Full text of Budget in Brief : Fiscal Year 1968
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THE
BUDGET
IN BRIEF
E X E C U T I V E O F F I C E OF THE P R E S I D E N T / B U R E A U OF T H E B U D G E T
GLOSSARY
Fiscal year.—Year running from July i to June 30 and designated by the calendar year in which it ends.
New obligational authority.—Authority provided by the Congress to obligate the Federal Government to pay out money. While
usually voted each year, it may become available annually under a
permanent law, as with interest on the public debt. Appropriations
are the most common form of obligational authority.
Obligations.—Commitments made by Federal departments and
agencies to pay out money—as distinct from the actual payments
made for products, services, loans or other purposes.
The amounts
must be within the maximum amounts provided by Congress.
Expenditures.—The
actual disbursements or payments.
They
consist generally of checks issued and cash paid. The transactions
of business-type activities which generate their own receipts (such
as the Post Office) are normally recorded as net expenditures—that
is, the excess of disbursements over receipts. If receipts exceed disbursements, the result is shown as a negative expenditure.
Administrative
budget.—Contains all transactions in funds
owned by the Federal Government. This provides the major framework for requesting and approving authority to obligate funds.
Trust funds.—Money held by the Federal Government in trust
for specified purposes, such as social security and highways. Transactions of these funds are not included in the administrative budget.
Consolidated
cash statement.—Combines transactions of ad-
ministrative budget accounts with those of the trust funds (less certain internal transactions) to show the flow of cash between the
Government and the public. This statement is often referred to as
Receipts from and Payments to the Public.
National income accounts, Federal sector.—A comprehensive
measure which records Federal receipts and expenditures directly
affecting the current flow of income and output. Thus, it includes
trust funds but excludes transactions of a financial nature.
Gross national product.—Total market value of all final goods
and services that the Nation produces in a single year.
FROM THE PRESIDENrS BUDGET MESSAGE
Our Nation is stronger today than ever before.
W e need not, indeed we dare not, forsake our basic
goals of peace, prosperity, and progress.
• The pursuit of peace is essential for the continued
advancement of our Nation and all mankind.
• Prosperity and progress will lead us toward a
society where all can share in the bounty of nature
and the products of man's ingenuity and creativity.
At various times in the past, democracies have been
criticized for their seeming inability to make hard
choices—for seeking soft, easy answers to critical
problems. This Nation has proven the doubters
wrong time and again, and will not fall prey to such
weakness now.
We can afford to achieve our goals. Let us not
retreat from the task, no matter how demanding it
may be.
This budget represents a careful balance of our
abundant resources and our awesome responsibilities.
As President, I have weighed the alternatives and
made the hard choices as best I could.
JANUARY 24,
1967.
1
CONTENTS
Page
BUDGET SUMMARY
Program Highlights
3
4
P A R T 1. B U D G E T P O L I C Y A N D T H E E C O N O M Y
5
The Budget in Perspective
Growing public responsibilities
Public use of the Nation's output and labor force
Aid to State and local governments
Public debt
Investment
9
9
12
13
15
16
P A R T 2. T H E B U D G E T P R O G R A M B Y F U N C T I O N
National Defense
International Affairs and Finance
Space Research and Technology
Agriculture and Agricultural Resources
Natural Resources
Commerce and Transportation
Housing and Community Development
Health, Labor, and Welfare
Education
Veterans Benefits and Services
General Government
Interest
P A R T 3. T H E B U D G E T PROCESS
51
The Federal Budget Cycle
Economic Aspects of the Budget Process
Planning-Programing-Budgeting
Cost Reduction
51
54
56
57
P A R T 4. M E A S U R E S OF F E D E R A L F I N A N C E S
TABLES ON THE BUDGET
Note.—All years referred to are fiscal years, unless otherwise noted.
58
65
Details in the tables,
text, and charts of this booklet may not add to totals because of rounding.
2
19
20
25
28
30
32
34
37
40
44
47
49
50
1968 BUDGET SUMMARY
The Federal budget has two purposes:
* Its individual programs are designed to provide for the national
security, to encourage international cooperation, and to carry on
important domestic activities;
* Its total expenditures and receipts have an important influence on
the growth and stability of the national economy.
Expenditures for national defense will rise sharply in the 1968
budget, as we:
• Support combat operations in Vietnam;
#
Maintain and improve the forces needed to deter aggression
elsewhere.
The 1968 budget provides assistance to the developing nations of
the world, to help them help themselves in building strong and free
societies.
The budget also includes selective expansion in a number of domestic programs aimed at meeting the Nation's most urgent social problems. The development of our cities, health, education, and pollution
control will receive particular stress. Within these and other programs,
the budget emphasizes measures to open up opportunities for the
poor.
In its overall expenditures and receipts, the 1968 budget is designed
to help the national economy maintain steady growth, while avoiding inflationary pressures. In order to finance the increase in defense
expenditures, and to achieve an economic climate in which lower interest rates are possible, the budget proposes tax measures which will
increase 1968 revenues by $5.5 billion.
3
Program
Highlights
A detailed discussion of the budget programs is presented in Part 2.
In summary, funds are provided for:
• Meeting our international commitments and further strengthening
our defense forces;
* Improving our education, health care, community development,
and transportation;
* Continuing the attack on poverty, and extending it to combat
more effectively the problems of the rural poor;
* Restoring our Nation's natural beauty, purifying its air and water,
and conserving natural resources;
• Helping States and communities to combat crime; and
• Assisting veterans in easing their adjustment to civilian life.
In the past few years, the Federal Government has undertaken
an unprecedented number of forward-looking programs which
promise to enrich the quality, the justice, and the opportunity of
American society to an extent no one would have dared hope
only a few short years ago.
But our responsibilities to the American people are not discharged with the enactment of new programs which meet the
needs of the Nation. There exist two other closely related obligations of equal gravity:
First, we are obligated to assure effective and economical
management of governmental programs—both old and new.
Effective management of government activities enhances the
benefits of those programs. Economical management
releases resources for the people's use.
Second, we are obligated to maintain close and harmonious
working relationships with State, county, and local governments—our partners in a new and creative federalism.
—From the President's budget message,
January 24, 1967.
4
PART 1
BUDGET POLICY AND THE ECONOMY
There are different ways of measuring Federal budget totals.
Each serves a different purpose.
The national income accounts ( N I A ) budget provides the best single
measure of the overall economic impact of Federal receipts and expenditures on the economy. In this measure the income and outgo of
the Federal Government are recorded on the same basis employed by
private firms and individuals. Together with data from business and
individuals, these budget totals are used to construct the official gross
national product and national income statistics—hence the name,
"national income accounts budget." The NIA budget includes all
of the income and expenditure transactions of the Federal Government, including the various Federal trust funds, such as social security.
But it excludes the lending operations of the Government. Loans,
$ Billions
5
unlike grants, are repayable. They represent an exchange of assets,
not an addition to income.
The consolidated cash budget is a comprehensive accounting of the
total cash transactions of the Federal Government. It includes all of
the Federal lending operations. While the NIA budget is the best
measure of the economic impact of Federal spending and taxing policies on the economy, the cash budget—including the trust funds—provides the best basis on which to discuss detailed Federal program
decisions and descriptions.
The administrative budget is the one most referred to in Congressional discussions and in the press. But it is mucli less comprehensive
than the NIA budget or the consolidated cash budget, since it excludes
all of the Federal Government's trust funds—which are estimated to
have revenues of $48.1 billion and expenditures of $44.5 billion 111 fiscal
year 1968.
The 1968 budget proposals will result in an estimated $169.2 billion
of expenditures on a national income accounts basis. Revenues, including the tax proposals, are estimated at $167.1 billion, with a deficit
of $2.1 billion. This compares with a deficit of $3.8 billion in 1967
and a surplus of $300 million in 1966.
6
FEDERAL RECEIPTS AND EXPENDITURES IN THE NATIONAL INCOME
ACCOUNTS
[Fiscal years.
In billions]
Description
1967
estimate
1966
actual
1968
estimate
RECEIPTS
$57.9
$65.5
$76.8
Corporate profits tax accruals
30.7
32.3
35.3
Indirect business tax and nontax accruals
15.9
16.5
16.9
Contributions for social insurance
28.1
35.5
38.1
132.6
149.8
167.1
Personal tax and nontax receipts
T o t a l receipts, national income basis, ,
EXPENDITURES
Purchases of goods and services
71.7
83.6
91.9
Transfer payments
34.3
39.8
46.6
Grants-in-aid to State and local governments.
12.9
14.8
16.7
N e t interest paid
9.1
10.0
10.5
Subsidies less current surplus of Government enterprises. .
4.5
5.4
3.5
132.3
153.6
169.2
+0.3
—3.8
—2.1
Total expenditures, national income basis
Surplus ( + ) or deficit ( — ) , national income basis
The Federal Government exerts considerable influence on total
spending in the economy (primarily through purchases of goods and
services, transfer payments, and taxes) and thus on employment, output, and prices.
Consequently a major function of the budget is its
contribution, through tax and expenditure policies, to the maintenance of high employment and levels of real growth.
In the early part of the 1960's the economy was lagging behind its
potential. Unemployment was substantial and much industrial plant
capacity was idle. To fill this gap between actual and potential production, the Administration stimulated the economy through an expansionary fiscal policy.
This was accomplished primarily through
substantial reductions in individual and corporate taxes in 1962, 1964,
and 1965.
By increasing the purchasing power of consumers and
business firms, the tax cuts have fostered a strong and continuing
economic expansion, now in its 71st month.
The consequences
have been striking reductions in unemployment and unused plant
capacity.
The following chart illustrates the effect of fiscal policy
on economic activity in this period.
7
Indicators of Economic G r o w t h
Gross Notional Product - Constant Dollars
$ Billions
700
Percent
Amount
0I
1
1960
61
Calendar Y e a n
Percent
-8
A n n u a l Rate of Growth
68
1
63
I
64
I
'
65
66
' I
.
i
1 9 6 0 61
68
C a l e n d a r Years
Plant Utilization Rate
63
I
64
I I
65
Unemployment Rate
Percent
~8
100 ~
1960
61
Calendar Years
62
63
64
66
1960
61
Calendar Y e a n
62
63
64
65
66
1 9 6 6 Preliminary
The best overall indicator of economic growth is the rise in the real
gross national product—the aggregate value of final goods and services
produced during the year, adjusted for price changes. The G N P rose
by about one-third during the 1960-66 period and the average annual
rate of growth was almost 5%. As a result of the increased economic
activity, reflected in a rising GNP, more than 7 million new jobs were
created, and for 1966 the unemployment rate was below 4% for the
first time in 13 years.
As the economy approached high employment levels in late 1965
and 1966, idle capacity was gradually used up. At the same time, defense expenditures were increasing rapidly to meet requirements in
Vietnam. While tax reductions had been used in earlier years to
stimulate a lagging economy, tax policy last year was employed to
restrain pressure on resources and combat inflation. In March 1966,
8
and again in October, tax measures were enacted to raise Federal revenues and ease inflationary pressures. In addition, fiscal year 1967
expenditures are being deferred or reduced by $3 billion below levels
authorized by the Congress.
Additional tax measures are proposed in the 1968 budget. A 6%
surcharge on both individual and corporate tax liabilities is recommended. The proposal exempts individual taxpayers in the first two
brackets and would remain in effect for 2 years, or for such period
as may be warranted by the unusual expenditures in Vietnam. If
the fiscal requirements of the commitments in Vietnam allow, however, an earlier expiration date will be recommended.
THE BUDGET IN PERSPECTIVE
To meet the continuing needs of our citizens, the Federal Government provides a wide range of public services—from national defense
to finding new sources of food and fuels. The pattern and quantity
of public services provided at any given time are strongly influenced
by changes in social and economic conditions.
Growing
Public
Responsibilities
The pace of growth and change in recent years has led to expanding
requirements for services from the Federal Government, and for Federal assistance to State and local governments to help them meet the
needs of their citizens.
Over the last decade alone, the Nation's population increased by
more than 27 million. Changes in the age distribution and location
of our people increase public service demands over and above what
this total growth alone would require.
First, population has in-
creased markedly in age groups under 18 or 65 and over which have
greater need for such public services as education or social security.
These groups have increased by 20% over the past 10 years and now
constitute 45% of our population.
Second, the number of people of
all ages living in urban areas has increased in this same decade more
than 2 5 % , and now makes up more than 70% of the population.
250-400 O - 67 - 2
9
The quantitative changes outlined above explain only part of the
reason for growing Federal responsibilities. Our society has changed
qualitatively, as well. The standard of living has risen dramatically.
One measure of this increase is real disposable income per capita,
which is simply the amount of money available for private spending after adjustment for taxes, price increases, and population growth.
Using this measure, the Nation's standard of living rose nearly 30%
over the past decade. As our level of living increases we not only
desire better private goods and services, but we demand and can afford
better public services as well.
Selected Program Trends
Millions
Millions
55 —
— 60
Federal Airways Operations
Social Security
—
— 80
Total Landings a
lakeoffs
40
Controll
Siliiom
Millions
— 400
19 —
National Parks and Forests
300
1 Ov
Minted
61
63
65
67
68 1957
Estimate
IO
59
61
63
65
67
68
Estimate
In recent years, the American economy has performed superbly.
Since 1963, our Nation's output has risen at an average rate of 5.5%
a year. 5.3 million more people are employed and 1.2 million
fewer unemployed. Industrial capacity has grown by 1 8 % , and
far less of it is idle than was the case 3 years ago.
—From the President's budget message,
January 24, 7967.
The growing workloads of Federal agencies stem directly from these
steadily increasing requirements for more and better public services.
For example, between 1958 and 1968:
• The number of active urban renewal projects will have risen by
over 250%.
• Visitors to our national parks will have increased 150%.
• The number of occupied federally assisted public housing units
will have grown by nearly 70%.
• Enrollees in vocational education programs will have increased
by almost 80%.
• The volume of mail delivered will have risen by nearly 40%.
• The number of passports issued will have increased 175%.
• The number of Federal grants and loans to college students will
increase more than four-fold, to 2.2 million.
Also, the 1968 budget includes many programs which did not exist
in 1958.
For instance, by 1968:
• Medicare will cover over 40% of the medical costs incurred by
20 million aged people.
• The education of 8% million disadvantaged school children will
be strengthened.
• The number of medical schools improved or constructed with
Federal support will total 71.
• Federal funds will have assisted in making about 117,000 low and
moderate income housing units available under private sponsorship.
11
Public
Use of the Nation's
Output
and Labor
Force
The reasons for growth in Federal spending art clear.
The relative
size of the increase, however, requires some comparisons to place it
in proper perspective.
Tin national economy and State and local
government activities serve as useful measuring rods since they are
subject to demands similar to those affecting the Federal Government.
For more than a decade, Federal expenditures ( N I A basis) have
constituted a remarkably stable proportion of gross national product
(GNP)—approximately one-fifth. Considering only the administrative budget, which excludes the rapidly growing trust funds, the ratio
of Federal spending to G N P will be under
17% in 1968.
Excluding
special spending for Vietnam operations, Federal expenditures drop
to about 1 4 % of G N P in 1968—the lowest in recent years.
iwnt
50
Federal Expenditures — National Income Accounts
as a Percent of Gross National Product
State and local governments, in trying to meet their rapidly growing
responsibilities, will have increased their purchases of current output by two-thirds in the past 10 years—much more rapidly than the
12
Federal Government. A part of this increase has been financed by
Federal grant-in-aid programs. Private spending will have increased
by about 50% during the period. The accompanying chart shows
the relative growth in spending by the major sectors of the economy
since 1942. (The amounts are in real terms, which means that the
effects of price increases have been removed.)
T h e N a t i o n ' s Real O u t p u t :
Public a n d Private
Demand
The same trends are evident for Government employment. While
Federal civilian employment will increase 22% from 1958-1968, State
and local governments will find it necessary to increase employment
by more than 70%. Federal employment, therefore, is a declining
portion of all governmental civilian employment, 23% estimated for
1968, compared to 29% in 1958.
Aid to State
and Local
Governments
The growing strain on State and local government resources creates
an additional responsibility for the Federal Government—to assist
these governments in meeting the burgeoning needs of the people.
Federal expenditures to aid State and local governments (including
13
shared revenue, as well as grants) will have grown from about $4.9
billion in 1958 to an estimated $17.4 billion in 1968—an increase of
255%. These aids cover a wide variety of activities ranging from
airport construction to urban renewal. In 1968, about half of the
funds will be spent for highways and public assistance.
Federal A i d to S t a t e a n d L o c a l Governments
Budget
and
Trust
Fund
Expenditures
0 JBBBWBBBMBBMMwMMMMMBlMMHM
1957
1958
1959
Fiscal Years
I960
1961
1962
1963
1964
1965
1966
1967
1968
Estimate
As a proportion of total Federal cash payments to the public, these
grant-in-aid expenditures rose from 6% in 1958 to about 10% currently. Federal funds have also become an important source of
revenue for State and local governments, constituting about 1 5 % of
total State-local general revenue in recent years. Many of the newer
Federal programs—in health, education, housing, and community
development—involve the Federal Government in cooperative ventures with State and local governments in communities across the
Nation. Federal expenditures for these purposes insure that many
essential public needs are met at the local level, thus maintaining a
workable cooperative federalism.
Public
Debt
The public debt of the Federal Government was incurred primarily
in World War II. About two-thirds of the present debt level was
incurred in the 8-year period from 1939 to 1947. In 1939, the debt
was $45.9 billion. By 1947, it had risen almost sixfold to $258.4 billion. At the end of 1967, it is expected to be $327.3 billion.
While the debt is estimated to increase $8.1 billion in 1968, to $335.4
billion, it will continue to decline in relation to the size of our economy.
As a percentage of the gross national product, the public debt has declined sharply since 1947—from 1 1 8 % to about 4 1 % in 1968. As
the economy continues to expand, the public debt becomes a continually smaller proportion of gross national product.
Percent
125
Public D e b t
as a Percent of G r o s s N a t i o n a l Product
0
1942
1945
Fiscal Years
Estimate
Moreover, net Federal debt will have grown much more slowly
than other kinds of net debt. Since 1947, the national debt will have
grown less than 30%, while private debt will rise about 550% and the
debt of State and local governments about 700%.
15
N e t Public a n d Private D e b t
$ Billions
1600 ~
1400
1200
1000
600
0
1942
1945
End of Y e a r
1965
Estimate
68
Investment
In assessing financial position, it is important to consider assets as
well as liabilities. While the Federal Government does not budget
separately for capital investments and current operating expenses,
data are made available in the budget to identify expenditures which
are of an investment nature. These expenditures add to our supply
of assets and produce benefits which extend over many years. Examples are the construction of highways and other public works, loans
to finance housing, and grants to build hospitals. In 1968, net Federal
16
investment expenditures, other than for defense and space, will total
$9.7 billion. This total would be substantially higher were it not for
the sale of about $5.3 billion of financial assets, as a result of increased
efforts to substitute private credit for Federal lending programs wherever appropriate.
Outlays for other developmental purposes are also grouped and
shown separately, since they yield benefits of increased productivity
over many years. Research, education, training and health programs
tend to raise national productivity, and are as truly an investment
from the Nation's standpoint as outlays for plant and equipment.
These developmental outlays will total $8.5 billion in 1968, an increase
of $1.2 billion over the prior year.
These expenditures for investment and for other developmental purposes in 1968 will constitute 1 1 % of total Federal payments and about
20% of outlays excluding defense and space.
Our agenda must give high priority to a stronger and more
effective federal system of government in the United States. To
meet urgent and growing needs, the Federal Government is
providing a wide range of programs to assist State and local
governments. Now the chief task is to manage these programs
efficiently at every level of government to assure the most effective public services.
IT
"7T
#Jt
J»,
W
JL
TT
. . . Federalism is not a one-sided partnership, and the States
and local governments do not exist simply to carry out programs
on behalf of the National Government. When we lose sight of
these facts the federal system suffers, governments work at cross
purposes, and the programs fail to achieve their objectives. Our
task now is to improve Federal programs and administration,
while we do more to help State and local governments strengthen
their machinery for planning and management.
—From the President's budget message,
January 24, ig6y.
2 5 0 - 4 0 0 O - 67 - 3
17
THE GOVERNMENT DOLLAR
Administrative Budget a n d Trust Funds
Where
it comes from . . .
Where
it goes . . .
^ F i x e d Interest Charges
Fiscal Y e a r J 9 6 8 Estimate
18
PART 2
THE BUDGET PROGRAM BY FUNCTION
The expenditures of the Federal Government are
grouped into 12 functional categories according to the
general purpose served. The chart below 1 indicates the
estimated scale of each of these functions.
In addition, the budget includes special allowances
estimated at $2.2 billion in 1968. These allowances cover
unforeseen contingencies, proposals for which estimates
of cost are not yet possible, and matters which are still
under study, for which specific proposals may be made
later. Examples include pay raises for military and
civilian employees, a prototype civil supersonic transport
and a nuclear space rocket.
1 9 6 8 Expenditures by Function
S Billions
20
40
!
mmi
[
I ^ H H ^ ^ B
Interest
1
1
N a t i o n a l Defense
H e a l t h , Labor, and
Welfare
60
A
80
1
M.
M
Administrative Budget
wm\
M
Y
Trust Funds
WKMi
Commerce and
Transportation
Veterans
S p a c e Research and
Technology
International
Agriculture
N a t u r a l Resources
Education
'31
General Government
Housing and Community
Development
1
T h e figures in this section do not add to the net total of Federal payments to the public,
largely because some transactions which take place wholly between one Government agency
and another have not been eliminated, as they have been in calculating the totals.
N A T I O N A L DEFENSE
/Dr
...
/Administrative Budget..
1 9 6 8 Expenditures | T r u $ f F u n d s
*
4 n
$ 7 5 . 5 Billion
$ 1 4 Bj„ion
This Nation is confronted with two fundamental defense tasks.
We must maintain and continue to improve the powerful strategic
and conventional war forces needed to meet all forms of threat to our
Nation's security. At the same time, we must provide all the forces
and equipment needed to preserve the independence of South Vietnam.
Funds are requested in the 1968 budget—including a supplemental
request for the current year—to enable us to meet these requirements.
Expenditures for national defense in 1968 are estimated to increase
by $5.5 billion over 1967, and $18.4 billion above 1966. Savings from
vigorous cost-reduction efforts and the prompt retirement of obsolete
weapon systems and unneeded installations are helping to hold total
expenditures to the lowest level consistent with our objectives.
Aside from the special costs of our operations in Vietnam, regular
Department of Defense payments will rise from $47.5 billion in
1967 to $50.4 billion in 1968.
ESTIMATED DEPARTMENT OF DEFENSE SPECIAL EXPENDITURES FOR
SUPPORT OF VIETNAM OPERATIONS
[In millions]
Fiscal year
1965
1966
196 7
1968
20
Expenditures
$103
5,812
19, 419
21,900
Expenditures
excluding
Vietnam
$46,070
48, 597
47, 531
50,400
Department
of
Defense—Military
As shown in the accompanying chart, expenditures by the Department of Defense are made for the pay of military personnel, purchase of
weapons and equipment, operation and maintenance of equipment
and facilities, research and development, civil defense, and the construction of needed facilities.
N a t i o n a l Defense
HI
Administrative
Budget
%
Trust
Funds
MILLIONS
DEPARTMENT OF DEFENSE-MILITARY
Military Personnel
Procurement
Operation and Maintenance
H H H B H H H I H I
Research and Development
7.200
B B 2,635
Military Construction, Civil Defense, and Other
ATOMIC ENERGY
m m
2,330
MILITARY ASSISTANCE
DEFENSE-RELATED ACTIVITIES
For purposes of planning, however, the Department of Defense has
found it useful to consider its financial needs another way—in terms
of major programs. Each program groups all forces, regardless of
military service, according to major military mission. The table on
page 22 is a brief summary of the forces now planned for each program for the end of fiscal year 1968.
Strategic forces.—The first purpose of our strategic forces is to
deter military aggression against this Nation and its allies. Should
deterrence fail, our combined strategic offensive and defensive forces
have the additional function of limiting damage to ourselves and our
allies. This is accomplished by striking the aggressor's remaining
strategic offensive forces and reducing the impact of the attack through
warning, interception, and civil defense programs.
21
T o increase the ability of these forces to survive an attack, and to
increase their capacity to penetrate an aggressor's defenses, the 1968
budget provides for ( 1 ) procurement of the Minuteman III missile
and the F B - 1 1 1 strategic bomber, (2) procurement of components
for the new Poseidon submarine-launched missile, (3) improved
penetration and payload capabilities for our present strategic missiles,
and (4) increased ability to direct these forces in the event of attack.
SUMMARY OF ACTIVE FORCES
Description
June 30,1968
(estimate
SELECTED FORCES B Y PROGRAM
Strategic Forces:
Intercontinental ballistic missile squadrons
Polaris submarines/missiles (in commission)
Strategic bomber w i n g s
Manned fighter interceptor squadrons
General Purpose Forces:
A r m y divisions
Warships (in commission)
Amphibious assault ships (in commission)
Marine Corps divisions/aircraft w i n g s
A i r Force tactical forces squadrons
Airlift and Sealift Forces:
A i r c r a f t squadrons
Troopships, cargo ships, and tankers
SELECTED DEPARTMENTWIDE TOTALS
A c t i v e aircraft (all programs)
Commissioned ships in fleet (all programs)
M i l i t a r y personnel (in thousands):
Army
Navy
Marine Corps
A i r Force
T o t a l , Department of Defense
General-purpose forces.—Our ground, sea, and air forces must
be sufficiently strong and flexible to respond to conventional, limited,
and guerrilla wars. The 1968 program provides funds to support
Vietnam operations without reducing our ability to react appropriately to other contingencies. Improvements include: ( 1 ) increases in
22
helicopter forces, (2) further gains in land force firepower, (3) a
ship construction and conversion program amounting to 44 ships, and
(4) additional purchases of modern tactical aircraft.
Specialized activities.—Included in the 1968 budget are funds
for intelligence activities, command and communications functions,
refined aerial mapping, weather forecasting, and aerospace rescuerecovery techniques.
Airlift-sealift forces.—These forces include the ships and planes
required to move our military forces rapidly and to support them in
combat. This ability can significantly reduce the duration and destructiveness of a conflict. Procurement of the new C - 5 A transport
aircraft—which should be able to do the work of four of our largest
existing transports—will increase in 1968. Funds are also provided
for five of a new class of fast-deployment logistic ships. These ships
represent a new concept in ship construction and enable more efficient
operation than existing ships.
National Guard and reserve forces.—Defense planning requires
highly trained reserve units which can be mobilized and deployed
quickly in an emergency.
To achieve improved combat readiness,
a selected reserve force has been created which will be more fully
equipped, manned, and trained.
Research
and development.—Our
vigorous military research
and development efforts are reflected in two categories. The costs for
new weapons systems and techniques are included in the research and
development program until these systems are procured for operational
use. At that time, they are shifted to the appropriate mission-oriented
program, where further development may continue if needed.
The
1968 budget emphasizes projects designed to meet needs in Southeast
Asia and continues development of strategic and conventional systems,
such as antisubmarine warfare, tactical operations, electronic warfare,
and command and control.
Other projects under development in-
clude the manned orbiting laboratory (MOL), satellite communications, navigation systems, nuclear test detection, and systems to provide early warning of missile launches.
23
Logistics, personnel support, and administration.—These defensewide support activities include supply and maintenance, training, family housing, and general medical services. They also provide
the funds for the support of allies such as Vietnam and Thailand,
which are not supported through the regular military assistance
program.
Military
Assistance
The loss of freedom anywhere is a vital concern to all free peoples.
The United States continues to provide assistance to nations unable to
support adequate military forces by themselves. Since its inception
in 1950, however, this program has changed in character and scope.
Now that many of our allies have become able to support their own
forces, emphasis has shifted to improving the internal security forces
of less prosperous nations faced with the threat of subversion.
Atomic
Energy
The Atomic Energy Commission is responsible for developing and
manufacturing nuclear weapons, pursuing other military uses for nuclear energy, adapting atomic energy to peaceful uses, and conducting
basic research. Expenditures in 1968 will rise by $60 million to $2.3
billion, as a result of increases in the weapons program, civilian power
reactor development, and basic research in the physical and biomedical
sciences. These increases are partially offset by a decline in the procurement of uranium and in the production of special nuclear materials.
Development efforts will be intensified on the "fast breeder" civilian power reactor, which would produce more fissionable fuel than
it consumes. The program for basic research in the physical sciences
will be marked by initiation of the design of a 20o-billion electron volt
accelerator which will be used by scientists to study the basic structure
of matter.
Defense-Related
Services
These programs include the Selective Service System, the strategic
and critical materials stockpile, the expansion of defense production,
and various other emergency preparedness programs outside the Department of Defense and the Atomic Energy Commission.
24
INTERNATIONAL AFFAIRS A N D FINANCE
r
j.,
/Administrative Budget..
1 9 6 8 Expenditures | j r u s t p u n d s
S 4 . 8 Billion
B|||jon
$ 0 2
U.S. leadership in the world community requires that our international policies and programs be responsive to political and economic
change. Our efforts to promote world peace, prosperity, and stability—the primary aims of our international programs—are essential to
the security and welfare of America.
The United States pursues these objectives in a variety of w a y s through discussions and negotiations with other nations, participation in international organizations such as the United Nations, programs of economic assistance to developing nations, and worldwide
information and exchange activities.
(f Administrative Budget 'Wfr.Truit Fu
International A f f a i r s a n d Finance
Net Receipts
N e t Expenditure.
|
Food for Freedom
* MILUONS
1,799
Economic a n d
Financial
^
Programs
Conduct of Foreign Affairs
Foreign fnfomatton and Exchange Activities
248
Economic
and Financial
Programs
Economic assistance programs are based on the logic that peace and
security throughout the world are served by the strong social and
economic development and stability of the developing countries. The
basic approach is one of supplementing local resources in support of
self-help efforts—through long-term development loans and technical
250-400 O - 67 - 4
25
and supporting assistance. In 1968 our economic aid programs will
require greater evidence and assurance from developing nations that
they are taking the difficult steps to stimulate and sustain economic
growth and social progress.
Two-thirds of 1 % of our national income is devoted to foreign aid,
including shipments of food, about the same as the average of all the
developed countries of the free world.
More than 85% of A I D expenditures in 1968 will be for purchases of
U.S. goods and services, compared with 42% in i960. This will minimize the effect of assistance programs on the U.S. balance of payments,
and will promote the long-term growth of U.S. exports by stimulating
new trade patterns and opportunities. Excluding Vietnam, about 65%
of our economic assistance is in the form of long term, dollar repayable,
development loans.
Alliance for Progress.—The Alliance encourages the economic
and social reforms needed to promote orderly economic and political
development in Latin America. Our development loans and technical assistance grants are related to progress in undertaking necessary
reforms. Increased emphasis will be given to programs in agriculture
and education.
Development loans and technical cooperation.—These programs
provide economic assistance to underdeveloped nations in areas of
the world other than Latin America. Concentrated in key countries
and supplemented by local resources, development loans support critical development activities ranging from schools, fertilizer plants and
transportation facilities to farm credit and imports of parts and materials to stimulate private production. The United States also pays part
of the costs of technical advisors whose experience and skills are needed
in solving the complex problems of economic and social development.
Supporting assistance.—These loans and grants provide commodities, equipment, and technical advice to countries facing immediate
threats to their stability and security. In 1968, Vietnam will receive
three-fourths of this type of assistance, which will increasingly emphasize construction projects in that strife-torn country.
The accompanying chart shows program trends by region, summarizing the individual country programs which are the basic A I D programing units:
26
A g e n c y for International Development — Prosram
Trends
I Billions
3.0 -
1961
1962
Fiscal Years
1963
1964
1965
1966
1967
1968
Estimate
N o t e : Because aid was suspended to India and Pakistan in 1966 d u r i n g the K a s h m i r crisis,
§320 million shown in 1966 is being used to support the 1967 p r o g r a m . As a result, the
effective p r o g r a m levels in 1967 and 1968 are about the same, at $2.7 billion.
Other programs.—Several other programs give additional support to U.S. development efforts:
* The Peace Corps will continue to grow and will be active in an
estimated 60 countries in 1968. Program emphasis will shift towards
the critical areas of agriculture and community development.
• The United States will also continue to share the cost of supporting
the United Nations and over 60 other international organizations
of which this Nation is a member.
The Export-Import Bank will aid in expanding U.S. exports by insuring, financing and guaranteeing export loans.
In 1968, legislation will be sought to enable us to join in making
an additional contribution to the Inter-American Development
Bank (IDB), and, pending successful completion of negotiations, to
the International Development Association ( I D A ) . These agencies
provide greatly needed financial resources to the less developed
nations.
27
Food for
Freedom
With large U.S. surplus food stocks eliminated, and the world food
problem undiminished, legislation in 1966 provided several major new
directions in the Food for Freedom program. To meet the goal of
greatly increased food production in the developing nations, self-help
will be emphasized and food aid and economic assistance to agriculture
will be closely linked in the larger War on Hunger.
Despite the efforts to increase food production in the developing
countries, these measures cannot be expected to offset, in the short run,
increased demand resulting from rapid population growth. Accordingly, increased shipments of U.S. agricultural commodities will help
fill the gap. Expenditures will rise to an estimated $1.8 billion in 1968.
Foreign
Information
and Exchange
Activities
The Department of State and the U.S. Information Agency conduct
various programs aimed at improving the world's understanding of
our Nation and our foreign policy. Motion pictures, radio and television broadcasts, and cultural and educational exchange activities
are some of the techniques used. USIA activities are to be increased in
Southeast Asia and Latin America.
SPACE RESEARCH A N D TECHNOLOGY
1 9 6 8 A d m i n i s t r a t i v e Budget E x p e n d i t u r e s . .
$ 5 . 3 Billion
The primary objectives of the programs of the National Aeronautics and Space Administration ( N A S A ) are to extend our ability to
operate in space and to use that capability for the benefit of mankind.
The achievement of the manned lunar landing by 1970 will demonstrate clearly our position as a leading space-faring nation.
This
budget marks the beginning of a new manned space flight program
which will extend our space capabilities even beyond the manned
lunar landing.
Because the major systems for the lunar landing program are progressing beyond the most costly phase of development, expenditures
are estimated to decline $300 million from the 1967 level.
28
Manned space flight.—As part of the manned lunar landing program, earth orbital flight tests of the manned Apollo spacecraft using
the Uprated Saturn I launch vehicle will begin in 1967.
First flight
tests of the large Saturn V launch vehicle will occur near the end of
fiscal 1967, with manned flights planned before the end of fiscal 1968.
In 1968, a new program will be started to extend man's ability to
operate in space and, at the same time, to conduct scientific experiments.
In the early portion of this program, space vehicles developed
for the manned lunar landing will be used, followed by more advanced
systems for later use. Manned flights in earth orbit of one year's duration and manned exploration missions of up to 14 days on the surface of
the moon are planned.
S p a c e Research a n d Technology
N H
Administrative
I
Budget
$
W^f.Trust
Funds
MILLIONS
I M a n n e d S p a c e Flight
H M M H R H H H
7 4 0
1 Space Science and Applications
M
B
140
1 Space Technology
P H
'10
1 Aircraft Technology
•HHHHI 437
1 Supporting Activities
Space science and applications.—In
preparation for the first
manned lunar landing, unmanned exploration of the moon will continue in 1968 with Surveyor and Orbiter spacecraft. Full-scale development of the Voyager system for the unmanned exploration of the
near planets, Mars and Venus, will begin in 1968.
Funds are also
requested to initiate development of the Mariner spacecraft to take
measurements of the atmosphere of Mars in 1971, two years before
the first Voyager mission.
Improvements in space communications
and weather prediction technology will also be pursued, using
Applications Technology Satellites and Nimbus weather observatories.
2 5 0 - 4 0 0 O - 67 - 5
29
Space technology.—Advancements in space systems technology
will be pursued, primarily in the fields of rocket propulsion, spacecraft
electric power, space vehicle systems, human factors, and electronics.
Aircraft technology.—Continued research in aeronautics—ranging from helicopters to supersonic transports—is being pursued in 1968
for application to both civil and military aircraft.
Supporting activities.—The operation of N A S A ' s worldwide
tracking and data acquisition networks will be stepped up in 1968 to
support the manned Apollo program. Grants for university research
2nd facilities will be reduced in 1968.
AGRICULTURE A N D AGRICULTURAL RESOURCES
i A / D r
j..
[ A d m i n i s t r a t i v e B u d g e t . . $ 3 . 2 Billion
1 9 6 8 Expenditures j T n j $ t F u n d $
' . . . $ 1 . 2 Billion
Stocks of agricultural commodities are considerably different today
than in previous years. Wheat and feed-grain stocks are no longer
in excess, taking into account domestic and foreign requirements. As
a result, the Secretary of Agriculture has eased acreage restrictions on
wheat and feed grains. Expenditures for agricultural programs are
expected to remain at about the same level in 1968 as in 1967.
The Department of Agriculture is playing a major role in helping
rural people improve their living standards. To this end, the Department will work with State and Federal agencies and with local groups
to assure that rural communities make the best use of all existing
governmental programs.
Farm income stabilization.—Expenditures in 1968 for farm income
stabilization are estimated at $2.5 billion, $99 million above the 1967
level. Increased expenditures resulting from lower commodity sales
will be largely offset by reduced payments to farmers for diverting
farm acreage, and by an anticipated increase in the holding of price
support loans by commercial banks.
Financing farming and rural housing.—The Farmers Home
Administration makes direct Federal loans and insures private loans
to meet the special credit needs associated with farming, housing con-
30
struction, and community development. This agency is providing
increased assistance through grants and loans for planning and construction of sewers and for water purification and distribution facilities. Without these improved community services, rural areas cannot
expect to grow or prosper.
Agriculture a n d Agricultural Resources
Net Receipts
Administrativt
Net Expenditures
Budget
*
ww.
Trust
Funds
MILLIONS
2,467
Income Stabilization
38?
ral L a n d a n d W a t e r Resources
319
E l e c t r i f i c a t i o n a n d Rural T e l e p h o n e Loans
-584
Farming a n d Rural H o u s i n g Loans
1,192
Research a n d O t h e r A g r i c u l t u r a l Services
Agricultural land and water resources.—The Government now
provides technical and financial assistance to farmers for undertaking
selected conservation practices on their farms. There are also underway pilot projects designed to help local communities plan and implement projects to promote orderly improvement, conservation, and
utilization of their natural resources.
Financing electrification and telephones.—The Rural Electrification Administration makes low-interest loans to furnish and improve electric and telephone services in rural areas. Legislation is being
proposed to provide new sources of private financing to meet the
growing capital needs of R E A borrowers.
Research and other agricultural services.—Greater emphasis will
be given in 1968 to agricultural research which enhances consumer
nutrition and health, improves community services and environment,
and raises the level of living of rural people. Funds are also provided
for plant and animal inspection and quarantine and for control of
animal diseases and plant pests. Legislation is being recommended to
strengthen the Federal meat inspection service.
3i
N A T U R A L RESOURCES
1 9 6 8 Expenditures
{^"fJ^!^-
I
$ 0 . 1 Billion
Intelligent conservation and development of our natural resources
is essential to the Nation's long-run growth. To help assure continued economic growth, the use and development of such resources
as water, forests, and minerals must be carefully planned. Federal
activities in this area are coordinated with similar programs of States,
local governments, and private interests.
Land, water, and power resources.—These programs, which account for two-thirds of all expenditures for natural resources, provide
for the efficient development and use of the Nation's water resources.
They include flood control, irrigation, watershed protection, navigation, and related water projects. -Many of these projects are multiplepurpose projects, providing electric power, water supply, water quality, fish and wildlife, and recreation benefits as well as serving other
project purposes. In addition, Federal grants are made to assist municipalities in the construction of waste treatment plants.
Because water problems are becoming increasingly critical in various
parts of the country, legislation is proposed to establish a National
Water Commission to assess the problems and to outline actions to
achieve the most efficient use of our water resources. Newly coordinated water pollution control programs are being reoriented toward
attacking the problems of pollution in entire river basins. The Office
of Saline Water will intensify its research and development work on
desalting water for municipal and industrial uses.
Upon approval of a license by the Atomic Energy Commission, the
T V A will carry forward construction of the Brown's Ferry Nuclear
Power Plant, estimated to be in commercial operation by October 1970.
Programs of the Bureau of Indian Affairs will improve the economic
and social conditions of 380,000 American Indians. Emphasis will
be placed on needed school construction for Indian children. Other
programs will provide for irrigation and roads on Indian reservations, and for expansion of industrial activities and housing facilities.
Forest resources.—National forest lands are a major source of the
timber used by American industry. Harvested timber from the 154
national forests will make up about one-fourth of the total timber
32
consumed by American industry in 1968. These forests also provide
recreational opportunities for a large segment of our population.
N a t u r a l Resources
Administrative
Budget
1
%%%Trust
S
Funds
MILLIONS
I
I
L a n d , W a t e r a n d P o w e r Resources
|
Forests
480
IHHH
|
2 5 8
R e c r e a t i o n a l Resources
ffhand
Wildlife
1 Minerals
1 G e n e r a l Resource Surveys a n d O t h e r
Recreation.—Because of increases in population and income, more
people are spending more leisure time out of doors in recreational
activities. The Bureau of Outdoor Recreation helps coordinate activities designed to meet the growing needs for outdoor recreation.
In 1968, this Bureau expects to complete the first Nationwide Outdoor
Recreation Plan as a general guide for all outdoor recreational programs in the country. The Land and Water Conservation Fund is
used to make grants to States for recreation purposes as well as to
acquire new Federal recreation areas.
The annual number of visitors to Federal recreation areas is increasing rapidly, as shown in the following figures.
VISITORS T O FEDERAL RECREATION AREAS
[Calendar years.
Agency
N a t i o n a l Park Service
Bureau of Reclamation
Sport Fisheries and Wildlife
Forest Service
Tennessee V a l l e y A u t h o r i t y
Corps of Engineers—Civil
I n millions]
i960
actual
72
24
11
82
42
109
1966
actual
135
39
17
160
63
190
1967
estimate
147
43
19
173
65
201
1968
estimate
160
45
21
199
67
226
33
Minerals, fish, wildlife, and other.—The Bureau of Mines will
initiate a new research program directed toward major improvements
in tunneling technology. If successful, this effort will be of major
benefit to mining, urban transportation, water supply, and other public services. The Bureau of Sport Fisheries and Wildlife will operate
90 fish hatcheries and 312 wildlife refuges in 1968. Substantial assistance to the commercial fishing industry will be continued.
COMMERCE A N D TRANSPORTATION
1 9 6 8 Expenditures
I A d m i n i s t r a t i v e B u d g e t . • $ 3 . 1 Billion
I Trust Funds
$ 3 . 7 Billion
The Federal Government contributes to the Nation's economic development by investing in facilities and services which add to present
economic strength and lay the foundation for future growth. Programs
to assist business, improve transportation and communications services,
develop depressed areas, and assure effective competition and fair business practices will be strengthened in 1968. More than half of the total
payments for these programs will be devoted to highway construction.
Commerce a n d T r a n s p o r t a t i o n
Net Receipts
Administrative
N e t Expenditures
Budget
f
^ Trust
Funds
MILLIONS
4,091
Advancement of
Business
-226
Federal
Deposit
34
insurance
Corporation
Transportation
Continued economic advance and increased population mobility
bring growing demands for a safe and efficient national transportation
network.
Consolidation of related Federal transportation programs
in the new Department of Transportation should help to meet these
needs and lead to better use of the taxpayer's money by ( i ) permitting
improved planning of transportation programs, and (2) providing
leadership in technological and economic research in transportation.
The budget proposes transportation user charges to help meet rising
highway and airway costs and inland waterway costs now borne predominantly by the general taxpayer rather than by those benefited
directly by the Federal services.
Air transportation.—Expenditures by the Federal Aviation Administration for the operation of the airways will continue to rise with
the improvement of traffic control services, construction of facilities,
and modernization of equipment to meet the needs of growing air
traffic. Air traffic control in congested, multi-airport localities will be
aided through new automated equipment.
Water
transportation.—Both
operating and construction sub-
sidies are paid to strengthen and maintain the competitiveness of our
ocean shipping industry.
Funds will be provided for the construc-
tion of 13 new vessels as part of the continuing program for modernization of the subsidized fleet. Vessels now under construction will have
significantly increased cargo capacity.
Ground transportation.—Federal expenditures for highway programs are expected to increase by $61 million in 1968 to $4.1 billion.
Nearly three-fourths of this total is for the 90% Federal share of the
annual cost of constructing the 41,000-mile Interstate Highway System,
now more than half completed. Most of the remaining expenditures
in 1968 are for the primary and secondary road programs.
Highway
construction expenditures are financed primarily from highway user
charges, such as receipts from taxes on gasoline, which are deposited
in the highway trust fund.
35
Legislation is again being proposed to transfer financing of forest
highways and public lands highways to the highway trust fund so that
costs will be borne by highway users rather than by the general taxpayer. Legislation is also being proposed to establish a Beauty-Safety
Trust Fund to finance the highway beautification and safety programs. Research will continue in 1968 on railroad technology and
new systems for high speed ground transportation.
Postal
Services
Costs for postal services are estimated to rise from $6.4 billion in
1967 to $6.8 billion in 1968. About 90% of the cost incurred will be
covered by receipts from operations, leaving an estimated $618 million
postal deficit excluding the costs of providing public services. As
private salaries continue to rise, additional costs will also be incurred
to pay higher salaries to postal employees. To provide improved services, to cover proposed pay increases for postal workers and largely
offset the remaining postal deficit, legislation is sought to raise postal
rates.
Advancement
of
Business
The Federal Government provides many services valuable to American business. These include census and economic data, information
about advanced technology, and marketing services overseas. Various
Federal programs aiding business also provide important benefits to
individual citizens and consumers. For example, the Commerce Department provides detailed weather forecasts and flood warning services. Through promotion of new technologies, it aids in the solution
of basic social problems as well as aiding general economic growth.
The Small Business Administration (SBA) provides loans and other
aids to credit-worthy small businesses which are unable to obtain funds
elsewhere on reasonable terms. In 1968, emphasis will be on aiding
very small firms through special economic opportunity loans, with
over 5,200 receiving help. The agency's business lending program will
be substantially enlarged through participation with private lenders
and guarantees of bank loans. Loan repayments and sales to the
public of shares in a pool of SBA loans will largely offset the $648
million in expenditures planned for SBA programs.
36
Commerce a n d Transportation
$ Billions
-
Fiscal Years
Area
and Regional
8
Estimate
Development
Progress is being made in the redevelopment of America's depressed
areas. The number of areas which have severe unemployment has
decreased from 748 in calendar 1962 to 555 in calendar 1965. In 1968,
emphasis will be placed on coordinated efforts for district and regional
planning activities.
H O U S I N G A N D C O M M U N I T Y DEVELOPMENT
c
J-.
[ A d m i n i s t r a t i v e B u d g e t . . $ 1 . 0 Billion
1 9 6 8 Expenditures j T r u s t F u n d $
? . . . . $ 1 . 0 BillU
lion
In 1968, increasing emphasis will be placed on strengthening and
coordinating programs to upgrade our urban areas—areas which contain more than 70% of our population. Federal assistance also contributes to the ability of families to acquire suitable housing and improve their living conditions. These goals are pursued using grants,
loans, purchases of mortgages, and insurance of private loans and
savings and loan accounts.
37
Urban
Renewal
and Community
Facilities
Federal urban development programs help stimulate well-planned
local efforts to improve our communities and to halt urban blight.
The new Model Cities program is designed to show how the
coordinated use of Federal, State, local, and private resources can transform urban areas beset by physical and social decay into model neighborhoods.
Increasing emphasis will be placed on using urban renewal in programs to provide standard housing for low-income families, and on
rehabilitating rather than demolishing and rebuilding the blighted
areas. Grants will also be made to help cities finance mass transportation facilities, encourage comprehensive metropolitan-wide planning,
aid in the preservation of urban open space, and provide assistance for
basic water and sewer facilities. Aid for the construction of neighborhood facilities in city core areas will help bring needed comprehensive
social services to low-income neighborhoods.
Housing a n d Community D e v e l o p m e n t
Hi
Administrative
Budget
W&J""*
$
Funds
MILLIONS
N e t Expenditures
Urban Renewal and Community Facilities
Public Housing Programs
Supplements to the Private Market
A i d s to
Private Market
Private
Housins
Loan Insurance Corporation
National Capital Region
Public
Housing
Programs
The Federal Government, through its low-rent public housing program, assists local housing authorities in providing apartments for
low-income families whose members are elderly, dispossessed, or living
in substandard housing. Total expenditures for all public housing
programs are expected to rise to $282 million in 1968.
38
Private
Housing
Programs
Supplements to the private market.—Government grants and low
interest rate loans assist low and moderate income families, unable
to afford adequate housing without assistance, to live in decent private housing.
The rent supplement program is the newest effort to increase the
supply of housing for low-income families. Under this program, the
Government agrees to pay nonprofit and limited dividend private
housing sponsors the difference between 25% of the income of a lowincome family and the total rent for the apartment it occupies. In
1968, as housing projects are completed and occupied, payments are
estimated to rise to $5 million. The Federal National Mortgage
Association ( F N M A ) helps the supply of private housing for moderate
income families by buying mortgages with 3 % interest rates.
Support of private market.—To improve housing conditions and
to broaden homeownership, the Federal Housing Administration insures certain housing loans against loss—thus encouraging lenders to
make loans with the smaller down payments and longer terms that
more people can afford.
The F N M A also supports the private market by buying and selling
federally insured or guaranteed mortgages, thus making funds available for housing when they are most needed. Further support of the
private housing market is furnished by the Federal Savings and Loan
Insurance Corporation and the Federal Home Loan Banks by insuring
accounts in savings and loan institutions or making advances to them
when money for mortgages is tight. These institutions make most
of their loans for housing purposes.
National
Capital
Region
The District of Columbia government provides both State and
municipal government services in the National Capital city. As the
major landholder, enterprise and employer in the District, the Federal Government has a special responsibility to bear its fair share
of the costs of these services, and to provide long-term loans for
needed capital improvements. In 1968, legislation will again be proposed to grant home rule to the 800,000 residents of the District of
Columbia.
39
HEALTH, LABOR, A N D WELFARE
c
i..
/ A d m i n i s t r a t i v e B u d g e t . . $ 1 1 . 3 Billion
1 9 6 8 Expenditures | T r u $ t F u n c J s
$ 3 7 < 1 Billion
Through social security and other Federal programs, older Americans receive retirement income, hospital insurance, and other health
benefits. Families are protected against the possible loss of income
that would result from the unemployment, disability, or death of the
wage earner. Other programs promote the well-being of the American people through health research and care, manpower training,
vocational rehabilitation, and the Nation's attack on poverty. Payments for these purposes will increase by $7.1 billion over 1967.
About 7 5 % of the total is self-financed through trust funds.
Social insurance and public welfare.—In 1968, an estimated
$30.5 billion in benefits will be provided to the retired, the disabled,
or their survivors under the self-financed insurance and retirement programs which cover almost all of the Nation's workers and their families. The old-age, survivors, and disability insurance trust funds are
the largest and will pay out approximately $27 billion in benefits.
Railroad and Federal employees will receive benefits from special trust
funds amounting to $3.5 billion.
The average payment under social security is still so low that the
income of about one-third of the recipients remains below the poverty
level even after the benefits are counted. Legislation will be proposed
to provide an overall increase of 20% in benefits effective June 1,1967,
with a larger percentage increase for those now receiving the lowest
benefits and those with many years of coverage under the system.
Grants to States for public assistance in 1968 will help meet the most
basic needs—food, clothing, and shelter—of more than 7.4 million of
our poorest citizens, including more than 3.5 million dependent children. Serious gaps in coverage exist in these programs, and for many
who are helped, even their limited needs are not met. Corrective
legislation will be proposed to raise the general level of welfare payments and provide incentives and training to equip recipients for
regular employment.
Economic opportunity programs.—For the past 2 years, the
Office of Economic Opportunity has been spearheading a concerted
effort to combat poverty and eliminate its causes. In 1968, estimated
40
expenditures of $1.9 billion will be made to help break the vicious
cycle whereby one generation's poverty, ignorance, and disease breed
the same conditions for the next.
Health, Labor, and Welfare
Administrative
Budget
Funds
$
MILLIONS
32,356
Social Security, U n e m p l o y m e n t , a n d R e t i r e m e n t Benefits
'm6-285
Medicare
and
Medical
Assistance
3,036
Public
Assistance
{Excluding Medico! Assistance!
_ 2,653
O t h e r H e a l t h Services a n d
Research
1,860
Economic Opportunity
H
Programs
U09
L a b o r a n d M a n p o w e r Services
540
School Lunch, Special Milk, a n d F o o d S t a m p Programs
574
The organizations and methods used in this attack on poverty are
flexible and varied. Community action programs will coordinate and
focus local leadership and resources in about 1,100 urban and rural
communities in 1968. They will cover areas containing 70% of the
l
Nation's 31 million poor and provide direct services to 6 /2 million
persons. These programs provide health services, employment and
counseling, education, training, and other services in impoverished
areas. Increased funds in 1968 will go largely to rural communities
to help the 43% of the Nation's poor who reside in rural America,
and will restore the recent reductions in programs in larger cities.
Project Head Start will provide preschool classes for over 735,000
underprivileged children, giving them the special attention they need
to enable them to progress in the regular school environment. The
budget also includes a new program in the primary grades to sustain the gains made in preschool classes. There will be an average of 38,000 youths enrolled in Job Corps programs during fiscal
1968. A total of $649 million will be made available for other wor\
41
and training programs in 1968 to provide disadvantaged job seekers
with work experience, training, and supporting services to enable
them to obtain and hold suitable employment. Of this total, $321
million will be for youths in the Neighborhood Youth Corps, $70
million principally for public assistance recipients, and the balance
mainly for adult job seekers residing in urban ghetto areas. Other
programs include aid to migrant farmworkers, loans to rural families,
and services to the poor by Volunteers in Service to America ( V I S T A ) .
Benefits and services, including education, health, and cash payments, which help overcome poverty of the more than 31 million
poor people, are provided by 10 agencies. In fiscal 1968, they will
devote $25.6 billion to help the poor, 16% more than in the current year
and more than 2l/2 times the level in i960.
Labor and manpower.—The Federal Government plays an important role in our economy by providing workers with financial
assistance when they are unemployed, and by helping those with outmoded or minimal skills to acquire new skills and find new jobs.
These programs also help meet the demand for essential skills required
for an expanding economy.
Under the Manpower Development and Training Act of 1962 about
613,000 unemployed workers have been enrolled in training programs
which help equip them to meet up-to-date job requirements. In 1968,
training will be approved for 280,000 persons with efforts to be concentrated on disadvantaged workers who have little or no skills.
The 2,000 local offices of the Federal-State employment service help
to match the abilities of workers with the needs of employers. Grants
to State employment agencies in 1968 will continue to be used for improving employment services for disadvantaged youths and will
broaden the special services to include adults.
Health services and research.—In 1968, an estimated $8.0 billion, $1.2 billion more than in 1967, will be spent by the Federal
Government to improve the health of our people. This rise
reflects the Government's developing role in: ( 1 ) bringing quality
medical care, particularly to aged and indigent people; (2) increasing the Nation's supply of hospitals, medical schools, doctors,
and other health resources; (3) supporting biomedical research and
42
iis applications; and (4) reducing or preventing health hazards in our
food, drugs, air and water.
Two programs of major significance were recently enacted:
Medicare, which provides hospital and medical insurance for the aged
and Medicaid, which is designed to remove the financial barriers to
quality medical care for indigent people. In 1968, estimated expenditures for Medicare will be $4.2 billion from trust funds financed by
special taxes. Under Medicaid, Federal outlays in 1968 will be approximately $1.1 billion. Child health programs will be expanded further
as an increasing portion of their cost is borne through Medicaid.
Legislation will be proposed to improve the availability and quality
of health care to children, including dental care.
Health, Labor, and W e l f a r e
$ Billions
-50
-40
Total Payments
- 30
20
Trust F u n d E x p e n d i t u r e s ,
1957
(958
Fiscal Years
1959
I960
!96!
I96S
1963
1964
J965
1966
1967
1968
Estimate
Federal programs to help provide medical care are most effective
if they are accompanied by—or help increase—the manpower and
other resources to supply the facilities and services being purchased.
Federal hospital construction programs have made a significant contribution toward helping provide needed hospital and long-term care
facilities. To increase the supply of health personnel the Federal
Government will provide direct support to 16,400 medical students,
43
5,900 dental students, 28,000 nursing students, and 1,200 students in
other health professions.
The total national investment in biomedical research, public and
private, is expected to grow to $2.5 billion in 1968. This investment,
almost 65% of which is financed by the Federal Government, will
support about 65,000 senior research investigators at 2,000 academic
and research institutions.
The rapid expansion of Federal efforts to control air pollution and
other environmental hazards will continue in 1968. Programs will
expand for improving laboratory diagnostic services. The Food and
Drug Administration will triple its research on dangerous drug abuse
and also will increase enforcement of laws against illegal traffic in
these drugs.
Other welfare services.—In 1968, the Federal-State vocational rehabilitation program will restore an estimated 218,000 disabled individuals to employability. The school lunch program will reach 20
million children, with more emphasis on improving the nutrition of
needy children. Breakfasts are now provided in low-income area
schools. The food stamp program will be expanded so that more lowincome families will be able to improve their diets. Legislation will be
proposed to provide for a youth development program to combat
juvenile delinquency and improve the effectiveness of community
services provided for youth.
EDUCATION
1 9 6 8 A d m i n i s t r a t i v e Budget E x p e n d i t u r e s . .
$ 2 . 8 Billion
Investment in education is essential for the social and economic
progress of our Nation. The best possible education should be provided
so every citizen can develop fully his capabilities for employment and
for participation in community and cultural life. Legislation passed
in the 89th Congress has greatly expanded the Federal contribution
toward realizing these objectives.
Total assistance for major education programs, excluding sales of
financial assets, will rise to $4.5 billion in 1968—63% above the 1966
level. Particular attention in the coming year will be placed on promoting innovation and increasing the effectiveness of programs serving the disadvantaged.
44
Assistance for elementary and secondary education.—In 1968
$1.1 billion will be spent for special grants to low-income areas authorized by the Elementary and Secondary Education Act of 1965—an
increase of $59 million over 1967. This program will provide improved educational opportunities for 8.5 million disadvantaged children. These efforts are annually reaching an increasing number of
communities and children:
Number of school districts aided
Number of children aided (in thousands) .
1966
1967
1968
actual
estimate
estimate
17,481
7, 000
18,694
7,500
J
9> 94°
8, 500
Special efforts will be made in 1968 to establish close ties between
this program and the preschool Head Start program and other community action programs of the Office of Economic Opportunity. Legislation is recommended to help States and localities develop comprehensive planning for education, to broaden teacher training programs,
to strengthen the education of handicapped children, and to extend
the Teacher Corps.
Estimated expenditures of $21 million in 1968 will permit the
Teacher Corps to reach a strength of 5,950 by the end of the year.
Through this program, experienced teachers and interns are made
available to serve, upon request, in schools with concentrations of
children from low-income families.
Another $142 million will be spent for supplementary educational
centers and other efforts to demonstrate new and better methods of
instruction, curricular materials, and school organization. There will
also be expenditures of $221 million in grants for schoolbooks and
equipment, counseling programs, and for strengthening State
educational agencies. In 1968, Federal assistance to school districts
with concentrations of Federal employees will total $422 million, the
same as in 1967.
Through a number of programs, the Government is expanding
its efforts to train teachers for elementary and secondary education
and for college-level instruction. In 1968, teacher training programs
of the Office of Education and the National Science Foundation will
provide full- or part-time training for 123,000 teachers, 21,000 more
than in 1967.
Assistance for higher
education—Recent
legislation has pro-
vided unprecedented Federal aid for college and graduate students.
45
Substantially increased support will be provided by the Office of
Education and the Veterans Administration for college students.
1966
actual
Total aid provided or guaranteed (in millions)
Total number of grants and loans (in thousands)
$448
846
1967
estimate
$1,229
1, 782
1968
estimate
$1,537
2,176
Support will be given to an estimated 900 colleges for construction
of academic facilities. A n estimated $310 million will be spent for
facility loans and grants in 1968. In addition, $300 million will be
committed for college housing loans. This amount will support the
planning and construction of living space and related facilities for
50,000 college students. However, sale of shares in pools of collcge
housing, academic facility and student loans is expected to more than
offset expenditures for higher education by $413 million.
Education
( Receipts
WM
S
Administrative
N e t Expenditures
Budget
$
i Trust
Funds
MILLIONS
1 Assistance for Elementary a n d Secondary Education
Assistance for H i g h e r E d u c a t i o n
|HHHBH455
A s s i s t a n c e t o S c i e n c e E d u c a t i o n a n d Basic R e s e a r c h
HHHHHHHHi743
Other Aid to
Education
Assistance to science education and basic research.—The National Science Foundation continues to perform a vital role in furthering science education and basic research. Nearly half of the $60 million increase in 1968 will be used for basic research support. The remainder will be used for strengthening secondary and undergraduate
science education and for building additional research and training
capability at the graduate level.
Other aids to education.—Other programs include education of
Indians, vocational education, educational television, adult basic education, aid for libraries, educational research, and the new center for
international education. Legislation is proposed to strengthen vocational education, educational television, and to broaden educational
and training opportunities for students planning public service careers,
and to upgrade the skills of present public employees.
46
VETERANS BENEFITS A N D SERVICES
o c
...
/Administrative Budget..
3 . . . .
1 9 6 8 Expenditures | T r u $ t F u n d $
4 n i
$ 6 . 1 Billion
$ 0 . 6 Billion
The Federal Government provides special benefits and services for
the veterans of the Nation's wars or their survivors. Most of this assistance consists of compensation, pensions, and medical care for disabled veterans. Expenditures for these programs, including the new
"GI bill," will rise in 1968, largely reflecting a growth in numbers
of younger veterans seeking education and of older veterans and survivors seeking health and income benefits. Legislation in 1968 will
increase educational allowances and extend the educational training
time under the new " G I bill." Other legislative proposals will extend
to those facing the hazards of current military service an increased
amount of insurance protection and all compensation, pension, and
medical benefits accorded to veterans of earlier wars.
Service-connected compensation.—Compensation payments are
made to veterans who are physically disabled as a direct result of military service. In 1968, payments of $2.4 billion will be made to approximately 2.4 million veterans or their survivors.
Non-service-connected pensions.—Income supplements are made
to veterans with demonstrated financial need or their survivors for disability or death from causes not related to military service. In 1968,
payments estimated at $2 billion will be made to 2.2 million recipients.
Readjustment benefits.—The Government provides educational
and housing assistance to recently discharged servicemen to ease their
readjustment to civilian life. Under the new " G I bill," which became
effective June 1, 1966, all types of education and training assistance
are available to approximately 4.5 million recently discharged veterans.
Benefits are also available for the education and training of war orphans
and children of totally disabled veterans, and for the vocational rehabilitation of disabled veterans. The number of war orphans or
dependent children receiving education and training is estimated at
15,700 in 1968.
In addition to educational benefits, the Veterans Administration will
guarantee 195,000 housing loans for eligible veterans, and make over
12,000 direct loans to veterans in rural areas and relatively small communities where private credit is not generally available. In 1968, the
47
demand for both home mortgage guarantees and direct loans is not
expected to differ greatly from 1967, but there will be a substantial
change in applicants as demand of post-Korean veterans increases
and eligibility of World War II veterans nears termination. While
accommodating slightly rising program levels, net budget receipts of
$459 million are estimated in 1968, in contrast to net budget expenditures of $144 million in 1967, reflecting planned increases in the sale of
loans and shares in a pool of loans owned by the Federal Government.
Hospitals and medical care.—Federal expenditures for hospital
and medical care of veterans are estimated at $1.5 billion in 1968.
This amount—which covers medical services, administration, medical
research, and construction of new medical facilities—is $82 million
higher than in 1967. This increase will largely be used to provide for
new medical services including construction and modernization of
facilities, to further improve nurse staffing, and to expand the research
and training program. V A facilities will provide medical care for
about 805,000 patients during 1968.
V e t e r a n s Benefits a n d Services
H
Administrative Budget
Funds
Other benefits and services.—The National Service and U.S. Government life insurance trust funds finance about 4.9 million life
insurance policies, primarily for veterans of World Wars I and II. Recently enacted legislation provides commercial insurance coverage of
up to $10,000 for each serviceman on active duty—the Government
pays only the extra-hazard cost of this insurance. Legislation will be
proposed to increase this coverage.
48
GENERAL G O V E R N M E N T
1 9 6 8 A d m i n i s t r a t i v e Budget E x p e n d i t u r e s . .
$ 2 . 8 Billion
Expenditures for general government provide for Government-wide
service activities, for executive direction and financial management,
for programs of law enforcement and criminal justice, and for the costs
of the Congress and the Federal court system In 1968, these expenses
of the Federal Government will require an estimated $56 million more
than in 1967.
Tax collection and central fiscal operations.—Expenditures for
the Internal Revenue Service are estimated to he $681 million in 1968.
This increase of $26 million over the previous year roughly parallels
the growth in the number of taxpayer returns.
In 1968 the IRS will be able to use its master file system for taxpayer
information on a nationwide basis. Also in 1968, centralized filing
of returns at computer centers will begin in several parts ->f the country.
This program is expected to produce significant improvements in tax
administration.
General property and records management.—The General
Services Administration is proceeding with its programs to provide
more modern and improved facilities for Government operations
throughout the United States. Efforts also will be made to increase
the efficiency—while lowering the costs—of procurement, maintenance, and use of automatic data processing equipment by Federal
agencies.
General
Government
•
Administrative
Budget
$
I
I T a x C o l l e c t i o n a n d C e n t r a l Fiscal
%%% Trust
Funds
MILUONS
Operations
I Property a n d Records M a n a g e m e n t
I Protective Services a n d A l i e n Control
IHIHHHHHHIHI 274
I Legislative a n d Judicial Functions
•HHHHHHIi197
I C e n t r a l Personnel M a n a g e m e n t
iHHflflHHIli
216
I T e r r i t o r i e s a n d Possessions, a n d
Other
49
Protective services and alien control.—With the recommendation
of legislation to strengthen the Nation's attack on crime, expenditures
for the Department of Justice will increase as a first step toward providing major Federal assistance to State and local programs for law
enforcement and administration of justice.
Civil rights.—Increases have been provided to expand activities
which seek to secure the civil rights of individuals and minority groups.
Legislative proposals will be made to strengthen further the guarantee
of equal protection to all under the law.
Central personnel management.—These expenditures include
the administrative costs of the Civil Service Commission. They also
include the costs of accident compensation and the employer portion
of health benefits for Federal employees.
INTEREST
1 9 6 8 A d m i n i s t r a t i v e Budget E x p e n d i t u r e s . .
$ 1 4 . 2 Billion
Interest payments on the public debt will increase substantially in
1967 and again in 1968. These increases reflect both higher interest
rates and the higher level of the outstanding public debt, primarily
the former. Of total interest expenditures, $3.0 billion will be paid
to the Federal trust funds and agencies which have their reserves
invested in U.S. securities.
The table below shows the estimated ownership of the public debt
as of June 30,1966.
OWNERSHIP OF THE PUBLIC DEBT
Description
Amount
in
billions
Percentage
of
total
Federal trust funds and agencies
66.7
Commercial banks
54.5
Federal reserve banks
42.2
23.2
20.8
17.0
13.2
State and local governments
23.9
7.5
Corporations
14.4
4.5
Foreign and international
15.4
4.8
Other
29.1
9.1
320.4
100.0
Individuals
Total
50
$74.3
PART 3
THE BUDGET PROCESS
Crucial to understanding budget policy—which involves determining the level and composition of expenditures needed to achieve national goals—is some knowledge of the administrative and legislative
process through which expenditures and taxes are determined.
THE FEDERAL BUDGET CYCLE
Budgeting is a continuous process, but the "budget cycle" has four
identifiable phases: ( i ) executive formulation and submission, (2)
congressional appropriation, (3) budget execution and control, and
(4) audit.
Executive formulation and submission.—Each January, the
President submits his budget proposals to the Congress. The budget
incorporates Presidential review and decisions on a wide range of
diverse issues. Its submission culminates many months of planning
and analysis throughout the executive branch. For example, formulation of the 1968 budget, which covers the fiscal year beginning
July 1, 1967, and ending June 30, 1968, began in March 1966. Ten
months later, in January 1967, the budget was sent to Congress—
6 months before the beginning of the new fiscal year. (When the
fiscal year comes to a close, over 2 years will have elapsed since the
start of the budget cycle.)
During the period of executive formulation, a continuous exchange
of information and decisions occurs among the President, the Bureau
of the Budget, and the various Government agencies. Each agency
makes early plans giving particular attention to important modifications and innovations in its programs. These are reviewed by the
agency and the Bureau of the Budget in the spring, 15 months preceding the budget year. The preliminary agency plans and goals are
then presented to the President. On the basis of this information,
together with projections of the economic outlook and revenue esti-
51
mates, the President and his advisers establish tentative budget policy
guidelines on expenditures and revenues. These guidelines are then
given to the agencies as planning figures for the preparation of the
final budget review in the fall. Throughout the fall and early winter,
individual agency budgets are reviewed in detail. At the same time,
overall fiscal policy problems—relating to total budget receipts and
expenditures—are considered. The January budget submission reflects
final Presidential decisions on both individual programs and budgetary
totals.
Congressional appropriation.—Congressional review and enactment starts when the budget is sent to Congress. The actual amounts
to be spent are determined by both Houses of Congress and sent to the
President for signature in the form of appropriation bills. In some
cases the Congress must first authorize the programs and their spending limits before any appropriations may be made.
The budget requests are considered first in the House of Representatives: The Ways and Means Committee reviews all proposals for new
revenue measures; the Appropriations Committee, through its 12 subcommittees, studies in detail the proposals for new obligational authority. The two committees then recommend actions to be taken by the
House of Representatives. As parts of the budget are approved by the
House, they are forwarded to the Senate, where a similar process is
followed. In case of disagreement between the two Houses of Congress, a conference committee (consisting of Members of both bodies)
meets to resolve the issues. The conference report is returned to both
Houses for approval and then is transmitted to the President for his
signature, or veto.
Budget execution afid control.—Once approved, the budget becomes the basis for the program of each agency during the fiscal year.
It is the responsibility of the President and the officials to whom
appropriations are made to see that the laws are faithfully executed,
that appropriation limits are observed, that costs are minimized, and
that the Government get the greatest possible value for each dollar it
spends.
However, not all the funds approved by Congress in one year will
be spent in that year. The funds authorized for some programs (such
52
as the building of highways or other major construction items) will
be spent over a period of several years. Therefore, when the Congress
reduces or increases the amount of new obligational authority requested by the President for a given year, it does not necessarily alter
expenditures in that year by the same amount. Such a change may
affect expenditures over a period of several years.
The relationship between new obligational authority and expenditures estimated for 1968 is illustrated in the following chart.
1968
A d m i n i s t r a t i v e Budget -
R e l a t i o n of A u t h o r i z a t i o n s t o E x p e n d i t u r e s
Audit.—Audit is the final step in the budget process. The individual agencies are responsible for assuring that the obligations that they
incur, and the resulting expenditures, are legal with respect to the
authorizing and appropriations legislation. The Congress receives
independent checks through the General Accounting Office (GAO),
headed by the Comptroller General. The G A O also plays an important role in supervising the accounting systems used by the agencies,
and in reviewing how the agencies spend the funds appropriated by
the Congress.
53
ECONOMIC ASPECTS OF THE BUDGET PROCESS
In providing services through its budget, the Government makes
economic decisions very similar to those made by private citizens and
business firms. Whether public or private, all economic activity
must answer two basic questions: First, what goods and services shall
be produced; second, how can such goods and services be produced
most efficiently. In the private sector of the economy these decisions
are resolved through the market process. In the public sector, decisions as to what the Government does and how it does them are
answered through the budget process.
In the private sector of the economy, the question of what is to be
produced is answered by the consumer. He goes into the market and
"votes" his dollars. His willingness to pay for commodities brings
forth production. If enough of an item is not available immediately,
the price will rise, encouraging increased production. The process
of "voting" dollars, carried out by every consumer, determines what
kinds of goods and services will show up in the market.
The question of efficiency—how do we get the most product out
of any given amount of resources—is also answered by the market
process. A major advantage of the market process is the automatic
way in which this question is answered. When the required conditions are met, the market process assures efficient production through
competition.
Some goods and services, by their very nature, cannot be produced in
the private sector of the economy. This distinction can be made clear
by comparing one commodity—such as bread—with a public service—
such as national defense. When the consumer wants a loaf of bread
he enters the market and makes the purchase. He eats the bread
and enjoys its benefits as an individual consumer. However, if he
is concerned with national defense, the process is altogether different.
The benefit he gets from maintaining the Army, Navy, and Air Force
is enjoyed equally by everyone. Therefore, since public goods and
services cannot be produced and consumed on an individual basis,
the market process of organizing resources must give way to the
budget process. However, the budget process must also provide
answers to the basic economic questions of what objectives to seek—the
program problem—and how to achieve those objectives efficiently—the
efficiency problem.
54
The program problem.—One purpose of the budget process,
therefore, is to find the mixture of objectives which contributes the
most to the general welfare. For instance, a government might use all
its resources for a recreation program: this would probably result in an
excellent recreational facility. Or, it might concentrate exclusively on
highways and provide a superb network of roads. In the first instance,
the government would have provided a fine place to go but no way to
get there. In the second case, the government would have provided an
excellent way to get there but no place to go. It is clear in this example
that some combination of recreational facilities and highways would
result in a greater benefit than would concentrating solely on either
one program. While the conclusion is easily drawn from this simple
example, the problem becomes very complicated when dealing with
the full list of goods and services provided by all units of government.
As the accompanying diagram illustrates, the citizen in a democracy
stands at the center of the budget process. Operating through the
executive branch and the Congress, he influences the expenditure plan
at each step in the process:
The Federal Budget Process
VOTER
Formulate
•
Appropriate
»> E x e c u t e
>
Audit
The question of what goods and services to include in the budget is
answered during the formulation stage of the budget process. The
President includes in his budget the public services which he believes
the Nation requires and is willing to pay for.
55
The President's budget is sent to the Congress for consideration. The
individual Congressman has been elected by his constituents because of
his views and opinions on public issues. Because of the differences in
its membership, on geographic as well as other grounds, the Congress
forms its collective decisions through the give and take of individual
opinions about national needs and priorities for meeting them. In
this way, the program content of the budget benefits from the system
of checks and balances.
The efficiency problem.—The budget process also must assure that
Government services will be produced efficiently. The executive
budget was itself a major step towards the goal of efficiency. Prior to
the Budget and Accounting Act of 1921, departmental budgets were
presented piecemeal, making an overview impossible. Over the years,
additional techniques have been developed to assure efficiency in Government services. One useful technique is found in benefit-cost studies.
Using this method, projects are considered only after weighing their
full benefits and their costs. Program budgeting—another recent
development—organizes information to measure Government services
in terms of the things accomplished, rather than by its components.
Most recently, these and other similar techniques have been organized
into a unified approach, called the Planning-Programing-Budgeting
system.
PLANNING-PROGRAMING-BUDGETING
The Planning-Programing-Budgeting (PPB) system of the Federal Government represents a major advance in the application of
economic analysis to Government decisionmaking. It serves to help
find the most desirable combinations of services and goods to be provided with Federal dollars and the most efficient ways of providing
them.
The system involves the development, annual refinement, and updating of specific working plans for each agency. The plans are
based on systematic analysis of the costs and benefits of the proposed
programs.
PPB is designed to help appraise needs and analyze objectives
clearly and explicitly, and to evaluate alternative means of attaining
those objectives. The system thus displays for high-level decisionmakers a specific statement of objective—such as the reduction of the
56
high school dropout rate by one-half over a 5-year period, a proposed
plan of work to accomplish the objective, an outline of alternative
plans, and an analysis of the full costs and probable effectiveness of
the proposed plan as against the alternatives. The system provides
both a basis for decisions between competing program proposals and
a standard for the later measurement of actual performance.
PPB involves little that is new in concept. What it does seek is
hard and specific analysis of Federal programs on a more comprehensive and intensive basis than ever before. The scale of this work,
its requirements for better data, and more sophisticated analytic techniques mean that its full effects have not been felt in this first year of
operation. Even on the basis of first analyses, however, a number of
agencies have modified existing programs, and some have designed
new and more effective methods of operation.
COST REDUCTION
Significant cost savings are being made by individual agencies. Concentration on cost-saving actions will be continued and intensified in
the coming years.
The Secretary of Defense reported that in fiscal year 1966 his department had realized savings of $4.5 billion from the cost reduction
program that has been underway for the past several years. By
practicing economy and finding more efficient ways of getting work
done, the civilian agencies saved $1.7 billion during fiscal year 1966.
. . . We will continue to offset a significant part of increased
costs of important new programs by increasing efficiency throughout the Federal Government. Savings from this source have
been substantial during the past year under our drive for cost
reduction. I have made it clear to the heads of all Departments
and Agencies that they are to continue their emphasis on cost
reduction in the coming year.
—From the President's budget message,
January 24, ig6y.
57
PART 4
MEASURES OF FEDERAL FINANCES
Federal financial activities are studied for many different purposes.
No single measure serves all purposes equally well. In the budget,
Government income and spending are discussed in terms of the "administrative budget," the "trust funds," the "statement of cash receipts
from and payments to the public," and the "Federal sector of the national income accounts."
To gain an understanding of the differences in these concepts, it is
helpful to begin with the three basic sets of accounts used by the
Government. The first covers administrative budget funds; the second covers trust funds; and the third covers the Federal Government
in the national income accounts. Together they comprise the financial
records of the Government, recording in detail the expenditures of
each agency and the revenues of the Government. They are indispensable tools for the proper managem«nt of Federal finances.
Administrative budget accounts include the receipts and expenditures of the Government available for general purposes. Administrative budget funds are the property of the Federal Government—owned
just as land and equipment are owned. Included are the transactions
of Government-owned enterprises of a business nature, such as the
Post Office, the Export-Import Bank, and the Federal Housing
Administration.
The administrative budget is the oldest and most widely known
measure of our Federal finances. It is mainly within the framework
of this budget that Congress evaluates requests for funds and grants
the authority for Government agencies to carry out the President's
program. The administrative budget is generally used for control,
administration, and execution of programs financed with funds owned
by the Government.
58
Trust funds are created when Congress designates certain receipts
to he set aside—in trust—for specified payments or programs. They
are also created, occasionally, when an activity is financed partly by
the Federal Government and partly by someone else. Trust fund
expenditures may be made only to finance the programs for which
they are designated.
Trust Fund Estimates For 1968
•
O l d A g e a n d Survivors Insurance
f
MILLIONS
124,442
|4,235
12,534
S o c i a l Security
Programs
Unemployment
WMita.m
Insurance
M M
2,389
Disability Insurance
3,736
MMr2,S76
H o s p i t a l Insurance
H1,329
•01,295
Supplementary Medical
Insurance
Fedetal-aid
Highways
Federal Employe*
r u nds
Railroad
Retirement
Veterans
Life Insurance
FNMA
and
A l l Other
i 1,613
|l,511
Receipts
Expenditures
|754
(587
1,992
2,994
Most trust funds finance activities such as social security (old-age
survivors, disability, and hospital insurance for the aged), unemployment insurance, Federal employees' retirement, and veterans' life insurance. Trust funds also finance the Federal-aid highway program
and that portion of the Federal National Mortgage Association
( F N M A ) which is partially owned by private stockholders. In addition, the net expenditures of five Government sponsored enterprises
(mainly lending) are included in the trust accounts.
Receipts of the trust funds come from sources related to their
activities. For example, employers and employees covered by social
security pay the taxes to finance the social security trust expenditures;
59
taxes related to highway use—such as those on gasoline—provide the
receipts for the highway trust funds. In addition, the trust funds
invest reserve funds in U.S. bonds and receive interest on these and
other guaranteed investments. The chart on page 59 lists the major
trust funds along with their estimated receipts and expenditures
for 1968.
SUMMARY OF FEDERAL RECEIPTS AND PAYMENTS
[Fiscal years.
In billions]
1966
actual
Description
1967
estimate
FEDERAL RECEIPTS
Administrative budget receipts
Trust fund receipts
$104.7
34.9
$117.0
5.1
7.2
134.5
154.7
44.9
Deduct: Intragovernmental transactions and other adjustments
Total, cash receipts from the public.
Deduct: Loans, differences in coverage, and other
adjust-
ments
A d d : Cash to accrual basis
National income accounts receipts—Federal
sector
.7
1.0
— 1.2
-3.9
132.6
149.8
107.0
34.9
126.7
40.9
4.0
6.8
137.8
160.9
5.2
-.3
7.5
132.3
153.6
-2.3
-3.3
+ .3
-9.7
FEDERAL PAYMENTS
Administrative budget expenditures
Trust fund expenditures
Deduct: Intragovernmental transactions and other adjustments (net)
Total, cash payments to the public.
Deduct: Loans, differences in coverage, and other adjustments
A d d : Cash to accrual basis
National income accounts expendituresFederal sector
.2
EXCESS OF RECEIPTS ( + ) OR
PAYMENTS(-)
Administrative budget
Receipts from and payments to the public.
National income accounts—Federal sector.
60
— 6.2
-3.8
Federal receipts from and payments to the public.—Basically,
this statement of cash flow between the Federal Government and the
public (often called the consolidated cash statement) represents a consolidation of the administrative budget with the trust funds. Payments
between the administrative budget and the trust funds—such as interest
payments to trust funds on their investments in U.S. securities—are
eliminated from the statement, since they are payments from one Government agency to another and they do not involve a flow of money
between the Government and the public.
The statement of receipts from and payments to the public is much
more inclusive than the administrative budget alone, and it is the best
measure of the cash flows and borrowing requirements of the Federal
Government.
The Federal sector in the national income accounts is the measure of Federal receipts and expenditures which best indicates the economic impact of the Federal Government. This is so because this
measure records only those receipts and expenditures which directly
affect the current flow of income and output. Like the cash budget it
includes the trust funds; however, it excludes lending and other financial transactions.
Expenditures in the Federal sector of the national income accounts
are divided into five basic components that indicate the economic
nature of transactions. As the table on page 62 shows, the largest
item is purchases of goods and services, representing the amount of
our gross national product which is used directly by the Government
for public purposes. This category includes such items as military
procurement, new Government buildings, and the services of military
and civilian employees.
The second category, transfer payments, covers Federal payments
for which no current services are rendered—unemployment and social
security benefits (including hospital care for the aged), veterans' pensions, and similar programs. Transfer payments do not represent
Government use of resources, but rather the channeling of purchasing
power to others.
Grants-in-aid to State and local governments also represent a transfer of funds. In this case, however, the transfer is to another level of
61
government which may then spend the funds in some other way—
for example, by purchasing goods and services (such as constructing
highways) or by making further transfer payments to individuals
(such as public assistance payments).
NATIONAL
INCOME
ACCOUNT
EXPENDITURES—FEDERAL
[Fiscal years.
SECTOR
I n billions]
Description
1966
actual
1967
estimate
1968
estimate
$71.7
$83.6
$91.9
Transfer payments
34.3
39.8
46.6
Grants-in-aid to State and local governments
12.9
14.8
16.7
N e t interest paid
9.1
10.0
10.5
Subsidies less current surplus of Government enterprises....
4.5
5.4
3.5
Total national income account expenditures—
Federal sector
132.3
153.6
169.2
Purchases of goods and services
Net interest consists of interest paid by the Federal Government less
interest received on Government loans to others.
Subsidies less current surplus of Government enterprises includes
Federal aid to business and agriculture and the net surplus or deficit
of Government business-type activities, such as the Post Office and
Tennessee Valley Authority.
The Federal sector account, as part of the Nation's economic accounts which measure total national income and output, is particularly
valuable in analyzing the impact of Federal activities on the Nation's
economy. The national income accounts ( N I A ) are designed to record the market value of the current output of the Nation's economy.
The Federal sector of these accounts follows this design. The N I A
measure of Federal finances is more comprehensive than the administrative budget because it includes the trust funds such as social
security and highways. And, unlike the consolidated cash budget,
it includes only transactions which directly affect current output and
income.
62
A series of adjustments is necessary in moving from the administrative, to cash, to N I A concepts. The table which follows, "Derivation of
the Federal Sector in the National Income Accounts," shows the adjustments in some detail for fiscal year 1968. These adjustments can be
grouped together as to type.
DERIVATION OF EXPENDITURES IN THE FEDERAL S E C T O R NATIONAL INCOME ACCOUNTS, FISCAL YEAR 1968
[In billions of dollars]
Adjustments
Plus
Less
Description
go
Om
tap
ihT3
EXPENDITURES
National defease
International affairs and f i n a n c e . .
Space research and technology
Agriculture and a g r i c u l t u r a l
resources
Natural resources
Commerce and transportation
Housing and community development
Health, labor, and welfare
Education
Veterans benefits and services
Interest
General government
Allowances
Undistributed
Total
75.5
4.8
5.3
1.4
.2
1.2
3.2
3.5
3.1
3.7
1.0
11.3
1.0
37. 1
6. 1
.6
2.8
-.3
4.1
3.5
6.9
- . 2
-3.6
-.1
1.8
46.6
2.7
6.7
10.5
2.7
. 1 -. 1
.1
14.2
2.8
2.2
76.8
5.0
5.3
-1.8
1.4
.5
.7
.1
-. 1
-1.2
-.4
2.2
-.7
-.9
-.9
-2.5
135.0
44.5
-7.1
172.4
-1. 1
2.3
2.3
3.1
2.0
2.3
*Less than $50 million.
Combining the administrative and trust funds and deducting intragovernmental payments yields the consolidated cash statement. The
cash statement is more comprehensive than the administrative budget
and gives a good picture of Federal financial activities. However, it
is still not the best measure of the overall impact of Federal receipts
and expenditures on the economy. For this purpose, further adjustments are necessary.
63
Certain agencies are included in the cash budget which are, for
one reason or another, excluded from the Federal sector. For example,
tax receipts and expenditures of the government of the District of
Columbia are included in the cash budget, but for national income
accounting purposes they are classified with the State and local government accounts. Therefore, $0.6 billion in D.C. expenditures was
deducted from the "Housing and Community Development" function
of the cash budget.
A second category of adjustments is made to account for the lending
activities of the Federal Government. When the Federal Government purchases goods and services it is placing a direct demand on
the economy and all such purchases are included in the national income
accounts. However, when a loan is made no direct purchase is involved. What the Government has done in such a case is to trade its
funds for a claim upon someone else—a claim which will be repaid
with interest.
Offsetting transactions must be adjusted because some agencies receive revenues for their services which are used to offset expenditures.
In such cases the administrative and cash budgets usually include only
the net amount of expenditures. In the N I A , an equal amount is added
to both receipts and expenditures to give a more accurate measure of
the economic impact of the Federal Government. However, such adjustments add equally to both sides and thus leave the net surplus or
deficit unchanged.
Finally, certain timing adjustments are necessary on both the
expenditures and receipts side in order to record transactions when
the economic impact occurs. For example, advance payments on
goods to be delivered at a later date are excluded from N I A totals and
are recorded when the goods are delivered. Similarly, timing adjustments are also made in order to record receipts on a liability basis.
For a more detailed discussion of the measures of Federal finances
see, The Budget of the United States Government, 1968, Special Analysis A—"Three Measures of Federal Financial Transactions."
64
TABLES ON THE BUDGET
In the previous sections of this booklet, an effort
was made to limit the use of statistics. However, for
a complete understanding of the budget it is important to know the amounts being spent for the various
Government programs, and how they relate to other
measures of economic activity. The following tables
also show how these current amounts compare with
the past levels of Government spending.
T h e following additional budget documents are available from the Superintendent
of Documents, U . S . Government Printing Office, Washington, D . C .
1 . The
Budget
of the
United
States
Government,
1968.
20402:
Contains most of the facts,
figures, and analyses that general users of the budget would normally desire or need.
Price:
$1.50.
2 . The
Budget
of the
United
States
Government,
1968—Appendix.
Contains the
text of appropriation language, schedules, and narrative statements for individual appropriations and funds.
3 . Special
Analyses,
Price: $ 6 . 5 0 .
Budget
of the United
States,
1968.
Contains special tabulations
and analyses of budgetary data for those interested in selected aspects of the total
Federal program.
Price: 5 5 cents.
65
Administrative Budget and Trust Fund Expenditures by Function,
1961-68
T h e following t w o tables show administrative budget and trust fund expenditures since 1 9 6 1 ,
according to the functions they serve.
torical comparison
The functional categories provide a meaningful his-
because all expenditures for activities of a similar nature are grouped
together even if they are made by different agencies, or if—through reorganizations or other
actions—they have been shifted from one agency to another over the years.
ADMINISTRATIVE BUDGET EXPENDITURES BY FUNCTION
[Fiscal years.
In millions of dollars]
Actual
Description
1961
National
1962
1963
Estimate
1964
1965
1966
1967
1968
defense:
Department of Defense—military:
Military personnel
..
Procurement
Operation and maintenance
Research and development
Military construction, civil defense,
and other
12,085 13,032
13,095 14,532
10,611 11,594
6,131
6,319
Subtotal, military
Atomic energy
Military assistance
Defense-related activities
43, 227 46,815 48, 252 49, 760 46,173 54, 409 66,950 72,300
2,713
2,625
2,270
2,330
2,403
2, 806 2, 758 2,765
1,449
1,229
1,000
800
1, 390 1, 721 1,485
968
104
24
136
1
57
92
172
-62
Subtotal
1,305
1, 338
47,494
51,103
1,823
1,947
258
1,013
169
487
216
347
618
155
272
738
249
158
13,000 14,195 14, 771 16, 753 20,200 21,823
16,632 15,351 11,839 14,339 18,465 21,632
11, 874 11, 932 12, 349 14, 710 18,600 19,017
7,200
6, 376 7,021
6, 236 6,259 6,700
373
1, 261
978
2, 349
2,985
57, 718 70,222
2,628
52, 755 54,181
50,163
75,487
2,040
2,049
1,843
1,784
1,710
1,799
760
494
260
245
67
346
768
371
272
226
-158
297
754
387
367
227
359
346
677
500
459
224
3
710
604
593
196
219
335
695
680
588
212
229
346
197
201
207
223
4,124
4,523
4,412
4,032
279
249
87
79
51
565
420
159
82
31
1,516
576
303
122
36
744
1,257
2,176
347
301
349
324
International affairs and finance:
Food for Freedom
__
Economic and financial programs:
Development loans
Supporting assistance
Alliance for Progress
Technical cooperation
Other
Conduct of foreign affairs
Foreign information and exchange activities
Subtotal
315
242
248
4,506
227
4,191
4,608
4,797
2,768
754
432
178
40
3,538
751
484
262
58
4,210
778
435
435
75
3,825
770
450
460
95
,575
740
440
435
110
2,552
4,171
5,093
5,933
5,600
5,300
2,871
367
303
234
341
3.693
324
342
300
391
3,798
324
342
251
414
3,236
341
392
268
457
1,925
346
373
160
503
2,368
379
259
-532
560
2,467
381
319
-584
591
3,498
4,116
5,050
5,129
4,696
3,307
3,035
3,173
1,488
331
91
61
73
55
1,680
280
94
68
81
60
1,853
303
112
71
94
73
1,927
332
130
91
105
73
2,023
374
134
105
120
94
2,235
406
152
108
130
89
2,218
463
199
115
134
97
2,443
449
246
140
139
103
2,100
2,264
2,506
2,658
2,851
3,120
3,226
3,518
Space research and technology:
Manned space flight
Space science ana applications
Space technology
Supporting activities
Aircraft technology
Subtotal
Agriculture and agricultural resources:
Farm income stabilization
Agricultural land and water resources
Rural electrification and telephone loans.
Farming and rural housing loans
..
Research and other agricultural services .
Subtotal
Natural resources:
Land, water, and power resources
Forests
Recreational resources
Minerals
Fish and wildlife
General resource surveys and other
Subtotal
66
ADMINISTRATIVE BUDGET EXPENDITURES BY FUNCTION-Continued
[Fiscal years.
In millions of dollars]
Actual
Description
1961
Commerce and
transportation:
Air transportation
Water transportation
Postal service
Advancement of business
Area and regional development.
Regulation of business
Ground transportation
Subtotal.
Housing and community
development:
Urban renewal and community facilities.
Public housing programs
Aids to private housing:
Federal Savings and Loan Insurance
Corporation
Federal National Mortgage Association
Federal Housing Administration and
other
National capital region
Subtotal _
Health, labor, and welfare:
Public assistance (excluding medical
assistance)
Other health services and research.
Medicare and medical assistance
Economic opportunity programs
School lunch, special milk, and food
stamp
Labor and manpower
Vocational rehabilitation and other
Subtotal.
Education:
Elementary and secondary education..
Science education and basic r e s e a r c h . .
Higher education
Other aid to education
Subtotal.
Veterans benefits and services:
Disability and survivors compensation.
Non-service-connected pensions
Hospitals and medical care
Education and training
Housing loan programs
Other benefits and services
Subtotal .
General government:
Tax collection and central fiscal operations
Property and records management
Protective services and alien control
Legislative and judicial functions
Central personnel management
Territories and possessions, and other
Subtotal.
Interest.
1962
1963
Estimate
1964
1965
1966
{deduct).
67
36
808
672
770
366
101
84
41
835
658
578
401
401
91
39
875
728
805
557
398
98
39
879
708
888
193
156
99
46
946
757
1,208
182
207
103
92
890
806
544
407
323
100
19
2,573
2, 774
2, 843
3,002
3,499
2,969
3,495
3,089
162
150
261
163
222
178
306
149
420
230
446
233
561
263
982
282
-35
-237
-264
-248
-205
-255
-130
-317
75
-123
-439
-347
-540
-392
-133
-82
-84
51
211
74
167
70
*
59
-73
64
241
75
202
127
23
135
320
349
-67
-80
-104
347
890
1,023
1,918
894
252
2,087
1,073
347
2,361
1,280
427
2,506
1,574
490
2,544
1,509
555
211
2,797
1,754
770
1,018
2,942
2,277
1,988
1,580
3,036
2,653
2,113
1,860
241
809
85
275
591
108
284
224
140
308
345
158
299
464
214
363
500
373
455
493
654
540
526
574
4,200
4,481
4,715
5,381
5,797
7,574
'.0,389
11,304
332
143
286
181
337
183
350
207
392
206
428
219
404
310
383
241
418
309
413
405
1,368
368
701
397
1,827
395
451
631
2,000
455
-376
737
943
1,076
1,244
1,339
1,544
2,834
3,304
2,816
2,034
1, 532
1,030
237
312
268
2,017
1,635
1,084
142
236
287
2, 116
1,698
1, 145
88
-109
248
2, 158
1, 743
1,229
59
44
259
2,176
1,864
1,270
43
-100
241
2,221
1, 910
1,318
42
-706
238
2,298
1,931
1,389
366
144
266
2,427
2,037
1,471
417
-459
231
5, 414
5,403
5,186
5,492
5,495
5,023
6,394
6,124
607
372
289
170
140
131
653
419
300
192
153
158
715
444
323
194
142
160
791
576
335
192
174
211
825
606
366
218
174
213
864
585
385
238
175
216
909
676
445
261
194
239
940
691
465
274
197
216
1,709
1,875
1, 979
2, 280
2,402
2,464
2,725
2,781
9,050
9,198
9,980
10,765
11,435
12,132
13,508
14,152
100
1,000
750
400
766
682
654
Total administrative budget expend81,515
itures
1968
781
654
797
427
7
74
33
716
569
914
271
Allowance for:
Civilian and military pay increase.
Possible shortfall in asset sales
Contingencies
Inter/und transactions
1967
513
664
87, 787 92,642
97,684
633
870
635
96, 507 106, 978 126,729 135,033
67
TRUST FUND EXPENDITURES B Y FUNCTION
[Fiscal years.
In millions of dollars]
Actual
Description
1961
National defense
International affairs and finance
196
13
Agriculture and agricultural resources
Natural resources
Commerce and transportation
Housing and community development
Health, labor, and welfare
Education
Veterans benefits and services
General government
Deposit funds (net)
Interfund transactions (deduct)
Total trust fund expenditures
1963
1962
366
15
679
44
Estimate
1964
1965
487
62*
751
—160*
1966
1967
1968
496
416
398
507
927
137
183
112
122
134
2, 505 2,662
2, 877 3,482
3, 864
-273
1, 524
—36
1,889
1,136
19, 236 20, 382 21,855 22, 733 23,186
1
1
2
2
2
666
811
624
733
835
18
16
21
20
19
203 —544
146 —567 —210
521
515
638
528
505
1,138
760
1,370
171
111
229
1
2
1,382
1,224
1,151
145
148
145
3,738
3, 751 3,722
981
3, 202 2,999
26, 384 31,477 37,111
—4
—31
2
770
557
565
33
29
24
—520 —159 —122
734
730
770
22, 793 25,141
34,864 40,882 44,507
26, 545 28, 885 29,637
*Less than one-half million dollars.
Government Employment and Population, 1942-68
T h e following table presents data on employment and population.
T h e figures for the Fed-
eral Government include full-time and part-time employment in the executive branch, except
for summer workers under the President's Youth Opportunity Campaign and various merchant
seamen on vessels under Federal shipping contracts.
Legislative and judicial branch employ-
ment is excluded.
Population
Government employment
Federal
executive
branch
(thousands)
State and
local governments
(thousands)
All governmental
units
(thousands)
Federal as
percent of
all governmental
units
Total
United
States
(thousands)
,272
,274
,304
,787
,666
,082
,044
,075
,934
,456
,574
,532
,382
,371
,372
,391
,355
,355
,371
,407
,485
,490
,469
,496
,664
,809
,881
3,310
3,184
3,092
3,104
3,305
3,568
3,776
3,906
4,078
4,031
4,134
4,282
4,552
4,728
5,064
5,380
5,630
5,806
6,073
6,295
6,533
6,834
7,236
7,700
8,314
5,582
6,458
6,396
6,891
5,971
5,650
5,820
5,981
6,012
6,487
6,708
6,814
6,934
7,099
7,436
7,771
7,985
8,161
8,444
8,702
9,018
9,324
9,705
10,196
10,978
40.7
50.7
51.7
55.0
44.6
36.8
35.1
34.7
32.2
37.9
38.4
37.2
34.4
33.4
31.9
30.8
29.5
28.9
28.1
27.7
27.6
26.7
25.4
24.5
24.3
23.7
22.7
135,361
137,250
138,916
140,468
141,936
144,698
147,208
149,767
152,271
154,878
157,553
160,184
163,026
165,931
168,903
171,984
174,882
177,830
180,684
183,756
186,656
189,417
192,120
194,572
196,842
NOTES:
E m p l o y m e n t data are for June.
Population data are for July 1 and include Hawaii and Alaska.
A n official projection of population and of State and local government employment for 1967 and 1968 is
not available. T h e percentages and ratios shown for these years are consistent w i t h a range of reasonable estimates based on recent trends in population and State and local employment.
68
Receipts From and Payments to the Public, 1961-68
T h e following table presents total receipts from the public by source and payments to the
public by function.
These data combine the administrative budget and trust fund
and eliminate transactions taking place entirely within the Government.
figures,
A few other adjust-
ments are also made to shift data recorded on an accrual basis to a cash basis.
[Fiscal years.
Actual
Description
Receipts from the public:
Individual income taxes _
Corporation income taxes
Excise taxes
Employment taxes
Estate and gift taxes _ . _ _
Customs
Deposits by States, unemployment insurance
Veterans life insurance premiums
Other budget and trust receipts..
Total, receipts from the
public
I n millions of dollars]
Estimate
1961
1962
1963
1964
1965
1966
1967
41, 338
20, 954
11,860
12, 405
1,896
982
45,571
20, 523
12,534
12, 561
2,016
1, 142
47, 588
21, 579
13, 194
14, 862
2,167
1,205
48, 697
23, 493
13,731
16, 832
2, 394
1,252
48, 792
25,461
14, 570
16, 905
2,716
1,442
55,446
30,073
13,062
20,022
3,066
1,767
62,200
34,400
13,814
26,445
3,100
1,980
73,200
33,900
13,746
28,392
3,100
2,100
2, 398
2, 729
3,009
3,042
3,052
3,067
3,000
3,000
504
501
494
494
488
511
517
515
4,905
4, 288
5,641
5,596
6, 274
7,466
9,206
10,153
97, 242
101, 865
119, 699 134,480
154,662
168,106
58,464
71,325
76,828
4,463
5,264
4,988
5,933
5,600
5,302
4,114
3,229
6,784
4,103
3,250
7,356
4,076
3,538
6,911
3,425
33,249
2,780
5,556
9,215
2,404
-520
-1,279
3,918
39,498
3,333
7,092
9,877
2,694
-159
-2,292
1,814
46,609
2,738
6,664
10,509
2,729
-122
-181
122,395
137,817
160,859
172,403
—4,012 —4,802 —2,696
-3,337
-6,197
-4,297
109, 739 115,530
Payments to the public:
53,429
54,514
50,790
National defense
47,685
51,462
International affairs and fi4,066
4,794
3,777
4,198
3,837
nance
Space research and tech2,552
4,171
nology
744
1,257
5,093
Agriculture and agricultural
5,362
3,508
5,416
5,142
4,177
resources
2,609
2,774
2,921
Natural resources
2,195
2,339
5,777
5,107
6,545
7,421
5,487
Commerce and transportation.
Housing and community de—268
1,674
908
—103
1,691
velopment
28,191
25,624
27,191
22,321
23,918
Health, labor, and welfare
1,214
1,299
1,497
Education
945
1,052
5,971
6,107
6,080
6,092
Veterans benefits and services.. 6,187
7,427
8,011
8,605
7,257
6,940
Interest
1,953
2,221
2,341
1,677
1,837
General Kovernment
—194
—567
—544
—210
203
Deposit funds (net)
—1,960 —2,244 —1,771 —2,862 —1,179
Undistributed adjustments
Total, payments to the
public
99,542
107,662
Excess of receipts ( + ) or pay—2,300 —5,797
ments (—)
-
113,751
120,332
1968
69
Expenditures and New Obligational Authority by Agency
T h e following table lists the expenditure estimates for the major agencies of the Federal
Government.
agency.
It also shows the amount of spending authority
being requested for each
Because of the long lead time required to design, order, produce, and deliver such
complex goods as military and space equipment, and for other reasons, not all the new obligational authority granted will result in expenditures during the same year.
[Fiscal year 1968 estimate.
In millions of dollars]
Expenditures
N e w obligational
authority '
Description
AdministraAdministrative budget Trust funds tive budget Trust funds
funds
funds
Legislative branch
The Judiciary
270
2
275
2
96
1
96
1
28
28
Funds appropriated to the President:
800
1 , 363
596
1,697
Economic assistance
2,430
3
2,530
2
Office of Economic Opportunity
1,860
*
2,060
*
328
1
245
1
6,047
61
6,001
63
997
41
1,160
47
72,300
7
74,674
7
1,415
36
1,370
33
11,739
31,003
13,264
3 1 , 872
— 102
442
3,179
214
1,692
91
1 , 859
132
445
63
467
527
2, 5 3 4
Military assistance
Other
Department of Agriculture
Department of Commerce
Department of Defense:
Military
Civil
Department of Health, Education, and Welfare.
Department of
Housing
and
Urban
Devel-
opment
Department of the Interior
Department of Labor
544
Department of State
Department of Transportation
Treasury Department
Atomic Energy Commission
650
4,235
651
420
14
415
12
1,375
4,078
1,308
5,791
15,116
38
15,125
36
2,330
*
2,493
*
*
*
5,300
6,121
2
569
5,050
2
588
6,649
756
Other
651
4, 2 3 2
1,320
4,702
District of Columbia
127
635
159
623
General Services Administration
National Aeronautics and Space Administration.
Veterans Administration
710
A l l o w a n c e for:
1,000
1,000
750
800
400
Interfund transactions (deduct)
Total
682
730
135,033
44, 507
1 4 3 , 994
50,230
•Less than one-half million dollars.
i Of which $17.5 billion in administrative budget funds and $48.6 billion in trust funds do not require
current action b y the Congress.
70
Administrative Budget Totals and Public Debt, 1789-1968
T h e administrative budget surplus or deficit during a given year does not alone determine
the change in the public debt.
Changes in the Federal Government's cash balance and a few
other factors also influence the change in the debt.
A significant part of the public debt is
held by Federal Government trust funds.
A s explained in this booklet, the administrative budget totals are not as comprehensive as
the totals for Federal receipts from and payments to the public.
However, for most years
prior to the commencement of social security payments in 1 9 3 7 , the differences are insignificant.
[In millions of dollars]
Administrative
budget
receipts
A d m i n - Surplus
istrative ( + ) or
budget
deficit
expendi
(-)
itures
Public
debt at
end of
year 1
Fiscal year
Administrative
budget
receipts
A d m i n - Surplus
istrative ( + ) or
budget
deficit
expendi
(-)
itures
1.160
13, 895
1,090
14, 932
+70
-1,037
63
1,437
1933-..
1934...
1,997
3,015
4,598
6,645
-2,602
-3,630
567
588
562
562
541
521
525
485
517
584
+46
+63
+77
+45
-43
1, 263
1,222
1,178
1,159
1,136
1935...
1936...
1937...
1938..1939...
3,706
3,997
4,956
5,588
4,979
6,497
8,422
7,733
6,765
8,841
-2,791
-4,425
-2,777
-1,177
-3,862
544
595
666
602
604
567
570
579
659
694
-23
+25
+87
-57
-89
1,132
1,143
1.147
1,178
1.148
1940-..
1941...
1942...
1943...
1944...
5,137
7,096
12,547
21,947
43,563
9,055
13,255
34,037
79.368
94,986
-3,918
-6,159
-21,490
-57,420
-51,423
676
702
693
714
725
694
691
690
715
725
+11
-18
+
_ 3*
1,147
1,154
1,194
1,193
1,188
1945...
1946...
1947...
1948...
1949...
44,362
39,650
39,677
41.375
37,663
98,303
60,326
38,923
32,955
39,474
-53,941
-20,676
+754
+8,419
-1,811
1,100
683
762
3,630
5,085
746
713
1, 954
12,662
18,448
-63
+48
-853
-9,032
- 1 3 , 363
1,191
1,225
2,976
12, 455
25, 485
1950...
1951...
1952--1953...
1954---
36,422
47,480
61,287
64,671
64,420
39,544
43,970
65,303
74,120
67,537
-3,122
+3,510
-4,017
-9,449
-3,117
6,649
5, 567
4,021
3, 849
3, 853
6,357
5,058
3,285
3,137
2, 890
+291
+509
+736
+713
+963
24, 299
23,977
22,963
22, 350
21,251
1955.. .
1956...
1957...
1958...
1959...
60,209
67,850
70,562
68,550
67,915
64,389
66,224
68,966
71.369
80,342
-4,180
+1,626
+1,596
-2,819
-12,427
3,
3,
3,
3,
3,
598
753
992
872
861
2, 881
2, 888
2, 837
2, 933
3,127
+717
+865
+1,155
+939
+734
20,516
19,643
18,512
17,604
16,931
1960...
1961...
1962...
1963...
1964...
77,763
77,659
81,409
86.376
89,459
76,539
81,515
87,787
92,642
97,684
+1,224
-3,856
-6,378
-6,266
-8,226
4,058
3,116
1,924
3, 320
3,577
4,659
+738
-462
- 2 , 735
16,185
16, 801
19, 487
1965...
1966...
1967 est
1968 est.
93,072
104,727
116,995
126,937
96,507
106,978
126,729
135,033
-3,435
-2,251
-9,734
-8,096
* Less than one-half million dollars.
1
Includes Government enterprise debt guaranteed b y the U.S. Treasury.
NOTES:
Refunds of receipts are excluded from administrative budget receipts and expenditures starting in 1913;
comparable data are not available for prior years.
Certain interfund transactions are excluded from administrative budget receipts and expenditures starting in 1932. For years prior to 1932 the amounts of such transactions are not significant.
71
Federal Finances and the Gross National Product, 1942-67
Since the gross national product ( G N P ) is the total of all the goods and services produced
by the Nation in a given year, its trend is a useful measure of the growth of the economy.
By calculating annual Federal outlays as a percentage of G N P , it is possible to tell at a glance
how these outlays have changed over a period of time in relation to the change in the economy
as a whole.
Only Federal purchases of goods and services represent the use of currently
produced
resources by the Federal Government—in effect, the Government's direct share of the G N P .
In contrast, both administrative budget expenditures and Federal payments to the public
include funds lent or transferred to others, or channeled to State and local governments, which
do not represent the use of current economic resources by the Federal Government.
[Amounts in billions of dollars]
Fiscal year
Gross
national
product
Administrative
budget expenditures
Cash payments
t o the public
Federal purchases of goods
and services
Public debt at
end of year >
A m o u n t Percent A m o u n t Percent A m o u n t Percent A m o u n t Percent
of G N P
of G N P
ofGNP
of G N P
1942
139.2
34.0
24.4
34.5
24.8
29.9
21.5
77.0
55.3
1943
177.5
79.4
44.7
78.9
44.5
72.3
40.8
140.8
79.3
1944
201.9
95.0
47.1
94.0
46.6
85.6
42.4
202.6
100.4
1945
216.8
98.3
45.3
95.2
43.9
89.7
41.4
259.1
119.5
1946
201.6
60.3
29.9
61.7
30.6
40.1
19.9
269.9
133.9
1947
219.8
38.9
17.7
36.9
16.8
13.0
5.9
258.4
117.5
1948
243.5
33.0
13.5
36.5
15.0
13.2
5.4
252.4
103.6
1949
260.0
39.5
15.2
40.6
15.6
19.3
7.4
252.8
97.2
1950
263.3
39.5
15.0
43.1
16.4
19.0
7.2
257.4
97.7
1951
310.5
44.0
14.2
45.8
14.7
25.1
8.1
255.3
82.2
1952
337.2
65.3
19.4
68.0
20.2
46.6
13.8
259.2
76.8
1953
358.9
74.1
20.7
76.8
21.4
56.1
15.6
266.1
74.1
1954
362.1
67.5
18.7
71.9
19.8
53.2
14.7
271.3
74.9
1955
378.6
64.4
17.0
70.5
18.6
43.9
11.6
274.4
72.5
1956
409.4
66.2
16.2
72.5
17.7
45.2
11.0
272.8
66.6
1957
431.3
69.0
16.0
80.0
18.5
47.7
11.1
270.6
62.7
1958
440.3
71.4
16.2
83.5
19.0
50.7
11.5
276.4
62.8
1959
469.1
80.3
17.1
94.8
20.2
54.7
11.7
284.8
60.7
1960
495.2
76.5
15.5
94.3
19.0
52.7
10.6
286.5
57.8
1961
81.5
16.1
99.5
19.7
55.5
11.0
289.2
57.1
1962
506.5
542.1
87.8
16.2
107.7
19.9
60.9
11.2
298.6
55.1
1963
573.4
92.6
16.2
113.8
19.8
63.4
11.1
306.5
53.4
1964
612.0
97.7
16.0
120.3
19.7
65.7
10.7
312.5
51.1
1965
651.8
122.4
18.8
64.3
9.9
317.9
48.8
712.0
96.5
107.0
14.8
1966
15.0
137.8
19.4
10.1
320.4
45.0
1967 (estimate)
762.5
126.7
16.6
160.9
21.1
71.7
83.6
11.0
327.3
42.9
i Includes Government enterprise debt guaranteed b y the U.S. Treasury.
For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C. 20402 - Price 35 cents
72
o
O R G A N I Z A T I O N CHART OF THE
EXECUTIVE BRANCH
This foldout chart presents a graphic view of
the major components of the Executive Branch
of the Government. Included are the staff
offices that make up the Executive Office of the
President, the 12 executive departments, and
various agencies, boards, and commissions.
Temporary commissions, and interagency and
public advisory committees are not included.
New Agencies Created Since January 1966:
• Department of Transportation. (The Department will come into existence 90 days
after the Secretary takes office, or on such
earlier date as the President shall prescribe.)
* National Council on Marine Resources
and Engineering Development, in the Executive Office of the President.
F o r further details on the organization and functions of Federal agencies, see the
Government
Organization
Manual
(for
sale by
the
Government Printing Office, Washington, D . C . , 2 0 4 0 2 ) .
Superintendent
of
U.S.
Documents,
E X E C U T I V E
BRANCH
OF
THE
G O V E R N M E N T
JANUARY
EXECUTIVE OFFICE OF THE PRESIDENT • BUREAU OF THE BUDGET
76
1, 1967
@FedFRASER