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97th Congress, 2nd Session

House Document No. 97-124

Budget

of the
United States
Government
Fiscal Year 1983

THE BUDGET DOCUMENTS
Budget of the United States Government, 1983 contains the Budget Message of the
President and presents an overview of the President's budget proposals. It includes
explanations of spending programs in terms of national needs, agency missions, and
basic programs, and an analysis of estimated receipts, including a discussion of the
President's tax program. This document also contains a description of the budget
system and various summary tables on the budget as a whole.
United States Budget in Brief, 1983 is designed for use by the general public. It
provides a more concise, less technical overview of the 1983 budget than the above
volume. Summary and historical tables on the Federal budget and debt are also
provided, together with graphic displays.
Budget of the United States Government, 1983—Appendix contains detailed information on the various appropriations and funds that comprise the budget. The
Appendix contains more detailed information than any of the other budget documents. It includes for each agency: the proposed text of appropriation language,
budget schedules for each account, new legislative proposals, explanations of the
work to be performed and the funds needed, proposed general provisions applicable
to the appropriations of entire agencies or groups of agencies, and schedules of
permanent positions. Supplemental and rescission proposals for the current year
are presented separately. Information is also provided on certain activities whose
outlays are not part of the budget totals.
Special analyses previously published in the Special Analyses volume of the
Budget may be purchased individually.
Major Themes and Additional Budget Details, a supplementary report to the
budget documents, highlights the ways in which the 1983 Budget implements major
themes of the President's program and describes specific programmatic changes and
their effects.
Instructions for purchasing copies of any of these materials are on the preceding
two pages of this volume.

GENERAL NOTES
1. All years referred to are fiscal years, unless otherwise noted.
2. Detail in the tables, text, and charts of this volume may not add to the
totals because of rounding.
For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C. 20402

TABLE OF CONTENTS
Page

PART 1. THE BUDGET MESSAGE OF THE PRESIDENT
Ml
PART 2. ECONOMIC ASSUMPTIONS AND THE BUDGET OUTLOOK
2-1
The economic outlook
2-2
Sensitivity of the budget to economic assumptions
2-6
Changes in the budget outlook since last year
2-13
PART 3. BUDGET PROGRAM AND TRENDS
3-1
Summary
3-2
Current services budget with adequate defense
3-5
The 1983 budget deficit reduction program
3-7
The impact of adequate defense funding on the budget
3-16
Reversal of the growing tax claim on GNP
3-18
Asymmetrical pattern of prospective budget growth, 1983-87
3-20
Correcting the underlying budget imbalance
^
3-22
Control of Federal credit
3-23
The prospective budget margin for discretionary programs
3-26
Transition of American federalism
3-28
Summary tables
3-32
PART 4. BUDGET RECEIPTS
4-1
Summary
4-2
Enacted legislation
4-3
Receipts proposals
4-11
Effect of enacted and proposed changes on receipts
4-16
Changes in budget receipts
4-17
Receipts by source
4-19
PART 5. MEETING NATIONAL NEEDS: THE FEDERAL PROGRAM BY
FUNCTION
5-1
Introduction
5-2
National defense
5-9
International affairs
5-21
General science, space, and technology
5-34
Energy
5-41
Natural resources and environment
5-49
Agriculture
5-59
Commerce and housing credit
5-65
Transportation
5-79
Community and regional development
5-91
Education, training, employment, and social services
5-103
Health
5-127
Income security
5-139
Veterans benefits and services
5-163
Administration of justice
5-172
General government
5-179
General purpose fiscal assistance
5-187

III

CONTENTS
Page

Interest
Allowances
Undistributed offsetting receipts
PART 6. PERSPECTIVES ON THE BUDGET
Relationship of budget authority to outlays
Fiscal activities outside the Federal budget
Budget funds and the Federal debt
The increase in total 1981 outlays over the initial budget estimate
Comparison of relatively uncontrollable outlays and of receipts
Reductions in consulting services and travel
Allocation of windfall profit tax receipts
PART 7. THE BUDGET SYSTEM AND CONCEPTS
The budget process
Coverage of the budget totals
Budget authority and related transactions
The credit budget
Collections
Other transactions
Basis for budget figures
PART 8. THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT
Explanatory note...
Legislative branch
The judiciary
Executive Office of the President
Funds appropriated to the President
Department of Agriculture
Department of Commerce
Department of Defense—Military
Department of Defense—Civil
Department of Health and Human Services
Department of Housing and Urban Development
Department of the Interior
Department of Justice
Department of Labor
Department of State
Department of Transportation
Department of the Treasury
Environmental Protection Agency
National Aeronautics and Space Administration
Veterans Administration
Other independent agencies
Allowances
Budget totals
Off-budget Federal entities
PART 9. SUMMARY TABLES
Explanatory note relating to the summary tables
Table 1. Budget summary
Table 2. Budget receipts, outlays, and budget authority
Table 3. Budget authority and outlays by agency
Table 4. Budget authority and outlays available through current action by
Congress
Table 5. Relation of budget authority to outlays
Table 6. Obligations incurred, net
Table 7. Balances of budget authority

5-194
5-197
5-201
6-1
6-2
6-5
6-22
6-27
6-31
6-39
6-41
7-1
7-2
7-6
7-9
7-12
7-13
7-15
7-16
8-1
8-2
8-3
8-12
8-15
8-18
8-25
8-38
8-47
8-57
8-61
8-74
8-79
8-90
8-93
8-99
8-102
8-111
8-118
8-120
8-121
8-124
8-163
8-165
8-168
9-1
9-2
9-3
9-4
9-5
9-6
9-7
9-8
9-9

CONTENTS
Page

Table 8. Full-time equivalent of total Federal civilian employment in the
executive branch
Table 9. Budget financing and outstanding debt
Table 10. Budget receipts by source
Table 11. Offsetting receipts by type
Table 12. Budget authority by function and agency
Table 13. Outlays by function and agency
Table 14. Legislative proposals for major new and expanded programs in
the 1983 budget, projection of costs
Table 15. New direct loan obligations by agency
Table 16. New loan guarantee commitments by agency
Table 17. Controllability of budget outlays, 1973-83
Table 18. Budget receipts by source, 1973-83
Table 19. Budget outlays by function, 1973-83
Table 20. Federal transactions in the national income accounts, 1972-83
Table 21. Federal finances and the gross national product, 1964-85
Table 22. Composition of budget outlays in current and constant (fiscal year
1972) prices: 1962-85
Table 23. Budget receipts and outlays, 1789-1985
INDEX

9-10
9-11
9-12
9-15
9-18
9-30
9-43
9-44
9-45
9-46
9-48
9-50
9-59
9-60
9-61
9-62
Ind-1

PART 1

THE BUDGET MESSAGE
OF THE
PRESIDENT

*r.-^?rV.- operate.
•-••

r'T'-'^P'

BUDGET MESSAGE OF THE PRESIDENT
To the Congress of the United States:
One year ago, in my first address to the country, I went before
the American people to report on the condition of our economy. It
was not a happy occasion.
Inflation, interest, and unemployment rates were at painfully
high levels, while real growth, job creation, new investment, personal savings, and productivity gains had virtually ceased. Our
economy was staggering under the burden of excessive tax rates,
double-digit inflation, runaway Government spending, counter-productive regulations, and uneven money supply growth. The economy, I declared, was in the "worst mess" in half a century.
To our great good fortune, there were many in the Congress who
understood the nature of our difficulties and who rose with us to
meet the challenge. Fundamental and long-overdue remedies were
proposed and put in place. Together, we enacted the biggest spending and tax reductions in history. Counter-productive regulations
have been swept away, and the Federal Reserve has taken action
to bring excessive monetary growth under control.
The first year of the 97th Congress will be remembered for its
decisive action to hold down spending and cut tax rates. Today, the
question before us is whether the second year of this Congress will
bring forward equal determination, courage, and wisdom. Clearly,
there is a great deal more to be done.
Some seek instant relief from the economic problems we face.
There is no such panacea. Our program began October 1, and it
cannot solve in 4 months problems that have been building for
more than 4 decades. All the quick fixes tried in the past not only
failed to solve but actually aggravated our economic difficulties.
They simply ensured a new cycle of boom and bust, of exaggerated
hopes and eventual disappointment.
We did not promise the American people a miracle. We did
promise them progress, and progress they will get.
Our goal was and remains economic recovery—the return of noninflationary and sustained prosperity. We seek a larger economic
pie to provide all Americans more jobs, more after-tax income, and
a better life. Quick fixes won't get us there.

THE BUDGET FOR FISCAL YEAR 1983

What will get us there is firm resolve and unwavering adherence
to the four fundamentals of our economic recovery program that I
outlined to the Congress 1 year ago:
• Reducing personal and business taxes to stimulate saving,
investment, work effort, and productivity.
• Reducing the growth of overall Federal spending by eliminating Federal activities that overstep the proper sphere of Federal Government responsibilities.
• Reducing the Federal regulatory burden in areas where the
Federal Government intrudes unnecessarily into our private
lives or interferes unnecessarily with the efficient conduct of
private business or of State or local government.
• Supporting a moderate and steady monetary policy, to bring
inflation under control.
At the same time, I have proposed strengthening the Nation's
defenses, to restore our margin of safety and counter the Soviet
military buildup.
Congressional response to these proposals has been positive and
gratifying. While much remains to be done, we have made a good
beginning.
The Nation's fiscal policy is now firmly embarked on a new,
sound, and sustainable course. For the first time in 2 decades, the
destructive pattern of runaway spending, rising tax rates, and expanding budgetary commitments has been slowed, and with the
cooperation of the Congress this year, will finally be broken.
• Where the growth rate of spending had soared to 17.4% in
1980, it is now declining dramatically—to 10.4% this year,
and, under the budget I am submitting, to 4.5% next year.
• Where budget growth totaled $166 billion from 1979 to 1981,
spending will rise by only 60% of that amount from 1981 to
1983, despite cost-of-living adjustments and the needed defense buildup.
• After having reached 23% of GNP in 1981, the Federal Government's claim on our economy will steadily recede—to 22%
in 1983 and to below 20% by 1987.
• After a decade of tax-flation in which fiscal and monetary
excess fueled the unrelenting rise of prices and the automatic
increase of taxes, significant tax rate reductions have been
enacted. A permanent safeguard against bracket creep and
Government profiteering on inflation—income tax indexing—
has also been created.
• Where Government had passively tolerated the swift, continuous growth of automatic entitlements and had actively shortchanged the national security, a long-overdue reordering of
priorities has begun, entitlement growth is being checked, and
the restoration of our defenses is underway.

THE BUDGET MESSAGE OF THE PRESIDENT

This dramatic progress in reordering fiscal policy has been paralleled by a similar redirection of monetary policy. The excessive,
unsustainable, and eventually ruinous growth of money and credit
of the past decade has been curbed. The inflation spiral has been
broken. The growth of prices is slowing down. Peoples' savings are
beginning to flow out of unproductive speculation, tangible assets,
and other inflation hedges back into the Nation's financial arteries
where they will be available to power economic recovery, more
jobs, and growing incomes and opportunities.
THE BUDGET TOTALS
(In billions of dollars)
1981 actual

Budget receipts
Budget outlays
Surplus or deficit ( - )
Budget authority

1982 estimate

1983 estimate

1984 estimate

1985 estimate

599.3
657.2

626.8
725.3

666.1
757.6

723.0
805.9

796.6
868.5

-57.9

-98.6

-91.5

82.9

-71.9

718.4

765.5

801.9

858.0

943.5

In short, we are putting the false prosperity of overspending,
easy credit, depreciating money, and financial excess behind us. A

THE BUDGET FOR FISCAL YEAR 1983

solid foundation has been laid for a sound dollar, sustained real
economic growth, lasting financial stability, and noninflationary
prosperity for all Americans.
We are also moving to shackle the regulatory juggernaut that
burdened production, consumed jobs, and diminished productivity
growth. During the past year no significant new regulatory statutes were enacted and few major new regulations were imposed.
Additions to the Federal Register declined by 23,000 pages. Benefitcost analysis was made mandatory for regulations. Dozens of existing regulations were reviewed, modified, or eliminated. Without
taking into account billions of dollars of savings from regulations
never formally proposed because of the changed climate our program has created, quantifiable one-time cost savings of over $3
billion and recurring annual savings of nearly $2 billion have been
realized. And the effort has just begun.

A YEAR OF HISTORIC ACHIEVEMENT
These remarkable achievements are the cornerstones of our national economic recovery program. They far exceed anything that
the skeptics and critics ever dreamed possible just 1 year ago. They
occurred because the executive and legislative branches of our
Government joined together to respond to the mandate of the
American people and overcome the impediments that had paralyzed Washington for a decade. Together, we have launched a
process of reform and change that can transform the course of
events.
The Economic Recovery Tax Act of 1981 is the largest, most
comprehensive, and most constructive tax bill ever adopted. With
the cooperation of the Congress and support of the public, it was
enacted in just 5 months. It addressed and substantially remedied
most of the tax system's shortcomings and disincentives that had
accumulated over decades—distortions that were imposing an increasingly heavy toll on investment, economic growth, and job
creation.
• The penalty tax rate on investment income has been eliminated. By dropping the top rate from 70 to 50%, the attractiveness of tax shelters will be reduced and the incentives for
productive investment in stocks, bonds, new business ventures, and other financial assets will be increased. Our Nation's capital will again flow to the growth of business and
jobs rather than to the vendors of protection from punitive
taxation.
• Marginal tax rates have been significantly lowered for the
first time in two decades. The 23% across-the-board rate reduction will mean $183 billion in lower taxes for individuals
over the first 3 years. The financial reward for savings, work

THE BUDGET MESSAGE OF THE PRESIDENT

•

effort, and new production will stop diminishing and start
rising once again.
Powerful new incentives for savings have been established.
Beginning this year, 50 million workers will be eligible for the
first time to set aside tax-free up to $2,000 per year for
Individual Retirement Accounts. The annual limit for existing
Keogh and IRA investors will also be raised. By sharply altering the incentives for saving as opposed to consumption, a
huge new flow of current income will be channeled toward
restoring our productivity and lifting our national savings
rate from last place in the industrial world.
The taxation of phantom corporate profits has also been significantly curtailed. The new accelerated cost recovery system
will shorten depreciation periods to 5 years for machinery and
15 years for structures. This will permit fuller recovery of
asset costs, a more valid accounting of taxable profits, and a
reasonable after-tax return on investments for the first time
in years. By eliminating the drastic under-depreciation provided in previous tax law, after-tax business cash flow will be
increased by $10 V2 billion this year and $211 billion over the
next 6 years. This growing stream of funds for modernization,
new machinery, new technology, new products, and new
plants will revive our lagging productivity, restore our competitiveness in world markets, and spur the steady growth of
jobs, production, and real incomes.
The confiscatory taxing of estates and inheritances has been
halted as well. By raising the exemption to $600,000, by lowering the rate to 50%, and by removing the limits on the
marital deduction, 99.7% of all estates will eventually be
exempt from estate taxation. Hard-working American farmers, small businessmen, investors, and workers can once again
be confident that the sweat, sacrifices, and accumulations of a
lifetime will belong to their heirs rather than their Government.
Government profiteering on inflation has been abolished. Beginning in 1985, the individual income tax brackets, the zerobracket amount, and the personal exemption will be corrected
annually for inflation. Bracket creep will never again systematically plunder the rewards for production and effort. Government will never again use inflation to take a rising share
of the peoples' income without a vote of their representatives.

THE BUDGET FOR FISCAL YEAR 1983

as a Percent of GNP

The past year's achievements on spending control and the reestablishment of budgetary discipline are no less impressive than the
sweeping tax changes. For the first time ever, the Congress activated its central budgetary machinery and overcame the spending
impulses of its fragmented parts. The Omnibus Budget Reconciliation Act of 1981 was a watershed in fiscal history—a giant step
toward the restoration of fiscal discipline. By the accounting of its
own Congressional Budget Office, spending will be $35 billion lower
this year and about $130 billion lower over the next 3 years due to
just one bill passed in only 5 months after having been considered
by 30 different committees, a bill that reduced, reformed or eliminated hundreds of programs. The growth of budgetary outlays is at
last being brought in line with the growth of the tax base and the
national income. Excess spending commitments, unnecessary programs and overlapping activities were meaningfully addressed in
the Reconciliation Act for the first time in decades.
• As a result of congressional action in 1981, the growth of
entitlements will be reduced by $41 billion during the next 3
years. For the first time, eligibility standards for food stamps
and student loans have been tightened. Unemployment benefits have been targeted to States where they are needed.
Subsidies for non-needy students have been reduced in the
school lunch program. Abuses of the medicaid, nutrition, and

THE BUDGET MESSAGE OF THE PRESIDENT

•

AFDC programs have been curtailed, saving $14.4 billion over
the next 3 years. Overly generous and unaffordable twice-ayear cost-of-living adjustments for Federal retirees have been
eliminated. The "uncontrollables" are being brought under
control, and benefits have been retargeted where they are
most needed.
Dozens of ineffective or counter-productive programs have
been eliminated or reduced. The $4 billion make-work CETA
public sector jobs program was abolished. Extravagant dairy
subsidies have been cut substantially. The ineffective $700
million Economic Development Administration is being
phased out. The Community Services Administration has
been eliminated. An unnecessary $2 billion in Government
subsidies for new energy supplies and technologies has been
cut. The excessively-funded impact aid program was substantially scaled back. In short, a long-overdue housecleaning of
excess budgetary commitments was accomplished.
Inappropriate Federal subsidies have been withdrawn. Legislation to return Conrail to the private sector has been enacted. The National Consumer Cooperative Bank has been
privatized. Subsidies to the auto industry for new technology
demonstrations have been eliminated. Operating subsidies to
local mass transit systems are being phased out. Subsidies to
exporters have been sharply curtailed. Subsidized disaster
loans to financially viable businesses have been eliminated.
A major stride toward rationalizing the structure, reducing
the cost, and increasing State and local flexibility in the
Nation's $91 billion grant-in-aid system has been enacted.
Fifty-seven narrow, redtape-ridden categorical grants programs have been replaced with 9 block grants. The pages of
regulation imposed on State and local governments have been
reduced from over 300 to 6, while the cost to the Federal
budget has been reduced.
Total funding for nondefense discretionary programs has been
reduced. After continuous growth for two decades, the budget
cost of these programs will actually decline from $137 billion
in 1981 to $130 billion in 1982.
An impressive start at reducing fraud, waste, abuse, and unnecessary Government overhead was made. The President's
Council on Integrity and Efficiency, established to coordinate
a Government-wide attack on fraud and waste, saved $2 billion in the last 6 months of 1981 alone. A comprehensive
effort to collect $33 billion in delinquent debts has been
launched and will recover $1.5 billion in 1982 and $4.0 billion
in 1983. These estimates include recoveries of delinquent
taxes due to the Internal Revenue Service. Federal nondefense employment has been reduced by 35,000 since January

M10

THE BUDGET FOR FISCAL YEAR 1983

1981. The cost of Government travel, publications, and
consultants has been reduced substantially.
At the same time that the Congress joined in these long-overdue
efforts to pare back the size of the Federal budget and slow its
momentum of growth, it has fully supported our ambitious but
essential plan to rebuild our national defense. A year ago every
component of military strength was flashing warning lights of
neglect, under-investment, and deteriorating capability. Today,
health is being restored.
• Pervasive deficiencies in readiness—including too many units
not ready for combat, too many weapons systems out of commission, too few people with critical combat skills, and too
few planes and ships fully capable of their missions—are
being corrected. Funds for operations and maintenance, including training and aircraft flying hours, have been boosted.
Backlogs of combat equipment needing repair are being eliminated. Adequate supplies of spare parts necessary to support
high operating rates for training, as well as to provide war
reserves, are being purchased.
• The serious inadequacy in pay and benefits that threatened
the all-volunteer force, caused an exodus of skilled personnel,
and sapped morale throughout the armed services has been
corrected. Last year's 14.3% pay increase has improved recruit quality, boosted reenlistment rates, stopped the drain of
critical skills, and contributed to the dramatic revival of
morale in our military services. End-strength goals are now
being exceeded. In addition, the percentage of recruits with
higher test scores has risen in the past year.
• Critical investments in conventional and strategic force modernization are now moving rapidly forward. A new bomber for
early deployment and an advanced (Stealth) bomber for the
1990's have been approved to retain our capability to penetrate Soviet air defenses. Development of a new, larger, and
more accurate MX missile to preserve our land-based deterrent is proceeding. A 5-year shipbuilding program including
133 new ships and a total investment of $96 billion—double
the 5-year program of the previous administration—has been
launched. Rapid production of new combat systems including
the M-l Abrams tank, the AV-8B Marine Corps attack aircraft and the F/A-18 Navy tactical fighter have been approved. Improvements in our airlift and sealift forces to transport equipment and soldiers rapidly to counter military aggression anywhere in the world, are moving forward.

THE BUDGET MESSAGE OF THE PRESIDENT

Mil

NO TIME TO RETREAT
These achievements of the first year truly constitute a new beginning. In every major dimension of national strength and wellbeing we have launched the redirection of policy that was so desperately needed and so long overdue. We are ending the destructive inflation and the financial disorder built up over a decade. We
have removed the yoke of over-taxation from our workers and our
business enterprises. We have begun to dismantle the regulatory
straitjacket that impeded our commerce and sapped our prosperity.
And we have reversed the dangerous erosion of our military capabilities.
The task before us now is a different one, but no less crucial. Our
task is to persevere; to stay the course; to shun retreat; to weather
the temporary dislocations and pressures that must inevitably accompany the restoration of national economic, fiscal, and military
health.
The correction of previous fiscal and monetary excesses has come
too late to avert an unwelcome, painful, albeit temporary business
slump. In the months ahead there will be temptation to resort to
pump-priming and spending stimulus programs. Such efforts have
failed in the past, are not needed now, and must be resisted at
every turn. Our program for permanent economic recovery is already in place. Artificial stimulants will undermine that program,
not reinforce it.
Likewise, previous excesses in money and credit growth have
resulted in financial strain in many regions and sectors of our
national economy. The adjustment to lower inflation and a more
moderate money and credit policy did not come soon enough to
avoid interest rates and unemployment far higher than we would
like, and that we are working to reduce. But these effects are
temporary. They cannot be remedied by a return to rapid, unsustainable expansion of Federal spending and money growth, which
would drive inflation and interest rates to new highs. Our hardwon gains in reducing inflation must be preserved and extended—
because permanent reduction of interest rates and unemployment
is impossible if the fight against inflation is abandoned, just when
it is being won.
Similarly, our budget deficits will be large because of the current
recession, and because it is impossible in a short period of time to
correct the mistakes of decades. But our incentive-minded tax
policy and our security-based defense programs are right and necessary for long-run peace and prosperity, and must not be tampered with in a vain attempt to cure deficits in the short-run. The
answer to deficits is economic growth and indefatigable efforts to

360-000

0 - 8 2 - 2

M12

THE BUDGET FOR FISCAL YEAR 1983

control spending and borrowing. These principles we dare not
abandon.

THE DEFICIT PROBLEM: ITS ORIGINS
Despite the new course we have charted and the gains we have
achieved, the voices of doubt, retreat, and rejection are beginning
to rise. They conveniently forget that the present business slump
was not caused by our program but is the result of the accumulated burdens of past policy errors, which we have taken action to
redress. They fail to comprehend that our spending cuts and tax
reductions were not designed to redistribute the output of a stagnant economy, but to revive the economy's growth and to increase
its size—for the jobless as well as the affluent, for those who aspire
to get ahead as well as those who have already arrived.
Increasingly, the larger budget deficits that we unavoidably face
are offered as evidence that our entire course should be recharted.
The matter of budget deficits, therefore, must be addressed squarely. We must fully comprehend why they have grown from our
original projections, why they may remain with us for some time to
come, what dangers they pose if not vigorously combatted and
what steps we can and must take to steadily reduce their size and
drain on our available savings.
Our original plan called for a balanced budget in 1984. Balance is
no longer achievable in 1984, but the factors that have postponed
its realization are neither permanent nor cause for abandoning the
goal of eventually living within our means.
In the near term, the most important setback to our budgetary
timetable is the recession now underway. During 1982, receipts will
decline by $31 billion and outlays rise by $8 billion due to the falloff of business activity and the increase of unemployment-related
payments. This factor alone accounts for nearly all of the difference between the $45 billion 1982 deficit we projected last year and
our current estimate of $98.6 billion.
While the recession will end before this fiscal year is over, its
budgetary impact will spill over for many years into the future. It
will take time for the unemployment rate to come down and safety
net payments to diminish. The growth of receipts will recover, but
not at the levels previously projected. This will add billions to
deficits for 1983 and 1984.
The second major factor widening the deficit projection is interest payments on our trillion dollar debt. Here we are being penalized doubly for the misguided policies of the past.
The discredited philosophy of spend and spend, borrow and
borrow, saddled us with a permanent debt burden of staggering
dimensions. This year's interest payment of $83 billion exceeds the
size of the entire Federal budget as recently as 1958.

THE BUDGET MESSAGE OF THE PRESIDENT

M13

In addition, past fiscal, monetary, and credit excesses have resulted in temporarily high interest rates—rates that will come
down, but only as inflation abates, private and public financing
practices adjust, and long-term confidence rebuilds. Since market
confidence has been so badly shaken by runaway inflation and
interest rates in the past 3 years, it is apparent that interest rates
over the next several years will fall less rapidly than we had
originally anticipated. Between the huge inherited base of national
debt, the higher interest rates, and the large prospective additions
to the national debt in the next several years, our total debt service
costs will rise substantially.
Interest payments on the debt will exceed our original projections by $18 billion in 1982, $32 billion in 1983, and $182 billion
over 1982-86 taken as a whole. The interest rate/debt service
factor, then, constitutes a major source of the setback to our budget
timetable. But let us be clear about its origins: it arises primarily
from a legacy of past excesses, not from a shortfall in our current
budget control efforts, nor from a flaw in our overall program.
The third and most important factor contributing to the growth
in deficit projections is quite simply the ironic by-product of our
rapid and decisive success in bringing down the rate of inflation.
Our economic forecast last February projected a 9.5% inflation rate
in calendar year 1981 and a further decline to 7.7% in 1982. This
projection was scorned by many as too rosy just 1 year ago. Yet
the actual inflation rate in 1981 turned out to be lower than our
projection, and the inflation decline this year and next year almost
certainly will exceed our earlier projections.
This is welcome news to every American and we have adjusted
our inflation forecast accordingly. But lower rates of price increase
also mean lower inflation components in wages and incomes and a
reduced flow of inflation-swollen tax receipts to the Treasury.
This point is not merely academic. Over the next 5 years, our
forecast projects a 9.9% average rate of growth in nominal GNP
reflecting a steady fall of inflation to about 4V2% by 1987. If
nominal GNP growth were just 2% higher each year, reflecting a
continuation of higher inflation, Federal receipts would be enlarged by the staggering sum of $353 billion over the 5 years. On
paper, at least, the budget would be nearly balanced in 1987 rather
than more than $50 billion in deficit.
But if the last decade offers any lesson, it is that we cannot
inflate our way to budget balance. Indeed, every budget from 1975
forward projected a balanced budget 2 years into the future and
growing surpluses in the out-years. Not one of these surpluses
materialized for a very compelling reason: the monetary excesses
needed to finance inflationary growth of wages and incomes are
the enemy of savings, investment, real economic growth, and fun-

M14

THE BUDGET FOR FISCAL YEAR 1983

damental business confidence and financial stability. They lead to
the kind of pervasive economic breakdown that we experienced
during 1979-81—a breakdown that swells Government spending,
interrupts the flow of receipts, and causes prospective budgetary
surpluses to vanish in a flow of red ink.
Thus, we cannot and will not pursue the will-o'-the-wisp of reflation nor the phantom of future budget surpluses premised on a
continuance of high inflation.
Instead, we must recognize that for a period of time, success in
our unyielding battle against inflation will appear to work against
our goal of a balanced budget. Thus, while our current revenues
will reflect the decline of inflation today, part of our current outlays will reflect the higher rates of inflation in years past. This is
especially true in the case of some $249 billion in indexed programs. Generally, the inflation rate used to adjust indexed benefits
lags a year or more behind the current payment period. During
1983, for example, an inflation rate of 6.5% is projected, but cost-ofliving adjustments to social security and other program benefits
will be 8.1% based largely on the actual inflation experience of
1981. Much the same is true of the $96.4 billion in debt service for
1983. Some part of that will reflect the higher cost of debt securities issued in 1980-82 when inflation and interest rates will have
been higher than is now projected for 1983.
Thus, the conquest of inflation will contribute to budgetary imbalance for some years to come. But these deficits will prove manageable if we understand why we have them and redouble our
efforts to reduce them.
The final factor contributing to the worsening of the deficit
outlook is that all of the budget savings we had planned for last
year were not actually achieved. Most importantly, our plan to
ensure the short- and long-run solvency of social security was
discarded by the Congress. In an effort to eliminate partisanship
and facilitate movement toward a constructive solution, our reform
proposal has been withdrawn in favor of a bipartisan commission
charged with developing a plan to rescue the social security system
by next fall. I am confident that the commission will do just that,
but in the meanwhile our outlay projections must be increased by
$6 billion in 1983 and $18 billion for 1987.
Likewise, the Congress failed to adopt all of the reforms we
proposed for medicaid, guaranteed student loans, food stamps and
other entitlements. Without further action, about $4 billion would
be added to the 1983 deficit in these areas alone. While major and
unprecedented action was taken to curb the growth of entitlements
last year, the shortfall is still substantial. Entitlement reforms not
acted upon by the Congress last year will add nearly $20 billion to
the deficit over the next 3 years. When this is combined with

THE BUDGET MESSAGE OF THE PRESIDENT

M15

substantial added outlays for farm subsidies and for discretionary
programs that were not reformed, it is clear that the task of budget
control is far from complete.

THE BUDGET DEFICIT IN PERSPECTIVE
Taken together, the effects of recession, higher interest rates,
declining inflation, and incomplete congressional action will mean
high, continuing, and troublesome Federal budget deficits. Constant vigilance and relentless efforts to pare back future spending
and borrowing will be imperative to ensure that they are not
permitted to worsen and add further pressure to financial markets
and interest rates.
Nevertheless, three features of these high deficit numbers must
not be lost sight of even as we seek eventually to eliminate them.
First, even the 1982 deficit of $98.6 billion is not unprecedented
in the context of a recession and recovery cycle. Relative to the
present size of the U.S. economy, the budget deficit would have
been $94 billion for 1975, followed by deficits of $139 billion, $91
billion and $97 billion in the next 3 years, respectively.
Second, these deficits reflect the excess spending commitments of
past rather than new spending programs with potential to grow in
the future. That means that by remaining firm in our efforts to
reduce waste and excess, reform entitlements, reduce low priority
spending, and gradually return domestic programs back to State
and local governments, the gap between spending subject to firm
fiscal discipline and revenues being lifted by steady economic expansion will gradually diminish.
Finally, the share of GNP taken in taxes will be substantially
lower and the incentives for savings markedly stronger. This expansion of the total savings supply will increase our capacity to
absorb deficits and give us additional time to work toward their
elimination.

M16

THE BUDGET FOR FISCAL YEAR 1983

$239 BILLION DEFICIT REDUCTION PLAN
The prospect of high deficits during the transition to strong
economic growth and low inflation contains a profound warning:
any relaxation of our budget control efforts, any backsliding to
spending politics as usual, any retreat to time-worn excuses about
"uncontrollables"—that results in spending growth significantly
above our projections, will mean a serious threat to the progress of
our entire economic recovery program. There is precious little
margin for shirking or diluting the task the American people have
charged us with. That task is nothing less than a constant, comprehensive, ceaseless search for ways to reduce the size of Government
and the future growth of its spending.
The 1983 budget I am presenting to the Congress faithfully adheres to that mandate. If all proposed measures are adopted, the
prospective deficit will be reduced by $56 billion next year, $84
billion in 1984, and $99 billion in 1985. In short, the budget this
year represents much more than simply a tabulation of accounts or
a compilation of spending decisions, large and small. Instead, it
represents a far-reaching, resourceful, and integrated blueprint for
reducing the prospective deficit by $239 billion over the next 3
years. It is a bold action plan that, if faithfully implemented, can
cut the prospective deficits over that period by nearly 50%.

THE BUDGET MESSAGE OF THE PRESIDENT

M17

Our plan for deficit reduction consists of five parts. It addresses
each area of the budget where actions to reduce the gap between
spending and revenues are possible and desirable.
The first area concerns nonsocial security entitlements. Despite
the heartening progress we made toward reform last year, the cost
of these automatic spending programs will rise to $201 billion in
1983 without further action. This figure compares to only $119
billion in 1979.
Thus, our 1983 budget proposals continue the objective set out
previously: to reduce the swift growth of automatic entitlements
while preserving benefits for the truly needy. If acted upon fully by
the Congress, these new reform measures will save $12 billion next
year and $52 billion over the next 3 years. They include new steps
to tighten eligibility, reduce errors and abuse and curtail unwarranted benefits in the welfare, medical, and nutrition programs.
The explosive growth of medical programs—16.7% per year since
1978—will be contained with tighter reimbursement standards for
providers, modest copayment requirements for medicaid beneficiaries, and, later in the year, a comprehensive plan to reform the
health care reimbursement system and provide new cost control
incentives for all participants. We have also proposed measures to
target guaranteed student loans better to those with financial need
and to limit the cost growth of Federal military and civilian retirement programs.
Nevertheless, let me be clear on this point. Our administration
has not and will not turn its back on our elderly or needy citizens.
Under our new budget, funding for social insurance programs will
be more than double the amount spent only 6 years ago. For
example, the Federal Government will subsidize 95 million meals
every day. That is one of every seven of all meals served in America. Headstart, senior nutrition programs, and child welfare programs will not be cut from the levels we proposed last year.
The second component of our deficit reduction plan covers domestic discretionary and other programs for purposes ranging from
agricultural research to housing subsidies and manpower training.
Our proposed savings here total $14 billion next year and $76
billion over the next 3 years.
These savings measures involve two essential principles. First,
where programs are unnecessary, can be better targeted or can be
significantly streamlined, we have proposed substantial reductions.
Our proposals to convert the fragmented and wasteful CETA training program to a block grant, to target low-income energy assistance to the colder States where it is needed, to combine the WIC
program with the child and maternal health block grant, and to
further reduce subsidies to business for energy technology development and commercialization are all examples of this principle.

M18

THE BUDGET FOR FISCAL YEAR 1983

The other principle governing discretionary programs is that we
have generally not provided inflation allowances for them. This
will provide a powerful incentive to reduce overhead, waste, and
low-priority activities and ensure that the money we spend for
many worthwhile purposes in the areas of education, transportation, community development, and research is utilized in the most
efficient and productive manner possible. Our deficit problem is
simply too severe to permit business as usual to continue any
longer.
The third component of the deficit reduction program involves
user fees, or more appropriately, the recovery of costs borne by the
taxpayers generally, but that predominantly benefit a limited
group of businesses, communities or individuals. Total savings
would amount to $2.5 billion in 1983 and $10 billion over the next 3
years.
While the Congress made great strides on most of our proposed
budget cuts last year, the user fees proposals were a noticeable and
disappointing departure from this pattern. The case for action now
is even stronger than it was last year. With sacrifices required of
almost every beneficiary of Federal programs, it is simply inexcusable and intolerable that yacht owners escape without paying even
a small part of the Coast Guard services; or that commercial and
general aviation are not paying the cost of the air traffic control
system that ensures their safety; or that ship and barge operators
do not pay a fair share of the costs of waterways maintained by the
Federal Government. Our user fee package corrects these and similar shortcomings in current budget policy and will contribute significantly toward reducing the deficit.
The fourth part of the plan is aimed at the executive branch and
the most inexcusable of all forms of spending: lax management, the
toleration of fraud and abuse, the failure to recover debts owed the
Government or to dispose of properties it does not need, and outdated, inefficient, procurement practices.
Our fiscal plan has always assumed that our new management
would take hold, and that savings would be possible in areas we
have simply never looked at before. After 1 year, our new management team has indeed taken hold, the results to date have been
impressive, and our plans for future savings are bold and farreaching. All told, these efforts will reduce the budget deficit by
$20 billion next year and $68 billion over the next 3 years.
We will collect the debts we are owed and the taxes we are due.
New legislation will be needed in some cases, but much of these
savings will flow from tighter, more aggressive management
throughout executive branch agencies.
Likewise, we will move systematically to reduce the vast Federal
holdings of surplus land and real property. It is estimated that the

THE BUDGET MESSAGE OF THE PRESIDENT

M19

Federal Government owns approximately 775 million acres, and
405,000 buildings, covering about 2.6 billion square feet. Some of
this real property is not in use and would be of greater value to
society if transferred to the private sector. During the next 3 years
we will save $9 billion by shedding these unnecessary properties
while fully protecting and preserving our national parks, forests,
wildernesses and scenic areas.
Our management efforts will also be directed toward the more
cost-effective procurement of the goods and services required by the
Federal Government. The changes we seek will increase competition for the Government's business, reduce and simplify paperwork
and regulations, and develop better standards for our procurement
processes and personnel. Over time these efforts will yield large
outyear savings not included in the budget totals.
Finally, our emphasis thus far has been on reducing excessive
tax rates and shrinking the Government's take from the paychecks
of workers and the profits of business. On that principle we will
not waver. But that does not mean unintended loopholes should go
uncorrected, that obsolete tax incentives should be continued, or
that profitable business should not contribute at least some minimum fair share to the cost of financing Government. Thus, our
deficit reduction plan includes $34 billion over the next 3 years in
additional receipts from new initiatives in these areas.
About one-third of this total is attributable to our proposal to
strengthen the minimum corporate tax, and a substantial share of
the other tax revisions will also affect business. In every case, these
measures involve the collection of a tax that is owed now or that
was intended by the Congress, or elimination of incentives that are
no longer needed due to the sweeping reform of business taxation
contained in the Economic Recovery Tax Act of 1981.
These new proposals will have no adverse impact on our economic recovery program, are fair and equitable, and will contribute
significantly to the reduction of future deficits.

CONTINUING THE RESTORATION OF NATIONAL
DEFENSE
Our 1983 budget plan continues the effort begun last year to
strengthen our military posture in four primary areas: strategic
forces, combat readiness, force mobility, and general purpose
forces.
A thorough 8-month review of U.S. strategic forces and objectives
preceded my decision this past October to strengthen our strategic
forces. The review found that the relative imbalance with the
Soviet Union will be at its worst in the mid-1980's and hence needs
to be addressed quickly. It also concluded that the multiple protec-

M20

THE BUDGET FOR FISCAL YEAR 1983

tive structure basing proposal for MX did not provide long-term
survivability since the Soviets could counter it (at about the same
cost) by simply deploying more warheads.
In addition, our review pointed to serious deficiencies in force
survivability, endurance, and the capability to exercise command
and control during nuclear war. Current communications and
warning systems were found to be vulnerable to severe disruption
from an attack of very modest scale.
The 1983 budget funds programs to correct these deficiencies.
The 1983 strategic program of $23.1 billion, an increase of $6.9
billion over 1982, provides for both near-term improvements and
longer-term programs. These initiatives include:
• Early deployment of cruise missiles on existing bombers and
attack submarines.
• Acquisition of a new bomber (the B-1B) and development of
advanced technology (Stealth) bomber for deployment in the
1990's to provide a continued capability to penetrate Soviet
defenses.
• Development and procurement of a new, larger, and more
accurate land-based missile, the MX.
• Continued deployment of Trident ballistic missile submarines
to strengthen the sea-based leg of our strategic deterrent.
Longer-term programs include: development of a survivable deployment plan for the MX missile, development of a new submarine-launched ballistic missile, continued improvements in the survivability of warning and communications systems, and improvements in strategic defenses against both bomber and missile
attacks.
The 1983 budget provides $114.3 billion in operations and military personnel costs, an increase of over $13 billion from the 1982
level to improve the combat readiness of our forces.
Today a major conflict involving the United States could occur
without adequate time to upgrade U.S. force readiness. Our concerns with military readiness reflect both the long lead time required to procure sophisticated equipment (both parts and finished
equipment) and past failures to provide adequate peacetime support for combat units. We cannot wait for a period of rising tensions before bringing forces up to combat readiness.
My program will continue to bolster combat readiness by increasing training, operating rates, and equipment support. There will be
increased aircraft flying hours and supply inventories. In addition,
backlogs of combat equipment and real property awaiting maintenance will be reduced. Also, the 1983 budget will provide levels of
military compensation that will improve the readiness and capability of the All Volunteer Force.

THE BUDGET MESSAGE OF THE PRESIDENT

M21

Current U.S. mobility forces cannot move the required combat or
combat support units fast enough to counter effectively military
aggression in Europe, Korea or in the Southwest Asia/Persian Gulf
region. For example, at present only a small light combat force
could be moved rapidly to the Southwest Asia region. Major mobility shortages include wide-body military cargo aircraft; fast logistics ships; and prepositioned ships and associated support equipment. Elimination of these shortages is an essential first step
toward improving U.S. military capability during the first 30 days
after the beginning of a crisis.
The 1983 budget provides $4.4 billion for:
• Initial procurement of a fleet of improved C-5 cargo aircraft,
and additional KC-10A tanker/cargo aircraft that will double
our wide-bodied military airlift capability by the 1990's.
• Continued upgrading of existing C-5A aircraft to extend their
effectiveness beyond the year 2000.
• Conversion of four additional fast logistic ships that will provide the capability to move heavy combat forces rapidly.
• Chartering a fleet of supply ships that can be stationed with
equipment and supplies in Southwest Asia to reduce the time
required for deployment of heavy forces.
In the last decade, the Soviet Union introduced large quantities
of highly capable, new-generation tactical equipment including
combat ships, tanks and aircraft, which must be countered by
modernized U.S. forces. Also, the traditional U.S. superiority in
system quality has been considerably narrowed, making Soviet
quantitative advantages more serious. The Soviet military force
buildup has increased the risk that they may rely on military
power to support their foreign policy goals. For the U.S. to maintain, in concert with our allies, sufficient conventional forces to
deter potential aggression, our forces must be provided with adequate numbers of new, modern tactical equipment.
My 1983 budget includes $106.2 billion for general purpose forces
(including both operations and investment), an $18 billion increase
over 1982. A key initiative is an expanded shipbuilding program.
The United States, dependent on open seas for commerce and
military resupply, must have the naval capability to maintain control of vital sea lanes. While our naval forces have declined from
the mid-1960's, the Soviets have in existence or under construction
eight new classes of submarines and eight new classes of major
surface warships, including nuclear-powered cruisers and new aircraft carriers.
The budget provides an $18.6 billion shipbuilding program including full funding for two nuclear-powered aircraft carriers, to be
constructed during 1983-87. Other ships included in my 1983 program are three large cruisers equipped with an advanced air de-

M22

THE BUDGET FOR FISCAL YEAR 1983

fense system; two nuclear-powered attack submarines; two frigates
for convoy protection and four mine countermeasure ships to improve fleet capability to operate in mined waters. My longer term
objective is to increase the deployable battle force from 513 ships in
1982 to over 600 by the end of the decade.
In addition, the budget provides for increased production of
ground and tactical air force weapons. Production rates will be
increased for a variety of new systems such as the M-l Abrams
tank, light armored vehicles, and the AV-8B Marine Corps attack
aircraft.
All of this will be done with a major reform of the acquisition
process and vastly improved management of defense operations,
which will save $51 billion by 1987. In a continuing fight against
fraud, waste, and inefficiency, the Secretary of Defense has appointed an Assistant for Review and Oversight and a Council on
Integrity and Management Improvement.

REVITALIZATION OF AMERICAN FEDERALISM
The Constitution provides clear distinctions between the roles of
the Federal Government and of the States and localities. In their
wisdom, our founding fathers provided for considerable flexibility
so that in following centuries these responsibilities could be adapted to new conditions. But in recent years we have not adapted well
to new conditions. We have created confusion as to who is responsible for what. During the past 20 years, what had been a classic
division of functions between the Federal Government and the
States and localities has become a confused mess. Traditional understandings about the roles of each level of government have been
violated.
Governments at all levels have had and will continue to face
various problems. But, as Governor of California, I learned that a
problem in one part of the country does not automatically mean
that we need a new Federal program in all 50 States. Yet that is
what has happened.
In 1964, total Federal grants to State and local governments
were $10 billion. By 1980, total Federal grants to States and localities exceeded $90 billion, meaning that 18% of Federal tax receipts
were being passed through to States and localities for one reason or
another. However, these funds were not passed through entirely
benignly. Attached to them were Federal rules, mandates, and
requirements. This massive Federal grantmaking system has
distorted State and local decisions and usurped State and local
functions.
I propose that over the coming years we clean up this mess. I am
proposing a major effort to restore American federalism. This transition over nearly 10 years will give States and localities the time

THE BUDGET MESSAGE OF THE PRESIDENT

M23

they need to plan for themselves when and how to meet State and
local needs that are now being met with Federal Government
funds. My proposal will also make available to the States and
localities the tax resources that would otherwise fund these programs by the Federal Government.
In coming weeks, we will have intensive discussions with local
and State officials, the Congress, and many others to hammer out a
proposal I will soon send to the Congress. Essentially, I believe the
Federal Government should assume full responsibility for the medicaid program which assures adequate health care for the poor. In
contrast, financial assistance to the poor is a legitimate responsibility of States and localities. I am proposing, therefore, that the aid
to families with dependent children (AFDC) and food stamp programs be turned over to the States. This swap will clarify responsibilities substantially because these programs will become the clear
responsibility of one level of government or another. That responsibility is now mixed.
In addition, I propose that more than 40 current grant-in-aid
programs costing the Federal Government about $30 billion a year
be turned back to the States and localities, along with the funds to
pay for them. During the period 1984-87, these programs will be
funded by a specially designated set of taxes to be used exclusively
for financing this transition program. These taxes will be deposited
in a fund that will belong to the States. Each State will be able to
make its own decision on how rapidly to phase out the turnback
programs. This is because each State will have two options: it may
use its share of the federalism trust fund to reimburse Federal
agencies for continuing to carry out turnback programs, or it may
ask that the programs be terminated and then use the funds directly for whatever purposes it desires.
Beginning in 1987, the federalism trust fund will gradually be
dissolved and the tax sources themselves will be made available to
the States.
The key to this program is that the States and localities make
the critical choices. They have the time to make them in an orderly way. A major sorting out of Federal, State and local responsibilities will occur, and the Federal presence and intervention in State
and local affairs will gradually diminish.

CONCLUSION
While some administration proposals have been turned down,
turned aside, or compromised by the Congress, the overall assessment of the past year's action on the budget is heartening. Cooperation, support, goodwill, and a genuine sense of national purpose
have enabled us to make significant progress in setting the Federal

M24

THE BUDGET FOR FISCAL YEAR 1983

Government's affairs in order and America on the road to economic recovery.
I urge the Congress to approach the new, or renewed, proposals
in this budget in the same spirit and with the same goodwill as it
did my proposals of a year ago. Much has been accomplished. This
budget proposes that more be done.
The proposals set forth in this budget will not be accepted readily. They are a second challenging installment of a politically difficult, yet necessary, program. In their specifics, these proposals will
undoubtedly be altered by the Congress. The general direction we
must travel, however, is clear. I urge the Congress to weigh these
budget proposals thoughtfully, and to join me, and my administration, in a constructive effort to curb the growth of Federal spending and to provide for the Nation's security. We must, in the end,
roll up our sleeves, face our responsibilities squarely, and persevere
at the unending task of setting, and keeping, the Nation's affairs in
order.
RONALD W. REAGAN.
FEBRUARY 8,

1982.

PART 2

ECONOMIC ASSUMPTIONS
AND THE BUDGET

2-1

ECONOMIC ASSUMPTIONS AND THE BUDGET
This part of the budget discusses the budget outlook and the
economic assumptions underlying that outlook. The first section
presents economic assumptions for calendar years 1982 through
1987, and explains the nature of these assumptions. The second
section discusses the sensitivity of the budget to changes in economic assumptions. The third section examines the changes in the
budget outlook since last year.
The Economic Outlook

Previous Government efforts to manage the economy through a
mixture of excessive spending, taxing, borrowing, and fine-tuning
have exacted a heavy toll in terms of lost economic growth. Major
disruptions, imbalances, and abnormalities have appeared in every
nook and cranny of the economy.
By 1981, the resulting problems had reached crisis proportions.
Since early 1979, real output has grown at an average annual rate
of only 0.4% and output per manhour has grown by only 0.5% per
year, while the level of industrial production has actually declined
by 5.7%. Housing starts have managed only an average 1.4 million
units. The unemployment rate has been trending steadily higher
since mid-1979 and has averaged 7.4% in the last 2 years. In short,
economic growth has virtually disappeared.
The financial markets have also suffered. Interest rate fluctuations have widened as market uncertainty has grown and the
balance sheets of many industrial and financial firms have become
dangerously illiquid. With the increasing looseness and unpredictability of fiscal and monetary policies in the 1970's, rising inflation
premiums have been supplemented by risk factors to drive interest
rates to record levels. Short-term interest rates, such as those on
large commercial bank CDs, have fallen to single digits in only 4
out of the past 36 months. The prime rate has not fallen below
10% since 1978, and over the last 3 years it has averaged 15.6%.
Long-term Government bond yields reached a lofty 12.4% in 1980
and a record 14.7% in 1981.
In 1981 the economy found itself in a state of recession for the
second time in 2 years. The final wave of excess Government
spending and credit expansion during the second half of 1980 virtually ensured the substantial shrinkage in real output and the rise
in unemployment that in fact occurred in 1981. As a result of this

2-2

2-3

ECONOMIC ASSUMPTIONS AND THE BUDGET

artificial stimulus, economic imbalances worsened, financial
market disruptions intensified, and business and consumer attitudes turned more pessimistic.
In early 1981 the President redirected economic policy to break
cleanly from the free-spending, easy money, excess credit trends of
previous years. In its place, the administration seeks a new era of
strong and sustainable economic growth predicated on a new
fiscal/monetary policy of tax reduction, budget control, deregulation, and moderate monetary growth. This proved to be a difficult
task after the spending spree of the past few years—and the shaking out of previously nurtured excesses has not been accomplished
without some difficult short-run side effects. But the adjustment
phase appears to be coming to a close, and there are numerous
signs that economic recovery will appear on schedule in the spring
quarter.
From the standpoint of the administration's redirection of policy,
the most encouraging development in 1981 was the substantial
reduction in the rate of inflation. Money supply growth during
1981 fell to 5%, the first year since 1976 that it was below 7%.
Inflation rates correspondingly declined by a range of 3 to 5 percentage points for the consumer and producer price indexes. For
the year as a whole, 1981 registered the first significant downturn
in inflation since 1976.
ANNUAL INFLATION RATES
(Percent; 4th quarter over 4th quarter)

1977
1978
1979
1980
1981

Consumer
Price
Index

Producer
Price
Index

6.6
8.9
12.9
12.6
9.4

7.1
8.8
12.7
12.5
7.2

GNP
deflator

6.1
8.4
8.0
9.8
8.6

Progress on the inflation front has not been confined to a narrow
segment of the economy, but instead has been well represented in
the areas of wages, food, energy, housing (homeownership), apparel,
and entertainment. Particularly encouraging are recent collective
bargaining discussions that suggest the possibility of greater than
expected wage moderation in the auto sector, indicating that credible and persistent anti-inflation policies are capable of overcoming
longer-term structural problems and rigidities.
The economic assumptions used for developing the budget estimates indicate a continued reduction in inflation during 1982.
Growth in the GNP deflator drops to a range of 7-8%, against the
policy backdrop of persistent budget control and moderate monetary growth. Following this expected inflation decline, the econom360-000

0 - 8 2 - 3

2-4

THE BUDGET FOR FISCAL YEAR 1983

ic assumptions anticipate a gradual withdrawal of inflation premiums and further reduction in market interest rates beyond the
modest beginning initiated in 1981.
During the past year all market rates moved erratically, but by
yearend the prime rate had fallen to 15%% from a peak of 20^4%.
The 91-day Treasury bill rate finished the year at 10.9%, which
was considerably below its May peak of 16.3%. Long-term rates
also gave ground from their 1981 peaks, and Government bonds
finished the year around 13.7%, which is 160 basis points below
their highest levels reached in September and October.
Continued progress on inflation and inflation expectations in
1982 will open the way for the first steps toward economic recovery. Additionally, the effects of the Economic Recovery Tax Act
will be more prominent in 1982, contributing new incentives for
enhanced saving, investment, work, and productivity. As a result,
real GNP is expected to increase by 3.0% from the fourth quarter
of 1981 through the fourth quarter of 1982, with even more robust
growth anticipated during the final quarters of the calendar year.
Interest rates during the year are expected to descend, if perhaps
unevenly. For the year as a whole, the 91-day Treasury bill rate is
estimated to average 11.7%, considerably below the 1981 average of
14.1%.
The recovery is expected to continue in 1983. Real output is
estimated to rise by 5.2% from the fourth quarter of 1982 to the
end of 1983, and the unemployment rate is projected to decline to
7.6% by the fourth quarter of 1983. The GNP deflator is projected
to rise by only 5.5%, while the consumer price index is estimated
to increase by 5.1%. Against this background of inflationary improvement, 91-day Treasury bills are assumed to decline to 9.8% in
the last quarter of 1983.
The forecasts for 1982 and 1983 are subject to substantial margins of error, particularly in the interest rate area. For periods
further in the future, economic projections are subject to even
greater uncertainty. In contrast to the short-range economic forecast, the long-range assumptions for the 1984-87 period are not
forecasts of future economic conditions. Instead, they are projections consistent with the economic policy objectives of the administration that assume steady progress in reducing unemployment,
inflation, and interest rates and in sustaining strong real growth.
A central policy objective embodied in the long-range assumptions is the steady reduction in the growth of nominal GNP.
During the recovery year 1983, GNP is projected to increase at an
annual rate of 11.5%. Over the next 4 years, however, nominal
GNP growth declines steadily to a rate of 9.0% by 1987. Fundamental to this expected decline in the growth of nominal GNP is the
assumption of a moderate money supply growth path during the

2-5

ECONOMIC ASSUMPTIONS AND THE BUDGET
SHORT-RANGE ECONOMIC FORECAST
(Calendar years; dollar amounts in billions)
Actual
1980

Major economic indicators:
Gross national product, percent change, fourth quarter
over fourth quarter:
Current dollars
Constant (1972) dollars
GNP deflator (percent change, fourth quarter over fourth
quarter)
Consumer Price Index (percent change, fourth quarter over
fourth quarter) 2
Unemployment rate (percent, fourth quarter)
Annual economic assumptions:
Gross national product:
Current dollars:
Amount
Percent change, year over year
Constant (1972) dollars:
Amount
Percent change, year over year
Incomes:
Personal income
Wages and salaries
Corporate profits
Price level:
GNP deflator:
Level (1972=100), annual average
Percent change, year over year
Consumer Price Index: 2
Level (1967=100), annual average
Percent change, year over year
Unemployment rates.Total, annual average
Insured, annual average3
Federal pay raise, October (percent): 4
Civilian
Military
Interest rate, 91-day Treasury bills (percent) 5

Forecast

19811

1983

1982

9.4
-0.3

9.3
0.7

10.4
3.0

11.0
5.2

9.8

8.6

7.2

5.5

12.6
7.5

9.4
8.4

6.6
8.4

5.1
7.6

2,626

2,922
11.3

3,160
8.1

3,524
11.5

1,481
-0.2

1,510
2.0

1,513
0.2

1,591
5.2

2,160
1,344
246

2,404
1,483
230

2,641
1,605
215

2,887
1,747
260

177.4
9.0

193.6
9.1

208.9
7.9

221.5
6.0

247.0
13.5

272.3
10.3

292.1
7.3

309.5
6.0

7.1
3.8

7.6
3.5

8.9
4.9

7.9
4.3

9.1
11.7
11.5

4.8
14.3
14.1

5.0
8.0
11.7

5.0
7.6
10.5

1
Preliminary actual data.
2
CPI for urban wage earners and clerical workers. Two versions of the CPI are now published. The index shown here is that currently used,
as required by law, in calculating automatic cost-of-living increases for indexed Federal programs.
3
This indicator measures unemployment under State regular unemployment insurance as a percentage of covered employment under that
program. It does not include recipients of extended benefits under that program.
4
General schedule pay raises become effective in October—the first month of the fiscal year. Thus, the October 1982 pay raise will set new
pay scales that will be in effect during fiscal year 1983.
5
Average rate on new issues within period. These projections assume, by convention, that interest rates decline with the rate of inflation. They
do not represent a forecast of interest rates.

entire period, rather than the stimulative monetary acceleration
that has accompanied business cycle recoveries during the past 20
years. It is this fundamental break from the stop-go policies of the
past that promises a continuing descent of inflation, rather than
merely a temporary pause, and that creates a financial environment in which strong, permanent real growth is possible.
Money growth is one of the key determinants of the trend rate of
inflation. Consistent with the assumed pattern of moderate money
growth and steadily declining nominal GNP growth, the GNP deflator is expected to show a slow but steady decline from a 6.0%
rate in 1983 to a 4.5% rate by 1987.

2-6

THE BUDGET FOR FISCAL YEAR 1983

Against a backdrop of firm budget restraint and a controlled
expansion of money and credit, inflation expectations and inflation
premiums will gradually recede during the period ahead, paving
the way for a sustained decline in market interest rates. But the
widely anticipated decline in interest rates will not proceed as
rapidly nor as predictably as many hope.
The attitude of inflationary pessimism that has dominated economic behavior in recent years will not be dissolved quickly. Nonetheless, firm anti-inflation resolve and reliable Government policies
to reduce fiscal borrowing requirements can be expected to moderate inflation fears and generate substantially lower interest rates.
Accordingly, the interest rate objectives of the administration are
embodied in long-range assumptions that anticipate Treasury bill
rates of 9.5% in 1984, 8.5% in 1985, 7.0% in 1986, and 5.5% in
1987.
In an environment marked by slowing inflation and declining
interest rates, the historic reduction of average and marginal tax
rates resulting from the Economic Recovery Tax Act of 1981 is
expected to create major new incentives for saving, investment,
and productivity. Substantial efforts to lower the regulatory
burden and other forms of unnecessary interference with private
economic activity will supplement the incentives from the tax reductions. Indeed, the interactive combination of lower tax rates,
fiscal restraint, reduced regulatory drag, and the improved purchasing power of money is expected to generate the most robust
economic recovery period in more than a decade. When measured
on a year-over-year basis, the administration's long-run economic
policy objectives set real GNP growth at 5.0% in 1984, 4.7% in
1985, 4.4% in 1986, and 4.3% in 1987.
Sensitivity of the Budget to Economic Assumptions

The economy and the budget are interrelated. Economic conditions significantly affect the budget. The budget and its financing,
in turn, influence economic conditions.
Both budget outlays and the tax structure have substantial effects on national output and its composition, employment, and
inflation. Other activities of Government that are not reflected in
the budget totals, such as guaranteed loans, off-budget outlays, and
regulatory requirements, also affect the economy.
Budget receipts vary with individual and corporate incomes,
which respond both to real economic growth and to inflation. Outlays for many Federal programs are also directly linked to developments in the economy. For example, most retirement and other
social insurance benefit payments are now tied by law to cost-ofliving indices. Interest on the debt is linked to market interest
rates and the size of the budget surplus or deficit, both of which in

2-7

ECONOMIC ASSUMPTIONS AND THE BUDGET

LONG-RANGE ECONOMIC ASSUMPTIONS
(Calendar years; dollar amounts in billions)
Assumptions
1985

1984

Percent change, year over year
Incomes.Personal income
Wages and salaries
Corporate profits
Price level:
GNP deflator:
Level (1972=100), annual average
Percent change, year over year
Consumer Price Index:1
Level (1967 = 100), annual average
Percent change, year over year
Unemployment rates:
Total, annual average
Insured, annual average2
Federal pay raise, October (percent): 3
Civilian
Military
Interest rate, 91-day Treasury bills (percent) 4

1986

1987

10.0
4.9

9.4
4.6

9.1
4.3

8.9
4.3

4.9

4.6

4.4

4.7
6.8

4.6
6.2

4.6
5.6

4.4
5.2

3,883
10.2

4,258
9.7

4,651
9.2

5,068
9.0

1,670
5.0

1,750
4.7

1,827
4.4

1,905
4.3

3,121
1,887
314

3,411
2,065
330

3,723
2,256
317

4,057
2,458
334

232.5
5.0

243.4
4.7

254.6
4.6

266.0
4.5

323.8
4.6

339.2
4.8

354.8
4.6

370.8
4.5

7.1
3.7

6.4
3.2

5.8
2.8

5.3
2.4

5.0
5.5
9.5

5.0
5.0
8.5

5.0
5.0
7.0

5.0
5.0
5.5

1
CPI for urban wage earners and clerical workers. Two versions of the CPI are now published. The index shown here is that currently used,
as 2required by law, in calculating automatic cost-of-living increases for indexed Federal programs.
This indicator measures unemployment under State regular unemployment insurance as a percentage of covered employment under that
program.
It does not include recipients of extended benefits under that program.
3
General schedule pay raises become effective in October—the first month of the fiscal year. Thus, the October 1984 pay raise will set new
pay4 scales that will be in effect during fiscal year 1985.
Average rate on new issues within period. These projections assume, by convention, that interest rates decline with the rate of inflation. They
do not represent a forecast of interest rates.

turn are influenced by economic conditions. Outlays for certain
benefits, such as unemployment compensation and food stamps,
vary with unemployment and incomes and are thereby linked to
the state of the economy.
In recent years the sensitivity of the budget to economic conditions has become increasingly apparent. For example, actual Federal spending in 1980 was $48 billion higher than the original budget
estimate in January 1979, with over half the increase directly

2-8

THE BUDGET FOR FISCAL YEAR 1983

attributable to economic conditions different from those originally
assumed. Similarly, 1981 outlays were nearly $45 billion above the
original January 1980 estimate, with assumptions about economic
conditions again accounting for over half of the increase.
The budget impact of declining nominal GNP growth.—The interaction effects between the economy and the budget are particularly
crucial now. The Nation's economic policy is undergoing dramatic
change, including a clear reversal of the past trends toward continually higher Federal taxes, spending, and borrowing. As discussed
earlier in the context of the administration's economic assumptions, a central feature of the shift in policy is the expectation that
the growth rate of nominal GNP will fall steadily each year after
the initial recovery from the current recession and will reach 9%
by 1987.
NOMINAL GNP GROWTH
(Calendar years; annual rates; percent)
1961-66

1970-75

7.6

Peak, mid-1980 to
mid-1981

1978-81

9.3

10.7

12.5

1983-85

1985-87

9.9

9.1

The disinflationary process reflected in the falling growth of
nominal GNP over this period has major implications for the
budget aggregates, particularly for actual and projected receipts.
Tax collections increase automatically as inflation swells various
tax bases—personal incomes, corporate profits, payrolls, and sales.
This rise occurs almost immediately because of our system of
income and payroll tax withholding and estimated payments. The
increase in receipts has been proportionately larger than the
growth in incomes because of the progressive individual income
tax. However, a declining rate of growth of nominal incomes yields
a shortfall in receipts as overall economic policy functions to
reduce the inflation component of taxable incomes.
Federal spending in a variety of areas, such as social security
and interest, also responds automatically to inflation. For outlays,
however, the response is less than proportionate and occurs more
slowly. Statutory cost-of-living benefit increases occur at fixed intervals and are not paid until substantially after the price increases that triggered them. If, for example, benefit increases for
social security and other Federal retirement programs were based
on a contemporaneous increase instead of a lagged increase beginning in 1982, outlays would be reduced by $5 billion in 1983 and $9
billion by 1987. Similarly, higher interest rates that generally accompany higher inflation are only reflected in new debt issues and
do not affect existing debt until it is refinanced. If all debt were

2-9

ECONOMIC ASSUMPTIONS AND THE BUDGET

financed at contemporaneous rates, net interest outlays would be
reduced by $24 billion by 1987.
During the last decade the true fiscal imbalance between Federal
revenues and spending has been masked by the accelerating
growth in nominal GNP and inflation. This acceleration has increased receipts faster than spending, relative to what would have
occurred with non-accelerating inflation and GNP growth rates. In
the period of disinflation projected over the next 5 years, the
reverse is the case. Receipts will respond immediately to the projected shrinkage in the inflation component of incomes. Outlays,
however, will respond with a lag effect. This is partially attributable to built-in prior year spending commitments and partially due
to the fact that the inflation-sensitive sectors of the budget (indexed programs and the debt service) discussed above will be
driven by higher, earlier rates of inflation.
In short, the disinflation process tends to worsen the budget
imbalance temporarily and to highlight the extent to which previous deficit levels were artificially supressed by rising inflation.
The structural imbalance associated with disinflation is best portrayed by showing what the administration's budget projections
would be if inflation and nominal GNP growth were increased by 2
percentage points during calendar years 1982-87. The table below
shows that for 1985 receipts would be increased by $67.5 billion
compared to an outlay rise of $46.5 billion. This budget gain of $21
billion would widen to $38.5 billion by 1987. Thus, with the higher
inflation, the budget would be $15 billion in deficit in 1987 in
contrast to the projected deficit of $53 billion in that year.
BUDGET EFFECT OF TWO PERCENTAGE POINT HIGHER NOMINAL GNP GROWTH 1
(In billions of dollars)
1982

Receipts
Outlays
Reduction in deficit
MEMORANDUM
Projected deficits:
Administration forecast.
Higher nominal GNP path

1983

1984

1985

1986

1987

7.4
3.7

26.3
17.4

45.1
31.6

67.5
46.5

92.6
63.7

121.7
83.2

3.7

8.9

13.5

21.0

28.9

38.5

98.6 - 9 1 . 5
— 94.9 82.6

-82.9
69.4

-71.9
-50.9

-66.0
-37.1

-53.2
-14.7

1
Estimates assume that the projected inflation rate is 2 percentage points higher beginning in calendar year 1982 and that the projected real
growth rate is unchanged. Interest rates are also assumed to be 2 percentage points higher.

The above table suggests that inflation-induced increases in
nominal GNP growth would have salutory budget implications.
However, the higher nominal GNP path contradicts the goal of
moderate and noninflationary monetary policy. Assuming historically high velocity growth rates, the monetary growth implied from
a 2 percentage point rise in nominal GNP would range between 7

2-10

THE BUDGET FOR FISCAL YEAR 1983

and 8%, the same rate of rise as occurred during the inflationary
period of 1976 to 1980. Consequently, a return to the high money
growth rates required to achieve this GNP growth would reignite
inflationary expectations, generate a rapid run-up of interest rates
and inflation premiums, and produce the sort of financial and
economic instability that would be incompatible with the objective
of sustained real economic growth. Thus, the potential short-run
improvement to the budget from inflationary policies would undermine economic recovery. In time, a high unemployment, high interest rate, low growth economy would undermine the objective of
budget restraint.
Budget impact of the composition of GNP.—The reduction in
inflation and nominal GNP growth projected to result from the
administration's proposals does create short-run structural imbalances in the Federal budget for the reasons cited above. These
structural imbalances are partly ameliorated, however, by the projected shift in the composition of nominal GNP between real GNP
growth and inflation. This shift, which will result from the combination of tax and spending cuts, deregulation, and restoration of
monetary stability, will change the inflation and real growth composition of nominal GNP from the 5:1 ratio that occurred in 197881 to a projected 1:1 ratio in 1983-87. Such a change will represent a major improvement over the recent past and will be a
realistic first step toward regaining the low inflation-high growth
record of the early 1960's, when the inflation-to-real-GNP-growth
ratio was 1:3.
COMPOSITION OF CHANGES IN NOMINAL GNP
Nominal
GNP

Annual rate of change:
1961-1966 .
1978-1981
1983-1987
Share of total GNP growth (percent):
1961-1966
1978-1981
1983-1987

7.6%
10.7
9.5
100
100
100

Real GNP

5.4%
1.7
4.6
72
16
50

Inflation
(GNP
deflator)

2.1%
8.9
4.7
28
84
50

This change in the composition of GNP growth will improve the
overall budget posture and thereby help constrain the increases in
the deficit due to lower nominal GNP growth. The table below
shows the effect on the deficit of changes in the composition of
GNP growth. The shift in composition from inflation to real growth
will have little or no effect on receipts because they are determined

2-11

ECONOMIC ASSUMPTIONS AND THE BUDGET

primarily by the level of nominal GNP. Outlays, however, would
be significantly affected. A shift from inflation to real growth
reduces both inflation-sensitive and unemployment-sensitive outlays. Such a shift therefore reduces the budget deficit.
To highlight the magnitude of compositional shifts, the table
below shows the effect on the administration's projected budget
deficits for 1983-87 of a 1.2 percentage point change in the composition of GNP. The higher real growth scenario assumes real
growth 1.2 percentage points above the administration forecast
each year and an inflation path correspondingly lower. The lower
real growth scenario assumes the opposite changes.
COMPARISON OF ECONOMIC ASSUMPTIONS*
(Percentages)
1982

Real GNP growth rate:
Administration forecastHigher growth scenario.
Lower growth scenarioInflation (GNP deflator):
Administration forecast..
Higher growth scenario.
Lower growth scenario..
Unemployment rate:
Administration forecast..
Higher growth scenario.
Lower growth scenario..

1983

1984

1985

1986

1987

3.0
4.2
1.8

5.2
6.4
4.0

4.9
6.1
3.7

4.6
5.8
3.4

4.3
5.5
3.1

7.2
6.0
8.4

5.5
4.3
7.7

4.9
3.7
6.1

4.6
3.4
5.8

4.4
3.2
5.6

8.9
8.6
9.2

7.9
7.1
8.7

7.1
5.7
8.5

6.4
4.5
8.3

5.8
3.3
8.3

5.3
2.3
8.3

*Nominal GNP is the same in all cases as in the administration forecast. Interest rates are modified for changes in inflation from the
administration forecast.

The impact of these GNP composition changes on budget projections is substantial. Under the higher real GNP growth scenario,
the projected deficit is reduced by $32 billion in 1984 relative to the
administration forecast and by $82 billion in 1987. By contrast, the
lower real growth path produces deficits above the $100 billion
level each year.
EFFECT ON DEFICIT OF SHIFT IN THE COMPOSITION OF NOMINAL GNP
(In billions of dollars)

Administration forecast
Alternative deficit projections:1
Higher growth/lower inflation..
Lower growth/higher inflation..

1982

1983

1984

1985

1986

1987

-98.6

-91.5

-82.9

-71.9

-66.0

-53.2

-94.0
-102.8

-74.7
-108.3

-50.7 -23.9
-0.6
28.8
-115.1 -119.9 -131.4 -135.2

1
Alternative projections assume that the rates of growth of real GNP and inflation are changed in opposite directions and by 1.2 percentage
points, beginning in calendar year 1982.

The administration's budget projections are predicated, on sustained real growth from the middle of calendar year 1982 through

2-12

THE BUDGET FOR FISCAL YEAR 1983

1987. Over this period, real growth is projected to average 4.7%.
This is higher than the 3.5% average for the period from 1947 to
1981 but it is lower than the 5.4% average rate from 1961 to 1966.
Thus, the higher real growth scenario exceeds the 1960's experience by one-half of one percentage point. The lower real growth
scenario equals the post-World War II average.
REAL GNP GROWTH RATES
(Average annual percentage rates)

Average 1947-81
Average 1961-66
Administration forecast, 1982-87
Alternative forecasts:
High growth
Low growth

3.5
5.4
4.7
5.9
3.5

With a major reversal from the inflationary policies of recent
years, the objective of the administration's comprehensive economic program is to produce real economic growth that exceeds the
average for the post-war period. Federal spending cuts will contribute to a more efficient use of resources in the economy. The tax
program enacted last year will substantially boost the after-tax
rewards to work, saving, and investment. And removing the excessive burdens of government regulation will further reduce costs to
individuals and businesses and increase efficiency and productivity.
These administration initiatives, together with the implementation
of a sound monetary policy by the independent Federal Reserve
System, provide a foundation for sustained economic growth above
the average for the post-war period. However, in view of the distortions and imbalances that have resulted from past policy excesses,
it does not seem reasonable to expect an immediate return to the
highest growth rates observed in the past.
The following table provides some historical perspective for alternative economic growth scenarios over 22-quarter periods comparable to the continuous high real growth projected in the administration forecast from mid-1982 through 1987. In view of the above
policy initiatives, the administration's projection of 4.7% real
growth would seem to be an achievable goal. Consistent with the
dramatic reversal from past policy trends, however, it would still
exceed the growth attained in four-fifths of such periods over the
past 25 years. In contrast, there has never been a 22-quarter period
when real growth has approached the 5.9% rate assumed in the
high growth scenario, thus implying that the high growth scenario
has an extremely low probability of materializing. On the other
hand, growth of 3.5% or less occurred only half of the time and
this seems too pessimistic in view of the substantial changes in

2-13

ECONOMIC ASSUMPTIONS AND THE BUDGET

monetary and fiscal policy brought about by actions of the administration, the Congress, and the Federal Reserve.
POST-WAR REAL GNP GROWTH EXPERIENCE*
(118 twenty-two quarter periods)
Number
of periods
above

Number
of periods

below

118
96
52

High growth scenario (5.9% annual rate)
Administration projection, 1982-87 (4.7% annual rate)
Low growth scenario (3.5% annual rate)
*Average annual percentage change over 22-quarter periods.

Changes in the Budget Outlook Since Last Year
The budgetary effects of changes in economic assumptions are
illustrated by an analysis of the changes in estimated budget totals
resulting from changes in economic assumptions since the administration's budget program was first presented a year ago. A summary comparison of the current economic assumptions with those
used last March is shown in the table below. The largest difference
between the two sets of assumptions arises because of the current
recession, not anticipated a year ago, which results in a 1982 GNP
now estimated to be 4% lower than was forecast last March and a
1982 unemployment rate over IV2 percentage points higher. The
lower GNP base (and correspondingly lower taxable incomes) is
estimated to reduce 1982 receipts by $31 billion compared to the
level that would be expected under last March's economic assumptions. At the same time, outlays for unemployment-sensitive programs are estimated to be $7.9 billion higher for 1982 and $7.4
billion higher for 1983.
COMPARISON OF MARCH 1981 AND CURRENT ECONOMIC ASSUMPTIONS
(Calendar years; dollar amounts in billions)

Nominal GNP:
1981 forecast
1982 forecast
Real GNP (percent change):
1981 forecast
1982 forecast
GNP deflator (percent change):
1981 forecast
1982 forecast
nterest rate on 91-day Treasury bills (percent):
1981 forecast
1982 forecast
Unemployment rate (percent):
1981 forecast
1982 forecast

1981

1982

1983

1984

1985

1986

2,920
2,922

3,293
3,160

3,700
3,524

4,098
3,883

4,500
4,258

4,918
4,651

1.1
2.0

4.2
0.2

5.0
5.2

4.5
5.0

4.2
4.7

4.2
4.4

99
9.1

83
79

70
60

60
50

54
47

49
46

11.1
14.1

8.9
11.7

7.8
10.5

7.0
9.5

6.0
8.5

5.6
7.0

7.8
7.6

7.2
8.9

6.6
7.9

6.4
7.1

6.0
6.4

5.6
5.8

2-14

THE BUDGET FOR FISCAL YEAR 1983

A second major difference in the two sets of economic assumptions lies in the lower rates of inflation that are now forecast. The
1981 price level (GNP deflator) ended up about three-quarters of a
percentage point lower than was forecast in March, and the 1982
level is now expected to be even further below the March forecast.
After 1982, the rate of inflation is projected to average threequarters of a percent per year lower than was forecast last March.
By 1986, the projected overall price level is 4% lower than last
year's forecast.
The less rapid growth of nominal GNP (and of taxable incomes)
corresponding to this lower inflation substantially reduces the
growth of Federal tax collections, as shown in the table below.
Outlays for inflation-sensitive programs also slow, but not by as
much, and only with a substantial time lag, because of the factors
discussed earlier.
Within the projected nominal GNP growth rate, the lower inflation is partially offset by slightly higher real growth after 1982
than was forecast last March, as the economy rebounds and recovers from the recession. This offsets some of the receipts slowdown
associated with lower inflation.
EFFECTS ON THE BUDGET OF CHANGES IN ECONOMIC ASSUMPTIONS SINCE MARCH 1981
(In billions of dollars)

Current budget estimates adjusted to March 1981
Receipts
Outlays
Deficit ( - )
Changes due to economic assumptions:
Receipts
Outlays:
Inflation
Unemployment

Interest rates and deficits
Total
Increase in deficit ( — )
Current budget estimates:
Receipts
Outlays
Deficit ( - )

1982

1983

1984

1985

1986

657.7
699.4

718.7
721.1

779.7
771.2

856.9
836.1

922.7
897.5

-41.7

-2.4

8.5

20.8

25.2

-31.0

-52.6

-56.7

-60.3

-61.7

15
7.9
16.6

-21
7.4
31.1

-57
4.4
36.0

-98
2.3
39.8

-119
0.9
40.5

25.9

36.5

34.7

32.4

29.5
-91.2

forecast:

-56.9

-89.1

-91.4

-92.6

626.8
725.3

666.1
757.6

723.0
805.9

796.6
868.5

861.0
927.0

-98.6

-91.5

-82.9

-71.9

-66.0

Interest rates are now projected to be substantially higher than
was assumed last March; for 91-day Treasury bills, the rate was 3
percentage points higher in 1981 and is projected to be higher by 3
percentage points in 1982, 2% percentage points in 1983-85, and
lVfe percentage points in 1986. This shift toward higher interest
rate assumptions substantially increases estimated interest costs
for interest on the public debt, and for other interest rate-sensitive

2-15

ECONOMIC ASSUMPTIONS AND THE BUDGET

programs, such as subsidized housing credit programs. Higher projected deficits also add to total projected interest costs. In 1982,
these factors add an estimated $16.6 billion to budget outlays,
compared to last March's interest assumptions; by 1986, this grows
to $40.5 billion, as shown in the preceding table.
The budget impact of interest rate assumptions.—Interest costs
are a major component of Federal spending. In 1983, net interest
costs are projected to be $96.4 billion, or 12.7% of total Federal
spending.
Estimates of interest costs are highly sensitive to interest rates.
If market interest rates rise from, say, 10 to 12%, this two-percentage-point rise would eventually increase interest costs by 20% once
all securities are financed at the higher interest rates.
Interest costs are also a function of the amount of debt outstanding. In the last decade the public debt has grown rapidly. In December of last year it was over $1 trillion, more than double the
amount outstanding only 7 years earlier. The structural deficits
that will occur in the immediate future will further add to the
future burden of interest costs.
COMPARISON OF INFLATION AND INTEREST RATES
(Calendar years; percent)
1960-69
Average inflation rate
Average 91-day bill rate
Difference

1970-79

1980-81

1982-85

1986-87

2.5
4.0

6.5
6.3

9.1
12.8

5.9
10.0

4.5
6.2

1.5

-0.2

3.7

4.1

1.7

Interest costs are expected to be especially burdensome in the
next few years because interest rates are expected to remain high
relative to inflation. Interest rates reflect borrowers' expectations
about inflation. These expectations, reflecting the inflationary
fiscal and monetary policies of the last decade, can be expected to
adjust only slowly to the disinflationary policies currently in effect.
As a result, the gap between inflation and short-term interest rates
is likely to be large for the next few years, as shown in the table
above.
OUTLAY EFFECT OF INTEREST RATE INCREASE
(In billions of dollars)
1982
Direct effect of two percentage point higher rates
Effect of financing additional borrowing due to higher
rates
Total effect

3.8

1983
10.4

1984
14.0

16.0

1986
17.8

1987
19.4

0.2

0.8

2.2

3.6

4.6

5.8

4.0

11.2

16.2

19.6

22.4

25.2

Note: Estimates assume that interest rates are two percentage points higher beginning in January 1982.

1985

2-16

THE BUDGET FOR FISCAL YEAR 1983

The large "real" interest rates in the next few years will have
important consequences for Federal spending. This can best be
understood by the table above, which shows the effect on Federal
spending of a two-percentage-point increase in interest rates. The
table shows both the direct effect of higher rates, which increases
over time as more and more Federal securities are refinanced at
the higher rates, and the effect of the additional Federal borrowing
necessitated by the higher interest rates. The combined effects add
$11 billion to outlays in 1983 and more than double that amount by
1987.

PART 3

BUDGET PROGRAM
AND TRENDS

3-1

BUDGET PROGRAM AND TRENDS
Summary
The shape, direction, and composition of the Federal budget are
undergoing dramatic change under this administration. The 1982
budget began this process with long-range measures to reduce Federal spending. The 1983 budget continues and expands this redirection. Together, the actions achieved and actions proposed result in
two fundamental changes: a new environment to foster economic
prosperity, and a rational and lean realignment of domestic programs, combined with an adequate defense force.
Economic prosperity.—The 1983 budget supports the President's
program for economic recovery in several important ways:
• Tax, spending, and management initiatives proposed in the
budget will reduce the deficits by $239 billion during 1983 to
1985. This figure includes $34 billion in additional revenues
due to proposed tax revisions, including a strengthened minimum tax for corporations. Reform of entitlement programs
will save $52 billion. Discretionary programs will be cut by
$76 billion. New or reproposed user fees will save $10 billion.
Budget savings of $68 billion will be achieved through better
management: such as debt collection, surplus property sales,
accelerated leasing of off-shore oil areas, and prevention of
fraud, waste, and abuse. Taken together, all of these measures
will reduce the deficit by $56 billion in 1983, $84 billion in 1984,
and $99 billion in 1985.
• The overall rate of growth in spending is being substantially
reduced. After peaking at the unsustainable rate of 17% in
1980, spending growth will decline to 10% in 1982, and 4% in
1983. In real terms, spending growth will average less than
1% in the 1982 to 1987 period, as compared to 4% in the 1976
to 1981 period.
• The growth path of the budget has been shifted dramatically
downward. Under policies in effect before February 1981,
total Federal outlays with an adequate defense would have
climbed by 12%, or to $755 billion in 1982, with further large
increases to $844 billion in 1983 and $916 billion in 1984.
Overall, outlays would have increased by $241 billion between
1981 and 1984. Budget reductions enacted last year and the
3-2

BUDGET PROGRAM AND TRENDS

3-3

new measures now proposed, will reduce built-in budget
growth markedly: outlay reductions total $30 billion in 1982,
$88 billion in 1983, $112 billion in 1984. For the 6 years
projected in this budget, the proposed and achieved reductions
total $659 billion.
• The heretofore rapidly growing Federal Government claim on
the private economy is being reversed. Under tax laws in effect
prior to August 1981, Federal receipts would have equalled
21.7% of our national output in 1983 and 24.1% by 1987.
Because of the President's tax cuts, the receipts share under
current law will decline to 19.0% in 1983 and to 18.3% by
1987, resulting in a 5.8% or $287 billion shift of GNP from the
Federal to the private sector of the economy compared to
previous tax law.
• The underlying imbalance in the Federal budget will be steadily reduced. The budget imbalance inherited from the previous administration was substantially larger than the reported
back-to-back deficits of nearly $60 billion each year for 19801981. This is because of underfunding of defense and uncontrolled growth of off-budget spending. Taking these factors
into account, a valid measure of the true underlying deficit as
a share of GNP was 3.4% in both 1980 and 1981. On a
comparable basis, the total deficit will decline to 2.6% of GNP
in 1984 and 1.3% by 1987. This steady reduction of the total
deficit—and the burden it places on financial markets—is an
indispensible element of the President's economic recovery
program.
• Total Federal credit demands on financial markets are being
systematically reduced. Total Federal credit demand, including the budget deficit, off-budget borrowing, guaranteed loans,
and federally sponsored borrowing soared from $79 billion in
1977 to $142 billion in 1981. During 1981, Federal credit demands accounted for 35% of all funds raised in U.S. credit
markets. Systematic efforts to curtail this counterproductive
growth have now been put in place. Net direct and guaranteed
lending will decrease by 6% in 1983, compared to average
growth rates of 21% a year between 1977 and 1981. The offbudget deficit will decline from a 1981 peak of $21 billion to $16
billion in 1983 and $14 billion in 1984.
Restructuring of the Federal budget—These overall trends, which
are essential to economic revival, complement the structural
changes in the budget that are now being proposed—changes that
build on the successful efforts begun in 1982.
• Real defense spending will rise rapidly in the next several
years, and the defense share of the Federal budget will climb
steadily. As the President's program to restore an adequate
360-000

0 - 8 2 - 4

3-4

THE BUDGET FOR FISCAL YEAR 1983
national defense continues apace during 1982, real defense
funding will increase by 12.7%, followed by another 13.2%
increase in 1983. Over the entire 1981-87 rebuilding period,
real Department of Defense obligations will increase at an
8.3% annual rate. As a consequence, the national defense
share of total outlays will steadily rise from 24.3% in 1981 to
29.2% by 1983 and 37.2% by 1987.
• Entitlement spending growth is being brought under control
for the first time since the entitlement explosion began. There
is a broad consensus on the need for a well designed, well
financed social security system. But beyond that, many entitlement programs have grown explosively and not necessarily
wisely. Between 1970 and 1981, entitlements other than social
security grew from $33 billion to $168 billion, or 412%, representing a 15.6% annual rate of growth. Last year's Omnibus
Budget Reconciliation Act—plus new proposals in this
budget—will reduce these non-social security entitlements by
$25 billion in 1983 and $44 billion by 1987. The projected
annual growth rate will decline to 5.2%, a rate only one-third
that of the 1970-S1 period.
• The structural changes in the budget will result in radically
asymmetrical patterns of budget growth in the years ahead.
Growth will be limited primarily to defense, social security,
and medical care. These will account for 62% of the 1983
budget and total $467 billion compared to $357 billion in 1981.
By 1987, total outlays for these programs will climb to $704
billion, representing an 11% annual rate of growth above
1983. By contrast, the budget outside of medicare, medicaid,
social security, and defense will decline by 1% a year during
the same period.
• The budget margin for discretionary programs and lower priority activities will shrink after the tax reduction program is
fully effective. Tax reform will stabilize receipts as a share of
GNP at 18.7% by 1987. Defense, net interest and the social
insurance programs—social security, medicare and unemployment insurance—will absorb 15.8% of GNP in 1987. Other
Federal budget commitments, therefore, must be steadily reduced if fiscal balance is to be achieved. The process is underway and part of this shrinkage has already occurred. Excluding defense, interest, and social insurance, the budget will
decrease from 8.1% of GNP in 1981 to 5.6% in 1983. The
fundamental fiscal challenge for several years ahead will be
further reductions in the discretionary components of the
budget to a level compatible with the tolerable revenue claim
on national income.

BUDGET PROGRAM AND TRENDS

3-5

• A major realignment of the responsibilities of Federal, State,
and local governments will begin in 1984, reversing the trend
of Federal interference in State and local affairs and the
bloated growth of Federal grants (from $3 billion in 1954 to
$91 billion in 1980). The President's federalism program will
redistribute responsibilities among the units of government in
the United States to take advantage of the relative capabilities of each. The Federal Government will take full responsibility for all major Government-financed medical programs
including medicaid, which is now a shared responsibility
among the various levels of government. In exchange, States
and localities will assume full responsibility for public assistance and food stamps—also now shared responsibilities. In
addition, the President is proposing that the Federal Government turnback to the States over 40 grant programs that
address problems that can best be handled closer to the local
level. Along with this shift in responsibility will be a comparable shift of tax resources. States and localities can choose to
continue programs, restructure them, or terminate them, according to local needs and desires.
Current Services Budget With Adequate Defense
If an adequate defense had been provided by the previous administration, military pay would have been higher, readiness improvements we are now undertaking would have begun earlier, and
investment in weapons and support systems would have been substantially larger. This higher defense spending, together with the
already high levels of nondefense spending, would have resulted in
much larger deficits during recent years than those actually recorded.
The table below presents projections of Federal spending for 1982
to 1987 that assume the administration program for an adequate
level of defense and current services for nondefense. Two spending
baselines are projected. One is the current services baseline for this
budget, which is based on an extrapolation of enacted 1982 program levels. Differences in outlays between this path and administration policy represent the effect of proposed changes recommended in the 1983 budget. The second baseline is extrapolated from
1981 program levels. It is designed to show the path of the budget
prior to the sweeping budget reductions initiated by this administration in February 1981. Differences between the pre-February
1981 policy path and the current services baseline represent the
effect of changes enacted since this administration came into office.
Differences between the pre-February 1981 policy path and the
1983 budget estimates measure the total change in spending
levels—both enacted and proposed.

3-6

THE BUDGET FOR FISCAL YEAR 1983

THE OUTLAY IMPACT OF ENACTED AND PROPOSED BUDGET CHANGES
(Dollar amounts in billions)
1982

1983

1984

1985

754.8

844.0

916.1

994.4 1,069.4 1,132.3

-10.6
-16.6

-14.8
-30.2

-14.2
-33.3

-12.2
-35.9

-12.6
-38.1

-13.3
-37.3

-27.1

-45.0

-47.5

-48.0

-50.7

-50.6

727.7

799.0

868.6

-1.4
-1.2

-12.8
-30.2

Subtotal, Decreases

-2.6

-43.0

64.7

Major increases
Administration budget proposals

0.2
725.3

1.8
757.6

2.1
805.9

-12.0
-17.7

-27.6
-60.5

-32.3
-80.0

-29.7

- 8 8 . 1 -112.2 -128.6 -144.7 -155.5

Pre-February 1981 baseline with adequate defense
Enacted changes:
Entitlement programs
Other programs
Subtotal, Enacted changes1
Current services baseline with adequate defense
Proposed change in the 1983 Budget:
Major decreases:
Entitlement programs
Other

MEMORANDUM
Total savings by major budget category:
Entitlements
Other
Total savings

1986

1987

946.3 1,018.7 1,081.7

18.1
23.8
-46.7 -56.7

-29.4
-64.7

-35.9
69 0

-80.5

94.0

104 9

2.7
868.5

2.3
927.0

2.1
978.9

-36.0 -42.0 -49.2
92.6 -102.7 -106.3

Comparative growth rates (percent).Pre-February 1981 baseline with adequate defenseAfter reductions achieved last year
. ...
After reductions proposed in the 1983 budget

11.8
7.8
7.5

11.8
9.8
4.5

8.5
8.7
6.4

8.5
8.9
7.8

7.5
7.7
6.7

5.9
6.2
5.6

•The outlay savings shown are less than the congressional estimates of the savings associated with the Omnibus Reconciliation Act of 1981
largely because they do not include the reductions associated with shifting the strategic petroleum reserve off-budget and because they reflect
different methods of calculating the savings from restraining Federal pay raises and other programs. In addition, the estimates shown reflect the
impact
of legislation other than the Reconciliation Act.
2
The 1982 growth rates are calculated from 1981 outlays restated for adequate defense.

The momentum of nondefense spending that existed prior to this
administration coming into office, together with adequate defense
spending, would have resulted in spending growth about 9% per
year through 1987. Under this path, Federal spending would have
remained at 23 to 24% of GNP over the next 5 years. The spending
reductions proposed by the administration, when combined with
spending reductions enacted last year, reduce the annual rate of
spending to about 6% per year. Under this path, spending is reduced to 20% of GNP by 1987, 3 percentage points less than under
previous budget momentum.

BUDGET PROGRAM AND TRENDS

3-7

Pre February 1981 Baseline
With Adequate Defense

The net reductions enacted in the administration's first year in
office will lower Federal spending by more than $269 billion in the
1982-87 period. The further reductions now proposed are almost
one and a half that magnitude. Total reductions, enacted and
proposed, reduce spending nearly $659 billion over the same period.
About 30% of the total cuts are directed toward reducing entitlement programs and 70% are in other programs.
The 1983 Budget Deficit Reduction Program

Due to the economic influences discussed in Part 2 and incomplete action on the administration's program last year, the budget
deficit would soar into the triple digit range and remain there
beyond 1987 without corrective action. Deficits of this magnitude
would impose extreme pressures on financial markets, undermine
the outlook for continued monetary restraint, reduced inflation and
economic growth and result in a permanent deficit-to-GNP ratio
that is unprecedented in peacetime.
The policy actions proposed in the President's 1983 budget
change this picture dramatically. Total deficit reduction initiatives
rise from $56 billion in 1983 to $99 billion by 1985. If implemented,
these measures will assure a steady reduction of the deficit from
the 1982 recession peak to levels that, while high by past standards, will be increasingly less burdensome on financial markets

3-8

THE BUDGET FOR FISCAL YEAR 1983

given the increase in national savings expected from the tax program.
The President's deficit reduction program attacks the budgetary
imbalance on a broad range of fronts. The following section discusses the savings proposed in the budget by major category.
THE 1983 DEFICIT REDUCTION PROGRAM
(In billions of dollars)
1984

1985

727.7
-2.6
0.2

799.0
-43.0
1.8

868.6
-64.7
2.1

946.3
-80.5
2.7

725.3

757.6

805.9

868.5

927.0

978.9

Current services receipts
Deficit reduction measures
Other proposals

626.4
0.3

653.3
12.8

703.8
19.4
-0.1

778.3
18.8
-0.5

843.3
18.6
-0.9

906.7
20.2

Budget total

626.8

666.1

723.0

796.6

861.0

925.7

Outlays:
Current services baseline with adequate defense
Proposed savings
Proposed increases
Budget total

1986

1987

1983

1982

1,018.7 1,081.7
-94.0 -104.9
2.1
2.3

Receipts:

Deficit:
Current services deficit with adequate defense
Budget deficit
*50

-101.2 -145.6 -164.8 -168.0 -175.4 -174.9
- 9 8 . 6 —91.5 —82.9 - 7 1 . 9 — 66.0 - 5 3 . 2

million or less.

COMPOSITION OF 1983 BUDGET DEFICIT REDUCTION MEASURES
(In billions of dollars)
1984

1983

Subtotal, Entitlement savings
User fee increases:
Offsetting receipts
Governmental receipts
Subtotal, User fee increases
Management initiatives

Discretionary and other programs
Tax revisions
Total, all deficit reduction measures
1

51
4.6

83
52

12 5

0.9
1.1

1.8
1.8

11.7

Total

Percent

10 8

2.3
2.1

25 9
15 6
5.1
5.0

17.1

22.8

51.6

21.5

CVJ CO

Entitlement savings:x
Medical entitlements
Cash assistance and nutrition
Federal retirement
Other

1985

2.1
1.4

2.2
1.6

5.5
4.3

2.3
1.8

2.5

3.5

3.8

9.8

4.1

20.3

24.0

23.9

68.2

28.5

14.2

26.1

35.3

75.6

31.6

7.2

13.5

34.1

14.3

55.9

84.1

99.3

239.3

100.0

5.9

65
2.1
2.1

Includes both outlay and receipts changes.

Entitlement savings.—The administration is proposing further
entitlement reforms to restore the focus of social welfare programs

3-9

BUDGET PROGRAM AND TRENDS

on the people who need them most and to prevent overcompensation
of benefits. The major proposals in entitlement programs include:
• Medical entitlements.—Excessive medicare reimbursements
would be reduced by slowing the rate of increase in reimbursible physician fees and by imposing an interim 2% reduction
in hospital reimbursement. The supplementary medical insurance (SMI) deductible would be indexed to the CPI. Federal
employees would be covered by medicare. Beneficiaries would
be required to contribute a modest payment for use of medicaid services. Federal matching payments would be reduced for
optional medicaid services and phased out for State payment
errors over a 4-year period.
EFFECTS OF ENTITLEMENT REFORM
(In billions of dollars)
Outlay savings

1983

1984

1985

1986

(0.3)
0.3
(0.2)

2.0
(1.9)
(0.1)
2.5
(1.7)

(0.1)

(0.7)

2.3
(2.2)
(0.1)
5.1
(2.3)
(2.0)
(0.9)

3.7
(3.6)
(0.1)
7.8
(2.6)
(4.1)
(1.1)

4.3
(4.2)
(0.1)
11.4
(3.0)
(7.2)
(1.3)

4.9
(4.8)
(0.2)
16.1
(3.4)
(11.3)
(1.4)

0.6

4.5

7.5

11.6

15.7

21.0

0.2
*

0.1

1.2
0.1
2.4
0.3
0.3
0.3

1.1
0.2
2.8
0.4
0.4
0.5

1.1
0.2
2.9
0.5
0.5
0.7

1.2
0.2
3.1
0.5
0.6
0.9

1.2
0.2
3.1
0.6
0.8
1.1

0.6

4.6

5.2

5.9

6.5

6.9

0.5
0.1
2.0

1.1
0.2
2.2

1.5
0.3
2.4

1.7
0.3
2.5

1.9
0.3
27

0.1

4.3

0.1
0.5
1.1

0.1
0.5
1.4

0.1
0.6
1.8

0.1
0.6
2.2

1982

Medical entitlements:
Medicaid
Proposed legislation
Administrative action
Medicare
..
Proposed legislation
Future legislation
Administrative action

0.3

Subtotal...

Cash assistance and nutrition.Aid for families with dependent children
Child support enforcement
Food stamps
Child nutrition and special milk
Combined welfare administration
Supplemental security income
Subtotal
Federal retirement and disability:
Civil service retirement
Military retirement
Railroad retirement
Federal Employees Compensation Act

0.3

Subtotal

Other:
Unemployment benefits
Veterans Administration
Guaranteed student loans

*
*

1987

0.2

0.1
0.2
0.8

Subtotal

0.3

1.1

1.8

2.1

2.5

2.9

Total outlay savings

1.4

.. .

12.8

18.1

23.8

29.4

35.9

Revenue effects:
Railroad retirement
Medicare coverage of Federal employees

-1.7
0.6

-1.8
0.8

1.9
0.9

-2.0
1.1

-2.1
1.2

Net revenue effect

-1.1

-1.0

-11.7

-17.1

-22.8

-28.4

-34.9

Total effect on the deficit
* 5 0 million or less.

-1.4

3-10

THE BUDGET FOR FISCAL YEAR 1983

• Cash assistance and nutrition.—Federal matching payments
for State payment errors would be phased out over a 4-year
period. Work requirements for AFDC and disability criteria
for SSI would be strengthened. Food stamp benefits would be
reduced 35 cents for every dollar increase in a recipient's
income, rather than 30 cents. The allowance for shelter and
utilities of AFDC families living in larger households would
be reduced and energy assistance would be counted as income.
• Federal retirement.—A private rail industry pension would
replace a portion of the present Federal pension for railroad
workers. The cost-of-living increases in retirement benefits for
civilian and military employees of the Federal Government
would be limited to the percentage increase in Federal pay if
that is lower than the CPI increase.
• Other.—A needs test would be applied for guaranteed student
loans at all income levels, and charges for making the loans
would be increased.
These reforms will restore the original character of those Federal
entitlement programs which were meant to ensure reasonable
levels of income security for those who, through no fault of their
own, need assistance from society.
The President has also established a bipartisan National Commission on Social Security Reform to propose realistic, long-term
reforms. The Commission will make its recommendations by January 1983. No entitlement reforms for social security are proposed
in this budget.
User fees.—Most Government programs are designed to benefit
the Nation as a whole, or provide special assistance to needy or
vulnerable groups. Some activities, however, provide direct services
to specific groups of individuals or enterprises above and beyond
those that accrue to the general public. While it is often necessary
or desirable for these activities to be conducted by the Federal
Government, it is clearly inequitable and inefficient for the general
taxpayer to bear the burden of special services for specific users.
To the extent that special beneficiaries of Federal programs do
not pay the full cost of those programs, they are receiving a subsidy. Such subsidies both increase the size of the budget and distort
the workings of the marketplace.
The administration's 1983 budget request includes several proposals to shift the cost of Federal programs that provide special
benefits to those who directly benefit from them.
The administration supports legislation to:
• Reauthorize use of the airport and airway trust fund, and
institute user fees to recover all Federal Aviation Administration capital operating and maintenance costs clearly allocable
to air carriers and general aviation.

3-11

BUDGET PROGRAM AND TRENDS
PROPOSED INCREASES IN USER FEES
(In billions of dollars
1982
Offsetting receipts:
Coast Guard user fees
Corps of Engineers navigation fees
Commercial nuclear waste
Other

1983

1984

1985

1986

1987

0.2
0.4
0.3
0.3

0.8
0.5
0.5
0.3

0.8
0.5
0.6
0.3

0.8
0.5
0.7
0.4

1.2

2.1

2.2

2.3

0.1
*

1.2
0.1

1.4
0.1

1.5
0.1

1.7
0.1

1.9
0.1

Subtotal, governmental receipts

0.2

1.3

1.4

1.6

1.8

2.0

Total, user fees

0.2

2.5

3.5

3.8

4.1

4.4

Subtotal offsetting receipts
Governmental receipts:
Airport and airway trust fund
Passport and visa fees

*$50 million or less.

• Recover the costs of constructing and maintaining commercial
navigation projects.
• Cover the costs of developing permanent disposal facilities for
high-level radioactive waste through user fees on electric utilities that generate nuclear waste.
• Collect fees for special services to boat and yacht owners
provided by the Coast Guard. The proposal calls for the full
costs of services allocable to users to be recovered by the end
of 1984.
• Increase existing entrance fees at Federal recreation areas
and expand the number of areas where fees are charged.
• Cover the costs of various other goods, services and activities
for special users.
In total these proposed user charges will reduce the deficit by
$2.5 billion in 1983.
Management initiatives.—The 1983 budget includes a number of
management initiatives that will substantially reduce the budget
deficit over the next 5 years and improve the efficiency of Federal
operations. These initiatives include:
• a vigorous program to reduce fraud, waste, and abuse;
• an aggressive program to collect delinquent debts to the Federal Government and to prevent unnecessary new delinquencies from occurring;
• a further reduction of 75,000 workyears in the non-Defense
agencies over the 1985-87 period, consistent with the transfer
of more than 40 programs to State and local governments and
with management efficiencies;
• sale of underused Federal property and creation of economic
incentives for agencies to manage property more efficiently;

3-12

THE BUDGET FOR FISCAL YEAR 1983

• acceleration of leasing of Outer Continental Shelf (OCS) lands
that have the promise of containing oil and gas;
• restraint on Federal pay raises;
• improved asset sale management;
• replacing monthly premiums for FHA mortgage insurance
with a one time payment at settlement; and
• improved tax collection and enforcement through speed up of
corporate income tax payments, withholding on interest and
dividends, and increased IRS enforcement.
In total, these management initiatives will reduce the deficit by
$20 billion in 1983 and larger amounts in subsequent years.
SAVINGS FROM MANAGEMENT INITIATIVES
(In billions of dollars)

1982

Outlay reductions:
Prevention of fraud, waste, and abuse
Improved debt collection
Federal employment reduction
Federal property disposition
Accelerated OCS leasing
Federal pay restraint
Improved asset sale management
Revised FHA mortgage insurance payments....
Subtotal, outlays
Receipts increases:
improved tax collection and enforcement:
Speed up of corporate tax collections
Withholding on interest and dividends
Increased IRS enforcement and collections.

1.0

0.1
1.1

0.2

1983

1984

1.0
1.0

1.0
8.4
1.4
1.3
0.7

4.0
7.8
3.0
1.0
0.7

14.8
1.4
2.0
2.1

18.5
1.7
1.3
2.4

1985

1.0
2.0
0.7
4.0
5.8
4.5
0.5
0.7
19.2
0.9
1.4
2.4

1986

1.0
2.0
1.5
4.0
6.3
5.8
0.5
0.6
21.8
0.2
1.6
1.3

1987

1.0
2.0
2.3
4.0
5.4
6.9
0.7
0.6
22.9
—0.2
1.9
0.6

Subtotal, receipts

0.2

5.5

4.7

3.0

2.4

Total, management initiatives..

1.2

20.3

24.0

23.9

24.8

25.2

Discretionary and other programs.—The administration is proposing reductions in discretionary and other programs that total $14
billion in 1983 outlays. These cuts are needed to reduce the Federal
role in areas that are more appropriately the responsibility of the
private sector or of the State and local sector; to eliminate unwarranted subsidies; and to reduce lower priority spending.
Major sources of discretionary outlay cuts in 1983 include the
following:
—A $0.9 billion reduction for energy research and development,
conservation, and regulation consistent with the need to
reduce or phase out energy programs that have subsidized
industry and substituted for appropriate private sector investments.
—A reduction of $0.7 billion for natural resources and environment programs results primarily from emphasizing non-Feder-

BUDGET PROGRAM AND TRENDS

3-13

al financial and cost-sharing for water projects and cuts in
low priority programs.
-A $1.6 billion reduction in transportation-related outlays, with
increased responsibility given to States and localities to build
and maintain highways and roads that serve primarily State
and local traffic. Formula grants for mass transit operating
expenses will also be phased out by 1985. Also, Federal aid for
railroads is being reduced as the financial condition of the
industry improves.
-A $1.0 billion reduction in outlays for elementary and secondary education consistent with current fiscal stringencies and
the fact that States and localities must continue to have primary responsibility for meeting education needs.
-A reduction of $2.2 billion for training and employment programs, reflecting the consolidation of the fragmented CETA
program into a block grant to the States.
-A reduction of $1.0 billion in social services programs reflecting the need to reduce costs and better target services produced by State and local delivery systems.
-A reduction of $0.6 billion for housing assistance. A major
reform of the structure of Federal housing assistance, which
has been endorsed by the President's housing commission, is
reflected in the 1983 budget. Budget authority for subsidized
housing is reduced by $22.5 billion in 1983.
-A $0.6 billion reduction in low-income energy assistance,
through an adjustment of the grant formula to target funds to
those States most in need.
-Reductions of $1.3 billion for various discretionary health and
income security programs reflecting program consolidations
and improved targeting.
-A $2.7 billion reduction in net interest outlays relative to the
current services base, reflecting the lower Federal borrowing associated with the deficit reduction measures.
SUMMARY OF REDUCTIONS IN DISCRETIONARY AND OTHER PROGRAMS
(Outlays; in billions of dollars)

Energy
Natural resources
Transportation
Elementary and secondary education
Training and employment
Social services
Housing assistance
Low-income energy assistance
Other income security and health
Net interest
Allother
Total

-0.9
-0.7
-1.6
-1.0
-2.2
-1.0
—0.6
-0.6
-1.3
-2.7
-1.7
-14.2

3-14

THE BUDGET FOR FISCAL YEAR 1983

Tax revisions.—The administration is proposing a variety of tax
changes designed to eliminate unintended tax benefits and remove
obsolete incentives. These changes include the following:
• Completed contract accounting.—Under current law, contractors may defer tax on income from long-term capital gains
until the year that the contract is completed, even when
income is received throughout the term of the contract and
certain costs are deducted as they occur. The administration
proposes to disallow this method of accounting effective January 1, 1983.
• Business energy tax credits.—Effective January 1, 1983, the
administration proposes to repeal all business energy tax
credits.
• Tax-exempt revenue bonds.—The administration proposes that
assets financed with tax-exempt revenue bonds issued after
1982 must be depreciated using the straightline method over
an extended recovery period. In addition, tax-exempt revenue
bond financing will be limited to bonds that are publicly
approved by local governments and that, after 1985, receive a
financial contribution, commitment, or obligation from the
local government.
• Modified coinsurance.—Under current tax accounting rules,
insurance companies that enter into modified coinsurance arrangements are able to convert taxable investment income,
which is subject to tax at a 46% rate, into underwriting income,
which is subject to tax at a maximum rate of 23%. The administration proposes to eliminate this tax benefit.
• Construction period interest and taxes.—Under current
law, corporations are allowed an immediate write-off of interest
and taxes incurred during the construction of commercial buildings. The administration proposes that for nonresidential property, these costs must be amortized over 10 years, effective
January 1, 1983.
• Corporate minimum tax.—Corporations currently must pay a
minimum tax, in addition to regular income tax, equal to 15%
of certain preferences. The administration proposes to repeal
this "add-on" tax effective January 1, 1983. An alternative
minimum tax is proposed that would apply only to those
corporations that pay very low regular rates of tax.

3-15

BUDGET PROGRAM AND TRENDS

In total, these tax revisions increase receipts by $7.2 billion in
1983, $13.5 billion in 1984, and $16.8 billion by 1987.
RECEIPT EFFECT OF TAX REVISIONS
(In billions of dollars
1983
Tax revisions:
Completed contract accounting
Business energy tax credits
Tax-exempt revenue bonds
Modified coinsurance
Construction period interest and taxes
Corporate minimum tax
Total

1984

1985

1986

1987

3.3
0.1
-0.2
1.1
0.5
2.3

5.0
0.4
0.3
2.2
1.1
4.6

3.2
0.6
1.1
2.5
1.0
5.1

2.7
0.6
2.1
2.7
1.0
5.6

2.8
0.6
3.3
3.0
1.0
6.2

7.2

13.5

14.8

16.8

Budget outlays in constant dollars.—The abrupt shift in budget
trends and priorities is highlighted by reviewing Federal spending
estimates after adjusting for inflation. In the period from 1975 to
1981, real outlays grew by almost 4% per year, with major growth
in nondefense spending at the expense of very sluggish growth in
spending for our national defense. In sharp contrast to these past
trends, overall real spending growth under the administration's
proposals will be slowed to an average of only 1% per year from
1981 to 1987, only one-fourth the rate of the previous period. Moreover, spending growth for national defense will be almost 8% per
year in real terms, with real nondefense spending declining by
almost 2% per year. The decline in nonentitlement outlays is much
sharper, averaging about 8% per year.
ANNUAL RATES OF INCREASE IN REAL FEDERAL SPENDING
(Percent)
1975 to
1981

1981 to
1987

47
4.3

-7.6

Subtotal, Nondefense

4.6

-1.7

Total

3.9

National defense..
Nondefense:
Entitlements....
Other

1.0

3-16

THE BUDGET FOR FISCAL YEAR 1983

The Impact of Adequate Defense Funding on the Budget
The underfunding of national defense between 1975 and 1981
substantially complicates the challenge of restoring budget equilibrium. During this period, the real growth in defense spending
averaged only 1.8% at a time when Soviet investment growth rates
reached unprecedented peacetime levels. As a consequence, the
catch-up costs for restoring our military capabilities will be substantial.
Strategic deterrence will be strengthened by modernizing all
strategic force elements: bombers, land- and submarine-based ballistic and cruise missiles, and command and control systems. Conventional forces will be strengthened and modernized with new
aircraft, tanks, missiles, and warships. The budget provides for
military pay raises that will permit continued improvements in the
quality of armed forces personnel through improved recruitment
and retention, and provides for increased training. The budget
proposals will also make possible increases in the readiness of our
forces through increases in ammunition, spare parts, and other
supplies; and improvements in mobility.
The planned rebuilding of our military capabilities will be expensive, but only in comparison to the defense budgets of the 1970's.
At its peak for the 1980's, the defense budget will remain a consid-

3-17

BUDGET PROGRAM AND TRENDS

erably smaller percentage of GNP than the average during the
1950's and 1960's.
The accompanying table indicates projected defense outlays, total
obligational authority and annual real growth rates from inadequate 1981 levels proposed by the previous administration.
DEPARTMENT OF DEFENSE FUNDING
(Dollar amounts in billions)
Outlays

Total obligational authority
Amount
1982
1983
1984
1985
1986
1987
Average annual growth rate:
1981-1984
1981-1987

Real growth
rate

Amount

214.2
258.0
285.5
331.7
367.6
400.8

12.7
13.2

3.8

182.8
215.9
247.0
285.5
324.0
356.0

17.5%
14.7%

10.1
8.3

16.5%
14.7%

4.6
10.4
5.4

Real growth
rate

7.7
10.5

8.0
9.6
8.0

4.6
8.7%
8.1

These defense catch-up requirements will absorb most of the gain
in receipts projected for 1982-87, necessitating the pervasive alteration of priorities and reductions of spending commitments elsewhere in the budget. Through 1984, three-quarters of the growth in

3-18

THE BUDGET FOR FISCAL YEAR 1983

total budget receipts will be required to fund the defense buildup.
While this requirement will relax somewhat beyond 1984, threefifths of the receipts growth will still be needed to meet defense
requirements in subsequent years.
INCREASE IN RECEIPTS AND DEFENSE DEPARTMENT OUTLAYS
(Dollar amounts in billions)
"1982

Cumulative increase in Defense Department outlays over 1981
Cumulative increase in total receipts over
1981
Defense share of receipts gain

1983

1984

1985

1986

1987

26.7

59.8

90.9

129.4

167.9

199.9

27.5
97.2%

66.8
89.5%

123.7
73.5%

197.3
65.6%

261.7
64.2%

326.4
61.2%

Reversal of the Growing Tax Claim on GNP

During the period 1955-1968, the average performance of the
economy was characterized by sustained real economic growth, low
inflation, and stable financial markets and interest rates. Federal
taxes as a share of GNP averaged 18.1%.
Since 1968, this stable performance pattern has broken down as
shown in the table below. The increase in the Federal receipts
claim on national income is both a cause and consequence of this
breakdown. As tax burdens rose, real growth faltered, inflation
soared and tax burdens were automatically notched up further—
reaching an historic peacetime high of 21.0% in 1981.
THE TAX CLAIM ON GROSS NATIONAL PRODUCT
(Percent)
Average real
GNP growth

1955-1968
1969-1978
1979-1981

3.7%
3.1
0.9

Average
inflation rate

2.4%
6.3
9.1

Average
Treasury
bond rate

Average tax
share of
GNP

4.3%
7.2
11.6

18.1%
19.0
20.3

Had this destructive cycle not been broken, the tax share of GNP
would have accelerated rapidly under the impetus of bracket creep
to over 24% of GNP by 1987. The Federal tax claim on GNP would
have been one-third higher than during the strong economic performance years of 1955-68—thereby ensuring a steady deterioration
in the trend of savings, investment, productivity, and real economic
growth. As shown below, the Economic Recovery Tax Act of 1981
will dramatically reverse this upward creep in the tax burden. The
Federal tax claim on GNP will return to pre-1968 levels. The total
reduction in tax revenues over the 1982-87 period will exceed $960
billion relative to previous law. This fundamental change in the

BUDGET PROGRAM AND TRENDS

Pre Econom ic Recovery /li!
Tax Act
^jiiiij

3-19

^ z,

3-20

THE BUDGET FOR FISCAL YEAR 1983

distribution of national income between the Federal sector and the
remainder of the economy capsulizes the basic redirection of national economic policy embodied in the President's economic recovery program.
CURRENT LAW RECEIPTS—BEFORE AND AFTER THE ECONOMIC RECOVERY TAX ACT OF 1981
(Dollar amounts in billions)

Total receipts:
Pre-1981 Tax Act
Current law 1
Difference
Share of GNP (percent):
Pre-1981 Tax Act
Current law 1
1

1982

1983

1984

1985

1986

1987

664.7
626.4

744.9
653.3

842.7
703.8

955.0
778.3

1,073.0
843.3

1,193.3
906.7

-38.3

-91.6

-139.0

-176.7

-229.7

-286.5

21.6
20.3

21.7
19.0

22.2
18.6

22.9
18.7

23.6
18.5

24.1
18.3

Includes the extension of highway trust fund taxes at present rates after September 30, 1984.

Constant dollar receipts.—During the period from 1955 to 1981,
real economic growth, legislated tax increases, and the effects of
inflation moved taxpayers into higher tax brackets, generating a
steadily rising level of real budget receipts. This permitted the real
spending commitments of the Federal Government to nearly triple
over this period.
With new budget and monetary policies in place, this era of
rapidly growing real spending and real receipts will be brought
to an end. Due to the personal income tax rate cuts, indexing of
the individual income tax brackets beginning in 1985, and the
sweeping depreciation reform on business income taxes, the growth
in constant dollar income tax receipts will be very small between
1981 and 1987. The largest real growth in receipts in this period will
come from the social security payroll tax, due to automatic increases
in the taxable earnings base, scheduled rate increases, and rising
real incomes. As a consequence, fiscal policy must now focus on
tradeoffs among existing spending commitments rather than on the
allocation of new budget receipts to new or expanded programs.
Asymmetrical Pattern of Prospective Budget Growth, 1983-87
During the 1973-81 period, rapid growth was widely distributed
across broad sectors of the budget. The average annual growth rate
for total outlays was 13%. While most entitlements grew around
14% a year, the average growth rate for medicare and medicaid
was 19%. Net interest grew by 18% a year. On average, defense
grew by almost 10% a year. In total, discretionary nondefense
programs grew by 11% a year.

3-21

BUDGET PROGRAM AND TRENDS
THE GROWTH IN BUDGET OUTLAYS, 1973-1981
(Dollars amounts in billions)
1973
Budget component:
National defense
Entitlements:
Social security
Medicare and medicaid
Other

Average rate
of growth

74.5

159.8

48.2
14.1
32.2

138.0
59.3
94.8

13.6
19.0
14.0

94.6
17.3

292.0
68.7

14.6
18.2

12.7
1.2
9.0
4.6
31.7

29.1
10.3
23.1
9.4
64.7

10.6
30.0
12.1
9.1
9.0

59.2

136.7

10.7

245.6

657.2

12.7

Subtotal, Entitlements
Net interest
Other nondefense:
Education, training, employment, and social services
Energy
Transportation
Community and regional development
Allother
Subtotal, other nondefense
Total budget

1981

9.7%

The reduction of spending now underway and extended in the
1983 budget proposals embodies nearly an opposite pattern: rapid
growth in a few large components of the budget and no growth or
negative nominal and real growth in the remainder. These asymmetrical patterns are highlighted in the table below.
The reasons for rapid growth in these three major components
are varied. The growth in defense represents a deliberate policy
THE GROWTH IN BUDGET OUTLAYS, 1982-1987
(Dollar amounts in billions)

Outlays:
National defense
Social security
Medicare and medicaid

All other entitlements..
Net interest
Other nondefense
Total budget outlays
Growth rate (percent):
Defense, social security, medicare and
medicaid

All other
Total budget

Share of budget (percent):
Defense, social security, medicare and
medicaid
All other

1982

1983

1984

1985

1986

1987

187.5
154.6
67.4
102.9
83.0
129.9

221.1
173.5
72.4
95.6
96.4
98.7

253.0
188.5
79.8
93.7
98.7
92.3

292.1
202.3
88.8
95.3
100.8
89.2

331.7
216.5
97.8
96.6
99.3
85.2

364.2
232.0
107.4
98.5
93.2
83.5

725.3

757.6

805.9

868.5

927.0

978.9

14.7
5.2

14.0
-8.0

11.6
-2.1

11.9
0.2

10.8
-1.5

8.9
2.1

10.4

4.5

6.4

7.8

6.7

5.6

56.5
43.5

61.6
38.4

64.7
35.3

67.1
32.9

69.7
30.3

71.9
28.1

3-22

THE BUDGET FOR FISCAL YEAR 1983

decision to improve national military capabilities after a period of
under-investment. The social security growth pattern reflects demographic patterns, the large real benefit increases built into the
base during the 1970's, and the system's characteristic as an intergeneration transfer and social compact that cannot, and should
not, be precipitously altered. The explosive growth of medicare and
medicaid is symptomatic of pervasive structural shortcomings in
the U.S. health care delivery and financing system. The administration will propose a major cost containment and health competition plan in the near future designed to correct these structural
defects. But such system-wide reforms will take years to implement
and will have only limited near-term budget impact.
Given these factors, the burden of continued budget restraint
must fall heavily on the 38% of the budget outside of these three
sectors. As the 1983 budget program demonstrates, additional
spending reductions in these remaining budget sectors are possible
and desirable. But with the passage of time, the problem of overall
budget control will be made more difficult by the vast imbalances
in present budget growth patterns.
Correcting the Underlying Budget Imbalance

The fact that Federal fiscal policy had become unsustainable and
counterproductive by the 1980-81 period is best revealed by the
records set during those 2 years:
• the highest rate of peacetime spending growth in history
(17% in 1980);
• the highest peacetime outlay share of GNP (23.0% in 1981);
• the highest peacetime receipts share of GNP (21.0% in 1981);
and
• the largest back-to-back total deficits in history ($152.7 billion
in 1980 and 1981).
While these statistics tell a disconcerting story, they do not tell
all of it. If it had not been for the shortchanging of national
defense in the late 1970's, the total fiscal imbalance at that time
would have been far worse.
The table below provides a restatement of deficits for 1980 and
1981 based on the minimum defense expenditure increases that
would have been necessary in that period to prevent the shortfalls
in pay and readiness and the lags in strategic and conventional
modernization that actually occurred and are now being reversed.
The table also includes off-budget deficits, which grew rapidly in
the late 1970's and are now being steadily reduced.
The table demonstrates the true extent of fiscal disequilibrium
that had set in by 1980 and 1981. Despite steady growth of tax
rates and the receipt claim on GNP and only a brief recession, the
true total deficit share of GNP averaged 3.4% during 1980-81. The

3-23

BUDGET PROGRAM AND TRENDS
BUDGET AGGREGATES
(Dollar amounts in billions)
Actual—Restated for
adequate defense

Receipts
Outlays
Budget deficit
Off-budget deficit
Total deficit
Total deficit share of
GNP (percent)

Estimate

1980

1981

1982

517.1
591.3

599.3
674.9

626.8
725.3

-74.2
-14.2
-88.4
-3.4

1983

1984

1985

1986

1987

666.1
757.6

723.0
805.9

796.6
868.5

861.0
927.0

925.7
978.9

-75.6 -98.6 -91.5 -82.9
-21.0 -19.7 -15.7
14.3
- 9 6 . 6 -118.3 — 107.2 - 9 7 . 2
-3.4

-3.8

-3.1

-2.6

71.9
66.0
-11.0 -10.9
-82.8 -77.0
-2.0

-1.7

-53.2
-9.3
— 62.5
-1.3

Federal budget was drastically over-committed in nondefense areas
if the Federal tax take was to be restored to levels compatible with
strong economic growth and modern historical experience.
The structural factors of underinvestment in defense and the
adverse temporary impact of disinflation on reduced income and
revenue growth help to explain the abnormally large deficits being
projected and the lengthy period of time it will take to restore
fiscal equilibrium. This structural deficit will diminish steadily
over future budget years if continued fiscal restraint is maintained.
Control of Federal Credit
The rapid growth of Federal credit activity—both direct loans
and guaranteed loans—has had serious effects on the Nation's
economy and financial markets. During the last decade, the Federal Government became the dominant consumer of the Nation's
financial resources. By 1981, direct and guaranteed borrowing, combined with Government-sponsored enterprise borrowing, absorbed
an estimated 35% of total credit raised in domestic credit markets.
Large Federal credit demands impede the Nation's ability to
improve investment and productivity, exacerbate inflation expectations and place upward pressure on both interest rates and inflation. Federally assisted borrowers are frequently less productive
than unsubsidized private borrowers; and this preemption of capital that could be efficiently employed in private hands has substantially inhibited economic growth in recent years. Moreover,
Federal intervention through guarantees and provision of direct
lending distorts the market's assessment of true risk and return.
This too has caused a misdirection of investment and a decline in
economic growth.
The accelerated rate of growth in Federal credit occurred largely
in the second half of the 1970's and the first years of the 1980's.
Between 1975 and 1982, net direct and guaranteed lending grew at
a 19% annual rate of growth. During 1982, however, systematic

3-24

THE BUDGET FOR FISCAL YEAR 1983

efforts to curtail this growth trend have been put in place. Under
the President's proposals, as economic growth resumes and the
budget deficit steadily shrinks, total Federal credit demand will
steadily fall as a share of GNP and credit market activity.
The credit budget—For 1983, the administration is proposing
that the credit budget be limited to 2.7% growth above the 1982
level. The credit budget, which is on a gross basis, is the point of
budgetary control for credit programs. Due to increased repayments, the net change in credit extended is estimated to decrease
by 6% between 1982 and 1983.
THE CREDIT BUDGET TOTALS
(In billions of dollars)
1981
actual

New direct loan obligations1
New guaranteed loan commitments2
Total
MEMORANDUM
Secondary loan guarantee commitments
Guaranteed loans held as direct loans

1982
estimate

1983
estimate

57.2
76.5

56.4
87.1

49.0
98.4

133.7

143.4

147.3

44.1
32.1

48.7
30.4

38.4
24.7

1
Excludes
2

purchases of loan assets by the Federal Financing Bank.
Excludes commitments for guarantees of loans previously guaranteed (secondary guarantees) and for guarantees by one Government account
of direct loans made by another Government account.

Throughout the past year, the administration conducted an intensive inter-agency, Cabinet-level review of Federal credit activities, seeking ways to restrain Federal credit demands on private
credit markets and to reduce interest rate pressures in the open
market. This effort focused primarily on the areas of housing
credit, agriculture credit, credit entitlements and aid to businesses.
Major proposals to slow down the growth in the credit budget
include:
• Government National Mortgage Association.—Loan commitments for mortgage-backed securities by GNMA are proposed
to decrease from $48.0 billion in 1982 to $38.4 billion in 1983.
This represents a 20% reduction from the 1982 level. Private
sector mortgage securities programs are now rapidly developing; to encourage the success of these efforts the administration is proposing to restrain the GNMA program.
• Export-Import Bank.—Direct lending will be reduced by $0.6
billion between 1982 and 1983, and guaranteed loans will be
held at the 1982 level. Because of the decline in demand for
direct credit, and the potential for the private sector to undertake increased insurance activity, these amounts will be sufficient to enable the Export-Import Bank to meet the requisite
needs of exporters facing subsidized foreign competition.

3-25

BUDGET PROGRAM AND TRENDS
MAJOR CHANGES IN THE CREDIT BUDGET TOTALS
(In billions of dollars)

Credit budget totals, 1982
Changes:
Export-Import Bank
Farmers Home Administration
Rural Electrification Administration..
Small Business Administration
Public housing
International security assistance
CCC price supports
Federal Housing Administration
Veterans' housing
Other
Total change
Credit budget totals, 1983
MEMORANDUM
GNMA mortgage-backed securities (secondary guarantees).

Direct loan
obligations

Guaranteed
loan
commitments

56.4

87.1

-0.6
-2.6
-0.4
-0.4
-0.5
1.0
-2.0
-0.1

-0.6
-0.5
-0.3
1.5
0.8

-1.8

6,4
2.9
1.0

-7.4

11.3

49.0

98.4

5.8

-9.6

* $ 5 0 million or less.

• Farmers Home Administration.—The administration believes
that private lenders are increasingly able to fill rural credit
needs adequately. Accordingly, reductions proposed in FmHA
programs total $2.6 billion in direct loans and $0.6 billion in
loan guarantees. These changes include major decreases in
direct loans for rural housing, and termination of the business
and industrial and alcohol fuels loan guarantee programs.
• Rural Electrification Administration.—REA guaranteed loans
will be reduced by $0.5 billion in 1983, and direct loans will be
reduced by $0.4 billion. These reductions are proposed because
a large number of REA borrowers can obtain credit from
unsubsidized private sources at prevailing market rates.
• Small Business Administration.—The Administration is proposing to eliminate SBA direct loans beginning in 1983 and to
reduce 1983 guarantees by 10% below the 1982 level. These
decreases are proposed because inequitable and inefficient
subsidies are provided only to certain small businesses, while
equally deserving firms rely on unsubsidized credit resources.
• Public Housing.—A decrease in direct loan obligations of $0.5
billion and an increase of $1.5 billion in guaranteed loan
commitments between 1982 and 1983 result from financing
transactions of prior year commitments for public housing
notes.
• International Security Assistance.—The administration plans
to increase its military assistance to friendly and strategically
important nations in both 1982 and 1983. Direct loans will

3-26

THE BUDGET FOR FISCAL YEAR 1983

increase by $1.0 billion in 1983, and guaranteed loans, financed through the Federal Financing Bank, will increase by
$0.8 billion.
• Commodity Credit Corporation.—Direct loan obligations for
commodity price support programs are estimated to decrease
by $2.0 billion between 1982 and 1983 due to provisions in the
recently enacted Agriculture and Food Act of 1981.
Major upwards reestimates in the credit budget are due to improved economic conditions for housing. As the housing industry
recovers from its depressed 1981 levels, guaranteed lending increases are expected for:
• Federal Housing Administration.—Guaranteed loan commitments for FHA are estimated to increase by $5.0 billion in
1982 and $6.4 billion in 1983.
• Veterans.—Guaranteed loan commitments in the veterans
loan guarantee revolving fund are estimated to increase by
$7.8 billion in 1982 and $2.9 billion in 1983.
The Prospective Budget Margin for Discretionary Programs

The economic growth and incentive-oriented tax policy now in
place will steadily reduce receipts as a share of GNP to an equilibrium level of about 18.7% in 1987. As shown below, this returns
the government tax claim on national income to a level consistent
with that obtained during the period of strong economic performance of the 1960's.
RECEIPTS AS A SHARE OF GNP
1963-73
1978-81
1981
1987, before 1981 tax act
1987, administration policy

18.7%
20.0
21.0
24.1
18.7

The restoration of long-run fiscal equilibrium will require a continuing curtailment and restructuring of Federal budget commitments in order to bring outlays back into balance with receipts and
to end debt financing of the Federal budget. Unfortunately, Federal spending commitments grew substantially as a share of GNP
during the high-tax era of the mid- and late-1970's. Outlays in 1981
reached an historic peak of 23.0% of GNP. Without the major
reductions achieved in the Reconciliation Act of 1981 and the 1982
Appropriations Acts, the outlay claim would have remained at that
level indefinitely.

3-27

BUDGET PROGRAM AND TRENDS

Reducing this structural excess on the outlay side will take time
and require difficult choices beyond those new spending restraints
proposed in the President's 1983 budget. As is shown in the table on
the following page, even with the major deficit reduction initiatives
proposed this year, the gap between outlays and receipts as a share
of GNP will remain at nearly 1.1% by 1987.
Future efforts to reduce this gap will confront an imposing challenge: namely that the combined claim of the Nation's two largest,
highest priority, and least flexible budget commitments—defense
and the social insurance system—increased substantially since the
1963-73 period.
As shown below, the cost of medicare, social security, and unemployment insurance will have grown from 3.9% of GNP during
1963-73 to 6.5% in 1987. After the current defense catch-up effort is
nearly completed in 1987, the defense share of GNP will be slightly
under its 1963-73 average. In addition, the net interest share will be
slightly higher due to the sizable and chronic deficits that will have
characterized policy over the entire period. Overall, the GNP share
of these three basic components of the budget will rise from 13.1%
of GNP during the 1963-73 period to 15.8% by 1987.
GNP SHARE OF MAJOR BUDGET COMPONENTS
1963-73

1981

1987

Receipts
Major outlay commitments:
National defense
Social insurance
Net interest

18.7%

21.0%

18.7%

7.9
3.9
1.4

5.6
6.9
2.4

7.3
6.5
1.9

Subtotal, major outlay commitments
All other budget outlays

13.1
6.7

14.9
8.1

15.8
4.0

19.8

23.0

19.7

Total budget outlays

Given the relative inflexibility of these budget claims, nondefense discretionary programs and non-social insurance entitlements
will have to bear the major burden of future measures to close the
budget gap. Under current budget policy, including all spending
reductions proposed in the 1983 budget, the GNP share for "all
other" budget programs would be 4.0% in 1987. As is shown in the
accompanying table, the all other category is steadily shrinking
under current policy, but ultimately major restructuring of budget
priorities and elimination of some activities in the category will be
required if permanent fiscal equilibrium is to be achieved.

3-28

THE BUDGET FOR FISCAL YEAR 1983

REQUIREMENTS TO CLOSE THE BUDGET GAP
(Dollar amounts in billions)
1981

Share of GNP:
Outlays:
Defense, social insurance and net interest
Allother
Total outlays
Total receipts
Deficit gap
"All other" portions of the budget:
Pre-February 1981 current services
Current 1983 budget policy
Difference (savings)
Further outlay savings needed to close the 1987 budget gap

14.9%
8.1

1984

16.3%
5.0

1987

15.8%
4.0

23.0
21.0
-2.0

21.3
19.1
-2.2

19.7
18.7
-1.1

$230.3
n.a.

$284.3
$189.7

$325.0
$197.0

n.a.
n.a.

$94.6
n.a.

$128.0
$53.2

n.3.: Not applicable.

Transition of American Federalism
Federal grants to States and localities have grown from $3 billion in 1954 to $10 billion in 1964 and to $91 billion in 1980. In the
last 10 years alone, grants to State and local governments have
grown at an average annual rate of 13%. This growth has caused
serious ambiguity in both the uses of the Federal tax dollars and in
the functions of each level of government under our Federal
system. The administration has proposed significant reforms in the
intergovernmental grant system through the substitution of block
grants, accompanied by decreased regulation, for a large number of
categorical,grants. This approach has been only partially accepted
by the Congress.
The President's new federalism initiative—announced in the
State of the Union Message—is sweeping. It explicitly distinguishes
Federal from State and local responsibilities. It also provides for
the transfer of revenue resources to the States as federally funded
activities again become the responsibility of States and localities.
A major feature of the initiative is to create clear responsibilities
for programs now jointly administered or financed by several levels
of government. Under the administration's proposal, States and
localities would assume full responsibility for public assistance and
food stamp programs. In return, the Federal Government would
accept full responsibility for the medicaid program that finances
medical care for the poor. This swap will result in substantial
administrative efficiencies. Moreover, States will be able to design
income support programs for the poor in accordance with local
needs. The Federal Government will be required to establish meas-

BUDGET PROGRAM AND TRENDS

3-29

ures that will reduce the very rapid cost increases for the medicaid
program that have taken place since its inception.
The second major feature of the federalism initiative is the transfer of responsibility for over 40 existing federally financed programs that are actually non-Federal in nature to the States and
localities. Under the administration's initiative, the States will
have 4 years in which to decide whether to carry out these programs themselves, whether to do so in a modified form, or whether
to discontinue them.
A third feature of the federalism initiative is that as the program responsibilities are turned over to the States, so will the
means of funding them. This will be the case regardless of whether
the States choose to substitute their own programs for those that
will be phased out.
During the first transition phase of the federalism initiative, a
special transition fund will be established. This fund will receive
approximately $28 billion per year from existing excise taxes that
will be specially dedicated to finance the federalism transition.
This fund will be administered by the Federal Government, but the
States will have broad latitude on specific allocations of funds. The
fund will be used for three purposes during the first phase of the
federalism initiative:
• It will finance more than 40 programs slated to be turned
back to the States and localities to the extent States wish these
programs to be maintained.
• It will provide the option for States to receive unrestricted
allocations of funds to the extent they decline financing for
turnback programs.
• It will provide the mechanism for equalizing gains and losses
among States that result from the medicaid/public assistance
swap.
Each State will have an account in the fund based on its share of
the turnback programs during the 1979-81 period. These amounts
will be modified as necessary to compensate for gains or losses that
result from the medicaid/public assistance swap. During the 198487 period, the States may at their option use these funds from their
transition account to continue Federal programs that are destined
to be turned back to States and local governments. If they do so,
they must abide by existing Federal conditions and rules.
If a State chooses to have some or all of the designated Federal
programs terminated before 1987, the resulting surplus in its transition fund accounts will be made available as a "super revenue
sharing" payment to States and localities, and Federal agencies
will cease designated program activity in the State concerned.
Some super revenue sharing payments will be passed through to
localities. Specifically:

3-30

THE BUDGET FOR FISCAL YEAR 1983

• If States opt out of existing programs designated solely for
localities (e.g., urban action development grants and mass
transit subsidies), the entire amount of the savings will be
passed through to local governments.
• For education grants, which are generally not made to localities, no pass-through will be required.
• For other programs, 15% of the savings will be passed
through, using the general revenue sharing formula.
This program permits the States to decide how soon, and in what
way, the phaseout of the turnback programs will take place. It
permits each State to decide its own mix of continued categorical
grant programs during the transition phase relative to the use of
additional unrestricted tax receipts.
The second stage of the federalism initiative is slated to begin in
1988 when the programs designed for turnback will no longer be
operated by the Federal Government. Beginning in that year, the
Federal taxes dedicated to the fund will be reduced 25% per year.
States will be able, at their option, to replace their own excise
taxes for those collected by the Federal Government. By 1991, all of
the Federal excise taxes designed to finance the federalism transition fund will expire. As a result of this process, the States will
have the option of:
• continuing, changing, or terminating more than 40 turnback
programs that are currently funded through the grant mechanism and through direct Federal operations; or
• increasing their tax base by substituting local taxes for Federal taxes that will be phased out.
This program will:
• create a genuine joint Federal-State transition process; and
• provide adequate time for States to adjust local program priorities and local revenue sources.
The result of the federalism transition will be a clear separation
of Federal from State and local roles. The Federal Government will
have responsibility for:
• Our national social insurance system, including social security retirement, disability, and medicare.
• Aid to the elderly through supplemental security insurance,
medicaid, housing assistance, and senior service programs.
• Health insurance and medical assistance, including medicare,
medicaid programs, and tax incentives for private insurance.
• Other national concerns, such as compensatory education and
head start, higher education support, handicapped education,
and Interstate highways.
The States and localities will have responsibility for:
• Local transportation facilities and services, such as bridges,
streets, State and local highways, and mass transit.

BUDGET PROGRAM AND TRENDS

3-31

Community development and local capital investment, including sewage treatment plants, neighborhood renewal, and
urban revitalization.
General education.
Social, health, and nutrition services, such as day care, rehabilitation, community health programs, drug and alcohol
treatment, nutrition and health services to low-income families, social work, and protective services.
Cash assistance to non-elderly needy, through State and local
substitutes for existing food stamp and AFDC programs.

3-32

THE BUDGET FOR FISCAL YEAR 1983

Summary Tables
The following tables show estimates through 1987 for receipts by
source, budget authority and outlays by function, and budget authority and outlays by agency. The data shown by function show
major programs within some functions.
BUDGET RECEIPTS BY SOURCE
(In billions of dollars)

Individual income taxes
Corporation income taxes
Social insurance taxes and contributions
Excise taxes
Other
Total

Estimate

1981
actual

1982

1983

1984

1985

1986

1987

285.9
61.1
182.7
40.8
28.7

298.6
46.8
206.5
43.0
31.9

304.5
65.3
222.5
41.7
32.1

322.9
83.7
242.5
41.5
32.5

362.0
88.2
273.1
40.8
32.5

401.5
83.9
304.0
39.2
32.4

445.7
80.7
329.1
37.9
32.3

599.3

626.8

666.1

723.0

796.6

861.0

925.7

0.1
0.1
0.1
•

3.5
9.1
-1.1
1.2
0.1

2.6
16.1
-1.0
1.4
0.1

2.7
14.9
-1.0
1.6
0.1

2.0
14.8
-1.0
1.8
0.1

2.0
15.8
-1.0
2.0
0.1

0.3

12.8

19.3

18.3

17.7

19.0

MEMORANDUM

Effect of receipts proposals in comparison
to current services: 1
Individual income taxes
Corporation income taxes
Social insurance taxes and contributionsExcise taxes
Other
Total

•$50
million or less.
1
These estimates do not reflect the extension of the highway trust fund taxes that are scheduled 1 expire September 30, 1984; extension is
assumed in the current services receipts estimates.

3-33

BUDGET PROGRAM AND TRENDS
BUDGET AUTHORITY BY FUNCTION
(In billions of dollars)
Estimates
1982

1983

1984

1985

1986

1987

(218.9)
38.5
15.0
62.3
65.7
37.4
18.5
7.0'
4.8
10.0
9.6
6.3
21.0
6.6

(263.0)
44.9

16.5
69.4
89.5
42.7
18.1
7.8
4.3
8.4
6.9
3.4
19.1
6.7

(291.0)
46.0
17.7
73.0
101.9
52.4
17.4
7.7
4.5
7.7
7.3
4.2
19.2
6.9

(338.0)
47.7
18.9
82.0
125.5
64.0
16.4
7.3
4.1
7.3
4.5
4.6
19.5
7.0

(374.9)
48.9
20.0
90.9
142.8
72.3
15.9
6.7
4.5
7.0
4.5
5.4
19.8
7.0

(408.4)
49.7
21.1
98.7
155.1
83.8
15.6
6.7
4.5
6.4
4.5
5.8
20.1
7.0

(23.5)
13.0
4.5
6.0

(17.7)
9.2
3.6
5.0
(81.4)
52.6
18.7
10.1
(281.9)
190.6
2.2
37.0
21.6
-2.2
14.1
18.6
26.3
4.6
5.4
6.9
116.2

(17.8)
9.2
3.6
5.0
(93.6)
62.6
20.5
10.5

14.6
19.3
27.0
4.5
5.2
7.2
119.7

(17.3)
8.8
3.6
5.0
(115.7)
82.5
22.2
11.0
(323.6)
225.7
2.2
40.3
21.3
_4
K9
19.6
27.9
4.6
5.1
7.5
120.5

(16.8)
8.3
3.6
5.0
(128.3)
92.4
24.4
11.6

150.1
7.4
33.6
21.0
6.6
15.8
17.8
24.8
4.3
5.2
6.4
99.1

(18.8)
10.3
3.6
5.0
(77.8)
55.0
13.0
9.8
(257.6)
168.6
2.2
35.0
22.2
-3.9
13.8
19.7
25.7
4.5
5.3
6.7
112.5

.4
-1.0

-2.0

1.9
-2.0

3.4
-3.7

5.0
-4.5

6.7
-5.3

-7.6
-16.1

-8.4
-16.1

-8.7
-17.5

-9.1
-18.9

-9.5
-21.3

-9.8
-23.5

-7.9

-18.0
-1.0

-18.0
-4.0

-19.5
-4.0

-21.0
-4.0

765.5

801.9

858.0

943.5

1,014.1

1,078.2

Budget authority, off-budget Federal entities....

32.6

28.8

31.6

20.4

22.1

27.4

Budget authority, including off-budget Federal
entities

798.1

830.7

889.6

963.9

1,036.2

1,105.6

National defense
Military personnel
Retired pay
Operation and maintenance
Procurement
Other 1
International affairs
General science, space, and technology
Energy
Natural resources and environment
Agriculture
Commerce and housrng credit
Transportation2
Community and regional development
Education, training, employment, and social
services
Education
Training, employment and other labor
Social services
Health
Medicare
Medicaid
Other
„
Income security
Social security
Other general retirement
Federal employee retirement
Unemployment compensation
Housing assistance
Food and nutrition assistance
Other income security
..
Veterans benefits and services
Administration of justice
General government
General purpose fiscal assistance
Interest
Allowances:
Civilian agency pay raises
Contingencies and other
Undistributed offsetting receipts:
Employer share, employee retirement
Interest received by trust funds
Rents and royalties on the Outer Continental Shelf
Federal surplus property disposition
Total budget authority.

(79.2)
52.0

18.0
9.2
(252.3)

(310.2)

212.0
2.2
38.8
21.3
2.1

(348.0)

245.1
2.2
41.6
21.1
2.8
15.4
19.9
28.8
4.6
5.1
7.7
116.7

MEMORANDUM

1
2

Includes allowances for civilian and military pay raises for Department of Defense—Military.
Includes allowances for military pay raises for the Coast Guard.

3-34

THE BUDGET FOR FISCAL YEAR 1983
BUDGET OUTLAYS BY FUNCTION
[In billions of dollars]
Estimates

National defense
Military personnel
Retired pay
Operation and maintenance
Procurement
Other 1
International affairs
General science, space and technology.
Energy
Natural resources and environment
Agriculture
Commerce and housing credit
Transportation2
Community and regional development...
Education, training employment, and social
services
,
Education
Training, employment and other labor
Social services
Health
Medicare
Medicaid
Other
Income security
Social security
Other general retirement
Federal employee retirement
Unemployment compensation
Housing assistance
Food and nutrition assistance
Other income security
Veterans benefits and services
Administration of justice
General government
General purpose fiscal assistance
Interest
Allowances:
Civilian agency pay raises
Contingencies and other
Undistributed offsetting receipts:
Employer share, employee retirement
Interest received by trust funds
Rents and royalties on the Outer Continental Shelf
Federal surplus property disposition
Total budget outlays.

1982

1983

1984

1985

1986

1987

(187.5)
38.3
15.0
60.6
41.3
32.3
11.1
6.9
6.4
12.6
8.6
3.3
21.2
8.4

(221.1)
44.5
16.5
67.3
55.1
37.6
12.0
7.6
4.2
9.9
4.5
1.6
19.6
7.3

(253.0)
45.8
17.7
71.9
70.0
47.5
12.3
7.8
3.8
8.4
5.1
1.3
18.8
6.7

(292.1)
47.5
18.8
79.6
88.3
57.8
13.0
7.4
3.8
7.7
4.6
-.5
19.4
6.9

(331.7)
48.8
19.9
88.5
106.9
67.6
12.5
6.9
4.0
6.9
2.8
-.8
19.7
6.7

(364.2)
49.5
21.1
96.5
119.4
77.7
11.9
6.7

(27.8)
15.4
6.0
6.4
(73.4)
45.7
17.9
9.9
(250.9)
154.6
7.6
19.4
25.2
8.2
15.6
20.2
24.2
4.5
5.1
6.4
99.1

(21.6)
13.1
3.4
5.1
(78.1)
51.0
17.1
10.1
(261.7)
173.5
2.1
21.1
22.6
8.9
13.8
19.8
24.4
4.6
5.0
6.7
112.5

(19.3)
10.3
4.0
5.0
(84.9)
56.3
18.7
9.9
(274.8)
188.5
2.1
22.5
19.8
9.4
14.0
18.6
25.6
4.6
5.2
6.8
116.2

(17.8)
9.3
3.6
5.0
(93.5)
63.0
20.5
10.1
(290.1)
202.3
2.1
24.1
18.0
9.9
14.4
19.3
26.9
4.5
4.9
119.7

(17.3)
8.8
3.6
5.0
(102.4)
69.9
22.2
10.3
(305.7)
216.5
2.2
25.8
16.5
10.4
14.8
19.6
27.9
4.5
4.8
7.3
120.5

(16.8)
8.3
3.6
5.0
(111.9)
76.9
24.4
10.6
(323.1)
232.0
2.1
27.6
15.5
10.7
15.2
19.9
28.7
4.6
4.6
7.6
116.7

.4
-1.0

.7
-2.0

1.8
-2.0

3.3
-3.7

5.0
-4.5

6.7
-5.3

-7.6
-16.1

-8.4
-16.1

-8.7
-17.5

-9.1
-18.9

-9.5
-21.3

-9.8
-23.5

-7.9

-18.0
-1.0

-18.0
-4.0

-19.5
-4.0

-21.0
-4.0

725.3

757.6

805.9

868.5

927.0

978.9

19.7

15.7

14.3

11.0

10.9

9.3

745.0

773.3

820.2

879.4

938.0

988.2

7.1

4.1
6.3
2.8
-.7

19.7
6.7

MEMORANDUM

Outlays, off-budget Federal entities
Outlays, including off-budget Federal entities
1
2

Includes allowances for civilian and military pay raises for Department of Defense—Military.
Includes allowances for military pay raises for the Coast Guard.

3-35

BUDGET PROGRAM AND TRENDS
BUDGET AUTHORITY BY AGENCY
(In billions of dollars)
Estimates
Department or other unit

Legislative branch
The Judiciary
Executive Office of the President
Funds appropriated to the President.
Agriculture
Commerce1
Defense—Military 2 3
Defense—Civil
Health and Human Services 2
Housing and Urban Development
Interior 1 2
Justice 1 2
Labor
State
Transportation4
Treasury 2
Environmental Protection Agency
National Aeronautics and Space Administration.
Veterans Administration
Foundation for Education Assistance 2
Office of Personnel Management
Other agencies 1 2
Allowances 5
Undistributed offsetting receipts
Total budget authority..
1

1982

1983

1984

1985

1986

1987

1.4
0.7
0.1
11.0
30.3
10.0
214.1
2.9
251.4
13.C
2.9
2.5
26.6
2.5
20.3
110.3
3.7
5.9
24.8
11.2
34.0
17.9
-0.6
-31.5

1.5
0.8
0.1
11.5
24.7
9.7
257.5
2.3
268.4
0.7
3.3
2.6
26.4
2.7
18.4
125.0
3.6
6.6
25.6
8.8
35.6
10.8
-1.2
-43.5

1.6
0.9
0.1
10.6
26.0
10.5
284.7
2.3
292.3
2.8
3.7
2.6
24.9
2.9
18.6
129.8
3.3
6.5
26.3
7.8
37.9
10.5
-0.1
-48.2

1.6
0.9
0.1
9.5
23.7
11.2
330.9
2.4
326.4
7.4
3.2
2.6
24.4
2.9
18.7
133.6
3.3
6.1
27.0
7.8
40.0
10.3
-0.3
-50.0

1.6
0.9
0.1
8.8
24.2
12.0
366.8
2.5
362.0
5.4
3.0
2.6
24.7
3.0
19.0
134.1
3.3
5.5
27.9
7.3
41.9
11.0
0.5
-54.3

1.7
1.0
0.1
8.4
24.3
12.5
399.9
2.6
393.9
9.4
2.8
2.6
25.0
3.1
19.3
129.8
3.1
5.4
28.7
6.8
43.7
11.0
1.4
-58.2

765.5

801.9

858.0

943.5

1,014.1

1,078.2

The budget proposes dismantlement of the Department of Energy (DOE), effective October 1, 1982. Budget data for activities previously
performed by DOE are included in the agencies that are proposed to assume these activities.
2
The budget proposes dismantlement of the Department of Education (DEd), effective October 1, 1982. Budget data for activities previously
performed by DEd are included in the agencies that are proposed to assume these responsibilities.
3
Includes allowances for civilian and military pay raises for Department of Defense.
4
Includes allowance for military pay raises for the Coast Guard.
5
Includes allowances for civilian agency pay raises and contingencies.

360-000

0 - 8 2 - 6

3-36

THE BUDGET FOR FISCAL YEAR 1983
BUDGET OUTLAYS BY AGENCY
(In billions of dollars)
Department or other unit

Legislative branch
The Judiciary
Executive Office of the President
Funds appropriated to the President.
Agriculture
Commerce 1
Defense—Military 2 3
Defense—Civil
Health and Human Services 2
Housing and Urban Development
Interior 1 2
Justice * 2
Labor
State
Transportation 4
Treasury 2
Environmental Protection Agency
National Aeronautics and Space Administration.
Veterans Administration
Foundation for Education Assistance 2
Office of Personnel Management
Other agencies 1 2
Allowances 5
Undistributed offsetting receipts
Total budget outlays..
1

Estimates
1982

1983

1984

-31.5

1.4
0.8
0.1
6.9
23.5
9.9
215.9
2.3
274.2
13.1
3.3
2.7
26.5
2.4
19.0
124.5
4.6
6.6
24.4
11.4
21.7
7.1
-1.3
-43.5

725.3

757.6

1.5
0.7
0.1
6.4
29.4

11.6
182.8
3.0

252.9
14.6
3.1
2.6
32.1
2.2
20.6
110.0
5.4
5.8
24.1
13.4
19.9
15.0
-0.6

1985

1986

1987

1.5
0.9
0.1
7.6
24.0
10.1
247.0
2.1
294.2
13.4
3.1
2.6
23.6
2.6
18.1
129.4
4.1
6.5
25.6
8.9
23.2
5.9
-0.2
-48.2

1.5
0.9
0.1
7.9
23.9
10.6
285.5
2.2
317.1
13.6
2.9
2.6
21.0
2.6
18.8
133.1
4.0
6.2
26.9
7.9
25.0
4.6
-0.4
-50.0

1.6
0.9
0.1
7.1
22.3
11.3
324.0
2.3
340.3
14.0
2.6
2.6
19.9
2.8
18.9
133.6
3.5
5.7
27.8
7.4
26.9
5.2
0.5
-54.3

1.6
0.9
0.1
7.0
22.5
11.9
356.0
2.4
365.3
14.5
2.5
2.6
19.4
2.9
19.0
129.3
3.2
5.5
28.7
6.9
29.0
4.5
1.4
-58.2

805.9

868.5

927.0

978.9

The budget proposes dismantlement of the Department of Energy (DOE), effective October 1, 1982. Budget data for activities previously
performed
by DOE are included in the agencies that are proposed to assume these activities.
2
The budget proposes dismantlement of the Department of Education (DEd), effective October 1, 1982. Budget data for activities previously
performed
by DEd are included in the agencies that are proposed to assume these responsibilities.
3
Includes allowances for civilian and military pay raises for Department of Defense.
4
Includes
allowance for military pay raises for the Coast Guard.
5
Includes allowances for civilian agency pay raises and contingencies.

PART 4

BUDGET RECEIPTS

4-1

BUDGET RECEIPTS
This section of the budget discusses budget receipts for 1981 to
1985 and the legislative proposals and administrative actions affecting them.1
The economic assumptions on which the receipts estimates are
based are presented in Part 2, and estimates of receipts for 1986-87
are presented in Part 3. Part 6 contains an analysis of the difference between actual receipts for 1981 and the budget estimates for
1981 made 2 years ago. Part 7 explains the conceptual basis for
classifying certain amounts collected by the Federal Government
as budget receipts and other amounts as offsetting collections.
SUMMARY
Total budget receipts in 1983 are estimated to be $666.1 billion,
an increase of $39.4 billion from the $626.8 billion estimated for
1982. Receipts in 1984 and 1985 are estimated to be $723.0 billion
and $796.6 billion, respectively. These estimates include the effects
of:
• the income tax reductions and other tax changes provided in
the Economic Recovery Tax Act of 1981;
• the increases in the social security tax rate and taxable earnings base scheduled under current law;
• the proposed tax revisions and improvements in tax collection
and enforcement; and
• other receipts changes currently being proposed.
BUDGET RECEIPTS BY SOURCE
(In billions of dollars)
1981
actual

Source
Individual income taxes
Corporation income taxes

Social insurance taxes and contributions....
Excise taxes....
Estate and gift taxes
Customs duties
Miscellaneous receipts
Total, budget receipts

. .

1982
estimate

1983
estimate

1985
estimate

285.9
61.1
182.7
40.8
6.8
8.1
13.8

298.6
46.8
206.5
43.0
7.2
8.9
15.9

304.5
65.3
222.5
41.7
5.9
9.4
16.8

322.9
83.7
242.5
41.5
5.4
9.8
17.2

362.0
88.2
273.1
40.8
5.1
10.2
17.2

599.3

626.8

666.1

723.0

796.6

Detailed estimates of budget receipts by source are shown in tables 10 and 18 of Part 9.

4-2

1984
estimate

BUDGET RECEIPTS

4-3

Composition of budget receipts.—The Federal tax system relies
predominantly on income and payroll taxes. In 1983:
• Income taxes paid by individuals and corporations are estimated at $304.5 billion and $65.3 billion, respectively. These
sources combined account for 55.5% of estimated budget receipts.
• Social insurance taxes and contributions—composed largely of
payroll taxes levied on wages and salaries, most of which are
paid in equal amounts by employers and employees—will
yield an estimated $222.5 billion, 33.4% of the total.
• Excise taxes imposed on selected products, services, and activities are expected to provide $41.7 billion, 6.3% of the total.
• Estate and gift taxes, customs duties, and miscellaneous receipts are estimated at $32.1 billion, the remaining 4.8% of
budget receipts.
Under the tax policy assumptions presented in this budget, the
income tax share of total receipts is projected to decline to 56.5%
by 1985, 1.4 percentage points less than for 1981. This decline is the
net effect of a 2.3 percentage point decline in the individual income
tax share that is partially offset by a 0.9 percentage point rise in
the corporation income tax share from 10.2% in 1981 to 11.1% in
1985. Social insurance taxes and contributions are projected to rise
as a share of total receipts from 30.5% in 1981 to 34.3% in 1985.
The projected share of all other receipts declines by 2.4 percentage
points between 1981 and 1985.
ENACTED LEGISLATION
The Economic Recovery Tax Act of 1981, signed by President
Reagan on August 13, 1981, is an integral part of the administration's economic recovery program. This Act, which provides incentives for work, saving, and investment, is estimated to reduce receipts by $38.3 billion in 1982, $91.6 billion in 1983, $139.0 billion in
1984, and $176.7 billion in 1985. The major provisions of the Act
are described briefly below.
Individual income tax provisions.—A number of provisions to
reduce individual income tax liabilities are included in the Act.
These provisions, which are estimated to reduce receipts by $26.0
billion in 1982, $69.8 billion in 1983, $104.2 billion in 1984, and
$127.1 billion in 1985, include the following:
• Individual income tax rate reductions.—Marginal tax rates
for individuals were reduced by 5% effective October 1, 1981,
and will be reduced an additional 10% effective July 1, 1982,
and an additional 8% effective July 1, 1983. Compared with
prior law, this translates into a reduction in marginal tax
rates for individuals of 1.25% for calendar year 1981, 10%

4-4

THE BUDGET FOR FISCAL YEAR 1983

for calendar year 1982, 19% for calendar year 1983, and 23%
for calendar year 1984 and subsequent years. Withholding
rates, which were reduced by 5% on October 1, 1981, will be
reduced by an additional 10% on July 1, 1982 and 8% on July
1, 1983.
• Reduction in the maximum individual income tax rate.—The
maximum marginal tax rate on individual income was reduced from 70% to 50% effective January 1, 1982. Since 60%
of long-term capital gains are excluded from tax, this provision reduces the maximum effective tax rate on capital gains
from 28% (a 70% rate times the 40% included in taxable
income) to 20% (a 50% rate times the 40% included in taxable income). The 20% maximum rate applies to all sales or
exchanges occurring after June 9, 1981.
• Deduction for two-earner married couples.—Married couples
with two earners often pay higher taxes than if they were
single. To reduce this penalty, the Act allows couples a tax
deduction equal to 5% of the first $30,000 of earnings of the
spouse with the lower earnings in calendar year 1982. In 1983
and subsequent years, the deduction increases to 10%.
• Indexing.—Beginning with calendar year 1985, the individual
income tax brackets, the zero bracket amount, and the personal exemption will be adjusted annually for inflation as
measured by the Consumer Price Index for all urban households (CPI-U). The adjustment for a given calendar year will
be the increase in the CPI-U between fiscal year 1983 and the
• preceding fiscal year. The 1985 adjustment therefore will be
based on the increase in the CPI-U between fiscal years 1983
and 1984.
• Charitable contributions deduction for nonitemizers.—Taxpayers who do not itemize deductions are provided a deduction for charitable contributions made after December 31,
1981 and before January 1, 1987. For 1982 and 1983, the
deduction is limited to 25% of the first $100 of contributions.
For 1984, the deduction will increase to 25% of the first $300
of contributions. The deduction will increase to 50% of all
charitable contributions in 1985 and to 100% of contributions
in 1986.
• Taxation of foreign earned income.—Under prior law, U.S.
taxpayers who had foreign earned income were allowed a
variety of deductions and exclusions for expenses incurred
abroad. This Act replaces these allowances for expenses with
a partial exclusion of foreign earned income from tax. Beginning in 1982, each taxpayer may exclude up to $75,000 of
foreign earned income from tax. The exclusion will increase
by $5,000 annually through 1986, to a maximum exclusion of

BUDGET RECEIPTS

4-5

$95,000. In the case of a married couple, the exclusion is
computed separately for each qualifying individual. An exclusion for excess housing costs is also provided.
Capital cost recovery provisions.—Taxpayers may claim depreciation deductions for tangible property used in a trade or business.
Under prior law, these deductions were determined by the particular "facts and circumstances" of the anticipated use of the property, or according to a system of guidelines known as the Asset
Depreciation Range System (ADR). The Economic Recovery Tax
Act of 1981 replaces these methods of depreciation with the Accelerated Cost Recovery System (ACRS), which provides for a faster
write-off of capital expenditures under simplified and standardized
rules. This system of accelerated depreciation, which generally applies to all new and used property placed in service after December
31, 1980, is estimated to reduce receipts by $10.5 billion in 1982,
$16.5 billion in 1983, $25.8 billion in 1984, and $37.1 billion in 1985.
• Depreciation of personal property.—Under this Act, the cost of
personal property may be written-off in 3, 5, 10, or 15 years.
The 3-year class includes automobiles, light trucks, and machinery and equipment used in research and development.
Most other machinery and equipment is classified as 5-year
property. The 10-year class includes mobile homes and public
utility property for which previous guidelines did not exceed
25 years. Public utility property for which previous guidelines
exceeded 25 years is classified as 15-year property. All personal property placed in service after December 31, 1980 and
before January 1, 1985 may be depreciated using rates that
approximate the 150% declining balance method. This percentage increases to 175% for property placed in service in
1985 and to 200% in subsequent years. As an option, taxpayers may elect to recover the cost of each class of personal
property on a straight-line basis over the designated recovery
period or over one of two longer periods provided in the Act.
• Depreciation of real property.—Real property, other than lowincome housing, may be written-off in 15 years using the
175% declining balance method of depreciation. Low-income
housing may be depreciated over 15 years using the 200%
declining balance method. As an option, taxpayers may elect
to recover the cost of any real property on a straight-line
basis over 15, 35, or 45 years.
• Leasing.— This Act liberalizes the rules under which firms
may transfer unused investment tax credits and depreciation
deductions on new investments to profitable firms through
leasing transactions.

4-6

THE BUDGET FOR FISCAL YEAR 1983

Windfall profit tax provisions.—Windfall profit taxes for certain
producers and types of oil are reduced by several provisions in the
Act. These provisions are estimated to reduce windfall profit tax
receipts by $0.9 billion in 1982, $1.6 billion in 1983, $1.9 billion in
1984, and $2.2 billion in 1985. Since the windfall profit tax is an
excise tax, it is deductible when calculating taxable income. As a
result, the net reduction in total budget receipts—taking into account the increase in individual and corporation income taxes—is
$1.2 billion in 1982, $1.1 billion in 1983, $1.2 billion in 1984, and
$1.4 billion in 1985.
Corporation income tax rate reductions.—The Economic Recovery
Tax Act of 1981 reduces the tax rate on the first $50,000 of taxable
corporate income as shown in the table below. These reductions in
corporation income tax rates are estimated to reduce receipts by
$0.1 billion in 1982, $0.3 billion in 1983, and $0.5 billion in 1984 and
1985.
Tax Rate
Current law

Taxable corporate income
Prior law

First $25,000....
Second $25,000
Third $25,000...
Fourth $25,000.
Over $100,000..

17
20
30
40
46

1982

1983 and
beyond

15
18
30
40
46

Saving incentive provisions.—In addition to the across-the-board
reductions in marginal tax rates, several other provisions to encourage saving by individual taxpayers are provided. These provisions, which are estimated to reduce receipts by $0.2 billion in
1982, $2.1 billion in 1983, $3.7 billion in 1984, and $3.5 billion in
1985, are:
• Partial exclusion of interest and dividend income from tax.—
Under prior law, a single taxpayer was allowed to exclude up
to $200 in annual interest and dividend income from tax in
1981 and 1982. For a married couple filing a joint return, the
exclusion was $400. Beginning in 1983, the exclusion would
have been limited to $100 in annual dividend income per
taxpayer. The Economic Recovery Tax Act of 1981 replaces
the $400/$200 interest and dividend exclusion with a $200/
$100 dividend exclusion, effective January 1, 1982. The Act
also provides that beginning in 1985, 15% of annual interest
income may be excluded from tax, up to a maximum exclusion of $450 for a single taxpayer and $900 for a married
couple filing a joint return. For taxpayers who itemize deduc-

BUDGET RECEIPTS

4-7

tions, only interest income in excess of the taxpayer's interest
deductions (excluding interest paid on a home mortgage or in
connection with a trade or business) is eligible for the deduction.
• Tax-exempt savings certificates.—Under this Act, financial institutions that invest in residential or agricultural loans are
allowed to igjsue tax-exempt savings certificates between October 1, 1981 and December 31, 1982. These certificates, which
must pay a rate equal to 70% of the rate on the most recently
issued 52-week Treasury bill, must be issued for a period of 1
year. Married couples filing a joint return may exclude up to
$2,000 in interest earned on a qualified savings certificate
from tax. For a single taxpayer, the maximum allowable exclusion is $1,000.
• Individual retirement accounts (IRAs).—Beginning January 1,
1982, eligibility for an IRA is extended to all active participants in a tax-qualified employer-sponsored pension plan. In
addition, the maximum annual contribution to an IRA established by a working individual for him/herself is increased to
$2,000 or 100% of compensation, whichever is less. The maximum annual contribution to an IRA established by a worker
for him/herself and a nonworking spouse is increased to the
lesser of $2,250 or 100% of compensation.
• Self-employed retirement savings (Keogh plans).—The maximum annual contribution to a Keogh plan by a self-employed
individual is increased from $7,500 to $15,000, effective January 1, 1982.
Estate and gift tax provisions.—Several provisions to reduce
estate and gift taxes are provided in the Act. These provisions,
which are estimated to reduce receipts by $0.2 billion in 1982, $2.3
billion in 1983, $3.6 billion in 1984, and $4.6 billion in 1985, include
the following:
• Marital deduction.—Effective January 1, 1982, a surviving
spouse is permitted to inherit an unlimited amount without
paying tax. Under prior law, the marital deduction was limited to the greater of one-half the adjusted gross estate or
$250,000.
• Estate and gift tax credit—The maximum credit against
estate and gift taxes was $47,000 under prior law. Since
$47,000 is the amount of tax owed on an estate or gift of
$175,625, estates or gifts of $175,625 or less were exempt from
tax. This Act increases the credit annually to $192,800 in 1987
and subsequent years, which will exempt from tax all estates
of $600,000 or less.

4-8

THE BUDGET FOR FISCAL YEAR 1983

• Rate reduction.—The maximum tax rate on estates and gifts
is reduced by 5 percentage points a year from 70% in 1981 to
50% in 1985 and subsequent years.
• Gift tax exclusion.—The annual gift tax exclusion is increased
from $3,000 to $10,000 per donee, effective January 1, 1982. In
addition, an unlimited exclusion is provided amounts paid for
certain medical expenses and school tuition.
Tax straddles.—Under this act the market value of all regulated
commodity futures contracts must be determined at year end.
Gains and losses on these contracts are to be treated as if 60% of
the capital gains and losses are long-term and 40% are short term.
Net losses under this rule may be carried back 3 years against
corresponding gains. This provision, which applies to property acquired after June 23, 1981, is estimated to increase receipts by $0.6
billion in 1982, $0.9 billion in 1983, $1.0 billion in 1984, and $1.1
billion in 1985.
Corporation estimated tax payments.—Corporations are generally
required to pay 80% of their income tax liability in estimated
payments during the taxable year. The required level of estimated
payments has several exceptions, including one that allows corporations to make estimated payments on the basis of the previous
year's tax liability. However, under prior law, corporations with
taxable income exceeding $1 million in any of the three preceding
taxable years were required to make estimated payments equal to
at least 60% of their current year's liability, regardless of the
previous year's liability. Under this Act, the required level of estimated payments for such corporations is increased to 65% of the
current year's liability in 1982, 75% in 1983, and 80% in 1984 and
subsequent years. It is estimated that this provision will increase
receipts by $0.5 billion in 1982, $1.4 billion in 1983, $1.3 billion in
1984, and $0.3 billion in 1985.

EFFECT ON RECEIPTS OF THE ECONOMIC RECOVERY TAX ACT OF 1981 ]
(In billions of dollars)
Calendar year liabilities
1981

1982

1983

Fiscal year receipts
1984

1985

1981

1984

1982

1983

-26.0

-69.8

-104.2

-127.1

1985

Individual income tax provisions

-3.7

-40.9

-82.3

-110.6

-137.6

Capital cost recovery provisions-.
Individual income taxes
Corporation income taxes

-0.9
-4.5

-2.4
-9.5

-3.9
-18.1

-5.3
-25.2

-7.4
-37.2

-0.2
*

-1.6
-8.9

-3.0
-13.6

-4.4
-21.4

6.0
-31.0

-5.4

11.8

-22.0

-30.5

-44.6

-0.2

-10.5

16.5

25.8

-37.1

0.4
-0.1

0.5
*
-1.3

0.5
0.2
-1.9

0.4
0.3
-2.0

0.5
0.4
-2.4

-0.2
*
-0.9

0.5
0.1
-1.6

0.5
0.2
-1.9

0.5
0.3
-2.2

-0.5

-0.8

-1.2

-1.5

-1.2

-1.1

-1.2

-1.4

-0.2

0.4

-0.5

-0.1

-0.3

-0.5

-0.8

-4.6

-2.0

-5.6

-0.2

-2.1

-3.7

-3.5

-2.3

-3.6

-4.6

-6.2

-0.2

-2.3

-3.6

-4.6

1.3
0.1

0.8
0.1

1.0
0.1

*
*

0.6
0.1

0.8
0.1

0.9
0.1

1.0
0.1

1.4

0.8

0.9

1.1

0.6

0.9

l.Oj

1.1

0.5

1.4

1.3

0.3

0.7

-1.9

-2.2

-2.4

Subtotal, capital cost recovery provisions
Windfall profit tax and other energy provisions:
Individual income taxes
Corporation income taxes
Excise taxes
Subtotal, windfall profit tax and other energy
provisions
Corporation income tax rate reductions
Saving incentive provisions

Estate and gift tax provisions
Tax straddles:
Individual income taxes
Corporation income taxes
Subtotal, tax straddles
Corporation estimated tax payments
Other:
Individual income taxes

-0.2

-1.6

-2.1

-0.1

EFFECT ON RECEIPTS OF THE ECONOMIC RECOVERY TAX ACT OF 1981*—Continued
I—*

(In billions of dollars)

Calendar year liabilities
1981
Corporation income taxes
.
Social insurance taxes and contributions
Excise

-0.5

1982
-0.8
05

1983

Fiscal year receipts
1984

-1.0
0.5

0.7

1985

1981

1983

1982

-1.8
06
0.8

-2.8
06

-2.6

-4.3

-0.1

1984

1985

-0.9
05

-1.4
06

-2.2
06

0.4

0.7

0.3

1.2

-1.9

-2.3

-3.8

-0.9
04

Subtotal, other

-0.7

-1.8

-1.9

Total

-8.9

-57.7

-115.0

-151.1

-199.2

0.2

-38.3

-91.6

139.0

-176.7

-4.0
-4.8

44.4
-10.3
0.5
-1.3
-2.3

-91.6
-19.2
0.5
-1.2
-3.6

-118.7
-27.1
0.6
-1.2
-4.6

-151.2
-40.1
0.6
-2.4
-6.2

-0.2
*

-28.2
-9.3
0.4
-0.9

-113.1
-21.6
0.6
-1.2

0.2

-75.4
-13.1
0.5
-1.2
-2.3

3.6

-137.6
33.1
0.6
-1.9
-4.6

57.7

-115.0

-115.1

-199.2

0.2

-38.3

-91.6

-139.0

-176.7

ADDENDUM
Effect on receipts by source:
Individual income taxes
Corporation income taxes

Social insurance taxes and contributions
Excise taxes
Estate and gift taxes
Total

-0.1

-8.9

*1 $ 5 0 million or less.
These estimates are based on the direct effect only of legislative changes at a given level of economic activity. Induced effects are taken into account for forecasting incomes, however, and in this way affect the receipts estimates by major
source and in total.

BUDGET RECEIPTS

4-11

RECEIPTS PROPOSALS

Tax revisions.—The administration is proposing a variety of tax
changes designed to eliminate abuses and remove obsolete incentives. These changes, which are described briefly below, are estimated to increase receipts by $7.2 billion in 1983, and $13.5 billion
in 1984 and 1985.
• Completed contract method of accounting.—Current regulations allow contractors to defer tax on income from long-term
contracts until the year that the contract is completed. This
completed contract method of tax accounting permits full deferral of tax even when income is received by the contractor
throughout the term of the contract and certain costs are
deducted when they are incurred. The administration proposes to disallow the use of the completed contract method of
tax accounting effective January 1, 1983. Taxpayers will be
required to use either the percentage of completion method or
the progress payment method of accounting for long-term
contracts. The percentage of completion method permits current deductions for allowable costs but requires that income
be reported according to the percentage of the contract completed in the tax year. The progress payment method defers
the deduction of costs until payment is received.
• Business energy tax credits.—Under current law, businesses
are allowed investment tax credits for energy saving equipment and structures, in addition to the regular investment
tax credit. Some energy tax credits expire at the end of 1982,
but others extend through 1985 and beyond. Current law also
provides an excise tax exemption, or an equivalent tax credit,
for gasohol. With decontrol of oil and natural gas prices,
businesses no longer need additional investment incentives
for energy conservation and the development of alternative
energy sources. Such subsidies interfere with business decisions by preempting free market resource allocations. Effective January 1, 1983, the administration proposes to repeal all
business energy tax subsidies and to repeal special provisions
allowing States and localities to issue tax-exempt industrial
development bonds to finance certain energy property.
• Tax-exempt revenue bonds for private activities.—Current law
permits States and localities to issue tax-exempt revenue
bonds for industrial development, housing, and other specific
purposes. The volume of tax-exempt revenue bonds issued for
use by private business has grown rapidly over the past few
years, raising the cost of financing traditional public projects
such as schools and roads. In addition, tax-exempt financing,
combined with the Accelerated Cost Recovery System and the
investment tax credit, can result in unintended tax shelter

4-12

THE BUDGET FOR FISCAL YEAR 1983

benefits. The administration proposes that assets financed
with tax-exempt revenue bonds issued after 1982 must be
depreciated using the straight-line method over an extended
recovery period. Tax-exempt revenue bond financing will be
limited to bonds that are publicly approved by local governments and that, after 1985, receive a financial contribution,
commitment, or obligation from the local government. Small
issue industrial development bonds will not be allowed for
large businesses.
• Modified coinsurance.—Under current tax accounting rules,
insurance companies are permitted to enter into modified
coinsurance arrangements that result in a reduction in their
tax liability. Such arrangements serve no purpose other than
tax avoidance, since little, if any, insurance risk is actually
transferred between companies. Use of modified coinsurance
enables life insurance companies to convert taxable investment income, which is subject to tax at a 46% rate, into
underwriting income, which is subject to tax at a maximum
rate of 23%. For many life insurance companies, the underwriting income generated under modified coinsurance is not
subject to tax. The administration proposes to eliminate the
unintended tax benefits resulting from the use of modified
coinsurance. In addition, the tax treatment of other forms of
coinsurance will be changed to prevent insurance companies
from obtaining similar benefits through other provisions of
the law.
• Construction period interest and taxes.—Individual taxpayers
must amortize interest and taxes incurred during the construction of commercial buildings over 10 years. The amortization period for rental housing is 8 years, but is scheduled to
become 10 years by 1984. Corporations are allowed an immediate write-off of these costs. The substantial acceleration of cost
recovery provided by the Economic Recovery Tax Act of 1981
makes it unnecessary to grant corporations an immediate
deduction for a portion of construction costs. The administration proposes that construction period interest and taxes incurred by corporations to develop nonresidential real property
after December 31, 1982 be amortized over 10 years.
• Corporate minimum tax.—Corporations currently must pay a
minimum tax, in addition to regular income tax, equal to 15%
of certain tax preferences. This "add-on" minimum tax may
apply to any corporation that has reduced its tax liability
through the use of designated tax preferences. The administration proposes to repeal the add-on minimum tax effective
January 1, 1983, and to replace it with an alternative minimum tax that would apply only to those corporations that pay

BUDGET RECEIPTS

4-13

very low regular rates of tax. Corporations will be required to
pay the greater of their regular income tax or an alternative
tax equal to 15% of their alternative tax base in excess of
$50,000. This alternative tax base consists of regular taxable
income plus certain tax preferences. The investment tax
credit will not be allowed against the alternative tax.
• Other tax code changes.—Technical changes will be proposed
to close other tax loopholes.
Improved Tax Collection and Enforcement—Several improvements in tax collection and enforcement are proposed. These initiatives, which will ensure that the taxes due the Government are
paid and that they are collected on a more timely basis, are estimated to increase receipts by $0.2 billion in 1982, $5.5 billion in
1983, $5.5 billion in 1984 and $4.7 billion in 1985.
• Withholding on interest and dividends.—Currently no tax is
withheld on interest and dividends paid to domestic taxpayers, although taxes are withheld from wages. About 9% to
16% of taxable interest and dividends currently is not reported; the comparable figure for wages and salaries is 2% to 3%.
The administration proposes withholding on interest and dividend payments at the rate of 5% effective January 1, 1983.
Where feasible, withholding would be extended to U.S. Government securities. Corporations and nontaxable individuals
filing exemption certificates would be exempt from withholding. Taxpayers aged 65 or older with a tax liability of $500
($1,000 on a joint return) or less would also be exempt.
• Acceleration of corporate income tax payments.—Corporations
generally are required to pay at least 80% of their current
year's tax liability in estimated payments. The remaining
liability is payable in two equal installments due on the 15th
day of the 3rd and 6th months following the close of their
taxable year. An exception to these rules permits corporations
to base their estimated tax payments on the full amount of
their prior year's tax liability. For large corporations, the
estimated payments must be at least 65% of their current
year's liability (75% in 1983 and 80% thereafter). In order to
collect corporate taxes on a more current basis, the administration proposes, for tax years beginning after 1982, to increase the required estimated tax payment from 80% to 90%
of the current year's liability and to require that all remaining liability be paid in one payment on the 15th day of the
3rd month following the close of the tax year. In addition,
large corporations making estimated tax payments based on
their prior year's liability will be required to pay at least 85%
of their current year's liability in 1985 and 90% thereafter.

4-14

THE BUDGET FOR FISCAL YEAR 1983

• Internal Revenue Service staff increases.—In order to improve
the efficiency of enforcement and collection activities, the
administration proposes to increase the IRS enforcement staff
by more than 5,000 persons.
• Other provisions.—Additional measures will be proposed to
facilitate IRS collection and enforcement efforts.
Enterprise zone tax incentives.—Under current law, no special
tax incentives are provided for the redevelopment of depressed
areas. The administration therefore proposes that beginning January 1, 1984, up to 25 small urban areas per year (not to exceed 75
in total) may be designated as "enterprise zones." Special tax incentives and relief from regulation, designed to increase investment and employment, will be provided businesses and individuals
locating in these areas. These incentives, which will be applicable
for 20 years, are estimated to reduce receipts in 1984 and 1985 by
$0.1 billion and $0.5 billion, respectively.
Airport and airway trust fund taxes.—Statutory authority for the
airport and airway trust fund expired on September 30, 1980. Since
then, revenue from a 5% passenger ticket tax has been deposited
in the general fund. The only other aviation taxes currently being
levied—a 4 cents per gallon tax on general aviation gasoline and a
tire and tube tax—are deposited in the highway trust fund. The
administration proposes to reinstate statutory authority for the
airport and airway trust fund effective July 1, 1982. The general
aviation gasoline tax is proposed to be increased to 12 cents per
gallon on July 1, 1982, to 14 cents per gallon on October 1, 1983,
and annually thereafter to 20 cents per gallon on October 1, 1986.
The administration also proposes to increase the passenger ticket
tax to 8% effective July 1, 1982, and to levy a general aviation jet
fuel tax that rises annually from 14 cents per gallon on July 1,
1982 to 22 cents per gallon on October 1, 1986. A 5% freight
waybill tax and a $3.00 international departure tax also are being
proposed. These taxes are estimated to increase receipts by $0.1
billion in 1982, $1.2 billion in 1983, $1.4 billion in 1984, and $1.5
billion in 1985.
Increases in passport and visa fees.—The administration has proposed an increase in passport fees from $15 to $30 effective April 1,
1982. An increase in immigrant visa fees from $25 to $100, effective
March 1, 1982, is also proposed. While the increase in passport fees
requires the passage of legislation currently pending before the
Congress, the change in visa fees can be accomplished by administrative action. Together, these proposals are estimated to increase
receipts by $41 million in 1982 and by $0.1 billion in each year,
1983-1985.

BUDGET RECEIPTS

4-15

Change in railroad retirement system.—The railroad retirement
system, which is currently administered by the Federal Railroad
Retirement Board and embedded in Federal statute, provides coverage generally equivalent to a combination of social security and a
multi-employer industry pension plan. Railroad employees and employers make contributions to railroad retirement that are generally equivalent to social security payroll taxes. These contributions
are subsequently transferred to the social security trust funds. Rail
industry employers also contribute 11.75% of monthly taxable compensation ($2,025 in 1982) to the industry plan; the employee contribution is 2%. Beginning October 1, 1982, the administration
proposes to extend full social security coverage to railroad workers;
payroll taxes would be deposited directly in the social security
trust funds. The administration also proposes to return the rail
industry's plan to the private sector. This proposal is estimated to
reduce receipts by $1.7 billion in 1983, $1.8 billion in 1984, and $1.9
billion in 1985.
Extension of highway trust fund taxes.—Under current law, the
4 cents per gallon tax on gasoline and diesels fuels will decline to
1.5 cents per gallon on October 1, 1984. Several other taxes that are
deposited in the highway trust fund will be reduced or expire at
the same time. The administration proposes to extend these taxes
at their present rates, which is estimated to increase 1985 receipts
by $4.2 billion.
Extension of social security hospital insurance taxes to Federal
employees.—Most Federal civilian employees currently are exempt
from social security taxes. Under this proposal, Federal employees
would be required to pay the employee portion of the social security hospital insurance tax (1.3% in 1983 and 1984, and 1.35% in
1985). This change, proposed to become effective January 1, 1983, is
estimated to increase budget receipts by $0.6 billion in 1983, $0.8
billion in 1984, and $0.9 billion in 1985.
Federalism initiative.—The administration's federalism initiative
provides for the eventual transfer of revenue sources to States and
localities as they assume responsibility for programs that are now
administered and funded by the Federal Government. During the
first phase of this initiative (1984-1987), some existing excise taxes
will be dedicated to a special fund. This fund will be used to
continue interim financing of the programs selected to be returned
to the States and localities, or will provide payments to the States
equal to the cost of these programs. The choice will be made by the
States. The establishment of this fund will have no effect on receipts. For a more detailed discussion of this initiative, see Part 3
of this budget.
360-000

0 - 8 2 - 7

4-16

THE BUDGET FOR FISCAL YEAR 1983
EFFECT OF ADMINISTRATIVE ACTION AND PROPOSED LEGISLATION1
(In billions of dollars)
1982

Tax revisions:
Completed contract accounting
Business energy tax credits
Tax-exempt revenue bonds
Modified coinsurance
Construction period interest and taxes
Corporate minimum tax

Subtotal, improved tax collection and enforcement
Enterprise zones
Airport and Airway Trust Fund
Highway Trust Fund
Railroad retirement
Federal employee hospital insurance taxes
Other
Total
ADDENDUM
Effect of proposals on receipts by source:
Individual income taxes
Corporation income taxes
Social insurance taxes and contributions
Excise taxes
Other
Total

... .

1985

3.3
0.1
-0.2
1.1
0.5
2.3

5.0
0.4
0.3
2.2
1.1
4.6

3.2
0.6
1.1
2.5
1.0
5.1

7.2

13.5

0.2

2.0
1.4
2.1

1.3
1.7
2.4

1.4
0.9
2.4

0.2

5.5

4.7

0.1

1.2

-0.1
1.4

-1.7
0.6
0.1

-1.8
0.8
0.1

-0.5
1.5
4.2
-1.9
0.9
0.1

0.3

12.8

19.3

22.5

0.1
0.1

3.5
9.1
-1.1
12

2.6
16.1
-1.0
14

2.7
14.9
-1.0
5.8

Subtotal tax revisions
Improved tax collection and enforcement:
Withholding on interest and dividends
Acceleration of corporate tax payments
Internal Revenue Service staff increases

1984

1983

0.1
*
0.3

0.1

12.8

19.3

22.5

*1 $ 5 0 million or less.
These estimates are based on the direct effect only of legislative changes at a given level of economic activity. Induced effects are taken into
account for forecasting incomes, however, and in this way affect the receipts estimates by major source and in total.

EFFECT OF ENACTED AND PROPOSED CHANGES ON
RECEIPTS
The actual change in receipts that will result from an enacted or
proposed tax revision will depend on both the direct effect of the
tax change and the indirect or "feedback" effect. The direct effect
is the increase or decrease in receipts due only to the tax change.
The indirect or feedback effect is the increase or decrease in receipts due to the effect of the tax change on income levels.
The estimates of the effect of enacted and proposed tax changes
shown in this budget represent the direct effect of these changes on
receipts, based on levels of corporate and individual income that
reflect enactment of the tax change. The estimated indirect or
feedback effect on receipts due to the tax-induced change in in-

4-17

BUDGET RECEIPTS

comes is not included in these estimates because it is already
included in gross receipts.
For example, the estimates of the effect of the Economic Recovery Tax Act of 1981 shown in this budget represent only the direct
effect of the changes provided in the Act. The increased receipts
resulting from the tax-induced increase in incomes are included in
gross receipts. The estimates of the direct effect of the Economic
Recovery Tax Act of 1981 on receipts therefore overstate the net
loss to the Treasury of the income tax reductions and other tax
changes provided in the Act.
The estimates in this budget of the effect of the administration's
proposals on receipts also represent the direct effect of these
changes. The indirect effect of these proposals, which is small, is
included in gross receipts.

CHANGES IN BUDGET RECEIPTS
Budget receipts are estimated to rise by $27.5 billion in 1982 and
$39.4 billion in 1983. The year-to-year changes can be divided between changes due to growth in the tax base and changes due to
revisions in the tax structure. Under the tax rates and structure in
effect on January 1, 1980, receipts would have risen by $56.5 billion
in 1982 and $75.1 billion in 1983. Thus, the combined effect of
administrative actions and enacted and proposed tax law changes,
which is shown in the accompanying table, reduces the growth in
receipts by $29.0 billion in 1982 and $35.7 billion in 1983. The
corresponding decrease for 1984 and 1985 is $33.5 billion and $18.1
billion, respectively.

1982

Growth in receipts (in billions of dollars):
Under existing law and administrative actions and proposed
legislation
Under tax rates and structure in effect Jan. 1, 1980
Difference

27.5
56.5
29.0

1983

39.4
75.1
35.7

1984

56.9
90.4
33.5

1985

73.6
91.7
18.1

4-18

THE BUDGET FOR FISCAL YEAR 1983
CHANGES IN BUDGET RECEIPTS
(In billions of dollars)

Receipts under tax rates and structure in
effect January 1, 1980 »
Administrative actions:
Acceleration of State and local deposits of social
security taxes effective July 1,1980
Acceleration of employer deposits of withheld
income and FICA taxes effective January 1,
1981...
Other
Enacted legislative changes:
Crude Oil Windfall Profit Tax Act of 1980
Omnibus Reconciliation Act of 1980
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
Economic Recovery Tax Act of 1981
Social security taxable earnings base increases: 2 4
$25,900 to $29,700 effective Jan. 1,1981
$29,700 to $32,400 effective Jan. 1, 1982
$32,400 to $35,100 effective Jan. 1,1983 .
$35,100 to $38,100 effective Jan. 1, 1984
$38,100 to $40,500 effective Jan. 1,1985
Social security tax rate increases-. 4
12.26% to 13.3% effective Jan. 1,1981
13.3% to 13.4% effective Jan. 1,1982
13.4% to 14.1% effective Jan. 1, 1985
Other
Total, receipts under existing legislation
Proposed changes:
Tax revisions
Improved tax collection and enforcement
Enterprise zones
Airport and Airway Trust Fund
Highway Trust Fund
Federal employee hospital insurance taxes
Railroad retirement
Other
Total, receipts under existing and proposed legislation 3

1984

1983

1982

1981

1985

572.3

628.8

703.9

794.2

885.9

0.3

0.2

0.3

0.5
-0.2

2.6
0.4

0.3
0.1

-2.0
0.1

0.1
0.1

14.4
2.7

10.9
1.5

10.0
3.6

11.7
6.0

11.0
8.9

0.1
-0.2

0.3
-38.3

0.3
-91.6

0.4
-139.0

0.4
176.7

1.5

4.8
1.0

6.0
3.2
1.1

6.9
3.8
3.2
1.1

8.2
4.6
3.8
3.4
0.9

9.3

14.5
1.0

15.9
1.5

17.1
1.6

-L5

-1.3

1.3

-1.7

18.7
1.7
9.0
-6.4

599.3

626.4

653.3

703.8

774.1

0.2

7.2
5.5

0.1

1.2

13.5
5.5
-0.1
1.4

0.6
-1.7
0.1

0.8
-1.8
0.1

13.5
4.7
-0.5
1.5
4.2
0.9
-1.9
0.1

626.8

666.1

723.0

796.6

599.3

*$50
million or less.
1
These figures assume a social security taxable earnings base of $25,900.
2
If the taxable earnings base were not changed to reflect increased earnings, the effective social security tax rate on earnings would fall. The
amounts included in legislative changes that can be attributed to keeping taxes and average earnings in the same relationship that existed in
19803 are: $1.0 billion in 1981, $4.3 billion in 1982, $8.4 billion in 1983, $13.3 billion in 1984, and $19.2 billion in 1985.
These estimates include both the direct and indirect effects of administrative action and legislative changes.
4
Technical note: When the tax rate and the taxable earnings base increase at the same time, dividing up the total effect on receipts is
arbitrary to some small extent because of an interaction effect. The increase in receipts due to this interaction effect is attributed to the rate and
base changes in proportion to the increases in receipts that would occur if the rate and base were each changed separately.

BUDGET RECEIPTS

4-19

RECEIPTS BY SOURCE
Individual income taxes.—Individual income tax receipts are estimated at $298.6 billion in 1982 and $304.5 billion in 1983. These
estimates reflect the individual income tax reductions provided in
the Economic Recovery Tax Act of 1981, which reduce individual
income tax receipts in 1982 and 1983 by $28.2 billion and $75.4
billion, respectively. The proposed tax revisions and improvements
in tax collection and enforcement increase individual income taxes
by an estimated $0.1 billion in 1982 and $3.5 billion in 1983.
Individual income taxes in 1984 and 1985 are projected at $322.9
billion and $362.0 billion, respectively. The individual income tax
reductions provided in the Economic Recovery Tax Act of 1981
reduce individual income tax receipts by $113.1 billion in 1984 and
$137.6 billion in 1985. The tax revisions and other proposed
changes offset these reductions in 1984 and 1985 by an estimated
$2.6 billion and $2.7 billion, respectively.
Corporation income taxes.—Corporation income tax receipts are
estimated at $46.8 billion in 1982 and $65.3 billion in 1983. These
estimates reflect the Accelerated Cost Recovery System and other
provisions of the Economic Recovery Tax Act of 1981, which are
estimated to reduce corporation income tax receipts in 1982 and
1983 by $9.3 billion and $13.1 billion, respectively. The proposed tax
revisions and improvements in tax collection and enforcement add
$0.1 billion to receipts in 1982 and $9.1 billion in 1983.
Corporation income tax receipts in 1984 and 1985 are estimated
at $83.7 billion and $88.2 billion, respectively. These estimates reflect reductions of $21.6 billion in 1984 and $33.1 billion in 1985 due
to enactment of the Economic Recovery Tax Act of 1981. The
proposed tax revisions and other proposed changes are estimated to
increase corporation income tax receipts in 1984 and 1985 by $16.1
billion and $14.9 billion, respectively.
Social insurance taxes and contributions.—This category includes
social security and railroad retirement taxes, unemployment insurance taxes and deposits, and other retirement contributions. Supplemental medical insurance premiums (SMI) and voluntary hospital insurance premiums, previously included in this category, have
been reclassified as proprietary receipts.
Receipts from this source are expected to be $206.5 billion in
1982 and $222.5 billion in 1983. These estimates reflect the administration's proposal to convert the rail industry's multi-employer
pension from a public to a private system, and a proposal requiring
Federal employees to pay the employee portion of the social security hospital insurance tax. The recent increase in the combined
employer-employee social security tax rate from 13.3% to 13.4% on

4-20

THE BUDGET FOR FISCAL YEAR 1983

January 1, 1982, and annual increases in the social security taxable
earnings base from $29,700 in 1981 to $32,400 in 1982 and to
$35,100 in 1983, also are reflected in these estimates.
The estimates for 1984 and 1985 are $242.5 billion and $273.1
billion, respectively. These estimates reflect an increase in the
combined employer-employee social security tax rate from 13.4% to
14.1% on January 1, 1985 and annual increases in the taxable
earnings base to $40,500 in 1985.
Excise taxes.—Excise taxes are levied on a variety of products,
services, and activities. Receipts from these taxes are estimated at
$43.0 billion in 1982 and $41.7 billion in 1983. These estimates
include the windfall profit tax, which is estimated at $24.1 billion
in 1982 and $21.2 billion in 1983. The estimates also reflect enactment of the Economic Recovery Tax Act of 1981, which reduces
excise taxes by $0.9 billion in 1982 and $1.2 billion in 1983. The
Black Lung Benefits Revenue Act of 1981, which doubled the taxes
that finance the black lung disability trust fund effective January
1, 1982, increases excise tax receipts by $0.2 billion in 1982 and $0.3
billion in 1983. The proposed increases in airport and airway user
taxes are estimated to add an additional $0.1 billion to excise taxes
in 1982 and $1.2 billion in 1983.
The estimates for 1984 and 1985 are $41.5 billion and $40.8
billion, respectively. These estimates include $20.0 billion from the
windfall profit tax in 1984 and $19.0 billion in 1985. The provisions
of the Economic Recovery Tax Act of 1981 result in a net decrease
in excise taxes of $1.2 billion in 1984 and $1.9 billion in 1985. The
proposed increases in airport and airway user taxes and the extension of highway trust fund taxes at their current rates increase
excise taxes by $1.4 billion in 1984 and $5.7 billion in 1985.
Estate and gift faxes.—Estate and gift taxes are estimated at $7.2
billion in 1982, $5.9 billion in 1983, $5.4 billion in 1984 and $5.1
billion in 1985. These estimates reflect reductions due to enactment
of the Economic Recovery Tax Act of 1981 that start at $0.2 billion
in 1982 and increase annually to $4.6 billion in 1985.
Other receipts.—Customs duties and miscellaneous receipts (the
largest of which are deposits of earnings by the Federal Reserve
System) are estimated to total $24.8 billion in 1982, $26.2 billion in
1983, $27.0 billion in 1984, and $27.5 billion in 1985.
Proprietary receipts.—In addition to budget receipts, the Government receives significant proprietary income from the public. This
income is derived from various market-oriented activities and takes
the form of interest, rents, royalties, and the sale of Government
property, products, and services. Because this income arises from
business-type transactions rather than from taxation, it is treated

BUDGET RECEIPTS

4-21

Excise and Other
Social Insurance Taxes
and Contributions

Corporation Income Taxes
Individual Income Taxes

:r> >,m>.* ^i*HsaiafiwfiKi;^^;ss^

as an offset to related outlays and budget authority rather than as
budget receipts. Proprietary receipts from the public are explained
further in Part 7 and are shown in table 11 of Part 9.

PART 5

MEETING NATIONAL NEEDS:
THE FEDERAL
PROGRAM BY FUNCTION

5-1

INTRODUCTION
National needs and the functional classification.—This section of

the budget discusses budget authority, outlays, and related measures of Federal spending, focusing on the end purposes served by
the spending. The presentation is in terms of two closely related
analytical structures: the national needs structure and the functional structure.1
The functional structure is divided into 17 broad areas (functions) that provide a coherent and comprehensive basis for analyzing the budget. It has two additional categories—allowances and
undistributed offsetting receipts—that are not functions but are
required in order to cover the entire budget. In the functional
structure, budget authority and outlays are classified according to
the primary purpose of the activity; to the extent feasible this
classification is made without regard to agency or organizational
distinctions. The process of classifying each activity in the function
that defines its most important purpose—even though many activities serve more than one purpose—permits adding the budget authority and outlays of each function to obtain the budget totals.
The national needs structure uses the same broad categories as
the functional structure except that there are no national needs
categories for interest, allowances, and undistributed offsetting receipts. In the national needs presentation, programs or activities
are counted more than once in those cases where the activities
make a significant contribution to more than one national need.
For example, budget outlays for medical care for military personnel and dependents are primarily designed to strengthen our nation's defense capability. Hence, they are counted in the national
defense function and are not counted in the health function. However, this spending does have a major impact on our Nation's
health care for a significant part of the population, so the spending
is included in the national needs presentation for health as well as
in that for national defense.
The Federalism Initiative.—The President's federalism proposal
is central to his efforts to streamline the Federal Government,
restore its appropriate role within our overall system of government, and reduce its intrusion into the economy and into the lives
1
See the sections entitled "Functional classification" and "National needs presentation" in Part 7 of this
volume for additional background information.

5-2

INTRODUCTION

5-3

of the American people. It involves a realignment of the relative
roles of the Federal Government and of the State and local governments. The initiative calls for the establishment of clear understandings of what levels of government are responsible for various
governmental functions. Under the administration's proposal the
Federal Government would accept full responsibility for medicaid,
which is now a shared responsibility. In exchange, the States and
localities would take full responsibility for aid to families with
dependent children and food stamps, now also a shared responsibility. In addition, the States and localities would be given a wide
responsibility for a range of programs currently financed by Federal grants-in-aid, and the sources of income to finance them. They
would have the choice of maintaining these programs, or discontinuing them.
The initiative is planned to phase in over a 4-year period beginning
in 1984. This will provide adequate time for Federal and local levels
of government to plan, consult, and take legislative action. While
the broad outline of the program has been specified by the President,
there is ample room for negotiation on many specifics. Hence, this
budget discusses the broad rationale underlying the initiative and
the most likely major programs to be included in it. As a result:
—the data shown in Part 5 and other sections of the budget for
1984 and subsequent years reflect current law and Presidential
policy prior to implementation of the Federalism initiative;
and
—major programs which have been identified as likely to be
included in the federalism initiative are identified in Part 5.
A more detailed explanation of this initiative can be found in
Part 3 of this Budget.
Structure of the Part 5 sections.—For each major function (except
the interest function), there is a common structure to the presentation. Each section starts with a statement of national needs and
the Federal role in meeting these needs. Each section has a table
that shows budget authority and another that shows outlays for
that function for 5 years (1981 through 1985). These tables display
each subfunction and provide programmatic detail below the subfunction level. In many cases, additional tables are presented showing related programs in other functions that support these national
needs. Off-budget authority and outlays for each function are
shown as addendum entries.
Credit budget—Federal credit activity may take the form of
direct loans or loan guarantees, and both direct loans and loan
guarantees may be issued by either on-budget agencies or offbudget entities. Hence, in order to have a comprehensive system it

5-4

THE BUDGET FOR FISCAL YEAR 1983

is necessary to include all of these transactions in a single credit
budget. There is a fundamental difference in budget accounting
between direct loans and loan guarantees. Direct loans are loans
made by the Federal Government to borrowers. As such, they are
Federal outlays that must be financed by Federal taxes or borrowing. Loan guarantees are Federal guarantees of lending and as
such do not directly result in Federal outlays. In recent years most
Federal direct loans have been made by or sold to the Federal
Financing Bank (FFB), an off-budget Federal entity described in
greater detail in Part 6 of this document. The tables in Part 5
display the program activity of the credit budget by function; the
sum of these tables adds up to the credit budget totals presented in
Part 3 of this document.
There are three major changes in the credit budget presentation
in Part 5 from that reflected in prior budgets:
—In prior budgets the loan guarantee totals were the totals of
the Federal contingent liabilities. For example, if the Federal
guarantee was for 90% of the total loan, the amount shown in
the credit budget was 90% of the loan rather than the total
value of the loan that had a guarantee attached. However, the
true economic impact of the loan is the full loan—not just the
contingent liability. Therefore, the present tables reflect the
full value of any loan guaranteed by the Government.
—In prior budgets the focus of the credit budget presentation
was on the net credit activity (loans less repayments and
changes in guaranteed loans outstanding). However, the credit
budget tables now focus on new activity—new direct loan obligations and new guaranteed loan commitments—since it is
only at that point that the level of new extensions of Federal
credit can be controlled.
—The tables have been redesigned in order to show both the
gross and net obligations and commitments (i.e., after removing double-counting). In last year's budget the tables did not
deduct the double-counting. The reasons for this double-counting and the deductions to eliminate it are explained below.
Double counting in the credit budget.—There are three types of
double-counting of credit activities. Each of these are adjusted for
in the Part 5 tables to arrive at net totals.
—Loan asset sales and repurchases.—It is commonplace for loans
to be made by one agency and then sold to another agency (or
another account within the originating agency). This most commonly occurs in the form of loan sales to the FFB and the
repurchase of loans from the FFB. Whenever these internal
loan sales occur, the purchase of the loan by the acquiring
account constitutes a new loan by that account even though it
is not a new loan by the Government. Therefore, each time

INTRODUCTION

5-5

such internal loan sales occur, new loan activity is recorded
that does not constitute new loans to the public.
—Guaranteed loans held as direct loans.—In addition to doublecounting of new loan activity, there is also double counting of
loan guarantees relative to direct loans. Normally, loan guarantees are alternatives to direct Federal loans. Borrowers may
obtain a private housing loan, for example, with Federal housing loan insurance that reduces the risk to the lenders and
thus facilitates the private loans. However, when the FFB
makes a loan (either a direct loan or a loan purchased from
another agency) it requires that some other agency guarantee
that the loan will be repaid to the FFB. Hence, all FFB loans
are included in the direct loan totals and the same transactions are included in the loan guarantee totals of the guaranteeing agencies.
—Secondary guarantees.—On occasion more than one guarantee
will be attached to a single loan. This double-guarantee of a
loan is called a secondary guarantee and it is deducted from
the guaranteed loan totals.
Allowances.—The allowances reflected in the current budget fall
into three categories—allowances for pay raises, for contingencies,
and for greater economies and efficiencies. The transactions in
these categories are discussed in greater detail in the allowances
section of Part 5.
Budget authority and outlays for allowances are always recorded
differently in the estimate years than in the past years. For the
estimate years allowances are generally undistributed by agency,
function, and account; they constitute an adjustment entry to move
the budget closer to realistic totals, but the actual distribution of
the transactions by account is unidentified. When the transactions
actually take place they are recorded in the appropriate agencies,
functions, and accounts, so that the budget never records allowances for past periods.
Changes in the functional structure.—Only one significant change

has been made in the functional classification for the 1983 budget.
This change was to rename the subfunction formerly entitled "military assistance" to "international security assistance" and to shift
two accounts from the foreign economic and financial assistance
subfunction into the international security assistance subfunction.
In addition, the title of the subfunction "other advancement and
regulation of commerce" no longer includes the words "and regulation" but this had no affect on the coverage of the subfunction.
Agency reorganizations connected with the proposed elimination
of the Departments of Education and Energy had only minimal
affect on the functional classification of programs or accounts. A

5-6

THE BUDGET FOR FISCAL YEAR 1983

major reclassification has affected one functional total significantly, however. In previous budgets, voluntary social insurance premiums collected by the hospital and supplementary medical insurance trust funds were classified as budget receipts. Because these
are not compulsory payments to the Government and are in the
nature of medical insurance premiums, they have been reclassified
to be offsetting collections. This change reduces recorded budget
receipts and outlays by equal amounts ($3.3 billion in 1981). The
collections are now classified as offsets to the health care services
subfunction of the health function. This change was made retroactively to 1967, the first year of such collections.
Relationship to other budget tables.—The budget includes a

number of tables that supplement the tables shown in Part 5,
including (1) outlays over a longer period of past years; (2) estimates and projections further into the future; (3) budget authority
and outlays by agency; and (4) more detailed data than those
reflected in the Part 5 tables.
• Budget outlays by function and subfunction for the years 1973
through 1983 are shown in table 19 in Part 9 of this document. (Earlier data can be obtained upon request from the
Office of Management and Budget.)
• Estimates and projections of budget authority and outlays by
agency, major function, and major program for the years 1983
to 1987 are published in Part 3 of this document.
• Summary budget authority and outlay data by agency for the
years 1981 to 1983 are contained in table 3 in Part 9. Detailed
data are published in Part 8 (The Federal Program by Agency
and Account).
• Part 8 contains a detailed set of budget authority and outlay
figures for all budget and off-budget transactions. Each item
in that listing has a 3-digit code indicating the function and
subfunction in which it is classified.
The Full Employment and Balanced Growth Act—Section 4(a) of

the Full Employment and Balanced Growth Act of 1978 provides
that the President's budget shall incorporate the programs and
policies that the President deems necessary to achieve the goals
specified in the Act. These goals are discussed in the President's
Economic Report. Programs and policies to help achieve these
goals, as well as a broad range of other goals mentioned in the Act,
are discussed throughout this section.
As demonstrated by the national needs sections following, the
goals listed in the Act were among those weighed in the process of
developing the President's budget recommendations.

INTRODUCTION

5-7

Tax expenditures.—Tax expenditures are features of the individual and corporation income tax laws that provide special benefits or
incentives in comparison with what would be permitted under the
general provisions of the Internal Revenue Code. They arise from
special exclusions, exemptions, or deductions from gross income, or
from special credits, preferential tax rates, or deferrals of tax
liability. Tax expenditures can be viewed as alternatives to other
means by which the Federal Government can carry out policy
objectives, such as direct outlays, loan guarantees, regulations, and
other tax law provisions. Tax expenditures are discussed in the
following sections on the Federal program by function, so that they
may be compared with the outlays and loan guarantees that serve
similar purposes.
The method used to measure tax expenditures has been significantly revised in this budget. In previous years tax expenditures
were measured as the decrease in tax receipts caused by a tax
expenditure provision. This year the concept of tax expenditures
has been, changed in order to show the amount of spending that
would be required to provide an equal after-tax benefit to the
taxpayer. This is designed to make the tax expenditure data more
comparable with direct budget outlays.
In most cases it would take greater budget outlays to achieve a
given level of after-tax benefits than would be required by special
tax reductions, because taxpayers would have to pay taxes on the
higher income derived from budget outlays. For example, one tax
expenditure provision is the exclusion from taxable income of the
value of housing and meals provided military personnel. If the
Government were to repeal this tax exclusion but instead pay
higher salaries, the increase in salaries would be taxed. Therefore,
if the Government were to use direct expenditures rather than tax
expenditures and were to provide the same total after-tax compensation, the increase in direct outlays for higher salaries would have
to be greater than the revenue loss under the special tax provision.
The Federal deficit would be the same in either case, however,
because the higher outlays would be required only to the extent
that tax receipts were higher.
Another tax expenditure provision is the exclusion of social security payments from taxable income. If the Government were to
repeal this.exclusion while maintaining the value of the program,
the increase in direct outlays for benefit payments would similarly
have to be greater than the present revenue loss under the special
tax provision.
For some tax expenditure provisions the revenue loss is equivalent to the direct outlay without any adjustment. This is the case
for itemized deductions, such as the deduction for medical expenses. Under present law a patient can pay his medical expenses,

5-8

THE BUDGET FOR FISCAL YEAR 1983

deduct the amount (if eligible), and obtain a decrease in his tax.
Alternatively, the Government could directly pay the portion of
medical expenses equal to the revenue loss under the present law.
In either case the patient would have the same net medical bill to
pay, and the doctor a.nd other suppliers of medical service would
have the same taxable income. The revenue loss is therefore itself
equal to the equivalent outlay.
Tax expenditure estimates cannot simply be added together to
obtain totals for functional areas or a grand total. In many cases,
simply adding tax expenditures together produces inaccurate totals
because certain tax expenditures affect the value of other tax
expenditures. These interaction effects are discussed in detail in
Special Analysis G, "Tax Expenditures/' which is published separately from this document. In a departure from prior practice, Part
5 of this document and Special Analysis G provide total tax expenditures for each functional area after adjustment for interaction effects. For some functional areas there are no interaction
effects; thus the total is simply the arithmetic sum of the individual tax expenditures. However, in many instances this is not the
case, and the total for a functional area may be either greater or
less than the arithmetic sum of the individual tax expenditures.
Tax expenditures are discussed further in Part 6 of this document. In addition, Special Analysis G analyzes the concept and
measurement of tax expenditures, explains each tax expenditure
provision, and contains tables showing the data under both the old
and the revised methods of measurement.
Other Federal fiscal activities.—The Federal Government allocates resources by means other than those reflected in budget
outlays, tax expenditures, and loan guarantees. Outlays of the offbudget Federal entities, which are federally owned and controlled
but excluded from the budget under provisions of laws, are similar
in nature to budget outlays. The regulation of economic activity
also has a major impact on the economy in many sectors. Finally,
provisions of the tax law affect the allocation of resources among
private uses and the distribution of income among individuals in
many important ways not covered by tax expenditures, which include only special provisions of income taxes. Federal taxes other
than income taxes have economic effects, as do tax rates, personal
exemptions, and other features of the income tax structure that
are not treated as tax expenditures.
The national needs sections that follow include information on
off-budget Federal entities and discuss major issues regarding economic regulation. Off-budget Federal entities and privately owned,
Government-sponsored enterprises are discussed in Part 6 of the
Budget

NATIONAL DEFENSE

5-9

NATIONAL DEFENSE
National Needs Statement
• Protect America's people, its institutions, and its lands
from foreign aggression.
The Federal Role in Meeting the Need:
• Deter any attack upon, and prevent the coercion of, the
United States, its allies, and friends.
• Protect U.S. economic interests and U.S. citizens abroad.
• Maintain access to critical resources.
• Maintain, in conjunction with our allies, the military
capabilities required to counter the expansion of Soviet
military presence, particularly where such expansion
threatens the interests of the United States.
The basic national security objective of the United States defense
program is to prevent war—particularly nuclear war. The purpose
of United States national security programs is to deter other nations from threatening our vital interests as well as those of our
allies and friends. This deterrence must be based on the maintenance of strategic nuclear capabilities, which make nuclear war
with us an unacceptable option; maritime superiority; a strong
force posture in NATO and Northeast Asia; and the ability to
deploy and sustain our forces worldwide.
The accompanying table shows budget authority and outlays by
appropriation categories for the three major national defense components: military functions of the Department of Defense, atomic
energy defense activities, and the defense-related activities of other
agencies.
The budget proposes $263.0 billion in budget authority for the
national defense function in 1983. Outlays are estimated at $221.1
billion in 1983, increasing to $253.0 billion in 1984 and $292.1
billion in 1985.
Department of Defense.—The $43.4 billion increase in budget
authority for the Department of Defense in 1983 is the largest
discretionary increase proposed in the budget. It demonstrates the
administration's commitment to provide adequate military
strength to maintain the Nation's security.
U.S. defense policies ensure our preparedness to respond to and,
if necessary, successfully fight either conventional or nuclear war.
As the Soviet Union continues to improve its military capabilities,
United States forces must be strengthened so that they are ready
and able to meet the Soviet challenge and assure the protection of
360-000

0 - 8 2 - 8

5-10

THE BUDGET FOR FISCAL YEAR 1983
NATIONAL DEFENSE
(Functional code 050; in millions of dollars)
Major missions and programs

BUDGET AUTHORITY
Department of Defense—Military:
Military personnel
Retired military personnel:
Existing law
Proposed legislation
, Operation and maintenance
Procurement
Research, development, test and evaluation....
Military construction
Family housing
Revolving funds and other:
Existing law
Proposed legislation
Allowance for civilian and military pay raises..
Other legislation
Subtotal, Department of Defense—Military..
Atomic energy defense activities:
Existing law
Subtotal, atomic energy defense activities....
Defense-related activities:
Existing law
Proposed legislation
Subtotal, defense, related activitiesDeductions for offsetting receipts
Total, budget authority
OUTLAYS
Department of Defense—Military:
Military personnel
Retired military personnel:
Existing law
Proposed legislation
Operation and maintenance
Procurement
Research, development, test and evaluation....
Military construction
Family housing
Revolving funds and other:
Existing law
Proposed legislation
Allowance for civilian and military pay raises..
Other legislation
Subtotal, Department of Defense—Military..
Atomic energy defense activities:
Existing law
Subtotal, Atomic energy defense activities...
Defense-related activities:
Existing law
Proposed legislation
Subtotal, defense related activities.,
Deductions for offsetting receipts
Total, outlays...

1981
actual

1982
estimate

36,930

38,489

44,896

13,840

15,036

55,548
48,025
16,609
3,398
2,004

62,271
65,701
20,058
5,026
2,239

16,600 17,922 19,113
-89
-190
-257
69,392 73,023 81,983
89,547 101,871 125,497
24,257 27,455 31,687
5,436
6,984
9,162
2,777
2,928
3,120

1983
estimate

1984
estimate

45,996

1985
estimate

47,710

2,031

-206
46
5,399

365 - 2 8 8
297
63
300
4,089
8,504 12,450
137
147
162
178,38,6 214,060 257,469 284,652 330,924
3,651
3,651

4,673
4,673

5,506
5,506

6,383
6,383

6,982
6,982

373

137

460
-402

438
-434

505
-401

373
-4

137
-4

104

182,405 218,865 263,033 291,039 338,011
36,409

38,284

44,534

45,820

47,522

13,729

15,000

51,920
35,191
15,278
2,463
1,721

60,585
41,325
18,299
2,744
2,138

16,560
-89
67,279
55,144
22,200
3,975
2,436

17,880
-190
71,890
70,022
25,608
4,817
2,783

19,068
-257
79,636
88,262
29,343
6,238
3,035

-537
107
-625
63
300
4,285
8,461 12,383
137
162
147
156,096 182,800 215,900 247,000 285,500
-614

-702
46
5,081

3,398
3,398

4,498
4,498

5,155
5,155

5,968
5,968

6,473
6,473

276

204

415
-402

436
-434

503
-401

276
-4

204
-4

159,765

187,497

102

221,068 252,969 292,075

5-11

NATIONAL DEFENSE

our national interests. This requires that our current defense program support:
• modernization of all components of U.S. strategic forces to
ensure their ability to survive an attack and retaliate;
• improvements in the Nation's ability to respond militarily to
crises anywhere in the world;
• maintaining the maritime superiority required for the deployment of U.S. forces to vital regions overseas, for the support
of our allies, and for assuring continued access to vital resources;
• revitalizing alliances and coalitions to support maritime superiority, protect U.S. interests worldwide, and achieve NATO
objectives; and
• improving the readiness and combat endurance of conventional forces, and modernizing these forces with new equipment.
The administration has initiated defense programs to achieve
these objectives and reverse the decline in our relative military
strength. Substantial increases in defense resources will be required over a period of years. The distribution of budget authority
for the Department of Defense by mission category is shown in the
following table.
MISSION CATEGORIES: DEFENSE, MILITARY
(Functional code 051; in billions of dollars)
t authority
Major missions and programs

Strategic forces 1
General purpose forces
Intelligence and communications
Airlift and sealift
Guard and reserve
Research and development2
Central supply and maintenance
Training, medical, and other general personnel activities.
Administration and associated activities
Support of other nations
Total, budget authority..
Prior-year funds and other financial adjustments...
Total obligational authority

1981
actual

1982
estimate

1983
estimate

1984
estimate

1985
estimate

12.7
68.8
11.2
2.9
9.9
14.2
19.1
35.3
3.4
.9

16.2
88.2
14.0
4.0
11.6
16.9
18.9
39.7
3.6
1.0

23.1
106.2
18.0
4.4
14.3
20.1
22.0
44.2
4.3
.9

30.3
114.0
20.2
6.6
15.6
22.7
22.2
47.6
4.7

33.2
139.0
24.6
6.8
17.7
26.3
24.8
52.5
5.2
.9

178.4

214.1

257.5

284.7

330.9

176.1 214.2

258.0

285.5

331.7

-2.3

Excludes strategic systems development included in the research and development category.
2
Excludes research and development in other program areas on systems approved for production.

Strategic forces.—The 1983 budget provides for continuing modernization of all strategic force elements, including the B-l bomber
and a restructured MX missile program.
The strategic modernization program consists of five mutually
reinforcing elements:

5-12

THE BUDGET FOR FISCAL YEAR 1983

• Improved communications and control systems better able to
survive and fight a nuclear war should deterrence fail.
• Modernization of our bomber forces with the production of
the B-1B aircraft in the mid-1980's, and an advanced technology Stealth bomber in the 1990's.
• Development and deployment of a new submarine-launched
ballistic missile (Trident II) with improved range, accuracy,
and payload. In addition, the sea-based strategic forces are
being augmented in the near term by the deployment of sealaunched cruise missiles.
• A step-by-step program to improve land-based ballistic missile
accuracy, size, and survivability through the deployment of
the MX missile in existing fixed silos and research on future
more survivable basing alternatives.
• Improvements to strategic defenses including modernization
of bomber attack warning systems, acquisition of new F-15 air
defense interceptor aircraft, and accelerated development of
ballistic missile defense.
General purpose forces.—The largest components of defense are
conventional military forces, which deter or counter non-nuclear
military aggression.
General purpose forces must be able to respond to the most
demanding of potential conflicts—a war between NATO and the
Warsaw Pact—while retaining the flexibility to meet other threats
to U.S. interests.
The 1983 budget proposes budget authority of $106.2 billion for
general purpose forces, a 20% increase over 1982. This provides for
strengthening our forces—including rapid deployment forces—by
increasing combat readiness and by fielding new and more capable
equipment. The following active forces are supported: 16 Army
divisions, 3 Marine divisions, 3 Marine air-wings, 26 wings of Air
Force tactical aircraft, and 325 general purpose naval warships,
including 13 aircraft carriers and 13 carrier air-wings.
Army general purpose forces.-^Initiatives to modernize these
forces and improve their combat readiness involve procurement of
new equipment, including tanks, helicopters, and improved air defense systems. Emphasis is also placed on more realistic unit training, including increased participation of designated rapid deployment force units in servicewide exercises. Additional ammunition
and other combat supplies will be acquired so that our forces can
better sustain military operations.
Continued modernization of equipment is crucial if the Army is
to meet the new challenges of conventional warfare. The continued
procurement of the M-l main battle tank and other modern fighting vehicles will greatly improve our armored combat capability.

NATIONAL DEFENSE

5-13

Production of the Blackhawk helicopter will increase troop mobility, and procurement of the advanced attack helicopter (AAH) will
enable our forces to engage heavily armored vehicles at longer
ranges and in greater numbers than is possible with existing helicopters. Also included in the budget is the Patriot air defense
system to provide more effective protection of vital targets, such as
depots, bridges, and airbases. Acquisition of a new division air
defense gun, DIVAD, will also continue in 1983. In addition, the
Army is continuing steps to improve its retaliatory and defensive
chemical warfare capabilities.
In addition to continuing equipment modernization, the budget
provides funds to increase readiness by improving the quality and
degree of unit training. During 1983 more battalions are scheduled
to participate in training programs at the new National Training
Center at Fort Irwin, Calif. These improvements in training
will enhance the Army's ability to deploy effective combat power
anywhere in the world at any time.
General purpose naval forces.—These forces provide a deterrent
to military aggression both in peacetime and during crises; additionally, in peacetime they are a highly visible symbol of our
defense commitments. Should deterrence fail, our naval forces
must be able to control vital sea lanes and be able to seek out and
destroy enemy forces. Our naval forces must also be capable of
supporting ground battles by attacking land targets and by conducting amphibious Marine Corps assaults.
The U.S. Navy operating fleet will increase from 555 ships in
1982 to 569 in 1983. Achieving a clear margin of naval superiority,
however, requires that we continue to modernize our naval weapons systems and increase our force levels further. The $96 billion,
5-year shipbuilding plan calls for building 133 ships between 1983
and 1987, including 6 Trident ballistic missile submarines. The
budget proposes procurement of the following new general purpose
force ships in 1983:
• 2 nuclear powered aircraft carriers, which provide the major
striking power of our sea-based conventional forces;
• 3 large warships (cruisers) equipped with the AEGIS system,
to help protect the fleet from aircraft and missile attack;
• 2 small warships (frigates) to protect the fleet and military
convoys;
• 1 dock landing ship, to support Marine Corps amphibious
landings;
• 2 nuclear powered attack submarines;
• 4 mine countermeasures ships to improve the fleet's ability to
operate in the presence of enemy mine threats;
• 1 fleet oiler to support our deployed forces; and
• 1 salvage ship for recovering damaged ships or aircraft.

5-14

THE BUDGET FOR FISCAL YEAR 1983
SUMMARY OF ACTIVE MILITARY PERSONNEL AND FORCES
(Year end—i.e., as of September 30)
1981
actual

Military personnel (in thousands):
End strength:
Army
Navy
Marine Corps
Air Force
Total, Department of Defense..
Average strength:
Army
Navy
Marine Corps
Air Force
Total, Department of Defense..
Strategic forces:
Intercontinental ballistic missiles:
Minuteman
Titan II
Polaris-Poseidon-Trident
Strategic bomber squadrons
General purpose forces:
Land forces:
Army divisions
Marine Corps divisions
Tactical air forces-.
Air Force wings
Navy attack wings
Marine Corps wings
Naval Forces:
Attack and multipurpose carriers..
Nuclear attack submarines
Other warships
Amphibious assault ships
Airlift and sealift forces:
C-5A airlift squadrons
Other airlift squadrons
Sealift fleet
1
2

1982
estimate

1983
estimate

781 784 784
540 553 569
195
191
192
570 581 600
2,082 2,110 2,148
775 783 782
536 544 558
188
190 194
564 577 592
2,064 2,094 2,125

1,000 1,000 1,000
44
52
53
520 544 568
22
25
25
16
3

16
3

26
12
3

26
13
3

12
81
196
59
4
13
2
60
1

13
90
207
59

4
13
63

13
93
219
60

4
13
63

Includes ex-Polaris ships operating as attack submarines.
Excludes 6 SL-7 logistics ships undergoing conversion.

Naval aviation forces will include 16 tactical air wings (13 Navy
and 3 Marine Corps), 24 land-based patrol squadrons, and various
support aircraft. To maintain and modernize these forces the
budget provides funding for continued production of F-14 and F/A18 aircraft for the tactical airwings, additional production of the
SH-60B helicopter and the P-3C long-range aircraft for anti-submarine warfare, and production of the C-2 aircraft as a replacement
carrier-support aircraft.
Airlift and sealift forces.—These forces must be able to deliver
military personnel and combat equipment rapidly to crisis areas

NATIONAL DEFENSE

5-15

anywhere in the world. These transportation forces must then be
able to deliver the materiel needed to sustain the forces in combat.
Readiness will be increased by improvements to existing transport aircraft, and procurement of additional spare parts. The
budget provides for replacing the wings on existing C-5A aircraft,
extending their service life beyond the year 2000. The budget also
proposes acquisition of an updated version of the wide-body, longrange, C-5 cargo aircraft, and more KC-10A tanker/cargo aircraft,
increasing our deployment capabilities.
Our rapid deployment sealift capability will be increased by the
conversion of SL-7 logistics ships and the chartering of additional
ships to preposition equipment and supplies near possible trouble
spots. Six more supply ships, loaded with equipment and supplies,
were deployed to Diego Garcia in 1981, bringing the total in that
area to 13 ships.
Air Force tactical aircraft.—These forces must be able to gain air
superiority, provide close air support to ground combat troops,
disrupt enemy forces behind the line of battle, and limit enemy air
attacks on allied forces and installations. To increase the combat
effectiveness of the tactical air forces, the 1983 budget proposes
procurement of the following Air Force tactical aircraft and equipment:
• F-15 fighter aircraft for maintaining air superiority;
• F-16 multi-mission aircraft for both maintaining air superiority and attacking ground targets;
• A-10 aircraft for close air support of ground troops, including
anti-tank operations;
• modification of some F-lll aircraft with electronic equipment
for jamming enemy air defense radars;
• TR-1 high altitude reconnaissance aircraft for accurately locating enemy targets from stand-off locations;
• AWACS aircraft for providing early warning of hostile aircraft; and
• improved guided missiles and bombs for air combat and
ground attack missions.
The budget supports continued moderization of the Air Force
tactical fighter force, providing for 26 active and 12 reserve wings
by 1983. Modernization of U.S.-based air defense force with F-15
aircraft is also planned. Improvements to Air Force readiness continue to be made through increased purchases of spare parts and
elimination of aircraft maintenance backlogs. Flying hours will
increase as a result of additional aircraft entering the inventory
and initiatives to increase pilot readiness. Frequent exercises will
keep our forces prepared for combat on short notice.

5-16

THE BUDGET FOR FISCAL YEAR 1983

Guard and reserve forces.—Guard and reserve forces need to be
trained and equipped to mobilize and deploy rapidly in an emergency. Greater emphasis is being placed on the readiness of these
forces.
The current reserves are far more capable as a military force
than any peacetime reserves have been in the past. The budget
provides for continued improvement in unit strength, equipment,
and training. The number of personnel is scheduled to increase
significantly during 1983, primarily in the Army Guard and Reserve. Modernization of reserve equipment continues with the provision of new aircraft, frigates, and trucks. The first new F-16
fighters for the reserve components will enter Air National Guard
service during 1983. More intensive and effective unit training and
increased participation of guard and reserve personnel in servicewide training exercises also will help improve readiness.
Research and development—The purpose of defense research and
development is to devise new and more capable weapon systems to
meet changing military requirements and to ensure that our current lead in most areas of military technology is sustained. To
accomplish this task, defense research and development supports a
wide variety of activities ranging from basic research to construction of full-scale prototypes of weapon systems.
The administration proposes that budget authority for defense
research and development increase by about 20% in 1983. Major
efforts include:
• Technology.—Substantial increases in funding are proposed
for basic and applied research, as well as for exploratory
development of promising new technologies. Areas of emphasis include systems for detecting the enemy at night or in
poor weather and lightweight materials for use in weapon
systems.
•Strategic systems.—The budget provides for accelerated development efforts in support of the overall strategic modernization program. Ballistic missile defense, deep underground
basing, and continuous patrol aircraft are being explored as
options for future MX missile basing. In addition, development is continuing on a new technology bomber and the new
Trident II submarine-launched ballistic missile.
• Tactical systems.—The budget emphasizes development of
new long-range, ground attack versions of current F-15 and
F-16 fighter aircraft for the Air Force, as well as an improved
medium-range air-to-air missile. The Navy budget request
supports development of a lightweight anti-submarine torpedo, improvements to the heavyweight MK48 torpedo, vertical
launch systems for ship-launched missiles, and a major surface warship. The Army is continuing development of new

NATIONAL DEFENSE

5-17

missiles and armored vehicles, and improving helicopters and
artillery systems.
• Other defense research and development—The budget provides for continued improvements in defense intelligence systems, worldwide communications systems, and test and evaluation capabilities. Defense support for the NASA Space Shuttle program will continue.
Active duty military personnel.—The past year has been one of
the best years for military recruiting and retention since the inception of the All Volunteer Force in 1973. All the military services
achieved or exceeded their strength objectives. All made significant
improvements in retaining experienced personnel and in enlisting
high-quality recruits. These major improvements are due primarily
to substantial increases in military pay and benefits enacted in
1980 and 1981. While the 1981 experience demonstrates clearly
that the concept of the All Volunteer Force is working, the military services will face other manpower challenges in 1983 and
beyond. A further decline in the number of available military-age
youths is forecast, and vigorous efforts will have to be made to
meet the demands of planned increases in force levels. The 1983
budget supports levels of compensation that will help assure that
future manning requirements are achieved.
Defense acquisition improvement—The Department of Defense is
improving the efficiency of its acquisition process to reduce both
cost and the length of the acquisition cycle. New initiatives in this
area include:
• savings through greater program stability, multiyear contracting, and maintaining economic production rates;
• streamlining the acquisition process through decentralization
and reduced documentation requirements; and
• improving weapon systems development by supporting evolutionary design, reliability criteria, and design-to-cost approaches.
The F-16 fighter aircraft program was adopted as a multiyear
program in 1982, and promises significant savings. The Navy's C-2
aircraft, medium-range standard missile, fleet oiler, and the
Army's Blackhawk helicopter are all candidates to become multiyear acquisition programs.
Military retired pay.—Legislation will be proposed to change the
military retirement system in order to remove certain inequitable
features and make military retirement consistent with other Federal retirement programs. The most important of these is a limitation on the annual cost-of-living adjustment for retirees whose
retired pay is greater than that of similar personnel retiring under

5-18

THE BUDGET FOR FISCAL YEAR 1983

current pay scales. Retirees whose retired pay is between 100%
and 120% of current retired pay scales would receive three-fourths
of the full cost-of-living adjustment. When retired pay is 120% or
more of current retired pay, there would be no cost-of-living increase.
In addition, the administration will propose legislation to change
the way the budget provides for military retired pay. The budget
now reflects only the benefits paid to military personnel who have
already retired. Under the proposal, the defense budget would reflect the cost of retirement benefits being earned by military personnel on active or reserve duty at the time they are being earned.
This change would improve personnel management by more accurately reflecting true personnel costs. Because the proposal involves complex changes in many parts of the budget, these changes
will not be reflected in the budget schedules until the legislation is
enacted.
Tax expenditures.—The exclusion from taxable income of housing
and meals for military personnel, provided either in-cash or inkind, results in an outlay equivalent estimate of $2.5 billion in
1983. In addition, disability pensions received by current military
retirees are largely excluded from taxable income, resulting in an
outlay equivalent estimate of $165 million for 1983. Tax expenditures for national defense total $2.6 billion in 1983.
Atomic energy defense activities.—Under the President's reorganization plan for energy, the Department of Commerce will be
responsible for the defense activities formerly within the Department of Energy. These include research, development, testing and
production of nuclear weapons, production of special nuclear materials, storage of nuclear wastes from defense programs, and design
of reactors for Navy vessels. The accompanying table shows the
funding levels for these programs. In total, budget authority of $5.5
billion is requested for 1983, compared to $4.7 billion for 1982.
Outlays are estimated to increase from $5.2 billion in 1983 to $6.0
billion in 1984 and $6.5 billion in 1985.
The nuclear weapons program involves the design, research, development, testing, and production of nuclear warheads for the
nuclear weapons stockpile, including quality control and periodic
inspection of the finished devices. Funding levels proposed for 1982
and 1983 provide for increased missile warhead production for
current and new weapon systems. The budget provides for increased production of special nuclear materials for use in nuclear
warheads.
The defense nuclear waste management program provides interim storage for all defense nuclear wastes. The program also sup-

5-19

NATIONAL DEFENSE
ATOMIC ENERGY DEFENSE ACTIVITIES
(Functional code 053; in millions of dollars)
Major missions and programs

1981
actual

1982
estimate

1983
estimate

1984
estimate

1985
estimate

2,304
957
303
87

2,930
1,265
359
119

3,408
1,595
376
127

3,692
2,168
392
131

4,158
2,280
408
136

3,651

4,673

5,506

6,383

6,982

BUDGET AUTHORITY
Weapons research, development, test, and production...
Weapons materials production and waste management.
Naval reactor development
Other research programs
Total, budget authority..
OUTLAYS
Weapons research, development, test, and production...
Weapons materials production and waste management.
Naval reactor development
Other research programs

Total, outlays
1

2,186 2,779 3,217 3,428 3,823
984 1,271 1,421 2,020 2,115
283
336
392 390 400
112
135
125
130
3,398 4,498 5,155 5,968 6,473

Includes negative undistributed cost outlay adjustments.

ports research to develop permanent storage and isolation of these
wastes.
The naval reactor development program includes the research
and development, design, procurement, and testing of prototype
reactors for current and future naval vessels.
Other atomic energy defense research and development programs involve improved security at defense nuclear facilities, and
arms control and verification technology development.
Defense-related activities.—Activities of civilian departments and
agencies that support national defense include emergency management, maintenance of strategic stockpiles, and the Selective Service
System. In 1983, offsetting receipts are expected to nearly match
other outlays because stockpile sales are about the same as purchases.
Estimated outlays for the defense-related functions of the Federal Emergency Management Agency of $341 million in 1983 provide
for increases in the Nation's civil defense, continuity of government, and mobilization programs. Outlays for the years following
1983 do not include the full effect of an enhanced civil defense
program.
To meet our needs for critical raw materials that might be
unavailable during wartime, the General Services Administration
stockpiles strategic and critical materials. Sales and purchases are
proposed in 1983 to adjust the inventory of the stockpile to current
requirements. Outlays for purchases are estimated at $120 million
in 1983.
The Selective Service System is responsible for maintaining
standby capability to meet defense personnel requirements during

5-20

THE BUDGET FOR FISCAL YEAR 1983

an emergency national mobilization. The budget includes outlays of
$24 million in 1983 to improve the Selective Service System's mobilization capability, including a continuing national registration program.

INTERNATIONAL AFFAIRS

5-21

INTERNATIONAL AFFAIRS
National Needs Statement:
• Protect and advance the interests of the United States
and its people in international affairs.
The Federal Role in Meeting the Need:
• Strengthen U.S. national security by extending assistance to friendly governments in order to counter threats
of internal instability or external aggression.
• Help friendly Third World countries develop economically through cooperative actions in trade, investment,
energy, and agriculture, consistent with the spirit of the
Cancun Summit.
• Provide humanitarian assistance abroad.
• Maintain effective diplomatic and consular operations
abroad supported by a well staffed, trained, and equipped
Department of State.
• Communicate effectively with foreign peoples to explain
and defend fully American views and policies and to
blunt Soviet propaganda.
• Promote a smoothly functioning international economic
and financial system through responsible participation in
international financial institutions.
• Stimulate mutually beneficial trade relations with other
countries.
The foreign policy of the United States is directed toward achieving an environment of peace, international security and economic
prosperity, in which individual political and economic freedoms
may flourish. This budget is designed to be a practical allocation of
resources toward achieving U.S. foreign policy aims. For 1983, the
budget requests $18.1 billion in budget authority and $12.0 billion
in estimated outlays, compared with 1982 estimates of $18.5 billion
in budget authority and $11.1 billion in outlays.

5-22

THE BUDGET FOR FISCAL YEAR 1983
NATIONAL NEED: CONDUCTING INTERNATIONAL RELATIONS
(Functional code 150; in millions of dollars)
Major missions and programs

1981
actual

1982
estimate

1983
estimate

1984
estimate

1985
estimate

BUDGET AUTHORITY
Foreign aid:
International security assistance:
Foreign military sales credit
Economic support fund

Military assistance
International military education and training
Peacekeeping operations .
....
Offsetting receipts and other
Proposed legislation
Subtotal, international security assistance....

500
2,100
110
28
34
-231

750
2,564
177
38
151
-194

1,739
2,886
108
54
43
-171
5

1,739
2,886
88
54
46
-129
5

1,739
2,886
88
54
46
-115
6

2,543

3,486

4,663

4,689

4,703

Foreign economic and financial assistance:
Multilateral development assistance:
Multilateral development banks
International fund for agricultural development
International organizations
Agency for International Development
Public Law 480 food aid
Peace Corps
Refugee assistance
Offsetting receipts and other

1,004

1,262

1,537

1,543

1,193

262
1,684
1,229
106
474
-259

215
1,771
1,000
105
503
-327

65
173
1,816
1,028
98
419
-371

115
173
1,828
1,004
98
418
-389

173
1,839
988
98
380
-403

Subtotal, foreign economic and financial
assistance

4,499

4,529

4,764

4,790

4,267

Total, foreign aid

7,042

8,015

9,427

9,479

8,970

996
433
41

1,113
467
45

1,255
508
46

1,320
622
42

1,375
639
41

1,471

1,624

1,809

1,984

2,055

551

588

746

672

710

6,908
3,566
5,361
88
-79

3,986
4,446

2,701
3,622

2,667
2,759

2,731
2,124

-80

-82

-84

-85

15,844

8,352

6,241

5,342

4,770

Conduct of foreign affairs:
Administration of foreign affairs
International organizations and conferences
Other
Subtotal, conduct of foreign affairs
Foreign information and exchange activities
International financial programs:
Export-Import Bank
Foreign military sales trust fund (net)
International monetary programs
International commodity agreements
Offsetting receipts and other
Subtotal, international financial programs
Deductions for offsetting receipts
Total, budget authority

-95

-97

-98

-96

24,812

18,482

18,126

17,379

16,410

5-23

INTERNATIONAL AFFAIRS
NATIONAL NEED: CONDUCTING INTERNATIONAL RELATIONS—Continued
(Functional code 150; in millions of dollars)
Major missions and programs

1981
actual

1982
estimate

1983
estimate

1984
estimate

1985
estimate

OUTLAYS
Foreign aid:
International security assistance:
Foreign military sales credit
Economic support fund
Military assistance
International military education and training
Peacekeeping operations
Offsetting receipts and other
Proposed legislation
Subtotal, international security assistance....

507
2,053
228
22
29
292

755
2,307
317
40
164
-97

913
2,683
203
50
54
-71
4

1,363
2,919
137
51
54
-34
5

1,653
2,922
124
53
54
-25
6

3,131

3,485

3,835

4,496

4,787

955

1,109

1,253

1,366

1,316

10
326
1,544
1,254
99
384
-357

30
220
1,605
1,141
105
465
-398

40
184
1,720
1,028
98
455
-451

60
173
1,768
1,004
98
436
-476

65
173
1,818
988
98
395
-494

Subtotal, foreign economic and financial
assistance

4,215

4,277

4,327

4,429

4,359

Total, foreign aid

7,346

7,762

8,162

8,925

9,146

868
441
39

1,023
474
46

1,168
582
44

1,264
621
37

1,335
638
40

1,347

1,543

1,794

1,922

2,014

525

599

655

699

746

2,066

1,855
-288
122

1,918
-218
247

1,188
-128
292

1,385
127
151

-880

29
452

493

-483

2,007

1,265

1,455

875

1,180

Deductions for offsetting receipts

-95

-96

Total, outlays

11,130

11,074

11,968

12,323

12,990

Conduct of foreign affairs:
Administration of foreign affairs
International organizations and conferences
Other ...
Subtotal, conduct of foreign affairs
Foreign information and exchange activities
International financial programs:
Export-Import Bank
Special defense acquisition fund
Foreign military sales trust fund (net)
International monetary programs
International commodity agreements
Offsetting receipts and other
Subtotal, international financial programs

456
365

5-24

THE BUDGET FOR FISCAL YEAR 1983
NATIONAL NEED: CONDUCTING INTERNATIONAL

RELATIONS—Continued

(Functional code 150; in millions of dollars)
Major missions and programs

1981
actual

1982
estimate

1983
estimate

1984
estimate

1985
estimate

ADDENDUM
Off-budget Federal entity:
Federal Financing Bank:
Overseas Private Investment Corporation:
Outlays
Foreign military sales credit:
Budget authority
Outlays

-5

-6

2,505
1,945

3,320
2,670

4,400
3,715

4,900
4,250

3,648
2,963

International security assistance.—Security assistance programs
are vital instruments of United States national security and foreign policy, serving to strengthen allied and friendly countries
where the United States has special security concerns. Through
these programs, the United States assists other countries in acquiring, training for, and using modern military equipment necessary
for their defense, and promotes economic and political stability
through balance of payments support and project assistance. They
enable the United States to promote peace in the Middle East, to
strengthen NATO's southern flank and to support countries in
Africa, Asia and the Caribbean threatened >by direct or indirect
Soviet expansionism. Security assistance is also provided in connection with U.S. access to military bases and facilities overseas.
Security assistance programs are under the policy direction of
the Secretary of State and are administered by the Secretary of
Defense and the Administrator of the Agency for International
Development. Because of serious threats to U.S. interests in several
parts of the world, the budget provides for a substantial increase in
security assistance and an improvement in the financial terms on
which it is provided. Proposed budget authority would rise to $4.7
billion in 1983, $1.2 billion above 1982. Budget outlays are estimated to rise from $3.5 billion in 1982 to $3.8 billion in 1983.
Foreign military sales credit.—This program consists of direct
credits and loan repayment guarantees to enable foreign governments in 1983 to purchase U.S. defense articles, services, and training. New commitments in 1983 are estimated to be $5.7 billion, $1.8
billion above the 1982 level. Direct loans, which are on-budget,
would total $1.7 billion, of which $500 million would be for a loan
to Israel. Repayment of this transaction would be forgiven, making
it a grant. The remaining $1.2 billion would be provided on belowmarket terms so as to reduce the burden of repayment of these
loans on recipients' economies while helping them meet their defense needs. In addition, $3.9 billion would be off-budget loans at

INTERNATIONAL AFFAIRS

5-25

interest rates equal to U.S. Treasury borrowing costs provided
through the Federal Financing Bank and guaranteed by the Department of Defense. Budget outlays from the foreign military
sales credit program, estimated at $913 million in 1983, result only
from disbursements on direct loans and from payments of claims
for late repayment on prior-year guarantees.
Economic support fund.—Through the economic support fund,
the United States furnishes general budget and balance of payments support and finances individual development projects. Economic assistance is provided on a loan and grant basis. The proposed 1983 program includes budget authority of $895 million for
direct loans and $1,991 million for grants. Because unanticipated
needs invariably arise requiring the rapid provision of U.S. aid, the
1983 budget proposes $75 million in budget authority that are not
allocated to specific activities.
Military assistance.—Grant military assistance is requested to
finance administrative costs of security assistance programs, reimbursements to the armed services for military equipment delivered
to foreign governments during prior-year emergencies, and a $50
million special requirements fund to enable more rapid response to
unforeseen situations requiring U.S. military assistance. No specific country programs are proposed for funding in 1983. These activities will require $108 million in budget authority and, with spending from prior year appropriations, will result in estimated outlays
of $203 million in 1983.
International military education and training.—This program
provides professional training and education in U.S. and overseas
facilities to foreign military and related civilian personnel. It also
acquaints these personnel with U.S. social, economic, and political
institutions. Proposed grants totaling $54 million in budget authority are requested in 1983. This represents a $16 million increase
over 1982.
Peacekeeping operations.—The United States is a leading participant in peacekeeping operations, with contributions to the Multinational Force and Observers in the Sinai (part of the Camp David
agreement), the United Nations Force in Cyprus, and in 1982 the
new peacekeeping force sponsored by the Organization for African
Unity in Chad. Total budget authority proposed for peacekeeping
programs in 1983 is $43.5 million.
Other.—-Legislation will be proposed for $5 million in budget
authority for 1983 for a new anti-terrorism training and assistance

360-000 0 - 82 -

5-26

THE BUDGET FOR FISCAL YEAR 1983

program. Its purpose is to help foreign law enforcement authorities
to combat international terrorism more effectively.
Foreign economic and financial assistance.—Foreign

economic

and financial assistance supports the foreign policy interests of the
United States by promoting economic development in Third World
countries and providing humanitarian aid to needy people abroad.
The United States provides aid both bilaterally and through multilateral institutions. The 1983 proposal of $4.8 billion in budget
authority and $4.3 billion in estimated outlays represents a modest
increase over the levels recently appropriated for 1982. The increase is necessary to meet past commitments and to respond to
the critical needs of developing countries in Asia, Africa, and Latin
America.
Multilateral development assistance.—Multilateral development
banks provide project financing and technical assistance, on both
near-market and concessional terms. The World Bank group of
institutions and the three regional banks for Latin America, Asia,
and Africa lent nearly $17 billion during their last completed fiscal
years. Funding is contributed by developed and some advanced
developing countries through regular replenishments of capital,
which call for annual installment payments by donors, generally
over 3- to 5-year periods. Because of the long repayment periods for
bank loans, these contributions are required to permit ongoing
operations. Contributions to the banks are of two types:
• Paid-in capital. This is a direct contribution that requires
budget authority and results in budget outlays. Most paid-in
capital finances concessional lending.
• Callable capital. Members guarantee repayment of the funds
that banks borrow on world capital markets to finance their
non-concessional lending. This capital is provided under a
limitation in appropriations acts and has never led to budgetary outlays.
For 1983, proposed budget authority for the banks totals $1.5
billion, and outlays are estimated to be $1.3 billion. The growth in
the requested level of funds for 1983 over the 1981 and 1982 levels
is almost entirely a function of past commitments to increase participation in capital replenishments.
A recent study by the administration concluded that the banks
have an important role to play in promoting sound economic policies in recipient countries and recommended that the United
States continue to participate in the banks while supporting
changes in their operations. The study recommended heavier emphasis on non-concessional lending (at near-market rates) and an
end to paid-in capital for non-concessional lending. As a result, U.S.

INTERNATIONAL AFFAIRS

5-27

contributions to future replenishments for some institutions should
decrease from 1983 levels.
Specialized lending for agriculture will continue through the
International Fund for Agricultural Development, an institution
that focuses on the small farmer and has major support from the
OPEC countries. A replenishment, estimated to total $1.1 billion
from all donors, is in negotiation. If remaining issues are successfully resolved, the United States is expected to contribute $180
million in budget authority over 2 years, with a first installment of
$65 million in 1983.
The United States voluntarily contributes to the United Nations
and other international organizations and programs that carry out
developmental, humanitarian, and scientific activities. Participation in these multilateral programs complements bilateral assistance in accomplishing overall U.S. foreign policy objectives. Nevertheless, U.S. contributions will decrease in 1983 from the levels of
recent years reflecting the administration's view that some multilateral programs are less effective than bilateral aid in achieving
the most critical U.S. goals. Of the $173 million of budget authority
proposed for 1983, $107 million will support the United Nations
Development Program, which is the primary multilateral source of
technical assistance for developing countries. Contributions of $26
million are planned for the United Nations Children's Fund, which
provides basic development services for mothers and children.
Agency for International Development (AID).—Bilateral development assistance programs are carried out by AID. The proposed
budget authority for AID for 1983 of $1.8 billion, $45 million greater than the 1982 appropriation, will promote economic growth in
developing countries through grants and concessional loans in such
sectors as agriculture, population, health, education, and energy.
AID also assists development-related research carried out by U.S.
universities and supports programs carried out by private and
voluntary organizations abroad. The administration's initiatives in
the AID program include support of sound economic policies of
recipient countries, increased use of American and recipient country private sector resources in development, and promotion of science and technology capabilities within developing countries. AID
outlays in 1983 are estimated to be $1.7 billion.
Closely related to AID's activities are two other programs that
support the private sector emphasis of bilateral aid:
• The Overseas Private Investment Corporation (OPIC) provides
political risk insurance and financial assistance to support the
participation of private American business in the development of the Third World. OPIC is a self-sustaining agency
that does not require appropriated funds. In 1983, receipts

5-28

THE BUDGET FOR FISCAL YEAR 1983

(largely interest and insurance premiums) are expected to
exceed outlays by $82 million.
• The trade and development program promotes sales of U.S.
goods and services that contribute to the economic programs
of certain developing countries, principally those that do not
receive AID funding. Budget authority of $10.5 million is
proposed for 1983.
Public Law 480 food aid.—This program contributes to achieving
U.S. objectives in the areas of security assistance, economic development, export market development, and humanitarian relief. The
budget requests $1,028 million in budget authority in 1983, an
increase of $28 million from 1982. Assistance will be concentrated
on the poorest developing countries and on countries of major
importance to the United States. A significant portion of direct
food donations will be devoted to meeting refugee and emergency
relief needs.
Peace Corps.—The Peace Corps will continue to help meet the
skilled manpower needs of developing countries and promote
mutual understanding between the people of the United States and
people in more than 50 countries in the developing world. Budget
authority of $98 million is requested for 1983, which is a small
reduction from 1982. More than 4,600 volunteer service years will
be provided in 1983.
Refugee assistance.—While there has been no extraordinary refugee emergency this past year, refugee problems continue to be
sizable in many parts of the world. Refugee needs can be expected
to continue in Africa, the Middle East, Southwest Asia, Indochina,
and Eastern Europe. Care for these refugees abroad and the resettlement of some of them in the United States will continue in 1983.
Because lower flows of new refugees are anticipated in 1983, this
budget proposes $419 million of budget authority, a reduction from
1982, to help international organizations and American voluntary
agencies to provide assistance. Recognizing that resettlement in the
United States is only a small part of the solution to the worldwide
refugee problem, the budget provides funds to encourage voluntary
repatriation and other resettlement alternatives abroad. Additional
funding for refugee assistance is discussed in the income security
section of Part 5.
Conduct of foreign affairs.—Funds for this category of programs
primarily finance the operating costs of the State Department in
carrying out the administration of foreign affairs and provide contributions assessed by certain international organizations of which
the United States is a member. Both proposed budget authority
and estimated outlays in 1983 would be $1.8 billion.

INTERNATIONAL AFFAIRS

5-29

Administration of foreign affairs.—The administration's commitment to the vigorous pursuit of American interests abroad is clearly reflected in the budget request for State Department operations.
A personnel increase is requested to enhance the Department's
overseas political and economic reporting and analysis. In addition,
training designed to improve the professional reporting, analytical,
consular, and administrative skills of the Foreign Service will be
expanded. Additional staff are also provided to cope with growing
passport and consular workloads. Because the personal safety of
government personnel abroad and the protection of overseas physical facilities and national security information are vital, protective
security personnel will be increased and security measures will be
further strengthened. Funds are provided for the construction of
only the highest priority office buildings and staff housing projects
abroad, mainly large projects in Moscow, Tokyo, and Riyadh, Saudi
Arabia. These improvements in foreign affairs administration,
along with inflationary costs abroad, increase proposed budget authority from $1.1 billion in 1982 to $1.3 billion in 1983.
International organizations and conferences.—The United States
is a member of the United Nations and over 50 other international
organizations responsible for many multinational activities of a
political, peacekeeping, economic, and social nature. Members of
these organizations have collective responsibility for their operating costs, which are financed through assessments based primarily
on ability to pay. The United States usually pays the largest share,
most commonly 25%.
In 1981 the United States began to shift the payment of its
contributions to most major organizations to the last quarter of
each organization's budget year. While this action has reduced
outlays in 1981 and 1982, it will increase 1983 outlays, which will
fund most major organizations' calendar year 1982 budgets. Budget
authority of $508 million is requested in 1983 for these payments,
for assessed contributions to peacekeeping activities, and for the
costs of U.S. participation in international conferences. Outlays are
estimated to be $582 million in 1983.
The United States continues to place a high priority on effective
management of international organizations. It is particularly important that organizations regularly evaluate their programs,
reduce and phase out low-priority and obsolete activities, operate
with lean staffs, and minimize support and overhead costs. The
United States intends to support only those organizations' budgets
that reflect significant restraint. This administration is convinced
that, after the substantial program growth of recent years, the
effectiveness of most organizations will be enhanced by a period
devoted to evaluation, assimilation, and rationalization. Working
closely with other major donors, the United States will seek imple-

5-30

THE BUDGET FOR FISCAL YEAR 1983

mentation of a budget policy of no program growth and significant
absorption of nondiscretionary cost increases.
Other.—Budget authority of $20 million and estimated outlays of
$18 million are requested for the Arms Control and Disarmament
Agency in order to support new negotiations to limit intermediaterange nuclear forces (INF) and strategic arms reduction talks
(START), as well as other arms control negotiations and activities.
Foreign information and exchange activities.—Programs under
this heading are intended to provide the rest of the world with a
better understanding of the United States and its policies, and to
broadcast accurate information to communist countries about
world attitudes toward their governments and about events within
their borders. These programs are important components of the
foreign policy of the United States. Better communication with the
communist and noncommunist peoples of the world calls for an
increase in budget authority for these activities from $588 million
in 1982 to $746 million in 1983. Estimated outlays in 1983 will be
$655 million.
To counter a growing global campaign by the Soviet Union to
undercut United States foreign policy objectives with false and
distorted information, the International Communication Agency
(ICA) will expand its major effort, Project Truth, to reveal Soviet
tactics and to communicate clearly United States policy and objectives.
This budget proposes $640 million of budget authority in 1983 to
conduct and improve all ICA activities, including Voice of America
(VOA) radio broadcasting, academic and leader exchange, seminars, operation of libraries and cultural centers and dissemination
of media material in 125 countries. Included are $115 million to
complete new VOA shortwave broadcasting facilities in Sri Lanka
and Botswana, to renovate Washington studios, and to finance five
medium wave AM transmitters to broadcast throughout the Caribbean and Central America.
Budget authority for the Board for International Broadcasting is
increased to $96 million, which will permit Radio Free Europe/
Radio Liberty, Inc., to improve programs in 8 of the 21 languages
in which it broadcasts to the Soviet Union and Eastern Europe and
to replace old transmission equipment.
To continue a program begun in 1982, $8 million in budget
authority is requested for a grant to a private corporation to broadcast to the Cuban people information about Cuban developments at
home and abroad.
International financial programs.—To support the stable expansion of the international economy, the United States is active in

INTERNATIONAL AFFAIRS

5-31

programs to improve the functioning of the international financial
system, facilitate U.S. participation in world trade, and stabilize
commodity markets. In 1983, budget authority is estimated to be
$6.2 billion and estimated outlays will be $1.5 billion.
Export-Import Bank.—The Bank provides direct loans, loan guarantees, and insurance to facilitate the export of U.S. goods and
services. In recent years, the Bank's programs and subsidies to
domestic businesses and foreign borrowers grew rapidly due to the
previous administration's policy of using the Bank as a vehicle to
match foreign governments' export subsidy programs on an untargeted basis. The budget for 1983 continues the current policy of
limiting the size of the Bank's program while enabling it selectively to meet foreign competition.
Proposed authorizations for the Bank's direct loan program are
$3.8 billion, 13 percent below the level set in 1982 appropriations
legislation. When used selectively, this will be sufficient to meet
the most critical requirements for export financing. Proposed commitments for guarantee and insurance programs are $8.0 billion.
EXPORT-IMPORT BANK AUTHORIZATIONS
(In millions of dollars)
1981
actual

Direct loan obligations
Loan guarantee commitments
Total
Total outlays (net)

1982
estimate

1983
estimate

5,431
7,416

4,400
8,000

3,830
8,000

12,847

12,400

11,830

2,066

1,855

1,918

The budget will support export financing on a substantial scale,
one that is consistent with the Bank's legitimate role in overcoming limitations in private credit markets and in providing support
and leadership in the effort to negotiate an improved international
export credit agreement. The administration has already achieved
significant progress in negotiating international export credit
agreements, which have reduced the high subsidies previously provided by governments in their export financing. The United States
will press for substantial further progress.
Special defense acquisition fund.—To reduce disruptive and
costly diversions of military equipment from U.S. military uses to
meet security assistance needs, a special revolving fund has been
established. This fund permits the procurement of military equipment in advance of the identification of specific country needs. The
equipment can then be transferred to other governments when it is
needed.

5-32

THE BUDGET FOR FISCAL YEAR 1983

Foreign military sales trust fund.—U.S. law requires that sales of
most military equipment and services to foreign governments be
made only by the Federal Government. Foreign governments make
payments to the fund for cash purchases of U.S. military equipment and services. Outlays occur when payments are made to
suppliers. The total estimated outlays of $247 million for 1983 are
the net result of all transactions.
International monetary programs.—The International Monetary
Fund plays a key role in promoting an orderly, market oriented,
and responsible system of international financial transactions. Periodically, the United States participates in increases of the resources that the Fund requires to achieve its goals. Budget authority for the U.S. share of an increase was last appropriated in 1981.
Outlays, which reflect several types of Fund transactions in dollars,
are unpredictable. Over time they should net to zero, the amount
estimated for 1983.
International commodity agreements.—The United States participates in international commodity agreements whose purpose is to
reduce price fluctuations in certain raw materials and thereby
encourage production. In 1982, managers of the International Natural Rubber Agreement began acquiring rubber for a buffer stock,
funded in part by a 1981 U.S. appropriation of $88 million. No
budget authority or outlays are estimated for 1983.
Other.—Other programs include transactions of the exchange
stabilization fund and repayments of loans to the United Kingdom.
The exchange stabilization fund's interest income on holdings of
U.S. securities is estimated to result in negative outlays of —$372
million in 1982 and -$411 million in 1983.
Tax expenditures.—A tax expenditure results from the deferral
of taxes on one-half of the profits derived from the incremental
export sales of domestic international sales corporations (DISCs).
The DISC provision was established to provide an incentive for
domestic firms to increase their exports and to offset partially the
perceived export advantages of other countries tax systems. The
outlay equivalent estimate for the DISC provision is $2.8 billion in
1983.
Americans living and working abroad may exclude up to $75,000
in 1982 and $80,000 in 1983 of foreign earned income as well as
allowances for reasonable housing costs in excess of 16% of
the salary of a civil service grade 14, step one employee. The outlay
equivalent estimate for these benefits is $2.2 million in 1983. This
provision is intended to correct for the perceived inequity resulting
from high living costs abroad and also to encourage firms to main-

5-33

INTERNATIONAL AFFAIRS

tain U.S. nationals abroad. Estimated tax expenditures for international affairs total $4.9 billion in 1983.
Credit programs.—A number of programs in this function are
direct loan and loan guarantee programs. For these programs, the
national needs tables showing budget authority and outlays understate the volume of new activity, because most credit activity does
not result in additions to the budget. The total volume of new
direct loan obligations and new guaranteed loan commitments, as
recorded in the credit budget, is shown in the following table. Total
direct loan obligations are proposed to be $12.2 billion in 1983.
Appropriation bill limitations are requested for $6.9 billion of this
amount. Total guaranteed loan commitments are proposed to fall
to $7.8 billion in 1983, all of which is subject to limitation in
appropriation bills.
As the table shows, guarantees of the foreign military sales
credit program, discussed earlier in this section, are financed as offbudget direct loans by the Federal Financing Bank.
CREDIT PROGRAMS—INTERNATIONAL AFFAIRS
(In millions of dollars)
Guaranteed loan commitments

Direct loan obligations
Program

1981
actual

1982
estimate

1983
estimate

Foreign military sales credit 1
Economic support fund
Bilateral development credit
Public Law 480 food aid
Export-Import Bank
Other international assistance
Off-budget Federal entity:
Federal Financing Bank: 2
Foreign military sales credit

500
274
401
821
5,431
165

750
216
403
754
4,400
171

1,739
895
403
767
3,830
181

2,505

3,320

4,400

Subtotal, gross

10,097

10,014

10,097

10,014

1
Includes
2

1982
estimate

1983
estimate

2,546

3,084

3,929

229

250

7,416

8,000

12,215

10,192

11,334

12,179

2,505

3,320 - 4 , 4 0 0

12,215

7,687

8,014

Less:
Guaranteed loans held as direct loans by the FFB:
Foreign military sales credit
Total, international affairs .

1931
actual

7,779

guarantees of direct loans made by the FFB as shown below.
The FFB is a mechanism to finance direct loans sold or guaranteed by other Federal agencies. The deductions below eliminate overlap with
transactions shown above in this table. See the introduction to Part 5 for further explanation.

5-34

THE BUDGET FOR FISCAL YEAR 1983

GENERAL SCIENCE, SPACE, AND TECHNOLOGY
National Needs Statement
• Assure the long-term
strength of the Nation.

scientific

and

technological

The Federal Role in Meeting the Need:
• Support long-term basic scientific research that is in the
broad national interest.
• Develop a greater understanding of the Earth, the solar
system, and the universe through space research and
technology development.
• Develop a space transportation system, based upon the
Space Shuttle, to meet the future needs of national security, civil and commercial users.
This function includes the National Science Foundation (NSF),
and the space programs of the National Aeronautics and Space
Administration (NASA). (NASA aeronautics programs are included
in the transportation function.) This function also includes basic
physics and life science programs that the administration plans to
transfer from the Department of Energy to the Department of
Commerce, as part of the administration's proposal to dismantle
the Department of Energy. It does not include research for specific
missions, such as defense and medical research, that are included
in other functions. Proposed budget authority for this function is
$7.8 billion in 1983, an increase of $0.8 billion or 12% over 1982.
Advances in science and technology are essential to the security
of our Nation; to the health, welfare, and safety of our citizens; and
to the long-term growth and vitality of our economy.
Most Federal Government support for science and technology,
including basic research, is provided through research and development programs that serve specific missions in areas such as defense, health, and environmental regulation. The Federal Government also supports, through the National Science Foundation,
basic research that is in the broad national interest because the
economic incentives of the market place are insufficient to assure
adequate private sector investment in such research. For similar
reasons, the Federal Government also supports space programs,
including the development of the Space Shuttle. Of all Federal
support for basic research, about one-third is included in this function.
General science and basic research.—The National Science Foundation and the basic physics and life science programs of the De-

5-35

GENERAL SCIENCE, SPACE, AND TECHNOLOGY
NATIONAL NEED: INCREASING BASIC SCIENTIFIC KNOWLEDGE AND USE OF SPACE
(Functional code 250; in millions of dollars)

Major missions and programs

BUDGET AUTHORITY
General science and basic research:
National Science Foundation programs
Department of Commerce general science programs
Smithsonian scientific exchange activities
Subtotal, general science and basic research
Space research and technology:
Space flight
Space science applications and technology
Supporting space activities
Subtotal, space research and technology
Deductions for offsetting receipts
Total, budget authority
OUTLAYS
General science and basic research:
National Science Foundation programs
Department of Commerce general science programs
Smithsonian scientific exchange activities
Subtotal, general science and basic research
Space research and technology:
Space flight
Space science, applications, and technology
Supporting space activities
Subtotal, space research and technology
Deductions for offsetting receipts
Total, outlays
ADDENDUM
Off-budget Federal entity:
Federal Financing Bank:
Supporting space activities:
Budget authority
Outlays .,

1981
actual

1982
estimate

1983
estimate

1984
estimate

1985
estimate

1,036
504
*

1,003
529
*

1,078
601
*

1,078
629
*

1,078
652
*

1,541

1,533

1,679

1,707

1,730

3,187
1,359
450

3,578
1,381
508

3,983
1,526
618

3,783
1,482
748

3,368
1,488
688

4,996

5,467

6,127

6,013

5,544

-5

6,533

6,995

7,800

7,714

7,270

981
501
*

1,101
559
*

982
589
*

1,130
627
*

1,048
652
*

1,483

1,660

1,572

1,757

1,700

3,053
1,384
444

3,462
1,344
481

3,992
1,462
613

3,803
1,495
729

3,476
1,501

4,881

5,287

6,067

6,027

5,684

707

-5

6,359

6,942

7,633

7,779

7,379

111
111

206
206

171
20
112 - 1 9 6 - 2 1 9

partment of Commerce constitute the general science mission of
this function. Budget authority of $1.7 billion is proposed for these
programs in 1983, an increase of 10% over 1982.
National Science Foundation programs.—The principal mission of
the National Science Foundation (NSF) is to support basic research
in all science and engineering disciplines. The Foundation's programs are particularly important because they complement and
balance the support of basic research by mission agencies such as
the Department of Defense and the National Institutes of Health.

5-36

THE BUDGET FOR FISCAL YEAR 1983

The 1983 budget proposes $1.1 billion in budget authority for the
NSF, 7% more than in 1982. The budget provides for growth above
estimated cost increases due to inflation in the natural sciences
and engineering.
The budget also includes continued support of the U.S. Antarctic
program administered by the NSF. The Antarctic Treaty designates the Antarctic as a zone of peaceful international coexistence
to be used for study and research. The NSF program includes
projects aimed at a better understanding of the Antarctic region.
Savings are proposed in the NSF's science education program.
The administration believes that support of education is more appropriately the responsibility of State and local governments. The
NSF research fellowship program will be continued because it complements the Foundation's support of research.
Department of Commerce general science programs.—These programs conduct and support basic research in high energy physics,
nuclear physics, life sciences, and nuclear medicine. The budget
authority request increases to $0.6 billion in 1983 with the major
emphasis on the high energy physics program.
The goal of the high energy and nuclear physics programs is to
achieve a comprehensive understanding of the fundamental constituents of matter and energy and the basic forces that govern
their interaction. The increase provided for high energy physics
will permit more effective utilization of existing research facilities.
It will also provide for continuation of research and development
on improved components and novel concepts that will lead to new
research facilities that are essential to the future vitality of the
field.
Space research and technology.—This part of the function consists of the space-related activities of the National Aeronautics and
Space Administration.
The administration is committed to the timely completion of the
development of the Space Shuttle and the beginning of regular
operations. In addition to the Space Shuttle, a vigorous program of
space activities in space science, applications and technology development is proposed.
Space flight—The space flight programs of NASA are intended
to sustain and improve our ability to supply space transportation
services to government, industry, university, and foreign users.
Space flight includes the development, production, and operation of
the Space Shuttle; procurement and operation of the Europeandeveloped Spacelab for use in the Shuttle for research in nearEarth orbit; and development and procurement of the space vehicles needed to carry satellites into high-Earth orbit and to launch

GENERAL SCIENCE, SPACE, AND TECHNOLOGY

5-37

jjjjjjjjSjSpace Flight (Primarily Space Shuttle)

V////////////A

Space Science, Applications,
Technology, and Other

General Science and Basic Research

planetary exploration spacecraft. Budget authority of $4.0 billion is
proposed for these programs in 1983, $0.4 billion more than in
1982.
The Space Shuttle is the world's first reusable manned space
transportation system, and will routinely launch, retrieve, repair
and service satellites in space. The Shuttle will be valuable to a
variety of domestic and foreign users, who anticipate its availability for their needs in the early 1980s. It will also be important in
meeting national security requirements.
The Shuttle is expected to be ready for operations beginning in
1983. The second successful launch of the Space Shuttle Columbia
clearly demonstrated that a manned reusable space vehicle is practical.
While the Shuttle is expected to replace most expendable launch
vehicles when it is operating at full capacity, the budget includes
funding for efforts to assure the availability of expendable vehicles
until the complete Shuttle fleet is able to replace them.
Funding is proposed to complete development and production of
the Space Shuttle and to prepare for the regular operations necessary to meet civilian and national security commitments. Funds
are also included to demonstrate the ability to repair a damaged

5-38

THE BUDGET FOR FISCAL YEAR 1983

satellite while in orbit, and for modifications to enable the Shuttle
to lift heavier payloads. Budget authority of $3.0 billion is proposed
for the Space Shuttle program in 1983, compared to $2.5 billion in
1982.
Procurement of a second Spacelab is underway, with the initial
flight of the first Spacelab planned in the fall of 1983. An upper
stage booster to launch high-Earth orbit and interplanetary missions from the Shuttle is being developed.
Space science, applications and technology.—Programs in this cat-

egory include space science activities to study the solar system and
the universe; the development, launch and demonstration of satellite systems for agricultural, geological, weather, and communications uses; and long-range basic space research and technology
programs.
Budget authority of $0.8 billion is proposed for space science in
1983, an increase of 18% over 1982. The program includes the
study of the solar system and the universe, (using satellites in
Earth orbit and spacecraft sent to the planets and their moons),
and life sciences research related to the space environment. As
part of such scientific investigations, the administration supports
the continued development of projects such as the space telescope,
the gamma ray observatory, Spacelab astronomy experiments, and
the Galileo mission to Jupiter.
The space telescope program is intended to place a telescope in
orbit around the Earth in 1985, allowing the observation of objects
in space unobstructed by the Earth's atmosphere and clouds. The
space telescope promises significant advances in astronomy, with
far better resolution than Earth-based telescopes.
The gamma ray observatory, which will allow the investigation
of distant objects and phenomena in deep space through study of
the gamma ray region of the electromagnetic spectrum, is to be
launched in late 1988. Spacelab is designed to be reusable and will
be flown repeatedly on the Space Shuttle to conduct advanced
investigations of the sun and the universe from Earth orbit. In
addition to these major flight programs, funding is proposed for
experiments to be flown on satellites, balloons, aircraft, and sounding rockets.
Exploration of the solar system will continue with projects under
development and spacecraft already in flight such as the Galileo
project being developed to explore Jupiter and its moons and Voyager on its way to Uranus.
Ground-based research will continue to analyze data from these
missions and to assess potential future missions that are costeffective. The Venus orbiting imaging radar (VOIR) mission is
being cancelled to permit adequate funding of higher priority space
science missions.

GENERAL SCIENCE, SPACE, AND TECHNOLOGY

5-39

Budget authority of $0.5 billion is proposed for space applications
in 1983, maintaining about the same program level as in 1982. The
budget requests continued funding for research activities to improve understanding of the Earth's resources, climate, weather,
and pollution; to develop agriculture forecasting techniques based
on satellite data; to advance knowledge in materials science
through low gravity experiments; and to extend the range of satellite communications technology.
Development of the fourth and fifth in the series of Landsat
satellites that collect data from space about the Earth's land resources is continuing. Landsat-D, the fourth in the series, is scheduled for launch in 1982. These advanced satellites will improve
substantially the quality of Earth resources data gathered from
space for a variety of applications. In 1983, the administration
proposes that the National Oceanic and Atmospheric Administration (NOAA) assume responsibility for operating an Earth-resources satellite data system based on the Landsat-D series of
satellites.
The climate-observing program is designed to provide global
measurements of the level of solar and cosmic radiation absorbed
by the Earth. Observations from satellites help improve our understanding of the factors that determine the Earth's climate.
Budget authority of $0.2 billion is proposed for basic space research and technology programs, an increase of 9% over 1982. The
increase will provide for a strong program in the basic space disciplines including propulsion, electronics, and materials, and assure
a sound scientific foundation for the future of the space program.
Supporting space activities.—Budget authority of $0.6 billion is
proposed for spacecraft tracking and data gathering and processing
support for the entire NASA space program, an increase of 22%
over 1982. This increase is primarily for the initial lease payments
for the new tracking and data relay satellite system (TDRSS). The
first TDRSS satellite is proposed for launch from the Shuttle in
early 1983.
Tax expenditures.—In addition to direct Federal funding of basic
research, the tax code encourages private sector research and development, including basic research, by allowing expenditures for
such purposes to be deducted as a current expense. The 1983 outlay
equivalent estimate for this provision is —$1.3 billion. A new 25%
tax credit for increased research and development expenditures is
expected to encourage more investment by industry in research
and development. The outlay equivalent estimate is $1.1 billion in
1983; tax expenditures for general science, space, and technology
are estimated to total -$0.2 billion in 1983.

5-40

THE BUDGET FOR FISCAL YEAR 1983

Credit programs.—Long-term lease commitments to finance the
construction and acquisition of tracking and data relay satellites
for NASA were made in 1976. New commitments in 1983 for this
system are expected to be $171 million. These commitments result
in loan guarantees and off-budget outlays by the Federal Financing
Bank. Lease payments by NASA are expected to commence in
1983, when the system begins operations.
CREDIT PROGRAMS—GENERAL SCIENCE, SPACE AND TECHNOLOGY
(In millions of dollars)
Direct loan obligations
Program

NASA satellite leases l
Off-budget Federal entity:
Federal Financing Bank: 2
NASA satellite leases
Subtotal, gross

1981
actual

1982
estimate

Guaranteed loan commitments

1983
estimate

111

206

171

111

206

171

Less:
Guaranteed loans held as direct loans by the FFB:
NASA satellite leases
Total, general science, space and technology
1

1981
actual

-111
HI

206

1982
estimate

206

-206

1983
estimate

171

-171

171

Includes guarantees of direct loans made by the FFB as shown below.
2
The FFB is a mechanism to finance direct loans sold or guaranteed by other Federal agencies. The deductions below eliminate overlap with
transactions shown above in this table. See the introduction to Part 5 for further explanation.

ENERGY

5-41

ENERGY
National Needs Statement:
• Produce and use energy efficiently.
The Federal Role in Meeting the Need:
• Establish sound, stable public policies that encourage
economically efficient energy production and use.
• Adopt environmental and nuclear safety regulations that
are rational, realistic, and effective.
• Focus Government spending for energy on those few
areas where the private sector lacks sufficient incentive
to invest, primarily long-term research and emergency
petroleum stockpiles.
Most decisions on producing and using energy in the economy
are made in response to market forces, not by the Federal Government. Instead of improving the Nation's energy outlook, Federal
Government programs during the 1970's actually reduced our ability to respond to the supply disruptions and rapid increases in
prices that occurred during that decade. Federal energy policies,
especially price controls on domestically-produced crude oil, dulled
market incentives and slowed the response of our economy to
changes in world oil markets.
The Federal Government has one overriding responsibility with
respect to energy: to establish public policies, based on sound economic principles, that reward and encourage efficient energy production and use. The President took a major step in fulfilling this
responsibility when he removed controls from oil markets in January 1981.
The results have been impressive. In response to market forces:
• net oil imports, other than oil purchased for the strategic petroleum reserve, declined from 7.9 million barrels per day in 1979
to about 5.1 million barrels per day in 1981;
• total oil consumption has been reduced 14% from the amount
used 2 years ago;
• less fuel is being used to run a larger economy: this year, 2% less
energy was used to provide 2% more goods and services than
last year;
• oil exploration and drilling activity are setting all-time records,
increasing about 40% this year alone; and
• world oil prices have begun to decline.
The Federal Government has limited responsibilities in energy
beyond its overriding responsibility to let the market economy
360-000

0 - 8 2 - 1 0

5-42

THE BUDGET FOR FISCAL YEAR 1983

function. The proposals in this budget focus Government spending
on meeting those responsibilities. They include adopting environmental and nuclear safety regulations that are rational, realistic
and effective; providing a strategic petroleum reserve to help deal
with possible severe disruptions in world oil markets; and supporting limited research and development that the private sector is
unlikely to undertake because of its long-term, high risk characteristics.
In view of the limited responsibilities and role of the Federal
Government in energy, it is wasteful and inappropriate to maintain a Cabinet-level Department of Energy. The President will
submit legislation to the Congress that will transfer essential programs of the Department of Energy primarily to the Departments
of Commerce and Interior. The budget proposals in this function
are identified below by the department and agency that are proposed to be responsible for them in 1983.
The budget proposes $4.3 billion in budget authority in 1983 for
programs included in this function. Outlays are estimated to be
$4.2 billion, a 34% reduction from estimated 1982 levels. Off-budget
outlays, including oil purchased for the strategic petroleum reserve, are expected to be $8.6 billion in 1983. There are also approximately $8.8 billion in energy tax expenditures and $11.2 billion in direct loan obligations classified in this function.
Energy supply.—The Federal Government's energy supply programs include research and development on new energy technologies, direct energy production, and incentives for nonconventional
fuels.
Federal spending for energy research and development programs
is proposed to be administered by the new Energy Research and
Technology Administration in the Department of Commerce. These
programs are designed to complement, rather than substitute for,
private sector spending. In keeping with this policy, estimated
outlays for energy supply research and development decrease from
$3.6 billion in 1982 to $2.1 billion in 1983.
Outlays for fossil, solar, geothermal, and other non-nuclear research and development programs are estimated to decrease from
$1.7 billion in 1982 to $0.7 billion in 1983 on the assumption that
the Federal Government will concentrate its efforts on basic and
other long-term research and technology development. The budget
also includes funds for continued operation of unique experimental
and test facilities.
This emphasis on long-term research and development includes
continued support for nuclear energy programs, particularly magnetic fusion and technology development for nuclear breeder reactors. Neither of these technologies is at the stage where significant
industry investment can be expected. Outlays for magnetic fusion

5-43

ENERGY
NATIONAL NEED: ENERGY
(Functional code 270; in millions of dollars)

Major missions and programs

BUDGET AUTHORITY
Energy supply:
Research and development:
Existing law
Proposed legislation

1981
actual

1982
estimate

1983
estimate

1984
estimate

1985
estimate

3,808

2,755

2,010
185

2,099

2,101

3,808

2,755

2,195

2,099

2,101

442
-655
-96
-1,274

1
-908
1,841

848
2,071

24
-806
1,886

16
-781
1,892

2,224

3,689

3,418

3,203

3,228

728

163

Emergency energy preparedness

2,791

191

242

633

235

Energy information, policy, and regulation:
Existing law
Proposed legislation

1,089

871

772
-60

809
-60

764
60

1,089

871

712

749

704

Subtotal research and development
Direct production (net):
Uranium enrichment
Petroleum reserves
Power marketing
Incentives for nonconventional fuel production
Subtotal, energy supply
Energy conservation

Subtotal, energy information, policy, and regulation
Deductions for offsetting receipts

-62

-69

Total, budget authority .

6,769

4,846

4,330

4,536

4,102

in 1983 are estimated to be $0.4 billion, roughly equal to 1982
levels. Outlays for breeder reactors are estimated to be $0.6 billion
in 1983, compared to $0.7 billion in 1982. The breeder program will
continue its focus on the construction of the Clinch River breeder
reactor, now scheduled to begin operations before 1990.
There is a clear Federal responsibility for assuring permanent
disposal of nuclear waste. Estimated outlays of $50 million are
included for generic research on nuclear waste. The budget assumes the enactment of legislation establishing a user fee on utilities for nuclear waste disposal. The fee is expected to yield $0.3
billion in 1983 to support development and operation of geological
repositories for the disposal of nuclear waste.
To provide general support for all energy technology development, outlays of $0.3 billion in 1983 are estimated for basic energy
sciences. This program supports basic research in scientific disciplines that have broad applicability to the development of new
energy technologies. Drawing on the resources available at major
laboratories and universities, research will continue in fields such
as chemical sciences, atomic physics, and basic engineering studies.
Such research provides the critical base of knowledge applicable to
future technology development by both Government and industry.

5-44

THE BUDGET FOR FISCAL YEAR 1983
NATIONAL NEED: ENERGY—Continued
(Functional code 270; in millions of dollars)

Major missions and programs

OUTLAYS
Energy supply:
Research and development:
Existing law
Proposed legislation
Subtotal, research and development
Direct production (net):
Uranium enrichment
Petroleum reserves
Power marketing
Incentives for non-conventional fuel production..
Subtotal, energy supply
Energy conservation
Emergency energy preparedness..
Energy information, policy, and regulation:
Existing law
Proposed legislation
Subtotal, energy information, policy, and regulationDeductions for offsetting receipts
Total, outlays
ADDENDUM
Off-budget Federal entities:
Rural electrification and telephone revolving fund:
Budget authority
Outlays
Synthetic Fuels Corporation:
Budget authority
Strategic Petroleum Reserve:
Budget authority
Outlays
Federal Financing Bank:
Rural electrification and telephone revolving fund:
Budget authority
Outlays
Tennessee Valley Authority (power program):
Budget authority
Outlays
Alternative fuels production:
Budget authority
Outlays
Other energy:
Budget authority
Outlays

1982
estimate

1983
estimate

1984
estimate

3,893

3,615

2,255
-115

2,147
-272

2,226
-329

3,893

3,615

2,140

1,875

1,897

341
-624
1,658
93

-271
-736
1,824
123

-141
-803
1,730
39

-64
-805
1,570
38

84
-819
1,527

5,362

4,554

2,965

2,614

2,730

757

736

326

167

3,280

227

302

375

410

940

964

750
-60

779
-60

734
-60

940

964

690

719

674

1981
actual

1985
estimate

-62

-69

10,227

6,413

4,215

3,807

3,756

3,684
2,834

2,074
2,774

1,935
2,297

2,440
2,196

4,690
4,601

4,934
4,932

4,661
4,654

4,020
4,003

3,827
3,796

3,624
237

4,285
198

5,289
278

6,317
236

1,302
252

470
470

915
915

987
987

795
795

-7

-10

28
28

The Federal Government's direct production programs include enriching and selling uranium for use in military programs and
civilian nuclear power plants. Outlays result from operating three

ENERGY

5-45

existing enrichment plants; building and equipping a fourth, more
efficient plant; and from investment in the development of an
improved uranium enrichment process. Revenues of $2.0 billion
from the sale of enriched uranium are expected to more t h a n offset
the outlays for this program in 1983. Responsibility for uranium
enrichment is proposed for transfer to the Energy Research and
Technology Administration in the Department of Commerce.
Receipts from the sale of oil and gas produced at the naval
petroleum reserves in California and Wyoming are expected to
exceed $1.6 billion, more t h a n offsetting $0.3 billion in production
cost outlays. Responsibility for this program is proposed to be in
the Interior Department beginning in 1983.
The Federal power marketing programs, which include the Tennessee Valley Authority and the five regional administrations t h a t
sell and transmit power from Federal hydroelectric dams, are generally unchanged from prior years, with two exceptions.
Outlays for the Tennessee Valley Authority power program are
estimated to fall from $1.9 billion in 1982 to $1.6 billion in 1983,
reflecting changed construction schedules for major facilities.
Among the five regional agencies, the Bonneville Power Administration will continue its legislatively-mandated efforts to assure
t h a t the electric power needs of the Pacific Northwest are satisfied.
This will require $0.5 billion in budget authority and $0.3 billion in
estimated outlays in 1983. Outlays for power marketing programs
are more t h a n offset by receipts from sales of power. Responsibility
for the power marketing administrations is proposed for transfer to
the Interior Department in 1983.
Incentives for non-conventional
fuel production are primarily
price, purchase, and loan guarantees t h a t the Synthetic Fuels Corporation may employ to demonstrate the feasibility of producing
synthetic fuels commercially.
Credit programs.—Federal
credit activities in this function are
summarized in the accompanying table. The Federal Financing
Bank (FFB) finances a significant amount of credit activity in the
energy function as off-budget direct loans. Two alternative fuel production projects will continue to be funded through the FFB, and
the FFB will offer continued support to the Rural Electrification
Administration and the nuclear fuel leasing program of the Tennessee Valley Authority. As part of the administration's Federal
credit control program, limitations will be proposed for gross obligations for new Rural Electrification Administration direct loan
obligations and new guaranteed loans commitments for 1983.
Energy conservation.—The
administration has promoted the efficient use of energy and other resources by ending the system of
controls on oil markets. This established a realistic oil pricing

5-46

THE BUDGET FOR FISCAL YEAR 1983

policy for the first time in nearly a decade. Investments in modernized plants, equipment, and homes are invariably accompanied
today by investments to use energy more efficiently.
The response of the economy to decontrolled oil prices has demonstrated that market forces are effective in stimulating the efficient use of energy. In 1979, overall U.S. oil consumption was 18.5
million barrels of oil per day. In 1981, oil consumption had fallen to
16.0 million barrels per day in response to market forces. The
amount of energy needed per dollar of gross national product, a
key measure of energy efficiency, has fallen each year since energy
prices first increased in 1973. Gasoline consumption has decreased
from 7.4 to 6.6 million barrels per day in the past 3 years. Homeowners and others in the residential sector have similarly reduced
their use of home heating oil by some 500,000 barrels per day in
response to market forces. Energy users have invested billions of
dollars each year to save energy because those investments make
sound economic sense.
CREDIT PROGRAMS—ENERGY
(In millions of dollars)
Guaranteed loan commitments

Direct loan obligations
Program

Tennessee Valley Authority 1
Alternative fuels production *
Biomass energy development .
Geothermal and other
Off-budget Federal entities: *
Rural electrification and telephone revolving fund 2 ..
Federal Financing Bank: 3
Tennessee Valley Authority
Rural electric and telephone revolving fund
Alternate fuels production
Other energy programs

Subtotal, gross
Less:
Loan assets sold to the FFB and associated
guarantees:
Rural electrification and telephone revolving
fund
Guaranteed loans held as direct loans by the FFB:
Tennessee Valley Authority .
Rural electrification and telephone revolving
fund ....
Alternate fuels production and other
Total, energy
1
Includes
2
Includes
3

1982
estimate

1981
actual

1983
estimate

1981
actual

1982
estimate

1983
estimate

102

3,624
3,253

700
2

1,100

700

5,131

4,245

3,760

3,624
4,690

5,289
4,661
915

4,285
4,934
470
28

9,538

10,941

11,707

12,053

9,233

9,049

-683

-623

-525

-683

-623

-525

4,285

5,289

-3,624 -4,285 -5,289
-4,007
-18
8,855

10,317

11,182

3,721

4,311 - 4 , 1 3 6
915
-498
-484

-1,816

guarantees of direct loans made by the FFB as shown below.
loans sold to the FFB as loan assets, and guarantees of those loan assets. The FFB purchases are shown below.
The FFB is a mechanism to finance direct loans sold or guaranteed by other Federal agencies. The deductions below eliminate overlap with
transactions shown above in this table. See the introduction to Part 5 for further explanation.

ENERGY

5-47

Realistic energy prices have eliminated the need for much Government spending on conservation. The budget authority request
for energy conservation is reduced from $0.2 billion enacted in 1982
to $27 million in 1983. Outlays are expected to be $0.3 billion in
1983, $0.2 billion of which is for the final year of funding for grants
for low income home weatherization and energy saving investments in schools and hospitals. The remaining spending under
these grants is proposed to be administered by the Department of
Commerce. The remaining $0.1 billion in outlays is for limited,
long-term research on energy use that the private sector is unlikely to undertake. All energy conservation research is proposed to be
administered by in the new Energy Research and Technology Administration in the Department of Commerce.
Emergency energy preparedness.—Emergency energy preparedness programs are intended to help the economy adjust to severe
disruptions in the supply of oil. A stockpile of oil (called the strategic petroleum reserve) that can be used in the event of such a
disruption is the major program for this purpose.
The Omnibus Budget Reconciliation Act of 1981 moved outlays
for oil purchases for the reserve off-budget beginning in 1982. Offbudget outlays for the reserve are estimated to be $2.8 billion in
1982 and 1983. The reserve is expected to be filled to the limit of its
capacity of 267 million barrels of oil at the end of 1982 and 343
million barrels at the end of 1983.
Outlays for construction of the reserve, which are included in the
budget totals, are estimated to be $0.2 billion in 1982 and $0.3
billion in 1983.
Energy information, policy, and regulation.—Federal outlays for
energy information, policy analysis, and regulation are estimated
to decline from $1.0 billion in 1982 to $0.7 billion in 1983. Responsibilities for energy information and policy are to be administered by
the Department of Commerce.
The administration is proposing that the Federal Energy Regulatory Commission, which is responsible for regulating natural gas
and oil pipelines, hydroelectric power and electric power transmission, be re-established as an independent agency. Estimated outlays
of $90 million for the Commission will be partially offset by receipts of $60 million that are proposed to be raised by levying user
fees on industry. The Department of Justice is to take responsibility for the orderly phase-out of the petroleum regulatory enforcement program. The Alaska gas pipeline inspector will continue to
oversee planning and construction of the portion of the Alaska
natural gas pipeline that runs through the United States.

5-48

THE BUDGET FOR FISCAL YEAR 1983

The budget includes estimated outlays of $0.5 billion in 1983 for
the Nuclear Regulatory Commission to support the Commission's
work in improving regulation of nuclear power.
The administrative and other overhead costs of the Department
of Energy are classified in this category. Dismantling the Department, together with other program reductions noted above, is expected to reduce 1983 outlays by approximately $1.0 billion below
1982 levels. Associated reductions in Federal employment are expected to be about 3,800 positions.
Tax expenditures.—To encourage energy exploration and production, the tax code permits certain capital costs to be deducted as
current expenses rather than amortized over the useful life of the
property. In addition, extractive industries are generally permitted
to use percentage depletion rather than cost depletion. The outlay
equivalent estimates of expensing exploration and development
costs, and the use of percentage depletion are $5.6 billion and $2.9
billion, respectively in 1983.
A variety of residential tax incentives stimulate energy conservation and encourage conversion to energy sources other than oil or
natural gas. The outlay equivalent estimates for these residential
energy provisions are $0.5 billion and $0.4 billion respectively in
1983.
Business investments in specified energy property are also eligible for special tax credits, in addition to the normally available
investment tax credit. The outlay equivalent estimates for these
alternative, conservation and new technology credits are $0.8 billion in 1983.
However, in the light of the substantial benefits provided by the
Economic Recovery Tax Act of 1981 and the administation's commitment to free market forces, certain of these provisions are no
longer considered warranted. Accordingly, the administration is
proposing to eliminate them.
Tax expenditures for energy exploration, production and conservation total $8.8 billion in 1983.

NATURAL RESOURCES AND ENVIRONMENT

5-49

NATURAL RESOURCES AND ENVIRONMENT
National Needs Statement
• Ensure responsible management and conservation of natural resources held in common—air, water, and public
lands.
The Federal Role in Meeting the Need• Work with State governments to ensure a clean environment, with special emphasis on controlling emissions of
hazardous wastes, pesticides, and toxic substances.
• Manage public lands, water, timber, and minerals to balance national needs for their preservation, conservation,
and economic development.
• Encourage increased knowledge and understanding of
the atmosphere, and of the Earth's structure, environment, and natural resources.
Major policy changes instituted by the administration over the
past year include:
• Simplification and provision of increased State and local flexibility in administering pollution control programs.
• Turning over regulation of surface coal mining and mined
land reclamation to State governments as the appropriate
level of government to administer this important program.
• Initiation of a 5-year program to rehabilitate and improve the
maintenance of the national parks for the enjoyment of the
American public.
• Streamlining regulations to make appropriate public land
available for mineral exploration and development, encouraging additional production of energy and other strategic minerals.
• Terminating River Basin Commissions. In most cases they
have been replaced by locally supported organizations.
Pollution control and abatement—Efforts to control and reduce
pollution of air, water, and land are carried out both through
direct Federal programs and through Federal financial assistance
to State and local governments. Estimated outlays should decrease
by 14% to $4.6 billion in 1983, mostly due to the decline in sewage
treatment plant construction.
Regulatory, enforcement and research programs.—The Environ-

mental Protection Agency (EPA) will continue to meet its statutory
mandates while emphasizing three new objectives: reducing the

5-50

THE BUDGET FOR FISCAL YEAR 1983

regulatory burden on States, local governments, and regulated industries; concentrating enforcement actions against the most environmentally significant sources; and improving the agency's management efficiency by eliminating duplicative programs, functions,
and responsibilities. Efforts will continue to integrate EPA's regulation of toxic pollutants emissions into air, water, and land in a
more cost-effective manner.
Research will concentrate on improving the scientific and technical basis of the EPA's regulatory decisions. It will emphasize support of regulatory programs that either meet statutory requirements and deadlines or focus on the most pressing environmental
problems. For example, the administration expects to accelerate
the multi-agency research effort on the sources, transport, and
effects of acid rain by increasing budget authority for 1983 by 20%
to $22.2 million.
Hazardous substance response fund.—Estimated outlays for this
program in 1983 are $187 million, an increase of 60% over the 1982
level. The increase reflects EPA's progress in implementing the
new "Superfund" program. The hazardous substance response trust
fund provides money primarily for cleaning up abandoned hazardous waste sites and for responding to hazardous chemical spills.
The fund also finances EPA's vigorous enforcement program to
secure cleanup by responsible private parties and to recover costs
from responsible parties when fund monies are used to finance
cleanup. Taxes on the oil and chemical industries provide most of
the financing for these activities.
Sewage treatment plant construction grants.—In recognition of
program reforms enacted in December 1981, the administration
requests 1982 and 1983 budget authority of $2.4 billion for grants to
States and localities to construct sewage treatment facilities. The
decrease in estimated outlays from 1982 to 1983, from $4.1 billion
to $3.4 billion, accounts for 91% of the change in outlays for all
pollution control programs. The recently enacted reforms are essential to the long-run integrity of the program because they will
concentrate limited funds on the pollution problems of existing
populations.
This program may be included in the Federalism initiative described in Part 3 of this Budget. The program's continuation in
1984 and beyond will depend on decisions made by States and
localities as part of this initiative.
Water resources.—This budget provides funds to the Army's
Corps of Engineers, Interior's Bureau of Reclamation, and Agriculture's Soil Conservation Service to continue construction already in
progress to develop water resources. The administration proposes

5-51

NATURAL RESOURCES AND ENVIRONMENT
NATIONAL NEED: USING AND PRESERVING NATURAL RESOURCES AND IMPROVING THE
ENVIRONMENT
(Functional code 300; in millions of dollars)
Major missions and programs

1981
actual

1982
estimate

1983
estimate

1984
estimate

1985
estimate

BUDGET AUTHORITY
Pollution control and abatement:
Regulatory, enforcement and research programsHazardous substance response fund
Oil pollution fund
Sewage treatment plant construction grants

1,281
68
28
1,605

1,045
189
5
2,400

934
229
3
2,400

934
300
3
2,000

934
355
3
2,000

Subtotal, pollution control and abatement....

2,981

3,639

3,566

3,237

3,292

4,163

3,916

3,824
-448

4,067
-458

4,125
-475

4,163

3,916

3,376

3,609

3,650

Conservation and land management:
Management of national forests, cooperative forestry and
forestry research
Management of public lands
Mining reclamation and enforcement
Conservation of agricultural lands
Other, including offsetting receipts

2,054
496
178
579
-558

1,759
510
161
570
-969

1,783
455
160
428
-1,433

1,802
456
176
418
-1,529

1,782
463
187
418
-1,551

Subtotal, conservation and land management..

2,749

2,031

1,393

1,324

1,298

319
27

176
33

942

1,018

1,092
-5

1,104
-10

1,123
-10

1,287

1,228

1,156

1,163

1,182

1,500

1,548

1,457
13

1,477
29

1,503
31

1,500

1,548

1,470

1,505

1,535

Water resources:
Construction, operations, and maintenance, etc..
Proposed legislation (navigation user fees)
Subtotal, water resources..

Recreational resources:
Federal land acquisition*
Urban park and historic preservation funds..
Operation of recreational resources:
Existing law
Proposed legislation (user fees)
Subtotal, recreational resources
Other natural resources:
Existing law
Proposed legislation
Subtotal, other natural resources..
Deductions for offsetting receipts:
Existing law
Proposed legislation
Subtotal, deduction for offsetting receipts..
Total, budget authority
1

-1,553 - 2 , 3 3 0 -2,409 -2,948 -3,483
-111 -144 -161
-1,553 -2,330 -2,520 -3,092 -3,644
11,128

10,030

8,440

7,746

7,313

Includes budget authority in 1981 from State outdoor recreation grants funded by the land and water conservation fund.

funding at a pace that assures the timely completion of highpriority facilities, such as municipal water supply and hydroelectic
power.
After consultation with local project sponsors, the administration
will request appropriations of up to $48 million to initiate construction by the Corps of Engineers and the Bureau of Reclamation of

5-52

THE BUDGET FOR FISCAL YEAR 1983
NATIONAL NEED: USING AND PRESERVING NATURAL RESOURCES AND IMPROVING THE
ENVIRONMENT—Continued
(Functional code 300; in millions of dollars)
Major missions and programs

1981
actual

1982
estimate

1983
estimate

1984 1985
estimate
estimate

OUTLAYS
Pollution control and abatement:
Regulatory, enforcement and research programs..
Hazardous substance response fund
Oil pollution fund
Sewage treatment plant construction grants

1,264
1
23
3,881
5,169

1,207
117
11
4,050
5,384

1,070
187
6
3,350
4,613

967
255
3
2,840
4,065

944
316
3
2,680
3,943

4,215

4,106

3,855
-448

3,884
-458

3,922
-475

4,215

4,106

3,407

3,426

3,447

1,920
492
131
597
-565

1,968
489
137
572
-917

1,834
429
146
540
-1,427

1,768
430
139
450
-1,522

1,747
437
167
446
-1,546

Subtotal, conservation and land management..

2,576

2,249

1,521

1,265

1,252

495
71

482
109

271
61

1,066

1,057

1,056
-5
1,383

1,044
-10
1,226

1,075
-10
1,194

1,485

1,569

1,494
13

1,441
29

1,508
31

1,485

1,569

1,507

1,469

1,539

-1,553

-2,330

Subtotal, pollution control and abatement...
Water resources:
Construction, operations, and maintenance, etc....
Proposed legislation (navigation user fees)

Subtotal, water resources..

Recreational resources:
Federal land acquisition 1
Urban park and historic preservation funds..
Operation of recreational resources:
Existing law
Proposed legislation (user fees)
Subtotal, recreational resources
Other natural resources:
Existing law
Proposed legislation
Subtotal, other natural resourcesDeductions for offsetting receipts:
Existing law
Proposed legislation
Subtotal, deductions for offsetting receipts.
Total, outlays
1

1,632

184

126
3

-2,409 -2,948 -3,483
-111 -144 -161

-1,533 -2,330 -2,520 -3,092 -3,644
13,525 12,626

9,911

8,359

7,732

Includes outlays for State outdoor recreation grants financed by the land and water conservation fund.

new water resource projects that meet the administration's criteria
for non-Federal financing and cost-sharing and that are economically and environmentally sound.
The administration has reduced from prior years' levels the
budget for maintenance of shallow draft harbors, waterways, and
commercial ports. The administration believes users should pay for

NATURAL RESOURCES AND ENVIRONMENT

5-53

most of these services and has proposed user charge legislation
that would require non-Federal interests to pay the costs of Federal
commercial navigation projects, such as deep draft ports and
inland waterways. In the absence of user fees, adequate funds are
available for maintenance activities only on waterways and ports
with heavy commercial use.
The administration will increase its request for appropriations
for navigation project maintenance when sufficient offsetting revenues become available from user charge legislation now being
considered by the Congress.
Conservation and land management—Changes in these programs
reflect the administration's efforts to improve the management and
productivity of the national forests and public lands, to streamline
major leasing programs, and to place maximum responsibility with
the States for coal surface mining regulatory and reclamation
programs.
Management of national forests, cooperative forestry, and forestry

research.—Proposed budget authority in 1983 for direct management of national forests is $70 million more than in 1982, after
adjusting for variations in funds for fighting forest fires.
The administration proposes a major new effort to improve the
productivity of national forest management by carefully controlling
costs, adjusting management procedures, and paying close attention to benefit-cost relationships. Proposals are directed at producing timber, recreation, and other outputs at the lowest costs. Careful attention will be given to both market values, such as timber,
and non-market values, such as water quality, and their associated
costs. Receipts—from timber sales, planned at 12.3 billion board
feet (BBF), and other activities—are estimated to be $2.1 billion in
1983. This quantity of timber sales compares to estimated 1982
sales of 11.0 BBF. Sales to be made in 1983, together with the 33.6
BBF uncut volume under contract at the end of 1982, should be
adequate to respond to anticipated, substantial increases in housing
construction by 1983. The proposed budget provides flexibility to
further increase sales in subsequent years if necessary by allowing
for advance work on sale preparation and road construction.
The 1983 budget proposes reductions in budget authority of $12
million for forestry research and $16 million for cooperative forestry from 1982 levels. Research projects from which businesses benefit directly will be sharply curtailed. The private sector can and
should finance such commercial research. Grants to States for
various management and protection activities on non-Federal lands
will be reduced.

5-54

THE BUDGET FOR FISCAL YEAR 1983

Management of public lands.—The Bureau of Land Management
administers approximately 325 million surface acres of public
lands, about 370 million acres of federally owned subsurface mineral rights, and another 1.1 billion acres of the Outer Continental
Shelf used for mineral exploration and development. These public
lands are managed for a variety of purposes, including recreation,
energy and mineral development, timber production, wilderness
preservation, grazing, and watershed and wildlife protection.
Estimated outlays increase in 1983 for the Outer Continental
Shelf oil and gas leasing program, due to acceleration of both the
number of sales planned (9) and the number of acres offered. Major
leasing programs to develop tar sands and oil shale are underway.
Streamlined leasing procedures allow reduced funding for the coal
leasing program without affecting the two major sales scheduled in
1983. Participation of permittees in projects to maintain and improve rangelands is increasing, thereby reducing costs to the Federal Government.
Revenues generated from activities on public lands, which also
return payments to State and local governments, are deposited in
the general fund of the Treasury to lower the national debt, or are
earmarked for specific program uses. Actual receipts are predicted
to increase in 1983 above 1982 due to higher revenues from oil and
gas rents and royalties (see Part 4 of the Budget).
Mining reclamation and enforcement.—The 1983 budget request
returns maximum responsibility to the States for regulation of
surface coal mining and reclamation of mined lands. Estimated
outlays of $146 million in 1983 include $80 million from the abandoned mine fund. An expected carryover of reclamation grant
budget authority from 1982 would supplement requested 1983
budget authority of $78.5 million. The abandoned mine fund provides grants to encourage the 26 coal-producing States to assume
primary responsibility for reclamation of lands mined for coal and
abandoned prior to 1977. States are also eligible for grants to
finance partially programs that regulate coal mining on private
and State lands. In addition, States will be reimbursed if they
agree to regulate mines located on Federal lands.
Conservation of agricultural lands.—Proposed budget authority
for these programs in 1983 is $428 million, compared with $570
million in 1982. Technical and financial assistance for soil and
water conservation will concentrate on high priority soil and water
resource problems. This will achieve the major conservation benefits achieved under current funding levels. To improve the productivity of conservation activities, the administration proposes $10
million in budget authority for a pilot program of matching grants
to induce States to increase technical assistance for soil and water

NATURAL RESOURCES AND ENVIRONMENT

5-55

conservation in high priority problem areas. This will enable State
governments to play a significantly greater role in managing and
allocating funds for conservation programs.
Other conservation and land management—The National Oceanic and Atmospheric Administration (NOAA) provides grants to
States to develop and carry out their coastal zone management
(CZM) programs and to mitigate the socio-economic and environmental impacts of coastal energy development activities. NOAA
also protects unique estuarine and marine areas through its sanctuaries program. A total of 27 States (87% of the U.S. coastline)
already have received 8 years of Federal assistance for coastal zone
management and have coastal zone management plans approved
by NOAA.
States and their localities should assume responsibility for management of coastal zones. The Federal Government has provided
more than adequate funding for the States to develop and implement their CZM programs. Furthermore, offshore oil and gas developments are less than originally anticipated and States and localities have the capability to handle them. The administration requests no budget authority for CZM State grants or coastal energy
impact assistance grants in 1983. The sanctuaries program is proposed to continue at a reduced level of budget authority of $6
million in 1983. Total outlays in 1983 for these programs are estimated to be $16 million.
Recreational resources.—The Federal Government operates and
preserves national parks, recreation areas, historic sites, wild and
scenic rivers, fish hatcheries, and wildlife refuges. The administration's policy is to improve and maintain nationally significant recreation resources rather than expand the Federal estate. The administration also is leaving to State and local governments decisions concerning acquisition and development of their own parks
and other recreational resources. The administration is committed
to making national resources widely available to the public for
their enjoyment. Estimated outlays in 1983 are $1.4 billion, which
is $0.3 billion below 1982.
The administration will propose legislation to increase entrance
and user fees for recreational use of Federal lands and facilities.
Increased receipts for 1983 are estimated to be about $60
million. (Some of these receipts offset recreational resources outlays,
while the rest offset the entire natural resources and environment
function.)
Federal land acquisition.—Four Federal agencies—the Forest
Service, Park Service, Fish and Wildlife Service, and Bureau of
Land Management—will request a total of $69 million in 1983

5-56

THE BUDGET FOR FISCAL YEAR 1983

budget authority for new recreation lands. Funds will continue to
come from receipts deposited into the land and water conservation
fund, and will pay only for outstanding court awards for land
where the prior administration already had begun the purchase
process, for exchanges, and for acquisition of selected and specifically authorized areas.
Operation of recreational resources.—An important administration initiative in the operation of recreational resources is a 5-year
effort to correct for insufficient maintenance in the past and to
assure the quality and accessibility of the national parks to all
Americans in the future. As part of this effort, the 1983 budget
proposes $190 million in budget authority for Park Service construction and repair, including $105 million for the Administration's park restoration and improvement program. Total budget
authority to operate and improve the 333 parks, covering 74 million acres, of the National Park System is proposed at $677 million,
a 9% increase over 1982.
The Fish and Wildlife Service requests $416 million in budget
authority to manage 89 million acres of wildlife refuges, operate 58
fish hatcheries, administer programs to protect endangered species,
and provide grants to States for managing hunting and fishing
programs. The 1983 budget includes measures to improve overall
program efficiency, such as closing facilities not of national significance and streamlining the administrative structure.
Other natural resources.—These activities focus on understanding, conservation, and careful husbandry of the Earth's resources,
structure, and environment through research and development and
information dissemination programs. They comprise elements of
the Geological Survey, the Bureau of Mines, and the National
Oceanic and Atmospheric Administration.
For the Geological Survey, total outlays in 1983 are an estimated
$520 million. An increase in budget authority of $7 million is
proposed for development of an automated system to account for
royalties from oil and gas production on Federal and Indian lands.
Other increases are proposed for resource evaluations on the Outer
Continental Shelf, inspection of oil and gas operations, hydrologic
studies of acid rain and toxic waste problems, and provision of
natural gas to Point Barrow, Alaska. These increases are offset by
decreases from three other initiatives: savings from streamlined
procedures in mineral leasing and regulatory programs; reductions
in lower priority programs; and lower administrative costs.
The administration estimates outlays of $136 million in 1983
for the Bureau of Mines, compared with $153 million in 1982. The
reduction reflects a reorientation of government research away
from technology development and demonstration for direct applica-

NATURAL RESOURCES AND ENVIRONMENT

5-57

tion to the mining industry. That research should be financed by
the private sector, which benefits directly from it. The administration also expects that 1981 tax law changes will encourage industry
to carry on more mining research.
Funding for NOAA programs (other than coastal zone management) reflects a decrease in budget authority from $830 million to
$759 million (about an 8.6% decrease) in 1983. Estimated outlays
for 1983 are $785 million. This funding would continue the basic
NOAA programs: national weather service; civil environmental satellite remote sensing; fisheries research, management, and development; ocean and atmospheric research and development; research
fleet operations; aeronautical and nautical mapping and charting
and geodetic surveying; and, a national environmental data storage
and retrieval system.
Increases for NOAA include system changes for the satellite
communication network and operational responsibility for LANDSAT satellite system, a satellite weather information system for
the weather forecast offices and acid rain research.
Reductions in NOAA programs include: elimination of one polar
orbiting satellite, closure of 45 weather stations, phaseout of fisheries industry development activities, and decreases in or elimination
of various oceanic and atmospheric research and service programs.
The Columbia River hatcheries and the Pribilof Island operations
will be phased over to the benefitting States and industries.
The administration proposes to recover—by 1985—the full cost of
producing aeronautical and nautical charts from users. Likewise,
users of the LANDSAT data will be charged to recover the system's
operating costs. The NOAA aviation weather program will be financed from the airport and airway trust fund administered by the
Federal Aviation Administration (FAA) since it is a subsidy to the
aviation industry.
Offsetting receipts.—Total offsetting receipts from natural resources and environment activities are expected to rise from $3.4
billion in 1982 to $4.5 billion in 1983 (part of which is discussed
previously in this section). Approximately 15% of this $1.5 billion
increment is due to sharp increases in both volume and price of
timber harvests in the national forests. Receipts that offset the
functional totals come mostly from rents and royalties from land
and minerals and sales of timber, from fees for miscellaneous services, and from selling other products and publications. The administration anticipates that the additional offsetting receipts will
come from three other sources for which legislation has been
proposed:
• inland waterway user charges;
• deep draft harbor and channel user charges;
• increases in recreation user fees.
360-000

0 - 8 2 - 1 1

5-58

THE BUDGET FOR FISCAL YEAR 1983
CREDIT PROGRAMS—NATURAL RESOURCES AND ENVIRONMENT
(In millions of dollars)
Guaranteed loan commitments

Direct loan obligations
Program

Water resources
Total, natural resources and environment.

1981
actual

1982
estimate

1983
estimate

1981
actual

1982
estimate

1983
estimate

Credit programs.—Direct loans are made to State and local organizations for construction and rehabilitation of non-Federal irrigation, and municipal and industrial water systems. Direct loan obligations in 1983 are proposed to be $39 billion.
Tax expenditures.—As an incentive to encourage production, certain capital costs associated with exploration and development of
nonfuel-minerals may be expensed rather than depreciated over
the life of the asset. Most nonfuel-mineral extractors use percentage depletion, rather than cost depletion. Percentage depletion is
more generous than cost depletion in that deductions are not limited to the cost of the investment. The outlay equivalent estimates
for those two provisions are $90 million and $640 million, respectively in 1983.
Interest on State and local government debt issued to finance the
pollution control facilities of private firms is excluded from income
subject to tax; the resulting outlay equivalent estimate for 1983 is
$1.0 billion.
Expenditures made before January 1982 to preserve and restore
certain historic structures were eligible for special accelerated depreciation. The outlay equivalent estimate for this provision is $75
million.
The gains on the cutting of timber and royalties from iron ore
deposits are taxed at rates applicable to long-term capital gains
rather than ordinary income. In addition, up to $10,000 of direct
costs incurred in a taxable year to forest or reforest a site for the
commercial production of timber may be amortized over a 7-year
period. The outlay equivalent estimate for these two provisions is
$1.1 billion and $30 million respectively.
Tax expenditures for natural resources and environment total
$2.9 billion in 1983.

AGRICULTURE

5-59

AGRICULTURE
National Needs Statement:
• Ensure agricultural capacity to meet domestic and
export demands for food and fiber.
The Federal Role in Meeting the Need:
• Ensure a healthy, free-market oriented U.S. farm economy with minimal Government interference.
• Mitigate the effects of commodity price fluctuations on
American farmers through price support, crop insurance,
and various agricultural credit programs.
• Encourage the conduct of research to increase the quality and production of agricultural commodities.
• Provide agricultural commodity marketing services on a
user fee basis.
This administration has made several major changes in the agriculture function over the past year by:
• instituting user charges for cotton classing, tobacco grading,
and warehouse inspection and licensing, and broadening the
coverage of user charges for grain inspection;
• expanding Federal crop insurance to many additional agricultural counties;
• reforming the emergency disaster loan program to prevent
abuse while continuing to help family-size farm operators
recover from damage caused by natural disasters; and
• setting interest rates for price support and related loans at
the cost of U.S. Treasury borrowing.
In addition, the Agriculture and Food Act of 1981 (Public Law
97-98, enacted in December 1981) makes a number of changes in
the way farm programs will operate, including the following:
• Dairy price support was made more flexible so that increased
production can be discouraged during times of constant or
declining demand and so that excessive Government outlays
can be avoided.
• Acreage allotment controls were eliminated from the peanut
and rice programs.
• Other commodity price support levels were increased to allow
for increased farm costs, and added flexibility was provided in
production controls, loan rates and disaster payments.
• Grain reserve programs were improved by providing added
flexibility to respond to changing supply and demand.

5-60

THE BUDGET FOR FISCAL YEAR 1983
NATIONAL NEED: IMPROVED AGRICULTURE
(Functional code 350; in millions of dollars)

Major missions and programs

1981
actual

1982
estimate

1983
estimate

1984
estimate

1985
estimate

BUDGET AUTHORITY
Farm income stabilization:
Commodity price support and related programs..
Crop insurance
Agricultural credit
Other programs and unallocated overhead

4,207 7,085
58
425
573
464
211
62

3,828 4,336
717
574
682
819
62
62

1,858
508
564
62

Subtotal, farm income stabilization

5,049 8,037

5,289

5,790

2,992

657
314

703
312

703
310

703
307

119

117
-2

115

Agricultural research and services:
Research programs
Extension programs
Marketing programs:
Existing law
Proposed legislation
Animal and plant health programs:
Existing law
Proposed legislation
Economic intelligence
Other programs and unallocated overhead..
Offsetting receipts
Subtotal, agricultural research and services.
Deductions for offsetting receipts
Total, budget authority

630
304

291

283

156
176
-78

160
119
-77

233 196 151
*
175 175 175
126 126 126
-84 -84 -84

1,559

1,576

1,580

1,541

1,494

-4

6,646

9,609

6,865

7,328

4,482

*$500 thousand or less.

Total outlays for the agriculture function are estimated to drop
from $8.6 billion in 1982 to $4,5 billion in 1983. The decrease is
predominantly in commodity pi ice support and related programs.
Farm income stabilization.—These programs are the major Federal involvement in the agricultural sector, representing 65% of
estimated 1983 outlays in the agriculture function. Price support
outlays are highly variable and subject to the uncertainties of
weather and of markets at hone and abroad. The estimated outlays shown for 1983 of $2.9 billion are not limits on assistance, and
they will vary upward or downward depending upon market conditions.
Commodity price support and related programs.—Price support
and related programs were created to stabilize, support, and protect farm income and prices and to help the orderly distribution
and maintenance of a balanced and adequate supply of agricultural
commodities and their product*. The Commodity Credit Corporation (CCC) provides price support to producers of agricultural commodities through loans, purchases, payments and other means.

5-61

AGRICULTURE
NATIONAL NEED: IMPROVED AGRICULTURE—Continued
(Functional code 350; in millions of dollars)
Major missions and programs

OUTLAYS
Farm income stabilization:
Commodity price support and related programs..
Crop insurance
Agricultural credit
Other programs and unallocated overhead
Subtotal, farm income stabilization..
Agricultural research and services:
Research programs
Extension programs
Marketing programs:
Existing law
Proposed legislation
Animal and plant health programs:
Existing law
Proposed legislation
Economic intelligence
Other programs and unallocated overheadOffsetting receipts
Subtotal, agricultural research and services..
Deductions for offsetting receipts
Total, outlays

1981
actual

1982
estimate

1983
estimate

1984
estimate

1985
estimate

4,036 6,343 1,850 2,215 1,765
1
212
431
436
318
405
857
-228
844
698
184
81
60
60
3,993 7,041

2,926

3,564

3,105

624
301

667
310

694
308

696
306

698
304

125

117

115

282

289

238

196

151

147
177
-78

160
121
-77

175
126
-84

1,540

1,596

1,572

1,530

1,485

-4

5,572

8,633 4,494 5,090 4,586

6,815
5,790

5,391 3,071 4,952 3,802
1,066 - 3 9 4 - 4 4 3 - 3 5 5

ADDENDUM
Off-budget Federal entity:
Federal Financing Bank:
Agricultural credit:
Budget authority
Outlays
*$500 thousand or less.

Outlays for price support programs are projected to decrease
from $6.3 billion in 1982 to $1.8 billion in 1983. This decrease is
partly a result of changes that add flexibility to price support
programs, embodied in the Agriculture and Food Act of 1981, and
partly a reflection of anticipated improvements in agricultural
markets. Outlays estimated for 1982 are abnormally high because
of farm price conditions; 1983 outlays are projected to be closer to
the norm.
The United States is the world's largest exporter of farm products. Many countries depend on us for food, and we look to them as
markets for our farm products. The value of agricultural exports in
1981 was $44 billion while imports totaled $17 billion, resulting in
a positive trade balance of $27 billion. Exports are expected to grow
to approximately $46 billion in 1982 and to about $48 billion in
1983. This would create positive trade balances of $28 billion and
$30 billion, respectively.

5-62

THE BUDGET FOR FISCAL YEAR 1983

Export credit is provided by CCC through a loan guarantee program for commercial and non-commercial export sales that would
not occur without the Federal credit guarantee. Federal export
credit will expand from $755 million in 1977 to loan guarantee
commitments of $2.5 billion per year in 1982 and 1983. This is the
highest level of Federally-backed credit ever extended for agricultural exports.
Crop insurance.—The Federal Crop Insurance Corporation offers
insurance to producers against crop losses from natural hazards.
Under the Federal Crop Insurance Act of 1980, the new all-risk
crop insurance program will serve 3,000 counties in 1983. Starting
in 1983, the expanded insurance program replaces CCC disaster
payments while the Farmers Home Administration emergency loan
program will be significantly curtailed. Outlays depend primarily
on the weather, the number of participants, and crop prices. Outlays are estimated to increase by $0.1 billion in 1983 due to program expansion. (Small business disaster loans, also available
under limited circumstances to farmers, are discussed under community and regional development.)
Agricultural credit.—New agricultural loan commitments under
the agricultural credit insurance fund totaled $8.0 billion in 1981,
with approximately 79% of this amount going for disaster and
economic emergency loans. Outlays arising from direct loans in
this account are financed off-budget through the Federal Financing
Bank. Thus, these outlays are excluded from the budget deficit, but
they are included in the off-budget deficit.
Total new direct loan obligations by the agricultural credit insurance fund (ACIF) are estimated to decline from $8.0 billion in 1981
to $3.7 billion in 1982 and in 1983, largely because of expiration of
the economic emergency loan program in 1983 and tighter disaster
loan eligibility requirements. The budget does not provide for 1983
extension of the economic emergency loan program, since expanded
crop insurance, farm ownership loans, and expanded operating
loans will meet the needs of family farmers who formerly participated in the economic emergency loan program.
Agricultural research and services.—Research helps to increase
agricultural productivity, and it expands knowledge of human nutrition and food safety. The research program will be reoriented in
1983 to focus on long-term, high risk, and potentially high payoff
research with widely dispersed benefits. Research also will focus on
areas of Federal responsibility, such as specific regulations. Shortterm applied research and development, from which the agricultural industry can expect to benefit, will be phased out of the Federal

5-63

AGRICULTURE
AGRICULTURAL CREDIT INSURANCE FUND—LOAN OBLIGATIONS
(In millions of dollars)
Loan program
Farm ownership .
Farm operating
Emergency:
Natural disasters

1981
actual

1982
estimate

1983
estimate

795
823

700
1,325

700
1,460

5,112
1,245
49
24

1,600

1,540

Economic
Soil and water
Other

47
56

25
12

Total

8,048

3,728

3,737

programs. The groups that benefit directly will be expected to
finance such research in the future.
Animal and plant health.—The Federal Government carries out
a number of programs to prevent the introduction and spread of
plant and animal pests and diseases that can cause severe losses in
crop yields or livestock. The most significant change in this area is
the proposal to phase in a voluntary control program for brucellosis and to terminate the costly control and eradication programs
now financed by Federal and State Departments of Agriculture.
The Federal Government has spent over $900 million over 47 years
in efforts to eradicate this disease, which now can be controlled
through vaccination financed by livestock owners. By 1985, savings
of $85 million per year will accrue to the general taxpayer.
Tax expenditures.—Agriculture is promoted by several tax expenditures. The tax code permits farmers to treat certain capital
outlays as current expenses and allows capital gains treatment for
certain types of ordinary income. The 1983 outlay equivalent estimates for these two provisions are $570 million and $555 million,
respectively. The tax expenditures for agriculture total $1.2 billion
in 1983.
Credit programs.—A number of programs in this function are
credit programs. In some instances, the amount of credit extended
under these programs is only partially reflected in the budget
totals. Some of the activity occurs in guaranteed loans, and another
portion is financed as off-budget direct loans.
Related programs.—Several programs, classified in other sections
of Part 5 of this Budget, complement the programs in agriculture.
The two most significant of these programs are:
• Public Law 480, international food aid provided through CCC,
classified in the international affairs section; and
• soil and water conservation, classified in the natural resources and environment section.

5-64

THE BUDGET FOR FISCAL YEAR 1983
CREDIT PROGRAMS—AGRICULTURE
(In millions of dollars)
Direct loan obligations
Program

1981
actual

Price support and related commodity loans (CCC)
Agricultural and emergency credit (FmHA): 1
New loans
Repurchases and guarantees of loan assets
Off-budget Federal entity:
Federal Financing Bank: 2
Agricultural credit insurance fund
Subtotal, gross
Less:
Loan assets sold to the FFB:
Agricultural and emergency credit (FmHA)
Total, agriculture

1982
estimate

Guaranteed loan commitments

1983
estimate

1981
actual

1982
estimate

1983
estimate

5,872

8,600

6,560

2,015

2,500

8,048
1,181

3,728
4,468

3,737
3,481

49
6,910

201
5,391

131
3,071

6,815

5,391

3,071

21,916

22,187

16,889

8,973

8,092

5,702

-6,815 -5,391 -3,071 -6,815
15,101

16,796

13,818

2,158

-5391 -3,071
2,701

2,631

1
Includes
2

loans sold to the FFB as loan assets, and guarantees of those loan assets. The FFB purchases are shown below.
The FFB is a mechanism to finance direct loans sold or guaranteed by other Federal agencies. The deductions below eliminate overlap with
transactions shown above in this table. See the introduction to Part 5 for further explanation.
OUTLAYS FOR FEDERAL PROGRAMS THAT SUPPORT THE AGRICULTURE MISSIONS
(In millions of dollars)

Program title

Disaster loans, drought assistance, and emergency conservationConservation of agricultural lands
Rural development programs
Public Law 480 food aid
Food safety and inspection service

Primary
function
in
budget

1981
actual

1982
estimate

1983
estimate

453 - 6
13
302 597 572 540
452 839 1,066 1,217
150 1,254 1,141 1,028
554 377 310 321

COMMERCE AND HOUSING CREDIT

5-65

COMMERCE AND HOUSING CREDIT
National Needs Statement:
• Seek to maximize the private financing of mortgage
credit.
• Assure fair and equitable opportunities for business development and growth.
The Federal Role in Meeting the Need:
• Reduce Federal involvement in the Nation's credit markets to help relieve pressure on interest rates. Reduce
the size of current Federal credit programs as one contribution to this end.
• Encourage the restructuring of the mortgage lending industry.
• Target scarce Federal commerce and housing credit resources to those who are not adequately served by private credit markets, including residents of distressed
urban and rural areas.
Commerce and housing credit programs provide support to the
business and housing sectors in the areas of mortgage credit and
thrift insurance, the postal service, and other areas of commerce,
including small business assistance. These credit programs are only
marginally affected by Federal programs as a whole. Rather, credit
levels are largely the result of economic conditions and aggregate
Federal sector activity. The 1983 Budget provides $3.4 billion in
budget authority and $1.6 billion in estimated budget outlays to
meet these national needs. Mortgage credit and thrift insurance
programs and activities comprise the largest portion of this assistance, with $1.6 billion in budget authority in 1983.
A prolonged period of record high interest rates has resulted in
the deepest decline in the housing industry since World War II.
Total housing starts in calendar year 1981 were about 1.2 million
units, down slightly from 1.3 million in 1980. As overall economic
conditions improve and interest rates decline in the second half of
1982, the housing sector should return to higher levels of activity.
Housing starts are projected to be about 1.5 million units annually
by the end of calendar year 1982.
The administration's emphases on deregulation and institutional
improvements in financial markets have prevented housing activity from being even lower. Liberalized retirement (IRA and Keogh)
accounts, which became effective January 1, 1982, will increase the
flow of savings to mortgage lenders and enable them to compete

5-66

THE BUDGET FOR FISCAL YEAR 1983

more effectively for available funds. New mortgage instruments
have contributed significantly to mortgage lenders' ability to lend
new money at competitive rates. Strong underlying demand for
housing by the post-World War II baby boom generation has also
provided support for the housing sector.
The quality of the nation's housing stock improved substantially
after the Second World War and has continued to improve in the
last decade. In 1940, almost half of all housing units were dilapidated or lacked plumbing. By 1970, less than 10% fell into that category. During the decade of the 1970's, the percent of units with one
or more physical defects fell from 10% of the housing stock in 1973
to 7.5% in 1977. This improvement has resulted largely from the
strong performance of the private housing market and the growth
in family incomes. Overall housing quality is expected to continue
to improve as both the private housing market and the national
economy regain strength. As a result, direct Federal assistance
(which is discussed in the income security function) will be directed
toward helping low-income households obtain decent housing. Federal housing credit will be directed toward those groups that the
private sector inadequately serves.
Investment opportunities that yield high interest rates have not
been uniformly available to all Americans, especially those with
limited assets and those less able to shift to more profitable investments. The administration has demonstrated its commitment to
greater equity in the provision of financial services through support of the Depository Institutions Deregulation and Monetary Control Act of 1980. The law provides for an orderly phasing out of
regulatory restrictions on the earnings of deposits at banks and
savings institutions. This will enable savers to receive competitive
rates of return on their investments in these institutions.
The administration seeks to reduce Federal and Federally-assisted demands for credit and, by so doing, reduce interest rates and
increase the supply of funds available for private investors. Major
proposed reductions in Federal loan guarantees in 1982 include $20
billion in the commitment level of the Government National Mortgage Association's (GNMA) mortgage-backed securities program
and $1 billion in the authorized guarantee commitment levels for
the Small Business Administration (SBA).
The 1983 Budget requests further reductions in commerce and
housing credit programs. These credit reductions should relieve
pressure on interest rates without adversely affecting the industries involved. Where Federal involvement is necessary and justified, the principal concern is to target scarce Federal resources
efficiently and effectively to those groups with the greatest need.
This budget ensures the efficient and effective use of limited Federal credit resources by:

COMMERCE AND HOUSING CREDIT

5-67

• targeting rural housing programs to low-income families occupying substandard housing;
• targeting the guaranteed credit assistance of the Small Business Administration more effectively to those firms for which
a valid case can be made that the market overestimates the
risk of credit or underestimates its return in terms of achieving social objectives (e.g., counteracting discrimination);
• deregulating the interest rate on FHA-insured mortgages and,
thereby, allowing it to be determined by the market;
• ensuring a strong private economy by acting only as a lender
of last resort in certain areas, thus reducing inflationary and
interest rate pressures and increasing the amount of credit
available for productive investment in the private sector; and
• redirecting FHA mortgage insurance programs to those
groups not served by the private mortgage market.
Mortgage credit and thrift insurance.—The most pressing need of

both the housing industry and individual homebuyers is lower
interest rates. Overall Federal credit reductions will exert downward pressure on interest rates and allow the private housing
sector opportunity for growth. The focus of government mortgage
credit programs will be on areas the private sector cannot serve,
particularly distressed rural areas and central-cities.
Savings and loan associations now have the authority to offer
new types of adjustable rate mortgages (ARM's). These will allow
primary mortgage lenders to receive approximately the market
rate of return for the entire duration of long-term loans. Previously, lenders were locked into fixed rates. This situation led to earnings problems in a volatile interest rate climate, especially in 1980
and 1981. Furthermore, proposals by the Federal Home Loan Bank
Board to restructure thrift institutions are intended to ensure that
these providers of mortgage credit can function profitably over the
long term. These measures, which are currently before the Congress, include the expansion of non-mortgage lending to consumers,
broadened real estate investment activity, and the authority to
offer demand deposits to any customer.
Mortgage purchase activities.—The Government National Mortgage Association (GNMA) has provided support for the mortgage
market through two major activities:
• guarantees of mortgage-backed securities; and
• purchases of below market rate tandem mortgages.
In 1981, with a commitment limitation of $64 billion, the mortgage-backed securities program issued commitments of $42 billion
and guaranteed $17 billion in securities backed by pools of mortgages that were either insured by the Federal Housing Administration or guaranteed by the Veterans Administration. In 1982, a

5-68

THE BUDGET FOR FISCAL YEAR 1983
NATIONAL NEED: PROMOTION OF COMMERCE AND HOUSING CREDIT
(Functional code 370; in millions of dollars)
Major missions and programs

1981
actual

1982
estimate

1983
estimate

1984
estimate

1985
estimate

BUDGET AUTHORITY
Mortgage credit and thrift insurance:
Department of Housing and Urban Development:
Mortgage purchase activities (GNMA)
Mortgage credit (FHA)
Housing for the elderly or handicapped
Department of Agriculture—rural housing programs
National Credit Union Administration

1,358
412
797
596
15

1,252
252
745
1,583
230

2
134
277
1,112
121

247
189
402
1,539
130

274
283
456
1,700
150

Subtotal, mortgage credit and thrift insurance

3,178

4,061

1,646

2,507

2,863

1,343

619

500

875
105

570
52

379

382

346

242

263

270

185

233
-41
199

235
50
160

241
55
173

1
529

1
532

1
511

1
510

2,022

1,603

1,282

1,238

1,216

-8

6,537

6,275

3,419

4,237

4,571

Postal Service
Other advancement of commerce:
Small business assistance
National Consumer Cooperative Bank
Technology utilization:
Existing law
Proposed legislation.
.
.
Economic and demographic statistics
Chrysler Corporation loan guarantees (administrative expenses)
Other.. .
Subtotal, other advancement of commerce
Deductions for offsetting receipts
Total, budget authority

510

limitation of $48 billion is requested on commitments for GNMAguaranteed securities and $28.5 billion are expected to be guaranteed. A 20% reduction from the 1982 commitment limitation, $38.4
billion, is proposed for 1983 and $32 billion of securities are expected to be guaranteed.
Tandem mortgage purchase activities will conclude with the
award of about $2 billion of commitments in 1982. No further
mortgage purchase authority is proposed for 1983. This is largely
because of the proposed termination of most new subsidized housing construction programs discussed in the income security function. Also, subsidized mortgage financing for otherwise unsubsidized middle income rental housing will be discontinued. Not only
is the private market better able to determine where and when
such housing should be constructed, but scarce federal housing
subsidies must also be directed to the truly needy. Despite the
termination of the section 8 tandem and targeted tandem subsidized mortgage programs in 1983, GNMA will continue to carry out
a large volume of mortgage purchase ($2 billion) and sales ($2.5
billion) activity in 1983. Outlays for this program are estimated to

5-69

COMMERCE AND HOUSING CREDIT
NATIONAL NEED: PROMOTION OF COMMERCE AND HOUSING CREDIT—Continued
(Functional code 370; in millions of dollars)

Major missions and programs

OUTLAYS
Mortgage credit and thrift insurance:
Department of Housing and Urban Development:
Mortgage purchase activities (GNMA)
Mortgage credit (FHA)
Housing for the elderly or handicapped
Department of Agriculture—rural housing programs..
Federal Deposit Insurance Corporation
Federal Savings and Loan Insurance Corporation
National Credit Union Administration
Subtotal, mortgage credit and thrift insurance..
Postal Service
Other advancement of commerce:
Small business assistance
National Consumer Cooperative Bank
Technology utilization:
Existing law
Proposed legislation
Economic and demographic statistics
Chrysler Corporation loan guarantees (administrative expenses)
Other
Subtotal, other advancement of commerce..
Deductions for offsetting receipts
Total, outlays

1981
actual

1982
estimate

1983
estimate

1984
estimate

1985
estimate

1,148 1,032 1,135 1,414
510
182 -245 -1,179 -1,155 -1,142
817
711
286 -51
165
-129 1,095 1,619 1,725 1,777
-1,726 -1,800 -2,000 -2,050 -2,850
370
38 -150 -400 -720
104
117
-10
93
117
-184

- 3 9 9 -2,143

651

925

1,343

619

500

812
131

602
86

368

358

281

242

259

286

194

233
-45
192

234
-51
159

238
-55
171

1
487

1
585

1
535

1
505

501

1,959

1,728

1,284

1,206

1,136

3,265

1,591

1,298

-516

348
554

1,786
713

851
851

6,045
4,045

5,619
3,249

3,537
852

4,060
130

2,188
78

165
119

275
224

240
179

240
174

240
169

-7
3,946

ADDENDUM
Off-budget Federal entities:
Postal Service:
Budget authority
Outlays
Federal Financing Bank:
Rural housing insurance fund:
Budget authority
Outlays
Small business assistance:
Budget authority
Outlays.-.

be $1.3 billion in 1983. Total outlays for GNMA mortgage purchase
activities are estimated to be $1.1 billion in 1983.
Credit reductions in the GNMA mortgage-backed securities program will not have a major impact on the amount of housing
available to consumers. To the contrary, an important effect of the
GNMA reductions will be to further encourage and accelerate the
development of what is already a predominately private sector
housing market. Two government-sponsored enterprises, the Feder-

5-70

THE BUDGET FOR FISCAL YEAR 1983

al National Mortgage Association (FNMA) and the Federal Home
Loan Mortgage Corporation (FHLMC), have developed conventional
mortgage-backed securities programs in the secondary mortgage
market that will be operating in 1982. Furthermore, the most
pressing need of the housing industry is lower interest rates. Federal credit reductions should relieve pressure on interest rates and
lead to a sustainable and non-inflationary recovery of the mortgage
finance and construction industries.
Mortgage credit.—The Federal Housing Administration (FHA)
provides mortgage and loan insurance for families who may be
unable to obtain a mortgage without Federal insurance.
Many families, particularly first-time homebuyers, can only
afford a low downpayment when purchasing a home. Mortgage
lenders, however, are reluctant to make low downpayment loans
unless the mortgages are insured. Although private mortgage insurers currently insure more mortgages and charge lower premiums than FHA, some homebuyers—particularly those able to make
only very low downpayments—may be unable to obtain private
mortgage insurance. Thus, they require FHA mortgage insurance if
they are to be able to purchase a home.
In addition, FHA insurance is often used in conjunction with
GNMA guarantees of securities backed by FHA-insured mortgages.
These securities provide mortgage bankers and other lenders with
the means to make funds available for mortgages without having
to use much, if any, of their own capital.
Partially in response to the tremendous growth of private mortgage insurance, the President has appointed a Commission on
Housing to consider a range of housing issues. The Commission
recommended, in its October Interim Report, that FHA insurance be continued for segments of the housing market not adequately served by the private sector. The administration is requesting $35 billion of new loan guarantee commitment authority for
1983. The request reflects projections of future housing activity
and, more importantly, the recognition that private mortgage insurers will be able to adequately serve a larger share of the housing market.
Beginning this year, FHA will use a simplified foreclosure
method enacted as part of the Omnibus Budget Reconciliation Act
of 1981. This new law will expedite the foreclosure of multifamily
mortgages held by the Secretary of the Department of Housing and
Urban Development (HUD). Legislation is being proposed this year
to modify bankruptcy laws to ensure the effectiveness of this expedited forecloseure procedure. Previously, long periods were required to complete foreclosure under certain State laws. This led to
numerous problems, including: deterioration in the condition of the
properties involved, substantial Federal management and holding

COMMERCE AND HOUSING CREDIT

5-71

expenditures, vandalism, fire, depreciation and damage, and decline of the neighborhoods in which the properties were located.
The use of a uniform and more expeditious foreclosure procedure
will not only help ameliorate these conditions, but will also remove
foreclosure proceedings from the courts, which are already overcrowded.
The administration is proposing a different method for collecting
insurance premiums on insured single-family mortgages beginning
in 1983. Instead of paying monthly premiums for the life of the
mortgages, homebuyers with FHA-insured mortgages will either
pay a lump sum at the time of settlement or have the insurance
added to the mortgage total. In the latter case, this change will
have little effect on the homebuyer's monthly payment. Administrative costs and the burden of monthly premium collections will
be eliminated in either case.
In addition, legislation to remove current statutory ceilings on
interest rates for FHA-insured mortgages is being proposed. FHA
also limits the number of points, or advanced interest, that FHAinsured homebuyers may be charged. Points are interest charges
that are paid at the time a property is purchased and are used by
lenders to increase effective interest rates on FHA-insured mortgages. Each point equals one percent of the mortgage amount.
Although the additional points cannot be passed on to the buyer
directly, they are passed on indirectly through increased home
prices. The proposed deregulation measure will allow mortgage
markets to operate more effectively and will benefit buyers by
reducing artificially increased home prices.
Finally, legislation to remove current restrictions on the sale of
FHA defaulted properties is being proposed. Low income tenants
can be better served through the administration's proposed modified Section 8 certificate program, while allowing the private
market to determine the most economical use of particular properties. This change will facilitate faster sale of FHA properties.
All of these factors are expected to result in an increase in net
receipts to the FHA fund from $245 million in 1982 to $1,179
million in 1983.
Housing for the elderly or handicapped.—In addition to supporting private market mortgage financing with FHA insurance, HUD
provides direct loans to finance housing for the elderly and the
handicapped. The budget provides for $453 million of new loan
commitments in 1983 and continues to support housing for the
handicapped in the form of a $40 million set-aside for nonelderly
handicapped households. The administration plans to sell $4.6 billion of these direct loans starting with $1.1 billion in 1983. There is
no reason for the Federal Government to continue to hold these
loans once the projects have been constructed. Legislation will be

5-72

THE BUDGET FOR FISCAL YEAR 1983

proposed to facilitate such sales. Outlays for this program are
estimated to be $711 million in 1982 and $286 million in 1983. The
decline in 1983 outlays reflects the estimated receipts from the
loan sales.
Department of Agriculture rural housing programs.—The Farmers Home Administration (FmHA) of the Department of Agriculture administers direct loan programs for homeownership, repair,
rental, and farm labor housing. These programs are available in
any rural community of 10 thousand or less, and in communities of
10 to 20 thousand outside of a standard metropolitan statistical
area (SMSA). Loans are made at interest rates that may be as low
as 1%. In addition, a rural rental assistance program assists the
tenants of FmHA-financed rental housing. Related grant programs
to repair inadequate single family housing, and grants for farm
labor projects are classified in the income security function.
The 1983 budget proposes $1.1 billion in new direct loans, a
reduction of $2.6 billion from the 1982 level. Budget authority of
$185 million for rural rental assistance payments is requested to
cover the entire life of contracts negotiated in 1983.
The reduction in FmHA direct lending is part of a general effort
to limit the growth of Federal outlays and to reduce dependence on
the Federal Government as a major source of credit. The reduced
Federal involvement in credit markets should help to relieve pressure on interest rates in the housing sector. While a reduced program level is proposed, FmHA will improve its efforts to ensure
that truly needy households are the primary beneficiaries of the
rural housing programs. The agency will enforce a credit-elsewhere
test to determine eligibility for homeownership loans.
Outlays for FmHA housing programs in this function are estimated to increase from $1.1 billion in 1982 to $1.6 billion in 1983
due primarily to reduced loan repayments.
Banking and thrift insurance.—A number of programs enhance
the safety and soundness of the banking system and affect its
responsiveness to the needs of both savers and borrowers.
The Federal Deposit Insurance Corporation (FDIC) insures the
deposits of all federally and many State chartered commercial and
savings banks. Receipts of the FDIC are estimated to exceed expenses by $1.8 billion in 1982 and $2.0 billion in 1983.
The Federal Savings and Loan Insurance Corporation (FSLIC)
insures deposits in savings and loan associations. In 1982, the costs
of the FSLIC are estimated to exceed its receipts by only $38
million, which is significantly less than the $370 million cost to the
fund in 1981. As economic conditions improve in 1983, receipts are
estimated to exceed costs by $150 million.

COMMERCE AND HOUSING CREDIT

5-73

The National Credit Union Administration (NCUA) regulates
credit unions and insures depositors' accounts. The Insurance Fund
of NCUA insures the shares of credit union depositors. In 1983
receipts of the fund are estimated to exceed costs by $1 million.
Total net outlays for the NCUA are estimated to be $104 million in
1983. The NCUA also operates a central liquidity facility that
provides loans to member credit unions to meet their liquidity
needs. The facility is intended to serve as a source of financing only
after other sources have been used. It is estimated that the central
liquidity facility will provide a gross total of $473 million in loans
in 1983 compared to $330 million in 1982.
Postal Service.—The Postal Reorganization Act of 1970 established the U.S. Postal Service as an independent part of the executive branch. The Act charges it to provide prompt and efficient
mail services to patrons at reasonable rates and fees. Outlays for
the general operations of the Postal Service are excluded from
Federal budget totals, except for the Federal subsidy payment. In
the past this payment covered certain liabilities of the former Post
Office Department, public service payments that provide a direct
postal subsidy, and reimbursements for revenue forgone by carrying certain classes of mail at free and reduced rates.
The request for 1983 reflects the administration's policy that the
costs of operating the Nation's postal system should be paid directly by mailers, not by the taxpaying public. Budget authority of
$500 million is requested for 1983, $119 million below the President's 1982 request. This reduction will result in an elimination of
the public service subsidy and payments to offset the liabilities of
the former Post Office Department.
The budget also includes a limitation on the Postal Service's
authority to borrow from the Treasury. For fiscal year 1983, the
maximum amount of funds available would be limited to $1 billion
annually, with the stipulations that no more than $500 million
could be used for operating expenses and the repayment schedule
could not exceed 12 months. This limitation is consistent with the
administration's objective of maintaining effective credit control
procedures.
The off-budget outlays of the Postal Service, $0.7 billion in 1983,
represent the difference between its gross expenditures and its
gross receipts. The estimates for 1982 and 1983 reflect the increased revenues resulting from the increase in postal rates that
became effective on November 1, 1981.
Other advancement of commerce.—Federal programs attempt to
assure fair and equitable business opportunities by collecting and
disseminating information on the economy and by providing technical assistance and guaranteed loans.
360-000

0 - 8 2 - 1 2

5-74

THE BUDGET FOR FISCAL YEAR 1983

Small business assistance.—Net outlays for assistance to small
business are estimated to total $0.4 billion in 1983, a reduction of
$0.2 billion from the 1982 level. The budget request for the Small
Business Administration (SBA) calls for elimination of subsidized
direct loans, $2.8 billion in new commitments for guaranteed business loans, including $125 million for small business investment
companies (SBIC's), and $41 million in direct financing for minority
enterprise small business investment companies (MESBIC's).
The reduction in SBA financial assistance is an integral part of
the administration's effort to reduce Federal credit programs and,
thereby, increase private credit availability for businesses. As a
group, small businesses will benefit more from the administration's
efforts to stabilize financial markets, reduce interest rates, eliminate burdensome regulations, and lower inflation than from direct
Federal credit subsidies. In particular, subsidized direct loans have
been very costly to the small business community as a whole. Not
only do such loans directly increase the need for Federal borrowing, they also create a competitive advantage for some small firms
over others that are equally deserving.
Since the vast majority of small businesses are obtaining financing without Federal assistance, the administration plans to limit
assistance only to those businesses for which a valid case can be
made that market imperfections exist. Consistent with this philosophy, 17% of SBA's guaranteed business loans will be targeted to
minority-owned firms in 1983. In addition, the budget proposes that
the non-credit minority business assistance programs in the Department of Commerce and the SBA continue to operate in 1983 at the
1982 program level of $101 million—an increase of $26 million over
the actual 1981 level.
National Consumer Cooperative Bank.—The National Consumer
Cooperative Bank began operations in 1979 and made its first loans
in 1980 with Federal funding. The Bank makes loans at market
interest rates to finance a wide variety of cooperatively owned
businesses. In 1981 legislation was passed that moves the Bank
toward the status of a private financial institution. No funds are in
the budget to finance its operations or to cover any of its liabilities.
Technology utilization.—In addition to the initiatives to encourage innovation and productivity growth that are built into the tax
reduction and deregulation components of the economic recovery
program, the administration proposes that the Department of Commerce:
• expand and modernize the operation of the patent and trademark systems;
• promote commercial use of government-owned patents
through licensing of patent rights; and

COMMERCE AND HOUSING CREDIT

5-75

• increase patent and trademark fees to cover 100 percent of
application processing costs.
Under the patent and trademark user fee proposal those individuals who benefit from the 17-year monopoly provided by patent
protection would pay for the full cost of providing them with this
protection.
Economic and demographic statistics.—The budget proposes 1983
budget authority for the data collection efforts associated with the
1982 Census of Agriculture ($20 million), Economic Censuses ($22
million), the Census of Governments ($2 million), and the final
phase of the 1980 Decennial Census of Population and Housing ($36
million). Decennial census activities in 1983 will include data dissemination and program evaluation.
The budget proposes $33 million in 1983 budget authority reflecting, in part, an upgrade and consolidation of the Department of
Commerce's industrial and productivity analysis activities in support of the Economic Recovery Program. In addition, these funds
support preparation and analysis of the National Income and Product Accounts summarized in quarterly estimates of the Gross
National Product.
Chrysler Corporation loan guarantees.—The Chrysler Corporation
Loan Guarantee Act of 1979 created the Chrysler Corporation Loan
Guarantee Board and authorized it to guarantee up to $1.5 billion
in loans to the Chrysler Corporation. In 1981, $400 million in loans
were guaranteed; this brought the amount of loan guarantees outstanding to $1.2 billion. No guarantees are expected in 1982 or
1983. Administrative expenses for the loans, however, are expected
to be $1 million in 1983.
Other.—This budget continues the export and import control activities of the Department of Commerce's International Trade Administration (ITA). ITA's export promotion assistance to small and
medium sized businesses will be strenghthened by an expansion of
the Foreign Commercial Service overseas. No funding is requested
for Trade Adjustment Assistance (TAA) to firms. The TAA program has a high default rate and many of its beneficiaries have
failed to adjust to import competition.
Tax expenditures.—The tax system provides a variety of incentives for investment in equipment, commercial and industrial
structures, and residential housing. The investment tax credit for
capital equipment generates an outlay equivalent estimate of $27
billion in 1982.
The safe harbor leasing rules enable new or unprofitable companies to obtain the benefits of the accelerated depreciation provisions of the Economic Recovery Tax Act of 1981. This results in an

5-76

THE BUDGET FOR FISCAL YEAR 1983

outlay equivalent estimate of $4.6 billion in 1983. The expensing of
construction period interest and taxes produces an estimated tax
expenditure of $615 million in 1983.
The cost of financing investment is also reduced by a number of
tax incentives. The exclusion of interest on State and local industrial development bonds generates an outlay equivalent cost of $2.3
billion in 1983. The administration is proposing to restrict the
excessive use of such bonds. The dividend and interest exclusion
produces an outlay equivalent estimate of $650 million. The 1981
Act also provides savings incentives by exempting up to $1,000
($2,000 for a joint return) of interest on qualified exempt savings
certificates. The outlay equivalent estimate for this provision is
$2.8 billion in 1983. The Act also permits the tax free reinvestment
of dividends in public utility companies; the outlay equivalent estimate for this provision is $590 million in 1983. Preferential treatment of capital gains produces two types of tax expenditures. Taxation of capital gains at less than ordinary rates results in an
outlay equivalent estimate of $22.2 billion in 1983. Exempting from
tax the full gain from the sale of capital assets acquired by inheritance produces an outlay equivalent estimate of $3.3 billion.
Housing investment is encouraged by permitting deductions for
mortgage interest and property taxes on owner-occupied homes.
This treatment results in outlay equivalent estimates in 1983 of
$25.8 billion and $10.5 billion, respectively. In addition, deferral of
capital gains on home sales produces further equivalent outlays of
$2.1 billion in 1983. Finally, elderly homeowners are permitted a
once-in-a-lifetime tax exemption on capital gains up to $125,000 on
the sale of a principal residence. This will result in an outlay
equivalent estimate of $820 million in 1983.
In the past, State and local governments used tax-exempt bonds
to finance only low-income rental housing. In recent years, however, they have made increasing use of tax-exempt bonds to provide
below-market-rate mortgages for single-family homeownership at
an equivalent outlay cost of $1.3 billion in 1983. Use of tax-exempt
bonds to finance homeownership was significantly restricted with
the passage of the Omnibus Reconciliation Act of 1980. The tax
exempt status of such bonds is now scheduled to terminate at the
end of 1983.
There are also tax expenditures for specific types of business.
Financial institutions will receive equivalent outlays of $1.0 billion
in 1983 because of the favorable tax treatment accorded excess bad
debt reserves. The exclusion of interest on life insurance savings
produces an equivalent outlay of $6.8 billion in 1983. Finally, permitting the deduction of interest on consumer debt results in an
outlay equivalent estimate of $9.3 billion in 1983.

5-77

COMMERCE AND HOUSING CREDIT

Total tax expenditures for commerce and housing credit are
estimated to be $120.9 billion in 1983.
CREDIT PROGRAMS—COMMERCE AND HOUSING CREDIT
(In millions of dollars)
Direct loan obligations
Program

Mortgage purchase activity (GNMA)
Mortgage credit (FHA)
Housing for the elderly or handicapped
Rural Housing (FmHA):
New loans
Repurchases and guarantees of loan assets
Central Liquidity Facility (NCUA)
Small Business Assistance 124
National Consumer Cooperative Bank
Chrysler Corporation
Other programs
Off-budget Federal Entities-.
Federal Financing Bank: 3
Rural housing (FmHA)
Small business assistance
Subtotal, gross

1981
actual

1982
estimate

Guaranteed loan commitments

1983
estimate

1982
estimate

1983
estimate

1,836
414
873

1,993
383
819

6
311
453

42,150
23,635

48,000
28,609

38,400
35,000

3,487
2,592
68
871
130

3,727
2,644
330
712
11

1,145
2,750
473
554

6
6,076

5,648

3,557

3,616

3,150

2,850

278

6,045
165

5,619
275

3,537
240

16,759

16,532

9,475

Less:
Loan assets sold to the FFB and associated
guarantees:
Rural housing (FmHA)
-6,045 -5,619 -3,537
Guaranteed loans held as direct loans:
By the FFB:
Small business assistance
By GNMA:
Tandem plan purchases
Secondary guarantees:
Mortgage purchase activity (GNMA)
Total, commerce and housing credit
(net)

1981
actual

10,714

10,913

5,938

400
152

181

100

76,035

85,589

79,907

-6,045

-5,619

-3,537

-165

-275

-240

1,832

1,988

-42,150 -48,000 -38,400
25,843

29,707

37,730

Includes loans sold to the FFB as loan assets, and guarantees of those loan assets. The FFB purchases aie shown below.
Includes guarantees of direct loans made by the FFB as shown below.
The FFB is a mechanism to finance direct loans sold or guaranteed by other Federal agencies. The deductions below eliminate overlap with
transactions shown above in this table. See the introduction to Part 5 for further explanation.
4
Direct loan obligations for 1983 are repurchases of defaulted guaranteed loans.
2

Credit programs.—Most of the programs in this function are
direct loan or loan guarantee programs. For these programs, the
National Needs tables showing budget authority and outlays understate the volume of new activity, as most credit activity does not
result in additions to the budget totals. The total volume of new
direct loan obligations and new guaranteed loan commitments, as
recorded in the credit budget, is shown in the accompanying table.
Total direct loan obligations are expected to be $5.9 billion in 1983.
Appropriation bill limitations are requested for $2.4 billion of this

5-78

THE BUDGET FOR FISCAL YEAR 1983

amount. Total guaranteed loan commitments are expected to rise
to $37.7 billion in 1983, all of which is subject to appropriation
limitations. The guarantees issued in GNMA's mortgage-backed
securities program cover loans previously guaranteed by FHA and
VA, and therefore are not added to net credit budget totals.

TRANSPORTATION

5-79

TRANSPORTATION
National Needs Statement:
• Maintain a safe, reliable, and efficient transportation
system to meet the needs of commerce and the public,
with maximum reliance on the private sector and, secondarily, on State and local governments.
The Federal Role In Meeting the Need:
• Assist the States in developing and maintaining a highway system capable of providing for interstate commerce
and the national defense.
• Provide capital assistance to repair and modernize existing mass transit systems, especially in large cities, while
operating subsidies are phased out.
• Encourage the development of self-sufficient, cost-effective rail systems for freight and passengers.
• Provide safe and reliable management of the air space
and of facilities within which the aviation system operates.
• Facilitate a safe, reliable, and efficient marine transportation system.
The Nation's transportation systems serve the dual purpose of
meeting the personal transportation needs of our citizens and providing an essential component to the smooth working of a healthy
national economy. Meeting transportation needs is a responsibility
in which all levels of government and private enterprise are involved. The appropriate Federal role is to support programs and
activities that address national transportation needs and priorities
that would not otherwise be met.
In fulfilling its role, the Federal Government must constantly
strive to create a balance of Federal, State, local, and private
involvement in transportation programs by allowing other levels of
government and the private sector the freedom to develop transportation systems that best suit their diverse needs. This administration is committed to returning authority, responsibility, and
discretion for transportation programs when overriding national
interests are not at stake, to the private sector as a first priority,
and to State and local governments when public sector involvement is necessary.
The transportation proposals in the 1983 budget illustrate the
administration's view of the appropriate Federal role in transportation programs. A theme repeated throughout the discussion of

5-80

THE BUDGET FOR FISCAL YEAR 1983

ground, air, and water systems is the reduction of Federal involvement in programs that can be managed more efficiently by other
levels of government or that perpetuate inefficient modes of transportation and distort free market incentives. For example, the
Federal highway program will be focused on funding highways
needed for the smooth flow of interstate commerce and for the
national defense, with particular emphasis on rehabilitating deteriorating interstate highways. States and localities will assume
greater responsibility for roads of principal interest to them. Transportation programs that are appropriately State and local responsibilities have been included in the new federalism initiative starting
in 1984. This initiative is discussed in Part 3 of this Budget
Excessive regulation has been identified as a primary contributor
to our current economic difficulties. The 1983 budget reflects a
continued effort on the part of this administration to eliminate or
relax regulations, and to rely on competition rather than regulation to provide transportation services. The budgets of the Civil
Aeronautics Board and the Interstate Commerce Commission, for
example, have been reduced as these agencies lessen their regulatory efforts. The administration also supports deregulation of the
bus industry to encourage more firms to provide intercity services.
In order to ensure that the Federal tax burden is borne equitably
by those who benefit from transportation programs, this administration is sponsoring major initiatives aimed at the recovery—
through user charges—of the cost of transportation services that
provide benefits to individuals or enterprises. The 1983 budget
proposals include increases in fees for aviation system use and the
introduction of fees for some Coast Guard services. The total 1983
request for budget authority for Federal transportation programs is
$19.1 billion, and outlays are estimated at $19.6 billion.
Ground transportation.—The budget estimates include outlays of
$13.0 billion in 1983 for programs to preserve the Nation's investment in highways, railroads, and mass transit while ensuring that
their operations continue in a safe, reliable, and efficient manner.
Estimated outlays in 1983 are $1.7 billion lower than in 1982
primarily because of substantial reductions in outlays for railroad
grants and subsidies.
Highway improvement and construction.—The Federal highway
program currently provides grants to the States for construction
and rehabilitation of interstate highways, as well as primary, secondary, and urban road systems. Legislation proposed in this
budget emphasizes funding for the interstate highway programs
vital for interstate commerce and national defense. Funds will be
directed toward completing construction of the interstate system
and rehabilitating deteriorated pavement on some existing inter-

5-81

TRANSPORTATION
NATIONAL NEED: EFFICIENT TRANSPORTATION SYSTEMS
(Functional code 400; in millions of dollars)
Major missions and programs

1981
actual

1982
estimate

1983
estimate

1984
estimate

1985
estimate

BUDGET AUTHORITY
Ground transportation:
Highway improvement and construction:
Existing law
Proposed legislation
Highway safety
Mass transit
Railroads
Regulation
Subtotal, ground transportation..
Air transportation:
Airways and airports:
Existing law
Proposed legislation
Aeronautical research and technology..
Air carrier subsidies

Regulation
Subtotal, air transportation
Water transportation:
Marine safety and transportation
Coast Guard user fees (proposed legislation)..
Ocean shipping
Regulation
Subtotal, water transportation..
Other transportation
Deductions for offsetting receipts.
Total, budget authority

9,093 8,596 7,949 8,374 8,374
80
80
80
199 203 204 200 200
4,727 3,546 3,202 3,028 3,028
4,134 1,942 814 675 601
82
70
69
57
62
18,236 14,357 12,317 12,418 12,339

3,412 2,613 3,130 3,221 3,310
450 774 668 855
526 474 486 500 514
115
86
48
53
58
24
20
29
26
19
4,082 3,648 4,463 4,463 4,756
2,006 2,501 1,989 2,402 2,496
-200 -800 - 8 0 0
574 489 480 608 608
11
10
10
10
12
2,592 3,002 2,279 2,219 2,314
109

113

114

117

-99 -97 -70 -59 -59
24,920 20,996 19,102 19,155 19,468

state highways. Greater responsibility will be given to State and
local governments to build and maintain highways and roads that
serve State and local traffic. Through elimination of unnecessary
Federal requirements, the administration will provide States and
localities with increased flexibility in the use of the Federal funds
they now receive.
Over time, several small categorical programs were added to the
Federal highway program to provide a source of funds for special
projects and priorities. Three such programs are proposed for termination in the 1983 budget: highway beautification, railroad-highway crossings demonstration projects, and territorial highways.
Elimination of these programs is consistent with the administration's policy of reducing Federal involvement in State and local
road programs. The administration is requesting $8.0 billion in
budget authority for highway improvement and construction in
1983, $0.6 billion less than the 1982 level.

5-82

THE BUDGET FOR FISCAL YEAR 1983
NATIONAL NEED: EFFICIENT TRANSPORTATION SYSTEMS—Continued
(Functional code 400; in millions of dollars)
Major missions and programs

OUTLAYS
Ground transportation:
Highway improvement and construction:
Existing law
Proposed legislation
Highway safety .
Mass transit
.
Railroads
.. ..
Regulation
Subtotal, ground transportation
Air transportation:
Airways and airports:
Existing law
Proposed legislation
Aeronautical research and technology
Air carrier subsidies
Regulation
Subtotal, air transportation
Water transportation:
Marine safety and transportation
Coast Guard user fees (proposed legislation)
Ocean shipping
Regulation
Subtotal, water transportation
Other transportation
Deductions for offsetting receipts
Total, outlays

1981
actual

1982
estimate

1983
estimate

1984
estimate

1985
estimate

9F068

8,264

336
3,917
3,703
75

307
3,817
2,271
70

8,312
4
230
3,221
1,209
68

8,211
36
207
3,059
876
62

8,333
64
187
2,991
831
58

17,100 1:4,728 13,045 12,451 12,463

3,158

3,073
544
88

3,209
166
516
52

3,163
491
507
53

3,357
838
514
58

544
119

3,850

3,730

3,968

4,233

4,785

1,829

2,114

580
12

653
11

2,238
-200
527
10

2,325
-800
477
10

2,418
-800
484
9

2,420

2,778

2,575

2,012

2,112

110

115

117

-99

-97

-59

111
-70

23,381 21,228 19,628 18,752 19,418
ADDENDUM

Off-budget Federal entities:
U.S. Railway Association:
Budget authority
Outlays
Federal Financing Bank:
Railroads:
Budget authority
Outlays

228
-267

-94

-13

1,794
250

195
64

58
19

49
-83

-21

The Federal-aid highway programs, with the exception of the
interstate system, have been identified for inclusion in the new
federalism initiative and eventual turnback to the States.
Highway safety.—Programs for highway safety are designed to
promulgate and enforce Federal vehicle safety and fuel economy
standards, support research and development, and provide supplemental assistance for State highway safety programs. The Omnibus
Budget Reconciliation Act of 1981 reduced funding for some regula-

TRANSPORTATION

5-83

tory programs and grants to the States. Funds for regulatory activities were decreased in line with the administration's view that
excessive regulation suppresses market incentives to achieve greater fuel efficiency and is a significant factor in our current economic
difficulties. Grants to States were restricted to programs with demonstrated success in promoting highway safety.
The 1983 request of $0.2 billion in budget authority continues
funding for programs of proven success in promoting highway
safety. Major initiatives include the development of comprehensive
State and local programs to prevent alcohol abuse and to encourage the use of seatbelts. Outlays for highway safety in 1983 are
estimated to be $0.2 billion, somewhat less than those estimated for
1982.
Mass transit—The Federal Government provides assistance for
mass transit through a variety of formula and discretionary grant
programs. The majority of funds are reserved for capital projects
and operating assistance; grants are also provided for planning
activities, demonstration projects, and research.
In 1983, $3.2 billion in budget authority is requested for mass
transit programs. This amount is $0.3 billion below the level provided for 1982. The budget proposals reflect two major changes for
mass transit programs: formula grants for operating expenses are
to be phased out over a 3-year period, and construction grantswhile proposed at near current levels—are directed primarily
toward projects that modernize and repair existing, proven transit
systems. Discretionary assistance for the initiation of new rail transit systems is not proposed in this budget.
In the past, most mass transit systems were owned and operated
by private companies. However, as the car replaced public transit
as the preferred alternative for commuting, ridership on mass transit declined. The drop in ridership, combined with increases in the
costs of operating mass transit systems, has resulted in a reliance
on public funds to sustain mass transit.
The Federal share of the national spending for transit operating
expenses has been approximately 15% over the last few years. The
administration has examined the usefulness of Federal funding of
operating costs and determined that State and local governments
should assume complete responsibility for operating local mass
transit systems. Federal operating assistance has led to a number
of unintended consequences. In some areas these funds support
marginally effective, conventional transit services where transportation needs could be better served by more cost-effective and
innovative alternatives. Shifting financial responsibility to local
authorities should make low-cost alternatives more attractive. Federal operating subsidies have also been partially absorbed by artificially low fares. Fares have not kept pace with inflation since the

5-84

THE BUDGET FOR FISCAL YEAR 1983

1973 oil embargo, even though the cost of operating a private
vehicle has increased significantly. In addition, regulations attached to Federal assistance increase costs and reduce productivity.
Decisions about service levels, equipment, facilities, fares, wage
rates, and management practices are better left to local governments or to the private sector.
A gradual phaseout of Federal operating subsidies gives cities
and States time to adjust to the loss of funds. No new funds are
requested for formula grants to small cities and towns under 50,000
population; however, capital projects in such areas are eligible for
discretionary grants. Unobligated funds from previous years can
also be used for capital projects or to phase out operating assistance.
Assistance for continuing construction of up to 75 miles of the
Washington Metrorail system will be provided from two grant
programs. Capital grants of $100 million will be provided for the
first time from authorizations contained in the National Capital
Transportation Act, if local jurisidictions are able to provide sufficient assurances that stable and reliable revenue sources will be
available for covering the operating costs of the local transit
system. Additional budget authority of up to $195 million may be
available from interstate transfer grants, depending on the willingness of local governments to use these funds for Metrorail construction.
Mass transit grant programs have been identified for inclusion in
the new federalism initiative and eventual turnback to the States.
Railroads,—The past several years have been better ones for the
railroad industry. Improvements are evident in several ways: 1980
profits were nearly 60% higher than in 1979 and the best since
1943; major mergers were approved by the Interstate Commerce
Commission; the Economic Recovery Tax Act of 1981 will help the
railroads improve their after-tax profitability; and the deregulatory
provisions of the Staggers Rail Act of 1980 will enable railroads to
compete more successfully with trucks and barges.
Estimated Federal outlays for railroads in 1983 are $1.2 billion,
$1.1 billion less than in 1982. Most of the reduction is attributable
to settlements of litigation against the Government in 1982, whereas no additional settlement costs are projected for 1983. Federal aid
is being phased back or eliminated, consistent with budgetary restraint and the improved financial condition of the industry. Reduced railroad subsidies are proposed for the three main Federal
Railroad Administration freight assistance programs: redeemable
preference shares, loan guarantees, and local rail service assistance. The first two programs provide funding for acquisition or
rehabilitation of tracks and equipment. No funds are recommended
for 1983. The third program, local rail service assistance, provides

TRANSPORTATION

5-85

funding for rehabilitation or operating subsidies on low volume
branchlines that might otherwise be abandoned. The administration proposes to reduce funding for this program from $35 million
in 1982 to $20 million in 1983. No funding is planned for 1984. This
program benefits primarily local areas and should be supported by
States and localities.
Conrail provides freight and commuter rail service in the northeast and midwest. The Omnibus Budget Reconciliation Act of 1981
stipulated that Conrail should be sold as part of a private market
solution to rail problems in that part of the Nation. In the past
year, Conrail has made remarkable financial and operational progress which will make it more attractive to potential purchasers.
Additional operating subsidies have not been requested by Conrail
or proposed by the administration for either 1983 or 1984. Conrail
has accumulated cash reserves in recent months sufficient to meet
potential emergency requirements.
Budget proposals in the income security function provide funds
for Conrail labor protection payments under a program authorized
by the Omnibus Budget Reconciliation Act of 1981. This program
provides financial compensation to certain Conrail employees who
are laid off. The labor protection program will help Conrail become
financially self-sufficient by assisting it to reduce its labor force. In
turn, this will strengthen the administration's efforts to sell the
railroad as a single entity to a buyer who agrees to provide service
on Conrail's system. Transfer of commuter services from Conrail is
supported by a one-time-only appropriation in 1982 of $45 million.
The 1983 budget includes a proposal to eliminate funding for the
federally owned and operated Alaska Railroad. Legislation to transfer the Railroad to the State of Alaska is supported by the administration. In addition, the 1983 budget does not include funding for
the continued operation of the Transportation Test Center in
Pueblo, Colorado, which carries out research and development for
railroads. While the Federal Government would continue to contract for specific research and development projects, the administration believes that the Center should be privately operated.
The Federal Government subsidizes intercity rail passenger service throughout the United States by providing grants to the National Railroad Passenger Corporation (Amtrak). In 1981, the Federal Government covered more than 60% of Amtrak's costs, a
much greater percentage than it currently covers of intercity bus
or commercial aviation costs. To reduce the competitive inequities,
the administration supports decreased funding for Amtrak and
increased coverage of costs by passengers and the States.
The Amtrak Improvement Act of 1981 requires Amtrak to cover
50% of costs with revenues and enables Amtrak to terminate service without congressional approval in certain circumstances.

5-86

THE BUDGET FOR FISCAL YEAR 1983

Amtrak had never before been required to cover a given percentage of costs with revenues. The budget proposals include an estimated $610 million in outlays for subsidies to Amtrak in 1983, a
reduction of $210 million from estimated outlays for 1982. Also
proposed are certain Federal cost-saving measures: labor and management cost savings of $75 million, higher State payments for
Federal and State-funded trains, and elimination of any route that
does not meet legal criteria in the authorizing legislation for
Amtrak. In addition, the administration proposes to alter labor
protection for Amtrak employees to lump sum severance payments,
similar to the type of payment provided Conrail employees.
Federal capital subsidies have allowed Amtrak to improve its
passenger cars and engines substantially. By July 1982, 60% of
Amtrak's rail passenger cars will be less than 6 years old and 65%
of Amtrak's engines less than 4 years old. Of the remaining cars,
over 90% have been refurbished within the past 3 years. Budget
authority of $55 million is proposed for labor protection and capital
grants.
With the recommended changes and proposed funding levels,
Amtrak should be able to maintain a national system. Amtrak is
expected to provide 5.3 billion passenger miles in 1983, a 10%
increase over 1981. In 1983, Amtrak passenger revenues are expected to reach $725 million.
The administration has altered the primary focus of the Northeast Corridor Improvement Project from developing high speed rail
service to ensuring safe and reliable service. Many of the more
critical portions of the project are finished.
Regulation.—The administration will continue to carry out
deregulatory measures in the trucking, railroad, and moving industries. As a result of deregulation, the trucking industry has experienced increased competition and now offers a wider variety of
services. Railroads are also becoming more competitive with trucks
and barges. The administration is currently pressing for deregulation of the bus industry to increase competition and reduce inefficiencies.
Air transportation.—Outlays for air transportation are estimated
to be $4.0 billion in 1983 compared to $3.7 billion in 1982. Federal
spending for air transportation is for improvement, operation, and
maintenance of a safe and efficient national airspace system, aeronautical research and technology, and air carrier subsidies.
Airways and airports.—The primary mission of the Federal Aviation Administration (FAA) is to ensure the safe and efficient
movement of air traffic. The 1983 budget requests $3.9 billion in
budget authority for the FAA.

TRANSPORTATION

5-87

Rebuilding the air traffic control system to the capacity provided
prior to the August, 1981 illegal strike of approximately 11,500
controllers will continue to be a top priority for the FAA during
1983. Funds provided in the 1983 budget request should allow the
FAA to have the system operating at full capacity by January 1,
1984. The FAA estimates net savings from the strike of slightly
under $100 million in outlays in 1983. These savings, however, are
offset by increases in other operational costs.
The administration is proposing to revise legislation transmitted
in March 1981 to reauthorize revenue deposits into the airport and
airway trust fund. The revised proposal would institute the following user fees for deposit into the trust fund:
• an 8% passenger ticket tax on scheduled air carrier flights;
• a general aviation tax on aviation gasoline of 12 cents per
gallon in 1982, increasing to 20 cents per gallon in 1987;
• a 14 cents per gallon tax on jet fuel used by general aviation
in 1982, increasing to 22 cents per gallon in 1987;
• a 5% freight waybill tax;
• a $3.00 international departure tax; and
• a tax on tires and tubes.
Revenues from these user fees are estimated to be approximately
$2.7 billion in 1983, increasing to nearly $4.3 billion in 1987.
Funding levels for FAA capital programs are contingent upon
congressional approval of the administration's user fee proposal
and recovering 85% of FAA costs (all those allocable to air carriers
and general aviation) from the trust fund. The 1983 budget proposal includes $450 million of contract authority for airport grants,
additional budget authority of $300 million for facilities and equipment, and $24 million for research, engineering, and development
if the Congress enacts the administration's user fee and cost recovery proposals.
The administration continues to support its legislative proposal
transmitted in 1981 to eliminate Federal financial support for the
41 largest airports and to create State block grants for small commercial service and general aviation airports. The increased funding levels for development and procurement of facilities and equipment, which total nearly $535 million in budget authority above
the enacted 1982 levels, reflect the administration's commitment to
modernizing and expanding the FAA capital plant to meet projected aviation growth if users are willing to pay the allocable costs of
development, acquisition, operation and maintenance. The 1983 request for FAA also proposes funding of aviation weather services
provided by the National Oceanic and Atmospheric Administration
from the airport and airway trust fund. No new commitments are
proposed under the aircraft purchase loan guarantee program.

5-88

THE BUDGET FOR FISCAL YEAR 1983

Aeronautical research and technology.—The National Aeronautics and Space Administration (NASA) conducts research and technology development programs in the aeronautical sciences. These
programs primarily support public sector needs, particularly in the
area of defense. The administration requests $486 million in budget
authority for these activities in 1983. The budget proposals maintain the major national aeronautical facilities, such as the wind
tunnels, and would support research in the basic aeronautical sciences and technology development projects critical to defense and
air transportation safety. .
Air carrier subsidies.—In conjunction with airline deregulation,
one existing air carrier subsidy program designed to promote general aviation, is being replaced with a new program that funds
essential air services to small communities. By 1983, the administration expects that the older subsidy will have been terminated.
Proposed budget authority for air carrier subsidies is $48 million in
1983, a reduction of over $65 million from the 1981 level.
Water transportation.—To meet the need for a competitive U.S.
merchant marine and to maintain a safe, reliable, and efficient
marine transportation system, the budget includes an estimated
$2.6 billion in outlays for water transportation programs in 1983,
about $0.2 billion less than estimated for 1982.
Marine safety and transportation.—Coast Guard services to the
public include search and rescue to vessels in distress, maintenance
of navigation aids, icebreaking, prevention and cleanup of marine
pollution, enforcement of maritime, customs, and safety-related
laws, and examination and licensing of vessels, merchant seamen
and ships' officers.
The 1983 budget request for the Coast Guard seeks to improve
the efficiency of its capital plant and operations. Five aged cutters
are to be decommissioned, resulting in substantial savings from
reduced maintenance costs. These vessels will be replaced by new
cutters better able to meet the many roles of the Coast Guard. The
Coast Guard's aircraft fleet will be modernized by the introduction
of significant numbers of new medium-range search jet aircraft and
short-range recovery helicopters. The budget also proposes improving and modernizing a number of Coast Guard shore facilities.
A major new initiative for 1983 is to require users of certain
services offered by the Coast Guard to pay fees covering the costs
of the service. Currently, most services rendered by the Coast
Guard for the public are provided without charge. User fee legislation will be introduced in early 1982 to recover 100% of the costs of
Coast Guard services that provide benefits to individuals or enterprises. Fees for services involving a transaction, such as licensing

TRANSPORTATION

5-89

and inspections, would be set according to the cost of providing the
service. Other services, such as maintaining navigation aids and
providing search and rescue services, would be financed by an
annual fee or other type of charge. Funding for the Coast Guard's
polar ice operations, a service provided for the National Science
Foundation, Department of Defense, and the Maritime Administration, will be charged to those agencies. Estimated outlays for
marine safety and transportation are $2.2 billion in 1983.
Ocean shipping,—Programs in ocean shipping are administered
by the Department of Transportation's Maritime Administration,
the Panama Canal Commission, and the Federal Maritime Commission. Outlays for ocean shipping are estimated to be $527 million in
1983, $126 million less than estimated for 1982.
The Maritime Administration has traditionally provided subsidies to assist the U.S. merchant marine and shipbuilding industry.
These include direct operating differential subsidies to offset the
higher costs of operating U.S.-flag vessels in the oceanborne foreign
commerce.
A full review of maritime policies is currently being conducted to
determine effective methods for revitalizing the maritime industry.
The Omnibus Budget Reconciliation Act of 1981 eliminated ship
construction subsidies for 1982, that offset the higher construction
costs of building in U.S. shipyards. No budget authority will be
requested for ship construction subsidies in 1983. For the operating
subsidies program, 1983 outlays are estimated to be $454 million to
meet the Government's obligation on existing contracts; administrative changes will be made to hold down escalating costs.
Legislative changes are being pursued to eliminate many of the
restrictions under which the U.S. Merchant Marine now operates.
The administration's proposals would exempt ocean carrier collective shipping activities from antitrust laws, such as setting rates
jointly, dividing revenues and profits on each trade route, and jointly
offering vessel capacity and service to shipping customers. The
Federal Maritime Commission (FMC) would automatically approve
agreements between carriers to engage in these permissible joint
activities. The administration's proposals also eliminate the requirement that tariffs be filed with and enforced by the FMC. This
restructuring of the regulatory framework will benefit the industry
by putting U.S. carriers on an equal footing with foreign carriers.
Credit programs.—Many of the programs discussed above contain
direct and guaranteed loans including aid to railroads, air carrier
subsidies and assistance to ocean shipping. As described in previous
sections, the administration is restraining these activities in order
to allow private market forces to operate. The Maritime Administration's ship financing fund will extend $600 million in new loan

5-90

THE BUDGET FOR FISCAL YEAR 1983

guarantee commitments, as shown in the accompanying table.
Other amounts shown represent obligations from prior commitments.
CREDIT PROGRAMS—TRANSPORTATION
(In millions of dollars)
Guaranteed loan commitments

Direct loan obligations
Program

Highways and mass transportation
Aid to railroadsx
Aircraft purchase loan guarantees
Assistance to ocean shipping
Off-budget Federal entities:
U.S. Railway Association.
Federal Financing Bank: Aid to railroads
Subtotal, gross

1981
actual

1982
estimate

1983
estimate

13
39

19
144

32
2

1,794

173

1,886

362

117

1,886

362

117

Less:
Guaranteed loans held as direct loans by the FFB:
Aid to railroads
Total, transportation

1981
actual

1982
estimate

1983
estimate

16
408
1,047

135
56
675

600

1,472

866

600

-1,802
-330

-173

693

-58
542

1
Includes
2

Tax expenditures.—In addition to direct Federal funding, two tax
expenditures provide assistance to shipping concerns and mass
transit systems. The 1983 outlay equivalent estimates for these two
tax expenditures are $90 million and $15 million, respectively. Tax
expenditures for transportation total $105 million in 1983.

COMMUNITY AND REGIONAL DEVELOPMENT

5-91

COMMUNITY AND REGIONAL DEVELOPMENT
National Needs Statement:
• Promote the economic and social viability of urban and
rural neighborhoods, communities, and regions.
The Federal Role in Meeting the Need:
• Promote economic expansion through reductions in Federal expenditures, taxes, and regulations.
• Transfer primary responsibility for administering specific community, regional, and economic development programs to State and local governments.
• Provide Federal financial assistance to State and local
governments to help them identify and resolve essential
community, regional, and economic needs in their own
manner.
• Maintain necessary supplemental assistance for recovery
from unexpected disasters.
Community and regional development is promoted best by a
sound and expanding economy, which can only be achieved by
reducing inflation and by increasing the resources available to the
private sector. Government policies and programs can do no more
than encourage and stimulate community and regional development. Permanent revitalization of depressed areas will require a
substantial and long-term commitment of State, local, and private
sector resources. Over the past year, the administration has increased the productive resources available to citizens, businesses,
States, and local governments by slowing increases in Federal expenditures, reducing individual and corporate income tax rates,
and eliminating unnecessary Federal regulations. However, more
remains to be done. There are still programs that are unnecessary
or ineffective or that could be administered more efficiently by
States, local governments, or the private sector.
Community and regional development is also encouraged by allowing State and local governments the latitude to address their
own problems in their own way. The administration has made
progress in this area by returning authority, responsibility, and
flexibility to State and local governments for administering programs. In 1981, the Federal Government's principal community
and regional development program—the community development
block grant program—was simplified to allow for increased flexibility in the use of these funds. Application and reporting requirements were significantly reduced. In addition, legislation was en-

5-92

THE BUDGET FOR FISCAL YEAR 1983
NATIONAL NEED: COMMUNITY AND REGIONAL DEVELOPMENT
(Functional code 450; in millions of dollars)
Major missions and programs

1981
actual

1982 1983 1984 1985
estimate estimate estimate estimate

3,695
675

3,456
440

12
32

BUDGET AUTHORITY
Community development:
Community development block grants
Urban development action grants
Rental rehabilitation grants (proposed legislation).
Neighborhood Reinvestment Corporation
Pennsylvania Avenue development
Other programs
Subtotal, community development.
Area and regional development:
Rural development
Economic development assistance..
Coastal energy impact assistance..
Indian programs:
Existing law
Proposed legislation
Regional commissions
Other programs:
Existing law
Proposed legislation
Offsetting receipts
Subtotal, area and regional development..
Disaster relief and insurance:
SBA disaster loans
Disaster relief
National flood insurance fund...,
Other programs
Subtotal, disaster relief and insurance..
Deductions for offsetting receipts
Total, budget authority

397

14
18
357

3,456
440
150
16
12
386

3,456
440
150
16
16
459

3,456
440
150
16
16
377

4,811

4,286

4,460

4,537

4,455

701
476

585
224
-7

754
15

1,278 1,178

914 1,022
10

1,225 1,251
30

1,379

"356

158

212

115

2,626

1,928

1,801

1,930

2,098

302
93
64

325
62
66

325
84
66

325
64
66

737

459

452

475

455

-30

-51

-55

-69

-31

8,143 6,621

6,658

6,873

6,978

119 111
89
-1
-1
-1
-397 —325" -343 -355 -399

315
359

acted to transfer responsibility for distributing and administering
grants to small cities from the Department of Housing and Urban
Development to the States, on an optional basis, through the new
State community development block grant program for small cities.
To achieve both objectives of reducing Federal expenditures and
providing adequate and effective financial support for community
and regional development, this budget includes proposals that provide economic incentives for private investment in distressed areas,
transfer functions from the Federal Government to State and local
governments, and maintain adequate support for programs that
are consistent with the administration's approach to federalism.
Economic incentives for private investment in distressed areas
would be encouraged by the establishment of enterprise zones as
an experimental, free-market approach to urban problems. The
enterprise zone concept is based on a reduction of tax and regulatory burdens in clearly delineated geographic areas as a means of

5-93

COMMUNITY AND REGIONAL DEVELOPMENT
NATIONAL NEED: COMMUNITY AND REGIONAL DEVELOPMENT—Continued
(Functional code 450; in millions of dollars)

Major missions and programs

OUTLAYS
Community development:
Community development block grants
Urban development action grants
Rental rehabilitation grants
Neighborhood Reinvestment Corporation.
Pennsylvania Avenue development
Other programs
Subtotal, community development.,
Area and regional development:
Rural development
Economic development assistanceLocal public works
Coastal energy impact assistance..
Indian programs.Existing law
Proposed legislation
Regional commissions
Other programs:
Existing law
Proposed legislation
Offsetting receipts
Subtotal, area and regional development..
Disaster relief and insurance:
SBA disaster loans
Disaster relief
National flood insurance fund
Other programs
Subtotal, disaster relief and insurance..
Deductions for offsetting receipts
Total, outlays ....„
ADDENDUM
Off-budget Federal entities:
Rural Telephone Bank:
Budget authority
Outlays
Federal Financing Bank:
Community development:
Budget authority
Outlays
Rural development:
Budget authority
Outlays

1981
actual

1982
estimate

1983
estimate

1984
estimate

1985
estimate

4,042
371

4,005
525

3,350
550

12
35
650

14
32
490

16
17
417

3,200
525
75
16
16
304

3,456
522
150
16
14
287

5,111

5,066

4,349

4,135

4,444

839
536
83
36

1,066
422
60
37

1,217
262
30
21

1,131
157
30
16

1,101
85
5
1

984

1,030

1,088 1,151
5
15
169
325 301

1,285
10
85

425

94
151
131
-1
-1
-1
-397 -325 -343 -355 - 3 9 9
203

233

2,708 2,848 2,732 2,442 2,266
1,101
401
54
48

- 7 7 -290 -290 - 2 5 0
325
325
406
381
40
84
57
107
62
62
62
67

1,604

503

237

154

176

-30

-51

-55

-69

-31

9,394 8,366 7,263 6,663 6,856

126
114

163
156

163
155

45
34

110
96

120
83

100
46

50
-18

1,650
1,025

1,511
1,036

1,196
691

1,466
486

1,032
437

revitalizing distressed urban areas by stimulating new private
investment and creating jobs in those areas. The President intends to
submit his plan for enterprise zones to the Congress in the next
several weeks and expects enactment this year.

5-94

THE BUDGET FOR FISCAL YEAR 1983

Transferring functions in this area to the States will be promoted by the President's federalism initiative as announced in his
State of the Union address. This proposal would shift the responsibility for several programs classified in this function (e.g., community development block grants, urban development action grants,
community facility loans, and water and sewer grants and loans) to
the States. This initiative is further described in Part 3 of the
Budget
The administration is confident that policies enacted during the
past year and those contained in the 1983 budget will increase and
strengthen the viability of our urban and rural areas. Achieving
this end will require a combination of the recommended financial
assistance from the Federal Government, further reductions in
Federal expenditures, a transfer of the primary responsibility for
administering community and economic development programs to
States and localities, and more involvement by States, localities,
and the private sector in these development activities. Outlays for
this function are estimated to decrease from $8.4 billion in 1982 to
$7.3 billion in 1983.
Community development—A variety of Federal programs, administered by several agencies, support the mission of community development. These programs provide Federal grants, direct loans,
loan guarantees, and technical assistance to States and units of
local governments.
Community development block grants,—The Housing and Community Development Act of 1974 consolidated a number of separately funded programs of the Department of Housing and Urban
Development (HUD) into the community development block grant
(CDBG) program. This program substantially improved and simplified the delivery of Federal community development assistance to
local governments. In its 7 years, over $20 billion has been spent on
community improvements such as housing rehabilitation, streets
and roads, water and sewer facilities, and other public facilities.
The objective of the block grant program is to develop viable urban
communities, by providing decent housing, a suitable living environment, and expanding economic opportunities, principally for
persons of low and moderate income. Funds are distributed to all
large cities and urban counties by entitlement formulas. Smaller
cities receive discretionary funding either from HUD or from their
States, if their States have elected to administer the new State
community development block grant program for small cities.
Realizing the national importance of economically and socially
viable communities, the administration recommends budget au-

COMMUNITY AND REGIONAL DEVELOPMENT

5-95

thority of $3.5 billion in 1983, the same level provided in 1982. This
funding level would provide about $2.4 billion in budget authority
for the entitlement program for large cities and urban counties and
about $1.0 billion in budget authority for the nonentitlement,
"small cities" program. The balance of about $57 million is for the
Secretary's discretionary fund, which provides community and economic development assistance to Indian tribes, Alaskan natives,
and U.S. Territories, as well as technical assistance to selected
CDBG participants. Outlays are estimated to decrease from $4.0
billion in 1982 (when outlays from prior-year obligations are estimated to peak) to $3.4 billion in 1983.
Urban development action grants.—This program provides financial assistance to units of local government to be used in conjunction with private and other public funds in promoting locally designed and managed economic development projects. Program revisions made by this administration target more funds on commercial and industrial projects that have the greatest potential for
private sector investment, job creation and urban revitalization.
Because of the need to increase private investment and jobs in
distressed areas and in the Nation as a whole, the administration
is requesting $440 million in budget authority for this program in
1983, which is the same level of budget authority as provided for
1982. Outlays are estimated to increase from $525 million in 1982
to $550 million in 1983.
Rental rehabilitation grants.—The administration is proposing a
new program to be called rental rehabilitation grants. This program will be administered by HUD and will be linked with the
modified section 8 housing certificate program. It will provide
grants to States and units of local government for up to half the
cost of rehabilitating multi-family rental properties, principally for
low-income families. It is proposed that this new program replace
the section 8 moderate rehabilitation program (discussed in the
income security function) and the rehabilitation loan fund, both of
which are too expensive and inefficient. (The rehabilitation of
single-family, owner-occupied units will continue to be satisfactorily addressed by the CDBG program.) The administration is proposing budget authority of $150 million for this new program in 1983.
It is estimated that this level of support will assist in the rehabilitation of 30,000 housing units. Outlays are expected to begin the
following year.
Neighborhood Reinvestment Corporation.—This public corporation has been successful in forming working partnerships among
residents, local governments, and local financial institutions that
promote neighborhood reinvestment and revitalization. Unlike

5-96

THE BUDGET FOR FISCAL YEAR 1983

many other community development programs, this corporation
does not provide funds for neighborhood projects, but offers the
necessary technical assistance so that neighborhoods and communities can begin to resolve their own problems in their own ways.
Because of the success of neighborhood organizations in revitalizing
distressed areas and the need for the kinds of technical and organizational support provided by the Neighborhood Reinvestment Corporation, the administration requests budget authority in 1983 of
$16 million, $2 million more than in 1982.
Pennsylvania Avenue development.—The administration requests
$12 million in budget authority for 1983 to continue the redevelopment and revitalization of 21 blocks along the north side of Pennsylvania Avenue in downtown Washington, D.C. The first major
commercial projects began in 1979 and were completed in 1980
with private investment in excess of $65 million. Several new projects that incorporate private investment in excess of $600 million
have been initiated since 1980 in a unique public-private partnership between the Pennsylvania Avenue Development Corporation
and private businesses. For 1983, the Corporation will discontinue
the practice of requiring developers to construct a specific number
of residential housing units within the project area. Outlays for
land acquisition and public development activities are estimated to
be $17 million in 1983.
Other programs.—Several other programs contribute to community development. One of the more important is the urban homesteading program administered by HUD. This program transfers
federally owned, single-family properties to local governments for
use in locally administered programs to revitalize distressed and
abandoned residential areas.
For 1983, the administration proposes to expand this program to
multifamily units in distressed urban areas. This proposal is in
keeping with the President's campaign promise to implement a
more comprehensive urban homesteading program to help revitalize distressed neighborhoods and to improve the housing of urban
Americans. This program expansion would be carried out on an
experimental and limited basis to test the feasibility and effectiveness of multi-family homesteading. If the experiment proves efficient and beneficial, it will be continued on an appropriate scale.
The administration requests $12 million in budget authority to
operate this program in 1983. This amount is expected to provide
for both single-family homesteading as well as the multi-family
homesteading demonstration.

COMMUNITY AND REGIONAL DEVELOPMENT

5-97

Area and regional development—Programs in this category support rural development, American Indian tribal governments, and
multi-State regional development.
Rural development.—The Department of Agriculture administers
a variety of programs for developing rural areas. For rural water
and waste disposal systems, the 1983 budget provides $300 million
in direct loan obligations and $120 million in budget authority for
grants. Direct loan obligations of $130 million are provided for
community facilities.
Rural areas can also receive assistance from the Housing and
Urban Development's community development block grant program. Outlays for rural development programs are estimated to be
$1.1 billion in 1982 and $1.2 billion in 1983.
Economic development assistance.—The Department of Commerce's Economic Development Administration (EDA) provides assistance to States, rural and urban communities, and Indian tribes
that is designed to reduce unemployment in economically distressed areas and to react to problems of economic adjustment.
EDA is proposed for termination at the end of 1982. In March
1981, the administration proposed termination of EDA at the end
of 1981 as part of its policy of placing greater emphasis on the
private sector and transferring primary responsibility for administering community and economic development programs to States
and local governments. However, to facilitate an orderly phase out
of EDA programs and provide for an adequate adjustment period
prior to termination, funds have been provided to continue EDA
programs through 1982.
The President's comprehensive economic plan of spending, tax,
and regulatory reductions will spur economic expansion and job
creation far beyond the capacity of categorical programs administered by EDA. Funds for State and local community and economic
development programs will continue to be available in 1983
through the Community Development Block Grant and Urban Development Action Grant programs. Both programs distribute Federal funds more equitably and efficiently than EDA. Specialized
assistance for rural areas will continue to be available through the
Farmers Home Administration.
Coastal energy impact assistance.—This Department of Commerce program provides grants and loans to State and local governments to assist them in planning and financing public facilities
and services required as a result of energy development activities
in or near coastal areas, such as Outer Continental Shelf (OCS) oil
and gas developments. Grants are also provided to States to help
them participate in OCS leasing decisions. No budget authority is

5-98

THE BUDGET FOR FISCAL YEAR 1983

requested for this program in 1983 because managing the consequences of offshore oil and gas development has proven to be well
within the capacity of States and localities.
Indian programs.—The three major objectives of Federal Indian
policy are to meet the trusteeship responsibilities of the U.S. Government, to increase self-determination for American Indian tribal
governments, and to encourage economic development on Indian
reservations. To further these objectives, the Federal Government
provides grants, training, technical assistance, direct Federal loans,
loan guarantees, and interest subsidies designed to strengthen
tribal management and encourage a variety of economic and community development activities.
In the 1983 budget, the administration is proposing two initiatives for Indian tribes: (1) $5 million in budget authority for tribal
government development for small tribes; and (2) $10 million in
budget authority for economic development initiatives that provide
seed money grants to help Indian enterprises attract private sector
financing. These initiatives are expected to strengthen both tribal
governments and reservation economies and make tribes more selfsufficient.
Outlays for the Indian programs and for miscellaneous trust
funds for regional development are estimated to be $1.0 billion in
1982 and $1.1 billion in 1983. In addition to these programs, other
assistance for Indians is classified in the health; education, training, employment, and social services; natural resources and environment; and general government functions.
Regional commissions.—The Appalachian Regional Commission
and the Commerce Department's Title V Regional Action Planning
Commissions were intended to support regional development programs.
The Appalachian Regional Commission (ARC) and its nonhighway and access roads programs are proposed for termination at the
end of 1982. In March 1981, the administration proposed elimination of these activities at the end of 1981, as part of its policy of
relying on the private sector and State and local governments to
provide the stimulus for economic development. Because of concerns that the March proposal did not provide adequate time for
recipients of ARC funds to adjust to the termination of Federal
support, the ARC and its programs were continued through 1982.
Funding for one ARC program, the Appalachian Development
Highway System (ADHS), is continued in the Department of Transportation budget, to be funded out of the highway trust fund. This
separate categorical highway construction program is proposed to
be phased out between 1983 and 1986. The ADHS is eligible for
funding through Federal-aid for highways, and continued construe-

COMMUNITY AND REGIONAL DEVELOPMENT

5-99

tion after 1986 would be through this funding mechanism, at the
discretion of the States.
Federal support for the title V regional commissions was discontinued at the end of 1981. Continuation of the commissions was
unnecessary because nearly all of the commissions' projects duplicate activities that would normally be undertaken by State agencies without Federal support.
Disaster relief and insurance.—Insurance against losses from
floods, hurricanes, tornadoes, and other natural disasters is primarily the responsibility of individuals and businesses. State and local
governments aid recovery, when necessary, and Federal insurance
and disaster relief programs are available to supplement State and
local resources when they are insufficient.
SBA disaster loans.—The Small Business Administration (SBA)
provides loans to homeowners and non-agricultural businesses that
suffer losses as a result of physical disasters, such as hurricanes or
floods. (Starting in 1983, it is anticipated that the Federal Crop
Insurance Corporation will be the primary source for disaster assistance for agricultural enterprises.) Statutory changes enacted in
the Omnibus Budget Reconciliation Act of 1981 ensure that such
assistance is directed to disaster victims who are truly in need. For
businesses eligible for private financial assistance, the act sets a
maximum 3-year term for loans at market interest rates. These
changes will eliminate interest subsidies to wealthier borrowers
and reduce their incentive to apply for disaster loans when no real
need exists. In addition, a ceiling of 85% was established for all
businesses on the amount of loss covered by disaster loans. The
purpose of this limitation is to create an incentive for businesses to
make sound locational decisions and to obtain private market insurance rather than to rely on the Federal Government for aid.
Interest rates on loans to businesses and homeowners who have no
source of private financial assistance have been increased moderately but still provide a subsidy to such victims.
Disaster relief.—The Federal Emergency Management Agency
administers the Federal disaster assistance program. This nationwide program provides supplemental assistance to individuals,
businesses, and State and local governments in the event of a
Presidentially declared emergency or disaster. In addition, States
or Federal agencies may be reimbursed for expenditures in disaster
relief work performed under this authority.
The President has proposed that the Federal share of costs for a
disaster or major emergency be limited to 75% of total expenditures. This proposal will reduce outlays from the disaster relief
fund by an estimated $50 million annually. A number of adminis-

5-100

THE BUDGET FOR FISCAL YEAR 1983

trative changes will result in further savings of several million
dollars per year.
It is difficult to forecast levels of disaster activity with any
degree of certainty. Demands on the fund were light in 1981: 16
disasters or major emergencies were declared, compared to a 5-year
average of 34. Unlike 1980 when Mt. St. Helens erupted, none of
the 1981 disasters had major budget implications.
Estimates of outlays for 1983 through 1987 anticipate the results
of the cost-saving measures proposed by this administration, offset
by an anticipated return to normal levels of disaster activity. Outlays are estimated to be $406 million in 1982 and $381 million in
1983.
National flood insurance fund.—The Federal Emergency Management Agency operates a national program of direct Federal
flood insurance at subsidized rates. Over the past 5 years, the
program has cost the taxpayers an average of $171 million per
year. This budget continues the insurance program but contains a
plan to phase-out the costly subsidy by 1987 through a series of
rate increases. This plan supports the administration's policy of
recovering clearly allocable costs of flood insurance from those who
receive the benefits of this program. The change will eliminate a
substantial portion of the subsidy that the taxpayer now provides
and discourage uneconomic development in flood prone areas. Outlays for this program are estimated at $84 million for 1983.
Credit programs.—There are a number of credit programs for
community and regional development. For several, the amount of
credit activity is only partially reflected in the budget. As shown in
the table, direct loan obligations in 1983 are estimated to decrease
by $.4 billion from the 1982 estimate and by $1.9 billion from 1981.
The largest decreases in direct loan obligations between 1981 and
1983 occur in Small Business Administration disaster loans ($1.1
billion), and the rural development insurance fund in the Farmers
Home Administration ($.6 billion). Gross guaranteed loan commitments decrease by $1.1 billion from the 1982 estimate and $1.5 billion
from 1981.
Related programs.—Many programs that fulfill other national
needs as their primary purpose also promote community and regional development. For example, Federal outlays for civil public
works shown in the table below and grants for local health, education, transportation and general revenue sharing programs support
State and local development. Community development is also encouraged by other Federal activities, including defense contracting,
management of public forests and parks, and the operation of

5-101

COMMUNITY AND REGIONAL DEVELOPMENT
CREDIT PROGRAMS—COMMUNITY AND REGIONAL DEVELOPMENT
(In millions of dollars)
Direct loan obligations
Program

Community development*
Other Housing and Urban Development programs
Rural development insurance fund (FmHA):
New loans
....
Repurchases and guarantees of loan assets
Economic development assistance
Small Business Administration disaster loans
Other programs
Off-budget Federal entities.Rural Telephone Bank
Federal Financing Bank: 2
Rural development insurance fund (FmHA)
Community development
Subtotal, gross

1981
actual

1982
estimate

Guaranteed loan commitments

1983
estimate

110

1,010
659
54
1,522
41

505
541
30
640
17

430
518

160

185

1,650
45

1,511
110

1,196
120

5,250

3,607

2,911

440
22

1981
actual

1982
estimate

156

125

743
1,650
178
1
4

575
1,511
50
6
31

2,732

2,292

1983
estimate

1,196
16

1,212

Less:
Loan assets sold to the FFB and accompanying
guarantees:
Rural development insurance fund (FmHA)
-1,650 -1,511 -1,196 -1,650 -1,511 -1,196
Guaranteed loans held as direct loans by the FFB:
Community development
... .
-120
45 - 1 1 0
Total, community and regional development

3,600

2,096

1,715

1,037

671

-104

Includes guarantees of direct loans made by the FFB shown below.
2
The FFB is a mechanism to finance direct loans sold or guaranteed by other Federal agencies. The deductions below eliminate overlap with
transactions shown above in this table. See the introduction to Part 5 for further explanation.

Federal facilities, such as Veterans Administration hospitals, naval
shipyards, and NASA research facilities.
Tax expenditures.—Direct Federal funding for community and
regional development is supplemented by several tax expenditures.
Under certain conditions, taxpayers may elect to amortize rehabilitation expenditures for low- and moderate-income rental housing
over a 5 year period. The 1983 outlay equivalent estimate for this
provision is $60 million. The Economic Recovery Tax Act of 1981
replaced the 10 percent investment credit for the rehabilitation of
buildings that are at least 20 years old with a three-tier system of
investment credits. Under the Act, the credit is 15 percent for
rehabilitation of nonresidential buildings 30 to 39 years old; 20
percent for rehabilitation of nonresidential buildings over 39 years
old; and 25 percent for rehabilitation of certified historic structures. For 1983, the outlay equivalent estimate is $315 million; tax
expenditures for community and regional development total $375
million.

5-102

THE BUDGET FOR FISCAL YEAR 1983

FEDERAL OUTLAYS FOR CIVIL PUBLIC WORKS AND CONSTRUCTION 1
(In millions of dollars)
Function or Program

Federal civil public works: 1
Community and regional development
Water resources projects
Other natural resources and environment..
Energy
Transportation
Veterans hospitals and health
Other
Total, Federal civil public works..
Grants to State and local governments:
Community and regional development:
Community development block grants..
Other
Subtotal, community and regional development..
Highways and mass transit
Other transportation
Pollution control and abatement
Other natural resources and environment.,
Other
Total, grants to State and local governments..
Total, civil public works
1

Outlays for the construction and rehabilitation of physical assets, including privately owned assets.

1981
actual

1982
estimate

1983
estimate

146
2,264
1,121
2,279
446
552
346
7,154

138
2,215
1,143
2,228
480
574
529
7,307

128
2,143
955
1,872
497
637
415
6,647

4,042
1,531
5,573

4,005
1,433
5,438

3,350
1,153
4,503

11,428
469
3,881
277
194

10,726
475
4,050
305
248

10,509
374
3,350
196
176

21,823
28,977

21r242
28,549

19,107
25,754

EDUCATION, TRAINING, EMPLOYMENT, SOCIAL SERVICES

5-103

EDUCATION, TRAINING, EMPLOYMENT, AND
SOCIAL SERVICES
National Needs Statement*
• Assist parents, States, and localities in providing education, especially for educationally disadvantaged, lowincome, and handicapped persons.
• Assist economically disadvantaged or dislocated workers
in finding permanent unsubsidized employment opportunities.
• Maintain stable and productive relations between employers and employees.
• Provide basic social services for needy children, families,
the elderly, and other groups.
The Federal Role in Meeting the Needs:
• Ensure that the Federal Government's participation in
education is limited to appropriate areas of financial
support and does not intrude improperly on parental,
State, and local responsibilities.
• Provide States with block grants for training to help
them give their disadvantaged citizens the skills needed
for access to jobs.
• Assure fairness in the handling of disputes between
unions and management and enforce equitable standards
governing wages and other relations between employers
and employees.
• Allow States the flexibility to direct social services resources to help low-income individuals and others with
special needs.
The Federal role in meeting education, training, employment,
and social services needs should be limited to those specific areas
where a demonstrated Federal responsibility exists and is of sufficient priority to warrant expenditure of scarce Federal budget
resources. Historically, the responsibility for meeting most of these
needs has rested with State or local governments and the private

5-104

THE BUDGET FOR FISCAL YEAR 1983

sector. Most Federal programs in this function have been very
expensive but not very effective, and have encouraged excessive
dependence on the Federal Government. This administration therefore proposes to continue the policies it initiated in its first year by
eliminating low priority activities, combining related activities into
consolidated grants, and phasing out funding where Federal support is not appropriate. Total outlays for this function are estimated to be $21.6 billion for 1983. This is a 31% decrease from the 1981
level of $31.4 billion.
Total outlay equivalent tax expenditures for education, training,
employment, and social services are estimated to be $15.7 billion in
1983.
Several programs in this function are involved in the federalism
initiative described in Part 3 of the Budget. Continuation of these
programs in 1984 and beyond will depend on the specifics of the
initiative or on decisions made by States and localities as part of
the initiative.
The responsibility for education rests primarily with parents and
with State and local governments. In recent years, Federal intervention has imposed many burdensome requirements that have
made the exercise of this responsibility both more costly and more
difficult. To decrease the Federal Government's intervention gradually, the administration proposes to continue many of the existing
programs in 1983, but at lower funding levels and with fewer
regulatory and reporting requirements than in years past. In addition, this budget directs elementary, secondary, and higher education funds more toward those in greatest need.
Most training and employment activities are and should be carried out by the private sector. Private businesses and employers
are far more efficient than the Government at training workers for
specific tasks that contribute to a productive economy. Government
training in most cases has been expensive, often has been for
people who would probably find work anyway, and too frequently
has been for jobs that do not exist. The best contribution the
Federal Government can make to the under-trained and unemployed is to encourage the steady expansion of the private economy
and private employment. The administration's economic recovery
program will assist job seekers much more than expensive and
misdirected Federal employment programs. Some Federal training
programs for the most disadvantaged should continue, but even

EDUCATION, TRAINING, EMPLOYMENT, SOCIAL SERVICES

5-105

these will contribute little if the Federal Government, by excessive
spending that adds to the Federal deficit, retards economic growth.
Those potential workers who have not learned the basic reading,
writing, and arithmetic skills required to get started in an entrylevel job may be helped by publicly financed remedial training
programs. Such training can best be provided by the States, which
can better coordinate it with their already extensive vocational and
adult education programs. States also are in a better position than
the Federal Government to diagnose the problems of their unemployed and to design appropriate solutions.
Different communities have differing needs for social services.
Since social services programs are most appropriately operated by
States or localities, the administration proposes to provide continued assistance through flexible block grants.
For 1981 and 1982, the following major achievements toward
fulfilling the Federal role in this function have been realized:
• streamlining the major elementary and secondary education
program for compensatory education for the disadvantaged to
allow more local flexibility;
• combining over 40 authorized narrow-purpose categorical education programs into a single State block grant; only 27 of
these programs were funded in recent years;
• phasing out the programs providing temporary, federally
funded jobs in State and local governments; among other
drawbacks, these programs had been among the least successful of Federal programs in preparing the unemployed for
unsubsidized jobs in the private sector;
• phasing out the young adult conservation corps, which failed
to focus resources on the most disadvantaged, had one of the
worst records among training and employment programs of
placing former participants in productive activities, and was
one of the most costly training and employment programs per
year of service;
• establishing an outreach program through ACTION to encourage able and successful Vietnam veterans to help their
fellow Vietnam veterans overcome lingering problems associated with military service; and
• creating a block grant for social services, which combined a
number of social services and related activities.

360-000

0 - 8 2 - 1 4

5-106

THE BUDGET FOR FISCAL YEAR 1983

In addition to the federalism initiative that would begin in 1984,
major 1983 budget proposals in education, training, employment,
and social services would:
• Abolish the Department of Education and form a smaller
Foundation for Education Assistance, transferring a number
of programs to other agencies.
• Consolidate programs providing education for the handicapped, rehabilitation services, and vocational and adult education into less cumbersome, but separate, State grants.
• Restrict eligibility for higher education aid to students (grants
and loans) to those most in need and concentrate campusbased student aid funds on work-study rather than on additional grants and loans.
• Provide a block grant to States for training activities. This
would permit an increase in the coordination between education and training programs at the State and local level and
would, by eliminating stipends, prevent costly overlap with
income maintenance programs.
• Continue the Job Corps as a separate federally administered
residential training program serving the most educationally
and economically disadvantaged youth.
• Provide greater flexibility to States in the area of child welfare by consolidating child welfare services, child welfare
training, foster care, and adoption assistance programs into a
single block grant.
NATIONAL NEED: EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES
(Functional code 500; in millions of dollars)

Major missions and programs

BUDGET AUTHORITY
Education:
Elementary, secondary, and vocational education:
Education for the disadvantaged
State education block grant
Indian education
Impact aid
Education for the handicapped:
Existing law
Proposed legislation
Vocational and adult education:
Existing law
Proposed legislation
Other
Subtotal, elementary, secondary, and vocational
education

1981
actual

1982
estimate

3,112
614
352
662

2,481
471
326
453

1,025

784

1983
estimate

1984
estimate

1985
estimate

1,942
433
308
289

1,500
305
291
289

846

782

634

166

131

500
99

500
79

6,713

5,280

4,417

3,809

EDUCATION, TRAINING, EMPLOYMENT, SOCIAL SERVICES

5-107

NATIONAL NEED: EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES—Continued
(Functional code 500; in millions of dollars)
Major missions and programs
Higher education:
Aid to students:
Pell Grants
Campus-based aid
Guaranteed student loans:
Existing law
Proposed legislation
General institutional assistance..
Special institutions
Other
Subtotal, higher education.
Research and general education aids:
Educational research and statistics
Cultural activities

Other
Subtotal, research and general education aids
Subtotal, education
Training, employment, and labor services:
Training and employment:
General training and employment programs:
Existing law
Proposed legislation
Special target groups:
Existing law
Proposed legislation
Job Corps:
Existing law
Proposed legislation
Public service employment
Work incentive program
Federal-State employment service

Other
Subtotal, training and employment..
Other labor services:
Existing law
Proposed legislation
Subtotal, training, employment, and labor
services
Social services:
Social services block grant
Rehabilitation services
Community service programs
Child welfare block grant:
Existing law
Proposed legislation
Services for children, youth, and families..

1981
actual

1982
estimate

1983
estimate

1984
estimate

1985
estimate

2,604
1,198

2,188
1,024

1,400
400

1,000
400

2,535

216
204
157

3,061
-309
228
220
140

3,397
-912
200
222
82

3,689
-1,174
185
223
82

4,035
-1,536
184
223
82

6,913

6,552

4,789

4,405

4,388

75
673
539

62
639
486

62
562
436

62
506
441

62
528
449

1,286

1,186

1,060

1,010

1,039

14,912

13,018

10,266

9,224

9,236

3,902

2,194
1,800

1,800

200

387

782
561

290
586

2,606
365
799
94

246
547
83

487
81

487
70

9,109

3,945

2,955

2,944

606

585

639
-2

645
-2

649
_2

9,715

4,530

3,592

3,587

3,591

2,399
938
525

2,400
848
378

1,974
637
104

1,974
639
103

174

465

832

923

420
-40
923

420
-40
928

5-108

THE BUDGET FOR FISCAL YEAR 1983

NATIONAL NEED: EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES—Continued
(Functional code 500; in millions of dollars)
Major missions and programs

Services for the elderly and other special groups-.
Existing law
Proposed legislation
Domestic volunteer programs
Other social services
Subtotal, social services.,
Deductions for offsetting receipts.
Total, budget authority
OUTLAYS
Education:
Elementary, secondary, and vocational education:
Education for the disadvantaged
State education block grant
Indian education
Impact aid
Education for the handicapped:
Existing law
Proposed legislation
Vocational and adult education:
Existing law
Proposed legislation
Other
Subtotal, elementary, secondary, and vocational
education
Higher education:
Aid to students:
Pell Grants
Campus-based aid
Guaranteed student loans:
Existing law
Proposed legislation
General institutional assistance..
Special institutions

Other
Subtotal, higher education..
Research and general education aids:
Educational research and statistics
Cultural activities
Other
Subtotal, research and general education aids..
Subtotal, education
Training, employment, and labor services:
Training and employment:
General training and employment programs:
Existing law
Proposed legislation

1981
actual

1982
estimate

1983
estimate

1984
estimate

1985
estimate

129
63

778
-4
118
59

782
-4
109
59

5,935

5,989

4,968

4,970

-13

-31

-32

-33

-34

30,550

23,507

18,794

17,747

17,762

3,354
735
316
697

2,978
666
326
580

2,553
578
314
359

1,997
441
291
307

1,568
335
284
290

1,035

1,255

839
38

187
651

846

122
415
110

12
490
84

829

783

153
87

728

1,120

178

156

474
170
142

7,043

7,092

5,467

4,521

3,908

2,495
1,411

2,296
1,195

2,122
1,015

1,336
425

1,008
400

2,259
256
206
162

3,039
-232
315
224
145

3,313
-762
277
241
139

3,616
-1,108
121
231
89

3,948
-1,445
108
225
82

6,790

6,982

6,346

4,709

4,326

61
663
500

91
663
550

106
623
544

68
514
471

62
515
449

1,223

1,304

1,273

1,052

1,026

15,056

15,378

13,086

10,282

9,260

4,150

2,972

596
900

2,250

1,800

EDUCATION, TRAINING, EMPLOYMENT, SOCIAL SERVICES

5-109

NATIONAL NEED: EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES—Continued
(Functional code 500; in millions of dollars)
1981
actual

Major missions and programs
Special target groups:
Existing law
Proposed legislation
Job Corps:
Existing law
Proposed legislation
Public service employment
Work incentive program
Federal-State employment service..
Other

874

Subtotal, training and employment..
Other labor services:
Existing law
Proposed legislation
Subtotal, training, employment, and labor
services
Social services:
Social services block grant
Rehabilitation services
Community services programs
Child welfare block grant:
Existing law
Proposed legislation
Services for children, youth, and families
Services for the elderly and other special groups.Existing law
Proposed legislation
Domestic volunteer programs
Other social services

Subtotal, social services..
Deductions for offsetting receipts.
Total, outlays
ADDENDUM
Off-budget Federal entity:
Federal Financing Bank:
Higher education:
Budget authority
Outlays

1982
estimate

692

1983
estimate

94
180

1984
estimate

1985
estimate

200

387

275
269
547
90

90
320
4
11
487
81

487
71

487
70

9,241

5,439

2,764

3,395

2,944

587

584

635
-2

644
-2

648
-2

9,828

6,023

3,397

4,037

3,590

2,646
1,007
619

2,912
788
508

1,974
641
183

1,974
655
104

1,974
655
103

180

493

916

857

423
-40
892

420
-40
919

915

630

150
97

133
81

843
_4
119
69

774
-4
113
66

774
-4
109
65

6,531

6,400

5,101

4,980

4t974

-13

-31

-32

-33

-34

31,402

27,770

21,552

19,266

17,791

1,955
1,955

700
700

540

595

2,399
381
804
93

Education

The Federal Government traditionally has had only a small role
in the financial support of education. In 1981, only about 10% of
the total national support for education came from the Federal
Government. However, the Federal Government's influence on parental, State, and local education decisionmaking has been growing
rapidly in recent years.

5-110

THE BUDGET FOR FISCAL YEAR 1983

The administration believes that Federal involvement should
return to more traditional minimal levels. This budget includes
proposals that would restore a more appropriate Federal-State balance and would substantially reduce the Federal regulatory burden
imposed on States and localities. Two major grant consolidations
are proposed; they are designed to give more discretion to States
and localities. Significant reductions in funding for almost all programs are also requested.
The creation of the Department of Education symbolized the
progressive intrusion of the Federal Government into an educational system that has drawn its strength from diversity, adaptability,
and local control. Legislation is being transmitted to abolish the
Department of Education, form a Foundation for Education Assistance, and transfer several programs to other agencies whose missions are more appropriate for these activities. The Foundation and
the other proposals in this budget would affirm that the primary
responsibility for education rests with parents, the States, and local
school systems.
Programs administered by the Foundation for Education Assistance would emphasize:
• leadership that strengthens State, local, and private control;
• more family and private resource involvement in providing
student financial assistance to needy college students and
more aggressive policies to collect overdue loans;
• limited assistance to special student populations at the elementary and secondary school level and greater use of block
and consolidated grants;
• research and limited data collection; and
• civil rights investigation and related activities, except enforcement, which would be transferred to the Justice Department.
Federal spending for 1983 is expected to continue its decline from
the excessive levels reached in recent years. For 1983, the administration proposes $10.3 billion in budget authority for education
programs, $2.8 billion less than is proposed for 1982. Outlays are
estimated to be $15.4 billion for 1982 and $13.1 billion for 1983.
These estimates assume Congressional approval of rescissions of
$1.2 billion and supplemental requests—primarily for guaranteed
student loans and for developing institutions—of $1.0 billion in
1982 budget authority.
The 1983 budget request includes:
• $4.4 billion in budget authority for elementary, secondary,
and vocational education programs;
• $4.8 billion in budget authority for Federal assistance to support higher education; and
• $1.1 billion in budget authority for research and general education aids.

EDUCATION, TRAINING, EMPLOYMENT, SOCIAL SERVICES

5-111

Elementary, secondary, and vocational education.—Most of the
funds requested in the 1983 budget for elementary, secondary, and
vocational education are to assist States and localities in providing
education to students within priorities determined locally.
Education for the disadvantage^—The largest share of the funds
for elementary and secondary education goes to States and localities for supplementary compensatory education services—such as
special classes in reading and mathematics—to low-income, lowachieving students under Chapter 1 of the newly enacted Education Consolidation and Improvement Act (ECIA) of 1981. In the
1983-84 school year, approximately 13,800 school districts in all 50
States, the District of Columbia, Puerto Rico, and the outlying areas
will participate in these programs, serving an estimated 4.3 million
students. The 1983 request of $1.9 billion in budget authority is $539
million below the 1982 level.
State education block grant—Chapter 2 of ECIA combines over
40 authorized categorical programs. (Only 27 of these programs
were funded in recent years.) State and local education agencies
will determine which of the Act's authorized activities most appropriately address local educational priorities. In 1983, $433 million
in budget authority is requested for Chapter 2, $38 million less
than is provided in 1982.
Indian education.—Budget authority of $308 million is requested
for 1983 to support the education of Indians, $18 million less than
in 1982. The Bureau of Indian Affairs (BIA) provides support for
the education of Indian children through direct operation of 200
elementary and secondary schools, support of tribally operated
schools, and financial assistance to public schools serving Indian
children. BIA also assists Indian adults by providing financial assistance for higher education, by direct support of tribally operated
post-secondary institutions, and by operating continuing education
programs on many reservations. Under the administration's proposal to abolish the Department of Education, programs in this
area that were formerly administered by the Department would be
transferred to BIA.
Impact aid—This program compensates local school districts
whose revenues are reduced because the parents of school-aged
children live or work on tax-exempt Federal property. Payments
are made directly to the local districts, which use them for operating expenses and, in some cases, construction. The administration
proposes to limit this assistance in 1983 to only those districts most
directly affected by Federal activity. Payments would be made to
districts only on behalf of children whose parents both live and
work on Federal property. The Department of the Treasury would

5-112

THE BUDGET FOR FISCAL YEAR 1983

have primary responsibility for this program. Construction payments for schools serving military personnel would be transferred
to the Department of Defense and are classified in the national
defense function. Similarly, responsibility for construction of
schools serving children living on Indian lands would be transferred to the Department of the Interior. The budget includes a
request for 1983 budget authority of $289 million and estimated
outlays of $359 million for impact aid payments, including program
administration.
Education for the handicapped.—Federal funds from two sources
help States and localities educate handicapped children. For 1983
the administration is proposing legislation to consolidate programs
authorized by the Education of the Handicapped Act and activities
for education of the handicapped funded under Chapter 1 of the
Education Consolidation and Improvement Act of 1981 into one
State block grant. Under this approach, States would be able to use
funds more effectively and efficiently than in previous years because of reduced Federal restrictions and regulations. For 1983,
$846 million in budget authority is requested, which is $54 million
less than the $900 million in budget authority requested for the
prior categorical programs in 1982, $116 million of which is shown
under education for the disadvantaged.
Vocational and adult education.—Vocational education funds
assist youth in preparing for careers and assist adults who are in
need of training or retraining. These funds, currently provided
under several categorical grants with overlapping purposes, are
used by States and local agencies to teach work and work-related
skills. The adult education program provides formula grants to
States to reduce functional illiteracy. Legislation is proposed to
consolidate vocational and adult education authorities into a simplified grant to the States, starting in 1983. This will enable States
to select the appropriate mix of activities to address vocational and
adult education issues in their areas. Budget authority of $500
million is requested for 1983, a $134 million decrease from 1982.
Higher education.—The administration requests $4.8 billion in
budget authority and $6.3 billion in estimated outlays to support
higher education activities in 1983.
Federal aid to postsecondary students helps qualified students
enter and complete schooling beyond the twelfth grade. These
grants, direct loans, loan guarantees, and work-study stipends have
expanded from $250 million in budget authority in 1965 to $6.3
billion in 1981. Growth in these programs has been especially rapid
in the last few years, as indicated by the accompanying chart.

EDUCATION, TRAINING, EMPLOYMENT, SOCIAL SERVICES

5-113

Included in the 1983 budget are proposals to control the rapid
cost increases in student aid, especially in the guaranteed student
loan program. Reforms will be proposed in the student loan programs, such as limiting participation to students with proven financial need and reducing the amount of Federal subsidy per loan.
In addition, limits will be placed on Federal grant assistance and
increases have been made in expected family and student contributions to educational costs.

Aid to students.—Aid to students includes all of the major student aid programs. Budget authority of $4.3 billion and estimated
outlays of $5.7 billion are requested for 1983.
Pell Grants provide financial aid directly to undergraduate students and form the base upon which other financial aid is awarded.
Students qualify for these grants under a needs analysis, performed uniformly nationwide, that takes into account the ability of
the student's family to contribute to educational costs. The 1983
request of $1.4 billion in budget authority would allow a maximum
award of $1,600 per eligible student, a decrease of $70 from the
maximum award level proposed for 1982. In the 1983-84 school
year, an estimated 1.8 million students would receive Pell Grants.
There are currently three campus-based aid programs: national
direct student loans, college work-study, and supplemental educational opportunity grants. Under these programs, each institution

5-114

THE BUDGET FOR FISCAL YEAR 1983

determines a student's individual need under guidelines provided
by the Federal Government. In 1983, the administration requests
budget authority of $400 million for the college work-study program, which provides stipends to students who work while in
school. The administration proposes to eliminate funding for the
supplemental educational opportunity grant program and discontinue Federal contributions of capital funds to the national direct
student loan program. Even without additional Federal capital contributions, repayments on prior-year loans will make available $435
million for the national direct student loan program, allowing
590,000 new loans.
The administration's 1983 request for the guaranteed
student
loan program (GSL) of $2.5 billion in budget authority and $2.6
billion in estimated outlays would provide new loans to 2.8 million
undergraduate students and 1.4 million "auxiliary" loans to parents and graduate and professional students. Several reforms are
proposed for the guaranteed student loan program in 1982 and
1983 to reduce future costs, provide help according to need, and
produce a more equitable distribution of loans. These reforms
would:
• increase the loan "origination fee" charged on new loans from
5 to 10%;
• apply the GSL need analysis to students from all income
levels;
• allow graduate and professional students to borrow only
under the much less subsidized auxiliary loan program;
• increase the insurance premiums paid on GSL's to the Federal Government by: (a) increasing the premium charged lending institutions in the federally insured loan program, which
accounts for 5% of new loan volume, from V* to 1%, and (b)
initiating a reinsurance premium charged State and private
guarantee agencies, which account for 95% of new loan
volume, equal to V2 of the yearly income of the agencies from
the insurance premium these agencies charge their participating lending institutions; and
• limit special allowance payments to the in-school periods plus
a 2-year period following graduation or withdrawal from
school.
These proposals would save $232 million in estimated outlays in
1982 and $762 million in 1983. Even with these changes, $1.2 billion
in estimated 1982 outlays are required by loan commitments made
under prior agreements that allowed larger interest subsidies.
Total outlays for this program are estimated to decrease from $2.8
billion in 1982 to $2.6 billion in 1983 and $2.5 billion in 1984.
General institutional

assistance.—The

major program in this

area provides grants to strengthen institutions serving large num-

EDUCATION, TRAINING, EMPLOYMENT, SOCIAL SERVICES

5-115

bers of disadvantaged students, especially black colleges. Institutions receiving assistance have considerable flexibility in determining how funds will be used. Funds may provide support services to
students, finance outreach efforts, or improve the administrative
and academic capabilities of the institution. The budget proposes
budget authority in both 1982 and 1983 of $130 million for this
program. The request represents an increase of $10 million over
the 1981 level. In addition, $9 million will be made available to
establish an aerospace science and engineering education center at
Tuskeegee Institute as a memorial to General Daniel James.
The administration has been particularly concerned with the
level of support provided for traditionally black colleges. Federal
outlays for education programs directly supporting black colleges
are estimated to be $212 million in 1983, $26 million more than in
1982. In addition, black colleges will continue to receive a substantial amount of student financial assistance in 1983 under the administration's student aid proposals. These proposals focus aid on
the lowest income students, who make up a significant proportion
of the enrollment at these colleges.
Budget authority of $70 million is requested in 1983 for other
general institutional assistance programs such as the higher education facilities loan and insurance program. The administration is
proposing a 1982 rescission that would result in no funding for the
following general institutional assistance programs: veterans cost
of instruction, educational outreach, cooperative education, aid to
land grant colleges, public service fellowships, mining fellowships,
and law school clinical experience. No funding is requested in 1983
for these programs or for the graduate professional opportunities
fellowships and the program for legal training for the disadvantaged. These programs were designed to serve special groups that
are eligible for assistance under other higher education programs.
Special institutions.—The American Printing House for the
Blind (classified in elementary, secondary, and vocational education), Gallaudet College, the National Technical Institute for the
Deaf, and Howard University are private institutions that receive
direct appropriations from the Federal Government. Under the
administration's proposal for the Foundation for Education Assistance, funding for the special institutions, except Howard University, would be transferred to the Department of Health and Human
Services in 1983. Howard University would be funded through the
Foundation. In 1982, a supplemental request of $5.8 million in
budget authority is included for Howard University to help overcome accreditation deficiencies. The 1983 request for the higher
education special institutions is $222 million in budget authority
and $241 million in estimated outlays, slightly higher than in 1982.

5-116

THE BUDGET FOR FISCAL YEAR 1983

Other.—Funds are made available to a variety of agencies and
groups to provide support services that encourage the disadvantaged to enter or complete postsecondary education. In 1983,
budget authority of $82 million is requested for these programs.
CREDIT PROGRAMS—EDUCATION
(In millions of dollars)
Direct loan obligations
Program

Guaranteed student loans
Student financial assistance
Guarantees of SLMA obligations *
Other education .
Off-budget Federal entities: 2
Federal Financing Bank:
SLMA obligations
Subtotal, gross

1981
actual

1982
estimate

Guaranteed loan commitments

1983
estimate

238
183

410
179

548

138

344

100

1,955

700

2,514

1,633

648

Less:
Guaranteed loans held as direct loans by the FFB:
Guarantees of SLMA obligations
Secondary guarantees:
Guarantees of SLMA obligations
Total, education

2,514

1,633

648

1981
actual

1982
estimate

7,762

9,500

1,955

700

9,717

10,200

-1,955

-700

-1,955

-700

5,807

8,800

1983
estimate

10,300

Credit programs.—The major education credit program, the guaranteed student loan program, is expected to generate $10.3 billion
in new guaranteed loan commitments in 1983. Federal capital contributions to the national direct student loan program, a part of aid
to students, are proposed to be terminated. Other education credit
would continue at stable levels with no new lending activities.
Prior to 1983 the Federal Government has supported the guaranteed student loan program by granting Federal Financing Bank
financing for the obligations of the Student Loan Marketing Association (SLMA), which provides a secondary market for student
loans. Beginning in 1983, SLMA will finance its operations solely
from private sources.
Research and general education aids.—The administration requests $1.1 billion in budget authority for educational research and
statistics, cultural activities, and other general education, including
the cost of administering programs.
The budget includes $62 million in budget authority for 1982 and
1983 educational research and development activities and for limited collection of educational statistics. The budget also requests $562
million in 1983 budget authority for cultural activities, including

EDUCATION, TRAINING, EMPLOYMENT, SOCIAL SERVICES

5-117

budget authority of $101 million for the National Endowment for
the Arts and $97 million for the National Endowment for the
Humanities. No funding is requested for the Institute of Museum
Services, established as an independent agency in 1981. Funds for
the Corporation for Public Broadcasting are provided 2 years in
advance; this budget includes $110 million in budget authority for
1985, $27 million less than in 1983. These reduced levels of funding
reflect the administration's intent to encourage direct beneficiaries
and the private sector to make larger contributions to cultural
activities. Budget authority of $227 million for the Smithsonian
Institute is also requested in 1983.
Other research and general education aids includes the cost of
administering programs in the Library of Congress, the Foundation
for Education Assistance, and other independent agencies. Budget
authority of $436 million is requested for these costs in 1983.
OUTLAYS FOR EDUCATION SUPPORTING OTHER MAJOR MISSIONS
(In millions of dollars)
Agency
Elementary and secondary education:
Health and Human Services

Defense
Veterans A d m i n i s t r a t i o n . . . .
Agriculture
Interior
Other

...

Subtotal, elementary and secondary education
Higher education:
Health and Human Services
Defense
Veterans Administration
Agriculture
Interior
Other
Subtotal, higher education

1981
actual

1982
estimate

1983
estimate

616
633
242

406
685
250

282
733
223

4,009
16

3,266
18

3,213
20

723

591

375

6,239

5,216

4,846

2,370

1,645

686

818

975
870

1,744
12
53
79

1,474

1,203

53
71

47
57

4,944

4,061

3,152

423

325

236

701
187
298
36
12
599
154

812
149
320
12
12
176
150

939
111
317
12
12
16
170

2,410

1,956

1,813

13,593

11,233

9,811

Other:

Health and Human Services
Defense
Veterans Administration
Agriculture
Transportation
Justice
Labor
Other
Subtotal, other
Total

5-118

THE BUDGET FOR FISCAL YEAR 1983

Tax expenditures.—The major tax expenditures that aid higher
education are the exclusion of interest on State and local student
loan bonds, the personal income tax exemptions available to parents of children age 19 and over who are in school, the deductibility of charitable contributions to educational institutions, and employer educational assistance plans. The outlay equivalent estimates for these provisions in 1983 are $170 million, $1.0 billion,
$940 million, and $55 million, respectively. Later in the year, the
administration will transmit to the Congress a plan to implement
a program of tax credits for families of tuition paying students.
Related programs.—Many Federal programs are related to education, although their primary purpose is to meet other national
needs. For example, veterans readjustment benefits provide assistance to eligible veterans attending school. The Department of Defense operates the service academies and schools for the dependents of military personnel. The Department of Labor training programs previously authorized by the Comprehensive Employment
and Training Act (CETA) were frequently conducted through State
and local education agencies. CETA also provided special grants to
be used by, or in cooperation with, education agencies to increase
coordination between education and training programs. This coordination is expected to increase under the provisions of the block
grant to States for training that will be proposed to replace CETA
in 1983. The accompanying table shows major education-related
programs that support other missions.
Training, Employment, and Other Labor Services
Programs that carry out the training and employment mission
are intended to improve the operation of the labor market and
enhance individuals' long-term employment and earnings prospects. Some programs provide training that is intended to develop
and improve work skills or provide job counseling and labor exchange services that match workers and jobs. Other labor services
programs include the regulation of employer-employee relations
and the publication of labor statistics. The administration believes
that most training and employment activities should be carried out
by the private sector and that, in areas where potential workers
lack basic skills required for entry-level jobs, training can best be
provided by the States which are already responsible for vocational
and adult education programs. Therefore, the budget includes $3.4
billion in estimated outlays for these activities in 1983, a reduction
of $2.6 billion from the 1982 estimate of $6.0 billion.
Training and employment—Beginning in the 1960's the Federal
Government embarked on a series of initiatives that was based on
the belief that normal market mechanisms would not work well

EDUCATION, TRAINING, EMPLOYMENT, SOCIAL SERVICES

5-119

enough to keep cyclical or structural unemployment at a socially
acceptable level. As a result, the programs enacted were generally
intended to improve the labor market position of the worst off in
society through training, subsidized employment, counseling, and
related activities. Outlays for training and employment programs
increased steadily over the years from $194 million in 1962 to $9.2
billion in 1981, including large temporary increases for public
sector jobs as part of the economic stimulus programs in 1977 and
1978.
The most recent in the panoply of major training and employment programs is the Comprehensive Employment and Training
Act (CETA) of 1973. Originally intended to consolidate the myriad
of categorical programs authorized by its predecessors into a block
grant to local governments, CETA was continually amended so that
the use of funds by local governments was restricted to several
separate activities designed to provide specific services to narrowly
defined population groups. The enactment of these special categorical programs, first for public service jobs and later for various
youth activities, thwarted CETA's original purpose of allowing
States and localities to carry out programs to meet the particular
needs of their citizens, created severe administrative burdens for
grant recipients, and often precluded the development of efficient
and effective programs.
The authority for CETA appropriations expires at the end of
fiscal year 1982. Initiatives undertaken in 1981 to phase out the
public service jobs programs were a first step in eliminating the
categorical grants under CETA and restoring the training and
employment programs to their original purpose of improving longterm employability by providing the disadvantaged with skills that
are marketable in the private sector. For 1983, the administration
is proposing legislation to replace the expiring CETA. This proposal
would:
• consolidate current training and employment categorical
grant programs into a block grant to the States for training;
• continue the Job Corps residential training program, which
serves the most educationally and economically disadvantaged
youth; and
• provide authority for Federal training programs for special
target groups that have the most difficulty establishing or
maintaining ties to the labor market.
The last authority would permit the Federal Government to
continue serving such groups as Indians, seasonal farmworkers,
older Americans, and those displaced from jobs by changing patterns of international trade.
General training and employment programs.— The block grant
proposed for 1983 would accomplish several purposes. First, it

5-120

THE BUDGET FOR FISCAL YEAR 1983

would remove the artificial categorization of Federal assistance
that has prevented recipients from using grant resources to address
their most pressing training and employment problems. Programs,
service mix, and geographical areas and the types of people
served can then vary from State to State depending on economic
situations within the State and on the degree States choose to
coordinate other training, education, and labor market services
with the block grant training resources. Second, by directing resources to the States, the legislation would permit increased coordination among programs intended to provide training and to improve the operation of the labor market, such as vocational and
adult education and the employment service, which are already
primarily the responsibility of State governments. Third, the payment of training stipends, which may now supplant regular income
maintenance, would be eliminated. These stipends often have enticed people to enter training programs for short-term income
rather than long-term earnings or employability gains. This would
assure that those who participate in training are those most serious about improving their skills. Although few restrictions on the
use of funds will be included in the proposed legislation, no Federal
funds could be used for public service employment or work experience activity.
Outlays for the block grant for training and employment are
estimated to be $900 million in 1983. Outlays for prior CETA
grants are expected to be $596 million in 1983. Total outlays will be
$1.5 billion less than in 1982.
Special target groups.—The Federal Government finances other
training and employment services in addition to the grants to
States and local prime sponsors authorized under CETA. These
programs have been primarily for groups that have special difficulty in forming permanent attachments to the labor force or who
have experienced sudden and severe changes in their labor market
status. The administration's legislative proposal for training and
employment programs in 1983 will include a nationally-administered program authorizing the provision of training and employment services to special target groups. Included among these target
groups could be older workers, Indians and other Native Americans, migrants, and other groups such as displaced homemakers or
experienced workers dislocated due to increased imports. Because
older workers could be served under this proposal, separate funding for the community service employment program for older
Americans is not requested in 1983. Outlays for these programs are
estimated to be $274 million in 1983, a decrease of $418 million
from 1982; $180 million of these outlays in 1983 would be from the
new program.

EDUCATION, TRAINING, EMPLOYMENT, SOCIAL SERVICES

5-121

Job Corps.—The Job Corps residential training program would be
reduced from an expected enrollment of 32,000 at the end of 1982
to a level of 22,000 at the end of 1983. This end-of-year level is
roughly equal to service levels achieved during most of the 1970's.
Unit costs would be held to a minimum through such actions as
closing federally operated centers, which are more expensive than
centers operated by private contractors. The administration expects
to request budget authority of $387 million for the Job Corps under
the new legislation in 1983.
Public service employment.—Two public service employment programs under CETA provided temporary, federally subsidized employment for low-income, unemployed persons in public or nonprofit agencies. These programs failed as countercyclical stimulus programs, often replaced local resources that could otherwise have
been used for any necessary work that these employees might have
performed, and were generally less successful than other CETA
components in preparing the structurally unemployed for jobs in
the private sector. These programs were phased out in 1981. A
freeze on new hiring was imposed in March; all participants had
left their federally subsidized jobs by September 30, 1981. Outlays
of $275 million are estimated for 1982 for the cost of closing out
both public service employment programs.
Work incentive (WIN)program.—-The WIN program has provided
persons receiving aid to families with dependent children (AFDC)
training, job counseling, and labor market services. The administration is proposing to terminate this program at the end of 1982
and, in its place, is proposing comprehensive social welfare amendments that would require States to establish a community work
experience program (CWEP). This program would provide ablebodied AFDC recipients with public sector work assignments and
would require recipients to work enough hours to offset their welfare benefit calculated at the minimum wage. Passage of this proposal would make WIN unnecessary. (This proposal is described
more fully in the income security function, where outlays for the
new program are classified.) Outlays connected with WIN program
termination in 1983 are estimated to be $11 million.
The Omnibus Budget Reconciliation Act of 1981 authorized
States to elect to participate in a 3-year WIN demonstration program in lieu of their regular WIN program. Resources for continuing these demonstrations or other WIN-type activities in 1983
would be available under the block grant to States for social services. The WIN tax credit is discussed under tax expenditures.
Federal-State employment service.—Job matching services are
provided for job seekers and employers free of charge by State
360-000

0 - 8 2 - 1 5

5-122

THE BUDGET FOR FISCAL YEAR 1983

employment service agencies financed by Federal grants. During
1981, the employment service began a redirection of its job finding
services to focus on those who most need assistance and to provide
others with the basic tools necessary to carry out their own search
for jobs. Staff levels are being reduced in 1982 and 1983 as available Federal resources decline. The 1983 request for grants to States
for employment services, combined with the grants to operate the
State unemployment insurance offices, is the maximum permitted
by law, given the anticipated level of receipts of Federal unemployment taxes available for this purpose. Budget authority of $487
million is requested for the Federal and State cost of administering
the employment service in 1983, $60 million less than in 1982.
Other labor services.—The Federal Government establishes and
enforces standards affecting the relationship between employers
and employees and between unions and their members. The activities include enforcement of the minimum wage and related laws,
regulation of welfare and pension plans, supervision of labor-management relations, regulation of the equal employment practices of
Federal contractors, and assurances that election of labor union
officials are democratic and that such officials do not abuse their
stewardship. In addition, employment and unemployment statistics
and data on wages, prices, and productivity are collected and disseminated. Outlays for these activities are estimated at $633 million in 1983.
Job safety and health activities are included in the health function; activities relating to job discrimination on the basis of race,
age, or sex are included in the administration of justice function.
Tax expenditures.—The tax code provides incentives for employers to hire disadvantaged individuals and recipients of certain welfare benefits. Tax credits are also provided to encourage individuals
with dependents to work by allowing tax credits for child care
expenses.
The targeted jobs tax credit provides employers with a credit of
50% of the first $6,000 of a covered employee's wages in the first
year and 25% in the second year. This credit was reauthorized and
amended by the Economic Recovery Tax Act of 1981. The Act
extends the life of the tax credit through December 31, 1982, and
allows a 2-year tax credit to an employer for each qualified employee who begins work before January 1, 1983. The previous categories
of economically disadvantaged individuals eligible for the program
were retained (youth ages 18 to 25, Vietnam veterans, general
assistance and SSI recipients, cooperative education students, exoffenders, and handicapped individuals undergoing vocational rehabilitation). WIN registrants and individuals involuntarily terminated from CETA public service employment programs were added,

EDUCATION, TRAINING, EMPLOYMENT, SOCIAL SERVICES

5-123

thereby replacing the WIN tax credit. In addition, two failings of
the previous tax credit were addressed: retroactive certifications of
workers are limited, and cooperative education students are not
eligible for the credit unless they are economically disadvantaged.
The outlay equivalent estimate for the targeted jobs credit is $200
million in 1983.
Employment is also encouraged by a credit for 20% of child care
expenses incurred to allow people with dependent children to work.
The Economic Recovery Tax Act of 1981 increased the child care
credit to 30% for taxpayers with incomes of $10,000 or less. The
Act also increased the maximum credit per year from $400 to $480
for one child and from $800 to $960 for 2 or more children. The
outlay equivalent estimate for this credit is $2.0 billion in 1983.
Training and employment-related programs.—A number of Feder-

al programs are related to training and employment, although
their primary purpose is to meet other national needs and serve
other missions. The following table shows major training and employment-related programs that support other national needs. The
table does not include programs that are primarily for economic
development.
TRAINING AND EMPLOYMENT OUTLAYS IN OTHER NATIONAL NEEDS
(In millions of dollars)
National needs

Natural resources and environment
Community and regional development
Education
Social services1
Income security
Veterans benefits and services
Administration of justice
Allother
Total
1

1981
actual

19
29
1,209
1,150
33
516
139
237
3,332

1982
estimate

7
26
1,533
981
152
521
148
213
3,582

1983
estimate

22
1,110
796
22
457
150
210
2,769

Assumes service mix in social service block grant identical to predecessor programs.

Social Services
The Federal Government provides funds to States and to local
public and private institutions for a variety of social services.
These services are primarily designed to meet the needs of lowincome people, children and youth, the elderly, the disabled, and
other groups with special needs. Many of these programs are more
appropriately administered by States, localities, or private groups
who are much better able to judge local needs. In 1981, the administration proposed, and Congress enacted, legislation to consolidate
many of these programs. This not only enhances State flexibility to
target resources where they are most needed but also permits

5-124

THE BUDGET FOR FISCAL YEAR 1983

significant efficiencies and savings in program administration. The
administration is proposing additional consolidations for 1983. Outlays for social services are estimated to decrease from $6.4 billion
in 1982 to $5.1 billion in 1983.
Social services block grant—The Omnibus Budget Reconciliation
Act of 1981 created a block grant for social services that consolidated several social services related activities. States have wide
discretion in determining the types of services offered and who is
eligible to receive them. The broad array of services provided by
the States includes child day care, foster care, child protective
services, homemaker services, family planning, preparation and
delivery of meals, transportation, counselling, legal services, and
substitute care and day care for adults. Funds may be used for
State and local administrative costs, including planning, evaluation, staff training, and conferences or workshops. The funds are
distributed among the States on the basis of population.
States also have the flexibility of transferring up to 10% of any
block grant allotment to other block grants, which support health
services, health promotion and disease prevention activities, or lowincome home energy and emergency assistance.
Budget authority of $2.0 billion is requested for the social services block grant in 1983, $0.4 billion less than 1982.
Rehabilitation services.—In 1983, under the administration's
Foundation for Education Assistance proposal, rehabilitation services programs formerly administered by the Department of Education would be transferred to the Department of Health and Human
Services. This includes the National Institute for Handicapped Research, which is now shown in "other social services."
Budget authority of $637 million is requested in 1983 for rehabilitation services. The administration will propose legislation to consolidate the many categorical programs in this area. Federal funds
support a variety of services designed to help disabled individuals
become self-sufficient. Reduced Federal restrictions and regulations
would allow States and social services agencies to use these funds
more effectively and efficiently than in prior years.
Community service programs.—In 1983, budget authority of $104
million is requested for community services programs, including
$100 million for grants to States under the newly authorized community services block grant. These funds would provide community-based services that could have a major impact on the causes of
poverty. Community services programs assist poor persons in a
variety of areas such as employment and education. These programs use a wide range of services including those provided by the
private sector.

EDUCATION, TRAINING, EMPLOYMENT, SOCIAL SERVICES

5-125

Estimated outlays for community services programs in 1983 include $100 million for the community services block grant and $33
million for the unexpended obligations of the Community Services
Administration, which was terminated on September 30, 1981.
These funds will be used for final payments for CSA grant activities financed from appropriations in earlier years and will be administered by the Department of Health and Human Services.
Child welfare block grant.—Legislation is being proposed to consolidate child welfare services, child welfare training, foster care,
and adoption assistance into one child welfare block grant. Budget
authority of $380 million in 1983 is requested for this grant program, a decrease of $85 million from 1982. The block grant would
support State services that are designed to strengthen and reunite
families and place children promptly and permanently in adoptive
homes when they cannot be reunited with their families. (The 1982
amounts for child welfare shown here exclude $300 million that is
shown in the income security function.)
Services for children, youth and families.—These programs are
designed to .improve the quality of services for children and to
protect neglected, abused, and homeless children. Budget authority
of $923 million is requested for these programs in 1983, a slight
decrease from 1982. For 1983, budget authority of $912 million is
requested for Head Start, which assists local community groups in
providing comprehensive services for low-income pre-school children and their families. This level will allow the program to maintain enrollment of 377,300 children and will enable local projects to
reduce overcrowding in Head Start classrooms.
Services for the elderly and other special groups.—For 1983, the

budget requests budget authority of $774 million for social services
for elderly people and other special groups, a slight decrease from
1982.
Grants are made to State and area agencies on aging to assist in
financing a range of services to older Americans, particularly those
with the greatest economic and social need. State and area agencies analyze and evaluate the need for services, act as advocates on
behalf of the elderly, furnish technical assistance to service providers, and help to coordinate systems of services for older people.
Services delivered locally include transportation, information and
referral, legal, and community services in addition to a variety of
services provided in the home.
These services include nutrition projects for the elderly, which
finance meals served in a group setting or delivered to the homebound elderly. Budget authority of $390 million is requested for

5-126

THE BUDGET FOR FISCAL YEAR 1983

these projects in 1983, the same as the 1982 level. The 1983 request
would finance approximately 608,000 meals daily.
Domestic volunteer programs.—ACTION, a Federal agency for
volunteer programs, supports Foster Grandparents, the Retired
Senior Volunteer Program (RSVP), Senior Companions, and programs to stimulate volunteer services. In 1983, 345,200 RSVP volunteers are expected to work on community needs, 18,100 foster
grandparents are expected to serve 54,000 children with special
needs, and 4,100 senior companions are expected to provide longterm care to 14,500 frail and elderly people. No budget authority is
requested for the Volunteers in Service to America (VISTA) program for 1983. ACTION will encourage volunteer service through
technical assistance, demonstrations, and small grants and will
support groups of Vietnam veterans to help other veterans of the
Vietnam war with problems stemming from their military service.
Outlays for ACTION are estimated to decrease from $133 million
in 1982 to $119 million in 1983.
Other social services.—Budget authority of $59 million is requested in 1983 to support research, demonstration, training and technical assistance, and evaluation activities in a variety of human
services areas. These include the abuse and neglect of children, day
care, placing children who are difficult to adopt, information systems, service delivery, strengthening family and community support systems, and the National Institute for Handicapped Research,
which develops rehabilitation methods and equipment for the disabled.
Tax expenditures.—The provision of social services by a wide
variety of private institutions is encouraged by the tax deductibility of contributions to those institutions. The outlay equivalent
estimate for charitable contributions, other than to educational
and health institutions, is $8.1 billion in 1983.

HEALTH

5-127

HEALTH
National Needs Statement:
• Promote the health of the population.
The Federal Role in Meeting the Need:
• Promote competition to reduce the rate of inflation in
health care costs.
• Improve the efficiency and effectiveness of Federal
health care programs.
• Support health care for the poor.
• Promote preventive health and health maintenance
measures.
• Acquire knowledge regarding the causes, prevention, and
treatment of disease.
J

The administration has begun to restructure the Federal role in
financing and providing health care services. The Omnibus Budget
Reconciliation Act of 1981 included a number of the administration's proposals that will help to reduce Federal regulation and
control over the provision of health services. This budget proposes
more changes to:
• Moderate the excessive rate of increase in health care costs
through improvement of market forces. In support of the objective of strengthening market forces in health care, the administration is proposing elimination of ineffective Federal regulatory activities, including the health planning and professional standards review organization (PSRO) programs. Later
this year the administration will propose major reforms of the
current health care financing system to introduce more price
discipline into the health care market and moderate the explosive growth of health care costs.
• Reform the Federal health care financing programs to increase
their effectiveness and efficiency. Proposed reforms of the
medicaid program emphasize greater program efficiency and
effectiveness. Proposed reforms of the medicare program emphasize increased program efficiency, reductions in excessive
reimbursements to providers of health care, more appropriate
beneficiary financing of program activities, and greater competition in the medicare market.
• Reorganize health services to deliver care more effectively. The
Omnibus Budget Reconciliation Act of 1981 consolidated 21
categorical health programs into 3 health block grants in

5-128

THE BUDGET FOR FISCAL YEAR 1983

1982—for maternal and child health, preventive care, and
mental health and substance abuse—with a fourth block
grant for primary care authorized to begin in 1983. For 1983,
the administration is proposing to consolidate additional programs into the block grants to improve primary care and
services for women, infants and children.
• Expand research and education efforts throughout the Federal
Government to promote health and to prevent illness, accidents
and premature death. Increased budget authority is requested
to expand the resources available for basic and clinical research. Increased budget authority is also requested for
health promotion and disease prevention programs.
In 1984, under the administration's federalism initiative, financial responsibility for the total medicaid program would be assumed by the Federal Government in exchange for the States
assuming the responsibility for the aid to families with dependent
children and food stamp programs. In addition, the responsibility
for the health block grants and several other small health grants is
proposed to be shifted from the Federal Government to State governments. This initiative would begin in 1984 and be phased in over 4
years. The federalism initiative is discussed in more detail in Patrt 3
of the Budget
Health care services.—About 93% of Federal outlays for national
health needs is devoted to the mission of financing and providing
health care services directly to individuals. Federal outlays for
health care services are estimated to rise from $68.0 billion in 1982 to
$72.7 billion in 1983 and $79.6 billion in 1984, despite proposed
savings.
Medicare and medicaid.—Medicare and medicaid outlays, which
finance health care services for poor, disabled, and aged Americans, are estimated to be $72.4 billion in 1983 (prior to deduction of
offsetting premiums and collections), including proposed legislative
savings of $3.6 billion. Medicare outlays are estimated at $55.4
billion in 1983 (prior to deduction of offsetting premiums and collections), including proposed legislation of $1.7 billion in savings. These
outlays are expected to finance services for 26 million aged and 3 million
disabled Americans. Estimated medicaid outlays of $17.1 billion in
1983, with an additional $15.5 billion provided by States, are expected to
finance care for 22 million poor Americans. Medicare and medicaid
together are expected to aid nearly one in every five Americans in 1983.

5-129

HEALTH
NATIONAL NEED: HEALTH
(Functional code 550; in millions of dollars)
Major missions and programs

BUDGET AUTHORITY
Health care services:
Medicare:
Hospital and supplementary medical insurance:
Existing law
Proposed legislation
Premiums and collections:1
Existing law
Proposed legislation

1981
actual

1982
estimate

1983
estimate

1984
estimate

1985
estimate

45,292

55,846
17

61,293
-1,910

67,768
-10,273

76,127
-8,180

-3,340

-3,862
6

-4,418
26

-4,922
28

-5,387
32

41,952

52,007

54,991

52,601

62,592

17,530

18,492
-451

14,427
-1,432

20,913
-2,216

24,092
-3,617

861

1,193
741

3,980

3,047

2,551
-3

2,803
-3

3,261
-3

63,462

73,955

72,468

76,032

88,260

3,352
405

3,442
381

3,554
416

3,757

3,824

3,969

Education and training of the health care work
force:
Research training
Clinical training

238
427

215
245

212
125

Subtotal, education and training of the
health care work force

665

460

337

708

668

712
-2

704

700

369

344

351
-9

354
-14

356
-14

1,077

1,012

1,052

1,043

1,041

-25

-16

-17

-14

68,936

79,234

77,808

81,367

93,593

Subtotal, medicare
Medicaid:
Existing law 2
Proposed legislation
Health blocks grants:
Existing law
Proposed legislation
Other health care services:
Existing law
Proposed legislation
Subtotal, health care services
Health research:
National Institutes of Health research
Other research programs
Subtotal, health research

Consumer and occupational health and safety:
Consumer safety:
Existing law
Proposed legislation
Occupational safety and health:
Existing law
Proposed legislation
Subtotal, consumer
health and safety

and occupational

Deductions for offsetting receipts
Total, budget authority
1
2

Includes voluntary enrollee premiums for medicare coverage.
The large decrease in 1983 budget authority is due to a transitional quarter resulting from a technical change in the appropriations language.

The Omnibus Budget Reconciliation Act of 1981 established
target rates of medicaid cost increases to encourage the States to
limit the program's explosive growth. States above the target will
have their Federal matching funds reduced, to the extent that they

5-130

THE BUDGET FOR FISCAL YEAR 1983
NATIONAL NEED: HEALTH—Continued
(Functional code 550; in millions of dollars)
Major missions and programs

OUTLAYS
Health care services:
Medicare:
Hospital and supplementary medical insurance:
Existing law
Proposed legislation

Premiums and collections:x
Existing law
Proposed legislation
Subtotal, medicare

Medicaid:
Existing law
Proposed legislation
Health block grants:
Existing law
Proposed legislation
Other health care services:
Existing law
Proposed legislation
Subtotal, health care services
Health research:
National Institutes of Health research
Other research programs
Subtotal, research programs
Education and training of the health care work
force:
Research training
Clinical training

Subtotal, education and training of the
health care work force
Consumer and occupational health and safety:
Consumer safety:
Existing law
Proposed legislation
Occupational safety and health:

Existing law
Proposed legislation
Subtotal, consumer
health and safety

1982
estimate

1983
estimate

1984
estimate

1985
estimate

42,489

49,800
-248

57,099
-1,747

65,379
-4,201

75,094
6,729

-3,340

-3,862
6

4,418
26

4,922
28

-5,387
32

39,149

45,696

50,960

56,284

63,010

16,948

17,888

18,959
-1,883

20,910
-2,216

24,092
-3,617

761

1,052
650

1,193
741

4,254

3,617

2,937

2,644
_2

2,783
-3

60,351

67,961

72,675

79,554

88,199

3,394
442

3,422
417

3,515
427

3,550
416

3,554
417

3,836

3,839

3,941

3,966

3,970

236
543

217
420

206
245

207
157

208
132

779

637

451

364

340

688

677

716
_2

707

702

353

339

349
-8

354
-14

355
-14

1,042

1,017

1,055

1,047

1,043

and occupational

Deductions for offsetting receipts
Total, outlays

1981
actual

-25

-17

-14

65,982

73,437

78,105

84,917

93,539

5-131

HEALTH

NATIONAL NEED: HEALTH—Continued
(Functional code 550; in millions of dollars)
Major missions and programs

ADDENDUM
Off-budget Federal entity:
Federal Financing Bank:
Health care services:
Budget authority
Outlays
1

1981
actual

1982
estimate

1983
estimate

1984
estimate

1985
estimate

15
-5

-5

Includes voluntary enrollee premiums for medicare coverage

are unsuccessful in slowing the rate of increase in program costs.
The Congress also adopted a number of the administration's proposals to increase the ability of States to manage their programs
more efficiently and effectively, and to assure continuance of basic
health care services to welfare recipients. Administration proposals
for reducing medicare reimbursement to health providers, as well
as a number of other economies designed to increase program
economy or effectiveness, were also enacted. The accompanying
table displays savings proposals in medicare and medicaid adopted
in the 1981 Reconciliation Act.
The 1983 budget proposes additional measures to achieve savings
in medicaid and medicare. Those measures are discussed below and
displayed in an accompanying table.
Medicaid reform proposals have three major emphases:
• Program efficiency would be improved by eliminating the unnecessary Federal match for State payment of medicare premiums, requiring beneficiaries to contribute a modest payment for use of medicaid services, reducing the length of
automatic eligibility extensions for those who find private
employment, and gradually eliminating Federal matching
payments for State payment errors.
• States would be provided incentives to improve program effectiveness by proposals such as eliminating higher matching for
particular medicaid services, and reducing Federal matching
payments for optional services and beneficiaries. In addition,
Federal support for administrative costs will be consolidated
into a single payment to States for the administration of
medicaid, food stamps, and aid to families with dependent
children. This proposal is discussed in the income security
function under combined welfare administration.
• States would be given flexibility to reduce inappropriate expenditures by such proposals as increasing States' ability to
collect long-term care expenditures from beneficiaries' estates
and from relatives.
Medicare proposals emphasize:

5-132

THE BUDGET FOR FISCAL YEAR 1983
1981 BUDGET RECONCILIATION ACT OUTLAY SAVINGS
(In millions of dollars)
1983
estimate

Medicaid:
Reduce the Federal match in 1982-1984 and impact of other welfare
program changes
Medicare:
Lower the routine hospital cost reimbursement limit to 108 percent of the
average for similar hospitals
Lower home health agency (HHA) reimbursement limit to the 75th percentile
of similar HHAs
Reduce the hospital nursing cost reimbursement bonus from 8 percent to 5
percent of costs
Increase the hospital insurance (HI) deductible
Repeal the coverage of outpatient alcohol detoxification facilities
Base coinsurance on deductible in the year the expense was incurred
Eliminate the 80 percent occupancy test for hospital reimbursement based on
level of care
Increase the supplementary medical insurance (SMI) deductible to $75
Eliminate the SMI deductible carry-over from one year to the next
Eliminate unlimited open enrollment in SMI
Adjust for interactive effects of changes
Total

1984
estimate

1985
estimate

-696

-835

-3

-43

-39

-38

-14

-16

-18

-65
-305
-90
-10

-74
-360
-110
-10

-84
-410
-120
-10

_5
-210
-55
-10
-10

_5
-240
-55
-11
-15

-10
-250
-55
-13
-15

-1,513

-1,770

-1,026

Improvement in market forces in the health care industry. The
administration is currently developing health care financing
reforms to eliminate perverse characteristics of the health care
market and of medicare which have contributed to excessively
high health care costs. These reforms are expected to reduce the
rate of medicare cost inflation beginning in 1984. Reforms
proposed for 1983 include: indexing the supplementary medical
insurance (SMI) deductible to the CPI, coordinating medicare
benefits with employment-based group insurance for the working aged, initiating co-payments for home health agency (HHA)
services, establishing medicare coverage at the beginning of the
first full month of eligibility, and fully integrating Federal
employees into medicare through payment of the medicare tax.
• Improved program efficiency. Excessively long hospital stays
and unnecessary utilization of services would be reduced
through better claims review and through tightening current
rules which encourage providers to render unnecessary care.
The cost effectiveness of the billing process would also be
improved.

5-133

HEALTH

• Reduction in excessive reimbursement for providers. The administration proposes such reforms as eliminating unintended
subsidies for private rooms, reducing duplicate payments to
physicians, and reducing the rate of increase of maximum
physician reimbursements. Other proposals would eliminate
the unwarranted distinction between hospital-based and independent facilities, reimburse radiologists and pathologists on
the same basis as other physicians and impose an interim 2%
reduction in hospital reimbursements until forthcoming administration proposals to improve market forces in health
care can reduce the rate of increase in industry costs.
The table below displays the medicare and medicaid savings
proposals.
PROPOSED HEALTH CARE FINANCING PROGRAM OUTLAY SAVINGS AND REVENUE INCREASES
(In millions of dollars)
1983
estimate

Medicaid:
Proposed legislation:
Require beneficiary co-payments
Eliminate Federal matching for State payment of beneficiary medicare
premiums
Eliminate special medicaid matching rates
Allow State flexibility to recover long term care expenditures from
beneficiary estates and relatives
Reduce automatic extension of Medicaid eligibility for AFDC cases dropped
from the rolls from 4 months to 1 month
Reduce Federal matching for optional services and beneficiaries by 3
percent
Phased-in elimination of Federal matching for Medicaid payment errors
Medicaid impact of AFDC changes
Eliminate hospital utilization review requirement in conjunction with PSRO
phase-out
Medicaid impact of SSI proposals
Extension of Reconciliation Act savings «
Impact of medicare proposals on medicaid
Subtotal, Medicaid proposed legislation.
Administrative and other reductions:
Allow State flexibility to recover LTC costs from relatives..
Establish limit on State administrative costs 1
Subtotal, Medicaid administrative action.
Total, Medicaid
Medicare:
Proposed legislation:
Update medicare physician fee limits in October rather than July..
Repeal mandated State facility review

1984
estimate

1985
estimate

-329

-370

-415

-203
-64

-216
-70

-230
-81

-183

-200

-221

-75

-85

-95

-600
-59
-153

-670
-130
-170

-740
-225
-190

-16
-176

-17
-328

-25
-1,883

+40

-17
-527
-930
+ 54

-2,216

-3,617

-100
(-218)

-116
(-284)

-128
(-393)

-100

-116

-128

-1,983

-2,332

-3,745

-210
-10

-235
-10

-230
-10

5-134

THE BUDGET FOR FISCAL YEAR 1983

PROPOSED HEALTH CARE FINANCING PROGRAM OUTLAY SAVINGS AND REVENUE INCREASES—
Continued
(In millions of dolars)
1983
estimate

Index SMI deductible to the CPI
Conform radiologist-pathologist reimbursement to that for other physicians..
Begin medicare coverage with the first day of the first full month of
eligibility
Establish an interim 2 percent reduction in medicare hospital reimbursement
Eliminate reimbursement for provider delivery of uncovered services
Repeal the PSRO program and provider utilization review requirement
Cut projected increase in physician fee screen from 8 percent to 5 percent.
Establish coinsurance for home health agency services
Make medicare coverage secondary to private group insurance for the
working aged
Adjust for other proposals
Reform health care financing (future legislation)
Subtotal, Medicare proposed legislation.,
Administrative and other reductions:
Eliminate subsidy for private hospital rooms
Set single reimbursement limits for hospital-based and free-standing
facilities
Improve contractor utilization review activities
Eliminate duplicate payments for physicians in hospital outpatient departments
Establish prospective reimbursement rates for renal dialysis services
Subtotal, Medicare, administrative action
Revenue increase:
Integrate Federal workers into medicare hospital insurance2
Total, Medicare deficit reduction 3 .
1
Savings included in the income security
2
Revenues from imposition of HI tax.
3

1984
estimate

1985
estimate

-65
-160

-145
-210

-230
-250

-145

-183

-217

-653
-10
-83
-35
-35

-850
-10
-86
-45
-55

-950
-10
-89
-55
-60

-306
-36

-393
-29
-1,950

-450
-78
-4,100

-1,747

-4,201

-6,729

-54

-75

-80

-18
-362

-46
-405

-46
-460

-160
-130

-225
-179

-270
-224

-724

-930

-1,080

-619

-844

-933

-3,090

-5,975

-8,742

function.

Excludes offsetting premiums and collections.

Health block grants.—Budget authority for health block grants is
proposed to increase from $0.9 billion in 1982 to $1.9 billion in
1983, as a result of additional programs being consolidated into
these grants.
The 1981 Reconciliation Act consolidated an initial 21 categorical
programs into 4 block grants. Enactment of these block grants was
a critical step toward accomplishing the President's goals of restoring a more appropriate balance among the levels of government
and encouraging more efficient and effective use of health resources. The block grants will serve program purposes similar to
the categorical programs consolidated, but will allow States flexibility to coordinate and improve the effectiveness of services for
their citizens. The block grants streamline program administration
by reducing unnecessary Federal regulatory, legal, and reporting

HEALTH

5-135

requirements previously imposed on States and grantees. Duplicative and low-priority programs can be eliminated, while gaps in
needed local services can be filled.
The administration is proposing legislation to consolidate an additional four programs into these grants.
• Services for women, infants, and children block grant (formerly
maternal and child health).—For 1982, this block grant consolidated seven Federal categorical grant programs. It is enabling
States to assist and improve the health of mothers and children through a State-administered program. For 1983, the
administration proposes an expansion of the maternal and
child health block grant to include the women, infants, and
children (WIC) nutrition program formerly classified in the
income security function, and a change in the name of the
program to "Services for women, infants and children." Evidence indicates that improvement in health status is much
greater when supplemental nutrition is combined with improved access to health care than when provided alone. The
1983 request for budget authority for this block grant is $1.0
billion.
• Health prevention and services block grant.—This block grant
consolidated eight categorical grant programs into one program
that emphasizes services to prevent unnecessary injury, illness, and death. For 1983, the administration is requesting
$83 million in budget authority for this block grant.
• Alcohol, drug abuse, and mental health block grant—Five
categorical grant programs were consolidated in this block
grant, which emphasizes substance abuse—drugs and alcohol—and mental health services. The administration is requesting $433 million in budget authority in 1983 for this
program.
• Primary care block grant.—This block grant will enhance the
ability of States to provide primary care services to populations in need by converting the categorical community health
centers (primary care) program into a block grant to States
beginning in 1983. The administration proposes to expand this
block grant to include categorical programs for black lung
clinics, migrant health, and family planning. The total budget
authority requested for 1983 is $417 million.
Other health care services.—In order to promote competition in
health care, the budget reflects proposed legislation to continue the
phaseout of the health planning program, which bars market entry
to providers, and the phaseout of direct Federal subsidies for the
professional standards review organization (PSRO) program. Legislation will also be proposed to assist federally-funded health maintenance organizations (HMOs) to compete by removing unnecessary

5-136

THE BUDGET FOR FISCAL YEAR 1983

Federal requirements, thus allowing a phaseout of Federal grant
and loan subsidies.
For 1983, the administration is requesting $68 million in budget
authority for the direct Federal subsidy to St. Elizabeths Hospital
(SEH)—a reduction of $27 million from the Federal subsidy level of
$95 million projected for this program in 1982. Federal employees
at SEH will be actively working with the District of Columbia
(D.C.) to place in the community the patients for whom inpatient
psychiatric care is less appropriate than community care. In 1983,
this budget proposes that the hospital bill D.C. and Federal agencies for the cost of SEH care for individuals for whom they are
responsible. The administration is also considering the development of legislation to establish a corporation to manage the
hospital.
The administration requests budget authority for the Indian
Health Service at a level of $600 million in 1982 and $613 million
in 1983, and for the National Health Service Corps at a level of $95
million in 1982 and $103 million in 1983.
Federal expenditures to cover the Government's share of health
insurance premiums for its employees and annuitants enrolled in
the Federal Employees Health Benefits program (FEHB) are estimated at $2.5 billion in 1982 and $3.2 billion in 1983. These estimates include $0.9 billion in 1982 and $1.1 billion in 1983 shown in
this function; the remaining agency contributions to health care
funds are shown in the table at the end of this function displaying
health-related outlays. The administration intends to strengthen
the FEHB program through administrative improvements which
will capitalize on its uniqueness in providing for participant choice
among a number of health plans. Reform proposals also will be
developed to moderate the growth of health care costs.
Tax expenditures.—Federal tax laws help finance health care by
allowing employees to exclude from their taxable income the insurance premiums paid by their employers. The outlay equivalent
estimate for this provision is $21.5 billion for 1983. Individuals also
are permitted to itemize as deductions certain expenses for health
care and premiums paid for health insurance. In 1983, the outlay
equivalent estimates of these tax deductions are $4.2 billion. In
addition, health-related charitable contributions result in an outlay
equivalent estimate in 1983 of $1.4 billion and the exclusion of
interest on State and local hospital bonds results in an outlay
equivalent estimate of $845 million. Tax expenditures for health
total $28.1 billion in 1983.
Health research.—The Federal Government provides approximately two-thirds of the total funds devoted to health research in
the country. The budget proposes to increase budget authority for

HEALTH

5-137

health research from $3.8 billion in 1982 to $4.0 billion in 1983.
These funds will support primarily basic biomedical research conducted by the National Institutes of Health. Support will be provided for such activities as research project grants, research centers, training of biomedical scientists, and the NIH intramural
research program. Funds are also requested for continued support
of research on chemical and related behavioral disorders, such as
mental illness and alcohol and drug abuse, as well as health services research and health statistical activities.

Education and training of the health care workforce.—In 1983,

$212 million in budget authority is requested for the support of
about 10,000 research trainees. Because the supply of most health
care professionals is now adequate and Federal support for clinical
training is therefore no longer essential, budget authority requested for clinical training of health care professionals decreases from
$245 million in 1982 to $125 million in 1983.
Consumer and occupational health and safety.—Budget authority
of $1.1 billion in 1983 is requested for protecting consumers from
unsafe and defective products and for protecting workers from
occupational hazards. This is $40 million above the 1982 budget
authority.
Consumer safety.—Budget authority for consumer safety activities is proposed to increase from $668 million in 1982 to $710
million in 1983. Funding would support research, dissemination of
information, and regulatory measures to protect consumers from
unreasonable consumer product risks. Inspection activities to
assure the safety and efficacy of drugs and medical devices and the
safety of foods would be continued.
Occupational safety and health.—The budget includes $342 million in budget authority to improve occupational safety and health
in 1983, $2 million below the 1982 level. The Occupational Safety
and Health Administration (OSHA) and the Mine Safety and
Health Administration (MSHA) in the Department of Labor issue
and enforce standards to eliminate workplace hazards causing
injury, illness, or death. During 1982 and 1983, both OSHA and
MSHA will continue efforts to revise or eliminate standards that
burden employers more than needed to protect workers. These
efforts will focus resources on those activities most likely to ensure
safe and healthful working conditions. Cooperative programs providing voluntary assistance to employers in complying with regulations, without the threat of penalties, will be expanded. For 1983,
legislation is proposed that would allow MSHA to concentrate its
resources on mines most likely to be hazardous and to eliminate
360-000

0 - 8 2 - 1 6

5-138

THE BUDGET FOR FISCAL YEAR 1983

unproductive activities saving $9 million in proposed budget
authority.
Health-related expenditures.—The Federal Government supports
health-related expenditures that are reported in other budget functions. Among the most important are medical care for veterans and
military personnel, reported in the veterans benefits and services
and national defense functions, and agency contributions to Federal
employee health benefits, which were described under health care
services.
MAJOR FEDERAL HEALTH AND HEALTH-RELATED OUTLAYS SUPPORTING OTHER MISSIONS
(In millions of dollars)

1981
actual

Agency

1983
estimate

6,965
5,487
1,190
638

7,594
6,252
1,613
666

8,108
6,710
2,089
655

14,280

16,125

17,562

Veterans
Defense
Agency contributions to employee health funds
Agriculture
Total, outlays

1982
estimate

Credit programs.—The health function includes several small
loan and loan guarantee programs, which generally support larger
health initiatives. These include health related student loans and
assistance to health maintenance organizations. The total amount
of health credit activity proposed for 1983 includes $40 million in
direct loan obligations and $88 million in loan guarantee
commitments.
CREDIT PROGRAMS—HEALTH
(In millions of dollars)
Direct loan obligations
Program

Health maintenance organization, loan fund
Other health programs l
Off-budget Federal entity: 2
Federal Financing Bank:
Health programs
Subtotal, Gross
Less:
Loan assets sold to the FFB and associated
guarantees:
Health maintenance organization, loan fund
Total, health

1981
actual

27
30

1982
estimate

41
13

Guaranteed loan commitments

1983
estimate

38
1

1981
actual

1982
estimate

1983
estimate

19
48

36
80

24
80

116

104

-15

-28

-16

-15

-28

-16

'Includes loans sold to the FFB as loan assets, and guarantees of those loan assets. The FFB purchases are shown below.
2
The FFB is a mechanism to finance direct loans sold or guaranteed by other Federal agencies. The deductions below eliminate overlap with
transactions shown above in this table. See the introduction to Part 5 for further explanation.

5-139

INCOME SECURITY

INCOME SECURITY
National Needs Statement:
• Insure against the loss of income resulting from unemployment, old age, disability, or death of a wage earner.
• Assist the truly needy who are unable to provide for
themselves.
The Federal Role in Meeting the Need:
• Provide a base of social insurance upon which individuals can build their own income security through private
insurance, pension plans, and personal savings.
• Assure that food and shelter are available to the poor,
particularly to dependent children, the elderly, and the
disabled.
• Help the poor in working their way out of need rather
than foster permanent dependence on government assistance.
• Administer income security programs efficiently, protecting the American taxpayer from costly fraud, waste, and
abuse.
Income security is the largest and one of the most steadily growing functions in the Federal budget. In 1983 income security outlays are estimated to be $262 billion, about 35% of total budget
outlays. The income security function has grown from 2.7% of
gross national product (GNP) in 1957 to 7.6% of GNP in 1983. This
growth is dominated by social security, which grew at a rate more
than three times as fast as GNP over this period. Unemployment
compensation outlays, which vary with the unemployment rate,
have fluctuated widely both in absolute amounts and as a percent
of GNP, but in general have not increased. Other income security
outlays, which have risen at a rate roughly three times as fast as
GNP in the past, will decline as a percent of GNP in 1983.
INCOME SECURITY OUTLAYS AS A PERCENT OF GROSS NATIONAL PRODUCT
1957
actual

Social security
Unemployment compensation
All other. ..
Total

... .

1962
actual

1967
actual

1972
actual

1977
actual

1983
estimate

1.5
.4
.7

2.6
.7
.9

2.8
.3
.9

3.5
.6
1.5

4.5
.8
2.1

5.1
.7
1.9

2.7

4.1

4.0

5.7

7.4

7.6

5-140

THE BUDGET FOR FISCAL YEAR 1983

Increases in the cost of income security programs come largely
from automatic cost-of-living adjustments and growth in the
number of beneficiaries. Most of the benefits are paid under entitlement standards established in law. Last year, the administration
proposed and the Congress enacted some entitlement qualifications
and made a number of other legislative changes to income security
programs through the Omnibus Budget Reconciliation Act of 1981.
These changes include:
• Elimination of inappropriate social security payments to
adult students, nondependent survivors, and disabled workers
receiving more in public disability payments than they earned
before their disability.
• Concentration of extended unemployment benefits on workers
in states that are experiencing high levels of unemployment.
• Decreases in trade adjustment assistance benefits and increases in training efforts to focus the program more clearly
on helping claimants become employed again.
• Reductions in the food stamp and other nutrition programs to
reduce waste and fraud and to target this assistance on the
most needy recipients.
• Reforms in aid to families with dependent children that eliminate families with substantial income from the rolls, create
new work opportunities for those recipients who should be
self-supporting, correct inequities that failed to focus assistance on those in greatest need, and streamline administration.
• Reduction in the eligibility ceiling for subsidized housing with
the introduction of a requirement that 90% of new tenants
have incomes below 50% of the median income for their area,
and an increase in the maximum rent contribution from 25%
to 30% of income that can be charged tenants in subsidized
housing.
• Provision of automatic increases in Federal employee retirement programs once per year rather than twice per year.
These reforms of the Omnibus Budget Reconciliation Act significantly improved the Federal entitlement programs. In addition, a
separate law provided for the eventual solvency of the black lung
disability trust fund by raising taxes on coal and by requiring
better evidence of disability caused by black lung disease before
benefits can be paid.
Additional proposals included in this budget will improve further
the focus and administration of the entitlement programs. The
basic principles of the entitlement reforms proposed in this budget
are:
• Restoring the focus of social welfare programs on the people
who need them the most.—Eligibility for these programs will

INCOME SECURITY

5-141

be further restricted to those with the most need, and overlapping benefits will be eliminated.
• Reforming Federal retirement programs.—Future benefit increases will be adjusted so that retirees are not better off
than those now working in their old jobs.
• Preventing overcompensation of benefits.—Benefits will not be
provided for periods before the applicant is actually eligible.
The major proposals in income security entitlement programs
include:
•Aid to families with dependent children (AFDC).—Requirements for work as a condition of eligibility will be strengthened, the allowance for shelter and utilities of AFDC families
living in larger households will be reduced to reflect economies in shared living expenses, and energy assistance will be
counted as income. Federal sharing in the costs of erroneous
payments will be phased out.
• Child support enforcement.—Federal matching for State and
local administrative costs of establishing paternity and collecting support from legally liable absent parents will be restructured. States will be encouraged to increase collections
and to operate more cost-effective programs.
• Supplementary security income.—The disability criteria will be
based on long-term medical prognosis for recovery.
• Food stamps.— Benefits will be reduced 35% for increases in
income, instead of 30%. Federal payments for benefits issued
erroneously will be phased out.
• Railroad retirement—The rail industry's pension will be restored to the private sector, and the Department of Health
and Human Services will provide social security benefits directly to former rail employees and their families.
• Federal civil service.— Excessive cost-of-living increases in retired pay will be eliminated.
• Combined welfare administration.—Payments to States for
the administrative expenses of food stamps, medicaid, and
AFDC will be combined into a single payment with reduced
Federal requirements.
Under the administration's federalism initiative, responsibility
for the AFDC and food stamp programs would be assumed by the
State governments in exchange for the Federal Government assuming the responsibility for the medicaid program. This proposed
exchange would begin in 1984. In addition, the responsibility for
the low income home energy assistance program is proposed to be
assumed by the States. This initiative is discussed in more detail in
Part 3 of the Budget along with revenues to support it.

5-142

THE BUDGET FOR FISCAL YEAR 1983
NATIONAL NEED: PROVIDING INCOME SECURITY
(Functional code 600; in millions of dollars)
1981
actual

Major missions and programs

1982
estimate

1983
estimate

1984
estimate

1985
estimate

BUDGET AUTHORITY
General retirement and disability insurance:
Social security (OASDI):
Existing law
Proposed legislation
Railroad retirement:
Existing law
Proposed legislation

Benefits for disabled coal miners.
Other
Subtotal, general retirement and disability insurance
Federal employee retirement and disability:
Retirement and disability programs:
Existing law
Proposed legislation
Federal employees workers' compensation.Existing law
Proposed legislation
Subtotal, Federal employee retirement and disability
Unemployment compensation:
Existing law

Proposed legislation
Subtotal, unemployment compensation..
Housing assistance:
Subsidized housing
Other housing assistance
Subtotal: housing assistanceFood and nutrition assistance:
Food stamps and aid to Puerto Rico:
Existing law
Proposed legislation
Child nutrition and other programs:
Existing law
Proposed legislation
Subtotal, food and nutrition assistance-

132,950 150,128 161,981 176,076 200,893
6,593 14,506 11,100
\
j

4,675

1,778
28

5,500

5,843 6,125 6,419
-5,493 -5,775 -6,069
1,873 1,780 1,786 1,781
37
31
44
53

139,431 157,531 170,741 192,762 214,176

28,498 33,222 34,664 36,853 38,782
-212 -477
394
418
472
-46
-58
-22
28,777 33,567 34,992 37,013 38,755
279

345

19,048 21,006 22,392 21,719 21,349
-143 - 1 1 2
-95
19,048 21,006 22,249 21,607 21,254
24,840
1,265
26,105

5,217 -5,221 -3,478
1,432 1,367 1,313
6,649 -3,854 -2,164

890
1,223
2,113

11,470 11,559 12,650 12,970 13,374
-273 -2,294 -2,407 -2,541
5,103

4,498

3,747 3,950 4,198
-319 -398 -473
16,573 15,785 13,784 14,115 14,557

7,227

7,878
-101

8,485

6,303 7,163 7,230 7,370
-201 -1,300 -1,217 -1,274

Other income security:

Supplemental security income:
Existing law
Proposed legislation
AFDC and related assistance:
Existing law
Proposed legislation
Combined welfare administration.Existing law
Proposed legislation
Earned income tax credit
Refugee assistance
Energy and emergency assistance..
Other

1,318
902
1,850
204

1,254
670
1,752
230

9,177
-286

1,914
-259
1,180
532
1,300
243

8,270
-489

2,028
-373
1,100
468
1,300
243

9,330
-708

2,184
-529
1,004
395
1,300
243

5-143

INCOME SECURITY
NATIONAL NEED: PROVIDING INCOME SECURITY—Continued
(Functional code 600; in millions of dollars)
Major missions and programs
Subtotal, other income security..
Total, budget authority

1981
actual

1982
estimate

1983
estimate

1984
estimate

1985
estimate

19,985

17,784

19,664

18,559

19,315

249,918

252,322

257,576 281,891 310,170

OUTLAYS
General retirement and disability insurance:
Social security (OASDI):
Existing law
Proposed legislation
Railroad retirement:
Existing law
Proposed legislation
Benefits for disabled coal miners

Other
Subtotal, general retirement and disability insurance.
Federal employee retirement and disability:
Retirement and disability program:
Existing law
Proposed legislation
Federal employees workers' compensation:
Existing law
Proposed legislation
Subtotal, Federal employee retirement and disability..
Unemployment compensation:
Existing law
Proposed legislation
Subtotal, unemployment compensation..
Housing assistance:
Subsidized housing
Other housing assistance
Subtotal: housing assistance..
Food and nutrition assistance:
Food stamps and aid to Puerto Rico:
Existing law
Proposed legislation
Child nutrition and other programs:
Existing law
Proposed legislation
Subtotal, food and nutrition assistance-

137,970 154,643 169,928 174,363 185,779
3,608 14,120 16,473
5,294

5,707

6,072 6,417 6,684
-5,722 -6,067 -6,334
1,773 1,957 1,781 1,786 1,781
-39
1
-13
-16
-5
145,024 162,268 175,650 190,614 204,384

17,309 19,116 21,215 23,193 25,066
- 2 4 -489 -1,099 -1,458
269

394
472
418
-22
-58
-46
17,547 19,361 21,062 22,466 24,058
238

19,664 25,245 22,747 19,954 18,114
- 3 2 - 1 4 9 - 1 4 5 -125
19,664

25,213

22,598

19,809

17,989

5,747
1,195

6,726
1,521

7,352
1,532

7,831
1,533

8,401
1,548

6,942

8,247

9,364

9,949

11,253

11,517 12,600 12,933 13,330
- 2 7 3 -2,258 -2,375 -2,502

4,949

4,325

3,695
-265

3,768
-348

4,004
-420

16,202

15,569

13,772

13,977

14,411

7,192

8,000
-100

9,188
-286

8,268
-489

9,326
-708

8,504

8,322 7,163 7,230 7,370
- 2 0 1 -1,300 -1,217 -1,274

Other income security:
Supplemental security income:
Existing law
Proposed legislation
AFDC and related assistance:
Existing law
Proposed legislation
Combined welfare administration:
Existing law
Proposed legislation

1,914
-259

2,028
-373

2,184
-529

5-144

THE BUDGET FOR FISCAL YEAR 1983
NATIONAL NEED: PROVIDING INCOME SECURITY—Continued
(Functional code 600; in millions of dollars)

Major missions and programs

Earned income tax credit
Refugee assistance
Energy and emergency assistance
Other
Subtotal, other income security
Total, outlays
ADDENDUM
Off-budget Federal entity:
Federal Financing Bank:
Housing assistance:
Budget authority
Outlays

1981
actual

1982
estimate

1983
estimate

1984
estimate

1985
estimate

1,318
726
1,780
202

1,254
849
1,865
223

1,180
633
1,300
237

1,100
485
1,300
248

1,004
415
1,300
243

19,721

20,213

19,770

18,579

19,331

225,099 250,870 261,736 274,808 290,122

822
810

1,261
1,224

1,026
969

1,485
1,417

-96

These reforms will restore the original mission of Federal programs to ensure some income security for those who, through no
fault of their own, need assistance from society.
General retirement and disability insurance.—Seventy-five per-

cent of income security outlays goes to retirement and disability
insurance programs. Except for benefits to disabled coal miners,
the beneficiaries during their working years have paid to help
support these programs. On the average, however, benefits are
substantially higher, even after allowing for inflation, than the
amounts the beneficiaries paid into the program. Outlays for general retirement and disability insurance are estimated to increase
from $162 billion in 1982 to $176 billion in 1983 because of:
• automatic increases in benefits tied to the Consumer Price
Index;
• an increase in the number of aged and disabled persons eligible for benefits; and
• increases in individual earnings histories upon which the
benefits are based.
Social security,—Old age, survivors, and disability insurance
(OASDI) touches the lives of virtually every American through
benefits received or through payroll taxes deducted from earnings
to finance the program. In 1983, 20.9 million people age 62 or over,
and 3.6 million of their dependents will be eligible for social security retirement benefits. About 7.5 million people under 65 will
receive benefits because they are survivors of deceased workers,
and 4.3 million more because they are disabled workers or dependents of disabled workers. Outlays for social security are estimated
to be $155 billion in 1982 and $174 billion in 1983.

INCOME SECURITY

5-145

Significant reforms to the social security system achieved in the
Omnibus Budget Reconciliation Act of 1981 include:
• elimination of benefits for new adult students and phase out
of benefits to current adult students over the next 4 years;
• payment of lump-sum death benefits only to eligible survivors
and not directly to estates or funeral homes; and
• integration of disability insurance benefits with other public
disability payments, and limitation of total public disability
benefits to a worker's pre-disability take-home pay, adjusted
for inflation.
Despite these reforms, the social security system faces serious
financial problems. This financial crisis has been developing over
the last decade. It results from weaker economic growth than
anticipated and increases in prices relative to wages. Weaker economic growth reduces the amount of payroll taxes collected, and
the more rapid increases in prices relative to wages result in larger
increases in benefits than in the payroll tax revenues that finance
them. The reserves of the Old Age and Survivors Insurance (OASI)
trust fund, including the current interfund borrowing authority to
use funds from the Disability (DI) and Hospital Insurance (HI)
trust funds through December 1982 are sufficient to finance full
OASI benefit payments only through September, 1983. There is
estimated to be adequate funds in the OASI, DI, and HI trust funds
on a combined basis to finance benefits in subsequent years. The
amount of additional budget authority that will be needed to fund
OASI benefits and the associated outlays are displayed under proposed legislation. The proposed legislation also reflects the effects
of the proposal to restore the railroad industry's pension to the
private sector, which is discussed in detail in the Railroad Retirement section below.
Long-term financing of the entire social security system looms as
a major problem requiring a future restructuring of social security.
The longer a solution is postponed the more severe the remedies
will have to be.
The President seeks to develop a bipartisan consensus to resolve
the problems threatening the financial stability of social security.
A bipartisan National Commission on Social Security Reform has
been established to address these issues and report its recommendations by January 1983.
Railroad retirement.—The Railroad Retirement Board (RRB),
currently a Federal agency, administers industry pensions funded
by the rail sector, windfall payments fully subsidized by the American taxpayer, and the basic social security benefit. Estimated outlays of $5.7 billion in 1982 will go to 988,000 retired and disabled
railroad employees, their dependents, and survivors.

5-146

THE BUDGET FOR FISCAL YEAR 1983

The administration proposes to defederalize railroad retirement,
restoring the rail industry's pension to the private sector at the
end of 1982. Social security benefits would be directly administered
by the Department of Health and Human Services rather than by
the Railroad Retirement Board, which would be eliminated as a
Federal agency.
Rail workers, like all other private sector workers, would be
entitled to social insurance benefits and protections. Retirees' benefits and workers' rights would be unchanged due to the reorganization. Rail workers would become eligible for higher unemployment
insurance benefits typically available under the normal State unemployment insurance systems. The rail industry pension plan
would be administered like other multi-employer private pension
plans. Employee Retirement Income Security Act (ERISA) protections would apply to newly negotiated benefits. Ownership of the
assets of the railroad retirement trust fund would be transferred to
the new private corporation chartered to run the rail industry
pension.
For almost five decades, rail labor and management have collectively bargained the terms and conditions of rail pensions. Restoring the rail industry pension to the private sector frees rail labor
and management from the need to petition the Congress to enact
legislation to change the rail pension system to conform to labor
contracts.
The budget includes $350 million in estimated outlays and proposed budget authority for the Federal windfall subsidy for railroad retirement. In the Omnibus Budget Reconciliation Act of
1981, Congress enacted the rail sector's negotiated agreement,
which substantially restructured windfall benefits in order to realize future savings. The savings associated with the restructuring
are reflected in the budget and require an annual windfall subsidy
appropriation not in excess of $350 million to be fully realized.
Benefits for disabled coal miners.—Benefits are provided to coal
miners disabled from pneumoconiosis (commonly known as "black
lung disease") and to their dependents and survivors. Under the
Black Lung Benefits Act, if a miner suffers from a chronic dust
disease of the lungs meeting specified medical criteria, it is presumed that the miner is totally disabled due to black lung disease
and is entitled to benefits. Total outlays for benefits for disabled
coal miners are estimated to be $1.8 billion in 1983. These benefits,
are increased automatically when there are increases in the GS-2
Federal salary levels.
The Department of Health and Human Services (HHS) pays
benefits from general revenues that are paid to disabled coal
miners and their dependents and survivors who filed for benefits
from 1970 through 1973.

INCOME SECURITY

5-147

The Department of Labor receives black lung claims filed after
1973 and reviews all claims denied by HHS for possible approval
under new eligibility criteria. Benefits are to be paid by the mine
operator found responsible for the disability. Benefit payments for
eligible miners and survivors where no mine operator can be assigned responsibility, or where mine employment terminated
before 1970, are paid from the black lung disability trust fund.
This trust fund was intended to be financed by an excise tax on
coal. However, through 1981 benefit payments and expenses greatly exceeded the tax revenues, and the trust fund deficit has been
financed by advances from the general fund. The trust fund is
expected to be $1.7 billion in debt at the end of 1982.
Recently enacted legislation will gradually eliminate the Federal
Treasury advances to the black lung disability trust fund. Excise
taxes on coal were temporarily doubled, beginning on January 1,
1982. This increase will expire at the end of 1995 or when the debt
is totally retired, whichever is sooner. In addition, eligibility and
benefit criteria were adjusted to require better evidence of disability due to black lung disease for claims filed on or after January 1,
1982. However, the liability for claims that were denied prior to
the 1977 amendments, subsequently reopened and ultimately approved as the result of these amendments, was transferred from
individual mine operators to the trust fund. The new Act will
eliminate the need for new general fund advances by 1985, and the
trust fund will begin to repay outstanding advances in that year.
Federal employee retirement and disability.—Federal

employee

retirement and disability programs include a number of Federal
employee retirement programs in the legislative, judicial, and executive branches. The largest program is the civil service retirement and disability program. In addition, Federal employees workers' compensation is included in this category. Outlays for Federal
employee retirement and disability are estimated to increase from
$19.4 billion in 1982 to $21.1 billion in 1983.
Retirement and disability programs.—Federal employee retirement systems have been unique among pension plans in the generosity of their adjustments to annuities to reflect increases in the
cost of living. Civil service annuities are required by current law to
be adjusted by the full amount of any increase in the CPI, and in
the past even greater adjustments were required.
As a result, Federal retirees have found their standards of living
remaining level or even improving, while active Federal employees
have found their pay rising more slowly than the CPI. With annuities rising so much faster than pay, new Federal retirees are
finding their annuities much lower than the annuities of those who

5-148

THE BUDGET FOR FISCAL YEAR 1983

retired several years ago, even when their service history is identical.
In order to deal with this problem, legislation is proposed to
adjust future civil service retirement annuities by the lesser of the
increase in the CPI or the increase in General Schedule pay for
Federal employees. In addition, in order to rectify excessively generous adjustments granted to certain annuitants in the past, the
proposal would hold down future adjustments to these annuitants
until their annuities are once again drawn into a reasonable relationship with the annuities that new retirees with comparable
service receive. Retirees whose retired pay is between 100% and
120% of current retired pay scales would receive three-fourths of
the full cost-of-living adjustment. For those whose retired pay is
120% or more of current retired pay, there would be no cost-ofliving increase.
The proposal will also address another problem. The civil service
retirement system contains obsolete or unnecessary provisions that
are wasteful and inconsistent with a sound staff retirement system.
There are also a number of provisions that hinder efficient administration of the system. These provisions will be deleted or modified. Included are:
• the elimination of adult student benefits to conform to
changes in social security;
• the limitation of retirement service credit for leave without
pay;
• a requirement for deposits or redeposits with reasonable interest to ensure that only paid service will be credited for
retirement purposes; and
• the expansion of enforcement authority to reduce waste,
fraud, and abuse.
Federal employees workers' compensation,—The Department of
Labor provides tax-free cash and medical benefits to federal employees or their survivors for job-related injuries, illnesses, or
deaths. Federal agencies subsequently reimburse the Department
of Labor for payments made on behalf of their employees. About
49,000 workers with long-term disabilities, or their survivors, received monthly payments in 1982. In 1983, this number is estimated to remain the same, primarily because of increased efforts to
return recipients to work and to remove those no longer eligible
from the rolls. After reimbursements from other agencies, outlays
are estimated to increase from $269 million in 1982 to $336 million
in 1983.
There is evidence that the Federal employees workers' compensation program is being abused. Consequently, legislation is proposed
to amend the Federal Employees Compensation Act to (1) remove
incentives to file questionable claims; (2) encourage injured workers

INCOME SECURITY

5-149

to return to work when they are medically able; (3) remove inequities in compensation, which now permit higher paid workers to
receive more in compensation than they took home in pay when
working; and (4) encourage both employees and employers to participate fully in the restoration of injured workers to gainful employment as soon as medically possible. In addition future cost-ofliving adjustments will be limited to the lesser of the increase in
the CPI or the increase in General Schedule pay for Federal employees. The proposed legislation produces estimated outlay savings
of $58 million in 1983.
Unemployment compensation.—About 97% of wage and salaried
employment in the United States is covered by unemployment
compensation that supports individuals who are temporarily out of
work and are searching for jobs. Regular benefits (usually up to 26
weeks) are financed by a State tax on employers. State and Federal
administrative costs are financed by a Federal tax on employers.
Based on the economic assumptions described in Part 2, an estimated average of 4.2 million workers per week will receive unemployment benefits during 1982 and 3.6 million in 1983. Outlays are
estimated to decrease from $25.2 billion in 1982 to $22.6 billion in
1983 as a result of a decline in the projected average unemployment rate from 8.9% in fiscal year 1982 to 8.1% in 1983 and the
proposed legislation described below.
Through 1982, the number of weeks an unemployed worker can
receive unemployment insurance is increased by 50%, to a maximum of 39 weeks, in any State where the unemployment rate of
covered individuals is 4% or more for 13 consecutive weeks and at
least 120% of the rate in the corresponding period in each of the
previous 2 years. States may also provide these extended benefits
when their insured unemployment rate reaches 5% for a 13-week
period regardless of the rate in prior years. Extended benefits are
financed one-half from State taxes on employers and one-half from
the Federal tax on employers.
The Omnibus Budget Reconciliation Act of 1981 made two
changes in extended benefits beginning with 1983 in order to concentrate the additional 13 weeks of benefits on workers in States
experiencing high levels of unemployment who held jobs for a
reasonable period. As of 1983, extended benefits will be payable in
States with 13-week insured unemployment rates of 5% or more
(rather than 4%), if that rate is at least 120% of the rate for the
comparable period of each of the prior 2 years or, at State option,
when the 13-week insured unemployment rate reaches 6% (rather
than 5%), regardless of the rate in prior years. Also, beginning
with 1983, in order to be eligible for extended benefits a worker
must have worked the equivalent of at least 20 weeks during the

5-150

THE BUDGET FOR FISCAL YEAR 1983

year-long period used to determine eligibility for unemployment
benefits.
Legislation is proposed to correct an inequity that has arisen in
administering the program of unemployment compensation for exmilitary personnel as amended by the Omnibus Budget Reconciliation Act of 1981. The proposed legislation would provide benefits
only to those involuntarily discharged under honorable conditions
because of demobilization, reduction in force, or disability incurred
while in the service. Thus those who are not given an opportunity
to re-enlist because of a record of indiscipline or failure to maintain skill proficiency would no longer be eligible for benefits. Outlays are estimated at $90 million in 1982 and $50 million in 1983.
The legislation, effective for those discharged on or after July 1,
1982, would reduce outlays by $5 million in 1982 and by $30 million
in 1983.
As part of the general reform of entitlement programs, legislation is proposed to round the weekly unemployment benefit
amount down to the next lower whole dollar. To provide time for
States to enact necessary legislation to carry out this reform, this
change would be effective for new claims beginning July 1, 1983.
In addition to the regular unemployment compensation programs, special extra unemployment benefits are available to certain workers under specific circumstances. Legislation is proposed
to eliminate most of the extraordinary cash benefits under two of
these programs. This legislation is part of a reform aimed at providing, to all eligible workers who have lost their jobs through no
fault of their own, the equitable benefits available under the regular unemployment compensation programs. First, under proposed
legislation, benefits under the program for workers in the Redwood
National Park area would be limited to workers who became unemployed within 9 months of the Federal land acquisition. Redwood Park outlays are estimated to be $12 million in 1982 and $10
million in 1983. The legislation would reduce outlays by $1 million
in 1982 and $5 million in 1983. Second, entitlements to weekly cash
benefits under the trade adjustment assistance (TAA) program
would cease, effective July 1, 1982, except for those in approved
training on that date. Special training and employment services
would continue to be available for workers under TAA. Under
current law, outlays for TAA cash benefits are estimated to be $144
million in 1982 and $118 million in 1983. The proposed legislation
would reduce them by $26 million in 1982 and $108 million in 1983.
Housing assistance.—The Federal Government subsidizes housing
for low-income families and individuals through several programs
in the Department of Housing and Urban Development and the
Department of Agriculture. Budget authority for these programs is
proposed to decline from $6.6 billion in 1982 to —$3.9 billion in

INCOME SECURITY

5-151

1983. Despite this dramatic decline, outlays are estimated to increase from $8.2 billion in 1982 to $8.9 billion in 1983 due to
commitments from prior years.
Subsidized housing.—Currently, there are 3.4 million households
living in housing subsidized by the Department of Housing and
Urban Development (HUD). Commitments to build about 700,000
more units of public housing and housing subsidized under HUD's
section 8 lower income rental assistance program were made by the
end of 1981. This full inventory of 4.1 million housing units would
require Federal subsidies of about $240 billion over the next 30 to
40 years. This estimate excludes operating subsidies for the 1.2
million units of public housing included in this total inventory.
Rent ceilings now range as high as $1,500 per unit per month for
some privately developed, newly constructed subsidized housing
projects. Typically, about 75% of the rent for newly constructed
units is paid by the Federal Government. Under the present subsidy program, the Federal Government is assisting about one-third of
the eligible low-income renter household population with income at
or, below 50% of median family income.
Legislation proposing major reform of the structure of Federal
housing assistance is reflected in the 1983 budget. This type of
change has been endorsed by the President's Housing Commission
in its interim report issued in October 1981, and draws upon studies conducted by HUD under the experimental housing allowance
program. The reform would build upon the current section 8 existing rental housing assistance program. This program, as it currently operates, enables eligible low-income households to find their
own rental housing and receive rental subsidy payments, provided
that the housing unit meets housing quality standards and does not
rent for more than a fixed amount. The Federal subsidy equals the
difference between the tenant rent contribution and the actual
rent charged by the landlord. Tenants cannot contribute more than
30% of their income for rent, and most current tenants now pay
26% or less of their income for rent.
The principal modification proposed for the section 8 existing
rental housing program would be to set the Federal rental subsidy
payment (certificate) per participating household at a fixed
amount, which will not change over the proposed 5-year contract
period, and to remove any ceiling on the amount of rent charged to
units, occupied by subsidized tenants. Participating households will
be free to shop for any unit of their choice—provided that the unit
continues to meet minimum quality standards—with the understanding that any rent charges above the fixed section 8 rent
subsidy must be paid by the tenant. The initial level of the annual
Federal subsidy payment is estimated to average $2,000 per house-

5-152

THE BUDGET FOR FISCAL YEAR 1983

hold. Actual amounts will be based on the difference between local
market rent levels and an assumed tenant rent contribution.
This modified section 8 certificate program would also replace
the current section 8 moderate rehabilitation program. A new
rental rehabilitation grant program (see community and regional
development function) will be used to upgrade housing units in
conjunction with a portion of the modified section 8 certificate
program, beginning in 1983.
In 1983, the administration is providing for new construction of
rental housing for low-income households under two programs: (1)
section 8 subsidized units built for elderly and handicapped households with permanent financing made available by the HUD section 202 housing for the elderly and handicapped loan program,
and (2) multifamily housing supported by subsidized loans from the
Farmers Home Administration (FmHA). However, many of the
700,000 new construction units currently under contractual commitment are not financially viable, and will therefore not be constructed. In addition, the modified section 8 certificate program
will substitute for a substantial portion of the 700,000 new construction units currently under contract. In the case of public
housing, a portion of the funding that becomes available from
cancellations of new construction projects will be made available to
public housing authorities to modernize units. Under these assumptions, it is expected that the HUD subsidized housing inventory
will continue to grow to 3.8 million units by 1985.
Increases in rents for units currently operated by public housing
authorities or subsidized by the HUD section 8 or other rental
subsidy programs were authorized in the Omnibus Budget Reconciliation Act of 1981. The ceiling on rents was raised from 25% to
30% of income, with the requirement that rents may not increase
by more than 10% per year. Legislation is proposed to change this
limitation on the annual rate of rent increases to 20%. Legislation
is also proposed to count food stamps as income for purposes of
calculating rent charges beginning in 1983, thus increasing the
amount of rent that can be charged. Finally, while the recently
authorized 30% of income limitation on rent charges in HUD subsidized housing will be phased in at a rate of 1% of income per year,
beginning in 1982 for current occupants, all new tenants moving
into subsidized housing will have their rent set at 30% of income
upon occupancy.
For 1982, the budget proposes that $9.4 billion in budget authority appropriated for the HUD subsidized housing programs be rescinded. Similarly, for 1983, $2.4 billion in budget authority already
provided by the Congress is proposed for rescission as cancellations
of construction contracts occur. Nevertheless, outlays are estimated
to continue to rise for HUD subsidized housing programs from $6.7

INCOME SECURITY

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billion in 1982 to $7.4 billion in 1983 as units already under construction are completed and occupied.
Other housing assistance.—The two major programs in other
housing assistance are payments for operation of low-income housing projects (public housing operating subsidies) and rural rental
assistance payments. Estimated outlays for these two programs in
1983 are $1.1 billion and $0.2 billion, respectively.
With the availability of increased rental incomes, and with emphasis upon modernizing the existing public housing inventory—
rather than adding to it—in order to make it more energy efficient
and less costly to operate, the requirement for separate operating
subsidies from the Federal Government should be reduced.
For 1983, this budget includes outlays of $204 million for housing
programs administered by the Department of Agriculture in this
function. The rental assistance program provides subsidies to lowincome households living in FmHA financed units. The Department of Agriculture also assists farmers to construct housing for
farm laborers and individuals to build their own homes.
Other major forms of Federal support for the housing sector are
tax expenditures and housing credit programs. The housing credit
programs and the tax expenditures for housing in general are
discussed under the commerce and housing credit function.
Food and nutrition assistance.—Needy families and individuals
receive food and nutrition assistance through a number of federally-supported programs. The largest programs are food stamps and
the school lunch program. The administration requests $13.8 billion
in budget authority for food and nutrition assistance for 1983.
Food stamps and aid to Puerto Rico.—Food stamps help lower
income Americans maintain a nutritious diet. Monthly allotments
of stamps based on income and household size are issued to help
finance food purchases. These benefits are entirely federally-financed; administrative costs are shared equally by the States and
the Federal Government. This budget assumes food stamp participation will average 18.6 million people each month in 1983. Estimated Federal outlays for food stamps and aid to Puerto Rico is
$10.3 billion in 1983, a decrease of $902 million from 1982.
The Omnibus Budget Reconciliation Act of 1981 included several
changes designed to focus food stamps on the most needy recipients, to reduce wasteful or fraudulent use of food stamps, and to
improve program administration. Specifically, a gross income limit
on eligibility was established at 130% of the national poverty level.
Elderly or disabled people are exempted from this gross income
eligibility limit and can qualify if their net income is below the
poverty line after allowable deductions are subtracted. Benefits
360-000 0 - 82

5-154

THE BUDGET FOR FISCAL YEAR 1983

issued in the first month of eligibility were prorated from the
application date rather than from the beginning of the month.
Tighter limits were placed on the income disregards that help to
establish benefit levels, and income accounting procedures were
revised to assure use of actual income in determining current need
rather than estimating future income to establish eligibility and
benefit levels.
The Reconciliation Act also established a nutrition assistance
block grant for Puerto Rico as a replacement for food stamps in the
Commonwealth. This change will give Puerto Rico the flexibility to
target nutrition assistance to its most needy residents and to use
the grant as a mechanism to promote economic growth and greater
self-sufficiency. The 1983 budget reflects proposed legislation to
consolidate nutrition assistance to other insular areas (Virgin Islands, Guam, American Somoa, and Northern Marianas). This
change will allow these areas to provide adequate nutrition for
needy residents without the constraints of inappropriate Federal
regulatory and program requirements.
New food stamp reforms are proposed for 1983. These reforms
include additional changes to direct food stamp benefits only to
those who cannot secure adequate food without them. The growth
of food stamp costs will be restrained by enactment of proposed
legislation to:
• reduce benefits by 35% of additional income rather than by
30%;
• count all types of cash assistance for energy consumption as
income;
• establish a $10 per month minimum for food stamp benefits;
• remove special disregards for earnings so that all income is
treated the same;
• establish combined funding for State administration of food
stamps, medicaid and aid to families with dependent children,
as discussed below under combined welfare administration;
and
• phase out by 1986 Federal sharing in the costs of erroneous
payments made by States.
These proposals are estimated to reduce outlays $0.3 billion in
1982 and $2.3 billion in 1983.
As part of the administration's federalism initiative, financial
responsibility for food stamps and AFDC (including child support
enforcement) will be given to the States beginning in 1984. In
return, the Federal Government will assume financial responsibility for medicaid.
Child nutrition and other programs.—Estimated outlays for child
nutrition and other problems in 1983 are $3.4 billion. The Federal
Government subsidizes meals for students in schools, child care

INCOME SECURITY

5-155

centers, and other institutional settings. Approximately 23.2 million young Americans will receive federally subsidized meals in
1983, with estimated outlays of $3.0 billion.
Major changes in these subsidized meal programs were made in
the Omnibus Budget Reconciliation Act of 1981. Subsidies for nonneedy students, were reduced. Unneeded grants for new food service equipment purchases were eliminated. The duplicative special
milk program was removed from schools that participate in other
Federal meal subsidy programs. Procedural changes were made to
discourage fraudulent claims for meals and to establish eligibility
for Federal subsidies more accurately. The summer meal program,
long ridden with fraud and abuse, was limited by the Congress to
government sponsors only in areas with high concentrations of
lower income households. These changes were made to focus assistance to needy youngsters, to reduce duplication in subsidies, and to
restrain the growth in Federal costs.
Additional changes are proposed in this budget to continue the
reforms begun in 1981. The special milk program, which subsidizes
milk consumption mainly for 1.4 million non-needy students, and
the inefficient and duplicative summer feeding program are proposed to be eliminated. Legislation is also proposed to convert the
unconstrained entitlement for child care and breakfast subsidies to
a grant to States. This will reduce costly and unnecessary Federal
regulation and maximize State flexibility in providing nutrition
assistance to pre-school children.
Special supplemental food programs finance food supplements for
women and their young children. These programs have grown rapidly since the mid-1970's, with outlays rising from $14 million in
1974 to an estimated $917 million in 1982.
The women, infants, and children (WIC) program and the smaller commodity supplemental food program make nutritious foods
such as milk, cheese, eggs, and juices available as an adjunct to
health care. These foods are intended to help reduce or prevent
health problems associated with pregnancy, child birth, and
infancy.
This budget reflects proposed legislation to consolidate WIC into
a new service for women, infants and children block grant which is
described in more detail in the health function. Currently, WIC
and the maternal and child health block grant are nearly identical
in intent and in the populations served. This consolidation will
help accomplish several objectives. It will fully integrate food supplementation into the provision of health services by the States for
women and children. Complicated and burdensome regulations associated with the current WIC program will be reduced. Each State
will be able to determine the most appropriate mix of health
services that should be available to meet the specific health needs

5-156

THE BUDGET FOR FISCAL YEAR 1983

of its women and children. Finally, this consolidation will help
eliminate duplicative administrative structures in the Federal Government.
Distribution of surplus food on Indian reservations and in the
Pacific Trust Territory will continue unchanged. These foods will
help improve the diets of needy Indian and Micronesian households
at a cost of $54 million in estimated outlays in 1983.
Other income security.—There are a number of other income
security programs that assist the poor. Estimated outlays for these
programs are $19.8 billion in 1983, a 2 percent decrease from 1982.
Supplemental
security income.—The supplemental security
income (SSI) program, administered and financed by the Federal
Government, makes cash payments to needy aged, blind, or disabled individuals. The basic Federal grant is supplemented by
State payments in some States.
The number of Federal and State recipients was 4.1 million in
1981 and is expected to remain at that level through 1983. Federal
outlays in 1983 are estimated to reach $8.9 billion, compared to the
1982 level of $7.9 billion.
While automatic cost-of-living increases in benefits account for
some of this increase in outlays, the 1983 outlays reflect 13 months
of benefit payments because the October 1983 payment date falls
on a weekend, and therefore will be paid in 1983.
High error rates experienced in the program's initial years have
been markedly reduced. Much of this reduction is due to concentrating staff resources on error-prone cases and extensively crosschecking the records of other benefit programs. The Congress
adopted the administration's retrospective monthly accounting proposal in the Omnibus Budget Reconciliation Act of 1981 as a means
of further reducing errors in benefit payments without sacrificing
equity or incurring substantial administrative costs.
When SSI began, the Federal Government provided some States
with hold-harmless payments, which should have been phased out
several years ago under the original legislation. Subsequent legislation indexed these subsidies to inflation. In 1983, these payments
are expected to go only to Wisconsin and will be phased out over 3
years.
The administration is proposing the following legislative changes
to improve the focus and administration of the SSI program:
• Prorate the first month's SSI benefit based upon date of application or date of eligibility (in the case of aged persons).
• Define permanent disability based on a prognosis of at least
24 months of disability.
• Ensure that the definition of permanent disability is based on
a preponderance of medical factors.

INCOME SECURITY

5-157

• Eliminate the initial $20 monthly supplemental security
income disregard starting with new recipients.
Outlay savings from these proposals are estimated to be $286
million in 1983 and $489 million in 1984.
AFDC and related assistance.—The aid to families with dependent children (AFDC) program helps State and local governments
finance cash assistance to needy families. States determine the
levels of AFDC eligibility and benefits within broad Federal guidelines, and administer their own programs. The Federal Government reimburses States, on average, for slightly more than half of
their expenses. Child support enforcement (CSE) helps finance a
share of State and local administrative expenses for establishing
paternity and collecting support from legally liable absent parents.
These collections offset AFDC costs. Federal outlays for AFDC and
CSE are estimated to be $5.9 billion in 1983, compared to $8.1
billion in 1982. These estimates include proposed legislation discussed below. About 3.7 million families are expected to receive
AFDC benefits in 1983 under current law.
Reforms enacted in the Omnibus Budget Reconciliation Act of
1981 refocus AFDC on its original goal: to serve as an aid for
dependent children in families where the resources for complete
self-support do not exist. These reforms create new opportunities
for work and work experience, correct inequities that have provided higher benefits from welfare than from work, and eliminate
families who should not receive government aid from the rolls.
Combined Federal, State, and local savings from these reforms are
estimated to be about $1.5 billion in 1982, and over $2 billion in
1983.
Legislation is proposed for 1983 to establish new community
work experience programs in all States, which would require those
who are able to work to do so as a condition of AFDC eligibility.
The work incentive (WIN) program, classified in the education,
training, employment, and social services function would be eliminated. Legislation is also proposed that would include income and
other resources that have not previously been counted in determining AFDC benefits. Other changes would eliminate program overlaps and streamline administration as discussed below. Legislation
is proposed to phase out over 4 years Federal payments to the
States for costs of erroneous benefit payments made by States in
AFDC, medicaid and food stamps. New incentives for State and
local performance in collecting child support payments are also
proposed. These reforms will save an estimated $1.3 billion in
Federal outlays in 1983 and about an equal amount in State and
local costs.
As part of the administration's Federalism initiative, financial
responsibility for AFDC (including child support enforcement) and

5-158

THE BUDGET FOR FISCAL YEAR 1983

food stamps will be given to the States beginning in 1984. In
return, the Federal Government will assume financial responsibility for medicaid.

Combined welfare administration.—The Federal Government
currently reimburses States for 50% of their administrative expenses for the food stamp, medicaid, and AFDC programs on an
open-ended basis. Some administrative expenses, such as those for
anti-fraud activities and management information systems, receive
a higher Federal match. Although these three programs are often
jointly administered, and there is a large overlap among beneficiaries, States work with a different set of cost allocation and reporting requirements for each program.
Legislation is being proposed to consolidate payments to States
for most of these administrative expenses into a single payment
with no State match required. Federal administrative requirements
will be reduced or eliminated, giving States added flexibility to
design efficient public assistance programs. In certain areas where
the Federal Government supports anti-fraud and abuse activities at
a matching share greater than 50%, such as food stamps and
medicaid fraud control, the current open-ended Federal match will
continue.
Combined welfare administration will be funded at 95% of the
current estimate of ongoing 1982 administrative expenses for food
stamps, medicaid, and AFDC. In 1983, outlays are estimated to be
$1.7 billion ($800 million of which is the medicaid share and was
previously shown in the health function). An additional $526 million in outlays for the food stamp share will continue to be appropriated to the food stamp program. Outlays for combined welfare
administration in 1983 are estimated to be $259 million less than if
open-ended funding remained available.
Earned income tax credit—Since 1975, the Federal Government
has provided a tax credit for low-income workers that reduces their
income tax liabilities. Where the credit amounts to more than the
income taxes owed, the worker receives the difference. Beginning
in 1979, provision was made for the credit to be received in advance through additions to wages. In 1983, total outlays for these
payments are estimated to be $1.2 billion.
Refugee assistance.—The refugee assistance programs reimburse
States for refugee/entrant cash and medical assistance, social services, State administrative costs, and child welfare services. This
interim assistance includes employment training and services to
help refugees and entrants achieve self sufficiency. In recent years,
the number of refugees coming to this country has increased dramatically. From 1975 to 1983 more than 700,000 Indochinese and

INCOME SECURITY

5-159

190,000 Soviet and other refugees will have been resettled in the
United States. This budget assumes the resettlement in 1983 of up
to 72,000 Asian refugees and 31,500 others, most of whom will come
from the Soviet Union and Eastern Europe.
Total outlays for the refugee assistance and related programs are
estimated to be $849 million in 1982 and $633 million in 1983. The
Federal share of costs for refugees participating in regular assistance programs such as AFDC, medicaid, and food stamps is included in the budget request for each of those programs. Estimated
outlays for such costs are $250 million in 1982 and $300 million in
1983.
In 1982, the Office of Refugee Resettlement initiated a more
restrictive refugee cash and medical assistance reimbursement
policy. After an 18-month period of special transitional assistance—which formerly was a 3-year period—assistance is available
to a refugee on the same basis as a non-refugee. This policy change
supports the administration's effort to reduce the likelihood of
unnecessary welfare dependency. This change also reduces the special treatment given to refugees, which is different from the treatment given to other low-income groups. Additional funding for
refugee assistance is discussed in the international affairs section
of Part 5.
Since April 1980, over 135,000 Cubans and about 40,000 Haitians
have been allowed to remain in the United States. Although they
are not refugees, the Congress authorized their eligibility for
AFDC, medicaid, food stamps, and other special assistance for an
interim period. For 1983, $17 million in budget authority is requested for their welfare and social services. Cuban and Haitian entrants receive the same 18-month transitional assistance as refugees. After this 18-month period, assistance to Cuban and Haitian
entrants will be available on the same basis as non-entrants. For
those few entrants remaining in Federal custody, the Department
of Justice will administer a program of care and maintenance for
1983.
Energy and emergency assistance.—To moderate the impact of
rising energy costs on low-income families, $1.3 billion in budget
authority is requested for energy and emergency assistance in 1983.
This program is a grant to States for aid to their needy citizens.
This aid can be in the form of direct cash assistance to needy
households, direct payments to fuel vendors on behalf of the needy,
or payments to public housing building operators.
The administration proposed consolidating low-income energy assistance with the emergency assistance program as a block grant
for 1982. The Congress reauthorized this program as a partial block
grant without the emergency assistance in the Omnibus Budget
Reconciliation Act of 1981. For 1983, the administration is request-

5-160

THE BUDGET FOR FISCAL YEAR 1983

ing consolidated low-income energy assistance and emergency assistance funding. This will eliminate unnecessary regulatory burdens on States. The administration will also propose concentrating
this program for the winter months by adjusting the grant formula
to target funds to States most in need of heating assistance.
Tax expenditures.—A variety of income exclusions, tax deferrals,
and credits assist the unemployed, aged, retired, and disabled. Unemployment compensation benefits received by people with an
annual income, including unemployment compensation, of under
$20,000 (single persons) or under $25,000 (married couples) are
excluded from taxable income. This results in an outlay equivalent
estimate of $2.3 billion in 1983. The exclusion from income subject
to tax of all social security (including benefits for dependents and
survivors) and most railroad retirement benefits without regard to
an individual's income from other sources results in outlay equivalent estimates of $12.5 billion and $375 million, respectively, in
1983. The exclusion of workmen's compensation benefits and the
exclusion from income of benefits for the disabled result in outlay
equivalent estimates of $3.5 billion and $1.0 billion, respectively, in
1983. The exclusion of disability pay from income taxes will result
in an outlay equivalent estimate of $170 million. The outlay equivalent estimates resulting from the extra personal exemption for
those over 64 and the blind, and from tax credits for the elderly
are $2.4 billion, $30 million, and $135 million, respectively, in 1983.
Tax expenditures also provide incentives for employers to provide their workers with pensions and other benefits such as life,
accident, and disability insurance and supplemental unemployment
compensation. Excluding the cost of these benefits from personal
income results in outlay equivalent tax expenditure estimates of
$37.9 billion, $2.5 billion, $130 million, and $20 million, respectively, in 1983.
The Economic Recovery Tax Act of 1981 provided a new itemized
deduction for up to $1,500 of expenses for adoption of children with
special needs which make them difficult to adopt. This provision
results in an outlay equivalent estimate of $15 million in 1983. In
addition, the act also expanded the availability of IRA and Keogh
Plans and increased the level of tax deductible contributions. The
equivalent outlay cost of all self-employed retirement plans and the
IRA and Keogh Plans is $5.8 billion in 1983.
Tax expenditures for income security total $72.9 billion in 1983.
Related programs.—A number of other programs are related to
income security but have as their primary purpose meeting other
national needs and servicing other major missions. The following
table lists these income security-related programs that support
other missions.

5-161

INCOME SECURITY

FEDERAL OUTLAYS FOR INCOME SECURITY-RELATED BENEFITS SUPPORTING OTHER MAJOR
MISSIONS
(In millions of dollars)
Benefit outlays
Department, agency, and program

Department of Health and Human Services:
Medicare
Medicaid
Indian Health
Health care services
Public Health Service officers retirement
Total, Department of Health and Human Services
Veterans Administration:
Service-connected compensation
Veterans pensions
Readjustment benefits
Medical care
Other
Total, Veterans Administration
Department of Defense—Military:
Military retirement
Foundation for Education Assistance:
Student assistance
Student loans
Total, Foundation for Education Assistance
Department of Transportation:
Coast Guard retirement
Total, outlays

1981
actual

1982
estimate

1983
estimate

42,489
16,948
626
1,246
80

49,552
17,888
628
1,358
100

55,352
17,076
621
1,799
83

61,389

69,526

74,931

8,426
3,755
2,332
6,320
208

9,487
3,940
1,994
6,945
145

10,170
4,014
1,681
7,369
141

21,041

22,511

23,375

13,729

15,000

16,471

3,906
2,404

3,490
2,686

3,137
2,602

6,310

6,176

239

279

336

102F708

113,492

120,853

5,739

Credit programs.—Most of the credit activities in this function
finances for public housing operation and construction. For 1983,
direct loan obligations in this function are proposed to be $2.0
billion and guaranteed loan commitments are proposed to be $18.7
billion. As shown in the table, a portion of the guaranteed loans for
public housing operation and construction are financed as offbudget direct loans by the Federal Financing Bank.

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THE BUDGET FOR FISCAL YEAR 1983
CREDIT PROGRAMS—INCOME SECURITY
(In millions of dollars)
Direct loan obligations
Program

Low rent public housing1
Other income security
Off-budget Federal entity.-2
Federal Financing Bank:
Low-rent public housing
Subtotal, gross

1981
actual

1982
estimate

Guaranteed loan commitments

1983
estimate

1982
estimate

1983
estimate

19,343

18,293

19,771

18,293

19,771

2,196
2

1,500
5

1,000
5

822

1,261

1,026

3,020

2,766

2,031

19,343

3,020

2,766

2,031

18,520

Less:
Guaranteed loans held as direct loans by the FFB:
Low-rent public housing
Total, income security

1981
actual

- 8 2 2 -1,261 -1,026
17,032

18,745

1
Includes guarantees of direct loans made by the FFB as shown below.
2
The FFB is a mechanism to finance direct loans sold or guaranteed by other Federal agencies. The deductions below eliminate overlap with
transactions shown above in this table. See the introduction to Part 5 for further explanation.

[VETERANS BENEFITS AND SERVICES

5-163

VETERANS BENEFITS AND SERVICES
National Needs Statement:
• Meet the Nation's obligation to veterans of military service.
The Federal Role in Meeting the Need:
• Compensate veterans disabled while in military service
for the degree to which average earnings are impaired.
• Provide medical care to veterans for disabilities incurred
while in military service; and, within available resources,
to needy and aged veterans.
• Compensate the families of veterans who are killed in
service or who die from service-related disabilities for the
reduction in the family's earning power.
• Help veterans of wartime and draft service return to
civilian life on a social and economic basis comparable to
their peers who did not perform military duty.
• Provide psychological readjustment services and expanded training opportunities to Vietnam-era veterans with
special needs.
• Provide financial assistance to needy veterans and their
survivors.
The benefits and services provided to veterans recognize the
special needs of veterans and their survivors that result from sacrifices made in military service. Benefits compensate for loss of
earnings resulting from service-related disabilities, provide medical
care for physical and psychological disabilities suffered in military
service, and assist in preparing returning veterans for civilian life.
In addition, veterans benefits assist needy veterans of wartime
service and their survivors. Outlays for veterans benefits and services are estimated at $24.2 billion in 1982 and $24.4 billon in 1983.
During 1981, the President signed into law several bills that
enlarge benefits to veterans:
• Medical care for veterans with disabilities resulting from exposure to agent orange and low-level ionizing radiation. The law
assures that any veterans with disabilities arising from these
sources will be provided outpatient care in Veterans Administration (VA) medical facilities with priority second only to
that given to veterans seeking care for service-related disabilities. Hospital care also will be provided, as necessary.
• Cost-of-living increases for veterans being compensated for
service-connected disabilities. The law provided veterans receiving compensation with a cost-of-living increase averaging

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THE BUDGET FOR FISCAL YEAR 1983

11.2% effective October 1, 1981. This is identical to the increase provided automatically to veteran pensioners effective
in July 1981.
• Two-year extension of eligibility for GI bill training for educationally disadvantaged Vietnam veterans. This law extended
from 10 to 12 years the period of entitlement to vocational
training or education necessary to complete requirements for
a high school diploma or for on-the-job training.
This budget reflects a legislative proposal for an 8.1% cost-ofliving increase in compensation benefits for veterans with servicerelated disabilities to be effective in October 1982.
Funds are included for health care for the growing number of
elderly veterans. During the 1980's, the number of veterans over
age 65 is expected to more than double as virtually all of the 12
million veterans of World War II turn 65. In anticipation of this
change, VA's medical care and research activities are devoting
more attention to the problems of aging veterans by increasing the
availability of long-term and geriatric care and devoting more research to the illnesses and disabilities of the aged.
This budget provides construction funds to maintain, renovate,
modernize, and systematically replace aging VA medical structures
in order to prevent deterioration of the physical facilities housing
VA medical services. VA construction projects will focus especially
on activities necessary to correct fire and safety deficiencies, and to
minimize potential risks from earthquakes.
Several legislative proposals, which are described below, would
help offset part of the costs of the proposed improvements in veterans programs.
Income security for veterans.—In addition to Federal income security programs for the general population, such as social security,
unemployment insurance, housing and energy assistance programs,
food stamps, and medicare and medicaid, several VA programs
help certain veterans and their survivors maintain their income
when the veteran is disabled, aged, or deceased. Outlays for this
mission are estimated to increase from $14.1 billion in 1982 to $14.8
billion in 1983.
Service-connected compensation.—Monthly

compensation

pay-

ments are provided to veterans whose disabilities resulted from
military service. The amount of the benefit depends on the degree
to which average earnings of individuals with a particular disability are reduced. In addition, payments are made to survivors of
veterans who die from service-connected injuries. Legislation effective in October 1981 increased compensation benefits by an average
of 11.2%. The administration proposes legislation to provide an

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VETERANS BENEFITS AND SERVICES
NATIONAL NEED: PROVIDING VETERANS BENEFITS AND SERVICES
(Functional code 700; in millions of dollars)

Major missions and programs

BUDGET AUTHORITY
Income security for veterans:
Compensation and pensions:
Service-connected compensation:
Existing law
Proposed legislation
Non-service-connected pensions:
Existing law
Proposed legislation
Burial and other benefits
Insurance programs:
National service life insurance trust fund...,
U.S. Government life insurance trust fund.,
All other insurance programs
Insurance program receipts
Subtotal, income security for veterans.
Veterans education, training, and rehabilitation:
Existing law
Proposed legislation
Subtotal, veterans education, training, and rehabilitation.
Hospital and medical care for veterans:
Medical care and hospital services:
Existing law
Proposed legislation
Construction
Medical administration, research, and other
Subtotal, hospital and medical care for veterans..

1981
actual

1982
estimate

Subtotal, other veterans benefits and services.
Deductions for offsetting receipts
Total, budget authority

1984
estimate

1985
estimate

8,530 9,604 9,522 9,661 9,706
624 1,007 1,521
3,794 4,048 3,981 4,181 4,290
-66 -60 -57
208 147 141 147 151
1,104 1,162 1,256 1,281 1,226
34
32
30
28
26
5
8
6
6
6
-465 -476 -470 -461 - 3 9 4
13,210 14,524 15,024 15,789 16,473
2,351

1,945

1,691
-25

1,402
-25

1,178
-23

2,351 1,945 1,666 1,377 1,156

6,339 6,966 7,496 7,684 7,897
5
5
5
386 490 630 630 680
194 184 194 204 210
6,919

7,640

Veterans housing:
Housing program receipts (proposed legislation)
Other veterans benefits and services:
Cemeteries, undistributed VA overhead, and other:
Existing law
Proposed legislation
Non-VA support programs

1983
estimate

8,522

8,791

-95 - 1 0 5

-110

8,324

648
*
35

704
*
39

693
*
39

701
*
41

690

683

743

732

742

-3

—3

656

23,167 24,789 25,660 26,310 27,048

*$500 thousand or less.

8.1% cost-of-living increase in compensation benefits, effective in
October 1982; estimates for subsequent years assume annual costof-living increases based on projected increases in the Consumer
Price Index.
This budget contains several legislative proposals to limit excessively liberal compensation benefits. One would eliminate (effective

5-166

THE BUDGET FOR FISCAL YEAR 1983
NATIONAL NEED: PROVIDING VETERANS BENEFITS AND SERVICES—Continued
(Functional code 700; in millions of dollars)
Major missions and programs

1981
actual

1982 1983 1984 1985
estimate estimate estimate estimate

OUTLAYS
Income security for veterans:
Compensation and pensions:
Service-connected compensation.Existing law
Proposed legislation
Non-service-connected pensions:
Existing law
Proposed legislation
Burial and other benefits
Insurance programs:
National service life insurance trust fund....
U.S. Government life insurance trust fund..
All other insurance programs
Insurance program receipts

965 979 991 1,049 1,076
55
70
62
60
59
-50 -67 -63 -67 -35
-465 -476 -470 -461 -394

Subtotal, incomes security for veterans..

12,909 14,070 14,843 15,439 16,244

Veterans education, training, and rehabilitation:
Existing law
Proposed legislation
Subtotal, veterans education, training and rehabilitation.
Hospital and medical care for veterans:
Medical care and hospital services:
Existing law
Proposed legislation
Construction
Medical administration, research, and other
Subtotal, hospital and medical care for veterans..
Veterans housing:
Loan guaranty revolving fund
Direct loan revolving fund
Other (HUD participation sales trust fund)
Housing program receipts (proposed legislation)
Subtotal, veterans housing..
Other veterans benefits and services:
Cemeteries, undistributed VA overhead, and other:
Existing law
Proposed legislation
Non-VA support programs
Subtotal, other veterans benefits and services.
Deductions for offsetting receipts
Total, outlays

8,426 9,488 9,609 9,656 9,702
-1
561 951 1,477
3,755 3,940 4,077 4,166 4,271
-62 -60 -58
208 145 141 146 151

2,254

1,883

1,582
-25

1,287
-25

1,065
-23

2,254 1,883 1,557 1,262 1,043

6,320 6,945 7,364 7,552 7,765
5
5
5
412 444 524 668 823
233 206 216 215 216
6,965 7,594 8,108 8,440 8,809
278
-128
51

13
-85
- 6 8 -183 - 8 5
-14 -13
-8
- 9 5 -105

201 -68

629

-863

-283

234
2
-8
-110
117

698
*
41

""33

690
*
39

662

680

741

730

738

-3

645

702
_*

22,988 24,155 24,383

25,584 26,948

*$500 thousand or less.

October 1, 1983) the payment of compensation at the 100% rate to
veterans who are 60% to 90% disabled and deemed unemployable,
if those veterans are also collecting social security disability, sup-

VETERANS BENEFITS AND SERVICES

5-167

plemental security income, or Federal retirement payments. These
veterans would continue to receive their base compensation benefit. A second would cease the payment of dependents' allowances to
veterans with 30% or 40% disability ratings. Finally, the budget
contains a proposal to make compensation disability rating changes
effective in the month the change is determined, rather than waiting until the anniversary date of the current rating. Estimated
outlay savings from these proposals are $146 million in 1983.
An estimated 2.6 million veterans and their survivors are expected to receive compensation benefits in each of the years 1982
through 1985. Outlays for this mission are estimated to increase
from $9.5 billion in 1982 to $10.2 billion in 1983.
Non-service-connected pensions.—Pensions are provided to needy

wartime-service veterans who are age 65 or older or who have
become disabled subsequent to their military service. Survivors of
wartime-service veterans also may qualify for pension benefits
based on financial need. Under current law automatic cost-of-living
increases are provided each July.
Legislation is proposed to eliminate adult student benefits in the
pension program, comparable to the recently enacted change in the
social security program.
The administration also proposes legislation that would make
compensation and pension benefits payable starting in the first full
month of entitlement and would round monthly pension benefit
payments down to the nearest full dollar amount. These rules
currently are applied to social security benefits and are also being
proposed for application to other Federal benefits.
Even though the number of veterans age 65 and over is expected
to double during the 1980's, the number of pension recipients will
decline from 2.0 million in 1981, to 1.9 million in 1982, and to 1.8
million in 1983. This is due to the Veterans and Survivors Pension
Improvement Act of 1978, which sharpened the focus of veterans
pension benefits upon needy, non-service disabled veterans. Despite
this decline, outlays for veterans pensions are estimated to rise
from $3.9 billion in 1982 to $4.0 billion in 1983, as a result of an
automatic cost-of-living increase estimated to be 8.1% in July 1982.
Burial and other benefits.—Families of deceased veterans who
received pension or compensation benefits and who are to be
buried in private cemeteries may receive allowances to apply
toward the purchase of burial plots. Families of deceased veterans
also receive burial benefits to assist in defraying funeral expenses.
Outlays for burial and other allowances are estimated to decrease
from $145 million in 1982 to $141 million in 1983.

5-168

THE BUDGET FOR FISCAL YEAR 1983

Insurance programs.—The budget assumes that life insurance
programs for veterans and their survivors will provide an estimated $30 billion of coverage on 4.4 million policies in 1983. Policy
loans against life insurance reserves declined during 1981 as a
result of new regulations tying interest rates more closely to
market interest rates. Direct loan obligations in 1983 are expected
to be $152 million, 29% higher than the $118 million estimated for
1982.
Veterans education, training, and rehabilitation.—The GI bill pro-

vides education benefits ranging from college courses to vocational
and on-the-job training. These benefits help eligible veterans make
the transition from military to civilian life by assisting them to
obtain the education they might have received had they not entered military service. Active duty servicemen and widows and
children of veterans who have died or been totally disabled in
military service also are eligible for these benefits.
Individuals who enter military service after 1976 are eligible for
the post-Vietnam-era education program, which allows them to set
aside $25 to $100 from their monthly pay to finance future education. These amounts are matched by the government on a two-forone basis and returned to these individuals in education payments
after they are discharged. This program was funded by the Veterans Administration through December 31, 1981. The Veterans Administration continues to administer the program, but it is currently funded by the Department of Defense and is classified in the
national defense function.
More than 65% of all Vietnam-era veterans have utilized GI bill
benefits. In 1983, nearly 812,000 GI bill trainees are expected to
participate in the program, compared with 970,000 in 1982. The
number of GI bill trainees (including dependents) will continue to
drop in the future as the number of eligible veterans becomes
smaller. Thus, outlays for this mission are estimated to decline
from $1.9 billion in 1982 to $1.6 billion in 1983, and to $1.0 billion
by 1985.
The Omnibus Budget Reconciliation Act of 1981 eliminated flight
training under the GI bill, and reduced the matching rate for
correspondence training from 70% to 55%. Correspondence training has had a poor record of readying veterans for full-time employment in related occupations This budget, therefore, proposes
legislation providing for total elimination of eligibility for correspondence training, with estimated 1983 outlay savings of $6 million. Legislation is also proposed to eliminate the payment of certain dependents' allowances to veterans in vocational training programs who also are receiving dependency allowances under the
compensation program.

VETERANS BENEFITS AND SERVICES

5-169

Hospital and medical care for veterans.—The Veterans Administration provides hospital and medical care to veterans by operating
a nationwide medical care system. In 1983 it is expected to accommodate over 18 million outpatient medical and dental visits, and to
treat nearly 1.3 million patients in 172 hospitals, 228 outpatient
clinics, 102 nursing homes, and 16 domiciliary facilities. Outlays for
medical programs are estimated to be $7.6 billion in 1982 and $8.1
billion in 1983.
Medical care and hospital services.—In 1982 and 1983 the VA
plans to continue to reorder its program of health care services to
provide the most appropriate types of care and to accommodate the
anticipated influx of World War II veterans. Almost all of this
group of about 12 million veterans (40% of all veterans) will reach
age 65 during the decade beginning in 1980. This milestone is
especially significant because veterans reaching age 65 become eligible for a wide variety of medical benefits without regard to
financial status, and the VA anticipates a rapid increase in the
number of veterans seeking long-term and geriatric care.
The VA's medical care system will continue to place the needs of
service-disabled veterans before all other demands for medical care,
and many efforts to improve the quality of medical care will be
continued. It is assumed that increases in the cost of VA health
care will be moderated through greater efficiency.
Under the budget proposals, the research programs of the VA
medical system will grow from $128 million in estimated outlays in
1982 to $138 million in 1983. Training of health care professionals
will continue, primarily through the affiliation of 137 VA hospitals
with medical schools.
The Veterans Administration Health Care Amendments of 1981
require that VA medical facilities provide care for veterans whose
disabilities result from exposure to agent orange and low-level
ionizing radiation. These cases will receive outpatient priority
second only to veterans being treated for service-connected disabilities. The VA estimates that this provision will generate 612,000
outpatient visits and 17,000 hospital admissions in 1983.
Construction of hospital and extended care facilities.—Budget authority of $612 million is requested for VA medical construction in
1983, $137 million more than for 1982. The 1983 request recognizes
the critical need for renovation and modification of many of the
aging facilities in which medical services are provided. Funding is
included for new nursing homes, projects to remedy health and
safety deficiencies, and for construction funds for a replacement
hospital in Albuquerque, New Mexico. Budget authority of $18
million is requested for 1983, compared to $16 million enacted for

360-000 0 - 82

5-170

THE BUDGET FOR FISCAL YEAR 1983

1982, for grants to States for construction of extended care facilities, permitting the establishment or repair of State veterans
homes for the care of aging veterans.
Veterans housing.—VA mortgage loan guarantee and direct loan
programs are expected to assist 325,000 veterans obtain mortgage
loans in 1983. Guaranteed loan commitments and direct loan obligations for mortgage loans in 1983 are estimated at $22.5 billion
and $0.8 billion, respectively. Sales of housing assets (VA mortgages), estimated at $968 million in 1983, will more than offset the
direct cost of these programs. Legislation is proposed to charge a
0.5% loan origination fee to veterans receiving VA mortgage guarantees. This will offset the direct cost of VA housing programs by
an additional $95 million in 1983.
Other veterans benefits and services.—The Veterans Administration oversees a national cemetery system for burial of eligible
veterans, servicemen, and their survivors. New regional cemeteries
are under construction in 4 of the 10 Federal regions (I, II, III, and
IX) and existing cemeteries have been designated as National
Cemeteries in 4 other regions (VI, VII, VIII, and X). In 1982,
construction will begin on the National Cemetery at Fort Custer,
Michigan (Region V). The budget includes construction funds for
expansion of a cemetery in Region IV and $2.5 million in 1983
budget authority for matching grants to States for the construction
of State veterans cemeteries. Other expenditures include the cost of
non-medical program administration, both in VA headquarters and
in field units.
Outlays for these programs are estimated to be $680 million in
1982 and $741 million in 1983.
Tax expenditures.—In addition to direct Federal funding, a
number of tax expenditures provide assistance to veterans. Disability compensation and pension benefits for veterans are excluded
from taxable income. The outlay equivalent estimates for these
exclusions in 1983 are $1.4 billion and $90 million, respectively. GI
bill benefits also are excluded from taxable income, which results
in estimated 1983 equivalent outlays of $150 million. Tax expenditures for veterans total $1.7 billion for 1983.
Credit programs.—Loans against VA-administered life insurance
in the income security area are expected to increase direct loan
obligations from $118 million in 1982 to $152 million in 1983, as
veterans take advantage of the projected decline in market interest
rates. For the same reason, an increase in demand for mortgage
insurance and other housing programs is expected to increase guaranteed loan commitments from $19.5 billion in 1982 to $22.5 billion
in 1983.

5-171

VETERANS BENEFITS AND SERVICES
CREDIT PROGRAMS—VETERANS BENEFITS AND SERVICES
(In millions of dollars)
Direct loan obligations
Program

1981
actual

1982
estimate

Guaranteed loan commitments

1983
estimate

1981
actual

1982
estimate

1983
estimate

Income security
Education programs
Mortgage insurance and other housing programs

241
7
738

118
2
757

152
2
781

11,719

19,542

22,451

Total, veterans benefits and services

987

878

936

11,719

19,542

22,451

Related programs.—In addition to the assistance provided specifically for veterans by the VA, many veterans receive assistance
from other income security, health, housing, education, training,
employment, and social service programs supported by the Federal
Government and available to the general population. Some of these
programs have components specifically intended to assist veterans.
Recent legislation created the position of Assistant Secretary for
Veterans Affairs in the Department of Labor and upgraded the
status of the 2,000 State employment service staff designated by
the legislation to assist disabled veterans to find jobs. Qualified
veterans are also eligible to participate fully in the training and
related services available under programs run by the Department
of Labor. Firms holding Government contracts are required to list
their job vacancies with the State employment service and are
required to take affirmative action to employ Vietnam-era and
handicapped veterans.

5-172

THE BUDGET FOR FISCAL YEAR 1983

ADMINISTRATION OF JUSTICE
National Needs Statement
• Promote the safety of persons and protection of their
property through law enforcement.
• Provide judicial services to adjudicate both criminal and
civil disputes.
• Operate detention facilities for those charged with
crimes and correctional facilities for those convicted of
crimes.
The Federal Role in Meeting the Need:
• Enforce Federal law through the investigation, prosecution, adjudication, and punishment of those violating
Federal statutes.
• Represent the United States in civil cases.
• Provide Federal courts to resolve disputes.
• Assist in the improvement of State and local justice systems through training, research, and collection and dissemination of criminal justice statistics.
Our body of laws is a formal means to deter criminal conduct; to
resolve disputes peacefully; to facilitate voluntary arrangements,
such as contracts; and to reinforce basic moral concepts. The order
and predictability that the law and its institutions bring to our
lives are the foundation of civil society. Recognizing their importance, the Federal Government will spend an estimated $4.6 billion
in outlays to maintain the justice system in 1983. Although the
Federal Government plays a central role in the administration of
justice, its resources are only a small portion of the overall effort:
State and local governments are expected to continue spending
nearly eight times the amount the Federal Government spends for
administration of justice activities.
An important theme in the administration of justice in 1983 is
for the Federal Government to improve the Nation's law enforcement—not through the past practice of financial assistance to State
and local governments—but through the more direct approach of
Federal law enforcement agencies cooperating closely with their
State and local counterparts.
A second theme reflected in this budget is to focus the Federal
Government's law enforcement efforts on violent crime—to the
extent Federal jurisdiction will permit—by adding it to the Government's other high-priority target areas of organized crime, white
collar crime, major drug offenses, and foreign counterintelligence.

ADMINISTRATION OF JUSTICE

5-173

A third theme is to protect the Federal Government against
waste, fraud, and abuse through early involvement by the Justice
Department in cases uncovered by the Inspectors General located
in the major departments and agencies.
Federal law enforcement activities.—Over half of the resources of
Federal administration of justice are associated with law enforcement activities. While no increases in personnel are proposed, Federal law enforcement outlays in 1983 are estimated to grow to $2.6
billion, or 7% above 1982 levels, in order to maintain current
activities.
General investigation (FBI).—The Federal Bureau of Investigation (FBI) enforces a broad range of Federal criminal statutes, and
works with State and local authorities both to support FBI missions and to assist them in performing their activities through
training, dissemination of information, and other assistance. Federal law enforcement funds are used primarily for investigating those
cases that are purely Federal, multi-jurisdictional, or too complex
for State and local authorities to handle.
The budget request for the FBI will emphasize investigations of
violent crime, organized crime, white collar crime, and foreign
counterintelligence activities. It will also reinstitute fingerprint
identification services for non-Federal criminal justice agencies and
for institutions that are not responsible for law enforcement, such
as banks and State and local licensing agencies. Fingerprint services for these groups were suspended in 1982 to reduce the backlog
and the processing time of fingerprint cards for criminals. Services
will resume on a reimbursable basis.
Outlays for the FBI are estimated to increase from $739 million
in 1982 to $798 million in 1983.
Narcotics violation investigation (DEA).—The Drug Enforcement
Administration (DEA) was established in 1973 to provide leadership
in the suppression of narcotics and dangerous drugs nationally and
internationally. Efforts will increase in 1983 to strengthen enforcement and to disrupt trafficking in the most dangerous drugs. The
DEA will expand the number of drug-related investigations carried
out jointly with the FBI. Legislative initiatives enacted in 1981 will
also improve enforcement of the anti-drug laws, such as posse
commitatus provisions to gain access to military assistance for drug
enforcement, and the repeal of restrictions against the destruction
of opium-producing poppies and other drug-producing crops. Outlays for the DEA are estimated to increase from $227 million in
1982 to $242 million in 1983.
Alcohol, tobacco, and firearms investigation (ATF).—The Bureau
of Alcohol, Tobacco, and Firearms is responsible for the enforce-

5-174

THE BUDGET FOR FISCAL YEAR 1983
NATIONAL NEED: ADMINISTRATION OF JUSTICE
(Functional code 750; in millions of dollars)
1982
estimate

1983
estimate

1984
estimate

1985
estimate

740
231
79
938
232
260

799
247

Alcohol, tobacco, and firearms investigation (ATF)
Border enforcement activities (Customs and INS)
Protection and other activities (Secret Service)
Other enforcement

675
215
150
864
186
259

1,055
303
266

1,055
335
264

996
310
264

Subtotal, Federal law enforcement activities

2,350

2,479

2,671

2,701

2,617

506
658
321

521
747
120

576
850

576
882

576
914

1,485

1,388

1,427

1,458

1,490

352
169
-13

367
140
-35

383
67
-23

383
63
-23

CO •—• CO
OO CD CSJ
CO
j

4,343

4,339

4,525

4,583

4,530

691
217
147
890
189
251

739
227
82
924
230
266

798
242

799
242

799
247

1,041
298
265

1,041
329
265

986
304
265

2,384

2,468

2,643

2,675

2,601

517
651
324

502
743
148

570
840
13

576
869

576
900

1,493

1,393

1,423

1,445

1,476

361
473
-13

376
318
-35

386
162
-23

CD OO CO
OO OO CVJ
CO
,

383
62
-23

4,698

4,521

4,592

4,571

4,500

Major missions and programs

1981
actual

BUDGET AUTHORITY
Federal law enforcement activities:
General investigation (FBI)
Narcotics violation investigation (DEA)

Federal litigative and judicial activities:
Civil and criminal prosecution and representation
Federal judicial activities
Representation of indigents in civil cases
Subtotal, Federal litigative and judicial activities
Federal correctional activities
Criminal justice assistance
Deductions for offsetting receipts
Total, budget authority
OUTLAYS
Federal law enforcement activities:

General investigation (FBI)
Narcotics violation investigation (DEA)
Alcohol, tobacco, and firearms investigation (ATF)
Border enforcement activities (Customs and INS)
Protection and other activities (Secret Service)
Other enforcement
Subtotal, Federal law enforcement activities
Federal litigative and judicial activities:
Civil and criminal prosecution and representation
Federal judicial activities
Representation of indigents in civil cases
Subtotal, Federal litigative and judicial activities
Federal correctional activities
Criminal justice assistance
Deductions for offsetting receipts
Total, outlays

ment of laws and the regulation of activities relating to alcohol,
tobacco, firearms, and explosives. In 1982, the functions of the
Bureau of Alcohol, Tobacco and Firearms will be transferred to the
U.S. Secret Service and the U.S. Customs Service. Statutory firearms and explosives enforcement activities will be transferred to
the U.S. Secret Service. Regulatory and revenue collection activities will be transferred to the Customs Service. The reorganization

ADMINISTRATION OF JUSTICE

5-175

of the Bureau of Alcohol, Tobacco, and Firearms will not occur
before March 30, 1982.
Border enforcement activities (Customs and INS).—The United
States Customs Service collects revenue from imports and enforces
customs and related laws. It administers the Tariff Act of 1930, as
amended, as well as numerous other laws. Some of the specific
activities Customs is responsible for include: assessing and collecting customs duties, excise taxes, fees and penalties on imported
merchandise; interdicting and seizing contraband; and processing
persons, carriers, cargo, and mail into and out of the United States.
The Immigration and Naturalization Service (INS) administers
laws related to the admission, exclusion, deportation, and naturalization of aliens. The 1983 budget proposals for INS reflect the
administration's commitment to a strong and cohesive immigration
policy with special emphasis on improving enforcement, management, and service to those seeking adjustments in their legal
status. An additional $58 million in budget authority is requested
in 1983 to cover expenses under Section 501(c) of the Refugee
Education Assistance Act of 1980 associated with the processing,
care, maintenance, transportation, return, and resettlement of
Cuban and Haitian entrants.
In 1981 the administration introduced omnibus immigration legislation that presents a comprehensive and integrated approach to
immigration policy. The legislative proposals are designed to
reduce illegal immigration through programs that increase opportunities to work lawfully in the United States, while prohibiting
the employment of illegal aliens outside of these programs. Other
provisions in the legislation create legal authority to deal with the
Cuban and Haitian arrivals of 1980 and avert future migrations of
undocumented aliens. The legislation also increases the opportunities for legal immigration from our immediate neighbors, Canada
and Mexico.
Outlays for border enforcement activities are estimated to increase from $924 million in 1982 to $1,041 million in 1983.
Federal litigative and judicial activities.—The Department of Justice litigates all of the Federal Government's criminal cases and
most of its civil cases. The Department's concentration on more
complex crimes has reduced the number of Federal criminal cases
24% between 1976 and 1980. The civil caseload, on the other hand,
has increased 55% during the same period.
Approximately one-third of all resources for the administration
of justice are for Federal litigative and judicial activities. Outlays
in 1983 are estimated to be $1.4 billion, an increase of 2% over the
level estimated for 1982.

5-176

THE BUDGET FOR FISCAL YEAR 1983

Civil and criminal prosecution and representation.—Outlays for
civil and criminal prosecution and representation are estimated to
rise from $502 million in 1982 to $570 million in 1983.
In recognition of the central role Federal prosecutors play in
criminal law enforcement, the administration is directing each of
the 94 U.S. attorneys to create law enforcement coordinating committees in their districts. The committees, composed of Federal,
State, and local law enforcement officials, will formulate local law
enforcement cooperation plans. These plans will identify law enforcement needs and priorities within the district and pinpoint
areas where improved Federal, State, and local cooperation is
likely to produce the greatest public benefit.
The administration also supports:
• an active role in civil litigation on the part of the executive
branch, to carry out administration policies and to protect the
Government's financial interests in court;
• improved management of the court preparation process in the
executive branch, including better case control and computerization of evidence; and
• special emphasis on litigation to collect approximately $3 billion in debts owed to the Federal Government.
Federal judicial activities.—Budget estimates from the judiciary
are included in the budget without modification by the executive
branch. The U.S. Courts have estimated outlays of $840 million in
1983 for all judicial branch activities, a 13% increase over the 1982
level.
Representation of indigents in civil cases.—The Legal Services
Corporation (LSC) funds State and local agencies that provide free
civil legal assistance to the poor. The Corporation is a private nonprofit organization that acts independently of related Federal social
and community services programs. Grantees are currently involved
both in cases for individual clients and in broader "law reform"
activities.
The administration proposes that the Corporation not be reauthorized, and that no further separate Federal funding be provided.
The administration's social and community services block grants
include adequate authority to fund legal services activities that
States wish to provide for their citizens. In addition, private attorneys are expected to increase free services to the indigent in accordance with the legal profession's ethical obligations.
Federal correctional activities.—The Federal Government is responsible for the care and custody of prisoners charged with or
convicted of violating Federal laws.

ADMINISTRATION OF JUSTICE

5-177

The Federal Government generally uses its own facilities to
house its convicted prisoners and uses State or local jails to house
Federal detainees awaiting trial, sentencing, or transfer to another
institution. In some areas, however, either because of the volume of
Federal detainees or the unavailability of local facilities, the Federal Government must have its own facilities for detention. In 1982, a
new Federal jail opened in Tucson, Arizona to meet the need for
additional Federal facilities.
The Federal prison population in 1982 is expected to be 12%
larger than originally estimated. This unanticipated increase occurred because of the use of prison facilities for many of the
Cubans who arrived in 1980, vigorous Federal prosecution in 1981,
and use by State offenders paid through reimbursements. These
factors should keep the prisoner population at the same level
throughout 1983. Because of insufficient housing for prisoners, additional housing will be made available by the end of 1983 through
renovations and construction now under way.
Outlays for correctional activities in 1983 are estimated to be
$386 million, 3% above the level estimated for 1982.
Criminal justice assistance.—Public safety is primarily a State
and local responsibility. This administration does not believe that
providing criminal justice assistance in the form of grants or contracts is an appropriate or effective use of Federal funds. For this
reason, budget authority is not requested in the 1983 budget for the
juvenile justice and delinquency prevention program, or for any
other general law enforcement assistance programs for States and
local governments. However, the Federal Government will continue
to provide certain types of specialized training and technical assistance to State and local governments, including training for local
prison and jail staff and forensic laboratory services. In these areas
the Federal Government has a unique capability to meet a nationwide need.
The collection and dissemination of criminal justice statistics and
research on criminal or civil matters also are appropriate activities
for the Federal Government and are included in the budget proposals for 1983. Budget authority of $37 million is requested for the
National Institute of Justice and the Bureau of Justice Statistics,
slightly above the 1982 level. Projects involving the evaluation and
redesign of two of the most important information sources for
national crime statistics—the Uniform Crime Reports and the National Crime Survey—will continue as scheduled.
Outlays for criminal justice assistance are estimated to decrease
from the 1982 level of $318 million to $162 million in 1983, primarily because of grant program reductions begun under prior administrations and continued under this administration.

5-178

THE BUDGET FOR FISCAL YEAR 1983

Related programs.—A number of programs described in other
functions support the administration of justice. Over 100 agencies
and regulatory commissions perform some type of law enforcement
activity. About 30 Federal agencies, including the Departments of
Agriculture and Labor, the Environmental Protection Agency, and
most independent regulatory commissions, have some litigation authority independent of the Department of Justice.

GENERAL GOVERNMENT

5-179

GENERAL GOVERNMENT
National Needs Statement
• Provide central policy formulation and management that
responds effectively and efficiently to the needs of the
Nation.
The Federal Role in Meeting the Need:
• Provide a legislative system responsive to the Nation's
people.
• Provide national executive leadership and set policy and
management for the Federal agencies.
• Ensure efficiency and accountability in the use of Federal finances, property, and personnel.
• Conduct efficient central services, such as tax and fiscal
operations and property and personnel management, for
the Federal Government.
The general government function includes the central management and policy responsibilities of the Federal Government. The
goals of the President, his staff, the Congress, and other personnel
in this function are to address the needs of the Nation and to
improve the management and efficiency of Federal finances, property, and personnel. This function includes leadership, policy formulation and managerial oversight by the President and his executive staff, and the setting of overall policy pursuant to statutes
enacted by the Congress. Central services include tax collection,
fiscal operations, personnel management, property control, and
records management.
Outlays for general government are estimated to be $5.0 billion
in 1983. This compares with estimated outlays of $5.1 billion in
1982 and $4.6 billion in 1981. Major objectives of this administration are fiscal restraint, greater productivity, and concentration of
available resources on the most essential needs. To achieve these,
the 1983 budget includes proposals to:
• enhance efforts to identify and collect unpaid taxes;
• dispose of excess property; and
• improve productivity in the Federal Government.
Legislative functions.—By law, budget estimates for the legislative branch are included in the President's budget without change
as submitted by Congress. The legislative branch estimates $1.2
billion in outlays in 1983 for the operation of the Congress, the
General Accounting Office, the Library of Congress, and similar
activities. This is about the same as the 1982 level.

5-180

THE BUDGET FOR FISCAL YEAR 1983
NATIONAL NEED: GENERAL GOVERNMENT
(Functional code 800; in millions of dollars)
Major missions and programs

1981
actual

1982
estimate

1983
estimate

1984
estimate

1985
estimate

1,031

1,194

1,217

1,330

1,291

BUDGET AUTHORITY
Legislative functions
Executive direction and management

108

104

107

2,480
-210
410

2,589
-158
424

2,917
-192
428

2,987
-251
425

3,002
-343
428

2,679

2,855

3,154

3,162

3,087

175
89
313

20
75
273

38
85
239

23
85
229

577

369

362

337

162

136

139

172
145
504
-58

188
11
506
3

134
14
506
6

146
16
506
35

138
16
506
15

763

707

660

703

645

-200

-361
-16

359 - 3 8 0
-16
-16

?00 - 3 7 7

375 - 3 9 6

Central fiscal operations:

Collection of taxes
Federal Financing Bank
Other fiscal operations
Subtotal, central fiscal operations
General property and records management:
Real property

Personal property
Records management
Other
Subtotal, general property and records management
Central personnel management
Other general government:

Territories
Indian affairs
Treasury claims..
Other

.
.

Subtotal, other general government
Deductions for offsetting receipts:
Existing law
Proposed legislation

-195

Subtotal, deductions for offsetting receipts

-195

Total, budget authority

5,125

5,152

5,259

5,400

5,210

Executive direction and management—Outlays in 1983 for the
White House, other components of the Executive Office of the
President, and related activities are estimated to be $101 million—
an increase of $7 million over 1982.
Central fiscal operations.—The mission of central fiscal operations is to collect taxes, administer the public debt, and carry out
certain other financial operations of the Federal Government. Outlays are estimated to be $3.1 billion in 1983, a 10% increase over
the 1982 level.
Collection of taxes.—The funds supporting this mission are for
the Internal Revenue Service (IRS). IRS plans to continue efforts to
improve compliance and to ensure that all taxpayers pay their
share of the tax burden. Compliance by taxpayers should be enhanced by the Economic Recovery Act, which increased the inter-

5-181

GENERAL GOVERNMENT
NATIONAL NEED: GENERAL GOVERNMENT—Continued
(Functional code 800; in millions of dollars)
Major missions and programs

1981
actual

1982
estimate

1983
estimate

1984
estimate

1985
estimate

1,036

1,200

1,204

1,252

1,272

2,429
-210
382

2,537
-158
423

2,600

2,802

OUTLAYS
Legislative functions
Executive direction and management

102

105

2,860
-192
424

2,927
-251
421

2,941

3,092

3,097

3,022

2 -171
65
35
73
84
288
244

-191
22
84
234

-238
22
83
234

101

Central fiscal operations:

Collection of taxes
Federal Financing Bank
Other fiscal operations
Subtotal, central fiscal operations
General property and records management:
Real property

Personal property
Records management
Other
Subtotal, general property and records management
Central personnel management

-142
-33
84
260

423

169

428

192

150

102

159

136

140

139

Other general government:

Territories
Indian affairs
Treasury claims
Other
Subtotal, other general government
Deductions for offsetting receipts:
Existing law
Proposed legislation

197

188

169

188

166

150
504
-105

12
506
-20

14
506
-33

16
506
136

16
506
-46

745

687

656

846

642

359
-16

-380
16

377 - 3 7 5

-396

-195

-200

Subtotal, deductions for offsetting receipts

-195

-200

Total, outlays

4,614

5,146

5,008

5,210

4,886

14
13

35
28

-8

-9

30
30

-1

-361
-16

ADDENDUM
Off-budget Federal entity:
Federal Financing Bank:
Federal buildings fund:
Budget authority
Outlays
Territories:
Budget authority
Outlays
Other:
Budget authority .
Outlays

79
79

*$500 thousand or less.

est rate paid on underpayments or overpayments of taxes. It provides for adjustments, each January, to make the interest rate
equal 100% of the prime interest rate in effect the previous September. Under prior law, the rate was adjusted every alternate
year to 90% of the prime rate. Beginning in February of 1982, the

5-182

THE BUDGET FOR FISCAL YEAR 1983

statutory rate will be 20%, as contrasted with 12% in the previous
2 years.
In addition, IRS will increase its emphasis on identification and
collection of unpaid taxes. First, IRS will allocate a greater portion
of its existing resources to these efforts. Second, the 1983 budget
reflects an initiative to improve tax administration and increase
receipts by increasing resources dedicated to collecting receipts and
by automating collection procedures. These initiatives are estimated to produce additional receipts of $2.3 billion in 1983.
Federal Financing Bank (FFB).—The Federal Financing Bank
(FFB) is an off-budget Federal entity under the supervision of the
Treasury Department. It was created with the objectives of reducing the cost of Federal and federally-assisted borrowing from the
public and ensuring that such borrowing takes place with the least
disruption to financial markets. The FFB neither initiates nor
reviews Federal credit programs; it is solely a financing vehicle.
Prior to the creation of the FFB, the frequency of non-Treasury
government borrowing, the small size of many issues, and the lack
of investor familiarity caused higher yields on these securities than
on Treasury issues of similar maturity. The Bank was meant to
replace the market as a source of funds for these securities, thereby reducing the number of government-backed securities going to
market and lowering the financing costs to the Federal Government.
The FFB has become the major vehicle to finance Federal programs involving the sale or placement of credit market instruments. Net lending by the FFB to purchase loan assets and disburse direct loans with agency guarantees have grown from $0.6
billion in 1974 (the first year of operation) to $20.9 billion in 1981,
decreasing to an estimated $12.1 billion in 1983. The amount of
these loans outstanding held by the FFB is expected to grow from
$0.6 billion at the end of 1974 to an estimated $111 billion in 1983.
The activities of the FFB are determined by the level of activity
of the agencies using the Bank. The administration's actions to
limit the size of Federal credit programs through the credit budget
will slow expansion of the FFB, since all FFB lending is included in
the credit budget.
The FFB receives interest on the loans it makes higher than the
interest rate at which it borrows from the Treasury. It uses a
portion of these funds for administrative expenses; the surplus
monies are shown as offsetting collections to central fiscal operations. They are estimated to be $192 million in 1983.
Further discussion of the Federal Financing Bank is in Part 5
(the introduction) and Part 6 of the Budget, in Special Analysis E,
"Borrowing and Debt," and in Special Analysis F, "Federal Credit
Programs." These sources also summarize the distribution of FFB

GENERAL GOVERNMENT

5-183

activity according to the agencies that it assists. (The special analyses are available from the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402.) The national
needs tables in each function, which show budget authority and
outlays, also display off-budget activity of the FFB.
Other fiscal operations.—Other fiscal operations include primarily the manufacture of coins by the Bureau of the Mint and of
currency by the Bureau of Engraving and Printing. The Mint plans
to increase its production capacity by 6.5 billion coins per year
through a 5-year program to expand and improve existing facilities.
This will help meet the demand for coins, which has doubled in the
last 10 years. Estimated outlays for 1983 for other fiscal operations
are $424 million, which are above estimated outlays of $423 million
in 1982 and $382 million in 1981.
General property and records management—The General Services Administration (GSA) is the government's builder and landlord, wholesaler and retailer of supplies, and historian and records
keeper. These housekeeping services support the activities of other
Federal agencies.
Real property.—New Federal building construction was curtailed
sharply in 1981 and 1982. In 1983, the administration is requesting
$68 million in new obligational authority for a moderate level of
new construction. Large projects proposed are new Federal courthouses in Birmingham, Alabama, and Youngstown, Ohio.
A new office building is planned for Washington, D.C. to complete the Federal Triangle project. The 1983 budget requests funds
for preliminary design of this building, with requests for construction funds to come in subsequent years. The Federal Triangle
building will replace some leased space now used as offices for
numerous Federal employees. The total amount of federally leased
space is expected to decline along with the projected decline in the
number of Federal employees.
Central personnel management—Personnel management functions are carried out by the Office of Personnel Management
(OPM), the Federal Labor Relations Authority and the Merit Systems Protection Board. Estimated outlays for 1983 are $140 million,
an increase of $4 million over 1982 levels.
As the central personnel management agency of the executive
branch, OPM will direct its attention to developing and operating a
personnel program that will improve the effectiveness of the Federal Government's operations. Previously, OPM had decentralized its
responsibility for ensuring that executive agencies' personnel management and operations are based on standards of merit in the
hiring, promotion, and other personnel actions of Federal employ-

5-184

THE BUDGET FOR FISCAL YEAR 1983

ees. OPM is moving to recentralize its delegation of authority in
these areas and is reemphasizing its traditional personnel management role.
Several issues continue to face the Federal Government, as employer of approximately 2 million civilians, in the area of personnel
compensation. The administration is committed to providing a
structure of employee pay and benefits that is fair to both the
employee and the taxpayer, while ensuring that the Government is
able to attract and retain a qualified workforce. As a result, the
administration will initiate a study of Federal civilian pay, which
is discussed further in the allowances section of the budget. In
addition, proposals to modify the civil service retirement system
will help ensure that there is more equitable treatment between
active and retired Federal employees in protection from inflation.
Additional information on employee-related issues is also contained
in the health and income security sections of this part of the
budget.
Other general government—Other activities in the general government function include payments of claims and judgments
against the Federal Government, and funding for the territories,
Indian affairs, and various commissions. Outlays are expected to
decrease from $745 million in 1981 to $656 million in 1983.
Territories.—Budget authority of $58 million is proposed for 1983
for continued support of the U.S. territories of Guam, American
Samoa, the Virgin Islands, and the Northern Marianas. The decrease of $32 million in budget authority from 1982 is caused
primarily by the completion of a major hospital construction project in the Virgin Islands. In addition, the administration proposes
up to $8 million in Federal loan guarantees of private sector financing for new power generation facilities in American Samoa.
Budget authority of $76 million is requested for the Trust Territory of the Pacific Islands for operations and construction, including $8 million to assist the three Micronesian governments to build
new capitols. To increase self-government, the U.S. seeks to terminate the trusteeship (begun shortly after World War II) upon final
agreement on a compact of free association with the governments
of Palau, the Federated States of Micronesia, and the Marshall
Islands. The administration is also seeking a 1982 supplemental
appropriation of $21 million for the resettlement of Bikini Islanders (displaced from their homes by U.S. nuclear testing in the
1940V and 1950's) to Kili and Ejit Islands in the Marshalls until
such time that Bikini is safe for return.
In addition to these programs funded by the Department of the
Interior, the territories and the Trust Territory receive grants and
payments from other federal agencies.

GENERAL GOVERNMENT

5-185

Indian Affairs.—Budget authority was exceptionally high—$145
million—in 1981 for Indian affairs, mostly to provide final payments to settle land claims in Alaska and Maine, as authorized by
law. No similar funding involving Indian land claims is projected
for 1983. Budget authority for the Navajo and Hopi Indian Relocation Commission is proposed at $14 million in 1983. These funds
would continue the relocation of those Indians required to move
because of a Federal court determination of the boundary line
between the reservations of the two tribes. Funds would cover
moving expenses and the cost of replacement housing for relocated
families. It will also aid in the selection and transfer of ownership
of 250,000 acres of federally owned land to the Navajo Tribe for
permanent resettlement. Additional assistance to Indian tribes is
classified in a number of functions—health; natural resources and
environment; community and regional development; and education,
training, employment and social services.
Offsetting receipts.—The administration is proposing to eliminate
all transfers of excess real property at discounted prices to other
Federal agencies and to end all donations of real property to State
and local governments. Federal agencies will be required to pay
100% of fair market value; State and local governments will be
permitted first right of refusal but will also be required to pay the
full market price. The only exception will be real property donations to State and local governments for use as correctional facilities. These measures alone should increase receipts from 1983 to
1987 by approximately $200 million annually. Other new initiatives
of the administration to identify and sell excess Federal property
are discussed in the undistributed offsetting receipts section of this
budget.
The General Services Administration (GSA) is proposing to use
private sector auditing firms to identify overcharges on transport
contracts. The GSA will recover and deposit increased receipts
from recovered overcharges into miscellaneous receipts of the
Treasury. This is expected to save 16 million in 1983.
Credit programs.—This function contains credit programs financed as off-budget direct loans by the Federal Financing Bank
(FFB). These include Interior Department guaranteed loans for
capital improvement projects in U.S. territories as well as General
Services Administration guaranteed loans originated for lease-purchase agreements on some Federal buildings. The accompanying
table shows the level of operation of these two programs.
Tax expenditures.—In addition to direct Federal funds for general government, the tax code permits individuals to claim a 50% tax
credit on political contributions of up to $100 ($200 for joint re360-000

0 - 8 2 - 1 9

5-186

THE BUDGET FOR FISCAL YEAR 1983
CREDIT PROGRAMS—GENERAL GOVERNMENT
(In millions of dollars)
Direct loan obligations
Program

Loans to U S territories and other *
Federal buildings fund 1
Off-budget Federal entities:
Federal Financing Bank: 2
Loans to U.S. territories
Federal buildings fund
Subtotal, gross

1981
actual

1982
estimate

30
35

Less:
Guaranteed loans held as direct loans by the FFB:
Loans to U S territories
Federal buildings fund
Total, general government

1983
estimate

Guaranteed loan commitments
1981
actual

1982
estimate

1983
estimate

30
35

-14

-30
-35

1
Includes
2

guarantees of direct loans originated by the FFB as shown below.
The FFB is a mechanism to finance loan asset sales or loan guarantees made by other Federal agencies. The deductions below eliminate
overlap with transactions shown above in this table. See the introduction to Part 5 for further explanation.

turns). The outlay equivalent estimate for this provision is
million in 1983.

GENERAL PURPOSE FISCAL ASSISTANCE

5-187

GENERAL PURPOSE FISCAL ASSISTANCE
National Needs Statement:
• Reduce the size and influence of the Federal Government,
and return to State and local governments increased
discretion in the use of Federal assistance.
The Federal Role in Meeting the Need:
• Provide State and local governments with general purpose revenues and with responsibilities that have been
preempted by the Federal Government.
• Replace some portion of Federal funding with a transfer
of revenue sources from the Federal Government to
State and local governments.
General purpose fiscal assistance provides financial aid to State
and local governments without major restrictions or matching requirements. This assistance can be used to provide local services,
build infrastructure, retire debt, and for other purposes of general
government. Programs in this category include general revenue
sharing, payments and loans to the District of Columbia, Forest
Service receipts paid to the States, payments in lieu of taxes, and
payments to territories and Puerto Rico.
Consistent with the President's new federalism initiative, which
is discussed in Part 3 of this document, the administration intends to
turn over to the States the responsibility for, and the resources to
finance, many Federal programs. A federalism trust fund will be
established to finance them during the period 1984-87. Over a 4year transition period beginning in 1988, Federal excise taxes will
decline each year with States free to substitute their own taxes or
to reduce program costs.
Outlays for this function are estimated to be $6.7 billion in 1983,
compared to $6.4 billion in 1982.
General revenue sharing.—Outlays for the general revenue sharing program are estimated to decline from $5.1 billion in 1981 to
$4.6 billion in 1983. This decrease is caused by termination of State
participation in the program beginning 1981.
General revenue sharing currently provides funds to approximately 39,000 jurisdictions. Federal controls are minimal, and are
primarily designed to ensure public participation in spending decisions. Governments that receive $25,000 or more in any one year
must undergo a full audit of financial accounts every 3 years.
Revenue sharing funds are first divided among the States on the
basis of total population, urban population, personal and per capita

5-188

THE BUDGET FOR FISCAL YEAR 1983
NATIONAL NEED: FISCAL ASSISTANCE TO STATE AND LOCAL GOVERNMENTS
(Functional code 850; in millions of dollars)
Major missions and programs

1982
estimate

1981
actual

1983
estimate

1985
estimate

1984
estimate

BUDGET AUTHORITY
General revenue sharing:
General revenue sharing payments
Administration

4,567
7

4,567
6

4,567
7

4,573

489

551

553

241

242

342

489

588

453

606

763

848

1,043

103

385
5

407
5

45
416
6

45
430
6

45
440
6

Subtotal, other general purpose fiscal assistance

1,678

1,846

2,123

2,371

2,672

Total, budget authority

6,251

6,419

6,696

6,944

7,245

5,134
7

4,570
6

4,567
6

5,140

4,576

4,573

492

479

541

398

395

241

242

342

489

588

450

605

763

848

1,043

104

423
5

411
7

45
416
5

45
430
6

45
440
6

Subtotal, other general purpose fiscal assistance

1,716

1,841

2,113

2,215

2,516

Total, outlays

6,856

6,417

6,686

6,788

7,090

Subtotal, general revenue sharing
Other general purpose fiscal assistance:
Payments and loans to the District of Columbia....

New York City loan guarantees (administrative
expenses)
Other payments:
Payments to States from Forest Service receipts
Payments to States and counties from Federal land management activities
Payments in-lieu-of taxes:
Existing law
Proposed legislation
Payments to territories and Puerto Rico
Other

550

OUTLAYS
General revenue sharing:
General revenue sharing payments
Administration

Subtotal, general revenue sharing
Other general purpose fiscal assistance:
Payments and loans to the District of Columbia....
New York City loan guarantees (administrative
expenses)
Other payments:

Payments to States from Forest Service receipts . ...
Payments to States and counties from Federal land management activities
Payments in-lieu-of taxes:
Existing law
Proposed legislation..
Payments to territories and Puerto Rico
Other

*$500 thousand or less.

income, Federal and State income, tax collections, and general tax
effort. Local governments' shares of the allocation are in turn

GENERAL PURPOSE FISCAL ASSISTANCE

5-189

based primarily on population, per capita income, and tax effort.
The formula helps target assistance to governments with fiscal
problems.
The program, which originally included allocations for use by
State governments, was first passed in 1972 to:
• raise funds from what at that time was a relatively more
productive and more equitable Federal tax system;
• redistribute funds to reduce disparities in State and local
fiscal capacities; and
• reduce red tape and increase State and local control over the
expenditure of Federal aid.
Since then, the revenue-generating ability of State and local tax
systems, in the aggregate, has grown. State and local tax systems
are now less regressive, and Federal taxes relative to both State
and local taxes and the gross national product are declining as a
result of the administration's 3-year tax reduction package.
These changes in the revenue generating ability of State and
local governments are consistent with the goal of reducing the size
and influence of the Federal Government and turning over decision
making and financing for many domestic programs to State and
local governments. These changes have increased the ability of
State and local governments to finance their local needs. General
revenue sharing outlays to local governments are estimated at $4.6
billion in 1983. General revenue sharing is part of the federalism
initiative described in Part 3 of this Budget.
Other general purpose fiscal assistance.—Several other programs

provide funds with minimal restrictions to States and localities.
Outlays for these programs are estimated to be $1.8 billion in 1982
and $2.1 billion in 1983.
Payments and loans to the District of Columbia.—The District of
Columbia's operating budget is financed in part by annual payments from the Federal Government in recognition of the costs to
the local government of the Federal presence. The administration
requests $551 million in budget authority for the District of Columbia in 1983, of which $425 million is for Federal payments. Included in the Federal payment request is $52 million for the annual
Federal contribution to the retirement funds for the District's
police officers, firefighters, teachers, and judges as required under
the pension reform legislation enacted in 1979.
In anticipation of the District of Columbia's entry into the private capital market, the administration will seek legislation to
discontinue the City's authority to borrow interest-free short-term
funds from the U.S. Treasury. The 1983 estimates anticipate that
the City will begin to exercise its authority to borrow in the private
market for short term, cash management purposes. For long-term

5-190

THE BUDGET FOR FISCAL YEAR 1983

funding purposes, the 1983 budget requests budget authority of
$155 million for Federal loans to fund capital improvements in the
District. However, it is expected that the District will make significant progress in developing the capability to finance long-term
borrowing in the private market, so that long-term loans from the
Federal Government can eventually be phased out.
Outlays for the payments and loans to the District of Columbia
are estimated to increase from $479 million in 1982 to $541 million
in 1983.
New York City loan guarantees.—Under the New York City Loan
Guarantee Act of 1978, the Secretary of the Treasury is authorized
to guarantee up to $1.6 billion of New York City obligations. The
remaining guarantee authority is $300 million. The authority to
make new loan guarantees ends on June 30, 1982.
These guarantees depend on the City's meeting a number of
conditions including: sale of the obligations to City or State employee pension funds, balancing of the City's budget by June 30, 1982,
and payment of an annual guarantee fee of 0.5% on the outstanding balance. The loan guarantees are not included in the budget
totals because they are not expected to result in Federal outlays,
but the related administrative costs are included.
Other payments.—Some jurisdictions receive payments from the
Federal Government based on a percentage of receipts generated
from the sale of timber, mineral leases, grazing permits, and other
activities on Federal property.
Payments to States from Forest Service receipts will return an
estimated $242 million in outlays in 1982 and $342 million in 1983
to States for distribution to counties in which National forests are
located. These funds are to be used for schools and roads.
Payments to States and counties from Federal land management
activities are estimated to be $605 million in 1982 and $763 million
in 1983 for shared revenues from oil and gas, coal, timber, and
grazing activities on Federal lands.
Payments in lieu of taxes provide fees to local governments for
some Federal lands located within their jurisdictions. They resulted
in cash outlays of $104 million in 1981. Revised legislation has been
proposed for this program to correct fiscal inequities among the
recipients. Upon enactment of acceptable legislation, budget authority of $45 million for 1983 will be requested for payments in
lieu of taxes.
Payments to territories and Puerto Rico are made because the
Federal Government collects some taxes levied by the territories
and Puerto Rico and returns these taxes to them. These payments
comprise (1) annual advance payments of certain income tax withholding and excise tax collections involving Guam and the Virgin

5-191

GENERAL PURPOSE FISCAL ASSISTANCE

Islands, and (2) excise tax withholding involving Puerto Rico. Outlays are estimated at $411 million in 1982 and $416 million in 1983.
Credit programs.—The three major credit programs in this function, direct loans to the District of Columbia, short term advances
to the District's general fund, and loan guarantees to New York
City, are described in the text above. Their expected levels of new
activity are shown in the accompanying table.
CREDIT PROGRAMS—GENERAL PURPOSE FISCAL ASSISTANCE
(In millions of dollars)
Direct loan obligations
Program

Loans to the District of Columbia
Repayable advances to D.C. general fund
Guarantees of New York City loans
Total, general purpose fiscal assistance....

1981
actual
134
80

214

1982
estimate
145
80

225

Guaranteed loan commitments

1983
estimate

1981
actual

1982
estimate

1983
estimate

155

145

300

Tax expenditures.—Interest on State and local government debt is
excluded from Federal taxation. Both corporations (mainly commercial banks) and individuals receive this tax-exempt income. As a
result, State and local governments can sell debt obligations at a
lower interest cost than would be possible if such interest were
subject to tax. Only the effect of excluding interest on general
purpose obligations and revenue bonds for public purposes such as
toll roads is included in this function. The exclusion of interest on
State and local government securities issued to finance pollution
control facilities, other industrial development bonds, and housing
bonds is classified elsewhere. The outlay equivalent estimate for the
exclusion of interest on general purpose State and local debt is $7.7
billion in 1983.
The deductibility of nonbusiness State and local taxes gives indirect assistance to these governments of $21.7 billion in 1983. This
outlay equivalent estimate is primarily for the deductibility of
State and local income and sales taxes. The deductibility of property taxes on owner-occupied homes is classified in the commerce and
housing credit function. Under certain conditions, U.S. corporations receiving income from sources in a U.S. possession can claim
a special tax credit equal to the U.S. tax, but only on income from
such sources. For 1983, the outlay equivalent estimate for this
provision amounts to $2.4 billion. Tax expenditures for general
purpose fiscal assistance total $32.1 billion in 1983.
Related programs.—In addition to general purpose fiscal assistance, the Federal Government provides States and localities with
assistance through a variety of Federal grant-in-aid programs.
These programs, which range from relatively narrow categorical
programs to broader grant programs, are more restrictive than

5-192

THE BUDGET FOR FISCAL YEAR 1983

general purpose fiscal assistance, and are designed to meet other
national needs and to serve other major missions. Therefore, they
are not included as general purpose fiscal assistance, although they
do provide, when taken together, a large source of State and local
revenues. Total grant-in-aid outlays to States and localities are
estimated to decrease from an estimated $91.2 billion in 1982 to an
estimated $81.4 billion in 1983.
A major objective of this administration is to simplify the grantsin-aid system, which now contains hundreds of small categorical
programs that have high administrative costs and are very restrictive in the use of the funds. There are now so many grant programs that they have become a confusing tangle of minor programs that overlap, conflict, and overregulate.
In the Omnibus Budget Reconciliation Act of 1981, 57 categorical
grants were consolidated into 9 block grants. This consolidation
carries out the administration's objectives of simplifying grants and
increasing State and local discretion over the use of Federal funds.
In 1983 the administration proposes to combine 41 additional
categorical grants into 7 new block grants for vocational and adult
education, education for the handicapped, rehabilitation services,
training and employment, combined welfare administration, child
welfare, and rehabilitation of rental housing. In addition, the administration proposes to combine four other health programs into
two existing health block grants and to consolidate the energy and
emergency assistance program with the existing low income home
energy assistance block grant.
As is noted above, through its federalism initiative the administration proposes to shift dramatically the responsibility for and the
resources to finance a major portion of the Federal grant programs
during an 8-year transition period from 1984-91.
Grants are discussed in more detail in "Special Analysis H,
Federal Aid to State and Local Governments" which is available
from the Superintendent of Documents, Government Printing
Office, Washington, D.C. 20402.

5-193

GENERAL PURPOSE FISCAL ASSISTANCE
FEDERAL GRANT-IN-AID OUTLAYS BY FUNCTION
(In millions of dollars)

Function

National defense
Energy
Natural resources and environment
Agriculture
Commerce and housing credit
Transportation
Community and regional development
Education, training, employment, and social servicesHealth
Income security
Veterans benefits and services
Administration of justice
General government
General purpose fiscal assistancex

Total grant outlays...
1

1981
actual

75
617
4,944
829
4
13,462
6,124
21,146
18,895
21,341
74
333
208
6,710
94,762

These numbers differ slightly from total outlays for this function, because they exclude administrative expenses.

1982
estimate

82
679
5,110
896
5
12,534
5,933
17,310
20,122
21,718
66
257
190
6,319
91,220

1983
estimate

106
409
4,166
859
2
11,889
5,010
12,281
19,469
20,331
65
118
163
6,549
81,418

5-194

THE BUDGET FOR FISCAL YEAR 1983

INTEREST
Interest is the cost of borrowing or the income from lending
money. The interest function includes both interest paid and interest received by the Federal Government. In 1982 and 1983 interest
outlays are estimated to grow substantially, rising by $16.6 billion
and $13.4 billion, respectively. By 1983, outlays for the interest
function are estimated to be $112.5 billion.
INTEREST
(Functional code 900; in millions of dollars)
Programs

1981
actual

1982
estimate

1983
estimate

1984
estimate

1985
estimate

95,503

115,700

133,229
329

141,391
-691

147,458
-858

95,503

115,700

132,900

140,700

146,600

BUDGET AUTHORITY
Interest on the public debt:
Existing law

Proposed legislation
Subtotal, interest on the public debt
Other interest:
Interest on refunds of tax collections

Interest on loans to the Federal Financing Bank
Other:
Existing law
Proposed legislation
Subtotal, other interest
Total, budget authority

1,456
1,046
1,712
1,937
1,567
-8,570 -11,885 -15,171 -17,526 -19,121
-5,442

-6,432

-7,146
16

-8,209
-347

-8,667
-541

- 1 2 , 9 6 6 -16,606 - 2 0 , 3 6 4 - 2 4 , 5 1 5 - 2 6 , 8 7 4
82,537

99,094

112,536

116,185

119,726

95,503

115,700

133,229
-329

141,391
-691

147,458
-858

95,503

115,700

132,900

140,700

146,600

OUTLAYS
Interest on the public debt:
Existing law
Proposed legislation
Subtotal, interest on the public debt
Other interest:
Interest on refunds of tax collections
Interest on loans to the Federal Financing Bank
Other:
Existing law
Proposed legislation
Subtotal, other interest
Total, outlays

1,937
1,046
1,712
1,567
1,456
- 8 , 5 7 0 -11,885 - 1 5 , 1 7 1 - 1 7 , 5 2 6 - 1 9 , 1 2 1
-5,443

-6,431

-7,146
16

-12,967 - 1 6 , 6 0 5 - 2 0 , 3 6 4
82,537

99,095

112,536

-8,209
-347

-8,667
541

24,515 - 2 6 , 8 7 4
116,185

119,726

Interest on the public debt—This subfunction includes all interest paid on the public debt. The public debt consists of Treasury
securities sold to the public and to trust, revolving, and deposit
funds within the Federal Government.
Estimates of interest on the public debt are highly sensitive to
assumptions about interest rates. For purposes of developing
budget estimates, interest rates are assumed—by convention—to

INTEREST

5-195

fall as inflation declines. Under this convention, it is assumed t h a t
the 91-day bill rate will decline from an average of 14.0% in
calendar year 1981 to 11.7% in 1982, 10.5% in 1983, 9.5% in 1984,
and 8.5% in 1985.
Interest on the public debt is estimated to grow by $20.2 billion
in 1982 due to the combined effects of higher average interest rates
on Treasury securities and higher Treasury debt outstanding. The
1983 increase is projected to be $17.2 billion and is due primarily to
an increase in the amount of Treasury debt outstanding.
The estimates of interest on the public debt reflect proposed
legislation to modernize the savings bond program. The proposal
would establish a new interest rate for savings bonds held at least
5 years. The rate would be 85% of the average market yield on 5year Treasury securities during the holding period. The new rate
would also apply to outstanding bonds if held another 5 years. This
proposal is estimated to reduce interest outlays by $0.3 billion in
1983.
Other interest—This
subfunction includes interest payments on
tax refunds and, as an offset, interest collections from Federal
agencies and the public.
Interest on refunds of tax collections.—Interest
payments by the
Treasury on tax refunds are estimated to be $1.9 billion in 1983, an
increase of $0.2 billion from 1982. The Omnibus Budget Reconciliation Act of 1981 included a provision to set at t h e prime r a t e the
interest rates charged on delinquent tax returns and on refunds of
tax collections. This makes these payments much more sensitive to
interest rates and increases the 1982 and 1983 estimated payments
for interest on refunds of tax collections. As projected interest rates
decline for later years, these outlays are also expected to decline.

Interest on loans to the Federal Financing Bank (FFB).—The
largest item of offsetting interest collections is from the off-budget
Federal Financing Bank, which is estimated to provide $15.2 billion
in offsetting receipts in 1983. In recent years, this off-budget Federal entity has become the major source of funds for many Government programs. The FFB borrows directly from the Treasury and
uses these funds to purchase debt and financial assets guaranteed
by various Government programs. It then pays interest to the
Treasury on this borrowing.
Other.—Offsetting interest collections other than from the FFB
are estimated at $7.1 billion in 1983. These come from two basic
sources: interest charges by Treasury to Federal agency revolving
funds, which is by far the largest source, and interest collected
from the public outside of revolving funds. Revolving funds borrow
from the Treasury primarily to finance direct loans to the public.

5-196

THE BUDGET FOR FISCAL YEAR 1983

Other interest collections are from loans made by non-revolving
funds to the public and interest paid by banks holding deposits of
Federal tax collections.
Net interest—A substantial portion of interest outlays is paid to
Federal trust funds on securities held by these funds. Since this
payment of interest is not made to the public, but rather consists of
offsetting transactions within the budget itself, these amounts are
deducted from both budget authority and outlays before arriving at
the budget totals. As shown in the following table, net interest
outlays—the interest function minus the interest received by trust
funds—are projected to be $96.4 billion in 1983.
Net interest in 1983 is projected to continue its recent rapid
growth as a percent of budget outlays. Net interest outlays are
estimated to be 12.7% of budget outlays in 1983, compared to
10.5% in 1981. In subsequent years this percent is expected to
decline. During most of the 1970's, net interest outlays were in the
7-8% range.
In addition, the Federal Reserve Banks hold Government securities as part of their monetary function. The Federal Reserve Banks
return most of the interest they receive on these securities back to
the Treasury as miscellaneous budget receipts. This deposit of earnings is projected to be $15.8 billion in 1983. Deducting these receipts from net interest results in a net impact on the budget of
$80.6 billion in 1983. The net impact of interest is the amount of
interest that must be paid from receipts or additional borrowing to
meet Federal financing requirements.
NET INTEREST
(In millions of dollars)
1981
actual

Outlays for the interest function
Interest received by trust funds

Net impact
1
2

1983
estimate

1984
estimate

1985
estimate

82,537
99,095 112,536 116,185 119,726
-13,810 -16,080 -16,122 -17,502 -18,934

Net interest outlays

Deposit of earnings by the Federal Reserve System

1982
estimate

68,727
1

83,015

96,414

98,683

100,792

-12,834 -14,974 -15,809 -16,155 -16,170
55,893

68,041

80,605

82,528

84,622

Shown as budget receipts.
Net amount of interest to be paid from receipts, borrowing, or other means of financing.

Tax expenditures.—A tax expenditure arises from the optional
deferral of interest income on U.S. savings bonds. Interest is normally taxed each year as it is earned, but the holder of savings
bonds may defer paying tax until the bond is redeemed. The outlay
equivalent estimate for this provision is $710 million in 1983.

5-197

ALLOWANCES

ALLOWANCES
Allowances cover certain forms of budgetary transactions that
are not reflected in the programmatic detail shown in the preceeding functions. When these transactions actually take place, they
will be reported as part of the agency and functional outlays or
receipts, rather than as allowances. For this reason the allowances
for the year just completed—in this case, 1981—are always zero.
The allowances included in the current budget fall into three
groupings—allowances for civilian agency pay increases, allowances for contingencies, and allowances for anticipated budgetary
savings resulting from the administration's actions to achieve more
efficient management.
ALLOWANCES
(Functional code 920; in millions of dollars)
Program

1981
actual

1982
estimate

1983
estimate

1984
estimate

1985
estimate

BUDGET AUTHORITY
Civilian agency pay raises
Allowances for contingencies:

392

757

1,853

3,393

-1,000

-1,000
-1,000

-700
-1,000
-2,000

-1,000

-2,000

-3,700

-608

-1,243

-147

-307

376

743

1,809

3,331

-1,000

-1,000
-1,000

-700
-1,000
-2,000

-1,000

-2,000

3,700

-624

-1,257

Relatively uncontrollable programs
Other requirements
Allowances for more efficient management:
Federal employment reduction

Fraud waste and abuse
Undistributed debt collection
Subtotal, more efficient management
Total, budget authority
OUTLAYS
Civilian agency pay raises
Allowances for contingencies:
Relatively uncontrollable programs
Other requirements
Allowances for more efficient management:
Federal employment reduction
Fraud waste and abuse

Undistributed debt collection
Subtotal, more efficient management
Total, outlays

191

-369

Civilian agency pay raises.—The allowance for civilian agency
pay raises is designed to include in the budget amounts sufficient
to cover the add-on costs of future pay raises. In addition to this
allowance, two pay raise allowances are included in the functional
detail and, hence, are not included here. An allowance for Department of Defense civilian and military pay increases is separately
included in the budget totals for the Defense Department and for

5-198

THE BUDGET FOR FISCAL YEAR 1983

the national defense function. In addition, the Coast Guard military pay allowance is included in the Transportation Department
and in the transportation function. The undistributed pay allowance included in this section is for all other employees of civilian
agencies.
This administration has endorsed the principle of comparability
in setting Federal compensation, which has been tested and accepted over time. However, the procedures under current law used to
implement this principle have several shortcomings. For example,
the law provides for pay comparability only, thus ignoring benefits
that now amount to nearly 40% of compensation. Further, pay
surveys of the non-Federal labor force exclude the 12 million positions in State and local governments, many of which compare
closely with Federal jobs.
In February 1981, the administration submitted a legislative proposal to the Congress to correct these shortcomings and others in
setting Federal pay. The Congress, in response, did limit the 1982 pay
increase to the amount (4.8%) that would have resulted from enactment of the proposed legislation. However, the Congress did not act
on the specific legislative proposal.
In order to consider certain objections that the Congress raised
about the administration's proposals, as well as to consider other
proposals that have since been made, the administration plans to
withdraw its current legislative proposal and initiate a new review
of Federal civilian compensation. This review will recommend revised procedures for setting Federal civilian employees' pay and
revised benefit structures, both designed to serve the Government's
long-term needs. It is anticipated that the review's recommendations will be available in time to permit a new legislative proposal
to be submitted to the Congress with the 1984 budget.
As part of the overall effort to reduce Government spending in
support of the President's economic recovery program, this budget
anticipates an October 1982 pay increase for the white collar workforce of 5.0%, and a blue collar pay increase of the same amount.
The final decision on the level of the fiscal year 1983 pay increase
will be made in the late summer, as the law provides, after Presidential review of the recommendations of the President's Pay
Agent, the Federal Employees Pay Council and the Advisory Committee on Federal Pay, and after a review of the economic conditions prevailing then.
For 1982, there is an allowance for the unabsorbed costs of the
civilian agency pay raises. Normal practice is to transmit requests
for current pay requirements with the budget. This year the requests will be transmitted later because of the late enactment of
regular appropriations; this did not provide adequate time to
review agency needs carefully. In subsequent years, the 1982 pay

ALLOWANCES

5-199

increases are allocated to the agencies' and functional budgets. For
1983, the allowance for civilian agency pay raises covers funds
required for the pay raises effective in 1983.
Allowances for contingencies.—The Congressional Budget Act requires the budget to include two allowances—one for unanticipated
additional spending or savings in relatively uncontrollable programs (such as social security), that would occur under current law
without any new appropriations, and the other for estimated additional spending or reductions in discretionary programs, which
would require appropriations for the coming year. The estimates
for each of these contingency allowances are zero in this budget.
The contingency allowance for relatively uncontrollable programs
is estimated to be zero because the chances of these outlays being
lower than the estimates are as great as the chances of their being
higher. Any increase in discretionary program costs above the
levels reflected in this budget are expected to be offset by further
program reductions. Hence, the contingency allowance for other
requirements is also zero.
Allowances for more efficient management.—The administration
is proposing efficiencies in several areas that would permit substantial budget savings. These savings are expected to decrease
estimated outlays by $2.0 billion in 1983 and more in later years.
Federal employment reduction.—The detailed budget estimates
for agencies and functions assume that Federal employment levels
stay constant beyond 1984. The allowance for Federal employment
reduction shows the savings that would occur from a reduction of
75 thousand civilian agency employees from 1985 through 1987.
Such action would lower Federal outlays by an estimated $0.7
billion in 1985, $1.5 billion in 1986, and $2.3 billion in 1987.
Fraud, waste, and abuse.—Budget savings of an estimated $1.0
billion annually are expected from the Inspector General's vigorous
program to save Federal money and property that otherwise would
be lost through mismanagement in the executive departments and
agencies. Comprehensive audits are expected to recover money and
property already misallocated because of fraud, waste, and abuse,
and to achieve savings by questioning and disallowing prospective
abuses, such as inappropriate contracting proposals.
Debt collection.—The administration is initiating an aggressive
program to collect at least $1.0 billion annually in 1983 and 1984
and $2.0 billion in each subsequent year, by reducing the backlog of
delinquent debts to the Federal Government and by preventing
unnecessary new delinquencies from occurring. (Other savings
from improved debt collection are distributed into the accounts of

5-200

THE BUDGET FOR FISCAL YEAR 1983

executive departments and agencies. All of these savings are displayed in the Debt Collection section of Major Themes and Additional Budget Details.) Actions available under current law should
recover $0.5 billion annually, while pending legislation should
allow collection of another $0.5 billion annually. Specific efforts
under current law will include: increasing the effectiveness of collection officials in the Federal agencies; instituting speedier and
more effective litigation against delinquent debtors who are able
but refuse to repay; utilizing new techniques, such as greater automation of recordkeeping, billing, and other related functions; and
use of private debt collection agencies.
In addition, legislation proposed by the administration and now
pending before the Congress would provide incentives for debtors to
repay promptly. The pending legislation would allow agencies to:
—require credit applicants to supply their social security numbers to ensure identity of the prospective debtor;
—contract for use of private debt collection agencies where not
currently allowed by law;
—assess interest and other penalties on non-tax debts; and
—refer credit information on delinquent debtors to credit
bureaus.

5-201

UNDISTRIBUTED OFFSETTING RECEIPTS

UNDISTRIBUTED OFFSETTING RECEIPTS
Offsetting receipts are generally deducted from outlays and
budget authority at the function, subfunction, or agency level. In
four instances, however, such payments are deducted from the
budget totals as undistributed offsetting receipts. Deductions for
the payments that each agency makes as its share of employee
retirement costs and for interest received by trust funds are included as undistributed offsetting receipts to eliminate double counting
of budget authority and outlays and thereby measure properly the
transactions of the Government with the public. Payments for
rents and royalties on the Outer Continental Shelf are extremely
large, and their inclusion in a particular function would distort the
display of Federal program costs. Federal surplus property disposition is included as an undistributed offsetting receipt because all
properties to be sold have not been identified and therefore receipts
cannot be allocated among specific programs or functions. Undistributed offsetting receipts are estimated to be $43.5 billion in 1983,
$12.0 billion greater than in 1982. Details of all offsetting receipts
are shown in table 11 in Part 9 of this Budget.
UNDISTRIBUTED OFFSETTING RECEIPTS
(Functional code 950; in millions of dollars)
Offsetting Receipts

BUDGET AUTHORITY AND OUTLAYS
Employer share, employee retirement:
Existing law
Proposed legislation
Subtotal, employer share, employee retirement
Interest received by trust funds:
Existing law
Proposed legislation
Subtotal, interest received by trust funds
Rents and royalties on the Outer Continental Shelf
Federal surplus property disposition
Total

1983
estimate

1984
estimate

1985
estimate

1981
actual

1982
estimate

-6,371

-7,560

7,734
-619

7,899
-844

-8,176
933

-6,371

-7,560

-8,353

-8,743

-9,109

16,062 -18,000
498
-59

20,948
2,014

-13,810 -16,053
-27

-13,810 -16,080 -16,122 -17,502 -18,934
-10,138

- 7 , 8 6 1 -18,000 -18,000 -18,000
-1,000 -4,000 -4,000

-30,320 -31,502 -43,474 -48,245 -50,043

Employer share, employee retirement—The payments by Federal
agencies to various employee retirement funds are counted as outlays of the agencies and as receipts of the respective retirement
funds. Nearly two-thirds of these payments are to the civil service
retirement fund. Most of the remainder is paid to the social security trust funds.
The administration is proposing legislation to cover Federal employees under medicare. This involves the collection of employee
360-000

0 - 8 2 - 2 0

5-202

THE BUDGET FOR FISCAL YEAR 1983

contributions (governmental receipts) and matching employer contributions (offsetting collections) at rates equal to those paid by all
other participants. Federal employing agency payments for this
purpose are estimated to be $619 million in 1983.
Interest received by trust funds.—By law, most trust fund bal-

ances are invested in interest-bearing Federal securities. The interest outlays are included in interest on the public debt and are
deducted here as undistributed offsetting receipts to avoid double
counting. Nearly half of these interest collections is received by the
civil service retirement and disability fund, and almost one-third is
received by social security and medicare. Several of the proposed
legislation items discussed in the other functions such as proposals
for medicare and social security trust funds, affect trust fund payments or receipts and thereby affect trust fund balances and interest earnings. On a net basis, these proposals increase interest received by trust funds.
Rent and royalities from the Outer Continental Shelf (OCS).—

These estimates include cash bonuses received from the new leasing of OCS lands that have the promise of containing oil and gas.
Also included are annual rents on existing leases, based on a
percentage share of profits, and royalties, based on a percentage of
the value of production. OCS collections from lands immediately
adjoining State lands or from disputed lands are recorded in deposit funds rather than as offsetting receipts. Such funds are now
usually invested in public debt securities. On September 30, 1981,
such deposit funds held $4.1 billion of debt securities.
The proposed 5-year OCS leasing program significantly accelerates leasing by offering larger areas and by streamlining leasing
procedures. The current estimates assume that eight OCS sales will be
conducted in 1982 and eight sales in 1983. Seven sales are currently
scheduled for 1984. No final decision will be made on any of these
sales until environmental studies and other requirements under
the National Environmental Policy Act have been completed.
Federal surplus property disposition.—The General Services Administration (GSA) manages 36 million acres of property, much of
which is developed and is owned to carry out Federal programs.
The Departments of the Interior and Agriculture manage about
650 million acres of public lands, much of which is undeveloped
and some of which has been set aside to protect its unique characteristics and national value. These protected areas include national
parks, monuments, historic sites, refuges, and wilderness areas.
The administration will establish a White House/Cabinet level
Real Property Review Board to review Federal asset management
policies and practices and to identify unneeded Federal properties

UNDISTRIBUTED OFFSETTING RECEIPTS

5-203

for disposal. These surplus assets would include those that are
excess to the needs of the agencies holding them, properties not
utilized at highest and best uses, public lands too small or widely
scattered to be efficiently managed, and public lands hindering
local growth and economic development. Property integral to
agency operations or of unique national value would not be sold.
Receipts from surplus property disposition are estimated to be $1.0
billion in 1983 and $4.0 billion for 1984 and 1985.
The purposes of improving Federal asset management, including
disposal of surplus properties, are to reduce Federal property management costs, to promote highest and best uses of property, to
increase receipts and thereby to lower the budget deficit, and to
encourage local economic development.

PART 6

PERSPECTIVES ON
THE BUDGET

6-1

PERSPECTIVES ON THE BUDGET
This part of the budget explains several topics that help to
interpret the budget totals and to place the budget in perspective:
• the relationship of budget authority to outlays;
• fiscal activities outside the Federal budget:
—outlays of off-budget Federal entities,
—Government-sponsored enterprises,
—loan guarantees, and
—tax expenditures;
• Federal debt and the relationship of budget funds to changes
in Federal debt;
• the difference between the initial 1981 budget estimate and
the actual outcome for:
—total outlays,
—outlays of relatively uncontrollable programs, and
—total receipts;
• reductions in consulting services and travel during 1982; and
• the allocation of windfall profit tax receipts.
RELATIONSHIP OF BUDGET AUTHORITY TO OUTLAYS
The Congress must usually provide budget authority, generally
in the form of appropriations, before Federal agencies can obligate
the Government to make outlays. For 1983, $801.9 billion of new
budget authority is proposed for those Federal agencies included in
the budget. In addition, $28.8 billion in new budget authority is
proposed for those Federal entities that are excluded from the
budget. x
Of the total new budget authority proposed for budget agencies
in 1983, $461.1 billion will require congressional action. New
budget authority of $475.8 billion will be available through permanent appropriations under existing law. This consists mainly of
trust fund receipts, which in most trust fund programs are automatically appropriated under existing law, and interest on the
public debt, for which budget authority is automatically provided
under a permanent appropriation enacted in 1847. Offsetting the
gross new budget authority is $135.0 billion of deductions for offsetting receipts, which consist of transactions within the Government
and proprietary receipts from the public. Almost all of the budget
1

Budget authority is discussed further in Part 7 of this volume.

6-2

6-3

PERSPECTIVES ON THE BUDGET
BUDGET AUTHORITY
(In billions of dollars)
Description

Available through current action by the
Congress:
Enacted and pending appropriations
Proposed in this budget:*
Appropriations
Supplemental requests
Rescission proposals
To be requested separately:
Upon enactment of proposed legislation
Allowances:
Civilian agencies 2
Department of Defense—Military 3 ....
Subtotal, available through current action by the Congress
Available without current action by the
Congress
(permanent
appropriations): 4
Trust funds (existing law)
Interest on the public debt
Other
Subtotal, available without current
action by the Congress
Deductions for offsetting receipts
Total, budget authority

1982
estimate

1981
actual

437.8

1983
estimate

1984
estimate

1985
estimate

441.9
462.6

489.3

542.4

-0.9

-4.5

-8.0

-12.2

-0.6
5.4

1.2
4.2

0.1
8.7

-0.3
12.6

437.8

446.9

461.1

4.89.8

542.5

260.5
95.6
23.3

295.6
115.7
23.6

319.9
133.2
22.7

343.7
141.4
30.2

379.7
147.5
28.1

379.4

435.0

475.8

515.2

555.3

-98.9

-116.4

135.0

-147.1

-154.4

718.4

765.5

801.9

858.0

943.5

3.7

2.1

1.9

2.4

30.7

28.9

26.7

29.6

17.8

30.7

32.6

28.8

31.6

20.4

749.1

798.1

830.7

889.6

963.9

11.7
-10.7

ADDENDUM
Budget authority for off-budget Federal
entities:
Available through current action by the
Congress
Available without current action by the
Congress
Total, off-budget Federal entities
Total, budget authority including offbudget Federal entities

*$50 million or less.
1
Amounts for 1984 and 1985 are tentative planning targets.
2
Includes allowances for civilian agency pay raises; contingencies; fraud, waste, and abuse; and undistributed debt collections.
3
Includes allowances for civilian and military pay raises for Department of Defense.
4
Allowances for relatively uncontrollable programs with permanent appropriations are estimated at zero.

authority proposed for off-budget Federal entities will be available
under existing law.
Not all of the new budget authority for 1983 will be obligated or
spent in that year: 2
2
This subject is discussed more fully in a separate OMB report, "Balances of Budget Authority," which can be
purchased from the National Technical Information Service (NTIS) shortly after the budget is transmitted.

6-4

THE BUDGET FOR FISCAL YEAR 1983

• Budget authority for most trust funds comes from the authority of these funds to spend their receipts from special taxes
and contributions and from Federal fund payments. Any balances arising from these receipts remain available to these
trust funds indefinitely in order to finance benefits and other
purposes specified by law.
• Budget authority for most major construction and procurement projects covers the entire cost estimated when the projects are initiated, even though costs will be incurred and
outlays made over a period extending beyond the year for
which the budget authority is enacted. An exception to this
policy is made for water resource programs.
• Government enterprises are occasionally given budget authority for general capital purposes that will be used over a period
of years.
• Budget authority for the subsidized housing programs is equal
to the Government's estimated maximum contractual obligation to pay subsidies under contracts, which may extend for
periods of up to 40 years.
• Budget authority for most other long-term contracts also
covers the estimated maximum obligation of the Government.
For example, budget authority for many direct loan programs
provides financing for a number of years; budget authority for
many insurance and loan guarantee programs consists of
amounts to be used only in the event of defaults or other
claims made upon the programs.
As a result of these factors, a substantial amount of budget
authority carries over from one year to the next. Most of this is
earmarked for specific uses and is not available for new programs.
A small part may never be obligated or spent, because it is primarily for contingencies that do not occur or reserves that never have
to be used.
As shown in the chart on the next page, $125.7 billion of the
outlays in 1983, 17% of the total, will be made from budget authority enacted in previous years. At the same time, $169.9 billion of
the new budget authority proposed for 1983, which is 21% of the
total amount proposed, will not lead to outlays until future years.
Thus, the total budget authority for a particular year is not useful
for the analysis of that year's outlays, since it combines various
types of budget authority that have different short-term and longterm implications for budget obligations and outlays. The relationship between budget authority, obligations, and outlays is discussed
further in Part 7 of the Budget and displayed in table 5 of Part 9.
Once budget authority is provided, the Congressional Budget and
Impoundment Control Act requires that any available amounts
withheld from use (without specific congressional authorization)

6-5

PERSPECTIVES ON THE BUDGET

New Authority
Recommended
for 1983

To be spent in 1983

632.0

757.6

801.9

Unspent Authority
Enacted in
Prior Years
830.8

Outlays
in 1983

To be spent in
Future Years

699.6

Unspent Authority
for Outlays in
Future Years

869.5

must be reported to the Congress in rescission or deferral messages. The Congress may require these funds to be released by
overturning the deferral of budget authority or by not taking
action on the proposed rescission.
FISCAL ACTIVITIES OUTSIDE THE FEDERAL BUDGET

The budget does not include a number of fiscal activities of the
Federal Government that result in spending similar to budget outlays. These activities, nevertheless, channel economic resources
toward particular uses in ways that are analogous to the effects of
budget spending.
The outlays of off-budget Federal entities are a major exclusion
from the budget. These are discussed in some detail below. This is
followed by a description of the Government-sponsored enterprises,
which are outside the budget because of their private ownership.
Loan guarantees, which are discussed next, allocate economic resources toward particular uses by providing credit to borrowers at
more favorable terms than would otherwise be available in the
private market. Taxation and tax expenditures, which also have
significant allocative effects on the economy, are discussed subsequently.

6-6

THE BUDGET FOR FISCAL YEAR 1983

The regulation of economic activity can also have economic effects similar to budget spending by requiring the private sector to
make expenditures for specified purposes such as safety, pollution
control, and accessibility for the handicapped. The effects of this
spending are very important, but many of them have not been
quantified satisfactorily and therefore cannot be clearly related to
the budget. The economic effects of regulation and the Administration's proposals for regulatory reform are discussed in chapter 6 of
the Economic Report of the President for 1982.
Outlays of off-budget Federal entities.—Off-budget Federal enti-

ties are federally owned and controlled, but their transactions have
been excluded from the budget totals under provisions of law.3
Therefore, their fiscal activities are not reflected in either budget
outlays or the budget surplus or deficit; appropriation requests for
their programs are not included in the totals of budget authority
for the budget; and their outlays are not subject to the ceilings set
by the congressional budget resolutions. As shown in the table on
page 6-24, the outlays of the off-budget Federal entities are added
to the budget deficit to derive the total Government deficit, which
has to be financed by borrowing from the public or by other means.
When off-budget outlays are financed by Treasury borrowing, as is
usual, the additional debt is subject to the statutory debt limitation; when financed by the entities' own borrowing, it is not. In
either case the additional debt is part of the gross Federal debt.
Since the 1969 budget, the Federal Government has used the
unified budget concept as the foundation for its budgetary analysis
and presentation. This concept measures the Government's cash
payments to and from the public. The first departure from the
unified budget concept occurred in August 1971, when the ExportImport Bank was excluded by statute from the budget. Further
departures followed in the next few years under various statutes.
The Postal Service fund, the Rural Telephone Bank, the lending
transactions that became the Rural Electrification and Telephone
revolving fund, and the Housing for the Elderly or Handicapped
fund were removed from the budget. The Federal Financing Bank,
the U.S. Railway Association, and the Pension Benefit Guaranty
Corporation were established off-budget. The Exchange Stabilization Fund had always been outside the unified budget, although it
was initially classified as a deposit fund instead of an off-budget
Federal entity.4 5
3
Financial statements for these entities are published in the Appendix, Budget of the United States Government, Fiscal Year 1983. See Part IV, "Off-Budget Federal Entities."
4
The Exchange Stabilization Fund conducts a cycle of operations similar to revolving funds. Consequently, its
initial classification as a deposit fund was contrary to the normal meaning of a deposit fund, as defined in Part
7 of this volume.
5
The Board of Governors of the Federal Reserve System (but not the Federal Reserve banks, which are
privately owned) is a Federal organization. It is excluded from the budget and from this discussion.

PERSPECTIVES ON THE BUDGET

6-7

In the past few years the trend toward steadily increasing the
number of off-budget Federal entities has been altered. The ExportImport Bank, the Housing for the Elderly or Handicapped fund,
and the Pension Benefit Guaranty Corporation were put on-budget
by statute in different years. The administrative expenses, interest
collections, and actual profits and losses realized from foreign exchange transactions of the Exchange Stabilization Fund were put
on-budget in a series of legislative and administrative actions.6
Whenever a former off-budget entity was put on-budget, the budget
outlays and deficits of previous years were revised to include the
entity to the extent feasible so that the historical series measuring
budget transactions would be as accurate and consistent as possible. Most of the transactions of the U.S. Railway Association have
also been brought into the budget. Legislation several years ago
required that its purchases of Conrail securities be included in the
budget, and these purchases have comprised most of its recent
activity.
In the past two years, however, two new off-budget Federal entities have been established that carry out energy programs. The
Synthetic Fuels Corporation was created outside of the budget in
1980 as a means of helping private industry finance the development of oil substitutes. Although the Corporation is itself offbudget, the system of financing was devised so that its funding is
included in the budget totals. The funds for carrying out the Corporation's activities come from appropriations to the Secretary of the
Treasury. The Treasury makes these funds available to the Corporation by purchasing the Corporation's notes. These payments are
shown as Treasury outlays and are included in the budget totals.
These budget outlays count as income to the Corporation and,
consequently, as an offset to the Corporation's off-budget outlays.
Since the Corporation acquires funds only as needed, its net offbudget outlays are approximately zero.7 The Treasury outlays are
included in the energy function and discussed in the energy section
of Part 5.
The strategic petroleum reserve is a program created several
years ago to offset partially the effects of potential disruptions in
the supply of imported oil to the United States. It does this by
building a stockpile of petroleum that can be made available if the
need arises. The Congress stipulated in the Omnibus Budget Reconciliation Act of 1981 that budget authority and outlays for purchasing oil for the reserve were not to be included in the budget totals.
This budget adheres to the requirements of this Act by not counting budget authority and outlays for strategic petroleum reserve oil
6
Because it is not practicable to forecast transactions in gold, foreign currency, and foreign investments,
profits and losses from foreign exchange transactions are not estimated for the current and future years.
7
Any receipts of the Corporation are also offsets to its outlays and thus reduce its need to borrow from the
Treasury.

6-8

THE BUDGET FOR FISCAL YEAR 1983

purchases in the budget totals beginning in 1982. The costs of
operations, maintenance, construction, and administration, however, remain in the budget.
Conrail was created by the Federal Government to own and
operate the facilities of several railroads in the northeast and
midwest. As the result of a settlement in 1980 with the Penn
Central Railroad, the Government now owns about four-fifths of
ConraiFs common stock and series B preferred stock. The Government's financial assistance to Conrail and its payment to Penn
Central have been included in the budget totals. However, Conrail
is not currently included in the budget nor is it classified as an offbudget Federal entity.
Despite the exclusion of the off-budget entities from the budget,
some of the outlays related to their operations are nonetheless
included in the budget totals. The budget totals include the funding
of the Synthetic Fuels Corporation, the operating costs and certain
other expenses of the strategic petroleum reserve, the payment
made to the Postal Service fund, and the administrative expenses
of the Rural Electrification lending programs and the U.S. Railway
Association. Moreover, while the budget authority and outlays of
off-budget Federal entities are excluded from the budget totals,
some of their activities are subject to Presidential and congressional review. For example, limits on the amount of new lending for
the rural electrification program financed by the Rural Electrification and Telephone revolving fund are set annually by law; and the
outstanding debt and annual borrowing of the Postal Service are
limited by statute.
Even though the exclusion of off-budget Federal entities from the
budget results from provisions of law, the executive and the Congress have on several occasions expressed concern about this practice and have taken actions to control off-budget spending. This
Administration has been very concerned about the effects of the
off-budget direct loans in allocating credit toward particular uses
and about the necessity of financing these loans by additional
Federal borrowing from the public. It has used the credit budget
process, discussed in Parts 3 and 7 of this volume, to reduce offbudget direct loans from $20.9 billion in 1981 to an estimated $12.3
billion in 1983 and still lower levels in later years. Within Congress, the House Budget Committee held hearings on off-budget
entities in 1976 and subsequently recommended that they all be
included in the budget.8 The congressional budget resolutions for
1980 recommended that the congressional budget process should
accurately relate the off-budget outlays to the budget. Following
8
House of Representatives, Committee on the Budget, Off-Budget Activities of the Federal Government, Report
No. 94-1740 (1976); First Concurrent Resolution on the Budget—Fiscal Year 1978, Report No. 95-189 (1977), pp.
11-12 and 135; and First Concurrent Resolution on the Budget—Fiscal Year 1979, Report No. 95-1055 (1978), p.
23.

6-9

PERSPECTIVES ON THE BUDGET

this procedural recommendation, the budget resolutions for 1981
and 1982 recommended specific aggregate limits on obligations for
new direct loans made by the off-budget entities as well as by the
budget agencies. The resolutions for 1982 also recommended that
the President take administrative action to limit FFB activities to
specified amounts.
The off-budget Federal entities, except for the strategic petroleum reserve account and the Postal Service, incur their outlays in
order to carry out loan programs. These programs have the same
general characteristics as the direct loan programs in the budget.
The outlays of the off-budget loan programs are approximately
equal to the difference between the new loans disbursed and the
repayments of principal. For example, during 1983 the new loans
disbursed by the off-budget programs are estimated to be $25.9
billion and repayments $13.6 billion, for an increase in loans outstanding of $12.3 billion. This is about the same as the estimated
outlays of $12.2 billion. The difference is due to such factors as
administrative expenses and interest paid and received.
Like direct loans in the budget, the loans of the off-budget entities are designed to allocate economic resources toward particular
purposes. Part 5 of the Budget, "Meeting National Needs: the Federal Program by Function," shows the outlays of the off-budget
Federal entities by function and discusses some of their more significant activities.
OUTLAYS OF OFF-BUDGET FEDERAL ENTITIES
(In billions of dollars)

Off-budget Federal entity

Federal Financing Bank
Rural Electrification and Telephone revolving
fund
Rural Telephone Bank
Strategic Petroleum Reserve account
Postal Service fund
U.S. Railway Association
Synthetic Fuels Corporation
Total

1981
actual

1982
estimate

1983
estimate

1984
estimate

1985
estimate

16.2

12.1

11.0

7.8

.1
— 3

.2
2.8
.6
-.1

.2
2.8
.7
*

.2
2.3
.9

.2
2.2
8

21.0

19.7

15.7

14.3

11.0

21.0
*
.1

*$50 million or less.

As the table above shows, the Federal Financing Bank (FFB)
accounts for most of the off-budget outlays and for more than the
entire decline estimated in off-budget outlays from 1981 to 1985.
Among the other off-budget Federal entities, only the strategic
petroleum reserve account and, in some years, the Postal Service
fund have comparatively large outlays. Even these are of a smaller
magnitude. The outlays of the Postal Service fund are calculated
with an offset for the payment it receives that is included in the

6-10

THE BUDGET FOR FISCAL YEAR 1983

budget. This payment, which is estimated to be $0.5 billion in 1983,
is mostly for public service costs and for revenue forgone from
carrying certain mail at free or reduced rates.
The FFB's outlays do not come from programs that the FFB
operates itself. Rather, the FFB finances other programs within the
Government by purchasing their debt securities or purchasing obligations that they have guaranteed. The operation of these programs remains both legally and administratively with the agencies
that borrow from the FFB or provide the guarantees. The outlays
of the FFB include its purchase of guaranteed obligations but not
its purchase of Federal agency debt securities. An agency's outlays
increase when it spends the proceeds of borrowing from the FFB,
so FFB outlays must exclude this borrowing transaction in order to
prevent double counting.
The FFB buys two types of guaranteed obligations, newly originated guaranteed loans and guaranteed loan assets. Newly originated guaranteed loans are loans that the FFB makes directly
itself. This is done upon agency request, with the repayment of the
loan to the FFB being guaranteed by the requesting agency. Thus,
the Federal Government makes a direct loan outside the budget.
Loan assets are loans that an agency has made and for which
repayments are still owed. According to law, the category of loan
assets also includes certificates of beneficial ownership issued
by the Farmers Home Administration and the Rural Electrification
and Telephone revolving fund. These certificates are securities
backed by loans that the agency continues to hold and service.9
Loan asset sales are offsets to the outlays of the agency that sells
them. Therefore, if the selling agency is in the budget, the budget
outlays caused by its direct loans are offset by its sales of loan
assets. When the FFB buys loan assets, it in effect converts direct
loans that have already been made by another agency into offbudget direct loans of the FFB.
In order to present the implications of the FFB's transactions for
different programs, the budget documents distribute the FFB outlays that are made on behalf of an agency to that agency itself.
The table on the next page summarizes this distribution. It shows
the outlays that arise from the FFB making direct loans to the
public (guaranteed by another Federal agency) and to other agencies or programs (by purchasing loan assets). FFB outlays distributed to an agency or program equal gross FFB loans (of either type)
less repayments. The remainder of FFB outlays consists of administrative expenses, the payment of surplus income to the general
9
The President's Commission on Budget Concepts recommended that the sale of such securities (also known
as participation certificates) be treated as borrowing, since as a means of financing outlays there is no difference
between an agency selling securities labeled "certificates of beneficial ownership," the same agency selling
securities labeled "debt," and the Treasury selling securities labeled "debt." See Report of the President's
Commission on Budget Concepts (Washington: U.S. Government Printing Office, 1967), pp. 8, 47-48, and 54-55.

6-11

PERSPECTIVES ON THE BUDGET

fund, and interest paid on borrowings from Treasury, offset by
interest received on its own holdings of loans and debt. This category is zero beginning in 1982, because it is planned that all net
interest (less administrative expenses) will be paid to the general
fund. The distribution of FFB outlays by function is shown as an
addendum to the tables throughout Part 5, and a complete listing
is given in Part 8 in the section that displays the off-budget entities.
DISTRIBUTION OF FEDERAL FINANCING BANK OUTLAYS
(In millions of dollars)
Description
Outlays from direct loans, by agency or
program:
Farmers Home Administration: certificates
of beneficial ownership
Rural Electrification and Telephone revolving fund:
Certificates of beneficial ownership
New originations
Foreign military sales credit
Commerce: Alternative fuels production
Housing and Urban Development:
Section 108 loan guarantees
Low-rent public housing
Transportation: Railroad programs
Student Loan Marketing Association
National Aeronautics and Space Administration
Small Business Administration
Tennessee Valley Authority: Seven States
Energy Corporation
Other
Subtotal, outlays from direct loans
nterest, administrative expenses, and payment of surplus income
Total, FFB outlays

1982
estimate

1981
actual

1983
estimate

1984
estimate

1985
estimate

10,860

5,352

1,149

174

160

683
3,918
1,945

623
4,309
2,670
470

525
4,129
3,715
915

404
3,599
4,250
987

466
3,330
2,963
795

35
810
250
1,955

96
1,224
64
700

83
969
19

46
1,417
-83

-18
96
-21

111
119

206
224

112
179

-196
174

-219
169

237
33

198
100

278
-4

236
-27

252
-30

20,956

16,239

12,071

10,982

7,751

16,239

12,071

10,982

7,751

•

79
21,035

As shown in this table, FFB finances a wide variety of programs.
In past years and until now, the largest part of its outlays has been
for the net purchase of certificates of beneficial ownership from the
Farmers Home Administration. These are estimated to decline
greatly in the next few years, as FFB's purchase of new certificates
decreases and the repayment of old certificates rises. Direct loans
to the public guaranteed by the Rural Electrification and Telephone revolving fund and the foreign military sales credit program
come to account for most of FFB's outlays. FFB outlays as a whole
are estimated to decrease by almost two-thirds from 1981 to 1985
due to restraint on the credit programs that FFB finances, less use

6-12

THE BUDGET FOR FISCAL YEAR 1983

of the FFB by some of these programs, and a rise in the repayment
of past loans.
Since the Farmers Home Administration is on-budget, FFB's purchases of its certificates of beneficial ownership reduce total budget
outlays as well as Farmers Home outlays. The purchase of certificates of beneficial ownership from the off-budget Rural Electrification and Telephone revolving fund explains the small size of this
fund's outlays in the previous table on the outlays of off-budget
entities. The purchases by FFB offset this fund's outlays and augment the outlays of the FFB by an equal amount.
The table on the next page compares the outlays of the offbudget Federal entities with budget outlays.10 The outlays of the
entities that are now off-budget were negligible in 1973 but grew
rapidly afterwards, particularly due to the creation and subsequent
rapid expansion of the Federal Financing Bank. The outlays of the
off-budget Federal entities equalled 3.2% of budget outlays in 1981
but are estimated to decrease substantially to 2.1% in 1983 and
1.3% in 1985.
Government-sponsored enterprises. —Several Government-sponsored enterprises have been established and chartered by the Federal Government to perform specialized credit functions. The earlier enterprises were all created with partial or full Government
ownership and with direct Government control. In time, however,
they were converted to private ownership and some new enterprises were created as privately owned institutions. The rule governing the budget treatment of these enterprises was established in
1967 in accordance with a recommendation by the President's Commission on Budget Concepts. The Commission basically recommended that the budget exclude those Government-sponsored enterprises that are entirely privately owned. Since the enterprises
carry out federally designed programs and receive benefits from
their close association with the Government, the Commission recommended that financial statements of their operations be included in the budget documents.1112
The Federal Land Banks and Federal Home Loan Banks had
both become entirely privately owned a number of years before the
unified budget was adopted and therefore have always been excluded. The Federal National Mortgage Association, the Banks for
Cooperatives, and the Federal Intermediate Credit Banks became
wholly privately owned by repaying their Federal equity capital
10
The historical data for budget outlays include Federal entities that are now off-budget for any period when
they were in the budget, and include Government-sponsored enterprises for periods when they had any
Government ownership. The outlays of former off-budget entities are included in the budget totals for all years
to the extent practicable.
11
Report of the President's Commission on Budget Concepts, pp. 29-30.
12
Financial statements for the Government-sponsored enterprises are published in the Appendix, Part VI,
"Government-Sponsored Enterprises." Their borrowing and lending are discussed in sections of separate OMB
publications, "Special Analysis E, Borrowing and Debt," and "Special Analysis F, Federal Credit Programs."

6-13

PERSPECTIVES ON THE BUDGET

COMPARISON OF OUTLAYS FOR THE BUDGET, OFF-BUDGET FEDERAL ENTITIES, AND GOVERNMENTSPONSORED ENTERPRISES
(In billions of dollars)
Outlays
Federal Government1

Fiscal year
Budget

Off-budget
Federal entities

Total

Governmentsponsored
enterprises 2

1960
1961
1962
1963
1964

92.2
97.8
106.8
111.3
118.6

.4
3
1.1
.5
1.8

1965
1966
1967
1968
1969

118.4
134.7
157.6
178.1
183.6

118.4
134.7
157 6
178.1
183.6

1.2
1.9
29
1.7
4.3

1970
1971
1972
1973
1974

195.7
210 2
230.7
245.6
267.9

0.1
1.4

195.7
210 2
230.7
245.7
269.4

9.6
*
4.4
11.4
14.5

1975
1976
TQ
1977
1978
1979

324.2
364.5
94.2
400.5
448.4
491.0

8.1
7.3
1.8
8.7
10.4
12.5

332.3
371.8
96.0
409.2
458.7
503.5

7.0
4.6
2.3
9.7
24.5
25.9

1980
1981
1982
1983
1984
1985

576.7
657.2
725 3
757 6
805 9
868.5

14.2
21.0
19 7
157
14 3
11.0

590.9
678.2
745 0
773 3
820 2
879.4

25.3
33.4
49 6
52 9

. .

estimate
estimate
estimate
estimate

(3)
(3)

*$50 million or less.
1
The 1972-80 data have been revised to include the Export-Import Bank, the Housing for the Elderly or Handicapped fund, and the Pension
Benefit Guaranty Corporation in the budget instead of with the off-budget Federal entities. The administrative expenses and interest collections of
the Exchange Stabilization Fund are included in the budget beginning in 1976, and the actual profits and losses realized from foreign exchange
transactions are included beginning in 1979. Earlier data for the ESF are not available on a comparable basis.
2
To prevent double counting, outlays of Government-sponsored enterprises exclude loans to other Government-sponsored enterprises and loans to
or from Federal agencies and off-budget Federal entities.
3
Not available.

late in calendar year 1968 and were accordingly removed from the
budget for all later periods. The Federal Home Loan Mortgage
Corporation and the Student Loan Marketing Association were
later established with full private ownership. The Federal Home
Loan Mortgage Corporation is not privately operated, however,
because its board of directors consists entirely of members of the
Federal Home Loan Bank Board, who are Federal Government
officials appointed by the President.
The Government-sponsored enterprises were all created to carry
out loan programs, either lending their funds directly for specifical360-000

0 - 8 2 - 2 1

6-14

THE BUDGET FOR FISCAL YEAR 1983

ly authorized purposes, or buying loans originated by the private
groups that they were established to assist. The loans of these
enterprises primarily support housing, but also support agriculture
and higher education. As shown in the previous table, their outlays
have grown considerably—from relatively small amounts in the
1960's to $24.5 billion in 1978 and $33.4 billion in 1981.
The operations of the Government-sponsored enterprises are not
subject to the normal Federal budget review process, and the economic assumptions on which their estimates are based are not
necessarily the same as the Administration's economic forecast
shown in Part 2. These enterprises estimate that they will increase
their spending to $52.9 billion in 1983, which equals 7.0% of budget
outlays in that year. The following table shows the total amounts
of Government-sponsored loans outstanding and net loans (i.e., the
change in loans outstanding) during 1981-83, in billions of dollars: 13
1981 actual

Loans outstanding, end of year
Net loans

182.3
32.4

1982 estimate

232.4
50.1

1983 estimate

285.5
53.1

Loan guarantees.—Government-guaranteed loans are loans for
which the Government guarantees the payment of the principal
and the interest in whole or in part. Loan guarantees are contingent liabilities of the Federal Government. They generally do not
result in budget outlays except in case of default.
Loan guarantees are designed to allocate economic resources to
particular uses by providing credit at more favorable terms than
would otherwise be available in the private market. If loan guarantee recipients would not have been sufficiently creditworthy to
borrow without Federal assistance, the guarantee reallocates credit
toward federally selected uses, increasing the total volume of credit
channeled into these uses. This leaves a smaller supply of credit to
be allocated to those potential borrowers who do not receive assistance. However, the guarantee does not always change the allocation of credit. Some beneficiaries of loan guarantee programs would
have been able to secure the funds privately, without Government
support. For example, guaranteed mortgage credit might be used to
finance, at a lower cost, a house that would have been purchased
anyway. In such a case, the guarantee does not alter the allocation
of credit resources.

13
In order to prevent double counting in adding Government-sponsored loans to Federal direct loans and
guaranteed loans, this table excludes loans from one Government-sponsored enterprise to another, loans from
the Federal Government, and guaranteed loans acquired.

PERSPECTIVES ON THE BUDGET

6-15

Most of the guarantee programs operated by the Federal Government began in efforts to revive the economy during the depression.
The Reconstruction Finance Corporation, created in 1932, was the
forerunner of the Export-Import Bank, the Small Business Administration, and other credit programs. The Nation's single largest
credit program, the Federal Housing Administration's (FHA) home
mortgage insurance program, was created in 1934 to stimulate
housing construction.
During the 1950s and 1960s housing credit dominated Federal
credit activities. The home mortgage programs of the FHA and
Veterans Administration, which comprised most of these agencies'
guarantees, accounted for 81% of the total volume of new commitments for guaranteed loans in 1956. As the chart below shows, the
range of activities financed with Federal guarantees has widened
since that time. Guarantees are now offered for business, agriculture, energy, and education, though housing continues to dominate.
In 1981, total guaranteed loans outstanding were $309.1 billion, and
they are expected to rise to $399.3 billion in 1983.

Relative Shares of New Commitments
for Guaranteed Loans

Other

Housing
iiiiand jji;

j'Urbanjj
Development

Foundation
for
Export-Import Education
Bank.
Assistance

::::: HOUSJng
;;;!;;;;; and iiji

H I Urban j
Development

Guaranteed loans may be made to many types of borrowers:
individuals, businesses, State and local governments, and foreign
governments. The guarantees may be full or partial, and in some
programs, such as the guaranteed student loan program, they are
supplemented by explicit subsidies or other forms of assistance.
Most guaranteed loans are made by banks or other private institu

6-16

THE BUDGET FOR FISCAL YEAR 1983

tional lenders, and may take the form of mortgages or bank loans.
Others are sold in securities markets. An increasing portion of
guaranteed loans is disbursed by the Federal Financing Bank
(FFB), which is described above on pages 6-9 through 6-12. Since the
FFB is an off-budget Federal entity, these disbursements are offbudget direct loans. An additional amount of guaranteed loans originally made by private institutions is purchased and held by privately
owned, Government-sponsored enterprises, as the chart below
shows.

i Held by Federal Financing Bank
Held by Government-Sponsored
Enterprises

Because loan guarantees are not included in the outlay totals or,
usually, in the budget authority totals, they were formerly excluded as well from normal budget discipline. In 1980 the credit
budget was instituted to subject guaranteed and direct loans to
greater scrutiny throughout the budget process. The credit budget
covers all direct and guaranteed loans by Federal agencies, whether on- or off-budget. Control is effected through appropriation bill
limitations, which cover 58% of all new loan guarantee commitments to be extended in 1983. (See Part 3 of this document for a
presentation of credit budget totals for 1981 through 1983, Part 5
for a discussion of credit programs by function, and Part 7 for a
more complete description of the credit budget and credit control
system.)

PERSPECTIVES ON THE BUDGET

6-17

Taxation and tax expenditures.—Taxation affects the economy
not only by providing the Government with receipts but also by
changing the allocation of resources among private uses and the
distribution of income and wealth among individuals. These effects
are caused by the structural characteristics of each different tax—
for example, by the rate schedules, exemptions, deductions, and
exclusions of the individual income tax—and by the magnitude of
each tax. The effects of taxation on resource allocation and income
distribution are analogous to the effects of outlays.
Some features of the tax structure have been defined as "tax
expenditures" and are required to receive special attention in the
budget. Tax expenditures are defined for purposes of the Congressional Budget Act as "revenue losses attributable to provisions of
the Federal tax laws which allow a special exclusion, exemption, or
deduction from gross income or which provide a special credit, a
preferential rate of tax, or a deferral of tax liability." For a tax
provision to cause a tax expenditure under this definition, two
conditions are necessary: the provision must be "special" in that it
applies to a narrow class of transactions or transactors; and there
must be a "general" provision to which the special provision is a
clear exception.
Tax expenditures are so designated because they are one means
by which the Federal Government pursues its objectives, and because in many respects they can be regarded as an alternative
means of achieving the same objectives as direct expenditures.
They can also be regarded as an alternative means of achieving the
same objectives as other instruments of Government policy, such as
off-budget outlays, loan guarantees, regulations, and provisions of
the tax law other than those that give rise to tax expenditures.
There are numerous examples of the similarity in objectives between tax expenditures and direct outlays. For instance, direct
expenditures and tax expenditures both reduce the cost of ship
acquisition by shipping companies; and direct interest subsidies
and the use of tax-exempt bonds both lower the mortgage interest
cost for eligible borrowers. Similarly, State and local governments
benefit both from direct grants and from the ability to borrow
funds at tax-exempt rates; individuals benefit both from direct
medicare payments and from the income tax deductibility of medical expenses; and individuals also benefit both from social security
payments and from the tax exemption of these payments.
Tax expenditures ordinarily result from permanent legislation
and therefore are not submitted to the Congress each year and do
not routinely receive a formal and systematic annual review. Many
tax expenditures and other provisions of tax law were, nonetheless,
reviewed by the Administration and the Congress during the work
that led to the Economic Recovery Tax Act of 1981. The Congress

6-18

THE BUDGET FOR FISCAL YEAR 1983

may also review tax law generally as the result of a reconciliation
directive in a congressional budget resolution that calls on various
committees to increase receipts or decrease outlays by specified
amounts. This procedure was used in the Omnibus Reconciliation
Act of 1980, which changed tax expenditures and other provisions
of tax law as well as outlays. In addition, the Treasury Department
and the Office of Management and Budget reviewed a number of
tax expenditure provisions in connection with the preparation of
this budget.
The Congressional Budget Act requires that the estimated levels
of tax expenditures be presented each year in the budget that the
President transmits to the Congress and in the reports of the
Senate and House Budget Committees on the proposed congressional budget resolutions. This is intended to encourage regular examination of tax expenditures by the Administration, the Congress,
and the public. The provisions of the income tax law other than
those that result in tax expenditures likewise have major effects on
the allocation of resources and the distribution of income. However, these other provisions do not receive the annual, systematic
presentation of the kind mandated for tax expenditures; nor do
taxes other than the individual and corporation income taxes receive such a presentation. Tax expenditures, other provisions of the
income tax, and other tax laws are, nevertheless, generally reviewed whenever fiscal policy decisions are considered regarding
the overall level of tax receipts.
The classification of certain provisions of law as resulting in tax
expenditures requires some standard against which the law can be
compared. Deviations of the law from this reference tax structure
are deemed to cause tax expenditures. The reference standard used
for the individual income tax includes those provisions that exist
under current law for graduated rate schedules, personal exemptions, zero-bracket amounts (standard deductions), and basic accounting rules. Thus, under current definition, these characteristics of the tax structure do not generate tax expenditures.
The reference standard was not defined explicitly in previous
budgets. This year the definition of tax expenditures has been
sharpened by using as a reference structure the general provisions
of the Internal Revenue Code. As a result, a number of items
included in previous lists are no longer deemed to be tax expenditures, such as the exclusion from taxable income of public assistance benefits and the graduated rates of the corporation income
tax.
The explicit use of the general provisions of the Internal Revenue Code as the reference tax structure makes it clear that listing
an item as a tax expenditure does not imply that it is either a
desirable or an undesirable provision. If the general provisions of

PERSPECTIVES ON THE BUDGET

6-19

the Code were different, the list of tax expenditures and the estimated amounts for particular provisions would also be different.
Alternative lists of tax expenditures would be derived if a different
reference tax structure were adopted. A different standard might
exclude personal exemptions and the zero-bracket amount and thus
classify these provisions as resulting in tax expenditures. A different standard might be based upon a normative judgment about an
"ideal" income tax base. Such a standard might, for example,
adjust incomes for inflation, or it might integrate the individual
and corporation income taxes rather than regarding the separate
tax treatment of individuals and corporations as part of the reference tax structure. Whatever reference tax structure is adopted,
the provisions of tax law that are not defined as resulting in tax
expenditures deserve as much scrutiny as the provisions that are,
since they also have important allocation and income distribution
effects.
Tax expenditures are presented at two places in the budget. Part
5, "Meeting National Needs: the Federal Program by Function,"
discusses the most important tax expenditures in each functional
category, together with outlays and guaranteed loans, in order to
describe more fully the effects of governmental policy toward meeting each national need. "Special Analysis G, Tax Expenditures,"
analyzes the concept and measurement of tax expenditures, explains the changes from last year's budget, and presents a complete
list of tax expenditure estimates for 1981-83.14 15
The figures shown for tax expenditures in previous budgets were
estimates of revenue losses, for past years as well as future ones,
for they compared actual or estimated tax receipts with estimates
of what tax receipts would have been if the tax law had been
different. It was assumed that only the tax provision in question
was removed and that taxpayer behavior and all other characteristics of the tax system remained the same. If removing a tax provision would have increased taxable income, for example, the tax
expenditure was estimated as the increase in taxable income multiplied by the tax rate that would have been paid on the additional
income.
In this year's budget the concept of tax expenditures has been
changed in order to make tax expenditures more comparable with
direct budget outlays. This is done by measuring the tax expenditure as the amount of outlays that would be required to provide an
equal after-tax income to the taxpayer (and thereby an equal incentive). In most cases more budget outlays would be required by a
14
"Special Analysis G" is a separate OMB publication. The presentation of tax expenditure estimates in this
special analysis meets requirements in the Congressional Budget Act that tax expenditures be set forth in the
budget.
15
The role of certain tax expenditures as a form of credit assistance is discussed in a separate OMB
publication, "Special Analysis F, Federal Credit Programs."

6-20

THE BUDGET FOR FISCAL YEAR 1983

special tax provision, because taxpayers would have to pay taxes on
the higher income derived from budget outlays. For example, one
tax expenditure provision is the exclusion from taxable income of
the value of housing and meals provided military personnel. If the
Government were to repeal this tax exclusion and instead pay
higher salaries, the increase in salaries would be taxed. Therefore,
if the Government were to use direct expenditures rather than tax
expenditures and were to provide the same total after-tax compensation (and thereby the same incentive to engage in work), the
increase in direct outlays for higher salaries would have to be
greater than the revenue loss under the special tax provision. The
Federal deficit would be the same in either case, however, because
the higher outlays would be required only to the extent that tax
receipts were higher.
In order to make the tax expenditure equivalent to a direct
outlay, the revenue loss is adjusted where appropriate so that the
taxpayer's after-tax income is the same regardless of whether the
Government uses a direct outlay or a tax expenditure provision to
achieve its objectives. For some tax expenditure provisions, though,
the revenue loss is equivalent to a direct outlay without any adjustment. The new concept is explained more fully in the introduction
to Part 5 as well as in "Special Analysis G, Tax Expenditures." 16
This special analysis presents estimates of tax expenditures according to the old concept as well as the revised one, but for program
analysis throughout Part 5 only the outlay equivalent estimates
are used.
The size of a particular tax expenditure depends not only on the
tax provision in question but also on the interaction of this provision with the rest of the tax structure. The reductions in the
income tax rate schedule enacted in 1981, as an example, automatically decrease many tax expenditures below what they otherwise
would have been. A tax rate reduction decreases the amount of
receipts that would be gained by repealing deductions and exclusions, because lower tax rates are applied to the increase in taxable
income.
The interaction among tax provisions means that special calculations are generally needed to add tax expenditures together. For
example, if more than one exclusion from individual income were
ended, the gain in receipts would generally be greater than the
sum of the separate tax expenditures, because some taxpayers
would move into higher tax rate brackets. If more than one personal deduction were ended, the gain in receipts would generally be
smaller than the sum of the separate tax expenditures, because
16
The new measurement concept was used on a limited and supplementary basis in last year's budget. See
Special Analysis G, "Tax Expenditures," in Special Analyses, Budget of the United States Government, Fiscal
Year 1982, pp. 234-38.

PERSPECTIVES ON THE BUDGET

6-21

some taxpayers would switch to the zero-bracket amount (standard
deduction). Consequently, adding together separate tax expenditures would usually be misleading, and they are not added together
in this budget except for specially computed totals by functional
category.
Even if the interaction effects could be properly taken into account, the total amount of all tax expenditures added together
would have a restricted meaning. This amount would be defined
only with respect to the particular reference tax structure from
which it was measured. If a different reference tax structure were
used than the general provisions of the Internal Revenue Code, the
total amount would be different.
The Government's budget receipts would not ordinarily be raised
by the total amount of a group of tax expenditures if all the tax
expenditure provisions in that group were removed together. The
interaction effects would have to be taken into account; and, in
accordance with the new concept of outlay equivalence, the tax
expenditure is larger than the revenue loss for most special tax
provisions. Furthermore, tax expenditures and other provisions of
law have frequently been changed together or viewed as substitutes
for one another. A direct outlay may also be substituted for a tax
expenditure. Thus, even for aggregations of tax expenditures that
were measured as revenue losses and that did take interaction into
account, the total amount would simply indicate the total resources
available for some combination of cutting tax rates, increasing
outlays, and reducing the deficit. If a group of tax expenditure
provisions were removed, the overall effects on budget receipts and
on resource allocation and income distribution would therefore
depend on the particular decisions made as to which changes in tax
rates and outlays—out of a limitless number of alternatives—were
used to compensate for their removal.
As discussed in Part 4 of this volume, "Budget Receipts," the
principal tax change enacted last year was the Economic Recovery
Tax Act of 1981. This act reduced individual and corporation
income taxes substantially. The major reductions were caused by
decreases in the individual income tax rates and by adoption of the
accelerated cost recovery system as the method for depreciating
assets. Neither the rate schedule nor the accelerated cost recovery
system is a tax expenditure provision. The individual tax rate
schedule has always been considered part of the reference standard, and the accelerated cost recovery system is the general rule
governing the recovery of the cost of depreciable property rather
than a special method. These reductions are estimated to have
major economic effects including increased incentives to work,
save, and invest.

6-22

THE BUDGET FOR FISCAL YEAR 1983

The reductions in the individual income tax rate schedules will,
for the reasons stated above, decrease the tax expenditures for
deductions and exclusions. The Economic Recovery Tax Act also
affects many tax expenditure provisions directly. The incentive to
invest is enhanced by liberalizing the rules under which firms that
have no tax liability may use leasing transactions to transfer
unused investment tax credits and depreciation deductions on new
investments to profitable firms. It is also enhanced by several other
tax expenditure provisions, including an increase in the investment
tax credit for equipment with short lives. The incentive to save is
enhanced by the tax exemption of interest on certain one-year
savings certificates issued by savings and loan associations and
other financial institutions. These provisions, which are comparatively small except for leasing, affect the form in which investment
and saving occur and supplement the changes in law that increase
the incentives to invest and save but that do not give rise to tax
expenditures. Other increases in tax expenditures arise from several provisions, including a tax credit for research and experimentation, a change in the taxation of income earned abroad, and a
deduction for charitable contributions given by taxpayers who do
not itemize.
The Administration is proposing a number of tax changes to end
abuses and remove obsolete incentives. Some of these changes
would eliminate or modify tax expenditure provisions. For example, the use of tax-exempt bonds for private activities would be
restricted, and the business energy tax credits would be repealed.
The corporate minimum tax would reduce tax expenditures generally for corporations. The Administration is also proposing a new
tax expenditure provision that would provide incentives for the
redevelopment of depressed areas designated as "enterprise zones."

BUDGET FUNDS AND THE FEDERAL DEBT
The budget consists of two major groups of funds: Federal funds
and trust funds.17
The Federal funds are derived mainly from taxes and borrowing
and are used for the general purposes of the Government. Most of
these funds are not restricted by law to any specific Government
program. The trust funds, on the other hand, collect certain taxes
and other receipts for specified purposes, such as paying social
security and unemployment insurance benefits.
The budget includes the receipts and outlays of both the Federal
funds and the trust funds and, as shown in the following table,
deducts the various transactions that occur between them. The
budget totals for receipts and outlays therefore generally display
17
Data for Federal funds and trust funds are presented in "Special Analysis C, Funds in the Budget," which
is available from the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402.

6-23

PERSPECTIVES ON THE BUDGET
BUDGET TOTALS BY FUND GROUP
(In billions of dollars)
1981 actual

Budget receipts:
Federal funds
Trust funds
Interfund transactions
Total, budget receipts
Budget outlays-.
Federal funds
Trust funds
Interfund transactions
Total budget outlays
Budget surplus or deficit ( —)-.
Federal funds
Trust funds
Total, budget surplus or deficit (—)
Addendum:
Deficit (—), off-budget Federal entities1
Total, surplus or deficit (—) including
off-budget Federal entities

1982
estimate

1983
estimate

1984
estimate

1985
estimate

410.4
239.4
-50.6

412.8
274 7
-60.8

433.7
296 6
-64.2

470.4
318 6
-66.1

513.2
352.3
-69.0

599.3

626.8

666.1

723.0

796.6

475.2
232.6
-50.6

523.9
262.2
-60.8

540.6
281.2
-64.2

5713
300.7
-66.1

616.4
321.1
-69.0

657.2

725.3

757.6

805.9

868.5

-64.7

_6!l

-111.1
12.5

106.9
15.4

-100.8
17.9

103.2
31.3

-57.9

-98.6

-91.5

-82.9

-71.9

-21.0

-19.7

-15.7

-14.3

-11.0

-78.9

-118.3

-107.2

-97.2

-82.8

No off-budget Federal entities collect governmental receipts. Hence, no adjustments are made to receipts when on and off-budget totals are
consolidated. The off-budget outlays would be classified as Federal funds outlays if they were included in the budget.

the net transactions of the Federal Government with the public.
The budget does not, however, include the transactions of the
Federal Financing Bank and the other off-budget Federal entities,
which have been excluded from the budget under provisions of law.
Were they to be included in the budget, all of their transactions
would be classified in the Federal funds group.
Thus, as shown in the table on the next page, the combined
deficit or surplus of the budget and the off-budget entities is the
principal determinant of the change in the Federal debt held by
the public. 18 The budget and off-budget deficits, together with the
other factors noted in this table, are estimated to increase the
Federal debt held by the public from $794.4 billion at the end of
1981 to $1,021.4 billion at the end of 1983, with the increase in 1983
being a little smaller than in 1982. Borrowing beyond the budget
year is projected consistently with the economic assumptions that
are explained in Part 2 of this volume. The projected change in
debt held by the public in 1984 and 1985 continues to be large each
year but to decline as the total Government deficit gradually
diminishes.
Gross Federal debt is the sum of the debt held by the public and
the debt held by the Government itself, which includes such invest18
Table 9 in Part 9 of this Budget contains more detail on budget financing through 1983 and shows the levels
of debt from 1980 to 1983. Federal debt is discussed further in a separate OMB publication, "Special Analysis E,
Borrowing and Debt," which is available from the Superintendent of Documents, U.S. Government Printing
Office, Washington, D.C. 20402.

6-24

THE BUDGET FOR FISCAL YEAR 1983
BUDGET FINANCING AND CHANGE IN DEBT OUTSTANDING
(In billions of dollars)
Description

1981 actual

1982
estimate

1983
estimate

1984
estimate

1985
estimate

Budget surplus or deficit ( - )
Deficit ( - ) of off-budget Federal entities

-57.9
21.0

-98.6
19.7

-91.5
15.7

-82.9
-14.3

-71.9
-11.0

Total, surplus or deficit ( — )

-78.9

118.3

107.2

97.2

82.8

Means of financing other than borrowing from
the public:
Decrease or increase ( —) in cash and other
monetary assets
Increase or decrease ( —) in liabilities for.Checks outstanding, etc
Deposit fund balances
Seigniorage on coins

-1.7

3.7

-1.3
2.1
.5

.3
1.7
.6

.3
-1.6
.5

Total, means of financing other
than borrowing from the public

-.4

2.9

-.8

Total, requirements for borrowing
from the public

-79.3

-108.0

-96.5

-82.0

96.5

82.0

17.9

31.3

Transfer of debt holdings2
Change in debt held by the public
Change in Federal agency investments in
Federal debt:
Federal funds
Trust funds 2 3
Off-budget Federal entities
Deposit funds 4
Total, change in Federal agency investments in Federal debt
Change in gross Federal debt

-115.4
-3.6

79.3

119.0

108.0

.4
9.4
-.6
2.0

.8
8.6
-.2
2.1

2.0
15.4
-.8
-.4

10.3

11.2

16.2

17.9

31.3

89.6

130.2

124.2

114.4

113.3

Several amounts have been assumed to be zero in 1984 and 1985 because they are usually small and cannot be estimated accurately.
As of September 30, 1982, $3.6 billion of Federal debt held by trust funds are estimated to be reclassified as debt held by the public,
because under proposed legislation the ownership of the assets of the railroad retirement account are to be transferred to a newly created private
rail industry pension corporation.
3
Estimates for 1984 and 1985 are equal to the total trust fund surplus.
4
Certain deposit funds only.
2

ments as the Treasury debt held by the social security and other
trust funds. At the end of 1983 gross Federal debt is estimated to
be $1,258.4 billion, of which debt held by the Government is $237.0
billion. Thus, gross Federal debt is much larger than the Federal
debt held by the public.
Gross Federal debt is estimated to rise by $124.2 billion during
1983. As indicated in the lower section of the table above, $16.2
billion of this increment will be held by trust funds and other
Federal agencies. This is mainly due to the investment of trust
fund surpluses in Treasury debt. The Federal funds deficit and the
deficit of off-budget Federal entities are the principal determinants
of the change in gross Federal debt.
The gross Federal debt consists almost entirely of securities
issued by the Treasury Department. However, a few Government

6-25

PERSPECTIVES ON THE BUDGET

agencies are authorized to issue their own debt instruments to the
public or to other Government agencies and funds. These securities
are part of the gross Federal debt. At the end of 1981 the public
held $4.6 billion of agency debt. This debt is expected to fall by
small amounts each year as existing agency debt matures and most
new agency borrowing is from the Federal Financing Bank (FFB).
The FFB finances its purchases of agency debt by borrowing from
Treasury, which in turn borrows from the public. To prevent
double counting, FFB's holdings of agency debt are not included in
gross Federal debt.
Almost all Treasury debt issues are covered by a statutory debt
limit, though most borrowing by Federal agencies other than the
Treasury is excluded from this limit. The ceiling on the debt subject to limit is $1,079.8 billion through September 30, 1982. However, to permit the Federal Government to meet its obligations, the
ceiling will have to be raised before that time.
Debt subject to the general statutory limit, like gross Federal
debt, includes debt held internally within the Government, such as
the Treasury issues held by the social security trust funds. Debt
subject to the statutory limit is therefore much larger than the
debt held by the public and is nearly as large as gross Federal debt.
It is a little less than gross Federal debt primarily because most
agency debt is excluded from the general statutory limitation.
FEDERAL FUNDS FINANCING AND CHANGE IN DEBT SUBJECT TO LIMIT
(In billions of dollars)
Description

1981
actual

1982
estimate

1983
estimate

Federal funds surplus or deficit ( —)
Deficit ( - ) of off-budget Federal entities

-64.7
-21.0

-111.1
-19.7

-106.9
-15.7

Total, amount to be financed

-85.8

-130.8 ,

—122.6

Means of financing other than borrowing:
Decrease or increase ( —) in cash and monetary assets
Increase or decrease (—) in liabilities for:
Checks outstanding, etc
Deposit fund balances
Seigniorage on coins
Total, means of financing other than borrowing
Decrease or increase ( - ) in investments in Federal debt by Federal
funds, off-budget entities, and deposit funds 1
Increase or decrease ( —) in Federal funds and off-budget entity debt
not subject to limit
Total, requirements for borrowing subject to debt limit
Change in debt subject to limit
*$50 million or less.
1
Certain deposit funds only.

-1.7

3.7

-3.8
2.1
.5

.7
-1.7
.6

.3
1.6
.5

-2.9

3.2

-.8

-2.6

-.5

1.0

-90.1

-131.2

-124.3

90.1

131.2

124.3

— .9

6-26

THE BUDGET FOR FISCAL YEAR 1983

Since trust fund surpluses for the most part have been invested
in debt securities, rather than being held as cash assets, the Federal funds deficit and the deficit of the off-budget Federal entities
must be financed primarily by selling Federal debt. This debt is
almost entirely subject to the statutory limit. As shown in the
previous table, the Federal funds deficit plus the off-budget deficit
was $85.8 billion in 1981, and the increase in debt subject to statutory limit was $90.1 billion. Thus, these deficits approximately
accounted for the increase in the debt subject to limit.
A large part of the Federal funds deficit—and, therefore, a large
part of the growth in debt subject to limit—is attributable to transactions between Federal funds and trust funds. These transactions
consist primarily of Federal funds payments to trust funds. These
payments include interest paid on Treasury debt securities held by
trust funds; payments to the civil service retirement fund; and
other payments, which are primarily to social insurance trust
funds, such as the Federal Government's contribution for supplementary medical insurance. The trust fund payments to Federal
funds are relatively small.
BUDGET SURPLUS OR DEFICIT ( - ) BY FUND GROUP 1
(In billions of dollars)
Description

Federal funds.Transactions with the public 2
Transactions with trust funds
Total
Trust funds:
Transactions with the public 2
Transactions with Federal funds
Total
Budget total:
Federal funds
Trust funds...
Total

1981
actual

1982
estimate

1983
estimate

1984
estimate

1985
estimate

-20.2
-44.6

-55.6
-55.5

-48.9
-58.1

-42.3
-58.5

-33.2
-70.0

-64.7

-111.1

106.9

100.8

103.2

-37.7
44.6

-42.9
55.5

-42.7
58.1

-40.6
58.5

-38.7
70.0

6.8

12.5

15.4

17.9

31.3

-64.7
6.8

-111.1
12.5

-106.9
15.4

-100.8
17.9

-103.2
31.3

-57.9

98.6

-91.5

-82.9

-71.9

For purposes of this analysis, payments from Federal funds to the general revenue sharing trust fund are treated as transactions with the
public instead of transactions with a trust fund; and the corresponding payments from the general revenue sharing trust fund to the public are
accordingly omitted. This is because the general revenue sharing trust fund has no independent source of funding, and serves only as a channel
through which a Federal funds payment is made to the public.
2
Includes some incidental transactions with off-budget Federal entities.

The cumulative Federal funds deficit from 1972 through 1981
was $501.0 billion, of which $261.0 billion was attributable to transactions with trust funds and the remaining $240.0 billion was
attributable to transactions with the public. The Federal funds
group can have a deficit at the same time as there are surpluses in
the budget and in the transactions of the Federal funds group with
the public. This occurred in 1969. The table above displays the net

6-27

PERSPECTIVES ON THE BUDGET

transactions of the Federal funds with the public and the trust
funds in comparison with the budget surplus or deficit.
THE INCREASE IN TOTAL 1981 OUTLAYS OVER THE
INITIAL BUDGET ESTIMATE

Budget outlays for 1981 were $657.2 billion, which is $44.8 billion
higher than originally proposed in January 1980.
Since the time when the budget was first prepared on a unified
basis for 1969, this increase is the second largest that has ever
occurred between the proposal of a budget and its outcome, both in
absolute dollars and as a percent of total spending. (The largest
was in 1980.) The average difference in previous years was 2.9%,
while in 1981 it was 7.3%. This section reviews the major forces
that caused this large increase.
The following table compares the initially estimated outlays and
the actual totals in current and constant (fiscal year 1972) dollars
and as a percent of GNP. It also compares the changes in defense
and nondefense outlays. The actual outlays for both were substantially above the initial estimate, with defense being 9.2% higher
and nondefense 6.7% higher.
1981 OUTLAY INCREASES 1
(Dollars in billions)
Initial proposal
(January 1980)

Budget outlays:
Current dollars
National defense
Nondefense
Constant (fiscal year 1972) dollars
As a percent of GNP
Off-budget outlays (current dollars)

612.4
(146.2)
(466.1)
314.4
22.2
18.1

Actual

657.2
(159.8)
(497.4)
330.6
23.0
21.0

Percent increase

7.3
(9.2)
(6.7)
5.2
3.6
15.8

J
The data in this table include an adjustment for shifting the Pension Benefit Guaranty Corporation on-budget retroactivity ( - $ 4 4 million) and
for a retroactive ^classification of supplemental medical insurance (SMI) premiums ana voluntary hospital insurance premiums. These premiums
were formerly classified as budget receipts, and are now classified as offsets to outlays. These changes reduce 1981 receipts and outlays by $3.3
billion, thus having no impact on the deficit.

Spending increased generally throughout most of the budget and
in different kinds of programs. Outlays were larger than initially
estimated in almost all of the 19 budget functions. Relatively uncontrollable programs increased 7.0%, and relatively controllable
programs increased 8.4%. The causes of the specific changes are
described below.
Chronology of Outlay Increases.—The chronology of outlay in-

creases is displayed in the following table. The financial markets
and the Congress reacted unfavorably to the 1981 budget transmitted in January 1980. In response, the Carter administration proposed reductions only two months later, in March 1980. These
reductions more than offset large upward reestimates that had

6-28

THE BUDGET FOR FISCAL YEAR 1983

occurred during that period. After these reductions, however, there
were major upward revisions in the July 1980 Mid-Session Review
($22.2 billion) and the January 1981 Budget ($28.9 billion). The net
change subsequently was a small decrease.
CHRONOLOGY OF THE 1981 OUTLAY INCREASE
(In billions of dollars)

January 1980 (1981 budget)
Changes:
March 1980 (1981 Budget Revisions): A substantial budget revision. Upward reestimates of $13.0 billion were more than offset by planned reductions of $17.2 billion
July 1980 (Mid-Session Review): Major increases from changed economic conditions
($11.1 billion), higher Defense-Military spending ($6.9 billion), and other causes
($4.1 billion)
January 1981 (1982 budget): The largest increases were for net interest ($11.9
billion), transportation ($4.9 billion—including the $2.1 billion Penn Central settlement), and national defense ($3.6 billion)
March 1981 (1982 Budget Revisions): The largest reductions were for net interest
($2.9 billion) and income security ($1.9 billion)
July 1981 (Mid-Session Review): The largest increase was for net interest ($5.0 billion)..
October 1981 (End of Year Statement)
Total increase

612.4

-4.2

22.2

28.9
-7.5
6.0
-0.7
44.8
657.2

Actual

Major Causes of the Increase.—The following table summarizes
the budget increase according to the reason for the change: (1)
economic conditions that were different from the original assumptions; (2) policy changes; (3) unforeseen events such as the courtapproved settlement with the Penn Central Corporation; or (4) estimating and other differences. The amounts in the first three categories are orders of magnitude, and include only the major items.
The fourth category is a residual. The figures should therefore be
considered approximations.
Changes in economic conditions explain 72% of the total increase. Policy changes account for almost half of the remainder.
These are analyzed below separately for defense and nondefense.
SUMMARY OF REASONS FOR CHANGES IN 1981 OUTLAYS
(in billions of dollars)
Total

Reasons for change (net):
Economic conditions
Policy:
January 1981 and earlier
After January 1981
Unforeseen events
Estimating differences and other changes
Total

National defense

Nondefense

32.3

7.3

25.0

4.0
1.7
0.6
6.2

1.7
3.2
1.3

2.3
-1.5
0.6
4.9

44.8

13.5

31.3

6-29

PERSPECTIVES ON THE BUDGET

National defense.—Outlays in 1981 for national defense increased
by $13.5 billion, which is 9.2% above the original budget estimate.
Roughly half of the defense increase was due to pay and prices,
and half reflected real outlays. More specifically, the increase was
due primarily to three causes:
—higher inflation, primarily the rising costs of fuel and transportation;
—higher outlays than anticipated from prior-year contracts and
obligations (i.e., faster contractor delivery of previously ordered
goods and services); and
—policy decisions to increase national defense. These outlays
were primarily for increased operations in the Persian Gulf
while American hostages were held in Iran, and the October
1980 increase in military pay and benefits. This increase of
about 19%, which included the Nunn-Warner pay package,
compares to 7.4% assumed in the initial estimates.
Nondefense.—There are several major causes of increases in nondefense budget outlays.
Economic conditions differed from those forecast in January
1980, as shown in the following table. Growth in real GNP was a
little higher than projected for 1980, but 2.1 percentage points
lower for 1981. Inflation as measured by the GNP deflator was 0.1
percentage points higher than originally projected for 1980, and 0.3
percentage points higher for 1981. As measured by the Consumer
Price Index (CPI), however, inflation was 1.7 percentage points
higher than projected for 1980 and 1.0 percentage point higher for
1981. (The CPI increase from the first quarter of calendar year
1979 to the first quarter of 1980 determined the July 1980 increase
in social security. It was projected to be 13.0% but was actually
14.3%.) The unemployment rate was slightly higher than originally
projected. Interest rates, however, were significantly higher than
the initial assumptions. The 91-day Treasury bill rate during calenCOMPARISON OF ECONOMIC ASSUMPTIONS: JANUARY 1980 AND ACTUAL
(Calendar years)
January 1980 estimate

Actual

1981

Percent change:
GNP (constant 1972
dollars) 4th quarter over
4th quarter
Inflation (year over year):
GNP deflator
Consumer Price Index
(CPI)
Unemployment rate (annual
average)
Interest rate (91-day bills,
annual average)

360-000

0 - 8 2 - 2 2

1980

Difference

1981

1980

-1.0

2.8

-0.3 |

0.7

8.9

8.8

9.0

9.1

0.1

11.8

9.2

13.5

10.2

1.7

7.0

7.4

7.1

7.6

0.1

10.5

9.0

11.5

14.1

1.0

-2.1
0.3
1.0
0.2
5.1

6-30

THE BUDGET FOR FISCAL YEAR 1983

dar year 1980 averaged 1.0 percentage point more than the January 1980 assumption, and the 1981 rate was 5.1 percentage points
higher.
These differences in economic assumptions increased nondefense
outlays by an estimated $25.0 billion—with more than two-thirds of
this due to higher interest rates than estimated. Higher inflation
accounted for the rest. These changes are shown in more detail on
the accompanying table.
EFFECT OF CHANGES IN ECONOMIC ASSUMPTIONS ON 1981 NONDEFENSE OUTLAYS
(In billions of dollars)
Description

Inflation:
Indexed programs:
Social security and railroad retirement
Other
Medicaid and medicare
Subtotal, inflation

Interest rates and changes in borrowing:
Interest on the public debt:
Interest rates
Changes in borrowing 1
FSLIC, higher education, housing (FHA and VA), and Export-Import Bank
Other interest (payment to trust funds, refunds, etc.)

ence

1.1
1.0
5.4
7.5

9.4
6.8
3.0
—1.7

Subtotal, interest rates and changes in borrowing

17.5

Total

25.0

Change in borrowing for all reasons, including causes other than economic assumptions.

Other 1981 nondefense changes were caused by various factors:
—Net policy changes increased 1981 nondefense outlays about
$0.9 billion. The major increases before February 1981 were
$9.0 billion, primarily for the inclusion of farmers hurt by
droughts as eligible for SB A disaster loans ($1.7 billion), phaseout of the GNMA tandem plan ($1.5 billion), and filling the
strategic petroleum reserve ($1.7 billion). These were partially
offset by major decreases of $6.7 billion, primarily for elimination of the State share of general revenue sharing ($1.7 billion),
employment and training ($1.7 billion), and countercyclical
fiscal assistance ($1.0 billion). After January 1981, outlays decreased $1.5 billion for policy reasons.
—Increases in outlays for unforeseen events, such as the courtapproved settlement with the Penn Central Corporation, were
almost entirely offset by reductions in the allowance for contingencies.
—Nondefense outlays increased $4.9 billion on a net basis due to
estimating differences and other changes. The major increases
were for the Commodity Credit Corporation ($2.6 billion) and
food stamps ($1.6 billion).

PERSPECTIVES ON THE BUDGET

6-31

COMPARISON OF RELATIVELY UNCONTROLLABLE
OUTLAYS AND OF RECEIPTS
The Congressional Budget Act requires that the budget contain
two comparisons between the initial budget estimates and the
actual amounts for the last completed fiscal year: a comparison of
the differences in relatively uncontrollable outlays by major program, and a comparison of the differences in receipts by major
source. These comparisons are made in the following two sections
for the 1981 budget, which was submitted in January 1980 for the
fiscal year ending on September 30, 1981.
Comparison of relatively uncontrollable outlays.—Outlays in any
one year are considered to be relatively uncontrollable when the
program level is determined by existing statutes or by contracts or
other obligations. Outlays for these programs generally depend on
factors that are beyond administrative control under existing law
at the start of the fiscal year. For example, the definition of
beneficiaries eligible for programs like medicaid and social security
is established by law, and usually can be altered only by a change
in the law. Prior-year contracts and obligations are also legally
binding.
For a number of reasons, the amounts estimated in the budget
for relatively uncontrollable outlays may differ from the actual
outlays that are subsequently realized. For example, legislation
may change benefit rates or coverage; the actual number of
beneficiaries may differ from the number estimated; and economic
conditions (such as interest rates) may differ from what was assumed in making the estimates.
Relatively uncontrollable outlays are grouped into two major
categories: open-ended programs and fixed costs, for which outlays
are generally mandated by law; and payments from prior-year
contracts and obligations, for which outlays are required because of
previous action, such as entering into contracts. In accordance with
the definition, budget estimates of relatively uncontrollable outlays
do not include the effects of proposed legislation. In cases where
legislation was enacted that significantly affected relatively uncontrollable outlays in 1981, it is identified in the discussion below.
The following table shows the differences between actual outlays
for relatively uncontrollable programs for 1981 and the amounts
estimated in the 1981 budget. The list of programs in this table is
the same as table 17 (Controllability of Budget Outlays) in Part 9 of
this year's Budget. Several categories include revisions in the classifications of programs, which are shown retroactively for the January 1980 estimate.

6-32

THE BUDGET FOR FISCAL YEAR 1983
RELATIVELY UNCONTROLLABLE OUTLAYS FOR 1981
(In billions of dollars)
January 1980
estimate
(existing law) *

Relatively uncontrollable under present law

Open-ended programs and fixed costs:
Payments for individuals:
Social security and railroad retirement
Federal employees retirement and insuranceJ
(Military retired pay)
(Other) 1
Unemployment assistance
Medical care
Assistance to students1
Food and nutrition assistance12
Public assistance and related programs
All other relatively uncontrollable payments for
individuals3

Change

Actual

142.1
38.9
(13.7)
(25.2)
18.7
53.9
2.1
3.7
20.2

1.0
1.6
(0.1)
(1.5)
0.8
5.4
2.5
-0.1
0.6

143.2
40.5
(13.7)
(26.8)
19.5
59.3
4.7
3.5
20.8

3.2

-0.2

3.0

282.8

11.7

294.5

54.8
6.9
1.8
-0.1

14.0
-1.7
2.3
4.1

68.7
5.1
4.1
4.0

Total, open-ended programs and fixed
costs 2

346.1

30.4

376.4

Outlays from prior-year contracts and obligations:
National defense
Civilian programsJ

40.6
66.8

0.9
0.3

41.5
67.1

Total, outlays from prior-year contracts
and obligations

107.4

1.2

108.6

Total, relatively uncontrollable outlays

453.5

31.6

485.0

Subtotal, payments for individuals

Net interest
General revenue sharing
Farm price supports (CCC)*
Other open-ended programs and fixed costs 1 2

Adjusted for redefinition of classifications in the 1982 or 1983 budgets.
This category no longer includes programs that have been reclassified as relatively controllable since January 1980.
This category now contains programs that were classified as relatively controllable in January 1980.
4
This category now includes offsetting collections that were classified as receipts in January 1980.
2

Actual outlays for relatively uncontrollable programs in 1981
were $485.0 billion, which is $31.6 billion, or 7.0% higher than
estimated in January 1980. Outlays for open-ended programs and
fixed costs were $30.4 billion higher, and outlays from prior-year
contracts and obligations were $1.2 billion higher.
Open-ended programs and fixed costs consist mainly of benefit
programs, grants, and subsidies for which eligibility is automatic or
fixed by law; interest payments; general revenue sharing; farm
price supports; and payments for the legislative and judicial
branches, which the President must—by law—include in the
budget as submitted.
Payments for individuals is the major grouping within openended programs and fixed costs. These budget outlays are essential-

PERSPECTIVES ON THE BUDGET

6-33

ly income transfers rather than payments for direct Federal operations. Total payments for individuals were 78% of all open-ended
programs and fixed costs in 1981. Actual outlays for this grouping
were $11.7 billion higher than estimated. This was caused by differences between actual and assumed economic conditions and the
number of beneficiaries, and by enactment of legislation.
Outlays for social security retirement and disability and for railroad retirement, the biggest category of payments for individuals,
were $1.0 billion higher than estimated. The original estimates
assumed automatic benefit increases, based on inflation as measured by the consumer price index, of 13.0% in July of 1980 and
9.9% in July of 1981. The actual increases were 14.3% and 11.2%,
respectively.
Actual outlays for Federal employee 'retirement and disability
insurance programs were $1.6 billion above the budget estimate.
These programs consist of military retired pay, civilian employee
retirement and disability (largely civil and foreign service), and
veterans service-connected compensation. Except for veterans service-connected compensation, these benefits are indexed to the consumer price index. Outlays for the indexed Federal employee retirement programs exceeded the budget estimates by $0.6 billion,
largely because of higher than anticipated cost-of-living increases.
The original estimates assumed automatic increases of 5.8% in
September 1980 and 4.3% in March 1981. Actual increases were
7.7% and 4.4%, respectively. The portion of veterans service-connected compensation benefits that increases to adjust for the effects of inflation is considered relatively controllable because it
requires congressional action. However, when the increase occurs,
it is added to the relatively uncontrollable portion of outlays, and
in 1981 it accounts for a $1.0 billion increase in actual outlays.
Outlays for unemployment assistance programs were $0.8 billion
higher than estimated. While the overall unemployment rate for
fiscal year 1981 was 7.3%, slightly below the budget forecast of
7.4%, many more workers in the automobile industry were certified to receive trade adjustment assistance than originally estimated, raising outlays by $1.4 billion. Outlays for other unemployment
assistance were lower than expected.
Outlays for medical care were $5.4 billion higher than estimated,
largely as a result of the higher prices in the health sector that
accompanied the higher inflation in general. The use of medical
care services was also greater than anticipated. Medicaid outlays
were $1.4 billion higher than originally estimated, and medicare
outlays were $3.2 billion higher.
Assistance to students previously consisted primarily of GI bill
benefits. However, the student loan insurance fund has been reclassified as a relatively uncontrollable payment for individuals, and

6-34

THE BUDGET FOR FISCAL YEAR 1983

the data have been adjusted to reflect this change. Outlays for
assistance to students were $2.5 billion higher than originally estimated, largely due to the effect of higher interest rates than expected on the interest subsidy for guaranteed student loans. Use of
GI bill benefits was greater than anticipated and accounts for a
$0.5 billion increase over estimated outlays.
Outlays for food and nutrition assistance were $0.1 billion lower
than estimated. Lower participation in the child nutrition and
special milk programs accounts for the difference between the
original estimate and actual outlays for food and nutrition assistance. The food stamp program previously was classified as relatively uncontrollable, but in this budget has been reclassified as relatively controllable. The outlays originally estimated for 1981 have
been adjusted to account for this change.
Public assistance and related programs include public assistance
payments, supplemental security income, outlays for earned
income tax credits, and veterans non-service-connected pensions.
Outlays were $0.6 billion above the initial estimate largely due to
increases of $0.8 billion for public assistance payments and $1.0
billion for supplemental security income. These increases were partially offset by a $0.3 billion decrease in veterans non-service connected pensions, because fewer beneficiaries than expected chose to
participate in the new pension program that became effective in
1979, and by a $0.3 billion decrease in outlays for earned income
tax credits.
Uncontrollable outlays for all other payments for individuals
were $0.2 billion lower than estimated, mostly because of lower
than expected payments for black lung disabilities.
The single largest difference between estimated and actual outlays for open-ended programs and fixed costs was for net interest,
where outlays were $14.0 billion—or 25.5%—higher than originally
estimated. Interest on the public debt was $16.0 billion higher than
assumed, largely because interest rates and Federal borrowing
were higher than anticipated, and the average length of maturity
of debt was shorter. The budget estimate assumed a 9.2% interest
rate on 91-day Treasury bills for fiscal year 1981 whereas the
actual 91-day rate averaged 15.7%. Interest received by trust funds,
which is offset against interest costs to reflect transactions with
the public, was $2.0 billion higher than the budget estimate due to
higher than anticipated interest rates and despite lower trust fund
balances.
Outlays for general revenue sharing declined $1.7 billion due to
congressional action to eliminate payments to States. The program
now aids local governments only.
Other open-ended programs and fixed costs were $4.3 billion
above the original budget estimates. A legal settlement with the

PERSPECTIVES ON THE BUDGET

6-35

Penn Central Railroad accounts for $2.1 billion of this. Outlays for
the Federal Savings and Loan Insurance Corporation were $1.0
billion higher than estimated due to increased aid to support savings and loan institutions for losses caused by prolonged high interest rates, low-yielding portfolios, and losses from speculation. Outlays for the foreign military sales trust fund were $0.5 billion above
receipts, whereas the 1981 budget assumed that trust fund receipts
would exactly offset outlays. The remaining $0.6 billion difference
between estimated and actual outlays in this category is due to
higher than estimated outlays for several other programs, the largest of which was the Federal Deposit Insurance Corporation ($0.2
billion).
Outlays for prior-year contracts and obligations for civilian and
national defense programs were $1.2 billion—or 1.1%—higher than
estimated. Outlays for civilian programs were $0.3 billion higher
than estimated, an increase of only 0.5%. The largest differences
between estimated and actual outlays in 1981 for prior-year contracts and obligations occurred in housing credit and subsidies,
strategic petroleum reserves and other energy programs, urban
mass transit, health programs, the Export-Import Bank, and commerce assistance. These programs account for increases of $5.2
billion and decreases of $1.2 billion from estimated to actual outlays. The remaining $3.7 billion of decreases is the result of small
differences divided among numerous Federal agencies.
Department of Housing and Urban Development outlays for
prior-year contracts and obligations account for $1.3 billion more
outlays than estimated, largely because the Government National
Mortgage Association purchased more mortgages than expected
and sold mortgages at lower prices; its relatively uncontrollable
outlays were $1.1 billion greater than estimated. The emergency
mortgage purchase and subsidized housing programs had outlays
$0.4 billion and $0.2 billion higher than expected, respectively.
Payments for operation of low-income housing were almost $0.5
billion less than anticipated.
The strategic petroleum reserves were filled at a faster rate than
expected, raising outlays $1.0 billion over the estimated level. Outlays were higher also for uranium supply and enrichment by $0.3
billion, while other energy supply and conservation programs had
outlays approximately $0.2 billion below estimated levels. Tennessee Valley Authority outlays for power supply were $0.4 billion
lower than anticipated.
Outlays for prior-year contracts and obligations of transportation
programs were $0.7 billion higher than estimated. Nearly $1.0 billion resulted from an underestimate of how quickly obligations
made by the Urban Mass Transportation Administration would be
spent.

6-36

THE BUDGET FOR FISCAL YEAR 1983

Outlays for health programs were $1.1 billion above the original
estimates, particularly for education and training of the health
care work force, which increased by $0.3 billion. In veterans programs, relatively uncontrollable medical care outlays from prioryear contracts and obligations were $0.1 billion lower than expected. Outlays for regulation of pollution were $0.2 billion above estimated outlays, while lower than anticipated outlays in other programs brought the net difference for all pollution control and
compliance activities to $0.1 billion above expected levels.
The $0.8 billion increase in outlays over anticipated levels from
the Export-Import Bank mostly reflects a shift in the Bank's loans
from slower to faster spending programs. Outlays for Federal assistance for commerce, economic development and local public
works were $0.8 billion below estimated levels.
National defense outlays for prior-year contracts and obligations
were $0.9 billion—or 2.1%—above the original budget estimate.
Outlays for procurement and operations and maintenance were
$2.8 billion higher than estimated, but were offset by $1.4 billion
greater offsetting collections in various funds. Net changes in outlays for other programs were $0.5 billion lower than originally
estimated. Overall, Department of Defense military programs accounted for $0.9 billion of higher outlays, whereas outlays for
atomic energy defense were $0.1 billion lower than estimated.
Comparison of actual and estimated receipts.—Budget receipts in
1981 were $599.3 billion, which is only $2.6 billion more than the
January 1980 estimate of $596.7 billion. The composition of receipts, however, was substantially different from the original estimates, primarily due to changes in incomes and differences in tax
law from the legislation proposed in the 1981 budget.
COMPARISON OF FISCAL YEAR 1981 BUDGET RECEIPTS
(In billions of dollars)
January 1980
estimate

Individual income taxes
Corporation income taxes
Social insurance taxes and contributions..
Excise taxes
Estate and gift taxes
Customs duties
Miscellaneous receipts
Total

Change from 1980
estimate

Actual

274 4
71.6
184.1
40.2
5.9
8.4
12.1

11.6
-10.4
-1.3
0.6
0.8
-0.3
1.7

285 9
61.1
182.7
40.8
6.8
8.1
13.8

596.7

2.6

599.3

NOTE.—The data have been revised to reflect the retroactive reclassification of supplemental medical insurance (SMI) premiums and voluntary
hospital insurance premiums, formerly classified as budget receipts, as offsets to outlays. These changes reduce 1981 receipts and outlays by $3.3
billion, thus having no impact on the deficit.

Higher than anticipated personal incomes, lower than expected
corporate profits, and changes in collection patterns and effective
tax rates resulted in a net increase in 1981 receipts of $7.8 billion.

PERSPECTIVES ON THE BUDGET

6-37

This increase was partially offset by differences in tax law from
the legislation proposed in the budget, which reduced receipts by
$5.2 billion. These differences in tax law consist of modifications of
the original budget proposals and changes in law that were not
proposed in the 1981 budget.
A windfall profit tax on domestic producers of crude oil was
proposed in the 1981 budget, together with several energy tax
credits and a change in the foreign tax credit on oil and gas
extraction. These energy related proposals were expected to increase 1981 receipts by $14.4 billion. The other major proposals
affecting 1981 receipts included several initiatives to require taxpayers to make income tax payments closer to the time when tax
liabilities are incurred, to require employers to deposit taxes withheld from employees on a more timely basis, and to accelerate the
payment schedule of customs duties and tobacco excise taxes. Together, these cash management initiatives were estimated to increase receipts in 1981 by $4.5 billion. Other proposals, which were
estimated to increase 1981 receipts by $3.0 billion, included restrictions on the use of tax-exempt funds for mortgage financing; the
extension of airport and airway trust fund taxes that were scheduled to expire; and the establishment of a fund, to be financed
primarily by fees paid by industry, to assure the adequate and
timely clean-up of oil and hazardous substances. Together, the 1981
budget proposals were estimated to increase 1981 receipts by $21.9
billion.
Congress passed three major tax laws during 1980 that affected
1981 receipts: the Crude Oil Windfall Profit Tax Act of 1980, the
Omnibus Reconciliation Act of 1980, and the Comprehensive Environmental Response, Compensation, and Liability Act of 1980.
These laws, which were in large part modifications of the January
budget proposals, increased 1981 receipts by $17.2 billion. The
Crude Oil Windfall Profit Tax Act of 1980 levied a windfall profit
tax on domestic producers of crude oil, provided several energy
related income tax credits, and excluded some interest and dividend income from tax. The major revenue provisions of the Omnibus Reconciliation Act of 1980 restricted the use of tax-exempt
bonds for mortgage financing and required corporations with taxable income exceeding $1 million in any of the three preceding
taxable years to make estimated payments equal to at least 60% of
their current year's liability. The Comprehensive Environmental
Response, Compensation, and Liability Act of 1980 established a
fund to clean up hazardous substances spills and uncontrolled hazardous waste dumps.
Regulations were published in 1980 that accelerated employer
payments to the Treasury of withheld income and payroll taxes.

6-38

THE BUDGET FOR FISCAL YEAR 1983

These regulations, which had been proposed in the 1981 budget,
increased 1981 receipts by $0.5 billion.
Other legislation enacted in 1980, primarily a tariff reduction
and the Depository Institutions Deregulation and Monetary Control Act of 1980, reduced 1981 receipts by $0.6 billion. Several
administrative changes reduced receipts by an additional $0.2 billion.
The Economic Recovery Tax Act of 1981, enacted on August 13,
1981, was the only major legislated tax change affecting 1981 receipts that had not been proposed in the 1981 budget. The capital
cost recovery provisions of this Act, which provided for the faster
write-off of capital expenditures under simplified and standardized
rules, reduced 1981 receipts by $0.2 billion.
Individual income taxes were $285.9 billion in 1981, $11.6 billion
greater than the original budget estimate of $274.4 billion. Differences in tax law from the legislation proposed in the 1981 budget
reduced individual income tax receipts by $3.1 billion. This was
more than offset by higher than anticipated personal incomes,
which increased receipts by $14.6 billion.
COMPARISON OF ACTUAL 1981 BUDGET RECEIPTS WITH THE JANUARY 1980 ESTIMATES
(In billions of dollars)
January 1980
estimate

Individual income taxes
Corporation income taxes
Social insurance taxes and contributions
Excise taxes
Estate and gift taxes
Customs duties ..
Miscellaneous receipts
Total. .

Differences in tax
law from 1980
proposals

274.4
71.6
184.1
40.2
5.9
84
12.1

-3.1
-1.2
-1.3
12
*

596.7

-5.2

-04
0.4

Technical
adjustments and
revised incomes

Actual

14.6
-9.2
-0.1
05
0.9
*
2.1

285.9
61.1
182.7
40 8
6.8
81
13.8

7.8

599.3

*$50 million or less.
NOTE.—The data have been revised to reflect the retroactive ^classification of supplemental medical insurance (SMI) premiums and voluntary
hospital insurance premiums, formerly classified as budget receipts, as offsets to outlays. These changes reduce 1981 receipts and outlays by $3.3
billion, thus having no impact on the deficit.

Corporation income taxes were $10.4 billion below the January
1980 estimate. Substitution of legislation enacted during 1980 for
the original budget proposals reduced corporation income taxes by
$1.2 billion. Different effective tax rates, collection patterns, and
economic conditions account for the remaining decline of $9.2 billion.
Social insurance taxes and contributions (which are composed of
employment taxes and contributions, unemployment insurance receipts, and other retirement contributions) were $1.3 billion less
than the January 1980 estimate of $184.1 billion. Higher employment taxes and contributions increased social insurance taxes and
contributions by $1.4 billion..This increase was more than offset by

PERSPECTIVES ON THE BUDGET

6-39

a $2.9 billion decline in unemployment insurance receipts, primarily due to an overestimate of State taxes deposited in the Treasury
to finance unemployment benefits. Other retirement contributions
were $0.2 billion above the original estimate.
Substitution of the Crude Oil Windfall Profit Tax Act of 1980 for
the windfall profit tax proposal reflected in the 1981 budget increased excise taxes by $2.2 billion. Other changes in legislation
reduced excise taxes by $1.1 billion, resulting in a net increase in
excise taxes due to differences in tax law of $1.2 billion.
Estate and gift taxes were $0.8 billion higher than the January
1980 estimate, and customs duties were $0.3 billion lower. A decline in sugar import duties effective February 1, 1980, accounted
for $0.2 billion of the decline in customs duties receipts.
Miscellaneous receipts in 1981 were $1.7 billion above the original budget estimate of $12.1 billion. An increase in deposits of
earnings by the Federal Reserve System, primarily reflecting
higher interest rates than anticipated in January 1980, added $2.0
billion to miscellaneous receipts. This was partially offset by a
decline in other miscellaneous receipts of $0.3 billion.
REDUCTIONS IN CONSULTING SERVICES AND TRAVEL
Sections 1731 and 1732 of the Omnibus Budget Reconciliation
Act of 1981 require that funds appropriated for the Executive
Branch for 1982 be reduced by $100 million for direct administrative travel and $500 million for consulting and related services
below the level in the 1982 budget transmitted in January 1981.
The Act requires further that if the 1982 appropriation bills do not
achieve these reductions, the President must calculate the additional amounts to be reduced, allocate these amounts among the agencies, and propose rescissions in this budget to achieve the additional reductions.
The provisions of the Act assumed that all Executive Branch
appropriations for 1982 would be enacted before the beginning of
the fiscal year or soon thereafter. This would have provided sufficient time for agencies to determine the effect of the appropriations upon administrative travel and consulting services before
the budget was transmitted to the Congress. Such time is necessary
because appropriations do not usually specify the amounts available for administrative travel and consulting services. After appropriations are enacted, agencies must determine how the funds will
be allocated among these and other uses.
Three of the 1982 appropriations bills have not been enacted.
Funds for them were provided by a continuing resolution that
expires on March 31, 1982. There is, therefore, no way to determine
the total Executive Branch amounts appropriated for 1982 for
direct administrative travel or for consulting and related services.

6-40

THE BUDGET FOR FISCAL YEAR 1983

Moreover, eight of the other ten appropriation bills were not
passed until mid-December. This did not provide enough time for
agencies to determine the effect of the appropriations on consulting
and travel expenditures with any precision; nor did it provide
enough time for the Office of Management and Budget to collect
and review data, and to allocate reductions for each agency. Therefore, from a procedural standpoint it is impossible to comply literally with the provisions of the Act.
Furthermore, it is not possible to achieve the reduction of $100
million in direct administrative travel because the Act provided
that no agency could be reduced by more than 15% and exempted
travel for emergency national defense, law enforcement, and debt
collection activities. The 15% constraint coupled with the fact that
direct administrative travel is on the average only 7.5% of all
travel* 9 limits the reductions that can be allocated to the agencies
to $54 million. Once the exemptions mentioned earlier are subtracted, the amount that can be reduced under the provisions of
the Act will be even lower.
Meanwhile, on its own initiative the administration had already
taken action to constrain 1982 total travel (which includes direct
administrative travel). Total travel by the civilian agencies of the
Executive Branch has been reduced by approximately $150 million
below the level estimated in the January 1981 budget.
As for the reduction for consulting and related services, although
the amounts of reduction that eventually will be included in appropriations for the executive branch cannot be known at this time,
the President's proposed 1983 budget already includes reductions
for 1982 in these areas. The President initiated such reductions as
part of his March 1981 budget revisions and also in connection
with his September 1981 revisions. As a result of these actions, the
estimates for 1982 for consulting and related services show reductions of approximately $320 million.
The Congress assumed that agencies spent $4 billion a year for
consulting and related services when it required that funds enacted
for these services be reduced by $500 million in 1982. This is a
12.5% reduction. More recently, executive branch agencies reported that the estimated 1982 obligations for contracting and related
services in the January 1981 budget amounted to $1.7 billion. A
$320 million reduction against this base is an 18.8% reduction.
Thus, the reduction achieved satisfies the congressional intent in
percentage terms.

Travel is classified as object class 21 in the Budget Appendix.

6-41

PERSPECTIVES ON THE BUDGET

ALLOCATION OF WINDFALL PROFIT TAX RECEIPTS
Section 102 of the Crude Oil Windfall Profit Tax Act of 1980
requires that each year the President propose the allocation of net
receipts from the tax in his budget.
This act establishes a Windfall Profit Tax Account in the Treasury "for accounting purposes only/' After the Secretary of the
Treasury has determined the amount of net receipts from the tax,
they are to be allocated to the Windfall Profit Tax Account. Since
the Conference Report accompanying the act stated explicitly that
the net receipts from the tax "shall not be earmarked or invested
separately from general revenues . . .", the allocations referred to
in section 102 cannot be interpreted as earmarking funds for specific purposes.
The method for these allocations is prescribed by three formulas
in subsections b(l), b(2), and b(3) of section 102. The allocations for
1983 are compared in the following table with the amounts included in this budget for the functional categories referred to in the
formula.
ALLOCATION OF WINDFALL PROFIT TAX, NET RECEIPTS, 1983
(In millions of dollars)
Section 102 Formula

Total net receipts
Allocation:
Low-income assistance1
Energy and transportation programs 2
Income tax reductions
Total
1

1983 Budget

11,407

2,852
1,711
6,844

19,770
17,260

11,407

37,030

This amount is the total outlays for the other income security subfunction (609).
2
This amount is the total outlays for all energy and transportation programs in the energy function (270) and the ground transportation
subfunction (401).

PART 7

THE BUDGET SYSTEM
AND CONCEPTS

7-1

7-2

THE BUDGET FOR FISCAL YEAR 1983

THE BUDGET SYSTEM AND CONCEPTS
The budget system of the U.S. Government provides the framework within which decisions on resource allocation and program
management are made in relation to the requirements of the
Nation, availability of Federal resources, effective financial control,
and accountability for use of the resources.
THE BUDGET PROCESS

The budget process has four main phases: (1) executive formulation and transmittal; (2) congressional action; (3) budget execution
and control; and (4) review and audit. Each of these is interrelated
with the others.
Executive formulation and transmittal.—The budget sets forth
the President's financial plan and indicates his priorities for the
Federal Government. The President's transmittal of his budget to
the Congress early in each calendar year is the climax of many
months of planning and analysis throughout the executive branch.
Last January, a new President took office and in March transmitted budget revisions that proposed changes to the 1982 budget
submitted by his predecessor.
Formulation of the 1983 budget began in the spring of 1981. The
budget is formulated in the context of a multi-year budget planning and tracking system that extends coverage to the 4 years
following the budget year and integrates long-range planning into
the executive budget process. This multi-year budget planning
system requires that broad fiscal goals and agency spending and
employment targets be established beyond the budget year.
During the period when a budget is formulated in the executive
branch, there is a continual exchange of information, proposals,
evaluations, and policy decisions among the President, the Office of
Management and Budget (OMB) and other Executive Office units,
and the various Government agencies.
In the spring, agency programs are evaluated, policy issues are
identified, and budgetary projections are made, giving attention
both to important modifications and innovations in programs and
to alternative long-range program plans. These budgetary projections, including projections of estimated receipts prepared by the
Department of the Treasury, are then presented to the President
for his consideration, and the major issues are discussed. At about
the same time, the President receives projections of the economic
outlook that are prepared jointly by the Council of Economic Advisers, OMB, and the Treasury.
Following a review of these projections, the President establishes
general budget and fiscal policy guidelines. General policy directions and planning ceilings for both the fiscal year that will begin

THE BUDGET SYSTEM AND CONCEPTS

7-3

about 15 months later and for the 2 years beyond are then given to
the agencies to govern the preparation of their budget requests.
Throughout the fall and early winter, the executive branch is
involved in the development of the President's budget. The primary
phase of the budget process involves the formulation and preparation of the President's budget for transmittal to the Congress.
Budget determinations are made after detailed reviews of agency
budget requests. These determinations are then provided to the
agencies but may be revised as a result of later Presidential decisions. Fiscal policy issues—relating to total budget outlays and
receipts—are reexamined. The effects of budget decisions on budget
authority and outlays in the years that follow are also considered
and are explicitly taken into account, consistent with the multiyear budget planning system. Thus, the budget formulation process
involves the simultaneous consideration of the resource needs of
individual programs and the total outlays and receipts that are
appropriate in relation to current and prospective economic conditions. The budget reflects the results of both of these
considerations.
Current services estimates are also prepared to provide the Congress with a basis for the review of the President's budget. These
estimates are projections of budget authority and outlays required
to continue Federal programs and activities in the upcoming fiscal
year, without policy changes from the fiscal year in progress, at the
time the estimates are transmitted.
The Congressional Budget Act of 1974 requires that these current services estimates be transmitted to provide the Congress with
information on projected costs of current programs. For the first
two years after the requirement became effective, they were transmitted in November. However, it was generally agreed that the
estimates transmitted at that time did not provide a suitable basis
for review, since the underlying assumptions changed before the
budget was transmitted. As a result, the comparability of the current services and the budget estimates was lessened significantly.
Consequently, the current services estimates are now transmitted
with the President's budget.
Congressional action.—The Congress can act to approve, modify,
or disapprove the President's budget proposals. It can change funding levels, eliminate proposals, or add programs not requested by
the President. It also enacts legislation affecting taxes and other
sources of receipts.
In making appropriations, the Congress does not vote on the
level of outlays directly, but rather on budget authority. However,
since the concurrent budget resolutions, described below, also set
targets for outlays, the outlay effect of appropriations must be
considered. The Congress first enacts legislation that authorizes an
360-000

0 - 8 2 - 2 3

7-4

THE BUDGET FOR FISCAL YEAR 1983

agency to carry out a particular program and, in some cases,
includes limits on the amount that can be appropriated for the
program. Many programs are authorized for a specified number of
years or indefinitely; other programs, such as most nuclear energy,
space exploration, defense procurement, foreign affairs, and some
construction programs, require annual authorizing legislation.
Provision of budget authority is usually a separate, subsequent
action. Generally, budget authority becomes available each year
only as voted by the Congress in appropriation acts. However, in a
number of cases the Congress has voted permanent budget authority, under which funds become available annually without further
Congressional action. Many trust fund appropriations are permanent, as are a number of Federal fund appropriations, such as the
appropriation to pay interest on the public debt.
Congressional review of the budget begins when the President
transmits his budget estimates to the Congress within 15 days after
the start of each new session in January, as required by law.
Under the procedures established by the Congressional Budget Act
of 1974, the Congress considers budget totals before completing
action on individual appropriations. The act requires each standing
committee of the Congress to report on budget estimates to the
House and Senate Budget Committees by March 15. It also requires
the Congressional Budget Office to submit a fiscal policy report to
the two budget committees. The Congress adopts the first concurrent budget resolution to guide the Congress in its subsequent
consideration of appropriations and revenue measures. The first
budget resolution, which is scheduled to be adopted by May 15, sets
targets for total receipts and for budget authority and outlays, in
total and by functional category.
Congressional consideration of requests for appropriations and
for changes in revenue laws occurs first in the House of Representatives. The Appropriations Committee, through its subcommittees, studies the proposals for appropriations and examines in
detail each agency's performance. The Ways and Means Committee
reviews proposed revenue measures. Each committee then recommends the action to be taken by the House of Representatives.
When the appropriation and tax bills are approved by the House,
they are forwarded to the Senate, where a similar review process is
followed. In case of disagreement between the two Houses of the
Congress, a conference committee (consisting of Members of both
bodies) meets to resolve the differences. The report of the conference committee is returned to both Houses for approval. When the
measure is agreed to, first in the House and then in the Senate, it
is ready to be transmitted to the President as an enrolled bill, for
his approval or veto.

THE BUDGET SYSTEM AND CONCEPTS

7-5

After action has been completed on all or most money bills, the
Congress adopts a second concurrent budget resolution containing
a budget ceiling on total budget authority and outlays, and a floor
on budget receipts. This resolution, which is scheduled to be adopted by September 15, may retain or revise any of the levels set
earlier in the year.
A budget resolution may include a reconciliation directive that
requires various committees of the Congress to reduce budget authority or increase revenues by specified amounts and to report
changes in legislation needed to achieve the dollar targets in the
reconciliation directive. The legislative changes reported by the
individual committees are then compiled into an omnibus reconciliation bill. For the past two years, the Congress has enacted omnibus reconciliation acts in response to directives in budget resolutions.
After completing action on the second budget resolution, the
Congress may not consider any spending or revenue legislation
that would breach the totals specified in this resolution. The Congress may, however, adopt a new budget resolution changing the
levels set by the second resolution.
If action on appropriations is not completed by the beginning of
the fiscal year, the Congress enacts a continuing resolution to
provide authority for the affected agencies to continue operations
up to a specified date or until their regular appropriations are
enacted.
Budget execution and control.—Once approved, the President's
budget, as modified by the Congress, becomes the basis for the
financial plan for the operations of each agency during the fiscal
year. Under the law, most budget authority and other budgetary
resources are made available to the agencies of the executive
branch through an apportionment system. The Director of OMB
apportions (distributes) appropriations and other budgetary resources to each agency by time periods or by activities. The objective of the apportionment system is to ensure the effective and
orderly use of available resources and to preclude the need for
additional appropriations.
Nonetheless, changes in laws or other factors may indicate the
need for additional appropriations during the year, and supplemental requests may have to be sent to the Congress. On the other
hand, reserves may be established under the Antideficiency Act to
provide for contingencies or to effect savings made possible by
changes in requirements or greater efficiency of operations.
Amounts may also be withheld from obligation for policy or other
reasons. The Impoundment Control Act of 1974 provides that the
executive branch, in regulating the rate of spending, must report to
the Congress any deferrals or proposed rescissions of budget au-

7-6

THE BUDGET FOR FISCAL YEAR 1983

thority, that is, any effort through administrative action to postpone or eliminate spending authorized by law.
Review and audit—This is the final phase in the budget process.
The individual agencies are responsible for assuring—through their
own review and control systems—that the obligations they incur
and the resulting outlays follow the provisions of the authorizing
legislation and appropriations, as well as other laws and regulations relating to the obligation and expenditure of funds. Agencies
are assisted in this responsibility by their audit staffs. Audit activities of major departments and agencies are directed by statutory
Inspectors General, appointed by the President. OMB reviews program and financial reports and keeps abreast of agency programs
to help assure that program objectives are attained.
In addition, the General Accounting Office (GAO), as an agent of
the Congress, regularly audits, examines, and evaluates Government programs. Its findings and recommendations are made to the
Congress, to OMB, and to the agencies concerned. The GAO also
monitors the executive branch's reports to the Congress on deferrals and proposed rescissions.
COVERAGE OF THE BUDGET TOTALS

Agencies and programs.—The budget totals cover agencies and
programs (including Government corporations) no matter how
funded, except for the following off-budget Federal entities:
Rural electrification and telephone revolving fund
Rural Telephone Bank
Board of Governors of the Federal Reserve System
Postal Service fund
United States Railway Association 1
Federal Financing Bank
Synthetic Fuels Corporation2
Strategic Petroleum Reserve3
The off-budget Federal entities listed above are discussed in Part
6 of the Budget. Schedules and financial statements are presented
in Part IV of the Budget Appendix. Except for the Federal Reserve
Board, these data are also presented in selected tables throughout
the budget documents.
1
Amounts made available for investments in Conrail securities, which comprise almost all of the Association's
activity after 1977, are included in the budget totals.
2
Budget authority and outlays for the Corporation are not included in the budget totals. However, cash
requirements of the Corporation are met by borrowing from the Secretary of the Treasury. Such borrowing is
financed by appropriations to the Secretary, and thus is reflected as budget authority and outlays within the
budget totals.
3
Budget authority and outlays for the acquisition of petroleum for the Reserve are not included in the budget
totals after 1981.

THE BUDGET SYSTEM AND CONCEPTS

7-7

The budget totals do not include transactions of privately owned,
Government-sponsored enterprises, such as the Federal land banks
and Federal home loan banks. However, privately owned Government-sponsored enterprises are discussed in Part 6 of the Budget,
and financial statements are presented in Part VI of the Budget
Appendix.
Functional classification.*—The functional classification arrays
budgetary data according to the major purpose served by the unit
being classified. In accordance with the Congressional Budget Act
of 1974, the Congress must pass resolutions establishing budget
targets by these functional categories.
The following criteria are used in establishing and in assigning
activities to functional categories:
• A function must have a common end or ultimate purpose
addressed to an important national need. (The emphasis is on
what the Federal Government seeks to accomplish rather
than the means of accomplishment, what is purchased, or the
clientele or geographic area served.)
• A function must be of continuing national importance and the
amounts attributable must be significant.
• Each basic unit of classification (generally the appropriation
or fund account) is classified into the single best or predominant purpose and assigned to only one subfunction. However,
when an account is large and serves more than one major
purpose, it may be subdivided into two or more subfunctions.
• Activities and programs are normally classified by common
purpose (or function) regardless of which agencies conduct the
activities.
National needs presentation.—Section 601 of the Congressional
Budget Act of 1974 requires that the budget for each fiscal year
shall contain a presentation of budget authority, proposed budget
authority, outlays, proposed outlays, and descriptive information in
terms of—
(1) a detailed structure of national needs, which shall be used
to reference all agency missions and programs;
(2) agency missions; and
(3) basic programs.
To meet the requirement of law for a national needs presentation, the budget functional classification was refined to focus more
sharply on end purposes and accomplishments. Further refinements in the classification are made as circumstances warrant.
Each major function is described in the context of national needs

A discussion of this subject is also found in Part 5 of this volume.

7-8

THE BUDGET FOR FISCAL YEAR 1983

being served, and subfunctions are described in the context of
major missions devoted to serving national needs.
In the national needs presentation, Federal programs are discussed in terms of national needs and the functional classification.
In this context, a single program may be identified as serving
several national needs even though classified in a single function.
For example, medicare, primarily a health program, is identified as
meeting the national need for improved health care. However, it
also provides a form of income security by paying for medical bills
and, hence, also can be identified as meeting the national need for
income security. A discussion of Federal programs based solely on
the functional classification system would have been limited to
discussing each program in only one category.
The national needs presentation can be found in Part 5 ("Meeting National Needs: the Federal Program by Function").
Types of funds.—Agency activities are financed through Federal
funds and through trust funds, both of which are included in the
budget.
Federal funds are of several types. The general fund is credited
with receipts not earmarked by law for a specific purpose and with
the proceeds of general borrowing. It is charged with payments
from appropriations. Special funds contain Federal receipts earmarked for specific purposes, other than for carrying out a cycle of
operations. Public enterprise (revolving) funds finance a cycle of
business-type operations in which outlays generate collections, primarily from the public. Intragovernmental funds, including revolving, management, and consolidated working funds, finance operations within and between Government agencies and are credited
with collections from other Government accounts. Intragovernmental revolving funds are credited with collections earmarked by law
to carry out a cycle of business-type operations within and between
Government agencies.
Trust funds are established to account for the receipt and expenditure of monies by the Government for carrying out specific
purposes and programs in accordance with the terms of a statute
or trust agreement. These monies are not available for the general
purposes of the Government. Within the category of trust funds,
there is a special subcategory of trust revolving funds, which are
credited with trust-type collections earmarked by law to carry out
a cycle of business-type operations.
Current expense and capital investment—The budget includes
spending for both current operating expenses and capital investment, such as the purchase of lands, structures, and equipment. It

THE BUDGET SYSTEM AND CONCEPTS

7-9

also includes capital investment in the form of lending and the
purchase of investments.5
BUDGET AUTHORITY AND RELATED TRANSACTIONS
Budget authority.—Government agencies—whether or not they
are included in the budget totals—are permitted to enter into
obligations requiring either immediate or future payment of money
only when they have been granted authority to do so by law. This
authority is usually provided as budget authority. In addition, collections specifically authorized to be credited to appropriation and
fund accounts, while not scored as budget authority, are also available for obligation.
Budget authority permits obligations to be incurred. The
amounts of budget authority requested are determined by the
nature of the programs or projects being financed.
For activities such as operations and maintenance, entitlement
programs, and continuing research programs, for which the cost
depends upon the program level planned for a fiscal year, the
amount of budget authority requested covers the obligations expected to be incurred during the year.
For most projects that are separate and distinct units, particularly direct Federal major procurement and construction projects,
"full funding" is requested. That is, funds are requested in sufficient amounts at the time the project is initiated to complete it,
regardless of the expected time of completion.
Budget authority usually takes the form of appropriations, which
permit obligations to be incurred and payments to be made. Some
budget authority is in the form of contract authority, which permits
obligations in advance of appropriations, but requires a subsequent
appropriation or the collection of receipts to liquidate (pay) these
obligations. There is also authority to borrow; such budget authority permits obligations to be incurred and liquidated by using funds
that are borrowed, generally from the Treasury.
It is not in order for either House of the Congress to consider any
bill, with certain exceptions, that provides new borrowing or contract authority unless that bill also provides that such new spending authority will be effective only to the extent or in such
amounts as provided in appropriations acts.
Most appropriations for current operations are made available
for obligation only during a specified fiscal year (annual appropriations). Some are for a specified longer period (multiple-year appropriations). Others, including most of those for construction, some
for research, and many trust fund appropriations, are made availa5
Additional information on these categories of outlays is provided in "Special Analysis D, Investment,
Operating and Other Budget Outlays," which is available from the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402.

7-10

THE BUDGET FOR FISCAL YEAR 1983

ble for obligation until the amount appropriated has been expended or until the objectives have been attained (no-year appropriations).
Budget authority can be made available by the Congress for
obligation and disbursement during a fiscal year from a succeeding
year's appropriation (advance funding). For many education programs, Congress provides forward funding—budget authority made
available for obligation in one fiscal year for the financing of
ongoing grant programs during the succeeding fiscal year. When
advantageous to the Federal Government, an appropriation is provided by the Congress for use in a fiscal year, or more, beyond the
fiscal year for which the appropriation act is passed (advance appropriations). Accounts in which budget authority is made available on these bases are listed in Part V of the Budget Appendix.
When budget authority is made available by the Congress for a
specific period of time, any part that is not obligated during that
period expires and cannot be used later. Congressional actions that
continue the availability of unobligated amounts that have expired
or would otherwise expire are known as reappropriations. The
amounts involved are counted as new budget authority in the fiscal
year of the legislation in which the reappropriation action is included, regardless of when the amounts were originally appropriated or when they would otherwise lapse.
A rescission is a legislative action that cancels new budget authority or balances of budget authority previously made available,
prior to the time the authority would otherwise have expired.
Rescissions are offset against new budget authority becoming available in arriving at the total of budget authority for each year. A
deferral is an executive branch action or inaction—including the
establishment of reserves under the Antideflciency Act—that
delays the obligation and expenditure of funds within the year that
the action is taken.
Most authority to obligate funds is enacted by the Congress
during or immediately preceding the fiscal year in which it becomes available (current authority). Most current authority is
granted year by year. Some budget authority in Federal funds and
most budget authority in trust funds becomes available from time
to time as the result of previously enacted legislation and does not
require current action by the Congress (permanent authority). Such
authority is presented as "current" in the year in which the legislation is enacted and "permanent" in succeeding years.
The amount of budget authority is usually stated specifically in
the legislation that makes it available (definite authority). In some
cases the legislation permits the amount to be determined by subsequent circumstances (indefinite authority). Examples of the latter
type are authority to borrow that is limited only to the amount of

THE BUDGET SYSTEM AND CONCEPTS

7-11

borrowing that may be outstanding at any time, the appropriation
for interest on the public debt, and the trust fund appropriation
equal to receipts under the Federal Insurance Contributions Act
(social security). Indefinite budget authority is recorded in the
amount of receipts collected or estimated to be collected each year
in the case of special and trust funds, and in the amount needed to
finance obligations incurred or estimated to be incurred in the case
of certain appropriations, contract authority, and authority to
borrow.
Obligations incurred.— Following the enactment of budget authority and the completion of required apportionment action, obligations are incurred by Government agencies. Such obligations
include the current liabilities for salaries and wages and interest;
agreements to make loans; contracts for the purchase of supplies
and equipment, construction and the acquisition of land, and other
arrangements requiring the payment of money.
Outlays.—Obligations generally are liquidated by the issuance of
checks or the disbursement of cash; such payments are called
outlays. In lieu of issuing checks, obligations may also be liquidated
(and outlays recorded) by the maturing of interest coupons in the
case of some bonds, or by the issuance of bonds, debentures, or
notes (or increases in the redemption value of bonds or debentures
outstanding). Payments for tax credits in excess of tax liabilities
are treated as outlays rather than as an adjustment to budget
receipts. Outlays during a fiscal year may be for payment of obligations incurred in prior years or in the same year. Outlays, therefore, flow in part from unexpended balances of prior year budget
authority and in part from budget authority provided for the year
in which the money is spent.6 Total budget outlays are stated net of
offsetting collections and exclude outlays of off-budget Federal entities.
Balances of authority.—Not all budget authority enacted for a
fiscal year is obligated and paid out in the same year. In multipleyear or no-year accounts, budget authority that is still available for
obligation (unobligated balances) may be carried forward for obligation in the following year. The obligated balance is that portion of
the budget authority that has been obligated but not yet liquidated
(paid). For example, in the case of salaries and wages, 1 to 3 weeks
elapse between the time of obligation and the time of payment. In
the case of major procurement and construction, several years may

6
This process is depicted on the chart, "Relation of Budget Authority to Outlays—1983 Budget," in Part 6 of
this volume.

7-12

THE BUDGET FOR FISCAL YEAR 1983

elapse. Obligated balances of budget authority are carried forward
until the obligations are subsequently paid.7
Therefore, a change in the amount of budget authority for a
given year does not necessarily result in a similar change in either
the obligations incurred or the budget outlays of that same year. A
change in budget authority in any one year may have an effect on
obligations for 2 or more years, and may affect budget outlays for
an even longer period.
Allocations between agencies.—In some cases, an agency may
share in the administration of a program for which appropriations
are made to another agency or to the President. This is made
possible by the establishment of allocations from the "parent" account, that is, the account to which the appropriation was made.
Obligations incurred under such allocations are included with the
parent account in the Budget (without separate identification) and
in the Budget Appendix (where the total obligations of each participating agency are identified separately under the parent account).
THE CREDIT BUDGET8

The credit budget is a presentation of direct loan obligations and
loan guarantee commitments that provides a framework for
making planning and policy decisions on the extent of Federal
credit. It also provides a means to analyze, evaluate, and control
Federal credit activity. Development of the credit budget is integrated thoroughly with the executive budget process. The credit
budget totals and limitations on credit activity proposed for enactment in appropriations language are transmitted to the Congress
as part of the President's budget.
Since initiation of the credit budget, Congress has voted nonbinding targets in the concurrent budget resolutions for total direct
loan obligations and total loan guarantee commitments. Actual
control of credit program levels, however, remains with authorizing
legislation and appropriations acts.
Concepts used in the credit budget—"The credit budget totals are
presented in two parts: total direct loan obligations and total loan
guarantee commitments. These totals are based on the following
concepts:
• All direct loan and loan guarantee activities of the Government are included. The credit budget makes no distinction
between on-budget and off-budget Federal entities;
7
Additional information on balances of budget authority is provided in a separate report. "Balances of Budget
Authority," which can be purchased from the National Technical Information Service shortly after the budget is
transmitted.
8
The credit budget is discussed further in Parts 5 and 6 of this volume. Credit schedules and proposed credit
limitations in appropriations language are presented in the Budget Appendix. Additional information is provided in "Special Analysis F, Federal Credit Programs," which is available from the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402.

THE BUDGET SYSTEM AND CONCEPTS

7-13

• The credit budget totals represent gross levels of credit activity, without offsets for repayments and other recoveries. By
excluding recoveries, the credit budget measures the current
level of program activity and enables control to be based on a
measure over which the Government has discretion—new extensions of credit;
• The credit budget is based on the amount of obligations incurred for direct loans and the amount of commitments for
loan guarantees. Obligations for direct loans result from
agreements requiring the Government to disburse a loan immediately or at some future time. Commitments for loan
guarantees are agreements entered into by the Government
to guarantee a loan at such time as the borrower or lender
fulfills stipulated preconditions. Unlike direct loan obligations, loan guarantee commitments are excluded from the
President's budget totals. They create Government liabilities
of a contingent nature that result in obligations and outlays
only in the event of a borrower default. Direct loan obligations and loan guarantee commitments represent points at
which the Government legally becomes bound to extend
credit;
• The amount of loan guarantees presented in the budget is
calculated on the basis of the full principal amount of the
loan involved, even though the loan guarantee may extend to
only a portion of the principal. This is done in order to
represent the full amount of credit allocated to a particular
purpose through a Federal lending program.
Limits on Federal credit programs.—Separate limitations on the
amount of new direct loan obligations and commitments for loan
guarantees are proposed for enactment in the appropriations language for the accounts that support credit activities. These limitations, if enacted, place annual ceilings on credit programs that, in
most cases, are otherwise relatively unlimited.
Appropriation bill limitations are proposed for about two-thirds
of the credit budget totals. The exemptions are primarily for entitlements, emergency or disaster, and insurance programs. These
programs can be controlled, however, through changes in authorizing legislation.
COLLECTIONS

In general.—Amounts collected are classified into two major categories:
• Budget receipts, which are compared with budget outlays in
calculating the budget surplus or deficit.

7-14

THE BUDGET FOR FISCAL YEAR 1983

• Offsetting collections, which are deducted from gross disbursements in calculating budget outlays.
Budget receipts.—These are collections from the public that
result from the exercise of the Government's sovereign or governmental powers. These collections, also called governmental receipts,
consist primarily of tax receipts (including social insurance taxes),
but also include receipts from court fines, certain licenses, and
deposits of earnings by the Federal Reserve System. Gifts and
contributions (as distinguished from payments for services or costsharing deposits by State and local governments) are also counted
as budget receipts.
Offsetting collections.—These are collections from other Government accounts or the public that are of a business-type or marketoriented nature. They are classified into two major categories: offsetting collections credited to appropriation or fund accounts and
offsetting receipts (that is, amounts deposited in receipt accounts).
In general, the distinction between these two major categories is
that collections credited to appropriation or fund accounts can be
used without further appropriation action by the Congress, whereas funds in receipt accounts cannot be used without being appropriated.
Offsetting collections credited to appropriation or fund accounts
occur in two circumstances:
• Reimbursements.—When authorized by law, amounts collected
in advance or after materials or services are furnished (for
example, advances received from the public to pay expenses of
providing information under the Freedom of Information Act)
are treated as reimbursements to appropriations. These collections are netted against obligations in determining outlays
from such appropriations.
• Revolving funds.—-In the three types of revolving fundspublic enterprise, intragovernmental, and trust revolving—
collections are netted against obligations, and outlays are
netted accordingly.
Offsetting receipts, generally, are deducted from budget authority
and outlays by function or subfunction and by agency. Offsetting
receipts are subdivided into two categories, as follows:
• Proprietary receipts from the public.—These are collections
from the public—deposited in receipt accounts of the general
fund, special funds, or trust funds—that arise out of the business-type or market-oriented activities of the Government (for
example, loan repayments, interest, sale of property and products, charges for nonregulatory services, and rents and royalties). Such collections are not counted as budget receipts but,
rather, are offset against budget authority and outlays by

THE BUDGET SYSTEM AND CONCEPTS

7-15

agency and by function. There are two exceptions to this rule.
Receipts from rents and royalties from Outer Continental
Shelf lands and additional receipts from Federal surplus real
property disposition are deducted from total budget authority
and outlays for the Government as a whole rather than from
any single agency or function.
• Intragovernmental transactions.—These are payments into receipt accounts from governmental appropriation or fund accounts. They are treated as offsets to budget authority and
outlays, rather than as budget receipts. Intragovernmental
transactions may be intrabudgetary (where the payment and
receipt both occur within the budgetary universe) or result
from receipts from off-budget Federal entities in those cases
where the payment is made by a Federal entity whose budget
authority and outlays are excluded from the budget totals.
Normally, intragovernmental transactions are deducted from
both the outlays and the budget authority for the agency
receiving the payment. However, in two cases intragovernmental transactions are not deducted from the figures of any
agency or function. Intragovernmental transactions that involve agencies' payments (including payments by off-budget
Federal entities) as employers into employee retirement trust
funds or agencies' payments of interest to nonrevolving trust
funds appear as special deduct lines in computing total
budget authority and outlays for the Government.
Intrabudgetary transactions are subdivided into three categories: (1) interfund transactions, where the payment is from
one fund group (either Federal funds or trust funds) to a
receipt account in the other fund group; (2) Federal intrafund
transactions, where the payment and receipt both occur
within the Federal fund group; and (3) trust intrafund transactions, where the payment and receipt both occur within the
trust fund group.
OTHER TRANSACTIONS

Borrowing and repayments.—Borrowing and debt repayments are
not treated as receipts or outlays. If they were, the budget could be
balanced simply by borrowing. This rule applies both to borrowing
in the form of public debt securities and to specialized borrowing in
the form of agency securities, including the sale of certificates
representing participation in a pool of loans. However, some sales
of participation certificates, which otherwise would be treated as
borrowing, are required by law to be treated as a sale of assets.
This results in the proceeds of such sales being credited to an
appropriation or fund account with a corresponding reduction in
outlays and in the requirement for new budget authority.

7-16

THE BUDGET FOR FISCAL YEAR 1983

Exercise of the monetary power.—Seigniorage is the profit from
coining money. It is the difference between the value of coins as
money and their cost of production. Seigniorage on coins arises
from the exercise of the Government's monetary powers and differs
from receipts coming from the public, since there is no corresponding payment by another party. Therefore, seigniorage is excluded
from receipts and treated as a means of financing a deficit or as a
supplementary amount to be applied to reduce debt or to increase
the cash in the Treasury in a year with a surplus. The increment
(profit) resulting from the sale of gold as a monetary asset is
treated like seigniorage, since the value of gold is determined by its
value as a monetary asset rather than as a commodity.
Liabilities in deposit fund accounts.—Certain accounts outside
the budget, known as deposit funds, are established to record
amounts held in suspense temporarily (for example, proceeds from
mineral leases on the Outer Continental Shelf to which title is in
dispute) or held by the Government as agent for others (for example, State and local income taxes withheld from Federal employees'
salaries and payroll deductions for the purchase of savings bonds
by civilian employees of the Government). Such transactions affect
Treasury's cash balances even though they are not a part of the
budget. To the extent that deposit fund balances are not invested,
changes in the accounts are treated as a means of financing.
Exchange of cash.—The Government's deposits with the International Monetary Fund are considered to be similar to cash assets.
Therefore, the movement of money between the IMF and the Department of the Treasury is not considered in itself a receipt or an
outlay, borrowing or lending. In a similar manner, the holdings of
foreign currency by the Exchange Stabilization Fund are considered to be cash assets. Changes in these holdings are outlays only
to the extent there is a realized loss and offsetting collections only
to the extent there is a realized profit on the exchange.
BASIS FOR BUDGET FIGURES

In general—Outlays usually are stated in terms of checks issued,
including cash paid in lieu of checks, net of offsetting collections
received. The accrual basis is used generally for interest on the
public debt held by private investors; however, interest on the
public debt held by trust and other Government accounts is stated
on a cash basis. When debt securities are issued at a discount (or at
a premium), the difference between the sales price and the redemption value is treated as interest and is accrued evenly over time in
the account that issued the securities.
This budget incorporates the President's proposal that the Departments of Energy and Education be dismantled. Budget data for

THE BUDGET SYSTEM AND CONCEPTS

7-17

these departments are included in the successor agencies for all
three years. Appropriate information is presented in the Budget
Appendix to identify the predecessor accounts.
Data for 1981.—The 1981 column of this budget generally presents the actual transactions and balances as recorded in agency
accounts and as summarized in the central financial reports prepared by the Department of the Treasury.
Data for 1982.—Most of the regular appropriations acts for 1982
have been enacted. However, funding for activities covered by
three appropriations bills (Labor, Health and Human Services, and
Education and related agencies; Commerce, Justice, and State, the
Judiciary, and related agencies; and Treasury, Postal Service and
General Government) was provided in a continuing resolution that
is effective through March 31, 1982. Supplemental appropriations
are proposed in the 1983 budget for pay raises involving the Legislative Branch, the Judiciary, and the International Trade Commission and for additional amounts requested to meet previously unforeseen program costs throughout the Government. To the extent
that supplemental appropriations for pay raises in 1982 will be
needed for Executive Branch agencies, requests will be submitted
to the Congress after transmittal of the budget.
Where the word "enacted" is used with reference to 1982, as in
tables 1 and 5 of Part 9 of the Budget, the amount generally
represents budget authority already voted by the Congress. However, for the budget accounts covered by the 1982 continuing resolution, the amount is based on the full year effect of appropriations
available under the continuing resolution. In the case of indefinite
appropriations, the enacted sums include the amounts likely to be
required. Where the word "estimate" is used, the amounts include
enacted budget authority and requested supplemental.
Data for 1983.—This budget includes complete estimates for
1983. Part I of the Budget Appendix generally includes the proposed appropriation language for the various items identified in
the budget. In some instances, estimates are included in the budget
schedules without appropriation language for 1982 and 1983. For
these, proposed legislation may be required or the estimated
amounts will be requested later when the requirements are known.
In certain tables of the budget, the items for later transmittal and
the related outlays are separately identified. Estimates of the total
requirements for 1982 and 1983 include both the amounts formally
requested and the amounts planned for later transmittal.
Data for 1984 through 1987.—To place emphasis on longer term

objectives and plans consistent with the multi-year budget planning system, this budget presents estimates through 1987. These

7-18

THE BUDGET FOR FISCAL YEAR 1983

data often reflect specific Presidential policy determinations and
are shown in a number of budget tables.
Allowances.—Lump sum allowances are included in the tables to
cover expected additional changes, such as civilian pay increases,
and for expected additional reductions associated with management improvements.
The allowance for civilian agency pay raises includes an estimate
of the additional amounts that will be required for pay raises that
are effective in 1982 for which specific requests will be made later
and for pay raises anticipated in 1983 and the years beyond for
employees of civilian agencies of the Government. Separate allowances for pay raises are shown for the military and civilian employees of the Department of Defense and for the military employees of the Coast Guard and are included in the figures of the
Departments of Defense and Transportation, respectively. These
increases are not reflected in the various program appropriation
requests since the detailed amounts have not yet been determined.
An allowance for relatively uncontrollable programs is shown
separately, as required by the Congressional Budget Act. The estimates for such programs are zero because the probability of net
decreases or net increases for such programs is believed to be
equal. Other allowances contain estimates of expected additional
savings from further elimination of fraud, waste, abuse; for undistributed anticipated debt collections; and, in fiscal years 1985
through 1987, for further reductions in Federal employment. Allowances are also shown for the Department of Defense.
Budget authority and outlays included in the allowance-section
are never appropriated as undistributed allowances, but rather
indicate the estimated budget authority and outlays that may be
requested.

PART 8

THE FEDERAL PROGRAM
BY AGENCY AND ACCOUNT

8-1
360-000 0 - 82 - 2H

EXPLANATORY NOTE
This tabulation contains information on budget authority
(BA) and outlays (O) for each appropriation and fund account.
The budget authority in this tabulation takes account of certain transfers between appropriations. All budget authority
items are definite appropriations except where otherwise indicated. Also, budget authority and outlay data for off-budget
Federal entities are presented at the end of this table. Within
the Federal Financing Bank (FFB) presentation, there is a
distribution of its budget authority and outlays to the accounts
in the various agencies that are provided credit services by the
FFB.
Functional code numbers are shown for each account as a
cross reference to tables 12 and 13, where the figures are
summarized by functional classification. Types of funds in the
budget and the deduct entries at the end of each chapter of
this tabulation are explained in Part 7.
Congressional action in the appropriation process occassionally takes the form of a limitation on the use of a trust fund or
other fund, or of an appropriation to liquidate contract authority. Amounts for such items, which do not affect budget authority, are included here in parentheses and identified in the
stub column, but are not included in the totals.
8-2

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-3

BUDGET ACCOUNTS LISTING (in thousands of dollars)
1982
estimate

1981
actual

Account and functional code

1983
estimate

Legislative Branch
Senate

Federal funds
General and Special Funds:

Compensation of Members, Senate
801
Appropriation, current
Appropriation, permanent, indefinite
Outlays
Mileage of the Vice President and Senators
801
Appropriation, current
Outlays
Expense allowances of the Vice President, President
Pro Tempore, Majority and Minority Leaders and
Majority and Minority Whips
801
Appropriation, current
Outlays
Salaries, officers and employees
801
Appropriation, current
Outlays
Office of the Legislative Counsel of the Senate
Appropriation, current

801

Outlays
Office of Senate Legal Counsel
Appropriation, current

801

Outlays
Expense allowance for the Secretary of the Senate,
Sergeant at Arms, and Doorkeeper of the Senate
and secretaries for the majority and
801
Appropriation, current
Outlays
Senate procedure
801
Appropriation, current
Outlays
Senate policy committees
801
Appropriation, current
Outlays
Automobiles and maintenance
Appropriation, current
Outlays
Inquiries and investigations
Appropriation, current
Outlays
Folding documents
Appropriation, current

BA
BA
0

6,703

6,932

6,789

6,932

8,431
8,431
*60
60

BA
0

19
33

45
45

112,159

145,823

123,076

131,785
D
8,771
140,556
1,021
^66
1,087

1,255

495
13
508

525

922

804

355

323

BA
O

8
8

BA
0

5
5

145,823

1,255

525

1,773

1,268

1,524
D
80
1,604

BA
0

57
49

75
75

23,351

33,622

41,225
1,975
43,200

128

109

134

1,036

1,773

801

801
D

801

47,524
47,524
134

Outlays
See footnotes at end of table.

134

8-4

THE BUDGET FOR FISCAL YEAR 1983
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1983
estimate

1982
estimate

1981
actual

Account and functional code

Legislative Branch—Con.
Senate—Con.
Miscellaneous items
Appropriation, current

801

Outlays..
Postage stamps
Appropriation, current
Outlays
Stationery (revolving fund)
Appropriation, current
Outlays
Congressional use of foreign currency, Senate
Appropriation, permanent
Outlays

15,204

32,561

39,543

28,720

32,561

39,543

BA
0

5
7

9
9

11
11

BA
0

142
121

43
43

51
51

BA
0

300 ..
342 ..

227,420
227,420

245,279
245,279

801
801
801

Public Enterprise Funds:

Senate restaurant fund (revolving fund)
Outlays
Recording studio (revolving fund)
Outlays
Senate barber shops (revolving fund)
Outlays

801
0

-301 ..

801
0

513

- 8 ..

801

Total Federal funds Senate

BA
0

160,310
195,467

BA
0

121
121

BA
0

29,254
28,886

29,382
28,207

BA
0

210

210
201

House of Representatives
Federal funds
General and Special Funds:

Payments to widows and heirs of deceased members
of Congress
801
Appropriation, current
Outlays
Compensation of Members, House of Representatives
801
Appropriation, current
Outlays
Mileage of Members
801
Appropriation, current
Outlays
House leadership offices
801
Appropriation, current

201

2,564
D
141
2,597

2,562
Outlays
Salaries, officers and employees
Appropriation, current

0
801

2,225
BA
35,146

Outlays
Committee employees
Appropriation, current..

0
801

29,225
Outlays
See footnotes at end of table.

0
28,112

2,726
2,617

36,165
D
1,651
36,369

34,228
BA

210

41,959
40,281

29,225
1,955
30,011

32,035
30,754

8-5

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Legislative Branch—Con.
House of Representatives—Con.
Committee on Appropriations (Studies and Investigations)
801
Appropriation, current
BA
Outlays
Committee on the Budget (Studies)
Appropriation, current
Outlays
Office of the Legislative Counsel
Appropriation, current

3,669

3,685

3,750

2,924

3,554

3,600

BA
0

245
196

218
209

276
265

2,202

2,390 ..

1,863

2,431 ..

801
801

Outlays
Office of the Law Revision Counsel
Appropriation, current

801

Outlays
Members' clerk hire
Appropriation, current

801

Outlays
Allowances and expenses
Appropriation, current

801

521

525

478

533

138,348

143,953

135,451

138,813
D
4,902
138,162

77,977

81,866

73,312

78,856
^ 5,987
c
1,279
76,981
A
5,987

324

41,500

Outlays
0
Compensation of Members and related administrative
expenses
801
Appropriation, permanent, indefinite
BA
Outlays
0
Congressional use of foreign currency, House of Representatives
801
Appropriation, permanent
BA
Outlays
0

38,651

41,761
D
374
40,464

Outlays..
Stationery (revolving fund)
Outlays
Special and select committees
Appropriation, current

801

House of Representatives restaurant fund (revolving
fund)
801
Outlays
0
Recording studio (revolving fund)
801
Outlays
0
Beauty shop (revolving fund)
801
Outlays
0
House barber shops (revolving fund)
801
Outlays
0

78,591

801
43,600
41,856
29,432
29 432
1,900
1,492

1,900
1,900

-514

124

Public Enterprise Funds:

See footnotes at end of table.

138,195

583

149 ...

23 ...

-58

59 ...

1,900
1,900

8-6

THE BUDGET FOR FISCAL YEAR 1983

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Legislative Branch—Con.
House of Representatives—Con.
Office of the attending physician (revolving fund)
801
Outlays

Total Federal funds House of Representatives

BA
0

362,880
347,721

382,165
367,959

381,707
367,692

2,207

2,375

2,075

2,250
*55
2,305

BA
0

760
692

816
816

951
951

BA
0

6
6

2,759

3,405

2,434

2,967
^84
D
169
3,017
A
U

Joint Items
Federal funds
General and Special Funds:
Joint Economic Committee
Appropriation, current
Outlays
Joint Committee on Printing
Appropriation, current
Outlays
Statements of appropriations, Senate
Appropriation, current
Outlays
Joint Committee on Taxation
Appropriation, current

801

Outlays
Office of the Attending Physician
Appropriation, current
Outlays
General expenses, Capitol police
Appropriation, current
Outlays
Capitol Police Board
Appropriation, current
Outlays
Education of pages
Appropriation, current

2,375

801

3,269

801
BA
0

504
442

603
579

633
608

BA
0

834
699

887
852

945
907

BA
0

915
470

628
302

327

245

244

271

801

801
D

Outlays
Official mail costs
801
Appropriation, current
Outlays
Capitol Guide Service
801
Appropriation, current
Outlays
Statements of appropriations, House of Representatives
801
Appropriation, current
Outlays
Total Federal funds Joint Items

See footnotes at end of table.

291

246

260

BA
0

52,033
43,433

75,095
72,091

55,196
52,988

BA
0

731
628

734
734

BA
0

7
7

BA
0

61,001
51,164

84,556
81,039

64,523
62,432

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-7

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Legislative Branch—Con.
Congressional Budget Office
Federal funds
General and Special Funds:

Salaries and expenses
Appropriation, current

801

Outlays

12,519

12,289

BA
0

12,868
D
408
13,100

16,352

3,327

3,760
C
27

4,540

3,376

3,934

4,465

BA
0

210
338

210
419

210
210

7,462

11,814

7,875

10,100
C
179
D
51
9,859

2,264

2,430

5,608

15,941

Architect of the Capitol
Federal funds
General and Special Funds:

Office of the Architect of the Capitol: Salaries
Appropriation, current
Outlays
Contingent expenses
Appropriation, current
Outlays
Capitol buildings
Appropriation, current
Outlays
Capitol grounds
Appropriation, current

801

801
.

801

12,331

801
D

Outlays
0
West central front of the Capitol
801
Outlays
0
Master plan for future development of the Capitol
grounds and related areas
801
Outlays
0
Acquisition of property as an addition to the Capitol
grounds
801
Appropriation, current
BA
Outlays
Senate office buildings
Appropriation, current

2,353

Z
2,595

123

11,500

12,785

Construction of an extension to the New Senate Office
Building
801
Outlays
0
Acquisition of property as a site for parking facilities
for the United States Senate
801
Outlays
0

41,218

4,500
11,497
4,000

500

801
11,881

See footnotes at end of table.

Outlays

5,625

14,851
11,500
C
374
16,269
^ 5,000

29,273
5

25,383
22,085
6,500

9,489

THE BUDGET FOR FISCAL YEAR 1983
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1982
estimate

1981
actual

Account and functional code

1983
estimate

Legislative Branch—Con.
Architect of the Capitol—Con.
Senate garage
Appropriation, current
Outlays
House office buildings
Appropriation, current

801
BA
0

19,899
C
568
21,069

20,814

104

16,602

18,451

0
0

18,606

17,748

Expansion of facilities, Capitol Power Plant
801
Outlays
0
Modifications and enlargement, Capitol Power
Plant
801
Outlays
0
Memorial to Hale Boggs
801
Appropriation, current
BA
Outlays
0
Alterations and improvements, buildings and grounds,
to provide facilities for the physically handicapped
801
Outlays
0
Structural and mechanical care, Library buildings and
grounds
801
Appropriation, current
BA
Outlays
0
Library of Congress James Madison Memorial Building
801
Outlays
0
Total Federal funds Architect of the Capitol

104

801

Outlays
Acquisition of property, construction, and equipment,
additional House Office Building
801
Outlays
Installation of solar collectors in House office buildings
801
Outlays
Capitol Power Plant
801
Appropriation, current
Outlays..

99
3
105

104

...

1,388

...

20,916
1,500
c
106
21,550
A
1,500
A

122

1,338

4,680

154
4,675
4,373

BA
0

2,932
76,638
113,262

106,874

21,508

7
6

112

24,060
25,194

1,095

...

797
8,715
C
138
9,140

700
5,137
5,505

2,019
100,160
145,431

97,670
115,319

111,989
C
213
D
4,011
123,109

129,657

Library of Congress
Federal funds
General and Special Funds:

Salaries and expenses
Appropriation, currentOutlays
; footnotes at end of table.

103,469

128,993

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-9

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Legislative Branch—Con.
Library of Congress—Con.

376
BA

10,201

Outlays
0
Congressional Research Service: Salaries and expenses
801
Appropriation, current
BA

9,804

Outlays
0
Books for the blind and physically handicapped: Salaries and expenses
503
Appropriation, current
BA

29,689

9,123
D
630
9,728

15,515
15,464
37,109

29,627

30,000
1,605
31,543

32,891

33,221

35,478

36,723

10
^153

Outlays
0
Collection and distribution of library materials (special
foreign currency program)
503
Appropriation, current
BA
Outlays
Furniture and furnishings
Appropriation, current
Outlays
Payments to copyright owners
Appropriation, permanent, indefinite
Outlays
Oliver Wendell Holmes devise fund
Appropriation, permanent, indefinite
Outlays

31,523
3,479

32,382

2,798

4,405
^16
4,451

BA
0

1,686
6,341

1,089
3,097

33,472
4,438

1,563
1,850

4,908

503
376
BA
0

24,981
-2,672

23,000
80,000

23,000
23,000

BA
0

3
11

2
20

657

133

503

Intragovernmental Funds:

Consolidated working fund
Outlays
Trust funds
Gift and trust fund accounts
Appropriation, permanent, indefinite
Outlays
Total Federal funds Library of Congress

503
0
503

Total Trust funds Library of Congress

BA
0
BA
0

6,373
6,096
209,804
181,558

6,400
6,336
219,467
284,463

6,896
6,465
246,762
244,430

BA
0

6,373
6,096

6,400
6,336

6,896
6,465

BA
0

16,250
8,178

17,888
12,618

16,591
14,405

BA
0

82,400
58,514

84,843
71,982

90,247
81,480

Government Printing Office
Federal funds
General and Special Funds:

Printing and binding
Appropriation, current
Outlays
Congressional printing and binding
Appropriation, current
Outlays
See footnotes at end of table.

801
801

8-10

THE BUDGET FOR FISCAL YEAR 1983
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Legislative Branch—Con.
Government Printing Office—Con.
Office of Superintendent of Documents: Salaries and
expenses
806
Appropriation, current
BA
Outlays
0
Acquisition of site and general plans and designs of
buildings
806
Outlays
0
Project planning
806
Outlays
0

24,000
18,180

27,120
^303
25,423

28,889
28,084

4,600
41

Intragovernmental Funds:

Government Printing Office revolving fund
Outlays

806
0

-8,176

4,835

-327

122,650
76,696

130,154
119,499

135,727
123,642

220,602

255,014

209,033

229,300
^2,211
D
9,225
235,915
A
2,111

12,404
°381
12,756

15,083

Total Federal funds Government Printing Office... BA
0
General Accounting Office
Federal funds
General and Special Funds:

Salaries and expenses
Appropriation, current

801

Outlays

252,483
MOO

United States Tax Court

Federal funds
General and Special Funds:

Salaries and expenses
Appropriation, current

752

Outlays
Trust funds
Tax Court judges survivors annuity fund
Appropriation, permanent, indefinite
Outlays

11,094

10,856

15,013

602
BA
0

149
79

164
79

172
79

Commission on Security and Cooperation in Europe:
Salaries and expenses
801
Appropriation, current
BA
Outlays
0
Botanic Garden: Salaries and expenses
801
Appropriation, current
BA

450
336

404
550

550
580

1,644

2,311
C
56
2,165

Other Legislative Branch Agencies
Federal funds
General and Special Funds:

Outlays
See tootnotes at end of table.

1,620

1,827
1,997

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-11

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Legislative Branch—Con.
Other Legislative Branch Agencies—Con.

461

400

526

Outlays

436

*36
438
^59

525

Cost-Accounting Standards Board: Salaries and expenses
801
Outlays
0
Temporary Commission on Financial Oversight of the
District of Columbia-. Salaries and expenses
801
Outlays
0
Office of Technology Assessment: Salaries and expenses
801
Appropriation, current
BA
Outlays

168

1,649
11,183

14,100

4
2

13,738
15,739

15,535
15,584

16,803
17,202

4
2

1,251,236
1,213,785

1,426,254
1,505,277

1,474,920
1,459,533

11,530

Total Trust funds Other Legislative Branch Agencies
BA
0
Summary
Federal funds:
(As shown in detail above)
Deductions for offsetting receipts:
Intrafund transactions

BA
0
803 BA
Q
902

Proprietary receipts from the public

jjA
503 BA
n
801

Total Federal funds
Trust funds:
(As shown in detail above)
See footnotes at end of table.

-223
12,019
D
250
12,593

Trust funds
Office of Technology Assessment: Contributions and
donations
801
Appropriation, permanent, indefinite
BA
Outlays
0
Total Federal funds Other Legislative Branch
Agencies
BA
0

cnc

— 626
-1881
cc.
— 00/

Acn

— 450
-302
no
—ifO

{*A

-4,081

-4,050

BA
0

1,243,981
1,206,530

1,421,354
1,500,377

BA
0

6,524
6,175

6,568
6,417

13,900

ACn

— 450
-302
c con
—0,00V

-4,053
1,463,535
1,448,148
7,072
6,546

8-12

THE BUDGET FOR FISCAL YEAR 1983

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1982
estimate

1981
actual

Account and functional code

1983
estimate

Legislative Branch—Con.
Summary—Con.
Deductions for offsetting receipts:
Proprietary receipts from the public

503 BA
0
902 BA
0

-3,796

-4,478

-4,971

-88

-192

Total Trust funds

BA
0

2,640
2,291

1,898
1,747

1,969
1,383

Total Legislative Branch

BA
0

1,246,621
1,208,821

1,423,252
1,502,124

1,465,444
1,449,531

11,840

12,922

10,602

11,208
D
427
11,358

1,568

Outlays
0
Acquisition of property as an addition to the grounds
of the Supreme Court building
752
Appropriation, current
BA
Outlays
0

1,783

The Judiciary
Supreme Court of the United States
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current
Outlays
Care of the building and grounds
Appropriation, current

752

12,622

752

Total Federal funds Supreme Court of the United
States
BA
0

1,654
C
32
2,550

2,017
2,027

645
645

...

14,053
12,385

13,321
14,553

14,939
14,649

1,911

2,660

1,703

1,950
D
58
2,000

5,150

5,730

5,035

5,200
D
166
5,351

Court of Customs and Patent Appeals
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current

752

Outlays

2,632

United States Court of International Trade
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current
Outlays
See footnotes at end of table.

752

5,717

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-13

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

The Judiciary—Con.
Court of Claims

Federal funds
General and Special Funds:

Salaries and expenses
Appropriation, current

752

Outlays..

5,793

5,463

56,000

5,900
D
270
6,130

8,106

59,400
2,850
62,253

63,500

263,400
12,900
272,766

297,100

26,500
2,350
^670
28,703
A
1,693

34,180

36,000
41,141

43,500
44,257

48,000
47,729

41,827
41,045

55,600
53,722

70,400
68,559

24,551
24,403

1,272

7,987

Courts of Appeals, District Courts, and
other Judicial Services
Federal funds
General and Special Funds:

Salaries of judges
Appropriation, current..

752

Outlays
Salaries of supporting personnel
Appropriation, current

752

Outlays
Defender services
Appropriation, current

752

55,008

232,931

230,734

24,000

63,500

296,532

Outlays..

Fees of jurors and commissioners
752
Appropriation, current
BA
Outlays
0
Expenses of Operation and Maintenance of the
Courts
752
Appropriation, current
BA
Outlays
0
Salaries and expenses of magistrates
752
Appropriation, current
BA
Outlays
0
Bankruptcy courts, salaries and expenses
752
Appropriation, current
BA

27,481

68,294

68,350

81,200
3,500
83,820

BA
0

3,645
2,842

3,750
3,629

4,500
4,328

BA
0

105,500
97,538

123,000
120,631

158,100
153,325

1,821

1,240

Outlays
Services for drug dependent offenders
Appropriation, current
Outlays
Space and facilities
Appropriation, current
Outlays..
Furniture and furnishings
Outlays
Speedy trial planning
Outlays
Pretrial services agencies, The Judiciary
Outlays
See footnotes at end of table.

32,647
A
657

94,100
93,120

752
752
752
752
22
752
123

774

8-14

THE BUDGET FOR FISCAL YEAR 1983
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1982
estimate

1981
actual

Account and functional code

1983
estimate

The Judiciary—Con.
Courts of Appeals, District Courts, and
other Judicial Services—Con.

Special rail reorganization court
Outlays

752

Total Federal funds Courts of Appeals, District
Courts, and other Judicial Services

275

489

623

BA
0

592,748
590,783

678,620
675,249

769,880
761,020

17,150

20,000

25,500

16,319

20,311

24,978

17,766
17,163

20,750
20,311

25,500
24,978

9,222

8,598

7,742

7,600
^170
7,120

BA
0

10,696
1,823

10,631
2,646

10,355
1,975

BA
0

646,643
640,278

734,005
730,790

835,413
825,191

Administrative Office of the United States
Courts

Federal funds
General and Special Funds:

Salaries and expenses
Appropriation, current....
Outlays
Judicial survivors' annuity program
Appropriation, current
Outlays

752

BA
0

616
616

228

Intragovernmental Funds:

Consolidated working fund
Outlays

752

Total Federal funds Administrative Office of the
United States Courts
BA
0

Federal Judicial Center

Federal funds
General and Special Funds:

Salaries and expenses
Appropriation, current

752

Outlays

8,208

Bicentennial Expenses, The Judiciary

Federal funds
General and Special Funds:

Bicentennial activities
Outlays

806
..

Judiciary Trust Funds

Trust funds
Judicial survivors' annuities fund
Appropriation permanent indefinite
Outlays
Summary
Federal funds:
(As shown in detail above)
See footnotes at end of table.

602

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-15

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

The Judiciary—Con.
Summary—Con.

Deductions for offsetting receipts:
Proprietary receipts from the public

750 BA
902

Total Federal funds

f
BA
0

Trust funds:
(As shown in detail above)

BA
0

Interfund transactions

-3212

-3111

-265

-200

643,166
636,801

730,694
727,479

832,102
821,880

10,631
2,646

10,355
1,975

741,325
730,125

842,457
823,855

10,696
1,823

602 BA
0

, ...
-1'346

BA
0

652,516
637,278

Total The Judiciary

-3111

Executive Office of the President
Compensation of the President
Federal funds
General and Special Funds:

Compensation of the President
Appropriation, current
Outlays

802
BA
0

250
268

250
272

250
250

BA
0

21,278
20,810

18,877
18,877

22,164
22,164

BA
0

3,374
3,277

3,527
3,467

3,878
3,828

BA
0

168
236

178
212

281
254

The White House Office
Federal funds
General and Special Funds:

Salaries and expenses
Appropriation, current
Outlays

802

Executive Residence at the White House
Federal funds
General and Special Funds:

Operating expenses
Appropriation, current
Outlays

802

Official Residence of the Vice President
Federal funds
General and Special Funds:

Operating expenses
Appropriation, current
Outlays
See footnotes at end of table.

802

8-16

THE BUDGET FOR FISCAL YEAR 1983
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Executive Office of the President—Con.
Special Assistance to the President
Federal funds
General and Special Funds:

Salaries and expenses
Appropriation, current
Outlays

802
BA
0

1,591
1,477

1,385
1,434

1,483
1,394

BA
0

2,205
1,975

1,954
1,961

2,115
2,115

2,542
2,602

919
1,161

926
1,168

-3,508

1,551

Council of Economic Advisers
Federal funds
General and Special Funds:

Salaries and expenses
Appropriation, current
Outlays

802

Council on Environmental Quality and Office
of Environmental Quality
Federal funds
General and Special Funds:

Council on Environmental Quality and Office of Environmental Quality
802
Appropriation, current
BA
Outlays
0
Intragovernmental Funds:

Consolidated working fund
Outlays

802
0

Total Federal funds Council on Environmental
Quality and Office of Environmental Quality BA
0

2,542
-906

919
2,712

926
1,168

BA
0

5,302
6,161

478

BA
0

2,927
2,733

2,500
2,760

2,653
2,618

BA
0

3,839
3,268

3,356
3,442

3,976
3,994

Council on Wage and Price Stability
Federal funds
General and Special Funds:

Salaries and expenses
Appropriation, current
Outlays

802

Office of Policy Development
Federal funds
General and Special Funds:

Salaries and expenses
Appropriation, current
Outlays

802

National Security Council
Federal funds
General and Special Funds:

Salaries and expenses
Appropriation, current
Outlays
See footnotes at end of table.

802

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-17

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Executive Office of the President—Con.
Office of Administration

Federal funds
General and Special Funds:

Salaries and expenses
Appropriation, current
Outlays

802
BA
0

12,200
11,614

11,722
11,370

13,640
13,231

BA
0

33,484
32,635

32,079
31,694

36,109
34,136

BA
0

2,628
2,578

2,355
2,663

2,486
2,486

BA
0

36,112
35,213

34,434
34,357

38,595
36,622

34,434
34,357

38,595
36,622

Office of Management and Budget
Federal funds
General and Special Funds:

Salaries and expenses
802
Appropriation, current
Outlays
Office of Federal Procurement Policy: Salaries and
expenses
802
Appropriation, current
Outlays
Summary

Federal funds:
(As shown in detail above)
Deductions for offsetting receipts:
Proprietary receipts from the public

802 BA
0

Total Office of Management and Budget

BA
0

•

~yu

36,022
35,123

Office of Science and Technology Policy
Federal funds
General and Special Funds:

Salaries and expenses
Appropriation, current
Outlays

802
BA
0

2,063
1,632

1,578
1,578

9,360

9,000

8,329

8,585

-2

1,839
1,839

Office of the United States Trade
Representative
Federal funds
General and Special Funds:

Salaries and expenses
Appropriation, current

802

Outlays
Special Action Office for Drug Abuse
Prevention
Federal funds
General and Special Funds:

Salaries and expenses
Outlays
See footnotes at end of table.
360-000

0 - 8 2 - 2 5

554
16

* 10,100
9,542

8-18

THE BUDGET FOR FISCAL YEAR 1983

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1983
estimate

1982
estimate

Executive Office of :he
1 President—Con
Special Action Office for Drug Abuse
Prevention—Con.
Special fund for drug abuse
Outlays

554

Total Federal funds Special Action Office for
Drug Abuse Prevention

-360

103

-362

119

BA
0

103,211
95,725

89,680
91,624

101,900
99,019

BA
0

-90

BA
0

103,121
95,635

89,680
91,624

101,900
99,019

150,000
295,000

289,000

Summary
Federal funds:
(As shown in detail above)
Deductions for offsetting receipts:
Proprietary receipts from the public

802

Total Executive Office of the President

Funds Appropriated to the President
Appalachian Regional Development Programs
Federal funds
General and Special Funds:
Appalachian regional development programs
Appropriation, current
Outlays
Public Enterprise Funds:
Appalachian housing fund
Outlays

452
BA
0

299,300
336,779

452
0

Total Federal funds Appalachian Regional Development Programs

1,696

BA
0

299,300
336,795

150,000
296,696

289,000

BA
0

358,449
400,590

301,694
406,000

325,000
381,000

BA
0

802
-43

BA
0

358,449
400,590

301,694
406,000

325,000
381,000

Disaster Relief
Federal funds
General and Special Funds:
Disaster relief
Appropriation, current
Outlays

453

Trust funds
Bequests and gifts
Appropriation, permanent, indefinite
Outlays

453

Summary
Federal funds:
(As shown in detail above)
See footnotes at end of table.

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-19

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1983
estimate

1982
estimate

Funds Appropriated to the President—Con.
Disaster Relief—Con.
Deductions for offsetting receipts:
Proprietary receipts from the public

450 BA
0

902 BA
o
Total Federal funds

Trust funds:
(As shown in detail above)

Total Disaster Relief

•

-300

300

-22

BA
0

358,449
400,590

301,372
405,678

324,678
380,678

BA
0

802
-43

BA
0

359,251
400,547

301,456
405,678

324,770
380,678

BA
0

1,000
179

880
811

1,000
1,000

Unanticipated Needs
Federal funds
General and Special Funds:
Unanticipated needs
Appropriation current
Outlays

802

Expenses of Management Improvement
Federal funds
General and Special Funds:
Expenses of management improvement
Outlays

802

128

International Security Assistance
Federal funds
General and Special Funds:
Foreign military sales credit
Appropriation, current
Outlays
Economic support fund
Appropriation, current, indefinite

152
BA

500,000

750,000

506,855

755,000

2,095,500

2,564,000

BA
0

4,950

152

1,739,000
913,000
"2,886,000

Reappropriation
Outlays
Military assistance
Appropriation, current

2,306,925
176,512

110,200
Outlays
International military education and training
Appropriation, current

316,612

228,112

152

See footnotes at end of table.

"107,500
203,117

38,488

28,400
Outlays

2^682*825

2,052,679

152

39,715
22,422

"53,700
50,068

8-20

THE BUDGET FOR FISCAL YEAR 1983
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Funds Appropriated to the President—Con.

International Security Assistance—Con.
Peacekeeping operations
Appropriation, current, indefinite
Outlays
Military assistance, South Vietnamese Forces
Outlays
Assistance for relocation of facilities in Israel
Contract authority, permanent, indefinite
Outlays

152
BA

34,000

151,000

28,748

164,000

353

152

M3,474
53,500

152
BA
0

412,084

19,000
15,835

109,958

100,000

2,773,050
3,361,211

3,699,000
3,698,087

4,829,674
4,002,510

-218,220

-200,100

-157,800

-52,751

-74,500

-89,200

BA
0

2,502,079
3,090,240

3,424,400
3,423,487

4,582,674
3,755,510

BA
0

32,789
122,542

146,889
24,526

126,042
33,591

BA
0

520,000
489,713

700,000
742,000

945,000
828,000

BA
0

11,148

14,448
14,448

BA
0

251,547
278,634

221,230
256,822

284,100
269,254

BA
0

139,612
53,242

120,812
58,660

131,883
103,482

Public Enterprise Funds:

Guarantee reserve fund
Outlays

152

Summary

Federal funds:
(As shown in detail above)
Deductions for offsetting receipts:
Proprietary receipts from the public

BA
0
152 BA
0
902 BA
0

Total International Security Assistance
International Development Assistance
Multilateral Assistance

Federal funds
General and Special Funds:

Contribution to the International bank for reconstruction and development
151
Appropriation, current
Outlays
Contribution to the International development association
151
Appropriation, current
Outlays
Contribution to the International finance corporation
151
Appropriation, current
Outlays
Contribution to the Inter-American development
bank
151
Appropriation, current
Outlays
Contribution to the Asian development bank
151
Appropriation, current
Outlays
See footnotes at end of table.

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-21

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Funds Appropriated to the President—Con.
International Development Assistance—Con.
Contribution to the African development fund
Appropriation, current

151
BA

Outlays
Contribution to the African development bank 151
Appropriation, current
Payment to the International Fund for Agricultural
Development
151
Appropriation, current
Outlays
International organizations and programs
151
Appropriation, current
Outlays
Total Federal funds Multilateral Assistance

41,667

58,333

12,876

* 50,000
19,165

17,987

BA
0

9,783

30,000

65,400
40,000

BA
0

262,380
325,761

215,438
219,735

173,250
183,797

BA
0

1,265,982
1,290,823

1,477,150
1,359,067

1,775,675
1,477,289

Bilateral Assistance

Federal funds
General and Special Funds:

Functional development assistance program
Appropriation, current

151
BA
* 1,298,243

Outlays..
Sahel development program
Appropriation, current

1,105,922

91,000

-8,129
1,097,955
^ —270

1,190,208
^ —1,600

151
93,757
* 93,757
H

Outlays..

54,795

Payment to the Foreign Service retirement and disability fund
153
Appropriation, current
BA

27,852

-2,500
70,165
" -2,500

78,726

32,552
* 35,403
A

Outlays..

American schools and hospitals abroad
151
Appropriation, current
BA
Outlays
0
International disaster assistance
151
Appropriation, current
BA
Outlays
0
Operating expenses of the International Development
Cooperation Agency
151
Appropriation, current
BA
Outlays
See footnotes at end of table.

18,487

1,031
41,917
^ 1,031

35,403

20,000
23,667

20,000
20,152

7,500
17,591

87,250
56,670

27,000
47,115

25,000
43,400

300,578

331,000

278,012

338,966

* 376,000
366,814

8-22

THE BUDGET FOR FISCAL YEAR 1983
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Funds Appropriated to the President—Con.

International Development Assistance—Con.
Trade and development program
Appropriation, current

151
BA

6,907

2,881

10,500
6,528

Outlays
Peace Corps operating expenses
Appropriation, current
Outlays
Miscellaneous appropriations
Outlays

151
BA
0

105,531
99,028

105,000
104,844

97,500
97,500

12,770

9,092

5,000

3,472

7,132

3,000

3,611

2,126

1,977

-72,129

-73,705

-77,698

15,826

12,000

2,332

14,124

151

Public Enterprise Funds:

Development loans-revolving fund
Outlays
Housing and other credit guaranty programs
Outlays
Overseas Private Investment Corporation
Outlays..
Inter-American Foundation
Appropriation, current

151
151
151
151

Outlays

* 10,634
12,976

I ntra govern mental Funds:

Advance acquisition of property-revolving fund
151
Outlays..
0
Office of the Inspector General of Foreign Assistance
151
Outlays
0

683
-1

139

BA
0

2
2

20
20

BA
0

-96

250
343

210
210

15,000
15,000
1,913,773
1,681,164
15,270
15,363

15,000
15,000
1,954,537
1,779,825
15,210
15,210

3,390,923
3,040,231

3,730,212
3,257,114

Trust funds
Gifts and contributions, Inter-American Foundation
151
Appropriation, permanent, indefinite
Outlays
Peace Corps miscellaneous trust funds
Appropriation, permanent, indefinite
Outlays
Miscellaneous tmst funds
Appropriation, permanent, indefinite
Outlays

151
151
BA
0

Total Federal funds Bilateral Assistance

BA
0

Total Trust funds Bilateral Assistance

BA
0

238
4,230
1,832,925
1,587,319
240
4,136

BA
0

3,098,907
2,878,142

Summary

Federal funds:
(As shown in detail above)
Deductions for offsetting receipts:
Proprietary receipts from the public
See footnotes at end of table.

150 BA
0

912

-455

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-23

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Funds Appropriated to the President—Con.
International Development Assistance—Con.
151
902

Total Federal funds

Trust funds:
(As shown in detail above)
Deductions for offsetting receipts:
Proprietary receipts from the public

151

BA
0
BA
0

-305,897

-353,344

-406,616

-308,610

-334,385

-377,998

BA
0

2,485,312
2,264,547

2,702,739
2,352,047

2,945,143
2,472,045

BA
0

240
4,136

15,270
15,363

15,210
15,210

BA
0

-238

Total Trust funds

0
CD

Total International Development Assistance

-15,140

-15,100

2
3,898

130
223

110
110

2,485,314
2,268,445

2,702,869
2,352,270

2,945,253
2,472,155

International Commodity Agreements
Federal funds
General and Special Funds:
Contributions to international buffer stocks
Appropriation, current
Outlays

155

BA
0

88,000 ...
29,000

International Monetary Programs
Federal funds
General and Special Funds:
United States quota, IMF
Appropriation, current, indefinite
Outlays

155

BA
0

5,361,132
364,743

Military Sales Programs
Federal funds
Public Enterprise Funds:
Liquidation of foreign military sales fund
Outlays
Special defense acquisition fund
Outlays

155
0

-1,771

-1,690

-1,640

-288,500

-217,550

13,020,008
(9,454,211)
9,912,424

15,273,000
(10,827,000)
10,95i;000

15,819,000
(12,197,000)
12,446,000

-1,771

-290,190

-219,190

155
0

Trust funds
Foreign military sales trust fund
Contract authority, permanent, indefinite
Liquidation of contract authority, permanentOutlays

155
BA
0

Summary
Federal funds:
(As shown in detail above)
See footnotes at end of table.

8-24

THE BUDGET FOR FISCAL YEAR 1983

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Funds Appropriated to the President—Con.
Military Sales Programs—Con.
Trust funds:
(As shown in detail above)

BA
0

13,020,008
9,912,424

15,273,000
10,951,000

15,819,000
12,446,000

Deductions for offsetting receipts:
Proprietary receipts from the public

155

Total Trust funds

BA
BA

0
Total Military Sales Programs

_ ^ ^

_10f827,000

;

-12,197,000

3,565,797

4,446,000

458,213

124,000

3,622,000

249,000

3,565,797

4,446,000

3,622,000

456,442

-166,190

29,810

* 10,000
9,000

*7,700
8,200

Radio Broadcasting to Cuba
Federal funds
General and Special Funds:
Radio Broadcasting to Cuba
Appropriation, current
Outlays

154
BA
0

Petroleum Reserves
Federal funds
General and Special Funds:
Petroleum reserves:
(Energy supply)
(Outlays)

271
0

92,373

17,726

1,136

11,979,838
7,432,409

7,552,497
7,208,540

8,893,586
7,719,634

. „

4cc

Public Works Acceleration
Federal funds
General and Special Funds:
Public works acceleration
Outlays

452

Summary
Federal funds:
(As shown in detail above)
Deductions for offsetting receipts:
Proprietary receipts from the public

BA
0
150

q]p

151

-305,897

-353,344

-406,616

152

-218,220

-200,100

-157,800

450

QO9 RA
™L
Q
Total Federal funds

See footnotes at end of table.

BA
0

-300
-361,361
11,095,272
6,547,843

-408,907
6,589,391
6,245,434

-300
-467,220
7,861,195
6,687,243

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT
BUDGET ACCOUNTS LISTING

8-25

(in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Funds Appropriated to• the President—Con.
Summary—Con.
Trust funds:
(As shown in detail above)

BA
0

Deductions for offsetting receipts:.
Proprietary receipts from the public

151
155

Total Trust funds

BA
0
BA
0
BA

0
CO

Total Funds Appropriated to the President.

15,288,354
10,966,363

15,834,302
12,461,210

-238

-15,140

-15,100

-9,454,211

-10,827,000

-12,197,000

13,021,050
9,916,517

3,566,601
462,068

4,446,214
124,223

3,622,202
249,110

14,661,873
7,009,911

11,035,605
6,369,657

11,483,397
6,936,353

Department of Agriculture
Office of the Secretary
Federal funds
General and Special Funds:
Office of the Secretary
Appropriation, current
Outlays

352
BA
0

5,028
5,714

4,715
4,607

5,406
5,406

BA
0

13,541
14,742

14,468
14,034

13,647
13,647

Departmental Administration
Federal funds
General and Special Funds:
Departmental administration
Appropriation, current
Outlays
Intragovernmental Funds:
Working capital fund
Outlays

352

352
0

Total Federal funds Departmental Administration.

348

13,541

15,090

14,468
14,034

13,647
13,647

BA
0

8,881
7,523

8,628
8,628

7,752
7,752

BA
0

38,752
37,732

40,828
40,136

43,918
43,226

Office of Governmental and Public Affairs
Federal funds
General and Special Funds:
Governmental and Public Affairs
Appropriation, current
Outlays

352

Office of the Inspector General
Federal funds
General and Special Funds:
Office of the Inspector General
Appropriation, current
Outlays
See footnotes at end of table.

352

8-26

THE BUDGET FOR FISCAL YEAR 1983
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Agriculture—Con.
Office of the General Counsel
Federal funds
General and Special Funds:

Office of the General Counsel
Appropriation, current
Outlays..

352
BA
0

12,519
12,080

13,330
13,078

14,197
13,457

BA
0

426,831
407,394

425,678
430,028

468,548
453,515

BA
0

15,751

8,596
8,776

9,800

Trust funds
Miscellaneous contributed funds
352
Appropriation, permanent, indefinite
BA
Outlays
0
Total Federal funds Agricultural Research Service BA
0

2,447
1,384
426,831
423,145

2,000
1,560
434,274
438,804

2,000
1,820
468,548
463,315

Total Trust funds Agricultural Research Service... BA
0

2,447
1,384

2,000
1,560

2,000
1,820

Agricultural Research Service
Federal funds
General and Special Funds:

Agricultural Research Service
Appropriation, current
Outlays
Buildings and facilities
Appropriation, current
Outlays

352
352

Cooperative State Research Service
Federal funds
General and Special Funds:

Cooperative State Research Service
Appropriation, current
Outlays...

352
BA
0

200,897
198,992

303,769

301,288

221,216
226,581

232,103
228,583

315,702
-2,000
312,154
H
-1,800

311,911
308,472
^ —200

8,279
7,709

9,016
8,632

Extension Service
Federal funds
General and Special Funds:

Extension Service
Appropriation, current

352

Outlays

National Agricultural Library
Federal funds
General and Special Funds:

National Agricultural Library
Appropriation, current
Outlays
See footnotes at end of table.

352
BA
0

8,822
8,123

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-27

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1982
estimate

1981
actual

Account and functional code

1983
estimate

Department of Agriculture—Con.
National Agricultural Library—Con.
Library facilities
Outlays

352
0

Total Federal funds National Agricultural Library. BA
0

-4
8,822
8,119

8,279
7,709

9,016
8,632

BA
0

51,636
51,350

53,694
53,429

BA
0

12
12

BA
0

39,360
39,112

40,584
40,329

BA
0

50
72

50
50

1,422
1,706

1,535
1,535

Statistical Reporting Service
Federal funds
General and Special Funds:

Salaries and expenses
Appropriation, currentOutlays
Trust funds
Miscellaneous contributed funds
Appropriation, permanent, indefinite
Outlays

352

Economics and Statistics Service
Federal funds
General and Special Funds:

Salaries and expenses
Appropriation, current
Outlays
Trust funds
Miscellaneous contributed funds
Appropriation, permanent, indefinite
Outlays

352
BA
0

93,354
89,925

BA
0

41
26

352

Economic Research Service
Federal funds
General and Special Funds:

Salaries and expenses
Appropriation, current..
Outlays
Trust funds
Miscellaneous contributed funds
Appropriation, permanent, indefinite
Outlays

352

World Agricultural Outlook Board
Federal funds
General and Special Funds:

World agricultural outlook board
Appropriation, current
Outlays
See footnotes at end of table.

352
BA
0

1,731
1,374

8-28

THE BUDGET FOR FISCAL YEAR 1983
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Agriculture—Con.
Foreign Agricultural Service

Federal funds
General and Special Funds:

Foreign Agricultural Service
352
Appropriation, current
BA
Outlays
0
Salaries and expenses (special foreign currency program)
352
Outlays
0
Total Federal funds Foreign Agricultural Service.. BA
0

60,816
55,197
319

67,694
67,639
387

79,207
79,207
251

60,816
55,516

67,694
68,026

79,207
79,458

3,500
6,047

3,627
3,627

3,703
3,703

5,000
5,405

450
5,318

Office of International Cooperation and
Development
Federal funds
General and Special Funds:

Salaries and expenses
352
Appropriation, current
BA
Outlays
0
Scientific activities overseas (foreign currency program)
352
Appropriation, current
BA
Outlays
0

2,977
4,818

Intragovemmental Funds:

Consolidated working fund
Outlays
Trust funds
Miscellaneous contributed funds
Appropriation, permanent, indefinite
Outlays

151
0

-5,559

352
BA
0

9,843
8,076

7,690
9,500

10,095
10,095

Total Federal funds Office of International Cooperation and Development
BA
0

8,500
5,893

4,077
8,945

6,680
8,521

Total Trust funds Office of International Cooperation and Development
BA
0

9,843
8,076

7,690
9,500

10,095
10,095

1,228,930
1,253,801

1,000,000
1,140,722

1,028,000
1,028,000

Foreign Assistance Programs
Federal funds
General and Special Funds:

Expenses, Public Law 480, foreign assistance programs, Agriculture
151
Appropriation, current
BA
Outlays
0
See footnotes at end of table.

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-29

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Agriculture—Con.
Foreign Assistance Programs—Con.
Increase (-) or decrease in amount owed by the
Public Law 480 account to the Commodity
Credit Corportation
351
Outlays
0

-24,871

-140,722

BA
0

1,228,930
1,228,930

1,000,000
1,000,000

1,028,000
1,028,000

BA
0

208,834
183,278

62,000
80,100

62,046
60,378

BA
0

20,000
1,808

10,800

11,600

BA
0

190,000
200,876

190,000
190,000

56,000
153,720

BA
0

10,000
11,433

8,800
11,000 .

BA
0

10,000
15 701

8,800
18 500

BA
0

1,700
60

176
177

BA
0

12,500
19,152

12,500
14,300 ..

Total Federal funds Agricultural Stabilization and
Conservation Service
BA
0

453,034
432,308

282,276
324,877

118,046
225,698

57,739
41,997

117,600
117,600

293,703
235,104

Total Federal funds Foreign Assistance Programs
Agricultural Stabilization and Conservation
Service
Federal funds
General and Special Funds:

Salaries and expenses
Appropriation, current
Outlays
Rural clean water program
Appropriation, current
Outlays
Agricultural conservation program
Appropriation, current
Outlays
Water Bank program
Appropriation, current
Outlays
Emergency conservation program
Appropriation, current
Outlays
Dairy and beekeeper indemnity programs
Appropriation, current
Outlays
Forestry incentives program
Appropriation, current
Outlays

351
304
302
302
453
351
302

Federal Crop Insurance Corporation
Federal funds
General and Special Funds:

Administrative and operating expenses
Appropriation, current
Outlays

See footnotes at end of table.

351
BA
0

8-30

THE BUDGET FOR FISCAL YEAR 1983
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Agriculture—Con.
Federal Crop Insurance Corporation—Con.
Public Enterprise Funds:

Federal Crop Insurance Corporation fund
351
Appropriation, current
BA
Outlays
0
Limitation on administrative and operating expenses
Total Federal funds Federal Crop Insurance Corporation
BA
0

307,456
93,941

423,233
82,890

57,739
1,182

425,056
211,541

716,936
317,994

3,299,887

2,043,229

-40,815
(6,318) ..

Commodity Credit Corporation
Support and Related Activities

Federal funds
Public Enterprise Funds:

Price support and related programs: Reimbursement
for net realized losses
351
Appropriation, current
Indefinite
Authority to borrow, current
Authority to borrow, permanent
Outlays
Limitation on administrative expenses and direct
loans

BA
BA
BA
BA
0

3,783,244
5,000,000
872,853
3,994,229

6,298,607

1,819,000

34,520
42,078

42,078
44,632

44,632
31,000

24,871

140,722

BA
0

34,520
66,949

42,078
185,354

44,632
31,000

Total Federal funds Commodity Credit Corporation
BA
0

4,207,260
4,061,178

7,085,307
6,483,961

3,827,876
1,850,000

1,875
1,780

2,501
2,376

(52,750)

Special Activities

Federal funds
General and Special Funds:

National Wool Act (special fund)
Appropriation, permanent, indefinite
Outlays

351
BA
0

Intragovernmental Funds:

Increase or decrease (-) in amount owed to the
Corporation by the Public Law 480 account
351
Outlays
0
Total Federal funds Special Activities

Office of Rural Development Policy
Federal funds
General and Special Funds:

Salaries and expenses
Appropriation, current
Outlays
See footnotes at end of table.

452
BA
0

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-31

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Agriculture—Con.
Office of Rural Development Policy—Con.
Rural development planning grants
Appropriation, current
Outlays

452
BA
0

5,000
5,155

3,073

977

Total Federal funds Office of Rural Development
BA
Policy
0

5,000
5,155

1,875
4,853

2,501
3,353

BA
0

28,309
28,023

29,673
29,670

30,340
30,334

BA
BA
0

17,158
3,354

573
5,828

91
1,345
11,318

Total Federal funds Rural Electrification Administration
BA
0

45,467
31,377

30,246
35,498

31,776
41,652

BA
0

200,000
268,886

125,000
254,641

120,000
204,228

BA
0

5,000
9,054

7,506

5,378

BA
0

252,630
243,691

274,543
277,516

294,206
292,016

BA
0

3,500
3,710

3,250
3,273

1,508

BA
0

25,000
17,407

13,750
20,476

12,500
21,022

BA
0

6,694

3,950
7,740

5,292

BA
0

1,000
1,984

2150

BA
0

25,000
21,199

15,000
16,210

Rural Electrification Administration
Federal funds
General and Special Funds:

Salaries and expenses
Appropriation, current
Outlays

271

Public Enterprise Funds:

Rural communication development fund
Appropriation, current
Authority to borrow, permanent, indefinite
Outlays

452

Farmers Home Administration
Federal funds
General and Special Funds:

Rural water and waste disposal grants
Appropriation, current
Outlays
Rural development grants
Appropriation, current
Outlays
Salaries and expenses
Appropriation, current
Outlays
Rural community fire protection grants
Appropriation, current
Outlays
Rural housing for domestic farm labor
Appropriation, current
Outlays
Mutual and self-help housing
Appropriation, current
Outlays
Rural housing supervisory assistance grants
Appropriation, current
Outlays
Very low income housing repair grants
Appropriation, current
Outlays
See footnotes at end of table.

452
452
452
452
604
604
371
604

12,500
12,550

8-32

THE BUDGET FOR FISCAL YEAR 1983
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1983
estimate

1982
estimate

Department of Agriculture—Con.
Farmers Home Administration—Con.
Rural rental assistance payments
Appropriation, current
Outlays
Compensation for construction defects
Appropriation, current
Outlays

604
BA
0

185,000
164,818

BA
0

2,000
2,000

371

Public Enterprise Funds:

Self-help housing land development
Appropriation, current
Outlays
Rural housing insurance fund
Appropriation, current
Indefinite
Authority to borrow, permanent,
Outlays
Agricultural credit insurance fund
Appropriation, current
Indefinite
Authority to borrow, permanent,
Outlays
Rural development insurance fund
Appropriation, current
Indefinite
Authority to borrow, permanent,
Outlays

fund

371
BA
0

1,000
-456

601

BA
BA
BA
0

504,318
57,525
32,158
-130,453

575,087
132,880
874,734
1,092,476

BA
BA
BA
0

297,032

464,083

117

371
indefinite

1,109,722
1,616,910

351
indefinite

682,074

276,090
-228,346

405,243

143,282

180,040

'698,005

452
indefinite

Total Federal funds Farmers Home Administration

BA
BA
BA
0

74,141
304,906

511,935

699^377

BA
0

1,897,676
518,276

2,662,317
2,599,767

2,754,219
3,723,221

BA
0

311,863
305,231

310,809
307,394

336,580
341,003

336,217

Soil Conservation Service
Federal funds
General and Special Funds:

Conservation operations
Appropriation, current
Outlays
Soil and water conservation grants
Appropriation, current
Outlays
River basin surveys and investigations
Appropriation, current
Outlays
Watershed planning
Appropriation, current
Outlays
Watershed and flood prevention operations
Appropriation, current
Outlays
Great plains conservation program
Appropriation, current
Outlays
See footnotes at end of table.

302
302
BA
0

10,000
7,500

301
BA
0

18,323
17,464

15,500
15,726

16,743
16,677

BA
0

10,813
10,381

8,690
8,900

9,152
9,165

BA
0

192,524
205,398

192,045
201,343

117,721
143,186

BA
0

20,664
24,238

21,500
21,588

15,308
20,409

301
301
302

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-33

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Agriculture—Con.
Soil Conservation Service—Con.
Resource conservation and development
Appropriation, current
Outlays
Trust funds
Miscellaneous contributed funds:
(Water resources)
(Appropriation, permanent, indefinite)
(Outlays)
(Conservation and land management)
(Appropriation, permanent, indefinite)
(Outlays)

302
BA
0

34,046
36,391

26,000
27,789

10,312
17,168

301
BA
0

660
888

800
832

600
632

BA
0

100
103

100
104

760

900

700

991

936

302

Total Miscellaneous contributed funds
Total Federal funds Soil Conservation Service
Total Trust funds Soil Conservation Service

736

588,233

574,544

515,816

599,103

582,740

555,108

760

900

700

991

936

736

Animal and Plant Health Inspection Service

Federal funds
General and Special Funds:

Animal and Plant Health Inspection Service
Appropriation, current

352

Outlays
Buildings and facilities
Appropriation, current
Outlays
Trust funds
Miscellaneous trust funds
Appropriation, permanent, indefinite
Outlays

282,644

277,382

280,560

278,259

227,933

-400

231,533
^ —400

352
BA
0

6,986
432

3,000
8,127

2,386
3,813

BA
0

1,249
1,378

2,798
2,798

2,878
2,878

352

Total Federal funds Animal and Plant Health
Inspection Service
Total Trust funds Animal and Plant Health Inspection Service

289,630

280,382

229,919

280,992

286,386

234,946

1,249

2,798

2,878

1,378

2,798

2,878

5,600
5,600

5,195
5,195

Federal Grain Inspection Service

Federal funds
General and Special Funds:

Salaries and expenses
Appropriation, current
Outlays
See footnotes at end of table.

360-000

0 - 8 2 - 2 6

352
BA
0

25,062
21,322

8-34

THE BUDGET FOR FISCAL YEAR 1983
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Agriculture—Con.
Federal Grain Inspection Service—Con.
Public Enterprise Funds:

Inspection and weighing services
Outlays

352
0

Total Federal funds Federal Grain Inspection
Service
BA
0

7,708

1,000

25,062
29,030

5,600
6,600

5,195
5,195

50,882

38,233

53,999

38,233

33,176
-1,806
33,176
L
-1,806

Agricultural Marketing Service
Federal funds
General and Special Funds:

Marketing services
Appropriation, current

352

Outlays
Payments to States and possessions
352
Appropriation, current
Outlays
Perishable Agricultural Commodities Act fund 352
Appropriation, permanent, indefinite
Outlays
Funds for strengthening markets, income, and supply
(section 32)
605
Appropriation, permanent, indefinite
Outlays
Trust funds
Miscellaneous trust funds
Appropriation, permanent, indefinite
Outlays

BA
0

1,600
1,637

1,000
1,000

'..

BA
0

2,553
2,392

2,740
2,753

BA
0

383,012
289,454

462,701
424,070

409,232
370,129

62,702
67,585

67,535
67,535

504,674
466,056

443,342
404,252

352
BA
0

Total Federal funds Agricultural Marketing Service
BA
0
Total Trust funds Agricultural Marketing Service.

208
265
438,047
347,482

BA
0

208
265

62,702
67,585

67,535
67,535

BA
0

2,000
1,713

2,400
2,400

2,398
2,398

Office of Transportation
Federal funds
General and Special Funds:

Office of Transportation
Appropriation, current
Outlays

See footnotes at end of table.

352

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-35

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Agriculture—Con.
Food Safety and Inspection Service
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current

554
BA

311,106

308,228
L

Outlays

310,808

308,891

321,876
-2,000
321,876

-2,000

Trust funds
Expenses and refunds, inspection and grading of farm
products
352
Appropriation, permanent, indefinite
Outlays

BA
0

63,667
66,567

719
719

BA
0

84,592
85,190

86,461
84,700

85,477
85,100

11,470,000

Food and Nutrition Service
Federal funds
General and Special Funds:
Food program administration
Appropriation, current
Outlays
Food stamp program
Appropriation, current

605

605
10,279,610

Outlays

11,252,902

1,279,616
-273,000
10,250,659

A
L

Nutrition assistance for Puerto Rico
Appropriation, current
Outlays
Nutrition assistance for the Territories
Appropriation, current
Outlays
Special milk program
Appropriation, current

11,824,650

A
L

1,266,791
-273,000

-2,293,600
11,807,575
^ 12,825
-2,257,800

605
BA
0

825,000
779,600

605
J

BA
0

43,760
'41,570

605
BA

118,800

28,100
L

Outlays

104,384

34,000
L

Child nutrition programs
Appropriation, current

605
BA

Appropriation, permanent
Outlays

BA
0

1,583,998
1,879,653
3,438,238

1,082,890

1,763,948
2,728,900
L

Special supplemental food programs (WIC)
Appropriation, current

2,214,690
2,989,470
-281,500

927,040

934,080

930,119

916,990

128,160

BA
0

128,660
104,251

141,420
137,220

65,200
96,120

16,192,743

15,323,125

13,376,268

15,915,084

15,146,260

13,403,120

605

Total Federal funds Food and Nutrition Service....

See footnotes at end of table.

945,516

-334,425

605

Outlays
Food donations program
Appropriation, current
Outlays

28,600
-28,600
27,200
-25,200

8-36

THE BUDGET FOR FISCAL YEAR 1983
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1983
estimate

1982
estimate

Department of Agriculture—Con.
Human Nutrition Information Service
Federal funds
General and Special Funds:

Human Nutrition Information Service
Appropriation, current
Outlays

352
BA
0

9,203
6,549

8,289
8,289

BA
0

8,806
8,806

8,564
8,564

4,639
4,621

3,683
3,683

Packers and Stockyards Administration
Federal funds
General and Special Funds:

Packers and Stockyards Administration
Appropriation, current
Outlays

352

Agricultural Cooperative Service
Federal funds
General and Special Funds:

Salaries and expenses
Appropriation, current
Outlays
Trust funds
Miscellaneous contributed funds
Appropriation, permanent, indefinite
Outlays

352
BA
0

4,500
3,242

BA
0

36
50

BA
0

127,812
98,645

110,392
112,153

97,990
99,215

BA
0

74,184
50,758

63,662
67,929

47,520
50,072

1,021,050

1,036,569

847,442

966,791
* 76,600
964,700
* 67,400

BA
0

13,442
196,621

25,000

5,014

BA
0

464,660
487,871

254,497
475,181

297,505
344,588

8,474

461

352
18
28 ....

Forest Service
Federal funds
General and Special Funds:

Forest research
Appropriation, current
Outlays
State and private forestry
Appropriation, current
Outlays
National forest system
Appropriation, current

302
302
302

Outlays..
Forest management, protection and utilization
Reappropriation
Outlays
Construction
Appropriation, current
Outlays
Youth Conservation Corps
Outlays
Other general appropriations
Outlays
See footnotes at end of table.

1,028,126
^ 9,200

302
302
302
0
302
0

280

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-37

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Agriculture—Con.
Forest Service—Con.
Acquisition of lands for national forests, special
acts
302
Appropriation, current
BA
Outlays
0
Acquisition of lands to complete land exchanges
302
Appropriation, current, indefinite
BA
Outlays
0
Range betterment fund
302
Appropriation, current, indefinite
BA
Outlays
0
Construction and operation of recreation facilities
303
Outlays
0
Timber salvage sales
302
Appropriation, permanent, indefinite
BA
Outlays
0
Land acquisition
303
Appropriation, current
BA
Outlays
0
Forest Service permanent appropriations
302
Appropriation, permanent, indefinite
BA
Outlays
0
Forest Service permanent appropriations
852
Appropriation, permanent, indefinite
BA
Outlays
0
Intragovernmental Funds:
Working capital fund
302
Outlays
Consolidated working fund
302
Outlays
0
Trust funds
Miscellaneous trust funds
Appropriation, permanent, indefinite
Outlays
Highland scenic highway
Outlays

754
807

724
724

753
753

532
112

314
314

147
147

6,940
6,755

6,580
6,580

5,800
5,800

11,884
9,440

764
26,262
21,010

7,563
11303

179,391
96,901

134,573
141,032

149,760
144,408

241,217
241,217

241,712
241,712

342,000
342,000

153,465
117,593

145,000
105,456

146,600
146,280

286

780
1,882,107
2,125,281
145,000
106,236

1,985,607
2,040,626
146,600
146,280

31,614,414
30,838,157

26,666,509
25,451,537

-3,877
2,718

302
BA
0
401
0

Total Federal funds Forest Service

BA
0

Total Trust funds Forest Service

BA
0

2,141,866
2,043,909
153,465
117,879

BA
0

29,071,734
26,972,160

Summary
Federal funds:
(As shown in detail above)
Deductions for offsetting receipts:
Intrafund transactions
See footnotes at end of table.

302 BA
-186,306
0

-216,150

-230,000

8-38

THE BUDGET FOR FISCAL YEAR 1983
BUDGET ACCOUNTS LISTING

(in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

-454,220

-502,585

Department of 1Agriculture—Con.

Summary—Con.
Proprietary receipts from the public

270 BA
0

300 BA
0

-374,427

oA
302 BA
0

350 BA
0

450 BA
0

-36,000

-377,426
38,418

605
902
Total Federal funds

Trust funds:
(As shown in detail above)
Deductions for offsetting receipts:
Proprietary receipts from the public

-3,851

-38

-5

-4

-2,649

-1,292

-379

-168

-174

28,168,931
26,069,357

30,251,144
29,474,887

24,748,098
23,533,126

BA
O

231,716
196,616

221,889
189,446

230,589
230,125

352 BA
0

BA
0

Total Department of Agriculture

-3,851

BA
O

302 BA

Total Trust funds

-1,144,467

-28

550 BA
0
BA
0
BA
0

-687,547

-153,465

-145,000

-78,250

-76,889

-83,989

1
-35,099

-32,443

-464

28,168,932
26,034,258

30,251,144
29,442,444

24,748,098
23,532,662

25,061
3,171
24,967
A
3,171

31,613

Department of Commerce

General Administration
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current

376

Outlays
White House conference on balanced national growth
and economic development
376
Outlays
Special foreign currency program
376
Outlays
See footnotes at end of table.

35,937

39,129

0
0

223

200

31,584

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-39

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Commerce—Con.
General Administration—Con.
Intragovemmental Funds:

Working capital fund
Outlays
Trust funds
Miscellaneous trust funds
Appropriation, permanent
Outlays

376
0

649

BA
0

464
478

376

Total Federal funds General Administration

BA
0

Total Trust funds General Administration

BA
0

35,937
40,001
464
478

200
200
28,232
28,339
200
200

200
200
31,613
31,584
200
200

Bureau of the Census
Federal funds
General and Special Funds:

Salaries and expenses
Appropriation, current
Outlays
Periodic censuses and programs
Appropriation, current
Outlays

376
BA
0

57,200
55,171

57,200
45,917

64,125
64,540

BA
0

177,850
194,201

87,898
98,070

91,294
83,511

376

Intragovemmental Funds:

Consolidated working fund
Outlays

376
0

1,393

10,980

BA
0

8,365
8,443

10,750
10,750

Total Federal funds Bureau of the Census

BA
0

235,050
250,765

145,098
154,967

155,419
148,051

Total Trust funds Bureau of the Census

BA
0

8,365
8,443

10,750
10,750

BA
0

26,015
26,362

28,771
28,380

32,652
32,755

Trust funds
Special studies, services, and projects
Appropriation, permanent
Outlays

376

Economic and Statistical Analysis
Federal funds
General and Special Funds:

Salaries and expenses
Appropriation, current
Outlays
Trust funds
Special studies, services, and projects
Appropriation, permanent
Outlays
See footnotes at end of table.

376

376
BA
0

198
185

250
250

8-40

THE BUDGET FOR FISCAL YEAR 1983
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Commerce—Con.
Economic Development Assistance
Economic Development Administration

Federal funds
General and Special Funds:

Salaries and expenses
Appropriation, current
Outlays
Economic development assistance programs
Appropriation, current
Outlays
Local public works program
Outlays
Drought assistance program
Outlays
Financial and technical assistance
Outlays
Job opportunities program
Outlays

452
BA
BA

39,700
38,681

25,000
25,000

15,448
15,448

436,800
501,674

198,500
359,567

242,244

82,760

60,410

30,000

838

176

225

571

5,537

-4,788

37,000

4,000

476,500
618,970

223,500
488,261

15,448
291,692

BA
0

22,838
34,628

10,237

8,633

BA
0

24,905
43,020

9,114

3,316

BA
0

499,338
653,598

223,500
498,498

15,448
300,325

Total Trust funds Economic Development Assistance
BA
0

24,905
43,020

9,114

3,316

107,382

151,995

105,588

144,361

136,267
* 1,104
141,271

452

0
BA
BA

452
453
376
504

Public Enterprise Funds:

Economic development revolving fund
Outlays

452

Total Federal funds Economic Development Administration
BA
0
Regional Development Program

Federal funds
General and Special Funds:

Regional development programs
452
Appropriation, current
Outlays
Trust funds
Regional development commissions
452
Appropriation, permanent, indefinite
Outlays
Total Federal funds Economic Development Assistance

Promotion of Industry and Commerce
International Trade Administration

Federal funds
General and Special Funds:

Operations and administration
Appropriation, current
Outlays
See footnotes at end of table.

376

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-41

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Commerce—Con.
Promotion of Industry and Commerce—Con.
International Trade Administration—Con.
Participation in United States expositions
Outlays

376
0

7,458

3,111

BA
0

9,118
8,374

8,850
8,850

5,100

Trust funds
Miscellaneous trust funds
Appropriation, permanent, indefinite
Outlays

376

Total Federal funds International Trade Administration

Total Trust funds International Trade Administration

9,723
9,723

107,382

151,995

137,371

113,046

147,472

146,371

9,118

8,850

9,723

8,374

8,850

9,723

BA
0

59,600
48,954

56,641
64,000

50,000
60,000

BA
0

7,959
7,907

7,600
7,600

5,033
5,033

174,941

216,236

192,404

169,907

219,072

211,404

Minority Business Development Agency
Federal funds
General and Special Funds:
Minority business development
Appropriation, current
Outlays

376

United States Travel and Tourism
Administration
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current
Outlays

376

Total Federal funds Promotion of Industry and
Commerce
Total Trust funds Promotion of Industry and
Commerce

9,118

8,850

9,723

8,374

8,850

9,723

775,644

829,751

Science and Technology
National Oceanic and Atmospheric
Administration
Federal funds
General and Special Funds:
Operations, research, and facilities
Appropriation, current

306
BA

683,817

* 61,748
L
12,955
Indefinite
Outlays
See footnotes at end of table.

BA
0

476
747,706

750
816,947

750
767,429

12,955

8-42

THE BUDGET FOR FISCAL YEAR 1983
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Commerce—Con.
Science and Technology—Con.
National Oceanic and Atmospheric
Administration—Con.

Construction
Appropriation, current
Outlays
Coastal zone management
Appropriation, current

306
-11,000
8,604

51,585

54,879

BA
0

17,485
19,347

31,512

5,000

7,415
"-12,000
44,644

6,409

302

Outlays
Promote and develop fishery products and research
pertaining to American fisheries
376
Appropriation, permanent, indefinite
Outlays
Fishing vessel and gear damage compensation
fund
376
Appropriation, current, indefinite
Outlays
Fishermen's contingency fund
376
Appropriation, current
Outlays
Foreign fishing observer fund
376
Appropriation, current
Outlays
Fisheries loan fund
Outlays
Fishermen's guaranty fund
Appropriation, current
Indefinite
Outlays

BA
0

16,186
17,866

27,689
"-12,000

16,466

BA
0

3,155
1,883

3,500
3,611

1,750
1,637

BA
0

290
144

900
900

250
221

BA
0

-259

4,323

BA
BA
0

1,450
450
1,689

4,000
^3,250
3,788
^ 3,250

7,950
7,950

376
-1,000

376
1,800
2,500

600
600

Public Enterprise Funds:

Coastal energy impact fund
Appropriation, current
Outlays

452

Federal ship financing fund, fishing vessels
Outlays

376

BA
0

36,254

2,580

- 3

Intragovernmental Funds:

Consolidated working fund
Outlays

See footnotes at end of table.

306

-7,000
37,400
600

25,384
"-4,000
600

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-43

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Commerce—Con.
Science and Technology—Con.
National Oceanic and Atmospheric
Administration—Con.

Trust funds
Miscellaneous trust funds
Appropriation, current, indefinite
Appropriation, permanent, indefinite
Outlays

306

BA
BA
0

17,654
17,314

18,400
18,400

Total Federal funds National Oceanic and Atmospheric Administration
BA
0

839,535
877,147

848,552
963,018

776,229
848,931

Total Trust funds National Oceanic and Atmospheric Administration
BA
0

17,654
17,314

18,400
18,400

4,760
4,760

116,150

118,961
B
2,500

107,176

111,650

118,041
B
2,393

-15,600
20,360
20,360
-15,600

Patent and Trademark Office

Federal funds
General and Special Funds:

Salaries and expenses
Appropriation, current

376

Outlays

-39,090
104,078
B
107
-39,090

Science and Technical Research

Federal funds
General and Special Funds:

Scientific and technical research and services
Appropriation, current

376
BA

Indefinite
Outlays

BA
0

102,904

117,822
* 107,587
-7,131
109,982
L
-6,102

104,060

115,540

Public Enterprise Funds:

Technical information clearinghouse fund
Appropriation, current

376

5,000

Intragovemmental Funds:

Working capital fund
Appropriation, current
Outlays
Consolidated working fund
Outlays
See footnotes at end of table.

376
BA

6,123

10,723

-2,118

7,228
7,100

376
5,376

* 5,886
5,360

8-44

THE BUDGET FOR FISCAL YEAR 1983

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1983
estimate

1982
estimate

Department of Commerce—Con.
Science and Technology—Con.
Science and Technical Research—Con.

Trust funds
Information products and services
Appropriation, current, indefinite
Appropriation, permanent, indefinite
Outlays

376
J

BA
BA
BA
BA
0

-27,400
27,400
27,400
'-27,400

125,050
128,016

111,342
109,240

CD CO

24,000
23,601

109,027
112,665

CD CO

Total Federal funds Science and Technical Research

23,108
21,279

24,000
23,601 .

17,237

16,483

Outlays
0
Public telecommunications facilities, planning and construction
503
Appropriation, current
BA
Outlays
0

19,432

11,255

* 12,417
13,098

19,705
19,706

18,000
25,112

23,800

36,942
39,138
1,101,654
1140,600
40,762
38,593

34,483
36,367
1,129,546
1,247,835
42,400
42,001

12,417
36,898
968,074
1,060,164
4,760
4,760

253,448

196,970

222,961

230,789

152,772
152,772

157

3,650,542
3,397,761

4,673,154
4,498,008

Total Trust funds Science and Technical Research
National Telecommunications and
Information Administration

Federal funds
General and Special Funds:

Salaries and expenses
Appropriation, current..

376

Total Federal funds National Telecommunications
and Information Administration
BA
0
Total Federal funds Science and Technology

BA
0

Total Trust funds Science and Technology

BA
0

Energy Research and Technology
Administration
Federal funds
General and Special Funds:

Program administration:
(Energy information, policy, and regulation)
276
(Appropriation, current)
(Outlays)
Special foreign currency program
Outlays
Atomic energy defense activities
Appropriation, current
Outlays
See footnotes at end of table.

BA
0
271
053
BA
0

5,505,781
5,154,941

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-45

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Commerce—Con.
Energy Research and Technology
Administration—Con.
General science and research activities
Appropriation, current
Outlays
Energy supply, research and development
Appropriation, current
Outlays
Uranium supply and enrichment activities
Appropriation, current
Contract authority, current
Outlays
Fossil energy research and development
Appropriation, current
Outlays
Energy conservation research activities
Appropriation, current
Outlays
Geothermal resources development fund
Appropriation, current
Outlays
Alternative fuels production
Appropriation, current
Outlays

251
BA
0

504,415
501,152

529,360
558,887

600,970
589,370

BA
0

2,739,564
2,899,531

2,294,126
2,867,265

1,875,146
1,997,650

BA
BA
0

30,955
411,000
341,416

1,806,000
1,533,672

-140,504

BA
0

993,817
890,063

416,872
639,052

106,900
203,000

BA
0

279,260
248,806

81,203
197,075

17,542
91,224

BA
0

-20,698
727

2,200
2,200

75
75

271
271

271
272
271
271
BA
0

—300,000
83,234

95,083

Public Enterprise Funds:

Nuclear waste disposal fund
Authority to borrow, current
Outlays
Trust funds
Advances for cooperative work
Appropriation, permanent, indefinite
Outlays

271

J
185,000
'-115,000

BA
0
271
BA
0

14,656
14,072

5,630
39,100

3,606
9,324

Total Federal funds Energy Research and Technology Administration
BA
0

8,542,303
8,585,693

9,999,885
10,622,188

8,444,186
7,933,528

Total Trust funds Energy Research and Technology Administration
BA
0

14,656
14,072

5,630
39,100

3,606
9,324

28,376
28,376

23,687
23,887

5,468
5,580

Energy Programs
Federal funds
General and Special Funds:

Administrative support for energy programs:
(Energy conservation)
(Appropriation, current)
(Outlays)
See footnotes at end of table.

272
BA
0

8-46

THE BUDGET FOR FISCAL YEAR 1983
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Commerce—Con.
Energy Programs—Con.
Energy conservation grants:
(Energy conservation)
(Appropriation, current)

272

(Outlays)
(Area and regional development)
(Appropriation, current)

420,015

479,859

64,197
-5,663
520,136
"_4,814

4,260

230,284
^ —849

452
BA

10,000

(Outlays)

14,634

25,000
"-12,186

14,129
"-2,151

Total Energy conservation grants

BA
0

430,015
494,493

44,197
528,136

4,260
241,413

BA
0

90,417
83,465

78,919
93,061

54,500
58,300

BA
BA

55,606
6,629

11,776

8,856

(Outlays)

62,250

47,169
-4-800

12,833
^800

Total Federal funds Energy Programs

BA
0

611,043
668,584

159,379
691,453

73,084
318,926

BA
0

11,226,281
11,535,510

11,930,647
13,490,732

9,912,880
10,036,737

902 BA

100

1cn

y™

270 BA

_ 41262

"-14,337

Energy information activities
276
Appropriation, current
Outlays
Emergency preparedness and energy regulation:
(Energy information, policy, and regulation)
276
(Appropriation, current)
(Reappropriation)

Summary
Federal funds:
(As shown in detail above)
Deductions for offsetting receipts:
Intrafund transactions
Proprietary receipts from the public

271

276

300

800

-45274

-1,805,000
-67,386
-2,001

-1,808

See footnotes at end of table.

-45274

-1,793
J

-53,278

370

376

-459

450

^247

_6,739

-7,500

-8,000

-22,800

-1,800

-333

-600

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-47

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Commerce—Con.
Summary—Con.
806 BA
0

902 BA

-15,603

-4,203

-5,203

BA
0

11,159,742
11,468,971

10,043,579
11,603,664

9,729,396
9,853,253

BA
0

98,468
113,165

68,080
110,265

29,289
38,323

-727

-654

-589

-14,656

-5,630

-3,606

-17,655

-18,400

-20,360

Total Federal funds
Trust funds:
(As shown in detail above)
Deductions for offsetting receipts:
Intrafund transactions
Proprietary receipts from the public

376 BA
0
271 BA
0
306 BA

376

452

BA
0
BA
0
BA
0
BA
0
BA
0

Total Trust funds

376 BA

Interfund transactions

452
Total Department of Commerce

-96

BA
0
BA
0
BA
0

-37,059

-39,926

15,600

-44,264
J

24,100

-2,123
26,248
40,945

3,470
45,655

170
9,204

-3,226

-3,300

-3,300
J

3,300

-22,782
11,159,982
11,483,908

10,043,749
11,646,019

9,729,566
9,862,457

12,447,827
A
105,400
12,41.5,300
A
102,900

14,401,100

Department of Defense-Military
Military Personnel
Federal funds
General and Special Funds:
Military personnel, Army
Appropriation, current
Outlays
See footnotes at end of table.

051
BA

12,148,300

12,006,404

14,316,900
* 2,500

3-48

THE BUDGET FOR FISCAL YEAR 1983
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

8,920,295

9,117,956

10,578,900

8,925,328

154,200
9,062,100

10,516,400

^ 151,600

^ 2,600

2,766,966
^50,700
2,755,500
^ 48,700

3,276,100

10,001,821

10,305,414

12,031,400

9,834,483

28,300
10,274,900

11,960,400

^27,700

^600

Department of Defense-Military—Con.
Military Personnel—Con.
Military personnel, Navy

051

Appropriation, current

Outlays
Military personnel, Marine Corps
Appropriation, current

0
051

Outlays
Military personnel, Air Force
Appropriation, current

2,688,500

2,611,362

20,900

870,500

963,700
^9,400

1,224,800

837,261

945,800

1,198,100

^ 8,600

^800

051

051
BA
0

318,758
302,255

346,670
339,300

641,300
601,200

120,357

138,720
^2,800

165,900

112,271

132,800

158,100

051

Outlays

Reserve personnel, Air Force
Appropriation, current

Outlays

Total Federal funds Military Personnel

See footnotes at end of table.

M00

291,197
^ 4,000
284,900
A
3,700

350,900

1,175,600

1,320,100

1,680,500

1,133,520

9,700
1,294,300

1,640,700

^ 8,800

^900

423,867

544,600

277,360

272,372

343,300
^300

051
BA

Outlays
National Guard personnel, Air Force
Appropriation, current

2,400

051

Outlays
National Guard personnel, Army
Appropriation, current

3,253,000
^ 2,000

051

Outlays
Reserve personnel, Navy
Appropriation, current
Outlays
Reserve personnel, Marine Corps
Appropriation, current

051

Outlays
Special pay for aviation officers
Appropriation, current
Reserve personnel, Army
Appropriation, current

051
BA
0

BA
0

387,209
373,628

36,929,600
36,408,884

2,200

422,400

536,100

2,100

^ 100

38,489,117
38,283,800

44,895,500
44,534,400

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-49

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1983
estimate

1982
estimate

Department of Defense-Military—Con.
Retired Military Personnel
Federal funds
General and Special Funds:

Retired pay, Defense
Appropriation, current..

051
BA

13,840,000

14,938,315
A
97,685

16,599,800
L

Outlays..

13,729,065

14,902,300
^97,400

13,013,933

14,948,197

-89,000
16,559,815
^285
L
-89,000

Operation and Maintenance
Federal funds
General and Special Funds:

Operation and maintenance, Army
Appropriation, current

051
B

Liquidation of contract authority, current..
Outlays
Operation and maintenance, Navy
Appropriation, current

(2,985)
11,784,542

14,690,100
B
290,300

Liquidation of contract authority, current-

17,742,999
(153,567)

Outlays

19,359,489
* 22,165,800
229,100

16,935,681

(43,641)
18,433,300
B
189,900

1,072,206

1,178,740

Liquidation of contract authority, current
Outlays

(4,077)
969,629

1,481,800
25,300

1,136,200
B
18,000

1,371,700
B
6,100

051
BA

14,756,374

16,020,619
B

Liquidation of contract authority, currentOutlays
Operation and maintenance, Defense agencies
Appropriation, current

21,151,900
B
67,600

051
B

Operation and maintenance, Air Force
Appropriation, current

16,617,400
B
60,200

051
B

Operation and maintenance, Marine Corps
Appropriation, current

16,827,600
362,900

(388,743)
13,965,253

4,415,749

* 17,944,700
103,300

16,057,400
B
88,300

17,200,900
B
13,200

051
4,998,047
* 5,755,400
B

Outlays..

4,144,710

See footnotes at end of table.
360-000

0 - 8 2 - 2 7

61,200
4,920,400
B
37,900

5,665,500
B
4,600

8-50

THE BUDGET FOR FISCAL YEAR 1983

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Defense-Military—Con.
Operation and Maintenance—Con.

Operation and maintenance, Army Reserve
Appropriation, current

051
BA

521,593

658,150
s

OutlaysOperation and maintenance, Navy Reserve
Appropriation, current

"686,400
800

498,493

625,100
5
700

554,172

570,940

680,000
MOO

051
BA

"653,000
fi

200

Liquidation of contract authority, currentOutlays

(8,786)
487,872

554,870
fi
130

617,630
s
70

Operation and maintenance, Marine Corps Reserve
051
Appropriation, current
Outlays
Operation and maintenance, Air Force Reserve
Appropriation, current

28,854

40,299

25,036

34,300

601,980

669,154

"48,415
43,300

051
"766,300
fi

600

Liquidation of contract authority, current
Outlays

(14,997)
583,604

951,370

662,250
fi
550

754,550
B
50

Operation and maintenance, Army National Guard
051
Appropriation, current

1,087,950
B

Liquidation of contract authority, currentOutlays

(2,663)
920,460

"1,123,900
1,500

1,055,100
B
1,300

1,106,900
B
200

Operation and maintenance, Air National Guard
051
Appropriation, current

1,530,907

1,646,418
B

Liquidation of contract authority, currentOutlays

"1,761,800
1,400

(44,235)
1,468,454

National Board for the Promotion of Rifle Practice,
Army
051
Appropriation, current
BA

845

522

900

141,850

155,700

132,380

149,600

Outlays
Claims, Defense
Appropriation, current
Outlays
Contingencies, Defense
Outlays
See footnotes at end of table.

1,634,500
B
1,300

1,742,900
MOO

"875
800

051

051
-20

"172,500
169,800

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-51

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1983
estimate

1982
estimate

Department of Defense-Military—Con.
Operation and Maintenance—Con.
Court of Military Appeals, Defense
Appropriation, current
Outlays
Foreign currency fluctuations, Defense
Appropriation, current
XIII Olympic winter games
Outlays

051
BA

2,310

2,607

1,947

2,600

213,143

147,900

1,182

200

100

55,548,285
51,919,745

62,271,355
60,585,200

69,391,700
67,278,700

1,199,100

1,936,100

BA
0

3,500
855,596

943,600

1,544,900

2,155,200

* 3,210
3,100

051
BA
051
0

Total Federal funds Operation and Maintenance... BA
0
Procurement
Federal funds
General and Special Funds:

Aircraft procurement, Army
Appropriation, current
Reappropriation
Outlays
Missile procurement, Army
Appropriation, current

051
K

051

Outlays
0
Procurement of weapons and tracked combat vehicles,
Army
051
Appropriation, current
BA

1,146,266
3,374,200

1,503,000

* 5,030,685

1,848,144

126,000
2,490,400
B
7,700

1,558,700

2,297,900

1,367,959

1,525,000

2,820,408

3,705,871

Outlays..

Outlays
Other procurement, Army
Appropriation, current

* 2,846,600
2,083,900

3,876,300
B

Procurement of ammunition, Army
Appropriation, current

2,745,914

3,475,300
B
56,200

051

* 2,633,384
2,005,500
K

4,567,491

^ 20,000
Reappropriation
Outlays
Army national guard equipment
Appropriation, current
Outlays
Aircraft procurement, Navy
Appropriation, current
Outlays
Weapons procurement, Navy
Appropriation, current
Outlays
See footnotes at end of table.

BA
0

20,940
1,637,226

2,219,100
A
1,600

2,977,300
A
7,200

051
BA
0

50,000
12,500

051
BA

6,254,307

9,140,000

4,396,638

5,657,500

2,766,029

3,215,100

2,296,632

2,442,400

051

* 11,582,300
7,819,600
* 3,901,600
2,930,500

8-52

THE BUDGET FOR FISCAL YEAR 1983

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Defense-Military—Con.
Procurement—Con.
Shipbuilding and conversion, Navy
Appropriation, current

051
BA

7,691,500

8,402,400
18,648,300
B

Reappropriation

Outlays
Other procurement, Navy
Appropriation, current
Outlays
Procurement, Marine Corps
Appropriation, current

27,900

263,400
236,500
5
343,721
5,386,000
B
28,300

5,217,724

3,029,857

3,676,577

2,521,046

2,697,200

506,013

1,711,456

6,213,400
B
81,600

051
* 3,970,156
3,237,200

051
* 2,300,700
A

Outlays..
Aircraft procurement, Air Force
Appropriation, current

339,290

20,000
423,600
A
1,000

10,424,428

13,639,898

845,600
A
5,400

051
BA

* 17,756,700
B

Reappropriation
Outlays
Missile procurement, Air Force
Appropriation, current

219,100
162,900
9,146,900
B
18,600

BA
0

7,941,065

3,333,286

4,559,550

BA
0

2,366,466

14,400
2,934,300

3,148,878

5,365,633

12,344,900
B
112,900

051
* 6,827,900

Reappropriation
Outlays
Other procurement, Air Force
Appropriation, current

4,177,600

051
* 5,845,200
A

Reappropriation
Outlays
Procurement, Defense agencies
Appropriation, current

BA
0

2,935,010

321,464

40,470
800
3,533,200
^ 6,900

4,791,200
A
14,700

051
511,500
10,000
341,100
A
1,600

890,284

Outlays..
Procurement of aircraft and missiles, Navy
Outlays
Procurement of equipment and missiles, Army
Outlays
Total Federal funds Procurement

See footnotes at end of table.

303,961

13,590

15,000

10,000

4,618

1,000

600

48,025,410
35,191,231

65,700,776
41,325,000

89,547,214
55,143,500

468,200
* 3,900

051
051
BA
0

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-53

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Defense-Military—Con.
Research, Development, Test, and
Evaluation

Federal funds
General and Special Funds:

Research, development,
Army
Appropriation, current

test,

and evaluation,
051
BA

Outlays
Research, development, test, and evaluation, Navy

3,127,774

3,609,535

3,366,100
2,957,986

* 4,484,000
4,038,900

051
Appropriation, current

5,844,357
4,988,169
B

Reappropriation
BA
Outlays
0
Research, development, test, and evaluation, Air
Force
051
Appropriation, current
BA

* 6,232,300
-37,226

8,800

5,411,600

4,782,911

8,833,710
B

BA
0

7,090,187
6,340,912

Research, development, test, and evaluation, Defense
agencies
051
Appropriation, current
BA

43,160

Reappropriation
Outlays

Outlays
Director of test and evaluation, Defense
Appropriation, current

5,947,100

* 11,220,400
57,000

7,934,300
B
35,000

10,178,000
B
19,000

1,308,948

1,697,646

1,160,041

1,508,600

42,100

53,000

35,743

43,400

60,000
52,200

16,609,138
15,277,593

20,058,022
18,299,000

24,256,600
22,200,200

943,701

134,370
* 965,830

* 2,259,900
1,965,000

051
K

Outlays

Total Federal funds Research, Development,
Test, and Evaluation
BA
0
Military Construction

Federal funds
General and Special Funds:

Military construction, Army
Appropriation, current

051
BA

886,234

Reappropriation
Outlays
Military construction, Navy
Appropriation, current
Outlays
See footnotes at end of table.

BA
0

3,200
726,577

34,000

782,800
B
3,400

793,800
16,300

051
BA

794,265

1,451,393

617,563

688,600

75,782
* 1,132,518
1,025,600

8-54

THE BUDGET FOR FISCAL YEAR 1983
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Defense-Military—Con.
Military Construction—Con.
Military construction, Air Force
Appropriation, current

051
BA

937,225

1,545,751
B

717,484

84,400
868,500
B
15,700

276,670

310,350

71,265

92,000

250,000

345,000

BA
0

16,968
167,424

94,100

207,200

42,269

67,658

29,899

40,500

18,100
* 33,000
55,700

89,700

105,140

46,354

69,000

46,942

65,173

46,881

42,400

33,000

36,000

24,084

27,100

21,600

37,400

15,009

20,300

6,600
* 29,000
31,000

BA
0

3,398,073
2,462,540

5,025,966
2,744,400

5,435,700
3,975,100

OutlaysMilitary construction, Defense agencies
Appropriation, current

200,703
* 1,881,097
1,446.700
B
40,900

051

Outlays
North Atlantic Treaty Organization infrastructure

21,825
* 387,075
183,500

051
Appropriation, current
Reappropriation
Outlays
Military construction, Army National Guard
Appropriation, current

375,000

051

Outlays
Military construction, Air National Guard
Appropriation, current

051

Outlays
Military construction, Army Reserve
Appropriation, current

051

Outlays
Military construction, Naval Reserve
Appropriation, current

051

Outlays
Military construction, Air Force Reserve
Appropriation, current

051

Outlays..
Total Federal funds Military Construction

16,400
* 90,400
93,100
14,440
* 28,360
51,500
3,300
* 21,900
29,800

Family Housing
Federal funds
General and Special Funds:

Family housing, Army
Appropriation, current
Outlays
Family housing, Navy
Appropriation, current
Outlays
Family housing, Air Force
Appropriation, current
Outlays
See footnotes at end of table.

051
BA
0

* 1,053,419
936,900

BA
0

* 768,837
678,700

BA
0

* 931,550
800,700

051
051

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-55

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1983
estimate

1982
estimate

Department of Defense-Military—Con.
Family Housing—Con.
Family housing, Defense agencies
Appropriation, current
Outlays
Family housing, Defense
Appropriation, current

051
BA
0

* 18,321
16,800

051

Reappropriation
Outlays

1,984,471

BA
0

18,651
1,716,579

2,153,554
B
80,300
1,992
2,062,600
B
72,300

Public Enterprise Funds:

Homeowners assistance fund, Defense
Appropriation, current

051
BA

2,000

Authority to borrow, permanent, indefinite
Outlays

BA
0

906
4,308

1,200
2,700

*4,000
1,200
3,300

Total Federal funds Family Housing

BA
0

2,004,028
1,720,887

2,239,046
2,137,600

2,777,327
2,436,400

2,760

3,083

2,465

1,200

* 3,800
1,000

-6

-4

-3

176,300

221,138

134,000

65,900

Special Foreign Currency Program
Federal funds
General and Special Funds:

Special foreign currency program
Appropriation, current

051

Outlays..
Revolving and Management Funds
Federal funds
Public Enterprise Funds:

Defense production guarantees
Outlays
Laundry service, Naval Academy
Outlays

051
051
0

-81

BA
BA
0

34,000
221,630 .
159,396

Intragovernmental Funds:

Army stock fund
Appropriation, current
Contract authority, permanent, indefinite
Outlays
Navy stock fund
Appropriation, current
Contract authority, permanent, indefinite
Outlays
Marine Corps stock fund
Appropriation, current
Outlays
Air Force stock fund
Appropriation, current
Contract authority, permanent, indefinite
Outlays
See footnotes at end of table.

051

051
BA
BA
0

309
580,929
-59,963

9,435

354,372

75,900

191,600

BA
0

4,108
3,049

13,334
29,500

11,812
14,700

BA
BA
0

28,300
564,724
-17,521

78,800

161,600

67,400

179,100

051
051

8-56

THE BUDGET FOR FISCAL YEAR 1983
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Defense-Military—Con.
Revolving and Management Funds—Con.
Defense stock fund
Appropriation, current

051
BA

Contract authority, permanent, indefinite
Outlays
Army industrial fund
Outlays
Navy industrial fund
Outlays
Marine Corps industrial fund
Outlays
Air Force industrial fund
Outlays
Defense industrial fund
Outlays
Army management fund
Outlays
Navy management fund
Outlays
Air Force management fund
Outlays
Army conventional ammunition
fund
Appropriation, current
Outlays

438,000

BA
0

805,463
-32,903

69,000

160,500

109,200

-378,200
A
80,000

-170,100
^ 10,000

-16,356

-44,300

-138,400

74,537

44,700

-124,000

-3,450

-900

100

2,068

7,900

-5,900

-74,252

32,000

-300

-7,451

4,500

8,632

2,504

247

-100

051
051
051
051
051
051
051
3

051
working

capital
051
BA
0

Total Federal funds Revolving and Management
Funds

-100,000

1,000
-110,000

2,677,463

456,069

910,422

35,946

-45,100

-87,300

5,398,826
'5,080,900

'4,088,654
'4,284,700

Allowances
Federal funds
General and Special Funds:
Civilian and military pay raises
Appropriation, current
Outlays
Other legislation
Appropriation, current
Outlays

051
7

BA
0
051

BA
0

Total Federal funds Allowances

137,400
•'137,400

5,398,826

4,226,054

5,080,900

4,422,100

30
45

31
50

Trust Funds
Trust funds
Department of the Army trust funds
Appropriation, permanent, indefinite
Outlays
Department of the Navy trust funds
Appropriation, permanent, indefinite

Outlays
See footnotes at end of table.

051
BA
0

35
129

15,894

17,261

16,557

15,418

15,850

16,740

051

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-57

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Defense-Military—Con.
Trust Funds—Con.
Department of the Air Force general gift fund
051
Appropriation, permanent, indefinite
Outlays
Surcharge collections, sales of commissary stores,
Army
051
Outlays
Department of the Navy trust revolving funds
051
Outlays
Department of the Air Force trust revolving funds

BA
0

47
6

9
5

12
10

-3,879

-4,245

-150

7,250

4,660

-3,364

5,195

5,990

15,976

17,300

16,600

12,430

24,100

27,300

179,034,757
156,748,356

214,678,260
183,411,700

257,955,117
216,375,200

0
0

4,120

051
Outlays

Total Trust funds Trust Funds

Summary
Federal funds:
(As shown in detail above)

BA
0

Deductions for offsetting receipts:
Proprietary receipts from the public

051 BA

QA
Total Federal funds

Trust funds:
(As shown in detail above)

interfund transactions

46,500

63,300

178,384,531

214,057,460

257,468,617

156,098,130

182,790,900

215,888,700

15,976

17,300

16,600

12,430

24,100

27,300

178,385,521

214,059,760

257,469,217

156,095,574

182,800,000

215,900,000

4,476
4,638

6,689
6,598

051 BA

Total Department of Defense-Military

Department of Defense-Civil
Cemeterial Expenses, Army
Federal funds
General and Special Funds:
Salaries and expenses
Appropriation, current
Outlays

See footnotes at end of table.

705
BA
0

5,032
6,139

8-58

THE BUDGET FOR FISCAL YEAR 1983
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Defense-Civil—Con.
Corps of Engineers-Civil
Federal funds
General and Special Funds:

301
301

Outlays
Operation and maintenance, general
Appropriation, current

301

OutlaysFlood control and coastal emergencies
Appropriation, current
Outlays
General expenses
Appropriation, current
Outlays..
Flood control, Mississippi River and tributaries
Appropriation, current

134,013
143,951

137,225
137,200

129,250
129,250

1,593,892

1,416,992

1,535,956

1,417,000

1,209,350
'-108,000
1,240,050
'-108,000

967,905

1,008,355

980,358

1,008,400

BA
0

25,000
104,352

20 000

BA
0

86,630
89,226

91,000
91,000

99,000
99,000

237,519

256,310

265,099

256,300

282,000
'-47,000
254,000
'-47,000

5,000
5,119

4,784
4,784

6,000
6,000

BA
0

1,571
1,711

1,748
1,730

1,848
1,748

BA
0
BA
0

5,207
4,625

5,352
5,207

5,552
5,352

6,778
6,336

7,100
6,937

7,400
7,100

BA
0

43,225
34,667

17,100

-5,800

-17,538

35,123

1,011,000
'-89,000
1,008,200
'-89,000

301
301
301

OutlaysSpecial recreation use fees
Appropriation, current
Outlays
Permanent appropriations:
(Water resources)
(Appropriation, permanent, indefinite)...
(Outlays)
(Other general purpose fiscal assistance)
(Appropriation, permanent, indefinite)...
(Outlays)

BA
0

CD O3

General investigations
Appropriation, current...
Outlays
Construction, general
Appropriation, current...

303

301
852

Total Permanent appropriations..
Intragovernmental Funds:

Revolving fund
Appropriation, current
Outlays
Consolidated working fund
Outlays
Trust funds
Inland waterways trust fund
Appropriation, current
Outlays
Rivers and harbors contributed funds
Appropriation, permanent, indefiniteOutlays
See footnotes at end of table.

301
301

301

BA
0
301

BA
0

'244,990
'244,990
81,032
83,846

70,000
70,000

71,000
71,000

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-59

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

2,921,766
2,993,844

2,500,000
2,493,800

Department of Defense-Civil—Con.
Corps of Engineers-Civil—Con.
Summary
Federal funds:
(As shown in detail above)
Deductions for offsetting receipts-.
Proprietary receipts from the public

BA
0

3,099,962
3,147,526

271 BA

300 BA

—1U

_23j80

-23,332

-23,855

301

'-270,000

303

'-5,000

902

Total Federal funds
Trust funds:
(As shown in detail above)
Deductions for offsetting receipts:
Proprietary receipts from the public

—o

—4

-3,181

-3,660

-4,135

3,073,597

2,894,766

2,197,000

3,121,161

2,966,844

2,190,800

81,032
83,846

70,000
70,000

315,990
315,990

BA
0
301

_/om

QA
Total Trust funds

0
Total Corps of Engineers-Civil

n m

-178,000
66,990

2,814

66,990

3,073,597

2,894,766

2,263,990

3,123,975

2,966,844

2,257,790

Ryukyu Islands, Army

Summary
Federal funds:
Deductions for offsetting receipts:
Proprietary receipts from the public

800 BA

Total Ryukyu Islands, Army

..„

-410

_410

-410

22,155

22,872

26,718

Soldiers' and Airmen's Home

Trust funds
Operation and maintenance
Appropriation, current

705

^796
Outlays

21,392

23,018

^796
See footnotes at end of table.

26,718

8-60

THE BUDGET FOR FISCAL YEAR 1983

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1983
estimate

1982
estimate

1981
actual

Account and functional code

Department of Defense-Civil—Con.
Soldiers' and Airmen's Home—Con.
Payment of claims
Appropriation permanent indefinite
Outlays
Soldiers' and Airmen's Home revolving fund
Outlays

705
BA
0

5
5

23,673
23,819

26,723
26,723

705
0

Summary
Federal funds:
Deductions for offsetting receipts:
Proprietary receipts from the public

705 BA
0

Total Federal funds... .

Trust funds:
(As shown in detail above)
Deductions for offsetting receipts:
Proprietary receipts from the public

BA
0

1
—1

BA
0

22,155
21,366

705 BA
0

Total Trust funds

...

-3,122

-4,021

-4,865

BA
0

19,033
18,244

19,652
19,798

21,858
21,858

BA
0

19,032
18,243

19,652
19,798

21,858
21,858

BA
0

1,159
863

1,316
1,336

1,449
1,389

BA
0

1,159
863

1,316
1,336

1,449
1,389

300 BA
0

-1,159

-1,316

-1,449

Total Soldiers' and Airmen's Home

Wildlife Conservation, Military Reservations
Federal funds
General and Special Funds:
Wildlife conservation
Appropriation, permanent, indefinite
Outlays

303

Summary
Federal funds:
(As shown in detail above)
Deductions for offsetting receipts:
Proprietary receipts from the public

Total Wildlife Conservation, Military Reservations
Summary
Federal funds:
(As shown in detail above)
Deductions for offsetting receipts:
Proprietary receipts from the public

BA
0

271 BA
0

300 BA
0
See footnotes at end of table.

-296

3,106,153
3,154,528

2,927,558
2,999,818

-60

2,508,138
2,501,787

-4

-10

-24,339

-24,648

-25,304

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-61

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Defense-Civil—Con.
Summary—Con.
301
303

I"
5

'-270,000

'-5,000

705 BA
~J

0
800

902

-3,181

-3,660

3,078,218

2,898,832

2,203,279

3,126,593

2,971,092

2,196,928

103,187
105,212

93,673
93,819

342,713
342,713

Total Federal funds
Trust funds:
(As shown in detail above)
Deductions for offsetting receipts:
Proprietary receipts from the public

BA
0
301

-410

-4,135

BA
QA

705

-410

-178,000

-3,122

-4,021

-4,865

Total Trust funds

19,033

19,652

88,848

Total Department of Defense-Civil

0
BA
0

21,058
3,097,251
3,147,651

19,798
2,918,484
2,990,890

88,848
2,292,127
2,285,776

Department of Health and Human Services
Health Programs
Public Health Service
Food and Drug Administration

Federal funds
General and Special Funds:

Salaries and expenses
Appropriation, current
Outlays
Buildings and facilities
Appropriation, current
Outlays

See footnotes at end of table.

554
BA
0

326,925
334,519

328,032
329,644

356,163
353,955

BA
0

28,253
1,686

4,397

7,723

554

8-62

THE BUDGET FOR FISCAL YEAR 1983
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Health and Human Services—Con.
Health Programs—Con.
Public Health Service—Con.

Food and Drug Administration—Con.
Public Enterprise Funds:
Revolving fund for certification and other services
554
Outlays

Total Federal funds Food and Drug Administration

962

355,178

328,032

356,163

337,167

334,041

361,678

1,281,085

1,134,743

Health Services Administration
Federal funds
General and Special Funds:
Health services
Appropriation, current

551
BA

Outlays

1,298,205

1,409,978

L
L

Indian health services
Appropriation, current

646,522

551

Outlays
Indian health facilities
Appropriation, current
Outlays
Emergency health
Outlays

846,472

741,260
1,186,870

606,709

599,645

613,280

589,999

600,283

613,364

83,053
89,482

47,152
84,884

58,835

-49

-736

1,970,847

1,781,540

2,201,012

1,977,641

2,094,412

2,504,855

208,980

223,279

166,671

220,341

241,735

188,046

67,848

60,331

50,521

79,687

68,359

61,804

551
BA
0
054

Public Enterprise Funds:
Health professions graduate student loan insurance
fund
553
Outlays
Total Federal funds Health Services Administration

Centers for Disease Control
Federal funds
General and Special Funds:
Preventive health services:
(Health care services)
(Appropriation, current)

551

(Outlays)
(Health research)
(Appropriation, current)

552

(Outlays)
Total Preventive health services

Total Federal funds Centers for Disease Control..

See footnotes at end of table.

276,828

283,610

217,192

300,028

310,094

249,850

276,828

283,610

217,192

300,028

310,094

249,850

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-63

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Health and Human Services—Con.
Health Programs—Con.
Public Health Service—Con.
National Institutes of Health
Federal funds
General and Special Funds:

National Cancer Institute:
(Health research)
(Appropriation, current)

552
BA

(Outlays)

963,137

963,176

932,674

1,044,892

982,702

955,574

26,218

23,441

22,775

22,365

21,855

19,023

(Education and training of health care work
force)
553
(Appropriation, current)

(Outlays)
Total National Cancer Institute

989,355

986,617

955,449

1,067,257

1,004,557

974,597

516,269

529,787

549,677

508,250

526,167

540,196

33,424

29,850

27,466

32,907

29,639

26,992

549,693

559,637

577,143

541,157

555,806

567,188

66,157

67,450

69,914

64,354

66,099

68,799

BA
0

4,957
4,822

4,533
4,440

4,548
4,476

71,114

71,983

74,462

69,176

70,539

73,275

348,877

349,535

359,560

341,492

345,562

354,794

0
National Heart, Lung and Blood Institute:
(Health research)
(Appropriation, current)

552

(Outlays)
(Education and training of health care work
force)
553
(Appropriation, current)

(Outlays)
Total National Heart, Lung and Blood Institute....

National Institute of Dental Research:
(Health research)
(Appropriation, current)

552

(Outlays)
(Education and training of health care work
force)
553
(Appropriation, current)
(Outlays)
Total National Institute of Dental Research

National Institute of Arthritis, Diabetes, and Digestive
and Kidney Diseases:
(Health research)
552
(Appropriation, current)

(Outlays)
(Education and training of health care work
force)
553
(Appropriation, current)

(Outlays)
Total National Institute of Arthritis, Diabetes,
and Digestive and Kidney Diseases

See footnotes at end of table.

20,585

18,656

19,862

22,088

20,144

18,913

369,462
363,580

368,191
365,706

379,422
373,707

BA
0

3-64

THE BUDGET FOR FISCAL YEAR 1983

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Health and Human Services—Con.
Health Programs—Con.
Public Health Service—Con.
National Institutes of Health—Con.
National Institute of Neurological and Communicative
Disorders and Stroke:
(Health research)
552
(Appropriation, current)
(Outlays)
(Education and training of health care work
force)
553
(Appropriation, current)

(Outlays)
Total National Institute of Neurological and Communicative Disorders and Stroke

BA
0

242,861
226,996

257,322
244,756

265,012
258,141

9,672

8,579

9,493

9,190

9,400

8,597

252,533

265,901

274,505

236,186

254,156

266,738

222,823
252,922

227,288
229,324

237,560
234,278

National Institute of Allergy and Infectious Diseases:
(Health research)
552
(Appropriation, current)
BA
(Outlays)
0
(Education and training of health care work
force)
553
(Appropriation, current)
BA
(Outlays)
0
Total National Institute of Allergy and Infectious
Diseases
National Institute of General Medical Sciences:
(Health research)
'
552
(Appropriation, current)
(Outlays)
(Education and training of health care work
force)
553
(Appropriation, current)
(Outlays)
Total National Institute of General Medical Sciences
National Institute of Child Health and Human Development:
(Health research)
552
(Appropriation, current)
(Outlays)

See footnotes at end of table.

9,254
10,505

8,607
8,681

8,483
8,366

BA
0

232,077
263,427

235,895
238,005

246,043
242,644

BA
0

278,979
245,199

292,344
280,463

299,473
293,354

BA
0

54,785
48,150

47,518
45,581

46,148
45,202

333,764

339,862

345,621

293,349

326,044

338,556

BA
0

210,800
223,471

217,393
218,881

224,508
222,250

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-65

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Health and Human Services—Con.
Health Programs—Con.
Public Health Service—Con.
National Institutes of Health—Con.
(Education and training of health care work
force)
553
(Appropriation, current)
(Outlays)

BA
0

9,828
11,100

Total National Institute of Child Health and
Human Development
BA
National Eye Institute:
(Health research)
(Appropriation, current)

8,916
9,300

9,067
8,500

220,628

226,309

233,575

234,571

228,181

230,750

113,794

123,828

127,921

99,571

116,161

123,968

552

(Outlays)

(Education and training of health care work
force)
553
(Appropriation, current)
(Outlays)
Total National Eye Institute

BA
0

4,189
3,579

3,546
3,124

3,629
3,205

117,983

127,374

131,550

103,150

119,285

127,173

86,609
87,671

99,672
94,878

152,554
132,731

6,882
6,966

6,598
6,276

4,894
4,258

93,491
94,637

106,270
101,154

157,448
136,989

72,780
67,553

79,550
74,424

82,164
79,134

2,353
2,025

2,392
2,058

National Institute of Environmental Health Sciences-.
(Health research)
552
(Appropriation, current)
BA
(Outlays)
0
(Education and training of health care work
force)
553
(Appropriation, current)
BA
(Outlays)
0
Total National Institute of Environmental Health

Sciences

BA
0

National Institute on Aging:
(Health research)
552
(Appropriation, current)
BA
(Outlays)
0
(Education and training of health care work
force)
553
(Appropriation, current)
BA
(Outlays)
0
Total National Institute on Aging
Research resources:
(Health research)
(Appropriation, current)
(Outlays)
See footnotes at end of table.
360-000

0 - 8 2 - 2 8

2,828
2,521

75,608

81,903

84,556

70,074

76,449

81,192

174,897
156,884

183,475
178,016

190,315
185,913

552
BA
0

8-66

THE BUDGET FOR FISCAL YEAR 1983

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1982
estimate

1981
actual

Account and functional code

1983
estimate

Department of Health and Human Services—Con.
Health Programs—Con.
Public Health Service—Con.

National Institutes of Health—Con.
(Education and training of health care work
force)
553
(Appropriation, current)
(Outlays)

BA
0

702
681

709
693

175,627
157,446

184,177
178,697

191,024
186,606

9,124
7,274

9,205
8,284

10,147
9,278

12,327
12,827

11,752
11,848

12,309
12,218

32,339
33,651

32,650
32,916

33,734
33,485

44,666
46,478

44,402
44,764

46,043
45,703

BA
0

20,727
19,227

20,757
20,972

22,340
22,293

BA
0
BA
0

1,804
1,671

1,805
1,823

1,943
1,939

22,531
20,898

22,562
22,795

24,283
24,232

BA
0

11,750
32,801

9,898
23,357

17,500
21,614

3,640,186
3,617,806

3,748,771
3,700,253

QQ CD

730
562

Total Research resources

John E. Fogarty International Center for Advanced
Study in the Health Sciences
552
BA
Appropriation, current
0
Outlays
National Library of Medicine:
(Health research)
552
BA
(Appropriation, current)
0
(Outlays)
(Education and training of health care work
force)
553
(Appropriation, current)
(Outlays)
O

Total National Library of Medicine
Office of the Director:
(Health research)
552
(Appropriation, current)
(Outlays)
(Education and training of health care work
force)
553
(Appropriation, current)
(Outlays)
Total Office of the Director
Buildings and facilities
Appropriation, currentOutlays

552

Intragovernmental Funds:

General research support grants
552
Outlays
National Institutes of Health management fund
552
Outlays
0
Consolidated working fund
552
Outlays
0
Service and supply fund
552
Outlays
0
Total Federal funds National Institutes of Health.
See footnotes at end of table.

BA
0

-501
64
2,775
3,569,406
3,603,805

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-67

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Health and Human Services—Con.
Health Programs—Con.
Public Health Service—Con.
Alcohol, Drug Abuse, and Mental Health
Administration
Federal funds
General and Special Funds:
Alcohol, drug abuse, and mental health:
(Health care services)
551
(Appropriation, current)
(Outlays)
(Health research)
552
(Appropriation, current)
(Outlays)
(Education and training of health care work
force)
553
(Appropriation, current)

(Outlays)

BA
0

599,964
712,344

432,000
684,297

147,278

BA
0

239,667
249,673

255,730
263,136

288,790
280,567

94,452

63,277

16,387

115,747

92,396

61,635

934,083

751,007

305,177

1,077,764

1,039,829

489,480

Total Alcohol, drug abuse, and mental health

0
Construction and renovation, St. Elizabeths Hospital
551
Outlays
Federal subsidy for St. Elizabeths Hospital
551
Appropriation, current

Outlays

0
BA

5,182

8,156

18,168

99,401

94,717

67,505

119,027

82,717

61,393

Total Federal funds Alcohol, Drug Abuse, and
Mental Health Administration

1,033,484

845,724

372,682

1,201,973

1,130,702

569,041

Health Resources Administration
Federal funds
General and Special Funds:
Health resources:
(Health care services)
(Appropriation, current)

551

(Outlays)
(Health research)
552
(Outlays)
(Education and training of health care work
force)
553
(Appropriation, current)
(Outlays)
Total Health resources

Public Enterprise Funds:
Health education loans
Outlays
Nurse training fund
Outlays
See footnotes at end of table.

135,333

68,629

11,176

171,901

130,610

79,320

687

171

BA
0

352,762
456,832

198,550
350,777

125,235
204,036

488,095

267,179

136,411

629,420

481,558

283,356

-3,168

-1,230

-492

-250

553
553

8-68

THE BUDGET FOR FISCAL YEAR 1983
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Health and Human Services—Con.
Health Programs—Con.
Public Health Service—Con.

Health Resources Administration—Con.
Medical facilities guarantee and loan fund
Appropriation, current
Outlays

551
BA
BA

Total Federal funds Health Resources Administration

32,105

22,000
35,422

32,000
30,400

BA
0

488,095
657,865

289,179
515,500

168,411
313,756

109,888

66,289
10,313

53,148

95,225
^ 1,856

56,514
^ 7,611

Office of Assistant Secretary for Health
Federal funds
General and Special Funds:
Health services management:
(Health care services)
(Appropriation, current)

551

(Reappropriation)
(Outlays)
(Health research)
(Appropriation, current)
(Outlays)

BA
0

8,675
117,812

BA
0

71,742
84,266

53,882
69,659

56,415
61,524

BA
0

190,305
202,078

130,484
166,740

109,563
125,649

552

Total Health services management

Health block grants
551
Appropriation, current
BA
Outlays
0
Retirement pay and medical benefits for commissioned
officers
551
Appropriation, current
BA
Indefinite
BA
Outlays
0

81,679
80,438

106,172
99,995

82,620

Public Enterprise Funds:
Health maintenance organization loan and loan guarantee fund
551
Appropriation, current, indefinite
BA
Outlays
0

3,087

1,358

2,500
477

2,500

3,000

Intragovernmental Funds:
Service and supply fund
Outlays
Miscellaneous consolidated working funds
Outlays

See footnotes at end of table.

515,600
387 000
85,433

551
0

804

552
0

4,797

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-69

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Health and Human Services—Con.
Health Programs—Con.
Public Health Service—Con.

Office of Assistant Secretary for
Health—Con.
Trust funds
Miscellaneous trust funds
Appropriation, permanent, indefinite

551

Outlays

6,294

4,620

4,545

4,299

4,524

4,541

271,984
291,204

236,656
270,593

713,096
598,746

6,294

4,620

4,545

4,299

4,524

4,541

7,965,822

7,404,927

7,777,327

8,369,683

8,273,148

8,298,179

6,294

4,620

4,545

4,299

4,524

4,541

Total Federal funds Office of Assistant Secretary

for Health

BA
0

Total Trust funds Office of Assistant Secretary
for Health

Total Federal funds Public Health Service

Total Trust funds Public Health Service

Other Health Programs
Health Care Financing Administration
Federal funds
General and Special Funds:
Grants to States for Medicaid
Appropriation, current

551
BA

17,439,623

17,866,488
L

Outlays
Payments to health care trust funds
Appropriation, current

16,833,344

^ 552J57
-451,000
17,269,843
^552,757

14,357,462
L

-1,432,300
18,889,462

-1,883,300

551
BA

Outlays

9,570,600

9,581,041

14,338,000

15,576,000

-162,000
15,576,000

'-162,000
Program management:
(Health care services)
(Appropriation, current)

551
BA

(Outlays)

90,228

66,535

114,505

^ 5,941
63,235
^ 2,052

(Health research)
(Appropriation, current)
(Outlays)
Total Program management

See footnotes at end of table.

69,405

65,961
A

3,889

552
BA
0

25,750
20,600

11,500
9,200

20,000
16,000

115,978

83,976

89,405

135,105

74,487

85,850

8-70

THE BUDGET FOR FISCAL YEAR 1983
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Health and Human Services—Con.
Health Programs—Con.
Other Health Programs—Con.
Health Care Financing AdministrationCon.
tntragovernmental Funds:

Miscellaneous consolidated working funds
Outlays
Trust funds
Federal hospital insurance trust fund
Appropriation, current
Appropriation, permanent, indefinite
Outlays

551
0

613

551
J

BA
BA
0

32,851,165
29,248,149

19,000
38,274,000
34,279,550
^ — 142,246

Federal supplementary medical insurance trust
fund
551
Appropriation, current
BA
Appropriation, permanent, indefinite
BA
Outlays..
0

12,451,059
13,240,433

J
-2,000
17,572,000
15,520,220
^ —105,906

BA
0

27,126,201
26,550,103

32,390,221
32,235,087

28,428,567
32,506,012

BA
0

45,302,224
42,488,582

55,863,000
49,551,618

59,383,000
55,352,374

Total Federal funds Health Programs

BA
0

35,092,023
34,919,786

39,795,148
40,508,235

36,205,894
40,804,191

Total Trust funds Health Programs

BA
0

45,308,518
42,492,881

55,867,620
49,556,142

59,387,545
55,356,915

BA
0

672,225
670,456

844,698
843,750

855,213
855,213

BA
0

1,101,300
1,090,493

1,098,765
1,098,300

1,102,000
1,103,000

7,227,244

7,877,596
^ —100,738
8,000,137
L _ ioo;OOO

Total Federal funds Health Care Financing Administration
Total Trust funds Health Care Financing Administration

—1,750,000
41,849,000
39,240,983
-1,130,773

-160,000
19,444,000
17,858,147
^ —615,983

Social Security Administration
Federal funds
General and Special Funds:

Payments to social security trust funds
Appropriation, current
Outlays
Special benefits for disabled coal miners
Appropriation, current
Outlays
Supplemental security income program
Appropriation, current

601
601
609

Outlays
Assistance payments program
Appropriation, current

7,191,506

8,484,107

8,503,122
L

See footnotes at end of table.

9,177,062
-285,700
9,188,244
-285,700

609
L

Outlays

6,302,260
-201,000
8,321,943
-201,000

6,609,017
-1,155,200
6,609,017
*-1,155,200

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-71

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1983
estimate

1982
estimate

Department of Health and Human Services—Con.
Social Security Administration—Con.
Child support enforcement
Appropriation, current

609
BA

553,377
-145,000
553,377
L
-145,000
L

Outlays..

Combined welfare administration
Appropriation, current

609
BA

1,914,000
-259,000
1,914,000
^ —259,000

Outlays..

Energy and emergency assistance
609
Appropriation, current
Outlays
Refugee and entrant assistance
609
Appropriation, current
Outlays
Payments to states from receipts for child support
609
Appropriation, permanent
Outlays

BA
0

1,849,500
1,734,353

1,752,000
1,864,701

1,300,000
1,300,000

BA
0

901,652
725,987

669,747
849,152

532,152
633,119

BA
0

497
519

450
520

450
450

BA
BA
0

121,571,604
122,304,248

130,139,351
138,197,914

'9,688,000
144,820,921
153,207,491
J
1,176,000

Trust funds
Federal old-age and survivors insurance trust fund
601
Appropriation, current, indefinite
Appropriation, permanent, indefinite
Outlays
Federal disability insurance trust fund
Appropriation, current
Appropriation, permanent, indefinite
Outlays

601
BA
BA
0

-5,313,000
19,378,292
18,938,323
J
214,000
(3,408,451)

12,992,425
17,280,271

21,989,235
18,446,498

(2,777,050)

(3,017,000)
A
(42,900)

Total Federal funds Social Security Administration
BA
0

20,236,525
19,916,436

18,243,778
20,677,503

20,198,371
20,311,520

Total Trust funds Social Security Administration.. BA
0

134,564,029
139,584,519

152,128,586
156,644,412

168,574,213
173,535,814

2,398,660
2,646,150

2,400,000
2,911,511

1,974,126
1,974,126

Limitation on administrative expenses

Human Development Services
Federal funds
General and Special Funds:

Human services block grants
Appropriation, current
Outlays
See footnotes at end of table.

506
BA
0

8-72

THE BUDGET FOR FISCAL YEAR 1983

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1983
estimate

1982
estimate

1981
actual

Account and functional code

Department of Health and Human Services—Con.
Human Development Services—Con.
Services to selected groups:
(Elementary, secondary, and vocational education)
501
(Appropriation, current)
BA
(Outlays)
0
(Higher education)
502
(Appropriation, current)
BA
(Outlays)
0
(Social services)
506
(Appropriation, current)
BA

70,043
79,020

75,168
82,325

77,297
84,234

2,644,952
-91,171

2,350,866
-77,495

2,598,575

2,337,627
L

BA
O

2,673,539
2,922,166

2,633,749
2,360,670

BA
O

75,483
85,620

58,062
71,686

57,291
61,392

173,750

465,149

179,850

506
506

Outlays..

493,057
L

420,120
-40,000
423,427
-40,000

506

2,000
1,834

1,572

1,922

2,971

4,217

4,331

BA
O

2,000
4,805

5,789

6,253

BA
O

365,000
381,067

245,760
268,575

11,353

366,075
311,249

103,500
150,550

-21,532

-1,000

0
552

Total Scientific activities overseas.
Work incentives
Appropriation, currentOutlays
Community services
Appropriation, currentOutlays

4,924
4,924

2,838,399

Total Services to selected groups.

Scientific activities overseas:
(special foreign currency program)
(Appropriation, current)
(Outlays)
(special foreign currency program)
(Outlays)

4,800
4,974

-4,123
2,389,772
H
-13,676
L
-4,123
2,415,725
2,461,131

(Outlays).

Human resources research and demonstration
Appropriation, current
Outlays
Child welfare block grants
Appropriation, current

4,921
4,747

504
506

BA
0

Public Enterprise Funds:

Rural Development loan fund
452
Outlays
Community development credit unions revolving
fund
452
Outlays
Total Federal funds Human Development Services
See footnotes at end of table.

23,038

BA
0

3,322

878

-1,000

5,688,432
6,246,018

6,168,795
6,401,883

4,930,762
5,046,232

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-73

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Health and Human Services—Con.
Departmental Management
Federal funds
General and Special Funds:
General Departmental management
Appropriation, current

Outlays
Office of Inspector General
Appropriation, current
Outlays
Office for Civil Rights
Appropriation, current
Outlays
Office of Consumer Affairs
Appropriation, current
Outlays
Policy research
Appropriation, current
Outlays

609
BA

131,454

140,982

158,969

127,623

137,562

156,472

BA
0

55,578
54,094

78,809
71,510

72,240
68,147

BA
0

17,420
19,417

17,063
17,321

19,163
19,084

609
751
506
BA
0

2,256
1,746

1,760
1,780

1,987
1,954

609
BA
0

19,500
22,496

13,440
17,599

14,718
15,605

Intragovernmental Funds:

Working capital fund
Outlays
Consolidated working fund
Outlays
Grants management fund
Outlays

506
561

1,094

2,091

1,243

-192

Summary
Federal funds:
(As shown in detail above)

BA
0

226,208
227,836

252,054
248,109

267,077
262,504

BA
0

61,243,188
61,310,076

64,459,775
67,835,730

61,602,104
66,424,447

500 BA

nno

Total Federal funds

Trust funds:
(As shown in detail above)
Deductions for offsetting receipts.Intrafund transactions

1,242

552

Total Federal funds Departmental Management...

Deductions for offsetting receipts:
Proprietary receipts from the public

0
506

cnn

—ZUo

cni

—oUU

—bUl

550

_ 24,826

902

-6,079

61,212,075

64,441,692

61,583,076

61,278,963

67,817,647

66,405,419

179,872,547
182,077,400

207,996,206
206,200,554

227,961,758
228,892,729

_mfi0(j

BA
0
601 BA

-16,232

-17,176

-1,251

2,218,000

on? RA

Q
See footnotes at end of table.

-30,069

-36,928

-509,000

8-74

THE BUDGET FOR FISCAL YEAR 1983
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1983
estimate

1982
estimate

Department of Health and Human Services—Con.
Summary—Con.

Proprietary receipts from the public

551

554
601
902
Total Trust funds

BA
0
BA
0
BA
0
BA
0
BA
0
BA
0
BA
0

551 BA
0
BA
0
601 BA
0

Interfund transactions

Total Department of Health and Human Services

BA
0

-3,339,912

-3,862,000
J

-5,063

41,000

-4,418,000
J

26,000

6,000

-4,142

-4,217

-89
-2
174,883,037
177,087,890

202,098,061
200,302,409

223,097,616
224,028,587

-9,581,030

-14,338,000

-15,576,000
J

162,000

-670,456

-843,658

-855,213

225,843,626
228,115,367

251,358,095
252,938,398

268,411,479
274,164,793

Department of Housing and Urban Development
Housing Programs
Federal funds
General and Special Funds:

Subsidized housing programs
Contract authority, current

604

Contract authority, permanent
Liquidation of contract authority, current
Outlays
Payments for operation of low income housing projects
604
Appropriation, current
Outlays
Troubled projects operating subsidy
604
Appropriation, current
Outlays
Congregate services program
604
Outlays
Housing counseling assistance
506
Appropriation, current
Outlays
Mobile home standards program
376
Outlays
See footnotes at end of table.

BA
BA
0

16,336,528
^ —1,750,480
"-9,399,789
32,335
30,257
(7,207,123)
(8,629,000)
5,746,548
6,726,000
24,807,201

-5,245,901
24,800
(9,538,000)
7,352,000

BA
0

1,070,800
928,581

1,292,906
1,278,000

1,075,000
1,110,000

BA
0

18,050
52,735

4,000
83,000

24,000

1,376

4,000

6,000

BA
0

7,000
5,437

3,520
4,000

2,810

405

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-75

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Housing and Urban Development—Con.
Housing Programs—Con.
Manufactured home inspection and monitoring

376

Appropriation, permanent, indefinite
Outlays
Interstate land sales
376
Appropriation, permanent, indefinite
Outlays
Public Enterprise Funds:
Federal Housing Administration fund
371
Appropriation, current, indefinite
Authority to borrow, permanent
Outlays
Low-rent public housing-loans and other expenses
604
Authority to borrow, permanent, indefinite
Liquidation of contract authority, current

BA
0

4,724
4,671

4,449
7,240

BA
0

216
414

171
171

BA
BA
0

268,640
143,402
181,588

94,900
156,650
-244,666

78,405
55,745
-1,178,726

34,360
(1,060,422)

(1,400,000)
A

Outlays
Housing for the elderly or handicapped fund
Authority to borrow, current, indefinite
Outlays
Nonprofit sponsor assistance
Outlays
Community disposal operations fund
Outlays
Rental housing assistance fund
Outlays
Revolving fund (liquidating programs)
Appropriation, current
Appropriation, permanent, indefinite
Outlays
Intragovernmental Funds:
Disaster assistance fund
Outlays

5,700
6,632

77,359

(1,400,000)
6,094

104,661

797,036
817,404

744,511
711,000

276,617
286,264

146

800

600

-394

-358

-289

3,076

2,542

BA
BA
0

903
16
-26,738

84
6
-27,400

-23,007

-4,738

27,184,683

7,517,713

-3,727,966

7,769,292

8,546,090

7,666,666

0
371
BA
0
604
451
604
451

962
535
-47,457

453

Total Federal funds Housing Programs

0
Government National Mortgage Association
Federal funds
General and Special Funds:
Payment of participation sales insufficiencies
Appropriation, current
Public Enterprise Funds:
Special assistance functions fund
Appropriation, current
Appropriation, permanent, indefinite
Authority to borrow, permanent, indefinite

371
BA
371

Outlays
Emergency mortgage purchase assistance
Outlays
Management and liquidating functions fund
Outlays
See footnotes at end of table.

2,295

BA
BA
BA

1,769
877
1,352,914

1,880
205
1,249,423

1,764
116

1,302,613

1,282,190

1,372,904

-73,721

-139,347

-67,841

-12,284

-25,500

-10,000

371
371

8-76

THE BUDGET FOR FISCAL YEAR 1983

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Housing and Urban Development—Con.
Government National Mortgage
Association—Con.
Guarantees of mortgage-backed securities
Outlays
Participation sales fund:
(Mortgage credit and thrift insurance)
(Outlays)
(Other advancement of commerce)
(Outlays)
(Community development)
(Outlays)
(Higher education)
(Outlays)
(Health research)
(Outlays)
(Veterans housing)
(Outlays)

371
0

-92,015

-118,200

-148,670

23,003

32,610

-11,623

-12,145

-5,068

-3,147

371
376
451
0

617

823

-837

502
0

-2,965

-3,248

-2,293

552
0

-561

-423

-352

51,327

-13,962

-12,597

59,276

10,732

-30,849

1,357,855

1,251,508

1,880

1,183,869

1,009,875

1,115,544

704

Total Participation sales fund
Total Federal funds Government National Mortgage Association

Solar Energy and Energy Conservation Bank
Federal funds
General and Special Funds:
Assistance for solar and conservation
ments
Appropriation, current

improve272
BA

Outlays

250
250

21,850

-21,850
6,850

^ —6,850

15,000

-15,000

Community Planning and Development
Federal funds
General and Special Funds:
Community development grants
Appropriation, current
Outlays
Urban development action grants
Appropriation, current
Reappropriation
Outlays
Urban homesteading
Appropriation, current
Outlays
Rental rehabilitation grants
Appropriation, current
Planning assistance
Appropriation, current
Outlays
See footnotes at end of table.

451
BA
0

3,694,600
4,042,407

3,456,000
4,005,000

3,456,000
3,350,000

BA
BA
0

675,000

435,100
5,025
525,000

440,000

451

371,114

550,000

451
BA
0

* 12,000
12,000

20,000

451
J

150,000

451
BA
0

15,756
38,941

20,290

4,738

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-77

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Housing and Urban Development—Con.
Community Planning and Development—
Con.
Neighborhood self-help development program
Appropriation, current
Outlays
Miscellaneous appropriations
Outlays

451
BA
0

881
8,886

4,763

4,556

3,704

451

Public Enterprise Funds:

Rehabilitation loan fund
451
Appropriation, current
BA
Outlays
0
Urban renewal programs
451
Liquidation of contract authority, permanent
Outlays
0

5,631
60,000

11,950

(67,453)
143,699

(92,652)
100,000

(70,000)
70,000

Total Federal funds Community Planning and
Development
BA
0

4,391,868
4,669,603

3,896,125
4,690,707

4,058,000
3,986,738

BA
0

-4,029
1,232

-453
1,295

450

BA
0

47,575
49,058

33,096
33,496

32,781
32,981

Total Federal funds New Community Development Corporation
BA
0

43,546
50,290

32,643
34,791

32,781
33,431

39,650

20,000

43,178

27,740

* 20,000
25,440

BA
0

5,700
723

5,016
7,556

5,700
5,763

New Community Development Corporation
Federal funds
General and Special Funds:

New community assistance grants
Appropriation, current, indefinite
Outlays

451

Public Enterprise Funds:

New communities fund
Authority to borrow, permanent, indefinite
Outlays

451

Policy Development and Research
Federal funds
General and Special Funds:

Research and technology
Appropriation, current

451

Outlays..
Fair Housing and Equal Opportunity
Federal funds
General and Special Funds:

Fair housing assistance
Appropriation, current
Outlays
See footnotes at end of table.

751

8-78

THE

BUDGET FOR FISCAL YEAR 1983

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

Department

1982
estimate

1983
estimate

Housing and Urban Development—Con.

Management and Administration
Federal funds
General and Special Funds:

Salaries and expenses, Including transfer of funds:
(Energy conservation)
272
(Appropriation, current)
(Outlays)
(Community development)
451
(Appropriation, current)
(Outlays)
(Public assistance and other income supplements)
604
(Appropriation, current)
(Outlays)
(Federal law enforcement activities)
751
(Appropriation, current)
(Outlays)
Total Salaries and expenses, Including transfer
of funds

BA
0

17
16

BA
0

214,664
202,619

194,800
194,253

216,679
217,783

BA
0

92,233
86,564

102,720
102,432

82,190
82,609

BA
0

22,182
20,902

21,980
21,918

22,132
22,244

BA
0

329,096
310,101

319,500
318,603

321,001
322,636

BA
0

8,332

528
2,407

314

BA
0

329,096
318,433

320,028
321,010

321,001
322,950

BA
0

33,352,648
14,035,638

13,043,033
14,637,769

711,396
13,156,532

-189

-21154

-24,554

-2,087

-2,122

33,350,372
14,033,362

13,019,757
14,614,493

Intragovernmental Funds:

Working capital fund
Appropriation, currentOutlays
Trust funds
Gifts and bequests
Appropriation, permanent, indefinite..
Outlays

451

Total Federal funds Management and Administration
Total Trust funds Management and Administration

Summary
Federal funds:
(As shown in detail above)
Deductions for offsetting receipts:
Proprietary receipts from the public

Total Federal funds..
See tootnotes at end ot table.

450 BA
0
902 BA
0
BA
0

684,720
13,129,856

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-79

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of Housing and Urban Development—Con.
Summary—Con.
Trust funds:
(As shown in detail above)

BA
0

Total Department of Housing and Urban Development
BA
0

33,350,372
14,033,377

13,019,760
14,614,496

684,720
13,129,856

355,326

4,750
* 368,777

Department of the Interior
Land and Water Resources
Bureau of Land Management

Federal funds
General and Special Funds:

Management of lands and resources
Appropriation, current

302
BA

406,621

Outlays
Construction, access, and land acquisition
Appropriation, current
Outlays
Payments in lieu of taxes
Appropriation, current

399,990

60,000
339,688
^ 60,000

14,768

15,223

16,799

13,138

103,000

95,520

104,082

95,520

351,290

302
*2,711
2,207

852

Outlays

45,000

'45,000
Oregon and California grant lands
302
Appropriation, current, indefinite
Outlays
Range improvements
302
Appropriation, current, indefinite
Outlays
Recreation development and operation of recreation
facilities
302
Outlays
Service charges, deposits, and forfeitures
302
Appropriation, current, indefinite
Outlays
Miscellaneous permanent appropriations:
(Conservation and land management)
302
(Appropriation, permanent, indefinite)
(Outlays)
(Other general purpose fiscal assistance)
852
(Appropriation, permanent, indefinite)
(Outlays)
Total Miscellaneous permanent appropriations
See footnotes at end of table.

BA
0

48,478
54,251

52,788
49,726

52,883
49,883

BA
0

13,117
11,660

13,226
13,226

11,048
11,048

106

BA
0

8,296
5,828

9,600
9,500

10,000
9,500

BA
0

3,811
3,296

3,000
3,000

4,000
4,000

BA
0

436,255
435,676

593,699
593,699

756,461
756,461

BA
0

440,066
438,972

596,699
596,699

760,461
760,461

8-80

THE BUDGET FOR FISCAL YEAR 1983
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1983
estimate

1982
estimate

1981
actual

Account and functional code

Department of the Interior—Con.
Land and Water Resources—Con.
Bureau of Land Management—Con.
Intragovemmental Funds:

Working capital fund
Outlays
Trust funds
Miscellaneous trust funds
Appropriation, current, indefinite
Appropriation, permanent, indefinite
Outlays

302
0

-909

302

Total Federal funds Bureau of Land Management

BA
BA
BA
BA
0

100
968
1,111

100
600
700

1,034,346
1,030,779

1,198,382
1,177,521

1,255,630
1,229,389

1,068
1,111

700
700

BA
0

22,924
26,400

22,614
26,886

39,600
39,600

BA
0

576,115
590,975

548,505
612,947

666,585
666,585

BA
0

40,029
40,610

30,596
30,279

36,485
35,485

BA
0

829

11160

BA
0

106,317
106,375

118,518
109,383

140,850
138,680

BA
0

40,500
38,839

39,928
41,416

49,300
49,300

BA
BA
0

600
1,695
2,426

600
2,100
2,700

-19,375 ..

-16,893

0
Total Trust funds Bureau of Land Management...

Bureau of Reclamation

Federal funds
General and Special Funds:

Loan program
Appropriation, current
Outlays
Construction program
Appropriation, current
Outlays
General investigations
Appropriation, current
Outlays
Emergency fund
Appropriation, current
Outlays
Operation and maintenance
Appropriation, current
Outlays
General administrative expenses
Appropriation, current
Outlays
Miscellaneous permanent appropriations
Appropriation, permanent
Indefinite
Outlays

301
301
301
301
1,000

301
301
852

Public Enterprise Funds:

Colorado River Basin project
Outlays
Upper Colorado River storage project
Outlays

301
301

Intragovemmental Funds:

Consolidated working fund
Outlays
See footnotes at end of table.

301
-3.987

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-81

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of the Interior—Con.

Land and Water Resources—Con.
Bureau of Reclamation—Con.
Trust funds
Reclamation trust funds
Dropnation, permanent, indefinite...
tlays

301

Total Federal funds Bureau of Reclamation

Total Trust funds Bureau of Reclamation

BA
0

6,969
6,827

8,352
8,352

13,800
13,800

BA
0

788,180
766,199

762,861
834,771

936,520
932,350

6,969
6,827

8,352
8,352

13,800
13,800

BA
BA
0

24,585
2,745
33,082

10,636

Office of Water Research and Technology
Federal funds
General and Special Funds:

Salaries and expenses
Appropriation, current
Reappropriation
Outlays

301

25,900

4,635

Intragovernmental Funds:

Consolidated working fund
Outlays

306

Total Federal funds Office of Water Research
and Technology
BA
0

27,330
33,082

10,636
25,986

4,635

Total Federal funds Land and Water Resources... BA
0

1,849,856
1,830,060

1,971,879
2,038,278

2,192,150
2,166,374

BA
0

8,037
7,938

9,052
9,052

14,500
14,500

233,183

218,922

228,774

220,350
A
1,800
213,740
^ 1,700

BA
0

35,397
71,465

6,683
28,844

12,705
12,594

16,491
11,860

1,567
5,546

1,200
16,376
16,757

16,376
15,876

Total Trust funds Land and Water Resources

Fish and Wildlife and Parks
United States Fish and Wildlife Service
Federal funds
General and Special Funds:

Resource management
Appropriation, current

303

Outlays..
Construction
Appropriation, current
Outlays
Land acquisition
Appropriation, current
Outlays
Migratory bird conservation account
Appropriation, current
Appropriation, permanent, indefinite
Outlays
See footnotes at end of table.
360-000

0 - 8 2 - 2 9

212,428
MOO

303

303
BA
0
303
BA
BA
0

1,250
15,140
18,437

8-82

THE BUDGET FOR FISCAL YEAR 1983

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of the Interior—Con.
Fish and Wildlife and Parks—Con.
United States Fish and Wildlife Service—
Con.

Development and operation of recreation facilities
303
Outlays
National wildlife refuge fund
Appropriation, current
Appropriation, permanent
Outlays
Miscellaneous permanent appropriations
Appropriation, permanent, indefinite
Outlays

BA
BA
0

8,500
5,892
11,647

5,760
4,053
9,002

4,053
3,953

BA
0

124,863
131,758

145,400
126,597

158,730
132,584

852

303

Intragovernmental Funds:

Consolidated working fund
Outlays

303
0

920 ..

Trust funds
Contributed funds
303
Appropriation, permanent, indefinite
BA
Outlays
0
Total Federal funds United States Fish and Wildlife Service
BA
0

3,327
3,077

3,442
3,142

3,750
3,242

424,225
463,093

418,113
408,500

412,353
383,081

Total Trust funds United States Fish and Wildlife
Service
BA
0

3,327
3,077

3,442
3,142

3,750
3,242

475,021

539,703

460,155

512,882
A
2,200
494,675
^ 2,200
12,372
14,324

6,987
6,682

43,367
134,270

85,172
136,913

123,721
127,009

2,577

5,015

BA
0

4,541
4,440

4,142
4,101

3,986
3,884

BA
0

1,000
18,374

7,680
64,441

38,554

National Park Service

Federal funds
General and Special Funds:

Operation of the national park system
Appropriation, current

303

Outlays..
National recreation and preservation
303
Appropriation, current
Outlays
Construction
303
Appropriation, current
Outlays
Road construction
303
Outlays
John F. Kennedy Center for the Performing Arts
303
Appropriation, current
Outlays
Urban park and recreation fund
303
Appropriation, current
Outlays
See footnotes at end of table.

BA
0
BA
0

534,620

8-83

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1983
estimate

1982
estimate

Department of the Interior—Con.
Fish and Wildlife and Parks—Con.
National Park Service—Con.
Land and water conservation fund
303
Appropriation, current
BA
Contract authority, permanent
BA
Outlays
0
Land acquisition
303
Appropriation, current
BA
Outlays
0
Planning, development, and operation of recreation
facilities
303
Outlays
0
Historic preservation fund
303
Appropriation, current
BA
Outlays
0
Commemorative activities fund
303
Outlays
0
Miscellaneous permanent appropriations
303
Appropriation, permanent, indefinite
BA

288,593
30,000
494,960

30,000
382,400

182,300

103,462
66,600

59,776
71,700

5,023

2,287

26,000
52,637

25,440
44,290

295

437
373

405
405

-632

BA
0

-12,000
1

3,000

499

BA
0

821
956

1,764
1,764

1,700
1,700

Total Federal funds National Park Service

BA
0

868,959
1,172,198

783,755
1,217,946

734,578
987,968

Total Trust funds National Park Service

BA
0

-11,179
957

1,764
4,764

1,700
2,199

Total Federal funds Fish and Wildlife and Parks.. BA

1,293,184
1,635,291

1,201,868
1,626,446

1,146,931
1,371,049

BA
0

-7,852
4,034

5,206
7,906

5,450
5,441

BA
0

516,056
510,424

494,545
497,730

507,577
506 705

Outlays...

22,814

Intragovernmental Funds:

Consolidated working fund
Outlays

303

Trust funds
Construction (trust fund)
Appropriation, current
Outlays
Miscellaneous trust funds
Appropriation, permanent, indefinite
Outlays

401

303

0
Total Trust funds Fish and Wildlife and Parks

Energy and Minerals
Geological Survey
Federal funds
General and Special Funds:

Surveys, investigations and research
Appropriation, current
Outlays
See footnotes at end of table.

306

8-84

THE BUDGET FOR FISCAL YEAR 1983

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1983
estimate

1982
estimate

Department of the Interior—Con.
Energy and Minerals—Con.
Geological Survey—Con.

Barrow area gas operation, exploration, and development
271
Appropriation, current
BA
Outlays
0
Exploration of national petroleum reserve in
Alaska
271
Appropriation, current
BA
Outlays
0
Payments from proceeds, sale of water
301
Appropriation, permanent, indefinite
BA
Outlays
0

6,400
5,900
107,001
114,505

2,196 ..
74,981

3,970

2
-1

Intragovernmental Funds:

Digitial cartography
Appropriation, current
Outlays
Consolidated working fund
Outlays

306
BA
0

3,873
3,330

306
0

Total Federal funds Geological Survey

-15,427 ..

BA
0

623,059
609,501

496,741
572,711

517,850
519,905

BA
BA
0

89,679
5,800
74,786

58,515

62,173

66,366

65,828

BA
0

82,485
56,365

102,082
70,600

97,649
80,520

Total Federal funds Office of Surface Mining
Reclamation and Enforcement
BA
0

177,964
131,151

160,597
136,966

159,822
146,348

142,319

124,676

156,694

146,529
^ 4,073
150,549
A
1,000

645

300

Office of Surface Mining Reclamation and
Enforcement

Federal funds
General and Special Funds:

Regulation and technology
Appropriation, current
Reappropriation
Outlays
Abandoned mine reclamation fund
Appropriation, current
Outlays

302

Bureau of Mines

Federal funds
General and Special Funds:

Mines and minerals
Appropriation, currentOutlays

306

Drainage of anthracite mines
Outlays

306

Public Enterprise Funds:

Helium fund
Outlays
See footnotes at end of table.

306
-251

131,436
^ 3,564

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-85

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of the Interior—Con.
Energy and Minerals—Con.
Bureau of Mines—Con.
Intragovernmental Funds:

Consolidated working fund
Outlays

306
,

1,380

652

BA
0

692
599

800
800

142,319

150,602

124,676

158,468

152,501

135,300

692

800

599

800

Trust funds
Contributed funds
Appropriation, permanent, indefinite
Outlays

306

Total Federal funds Bureau of Mines

Total Trust funds Bureau of Mines
Total Federal funds Energy and Minerals

Total Trust funds Energy and Minerals

943,342

807,940

802,348

899,120

862,178

801,553

692

800

599

800

Indian Affairs
Bureau of Indian Affairs
Federal funds
General and Special Funds:

Operation of Indian programs-.
(Conservation and land management)
(Appropriation, current)

302

(Outlays)
(Area and regional development)
452
(Appropriation, current)
(Outlays)
(Elementary, secondary, and vocational education)
501
(Appropriation, current)
(Outlays)
Total Operation of Indian programs
Indian education assistance
Appropriation, current

Outlays
Construction
Appropriation, current

85,712

82,283

77,743
^7,000
77,720
A
7,000

87,203
83,700

BA
0

482,245
465,855

469,971
469,840

505,375
489,218

BA
0

270,183
259,375

254,506
254,440

256,672
246,466

838,140

809,220

849,250

807,513

809,000

819,384

77,852

51,119

501
BA

81,680

-6,255
73,531

71,026

-2,005

"-3,417

56,419

452
BA

100,182

93,628

76,200
J

Outlays

76,857

85,000

29,800
80,000
5,000

See footnotes at end of table.

8-86

THE BUDGET FOR FISCAL YEAR 1983
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of the Interior—Con.
Indian Affairs—Con.
Bureau of Indian Affairs—Con.

Impact aid: school construction affecting
lands
Appropriation, current
Outlays
Road construction
Appropriation, current
Outlays
Eastern Indian land claims settlement fund
Appropriation, current
Outlays
Miscellaneous permanent appropriations:
(Area and regional development)
(Appropriation, permanent, indefinite)
(Outlays)
(Other general government)
(Appropriation, current)
(Appropriation, permanent, indefinite)
(Outlays).

Indian
501
BA
0

22,865
10,170

9,000
25,350

838
18,824

BA
0

48,625
69,536

47,160
53,000

43,585
44,325

BA
0

81,500
81,765

958

BA
0

29,289
28,035

29,000
26,700

29,000
27,000

BA
BA

30,000
844
30,857

1,000
1,000

BA
0

60,133
58,892

30,000
27,700

30,000
28,000

-1,099

5,200

6,300

1,570

2,800

2,700

3,000
50,000
485,400
387,800

3,000
50,000
518,200
438,600

452
806

Total Miscellaneous permanent appropriations
Public Enterprise Funds:

Revolving fund for loans
452
Outlays
0
Indian loan guaranty and insurance fund
452
Outlays
0
Liquidation of Hoonah Housing Project revolving
fund
452
Outlays
0
Intragovernmental Funds:

Consolidated working fund
Outlays
Trust funds
Miscellaneous trust funds:
(Area and regional development)
(Appropriation, current)
(Indefinite)
(Appropriation, permanent, indefinite)
(Outlays)
(Other general government)
(Appropriation, permanent)
(Outlays)

452

BA
BA
BA
0

2,032
46,775
569,114
362,719

BA
0

30,000
30,000

BA
0

647,921
392,719

538,400
387,800

571,200
438,600

BA
0
BA
0

1,233,125
1,142,509

1,060,605
1,080,534

1,080,792
1,072,142

647,921
392,719

538,400
387,800

571,200
438,600

806

Total Federal funds Bureau of Indian Affairs.

See footnotes at end of table.

-19,119

452

Total Miscellaneous trust funds

Total Trust funds Bureau of Indian Affairs

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-87

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of the Interior—Con.
Territorial Affairs
Office of Territorial Affairs
Federal funds
General and Special Funds:
Administration of territories
Appropriation, current

806
BA

77,915

86,990

54,911

*3,165
Outlays

Trust Territory of the Pacific Islands
Appropriation, current

79,913

^ 3,402
82,710

66,928

^ 2,930

M72

76,157

75,500

806
BA

Outlays

Micronesian claims fund, Trust Territory of the Pacific
Islands
806
Outlays
Payments to the United States territories, fiscal assistance
852
Appropriation, permanent, indefinite

Outlays

94,522

116,755

21,000
99,733

95,655

^ 1,400

^ 5,800

-15

1,676

66,366

54,200

113,366

57,359

54,200

Internal revenue collections for the Virgin Islands

852
Outlays

Total Federal funds Office of Territorial Affairs....

231

- 238,803

241,749

187,776

310,047

246,039

223,055

Secretarial Offices
Office of the Solicitor and Office of the
Secretary
Federal funds
General and Special Funds:
Office of the Solicitor, salaries and expenses
Appropriation, current

306

Outlays
Departmental management
306
Appropriation, current
Outlays
Construction management
306
Appropriation, current
Outlays
Office of Inspector General, salaries and expenses
306
Appropriation, current
Outlays
Youth conservation corps
302
Appropriation, current
Outlays
Salaries and expenses (special foreign currency program)
306
Outlays
See footnotes at end of table.

17,908

17,600

19,071

17,359

17,071

18,498

BA
0

41,108
44,412

40,213
38,464

44,157
42,172

BA
0

8,789
1,416

3,840
4,500

4,000

BA
0

9,119
7,227

10,219
9,485

11,400
10,700

BA
0

26,000
19,220

4,200
7,002

704

450

550

8-88

THE BUDGET FOR FISCAL YEAR 1983
BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of the Interior—Con.
Secretarial Offices—Con.
Office of the Solicitor and Office of the
Secretary—Con.
Intragovernmental Funds:

Working capital fund
306
Outlays
0
Consolidated working fund, Office of the Secretary
306
Outlays
0
Total Federal funds Office of the Solicitor and
Office of the Secretary
BA
0

-2,532
6,807
102,924
94,613

76,072
76,972

74,628
75,920

2,426
2,426

1,825
1,825

Energy Programs
Federal funds
General and Special Funds:

Administrative support for energy programs:
(Energy supply)
271
(Appropriation, current)
(Outlays)
Naval petroleum and oil shale reserve
271
Appropriation, current
Outlays
Strategic petroleum reserve
274
Appropriation, current
*
Outlays
Strategic petroleum reserve entitlements and royalties
274
Appropriation, current
Outlays

BA
0

2,024
2,024 *

BA
0

216,713
147,676

213,142
294,443

232,500
274,500

BA
0

2,790,507
3,313,985

191,432
227,402

242,118
302,400

BA
0

542,146
508,321

BA
0

3,069
2,960

3,538
3,496

2,809
2,809

BA
0

1,552
1,552

7,237
6,931

11,848
11,462

BA
0

261
207

50
104

General and Special Funds:

Operation and maintenance, Alaska Power Administration
271
Appropriation, current
Outlays
Operation and maintenance, Southeastern Power Administration
271
Appropriation, current
Outlays
Continuing fund, Southeastern Power Administration
271
Appropriation, permanent
Outlays
General and Special Funds:

Operation and maintenance, Southwestern Power Administration
271
Appropriation, current
BA
Outlays
0
Continuing fund, Southwestern Power Administration
271
Appropriation, current
BA
See footnotes at end of table.

28,208
32,930
107

21,269
29,285

34,290
34,290

THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT

8-89

BUDGET ACCOUNTS LISTING (in thousands of dollars)—Continued
1981
actual

Account and functional code

1982
estimate

1983
estimate

Department of the Interior—Con.
Energy Programs—Con.
Construction, rehabilitation, operation and maintenance, Western Area Power Administration

271
Appropriation, current
BA
Outlays
0
Emergency fund, Western Area Power Administration
271
Appropriation, current
BA
Outlays
0
Public Enterprise Funds:
Colorado river basins power marketing fund, Western
Area Power Administration
271
Appropriation, current
BA
Outlays
0
Bonneville Power Administration fund
271
Authority to borrow, current
BA
Authority to borrow, permanent, indefinite
BA
Outlays
0
Total Federal funds Energy Programs

138,502
148,964

210,774
210,371

207,200
207,200

200
355

500
500

3,548
-17,751

-2,049

-5,000
276,000
1

Full text of Budget of the United States Government : Fiscal Year 1983

FRASER