment of forces.
Total obligational authority (TOA) for the military missions of
the Department of Defense is proposed at $158.7 billion in 1981 and
$180.0 billion in 1982. Outlays are estimated at $142.7 billion in
1981. This is an increase of $15.3 billion over 1980, which is approximately 3.3% growth in real terms.
90
THE BUDGET FOR FISCAL YEAR 1981
The major proposals reflected in the 1981 budget are:
• Upgrade our strategic forces so that initiation of nuclear war
continues to be clearly disadvantageous for the Soviet Union.
• Improve, in cooperation with our NATO allies, the ability of
our forces to mobilize quickly and fight effectively for the
defense of Europe, in order to make initiation of a conventional war clearly disadvantageous for the Soviet Union and
its Warsaw Pact allies.
• Enhance our capability to deter and, when necessary, respond
to, crises outside Europe, especially in critical and potentially
unstable areas such as Northeast Asia, the Middle East, and
the Persian Gulf.
• Continue to modernize our naval forces to assure freedom of
the seas, to maintain maritime and naval lines of communication, and to enhance our ability to conduct military operations wherever we are challenged.
• Maintain our ability to monitor foreign military developments
and activities and to verify arms control agreements, with a
high degree of reliability.
• Increase military pay, benefits, and reimbursements to help
attract and retain sufficient numbers of experienced military
personnel in the coming years, as the population of young
people declines in numbers.
• Continue to improve operating efficiencies through greater
competition in the acquisition process, supply system reforms,
and improved utilization of civilian personnel.
These budget proposals are consistent with the defense spending
goal adopted by NATO. In 1977 and again in 1979, the NATO allies
agreed to U.S. proposals that each member should aim at annual
defense spending increases of about 3% above the rate of inflation
to maintain the deterrent value of NATO forces and to counter the
large increases in Soviet defense capability. This budget exceeds
that objective.
For many years, rising Soviet military spending levels have permitted steady increases in the size and combat capabilities of
Soviet forces. These increases occurred, for the most part, while
U.S. defense spending was declining, in real terms, from its Vietnam war peak. By the mid-1970's, it was apparent that NATO
members needed to increase their defense efforts to prevent the
Warsaw Pact forces from eventually achieving a position of military superiority.
The 7-year downward trend in real U.S. defense program (TOA)
was reversed in 1976. Annual increases in real defense outlays
averaged 3% in 1979 and 1980. The budget estimates for 1981 and
1982 reflect real outlay increases averaging 3.8% a year.
NATIONAL DEFENSE
91
Real growth in defense spending is not an end in itself. What is
essential is that we now build our conventional and strategic forces
to the levels required to assure our future security—and keep them
there. To be adequate, our defense capabilities must keep pace with
Soviet growth. The necessary funds must be provided. The 1981
budget provides funds for necessary improvements in both our
conventional and strategic capabilities, and proposes significant
economies to make the defense dollar go further.
The principal objective of strategic forces is to act as an effective
deterrent to both nuclear and conventional warfare. The 1981 program provides $1.6 billion for the new intercontinental ballistic
missile program, the MX, which is in full-scale development. The
MX is scheduled to become operational in 1986. The 1981 program
provides for continued procurement of the Trident missile and
submarine. Funds are also provided for the air-launched cruise
missile, as well as for improvements to our bomber and airlaunched missile fleets.
As our part of the long-term NATO defense program that was
approved in 1977 and reaffirmed in 1979, the 1981 budget also
supports programs to improve the ability of our conventional forces
to deter or respond to military threats in Western Europe and
elsewhere. These include the continuation of cooperative NATO
programs for the joint purchase and operation of a fleet of airborne
warning and control (AWACS) aircraft; joint production of the new
F-16 fighter aircraft; and the development of a common gun for
new tanks. The budget also provides funds for storing additional
U.S. Army equipment in Europe to make possible a more rapid
force buildup there. The budget requests funds to upgrade artillery,
anti-tank weapons, combat medical support, and the combat capability of land forces in Europe. It provides $2.3 billion to continue
the procurement of a new main battle tank, an armored personnel
carrier, and air defense missile systems. These improvements will
expand our conventional warfare capability in Europe.
The budget will enhance our ability to deploy our forces rapidly
anywhere in the world. It proposes improvements to the C-5A and
the C-141 cargo aircraft, initial procurement of a new sealift vessel
for overseas storage of land force equipment, and the development
of a new long-range airlift aircraft.
Strategic forces.—The most serious threat to our security is a
nuclear war. The probability of such a war has been kept very low
by the deterrent effect of our triad (bombers, and land- and submarine-based missiles) of strategic nuclear forces. These forces must
be able to retaliate with devastating effect, even after suffering a
first strike. They must also be capable of varying degrees of response appropriate to different levels of attack. This will assure
92
THE BUDGET FOR FISCAL YEAR 1981
that Soviet leaders will have no incentive to initiate a nuclear
attack against the United States, nor will they be able to gain any
advantage in a conventional conflict by threatening a nuclear
attack. Maintenance of adequate strategic force strength is an
essential foundation for deterrence at all possible levels of
conflict.
To this end, the 1981 budget proposes modernization of each
component of the strategic triad. Our land-based intercontinental
ballistic missiles will be enhanced by the larger, more accurate,
and less vulnerable MX. These missiles and their mobile launchers
will be based among horizontal shelters linked by special road
circuits constructed in the western part of the United States. This
system minimizes vulnerability to attack and complies with arms
control objectives.
The budget also supports programs to deploy cruise missiles on
modernized B-52 bombers.
Authorization for the ninth Trident submarine is requested in
1981. The Trident submarines will replace the Polaris and Poseidon
submarines as the latter reach the end of their service lives.
Important improvements are being made to strategic command,
control, and warning systems. These radar and satellite systems
insure reliable warning of a hostile attack.
Our intermediate-range nuclear weapons, based in Europe, act as
a deterrent against potential Soviet military aggression, either nuclear or conventional. To assure continued deterrence, we must
strengthen these forces to offset the Soviet deployment of new SS20 nuclear missiles against Western Europe. In cooperation with
our NATO allies, we are beginning to modernize NATO's intermediate-range nuclear forces through deployments of ground-launched
cruise missiles and new Pershing II ballistic missiles.
These weapon modernization programs work in concert with our
continuing arms control agreements and negotiations to promote a
strong and stable strategic posture. While the United States possesses the superior economic and technical capacity necessary to
deploy still greater nuclear forces, it is not in our interest to do so,
if we can forge balanced and verifiable limits to the strategic
competition with the Soviet Union,
General purpose forces.—Most of the defense budget goes for
conventional military forces, which help deter or counter nonnuclear military aggression. The 1981 budget proposes a $6.7 billion
increase over 1980 budget authority. Active general purpose forces
include 16 Army divisions, 3 Marine divisions, 3 Marine air wings,
26 wings of Air Force tactical aircraft, and 295 naval warships,
including 12 aircraft carriers and 12 carrier air wings.
93
NATIONAL DEFENSE
A number of important initiatives for modernizing existing
forces and improving their readiness for combat are proposed.
These initiatives will strengthen the ability of our general purpose
forces to maintain the balance of conventional military power,
particularly in Western Europe, and to deter aggression elsewhere
in the world.
SUMMARY OF ACTIVE MILITARY PERSONNEL AND FORCES
(Year end—i.e., as of September 30)
1979
actual
I960
estimate
Military personnel (in thousands):
End strength:
Army
Navy
Marine Corps
Air Force
758
522
185
559
Total, Department of Defense
W A
Average strength:
Army
Navy
Marine Corps
Air Force
Total, Department of Defense
Strategic forces:
Intercontinental ballistic missiles-.
Minuteman
Titan II
Polaris-Poseidon-Trident
Strategic bomber squadrons
General purpose forces:
Land forces:
Army divisions
Marine Corps divisions
Tactical air forces:
Air Force wings
Navy attack wings
Marine Corps wings
Naval Forces:
Attack and multipurpose carriers
Nuclear attack submarines
Other warships
Amphibious assault ships
Airlift and sealift forces:
C - 5 A airlift squadrons
Other airlift squadrons
Sealift fleet
1981
estimate
774
528
185
558
2^045
776
534
185
565
W59
757
525
186
564
765
520
183
559
770
530
184
562
^033
W27
W 7
1,000
54
656
25
1,000
54
600
25
1,000
54
544
25
16
3
16
3
16
3
26
12
3
26
12
3
26
12
3
13
72
172
65
13
75
184
63
12
85
198
60
4
13
47
4
13
48
4
13
2
45
1
1
Includes 5 e*-Po!ans ships operating as attack submarines,
' Sealift capacity for both dry cargo and petroleum will be greater in 1981 than in 1979 and 1980.
Army forces are designed primarily to meet the most demanding
of all general purpose force challenges—a land conflict between
94
THE BUDGET FOR FISCAL YEAR 1981
NATO and the Warsaw Pact countries—while retaining the flexibility to meet threats to U.S. interests elsewhere.
Improvements proposed in 1981 include:
• modernization of equipment, including introduction into the
force of new types of tanks, infantry fighting vehicles, helicopters, and new air defense systems;
• storage of additional equipment in Europe to facilitate rapid
U.S. reinforcement of NATO in an emergency;
• greater combat readiness of combat units in Europe and selected units in the United States;
• improved living and working conditions for our soldiers; and
• improved ability of our forces to withstand nuclear, biological
and chemical warfare.
The XM-1 main battle tank represents a major increase in the
Army's ability to survive and maneuver on the modern battlefield,
A new type of armor enables the XM-1 to withstand direct hits
and continue fighting. A more powerful engine and an improved
track system enable the XM-1 to move faster over rougher terrain
than other tanks. The budget provides for continued procurement
of the XM-1 in 1981, The Army's new infantry fighting vehicle,
also included in the 1981 program, will provide infantry forces with
the speed, protection, and firepower needed to fight alongside the
XM-1 tank.
The Patriot air defense missile system will provide more effective
protection of vital targets, such as depots, bridges, and airbases.
The Patriot system is able to counter mass air attacks at longer
ranges and higher altitudes than previous systems.
The ability of combat and support forces to respond effectively
when required depends on the condition of equipment and the
ability of well-trained combat units to act with confidence, skill,
and coordination. To maintain our military forces in a high state of
readiness, the 1981 budget provides for continued increases for unit
training and for continued development of a national training
center for ground forces. Backlogs of weapons systems overdue for
maintenance would be reduced further under the budget proposals.
Inventories of spare parts are being increased to bolster the combat
endurance of our forces' weapon systems and equipment. In view of
recent upward revisions of North Korean military strength, the
budget reflects a decision by the President to suspend the withdrawal of the Second Infantry Division from Korea. This will help
maintain stability in Northeast Asia.
Air Force tactical aircraft must be able to gain superiority in the
air, give close support to ground forces, disrupt enemy forces
behind the lines, and limit enemy air attacks on allied forces and
installations.
NATIONAL DEFENSE
95
The 1981 budget proposes procurement of the following Air Force
tactical aircraft and equipment:
• F-15 fighter aircraft for maintaining air superiority;
• F-16 multimission aircraft for both maintaining air superiority and attacking ground targets;
• more capable versions of the Sidewinder and Sparrow air-toair missiles for fighter aircraft;
• EF-111A aircraft for jamming enemy air defense radars;
• A-10 attack aircraft to provide close support of our ground
forces by attacking tanks and similar targets;
• KC-10 aerial tankers for long-range refueling of fighter,
bomber, and transport aircraft; and
• TR-1 tactical reconnaissance aircraft with advanced radars to
improve our ability to locate enemy forces on the ground.
Air Force tactical units will remain fully prepared to move overseas rapidly to any potential trouble spot. All new fighter aircraft
are provided with aerial refueling capability to assist in such deployment. Real increases are proposed for Air Force tactical operations, to permit greater readiness and more realistic training.
NATO defenses are being strengthened by the deployment of new
F-15 fighter aircraft and A-10 attack aircraft in Europe. In addition, many allied airbases will be upgraded so that they can be
used by the U.S. during mobilization, thereby increasing U.S.
combat flexibility. The budget also requests continued funding for
U.S. participation in the program for NATO ownership and operation of 18 AW ACS airborne warning and control aircraft.
Naval general purpose forces serve our national needs in several
ways. The presence of U.S. warships in an area provides a visible
symbol of support to our allies and a deterrent to military action
both in peacetime and during crises. Should deterrence fail, our
naval forces will protect vital sea lanes and deny their use to the
enemy. Our naval forces can also attack land targets and support
the U.S. Marine Corps in amphibious assaults.
Total fleet size will increase from 540 ships in 1980 to 544 in
1981. Delivery of 5 new Los Angeles class submarines and conversion of 5 Polaris submarines to attack submarines will increase the
nuclear attack submarine force by 10. Other warship forces will be
augmented with the delivery of 4 new anti-air-warfare destroyers
and 8 new frigates. Active amphibious force ships will decline due
to the transfer of ships to the Naval Reserve. Our ability to transport one Marine amphibious division will be maintained.
Maintenance of our naval superiority requires that we continually modernize our naval weapon systems. Toward that goal, the $45
billion 5-year shipbuilding plan for 1981-85 calls for the construction of 97 new ships, including 6 ballistic missile (Trident) subma
96
THE BUDGET FOR FISCAL YEAR 1981
rines. The 1981 budget includes procurement of the following new
general purpose force ships:
• 2 large warships (destroyers) equipped with the AEGIS antiair warfare system to help protect the fleet from aircraft and
missile attack;
• 4 smaller warships (frigates) to protect military convoys and
fleets;
• 2 cargo ships for transporting combat equipment in support of
the Marine Corps, as part of our Rapid Deployment Forces,
and 1 amphibious landing ship;
• 1 nuclear powered attack submarine and 5 surveillance ships
to counter enemy submarine threats; and
• 1 salvage ship for recovering disabled ships or aircraft.
The budget requests funds to design new ships of moderate cost
that can be bought in quantity to maintain U.S. naval superiority.
These include a new anti-air warfare destroyer, a new attack submarine, and a new anti-submarine frigate that can be used by the
Naval Reserve.
Plans for the modernization of our naval aircraft forces include
procurement of F-14 and F-18 fighter aircraft in 1981. The F-18 will
be purchased in large quantities over the next several years. By
using a single type of aircraft for a major portion of both fighter
and attack missions, the Navy and Marine Corps will reduce the
cost of buying and maintaining sufficient numbers of aircraft to
meet national security needs. Also, available aircraft carrier capacity will be used more effectively.
Airlift and sealift forces.—Airlift and sealift forces provide dayto-day peacetime logistic support to U.S. forces stationed overseas
and must be able to move military personnel and equipment to
combat zones quickly. The U.S. and its allies depend upon rapid
movement and resupply to sustain our forces. Awareness of our
ability to move forces and supplies rapidly to crisis areas deters
hostile acts against countries friendly to the U.S.
Most of the $2.4 billion in 1981 budget authority proposed for
airlift and sealift forces supports day-to-day operations and maintenance. These funds will assure a high state of readiness for these
forces.
Several specific measures are being taken to assure that U.S.
forces can deploy rapidly to any point in the world. The C-5A cargo
aircraft is being modified so that it can carry maximum loads and
remain in the airlift force beyond the year 2000. C-141 aircraft are
being modified so that they can be refueled in flight, thus extending their range. Their fuselages are being lengthened to enable
them to carry heavier payloads. In addition, a new, wide-body,
long-range aircraft, the CX, is being designed to improve our ability to respond rapidly to contingencies.
NATIONAL DEFENSE
97
The Civil Reserve Air Fleet (CRAF) modification program is
making it possible for U.S. commercial aircraft to supplement our
military airlift capability in an emergency. The budget requests
funds for structural improvements to U.S. commercial jumbo jets
to enable them to transport military equipment overseas. Under
the budget proposals, our ability to deploy Marine Corps ground
combat units rapidly in support of friendly nations would be enhanced by construction of a new class of ships that would be
stationed near potential trouble spots, carrying ready-use Marine
Corps equipment. All of these programs are designed to provide
enough force on a timely basis to deter hostile acts or, if necessary,
to respond with the appropriate level of military force.
Guard and Reserve forces.—Guard and Reserve forces must be
fully trained and equipped forces that can be rapidly mobilized and
deployed as an integral part of the active forces in an emergency.
Units scheduled for early deployment in the event of mobilization
receive the highest priority for training and equipment.
Continued improvement of Guard and Reserve unit strength
levels are projected for 1981 and beyond. Added emphasis is being
placed on better utilization of trained personnel.
More intensive and effective unit training programs are proposed. These will permit increased participation of Guard and Reserve personnel in major training exercises and tactical deployments to locations overseas. This will help acquaint them with
foreign military environments.
The budget provides for the development of an anti-submarine
warfare frigate for the Reserves, and for supplying Guard and
Reserve forces with the new A-10 attack aircraft.
Research and development—Defense research and development
on new weapon systems is directed toward maintaining our current
lead in military technology. The 1981 budget for research and
development, including programs approved for production, provides
a $3.0 billion increase over the 1980 budget authority level to
strengthen our technology base, significantly upgrade our strategic
capability, and modernize our conventional forces. Principal research and development initiatives, some of which have been noted
above, include:
• Technology base.—Substantial real growth in budget authority is proposed for basic research and the exploration of promising technologies such as high-energy lasers and very-highspeed integrated circuits.
• Strategic systems.—The budget places major emphasis on fullscale development of the new MX land-based intercontinental
ballistic missile system.
310-000 0 - 8 0 - 8
98
THE BUDGET FOR FISCAL YEAR 1981
• Tactical systems.—Significant levels of funding are provided
for development of new Army air defense systems and for
support areas such as communications and electronics. Navy
efforts to develop a new fleet attack submarine, a new guided
missile destroyer, and improved anti-air warfare capabilities
will help insure that we maintain our control of the seas.
Proposed Air Force initiatives include the development of the
new CX long-range transport aircraft, and improved missiles
and munitions for fighter aircraft.
• Other defense research and development.—Programs under
development that offer potential benefits to both the military
and civilian communities include the construction of facilities
at Vandenberg Air Force Base, California for space shuttle
operations, and defense participation in the interagency national oceanic satellite system project.
Efficiencies.—Improved efficiency, reduced costs, and increased
productivity mean that more resources will be available to improve
combat capabilities. Defense programs have been reviewed to identify ways to achieve the lowest program costs while still achieving
our national security requirements. Greater competition is being
encouraged in contracting, and the purchase of standard goods and
services is also being encouraged. Initiatives in supply management
include correction of pricing inequities, disposal of obsolete or
excess stocks, and greater use of commercially-available equipment.
Active duty military personnel.—Since 1973 the United States has
relied exclusively on volunteers to meet peacetime military personnel requirements. During this period, the All Volunteer Force has
provided the military services with an active force of a quality
equal or superior to that achieved under the draft. Active-duty
strength levels have remained within 2% of congressionally authorized levels. During 1981 the military services should continue
to attract and retain enough qualified personnel to staff our armed
forces adequately. An impending 25% decline in the size of the pool
of eligible 18-year-olds over the next 15 years, however, may
threaten the longer-run success of the volunteer force. To offset
this decline, the military services are making efforts to increase
the rate of reenlistment after the initial period of service, and
otherwise improve personnel retention.
To assist the Department of Defense in retaining adequate numbers of trained military personnel in 1981, the budget requests
increased funding for enlistment and reenlistment bonuses. In addition, legislation will be proposed to set higher maximum bonuses
and to authorize bonus payments at later stages of a service career
than is now permitted. Funds are also requested to permit increased reimbursements for expenses incurred by personnel during
reassignments.
NATIONAL DEFENSE
99
Military pay adjustments.—The proposed Federal Employees
Compensation Reform Act includes two revisions to the procedures
for adjusting military pay levels. One would link military salaries
directly to the average increase in private sector wages and salaries, replacing the current indirect linkage through Federal civilian
salaries. The second would authorize the President to propose an
alternative military pay adjustment in special circumstances. The
1981 budget estimates assume enactment of this legislation, and
provide for a 7.4% average military pay raise, which is slightly
higher than the 6.2% pay raise assumed for Federal civilian
personnel.
Military retirement reform.—The administration has submitted
to the Congress legislation to reform the military retirement
system. This legislation is designed to correct inefficiencies and
inequities in the retirement program that were highlighted in the
April 1978 Report of the President's Commission on Military
Compensation.
The key feature of the proposed retirement reform, drawn from
the Commission's plan, would provide new career incentives by
giving active-duty personnel special cash payments after 10 years
of service. These payments would be charged against their future
pension rights. Members completing 20 years of service would still
be entitled to immediate pensions, although benefits would be reduced from current levels until age 60. Personnel leaving active
duty after completing 10, but before completing 20 years of service
would be entitled to deferred pensions beginning at age 60. Annuities would be calculated on high-2-years' average basic pay, rather
than final basic pay, and would be offset by benefits available
under the social security system.
Although more costly in the near term, these proposals would
eventually result in substantial cost reductions after a transition
period that would protect the interests of members of the current
active-duty force. At the same time, this legislation would provide
major improvements over the current system in achieving more
management flexibility, fairness, and cost effectiveness.
Financing military retirement costs on an accrual basis.—Legislation has also been proposed to change the way the budget accounts
for military retired pay. The budget now includes only the benefits
paid to military personnel who have already retired. Under the
proposed legislation, the budget would reflect the cost of retirement
benefits being earned by military personnel on active or reserve
duty at the time they are being earned. This change would improve
personnel management by focusing attention on those retirement
costs that can be controlled. Because the proposal involves complex
100
THE BUDGET FOR FISCAL YEAR 1981
NATIONAL DEFENSE
{Functional code 050; in millions of dollars)
1980
estimate
1979
actual
Major missions and programs
BUDGET AUTHORITY
Department of Defense—Military:
Military personnel
Retired military personnel:
Existing law
Proposed legislation
Operation and maintenance
Procurement
Research, development, test and evaluation.
Military construction
Family housing
Revolving funds and other
Allowance for civilian and military pay
raises
Other legislation
Subtotal, Department of D e f e n s e Military
Atomic energy defense activities
Defense-related activities:
Existing law
Proposed legislation
Subtotal, defense-related activities....
Deductions for offsetting receipts
Total, budget authority
OUTLAYS
Department of Defense—Military:
Military personnel
Retired military personnel:
Existing law
Proposed legislation
Operation and maintenance
Procurement
'
Research, development, test and evaluation.
Military construction
Family housing
Revolving funds and other
Allowance for civilian and military pay
raises
Other legislation
Subtotal, Department of DefenseMilitary
1981
estimate
1982
estimate
1983
estimate
28,703
30,825
32,037
32,534
32,855
10,283
11,981
38,023
31,428
12,437
2,319
1,563
249
43,405
35,686
13,517
2,170
1,625
—574
13,700
37
48,563
40,524
16,486
3,251
1,972
-490
15,334
728
52,303
47,260
17,760
4,481
2,117
-440
16,954
888
56,004
54,736
19,763
6,314
2,215
—395
1,847
229
7,089
245
11,398
256
125,004
138,635
158,155
179,411
200,989
2,668
3,006
3,443
3,811
4,066
140
172
-178
378
-203
425
-203
451
-203
140
-3
-6
-3
175
-4
222
—4
248
-4
127,809
141,632
161,770
183,440
205,299
28,407
30,574
31,705
32,186
32,518
10,279
11,941
36,424
25,404
11,152
2,080
1,468
-201
40,852
27,648
12,933
2,147
1,571
-266
13,677
37
46,376
30,497
14,843
2,053
1,686
-222
15,345
727
49,904
36,061
15,926
2,561
1,933
-236
16,968
885
53,436
43,579
17,785
3,204
2,055
-230
1,819
229
6,968
245
11,204
256
115,013
127,400
142,700
161,621
181,661
2,541
2,980
3,386
3,630
3,961
'
129
169
-178
362
—203
418
—203
443
-203
Subtotal, defense-related activities....
Deductions for offsetting receipts
129
-3
-9
—3
159
-4
215
-4
240
—4
117,681
130,368
146,241
165,463
185,859
Atomic energy defense activities
Defense-related activities:
Existing law
Proposed legislation
Total, outlays
NATIONAL DEFENSE
101
changes in many parts of the budget, the changes will not be
reflected in the budget schedules until the legislation is enacted.
Tax expenditures.—The provision of housing and meals for military personnel, either in cash or in kind, is excluded from taxable
income. This results in an estimated 1981 tax expenditure of $1.6
billion. In addition, disability-related military pensions received by
current retirees are largely excluded from taxable income, resulting in a tax expenditure of $0.1 billion for 1981.
National defense summary.—The accompanying national defense
table shows budget authority and outlays by appropriation categories for the three major defense missions: military functions of the
Department of Defense, atomic energy defense activities, and the
defense-related activities of other agencies.
Atomic energy defense activities.—Department of Energy responsibilities for national defense include research and development,
testing and production of nuclear weapons, production of special
nuclear materials, storage of nuclear wastes from defense programs
and design of reactors for Navy vessels. The following table shows
ATOMIC ENERGY DEFENSE ACTIVITIES
(Functional code 053; in millions of dollars)
Major mssjorts arvj programs
BUDGET AUTHORITY
Weapons research, development, test, and
production
Weapons materials production and waste
management
Naval reactor development
Other research programs
Total, budget authority
OUTLAYS
Weapons research, development, test, and
production
Weapons materials production and waste
management
Naval reactor development
Other research programs
Total, outlays
1979
actual
1980
estimate
1981
estimate
1982
estimate
1983
estimate
1,448
1,654
1,972
2,180
2,343
702
298
220
794
278
280
872
305
294
941
378
312
999
393
331
2,668
3,006
3,443
3,811
4,066
1,387
1,651
1,869
2,028
2,247
685
258
211
806
272
251
903
314
300
941
353
308
999
388
327
2,541
2,980
3,386
3,630
3,961
the distribution of funding levels for these programs. Budget authority of $3.4 billion is requested for 1981, compared to $3.0 billion
in 1980.
The nuclear weapons program involves the design, research, development, testing and production of nuclear warheads for the
102
THE BUDGET FOR FISCAL YEAR 1981
nuclear weapons stockpile, including quality control and periodic
inspection of the finished devices. Funding proposed for 1980 and
1981 supports increased missile warhead production.
Nuclear materials production entails the production of special
nuclear materials for use in nuclear warheads. The 1981 budget
maintains normal rates of production of these materials.
The defense nuclear waste management program currently provides temporary storage for all defense nuclear wastes. The program also supports research to develop permanent storage and
isolation of these wastes. Funding proposed for 1981 continues the
transfer of old defense wastes to new interim storage tanks, and
supports increased research and development on waste storage.
The naval reactor development program includes the research
and development, design, procurement, and testing of prototype
reactors for current and future naval vessels.
Other Department of Energy defense research and development
programs involve work on inertial confinement fusion, using intense laser beams; improved physical security at Department of
Energy nuclear facilities; and arms control and verification
technology.
Defense-related activities,—In 1980, offsetting receipts are expected to exceed other outlays for the activities of the civilian departments and agencies that support national defense by $9 million.
For 1981, net outlays of $159 million are estimated. These activities
include emergency management, maintenance of strategic stockpiles, and the selective service system.
The emergency management program recommended in 1981 includes planning for limited relocation during crises, and support of
State and local planning to deal with possible future nuclear power
plant emergencies. This activity is part of the responsibility of the
Federal Emergency Management Agency, which was established in
1979. Outlays for the emergency planning, preparedness, and mobilization functions of the Federal Emergency Management Agency
are estimated at $145 million in 1981 compared to $138 million in
1980.
To meet our needs for critical raw materials that might be
unavailable during wartime, the General Services Administration
stockpiles strategic and critical materials. Sales and purchases are
proposed in 1981 to adjust the inventory of the stockpile to current
requirements. Outlays are estimated to be $170 million in 1981.
Receipts from sales are estimated at $263 million in 1981.
The Selective Service System is responsible for maintaining
standby capability to meet defense personnel requirements in a
future national mobilization. The budget requests $11 million in
budget authority for 1981 and a 1980 supplemental of $1.4 million.
NATIONAL DEFENSE
103
These funds will allow the system to improve its ability to respond
efficiently to a wide variety of potential mobilization situations.
CREDIT PROGRAMS—NATIONAL DEFENSE
(In millions of dollars)
1979
actual
Direct loans:
New loans
Repayments, sales and adjustments ( - )
Net loan outlays
Loan guarantees:
New loans
Net loan guarantees.
1980
estimate
1981
estimate
1
- 1 1
—11
- 1 0
- 1 0
- 1 1
- 1 0
-46
30
5
30
104
THE BUDGET FOR FISCAL YEAR 1981
INTERNATIONAL AFFAIRS
National Needs Statement
• Promote a stable international environment that will
reduce conflicts, encourage worldwide economic progress,
and bring greater respect for human rights,
• Support the security and economic and political stability
of allies and friendly governments.
• Support the long-term development of poor countries
with particular emphasis on reducing widespread poverty.
• Assist our domestic economy by strengthening international economic institutions and promoting trade,
• Advance American foreign policy through diplomacy and
improved communication between the United States and
other nations.
The United States plays an active leadership role in international affairs, because our well-being as a nation depends, in part, upon
events outside our borders. Our national needs in international
affairs involve the protection of American interests abroad and the
promotion of conditions throughout the world that advance those
interests. U.S. foreign policy seeks a world that is at peace and
abides by commonly accepted rules of international law, a world
that provides opportunities for people everywhere to meet their
basic human needs, and a world where there is respect for human
rights and dignity.
In the broadest sense, this country's international role is supported by its economy, its armed forces, its institutions, and the moral
values and activities of its people. More specifically, the Federal
Government's role in international affairs is carried out through
formal diplomatic relations with 138 other governments, participation in the United Nations and 71 other international organizations and programs, economic and military assistance programs,
contributions to international financial institutions, information
and cultural activities, assistance to homeless refugees, and promotion of export opportunities. For 1981, the budget includes an estimated $16.9 billion in budget authority and $9.6 billion in outlays
for these activities.
• Foreign assistance programs are the most significant budgetary items in international affairs, with economic assistance
estimated at $7.5 billion in budget authority and $6.2 billion
in outlays, and military assistance estimated at $0.6 billion
INTERNATIONAL AFFAIRS
105
and $0.8 billion, respectively. These activities involve the
transfer of substantial resources to recipients abroad.
• For 1981, a total of $2.1 billion in budget authority and $2.1
billion in outlays are requested for the conduct of foreign
affairs and for foreign information and exchange activities.
• International financial programs are estimated at $6.9 billion
in budget authority and $0.7 billion in outlays in 1981.
The estimates in this budget are designed to allow the United
States to continue in its long-term leadership role in world affairs.
While these totals take into account changing world events, recent
happenings in Iran and Afghanistan may require further adjustments in spending for international affairs. These will be presented
as soon as requirements become clearer and are covered by the
allowance for contingencies.
In carrying out our international responsibilities, the administration is also emphasizing ways to improve the effectiveness and
efficiency of all U.S. international programs. For example, at the
direction of the President, the Secretary of State and the Director
of the Office of Management and Budget conducted a review of
American employee positions in diplomatic missions abroad. To
date, this review has resulted in the elimination of 626 positions
from agency requests in the 1981 budget, including 359 currently
filled positions. Similar efforts to achieve greater efficiency are
discussed below.
Foreign economic and financial assistance.—The mission of foreign economic and financial assistance is:
• to provide humanitarian aid to needy people abroad;
• to promote economic development; and
• to support the foreign policy interests of the United States.
The need for U.S. assistance to carry out this mission is increasing* A handful of developing countries, most of them with small
populations, have benefited immensely from oil price increases.
However, the majority of Third World nations have been hard hit
not only by the energy situation but by rising prices of other
products, and by reduced export earnings because of slow economic
growth in the developed countries.
Compared with the need for assistance, the $7.5 billion in budget
authority and $6.2 billion in outlays proposed for 1981 for foreign
economic and financial assistance is small. Therefore, much consideration has been given to improving the effectiveness of our assistance programs.
106
THE BUDGET FOR FISCAL YEAR 1981
NATIONAL NEED: CONDUCTING INTERNATIONAL RELATIONS
(Functional code 150; in millions of dollars)
Major missions and programs
1979
actual
1980
estimate
1981
estimate
1982
estimate
1983
estimate
BUDGET AUTHORITY
Foreign economic and financial assistance:
International Development Cooperation
Agency
Multilateral development banks
Public Law 480—Food aid
Peace Corps
Economic support fund/Peacekeeping operations
Refugee assistance
Offsetting receipts and other
1,821
2,515
806
99
1,989
3,234
840
106
2,225
1,666
1,129
119
2,435
1,602
1,152
130
2,704
1,625
1,198
142
2,321
227
—310
2,152
496
-306
2,106
567
-356
2,200
570
-398
2,200
535
-401
Subtotal, foreign economic and financial assistance
7,479
8,512
7,456
7,692
8,004
209
34
1,024
800
-274
110
28
669
236
-273
105
32
714
18
32
734
15
32
704
-258
-258
-253
1,793
770
594
526
498
(8,218)
(8,502)
Military assistance:
Grant military assistance
Foreign military training
Foreign military sales credit
Relocation of facilities (Israel)
Offsetting receipts and other
Subtotal, military assistance
(9,272)
(9,282)
(8,050)
Conduct of foreign affairs:
Administration of foreign affairs
International organizations and conferences.
Other
813
479
25
821
515
35
995
519
41
1,084
551
41
1,183
581
43
Subtotal, conduct of foreign affairs....
1,318
1,372
1,554
1,676
1,808
Foreign information and exchange activities
506
526
565
618
645
105
-2,327
1,338
700
6,850
3,863
3,452
-76
-77
88
-79
-80
-81
—2,298
1,961
6,859
3,756
3,370
-110
-90
-89
-88
-88
8,688
13,050
16,939
14,180
14,236
Total, foreign aid
International financial programs:
Export-Import Bank
Foreign military sales trust fund (net)
Internationa! commodity agreements
Other
Subtotal, international financial proDeductions for offsetting receiptsTotal, budget authority
107
INTERNATIONAL AFFAIRS
NATIONAL NEED: CONDUCTING INTERNATIONAL RELATIONS—Continued
(Functional axle 150; in millions of dollars)
Ma/of missions and programs
1979
actual
1980
estimate
1981
estimate
1982
estimate
1983
estimate
OUTLAYS
Foreign economic and financial assistance:
International Development
Cooperation
Agency
Multilateral development banks
Public Law 480—Food aid
Peace Corps
Economic support fund/Peacekeeping operations
Refugee assistance
Offsetting receipts and other
1,374
683
976
94
1,575
926
1,169
104
1,737
966
1,153
116
1,928
1,193
1,190
126
2,158
1,297
1,275
138
1,755
166
-304
2,040
468
-308
2,056
534
-349
2,200
598
-397
2,200
514
-405
Subtotal, foreign economic and financial assistance
4,743
5,974
6,212
6,839
7,178
140
28
640
31
— 276
195
26
540
411
-275
150
28
515
318
-260
150
29
510
175
-260
95
29
510
100
-254
563
897
751
604
479
(5,306)
(6,871)
(6,963)
(7,443)
(7,657)
Conduct of foreign affairs:
Administration of foreign affairs
International organizations and conferences.
Other
785
495
30
867
487
35
927
535
39
1,042
543
40
1,166
573
41
Subtotal, conduct of foreign affairs....
1,310
1,389
1,501
1,625
1,780
Foreign information and exchange activities
465
544
569
600
643
200
-1,434
1,054
1,200
1,230
1,193
1,822
354
-568
5
-566
-573
-580
-879
1,687
669
620
1,241
-110
-90
-89
-88
-88
6,091
10,401
9,612
10,199
11,234
-4
1,293
-7
2,420
50
-7
1,990
350
-7
2,270
500
-6
1,020
340
Military assistance:
Grant military assistance
Foreign military training
Foreign military sales credit
Relocation of facilities (Israel)
Offsetting receipts and other
Subtotal, military assistance
Total, foreign aid
International financial programs:
Export-Import Bank
Foreien
IVlVrl£ll military
llliillQIJ salps
v v l W trust
il UJl fund
IUMU (net)
^IIWI/»***»*«*
International commodity agreements ...
Other
Subtotal, international financial programs
Deductions for offsetting receipts
Total, outlays
MEMORANDUM—Attribution of Federal
Financing Bank outlays
Overseas Private Investment Corporation
Foreign military sales credit...
Export-Import Bank
108
THE BUDGET FOR FISCAL YEAR 1981
A major step toward making these programs work better was
taken on October 1, 1979, when the International Development
Cooperation Agency (IDCA) was established to oversee all development assistance activities. The IDCA Director is responsible for
improving both the coordination and the effectiveness of development programs. Two additional organizational changes have been
made to improve other foreign economic assistance activities:
• The Peace Corps has been given greater autonomy within
ACTION in recognition of the uniqueness of this volunteer
program.
• A special coordinator for refugee affairs has been set up in
the State Department to speed and improve the U.S. response
to the growing problem of refugees in many regions of the
world.
The broad elements of the U.S. development strategy are clear.
• To enable the developing countries to pay their own way as
far as possible through exports, the United States will give
special emphasis to their concerns as the recently agreedupon trade liberalizations go into effect.
• Where development aid is required, the United States will
support effective multilateral assistance institutions.
• For bilateral programs, new kinds of solutions to development
problems will be sought in a limited number of areas of
activity where the United States possesses the greatest
expertise.
• Food aid will focus on the poorest countries and serve both
humanitarian and developmental objectives.
The Director of the International Development Cooperation
Agency has direct responsibility for the policies and budgets of five
development assistance programs: the Agency for International Development (AID), the new Institute for Scientific and Technological
Cooperation, the Overseas Private Investment Corporation, voluntary, contributions to the more developmentally oriented international organizations and programs, and U.S. contributions to the
International Fund for Agricultural Development, a multilateral
lending entity. In addition, the Director shares responsibility with
the Secretary of the Treasury for developmental aspects of U.S.
participation in the multilateral development banks, and with the
Secretary of Agriculture and other officials over the food aid
program.
109
INTERNATIONAL AFFAIRS
INTERNATIONAL DEVELOPMENT COOPERATION AGENCY
(In millions of dollars)
1980
estimate
1981
estimate
1982
estimate
1983
estimate
Budget Authority
IDCA/AID, operating expenses
Agency for International Development
Institute for Scientific and Technological Cooperation.
International organizations and programs
Total, budget authority
Outlays
IDCA/AID, operating expenses
Agency for International Development
Institute for Scientific and Technological Cooperation
Internationa! organizations and programs
Overseas Private Investment Corporation
International Fund for Agricultural Development
Total, outlays
272
1,431
24
262
294
1,592
95
244
310
1,757
108
260
335
1,969
120
280
1,989
2,225
2,435
2,704
270
1,091
7
243
-56
20
285
1,185
32
247
— 52
40
309
1,319
59
254
-53
40
331
1,487
88
270
-58
40
1,575
1,737
1,928
2,158
The bilateral AID program enables the United States to finance
technical assistance and capital projects that can make a unique
contribution to overcoming development bottlenecks and serve as
models for larger-scale undertakings by the multilateral banks.
AID, using specially developed skills and technologies, focuses on
meeting the basic needs of the poorest people abroad. Budget authority for AID is projected to increase from $1.4 billion in 1980 to
$1.6 billion in 1981, and outlays are estimated to grow from $1.1
billion to $1.2 billion between the 2 years.
The increased funding levels requested will enable AID to
expand its programs in the traditional areas of agriculture, rural
development, health, and population. The agency will also undertake new initiatives in the areas of energy, particularly for use of
renewable energy sources, and of conservation of the scarce natural resources of less developed countries. In allocating its funds
among countries, AID takes into account past economic performance and the human rights policies and practices of recipient countries. Consistent with the President's effort to reduce Federal employment, AID employment will decrease in 1981.
The Institute for Scientific and Technological Cooperation (ISTC)
will draw on the scientific and technological resources of the
United States to design means of promoting development that are
adapted specifically to the needs of the Third World. It will
strengthen the institutional capacity of developing countries to
conduct their own scientific research and applications and to make
informed technological choices. ISTC will thus provide strong sup-
110
THE BUDGET FOR FISCAL YEAR 1981
port to AID, which will finance actual field applications of proven
new techniques.
More than half of the $95 million in budget authority requested
for ISTC in 1981 will support the research program taken over
from AID, much of which is devoted to agricultural research in a
growing network of international centers. A portion of ISTC's
funds will be used to finance cooperative projects with developing
countries no longer eligible for AID programs because of their
improved economic situation.
Budget authority of $244 million is proposed in 1981 for contributions to 14 international organizations and programs that are supported voluntarily by many nations as effective ways to assist in
developmental, humanitarian, and scientific endeavors around the
world. Our voluntary participation in these multilateral organizations and programs complements similar bilateral activities and
aids in accomplishing overall U.S. foreign policy and international
development objectives. The United States also concentrates its
voluntary funding of multilateral programs in those problem areas
where bilateral assistance or domestic research cannot be as effective, such as global environment problems and weather research
and monitoring.
The largest contribution planned in 1981 is $140 million for the
United Nations development program, which is the primary multilateral source of technical assistance to developing countries. A $15
million contribution to the new science and technology fund proposed by the 1979 United Nations Conference on Science and Technology for Development is also proposed. Included in the 1981
request are sizeable contributions to the United Nations Children's
Fund (UNICEF), the Organization of American States, and the
International Atomic Energy Agency, as well as contributions to
several smaller scientific and developmental programs.
The Overseas Private Investment Corporation is a self-sustaining
program that provides political risk insurance, loan guarantees,
and, on a selected basis, direct loans to U.S. firms investing in the
developing countries. No budget authority will be needed in 1981;
receipts are expected to exceed outlays by $52 million. The Corporation is giving particular emphasis to new methods of encouraging
energy investment, and, in keeping with its legislative mandate, to
stimulating and supporting small business investment abroad.
The financing of capital projects and related technical assistance
is provided by the multilateral development banks (MDBsX The
World Bank and its affiliated programs and the regional African,
Asian, and Inter-American Development Banks lent a total of $14
billion during their last completed fiscal year. The United States
supports these institutions because of the quality of bank operations and because U.S. participation can encourage a greater shar-
INTERNATIONAL AFFAIRS
111
ing of the cost by other wealthy countries. In a period of budget
stringency, the potential multiplier effect of U.S. contributions
through these institutions is particularly important.
The $1.7 billion in budget authority proposed for 1981 consists of
both new and overdue installment payments for replenishments of
the banks' funds to which the United States has already agreed.
The major new contribution being proposed is a $1.1 billion first
installment toward a 1981-83 replenishment of the International
Development Association (IDA), the World Bank affiliate that
makes low interest loans to the poorest developing countries. The
United States benefits from the cost-sharing features of this approach. The U.S. share of the total replenishment will be 27%,
down from 31% 3 years ago. The U.S. share was 40% when IDA
was initiated in 1960. The gradual shift in responsiblity for MDB
financing to other countries has been achieved only after difficult
negotiations. Other donors clearly expect the United States to pay
its reduced share on time.
Congressional reductions in appropriations requests for the
banks have created problems in meeting pledges for U.S. installment payments. The 1981 budget request to make up these payments, which were scheduled to be made in previous years, totals
$168 million, including $20 million for the World Bank. This request is smaller than those of previous years.
For 1981 the budget proposes to change the budgetary treatment
of callable capital subscriptions. Callable capital is provided to back
up paid-in capital and reserves, and would be used only to meet
liabilities to bondholders in the unlikely event that the banks'
other resources are insufficient to meet those liabilities. Because
the banks have nearly perfect repayment records on their loans to
developing countries and have accumulated large cash reserves
against any potential losses, the likelihood that U.S. callable capital will ever be called and lead to budget outlays is very remote. As
a result, the practice of seeking budget authority for the full
amount of callable capital overstates its likely outlay impact. In
recognition of the contingent nature of U.S. liability under subscriptions to callable capital, the administration proposes enactment of program limitations, rather than budget authority, for
control of callable capital. For 1981, this will reduce budget authority for the multilateral development banks to $1.7 billion, which is
$1.1 billion less than the previous accounting system would have
shown.
The emphasis of Public Law 480 food aid is on meeting humanitarian needs and promoting economic development abroad. Over
the past year, rising commodity prices have forced cutbacks in the
volume of food originally planned within budget request levels. For
1980, the administration requested supplemental appropriations of
112
THE BUDGET FOR FISCAL YEAR 1981
$206 million, in part to meet minimum tonnage requirements mandated in authorizing legislation for food donations including relief
shipments to Cambodia. Of this amount, $97 million remains unenacted, and is still pending before the Congress.
For 1981, budget authority of $1.1 billion and outlays of $1.2
billion are proposed to permit shipment of 6 million metric tons of
food, the same volume as in 1980. The administration is also proposing to build a food security reserve of up to 4 million metric
tons for use in the food aid program. Funds for this initiative are
included in the agriculture function.
The Peace Corps will continue to supply needed personnel to
developing countries, to support social and economic development,
and to promote mutual understanding between the peoples of the
United States and the Third World. The $119 million in budget
authority proposed for 1981, $13 million above the 1980 level, will
be used primarily to improve the quality of the program by upgrading training and expanding recruitment efforts. It will also allow a
small increase in overseas volunteers and the initiation of programs in additional countries as opportunities arise.
Economic assistance to carry out security-related objectives is
provided through the economic support fund and peacekeeping operations. This assistance is provided in a variety of forms, including
general budget and balance of payments support, the financing of
capital projects and technical assistance, and payment of a share of
the costs of U.N. peacekeeping forces in Cyprus. In recent years
most of these funds have been committed to Egypt and Israel in
support of U.S. efforts toward a peaceful Middle East political
settlement. That support will continue in 1980 and 1981. Economic
support fund financing is also being provided to assist our NATO
ally, Turkey, in a time of economic difficulties and facilitate a
peaceful settlement of hostilities in southern Africa.
Because of recent Soviet actions in Afghanistan, which threaten
Pakistan, the budget proposes a $100 million supplemental appropriation for Pakistan for 1980. Budget amendments will also be
proposed for Pakistan for 1981. A supplemental appropriation to
provide assistance to Nicaragua and Central America to support
moderate, democratic reforms is also pending.
Recent events have demonstrated the need for a rapid U.S. response to security-related requirements that cannot be anticipated.
To provide for a timely U.S. response in such situations, the 1981
budget estimates include $50 million that is not allocated to any
specific mission. These funds are appropriated to the President and
will be held in reserve to meet unanticipated requirements. Total
budget authority proposed for economic support fund and peacekeeping operations is $2.2 billion in 1980 and $2.1 billion in 1981.
INTERNATIONAL AFFAIRS
113
Refugee assistance will increase since the number and needs of
refugees continue to rise dramatically due to war, famine, and
social and political disorder throughout the world. Major refugee
movements are expected within Africa and from Indochina and
Eastern Europe. The need for care and maintenance services
abroad and for the transportation and resettlement of refugees
from these areas will continue to be substantial in 1981. The administration proposes $567 million of budget authority for 1981 to
enable the U.S. to continue to play a leading role in the international efforts to meet these needs. All U.S. assistance will be provided through the United Nations, the International Red Cross,
other international organizations, and numerous American voluntary agencies.
The United States provides assistance through the United Nations High Commissioner for Refugees for the care of large numbers of refugees in Southeast Asia and in Africa. In addition, the
United States intends to continue to be the largest contributor to
the United Nations Relief and Works Agency to aid in the care of
Palestinian refugees.
While the President will not determine the number of refugees
to be resettled in the United States in 1981 until this summer, the
budget requests funds to cover the costs of transportation and
initial placement in the United States of 168,000 Indochinese refugees and 54,000 others, most of whom will come from the Soviet
Union and Eastern Europe.
Military assistance.—The international security assistance program is an essential instrument for achieving our foreign policy
objectives. It consists of military assistance and security-related
economic assistance (economic support fund and peacekeeping operations). These programs form the basis of this country's ability to
assist allies and other friendly nations in maintaining necessary
defense forces, and to promote economic stability in areas where
the United States has special security interests. Military and security-related economic assistance are also used in conjunction with
U.S. military bases and facilities overseas. These programs will
continue to enable the United States to promote peace in the
Middle East, demonstrate timely support of Southeast Asia,
strengthen the NATO southern flank, help maintain a stable balance of forces on the Korean Peninsula, and assist Latin American
nations in resisting threats to their independence and democratic
institutions. They will be critical to the success of efforts to meet
challenges posed by events in Afghanistan and elsewhere. Security
assistance programs are under the policy direction of the Secretary
of State and are administered by the Department of Defense and
the Agency for International Development.
310-000
0 -
80 - 9
114
THE BUDGET FOR FISCAL YEAR 1981
Emphasis of military assistance programs continues to shift from
grants to credit, a trend that reflects the improved ability to pay by
some recipients and the congressional mandate to phase out grant
military assistance. In this budget, grant military assistance programs are planned for three countries to complete outstanding
commitments made in return for base facilities for U.S. Armed
Forces. No grant military assistance programs are currently
planned after 1981 but could be proposed in extraordinary circumstances. Outlays will continue to occur for several years from prioryear programs.
Grants for foreign military training have been planned for 61
countries in 1981. This program provides training and exposure to
the social, economic, and political institutions of the United States
for members of foreign military establishments.
The foreign military sales (FMS) credit estimates for 1981 include
$2.6 billion in new commitments for loans to 35 countries, roughly
$500 million above the 1980 level. Most of this increase is to assist
Israel in meeting the costs involved in withdrawing from the Sinai
Peninsula and to help modernize Egypt's military forces.
Proposed loans valued at $2.1 billion would be made by the
Federal Financing Bank and guaranteed by the Department of
Defense using foreign military sales credit appropriations. The remaining $500 million will be in the form of a direct loan to Israel.
However, since loan repayments will not be required, it will, in
effect, be a grant. On-budget outlays for this program result only
from direct loans and from payments of claims for defaults on
prior-year guarantees.
The budget reflects the effect of the 1979 Middle East peace
package, which included $800 million in grants to help in replacing
two Israeli air bases in the Sinai. Outlays associated with this
activity will occur through 1983.
In addition, the budget proposes a supplemental appropriation
for 1980 of $10 million to provide loan guarantees for $100 million
in foreign military sales financing to assist Pakistan to meet the
increased threat resulting from events in Afghanistan. Budget
amendments will be proposed to provide FMS credit and grant
military training to Pakistan in 1981.
Conduct of foreign affairs.—The most important resource in the
administration of the foreign affairs of the United States is dedicated and competent officers and employees. Those people must be
supported and their productivity augmented.
Additional foreign service officers are requested to improve the
reporting and analysis of events and trends from selected diplomatic missions abroad. Increasing consular workloads abroad require
additional staff. Planned improvements in communications, admin-
INTERNATIONAL AFFAIRS
115
istrative, and passport and visa issuance systems will make staff
resources more productive and effective. Efforts will continue to
improve the working and living space of employees abroad and to
reduce expensive leasing costs. A new single pay structure is being
developed for foreign service employees. It will more accurately
compensate for each level of work responsibility, and better link
those levels to comparable levels of the general schedule of the
civil service. The necessary additional appropriations will be requested as soon as the new structure is completed.
At the same time, this budget reflects reductions in certain marginal activities. At the direction of the President, 12 small consulates are being closed. The administration proposes to cease the
issuance of nonimmigrant visas for citizens of 31 nations where
such visas are not required of Americans and where there is little
incidence of fraud in applying for visas.
Membership in the United Nations and international organizations results from multilateral treaties, conventions, and agreements under which the United States assumes a legal responsibility to contribute an assessed share of organization operating costs.
(The voluntary contributions to international organizations and
programs discussed above under foreign economic and financial
assistance are in addition to the assessed contributions discussed
here.) Membership in international organizations allows the United
States to participate as a responsible world leader in solving multinational problems. It further enables us to pursue our foreign
policy goals in regional and world bodies that deal with a wide
spectrum of international concerns, including peacekeeping, world
economic problems, health, energy, trade, transportation, social justice, agriculture, and communications.
Assessed contributions to international organizations, including
United Nations peacekeeping activities, are estimated to require
$519 million in budget authority for 1981 and $551 million in 1982.
As the major donor to most international organizations, the United
States continues to be concerned with matters of program growth
and priorities, financial management, and program evaluation and
management. The United States is especially concerned that obsolete and marginal activities be phased out so that new needs can be
met at minimal cost. Thus, the United States proposes to support
in most organizations only those budget increases needed to maintain the previous year's level of operation during the 1981-82
period. In only a very few cases of high-priority programs, such as
international nuclear safeguard activities, the budget proposes increases of 2 to 3% in real program growth.
The United States continues to place a high priority on United
Nations peacekeeping activities in the Middle East and on efforts
to bring about peaceful governmental transition in Namibia
116
THE BUDGET FOR FISCAL YEAR 1981
(Southwest Africa). Such peacekeeping operations and initiatives
will continue to play an important part in U.S. efforts to assure
international peace and security around the globe.
In 1979 the Arms Control and Disarmament Agency contributed
to successful negotiations of a second Strategic Arms Limitation
Treaty (SALT II) with the Soviet Union. The agency's role in arms
control negotiations and research continues to include major interest in strategic arms limitation, as well as in nuclear nonproliferation, arms trade restrictions, and defense analysis. Outlays of $18.5
million for 1981 are requested.
Foreign information and exchange activities.—The International
Communication Agency (ICA) conducts a variety of activities to
build long-term relationships between the people and Government
of the United States and those of other nations. The agency's staffs
in 126 countries, with guidance and media products from Washington, operate information and cultural centers and libraries. They
also maintain contact with government officials, journalists, and
academic, professional, and cultural leaders to further the understanding of American society and policies. Through academic exchanges and sponsored visits of Americans abroad and foreign
nationals to the United States, ICA provides selected individuals an
opportunity to increase their international understanding, and to
expand their personal and professional contacts. The agency's
Voice of America, broadcasting in 38 languages, provides accurate
news reports, portrays American society, and explains official U.S.
policies. ICA also provides the President and other foreign policy
officials with assessments of foreign public opinion, and its probable reaction to proposed U.S. policies. ICA activities are proposed
to continue at essentially current levels in real terms through 1983,
with modest increases planned for exchanges and Voice of America
broadcasts to the Middle East.
The Board for International Broadcasting makes grants to Radio
Free Europe/Radio Liberty, which broadcasts in 21 languages to
Eastern Europe and the Soviet Union. Amounts proposed in the
budget will permit operations throughout the 1980-83 period at
approximately the current annual level in real terms.
International financial programs.—The mission of our international financial programs is to advance U.S. interests by improving
the functioning of the international financial system and to facilitate U.S. participation in world trade. Since World War II, the
international financial system has been strengthened by closer cooperation among governments. Nonetheless, problems and market
deficiencies remain that require Government action to facilitate
U.S. commercial exports and military sales. In addition, there is a
INTERNATIONAL AFFAIRS
117
need to expand the resources of the International Monetary Fund
(IMF) to enable it to support economic programs initiated by member
countries to correct their balance of payments difficulties, and
thereby foster global monetary stability. The members of the IMF
have agreed on a 50% increase in IMF resources to take effect in
calendar year 1980. The administration is requesting congressional
approval of U.S. participation in this increase. At current exchange
rates, the U.S. quota in the IMF would increase from $11 billion to
$16.5 billion.
In keeping with the President's policy to encourage exports, the
Export-Import Bank's programs have increased substantially and
planned lending levels are being maintained. The proposed lending
levels will permit the Bank to supplement private sector financing
and to meet the most important foreign official credit competition.
The Export-Import Bank provides direct loans, refinancing of
export credits, loan guarantees, and insurance in order to facilitate
the export of U.S. goods and services. These programs support
exports by:
• assuming commercial and political risks that exporters or
private financial institutions are unwilling or unable to undertake;
• overcoming limitations in private sector U.S. export financing;
• assisting U.S. exporters to meet foreign officially supported
export credit competition; and
• providing guidance in export financing.
By concentrating on areas where private financing is not available and by meeting foreign competition on a case-by-case basis, the
Bank helps improve the functioning of the international economic
system and the efficient development of resources both at home
and abroad. The Export-Import Bank's programs are generally intended to supplement private credit markets. Terms and conditions
on use of its facilities are set at rates more favorable than those
available in the private sector to counteract the special terms
foreign governments provide to support their exporters.
EXPORT-IMPORT BANK AUTHORIZATIONS
( h millions of dollars)
1978
actual
1979
actual
1980
estimate
1981
estimate
1982
estimate
1983
estimate
Direct loan commitments
Discount loan commitments
Guarantees and insurance commitments
2,927
497
3,825
650
4,188
520
4,400
570
4,750
600
5,200
650
3,952
5,016
7,815
8,893
9,800
10,750
Total commitments
7,376
9,491
12,523
13,863
15,150
16,600
Net outlays
— 106
200
1,054
1,230
1,193
1,822
118
THE BUDGET FOR FISCAL YEAR 1981
In addition, the Export-Import Bank will guarantee up to $1
billion in both 1980 and 1981 in direct loans made through the
Federal Financing Bank (FFB). There are several large export
opportunities that could place a severe strain on the Bank's
direct loan resources. The Bank will be able to finance additional
exports by guaranteeing loans made by the FFB. A supplemental
increase in the Export-Import Bank's program limitation for 1980
is therefore being sought. It is also anticipated that the Bank will
make more extensive use of guaranteed financing through the
Private Export Funding Corporation during 1980 and 1981 in order
to meet the requirements for export finance on special terms.
There is a one-time sharp increase in budget authority in 1981
because of changes in procedures for recording obligations and the
inclusion of redemption of debt in the figures. These changes have
no impact on the Bank's program levels or outlays.
Foreign military sales trust fund.—U.S. law requires that sales of
certain types of military equipment and services may be undertaken only by the Federal Government. Thus, this trust fund does not
finance U.S. Government programs; rather, it is the vehicle
through which these sales are made. In recent years, payments by
foreign governments to this fund have been too high in relation to
the amounts needed to make payments to contractors. This situation will be corrected in 1980 by slowing receipts from foreign
governments. As a result, the fund is expected to be roughly in
balance in 1981 and beyond.
Tax expenditures.—A tax expenditure results from the deferral
of taxes on one-half of the profits derived from the incremental
sales of domestic international sales corporations (DISCs). The
DISC provision, estimated to cost $1.5 billion in 1981, was established to provide an incentive to domestic firms to increase their
export effort and to offset partially the perceived export advantages of other countries' tax systems.
Americans living and working abroad may deduct living expenses in excess of the cost of living in the United States, with an
extra $5,000 of deductions available for hardship areas. Tax expenditures for these benefits, estimated to be $600 million in 1981,
are intended to correct for the perceived inequity resulting from
high living costs abroad. This provision also has the effect of encouraging firms to maintain U.S. nationals abroad and of deepening our involvement in international economic activities.
Except for certain tax-haven provisions, the income of foreign
corporations controlled by U.S. shareholders is exempt from U.S.
taxation until that income is distributed to shareholders. This deferral of taxes results in an estimated tax expenditure of $480
million for 1981.
INTERNATIONAL AFFAIRS
119
CREDIT PROGRAMS—INTERNATIONAL AFFAIRS
(In millions of dollars)
Program
Security assistance:
Direct loans:
New loans
Repayments, sales and adjustments ( - )
1979
actual
1980
estimate
1981
estimate
1,642
-739
1,615
-722
Net loan outlays
903
894
699
Loan guarantees:
New loans
Net loan guarantees
1,622
1,207
2,900
2,260
2,600
1,835
364
-265
291
-312
284
-342
Net loan outlays
99
-21
— 59
Loan guarantees:
New loans
Net loan guarantees
96
49
230
189
188
146
755
-144
850
-161
781
-180
610
690
601
1,629
— 1,321
2,634
-1,461
2,836
-1,504
309
1,173
1,332
4,591
1,002
5,237
1,255
6,207
1,800
9
-129
9
-133
I
-105
-121
-124
Economic development credit:
Direct loans:
New loans
Repayments, sales and adjustments { - )
Public Law 480—food aid:
Direct loans:
New loans
Repayments, sales and adjustments ( - )
Net loan outlays
Export-Import Bank:
Direct loans:
New loans
Repayments, sales and adjustments ( - )
Net loan outlays
Loan guarantees:
New loans
Net loan guarantees
Other international assistance:
Direct loans:
New loans
Repayments, sales and adjustments ( - )
Net loan outlays
1,415
-716
-104
THE BUDGET FOR FISCAL YEAR 1981
120
GENERAL SCIENCE, SPACE, AND TECHNOLOGY
National Needs Statement:
• Expand scientific knowledge through support of basic
research in all fields of science.
• Promote technological innovation in industry.
• Develop a greater understanding of the Earth, the solar
system, and the universe through space exploration.
• Develop and demonstrate practical, economic, and productive applications of space technology.
The United States draws much of its vitality from a commitment
to wide-range scientific inquiry and to the pursuit of technological
excellence in industry and agriculture. The private sector plays a
major role in assuring the strength, independence, and diversity of
the Nation's science and technology. However, the long-range vigor
of the national effort is a proper concern of the Federal Government, which must stand ready to support fundamental and broadly
applicable research activities whose long-term benefits to society
exceed the profits that can be made by particular industries and
firms.
Despite overall budget constraints, the administration is committed to increasing support for basic scientific inquiry and to helping
advance the frontiers of technology in areas of general application.
This commitment has been demonstrated by a policy of "real
growth" for basic research in each of the budgets of this administration. The Federal Government now supports about 70% of the
Nation's basic research and since 1977 Federal support has increased by about 40% (9% in real terms).
Basic research is aimed at increasing our understanding of fundamental scientific principles that encompass a wide range of natural phenomena. Research on the laws of matter, of the universe,
and on biological processes can provide the foundation for technological progress that is essential to maintaining the Nation's longterm prospects for industrial growth, agricultural productivity, a
safe environment, medical advances, energy sufficiency and national security.
The budget provides for nearly 3% real growth over 1980 in
obligations for basic research for all scientific disciplines throughout
the Government. Particular emphasis is placed on basic research in the
materials and physical sciences, mathematics, and engineering.
These disciplines have not previously shared as fully as others in
basic research increases. Large increases are proposed for basic
agricultural research to sustain the Nation's long-term agricultural
GENERAL SCIENCE, SPACE, AND TECHNOLOGY
121
productivity. The budget also provides support, through the programs of the NSF, for:
• Initiation of a 10-year ocean drilling program on the seaward
slope of the Continental Shelf to provide scientific data about
the Earth's crust and basic information that can provide a
framework for subsequent resource assessment. This program
would be financed and conducted in collaboration with industry.
• Expansion of international science and technology activities,
including increased scientific cooperation with the Peoples
Republic of China.
• Creation of a new program to upgrade research facilities at
the Nation's most productive research universities.
Federal Obligations (or Basic Research
$ Bilions
-6
5 Billions
6 -
: A i l Other
; Department of
k
Defense
> Department of
' Energy
National Aeronautics
: and Space
Administration
• National Science
" Foundation
. National Institutes
' of Health
Fiscal Years 1 9 7 9
Actual
1980
1981
Estimate
Estimate
In an environment of scarce resources and intense worldwide
competition, U.S. industry requires a strong technological base. In
1979, the administration established a framework of new policies
and programs to encourage technological innovation throughout
American industry, including measures to:
• improve the dissemination of technical information to industry;
• strengthen the patent system;
122
THE BUDGET FOR FISCAL YEAR 1981
• foster the development of small, innovative firms;
• clarify antitrust policy to encourage joint industry ventures in
research; and
• encourage industrial innovation through Federal procurement
policies.
The budget supports specific activities to carry out this new
emphasis, including:
• increased support by the NSF of joint industry-university research teams leading to the advancement of industrial technology;
• NSF and Department of Commerce support for research and
development on technologies that are basic to the improvement of several industrial sectors;
• increased support for the small business innovation program
of the NSF to stimulate development of new processes and
products to encourage private investments; and
• initiation of a basic automotive research program in cooperation with industry.
Other aspects of these programs are also described in the commerce and housing credit and transportation functions.
The frontiers of technology and engineering are also advanced by
the Federal Government's space activities, and range from the
development of the Space Shuttle to better sensors for satellites.
This budget builds upon 20 years of path-breaking Federal investment in space science and technology, providing funds to:
• Complete development of the Space Shuttle, which will provide a reliable transportation system for ferrying large payloads to and from Earth orbit.
• Initiate the development of an observatory in space to study
gamma rays, leading to increased understanding of the nature
and origin of the universe.
• Improve satellite systems (such as the Landsat series) to
obtain worldwide agricultural production and other natural
resources information with no interruption in the flow of data
to Earth.
• Initiate the development of a national oceanic satellite system
(NOSS) to provide global weather and ocean data for scientific, economic and national security purposes.
• Initiate the development of advanced communication technology to provide a far more efficient worldwide communication
system by increasing the useful range of radio frequencies.
Most of these programs and initiatives are supported by the
National Aeronautics and Space Administration (NASA), but other
agencies, particularly the Departments of Commerce and Defense,
GENERAL SCIENCE, SPACE, AND TECHNOLOGY
123
are increasing their space-related activities to take advantage of the
Nation's 20-year investment in space.
Other science and technology activities of the Federal Government are conducted by a variety of agencies to fulfill their program
goals. Most of these activities are classified and discussed in other
budget functions. Detailed information is provided in Special Analysis K, "Research and Development/' in the Special Analyses
volume of the budget. The general science, space, and technology
function includes only the research programs of the National Science Foundation (NSF), the general science programs of the Department of Energy (DOE) and the space activities of the National
Aeronautics and Space Administration (NASA). Proposed outlays
for this function are $6.4 billion in 1981, an increase of $0.6 billion
or 9.4% over 1980.
SCIENCE
General science and basic research.—The programs that directly
support the mission of general science and basic research are administered by the National Science Foundation and the Department of Energy. Outlays for this mission are estimated to total $1.6
billion in 1981, an increase of $150 million, or 10.6%, over 1980.
National Science Foundation programs.—With the establishment
of the National Science Foundation (NSF) in 1950, the Federal
Government recognized that the Nation would benefit from increased support for basic research. The Foundation supports basic
research in virtually all scientific disciplines. It also supports applied research in selected areas of national need, and science education at all levels. The budget proposes an increase in outlays for
the NSF from $947 million in 1980 to $1,052 million in 1981.
Budget authority is proposed to increase from $996 million in 1980
to $1,153 million in 1981, or almost 16%.
In 1981, the additional funds proposed will allow the NSF to
emphasize research related to long-term national problems, such as
studies of the properties of materials and the formation and extraction of minerals. Proposed programs include investigations of the
Earth's crust (by drilling near the Continental Shelf), basic automotive research, and computer science.
Department of Energy general science programs.—An increase in
outlays from $462 million in 1980 to $508 million in 1981 is estimated for research supported by the Department of Energy in high
energy physics, nuclear physics, life sciences and nuclear medicine.
The goal of the high energy and nuclear physics programs is to
achieve a comprehensive understanding of the fundamental con-
124
THE BUDGET FOR FISCAL YEAR 1981
NATIONAL NEED: INCREASING BASIC SCIENTIFIC KNOWLEDGE AND USE OF SPACE
(Functional code 250; in millions of dollars)
Major missions and programs
BUDGET AUTHORITY
General science and basic research:
National Science Foundation programs
Department of Energy general science programs
Smithsonian scientific information exchange
activities
1980
estimate
1979
actual
1981
estimate
1982
estimate
1983
estimate
914
996
1,153
1,185
1,278
431
472
*
523
*
525
*
504
*
2
Subtotal, general science and basic
research
1,347
1,468
1,676
1,710
1,782
Space research and technology:
Space flight
Space science, applications, and technology
Supporting space activities
2,433
1,224
383
2,847
1,415
437
3,183
1,547
463
2,920
1,698
624
2,750
1,878
620
Subtotal, space research and technology
4,040
4,699
5,193
5,242
5,248
-10
—3
—3
-3
-3
5,377
6,164
6,866
6,948
7,027
870
947
1,052
1,114
1,201
425
462
*
508
*
527
*
508
*
Deductions for offsetting receipts
Total, budget authority
OUTLAYS
General science and basic research:
National Science Foundation programs
Department of Energy general science programs
Smithsonian scientific information exchange
activities
2
Subtotal, general science and basic
research
1,298
1,410
1,560
1,641
1,708
Space research and technology:
Space flight
Space science, applications, and technology
Supporting space activities
2,217
1,153
383
2,745
1,322
416
3,013
1,434
439
3,055
1,635
599
2,816
1,846
627
Subtotal, space research and technology
3,753
4,483
4,886
5,289
5,289
-10
-3
-3
-3
-3
5,041
5,889
6,442
6,927
6,993
184
132
101
Deductions for offsetting receipts
Total, outlays
MEMORANDUM—Attribution of Federal
Financing Bank outlays
Supporting space activities
*500 thousand or less.
GENERAL SCIENCE, SPACE, AND TECHNOLOGY
125
stituents of matter and energy, the basic forces that govern their
interactions, and their role in the properties and dynamics of nuclear particles.
Considerable progress is now being made in understanding the
fundamental constituents of matter called "quarks", the study of
nuclear forces and the properties of nuclear matter under extreme
conditions.
In high energy physics, large accelerators will be used to build on
recent major theoretical and experimental knowledge. Funds are
requested to begin modification of the accelerator at Fermi National
Laboratory to enable scientists to determine the existence of what
are so far theoretical subatomic particles.
Nuclear physics research in 1981 will take advantage of the new
heavy ion research facility. A new accelerator system is proposed,
to fill an important gap between existing lower energy accelerators
and a new generation of large circular accelerators.
Tax expenditures.—In addition to direct Federal funding of basic
research, the tax code encourages private sector research and development, including basic research, by allowing expenditures for
such purposes to be deducted as a current expense. The resulting
tax expenditures are estimated at $2.0 billion in 1981.
FEDERAL OBLIGATIONS FOR THE CONDUCT OF BASIC RESEARCH
(In millions of dollars)
Functional code and agency
Programs in general science, space, and technology function:
250 National Science Foundation
250 Energy
250 National Aeronautics and Space Administration
1979
actual
1980
estimate
1981
estimate
730
292
814
324
952
357
513
538
581
1,535
1,676
1,890
1,576
172
362
257
77
36
25
20
10
30
1,728
198
431
289
76
39
14
32
1,840
236
523
324
78
44
36
25
19
58
Subtotal
2,566
2,855
3,184
Total
4,101
4,531
5,074
Subtotal
Programs in other functions:
550 Health and Human Services
270 Energy
050 Defense
350 Agriculture
300 Interior
500 Smithsonian
370 Commerce
500 Education
300 Environmental Protection Agency
999 Other agencies
28
20
126
THE BUDGET FOR FISCAL YEAR 1981
Related programs.—As noted above, most of the Federal Government's basic research funds are allocated to other budget functions
since they support other specific national needs or missions. The
accompanying table shows total Federal obligations by agency for
the conduct of basic research. It excludes funds for major facilities
and tax expenditures.
SPACE RESEARCH AND TECHNOLOGY
This budget continues the administration's commitment to complete the development and initiate the operation of the Space Shuttle. The Shuttle's propulsion, thermal protection, and control systems are among the most complex challenges in the history of 20th
century engineering. Despite the additional resources required to
insure the success of the Shuttle, the administration continues to
support a vigorous and balanced space program. Projects for further exploration and exploitation of space are planned to take
advantage of the capabilities offered by the Shuttle. In addition to
maintaining ongoing programs in space science, applications and
technology development, the budget proposes several major new
initiatives that are discussed below.
Space flight—The National Aeronautics and Space Administration's (NASA) space flight programs sustain and improve the Nation's capabilities to provide space transportation facilities to government, industry, universities and foreign users. The administration is proposing outlays of $3.0 billion for these programs in 1981
compared to $2.7 billion in 1980, an increase of 10%.
Outlays of $1.8 billion are estimated for the Space Shuttle program in 1981 and supplemental outlays of $0.2 billion for 1980 are
proposed, compared to outlays of $1.6 billion for the program already approved by Congress for 1980.
The Space Shuttle will be the world's first manned space transportation system capable of being reused routinely and allowing
repair, service, and retrieval of satellites in space. The Shuttle is
essential to exploit space effectively and maintain U.S. leadership
in space throughout this century; to allow adequate advances in
military capabilities to meet national security commitments; and to
meet U.S. commitments to domestic and foreign users who have
made significant investments based upon its availability in the
early 1980's. The Shuttle is also expected to replace most U.S.
expendable launch vehicles, resulting in cost savings for future
civilian and military missions.
The Space Shuttle is now approaching the critical final phase of
development, with first flight scheduled for late 1980 and regular
operations beginning in 1982. The substantial additional funding
proposed for 1980 and 1981 is needed to permit a strengthening of
GENERAL SCIENCE, SPACE, AND TECHNOLOGY
127
ongoing development efforts to overcome remaining technical problems to make possible a fully operational Shuttle system beginning
in 1982.
Space science, applications and technology.—Programs in this category include space exploration to study the solar system and the
universe, and the development, launch, and operation of satellite
systems for agricultural, geological, weather, and communication
uses. Proposed outlays in 1981 are $1.4 billion, compared to $1.3
billion in 1980, and represent an increase of 8%. Programs in space
science account for proposed outlays of $725 million in 1981, compared to $665 million in 1980.
The administration is proposing the initiation of the development
of a gamma ray observatory in 1981. This observatory will be
placed in orbit using the Space Shuttle and will provide information on the nature of celestial phenomena providing clues about
the nature and origin of the universe. Such information cannot be
obtained by Earth-based observatories because of the absorption of
gamma radiation by the atmosphere. The administration also proposes to continue other previously approved major activites in
space science, including a mission to study the polar regions of the
sun and their effect on the Earth's atmosphere and climate, a
space telescope to observe distant galaxies, and a mission to explore the planet Jupiter.
The estimated outlays for space applications are $470 million in
1981, an increase of 10% over 1980. The administration is proposing a national oceanic satellite system to be developed jointly by
NASA and the Departments of Defense and Commerce. This operational demonstration system would provide global ocean data for
use in marine weather forecasting and climate studies, marine
transportation, and defense applications. The budget also proposes
a program to investigate advanced technologies to utilize new
radio-frequency regions for advanced satellite communications.
The budget requests continued funding for ongoing programs
such as the global agricultural production forecasting program
using the Landsat series of satellites. Development of Landsat-D,
the fourth satellite in this series, is continuing, leading toward a
late 1981 launch date. Landsat-D will provide a major advance in
the quality of remotely sensed Earth-resources data for a variety of
applications. The administration is committed to assuring the continuity of Earth-resources remote-sensing capability through the
1980's.
The Department of Commerce, through its National Oceanic and
Atmospheric Administration (NOAA), has been designated to
manage all civilian operations of remote sensing from space. An
interagency board will be created to provide Federal coordination
128
THE BUDGET FOR FISCAL YEAR 1981
of these activities. Special emphasis will be placed on developing
pricing policies for cost sharing by user agencies and on involving
the private sector in civil remote sensing operations, such as surveys of Earth's resources from space. These administrative changes
are expected to provide more efficient and successful management
of these national efforts.
Budget proposals would maintain other space research and technology programs, including basic research in materials, structures,
and propulsion.
Supporting space activities.—The administration proposes outlays
of $439 million in 1981 to provide tracking and data relay support
to the entire NASA flight program. This represents an increase of
$23 million or 6% over 1980. These activities include maintenance
and improvement of satellite tracking stations, antenna systems
and computer facilities to extract information from the signals
received from satellites.
CREDIT PROGRAMS—GENERAL SCIENCE, SPACE AND TECHNOLOGY
(In millions of dollars)
Program
Satellite leases:
Loan guarantees:
New loans
Net loan guarantees
1980
estimate
1979
actual
186
186
1981
estimate
132
132
101
101
Credit programs.—Long-term lease commitments to finance the
construction and acquisition of NASA satellites totaling $152 million were made in 1979. No further lease commitments are expected under this program in 1980 or 1981. Use of existing commitments results in loan guarantees and outlays by the Federal Financing Bank (FFB).
ENERGY
129
ENERGY
National Needs Statement:
• Mobilize the Nation's resources to protect the Nation's
energy security and independence.
• Promote energy production and conservation through
pricing policies that reflect the real cost of energy.
• Protect the Nation from being harmed by disruptions in
energy supplies.
• Develop renewable sources of energy to sustain long-term
economic growth.
• Increase the safety of nuclear power production and
assure the safe, long-term disposal of nuclear waste,
while limiting the potential for international proliferation of nuclear weapons.
• Protect the environment while achieving the Nation's
energy goals.
The fundamental aspects of the Nation's energy problem are
stark and unpleasant: as cheap supplies of oil and natural gas
dwindle, the price that we pay for all forms of energy will increase.
Since World War II, America's economic growth has been fueled
by inexpensive, readily available crude oil. During the 1960's and
early 1970's, world per capita energy consumption grew at Zl/z%
per year. The ready availability of oil and natural gas helped to
carry the American and the world economy to record levels of
prosperity.
The situation changed markedly in 1971 when proven domestic
oil resources began to decline and domestic oil production reached
a peak of 11.3 million barrels per day. Since then, we have rapidly
come to rely on imported crude oil as domestic supply failed to
meet the increase in demand arising from economic growth. Net
imports of petroleum products more than doubled between 1971
and 1978, from 3.7 to 7.9 million barrels per day.
In 1973, members of the Organization of Petroleum Exporting
Countries (OPEC) demonstrated their ability to control world oil
supply by imposing an embargo during the Arab-Israeli war. Since
1973, sharp increases in oil prices and restrictions in supply have
sent shocks through the world economy that have forced the
United States and the other major oil importing nations to struggle
with the new realities of the world oil market. OPEC price increases since 1973 have raised the average price of imported oil to
over $28 per barrel as of January 1980, more than 10 times the price
in 1973.
310-000
0 - 8 0 - 1 0
130
THE BUDGET FOR FISCAL YEAR 1981
In 1973, a two-tier system of price controls was applied to domestic oil prices, holding oil that had already been discovered ("old
oil") under price controls, and allowing newly discovered domestic
oil and imports to be sold at the market price. Oil price controls
did hold down the prices of petroleum products in the United
States, but also produced unintended consequences. The control
system had the effect of holding the average domestic price of oil,
including imports, to a level well below that charged by OPEC.
Therefore, the price control system subsidized oil consumption.
Price controls also reduced incentives to increase domestic oil production, so higher demand for oil was met only by increased imports.
Accelerating OPEC prices led to increasing pressure on the Nation's balance of payments and worsened an already severe rate of
domestic inflation. As long as the United States continued to subsidize oil consumption through price controls, massive oil imports
threatened the strength and stability of the economy.
Shortly after taking office in 1977, the administration proposed
the first parts of a national energy plan to encourage conservation,
foster conversion from oil to coal, and reduce oil imports. In 1978,
after many months of debate, the Congress passed the Energy Tax
Act, the Natural Gas Policy Act, the National Energy Conservation
Policy Act, the Powerplant and Industrial Fuel Use Act, and the
Public Utilities Regulatory Policies Act. Taken together, these laws
(also known as the National Energy Act) incorporated many of the
administration's proposals. The basic foundation of a rational response to the new realities of energy had been set in place.
A few months after the National Energy Act (NEA) was enacted,
the OPEC cartel began a series of new price increases that have, in
the course of the past year, more than doubled the official OPEC oil
price. This sudden increase seriously worsened inflation in the
United States and made it clear that the gradual reduction of oil
imports envisioned by the NEA would not be enough to protect the
American economy from the prospect of continued, rapid increases
in OPEC oil prices.
In April 1979, the administration announced a plan to decontrol
the price of domestic crude oil in conjunction with a windfall profit
tax on domestic oil production. The decontrol plan will allow domestic oil held under price controls to rise gradually to the world
oil price by September 30, 1981, providing increased incentives for
domestic production and conservation.
As the prices charged by domestic producers rise as a result of
decontrol and increasing world oil prices, the windfall profit tax
will capture a portion of the unearned revenues that would otherwise go to the oil industry. The receipts of the windfall tax will
make resources available to assist those low-income families least
able to pay increasing energy prices, finance investments to
ENERGY
131
increase the energy efficiency of our transportation system, and
greatly expand energy supply and conservation programs. The administration's initiative places maximum emphasis on oil import
reductions by allowing domestic oil prices to reach world levels and
ensuring that a significant portion of the excess profits caused by
rising world oil prices and decontrol will be invested in domestic
alternatives to foreign oil.
The 1979 proposals included an Energy Security Corporation
(ESC) to enable the United States to develop the capacity to produce synthetic fuels that would directly offset foreign oil imports;
an Energy Mobilization Board to assure that critical energy facilities receive prompt attention at every level of government; a permanent ceiling on oil imports of 8.5 million barrels per day; a
program to encourage utilities to switch from oil to coal; assistance
for additional conservation and the accelerated use of solar and
other renewable energy sources in residences and commercial establishments; and increased research and development into the use
of coal.
We have seen the risks of being unprepared for rapid changes in
energy supplies and prices; we must now move forward to reduce
Effect of Administration's O i l Import Reduction Program
Millions of Ban«!> p«r Day
14
0'
1970
Calendar Yean
14
75
*80
Projected
'85
'90
•0
THE BUDGET FOR FISCAL YEAR 1981
132
NATIONAL NEED: ENERGY
(Functional code 2/0; in millions of dollars)
BUDGET AUTHORITY
Energy supply:
Promotion of domestic production:
Synthetic fuels promotion:
Existing law
Proposed legislation
Biomass (proposed)
Solar bank (proposed)
Research, development, demonstration, and
applications:
Solar
Other renewable resources
Fossil:
Existing law..
Proposed legi
Nuclear fission:
Existing law
Proposed legislation
Other technology
Direct production (net):
Uranium enrichment
Petroleum reserves
Power marketing
Subtotal
Energy conservation:
Technology development
Conservation grants
Utility oil use reduction (proposed)
Public information and other
Residential and commercial conservation
(proposed)
Subtotal
Emergency energy preparedness:
Strategic petroleum reserve:
Existing law
Proposed legislation
Subtotal
Energy information, policy, and regulation:
Energy information and policy
Regulation:
Federal Energy Regulatory Commission...
Economic Regulatory Administration
Nuclear Regulatory Commission
Alaska gas pipeline inspector
Administrative expenses (Department of
Energy)
Subtotal
Deductions for offsetting receipts
Total, budget authority
Footnote at end of table.
1981
estimate
1980
estimate
1979
actual
1982
estimate
1983
estimate
2,208
17,792
50
35
41
150
45
150
37
150
514
541
602
529
652
620
680
643
728
680
784
895
50
1,165
50
1,717
50
1,462
50
1,218
925
859
899
490
1,227
300
578
827
872
875
-21
-364
-116
1,051
—647
14,892
87
-1,900
-99
560
—2,311
-115
302
-2,416
-122
3,046
39,562
2,519
3,150
2,645
229
377
297
458
1
11
299
568
25
50
323
568
1,030
54
347
608
2,420
58
110
390
600
700
oo
--J
Major missions and programs
1,332
2,575
4,133
9
2,404
15
2,191
122
4,274
140
3,008
9
2,419
2,313
4,414
82
129
142
141
141
54
99
327
72
198
417
11
76
162
468
26
77
126
513
38
78
110
523
32
215
259
337
363
363
5
611
3,008
*
777
1,086
1,211
1,258
1,247
-59
-72
-74
-74
-74
7,382
41,461
7,408
9,222
12,365
ENERGY
133
NATIONAL NEED: ENERGY-£ontinued
(Functional code 270; in millions of dollars)
Major n i t o n s aod programs
OUTLAYS
Energy supply:
Promotion of domestic production:
Synthetic fuels promotion:
Existing law
Proposed legislation
Biomass (proposed)
Solar bank (proposed)
Research, development, demonstration and
applications:
Solar
Other renewable resources
Fossil:
Existing law
Proposed legislation
Nuclear fission*.
Existing law
Proposed legislation
Other technology
Direct production (net):
Uranium enrichment
Petroleum reserves
Power marketing
Subtotal
Energy conservation:
Technology development
Conservation grants
Utility oil use reduction (proposed)
Public information and others
Residential and commercial conservation
(proposed)
Subtotal
Emergency energy preparedness:
Strategic petroleum reserve-.
Existing law
Proposed legislation
Subtotal
Energy information, policy, and regulation:
Energy information and policy
Regulation:
Federal Energy Regulatory Commission...
Economic Regulatory Administration
Nuclear Regulatory Commission
Alaska gas pipeline inspector
Administrative expenses (Department of
Energy)
Subtotal
Deductions for offsetting receipts
Total, outlays
Footnote at end of table.
1979
actual
1980
estimate
1981
estimate
1983
estimate
1982
estimate
#
*
155
12
50
29
53
16
41
130
60
45
146
100
37
150
437
509
617
537
656
645
674
678
724
683
740
931
50
939
50
1,374
50
1,521
50
1,207
671
1,269
-100
583
1,048
200
608
858
-36
872
890
-98
902
43
-350
1,643
245
—443
1,564
105
-1,823
1,825
214
-2,324
1,867
162
-2,442
1,612
4,900
5,499
4,493
4,478
4,291
176
76
246
336
1
11
278
481
22
34
309
648
979
54
339
692
2,321
58
14
357
504
727
252
608
1,172
2,494
4,137
1,021
767
3
1,294
11
2,912
14
3,850
122
1,021
770
1,306
2,926
3,973
82
127
144
140
140
50
82
309
70
172
307
9
76
176
476
25
77
134
474
36
78
112
484
34
219
261
314
325
325
1,211
1,186
1,173
742
946
—59
-72
-74
-74
-74
6,856
7,751
8,107
11,010
13,499
134
THE BUDGET FOR FISCAL YEAR 1981
NATIONAL NEED: ENERGY—Continued
(Functional code 270; in millions of dollars}
Major missions and programs
ADDENDUM
Off-budget Federal entity:
Rural electrification and telephone revolving
fund:
Budget authority
Outlays
Energy Security Corporation:
Budget authority
MEMORANDUM—Attribution of Federal
Financing Bank outlays
Rural electrification and telephone revolving
fund
Tennessee Valley Authority
1979
actual
1980
estimate
1981
estimate
1982
estimate
1983
estimate
134
- 4
2,320
4,160
684
4,745
16
2,400
MOO
5,342
6,779
*$500 thousand or less,
those risks and restore confidence to our economy. The administration's energy strategy acknowledges the changed realities of energy
and seeks to prepare the Nation for continued change in the
future.
The administration's energy strategy and programs are grounded
in the belief that we must move forward on many fronts to develop
whatever means are needed to establish our security and independence from foreign sources of energy. We cannot decide now to
pursue but one energy path or another; we must instead pursue
many alternatives in order to secure our energy future and restore
confidence in our economy. A broad energy strategy has been
needed to prepare us for the next decade and beyond. The Nation
now has such a strategy, and this budget supports it.
The administration's national energy strategy as set forth in the
1977 and 1979 initiatives and enacted by Congress now comprises a
broad-based program to reduce the Nation's dependence on imported oil. The strategy and the program have four basic elements:
expanded efforts to encourage conservation of energy throughout
the domestic economy; a rational pricing policy for depletable oil
and natural gas; a windfall profit tax to capture a portion of the
revenues that will accrue to the oil industry as a result of decontrol; and programs to increase our domestic supplies of energy. The
administration's overall energy program should reduce projected
1990 oil imports from 13 million barrels per day to 4.5 million
barrels per day. Such a reduction in the level of imports will stem
the flow of dollars overseas, improve our balance of payments, and
provide renewed confidence in the American economy.
ENERGY
135
In addition to direct spending programs, a variety of tax expenditures, designed to increase domestic energy production and stimulate conservation, significantly affect budgetary resources by reducing tax receipts. It is estimated that receipts will be lower by $5.4
billion in 1980 and $6.6 billion in 1981 due to these tax expenditures. Tax expenditures are discussed below and explained in more
detail in the Special Analyses volume of the Budget.
In addition to the energy programs included in this function, the
administration has proposed programs to assist those low-income
families most affected by rising energy prices. The Congress has
enacted a program of special energy allowances and an energy
crisis assistance program, which are discussed in the income security function. In addition, the administration has proposed programs to increase the energy efficiency of the Nation's transportation system. These programs are discussed in more detail in the
transportation function.
A variety of other Federal spending programs are related to
meeting national energy needs, but budget estimates for them are
classified elsewhere in the budget. These programs include:
• Department of the Interior programs for oil, gas, and coal, oil
shale, and geothermal leasing; coal mining research and development; surface mining reclamation; and environmental
assessments of energy minerals (classified in the natural resources and environment function).
• Department of Agriculture programs promoting gasohol and
energy conservation for rural communities (classified in the
agriculture function).
• Department of Commerce programs for coastal energy impact
assistance, an inland energy assistance program financed by
the Department of Energy and administered by the Department of Agriculture (classified in the community and regional
development function).
• Department of Transportation programs on pipeline safety
(classified in the transportation function).
• Department of Labor mine health and safety programs (classified in the health function).
• Assistance to developing countries and multilateral lending
institutions to promote energy production overseas (classified
in the international affairs function).
Energy supply.—Even if we conserve enough energy to substantially reduce total demand, we will need increased supplies of
energy to fuel our transportation system, our industrial base, and
our homes. While we seek to expand traditional sources of domestic
136
THE BUDGET FOR FISCAL YEAR 1981
supply, we will probably never again be able to meet our total
demand for energy from domestically produced oil and natural gas.
Coal will become more and more important, and new and unconventional sources of energy must be discovered and developed as
part of our strategy to reduce imports of foreign oil.
As a result, energy supply spending has grown rapidly from 1977
to 1981, and the relative emphasis among the various supply programs has changed over that same period in order to assure that
our long-term energy supply needs are met. Spending on solar and
fossil energy programs now dominates the supply area of the energy
budget, whereas nuclear fission development was the principal government objective in 1977. The programs that support the overall
energy supply mission fall into three main categories:
• promotion of production by the private sector of synthetic
fuels and other domestic energy resources;
• support of research, development, and demonstration of new
or improved technologies to produce energy from domestic
sources; and
• direct Federal energy production.
Government spending for energy supply programs is designed to
complement the billions of dollars invested each year in the private
economy for exploration, research, development, production, and
delivery of energy.
Budget authority of $2.5 billion is proposed for energy supply in
1981, primarily for research, development, and demonstration.
Budget authority in 1980 is $39.6 billion, but this amount is not
comparable with the 1981 level because it includes two unusual
amounts—$15.0 billion of new borrowing authority for the Tennessee Valley Authority (TVA), and $20 billion for synthetic fuels
promotion. Periodically, the TVA seeks borrowing authority to finance new generating capacity; this is later repaid through revenues from TVA power customers. For synthetic fuels promotion,
the Congress has already provided $2.2 billion and the budget
requests an additional $17.8 billion in 1980 to cover the activities of
the Energy Security Corporation in the first phase of its program
to support synthetic fuels production.
Adjusting for these two large transactions, and for offsetting
receipts, the budget proposes an increased overall program level for
energy supply in 1981 compared with 1980. Excluding major receipt
increases, outlays for energy supply are estimated to be $6.3 billion
in 1981 compared with $6.0 billion in 1980.
In addition to these budget outlays, increased tax expenditures for
energy supply provided by the National Energy Act of 1978 and the
ENERGY
137
Principal Energy Supply Programs, including Tax Expenditures*
Actoal
' Powwt M a A t r t f At*nd*i w*J M i met PtOffam* o n
Principal Elements of Energy Supply Programs'
4
Pow*t
Mail*ti*fl A»«ttlti <HhJ Mfirtw FWfrriait «r* £xc1*4KL
E*Hm«t«
138
THE BUDGET FOR FISCAL YEAR 1981
proposed energy security program are estimated to reduce receipts
by $0.6 billion in 1981. Total tax expenditures for energy supply are
estimated to be $5.2 billion in 1981. Taken together, these sources of
financial support for energy supply provide a vigorous overall Federal effort to encourage energy supply from domestic resources.
Promotion of domestic production,—The administration has proposed new programs to encourage the production and use of domestic energy supplies in order to help reduce the level of U.S. oil
imports. These objectives are promoted through the Energy Security Corporation, the Energy Mobilization Board, energy impact
assistance, the biomass and alcohol fuels program, and the solar
energy and conservation bank.
The budget provides for the initiation of the Energy Security
Corporation (ESC) in 1980. The ESC will be the primary vehicle for
synthetic fuels promotion in the United States. Because of uncertainties about the price and availability of oil in the future, it is
appropriate for the Federal Government to absorb some of the
risks that are associated with establishing a synthetic fuels industry. It is proposed that the Corporation be authorized to make
direct loans, and enter into loan, price, and purchase guarantees
for a variety of synthetic fuels produced by private firms under
contract. The ESC is proposed as an off-budget Federal entity to
allow it to operate with autonomy. However, budget authority and
outlays reflecting the Corporation's activities will be included in
the budget totals. The Corporation will operate using phased appropriations as provided by the Congress. The first phase of Corporation activities is to be financed by a multiyear appropriation of
$20.0 billion. To give an early start to meeting the Nation's synthetic fuels goals, the Congress appropriated $2.2 billion to the
Department of Energy (DOE) in 1980 to support synthetic fuels
production. The administration proposes that the unobligated balance of this amount be made available to the ESC once it is
established. In addition, the budget requests a supplemental appropriation of $17.8 billion for the Corporation in 1980. Since most of
the Corporation's activities are expected to involve price, purchase,
and loan guarantees that are contingent on the price of oil, its
outlays are estimated to be only $12 million in 1980 and $16
million in 1981. Corporation outlays are expected to grow substantially in future years as significant volumes of synthetic fuels begin
to be produced.
One of the major impediments to increasing production from
domestic energy supplies is the delay caused by regulatory procedures applied to proposed energy projects at all levels of govern-
ENERGY
139
ment. The establishment of the Energy Mobilization Board will
assure that critically needed energy facilities receive prompt action
by regulatory agencies at each level of government. The Board will
be responsible for designating critical energy projects, establishing
timely schedules for the completion of permit decisionmaking, and
ensuring compliance. A supplemental request for 1980 and a
budget amendment for 1981 will be proposed later for the initial
activities and operation of the Board.
To harness a portion of the country's agricultural resources for
energy purposes, the administration has proposed a 10-year program of outlays, tax expenditures, loans, and loan guarantees to
promote conversion of grain, farm residues, and other biomass into
synthetic fuels such as ethyl alcohol and gasohol. The budget proposes a 10-year, $3 billion credit program, providing $300 million
annually for small and medium sized biomass facilities. The budget
also reflects an additional 10% investment tax credit for liquid and
gaseous fuels produced from biomass and exemption from the Federal gasoline tax for gasohol, as proposed by the administration
and enacted into law. With the enacted and proposed initiatives,
the production and use of alcohol for gasohol are expected to expand
rapidly.
To encourage the use of solar technology in residential and commercial buildings, the administration proposes creation of a solar
energy and conservation bank within the Department of Housing
and Urban Development. The bank would provide subsidies to
lenders who make long-term, below-market rate loans to finance
the use of solar energy systems. Budget authority of $35 million in
1980 and $150 million annually from 1981 through 1984 are proposed, assuming enactment of authorizing legislation. A similar
program, classified in the conservation subfunction, provides subsidies to lenders for conservation loans. Budget authority of $100
million in 1980 and $300 million in 1981 is requested for the
conservation program, which is expected to provide a total of $5.8
billion in direct subsidies between 1980 and 1990.
Research, development, demonstration, and applications programs.—Energy research, development, demonstration and applications programs can provide new and improved technologies that
will permit the greater use of domestic energy resources in a safe
and environmentally acceptable manner. Rising energy prices, tax
credits, and regulatory incentives encourage private development
and production of new and improved energy technologies that use
domestic energy resources. Federal support seeks to complement
the work of the private sector by supporting longer-term, high-risk
Federal research, development, and demonstration programs. Fed-
140
THE BUDGET FOR FISCAL YEAR 1981
eral programs support technologies such as solar, geothermal,
fossil, fission, and fusion. Most Federal energy research is funded
by the Department of Energy, but other agencies are also involved.
The administration is strongly committed to the belief that solar
energy can, over time, make a significant contribution as a clean
and renewable source of energy. The President announced on June
20, 1979, a national goal of deriving 20% of the Nation's energy
from solar sources by the year 2000. To assist in achieving this
goal, the administration is proposing research, development, and
demonstration projects and tax credits for solar applications.
Total budget outlays for solar development and application, including programs not in this function, are estimated to reach $1.1
billion in 1981, an increase of $235 million over 1980. In addition,
the revenue loss associated with tax expenditures for solar energy
is expected to be $307 million in 1981, almost $100 million more
than in 1980. Thus, the total Federal solar effort will exceed the
1980 level by more than 30%.
Department of Energy outlays for direct solar and solar-related
programs are expected to increase from $617 million in 1980 to
$656 million in 1981. In longer term research, emphasis will be
given to photovoltaics to develop the means to produce electricity
economically directly from solar energy. Further efforts will also
be undertaken to develop improved processes to convert organic
wastes and crops to fuels, to convert solar energy to heat energy
and electricity, and to convert the energy of the wind and the
oceans into useful energy. Near-term efforts include development
and demonstration projects in passive solar facilities, advanced
cooling methods, and process heat.
The budget also requests funds for the construction of a new 300
acre facility for the Solar Energy Research Institute at Golden,
Colo.
In addition to the Department of Energy, other Federal agencies
encourage the use of solar technologies in pursuit of their missions.
This approach takes advantage of the unique character of many
solar technologies, which are often especially suited to small, decentralized applications. These efforts will assist significantly in
meeting the overall Federal goal of stimulating a vigorous solar
industry.
Additional stimulus for solar energy use will result from the
National Energy Act and the oil import reduction program, which
make tax credits available to consumers and businesses to help
defray the high initial cost of solar equipment.
ENERGY
141
OUTLAYS AND TAX EXPENDITURES FOR SOUR ENERGY DEVELOPMENT
(In millions of dollars)
1980 estimate
Outlays for solar energy:
In the energy function:
Longer-term research and development
Demonstrations and applications
Solar energy and conservation bank
Biomass loans
Other solar related
Subtotal
In other functions
Total outlays for solar energy
Tax expenditures for solar energy
Excise tax exemption for gasohol
1981 estimate
447
170
29
50
55
460
196
130
41
80
751
907
128
207
879
1,114
208
31
307
48
Other renewable energy resources include magnetic fusion, geothermal, and hydroelectric energy from small dams.
The magnetic fusion program has grown rapidly since 1977, reflecting the administration's belief that fusion represents one of
the Nation's most important long term energy options. The program is directed at determining the technical and economic feasibility of producing energy through a controlled thermonuclear reaction, which has the potential of providing a relatively clean and
limitless source of power in the next century.
It is expected that technical feasibility will be demonstrated
within the next 3 to 4 years as a result of major experiments
already in progress. The Department of Energy is also assessing
other fusion concepts. The 1981 budget provides for $471 million in
outlays, an increase of $90 million over 1980.
Ultimately, a single concept will be chosen for a prototype fusion
power reactor, the forerunner of commercial fusion power reactors,
which would produce more energy than it consumes.
The objective of the geothermal program is to encourage the
development of hot underground brines and deep deposits of hot
brines mixed with natural gas as useful energy sources. A longerterm goal is to develop the Nation's large reserves of thermal
energy stored in hot underground rock formations. Outlays of $155
million are proposed for 1981. The budget also supports efforts to
help identify and mitigate environmental and regulatory barriers
that inhibit the use of domestic geothermal resources.
For the development of hydroelectric power from small dams, the
primary Federal role of granting permits and licensing will be
augmented through programs of the Department of Energy that
THE BUDGET FOR FISCAL YEAR 1981
142
finance feasibility studies, cost-sharing for commercial demonstrations, and a limited amount of engineering development and
assessment.
Fossil fuel programs have grown dramatically since 1977 primarily because of the administration's emphasis on the increased use
of coal, America's most plentiful energy resource.
The major new initiative in the administration's fossil energy
strategy is the Energy Security Corporation. Most of the resources
for the ESC will be directed to assisting private industry in financing synthetic fuel production facilities using existing technologies.
The goal of this Corporation will be to create 1.75 million barrels
per day of synthetic fuels and unconventional natural gas supplies
by 1990. In addition to the ESC, a variety of other programs are
proposed. These include oil shale and unconventional gas production tax credits, and an aggressive research program on fossil fuel
energy technologies.
OUTLAYS AND TAX EXPENDITURES FOR FOSSIL ENERGY
(In millions of dollars)
1980 estimate
Outlays for fossil energy:
In the energy function:
Energy Security Corporation
Department of Energy research, development and demonstration
Subtotal
In other functions:
Leasing programs
Coal mining research and development
Surface mining reclamation
Subtotal
Total, outlays
New tax expenditures for fossil energy (revenue loss)
1
1981 estimate
12
1,216
16
1,215
U28
IJZX
240
51
116
267
60
150
407
477
1,635
1J08
Ill
235
'Since 1977.
The principal Federal support for increasing domestic fossil
energy supplies is provided through the research, development, and
demonstration programs of the Department of Energy. Outlays for
fossil energy programs are estimated to be $1.7 billion, an increase
of $73 million over 1980. The programs are aimed at (1) accelerating the use of coal; (2) increasing the production of domestic oil and
gas; and (3) developing technologies that convert abundant domestic energy resources such as coal and oil shale to synthetic liquid
and gaseous fuels.
The budget proposes $275 million in outlays for continuation of
programs to develop technologies that allow coal to be used more
efficiently and cleanly. Included in this area are new combustion
ENERGY
143
systems such as fluidized bed combustion and the direct production
of energy from coal (magnetohydrodynamics), new power generation systems such as high-temperature turbines and fuel cells, and
improved environmental control technologies such as better scrubbers and precombustion coal cleaning.
In 1979, the administration proposed several initiatives, including tax credits and pricing incentives, to accelerate production of
oil, gas and oil shale. To complement market incentives, the budget
includes $95 million in outlays to accelerate technologies that
would tap our large reserves of unconventional natural gas and
unrecovered oil and would develop our vast oil shale deposits. In
view of the substantial technical ability of the industry and the
existence of strong financial incentives, the funding requested in
this area continues the trend initiated last year of developing basic
scientific and engineering principles rather than field demonstrations of practical technology.
While the ESC will be responsible for financing commercial synthetic fuel production facilities, the Federal Government's development and demonstration of these technologies will continue to be
the responsibility of the Department of Energy. The budget both
supports a number of important developmental synthetic fuel
plants and expands basic and applied research in synthetic fuels
technology. The budget requests $431 million in budget authority
for initiating construction of two demonstration plants for converting coal into clean solid and liquid fuels using solvent refined coal
technology, and for constructing a demonstration plant for converting coal into pipeline-quality gas. The budget also supports two
large pilot plants for converting coal to liquid fuels using the donor
solvent and H-coal processes.
The nuclear fission programs continue the development of new
technologies related to all aspects of nuclear power: resource assessment, enrichment, reactor technology, and waste management.
The program also provides a technical base in support of the administration's nuclear nonproliferation policy.
Since 1977, the budget for nuclear research and development
programs has been altered significantly in order to fit better into
the administration's overall national energy policy. In the past,
nuclear programs concentrated on the development of new fission
technologies for the distant future, such as breeder reactors, with
less emphasis on solving the current problems of nuclear power.
The administration believes that the current problems must be
solved, since nuclear power is an important energy option for the
United States. Therefore, the administration has placed increased
emphasis on waste management as a problem that must be solved
to maintain a strong nuclear power industry in this country, has
144
THE BUDGET FOR FISCAL YEAR 1981
recognized the need for technical improvements in commercial
light water reactors, and has concentrated on fuel enrichment
techniques that will lower the cost of nuclear-generated electricity.
Increases to achieve these objectives have been offset by reduced
emphasis in this and past administration budgets on advanced
reactors and reprocessing technology.
In this budget, the administration proposes to further change the
emphasis of fission programs in three ways. The first change is a
decreased emphasis on alternative reactor concepts. Work on the
high-temperature gas cooled reactor and the gas cooled fast reactor
are proposed for termination in 1981.
The second change in the program comes in response to the
accident at Three Mile Island. Budget authority for reactor safety
and technology associated with light water reactors is proposed to
increase from $25 million in 1980 to $40 million in 1981.
The third change in the fission program comes about because of
increased evidence that breeder reactors will not be economic until
the year 2020 or later. Accordingly, the administration proposes to
reduce the scope of the liquid metal fast breeder reactor program
to a level that better reflects the expected need for this technology.
No funds are proposed for the continuation of the Clinch River
breeder reactor. Budget authority of $320 million is proposed for
the liquid metal fast breeder reactor program in 1981.
The budget supports an extensive program to identify and assess
suitable sites to serve as a permanent nuclear waste disposal facility. In addition, remedial work is underway to decontaminate various sites where radioactive materials have been handled previously. Again this year, the administration proposes legislation to establish temporary spent fuel storage facilities away from reactors.
The budget continues to support our nuclear nonproliferation
objectives with programs to develop lower enriched fuels, which
cannot be used for nuclear weapons, for research reactors and
programs to demonstrate that light water reactors can continue to
be an economic alternative to breeder reactors well into the next
century.
Total outlays for nuclear fission research and development under
existing law are estimated to be $1,048 million in 1981, a decrease of
$221 million from 1980. While increases occur in waste management
and light water reactor technology, major decreases occur because of
the reduction in the liquid metal fast breeder reactor program and
discontinuation of the gas reactor programs.
Research on the environmental effects of energy production and
use is conducted with an emphasis on determining the human
ENERGY
145
health and ecological effects of developing technologies, such as
coal liquefaction and other synthetic fuels technologies. Additional
funding is proposed for research to determine whether increasing
amounts of carbon dioxide in the atmosphere cause changes in the
Earth's climate. Over the past several years, the Department of
Energy and the Environmental Protection Agency have worked
closely together to improve the effectiveness of research on pollution control.
Direct production programs.—The Government's direct energy
production programs include producing enriched uranium for nuclear power plants, producing oil from the naval petroleum reserves, distributing electricity through five power marketing administrations, and generating and transmitting power through the
Tennessee Valley Authority.
The Department of Energy plans to continue to operate three
existing gaseous diffusion uranium enrichment plants. These plants
produce sufficient enriched uranium to meet the Federal Government's own requirements, as well as the needs of domestic nuclear
power plants and anticipated foreign orders. Proposed outlays of
$1.5 billion will continue ongoing work to increase enrichment
capacity and make plant operation more efficient. These funds also
provide for the continued construction of the new centrifuge enrichment plant at Portsmouth, Ohio. These outlays will be largely
offset by uranium enrichment receipts, estimated to be $1.3 billion
in 1981.
In 1976, the Congress directed that oil production be increased at
the naval petroleum reserves, located in California and Wyoming, in
order to reduce U.S. dependence on imported oil. Oil produced from
the reserves is sold at competitive prices, with receipts deposited in
the Treasury. Government production from the reserves is expected
to be about 160,000 barrels per day, with receipts estimated at $1.9
billion in 1981. The budget requests $145 million in new budget
authority for development and production costs at the California
and Wyoming reserves.
The President has proposed legislation to open the national petroleum reserve in Alaska for oil and gas exploration and development through leasing as the fastest way to find any commercial
quantities of these resources in the reserve with adequate protection for wildlife and other values. Accordingly, the budget proposes
that Government exploration to define the potential for oil and gas
resources at the Alaska reserve be concluded after the 24 exploratory wells funded for drilling through 1980 are completed. Ade-
146
THE BUDGET FOR FISCAL YEAR 1981
quate information has been collected to formulate recommendations to the Congress on the future use of the reserve. Of the 1980
appropriation, $18 million that was to prepare for drilling four
additional wells in 1981 is recommended for rescission. New budget
authority of $45 million is requested in 1981 for contract closeout
costs and $9 million is proposed for later transmittal if leasing is
authorized at the Alaska reserve.
Net outlays for power marketing activities are estimated to increase from $1.6 billion in 1980 to $1.8 billion in 1981. Approximately 95% of these outlays are for continuation of the nuclear
power plant construction program of the Tennessee Valley Authority (TVA). TVA, the Nation's largest electric utility, is currently
operating one nuclear plant, building six others, and marketing
about 5% of the electricity generated in the United States. Construction and operation of transmission facilities at the five Federal power marketing administrations and the administrative expenses of the rural electrification and telephone revolving fund
make up the balance of power marketing outlays.
In addition to its basic electric utility responsibilities, TVA is
aggressively demonstrating the use of new energy sources as well
as more efficient use of existing sources. For 1981, it is estimated
that nearly $153 million will be obligated to demonstrate ways to
use renewable energy resources such as wood, wind, and solar.
About $30 million is planned for energy technology projects such as
fuel cells for utility systems, and coal gasification plants to demonstrate that existing energy resources can be used in more efficient
and environmentally acceptable ways. Finally, TVA plans to obligate over $133 million to demonstrate the potential of energy conservation through home insulation, commercial weatherization, employee ride sharing, and other conservation programs.
The rural electric and telephone revolving fund is administered
by the Rural Electrification Administration (REA). New insured
loans to rural borrowers during 1981 are estimated to be at least
$850 million for electric service to rural areas, and at least $250
million will be provided to furnish and improve telephone service
to rural areas.
In addition, the REA proposes to finance the construction and
operation of generating plants, and electric transmission and distribution systems in rural areas. Under the Federal credit control
program, the gross obligations for new loans approved and new
loan guarantee commitments for 1981 are proposed to be included
in the appropriation bills approved by the Congress.
147
ENERGY
CREDIT PROGRAMS—ENERGY
(In millions of dollars)
Program
1979
actual
1980
estimate
Synthetic fuels promotion:
Loan guarantees:
New loans
Net loan guarantees
1981
estimate
2,300
2,300
2,000
2,000
50
50
Net loan outlays
50
50
Loan guarantees:
New loans
Net loan guarantees
250
250
250
250
24#
12
24
12
1
1
363
351
252
248
1,105
—899
1,325
-1,112
1,404
-1,210
206
212
194
2,650
2,650
4,260
4,260
4,845
4,845
Biomass:
Direct loans:
New loans
Repayments, sales, and adjustments ( - )
Geothermal development and other energy:
Direct loans:
New loans
Repayments, sales, and adjustments ( — )
*
Net loan outlays
Loan guarantees:
New loans
Net loan guarantees
Off-budget Federal entity—Rural Electrification: Administration:
Direct loans:
New loans
Repayments, sales and adjustments ( - )
Net loan outlays
2
Loan guarantees:
New loans
Net loan guarantees
* $500 thousand or less.
• includes sales of direct loans.
Includes guarantees of direct loans.
2
Energy conservation.—Conservation is the principal component
of the administration's energy strategy. The range of alternatives
for energy conservation is very broad. Realistic oil and natural gas
pricing and effective regulatory policies (such as automobile fuel
efficiency standards) are integral components of any meaningful
conservation strategy. Conservation is also promoted by tax credits
and by spending programs for conservation technology development, State and local grants, the Government's public
information campaign, conservation investments in Federal build-
148
THE BUDGET FOR FISCAL YEAR 1981
ings, and the proposed utility oil use reduction program. The following chart shows the rapid growth in Federal energy conservation spending from 1977 to 1981.
Federal Energy Conservation Programs
$ Billions
S BHlioni
-4
4 •
3
—3
-
Tax Expenditures
2-
— 2
Other
Federal
>
Budget Outlay*
Dept. of
Energy
1980
1981
Etfimaft
Outlays for conservation programs in the energy function rise
sharply from $0.3 billion in 1979 to $0.6 billion in 1980, and $1.2
billion in 1981. As the following table shows, when full account is
taken of energy-related programs in other functions, budget outlays
for energy conservation are estimated to increase from $0.9 billion in
1980 to $2.0 billion in 1981.
Total tax credits for energy conservation are estimated to be
almost $0.7 billion in 1981. These include business and residential
conservation tax credits. The private investment corresponding to
these credits is estimated to be over $6.0 billion in 1981.
Technology development—Federal programs in this area help
develop a better understanding of, and solution for, common technical problems in energy conservation. The programs include projects in cooperation with the private sector to develop energy
saving technologies where there are large potential energy savings
but severe technical risks and long lead times. In 1981, outlays for
conservation technology are estimated to total $279 million, up
ENERGY
149
OUTLAYS AND TAX CREDITS FOR ENERGY CONSERVATION
{in millions of dollars)
1980
estimate
Outlays for energy conservation:
In the energy function:
Conservation technology
Conservation grants
Public information campaign and other
Residential and commercial conservation*
Utility oil use reduction *
Subtotal, energy function
In other functions:
Mass transit and automobile efficiency*
Conservation investments in Federal buildings
Total, outlays
Tax credits for energy conservation (revenue loss)
1981
estimate
246
335
11
14
1
279
481
34
357
22
608
1,172
100
224
617
240
932
2,029
702
739
•Proposed in 1979 energy initiative.
13% from 1980. Proposed budget authority for these programs
remains at the 1980 level because of the increased incentives that
now exist for additional private investment in improved energyefficient technologies.
The 1981 conservation technology budget consists of programs in
four areas: buildings and community energy systems, industrial
energy use, transportation, and small-scale technology. The buildings and community systems program will continue development of
efficiency standards for buildings, conduct research to increase the
energy efficiency of consumer products, and assist communities in
reducing their energy consumption. The 1981 industrial conservation program includes key efforts in industrial waste energy reduction, cogeneration, and process efficiency improvements. Continued
development of advanced automobile engines and electric vehicles
are proposed. Finally, the budget supports development, demonstration, and encouragement of small-scale energy-related technologies that make use of renewable resources or conserve
nonrenewable resources.
Conservation grants.—Department of Energy grants provide
weatherization assistance to low-income persons and to public or
nonprofit schools and hospitals. These groups do not benefit from
existing tax credits and might not make investments in conservation equipment without assistance. The administration requests
that budget authority for low-income weatherization be continued
at $200 million and that the schools and hospitals program be
increased to $202 million in 1981, compared to $144 million in 1980.
150
THE BUDGET FOR FISCAL YEAR 1981
Proposed legislation for Energy Management Partnership Act
grants will consolidate State energy conservation planning and
"outreach" programs for public education, and extend the program
to include State emergency preparedness and supply planning activities. This will give States more flexibility to use these funds to
meet their needs. The legislation will also provide $50 million in
grants to support local government energy conservation activities.
This new program will be managed by the Department of Energy
in consultation with the Department of Housing and Urban Development. Budget authority of $152 million is proposed for these
initiatives, including $50 million for the local grants.
Total outlays for conservation grants are estimated to increase
from $336 million in 1980 to $481 million in 1981.
Public information.—A new, national education campaign will
give consumers information about the country's energy problems
and explain how they can use energy more efficiently and take
advantage of tax credits and other incentives. Outlays for the
program are proposed to rise from $4 million in 1980 to $33
million in 1981.
Utility oil use reduction.—The administration has proposed a
program to reduce the use of petroleum for generating electric power
and our dependence on imported energy sources. The Nation's
electric utilities now consume 1.5 million barrels of petroleum each
day.
Conservation investments in Federal buildings.—High priority
has been placed on conservation investments in Federal buildings.
In 1981, $308 million in budget authority is requested for making
such investments in the 8 departments or agencies that consume
91% of the energy used in Federal buildings. Other Federal establishments will also increase their conservation efforts. Through
1981, over $1.25 billion will be provided toward meeting the President's goal of increasing the energy efficiency of existing Federal
buildings by 20% by 1985. Most of these funds are classified in
functions other than the energy function.
Residential and commercial conservation.—This program helps to
finance conservation investments in residential and commercial
buildings. The administration has also proposed that utilities be
allowed to finance conservation investments in homes and businesses. Grant programs are proposed to support State training and
certification of home energy auditors, and to demonstrate more
sophisticated energy auditing techniques.
ENERGY
151
Energy emergency preparedness.—The events of 1973-79 make it
imperative that the Nation be prepared to deal with disruptions in
energy supplies. Development of the strategic petroleum reserve is
the major program in this area. Preparation of standby gasoline
rationing plans also contribute to emergency energy preparedness,
and is discussed in the energy information, policy, and regulation
section below.
The strategic petroleum reserve currently has $4 billion available
for oil acquisitions, $2.3 billion of which is proposed for reappropriation in 1981. The administration continues to believe that the
level of protection afforded by a billion-barrel reserve is needed.
Current plans call for the completion of 750 million barrels of
government storage in the late 1980's. No oil purchases for the
strategic petroleum reserve have been made since March 1979, but
purchases could be resumed in 1980 depending upon international
market conditions. The budget assumes that deliveries may be
resumed in June, 1980, at a level of 100,000 barrels per day. Additional budget authority of $9 million in 1980 and $15 million in
1981 is proposed for regional petroleum reserves for the east coast,
Hawaii, and Puerto Rico. Budget authority of $2.4 billion is proposed for energy emergency preparedness in 1981. Net outlays are
estimated to be $1.3 billion in 1981, compared to $0.8 billion in 1980
and $1.0 billion in 1979.
Energy information, policy, and regulation.—Establishing and enforcing a sound set of energy policies and regulations, based on
adequate information, are the objectives of this major mission.
Budget authority of $1.2 billion is proposed in 1981, compared to
$1.1 billion in 1980. Outlays are estimated to rise from $0.9 billion
in 1980 to $1.2 billion in 1981. Significant increases in funding and
personnel are proposed for the Nuclear Regulatory Commission for
1980 and 1981 to correct the weaknesses uncovered by the accident
at Three Mile Island.
Energy information and policy.—Three offices within the Department of Energy are primarily concerned with collecting energy
information and developing energy policy. The Energy Information
Administration collects data from the private sector on energy
production, consumption, imports, reserves, and other factors
needed for informed policy decisions. The Office of Policy and
Evaluation is responsible for overall policy development and coordination. The Office of International Affairs helps formulate and
carry out international energy policy. Outlays for these three offices are estimated at $144 million in 1981, compared to $127
million in 1980, with increases due mainly to planned improve-
152
THE BUDGET FOR FISCAL YEAR 1981
ments in the information collection programs of the Energy Information Administration.
Regulation.—The purpose of energy regulation is to assure that
national energy needs are satisfied safely, efficiently, and equitably. These objectives are important in both the 1980 and 1981
budgets, which provide for implementation of regulatory authorities in various laws, including those in the National Energy Act as
well as more recent energy initiatives.
The Federal Energy Regulatory Commission, an independent
agency in the Department of Energy, will continue the important
work of carrying out the requirements of the Natural Gas Policy
Act. During the first year under the new act, the Commission
successfully implemented the wellhead pricing provisions. Over the
next year, incremental pricing, which assures that industrial customers pay for higher cost gas, will be put into effect. The 1981
budget total proposed is little changed from 1980. Spending for
implementation of the Natural Gas Policy Act will be less, offset by
more spending to assure compliance with pricing ceilings and to
further reduce case backlogs.
The Economic Regulatory Administration in the Department of
Energy will continue to administer legislation that encourages industrial energy conservation to reduce dependence on oil.
The Economic Regulatory Administration also administers the
Emergency Petroleum Allocation Act that is intended to ensure
equitable petroleum pricing and allocation. Under that act, domestic crude oil prices are being gradually increased to reduce the
effect on consumers when full decontrol occurs on September 30,
1981. The 1981 budget therefore reflects small decreases from the
1980 level in anticipation of decontrol at the end of 1981. Large
decreases are anticipated in 1982 after controls have expired and
regulatory activities are reduced.
Development of standby plans for gasoline rationing is now underway. The rationing system could be used in the event of a
serious disruption in world petroleum markets. In 1980, $43 million
in budget authority is requested to prepare ration checks and
develop information and other systems that would be needed to put
the program into effect in an emergency.
The Nuclear Regulatory Commission regulates the siting, construction, and operation of all civilian nuclear reactors; nuclear
fuel storage; and disposal of radioactive waste materials. It also
conducts a nuclear safeguards program to prevent the loss or diversion of nuclear materials, and a research program to produce information needed to confirm the data and analytic methods that form
the basis for nuclear licensing standards and regulations.
ENERGY
153
The administration believes that safe nuclear energy generating
capacity is critically important to America's energy future. The
activities of the Nuclear Regulatory Commission will be redirected
and reformed as a result of the Kemeny Commission Report on the
accident at Three Mile Island to assure that nuclear energy is as
safe as possible.
In 1981, the Commission will place primary emphasis on enforcing the new requirements for safety, operator training, emergency
planning, based on lessons learned from the nuclear accident at
Three Mile Island. The lessons learned from the accident have
resulted in increased research on risk assessment and on accidents
involving small losses of coolant. Greater emphasis is also being
placed on minimizing human error as a cause of accidents.
The Commission will also continue to streamline its organization
to make the regulatory process more responsive to the goals of
improved reactor safety and reliable power. This process will include increased inspection activities and closer cooperation with
State regulatory bodies. Waste management activities, including
preparation of standards for licensing waste repositories, and closer
monitoring and inspection of materials facilities other than reactors, are other important priorities. Total outlays for the NRC are
proposed to increase from $307 million in 1980 to $476 million in
1981.
THE BUDGET FOR FISCAL YEAR 1981
154
NATURAL RESOURCES AND ENVIRONMENT
National Needs Statement
• Protect the public health and welfare by insuring a clean
environment with special emphasis on abating pollution
of the land, air and water through control of hazardous
wastes, injurious pesticides, and toxic substances.
• Provide for the conservation and development of public
lands, water, timber, minerals, and other natural resources.
• Preserve natural areas, historic sites, and fish and wildlife.
• Improve our knowledge and understanding of the atmosphere, the Earth's structure, environment, and resources.
Intelligent stewardship of America's natural resources and environment is a prime responsibility of government at all levels. As
energy and economic development proceeds throughout the Nation,
the resources held in common—our air, water, and public lands—
must be conserved and enhanced by every generation of
Americans.
The Federal budget must allocate funds with particular care to
assure that the Nation's resources are developed and protected so
as to provide a sturdy foundation for the Nation's future economic
security and environmental well-being.
To protect the environment and to assure a sound balance between the development and conservation of our natural resources,
the budget proposes $13.3 billion in budget authority in 1981, an
increase of 5% over the 1980 amount.
In the environmental area, the 1981 budget emphasizes the protection of human health from the effects of hazardous waste and
other toxic pollutants. Recent evidence indicates that hazardous
wastes could pose very serious threats to the health and safety of
many communities. Accordingly, the budget seeks large increases
in the hazardous waste program of the Environmental Protection
Agency. This program promotes proper management of chemical
wastes by assessing the dangers posed by uncontrolled dump sites
and by enforcing statutes regulating the disposal, treatment, and
storage of wastes. To get on with the job of cleaning up uncontrolled dump sites, the budget also requests funding for the administration's superfund proposal for a cleanup fund of up to $1.6
billion financed primarily by industry fees.
In addition, the budget maintains the administration's policy of
steady, broad-based support for critical environmental protection
NATURAL RESOURCES AND ENVIRONMENT
155
activities. This policy is put into effect by: increasing State grants
for the control of hazardous wastes and of air and drinking water
pollutants; strengthening the scientific data base on the health
effects of environmental pollution; bringing Federal facilities into
compliance with Federal, State, and local pollution laws; enhancing
efforts to assure the environmental soundness of coal surface
mining; focusing agricultural conservation efforts on reducing nonpoint source pollution; and strengthening the enforcement of endangered species legislation.
The budget stresses more efficient and more environmentally
sound development of resources on Federal lands. This emphasis
reflects an overall budgetary strategy of investing prudently in the
Nation's future economic and energy security. The 1981 budget
emphasizes funding for coal leasing, for Outer Continental Shelf oil
and gas lease sales, for timber sales and reforestation activities,
and for enhancing the productivity of public domain grazing lands.
Without impairing long-term commitments, the 1981 budget
seeks only moderate increases in funds for direct and federally
assisted land acquisitions and for sewage treatment plant construction grants, and directs water development planning toward highpriority projects, such as hydropower.
Pollution control and abatement—The mission of controlling and
reducing the pollution of air, water, and land is carried out both
directly by the Federal Government and by State and local governments, with Federal financial and technical assistance. Outlays for
this mission are estimated to increase by 4%, from $4.9 billion in
1980 to $5.1 billion in 1981.
Regulatory and research programs.—The administration proposes
budget authority of $1.4 billion in 1981 for the regulatory and
research programs of the Environmental Protection Agency (EPA),
an increase of 78% over 1977.
The budget provides significant increases for the hazardous
waste program, to protect human health and safety from chemical
pollution on the land and pollution of underground water supplies.
EPA will devote increased efforts to assessing the scope of the
problem, and will promulgate regulations to insure the proper
transportation, treatment, storage and disposal of hazardous
wastes. In addition, the agency will step up enforcement of existing
statutes to stop improper disposal activities and require remedial
actions. EPA will discharge these responsibilities in coordination
with State governments.
THE BUDGET FOR FISCAL YEAR 1981
156
NATIONAL NEED: USING AND PRESERVING NATURAL RESOURCES AND IMPROVING THE
ENVIRONMENT
(Functional code 300; in millions of dollars)
Major missions and programs
1979
actual
1980
estimate
BUDGET AUTHORITY
Pollution control and abatement:
Regulatory and research programs
Oil and hazardous substance liability fund
(proposed)
Oil pollution funds:
Existing law
Proposed legislation
Sewage treatment plant construction
grants
4,200
3,400
Subtotal, pollution control and abatement
5,306
Water resources:
Existing law
Proposed legislation
Subtotal, water resources
Conservation and land management:
Management of national forests, cooperative forestry and forestry research
Management of public lands
Mining reclamation and enforcement
Conservation of agricultural lands
Other, including offsetting receipts
Subtotal, conservation and land management
Recreational resources:
Land and water conservation fund:
Existing law
Proposed legislation
Urban recreation grants
Operation of recreational resources
Subtotal, recreational resources
Other natural resources:
Existing law
Proposed legislation
Subtotal, other natural resources
Deductions for offsetting receipts
Total, budget authority
lt091
1,241
1981
estimate
1,317
1982
estimate
lr339
1983
estimate
1,373
250
375
500
13
- 1 3
- 8
8
- 8
8
3,700
4,000
4,400
4,686
5,267
5,714
6,273
3,621
3,777
4,136
5
5,069
3
5,143
3,621
3,777
4,141
5,072
5,143
1,811
429
115
522
-610
1,917
456
181
543
-526
1,801
458
188
554
-677
1,870
476
256
553
-828
1,960
492
268
537
-1,015
2,267
2,571
2,324
2,328
700
- 3 0
125
1,074
725
- 3 0
125
1,116
15
45
2,242
767
539
20
1,046
125
1,034
610
- 3 0
125
1,027
1,833
1,699
1,732
1,869
1,936
1,364
1,400
1,442
21
1,522
23
1,624
24
1,364
1,400
1,463
1,546
1,648
-1,183
-1,445
-1,622
-1,783
-1,875
13,207
12,687
13,306
14,745
15,366
NATURAL RESOURCES AND ENVIRONMENT
157
NATIONAL NEED: USING AND PRESERVING NATURAL RESOURCES AND IMPROVING THE
ENVIRONMENT—Continued
{functional code 300; in millions of dollars)
Major missjons and programs
1979
actual
1980
estimate
OUTLAYS
Pollution control and abatement:
Regulatory and research programs
Oil and hazardous substance liability fund
(proposed)
Oil pollution funds:
Existing law
Proposed legislation
Sewage treatment plant construction
grants
13
Subtotal, pollution control and abatement
Water resources:
Existing law
Proposed legislation
Subtotal, water resources
Conservation and land management:
Management of national forests, cooperative forestry and forestry research
Management of public lands
Mining reclamation and enforcement
Conservation of agricultural lands
Other, including offsetting receipts
Subtotal, conservation and land management
Recreational resources:
Land and water conservation fund
Urban recreation grants...
Operation of recreational resources
Subtotal, recreational resources
Other natural resources:
Existing law
Proposed legislation
Subtotal, other natural resources
Deductions for offsetting receipts
Total, outlays
•500 thousand ot less.
1981
estimate
1982
estimate
1983
estimate
1,106
1,131
1,167
45
205
333
31
19
-13
16
-16
—8
8
3,756
3,900
3,950
4,100
4,150
4,706
4,922
5,107
5,436
5,650
3,897
4,214
4,118
3
4,552
2
4,730
1
3,897
4,214
4,121
4,554
4,731
1,536
395
48
559
-654
1,662
448
114
572
-541
1,755
444
158
562
-673
1,935
461
182
553
-841
1,950
476
215
545
— 1,030
1,884
2,256
2,245
2,291
2,157
600
913
451
74
938
489
74
936
610
92
999
670
99
1,044
1,513
1,463
1,499
1,701
1,813
1,273
1,366
1,449
19
1,527
22
1,628
22
938
*
991
1,273
1,366
1,468
1,549
1,650
— 1,183
-1,445
-1,622
-1,783
-1,875
12,091
12,776
12,819
13,748
14,126
158
THE BUDGET FOR FISCAL YEAR 1981
Relative to 1980, funding requested for hazardous waste is increased by 47% and personnel by 97%. Budget authority for the
development of the hazardous waste regulations is increased from
§81 million in 1980 to $111 million in 1981. Furthermore, $26
million in 1981 budget authority is requested for research and
development in support of the regulatory effort. Budget authority
for grants to assist States to develop hazardous waste control programs is increased from $19 million in 1980 to $30 million in 1981.
Hazardous waste enforcement activities are increased by $6 million
to a level of $10 million.
In addition to increasing grants to States to support the control
of hazardous wastes, air and drinking water pollutants, the administration has also proposed legislation that would give States the
flexibility to integrate two or more of the State environmental
program grants administered by EPA. The key feature of this
legislation is that States would have the flexibility to transfer up to
20% of certain grants to deal with problems that they consider
high priority. When the enabling legislation is enacted, the administration will request additional funds for this program.
In support of the President's energy programs, the budget proposes $16 million in 1981 budget authority for an EPA energy
initiative to insure proper environmental standards for new energy
technologies and development projects and to improve the accuracy
of automobile fuel economy standards.
The President, in his 1979 environmental message, established a
10-year, $13 million research program to assess the problem of acid
rain and seek methods to prevent it. Recent research has shown
that acid rain could threaten property, crops, and wildlife. EPA is
participating in a committee to coordinate this multiagency
program.
The 1981 request includes $20 million in new appropriations for
cost-sharing under the rural clean water program to solve agricultural nonpoint source pollution in rural areas. This funding is in
addition to the $50 million appropriated for the program in 1980.
Oil and hazardous substance liability fund.—The programs discussed above relating to hazardous wastes address current and
future waste disposal sites. To deal with inactive sites that pose
threats to the environment and public health, the administration
has proposed legislation to establish a cleanup and emergency response fund of up to $1.6 billion over 4 years. The fund, which
would also be used to provide emergency response to oil and hazardous substance spills, is to be financed primarily through fees
paid by industry.
Sewage treatment plant construction grants.—Since 1972, the Federal Government has provided over $31 billion for the planning,
NATURAL RESOURCES AND ENVIRONMENT
159
design, and construction of municipal sewage treatment facilities.
Federal grants cover 75% of the cost of facility construction. The
budget requests budget authority of $3.7 billion for the program in
1981. This request, together with funds available from prior years,
is estimated to make over $6.6 billion available to the States for
obligation in 1981.
Tax expenditures.—The Revenue Act of 1978 allows pollution
control facilities, which are amortized over 5 years, to qualify for
the full 10% investment credit, unless they are financed with taxexempt bonds. A 5% credit is allowed for tax-exempt financing.
The investment tax credit provisions for pollution control facilities
are estimated to result in a 1981 tax expenditure of $15 million.
The exclusion of interest paid on pollution control bonds from
taxable income also results in a tax expenditure. The facilities
financed by these bonds are privately owned, even though the
bonds are nominally issued by State or local governments. The
resulting 1981 tax expenditure is estimated at $0.5 billion. Additional tax expenditures result from allowing certain payments
made by customers of water and sewage disposal facilities to finance construction of new facilities to be treated as contributions
to capital rather than income. This benefit is also available to gas
and electric utilities. These exclusions will result in an estimated
1981 tax expenditure of $0.1 billion.
Water resources.—These programs, conducted by the Army Corps
of Engineers, Interior's Water and Power Resources Service, Agriculture's Soil Conservation Service, and other agencies, foster development of water resources while preserving the quality of the
environment. Program benefits include: flood control, municipal
and industrial water supply, irrigation of agricultural lands, water
conservation, inland waterways and harbors, hydroelectric power,
recreation and wildlife preservation, and erosion control.
Outlays for water resources programs are estimated to decrease
from $4.2 billion in 1980 to $4.1 billion in 1981. Outlay increases for
operations and maintenance are more than offset by decreases in
new and ongoing construction.
Because of earlier than anticipated costs accrued on major contracts for ongoing projects, a supplemental of $92 million is requested to finance Corps of Engineers construction programs in
1980. This supplemental will keep construction projects on
schedule.
The budget provides for completion of all major features and
project outputs on schedule. However, funding for the less essential
features of about 50 projects, such as campsite preparation and the
finishing of visitor facilities, will be postponed.
160
THE BUDGET FOR FISCAL YEAR 1981
No new starts for water resource construction are specifically
recommended in the 1981 budget because the independent review
of projects by the Water Resources Council must await authorizing
legislation. The administration will propose funding for new starts
as soon as such reviews can be legally conducted.
On June 6, 1978, after a major study of Federal water policy, the
President announced new and comprehensive proposals to:
• improve the planning and management of Federal water resources programs;
• move forward promptly with water projects that are economically efficient, safe, and environmentally sound;
• provide a new national emphasis on water conservation;
• improve Federal-State cooperation and State water resources
planning; and
• give enhanced emphasis and attention to environmental
quality.
The 1981 budget continues to press toward these goals.
Budget authority of $140 million is requested for the planning
programs of the Corps of Engineers and the Water and Power
Resources Service to examine specific solutions for water resources
problems throughout the country. These programs continue to be
oriented toward projects with high priority outputs such as hydropower, urban flood protection, water supply and commercial navigation. Hydroelectric power studies have been given particular emphasis in the 1981 budget. A 1980 supplemental of $3 million will
be requested to initiate hydroelectric project studies by the Water
and Power Resources Service. In 1981, the Corps of Engineers and
Water and Power Resources Service will emphasize studies to examine the potential benefits from adding hydroelectric generating
capacity at existing Federal facilities.
The budget provides $2.5 billion in 1981 budget authority for
continuing construction of water resource projects of the Water
and Power Resources Service, Corps of Engineers, and Soil Conservation Service. The comparable amount in 1980 was $2.4 billion.
The 1981 request continues work on about 250 major projects that
were started in prior years. Funding is also requested for major
project rehabilitation and work to ensure the safety of existing
Federal dams.
Budget authority of $1.1 billion is requested for operation and
maintenance of Federal water resources projects in 1981, compared
with $1.0 billion in 1980. The budget targets these funds on projects
that produce high-priority outputs—such as hydroelectric power—
and defers operation and maintenance on projects with lower priority outputs, such as maintenance on lightly-used navigation projects or projects whose primary benefit is recreation.
NATURAL RESOURCES AND ENVIRONMENT
161
The budget proposes for later transmittal $5 million of 1981
budget authority to initiate construction of two demonstration
plants for saline water conversion. This proposal is contingent on
passage of the pending administration proposal for non-Federal
cost sharing on such plants. The budget also requests 1981 funding
to complete the non-Federal dam inspection program. The administration will propose legislation authorizing continued maintenance
of an up-to-date inventory of non-Federal dams.
Conservation and land management-—Federal civil and defense
agencies administer about 762 million acres or one-third of the
land area of the United States. The Federal lands administered by
civil agencies are managed to provide a balance among various
considerations: recreation, wilderness preservation, wildlife habitat,
environmental quality, watershed protection, timber production,
mineral extraction, and range utilization.
In 1978, the administration took steps to protect and preserve
lands of outstanding national interest in Alaska by creating 56
million acres of national monuments, initiating steps to establish
permanent wildlife refuges on 39 million acres of land, and withdrawing these areas and an additional 21 million acres from mineral development and from selection for State ownership. These actions will insure the preservation of the extraordinary scientific,
historic, scenic, cultural, and wildlife values of the land. Much of
the Federal land and extensive Outer Continental Shelf areas bordering Alaska will continue to be open for development, including
timber, mineral, and oil and gas development. These actions will
allow for balanced growth in Alaska, as well as preservation of
unequaled national treasures.
Total outlays for the mission of conservation and land management are estimated to be $2.2 billion in 1981, $11 million below the
1980 level.
Management of national forests, cooperative forestry and forestry
research.—The Forest Service administers the national forest
system, covering 188 million acres; conducts a comprehensive forest
and range research program; and engages in forestry programs
with States and private landowners. Excluding Forest Service payments to States (which are included in the general purpose fiscal
assistance function) and funds for fighting forest fires, proposed
1981 budget authority for these activities totals $1.8 billion. As
usual, supplemental funds for uncontrollable costs of firefighting
will be requested in whatever amounts are required.
The budget proposes national forest timber sales of 11.9 billion
board feet compared with 11.7 billion board feet proposed in the
President's 1980 budget and 12.2 billion board feet provided in the
1980 appropriations. This level of timber sales will achieve the
162
THE BUDGET FOR FISCAL YEAR 1981
maximum environmentally acceptable harvest that can be economically justified with present policies. Although further increases in sales are possible, they would be uneconomic because the
costs of the sales would exceed the value of the timber harvested.
The budget also requests funding to carry out the President's
directive to accelerate land management planning on selected national forests to determine the feasibility of increasing the harvest
of mature timber through selective departure from the current
"nondeclining even flow policy," Therefore, modest increases in
timber sales and funding for land management planning are projected in 1983, 1984, and 1985. Significant increases in timber supplies by 1985 should result from this approach.
The appropriations requested for reforestation and timber stand
improvement will permit 195,000 acres of reforestation and 179,000
acres of timber stand improvement. An additional 265,000 acres of
reforestation and 174,000 acres of timber stand improvement will
be made with deposits from timber purchases and by the Young
Adult Conservation Corps. The budget thus provides for a total of
460,000 acres of reforestation (including replanting timber harvest
areas cut during 1981) and 353,000 acres of timber stand improvement. These amounts are sufficient to reduce the "reforestation
backlog" by 1985 to the minimum level required to efficiently
manage reforestation activities.
The budget requests $55 million in budget authority for the
Youth Conservation Corps in 1981 to provide summer employment
for about 33,000 youths, the same level as in 1980.
The 1981 budget proposes to fund forest research programs with
budget authority of $126 million in 1981 compared with $112 million in 1980. Funding for cooperative forestry programs is down
slightly due to reform of the rural fire protection program. Fish
and wildlife management programs and recreation use programs
on national forest are funded at $153 million in 1981, compared
with $146 million in 1980.
The 1981 budget was prepared with inputs from the multiyear
program planning process now nearing completion pursuant to the
Forest and Rangeland Renewable Resources Planning Act of 1974.
Policy recommendations will be transmitted to the Congress in the
near future.
Income realized from logging timber is taxed at rates applicable
to long-term capital gains, rather than as ordinary income. This
will result in an estimated 1981 tax expenditure of $0.6 billion.
Management of public lands,—The Bureau of Land Management
administers about 417 million acres of public domain land, including about 223 million acres in Alaska. In addition, it manages
subsurface rights vested in Federal ownership on another 370 million acres, and has jurisdiction over 1.1 billion acres of the Outer
NATURAL RESOURCES AND ENVIRONMENT
163
Continental Shelf. In managing these lands, the Bureau strives for
a balance among recreation, timber, grazing, mineral development,
wilderness, wildlife, and other uses. Revenues collected from onshore mineral leasing, grazing fees, timber sales, land and materials sales, rights-of-way and other sources are estimated at $1.0
billion in 1981. Outer Continental Shelf receipts are included in the
section on undistributed offsetting receipts. Budget authority for
the Bureau, excluding firefighting costs, is proposed to increase
from $411 million in 1980 to $458 million in 1981.
Leasing of Federal coal lands will be resumed, ending the moratorium on such leasing which has been in effect since 1971. This is
a major forward step in providing coal to meet the goals of our
national energy policy. Budget authority for the Department of
the Interior's coal leasing program is proposed to increase from $58
million in 1980 to $65 million in 1981. These amounts provide for:
• a substantial increase in existing management activities on
leased land and for preference right applications;
• completion of preparatory activities required to permit new
leasing of up to 1.5 billion tons of coal by 1982; and
• initiation of prelease planning for an additional 25 to 35
billion tons of coal deposits to assure sufficient flexibility in
location and tonnage leased, which may be necessary to meet
energy initiatives.
The budget provides for a significant increase in 1981 for investment projects to improve the quality of the public domain rangelands. The proposed 1981 level of budget authority is $97 million
compared with $68 million in 1980.
Outer Continental Shelf management activities are continued in
1981 at about the 1980 level, which reflects the new 5-year Outer
Continental Shelf oil and gas leasing program proposed by the
Secretary of Interior in June 1979.
Mining reclamation and enforcement—The goals of the Office of
Surface Mining Reclamation and Enforcement are the prevention
of environmental degradation of land due to surface mining of coal,
and reclamation of land previously damaged by such mining.
Budget authority of $188 million is recommended for 1981, an
increase of $7 million over 1980.
The Office sets standards for surface mining of coal. The program is designed to have States assume responsibility for enforcement as soon as feasible. During 1981, the Office plans to approve
the regulatory programs of most coal-producing States. The budget
includes technical assistance and grants to help support the operating expenses of State programs. The Office will continue to have an
oversight role in those States that assume regulatory responsibility, and will have full responsibility for enforcement in States that
do not exercise this option. Budget authority of $100 million is
164
THE BUDGET FOR FISCAL YEAR 1981
recommended for these programs in 1981, compared with $86 million in 1980.
Budget authority of $70 million in 1981 is requested for reclamation of abandoned mine lands by grants to the States and through
direct Federal mine reclamation. This includes, $45 million for
State reclamation grants. A supplemental request will be considered, if the requested funding proves insufficient.
The Federal reclamation projects program is now underway.
Prior year appropriations that have not yet been obligated are
sufficient to fund most of the currently identified Federal projects.
The 1981 budget requests additional budget authority of $25 million to fund the remaining projects and to identify and plan for
additional projects.
Conservation of agricultural lands.—Several programs contribute
to the mission of protecting and maintaining the future productive
capacity of the Nation's rural lands, through technical and financial assistance to conservation districts, State and local governments, and private landowners.
Budget authority requested for these programs in 1981 totals
$554 million, compared with $543 million in 1980. This request
continues the redirection of cost sharing under agricultural conservation and Great Plains conservation programs to emphasize conservation measures that have long-term benefits.
Other conservation and land management—The administration
will submit legislation to extend Federal assistance to State coastal
zone management programs under the Coastal Zone Management
Act, administered by the Department of Commerce's National Oceanic and Atmospheric Administration (NOAA). Under the proposal,
eligible States and territories would be guaranteed a total of 5
years of Federal assistance, at current funding levels, to aid them
in carrying out the programs they have developed to promote the
rational use and conservation of our coastal areas. Federal support
would then be phased down as State and local efforts become
established. The legislative proposal will also specify national coastal protection goals to be accomplished through the State programs.
In addition to the coastal zone management program, NOAA also
manages the coastal energy impact formula grant program and the
marine and estuarine sanctuary programs that aid in the national
development and conservation of our coastal areas. New funding
requested for coastal energy impact grants in 1981 is below the
1980 level because adequate carryover funds from prior years will
be available. Funds available in 1981 will allow the States to address adequately the economic and environmental impacts of Outer
Continental Shelf oil and gas developments.
NATURAL RESOURCES AND ENVIRONMENT
165
Outlays for the above programs are estimated to be $63 million
in 1981, slightly less than the $67 million in 1980.
Operation of Indian programs for conservation and land management, exclusive of fire-fighting costs, is proposed at $80 million in
budget authority in 1981, compared with $68 million in 1980.
Recreational resources.—The Federal Government acquires and
operates national parks, recreation areas, historic sites, wild and
scenic rivers, fish hatcheries, and wildlife refuges. Facilities are
provided for the public and to improve fish and wildlife habitat.
Grants and technical assistance are also provided to States for
planning, acquiring, developing, and managing areas for recreation, fish and wildlife conservation, and the preservation of historic
places.
Outlays for these programs are estimated at $1.5 billion in 1981,
about the same level as in 1980.
Land and water conservation fund.—This fund provides grants to
States to acquire and develop land for recreational purposes, and
finances the Federal purchase of recreational lands.
Appropriations of $580 million, an increase of $71 million over
1980, are requested in 1981 as follows:
• $320 million for matching grants to States;
• $252 million for the acquisition of land for national parks,
wildlife refuges, and recreation areas; and
• $8 million for administering the fund.
An increase of $20 million over 1980 is requested for the State
grant program in 1981. Budget authority of $35 million in 1981 is
requested for areas to be purchased under general Federal acquisition authorities. The remainder of funding requested for the Federal program is for areas specifically authorized by law.
Urban recreation grants.—This 5-year program was enacted in
1978 as one of the administration's urban initiatives. Urban recreation grants pay 70% of the costs of the rehabilitiation of city park
and recreation facilities. Budget authority of $125 million is recommended in 1981.
Operation of recreational resources.—This program conducts diverse activities necessary to the operation of the national park and
wildlife refuge system. In addition, its activities encompass grants,
research, and technical assistance in the areas of recreation, fish
and wildlife, and historic preservation.
Budget authority of $1.0 billion is recommended for 1981, about
the same level as in 1980 and 1979.
Budget authority of $45 million is recommended for the historic
preservation fund that makes grants to States covering 50% of the
costs of identifying, surveying and rehabilitating historic places.
166
THE BUDGET FOR FISCAL YEAR 1981
Increased funding is not appropriate because other Federal programs, including those of the Department of Housing and Urban
Development and the Economic Development Administration, are
increasingly being directed to counteract the loss of historic resources. Also, tax incentives to encourage historic preservation
have been effective in stimulating investment to protect historic
properties.
The Fish and Wildlife Service manages 46 million acres of wildlife refuges, operates 89 fish hatcheries, conducts research on fish
and wildlife, administers a program to protect endangered species,
and provides grants to States to assist them in their programs for
managing fish and wildlife.
Budget authority for grants to States funded by Federal excise
taxes on sporting equipment are estimated to total $128 million in
1981, compared with $124 million in 1980. The administration
urges that the States use these funds for the protection of nongame as well as game species of wildlife. In 1981, the Department
of Interior will attempt to allocate fish and wildlife grants to
benefit all wildlife, not just game species, by coordinating the use
of a number of available fish and wildlife categorical grants.
Budget authority of $39 million is recommended for cooperative
State-Federal wildlife management plans on Federal lands in 1986,
compared with $33 million in 1980. This work is conducted pursuant to the Sikes Act and similar authorizing laws.
The National Park Service develops, operates, and maintains the
national park system, comprising 327 units totalling about 72 million acres.
Included in the 1981 budget is a $2 million increase to fund air
quality reviews in parks to protect against environmental degradation due to proposed energy developments near park areas.
Budget authority recommended for the National Park Service in
1981 is $542 million, about the same as the 1980 level of $540
million.
Other natural resources.—These activities are primarily directed
at increasing the understanding of the environment and the
Earth's structure. To accomplish this mission, the Geological
Survey and the Bureau of Mines in the Department of the Interior,
and the National Oceanic and Atmospheric Administration in the
Department of Commerce conduct a wide range of activities.
The Geological Survey conducts national geologic and mineral
resources surveys, including the identification of geologic hazards
such as earthquakes, water resources investigations, and topographic surveys and mapping. It also supervises Federal mineral
leases and federally financed exploration to assess petroleum resources in the national petroleum reserve in Alaska. Recommended
NATURAL RESOURCES AND ENVIRONMENT
167
termination of the latter program in favor of opening a leasing
program are discussed in the energy function.
Budget authority of $486 million in 1981 is recommended for the
Geological Survey activities in this function, compared with $469
million in 1980 and $419 million in 1979. The budget requests
increases above the enacted 1980 levels in support of accelerated
leasing of the Outer Continental Shelf, supervision of onshore leasing activities, better coordination of water data, and for nuclear
waste disposal.
The Bureau of Mines conducts research and administers various
programs to develop and conserve the Nation's mineral resources,
to diminish the adverse effects on the environment of mining, and
to protect the health and safety of miners. Budget authority of
$109 million is recommended for these programs in 1981, compared
with $105 million in 1980.
The National Oceanic and Atmospheric Administration (NOAA)
conducts marine- and atmosphere-related research and environmental monitoring, produces maps and charts for navigation, manages our marine fisheries, protects marine mammals and endangered species, and operates a national system to monitor and forecast weather conditions. As discussed in the general science, space,
and technology function, NOAA also will assume responsibility for
operating civilian remote sensing satellites.
An increase in budget authority from $727 million in 1980 to
$744 million in 1981 is proposed for the operations of NOAA. The
requested increases in funding would allow for expanded research
in support of the protection and management of fisheries, improved
marine weather warning and forecasting services, increased climate-related research, and the development of a national ocean
satellite system (discussed in the space and technology function).
NOAA also plans to begin a rehabilitiation and upgrading program
to extend the useful life of its existing research fleet, accelerate the
automation of surface weather observations to reduce personnel
and improve data collection, and develop new, advanced weather
radars that will improve severe weather warnings significantly.
The proposed development of new meteorological equipment is
being coordinated closely by NOAA with the weather programs of
the Departments of Defense and Transportation to ensure that the
common requirements are met in a cost-efficient manner.
Credit programs.—Loans are made to State and local organizations for the construction and rehabilitation of small irrigation,
municipal, and industrial water systems that utilize water from
Federal projects.
168
THE BUDGET FOR FISCAL YEAR 1981
CREDIT PROGRAMS—NATURAL RESOURCES AND ENVIRONMENT
(In millions of dollars)
Program
Water resources and other.
Direct loans:
New loans
Repayments, sales and adjustments ( - )
Net loan outlays.
1979
actual
1980
estimate
1981
estimate
23
1
40
- 7
18
- 8
24
33
10
AGRICULTURE
169
AGRICULTURE
National Needs Statement:
• Assure sufficient agricultural production to meet domestic needs and export demands.
• Provide an adequate return to farmers based on the cost
of production.
• Dampen fluctuations in food prices.
• Increase farm production and income through the conduct and application of research.
• Improve health through nutrition and food safety.
• Improve the efficiency and reliability of domestic and
export agricultural marketing systems.
American agricultural commodities provide basic nutrition for
millions of people around the world and a livelihood for American
farmers. Total agri-business accounts for about 20% of our gross
national product; and U.S. exports of farm products in 1978
amounted to close to 17% of total world farm exports. The Nation,
therefore, has a strong interest in assuring that food supplies are
sufficient to meet domestic needs, to earn foreign exhange through
commercial exports, and to provide food to the needy in poor
countries facing shortages. It is also in the national interest to
protect American agricultural producers against the vagaries of
weather and of excessive fluctuations in prices.
Recent events have highlighted the importance of our agricultural policies. Periodically, the Soviet Union faces large shortfalls in
grain production with simultaneous growth in domestic demand. In
1976, the United States agreed to supply between 6 and 8 million
metric tons of grain per year to help offset these shortfalls. This
year, the Soviet purchases were projected to total 25 million metric
tons. However, following the Soviet aggression against Afghanistan,
the administration took a number of measures, the most important
of which was to limit Soviet grain purchases in the United States to 8
million metric tons annually.
The administration has pledged that any adverse effects of the
limitation of exports to the Soviet Union shall not fall disproportionately on farmers. To that end, an export control mitigation
plan has been announced, under which the Department of Agriculture will:
• offer to purchase contracts on at least 13.7 million metric tons
of grain and 1.1 million metric tons of soybeans and soybean
products in 1980;
• increase loan levels for wheat and feed grains;
170
THE BUDGET FOR FISCAL YEAR 1981
• modify the grain reserve programs to encourage farmers to
place additional grain in the reserves; and
• establish a reserve of up to 4 million metric tons of wheat for
use in foreign food assistance programs (included in the international affairs function).
The total effect of the export control mitigation program on
budget outlays is estimated at $2.0 billion in 1980 and $0.8 billion
in 1981.
The 1981 budget demonstrates the Federal commitment to a
strong agricultural economy in three ways:
• by supporting prices and incomes in years of abundant supplies and by helping to create farmer-held grain reserves for
use in years of short supply, moderating the swings in the
agricultural economy;
• by increasing basic animal and plant research so that the
American farmer can continue to be one of the world's most
efficient and dependable suppliers of food and fiber; and
• by assisting farmers in adopting environmentally sound soil
conservation and pollution control practices that protect our
land and water resources for a growing farm economy, (These
programs are discussed in the natural resources and environment national needs section.)
Outlays for the agriculture function are estimated to decrease
from $4.6 billion in 1980 to $2.8 billion in 1981. This decrease
reflects reduced costs for export control mitigation and major financing changes, including higher asset sales by the agricultural
credit insurance fund and a substitution of loan guarantees for
direct loans under the short-term export credit program.
The United States is the world's largest exporter of farm products. Many countries depend on us to close the gap between their
production and consumption, and we look to them as markets for
our farm products. U.S. grain exports increased from 26.4 million
tons in 1960 to 94,1 million in 1979 and are projected to grow to
over 100 million tons in 1980. Since exports are a large part of U.S.
agricultural production, small changes in world production and
demand can produce rapid increases and decreases in the prices of
U.S. farm products. Consequently, mechanisms are needed that
stabilize prices but are flexible enough to allow us to respond to
changing supply and demand.
These objectives are being met through the operation of grain
reserves. Farmers placed surplus grain from the large 1977 and
1978 crops into the reserve; and farmer-held reserves reached a
peak of 11.2 million tons of wheat and 22.2 million tons of feed
grains in May 1979. In the late spring of 1979, crop conditions
abroad indicated a likely shortfall in U.S.S.R. grain production, and
grain prices moved up substantially. In June 1979, grain prices rose
AGRICULTURE
171
above the minimum level at which farmers can sell their reserves
without penalty. This caused grain to flow out of the farmer-held
reserves and into export markets. The immediate budget impact of
this shift from a buyers to a sellers market was to increase offsetting collections, thus reducing net outlays. Actual receipts in 1979
were $700 million above the levels projected in last year's budget.
The administration decided not to establish acreage set-asides for
1980 crops. Under set-aside programs the Federal Government attempts to prevent the supply of the major crops that benefit from
Federal price supports from exceeding projected demand. This is
accomplished by requiring farmers to refrain from planting portions of their land in exchange for the benefits of price guarantees.
The administration made this decision against a background of
strong commodity prices and expanding export markets. With the
curtailment of grain exports to the Soviet Union, voluntary acreage set asides will be considered in the future, and put in place if
overall supply and demand conditions warrant them.
The administration is continuing to build export markets outside
of the Soviet Union. An aggressive market promotion program is
being carried out in cooperation with private commodity groups,
and export credit will be provided through an enlarged program of
credit guarantees. These will be revised to cover commercial as
well as noncommercial risks. Proposed commitments for loan guarantees are being increased from about $1.0 billion in 1980 to $2.0
billion in 1981. No new commitments for direct loans for shortterm export credits are proposed for 1981, compared to $800 million
in 1980. This shift to loan guarantees will enable private financing
institutions to provide the credit for importers of our farm products.
Farm income stabilization.— This mission is the major Federal
involvement in the agricultural sector. Estimates of price support
outlays are highly speculative and subject to the uncertainties of
weather and markets at home and abroad. The projected outlays
are not limits on the assistance to be provided and they will vary
upward or downward depending on the requirements of the agricultural sector.
As discussed above, on January 4, 1980, the President announced
a reduction of about 17 million metric tons in grain exports to the
Soviet Union. To offset adverse effects on grain producers, the
export control mitigation program will remove or divert from
normal marketing channels that portion of the 17 million metric
tons of grain that cannot be sold elsewhere.
For the 1980 crop, if circumstances warrant, the Department of
Agriculture is prepared to offer payments to grain producers to
172
THE BUDGET FOR FISCAL YEAR 1981
NATIONAL NEED: IMPROVED AGRICULTURE
(Functional code 350; in millions of dollars)
Major missions and programs
BUDGET AUTHORITY
Farm income stabilization:
Price support and related programs:
Existing law
Prnrwspri Ipoislatinn
Federal Crop Insurance Corporation:
Existing law
Proposed legislation
Agriculture credit insurance fund
Other programs
Unallocated salaries and expenses
Subtotal, farm income stabilization
Agricultural research and services:
Research programs:
Existing law
Proposed legislation.
Extension programs
Marketing programs
Animal and plant health programs
Economic intelligence
Other programs
Unallocated overhead
Offsetting receipts
Subtotal, agricultural research and
sen/ices
Deductions for offsetting receipts
Total, budget authority
1981
estimate
1980
estimate
1979
actual
1982
estimate
1983
estimate
6,491
3,056
3,300
1,751
1,980
14
12
12
1,132
36
228
273
43
193
12
111
297
37
198
12
138
469
41
203
12
146
384
60
208
7,899
3,576
3,955
2,614
2,805
598
572
275
73
239
137
56
75
-55
286
77
255
149
62
90
-66
602
5
298
79
261
163
63
101
-65
648
5
325
80
282
171
63
105
-66
681
5
351
82
302
181
64
109
-67
1,400
1,424
1,507
1,614
1,708
48
9,346
-3
-3
—3
-3
4,998
5,460
4,225
4,510
curtail the size of their crop. To the extent that the actions outlined above prove insufficient to offset the impact of the embargo,
the administration is prepared to seek emergency legislation to
remove any existing legal barriers that impede the achievement of
that objective.
Price support and related programs.—Commodity Credit Corporation (CCC) outlays for price support programs under existing law
are projected to fall from $2.8 billion in 1980 to $1.7 billion in 1981.
This decrease reflects a number of partly offsetting changes including:
• a $1.2 billion decrease in the export control mitigation program;
• the substitution of loan guarantees for direct lending under
the short-term export credit program, which reduces outlays
by $0.8 billion; and
• a $0.5 billion increase in disaster and deficiency payments.
AGRICULTURE
173
NATIONAL NEED: IMPROVED AGRICULTURE—Continued
(Functional code 350; in millions of dollars)
Major missions and programs
OUTLAYS
Farm income stabilization:
Price support and related programs:
Existing law
Proposed legislation
Federal Crop Insurance Corporation:
Existing law
Proposed legislation
Agriculture credit insurance fund
Other programs
Unallocated salaries and expenses
Subtotal, farm income stabilization
Agricultural research and services:
Research programs:
Existing law
Proposed legislation
Extension programs
Marketing programs
Animal and plant health programs
Economic intelligence
Other programs
Unallocated overhead
Offsetting receipts
Subtotal, agricultural research and
services
Deductions for offsetting receipts
Total, outlays
MEMORANDUM—Attribution of Federal
Financing Bank outlays
Agricultural credit insurance fund
1979
actual
1980
estimate
1931
estimate
1982
estimate
1983
estimate
3,572
2,792
1,697
359
313
264
1,126
227
—8
27
1,017
43
226
238
40
188
27
93
-1,020
41
193
28
122
544
60
198
29
129
512
66
203
4,850
3,286
1,389
1,529
2,292
524
524
273
64
230
133
56
115
-55
262
81
254
149
59
90
-66
538
1
276
81
261
163
61
99
-65
543
5
301
80
281
172
60
104
-66
567
5
325
82
301
181
61
108
-67
1,340
1,353
1,416
1,480
1,563
48
—3
-3
-3
-3
6,238
4,636
2,802
3,006
3,852
5,045
2,946
2,487
943
531
The budget also reflects pending legislation that would create a
food security reserve for international food aid programs and a
program of subsidized crop insurance. Purchases of grain for this
reserve would be made in 1981 and, with related carrying charges,
would amount to $359 million in outlays. For 1982 and beyond,
outlays for crop insurance subsidies and for storage costs for grain
in the reserve are estimated to range from about $225 to $300
million.
Crop insurance.—Farmers are offered insurance against crop
losses from natural hazards by the Federal Crop Insurance Corporation. Over the past year, the administration proposed, and the
Congress has been considering, ways of improving the crop insur-
174
THE BUDGET FOR FISCAL YEAR 1981
COMMODITY CREDIT CORPORATION OUTLAYS
(In millions of dollars)
Function and program
Agriculture:
Price support and related programs:
Existing law:
Commodity loans
Commodity purchases
nkactpr Davmpnts
Other direct payments
Grain reserve storage payments
Fxnort rnntrnl mitipation
Short-term and intermediate export
credit
Storage facility loans
Interest expenditures
Other price support operations
Receipts and adjustments
Proposed legislation
Subtotal, price support and related
programs
Other agricultural activities
Subtotal, agriculture
International affairs:
Public Law 480 food aid:
Gross outlays
Receipts and reimbursements
Subtotal, international..
Total, Commodity Credit Corporation outlays
1979
actual
1980
estimate
1981
estimate
1982
estimate
1983
estimate
4,111
840
562
313
221
800
3,731
917
3,493
1,056
358
141
837
112
225
1,104
375
-6,854
359
150
980
374
-6,337
264
150
825
354
-5,701
227
2,792
37
2,056
40
577
60
1,353
66
3,612
2,829
2,096
637
1,419
1,374
-399
1,605
-436
1,615
-462
1,680
-490
1,800
-525
976
1,169
1,153
1,190
1,275
4,587
3,998
3,249
1,827
2,694
3,897
677
367
1,444
247
3,869
928
247
145
240
2,000
1,528
679
705
389
-6,361
800
375
1,052
396
-7,258
3,572
39
ance program so that it can be substituted for the disaster payments component of price support and related programs. The proposals include expanding greatly the geographic area where crop
insurance is offered, increasing the number of crops that can be
insured, and expanding the risks that are covered. The budget
assumes enactment of this proposal for 1981, and estimates reflect
the administrative costs and the premium subsidies involved in the
proposed legislation to establish the new all-risk crop insurance
program. Although the administration is recommending that CCC
disaster payments be extended an extra year while the new system
is starting up, they will be dropped in favor of Federal crop insurance starting with the 1982 crop. Outlays for the new program will
depend primarily on the weather, the number of participants in
the new system and the trend in crop prices. Outlays are estimated
to be $120 million in 1981 and $150 million in 1982 if about 30% of
eligible farmers choose to participate in the new system. (Small
business disaster loans, which are also available to farmers, are
discussed under community and regional development.)
175
AGRICULTURE
Agricultural credit insurance fund.—Agricultural loans, including emergency loans, rose to $7.7 billion in 1979, with over 75% of
this amount going for disaster and economic emergency loans.
Total loan obligations by the agricultural credit insurance fund are
estimated to decline from $5.5 billion in 1980 to $3.8 billion in 1981,
largely because of the lapse of the economic emergency loan program and the tightening of the rules for disaster loans. The lending
levels proposed for farm ownership and farm operating loans in
1981 are the same as the increased levels enacted in 1980, and 25%
of these funds will continue to assist farmers with limited resources. Recent criticism over the large size of some of the disaster
loans and the apparent wealth of the recipients of those loans is
leading to a general tightening of the disaster loan program. Authority for economic emergency loans will expire in May of 1980.
The budget assumes that it will not be extended. Under the administration's proposal, once a new crop insurance program is fully
operative, eligibility for the disaster loan program will be conditioned on prior purchase of crop insurance. Receipts of the agricultural credit insurance fund are expected to exceed outlays by $0.3
billion in 1980 and $1.5 billion in 1981, largely as a result of asset
sales to the Federal Financing Bank carried over from the previous
year.
AGRICULTURAL CREDIT INSURANCE FUND—LOAN OBLIGATIONS
(In millions of dollars)
Loan program
Farm ownership
Farm operating
Emergency:
Natural disasters
Economic
Soil and water
Other
Total
1979
actual
1980
estimate
763
895
1981
estimate
870
875
870
875
2 t 872
3,090
52
42
2,500
1,100
53
56
2,000
7,714
5,454
3,848
53
50
Agricultural research and services.—Programs in this mission
seek to improve production and marketing efficiency by encouraging better technology and regulation. They also provide information on worldwide agricultural markets and control the spread of
animal pests and diseases.
Research. —Research helps increase agricultural productivity. It
can provide new knowledge of human nutrition, food safety and
post-harvest technology. Budget authority of $602 million is requested for agricultural research in 1981, compared to $572 million
in 1980.
THE BUDGET FOR FISCAL YEAR 1981
176
The funds requested will be used to respond directly to a number
of the key areas of national concern: stimulating innovation in
industry; improving health for all Americans; expanding the application of existing earth satellite technologies; managing natural
and man-induced environmental changes; and enhancing developing countries' agricultural capacities.
Research will be carried out primarily through private, State, and
local organizations. Increases are requested for the State agricultural experiment stations and cooperative extension services to offset
the effects of inflation on the level of program activity. In addition,
funding is requested to initiate a program of grants to renovate and
construct much needed laboratory space at the historically-black
land grant schools. Over a period of 5 years, Federal funding of $25
million would be matched by State funding, resulting in a total of
$50 million for research facilities at these institutions. Budget authority of $5 million is requested for 1981.
Animal and plant health.—The Federal Government carries out
a number of programs to prevent the introduction and spread of
plant and animal pests and diseases that can cause severe losses in
crop yields or livestock. Budget authority of $261 million is proposed for these services in 1981, an increase of $6 million over the
1980 request.
CREDIT PROGRAMS—AGRICULTURE
(In millions of dollars)
Program
Price support and related commodity loans:
Direct loans:
New loans
Repayments, sales and adjustments ( - )
Net loan outlays
Loan guarantees:
New loans
New loan guarantees
Agricultural and emergency credit programs
and other
Direct loans:
New loans
Repayments, sales and adjustments ( - ) 1
Net loan outlays
1979
actual
1980
estimate
1981
estimate
6,103
- 5,509
5,044
- 5,879
4,336
- 5,399
594
-835
-1,063
136
136
938
907
2,000
1,656
7,940
- 7,235
6,538
- 6,826
5,089
- 6,568
706
-288
-1,479
4,331
2,585
3,866
2,170
2
Loan guarantees:
New loans
Net loan guarantees
1
Includes sales of direct loans.
* Includes guarantees of sales of direct loans.
5,576
4,692
AGRICULTURE
177
Credit programs.—Net credit outlays for price support and related commodity loans are projected to fall by $228 million in 1981.
The elimination of direct lending for export credit more than offsets a decline in repayments for commodity loans.
Agricultural and emergency credit programs include farm real
estate, farm operating and emergency loans. The estimated decrease in net outlays for these programs is a result of larger
amounts of asset sales in 1981 than in 1980, and a projected reduction in new lending for emergency purposes.
Tax expenditures.—The objectives of agricultural income support
and rural development are promoted by a range of tax expenditures. The tax code permits farmers to treat certain capital outlays
as current expenses and accords capital gains treatment to certain
types of ordinary income. The 1981 revenue loss from these two
provisions is estimated to be $0.6 billion and $0.4 billion, respectively. Rural electric, telephone, and agricultural marketing cooperatives can deduct noncash patronage dividends, and they receive
preferential tax treatment in a variety of ways. A 1981 tax expenditure of $0.4 billion is expected from these preferences. The Revenue Act of 1978 permits payments received under Federal and
State cost sharing conservation programs to be excluded from
income. The revenue loss from this provision is estimated to be $0.1
billion in 1981.
Related programs.—Several programs that fulfill other national
needs complement the programs in agriculture. The most important of these programs is the Public Law 480, food aid program,
which is discussed in the International Affairs section.
OUTLAYS FOR FEDERAL PROGRAMS THAT SUPPORT THE AGRICULTURE MISSIONS
(In millions of dollars)
Program Title
Disaster loans, drought assistance, and emergency conservation
Conservation of agricultural lands
Rural clean water programs
Public Law 480 food aid
Food safety and quality service
310-000
0 - 8 0 - 1 3
Primary
function
in budget
450
300
300
150
550
1979
actual
993
559
976
263
1980
estimate
652
571
5
1,169
291
1981
estimate
217
562
6
1,153
300
178
THE BUDGET FOR FISCAL YEAR 1981
COMMERCE AND HOUSING CREDIT
National Needs Statement:
• Insure that an adequate supply of mortgage credit is
available nationally.
• Target credit to urban and rural areas and prospective
borrowers not well served by private credit markets.
• Encourage urban revitalization efforts.
• Maintain effective mail service at reasonable rates with
costs largely borne by postal customers.
• Encourage the development of jobs and a productive
economy through assistance to and oversight of business.
The Federal Government's long-term objectives in the commerce
and housing credit area are significantly affected by aggregate
fiscal and monetary policies, which must continue to counter inflationary pressures.
The housing industry has remained much stronger during this
current period of high interest rates than it has in previous periods
of credit restraint. Total housing starts in calendar year 1979 were
about 1.7 million units, down only about 300,000 units from 1978.
During calendar year 1980, housing starts will decline further
along with declines in other sectors of our economy. The trough of
housing starts is expected to occur during the middle of the year.
For 1980 as a whole, housing starts are forecast to be between 1.4
and 1.5 million units, more than 25% above the 1.17 million units
started in 1975, the low point of the previous housing cycle. As
overall economic conditions improve in 1981, the housing sector
should return to higher levels of activity. Housing starts are projected to be at an annual rate of about 2.0 million units by the end
of the calendar year 1981.
The ability of the housing sector to avoid bearing a disproportionate share of the decline in 1980 economic activity reflects:
• the administration's efforts to introduce institutional changes
in financial markets, such as the 6-month "money market"
certificate, to enable mortgage lenders to compete more effectively for available funds;
• administration support for housing through expanded use of
federally sponsored secondary market facilities and increased
production of federally subsidized low-income housing; and
COMMERCE AND HOUSING CREDIT
179
• the underlying strength of the demand for housing derived
largely from the post-World War II baby boom.
The performance of the housing market is important to the
continued improvement of housing conditions in the Nation, especially for low-income families. Census data indicate that the
number of households residing in physically substandard housing
units has declined substantially—for example, as of the fall of 1977,
5.0 million lower-income households resided in units with one or
more significant physical deficiencies, compared to 5.8 million in
1974. This favorable trend in housing conditions is expected to
persist because of continued strong performance by the private
housing market, the continued projected growth in family incomes,
and continued growth in the number of low-income families benefiting from Federal housing subsidies.
Current high interest rates have not been uniformly extended to
the small saver and the elderly, those with limited assets and least
able to shift to more profitable investments. The administration
continues its commitment to greater equity in the provision of
financial services by an orderly phasing out of regulatory restrictions on the earnings of deposits at banks and savings institutions.
A principal concern of this administration is to avoid the sharp
and disproportionate reductions in housing credit that can result
from tight monetary policies. The administration also seeks to
ensure that the Federal Government continues to provide an economic environment and adequate investment incentives to foster
continued strength in the housing market.
Other major concerns are to achieve Federal commerce and
housing credit objectives more efficiently, and to target Federal
resources more effectively to those groups, regions, or economic
sectors with the greatest need.
While Federal expenditure programs in this function contribute
significantly to the achievement of Federal objectives, Federal tax
policies and credit programs make perhaps an even more substantial contribution. Major administration efforts to avoid sharp curtailments of mortgage credit and housing market activities include:
• an additional $1.8 billion in 1981 commitments by the Government National Mortgage Association (GNMA) to purchase
mortgages of rent-subsidized housing projects and for middle/
moderate income multifamily housing projects in distressed
urban areas through the targeted tandem program;
• initiation of a new demonstration program under which lumpsum mortgage interest subsidy grants would be substituted
for mortgage purchases;
• continued broad use of GNMA mortgage-backed securities to
attract nontraditional investors to mortgage markets; and
180
THE BUDGET FOR FISCAL YEAR 1981
• continued use of money market certificates to attract deposits
at savings and loan institutions, especially the new 30-month
money market certificates approved recently by the Federal
Home Loan Bank Board.
The budget also makes more efficient and effective use of Federal resources allocated to commerce and housing credit by:
• reintroducing the administration's proposal to initiate a temporary mortgage assistance payments program to help homeowners in temporary financial trouble to avoid foreclosures;
• continuing to rely primarily on the private sector to renovate
and repair multifamily properties currently held by the Federal Housing Administration (FHA) in conjunction with the
sale of those properties;
• consolidating and restructuring international trade assistance
to strengthen the export performance of the United States
and to assure fair international trade practices;
• continuing to target rural housing programs to low-income
families occupying substandard housing;
• restructuring the business loans programs of the Small Business Administration and expanding direct loans to minorityand women-owned firms;
• initiating new program activities to strengthen the development of women's business enterprise;
• increasing the level of minority business participation in Federal procurement; and
• undertaking a new program initiative designed to enhance
the rate of industrial innovation.
Mortgage credit and thrift insurance.—Federal housing policy
continues to focus on the basic goal of providing a decent home in a
suitable living environment for every American family. Federal
housing programs carry out this goal by:
• ensuring an adequate supply of mortgage credit;
• increasing the stock of housing through new construction and
rehabilitation programs; and
• providing explicit subsidies primarily for low- and moderateincome households.
Most of the explicitly subsidized programs are discussed in the
income security section.
Mortgage credit programs are aimed at increasing the supply of
credit for housing. Mortgage insurance, guaranteed and direct
loans, interest subsidies, and secondary mortgage market activities
support the smooth operation of private mortgage credit markets
and supplement those markets, particularly in rural and centralcity areas. By making credit available at affordable interest rates,
Federal credit policies stimulate the demand for, and therefore, the
production of, housing.
COMMERCE AND HOUSING CREDIT
181
NATIONAL NEED: PROMOTION OF COMMERCE AND HOUSING CREDIT
(Functional code 370; in millions of dollars)
Major missions and programs
BUDGET AUTHORITY
Mortgage credit and thrift insurance:
Department of Housing and Urban Development:
Mortgage purchase activities (GNMA)....
Mortgage credit (FHA)
Housing for the elderly or handicapped...
Department of Agriculture—rural housing
programs
National Credit Union Administration
Subtotal, mortgage credit and thrift
insurance
Postal Service
1979
actual
Subtotal, other advancement and regulation of commerce
Deductions for offsetting receipts
Total, budget authority
1982
estimate
1983
estimate
509
391
786
1,829
286
803
698
263
780
415
270
765
547
250
750
793
2,310
1,200
621
1,443
1,645
2,479
6,428
2,363
2,893
3,193
1,785
1,677
1,593
1,627
1,490
-253
-188
-106
-100
759
4
220
276
776
74
245
723
941
175
278
241
996
221
285
192
1,032
156
293
216
398
502
526
-16
553
-31
576
-48
1,657
2,321
2,145
2,216
2,226
*
*
5,921
10,172
5,912
6,630
6,809
Federal Financing Bank
Other advancement and regulation of
commerce:
Small business assistance
National Consumer Cooperative Bank
Technology utilization
Economic and demographic statistics
Other.Existing law
Proposed legislation
1981
estimate
1980
estimate
* $500 thousand a less.
Past periods of fiscal and monetary austerity have led to sharp
outflows of savings from savings and loan institutions to other
savings instruments, resulting in severely depressed housing construction activity. However, the development of the 6-month money
market certificate, the recent introduction of the 2V2-year saving
certificate, the expanded use of GNMA mortgage-backed securities
to attract nontraditional mortgage investors and the provision of
GNMA tandem interest subsidies, continue to allow the housing
sector to compete more effectively for funds during the current
period of high interest rates.
Mortgage purchase activities.—Major Federal support for the
mortgage market is provided by the Government National Mortgage
Association (GNMA). Guarantees of securities that are backed by
privately held pools of mortgages insured by the Federal Housing
182
THE BUDGET FOR FISCAL YEAR 1981
NATIONAL NEED: PROMOTION OF COMMERCE AND HOUSING CREDIT—Continued
{Functional code 370; in millions of dollars)
Major missions and programs
1981
estimate
1980
estimate
1979
actual
1982
estimate
1983
estimate
OUTLAYS
Mortgage credit and thrift insurance:
Department of Housing and Urban Development:
Mortgage purchase activities (GNMA)....
Mortgage credit (FHA)
Housing for the elderly or handicappedDepartment of Agriculture—rural housing
programs
Federal Deposit Insurance Corporation
Federal Home Loan Bank Board
National Credit Union Administration
225
193
459
1,036
148
700
-351
-70
700
154
-125
650
166
-174
650
184
-1,218
—488
-30
1,806
-1,450
-479
173
-958
-1,500
-602
-32
1,087
-1,550
-668
-35
1,277
-1,600
-759
-40
Subtotal, mortgage credit and thrift
insurance
-677
1,935
-2,813
-487
-480
1,787
1,677
1,593
1,627
1,490
-253
-188
-106
-100
212
214
719
36
243
648
869
161
268
317
927
234
282
204
961
209
292
210
354
471
517
-12
554
-33
571
-50
1,454
2,118
2,121
2,168
2,193
Postal Service
Federal Financing Bank
Other advancement and regulation of
commerce:
Small business assistance
National Consumer Cooperative Bank
Technology utilization
Economic and demographic statistics
Other:
Existing law
Proposed legislation
Subtotal, other advancement and regulation of commerce
Deductions for offsetting receipts
Total, outlays
ADDENDUM
Off-budget Federal entities:
Postal Service:
Outlays
Federal Financing Bank:
Budget authority
Outlays
MEMORANDUM—Attribution of Federal
Financing Bank outlays
Rural housing insurance fund
Federal Financing Bank (net interest and capital transfers)
Small business assistance
674
*
#
_ *
2f565
5,476
712
3,202
3,103
—891
178
1,606
-73
858
16,050
13,172
22,006
16,408
23,937
16,316
19,840
15,017
22,445
11,806
2,930
1,852
4,889
1,637
1,637
-110
68
159
169
72
166
-140
164
-143
94
•$500 thousand or less.
Administation or guaranteed by the Veterans Administration are
one form of support. These guaranteed securities help to attract
COMMERCE AND HOUSING CREDIT
183
investors who have not traditionally invested in mortgages. New
securities guaranteed by GNMA are estimated to increase from
$20.5 billion in 1980 to $25.0 billion in 1981.
GNMA also operates 'tandem' mortgage purchase programs to
support special types of mortgages. Under the tandem programs,
GNMA purchases mortgages with below-market interest rates at
prices above their true market value and then resells these mortgages to private lenders at market value. The loss GNMA incurs in
reselling the below market interest rate mortgages is the net cost
of providing the interest rate subsidy. Two types of mortgages are
currently being supported by the GNMA tandem program. The first
type is FHA-insured mortgages for multifamily projects receiving
rent subsidies through the lower income housing assistance program
of the Department of Housing and Urban Development (HUD). The
second is the "targeted tandem" program, which supports the construction of moderate- and middle-income rental housing in distressed urban areas. Interest subsidies provided by the latter
program encourage the return of middle-income families to these
distressed areas.
The budget proposes $1.8 billion of mortgage purchase commitments in 1981, plus a new demonstration program under which
lump-sum mortgage interest grants can be provided in lieu of mortgage purchases. The combination of these two programs will support $2 billion of mortgages, the same amount supported in each of
the past 3 years. From 1978 through 1981, this assistance will
facilitate the development of an estimated 250,000 units of new or
substantially rehabilitated multifamily housing with below-market
interest rates. The new upfront mortgage interest grant proposal
will compare the efficiency and effectiveness of this mechanism
relative to the current GNMA "tandem" mortgage purchase and
resale mechanism. The new approach requires less budget authority and has a less volatile effect on budget outlays and the deficit
than the current tandem programs, under which the mortgages are
not always resold immediately, but are sometimes held for resale
when market conditions are more favorable. Net outlays for
GNMA's credit activities, including losses on mortgage purchases,
are estimated to be $1.0 billion in 1980 and -$0.4 billion in 1981.
The negative outlay in 1981 reflects an estimate that mortgage
sales will be greater than mortgage purchases.
Mortgage credit— The Federal Housing Administration's (FHA's)
mortgage and loan insurance programs provide assistance for families who are able to fulfill the obligations of a mortgage loan but
who may not be adequately served by the private market. Insurance for mortgages with graduated payment schedules, which re-
184
THE BUDGET FOR FISCAL YEAR 1981
quire lower initial monthly payments, will continue to be made to
assist young, first-time homebuyers.
Heavy default rates experienced under some mortgage insurance
programs in the early 1970's resulted in large increases in the FHA
inventory of assigned mortgages and properties were acquired by
HUD as a result of foreclosure. Improved economic conditions,
better underwriting, HUD's lower-income housing assistance (section 8) and troubled projects operating subsidies programs should
decrease the growth of this inventory. Efforts began in 1979 to
increase the sale of multifamily properties now owned by FHA by
using Section 8 rental assistance (classified as an income security
program). The section 8 program induces the private market to
rehabilitate properties not currently meeting minimum housing
standards. In addition, HUD intends to increase its sales to achieve
a 45% decline in the HUD inventory of assigned and acquired
properties between the end of 1979 and the end of 1985. In 1980, a
new program is proposed to protect homeowners from precipitous
foreclosures when suddeh, uncontrollable reductions in income
temporarily put them in default. This temporary mortgage assistance payments program will also prevent unnecessary additions to
the assigned inventory due to temporary default problems.
All of these factors are expected to result in a decline in outlays
for FHA mortgage credit activities from $148 million in 1980 to
—$70 million'in 1981. Loans insured under FHA programs are
expected to total $21.7 billion in 1981, an increase of $2.9 billion
from 1980. In addition, the administration will propose legislation
to simplify and consolidate the currently cumbersome, complex
and, in some instances, outmoded statutes governing FHA insuring
and GNMA mortgage credit authorities. This effort to simplify the
National Housing Act is long overdue and would make the services
provided under the Act more accessible and more understandable
to the American public.
Housing for the elderly or handicapped.—In addition to supporting private market mortgage financing with FHA insurance, HUD
provides direct loans to finance housing for the elderly or handicapped under the "section 202" program. The 1981 budget provides
for $830 million of new loan commitments and continues emphasis
on housing for the handicapped in the form of a $50 million setaside for nonelderly, handicapped households. Outlays for this program are estimated to be $700 million in both 1980 and 1981.
Rural housing programs.—The Farmers Home Administration
(FmHA) of the Department of Agriculture provides direct and guaranteed loan housing assistance to low- and moderate-income families in rural communities of less than 20,000 population. In addi-
COMMERCE AND HOUSING CREDIT
185
tion, there is a rural rental assistance program to assist the tenants of FmHA-financed housing. A related program of grants to
repair and rehabilitate inadequate single-family housing, and
grants for labor housing and self-help housing are classified in the
income security function.
For 1981, the budget proposes $4.0 billion in new direct and
guaranteed loans and $0.5 billion in budget authority for rural
housing assistance payments. The latter amount is the budget authority needed over the entire life of the contracts planned to be
entered into in 1981 by the Federal Government under the rural
rental assistance and homeownership assistance programs. These
totals represent a decrease of about $0.5 billion in insured and
guaranteed loans from the enacted level for 1980. This decrease
reflects a decision to reduce assistance to moderate and above
moderate income families. The requested funds, which are directed
primarily to the needs of lower-income families occupying inadequate housing, will provide assistance for about 131,000 rural
housing units. The 1981 budget proposes to continue directing housing assistance under FmHA programs to those rural families which
are most in need—low-income families and occupants of substandard housing.
Outlays for FmHA housing programs in this function are estimated to decline from $1.8 billion in 1980 to -$1.0 billion in 1981.
Receipts from sales of loans which are an offset to gross outlays,
are responsible for the projection that receipts will exceed outlays
in 1981.
Banking and finance—A number of programs enhance the
safety and soundness of the commercial banking system and affect
its responsiveness to the needs of both savers and borrowers.
The Comptroller of the Currency is the principal agency in the
Federal Government responsible for the chartering, examination,
and supervision of national banks. The Comptroller maintains an
examination staff of over 2,500 to assure the liquidity and solvency
of the national banking system. They conduct periodic onsite examinations of the commercial, trust, data processing, international,
and consumer operations of each bank; and a legal staff interprets
and administers the numerous banking laws. The Comptroller also
serves as Chairman of the Federal Financial Institutions Examination Council, an interagency group consisting of all of the depository institution regulatory agencies.
The Federal Deposit Insurance Corporation (FDIC) insures the
deposits of all nationally and many State chartered commercial
and savings banks. It also manages the assets of failed banks to
assure the protection of depositors at minimum cost to the Federal
Government. A trust fund currently in excess of $9 billion is available to meet its needs.
186
THE BUDGET FOR FISCAL YEAR 1981
The FDIC is responsible for the examination and supervision of
federally insured commercial banks that are not members of the
Federal Reserve system. These account for over 60% of all banks in
the country and over 20% of all commercial banking assets.
On May 22, 1979, the President transmitted a message to the
Congress calling for reforms in depository institutions. These include the gradual elimination of restrictions on interest that can be
paid to depositors at financial institutions; the authority for all
federally insured institutions to offer interest bearing transactions
accounts to individuals; and the use of variable rate mortgages
subject to appropriate consumer safeguards- by all federally chartered savings institutions. The administration affirms the continued commitment to the flexibility in the banking system, the provision of market rate returns on the savings of small depositors, and
the efficient functioning of our system of housing.
In recent years a number of banks have left the Federal Reserve
system. This has reduced the effectiveness of the Board's control
over monetary policy. The administration continues to support legislation that would allow the Federal Reserve system to engage in
the conduct of an effective monetary policy.
Other mortgage credit and thrift insurance,—The National Credit
Union Administration regulates credit unions and insures depositors' accounts.
In 1980 from the National Credit Union Administration (NCUA)
will perform more frequent supervisory reviews of credit unions in
order to assist them in handling the loss of deposits due to high
interest rates. The NCUA will assist in establishing community
development credit unions. These credit unions will promote thrift,
provide residents in poor communities access to credit at reasonable rates and provide other financial services that are difficult to
obtain in impoverished neighborhoods. They will receive aid through
low-interest loans, training, and other technical assistance from the
Federal Government. The community development credit union
program was proposed as part of the President's urban policy and
was authorized by the Congress in 1979.
The National Credit Union Administration began operating a
new central liquidity facility on October 1, 1979. The new facility
provides member credit unions with short-term loans for liquidity
purposes. It is similar to the short-term liquidity provided to
member commercial banks through the discount window of the
Federal Reserve. During 1981, the central liquidity facility expects
to lend $2.2 billion to member credit unions.
The Federal Savings and Loan Insurance Corporation (FSLIC)
insures deposits in savings and loan associations. In 1981, receipts
of the FSLIC are estimated to exceed outlays by $0.6 billion.
COMMERCE AND HOUSING CREDIT
187
Postal Service.—The Postal Reorganization Act of 1970 established the U.S. Postal Service as an independent part of the executive branch to replace the former Cabinet-level Post Office Department. The Act charges the Postal Service with providing prompt,
reliable, and efficient mail services to patrons at reasonable rates
and fees. Outlays for the general operations of the Postal Service
are excluded from Federal budget totals, with the exception of the
Federal subsidy payment. The payment covers certain liabilities of
the former Post Office Department, public service costs that provide a direct postal subsidy, and revenue forgone for carrying certain classes of mail at free and reduced rates. A payment of $1.6
billion is requested for 1981, $0.1 billion below the amount appropriated for 1980. This change reflects a $92 million reduction in the
public service subsidy and a $7 million increase in revenue forgone
due primarily to expected increases in mail volume and adjustments in prior years' revenue forgone. The changes in both the
public service subsidy and revenue forgone are scheduled to occur
under existing law. The budget also includes a proposed $1 billion
1981 limitation on postal borrowing authority in consonance with
the President's objective of establishing effective credit control
procedures.
The request for 1981 and future-year budget projections carry on
the existing policy that postal costs should be largely borne by mail
users and not by the general taxpayer. The off-budget outlays of
the U.S. Postal Service reflect the difference between gross expenditures and gross receipts.
Other advancement and regulation of commerce.—Many Federal
programs provide technical assistance to and promote the development of new business. Other programs provide oversight of the
economy and business community to assure fair and equal practices and opportunities.
Small business assistance.—Net outlays for assistance to small
business are estimated to total $0.9 billion in 1981. The budget
request for the Small Business Administration (SBA) provides for
$4.3 billion of new commitments for guaranteed business loans,
which is $0.5 billion greater than the level of assistance available
to the SBA in 1980. It is anticipated that the share of the SBA's
direct business loans approved for minority-owned businesses in
1981 will increase by $40 million over 1980 levels.
In 1981, the SBA is proposing a major restructuring of the direct
and guaranteed business lending programs. The changes will
permit the agency to shift to greater reliance on its guaranteed
lending programs, and to target its direct loans more selectively to
188
THE BUDGET FOR FISCAL YEAR 1981
minority and women-owned firms. Legislation will be proposed to
consolidate SBA's five business loan programs into one program,
raise loan limits on its guaranteed loans from $500,000 to $750,000
and delegate additional loan review, approval, and liquidation functions to selected banks. These changes will substantively improve
SBA's capability to serve the small business community.
In addition to a move intensive targeting of its direct loans to
minorities, the SBA will undertake a number of further initiatives
in 1981 to assist minority-owned businesses. This includes the provision of expanded counseling assistance in support of the SBA's
section 8(a) minority business development program. In addition,
the budget proposes that funding for Minority Enterprise Small
Business Investment Company (MESBIC) program be doubled.
Direct assistance for minority capital development under the
MESBIC program would grow from a current enacted level of $27
million in budget authority to $55 million in 1981. There are currently 100 MESBIC's certified by the SBA with the capability of
pooling their resources to assist minority firms in pursuing possible
acquisitions of other businesses. The MESBIC funding request will
help promote these acquisitions and enable minority firms to take
greater advantage of new and innovative market opportunities. As
a further aid to minority business, the administration will seek
legislation to provide a stautory base for the Commerce Department's existing Minority Business Development Agency, which is
currently authorized by Executive order.
The budget also includes funding in support of the President's
women's business enterprise policy announced in May of last year.
The SBA will undertake several new activities to foster the establishment, preservation, and strengthening of women's business enterprise. Direct loans targeted to women business owners are proposed to increase by 50% over the 1980 level. In addition, the SBA
proposes to expand the availability of management training, counseling, and support services to both new and established womenowned firms. Projects are planned in a number of cities to improve
the access of women entrepreneurs to credit and capital. In conjunction with these activities, an outreach effort to the financial
community would encourage greater interest in serving women's
businesses. Increased SBA funding is proposed to develop instructional materials to aid women business owners in working with the
Federal procurement system and to enhance public awareness of
the important role of women entrepreneurs in the economy. Emphasis will be placed on developing strong partnerships with the
business community in achieving these goals.
Federally guaranteed loans to the Chrysler Corporation.— To prevent the financial collapse of the Chrysler Corporation and the
consequent resulting unemployment and economic disruption, the
COMMERCE AND HOUSING CREDIT
189
administration proposed and the Congress has authorized up to
$1.5 billion in federally guaranteed loans in 1980. The program is
administered by a board consisting of the Secretary of the Treasury, the Chairman of the Federal Reserve Board, and the Comptroller General. Before making any Federal guarantees, substantial
contributions or investments in the company are required of
Chrysler's employees, suppliers, dealers, banks, and others with an
economic stake in the company's continued existence.
National Consumer Cooperative Bank.—The National Consumer
Cooperative Bank began operations in 1979. The Bank is authorized to make loans at market interest rates to finance a wide
variety of cooperatively-owned businesses.
An adjunct to the Cooperative Bank, the Office of Self-help Development and Technical Assistance, was also created to provide
new and existing cooperatives with technical assistance. This office
will provide interest subsidies and capital advances to cooperatives
that are not able to qualify for the Cooperative Bank loans.
The Cooperative Bank began with Federal funding and will
repay the Federal investment as its ownership is tranferred to the
member cooperatives that borrow from the Bank. Eventually, the
Cooperative Bank will be owned by its customers, and loans will be
financed through debt issues on the private market.
Technology utilization.—The President has announced several
initiatives to enhance the rate of industrial innovation in the
United States. In addition to the initiatives discussed in the general science, space, and technology function, the Department of Commerce will undertake the following activities:
• encourage the flow of technical knowledge from Federal laboratories to the private sector, and from foreign countries to
U.S. industry;
• initiate a program to establish private sector centers to cooperate with industry in the development of basic technologies
that apply to their manufacturing operations;
• update and modernize the patent and trademark systems and
improve the dissemination of patent information; and
• foster the development of small, innovative firms by the establishment of two Corporations for Innovation Development,
nonprofit corporations providing equity funding for firms that
will develop and market promising, high-risk innovations.
Economic and demographic statistics.—Budget outlays for the
Bureau of the Census are estimated to decline from $618 million in
1980 to $283 million in 1981, primarily due to the completion of the
decennial census in 1980. Approximately 40% of the total cost of
190
THE BUDGET FOR FISCAL YEAR 1981
the 1980 decennial census has supported data collection and other
improvements, including a major effort to reduce the undercounting of the population especially among minority groups.
Other.—The budget reflects reorganization changes proposed last
year by the administration and accepted by the Congress. These
changes will strengthen the Nation's capability to deal more effectively with international trade issues and problems. The reorganization transfers general operational responsibilities to the Department of Commerce from the State and Treasury Departments for
international trade functions, including export development, commercial representation abroad, the administration of the antidumping and countervailing duty laws, export controls, and monitoring compliance with international trade agreements to which
the U.S. is a party. This reorganization will assist in promoting the
expansion of U.S. exports and enhance our capabilities to protect
against unfair import competition.
The Federal Financing Bank (FFB) is an off-budget entity under
the supervision of the Treasury Department, created in 1973 to
reduce the costs of Federal agency borrowing, to coordinate the
financing of certain types of Federal credit assistance, and to promote a more orderly market for Federal debt securities, thereby
lowering the cost of funds to the government. The FFB does not
initiate programs but, rather, is solely a financing vehicle for other
governmental programs.
At the end of 1979, FFB holdings totaled $66 billion. These
holdings are estimated to rise to $86 billion at the end of 1980 and
$107 billion at the end of 1981. The off-budget outlays that the FFB
incurs by purchasing, loan assets and by financing, loans that are
guaranteed by other Federal agencies are shown as memorandum
items to the outlay tables throughout this part of the budget document. In 1980, the FFB deposits to the Treasury of surplus income
are estimated to be $253 million.
Further discussion of the FFB is contained in Part 6 of the
Budget and Special Analyses E and F in the Special Analyses
volume of the Budget.
Tax expenditures.—The tax system provides a variety of incentives for investment in equipment, commercial and industrial
structures, and residential housing.
The 10% tax credit for capital equipment generates a tax expenditure estimated at $20,0 billion in 1981. The new credit for the
rehabilitation of industrial structures will generate an additional
tax expenditure of $0.2 billion in 1981. Rapid depreciation using
asset depreciation ranges and additional first-year depreciation of
equipment are estimated to result in a 1981 tax expenditure of $3.7
billion. The depreciation of commercial structures at rates in
COMMERCE AND HOUSING CREDIT
191
CREDIT PROGRAMS—COMMERCE AND HOUSING CREDIT
(In millions of dollars)
1979
actual
Program
Mortgage purchase activity (GNMA):
Direct loans:
New loans
Repayments, sales and adjustments ( - )
1980
estimate
1981
estimate
1,492
-1,663
1,931
-1,327
1,760
-2,829
-170
604
-1,070
22,176
17,594
20,500
14,917
25,000
18,900
102
-254
277
-511
225
-499
-152
—234
-274
19,390
11,475
19,530
9,974
21,684
10,603
488
—7
740
-7
685
-9
481
733
676
4,797
-5,033
6,946
-5,787
6,429
—8,140
Net loan outlays
-236
1,159
-1,711
Loan guarantees:*
New loans
Net loan guarantees
4,005
2,803
4,977
1,922
7,294
4,631
1,800
-1,500
2,200
-2,200
1
Net loan outlays
3
Loan guarantees*.
New loans
Net loan guarantees
Mortgage credit (FHA):
Direct loans:
New loans
Repayments, sales and adjustments ( - )
1
Net loan outlays
3
Loan guarantees:
New loans
Net loan guarantees
Housing for the elderly or handicapped:
Direct loans:
New loans
Repayments, sales and adjustments ( - ) .
Net loan outlays
Rural housing programs:
Direct loans:
New loans
Repayments, sales and adjustments ( - )
Central Liquidity Facility:
Direct Loans:
New loans
Repayments, sales and adjustments ( — ) i
300
Net loan outlays
National Consumer Cooperative Bank:
Direct loans:
New loans
Repayments, sales and adjustments ( - )
1
Net loan outlays
29
-3
156
-5
26
151
Loan guarantees:
New loans
Net loan guarantees
Small Business assistance:
Direct loans:
New loans
..
5
4
567
608
752
THE BUDGET FOR FISCAL YEAR 1981
192
CREDIT PROGRAMS—COMMERCE AND HOUSING CREDIT—Continued
(In millions of dollars)
1981
estimate
1980
estimate
1979
actual
Program
—357
-361
-382
210
247
370
3,813
748
4,693
1,153
5,152
1,130
940
940
312
312
50
-27
84
-43
40
-74
Net loan outlays
23
41
-34
Loan guarantees:
New loans
Net loan guarantees
77
62
103
80
118
75
16,045
-2,763
22,004
-5,755
23,941
-7,697
13,282
16,249
16,244
Repayments, sales and adjustments ( - )
1
Net loan outlays
Loan guarantees:2
Net loan guarantees
Chrysler Corporation loans:
Loan guarantees:
New loans
Net loan guarantees
Other business assistance:
Direct loans:
New loans
Repayments, sales and adjustments ( - )
Off-budget Federal entity—Federal Financing
Bank:
Direct loans:
New loans
Repayments, sales and adjustments ( - )
Net loan outlays
* Includes sales of direct loans.
* Includes guarantees of sales of direct loans.
excess of straightline rates will produce an estimated 1981 tax
expenditure of $0.3 billion, and expensing construction period interest and taxes produces a tax expenditure estimated to be $0.7
billion in 1981.
The cost of financing investment is also reduced by a number of
tax preferences. The dividend exclusion produces a revenue loss
estimated at $0.5 billion in 1981. Exclusion of interest on State and
local industrial development bonds generates an estimated 1981 tax
expenditure of $0.7 billion. Preferential treatment of capital gains
produces two types of tax expenditures. Taxation of capital gains at
less than the ordinary rates is estimated to reduce receipts by $15.7
billion in 1981, and failure to tax capital gains at death is estimated to reduce receipts by another $5.1 billion.
Housing investment is encouraged by permitting deduction for
mortgage interest and property taxes of owner-occupied homes.
These deductions generate estimated 1981 tax expenditures of $14.8
COMMERCE AND HOUSING CREDIT
193
billion and $9.0 billion, respectively. Homeownership is also encouraged by the deferral of capital gains taxes on the sale of homes.
This treatment is estimated to reduce 1981 receipts by $1.1 billion.
Rental housing investment is encouraged by allowing depreciation
in excess of straightline rates. The 1981 tax expenditure that results from this practice is estimated at $0.4 billion.
There are also tax expenditures for specific types of business.
Financial institutions receive tax expenditures estimated at $1.0
billion in 1981 because of the favorable tax treatment accorded
excess bad debt reserves. Small businesses receive a tax preference
because the first $100,000 of corporate income is taxed at less than
46%. In 1981, this provision will generate a tax expenditure of $7.5
billion. The income of credit unions is exempt from tax, producing
a tax expenditure of $0.1 billion.
Finally, permitting the deduction of interest on consumer debt
produces an estimated tax expenditure of $4.2 billion in 1981.
194
THE BUDGET FOR FISCAL YEAR 1981
TRANSPORTATION
National Needs Statement:
• Develop and maintain a transportation system that
meets the needs of commerce and the public in a safe,
reliable, and increasingly efficient manner,
• Insure that transportation policy and programs are consistent with the Nation's economic, environmental, and
social goals,
• Encourage energy conservation.
Meeting the Nation's transportation needs requires a coordinated
effort by the Federal Government, State and local governments,
and the private sector of the economy. For its share, the 1981
budget proposes Federal support for:
• highway improvement and construction;
• mass transit construction equipment purchases, and operating
assistance;
• airway and airport capital improvements;
• financial assistance to railroads;
marine safety and environmental protection; and
• safety for all modes of transportation.
In addition to continuing its assistance for these major activities,
the administration's 1981 budget emphasizes support for energy
conservation and deregulation of several modes of transportation to
help reduce our dependence on foreign oil and strengthen the
economy.
The administration has proposed a number of transportation
initiatives to help meet our long-term energy and conservation
needs. Over the next 10 years, funds totaling $16.5 billion would be
made available for the following transportation energy initiatives:
• public transportation investment;
• auto-use management;
• fuel economy standards improvement; and
• cooperative basic automotive research.
Budget authority of $1.3 billion is proposed for 1980 and $1.5 billion
for 1981. These energy initiatives are further discussed in the
section on ground transportation and in the energy section.
In the past, Government regulation of transportation fostered
the economic growth of various regions of the country, encouraged
the growth of competing forms of transportation, and maintained
stability within the industries. However, now that the Nation's transportation sector is fully matured, the emerging impor-
TRANSPORTATION
195
NATIONAL NEED: BALANCED TRANSPORTATION SYSTEMS
(Functional code 400; in millions of dollars}
Major missions and programs
BUDGET AUTHORITY
Ground transportation:
Transportation energy initiatives (proposed):
Public transportation capital investment..
Auto-use management
Fuel economy standards
Cooperative automotive basic research....
Highway improvement and construction
Highway safety
Mass transit
Railroads:
Existing law
Proposed legislation
,
Regulation
1979
actual
1980
estimate
1,076
200
6,955
1,578
2,427
7,271
1,825
2,235
2,319
2,202
1981
estimate
1982
estimate
1983
estimate
1,222
250
8
20
7,414
2,101
3,887
1,372
250
22
55
6,546
1,708
4,051
1,372
250
27
75
8,150
1,729
4,542
1,695
400
88
1,503
325
91
73
80
1,798
250
85
Subtotal, ground transportation
13,351
14,890
17,035
16,186
18,063
Air transportation:
Airways and airports
Aeronautical research and technology
Air carrier subsidies
Regulation
3,145
519
73
28
3,245
570
96
30
3,473
543
86
29
3,698
534
84
29
3,875
561
75
29
Subtotal, air transportation
3,765
3,941
4,131
4,345
4,539
Water transportation:
Marine safety and transportation
Ocean shipping
Regulation
1,532
522
11
1,651
488
12
1,826
555
12
1,906
713
12
2,006
766
12
2,065
2,151
2,393
2,631
2,784
Subtotal, water transportation
Other transportation
Deductions for offsetting receipts
Total, budget authority
91
98
113
116
120
-67
-70
-55
-54
-54
19,204
21,009
23,618
23,224
25,452
tance of energy conservation gives rise to the second transportation
theme in the 1981 budget: transportation deregulation. The administration continues to support the elimination of outdated and unnecessary regulatory controls to encourage the transportation industries to increase operating efficiencies and to respond better to
the competitive market. To meet this objective, the administration
urges the Congress to enact major railroad and trucking regulatory
reforms by June 1980.
Ground transportation.—The budget includes outlays of $13.8 billion in 1981 for programs to support the Nation's network of highways, railroads, and mass transit in a safe, reliable, and efficient
manner. This is $237 million above the 1980 level.
THE BUDGET FOR FISCAL YEAR 1981
196
NATIONAL NEED: BALANCED TRANSPORTATION SYSTEMS—Continued
(Functional code 400; in millions of dollars)
Major Missions and Programs
OUTLAYS
Ground transportation:
Transportation energy intitiatives (proposed):
Public transportation capital investment..
Auto-use management
Fuel economy standards
Cooperative automotive basic research....
Highway improvement and construction
Highway safety
Mass transit
Railroads:
Existing law
Proposed legislation
Regulation
1979
actual
1980
estimate
50
50
1981
estimate
1982
estimate
1983
estimate
425
180
4
8
7,045
1,465
2,801
745
240
18
30
7,425
1,528
2,986
1,005
250
22
55
7,670
1,555
3,472
1,734
213
88
1,698
348
89
6,759
733
2,542
7,116
1,243
2,712
1,962
2,321
67
79
1,756
40
84
Subtotal, ground transportation
12,064
13,571
13,808
15,007
16,166
Air transportation:
Airways and airports
Aeronautical research and technology
Air carrier subsidies
Regulation
2,850
443
72
27
3,124
532
94
30
3,297
554
87
29
3,446
580
84
29
3,706
578
75
29
Subtotal, air transportation
3,392
3,779
3,967
4,138
4,388
Water transportation:
Marine safety and transportation
Ocean shipping
Regulation
1,424
543
10
1,570
668
12
1,728
590
12
1,801
603
12
1,885
651
12
1,977
2,250
2,330
2,417
2,549
93
102
109
109
115
—67
-70
-55
-54
-54
23,163
.Subtotal, water transportation
Other transportation
Deductions for offsetting receipts
Total, outlays
ADDENDUM
Off-budget Federal entity:
U.S. Railway Association:
Budget authority
Outlays
MEMORANDUM—Attribution of Federal
Financing Bank outlays
Railroads
17,459
19,631
20,159
21,617
59
89
68
68
71
68
75
75
80
80
- 2 5
305
241
235
-51
Transportation energy initiatives.—The administration proposes
to use $16.5 billion for energy-related transportation initiatives
over the next 10 years, including $1.5 billion in budget authority
for 1981.
The proposed public transportation capital investment program
would increase capacity and improve services. Grants would be
TRANSPORTATION
197
provided to States and cities that have adopted specific energy
conservation plans. Each major project to be funded would have to
be consistent with these plans and would be required to show high
probability of producing significant energy savings at a reasonable
cost. Public transportation improvements are needed to insure that
the Nation's transit systems can accommodate more passengers in
the short term in response to energy shortages. Over the longer
term, these investments are needed to make public transportation
an attractive and acceptable alternative to the single-occupant
automobile. Budget authority of $1.1 billion is proposed for 1980
and $1.2 billion for 1981.
The proposed auto-use management program consists of grants to
State and local governments to achieve energy savings by providing attractive alternatives to the use of single-occupant automobiles. This program would:
• increase the Federal share from 75% to 90% for highway
related projects that encourage energy efficiency;
• finance projects that have particularly high potential for reducing the amount of fuel Americans use in automobile
travel;
• purchase equipment that could monitor fuel economy as part
of routine vehicle inspection and maintenance programs; and
• measure and enforce compliance with the 55 miles per hour
speed limit.
A supplemental appropriation of $200 million for 1980 and an
appropriation of $250 million for 1981 are proposed to begin the
auto-use management program.
The fuel economy standards improvement program would study
the availability of technologies to improve the fuel efficiency of
motor vehicles. Specific projects would be directed toward improved
engines, drive trains, and structural design; fuel-efficient light
trucks and 2-passenger urban vehicles; and studying the market for
more fuel-efficient vehicles.
The cooperative basic automotive research program would be a
joint effort between a number of Federal agencies and the automotive industry to advance basic scientific knowledge for the development of energy-efficient, safe, and environmentally acceptable
technologies for the next generation of motor vehicles. Budget authority of $20 million is requested for 1981.
Highway improvement and construction.—Major highway programs will continue to focus on the adequacy of the Nation's highway system. The administration continues to support accelerating
the completion of the Interstate highway system and providing
maximum flexibility in the use of Federal money for either highway or transit programs. The budget proposes focusing highway
198
THE BUDGET FOR FISCAL YEAR 1981
construction funds on those programs that are clearly of national
interest and that require Federal support to undertake. The budget
does not propose separate funding of a number of smaller highway
programs that can be funded by existing categorical grant programs.
In providing multi-year authorizations for highway construction,
the Congress reduced the highway funds for 1982. The budget
incorporates this congressionally-approved lower level for 1982. The
budget assumes increased funding beginning in 1983, when new
authorization will be required.
Steps will be taken to assure that urban areas are not adversely
affected by the Federal highway program. Major new highway
projects will be evaluated on the extent to which they:
• reduce urban sprawl and the movement of jobs away from the
Nation's urban centers;
• rehabilitate existing facilities and provide alternatives to new
highway construction;
• minimize negative effects on both the natural and urban environment; and
• promote energy conservation through incentives such as special lanes for buses and carpools.
Highway safety.—Motor vehicle accidents are the leading cause
of death for persons between 15 and 45 years of age. Each year
approximately 50,000 lives are lost and 2,000,000 injuries occur on
our Nation's highways.
The administration continues to emphasize funding of highway
safety programs to reduce the number of highway deaths and
injuries. Outlays for these programs are expected to reach $1.5
billion in 1981, a doubling of the program over 2 years. The national highway safety program focuses regulatory and grant activities
on improving vehicle and highway safety programs. In 1981, emphasis will be placed on the safety design of light trucks and vans,
and to State enforcement of the national 55 mile per hour speed
limit. Highway safety programs will focus on rehabilitating or
replacing unsafe bridges and on construction activities to eliminate
highway hazards.
Mass transit —Including the energy initiative, Federal, State,
and local funding for transit capital improvements is projected to
be $52 billion during the 1980's, including $2.1 billion recently
approved for Washington Metro. In comparison, about $15 billion
was spent on mass transit capital improvements by all levels of
Government in the 1970's.
Including proposed legislation, $5.2 billion in obligations is requested for mass transit in 1981. This is $0.3 billion above the level
currently proposed for 1980. Programs for mass transit include:
TRANSPORTATION
199
• capital improvement assistance for construction and rehabilitation of transit facilities and the purchase of new equipment;
• operating assistance for labor, fuel, management, and maintenance expenses; and
• research, development, and demonstration of new technologies and operating, management, and marketing techniques.
The administration is committed to rapid expansion of the Nation's transit bus fleet, and to increasing Federal support for bus
replacement and modernization and expansion of bus facilities. The
budget would increase dramatically the funds available for these
purposes. Increased bus service is the quickest and most flexible
way to use mass transit to save energy. The administration also
intends to reduce the procedural problems that hinder the expeditious procurement of buses.
The administration is proposing that funds be devoted to expedite the completion of those rail transit system segments (in
Miami, Baltimore, Atlanta and Buffalo) for which the Federal Government has pledged support in letters of intent. Cities with existing rail transit systems will receive increased assistance from the
energy initiative to modernize and, in some cases, extend their
systems.
The Congress recently enacted a separate authorization for completing the Washington Metrorail system. In future years funding
will be requested under this authority provided that reliable
sources of revenue are provided by the Washington area jurisdictions to help support the operating costs of the regional transit
system.
Commitments to fund new fixed guideway transit systems or
extend present systems will depend upon thorough review of the
merits of each project and the alternatives available. Criteria for
reviewing and judging the extent to which each project meets the
Nation's urban transportation needs will be developed. In particular, the energy-saving potential of any proposed project, including
consideration of the energy used in construction, will be one determinant of whether the project is approved.
The administration also proposes to increase Federal mass transit operating subsidies as part of its overall energy-conservation
strategy. Budget authority of $1.2 billion is proposed for 1981 to
support those urban formula grants that can be used for operating
expenses. This is an increase of 8.6% over the 1980 level. Most of
the increase will go to cities with extensive transit networks.
Railroads.—Federal financial support of the railroads is primarily a phenomenon of the 1970's, resulting from the collapse of
200
THE BUDGET FOR FISCAL YEAR 1981
railroads in the Northeast and Midwest. The Penn Central, Milwaukee, and Rock Island Railroads bankruptcies are the most notable examples. The 1981 and subsequent budgets will focus Federal
aid on rebuilding the industry's health. Excluding investment in
Conrail, 1981 budget authority for assistance to railroads is $0.2
billion, or 13%, above the 1980 level. In addition, the administration's legislative program includes deregulation of the rail industry, without which increasing Federal subsidies can be anticipated
in future years to prevent the abandonment of rail services.
Historically, the Government has tended to use the railroad industry to promote economic development, often keeping rates at
unrealistically low levels. Furthermore, the standards used to judge
the need for, and level of, rail service have not been adequately
adjusted for changes in the economy and growth of truck and barge
transportation. Inefficient practices have also reduced railroad revenues, and contributed to the overall decline of the railroad industry, The administration has concluded that the railroads cannot
continue absorbing the cost of outdated and inefficient regulatory
practices. To do so would likely lead to increased rail bankruptcies
and, ultimately, to even greater demands for massive Federal subsidies to preserve activities the market has determined are not
viable.
The administration has already proposed substantial deregulation of the railroads. The administration's rail deregulation proposal
would insure an orderly transition to a less-regulated environment.
It would allow the railroads to base their rates more closely on the
actual cost of operations, compete more effectively with other transportation modes, and eliminate some services that currently operate
at a loss. The Nation needs transportation industries that are
responsive to the demands of today's economy, and deregulation is
the best way of making them responsive. The administration urges
prompt legislative action on its deregulation proposal.
The experience of Conrail illustrates the hardships that the rail
industry is experiencing as a result of outmoded regulatory practices. To date, $3.3 billion in direct Federal loans and investment in
preferred stock has been authorized for needed operating subsidies
and capital improvements in Conrail. The administration is requesting an appropriation of the final $185 million of that authorization in 1981. However, Conrail has indicated that it cannot
become self-sufficient within the existing authorization unless basic
rail regulatory reform legislation is enacted and operating efficiencies are carried out. The administration believes that enactment of
strong rail deregulation is critical to Conrail's financial future.
In May of last year, the administration proposed a 5-year authorization of $1.5 billion to support freight rail restructuring for rail-
TRANSPORTATION
201
roads other than Conrail. For 1981 the administration is requesting
the first $250 million in budget authority of this authorization to
provide repayable credit and other forms of direct rail assistance.
In addition, authority to guarantee over $300 million of loans is
requested, along with $85 million in grants to States for rehabilitation of rail lines. These funds would enhance the ability of the
railroads to provide more efficient and reliable rail services by
eliminating redundancy in the rail system and by promoting labor
productivity. Assistance in restructuring rail service in those geographic areas covered by the bankrupt Rock Island and Milwaukee
Railroads will be a special priority in 1981. Special consideration
will also be given to rail improvements that support movement of
energy resources, especially coal.
Assistance to intercity rail passenger service takes the form of
subsidy to the National Railroad Passenger Corporation (Amtrak),
and grants for capital improvement in the Northeast Corridor.
Federal subsidies in 1981 for Amtrak will total $975 million, as
Amtrak enters its second year of operating a more efficient route
structure than it had during the 1970's. Amtrak fares covered only
38.5% of the cost of train service in 1978. It is expected that
Amtrak will be able to increase the percent of operating costs
covered by revenues to 42 or 43% in 1981 and 50% by 1985. This
increase will result from ending service on the least cost-effective
routes (18% of the routes served were dropped in October 1979),
better scheduling, using more reliable equipment, and sustaining
the growth in train ridership now resulting from the increasing
cost of alternative means of transportation. Ridership growth and
ticket price increases are expected to increase Amtrak revenues to
over $500 million in 1981.
The Northeast Corridor improvement program to improve rail
service between Washington, D.C., New York, and Boston is to
be completed in 1984. The budget assumes an additional authorization of $750 million, which would bring the total amount authorized to $2.5 billion.
Regulation.—In 1979, the administration proposed legislation to
improve competition in the trucking industry. The industry is partially deregulated at present, and the additional reform would
increase the efficiency and lead to price savings for consumers and
energy savings for the Nation. Congressional action is expected by
mid-1980.
Air transportation.—To provide a safe and reliable air transportation system, the Federal Government will spend an estimated
$4.0 billion in 1981 compared with $3.8 billion in 1980. In addition,
approximately $400 million in private credit for aircraft acquisition
202
THE BUDGET FOR FISCAL YEAR 1981
will be guaranteed in 1981, which is similar to the level of demand
expected in 1980,
Airways and airports.—The primary mission of the Federal Aviation Administration (FAA) is to facilitate the safe movement of
air traffic. The 1981 budget requests $3.3 billion in budget authority and 195 new safety inspectors to permit the FAA to continue to
improve and expand aircraft safety inspections and review of airline maintenance and safety procedures. Increasing the number of
air traffic controllers by 412 to 23,600 will enable the FAA to
maintain airspace safety in the face of continued expected growth
in aviation traffic. The FAA will continue replacing older navigation and traffic control equipment with solid state technology.
The budget proposes to expand substantially the number of airports equipped with instrument landing systems. Budget authority
of more than $85 million is requested to purchase computer and
other equipment for flight service stations to provide improved
aviation, weather, and flight plan services to pilots.
The administration has proposed legislation to extend the airport
and airway trust fund from 1981 through 1985. The programs
financed by this fund will expand the capacity and safety of the
airport and traffic control system to handle the expected rapid
growth in air transportation—growth that is partly attributable to
the recent deregulation of the airline industry. The proposed
budget authority for 1981-85 totals $14.6 billion. This total includes
$8.0 billion for increased user financing of the FAA's cost of operating the airway system, $4.0 billion for airport development grants
and planning, $2.1 billion for facilities and equipment, and $0.5
billion for research and development. The administration has also
proposed changes in user taxes that sustain the trust fund to
provide a better balance between the sources of revenue and the
groups that benefit from the various trust fund programs.
Aeronautical research and technology.—NASA's aeronautical research and technology programs will continue to provide a sound
technological base for increasing the safety, efficiency, and performance of civilian and military air transportation systems, and
to maintain U.S. leadership in aeronautical technology. The budget
requests $0.5 billion in budget authority, and emphasizes the development of new technology to improve the performance of civil and
military helicopters and to develop quieter, less polluting, and
more efficient aircraft engines. The aircraft energy efficiency program would be augmented by an initiative for developing advanced
turboprop technology that could improve fuel efficiency by more
than 20% over currently used aircraft engines. A separate initiative involves studying the combuster parts of turbine engines for
ways to improve their durability and performance.
TRANSPORTATION
203
Air carrier subsidies.—Under the terms of the Airline Deregulation Act of 1978, the Civil Aeronautics Board (CAB) will continue
to provide Federal assistance to certified carriers that operate
routes eligible for subsidy. Moreover, the CAB's new subsidy program guarantees essential air services to small communities now
served by certified carriers. Commuter airlines serving these small
communities are eligible to receive funds under this subsidy program, and are also eligible to receive loan guarantees for the
purchase of aircraft. The administration believes commuter airlines can effectively replace larger airlines in serving small communities by providing more frequent and convenient service.
Regulation.—Administration initiatives enacted by the Congress
led to effective deregulation of the domestic airline industry. The
administration also favors a pro-competitive international aviation
policy and supports legislation to create a statutory framework
emphasizing competition for the international aviation activities of
the Federal Government. While domestic deregulation has clearly
shown that it can lead to reduced fares, increased traffic, and
higher industry profits, these benefits are expected to be partially
offset by soaring fuel costs.
Water transportation,—In order to meet the need for a competitive U.S. merchant marine and to maintain a safe, reliable, and
efficient marine transportation system, the budget proposes $2.3
billion in outlays for water transportation programs in 1981, compared with $2.2 billion in 1980.
Marine safety and transportation.—The Coast Guard provides a
variety of services to the marine and general boating public that
enhance the safe, efficient, and enjoyable use of the Nation's waterways. These services include search and rescue of persons in distress, maintenance of navigation aids, prevention and clean up of
marine pollution, and the. enforcement of laws concerning the
safety of vessels and the conservation of ocean fisheries. The
budget includes $1.8 billion in budget authority for these programs
in 1981. Funding levels in the 1981 budget permit the Coast Guard
to continue both scheduled replacement of older cutters and aircraft, and increase programs to improve operational efficiencies
and safety. Expanded efforts to upgrade and modernize many Coast
Guard training and shore facilities will also be undertaken.
As our Nation expands its efforts to increase domestic production
of energy, offshore drilling and exploration will increase. The Coast
Guard is increasing its inspection capability for offshore drilling
rigs, both to assure the safety of drilling personnel and to confirm
that adequate precautions are taken by industry so that oil spills
204
THE BUDGET FOR FISCAL YEAR 1981
do not create serious threats to the environmental and commercial
health of our shorelines.
In 1981 the Coast Guard will take over from the Navy full
responsibility for the operation of OMEGA, a world-wide navigation system.
Ocean shippingDirect
subsidies are provided to the U.S. merchant marine and shipbuilding industry to offset higher U.S. costs
that otherwise would encourage American ship operators to build
their vessels in foreign shipyards and operate them under foreign
registry. Outlays for this program are estimated to be $556 million
for 1981. Indirect support is provided to the maritime industry in the form of loan guarantees and Government cargo preference rules. (These rules require that all military ocean shipments
and half of all non-military ocean shipments of Government-sponsored cargoes be made aboard U.S. flag vessels.) In 1981, an estimated $1.5 billion in ship construction loan commitments will be
guaranteed by the Federal Government. The cost to the Federal
Government of the cargo preference rules is estimated to be approximately $110 million in 1981 outlays.
Despite continuing Federal subsidies, the U.S. merchant marine
faces an increasingly uncertain future. To help reverse the existing
unfavorable trend and to promote the industry more effectively,
the administration has proposed legislation to reorient the subsidy
programs toward the growing market in the transportation of bulk
commodities. It has also been reviewing legislation introduced in
Congress that is designed to reform both the shipping statutes
administered by the Federal Maritime Commission and the promotional programs administered by the Maritime Administration in
the Commerce Department.
On October 1, 1979, the Panama Canal Commission—a new Federal agency—took over operation of the canal. The Commission is
required to generate sufficient revenues to cover all costs over the
life of the treaty thereby eliminating the need for support from
taxpayers. Unlike the predecessor Panama Canal Company, the
Commission will not provide related commercial services to canal
users and employees. Commercial services will be provided largely
by the Government and private businesses of Panama.
The deferral of income taxes on shipping companies results in a
tax expenditure estimated at $70 million in 1981.
TRANSPORTATION
205
CREDIT PROGRAMS—TRANSPORTATION
(In mittens of dollars)
PfC't^iT!
Highways and mass transit:
Direct loans:
New loans
Repayments, sales and adjustments ( - )
Net loan outlays
Net loan guarantees
1979
actual
1981
estimate
1980
estimate
-106
— 12
— 106
-12
*
*
- 1
-1
84
2
104
2
175
2
Net loan outlays
86
105
177
Loan guarantees;
New loans
Net loan guarantees
213
40
332
308
322
305
29
-30
10
-4
250
-241
6
9
Aid to railroads:
Direct loans:
New loans
Repayments, sales and adjustments ( - )
Assistance to ocean shipping:
Direct loans:
New loans
Repayments, sales and adjustments ( - )
Net loan outlays
- 1
- 1
Loan guarantees:
New loans
Net loan guarantees
497
266
763
515
1,500
1,209
Aircraft loan guarantees:
Loan guarantees:
New loans
Net loan guarantees
8
— 17
402
387
400
360
Off-budget Federal entity—U.S. Railway Association:
Direct loans:
New loans
Repayments, sales and adjustments ( - )
53
-23
22
—22
22
-25
Net loan outlays
•$500 thousand or less.
30
—3
206
THE BUDGET FOR FISCAL YEAR 1981
COMMUNITY AND REGIONAL DEVELOPMENT
National Needs Statement:
• Promote the development, maintenance, or redevelopment of economically and socially viable neighborhoods
in urban, suburban, and rural areas,
• Develop a partnership among Federal, State, and local
governments and the private sector to assist in the stabilization and revitalization of economically depressed or
declining areas.
• Provide relief to areas that suffer from natural disasters.
The administration continues to place a strong emphasis on revitalizing economically depressed and declining areas through a partnership among Federal, State and local governments and the private sector. This partnership is essential to the administration's
urban and rural development policies, since Federal resources
alone cannot revitalize economically depressed or declining areas.
Budget authority for community and regional development is
proposed to increase from $9.0 billion in 1980 to $9.8 billion in
1981. This increase reflects the administration's commitment to
this national need as announced by the President in his urban and
rural policy statements. Outlays are expected to increase from $8.5
billion in 1980 to $8.8 billion in 1981.
Federal programs in this area were selectively increased in 1980.
The budget continues a policy of selective increases and proposes
increases for those programs that advance the Federal partnership
with State and local governments and the private sector and that
direct Federal resources to areas with the greatest need and potential for improvement. Therefore, Federal resources are focussed on
two key objectives:
• increasing the capability of State and local governments to
provide those public services essential to the revitalization of
their neighborhoods and communities; and
• providing more effective support for private sector economic
development, thus increasing the competitiveness of the U.S.
economy and the economic vitality of local areas, particularly
those areas facing economic stress.
To achieve these objectives, the budget proposes to:
• increase funding for the Economic Development Administration's (EDA) development finance activities from $0.5 billion
in 1979 to $1,1 billion in 1980 and $1.2 billion in 1981;
• increase EDA's authority to guarantee development loans to
$0.9 billion in 1980 and $1.6 billion in 1981;
COMMUNITY AND REGIONAL DEVELOPMENT
207
• increase the community development block grant program by
$150 million;
• maintain the urban development action grant program at its
enhanced 1980 funding level of $675 million; and
• continue support for neighborhood-oriented programs, including a 50% increase in budget authority for the neighborhood
self-help development grants and increased funding for housing rehabilitation activities of the Neighborhood Reinvestment Corporation.
NATIONAL NEED: COMMUNITY AND REGIONAL DEVELOPMENT
(Furctixa! code 4SO, in millions of deters)
Major missions i t i prolans
BUDGET AUTHORITY
Community development
Community development block grants
Urban development action grants
Rehabilitation loans
Neighborhood self-help
Neighborhood Reinvestment Corporation
Pennsylvania Avenue development
Other programs
Subtotal, community development
1979
actual
1SS0
estimate
19S1
estimate
1982
estimate
1983
estimate
65
318
3,900
675
135
10
12
40
332
3,950
675
188
15
13
38
350
4,100
675
207
15
15
48
357
4,250
675
208
15
17
43
373
4,770
5,103
5,230
5,417
5,580
1,034
538
11
20
704
1,138
723
1,241
832
1,273
909
1,325
50
150
150
150
1,063
5
522
124
-401
1,105
5
550
131
-281
3,750
400
232
5
Area and regional development:
Rural development and business assistance.
Economic development assistance
Local public works
Inland energy impact assistance
Indian programs:
Existing law
Proposed legislation
Regional commissions
Other programs
Offsetting receipts
1,013
1,037
492
155
-305
486
175
-406
1,005
5
496
146
-413
Subtotal, area and regional development
2,957
3,184
3,353
3,569
3,895
Disaster relief and insurance:
Disaster loans
Federal emergency management activities...
Drought assistance and other
1,235
1,020
10
44
628
15
181
1,092
10
210
514
10
225
506
10
Subtotal, disaster relief and insurance
2,266
687
1,283
734
741
-23
-25
-25
-26
-26
8,950
9,840
9,694
10,191
Deductions for offsetting receipts
Total, budget authority
9,969
Community development—A variety of Federal programs, administered by several agencies, support the mission of community development by providing Federal grants, loans, loan guarantees, and
technical assistance to States and localities. Outlays for this mission are estimated to rise from $4.5 billion in 1980 to $5.0 billion in
1981.
THE BUDGET FOR FISCAL YEAR 1981
208
NATIONAL NEED: COMMUNITY AND REGIONAL DEVELOPMENT—Continued
(Functional code 450; in millions of dollars)
Major missions and programs
OUTLAYS
Community development:
Community development block grants
Urban development action grants
Rehabilitation loans
Neighborhood self-help
Neighborhood Reinvestment Corporation
Pennsylvania Avenue development
Other programs
Subtotal, community development
1980
estimate
1979
actual
1981
estimate
1982
estimate
1983
estimate
29
631
3,500
180
170
9
12
44
604
3,805
365
190
10
13
40
539
3,850
610
217
18
15
44
484
3,975
660
197
18
17
38
415
3,995
4,519
4,963
5,238
5,319
669
656
784
874
931
431
551
16
358
34
10
802
43
200
53
62
1,093
1,175
71
55
154
45
160
904
5
478
144
-401
952
5
496
134
-281
3,161
73
100
Area and regional development:
Rural development and business assistance.
Economic development assistance:
Existing law
Proposed legislation
Local public works
Coastal energy impact assistance
Inland energy impact assistance
Indian programs:
Existing law
Proposed legislation
Regional commissions
Other programs
Offsetting receipts
805
846
418
130
-305
430
199
-406
856
5
458
170
-413
Subtotal, area and regional development
3,899
2,695
3,020
3,377
3,617
Disaster relief and insurance:
Disaster loans
Federal emergency management activitiesDrought assistance and other
957
617
36
626
627
26
200
646
17
230
579
15
245
744
10
Subtotal, disaster relief and insurance
1,611
1,278
863
824
999
-23
-25
-25
-26
-26
Deductions for offsetting receipts
1,741
11
*
9,482
8,467
8,820
9,413
9,910
ADDENDUM
Off-budget Federal entity—Rural Telephone
Bank:
Budget authority
Outlays
106
101
156
150
150
144
106
101
156
150
MEMORANDUM—Attribution of Federal
Financing Bank outlays
Community development
Rural development
5
830
157
992
Total, outlays
264
1,075
243
646
52
646
*$500 thousand or less.
Community development block grants.—The Housing and Community Development Act of 1974 consolidated a number of sepa-
COMMUNITY AND REGIONAL DEVELOPMENT
209
rately funded HUD programs of the Department of Housing and
Urban Development (HUD) into the community development block
grant program. This program substantially improved and simplified the delivery of Federal community development assistance to
local governments by offering a single flexible source of Federal
assistance to support a wide range of activities based on local
priorities. Activities funded under this program include property
acquisition, construction of public facilities, rehabilitation of buildings, provision of social services, planning and management, and
economic development, all primarily for the benefit of low- and
moderate-income people. Funds are allocated to large communities
by an entitlement formula, and to small communities through
competition on the basis of objective measures of need.
As in the past 2 years, the Administration is proposing that the
budget authority for the community development block grant program be increased $150 million, from $3.8 billion in 1980 to $3.95
billion in 1981. However, unlike previous years, the Administration
will not request additional budget authority for the categorical
program financial settlement fund (funded at $100 million in 1980),
which provided funds for the financial settlement of projects begun
under the categorical programs replaced by the community development block grant program. Available resources from the 1980
appropriation and other sources will be used to make financial
settlements on the remaining projects. In addition, total loan guarantees under the block grant program (section 108) are being increased from about $30 million in 1979 to an estimated $200 million in 1980 and $300 million in 1981. Outlays, which reflect the rate
at which local governments carry out their projects, are expected to
increase from $3.5 billion in 1980 to $3.5 billion in 1981.
Urban development action grants.—Under this HUD program,
originated by this Administration in 1978, severely distressed cities
and urban counties receive discretionary grants to supplement
local government and private sector financing for major economic
development and neighborhood revitalization projects. As a major
element of the President's urban policy, funding for the program
has increased from $400 million in 1979 to $675 million in 1980.
The 1981 budget continues the Administration's strong commitment to this program by requesting another $675 million in budget
authority for the action grants. Outlays for the program are estimated to rise from $180 million in 1980 to $365 million in 1981.
Rehabilitation loan program.—This HUD program offers subsidized loans to rehabilitate residential and commercial structures in
specified areas. New commitments of $240 million are proposed for
1981, an increase of $25 million over 1980. The 1981 request will
310-000 n . on .
It
210
THE BUDGET FOR FISCAL YEAR 1981
finance the rehabilitation of about 13,200 single-family dwellings
and 6,000 multi-family units. Outlays are estimated to increase
from $170 million in 1980 to $190 million in 1981.
Neighborhood self-help.—The budget continues to support the
neighborhood-oriented programs established by this administration
in HUD. Budget authority of $15 million is requested for the neighborhood self-help development program in 1981, a 50% increase
over the 1980 level. This program provides Federal grants to voluntary, nonprofit neighborhood organizations for specific revitalization projects in declining neighborhoods.
The Neighborhood Reinvestment Corporation.—This public corporation, established last year, has been successful in forming working partnerships among residents, local governments, and financial
institutions for neighborhood revitalization. The Corporation plans
to expand its neighborhood housing services program to more than
180 neighborhoods by the end of 1981. Budget authority of $13.4
million is requested for 1981, $1.4 million above the 1980 level.
Pennsylvania Avenue development—The budget requests $38 million in budget authority in 1981 for the Pennsylvania Avenue
development plan to revitalize downtown Washington, D.C. The
first major commercial and public development projects began in
1979, with additional growth in 1980. Development will continue
under the direction of the Pennsylvania Avenue Development Corporation in cooperation with private enterprise. Outlays for land
acquisition and public development activities are estimated at $40
million in 1981.
Other programs.—Several other programs contribute to community development. Two of the larger programs are the comprehensive planning grant and urban homesteading programs administered by HUD. Comprehensive planning grants, established by the
Housing Act of 1954, provide funds to States, local governments,
and areawide organizations for planning and management. Legislation will be proposed to relate planning more directly to the allocation of Federal and State funds. Budget authority of $40 million is
proposed for this program in 1981.
The urban homesteading program, which transfers properties to
local governments for use in locally administered programs of residential-area revitalization, will expand to allow for the transfer of
properties owned by the Veterans Administration and the Farmers
Home Administration, as well as HUD. This expansion will improve coordination in residential areas where properties are presently held by three separate agencies. Carryover balances from
COMMUNITY AND REGIONAL DEVELOPMENT
211
prior years will be used to reimburse agencies for the homesteading properties transferred.
Area and regional development—Programs in this mission support rural and urban development, American Indian tribal governments, and multistate regional development through the Appalachian Regional Commission and other regional commissions.
Rural development and business assistance.—The Department of
Agriculture administers a variety of programs aimed at developing
rural areas. The 1981 budget provides for:
• $700 million in direct loan obligations for water and waste
disposal systems;
• $240 million in direct loan obligations for community facilities;
• $926 million in loan guarantee obligations for business and
industrial development;
• $284 million in budget authority for water and waste disposal
grants; and
• $15 million in budget authority for development and planning
grants.
Rural areas can also receive assistance for sewer, water, and
community facilities from the Environmental Protection Agency's
waste treatment grant program and the Housing and Urban Development's community development block grant program. The Department of Agriculture's community facility programs are limited
to communities with a population of less than 10,000, while industrial development loan guarantees are available in communties of
less than 50,000 population. These and other Federal programs will
support the President's small community and rural development
policy, announced in December 1979. This policy recognizes the
different needs and problems of rural America, and the importance
of local priorities and local decisionmaking.
Outlays for rural programs are estimated to increase from $656
million in 1980 to $784 million in 1981.
Economic development.—The Economic Development Administration (EDA) assists States, rural and urban communities, and Indian
tribes in efforts to foster economic development and provide permanent employment opportunities in distressed areas. EDA assistance
includes grants for State and local planning, technical assistance to
public and private organizations, and construction of public facilities. It also includes direct loans and guaranteed loans for public
works and business development.
Legislation was submitted last year that would greatly improve
EDA's ability to address the economic development and adjustment
problems of rural and urban areas. This legislation, which is pro
212
THE BUDGET FOR FISCAL YEAR 1981
posed to become effective in 1980, would streamline eligibility requirements and tighten the targeting of EDA resources on distressed areas. It would also consolidate the fragmented authorities
under which assistance is now provided. Further, it would combine
EDA's existing business loan and guarantee programs with the
development of financing incentives that were formerly contained
in the National Development Bank proposal, which included loan
guarantees, direct loans, and interest subsidies to induce private
sector investment in economically distressed areas. These changes,
coupled with an ongoing program of planning grants to public
agencies, will help to create a more effective public and private
partnership for economic development.
For these programs the budget requests budget authority of $1.1
billion in 1980 and $1.2 billion in 1981. In contrast, EDA programs
were funded at a level of $0.5 billion in 1979, For loan guarantees,
the budget requests authority of $0.9 billion in 1980 and $1.6 billion
in 1981. Outlays for economic development assistance in 1981 are
estimated to increase by $278 million.
Coastal energy impact assistance.—This program provides grants
and loans to State and local governments to assist them in planning and financing public facilities and services required as a
result of energy development activities in or near coastal areas,
such as Outer Continental Shelf (OCS) oil and gas developments. In
addition, grants are provided to States to help them participate in
OCS leasing decisions. No budget authority is requested for the
program in 1981 because an estimated $62 million will be available
in 1981 for loans and grants from prior-year appropriations. For
1980 and 1981 an estimated total of $133 million will be obligated
for Federal grants and loans. Outlays are estimated to rise from
$34 million in 1980 to $53 million in 1981.
Inland energy impact assistance.—This program provides grants
to areas adversely affected by rapid energy development. Budget
authority is proposed to increase from $50 million in 1980 to $150
million per year starting in 1981. The increased funding depends
upon enactment of legislation authorizing State revolving funds
and loan guarantees to extend coverage of the program to a broader range of energy projects. Assistance is provided by the Department of Energy and administered by the Farmers Home
Administration.
Indian programs,—The major objectives of Federal Indian policy
are: to meet the trusteeship responsiblities of the U.S. Government,
to increase self-determination for American Indian tribal governments, and to encourage economic development on Indian reservations. To further these objectives, the Indian Self-Determination
COMMUNITY AND REGIONAL DEVELOPMENT
213
and Education Assistance Act of 1975 enables the Bureau of Indian
Affairs (BIA) to enter into contracts so that Indian communities
can administer the Federal programs serving them. Approximately
$190 million of BIA programs are covered by such contracts.
The Federal Government provides grants, training, and technical
assistance to strengthen tribal management and planning abilities.
It also encourages economic development through business development assistance, direct Federal loans, loan guarantees, and interest
subsidies. Federal Indian programs also fund community development activities, such as construction of roads, schools, and irrigation systems. Outlays for the Indian programs whose primary mission is regional development are estimated to be $846 million in
1980 and $861 million in 1981. Additional assistance to Indian
tribes is classified in the health, education, natural resources and
environment, and general government functions.
Regional commission programs.—Regional commissions are designed to secure Federal-State cooperation in addressing interstate
and shared substate problems of community and economic development. The commissions serve multiple jurisdictions and agencies
through planning, research and development activities. Legislation
was submitted in 1979 that would extend the regional commissions
nationwide and encourage the use of development grants to resolve
multistate, rather than strictly local, problems. Outlays are estimated to increase from $430 million in 1980 to $458 million in
1981.
Disaster relief and insurance.—Insurance against losses from
such natural disasters as floods, hurricanes, and tornadoes is the
responsibility primarily of individuals and businesses. Though
State and local governments are responsible for aiding recovery,
Federal insurance and disaster relief programs are available to
supplement these resources when they are insufficient.
Disaster loans.—The Small Business Administration administers
a program of loan assistance to victims of physical disasters, including farmers. The Farmers Home Administration in the Department of Agriculture also administers a program that provides
emergency loan assistance to farmers. To remedy the difficulties
caused by this overlap in responsibility, the administration has
proposed to place responsibility for agricultural disaster loans
solely in the Farmers Home Administration, which, because of its
longstanding experience in dealing with farmers, is better equipped
to handle such loans than the Small Business Administration.
Farmers Home Administration programs are discussed more fully
in the agriculture and commerce and housing credit functions.
THE BUDGET FOR FISCAL YEAR 1981
214
CREDIT PROGRAMS—COMMUNITY AND REGIONAL DEVELOPMENT
(In millions of dollars)
1979
actual
Program
Housing and Urban Development programs:
Direct loans:
New loans
Repayments, sales and adjustments ( - )
319
-264
Net loan outlays
Farmers Home Administration programs:
Direct loans:
New loans
1
Net loan outlays
1981
estimate
274
-122
259
- 8 1
152
178
55
-315
195
—75
435
215
1034
1,387
1,698
56
Loan guarantees:
New loans
Net loan guarantees
Repayments, sales and adjustments ( - )
S
estimate
-1,029
5
-1,513
-1,782
-126
- 8 4
1,833
1308
2,422
1690
2,701
1782
85
- 2 7
90
- 2 5
95
- 3 0
58
65
65
643
572
900
807
1,620
M94
1,250
-388
775
-446
540
-461
862
329
79
1
—2
2
—1
—2
22
- 1 1
74
- 1 1
95
- 1 4
Net loan outlays
11
63
81
Loan guarantees:
New loans
Net loan guarantees
1
- 3
41
33
13
_4
131
- 5
185
- 7
185
- 9
125
178
176
2
Loan
Newguarantees:
loans
Net loan guarantees
Economic Development Assistance:
Direct loans:
New loans
Repayments, sales and adjustments ( - )
Net loan outlays
Loan guarantees:
New loans
Net loan guarantees
Small Business Administration disaster loans:
Direct loans:
New loans
Repayments, sales and adjustments ( - )
Net loan outlays
Loan guarantees:
New loans
Net loan guarantees
Other programs:
Direct loans:
New loans
Repayments, sales and adjustments ( - )
Off-budget Federal entity—Rural Telephone
Bank:
Direct loans:
New loans
Repayments, sales and adjustments ( - )
Net loan outlays
1
Includes sales of direct loans.
* Includes guarantees of sales of direct loans.
COMMUNITY AND REGIONAL DEVELOPMENT
215
Based upon the Nation's disaster experience during recent years,
and assuming that 1981 is an average year, outlays in 1981 are
estimated at $200 million.
Federal emergency management activities.—The Federal Emergency Management Agency (FEMA) was established in 1979 to
bring together, in a single agency, the major Federal programs for
civil defense, emergency preparedness, flood insurance, disaster
relief assistance and hazard mitigation. The goal of this reorganization is to improve the coordination of Federal responsibilities for
civil and natural disasters and to establish a single Federal contact
for State and local disaster preparedness agencies. In 1981, FEMA
will continue to realign and consolidate its programs. Outlays for
disaster relief and assistance and for hazard mitigation are estimated to be $627 million in 1980 and $646 in 1981.
FEDERAL OUTLAYS FOR CIVIL PUBLIC WORKS AND CONSTRUCTION 1
(In millions of dollars)
Function or Program
1981
estimate
1980
estimate
19/9
actual
Federal public works: 1
Community and regional development
Water resources projects
Other natural resources and environment
Energy
Transportation
Veterans hospitals
Health
Other functions
204
2,269
669
2,093
302
236
177
426
126
2,410
722
2,383
413
264
171
549
118
2,262
602
3,098
469
371
161
547
Total, Federal public works
6,377
7,039
7,628
Grants to State and local governments:
Community and regional development:
Community development block grants
Local public works
Other
3,161
1,741
1,252
3,500
358
1,410
3,805
200
1,581
Subtotal, community and regional development
Highways and mass transit
Other transportation
Pollution control and abatement
Other natural resources and environment
Other
6,154
8,796
579
3,756
289
222
5,268
9,613
665
3,900
270
216
5,586
10,241
682
3,950
280
218
Total, grants to State and local governments
19,797
19,932
20,957
Total, public works
26,174
26,971
28,585
1
Outlays for the construction and rehabilitation of pftpcal assets, including privately owned assets.
Related programs.— Many programs whose primary purpose is to
fulfill other national needs also promote community and regional
development. For example, Federal outlays for civil public works,
shown in the table above, support community development. In
216
THE BUDGET FOR FISCAL YEAR 1981
addition, grants for local health, education, crime prevention, employment training, transportation and general revenue sharing
assist State and local development. Other direct Federal activities,
such as housing credit, defense contracting, management of public
forests and parks, and the operation of Federal faciltities—such as
Veterans Administration hospitals, naval shipyards, and NASA
research
facilities—also
significantly
affect
community
development.
EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES
217
EDUCATION, TRAINING, EMPLOYMENT, AND
SOCIAL SERVICES
National Needs Statement
• Assist State and local governments in providing elementary and secondary education to students of special national concern, particularly the disadvantaged and the
handicapped.
• Reduce financial barriers that may limit access to higher
education.
• Promote the development and dissemination of knowledge concerning education and training theory and
practice.
• Provide work skills needed for jobs.
• Provide transitional employment opportunities for the
disadvantaged who are unable to obtain regular jobs.
• Enhance the quality of the workplace and the stability of
labor-management relations.
• Assist the disadvantaged and the disabled to be selfsufficient.
• Promote the development of, and access to, the arts and
humanities.
Federal education, training, employment, and social services programs encompass a wide variety of activities that have many differing immediate concerns but share one common goal: to assist all
citizens to lead fulfilling and productive lives. The major objective of
the programs in this function is to help individuals who require
assistance in obtaining education, job skills, labor market information, and supportive services such as child care and counseling.
Government expenditures on these programs are considered
long-term investments in people, investments whose return will be
an improved ability of people to contribute to the Nation's wellbeing by increasing their participation in the labor market and
society in general. The allocation of resources among these programs depends heavily on the definition of the Federal Government's primary objective in human capital investment. Federal
priorities could be directed toward meeting immediate and pressing
needs caused by changes in the economy, such as subsidized public
sector jobs in times of recession, or directed more toward meeting
future needs, such as support of youth education and training.
Both concerns are valid and warrant appropriate action by the
Federal Government; they are not mutually exclusive. However, a
balance must be achieved so that the resources available are used
to best meet the Nation's needs.
218
THE BUDGET FOR FISCAL YEAR 1981
The budget reflects the administration's effort to develop this
balance and provide the most effective and efficient mix of programs and services. Concern for both present and future generations has guided the development of this portion of the 1981
budget. This approach builds upon initiatives begun in prior years
and supplements them with the administration's new proposals.
Since 1977, outlays for programs in this function have increased
by almost 50%—from $21.0 billion, to an estimated $30.7 billion in
1980. This trend continues in the 1981 budget, which proposes $34.8
billion in budget authority and $32.0 billion in outlays for education, training, employment, and social services.
The major new proposal in this function would provide an increase of $2 billion—$1,2 billion in 1981 and an additional $800
million in 1982—for highly targeted education and employment
activities that address the needs of disadvantaged youth. About
half of the Nation's unemployed are under age 25 and about onequarter are ages 16 through 19. Developing strategies to overcome
the problems associated with youth unemployment continues to be
a major administration objective.
The employment problems of young people are not general. Very
high rates of unemployment and long unemployment spells are
highly concentrated among disadvantaged and minority youth, who
are in turn heavily clustered in central cities and rural poverty
areas. There is evidence that when youth have long spells of unemployment after they finish school, their earnings as adults are
likely to be lower. Some of the employment problems of disadvantaged and minority youth are caused by discrimination, the
lack of information about job openings from employed relatives and
friends, and wage rigidities. Equal employment opportunity efforts,
special employment service programs, and the targeted-jobs tax
credit are aimed at these obstacles. However, a substantial portion
of the problem stems from a lack of the basic skills in language
and arithmetic that employers find essential. It is not surprising
that experience with current programs indicates that providing
needy youth only with subsidized public sector work experience
does not improve their prospects. On the other hand, improving a
young person's basic skills can improve future earnings. Well-supervised and carefully structured subsidized work experience can
play a useful role in supporting this fundamental learning experience.
The new proposal builds on past program experience and emphasizes the mastery of basic arithmetic and literacy skills as the key
to future job prospects. The program emphasizes the link between
EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES 2 1 9
the classroom and the workplace to develop marketable skills that
can help to improve future employability and earnings. The program depends upon close coordination and joint planning among
educators, employment and training officials, and private sector
employers to insure that locally developed programs provide those
services to youth that impart the basic education and work skills
required by local employers. The Departments of Education and
Labor will emphasize the use of objective program standards to
measure the performance of both program participants and program operators.
Other major budget proposals in this area would:
• provide for implementation of legislation creating a Department of Education to assure more effective use of Federal
resources available to support education activities;
• restructure Federal higher education programs to more effectively distribute Federal funds to those most in need of
assistance;
• reform the Nation's welfare system by establishing a uniform
minimum benefit level and increasing job and training opportunities that can lead to permanent employment and reduced
welfare dependency;
• limit impact aid payments to those local education agencies
that are most seriously burdened by Federal activity in their
districts; and
• support expansion of the Head Start program to improve the
social and learning skills of low-income preschool children.
EDUCATION
This Nation has traditionally valued education as an important
prerequisite to the effective functioning of its democratic system of
government. In 1981 the Nation will spend approximately $200
billion on education activities. Three-fourths of that amount will
come from public sources; approximately one-tenth will come from
the Federal Government.
The administration proposes $16.5 billion in budget authority for
education programs in 1981, $1.1 billion more than was provided in
1980 and an increase of $5.3 billion over 1977. This increase has
occurred during a time when school enrollments began to reflect
the shift in the age distribution of the population caused by the
aging of the post-war baby boom. Total enrollments, which reached
a high of over 60 million students in 1975, are expected to decline
to 58 million in the fall of 1981. During this period, elementary
school enrollments are expected to decline from 34 to 31 million,
and secondary enrollments are expected to decline from 16 to 14
THE BUDGET FOR FISCAL YEAR 1981
220
NATIONAL NEED: EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES
(Functional code 500; in millions of dollars)
Major Missions and Programs
BUDGET AUTHORITY
Education:
Elementaiy, secondary, and vocational
education:
Aid to education agencies:
Elementary and secondary education:
Existing law
Proposed legislation
Indian education
Impact aid
.
Education for the handicapped
Vocational and adult education
Other
Child development
Subtotal, elementary, secondary,
and vocational education
Higher education:
Student assistance:
Existing law
Proposed legislation
Higher and continuing education:
Existing law
Proposed legislation
Special institutions
Subtotal, higher education
Research and general education aids:
Educational research and improvement...
Unallocated salaries and overhead
Cultural activities
Other
Subtotal, research and general education aids
Subtotal, education
Training, employment, and labor services:
Training and employment:
General training and employment programs
Public service employment
Youth programs:
Existing law
Proposed legislation
Older workers
Work incentive program
Federal-State employment service
Subtotal, training and employment
Other labor services
Subtotal, training, employment, and
labor services
1980
estimate
1979
actual
1981
estimate
1982
estimate
1983
estimate
348
805
1,051
896
486
790
4,094
900
366
519
1,102
933
574
879
4,423
900
366
544
1,193
1,010
618
954
4,759
900
385
558
1,283
1,085
665
1,033
7,655
8,118
9,367
10,008
10,669
4,736
5,222
4,428
545
4,172
1,121
3,964
1,882
449
432
435
22
223
461
23
242
3,671
3,742
334
816
977
782
345
731
175
188
410
20
204
5,360
5,841
5,607
5,972
6,572
492
127
572
143
411
165
661
397
244
695
149
156
441
254
755
160
476
263
814
167
1,334
1,386
1,492
1,610
1,719
14,349
15,345
16,466
17,590
18,960
2,484
5,880
2,998
3,112
3,008
4,598
2,924
4,879
2,745
5,199
2,024
2,101
221
385
745
267
365
764
1,664
1,125
267
385
841
1,822
1,184
267
406
1,880
1,233
267
428
940
11,739
9,606
12,370
12,691
522
586
617
634
653
12,261
10,192
12,505
13,004
13,344
118
EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES
221
NATIONAL NEED: EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES—Continued
(functional code 500; in millions of dollars)
Major Missions and Programs
Social services:
Grants to States for social and child welfare services:
Existing law
Proposed legislation
Retroactive claims
Aid to the elderly
Services for the developmental^ disabled
and other special groups:
Existing taw
Proposed legislation
Community service programs
Domestic volunteer programs
Other social services
Subtotal, social services
Allowance for youth initiative
Deductions for offsetting receipts
Total, budget authority
OUTLAYS
Education:
Elementary, secondary, and vocational
education:
Aid to education agencies:
Elementary and secondary education:
Existing law
Proposed legislation
Indian education
Impact aid
Education for the handicapped
Vocational, and adult education
Other
Child development
Subtotal, elementary, secondary,
and vocational education
Higher education:
Student assistance:
Existing law
Proposed legislation
Higher and continuing education:
Existing law
Proposed legislation
Special institutions
Subtotal, higher education
1979
actual
1980
estimate
1981
estimate
1982
estimate
1983
estimate
2,744
438
2,710
523
2,675
533
2,675
542
543
543
652
714
777
841
1,103
1,111
554
119
11
551
169
11
1,150
10
550
178
12
1,246
11
612
183
13
1,349
12
661
188
13
5,962
5,676
5,847
6,048
6,281
-8
-7
-5
800
-5
800
-5
3,088
32,565
31,207
34,815
37,438
39,381
3,133
3,409
292
912
589
772
321
668
302
821
789
855
394
760
3,631
50
315
554
968
908
512
822
4,018
850
338
530
1,049
982
562
891
4,358
900
358
542
1,129
1,055
601
964
6,688
7,330
7,761
9,218
9,906
3,769
4,882
4,530
91
3,929
1009
3,842
1,733
388
370
12
221
375
18
239
588
170
4,528
410
182
5,474
196
5,205
5,540
6,207
THE BUDGET FOR FISCAL YEAR 1981
222
NATIONAL NEED: EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES—Continued
(Functional code 500; in millions of dollars)
Major Missions and Programs
1980
estimate
1979
actual
1981
estimate
1982
estimate
1983
estimate
Research and general education aids:
Educational research and improvement...
Unallocated salaries and overhead
Cultural activities
Other
432
131
543
127
422
163
629
182
362
202
688
157
401
231
727
158
431
252
785
165
Subtotal, research and general education aids
1,233
1,395
1,408
1,517
1,633
12,449
14,199
14,374
16,275
17,746
2,450
5,041
2,720
3,977
2,835
4,415
2,706
4,703
2,618
5,012
2,048
2,330
208
385
701
238
365
773
1,844
717
263
385
841
1,813
1,065
267
406
889
1,874
1,210
267
428
940
10,833
10,402
11,299
11,849
12,348
488
563
602
621
640
11,321
10,965
11,901
12,470
12,988
3,091
2,670
438
2,627
523
2,675
533
2,675
542
543
557
598
726
777
841
1,016
1,057
594
117
5
569
145
21
1,095
2
•555
175
14
1,227
9
612
181
12
1,330
10
661
183
12
5,923
5,498
5,717
6,026
6,256
760
-5
Subtotal, education
Training, employment and labor services:
Training and employment:
General training and employment programs
Public service employment
Youth programs:
Existing law
Proposed legislation
Older workers
Work incentive program
Federal-State employment service
Subtotal, training and employment
Other labor services
Subtotal, training, employment, and
labor services
Social services:
Grants to States for social and child welfare services:
Existing law
Proposed legislation
Retroactive claims
Aid to the elderly
Services for the developmental^ disabled
and other special groups:
Existing law
Proposed legislation
Community service programs
Domestic volunteer programs
Other social services
Subtotal, social services
Allowance for youth initiative
Deductions for offsetting receipts
Total, outlays
MEMORANDUM—Attribution of Federal
Financing Bank outlays
Higher education
-8
-7
-5
260
-5
29,685
30,654
31,989
35,027
37,746
90
375
530
670
-215
EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES 223
million. Declines in the elementary and secondary school age population are expected to continue into the 1980's. The decline in the
traditional college age population that is projected to begin in the
early 1980's, may be offset in part by the enrollment of increasing
numbers of older and continuing education students.
The mission of these programs is to improve the educational
opportunities available to the Nation's people. The budget proposes
to carry out this mission by providing:
• $9.4 billion in budget authority for elementary, secondary,
and vocational education programs;
• $5.6 billion in budget authority for Federal assistance to support higher education; and
• $1.5 billion in budget authority for educational research and
information dissemination, and support for other educationrelated activities.
In recognition of the growing size and complexity of Federal
support for education, the administration proposed the creation of
a Department of Education in 1977. Legislation establishing the
new Department was enacted late in 1979, and this budget is the
first to request funds for it. The new department will permit better
coordination and more efficient use of Federal funds to support
education activities, and will make a major contribution to more
effective use of Federal resources.
Elementary, secondary, and vocational education.—Elementary
and secondary education is one of the major activities of State and
local governments, costing them nearly $100 billion in 1981. Most
of the $9.4 billion of budget authority and $7.8 billion in outlays
proposed in the 1981 budget for elementary, secondary, and vocational education will assist State and local agencies to improve the
education offered to students of special national concern—those
from low-income families, the handicapped, Indians, and students
with limited English language proficiency.
Elementary and secondary education.—The largest share of the
funds for elementary and secondary education is channeled to
State and local education agencies for supplementary services to
low-income, low-achieving students.
The Department of Education will play a key role in the new
youth education and training initiative. As part of this initiative,
legislation will be proposed to establish a grant program to support
special supplementary education programs in school districts with
high concentrations of poor and unemployed youth. The new program will help needy junior and senior high school students learn
the basic academic and employment skills necessary for them to
graduate from high school and obtain jobs. Funds will be distribut-
224
THE BUDGET FOR FISCAL YEAR 1981
ed to States and eligible school districts on a formula basis. Schools
with concentrations of needy students will compete for the $900
million in budget authority proposed for the first year of the program, most of which will support local activities in the 1981-82
school year. Participating schools will cooperate closely with private industry and with the local agencies administering the complementary new youth training and employment program described below to determine what basic education and work skills
are required by local employers and to design projects to develop
those skills. Such a joint effort will help assure that disadvantaged
students receive the basic skills and work experience needed for a
full, productive, and rewarding life.
In addition, budget authority of $4.1 billion is requested for existing programs in 1981, most of which will finance supplementary
services for elementary school children. The request is $350 million
higher than the 1980 level.
Budget authority of $192 million, an increase from $166 million
in 1980, is requested for bilingual education for 378,000 children
with limited English language proficiency. These funds will promote teacher training, curriculum development, and support programs to teach English to children with limited English language
skills.
Indian education.—Budget authority of $366 million is recommended for 1981 to advance the education of Indians and Alaskan
Natives, an increase of $18 million over 1980. The Department of
the Interior's Bureau of Indian Affairs operates 223 schools that
serve approximately 46,000 elementary and secondary students,
and supports tribally controlled Indian community colleges under
recently enacted legislation. In addition, the Department of Education will provide grants of $195 per child to 1,200 public school
districts serving 356,000 Indian students, and over 12,000 adult
Indians will receive assistance in reading and mathematics.
Impact aid—This program is intended to compensate local
school agencies for the loss of property tax revenue that is the
result of the presence of tax-exempt Federal land or federally
related activities in their districts. The -administration proposes to
limit this assistance in 1981 to those districts most heavily burdened by Federal activity. Payments would be made for children
whose parents both live and work on Federal property only if such
payments comprised 2.5% or more of a district's budget in 1980.
Payments would be made for children whose parents either live or
work on Federal property only if such payments comprised 5% or
more of a district's budget in 1980. Budget authority of $519 million is requested for these payments in 1981, $286 million less than
in 1980.
EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES 2 2 5
Education for the handicapped.—The budget requests budget authority of $922 million in 1981 for grants to assist State and local
education agencies in educating handicapped children, $47.5 million more than the 1980 appropriation. The funds will pay approximately 12% of the extra costs incurred by school districts in meeting the special needs of handicapped children, the same percentage
as in 1980. The budget requests a total of $1.1 billion in budget
authority to support education of the handicapped.
Vocational and adult education.—Budget authority of $933 million is proposed to support vocational and adult education. The
request for vocational education, $784 million, is the same as the
1980 appropriation. However, general support for vocational education would be reduced by $33 million to $529 million to permit
greater support for research and demonstration in the field. The
request for adult education programs is $122 million, $22 million
above the appropriation for 1980.
Other aid to education agencies.—Budget authority of $574 million is requested for other assistance to education agencies. The
request includes $284 million to assist in the desegregation of
school districts, an increase of $24 million over 1980, and $20
million to support greater educational equity for women, twice the
level provided in 1980.
Child development—The Head Start program provides services
for low-income preschool children and funds for research and demonstration projects. This effort relies heavily on the participation of
parents in program control and operation to achieve program
goals. Recent evaluations suggest that Head Start projects improve
the social and learning skills of children as they mature. For 1981,
budget authority of $825 million is requested, an increase of $90
million over 1980, which will allow the program to serve 386,000
children, 19,000 more than in 1980. The level of funding for Head
Start in the 1981 budget is 74% above the level in the 1977 budget.
Budget authority of $10 million is requested for increased services
to migrant children, and an additional $20 million of budget authority is requested for services for low-income minority families
living in inner cities. An additional $5 million for special efforts to
improve grantee management capabilities and upgrade staff skills
is requested.
Higher education.—Higher education and its related activities
will cost the Nation approximately $70 billion in 1981. The budget
proposes $5.6 billion in budget authority and $5.2 billion in outlays
to support activities in this subfunction in 1981. The request is
based on the reauthorization proposal that the administration has
submitted to the Congress.
226
THE BUDGET FOR FISCAL YEAR 1981
Student assistance.—Federal student financial assistance helps
qualified students enter and complete schooling beyond the twelfth
grade. This assistance, in the form of grants, loans, and loan guarantees has expanded from budget authority of $250 million in 1965
to nearly $5 billion in 1981.
For 1981, the administration has, as part of its reauthorization
proposal, requested essential reforms in the student assistance programs. The most important reform is a complete overhaul of the
current guaranteed student loan and national direct student loan
programs. Under the existing guarantee program, loans from private lenders have not been uniformly available, and some students
in need of loans have been unable to obtain them. Moreover, the
cost of the interest subsidies for guaranteed loans has grown dramatically. The total interest paid on a guaranteed loan is tied to
the rate of Federal borrowing, which is estimated at 14.6% in 1980.
The Government pays all interest until one year after a student
leaves school, and all but 7% of the interest thereafter. The existing direct loan program, which is administered by colleges and
universities, has failed to fill the gaps in the guarantee program.
Availability of direct loans varies greatly from school to school and
the loan default rate currently exceeds 17%.
The administration proposes to replace these two existing loan
programs with a basic direct loan and a supplemental loan guarantee program. Basic loans would be loans from the Federal Government to students based on need. The amount of a loan would be
limited to the cost of a student's education adjusted for other
awards and grants, a contribution from the student, and family
assistance. Supplemental loans would be federally guaranteed
loans to parents and students from private lenders. The amount of
a supplemental loan would be limited to the cost of a student's
education not covered by basic loans and other sources. Interest
subsidies would be lower than under the current guarantee program. These programs will focus loan resources on students with
demonstrated financial need and thus permit the more effective
use of available resources. The 1981 budget requests $1.6 billion for
the new loan program to provide 1.25 million basic loans averaging
$720, and 1.35 million supplemental loan guarantees averaging
$1,600.
The administration's reauthorization proposal also provides for
continuation of the basic educational opportunity grant program.
The budget proposes a maximum grant of $1,900 for 1981, an
increase of $100 over 1980. Budget authority of $2.4 billion is
requested for this purpose.
The 1981 budget also recommends $370 million in budget authority for the supplemental educational opportunity grants provided
by higher education institutions as a supplement to basic grants,
EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES
227
and $77 million for the State student incentive grant program. This
would maintain both programs at their 1980 levels. An estimated
573,000 students will receive supplemental grants and 282,000 students will receive incentive grants.
The budget requests budget authority of $550 million for the
work-study program, the same amount as in 1980. The administration proposes that higher education institutions be encouraged to
provide work-study assignments that involve the tutoring of elementary and secondary school students, the dissemination of student financial aid information, and the provision of special services
to handicapped students.
Higher and continuing education.—In addition to student assistance programs, the budget proposes $430 million in 1981 budget
authority for assistance to higher education institutions. Most of
these funds support programs to help disadvantaged students to
obtain postsecondary education.
Although postsecondary enrollment of minorities and women has
improved dramatically in the last decade, problems persist in some
occupations. The budget proposes $13 million in budget authority
for the graduate professional education opportunities program to
increase the number of minorities and women entering these occupations. This represents an increase of 47% over 1980, and will
fund 850 new fellowships.
Budget authority of $160 million is proposed for special higher
education programs for the disadvantaged, an increase of $12 million above 1980. These programs identify and help prepare potential college students at the high school level, and assure that placement, career counseling, and other services are provided once they
enter college.
The budget proposes budget authority of $140 million, an increase of $30 million over 1980, for the developing institutions
program. In addition, a new matching program would be established to encourage developing institutions to increase the support
they receive from non-Federal sources, including State governments, and $20 million of the $30 million increase would be reserved for this purpose.
The budget also proposes $23 million in budget authority for
cooperative education programs, which allow schools and employers to provide students with work experience and education on a
cooperative basis and $30 million for foreign area and language
studies programs.
Special institutions.— Budget authority of $204 million is recommended for the American Printing House for the Blind, Gallaudet
College, the National Technical Institute for the Deaf, and Howard
University, an increase of $16 million over the 1980 appropriation.
228
THE BUDGET FOR FISCAL YEAR 1981
CREDIT PROGRAMS—EDUCATION
(In millions of dollars)
1980
estimate
1979
actual
Student assistance programs:
Direct loans:
New Loans
Repayments, sales and adjustments
1981
estimate
417
-62
573
-73
1,053
-477
355
500
576
2,760
1,477
3,960
2,557
2,160
483
283
-89
78
-168
103
-107
Net loan outlays
194
-13
-4
Loan guarantees:
New loans
Net loan guarantees
530
509
670
648
-237
Net loan outlays
Loan guarantees:
New Loans
Net loan guarantees
Other education:
Direct loans:
New loans
Repayments, sales and adjustments ( - ) ,
Research and general education aids.—The budget requests $1.5
billion in budget authority for education research and development, other general education and cultural activities, and program
administration. Budget authority of $264 million is requested to
support libraries and other learning resources in 1981, $9 million
above the 1980 level. This includes $70 million for support of public
libraries and $171 million for school libraries.
Budget authority of $88 million is proposed for research and
development, compared to $77 million in 1980. Research will focus
on improving equality of educational opportunities and general
teaching methods. In addition, budget authority of $40 million is
requested for the basic skills improvement program to improve the
teaching of reading, writing, and mathematics, an increase of $5
million over 1980.
Budget authority of $168 million for the National Endowment for
the Arts, and $164 million for the National Endowment for the
Humanities is requested for 1981 to increase Federal support for
individual and institutional endeavors. Budget authority of $12.9
million is proposed for the I ititute for Museum Services to provide general operating and special project support for the Nation's
museums. The budget also includes $182 million in budget authority for the Corporation for Public Broadcasting for 1983, provided 2
years in advance. Federal support for the Arts Endowment, Humanities Endowment, Institute for Museum Services, and the Corporation for Public Broadcasting is partially matched by contributions from non-Federal sources. Budget authority of $164 million is
requested for the Smithsonian Institution in 1981.
EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES
229
Tax expenditures.—The major tax expenditures that aid higher
education are the personal income tax exemptions available to
parents of children 19 and over who are in school, the deductibility of
contributions to educational institutions, and the exclusion of
scholarships and fellowships from income subject to tax. The revenue losses associated with these provisions in 1981 are estimated to
be $1.0 billion, $1.2 billion, and $0.4 billion respectively. In addition, the Revenue Act of 1978 permits employers to establish educational assistance plans for the benefit of their employees. Payments
under the plan, which may be used to pay for most educational
programs, are not included in the employee's income. Deductions
for educational assistance plans are estimated to result in a tax
expenditure of $35 million in 1981.
Related programs.—A number of Federal programs are related to
education, although their primary purpose is to meet other national needs and to serve other major missions. For example, veterans
readjustments benefits provide assistance to eligible veterans attending school, and the health programs of the Federal Government support a substantial amount of biomedical education. Comprehensive Employment and Training Act (CETA) training activities are frequently conducted through State and local education
agencies, and some CETA public service employment participants
are employed in education agencies. CETA also provides special
grants to be used by, or with the cooperation of, education agencies, to increase coordination between education and training and
employment programs. The accompanying table shows major education-related programs that support other missions.
TRAINING, EMPLOYMENT, AND OTHER LABOR SERVICES
Programs that carry out the training and employment mission
are designed to increase employment opportunities, mainly for the
disadvantaged, and to increase their long-term employment and
earnings. These programs attempt to correct deficiencies in labor
markets by developing work skills, providing temporary employment and work experience, and improving the matching of workers
and jobs. Other labor services include the regulation of employeremployee relations and the publication of labor statistics. The
budget proposes $11.9 billion in outlays for these activities in 1981.
Training and employment—Funding for training and employment activities has grown steadily over the years, including large
temporary increases in 1977 and 1978 as part of the administration's economic stimulus program. With improvement in the economy, employment has increased by 9.4 million jobs since December
1976, the second largest 3-year increase in employment since World
230
THE BUDGET FOR FISCAL YEAR 1981
FEDERAL OUTLAYS FOR EDUCATION AND RELATED PURPOSES
(In millions of dollars)
Level and program
19S1
estimate
1980
estimate
1979
actual
14,349
15,345
16,466
Related outlays supporting other major missions:
Elementary and secondary:
Child nutrition
Student grants, Social Security Administration.
U.S. Forest Service, Agriculture
Military personnel
Veterans readjustment
Other
3,014
361
120
376
284
1,242
3,465
419
141
391
241
1,358
3,225
480
160
459
244
1,491
Subtotal, elementary and secondary
5,397
6,015
6,059
2,120
1,385
672
23
1,757
1,565
728
12
1,535
1,752
720
8
143
171
168
92
150
95
158
94
174
4,585
4,486
4,451
262
109
137
204
250
90
157
215
264
21
175
229
Higher education:
Veterans readjustment benefits
Student grants, Social Security Administration.
Defense service academies and ROTC
Health professions training
Research training, National Institutes of
Health
Alcohol, Drug, and Mental Health Administration
Other
Subtotal, higher education
Adult and continuing education:
Agriculture Extension Service
Veterans readjustment benefits
Student grants, Social Security Administration.
Other
712
712
689
Training of Federal military employees:
Defense and Coast Guard
523
555
576
Other.
Comprehensive Employment and Training A c t International development assistance
Other
806
37
4
677
38
14
878
44
12
847
729
934
Subtotal, adult and continuing education
Subtotal, other
Total related outlays
12,064
12,497
12,709
Total outlays
26,413
27,842
29,175
> See national needs table at the beginning of this section.
War II. Starting in 1980, funding for training and employment
programs is being directed increasingly toward the disadvantaged
and the long-term unemployed, with continuing improvements expected in program management. The administration is proposing
new legislation to improve the targeting and content of programs
addressing the special problems of youth.
EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES
Outlays for Training and Employment Activities
1
Total P*btk Swict E*ptor»*«t Aertrtrtw
Service Years for Training and Employment Activities
Million*
Fitcol
Y«9»
1
Total Public Svfviu Eapbyiwnt AcfhrfH**
Millions
ttHmoH
231
THE BUDGET FOR FISCAL YEAR 1981
232
An evaluation started after the enactment of the Comprehensive
Employment and Training Act (CETA) in 1973 will soon produce
preliminary data that will allow a comparison of the employment
and earnings of federally supported training program participants
before and after the training with the employment and earnings of
similar people not in the programs. This will allow more accurate
calculations of the benefits of various programs to participants.
The accompanying tables and charts provide information on
trends in the level of training and employment services, on the
distribution of services by type of service provided, and on the
characteristics of participants in training and employment programs. They include all programs that are functionally classified as
training and employment services, as well as programs with similar
objectives in other subfunctions. Outlays for these other programs
are shown in the table at the end of this section
DISTRIBUTION OF TRAINING AND EMPLOYMENT SERVICES BY TYPE OF SERVICE
{In percent)
Outlays
Service
1979
Public service employment
Work experience
On-the-job training
Institutional training
Vocational rehabilitation
Labor market services, and other
1980
35
22
3
19
7
13
Years of service
1979
1981
28
24
4
21
8
14
29
19
4
21
8
19
1980
14
34
3
16
31
2
1981
12
36
3
16
30
3
12
31
3
17
31
6
CHARACTERISTICS OF THE UNEMPLOYED, THE POOR, AND TRAINING AND EMPLOYMENT
PROGRAM PARTICIPANTS1
Unemployed workers
1975
Average number (millions)
Percent:3
Age 21 or less
Female
Less than high school education...
Low income
Public assistance recipients
Minority
1977
Poverty population *
1979
Program participants
1975
1977
1979
1975
1977
1979
8.0
6.9
6.2
16.1
17.0
16.9
2.4
3.5
3.8
35
44
49
•21
n.a.
19
35
48
43
4 22
n.a.
22
39
49
45
<22
n.a
23
26
62
67
100
n.a.
30
26
63
65
100
n.a.
30
26
63
64
100
n.a.
30
29
58
38
71
42
40
33
48
38
65
23
36
39
52
45
73
33
40
' Unemployed and poor reported on a calendar year basis; program participants reported on a fiscal year basis.
• Data collected in March of year shown here; represents income of prior year. Source: Bureau of the Census data from the Current Population
Survey.
»Program participant figures exclude summer employment programs for youth.
4
Represents individuals living in poverty areas,
n.a. = Not available.
General training and employment programs.—Most training and
employment programs are operated by State and local governments through grants under the Comprehensive Employment and
Training Act (CETA). Legislation enacted in 1978, taking effect in
EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES
233
1979 and 1980, provided new authority that increased the emphasis
on permanent private sector jobs and assistance to the disadvantaged and the long-term unemployed. The law also introduced new
requirements to improve program management. Outlays for general training and employment programs are expected to total $2.8
billion in 1981, almost $100 million more than in 1980.
The budget would continue general purpose grants (under CETA
title II—ABC) to maintain 1980 service levels, providing an average
of up to 400,000 years of service in 1981. The services provided
include classroom and on-the-job training, work experience, and
retraining for individuals who can move to jobs requiring greater
skill or who lose their current jobs.
The ultimate success of structural employment and training programs can best be measured by long-term improvements in employment and earnings. Since most jobs are in the private sector, the
administration moved in 1978 to redirect Federal employment and
training programs toward private sector jobs. The 1978 amendments to CETA included the administration's proposed new private
sector opportunities initiative, and the Revenue Act of 1978 created
a new targeted jobs tax credit primarily for poor unemployed
youth, as requested by the administration. Both place increased
emphasis on assisting disadvantaged persons, including youth, to
secure private sector jobs. Under the new private sector program,
funds are provided through States and localities to improve the
quality and quantity of private sector job placements. Uses of the
funds include job development, training, placement, implementation of the targeted employment tax credit, and other services,
such as on-the-job training, designed jointly with Private Industry
Councils. Legislation is proposed to continue authority for this
initiative through 1982.
The Federal Government also finances training and employment
services outside of the State and local prime sponsor system for
migrant and seasonal farmworkers whose mobility makes them
difficult to serve, and for Indian tribes and groups, primarily because of their special Federal relationship. In addition, other services for groups such as displaced homemakers and older workers,
research, other program support, and administration are funded
separately.
Public service employment—Two public service employment
(PSE) programs under CETA provide temporary, federally subsidized employment for low-income, unemployed persons in public or
nonprofit agencies, principally through grants to State and local
governments. Outlays for PSE are estimated to be $4.4 billion in
1981.
234
THE BUDGET FOR FISCAL YEAR 1981
The public service employment program under CETA title II-D
will provide about 250,000 jobs for low-income, long-term unemployed persons. The program requires substantial investments in
training for participants who are thus better prepared for placement in permanent jobs after PSE. Outlays for title II-D are expected to be $2.4 billion in 1981.
The PSE program in title VI of CETA provides jobs for persons
with up to 40% higher incomes and with shorter periods of unemployment than those in the program under title II-D. The 1980
appropriations provided by the Congress will reduce the number of
jobs at the end of the year to a level of about 200,000. The budget
proposes maintaining title VI at the 200,000 jobs level in 1981, with
outlays of $2 billion.
Youth programs—As part of the major initiative to help youth
with the greatest need acquire basic work skills, the administration
is proposing a redirection and enhancement of youth programs.
Part of this program has been described in the preceding pages
under elementary and secondary education. In training and employment, three programs started as part of the 1977 economic
stimulus effort would be replaced. Two of them—the youth employment and training programs and the youth community conservation and improvement projects—would be combined and expanded
under the proposal. A third, the purely experimental youth incentive entitlement pilot projects, is being phased out and lessons
learned from it incorporated in the new initiative. Budget authority in 1981 would be $1,125 million, $300 million above the current
services level of the programs to be replaced. Prime sponsors receiving grants under the new program would work closely with
local school systems to provide the combination of training in basic
skills and work experience that fits the need of each individual
participant. Youngsters in schools receiving the new education aids
could be helped to get jobs, preferably in the private sector. Schoolage dropouts could get subsidized jobs only if they participated in a
training program designed to give them basic skills.
The older (18- through 21-year-old) out-of-school disadvantaged
youth who cannot find and keep jobs are by far the worst-off group,
since those who have serious post-school employment problems are
most likely to be condemned to a lifetime of low and sporadic
earnings. Prime sponsors would devote their greatest effort to
them, concentrating on providing opportunities to learn basic
skills, gain work discipline, develop specific skill training, and
obtain private sector employment. Prime sponsors would design
their programs in close cooperation with local industry to insure
the job relevance of program activities and to increase the number
of youth in the program who can get private sector jobs. Prime
EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES
235
sponsors would work with local employers to develop objective job
performance standards for program participants. Use of these
standards would foster better program management and enable
participants to develop credible training and work records that
would be acceptable to future employers, paving the way for employment in the private sector.
Continued expansion of the Job Corps training program to 44,000
service years for youth, double the 1977 level, is proposed. Under
the budget request, the summer youth employment program in
1981 would be maintained at the 1 million part-time jobs financed
in 1979 and proposed for 1980. The planning and administration of
this program would be closely integrated with the new youth program, easing the application and reporting burdens of prime sponsors. The Young Adult Conservation Corps, which provides work
experience on public lands for youth from families in all income
ranges, would be continued at the 1980 service level.
The private sector program and the new targeted employment
tax credit will provide additional resources aimed at increasing the
employment of youth in the private sector.
The accompanying chart covers these youth programs as well as
other major related youth training and employment programs.
Youth Training and Employment Programs
Fiscal Y«ar*
Ertimatt
236
THE BUDGET FOR FISCAL YEAR 1981
Older workers.—Funding is requested for the community service
employment program for older Americans to continue to provide
52,500 job opportunties for low-income persons aged 55 and over
with outlays of $263 million in 1981.
Work incentive (WIN) program— This program helps persons receiving aid to families with dependent children (AFDC) find and
retain jobs by providing training, work experience, subsidized jobs,
intensive employment services, child care, and other supportive
services. Private employers are encouraged to hire recipients
through the WIN tax credit. WIN outlays for 1981 are estimated to
be $385 million, a $20 million increase over 1980. An estimated
286,000 WIN participants will be hired in unsubsidized jobs.
Welfare reform employment program.—In 1979 the administration
proposed a carefully designed set of essential reforms of welfare
programs. Under this proposal, reforms in the level and delivery of
cash assistance would be integrated closely with an employment
and training strategy, the new employment tax credit, and revisions in the earned income tax credit (These proposals are also
discussed in the income security function.) The proposal would
ensure that individuals receiving public assistance have strong incentives to seek and retain permanent unsubsidized employment,
and would provide work and training for principal earners in eligible families. The budget request assumes enactment of welfare
reform in time for the substantial planning effort for training and
employment services to begin in 1981. The new program will build
on the existing CETA, work incentive, and tax credit authorities.
Provision has been made in the contingency allowance for initial
resource needs in 1981 and additional funding in subsequent years.
To help prepare for implementation and to continue to learn more
about how training and employment strategies affect welfare recipients and local labor markets, the budget requests $281 million in
budget authority under general training and employment programs for continuation of large-scale research and demonstration
projects begun in late 1979.
Federal-State employment service.—Job-matching services for
workers and employers are provided free of charge by 2,400 State
offices financed with Federal funds. The budget request maintains
employment service operations at the 1980 level. An assessment of
the results of computerized job-matching and redesign of automated procedures, begun in 1980, will continue in 1981.
Other labor services.—The Federal Government establishes and
enforces standards affecting the relationship between employer and
employees and between unions and their members. Th6se activities
include enforcement of the minimum wage and related laws, regu
EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES
237
lation of welfare and pension plans, supervision of labor-mangement relations, a new program of grants for labor-mangement
committees, and regulation of the equal employment practices of
Federal contractors. In addition, labor statistics and information on
employment, unemployment, wages, prices, and productivity are
collected and disseminated. Outlays for these services are estimated at $602 million in 1981. (Enforcement efforts for job safety and
health are included in the health function, while those relating to
job discrimination on the basis of race, age, or sex are covered in
the administration of justice function.)
Tax expenditures.—The tax code provides incentives for employers to hire disadvantaged individuals and those receiving certain
welfare benefits. Tax credits are also provided to encourage individuals with dependents to work by allowing tax credits for child care
expenses.
The targeted employment credit was enacted in the Revenue Act
of 1978. It encourages employers to hire disadvantaged youth ages
18 to 25, as well as Vietnam veterans, recipients of general assistance or supplementary security income, participants in cooperative
education programs, certain ex-offenders, and handicapped individuals undergoing vocational rehabilitiation. The credit, equal to
50% of the first year and 25% of the second year wages, applies to
the first $6,000 of each eligible employee's wages. It replaces the
general, untargeted employment tax credit that was in effect in
1977 and 1978. The new credit is estimated to result in a tax
expenditure of $0.3 billion in 1981.
The employment credit, for hiring employees under the WIN
program or other AFDC recipients, was revised to make it similar
to the targeted employment credit. This credit is estimated to
result in a tax expenditure of $60 million in 1981.
Employment is also encouraged by a credit of 20% of child care
expenses incurred to allow people with dependent children to work.
The maximum credit is $200 for one child and $400 for 2 or more
children. The revenue loss resulting from the child care credit is
estimated to be $0.9 billion in 1981.
Training and employment-related programs.—A number of Federal programs are related to training and employment efforts, although their primary purpose is to meet other national needs and
serve other missions. The following table shows major training and
employment-related programs that support other major missions.
The table does not include programs that are primarily economic
development activities.
THE BUDGET FOR FISCAL YEAR 1981
238
TRAINING AND EMPLOYMENT OUTLAYS FOR OTHER MAJOR MISSIONS
(In millions of dollars)
Functional
code
350
450
450
500
500
600
700
750
750
999
Agriculture
Housing and Urban Development
Interior
Education
Health and Human Services
Health and Human Services
Veterans Administration
Equal Employment Opportunity Commission
Justice
Various agencies
Total
1980
estimate
1979
actual
Agency
1981
estimate
63
20
55
1,223
1,047
142
629
55
23
52
1,656
671
151
542
61
26
47
2,296
282
151
460
93
2
202
120
2
206
135
3
206
3,475
3,478
3,666
SOCIAL SERVICES
The Federal Government provides grants to States for a variety
of social services, primarily for the poor and other groups with
special needs.
Grants to States for social and child welfare services.—Under
title XX of the Social Security Act, grants are made to States for
services to individuals and families to promote their independence
and self-support and to reduce institutionalization where appropriate. States provide a broad array of services including family planning, preparation and delivery of meals, transportation, counseling,
child care, and services to meet the special needs of the lowincome, aged, handicapped, mentally retarded, alcoholics, and drug
addicts. State and local government training of personnel for the
social service field is also provided under title XX.
Legislation has been proposed to increase the limits on Federal
payments under title XX to a total of $2.9 billion, beginning in
1980. This proposal would make permanent the $200 million increase in the regular ceiling enacted for 1979. The $200 million
special child day care set aside enacted for 1979 would be extended
through 1981. Specific appropriation authority is also requested for
the territories of Guam, Puerto Rico, the Virgin Islands, and the
Northern Mariana Islands. In addition, legislation is proposed to
phase in a ceiling on State and local government training expenses
at 4% of each State's allotment under title XX of the Social Security Act, the principal source of Federal social services funding.
Special efforts will be made to improve the management and operations of the rapidly growing State and local training program.
Child welfare grants are made to the States for the care and
protection of neglected, homeless, and abused children. The admin-
EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES
239
istration has proposed legislation to significantly improve the scope
and quality of services provided to children by the States, and to
develop stronger procedural safeguards for the rights of children
and their parents. This proposal is designed to:
• aid in reuniting children with their natural families whenever feasible;
require more frequent monitoring of the status of children in
foster care to assure that they are adopted or returned to
their families as rapidly as possible;
• encourage the adoption of children who might otherwise
remain in foster care for an extended period; and
• subsidize low-income families who want to adopt children.
Under these proposals, outlays for child welfare services are
estimated to rise from $57 million in 1979 to $119 million in 1980,
and $164 million in 1981.
Aid to the elderly.—Budget authority of $714 million is requested for
programs serving older persons in 1981.
These programs are intended to prevent or delay institutionalization by enabling older persons to continue living in their
homes and communities. Particular emphasis will be placed on
serving those elderly who have the greatest economic and social
need. Budget authority requested for nutrition projects is increased
from $320 million in 1980 to $350 million in 1981, which will
finance 410,000 daily meals for older Americans.
In addition, an increase of $33 million in budget authority, for a
total of $280 million, is requested for other services to the elderly
in 1981. This increase will aid in providing services for the elderly
in all parts of every State, finance the development of at least one
long-term care ombudsman program in each State, and help provide legal services for the elderly. Special efforts will also be made
to meet the special needs of, and improve the delivery of services
to, low-income, minority, rural, and disabled elderly.
Services for the developmentally disabled and other special
groups. —Outlays for rehabilitation and related services to the developmentally disabled are estimated to be $63 million in 1981.
The administration supports legislation to provide grants of up to
3 years duration for service projects, demonstrations, and research
on the problems of domestic violence. Budget authority of $10
million is requested for this activity in 1981.
Funds previously appropriated will be used for a White House
Conference on Families and a White House Conference on Aging to
be held in 1981, and for a White House Conference on Children and
Youth to be held in 1982. Additional budget authority of $3 million
is requested in 1981 for the White House Conference on Aging to
complete its activities. Funds are requested to explore ways to
240
THE BUDGET FOR FISCAL YEAR 1981
provide services to meet the needs of special groups such as young
runaways and Native Americans. To aid States and localities in
improving their adoption and foster care systems, budget authority
of $164 million is requested for 1981.
Budget authority of $964 million is requested for rehabilitation services and handicapped research in 1981, an increase of $33 million
over the 1980 appropriation. These resources aid the approximately
1.8 million persons who have physical and mental disabilities and
help them to become self-sufficient. Additional funds to rehabilitate
recipients of the supplemental security income program and beneficiaries of the old-age survivors and disability insurance programs
are classified in the income security function. In 1981, an increased
number of experimental programs helping the disabled live independently will be undertaken and carefully evaluated. Increased
budget authority is also requested for the National Institute for
Handicapped Research in order to provide for a comprehensive and
coordinated research plan to benefit handicapped individuals and
to improve the distribution of information to the professional community.
Community services program.—Several social services activities
are sponsored by the Community Services Administration's (CSA)
community services program. The program also provides administrative support for about 900 local community action agencies.
Budget authority of $550 million is requested for CSA programs,
which will be directed toward:
• improving grantee performance levels by establishing a competitive grant program for community action agencies;
• conducting demonstration projects in areas such as family
counseling, group homes, migrants, and rural housing; and
• increasing funding for successful community development corporations and enabling corporations to become administratively self-sufficient.
Domestic volunteer programs—ACTION, the Federal Government's agency for volunteer programs, supports Volunteers in
Service to America (VISTA) and the Foster Grandparent, Senior
Companion, and Retired Senior Volunteer programs. ACTION will
continue to emphasize planning and programming based on meeting the needs of the poor.
The budget proposes an increase of about 600 in the number of
VISTA volunteers. In 1981, the VISTA program will reorder its
priorities to place more emphasis on energy conservation, community development, and programs targeted to rural areas. All three
older American volunteer programs would enroll more volunteers
than in 1980. The major increase would be for an additional 1,000
senior companions providing long-term care to the elderly.
EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES
241
The budget also requests increases for technical assistance grants
and demonstration projects to explore alternative approaches to
voluntary action in the private sector. Emphasis in these demonstrations will be placed on carrying out the goals of the administration's urban initiatives by concentrating projects in distressed
urban areas. Outlays for ACTION'S domestic programs are estimated to increase from $117 million in 1979 to $145 million in 1980 and
$175 million in 1981.
Tax expenditures.—The provision of social services by a wide
variety of private institutions is encouraged by the tax deductibility of contributions to those institutions. The tax expenditure for
charitable contributions, other than to educational and health institutions, is expected to be $7.1 billion in 1981.
310-000 0 - 80 - 17
242
THE BUDGET FOR FISCAL YEAR 1981
HEALTH
National Needs Statement:
• Improve access to quality medical care and mental
health services.
• Provide better insurance protection including coverage
for catastrophic expenses.
• Restrain inflation in health care costs.
• Improve State and local health care systems.
• Acquire knowledge regarding the causes, prevention, and
treatment of diseases and promote preventive measures
by which good health can be maintained.
• Support education of students in the health professions,
especially in primary care fields and placement of health
workers in medically underserved areas.
• Improve consumer and workplace health and safety.
Federal involvement in promoting the Nation's health began
with the establishment of the Public Health Service in 1798 to
protect the Nation from contagious diseases brought into the country by seamen. The rapid growth in Federal support for the Nation's health care systems began in the mid-1960's when medicare
and medicaid were established. Between 1966 and 1979, Federal
health expenditures (including health-related programs classified
in other functions) rose from $7.4 billion, 13% of national health
expenditures, to $68 billion, 28% of national health expenditures.
Increased Federal involvement has dramatically improved the
health care system, particularly by increasing access to medical
care for the poor. Since the enactment of medicaid, for example,
the poor have substantially increased their use of health services.
In 1964 the poor made 7% fewer physician visits than the non-poor,
whereas by 1976 they made 17% more physician visits. Federal
assistance has also helped to eliminate the shortage of hospital
beds and of health professionals in the United States.
Despite the accomplishments of this expanded Federal investment, significant problems of financing and access remain. Improved services to the poor and underserved, better health insurance, and health care cost containment are major national needs
for the 1980's. Poor persons not covered by medicaid use medical
care services at rates 22% lower than the rest of the population.
Over 15 million Americans still lack health insurance. Nineteen
million lack adequate coverage, and 46 million lack protection
against catastrophic expenses. Although many advances have been
HEALTH
243
made, improvements in the planning and management of health
care are still needed, particularly for the poor and underserved.
Restraining inflation of health care costs is also a major national
need. Excessive inflation in these costs hinders the ability of people
to pay for needed health care, strains the national economy, and
burdens the Federal budget. Health care expenditures in the
United States have grown from 4.5% of gross national product
(GNP) in 1955 to 9.1% of GNP in 1978. During the last 10 years,
hospital costs—the largest component of health care costs—have
grown almost 2lA times as fast as the consumer price index. Without hospital cost containment legislation or other major changes in
the health system, national health expenditures are projected to
reach 10.5% of GNP in 1985.
Many of our Nation's health problems can be prevented, and
studies indicate that future improvements in our health are more
likely to come from greater attention to disease and injury prevention than to their treatment.1 Health research on the causes,
prevention, and treatment of disease, and the promotion of preventive measures are critical components of the administration's
health strategy for the 1980's. Federal actions focus on areas that
are likely to improve health status, and reflect efforts to better
link research and its practical application.
Since 1960, the Federal Government has spent about $18 billion
to help increase the supply of health professionals, which has risen
by 50%. The record of the last two decades is impressive in both
the level of Federal support and the response of the Nation's
health professions schools. As a result, there is and will continue to
be an adequate—or excessive—supply in most of the major health
professions. The Federal Government has begun to shift resources
toward correcting geographic maldistribution and overspecialization of health professions. Since Federal support for health professions training has achieved its initial goal, Federal resources are
being reallocated to address these new challenges.
To address these national health needs, the budget includes estimated outlays of $62.4 billion in 1981. The budget includes costsaving proposals that would reduce outlays by $1.7 billion in 1981
and $3.6 billion in 1983. The budget provides major support for the
following initiatives:
• A national health plan, effective in 1983, with a net increase
of $24.1 billion in Federal costs 2 and an increase of $9.6
billion in mandated private sector expenditures. This plan
would ensure that 155 million working Americans and their
families have adequate private insurance protection. Public
1
Healthy People: Surgeon General's Report on Health Promotion and Disease Prevention (August 1979).
* Included in the allowance for contingencies beginning in 1983. This proposal is discussed in greater detail in
the Special Analyses volume of the budget documents.
244
THE BUDGET FOR FISCAL YEAR 1981
programs would cover current medicare and medicaid recipients and an additional 20 million poor and near-poor persons.
Benefits would include catastrophic coverage and prenatal
and infant care services for the entire population. The program would be financed and administered through a combination of mandated coverage by employers and a Federal-State
health care program. The 1983 allowance reflects the impact
of the national health plan on both outlays and receipts.
• Improved access to health services especially for the poor and
underserved. Health financing proposals would expand medicaid eligibility to more than 2 million additional low-income
children, youth, and expectant mothers. Proposed expansions
of health services programs include new community health
centers, new mental health service programs, and more National Health Service Corps professionals in medically-underserved areas.
• Increased efforts to control inflationary growth in health care
costs. The budget presents policies to deal with excessive costs
by reducing the overall rate of health care cost inflation—
particularly through hospital cost containment legislation—
and by making the Federal Government a more prudent and
cost-conscious purchaser of services,
• Administrative reforms of health planning requirements and
services grants to improve the management of health programs. These reforms will use demonstration projects as a
vehicle for working with State and local entities.
• Expanded efforts throughout the Federal Government to promote health and longevity and to prevent disease, illness, and
injury. Increased budget authority is recommended for health
research and for health promotion and disease prevention
programs. The Federal Government will support programs to
reduce smoking, drug, and alcohol abuse.
These and other proposals are discussed in detail in the following
sections on health care services, health research, education and
training of the health care work force, and consumer and occupational health and safety.
Health care services.—The largest amount of Federal spending
for national health needs is devoted to the mission of financing and
providing health care services. Federal outlays for health care
services classified in this mission are expected to rise from $51.6
billion in 1980 to $57.3 billion in 1981 and $73.9 billion in 1983,
even with proposed savings legislation. Total Federal outlays for
health care services, including activities in other missions of the
budget, are estimated at $70 billion in 1981, of which 32% supports
HEALTH
245
NATIONAL NEED: HEALTH
{Functional code 550; in millions of dollars)
Major missions and programs
BUDGET AUTHORITY
Health care services:
Medicare.Existing law
Proposed legislation
Medicaid:
Existing law
Proposed legislation
Other health care services
1979
actual
1980
estimate
1981
estimate
1982
estimate
1983
estimate
31,762
35,922
45,007
-17
53,682
-235
61,381
-101
13,217
3,793
14,578
34
4,105
16,194
298
4,485
18,418
549
4,889
20,879
676
5,374
48,772
54,640
65,968
77,303
88,209
3,006
3,220
3,371
3,625
3,909
214
164
235
195
266
202
285
186
305
202
3,383
3,651
3,838
4,096
4,415
184
518
222
410
211
339
230
363
247
391
115
114
112
112
120
Subtotal, education and training of
the health care work force
817
747
662
706
759
Consumer and occupational health and
safety:
Consumer safety
Occupational safety and health
635
311
663
340
708
377
701
386
719
403
946
1,002
1,086
1,087
1,122
-10
-8
-8
-8
-8
Subtotal, health care services
Health research:
National Institutes of Health research
Alcohol, Drug Abuse, and Mental Health
Administration research
Other research programs
Subtotal, health research
Education and training of the health care
work force:
National Institutes of Health training
Health Resources Administration training....
Alcohol, Drug Abuse, and Mental Health
Administration training
Subtotal, consumer and occupational
health and safety
Deductions for offsetting receipts
Total, budget authority
53,908
60,033
71,546
83,184
94,497
services to the poor and 58% supports services to the aged, including low-income aged.
Medicare and medicaid.—Medicare and medicaid outlays, which
finance health care services for poor, disabled, and aged Americans, are estimated to be $53.2 billion in 1981. Medicaid outlays of
$15.9 billion will finance care of 23 million poor Americans. Medicare outlays of $37.3 billion will provide services to 25 million aged
and 3 million disabled Americans. These totals include a number of
benefit improvements and reforms to restrain health costs.
THE BUDGET FOR FISCAL YEAR 1981
246
NATIONAL NEED: HEALTH—Continued
(Functional code 550; in millions of dollars)
Major missions and programs
OUTLAYS
Health care services:
Medicare:
Existing law
Proposed legislation
Medicaid:
Existing law
Proposed legislation
Other health care services
1980
estimate
1979
actual
1981
estimate
1982
estimate
1983
estimate
29,147
33,540
1
38,425
-1,076
44,279
-1,927
50,825
-2,692
12,491
3,483
14,220
34
3,802
15,575
298
4,095
17,833
549
4,472
20,222
676
4,863
45,121
51,598
57,317
65,205
73,893
2,698
2,969
3,137
3,388
3,658
190
135
200
170
239
179
284
185
303
177
3,023
3,338
3,555
3,858
4,138
Education and training of the health care
work force:
National Institutes of Health training
Health Resources Administration training
Alcohol, Drug Abuse, and Mental Health
Administration training
171
307
190
348
198
265
229
342
247
433
105
114
96
117
119
Subtotal, education and training of
the health care work force
583
652
559
689
799
Consumer and occupational health and
safety:
Consumer safety
Occupational safety and health
603
293
645
337
658
369
684
374
701
391
896
982
1,027
1,058
1,092
-10
-8
-8
-8
—8
Subtotal, health care services
Health research:
National institutes of Health
Alcohol, Drug Abuse, and Mental Health
Administration research programs
Other research programs
Subtotal, health research
Subtotal, consumer and occupational
health and safety
Deductions for offsetting receipts
Total, outlays
MEMORANDUM—Attribution of Federal
Financing Bank outlays
Health care services
49,614
56,563
62,449
70,801
79,914
17
110
134
163
46
Benefit improvements.—Legislative proposals to expand medicare
and medicaid services include the following:
• Child health assurance program (CHAP% Passage of the
CHAP legislation would make an additional 2 million children and pregnant women eligible for medicaid, and improve
services to currently eligible children.
• Comprehensive clinic services. The administration will propose
legislation that would require States to reimburse community
HEALTH
247
TOTAL FEDERAL HEALTH SERVICE OUTLAYS BY INCOME AND AGE GROUPS
(In millions of dollars)
1979
actual
1980
estimate
1981
-estimate
Poor persons:
Aged ( 6 5 and over)
Other adults ( 1 9 to 64)
Children and youth ( 0 to 18)
6,318
9,052
2,955
7,236
10,245
3,323
7,984
11,106
3,602
Subtotal, poor
18,325
20,804
22,692
Non-poor persons:
Aged (65 and over)
Other adults ( 1 9 to 64)
Children and youth (0 to 18)
25,621
10,130
1,956
29,306
11,396
2,140
32,619
12,617
2,402
37,707
42,842
47,639
31,939
19,183
4,911
36,543
21,641
5,463
40,604
23,723
6,004
56,032
63,646
70,331
(45,121)
(10,911)
(51,595)
(12,051)
(57,317)
(13,014)
Subtotal, non-poor
Total, all recipients:
Aged (65 and over)
Other adults (19 to 64)
Children and youth ( 0 to 18)
Total, all recipients
Allocated to health (function 550)
Allocated to other national needs
•
•
•
•
health centers and other clinics not affiliated with hospitals
for services provided to medicaid patients.
Disability. The administration will continue to seek the liberalization of medicare and medicaid coverage for disabled beneficiaries.
Home health. In an effort to encourage alternatives to nursing home placement, the administration proposes to eliminate
the 3-<lay prior hospitalization requirement for home health
services under medicare hospital insurance. An expansion of
home health services under medicaid is also proposed to avoid
placement of persons in an institution.
Outpatient psychiatric services. The administration continues
to support liberalizing medicare mental health benefits by
reducing the beneficiary co-payment to the same level as for
other medical services, and by raising the total amount that
will be reimbursed by the program.
Medigap legislation. Most medicare beneficiaries purchase
medical insurance to supplement medicare coverage. The administration is proposing legislation to protect beneficiaries
from overpriced, inadequate policies and deceptive sales practices. It would set up a voluntary program of certification for
policies that supplement medicare and penalize insurers for
misrepresentation of policies.
248
THE BUDGET FOR FISCAL YEAR 1981
• Medicare enrollment in health maintenance organizations
(HMOs). Medicare costs in prepaid group practice are less
than those in fee-for-service practice, and the difference between payments for these two kinds of medical practices represents savings to the Federal Government. The administration supports legislation that would share the Federal savings
with medicare beneficiaries who enroll in HMOs, in the form
of reduced cost sharing or additional preventive services.
OUTLAY IMPACT OF PROPOSED MEDICARE AND MEDICAID EXPANSIONS
(In millions of dollars)
1981
1982
1983
Medicaid:
Child health assurance program (CHAP)
Comprehensive clinic services
Disability initiative
Other expansions,....
403
52
4
35
650
57
15
51
860
61
28
53
Total, medicaid expansions
494
773
1,002
43
7
18
5
2
89
12
31
25
2
128
13
37
35
2
75
159
215
Medicare:
Disability initiative
Home health
Outpatient psychiatric services
HMO enrollment
Other expansions
Total, medicare expansions
Restraining health care costs.—The most important action recommended to control health costs is passage of hospital cost containment legislation. The Congress failed to enact this essential piece
of legislation proposed by the administration last year. Had hospital cost containment been enacted, Federal outlays would be approximately $1.3 billion lower in 1980 and 1981 than will now be
the case. Enactment of hospital cost containment, effective October
1, 1980, would save the Federal Government an estimated $0.8
billion in 1981 and $4.8 billion from 1981 to 1983. The Nation as a
whole would save $2.0 billion in 1981 and $11.9 billion from 1981 to
1983.
Legislation has also been proposed to place a national limit on
capital investment in health care facilities. As an additional component of its cost containment strategy, the administration is requesting $10 million in 1981 budget authority for a new grant
program to facilitate closure and conversion of unnecessary health
facilities.
Other activities proposed in the budget to help control costs
include continued support for State and local health planning
agencies. Budget authority of $171 million is requested for this
HEALTH
249
Savings From Hospital Cost Containment
1981
1982
1983
Fltcol Y«on
activity in 1981. Health maintenance organizations have proven
effective in reducing health costs, and the budget proposes $69
million in 1981 budget authority, $7 million over the 1980 level, for
343 federally supported HMOs.
Professional standards review organizations (PSROs), which were
established to monitor unnecessary use of health services, are supported at a level of $195 million in 1981 obligations, up $51 million
from 1980. Legislation is proposed to strengthen the Federal authority to establish PSRO and utilization review performance
standards.
The 1981 budget also supports a number of other initiatives to
insure that the Federal Government purchases services in the most
cost-effective way. Total 1981 savings from these efforts are estimated at approximately $935 million of which about two-thirds
requires legislation, while the remainder will be achieved through
administrative changes in allowable reimbursements for hospitals
and hospital-based physicians. In addition to these proposals, the
administration places a high priority on obtaining authority for
competitive award of contracts for administering the medicare
program.
250
THE BUDGET FOR FISCAL YEAR 1981
HEALTH CARE COST CONTROL OUTLAYS
(In millions of dollars)
1982
estimate
1981
estimate
Programs to control health care costs:
Health planning
Health maintenance organizations
Closure and conversion of facilities
Professional standards review organizations
Total, programs to control health care
costs
Legislative savings proposals:
Hospital cost containment
Medicare as a supplement for the working aged..
Eliminate medicare nursing bonus
Common audit for medicare and medicaid
Hospital reimbursement for long-term care
Financial penalty to deter abuse
Social Security wage information to determine
eligibility
Competitive bid purchasing for equipment and
services
Other
Subtotal, legislative savings
Administrative savings proposals:
Hospital reimbursement reform
Reduced reimbursement for hospital-based physicians
Other
Subtotal, administrative savings
Total, savings proposals
1983
estimate
167
39
2
143
170
50
4
154
170
56
5
165
351
378
396
-780
-170
-191
—32
-20
-23
-1,620
-260
-245
-32
-30
-23
-2,390
-295
—305
-32
-35
-23
-14
-15
-17
-12
-55
-18
-75
-24
—80
-1,297
-2,318
-3,201
-279
-309
—335
-18
-123
-44
-13
—49
-2
-418
-356
-386
-1,715
-2,674
-3,587
Health planning and services grants reform.—The Department of
Health and Human Services will undertake administrative reform
of the Federal health planning and services system. The current
health planning and services system requires 11 separate State
plans, and includes 30 distinct grant programs. This fragmentation
has contributed to gaps in service delivery, burdensome application
requirements, and poor coordination of planning and management.
New procedures will provide the basic framework for an integrated
Federal/State/local system for budgeting and managing health
services programs.
Grants will be made to State and local governments to demonstrate effective ways to coordinate primary care programs for the
underserved. These grants will require performance agreements to
assure delivery of primary health services to the poor and estab-
HEALTH
251
lishment of standards for the cost of various services and for health
measures such as immunization and reduced mortality rates.
Consolidation among the disparate planning requirements will
improve the coordination of planning and decisionmaking. Both the
planning and grant reforms will be phased in on a voluntary basis
with State and local governments.
Other health care services.—Budget authority for health care
programs other than medicare and medicaid is proposed to increase
from $4.1 billion in 1980 to $4.5 billion in 1981.
HEALTH CARE SERVICES
(In millions of dollars)
Budget authority
Program
1981
estimate
1980
estimate
1979
actual
31,762
13,217
35,922
14,612
44,990
16,492
318
80
348
89
380
98
398
437
478
Health Services:
Community health centers
Maternal and child health
Family planning
National Health Service Corps
Public Health Service hospitals
Indian health service
Other health services
259
378
135
63
172
569
165
320
377
165
83
173
623
231
374
392
177
134
165
679
227
Subtotal, health services
1,741
1,972
2,148
297
337
152
282
606
296
351
167
256
627
326
356
171
255
758
Total, budget authority
48,772
54,640
65,968
(Total, outlays)
(45,121)
(51,598)
(57,317)
Medicare
Medicaid
Mental Health:
Mental health services
Saint Elizabeths Hospital
Subtotal, mental health
Prevention
Alcohol and drug abuse
Health planning
Public Health Service management
Federal employees health benefits
The administration has proposed the Mental Health Systems Act
to restructure Federal support to States and communities for the
development and delivery of comprehensive mental health services.
This proposal reflects the recommendations of the President's Commission on Mental Health. To support this new initiative, a 1980
supplemental appropriation of $50 million in budget authority and
$368 million in 1981 budget authority are requested. Total budget
authority for State and community mental health services is proposed to increase from $348 million in 1980 to $380 million in 1981.
Support to communities for mental health services in 1980 and
252
THE BUDGET FOR FISCAL YEAR 1981
1981 is expected to include about 40 new projects to initiate community-based services, 60 new comprehensive community mental
health projects, 200 new projects to provide mental health services
in general health care settings, and support for about 550 of the
nearly 800 established community mental health centers. These
centers will provide services to an estimated 3.6 million people in
1981. Through cooperative agreements with States, comprehensive
support systems serving about one million chronically mentally ill
persons will be improved.
Budget authority of $98 million in 1981 is requested to subsidize
the delivery of mental health care at St Elizabeths Hospital, which
serves primarily District of Columbia residents. Legislation will be
submitted to establish a public corporation—accountable to the
Secretary of the Department of Health and Human Services and
the Mayor of the District of Columbia—to manage the hospital.
The 1981 budget proposes to expand health services funding for
high-priority underserved areas through the community health centers program and the National Health Service Corps (NHSC). A
proposed $54 million increase in 1981 budget authority above the
1980 level of $320 million would support 886 community health
centers serving over 5 million people. Budget authority for the
NHSC services program is proposed to rise from $83 million in
1980 to $134 million in 1981. This will provide an increase of 1,708
NHSC professionals to a 1981 level of 4,528.
Budget authority of $679 million in 1981, an increase of $56
million from 1980, is requested to provide direct medical services or
contract care to 750,000 American Indians and Alaskan Natives
living on or near Federal reservations. Fifteen new facilities are
scheduled to open in 1981. Federal funding for Indian health services has doubled since 1976, and increased fivefold since 1970.
The 1981 budget reflects the administration's commitment to
effective and innovative disease prevention, health promotion,, and
health education programs. As a sequel to successful efforts in 1978
and 1979 to provide childhood immunizations to 90% of all children
under age 15, a new initiative in 1981 will focus on eliminating
measles. The 1981 budget also proposes a $10 million program for
community water and rural school fluoridation, which is one of the
most effective measures known for prevention of tooth decay.
The 1981 budget continues the expanded smoking and health
program, including a $10 million community-based demonstration
grant program designed to discourage smoking and alcohol abuse
among youth. Support will continue in 1981 for the national public
information program targeted at women and teenage smokers. A
new $10 million formula grant program for States will be initiated
in 1980 to support preventive health services addressing the five
leading causes of disease and death in each State.
253
HEALTH
Tax expenditures.—Federal tax laws help finance health care by
allowing employees to exclude from their taxable income the insurance premiums paid by their employers. The revenue loss from this
tax expenditure is estimated at $15.2 billion for 1981. Furthermore,
individuals are permitted to itemize certain deductions for health
care expenses and health insurance premiums. In 1981, the revenue loss from this tax expenditure is estimated at $4.1 billion. In
addition, tax reductions for health-related charitable contributions
are estimated at $1.6 billion in 1981. The national health plan
includes proposals to expand the earned income tax credit and to
increase the percentage of income above which medical expenses
can be deducted.
Health research.—The budget proposes to increase budget authority for health research from $3.7 billion in 1980 to $3.8 billion in
1981. Outlays are estimated to increase from $3.3 billion in 1980 to
$3.6 billion in 1981.
Health research at the National Institutes of Health (NIH) is the
largest component of these activities. Budget authority is proposed
to rise from $3.2 billion in 1980 to $3.4 billion in 1981. The request
provides for support of 5,000 grants for new and continued research
projects to increase the base of knowledge in health research, and
will support a total of approximately 16,700 research project grants
FEDERAL OUTLAYS FOR HEALTH RESEARCH
{In millions of dollars)
1979
actual
Cancer
Environmental health
Cardiovascular disease
Neurological and visual disease
Metabolic diseases
Infectious diseases
Mental health
Child health
Health services research and development..
Population and family planning
Pulmonary diseases
Nutrition
Dental health......
Research resources
Rehabilitation research and development
General medical sciences
Health statistics activities
Regulatory research and development
Other research and development
Total
Allocated to health (function 550)
Allocated to other national needs
1980
estimate
1981
estimate
840
341
280
274
242
237
232
49
72
86
79
99
69
43
269
12
219
49
40
395
869
399
288
339
296
263
286
58
110
91
81
116
71
57
263
16
243
53
37
409
908
449
298
368
310
282
295
65
114
95
86
130
72
68
248
18
292
50
37
449
3,929
4,345
4,635
(3,023)
(906)
(3,338)
(1,007)
(3,555)
(1,080)
254
THE BUDGET FOR FISCAL YEAR 1981
in 1981. This strategy reflects the adminstration's commitment to a
stable funding base for NIH basic research activities. Approximately 50% of the budget authority requested for NIH is for research
project grants.
In addition to NIH research funding, budget authority for research in mental health, alcohol, and drug abuse is proposed to
increase from $235 million in 1980 to $266 million in 1981, an
increase of nearly 55% over the 1977 level. The 1981 budget will
expand basic and applied research in areas such as neurotransmitters and brain biochemistry, mental health treatment assessment,
and biomedical factors in drug and alcohol abuse.
Budget authority of $202 million is requested for other research
such as health services, health care financing, health statistics, and
health care technology.
Federal outlays for health research, including outlays not in this
function, are expected to increase from $4.3 billion in 1980 to $4.6
billion in 1981. The Federal Government provides approximately
two-thirds of the total funds devoted to health research.
Education and training of the health care work force.—The Federal Government currently provides funding for nearly every
health profession through one or more of about 60 separate programs. Projections indicate, however, that there is, and will continue to be, an adequate and perhaps excess supply of personnel in all
the major health professions. For example, the Nation's supply of
active physicians is expected to reach nearly 600,000 by 1990, an
increase of 58% between 1975 and 1990. Moreover, student aid in
the Department of Education has expanded rapidly, reducing the
need for special programs for health professions training.
In recognition of these trends, the 1979 and 1980 budgets phased
down general institutional support. They concentrated on alleviating the problems of geographic maldistribution through service
commitment scholarships, and of overspecialization of medical
practice through support of primary care training programs. This
policy focus is continued in the 1981 budget. Total budget authority
for training health professions in this mission is proposed to decline from $747 million in 1980 to $662 million in 1981.
SUPPLY OF ACTIVE HEALTH PROFESSIONALS
(Calendar years)
1940
actual
Physicians
Dentists
Optometrists
Pharmacists
Podiatrists
Veterinarians
188,800
75,800
10,500
82,600
6,000
11,100
1950
actual
219,900
79,200
14,800
89,200
6,400
13,700
1970
actual
323,200
102,200
18,400
109,600
7,100
25,900
1975
actual
378,600
112,000
19,900
122,500
7,300
31,100
1980
estimate
1990
estimate
444,000
126,200
22,000
144,300
8,700
37,500
594,000
154,500
26,700
185,400
12,500
54,900
Source: "A Report to the President and Congress on the Status of Health Professions Personnel in the United States." (HEW, 1978.)
HEALTH
255
Budget authority for National Health Service Corps scholarships,
as distinguished from the services program, is proposed to increase
to $96 million in 1981 to support an estimated 6,700 scholarships
in 1981. Scholarship recipients agree to serve in health manpower
shortage areas. While the NHSC scholarship program will remain
the primary Federal mechanism for alleviating shortages in specific medically underserved areas, it is intended that the long-range
need for NHSC assignees will be met increasingly by volunteers.
Those obligated to service because of scholarships will serve only in
areas where physicians are least likely to locate voluntarily.
In addition to the NHSC scholarship program, the 1981 budget
continues support for other training programs, including those for
nurse practitioners and physician assistants, and primary care and
family medicine residencies. Special emphasis will be given to programs to strengthen minority health professions schools, expand
assistance for disadvantaged students, and enhance the recruitment and retention of minorities and women into health professions careers. Service commitments to underserved areas and understaffed facilities are also proposed for all federally supported
students in mental health professions.
Loan guarantees will continue to be available under the health
education assistance loan program for students seeking financial
assistance without a service commitment. It is estimated that new
loan guarantees will total $40 million for the 1980-81 academic
year.
Consumer and occupational health and safety.—Budget authority
of $1.1 billion in 1981 is requested for the Federal mission of
protecting consumers from unsafe and defective products, and
workers from occupational hazards.
For consumer safety activities, budget authority is proposed to
increase from $663 million in 1980 to $708 million in 1981. Funding
will support research, dissemination of information, regulatory
measures to protect consumers from unreasonable consumer product risks, and a laboratory facility for the Food and Drug Administration. The safety and efficacy of drugs and medical devices, the
safety of foods, and reform of existing drug laws are also priorities
of this administration.
The budget includes $377 million in budget authority to improve
occupational safety and health in 1981. Research initiatives will be
undertaken in 1981 to assess industrial safety technologies and
begin the first national mining occupational health survey. Research on the exposure of miners to hazardous substances in metal
and nonmetal mines will continue, and funding is requested for a
new occupational safety and health research laboratory.
The Occupational Safety and Health Administration and the
Mine Safety and Health Administration in the Department of
THE BUDGET FOR FISCAL YEAR 1981
256
Labor will continue to issue standards to eliminate working conditions that cause injuries, illness, or death. Increased technical support for developing and enforcing standards, including a new laboratory for the Mine Safety and Health Administration, is proposed.
Inspections are expected to increase from 268,000 in 1979 to 306,000
in 1981. The Occupational Safety and Health Administration will
increase grants to help private organizations train workers and
employers to recognize and eliminate hazards.
CREDIT PROGRAMS—HEALTH
(In millions of dollars)
1979
actual
Direct loans:
New loans
Repayments, sales and adjustments ( - ) *
1980
estimate
1981
estimate
75
-26
136
-118
163
-144
Net loan outlays
49
18
19
Loan guarantees:
New loans
Net loan guarantees2
48
5
217
181
268
229
1
2
Includes sales of direct loans.
Includes guarantees of sales of direct loans.
Health-related programs.—The Federal Government supports a
number of health-related programs that are a part of other major
functions. These programs meet other national needs, such as national defense, but are related to the health of the Nation's people.
The following table shows 1981 outlays for these health-related
programs.
257
HEALTH
PROPOSED 1981 FEDERAL HEALTH AND HEALTH-RELATED OUTLAYS
(In millions of dollars)
Mission
Agency
Health and Human Services
Veterans
Defense
Agency contributions to employee health funds
Labor
Agriculture
Energy
Interior
Environmental Protection Agency
State
National Science Foundation
Transportation
National Aeronautics and Space Administration
justice
Housing and Urban Development
Other agencies
Total
Allocated to health (550)
Allocated to other national needs
1
Health care
services
Health
research
56,717
6,048
4,486
2,589
3,667
144
177
45
145
228
Training the
health care
work force
736
374
326
332
1
158
13
349
411
11
61
11
43
6
38
31
84
5
83
5
49
Protecting
consumers
and workers
Total
'61,443
6,568
5,147
2,589
363
601
239
99
84
90
83
77
61
44
45
445
43
31
271
48
29
33
11
1
14
97
70,331
4,635
1,495
1,522
1
(77,976)
(559)
(936)
(1,027)
(495)
1
(62,449)
(15,527)
33
(57,317)
(113,014)
(3,555)
(1,080)
Includes offsetting receipts of — U million not allocated ty mission.
Highlights of recent and proposed initiatives in these and other
health-related activities are discussed in the special analysis presentation, "Improving the Nation's Health."
310-000 0 - 80 - 18
258
THE BUDGET FOR FISCAL YEAR 1981
INCOME SECURITY
National Needs Statement
• Mitigate the loss of income people experience as a result
of unemployment, retirement, disability, or death.
• Insure a reasonable income and adequate diet for all
poor Americans, especially families with children, the
elderly, and disabled who—even though they may be
working—cannot provide for themselves.
•Help the poor meet problems arising from increasing
energy costs.
• Promote decent and affordable housing for low-income
individuals and families.
• Eliminate duplication and inequities in these programs
and assure that they focus on those most in need.
• Administer these programs efficiently while preserving
the dignity and independence of the beneficiaries.
• Aid the poor to work their way out of poverty, rather
than fostering permanent dependence.
Income security is the largest and one of the most steadily growing functions in the Federal budget. In 1981 income security will
comprise over 35% of total budget outlays, while 25 years earlier it
was 14% of the total. In the last quarter of a century, Federal
social insurance protection has been extended to virtually all
Americans who are aged, poor, disabled, or unemployed. Growing
income security outlays reflect the extension of this protection.
Over that period total Federal budget outlays as a percentage of
gross national product (GNP) grew by 5.2 percentage points: from
17.1% in 1956 to 22.3% in 1981. The income security portion of
that total more than tripled—growing from 2.4% in 1956 to 8.0%
in 1981. As the table below shows, this growth is dominated by the
social security and unemployment programs. Over this period
social security (the old-age, survivors, and disability insurance trust
funds) grew at a rate roughly four times as fast as GNP, Unemployment assistance outlays, which vary with the unemployment
rate, have fluctuated widely both in absolute amounts and as a
percent of GNP. Other income security outlays have risen at a rate
roughly three times as fast as GNP.
INCOME SECURITY
259
INCOME SECURITY OUTLAYS AS A PERCENT OF GROSS NATIONAL PRODUCT
1956
actual
Social security
Unemployment assistance
All other
Total
1961
actual
1966
actual
1971
actual
1976
actual
1981
estimate
1.3
.4
.7
2.4
.9
.9
2.8
.3
.9
3.5
.6
1.4
4.5
1.2
2.2
5.0
.7
2.3
2.4
4.2
4.0
5.4
7.9
8.0
While outlays in the income security function go mainly to needy
individuals and families—the elderly, the disabled, the unemployed, and low-income families—the great bulk of such spending is
not needs- or income-tested. In 1981, about 16% of the total function—equal to about 1.3% of GNP—will be needs tested, while
most of the remainder is for payments such as retirement, disability insurance, and unemployment benefits.
Increases in the cost of income security programs come largely
from an increase in the number of people receiving benefits, from
legislated automatic cost-of-living increases, and from the higher
initial benefits received by new beneficiaries of the social security
system as a result of their work history. Most of the benefits are
automatically available to those who meet qualification standards
established in law. Therefore, outlays for these programs can be
changed in a major way only through new legislation.
The 1981 budget proposals continue the President's policy to
reform income security programs so that they better meet national
needs and can be administered as efficiently and inexpensively as
possible.
Administration proposals and initiatives in the income security
area include:
• simplifying programs to ease access for beneficiaries and to
increase administrative efficiency;
• reducing fraud and abuse, to promote public confidence and to
insure that benefits reach intended beneficiaries;
• offsetting the effect of rising energy costs on low-income families;
• reforming the welfare system by establishing a national basic
minimum level of assistance to families, increasing work opportunities and incentives for poor families, and providing
fiscal relief to the States; and
• improving the short-term financing of the social security
system.
A number of commissions and study groups have been appointed
by the President to study social security and other retirement
systems, including Federal employee, private, and State and local
260
THE BUDGET FOR FISCAL YEAR 1981
government systems, and to recommend changes in these systems
to guarantee their long-term soundness.
Legislation is proposed to allow borrowing between social security trust funds. This will increase the ability of the system to
respond to economic fluctuations without affecting the long-term
soundness of the system.
Rising energy costs place particularly large burdens on lowincome families. The administration is proposing a two-part effort
to meet those problems. The first is a special cash energy allowance for those who receive supplemental security income. The
second is energy crisis assistance grants to States for aid to lowincome families.
In the food stamp program, fraud and error will be reduced by
creating fiscal incentives for States to improve administration. Specifically, legislation is pending to require States with excessive
error rates in administering food stamp benefits to share in the
cost of such errors. A substantial increase in funding is proposed
for the special supplemental food program for women, infants, and
children (WIC) so that 300,000 more individuals can receive benefits. The budget assumes enactment of proposed legislation to
reduce child nutrition subsidies for meals for children from middleand upper-income families so that Federal resources may be better
targeted on the neediest.
Sound financing is a major concern for the railroad retirement
system and will require increased taxes coupled with a modest
restructuring of future benefits. These steps will correct anomalies
in the system and bring it more in line with social security benefits. The administration is proposing legislation to meet these problems.
All Federal retirement programs in this function and some
public assistance benefits are related by law to changes in the cost
of living, as measured by the consumer price index (CPI) or some
other index. In this way, benefits are protected from erosion by
inflation. Two consumer price indexes are published by the Bureau
of Labor Statistics: the original index, which was designed to measure the purchasing power of the dollar for urban wage earners and
clerical workers, and a new index, which covers all urban households. The new index covers about 80% of the population, double
that of the original index. The administration has proposed legislation to shift to the more comprehensive all-urban index in measuring automatic cost-of-living increases for Federal programs linked
to the CPI.
General retirement and disability insurance— The greatest portion of income security outlays is dedicated to retirement and
disability insurance programs. Except for special benefits to dis-
INCOME SECURITY
261
abled coal miners, the beneficiaries themselves have been taxed
during their working years to support the programs. Outlays for
general retirement and disability insurance are estimated to increase from $125 billion in 1980 to $144 billion in 1981 because of:
• an automatic increase in benefits to keep pace with the cost
of living;
• an increase in the number of aged and disabled persons eligible for benefits; and
• growth in earnings upon which the benefits are based.
Social security.—The largest single program in the budget is the
old-age, survivors and disability insurance program. In 1981, this
program is expected to pay benefits of $135 billion to 19.8 million
retired workers, 2.9 million disabled workers and their 13.2 million
dependents and survivors. More than 100 million workers and their
employers are expected to pay $130 billion in payroll taxes during
1981 to cover these costs. The program offers basic protection
against loss of earnings due to retirement, death or disability for
90% of the Nation's workers.
Since social security payments began 40 years ago, changes in
the rate of economic growth, the participation of single and married women in the labor force, and the birth rate have profoundly
affected the program. They have affected the level of benefits, the
amount of taxes that could be anticipated, and the way taxes and
benefits are distributed.
Recently, a number of commissions and study groups were appointed by the President and the Congress to examine and recommend ways that social security, and, in some cases, related social
insurance and income assistance programs, should be adapted to
reflect our understanding of future economic needs. The study
groups are expected to report in 1980 and 1981. No major policy
changes will be proposed in the social security program until these
reports are available.
Experience with economic conditions has shown the need for
more flexibility for financing the system in the short-term to
permit it to respond to temporary economic changes. Legislation
will be proposed to permit borrowing among the old-age and survivors insurance trust fund, the disability insurance trust fund and
the health insurance trust fund. Under present law, reserves in
one of these funds cannot be used to finance operations in another.
Without such legislation, by 1983 there would be inadequate
amounts in the old-age and survivors insurance trust fund and
large balances in the disability and health insurance trust funds.
Last year, a number of changes were proposed by the administration to modify the social security disability insurance program.
These changes would remove existing disincentives for beneficia-
262
THE BUDGET FOR FISCAL YEAR 1981
NATIONAL NEED: PROVIDING INCOME SECURITY
(Functional code 600; in millions of dollars)
Major missions and programs
BUDGET AUTHORITY
General retirement and disability insurance:
Social security (OASDI):
Existing law
Proposed legislation
Railroad retirement:
Existing law
Proposed legislation
Special benefits for disabled coal miners
Other
Subtotal
Federal employee retirement and disability:
Retirement and disability
Federal employees workers' compensation...
Subtotal
Unemployment compensation
Public assistance and other income supplements:
Supplemental security income:
Existing law
Proposed legislation
AFDC and other:
Existing law
Proposed legislation
Earned income tax credit
Food stamps
WIC food supplements:
Existing law
Proposed legislation
School lunch and other nutrition programs:
Existing law
Proposed legislation
Housing assistance
Refugee assistance:
Existing law
Proposed legislation
Low-income energy assistance:
Existing law
Proposed legislation
Other:
Existing law
Proposed legislation
Subtotal
Deductions for offsetting receipts
Total, budget authority
1979
actual
1980
estimate
1981
estimate
1982
estimate
1983
estimate
100,612
115,465
130,923
196
150,272
260
169,428
375
4,201
4,440
1,820
13
1,925
12
4,769
274
1,961
11
5,134
285
1,836
12
5,405
289
1,903
14
106,646
121,842
138,133
157,799
177,414
20,472
228
24,007
279
26,101
381
27,783
388
29,315
423
20,700
24,286
26,481
28,171
29,738
15,516
16,940
19,351
23,044
23,845
5,505
6,371
6,903
17
7,416
11
8,462
14
6,688
773
6,670
7,395
—79
1,696
8,735
7,798
-249
1,570
9,730
7,999
-181
1,454
10,594
8,134
-164
1,345
11,021
570
758
925
46
976
70
1,026
75
3,326
4,103
24,780
27,725
4,483
-458
33,488
4,908
-497
40,758
5,334
-533
41,716
235
524
87
511
79
495
72
409
189
1,597
2,400
2,400
2,400
284
232
4
216
18
226
3
235
49,020
59,062
67,487
76,712
79,545
~2
-2
-2
-2
-2
191,880
222,127
251,451
285,725
310,540
INCOME SECURITY
263
NATIONAL NEED: PROVIDING INCOME SECURITY—Continued
(Functional code 500; in millions of dollars)
Mapr m a * ! programs
OUTLAYS
General retirement and disability insurance:
Social security (QASDI):
Existing law
Proposed legislation
Railroad retirement:
Existing law
Proposed legislation
Special benefits for disabled coal miners
Other
Subtotal
Federal employee retirement and disability:
Retirement and disability:
Existing law
.
Proposed legislation
federal employees workers' compensation...
Subtotal
Unemployment compensation
Public assistance and other income supplements:
Supplemental security income:
Existing law
Proposed legislation
AFDC and other:
Existing law
Proposed legislation
Earned income tax credit
Food stamps
W1C food supplements:
Existing law
Proposed legislation
School lunch and other nutrition programs:
Existing law
Proposed legislation
Housing assistance
Refugee assistance:
Existing law
Proposed legislation
Low-income energy assistance:
Existing law
Proposed legislation
Other:
Existing law
Proposed legislation
Subtotal
Deductions for offsetting receipts
Total, outlays
1979
actual
1980
estimate
1981
estimate
1982
estimate
1983
estimate
102,595
117,927
-14
137,020
-99
154,623
-328
172,682
-650
4,279
4,748
1,610
8
1,968
12
5,227
-70
1,994
12
5,269
-102
1,835
12
5,967
-136
1,900
13
108,492
124,641
144,084
161,308
179,776
12,192
14,305
187
252
16,686
22
381
18,957
23
388
21,238
24
423
12,379
14,556
17,089
19,368
21,685
10,742
15,610
18,752
17,445
15,645
5,471
6,374
6,908
17
7,421
11
8,466
14
6,611
773
6,822
7,127
-79
1,696
8,678
7,681
-249
1,570
9,656
7,999
—181
1,454
10,524
8,136
-164
1,345
10,949
542
735
860
43
909
65
950
70
3,423
3,955
4,367
5,318
4,240
-432
6,606
4,736
-478
7,984
5,143
-513
9,401
141
419
228
296
97
425
72
425
186
1,660
2,400
2,400
2,400
252
259
214
22
221
229
28,586
36,143
40,060
43,591
—2
160,198
190,948
4
-2
—2
219,982
241,710
46,923
-2
264,028
264
THE BUDGET FOR FISCAL YEAR 1981
NATIONAL NEED: PROVIDING INCOME SECURITY—Continued
(Functional code 600; in millions of dollars)
Major missions and programs
ADDENDUM
Off-budget Federal entity:
Pension Benefit Guaranty Corporation:
Outlays
MEMORANDUM
Attribution of Federal Financing Bank outlays:
Housing assistance
1979
actual
- 3 8
1980
estimate
1981
estimate
1982
estimate
- 3 7
- 4 4
- 4 2
1,557
- 5 0
2,946
1983
estimate
- 4 2
512
ries to return to gainful employment, strengthen administration of
the program, and reduce costs. Depending on the resolution of
differences between House and Senate versions, a disability reform
bill could be enacted early in 1980. It would place new limits on the
maximum amount a disabled beneficiary and family might receive
in combined benefits, strengthen supervisory and technical review
capacity of the Social Security Administration over the adjudicatory services, and provide better protection for disabled beneficiaries seeking to return to active employment.
Other legislation is being proposed, primarily of a technical
nature, to facilitate the routine operation of the program and to
mitigate obvious inequities. Most of these measures would have
little or no effect on benefits costs. Items with budgetary signifiance include proposals to:
• permit retroactive benefits for surviving spouses who were
unable to file a claim for widow(er)s benefits within the
month in which the insured spouse died, provided the claim
was filed in the immediate next month;
• continue offsetting worker's compensation benefits against
social security benefits even after the social security beneficiary has converted from the disability insurance rolls to the
old-age rolls at age 62; and
• begin to offset worker's compensation benefits when the social
security beneficiary begins to receive both benefits rather
than when the Secretary of Health and Human Services receives notice of receipt of worker's compensation.
Railroad retirement.—The Railroad Retirement Board, a Federal
agency, administers benefits equivalent to social security as well as
industry pensions for retired and disabled railroad employees, their
dependents, and survivors. The industry pensions include an array
of retirement, survivpr, and disability benefits beyond those provided by social security. Benefit outlays are estimated to increase
INCOME SECURITY
265
from $4.7 billion in 1980 to $5.2 billion in 1981 as a result of
increased benefits. Higher benefits paid to the 1 million beneficiaries will more than offset the effect of an anticipated 2% decline of
21,000 beneficiaries between 1980 and 1981.
The Board's latest actuarial projections suggest that the industry
pension fund is underfunded. Its cash balances are being rapidly
depleted and would be inadequate by 1984. The budget reflects
proposed legislation to ensure that the interests of current and
future beneficiaries are protected by restoring the railroad industry
pension fund to solvency. The proposals would increase pension
revenues by 2% of railroad industry payroll chiefly by removing
the ceiling on earnings subject to railroad retirement taxes. The
proposal would also restrain the future growth in benefits, making
them more like social security benefits. The administration invites
railroad labor and management jointly to propose sound long-term
financing of the industry pension fund without added Federal subsidies.
The industry component of the railroad retirement system provides windfall benefits to certain beneficiaries entitled to both
social security and railroad retirement benefits. The general taxpayer has subsidized these benefits to railroad industry beneficiaries since 1976. The windfall subsidy, estimated in 1974 to require
25 level, annual $250 million appropriations, was re-estimated in
1976 and in 1979. The estimated cost of the windfall subsidy doubled in 5 years, and further increases are expected because the
current Railroad Retirement Board estimates assume no price increases after 1980. The administration is again requesting an increase in the annual windfall appropriation from $313 million in
1980 to $350 million in 1981. At the same time, legislation is
proposed to limit future Federal liability for this growing subsidy
to $350 million annually for the remaining 20 appropriations.
Legislation is also proposed to simplify benefit computations,
improve service to beneficiaries, and simplify administration.
Special benefits for coal miners.—Benefits are provided to coal
miners disabled from pneumoconiosis (commonly known as "black
lung") and their dependents and survivors. These benefits, which
are adjusted automatically in relation to changes in the GS-2 Federal salary levels, are estimated to total $2.0 billion annually in
1980 and 1981.
The Department of Health and Human Services (HHS) administers $1 billion in benefits funded from general revenues that are
paid to disabled coal miners and their dependents and survivors
who filed for benefits between 1970 and 1973. In the HHS-administered component, an increase in average benefit levels will be
offset by a decline in the number of beneficiaries from 440,000 in
1979 to 416,000 in 1980 and 391,000 in 1981.
266
THE BUDGET FOR FISCAL YEAR 1981
The Department of Labor receives black lung claims filed after
1973, and benefits are to be paid by the mine operator found
responsible for the disability. In addition, the Black Lung
Benefits Reform Act of 1977 provided for review by the Department of Labor of all claims denied by the Department of Health,
Education, and Welfare for possible approval under new eligibility
criteria. Benefit payments for eligible miners and survivors where
no mine operator can be assigned responsibility, or where mine
employment terminated before 1970, are paid from the black lung
disability trust fund. This trust fund is financed by an excise tax
on coal. Benefit payments are estimated at $829 million in 1980
and $772 million in 1981.
Other.—The President's Commission on Pension Policy, established to develop recommendations to the President on efficient
and equitable retirement systems for American workers, is examining several subjects, including what constitutes an adequate standard of living upon retirement and the ability of the various retirement systems to meet the needs of the retired population. In addition, data are being collected on the financial condition of the
various systems and their ability to provide promised benefits; on
the cost of these benefits now and in coming decades; and on tax
policy, capital formation and economic growth as they relate to
pension policy.
Pension Benefit Guaranty Corporation.—The Pension Benefit
Guaranty Corporation, an off-budget Federal entity, was established by the Employee Retirement Income Security Act of 1974 to
protect the vested benefits of workers, in covered pension plans that
terminate. Employers with covered plans pay an annual premium
of $2.60 per participant to cover the Corporation's costs of taking
over terminated pension plans and paying benefits when due. Employers whose plans terminate are liable for the unfunded portion
of vested retirement benefits to the extent it does not exceed 30%
of their net worth. The Corporation's receipts are expected to
exceed expenditures by $37 million in 1980 and $46 million in 1981.
Under current law, the Corporation would be required to cover all
terminating multiemployer plans on May 1, 1980. The budget estimates reflect pending legislation proposed last year to substitute a
comprehensive program to prevent termination of multiemployer
plans. Under the proposal, financially troubled multiemployer
plans would have to take corrective actions to avoid near- or longterm insolvency. Should a plan become unable to pay the full level
of guaranteed benefits, the insurance program would make loans to
enable such benefits to be paid. Loans would not be available to
plans that had not taken corrective action. This legislation is proposed to be effective on May 1, 1980.
INCOME SECURITY
267
FEDERAL BENEFITS FOR THE AGED
(In millions of dollars)
1979
actual
1980
estimate
1981
estimate
Cash benefits:
Covered employment:
Social security (0ASI) members
Federal civilian employees
Railroad employees
Uniformed services members
Coal miners
Supplemental security income
Income-tested veterans pension
68,991
6,187
3,198
832
1,128
1,685
3,192
79,541
7,445
3,461
967
1,376
1,774
3,431
91,121
8,535
3,726
1,107
1,345
1,832
3,727
Subtotal, cash benefit outlays
85,213
97,995
111,393
24,647
4,329
512
1,634
59
28,362
4,949
616
2,044
71
31,316
5,532
689
2,515
80
31,181
36,042
40,132
116,394
134,037
151,525
(80,336)
(36,058)
(92,790)
(41,247)
(105,834)
(45,691)
In-kind benefits:
Medicare
Medicaid
Food stamps
Subsidized public housing
Other in-kind
Subtotal, in-kind benefit outlays
Total, outlays
Allocated to income security (function 600)
Allocated to other national needs
Tax expenditures.—A variety of income exclusions, tax deferrals,
and credits assist the aged, retired, and disabled. The exclusion
from income subject to tax of all social security and most railroad
retirement benefits without regard to an individual's income from
other sources results in an estimated tax expenditure of $9.1 billion
in 1981. The exclusion from income of benefits for the disabled
results in an estimated tax expenditure of $2.5 billion in 1981. The
tax expenditures resulting from the extra personal exemption for
those over 64 and the blind, and from tax credits for the elderly
will reduce 1981 receipts by an estimated $2.3 billion. The Revenue
Act of 1978 significantly increased the level of tax expenditures
going to elderly homeowners. The new provisions that allow a oncein-a-lifetime tax exemption on capital gains up to $100,000 on the
sale of a principal residence will reduce tax collections by an
estimated $0.6 billion in 1981.
Tax expenditures also provide incentives for employers to provide their workers with pensions and other benefits such as life
and health insurance and supplemental unemployment compensation. Excluding the cost of these benefits from income results in an
estimated tax expenditure of $16.7 billion in 1981. Acquiring life
insurance is encouraged by the Government through exclusions
from income of interest earned on policies that reduce premiums.
268
THE BUDGET FOR FISCAL YEAR 1981
This exclusion will result in an estimated 1981 tax expenditure of
$3.9 billion.
Federal employee retirement and disability insurance— Outlays
for Federal civilian retirement and non-work-related disability insurance are estimated to increase from $15 billion in 1980 to $17
billion in 1981. These Federal programs are estimated to have 1.8
million beneficiaries in 1981. (Military retirement is discussed
under national defense.)
The Department of Labor, through the Federal Employee Compensation Act program, provides tax-free cash and medical benefits
to Federal employees or their survivors, for job-related injuries,
illnesses, or deaths. Other Federal agencies subsequently reimburse
the Department for payments made on behalf of their employees.
About 47,500 workers with long-term disabilities or their survivors
are expected to receive monthly payments in 1980 and about 48,200
are expected to receive them in 1981. Over $1 billion in benefits is
expected to be paid in 1981. After reimbursements from other
agencies, outlays are estimated to increase from $252 million in
1980 to $381 million in 1981.
There is evidence that the Federal employee workers compensation system is being misused. Consequently, legislation will be proposed to amend the Federal Employees Compensation Act to
remove (1) incentives to file questionable claims; (2) disincentives
for injured workers to return to work when they are medically
able; and (3) inequities that now may provide greater compensation
than a recipient would have received as a full-time employee. This
legislation would encourage both employees and employers to participate fully in the return of injured workers to employment as
soon as they can. The proposals include provisions designed to
reduce fraud and to simplify the program. Such provisions would
eventually produce savings in both compensation and administrative funds.
Unemployment compensation.—About 97% of wage and salaried
employment in the United States is covered by unemployment
compensation that provides support to individuals who are temporarily out of work and who are searching for jobs. This income to
unemployed workers also helps support aggregate purchasing
power during slack periods in the economy. It is estimated that an
average of 2.9 million workers per week will receive unemployment
benefits during 1980 and 3.4 million in 1981. Outlays for unemployment compensation are estimated to increase from $15.6 billion in
1980 to $18.8 billion in 1981 as a result of increases in wages on
which benefits are based, and a rise in the projected average unemployment rate from 6.7% in 1980 to 7.4% in 1981.
INCOME SECURITY
269
Tax expenditures.—Unemployment compensation benefits received by single persons with an annual income, including unemployment compensation, of under $20,000 (under $25,000 for married couples) are excluded from taxable income. The resulting tax
expenditure is estimated at $3.1 billion in 1981.
Public assistance and other income supplements.—This mission
includes programs that provide cash, food, and shelter for people in
need. Groups eligible for such aid include families with dependent
children, the aged, the blind, and the disabled. A major administration proposal for reform of the welfare system will provide significant improvements in welfare programs and in benefits for the
needy.
Welfare reform.—The administration's welfare reform proposal,
as contained in the jobs and cash assistance bills submitted to the
Congress, is designed to (1) establish a national basic minimum
level of assistance to families; (2) extend eligibility for cash assistance to two-parent families in all States; and (3) provide public jobs
and training opportunities for the principal earner in those families under the program of aid to families with dependent children
(AFDC) when he or she cannot find a private sector job. The earned
income tax credit (EITC) would be expanded to increase incomes of
working poor families, thus increasing the incentive to work and
reducing welfare costs. The resources of the CETA program and
tax credits will be relied on to provide opportunities for work and
training before new funds are added. State and local governments
will receive fiscal relief for welfare expenditures—including costs
due to reform—as a result of both increased Federal matching
rates for States* AFDC costs and funding to hold States harmless
for certain increased welfare costs. Upon enactment, the administration will promptly seek financing to implement welfare reform.
Estimates for welfare reform are covered by the allowance for
contingencies in the budget.
Supplemental security income.—The supplemental security
income (SSI) program, which is administered as well as financed by
the Federal Government, provides cash assistance to needy aged,
blind or disabled individuals. The basic Federal grant is supplemented by State payments in certain States.
The number of recipients was 4.2 million in 1979 and is expected
to remain at that level through 1981. Federal outlays in 1981 are
estimated to reach $6.9 billion, compared with $6.4 billion in 1980.
The increased outlays result from automatic increases in the benefit payments to offset inflation.
The high error rates in the program's initial years have been
markedly reduced. Much of this reduction is due to concentrating
270
THE BUDGET FOR FISCAL YEAR 1981
staff resources on error-prone cases, and extensively cross-checking
benefits provided by other benefit programs. The Department of
Health and Human Services intends to reduce further the number
of errors without sacrificing equity or incurring substantial new
program costs. For example, legislation has been proposed to shift
to a system under which a recipient's eligibility and benefits would
be determined by taking into consideration the past month's
income rather than trying to forecast income as under current law.
AFDC and related programs— The program of aid to families
with dependent children (AFDC) assists States and localities in
providing cash assistance to the needy. Federal outlays for these
grants are estimated at $7.4 billion in 1981 compared with $7.0
billion in 1980 and $6.6 billion in 1979. The 1981 outlay increase
results from moderate increases anticipated both in the number of
AFDC families and in the average benefit payment. Errors and
abuses are being combatted through closer cooperation between the
States and the Department of Health and Human Services. In
addition, vigorous management improvement efforts, such as welfare management and training institutes, are focusing on welfare
administration in selected States. Child support payments are
being collected from parents who are legally liable for such support. This results in a decrease in Federal, State, and local AFDC
expenditures.
Legislation has been proposed to include stepparents' income in
calculating AFDC eligibility and benefits, and to standardize allowable work expenses. These proposals, which are part of pending
welfare reform proposals, will simplify administration and reduce
costs. Legislation has also been proposed to revise the child support
enforcement program by extending enforcement and collection activities to alimony, permitting access to wage information of the
Social Security Administration, and not terminating AFDC eligibility before a regular pattern of support payments for the family can
be established. Finally, legislation is being proposed to bar the
discharge of child support obligations in bankruptcy proceedings.
Earned income tax credit—Since 1975, the Federal Government
has provided a tax credit for low-income workers that reduces the
amount of income tax they are liable to pay. Where the credit
amounts to more than the income taxes owed, the worker receives
a check for the difference. Beginning in 1979, provision was made
for the credit to be received in advance through additions to wages.
In 1981 the outlays for these payments are estimated to be $1.6
billion. The cost of this program, including revenue losses and
outlays is estimated to total $1.9 billion in 1981.
INCOME SECURITY
271
Food stamps.—Food stamps allow needy Americans to buy food.
Monthly allotments of stamps are provided for people based on
their income and household size, and are adjusted periodically to
reflect changes in food prices. Most recipients have incomes well
below the national poverty level.
Food stamps will help to improve the diet of 20.4 million lowincome people a month in 1981 at an annual cost of $9.7 billion.
The Federal Government finances food stamp costs and shares half
of the administrative costs with the States. States administer the
actual distribution of food stamps.
The original Food Stamp Act of 1964 required that a recipient
pay a portion of the value of food stamps. The amount to be paid
by the recipient was dependent on income. The Federal Government then granted additional "bonus" food stamps. The requirement to pay a portion of the value of food stamps was eliminated
in the Food Stamp Act of 1977—a change that helped people who
could not afford the initial purchase. As a result of the elimination
of the purchase requirement, significant increases in participation
have occurred in rural areas and among the elderly poor. In the
past year, an additional 1 million of the poorest families have
joined the program.
Pending legislation is designed to improve the efficiency of administering food stamp benefits. Under current law, rewards are
given to States that operate exemplary programs. Under the administration's proposal, States that fail to reduce high error rates
will be liable for a portion of the benefits issued erroneously.
Recent administrative improvements in calculating food stamp
benefits will reduce food stamp costs by $85 million in 1981.
Legislative changes are also pending to allow States to adopt
procedures to improve food stamp administration. One change
would permit States to calculate food stamp eligibility on the basis
of a recipient's past month's income rather than trying to forecast
the next month's income. Another would allow States to require
that certain food stamp households more frequently report their
income. The pending legislation would also remove the specific
1981 food stamp authorization ceiling contained in the Food Stamp
Act of 1977. Food stamp spending could then reflect annual appropriations based on current economic and social conditions.
Women, infants, and children (WIC).—The special supplemental
food program for women, infants, and children has grown significantly since it was introduced in 1973 as a pilot program. Outlays
have increased from $14 million in 1974 to $735 million in 1980 and
will rise to an estimated $903 million in 1981. Over 2 million
people—pregnant and lactating women, infants, and children
272
THE BUDGET FOR FISCAL YEAR 1981
under age 5—will receive food packages monthly. Recipients must
be both economically and nutritionally needy.
WIC food packages consist of dietary supplements of milk,
cheese, eggs, juices and other foods. Recent evidence suggests that
WIC expenditures help improve the health of the recipients and
minimize later medical costs. Both State and Federal costs for
medicaid and special education are reduced by WIC. Efforts will be
intensified to direct WIC benefits to people who live in areas of
need, and to tailor WIC food packages carefully to the nutritional
requirements of needy people.
School lunch and other nutrition programs.—A number of federally assisted programs subsidize meals to young people in schools,
child care programs, summer camps, and similar institutions. Over
25 million children will receive these subsidies in 1981 at an estimated cost of $3.6 billion.
Legislation is proposed to better direct these subsidies to needy
children. Included in the proposals are revised eligibility rules and
reduced subsidies for higher income children. In schools that receive Federal subsidies for milk served during breakfast or lunch,
subsidies for extra milk will be reduced for higher income students.
In addition, the assessment, improvement, and monitoring system
(AIMS) will be fully underway in 1981. As currently proposed,
AIMS will assure that Federal payments for these activities are
accurate and made in accordance with the law.
Surplus commodities and cash in lieu of commodities are also
made available for use in nutrition programs for the elderly. In
1981 about 158 million meals will be subsidized at a cost of $76
million.
Housing assistance.—The Federal Government provides a broad
range of economic assistance to support housing for our citizens.
The emphasis of the direct expenditure programs administered by
the Department of Housing and Urban Development (HUD) is on
housing assistance, primarily rental subsidies, for low-income families and individuals. Outlays for these programs are estimated to
grow by 24% in 1981 to $6.6 billion. HUD also provides operating
subsidies for many subsidized housing projects; outlays for these
subsidies are estimated to grow from $815 million in 1980 to $914
million in 1981.
The 1981 budget supports three major HUD housing programs:
• lower income rental assistance (section 8);
• construction of public housing; and
• homeownership assistance (section 235).
The emphasis of the first two programs is to improve conditions
for low-income individuals and families. The administration plans
to add 300,000 units under these programs for 1981, a 25% increase
INCOME SECURITY
273
above the enacted 1980 program level. The third, section 235, program provides interest rate subsidies for low-income homeowners.
The administration is stressing the use of this program to reduce
forced relocation of lower income families.
Occupants of section 8 housing pay rentals equal to 15% to 25%
of their family incomes. The Federal Government pays rental subsidies for the difference between the amounts the occupants pay
and market rents. The Federal subsidy thus covers construction,
financing, and operating costs over periods that range from 15 to
30 years.
There are currently 898,000 families being assisted by this program, and it is estimated that about 740,000 additional families
will be assisted out of budget authority already available through
1980. For 1981, the section 8 program will consist of the following
units:
• 114,700 new units at an average annual Federal cost of $5,235
each over 20-30 years;
• 23,300 substantially rehabilitated units at an average annual
Federal cost of $6,125 each over 20-30 years;
• 40,000 moderately rehabilitated units at an average annual
Federal cost of $4,200 each over 15 years; and
• 80,000 existing units that will each cost an estimated $3,000
per year over the 15-year contract period.
Currently, there are 1.1 million occupied units of public housing
and another 157,000 units are scheduled for construction under
budget authority already enacted. For 1981, the administration's
proposed subsidized housing program would provide for an additional 42,000 units of public housing, including 4,000 units for
Indians on reservations. These units would be constructed at an
estimated average cost of $57,368 per unit, except for Indian housing that is estimated to cost $71,698 per unit. The average annual
Federal costs for public housing, which reflect only the construction and financing costs, are estimated to be $5,340 per unit for
traditional public housing and $6,790 for Indian housing over a 30year period.
Tenants in public housing have low incomes and usually must
pay up to 25% of their incomes for rent. Because rent revenues are
insufficient to cover operating costs at more than 95% of the public
housing projects, the Federal Government also provides operating
subsidies for public housing at an estimated outlay cost of $811
million in 1981. The Federal Government also funds capital improvements to the existing stock of public housing units through a
separate public housing modernization program. The administration is proposing a significant change in the public housing modernization program to address the deterioration of public housing
units in some areas. In addition to the $1.0 billion in budget au310-000 Q - 80 - 1Q
274
THE BUDGET FOR FISCAL YEAR 1981
thority requested for the modernization program in 1981, the administration proposes that, beginning in 1980, local housing officials be allowed to use up to 50% of the appropriations for new
public housing production to make major renovations and other
repairs to badly deteriorated public housing projects in their areas.
The homeownership assistance program (section 235) provides a
mortgage interest subsidy to households with incomes less than
95% of the median income in the area in which they live. This
assistance reduces mortgage interest rates to 4%. In recent years,
lower income families have faced forced relocation resulting from
new or improved housing in their neighborhoods that they could no
longer afford. The administration is expanding its efforts to use
this program to alleviate the pressure toward forced relocation.
Last year, the ceiling on the size of the mortgage that can be
subsidized under this program was raised in designated neighborhoods for families in danger of being forced out of their neighborhoods by revitalization activities. For 1981, the administration proposes to make eligible for this program up to 5,000 families who
are living in apartments being converted to condominium or cooperative ownership in areas affected by revitalization.
The budget also requests $41 million in 1981 budget authority for
the troubled projects operating subsidy program. This program,
enacted in 1979, is intended to maintain the solvency of financially
troubled multifamily projects, thereby reducing FHA insurance
claim payments, and help defray additional rent burdens for lowincome tenants by providing subsidies for short-term operating cost
and financing repairs. Projects receiving such assistance must improve their management to correct the conditions that produced
the financial problems. Eligible State-aided projects that meet
these and other Federal requirements also may receive assistance.
Other major forms of Federal support for the housing sector of
the economy are tax expenditures and programs that provide and
guarantee mortgage credit. The housing credit programs and related tax expenditures are discussed in the section on commerce and
housing credit.
In addition, State and local governments have made increasing
use recently of tax-exempt bonds to provide below market rate
mortgages to their citizens. These bonds are estimated to cause a
loss to the Treasury of $1.6 billion in 1981. If left unchecked, this
loss could grow to nearly $10 billion by 1985. For this reason, the
administration supports legislation to eliminate the use of mortgage revenue bonds for single family housing.
There are also tax expenditures generated through the financing
of certain HUD subsidized housing programs. The most important
of these involves the sale of tax-exempt financial instruments by
State and local housing authorities to finance the construction of
INCOME SECURITY
275
section 8 and public housing projects. With respect to public housing projects, the administration is proposing to phase out the use of
this particular financing method and eventually end this tax expenditure by increasing direct Federal expenditures to sell the debt
of local housing agencies to the Federal Financing Bank. This is
expected to result in a $40 million increase in 1981 receipts.
CREDIT PROGRAMS—INCOME SECURITY
(In millions of dollars}
1979
actual
Program
Public housing operation and construction:
Direct loans:
New loans
Repayments, sales, and adjustments ( - )
1980
estimate
1981
estimate
278
-268
302
-301
Net loan outlays
9
1
Loan guarantees:
New loans
Net loan guarantees
9,451
483
10,000
200
10,825
2,000
-1
-1
Assistance to refugees:
Direct loans:
New loans
Repayments, sales, and adjustments ( — )
Net loan outlays
Off-budget Federal entity—Pension
Guaranty Corporation:
Direct loans:
New loans
302
-302
*
*
-1
-1
Benefit
5
R p rn ajv m e n k i <u»Ipc a n d a r lIi t K t m p n k I\_ '
\
Net loan outlays
5
*S500 thousand or less.
Refugee assistance.—Last year, the President announced that
14,000 Indochinese refugees per month would be resettled in the
United States during 1980, more than twice the previous rate. In
light of recent developments in Southeast Asia, this commitment
will continue in 1981. In addition, the resettlement of about 59,000
Soviet and other refugees is anticipated in 1981. The administration plans to request funds for a varied program designed to speed
the assimilation of refugees into American society.
States are reimbursed by the Federal Government for their expenses in providing cash and medical assistance, social services,
and English language and employment training to help integrate
refugees into American society. In some areas with large concentrations of newly arrived refugees, school districts receive assistance through the Department of Education to offset the cost of
educating Indochinese refugee children. Matching grants are also
276
THE BUDGET FOR FISCAL YEAR 1981
provided to several private voluntary organizations to aid in the
permanent resettlement of Soviet and other refugees. Consistent
with congressional appropriations action over the last 2 years,
special assistance to States on behalf of Cuban refugees who arrived in the United States before 1978 is being gradually phased
down. Outlays for the refugee assistance program are estimated to
be $419 million in 1980 and $524 million in 1981.
The regular Federal costs of assistance associated with refugees
participating in AFDC, medicaid, food stamps and other programs
are included in each of those programs.
The administration has proposed the Refugee Act of 1979 to
establish a permanent and systematic means to admit and assist
refugees of special concern to the United States.
Low-income energy assistance.—To help offset the impact of
rising fuel costs on low-income families, the administration proposed two energy-related income assistance programs for 1980. The
first program, special energy allowances, provides cash assistance
to recipients of the supplemental security income program and
grants to States for aid designed by the Governor to best fit the
circumstances of a given State. This aid can be in the form of cash
assistance, fuel bill payments, or other in-kind assistance. The special energy allowances program has received funding of $1.2 billion
for 1980 and a new authorization will be sought for $2.0 billion in
1981. The second program, energy crisis assistance, provides grants
to States to help low-income families experiencing energy-related
emergencies. Funding of $0.4 billion has been enacted for 1980 and
the same amount is requested for 1981 with a State matching
provision. The new 1981 programs would be financed by revenues
from the windfall profit tax and administered by the Department
of Health and Human Services.
Related programs.—There are a number of other programs that
are related to income security, but their primary purpose is to
meet other national needs and serve other major missions. The
following table lists these income security-related programs that
support other missions.
INCOME SECURITY
277
FEDERAL OUTLAYS FOR INCOME SECURITY-RELATED BENEFITS SUPPORTING OTHER MAJOR
MISSIONS
(In millions of dollars)
Benefit outlays
Department, agency, and program
1979
actual
1981
estimate
1980
estimate
Department of Health and Human Services:
Hospital insurance
Supplementary medical insurance
Medicaid
Public Health Service officers retirement
19,898
8,259
11,701
36
22,747
9,663
13,377
40
24,894
10,906
14,952
44
Total, Department of Health and Human
Services
39,894
45,827
50,796
Veterans Administration:
Disability and dependency and indemnity compensation
Veterans and survivors pensions
Life insurance (net subsidy)
Other veterans benefits
6,961
3,481
549
35
7,546
3,772
551
32
8,240
4,120
569
28
Total, Veterans Administration
11,026
11,901
12,957
Department of Defense—Military:
Military retirement
10,279
11,941
13,677
174
206
232
61,373
69,875
77,662
Department of Transportation:
Coast Guard retirement
Total, outlays
278
THE BUDGET FOR FISCAL YEAR 1981
VETERANS BENEFITS AND SERVICES
National Needs Statement:
• To meet the Nation's obligation to compensate veterans
disabled while in military service for their loss of earning power.
• To provide medical care to veterans for disabilities incurred while in military service.
• To compensate the families of veterans who are killed in
service or who die from service-related disabilities for the
reduction in the family's earning power.
• To help veterans of wartime and draft service return to
civilian life on a social and economic basis comparable to
their peers who did not perform military duty,
• To provide psychological readjustment services and expanded training opportunities to Vietnam-era veterans
with special needs.
• To provide financial assistance to needy veterans and
their survivors.
The Federal Government's veterans benefits and services programs recognize and are intended to meet the special needs of
veterans and their dependents and survivors that result from the
sacrifices that veterans have made in military service to this country. Benefits compensate for loss of earnings resulting from servicerelated disabilities, provide medical care for physical and psychological disabilities suffered in military service, and assist in preparing returning veterans for civilian life. In addition, veterans benefits provide financial assistance to needy veterans of wartime service and to their survivors.
This administration has sponsored and implemented a number of
improvements in veterans programs. Two of these improvements
are particularly significant:
• Reform of the pension program. This reform, enacted in 1978,
sharpened the focus of financial aid on truly needy veterans,
while eliminating inequities in the previous program that
allowed veterans in widely differing financial conditions to
receive identical pensions. The pension reform legislation also
introduced automatic annual cost-of-living increases in benefits.
• Improvements in medical care. The number of veterans served
by medical facilities of the Veterans Administration (VA) has
been increased and the quality of that care improved. These
improvements have been achieved in part by reducing the
VETERANS BENEFITS AND SERVICES
279
length of hospitalization and increasing reliance on outpatient
treatment.
The administration is proposing further improvements in veterans benefits and services for 1981. The budget reflects legislative
proposals that provide:
• A 13.0% cost-of-living increase in compensation benefits for
veterans with service-related disabilities.
• A 10% increase in GI bill educational benefits.
• A 2-year extension of the period of eligibility for certain readjustment benefits for needy and educationally disadvantaged
Vietnam-era veterans.
The budget also reflects further changes necessary to provide
health care for the growing number of elderly veterans. During the
1980's the number of veterans over age 65 is expected to increase
by 127% as virtually all of the 27 million veterans of World War II
pass this age milestone. In anticipation of this change in the age
structure of the veteran population, VA's medical care and research activities will devote increasing attention to the problems of
aging veterans.
This budget also provides, as a major initiative, substantially
increased construction funds to maintain, renovate, modernize, and
systematically replace aging VA medical structures in order to
prevent deterioration of the physical facilities housing VA medical
services.
At the same time, several cost-saving legislative proposals are
also included in the budget. These proposals, which are described
in more detail later, would help to offset the costs of the proposed
improvements in veterans programs.
Outlays for veterans benefits and services are estimated to rise
from $20.8 billion in 1980 to $21.7 billion in 1981. Outlays for
veterans income security programs, primarily compensation and
pensions, are expected to increase by $1.4 billion (11.8%) between
1980 and 1981, largely as a result of cost-of-living increases. In spite
of the proposed 10% increase in GI bill benefits and extension of
the period of entitlement for certain veterans, outlays for readjustment benefits are expected to decrease by $283 million (12.7%) over
the same period because fewer veterans will be eligible for GI bill
benefits. Outlays for the basic programs of hospital and medical
care for veterans are proposed to increase by $175 million in 1981.
Veterans housing programs are expected to produce negative outlays of $302 million in 1981 as a result of the sale of housing assets
held by the Veterans Administration.
Income security for veterans.—In addition to Federal income security programs for the general population, such as social security,
several programs help certain veterans and their survivors maintain their income when the veteran is disabled, aged, or deceased.
280
THE BUDGET FOR FISCAL YEAR 1981
NATIONAL NEED: PROVIDING VETERANS BENEFITS AND SERVICES
(Functional code 700; in millions of dollars)
Major missions and programs
BUDGET AUTHORITY
Income security for veterans:
Compensation and pensions:
Service-connected compensation:
Existing law
Proposed legislation
Non-service-connected pensions
Burial and other benefits
Insurance programs:
National service life insurance trust fund
U.S. Government life insurance trust
fund
All other insurance programs
Insurance program receipts
1981
estimate
1980
estimate
1979
actual
1982
estimate
1983
estimate
3,734
186
7,508
923
4,074
191
7,565
1,729
4,260
195
7,620
2,498
4,386
200
983
1,029
1,060
1,074
1,083
38
6
-458
36
5
-458
34
1
-445
32
5
-433
30
5
-422
Subtotal income security for veterans
11,212
11,869
13,346
14,428
15,399
Veterans education, training, and rehabilitation:
Existing law
Proposed legislation
2,510
2,279
1,822
193
1,446
165
1,187
121
2,510
2,279
2,015
1,611
1,307
5,374
462
275
5,855
-45
402
177
6,155
-353
675
192
6,465
-394
852
195
6,767
-390
954
198
6,112
6,388
6,669
7,118
7,529
638
638
34
658
-1
32
661
28
657
-1
32
666
672
688
690
692
Subtotal, education, training, and rehabilitation
Hospital and medical care for veterans:
Medical care and hospital services:
Existing law
Proposed legislation
Construction
Medical administration, research, and other.
Subtotal, hospital and medical care....
Other veterans benefits and services:
Undistributed VA overhead and other:
Existing law
Proposed legislation
Non-VA support programs
Subtotal, other benefits and servicesDeductions for offsetting receipts
Total, budget authority
6,909
7,337
3,555
179
-4
20,495
-3
21,205
-3
22,716
-3
23,844
32
-3
24,926
Outlays for this mission are estimated to increase from $11.7 billion in 1980 to $13.0 billion in 1981.
Service-connected compensation. —Monthly compensation payments are provided to veterans whose disabilities resulted from
military service. The amount of the benefit depends on the degree
to which average earnings of individuals with a particular disability are reduced. In addition, dependency and indemnity compensation payments are made to survivors of veterans who die from
service-connected injuries. Recently enacted legislation increased
compensation benefits by 9.9%, effective in October 1979.
VETERANS BENEFITS AND SERVICES
281
NATIONAL NEED: PROVIDING VETERANS BENEFITS AND SERVICES—Continued
(Functional code 700; in millions of dollars)
Major missions and programs
OUTLAYS
Income security for veterans:
Compensation and pensions:
Service-connected compensation:
Existing law
Proposed legislation
Non-service-connected pensions
Burial and other benefits
Insurance programs:
National service life insurance trust fund
U.S. Government life insurance trust
fund
All other insurance programs
Insurance program receipts
Subtotal, income security for veterans
1979
actual
1980
estimate
3,712
185
7,616
2,434
4,355
200
785
803
931
966
999
71
—60
-458
69
-62
-458
64
-54
-445
62
-50
-433
60
-52
-422
10,780
11,660
13,034
14,172
15,189
2,760
2,226
1,750
193
1,370
165
1,121
121
2,760
2,226
1,943
1,534
1,241
5,159
251
201
5,926
-45
274
226
6,101
-353
381
242
6,406
-394
539
215
6,765
-390
884
217
Subtotal, hospital and medical care....
5,611
6,380
6,370
6,766
7,476
Veterans housing:
Loan guaranty revolving fund
Direct loan revolving fund
Other (HUD participation sales trust fund).
207
—65
12
—32
-175
22
-195
-107
2
77
-68
-3
76
-64
-3
154
— 184
—300
6
10
598
654
655
656
658
- 1
- 1
Hospital and medical care for veterans:
Medical care and hospital services:
Existing law
Proposed legislation
Construction
Medical administration, research, and other.
Subtotal, veterans housing
Other veterans benefits and services:
Undistributed VA overhead and other:
Existing law
Proposed legislation
Non-VA support programs
Subtotal, other benefits and services..
Deductions for offsetting receipts
Total, outlays
3,522
177
1983
estimate
7,540
1,662
4,230
195
Subtotal, education, training, and rehabilitation
7,411
1982
estimate
7,471
846
4,032
190
Veterans education, training, and rehabilitation:
Existing law
Proposed legislation
6,743
1981
estimate
*
29
32
32
32
32
627
687
686
687
689
-4
-3
-3
-3
-3
19,928
20,766
21,731
23,162
24,603
* $500 thousand or less.
Legislation will be proposed to provide a 13.0% cost-of-living
increase in compensation benefits, effective in October 1980. The
estimates for subsequent years assume similar annual cost-of-living
282
THE BUDGET FOR FISCAL YEAR 1981
increases, based on the projected consumer price index. An estimated 2.6 million veterans and their survivors are expected to receive
compensation benefits in each of the years 1980 through 1983.
Non-service-connected pensions.—Pensions are provided to needy
wartime-service veterans who are aged or who have become disabled subsequent to their military service. Survivors of wartimeservice veterans also may qualify for pension benefits based on
demonstrated financial need. The Veterans and Survivors Pension
Improvement Act of 1978 sharpened the focus of veterans pension
benefits upon needy, non-service disabled veterans. The Act liberalized benefits for the neediest veterans and survivors, while correcting most of the inequities that existed in the previous program.
The reform legislation did away with most earnings exclusions,
which had allowed veterans in widely differing financial conditions
to draw identical pensions, and provided that pension benefits be
reduced dollar-for-dollar with increases in earnings. In addition,
the reform legislation provided for automatic cost-of-living increases each July starting in 1979. In all, 2.1 million needy veterans and their survivors are expected to receive $4.0 billion in 1981,
$4.2 billion in 1982 and $4.4 billion in 1983.
Burial and other benefits.—Families of deceased veterans who
are buried in private cemeteries rather than VA National Cemeteries may receive allowances to apply toward the purchase of burial
plots. Families of deceased veterans also receive burial benefits to
assist in defraying veterans funeral expenses. Outlays for burial
and other allowances are estimated to increase from $185 million
in 1980 to $190 million in 1981.
Life insurance.—Insurance programs for veterans and their survivors will provide $31 billion of coverage on 4.5 million policies in
1981. The servicemen's group life insurance program for military
personnel will provide $61 billion of coverage on 3.1 million policies. Policy loans against life insurance reserves are expected to
remain steady at about $170 million in new loans in 1981.
Veterans education, training, and rehabilitation.—The GI bill provides education benefits ranging from college courses to vocational
and on-the-job training. These benefits help eligible veterans make
the transition from military to civilian life by helping them obtain
the education they might have received had they not entered military service. Active duty servicemen and widows and children of
veterans who have died or been totally disabled in military service
also are eligible for these benefits. This budget proposes a 10%
increase in GI bill educational benefits to help Vietnam-era veterans and eligible dependents and survivors continue to pursue their
VETERANS BENEFITS AND SERVICES
283
educational goals in spite of increased costs. In addition, this
budget reflects legislation proposed last year that extends the
period of eligibility from 10 to 12 years for certain Vietnam-era
veterans who have less than a high school diploma or who require
on-the-job training to find employment. Another proposal improves
and modernizes the vocational rehabilitation services offered disabled veterans.
Those who enter military service after 1976 are eligible for the
post-Vietnam-era education program, which allows them to set
aside $50 to $75 from their monthly pay to finance future education. These amounts are matched by the government on a two-forone basis and returned in education payments after they are discharged. Current authority for this program expires on December
31, 1981. The VA is currently conducting a study to determine
whether to seek extension, and to evaluate changes in the program
as it currently exists.
Over 65% of all Vietnam-era veterans have utilized GI bill benefits. The number of GI bill trainees will continue to drop in the
future as the number of eligible veterans becomes smaller. In 1981,
nearly 1.0 million GI bill trainees are expected to participate in the
program, a reduction from 1.2 million in 1980. Thus, outlays for
this mission are estimated to decline from $2.2 billion in 1980, to
$1.9 billion in 1981, $1.5 billion in 1982, and $1.2 billion in 1983.
The administration continues to seek enactment of its pending
legislative proposal to end payments for general flight training and
correspondence courses, which do not promote the readjustment of
veterans to civilian life. This proposal would reduce outlays by $56
million in 1981.
Hospital and medical care for veterans.—The Veterans Administration provides hospital and medical care to veterans by operating
a nationwide medical care system. In 1981, it will operate 172
hospitals, 229 outpatient clinics, 97 nursing homes, and 16 domiciliary facilities. Outlays for medical programs are expected to be $6.4
billion in both 1980 and 1981. Savings from proposed legislation
requiring reimbursement from health insurers for the treatment of
non-service-connected disabilities are offset by higher outlays for
existing programs.
Medical care and hospital services.— In 1981, the VA will continue to reorder its health care program to provide the most appropriate type of care and to accommodate the anticipated influx of
World War II veterans, most of whom will reach age 65 during the
decade beginning in 1980. Since these veterans become eligible for
a wide variety of medical benefits under current eligibility criteria,
the VA anticipates a rapid increase in the number of veterans in
need of long-term and geriatric care. Increases in the cost of VA
284
THE BUDGET FOR FISCAL YEAR 1981
health care will be minimized through increased efficiencies. VA's
medical care system will continue to recognize the needs of servicedisabled veterans above all other demands for medical care. Efforts
to improve the quality of medical care, especially for service-disabled veterans, will continue. Under the budget proposals, the
research programs of the VA medical systems will grow modestly
between 1980 and 1981, and training of health care professionals
will continue, primarily through the affiliation of 136 VA hospitals
with medical schools.
The Veterans Health Care Amendments of 1979 (P.L. 96-22)
provided legislative authority to allow VA to contract with community halfway houses and other programs for a pilot drug and alcohol abuse treatment effort. That legislation also provided for the
establishment of a program of psychological counseling and readjustment services for Vietnam-era veterans, and authorized the VA
to set up a pilot program of preventive health care. The Veterans
Health Program Extension and Improvement Act (Public Law 96151), also enacted in 1979, authorized the VA to provide outpatient
care to all veterans of World War I and to contract for private care
for the treatment of medical emergencies. In addition, it extended
certain expiring programs and authorized the Veterans Administration to put a limit on travel reimbursement to veterans being
treated for non-service-connected disabilities.
The administration will continue to seek enactment of its proposal to obtain reimbursement from health insurers for the treatment
of non-service-connected disabilities of insured veterans. This proposal recognizes that an insurer's obligation to premium-paying
veterans is no different from its obligation to insured non-veterans
and is expected to save $0.3 billion a year beginning in 1981. The
administration will also continue to seek enactment of its proposal
to terminate certain dental benefits. This is estimated to save $32
million in 1981 and decreasing amounts in future years.
Construction of hospital and extended care facilities.—Budget authority of $660 million is requested for VA construction in 1981, a
record funding level. This is an increase of 67% over the 1980
request. The 1981 request recognizes the critical need for renovation and modification of many of the aging facilities in which VA
medical services are provided. This includes funding for new nursing homes and new outpatient clinics. Finally, budget authority of
$15 million is requested in 1981 for grants to States for construction of extended care facilities, permiting the establishment or
repair of additional State veterans homes for the care of aging
veterans.
Veterans housing.—VA mortgage loan guarantee and direct loan
programs are expected to assist 364,680 veterans obtain mortgage
285
VETERANS BENEFITS AND SERVICES
CREDIT PROGRAMS—VETERANS BENEFITS AND SERVICES
(In millions of dollars)
1979
actual
Program
Income security programs:
Direct loans:
New loans
Repayments, sales and adjustments ( - }
1980
estimate
172
-129
Net loan outlays
1981
estimate
168
-116
167
-104
43
52
62
9
-4
9
-6
9
-7
5
4
2
394
-369
568
-683
611
-648
Net loan outlays
25
-115
-37
Loan guarantees *
New loans
Net loan guarantees
7,375
2,938
9,524
6,317
9,584
6,428
Education programs:
Direct loans:
New loans
Repayments, sales and adjustments ( - )
Net loan outlays
Housing programs:
Direct loans:
New loans
Repayments, sales and adjustments ( - )
1
1
Includes sales of direct loans.
* Includes guarantees of sales of direct loans.
loans totaling $19.9 billion in 1981. Sales of VA-held housing assets
(VA mortgages) are expected to produce negative outlays of $302
million in 1981.
Other veterans benefits and services.—The Veterans Administration administers a national cemetery system for burial of eligible
veterans, servicemen, and their survivors. Under administration
policy, one large active national cemetery has been designated as
the regional cemetery in each of the 10 Federal regions. New
regional cemeteries are under construction in regions I, II, III and
IX; existing cemeteries have been designated in regions VI, VII,
VIII, and X. In addition, Fort Gilliam, near Atlanta, Ga., has been
selected as the site of the Region IV National Cemetery and Fort
Custer, Mich., has been selected as the site for Region V. The
budget again provides $5 million in 1981 budget authority for
grants for construction of State veterans cemeteries authorized in
1978.
Other VA expenditures include the cost of undistributed nonmedical program administration, both in VA headquarters and in
field units. Outlays for these programs are estimated to be $687
million in 1980 and $686 million in 1981.
286
THE BUDGET FOR FISCAL YEAR 1981
Tax expenditures.—Veterans compensation and pension benefits
are excluded from taxable income. The revenue losses from these
exclusions in 1981 are estimated to be $1,1 billion and $55 million,
respectively. GI bill benefits are also excluded from taxable income,
which results in an estimated 1981 tax expenditure of $0.1 billion.
Related programs.—In addition to the assistance provided under
the Federal Government's special programs for veterans, many
veterans receive assistance from other income security, health,
housing, education, training, employment, and social services programs supported by the Federal Government and available to the
general population. Some of these programs have components specifically intended to assist veterans. For example, the Department
of Labor has instituted a special program to aid disabled veterans
in need of job placement and related services, with anticipated
outlays of $24 million in 1981, The Department of Labor also takes
steps to ensure that qualified veterans participate fully in the
training and related services available under the Comprehensive
Employment and Training Act. Firms holding Government contracts are required to list their job vacancies with the State employment service and are required to take affirmative action to
employ Vietnam-era and handicapped veterans. There is also a
program that provides special priority for the appointment of Vietnam-era veterans to positions within the Federal Government.
ADMINISTRATION OF JUSTICE
287
ADMINISTRATION OF JUSTICE
National Needs Statement;
• Represent the interests of the public in civil litigation
and on other legal matters.
• Maintain public order and enforce Federal statutes.
• Provide those accused of crimes with fair and prompt
trials.
• Operate humane detention and corrections facilities for
persons charged with or convicted of violating Federal
laws.
• Assist in the improvement of State and local criminal
justice systems.
Ours is a pluralistic society bound together by a body of laws and
legal institutions that lend order and predictability to our lives.
The Federal Government will spend $4.7 billion to provide for the
equitable administration of justice in 1981, while States, counties,
cities and towns will spend close to $25 billion.
The principal responsibility for maintaining order and administering the laws has always rested with State and local governments. Beginning in the late 1960's, however, the amount of Federal assistance extended to other levels of government to improve the
administration of justice grew quite rapidly. Such assistance has
included:
• participating in criminal investigations and prosecutions in
cases in which the Federal Government and the States share
concurrent jurisdiction;
• training State and local officials, providing'technical assistance and services, maintaining national fingerprint records,
and facilitating the exchange of information on criminal activities; and
• financing demonstration projects and grants to improve police
departments, correctional institutions, judicial systems, and
State planning capabilities.
Assistance to State and local governments was expanded principally because of widespread concerns about growing domestic disorders and violent street crime. Although the Federal Government is
not directly responsible for maintaining order at the local level, it
was recognized that local capabilities were inadequate and that
State and local governments needed help to improve their criminal
justice systems.
These circumstances have changed. Partly because of Federal
programs, local authorities are far better trained and equipped to
288
THE BUDGET FOR FISCAL YEAR 1981
deal with all forms of crime than they were a decade ago. Equally
important is the improved financial condition of States and municipalities. It is now possible to begin to reduce Federal expenditures
and personnel resources devoted to State and local problems, and
to increase resources for efforts targeted at Federal priorities that
cannot be undertaken at the local level. This is a theme of the 1981
budget for the administration of justice.
A second theme relates to the setting of priorities on matters
that are solely Federal in jursidiction. Zero-base budgeting techniques and improved management control systems now allow
policy officials to identify tradeoffs between programs, which could
not always be done using traditional budgeting procedures. For
1981, the administration's highest law enforcement priorities are
foreign counterintelligence activities, reduction of organized crime,
white collar crime, and traffic in narcotics and dangerous drugs, as
well as the promotion of the integrity of public officials, and the
protection of individual civil rights.
A third theme of the budget is an emphasis on efficiency and
improved coordination among Federal institutions. Reorganizations
have played a part, but in this area the administration's principal
contribution to improving the machinery of government has been
to reduce jurisdictional disputes and unproductive duplication of
efforts by competing agencies.
Federal law enforcement activities.—The law enforcement mission is the most costly component of the administration of justice.
In addition, law enforcement is a personnel-intensive activity and
the President is committed to reducing the size of the Federal work
force. Rigorous attention to national priorities has made it possible
to propose an overall staff reduction of about 200 employees in
1981 without any appreciable loss in program effectiveness. Higher
operating costs and especially increased fuel costs will more than
offset the savings realized through staff reductions, but outlays are
expected to increase by only $42 million or 1.9% over 1980—a
significant achievement given recent very high rates of inflation.
The Federal Bureau of Investigation (FBI) enforces a broad range
of criminal statutes, and for many years has worked closely with
State and local authorities to support this mission. The budget
contemplates some shifting of FBI personnel from programs that
assist State and local governments to criminal activities that are
solely the responsibility of the Federal Government, or to investigations that require the attention of the Federal Government because
criminal activities cross jurisdictional lines. FBI staff targeted at
organized crime, white collar crime, and foreign counterintelligence will increase by more than 200, while personnel assigned to
general law enforcement training, forensic laboratory services, and
ADMINISTRATION OF JUSTICE
289
NATIONAL NEED: ADMINISTRATION OF JUSTICE
(functional code 750; in millions of dollars)
Major missions and programs
BUDGET AUTHORITY
Federal law enforcement activities:
General investigation (FBI)
Narcotics violation investigation (DEA)
Alcohol, tobacco and firearms investigation
(ATF)
Border enforcement activities (Customs
and INS)
Protection and other activities (Secret
Service)
Other enforcement
Subtotal, Federal law enforcement activities
1979
actual
1980
estimate
1981
estimate
1982
estimate
1983
estimate
584
194
614
202
637
209
649
215
658
222
137
144
147
151
154
753
795
822
838
854
145
252
186
280
167
310
169
322
173
333
2,065
2,220
2,292
2,344
2,394
508
-6
689
344
519
-6
723
368
Federal litigative and judicial activities:
Civil and criminal prosecution and representation:
Existing law
Proposed legislation
Federal judicial activities
Representation of indigents in civil cases....
397
456
523
270
627
300
497
-3
657
321
Subtotal, Federal litigative and judicial activities
1,190
1,383
1,473
1,535
1,604
339
656
-17
327
496
-12
355
582
-12
363
625
-12
373
671
-12
4,234
4,415
4,689
4,855
5,029
Federal correctional activities
Criminal justice assistance
Deductions for offsetting receipts
Total, budget authority
the investigation of local crimes will decline by about 150. A onetime reduction of 300 clerical employees is planned; this temporary
workforce was authorized 3 years ago for a special project related
to fingerprint automation that is now completed. In addition, about
200 full-time clerical positions in the fingerprint identification division will be converted to part-time staff. This measure is intended
to reduce the high employee turn-over rate by making these positions more attractive to others in the workforce. Outlays for the
FBI are expected to increase by $20 million to $635 million in 1981
because of increased operating expenses.
The Drug Enforcement Administration (DEA) will continue to
concentrate on the disruption of organized trafficking in the most
dangerous drugs. Increased emphasis will be placed on the investigation of complex financial transactions in the drug trade, which
often leads to the arrest of high-level drug dealers who have violated various conspiracy, racketeering, currency control, and tax laws.
Crop destruction at the point of origin will remain a key component of the administration's drug strategy; this practice will help to
290
THE BUDGET FOR FISCAL YEAR 1981
NATIONAL NEED: ADMINISTRATION OF JUSTICE—Continued
(Functional code 750; in millions of dollars)
Major missions and programs
OUTLAYS
Federal law enforcement activities:
General investigation (FBI)
Narcotics violation investigation (DEA)
Alcohol, tobacco and firearms investigation
(ATF)
Border enforcement activities (Customs
and INS)
Protection and other activities (Secret
Service)
Other enforcement
1979
actual
1980
estimate
1981
estimate
1982
estimate
1983
estimate
586
185
615
200
635
206
649
214
658
221
131
144
146
151
154
730
797
814
838
854
139
221
187
281
165
301
169
318
173
328
1,992
2,224
2,266
2,339
2,388
388
457
488
254
632
300
485
-3
659
329
498
-6
688
346
509
—6
720
364
1,130
1,389
1,471
1,527
1,587
Federal correctional activities
Criminal justice assistance
Deductions for offsetting receipts
337
710
—17
348
580
-12
357
618
-12
380
676
-12
384
651
-12
Total, outlays.....
4,153
4,530
4,699
4,910
4,999
Subtotal, Federal law enforcement activities
Federal litigative and judicial activities:
Civil and criminal prosecution and representation:
Existing law
Proposed legislation
Federal judicial activities
Representation of indigents in civil cases....
Subtotal, Federal litigative and judicial activities
reduce the supply of dangerous substances that would otherwise
have to be intercepted at the Nation's borders or searched out in
the interior—both extremely costly, personnel-intensive operations.
The 1981 budget, therefore, proposes only a small personnel increase for domestic enforcement and outlays of $206 million, $6
million more than in 1980.
For the Immigration and Naturalization Service (INS), The
budget provides staff above 1979 levels to patrol the Nation's borders, facilitate the processing of refugees from Southeast Asia and
Eastern Europe, and improve operations within the United States.
However, the administration's proposals do not provide for the full
border patrol increase authorized in the last session of the Congress because the administration does not believe that this increase
would, by itself, make a significant contribution to border enforcement. Illegal immigrants are drawn to the United States by high
wages, and there are no Federal restrictions against hiring those
ADMINISTRATION OF JUSTICE
291
who are in the country illegally. Until the Select Commission on
Immigration and Refugee Policy issues its report, which should
assist in developing agreement on statutory changes to remove the
incentives for illegal immigration, large budget increases for enforcement would be unproductive. The budget proposes outlays of
$347 million in 1981, only $12 million more than in 1980.
Late last year the General Accounting Office criticized Federal
agencies for inadequate coordination of border enforcement activities. Although this is a problem of long standing, there is considerable evidence of improvement. In 1977, the President's Reorganization Project addressed the problems of duplication of effort and
lack of coordination between Federal border agencies. It was decided that organizational changes were not appropriate at that time.
Nevertheless, the study and consultations encouraged the agencies
to address coordination problems and find solutions short of
reorganization.
Today, the level of cooperation between the several Federal agencies with border responsibilities is higher than ever before. The
Customs Service and the INS are adopting joint "one-stop" inspection procedures that minimize delays to travelers and reduce the
number of inspectors at ports-of-entry. They are also experimenting
with shared radio communications systems and shared information
systems. The El Paso Intelligence Center is now staffed 24 hours a
day with representatives of 6 Federal agencies providing information on all aspects of drug smuggling. To curtail illegal drug distri-'
bution in the southeast, the administration has established a working group that includes the DEA, the Criminal Division of the
Department of Justice, the Customs Service, the Coast Guard, and
the Department of State. There is now close cooperation and coordination between Federal investigative agencies, the Criminal
Division, the U.S. Attorneys, and the border interdiction forces.
It is not yet possible to identify precisely the total amount of
Federal resources devoted solely to border enforcement. In the
course of the next 12 months, the administration will work to
develop this information.
High priority is assigned to combating fraud and waste in Government programs. Inspectors General are now in place in 14
major departments and agencies. In May 1979 the President created an executive group, chaired by the Attorney General, which
brings the Inspectors General together in a concerted effort to
develop more effective procedures and better trained personnel.
In late 1979, an office for civil rights policy was established
within the Office of Management and Budget. This office now
assists in examining agency budget submissions for civil rights
enforcement programs. This should help to assure that a unified
and cohesive civil rights policy emanates from all Federal agencies.
292
THE BUDGET FOR FISCAL YEAR 1981
It should also improve the coordination of civil rights activities
within the Federal Government, result in more effective civil
rights law enforcement, and reduce the administrative burden on
industries and agencies that are subject to civil rights laws.
The responsibilities of the Equal Employment Opportunity Commission, which enforces statutory prohibitions against job discrimination, were recently expanded as the result of a reorganization of
civil rights functions within the Federal Government. The budget
proposes a staff increase for the Commission to improve coordination among agencies and the Federal Government's own equal
employment opportunity program. Outlays are expected to increase from $120 million in 1980 to $135 million in 1981.
Civil rights enforcement activities of the Department of Health,
Education, and Welfare are to be divided between two offices —
one in the Department of Health and Human Services, and one in
the new Department of Education. These offices will be responsible
for enforcing statutes that prohibit discrimination by recipients of
Federal funds. They will investigate complaints about discrimination, conduct periodic reviews, negotiate to secure compliance, initiate enforcement proceedings, and promote voluntary compliance.
Due in part to expanded staffing, which will permit increased
activities, 1981 budget outlays of the two offices are estimated at
$74 million, or $6 million more than in 1980.
Resources devo,ted to civil rights that are classified in other
functions are discussed in Special Analysis J in the Special Analyses volume of the budget.
Federal litigative and judicial activities.—The Department of Justice litigates all of the Federal Government's criminal cases and
most civil cases, although the Department has only 22% of the
Government's civilian lawyers. While the number of criminal cases
has been dropping as prosecutors concentrate on a more select
group of complex criminal activities (organized crime, white collar
crime, illegal drug traffic, and public corruption), the number of
civil case filings has ballooned. In response to this civil workload
on the Department's litigators, the administration is following the
recommendations of the President's Reorganization Project for improved coordination of litigation by the Department and delegation
of litigating responsibilities for some civil cases to the general
counsels of other Federal agencies.
Other administration proposals include:
• an increase in the Department's Criminal Division to staff
new white collar crime enforcement units;
• an increase in the Department's Civil Rights Division to prosecute more criminal violations and coordinate efforts to pre
ADMINISTRATION OF JUSTICE
293
vent systematic discrimination in Federal assistance programs; and
• continued support for legislation to reduce the workload of
the U.S. Marshals Service by shifting responsibility for the
service of private process to the private sector.
Outlays for civil representation, criminal prosecution and the
U.S. Marshals Service are expected to rise from $457 million in
1980 to $482 million in 1981.
Budget estimates from the judiciary are forwarded to the Congress without modification. The Administrative Office of the U.S.
Courts has estimated outlays of $659 million in 1981 for the Supreme Court, the appellate and district courts, and other judicial
activities—a 4% increase over current estimates for 1980. When
inflation is taken into account, this represents a relative stabilization of budgetary resources.
The Bankruptcy Reform Act of 1978 established an independent
system of bankruptcy courts and a pilot program to test the value
of U.S. trustees. While bankruptcy proceedings cost the Federal
Government $38 million in 1979, under the new system bankruptcy
administration is expected to require outlays of $60 million in 1980
and $65 million in 1981.
The Legal Services Corporation funds local programs that provide free civil legal assistance to the poor. Corporation outlays have
grown from $71 million in 1975 to an estimated $300 million in
1980. In 1981, outlays of $329 million are proposed for direct legal
services, demonstration projects to serve institutionalized persons,
and increased training for legal services lawyers and paralegals.
Social services grants, general revenue sharing, and other Federal
programs outside of the administration of justice function also
provide funds that can be used, in part, for legal services. Because
the primary obligation for legal services rests with the private bar,
the administration will continue to encourage and coordinate fulfillment of these obligations.
Federal correction system.—The Federal Government is responsible for the care and custody of prisoners convicted of violating
Federal laws as well as individuals charged with crimes and detained for trial or sentencing.
The Federal prison population is changing. In 1970, more people
were in prison for auto theft than for any other crime. Today,
those convicted of robbery and burglary lead the list, while drug
offenses run a close second. The average daily population in 1970
was 20,687. The average daily population peaked in 1978 at 29,347,
and since then has dropped to less than 24,000. This decline is
attributed to: (1) the increased use of halfway houses, (2) shifts in
prosecutorial policy resulting in fewer imprisonments, and (3)
294
THE BUDGET FOR FISCAL YEAR 1981
modifications in parole guidelines which have reduced incarceration times.
Because the prison population is smaller, and because reclassification efforts have identified many prisoners who can be held in
less secure institutions, three penitentiaries can be closed—McNeil
Island in 1981, Atlanta in 1984, and Leavenworth in 1985. Plans to
construct two new facilities in Detroit and central California have
bfeen cancelled since the facilities are no longer needed. The
Bureau of Prisons intends to open a new institution at Lake Placid
and a new prison camp in central California to house some of the
prisoners who will be displaced by the closing of the old penitentiaries.
Although the prison population is declining, inflation is driving
up the costs of operations. In consequence, outlays for operating
correctional facilities are expected to increase from $348 million in
1980 to $357 million in 1981.
Criminal justice assistance.—Early in this administration the
President's Reorganization Project and the Department of Justice
proposed a thorough reorganization of the Law Enforcement Assistance Administration. A new Office of Justice Assistance, Research
and Statistics (OJARS) was approved by the Congress in 1979. The
office will provide support and coordination for (1) a National
Institute of Justice to conduct research into criminal subjects, (2) a
Bureau of Justice Statistics to gather and disseminate statistics on
criminal and civil matters and to assist State and local governments, and (3) a somewhat smaller Law Enforcement Assistance
Administration to administer most grant programs. This organizational change will reduce paperwork and give cities and counties
more direct control over the Federal funds they receive for criminal justice assistance. A new formula grant program will provide
funds directly to States, cities, and counties, and a national priority
grant program will encourage government and private nonprofit
organizations to carry out programs that have proved to be effective in strengthening the criminal justice system.
Increased emphasis will be placed on programs for serious juvenile offenders administered by the Office of Juvenile Justice and
Delinquency Prevention. Outlays for OJARS are expected to reach
$607 million in 1981, compared to $570 million in 1980.
Related programs.—K number of agencies classified in other
functions support the administration of justice. Over 100 agencies
and regulatory commissions perform some type of law enforcement
activity. About 30 Federal agencies, including the Departments of
Agriculture and Labor, the Environmental Protection Agency, and
most independent regulatory commissions have some litigation authority independent of the Department of Justice.
ADMINISTRATION OF JUSTICE
295
CREDIT PROGRAMS—ADMINISTRATION OF JUSTICE
(In millions of dollars)
Program
Law enforcement assistance:
Direct loans:
New loans
Repayments, sales and adjustments ( - )
Net loan outlays
1979
actual
1980
estimate
1981
estmate
32
- 20
3
- 3 4
11
- 3 2
296
THE BUDGET FOR FISCAL YEAR 1981
GENERAL GOVERNMENT
National Needs Statement:
• Provide for a legislative system that is responsive to the
Nation's people.
• Provide effective and efficient central executive policy
development and management.
• Insure accountability in the use of resources.
• Formulate tax and fiscal policies and conduct efficient
and effective financial operation of the Federal Government.
• Provide essential internal government housekeeping
services, including property and personnel management.
The general government function includes funding for a variety
of entities that provide overall direction, policy and procedural
guidance, funding, and resources management for the Federal Government. These include the legislative branch, the Executive Office
of the President, and the agencies responsible for central tax collection, fiscal operations, personnel management, and property control and records management. It is the goal of the administration
to improve the management and efficiency of finances, property,
and personnel. To address national needs in general government
the Federal Government will spend an estimated $4.9 billion in
1981. The budget includes proposals to:
• continue to monitor private sector wage and price actions
along with Government actions and policies that may contribute to inflation;
• continue to improve cash management;
• expand efforts to identify individuals and companies that do
not file tax returns;
• strengthen management control of contract administration
and reduce opportunities for fraud and abuse; and
• improve productivity in the Federal Government and
strengthen agency executive development.
Legislative functions.—By law, the budget estimates for the legislative branch are included in the President's budget without
change. The legislative branch proposes to spend $1.1 billion in
1981 for the operation of the Congress, the General Accounting
Office, the Library of Congress, and other programs.
Executive direction and management—Outlays for the White
House, the Executive Office of the President, and related activities
are expected to be $109 million in 1981.
GENERAL GOVERNMENT
297
NATIONAL NEED: GENERAL GOVERNMENT
(Functional code 800; in millions of dollars)
Major missions and programs
BUDGET AUTHORITY
Legislative functions
Executive direction and management
Central fiscal operations:
Collection of taxes
Other fiscal operations
Subtotal, central fiscal operations
General property and records management:
Real property
Personal property
Records management
Other
Subtotal, general property and records management
Central personnel management
Other general government:
Territories:
Existing law
Proposed legislation
Indian affairs
Treasury claims
Other
Subtotal, other general government....
Deductions for offsetting receipts
Total, budget authority
1979
actual
1980
estimate
1981
estimate
1982
estimate
1983
estimate
925
1,086
1,065
1,106
1,099
84
103
112
112
115
2,145
286
2,298
354
2,385
387
2,446
431
2,506
457
2,431
2,652
2,772
2,877
2,963
21
163
78
125
157
90
168
158
87
175
160
88
190
163
90
180
386
414
420
438
433
133
150
156
159
162
183
210
132
198
43
205
296
—53
161
22
203
152
15
166
22
134
152
230
180
22
9
152
49
*
556
658
553
705
412
-120
-157
-132
-134
-135
4,395
4,906
4,946
5,262
5,048
• 500 thousand or less.
Special emphasis continues to be given to the President's antiinflation program, which consists of voluntary wage and price
guidelines that are designed to lower the rate of inflation without
disrupting the economy. The Council on Wage and Price Stability
will continue to monitor wage and price developments and will
make recommendations to increase productivity and reduce inflation. Recently the President established his Commission on the
Agenda for the Eighties. The Commission, which will remain at
work into 1981, is charged with examining the problems, opportunities, and challenges that the Nation must face in the 1980's, as well
as the fundamental social and economic questions that will be
confronted.
THE BUDGET FOR FISCAL YEAR 1981
298
NATIONAL NEED: GENERAL GOVERNMENT—Continued
(Fictional code 800; in millions of dollars)
Major missions and programs
OUTLAYS
Legislative functions
Executive direction and management
Central fiscal operations:
Collection of taxes
Other fiscal operations
Subtotal, central fiscal operations
General property and records management:
Real property.....
Personal property
Records management
Other
Subtotal, general property and records management
Central personnel management
Other general government:
Territories:
Existing law
Proposed legislation
Indian affairs
Treasury claims...
Other
Subtotal, other general government....
Deductions for offsetting receipts
Total, outlays
MEMORANDUM—Attribution of Federal
Financing Bank outlays
General property and records management
Territories
1979
actual
1980
estimate
1981
estimate
1982
estimate
1983
estimate
914
1,088
1,081
1,111
1,088
81
103
109
109
112
2,079
252
2,296
365
2,378
392
2,436
425
2,496
447
2,330
2,661
2,770
2,861
2,943
-70
129
75
101
-110
163
90
166
-10
163
87
174
40
160
88
191
30
163
90
178
235
309
414
479
460
127
156
158
158
161
200
185
135
240
12
216
323
3
178
22
210
152
-30
188
22
132
152
44
202
22
7
152
45
586
727
531
538
428
-120
-157
-132
-134
-135
4,153
4,885
4,931
5,123
5,057
90*
43
9
98
-38
-14
-2
-18
-10
*500 thousand or less.
Central fiscal operations.—The mission of central fiscal operations is to collect taxes and carry out certain other financial
operations of the Federal Government. Outlays for central fiscal
operations are estimated to increase by $109 million to $2.8 billion
in 1981.
Most of the funds supporting this mission are spent on the collection of taxes by the Internal Revenue Service (IRS). This budget
includes a substantial increase in IRS collections staff and includes
proposals to make the collection of taxes more efficient and to
improve Federal cash management.
GENERAL GOVERNMENT
299
IRS plans to continue programs to improve compliance and
assure that all taxpayers pay their fair share of the tax burden.
These programs include:
• matching information documents, such as W-2 forms and interest and dividend statements, with individual income tax
returns, and resolving discrepancies between the information
documents and tax returns;
• developing a predictive model to improve detection of people
who do not file returns;
• improving IRS use of data from financial institutions on currency transactions that exceed $10,000, and monitoring barter
transactions to ensure they are reported; and
• exploring the feasibility of gathering information on interest
derived from investment in certain money market and other
debt instruments.
The collection of tax receipts will be accelerated by requiring
that payments be made closer to the time the tax liability occurs.
Widespread noncompliance by independent contractors would be
mitigated through proposed legislation mandating a 10% withholding for certain compensation. At the same time, efforts will be
made to reduce the filing burden on small employers.
These cash management initiatives, which are discussed in more
detail in Part 4, will increase receipts by an estimated $4.5 billion
in 1981. The revenue gain is expected to total $12.2 billion for 1981,
1982, and 1983.
General property and records management—The General Services Administration (GSA) manages Federal real property, acts as a
central procurement agent, and is the custodian of the Federal
Government's historical records.
Real property.—This budget will permit the acquisition of 7.6
million square feet of office space and should satisfy the remaining
high priority leasing needs of Federal agencies. The procurement of
additional court facilities, required by enactment of the Omnibus
Judgeship Act, will continue at an accelerated pace during 1981.
Personal property.—GSA is improving its procurement procedures through increased training and certification of procurement
officers, centralization of procurement functions, identification of
commodity managers, and expanded audit review. The agency is
also taking steps to improve the administration of contracts and to
eliminate fraud and abuse. It has begun an examination of the
viability and efficiency of individual motor pools and the timing of
vehicle replacement.
300
THE BUDGET FOR FISCAL YEAR 1981
Records management— GSA stores Federal records, provides archival reference services, and preserves Federal historical records.
A 1980 supplemental request for $3 million is being made to speed
up the transfer of irreplaceable historical records from nitrate
based film to safety film.
Central personnel management—In 1978, comprehensive reforms
of the Federal civil service system were enacted into law. The
objectives were to (1) make Federal Government more efficient and
responsive through a fundamental change in the management of
Federal personnel, (2) improve administration of the Federal laborrelations program, and (3) safeguard merit systems against political
and other abuses.
The 1980 budget reflected the major organizational changes in
central personnel management that resulted from the reforms. The
personnel management tasks previously performed by the Civil
Service Commission became the responsibility of the Office of Personnel Management. Merit system review, investigation of reprisals against "whistle blowers," and employee appeals adjudication
are now performed by the Merit Systems Protection Board.
In 1981 resources will be focused on carrying out and evaluating
these reforms. Special emphasis will be placed on research, executive development, and improvement of productivity.
Other general government—Other activities included in the general government function include payments of claims and judgments against the Federal Government, and funding for the Territories, Indian Affairs, and various commissions. Outlays are expected to decline from $727 million in 1980 to $531 million in 1981
largely because of abnormally high claims and judgments against
the Federal Government in 1980. Most of these payments are for
Indian land claim settlements.
Territories.—Outlays for governmental operations, construction
projects, and Federal oversight in the Trust Territory of the Pacific
Islands and the U.S. territories of Guam, American Samoa, the
Virgin Islands and the Northern Marianas are estimated to be
$200 million in 1981, an increase of $15 million from 1980. To
provide incentives for increased territorial funding of local programs and projects, the budget proposes (1) a 50% Federal matching of territorial tax increases, and (2) 90%/10% Federal/territorial cost sharing for capital projects funded by the Department of
Interior. In the past these projects were generally 100% federally
financed. Also, budget authority of $18 million in 1981 is recommended to complete a major, 5-year construction program underway in the Trust Territory that will supply these Pacific Islands
GENERAL GOVERNMENT
301
with a basic infrastructure of roads, docks, harbors, airports, and
water, sewer, and electrical systems.
These programs are directly funded by the Department of the
Interior's Office of Territorial Affairs. The territories receive
grants and payments from other Federal agencies that are discussed elsewhere in the budget.
CREDIT PROGRAMS—GENERAL GOVERNMENT
(In millions of dollars)
Program
Loans to U.S. territories and other
Direct loans:
New loans
Repayments, sales and adjustments ( - )
Net loan outlays
Loan guarantees:
New loans
Net loan guarantees
1979
actual
1980
estimate
1981
estimate
- 3
2
- 2
- 3
1
10
9
1
- 2
- 3 8
* 500 thousand or less.
Indian affairs.—The budget includes outlays of $216 million in
1980 and $210 million in 1981 for Indian affairs, most of which are
annual payments to settle land claims in Alaska, and to pay Alaskan Natives mineral, oil, and gas royalties under the provisions of
the Alaskan Native Claims Settlement Act of 1971. The 1981 land
claim settlement payment to Alaska Natives is the last payment
authorized by Section 6(a)(1) of the Act. The outlay decrease in
1981 for Indian Affairs stems from the elimination of special, onetime payments of $12 million made in 1980 to eastern Indians for
land claim settlements. Partially offsetting the decrease are anticipated outlay increases for royalties paid to Alaskan Natives due to
increased oil production flowing through the Trans-Alaska Pipeline. Funding for the work of the Navajo-Hopi Relocation Commission is proposed to remain constant.
302
THE BUDGET FOR FISCAL YEAR 1981
GENERAL PURPOSE FISCAL ASSISTANCE
National Needs Statement:
• Strengthen the Federal system by financial assistance to
State and local governments.
• Enhance the capacities of State and local governments to
finance essential public services, and cushion the fiscal
impact of adverse economic conditions.
• Assist States and localities by providing monies in lieu of
taxes on certain Federal lands.
General purpose fiscal assistance is financial aid to State and
local governments without major restrictions or matching requirements. Recipients may use such aid to offset increasing costs, maintain service levels that would otherwise have been reduced, increase services, retire debt, or lower taxes. Its purpose is to reduce
the inequalities in the ability of the various State and local governments to provide public services from the fiscal resources available
to them. It is also a means of providing fiscal aid to those governments most in need, including those most affected by adverse economic conditions. The largest general purpose fiscal assistance program is general revenue sharing, the current authorization for
which expires at the end of 1980.
General revenue sharing (GRS)— Under existing legislation, general revenue sharing will provide $6.9 billion to States and local
governments in 1980. One-third will be allocated to States and twothirds to nearly 39,000 local governments around the country.
The program was conceived as a means of:
• reducing red tape and increasing State and local control over
the expenditure of Federal aid;
• raising funds from the relatively more productive and more
equitable Federal tax system; and
• redistributing funds to reduce disparities in State and local
fiscal capacities.
Since the inception of general revenue sharing in 1972, intergovernmental fiscal conditions have changed. The revenue generating
ability of State and local tax systems, in the aggregate, has grown
rapidly. In addition, State and local tax systems have become less
regressive.
Despite these improvements, general purpose fiscal assistance
remains necessary to provide aid to jurisdictions less able to meet
GENERAL PURPOSE FISCAL ASSISTANCE
303
NATIONAL NEED: FISCAL ASSISTANCE TO STATE AND LOCAL GOVERNMENTS
(functional code 850; in millions of dollars)
Major missions and programs
BUDGET AUTHORITY
General revenue sharing:
General revenue sharing payments to
States and localities
Administration
Subtotal, general revenue sharing
1979
actual
1980
estimate
1981
estimate
1982
estimate
1983
estimate
6,855
7
6,855
6
6,855
7
6,855
7
6,855
7
6,862
6,861
6,862
6,862
6,862
375
1,000
1,000
525
293
341
501
484
449
1
1
1
1
1
Other general purpose fiscal assistance:
Countercyclical and targeted fiscal assistance (proposed)
Payments and loans to the District of Columbia
New York City loan guarantees (administrative expenses)
Payments to States from Forest Service
receipts
Payments to States and counties from Federal land management activities
Payments to territories and Puerto Rico
Other
241
279
320
331
376
412
471
5
481
394
5
555
362
5
631
364
2
692
366
2
Subtotal, other general purpose fiscal
assistance
1,422
1,876
2,745
2,813
2,411
9,273
8,285
8,737
9,606
9,674
6,848
7
6,863
6
6,857
8
6,855
7
6,855
7
6,854
6,869
6,864
6,862
6,862
250
1,000
1,000
525
393
381
510
484
449
1
1
1
1
1
241
279
320
331
376
413
464
7
481
402
7
555
362
5
632
364
2
693
366
2
Subtotal, other general purpose fiscal
assistance
1,518
1,801
2,753
2,813
2,412
Total, outlays
8,372
8,670
9,617
9,675
9,274
Total, budget authority
OUTLAYS
General revenue sharing:
General revenue sharing payments to
States and localities...
Administration
Subtotal, general revenue sharing
Other general purpose fiscal assistance:
Countercyclical and targeted fiscal assistance (proposed)
Payments and loans to the District of Columbia
New York City loan guarantees (administrative expenses)
Payments to States from Forest Service
receipts
Payments to States and counties from Federal land management activities
Payments to territories and Puerto Rico
Other
their service obligations. Disparities in the revenue-raising capacity
of States and localities are substantial enough to warrant continued Federal efforts to redistribute resources. In addition, general
304
THE BUDGET FOR FISCAL YEAR 1981
purpose fiscal assistance is needed to ease the fiscal problems of
localities facing decline, particularly during periods of national
economic downturn.
The administration is proposing a 5-year reauthorization of general revenue sharing at 1980 levels. No changes are proposed in the
allocation formula to States or the proportion of payments to State
governments. Limited modifications in the allocation formula for
aid to local governments are proposed to increase the share of
payments to communities less able to pay for essential services from
available resources.
The existing disparities in the fiscal capacities of both State and
local governments are, in part, determined by legislation enacted
at the State level. It is the States that bear the ultimate responsibility for improving and strengthening the fiscal condition of both
States and localities. Their failure to do so, at least in some instances, could unfairly burden the residents of distressed communities or could risk transforming these governments into permanent
dependents of the Federal Government.
To address this problem and to strengthen the fiscal partnership
among all levels of government, revenue sharing payments to the
States would be contingent upon their cooperation in a participatory process designed to identify and promote necessary changes to
achieve a balancing of fiscal resources and service responsibilities
among the governments of each State. To commence this process,
each State would establish a broadly-based independent commission to assess disparities in access to fiscal resources of the governments within the State, to identify major problems, and to make
appropriate recommendations for change. The commissions would
also assess the fiscal management practices and make recommendations for improvements. States would be expected to act on these
recommendations.
Other general purpose fiscal assistance.—These programs also
provide funds with minimal restrictions to States and localities.
Total outlays are estimated to increase from $1.7 billion in 1980 to
$3.0 billion in 1981, largely because of the proposed countercyclical
fiscal assistance program.
Countercyclical and targeted fiscal assistance.—The administration is working with the Congress to develop an acceptable countercyclical fiscal assistance program. The Senate has passed a bill
very similar to the administration bill and the House is preparing
to vote on an alternative proposal that was developed in consulta-
GENERAL PURPOSE FISCAL ASSISTANCE
305
tion with the administration. The estimates reflected in the budget
are based on the administration proposal, which would trigger
countercyclical payments when the national unemployment rate
reaches 6V2%.
In addition to countercyclical assistance, the administration continues to support legislation authorizing highly targeted fiscal assistance for 1980. This 1-year program would provide general purpose fiscal assistance to localities with high levels of unemployment and low economic growth. Payments to localities under this
program would be offset by payments that might be made under
the countercyclical fiscal assistance program.
Outlays under targeted and countercyclical fiscal assistance are
estimated to be $250 million in 1980 and $1.0 billion in 1981.
Payments and loans to the District of Columbia.—The District of
Columbia's operating budget is financed in part by annual payments from the Federal Government in recognition of the costs to
the local government of the Federal establishment. The administration is requesting $361 million in budget authority for the Federal
payment in 1981 and a supplemental of $52 million in 1980. Included in the request is $8 million for reimbursement of water and
sewer charges in 1981, and $52 million in both 1980 and 1981 to
pay the initial Federal contributions to the retirement funds for
the District's police officers, firefighters, teachers, and judges under
pension reform legislation enacted in 1979 with the support of the
administration.
The 1981 request for the Federal payment was for the first time
determined by use of a formula. The formula, proposed by the
District of Columbia and modified by the administration, will be
submitted for the Congress' consideration in proposed legislation. It
is intended to make the determination of the size of the Federal
payment more equitable and more predictable.
The District of Columbia Self-Government and Governmental
Reorganization Act of 1973 (the "Home Rule Act") authorized the
city to issue short term notes on its own behalf. Accordingly, interest-free cash advances from the U.S. Treasury to the District will
no longer be made after 1980. The 1981 estimates anticipate that
the city will exercise its authority to borrow in the private market
for short-term, cash management purposes. For long-term funding
purposes, the 1981 budget requests budget authority of $166 million
for Federal loans to fund capital improvements in the District.
After 1981, it is expected that the District will have developed the
capability to finance long-term bonding in the private market.
310-000 0 - 80 - 21
306
THE BUDGET FOR FISCAL YEAR 1981
Outlays for the District of Columbia are estimated to rise from
$381 million in 1980 to $510 million in 1981 due to a requested
increase in the Federal payment, an increase in loans for capital
improvements, and a decrease in receipts.
New York City loan guarantees.— Under the New York City Loan
Guarantee Act of 1978, the Secretary of the Treasury is authorized
to guarantee up to $1,650 million of New York City obligations
through June 30, 1982. During 1981, an estimated $300 million in
standby guarantees will be made available.
These guarantees are contingent upon a number of conditions,
including the required holding of the obligations by City or State
employee pension funds, the balancing of the City's budget by the
fiscal year ending June 30, 1982, and the City's payment of an
annual guarantee fee of 0.5% to the Treasury. The loan guarantees
are not included in the budget totals, but the related administrative costs are reflected.
Other payments.—Some jurisdictions receive payments from the
Federal Government based on a percentage of receipts generated
from the sale of timber, mineral leases, grazing permits, and other
activities on Federal property and lands. Payments are also provided to local governments in lieu of taxes for certain Federal
lands contained within their jurisdictions. The Departments of Interior and Agriculture will return an estimated $760 million in
1980 and $875 million in 1981 to State and local jurisdictions. In
addition, Federal taxes and other revenues generated or collected
in Guam, the Virgin Islands, and Puerto Rico by various Federal
agencies are returned to these territories for their fiscal support.
Tax expenditures. —Major tax expenditures also provide fiscal
assistance to States and localities. Interest income from most State
and local government securities is not subject to Federal income
tax. This exclusion allows these governments to borrow at lower
interest rates. The cost of this tax expenditure for general purpose
State and local debt alone is estimated at $6.5 billion in 1981. In
addition, the deductibility of State and local taxes from gross
income allows individuals who itemize deductions to offset some of
their State and local taxes through reduced Federal taxes. This
revenue loss is estimated to be $17.3 billion in 1981.
Corporations may also take a tax credit for income earned from
doing business in United States possessions. This tax expenditure
will produce an estimated revenue loss in 1981 of $0.9 billion.
Related programs.—In addition to general purpose fiscal assistance, the Federal Government supports States and localities
GENERAL PURPOSE FISCAL ASSISTANCE
307
CREDIT PROGRAMS—GENERAL PURPOSE FISCAL ASSISTANCE
(In millions of dollars)
1979
actual
Program
Guarantees of New York City loans:
Loan guarantees:
New loans
Net loan guarantees
1980
estimate
500
500
Loans to the District of Columbia:
Direct loans:
New loans
Repayments, sales and adjustments { - )
Net loan outlays
1981
estimate
250
226
-47
141
-22
185
-105
174
-26
118
81
148
Loan guarantees: Net loan guarantees
- 2 0
through a large variety of Federal grant-in-aid programs. These
programs, which range from relatively narrow categorical programs to block grant programs, are designed to meet other national needs and to serve other major missions. Therefore they are
not included as general purpose fiscal assistance, although they do
provide, when taken together, a far larger source of State and local
revenues. Total grants-in-aid directly paid to States and localities
are estimated to rise from $88.9 billion in 1980 to $96.3 billion in
1981.
FEDERAL GRANT-IN-AID OUTLAYS BY FUNCTION
(In millions of dollars)
Function
National defense
Energy
Natural resources and environment
Agriculture
Commerce and housing credit
Transportation
Community and regional development
Education, training, employment, and social services
Health
Income security
Veterans benefits and services
Administration of justice
General government
General purpose fiscal assistance 1
Total outlays
1
1979
actual
1980
estimate
94
183
4,630
456
12
10,438
6,641
22,249
14,377
14,740
86
517
202
8,233
77
472
4,821
509
7
11,513
5,786
21,865
16,209
18,364
86
473
194
8,569
57
660
4,957
512
4
12,260
6,318
23,195
17,817
20,298
82
491
214
9,446
82,858
88,945
96,312
These numbers differ slightly from total outlays for this function, because they exclude administrative expenses.
1981
estimate
308
THE BUDGET FOR FISCAL YEAR 1981
INTEREST
Interest is the cost of borrowing or the income from lending
money. The interest function includes both interest paid and interest received by the Federal Government. In 1980 and 1981, interest
outlays are projected to grow substantially, rising by $10.8 billion
and $3.9 billion, respectively. By 1981, outlays for the interest
function are projected to be $67.2 billion.
INTEREST
(Functional code 900; in millions of dollars)
Programs
BUDGET AUTHORITY
Interest on the public debt1
Other interest:
Interest on refunds of tax collections
Interest on loans to the Federal Financing
Bank
Other
Subtotal, other interest
Total, budget authority
OUTLAYS
Interest on the public debt1
Other interest:
Interest on refunds of tax collections
Interest on loans to the Federal Financing
Bank
Other
Subtotal, other interest
Total, outlays
1979
actual
1980
estimate
1981
estimate
1982
estimate
1983
estimate
59,837
73,300
79,400
82,000
83,600
358
698
708
600
610
-4,015
-3,626
-6,085
-4,584
-8,041
-4,870
-9,754
-4,862
-10,960
-4,907
—7,283
-9,971
-12,203
-14,016
-15,258
52,554
63,329
67,197
67,984
68,342
59,837
73,300
79,400
82,000
83,600
358
698
708
600
610
-4,015
-3,624
-6,085
—4,583
-8,041
-4,870
-9,754
-4,862
-10,960
-4,907
-7,281
-9,970
-12,203
-14,016
-15,258
52,556
63,330
67,197
67,984
68,342
• Includes interest paid on the public debt held by Government investment accounts.
Interest on the public debt—'This subfunction includes all interest paid on the public debt. The public debt consists of Treasury
securities sold to the public and to trust and revolving funds within
the Federal Government.
Estimates of interest on the public debt are highly sensitive to
assumptions about interest rates. For purposes of developing
budget estimates, interest rates are assumed—by convention—to
fall as inflation declines. Under this convention, which is not
meant to be a forecast, it is assumed that the 91-day bill rate will
decline gradually from about 12%, the prevailing rate when the
estimates were made, to an average of 10.5% in calendar year 1980
and 9.0% in calendar year 1981.
INTEREST
309
Interest on the public debt is estimated to grow substantially in
1980. Much of this rise is due to an increase in average interest
rates on Treasury securities resulting from the sharp rise in
market interest rates in the fall of last year. Interest is projected to
grow at a much slower rate in 1981 and 1982 due to smaller
increases in debt outstanding and to assumed declines in interest
rates.
Other interest—This subfunction includes interest payments on
tax refunds and interest collections from Federal agencies and the
public. The largest item is collections from the off-budget Federal
Financing Bank (FFB). In recent years, this off-budget Federal
entity has become the major source of funds for many Government
programs. The FFB borrows directly from the Treasury and uses
those funds to purchase debt and financial assets guaranteed by
various Government programs. It then pays interest to the Treasury on this borrowing. A more detailed discussion of the FFB and
its operations is contained in Part 6 of this document. Part 6 also
discusses borrowing by the Federal Government. Additional information on borrowing is contained in Special Analysis E, "Borrowing, Debt, and Investment," in the Special Analyses volume of the
Budget.
Net interest—A substantial portion of interest outlays is paid to
Federal trust funds on securities held by these funds. Since the
payment of interest is not made to the public but, rather, consists
of offsetting transactions within the budget itself, these amounts
are deducted from both budget authority and outlays before arriving at budget totals. As shown in the following table, net interest
outlays—the interest function minus the interest received by trust
funds—are projected to be $54.2 billion in 1981.
In addition, Federal Reserve Banks hold Government securities
as part of their monetary function. The Federal Reserve Banks
return most of the interest they receive on these securities back to
the Treasury as miscellaneous budget receipts. This deposit of earnings is projected to be $10.9 billion in 1981. Deducting these receipts from net interest results in a net impact on the budget of
$43.4 billion in 1981. The net impact of interest is the amount of
interest that must be paid from receipts or additional borrowing to
meet Federal financing requirements.
A tax expenditure arises from the optional deferral of interest
income on U.S. savings bonds. Interest is normally taxed each year
as it is credited, but the holder of savings bonds may defer paying
the tax until the bond is redeemed. The revenue loss from this tax
expenditure is estimated to be $250 million in 1981.
310
THE BUDGET FOR FISCAL YEAR 1981
NET INTEREST
(In millions of dollars)
1979
actual
Outlays for the interest function
Interest received by trust funds
Net interest outlays
Deposit of earnings by the Federal Reserve
System1
Net impact 2
1
1
1980
estimate
1982
estimate
1983
estimate
52,556
-9,950
63,330
-11,539
67,197
-12,958
67,984
-14,094
68,342
-15,369
42,606
51,791
54,239
53,890
52,973
-8,327
-10,058
-10,876
— 11,751
-12,936
34,279
41,733
43,363
42,139
40,037
Shown as budget receipts.
Net amount of interest to be paid from receipts, borrowing, or other means of financing.
1981
estimate
ALLOWANCES
311
ALLOWANCES
Allowances are included in the 1981 budget to cover increases in
compensation for Federal civilian agency employees, future initiatives, and unforeseen requirements that may arise. Pay allowances
for the Department of Defense are included in the national defense
function.
ALLOWANCES
{Functional code 920; in millions of dollars)
Program
BUDGET AUTHORITY
Civilian agency pay raise
Contingencies for
Relatively uncontrollable programs
National health plan
Other requirements 1
Total, budget authority
OUTLAYS
Civilian agency pay raises
Contingencies for
Relatively uncontrollable programs
National health plan
Other requirements1
Total, outlays
1979
actual
1980
estimate
1981
estimate
1982
estimate
1983
estimate
1,115
3,340
5,447
150
2,000
7,900
24,100
8,500
150
3,115
11,240
38,047
1,070
3,251
5,318
100
1,500
6,500
24,100
7,100
100
2,570
9,751
36,518
' Includes welfare reform.
The administration has proposed comprehensive legislation to
reform and improve Federal pay-setting procedures. The legislative
proposal would broaden the principle of comparability and make
certain structural changes to bring Federal compensation rates and
practices more closely into line with those of the private and nonFederal governmental sectors. Both pay and benefits—rather than
just pay—would be used to determine comparability. Compensation
scales would be based on State and local government pay and
benefits, as well as those for private industry. The Federal wage
system for the blue collar workforce would be changed to improve
comparability with prevailing local rates.
Consistent with the one-time adjustment required by the legislative proposal discussed above, allowances are included in the 1981
budget to cover an overall increase in pay of 6.2% for while collar
and blue collar employees. A final decision on the level of the
October 1980 pay increase will be made in the late summer after
Presidential review of the recommendations of the President's Compensation Agent, the Federal Employees Compensation Council, and
the Advisory Committee on Federal Compensation, and after a
review of economic conditions at that time.
312
THE BUDGET FOR FISCAL YEAR 1981
The contingency allowance for relatively uncontrollable programs is assumed to be zero since outlays higher or lower than the
budget estimates are assumed to be equally probable.
A separate allowance is included for the national health plan,
which is proposed to start in 1983. The $24.1 billion allowance
reflects the effect on the surplus or deficit. While most of the costs
associated with the national health plan will show up on the outlay
side of the budget, the proposal will also affect budget receipts. The
health plan is discussed in the health function and in the presentation entitled "Improving the Nation's Health" in Section II of the
Special Analyses volume of the Budget.
The contingency allowance for other requirements does not represent a compilation of a specific list of future needs, but is a rough
estimate taking into account past experience of unanticipated requirements and possible future initiatives. Among the items covered by this contingency allowance are the costs associated with
the welfare reform proposal, discussed in the income security function and the education, training, employment and social services
function.
UNDISTRIBUTED OFFSETTING RECEIPTS
313
UNDISTRIBUTED OFFSETTING RECEIPTS
Offsetting receipts (which are shown in detail in table 11 in Part
9 of the Budget) are generally deducted from outlays and budget
authority at the function, subfunction, or agency level. In three
instances, however, such payments are deducted from the budget
totals as undistributed offsetting receipts. Payments for rents and
royalties on the Outer Continental Shelf are extremely large and
their inclusion in a particular function would distort the view of
Federal program costs. Deductions for interest received by trust
funds and for the payments that each agency makes as its share of
employee retirement costs are included as part of this category to
eliminate double counting of budget authority and outlays in order
to reflect properly transactions with the public.
UNDISTRIBUTED OFFSETTING RECEIPTS
(Functional code 950; in millions of dollars)
Offsetting Receipts
BUDGET AUTHORITY AND OUTLAYS
Employer share, employee retirement
Interest received by trust funds:
Existing law
Proposed legislation
Subtotal, interest received by trust
funds
Rents and royalties on the Outer Continental
Shelf
Total
1980
estimate
1981
estimate
1982
estimate
1983
estimate
-5,271
-5,919
—6,161
-6,354
-6,517
-9,950
-11,539
-12,427
-531
-13,429
-665
-14,489
-880
-9,950
-11,539
-12,958
-14,094
-15,369
1979
actual
-3,267
-4,800
-6,000
-6,000
-6,000
-18,488
-22,258
-25,119
-26,449
-27,886
Employer share» employee retirement—The payments by Federal
agencies to various employee retirement funds are reflected as
outlays of the agencies and as receipts of the respective retirement
funds. Over 70% of these payments are to the civil service retirement fund. Most of the balance is paid to the social security trust
funds.
Interest received by trust funds.—By law, most trust fund balances are invested in interest-bearing Federal securities. The interest outlays are included in interest on the public debt. The receipts
collected by various trust funds are shown as undistributed offsetting receipts. Almost half of these interest collections are received
by the civil service retirement and disability fund, and almost onethird are received by social security and medicare. Several proposals in the budget reduce estimated trust fund outlays. These outlay
reductions increase trust fund balances and thereby increase trust
fund investments in Treasury securities. The higher interest earn
314
THE BUDGET FOR FISCAL YEAR 1981
ings on these investments are included in the estimates of interest
received by trust funds.
Rents and royalties from the Outer Continental Shelf (OCS).—
These estimates include cash bonuses received from the leasing of
new OCS lands that have the promise of containing oil and gas.
Annual rents on existing leases and royalties based on a percentage of the value of production are also included. The current estimates assume that four OCS sales will be conducted in 1980 and
seven sales in 1981. Six sales are currently scheduled for 1982. No
final decision will be made on any of these sales until environmental studies and other requirements under the National Environmental Policy Act have been completed.
PART 6
PERSPECTIVES ON
THE BUDGET
PERSPECTIVES ON THE BUDGET
This part of the budget explains several topics that help place
the budget in perspective:
• the relationship of budget authority to outlays;
• alternate budget proposals that would balance the budget in
1981;
• fiscal activities outside the Federal budget:
—outlays of off-budget Federal entities,
-Government-sponsored enterprises, and
—tax expenditures;
• Federal debt and the relationship of budget funds to changes
in Federal debt;
• the difference between the initial budget estimate of outlays
and the actual outlays of relatively uncontrollable programs
for the last completed fiscal year; and
• the difference between the initial budget estimate of receipts
and the actual receipts for the last completed fiscal year.
RELATIONSHIP OF BUDGET AUTHORITY TO OUTLAYS
The Congress must provide budget authority, generally in the
form of appropriations, before Federal agencies can obligate the
Government to make outlays. For 1981, $696.1 billion of new
budget authority is proposed for those Federal agencies included in
the budget. In addition, $24.2 billion in new budget authority is
proposed for those Federal entities that are excluded from the
budget.1
Of the total new budget authority proposed for budget agencies
in 1981, $432.9 billion will require congressional action. New
budget authority of $351.8 billion will be available through permanent authorizations under existing law. This consists mainly of
trust fund receipts, which in most trust fund programs are automatically appropriated under existing law, and interest on the
public debt, for which budget authority is automatically provided
under a permanent appropriation enacted in 1847. Offsetting the
gross new budget authority is $88.6 billion of deductions for offsetting receipts, which comprise transactions within the Government
and proprietary income from the public. Almost all of the budget
authority for off-budget Federal entities will be available under
existing law.
' Budget authority is discussed further in Part 7 of this volume.
316
PERSPECTIVES ON THE BUDGET
317
BUDGET AUTHORITY
(In billions of dollars)
Description
Available through current action by the
Congress:
Enacted and pending appropriations
Proposed in this budget: 1
Appropriations
Supplemental requests
Rescission proposals
To be requested separately:
Upon enactment of proposed legislation.. .
Allowances:
Civilian agencies 2
Department of Defense—Military 3
Subtotal, available through current
action by the Congress
Available without current action by the
Congress (permanent authorizations): 4
Trust funds (existing law)
interest on the public debt
Other
Subtotal, available without current
action by the Congress
Deductions for offsetting receipts
Total, budget authority
1979
actual
1981
estimate
1980
estimate
360.1
1982
estimate
1983
estimate
378.5
416.7
443.2
475.9
22.0
10.9
14.0
16.9
.2
3.1
2.1
12.0
8.1
38.8
12.5
360.1
416.0
432.9
477.3
544.3
190.1
59.8
14.6
225.8
73.3
19.2
255.5
79.4
16.9
289.3
82.0
24.1
320.8
83.6
22.1
264.6
318.3
351.8
395.4
426.5
-68.0
-80.2
—88.6
-97.6
-102.4
556.7
654.0
696.1
775.1
868.5
15.4
-.1
MEMORANDUM
Budget authority for off-budget Federal
entities:
Available through current action by the
Congress
Available without current action by the
Congress
16.3
Total, off-budget Federal entities
16.3
573.1
Total, budget authority including offbudget Federal entities
*
*
22.2
*
*
*
24.1
22.4
24.1
22.2
24.2
22.4
24.1
676.2
720.2
797.5
892.5
* $50 million or less.
1
Amounts for 1982 and 1983 are tentative planning targets.
* Includes allowances for civilian agency pay raises, contingencies, youth initiative (beginning in 1982), and national health insurance (beginning in
1983).
1
Includes allowances for civilian and military pay raises for Department of Defense.
4
Allowances for relatively uncontrollable programs with permanent authorizations are estimated at zero.
Not all of the new budget authority for 1981 will be obligated or
spent in that year.2
• Budget authority for most trust funds arises from the authority of these funds to spend their receipts from special taxes
and contributions and from Federal fund payments made to
2
This subject is discussed more fully in a separate report, "Balances of Budget Authority," that is published
by the Office of Management and Budget shortly after the budget is transmitted.
318
THE BUDGET FOR FISCAL YEAR 1981
these funds. Any balances of these receipts remain available
to these trust funds indefinitely to finance benefits and other
purposes specified by law.
• Under longstanding budget policy, budget authority for most
major construction and procurement projects covers the
entire cost estimated when the projects are initiated, even
though costs will be incurred and outlays made over a period
extending beyond the fiscal year in which the budget authority is enacted. In the past, an exception to this policy has been
made for water resource programs. The administration policy
continues to be that funds for new water resource projects
should cover the entire costs of the projects. No new water
resource projects are proposed in this budget, but some will be
proposed later after the independent review of projects by the
Water Resources Council has been authorized by Congress.
• Government enterprises are occasionally given budget authority for general capital purposes that will be used over a period
of years.
• Budget authority for the subsidized housing programs is equal
to the Government's estimated maximum contractual obligation to pay subsidies under contracts, which may extend over
periods of up to 40 years.
• Budget authority for long-term contracts covers the estimated
maximum obligation of the Government. For example, budget
authority for many direct loan programs provides financing
for a number of years; budget authority for many insurance
and loan guarantee programs consists of amounts to be used
only in the event of defaults or other claims made upon the
programs.
As a result of these factors, a substantial amount of budget
authority carries over from one year to the next. Most of this is
earmarked for specific uses and is not available for new programs;
a small part may never be obligated or spent, because it is primarily for contingencies that do not occur or reserves that do not have
to be used.
As shown in the chart on the next page, $143.3 billion of the
outlays in 1981, 23% of the total, will be made from budget authority enacted in previous years. At the same time, $223.6 billion of
the new budget authority proposed for 1981, which is 32% of the
total amount proposed, will not lead to outlays until future years.
The relationship between budget authority, obligations, and outlays
is discussed further in Part 7 of the Budget and displayed in table 5
of Part 9.
PERSPECTIVES ON THE BUDGET
319
Relation of Budget Authority to Outlays—1981 Budget
* Billions
^
Unspent Authority
^
Enacted in
^
Prior Years
To be spent in
Future Yean
775.3
623.1
Unspent Authority
(or Outlays in
Future Years
846.8
Once budget authority is provided, the Congressional Budget and
Impoundment Control Act requires that any available amounts
withheld from use (without specific congressional authorization)
must be reported to the Congress in rescission or deferral messages. The Congress may require these funds to be released by
overturning the proposed deferral of budget authority or by not
taking action on the proposed rescission.
ALTERNATE BUDGET PROPOSALS
In April 1979, the Congress enacted a new temporary limit on
the Federal debt (Public Law 96-5). Included in the Act was a
provision that "If a budget which is transmitted by the President
to the Congress . . . would, if adopted, result in a deficit in Fiscal year
1981 or in fiscal year 1982, the President shall also transmit alternate budget proposals which, if adopted, would not result in a
deficit." This section outlines such alternative budget proposals,
describes the difference between the budget and alternate budget
proposals, and explains why the budget proposed by the President is
clearly preferable to these alternatives.
This discussion emphasizes, as it must, tax and spending proposals alternative to those in the 1981 budget. No alternative budget
policy, however, can be considered independently of economic conditions. This is particularly true for this budget.
320
THE BUDGET FOR FISCAL YEAR 1981
The 1981 budget proposed by the President includes a deficit of
$15.8 billion, which is 60% lower than the deficit currently estimated for 1980. But, at the same time, this budget projects a mild
economic downturn during calendar year 1980: a projection which
has a considerable effect on the 1980 and 1981 budget deficits. In
fact, as discussed in Part 2, if the economy were to perform strongly enough to keep the unemployment rate at its current level, the
1981 budget would be in surplus. This budget thus embodies prudent and responsible spending proposals, and a fiscal policy appropriate to our economic circumstances. An alternative, more restrictive fiscal policy would result in a deeper and more prolonged
economic downturn.
As noted in Part 2, this budget is the third to be prepared using
the zero-base budget review process. This process has allowed the
administration to establish priorities that make the best use of the
taxpayers* dollars. Reduction and cost saving proposals have been
recommended where possible and emphasis has been placed on
increasing the efficiency of existing programs.
To balance the budget in 1981, either taxes would have to be
increased or Federal spending reduced below the restrained levels
proposed in this budget, or a combination of both actions would be
required. Increased taxes or decreased Federal spending would
have secondary effects on the economy and therefore on other
Federal programs. They would reduce real economic growth and
employment and thereby reduce tax receipts and raise unemployment-sensitive spending. Consequently, tax increases or spending
cuts in excess of $15.8 billion, the size of the deficit now estimated,
would be needed to balance the budget. For purposes of this discussion, it has been estimated that $20 billion in tax increases or
spending decreases would be required to produce a balanced budget
in 1981.
The undesirable effects of actions to increase taxes or to reduce
spending still further in 1981 can be explained best by discussing
specific alternatives. A number of alternative ways to achieve a
balanced budget are possible. The alternatives considered here involve both tax and spending choices.
PERSPECTIVES ON THE BUDGET
321
Tax choices— The 1981 budget could be balanced by raising taxes
through a surcharge on individual and corporate income taxes. To
produce sufficient receipts to balance the 1981 budget, a surcharge
of about 6% would be required. Such a surcharge would not, however, be in either the short-run or the long-run interest of our
Nation. In the short-run, such an income tax increase would be
likely to delay and weaken recovery from the downturn that is
expected during the first half of this year. Unemployment would be
increased, with little beneficial effect on inflation. From the longer
run perspective, it is the goal of this administration to reduce tax
burdens, not to increase them. A tax increase therefore moves in
exactly the opposite direction from that planned by this administration and desired by the American people.
Another possible source of major tax receipts would be an increase in payroll taxes. It would be particularly inappropriate to
raise payroll taxes beyond those increases already scheduled under
current law. Such increases would have all of the disadvantages of
increases in income taxes and, in addition, would raise business
costs and thereby increase inflation.
Another policy that would increase receipts would be to further
increase the administration's proposed windfall profit tax. This tax
strikes a balance between providing adequate incentives to increase
energy production and capturing windfall gains resulting from
higher world oil prices and the policy of gradual decontrol of oil
prices. Increases in windfall profit taxes substantially above those
proposed by the administration would adversely affect production
incentives.
Spending choices.—If achievement of a balanced budget irrespective of economic circumstances and national priorities were the
administration's sole aim, an alternative to tax increases might be
program reductions that would lead to lower spending. Obviously,
such changes might be made in a variety of ways, however unacceptable. There could be a choice between a relatively few major
changes or widespread, relatively small decreases.
The following are a few of the larger changes that could be
considered:
310-000 0 - 80 - 22
THE BUDGET FOR FISCAL YEAR 1981
322
ALTERNATE BUDGET: OUTLAY REDUCTIONS IN MAJOR PROGRAMS
(In billions of dollars)
1980
Defense
The amount of these reductions represents the effect on
defense outlays if no real growth were planned in
obligational authority through 1983. Such a reduction
would be completely unacceptable because the resulting
defense levels would prevent the United States from
achieving its fundamental national security objectives.
We would be unable to ( 1 ) maintain our strategic
forces as an effective deterrent to both nuclear and
conventional warfare, ( 2 ) meet NATO commitments
that increase defense efforts to prevent eventual Soviet
military superiority, and ( 3 ) develop the overall force
structure necessary to assure our national security now
and in the future.
Social security, veterans compensation and pensions,
civil service and military retirement, public assistance, and other programs indexed to the Consumer Price Index
Under this option, inflation-related increases in retirement,
veterans, and disability benefits would be limited to
three-quarters of the adjustment that would otherwise
be made through calendar year 1981. Such a change
would be precipitous and inequitable and therefore
unacceptable to this administration.
-1.1
General revenue sharing
General revenue sharing grants to States and localities
could be terminated. Since the inception of this program in 1972, the fiscal condition of State and local
governments, in the aggregate, has improved. Despite
these improvements, however, general-purpose fiscal
assistance is needed to redistribute aid to jurisdictions
less able to meet their service obligations. Significant
disparities in fiscal capacity among States and localities
remain and are substantial enough to warrant continued
Federal assistance.
Federal pay increases
Defense
Civilian agencies and programs
This alternative would deny Federal pay increases that are
scheduled for October 1980; the estimates for 1982
and 1983 assume that this reduction would not be
made up in later years. Failure to provide this increase
would inordinately concentrate restraint on public servants; in the long run such a policy would make
Government less effective.
Energy security initiatives
Low-income assistance
Energy supply and conservation
Transportation programs
Estimates of 1981 spending would be reduced significantly
if the administration did not propose its energy security
program. Such an action would be irresponsible in view
of the current energy shortage, the long-run nature of
the Nation's energy problems, and the need to assist
low-income individuals facing dramatic increases in
utility costs.
1981
1982
1983
-2.2
-11.0
-20.0
-6.1
-10.3 -11.6
—5.1
_19
(-0.2)
) 01)
—6.9
—6.9
—2.9
(—1.8)
( — 1.1)
—3.0
(-1.8)
( 1-1)
—3.0
(-1.8)
( — 1.1)
_37
( - 2.4)
(-0.6)
( - 0 6 )
_52
-7.3
(—2.4)
( - 2.4)
(-1.8)
(-3.5)
( - 1 0 ) (-1.3)
323
PERSPECTIVES ON THE BUDGET
As an alternative to making reductions exclusively in major
programs, some of the reductions listed above could be chosen
together with a number of detailed reductions throughout the
budget. The following is one such list but it should be noted that,
by itself, it yields only one-fifth of the reduction required to balance the 1981 budget.
ALTERNATE BUDGET: SMALLER OUTLAY REDUCTIONS THROUGHOUT THE BUDGET
(In millions of dollars)
1981
International affairs:
Reductions in food aid, AID development programs, the economic support fund and contributions to the multilateral development banks.
Reductions in Export-Import Bank direct loans
Reductions in State Department programs
Energy:
Across-the-board reductions in supply and conservation programs (other than energy security programs)
Delays in oil purchases for the Strategic Petroleum Reserve
Agriculture: Reductions in operating support and
construction funds for land grant colleges, grading and marketing services, and basic research...
Natural resources:
Elimination of the Agricultural conservation program
One-year reduction in construction of water resources projects
Reduction in planned acquisition of park areas,
other recreational lands, and endangered species habitats by the Land and Water Conservation Fund
Reduction in basic operations of the Forest Service
Reduction in EPA municipal wastewater facilities
construction grants
Other reductions (Park Service operations, nonconstruction activities of the Corps of Engineers, earthquake prediction research, urban
recreation grants, historic preservation, saline
water research and development, operation
and maintenance activities of the Water and
Power Resources Service, air and water quality grant programs, and river basin surveys)...
Highway trust fund: Maintenance of the 1981 program level at the same level as 1980 ($8.4
billion)
Welfare reform: Cancellation of demonstration projects
Public service jobs: Reduction of 25,000 jobs from
planned levels
1982
1983
-439
-15
-71
-130
-90
-99
-95
-60
-89
-241
-290
-456
-228
-808
-1,097
-24
-22
-22
-63
-190
-190
-60
-30
-30
-42
-57
-57
-20
-30
-60
-147
-122
-85
-60
-240
-80
-226
-271
-34
-248
-262
-278
-100
324
THE BUDGET FOR FISCAL YEAR 1981
ALTERNATE BUDGET: SMALLER OUTLAYS REDUCTIONS THROUGHOUT THE BUDGET—Continued
(In millions of dollars)
1981
Health:
Elimination of funding for Public Health Service
hospitals and clinics
Delay of health services initiatives for 1 year
Delay of benefit improvements for medicare and
medicaid for 1 year
Reduction in program level for drug abuse treatment services
Reduction in program level for community health
centers
Elimination of adolescent health program
Income security:
Reduction of Federal housing subsidies for lowincome tenants
"Freeze" in deductions from gross income permitted for food stamp eligibility and benefit
level determination
Continuance of current level of special supplemental food programs for women and infant
children (WIC)
Veterans benefits and services:
No increases in medical programs and benefits,
construction, and other programs
Elimination of proposed 10% rate increase in Gl
bill benefits
LEAA block grant program: Elimination of grant
assistance to State and local governments for
criminal justice programs
Mass transit operating assistance: Decrease in section 5 base tier formula grants below 1980
levels
1982
-168
-55
1983
-165
-40
-165
-10
-70
-75
-31
-38
-564
—21
-18
- 6
-12
-18
—414
-801
-1,297
-110
-110
-110
-46
-70
-75
-144
-146
-162
-180
-143
-115
-87
-214
-307
-50
- 5
The reductions identified above are not included in this budget.
Among their more significant effects would be:
• a disproportionate burden on veterans, the poor, the disadvantaged, the aged, and the mentally ill;
• delays in increasing energy supply and conservation that
would be in direct conflict with the urgency of finding solutions to national energy problems;
• lack of an appropriate response on the part of the United
States to international food and development needs;
• increased costs in future years for programs and projects
(such as EPA construction grants) that can be postponed but
not cancelled if national needs are to be met;
• abandonment of necessary efforts to preserve natural resources and to use our renewable resources; and
• termination of most Federal assistance to States, cities, and
counties for criminal justice programs.
PERSPECTIVES ON THE BUDGET
325
Every effort has been made in the 1981 budget and in the previous budgets of this administration to eliminate unnecessary spending. Much of the savings this administration has proposed in the
past has not been enacted by the Congress. In the 1980 budget, for
example, the President proposed legislative actions that would have
reduced 1980 outlays by $4.5 billion, including $1.7 billion for hospital cost containment. Of the total amount of savings proposed, the
Congress completed action on legislation last session that reduced
1980 outlays by less than $500 million. Hospital cost containment
legislation has still not been enacted, although this and a number of
other savings proposals may be considered by the Congress during
the current session. Prompt action on these proposals is needed.
In this budget, additional savings actions have been proposed. As is
noted in Part 2, substantial operating efficiencies and cost reductions
have been achieved and more are proposed. Substantial additional
reductions cannot be achieved without further program reductions
that would unavoidably cause important national needs to go unmet.
For these reasons, the administration does not recommend that the
reductions listed above be made.
Consideration of these alternative budget proposals is useful
nonetheless because it illustrates the nature of the task that the
President faces each year in his review of the budget. Indeed, he
has already made a large number of difficult choices in order to
arrive at the restrained 1981 budget.
These alternatives are not dissimilar from those the President
faces every year. Most of the budget is composed of spending for
national security and for programs that must be carried out under
current law. To achieve significant reductions, the President must
face a series of difficult tradeoffs. Should he propose budget cuts
that harm millions of people, or should he risk reductions in national security, or both? It is not likely that the Congress or the
public would accept precipitous reductions in either of these areas. Yet
massive cuts in the remainder of the budget, which comprises less
than 25% of the total, would almost certainly create an ineffective
Government unacceptable to most.
The effort to restrain Government spending must be continuous
and progress must occur incrementally over a period of time. Restraint cannot be accomplished by rhetorical statements or by general directions to eliminate waste, fraud, and abuse. It requires
hard and unending efforts to determine the effectiveness of programs and to eliminate or change those that do not meet their
objectives. Such changes must be accompanied by the difficult task
of coping with the expectations and hopes of program supporters.
326
THE BUDGET FOR FISCAL YEAR 1981
The alternative approaches mentioned in this section may
appear unpalatable. Indeed, all actions that would result in major
budget reductions are unpalatable to someone. A President faces
and makes these kinds of choices each year. This discussion of
alternative proposals may increase understanding of the problems
inherent in restraint and therefore help develop the support necessary to achieve more restraint in the future.
FISCAL ACTIVITIES OUTSIDE THE FEDERAL BUDGET
The budget does not include a number of fiscal activities of the
Federal Government that result in spending similar to budget outlays. One major exclusion, the outlays of off-budget Federal entities,3 is discussed in some detail below. This is followed by a discussion of the Government-sponsored enterprises, which are outside
the budget because of their private ownership.4 Taxation and tax
expenditures, which also have significant effects on the economy,
are discussed subsequently. The regulation of economic activity can
also have economic effects similar to budget spending by requiring
the private sector to make expenditures for specified purposes,
such as safety and pollution control. While important, these effects
cannot be quantified satisfactorily at the current time and therefore are not discussed in this section.
Loan guarantees, which also allocate economic resources toward
particular uses, provide credit to borrowers at more favorable
terms than would otherwise be available in the private market.
Beginning this year, the administration has established a set of
budget-type controls on much of the Government's direct loan and
loan guarantee activity. The credit control system and the estimated amounts of lending, including loan guarantees, are discussed in
Parts 2 and 5 of this Budget
Outlays of off-budget Federal entities— Off-budget Federal entities are federally owned and controlled, but their transactions have
been excluded from the budget totals under provisions of law.5
Therefore, their fiscal activities are not reflected in either budget
outlays or the budget surplus or deficit, appropriation requests for
their programs are not included in the totals of budget authority
for the budget, and their outlays are not subject to the ceilings set
by the congressional budget resolutions. As shown in the table on
page 340, the outlays of the off-budget Federal entities are added
to the budget deficit to derive the total Government deficit that has
to be financed by borrowing from the public or by other means.
* Financial statements for these entities are published in the Appendix, Budget of the United States Government, Fiscal Year 1981. See Part IV, "Off-Budget Federal Entities."
4
For financial statements, see the Appendix, Part VI, "Government-Sponsored Enterprises."
•The Board of Governors of the Federal Reserve System (but not the Federal Reserve banks, which are
privately owned) is a Federal organization. It is excluded from the budget and from this discussion.
PERSPECTIVES ON THE BUDGET
327
When off-budget outlays are financed by Treasury borrowing, the
additional debt is subject to the statutory debt limit; when financed
by the entities' own borrowing, it is not. In either case the additional debt is part of the gross Federal debt.
The concept of the unified budget, currently used as a foundation
for the budget of the Federal Government, was adopted beginning
with the 1969 budget. It combined the administrative budget with
the substantial trust fund transactions of the Federal Government.
The first departure from the unified budget concept occured in
August 1971, when the Export-Import Bank was excluded by statute
from the budget. Further departures followed. The Postal Service
fund, the Rural Telephone Bank, the lending transactions that
became the Rural Electrification and Telephone revolving fund,
and the Housing for the Elderly or Handicapped fund were removed from the budget. The Federal Financing Bank, the U.S.
Railway Association, and the Pension Benefit Guaranty Corporation were established off-budget. The Exchange Stabilization Fund
had always been outside the unified budget, although until 3 years
ago it was classified as a deposit fund instead of an off-budget
Federal entity.6
In the past 4 years the trend toward increasing the number of
off-budget Federal entities has been reversed. The Export-Import
Bank was returned to the budget by statute on October 1, 1976, and
the Housing for the Elderly or Handicapped fund was returned to
the budget by statute a year later. In 1978 Congress enacted legislation proposed by the administration to include in the budget the
administrative expenses previously paid by the Exchange Stabilization Fund. The interest collections of the fund were put on-budget
by administrative action at the same time, and in the current
budget the actual profits and losses realized from foreign exchange
transactions are being put on-budget.7 To the extent feasible the
budget outlays and deficits of previous years have been revised to
include these three entities so that the series measuring budget
transactions over time would be as consistent as possible. Legislation has also brought most of the transactions of the U.S. Railway
Association into the budget. Almost all of the Association's current
activity is for assistance to Conrail, and since the start of this
program in 1976 the purchase of Conrail securities has been included in the budget by law.
* The Exchange Stabilization Fund conducts a cycle of operations similar to revolving funds. Consequently, its
classification as a deposit fund was contrary to the normal definition of a deposit fund: an account that records
amounts held by the Government as an agent for others or amounts held in suspense temporarily before being
refunded or paid into some other fund.
1
Because it is not practicable to forecast transactions in gold, foreign currency, and foreign investments, the
budget will continue the past practice of not estimating profits and losses from foreign exchange transactions for
the current and future years.
328
THE BUDGET FOR FISCAL YEAR 1981
Despite the exclusion of the off-budget entities from the budget,
some of the outlays related to their operations are nonetheless
included in the budget totals. The budget totals include the subsidy
paid to the Postal Service fund and the administrative expenses of
the Rural Electrification lending programs and the U.S. Railway
Association. Moreover, while the budget authority and outlays of
off-budget Federal entities are excluded from the budget totals,
some of their activities are subject to Presidential and congressional review. For example, limits on the amount of new lending for
the rural electrification program financed by the Rural Electrification and Telephone revolving fund are set annually by law; the
outstanding debt and annual borrowing of the Postal Service are
limited by statute; and the budget program of the Pension Benefit
Guaranty Corporation is approved in an appropriation act.
As part of its energy program the administration has proposed to
create an independent Energy Security Corporation outside of the
budget in order to help private industry finance the development of
oil substitutes. Although the Corporation is itself off-budget, its
funding is to be included in the budget totals. The funds for carrying out the Corporation's activities are proposed to come from
direct appropriations to the Treasury. The Treasury will make
direct loans to the Corporation,8 and the Treasury outlays for this purpose will be included in the budget totals. These budget outlays
will at the same time count as income to the Corporation and,
consequently, as offsets to the Corporation's own off-budget outlays.
Since the Corporation will acquire funds only as needed, its net offbudget outlays will be approximately zero.9
Even though the exclusion of off-budget Federal entities from the
budget results from provisions of law, the Congress has expressed
concern about this practice. The Congressional Budget Act of 1974
calls for the Committees on the Budget of the House of Representatives and the Senate to study on a continuing basis those provisions
of law that exclude any outlays of Federal entities from the budget
and to report to their respective Houses their recommendations for
terminating or modifying such provisions. In 1976, the House
Budget Committee held hearings and then adopted a report recommending that the budget include the administrative expenses of
the Exchange Stabilization Fund and the outlays of all other offbudget Federal entities except the Federal Financing Bank. At that
time the Committee deferred judgment about the Federal Financing Bank.10 The House Budget Committee subsequently supported
• In time, these loans will be repaid from windfall profit tax receipts.
• Any receipts of the Corporation will also be offsets to its outlays and will reduce its need to borrow from
Treasury.
"House of Representatives, Committee on the Budget, Off-Budget Activities of the Federal Government,
Report No. 94-1740 (1976); and First Concurrent Resolution on the Budget—Fiscal Year 1978' Report No. 95-189
(1977), pp. 11-12 and 135.
PERSPECTIVES ON THE BUDGET
329
legislation to include the Federal Financing Bank in the budget
and renewed its recommendation to include the other off-budget
entities.11 The first and second congressional concurrent resolutions
on the budget for 1980 recommended that a way be found within
the congressional budget process to relate accurately the outlays of
off-budget Federal entities to the budget.
Except for the Postal Service and the Pension Benefit Guaranty
Corporation, the excluded outlays of the off-budget Federal entities
are incurred for carrying out loan programs. These programs are of
the same nature as the direct loan programs in the budget. The
outlays of the off-budget loan programs are approximately equal to
the difference between new loans disbursed and repayments of
principal. For example, during 1981, new loans disbursed by the
excluded programs are estimated to be $25.6 billion and repayments $8.9 billion, for an increase in loans outstanding of $16.6
billion. This is about the same as the estimated outlays of these
programs, which are $16.5 billion. The difference is due to such
factors as administrative expenses and interest paid and received.
Like direct loans in the budget, the loans of the off-budget entities are designed to allocate economic resources toward particular
uses. Part 5 of the Budget, "Meeting National Needs: the Federal
Program by Function," shows the outlays of the off-budget Federal
entities by function and discusses some of their more significant
activities.
OUTLAYS OF OFF-BUDGET FEDERAL ENTITIES
(In billions of dollars)
Off-budget Federal entity
Federal Financing Bank
Rural Electrification and Telephone revolving
fund.
Rural Telephone Bank
Pension Benefit Guaranty Corporation
Postal Service fund
U.S. Railway Association
Energy Security Corporation
Total
1979
actual
1983
estimate
1982
estimate
1981
estimate
1980
estimate
13.2
16.4
16.3
15.0
11.8
.1*
1
.1
.1
.2*
-.9
.1
2
.1
1.6
.1
-.1
.1
.9
.1
12.4
16.8
18.1
15.1
12.9
*$50 million or less.
As the table above shows, the Federal Financing Bank (FFB)
accounts for most of the off-budget outlays. Among the other offbudget Federal entities, only the Postal Service fund in some years,
such as 1981, has comparatively large outlays. The outlays of the
11
House of Representatives, Committee on the Budget, First Concurrent Resolution on the Budget—Fiscal Year
197$, Report No. 95-1055 (1978), p. 23.
330
THE BUDGET FOR FISCAL YEAR 1981
Postal Service fund are calculated with an offset for the subsidy
that it receives, included in the budget, which is mostly for public
service costs and for revenue forgone from carrying certain mail at
free or reduced rates. This subsidy is estimated to be $1.6 billion in
1981.
The FFB's outlays do not come from programs that the FFB
operates itself. Instead, the FFB assists other programs within the
Government by purchasing their debt securities or purchasing obligations that they have guaranteed. The outlays of the FFB include
only its purchase of guaranteed obligations, not its purchase of
Federal agency debt. An agency's outlays increase when it spends
the proceeds of borrowing from the FFB, so FFB outlays must
exclude this borrowing transaction in order to prevent double
counting.
The FFB buys two types of guaranteed obligations, newly originated loans and loan assets. When the FFB buys newly originated
guaranteed loans, it is FFB that makes the loan, with the loan
being guaranteed by another agency. Thus, the newly originated
guaranteed loans are converted into direct Federal loans outside
the budget.
Loan assets are loans that an agency has made in the past.
According to law, the category of loan assets also includes certificates of beneficial ownership issued by the Farmers Home Administration and Rural Electrification and Telephone revolving fund.
These certificates are securities backed by loans that the agency
continues to hold and service.12
The sales of loan assets are treated as offsets to the outlays of
the agency that sells them, so if the selling agency is in the budget
its loan asset sales reduce the amount by which the direct loans of
Federal agencies add to budget outlays. When the FFB buys loan
assets, it in effect converts direct loans that have already been
made by another agency into off-budget direct loans of the FFB.
11
The President's Commission on Budget Concepts recommended that the sale of such securities (also known
as participation certificates) be treated as borrowing, since as a means of financing outlays there is no difference
between an agency selling securities labeled "certificates of beneficial ownership," the same agency selling
securities labeled "debt," and the Treasury selling securities labeled "debt." See Report of the President's
Commission on Budget Concepts (Washington: U.S. Government Printing Office, 1967), pp. 8, 47-48, and 54-55.
PERSPECTIVES ON THE BUDGET
331
ATTRIBUTION OF FEDERAL FINANCING BANK OUTLAYS
(In millions of dollars)
Description
Outlays from direct loans, by agency or program:
Farmers Home Administration: certificates
of beneficial ownership
Rural Electrification and Telephone revolving fund:
Certificates of beneficial ownership
New originations
Foreign military credit sales
Low rent public housing
,
Community development
Health maintenance organizations
Student Loan Marketing Association1
Amtrak and other railroad programs
Export-Import Bank: export guarantees
National Aeronautics and Space Administration
Small business investment companies
Tennessee Valley Authority: Seven States
Energy Corporation
Other
Subtotal, outlays from direct loans
Interest, transfer of surplus, and administrative expenses
Total, FFB outlays
1979
actual
1980
estimate
1981
estimate
1982
estimate
1983
estimate
8,805
5,790
8,450
3,227
2,815
586
1,735
1,293
760
3,400
2,420
1,557
162
114
670
305
50
845
3,900
1,990
-50
264
138
-215
241
350
945
4,397
2,270
2,946
247
168
90
235
500
801
5,978
1,020
512
56
51
375
-51
340
184
86
132
188
101
184
182
109
64
684
18
16
30
-50
-58
13,282
16,249
16,244
15,157
11,949
-110
159
72
— 140
-143
13,172
16,408
16,316
15,017
11,806
5
20
530
-25
1
Beginning in 1982, it is proposed that the activities attributed to the Student Loan Marketing Association be assumed by the Government Student
Loan Association within the Department of Education.
The above table attributes FFB outlays to the agencies and
programs that it assists by purchasing guaranteed loans and loan
assets. FFB outlays attributed to an agency or program equal gross
FFB loans (of either type) less repayments. The remainder of FFB
outlays consists of administrative expenses, the transfer of surplus
to the general fund, and interest paid on borrowings from Treasury, offset by interest received on its holdings of loans and debt.
The attribution of FFB outlays by function is shown as a memorandum entry to the tables throughout Part 5, and a complete listing
is given at the end of Part 8.
332
THE BUDGET FOR FISCAL YEAR 1981
As shown in this table on attributions, FFB assists a wide variety
of programs by its purchases of guaranteed loans and loan assets.
The largest part of FFB's outlays over the period as a whole, and
in some years over half of its outlays, are attributable to its purchases of certificates of beneficial ownership from the Farmers
Home Administration. Since the Farmers Home Administration is
on-budget, these transactions decrease total budget outlays as well
as the outlays of the Farmers Home Administration. The purchase
of certificates of beneficial ownership from the off-budget rural
electrification and telephone revolving fund explains the small size
of this fund's outlays in the previous table on the outlays of offbudget entities. These transactions offset this fund's outlays and
augment the outlays of the FFB.
The following table compares the outlays of the off-budget Federal entities with budget outlays.13 The outlays of the entities that
are now off-budget (which thus exclude the Export-Import Bank
and Exchange Stabilization Fund) were negligible in 1973 but grew
rapidly afterwards, as the Federal Financing Bank and other offbudget entities were created or shifted out of the budget. The
outlays of the off-budget Federal entities equalled 2.5% of budget
outlays in 1979 and are estimated to equal 3.0% in 1980 and 2.9%
in 1981.
» The historical data for budget outlays include Federal entities that are now off-budget for any period when
they were in the budget, and include Government-sponsored enterprises for periods when they had any
Government ownership. The outlays of former off-budget entities are included in the budget totals for all years
to the extent practicable.
333
PERSPECTIVES ON THE BUDGET
COMPARISON OF OUTLAYS FOR THE BUDGET, OFF-BUDGET FEDERAL ENTITIES, AND
GOVERNMENT-SPONSORED ENTERPRISES
(In billions of dollars)
Outlays
Federal Government1
Fiscal year
Off-budget
Federal
entities
Total
Governmentsponsored
enterprises1
196 0
196 1
196 2
196 3
196 4
92.2
97.8
106.8
111.3
118.6
92.2
97.8
106.8
111.3
118.6
.4
-.3
1.1
.5
1.8
196 5
196 6
196 7
196 8
196 9
118.4
134.7
158.3
178.8 .
184.5
118.4
134.7
158.3
178.8
184.5
1.2
1.9
-2.9
1.7
4.3
197 0
197 1
197 2
197 3
197 4
196.6
211.4 ,
232.0
247.1
269.6
9.6
0.1
1.4
196.6
211.4
232.0
247.1
271.1
4.4
11.4
14.5
197 5
197 6
TQ
197 7
197 8
197 9
326.2
366.4
94.7
402.7
450.8
493.7
8.1
7.3
1.8
8.7
10.3
12.4
334.2
373.7
96.5
411.4
461.2
506.1
7.0
4.6
2.3
10.2
25.6
27.1
563.6
615.8
686.3
774.3
16.8
18.1
15.1
12.9
580.3
633.9
701.4
787.2
16.4
17.7
1980
1981
1982
1983
estimate.
estimate.
estimate.
estimate.
*
3
3
*$50 million or less.
1
The 1972-77 and TQ data have been revised to include the Export-Import Bank and the Housing for the elderly or handicapped fund in the budget
instead of with the off-budget Federal entities. The administrative expenses and interest collections of the Exchange Stabilization Fund are included in the
budget beginning in 1976, and the actual profits and losses realized from foreign exchange transactions are included beginning in 1979. Comparable
data are not available for earlier years.
* To prevent double counting, outlays of Government-sponsored enterprises exclude loans to other Government-sponsored enterprises and loans to or
from Federal agencies and off-budget Federal entities.
1
Not available.
334
THE BUDGET FOR FISCAL YEAR 1981
Government-sponsored enterprises.—Several Government-sponsored enterprises have been established and chartered by the Federal Government to perform specialized credit functions. The earlier enterprises were all created with partial or full Government
ownership and with direct Government control, but, in time, they
were converted to private ownership and some new enterprises
were created as privately owned institutions. The rule governing
the budget treatment of these enterprises was established in 1967
in accordance with a recommendation by the President's Commission on Budget Concepts. The Commission recommended that the
budget exclude those Government-sponsored enterprises that are
entirely privately owned. Since the enterprises carry out federally
designed programs and receive benefits from their close association
with the Government, the Commission recommended that financial
statements of their operations be included in the budget documents.14
The Federal land banks and Federal home loan banks had both
become entirely privately owned a number of years before the
unified budget was adopted and therefore have always been excluded. The Federal National Mortgage Association, the Banks for
Cooperatives, and the Federal Intermediate Credit Banks became
wholly privately owned by repaying their Federal equity capital
late in calendar year 1968 and were accordingly removed from the
budget for all later periods. The Federal Home Loan Mortgage
Corporation and the Student Loan Marketing Association (SLMA)
were subsequently established with full private ownership. Under
proposed legislation, however, the activities of SLMA will be assumed in 1982 by the Government Student Loan Association, a
division within the Department of Education, and these activities
will be included within the budget totals.
The Government-sponsored enterprises were all created to carry
out loan programs, either lending their funds directly for specifically authorized purposes, or buying loans originated by the private
groups that they were established to assist. Their loans primarily
support housing, but also support agriculture and higher education.
As shown in the preceding table, the outlays of the privately owned
Government-sponsored enterprises have grown considerably—from
relatively small amounts in the early 1960's to an average of $14.6
billion (equal to 3.6% of budget outlays) during 1975-79.
The operations of the Government-sponsored enterprises are not
subject to the Federal budget review process, and the economic
assumptions on which their estimates are based are not necessarily
the same as the administration's economic forecast shown in Part
3. In 1981 these enterprises estimate that they will spend $17.7
14
Report of the President's Commission on Budget Concepts, pp. 29-30.
PERSPECTIVES ON THE BUDGET
335
billion, an amount equal to 2.9% of budget outlays in that year.
The following table shows the amounts of Government-sponsored
loans outstanding and net loans (i.e., the change in loans outstanding) during 1978-81, in billions of dollars:15
Loans outstanding, end of year.
Net loans
1978
1979
1980
actual
actual
estimate
95.5
25.0
123.0
27.5
138.1
15.1
mi
estimate
151.9
13.8
Taxation and tax expenditures.—Taxation affects the economy
not only by providing the Government with receipts, but also by
changing the allocation of resources among private uses and the
distribution of income and wealth among individuals. These effects
are caused by the structural characteristics of each different tax—
for example, by the rate schedules, exemptions, deductions, and
exclusions of the individual income tax—and by the magnitude of
each tax. The effects of taxation on resource allocation and income
distribution are analogous to the effects of outlays.
Some features of the tax structure are called "tax expenditures"
and receive special attention in the budget. Tax expenditures are
defined as revenue losses under the individual and corporation
income taxes that are attributable to a special exclusion, exemption, or deduction from gross income or to a special credit, preferential tax rate, or deferral of tax liability.
Tax expenditures are one means by which the Federal Government pursues its objectives and in almost all cases can be viewed
as alternatives to other instruments of Government policy, such as
outlays, loan guarantees, regulations, and provisions of the tax law
aside from those that give rise to tax expenditures. The objectives
of tax expenditures are varied. Nearly all are intended either to
encourage particular economic activities or to reduce the tax liabilities of taxpayers in special circumstances. Among the economic
activities encouraged are investment, homeownership, State and
local government borrowing, and support of charities; among the
persons with reduced tax liabilities are many of the aged and
unemployed and taxpayers with high medical expenses.
Tax expenditures ordinarily result from permanent legislation
and therefore, unlike much of the budget, are not submitted to the
Congress each year and do not routinely receive a formal and
systematic annual review. Some tax expenditures and many other
provisions of tax law were, nonetheless, reviewed by the administration and the Congress during the 2 years of work that led to the
Revenue Act of 1978. The Treasury Department and the Office of
"To prevent double counting in adding Government-sponsored loans to Federal direct loans and loan
guarantees, excludes loans from one Government-sponsored enterprise to another, loans from the Federal
Government, and guaranteed loans acquired.
336
THE BUDGET FOR FISCAL YEAR 1981
Management and Budget reviewed a number of major tax expenditure provisions in connection with the review of this budget, particularly those provisions related to housing and energy.
The Congressional Budget Act requires that the estimated levels
of tax expenditures be presented each year in the budget that the
President submits to the Congress and in the reports of the Senate
and House Budget Committees to their respective Houses on the
proposed congressional budget resolutions. This is intended to encourage regular examination of tax expenditures by the administration, the Congress, and the public. The provisions of the income
tax law other than those that result in tax expenditures, although
they can also affect the allocation of resources and the distribution
of income, do not receive either an annual, systematic review or
the kind of budget presentation mandated for tax expenditures; nor
do taxes other than the individual and corporation income taxes
receive such a review. However, tax expenditures, other provisions
of the income tax, and other tax laws are generally all reviewed
whenever fiscal policy decisions are considered regarding the overall level of tax receipts.
The classification of certain provisions of law as resulting in tax
expenditures requires some standard against which the law can be
compared. Deviations of the law from this standard—sometimes
called the "normal tax structure"—are deemed to cause tax expenditures. The "normal tax structure" used for the individual
income tax includes those provisions that exist under current law
for graduated rate schedules, personal exemptions, and standard
deductions. Thus, under current definition, these characteristics of
the tax structure do not generate tax expenditures.
The normal tax structure is not defined in the tax code. The
concept that is used has evolved from various congressional and
public reviews of the tax system focusing on the definitions of the
income tax base and on the rates applied to that base. A different
standard might exclude personal exemptions and standard deductions and thus classify these provisions as resulting in tax expenditures; or, a different standard might integrate the individual and
corporation income taxes, but the analysis in this budget regards
the separate taxation of individuals and corporations as part of the
normal tax structure. The provisions of tax law that are not defined as resulting in tax expenditures deserve as much scrutiny as
the provisions that are, since they also have resource allocation
and income distribution effects.
Tax expenditures are presented at two places in the budget. Part
5, "Meeting National Needs: the Federal Program by Function/'
discusses the most important tax expenditures in each functional
category, together with outlays and loan guarantees, in order to
describe more fully the effects of governmental policy toward meeting each national need. Special Analysis G, "Tax Expenditures,"
PERSPECTIVES ON THE BUDGET
337
discusses the concept of tax expenditures and presents a complete
list of tax expenditure estimates for individuals and corporations in
1979-81.16 17
The figures shown for tax expenditures are necessarily estimates
for past years as well as future ones, since they compare actual tax
receipts with what tax receipts would have been if the tax law had
been different. The method of estimation is to assume that only the
tax provision in question is removed and that taxpayer behavior
and all other characteristics of the tax system remain the same. If
removing a particular provision would increase taxable income, as
in most cases, the tax expenditure is then estimated as the increase
in taxable income multiplied by the appropriate tax rate.
The size of a particular tax expenditure depends not only on the
tax provision in question but also on the interaction of this provision with the rest of the tax structure. The income tax changes
enacted in 1978, as an example, automatically decreased many tax
expenditures below what they otherwise would have been, since
they reduced the tax rate schedules and raised standard deductions
and personal exemptions. The reduction in the tax rate schedules
decreased the amount of receipts that would be gained by repealing
deductions and exclusions, because lower tax rates would be applied to the increase in taxable income; the higher standard deductions decreased the number of taxpayers itemizing deductions,
thereby lowering tax expenditures for deductions, particularly
those taken disproportionately by low-income taxpayers; and the
higher standard deductions and personal exemptions decreased the
taxable income and marginal tax rates of individual taxpayers,
thereby reducing the receipts that would be gained by repealing
deductions and exclusions.
The interaction among tax provisions means that special calculations are generally needed to add tax expenditures together. For
example, if more than one exclusion from individual income were
ended, the gain in receipts would generally be greater than the
sum of the separate tax expenditures, because some taxpayers
would move into higher tax rate brackets. If more than one personal deduction were ended, the gain in receipts would generally be
smaller than the sum of the separate tax expenditures, because
some taxpayers would switch to the standard deduction. According
to a special calculation made by Treasury, if all itemized deductions resulting in tax expenditures were eliminated, the gain in
"See Special Analyses, Budget of the United States Government, Fiscal Year 1981. The presentation in the
special analysis meets the requirement in the Congressional Budget Act that tax expenditures be set forth in
the budget.
"The role of certain tax expenditures as a form of credit assistance is discussed in Special Analysis F,
"Federal Credit Programs."
338
THE BUDGET FOR FISCAL YEAR 1981
receipts in 1981 would be $44.5 billion. In comparison, the sum of
the separate tax expenditures is $58.9 billion. Consequently, except
for a few special calculations, adding together separate tax expenditures would be misleading, and they are not generally added together in this budget. Where tax expenditures for both individuals
and corporations result from the same provision, however, such as
the investment tax credit, the interaction is negligible and the two
estimates may meaningfully be added.
Even aside from these interaction effects, budget receipts would
not necessarily be raised by the total amount of a group of tax
expenditures if all the tax expenditure provisions were removed
together. Tax expenditures and other provisions of tax law have
frequently been changed together or viewed as substitutes for one
another. Furthermore, a direct outlay may be substituted for a tax
expenditure. Thus, an aggregation of tax expenditures that did
take interaction into account would indicate the total resources
available for some combination of cutting tax rates, increasing
outlays, or reducing the deficit. The overall effects on resource
allocation and income distribution from removing the tax expenditure provisions would therefore depend on the particular decisions
made as to which changes in tax rates and outlays—out of a
limitless number of alternatives—were used to compensate for
their removal.
As discussed in Part 4, "Budget Receipts," the principal tax
change proposed in this budget is the windfall profit tax, which
was initially proposed last year and is now in conference committee to resolve the differences between the versions passed by the
Senate and the House. Since this is an excise tax, it does not itself
give rise to tax expenditures. As a related part of the same program, however, the administration proposes to reduce the gross
income base for calculating percentage depletion by the amount of
the windfall profit. This would decrease the tax expenditure from
percentage depletion.
The proposal for a windfall profit tax has been accompanied by
several tax expenditure proposals designed to stimulate energy
conservation and production. They supplement the tax expenditure
and other incentive provisions in the Energy Tax Act of 1978,
which were discussed in last year's Budget Credits would be allowed against income tax for woodburning stoves and for builders
who use passive solar technology in the construction of new residences and commercial buildings. Income tax credits would also be
given to producers of natural gas from unconventional sources,
such as tight sands. A further energy incentive, though not a tax
expenditure, is the proposal to extend to the year 2000 the exemption of gasohol from the Federal excise tax on gasoline and diesel
fuels.
PERSPECTIVES ON THE BUDGET
339
The administration also supports the proposal to restrict the use
of tax-exempt bonds for mortgage financing. This proposal would
reduce the tax expenditure arising from the exemption of interest
on State and local securities. The use of tax-exempt bonds would be
banned for owner-occupied housing, and its use for multifamily
housing projects would be limited to projects with a sufficient
proportion of low-income residents. Enactment of this proposal
would halt an abuse of the tax-exempt borrowing privilege and
would stem a great potential loss in tax receipts.
BUDGET FUNDS AND THE FEDERAL DEBT
The budget consists of two major groups of funds: Federal funds
and trust funds.18
The Federal funds are derived mainly from taxes and borrowing
and are used for the general purposes of the Government. Most of
these funds are not restricted by law to any specific Government
program. The trust funds, on the other hand, collect certain taxes
and other receipts for specified purposes, such as paying social
security and unemployment insurance benefits.
BUDGET TOTALS BY FUND GROUP
(In billions of dollars)
1979
actual
Budget receipts:
Federal funds
Trust funds
Interfund transactions
Total, budget receipts
Budget outlays:
Federal funds
Trust funds
Interfund transactions
Total, budget outlays
Budget surplus or deficit ( - ) :
Federal funds
Trust funds
1980
estimate
1981
estimate
1982
estimate
1983
estimate
316.4
189.6
-40.1
347.8
222.2
-46.2
383.2
265.1
-48.3
438.3
307.0
-54.2
515.5
340.7
-57.3
465.9
523.8
600.0
691.1
798.8
362.4
171.3
-40.1
405.7
204.1
-46.2
429.7
234.3
-48.3
480.2
260.3
-54.2
543.6
288.1
-57.3
493.7.
563.6
615.8
686.3
774.3
-46.1
18.3
-57.8
18.1
—46.5
30.8
-41.9
46.7
-28.1
52.6
-39.8
-15.8
4.8
24.5
-16.8
-18.1
-15.1
-12.9
-56.5
-33.9
— 10.3
11.7
Total, budget surplus or deficit
-27.7
(-)
Memorandum:
Deficit (-), off-budget Federal entities1..- 1 2 . 4
Total, surplus or deficit ( - ) including off-budget Federal entities
-40.2
' All off-budget Federal entities are revolving funds; income is offset against expenditure to derive net outlays. Hence, no adjustments are made to
receipts when on and off-budget totals are consolidated. Virtually all off-budget outlays would be classified as Federal funds outlays if they were included
in the budget.
" Data for Federal funds and trust funds are presented in Special Analysis C, "Funds in the Budget," in
Special Analyses, Budget of the United States Government, Fiscal Year 1981.
340
THE BUDGET FOR FISCAL YEAR 1981
The budget includes the receipts and outlays of both the Federal
funds and the trust funds and, as shown in the table on the previous
page, deducts the various transactions that occur between them. The
budget totals for receipts and outlays therefore generally display the
net transactions of the Federal Government with the public. The
budget does not, however, include the transactions of the Federal
Financing Bank and the other off-budget Federal entities, which
have been excluded from the budget under provisions of law. Were
they to be included in the budget, virtually all of their transactions
would be classified in the Federal funds group.
BUDGET FINANCING AND CHANGE IN DEBT OUTSTANDING 1
(In billions of dollars)
Description
1979
actual
1980
estimate
1981
estimate
1982
estimate
1983
estimate
Budget surplus or deficit ( — )
Deficit (—) of off-budget Federal entities
-27.7
-12.4
-39.8
-16.8
-15.8
-18.1
4.8
— 15.1
24.5
— 12.9
Total, surplus or deficit ( - )
-40.2
-56.5
-33.9
-10.3
11.7
2.1
10.1
.7
2.7
1.0
.3
.9
1.0
_ 3
6
.4
1.0
1.1
Total, means of financing other than
borrowing from the public
6.5
12.2
.8
1.0
1.1
Total, requirements for borrowing
from the public
—33.6
-44.3
-33.1
-9.3
12.7
33.6
44.3
33.1
9.3
-12.7
3.4
15.6
.7
1.4
13.8
-.4
24.0
29.0
Means of financing other than borrowing
from the public:
Decrease or increase ( - ) in cash and
monetary assets
Increase or decrease ( - ) in liabilities for:
Checks outstanding, etc
Deposit fund balances
Seigniorage on coins
Change in debt held by the public
Change in Federal agency investments in
Federal debt:
Federal funds
Trust funds4
Off-budget Federal entities
Total, change in Federal agency investments in Federal debt
Change in gross Federal debt
1
2
16
13.8
-1.9 ,
19.7
14.8
13.4
24.0
29.0
53.3
59.1
46.5
33.2
16.2
Several amounts have been assumed to be zero in 1982 and 1983 because they are usually small and cannot be estimated accurately.
Estimates for 1982 and 1983 are equal to the total trust fund surplus less the surplus of the Energy security trust fund.
PERSPECTIVES ON THE
BUDGET
341
Thus, as shown in the preceding table, the combined deficit or
surplus of the budget and the off-budget entities is the principal
determinant of the change in the Federal debt held by the public.19
The budget and off-budget deficits, together with the other factors
noted in this table, are estimated to increase the Federal debt held
by the public from $644.6 billion at the end of 1979 to $722.0 billion
at the end of 1981—a $77.4 billion increase over the 2 years. Debt
beyond the budget year is projected on the basis of the assumptions
for the economy and the tentative long-range planning base that
are explained in Part 3 of this volume. Debt held by the public is
projected to rise in 1982, due to the deficit of the off-budget Federal
entities, but to fall in 1983 because of a large budget surplus.
Gross Federal debt is the sum of the debt held by the public and
the debt held by the Government itself, which includes such investments as the Treasury debt held by the social security and other
trust funds. At the end of 1981 gross Federal debt is estimated to
be $939.4 billion, of which internally held debt is $217.4 billion.
Thus, gross Federal debt is much larger than the Federal debt held
by the public.
Gross Federal debt is estimated to rise by $46.5 billion during
1981. As indicated in the lower section of the preceding table, $13.4
billion of this increment will be held by trust funds and other
Federal agencies, reflecting mainly the investment of trust fund
surpluses in Treasury debt. The Federal funds deficit and the deficit of off-budget Federal entities have ordinarily been the principal
determinants of the change in gross Federal debt.
The gross Federal debt consists almost entirely of securities
issued by the Treasury Department. However, a few Government
agencies are authorized to issue their own debt instruments to the
public or to other Government agencies and funds. These securities
are part of the gross Federal debt. At the end of 1979 the public
held $5.8 billion of agency debt. This debt is expected to fall by
small amounts each year as existing agency debt matures and most
new agency borrowing is from the Federal Financing Bank (FFB).
The FFB finances its purchases of agency debt by borrowing from
Treasury, which in turn borrows from the public. To prevent
double counting, FFB's holdings of agency debt are not included in
gross Federal debt.
16
Table 9 in Part 9 of this volume contains more detail on budget financing through 1981 and shows the levels
of debt from 1978 to 1981. Federal debt is discussed further in Special Analysis E, "Borrowing, Debt, and
Investment," in Special Analyses, Budget of the United States Government, Fiscal Year 1981.
342
THE BUDGET FOR FISCAL YEAR 1981
As shown in the following chart, the debt held by the public was
equal to more than 40% of GNP in the early 1960's, and gross
Federal debt was equal to more than 50%. Both proportions declined steadily through 1974. Because of the successive large deficits induced by the 1974-75 recession and its aftermath, Federal
debt as a proportion of GNP then rose. Federal debt held by the
public increased from a postwar low of 25% in 1974 to 30% in 1977,
but has declined since then and is estimated to decline further to
26% in 1981 and to still lower proportions in the following 2 years.
Federal Debt as a Percent of G N P
1980
'83
Estimate
343
PERSPECTIVES ON THE BUDGET
FEDERAL FUNDS FINANCING AND CHANGE IN DEBT SUBJECT TO LIMIT
(In billions of dollars)
Description
1979
actual
1980
estimate
1981
estimate
Federal funds surplus or deficit (—)
Deficit (—) of off-budget Federal entities
— 46.1
-12.4
-57.8
-16.8
-46.5
-18.1
Total, amount to be financed
-58.5
-74.6
-64.6
2.1
10.1
3.5
2.7
1.0
-1.1
.9
1.0
5.7
-.2
.6
.4
17.0
9.3
16.6
17.8
-4.1
-1.0
.3
-1.6
-.5
-.5
-54.9
-59.6
-47.1
54.9
59.6
47.1
Means of financing other than borrowing:
Decrease or increase ( - ) in cash and monetary assets
Increase or decrease ( — ) in liabilities for:
Checks outstanding, etc
Deposit fund balances
Seigniorage on coins
Uninvested trust fund surplus 1
Total, means of financing other than borrowing
Decrease or increase ( - ) in Federal funds and off-budget entity
investments in Federal debt
Increase or decrease ( - ) in Federal funds and off-budget entity
debt not subject to limit
Total, requirements for borrowing subject to debt limit
Change in debt subject to limit
1
Energy Security Trust Fund only.
Almost all Treasury debt issues are covered by a statutory debt
limit, though most borrowing by Federal agencies other than the
Treasury is excluded from this limit. The ceiling on the debt subject to limit is $879 billion through May 31, 1980. To permit the
Federal Government to meet its obligations, this ceiling will have
to be extended and raised.
Debt subject to the general statutory limit, like gross Federal
debt, includes debt held internally within the Government, such as
the Treasury issues held by the social security trust funds. Debt
subject to the statutory limit is therefore much larger than the
debt held by the public and is nearly as large as gross Federal debt.
It is a little less than gross Federal debt primarily because of the
exclusion of most agency debt from the general statutory limitation.
Since trust fund surpluses for the most part have been invested
in debt securities included under the general statutory limit, the
Federal funds deficit and the deficit of off-budget Federal entities
344
THE BUDGET FOR FISCAL YEAR 1981
must normally be financed primarily by selling Federal debt; and
this debt is almost entirely subject to the statutory limit. As shown
in the preceding table, the Federal funds deficit plus the off-budget
deficit was $58.5 billion in 1979, and the increase in debt subject to
statutory limit was $54.9 billion. Thus, these deficits approximately
accounted for the increase in the debt subject to limit. The surplus
of the proposed energy security trust fund will not be invested in
Federal debt, however, and thus will be available to finance Federal funds and off-budget outlays without an increase in debt subject
to limit (and without an increase in gross Federal debt). Thus, in
1981 the estimated increase in debt subject to limit is substantially
less than the total deficit of the Federal funds and off-budget
Federal entities.
A large part of the Federal funds deficit—and, therefore, a large
part of the growth in debt subject to limit—is associated with
transactions between Federal funds and trust funds. These transactions consist primarily of Federal funds payments to trust funds.
These payments include interest paid on Treasury debt securities
held by trust funds; the employer share of employee retirement
payments; the Federal payment to finance the unfunded liability of
the civil service retirement fund; and other payments, which are
primarily to social insurance trust funds, such as the Federal Government's contribution for supplementary medical insurance. The
trust fund payments to Federal funds are relatively small.
BUDGET SURPLUS OR DEFICIT ( - ) BY FUND GROUP1
(in billions of dollars)
„
. .
Description
Federal funds:
Transactions with the public2
Transactions with trust funds.
Total
Trust funds:
Transactions with the public2
Transactions with Federal funds
Total
Budget total:
Federal funds
Trust funds
Total
1979
actual
1980
estimate
1981
estimate
1982
estimate
1983
estimate
-14.8
-31.2
-24.0
-33.9
-6.5
-40.0
3.0
-44.9
19.1
-47.3
—46.1
—57.8
-46.5
-41.9
-28.1
-12.9
31.2
-15.8
33.9
-9.3
40.0
1.8
44.9
5.4
47.3
m
rn
m
46.7
52i
-46.1
m
-57.8
m
-46.5
30.8
-41.9
46.7
~
-28.1
52i
_27.7
-39.8
-15.8
4.8
24.5
' For purposes of this analysis, payments from Federal funds to the general revenue sharing trust fund are treated as transactions with the public
instead of transactions with a trust fund; and the corresponding payments from the general revenue sharing trust fund to the public are accordingly
omitted. This is because the general revenue sharing trust fund has no independent source of funding, and serves only as a channel through which a
Federal funds payment is made to the public.
3
Includes some incidental transactions with off-budget Federal entities.
PERSPECTIVES ON THE BUDGET
345
The cumulative Federal funds deficit from 1970 through 1979
was $410.9 billion, of which $199.4 billion was attributable to transactions with trust funds and the remaining $211.5 billion was
attributable to transactions with the public. The Federal funds
group can have a deficit at the same time as there are surpluses in
the budget and in the transactions of the Federal funds group with
the public. This occurred in 1969 and is projected to occur again in
1982 and 1983. The net transactions of the Federal funds with the
public and with the trust funds are shown in the preceding table in
comparison with the budget surplus or deficit.
RECONCILIATION OF RELATIVELY UNCONTROLLABLE
OUTLAYS AND OF RECEIPTS
The Congressional Budget Act requires that the budget contain
two reconciliations between the initial budget estimates and the
actual amounts for the last completed fiscal year: a reconciliation
of the differences in relatively uncontrollable outlays by major
program, and a reconciliation of the differences in receipts by
major source. These comparisons are made in the following two
sections for the 1979 budget, which was submitted in January 1978
for the fiscal year beginning on October 1, 1978.
Reconciliation of relatively uncontrollable outlays.—Outlays in
any one year are considered to be relatively uncontrollable when
the program level is determined by existing statute or by contract
or other obligations. These outlays generally depend on factors that
are beyond administrative control under existing law at the start
of the fiscal year. For example, the definition of beneficiaries eligible for programs like medicaid and social security is established by
law, and usually can be altered only by a change in the law. Prioryear contracts and obligations are also legally binding.
The amounts estimated in the budget for relatively uncontrollable outlays may differ from the actual outlays that are subsequently realized for a number of reasons. For example, legislation may
change benefit rates or coverage; the actual number of beneficiaries may differ from the number estimated; and economic conditions (such as the interest rates) may differ from what was assumed in making the estimates.
Relatively uncontrollable outlays are grouped into two major
categories: open-ended programs and fixed costs, for which outlays
are generally mandated by law; and payments from prior-year
contracts and obligations, for which outlays are required because of
previous action, such as entering into contracts. In accordance with
the definition of uncontrollable outlays, these budget estimates do
not include the effect of proposed legislation. In cases where legis-
346
THE BUDGET FOR FISCAL YEAR 1981
lation was enacted that significantly affected relatively uncontrollable outlays in 1979, it is identified in the discussion below.
The following table shows the differences between actual outlays
for relatively uncontrollable programs for 1979 and the amounts
estimated in the 1979 budget. The list of programs in this table is
the same as table 15 (Controllability of Budget Outlays) in Part 9 of
this year's Budget
RELATIVELY UNCONTROLLABLE OUTLAYS FOR 1979
(In billions of dollars)
Relatively uncontrollable under present law
January 1978
estimate
(existing law)
Change
Open-ended programs and fixed costs:
Payments for individuals:
Social security and railroad retirement
Federal employees retirement and insurance
(Military retired pay)
(Other)1
Unemployment assistance
Medical care
Assistance to students12
Housing assistance
Food and nutrition assistance2
Public assistance and related programs13
All other relatively uncontrollable payments for
individuals1
107.8
29.0
(10.1)
(18.9)
11.8
42.1
2.7
4.3
8.6
16.5
2.0
.7
2.7
Subtotal, payments for individuals
Net interest
General revenue sharing
Farm price supports (CCC)
Other open-ended programs and fixed costs1
225.0
39.9
6.9
4.5
9.5
-.1
2.7
-.8
-1.5
224.9
42.6
6.8
3.7
8.0
285.8
.3
286.1
33.8
55.7
-2.9
-6.6
30.9
49.1
89.5
375.3
—9.5
-9.2
80.0
366.1
Total, open-ended programs and fixed costs
Outlays from prior-year contracts and obligations:
National defense
Civilian programs
Total, outlays from prior-year contracts and
obligations
Total, relatively uncontrollable outlays..
-1.1
.9
(.2)
(.8)
-1.1
-.5
.1
1.2
-.1
106.7
30.0
(10.3)
(19.7)
10.7
41.6
2.8
4.2
9.8
16.4
*$50 million or less.
»This subcategory now contains elements that were previously classified in the veterans benefits grouping.
This is a new subcategory within payments for individuals.
4
Revised to treat earned income credit payments in excess of the tax liability otherwise owed as outlays instead of tax refunds.
s
In the aggregate, outlays for relatively uncontrollable programs
were $366.1 billion, which is $9.2 billion lower than estimated.
Outlays for open-ended programs and fixed costs were $0.3 billion
higher, and outlays from prior-year contracts and obligations were
$9.5 billion lower.
* Open-ended programs and fixed costs consist mainly of benefit
programs, grants, and subsidies for which eligibility is automatic or
fixed by law; interest payments; farm price supports; and payments
PERSPECTIVES ON THE BUDGET
347
for the legislative and judicial branches, which the President
must—by law—include in the budget as submitted and without
change.
Payments for individuals is a grouping of Federal budget outlays
that are essentially income transfers rather than payments for
direct Federal operations. Total payments for individuals, taking
all subcategories together, were 79 % of all open-ended programs
and fixed costs in 1979. Actual outlays for this grouping were $0.1
billion lower than estimated. This was caused by differences between actual and assumed economic conditions and beneficiary
numbers, and by the enactment of legislation.
In 1979 the subcategories within payments for individuals were
changed in order to make them more meaningful. All changes in
these subcategories are identified in the text below.20
Outlays for social security retirement and disability and for railroad retirement were $1.1 billion lower than estimated. Over 75%
of this difference is due to an unexpected decrease in the number
of applications for disability insurance benefit awards. There were
5.2 million disability insurance beneficiaries forecasted while the
actual number was 4.9 million. This difference was in part due to
lower unemployment rates than assumed, which gave more opportunity for severely disabled persons to find and retain jobs, and in
part due to stricter screening in the award of disability benefits.
Actual outlays for Federal employee retirement and disability
insurance programs were $0.9 billion above the budget estimate.
These programs primarily consist of military retired pay, civilian
employee retirement and disability (largely civil and foreign service), and veterans service-connected compensation (which previously had been in a separate category). Except for veterans compensation, these benefits are indexed to the consumer price index. Outlays for the indexed programs exceeded the budget estimates by
nearly $0.3 billion largely because of higher than anticipated costof-living increases. The original estimates assumed consumer price
index increases of 2.9% in September 1978 and 3.1% in March
1979, while the actual increases were 4.9% and 3.9%, respectively.
Actual spending for veterans service-connected compensation was
$0.6 billion higher than estimated due to the enactment of the
Veterans Disability Compensation and Survivors Benefits Act of
1978. This legislation increased compensation for disabled veterans
and their survivors by 7.3% beginning October 1, 1978.
Outlays for unemployment compensation programs were $1.1 billion lower than estimated largely due to lower than anticipated
M
These changes are discussed in greater detail in the OMB technical staff paper entitled Payments for
Individuals, which is available on request. These changes do not affect the total outlay figure for open-ended
programs and fixed costs.
348
THE BUDGET FOR FISCAL YEAR 1981
unemployment. The unemployment rate for fiscal year 1979 was
5.8%, compared to the budget forecast of 6.0%.
Outlays for medical care were $0.5 billion lower than estimated.
The hospital insurance component of medicare accounts for most of
this difference. In response to the administration's proposal for
hospital cost containment, the hospital industry initiated its own
program to control costs, which reduced medicare spending. Outlays for supplementary medical insurance were somewhat lower
than estimated, and outlays for medicaid were higher.
Assistance to students is a new subcategory in open-ended programs and fixed costs arising from the reclassification of payments
for individuals. It mainly consists of GI bill benefits. Actual outlays
were $0.1 billion higher than estimated due to unexpectedly high
enrollment.
Outlays for food and nutrition assistance, another new subcategory of payments for individuals, were $1.2 billion higher than
estimated. The food stamp program accounts for $1.1 billion of this
difference. The 1977 Food Stamp Act increased participation in
that program more quickly and to higher levels than anticipated,
and the average monthly bonus per beneficiary was higher than
expected due to food price increases and higher participation by
poorer families. In addition, outlays for child nutrition programs
were higher because more meals were served than had been
assumed.
Public assistance and related programs include public assistance,
supplemental security income, outlays for earned income tax credits, and veterans non-service-connected pensions. Outlays were $0.1
billion below the initial estimate. Lower than estimated outlays in
the first three programs were largely offset by legislated benefit
improvements for veterans pensions.
Uncontrollable outlays for all other payments for individuals
were $0.7 billion higher than estimated. Amendments to the Federal Coal Mine Health and Safety Act, enacted in March of 1978,
account for most of this difference. The amendments removed certain eligiblity restrictions and made it easier for applicants to
qualify for black lung benefits. Increased access to benefits, and, to
a lesser extent, the administrative costs associated with complying
with these reforms, account for almost the full increase.
Net interest outlays were $2.7 billion above the budget estimate.
Interest on the public debt was $3.7 billion higher due to significantly higher interest rates than were assumed. The budget estimate assumed a 6.1% interest rate on 91-day Treasury bills for
1979 while the actual 91-day rate averaged 9.3%. The effect of
higher interest rates on 1979 outlays more than offset the effect of
lower-than-projected borrowing in 1979. Borrowing requirements
were $6.7 billion lower than estimated in 1978 and $32.9 billion
PERSPECTIVES ON THE BUDGET
349
lower in 1979. Interest received by trust funds, which is offset
against interest costs to reflect transactions with the public, was
$0.9 billion higher than the budget estimate.
Actual outlays for general revenue sharing virtually matched the
original estimate since the amounts are specified by the law, which
authorizes the program through September 30, 1980.
Farm price supports were $0.8 billion lower than estimated.
Greater export demand than anticipated resulted in higher average
prices for wheat and feed grains, and reduced the need for support
payments.
Other open-ended programs and fixed costs were $1.5 billion
below the original budget estimates. Outlays for the foreign military sales trust fund were $1.7 billion lower than anticipated,
largely because contracts for the sale of military equipment to Iran
were cancelled. Outlays of the multilateral development banks
were $0.2 billion lower than estimated. Slower than anticipated
disbursements of loans explains this difference, in part. These overestimates were partially offset by higher than anticipated outlays
for social service grants and for prior-year claims arising from
social service grants.
Outlays for prior-year contracts and obligations were $9.5 billion
lower than estimated. National defense outlays for prior-year contracts and obligations were $2.8 billion below the budget estimate
largely due to a technical change in the accounting method used to
record unexpended balances for military construction. This change
more than offset military procurement outlays in this category,
which were higher than estimated.
Civilian program outlays for prior-year contracts and obligations
were $6.6 billion lower than estimated. Major shortfalls occurred in
programs administered by the Departments of Housing and Urban
Development, Energy, Transportation, Health and Human Services, and Commerce. These programs account for $5.4 billion of the
difference between actual and estimated outlays for prior-year contracts and obligations of civilian programs.
Programs administered by the Department of Housing and
Urban Development (HUD) account for $2.1 billion of the overestimate in civilian programs in this category. Accurate estimation is
made more difficult by the volatile nature of mortgage sales and
their dependence on market conditions. Outlays for HUD's tandem
mortgage purchase programs were significantly lower than estimated because mortgage sales (an offset to outlays) were higher.
Of the total difference between actual and estimated outlays for
prior-year contracts and obligations of civilian programs, $1.3 billion is attributable to Department of Energy programs. Outlays for
prior-year contacts and obligations of Department of Transportation programs were $1.2 billion lower than estimated. Over $0.8
350
THE BUDGET FOR FISCAL YEAR 1981
billion of this was due to the Urban mass transportation trust
fund. Programs in this category administered by the Department of
Health and Human Services were overestimated by $0.5 billion.
The $0.4 billion overestimate for Commerce Department programs
in this category can be attributed to the local public works program and the Economic development revolving fund.
The remaining $1.2 billion in the overestimate of outlays for
civilian prior-year contracts and obligations is attributable to small
differences divided among numerous other Federal agencies.
Reconciliation of actual and estimated receipts.—As shown in the
following table, receipts for 1979 were $465.9 billion, $25.5 billion
greater than the January 1978 estimate of $440.5 billion. Differences in tax law from the legislation proposed in the budget increased receipts by $18.9 billion, while higher than anticipated
incomes and changes in collection patterns and effective tax rates
account for the remaining increase of $6.5 billion.
COMPARISON OF FISCAL YEAR 1979 RECEIPTS
(In billions of dollars)
January
1978
estimate
Individual income taxes
Corporation income taxes
Social insurance taxes and contributions
Excise taxes
Estate and gift taxes
Customs duties
Miscellaneous receipts
Total
1
Change
from 1978
estimate
Actual
1
191.0
62.5
141.9
25.5
6.1
6.4
7.2
26.9
3.2
-.3
-6.7
-.7
1.0
2.0
217.8
65.7
141.6
18.7
5.4
7.4
9.2
1
440.5
25.5
465.9
Revised to treat earned income credit payments in excess of the tax liability otherwise owed as outlays instead of tax refunds.
In the 1979 budget, the administration proposed permanent individual and corporation income tax reductions, generally effective
October 1, 1978, as well as a number of simplifications and reforms,
generally effective January 1, 1979. Together, these proposals were
estimated to decrease 1979 receipts $31.8 billion.21 The President's
proposed national energy plan, which contained several tax provisions to provide incentives to conserve energy and to convert
energy use away from oil and natural gas toward other fuels, was
estimated to increase 1979 receipts by $1.1 billion. Other proposals
reduced estimated receipts by $1.9 billion. They included repeal of
the tax on telephone services; a reduction in the Federal unemployment insurance tax rate; an excise tax on crude oil to create a fund
" In comparison to the extension of the temporary tax provisions of the Tax Reduction and Simplification Act
of 1977, which were scheduled to expire December 31, 1978, these proposals reduced receipts $23.5 billion in
PERSPECTIVES ON THE BUDGET
351
to pay damages and cleanup costs of oil pollution; a 2-percentagepoint reduction in the tax on airplane passenger tickets and airfreight; payments by the Federal Reserve System of interest on
member bank deposits; and an increase in the charge for migratory
bird hunting stamps. Together, the proposals in the 1979 budget
reduced estimated receipts by $32.6 billion.
During 1978, three major acts were passed that reduced 1979
receipts by $13.5 billion: the Revenue Act of 1978, the Energy Tax
Act of 1978, and the Foreign Earned Income Act of 1978. The
Revenue Act of 1978, which was enacted November 6, 1978, reduced taxes for individuals and corporations, generally effective
January 1, 1979, and included several of the administration's tax
reform proposals. Together, the provisions of this Act reduced 1979
receipts by $11.9 billion.22 The Energy Tax of 1978, which contained
several provisions designed to reduce our energy problems, and the
Foreign Earned Income Act of 1978, which altered the tax treatment of income earned abroad, reduced 1979 receipts by $1.0 billion
and $0.6 billion, respectively.
Other enacted legislation increased 1979 receipts by a net
amount of $0.2 billion: the Black Lung Benefits Revenue Act,
which levied a tonnage tax on coal to finance benefits for disabled
coal miners; the Highway Revenue Act, which exempted qualified
taxicabs from the Federal gasoline tax; the Outer Continental Shelf
Lands Act, which levied a tax on crude oil obtained from the Outer
Continental Shelf to create a fund to pay damages and clean-up
costs of oil pollution; the Customs Procedural Reform Act, which
raised the amount of duty free imports allowed Americans returning from abroad; and the Migratory Bird Hunting Stamp Act,
which increased the charge for migratory bird hunting stamps.
An increase in sugar import fees and the waiver of import duties
and fees on crude oil and petroleum products, which were accomplished by administrative action, reduced 1979 receipts by a net
$0.3 billion.23
Individual income taxes were $217.8 billion in 1979, $26.9 billion
greater than the original budget estimate. As shown in the following table, legislated tax reductions, which were less than those
proposed by the administration, increased receipts above the estimate by a net amount of $21.7 billion. Higher than anticipated
personal incomes and an underestimate of collections increased
individual income tax receipts by an additional $5.2 billion.
SJ
In comparison to the extension of the temporary tax provisions of the Tax Reduction and Simplification Act
of 1977, this Act reduced 1979 receipts $4.4 billion.
" Pursuant to Presidential Proclamation 4655, fees and customs duties on imported crude oil and petroleum
products have been waived by the Secretary of Energy through June 30, 1980. As of the time this budget was
completed, no determination had been made as to whether the authority granted under Proclamation 4655
would be extended beyond June 30, 1980, and this budget includes, for periods beyond that date, revenues
received from such import fees and customs duties.
THE BUDGET FOR FISCAL YEAR 1981
352
RECONCILIATION OF ACTUAL 1979 RECEIPTS WITH THE JANUARY 1978 ESTIMATES
(In billions of dollars)
January
1978
estimate
Individual income taxes
Corporation income taxes
Social insurance taxes and contributionsExcise taxes
Estate and gift taxes
Customs duties
Miscellaneous receipts
Total
1
191.0
62.5
141.9
25.5
6.1
6.4
7.2
1
440.5
Inaction
on legislative
proposals
2
31.1
7.5
.6
-6.8
2
Enacted
legislation
and
administrative
actions
s-9.4
3
-4.0
.1
Technical
adjustments
and revised
incomes
5.2
-.3
-.9
*
.2
-.2
-.1
-.7
1.2
2.0
32.6
-13.6
6.5
Actual
receipts
217.8
65.7
141.6
18.7
5.4
7.4
9.2
465.9
*$50 million or less.
* Revised to treat earned income credit payments in excess of the tax liability otherwise owed as outlays instead of tax refunds.
• In comparison to the extension of the temporary tax provisions of the Tax Reduction and Simplification Act of 1977 which were scheduled to expire
December 31, 1978, inaction on these proposals increased individual income taxes and corporation incomes by an estimated $23.9 billion and $6.4
billion, respectively.
* In comparison to the extension of the temporary tax provisions of the Tax Reduction and Simplification Act of 1977, these enacted tax changes
reduced individual income taxes and corporation income taxes by $2.9 billion and $3.0 billion, respectively.
Corporation income tax receipts were $65.7 billion in 1979, $3.2
billion greater than the January 1978 estimate of $62.5 billion.
Substitution of the Revenue Act of 1978 and the Energy Tax Act
for the January 1978 proposals increased corporation income taxes
by $3.5 billion. Different effective tax rates, collection patterns, and
economic conditions than assumed in January 1978 reduced receipts by $0.3 billion.
Social insurance taxes and contributions in 1979 were $0.3 billion
less than the January 1978 estimate. Higher employment taxes and
contributions, largely due to higher than anticipated wages and
salaries, increased receipts by $0.5 billion; and an increase in contributions for other insurance and retirement programs raised receipts by $0.2 billion. This increase was more than offset by lower
than anticipated unemployment insurance tax receipts of $0.9 billion. Inaction on a proposal to reduce the Federal unemployment
insurance tax rate from 0.7% to 0.5% effective January 1, 1979,
increased unemployment tax receipts by $0.6 billion. However,
State taxes deposited in the Treasury to finance unemployment
benefits were lower than estimated by $1.5 billion.
The $6.7 billion shortfall in excise tax receipts is due almost
entirely to inaction on the administration's proposed national
energy plan.
Estate and gift taxes were $0.7 billion below the January 1978
estimate, and customs duties were $1.0 billion higher. Increased
imports of steel, automobiles, and electronic products are largely
responsible for the higher customs duties.
An increase in miscellaneous receipts of $2.0 billion is in large
part due to a $2.0 billion underestimate of deposits of earnings by
the Federal Reserve System. Significantly higher interest rates
than were assumed in the budget account for almost all of this
underestimate.
PART 7
THE BUDGET SYSTEM
AND CONCEPTS
THE BUDGET SYSTEM AND CONCEPTS
The budget system of the U.S. Government supports decisionmaking and management of programs in relation to the requirements of the Nation, effective financial control, and accountability
for the use of Federal resources.
THE BUDGET PROCESS
The budget process has four main phases: (1) executive formulation and transmittal; (2) congressional action; (3) budget execution
and control; and (4) review and audit. Each of these phases is
interrelated with the others.
Executive formulation and transmittal—The budget sets forth
the President's financial plan and indicates his priorities for the
Federal Government. The President's transmittal of his budget to
the Congress early in each calendar year is the climax of many
months of planning and analysis throughout the executive branch.
Formulation of the 1981 budget began in the spring of 1979, although general goals were set earlier.
The budget is formulated in the context of a 3-year budget planning and tracking system. The budget planning horizon covers the
2 years following the budget year and integrates long-range planning into the executive budget cycle. This multiyear budget planning system requires that broad fiscal goals and agency spending
targets beyond the budget year be established during the budget
planning process.
During the period when a budget is being formulated in the
executive branch, there is a continual exchange of information,
proposals, evaluations, and policy decisions among the President,
the Office of Management and Budget (OMB) and other Executive
office units, and the various Government agencies. Decisionmaking
in the budget process is facilitated by the use of zero-base budgeting, a management process that provides for an in-depth evaluation
of all proposed and existing programs and activities in conjunction
with planning and budgeting.
In the spring, agency programs are evaluated, policy issues are
identified, and budgetary projections are made, giving attention
both to important modifications and innovations in programs and
to alternative long-range program plans. These budgetary projections, including projections of estimated receipts prepared by the
Department of the Treasury, are then presented to the President
354
THE BUDGET SYSTEM AND CONCEPTS
355
for his consideration, and the major issues are discussed. At about
the same time, the President receives projections of the economic
outlook that are prepared jointly by the Council of Economic Advisers, OMB, and the Departments of Commerce, Labor, and the
Treasury.
Following a review of these projections, the President establishes
general budget and fiscal policy guidelines for both the fiscal year
that will begin about 15 months later and for the 2 years beyond.
General policy directions and planning ceilings are then given to
the agencies to govern the preparation of their budget requests.
Throughout the fall and early winter the executive branch is
involved in the development of the President's budget. Current
services estimates are also prepared to provide the Congress with a
basis for the review of the President's budget. These estimates are
projections of budget authority and outlays required to continue
Federal programs and activities in the upcoming fiscal year without policy changes from the fiscal year in progress at the time the
estimates are transmitted. The Congressional Budget Act of 1974
requires that these estimates be transmitted to provide the Congress with early information on projected costs of current programs. For the first 2 years after the requirement became effective, they were transmitted in November. However, it was generally agreed that the estimates transmitted at that time did not
provide a suitable basis for review, since the underlying assumptions changed before the budget was transmitted. As a result, the
comparability of the current services and the budget estimates was
lessened significantly. Consequently, the current services estimates
are now transmitted with the President's budget.
The primary phase of the budget process involves the formulation and preparation of the President's budget for transmittal to
the Congress. Budget determinations are developed after detailed
reviews of the agency zero-base budget requests and the Government-wide OMB ranking of zero-base decision packages falling at
the margin of approved agency totals. These determinations are
then discussed with the agencies and revised as a result of later
Presidential decisions. Fiscal policy issues—relating to total budget
outlays and receipts—are reexamined. Consistent with the multiyear budget planning system, the effects of budget decisions on
budget authority and outlays in the years that follow are also
considered and are explicitly taken into account. Thus, the budget
formulation process involves the simultaneous consideration of the
resource needs of individual programs, and the total outlays and
receipts that are appropriate in relation to current and prospective
economic conditions. The budget reflects the results of both of
these considerations.
356
THE BUDGET FOR FISCAL YEAR 1981
Congressional action.—The Congress can act to approve, modify,
or disapprove the President's budget proposals. It can change funding levels, eliminate proposals, or add programs not requested by
the President. It may also act upon legislation determining taxes
and other means of increasing or decreasing receipts.
In making appropriations, the Congress does not normally vote
on the level of outlays directly, but rather on budget authority. The
Congress first enacts legislation that authorizes an agency to carry
out a particular program and, in some cases, includes limits on the
amount that subsequently can be appropriated for the program.
Many programs are authorized for a specified number of years or
indefinitely; other programs, such as most education and health
programs, nuclear energy programs, space exploration, defense procurement, foreign affairs, and some construction programs, require
annual authorizing legislation.
Provision of budget authority is usually a separate, subsequent
action. Generally, budget authority becomes available each year
only as voted by the Congress in appropriation acts. However, in a
significant number of cases the Congress has voted permanent
budget authority, under which funds become available annually
without further congressional action. Most trust fund appropriations are permanent, as are a number of Federal fund appropriations, such as the appropriation to pay interest on the public debt.
Congressional review of the budget begins when the President
transmits his budget estimates to the Congress within 15 days after
the start of each new session in January, as required by law.
Under the procedures established by the Congressional Budget Act
of 1974, the Congress considers budget totals before completing
action on individual appropriations. The act requires that each
standing committee of the Congress submit reports on budget estimates to the House and Senate Budget Committees by March 15;
and that the Congressional Budget Office submit a fiscal policy
report to the two budget committees by April 1. The Congress then
adopts, no later than May 15, the first concurrent budget resolution to guide the Congress in its subsequent consideration of appropriations and revenue measures. The first budget resolution which
is required to be adopted by May 15, sets targets for total receipts
and for budget authority and outlays, in total and by function.
Congressional consideration of requests for appropriations and
for changes in revenue laws occurs first in the House of Representatives. The Appropriations Committee, through its subcommittees, studies the proposals for appropriations and examines in
detail each agency's performance. The Ways and Means Committee
reviews proposed revenue measures. Each committee then recommends the action to be taken by the House of Representatives.
THE BUDGET SYSTEM AND CONCEPTS
357
When the appropriation and tax bills are approved by the House,
they are forwarded to the Senate, where a similar review process is
followed. In case of disagreement between the two Houses of the
Congress, a conference committee (consisting of Members of both
bodies) meets to resolve the differences. The report of the conference committee is returned to both Houses for approval. When the
measure is agreed to, first in the House and then in the Senate, it
is ready to be transmitted to the President in the form of an
enrolled bill, for his approval or veto.
After action has been completed on all money bills, the Congress
adopts a second concurrent resolution containing a budget ceiling
on total budget authority and outlays, and a floor for budget receipts. This resolution, which is supposed to be adopted by September 15, may retain or revise the levels set earlier in the year, and
can include directives to the appropriations committees and to
other committees to recommend changes in budget authority and
outlays. Similarly, the second resolution may direct the appropriate committees to recommend changes in budget receipts or in the
statutory limit on the public debt. Changes recommended by various committees pursuant to the second budget resolution are to be
reported in a reconciliation bill (or resolution, in some cases) on
which the Congress is supposed to complete action by September
25, a few days before the new fiscal year commences on October 1.
After the Congress completes action on the reconciliation bill or
resolution, it may not consider any spending or revenue legislation
that would breach the totals specified in the second resolution. The
Congress may, however, adopt a new budget resolution changing
the levels set by the second resolution.
If action on appropriations is not completed by the beginning of
the fiscal year, the Congress may enact a "continuing resolution"
to provide authority for the affected agencies to continue operations usually until their regular appropriations are enacted.
Budget execution and control—Once approved, the President's
budget, as modified by the Congress, becomes the financial plan for
the operations of each agency during the fiscal year. Under the
law, most budget authority and other budgetary resources are
made available to the agencies of the executive branch through an
apportionment system. The Director of OMB apportions (distributes) appropriations and other budgetary resources to each agency
by time periods (usually quarters) or by activities. Obligations may
not be incurred in excess of the amount apportioned. The objective
of the apportionment system is to ensure the effective and orderly
use of available resources and to preclude the need for additional
or supplemental appropriations to meet unforeseen requirements.
358
THE BUDGET FOR FISCAL YEAR 1981
Nonetheless, changes in laws or other factors may indicate the
need for additional appropriations during the year, and supplemental requests may have to be sent to the Congress. On the other
hand, reserves may be established under the Antideficiency Act to
provide for contingencies or to effect savings made possible by or
through changes in requirements or greater efficiency of operations. Amounts may also be withheld from obligation for policy or
other reasons, but all amounts withheld must be reported for Congressional review pursuant to the Impoundment Control Act of
1974.
Whenever the President determines that all or part of any
budget authority provided by the Congress will not be required to
carry out the full objectives or scope of a program for which it was
provided, or that such budget authority should be rescinded for
fiscal policy or other reasons, a special message is transmitted by
the President to the Congress requesting a rescission of the budget
authority. The budget authority proposed by the President for rescission must be made available for obligation unless both the
House and the Senate pass a rescission bill within 45 days of
continuous session after receiving the President's message.
Whenever the President determines that the use of budget authority provided by the Congress should be deferred (that is, temporarily withheld from obligation), the President transmits a special
message to the Congress on such deferrals. Either House may, at
any time, pass a resolution disapproving this deferral of budget
authority, thus requiring that the funds be made available for
obligation. When no congressional action is taken, deferrals may
remain in effect until, but not beyond, the end of the fiscal year. If
the funds remain available beyond the end of a fiscal year and
continued deferral of their use is desired by the President, he must
transmit a new special message to the Congress.
Review and audit—This is the final phase in the budget process.
The individual agencies are responsible for assuring—through their
own review and control systems—that the obligations they incur
and the resulting outlays follow the provisions of the authorizing
legislation and appropriations, as well as other laws and regulations relating to the obligation and expenditure of funds. Agencies
are assisted in this responsibility by their audit staffs. In the case
of 15 major departments and agencies, audit activities are directed
by statutory Inspectors General, appointed by the President. OMB
reviews program and financial reports and keeps abreast of agency
programs and the effort to attain program objectives.
In addition, the General Accounting Office (GAO), as an agent of
the Congress, regularly audits, examines, and evaluates Government programs. Its findings and recommendations are made to the
THE BUDGET SYSTEM AND CONCEPTS
359
Congress, to OMB, and to the agencies concerned. The GAO also
monitors the executive branch's reporting of special messages on
proposed rescissions and deferrals. The GAO reports any items not
reported by the executive branch and any differences that it may
have with the classification (as a rescission or deferral) of withholdings included in special messages transmitted by the President.
The GAO may bring civil action to obtain compliance should the
President fail to report withholdings of budget authority in accordance with the Impoundment Control Act of 1974.
COVERAGE OF THE BUDGET TOTALS
Agencies and programs.—The budget totals cover agencies and
programs (including Government corporations) owned by the Federal Government, no matter how funded, except for the following offbudget Federal entities:
Rural electrification and telephone revolving fund
Rural Telephone Bank
Board of Governors of the Federal Reserve System
Pension Benefit Guaranty Corporation
Postal Service fund
United States Railway Association1
Federal Financing Bank
Energy Security Corporation2
The off-budget Federal entities listed above are discussed in Part
6 of the Budget. Schedules and financial statements are presented
in Part IV of the Budget Appendix. Except for the Federal Reserve
Board, these data are also presented in selected tables throughout
the budget documents. The budget totals do not include transactions of privately owned, Government-sponsored enterprises, such
as the Federal land banks and Federal home loan banks. However,
privately owned Government-sponsored enterprises are discussed in
Part 6 of the Budget, and financial statements are presented in
Part VI of the Budget Appendix.
Functional classification.3—The functional classification arrays
budgetary data according to the major purpose served by the unit
being classified. In accordance with the Congressional Budget Act
of 1974, the Congress must pass resolutions establishing budget
targets by these functional categories.
1
Investments in Conrail securities, which comprise almost all of the Association's activity after 1977, are
included in the budget.
* Budget authority and outlays for the Corporation will not be included in the budget totals. However, the
cash requirements of the Corporation will be met by loans from the Secretary of the Treasury. Such loans will
be financed by appropriations to the Secretary, and thus be reflected as budget authority and outlays within the
budget totals. It is proposed that these loans be repaid by proceeds of the windfall profits tax.
* A discussion of this subject is also found in Part 5 of this volume.
360
THE BUDGET FOR FISCAL YEAR 1981
The following criteria are used in establishing and in assigning
activities to functional categories:
• A function must have a common end or ultimate purpose
addressed to an important national need. (The emphasis is on
what the Federal Government seeks to accomplish rather
than the means of accomplishment, what is purchased, or the
clientele or geographic area served.)
• A function must be of continuing national importance and the
amounts attributable must be significant.
• Each basic unit of classification (generally the appropriation
or fund account) is classified into the single best or predominant purpose and assigned to only one function. However,
when an account is large and serves more than one major
purpose, it may be subdivided into two or more subfunctions.
• Activities and programs are normally classified by common
purpose (or function) regardless of which agencies conduct the
activities.
National needs presentation.—Section 601 of the Congressional
Budget Act of 1974 requires that the budget for each fiscal year
shall contain a presentation of budget authority, proposed budget
authority, outlays, proposed outlays, and descriptive information in
terms of—
(1) a detailed structure of national needs which shall be used
to reference all agency missions and programs;
(2) agency missions; and
(3) basic programs.
The functional presentation of the budget is used to meet the
national needs requirement. While national needs and agency missions were not specified, as such, in earlier budgets, the thrust of
the budget functional classification has always been to summarize
what the Government is doing, or expects to do, in terms of the
ultimate purpose that the Government programs are designed to
serve. To meet the requirement of law for a national needs presentation, the budget functional classification was refined to focus
more sharply on the end purposes and accomplishments, and further refinements in the classification are made as circumstances
warrant. Each major function is described in the context of national needs being served, and subfunctions are described in the context of major missions devoted to serving national needs. This is in
keeping with the act, which states:
"To the extent practicable, each agency shall furnish information in support of its budget requests in accordance with its
assigned missions in terms of Federal functions and subfunctions, including mission responsibilities of component organizations, and shall relate its programs to agency missions."
THE BUDGET SYSTEM AND CONCEPTS
361
In the national needs presentation, Federal programs are discussed in terms of national needs and the functional classification.
In this context, a single program may be identified as serving
several national needs even though classified in a single function.
For example, medicare, primarily a health program, is identified as
meeting the national need for improved health care. However, it
also provides a form of income security by paying for medical bills
and, hence, can also be identified as meeting the national need for
income security. A discussion of Federal programs based solely on
the functional classification system would have been limited to
discussion of each program, classified by major purposes served, in
only one category.
The national needs presentation can be found in Part 5 ("Meeting National Needs: the Federal Program by Function").
Types of funds.—Agency activities are financed through Federal
funds and through trust funds, both of which are included in the
budget.
Federal funds are of several types. The general fund is credited
with receipts not earmarked by law for a specific purpose, and is
charged with payments from appropriations and from general borrowing. Special funds contain Federal receipts earmarked for specific purposes, other than for carrying out a cycle of operations.
Public enterprise (revolving) funds finance a cycle of business-type
operations in which outlays generate collections, primarily from
the public. Intragovernmental funds, including revolving, management, and consolidated working funds, facilitate financing operations within and between Government agencies and are credited
with collections from other Government accounts. Intragovernmental revolving funds, are credited with collections earmarked by law
to carry out a cycle of business-type operations within and between
Government agencies.
Trust funds are established to account for receipt and expenditure of monies by the Government for use in carrying out specific
purposes and programs in accordance with the terms of a trust
agreement or statute. These monies are not available for the general purposes of the Government. Within the category of trust funds
there is a special subcategory of trust revolving funds that are
credited with collections earmarked by law to carry out a cycle of
business-type operations.
Current expense and capital investment—The budget includes
spending for both current operating expenses and capital investment, such as the purchase of lands, structures, and equipment. It
also includes capital investment in the form of lending and the
purchase of investments. These categories of outlays are discussed
in Special Analysis D.
362
THE BUDGET FOR FISCAL YEAR 1981
BUDGET AUTHORITY AND RELATED TRANSACTIONS
Budget authority.—Government agencies—whether or not they
are included in the budget totals—are permitted to enter into
obligations requiring either immediate or future payment of money
only when they have been granted authority to do so by law. This
authority is usually provided as budget authority; however, collections specifically authorized to be credited to appropriation and
fund accounts, while not scored as budget authority, are also available for obligation.
Budget authority permits obligations to be incurred. The
amounts of budget authority requested are determined by the
nature of the programs or projects being funded.
For activities for which the cost depends upon the program level
planned for a fiscal year, the amount of budget authority requested
covers the obligations expected to be incurred during the year.
Most of these Federal activities, such as operations and maintenance, entitlement programs, and continuing research programs
are fully funded on an annual basis.
For most projects that are separate and distinct units, particularly direct Federal major procurement and construction projects,
"full funding" is requested. That is, funds are requested to cover
the entire cost to complete the project at the time it is initiated,
regardless of the expected time of completion.
Budget authority usually takes the form of appropriations, which
permit obligations to be incurred and payments to be made. Some
budget authority is in the form of contract authority, which permits
obligations in advance of appropriations and therefore requires a
subsequent appropriation or the collection of receipts to "liquidate"
(pay) these obligations. There is also authority to borrow; such
budget authority permits obligations to be incurred and these obligations to be liquidated (paid) using funds that are borrowed, generally from the Treasury.
Since January 1976, it has not been in order for either House of
the Congress to consider any bill, with certain exceptions, that
provides new borrowing or contract authority unless that bill also
provides that such new spending authority will be effective only to
the extent or in such amounts as are provided in appropriations
acts.
Most appropriations for current operations are made available
for obligation only during a specified fiscal year (annual appropriationsX Some are for a specified longer period (multiple-year appropriationsX Others, including most of those for construction, some
for research, and many trust fund appropriations, are made available for obligation until the amount appropriated has been expend-
THE BUDGET SYSTEM AND CONCEPTS
363
ed or until the objectives have been attained (no-year appropriations).
When budget authority is made available by the Congress for a
specific period of time, any part that is not used for obligations
during that period expires and cannot be used later. Reappropriations—congressional actions to continue availability of unobligated
amounts that have expired or would otherwise expire—are counted
as budget authority in the year in which the availability is extended, i.e., the year for which the appropriation action is taken.
A rescission is a legislative action that cancels new budget authority or unobligated balances prior to the time the authority
would otherwise have expired. Rescissions are offset against new
budget authority in arriving at the total of budget authority for
each year. A deferral is an executive branch action or inaction—
including the establishment of reserves under the Antideficiency
Act—that effectively delays the obligation or expenditure of funds.
Most authority to obligate funds is enacted by the Congress in or
immediately preceding the fiscal year in which it becomes available {current authority). Most current authority is granted year by
year. Some budget authority in Federal funds and most budget
authority in trust funds becomes available from time to time as the
result of previously enacted legislation and does not require current action by the Congress {permanent authority). Such authority
is "current" in the first year in which it is provided and "permanent" in succeeding years.
The amount of budget authority is usually stated specifically in
the legislation that makes it available (definite authority). In some
cases the amount is left indefinite, to be determined by subsequent
circumstances (indefinite authorityX Examples of the latter type
are the appropriation for interest on the public debt, and the trust
fund appropriation equal to receipts under the Federal Insurance
Contributions Act (social security). Indefinite budget authority is
recorded in the amount of receipts collected or estimated to be
collected each year in the case of trust funds, and in the amount
needed to finance obligations incurred or estimated to be incurred
in the case of contract authority and authority to borrow.
Obligations incurred.—Following the enactment of budget authority, obligations are incurred by Government agencies. Such
obligations include the current liabilities for salaries and wages,
certain contractual services, and interest; contracts for the purchase of supplies and equipment, construction and the acquisition
of land; contracts to make loans; and other contractual arrangements requiring the payment of money.
Outlays.—Obligations generally are liquidated by the issuance of
checks or the disbursement of cash; such payments are called
364
THE BUDGET FOR FISCAL YEAR 1981
outlays. In lieu of issuing checks, obligations may also be liquidated
(and outlays occur) by the maturing of interest coupons in the case
of some bonds, or by the issuance of bonds or notes (or increases in
the redemption value of bonds outstanding). Outlays during a fiscal
year may be for payment of obligations incurred in prior years or
in the same year. Such outlays, therefore, flow in part from unexpended balances of prior year budget authority and in part from
budget authority provided for the year in which the money is
spent.4 Total budget outlays are stated net of offsetting collections
(see collections below), and exclude outlays of off-budget Federal
entities. Payments for tax credits in excess of tax liabilities are
treated as outlays rather than as an adjustment to budget receipts.
Balances of authority.—Not all budget authority enacted for a
fiscal year is obligated and paid out in the same year. The obligated balance is that portion of the budget authority that has been
obligated but not yet paid. For example, in the case of salaries and
wages, 1 to 3 weeks elapse between the time of obligation and the
time of payment. In the case of major procurement and construction, up to several years may elapse. Obligated balances of budget
authority are carried forward until the obligations are subsequently paid. In addition, in multiple-year or no-year accounts, budget
authority that is still available for obligation (unobligated balances)
may be carried forward for obligation in the following year.5
Therefore, a change in the amount of budget authority for a
given year does not necessarily result in a similar change in either
the obligations incurred or the budget outlays of that same year. A
change in budget authority in any one year may have an effect on
obligations for 2 or more years, and may affect budget outlays for
an even longer period.
Allocations between agencies.—In some cases, an agency may
share in the administration of a program for which appropriations
are made to another agency or to the President. This is made
possible by the establishment of allocations from the "parent" account; that is the account to which the appropriation was made.
Obligations incurred through such allocations are included with
the parent account in the Budget (without separate identification)
and in the Budget Appendix (where the total obligations of each
participating agency are identified separately under the parent
account).
Limits on Federal credit programs— Generally, separate limitations on the amount of direct loans and on loan guarantees are
4
This process is depicted on the chart, "Relation of Budget Authority to Outlays—1981 Budget," which is in
Part 6 of this volume.
5
Additional information on balances of budget authority is provided in a separate report, "Balances of Budget
Authority," which is prepared by OMB shortly after the budget is transmitted.
THE BUDGET SYSTEM AND CONCEPTS
365
proposed for enactment in the appropriations language related to
the budget accounts that support such programs. The limitations
apply to the amount of obligations to be incurred for direct loans
and the amount of commitments made for loan guarantees during
the year. A commitment for a loan guarantee is made when the
Government enters into a guarantee agreement to become effective
at such time as the lender meets stipulated preconditions. The
disbursement of a direct loan (an outlay) or the actual guarantee of
a loan (a contingent liability) may occur in a fiscal year subsequent
to the obligation or commitment, respectively. The limitations on
direct loans apply to the principal amount of the loan involved. In
the case of loan guarantees, only the amount of the Government's
contingent liability, which may be less than the full amount of the
loan, is subject to the limitation.
COLLECTIONS
In general— Amounts collected during the year are classified
into two major categories:
• Budget receipts, which are compared with total outlays in
calculating the budget surplus or deficit.
• Offsetting collections, which are deducted from disbursements
in calculating total outlays. Corresponding offsets are made in
arriving at total budget authority and net obligations incurred.
Budget receipts.—These are collections from the public that
result from the exercise of the Government's sovereign or governmental powers and from contributions paid by voluntary participants in certain Federal social insurance programs. These collections, also called governmental receipts, consist primarily of tax
receipts and social insurance premiums, but also include receipts
from court fines, certain licenses, and deposits of earnings by the
Federal Reserve System. Gifts and contributions (as distinguished
from payments for services or cost-sharing deposits by State and
local governments) are also counted as budget receipts.
Offsetting collections.—These are collections from other Government accounts or from transactions with the public that are of a
business-type or market-oriented nature. They are classified into
two major categories: collections credited to appropriation or fund
accounts and offsetting receipts (that is, amounts deposited in receipt accounts). In general, the distinction between these two major
categories is that, normally, collections credited to appropriation or
fund accounts can be used without further appropriation action by
the Congress, whereas funds in receipt accounts cannot be used
without being appropriated.
366
THE BUDGET FOR FISCAL YEAR 1981
Collections credited to appropriation or fund accounts occur in
two circumstances:
• Reimbursements—When authorized by law, amounts collected
for materials or services furnished (for example, advances
received from the public to pay expenses of providing information under the Freedom of Information Act) are treated as
reimbursements to appropriations. These collections are
netted in determining outlays from such appropriations.
• Revolving funds— In the three types of revolving fundspublic enterprise, intragovernmental, and trust revolving—
collections are netted against spending and outlays are reported as the net amount.
Offsetting receipts generally are deducted from budget authority
and outlays by function or subfunction, and by agency. Offsetting
receipts are subdivided into two categories, as follows:
• Proprietary receipts from the public.—These are collections
from the public—deposited in receipt accounts of the general
fund, special funds, or trust funds—that arise out of the business-type or market-oriented activities of the Government (for
example, loan repayments, interest, sale of property and products, charges for nonregulatory services, and rents and royalties). Such collections are not counted as budget receipts, and,
with one exception, are offset against total budget authority
and outlays by agency and by function. The exception consists
of receipts from rents and royalties from Outer Continental
Shelf lands that are deducted from total budget authority and
outlays for the Government as a whole rather than from any
single agency or function.
• Intragovernmental transactions.—These are payments into receipt accounts from Federal appropriation or fund accounts.
They are treated as an offset to budget authority and outlays,
rather than as a budget receipt. Intragovernmental transactions may either be intrabudgetary (where the payment and
receipt both occur within the budgetary universe) or result
from receipts from off-budget Federal entities in those cases
where the payment is made by a Federal entity whose funds
are excluded from the budget totals. Normally, intragovernmental transactions are deducted from both the outlays and
the budget authority for the agency receiving the payment.
However, in two cases intragovernmental transactions are not
deducted from the figures of any agency or function. Instead,
intragovernmental transactions that involve agencies' payments (including payments by off-budget Federal entities) as
employers into employee retirement trust funds and the payment of interest to nonrevolving trust funds appear as special
THE BUDGET SYSTEM AND CONCEPTS
367
deduct lines in computing total budget authority and outlays
for the Government.
Intrabudgetary transactions are subdivided into three categories: (1) interfund transactions, where the payment is from
one fund group (either Federal funds or trust funds) to a
receipt account in the other fund group; (2) Federal intrafund
transactions, in those cases where the payment and receipt
both occur within the Federal fund group; and (3) trust intrafund transactions, in those cases where the payment and
receipt both occur within the trust fund group.
OTHER TRANSACTIONS
Borrowing and repayments.—Borrowing and debt repayments are
not treated as receipts or outlays; if they were, the budget could be
balanced simply by borrowing. This rule applies both to borrowing
in the form of public debt securities and to specialized forms of
borrowing—such as the sale of agency securities, and the sale of
certificates representing participation in a pool of loans. However,
some transactions that otherwise would be treated as borrowing
are required by law to be treated as a sale of assets. This results in
collections being credited to an appropriation or fund account with
a corresponding reduction in outlays.
Exercise of the monetary power.—Seigniorage is the profit from
coining money; it is the difference between the value of coins as
money and their cost, including the cost of manufacturing. Seigniorage on coins arises from the exercise of the Government's
monetary powers and differs from receipts coming from the public,
since there is no corresponding payment by another party. Therefore, seigniorage is excluded from receipts and treated as a means
of financing a budget deficit, or as a supplementary amount to be
applied to reduce debt or to increase the cash in Treasury in the
years of a budget surplus. The increment (profit) resulting from the
revaluation of gold as a monetary asset is treated like seigniorage.
Prior to the 1980 budget, the profit from the sale of gold was
treated as a proprietary receipt. However since the value of gold is
determined by its value as a monetary asset rather than as a
commodity, the budget now treats all of the profits on gold sales as
a means of financing rather than as an offsetting collection; this
change was made retroactively in the historical budget data.
Liabilities in deposit fund accounts.—Certain accounts outside
the budget, known as deposit funds, are established to record
amounts held in suspense temporarily, or held by the Government
as agent for others (for example, savings accounts for military
personnel, State and local income taxes withheld from Federal
employees' salaries, and payroll deductions for the purchase of
368
THE BUDGET FOR FISCAL YEAR 1981
savings bonds by civilian employees of the Government). Such
transactions affect Treasury's cash balances even though they are
not a part of the budget. Increases in the accounts from year to
year serve as a means of financing.
Exchange of casA.—The Government's deposits with the International Monetary Fund (IMF) are considered to be similar to cash
assets. Therefore, the movement of money between the IMF and
the Department of the Treasury is not in itself considered a receipt
or an outlay, borrowing or lending. In a similar manner, the holdings of foreign currency by the Exchange stabilization fund (ESF)
are considered to be cash assets. Changes in these holdings are
outlays only to the extent there is a realized loss, and offsetting
collections only to the extent there is a realized profit on the
exchange.
BASIS FOR BUDGET FIGURES
In general—Outlays are stated in terms of checks issued, including cash paid in lieu of checks, net of offsetting collections received.
The accrual basis is generally used for interest on the public debt
held by private investors; however, interest on the public debt held
by trust and other Government accounts is stated on a cash basis.
When debt securities are issued at a discount (or at a premium),
the difference between the sales price and the redemption value is
treated as interest and is accrued evenly over time in the account
that issued the securities.
Data for 1979—The 1979 column of this budget generally presents the actual transactions and balances as recorded in agency
accounts and as summarized in the central financial reports prepared by the Department of the Treasury.
Data for 1980.—Most of the regular appropriation acts for 1980
have been enacted. (The Legislative Branch appropriation bill was
enacted by reference in the first 1980 continuing resolution.) However, funding for activities covered by the Foreign Assistance, and
Labor, Health, Education, and Welfare appropriation bills was provided in a continuing resolution, which is effective through September 30, 1980. Ongoing activities (with the exception of the
Federal Trade Commission) for which funding was not included in
appropriation bills because of a lack of authorizing legislation were
also provided funding by the same 1980 continuing resolution. The
expiration of the authority for the Federal Trade Commission is
March 15, 1980. Supplemental appropriations will be required in
certain cases for various pay raises, including those of October 1979
and additional amounts requested to meet previously unforeseen
program costs.
THE BUDGET SYSTEM AND CONCEPTS
369
Where the word "enacted" is used with reference to 1980, as in
tables 1 and 5 of Part 9 of the Budget, the amount represents
budget authority already voted by the Congress. In the case of
indefinite appropriations, the enacted sums include the amounts
likely to be required. Where the word "estimate" is used, the
amounts include enacted budget authority and requested supplementals.
Data for 1981.—This budget is complete as to the estimates for
1981. Part I of the Budget Appendix generally includes the proposed appropriation language for the various items identified in
the budget. However, in some instances, estimates are included in
the budget schedules without appropriation language for 1980 and
1981. For these, proposed legislation may be required, or the estimated amounts will be requested later when the requirements are
known. In certain tables of the budget, these items for later transmittal and the related outlays are separately identified. Estimates
of the total requirements for 1980 and 1981 include both the
amounts formally requested and the amounts planned for later
transmittal.
Data for 1982 and 1983.—To place emphasis on longer term
objectives and plans consistent with the multiyear budget planning system, this budget presents 1982 and 1983 estimates. The
data for 1982 and 1983 often reflect specific Presidential policy
determinations and are shown in a number of budget tables.
Allowances.—Lump sum allowances are included in the tables to
cover possible additional changes, such as civilian pay increases
and contingencies. The allowance for civilian agency pay raises
includes an estimate of the additional amounts that will be required for pay raises anticipated in October 1980 for employees of
civilian agencies of the Government. A separate allowance for pay
raises is shown for the military and civilian employees of the
Department of Defense and is included in its figures. These increases could not be reflected in the various program appropriation
requests since the applicable detailed amounts have not yet been
determined.
The allowance for contingencies is shown separately as required
by the Congressional Budget Act. The estimates for relatively uncontrollable programs are zero because the probability of net decreases or net increases for such programs is believed to be equal.
The allowances for other requirements contains estimates for potential requirements related to existing programs and for the possible enactment of legislation not specifically provided for in the
budget, including welfare reform legislation. In a similar manner,
allowances are shown for the Department of Defense. A separate
310-000 0 - 80 - 25
370
THE BUDGET FOR FISCAL YEAR 1981
allowance in the education, training, employment, and social services function is provided, beginning in 1982, for the President's
youth initiative. Beginning in 1983 a separate allowance is provided for national health insurance.
Budget authority and outlays included in the allowance section
are never appropriated as undistributed allowances. These
allowances merely indicate the estimated budget authority and
outlays that may be requested subsequently.
PART 8
THE FEDERAL PROGRAM
BY AGENCY AND ACCOUNT
371
EXPLANATORY NOTE
This tabulation contains information on budget authority (BA) and outlays (O) for each appropriation and fund
account. The budget authority in this tabulation takes
account of certain transfers between appropriations. All
budget authority items are definite appropriations except
where otherwise indicated. Also, budget authority and
outlay data for off-budget Federal entities are presented
at the end of this table. In addition, there is an attribution
of Federal Financing Bank (FFB) outlays to the accounts,
programs, and agencies that are provided credit services
by the FFB.
Functional code numbers are shown for each account as
a cross reference to summary tables 12 and 13 in Part 9,
where the amounts are presented by functional classification. Types of funds in the budget and the deduct entries
at the end of each chapter of this tabulation are explained
in Part 7.
Congressional action in the appropriation process occasionally takes the form of a limitation on the use of a trust
fund or other fund, or of an appropriation to liquidate
contract authority. Amounts for such items which do not
provide budget authority, are included here in parentheses and identified in the stub column, but are not included
in the totals.
372
THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT
373
BUDGET ACCOUNTS LISTING (in thousands of dollars)
1979
actual
Account and functional code
1980
estimate
1981
estimate
Legislative Branch
Senate
Federal funds
General and Special Funds:
Compensation and mileage of the Vice President and
Senators
801
Appropriation, current
Outlays
Expense allowances of the Vice President, President
Pro Tempore, Majority and Minority Leaders and
Majority and Minority Whips
801
Appropriation, current
Outlays
Salaries, officers and employees
801
Appropriation, current
BA
0
6,541
6,425
6,827
6,882
7,310
7,310
BA
0
60
28
45
45
45
BA
132,261
Outlays
0
Office of the Legislative Counsel of the Senate 801
Appropriation, current
BA
110,650
125,759
eg 058
14&62
Outlays
Office of Senate Legal Counsel
Appropriation, current
Outlays
Senate policy committees
Appropriation, current
0
893
800
1,750
350
350
500
1,462
D
Outlays
Automobiles and maintenance
Appropriation, current
Outlays
Inquiries and investigations
Appropriation, current
0
BA
0
64
59
Outlays
Miscellaneous items
Appropriation, current
801
BA
39,086
0
27,342
BA
O
961
500
1,562
1,562
70
32,600
1,725
38,938
36,000
143
109
36,000
84
142
117
0
70
BA
34,673
39,195
z>2
117
0
22,601
45,552
30,776
BA
0
8
6
7
7
30,776
BA
0
39
- 4
40
82
4077
40
BA
0
400
206
194
801
801
801
Public Enterprise Funds:
See footnotes at end of table.
65
65
801
801
Senate restaurant fund (revolving fund)
Outlays
100
1,776
801
Outlays
Folding documents
Appropriation, current
Outlays
Postage stamps
Appropriation, current...
Outlays
Stationery (revolving fund)
Appropriation, current
Outlays
Congressional use of foreign currency, Senate
Appropriation, current
Outlays
1,248
135,948
961
801
BA
135,948
899
"36
975
801
BA
0
45
801
0
62
T H E BUDGET FOR FISCAL Y E A R 1981
374
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Legislative Branch—Con.
Senate—Con.
Recording studio (revolving fund)
Outlays
Senate barber shops (revolving fund)
Outlays
801
0
-48
801
0
Total Federal funds Senate
- 5
BA
0
215,918
169,454
BA
27,699
217,287
241,870
213,336
213,336
27,690
29,254
House of Representatives
Federal funds
General and Special Funds:
Compensation of Members
Appropriation, current
801
D
Outlays
Mileage of Members
Appropriation, current
Outlays
House leadership offices
Appropriation, current
0
27,403
1,523
29,213
29,254
801
BA
0
210
187
210
210
210
210
801
BA
2,222
2,222
2,365
^ 143
Outlays
Salaries, officers and employees
Appropriation, current
801
0
Outlays
Committee employees
Appropriation, current
801
1,966
2,143
2,128
BA
29,479
29,613
o j 951
32,927
0
28,457
28^603
29,634
BA
24,705
24,705
27,000
D
Outlays
0
Committee on Appropriations (Studies and Investigations)
801
Appropriation, current
BA
1,700
23,924
25,624
25,624
2,904
2,950
2,856
°20
Outlays
Committee on the Budget (Studies)
Appropriation, current
Outlays
Office of the Law Revision Counsel
Appropriation, current
0
2,432
2,695
2,570
801
BA
0
261
.151
BA
449
277
249
245
220
465
510
801
*>28
Outlays
Office of the Legislative Counsel
Appropriation, current
0
455
474
459
801
BA
1,939
1,987
2,097
"99
Outlays
Members' clerk hire
Appropriation, current
0
1,472
1,887
BA
117,791
118,308
D
Outlays
See footnotes at end of table.
1,887
801
0
115,991
126,808
g 5QQ
1241612
124,612
375
THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Legislative Branch—Con.
House of Representatives—Con.
Allowances and expenses
Appropriation, current
801
BA
60,741
62,377
7,426
1,029
59,080
A
7,426
73,152
76
76
42,100
2,055
42,000
46,500
-354
-354
-354
-19
-19
-19
-20
-20
-20
- 7
- 7
- 7
A
c
Outlays
Stationery (revolving fund)
Outlays
Special and select committees
Appropriation, current
0
62,223
0
76
65,837
801
801
BA
46,762
0
Outlays
0
Congressional use of foreign currency, House of Representatives
801
Appropriation, current
BA
Outlays
0
Public Enterprise Funds:
House of Representatives restaurant fund (revolving
fund)
801
Outlays
0
Recording studio (revolving fund)
801
Outlays
0
Beauty shop (revolving fund)
801
Outlays
0
House barber shops (revolving fund)
801
Outlays
0
Office of the attending physician (revolving fund)
801
Outlays
0
Total Federal funds House of Representatives
38,908
41,850
800
477
- 1
z i
BA
O
315,962
303,721
337,378
323,891
343,924
323,960
BA
2,353
2,150
O
1,773
2,749
°116
3,694
Joint Items
Federal funds
General and Special Funds:
Joint Economic Committee
.Appropriation, current
Outlays
Joint Committee on Printing
Appropriation, current
. Outlays
American Indian Policy Review Commission
. Outlays
Statements of appropriations, Senate
Appropriation, current
Outlays
Joint Committee on Taxation
Appropriation, current
Outlays
See footnotes at end of table.
801
2,150
801
BA
O
716
688
864
1267
794
794
801
O
3
BA
O
6
13
13
13
13
BA
2,375
2,670
O
2,290
2,455
D
134
2,478
801
801
2,403
T H E BUDGET FOR FISCAL Y E A R 1981
376
BUDGET ACCOUNTS LISTING (in thousands of
dollars)—Continued
1979
actual
Account and functional code
Legislative
1980
estimate
1981
estimate
Branch—Con.
Joint Items—Con.
Office of the Attending Physician
Appropriation, current
Outlays
General expenses, Capitol police
Appropriation, current
Outlays
Capitol Police Board
Appropriation, current
Outlays
Education of pages
Appropriation, current
Outlays
Official mail costs
Appropriation, current
Outlays
Capitol Guide Service
Appropriation, current
801
BA
0
465
429
459
413
504
454
BA
0
750
599
810
729
834
751
BA
0
1,421
1,372
1,263
1,137
1,352
1,217
BA
0
217
196
220
220
258
258
801
801
801
801
BA
0
37,870
50,707
50,707
36,633
36,633
801
Outlays
Statements of appropriations, House of Representatives
801
Appropriation, current
Outlays
Total Federal funds Joint Items
BA
593
0
527
613
z>42
655
664
664
BA
0
6
13
7
13
7
BA
0
8,902
45,747
60,458
61,320
45,885
45,344
BA
11,368
12,117
13,544
Congressional Budget Office
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current
801
M14
Outlays
0
10,139
12,000
13,100
BA
2,490
3,401
0
2,278
2,836
c
30
° 142
2,998
210
443
210
210
Architect of the Capitol
Federal funds
General and Special Funds:
Office of the Architect of the Capitol: Salaries
Appropriation, current
Outlays
Contingent expenses
Appropriation, current
Outlays
Capitol buildings
Appropriation, current
Outlays
See footnotes at end of table.
801
3,394
801
BA
0
210
207
801
BA
6,380
7,394
c
226
0
6,842
8,029
°82
8,675
8,681
THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT
377
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Legislative Branch—Con.
Architect of the Capitol—Con.
Capitol grounds
Appropriation, current
801
BA
2,644
4,062
c
2,243
100
D
1
Outlays
West central front of the Capitol
Outlays
Master plan for future development of the
grounds and related areas
Outlays
Acquisition of property as an addition to the
grounds
Outlays
Senate office buildings
Appropriation, current
0
2,780
3,466
0
181
254
0
77
103
2,781
801
Capitol
801
Capitol
801
36
0
801
BA
10,983
11,263
c
13,818
11,577
Outlays
0
Construction of an extension to the New Senate Office
Building
801
Appropriation, current
BA
Outlays
0
Extension of additional Senate Office Building site
13,496
498
12,170
52,583
22,402
16,527
32,504
801
78
Outlays
0
Acquisition of property as a site for parking facilities
for the United States Senate
801
Outlays
0
Plans for garage and related facilities for the United
States Senate
801
0
Outlays
Senate garage
801
BA
49
196
171
c
Outlays
House office buildings
O
166
206
189
20,843
18,484
18,010
801
BA
c
1,500
...
...
1,300
200
14,181
17,629
801
BA
13,355
c
Outlays
Expansion of facilities, Capitol Power Plant
Outlays
See footnotes at end of table.
18,620
81
BA
0
700
22,561
20,157
O
Outlays
Acquisition of property, construction, and equipment,
additional House Office Building
801
Outlays
Installation of solar collectors in House office buildings
801
Outlays
Capitol Power Plant
186
10
O
11,149
O
19
801
125
14,427
228 ...
17,514
THE BUDGET FOR FISCAL YEAR 1981
378
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Legislative Branch—Con.
Architect of the Capitol—Con.
Modifications and enlargement, Capitol Power
Plant
801
Outlays
0
Alterations and improvements, buildings and grounds,
to provide facilities for the physically handicapped
801
Outlays
0
Structural and mechanical care, Library buildings and
grounds
801
Appropriation, current
BA
Outlays
0
Library of Congress James Madison Memorial Building
801
Outlays
O
Total Federal funds Architect of the Capitol
4,096
3,434
143
937
6,027
1,000
2,942
4,410
c
174
11,437
2,428
5,100
11,460
14,397
8,328
3,676
BA
0
61,798
117,433
75,287
93,024
108,284
118,426
BA
94,182
102,380
110,895
Library of Congress
Federal funds
General and Special Funds;
Salaries and expenses
Appropriation, current
503
c
379
" 4,600
Outlays
Copyright Office.- Salaries and expenses
Appropriation, current
0
89,039
112,296
110,571
8,622
9,251
10,612
376
BA
"781
Outlays
0
National Commission on New Technological Uses of
Copyrighted Works: Salaries and expenses
376
Outlays
0
Congressional Research Service: Salaries and expenses
801
Appropriation, current
BA
8,479
10,636
43
25,553
14
27,090
D
Outlays
0
Books for the blind and physically handicapped: Salaries and expenses
503
Appropriation, current
BA
10,574
31,589
1,600
24,607
29,081
31,673
34,736
34,337
35,290
c
13
° 183
Outlays
O
Collection and distribution of library materials (special
foreign currency program)
503
Appropriation, current
BA
Outlays
See footnotes at end of table.
O
27,693
42,495
34,829
3,860
3,563
3,980
3,246
"17
4,369
4,073
THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT
379
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Legislative Branch—Con.
Library of Congress—Con.
Furniture and furnishings
Appropriation, current
Outlays
Payments to copyright owners
Appropriation, permanent, indefinite
Outlays
Oliver Wendell Holmes devise fund
Appropriation, permanent, indefinite
Outlays
503
BA
0
7,694
870
4,160
4,306
21,845
4,511
15,195
17,293
17,280
-663
21,808
17,266
376
BA
0
503
BA
0
3
12
23
25
3
20
Intragovernmental Funds:
Consolidated working fund
Outlays
503
0
-205
BA
O
6,680
5,882
5,082
6,069
5,339
4,441
Total Federal funds Library of Congress
BA
0
189,845
156,557
202,380
240,692
213,809
214,950
Total Trust funds Library of Congress
BA
0
6,680
6,069
5,882
5,339
5,082
4,441
BA
0
11,476
13,646
22,145
12,774
13,398
21,550
BA
0
73,961
74,500
89,978
65,203
76,434
81,400
BA
23,613
23,000
A
790
° 401
26,200
0
23,547
23,265
^ 600
Trust funds
Gift and trust fund accounts
Appropriation, permanent, indefinite
Outlays
-1,877
1,433
503
Government Printing Office
Federal funds
General and Special Funds:
Printing and binding
801
Appropriation, current
Outlays
Congressional printing and binding
801
Appropriation, current
Outlays
Office of Superintendent of Documents: Salaries and
expenses
806
Appropriation, current
Outlays
Acquisition of site and general plans and designs of
buildings
806
Appropriation, current
BA
Outlays
0
Project planning
806
Outlays
0
A
26,062
190
20,869
20,869
41
Intragovernmental Funds:
Government Printing Office revolving fund
Outlays
806
Total Federal funds Government Printing Office...
See footnotes at end of table.
O
BA
0
11,908
-2,047
-2,050
109,050
113,432
112,337
111,691
159,192
148,021
THE BUDGET FOR FISCAL YEAR 1981
380
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Legislative Branch—Con.
General Accounting Office
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current
801
Outlays
BA
185,906
0
179,613
200,300
D
8,767
207,466
218,070
216,426
United States Tax Court
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current
752
Outlays
Construction
Outlays
752
Trust funds
Tax Court judges survivors annuity fund
Appropriation, permanent, indefinite
Outlays
602
BA
8,803
0
8,388
9,391
D
360
9,681
10,397
10,353
0
221
5
BA
0
109
49
123
59
128
59
9,751
9,686
10,397
10,353
Total Federal funds United States Tax Court
BA
0
8,803
8,609
Total Trust funds United States Tax Court
BA
0
109
49
123
59
128
59
Commission on Security and Cooperation in Europe:
Salaries and expenses
801
Appropriation, current
BA
Outlays
0
Botanic Garden: Salaries and expenses
801
Appropriation, current
BA
521
356
264
415
450
471
1,448
1,464
c
70
1,528
2,092
1,885
471
490
489
Other Legislative Branch Agencies
Federal funds
General and Special Funds:
Outlays
Copyright Royalty Tribunal: Salaries and expenses
0
1,440
376
Appropriation, current
BA
805
Outlays
O
Cost-Accounting Standards Board: Salaries and expenses
801
Appropriation, current
BA
Outlays
0
499
488
1,850
1,063
1,300
1,280
See footnotes at end of table.
z>19
961
1,004
THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT
381
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Legislative Branch—Con.
Other Legislative Branch Agencies—Con.
Temporary Commission on Financial Oversight of the
District of Columbia: Salaries and expenses
801
BA
500
7,500
A
Outlays
O
5,130
BA
9,700
6,500
5,040
1,500
942
* 3,500
11,000
14,200
A
Office of Technology Assessment: Salaries and expenses
801
Z>284
O
Outlays
Trust funds
Office of Technology Assessment: Contributions and
donations
801
BA
Appropriation, permanent, indefinite
0 ...
Outlays
9,211
11,097
14,273
6
5
5
5
5
Total Federal funds Other Legislative Branch
BA
0
Total Trust funds Other Legislative Branch Agencies
Summary
Federal funds:
(As shown in detail above)
Deductions for offsetting receipts:
Intrafund transactions
BA
0 ...
BA
0
803
BA
0
902 BA
0
Proprietary receipts from the public
376 BA
0
503 BA
5
5
5
5
1,129,376
1,300,494
1,311,637
1,097,995
1,338,248
1,326,480
-726
—700
-700
-548
-1,316
-1,283
-14,651
-6,510
-6,525
BA
1,105,716
1,291,371
1,302,481
1,074,335
1,329,125
1,317,324
BA
6,795
6,010
5,215
6,118
5,403
4,505
-3,713
-3,700
-3,700
0
503
BA
0
6
-7,019
0
See footnotes at end of table.
22,564
-648
O
Deductions for offsetting receipts:
Proprietary receipts from the public
18,193
21,348
-597
801 BA
Trust funds:
(As shown in detail above)
21,872
17,699
-716
0
Total Federal funds
21,824
THE BUDGET FOR FISCAL YEAR 1981
382
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
estimate
1980
estimate
1979
actual
Account and functional code
Legislative Branch—-Con.
Summary—Con.
902 BA
0
Total Trust funds
Total Legislative Branch
-180
-180
-180
BA
2,902
2,130
0
2,225
1,523
625
BA
1,108,618
1,293,501
1,303,816
0
1,076,560
1,330,648
1,317,949
9,690
10,250
1,335
The Judiciary
Supreme Court of the United States
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current
752
BA
11,140
"466
Outlays
Care of the buildings and grounds
Appropriation, current
0
8,165
BA
1,475
10,486
10,840
2,157
1,526
752
c
Outlays
0
Total Federal funds Supreme Court of the United
States
BA
0
1,571
48
2,550
1,888
11,165
12,921
12,666
9,736
13,036
12,728
1,121
1,719
1,839
Court of Customs and Patent Appeals
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current
752
BA
"93
Outlays
0
1,081
1,771
BA
3,095
4,850
1,838
Customs Court
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current
752
Outlays
0
2,999
BA
0
"241
5,036
4,976
5,040
3,570
5,230
5,598
3,374
5,348
5,591
Court of Claims
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current.:
Outlays
See footnotes at end of table.
752
THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT
383
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
The Judiciary—Con.
Courts of Appeals, District Courts, and
other Judicial Services
Federal funds
General and Special Funds:
Salaries of judges
Appropriation, current
752
BA
41,458
48,500
6,300
54,852
38,972
54,261
54,840
BA
175,495
195,700
* 13,428
216,688
0
169,176
207,320
215,688
BA
0
24,800
26,000
26,000
21,607
26,463
26,554
BA
0
24,750
34,000
36,937
28,844
35,783
36,910
BA
0
35,514
37,800
42,034
31,447
41,859
41,634
BA
19,441
22,000
23,851
0
18,539
22J27
23,804
BA
36,658
58,500
65,299
0
38,117
60^335
65,117
3,500
3,645
3,150
3,630
0
Outlays
Salaries of supporting personnel
Appropriation, current
Outlays
Defender services
Appropriation, current
Outlays
Fees of jurors and commissioners
Appropriation, current
Outlays
Travel and miscellaneous expenses
Appropriation, current
Outlays
Salaries and expenses of magistrates
Appropriation, current
Outlays
.
Bankruptcy courts, salaries and expenses
Appropriation, current
Outlays
Services for drug dependent offenders
Appropriation, current
Outlays
Space and facilities
Appropriation,current
Outlays
Furniture and furnishings
Appropriation, current
Outlays
Speedy trial planning
Outlays
Pretrial services agencies, The Judiciary
Appropriation, current
Outlays
Special rail reorganization court
Outlays
0
752
752
752
752
752
752
752
BA
0
752
BA
0
106,900
117,500
26364
90,434
115,245
125,038
BA
0
4,200
752
>
l
—
>
m
752
0
77
193
224
752
BA
0
5,000
3,935
3,039
564
752
0
Total Federal funds Courts of Appeals, District
Courts, and other Judicial Services
BA
See footnotes at end of table.
2 200
UO
474,216
287
567.425
M89
595,670
THE BUDGET FOR FISCAL YEAR 1981
384
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
The Judiciary—Con.
Administrative Office of the United States
Courts
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current
752
Outlays
BA
12,899
0
12,349
15,100
"747
15,621
16,906
15,847
15,621
16,906
16,795
8,500
9,376
16,795
Intragovemmental Funds:
Consolidated working fund
Outlays
752
0
32
Total Federal funds Administrative Office of the
United States Courts
BA
0
12,899
12,381
Federal Judicial Center
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current
752
BA
8,279
"202
Outlays
0
8,495
8,540
9,199
Bicentennial Expenses, The Judiciary
Federal funds
General and Special Funds:
Bicentennial activities
Outlays
806
0
113
135
138
7,029
1,920
8,210
2,260
9,400
2,300
Judiciary Trust Funds
Trust funds
Judicial survivors' annuities fund
Appropriation, permanent, indefinite
Outlays
602
BA
0
Summary
Federal funds:
(As shown in detail above)
Deductions for offsetting receipts:
Proprietary receipts from the public
BA
0
750
BA
Q
902
BA
Q
Total Federal funds
See footnotes at end of table.
BA
0
514,345
479,437
617,267
622,389
647,091
648,821
-if641
-lt648
-1,648
™
-52
512,652
477,744
r*
-60
rr
-65
615,559
620,681
645,378
647,108
THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT
385
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
The Judiciary—Con.
Summary—Con.
Trust funds:
(As shown in detail above)
BA
0
T o y The Judiciary
BA
0
7,029
1,920
519,681
479,664
8,210
2,260
623,769
622,941
9,400
2,300
654,778
649,408
Executive Office of the President
Compensation of the President
Federal funds
General and Special Funds:
Compensation of the President
Appropriation, current
Outlays
802
BA
0
250
250
250
250
250
250
The White House Office
Federal
General and Special Funds:
Salaries and expenses
Appropriation, current
802
Outlays
BA
17,163
20,627
15,909
18,210
"763
18,855
0
BA
2,683
2,957
C
3,204
0
2,667
"72
3,110
3,204
20,526
Executive Residence at the White House
Federal funds
General and Special Funds:
Operating expenses
Appropriation, current
802
Outlays
81
Official Residence of the Vice President
Federal funds
General and Special Funds:
Operating expenses
Appropriation, current
Outlays
802
BA
0
129
119
233
214
168
183
BA
1,315
1,M
1,551
0
1,207
1,426
1,510
Special Assistance to the President
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current
Outlays
See footnotes at end of table.
802
THE BUDGET FOR FISCAL YEAR 1981
386
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional ode
1980
estimate
1981
estimate
Executive Office of the President—Con.
Council of Economic Advisers
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current
802
Outlays
BA
2,042
2,075
2,197
0
1,822
2,296
2,193
BA
0
3,026
2,955
3,126
3,126
0
1,296
702
BA
0
3,026
4,251
3,126
3,828
d 27
Council on Environmental Quality and Office
of Environmental Quality
Federal funds
General and Special Funds:
Council on Environmental Quality and Office of Environmental Quality
802
Appropriation, current
Outlays
3,436
3,436
Intragovernmental Funds:
Consolidated working fund
Outlays
802
Total Federal funds Council on Environmental
Quality and Office of Environmental Quality
3,436
3,436
Council on International Economic Policy
Federal funds
General and Special Funds:
Salaries and expenses
802
JOutlays
0
-1
Council on Wage and Price Stability
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current
802
BA
4,502
8,483
* 9,770
fl
Outlays...
0
3,084
BA
2,544
516
* 464
9,362
s
491
9,845
^25
2,600
2,968
Domestic Policy Staff
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current
802
D
0ut|
122
ays
See footnotes at end of table.
0
2,757
2,815
2,984
THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT
387
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Executive Office of the President—Con.
National Security Council
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current
802
BA
Outlays
3,525
3,557
3,725
0
3,451
"101
3,650
3,725
BA
7,462
7,920
12,116
0
6,914
7,302
10,930
32,400
1,499
32,478
26,871
32,205
31,004
3,000
3,000
2,700
3,042
3,000
2,700
32,044
36,899
35,178
29,913
35,205
33,704
BA
0
31,919
36,899
35,178
29,788
35,205
33,704
BA
2,496
2,625
"87
2,948
0
3,097
3,000
3,000
Office of Administration
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current
802
Outlays
"185
Office of Management and Budget
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current
802
BA
29,044
D
Outlays
0
Office of Federal Procurement Policy: Salaries and
expenses
802
Appropriation, current
BA
Outlays
0
Summary
Federal funds:
(As shown in detail above)
Deductions for offsetting receipts:
Proprietary receipts from the public
BA
0
802
Total Office of Management and Budget
BA
Office of Science and Technology Policy
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current
Outlays
See footnotes at end of table.
802
THE BUDGET FOR FISCAL YEAR 1981
388
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
estimate
1980
estimate
1979
actual
Account and functional code
Executive Office of the President—Con.
Office of the United States Trade
Representative
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current
802
BA
2,707
9,271
8,158
"260
9,009
3,035
8,168
196
134
1,044
138
1,240
272
BA
81,888
101,241
107,409
0
79,715
100,244
104,524
Outlays..
Special Action Office for Drug Abuse
Prevention
Federal funds
General and Special Funds:
554
Salaries and expenses
Outlays
Special fund for drug abuse
Outlays
554
Total Federal funds Special Action Office for
Drug Abuse Prevention
0
Summary
Federal funds:
(As shown in detail above)
Deductions for offsetting receipts:
Proprietary receipts from the public
802
BA
0
Total Executive Office of the President
-1P5
BA
81,763
101,241
107,409
0
79,590
100,244
104,524
Funds Appropriated to the President
Appalachian Regional Development Programs
Federal funds
General and Special Funds:
Appalachian regional development programs
Appropriation, current
452
BA
378,700
170,000
356,500
r
Outlays
198,800
0
303,046
300,800
331,000
0
1,291
1,200
747
BA
0
378,700
356,500
368,800
304,337
302,000
331,747
Public Enterprise Funds:
Appalachian housing fund
Outlays
452
Total Federal funds Appalachian Regional Development Programs
See footnotes at end of table.
THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT
389
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Funds Appropriated to the President—Con.
Disaster Relief
Federal funds
General and Special Funds:
Disaster relief
Appropriation, current
453
Outlays
Summary
Federal funds:
(As shown in detail above)
Deductions for offsetting receipts-.
Proprietary receipts from the public
BA
386,772
0
276,992
BA
0
386,772
276,992
A
A
193,600
314,000
241,397
136,000
507,600
377,397
375,570
A
250,226
178,000
375,570
428,226
450 BA
902
Total Disaster Relief
-300
BA
99
0
BA
0
386,772
276,992
-22
507,278
377,075
375,248
427,904
' 146,500
'140,375
'266,000
Energy Security Programs
Trust funds
Energy security trust fund:
(Energy supply)
271
(Appropriation, current)
BA
(Outlays)
0
(Energy conservation)
272
(Appropriation, current)
BA
(Outlays)
0
(Energy emergency preparedness)
274
(Appropriation, current)
BA
(Outlays)
0
(Ground transportation)
401
(Appropriation, current)
BA
(Outlays)
i
'
0
(Public assistance and other income supplements)
604
(Appropriation, current)
BA
(Outlays)
'
0
Total Energy security trust fund
Summary
Federal funds:
Deductions for offsetting receipts:
Proprietary receipts from the public
Total Federal funds
See footnotes at end of table.
BA
0
271
0
BA
BA
0
'245,875
' 111,000
' 14,450
' 415,000
'378,650
' 8,600
3,100
'15,100
'11,200
' U76>0??
'100,000
' 1,500,000
'617,000
' 1,600,000
'1,600,000
'2,400,000
'2,400,000
3,142,100
1,857,925
4,596,100
3,652,725
y
r
-8,800
-8,800
-8,800
THE BUDGET FOR FISCAL YEAR 1981
390
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
estimate
1980
estimate
1979
actual
Account and functional code
Funds Appropriated to the President—Con.
Energy Security Programs—Con.
Trust funds:
(As shown in detail above)
Total Energy Security Programs
BA
3,142,100
4,596,100
0
1,857,925
3,652,725
BA
3,142,100
4,587,300
1,857,925
3,643,925
0
Unanticipated Needs
Federal funds
General and Special Funds:
Unanticipated needs
Appropriation, current
Outlays
802
BA
0
1,450
1,000
1,000
1,029
1,293
1,000
Expenses of Management Improvement
Federal funds
General and Special Funds:
Expenses of management improvement
Outlays
802
427
0
Foreign Assistance
International Security Assistance
Federal funds
General and Special Funds:
Military assistance
Appropriation, current
152
BA
83,375
BA
0
125,800
110,200
K
Reappropriation
Outlays
International military education and training
Appropriation, current
152
139,641
195,000
BA
BA
0
150,000
28,400
27,900
Reappropriation
Outlays
Military assistance, South Vietnamese Forces
Outlays
Foreign military credit sales
Appropriation, current
105,000
* 32,500
5,705
27,522
25,500
27,600
152
0
500
- 2
152
BA
1,024,500
659,000
* 714,000
B
Outlays
Assistance for relocation of facilities in Israel
Appropriation, current
Contract authority, permanent, indefinite
Outlays
See footnotes at end of table.
0
640,259
BA
BA
0
800,000
10,000
540,000
515,000
152
235,556
31,300
411,000
318,000
391
THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Funds Appropriated to the President—Con.
Foreign Assistance—Con.
International Security Assistance—Con.
Economic support fund
Appropriation, current
151
s
BA
Indefinite
BA
Reappropriation
Outlays
BA
0
2,281,500
100,000
* 80,000
1,927,000
* 2,080,500
Peacekeeping operations
Appropriation, current, indefinite
1,728,773
23,953
1,857,000
* 100,000
^ 50,000
1,994,000
*30,000
151
Reappropriation
Outlays
BA
27,243
BA
0
11,758
25,940
33,000
32,000
0
-1,849
-2,300
-1,837
6,217,758
(8,544,542)
7,110,679
9,000,000
(8,300,000)
9,500,000
(9,500,000)
9,500,000
4,387,781
3,195,209
2,957,000
2,591,584
3,209,700
3,064,763
-246,505
-245,000
21,100
* 25,000
Public Enterprise Funds:
Liquidation of foreign military sales fund
Outlays
152
Trust funds
Advances, foreign military sales
155
Contract authority, permanent, indefinite
BA
Liquidation of contract authority, permanent
Outlays
0
Summary
Federal funds:
(As shown in detail above)
BA
0
Deductions for offsetting receipts:
Proprietary receipts from the public
152
BA
0
902 BA
0
Total Federal funds
Trust funds:
(As shown in detail above)
Deductions for offsetting receipts:
Proprietary receipts from the public
-72,037
-75,000
9,500,000
245,000
-75,000
BA
4,069,239
2,875,209
2,637,000
0
2,273,042
2,889,700
2,744,763
BA
6,217,758
9,000,000
9,500,000
0
7,110,679
9,500,000
9,500,000
BA -8,544,542
-8,300,000
-9,500,000
155
0
Total Trust funds
BA
-2,326,784
700,000
-1,433,863
1,200,000
Total International Security Assistance
BA
1,742,455
3,575,209
2,637,000
839,179
4,089,700
2,744,763
See footnotes at wwl nf tihla
0
0
THE BUDGET FOR FISCAL YEAR 1981
392
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Funds Appropriated to the President—Con.
Foreign Assistance—Con.
International Development Assistance
Multilateral Assistance
Federal funds
General and Special Funds:
Contribution to the International bank for reconstruction and development
151
Appropriation, current
BA
Outlays
0
Contribution to the International development association
151
Appropriation, current
BA
0
Outlays
Contribution to the Internationa! finance corpora151
tion
BA
Appropriation current
0
Outlays
Contribution to the Inter-American development
bank
151
Appropriation, current
BA
163,079
825,777
20,000
16,298
82,578
20,000
1,258,000
1,092,000
375,621
500,000
40,045
33,448
25,599
22,299
763,728
869,556
K
1,080,000
571,600
22,299
143,023
* 226,547
Outlays
Contribution to the Asian development bank
Appropriation, current
0
235,711
267,000
BA
265,000
371,077
250,921
151
25,196
* 111,250
Outlays
Contribution to the African development fund
Appropriation, current
0
29,369
51,664
BA
25,000
41,667
77,974
151
* 41,667
Outlays
0
Contribution to the African development bank
151
Appropriation, current
BA
Outlavs
0
Payment to the International Fund for Agricultural
Development
151
Outlays
0
International organizations and programs
151
Appropriation, current
BA
4,800
2,000
K
40,000
20,000
260,000
261,640
200,102
243,365
246,503
BA
0
2,774,852
3,495,165
1,909,720
882,700
1,188,906
1,252,084
BA
1,132,000
1,218,680
837,449
881,227
K
Outlays
0
Total Federal funds Multilateral Assistance..
17,987
17,987
244,050
Bilateral Assistance
Federal funds
General and Special Funds:
Functional development assistance program
Appropriation, current
Outlays
See footnotes at end of table.
151
* 1,414,202
0
1,017,410
393
THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1980
estimate
1979
actual
Account and functional code
1981
Funds Appropriated to the President—Con.
Foreign Assistance—Con.
International Development Assistance—Con.
151
Sahel development program
Appropriation, current
Outlays
Payment to the Foreign Service retirement and disability fund
153
Appropriation, current
Indefinite
Outlays
75,000
100,000
0
15,923
34,482
BA
BA
0
25,676
25,676
25,296
25,676
25,676
25,296
A
* 113,442
52,066
1,020
* 1,020
American schools and hospitals abroad
Appropriation, current, indefinite
151
BA
25,000
20,000
0
26,047
18,032
BA
37,157
71,800
Reappropriation
BA
Outlays
0
Operating expenses of the International Development
Cooperation Agency
151
Appropriation, current
BA
9,634
"15,000
Outlays
International disaster assistance
Appropriation, current
17,820
151
* 25,000
77,305
53,987
263,000
252,500
Outlays
0
Institute for Scientific and Technological Cooperation
151
Appropriation, current
BA
43,077
D
8,587
269,794
285,161
229,810
23,750
* 95,000
Outlays
Miscellaneous appropriations
Outlays
0
151
7,000
32,000
0
20,958
20,209
13,018
0
20,524
33,427
13,537
0
2,787
2,764
2,790
0
-64,132
-55,706
—51,827
10,000
15,964
17,000
9,829
14,724
16,512
Public Enterprise Funds:
Development loans-revolving fund
Outlays
Housing and other credit guaranty programs
Outlays
Overseas Private Investment Corporation
Outlays
Inter-American Foundation
Appropriation, current, indefinite
Outlays
151
151
151
151
BA
0
Intragovernmental Funds:
Advance acquisition of property-revolving fund
151
Outlays
0
Office of the Inspector General of Foreign Assistance
151
Outlays
0
Consolidated working fund
151
Outlays
0
See footnotes at end of table.
286
139
-3
394
THE BUDGET FOR FISCAL YEAR 1981
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Funds Appropriated to the President—Con.
Foreign Assistance—Con.
international Development Assistance—Con.
Trust funds
Miscellaneous trust funds
Appropriation, permanent, indefinite
Outlays
151
BA
0
27,205
26,981
21,674
21,674
25,000
25,000
Total Federal funds Bilateral Assistance
BA
0
1,566,967
1,179,141
1,748,477
1,330,093
1,998,740
1,466,860
Total Trust funds Bilateral Assistance
BA
0
27,205
26,981
21,674
21,674
25,000
25,000
BA
0
4,341,819
2,061,841
5,243,642
2,518,999
3,908,460
2,718,944
Summary
Federal funds:
(As shown in detail above)
Deductions for offsetting receipts:
Proprietary receipts from the public
150 BA
q
—854
—294
— 2B4
151
qA
-314,388
-327,673
-373,867
902
®A
-270,616
-363,925
-393,869
BA
0
3,755,961
1,475,983
4,551,750
1,827,107
3,140,430
1,950,914
BA
0
27,205
26,981
21,674
21,674
25,000
25,000
Total Federal funds
Trust funds:
(As shown in detail above)
Deductions for offsetting receipts:
Proprietary receipts from the public
nn.
151 BA
_
Total Trust funds
BA
0
Total International Development Assistance
BA
0
3,755,962
1,475,760
4,551,750
1,827,107
BA
38,500
48,758
0
46,702
40,543
2 5 m
1
-223
3,140,430
1,950,914
International Narcotics Control Assistance
Federal funds
General and Special Funds:
International narcotics control
Appropriation, current
151
K
Outlays
See footnotes at end of table.
38,613
42,448
395
THE FEDERAL PROGRAM BY AGENCY A N D ACCOUNT
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1981
estimate
1980
estimate
Funds Appropriated to the President—Con.
Foreign Assistance—Con.
Contingencies
Federal funds
General and Special Funds:
President's foreign assistance contingency fund
151
Appropriation, current, indefinite
Outlays
Total Federal funds Foreign Assistance..
Total Trust funds Foreign Assistance
BA
3,000
0
3,031
1,470
BA
7,866,700
7,475,717
5,816,043
0
3,798,758
4,758,820
4,738,125
,
BA
-2,326,783
700,000
0
— 1,434,086
1,200,000
BA
99,179
105,000
°795
118,800
0
93,900
103,865
115,552
.
Peace Corps
Federal funds
General and Special Funds:
Operating expenses
Appropriation, current..
151
Outlays
Trust funds
Miscellaneous trust funds
Appropriation, permanent, indefiniteOutlays
151
Summary
Federal funds:
(As shown in detail above)
Deductions for offsetting receipts:
Proprietary receipts from the public
481
248
92
248
248
BA
99,179
105,795
118,800
0
93,900
103,865
115,552
BA
...
0
150
BA
-9
-55
-55
0
Total Federal funds..
Trust funds:
(As shown in detail above)..
BA
99,170
105,740
118,745
0
93,891
103,810
115,497
481
248
248
248
BA
92
0
Deductions for offsetting receipts:
Proprietary receipts from the public
151
BA
o
Total Trust funds
See footnotes at end of table.
111
BA
- 7 40
108
92
-122
108
BA
99,170
105,851
118,853
0
93,983
103,688
115,605
0
Total Peace Corps....
-370
•••
T H E B U D G E T FOR FISCAL YEAR 1981
396
BUDGET ACCOUNTS LISTING (in thousands of
dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Funds Appropriated to the President—Con.
International Commodity Agreements
Federal funds
Genera! and Special Funds:
Contributions to international buffer stocks
155
Appropriation, current
BA
Outlays
0
K
88,000
5,000
K
Israel-United States Binational Agreements
Federal funds
General and Special Funds:
Israel-United States binational agricultural research
and development fund
352
Appropriation, current
BA
Outlays
0
40,000
40,000
Petroleum Reserves
Federal funds
General and Special Funds:
Petroleum reserves:
(Energy supply)
(Outlays)
0
67,568
161,442
0
67,568
161,442
Summary
Federal funds:
(As shown in detail above)
Deductions for offsetting receipts:
Proprietary receipts from the public
271
271 BA
-525,208
742,680
BA
-525,208
742,680
0
-457,640
904,122
BA
9,677,201
9,458,504
7,856,243
0
5,486,984
6,717,136
6,707,680
0
Total Petroleum Reserves
Summary
Federal funds:
(As shown in detail above)
Deductions for offsetting receipts:
Proprietary receipts from the public
150 BA
0
151 BA
0
152 BA
0
271 BA
0
-863
-314,388
-246,505
-525,208
327,673
-245,000
0
BA
0
See footnotes at end of table.
-245,000
J
450 BA
Total Federal funds
-373,867
742,680
0
0
-349
-349
BA
902 BA
.
-342,653
- 8,800
-300
-300
-438,947
-468,891
8,247,584
9,188,915
6,759,036
4,057,367
6,447,547
5,610,473
THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT
397
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Funds Appropriated to the President—Con.
Summary—Con.
Trust funds:
(As shown in detail above)
BA
0
Deductions for offsetting receipts:
Proprietary receipts from the public
6,244,963
12,164,255
14,121,348
7,137,752
11,379,847
13,177,973
151 BA
O
155 BA
0
-27,204
-22,044
-25,140
-8,544,542
-8,300,000
-9,500,000
BA
0
-2,326,783
3,842,211
4,596,208
-1,433,994
3,057,803
3,652,833
5,920,801
13,031,126
11,355,244
2,623,373
9,505,350
9,263,306
Total Trust funds
BA
0
Total Funds Appropriated to the President..
Department of Agriculture
Office of the Secretary
Federal funds
General and Special Funds:
Office of the Secretary
Appropriation, current
352
Outlays
BA
4,395
4,470
°409
5,249
0
4,366
4,770
5,139
19,029
19,457
23,761
Departmental Administration
Federal funds
General and Special Funds:
Departmental administration
Appropriation, current
352
«... BA
C22
D
Outlays
0
19,364
0
14,174
0
15,872
BA
0
BA
32,130
1,086
20,166
23,305
19,029
20,565
23,761
49,410
20,166
23,305
34,474
1,223
38,584
Intragovernmental Funds:
Working capital fund
Outlays
Miscellaneous consolidated working funds
Outlays
352
352
Total Federal funds Departmental Administration.
Office of the Inspector General
Federal funds
General and Special Funds:
Office of the Inspector General
Appropriation, current
352
0
G
Outlays
See footnotes at end of table.
0
32,487
477
35,557
37,955
THE BUDGET FOR FISCAL YEAR 1981
398
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
estimate
1980
estimate
1979
actual
Account and functional code
Department of Agriculture—Con.
Office of the General Counsel
Federal funds
General and Special Funds:
Office of the General Counsel
Appropriation, current
352
Outlays
BA
10,598
0
10,199
11,000
D
696
11,492
12,162
402,739
197,773
'5,000
193,383
'1,000
11,957
Science and Education Administration
Federal funds
General and Special Funds:
Agricultural research
Appropriation, current
Reappropriation
Outlays
Cooperative research
Appropriation, current
352
Outlays
Technical information systems
Outlays
Buildings and facilities
Outlays
Library facilities
Outlays
Intragovernmental Funds:
Consolidated working fund
Outlays
Trust funds
Miscellaneous contributed funds
343,329
BA
0
2,000
330,119
369,920
c
1,106
0
8,144
2,000
335,006
BA
174,395
189,045
0
153,069
176,492
BA
0
275,399
272,936
285,537
261,732
298,134
275,968
BA
7,527
8,789
0
7,491
7,835
° 213
7,505
36,740
12
11,153
18,074
324,927
352
Outlays
Extension activities
BA
352
352
7,913
352
BA
0
352
0
1
0
235
15
BA
0
1,754
1,027
1,308
976
1,017
1,250
BA
O
839,390
763,863
863,800
791,903
912,435
821,265
BA
0
1,754
1,027
1,308
976
1,017
1,250
352
352
Outlays
Total Federal funds Science and Education Ad-
Total Trust funds Science and Education Admin-
See footnotes at end of table.
399
THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Department of Agriculture—Con.
Economics, Statistics, and Cooperatives
Service
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current
352
BA
82,501
87,625
c
3
4,651
98,975
91,910
98,606
0
Outlays
Trust funds
Miscellaneous contributed funds
Appropriation, permanent, indefinite
Outlays
0
82,260
352
BA
0
48
319
70
70
70
70
1,009
1,045
2,110
1,128
1,484
2,040
World Food and Agricultural Outlook and
Situation Board
Federal funds
General and Special Funds:
World food and agricultural outlook and situation
board
352
Appropriation, current
BA
Outlays
0
"66
Foreign Agricultural Service
Federal funds
General and Special Funds:
Foreign Agricultural Service
Appropriation, current
352
BA
53,917
54,631
0
708
61,760
Outlays
0
Salaries and expenses (special foreign currency program)
352
Outlays
0
48,942
54,895
62,162
Total Federal funds Foreign Agricultural Service..
BA
0
53,917
55,339
61,760
49,631
55,395
62,662
BA
456
2,547
D 17
6,868
Outlays
0
Scientific activities overseas (special foreign currency
program)
352
Appropriation, current
BA
Outlays
0
9,802
2,564
6,868
5,750
5,750
5,750
5,661
6,900
5,350
689
500
500
Office of International Cooperation and
Development
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current
352
Intragovernmental Funds:
Consolidated working fund
Outlays
See footnotes at end of table.
151
0
-2,643
THE BUDGET FOR FISCAL YEAR 1981
400
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Department of Agriculture—Con.
Office of International Cooperation and
Development—Con.
Trust funds
Miscellaneous contributed funds
Appropriation, permanent, indefinite
Outlays
352
BA
0
1,412
7,011
6,087
1,586
7,357
6,087
Total Federal funds Office of International CoopBA
O
6,206
8,314
12,618
12,820
9,464
12,218
1,412
7,011
6,087
1,586
7,357
6,087
743,476
1,128,930
Total Trust funds Office of International CooperBA
0
Foreign Assistance Programs
Federal funds
General and Special Funds:
Expenses, Public Law 480, foreign assistance programs, Agriculture
151
Appropriation, current
BA
805,900
^96,708
Outlays
0
975,902
1,072,092
w
96,708
1,153,000
Increase ( - ) or decrease in amount owed by the
Public Law 480 account to the Commodity
Credit Corportation
351
Outlays
0
-170,002
-328,616
-24,070
Total Federal funds Foreign Assistance Programs
BA
0
805,900
840,184
1,128,930
805,900
840,184
1,128,930
BA
227,509
186,529
197,942
Agricultural Stabilization and Conservation
Service
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current
351
D
Outlays
Sugar Act program
Outlays
Rural clean water program
Appropriation, current
Outlays
Agricultural conservation program
Appropriation, current
Liquidation of contract authority, current
Outlays
Water Bank program
Appropriation, current
Outlays
Cropland adjustment program
Outlays
See footnotes at end of table.
0
226,082
0
1
6,018
187,597
192,879
50,000
20,000
5,000
5,563
351
304
BA
0
302
BA
O
190,000
190,000
190,000
(190,000)
232,243
219,900
193,000
10,000
10,000
10,000
8,181
9,400
6,526
302
BA
O
351
0
2
.
401
T H E FEDERAL PROGRAM BY AGENCY A N D ACCOUNT
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Department of Agriculture—Con.
Agricultural Stabilization and Conservation
Service—Con.
Emergency conservation program
Appropriation, current
Outlays
Dairy and beekeeper indemnity programs
Appropriation, current
Outlays
Forestry incentives program
Appropriation, current
Outlays
453
BA
0
10,000
23,384
15,000
22,500
10,000
15,000
BA
0
3,240
3,242
3,290
3,290
200
200
BA
0
15,000
14,324
15,000
17,945
15,000
15,015
BA
0
455,749
507,459
475,837
465,632
443,142
428,183
BA
12,000
12,000
351
302
Total Federal funds Agricultural Stabilization and
Conservation Service
Federal Crop insurance Corporation
Federal funds
General and Special Funds:
Administrative and operating expenses
' Appropriation, current
351
Outlays
Public Enterprise Funds:
Federal Crop Insurance Corporation fund
Outlays
7
12,000
111,228
0
11,650
12,000
12,000
0
-19,589
14,893
15,193
' -18,583
(16,500)
(1,095)
(18,583)
-'111,228
351
Limitation on administrative and operating expenses
Total Federal funds Federal Crop Insurance Corporation
(12,377)
0
BA
0
12,000
—7,939
12,000
26,893
123,228
119,838
BA
BA
0
990,900
5,500,000
3,572,102
3,056,189
3,299,887
v";*;"™;
1,696,536
' 359,070
(50,100)
(50,700)
(53,600)
6,490,900
3,572,102
3,056,189
2,792,442
3,299,887
2,055,606
Commodity Credit Corporation
Support and Related Activities
Federal funds
Public Enterprise Funds:
Price support and related programs: Reimbursement
for net realized losses
351
Appropriation, current
Authority to borrow, current
Outlays
Limitation on administrative expenses and direct
loans
Total Federal funds Support and Related Activities
See footnotes at end of table.
310-000
0 - 8 0 - 2 7
BA
0
2,792,442
T H E B U D G E T FOR FISCAL YEAR 1981
402
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Department of Agriculture—Con.
Commodity Credit Corporation—Con.
Special Activities
Federal funds
General and Special Funds:
National Wool Act (special fund)
351
Appropriation, permanent, indefinite
BA
Outlays
0
Intragovemmental Funds:
Increase or decrease ( - ) in amount owed to the
Corporation by the Public Law 480 account
351
Outlays
0
Total Federal funds Special Activities
BA
0
Total Federal funds Commodity Credit Corporation
BA
0
33,038
39,421
36,886
39,421
36,886
40,421
170,002
328,616
24,070
33,038
39,421
209,423
365,502
36,886
64,491
6,523,938
3,095,610
3,336,773
3,781,525
3,157,944
2,120,097
26,165
28,051
Rural Electrification Administration
Federal funds
General and Special Funds:
Salaries and expenses
>n, current
271
BA
25,121
D
Outlays
Public Enterprise Funds:
Rural communication development fund
Appropriation, permanent, indefinite
Authority to borrow, permanent, indefinite
Outlays
0
23,923
1,256
27,963
27,899
452
BA
BA
0
Total Federal funds Rural Electrification Administration
BA
10,000
25
34,154
4,247
15,797
25,121
37,446
62,205
0
23,923
32,210
43,696
BA
0
282,500
300,000
284,000
286,989
300,548
302,736
BA
0
10,000
10,811
10,000
11,890
10,000
11,522
BA
0
5,000
7,000
5,000
4,270
7,130
6,600
BA
225,144
230,338
246,677
Farmers Home Administration
Federal funds
General and Special Funds:
Rural water and waste disposal grants
Appropriation, current
Outlays
Rural development grants
Appropriation, current
Outlays
Rural development planning grants
Appropriation, current
Outlays
Salaries and expenses
Appropriation, current
452
452
452
452
c
13
9,142
Outlays
See footnotes at end of table.
211,505
238,376
245,871
THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT
403
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1981
estimate
estimate
Department of Agriculture—Con.
Farmers Home Administration—Con.
Rural community fire protection grants
Outlays
Rural housing for domestic farm labor
Outlays
Mutual and self-help housing
Outlays
Rural housing supervisory assistance grants
Outlays
Very low income housing repair grants
Outlays
Public Enterprise Funds:
Self-help housing land development fund
Outlays
Rural housing insurance fund
Outlays
Agricultural credit insurance fund
Outlays
Rural development insurance fund
452
Outlays
Watershed planning
Outlays
See footnotes at end of table.
3,500
3,855
1,665
BA
O
33,000
5,886
25,000
8,331
25,000
20,108
BA
O
13,500
4,915
5,000
5,345
7,800
BA
O
2,500
1,500
4,000
2,000
2,000
BA
O
19,000
18,870
24,000
23,779
25,000
24,980
BA
O
1,000
-29
728
4,000
2,042
BA
BA
BA
BA
O
320,192
14,156
455
454,793
183,822
320,209
76,150
504,318
111,000
1,912,169
1,801,610
-961,916
BA
BA
0
143,565
988,867
1,017,151
272,809
297,032
23M76
-1,020,074
BA
BA
BA
O
107,276
143,282
400,094
151,990
91,874
-10,000
52,119
90,000
BA
0
3,024,542
1,899,622
3,330,823
2,734,068
1,657,309
-1,157,051
BA
262,402
283,801
0
256,417
264,747
12,328
277,766
BA
0
16,487
14,088
16,487
16,467
17,442
17,419
BA
11,847
6,660
0
12,964
10,500
»615
11,316
604
371
604
371
.
371
351
,
452
Total Federal funds Farmers Home Administration
Outlays
River basin surveys and investigations
3,500
3,442
604
Outlays..
Soil Conservation Service
Federal funds
General and Special Funds:
Conservation operations
Appropriation, current
BA
O
302
D
301
301
199,615
292,063
7,502
404
THE BUDGET FOR FISCAL YEAR 1981
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
Account and functional code
.
1979
actual
1980
estimate
1981
estimate
Department of Agriculture—Con.
Soil Conservation Service—Con.
Watershed and flood prevention operations
Appropriation, current
Outlays
Great plains conservation program
Appropriation, current
Outlays
Resource conservation and development
Appropriation, current
Outlays
301
BA
0
169,607
228,239
167,524
199,692
172,160
191,708
BA
0
18,689
21,543
18,689
22,032
20,591
23,916
BA
0
25,441
25,791
32,000
25,323
34,593
31,235
302
302
Trust funds
Miscellaneous contributed funds:
(Water resources)
(Appropriation, permanent, indefinite)
(Outlays)
(Conservation and land management)
(Appropriation, permanent, indefinite)
(Outlays)
301
BA
0
693
803
1,010
910
1,000
1,010
BA
0
298
345
100
90
78
100
Total Miscellaneous contributed funds
BA
0
991
1,148
1,110
1,000
1,078
1,110
Total Federal funds Soil Conservation Service
BA
0
Total Trust funds Soil Conservation Service
BA
0
302
504,473
559,042
991
1,148
522,890
552,596
1,110
1,000
535,247
563,843
1,078
1,110
Animal and Plant Health Inspection Service
Federal funds
Genera! and Special Funds:
Animal and Plant Health Inspection Service
Appropriation, current
Outlays
Animal quarantine station
Outlays
352
BA
237,406
0
227,990
245,631
» 6,834
251,765
259,044
258,178
352
0
406
115
1,968
1,702
2,126
2,094
Trust funds
Miscellaneous trust funds
Appropriation, permanent, indefinite
Outlays
352
Total Federal funds Animal and Plant Health
Inspection Service
Total Trust funds Animal and Plant Health Inspection Service
See footnotes at end of table.
BA
O
BA
0
BA
0
237,406
228,396
1,968
1,702
252,465
251,880
2,126
2,094
2,326
2,326
259,044
258,178
2,326
2,326
405
THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Department of Agriculture—Con.
Federal Grain Inspection Service
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current
352
Outlays
Public Enterprise Funds:
Inspection and weighing services
Outlays
BA
22,680
0
21,150
0
-2,844
23,122
1,172
24,294
D
26,268
26,268
352
Total Federal funds Federal Grain Inspection
Service
BA
0
22,680
18,306
BA
46,653
1,815
2,040
24,294
26,109
26,268
28,308
46,302
2,544
48,696
50,710
Agricultural Marketing Service
Federal funds
General and Special Funds:
Marketing services
Appropriation, current
352
D
Outlays
Payments to States and possessions
Appropriation, current
Outlays
Perishable Agricultural Commodities Act fund
Appropriation, permanent, indefinite
Outlays
Trust funds
Miscellaneous trust funds
Appropriation, permanent, indefinite
Outlays
Milk market orders assessment fund
Outlays
0
43,024
50,560
352
BA
0
1,600
783
1,600
3,391
BA
0
1,708
1,912
2,218
2,392
2,265
2,439
BA
0
653
43
177
177
178
178
52,664
54,479
52,975
52,999
352
352
351
Total Federal funds Agricultural Marketing Service..
Total Trust funds Agricultural Marketing Service.
0
-255
BA
0
49,961
45,719
BA
0
653
-212
177
177
178
178
BA
0
1,344
1,018
1,612
1,612
2,205
2,205
Office of Transportation
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current
Outlays
See footnotes at end of table.
352
406
T H E B U D G E T FOR FISCAL YEAR 1981
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
jctual
Account and functional code
1980
estimate
1981
estimate
Department of Agriculture—Con.
Food Safety and Quality Service
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current
554
BA
279,531
0
262,928
278,430
14,076
290,510
301,888
BA
0
223,192
273,889
311,163
303,083
390,190
370,610
BA
0
48,579
48,853
53,772
51,585
53,832
53,401
BA
0
502,723
536,817
603,669
593,593
692,078
670,687
BA
0
48,579
48,853
53,772
51,585
53,832
53,401
BA
77,290
87,008
71,300
82,000
2,408
83,265
6,670,278
6,179,676
6,226,494
* 3,503,376
D
Outlays
Funds for strengthening markets, income, and supply
(section 32)
604
Appropriation, permanent, indefinite
Outlays
300,077
Trust funds
Expenses and refunds, inspection and grading of farm
products
352
Appropriation, permanent, indefinite
Outlays
Total Federal funds Food Safety and Quality
Service
Total Trust funds Food Safety and Quality Service
Food and Nutrition Service
Federal funds
General and Special Funds:
Food program administration
Appropriation, current
604
D
Outlays
Food stamp program
Appropriation, current
0
BA
B
Outlays
0
6,821,746
fl
Special milk program
Appropriation, current
85,912
604
2,556,174
^ —477
6,155,156
2,522,844
9,622,170
B
33,330
142,000
166,200
604
BA
142,000
* 11,800
Outlays
Child nutrition programs
Appropriation, current
Appropriation, permanent
Outlays
0
134,086
142,000
* 7,600
1,402,035
1,279,215
* 337,400
' -55,700
154,700
A
4,200
'—53,300
604
BA
BA
0
1,411,575
2,879,668
1,830,923
J
1,831,086
2,992,434
* 322,700
J
See footnotes at end of table.
—401,800
1,879,653
3,483,800
A
14,700
—379,000
407
THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1980
estimate
1979
actual
Account and functional code
1981
estimate
Department of Agriculture—Con.
Food and Nutrition Service—Con.
Special supplemental food programs (WIC)
Appropriation, current
604
BA
569,500
757,700
924,540
J
542,158
Outlays..
food donations program
Appropriation, current
46,160
735,060
860,430
' 42,880
90,290
129,450
604
BA
69,800
A
Outlays
0
Total Federal funds Food and Nutrition Service.... BA
0
16,044
64,139
90,626
* 12,994
122,990
* 3,050
10,342,478
13,285,316
14,336,304
10,513,097
13,064,679
13,995,862
1,007,206
1,067,814
Forest Service
Federal funds
General and Special Funds:
Forest management, protection and utilization
Appropriation, current
302
BA
925,841
* 100,697
D
927,384
Outlays..
Construction and land acquisition
Appropriation, current
Outlays
Youth Conservation Corps
Appropriation, current
27,463
881,518
88,743
1,012,546
Ml,954
423,412
373,415
A
302
BA
279,643
D
0
136,869
6,282
223,919
BA
60,000
54,000
367,889
302
55,000
"797
Outlays
Forest roads and trails
302
Appropriation, current
Outlays
Other general appropriations
302
Outlays
Acquisition of lands for national forests, special
acts
302
Appropriation, current
Outlays
Acquisition of lands to complete land exchanges
302
Outlays
Rangeland improvements
0
BA
0
62,702
55,365
60,795
231,393
212,917
139,549
283
0
BA
0
385
325
754
135
325
754
BA
0
239
155
446
43
155
446
BA
0
5,356
5,900
6,800
4,890
4,135
6,800
BA
0
3,459
4,002
3,850
3,900
2,850
3,895
302
Outlays
Construction and operation of recreation facilities
303
Appropriation, current, indefinite
Outlays
See footnotes at end of table.
408
T H E BUDGET FOR FISCAL YEAR 1981
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Department of Agriculture—Con.
Forest Service—Con.
Timber salvage sales
Appropriation, current
Appropriation, permanent, indefinite
Outlays
Forest Service permanent appropriations
Appropriation, permanent, indefinite
Outlays
Forest Service permanent appropriations
Appropriation, permanent, indefinite
Outlays
Intragovernmental Funds:
Working capital fund
Outlays
Consolidated working fund
Outlays
Trust funds
Miscellaneous trust funds
Appropriation, permanent, indefinite
Outlays
Highland scenic highway
Outlays
Total Federal funds Forest Service
Total Trust funds Forest Service
302
BA
BA
0
8,782
11,000
8,070
11,200
10,080
BA
0
152,408
182,724
188,950
123,943
164,490
185,851
BA
0
240,605
279,163
320,000
240,708
279,163
320,000
302
852
302
0
-6,787
0
1,583
2,276
140,053
96,609
96,400
64,018
92,680
97,994
4,526
3,869
1,042
BA
1,914,716
2,102,974
2,028,279
O
1,717,171
1,850,841
1,981,010
BA
140,053
96,609
96,400
68,544
96,549
99,036
25,472,207
25,731,941
25,851,641
21,636,220
24,674,861
21,311,932
-100,230
—226,075
-210,000
302
302
BA
0
401
0
0
Summary
Federal funds:
(As shown in detail above)
BA
O
Deductions for offsetting receipts:
Intrafund transactions
302 BA
0
Proprietary receipts from the public
3,000
12,387
270 BA
O
300 BA
0
302 BA
O
350 BA
0
-3
363,762
-477,849
-517,154
510,400
-340,450
-498,993
47,776
-2,638
-2,638
BA
n
O
450 BA
0
-40
550 BA
3
O
600 BA
O
See footnotes at end of table.
-1,092
-38
-38
-3
-3
-1,000
-1,000
409
THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1980
estimate
1979
actual
Account and functional code
1981
estimate
Department of Agriculture—Con.
Summary—Con.
902
BA
O
BA
Total Federal funds
0
Trust funds:
(As shown in detail above)
BA
0
Deductions for offsetting receipts:
Proprietary receipts from the public
302
BA
0
352
BA
0
BA
Total Trust funds
0
BA
Total Department of Agriculture
0
-96
-122
-115
24,544,331
20,708,344
24,683,792
23,626,712
24,621,701
20,081,992
195,458
122,967
162,183
159,808
160,988
163,458
-140,053
-96,609
-96,400
-55,404
-65,574
-64,588
1
-72,490
—2,375
2,470
24,544,332
20,635,854
24,683,792
23,624,337
24,621,701
20,084,462
27,622
^ 4,200
c
3
D
950
27,907
A
4,200
39,019
Department of Commerce
General Administration
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current
376
Outlays
White House conference on balanced national growth
and economic development
376
Outlays
Special foreign currency program
376
Outlays
Participation in United States expositions
376
Appropriation, current
Outlays
tntragovernmental Funds:
Working capital fund
Outlays
Consolidated working fund
Outlays
See footnotes at end of table.
BA
25,640
0
25,599
0
1
0
329
143
76
* 20,800
98
^ 4,053
BA
0
376
0
454
0
-844
376
184
39,029
* 10,904
THE BUDGET FOR FISCAL YEAR 1981
410
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Department of Commerce—Con.
General Administration—Con.
Trust funds
Miscellaneous trust funds
Appropriation, permanent
Outlays
376
BA
0
224
243
200
200
200
200
Total Federal funds General Administration
BA
0
25,640
25,615
53,575
36,585
39,019
49,933
Total Trust funds General Administration
BA
0
224
243
200
200
200
200
BA
51,033
58,268
0
36,460
52,090
"1,699
50,724
148,085
...
Bureau of the Census
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current
Outlays
Periodic censuses and programs
Appropriation, current
376
BA
201,928
0
145,002
604,900
34,493
567,374
376
, 0
10,761
114
376
.... BA
.... 0
6,122
5,691
8,116
8,116
9,283
9,283
BA
O
252,961
192,223
693,182
618,212
206,353
283,154
.... BA
0
6,122
5,691
8,116
8,116
9,283
9,283
16,977
21,227
24,986
Outlays
Intragovernmenta! Funds:
Consolidated working fund
Outlays
Trust funds
Special studies, services, and projects
Appropriation, permanent, indefinite
Outlays
Total Federal funds Bureau of the Census
Total Trust funds Bureau of the Census
53,557
376
D
229,597
Economic and Statistical Analysis
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current
376
BA
^ 597
Outlays
Intragovernmental Funds:
Consolidated working fund
Outlays
See footnotes at end of table.
0
17,545
o
-1,156
376
21,389
24,554
THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT
411
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1980
estimate
1979
actual
Account and functional code
1981
estimate
Department of Commerce—Con.
Economic and Statistical Analysis—Con.
Trust funds
Special studies, services, and projects
376
Outlays..
Total Federal funds Economic and Statistical
Analysis
Total Trust funds Economic and Statistical Anal*
ysis
BA
0
145
43
250
250
250
250
BA
0
16,977
16,389
21,824
21,389
24,986
24,554
BA
0
145
43
250
250
250
250
BA
30,536
41,504
71,299
Economic Development Assistance
Economic Development Administration
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current
452
A
2,621
D
29,328
1,221
18,092
36,965
A
2,400
* 15,419
507,525
507,525
435,561
» 566,808
483,114
* 46,000
564,241
* 212,000
358,203
200,000
3,000
2,000
1,000
500
w
Outlays..
Economic development assistance programs
Appropriation, current
452
BA
Outlays
Local public works program
Outlays
Drought assistance program
Outlays
Financial and technical assistance
Outlays
Job opportunities program
Outlays
Public Enterprise Funds:
Economic development revolving fund
Outlays
BA
0
1,169,250
10,968
1,740,678
..
453
0
12,966
376
0
504
0
2,059
12,029
-33,490
-33,000
J
16,500
-43,000
' 43,000
549,029
2,187,102
1,137,771
941,630
1,240,549
1,047,059
452
0
K
452
Total Federal funds Economic Development Administration
BA
See footnotes at end of table.
65,424
^ 221
» 2,673
THE BUDGET FOR FISCAL YEAR 1981
412
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Department of Commerce—Con.
Economic Development Assistance—Con.
Regional Development Program
Federal funds
General and Special Funds:
Regional development program
Appropriation, current.
452
BA
62,800
62,800
D
Outlays
133
* 11,205
61,726
w
8,402 ,
* 74,227
0
60,859
BA
0
42,952
45,284
47,054
48,878
44,334
45,188
Total Federal funds Economic Development Assistance
BA
0
611,829
2,247,961
1,211,909
1,011,758
1,314,776
1,118,799
BA
0
42,952
45,284
47,054
48,878
44,334
45,188
BA
73,573
90,643
107,661
* 9,860
Trust funds
Regional development commissions
Appropriation, permanent, indefinite
Outlays
70,458
1,282
w
452
Total Trust funds Economic Development Assistance
Promotion of Industry and Commerce
International Trade Administration
Federal funds
General and Special Funds:
Operations and administration
Appropriation, current
376
Outlays
Trust funds
Miscellaneous trust funds
Appropriation, permanent, indefinite
Outlays
*600
"2,954
"600
92,312
^ 600
*600
0
70,771
BA
o
6,299
6,271
7,790
7,790
8,290
8,290
BA
57,965
62,857
0
54,110
59,015
°400
55,997
117,521
376
Minority Business Development Agency
Federal funds
General and Special Funds:
Minority business development
Appropriation, current
Outlays
See footnotes at end of table.
376
59,407
THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT
413
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Department of Commerce—Con.
Promotion of Industry and Commerce—Con.
United States Travel Service
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current
Outlays
Intragovernmental Funds:
Consolidated working fund
Outlays
376
BA
0
8,000
11,664
13,597
13,851
376
0
Total Federal funds United States Travel Service.
BA
0
Total Federal funds Promotion of Industry and
Commerce
BA
0
Total Trust funds Promotion of Industry and
Commerce
BA
0
34
13,597
8,000
13,885
11,664
145,135
162,212
180,378
138,766
161,173
176,928
6,299
7,790
8,290
6,271
7,790
8,290
679,510
706,500
..
Science and Technology
National Oceanic and Atmospheric
Administration
Federal funds
General and Special Funds:
Operations, research, and facilities
Appropriation, current
306
BA
675,168
* 67,833
0
A
1,000
c
1,304
17,218
£
Indefinite
Outlays
Construction
Appropriation, current
Outlays
Coastal zone management
Appropriation, current
383
BA
0
843
850
850
668,109
695,673
A
700
732,803
*300
BA
BA
60,000
890
18,557
26,766
63,840
64,675
306
0
...
302
BA
BA
7,172
* 45,163
A
6,000
^206
Outlays-
0
Promote and develop fishery products and research
pertaining to American fisheries
376
Appropriation, current
BA
Appropriation, permanent, indefinite
BA
Outlays
0
See footnotes at end of table.
60,083
3,300
30,355
64,067
* 2,700
12,436
21,679
35,827
10,431
15,400
29,000
12,000
A
' -15,827
THE BUDGET FOR FISCAL YEAR 1981
414
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
estimate
1980
estimate
1979
actual
Account and functional code
Department of Commerce—Con.
Science and Technology—Con.
National Oceanic and Atmospheric
Administration—Con.
Fishing vessel and gear damage compensation
376
fund
Appropriation, current, indefinite
Outlays
376
Fishermen's contingency fund
Appropriation, current
Outlays
Public Enterprise Funds:
Fisheries loan fund
Outlays
Fishermen's guaranty fund
Outlays
Coastal energy impact fund
Outlays
Federal ship financing fund, fishing vessels
Outlays
Intragovernmental Funds:
Consolidated working fund
Outlays
Trust funds
Miscellaneous trust funds
Appropriation, permanent, indefinite
Outlays
BA
0
1,000
64
3,500
3,200
3,500
3,500
600
600
600
600
-100
BA
0
376
0
202
200
0
-125
300
0
10,773
34,043
0
-1,094
-1,050
0
-2,253
376
452
53,472
376
306
306
BA
12,340
11,676
12,000
12,000
12,000
12,000
BA
0
817,629
717,352
823,915
834,390
820,286
897,724
BA
0
12,340
11,676
12,000
12,000
12,000
12,000
BA
96,654
99,672
1,671
c
58
D
4,512
101,840
113,202
0
Total Federal funds National Oceanic and Atmospheric Administration
Total Trust funds National Oceanic and Atmospheric Administration
Patent and Trademark Office
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current..
376
A
Outlays..
See footnotes at end of table.
97,124
A
1,600
108,477
A
l\
415
THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Department of Commerce—Con.
Science and Technology—Con.
Science and Technical Research
Federal funds
General and Special Funds:
Scientific and technical research and services
Appropriation, current
376
BA
86,970
91,670
16,467
* 101,746
c
489
° 2,282
116,211
79,961
96,706
BA
3,330
4,858
0
1,576
4,000
4,000
0
64
0
Outlays
Intragovernmental Funds:
376
Working capital fund
Appropriation, current
K
Outlays
Consolidated working fund
Outlays
6,123
376
....
Trust funds
Information products and services
Appropriation, permanent, indefinite
Outlays
376
Total Federal funds Science and Technical Research
Total Trust funds Science and Technical Research
BA
0
21,062
22,000
22,000
21,345
22,000
22,000
BA
0
90,300
99,299
124,336
81,601
100,706
120,211
BA
0
21,062
22,000
22,000
21,345
22,000
22,000
BA
11,925
17,305
18,068
National Telecommunications and
Information Administration
Federal funds
General and Special Funds:
Salaries and expenses
376
°437
Outlays
Public telecommunications facilities, planning and construction
503
Appropriation, current
Outlays
0
11,876
17,226
17,451
BA
0
18,000
23,705
23,705
8,777
21,090
22,845
BA
0
29,925
41,447
41,773
20,653
38,316
40,296
BA
0
1,034,508
1,070,574
1,099,597
916,730
1,076,852
1,166,779
BA
0
33,402
34,000
34,000
33,021
34,000
34,000
Total Federal funds National Telecommunications
See footnotes at end of table.
416
THE B U D G E T FOR FISCAL Y E A R 1981
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Department of Commerce—Con.
Ocean Shipping
Maritime Administration
Federal funds
General and Special Funds:
Ship construction
Appropriation, current
403
Outlays
Operating-differential subsidies
Contract authority, permanent, indefinite
Liquidation of contract authority, current
BA
157,000
101,000
0
200,777
254,000
289,625
(250,000)
304,755
(256,208)
* (44,307)
298,719
A
44,307
403
BA
Outlays
0
Research and development
Appropriation, current
Outlays
Operations and training
Appropriation, current
* 135,000
208,100
300,522
348,502
(347,697)
347,697
403
BA
17,500
16,300
0
17,166
16,300
BA
57,891
64,622
* 18,750
18,750
403
* 65,627
c
Outlays
Public Enterprise Funds:
Federal ship financing fund
Outlays
Vessel operations revolving fund
Outlays
War risk insurance revolving fund
Outlays
Intragovemmental Funds:
Consolidated working fund
Outlays
0
55,154
229
D
1,030
64,153
0
-28,068
-26,847
0
2,899
0
-407
67,220
-34,513
403
403
800
403
-549
-600
420
420
400
400
403
0
-1,008
Trust funds
Special studies, services and projects
Appropriation, permanent, indefinite
Outlays
403
BA
0
Total Federal funds Maritime Administration
BA
O
Total Trust funds Maritime Administration
BA
0
Summary
Federal funds:
(As shown in detail above)
Deductions for offsetting receipts:
Proprietary receipts from the public
BA
0
300 BA
370
See footnotes at end of table.
376
381
522,016
547,035
376
381
2,609,066
4,084,719
487,936
650,883
420
420
3,701,212
3,576,852
567,879
606,654
400
400
3,432,988
3,426,801
q
—937
—840
—840
SA
-406
-252
-252
THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT
417
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
estimate
1981
estimate
Department of Commerce—Con.
Summary—Con.
400
450
902
Total Federal funds
Trust funds:
(As shown in detail above)
Deductions for offsetting receipts:
Intrafund transactions
Proprietary receipts from the public
-9,916
-13,513
-7,150
-260
-418
-418
-3,049
-3,274
-3,274
BA
0
2,594,498
4,070,151
3,682,915
3,558,555
3,421,054
3,414,867
BA
0
89,520
90,934
97,830
99,654
96,757
97,611
-948
-869
-869
376
BA
0
306 BA
0
376 BA
0
403 BA
0
452 BA
0
-12,341
-12,000
-12,000
-26,292
-34,017
-35,684
-376
-420
-400
-1,720
-1,811
-2,099
BA
0
47,843
49,257
48,713
50,537
45,705
46,559
-6,409
-3,300
-3,300
-41,233
-45,243
—42,235
2,594,699
4,071,766
3,683,085
3,560,549
3,421,224
3,415,891
9,778,919
A
64,000
£
597,100
10,350,000
A
64,000
10,830,900
6,857,256
7,509,200
Total Trust funds
376
Interfund transactions
BA
0
BA
0
BA
0
452
BA
0
BA
0
BA
0
Total Department of Commerce
Department of Defense-Military
Military Personnel
Federal funds
General and Special Funds:
Military personnel, Army
Appropriation, current
051
Outlays
Military personnel, Navy
Appropriation, current
BA
9,702,873
0
9,617,759
BA
6,792,633
051
A
Outlays
0
See footnotes at end of table.
310-000 0 -
80 -
10,753,000
28
6,738,246
26,800
* 413,837
7,269,200
A
26,800
7,447,000
418
THE BUDGET FOR FISCAL YEAR 1981
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Department of Defense-Military—Con.
Military Personnel—Con.
Military personnel Marine Corps
Appropriation, current
051
Outlays
Military personnel, Air Force
Appropriation, current
0
2,054,816
BA
7,961,935
0
7,889,486
• 2,089,457
A
9,700
£
128,824
2,192,300
A
9,700
2,257,300
7,901,717
A
24,680
£
489,398
8,280,320
A
24,680
8,700,500
606,400
A
1,200
* 35,941
618,800
760,200
2,233,000
8,624,000
051
Outlays
Reserve personnel, Navy
Appropriation, current
2,106,200
051
Outlays
Reserve personnel, Army
Appropriation, current
BA
BA
566,800
0
560,128
A
730,000
1,200
051
BA
233,931
240,902
A
429
13,577
251,571
x
429
261,200
88,100
1,100
£
4,949
88,900
94,900
£
Outlays
Reserve personnel, Marine Corps
Appropriation, current
0
243,376
260,000
051
BA
87,200
A
Outlays
Reserve personnel, Air Force
Appropriation, current
Outlays
National Guard personnel, Army
Appropriation, current
0
A
91,000
1,100
051
BA
197,400
e j j JJ53
214,400
244,100
0
195,367
220^000
238,000
BA
787,100
1,056,200
0
765,386
877,550
A
3,850
£
52,800
890,150
A
3,850
BA
266,500
322,800
261,872
273,500
17,060
281,000
28,702,572
28,407,171
30,825,299
30^574,000
32,037,300
31,705,000
051
Outlays
National Guard personnel, Air Force
Appropriation, current
80,735
1,015,000
051
£
Outlays
Total Federal funds Military Personnel
See footnotes at end of table.
o
BA
0
314,000
419
THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Department of Defense-Military—Con.
Retired Military Personnel
Federal funds
General and Special Funds:
Retired pay, Defense
Appropriation, current
051
Outlays
BA
10,283,000
0
10,279,058
11,451,500
A
529,200
11,411,800
A
529,200
13,699,800
13,677,000
Operation and Maintenance
Federal funds
General and Special Funds:
Operation and maintenance, Army
Appropriation, current
051
BA
9,593,327
10,256,218
12,137,100
266,000
c
Outlays
0
9,187,348
76,700
° 206,700
9,741,000
A
11,457,000
266,000
Operation and maintenance, Navy
Appropriation, current
051
Outlays
Operation and maintenance, Marine Corps
Appropriation, current
Outlays
Operation and maintenance, Army Reserve
Appropriation, current
Outlays
See footnotes at end of table.
0
11,269,091
13,277,295
* 230,300
c
140,800
D
173,500
12,329,700
A
230,300
15,631,500
801,446
15,800
c
8,400
0
8,800
816,200
A
15,800
937,200
10,451,150
A
234,200
c
81,900
"137,200
10,239,800
A
234,200
12,137,500
3,551,214
c
16,000
° 132,000
3,696,000
4,066,300
420,644
c
4,100
D
8,700
428,000
469,200
14,749,000
BA
751,100
0
700,712
A
904,000
051
Outlays
Operation and maintenance, Defense agencies
Appropriation, current
11,935,515
051
Outlays
Operation and maintenance, Air Force
Appropriation, current
BA
BA
9,478,584
0
9,169,077
BA
3,160,018
0
3,183,983
11,726,000
051
3,965,000
051
BA
420,300
0
399,561
460,000
T H E B U D G E T FOR FISCAL Y E A R 1981
420
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
estimate
1980
estimate
1979
actual
Account and functional code
Department of Defense-Military—Con.
Operation and Maintenance—Con.
Operation and maintenance, Navy Reserve
Appropriation, current
051
BA
... 0
Outlays
Operation and maintenance, Marine Corps Reserve
380,469
315,205
396,436
c
1,200
D
2,200
396,000
444,100
421,000
051
BA
19,900
21,923
27,478
0
16,972
22,000
25,000
BA
393,300
486,000
0
391,408
429,407
c
3,000
D
6,300
432,000
BA
799,400
847,500
0
777,887
786,850
11,900
D
19,000
802,000
BA
950,000
1,229,400
Outlays
0
National Board for the Promotion of Rifle Practice,
Army
051
Appropriation, current
BA
915,364
1,088,687
c
11,100
D
15,400
1,075,000
425
296
397
°14
400
BA
BA
0
118,100
98,200
94,563
Tiwoo
BA
0
2,500
538
BA
1,840
2,030
D
69
2,197
0
2,175
2,000
2,170
BA
16,466
1,900
BA
0
2,000
124
10,000
9,000
1,000
BA
0
38,023,194
36,424,304
43,405,197
40,852,000
48,562,700
46,376,000
Outlays
Operation and maintenance, Air Force Reserve
D
m
051
Outlays
Operation and maintenance, Army National Guard
478,000
051
Appropriation, current
Outlays
Operation and maintenance, Air National Guard
c
831,000
051
Appropriation, current
Outlays
Claims, Defense
Appropriation, current
Indefinite
Outlays
Contingencies, Defense
Appropriation, current...
Outlays
Court of Military Appeals, Defense
Appropriation, current
Outlays
Foreign currency fluctuations, Defense
Appropriation, current
XIII Olympic winter games
Appropriation, current
Outlays
0
430
051
146,800
142,400
051
051
051
051
Total Federal funds Operation and Maintenance...
See footnotes at end of table.
375
1,214,000
421
T H E FEDERAL PROGRAM BY AGENCY A N D ACCOUNT
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Department of Defense-Military—Con.
Procurement
Federal funds
General and Special Funds:
Aircraft procurement, Army
Appropriation, current
051
BA
949,709
951,037
0
557,934
750,000
BA
761,900
1,162,500
Outlays
0
Procurement of weapons and tracked combat vehicles,
Army
051
Appropriation, current
BA
546,907
617,000
1,506,700
1,812,400
BA
0
1,247,753
12,100
1,371,000
BA
1,164,600
1,232,800
1,499,830
* 13,670
BA
0
30,000
958,085
999,000
1,138,000
BA
BA
0
1,616,950
40,000
1,138,561
1,407,810
47,000
1,293,000
2,129,758
BA
4,337,100
4,428,746
0
3,140,183
3,806,000
BA
1,931,022
1,953,914
BA
0
1,701,744
8,300
1,842,000
BA
5,112,600
6,606,150
BA
0
36,238
4,553,451
76,200
4,218,000
BA
BA
0
2,603,814
3,081,447
1,982,745
2,590,056
34,700
2,349,000
BA
356,000
283,785
0
404,400
373,000
306,442
* 161,158
351,000
6,871,107
7,962,381
5,138,195
13,800
5,772,000
Outlays
Missile procurement, Army
Appropriation, current
* 925,300
874,000
051
* 1,501,300
998,000
* 2,628,900
Reappropriation
Outlays
Procurement of ammunition, Army
Appropriation, current
Reappropriation
Outlays
Other procurement, Army
Appropriation, current
Reappropriation
Outlays
Aircraft procurement, Navy
Appropriation, current
Outlays
Weapons procurement, Navy
Appropriation, current
1,620,000
051
051
1,467,000
051
* 4,966,300
4,103,000
051
* 2,318,600
Reappropriation
Outlays
Shipbuilding and conversion, Navy
Appropriation, current
1,924,000
051
* 6,118,400
Reappropriation
Outlays
Other procurement, Navy
Appropriation, current
Reappropriation
Outlays
Procurement, Marine Corps
Appropriation, current
Outlays
Aircraft procurement, Air Force
Appropriation, current
4,408,000
051
2,431,000
051
051
BA
* 8,555,043
Reappropriation
Outlays
See footnotes at end of table.
BA
0
6,473,000
422
THE BUDGET FOR FISCAL YEAR 1981
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Department of Defense-Military—Con.
Procurement—Con.
Missile procurement, Air Force
Appropriation, current
051
1,473,000
2,167,985
BA
0
1,537,223
15,000
1,607,000
BA
BA
0
2,326,150
37,000
2,230,361
2,619,141
13,600
2,354,000
2,972,687
BA
0
274,600
237,225
286,375
278,000
302,523
291,000
14,202
15,000
15,000
BA
Reappropriation
Outlays
Other procurement, Air Force
Appropriation, current
Reappropriation
Outlays
Procurement, Defense agencies
Appropriation, current
Outlays
Procurement of aircraft and missiles, Navy
Outlays
Procurement of equipment and missiles, Army
Outlays
* 3,042,284
1,842,000
051
2,561,000
051
051
0
051
0
15,285
4,000
1,000
BA
0
31,428,490
25,404,254
35,685,780
27,648,000
40,523,642
30,497,000
BA
2,640,864
2,843,231
BA
0
2,408,870
2,000
2,652,000
BA
4,465,266
4,550,133
Reappropriation
BA
Outlays
0
Research, development, test, and evaluation, Air
Force
051
Appropriation, current
BA
15,000
3,826,449
15,886
4,710,000
4,383,140
4,944,802
11,837
4,079,757
81,230
4,581,000
892,887
1,037,022
808,781
958,000
Total Federal funds Procurement
Research, Development, Test, and
Evaluation
Federal funds
General and Special Funds:
Research, development,
Army
Appropriation, current
test,
and evaluation,
051
* 3,232,500
Reappropriation
Outlays
Research, development, test, and evaluation, Navy
2,966,000
051
Appropriation, current
x
Reappropriation
BA
Outlays
0
Research, development, test, and evaluation, Defense
agencies
051
Appropriation, current
BA
Outlays
See footnotes at end of table.
0
4,836,100
4,653,000
* 7,085,300
!
6,019,000
* 1,289,500
1,167,000
423
THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Department of Defense-Military—Con.
Research, Development, Test, and
Evaluation—Con.
Director of test and evaluation, Defense
Appropriation, current
051
Outlays
Total Federal funds Research, Development,
Test, and Evaluation
BA
27,600
42,500
0
28,320
32,000
* 42,100
38,000
BA
0
12,436,594
11,152,177
13,516,804
12,933,000
16,485,500
14,843,000
BA
722,409
725,649
0
606,561
643,000
84,680
* 895,620
659,000
BA
760,145
567,000
0
734,231
660,000
BA
483,264
565,456
0
564,064
562,000
BA
183,980
192,350
Military Construction
Federal funds
General and Special Funds:
Military construction, Army
Appropriation, current
Outlays
Military construction, Navy
Appropriation, current
051
051
Outlays
Military construction, Air Force
Appropriation, current
051
Outlays
Military construction, Defense agencies
Appropriation, current
051
* 703,000
553,000
196,860
* 618,440
515,000
K
Outlays
North Atlantic Treaty Organization infrastructure
0
3,550
125,000
235,700
62,000
051
Appropriation, current
Outlays
Military construction, Army National Guard
Appropriation, current
BA
0
051
Outlays
Military construction, Air National Guard
Appropriation, current
051
Outlays
Military construction, Army Reserve
Appropriation, current
051
Outlays
Military construction, Naval Reserve
Appropriation, current
051
Outlays
See footnotes at end of table.
* 300,000
125,000
BA
52,200
23,700
0
49,279
47,000
BA
44,750
36,000
0
38,741
37,000
BA
37,100
30,000
0
46,102
40,000
BA
21,850
18,300
0
25,477
21,000
7,859
* 27,141
31,000
9,700
* 80,500
43,000
4,479
* 39,721
34,000
2,450
* 22,250
17,000
T H E B U D G E T FOR FISCAL Y E A R 1981
424
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1981
estimate
estimate
Department of Defense-Military—Con.
Military Construction—Con.
Military construction, Air Force Reserve
051
Outlays..
BA
13,000
12,000
0
11,981
12,000
3,875
* 18,725
14,000
BA
0
2,318,698
2,079,986
2,170,455
2,147,000
3,251,000
2,053,000
BA
1,561,639
1,498,697
Family Housing
Federal funds
General and Special Funds:
Family housing, Defense
Outlays
Foreign currency
fense
051
BA
0
fluctuation,
1,469,113
.
* 1,953,749
K
18,651
1,685,000
1,570,000
Construction, De051
BA
BA
Public Enterprise Funds:
Homeowners assistance fund, Defense
100,000
25,000
.
.
051
Outlays..
BA
BA
0
1,500
26
-1,595
1,000
1,000
1,000
BA
0
1,563,165
1,467,518
1,624,697
1,571,000
1,972,400
BA
14,362
6,667
2,698
8,555
* 2,760
7,250
0
-1,445
-285
-113
0
-115
47
BA
BA
0
74,000
101,980
117,395
BA
BA
0
251,409
37,199
1,686,000
Special Foreign Currency Program
Federal funds
General and Special Funds:
Special foreign currency program
Appropriation, current
051
Outlays..
Revolving and Management Funds
Federal funds
Public Enterprise Funds:
Defense production guarantees
Outlays
Laundry service, Naval Academy
Outlays
Intragovernmental Funds:
Army stock fund
Appropriation, current
Contract authority, permanent, indefinite
Outlays
Navy stock fund
Appropriation, current
Contract authority, permanent, indefinite
Outlays
.
See footnotes at end of table.
051
051
051
81,600
43,100
051
309
44,100
"55,200
425
THE FEDERAL PROGRAM BY AGENCY A N D ACCOUNT
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
estimate
1980
estimate
1979
actual
Account and functional code
Department of Defense-Military—Con.
Revolving and Management Funds—Con.
Marine Corps stock fund
Appropriation, current
Outlays
Air Force stock fund
Appropriation, current
Contract authority, permanent, indefinite
Outlays
Defense stock fund
Appropriation, current
Contract authority, permanent, indefinite
Outlays
Army industrial fund
Outlays
Navy industrial fund
Outlays
Marine Corps industrial fund
Outlays
Air Force industrial fund
Outlays
Defense industrial fund
Outlays
Army management fund
Outlays
Navy management fund
Outlays
Air Force management fund
Outlays
051
BA
0
4,108
4,726
17,600
2,900
051
BA
BA
0
26,800
169,457
106,151
28,300
70,000
051
BA
BA
0
051
0
051
0
051
0
051
0
051
0
051
0
051
0
051
0
Total Federal funds Revolving and Management
Funds
BA
0
322^600
35,000
102,296
93,228
2,747
70,938
136
-116,406
-24,001
-11,232
5,785
489
725,942
285,595
-70,400
-7,669
100,900
1,200
—82*900
—21,544
-19,600
-1,600
35,000
29,200
28,600
-6,400
-25,528
2,060
120
277,945
67,717
320,250
Allowances
Federal funds
General and Special Funds:
Civilian and military pay raises
Appropriation, current
Outlays
Retired pay legislation
Appropriation, current
Outlays
Other legislation
Appropriation, current
Outlays
051
'1,846,718
n,819,200
BA
0
051
' 36,700
36,700
BA
O
7
051
Total Federal funds Allowances..
BA
0
'229,100
J
229,100
BA
2,112,518
2,085,000
0
Trust Funds
Trust funds
Miscellaneous trust funds
Appropriation, permanent, indefinite
Outlays
See footnotes at end of table.
051
BA
0
11,479
11,098
10,600
10,605
10,800
10,772
426
THE B U D G E T FOR FISCAL YEAR 1981
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Department of Defense-Military—Con.
Trust Funds—Con.
Miscellaneous trust revolving funds
Outlays
051
2,442
28,395
10,628
BA
0
11,479
13,540
10,600
39,000
21,400
BA
0
125,496,017
115,502,761
139,215,599
127,952,500
158,715,337
143,249,500
0
Total Trust funds Trust funds
10,800
Summary
Federal funds:
(As shown in detail above)
Deductions for offsetting receipts:
Proprietary receipts from the public
0 5 1 BA
Total Federal funds
Trust funds:
(As shown in detail above)
Interfund transactions
051
Total Department of Defense-Military
-492,492
-581500
-560,700
BA
0
125,003,525
115,010,269
138,634,099
127,371,000
158,154,637
142,688,800
BA
O
11,479
13,540
10,600
39,000
21,400
-10,760
-10,000
-10,200
125,004,244
115,013,049
138,634,699
127,400,000
158,155,237
142,700,000
8,326
7,000
5,300
5,200
141,463
1,546,681
q
BA
BA
0
10,800
Department of Defense-Civil
Cemeterial Expenses, Army
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current
Outlays
705
BA
0
5,100
5,558
Corps of Engineers-Civil
Federal funds
General and Special Funds:
General investigations
Appropriation, current
Outlays
Construction, general
Appropriation, current..
301
BA
137,978
0
124,293
142,145
c
115
D
4,127
£
58
154,300
1,343,711
1,467,566
143,205
301
BA
A
D
36,900
c
871
12,252
E
277
Outlays
See footnotes at end of table.
0
1,609,906
1,603,400
A
92,300
1,502,849
427
T H E FEDERAL PROGRAM BY AGENCY A N D ACCOUNT
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Department of Defense-Civil—Con.
Corps of Engineers-Civil—Con.
Operation and maintenance, general
Appropriation, current
301
950,729
0
806,418
848,500
11,288
12,206
£
106
893,600
BA
0
126,000
19,277
31,500
""26**600
BA
68,900
82,530
0
64,800
73,200
° 3,912
£
188
77,100
BA
0
223,035
233,613
210,515
235,000
228,986
244,986
BA
0
3,300
3,581
4,000
4,000
5,000
4,500
BA
0
3,625
6,841
1,748
1,748
1,748
1,748
BA
0
4,614
6,134
4,952
4,726
5,102
5,102
BA
0
8,239
12,975
6,700
6,474
6,850
6,850
BA
0
46,000
36,588
50,000
48,000
52,525
77,800
545
13,398
BA
833,100
c
D
Outlays
Flood control and coastal emergencies
Appropriation, current
Outlays
General expenses
Appropriation, current
Outlays
Flood control, Mississippi River and tributaries
Appropriation, current
Outlays
Special recreation use fees
Appropriation, current
Outlays
Permanent appropriations:
(Water resources)
(Appropriation, permanent, indefinite)
(Outlays)
(Other general purpose fiscal assistance)
(Appropriation, permanent, indefinite)
(Outlays)
301
81,920
301
303
301
852
Total Permanent appropriations
Intragovernmental Funds:
Revolving fund
Appropriation, current
Outlays
Consolidated working fund
Outlays
939,459
301
301
301
0
Trust funds
Inland waterways trust fund
Appropriation, current
Outlays
Rivers and harbors contributed funds
Appropriation, permanent, indefinite
Outlays
301
30,000
30,000
BA
0
301
BA
0
34,892
31,077
38,000
35,000
39,000
39,000
BA
0
2,790,263
2,911,996
2,884,926
3,159,072
3,014,764
3,021,569
-13
-13
Summary
Federal funds:
(As shown in detail above)
Deductions for offsetting receipts:
Proprietary receipts from the public
271
300
See footnotes at end of table.
BA
5A
-19,223
-18,377
-19,567
428
T H E B U D G E T FOR FISCAL Y E A R 1981
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Department of Defense-Civil—Con.
Corps of Engineers-Civil—Con.
902
-2,727
-3,110
-3,420
BA
0
2,768,303
2,890,036
2,863,426
3,137,572
2,991,764
2,998,569
BA
0
34,892
31,077
38,000
35,000
69,000
69,000
3 0 1 BA
~34f892
BA
0
-3,815
-3,000
30,000
30,000
BA
0
2,768,303
2,886,221
2,863,426
3,134,572
3,021,764
3,028,569
Total Federal funds
Trust funds:
(As shown in detail above)
Deductions for offsetting receipts:
Proprietary receipts from the public
Total Trust funds
Total Corps of Engineers-Civil
-38,000
-39,000
Ryukyu Islands, Army
Summary
Federal funds:
Deductions for offsetting receipts:
Proprietary receipts from the public
8 0 0 BA
Total Ryukyu Islands, Army
BA
0
4
- 4 1 0
- 4 1 0
- 4 1 0
- 4 1 0
BA
17,529
O
17,624
18,471
^ 386
c
432
D
379
19,282
^ 386
-410
-410
Soldiers' and Airmen's Home
Trust funds
Operation and maintenance
Appropriation, current
705
Outlays
Payment of claims
Appropriation, permanent, indefinite
Outlays
Soldiers' and Airmen's Home revolving fund
Outlays
20,595
20,595
705
BA
0
20
20
5
5
705
O
—14
Summary
Federal funds:
Deductions for offsetting receipts:
Proprietary receipts from the public
Total Federal funds
See footnotes at end of table.
7 0 5 BA
,
0
~J
BA
- 1
- 1
- 1
0
-1
-1
-1
~
429
T H E FEDERAL PROGRAM BY AGENCY A N D ACCOUNT
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Department of Defense-Civil—Con.
1
Soldiers and Airmen's Home—Con.
Trust funds:
Deductions for offsetting receipts:
Proprietary receipts from the public
BA
0
17,529
17,610
19,688
19,688
20,600
20,600
BA
0
-1,923
-2,447
-3,025
BA
0
15,606
15,687
17,241
17,241
17,575
17,575
BA
0
15,605
15,686
17,240
17,240
17,574
17,574
BA
BA
0
80,168
72,823
BA
0
849
2,002
BA
0
81,017
74,825
0
-459
(30,212)
71,216
0
- 4 5 9
71,216
BA
0
81,017
74,366
The Panama Canal
Canal Zone Government
Federal funds
General and Special Funds:
Operating expenses
Appropriation, current
Outlays
Capital outlay
806
806
Outlays..
Panama Canal Company
Federal funds
Public Enterprise Funds:
Corporation: Panama Canal Company
403
Outlays
Limitation on general and administrative expenses...
Total Federal funds Panama Canal Company
Summary
Federal funds:
(As shown in detail above)
Deductions for offsetting receipts:
Intrafund transactions
Proprietary receipts from the public
806
800
902
Total The Panama Canal
See footnotes at end of table.
.
71,216
BA
0
BA
o
BA
0
—23,671 .
-49
,
BA
0
8,108
1,457
.
49,189 ,
71,216
430
THE B U D G E T FOR FISCAL Y E A R 1981
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Department of Defense-Civil—Con.
Wildlife Conservation, Military Reservations
Federal funds
General and Special Funds:
Wildlife conservation, Army
Appropriation, current
Appropriation, permanent, indefinite
Outlays
Wildlife conservation, Navy
Appropriation, current
Appropriation, permanent, indefinite
Outlays
Wildlife conservation, Air Force
Appropriation, current
Appropriation, permanent, indefinite
Outlays
303
400
768
1,109
BA
BA
0
674
598
743
737
BA
BA
0
100
78
94
90
BA
BA
0
139
126
140
130
600
140
740
BA
913
0
802
977
957
2,529
2,479
-913
-977
-1,029
-Ill
-20
1,500
1,450
2,894,229
3,238,245
3,022,593
3,029,248
303
500
121
630
303
Summary
Federal funds:
(As shown in detail above)
Deductions for offsetting receipts:
Proprietary receipts from the public
300
BA
O
Total Wildlife Conservation, Military Reservations BA
0
Summary
Federal funds:
(As shown in detail above)
Deductions for offsetting receipts:
Intrafund transactions
Proprietary receipts from the public
BA
0
8 0 6 BA
271
O
2,877,293
2,992,722
-23,671
BA
-10
0
300 BA
0
-20,136
705 BA
O
902 BA
O
Total Federal funds
BA
0
Trust funds:
(As shown in detail above)
BA
O
Deductions for offsetting receipts:
Proprietary receipts from the public
301
BA
O
See footnotes at end of table.
-19,354
-13
-20,596
-1
-1
-410
-410
-3,110
-3,420
2,781,100
2,896,529
2,871,341
3,215,357
2,998,153
3,004,808
52,421
48,687
57,688
54,688
89,600
89,600
0
8 0 0 BA
-13
-49,599
—2,776
-34,892
38,000
-39,000
431
THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Department of Defense-Civil—Con.
,
Summary—Con.
705 BA
0
-1923
-2,447
-3,025
BA
0
15,606
11,872
17,241
14,241
47,575
47,575
„ , BA
0
2,796,706
2,908,401
2,888,582
3,229,598
3,045,728
3,052,383
BA
3,681,956
0
1,919,474
4,094,172
J
900,000
3,631,277
'50,000
Total Trust funds
Total Department of Defense-Civil
Department of Education
Office of Elementary and Secondary
Education
Federal funds
Genera) and Special Funds:
Elementary and secondary education
Appropriation, current
501
Outlays
School assistance in federally affected areas
Appropriation, current
Outlays
Equal educational opportunities
Appropriation, current
Outlays
Libraries and learning resources
Appropriation, current
Outlays
Indian education
Appropriation, current
Outlays
Elementary and secondary education
Appropriation, current
Outlays
Library resources
Appropriation, current
Outlays
501
BA
0
816,100
911,587
805,000
821,103
519,000
553,942
BA
0
341,350
317,078
323,773
298,646
359,013
321,699
BA
185,988
0
148,195
251,500
* 12,988
255,801
501
503
501
BA
71,735
0
60,581
75,900
D
89
69,856
100,950
BA
0
3,671,282
3,133,227
60,000
1,489,560
BA
0
266,475
255,888
67,500
128,580
BA
0
5,166,942
4,678,361
5,200,206
4,875,414
6,237,623
4,895,658
BA
BA
0
976,637
1,049,025
2,235
788,939
1,102,050
82,939
501
503
Total Federal funds Office of Elementary and
Secondary Education
Office of Special Education and
Rehabilitative Services
Federal funds
General and Special Funds:
Education for the handicapped
Appropriation, current
Reappropriation
Outlays
See footnotes at end of table.
501
589,120
968,506
T H E B U D G E T FOR FISCAL Y E A R 1981
432
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
estimate
1980
estimate
1979
actual
Account and functional code
Department of Education—Con.
Office of Special Education and
Rehabilitative Services—Con.
Rehabilitation services and handicapped research
506
Appropriation, current
Outlays
BA
0
Total Federal funds Office uf Special Education
and Rehabilitative Services
BA
395,984
449,802
963,875
957,334
0
976,637
589,120
1,447,244
1,238,741
2,065,925
1,925,834
BA
BA
0
774,453
7,161
772,075
889,035
7,161
854,888
925,635
7,161
907,913
BA
3,753,650
3,056,935
BA
0
2,871,316
544,034
3,412,695
BA
957,503
959,621
Office of Vocational and Adult Education
Federal funds
General and Special Funds:
Vocational and adult education
501
Outlays..
Office of Postsecondary Education
Federal funds
General and Special Funds:
Student financial assistance
Appropriation, current
502
* 3,305,750
Reappropriation
Outlays....
Student loan insurance
Appropriation, current
1419,926
502
A
661,798
'59,900
Authority to borrow, current
BA
Outlays
O
25,000
897,944
A
Higher and continuing education
Appropriation, current
Appropriation, permanent, indefinite
Outlays
See footnotes at end of table.
'485/X)0
941,661
A
168,457
'91,249
502
BA
< GC
<*
CO
Appropriation, permanent
Reappropriation
Outlays
Higher education facilities loan and insurance
Appropriation, current
975,489
493,341
393,000
405,730
2,700
478
564,623
2,700
* 390,539
'20,000
2,700
376,215
371,040
2,204
2,189
871
5,636
832
4,828
502
BA
* 1,656
708
3,538
433
THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Accounl and tunctonal code
1980
estimate
1931
estimate
Department of Education—Con.
Office of Postsecondary Education—Con.
Public Enterprise Funds:
College housing loans
Appropriation, current
Appropriation, permanent.
Outlays
502
BA
BA
0
Total Federal funds Office of Postsecondary Education
BA
0
13,097
241
-3,414
5,148,744
4,336,105
12,117
134
8,405
5,546,090
5,270,973
14,271
179
17,099
5,403,349
5,012,970
Office of Educational Research and
Improvement
Federal funds
General and Special Funds:
Educational statistics
Appropriation, current
Outlays
Research and related activities
Appropriation, current
503
BA
0
7,795
1,715
11,793
5,348
503
Outlays
School improvement programs
501
Appropriation, current
Outlays
Educational development
503
Outlays
Salaries and expenses, Assistant Secretary for Education
502
Appropriation, current
Outlays
National Institute of Education
503
Appropriation, current
Outlays
Special projects and training
503
Appropriation, current
Outlays
Total Federal funds Office of Educational Research and Improvement
BA
51,907
0
37,026
* 105,050
87,004
157,783
91,342
210,523
185,682
BA
0
0
101
500
500
BA
0
36,650
28,461
7,821
23,064
BA
0
94,133
70,629
45,586
43,993
BA
0
122,272
103,177
38,295
49,125
BA
0
253,055
202,368
309,187
246,765
327,366
278,534
BA
0
3,906
3,906
4,349
4,349
4,921
4,921
BA
0
16,625
16,463
17,349
17,413
20,305
20,305
BA
0
44,833
49,415
48,341
52,276
49,768
49,768
Special Institutions
Federal funds
General and Special Funds:
American Printing House for the Blind
Appropriation, current
Outlays
National Technical Institute for the Deaf
Appropriation, current
Outlays
Gallaudet College
Appropriation, current
Outlays
See footnotes at end of table.
310-000 0 - 60 - 29
501
502
502
T H E B U D G E T FOR FISCAL Y E A R 1981
434
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
estimate
1980
estimate
1979
actual
Account and functional code
Department of Education—Con.
Special Institutions—Con.
502
Howard University
Appropriation, current
Outlays
BA
0
113,393
104,494
121,893
112,434
133,983
125,460
BA
0
178,757
174,278
191,932
186,472
208,977
200,454
23,122
°891
22,079
49,215
155,707
A
1,775
* 7,447
160,936
A
1,598
244,181
1,500
1,980
3,000
3,573
3,000
3,152
7,852
10,900
Office of Civil Rights
Federal funds
General and Special Funds:
Salaries and expenses
751
BA
Outlays..
46,828
Departmental Management
Federal funds
General and Special Funds:
Salaries and expenses:
(Research and general education aids)
(Appropriation, current)
503
(Outlays)
BA
126,553
0
130,781
Educational, research and training activities overseas:
(Special foreign currency program)
503
(Appropriation, current)
BA
(Outlays)
0
Institute of Museum Services
503
Appropriation, current
BA
201,350
M77
..
* 12,900
Z>22
Outlays.
..
0
9,956
389
8,950
BA
0
38
75
94
Total Federal funds Departmental Management... BA
135,905
133,150
178,851
175,057
38
75
94
12,641,654
10,885,457
13,893,719
12,870,389
15,485,332
13,482,826
-5,477
-5,625
-2,975
Trust funds
Special statistical compilations and surveys
Appropriation, permanent, indefinite
Outlays
503
0
Total Trust funds Departmental Management
BA
O
260,081
214,635
.
Summary
Federal funds:
(As shown in detail above)
Deductions for offsetting receipts:
Proprietary receipts from the public
BA
0
5 0 0 BA
O
See footnotes at end of table.
435
THE FEDERAL PROGRAM BY AGENCY A N D ACCOUNT
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1980
estimate
1979
actual
Account and functional code
1981
estimate
Department of Education—Con.
Summary—Con.
902 BA
—791
0
Total Federal funds
Deductions for offsetting receipts:
Proprietary receipts from the public
Total Department of Education
15,481,724
13,479,218
12,635,386
10,879,189
13,887,470
12,864,140
BA
38
75
94
503 BA
Total Trust funds
-633
BA
0
Trust funds:
(As shown in detail above)
-624
0
-38
0
37
94
12,635,386
10,879,226
13,887,470
12,864,234
BA
0
15,481,724
13,479,218
Department of Energy
Atomic Energy Defense Activities
Federal funds
General and Special Funds:
Atomic energy defense activities - operating expenses
053
Appropriation, current
BA
2,185,830
2,371,147
* 2,794,723
fi
Outlays
0
Atomic energy defense activities - plant and capital
equipment
053
Appropriation, current
BA
2,086,666
482,158
34,700
D
2,346
2,330,720
* 29,700
2,736,594
* 5,000
588,249
* 648,505
A
Outlays
454,195
9,300
613,041
A
6,350
BA
0
2,667,988
2,540,861
3,005,742
2,979,811
BA
309,306
341,900
0
Total Federal funds Atomic Energy Defense Activities
641,204
2,950
A
3,443,228
3,385,748
Energy Programs
Federal funds
General and Special Funds:
General science and research
penses
Appropriation, current
• operating ex251
* 376,695
D 45
Outlays
See footnotes at end of table.
0
304,811
336,345
371,050
T H E B U D G E T FOR FISCAL Y E A R 1981
436
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1980
estimate
1979
actual
Account and functional code
1981
estimate
Department of Energy—Con.
Energy Programs—Con.
General science and research - plant and capital
equipment
251
Outlays
Energy supply, R&D - operating expenses
Appropriation, current
i
BA
121,700
130,000
0
120,681
125,710
2,029,961
2,220,923
* 146,200
136,922
2 7 1L
BA
* 2,349,904
5
2,295,837
0
Outlays
11,156
D
1,670
"7,000
2,280,735
B
3,156
^4,250
2,242,665
* 8,000
"7,750
Energy supply, R&D - plant and capital equipment
271
BA
BA
Appropriation, current
462,129
448,478
* 401,147
B
0
Outlays
Uranium enrichment - operating expenses
2,500
461,077
«1,000
337,477
433,779
1,500
271
BA
51,636
60,523
307,600
0
187
400,000
1,734
A
307,600
208,940
1,300
A
BA
0
Outlays..
Uranium enrichment - plant and capital
ment
8,281
213,350
equip271
Outlays
Fossil fuel - operating expenses
112,733
4,000
400,000
56,981
BA
660,876
746,627
54,809
23,443
271
Outlays
Fossil energy construction
BA
BA
O
0
713,158
*69U50
* 24,000
D
1,786
753,235
* 16,150
698,179
B
7,850
271
Outlays
Energy production, demonstration and distribution
BA
99,709
103,250
0
12,924
139,301
BA
BA
172,519
111,221
130,841
^ 566
128,050
* 449,835
209,700
271
Appropriation, current
Outlays
See footnotes at end of table.
0
K
178,737
224,333
437
THE FEDERAL PROGRAM BY AGENCY A N D ACCOUNT
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1980
estimate
1979
actual
Account and functional code
1981
estimate
Department of Energy—Con.
Energy Programs—Con.
Energy conservation:
(Energy conservation)
(Appropriation, current).
272
BA
610,848
5,000
* 912,284
578,702
B
27,392
D
m
(Reappropriation)
(Outlays)
(Area and regional development)
(Appropriation, current)
BA
0
251,733
158,750
579,644
* 13,820
BA
20,000
50,000
24
10,450
* 150,000
62,100
815,547
603,914
1,067,284
855,498
K
103,978
2,300,000
1,294,400
452
(Outlays)
0
Total Energy conservation..
BA
0
630,848
251,757
BA
3,007,746
BA
0
1,020,727
767,105
BA
65,644
87,273
Strategic petroleum reserve
Appropriation, current
Reappropriation
Outlays
Energy information administration
Appropriation, current
783,298
* 10,100
274
276
.
* 116,223
B
OutlaysEconomic regulation
Appropriation, current..
0
61,341
BA
99,233
20,200
D
935
86,161
* 20,200
116,173
276
152,879
* 162,471
Outlays..
Federal Energy Regulatory Commission
Appropriation, current
Reappropriation
Outlays
Energy security reserve
Appropriation, current
Outlays
Payments to states under Federal Power Act
Appropriation, permanent, indefinite
Outlays
See footnotes at end of table.
81,699
BA
54,130
156,186
20,000
B
276
0
Outlays..
Geothermal resources development fund
Appropriation, current
0
* 43,000
* 2,523
149,404
* 23,000
50,240
67,187
K
2,300
* 2,435
67,269
fl
2,300
76,374
75,587
271
BA
204
BA
0
376
181
D
1,284
7
1,397
41,982
1,247
2,208,000
155,000
53,000
85
85
85
85
271
BA
0
852
BA
0
85
218
T H E B U D G E T FOR FISCAL Y E A R 1981
438
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Department of Energy—Con.
Energy Programs—Con.
Public Enterprise Funds:
Spent fuel storage fund
Authority to borrow, current, indefinite
Outlays
271
'300,000
BA
0
'-100,000
'200,000
Trust funds
Advances for cooperative work
Appropriation, permanent, indefinite
Outlays
271
BA
0
3,967
2,653
12,996
13,309
14,903
14,873
Total federal funds Energy Programs
BA
0
7,820,535
5,503,101
9,025,984
6,391,159
8,674,089
7,345,697
Total Trust funds Energy Programs
BA
0
3,967
2,653
12,996
13,309
14,903
14,873
BA
2,614
2,660
' Outlays
0
Public Enterprise Funds:
Bonneville Power Administration fund
271
Outlays
0
General and Special Funds:
Operation and maintenance, Southeastern Power Administration
271
Appropriation, current
BA
2,322
2,660
* 3,069
3,069
59,137
-128,140
-84,500
Power Marketing Administrations
Federal funds
General and Special Funds:
Operation and maintenance, Alaska Power Administration
271
Appropriation, current
Outlays
0
Continuing fund, Southeastern Power Administration
271
Appropriation, permanent
BA
Outlays
0
General and Special Funds:
Operation and maintenance, Southwestern Power Administration
271
Appropriation, current
BA
1,253
1,400
1,028
1,475
* 1,552
1,544
50
50
36,077
32,180
* 28,208
*208
Outlays
Continuing fund, Southwestern Power Administration
271
Appropriation, permanent
Outlays
Construction, rehabilitation, operation and maintenance, Western Area Power Administration
271
Appropriation, current
Outlays
See footnotes at end of table.
0
19,896
32,388
BA
0
228
129
99
BA
103,252
122,800
79,053
122,800
0
37,208
rzirz
* 138,502
138,502
439
THE FEDERAL PROGRAM BY AGENCY A N D ACCOUNT
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1981
estimate
1980
estimate
Department of Energy-- C o n .
Power Marketing Administrations—Con.
Emergency fund, Western Area Power Administration
271
Appropriation, current
BA
Outlays
0
Public Enterprise Funds:
Colorado river basins power marketing fund, Western
Area Power Administration
271
Appropriation, current
BA
200
200
200
2,286
5,152
-7,299
5,152
* 3,548
3,548
0
BA
145,960
154,316
164,600
36,634
175,079
99,571
BA
231,180
264,294
Outlays
Total Federal funds Power Marketing Administrations
200
200
Departmental Administration
Federal funds
General and Special Funds:
Departmental administration:
(Energy information, policy, and regulation)
276
(Appropriation, current)
* 361,721
B
(Outlays)
Special foreign currency program
Appropriation, current
Outlays
239,153
0
8,233
D
6,396
276,428
* 4,483
339,548
8
2,800
271
BA
0
2,000
40
69
75
Total Federal funds Departmental Administration. BA
233,180
239,193
278,923
280,980
361,721
342,423
10,867,663
8,437,471
12,475,249
9,688,584
12,654,117
11,173,439
-59,137
-72,166
-73,956
0
Summary
Federal funds:
(As shown in detail above)
Deductions for offsetting receipts:
Proprietary receipts from the public
BA
0
270
BA
0
2 7 1 BA
-478,429
-1,920,296
-2,393,481
3 0 0 BA
-5,119
-15,500
-16,740
902 BA
-13
0
0
0
Total Federal funds
BA
0
Trust funds:
(As shown in detail above)
BA
0
See footnotes at end of table.
- 1
- 1
10,324,965
7,894,773
10,467,286
7,680,621
10,169,939
8,689,261
3,967
2,653
12,996
13,309
14,903
14,873
T H E B U D G E T FOR FISCAL Y E A R 1981
440
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1981
estimate
estimate
Department of Energy—Con.
Summary—Con.
Deductions for offsetting receipts:
Proprietary receipts from the public
2 7 1 BA
0
0
0
Total Trust funds
, , BA
0
-3,967
-12,996
— 1,314
313
10,324,965
7,893,459
10,467,286
7,680,934
-14,903
-30
10,169,939
8,689,231
Department of Health and Human Services
Health Programs
Public Health Service
Food and Drug Administration
Federal funds
General and Special Funds:
Salaries and expenses
554
Outlays
Buildings and facilities
554
Appropriation, current
Outlays
Public Enterprise Funds:
Revolving fund for certification and other services
554
Outlays
Total Federal funds Food and Drug Administration
332,799
297,811
312,796
c
276
D
10,420
*756
303,938
10,459
2,096
4,372
4,801
29,663
7,797
BA
301,954
0
BA
0
305,925
-73
0
312,413
299,834
328,620
308,739
362,462
313,722
BA
BA
1,265,311
1,367,903
1,303,448
* 133,832
BA
Health Services Administration
Federal funds
General and Special Funds:
Health services
Appropriation, current
551
c
1,378
6,692
* 2,183
w
10,825
1,237,603
* 9,093
D
Outlays..
Indian health services
Appropriation, current
Outlays
See footnotes at end of table.
0
1,183,174
551
BA
BA
492,193
0
465,345
538,874
c
700
D
7,043
£
2,155
526,239
1,260,228
* 1,732
601,819
588,621
441
THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Department of Health and Human Services—Con.
Health Programs—Con.
Public Health Service—Con.
Health Services Administration—Con.
Indian health facilities
Appropriation, current
Outlays
Emergency health
Outlays
551
BA
0
75,960
90,110
74,302
76,691
76,670
84,124
054
0
Total Federal funds Health Services Administration
3
19
BA
0
1,834,464
1,738,632
2,012,060
1,849,645
2,115,769
1,934,705
BA
201,472
211,863
0
182,947
181,659
305,331
K
3,000
223,129
BA
0
62,500
55,388
79,552
64,265
82,705
80,197
Total Preventive health services
BA
0
263,972
238,335
291,415
245,924
391,036
303,326
Total Federal funds Center for Disease Control....
BA
0
263,972
238,335
291,415
245,924
391,036
303,326
BA
914,953
982,967
0
840,940
970,710
-2,133
0
3,256
£
425
868,760
—2,133
Center for Disease Control
Federal funds
General and Special Funds:
Preventive health services:
(Health care services)
(Appropriation, current)
551
(Outlays)
(Health research)
(Appropriation, current)
(Outlays)
552
National Institutes of Health
Federal funds
General and Special Funds:
National Cancer Institute:
(Health research)
(Appropriation, current)
552
(Outlays)
(Education and training of health care work
force)
553
(Appropriation, current)
(Outlays)
Total National Cancer Institute
See footnotes at end of table.
A
A
895,202
BA
0
21,784
20,265
29,290
27,178
24,833
23,800
BA
0
936,737
861,205
1,001,548
893,805
1,007,800
919,002
442
T H E B U D G E T FOR F I S C A L Y E A R 1981
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1980
estimate
1979
actual
Account and functional code
1981
estimate
Department of Health and Human Services—Con.
Health Programs—Con.
Public Health Service—Con.
National Institutes of Health—Con.
National Heart, Lung and Blood Institute:
(Health research)
(Appropriation, current)
552
(Outlays)
BA
487,534
0
433,884
A
A
(Education and training of health care work
553
force)
(Appropriation, current)
(Outlays)
Total National Heart, Lung and Blood Institute....
National Institute of Dental Research:
(Health research)
(Appropriation, current)
492,102
—1,193
D
1,171
E
146
453,743
—1,193
515,259
BA
0
22,600
20,113
35,442
23,310
33,140
29,716
BA
0
510,134
453,997
527,668
475,860
548,399
491,735
BA
61,374
63,562
—217
z>494
66,128
552
A
(Outlays)
0
62,699
A
(Education and training of health
force)
(Appropriation, current)
(Outlays)
National Institute of Arthritis, Metabolism, and Digestive Diseases:
(Health research)
552
(Appropriation, current)
BA
0
3,839
3,924
4,756
4,465
4,323
4,221
BA
0
65,213
66,623
68,684
68,654
70,451
69,442
BA
287,237
349,828
0
247,485
318,473
D
1,434
£
150
307,273
22,773
1,012
17,131
—1,012
15,883
341,818
323,392
365,711
346,292
BA
15,530
0
15,530
A
Total National Institute of Arthritis, Metabolism.
and Digestive Diseases
65,221
325,241
care work
553
(Outlays)
See footnotes at end of table.
*89
64,406
—217
care work
553
Total National Institute of Dental Research
(Outlays)
(Education and training of health
force)
(Appropriation, current)
462,019
BA
0
302,767
263,015
21,051
443
THE FEDERAL PROGRAM BY AGENCY A N D ACCOUNT
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
198!
estimate
Department of Health and Human Services—Con.
Health Programs—Con.
Public Health Service—Con.
National Institutes of Health—Con.
National Institute of Neurological and Communicative
Disorders and Stroke:
(Health research)
552
(Appropriation, current)
BA
204,338
232,533
—427
"704
*53
211,494
A
-427
242,163
A
(Outlays)
0
(Education and training of health care work
force)
553
(Appropriation, current)
(Outlays)
Total National Institute of Neurological and Communicative Disorders and Stroke
National Institute of Allergy and Infectious Diseases:
(Health research)
552
(Appropriation, current)
(Outlays)
(Education and training of health care work
force)
553
(Appropriation, current)
(Outlays)
Total National Institute of Allergy and Infectious
Diseases
National Institute of General Medical Sciences:
(Health research)
(Appropriation, current)
Total National institute of General Medical Sciences
BA
0
8,027
7£93
BA
0
212,365
194,234
242,330
219,215
249,807
237,397
BA
182,703
204,969
* —564
°713
M21
219,610
0
160,300
184,956
—564
206,672
10,433
p
8,802
9,437
8,276
BA
8,625
0
7,571
9,467
8,148
228,637
A
n
7,644
8,760
BA
0
191,328
167,871
215,683
193,829
228,412
214,948
BA
230,431
275,263
0
201,793
263,110
®150
217,689
BA
0
47,197
44,716
49,368
44,142
56,376
44,690
BA
0
277,628
246,509
312,628
261,831
331,639
301,418
552
(Outlays)
(Education and training of health care work
force)
553
(Appropriation, current)
(Outlays)
See footnotes at end of table.
186,641
256,728
444
T H E B U D G E T FOR FISCAL Y E A R 1981
BUDGET ACCOUNTS LISTING (In thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1981
estimate
Department of Health and Human Services—Con.
Health Programs—Con.
Public Health Service—Con.
National Institutes of Health—Con.
National Institute of Child Health and Human Development:
(Health research)
552
(Appropriation, current)
BA
187,181
198,301
-236
D
707
208,516
176,710
—236
190,672
10,680
9,467
9,015
10,214
209,549
185,941
217,531
200,886
107,872
—265
"440
E9
113,187
112,201
—265
123,388
5,128
—250
4,769
—250
3,375
A
(Outlays)
0
(Education and training of health care work
force)
553
(Appropriation, current)
(Outlays)
Total National Institute of Child Health and
Human Development
National Eye Institute:
(Health research)
(Appropriation, current)
BA
0
155,331
A
10,449
8,921
BA
0
197,630
164,252
BA
100,479
552
A
(Outlays)
0
72,679
A
(Education and training of health care work
force)
553
(Appropriation, current)
BA
4,713
A
(Outlays)
0
4,074
A
Total National Eye Institute
National Institute of Environmental Health Sciences:
(Health research)
552
(Appropriation, current)
(Outlays)
(Education and training of health care work
force)
553
(Appropriation, current)
(Outlays)
Total National Institute of Environmental Health
Sciences
See footnotes at end of table.
3,139
BA
0
105,192
76,753
112,934
116,455
116,562
126,527
BA
73,082
90,087
0
60,550
76,886
D
381
£
13
72,212
7,026
6,477
7,182
6,611
84,306
78,689
97,269
90,433
BA
0
BA
0
4,998
4,178
78,080
64,728
83,822
445
T H E FEDERAL PROGRAM BY AGENCY A N D ACCOUNT
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1979
actual
Account and functional code
1980
estimate
1921
estimate
Department of Health and Human Services—Con.
Health Programs—Con.
Public Health Service—Con.
National Institutes of Health—Con,
National Institute of Aging:
(Health research)
(Appropriation, current)
552
(Outlays)
(Education and training of health care work
force)
553
(Appropriation, current)
(Outlays)
Total National Institute of Aging
Research resources:
(Health research)
(Appropriation, current)
BA
54,367
0
40,033
BA
0
2,544
1,873
67,012
"184
*44
56,104
72,966
2,988
2,564
2,351
2£84
67,094
BA
0
56,911
41,906
70,228
58,668
75,317
69,378
BA
153,629
168,522
"92
183,710
0
158,821
160,236
162,447
552
*11
(Outlays)
(Education and training of health care work
force)
553
(Appropriation, current)
(Outlays)
Total Research resources
John E. Fogarty International Center for Advanced
Study in the Health Sciences
552
Appropriation, current
BA
0
535
434
677
614
729
690
BA
0
154,164
159,255
169,302
160,850
184,439
163,137
BA
8,989
8,989
9,181
D
100
*6
Outlays
National Library of Medicine:
(Health research)
552
(Appropriation, current)
(Outlays)
(Education and training of health care work
force)
553
(Appropriation, current)
0
6,706
BA
0
9,782
9,221
8,801
10,653
9,902
9,767
10,610
34,963
44,730
42,839
BA
31,649
(Outlays)
0
29,988
33,347
D
640
£
17
31,486
Total National Library of Medicine
BA
0
41,431
39,209
44,657
41,388
See footnotes at end of table.
8,880
32,229
446
T H E B U D G E T FOR FISCAL Y E A R
@FedFRASER